-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, M6b4lLJBFGHqwgRRXw76RkIKiAAn/TpPjy1z0dui37WcqqtDSH/4WLAxqfmAhQak zuBBZKjcMRZ1JpOchrhE5A== 0000950153-94-000156.txt : 19940817 0000950153-94-000156.hdr.sgml : 19940817 ACCESSION NUMBER: 0000950153-94-000156 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19940630 FILED AS OF DATE: 19940812 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICA WEST AIRLINES INC CENTRAL INDEX KEY: 0000706270 STANDARD INDUSTRIAL CLASSIFICATION: 4512 IRS NUMBER: 860418245 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-10140 FILM NUMBER: 94543848 BUSINESS ADDRESS: STREET 1: 100 WEST WASHINGTON STREET STREET 2: SUITE 2100 CITY: PHOENIX STATE: AZ ZIP: 85003 BUSINESS PHONE: 6026930800 MAIL ADDRESS: STREET 1: 400 EAST SKY HARBOR BOULEVARD CITY: PHOENIX STATE: AZ ZIP: 85034 10-Q 1 QUARTERLY REPORT FOR AWA, PERIOD ENDING 6/30/94 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) X Quarterly report pursuant to Section 13 or 15(d) of the Securities ====== Exchange Act of 1934 For the quarterly period ended JUNE 30, 1994 or ------------- Transition report pursuant to Section 13 or 15(d) of the ====== Securities Exchange Act of 1934 For the transition period from ______________ to _______________ Commission file number 1-10140 ------------------------------------------------- AMERICA WEST AIRLINES, INC. - - ------------------------------------------------------------------------------ (Exact name of registrant as specified in its charter) DELAWARE 86-0418245 - - ------------------------------- ------------------------------------ (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 4000 EAST SKY HARBOR BLVD, PHOENIX, ARIZONA 85034 - - ------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (602) 693-0800 - - ------------------------------------------------------------------------------- N/A - - ------------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes XX No ---- ---- 1 2 APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS Indicate by check whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. X Yes _____ No _____ (Not Applicable) _____ APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. The number of shares of the Company's common stock outstanding as of July 31, 1994 was 25,720,743 shares. 2 3 Part I - FINANCIAL INFORMATION Item 1. Financial Statements AMERICA WEST AIRLINES, INC., D.I.P. Condensed Balance Sheets
(in thousands) --------------------------- June 30, December 31, Assets 1994 1993 ------ ------------- ------------ (Unaudited) Current assets Cash and cash equivalents . . . . . . . . . . . . . . . . . . .$ 176,922 $ 99,631 Accounts receivable, less allowance for doubtful accounts of $3,756,000 in 1994 and $3,030,000 in 1993 . . . . . . . . . . 78,207 65,744 Expendable spare parts and supplies, less allowance for obsolescence of $7,754,000 in 1994 and $7,231,000 in 1993 . . 28,622 28,111 Prepaid expenses. . . . . . . . . . . . . . . . . . . . . . . . 32,888 34,939 ------------ ------------ Total current assets . . . . . . . . . . . . . . . . . . . 316,639 228,425 ------------ ------------ Property and equipment Flight equipment. . . . . . . . . . . . . . . . . . . . . . . . 895,662 872,104 Other property and equipment. . . . . . . . . . . . . . . . . . 183,765 180,607 ------------ ------------ 1,079,427 1,052,711 Less accumulated depreciation and amortization. . . . . . . . 422,109 385,776 ------------ ------------ 657,318 666,935 Equipment purchase deposits. . . . . . . . . . . . . . . . . . 51,836 51,836 ------------ ------------ 709,154 718,771 ------------ ------------ Restricted cash. . . . . . . . . . . . . . . . . . . . . . . . . . 50,468 46,296 Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,280 23,251 ------------ ------------ $ 1,100,541 $ 1,016,743 ============ ============
See accompanying notes to condensed financial statements. 3 4 AMERICA WEST AIRLINES, INC., D.I.P. Condensed Balance Sheets
(in thousands) ---------------------------- June 30, December 31, Liabilities and Stockholders' Deficiency 1994 1993 ------------------------------------------------- ------------- ----------- (Unaudited) Current liabilities Current maturities of long-term debt. . . . . . . . . . . . . .$ 118,621 $ 125,271 Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . 71,463 62,957 Air traffic liability . . . . . . . . . . . . . . . . . . . . . 166,383 118,479 Accrued compensation and vacation benefits. . . . . . . . . . . 12,525 11,704 Accrued interest. . . . . . . . . . . . . . . . . . . . . . . . 7,812 8,295 Accrued taxes . . . . . . . . . . . . . . . . . . . . . . . . . 27,304 14,114 Other accrued liabilities . . . . . . . . . . . . . . . . . . . 19,291 11,980 ------------ ------------ Total current liabilities. . . . . . . . . . . . . . . . 423,399 352,800 ------------ ------------ Estimated liabilities subject to Chapter 11 proceedings. . . . . . 379,814 381,114 Long-term debt, less current maturities. . . . . . . . . . . . . . 381,397 396,350 Manufacturers' and deferred credits. . . . . . . . . . . . . . . . 71,366 73,592 Other liabilities. . . . . . . . . . . . . . . . . . . . . . . . . 59,903 67,149 Commitments and contingencies Stockholders' deficiency Preferred stock, $.25 par value. Authorized 50,000,000 shares: Series C 9.75 percent convertible preferred stock, issued and outstanding 73,099 shares; $1.33 per share cumulative dividend (liquidation preference $1,000,000) . . . . . . . . . 18 18 Common stock, $.25 par value. Authorized 90,000,000 shares; issued and outstanding 25,694,469 shares in 1994 and 25,291,102 in 1993 . . . . . . . . . . . . . . . . . . . . . . 6,424 6,323 Additional paid-in capital . . . . . . . . . . . . . . . . . . . 200,013 197,010 Accumulated deficit. . . . . . . . . . . . . . . . . . . . . . . (403,315) (438,626) ------------ ----------- (196,860) (235,275) Less deferred compensation and notes receivable - employee stock purchase plans. . . . . . . . . . . . . . . . . 18,478 18,987 ------------ ----------- Total stockholders' deficiency . . . . . . . . . . . . . (215,338) (254,262) ------------ ------------ $ 1,100,541 $ 1,016,743 ============ ============
See accompanying notes to condensed financial statements. 4 5 AMERICA WEST AIRLINES, INC., D.I.P. Condensed Statements of Operations and Accumulated Deficit (in thousands except per share amounts) (unaudited)
Three Months Ended Six Months Ended June 30, June 30, ------------------------ ------------------------- 1994 1993 1994 1993 ----------- ----------- ------------------------- Operating revenues Passenger. . . . . . . . . . . . . . . $ 340,617 $ 306,129 $ 665,044 $ 603,790 Cargo. . . . . . . . . . . . . . . . . 10,998 9,376 21,489 18,971 Other. . . . . . . . . . . . . . . . . 11,736 9,405 22,082 18,754 ----------- ----------- ----------- ----------- Total operating revenues . . . . . . 363,351 324,910 708,615 641,515 ----------- ----------- ----------- ----------- Operating expenses Salaries and related costs . . . . . . 83,013 75,830 162,484 149,990 Rentals and landing fees . . . . . . . 66,576 68,065 132,835 140,555 Aircraft fuel. . . . . . . . . . . . . 37,862 41,147 75,794 83,553 Agency commissions . . . . . . . . . . 30,820 26,629 59,931 52,093 Aircraft maintenance materials and repairs 10,973 7,425 18,902 14,619 Depreciation and amortization. . . . . 22,045 20,156 43,198 39,879 Other. . . . . . . . . . . . . . . . . 67,916 60,479 133,575 118,479 ----------- ----------- ----------- ----------- Total operating expenses . . . . . . 319,205 299,731 626,719 599,168 ----------- ----------- ----------- ----------- Operating income . . . . . . . . . . 44,146 25,179 81,896 42,347 ----------- ----------- ----------- ----------- Nonoperating income (expenses) Interest income. . . . . . . . . . . . 183 174 344 411 Interest expense . . . . . . . . . . . (12,893) (13,666) (26,068) (27,563) Loss on disposition of property and equipment. (728) (415) (1,270) (613) Reorganization expense, net. . . . . . (9,862) (806) (18,258) (1,892) Other, net . . . . . . . . . . . . . . 129 3 138 (43) ----------- ----------- ----------- ----------- Total nonoperating expenses, net . . (23,171) (14,710) (45,114) (29,700) ----------- ----------- ----------- ----------- Income before income taxes . . . . . . . 20,975 10,469 36,782 12,647 ----------- ----------- ----------- ----------- Income taxes . . . . . . . . . . . . . . 839 209 1,471 253 ----------- ----------- ----------- ----------- Net income . . . . . . . . . . . . . . . 20,136 10,260 35,311 12,394 Accumulated deficit at beginning of period (423,451) (473,657) (438,626) (475,791) ----------- ----------- ----------- ----------- Accumulated deficit at end of period . . $ (403,315) $ (463,397) $ (403,315) $ (463,397) =========== =========== =========== =========== Earnings per share Primary . . . . . . . . . . . . . . $ 0.74 $ 0.39 $ 1.30 $ 0.52 ----------- ----------- ----------- ----------- Fully diluted . . . . . . . . . . . $ 0.52 $ 0.27 $ 0.92 $ 0.36 Shares used for computation =========== =========== =========== =========== Primary . . . . . . . . . . . . . . 28,255 29,658 28,704 29,669 =========== =========== =========== =========== Fully diluted . . . . . . . . . . . 40,158 42,744 40,607 42,804 =========== =========== =========== ===========
See accompanying notes to condensed financial statements. 5 6 AMERICA WEST AIRLINES, INC., D.I.P. Condensed Statements of Cash Flows (in thousands) (unaudited) Six Months Ended June 30, --------------------- 1994 1993 --------- --------- Cash flows from operating activities: Net income . . . . . . . . . . . . . . . . . . . . . . . . . $ 35,311 $ 12,394 Adjustments to reconcile net income to cash provided by operating activities: Depreciation and amortization . . . . . . . . . . . . . . 43,198 39,879 Amortization of manufacturers' and deferred credits . . . (2,225) (2,451) Loss on disposition of property and equipment . . . . . . 1,270 613 Reorganization items. . . . . . . . . . . . . . . . . . . 3,703 - Other . . . . . . . . . . . . . . . . . . . . . . . . . . (283) (247) Changes in operating assets and liabilities: Increase in accounts receivable, net. . . . . . . . . . . (12,463) (8,227) Decrease (increase) in spare parts and supplies, net. . . (511) 2,941 Increase in prepaid expenses. . . . . . . . . . . . . . . 2,051 2,666 (Decrease) increase in other assets and restricted cash . (5,201) 2,078 Increase (decrease) in accounts payable . . . . . . . . . 8,923 (10,331) Increase in air traffic liability . . . . . . . . . . . . 45,467 33,312 Increase in accrued compensation and vacation benefits .. 821 195 Increase in accrued interest. . . . . . . . . . . . . . . 5,130 5,013 Increase in accrued taxes . . . . . . . . . . . . . . . . 13,190 8,168 Increase in other accrued liabilities . . . . . . . . . . 7,141 1,984 Decrease in other liabilities . . . . . . . . . . . . . . (6,337) (6,901) --------- --------- Net cash provided by operating activities . . . . . . . 139,185 81,086 Cash flows from investing activities: Purchases of property and equipment. . . . . . . . . . . . . (34,981) (23,586) Proceeds from disposition of property. . . . . . . . . . . . 269 619 --------- --------- Net cash used in investing activities . . . . . . . . . (34,712) (22,967) Cash flows from financing activities: Repayment of debt. . . . . . . . . . . . . . . . . . . . . . (27,182) (39,532) --------- --------- Net cash used in financing activities . . . . . . . . . (27,182) (39,532) --------- --------- Net increase in cash and cash equivalents . . . . . . . 77,291 18,587 --------- --------- Cash and cash equivalents at beginning of period . . . . . . 99,631 74,383 --------- --------- Cash and cash equivalents at end of period . . . . . . . . . $ 176,922 $ 92,970 ========= =========
See accompanying notes to condensed financial statements. 6 7 AMERICA WEST AIRLINES, INC., D.I.P. NOTES TO CONDENSED FINANCIAL STATEMENTS JUNE 30, 1994 1. REORGANIZATION UNDER CHAPTER 11, LIQUIDITY AND FINANCIAL CONDITION On August 10, 1994, the United States Bankruptcy Court for the District of Arizona (the "Bankruptcy Court") confirmed the Company's Plan of Reorganization ("Plan"). The Company currently anticipates that the Plan will be effective after expiration of the Bankruptcy Code 10-day appeal period on or about August 23, 1994 (the "Effective Date"). In connection with the confirmation hearing on August 10, 1994, the Company filed certain motions with the Bankruptcy Court to secure approval to pay the following confirmation bonuses or success fees: - $9.3 million to be paid based upon length of service to non-officer employees. - $1.2 million to be paid to officers and other members of management. - 125,000 shares of stock in the reorganized Company to be issued to the Company's Chairman and Chief Executive Officer. A hearing on these motions has been scheduled for August 24, 1994. Historical Chapter 11 Events and Events Leading to Plan Confirmation -------------------------------------------------------------------- On June 27, 1991, the Company filed a voluntary petition in the United States Bankruptcy Court for the District of Arizona to reorganize under Chapter 11 of the United States Bankruptcy Code (the "Bankruptcy Code"). The Company is currently operating as a debtor-in-possession ("D.I.P.") under the supervision of the Bankruptcy Court. As a debtor-in-possession, the Company is authorized to operate its business but may not engage in transactions outside its ordinary course of business without the approval of the Bankruptcy Court. Subject to certain exceptions under the Bankruptcy Code, the Company's filing for reorganization automatically enjoined the continuation of any judicial or administrative proceedings against the Company. Any creditor actions to obtain possession of property from the Company or to create, perfect or enforce any lien against the property of the Company are also enjoined. As a result, the creditors of the Company are precluded from collecting pre-petition debts without the approval of the Bankruptcy Court. The Company had the exclusive right for 120 days after the Chapter 11 filing on June 27, 1991 to file a plan of reorganization and 60 additional days to obtain necessary acceptances of such plan. Such periods were extended at the discretion of the Bankruptcy Court, but only on a showing of good cause. On May 17, 1994, the Company filed a Disclosure Statement with the Bankruptcy Court which includes its Plan of Reorganization. On June 28, 1994, the Bankruptcy Court approved the adequacy of the Disclosure Statement and set into motion a balloting process for the approval of the Plan of Reorganization. Subject to certain exceptions set forth in the Bankruptcy 7 8 Code, acceptance of a Plan of Reorganization requires approval of the Bankruptcy Court and the affirmative vote (i.e. 50 percent of the number and 66-2/3 percent of the dollar amount) of each class of creditors and equity holders whose claims are impaired by the plan. (See "Plan of Reorganization" for further discussion of the contents of the Plan of Reorganization). Certain pre-petition liabilities have been paid after obtaining the approval of the Bankruptcy Court, including certain wages and benefits of employees, insurance costs, obligations to foreign vendors and governmental agencies, travel agent commissions and ticket refunds. The Company has also been allowed to honor all tickets sold prior to the date it filed for reorganization. In addition, the Company is authorized to pay pre-petition liabilities to essential suppliers of fuel, food and beverages and to other vendors providing critical goods and services. Subsequent to filing and with the approval of the Bankruptcy Court, the Company assumed certain executory contracts of essential suppliers. Parties to executory contracts may, under certain circumstances, file motions with the Bankruptcy Court to require the Company to assume or reject such contracts. Unless otherwise agreed, the assumption of a contract will require the Company to cure all prior defaults under the related contract, including all pre-petition liabilities. Unless otherwise agreed, the rejection of a contract is deemed to constitute a breach of the agreement as of the moment immediately preceding the Chapter 11 filing, giving the other party to the contract a right to assert a general unsecured claim for damages arising out of the breach. February 28, 1992 was set as the last date for the filing of proofs of claim under the Bankruptcy Code and the Company's creditors have submitted claims for liabilities not paid and for damages incurred. There may be differences between the amounts at which any such liabilities are recorded in the financial statements and the amount claimed by the Company's creditors. In connection with the confirmation of the Company's Plan of Reorganization, the Bankruptcy Court will be requested to fix the total amount of allowed claims as well as the total amount of disputed claims that may become allowed claims. The Company has incurred and will continue to incur significant costs associated with the reorganization. The amount of these costs, which are being expensed as incurred, is expected to significantly affect the results of operations. As a result of its filing for protection under Chapter 11 of the Bankruptcy Code, the Company is in default of substantially all of its debt agreements. All outstanding pre-petition unsecured debt of the Company has been presented in these financial statements within the caption Estimated Liabilities Subject to Chapter 11 Proceedings. Additional liabilities subject to the proceedings may arise in the future as a result of the rejection of executory contracts, including leases, and from the determination by the Bankruptcy Court (or agreement by parties in interest) of allowed claims for contingencies and other disputed amounts. Conversely, the assumption of executory contracts and unexpired leases may convert liabilities shown as subject to Chapter 11 proceedings to post-petition liabilities. Substantially all of the aircraft, engines and spare parts in the Company's fleet are 8 9 subject to lease or secured financing agreements that entitle the Company's aircraft lessors and secured creditors to rights under Section 1110 of the Bankruptcy Code. Pursuant to Section 1110, the Company had 60 days from the date of its Chapter 11 filing, or until August 26, 1991, to bring its obligations to these aircraft lessors and secured creditors current and/or reach other mutually satisfactory negotiated arrangements. In September 1991, as a condition to the borrowings under the initial $55 million D.I.P. facility, the Company arranged for rent, principal and interest payment deferrals from a majority of its aircraft providers as a condition to the assumption of the related lease or secured borrowing by the Company. As a result of these arrangements, the Company was able to assume the executory contracts associated with 83 aircraft in its fleet without having to bring its obligations to these aircraft providers current. In addition, as part of the initial D.I.P. facility, the Company assumed and brought current certain agreements for 16 Airbus A320 aircraft, three CFM engines, a Boeing 757-200 and a Boeing 737-300. Twenty-two aircraft were deemed surplus to the Company's needs and the associated executory contracts were rejected. Included in 1991 reorganization costs was $35.2 million in write-offs of leasehold improvements, security deposits, accrued maintenance, accrued rents and other costs to return the aircraft which were subject to the rejected aircraft agreements. In certain cases, final agreements were reached with such aircraft providers and no further claims by such providers will be pursued as a result of the rejections. In other instances, the aircraft providers have filed claims in the normal course of the bankruptcy and as of June 30, 1994, significant claims for rejected aircraft have not yet been settled. Due to the uncertain nature of many of the potential claims, the Company is unable to project the magnitude of such claims with any degree of certainty. However, the claims (pre-petition claims and administrative claims) that have been filed against the Company are in excess of $2 billion. Such aggregate amount includes claims of all character, including, but not limited to, unsecured claims, secured claims, claims that have been scheduled but not filed, duplicative claims, tax claims, claims for leases that were assumed, and claims which the Company believes to be without merit; however, claims filed for which an amount was not stated, are not reflected in such amount. The Company is unable to estimate the potential amount of such unstated claims; however, the amount of such claims could be material. The Company is in the process of reviewing and seeking allowance or disallowance, as appropriate, of the general unsecured claims asserted against the Company. In many instances, such allowance process will include the commencement of Bankruptcy Court proceedings in order to determine the amount at which such claims should be allowed. The Company has accrued its estimate of claims that will be allowed or the minimum amount at which it believes the asserted general unsecured claims will be allowed if there is no better estimate within the range of possible outcomes. However, the ultimate amount of allowed claims will be different and such differences could be material. In its Disclosure Statement, the Company estimates the range of allowed general unsecured claims to be from a low of approximately $300 million to a high of approximately $360 million. This range does not include, nor can the Company currently estimate, claims which may arise and be allowed as a result of the renegotiation of certain aircraft purchase agreements. The Bankruptcy Code requires that all administrative claims be paid on the effective date of a plan of reorganization unless the respective claimants agreed to different treatment. The Company is actively negotiating with claimants to achieve mutually 9 10 acceptable dispositions of these claims. Since the commencement of the bankruptcy proceeding, claims alleging administrative expense priority totaling more than $153 million have been filed. As of June 30, 1994, $115 million of the filed claims have been allowed and settled for $50.2 million in the aggregate. Additionally, the Company has obtained Bankruptcy Court approval of an agreement which settled the remaining $38 million filed administrative expense claim (which relates to a rejected lease of a Boeing 737-300 aircraft) for $5 million. Pursuant to an order dated May 18, 1994, the Bankruptcy Court fixed July 1, 1994 as the bar date for filing such administrative claims. In response to the notice of this bar date, certain claims were filed asserting status as non-ordinary course administrative expense claims. These include claims for administrative rent, breach of return conditions on aircraft, guarantees and obligations under tax indemnity agreements. The amount of such asserted claims, if allowed, could be material; however, the Company is optimistic that the claims, except to the extent previously known and provided for by the Company, will be either disallowed, withdrawn or negotiated to a mutually acceptable amount. Plan of Reorganization On December 8, 1993 and February 16, 1994, the Bankruptcy Court entered certain orders which provided for a procedure through which interested parties could submit proposals to participate in a plan of reorganization for America West. The Bankruptcy Court also set February 24, 1994 as the date for America West to select a "Lead Plan Proposal" from the proposals submitted. On February 24, 1994, America West selected as its Lead Plan Proposal an investment proposal submitted by AmWest Partners, L.P., a limited partnership ("AmWest"), which includes TPG Partners, L.P., Continental Airlines, Inc. and Mesa Airlines, Inc. Certain funds managed or advised by Fidelity Management Trust Company and its affiliates and Lehman Brothers, Inc. are participating in the proposal as assignees of AmWest. On March 11, 1994, the Company and AmWest entered into an Investment Agreement which was filed with the Bankruptcy Court on March 11, 1994 (the "Original Investment Agreement"). The Original Investment Agreement was superseded by a Revised Investment Agreement dated as of March 11, 1994 and filed with the Bankruptcy Court on March 28,1994 (the "Revised Investment Agreement"). The Revised Investment Agreement was superseded by a Second Revised Investment Agreement dated as of April 7, 1994 and filed with the Bankruptcy Court on April 8, 1994 (the "Second Revised Investment Agreement"). The Second Revised Investment Agreement was superseded by a Third Revised Investment Agreement dated as of April 21, 1994 and filed with the Bankruptcy Court on April 26, 1994 (the "Third Revised Investment Agreement"). The Third Revised Investment Agreement is substantially identical to the Second Revised Investment Agreement except for a change in the configuration of the expanded 15-member board of directors of the Company. The Third Revised Investment Agreement substantially incorporates the terms of the AmWest investment proposal. It provides that AmWest will purchase from America West equity securities representing a 33.5 percent ownership interest (subject 10 11 to adjustment) in the Company for $114.8 million and $100 million in new senior unsecured debt securities. The Third Revised Investment Agreement also provides that, in addition to the 33.5 percent ownership interest in the Company, AmWest would also obtain 71.2 percent of the total voting interest (subject to adjustment) in America West after the Company is reorganized. The terms of the Third Revised Investment Agreement have been incorporated into a Plan of Reorganization which was filed with the Bankruptcy Court on May 17, 1994. By Order dated June 28, 1994, the Bankruptcy Court approved the Company's Disclosure Statement, finding that it contained adequate information as required by Section 1125 of the Bankruptcy Code. The Bankruptcy Court also entered an order fixing August 3, 1994 as the last date for filing objections to confirmation of the Plan of Reorganization, voting to accept or reject the Plan and making any available elections under the Plan. In addition, the Court fixed August 10, 1994 as the hearing date for confirmation of the Plan of Reorganization. Consummation of the Plan of Reorganization is subject to satisfaction of the closing conditions specified therein, including (among others) the accuracy of certain representations and warranties of the Company and the absence of any material adverse change in the Company's condition (financial or otherwise), business, assets, properties, operations or relations with employees or labor unions since December 31, 1993. In addition to the interest in the reorganized America West that would be acquired by AmWest pursuant to the Plan of Reorganization, the Plan also provides for the following: 1. The D.I.P. financing would be repaid in full with cash on the date the Plan of Reorganization is effective ("Effective Date") or on such other terms as may be agreed to. 2. On the Effective Date, unsecured creditors would receive 59.5 percent of the new common equity in the reorganized Company. In addition, unsecured creditors would have the right to elect to receive cash at $8.889 per share up to an aggregate maximum amount of $100 million, through a purchase by AmWest of the shares otherwise allocable to such unsecured creditors making the election under the Plan of Reorganization. 3. Holders of common stock equity interests would receive 5 percent of the new common equity of the Company. In addition, such holders of equity interests would have the right to subscribe to purchase up to 1,615,179 shares of the new Class B common stock of the Company for $8.889 per share from AmWest, and would also receive warrants entitling them to purchase 6,230,769 shares of the reorganized Company's common stock. With respect to establishing the price of the warrants, the Bankruptcy Court will be requested to fix the total amount of allowed unsecured claims as well as the total amount of disputed claims that may become allowed claims. In turn, the aggregate amount established by the Bankruptcy Court would be multiplied by 1.1 and the resultant product divided by the number of shares of new common equity to be issued to unsecured creditors (26,775,000 shares) to establish the price. Holders of preferred stock equity interests would receive $500,000 cash and the right to subscribe to the purchase of the first 250,000 shares of the over-subscription stock otherwise allocable to holders of common stock equity interests. 4. In exchange for certain concessions principally arising from cancellation of the right of Guinness Peat Aviation ("GPA") affiliates to put to America West 10 Airbus A320 aircraft at fixed rates, GPA, or certain affiliates thereof, would receive (i) 2.0 percent of the new common equity in the reorganized 11 12 Company, (ii) warrants to purchase up to 1,384,615 shares of the reorganized Company's common stock on the same terms as the AmWest warrants, (iii) $30.5 million in cash, and (iv) the right to require the Company to lease from GPA prior to June 30, 1999 up to eight aircraft of types operated by the Company on terms which the Company believes to be more favorable than those currently applicable to the put aircraft. (See Note 8(c) for further discussion of the new put agreement.) 5. Continental Airlines, Inc., Mesa Airlines, Inc. and America West would enter into certain alliance agreements which would include code-sharing, schedule coordination and certain other relationships and agreements. A condition precedent to the Effective Date of the Plan of Reorganization is that these agreements be in form and substance satisfactory to America West, including the Company's reasonable satisfaction that such alliance agreements when fully implemented will result in an increase in pre-tax income of not less than $40 million per year. 6. The expansion of the Company's board of directors to 15 members for a period not less than three years following Effective date. Nine members would be designated by AmWest and other members reasonably acceptable to AmWest would include three members designated by the Creditors' Committee, one member designated by the Equity Committee, one member designated by the Company's current board of directors and one member designated by GPA. 7. The pre-petition executory contract for the purchase of 24 A320-200 aircraft between the Company and AVSA would be amended to provide the Company with greater flexibility, reduced pricing and enhanced terms for the acquisition of the aircraft than is presently provided in the contract. Under the modified terms, delivery dates of the aircraft would fall in the years 1998 through 2000 with an option to further defer deliveries. In addition, if A320 aircraft are delivered as a result of the new GPA Put Agreement (see item 4 above), the Company would have the right to cancel on a one-for-one basis, up to a maximum of eight non-consecutive aircraft deliveries hereunder, subject to certain conditions. In exchange for these modifications, the contract, as modified, would be assumed and certain promissory notes relating thereto would be reinstated on the Effective Date of the Plan of Reorganization. 8. The Plan of Reorganization also provides for many other matters, including the disposition of the various types of claims asserted against the Company, the adherence to the Company's aircraft lease agreements, the renegotiation, assumption as modified or rejection of certain pre-petition aircraft purchase agreements and release of the Company's employees from all obligations presently existing under the notes issued in connection with the Company's employee stock purchase plan, concurrent with abandonment of such notes by the Company and the cancellation of the shares of Company stock securing such notes. In connection with the selection of AmWest's proposal as the Lead Plan Proposal and pursuant to an order of the Bankruptcy Court, America West and AmWest entered into an Interim Procedures Agreement setting forth, among other things, the rights and obligations of AmWest and America West pending Confirmation of the Plan of Reorganization. After a series of hearings, and certain modifications, a Third Revised Interim Procedures Agreement (the "Interim Procedures Agreement") was 12 13 approved by the Bankruptcy Court on May 4, 1994. Among other terms governing the relationship of America West and AmWest and its partners until the Effective Date of the Plan of Reorganization, the Interim Procedures Agreement provides, subject to certain exceptions, that America West is prohibited from directly soliciting additional investment proposals. However, the Interim Procedures Agreement provides that, until an order approving a Disclosure Statement is entered, America West may consider unsolicited proposals subject to certain rights of AmWest to match any alternative proposal. If America West accepts any such alternative proposal, or a competing plan of reorganization proposed by another party in interest is confirmed by the Bankruptcy Court, the Interim Procedures Agreement provides that AmWest may apply to the Bankruptcy Court, on a substantial contribution basis consistent with Section 503(b) of the Bankruptcy Code for recovery of an additional amount not to exceed $4 million as reasonable compensation for its actions in connection with the proposed investment in America West and the benefits it provided to America West and its constituents in connection therewith and with the Chapter 11 Case, provided, however, that making the proposed investment will not, in and of itself, entitle AmWest to any additional payment. Further, should America West breach the Interim Procedures Agreement at any time, AmWest has agreed that any damages it may be entitled to recover shall be limited to an amount not to exceed $4 million, subject to the approval of the Bankruptcy Court. Upon the entry of an order by the Bankruptcy Court approving the Disclosure Statement, America West has agreed not to consider any other proposals. (An order approving the Disclosure Statement was entered by the Bankruptcy Court on June 28, 1994.) The Interim Procedures Agreement also provides that America West will reimburse AmWest for all out-of-pocket and third-party expenses actually incurred by AmWest through February 28, 1994, subject to a cap of $550,000. The Interim Procedures Agreement also provides for America West to reimburse AmWest for expenses covered under the Interim Procedures Agreement and incurred by AmWest on and after March 1, 1994 in an amount of up to $300,000 per month, provided that any unused portion of such $300,000 for any month shall accumulate and be carried forward and be available in any subsequent month, through the Effective Date of the Plan of Reorganization. On the Effective Date, America West will be obligated to reimburse AmWest for all expenses covered under the Interim Procedures Agreement, irrespective of the foregoing monthly limitations. All such fees will be subject to final approval of the Bankruptcy Court. On June 28, 1994, the Bankruptcy Court entered an order fixing August 3, 1994, as the last date for filing objections to confirmation of the Plan of Reorganization, voting to accept or reject the Plan of Reorganization and making any applicable elections available under the Plan. Additionally, the Court fixed August 10, 1994, as the hearing date for confirmation of the Plan of Reorganization. The Plan of Reorganization must be approved by the Bankruptcy Court and by specified majorities of each class of creditors and equity holders whose claims are impaired by the Plan. Alternatively, absent the requisite approvals, the Company may seek Bankruptcy Court approval of its Reorganization Plan under Section 1129(b) of the Bankruptcy Code, assuming certain tests are met. If at any time the Creditors Committee, the Equity Committee or any creditor of the Company or equity holder of the Company believes that the Company is or will not be in a position to sustain operations, such party can move in the Bankruptcy Court to compel a liquidation of the Company's estate by conversion to Chapter 7 bankruptcy 13 14 proceedings or otherwise. In the event that the Company is forced to sell its assets and liquidate, it is unlikely that unsecured creditors or equity holders will receive any value for their claims or interests. The Company anticipates that the reorganization process will result in the restructuring, cancellation and/or replacement of the interest of its existing common and preferred stockholders. Because of the "absolute priority rule" of Section 1129 of the Bankruptcy Code, which requires that the Company's creditors be paid in full (or otherwise consent) before equity holders can receive any value under a plan of reorganization, the Company previously disclosed that it anticipated that the reorganization process would result in the elimination of the Company's existing equity interests. Due to recent events, including sustained improvement in the Company's operating results as well as general improvement in the condition of the United States' economy and airline industry, existing holders of equity interests are anticipated to receive 5 percent of the new common equity under the proposed Plan of Reorganization. The accompanying financial statements have been prepared on a going concern basis which assumes continuity of operations and realization of assets and liquidation of liabilities in the ordinary course of business. The financial statements do not include any adjustments as a result of the effects of the Plan of Reorganization. Fresh Start Reporting (pro forma) In connection with its emergence from Chapter 11 protection, which is anticipated to occur on or about August 23, 1994, the Company will be adopting fresh start reporting in accordance with SOP 90-7 of the American Institute of Certified Public Accountants. The pro forma effects of the Company's Plan of Reorganization and fresh start reporting on the Company's condensed balance sheet as of June 30, 1994 are as follows (in thousands):
June 30, 1994 Fresh Start and Other June 30, 1994 Assets (Historical) Adjustments (net) (Pro forma) ------ ------------- --------------------- ------------- Cash and cash equivalents $ 176,922 $108,005 $ 284,927 Other current assets 139,717 (8,825) 130,892 ---------- -------- --------- Total current assets 316,639 99,180 415,819 Property and equipment (net) 709,154 (162,559) 546,595 Other assets 74,748 (30,701) 44,047 Reorganization value in excess of amounts allocable to identifiable assets - 697,278 697,278 ---------- -------- ---------- Total assets $1,100,541 $603,198 $1,703,739 ========== ======== ==========
14 15
Liabilities and Stockholders' June 30, 1994 Fresh Start and Other June 30, 1994 Equity (Deficit) (Historical) Adjustments (net) (Pro Forma) --------------- ------------- --------------------- ------------- Current maturities of long-term debt $ 118,621 $ (59,172) $ 59,449 Other current liabilities 304,778 13,078 317,856 ---------- ---------- ---------- Total current liabilities 423,399 (46,094) 377,305 Estimated liabilities subject to Chapter 11 proceedings 379,814 (379,814) - Long-term debt 381,397 197,525 578,922 Other liabilities 131,269 28,743 160,012 Stockholders' equity (deficiency) (215,338) 802,838 587,500 ---------- ---------- ---------- Total liabilities and stockholders' equity (deficiency) $1,100,541 $ 603,198 $1,703,739 ========== ========== ==========
The pro forma fresh start reporting common equity value was estimated by the Company with the assistance of its financial advisors. The significant factors used in estimating this value were analyses of publicly available information of other companies believed to be comparable to the Company, industry, economic and overall market conditions and historical and estimated performance of the airline industry and certain financial analyses. There may be differences between the amounts estimated above and those actually recorded when fresh start reporting is applied as of the Effective Date, and such differences may be material. Under fresh start reporting, the pro forma reorganization value of the Company has been assumed to be allocated to the reorganized Company's assets and liabilities on a basis substantially consistent with the purchase method of accounting. Pro forma reorganization value not attributable to specific assets of the reorganized Company has been included as "Reorganization value in excess of amounts allocable to identifiable assets" in the pro forma condensed balance sheet above. The pro forma fresh start reporting adjustments relate primarily to the adjustment of the reorganized Company's assets and liabilities to fair market values as well as reflecting the issuance of new stock and debt and the discharge of certain pre-petition liabilities under the Plan. The ultimate amount of such adjustments, when actually recorded, will likely have a significant effect on the reorganized Company's future operations. As a result of elections made and subscription rights exercised in connection with the balloting for the Plan of Reorganization, the Company expects the allocation of its common shares post-emergence, excluding success bonuses, to approximate the following (in thousands):
PERCENT OF CLASS A CLASS B TOTAL TOTAL ------- ------ ------ ---------- Am West....................................... 1,200 13,366 14,566 32.4% Unsecured Creditors........................... -- 25,669 25,669 57.0% Common Equity Interests....................... -- 3,615 3,615 8.0% Preferred Equity Interests.................... -- 250 250 .6% GPA........................................... -- 900 900 2.0% ------- ------ ------ ---------- 1,200 43,800 45,000 100.0% ====== ====== ====== =======
The allocation as discussed above is based upon the preliminary balloting results as of August 3, 1994 and is subject to change. 15 16 Estimated Liabilities Subject to Chapter 11 Proceedings and Reorganization Expense Under Chapter 11, certain claims against the Company in existence prior to the filing of the petitions for relief under the Code are stayed while the Company continues business operations as debtor-in-possession. These pre-petition liabilities are expected to be settled as part of the plan of reorganization and are classified as "Estimated liabilities subject to Chapter 11 proceedings". Estimated liabilities subject to Chapter 11 proceedings as of June 30, 1994 consisted of the following (in thousands):
June 30, 1994 -------------- (in thousands) Long-term debt (including convertible subordinated debentures of $138.9 million) $223,023 Accounts payable and accrued liabilities 112,919 Accrued interest 18,153 Accrued taxes 25,719 -------- $379,814 --------
The debt balance included above consists of unsecured and secured obligations and other obligations that have not been affirmed by the Company through the Bankruptcy Court. Reorganization expense is comprised of items of income, expense, gain or loss that were realized or incurred by the Company as a result of reorganization under Chapter 11 of the Federal Bankruptcy Code. Such items consisted of the following:
Three Months Ended Six Months Ended June 30, June 30, ------------------ ---------------- 1994 1993 1994 1993 ---- ---- ---- ---- (in thousands) (in thousands) Provisions for pre-petition and administrative claims $ 4,500 $ - $ 8,680 $ - Professional fees 6,388 1,306 11,656 2,827 D.I.P. financing issuance costs - - 209 - Interest income (1,701) (557) (2,549) (1,025) Other 675 57 262 90 ------- ------- ------- ------- $ 9,862 $ 806 $18,258 $ 1,892 ------- ------- ------- -------
2. PER SHARE DATA Primary earnings per share is based upon the weighted average number of shares of common stock outstanding and dilutive common stock equivalents (stock options and 16 17 warrants). Primary earnings per share reflect net income adjusted for interest on borrowings effectively reduced by the proceeds from the assumed conversion of common stock equivalents. Fully diluted earnings per share is based on the average number of shares of common stock and dilutive common stock equivalents outstanding adjusted for conversion of outstanding convertible preferred stock and convertible debentures. Fully diluted earnings per share reflect net income adjusted for interest on borrowings effectively reduced by the proceeds from the assumed conversion of common stock equivalents. 3. LONG-TERM DEBT On June 13, 1994, the Company filed a motion seeking authorization to amend the terms and extend the maturity of approximately $77.6 million of the D.I.P. financing to the earlier of December 31, 1994, or the Effective Date of the Plan. On June 28, 1994, the Bankruptcy Court granted the extension of the D.I.P. financing. One of the D.I.P. lenders has elected to be repaid as of June 30, 1994 (the prior maturity date), in the approximate amount of $1 million. Accordingly, the outstanding principal amount of the extended D.I.P. financing will be approximately $77.6 million. While there are certain fees to be paid in the event that the D.I.P. financing is not fully repaid prior to September 30, 1994, there is an interest rate reduction to 90-day LIBOR plus 250 basis points for the period July 1, 1994 through September 30, 1994, unless the extended D.I.P. financing is not repaid by such date. Under the terms of the amended D.I.P. financing, the Company is required to notify the lenders if the unrestricted cash balance of the Company exceeds $175 million. Subsequent to June 30, 1994, the Company notified the D.I.P. lenders that the Company's unrestricted cash exceeded $175 million. The amended D.I.P. financing contains a minimum unencumbered cash balance requirement of $74 million and certain other covenants with which the Company was in compliance at June 30, 1994. 4. COMMON STOCK In May 1994, the Company entered into a settlement agreement with the Patrician Corporation for its preferred dividend claim and issued 336,277 shares of common stock. In return, Patrician agreed not to bring litigation seeking to compel the issuance of such shares, or, in the alternative, to either rescind its prior conversion of the Series B preferred stock into common stock, or assert a claim for such dividends senior to common equity. 5. EMPLOYEE STOCK PURCHASE PLANS Under the Plan of Reorganization, the remaining obligations of approximately $17.6 million under notes issued in connection with the Employee Stock Purchase Plan will be forgiven on the Effective Date in return for the cancellation of the shares held as security for such obligations. Such notes will be abandoned by the Company as provided for in the Bankruptcy Code. As of June 30, 1994, 7,486,427 shares of common stock had been sold under the plans. No shares were sold during the second quarter of 1994. At June 30, 1994, the unamortized deferred compensation and outstanding receivable balance relating to such plans amounted to $875,000 and $17,603,000, respectively. 17 18 6. SUPPLEMENTAL INFORMATION TO STATEMENTS OF CASH FLOWS Cash paid for interest and income taxes during the six months ended June 30, 1994 and 1993 was as follows:
1994 1993 ---- ---- (in thousands) Interest (net of amounts capitalized) $20,615 $22,356 Income taxes $ 1,207 $ 55
In addition, during the six months ended June 30, 1994 and 1993, the Company had the following non-cash financing and investing activities:
1994 1993 ---- ---- (in thousands) Equipment acquired through capital leases $ 138 $ 43 Conversion of long-term debt to common stock $ - $ 1,918 Accrued interest reclassified to long-term debt $ 4,268 $ 9 Notes payable issued to seller $ - $ 574
7. INCOME TAX For the quarter and six months ended June 30, 1994, the Company recorded income tax expense as follows based upon its estimate of its annual effective rate:
Three Months Ended Six Months Ended June 30, June 30, 1994 1993 1994 1993 ---- ---- ---- ---- (in thousands) (in thousands) Current taxes Federal $ 713 $ 178 $1,163 $ 215 State 126 31 308 38 ------ ------ ------ ------ $ 839 $ 209 $1,471 $ 253 ====== ====== ====== ====== Deferred taxes $ - $ - $ - $ - ====== ====== ====== ======
For the quarter and six months ended June 30, 1994, income tax expense is solely attributable to income from continuing operations. The difference in income taxes at the federal statutory rate ("expected taxes") to those reflected in the financial 18 19 statements (the "effective rate") primarily results from the benefit of net operating loss carryforwards resulting in an effective tax rate of 4 percent. As of June 30, 1994, to the best of the Company's knowledge, it has not undergone a statutory "ownership change" (as defined in Section 382 of the Internal Revenue Code) that would result in any material limitation of the Company's ability to use its net operating loss and business tax credit carryforwards in future tax years. Should an "ownership change" occur prior to the Effective Date of a plan of reorganization, the Company's ability to utilize said carryforwards would be significantly restricted. Further, the net operating loss and business tax credit carryforwards may be limited as a result of the Company's reorganization under the United States Bankruptcy Code. Effective January 1, 1993, the Company adopted Statement of Financial Accounting Standards No. 109 "Accounting for Income Taxes" (SFAS 109). Since there was no cumulative effect of this change in accounting method, prior year financial statements have not been restated. 8. COMMITMENTS AND CONTINGENCIES (a) LEASES During 1991, the Company restructured its lease commitment for Airbus A320 aircraft with the lessors. As a result of the restructuring, the Company's obligation to lease ten A320 aircraft was canceled and the basic rental rate for twelve aircraft was revised to provide for the repayment to the lessor over the then remaining lease term of certain advanced credits received by the Company which relate to the ten canceled aircraft. In the third quarter of 1991, the Company requested a deferral of rent and other periodic payments from its aircraft providers. The deferral was requested in an effort to conserve cash and improve the Company's liquidity position. As a condition of securing the $78 million D.I.P. financing, the Company was required to obtain from most aircraft providers rent, principal and interest payment deferrals in excess of $100 million covering the six-month period of June through November 1991. These deferrals will generally be repaid with interest at 10.5 percent over the remaining term of the lease or secured borrowing with repayment commencing generally in December 1991. At June 30, 1994 and December 31, 1993, the remaining unpaid deferrals are reported as follows:
June 30, December 31 1994 1993 --------- ----------- (in thousands) Accounts payable $ 5,744 $ 5,744 Other liabilities 20,071 22,912 Long-term debt 17,547 18,671 ------- ------- $43,362 $47,327 ======= =======
19 20 In the third quarter of 1992, the Company requested an additional deferral of rent and other periodic payments from its aircraft providers. The deferral was requested to assure sufficient liquidity to sustain operations while additional debtor-in-possession financing was obtained. The 1992 deferrals are generally scheduled to be repaid either without interest during the first quarter of 1993 or with interest over a period of seven years. At June 30, 1994 and December 31, 1993, the remaining unpaid deferrals are reported as follows:
June 30, December 31 1994 1993 -------- ----------- (in thousands) Accounts payable $ 1,823 $ 1,823 Other liabilities 6,922 8,513 Long-term debt 20,064 21,539 ------- ------- $28,809 $31,875 ======= =======
As of June 30, 1994, the Company had 66 aircraft under operating leases with remaining terms ranging from one year to 25 years. The Company has options to purchase most of the aircraft at fair market value at the end of the lease term. Certain of the agreements require security deposits and maintenance reserve payments. The Company also leases certain terminal space, ground facilities and computer and other equipment under noncancelable operating leases. Future minimum rental payments for years ending December 31 under noncancelable operating leases with initial terms of more that one years are as follows:
(in thousands) 1994 $ 194,379 1995 186,978 1996 184,152 1997 171,357 1998 160,759 Thereafter 1,333,187 ---------- $2,230,812 ==========
Rent expense (excluding landing fees) was approximately $118.3 million and $126.1 million for the six months ended June 30, 1994 and 1993, respectively. Collectively, the operating lease agreements require security deposits with lessors of $8.1 million and bank letters of credit of $17.7 million. The letters of credit are collateralized by $17.6 million in restricted cash. 20 21 (b) Revenue Bonds Special facility revenue bonds issued by a municipality have been used to fund the acquisition of leasehold improvements at the airport which have been leased by the Company. Under the operating lease agreements, which commenced in 1990, the Company is required to make rental payments sufficient to pay principal and interest when due on the bonds. The Company ceased rental payments in June 1991. The principal amount of such bonds outstanding at December 31, 1992 and 1991 was $40.7 million. In October 1993, the Company and the bondholder agreed to reduce the outstanding balance of the bonds to $22.5 million and adjust the related operating lease payments sufficient to pay principal and interest on the reduced amount effective upon the confirmation of a plan of reorganization. The remaining principal balance of $18.2 million will be accorded the same treatment under the plan of reorganization as a pre-petition unsecured claim. The Company also agreed to make adequate protection payments in the amount of $150,000 per month from August 1993 to plan confirmation. (c) Aircraft Acquisitions At June 30, 1994, the Company had on order a total of 49 aircraft of the types the Company currently operates, of which 29 are firm orders and 20 are option orders. The table below details such deliveries.
