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CUSIP No. 911905 10 7
EXHIBIT A
AGREEMENT FOR EXCHANGE OF STOCK
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AGREEMENT FOR EXCHANGE OF STOCK ("Agreement") dated August 15, 1997 by
and between Berkshire Hathaway Inc. ("BHI"), both for itself and on behalf of
the affiliates of BHI listed on Schedule A hereto (each a "Holder" and,
collectively, the "Holders"), and US Airways Group, Inc., a Delaware corporation
(the "Company").
RECITALS:
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WHEREAS, the Holders collectively own three-hundred and fifty-eight
thousand (358,000) shares of Series A Cumulative Convertible Preferred Stock
(the "Series A Shares") of the Company convertible into shares of Common Stock
pursuant to the terms contained in the certificate of designation for the Series
A Shares, dated August 7, 1989;
WHEREAS, subject to the terms and conditions set forth herein, the
parties have agreed that each of the Holders shall exchange the Series A Shares
owned by it, as set forth in Schedule A, for shares of a new issue of Series H
Senior Cumulative Convertible Preferred Stock of the Company (the "Series H
Shares") convertible into Common Stock pursuant to the certificate of
designation of the Series H Shares, attached hereto as Exhibit A;
WHEREAS, in exchange for consideration received pursuant to this
Agreement, the Company has agreed to amend the letter agreement dated August 7,
1989 between the Company and BHI (the "Letter Agreement") and waive a provision
of such Letter Agreement, as set forth herein;
WHEREAS, this Agreement is intended to effectuate a non-recognition
exchange of the Series A Shares for the Series H Shares under the Internal
Revenue Code of 1986, as amended; and
WHEREAS, the Company intends to issue a Notice of Redemption for the
$437.50 Series B Cumulative Convertible Preferred Stock of the Company (the
"Series B Shares"), which action is expected to result in the conversion of all
or substantially all of the Series B Shares into shares of common stock, par
value $1.00 per share, of the Company (the "Common Stock"), and the parties
hereto believe that such conversion will be beneficial to the Company and its
shareholders.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements hereinafter set forth, intending to be legally bound
hereby, the parties hereto agree as follows:
1. EXCHANGE OF STOCK, CLOSING, AND RELATED MATTERS.
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1.1 Exchange. Subject to the terms and conditions of this Agreement,
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each of the Holders agrees to exchange with the Company all of the Series A
Shares held by it for an equal number of Series H Shares.
1.2 Closing. The exchange referred to in Section 1.1 shall take
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place upon execution of this Agreement, at which time and upon receipt of the
certificates for the Series A Shares which shall be submitted to the Company for
cancellation, the Company shall cause the appropriate number of Series H Shares
to be issued to each of the Holders.
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CUSIP No. 911905 10 7
1.3 Issuance of Series H Shares. Each of the Holders hereby
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consents to the creation and issuance of the Series H Shares.
1.4 Company Opinion. Each of the Holders hereby acknowledges (i)
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receipt from the Company of an opinion dated the date hereof substantially in
the form attached as Exhibit B hereto and (ii) receipt from Skadden, Arps,
Slate, Xxxxxxx & Xxxx LLP, special counsel to the Company, of an opinion dated
the date hereof substantially in the form attached as Exhibit C hereto.
1.5 BHI Opinion. The Company hereby acknowledges receipt from
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Xxxxxx, Xxxxxx & Xxxxx LLP, special counsel to BHI, of an opinion dated the date
hereof substantially in the form attached as Exhibit D hereto.