Firm Orders ---------------------------------------------- Option 1994 1995 1996 1997 Thereafter Total Orders Total ---- ---- ---- ---- ---------- ----- ------ ----- Boeing: 737-300 - - 2 2 - 4 10 14 757-200 - - 1 - - 1 10 11 Airbus: A320-200 - - - - 24 24 - 24 -- -- -- -- -- -- -- -- Total - - 3 2 24 29 20 49 -- -- -- -- -- -- -- --
At June 30, 1994, the estimated aggregate cost for delivery positions under existing contracts for the acquisition of B737's, B757's and A320 aircraft from manufacturers listed in the above table is approximately $2.7 billion. The table does not include any deliveries under put arrangements more fully discussed below nor does it include orders for B747-400 aircraft. With respect to various contracts with Boeing, a purchase agreement to acquire B737-300 aircraft has been affirmed in the Company's bankruptcy proceedings. With timely notice to the manufacturer, all or some of these deliveries may be converted to B737-400 aircraft. Existing purchase agreements for B757-200 and B747-400 aircraft have not been affirmed nor rejected. All Boeing purchase agreements require a 24-month reconfirmation notice for the delivery of each aircraft. As of June 30, 1994, ten B737-300 and nine B757-200 delivery positions have expired due to the lack of reconfirmation by the Company, 21 22 leaving 14 and 11 delivery positions, respectively, as reflected above. The failure to reconfirm such delivery positions exposes the Company to loss of pre-delivery deposits and other claims which may be asserted in the bankruptcy proceeding. The Company also has a pre-petition executory contract under which the Company holds delivery positions for four B747-400 aircraft under firm order and four B747-400 aircraft under option order. This executory contract allows the Company, with the giving of adequate notice, to substitute B737-400 aircraft for those delivery positions. The Company is currently renegotiating all of its aircraft purchase agreements with Boeing. With respect to the purchase of aircraft from AVSA presented in the table above, a single executory contract for the purchase of 24 A320 aircraft has not been affirmed nor rejected by the Company. As part of the investment by AmWest, the A320 purchase agreement was amended to provide the Company with greater flexibility and reduced pricing. Under the modified terms, delivery dates of the aircraft will fall in the years 1998 through 2000 with an option to further defer deliveries. In addition, if new A320 aircraft are delivered as a result of the renegotiated put agreement (see below), the Company will have the right to cancel on a one-for-one basis, up to a maximum of eight non-consecutive aircraft deliveries hereunder, subject to certain conditions. Negotiations are currently continuing between AVSA and the Company to finalize the details of this amendment. In June 1994, the Company renegotiated a put agreement for ten A320 aircraft. The new agreement reduced the number of put aircraft from ten to eight and rescheduled the deliveries to start not earlier than June 30, 1995 and end on June 30, 1999. Under the new agreement, new or used A320-200 aircraft, B737-300 or B757-200 aircraft may be put to the Company but at a rate of no more than two in 1995, and with respect to each ensuing year during the put period, of no more than three. In addition, no more than five used aircraft may be put to the Company and for every new A320 aircraft put to the Company, the Company has the right to reduce the AVSA A320 purchase contract on a one-for-one basis. During each January of the put period, the Company will negotiate the type and delivery dates of the put aircraft for that year. The puts will require 150-day notice and will be leased at fair market rates for terms ranging from three to eighteen years, depending on the type and condition of the aircraft. As part of the renegotiated agreement, certain cash payments and securities will be issued to the put holder pursuant to the Plan of Reorganization (see Note 1). In connection with the $78 Million D.I.P. Facility, in December 1991, the Company terminated its agreement with a D.I.P. lender to lease 24 aircraft and replaced it with a put agreement to lease up to ten of the aircraft. In September 1992, the put agreement was amended and the number of put aircraft was reduced from ten to four with aircraft scheduled for delivery in 1994. In June 1994, the Company reached a settlement for the cancellation of the right to put four aircraft to the Company for $4.5 million of which $2.5 million was paid in June 1994 and $2.0 million will be paid on the Effective Date of the Plan of Reorganization. 22 23 (d) Concentration of Credit Risk The Company does not believe it is subject to any significant concentration of credit risk. At June 30, 1994, approximately 82 percent of the Company's receivables related to tickets sold to individual passengers through the use of major credit cards or to tickets sold by other airlines and used by passengers on America West. These receivables are short-term, generally being settled shortly after sale or in the month following usage. Bad debt losses, which have been minimal in the past, have been considered in establishing allowances for doubtful accounts. 23 24 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW On August 10, 1994, the United States Bankruptcy Court for the District of Arizona (the "Bankruptcy Court") confirmed the Company's Plan of Reorganization ("Plan"). The Company currently anticipates that the Plan will be effective after expiration of the Bankruptcy Code 10-day appeal period, on or about August 23, 1994 (the "Effective Date"). In connection with the confirmation hearing on August 10, 1994, the Company filed certain motions with the Bankruptcy Court to secure approval to pay the following confirmation bonuses or success fees: - $9.3 million to be paid based upon length of service to non-officer employees. - $1.2 million to be paid to officers and other members of management. - 125,000 shares of stock in the reorganized Company to be issued to the Company's Chairman and Chief Executive Officer. A hearing on these motions has been scheduled for August 24, 1994. On June 27, 1991, the Company filed a voluntary petition in the United States Bankruptcy Court for the District of Arizona (the "Bankruptcy Court") to reorganize under Chapter 11 of the United States Bankruptcy Code (the "Bankruptcy Code"). The Company is currently operating as a debtor-in-possession ("D.I.P.") under the supervision of the Bankruptcy Court. As a debtor-in-possession, the Company is authorized to operate its business but may not engage in transactions outside its ordinary course of business without approval of the Bankruptcy Court. The accompanying financial statements have been prepared on a going concern basis which assumes continuity of operations and realization of assets and liquidation of liabilities in the ordinary course of business. The financial statements do not include any adjustments that might be necessary as a result of the outcome of the Plan of Reorganization. Due to the bankruptcy proceedings, current economic conditions and the competitive nature of the airline industry, no measure of comparability can be drawn from past results in order to measure those that may occur in the future. Among the uncertainties which might adversely impact the Company's future operations are: economic recession; changes in the cost of fuel, labor, capital and other operating items; increased level of competition resulting in significant discounting of fares; changes in capacity, load factors and yields; or reduced levels of passenger traffic due to war or terrorist activities. During the second quarter of 1994, the following significant bankruptcy related events occurred. PLAN OF REORGANIZATION. On February 24, 1994, America West selected as its Lead Plan Proposal an investment proposal submitted by AmWest Partners, L.P., a limited partnership ("AmWest"), which includes TPG Partners, Continental Airlines, Inc. and Mesa Airlines, Inc. Certain funds managed by Fidelity Management Trust Company and 24 25 its affiliates and Lehman Brothers are participating in the proposal as assignees of AmWest. On April 21, 1994, the Company and AmWest entered into the Third Revised Investment Agreement (the "Investment Agreement") which substantially incorporates the terms of the AmWest Investment Proposal. The Investment Agreement provides that AmWest will purchase from America West equity securities representing a 33.5 percent ownership interest in the Company (subject to adjustment). AmWest would also obtain 71.2 percent of the total voting interest in America West (subject to adjustment) after the Company is reorganized. The terms of the Third Revised Investment Agreement were incorporated into a Plan of Reorganization which was filed with the Bankruptcy Court on May 17, 1994. There can be no assurance that such Plan of Reorganization will be accepted by the parties entitled to vote thereon or confirmed by the Bankruptcy Court. In addition to the interest in the reorganized America West that would be acquired by AmWest pursuant to the Plan of Reorganization ("Plan"), the Plan also provides for the following: 1. The D.I.P. financing would be repaid in full with cash on the date a Plan of Reorganization is effective ("Effective Date") or on such other terms as may be agreed to. 2. On the Effective Date, unsecured creditors would receive 59.5 percent of the new common equity in the reorganized Company. In addition, unsecured creditors would have the right to elect to receive cash at $8.889 per share up to an aggregate maximum amount of $100 million, through a purchase by AmWest of the shares to be otherwise allocable to such unsecured creditors making the election under the Plan of Reorganization. 3. Holders of common stock equity interests would receive 5 percent of the new common equity of the Company. In addition, such holders of equity interests would have the right to subscribe to purchase up to 1,615,179 shares of the new Class B common stock (3.6 percent of the outstanding shares) of the Company for $8.889 per share from AmWest, and would also receive warrants entitling them to purchase up to 6,230,769 shares of the reorganized Company's common stock, at a price to be set by the Bankruptcy Court. Holders of preferred stock equity interests would receive $500,000 in cash and the right to subscribe to the purchase of the first 250,000 shares of the over-subscription stock otherwise allocable to holders of common stock equity interests. 4. In exchange for certain concessions principally arising from cancellation of the right of GPA affiliates to "put" to America West 10 Airbus A320 aircraft at fixed rates, GPA, or certain affiliates thereof, would receive (i) 2 percent of the new common equity in the reorganized Company, (ii) warrants to purchase up to 1,384,615 shares of the reorganized Company's common stock on the same terms as the AmWest warrants, (iii) $30.5 million in cash, and (iv) the right to require the Company to lease up to eight aircraft of types operated by the Company from GPA prior to June 30, 1999 on terms which the Company believes to be more favorable than those currently applicable to the put aircraft. 5. Continental Airlines, Inc., Mesa Airlines, Inc. and America West would enter into certain alliance agreements which would include code-sharing, schedule coordination and certain other relationships and agreements. A condition 25 26 precedent to the Effective Date of the Plan of Reorganization would be that these agreements be in form and substance satisfactory to America West, including the Company's reasonable satisfaction that such alliance agreements, when fully implemented, will result in an increase in pre-tax income to the Company of not less than $40 million per year. 6. The expansion of the Company's Board of Directors to 15 members for a period of not less than three years following the Effective Date. Nine members would be designated by AmWest and other members reasonably acceptable to AmWest would include three members designated by the Creditors' Committee, and one member each designated by the Equity Committee, the Company's current Board of Directors and GPA. 7. The pre-petition executory contract for the purchase of 24 A320-200 aircraft between the Company and AVSA would be amended to provide the Company with greater flexibility, reduced pricing and enhanced terms for the acquisition of the aircraft than is presently provided in the contract. Under the modified terms, delivery dates of the aircraft would fall in the years 1998 through 2000 with an option to further defer deliveries. In addition, if new A320 aircraft are delivered as a result of the new GPA Put Agreement (see item 4 above), the Company would have the right to cancel on a one-for-one basis, up to a maximum of eight non-consecutive aircraft deliveries hereunder, subject to certain conditions. In exchange for these modifications, the contract, as modified, would be assumed and certain promissory notes relating thereto would be reinstated on the Effective Date of the Plan of Reorganization. 8. The Plan of Reorganization also provides for many other matters, including the disposition of the various types of claims asserted against the Company, the adherence to the Company's aircraft lease agreements, the renegotiation, assumption as modified or rejection of certain pre-petition aircraft purchase agreements and release of the Company's employees from all obligations presently existing under the notes issued in connection with the Company's employee stock purchase plan, concurrent with the abandonment of such notes by the Company and the cancellation of the shares of Company stock securing such notes. The Company has also entered into a Third Revised Procedures Agreement (the "Procedures Agreement") with AmWest dated April 21, 1994. The Procedures Agreement sets forth terms and conditions upon which the Company must operate prior to the Effective Date of a confirmed Plan of Reorganization based upon the terms of the Third Revised Investment Agreement. The Procedures Agreement provides for the reimbursement of expenses up to $550,000 for the period prior to March 1, 1994 and up to $300,000 per month subsequent to March 31, 1994. The Third Revised Procedures Agreement was approved by the Bankruptcy Court on May 4, 1994. On June 28, 1994, the Bankruptcy Court entered an order approving the adequacy of the Disclosure Statement under Section 1125 and set into motion a balloting process for the approval of the Plan of Reorganization. The Court fixed August 3, 1994 as the last date for filing objections to the Plan of Reorganization, voting to accept or reject the Plan and making any applicable elections under the Plan. A confirmation hearing for the Plan was set for August 10, 1994. 26 27 POSSIBLE LIMITATION ON NOL AND BUSINESS TAX CREDIT CARRYFORWARDS. As of December 31, 1993, the Company has net operating loss ("NOL") and general business tax credit carryforwards of approximately $530 million and $12.7 million, respectively. Under Section 382 of the Internal Revenue Code of 1986, if a loss corporation has an "ownership change" within a designated testing period, its ability to use its NOL and credit carryforwards is subject to certain limitations. The Company is a loss corporation within the meaning of Section 382. To the best of the Company's knowledge as of June 30, 1994, the Company has not undergone an "ownership change" that would result in any material limitation of the Company's ability to use its NOL and business credit carryforwards in future tax years. However, should an "ownership change" occur prior to the Effective Date of a Plan of Reorganization, the Company's ability to utilize such carryforwards would be significantly restricted. The issuance of certain common stock by the Reorganized Company pursuant to the Plan will result in an ownership change within the meaning of Section 382. Such an ownership change would entail the imposition of an annual limitation (the Section 382 Limitation) upon the Company's ability to offset any post-change taxable income with pre-change NOL. Should the Reorganized Company generate insufficient taxable income in any post-change taxable year to fully utilize the Section 382 Limitation for that year, any excess limitation will be carried forward to use in subsequent tax years, provided the pre-change NOL has not been exhausted nor has the carryforward period expired. Certain motions filed and adversary proceedings commenced by the Company during the first quarter of 1994 to restrict the sale or transfer of the Company's stock so as to preserve the Company's net operating loss and general business tax credit carryforwards have been withdrawn without prejudice. KAWASAKI PUT AGREEMENT. On June 28, 1994, the Bankruptcy Court entered an order approving a motion by the Company to terminate the Kawasaki Put Agreement. In consideration of payments totaling $4.5 million, Kawasaki agreed to waive its rights to put up to four A320 aircraft at predetermined lease rates to the Company in 1994. On June 29, 1994, the Company paid $2.5 million of the settlement amount with the remaining $2 million to be paid on the Effective Date of the Plan of Reorganization. RESULTS OF OPERATIONS The Company realized net income of $20.1 million ($.74 per common share) for the second quarter of 1994, the highest such level in the Company's history and the Company's sixth consecutive quarter of profitability. The continuation of the positive trend in operating results, which commenced during the fourth quarter of 1992, is attributable to several factors which include improved economic and competitive fare conditions, the continuation of relatively low fuel prices as well as the benefits derived from the reduction in fleet size from 104 aircraft to 85 aircraft, the implementation of numerous cost reduction and revenue enhancement programs, the elimination of the Company's commuter operation and the introduction of three code sharing agreements. During second quarter of 1994, the Company incurred $9.9 million of reorganization expenses. For the second quarter of 1993, the Company reported net income of $10.3 million ($.39 per common share) which included reorganization expenses of $.8 million. For the six months ended June 30, 1994, the Company realized net income of $35.3 million ($1.30 per common share) compared to $12.4 million ($.52 per common share) for the comparable period of 1993. The results for the six months include reorganization expenses of $18.3 million and $1.9 million for 1994 and 1993, respectively. 27 28 Passenger revenues for the second quarter of 1994 increased 11.3 percent to $340.6 million compared to the corresponding period of 1993. The impact on the quarter resulting from a 4.5 percent decline in average passenger yield was more than offset by the 16.4 percent increase in the level of traffic (RPMs). In addition, available seat miles (ASMs) increased 6.8 percent to 4.502 billion miles compared to the second quarter of 1993. The increase in available seat miles is the result of increased utilization as the fleet remained at the same level as the prior period. Passenger revenues for the six months ended June 30, 1994 increased 10.1 percent to $665.0 million compared to the 1993 period. Although average passenger yield declined by 4.6 percent during the period, revenue passenger miles increased by 15.3 percent more than offsetting the decline in yield. Passenger revenues per available seat mile increased 5.9 percent to 7.55 cents for the six months of 1994 on the strength of the increase in revenue passenger miles. Revenues from sources other than passenger fares increased during the 1994 quarter to $22.7 million compared to $18.8 million for 1993. This improvement of 20.7 percent was primarily due to increases in freight and mail revenues. For the six months ended June 30, such revenues increased 15.6% to $43.6 million for 1994 from $37.7 million for 1993 due to increases in freight and mail revenues. The following table details certain key operating statistics for the applicable periods.
THREE MONTHS ENDED JUNE 30 ---------------------------------------------------------- Percentage 1994 1993 Increase or (Decrease) ---- ---- ------------------------ Number of Aircraft (end of period) 85 85 - ASMs (millions) 4,502 4,214 6.8 RPMs (millions) 3,222 2,767 16.4 Load Factor (percent) 71.6 65.6 9.2 Yield (cents/RPM) 10.57 11.07 (4.5) Revenue Per ASM (cents): Passenger 7.57 7.26 4.3 Total 8.07 7.71 4.7
SIX MONTHS ENDED JUNE 30 ------------------------------------------------------- Percentage 1994 1993 Increase or (Decrease) ---- ---- ---------------------- Number of Aircraft (end of period) 85 85 - ASMs (millions) 8,804 8,467 4.0 RPMs (millions) 6,139 5,324 15.3 Load Factor (percent) 69.7 62.9 10.8 Yield (cents/RPM) 10.82 11.34 (4.6) Revenue Per ASM (cents): Passenger 7.55 7.13 5.9 Total 8.05 7.58 6.2
Operating expense per ASM decreased to 7.09 cents for the second quarter of 1994 compared to the same period of the prior year but increased to 7.12 cents for the 1994 six month period compared to 7.08 for the comparable 1993 period. The table below sets forth the major categories of operating expense per ASM for the applicable periods. 28 29
SECOND QUARTER FIRST SIX MONTHS ---------------- ---------------- (in cents/ASM) (in cents/ASM) 1994 1993 1994 1993 ---- ---- ---- ---- Salaries and Related Costs 1.84 1.80 1.85 1.77 Rentals and Landing Fees 1.48 1.61 1.51 1.66 Aircraft Fuel .84 .98 .86 .99 Agency Commissions .69 .63 .68 .62 Aircraft Maintenance Materials and Repairs .24 .18 .21 .17 Depreciation and Amortization .49 .48 .49 .47 Other 1.51 1.43 1.52 1.40 ---- ---- ---- ---- 7.09 7.11 7.12 7.08 ---- ---- ---- ----
The changes in the components of operating expense per ASM between the second quarter and first six months of 1994 and 1993 are explained as follows: * Approximately $3.8 million of the second quarter increase in salaries and related costs is attributable to the program commencing April 1, 1994 under which employees base wages were increased from 2% to 8% depending on length of service. Additionally, the Company reinstated its matching contribution under the America West 401(k) Plan to its pre-bankruptcy level which increased costs by approximately $ .6 million. The remaining balance is attributable to increased costs associated with medical claims and a higher staffing level. For the six month period of 1994, salaries and related costs have increased primarily due to performance and employment award distributions under the transition pay program which was instituted in the second quarter of 1993 as well as the new pay program instituted in the second quarter of 1994, as discussed above. * Rentals and landing fees for both the second quarter and the six month period of 1994 decreased due to the reduction in airport rent expense at New York's JFK and Phoenix's Sky Harbor International and the return of certain administrative office space as part of the Company's facilities consolidation program. In addition, rentals and landing fees have decreased for the first six months of 1994 compared to the 1993 period due to the return of a wet leased L-1011 aircraft on March 31, 1993. * Aircraft fuel expense decreased during the second quarter due to the decline in the average price per gallon to 52.65 cents in 1994 from 62.40 cents for 1993. For the six month period, the average price per gallon of fuel declined to 53.66 cents for 1994 from 62.87 cents for 1993. * The increase in the level of agency commission expense is primarily due to the significant increase in passenger revenue per ASM to 7.57 cents for 1994 from 7.26 cents for the second quarter of 1993. For the six month period, agency commission expense has increased due to an increase in passenger revenue per ASM to 7.55 cents for 1994 from 7.13 cents for 1993. * The level of aircraft maintenance materials and repairs expense has increased 29 30 primarily as a result of higher aircraft utilization. Average daily utilization of the aircraft fleet has increased from 10.7 hours per day for the first six months of 1993 to 11.1 hours per day for the first six months of 1994. This higher level of utilization has resulted in increases to engine and engine component repair expense and to increases in line maintenance materials usage. * The increase in depreciation and amortization expense is primarily attributable to increased scheduled heavy engine overhauls. * The increase in other operating expenses is primarily due to increased media advertising costs as well as expenses related to increased traffic such as credit card discount fees, booking fees, telephone charges, catering expenses and supplies. Non-operating expenses (net of non-operating income) amounted to $23.2 million and $14.7 million for the second quarter of 1994 and 1993, respectively. Interest expense for the second quarter of 1994 was $12.9 million, slightly below the $13.7 million for the same period of 1993. In conformity with SOP90-7, the Company has ceased accruing and paying interest on unsecured pre-petition long-term debt. Interest expense for the second quarter of 1994 would have been $17.5 million, if the Company had continued to accrue interest on such debt. During the second quarter, the Company incurred expenses of $9.9 million in 1994 and $.8 million in 1993 in connection with its effort to reorganize under Chapter 11. Such expenses for 1994 include increased professional fees and charges of $7.5 million related to the settlement of the Kawasaki Put Agreement and an administrative claim. Reorganization related expenses are expected to significantly affect future results and to continue until such time as the Company has obtained approval for its Plan of Reorganization. LIQUIDITY AND CAPITAL RESOURCES The Company had a working capital deficiency of $106.8 million and $124.4 million at June 30, 1994 and December 31, 1993, respectively. The decline in the deficiency is primarily due to the increase in cash position and receivable balances at June 30, 1994 resulting from improved operating results. Cash and cash equivalents increased to $176.9 million at June 30, 1994 from $99.6 million at December 31, 1993. Cash generated from operating activities for the six months ended June 30, 1994 and 1993 amounted to $139.2 million and $81.1 million, respectively. During the six months of 1994, the Company incurred capital expenditures of $34.9 million compared to $23.6 million in 1993. The capital expenditures for 1994 and 1993 consisted largely of aircraft spare parts and heavy engine overhauls. The Company's transition pay program, which was implemented in the second quarter of 1993, terminated in the second quarter of 1994. In connection with the termination of the transition pay program, the Company announced certain amendments to its compensation program on March 24, 1994. Effective April 1, 1994, employee base wages were increased between two percent to eight percent depending on the employee's length of service with the Company. Generally, each employee whose anniversary date occurs between April and December 1994 will also receive an additional increase on such date approximating 4 percent with certain exceptions. The Chairman of the Board and the President will not participate in 30 31 the salary increase program. Due to the current collective bargaining process with the representatives of the pilots, increase in pilots' salaries will not be fully paid but will be accrued. Although a partial distribution was paid in May 1994, the final distribution of such amounts will be determined through the collective bargaining discussions. The Company is currently in the process of revising its entire compensation program with the assistance of a consulting firm and anticipates implementing such program effective January 1, 1995. The Company has also announced that, effective April 1, 1994, matching contributions by the Company under the America West 401(k) plan will be increased from 25 percent to 50 percent of the first six percent contributed by the employees, subject to certain limitations. This change restores the Company's matching contribution to the level that existed prior to the Chapter 11 filing. The Company estimates that the implementation of the increases in pay and the 401(k) matching contributions will result in increased costs of approximately $12 million during the last six months of 1994. On June 13, 1994, the Company filed a motion seeking authorization to amend the terms and extend the maturity of approximately $77.6 million of the D.I.P. financing to the earlier of December 31, 1994, or the Effective Date of the Plan. On June 28, 1994, the Bankruptcy Court granted the extension of the D.I.P. financing. One of the D.I.P. lenders has elected to be repaid as of June 30, 1994 (the prior maturity date), in the approximate amount of $1 million. Accordingly, the outstanding principal amount of the extended D.I.P. financing will be approximately $77.6 million. While there are certain fees to be paid in the event that the D.I.P. financing is not fully repaid prior to September 30, 1994, there is an interest rate reduction to 90-day LIBOR plus 250 basis points for the period July 1, 1994 through September 30, 1994, unless the extended D.I.P. financing is not repaid by such date. Under the terms of the amended D.I.P. financing, the Company is required to notify the lenders if the unrestricted cash balance of the Company exceeds $175 million. Subsequent to June 30, 1994, the Company notified the D.I.P. lenders that the Company's unrestricted cash exceeded $175 million. The amended D.I.P. financing contains a minimum unencumbered cash balance requirement of $74 million and certain other covenants with which the Company was in compliance at June 30, 1994. The reorganization process is expected to result in the cancellation and/or restructuring of substantial debt obligations of the Company. Under the Bankruptcy Code, the Company's pre-petition liabilities are subject to settlement under a Plan of Reorganization. The Bankruptcy Code also requires that all administrative claims be paid on the Effective Date of a Plan of Reorganization unless the respective claimants agree to different treatment. There are differences between the amounts at which claims liabilities are recorded in the financial statements and the amounts claimed by the Company's creditors and such differences are material. Significant litigation may be required to resolve any disputes. Due to the uncertain nature of many of the potential claims, America West is unable to project the magnitude of such claims with any degree of certainty. However, the claims (pre-petition claims and administrative claims) that have been filed against the Company are in excess of $2 billion. Such aggregate amount, includes claims of all character, including, but not limited to, unsecured claims, secured claims, claims that have been scheduled but not filed, duplicative claims, tax claims, claims for leases that were assumed, and claims which the Company believes to be without merit; however, claims filed for which an amount was not stated are not reflected in such amount. The Company is unable 31 32 to estimate the potential amount of such unstated claims; however, the amount of such claims could be material. The Company is in the process of reviewing the general unsecured claims asserted against the Company including those claims that could arise as a result of the Company's rejection of executory contracts. In many instances, such allowance process will include the commencement of Bankruptcy Court proceedings in order to determine the amount at which such claims should be allowed. The Company has accrued its estimate of claims that will be allowed or the minimum amount at which it believes the asserted general unsecured claims will be allowed if there is no better estimate within the range of possible outcome. However, the ultimate amount of allowed claims will be different and such differences could be material. In its Disclosure Statement, the Company estimates the range of allowed general unsecured claims to be from a low of approximately $300 million to a high of approximately $360 million. This range does not include claims which may arise and be allowed as a result of the renegotiation of certain aircraft purchase agreements. The Bankruptcy Code requires that all administrative claims be paid on the Effective Date of a Plan of Reorganization unless the respective claimants agree to different treatment. Consequently, depending on the ultimate amount of administrative claims allowed by the Bankruptcy Court, the Company may be unable to obtain confirmation of a Plan of Reorganization. The Company is actively negotiating with the claimants to achieve mutually acceptable dispositions of these claims. Since the commencement of the bankruptcy proceeding, claims alleging administrative expense priority totaling more than $153 million have been filed. As of June 30, 1994, $115 million of the filed claims have been allowed and settled for $50.2 million in the aggregate. The Company is seeking Bankruptcy Court approval of an agreement which would settle the remaining $38 million filed administrative expense claim (which relates to a rejected lease of a Boeing 737-300 aircraft). Pursuant to an order dated May 18, 1994, the Bankruptcy court fixed July 1, 1994 as the bar date for filing non-ordinary course administrative expense claims. In response to the notice of this bar date, certain claims were filed asserting status as non-ordinary course administrative expense claims. The amount of such asserted claims, if allowed, could be material; however, the Company is optimistic that the claims, except to the extent previously known and provided for by the Company will be either disallowed, withdrawn or negotiated to a mutually acceptable amount. At June 30, 1994, the Company had on order a total of 49 aircraft of the types the Company currently operates, of which 29 are firm and 20 are options. The current estimated aggregate cost for the acquisition of the 49 aircraft is approximately $2.7 billion ( which amount may change as a result of current negotiations and does not reflect any deliveries pursuant to put arrangements more fully described below). All of these aircraft are to be purchased from Boeing or AVSA. Future aircraft deliveries are planned in some instances for incremental additions to the Company's existing aircraft fleet and in other instances as replacements for aircraft with lease terminations. With respect to the contracts to purchase aircraft from Boeing, a contract to purchase B737-300 aircraft has been affirmed in the Company's bankruptcy proceedings. With timely notice to the manufacturer, all or some of these deliveries may be converted to B737-400 aircraft. Existing purchase agreements for B757-200 and B747-400 aircraft have neither been affirmed nor rejected. All Boeing purchase agreements require a 24-month reconfirmation notice for the delivery of the aircraft. As of June 30, 1994, ten B737-300 and nine B757-200 delivery positions have expired due to the lack of reconfirmation by the Company, leaving 14 and 11 delivery positions for the B737-300s and B757-200s, 32 33 respectively. The failure to reconfirm such delivery positions exposes the Company to loss of pre-delivery deposits and other claims which may be asserted in the bankruptcy proceeding. The Company also has a pre-petition executory contract under which the Company holds delivery positions for four B747-400 aircraft under firm order and four B747-400 aircraft under option order. This executory contract allows the Company, with the giving of adequate notice, to substitute B737-400 aircraft for those delivery positions. Currently, the Company is renegotiating all of its aircraft purchase agreements with Boeing. With respect to the purchase of aircraft from AVSA, a single executory contract for the purchase of 24 A320 aircraft has not been affirmed nor rejected by the Company. As part of the investment by AmWest, the A320 purchase agreement was amended to provide the Company with greater flexibility and reduced pricing. Under the modified terms, delivery dates of the aircraft will fall in the years 1998 through 2000 with an option to further defer deliveries. In addition if new A320 aircraft are delivered as a result of the renegotiated put agreement (see discussion below), the Company will have the right to cancel on a one-for-one basis, up to a maximum of eight nonconsecutive aircraft deliveries hereunder, subject to certain conditions. Negotiations are currently continuing between AVSA and the Company to finalize the details of this amendment. During 1994, leases relating to four Boeing 737-200 aircraft, two Airbus A320 aircraft and two Boeing 757 aircraft are scheduled to expire. The Company has negotiated extensions of the leases of all but one of the Airbus A320 aircraft for terms ranging from one to three years. One Airbus A320 aircraft was returned to the lessor and was replaced by a Boeing 757 aircraft which has been leased for a term of three years. In June 1994, the Company renegotiated a put agreement for ten A320 aircraft. The new put agreement reduced the number of aircraft from ten to eight and rescheduled the deliveries to start not earlier than June 30, 1995 and end on June 30, 1999. Under the new agreement, new or used A320 aircraft, B737-300 or B757-200 aircraft may be put to the Company at a rate of no more than two in 1995, and with respect to each ensuing year during the put period, of no more than three. In addition, no more than five used aircraft may be put to the Company and for every new A320 aircraft put to the Company, the Company has the right to reduce the AVSA A320 purchase contract on a one-for-one basis. During each January of the put period, the Company will negotiate the type and delivery dates of the put aircraft for that year. The puts will require 150-day notice and will be leased at the fair market rate for terms ranging from three to eighteen years, depending on the type and condition of the aircraft. As part of the renegotiated agreement, certain cash payments and securities will be issued to the put holder. In connection with the $78 million D.I.P. facility, in December 1991, the Company terminated its agreement with a D.I.P. lender to lease 24 aircraft and replaced it with a put agreement to lease up to ten of the aircraft. In September 1992, the put agreement was amended and the number of put aircraft was reduced from ten to four and the aircraft were scheduled for delivery from 1994 through 1996. In June 1994, the Company reached a settlement for the cancellation of the right to put four aircraft to the Company for $4.5 million. As of June 30, 1994, the Company had deposits on aircraft orders of approximately $52 million of which approximately $21 million were financed. 33 34 PART II - OTHER INFORMATION Item 1. LEGAL PROCEEDINGS On June 27, 1991, the Company filed a voluntary petition in the United States Bankruptcy Court for the District of Arizona to reorganize under Chapter 11 of Title 11 of the United States Bankruptcy Code. See: Notes to Financial Statement under Item 1 and Item 2, Management's Discussion and Analysis of Financial Condition and Results of Operations. In August 1991, the Securities and Exchange Commission ("SEC") informally requested that the Company provide the SEC with certain information and documentation underlying disclosures made by the Company in annual and quarterly reports filed with the SEC by the Company in 1991. The Company has cooperated with the SEC's informal inquiry. On March 29, 1994, the Company submitted an offer of settlement for the purpose of resolving the inquiry through the entry of a consent decree pursuant to which the Company would, while neither admitting nor denying any violation of the securities laws, agree to comply with its future reporting obligations under Section 13 of the Securities Exchange Act of 1934. On May 6, 1994, the Securities and Exchange Commission accepted the Company's offer of settlement. In order to implement the settlement on May 12, 1994, the SEC issued an "Order Instituting Proceedings Pursuant to Section 21C of the Securities Exchange Act of 1934 and Opinion and Order of the Commission" finding that the Company's Form 10-K for the year ending December 31, 1990, violated Section 13(a) of the Exchange Act and Rule 13a-1 thereunder, and that the Company's Form 10-Q for the first quarter 1991 violated Section 13(a) of the Exchange Act and Rule 13a-13 thereunder, and ordering that the Company cease and desist from future violations of such provisions. The Order does not contain any findings of intentional wrongdoing and expressly provides that the Company neither admits or denies any violation of the securities laws. Item 2. CHANGES IN SECURITIES None. Item 3. DEFAULT UPON SENIOR SECURITIES As a result of the Chapter 11 filing, the Company is in default of substantially all of its debt and lease agreements. In addition, the Company has not made scheduled dividend payments on its outstanding preferred stock. 34 35 Item 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS On June 28, 1994, the Bankruptcy Court approved the adequacy of the Disclosure Statement and set into motion a balloting process for the approval of the Plan of Reorganization with a voting deadline of August 3, 1994. Of the 22,967,411 votes available to vote on the Plan of Reorganization, 13,955,661 votes were in favor, 1,361,464 votes were against, 5,918,964 votes abstained from voting and 1,731,322 votes were declared invalid. Item 5. OTHER INFORMATION During the second quarter of 1994, the Company's Board of Directors approved the acquisition by certain entities of shares of the Company's Common Stock and Preferred Stock. Absent such approval, such acquisitions may have resulted in a Triggering Event under the terms of the Company's Amended and Restated Rights Agreement. Such approval was also necessary in order to avoid having the acquisition deemed a "business combination" (as such term is defined under the General Corporation Law of the State of Delaware) between the purchasers and the Corporation. On October 26, 1993, the Air Line Pilots Association (ALPA) was certified by the NMB as the collective bargaining representative of America West's pilots. Negotiations with ALPA pursuant to the Railway Labor Act as amended commenced on April 19, 1994. Proposals for certain sections of a future collective bargaining agreement have been exchanged. Negotiations are continuing. On April 15, 1994, the NMB advised the Company that it had instituted an investigation in case number R-6277 to determine whether the Company's Fleet Service employees should be represented for collective bargaining purposes by the Transport Workers Union of America. The NMB has not yet determined which employees would be eligible as members of the class or craft of Fleet Service employees. Nor has the NMB announced whether the TWU has submitted sufficient number of interest cards to warrant an election. On June 28, 1994, the NMB officially dismissed AFA's prior petition and accepted a new petition for representation of America West's in-flight CSR's. An eligibility list for this representational election was submitted by America West on July 8, 1994. Disputes as to who will be considered eligible to vote have not yet been resolved by the NMB. However, ballots will be mailed to all eligible flight attendants in August. The ballot count will be held in Washington on September 15, 1994. On August 1, 1994, the NMB notified America West that the International Brotherhood of Teamsters had filed an application with the NMB for representation of mechanics and related personnel. America West filed its eligibility list on this same date. The NMB has yet to announce whether the IBT has submitted a sufficient number of interest cards to warrant an election. 35 36 Item 6. EXHIBITS AND REPORTS ON FORM 8-K a. Exhibits EXHIBIT NUMBER DESCRIPTION AND METHOD OF FILING ------- -------------------------------- 2. The Company's Plan of Reorganization under Chapter 11 of the Bankruptcy Code. Filed herewith. 10.1 Fourth Amended and Restated Credit Agreement dated June 30, 1994 (without exhibits). Filed herewith. 10.2 America West Airlines Management Resignation Allowance Guidelines, as amended, dated November 18, 1993. Filed herewith. 10.3 Key Employee Protection Agreement dated as of June 27, 1994 between America West Airlines, Inc. and William A. Franke. Filed herewith. b. Reports on Form 8-K None 36 37 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. AMERICA WEST AIRLINES, INC. By _____________________________ Raymond T. Nakano Vice President and Controller DATED: August 12, 1994 37 EX-2 2 PLAN OF RORGANIZATION 1 EXHIBIT 2 UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF ARIZONA IN RE AMERICA WEST AIRLINES, INC., CASE NO. 91-07505-PHX-RGM CHAPTER 11 Debtor. PLAN OF REORGANIZATION UNDER CHAPTER 11 OF THE UNITED STATES BANKRUPTCY CODE AMERICA WEST AIRLINES, INC. Martin J. Whalen, Esq. 4000 East Sky Harbor Blvd. Phoenix, Arizona 85034 LEBOEUF, LAMB, GREENE & MACRAE 633 17th Street, Suite 2800 Denver, Colorado (303) 291-2600 Of Counsel: Carl A. Eklund John Edward Maas GALLAGHER & KENNEDY 2600 North Central Avenue Phoenix, Arizona 85004 (602) 530-8000 Of Counsel: Charles R. Sterbach Co-Counsel to the Debtor and Debtor In Possession, Co-Proponent of this Plan of Reorganization Dated: Phoenix, Arizona June 28, 1994 ARNOLD & PORTER 1200 New Hampshire Avenue, N.W. Washington, D.C. 20036 (202) 872-6700 Of Counsel: Richard P. Schifter Samuel A. Flax Brian P. Leitch Counsel to AmWest Partners, L.P., Co-Proponent of this Plan of Reorganization 2 [THIS PAGE INTENTIONALLY LEFT BLANK] 3 TABLE OF CONTENTS
PAGE ---- ARTICLE 1 DEFINITIONS............................................................................. ARTICLE 2 TREATMENT OF UNCLASSIFIED CLAIMS........................................................ 9 2.1. Treatment of Post-Petition Agreement Claims................................ 9 2.2. Treatment of Administrative Claims......................................... 9 2.3. Allowed Priority Tax Claims................................................ 10 ARTICLE 3 DESIGNATION OF AND PROVISIONS FOR TREATMENT OF CLASSES OF CLAIMS AND EQUITY INTERESTS.......................................................... 10 3.1. Class 1 -- Allowed Priority Wage Claims.................................... 10 3.2. Class 2 -- Allowed Priority Benefit Plan Contribution Claims............... 10 3.3. Class 3 -- Allowed Secured Claims.......................................... 10 3.4. Class 4 -- Allowed Convenience Claims...................................... 12 3.5. Class 5 -- Allowed General Unsecured Claims................................ 13 3.6. Class 6 -- Preferred and Common Stock...................................... 13 3.7. Class 7 -- Certain Other Claims and AWA Warrants, Options and Other Equity Interests................................................. 14 ARTICLE 4 PROVISIONS OF NEWAWA SECURITIES ISSUED PURSUANT TO THE PLAN............................. 15 4.1. NewAWA Class A Common Stock................................................ 15 4.2. NewAWA Class B Common Stock................................................ 15 4.3. NewAWA Warrants............................................................ 15 4.4. NewAWA Senior Unsecured Notes.............................................. 16 ARTICLE 5 EXECUTORY CONTRACTS AND UNEXPIRED LEASES................................................ 16 5.1. Assumption of Certain Executory Contracts and Unexpired Leases............. 16 5.2. Rejection of Certain Executory Contracts and Unexpired Leases.............. 17 5.3. Claims Based on Rejection of Contracts or Unexpired Leases................. 17 ARTICLE 6 IDENTIFICATION OF CLASSES OF CLAIMS NOT IMPAIRED BY THE PLAN AND THE CLASS OF CLAIMS AND EQUITY INTERESTS DEEMED TO HAVE REJECTED THE PLAN..................................... 17 6.1. Unimpaired Classes......................................................... 17 6.2. Class Deemed to Have Rejected the Plan..................................... 17 6.3. Other Impaired Classes..................................................... 18 ARTICLE 7 ACCEPTANCE OR REJECTION OF THE PLAN; EFFECT OF REJECTION BY ONE OR MORE CLASSES..................................................................... 18 7.1. Impaired Classes to Vote................................................... 18 7.2. Acceptance by Class of Holders of Claims or Equity Interests............... 18 7.3. Cramdown................................................................... 18
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PAGE ---- ARTICLE 8 MEANS FOR IMPLEMENTATION OF THE PLAN.................................................... 18 8.1. Investment Agreement....................................................... 18 8.2. Stockholders' and Registration Rights Agreements........................... 18 8.3. Delivery of Alliance Agreements............................................ 18 8.4. GPA Settlement............................................................. 18 8.5. Corporate Governance....................................................... 19 8.6. Release of Certain Claims and Actions...................................... 19 8.7. Indemnification Obligations................................................ 19 8.8. Exemption from Certain Taxes............................................... 20 8.9. Directors and Officers..................................................... 20 8.10. Revesting of Assets; No Further Supervision................................ 20 8.11. Implementation............................................................. 20 8.12. Cancellation of Securities................................................. 20 ARTICLE 9 CONDITIONS PRECEDENT TO THE EFFECTIVE DATE.............................................. 21 9.1. Effectiveness of the Plan.................................................. 21 ARTICLE 10 PROVISIONS COVERING DISTRIBUTIONS AND PAYMENTS.......................................... 21 10.1. Making of Distributions and Payments....................................... 21 10.2. Distributions by the Distribution Agent.................................... 21 10.3. Service of Indenture Trustee............................................... 23 10.4. Reserves for Distributions for Disputed Claims and Disputed Equity Interests.................................................................. 25 10.5. Fractional Interests; Odd Lots; De Minimis Distributions................... 26 10.6. Delivery of Distributions; Unclaimed Property.............................. 26 10.7. Method of Payment.......................................................... 27 10.8. Payment Dates.............................................................. 27 10.9. Compliance with Tax Requirements........................................... 27 ARTICLE 11 PROCEDURES FOR RESOLVING DISPUTED CLAIMS OR EQUITY INTERESTS............................ 27 11.1. Filing of Objections to Claims or Equity Interests......................... 27 11.2. Settlement of Objections to Claims or Equity Interests After Effective Date....................................................................... 27 11.3. Payment or Distribution to Holders of Disputed Claims or Equity Interests.................................................................. 27 11.4. Reserves for Disputed Claims and Disputed Equity Interests................. 28 ARTICLE 12 MISCELLANEOUS PROVISIONS................................................................ 28 12.1. Modification of Payment Terms.............................................. 28 12.2. Discharge of Debtor........................................................ 28 12.3. Termination of Subordination Rights........................................ 28 12.4. Termination of the Creditors and Equity Committees......................... 28 12.5. Setoffs.................................................................... 29 12.6. Opt-Out.................................................................... 29 12.7. Section Headings........................................................... 29 12.8. Severability............................................................... 29 12.9. Computation of Time........................................................ 29 12.10. Governing Law.............................................................. 29
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PAGE ---- ARTICLE 13 PROVISIONS FOR EXECUTION AND SUPERVISION OF THIS PLAN................................... 30 13.1. Retention of Jurisdiction.................................................. 30 13.2. Amendment of Plan.......................................................... 31 13.3. Post-Effective Date Notice................................................. 31 13.4. Revocation of Plan......................................................... 31 LIST OF EXHIBITS Exhibit A -- Investment Agreement Exhibit B -- Stockholders' Agreement Exhibit C -- GPA Term Sheet LIST OF SCHEDULES Schedule 1 -- Section 1110 Stipulations Schedule 2 -- Certain Final Orders Related to Settlements Schedule 3 -- Certain Assumed Agreements
iii 6 [THIS PAGE INTENTIONALLY LEFT BLANK] 7 PLAN OF REORGANIZATION UNDER CHAPTER 11 OF THE UNITED STATES BANKRUPTCY CODE AMERICA WEST AIRLINES, INC., the Debtor and Debtor in Possession in the above-captioned Chapter 11 Case, and AMWEST PARTNERS, L.P., as co-proponents hereof, hereby jointly propose the following Plan of Reorganization pursuant to Section 1121(a), Title 11, United States Code for the resolution of the Debtor's outstanding creditor claims and equity interests. Reference is made to the Debtor's Disclosure Statement, filed contemporaneously with the Plan of Reorganization, for a discussion of the Debtor's history, business, properties, results of operations and projections for future operations and for a summary and analysis of the Plan of Reorganization and certain related matters. ALL HOLDERS OF CLAIMS AGAINST AND EQUITY INTERESTS IN THE DEBTOR ARE ENCOURAGED TO READ THE PLAN OF REORGANIZATION AND THE DISCLOSURE STATEMENT IN THEIR ENTIRETY BEFORE VOTING TO ACCEPT OR REJECT THE PLAN. ARTICLE 1 DEFINITIONS As used in the Plan, the following terms shall have the respective meanings specified below: 1.1. Administrative Claim: A Claim for any cost or expense of administration of the Chapter 11 Case allowed under Section 503(b), Section 507(b), Section 546(c)(2) or Section 1114(e)(2) of the Bankruptcy Code and entitled to priority under Section 507(a)(1) of the Bankruptcy Code, including, without limitation, fees payable pursuant to Section 1930 of Title 28 of the United States Code, but not including the Post-Petition Agreement Claims. To the extent that a Claim is allowed as an administrative claim pursuant to Section 365(d)(3) of the Bankruptcy Code, such Claim shall also be deemed an Administrative Claim under this Section. 1.2. Allowed Claim and Allowed . . . Claim: Any Claim against the Debtor (i) proof of which, request for payment of which or application for allowance of which was filed or deemed to be filed on or before the Bar Date for filing proofs of claim or requests for payment for Claims of such type against the Debtor, (ii) if no proof of claim is filed, which has been or hereafter is listed by the Debtor in the Schedules as liquidated in amount and not disputed or contingent, or (iii) a Claim that is allowed in any contract, instrument, indenture or other agreement entered into in connection with the Plan and, in any case, a Claim as to which no objection to the allowance thereof has been interposed within the applicable period of limitation fixed by the Plan, the Bankruptcy Code, the Bankruptcy Rules or the Bankruptcy Court. A Disputed Claim shall be an Allowed Claim if, and only to the extent that, such Disputed Claim has been Allowed by a Final Order or otherwise pursuant to Section 11.2. The term "Allowed," when used to modify a reference in the Plan to any Claim or class of Claims, shall mean a Claim (or any Claim in any such class) that is so Allowed, e.g., an Allowed Secured Claim is a Claim that has been Allowed to the extent of the value, as determined by the Bankruptcy Court pursuant to Section 506(a) of the Bankruptcy Code, of any interest in property of the estate of the Debtor securing such Claim. Unless otherwise specified in the Plan, the Confirmation Order or in the Final Order of the Bankruptcy Court allowing such Claim, "Allowed Claim" shall not include interest on the amount of such Claim from and after the Petition Date. 1.3. AmWest: AmWest Partners, L.P., a Texas limited partnership, and, as the context requires, parties purchasing NewAWA Securities as a part of the AmWest investment in NewAWA, even though such parties may or may not actually be partners or investors in AmWest itself. 1.4. Assumed Agreement: Each executory contract and unexpired lease of the Debtor which (i) has been assumed during the Chapter 11 Case prior to the Confirmation Date pursuant to Section 365 of the Bankruptcy Code, (ii) is the subject of a motion to assume pending on the Confirmation Date, or (iii) is listed on Schedule 3 hereto in accordance with Section 5.1.1, either without amendment, or with such amendments thereto as shall be agreed upon between the Debtor and the other parties thereto. 8 1.5. Avoidance Litigation: The Debtor's interest in any and all claims, rights and causes of action which have been or may be commenced by or on behalf of the Debtor to avoid and recover any transfers of property determined to be preferential, fraudulent or otherwise avoidable pursuant to Sections 544, 545, 547, 548, 549, 553(b) or 550 of the Bankruptcy Code. 1.6. AWA: America West Airlines, Inc., a Delaware corporation, as the Debtor and Debtor in Possession in the Chapter 11 Case, or, as the context may require, NewAWA. 1.7. AWA Common Stock: The duly authorized and validly issued shares of common stock of AWA, $.25 par value, which are outstanding immediately prior to the Effective Date. 1.8. AWA Debenture Claims: All Claims of the holders of AWA Debentures and the Indenture Trustee as of the Distribution Record Date for (i) payment, pursuant to the Indentures, of principal in the face amount of the AWA Debentures, plus interest accrued as of the Petition Date or (ii) the fees, costs and expenses of the Indenture Trustee pursuant to the Indentures, but excluding any Claims for damages in excess of the face amount of the AWA Debentures arising from the purchase or sale of such AWA Debentures, and excluding any Claims for equitable relief. 1.9. AWA Debentures: Collectively, the AWA 11 1/2% Convertible Subordinated Debentures, the AWA 7 3/4% Convertible Subordinated Debentures, and the AWA 7 1/2% Convertible Subordinated Debentures. 1.10. AWA 11 1/2% Convertible Subordinated Debentures: The 11 1/2% Convertible Subordinated Debentures due 2009, issued by AWA pursuant to the AWA 11 1/2% Subordinated Indenture and outstanding immediately prior to the Effective Date. 1.11. AWA 11 1/2% Subordinated Indenture: The Indenture of Trust dated December 15, 1986 between AWA and First Interstate Bank of Arizona, N.A. 1.12. AWA Preferred Stock: The duly authorized and validly issued shares of Series C 9 3/4% Convertible Preferred Stock of AWA, $.25 par value, outstanding immediately prior to the Effective Date. 1.13. AWA 7 1/2% Convertible Subordinated Debentures: The 7 1/2% Convertible Subordinated Debentures due 2011, issued by AWA pursuant to the AWA 7 1/2% Subordinated Indenture and outstanding immediately prior to the Effective Date. 1.14. AWA 7 1/2% Subordinated Indenture: The Indenture of Trust dated March 15, 1986 between AWA and First Interstate Bank of Arizona, N.A. 1.15. AWA 7 3/4% Convertible Subordinated Debentures: The 7 3/4% Convertible Subordinated Debentures due 2010, issued by AWA pursuant to the AWA 7 3/4% Subordinated Indenture and outstanding immediately prior to the Effective Date. 1.16. AWA 7 3/4% Subordinated Indenture: The Indenture of Trust dated August 1, 1985 between AWA and First Interstate Bank of Arizona, N.A. 1.17. AWA Warrants, Options and Other Equity Interests: All Equity Interests in AWA outstanding immediately prior to the Effective Date, except for the AWA Common Stock and the AWA Preferred Stock, but including without limitation all rights, options or warrants, authorized, adopted or distributed to holders of Equity Interests or officers, directors or employees of AWA, whether under one or more contracts or plans, to sell, purchase, grant or otherwise transfer any issued and outstanding or authorized but unissued Equity Interests of AWA under any and all applicable terms and conditions. 1.18. Ballot: The form for (i) acceptance or rejection of the Plan distributed to those holders of Claims or Equity Interests entitled to vote on the Plan and (ii) the election of (a) the option to purchase Equity Subscription Stock and Over-Subscription Stock and (b) the option to become an Electing Unsecured Creditor, as such form may be approved by the Bankruptcy Court and which shall otherwise comply with the requirements of Bankruptcy Rule 3018(c). 1.19. Bankruptcy Code: The Bankruptcy Reform Act of 1978, Title 11, United States Code, as applicable to the Chapter 11 Case, as now in effect or hereafter amended. 2 9 1.20. Bankruptcy Court: The unit of the United States District Court for the District of Arizona having jurisdiction over the Chapter 11 Case. 1.21. Bankruptcy Rules: Collectively, the Federal Rules of Bankruptcy Procedure and the local rules of the Bankruptcy Court, as applicable to the Chapter 11 Case, as now in effect or hereinafter amended. 1.22. Bar Date: In the case of Claims other than Administrative Claims, February 28, 1992, and in the case of Administrative Claims (other than Preserved Ordinary Course Administrative Claims and Professional Fees), July 1, 1994. 1.23. Business Day: Any day other than a Saturday, Sunday or other day on which commercial banks in New York or Arizona are authorized or required by law to close. 1.24. Cash: Currency, checks and wire transfers of immediately available funds. 1.25. Chapter 11 Case: The case under Chapter 11 of the Bankruptcy Code in which AWA is the Debtor pending in the Bankruptcy Court with Case No. 91-07505-PHX-RGM, including all adversary proceedings pending in connection therewith. 1.26. Claim: Any right to payment from the Debtor, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured arising at any time before the Effective Date or relating to any event that occurred before the Effective Date; or any right to an equitable remedy for breach of performance if such breach gives rise to a right of payment from the Debtor, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured or unsecured. Any alleged right to payment which is listed by the Debtor on the Schedules as disputed, unliquidated or contingent will not be a Claim hereunder if the holder thereof has not filed a timely proof of claim with regard thereto. 1.27. Class: A category of holders of Claims or Equity Interests as classified in the Plan. 1.28. Confirmation: The entry by the Bankruptcy Court of the Confirmation Order. 1.29. Confirmation Date: The date upon which the Bankruptcy Court enters the Confirmation Order. 1.30. Confirmation Hearing: The duly noticed hearing held by the Bankruptcy Court on Confirmation of the Plan pursuant to Section 1128 of the Bankruptcy Code. The Confirmation Hearing may be adjourned by the Bankruptcy Court from time to time without further notice other than the announcement of the adjourned date at the Confirmation Hearing. 1.31. Confirmation Order: An order of the Bankruptcy Court, in form and substance satisfactory to the Debtor and AmWest, confirming the Plan. 1.32. Contingent Claim: A Claim which is either contingent or unliquidated on or immediately before the Confirmation Date. 1.33. Convenience Claims: All Allowed General Unsecured Claims which are in an amount of five hundred dollars ($500) or less. 1.34. Creditors' Committee: The Official Committee of Unsecured Creditors appointed by the United States Trustee in the Chapter 11 Case pursuant to Section 1102(a)(1) of the Bankruptcy Code. 1.35. Debt Instrument: A debenture, promissory note or other transferable instrument evidencing a payment obligation. 1.36. Debtor and Debtor in Possession: AWA, as a debtor in possession in the Chapter 11 Case pursuant to Sections 1107 and 1108 of the Bankruptcy Code. 1.37. DIP Credit Agreement: The Third Amended and Restated Credit Agreement dated as of September 30, 1993, between AWA and the DIP Lenders, as approved by Final Order of the Bankruptcy Court dated September 29, 1993, together with all integrally related documents, schedules and exhibits, as 3 10 such agreement and such integrally related documents, schedules and exhibits may be amended or amended and restated from time to time. 1.38. DIP Lenders: BT Commercial Corp., as Administrative Agent, GPA Leasing USA I, Inc., GPA Leasing USA Sub I, Inc., Kawasaki Leasing International, Inc., B&B Holdings, Inc. d/b/a Phoenix Cardinals, Bank of America Arizona, Bank One Arizona, N.A., Commerce and Economic Development Division, The Dial Corp., DMB Holding Limited Partnership, El Dorado Investment Company, First Interstate Bank of Arizona, N.A., Phelps Dodge Corporation, Phoenix Newspapers, Inc., and Phoenix Suns, Ltd. Partnership and each substitute or additional lender under any permitted assignment, amendment or amendment and restatement of the DIP Credit Agreement. 1.39. DIP Loan Claims: Any and all Claims, whether a Secured Claim or an Unsecured Claim, of the DIP Lenders, arising under the DIP Credit Agreement. 1.40. Disclosure Statement: The Disclosure Statement dated as of June 28, 1994, including exhibits and any supplements, amendments or modifications thereto, prepared pursuant to Sections 1125(a) and 1126(b) of the Bankruptcy Code, and Bankruptcy Rule 3018(b), as approved by the Bankruptcy Court. 1.41. Disputed Claim and Disputed . . . Claim: A Claim which is (i) the subject of a timely objection interposed by the Debtor, NewAWA or any party in interest (including the Creditors' Committee and the Equity Committee) in the Chapter 11 Case, if at such time such objection remains unresolved, (ii) a Claim that is listed by the Debtor as disputed, unliquidated or contingent in the Schedules or (iii) if no objection has been timely filed, a Claim which has been asserted in a timely filed proof of claim in an amount greater than or in a class different than that listed by the Debtor in the Schedules as liquidated in amount and not disputed or contingent; provided, however, that the Bankruptcy Court may estimate a Disputed Claim for purposes of allowance pursuant to Section 502(c) of the Bankruptcy Code. The term "Disputed," when used to modify a reference in the Plan to any Claim or class of Claims, shall mean a Claim (or any Claim in such class) that is a Disputed Claim as defined herein. In the event there is a dispute as to classification or priority of a Claim, it shall be considered a Disputed Claim in its entirety. Until such time as a Contingent Claim becomes fixed and absolute, such Claim shall be treated as a Disputed Claim and not an Allowed Claim for purposes related to allocations and distributions under the Plan. 1.42. Disputed Equity Interest: An Equity Interest which is the subject of a timely objection interposed by the Debtor, NewAWA or any party in interest (including the Equity Committee) in the Chapter 11 Case, if at such time such objection remains unresolved. 1.43. Distribution Agent: NewAWA or such disbursing agent(s) as NewAWA shall from time to time employ at its expense for the purpose of making distributions under the Plan. 1.44. Distribution Agent Charges: Any Taxes imposed upon or with respect to (i) the Distribution Agent in its capacity as such, or (ii) the assets held by the Distribution Agent in its capacity as such or any income realized thereon. 1.45. Distribution Date: With respect to any Allowed Claim or Equity Interest, each date on which a payment is made with respect to such Allowed Claim or Equity Interest. 1.46. Distribution Record Date: For the purposes under Bankruptcy Rules 3001 and 3021 for any distribution under the Plan to the holders of Claims or Equity Interests and for the determination of which Claims or Equity Interests may be disallowed, the Effective Date. 1.47. Effective Date: The last to occur of (i) the first Business Day that is at least eleven (11) days after the Confirmation Date and on which no stay of the Confirmation Order is in effect, and (ii) the Business Day on which all of the conditions set forth in Section 9.1 shall have been satisfied. 1.48. Electing Creditor Cash: The Cash to be received by Electing Unsecured Creditors in accordance with Section 3.5. 1.49. Electing Creditor Stock: The NewAWA Class B Common Stock to be distributed under certain circumstances to Electing Unsecured Creditors pursuant to Section 3.5. 4 11 1.50. Electing Unsecured Creditors: Holders of General Unsecured Claims who elect to receive Electing Creditor Cash instead of NewAWA Class B Common Stock in accordance with Section 3.5. 1.51. Employee Stock Purchase Notes: Any and all Debt Instruments executed and delivered by any current or former director, officer or employee of AWA under the Employee Stock Purchase Plan. 1.52. Employee Stock Purchase Plan: Any and all of the Debtor's stock purchase plan(s) whereby directors, officers or employees of AWA were authorized (whether on a mandatory or optional basis) to acquire or finance the purchase of AWA Common Stock on certain terms and conditions and subject to certain repayment obligations. 1.53. Equity Committee: The Official Committee of Equity Security Holders of AWA appointed in the Chapter 11 Case pursuant to Section 1102(a)(2) of the Bankruptcy Code. 1.54. Equity Interest: Any interest in the Debtor represented by any class or series of common or preferred stock issued by the Debtor and any warrants, options or rights to purchase any such common or preferred stock. Equity Interests include, without limitation, all AWA Common Stock, AWA Preferred Stock and AWA Warrants, Options and Other Equity Interests. 1.55. Equity Interests Stock: The 2,250,000 shares of NewAWA Class B Common Stock to be issued to holders of AWA Common Stock as provided in Section 3.6.2. 1.56. Equity Interests Warrants: The NewAWA Warrants to purchase 6,230,769 shares of NewAWA Class B Common Stock to be issued to holders of AWA Common Stock as provided in Section 3.6.2. 1.57. Equity Subscription Stock: The up to 1,615,179 shares of NewAWA Class B Common Stock of which each holder of AWA Common Stock is entitled to purchase up to its Pro Rata Share as provided in Section 3.6.2. 1.58. ERISA: The Employee Retirement Income Security Act of 1974, as amended. 1.59. Escrow Agent: The bank, trust company or other organization independent of NewAWA, selected by AWA or NewAWA and retained pursuant to an agreement approved by order of the Bankruptcy Court, designated to act as escrow agent with respect to the Reserves as provided in Section 10.4, which entity may be the Distribution Agent, if the Distribution Agent is not affiliated with NewAWA. 1.60. Fidelity: Fidelity Management Trust Company, its affiliates and funds and accounts managed by it and its affiliates. 1.61. Final Distribution Date: The Distribution Date for a Class after which the Reserve Amount for such Class will be zero. 1.62. Final Order: An order or judgment which has not been reversed, stayed, modified or amended and is no longer subject to appeal, certiorari proceeding or other proceeding for review or rehearing, and as to which no appeal, certiorari proceeding, or other proceeding for review or rehearing shall then be pending. 1.63. General Unsecured Claim: Any Unsecured Claim other than a Post-Petition Agreement Claim, an Administrative Claim, a Priority Wage Claim, a Priority Benefit Plan Contribution Claim, a Priority Tax Claim, a Convenience Claim or a Claim treated in accordance with Section 3.7 of the Plan. 1.64. GPA: GPA Group plc and affiliates thereof. 1.65. Indenture Trustee: Texas Commerce Bank, National Association (f/k/a Ameritrust Company of New York), as Successor Trustee to First Interstate Bank of Arizona, N.A., or any successor under the Indentures. 1.66. Indentures: Collectively, the AWA 11 1/2% Subordinated Indenture, the AWA 7 1/2% Subordinated Indenture and the AWA 7 3/4% Subordinated Indenture. 1.67. Interim Procedures Agreement. The Third Revised Interim Procedures Agreement dated April 21, 1994 between AWA and AmWest, as amended from time to time. 5 12 1.68. Investment Agreement: The Third Revised Investment Agreement, dated April 21, 1994, as amended from time to time, between AWA and AmWest, in the form of Exhibit A hereto, which is incorporated herein by reference. 1.69. IRS: The Internal Revenue Service. 1.70. Lehman: Lehman Brothers, Inc. 1.71. Net Proceeds: The gross proceeds received from the sale, lease, disposition, liquidation and collection of assets, less amounts actually incurred for (i) necessary and reasonable costs and expenses in connection with such sale, lease, disposition, liquidation or collection, including, but not limited to, attorneys' fees related thereto, and (ii) all liabilities, charges, Taxes, offsets and encumbrances required to be discharged with respect to such assets and in connection with the sale, lease, disposition, liquidation and collection thereof. 1.72. NewAWA: AWA on and after the Effective Date. 1.73. NewAWA By-laws: The Restated By-laws of NewAWA. 1.74. NewAWA Charter: The Restated Certificate of Incorporation of NewAWA. 1.75. NewAWA Class A Common Stock: The Class A Common Stock, par value $.01 per share, of NewAWA which NewAWA shall be authorized to issue on and after the Effective Date. 1.76. NewAWA Class B Common Stock: The Class B Common Stock, par value $.01 per share, of NewAWA which NewAWA shall be authorized to issue on and after the Effective Date. 1.77. NewAWA Common Stock: Collectively, the NewAWA Class A Common Stock and the NewAWA Class B Common Stock. 1.78. NewAWA Securities: Collectively, the NewAWA Common Stock, NewAWA Warrants and NewAWA Senior Unsecured Notes. 1.79. NewAWA Senior Unsecured Notes: The Senior Unsecured Notes which NewAWA shall be authorized to issue on or after the Effective Date. 1.80. NewAWA Warrants: The warrants to purchase shares of NewAWA Class B Common Stock which NewAWA shall be authorized to issue on or after the Effective Date. 1.81. Non-Electing Creditor Stock: The NewAWA Class B Common Stock to be distributed to Non-Electing Unsecured Creditors in accordance with Section 3.5.2. 1.82. Non-Electing Unsecured Creditors: Holders of General Unsecured Claims that do not elect to be Electing Unsecured Creditors in accordance with Section 3.5. 1.83. Notice and a Hearing: This phrase shall have the same meaning as provided for in Section 102(1) of the Bankruptcy Code. 1.84. Official Service List: The then-current Official Service List in the Chapter 11 Case, as required by the Bankruptcy Court's "Order Establishing Notice Requirements With Respect to All Matters Herein" entered on June 28, 1991, and "Order Modifying Noticing Procedures and Requirements" entered on October 21, 1991. 1.85. Over-Subscription Stock: The shares of NewAWA Class B Common Stock which were available for purchase as Equity Subscription Stock and which were not so purchased. Over-Subscription Stock shall be available for sale to holders of AWA Preferred Stock in accordance with Section 3.6.1 and, if there are more than 250,000 such shares or if holders of AWA Preferred Stock subscribe for fewer shares than they are entitled to subscribe for, to Purchasing Stockholders in accordance with Section 3.6.2. 1.86. Person: An individual, a corporation, a limited liability company, a partnership, an association, a joint stock company, a joint venture, an estate, a trust, an unincorporated organization or a government, governmental unit or any subdivision thereof or any other entity. 6 13 1.87. Petition Date: June 27, 1991, the date on which the Debtor filed a voluntary petition commencing the Chapter 11 Case. 1.88. Plan: This Plan of Reorganization, either in its present form or as it may be amended, supplemented or modified from time to time, including all exhibits and schedules annexed hereto or referenced. 1.89. Plan Discount Rate: The rate of interest equal to eight percent (8%) per annum. 1.90. Post-Petition Agreement Claim: Any Claim against the Debtor of the type listed in Section 2.1 but not including an Administrative Claim arising as a result of the assumption of an executory contract or lease listed on Schedule 3 hereto. 1.91. Present Value: As the context requires, the present value as of the Effective Date of a stream of Cash payments computed using the Plan Discount Rate. 1.92. Preserved Ordinary Course Administrative Claim: Administrative Claims that are based on liabilities incurred in (a) AWA's purchase, lease or use of goods and services in the ordinary course of its business or (b) AWA's sale or provision of air transportation services (including the sale of tickets to passengers) in the ordinary course of its business, including Administrative Claims due on account of services provided to AWA after the Petition Date by its employees. 1.93. Prime Rate: The rate of interest which under current practice is listed as such under the heading "Money Rates" in the Eastern Edition of The Wall Street Journal and if a range of rates is listed, the lowest such rate. In the event that such a listing is not available, the Prime Rate shall be such other measure of the prime rate generally in effect as is reasonably selected by NewAWA. For purposes of the Plan and any notes or other instruments delivered pursuant hereto, the Prime Rate shall be deemed to adjust on and only on the last Business Day of each December, March, June and September to the Prime Rate then in effect. 1.94. Priority Benefit Plan Contribution Claim: Any Claim entitled to priority in payment under Section 507(a)(4) of the Bankruptcy Code. 1.95. Priority Tax Claim: Any Claim entitled to priority in payment under Section 507(a)(7) of the Bankruptcy Code. 1.96. Priority Wage Claim: Any Claim entitled to priority in payment under Section 507(a)(3) of the Bankruptcy Code. 1.97. Professional Fees: The Administrative Claims for compensation and reimbursement submitted pursuant to Section 330, Section 331 or Section 503(b) of the Bankruptcy Code by Persons (i) employed pursuant to an order of the Bankruptcy Court under Section 327 or Section 1103 of the Bankruptcy Code or (ii) for whom compensation and reimbursement has been allowed by the Bankruptcy Court pursuant to Section 503(b) of the Bankruptcy Code. 1.98. Pro Rata Share: The ratio of an Allowed Claim or Equity Interest in a particular Class to the aggregate amount of all Allowed Claims or Equity Interests in that Class. 1.99. Purchasing Stockholder: A holder of AWA Common Stock who elects to purchase Equity Subscription Stock or Over-Subscription Stock as provided in Section 3.6.2. 1.100. Registration Rights Agreement: The Registration Rights Agreement to be entered into by and among NewAWA, AmWest and certain other parties pertaining to certain NewAWA Securities to be purchased or otherwise issued pursuant to the Investment Agreement or the Plan. 1.101. Rejected Agreement: Each executory contract or unexpired lease of Debtor that is rejected pursuant to Section 5.2. 1.102. Reserve: As to any Class, the amount held at any particular time by the Escrow Agent, as provided in Section 10.4, including the Reserve Amounts at such time, and any interest, dividends or other income earned upon investment of the Reserve Amount. 7 14 1.103. Reserve Amount: The NewAWA Securities and/or Cash reserved as of a particular date for the Disputed Claims or Disputed Equity Interests of a particular Class pursuant to Section 10.4. 1.104. Reserve Order: Any Final Order of the Bankruptcy Court establishing the Reserve Amount for any Reserve, as established in Section 10.4. 1.105. Schedules: The schedules of assets and liabilities and any amendments thereto filed by the Debtor with the Bankruptcy Court in accordance with Section 521(1) of the Bankruptcy Code. 1.106. Secured Claim: A Claim to the extent of the value of any interest in property of the Debtor's estate securing such Claim or to the extent of the amount of such Claim subject to setoff in accordance with Section 553 of the Bankruptcy Code, in either case as determined pursuant to Section 506(a) of the Bankruptcy Code. To the extent that the value of such interest or setoff is less than the amount of the Claim which has the benefit of such security or is subject to such setoff, such Claim is an Unsecured Deficiency Claim unless, in the case of a Claim secured by a lien on property of the Debtor's estate, the Class of which such Claim is a part makes a valid election under Section 1111(b) of the Bankruptcy Code no later than the Voting Deadline to have such Claim treated as a Secured Claim to the extent allowed. 1.107. Securities Action: The presently uncertified class action lawsuit pending in the Superior Court of the State of Arizona for the County of Maricopa styled Clark v. Beauvais, Case No. CV 92-07197. 1.108. Stock Rescission or Damage Claim: Any Claim pursuant to Section 510(b) of the Bankruptcy Code (i) for rescission of the purchase or sale of AWA Common Stock, (ii) for damages arising from the purchase or sale of AWA Common Stock, or (iii) for reimbursement, contribution or indemnification on account of such rescission or damage claim. 1.109. Stock Payment Escrow Account: The escrow account to be established in accordance with Section 10.2.2 to receive payment for Equity Subscription Stock and Over-Subscription Stock. 1.110. Stockholders' Agreement: The Stockholders' Agreement for America West Airlines, Inc., to be dated as of the Effective Date, substantially in the form of Exhibit B hereto, which is incorporated herein by reference. 1.111. Subordinated Claim: Any Claim or Equity Interest subordinated, for purposes of distribution, pursuant to Section 510(c) of the Bankruptcy Code. 1.112. Taxes: All income, franchise, excise, sales, use, employment, withholding, property, payroll or other taxes, assessments, or governmental charges, together with any interest, penalties, additions to tax, fines, and similar amounts relating thereto, imposed or collected by any federal, state, local or foreign governmental authority. 1.113. Unsecured Claim: A Claim not secured by a charge against or interest in property in which the Debtor's estate has an interest, including any Unsecured Deficiency Claim. 1.114. Unsecured Deficiency Claim: A Claim by a holder of a Secured Claim arising out of the same transaction as a Secured Claim to the extent that the value of such holder's interest in property of the Debtor's estate securing such Claim or subject to setoff is less than the amount of the Claim which has the benefit of such security or setoff, as provided by Section 506(a) of the Bankruptcy Code. 1.115. Voting Deadline: The deadline for filing Ballots, as fixed by the Bankruptcy Court in the order approving the Disclosure Statement or otherwise. 1.116. Voting Record Date: June 8, 1994. 1.117. Other Definitions: Unless the context otherwise requires, any capitalized term used and not defined herein or elsewhere in the Plan but that is defined in the Bankruptcy Code or Bankruptcy Rules shall have the meaning set forth therein. Wherever from the context it appears appropriate, each term stated in either of the singular or the plural shall include the singular and the plural, and pronouns stated in the masculine, feminine or neuter gender shall include the masculine, the feminine and the neuter. The words 8 15 "herein," "hereof," "hereto," "hereunder," and others of similar inference refer to the Plan as a whole and not to any particular Article, Section, subsection, or clause contained in the Plan. ARTICLE 2 TREATMENT OF UNCLASSIFIED CLAIMS The Claims against the Debtor covered in this Article 2 are not designated as Classes pursuant to Section 1123(a)(1) of the Bankruptcy Code. The holders of such Claims are not entitled to vote on the Plan. 2.1. Treatment of Post-Petition Agreement Claims. This Section 2.1 contains provisions dealing with the Post-Petition Agreement Claims. 2.1.1. DIP Credit Agreement. The DIP Loan Claims will be paid in full, in Cash, by AWA on the Effective Date or such later date as may be agreed by AWA and the DIP Lenders, or shall be paid in such other manner as may be agreed to by AWA and the DIP Lenders. 2.1.2. Kawasaki Priority Facility. Any and all Claims arising from that certain Loan Restructuring Agreement, dated as of December 1, 1991, between AWA and Kawasaki Leasing International, Inc., as amended and supplemented from time to time, and as approved by Final Order of the Bankruptcy Court dated December 12, 1991, will be treated exclusively in accordance with the terms and conditions of such agreement or as otherwise agreed by the holder of such Claims and the Debtor or NewAWA. 2.1.3. Section 1110 Stipulations. Any and all Claims arising from the stipulations entered into pursuant to Section 1110 of the Bankruptcy Code between AWA and other parties during the Chapter 11 Case including, without limitation, the stipulations listed on Schedule 1 hereto, and as approved by Final Order of the Bankruptcy Court, shall in each case be treated exclusively in accordance with the terms and conditions of such stipulations and Final Orders, and such terms and conditions shall be binding upon NewAWA. 2.1.4. Settlement Stipulations and Other Post-Petition Orders. Any and all Claims arising from obligations of AWA which were or are the subject of settlement or other agreements entered into between AWA and other parties, whether prior to or after the Effective Date, which settlement or other agreements were or are approved by Final Order of the Bankruptcy Court, including, without limitation, those Final Orders listed on Schedule 2 hereto, shall be treated exclusively in accordance with the terms and conditions of such settlement and other agreements and Final Orders. 2.2. Treatment of Administrative Claims. 2.2.1. This Section 2.2 contains provisions dealing with the treatment of Administrative Claims. Such treatment is consistent with the requirements of Section 1129(a)(9)(A) of the Bankruptcy Code. 2.2.2. Each Allowed Administrative Claim, other than Preserved Ordinary Course Administrative Claims, shall be paid in full in Cash (or otherwise satisfied in accordance with its terms) by NewAWA at such time or times as provided in Section 10.1 or as otherwise agreed by the holder of such Allowed Administrative Claim and the Debtor or NewAWA. Each Preserved Ordinary Course Administrative Claim shall be paid by NewAWA pursuant to the terms and conditions under which such Claim arose, without further action by the holder of such Claim. 2.2.3. All requests for payment of Administrative Claims, except for Professional Fees and Preserved Ordinary Course Administrative Claims, must be filed by the Bar Date or the holders thereof shall be forever barred from asserting such Administrative Claims against the Debtor. All final applications for allowance and disbursement of Professional Fees must be filed not later than sixty (60) days after the Effective Date. All such applications must be in compliance with all of the terms and provisions of any applicable order of the Bankruptcy Court, including the Confirmation Order, and all orders governing payment of Professional Fees. AWA will request the Bankruptcy Court to set the hearing on final allowance of Professional Fees in the Confirmation Order. Such applications may be later amended to include any fees and costs incurred after the Confirmation Date but prior to the Effective Date, or hearing date, as the case may be. 9 16 2.3. Allowed Priority Tax Claims. Each Allowed Priority Tax Claim, if any, will be paid in full in Cash by NewAWA at such time or times as provided in Section 10.1 hereof; provided, however, that NewAWA may elect to pay such Claims, in any such case, through deferred Cash payments over a period not exceeding six (6) years after the date of assessment of such Claim, of a value as of the Effective Date equal to the Allowed amount of such Claim, in each case unless otherwise agreed between NewAWA and the holder of such Allowed Priority Tax Claim. Such payments shall be made in equal annual installments of principal, plus simple interest accruing from the Effective Date at 6% per annum on the unpaid portion of Allowed Priority Tax Claim or such other rate as the Bankruptcy Court may approve. The first such payment shall be payable on the latest of: (i) the Effective Date; (ii) 60 days after the date on which an order allowing such Claim becomes a Final Order; and (iii) such other time as is agreed upon by the holder of such Claim and AWA or NewAWA; provided, however, that NewAWA shall have the right to prepay any such Allowed Priority Tax Claim, or any remaining balance of such Claim, in full or in part, at any time on or after the Effective Date, without premium or penalty. The foregoing treatment of Allowed Priority Tax Claims is consistent with the requirements of Section 1129(a)(9)(C) of the Bankruptcy Code. ARTICLE 3 DESIGNATION OF AND PROVISIONS FOR TREATMENT OF CLASSES OF CLAIMS AND EQUITY INTERESTS All Claims and Equity Interests, except Post-Petition Agreement Claims, Administrative Claims and Priority Tax Claims are placed in the Classes described below. A Claim or Equity Interest is classified in a particular Class only to the extent that the Claim or Equity Interest qualifies within the description of that Class and is classified in other Classes only to the extent that any remainder of the Claim or Equity Interest qualifies within the description of such other Classes. A Claim is also classified in a particular Class only to the extent that such Claim is an Allowed Claim in that Class and has not been paid, released or otherwise satisfied prior to the Effective Date. 3.1. Class 1 -- Allowed Priority Wage Claims. Each Allowed Priority Wage Claim shall be paid in full in Cash by NewAWA at such time or times as provided in Section 10.1 hereof. Class 1 is unimpaired under the Plan. 3.2. Class 2 -- Allowed Priority Benefit Plan Contribution Claims. All Allowed Priority Benefit Plan Contribution Claims shall be paid in full in Cash by NewAWA at such time or times as provided in Section 10.1 hereof. Class 2 is unimpaired under the Plan. 3.3. Class 3 -- Allowed Secured Claims. 3.3.1. Class 3.1 -- U.S. Leasing (Ford) Ramp Equipment Loan. This Class consists of any Secured Claims arising from that certain Promissory Note dated December 13, 1988, between AWA and Ford Equipment Leasing Co., as amended and supplemented from time to time and as in effect as of the Petition Date. The principal collateral securing this Claim consists of certain group transport support equipment and jetway equipment. On the Effective Date, the holder of the Allowed Class 3.1 Claim will receive a promissory note in the amount of such Allowed Claim, bearing interest at the Prime Rate plus 100 basis points per annum payable over a term of five years in level monthly principal installments, plus interest. The holder of such Claim will retain all of the liens securing such Claim as such liens may exist as of the Effective Date to the extent of the amount of the Note. Class 3.1 is impaired under the Plan. 3.3.2. Class 3.2 -- Bank of America Revolver. This Class consists of any Secured Claims arising from that certain Revolving Loan Agreement dated April 17, 1990, among AWA, Bank of America National Trust & Savings Association, as Agent and for itself, First Interstate Bank of Arizona, the Industrial Bank of Japan Limited, Los Angeles Agency, The Valley National Bank of Arizona and First Hawaiian Bank, as amended and supplemented from time to time and as in effect as of the Petition Date. The principal collateral securing this Claim consists of Boeing 747 and 757 spare parts, certain expendable aircraft parts, inventory and six spare Pratt & Whitney Model JT8D-9A engines. On the Effective Date, the holder of the Allowed 10 17 Class 3.2 Claim will receive a promissory note in the amount of such Allowed Claim, bearing interest at the Prime Rate plus 100 basis points per annum, payable over a term of four years in level quarterly principal installments, plus interest. The holder of such Claim will retain all of the liens securing such Claim as such liens may exist as of the Effective Date to the extent of the amount of the Note. Class 3.2 is impaired under the Plan. 3.3.3. Class 3.3 -- Bank One of Arizona f/k/a Valley National Bank -- Spare Parts Loan. This Class consists of any Secured Claims arising from (a) that certain Master Reimbursement Agreement, dated as of April 15, 1989 between AWA and Valley National Bank of Arizona, a national banking association, n/k/a Bank One of Arizona, N.A. ("BOAZ"), as amended and supplemented from time to time and as in effect as of July 25, 1991, and (b) that certain Amended and Restated Reimbursement Agreement, dated June 29, 1990 among AWA, BOAZ and Bank of America National Trust and Savings Association, as amended and supplemented from time to time and as in effect on the Petition Date. The principal collateral securing these Claims consists of certain spare rotable nonconsumable parts, accessories, appliances, equipment and other items that are appropriate for installation or use on, in or with any Boeing model 737 aircraft or any part thereof. On the Effective Date, the holder of such claim shall receive either (i) a cash payment in an amount equal to the sum of (A) $21,212,953.98, if the Effective Date occurs on June 10, 1994, $21,760,297.61, if the Effective Date occurs on August 1, 1994, $22,099,874.80, if the Effective Date occurs on September 1, 1994, $22,433,542.61, if the Effective Date occurs on November 1, 1994, provided that such amount shall be appropriately adjusted at an identical compounded rate if the Effective Date occurs on any other date other than as set forth above; plus (B) $65,000; plus (C) $1,976,000, if the Effective Date occurs on June 10, 1994, $2,027,998.16, if the Effective Date occurs on August 1, 1994, $2,059,645.79, if the Effective Date occurs on September 1, 1994, $2,090,742.69, if the Effective Date occurs on October 1, 1994, $2,123,369.47, if the Effective Date occurs on November 1, 1994, provided, that such amount shall be appropriately adjusted at an identical compounded rate if the Effective Date occurs on any other date other than as set forth above, and provided, further, that if an unexpired letter of credit expires at any time prior to the Effective Date, such amount shall be appropriately adjusted at an identical compounded rate such that interest shall have ceased to accrue on the principal amount represented by such expired letter of credit as of the date of such expiration; minus (D) $1,976,000; plus (E) the principal amount drawn under any unexpired letters of credit on or after June 10, 1994 and prior to the Effective Date; or (ii) such other treatment as shall be agreed upon by the Debtor and the holders of such Claims as is approved by the Bankruptcy Court. Class 3.3 is impaired under the Plan. 3.3.4. Class 3.4 -- Hangar Facility Bonds. This Class consists of any Secured Claims arising from that certain Indenture of Trust dated August 1, 1986, between the Industrial Development Authority of the City of Phoenix, Arizona, and First Interstate Bank of Arizona, N.A., as Indenture Trustee, as amended and supplemented from time to time and as in effect as of the Petition Date and pursuant to which the Variable Rate Airport Facility Revenue Bonds (America West Airlines, Inc. Project) Series 1986 were issued. The principal collateral securing this Claim consists of the AWA maintenance and technical support facility located at Phoenix Sky Harbor International Airport. On the Effective Date, the holder of the Allowed Class 3.4 Claim will receive a promissory note in the amount of such Allowed Claim, bearing interest at the rate of 6% per annum, payable over a term of twelve years in level quarterly principal installments plus interest. The holder of such Claim will retain all of the liens securing such Claim as such liens may exist as of the Effective Date to the extent of the amount of the Note. Class 3.4 is impaired under the Plan. 3.3.5. Class 3.5 -- Lockheed Finance No. 2. This Class consists of any Secured Claims arising from that certain Master Equipment Lease Agreement No. 0134 dated as of November 12, 1987, between AWA and Lockheed Finance Corporation, as amended and supplemented from time to time and as in effect as of the Petition Date. The principal collateral securing this Claim consists of certain ground support equipment. On the Effective Date, the holder of the Allowed Class 3.5 Claim will receive a promissory note in the amount of $750,000 bearing interest at the 30-day LIBOR rate (as provided for in such Master Lease Agreement) plus 200 basis points per annum, payable over a term of five years in level monthly principal installments, plus interest. The holder of such Claim will have no Unsecured Deficiency Claim and will retain all of the liens 11 18 securing such Claim as such liens may exist as of the Effective Date to the extent of the amount of the Note. Class 3.5 is impaired under the Plan. 3.3.6. Class 3.6 -- Other Secured Claims. This Class consists of Allowed Secured Claims not specifically provided for above. On the Effective Date, as to such Allowed Secured Claim, at AWA's option either: (a) the holder of such Claim shall be treated in accordance with the terms and conditions of all documents respecting such Claim and the legal, equitable or contractual rights to which each holder of such Claim is entitled shall not otherwise be altered; (b) (i) any default, other than a default of the kind specified in Section 365(b)(2) of the Bankruptcy Code, shall be cured, provided that any accrued and unpaid interest, if any, which the Debtor may be obligated to pay with respect to such default shall be simple interest at the contract rate and not at any default or penalty rate of interest; (ii) the maturity of the Claim shall be reinstated as such maturity existed before any default; (iii) the holder of the Claim shall be compensated for any actual damages incurred as a result of any reasonable reliance by the holder on any contractual provision that entitled the holder to accelerate maturity of the Claim; and (iv) the other legal, equitable or contractual rights to which the holder of the Claim is entitled shall not otherwise be altered; provided, however, that as to any Allowed Secured Claim which is a nonrecourse claim and exceeds the value of the collateral securing the Claim, the collateral may be sold at a sale at which the holder of such Claim has an opportunity to bid; (c) on the Effective Date, or on such other date thereafter as may be agreed to by the Debtor and the holder of such Claim, the Debtor shall abandon the collateral securing such Claim to the holder thereof in full satisfaction and release of such Claim; (d) on the Effective Date, the holder of such Claim shall receive, on account of such Claim, Cash equal to its Allowed Secured Claim, or such lesser amount to which the holder of such Claim shall agree, in full satisfaction and release of such Claim; (e) the holder of such Claim shall retain the liens securing such Claim and shall receive, on account of such Claim, deferred Cash payments, pursuant to Section 1129(b)(2)(A)(i)(II) of the Bankruptcy Code, totalling at least the Allowed amount of such Claim, of a Present Value, as of the Effective Date, of at least the value of such holder's interest in the Debtor's interest in the property securing such Claim; (f) on the Effective Date, any property that is subject to the liens securing such Claim shall be sold, subject to Section 363(k) of the Bankruptcy Code, free and clear of such liens, with payment of the net proceeds thereof to the holder of such Claim to the extent of the value of such holder's respective interest in such property; or (g) the holder of such Claim shall otherwise realize the indubitable equivalent of such Claim. Each holder of an Allowed Claim in Class 3.6 shall be considered to be in its own separate subclass within Class 3.6, and each such subclass will be deemed to be a separate Class for purposes of this Plan. In the event that AWA does not make such designation, the holder of an Allowed Secured Claim shall, at any time prior to the Effective Date, be entitled to petition the Bankruptcy Court for an order requiring AWA to make such designation, but shall not be entitled to any other relief or to exercise any other remedies, except in accordance with such designation and any applicable Final Order(s) of the Bankruptcy Court. 3.4. Class 4 -- Allowed Convenience Claims. This Class consists of Convenience Claims. Each Allowed Convenience Claim shall be paid by NewAWA Cash in the amount of such Allowed Convenience Claim to be distributed as provided in Section 10.1. Class 4 is not impaired under the Plan. 12 19 3.5. Class 5 -- Allowed General Unsecured Claims. This Class consists of General Unsecured Claims. 3.5.1. Each holder of an Allowed General Unsecured Claim shall receive its Pro Rata Share of 26,775,000 shares of NewAWA Class B Common Stock; provided, however, that if the holder is an Electing Unsecured Creditor in accordance with Section 3.5.2, such holder shall receive Electing Creditor Cash equal to $8.889 for each share of NewAWA Class B Common Stock otherwise allocable to it under this sentence. 