2. AMENDMENT OF LETTER AGREEMENT. As consideration for BHI's and each of
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the Holders' consent to enter into this Agreement, the parties hereby agree to
amend the Letter Agreement as follows:
2.1 Section 1(b)(iv) of the Letter Agreement ia hereby deleted and
replaced by the following new Section 1(b)(iv):
(iv) that, except following a "Change in Control" or a "Prospective
Change in Control" (as such terms are defined in the Certificate of
Designation for the Series H Preferred Stock) and except for sales made
into a tender offer or exchange offer for all of the Company's common
stock, Purchaser will not sell any Company securities representing more
than 3% of the general voting power of the Company's Voting Securities
outstanding at the time of the sale to any one entity (or group known by
Purchaser to be acting in concert), and will not sell any Company
securities to any one entity (or group acting in concert) which (i) at the
time of sale has on file with the Securities and Exchange Commission a
Schedule 13D with respect to the Company's Voting Securities disclosing
that such entity (or such group) beneficially owns more than 5% of the
Company's Voting Securities, or (ii) is otherwise known by Purchaser to be
the beneficial owner directly or indirectly of more than 5% of the
Company's Voting Securities; provided, however, that in the event of a
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"Change in Control" described in paragraph (b) under the definition of
"Change in Control" in the Certificate of Designation or in the event of
a "Prospective Change in Control" the exception from Purchaser's
obligations under this subparagraph shall only extend to sales into the
tender offer or exchange offer that occasioned the "Change in Control" or
"Prospective Change in Control" or into another tender offer or exchange
offer for all of the Company's common stock; and provided further that
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Purchaser will in no event sell any of the Company securities owned by
Purchaser during the pendency of a tender or exchange offer that has not
occasioned a "Change in Control" or "Prospective Change in Control" (as
defined in the Certificate of Designation) unless such tender or exchange
offer shall have subsequently occasioned a "Change in Control" or
"Prospective Change in Control" or such offer shall be for all of the
Company's common stock and in the case of any sales permitted by this
proviso only into such a tender offer or exchange offer; and
2.2 All references to Series A Cumulative Convertible Preferred Stock
are hereby deleted and replaced with references to Series H Senior Cumulative
Convertible Preferred Stock, other than any such references contained in the
first paragraph of Section (1), in Section (2) or in Section (4) of the Letter
Agreement.
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CUSIP No. 911905 10 7
3. WAIVER OF PROVISION IN LETTER AGREEMENT. The Company hereby
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irrevocably waives its rights and irrevocably releases BHI and the Holders from
their obligations set forth in subsection 1(b)(v) of the Letter Agreement.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
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The Company hereby represents and warrants to BHI and each of the
Holders that:
4.1 The Company has the requisite corporate power and authority to
execute, deliver and carry out the terms and provisions of this Agreement and to
consummate the transactions contemplated hereby, and has taken all necessary
corporate action to authorize the execution, delivery and performance of this
Agreement.
4.2 The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware.
4.3 As of the date of this Agreement, the authorized capital stock of
the Company consists of 150,000,000 shares of common stock, $1.00 par value (the
"Common Shares"), 5,000,000 shares of preferred stock, without par value, of
which 358,000 are designated Series A Cumulative Convertible Preferred Stock
(the "Series A Preferred Shares") and 46,000 are designated Series B Cumulative
Convertible Preferred Stock (the "Series B Preferred Stock") and 3,000,000
shares of senior preferred stock, without par value. The Series B Preferred
Stock is represented by Depositary Shares (the "Series B Depositary Preferred
Shares" and, together with the Common Shares and the Series A Preferred Stock,
the "Capital Shares"), each Depositary Share representing 1/100 of a share of
Series B Preferred Stock. As of the date of this Agreement, 80,111,000 Common
Shares, 358,000 Series A Preferred Shares, 42,625 Series B Depositary Preferred
Shares and no shares of the senior preferred stock are issued and outstanding.
All Capital Shares have been duly authorized and validly issued and are fully
paid and nonassessable.
4.4 This Agreement has been duly and validly authorized, executed and
delivered by the Company and constitutes a valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms, except as
enforcement may be limited by applicable bankruptcy, insolvency or similar laws
effecting creditors rights generally and by principles of equity.
4.5 The execution of this Agreement by the Company does not, and the
performance by the Company of its obligations hereunder will not, constitute a
violation of, conflict with or result in a default under any contract,
commitment, agreement, understanding, arrangement or restriction of any kind to
which the Company is a party or by which the Company is bound or any judgment,
decree or order applicable to the Company.
4.6 Neither the execution and delivery of this Agreement nor the
performance by the Company of its obligations hereunder will violate any
provision of law applicable to the Company or require any consent or approval
of, or filing with or notice to, any public body or authority under any
provision of law applicable to the Company.