3.5.2. A holder of an Allowed General Unsecured Claim may become an Electing Unsecured Creditor only by providing notice of such election on the Ballot which such holder submits. Any holder of a Disputed General Unsecured Claim that wishes to become an Electing Unsecured Creditor must provide notice to the Debtor of the exercise of such right by no later than the Voting Deadline. Each such election by a holder of a General Unsecured Claim shall be irrevocable and must pertain to the entire amount of such holder's General Unsecured Claim. In the event that the aggregate amount of the Electing Creditor Cash would be in excess of $100,000,000, then each Electing Unsecured Creditor shall receive only its Pro Rata Share of $100,000,000 in Cash and shall also receive a number of shares of Electing Creditor Stock equal to the number of shares of NewAWA Class B Common Stock it would have received if it were a Non-Electing Unsecured Creditor minus the result of dividing the Electing Creditor Cash it receives by $8.889. For purposes of allocating Electing Creditor Cash among Electing Unsecured Creditors, each Disputed General Unsecured Claim held by an Electing Unsecured Creditor shall initially be valued at its face amount; provided, however, in the event that the aggregate amount of Electing Creditor Cash would exceed $100,000,000 and one or more holders of Disputed General Unsecured Claims have become Electing Unsecured Creditors, then any party in interest with regard thereto (including, without limitation, the Creditors' Committee), may seek an order of the Bankruptcy Court estimating the amount of any and all such Disputed General Unsecured Claims at a lower amount and, then, regardless of the amount at which such Disputed General Unsecured Claims are eventually Allowed, the holders thereof will be paid Electing Creditor Cash in an amount which does not exceed the amount of Electing Creditor Cash which would be payable for a Claim in the amount of such estimate and for any amount of the Disputed Claim which is Allowed in excess of such estimate, the holder shall receive Electing Creditor Stock in accordance with Section 10.4. NewAWA Class B Common Stock distributed to Non-Electing Unsecured Creditors, Electing Creditor Stock and Electing Creditor Cash shall be distributed in accordance with Section 10.2. 3.5.3. Any holder of an Unsecured Claim asserting that payment to any other holder of an Unsecured Claim should be subordinated to such first holder under Section 510(a) of the Bankruptcy Code, may only make such assertion by filing an adversary proceeding in the Chapter 11 Case on or before the Voting Deadline, or such other date as may be established by Final Order of the Bankruptcy Court. Any such subordination of one Unsecured Claim to another Unsecured Claim shall be made only upon Final Order of the Bankruptcy Court and no distribution hereby to any holder of an Allowed Claim which is the subject of such an adversary proceeding shall be delayed or withheld except upon Final Order of the Bankruptcy Court. Any such adversary proceeding involving holders of AWA Debenture Claims shall name as defendants the Debtor and on behalf of all such holders, the Indenture Trustee. 3.5.4. Class 5 is impaired under the Plan. 3.6. Class 6 -- AWA Preferred and Common Stock. 3.6.1. Class 6.1 -- AWA Preferred Stock. This Class consists of AWA Preferred Stock. Each holder of shares of AWA Preferred Stock shall receive its Pro Rata Share of $500,000 in Cash plus the right to purchase as of the Effective Date its Pro Rata Share of the first 250,000 shares of Over-Subscription Stock at the price of $8.889 per share or such lesser amount of Over-Subscription Stock as is available after the purchase of Equity Subscription Stock in accordance with Section 3.6.2. Such Cash shall be distributed in accordance with Section 10.1. Payment for such Over-Subscription Stock shall be made no later than the Effective Date. Such Cash and rights shall be deemed to be in full satisfaction for all Claims and Equity Interests arising in connection with the AWA Preferred Stock including accrued and unpaid dividends thereon. Class 6.1 is impaired under the Plan. All shares of AWA Preferred Stock shall be deemed to be cancelled, annulled and extinguished on the Effective Date. 13 20 3.6.2. Class 6.2 -- AWA Common Stock. (a) This Class consists of shares of AWA Common Stock other than shares of AWA Common Stock which are pledged as collateral for Employee Stock Purchase Notes. Each holder of such AWA Common Stock shall receive its Pro Rata Share of (i) the Equity Interests Stock and (ii) the Equity Interests Warrants, to be distributed in accordance with the procedure set forth in Section 10.2. (b) Additionally, each such holder of AWA Common Stock other than the holder of a Disputed Equity Interest shall have the right to purchase its Pro Rata Share of the Equity Subscription Stock at the price of $8.889 per share; provided, however, that for purposes of determining such Pro Rata Share there shall be considered to be an aggregate of 22,100,000 shares of AWA Common Stock outstanding. Such right is not transferrable and may only be exercised by the beneficial holder of such AWA Common Stock as of the Voting Record Date by the irrevocable indication thereof on the Ballot which such holder delivers or causes to be delivered. Each such holder may also indicate on the Ballot that it wishes to purchase Over-Subscription Stock, if available. The Over-Subscription Stock available to Purchasing Stockholders shall consist of the Equity Subscription Stock not subscribed for in accordance with the second preceding sentence and less the Over-Subscription Stock sold to holders of AWA Preferred Stock in accordance with Section 3.6.1. Each Purchasing Stockholder must irrevocably indicate on the Ballot the maximum number of shares of Equity Subscription Stock and Over-Subscription Stock which it desires to purchase. As set forth more fully in Section 10.2, either full payment or a satisfactory guarantee of payment for all Equity Subscription Stock and Over-Subscription Stock must be delivered by the Voting Deadline. The procedure for allocating Over-Subscription Stock is set forth in Section 10.2. (c) Class 6.2 is impaired under the Plan. All shares of AWA Common Stock will be cancelled, annulled and extinguished on the Effective Date. 3.7. Class 7 -- Certain Other Claims and AWA Warrants, Options and Other Equity Interests. 3.7.1. Class 7.1 -- Employee Stock Purchase Note Claims and Certain AWA Common Stock. This Class consists of Stock Rescission or Damage Claims (including, without limitation, Claims by members of the putative plaintiff class in the Securities Action) which are held by Persons who are obligated under one or more Employee Stock Purchase Notes. This Class also includes AWA Common Stock pledged as collateral for Employee Stock Purchase Notes. Each holder of an Allowed Claim or Equity Interest in this Class shall receive in exchange for and in consideration of the dismissal with prejudice and permanent enjoinment of the Securities Actions, a release of any and all indebtedness incurred under the Employee Stock Purchase Plan, including the forgiveness, abandonment and cancellation of any liability under the Employee Stock Purchase Notes, but shall receive no other distribution under the Plan. In addition, all liens on AWA Common Stock securing Employee Stock Purchase Notes will be released and such AWA Common Stock will be returned to AWA and cancelled, annulled and extinguished as of the Effective Date and will not be entitled to any distribution under Section 3.6.2. Pursuant to Sections 1123(a)(5)(E), (F) and 1123(b)(3)(A) of the Bankruptcy Code, the treatment provided Class 7.1 Claims constitutes a compromise and settlement of the Securities Action and any and all objections to such Claims. The Debtor will either file appropriate pleadings seeking to effect the treatment provided Class 7.1 Claims in this Section 3.7.1 as a compromise and settlement prior to the Confirmation Hearing or request the Bankruptcy Court to approve this compromise and settlement at the Confirmation Hearing as in the best interests of the Debtor and holders of Claims and Equity Interests and fair, equitable and reasonable. Class 7.1 is impaired under the Plan. 3.7.2. Certain AWA Warrants, Options and Other Equity Interests and Other Claims. This Class consists of the following Claims and Equity Interests (except to the extent they are included in Class 7.1): (i) AWA Warrants, Options, and Other Equity Interests, (ii) Stock Rescission or Damage Claims, (iii) Subordinated Claims and (iv) all Claims, if any, arising from the cancellation or rejection (to the extent they constitute executory contracts) of AWA Warrants, Options and Other Equity Interests. Holders of such Claims and Equity Interests will not be entitled to receive or retain any property under the Plan on account of such Claims or Equity Interests, and pursuant to Section 1126(g) of the Bankruptcy Code, are deemed not to have accepted the Plan. Class 7.2 is impaired under the Plan. All AWA Warrants, Options and Other Equity Interests will be cancelled, annulled and extinguished on the Effective Date. 14 21 ARTICLE 4 PROVISIONS OF NEWAWA SECURITIES ISSUED PURSUANT TO THE PLAN 4.1. NewAWA Class A Common Stock. Principal provisions of the NewAWA Class A Common Stock are summarized as follows: (a) Authorization. The NewAWA Charter shall authorize the issuance of 1,200,000 shares of NewAWA Class A Common Stock. (b) Par Value. The NewAWA Class A Common Stock shall have a par value of $.01 per share. (c) Rights. The NewAWA Class A Common Stock shall have such rights with respect to dividends, liquidation, voting and other matters as are set forth in the NewAWA Charter and as provided under applicable law, including, without limitation, the right to fifty votes per share which shall be voted together as a single class with the NewAWA Class B Common Stock. (d) Convertibility. Each share of NewAWA Class A Common Stock will be convertible, at the option of the holder, into one share of NewAWA Class B Common Stock. 4.2. NewAWA Class B Common Stock. Principal provisions of the NewAWA Class B Common Stock are summarized as follows: (a) Authorization. The NewAWA Charter shall authorize the issuance of 100,000,000 shares of NewAWA Class B Common Stock. (b) Par Value. The NewAWA Class B Common Stock shall have a par value of $.01 per share. (c) Rights. The NewAWA Class B Common Stock shall have such rights with respect to dividends, liquidation, voting and other matters as are set forth in the NewAWA Charter and as provided under applicable law, including, without limitation, the right to one vote per share which shall be voted together as a single class with the NewAWA Class A Common Stock. (d) Exchange Listing. NewAWA will seek a listing of the NewAWA Class B Common Stock on a national securities exchange or automated quotation system and will use its reasonable efforts to obtain such listing prior to the distribution to holders of Allowed Claims and Equity Interests of NewAWA Class B Common Stock. 4.3. NewAWA Warrants. Principal provisions of the NewAWA Warrants are as follows: (a) Authorization. The Plan hereby authorizes the issuance of NewAWA Warrants to purchase 10,384,615 shares of NewAWA Class B Common Stock. (b) Exercise Price. The proponents of the Plan will seek to have the exercise price for the NewAWA Warrants determined in the Confirmation Order or otherwise pursuant to a Final Order of the Bankruptcy Court to be issued before the Effective Date or as soon thereafter as possible, which exercise price shall equal the aggregate amount of Allowed General Unsecured Claims on the date of such order plus the Bankruptcy Court's estimate of the Disputed General Unsecured Claims which will become Allowed General Unsecured Claims, which sum shall be multiplied by 1.1 and divided by 26,775,000. (c) Exercise. The NewAWA Warrants will be exercisable by the holder thereof at any time on or prior to the fifth anniversary of the Effective Date. (d) Rights. The NewAWA Warrants will not be redeemable. The number of shares of NewAWA Class B Common Stock purchasable upon exercise of each NewAWA Warrant will be adjusted upon (i) payment of a dividend payable in, or other distribution of, NewAWA Class B Common Stock to all of the then-current holders of NewAWA Class B Common Stock, (ii) a combination, subdivision or a reclassification of NewAWA Class B Common Stock, and (iii) a rights issuance. The holders of the NewAWA Warrants will not have any voting rights in respect thereof. 15 22 (e) Exchange Listing. NewAWA will seek a listing of the NewAWA Warrants on the same securities exchange or automated quotation system as the NewAWA Class B Common Stock is listed. 4.4. NewAWA Senior Unsecured Notes. Principal provisions of the NewAWA Senior Unsecured Notes are as follows: (a) Authorization. The Plan hereby authorizes the issuance of the NewAWA Senior Unsecured Notes in a maximum principal amount of $100,000,000. (b) Maturity. The NewAWA Senior Unsecured Notes will mature seven years from issuance. (c) Interest Rate. The NewAWA Senior Unsecured Notes will bear interest, payable semiannually, in arrears at a fixed rate equal to 425 basis points over the yield of seven-year United States Treasury Notes as of the Effective Date, but not to exceed 11.5% per annum. (d) Ranking. The NewAWA Senior Unsecured Notes will rank pari passu with all existing and future senior unsecured indebtedness of NewAWA. (e) Mandatory Redemption. If within three years after the Effective Date, NewAWA completes an underwritten public offering of primary equity, NewAWA shall use 50% of the Net Proceeds thereof to redeem up to $20,000,000 in principal amount of the NewAWA Senior Unsecured Notes at 104% of the principal amount plus accrued interest, provided, however, that in the event that at the time of such offering the unrestricted cash balance of NewAWA is less than $100,000,000, then such redemption will be at the option of NewAWA. Thereafter, the NewAWA Senior Unsecured Notes will be redeemable at NewAWA's option, in whole or in part. The redemption price will be equal to the following percentage of the principal amount redeemed in each of the following years plus accrued interest: Year 4:..................................................... 105.0% Year 5:..................................................... 103.3% Year 6:..................................................... 101.7% Year 7 and thereafter:...................................... 100.0%
(f) Special Redemption. During the first three years after the Effective Date, the New AWA Senior Unsecured Notes will be callable by NewAWA (i) as a whole, without regard to the source of funding, at 105% of the principal amount redeemed plus accrued interest or (ii) in part, out of the proceeds of a primary equity offering at 105% of the principal amount plus accrued interest, less the $20 million in principal amount redeemed of NewAWA Senior Unsecured Notes subject to Mandatory Redemption as described above. ARTICLE 5 EXECUTORY CONTRACTS AND UNEXPIRED LEASES 5.1. Assumption of Certain Executory Contracts and Unexpired Leases. 5.1.1. Except as otherwise provided in the Plan or in any contract, instrument, release, indenture or other agreement or document entered into in connection with the Plan, on the Effective Date, pursuant to Section 365 of the Bankruptcy Code, AWA shall assume or assume and assign, as indicated, each of the Assumed Agreements including, without limitation, the executory contracts and unexpired leases listed on Schedule 3 hereto; provided, however, that AWA or NewAWA shall have the right, at any time prior to the Effective Date, to amend Schedule 3: (a) unless indicated otherwise on Schedule 3, to delete any executory contract or unexpired lease listed therein, thus providing for its rejection pursuant to Section 5.2; or (b) to add any executory contract or unexpired lease, thus providing for its assumption or assumption and assignment pursuant to this Section 5.1.1. The Debtor or NewAWA shall provide notice of any amendments to Schedule 3 to the parties to the executory contracts or unexpired leases affected thereby and, if such amendments are made before the Effective Date, to the parties on the Official Service List. Pursuant to Section 1123(b)(2) of the Bankruptcy Code, the Confirmation Order shall constitute an order of the 16 23 Bankruptcy Court approving the assumptions and assignments described in this Section 5.1.1, pursuant to Section 365 of the Bankruptcy Code, as of the Effective Date. 5.1.2. Unless otherwise agreed by AWA and the counterparty to any such Assumed Agreement, (i) all cure payments which may be required by Section 365(b)(1) of the Bankruptcy Code under any Assumed Agreement, if not previously made, shall be made on the Effective Date or promptly thereafter, and (ii) in the event of a dispute regarding the amount or timing of any cure payments, the ability of NewAWA to provide adequate assurance of future performance, or any other matter pertaining to assumption or assignment, such dispute shall be resolved by the Bankruptcy Court and NewAWA shall make such cure payments, if any, or provide such assurance as may be required by the Final Order resolving such dispute on the terms and conditions of such Final Order. 5.1.3. Except as otherwise provided in the Plan (including any such provision on Schedule 3) or in any contract, instrument, release or indenture or other agreement or document entered into in connection with the Plan, each Assumed Agreement shall, at AWA's option, be assumed only to the extent that any such contract or lease constitutes an executory contract or unexpired lease. Listing a contract or lease on Schedule 3 shall not, in and of itself, constitute an admission by the Debtor or NewAWA that such contract or lease is an executory contract or unexpired lease or that the Debtor or NewAWA has any liability thereunder. Contracts and leases which are within the definition of Assumed Agreements and which are later determined to have not been in fact executory contracts or unexpired leases, shall be treated in accordance with the provisions in the Plan for the treatment of that type of Claim which properly arises from the true nature of the legal relationship between the parties as determined by the Bankruptcy Court or by settlement; provided, however, that either the Debtor or NewAWA may in its sole discretion amend the Plan to provide for different treatment of any such Claim after Notice and a Hearing. 5.1.4. Except as otherwise provided in the Plan (including any such provision on Schedule 3) or in any contract, instrument, release or indenture or other agreement or document entered into in connection with the Plan, all assumptions of executory contracts and unexpired leases under the Plan shall be without prejudice to the rights of the Debtor or NewAWA to assign later such assumed executory contracts or unexpired leases, notwithstanding any prohibition to the contrary in any such contract or lease. 5.2. Rejection of Certain Executory Contracts and Unexpired Leases. On the Effective Date, except for every Assumed Agreement, each executory contract and unexpired lease entered into by AWA prior to the Petition Date that has not previously expired or terminated pursuant to its own terms and (to the extent they are executory contracts) all AWA Warrants, Options and Other Equity Interests shall be rejected pursuant to Sections 365 and 1123(b)(2) of the Bankruptcy Code and considered a Rejected Agreement hereunder. 5.3. Claims Based on Rejection of Executory Contracts or Unexpired Leases. All proofs of claim with respect to Claims arising from the rejection of any Rejected Agreement shall be filed with the Bankruptcy Court within the later to occur of thirty (30) days after the Effective Date. Any Claims not filed within such time shall be forever barred from assertion against the Debtor, its estate and property, or NewAWA. ARTICLE 6 IDENTIFICATION OF CLASSES OF CLAIMS NOT IMPAIRED BY THE PLAN AND THE CLASS OF CLAIMS AND EQUITY INTERESTS DEEMED TO HAVE REJECTED THE PLAN 6.1. Unimpaired Classes. Claims in Classes 1, 2 and 4 are not impaired under the Plan. Any Class not specifically designated in the Plan as unimpaired is impaired under the Plan. Claims in unimpaired Classes are not entitled to vote on the Plan. 6.2. Class Deemed to Have Rejected the Plan. Claims and Equity Interests in Class 7.2 are not entitled to receive or retain any property under the Plan and are therefore deemed not to have accepted the Plan, and such Class shall not be entitled to vote on the Plan. 17 24 6.3. Other Impaired Classes. Claims in Classes 3.1, 3.2, 3.3, 3.4, 3.5, 3.6, 5, 6.1, 6.2 and 7.1 are impaired under the Plan and shall be entitled to vote on the Plan. ARTICLE 7 ACCEPTANCE OR REJECTION OF THE PLAN; EFFECT OF REJECTION BY ONE OR MORE CLASSES 7.1. Impaired Classes to Vote. Except as otherwise required by the Bankruptcy Code or the Bankruptcy Court, each holder of a Claim or Equity Interest that is impaired under the Plan is entitled to vote to accept or reject the Plan if, as of the Voting Record Date, (i) its Claim is an Allowed Claim, (ii) its Claim has been temporarily allowed for voting purposes only by order of the Bankruptcy Court pursuant to Bankruptcy Rule 3018 (in which case such Claim may be voted in such temporarily allowed amount), (iii) its Claim has been scheduled by the Debtor (but only if such Claim is not scheduled as disputed, contingent or unliquidated) and no objection to such Claim has been filed, (iv) it has filed a proof of claim on or before the Bar Date (or such later date as the Bankruptcy Court may have established with respect to any particular Claim, but not later than the date of the order approving such Disclosure Statement), and such Claim is not a Disputed Claim, or (v) its Equity Interest is registered on the stock ledger or equivalent of the Debtor. Notwithstanding the foregoing, a holder of a Disputed Claim which has not been temporarily allowed as provided above may nevertheless vote such Disputed Claim in an amount equal to the portion, if any, of such Claim which is not disputed and is shown as fixed, liquidated and undisputed in the Debtor's Schedules or such amount which the Debtor concedes is Allowed in a filing made by the Debtor in the Bankruptcy Court. Each holder of an AWA Debenture Claim, and not the Indenture Trustee with respect to such Claim, shall have the right to vote to accept or reject the Plan. 7.2. Acceptance by Class of Holders of Claims or Equity Interests. A Class of holders of Claims shall have accepted the Plan if the Plan is accepted by at least two-thirds in amount and more than one-half in number of the Allowed Claims of such Class that have voted to accept or reject the Plan. A Class of Equity Interests shall have accepted the Plan if acceptance is voted for by the holders of at least two-thirds in amount of the Equity Interests of such Class who have voted to accept or reject the Plan. 7.3. Cramdown. Inasmuch as Class 7.2 is deemed not to have accepted the Plan in accordance with Section 1129(a) of the Bankruptcy Code, and in the event that one or more other Classes of impaired Claims or Equity Interests does not accept or is deemed not to have accepted the Plan, the Debtor requests that the Bankruptcy Court confirm the Plan in accordance with Section 1129(b) of the Bankruptcy Code. AWA and AmWest reserve the right to modify the Plan to the extent, if any, that confirmation pursuant to Section 1129(b) of the Bankruptcy Code requires or permits such modification. ARTICLE 8 MEANS FOR IMPLEMENTATION OF THE PLAN 8.1. Investment Agreement. On the Effective Date, the investment and sale of securities contemplated by the Investment Agreement shall be consummated in accordance with such agreement. In the event of conflict between the terms of the Plan and of the Investment Agreement, the terms of the Plan shall control. 8.2. Stockholders' and Registration Rights Agreements. On the Effective Date, the Stockholders' Agreement and Registration Rights Agreement shall become effective. 8.3. Delivery of Alliance Agreements. On or before the Effective Date, AWA, Continental Airlines, Inc., and Mesa Airlines, Inc., as applicable, shall enter into the Alliance Agreements, as such term is defined in the Investment Agreement. 8.4. GPA Settlement. On the Effective Date, NewAWA and GPA will consummate the transactions described in the term sheet attached hereto as Exhibit C and incorporated herein by reference. 18 25 8.5. Corporate Governance. On or as of the Effective Date, the NewAWA Charter shall be filed with the Secretary of State of the State of Delaware and the NewAWA By-laws shall take effect, each containing such provisions as are necessary to satisfy the terms of the Plan and Section 1123(a)(6) of the Bankruptcy Code. 8.6. Release of Certain Claims and Actions. 8.6.1. On the Effective Date, in consideration for services rendered in the Chapter 11 Case, the Debtor shall be deemed to have finally and irrevocably waived, released and relinquished any and all claims and causes of action, if any, that it has or may have against the Creditors' Committee, the Equity Committee or any member thereof or against their respective professional advisors arising out of or related to each such Person's actions or omissions to act in all of such Person's capacities in connection with the Chapter 11 Case, including the formulation, preparation, dissemination, implementation or confirmation of the Plan or the Disclosure Statement or any contract, instrument, release or other agreement or document created or entered into, or any other act taken or omitted to be taken in connection therewith, and the Debtor is enjoined from asserting any such claim or cause of action in any court or forum; provided, however, that this provision shall not operate as a release, waiver or relinquishment of, or injunction against asserting, any such claims or causes of action (i) provided in or contemplated by the Plan or (ii) arising from any actual fraud (but not constructive fraud) or willful misconduct of any such Person. 8.6.2. On the Effective Date, in consideration for benefits realized in the Chapter 11 Case, the Debtor shall be deemed to have finally and irrevocably waived, released and relinquished any and all claims and causes of action, if any, that it has or may have against AmWest, any of AmWest's partners, Fidelity or Lehman or their respective partners, affiliates, employees or professional advisors arising out of or related to such Person's actions or omissions to act in connection with the Chapter 11 Case, including the formulation, preparation, dissemination, implementation or confirmation of the Plan or the Disclosure Statement or any contract, instrument, release or other agreement or document created or entered into, or any other act taken or omitted to be taken in connection therewith, and the Debtor is enjoined from asserting any such claim or cause of action; provided, however, that this provision shall not operate as a release, waiver or relinquishment of, or injunction against asserting, any such claims or causes of action (i) provided in or contemplated by the Plan, (ii) arising from any actual fraud (but not constructive fraud) or willful misconduct of any such Person, and (iii) reserved to the Debtor pursuant to the Investment Agreement or the Interim Procedures Agreement. 8.6.3. On the Effective Date, the Creditors' Committee and each member thereof, the Equity Committee and each member thereof, AmWest and each of its partners, Fidelity and Lehman shall be deemed to have finally and irrevocably waived, released and relinquished any and all claims and causes of action, if any, that any of them have or may have against the Debtor or its professional advisors arising out of or related to such Person's actions or omissions to act in connection with the Chapter 11 Case, including the formulation, preparation, dissemination, implementation or confirmation of the Plan or the Disclosure Statement or any contract, instrument, release or other agreement or document created or entered into, or any other act taken or omitted to be taken in connection therewith, and such Persons are enjoined from asserting any such claims or causes of action; provided, however, that this provision shall not operate as a release, waiver or relinquishment of, or injunction against asserting any such claims or causes of action (i) provided in or contemplated by the Plan, (ii) arising from any actual fraud (but not constructive fraud) or willful misconduct of the Debtor, and (iii) reserved to AmWest and/or any of its partners pursuant to the Investment Agreement or the Interim Procedures Agreement; and, provided, further, this Section 8.6.3 shall not apply to any claims made against the Debtor arising from third party claims against the Creditors' Committee or any member thereof or the Equity Committee or any member thereof. Any Person who as of the Effective Date is or was an officer or director of AWA, shall be a beneficiary of the releases provided under Section 8.6.3 if such Person, no later than the Effective Date, delivers a release in substantially the form of Sections 8.6.1 and 8.6.2. 8.7. Indemnification Obligations. 8.7.1. Upon, and at all times after the Effective Date, the NewAWA Charter shall contain provisions which (i) eliminate the personal liability of AWA's former, present and future directors for monetary damages resulting from breaches of their fiduciary duties to the fullest extent permitted by 19 26 applicable law and (ii) require NewAWA, subject, to appropriate procedures, to indemnify AWA's former, present and future directors and executive officers to the fullest extent permitted by applicable law. 8.7.2. On or as of the Effective Date, NewAWA shall enter into written agreements with each person who is a director or executive officer of AWA as of the date of the Investment Agreement providing for similar indemnification of such person and providing that no recourse or liability whatsoever with respect to the Investment Agreement, the Plan or the consummation of the transactions contemplated hereby or thereby shall be had, directly or indirectly, by or in the right of AWA against such person. 8.7.3. For purposes of the Plan, except as limited hereinafter, any obligations of the Debtor to indemnify its current and former directors, officers, employees, and any officer, director or employee serving as a fiduciary of any employee benefit plan or program of AWA, pursuant to charter, by-laws, contract or applicable state law shall be deemed to be, and may be treated as though they are, executory contracts that are Assumed Agreements under the Plan, and such obligations (subject to any defenses thereto) shall survive confirmation of the Plan and remain unaffected thereby, irrespective of whether indemnification is owed in connection with a pre-Petition Date or post-Petition Date occurrence; provided however, that the foregoing assumption shall not affect any release of such obligations given to the Debtor before the Effective Date or to NewAWA on or after the Effective Date. 8.8. Exemption from Certain Taxes. Pursuant to Section 1146(c) of the Bankruptcy Code, none of the transactions contemplated to take place on the Effective Date shall subject the Debtor or NewAWA to any state or local sales, use, transfer, documentary, recording or gains tax. 8.9. Directors and Officers. A list of the initial post-Effective Date directors and officers of NewAWA shall be filed by the Debtor with the Bankruptcy Court prior to the Confirmation Date. 8.10. Revesting of Assets; No Further Supervision. The assets of the Debtor and all property of the Debtor's estate (including without limitation, all rights of the Debtor to recover property under Sections 542, 543, 550 and 553 of the Bankruptcy Code, all Avoidance Litigation and all proceeds thereof) and any property acquired by AWA or NewAWA under or in connection with the Plan shall vest or revest in NewAWA, in each case free and clear of all Claims, liens, charges, encumbrances or Equity Interests, other than as specifically set forth in the Plan. The Plan does not contain any restrictions or prohibitions on the conduct of the business of NewAWA and NewAWA shall have all of the powers of a corporation under the Delaware General Corporation Law, consistent with its obligations under the Stockholders' Agreement. From and after the Effective Date, NewAWA may use, operate and deal with its assets, and may conduct and change its business, without any supervision by the Bankruptcy Court or the Office of the United States Trustee, and free of any restrictions imposed on the Debtor by the Bankruptcy Code or by the Bankruptcy Court during the Chapter 11 Case. Nothing contained in this Section shall be construed to prohibit, limit, restrict or condition the Debtor's authority in any lawful manner to sell or otherwise dispose of any other assets. 8.11. Implementation. The Debtor and AmWest shall be authorized and are directed to take all necessary steps, and perform all necessary acts, to consummate the terms and conditions of the Plan, including, without limitation, the Investment Agreement. 8.12. Cancellation of Securities. As of the Effective Date, all previously issued and outstanding securities of the Debtor, including without limitation: all AWA Common Stock, all AWA Preferred Stock, all AWA Warrants, Options and Other Equity Interests and all AWA Debentures; any certificate or other instrument evidencing any such security; except as otherwise specifically provided in Section 10.3 hereof, any indenture relating to any of the foregoing; and the Debtor's obligations thereunder shall be deemed void, cancelled, and of no further force or effect, without any further action on the part of any Person. Holders of Allowed Claims and Equity Interests represented by such securities shall have such rights to receive distributions as are set forth in the Plan. 20 27 ARTICLE 9 CONDITIONS PRECEDENT TO THE EFFECTIVE DATE 9.1. Effectiveness of the Plan. The effectiveness of the Plan, and the occurrence of the Effective Date, shall be subject to the satisfaction of the following conditions precedent: (a) The Confirmation Order shall have been entered and no stay of the Confirmation Order shall be in effect; (b) Each of the conditions precedent to the obligations of AmWest under the Investment Agreement shall have been satisfied or waived by AmWest and the purchase and sale of securities and the other transactions contemplated by the Investment Agreement shall have been simultaneously consummated; and (c) Each of the conditions precedent to the obligations of the Debtor under the Investment Agreement shall have been satisfied or waived by the Debtor and the purchase and sale of securities and other transactions contemplated by the Investment Agreement shall have been simultaneously consummated. ARTICLE 10 PROVISIONS COVERING DISTRIBUTIONS AND PAYMENTS 10.1. Making of Distributions and Payments. NewAWA, or a Distribution Agent on its behalf, shall make the payments and distributions expressly required to be made by it in respect of the Post-Petition Agreement Claims, Allowed Administrative Claims (other than Preserved Ordinary Course Administrative Claims), Allowed Priority Wage Claims, Allowed Priority Benefit Plan Contribution Claims, Allowed Priority Tax Claims, Allowed Convenience Claims and AWA Preferred Stock upon the latest of (i) the Effective Date, or as soon thereafter as practicable, (ii) such date as may be fixed by the Bankruptcy Court, or as soon thereafter as practicable, (iii) the fifth Business Day after such Claim is Allowed, or as soon thereafter as practicable, and (iv) such date as the holder of such Claim and NewAWA have agreed or shall agree. 10.2. Distributions by the Distribution Agent. 10.2.1. On the Effective Date, NewAWA will issue in the name of the Distribution Agent, as trustee, the Non-Electing Creditor Stock for distribution to Non-Electing Unsecured Creditors in accordance with Section 3.5, and the Electing Creditor Stock for distribution to Electing Unsecured Creditors in accordance with Section 3.5. Additionally, NewAWA will deliver to the Distribution Agent the Electing Creditor Cash for distribution to Electing Unsecured Creditors in accordance with Section 3.5. As promptly as practicable after the issuance of such NewAWA Securities and delivery of Electing Creditor Cash to the Distribution Agent, the Distribution Agent will distribute such securities and Cash to the holders of Allowed Claims entitled thereto in accordance with Section 3.5, but shall reserve from such distributions the Reserve Amount as required by Section 10.4. 10.2.2. Not later than thirty (30) days after the Voting Deadline, the Debtor shall allocate among the Purchasing Stockholders, the Equity Subscription Stock and the Over-Subscription Stock in accordance with this Section 10.2.2 and advise the Distribution Agent of such allocation. Each Purchasing Stockholder shall be allocated initially the lesser of (i) the number of shares for which it has made a valid purchase election on its Ballot and (ii) its Pro Rata Share of the Equity Subscription Stock. Holders who hold shares of AWA Common Stock for the account of others such as brokers, trustees or depositories may only exercise the right to purchase Equity Subscription Stock and Over-Subscription Stock upon receipt of instructions and appropriate payment or guarantee of payment from the beneficial owners of such shares as of the Voting Record Date. The shares of Equity Subscription Stock not allocated as above will be considered Over-Subscription Stock and will be allocated first to holders of AWA Preferred Stock in accordance with Section 3.6.1 and then to holders of AWA Common Stock who have indicated on the Ballot that they wish to acquire more than their Pro Rata Share of the Equity Subscription Stock. If sufficient shares of Over- 21 28 Subscription Stock are available, all subscriptions therefor will be honored in full. If sufficient shares of Over-Subscription Stock are not available to honor all such subscriptions, the available shares of Over-Subscription Stock will be allocated among those who subscribed based on their proportional number of shares of AWA Common Stock. The allocation process may involve a series of allocations in order to assure that the total number of shares of Over-Subscription Stock is distributed on a Pro Rata Share basis. The right to purchase Equity Subscription Stock and Over-Subscription Stock may be exercised through a holder's broker, who may charge such holder a servicing fee in connection with such exercise. No such fees shall be paid by the Debtor or NewAWA. The Debtor shall establish the Stock Payment Escrow Account for the purpose of receiving payment for Equity Subscription Stock and Over-Subscription Stock, which shall be held by the Escrow Agent or another bank, trust company or other organization independent of AWA and designated by the Debtor and approved by the Bankruptcy Court. Purchasing Stockholders may choose one of the following methods of payment: (a) The Purchasing Stockholder may deliver full payment for the Equity Subscription Stock and the Over-Subscription Stock, together with its Ballot, with the check made payable to AWA Subscription Stock Escrow Account, by no later than the Voting Deadline. The Debtor shall deposit all such checks in the Stock Payment Escrow Account with any interest thereon to accrue to the benefit of Debtor or NewAWA pending distribution of the Equity Subscription Stock and Over-Subscription Stock; or (b) The Purchasing Stockholder may deliver or cause to be delivered to the Escrow Agent, by no later than the Voting Deadline, a notice of guaranteed delivery by telegram or otherwise, from a bank or trust company or a New York Stock Exchange member firm, guaranteeing delivery of payment of the full price of the subscribed for Equity Subscription Stock and Over-Subscription Stock. In such case, full payment for the Equity Subscription Stock and the Over-Subscription Stock (as such amount may be reduced as set forth below) must be received by the Escrow Agent by no later than 5:00 p.m. on the fifth Business Day after the Confirmation Date. Promptly after completing the allocation required by the first sentence of this Section 10.2.2, a confirmation will be sent to each Purchasing Stockholder showing the number of shares of Equity Subscription Stock and the number of shares, if any, of Over-Subscription Stock allocated to such holder. In the event that such number of shares of Over-Subscription Stock is less than the number of shares of Over-Subscription Stock for which such holder has either paid for or guaranteed payment for, such notice shall also state such fact and if full payment shall have already been made for such stock, such notice shall also include a check representing the excess payment. Whichever of the two above methods of payment is used, issuance and delivery of the Equity Subscription Stock, the Over-Subscription Stock and any refunds of payments therefor shall be subject to collection of checks and actual payment pursuant to any notice of guaranteed delivery. All offers to purchase Equity Subscription Stock and Over-Subscription Stock shall be irrevocable. In the event that the Effective Date has not occurred by the date the Interim Procedures Agreement is terminated, all amounts in the Stock Payment Escrow Account (other than interest accrued thereon) shall be returned to the Purchasing Stockholders who have made payment for the Equity Subscription Stock and/or Over-Subscription Stock. 10.2.3. On the Effective Date, NewAWA will issue in the name of the Distribution Agent, as trustee, (i) the number of shares of Equity Subscription Stock and Over-Subscription Stock to be issued to Purchasing Stockholders and holders of AWA Preferred Stock in accordance with Sections 3.6.1, 3.6.2 and 10.2.2, and (ii) the Equity Interests Stock and the Equity Interests Warrants for distribution to holders of AWA Common Stock as provided in Section 3.6.2. As promptly as practicable after the Effective Date, but in any event within fifteen (15) Business Days, the Distribution Agent will distribute (i) to each holder of AWA Preferred Stock, the number of shares of Over-Subscription Stock purchased in accordance with Section 3.6.1, (ii) to each Purchasing Stockholder, the number of shares of Equity Subscription Stock and Over-Subscription Stock purchased by such Purchasing Stockholder pursuant to Section 3.6.2 and (iii) to each holder of AWA Common Stock as of the Distribution Record Date other than the holder of a Disputed Equity Interest, such holder's Pro Rata Share of the Equity Interests Stock and of the Equity Interests Warrants, less any Reserve Amount required pursuant to Section 10.4; provided, however, that holders of AWA Common Stock whose stock is held of record by Cede or by any other depository or nominee on their behalf or their 22 29 broker-dealer's behalf will have their NewAWA Securities credited to the account of Cede or such other depository or nominee. 10.2.4. The Distribution Agent in its capacity as trustee holding issued but undistributed NewAWA Securities and Electing Creditor Cash shall (i) similarly hold in trust for distribution pursuant to this Section 10.2 any dividend or distribution made thereon, and (ii) whenever any matter (including election of directors) is presented for a vote by holders of such NewAWA Securities, vote all of the NewAWA Securities so held by it in trust in the same manner and proportion as the shares of NewAWA Class B Common Stock are voted. 10.2.5. If, after the Effective Date, NewAWA (i) pays a dividend or makes a distribution on the outstanding NewAWA Securities held by the Distribution Agent, (ii) subdivides the outstanding shares of NewAWA Securities held by the Distribution Agent into a greater number of shares or units, (iii) combines the outstanding shares or units of NewAWA Securities held by the Distribution Agent into a smaller number of shares or units, (iv) issues by reclassification of the outstanding NewAWA Securities held by the Distribution Agent any shares of its capital stock, or (v) is a party to a consolidation, merger or transfer of assets providing for any change in or exchange of the outstanding NewAWA Securities held by the Distribution Agent, then the Distribution Agent's obligation to distribute NewAWA Securities to any holder of an Allowed Claim or Equity Interest arising after the record date in the case of a dividend or distribution and after the Effective Date of any of the other foregoing transactions shall be adjusted so as to take into account such dividend, distribution or other event. Any such distribution shall be made net of any Distribution Agent Charges incurred in connection with such event. 10.2.6. The duties of the Distribution Agent (including its duties as trustee pursuant to this Section 10.2) are expressly limited to the ministerial functions set forth in this Article 10. The Distribution Agent shall incur no liability for its actions (or failure to act) or conduct as Distribution Agent, or as trustee holding issued but undistributed NewAWA Securities or Cash except to the extent attributable to the gross negligence or willful misconduct of the Distribution Agent. The Distribution Agent shall at all times maintain a segregated account for any Cash being held in trust, and shall deposit or invest all such Cash in (i) direct obligations of the United States of America or obligations for which the full faith and credit of the United States of America is pledged, (ii) certificates of deposit and interest bearing deposits with banks having a long-term bond rating of AA or better and capital, surplus and undivided profits of not less than $100,000,000, or (iii) commercial paper having one of the two highest ratings by Standard & Poor's, Inc. or Moody's Investor Services, Inc., except as otherwise authorized by the Bankruptcy Court; provided, however, that no such deposit or investment shall have a maturity of more than 90 days. All Distribution Agent Charges shall be deducted from the applicable NewAWA Securities or Cash held by the Distribution Agent. All Cash and NewAWA Securities held by or transferred to the Distribution Agent for distribution to holders of Allowed Claims or Equity Interests pursuant to the Plan shall be held by the Distribution Agent (including NewAWA in its capacity as Distribution Agent) solely as trustee of an express trust and shall not be or constitute property of the Distribution Agent (including NewAWA as Distribution Agent) for any purpose whatsoever, and the Distribution Agent shall not have any right or interest to any such Cash or stock for its own account, except as expressly provided in the Plan. 10.2.7. AWA shall deliver to the Distribution Agent its stock ledger for the AWA Common Stock or provide access thereto, which ledger shall reflect the cancellation of certain AWA Common Stock in accordance with Section 3.7.1. The Distribution Agent shall cause a register for the transfer of Allowed Claims (other than Allowed AWA Debenture Claims) and of AWA Common Stock to be maintained. Transfers after the Distribution Record Date shall be registered only (i) upon Final Order of the Bankruptcy Court directing such transfer or (ii) in the event of a transfer by operation of law. 10.3. Service of Indenture Trustee. 10.3.1. Subject to the right of the Indenture Trustee to resign and terminate an Indenture as set forth in Section 10.3.2, the Indenture Trustee shall receive and act as disbursing agent for all distributions to each holder of record of an Allowed AWA Debenture Claim. Unless terminated pursuant to Section 10.3.2 below, the Indentures shall continue in effect after the Effective Date for the sole purpose of allowing the 23 30 Indenture Trustee to make the distributions to be made on account of such Allowed AWA Debenture Claims under the Plan and for defending any subordination action brought under Section 3.5. AWA and NewAWA shall be required to reimburse the Indenture Trustee solely for fees, costs and expenses (including reasonable costs of counsel associated therewith) in connection with activities required under this Section 10.3.1. Any fees, costs, or expenses incurred by the Indenture Trustee for any other activities it may undertake shall be collectible solely from the holders of AWA Debentures. Notwithstanding anything to the contrary herein, the Indenture Trustee shall retain any and all charging liens or similar rights provided in the Indentures for so long as it is Indenture Trustee. 10.3.2. Notwithstanding the foregoing, the Indenture Trustee may at any time terminate any or all of the AWA Indentures and all of the Indenture Trustee's duties and obligations and authority to act thereunder, with or without cause, by giving fifteen (15) days written notice of termination to NewAWA and the Distribution Agent and by turning over to the Distribution Agent a list of record holders of Debentures under such Indenture as of the Distribution Record Date, together with such other information and documents as may be reasonably necessary in order to permit the Distribution Agent to make distributions to holders of Allowed AWA Debenture Claims arising out of the AWA Debentures issued pursuant to such Indenture. If distributions under the Plan have not been completed at the time of termination of such Indenture, the Distribution Agent shall thereafter act in place of such Indenture Trustee, and all references in the Plan to the Indenture Trustee for purposes of making distributions under the Plan with regard to such Indenture shall be deemed to apply to such Distribution Agent. Any actions taken by the Indenture Trustee not for a purpose authorized in the Plan shall be of no force or effect. 10.3.3. For purposes of any distributions under the Plan to holders of AWA Debenture Claims, the Indenture Trustee (or if the Indenture Trustee has resigned in accordance with Section 10.3.2, the Distribution Agent as its successor) shall be deemed to be the sole holder of all AWA Debenture Claims evidenced by the AWA Debentures issued under each Indenture. Accordingly, all distributions provided for in the Plan on account of Allowed AWA Debenture Claims shall be distributed to the Indenture Trustee as disbursing agent or, if the Indenture Trustee has resigned pursuant to Section 10.3.2, to the Distribution Agent as its successor, for further distribution to individual holders of Allowed AWA Debenture Claims pursuant to the Plan. The transfer books of the Indenture Trustee for the Debentures shall close as of the Distribution Record Date and no further transfers shall be recognized. 10.3.4. Any provision of the Plan to the contrary notwithstanding, no distribution under the Plan shall be required to be made by the Indenture Trustee or the Distribution Agent to any holder of an AWA Debenture Claim until such time as the certificate representing the AWA Debenture in respect of which such AWA Debenture Claim is made shall have been surrendered in accordance with Section 10.3.5. Notwithstanding any provision of this Section 10.3.4 to the contrary, any holder of an AWA Debenture Claim based on a certificate representing an AWA Debenture that has been lost, stolen, mutilated or destroyed may, in lieu of surrendering such certificate as provided in this Section 10.3, deliver to the Indenture Trustee, or if the Indenture Trustee has resigned, to the Distribution Agent as its successor, (i) evidence satisfactory to the Indenture Trustee or the Distribution Agent, as the case may be, of the loss, theft, mutilation or destruction of such certificate and (ii) such security or indemnity as may reasonably be required by the Indenture Trustee or the Distribution Agent, as the case may be, to save the Indenture Trustee or the Distribution Agent, as the case may be, harmless with respect thereto, and upon providing such evidence and such security or indemnity the holder of such AWA Debenture Claim shall, for all purposes under the Plan, be deemed to have surrendered such certificate. 