4.7 There are no actions, proceedings or investigations pending, or
to the Company' knowledge, threatened against the Company, which would
materially adversely affect the Company's ability to perform its obligations
under this Agreement.
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CUSIP No. 911905 10 7
4.8 The Series H Shares to be delivered to each of the Holders will
be validly issued and outstanding, fully paid and nonassessable, free from pre-
emptive and other similar rights and free and clear of any security interests,
liens, claims, options, proxies, voting agreements, charges or encumbrances of
whatever nature other than the Letter Agreement as amended.
4.9 The Company's Rights Agreement, dated as of June 29, 1989, with
the Chase Manhattan Bank, N.A. expired as of June 29, 1996 and is of no further
effect and no similar rights agreement has been entered into by the Company or
is currently in effect.
4.10 As of the date of this Exchange Agreement, each Series A Share
is convertible into the number of shares of Company Common Stock equal to the
quotient of 9,239,944 divided by 358,000 with fractions to be paid in cash,
pursuant to the terms of and after giving effect to all adjustments required by
the Certificate of Designation governing the Series A Shares. The Company has
delivered all notices to BHI and the Holders required under Section 9 of the
Certificate of Designation governing the Series A Shares.
5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF BHI.
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BHI represents, warrants and covenants to the Company as follows:
5.1 BHI has the requisite corporate power and authority to execute,
deliver and carry out the terms and provisions of this Agreement and the
transactions contemplated hereby, and has taken all necessary corporate action
to authorize the execution, delivery and performance of this Agreement.
5.2 This Agreement has been duly and validly authorized, executed and
delivered by BHI, and constitutes a valid and binding obligation of BHI,
enforceable against BHI in accordance with its terms, except as enforcement may
be limited by applicable bankruptcy, insolvency or similar laws effecting
creditors rights generally and by principles of equity.
5.3 The execution of this Agreement by BHI does not, and the
performance by BHI of its obligations under this Agreement will not, constitute
a violation of, conflict with or result in a default under any contract,
commitment, agreement, understanding, arrangement or restriction of any kind to
which BHI is a party or by which BHI is bound or any judgment, decree or order
applicable to BHI.
5.4 Neither the execution and delivery of this Agreement nor the
performance by BHI of its obligations under this Agreement will violate any
provision of law applicable to BHI or require any consent or approval of, or
filing with or notice to, any public body or authority under any provision of
law applicable to BHI.
6. REPRESENTATIONS, WARRANTIES AND COVENANTS OF EACH OF THE HOLDERS.
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Each of the Holders represents, warrants and covenants to the Company
as follows:
6.1 It has the requisite corporate power and authority to carry out
the terms and provisions of this Agreement and the transactions contemplated
hereby, and has taken all necessary corporate action to authorize the
performance of this Agree ment and the execution and delivery of this Agreement
by BHI on its behalf.
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CUSIP No. 911905 10 7
6.2 This Agreement has been duly and validly authorized by it, duly
and validly executed and delivered on its behalf by BHI and constitutes a valid
and binding obligation of it, enforceable against it in accordance with its
terms, except as enforcement may be limited by applicable bankruptcy, insolvency
or similar laws effecting creditors rights generally and by principles of
equity.
6.3 It is the beneficial owner of, and has good and valid title with
respect to, the Series A Shares set forth opposite its name on Schedule A
hereto, and there exist no security interests, liens, claims, options, proxies,
voting agreements, charges or encumbrances of whatever nature affecting the
Series A Shares owned by it other than the Letter Agreement as amended.
6.4 The execution of this Agreement by BHI on its behalf does not,
and the performance by it of its obligations under this Agreement will not,
constitute a violation of, conflict with or result in a default under any
contract, commitment, agreement, understanding, arrangement or restriction of
any kind to which it is a party or by which it is bound or any judgment, decree
or order applicable to it.
6.5 Neither the execution and delivery of this Agreement by BHI on
its behalf nor the performance by it of its obligations under this Agreement
will vio late any provision of law applicable to it or require any consent or
approval of, or filing with or notice to, any public body or authority under any
provision of law applicable to it.
7. MISCELLANEOUS.
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7.1 Entire Agreement. This Agreement constitutes the entire
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agreement between the parties regarding the subject matter hereof, superseding
any and all prior agreements or understandings (provided that this Agreement
does not supersede the Letter Agreement except as set forth in Section 2
hereof), and may not be amend ed or terminated except by an instrument signed by
the parties hereto.
7.2 Governing Law. This Agreement shall be governed by and construed
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in accordance with the laws of the State of Delaware.
7.3 Assignment. This Agreement shall not be assigned by any party
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without the prior written consent of the other parties. Nothing in this
Agreement is intended to confer upon any person, other than the parties hereto,
their permitted assigns and successors, any rights or remedies under or by
reason of this Agreement.
7.4 Expenses. The parties shall pay their respective expenses of the
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transactions herein contemplated.
7.5 Waiver. No waiver by any party hereto, whether express or
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implied, of its rights under any part of this Agreement shall constitute a
waiver of such party's rights under such provision at any other time or a waiver
of such party's rights under any provision of this Agreement. No failure by any
party hereto to take any action with respect to any breach of this Agreement or
default by another party hereto shall constitute a waiver of the former party's
right to enforce any provision of this Agreement or to take action with respect
to such breach or default or any subsequent breach or default by such other
party.
7.6 Notices. Any notice or other communication required or permitted
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under this Agreement shall be in writing and shall be delivered in person, by
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CUSIP No. 911905 10 7
courier (marked for overnight delivery), by facsimile transmission (with oral
confirmation of receipt) or by certified air mail (postage prepaid, return
receipt requested, if available). Any such notice shall be deemed given (i) if
delivered in person or by facsimile transmission, upon receipt, (ii) if mailed,
five (5) business days after the date of deposit in the mails, and (iii) if sent
by overnight courier marked for overnight delivery, two (2) business days after
the date of delivery to the courier service. All such notices shall be sent to
the facsimile number or address (as the case may be) specified below:
If to the Holders: x/x Xxxxxxxxx Xxxxxxxx Inc.
0000 Xxxxxx Xxxxx
Xxxxx, XX 00000
Attn: Chief Financial Officer
cc: Xxxxxx, Xxxxxx & Xxxxx LLP
000 X. Xxxxx Xxx.
Xxx Xxxxxxx, XX 00000
Attn: R. Xxxxxxx Xxxxxx
If to the Company: US Airways Group, Inc.
Crystal Park Four
0000 Xxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Attn: Executive Vice President-
Corporate Affairs and General Counsel
cc: Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxx.
Xxx Xxxx, XX 00000
Attn: Xxxxx Xxxxx Xxxxxx, Esq.
Any party may, by notice given in accordance with this Section to the
other parties designate another address or person or entity for receipt of
notices hereunder.
7.7 Counterparts. This Agreement may be executed in any number of
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counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
CUSIP No. 911905 10 7 Page 29 of 49
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
US AIRWAYS GROUP, INC.
By: /s/ Xxxx X. Xxxxxx
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Name: Xxxx X. Xxxxxx
Title: Senior Vice President
BERKSHIRE HATHAWAY INC.
By: /s/ Xxxx X. Hamburg
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Name: Xxxx X. Hamburg
Title: Vice President
THE HOLDERS
By: Berkshire Hathaway Inc.
on their behalf
By: /s/ Xxxx X. Hamburg
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Name: Xxxx X. Hamburg
Title: Vice President
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CUSIP No. 911905 10 7
Schedule A
Holder Number of Shares
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Nebraska Furniture Mart, Inc. 5,000
The Fechheimer Brothers Company 5,000
National Indemnity Company 250,000
Columbia Insurance Company 73,000
Redwood Fire & Casualty
Insurance Company 3,000
National Indemnity Company
of Mid America 3,000
Cypress Insurance Company 2,000
Wesco-Financial Insurance Company 12,000
National Liability & Fire
Insurance Company 2,000
Oak River Insurance Company 3,000
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TOTAL 358,000