10.3.5. A holder of record on the Distribution Record Date of a certificate relating to an AWA Debenture Claim shall surrender such holder's certificate representing such AWA Debenture Claim to the Indenture Trustee, or if the Indenture Trustee has resigned in accordance with Section 10.3.2, to the Distribution Agent as its successor, in accordance with written instructions given not more than thirty (30) days after the Effective Date to such holder by the Indenture Trustee or the Distribution Agent, as the case may be. Upon receipt of any certificate relating to such AWA Debenture Claim, the Indenture Trustee or the Distribution Agent shall cancel such certificate and deliver such canceled certificate to such Person as the Distribution Agent shall designate. 24 31 10.3.6. On the Final Distribution Date, all rights under the Plan of any holder of an Allowed AWA Debenture Claim which has not surrendered its certificate representing such AWA Debenture Claim in accordance with this Section 10.3 shall lapse and be automatically terminated without any further action and the Indenture Trustee or the Distribution Agent as its successor shall at such time return to the Distribution Agent any funds or property it then holds in respect of such unsurrendered certificate to be treated as unclaimed property pursuant to Section 10.6 and, upon such return, the Indenture Trustee or the Distribution Agent as its successor shall have no further obligation in respect of such funds or property. 10.4. Reserves for Distributions for Disputed Claims and Disputed Equity Interests. 10.4.1. Except as may be otherwise agreed with respect to any Disputed Claim or Disputed Equity Interest and as approved by the Bankruptcy Court, no distributions shall be made with respect to all or any portion of a Disputed Claim or Disputed Equity Interest unless and until such Disputed Claim or Disputed Equity Interest (or portion thereof) shall have become an Allowed Claim or Equity Interest and such Allowed Claim or Equity Interest is otherwise entitled to distributions hereunder. 10.4.2. Prior to making any distribution to holders of Allowed Claims or Equity Interests in Class 5 or Class 6.2 in accordance with Section 10.2, the Distribution Agent shall deposit in a Reserve established separately for each such Class an amount of NewAWA Securities and/or Cash equal to the amount of such distribution that would have been distributed to holders of Disputed Claims or Disputed Equity Interests in such Class if such Disputed Claims or Equity Interests were Allowed Claims or Equity Interests in their full face amount at the time of the calculation of such distribution. A separate Reserve shall be established and thereafter maintained for each Class as to which any Claims or Equity Interests remain Disputed as of the Effective Date. The Distribution Agent shall at all times until any Disputed Claim or Disputed Equity Interest is resolved by Final Order, retain in the Reserve all amounts that would have been distributed to the holder of such Disputed Claim or Disputed Equity Interest had such Claim or Equity Interest been an Allowed Claim or Equity Interest in its full face amount on the Effective Date. Notwithstanding the foregoing, upon motion by the Debtor or NewAWA, the Bankruptcy Court may enter a Reserve Order, establishing a Reserve Amount to be escrowed in the Reserve for any Class which may be less than the amount otherwise required hereunder, which amount shall reflect the Bankruptcy Court's estimate of the level of Reserves for a particular Class reasonably required to protect the legitimate rights and interests of holders of Disputed Claims or Disputed Equity Interests in such Class. In the event a Reserve Order is entered, the Distribution Agent shall deposit or retain in the Reserve with respect to any Class subject to such order only the Reserve Amount required by such Reserve Order. Any amount not so deposited or retained shall be distributed to all holders of Allowed Claims or Equity Interests in the Class for which such Reserve Amount was established as provided for in the Plan. The date of each such distribution shall be a Distribution Date. 10.4.3. As soon as practicable after a Disputed Claim or Disputed Equity Interest, or portion thereof, becomes an Allowed Claim or Equity Interest, the Distribution Agent shall make a distribution to the holder of such Allowed Claim or Equity Interest from the Reserve in the amount of (i) the portion of the NewAWA Securities or Cash in the Reserve that should be distributed pursuant to the terms of the Plan in view of the amount of the Allowed Claim or Equity Interest; plus (ii) the proportional share of any interest, earnings or dividends actually earned and received on such Reserve; less (iii) the proportional share of any Distribution Agent Charges incurred on account of such escrowed assets. To the extent that sufficient New AWA Securities or Cash are not available to make the full distribution required by the preceding sentence, in view of the then-appearing rights of the holders of other Disputed Claims and Disputed Equity Interests, the Distribution Agent shall make such lesser distribution as shall then be ordered by the Bankruptcy Court. No holder of a Disputed Claim or Disputed Equity Interest shall have any claim against the Reserve for the Class in which such Disputed Claim or Disputed Equity Interest is included until such Disputed Claim or Disputed Equity Interest shall become an Allowed Claim or Equity Interest. In no event shall any holder of any Disputed Claim or Disputed Equity Interest have any recourse against or be entitled to receive (under the Plan or otherwise) or recover from the Debtor, NewAWA, the Distribution Agent or any Reserve, any payment (in Cash, NewAWA Securities or other property) in the event that the Reserve therefor is insufficient to pay an Allowed Claim or Equity Interest in full. In no event shall the Distribution Agent, the Debtor or NewAWA have any responsibility or liability for any loss to or of any Reserve. 25 32 10.4.4. The Reserve for a Class shall be terminated when all Disputed Claims and Disputed Equity Interests are finally resolved in such Class. All remaining assets, if any, in the Reserve shall be distributed, first, to holders, if any, who received less than a proportionate distribution pursuant to order of the Bankruptcy Court under Section 10.4.3 and thereafter to all holders of Allowed Claims or Equity Interests in the Class for which such Reserve was established, on a pro rata basis. The date of such distribution shall be the Final Distribution Date with regard to such Class. 10.5. Fractional Interests; Odd Lots; De Minimis Distributions. 10.5.1. Fractional shares or units of NewAWA Securities shall not be issued or distributed and no Cash payments shall be made in respect thereof. All holders of Allowed Claims or Equity Interests in such Class which would otherwise be entitled to a fractional interest in such NewAWA Security shall be placed on a list in descending order according to the size of the fractional interest in the NewAWA Security to be distributed. For purposes of the preceding sentence, Electing Unsecured Creditors and Non-Electing Unsecured Creditors shall be placed on separate lists. In the event that two or more holders of Allowed Claims or Equity Interests are entitled to the same fractional portion (rounded to six decimal places) in such NewAWA Security, their relative ranking on any such list shall be determined by lot. The fractional shares or units which each such holder would have received will be aggregated. Then, one share or unit, as applicable, will be distributed to each of the holders on such list in descending order until the total amount of aggregated shares or units is exhausted. 10.5.2. In the event that any holder of an Allowed Claim or Equity Interest would receive fewer than ten (10) shares or units of NewAWA Securities in a distribution made under this Article 10, the Distribution Agent may instead sell such NewAWA Securities on behalf of any or all of such holders and they distribute to each such holder its pro rata share of the Net Proceeds of such sale. Such sale may be either a private sale or through a securities exchange or automated quotation system on which such NewAWA Securities are listed and absent manifest error or intentional wrongdoing on the part of the Distribution Agent in connection with such sale, the Net Proceeds realized from such sale shall be conclusively determined to be reasonable. The distribution of a pro rata share of such Net Proceeds to each such holder shall be deemed to be in full satisfaction of the payment to be made to such holder of Allowed Claims or Equity Interests in such distribution. These procedures are intended to result in the affected holders receiving appropriate distributions while saving expenses in the administration of the Debtor's estate that would be associated with maintaining such holders as stockholders of NewAWA. 10.6. Delivery of Distributions; Unclaimed Property. Distributions and deliveries to holders of (i) Allowed General Unsecured Claims shall be made at the addresses set forth on the proofs of claim filed by such holders (or at the last known addresses of such holders if no proof of claim is filed or if NewAWA has been notified of a change of address), (ii) AWA Debenture Claims shall be made at the address contained in the records of the Indenture Trustee (or, if the Indenture Trustee has resigned pursuant to Section 10.3.2 of the Plan, in such records it has delivered to the Distribution Agent as its successor) and (iii) Equity Interests shall be made to the address shown on the stock ledger of AWA. If any holder's distribution is returned as undeliverable, no further distributions to such holder shall be made unless and until the Distribution Agent, NewAWA or the Indenture Trustee is notified in writing of such holder's then-current address, at which time all missed distributions shall be made to such holder without interest (except to the extent that such missed distributions have become unclaimed property). Amounts in respect of undeliverable distributions made through the Distribution Agent or through the Indenture Trustee, shall be returned to NewAWA until such distributions are claimed. All claims for undeliverable distributions shall be made on or before the second (2nd) anniversary of the applicable Distribution Date, and after such date, such undeliverable distributions shall be unclaimed property. All unclaimed property attributable to any Claim or Equity Interest shall revert to the Reserve, if any, then existing with regard to Claims or Equity Interests of such Class and, if none exists, to NewAWA, and the Claim of any holder with respect to such property shall be discharged and forever barred and shall no longer be deemed an Allowed Claim or Equity Interest. 26 33 10.7. Method of Payment. Payments of Cash required to be made pursuant to the Plan shall be made by check drawn on a domestic bank or by wire transfer from a domestic bank at the election of the Person making such payment. 10.8. Payment Dates. Whenever any payment or distribution to be made under the Plan shall be due on a day other than a Business Day, such payment or distribution shall instead be made, without interest, on the immediately following Business Day. 10.9. Compliance with Tax Requirements. In connection with the Plan, to the extent applicable, the Distribution Agent and the Indenture Trustee shall comply with all tax withholding and reporting requirements imposed on it by any governmental unit, and all distributions pursuant to the Plan shall be subject to such withholding and reporting requirements. The Distribution Agent and Indenture Trustee shall be authorized to take any and all actions that may be necessary or appropriate to comply with such withholding and reporting requirements. Notwithstanding any other provision of the Plan, (i) each Person (including holders of Allowed Claims and Equity Interests) receiving a distribution of Cash or NewAWA Securities pursuant to the Plan shall have sole and exclusive responsibility for the satisfaction and payment of any tax obligations imposed by any governmental unit, including income, withholding and other tax obligations, on account of such distribution and (ii) at the option of NewAWA, no distribution pursuant to the Plan shall be made to or on behalf of such entity unless and until such entity has made arrangements satisfactory to NewAWA for the satisfaction and payment of such tax obligations. At the option of NewAWA, any Cash or NewAWA Securities to be distributed pursuant to the Plan shall, pending the implementation of such arrangements, be treated as an undeliverable distribution pursuant to Section 10.6 above. ARTICLE 11 PROCEDURES FOR RESOLVING DISPUTED CLAIMS OR EQUITY INTERESTS 11.1. Filing of Objections to Claims or Equity Interests. After the Effective Date, objections to Claims or Equity Interests shall be made and objections to Claims or Equity Interests made previous thereto shall be pursued only by NewAWA and, upon leave of the Bankruptcy Court for good cause shown, the Creditors' Committee (if it is then still in existence). Any objections made by NewAWA or the Creditors' Committee after the Effective Date shall be served and filed not later than 180 days after the Effective Date; provided, however, that such period may be extended by order of the Bankruptcy Court for good cause shown. 11.2. Settlement of Objections to Claims or Equity Interests After Effective Date. From and after the Effective Date, NewAWA may litigate to judgment, propose settlements of, or withdraw objections to, all pending or filed Disputed Claims or Disputed Equity Interests, and NewAWA may settle or compromise any Disputed Claim or Disputed Equity Interest, without notice and a hearing and without approval of the Bankruptcy Court; provided, however, notice of any settlement or compromise involving the allowance of a General Unsecured Claim in excess of $100,000 shall be provided to the Indenture Trustee (if the AWA Indentures have not been previously terminated) and to the Creditors' Committee (if still then in existence), who shall each have ten (10) days to object to such settlement or compromise and in such case, such settlement or compromise must be approved by the Bankruptcy Court. 11.3. Payment or Distribution to Holders of Disputed Claims or Equity Interests. Except as the Debtor or NewAWA, as applicable, may otherwise agree with respect to any Disputed Claim or Disputed Equity Interest, no payments or distributions shall be made with respect to any portion of a Disputed Claim or Disputed Equity Interest unless and until all objections to such Disputed Claim or Disputed Equity Interest have been settled or determined by a Final Order of the Bankruptcy Court. Payments and distributions to each holder of a Disputed Claim or Disputed Equity Interest to the extent that it ultimately becomes an Allowed Claim or Equity Interest shall be made in accordance with Section 10.4. A Disputed Claim or Disputed Equity Interest that is estimated for purposes of allowance and distribution pursuant to Section 502(c) of the Bankruptcy Code and which is estimated and Allowed at a fixed amount by Final Order of the Bankruptcy 27 34 Court shall thereupon be an Allowed Claim or Equity Interest for all purposes in the amount so estimated and Allowed. 11.4. Reserves for Disputed Claims and Disputed Equity Interests. Appropriate Reserves for Disputed Claims and Disputed Equity Interests shall be established and maintained as provided in Section 10.4. ARTICLE 12 MISCELLANEOUS PROVISIONS 12.1. Modification of Payment Terms. NewAWA reserves the right to modify the treatment of any Allowed Claim in any manner adverse only to the holder of such Claim at any time after the Effective Date upon the consent of the holder whose Allowed Claim treatment is being adversely affected. 12.2. Discharge of Debtor. The rights afforded and the treatment of Claims and Equity Interests under the Plan shall be in exchange for and in complete satisfaction, discharge, release and termination of all Claims of any nature whatsoever against the Debtor or any of its assets or properties and all Equity Interests in the Debtor; and upon the Effective Date (i) the Debtor shall be deemed discharged and released pursuant to Section 1141(d)(1)(A) of the Bankruptcy Code from any and all Claims, including but not limited to demands and liabilities that arose before the Effective Date, all debts of the kind specified in Section 502(g), 502(h) or 502(i) of the Bankruptcy Code, whether or not (a) a proof of claim based upon such debt is filed or deemed filed under Section 501 of the Bankruptcy Code, (b) a Claim based upon such debt is allowed under Section 502 of the Bankruptcy Code or (c) the holder of a Claim based upon such debt has accepted the Plan; and (ii) all rights and interests of holders of Equity Interests in the Debtor shall be terminated pursuant to Section 1141(d)(1)(B) of the Bankruptcy Code. The Confirmation Order shall be a judicial determination of discharge and termination of all liabilities of and all Claims against, and all Equity Interests in, the Debtor, except as otherwise specifically provided in the Plan. On the Effective Date, as to every discharged debt, Claim and Equity Interest, the holder of such debt, Claim or Equity Interest shall be permanently enjoined and precluded from asserting against NewAWA or against its assets or properties or any transferee thereof, any other or further Claim or Equity Interest based upon any document, instrument or act, omission, transaction or other activity of any kind or nature that occurred prior to the Effective Date, except as expressly set forth in the Plan or the Confirmation Order. 12.3. Termination of Subordination Rights. Except as specifically provided elsewhere herein, on the Confirmation Date, all contractual, legal or equitable subordination rights that a holder of a Claim or Equity Interest may have with respect to any distribution to be made pursuant to the Plan shall be discharged and terminated, and all actions related to the enforcement of such subordination rights shall be permanently enjoined. Accordingly, distributions pursuant to the Plan to holders of Allowed Claims and Equity Interests shall not be subject to payment to a beneficiary of such terminated subordination rights, or to levy, garnishment, attachment or other legal process by any beneficiary of such terminated subordination rights. Pursuant to Bankruptcy Rule 9019 and in consideration for the distribution and other benefits provided under the Plan, the provisions of this Section 12.3 shall constitute a good faith compromise and settlement of all claims or controversies relating to the termination of all contractual, legal and equitable subordination rights that a holder of a Claim or Equity Interest may have with respect to any Allowed Claim or Equity Interest, or any distribution to be made on account of such Allowed Claim or Allowed Equity Interest. 12.4. Termination of the Creditors' and Equity Committees. 12.4.1. The Creditors' Committee shall, unless theretofore terminated, terminate on the Effective Date and shall thereafter have no further responsibilities in respect of the Chapter 11 Case except (i) with respect to preparation and filing of applications for compensation and reimbursement of expenses in accordance with Section 2.2.3, (ii) with respect to any contested matter or adversary proceeding commenced prior to the Effective Date in which the Creditors' Committee is an indispensable litigant or any appeal of an order in the Chapter 11 Case in which the Creditors' Committee is an indispensable litigant and if, in each case, the Creditors' Committee's participation in such proceeding is consistent with the orders of the Bankruptcy Court establishing the Creditors' Committee and with Section 1103 of the Bankruptcy Code, and 28 35 (iii) with respect to monitoring and participating in matters and proceedings which could give rise to General Unsecured Claims (including, without limitation, Avoidance Litigation, rejection of executory contracts and unexpired leases and resolution of Unsecured Deficiency Claims and Disputed General Unsecured Claims) for a period of five months after the Effective Date, unless such period is extended by the Bankruptcy Court for good cause shown. In connection with such activities, the Creditors' Committee may continue the retention of its counsel, its local counsel and its accountants and may replace one or more of such professional advisors, if necessary, but shall not retain additional professional advisors. NewAWA shall pay the reasonable fees and expenses of the Creditors' Committee incurred in connection with such activities, provided, however, that the aggregate fees related to matters and proceedings which could give rise to General Unsecured Claims shall not exceed an average of $75,000 per month for the first two months after the Effective Date and an average of $50,000 per month for any subsequent month. All such fees and expenses shall be paid only in accordance with the fee and expense guidelines promulgated by the Debtor in the Bankruptcy Case and shall be paid by NewAWA within thirty (30) days of receipt of invoice therefor, except in the case of an objection to any such fees and expenses, which, if not resolved by NewAWA and the Creditors' Committee, may be noticed by either such entity for a hearing before the Bankruptcy Court. Notwithstanding anything to the contrary in this Section 12.4.1, all such activities shall cease when the aggregate amount of Disputed Claims is less than $3,000,000 or one year after the Effective Date, whichever occurs first, except in a case where the Creditors' Committee is an indispensable litigant as contemplated by clause (ii) above. 12.4.2. The Equity Committee shall, unless theretofore terminated, terminate on the Effective Date and shall thereafter have no further responsibilities in respect of the Chapter 11 Case except (i) with respect to preparation and filing of a final application for compensation and reimbursement of expenses in accordance with Section 2.2.3 and (ii) with respect to any contested matter or adversary proceeding commenced prior to the Effective Date in which the Equity Committee is an indispensable litigant or any appeal of an order in the Chapter 11 Case in which the Equity Committee is an indispensable litigant and, in each case, if the Equity Committee's participation in such proceeding is consistent with the orders of the Bankruptcy Court establishing the Equity Committee and with Section 1103 of the Bankruptcy Code. 12.5. Setoffs. The Debtor and NewAWA may, but shall not be required to, set off or recoup against any Claim and the payments or other distributions to be made pursuant to the Plan in respect of such Claim, claims of any nature whatsoever which the Debtor or NewAWA may have against the holder of such Claim to the extent such Claim may be set off or recouped under applicable law, but neither the failure to do so nor the allowance of any Claim hereunder shall constitute a waiver or release by the Debtor or NewAWA, of any such claim that it may have against such holder. 12.6. Opt-Out. Pursuant to Section 203(b)(3) of the Delaware General Corporation Law, AWA elects, as of the Effective Date, that it will no longer be governed by the provisions of Section 203 of the Delaware General Corporation Law. 12.7. Section Headings. The Section headings contained in the Plan are for reference purposes only and shall not affect in any way the meaning or interpretation of the Plan. 12.8. Severability. If any provision of the Plan is found by the Bankruptcy Court to be invalid, illegal or unenforceable, then, at the option of the Debtor or NewAWA, such provision shall not affect the validity or legality of any other provisions of the Plan which shall remain effective. 12.9. Computation of Time. In computing any period of time prescribed or allowed by the Plan, the provisions of Bankruptcy Rule 9006(a) shall apply. 12.10. Governing Law. Except to the extent that the Bankruptcy Code, the Bankruptcy Rules or any other statutes, rules or regulations of the United States are applicable, and subject to the provisions of any contract, instrument, release, indenture or other agreement or document entered into in connection with the Plan, the rights and obligations arising under the Plan shall be governed by, and construed and enforced in accordance with, the laws of the State of Arizona, without giving effect to the principles of conflicts of law thereof. Notwithstanding anything to the contrary herein, the laws of escheat and abandoned property of no state shall be applicable to any property distributed or abandoned hereunder. 29 36 ARTICLE 13 PROVISIONS FOR EXECUTION AND SUPERVISION OF THE PLAN 13.1. Retention of Jurisdiction. Except as otherwise provided herein, from and after the Effective Date, the Bankruptcy Court shall retain and have exclusive jurisdiction over the Chapter 11 Case for all legally permissible purposes, including, without limitation, the following purposes: (a) to determine any and all objections to the allowance of Claims; (b) to resolve any and all matters related to the rejection, assumption, or assumption and assignment, as the case may be, of executory contracts or unexpired leases to which the Debtor is a party or with respect to which the Debtor may be liable, and to hear and determine, and if need be to liquidate, any and all Claims arising therefrom; (c) to determine any and all applications for the determination of any priority of any Claim including without limitation Claims arising from any event that occurred prior to the Petition Date or from the Petition Date through the Effective Date and for payment of any alleged Administrative Claim, Priority Tax Claim, Priority Benefit Plan Contribution Claim or Priority Wage Claim; (d) to determine any and all applications, motions, adversary proceedings and contested or litigated matters that may be pending on the Effective Date; (e) to determine all controversies, suits and disputes that may arise in connection with the interpretation, enforcement or consummation of the Plan or in connection with the obligations of the Debtor, NewAWA or AmWest under the Plan, or in connection with the performance by any Distribution Agent of its duties hereunder, and to enter such orders as may be necessary or appropriate to implement any distributions to holders of Allowed General Unsecured Claims; (f) to consider any modification, remedy any defect or omission, or reconcile any inconsistency in the Plan or any order of the Bankruptcy Court, including the Confirmation Order, all to the extent authorized by the Bankruptcy Code; (g) to issue such orders in aid of execution of the Plan to the extent authorized by Section 1142 of the Bankruptcy Code; (h) to determine such other matters as may be set forth in the Confirmation Order or as may arise in connection with the Plan or the Confirmation Order; (i) to determine any suit or proceeding brought by NewAWA on behalf of the Debtor's estate to recover property under Section 542, 543 or 553 of the Bankruptcy Code or any Avoidance Litigation; (j) to consider and act on the compromise and settlement of any Claim against or cause of action by or against the Debtor's estate; (k) to estimate Claims for purposes of allowance pursuant to Section 502(c) of the Bankruptcy Code; (l) to hear and determine any dispute or controversy relating to any Allowed Claim or any Claim alleged or asserted by any Person to be an Allowed Claim; (m) to determine any and all applications for allowances of compensation and reimbursement of expenses and any other fees and expenses authorized to be paid or reimbursed under the Bankruptcy Code or the Plan; (n) to determine any issues arising in connection with elections made on a Ballot by a holder of a Claim or Equity Interest; (o) to determine the appropriate Reserve Amounts; 30 37 (p) to determine whether the payment of any Claims hereunder should be subordinated to the payment of other Claims; (q) to hear and determine any tax disputes concerning AWA, including the amount and preservation of AWA's tax attributes, to determine and declare any tax effects under the Plan, and to determine any Taxes which the Debtor's bankruptcy estate may incur as a result of the transactions contemplated herein, pursuant to Sections 346, 505 and 1146 of the Bankruptcy Code; and (r) to enter a final decree closing the Chapter 11 Case. 13.2. Amendment of Plan. The Plan may be amended by the Debtor before the Effective Date and by NewAWA thereafter as provided in Section 1127 of the Bankruptcy Code. 13.3. Post-Effective Date Notice. From and after the Effective Date, any notice to be provided under the Plan shall be sufficient if provided to (i) the Official Service List as contained in the records of the Bankruptcy Court on the Effective Date; or (ii) all parties whose rights may be affected by the action which is the subject of the notice; or (iii) in any case, such notice as is approved as sufficient by order of the Bankruptcy Court. 13.4. Revocation of Plan. Subject to the approval of AmWest as required by the Investment Agreement, the Debtor reserves the right to revoke and withdraw the Plan prior to entry of the Confirmation Order. If the Debtor revokes or withdraws the Plan, then the Plan shall be deemed null and void and nothing contained herein shall be deemed to constitute a waiver or release of any Claims by or against the Debtor or any other person or to prejudice in any manner the rights of the Debtor or any Person in any further proceedings involving the Debtor. Dated: Phoenix, Arizona June 28, 1994 Respectfully submitted, AMERICA WEST AIRLINES, INC. By: /s/ WILLIAM A. FRANKE William A. Franke Chairman of the Board and Chief Executive Officer AMWEST PARTNERS, L.P. By: AMWEST GENPAR, INC., its general partner By: /s/ JAMES G. COULTER James G. Coulter Vice President 31 38 [THIS PAGE INTENTIONALLY LEFT BLANK] 39 PLAN OF REORGANIZATION EXHIBIT A INVESTMENT AGREEMENT [EXHIBITS TO INVESTMENT AGREEMENT OMITTED] 40 [THIS PAGE INTENTIONALLY LEFT BLANK] 41 EXHIBIT A [Certain terms of the following Investment Agreement have been modified by the Plan of Reorganization to which this Exhibit A is attached.] THIRD REVISED INVESTMENT AGREEMENT April 21, 1994 America West Airlines, Inc. 4000 East Sky Harbor Boulevard Phoenix, AZ 85034 Attention: William A. Franke Chairman of the Board Gentlemen: This letter agreement (this "Agreement") sets forth the agreement between America West Airlines, Inc., a Delaware corporation (including, on or after the effective date of the Plan, as defined herein, its successors, as reorganized pursuant to the Bankruptcy Code, as defined herein) (the "Company"), and AmWest Partners, L.P., a Texas limited partnership ("Investor"). The Company will issue and sell to Investor, and Investor hereby agrees and commits to purchase from the Company, a package of securities of the Company for $244,857,000 in cash (subject to adjustment as herein provided), consisting of (i) shares of Class A Common Stock of the Company ("Class A Common"), (ii) shares of Class B Common Stock of the Company ("Class B Common" and, together with the Class A Common, "Common Stock"), (iii) senior unsecured notes of the Company ("Notes") and (iv) warrants to purchase shares of Class B Common ("Warrants"), all on the terms and subject to the terms and conditions hereinafter set forth. Investor's purchase of the securities referred to above (the "Investment") will be made in connection with and as part of the transactions to be consummated pursuant to a joint Plan of Reorganization of the Company (the "Plan") and an order (the "Confirmation Order") confirming the Plan issued by the Bankruptcy Court, as defined herein. The Plan will contain provisions called for by, or otherwise consistent with, this Agreement. In consideration of the agreements of Investor hereunder, and as a precondition and inducement to the execution of this Agreement by Investor, the Company has entered into the Third Revised Interim Procedures Agreement with Investor, dated the date hereof (the "Procedures Agreement"). SECTION 1. Definitions. For purposes of this Agreement, except as expressly provided herein or unless the context otherwise requires, the following terms shall have the following respective meanings: "Affiliate" shall mean (i) when used with reference to any partnership, any Person that, directly or indirectly, owns or controls 10% or more of either the capital or profit interests of such partnership or is a partner of such partnership or is a Person in which such partnership has a 10% or greater direct or indirect equity interest and (ii) when used with reference to any corporation, any Person that, directly or indirectly, owns or controls 10% or more of the outstanding voting securities of such corporation or is a Person in which such corporation has a 10% or greater direct or indirect equity interest. In addition, the term "Affiliate," when used with reference to any Person, shall also mean any other Person that, directly or indirectly, controls or is controlled by or is under common control with such Person. As used in the preceding sentence, (A) the term "control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of the entity referred to, whether through ownership of voting securities, by contract or otherwise and (B) the terms "controlling" and "controls" shall have meanings correlative to the foregoing. Notwithstanding the foregoing, the Company will be deemed not to be an Affiliate of Investor or any of its partners or assignees. A-1 42 "Alliance Agreements" shall have the meaning specified in Section 5. "Approvals" shall have the meaning specified in Section 8(b). "Bankruptcy Code" shall mean Chapter 11 of the United States Bankruptcy Code. "Bankruptcy Court" shall mean the United States Bankruptcy Court for the District of Arizona. "Business Combination" means: (i) any merger or consolidation of the Company with or into Investor or any Affiliate of Investor; (ii) any sale, lease, exchange, transfer or other disposition of all or any substantial part of the assets of the Company to Investor or any Affiliate of Investor; (iii) any transaction with or involving the Company as a result of which Investor or any of Investor's Affiliates will, as a result of issuances of voting securities by the Company (or any other securities convertible into or exchangeable for such voting securities) acquire an increased percentage ownership of such voting securities, except pursuant to a transaction open on a pro rata basis to all holders of Class B Common; or (iv) any related series or combination of transactions having or which will have, directly or indirectly, the same effect as any of the foregoing. "Class A Common" shall have the meaning specified in the second paragraph of this Agreement. "Class B Common" shall have the meaning specified in the second paragraph of this Agreement. "Common Stock" shall have the meaning specified in the second paragraph of this Agreement. "Company" shall have the meaning specified in the first paragraph of this Agreement. "Confirmation Date" shall mean the date on which the Confirmation Order is entered by the Bankruptcy Court. "Confirmation Order" shall have the meaning specified in the third paragraph of this Agreement. "Continental" shall mean Continental Airlines, Inc. "Creditors' Committee" shall mean the Official Committee of the Unsecured Creditors of America West Airlines, Inc. appointed in the Company's Chapter 11 case pending in the Bankruptcy Court. "Disclosure Statement" shall mean a disclosure statement with respect to the Plan. "Effective Date" shall mean the effective date of the Plan; provided that in no event shall the Effective Date be (a) earlier than 11 days after the Bankruptcy Court approves and enters the Confirmation Order providing for the confirmation of the Plan or (b) before all material Approvals are obtained. "Electing Party" shall have the meaning specified in Section 4(a)(2)(ii). "Equity Committee" shall mean the Official Committee of Equity Holders of America West Airlines, Inc. appointed in the Company's Chapter 11 case pending in the Bankruptcy Court. "Equity Holders" shall mean the Company's equity security holders (including holders of common stock and preferred stock) of record as of the applicable record date fixed by the Bankruptcy Court. "Governance Agreements" shall have the meaning specified in Section 6. "GPA" shall mean GPA Group plc or, if applicable, any direct or indirect subsidiary thereof. "GPA Put Agreement" shall have the meaning specified in Section 7(j). "Independent Directors" shall have the meaning specified in Section 6(a). A-2 43 "Initial Order" shall have the meaning specified in Section 8(a). "Investment" shall have the meaning specified in the third paragraph of this Agreement. "Investor" shall have the meaning specified in the first paragraph of this Agreement. "Mesa" shall mean Mesa Airlines, Inc. "Monthly Targets" shall mean the amounts specified in the Monthly Targets Schedule. "Monthly Targets Schedule" shall mean the letter agreement between the Company and Investor dated the date hereof. "Notes" shall have the meaning specified in the second paragraph of this Agreement. The Notes shall be subject to the terms and conditions set forth in Exhibit B hereto. "Outside Date" shall mean August 31, 1994; provided that Investor shall have the right from time to time to irrevocably extend the Outside Date to a date not later than November 30, 1994, but only if Investor gives the Company prior written notice of its election to extend the then current Outside Date (which notice shall specify the new Outside Date) and then only if, at the time of the giving of such notice, Investor is not in breach of any of its representations, warranties, covenants or obligations under this Agreement, the Procedures Agreement or any Related Agreement (excluding any breach by Investor which is not willful or intentional and which is capable of being cured on or before the new Outside Date). Unless waived by the Company, any notice given pursuant to this definition shall be delivered to the Company not less than 15 days prior to the then current Outside Date except that, in the event the Effective Date has not occurred for any reason arising within such 15-day period not due to a breach by Investor of any of its representations, warranties, covenants or agreements hereunder, such notice shall be given as soon as practicable but in no event later than the then current Outside Date. "Person" means a natural person, a corporation, a partnership, a trust, a joint venture, any Regulatory Authority or any other entity or organization. "Plan" shall have the meaning specified in the third paragraph of this Agreement. "Plan 9" means the Company's Plan Revision No. 9 which consists of the Summary Pro Forma Financial Statements: June 1993 Through December 1994, dated July 15, 1993. "Plan R-2" shall mean the Company's Summary Pro Forma Financial Statements, 5 Year Plan: 1994 Through 1998, Plan No. R-2, dated January 13, 1994. "Procedures Agreement" shall have the meaning specified in the fourth paragraph of this Agreement. "Projections" shall mean the projections set forth in Plan 9 on pages 15 and 18 of Tab E and pages 7 and 8 of Tab F. "Purchase Price" shall have the meaning specified in Section 2. "Regulatory Approvals" shall mean all approvals, permits, authorizations, consents, licenses, rulings, exemptions and agreements required to be obtained from, or notices to or registrations or filings with, any Regulatory Authority (including the expiration of all applicable waiting periods, if any, under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended) that are necessary or reasonably appropriate to permit the Investment and the other transactions contemplated hereby and by the Related Agreements and to permit the Company to carry on its business after the Investment in a manner consistent in all material respects with the manner in which it was carried on prior to the Effective Date or proposed to be carried on by the reorganized Company. "Regulatory Authority" shall mean any authority, agency, commission, official or other instrumentality of the United States, any foreign country or any domestic or foreign state, county, city or other political subdivision. "Related Agreements" shall have the meaning specified in Section 3. A-3 44 "Securities" shall mean the securities of the Company issued to the Unsecured Parties, Investor and its assigns and GPA under this Agreement. The Securities are described in Section 4. "Unsecured Creditors" shall mean, as of any date, the Persons holding of record as of such date the allowed or allowable prepetition unsecured claims without priority of the Company. "Unsecured Parties" shall mean the Equity Holders and the Unsecured Creditors. "Warrants" shall have the meaning specified in the second paragraph of this Agreement. SECTION 2. Commitment to Make Investment. Subject to the terms and conditions of this Agreement and the Procedures Agreement, on the Effective Date, the Company shall issue and sell and Investor shall purchase Securities in accordance with this Agreement and the Plan. Such Securities shall be issued, sold and delivered to Investor, its designees and/or one or more third party investors, and the $244,857,000 purchase price therefor, as such purchase price may be adjusted pursuant hereto (the "Purchase Price"), shall be paid by wire transfer of immediately available funds on the Effective Date. SECTION 3. Related Agreements. The agreements necessary to effect the Investment (the "Related Agreements," such term to include the Alliance Agreements and the Governance Agreements) shall be in form and substance reasonably satisfactory to Investor and the Company, and shall contain terms and provisions, including representations, warranties, covenants, warranty termination periods, materiality exceptions, cure opportunities, conditions precedent, anti-dilution provisions (as appropriate), and indemnities, as are in form and substance reasonably satisfactory to such parties; provided, however, that the Related Agreements shall contain provisions called for by, or otherwise consistent with, this Agreement. SECTION 4. Capitalization. (a) Upon consummation of the Plan, the capitalization of the Company shall be as follows: (1) Class A Common. There shall be 1,200,000 shares of Class A Common, all of which shares shall, in accordance with the Plan, be issued to Investor. Investor shall pay $8,960,400 for the Class A Common. At the option of the holders thereof, shares of Class A Common shall be convertible into shares of Class B Common on a share for share basis. (2) Class B Common. There shall be 43,800,000 shares of Class B Common, all of which shares shall, in accordance with the Plan, be issued as follows: (i) Investor. Investor shall be issued 13,875,000 shares plus the number of shares (if any) to be acquired by Investor pursuant to clause (ii) below minus the number of shares, if any, purchased by the Equity Holders pursuant to the second sentence of clause (iii) below. For each share of Class B Common issued to it, Investor shall pay $7.467; provided that (A) for each share acquired by Investor pursuant to clause (ii) below and (B) for each share not purchased by the Equity Holders pursuant to clause (iii) below, Investor shall pay $8.889. (ii) Unsecured Creditors. The Unsecured Creditors (or a trust created for their benefit) shall be issued 26,775,000 shares. Notwithstanding the foregoing, each Unsecured Creditor shall have the right to elect to receive cash equal to $8.889 for each share of Class B Common otherwise allocable to it under this clause (ii). The election of each such Person (the "Electing Party") must be made on or before the date fixed by the Bankruptcy Court for voting with respect to the Plan; provided, however, that in the event that such elections of all Electing Parties aggregate to more than $100 million, then (A) the amount of cash so paid shall be limited to $100 million and (B) the Electing Parties shall each receive proportionate amounts of cash and Class B Common in accordance with the Plan. Subject to the foregoing proviso, Investor shall increase the Investment by the amount necessary to pay all Electing Parties the cash amounts payable to them under this clause (ii) in respect of the shares of Class B Common specified in their elections and, upon payment of such amounts, such shares shall be issued to Investor without further consideration. Notwithstanding the foregoing, Investor's acquisition of shares of Class B Common pursuant to this clause (ii) shall, if permitted by applicable securities and other laws, be consummated immediately after the issuance of such shares to the Electing Parties on the Effective Date. If such shares are not so acquired post- A-4 45 consummation of the Plan, all shares of Class B Common acquired by Investor pursuant to this clause (ii) shall, for all purposes hereof, be deemed to be part of the Securities acquired by Investor hereunder. (iii) Equity Holders. The Equity Holders (or a trust created for their benefit) shall be issued 2,250,000 shares. In addition, the Equity Holders shall have the right to purchase up to 1,615,179 shares allocable to Investor pursuant to clause (i) above at $8.889 per share. Such election must be made by each Equity Holder on or before the date fixed by the Bankruptcy Court for voting with respect to the Plan. The Plan shall set forth the terms and conditions on which the foregoing rights may be exercised. (iv) GPA. 900,000 shares shall be issued to GPA. (3) Warrants. There shall be Warrants to purchase 10,384,615 shares of Class B Common at the exercise price as specified in and subject to the terms of Exhibit A hereto, and such Warrants shall, in accordance with the Plan, be issued as follows: (i) Warrants to purchase up to 2,769,231 shares of Class B Common shall be issued to Investor; and (ii) Warrants to purchase up to 6,230,769 shares of Class B Common shall be issued to the Equity Holders or a trust or trusts created for their benefit; and (iii) Warrants to purchase up to 1,384,615 shares of Class B Common shall be issued to GPA. (4) Senior Unsecured Notes. Investor shall, in accordance with the Plan and subject to the terms of Exhibit B hereto, be issued $100 million principal amount of Notes against payment in cash of not less than 100% of the principal amount thereof to the Company; provided, however, that the Company shall have the right, exercised at any time prior to the date fixed by the Bankruptcy Court for voting with respect to the Plan, to increase the principal amount of the Notes to be so purchased by Investor to up to $130 million. GPA shall, in accordance with the Plan, be issued $30,525,000 principal amount of Notes; provided, however, that GPA shall have the right to elect to receive cash in lieu of all or any portion of the Notes otherwise issuable to it under this paragraph (4), such election to be made on or before the date fixed by the Bankruptcy Court for voting with respect to the Plan. (b) Holders of the Class A Common shall have fifty votes per share. Holders of Class B Common shall have one vote per share. Holders of Class A Common and holders of Class B Common shall vote together as a single class except as otherwise required by law or the provisions of this Agreement. Investor may elect, with respect to any shares of Class B Common held by it, to suspend the voting rights relating to such shares by giving prior written notice to the Company, which notice shall describe such shares in reasonable detail and state whether or not the voting suspension is permanent or temporary and, if temporary, specify the period thereof. (c) Neither Investor nor any Affiliate of Investor or of any partner of Investor will transfer or otherwise dispose of any Common Stock (other than to an Affiliate of the transferor) if, after giving effect thereto and to any concurrent transaction, the total number of shares of Class B Common beneficially owned by the transferor is less than 200% of the total number of shares of Class A Common beneficially owned by the transferor; provided, however, than nothing in this paragraph (c) shall prohibit any Person from transferring or otherwise disposing, in a single transaction or a series of concurrent transactions, of all shares of Common Stock owned by such Person. SECTION 5. Business Alliance Agreements. Continental and the Company shall enter into mutually acceptable business alliance agreements on the Effective Date, which agreements may include, but shall not be limited to, agreements to share ticket counter space, ground handling agreements, agreements to link frequent flier programs, and combined purchasing agreements, and schedule coordination and code sharing agreements. On the Effective Date, Mesa shall enter into agreements with the Company extending the existing contractual arrangements between the Company and Mesa for five years from the Effective Date and A-5 46 modifying the termination provisions thereof consistent with such extension. Such agreements with Continental and Mesa are herein collectively referred to as the "Alliance Agreements". SECTION 6. Governance Agreements. On the Effective Date, the Company, Investor and Investor's partners (other than any such partner holding shares of Class B Common the voting rights with respect to which have been suspended as contemplated by Section 4(b)) shall enter into one or more written agreements (the "Governance Agreements") effectively providing as follows: (a) At all times during the three-year period commencing on the Effective Date, the Company's board of directors shall consist of 15 members designated as follows: (i) nine members (at least 8 of whom are U.S. citizens) shall be designated by Investor, with certain of the partners of Investor having the right to designate certain of Investor's designated directors; (ii) three members (at least two of whom are U.S. citizens) shall be designated by the Creditors Committee; provided that each such member shall be reasonably acceptable to Investor at the time of his or her initial designation; (iii) one member shall be designated by the Equity Committee; provided that such member shall be a U.S. citizen reasonably acceptable to Investor at the time of his or her initial designation; (iv) one member shall be designated by the Company's board of directors as constituted on the date preceding the Effective Date; provided that such member shall be a U.S. citizen reasonably acceptable to Investor at the time of his or her initial designation; and (v) one member shall be designated by GPA for so long as GPA shall own at least 2% of the voting equity securities of the Company; provided that such member shall be reasonably acceptable to Investor at the time of his or her initial designation. The directors (and their successors) referred to in clauses (ii), (iii) and (iv) above are hereinafter referred to collectively as the "Independent Directors." (b) In the case of the death, resignation, removal or disability of an Independent Director after the Effective Date, his or her successor shall be designated by the Stockholder Representatives, except that if such Independent Director was initially designated by the Creditors' Committee or the Equity Committee and if, at the time of such Independent Director's death, resignation, removal or disability (as the case may be), the Creditors' Committee or the Equity Committee (as the case may be) remains in effect, the successor to such Independent Director shall be designated by the Creditors' Committee or the Equity Committee (as the case may be). As used herein, "Stockholder Representatives" shall mean, collectively, (A) one individual who, on the date hereof, is serving as a director of the Company, (B) one individual who, on the date hereof, is serving as a member of the Creditors' Committee and (C) one individual who, on the date hereof, is serving as a member of the Equity Committee. The initial Stockholder Representatives shall be selected on or before the Effective Date (x) by the Company's board of directors in the case of the individual referred to in clause (A) above, (y) by the Creditors' Committee in the case of the individual referred to in clause (B) above and (z) by the Equity Committee in the case of the individual referred to in clause (C) above. In case of the death, resignation, removal or disability of a Stockholder Representative after the Effective Date, his or her successor shall be designated by the remaining Stockholder Representatives. (c) Until the third anniversary of the Effective Date, Investor will vote and cause to be voted all shares of Common Stock (other than those the voting rights of which have been suspended) owned by Investor or any of its partners or by the assignees or transferees of all or substantially all of the Common Stock owned by Investor or any of its partners (other than a Person who acquires such stock pursuant to a tender or exchange offer open to all stockholders of the Company) in favor of the election as directors of any and all individuals designated for such election as contemplated by clauses (ii), (iii), (iv) and (v) of paragraph (a) above. A-6 47 (d) No director nominated by Investor shall be an officer or employee of Continental. All Company directors, if any, who are selected by, or who are directors of, Continental shall recuse themselves from voting on, or otherwise receiving any confidential Company information regarding, matters in connection with negotiations between Continental and the Company (including, without limitation, those relating to the Alliance Agreements) and matters in connection with any action involving direct competition between Continental and the Company. All Company directors, if any, who are selected by, or who are directors, officers or employees of, Mesa shall recuse themselves from voting on, or otherwise receiving any confidential Company information regarding, matters in connection with negotiations between Mesa and the Company (including, without limitation, those relating to the Alliance Agreements) and matters in connection with any action involving direct competition between Mesa and the Company. (e) During the three-year period commencing on the Effective Date, the Company will not consummate any Business Combination unless such transaction shall be approved in advance by at least three Independent Directors or by a majority of the stock voted at the meeting held to consider such transaction which is owned by stockholders of the Company other than Investor or any of its Affiliates; provided, however, that neither Mesa nor any fund or account managed or advised by Fidelity Management Trust Company or its Affiliates (or any of their non-Affiliated transferees) will be deemed an Affiliate of Investor for purposes of voting on any Business Combination involving Continental. SECTION 7. Plan of Reorganization. The Plan shall (i) be proposed jointly by the Company and Investor, (ii) contain terms and conditions reasonably satisfactory to Investor and the Company, and (iii) include the following provisions; provided that Investor and the Company may, by mutual agreement, modify the Plan or otherwise restructure the Investment in a manner consistent with the contemplated economic consequences to the Company, Investor, the Unsecured Parties and GPA in order to enable the Company, as reorganized, to more fully utilize its existing tax attributes: (a) Debtor-in-Possession Financing. The Company's debtor-in-possession financing shall be repaid in full in cash on the Effective Date. (b) Administrative Claims. All allowed administrative claims shall be paid as required pursuant to Section 1129(a) of the Bankruptcy Code, provided that such claims do not exceed the amount set forth in Plan R-2 plus $15 million, and provided further that payment of such claims in excess of those set forth in Plan R-2 would not, if payment was to be made in the month immediately preceding the Effective Date, cause the Company to fail to meet any of the Monthly Targets for such month. (c) Tax Claims. All priority tax claims shall be paid over the maximum term permitted by the Bankruptcy Code, as determined by the Bankruptcy Court, with interest accruing at a rate determined by the Bankruptcy Court, provided that such claims do not exceed the amounts set forth in Plan R-2 plus $8.5 million, and provided further that payment of such claims in excess of those set forth in Plan R-2 would not, if payment was to be made in the month immediately preceding the Effective Date, cause the Company to fail to meet any of the Monthly Targets for such month. (d) Nontax Priority Claims. All nontax priority claims shall be paid as required pursuant to Section 507 of the Bankruptcy Code, provided that such claims do not exceed the amounts set forth in Plan R-2. (e) Secured Claims. Secured debt claims shall be treated as provided in Plan R-2 subject to (i) modification based on updated appraisals of collateral values to be conducted by the Company and consistent with the applicable provisions of the Bankruptcy Code, or (ii) such other terms as shall be reasonably satisfactory to the Company and Investor. (f) Unsecured Creditors. In consideration for the shares and cash issued or paid, as the case may be, to the Unsecured Creditors pursuant to Section 4(a)(2)(ii), the unsecured claims of the Unsecured Creditors shall be cancelled as specified in the Plan. (g) Equity Holders. In consideration for (A) the right to purchase shares pursuant to Section 4(a)(2)(iii), (B) the shares issued to the Equity Holders pursuant to Section 4(a)(2)(iii), and (C) the A-7 48 Warrants issued to the Equity Holders pursuant to Section 4(a)(3)(ii), the equity interests of the Equity Holders shall be cancelled as specified in the Plan. (h) Leases. All aircraft leases which have been assumed prior to the date hereof will be honored by the Company in accordance with their terms and without reduction of rentals thereunder, provided that with the consent of the Company, Investor and any applicable lessor, any such lease may be amended to reduce the rentals payable thereunder, it being understood that, in consideration of any such amendment and with the consent of the Creditors' Committee, securities of the Company may be issued to such lessors from securities otherwise allocable to the Unsecured Parties to the extent consistent with any agreement in writing entered into by Investor and the Equity Committee on or before the date hereof. (i) Kawasaki. The contractual right of Kawasaki Leasing International Inc. ("Kawasaki") to require the Company to lease certain aircraft and aircraft engines shall be modified on terms satisfactory to the Company, Investor and Kawasaki or, in the absence of such modification, honored. (j) GPA. In consideration for (A) the shares issued to GPA pursuant to Section 4(a)(2)(iv), (B) the Warrants issued to GPA pursuant to Section 4(a)(3)(iii), (C) the Notes and cash issued or paid, as the case may be, to GPA pursuant to Section 4(a)(4) and (D) the granting to GPA on the Effective Date of the right (the "New GPA Put") to require the Company to lease from GPA on or prior to June 30, 1999, up to eight aircraft of types consistent with the fleet currently operated by the Company, GPA shall, as specified in the Plan, cancel and waive all rights to put any aircraft to the Company which it may have pursuant to the Put Agreement between GPA and the Company, dated as of June 25, 1991 (the "GPA Put Agreement") and/or the related Agreement Regarding Rights of First Refusal for A320 Aircraft, dated as of September 1, 1992 (the "First Refusal Agreement") and all other claims of any kind or nature arising out of or in connection with the GPA Put Agreement and/or the First Refusal Agreement (other than claims for reimbursement of expenses incurred by GPA in connection therewith). Each such lease shall provide for the payment by the Company of a fair market rental (determined at or about the time of delivery of the related aircraft to the Company on the basis of rentals then prevailing in the marketplace for comparable leases of comparable aircraft to lessees of comparable creditworthiness); and each such lease shall have such other terms and provisions and be in such form as is agreed upon by the Company and GPA with the approval of Investor (which approval shall not be unreasonably withheld or delayed) and attached to the agreement pursuant to which GPA is granted the New GPA Put. (k) Prepetition Aircraft Purchase Contracts. The prepetition contract for the purchase of aircraft between the Company and The Boeing Company shall either be modified on terms satisfactory to Investor, the Company and The Boeing Company or, in the absence of such agreement, rejected. The Company's aircraft purchase contract with AVSA, S.A.R.L. ("Airbus") shall be amended on terms consistent with the provisions of the AmWest-A320 Term Sheet, dated as of February 23, 1994 by and between Investor and Airbus. (l) Employees. The Company shall have the right to release employees from all currently existing obligations to the Company in respect of shares of Company stock purchased by such employees pursuant to the Company's stock purchase plan, such release to be in consideration for the cancellation of such shares. (m) Exculpation. The Plan will contain customary exculpation provisions for the benefit of the Creditors' Committee and the Equity Committee and their respective professionals. SECTION 8. Conditions to Investor's Obligations Relating to the Investment. The obligations of Investor to consummate the Investment and the other transactions contemplated herein shall be subject to the satisfaction, or the written waiver by Investor, of the following conditions: (a) an initial order approving the Procedures Agreement, which order shall be in form and substance reasonably satisfactory to Investor (the "Initial Order"), shall have been entered by the Bankruptcy Court on or prior to May 6, 1994 and, once entered, shall be in effect and shall not be modified in any material respect or stayed; A-8 49 (b) subject to Section 10(b), the Company and Investor, as applicable, shall have received all Regulatory Approvals, which shall have become final and nonappealable or any period of objection by Regulatory Authorities shall have expired, as applicable, and all other material approvals, permits, authorizations, consents, licenses and agreements from other third parties that are necessary or appropriate to permit the Investment and the other transactions contemplated hereby and by the Related Agreements and to permit the Company to carry on its business after the Effective Date in a manner consistent in all material respects with the manner in which it was carried on prior to the Effective Date (collectively with Regulatory Approvals, the "Approvals"), which Approvals shall not contain any condition or restriction that, in Investor's reasonable judgment, materially impairs the Company's ability to carry on its business in a manner consistent in all material respects with prior practice or as proposed to be carried on by the reorganized Company; (c) the certificate of incorporation and bylaws of the Company shall contain the terms contemplated by this Agreement and shall otherwise be reasonably satisfactory to Investor; (d) there shall be in effect no injunction, stay, restraining order or decree issued by any court of competent jurisdiction, whether foreign or domestic, staying the effectiveness of any of the Approvals, the Initial Order or the Confirmation Order, and there shall not be pending any request or motion for any such injunction, stay, restraining order or decree; provided, however, that the foregoing condition shall not apply to any such injunction, stay, order or decree requested, initiated or supported by Investor or any of its partners or other Affiliates or to any such request or motion made, initiated or supported by Investor or any its partners or other Affiliates; (e) there shall not be threatened or pending any suit, action, investigation, inquiry or other proceeding (collectively, "Proceedings") by or before any court of competent jurisdiction or Regulatory Authority (excluding the Company's bankruptcy case, but including adversary proceedings and contested matters in such bankruptcy case, and excluding any such Proceedings fully and accurately disclosed by the Company in Schedule I hereto), or any adverse development occurring since December 31, 1993 in any such Proceedings, which Proceedings or development, singly or in the aggregate, in the good faith judgment of Investor, are reasonably likely to have a material adverse effect on the Company's ability to carry on its business in a manner consistent in all material respects with prior practices or are reasonably likely to impair in any material respect Investor's ability to realize the intended benefits and value of this Agreement, the Procedures Agreement or any Related Agreement; provided, however, that the foregoing condition shall not apply to any such Proceeding or development requested, initiated or supported by Investor or any of its partners or other Affiliates; (f) the Company shall have delivered to Investor appropriate closing documents, including the instruments evidencing the Securities being issued to Investor, certifications of the Company officers (including, but not limited to, incumbency certificates, and certificates as to the truth and correctness of statements made in the Disclosure Statement or any other offering document distributed in connection with any securities issued in respect of this Agreement or the Related Agreements) and opinions of legal counsel, all of which shall be reasonably satisfactory to Investor; (g) by no later than March 31, 1994, the Company shall have delivered to Investor audited financial statements as of December 31, 1993, and for the year then ended, which statements shall reflect a financial performance and a financial position of the Company consistent in all material respects with the unaudited results previously announced by the Company for such year, and, if requested by Investor, the Company shall have discussed such financial statements with Investor and provided an opportunity for Investor to discuss such financial statements with the Company's auditors; (h) since December 31, 1993, except for the matters disclosed in Schedule I hereto, no material adverse change in the Company's condition (financial or otherwise), business, assets, properties, operations or relations with employees or labor unions shall have occurred and no matter (except for the matters disclosed in Schedule I hereto) shall have occurred or come to the attention of Investor that, in the reasonable judgment of Investor, is likely to have any such material adverse effect; A-9 50 (i) the following shall be true in all material respects (in each case based on the Company's actual monthly or daily financial statements, which shall be prepared by the Company in a manner consistent in all material respects with its historical monthly and daily financial statements previously furnished to Investor): (A) the Company's actual monthly Operating Cash Flow (as defined on the Monthly Targets Schedule) shall not, in any month, be less than the minimum amount therefor established as part of the Monthly Targets, (B) the Company's actual 4 month Rolling Cash Flow (as defined on the Monthly Targets Schedule) shall not be less, as of the end of any four calendar month period, than the minimum amount therefor established as part of the Monthly Targets, (C) the Company's actual end of month Reported Cash Balance (as defined in the Monthly Targets Schedule) shall not, as of the end of any calendar month, be less than the minimum amount therefor established as part of the Monthly Targets, (D) the Company's actual five-day average Minimum Cash Balance (as defined in the Monthly Targets Schedule) shall not be, as of the end of any five day period, less than the minimum amount therefor established as part of the Monthly Targets; (E) the Company shall not have taken any actions which the Company knew or reasonably should have known would likely impair or hinder in any material respect the Company's ability to achieve the Projections; (F) the amount and nature of the obligations and liabilities (including, without limitation, tax liabilities and administrative expense claims) required to be paid by the Company on the Effective Date or to be paid by the Company following the Effective Date pursuant to obligations assumed by the Company during the course of its bankruptcy proceedings shall not be in excess of the amounts reflected in Plan R-2 plus any additional allowances provided in Section 7 (as reduced by any repayments of the existing debtor-in-possession loan made on or prior to the Effective Date) and shall not be materially different in nature than those specified in Plan R-2 (except with respect to administrative claims not known to the Company when Plan R-2 was developed); and (G) the Company shall have paid all fees and expenses due Investor under the Procedures Agreement; (j) since the date hereof, there shall have occurred no outbreak or escalation of hostilities or other international or domestic calamity, crisis or change in political, financial or economic conditions or other adverse change in the financial markets that impairs (or could reasonably be expected to impair) in any material respect the Company's ability to carry on its business in a manner consistent in all material respects with prior practice or impairs (or could reasonably be expected to impair) in any material respect Investor's ability to realize the intended benefits and value of this Agreement or any Related Agreement; (k) the Related Agreements, including all Alliance Agreements, to be executed by the Company shall have been executed by the Company on or before the Effective Date and, once executed, shall not have been modified without the consent of Investor, shall be in effect and shall not have been stayed; (l) the Company shall have performed in all material respects all obligations on its part required to be performed on or before the Effective Date under this Agreement, the Procedures Agreement and the Related Agreements and all orders of the Bankruptcy Court in respect thereof that are consistent with the provisions of such instruments; (m) all representations and warranties of the Company under this Agreement, the Procedures Agreement and the Related Agreements shall be true in all material respects as of the Effective Date; (n) the Plan and Disclosure Statement each shall have been filed by the Company on or prior to May 15, 1994, and, once filed, shall have been served by the Company on all appropriate parties and, once served, shall not have been modified in any material respect without the prior consent of Investor (which consent shall not be unreasonably withheld), withdrawn by the Company or dismissed; (o) the Disclosure Statement (in the form approved by the Bankruptcy Court and as amended or supplemented, if applicable) shall have been true and correct in all material respects as of the date first mailed to Unsecured Parties and as of the date fixed by the Bankruptcy Court for voting on the Plan and such Disclosure Statement shall not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein (taken as a whole), in light of the circumstances under which they were made, not misleading; provided, however, that the foregoing A-10 51 condition shall not apply to statements or other information furnished or provided by Investor or any of its Affiliates for use in the Disclosure Statement; (p) the order approving the Disclosure Statement shall have been entered by the Bankruptcy Court on or prior to June 30, 1994, and, once entered, shall not have been modified in any material respect, shall be in effect and shall not have been stayed; (q) the Plan (including all securities of the Company to be issued pursuant thereto and all contracts, instruments, agreements and other documents to be entered into in connection therewith), the Disclosure Statement and the Confirmation Order shall be consistent with the terms of this Agreement and otherwise reasonably satisfactory in form and substance to Investor; (r) the Confirmation Order shall have been entered by the Bankruptcy Court in form reasonably satisfactory to Investor on or before August 15, 1994, and, once entered, shall not have been modified in any material respect, shall be in effect and shall not have been stayed and shall not be subject to any appeal; (s) the Effective Date shall have occurred on or prior to the Outside Date unless the reason therefor shall be attributable to the breach by Investor or its Affiliates of any of their respective representations, warranties, covenants or obligations contained herein or in the Procedures Agreement or any Related Agreement;. (t) either pursuant to the Confirmation Order or otherwise, the Bankruptcy Court shall have established one or more bar dates for administrative expense claims pursuant to an order reasonably acceptable to Investor, which bar date or dates shall occur on or before dates reasonably acceptable to Investor; and (u) the Securities and Exchange Commission shall have declared effective a shelf registration statement with respect to the Securities issuable to Investor. In the event any of the conditions set forth in clause (a)-(n), (p) or (r) is not satisfied by the date specified in such clause (the "Deadline"), then, on the 15th day following the then current Deadline, the Deadline shall be automatically extended on a day-to-day basis unless the Company and Investor otherwise agree in writing or unless Investor gives a notice of termination to the Company pursuant to Section 20(b) of the Procedures Agreement within such 15-day period. If any Deadline is automatically extended as aforesaid, Investor may thereafter establish a new Deadline by giving notice to the Company specifying the new Deadline, provided that the new Deadline may not be sooner than 30 days after the date of such notice. SECTION 9. Conditions to Company's Obligations Relating to Investment. The Company's obligations to consummate or to cause the consummation of the issuance and sale of the Securities and the other transactions contemplated by this Agreement shall be subject to the satisfaction, or to the effective written waiver by the Company, of the condition described in Section 8(b) and the following additional conditions: (a) payment of the Purchase Price; (b) Investor shall have delivered to the Company appropriate closing documents, including, but not limited to, executed counterparts of the Related Agreements and certifications of officers, and opinions of legal counsel, all of which shall be reasonably satisfactory to the Company; (c) there shall be in effect no injunction, stay, restraining order or decree issued by any court of competent jurisdiction, whether foreign or domestic, staying the effectiveness of any of the Approvals, the Initial Order or the Confirmation Order, and there shall not be pending any request or motion for any such injunction, stay, restraining order or decree; provided, however, that the foregoing condition shall not apply to any such injunction, stay, order or decree requested, initiated or supported by the Company or to any such request or motion made, initiated or supported by the Company; (d) the Related Agreements to be executed by Investor or any of its partners shall have been executed by such parties on or before the Effective Date and, once executed, shall not have been modified without the consent of the Company, shall be in effect and shall not have been stayed; A-11 52 (e) Investor, Continental and Mesa shall have performed in all material respects all obligations on their part required to be performed on or before the Effective Date under this Agreement, the Procedures Agreement and the Related Agreements and all orders of the Bankruptcy Court in respect thereof that are consistent with the provisions of such instruments; (f) all representations and warranties of Investor, Continental and Mesa under this Agreement, the Procedures Agreement and the Related Agreements shall be true and correct in all material respects as of the Effective Date; (g) the Company shall be reasonably satisfied that the Alliance Agreements, when fully implemented, shall result in an increase to the Company's pretax income of not less than $40 million per year; provided, however, that Investor shall have no liability for any failure of the Company to achieve any such increase in net income except to the extent such failure results from a default by Investor or its partners pursuant to the terms of such Alliance Agreements; (h) since the date hereof, there shall have occurred (A) no outbreak or escalation of hostilities or other international or domestic calamity, crisis or change in political, financial or economic conditions or other adverse change in the financial markets or (B) any adverse change in the condition (financial or otherwise), business, assets, properties or prospects of Continental or Mesa, in each case that materially impairs the ability of either Continental or Mesa to perform its obligations under the Alliance Agreements or the Company's ability to realize the intended benefits and value of this Agreement, the Alliance Agreements (as contemplated by clause (g) above) or the other Related Agreements; (i) since the time of their initial filing by the Company, neither the Plan nor the Disclosure Statement shall have been modified in any material respect without the prior consent of the Company (which consent shall not be unreasonably withheld or delayed), withdrawn by Investor or dismissed; (j) the certificate of incorporation and bylaws of the Company shall contain the terms contemplated by this Agreement and shall otherwise be reasonably satisfactory to the Company; (k) the Plan (including all Securities to be issued pursuant thereto and all contracts, instruments, agreements and other documents to be entered into in connection therewith), the Disclosure Statement and the Confirmation Order shall be consistent with the terms of this Agreement and otherwise reasonably satisfactory in form and substance to the Company; (l) the Confirmation Order shall have been entered by the Bankruptcy Court in form reasonably acceptable to the Company and, once entered, shall not have been modified in any material respect, shall be in effect and shall not have been stayed and shall not be subject to any appeal; and (m) the Effective Date shall have occurred on or prior to the Outside Date unless the reason therefor shall be attributable to the breach by the Company of any of its representations, warranties, covenants or obligations contained herein or in the Procedures Agreement or any Related Agreement. SECTION 10. Cooperation. (a) The Company and Investor will cooperate in a commercially reasonable manner, and will use their respective commercially reasonable efforts, to consummate the transactions contemplated hereby, including all commercially reasonable efforts to satisfy the conditions specified in this Agreement. The Company will use commercially reasonable efforts, and Investor will cooperate in a commercially reasonable manner in seeking, to obtain all Approvals. (b) Notwithstanding anything in Section 8 or 9 to the contrary, if prior to the Outside Date, the Department of Justice or any other Regulatory Authority raises any antitrust objection to the consummation of the Investment or the implementation of any Alliance Agreement, which objection has not been resolved on or before the Outside Date, Investor nevertheless shall be required to consummate the Investment and, to that end, agrees to timely make such adjustment to the composition of its partnership and to the Alliance Agreements as required to resolve such antitrust objection; provided, however, that nothing in this paragraph (b) shall affect the rights of the Company under Section 9(g) or obligate the Company to enter into or approve any adjustment or modification of the Alliance Agreements which, in the Company's reasonable judgment, is prejudicial to the Company or the Unsecured Parties in any material respect and which, if A-12 53 entered into or approved, would materially impair the Company's ability to realize the reasonably anticipated benefits of such Alliance Agreements. SECTION 11. Registration Rights Agreement. Investor and the Company will enter into a registration rights agreement on terms acceptable to Investor and the Company. The registration rights agreement will reflect the understanding of the parties with respect to their registration rights and obligations and will provide that Investor, its partners and any assignees and transferees, shall have the right to cause the Company to (i) include the Securities issuable to Investor pursuant to the Plan (including any such Securities issued or issuable in respect of the Warrants or by way of any stock dividend or stock split or in connection with any combination of shares, merger, consolidation or similar transaction), on customary terms, in "piggyback" underwritings and registrations and (ii) to effect, on customary terms, one demand registration under the Securities Act for the public offering and sale of the Securities issued to Investor under the Plan at any time after the third anniversary of the Effective Date. SECTION 12. Applicable Provisions of Law and Regulations. It is understood and agreed that this Agreement shall not create any obligation of, or restriction upon, the Company or Investor or the partners of Investor that would violate applicable provisions of law or regulation relating to ownership or control of a U.S. air carrier. At all times after the Effective Date, the certificate of incorporation of the Company shall provide that, in the event persons who are not U.S. citizens shall own (beneficially or of record) or have voting control over shares of Common Stock, the voting rights of such persons shall be subject to automatic suspension as required to ensure that the Company is in compliance with applicable provisions of law or regulation relating to ownership or control of a U.S. air carrier. SECTION 13. Representations and Warranties of the Company. The Company represents and warrants to Investor as follows: (a) The Company has complied in all material respects with the terms of all orders of the Bankruptcy Court in respect of the Investment, this Agreement and the Procedures Agreement. (b) The Company has delivered to Investor copies of the audited balance sheets of the Company as of December 31, 1992 and the statements of income, stockholders equity and cash flows for the years then ended, together with the notes thereto. Such financial statements, and when delivered to Investor the financial statements of the Company referred to in Section 8(g) will, present fairly, in accordance with generally accepted accounting principles (applied on a consistent basis except as disclosed in the footnotes thereto), the financial position and results of operations of the Company as of the dates and for the periods therein set forth. (c) When delivered to Investor, the unaudited financial statements of the Company referred to in Section 15(b)(ii) will (i) present fairly, in accordance with generally accepted accounting principles (applied on a consistent basis except as disclosed therein and subject to normal year-end audit adjustments), the financial position and results of operations of the Company as of the date and for the period therein set forth, it being understood and agreed, however, that the foregoing representation relating to conformity with generally accepted accounting principles is being made only to the extent such principles are applicable to interim unaudited reports and (ii) reflect a financial position and results of operations not materially worse than those set forth in the pro forma financial statements contained in Plan 9. (d) The Projections and the Monthly Targets were prepared in good faith on a reasonable basis, and when prepared represented the Company's best judgment as to the matters set forth therein, taking into account all relevant facts and circumstances known to the Company. Nothing has come to the Company's attention since the dates on which the Projections and the Monthly Targets, respectively, were prepared which causes the Company to believe that any of the projections and other information contained therein were misleading or inaccurate in any material respect as of such dates. It is specifically understood and agreed that the delivery of the Projections and the Monthly Targets shall not be regarded as a representation, warranty or guarantee that the particular results reflected therein will in fact be achieved or are likely to be achieved. A-13 54 (e) No written statement, memorandum, certificate, schedule or other written information provided (or to be provided) to Investor or any of its representatives by or on behalf of the Company in connection with the transactions contemplated hereby, when viewed together with all other written statements and information provided to Investor and its representatives by or on behalf of the Company, in light of the circumstances under which they were made, (i) contains or will contain any materially misleading statement or (ii) omits or will omit to state any material fact necessary to make the statements therein not misleading. (f) The board of directors of the Company has approved the Investment and Investor's acquisition of Securities hereunder for purposes of, and in accordance with the provisions and requirements of, Section 203(a)(1) of the General Corporation Law of the State of Delaware and, as a consequence, Investor will not be subject to the provisions of such Section with respect to any "business combination" between Investor and the Company (as such term is defined in said Section 203). SECTION 14. Representations and Warranties of Investor. Investor represents and warrants to the Company as follows: (a) The general and limited partners of Investor (other than one such partner which will elect to suspend the voting rights of its Securities as contemplated by Section 4(b)) are U.S. citizens within the meaning of Section 101(16) of the Federal Aviation Act of 1958, as amended. (b) Investor has, or has commitments for, sufficient funds to pay the Purchase Price and otherwise perform its obligations under this Agreement. (c) No written statement, memorandum, certificate, schedule or other written information provided (or to be provided) to the Company or any of its representatives by or on behalf of Investor in connection with the transactions contemplated by the Alliance Agreements, when viewed together with all other written statements and information provided to the Company and its representatives by or on behalf of Investor, in light of the circumstances under which they were made, (i) contains or will contain any materially misleading statement or (ii) omits or will omit to state any material fact necessary to make the statements therein not misleading. SECTION 15. Covenants. (a) Investor covenants (i) to support, subject to management's recommendation, increases in employee compensation through 1995 at least equal to those set forth in Plan R-2 and (ii) after the Effective Date, to cause the board of directors of the Company to consider implementation of a broad based employee incentive compensation plan and a management stock incentive plan. (b) The Company covenants (i) to use commercially reasonable efforts to cause the shelf registration statement referred to in Section 8(u) to remain effective for three years following its effective date and (ii) as soon as available, to deliver to Investor a copy of the unaudited balance sheet of the Company as of the end of each fiscal quarter of the Company prior to the Effective Date and the unaudited statements of income and cash flows for the periods then ended. SECTION 16. Certain Taxes. The Company shall bear and pay all transfer, stamp or other similar taxes (if any are not exempted under Section 1146 of the Bankruptcy Code) imposed in connection with the issuance and sale of the Securities. SECTION 17. Administrative Expense. All amounts owed to Investor or its assignees by the Company under this Agreement, the Related Agreements, the Procedures Agreement and all orders of the Bankruptcy Court in respect thereof shall be treated as an allowed administrative expense priority claim under Section 507(a)(1) of the Bankruptcy Code. SECTION 18. Incorporation by Reference. The provisions set forth in the Procedures Agreement, including, but not limited to, the provisions regarding confidentiality, liability indemnity and termination, are hereby incorporated by reference and such provisions shall have the same force and effect herein as if they were expressly set forth herein in full. A-14 55 SECTION 19. Notices. All notices, requests and other communications hereunder must be in writing and will be deemed to have been duly given only if delivered personally or by facsimile transmission or mailed (first class postage prepaid) or by prepaid express courier to the parties at the following addresses or facsimile numbers: If to the Company: America West Airlines, Inc. 4000 East Sky Harbor Boulevard Phoenix, Arizona 85034 Attention: William A. Franke and Martin J. Whalen Fax Number: (602) 693-5904 with a copy to: LeBoeuf, Lamb, Greene & MacRae 633 17th Street, Suite 2800 Denver, Colorado 80202 Attention: Carl A. Eklund Fax Number: (303) 297-0422 and a copy to: Andrews & Kurth L.L.P. 4200 Texas Commerce Tower Houston, Texas 77002 Attention: David G. Elkins Fax Number: (713) 220-4285 and a copy to: Murphy, Weir & Butler 101 California Street, 39th Floor San Francisco, California 94111 Attention: Patrick A. Murphy Fax Number: (415) 421-7879 and a copy to: Lord, Bissell and Brook 115 South LaSalle Street Chicago, IL 60603 Attention: Benjamin Waisbren Fax Number: (312) 443-0336 If to Investor: AmWest Partners, L.P. 201 Main Street, Suite 2420 Fort Worth, Texas 76102 Attention: James G. Coulter Fax Number: (817) 871-4010 with a copy to: Arnold & Porter 1200 New Hampshire Ave., N.W. Washington, D.C. 20036 Attention: Richard P. Schifter Fax Number: (202) 872-6720 and a copy to: Jones, Day, Reavis & Pogue North Point 901 Lakeside Avenue Cleveland, Ohio 44114 Attention: Lyle G. Ganske Fax Number: (216) 586-7864
A-15 56 and a copy to: Goodwin, Procter & Hoar Exchange Place Boston, MA 02109 Attention: Laura Hodges Taylor, P.C. Fax Number: (617) 523-1231 and a copy to: Murphy, Weir & Butler 101 California Street, 39th Floor San Francisco, California 94111 Attention: Patrick A. Murphy Fax Number: (415) 421-7879 and a copy to: Lord, Bissell and Brook 115 South LaSalle Street Chicago, IL 60603 Attention: Benjamin Waisbren Fax Number: (312) 443-0336
All such notices, requests and other communications will (i) if delivered personally to the address as provided in this Section, be deemed given upon delivery, (ii) if delivered by facsimile transmission to the facsimile number as provided in this Section, be deemed given upon receipt, and (iii) if delivered by mail or by express courier in the manner described above to the address as provided in this Section, be deemed given upon receipt (in each case regardless of whether such notice is received by any other person to whom a copy of such notice, request or other communication is to be delivered pursuant to this Section). Either party from time to time may change its address, facsimile number or other information for the purpose of notices to that party by giving notice specifying such change to the other party hereto. SECTION 20. Governing Law. Except to the extent inconsistent with the Bankruptcy Code, this Agreement shall in all respects be governed by and construed in accordance with the laws of the State of Arizona, without reference to principles of conflicts or choice of law under which the law of any other jurisdiction would apply. SECTION 21. Amendment. This Agreement may only be amended, waived, supplemented or modified by a written instrument signed by authorized representatives of Investor and the Company. Investor may extend the time for satisfaction of the conditions set forth in Section 8 (prior to or after the relevant date) by notifying the Company in writing. The Company may extend the time for satisfaction of the conditions set forth in Section 9 (prior to or after the relevant date) by notifying Investor in writing. SECTION 22. No Third Party Beneficiary. This Agreement and the Procedures Agreement are made solely for the benefit of the Company and Investor and their respective permitted assigns, and no other Person (including, without limitation, employees, stockholders and creditors of the Company) shall have any right, claim or cause of action under or by virtue of this Agreement or the Procedures Agreement, except to the extent such Person is entitled to protection as contemplated by Section 28(b) or to expense reimbursement pursuant to the Procedures Agreement or may assert a claim for indemnity pursuant to the Procedures Agreement. SECTION 23. Assignment. Except as otherwise provided herein, Investor may assign all or part of its rights under this Agreement to any of its partners (each of whom may assign all or part to its Affiliates) or to any fund or account managed or advised by Fidelity Management Trust Company or any of its Affiliates and may assign any Securities (or the right to purchase any Securities) to any lawfully qualified Person or Persons, and the Company may assign this Agreement to any Person with which it may be merged or consolidated or to whom substantially all of its assets may be transferred in facilitation of the consummation of the Plan and the effectuation of the issuance and sale of the Securities as contemplated hereby or by the Related Agreements. None of such assignments shall relieve the Company or Investor of any obligations hereunder, under the Procedures Agreement or under the Related Agreements. A-16 57 SECTION 24. Counterparts. This Agreement may be executed by the parties hereto in counterparts and by telecopy, each of which shall be deemed to constitute an original and all of which together shall constitute one and the same instrument. With respect to signatures transmitted by telecopy, upon request by either party to the other party, an original signature of such other party shall promptly be substituted for its facsimile. SECTION 25. Invalid Provisions. If any provision of this Agreement is held to be illegal, invalid or unenforceable under any present or future laws, rules or regulations, and if the rights or obligations of Investor and the Company under this Agreement will not be materially and adversely affected thereby, (a) such provision will be fully severable, (b) this Agreement will be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part hereof, (c) the remaining provisions of this Agreement will remain in full force and effect and will not be affected by the illegal, invalid or unenforceable provision or by its severance herefrom, and (d) in lieu of such illegal, invalid or unenforceable provision, there will be added automatically as a part of this Agreement a legal, valid and enforceable provision as similar in terms to such illegal, invalid or unenforceable provision as may be possible. If the rights and obligations of Investor or the Company will be materially and adversely affected by any such provision held to be illegal, invalid or unenforceable, then unless such provision is waived in writing by the affected party in its sole discretion, this Agreement shall be null and void. SECTION 26. Tagalong Rights. On the Effective Date, Investor shall enter into a written agreement for the benefit of all holders of Class B Common (other than Investor and its Affiliates) whereby Investor shall agree, for a period of three years after the Effective Date, not to sell, in a single transaction or related series of transactions, shares of Common Stock representing 51% or more of the combined voting power of all shares of Common Stock then outstanding unless such holders shall have been given a reasonable opportunity to participate therein on a pro rata basis and at the same price per share and on the same economic terms and conditions applicable to Investor; provided, however, that such obligation of Investor shall not apply to any sale of shares of Common Stock made by Investor (i) to any Affiliate of Investor, (ii) to any Affiliate of Investor's partners, (iii) pursuant to a bankruptcy or insolvency proceeding, (iv) pursuant to judicial order, legal process, execution or attachment, (v) in a widespread distribution registered under the Securities Act of 1933, as amended ("Securities Act") or (vi) in compliance with the volume limitations of Rule 144 (or any successor to such Rule) under the Securities Act. SECTION 27. Stock Legend. All securities issued to Investor pursuant to the Plan shall be conspicuously endorsed with an appropriate legend to the effect that such securities may not be sold, transferred or otherwise disposed of except in compliance with (i) Section 26 and (ii) applicable securities laws. SECTION 28. Directors' Liability and Indemnification. (a) Upon, and at all times after, consummation of the Plan, the certificate of incorporation of the Company shall contain provisions which (i) eliminate the personal liability of the Company's former, present and future directors for monetary damages resulting from breaches of their fiduciary duties to the fullest extent permitted by applicable law and (ii) require the Company, subject to appropriate procedures, to indemnify the Company's former, present and future directors and executive officers to the fullest extent permitted by applicable law. In addition, upon consummation of the Plan, the Company shall enter into written agreements with each person who is a director or executive officer of the Company on the date hereof providing for similar indemnification of such person and providing that no recourse or liability whatsoever with respect to this Agreement, the Procedures Agreement, the Related Agreements, the Plan or the consummation of the transactions contemplated hereby or thereby shall be had, directly or indirectly, by or in the right of the Company against such person. Notwithstanding anything contained herein to the contrary, the provisions of this Section 28(a) shall not be applicable to any person who ceased being a director of the Company at any time prior to March 1, 1994. (b) Investor agrees, on behalf of itself and its partners, that no recourse or liability whatsoever (except as provided by applicable law for intentional fraud, bad faith or willful misconduct) shall be had, directly or indirectly, against any person who is a director or executive officer of the Company on the date hereof with respect to this Agreement, the Procedures Agreement, the Related Agreements, the Plan or the consumma- A-17 58 tion of the transactions contemplated hereby or thereby, such recourse and liability, if any, being expressly waived and released by Investor and its partners as a condition of, and in consideration for, the execution and delivery of this Agreement. SECTION 29. Jurisdiction of Bankruptcy Court. The parties agree that the Bankruptcy Court shall have and retain exclusive jurisdiction to enforce and construe the provisions of this Agreement. SECTION 30. Interpretation. In this Agreement, unless a contrary intention appears, (i) the words "herein", "hereof" and "hereunder" and other words of similar import refer to this Agreement as a whole and not to any particular Section or other subdivision and (ii) reference to any Section means such Section hereof. The Section headings herein are for convenience only and shall not affect the construction hereof. No provision of this Agreement shall be interpreted or construed against either party solely because such party or its legal representative drafted such provision. SECTION 31. Termination. This Agreement shall terminate concurrently with the termination of the Procedures Agreement. SECTION 32. Entire Agreement. The Agreement supersedes any and all other agreements (oral or written) between the parties in respect to the subject matter hereof other than the Procedures Agreement. AMWEST PARTNERS, L.P. By: AmWest Genpar, Inc., its General Partner By: -------------------------------------- Title: -------------------------------------- Accepted and Agreed to this 21st day of April, 1994. AMERICA WEST AIRLINES, INC. as Debtor and Debtor-in-Possession By: - - -------------------------------------- Title: - - -------------------------------------- A-18 59 PLAN OF REORGANIZATION EXHIBIT B STOCKHOLDERS' AGREEMENT 60 [THIS PAGE INTENTIONALLY LEFT BLANK] 61 STOCKHOLDERS' AGREEMENT FOR AMERICA WEST AIRLINES, INC. THIS STOCKHOLDERS' AGREEMENT FOR AMERICA WEST AIRLINES, INC. (this "Agreement") is entered into as of this day of , 1994 by and among AmWest Partners, L.P., a Texas limited partnership ("AmWest"), GPA Group plc, a corporation organized under the laws of Ireland ("GPA"), , and (collectively, the "Stockholder Representatives"), and America West Airlines, Inc., a Delaware corporation (the "Company"). RECITALS: WHEREAS, on June 27, 1991, the Company filed a case seeking relief under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the District of Arizona (the "Bankruptcy Court"); and WHEREAS, on December 8, 1993, the Bankruptcy Court entered an Order on Motion to Establish Procedures for Submission of Investment Proposals (the "Procedures Order"); and WHEREAS, pursuant to the Procedures Order, AmWest and the Company have entered into that certain Third Revised Investment Agreement dated April 21, 1994 (the "Investment Agreement"), contemplating an investment by AmWest in the Company (the "Investment") and providing for the consummation of the Company's Plan of Reorganization (the "Plan"); and WHEREAS, on , 1994, the Bankruptcy Court entered an order confirming the Plan; and WHEREAS, in consideration of the Investment, the Company has issued common stock of the Company ("Common Stock") consisting of Class A Common Stock ("Class A Common") and Class B Common Stock ("Class B Common") and warrants to purchase Class B Common to AmWest; and WHEREAS, in exchange for the release and modification of certain agreements and claims, the Company has issued shares of Class B Common and warrants to purchase Class B Common to GPA; and WHEREAS, pursuant to Section 6(b) of the Investment Agreement, the Official Committee of Equity Holders of America West Airlines, Inc., appointed in the Company's Chapter 11 case (the "Equity Committee") has appointed as a Stockholder Representative; and WHEREAS, pursuant to Section 6(b) of the Investment Agreement, the Official Committee of Unsecured Creditors of America West Airlines, Inc., appointed in the Company's Chapter 11 case (the "Creditors' Committee") has appointed as a Stockholder Representative; and WHEREAS, pursuant to Section 6(b) of the Investment Agreement, the Board of Directors of the Company, as constituted prior to consummation of the Plan, has appointed as a Stockholder Representative; and WHEREAS, the parties hereto have agreed to enter into this Agreement pursuant to Section 218(c) of Title 8 of the Delaware Code (the "General Corporation Law"). NOW, THEREFORE, in consideration of the premises herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. DEFINITIONS. "Affiliate" shall mean (i) when used with reference to any partnership, any person or entity that, directly or indirectly, owns or controls ten percent (10%) or more of either the capital or profit interests of such partnership or is a partner of such partnership or is a person or entity in which such partnership has a ten percent (10%) or greater direct or indirect equity interest and (ii) when used with reference to any corporation, any person or entity that, directly or indirectly, owns or controls ten percent (10%) or more of the outstanding voting securities of such corporation or is a person or entity in which such corporation has a ten percent (10%) or greater direct or indirect equity interest. In addition, the term "Affiliate," when used with B-1 62 reference to any person or entity, shall also mean any other person or entity that, directly or indirectly, controls or is controlled by or is under common control with such person or entity. As used in the preceding sentence, (A) the term "control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of the entity referred to, whether through ownership of voting securities, by contract or otherwise and (B) the terms "controlling" and "controls" shall have meanings correlative to the foregoing. Notwithstanding the foregoing, neither the Company nor any Fidelity Fund will be deemed to be an Affiliate of AmWest or any of its partners. "Alliance Agreements" shall have the meaning set forth in the Investment Agreement. "AmWest Director" shall mean a director of the Company designated by AmWest pursuant to Section 2.1(a). "Annual Meeting" shall mean an annual meeting of the shareholders of the Company. "Board" shall mean the Company's Board of Directors. "Bylaws" shall mean the Restated Bylaws adopted by the Company in accordance with Section 303 of the General Corporation Law pursuant to the Plan. "Citizens of the United States" shall have the meaning set forth in Section 1301, Title 49, United States Code, as now in effect or as it may hereafter from time to time be amended. "Continental" shall mean Continental Airlines, Inc. or any successor. "Creditors' Committee Director" shall mean a director of the Company designated by the Creditors' Committee or otherwise pursuant to Section 2.1(b). "Effective Date" shall mean the date upon which the Restated Certificate of Incorporation becomes effective in accordance with the Plan and the General Corporation Law. "Equity Committee Director" shall mean a director of the Company designated by the Equity Committee or otherwise pursuant to Section 2.1(b). "Fidelity Fund" shall mean a fund or account managed or advised by Fidelity Management Trust Company or any of its Affiliates or successor(s). "GPA Director" shall mean a director of the Company designated by GPA pursuant to Section 2.1(c). "Independent Company Director" shall mean a director of the Company designated pursuant to Section 2.1(b). "Independent Directors" shall mean, collectively, the Creditors' Committee Directors, the Equity Committee Director, and the Independent Company Director. "Mesa" shall mean Mesa Airlines, Inc. or any successor. "Public Offering" shall have the meaning set forth in Section 4.2. "Restated Certificate of Incorporation" shall mean the Restated Certificate of Incorporation adopted by the Company in accordance with Section 303 of the General Corporation Law pursuant to the Plan. "Stockholder Representatives" shall mean the persons identified as such in the recitals set forth above; provided that in the case of the death, resignation, removal or disability of a Stockholder Representative, his or her successor shall be designated by the remaining Stockholder Representatives, and upon providing a written acknowledgment to such effect to all other parties hereto and agreeing to be bound and subject to the terms hereof, shall become a Stockholder Representative. "Third Annual Meeting" shall mean the first Annual Meeting after the third anniversary of the Effective Date. B-2 63 2. DESIGNATION AND VOTING FOR COMPANY DIRECTORS. 2.1 Until the Third Annual Meeting, subject to the exception set forth in Section 4.7(a), the Board shall consist of up to fifteen (15) persons, of whom nine (9) persons shall be AmWest Directors, five (5) persons shall be Independent Directors and up to one (1) person shall be a GPA Director, all designated in accordance with the following procedure: (a) The AmWest Directors designated on Exhibit A hereto shall serve until the first Annual Meeting following the Effective Date and until the successor to each such director shall be duly elected and qualified, or until their death, disability, removal or resignation. No less than thirty (30) days in advance of each Annual Meeting prior to (but not including) the Third Annual Meeting, and no less than five (5) days in advance of any other meeting of the Board at which a director will be elected to sit on the Board in a seat vacated by an AmWest Director because of death, disability, removal, resignation, or otherwise, AmWest shall give written notice to the other parties hereto designating the individual or individuals to serve as AmWest Directors. For so long as AmWest and/or its Affiliates holds at least five percent (5%) of the voting equity securities of the Company, GPA agrees to vote the Common Stock held and controlled by it and to cause the GPA Director to vote or provide written consents in favor of such designees and to take any other action necessary to elect such designees. The Stockholder Representatives agree to recommend to the Independent Directors to vote or provide written consents in favor of such designees and to take any other action necessary to elect such designees. (b) Three (3) Creditors' Committee Directors, one (1) Equity Committee Director, and one (1) Independent Company Director, each as designated on Exhibit A hereto, shall serve until the first Annual Meeting following the Effective Date and until the successor to each such director shall be duly elected and qualified, or until their death, disability, removal or resignation. Until the Third Annual Meeting, the Company shall nominate for reelection, and AmWest and GPA shall vote the Common Stock held and controlled by them in favor of, each Independent Director designated on Exhibit A for so long as he or she continues to serve on the Board. No less than five (5) days in advance of any meeting of the Board at which a director will be elected to sit on the Board in a seat vacated by an Independent Director because of death, disability, removal, resignation or otherwise (a "Successor Independent Director"), and no less than thirty (30) days in advance of an Annual Meeting prior to (but not including) the Third Annual Meeting at which the term of any Successor Independent Director will expire, the Stockholder Representatives shall give written notice to the other parties hereto designating the individuals to serve as Independent Directors; except that if the Creditors' Committee or the Equity Committee remain in effect, they shall have the right to designate the Creditors' Committee Directors and the Equity Committee Director, respectively, or the individuals to fill vacancies thereof, by giving written notice to the other parties hereto in accordance with the terms set forth above and provided that the Stockholder Representatives shall select any Successor Independent Director to replace the Independent Company Director from among the executive officers of the Company. Each of AmWest and GPA agrees to vote the Common Stock held and controlled by them and to cause the AmWest Directors and the GPA Director, respectively, to vote or provide written consents in favor of such designees and to take any other action necessary to elect such designees; provided that each Independent Director shall be reasonably acceptable to AmWest at the time of his or her initial designation. (c) The GPA Director designated on Exhibit A hereto shall serve until the first Annual Meeting following the Effective Date and until the successor to such director shall be duly elected and qualified or until his or her death, disability, removal, or resignation. No less than thirty (30) days in advance of each Annual Meeting prior to (but not including) the Third Annual Meeting, and no less than five (5) days in advance of any other meeting of the Board at which a director will be elected to sit on the Board in a seat vacated by the GPA Director because of death, disability, removal, resignation or otherwise, GPA shall give written notice to the other parties hereto designating the individual to serve as GPA Director. Unless the rights of GPA hereunder have been terminated pursuant to Section 6.2, AmWest agrees to vote the Common Stock held and controlled by it, and to cause the AmWest Directors, and the Stockholder Representatives agree to recommend to the Independent Directors, to vote or provide written consents in B-3 64 favor of such designee and to take any other action necessary to elect such designee; provided that the GPA Director shall be reasonably acceptable to AmWest at the time of his or her initial designation. (d) Except as otherwise provided herein, each of AmWest, the Stockholder Representatives, and GPA agrees to nominate or cause the nomination of the AmWest Directors, the Independent Directors, and the GPA Director, respectively, in accordance with the Bylaws. (e) Notwithstanding the foregoing, no party hereto shall be obligated to vote any shares for which the voting rights have been suspended, whether voluntarily or involuntarily. (f) In the event that AmWest, the Creditors' Committee or Equity Committee (for so long as each is in existence and has the ability to designate a director as herein provided), the Stockholder Representatives, or GPA shall fail or refuse to designate a nominee to the Board for a position allocated to and to be filled by such group or entity as herein provided, such position shall not be filled and shall remain vacant unless and until such designation shall be made as herein provided. (g) In the event that the rights and obligations of GPA with respect to this Agreement are terminated in accordance with Section 6.2, GPA agrees to cause the resignation of, or provide notice to the other parties hereto as provided in subsection (h)(i) below requesting removal of the GPA Director, at which time the Board shall be reduced to fourteen (14) persons. (h) The parties hereto agree to (i) vote the Common Stock held and controlled by them in favor of the removal from the Board, upon notice by the group or entity having the right to designate such director under this Section 2.1 and requesting such removal, of any person or persons designated to the Board by such group or entity, and (ii) to vote the Common Stock held and controlled by them (other than stock held individually by any Stockholder Representative) and to cause (or in the case of the Stockholder Representatives, recommend to) the directors designated by them to vote or take such action as may be required under the General Corporation Law or otherwise to implement the provisions of this Agreement. The group or entity who has nominated any director in accordance with this Agreement shall have the exclusive right to remove or replace such director by written notice as herein provided; except that nothing in this agreement shall be construed to limit or prohibit the removal of any director for cause. 2.2 Until the Third Annual Meeting, at least eight of the AmWest Directors, at least two of the Creditors' Committee Directors, the Equity Committee Director, and the Independent Company Director shall each be Citizens of the United States. 2.3 AmWest agrees that no AmWest Director shall be an officer or employee of Continental. 3. VOTING ON CERTAIN MATTERS. 3.1 Any Director who is selected by, or who is a director of, Continental shall recuse himself or herself from voting on, or otherwise receiving any confidential information regarding, matters in connection with negotiations between Continental and the Company (including, without limitation, negotiation between Continental and the Company of the Alliance Agreements) and matters in connection with any action involving direct competition between Continental and the Company. Any Director who is selected by, or who is a director, officer or employee of, Mesa shall recuse himself or herself from voting on, or otherwise receiving any confidential information regarding, matters in connection with negotiations between Mesa and the Company (including, without limitation, negotiation between Mesa and the Company of the Alliance Agreements) and matters in connection with any action involving direct competition between Mesa and the Company. 3.2 Until the Third Annual Meeting, the affirmative vote of the holders of a majority of the voting power of the outstanding shares of each class of common stock of the Company entitled to vote (excluding any shares owned by AmWest or any of its Affiliates, but not, however, excluding shares owned, controlled or voted by Mesa or any of its transferees that are not otherwise Affiliates of AmWest), voting as a single class, shall be required to approve, adopt or authorize: B-4 65 (a) Any merger or consolidation of the Company with or into AmWest or any Affiliate of AmWest; (b) Any sale, lease, exchange, transfer, or other disposition by the Company of all or any substantial part of the assets of the Company to AmWest or any Affiliate of AmWest; (c) Any transaction with or involving the Company as a result of which AmWest or any of AmWest's Affiliates will, as a result of issuances of voting securities by the Company (or any other securities convertible into or exchangeable for such voting securities), acquire an increased percentage ownership of such voting securities, except for (i) the exercise of Warrants issued under the Plan, (ii) the conversion of Class A Common held by it to Class B Common, or (iii) otherwise pursuant to a transaction in which all holders of Class B Common may participate on a pro rata basis at the same price per share and on the same economic terms, including, without limitation, (A) a tender or exchange offer for all shares of the Common Stock and (B) a Public Offering; or (d) Any related series or combination of transactions having or which will have, directly or indirectly, the same effect as any of the foregoing. At the request of any party proposing such a transaction and subject to approval by the Board, the Company agrees to put to a vote of the shareholders the approval of any transaction referred to in subparagraphs (a) through (d) above (excluding the excepted transactions referred to in clauses (i), (ii), and (iii) of subparagraph (c)) at the next regular or any duly convened special meeting of the shareholders of the Company. The voting requirements specified above shall not be applicable to a proposed action which has been approved or recommended by at least three Independent Directors. 4. FURTHER COVENANTS. 4.1 Neither AmWest nor any partner or Affiliate of AmWest or of any partner of AmWest shall sell or otherwise transfer any Common Stock (other than to an Affiliate of the transferor) if, after giving effect thereto and to any related transaction, the total number of shares of Class B Common beneficially owned by the transferor is less than twice the total number of shares of Class A Common beneficially owned by the transferor; provided, however, that nothing contained in this Section 4.1 shall prohibit any owner of Common Stock from selling or otherwise transferring, in a single transaction or related series of transactions, all shares of Common Stock owned by it, subject to the remaining provisions of this Agreement. 4.2 AmWest agrees that its constituent documents shall at all times require that this Agreement be binding upon all general and limited partners of AmWest and any Affiliate of AmWest or such partners who hold or receive shares of the Company for their own account or direct the voting of any shares held by AmWest and upon any assignees or transferees in a single transaction or a related series of transactions of all or substantially all of the Common Stock owned by AmWest or any of its partners or Affiliates of AmWest or any of their partners; except any assignment or transfer made contemporaneous with the consummation of the Plan to any Fidelity Fund or Funds; and except any assignee or transferee who acquires such Common Stock pursuant to (i) a tender or exchange offer open to all shareholders of the Company on a pro rata basis at the same price per share and on the same economic terms, (ii) a distribution registered under the Securities Act of 1933 (as amended, the "Securities Act") (a "Public Offering"), or (iii) a transfer made pursuant to Rule 144 (as amended, "Rule 144") under the Securities Act. AmWest shall not sell or transfer (including upon dissolution of AmWest) any Common Stock held by it to any of its general or limited partners, to any Fidelity Fund, or to any Affiliate of AmWest or such partners and AmWest shall not sell or transfer all or substantially all of the Common Stock held by it in a single transaction or a related series of transactions, except in accordance with clauses (i), (ii) or (iii), above, unless and until it causes any assignee or transferee to provide a written acknowledgment to the other parties hereto that it accepts and is bound and subject to the terms of this Agreement. 4.3 AmWest covenants and agrees that it shall not sell, in a single transaction or a related series of transactions, shares of Common Stock representing fifty one percent (51%) or more of the combined voting power of all shares of Common Stock then outstanding, other than (i) pursuant to or in connection with a tender or exchange offer for all shares of Common Stock and for the benefit of all holders of Class B Common B-5 66 on a pro rata basis at the same price per share and on the same economic terms, (ii) to any Affiliate of AmWest, (iii) to any Affiliate of AmWest's partners, (iv) pursuant to a bankruptcy or insolvency proceeding, (v) pursuant to a judicial order, legal process, execution or attachment, or (vi) in a Public Offering. 4.4 Within ten (10) days of the Effective Date, AmWest shall file with the Securities and Exchange Commission, a Schedule 13D pursuant to Regulation 13D-G ("Regulation 13D-G") under the Securities Exchange Act of 1934 (as amended, the "Exchange Act"), and shall amend such filing as required by Regulation 13D-G. Each other party hereto covered by such filing covenants and agrees to promptly provide to AmWest all information pertaining to such party and necessary to make such amendments and to notify AmWest of any changes in facts or circumstances pertaining to such party that would require any amendments under Regulation 13D-G. 4.5 AmWest agrees that it shall not cause any amendment to the provisions of the Restated Certificate of Incorporation or the Bylaws or otherwise take any action that supersedes or materially adversely affects or impairs the rights and obligations of the parties under this Agreement or is contrary to the provisions of this Agreement. 4.6 (a) Each certificate evidencing shares of Common Stock issued to AmWest or any of its partners, GPA and any of their respective Affiliates, and any assignee or transferee bound by the terms hereof, including shares of Common Stock issued in connection with the exercise of any warrant, so long as such Common Stock is held by them and prior to the termination or expiration of this Agreement, shall be conspicuously stamped or marked with a legend including substantially as follows: THE RIGHTS AND OBLIGATIONS OF THE HOLDER OF THIS CERTIFICATE SHALL BE SUBJECT TO THE TERMS AND PROVISIONS OF THAT CERTAIN STOCKHOLDERS' AGREEMENT DATED , 1994, COPIES OF WHICH ARE ON FILE AT THE PRINCIPAL OFFICE OF AMERICA WEST AIRLINES, INC. and each such certificate, for so long as such certificate is held by AmWest or any of its partners and any of their respective Affiliates and any assignee or transferee bound by the terms hereof and prior to the termination or expiration of this Agreement, shall include in such legend the following: THIS CERTIFICATE AND ANY INTEREST HEREIN MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT IN ACCORDANCE WITH THE AFORESAID STOCKHOLDERS' AGREEMENT. (b) All certificates evidencing shares of Common Stock and warrants of the Company that have not been registered pursuant to the Securities Act of 1933, as amended, and that are not exempt from registration under Section 1145 of the Bankruptcy Code, shall at all times be conspicuously stamped or marked with a legend including substantially as follows: THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND THE RULES AND REGULATIONS THEREUNDER (THE "SECURITIES ACT") OR UNDER THE SECURITIES LAWS OF ANY STATE; AND SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED OTHER THAN IN ACCORDANCE WITH THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OR AN EXEMPTION THEREFROM AND FROM ANY APPLICABLE STATE SECURITIES LAWS. (c) Upon the termination of this Agreement, the Company shall, without charge and upon surrender of certificates by the holders thereof and written request cancel all certificates evidencing shares of Common Stock bearing the legend described in subparagraph (a) above and issue to the holders thereof replacement certificates that do not bear such a legend for an equal number of shares held by such holders. Upon the transfer of any Common Stock bearing the legend described in subparagraph (a) above to a party not bound and subject to by this Agreement, the Company shall, without charge and upon the surrender of certificates by B-6 67 the holders thereof and written request cancel all certificates evidencing such shares of Common Stock and issue to the transferee thereof replacement certificates that do not bear such a legend. 4.7 During the term of this Agreement, AmWest shall not cause the issuance of any preferred stock that would (a) increase the number of directors in excess of the number provided in Section 2.1 (except for increases caused by a provision allowing holders of preferred stock to elect additional directors in the event of nonpayment of dividends) or (b) eliminate or reduce the number of Creditors' Committee Directors, Equity Committee Director, Independent Company Director, or GPA Director. 5. RIGHTS UPON BREACH. 5.1 Each party hereto recognizes and agrees that a violation of any term, provision, or condition of this Agreement may cause irreparable damage to the other parties which is difficult or impossible to quantify or ascertain and that the award of any sum of damages may not be adequate relief to such other parties. Each party hereto therefore agrees that in the event of any breach of this Agreement, the other party or parties shall, in addition to any remedies at law which may be available, have the right to obtain appropriate equitable (including, but not limited to, injunctive) relief. All remedies hereunder shall be cumulative and not exclusive. 5.2 In addition to any other remedies available at law or in equity, each party hereto agrees that the Company shall have the right (a) to withhold transfer, and to instruct any transfer agent for securities of the Company to withhold transfer, of any certificates evidencing shares of Common Stock held by AmWest or any partner or Affiliate of AmWest or transferee if the Company reasonably believes that such transfer would not be in material compliance with the terms and provisions of this Agreement, unless the transferee provides to the Company an opinion of legal counsel reasonably acceptable to the Company that such transfer will be in material compliance with the terms and provisions hereof, and (b) to require any person requesting such transfer to provide such information as may reasonably be requested by the Company regarding ownership of securities, affiliations, if any, between AmWest and the transferee and such other matters pertaining to the transfer as may be appropriate to enable the Company to determine the compliance of the proposed transfer of securities with the terms and provisions of this Agreement. 6. TERMINATION. 6.1 This Agreement shall automatically terminate without any action by any party on the day immediately preceding the Third Annual Meeting and shall not be extended except in accordance with Section 7.3. Upon such termination, the rights and obligations of each party hereunder shall terminate and the provisions of this Agreement shall be of no force and effect; provided that no such termination shall relieve any person or entity from liability for breach or default of this Agreement prior to such termination. 6.2 GPA's rights and obligations under this Agreement (other than its obligations under Section 2.1(g)) shall terminate immediately and without notice upon the earlier of (a) termination of this Agreement under Section 6.1, (b) the sale or transfer by GPA of equity securities of the Company resulting in the holding by GPA of less than two percent (2%) of the voting equity securities of the Company (on a fully diluted basis), or (c) any occurrence, other than as described in clause (b) above, resulting in the holding by GPA of less than two percent (2%) of the voting equity securities of the Company (on a fully diluted basis) if (i) the Company files a Form 10-Q under the Exchange Act, or other written report or statement, that is delivered to GPA and a copy to the party designated in Section 7.1, reflecting information as to the Company's total issued and capital stock from which GPA can determine whether it holds less than two percent (2%) of the voting equity securities of the Company (on a fully diluted basis) and (ii) GPA continues to hold less than two percent (2%) of the voting equity securities (on a fully diluted basis) for greater than thirty-five (35) days after delivery of such Form 10-Q, or provision of such report or statement to GPA. GPA acknowledges that the Company's continuing with its existing procedures for the distribution of Form-10-Qs constitutes delivery to GPA within the meaning of this Section 6.2. B-7 68 7. MISCELLANEOUS. 7.1 All notices, requests and other communications hereunder must be in writing and will be deemed to have been duly given only if delivered personally or by facsimile transmission or mailed (first class postage prepaid) or by prepaid express courier at the following addresses or facsimile numbers: If to AmWest: AmWest Partners, L.P. 201 Main Street, Suite 2420 Fort Worth, Texas 76102 Attention: James G. Coulter Fax Number: (817) 871-4010 with a copy to: Arnold & Porter 1200 New Hampshire Ave., N.W. Washington, D.C. 20036 Attention: Richard P. Schifter Fax Number: (202) 872-6720 and a copy to: Jones, Day, Reavis & Pogue North Point 901 Lakeside Avenue Cleveland, Ohio 44114 Attention: Lyle G. Ganske Fax Number: (216) 586-7864 If to GPA: GPA Group plc GPA House Shannon, Ireland Attention: Patrick H. Blaney Fax Number: 353 61 360220 with a copy to: Paul, Hastings, Janofsky & Walker 399 Park Avenue, 31st Floor New York, New York 10022 Attention: Marguerite R. Kahn Fax Number: (212) 319-4090 If to : If to : If to : If to the Company: America West Airlines, Inc. 4000 East Sky Harbor Boulevard Phoenix, Arizona 85034 Attention: General Counsel Fax Number: (602) 693-5904 with a copy to: Andrews & Kurth, L.L.P. 4200 Texas Commerce Tower Houston, Texas 77002 Attention: David G. Elkins Fax Number: (713) 220-4285
All such notices, requests and other communications will (i) if delivered personally to the address as provided in this Section 7.1, be deemed given upon delivery, (ii) if delivered by facsimile transmission to the facsimile number as provided in this Section 7.1, be deemed given upon receipt, and (iii) if delivered by mail or by express courier in the manner described above to the address as provided in this Section 7.1, be deemed given upon receipt (in each case regardless of whether such notice is received by any other person to whom a copy of B-8 69 such notice, request or other communication is to be delivered pursuant to this Section 7.1). Any party from time to time may change its address, facsimile number or other information for the purpose of notices to that party by giving notice as provided in this Section 7.1 specifying such change to the other parties hereto. Nothing in this Section 7.1 shall be deemed or construed to alter the notice provisions contained in the Bylaws. 7.2 This Agreement shall in all respects be governed by and construed in accordance with the laws of the State of Delaware without reference to principles of conflicts or choice of law under which the law of any other jurisdiction would apply. 7.3 This Agreement may only be amended, waived, supplemented, modified or extended by a written instrument signed by authorized representatives of each party hereto. 7.4 This Agreement shall inure to the benefit of and be binding upon each of the parties hereto and their respective successors and permitted assigns. 7.5 This Agreement may be executed by the parties hereto in counterparts and by telecopy, each of which shall be deemed to constitute an original and all of which together shall constitute one and the same instrument. 7.6 If any term or provision of this Agreement shall be found by a court of competent jurisdiction to be illegal, invalid or unenforceable to any extent, the remainder of this Agreement shall not be affected thereby and shall be enforced to the greatest extent permitted by law. 7.7 The parties hereto intend that in the case of any conflict or inconsistency between this Agreement and the Restated Certificate of Incorporation or the Bylaws, that this Agreement shall control, and therefore in the event that any term or provision of this Agreement is rendered invalid, illegal or unenforceable by the Restated Certificate of Incorporation or the Bylaws, the parties agree to amend the Restated Certificate of Incorporation or the Bylaws (as the case may be) so as to render such term or provision valid, legal and enforceable, if and to the extent possible. B-9 70 IN WITNESS WHEREOF, the parties hereto, by their respective officers thereunto duly authorized, have executed this Agreement as of the date first written above. AMWEST PARTNERS, L.P. By: AmWest Genpar, Inc., its General Partner By: Name: Title: GPA GROUP PLC By: Name: Title: [Stockholder Representative] [Stockholder Representative] [Stockholder Representative] AMERICA WEST AIRLINES, INC. By: Name: Title: B-10 71 PLAN OF REORGANIZATION EXHIBIT C GPA TERM SHEET 72 [THIS PAGE INTENTIONALLY LEFT BLANK] 73 GPA TERM SHEET This Term Sheet, dated as of June 13, 1994, sets forth the principal terms and conditions (the "Terms and Conditions") of the treatment to be afforded to the claims and interests of GPA Group plc and its affiliates (individually and collectively, "GPA") pursuant to a joint plan of reorganization (the "Plan") of America West Airlines, Inc. (the "Company") to be proposed and sponsored by the Company in conjunction with AmWest Partners, L.P. ("AmWest") under and in accordance with the Third Revised Investment Agreement, dated as of April 21, 1994, between the Company and AmWest (the "Investment Agreement") and the Third Revised Interim Procedures Agreement, dated as of April 21, 1994, between the Company and AmWest (the "Interim Procedures Agreement"). Except as otherwise defined herein, capitalized terms used herein have the meanings stated in the Investment Agreement. Termination of Put Agreement............ On the Effective Date, GPA shall (i) cancel all rights of GPA to put any aircraft to the Company pursuant to the A320 Put Agreement, dated as of June 25, 1991, between the Company and GPA, as amended by the First Amendment thereto, dated as of September 1, 1992 (as so amended, the "Put Agreement") and the related Agreement Regarding Rights of First Refusal for A320 Aircraft, dated as of September 1, 1992 (the "First Refusal Agreement"), among the Company, GPA and Kawasaki Leasing International Inc., and (ii) waive, and covenant not to seek or assert, any and all claims of any kind or nature arising out of or in connection with the Put Agreement and/or the First Refusal Agreement, other than claims for reimbursement of expenses incurred by GPA in connection therewith. As of the date of this Term Sheet, GPA has been fully reimbursed by the Company for all expenses incurred by GPA in connection with the Put Agreement and the First Refusal Agreement. Aircraft and Engine Subleases.................. On the Effective Date, the Company shall ratify (without modification or amendment) all of its obligations (including, without limitation, rental obligations) under and in connection with (i) the sixteen separate Aircraft Sublease Agreements between the Company and GPA, and (ii) the three separate Engine Sublease Agreements between the Company and GPA (in each case, as such Sublease Agreement is more fully described on Schedule I to the Put Agreement and, in each case, as such Sublease Agreement was assumed by the Company pursuant to Section 365 of the Bankruptcy Code). DIP Financing.............. On the Effective Date, all amounts due and owing by the Company under the debtor-in-possession financing provided to the Company by GPA and other debtor-in-possession lenders shall be paid in full (it being understood that, upon receipt of such amounts, GPA shall take all such actions as are required to be taken by GPA pursuant to the documents relating to such financing to cause and evidence the release of all liens securing such financing and the termination of the transactions relating to such financing). Common Stock............... On the Effective Date, GPA shall receive 900,000 shares of the Class B Common Stock of the Company (the "Class B Common Stock"), which shares shall represent two percent of the total amount of the Common Stock of the Company (without giving effect to exercise of the warrants described below and in the Investment Agreement) and which Class B Common Stock shall have the terms and provisions contemplated in the Investment Agreement. C-1 74 Warrants................... On the Effective Date, GPA shall receive warrants to purchase up to 1,384,615 shares of Class B Common Stock, which shares shall represent 2.5% of the Common Stock of the Company on a fully diluted basis and which warrants shall be exercisable at a price determined in accordance with, and have such other terms and provisions as are described in, the Plan. Cash....................... On the Effective Date, GPA shall receive $30,525,000 in cash. Board Seat................. Pursuant to and in accordance with the terms, provisions and conditions to be contained in a Stockholders' Agreement to be entered into among the reorganized Company, AmWest, GPA and certain other parties, and for so long as GPA owns at least two percent of the voting equity securities of the Company (on a fully diluted basis), GPA shall be allocated one seat, out of a total of fifteen seats, on the Board of Directors of the reorganized Company. The member of the Board of Directors of the reorganized Company designated by GPA shall be reasonably acceptable to AmWest at the time of his or her initial designation (it being understood that each of the persons currently serving as "independent directors" of AWA, Patrick Blaney, John Tierney and Declan Traecy shall be acceptable to AmWest for such purposes). AmWest and GPA will execute a voting agreement or similar arrangement pursuant to which (i) AmWest will agree to vote in favor of GPA's nominee to the Board of Directors of the reorganized Company, and (ii) GPA will agree to vote in favor of AmWest's nine nominees to the Board of Directors of the reorganized Company, in each case, for so long as (a) AmWest owns at least five percent of the voting equity securities of the Company (on a fully diluted basis), and (b) GPA owns at least two percent of the voting equity securities of the Company (on a fully diluted basis). New Puts................... GPA will be granted the right to deliver or put to the Company, and the Company will be obligated to lease from GPA, during the period beginning not later than June 30, 1995 and ending on June 30, 1999 (the "New Put Period"), up to eight new or used aircraft of types consistent with the Company's fleet plan and requirements (such right being referred to herein as the "New Put Right"). Each lease entered into by the Company in connection with the exercise by GPA of the New Put Right shall provide for the payment by the Company of a fair market rental for the related aircraft, taking into consideration whether the related aircraft is new or used, the specifications and condition of the related aircraft and all provisions of such lease that are relevant to the overall cost to the Company of the related aircraft, and determined at or about the time of delivery of such aircraft to the Company on the basis of operating lease rentals then prevailing in the marketplace for comparable operating leases of comparable aircraft to airlines of comparable creditworthiness to the Company (at or about the time of delivery of such aircraft to the Company and without regard to the prior pendency of the Case); each such lease will be for a lease term determined as hereinafter described; and each such lease shall have such other terms and provisions and be in such form as is agreed upon by the Company and GPA and attached to the agreement between the Company and GPA pursuant to which GPA is granted the New Put C-2 75 Right (such agreement being referred to herein as the "New Put Agreement"). The specific number, types and delivery dates for the aircraft which GPA will be entitled to deliver to the Company (and which the Company will be obligated to lease from GPA) in a particular year during the New Put Period (as well as whether such aircraft will be new or used aircraft) will be determined on the basis of mutual agreement by the Company and GPA, taking into account the Company's fleet requirements for such year, the availability to GPA for purposes of the New Put Agreement (in light of applicable commercial constraints) of aircraft during such year and the number of aircraft theretofore delivered and thereafter remaining to be delivered by GPA to the Company under the New Put Agreement; provided, however, that if, on or prior to the Mutual Agreement Deadline (as such term is hereinafter defined) for a particular year, the Company and GPA shall not have mutually agreed upon the specific number, types and delivery dates for the aircraft which GPA will be entitled to deliver to the Company (and which the Company will be obligated to lease from GPA) during such year (as well as whether such aircraft will be new or used aircraft), GPA will have the right to put to the Company (and the Company will be obligated to lease from GPA without any necessity for further agreement of the Company) up to the Maximum Number (as such term is hereinafter defined) of aircraft for such year, with (i) the specific types of such aircraft being selected by GPA from among the Eligible Types (as such term is hereinafter defined), (ii) such aircraft being new or used aircraft as selected by GPA, and (iii) the specific delivery dates for such aircraft being selected by GPA, in each case, upon at least 150 days' prior written notice by GPA to the Company; and provided further, however, that, unless GPA and the Company shall otherwise agree in writing (whether by reason of mutual agreement relevant to a particular year or otherwise), GPA will not have the right to put to the Company more than five used aircraft during the New Put Period. As used herein, the term "Mutual Agreement Deadline" means (i) with respect to each of 1995 and 1996, January 31, 1995, and (ii) with respect to each ensuing year during the New Put Period, January 1st of the preceding year. As used herein, the term "Maximum Number" means (i) with respect to 1995, two, and (ii) with respect to each ensuing year during the New Put Period, three. As used herein, and unless GPA and the Company shall otherwise agree in writing, the term "Eligible Types" means, with respect to the types of aircraft which GPA will be entitled to put to the Company without the necessity for further agreement of the Company, Boeing 737-300 aircraft, Boeing 757 aircraft and Airbus A320 aircraft. The aircraft which GPA will be entitled to deliver or put to the Company (and which the Company will be obligated to lease from GPA) may be new or used aircraft; provided, however, that unless GPA and the Company shall otherwise agree in writing, GPA will not have the right to deliver or put to the Company more than five used aircraft during the New Put Period; and provided further, however, that any such aircraft which is an Airbus A320 aircraft will (i) be new ex factory or like-new having no greater than 100 flight hours of commercial service, (ii) have IAE V2500A-5 engines if (a) the Company has or is scheduled to have IAE V2500A-5 engines in its fleet on the delivery date for such aircraft, C-3 76 (b) the Company is scheduled to have IAE V2500A-5 engines in its fleet within 24 months of the delivery date for such aircraft, or (c) if new A320 aircraft powered with IAE V2500A-1 engines are not or are not scheduled to be generally available from the airframe and engine manufacturers on the delivery date for such aircraft, or have IAE V2500A-1 Engines (upgraded to maximum performance) if any of the conditions described in the preceding clauses (a), (b) and (c) is not fulfilled, and (iii) have such other specifications (including configuration) as are substantially the same as those of other A320 aircraft in the Company's fleet or as are otherwise mutually agreed upon by GPA and the Company and, in either case, incorporated in the New Put Agreement; and provided further, however, that any such aircraft which is not an A320 aircraft will have such specifications (including configuration and engines) as are substantially the same as those of other aircraft of the same type in the Company's fleet or as are otherwise mutually agreed upon by GPA and the Company and, in either case, incorporated in the New Put Agreement; and provided further, however, that any such aircraft which is a used aircraft will (i) be fresh from (or have no more than 150 flight hours beyond) "C" or annual check, (ii) if maintained under a program involving block "D" check, be in at least half-time condition or if maintained under a program involving segmentation of "D" check, be no more than 12 months from next scheduled major check on airframe and engines, and (iii) be in such other condition (consistent with operating lease return conditions currently prevailing in the operating lease marketplace) as is mutually agreed upon by GPA and the Company and incorporated in the New Put Agreement. The lease term shall be (i) not more than eighteen years and not less than (a) ten years for any new A320 aircraft, or (b) seven years for any other new aircraft, and (ii) not more than seven years and not less than three years for any used aircraft. Unless otherwise mutually agreed in writing by the Company and GPA, (i) the lease term for a new aircraft shall be the minimum term applicable to such aircraft, and (ii) the lease term for a used aircraft shall be five years. Conditions................. The obligation of GPA to consummate the transactions contemplated by this Term Sheet (including, without limitation, the cancellation of GPA's rights and claims under and in respect of the Put Agreement and the First Refusal Agreement) shall be subject to the satisfaction of the following conditions: (i) the Plan shall provide for, and be consummated in accordance with, all of the Terms and Conditions (it being understood that all of the Terms and Conditions are integral to the treatment of GPA's claims and interests and that no one Term or Condition is of greater significance than any other Term or Condition); (ii) the Plan shall provide for, and be consummated with, the capital structure of the reorganized Company being as described in the Investment Agreement, the consideration distributed pursuant to the Plan being as described in the Investment Agreement (except for changes approved in writing by GPA and Permitted Reallocations (as such term is hereinafter defined), and the economic interests of GPA not being diluted from those contained in the Investment Agreement and this Term Sheet; (iii) the Company shall have paid or reimbursed GPA for all expenses reasonably incurred by GPA in connection with the transactions contemplated by this Term Sheet, including, without limitation, the reasonable fees and C-4 77 expenses of GPA's counsel and financial advisor (other than the fees of such financial advisor that are in the nature of "success fees"); (iv) there shall have been executed and delivered, in form and substance reasonably satisfactory to GPA, all such definitive documentation as is necessary or reasonably advisable to implement the transactions contemplated by this Term Sheet (including, without limitation, documentation providing to GPA such registration rights as are reasonably acceptable to GPA with respect to the securities of the reorganized Company that are acquired by GPA in the transactions contemplated by this Term Sheet); and (v) the Board of Directors of GPA (or an appropriate committee thereof) shall have approved the execution and delivery by GPA of the aforesaid definitive documentation (it being understood that, within ten business days following the date of this Term Sheet, GPA shall deliver to AmWest and the Company a certified copy of a resolution evidencing the approval by the Board of Directors of GPA (or an appropriate committee thereof) of this Term Sheet and the transactions contemplated hereby). As used herein, the term "Permitted Reallocation" shall mean changes in the allocation among the Unsecured Creditors, AmWest (and its Affiliates) and the Equity Holders of the aggregate consideration payable to such persons and entities as set forth in the Investment Agreement, without (i) increase or decrease in the aggregate amount thereof, or (ii) change in the terms and conditions of such consideration from those set forth in the Investment Agreement unless, in any such case, AmWest shall have obtained the prior written consent of GPA. The obligations of the Company and AmWest to consummate the transactions contemplated by this Term Sheet shall be subject to the satisfaction of the following conditions: (i) the transactions contemplated by the Investment Agreement (other than those contemplated by this Term Sheet) shall have been consummated; (ii) there shall have been executed and delivered, in form and substance reasonably satisfactory to the Company and AmWest, all such definitive documentation as is necessary or reasonably advisable to implement the transactions contemplated by this Term Sheet; and (iii) there shall have been delivered to the Company and AmWest a certified copy of a resolution evidencing the approval by the Board of Directors of GPA (or an appropriate committee thereof) of this Term Sheet and the transactions contemplated hereby. Other...................... Nothing contained in this Term Sheet shall limit, restrict or impair in any manner or to any extent the treatment afforded by the Plan to any allowed administrative claim of GPA arising from the fulfillment by GPA of its deficiency guarantee obligations to General Electric Capital Corporation with respect to aircraft formerly leased by the Company from General Electric Capital Corporation (it being acknowledged that such treatment shall be in accordance with Section 1129(a)(9)(A) of the Bankruptcy Code). C-5 78 [THIS PAGE INTENTIONALLY LEFT BLANK] 79 PLAN OF REORGANIZATION SCHEDULE 1 SECTION 1110 STIPULATIONS 80 [THIS PAGE INTENTIONALLY LEFT BLANK] 81 SECTION 1110 STIPULATIONS I. Leased Aircraft And Engines. The leases of the following aircraft and engines have been assumed as modified pursuant to the stipulations set forth opposite the aircraft or engine: 1. N137AW Stipulation Regarding Aircraft Lease With Bay Air Lease II approved September 6, 1991, as modified by Supplemental Stipulation approved September 11, 1992, and as further modified by Order dated June 3, 1993. 2. N138AW Joint Stipulation With Respect to Bankruptcy Code N141AW Section 1110 and Related Matters Between America West N189AW Airlines, Inc., CIT and Certain Other Parties With Respect to Certain Aircraft, Engines and Equipment, Also Concerning Related Lease Modifications and Lease Assumption approved September 10, 1991 [Stipulation also covers N144AW and N304AW], as modified by Supplemental Stipulation (N138AW, N141AW, N189AW, N144AW) approved September 11, 1992 [Also covers N144AW]. 3. N147AW Letter Agreement approved October 9, 1991, as modified by a Stipulation approved September 11, 1992. 4. N150AW Stipulation and Order Regarding Aircraft Lease With Respect to One Boeing 737-300, FAA Reg. No. N150AW, Assuming Lease and Providing For Adequate Protection and Section 1110 Compliance approved September 12, 1991, as modified by Supplemental Stipulation (N150AW) approved September 11, 1992. 5. N151AW Stipulation and Order Regarding Aircraft Lease With Respect to One Boeing 737-300, FAA Reg. No. N151AW, Assuming Lease and Providing For Adequate Protection and Section 1110 Compliance approved September 12, 1991, as modified by Supplemental Stipulation (N151AW) approved September 11, 1992. 6. N164AW Stipulation Regarding Aircraft Leases with Ansett N165AW Worldwide Aviation (USA) approved September 6, 1991, as N166AW modified by Supplemental Stipulation approved September N167AW 11, 1992 [Supplemental Stipulation also covers 509DC]. N168AW N169AW N172AW N173AW N174AW N175AW 7. 509DC Stipulation Regarding Aircraft Lease With Ansett Worldwide Aviation (USA) approved September 6, 1991 as modified by Supplemental Stipulation approved September 11, 1992 [Supplemental Stipulation also covers other aircraft].
1-1 82 8. N178AW Joint Stipulation With Respect to Bankruptcy Code Section 1110 and Related Matters, Including Assumption of Agreement Pursuant to Bankruptcy Code Section 365 and Modification of the Automatic Stay Pursuant to Bankruptcy Code Section 362, Between America West Airlines, Inc. and Certain Other Parties With Respect to One Boeing 737-277, FAA Reg. No. N178AW and Related Engines and Equipment, Also Concerning Related Lease Modification approved September 6, 1991, as modified by Joint Supplemental Stipulation With Respect to Modification of Previously Authorized Stipulation Under Bankruptcy Code Section 1110 and Related Matters, Including Modification of the Automatic Stay Pursuant to Bankruptcy Code Section 362, Between America West Airlines, Inc., and Certain Other Parties With Respect to One Boeing 737-277, FAA Reg. No. N178AW and Related Engines and Equipment, Also Concerning Related Lease Modifications. 9. N188AW Joint Stipulation With Respect to Bankruptcy Code Section 1110 and Related Matters, Including Assumption of Agreement Pursuant to Bankruptcy Code Section 365 and Modification of the Automatic Stay Pursuant to Bankruptcy Code Section 362, Between America West Airlines, Inc. and Certain Other Parties With Respect to One Boeing 737-277, FAA Reg. No. N188AW and Related Engines and Equipment, Also Concerning Related Lease Modification approved September 6, 1991, as modified by Joint Supplemental Stipulation With Respect to Modification of Previously Authorized Stipulation Under Bankruptcy Code Section 1110 and Related Matters, Including Modification of the Automatic Stay Pursuant to Bankruptcy Code Section 362, Between America West Airlines, Inc., and Certain Other Parties With Respect to One Boeing 737-277, FAA Reg. No. N188AW and Related Engines and Equipment, Also Concerning Related Lease Modifications. 10. N180AW Joint Stipulation With Respect to Bankruptcy Code Section 1110 and Related Matters, Including Assumption of Agreement Pursuant to Bankruptcy Code Section 365 and Modification of the Automatic Stay Pursuant to Bankruptcy Code Section 362, Between America West Airlines, Inc. and Certain Other Parties With Respect to One Boeing 737-277, FAA Reg. No. N180AW and Related Engines and Equipment, Also Concerning Related Lease Modification approved September 6, 1991, as modified by Joint Supplemental Stipulation With Respect to Modification of Previously Authorized Stipulation Under Bankruptcy Code Section 1110 and Related Matters, Including Modification of the Automatic Stay Pursuant to Bankruptcy Code Section 362, Between America West Airlines, Inc., and Certain Other Parties With Respect to One Boeing 737-277, FAA Reg. No. N180AW and Related Engines and Equipment, Also Concerning Related Lease Modifications.
1-2 83 11. N182AW Joint Stipulation With Respect to Bankruptcy Code Section 1110 and Related Matters, Including Assumption of Agreement Pursuant to Bankruptcy Code Section 365 and Modification of the Automatic Stay Pursuant to Bankruptcy Code Section 362, Between America West Airlines, Inc. and Certain Other Parties With Respect to One Boeing 737-277, FAA Reg. No. N182AW and Related Engines and Equipment, Also Concerning Related Lease Modification approved September 6, 1991, as modified by Joint Supplemental Stipulation With Respect to Modification of Previously Authorized Stipulation Under Bankruptcy Code Section 1110 and Related Matters, Including Modification of the Automatic Stay Pursuant to Bankruptcy Code Section 362, Between America West Airlines, Inc., and Certain Other Parties With Respect to One Boeing 737-277, FAA Reg. No. N182AW and Related Engines and Equipment, Also Concerning Related Lease Modifications. 12. N186AW Joint Stipulation With Respect to Bankruptcy Code Section 1110 and Related Matters, Including Assumption of Agreement Pursuant to Bankruptcy Code Section 365 and Modification of the Automatic Stay Pursuant to Bankruptcy Code Section 362, Between America West Airlines, Inc. and Certain Other Parties With Respect to One Boeing 737-277, FAA Reg. No. N186AW and Related Engines and Equipment, Also Concerning Related Lease Modification approved September 6, 1991, as modified by Joint Supplemental Stipulation With Respect to Modification of Previously Authorized Stipulation Under Bankruptcy Code Section 1110 and Related Matters, Including Modification of the Automatic Stay Pursuant to Bankruptcy Code Section 362, Between America West Airlines, Inc., and Certain Other Parties With Respect to One Boeing 737-277, FAA Reg. No. N186AW and Related Engines and Equipment, Also Concerning Related Lease Modifications. 13. N187AW Joint Stipulation With Respect to Bankruptcy Code Section 1110 and Related Matters, Including Assumption of Agreement Pursuant to Bankruptcy Code Section 365 and Modification of the Automatic Stay Pursuant to Bankruptcy Code Section 362, Between America West Airlines, Inc. and Certain Other Parties With Respect to One Boeing 737-277, FAA Reg. No. N187AW and Related Engines and Equipment, Also Concerning Related Lease Modification approved September 6, 1991, as modified by Joint Supplemental Stipulation With Respect to Modification of Previously Authorized Stipulation Under Bankruptcy Code Section 1110 and Related Matters, Including Modification of the Automatic Stay Pursuant to Bankruptcy Code Section 362, Between America West Airlines, Inc., and Certain Other Parties With Respect to One Boeing 737-277, FAA Reg. No. N187AW and Related Engines and Equipment, Also Concerning Related Lease Modifications.
1-3 84 14. N181AW Joint Stipulation With Respect to Bankruptcy Code Section 1110 and Related Matters, Including Assumption of Agreements Pursuant to Bankruptcy Code Section 365 and Modification of the Automatic Stay Pursuant to Bankruptcy Code Section 362, Between America West Airlines, Inc., and Certain Other Parties With Respect to One Boeing 737-277, FAA Reg. No. N181AW and Related Engines and Equipment, Also Concerning Related Lease Modification approved September 6, 1991, as modified by Supplemental Stipulation (N181AW) approved September 11, 1992. 15. N185AW Joint Stipulation With Respect to Bankruptcy Code Section 1110 and Related Matters, Including Assumption of Agreements Pursuant to Bankruptcy Code Section 365 and Modification of the Automatic Stay Pursuant to Bankruptcy Code Section 362, Between America West Airlines, Inc., and Certain Other Parties With Respect to One Boeing 737-277, FAA Reg. No. N185AW and Related Engines and Equipment, Also Concerning Related Lease Modification approved September 6, 1991, as modified by Supplemental Stipulation (N185AW) approved September 11, 1992. 16. N302AW Stipulation Regarding Aircraft Lease With Meridian Trust Company, as Owner Trustee, Providing for Section 1110 Compliance and Assumption of Lease (N302AW) approved September 6, 1991, as modified by Supplemental Stipulation (N302AW) approved September 11, 1992. 17. N303AW Stipulation Regarding Aircraft Lease With Meridian Trust Company, as Owner Trustee, Providing for Section 1110 Compliance and Assumption of Lease (N303AW) approved September 10, 1991, as modified by Supplemental Stipulation (N303AW) approved September 11, 1992. 18. N304AW Joint Stipulation With Respect to Bankruptcy Code Section 1110 and Related Matters Between America West Airlines, Inc., CIT and Certain Other Parties With Respect to Certain Aircraft, and Related Engines and Equipment, Also Concerning Related Lease Modification and Lease Assumption approved September 11, 1991 [also covered certain other aircraft], as modified by Supplemental Stipulation (N304AW) approved September 11, 1992. 19. N305AW Joint Stipulation and Related Matters, With Respect to Bankruptcy Code Section 1110 Including Assumption of Agreements Pursuant to Bankruptcy Code Section 365 and Modification of the Automatic Stay Pursuant to Bankruptcy Code Section 362, Between America West Airlines, Inc., and Certain Other Parties With Respect to One Boeing 737-3G7, FAA Reg. No. N305AW and Related Engines and Equipment, Also Concerning Related Lease Modifications approved September 6, 1991, as modified by Supplemental Stipulation (N305AW) approved September 11, 1992.
1-4 85 20. N313AW Joint Stipulation With Respect to Bankruptcy Code Section N314AW 1110 And Related Matters, Including Assumption of N315AW Agreement Pursuant to Bankruptcy Code Section 365 and N316AW Modification of Automatic Stay Pursuant to Bankruptcy and spare Code Section 362, Between America West Airlines, Inc., engines And Certain Other Parties With Respect to Four Boeing 737-3s3 Aircraft, FAA Reg. Nos. N313AW, N314AW, N315AW, and N316AW and Related Engines and Equipment, And Also Concerning Related Lease Modification approved September 6, 1991, as modified by Supplemental Stipulation approved September 11, 1992. 21. N620AW Stipulation Regarding Aircraft Leases and/or Agreements N621AW with GPA Group plc, GPA Leasing USA I, Inc., GPA Leasing N622AW USA SUB I, Inc. and Industrial Bank of Japan and Order N624AW approved September 5, 1991. N625AW N626AW N627AW N628AW N629AW N631AW N632AW N633AW N634AW N635AW N636AW N637AW IAE Engine MSN V0025 IAE Engine MSN V0049 IAE Engine MSN V0019 22. N901AW Stipulation of America West and The Boeing Company as to N902AW the Assumption of Six (6) Boeing Aircraft Subleases N903AW approved September 12, 1991, as modified by a N904AW Supplemental Stipulation Relating to Six (6) Boeing N905AW Aircraft Subleases approved September 11, 1992. N906AW 23. N910AW Joint Stipulation With Respect to Bankruptcy Code Section 1110 and Related Matters, Including Assumption of Agreements Pursuant to Bankruptcy Code Section 365 and Modification of the Automatic Stay Pursuant to Bankruptcy Code Section 362, Between America West Airlines, Inc., and Certain Other Parties With Respect to One Boeing 757-2G7, FAA Reg. No. N910AW and Related Engines and Equipment, Also Concerning Related Lease Modification approved September 6, 1991, as modified by Supplemental Stipulation (N910AW) approved March 17, 1993. 24. Rolls Royce Stipulation with PLM Equipment Growth Fund V and First RB211-535 Security Bank of Utah, N.A. approved January 22, 1992. EX Engine Serial No. 30668
1-5 86 25. One CFM56 Stipulation Regarding Aircraft and Engine Leases with -3-B1 Progress Potomac Capital Ventures approved January 29, One CFM56 1992. -3-B2 Engine (serial nos. 720-955 and 722-127) 26. Rolls Royce Joint Stipulation and Order with Respect to Assumption of RB211-535E Engine Lease and Compliance with Bankruptcy Code Section Engine 1110 and Engine, Related Matters Between America West Serial No. Airlines, Inc., and Certain Other Parties with Respect to 30764 One Rolls-Royce RB211-535E4 Gas Turbine Engine, Serial No. 30764 approved September 25, 1991. 27. One CFM Stipulation Authorizing Assumption of Unexpired Equipment 56-331 Leases and the Debtor to Enter Into Transactions Other Engine Than In the Ordinary Course of Business approved (Serial No. September 26, 1991. 724-700), Three JT8D- 15A Engines (Serial Nos. 655150, 687314 and 708313), and Three JT8D-9A Engines (Serial Nos. 674267, 674452 and 674623) 28. N126AW(C-GCPW) Aircraft sublease agreements between America West N127AW(C-GAPW) Airlines, Inc. and Canadian Airlines International Ltd. N128AW(C-GBPW) dated May 1, 1989, as assumed and modified by Stipulation Regarding Aircraft Subleases with Canadian Airlines International Ltd. approved September 6, 1991, and by Supplemental Stipulation approved September 11, 1992. Such subleases were extended, as modified, by Extension Agreement dated April 1, 1994, and approved May 5, 1994.
II. Financed Aircraft And Spare Parts. The financings of the following aircraft and spare parts have been assumed as modified pursuant to the listed stipulations: 1. N149AW Stipulation approved September 6, 1991 as modified by Supplemental Stipulation approved September 11, 1992. 2. N160AW Joint Stipulation With Respect to Bankruptcy Code Section 1110 and Related Matters Including Modification of the Automatic Stay Pursuant to Bankruptcy Code Section 362, Between America West Airlines, Inc., and Certain Other Parties With Respect to One Boeing 737-3G7, FAA Reg. No. N160AW, and Related Engines and Equipment, and Modification of Related Agreements approved September 6, 1991, as modified by Supplemental Stipulation (N160AW) approved September 11, 1992.
1-6 87 3. N154AW Joint Stipulation With Respect to Bankruptcy Code Section 1110 and Related Matters Including Modification of the Automatic Stay Pursuant to Bankruptcy Code Section 362, Between America West Airlines, Inc., and Certain Other Parties With Respect to One Boeing 737-3G7 FAA Reg. No. N154AW, and Related Engines and Equipment, and Modification of Related Agreements approved September 6, 1991, as modified by Joint Supplemental Stipulation with Respect to Modification of Previously Authorized Stipulation Under Bankruptcy Code Section 1110 and Related Matters Including Modification of the Automatic Stay Pursuant to Bankruptcy Code Section 362, Between America West Airlines, Inc., and Certain Other Parties With Respect to One Boeing 737-3G7, FAA Reg. No. N154AW, and Related Engines and Equipment, and Modification of Related Agreements. 4. N155AW Joint Stipulation With Respect to Bankruptcy Code Section 1110 and Related Matters Including Modification of the Automatic Stay Pursuant to Bankruptcy Code Section 362, Between America West Airlines, Inc., and Certain Other Parties With Respect to One Boeing 737-3G7 FAA Reg. No. N155AW, and Related Engines and Equipment, and Modification of Related Agreements approved September 6, 1991, as modified by Joint Supplemental Stipulation with Respect to Modification of Previously Authorized Stipulation Under Bankruptcy Code Section 1110 and Related Matters Including Modification of the Automatic Stay Pursuant to Bankruptcy Code Section 362, Between America West Airlines, Inc., and Certain Other Parties With Respect to One Boeing 737-3G7, FAA Reg. No. N155AW, and Related Engines and Equipment, and Modification of Related Agreements. 5. N156AW Joint Stipulation With Respect to Bankruptcy Code Section 1110 and Related Matters Including Modification of the Automatic Stay Pursuant to Bankruptcy Code Section 362, Between America West Airlines, Inc., and Certain Other Parties With Respect to One Boeing 737-3G7 FAA Reg. No. N156AW, and Related Engines and Equipment, and Modification of Related Agreements approved September 6, 1991, as modified by Joint Supplemental Stipulation with Respect to Modification of Previously Authorized Stipulation Under Bankruptcy Code Section 1110 and Related Matters Including Modification of the Automatic Stay Pursuant to Bankruptcy Code Section 362, Between America West Airlines, Inc., and Certain Other Parties With Respect to One Boeing 737-3G7, FAA Reg. No. N156AW, and Related Engines and Equipment, and Modification of Related Agreements.
1-7 88 6. N157AW Joint Stipulation With Respect to Bankruptcy Code Section 1110 and Related Matters Including Modification of the Automatic Stay Pursuant to Bankruptcy Code Section 362, Between America West Airlines, Inc., and Certain Other Parties With Respect to One Boeing 737-3G7 FAA Reg. No. N157AW, and Related Engines and Equipment, and Modification of Related Agreements approved September 6, 1991, as modified by Joint Supplemental Stipulation with Respect to Modification of Previously Authorized Stipulation Under Bankruptcy Code Section 1110 and Related Matters Including Modification of the Automatic Stay Pursuant to Bankruptcy Code Section 362, Between America West Airlines, Inc., and Certain Other Parties With Respect to One Boeing 737-3G7, FAA Reg. No. N157AW, and Related Engines and Equipment, and Modification of Related Agreements. 7. N158AW Joint Stipulation With Respect to Bankruptcy Code Section 1110 and Related Matters Including Modification of the Automatic Stay Pursuant to Bankruptcy Code Section 362, Between America West Airlines, Inc., and Certain Other Parties With Respect to One Boeing 737-3G7 FAA Reg. No. N158AW, and Related Engines and Equipment, and Modification of Related Agreements approved September 6, 1991, as modified by Joint Supplemental Stipulation with Respect to Modification of Previously Authorized Stipulation Under Bankruptcy Code Section 1110 and Related Matters Including Modification of the Automatic Stay Pursuant to Bankruptcy Code Section 362, Between America West Airlines, Inc., and Certain Other Parties With Respect to One Boeing 737-3G7, FAA Reg. No. N158AW, and Related Engines and Equipment, and Modification of Related Agreements. 8. N306AW Joint Stipulation With Respect to Bankruptcy Code Section 1110 and Related Matters Including Modification of the Automatic Stay Pursuant to Bankruptcy Code Section 362, Between America West Airlines, Inc., and Certain Other Parties With Respect to One Boeing 737-3G7 FAA Reg. No. N306AW, and Related Engines and Equipment, and Modification of Related Agreements approved September 6, 1991, as modified by Joint Supplemental Stipulation with Respect to Modification of Previously Authorized Stipulation Under Bankruptcy Code Section 1110 and Related Matters Including Modification of the Automatic Stay Pursuant to Bankruptcy Code Section 362, Between America West Airlines, Inc., and Certain Other Parties With Respect to One Boeing 737-3G7, FAA Reg. No. N306AW, and Related Engines and Equipment, and Modification of Related Agreements.
1-8 89 9. N307AW Joint Stipulation With Respect to Bankruptcy Code Section 1110 and Related Matters Including Modification of the Automatic Stay Pursuant to Bankruptcy Code Section 362, Between America West Airlines, Inc., and Certain Other Parties With Respect to One Boeing 737-3G7 FAA Reg. No. N307AW, and Related Engines and Equipment, and Modification of Related Agreements approved September 6, 1991, as modified by Joint Supplemental Stipulation with Respect to Modification of Previously Authorized Stipulation Under Bankruptcy Code Section 1110 and Related Matters Including Modification of the Automatic Stay Pursuant to Bankruptcy Code Section 362, Between America West Airlines, Inc., and Certain Other Parties With Respect to One Boeing 737-3G7, FAA Reg. No. N307AW, and Related Engines and Equipment, and Modification of Related Agreements. 10. N308AW Joint Stipulation With Respect to Bankruptcy Code Section 1110 and Related Matters Including Modification of the Automatic Stay Pursuant to Bankruptcy Code Section 362, Between America West Airlines, Inc., and Certain Other Parties With Respect to One Boeing 737-3G7 FAA Reg. No. N308AW, and Related Engines and Equipment, and Modification of Related Agreements approved September 6, 1991, as modified by Joint Supplemental Stipulation with Respect to Modification of Previously Authorized Stipulation Under Bankruptcy Code Section 1110 and Related Matters Including Modification of the Automatic Stay Pursuant to Bankruptcy Code Section 362, Between America West Airlines, Inc., and Certain Other Parties With Respect to One Boeing 737-3G7, FAA Reg. No. N308AW, and Related Engines and Equipment, and Modification of Related Agreements. 11. N309AW Joint Stipulation With Respect to Bankruptcy Code Section 1110 and Related Matters Including Modification of the Automatic Stay Pursuant to Bankruptcy Code Section 362, Between America West Airlines, Inc., and Certain Other Parties With Respect to One Boeing 737-3G7 FAA Reg. No. N309AW, and Related Engines and Equipment, and Modification of Related Agreements approved September 6, 1991, as modified by Joint Supplemental Stipulation with Respect to Modification of Previously Authorized Stipulation Under Bankruptcy Code Section 1110 and Related Matters Including Modification of the Automatic Stay Pursuant to Bankruptcy Code Section 362, Between America West Airlines, Inc., and Certain Other Parties With Respect to One Boeing 737-3G7, FAA Reg. No. N309AW, and Related Engines and Equipment, and Modification of Related Agreements.
1-9 90 12. N311AW Joint Stipulation With Respect to Bankruptcy Code Section 1110 and Related Matters Including Modification of the Automatic Stay Pursuant to Bankruptcy Code Section 362, Between America West Airlines, Inc., and Certain Other Parties With Respect to One Boeing 737-3G7 FAA Reg. No. N311AW, and Related Engines and Equipment, and Modification of Related Agreements approved September 6, 1991, as modified by Joint Supplemental Stipulation with Respect to Modification of Previously Authorized Stipulation Under Bankruptcy Code Section 1110 and Related Matters Including Modification of the Automatic Stay Pursuant to Bankruptcy Code Section 362, Between America West Airlines, Inc., and Certain Other Parties With Respect to One Boeing 737-3G7, FAA Reg. No. N311AW, and Related Engines and Equipment, and Modification of Related Agreements. 13. N179AW Joint Stipulation With Respect to Bankruptcy Code Section N184AW 1110 and Related Matters Including Modification of the Automatic Stay Pursuant to Bankruptcy Code Section 362, Between America West Airlines, Inc., and Certain Other Parties With Respect to Two Boeing 737-277's, FAA Reg. Nos. N179AW and N184AW, and Related Engines and Equipment, and Modification of Related Agreements approved September 6, 1991, as modified by Joint Supplemental Stipulation With Respect to Modification of Previously Authorized Stipulations Under Bankruptcy Code Section 1110 and Related Matters Including Modification of the Automatic Stay Pursuant to Bankruptcy Code Section 362, Between America West Airlines, Inc., and Certain Other Parties With Respect to Three Boeing 737-277's, FAA Reg. Nos. N179AW, N183AW and N184AW, and Related Engines and Equipment approved September 11, 1992. [Supplemental Stipulation also covers other aircraft.] 14. N183AW Joint Stipulation With Respect to Bankruptcy Code Section 1110 and Related Matters Including Modification of the Automatic Stay Pursuant to Bankruptcy Code Section 362, Between America West Airlines, Inc., and Certain Other Parties With Respect to One Boeing 737-277, FAA Reg. No. N183AW, and Related Engines and Equipment, and Modification of Related Agreements approved September 6, 1991, as modified by Joint Supplemental Stipulation With Respect to Modification of Previously Authorized Stipulations Under Bankruptcy Code Section 1110 and Related Matters Including Modification of the Automatic Stay Pursuant to Bankruptcy Code Section 362, Between America West Airlines, Inc., and Certain Other Parties With Respect to Three Boeing 737-277's, FAA Reg. Nos. N179AW, N183AW and N184AW, and Related Engines and Equipment approved September 11, 1992. [Supplemental Stipulation also covers other aircraft.]
1-10 91 15. N908AW Joint Stipulation With Respect to Bankruptcy Code Section 1110 and Related Matters Between America West Airlines, Inc., and Certain Other Parties With Respect to One Boeing 757-2G7 Aircraft, FAA Reg. No. N908AW and Related Engine and Equipment, and Modification of Related Agreements approved September 6, 1991, as modified by Supplemental Stipulation approved September 11, 1992. 16. N909AW Stipulation Regarding Leases, Aircraft Mortgages and/or Security Agreements With The Industrial Bank of Japan, Limited, Los Angeles Agency, II Wing Leasing International Co., Ltd., JJ Wing Leasing International Co., Ltd., KK Wing Leasing International Co., Ltd., LL Wing Leasing International Co., Ltd., MM Wing Leasing International Co., Ltd. and NN Wing Leasing International Co., Ltd. approved September 6, 1991, as modified by Supplemental Stipulation approved September 11, 1992.
III. Financed Spare Parts. The financings of the following spare parts shall be performed in accordance with the following stipulations: 1. AIFS/ASCO Stipulation and Order Regarding Rights Under Section 1110 of the Bankruptcy Code of Airbus Industry Financial Services ("AIFS") and Airbus Service Company, Inc. ("ASCO") dated August 30, 1992, regarding that certain Amended and Restated Loan Agreement and that certain Security Agreement, both dated as of November 27, 1990 and between AIFS and America West Airlines, Inc. ("AWA") and Letter Agreement No. 1, dated as of September 28, 1990, between AWA and AVSA, S.A.R.L. ("AVSA") as assigned and assumed by ASCO pursuant to that certain Assignment and Assumption Agreement, dated as of December 3, 1990, between AVSA and ASCO.
1-11 92 [THIS PAGE INTENTIONALLY LEFT BLANK] 93 PLAN OF REORGANIZATION SCHEDULE 2 CERTAIN FINAL ORDERS ON SETTLEMENT AGREEMENTS 94 [THIS PAGE INTENTIONALLY LEFT BLANK] 95 CERTAIN FINAL ORDERS ON SETTLEMENT AGREEMENTS 1. Motion for Authority to Compromise controversies with GE Entities filed September 13, 1993 and Order granting same filed October 8, 1993. 2. Motion for Authorization to Compromise Controversy with McDonnell Douglas Finance Corporation filed March 11, 1993 and order granting same filed March 31, 1993. 3. Motion for Authorization to Compromise controversies with Household Commercial of California and Seventh HFC Leasing filed July 6, 1993 and order granting same filed August 25, 1993. 4. Motion for Authority to Compromise Controversies with Citicorp North America, Inc. filed December 23, 1993 and order granting same filed January 19, 1994; Motion for Authority to Amend Settlement Agreement between America West and Citicorp filed March 18, 1994 and order granting same filed on March 30, 1994. 5. Motion for Authority to Compromise Controversies with Export Development Corporation and Gilman Montrose Timber and Leasing Company filed December 22, 1993 and order granting same filed January 19, 1994. 6. Motion for Authorization to Compromise Controversy with the Internal Revenue Service filed February 14, 1994 and order granting same filed March 16, 1994. 7. Motion for Authorization to Enter into Credit Card Processing Agreement and Granting Security Interests and Modifying Agreements with First Interstate Bank of Arizona, N.A. and Order granting same filed March 31, 1993. 8. Order Authorizing Debtor to Assume Caterair Agreement and Addendum filed September 19, 1991. 2-1 96 [THIS PAGE INTENTIONALLY LEFT BLANK] 97 PLAN OF REORGANIZATION SCHEDULE 3 CERTAIN ASSUMED AGREEMENTS 98 [THIS PAGE INTENTIONALLY LEFT BLANK] 99 CERTAIN ASSUMED AGREEMENTS
VENDOR NAME TITLE - - ---------------------------------------- --------------------------------------------------- DELTA AIRLINES, INC. ................... Datas II Participating Carrier Agreement between Delta Airlines, Inc. and AWA, Inc. NORSTAN FINANCIAL SERVICES.............. Equipment Lease No. 1027-001 and 1027-002 dated 10/1/90 and 4/1/91 between Norstan Financial Services Inc. and AWA, Inc. AVSA S.A.R.L............................ Airbus A320 Purchase Agreement dated as of 9/28/90 between AVSA S.A.R.L. and AWA, Inc., as previously amended and as modified pursuant to the terms agreed to in the Term Sheet executed 2/24/94; such agreement not to be subject to the provisos set forth in subsection 5.1.1 or the provisions of subsections 5.1.3 or 5.1.4 of the Plan AIR FRANCE.............................. Passenger Interline Agreement BELL ATLANTIC SYSTEMS LEASING............................... Communication Controllers Lease Agreement dated 2/1/91 between Pacific Atlantic Leasing (formerly Bell Atlantic) and AWA, Inc. BELL ATLANTIC SYSTEMS LEASING............................... Communications Equipment Lease Agreement dated 6/1/91 between Pacific Atlantic Leasing (formerly Bell Atlantic) and America West Airlines, Inc. BELL ATLANTIC SYSTEMS LEASING............................... B757-200 Flight Simulator Lease Agreement, dated 7/1/90 between Bell Atlantic Systems Leasing and AWA, Inc. COMPUTER SYSTEMS OF AMERICA INC. ......................... Equipment Lease No. AZ-048-5093 dated 4/7/88 between Computer Systems of America, Inc. and AWA, Inc. COMPUTER SYSTEMS OF AMERICA INC. ......................... Equipment Lease No. AZ-048-5092 dated 4/7/88 between Computer Systems of America, Inc. and AWA, Inc. COMPUTER SYSTEMS OF AMERICA INC. ......................... IBM PS-2 Lan System Lease Agreement dated 12/1/90 between Computer Systems of America and AWA, Inc. COMPUTER SYSTEMS OF AMERICA INC. ......................... Equipment Lease No. NV-048-5090 dated 4/7/88 between Computer Systems of America, Inc. and AWA, Inc. COMPUTER SYSTEMS OF AMERICA INC. ......................... Equipment Lease No. AZ 129-6447 dated 12/15/89 be- tween Computer Systems of America, Inc. and AWA, Inc. FORSYTHE MCARTHUR ASSOC INC. ........................... Equipment Lease No. F 15358 dated 11/14/90 between Forsythe McArthur and AWA, Inc. HONEYWELL INC. ......................... Madison I & II Security Equipment Lease dated 8/21/90 between Honeywell Protection Service and AWA, Inc. AIR BC.................................. Passenger Interline Agreement AER LINGUS.............................. Employee Interline Agreement
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VENDOR NAME TITLE - - ---------------------------------------- --------------------------------------------------- AER LINGUS.............................. Cargo Interline Agreement AER LINGUS.............................. Passenger Interline Agreement AERO CALIFORNIA......................... Passenger Interline Agreement AERO MEXICO............................. Passenger Interline Agreement AERO MEXICO............................. Cargo Interline Agreement AERO MEXICO............................. Employee Travel Agreement AERO PERU - EMPRESSA DE................. Passenger Interline Agreement AEROLINEAS ARGENTINAS................... Cargo Interline Agreement AIR BC.................................. Employee Travel Agreement AIR CANADA.............................. Employee Travel Agreement AIR CANADA.............................. Passenger Interline Agreement AIR CHINA............................... Cargo Interline Agreement AIR FRANCE.............................. Employee Travel Agreement AIR INDIA............................... Employee Travel Agreement AIR INDIA............................... Passenger Interline Agreement AIR INTER............................... Passenger Interline Agreement AIR JAMAICA............................. Employee Travel Agreement AIR LANKA............................... Passenger Interline Agreement AIR MIDWEST............................. Employee Travel Agreement AIR MIDWEST............................. Passenger Interline Agreement AIR NEVADA.............................. Employee Travel Agreement AIR NEVADA.............................. Passenger Interline Agreement AIR NEW ZEALAND......................... Employee Travel Agreement AIR NEW ZEALAND......................... Cargo Interline Agreement AIR NEW ZEALAND......................... Passenger Interline Agreement AIR TAHITI.............................. Employee Travel Agreement AIR TAHITI.............................. Passenger Interline Agreement AIR WISCONSIN, INC. .................... Employee Travel Agreement AIR WISCONSIN, INC. .................... Passenger Interline Agreement ALASKA AIRLINES......................... Employee Travel Agreement ALASKA AIRLINES......................... Cargo Interline Agreement ALASKA AIRLINES......................... Passenger Interline Agreement ALITALIA................................ Employee Travel Agreement ALITALIA................................ Passenger Interline Agreement ALL NIPPON AIRWAYS - ANA ............... Passenger Interline Agreement ALM ANTILLEAN AIRLINES.................. Passenger Interline Agreement ALOHA AIRLINES, INC. ................... Passenger Interline Agreement ALOHA AIRLINES, INC. ................... Employee Travel Agreement ALOHA ISLAND AIR........................ Employee Travel Agreement ALOHA ISLAND AIR........................ Passenger Interline Agreement ALPHA AIR............................... Employee Travel Agreement
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VENDOR NAME TITLE - - ---------------------------------------- --------------------------------------------------- ALPHA AIR............................... Passenger Interline Agreement AMERICAN AIRLINES, INC. ................ Employee Travel Agreement AMERICAN AIRLINES, INC. ................ Passenger Interline Agreement AMTRAK.................................. Passenger Interline Agreement ANSETT OF AUSTRALIA..................... Employee Travel Agreement ANSETT OF AUSTRALIA..................... Cargo Interline Agreement ANSETT OF AUSTRALIA..................... Passenger Interline Agreement ANSETT OF NEW ZEALAND................... Employee Travel Agreements ANSETT OF NEW ZEALAND................... Passenger Interline Agreement ARKIA (ARKIA-ISREALI AIRLINES)............................. Passenger Interline Agreement ASIANA AIRLINES......................... Cargo Interline Agreement ASIANA AIRLINES......................... Passenger Interline Agreement AUSTRALIAN AIRLINES..................... Passenger Interline Agreement AUSTRIAN AIRLINES....................... Employee Travel Agreement AUSTRIAN AIRLINES....................... Cargo Interline Agreement AUSTRIAN AIRLINES....................... Passenger Interline Agreement AVENSA.................................. Passenger Interline Agreement AVIANCA................................. Passenger Interline Agreement BAHAMASAIR.............................. Employee Travel Agreement BAR HARBOR AIRLINES D/B/A/.............. Employee Travel Agreement BIG SKY AIRLINES........................ Employee Travel Agreement BIG SKY AIRLINES........................ Passenger Interline Agreement BRITISH AIRWAYS, INC. .................. Employee Travel Agreement BRITISH AIRWAYS, INC. .................. Cargo Interline Agreement BRITISH AIRWAYS, INC. .................. Passenger Interline Agreement BUSINESS EXPRESS........................ Passenger Interline Agreement BUSINESS EXPRESS........................ Employee Travel Agreement BWIA INTERNATIONAL A (TRINIDAD).......................... Employee Travel Agreement BWIA INTERNATIONAL A (TRINIDAD).......................... Passenger Interline Agreement CANADIAN AIRLINES....................... Passenger Interline Agreement CANADIAN AIRLINES....................... Employee Travel Agreement CANADIAN AIRLINES....................... Cargo Interline Agreement CATHAY PACIFIC.......................... Cargo Interline Agreement CATHAY PACIFIC.......................... Passenger Interline Agreement CAYMAN AIRWAYS LTD. .................... Employee Travel Agreement CAYMAN AIRWAYS LTD. .................... Passenger Interline Agreement CHALK'S INTERNATIONAL AIRLINES.............................. Employee Travel Agreement CHINA AIRLINES.......................... Cargo Interline Agreement
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VENDOR NAME TITLE - - ---------------------------------------- --------------------------------------------------- CHINA AIRLINES.......................... Passenger Interline Agreement COMAIR, INC............................. Employee Travel Agreement CONQUEST AIRLINES....................... Passenger Interline Agreement CONTINENTAL AIRLINES, INC. ............. Cargo Interline Agreement CONTINENTAL AIRLINES, INC. ............. Employee Travel Agreement CONTINENTAL AIRLINES, INC. ............. Passenger Interline Agreement CROSSAIR (CROSSAIR A.G.)................ Passenger Interline Agreement DELTA AIRLINES, INC. ................... Employee Travel Agreement DELTA AIRLINES, INC. ................... Passenger Interline Agreement DRAGONAIR, 12/F, TOWER 6................ Passenger Interline Agreement EAST WEST AIRLINES, LTD................. Employee Travel Agreement EAST WEST AIRLINES, LTD. ............... Passenger Interline Agreement EGYPTAIR................................ Employee Travel Agreement EGYPTAIR................................ Passenger Interline Agreement EL AL ISRAEL AIRLINES LTD. ............. Employee Travel Agreement EL AL ISRAEL AIRLINES LTD. ............. Passenger Interline Agreement EMPIRE AIRWAYS.......................... Passenger Interline Agreement EQUITORIANA............................. Passenger Interline Agreement ERA AVIATION............................ Employee Travel Agreement ERA AVIATION............................ Passenger Interline Agreement EXEC EXPRESS II, INC. .................. Passenger Interline Agreement FINNAIR................................. Passenger Interline Agreement FIRST AIR............................... Passenger Interline Agreement FRONTIER FLYING SERVICE................. Employee Travel Agreement GARUDA INDONESIA........................ Cargo Interline Agreement GARUDA INDONESIA........................ Passenger Interline Agreement GP EXPRESS.............................. Employee Travel Agreement GP EXPRESS.............................. Passenger Interline Agreement GRAND AIRWAYS........................... Passenger Interline Agreement GREAT LAKES AVIATION LTD. .............. Employee Travel Agreement GREAT LAKES AVIATION LTD. .............. Passenger Interline Agreement HARBOR AIRLINES......................... Employee Travel Agreement HARBOR AIRLINES......................... Passenger Interline Agreement HAWAIIAN AIRLINES, INC. ................ Employee Travel Agreement HAWAIIAN AIRLINES, INC. ................ Passenger Interline Agreement HENSON AVIATION, INC. .................. Employee Travel Agreement HORIZON AIRLINES ....................... Employee Travel Agreement HORIZON AIRLINES ....................... Passenger Interline Agreement HUB EXPRESS............................. Passenger Interline Agreement IBERIA.................................. Passenger Interline Agreement ICELANDER............................... Employee Travel Agreement
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VENDOR NAME TITLE - - ---------------------------------------- --------------------------------------------------- ICELANDER (ICELANAIR)................... Passenger Interline Agreement JAPAN AIR SYSTEM/DOMESTIC TOA................................... Employee Travel Agreement JAPAN AIR SYSTEM/DOMESTIC TOA................................... Passenger Interline Agreement JAPAN AIRLINES.......................... Cargo Interline Agreement JAPAN AIRLINES.......................... Passenger Interline Agreement JAPAN AIRLINES.......................... Employee Travel Agreement JAPAN ASIA AIRWAYS...................... Employee Travel Agreement JAPAN ASIA AIRWAYS...................... Passenger Interline Agreement KLM ROYAL DUTCH AIRLINES................ Passenger Interline Agreement KLM ROYAL DUTCH AIRLINES................ Employee Travel Agreement KOREAN AIRLINES......................... Passenger Interline Agreement KOREAN AIRLINES......................... Employee Travel Agreement KUWAIT AIRWAYS.......................... Cargo Interline Agreement LANCHILE................................ Passenger Interline Agreement LAS VEGAS AIRLINES...................... Passenger Interline Agreement LAUDA AIR LUFTFAHRT..................... Passenger Interline Agreement LOT-POLISH AIRWAYS...................... Employee Travel Agreement LOT-POLISH AIRWAYS...................... Passenger Interline Agreement LTU..................................... Passenger Interline Agreement LTU..................................... Employee Travel Agreement LUFTHANSA............................... Passenger Interline Agreement LUFTHANSA............................... Employee Travel Agreement MALAYSIA AIRLINES....................... Passenger Interline Agreement MALEV HUNGARIAN AIRLINES................ Passenger Interline Agreement MALEV HUNGARIAN AIRLINES................ Employee Travel Agreement MARKAIR, INC. .......................... Employee Travel Agreement MARKAIR, INC. .......................... Passenger Interline Agreement MARTINAIR HOLLAND....................... Passenger Interline Agreement MESA AIRLINES SHUTTLE................... Employee Travel Agreement MESA AIRLINES SHUTTLE................... Passenger Interline Agreement MESABA AVIATION......................... Employee Travel Agreement MESABA AVIATION......................... Passenger Interline Agreement METRO AIRLINES.......................... Employee Travel Agreement METRO AIRLINES.......................... Passenger Interline Agreement MEXICANA AIRLINES....................... Passenger Interline Agreement MEXICANA AIRLINES....................... Employee Travel Agreement MEXICANA AIRLINES....................... Cargo Interline Agreement MIDDLE EAST AIRLINES.................... Passenger Interline Agreement MIDWEST EXPRESS AIRLINES, INC. ................................. Employee Travel Agreement
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VENDOR NAME TITLE - - ---------------------------------------- --------------------------------------------------- MILITARY AIRLIFT COMMAND................ Passenger Interline Agreement N.P.A., INC. DBA UNITED EXPRESS......... Employee Travel Agreement N.P.A., INC. DBA UNITED EXPRESS......... Passenger Interline Agreement NIPPON CARGO AIRLINES CO. LTD. ............................. Cargo Interline Agreement NIPPON CARGO AIRLINES CO. LTD. ............................. Passenger Interline Agreement NORTHWEST AIRLINES, INC. ............... Employee Travel Agreement NORTHWEST AIRLINES, INC. ............... Passenger Interline Agreement OLYMPIC AIRWAYS......................... Passenger Interline Agreement ONTARIO EXPRESS DBA..................... Employee Travel Agreement PAKISTAN INTERNATIONAL AIRWAYS............................... Passenger Interline Agreement PHILIPPINE AIRLINES..................... Employee Travel Agreement PHILIPPINE AIRLINES..................... Cargo Interline Agreement PHILIPPINE AIRLINES..................... Passenger Interline Agreement PLUNA (PRIMERAS LINEAS)................. Passenger Interline Agreement QANTAS AIRWAYS.......................... Employee Travel Agreement QANTAS AIRWAYS.......................... Cargo Interline Agreement QANTAS AIRWAYS.......................... Passenger Interline Agreement REEVE AIRWAYS........................... Employee Travel Agreement REEVE AIRWAYS........................... Passenger Interline Agreement ROCKY MOUNTAIN AIRWAYS.................. Employee Travel Agreement ROYAL AIR MAROC......................... Passenger Interline Agreement ROYAL JORDANIAN......................... Cargo Interline Agreement ROYAL JORDANIAN......................... Passenger Interline Agreement SABENA.................................. Cargo Interline Agreement SABENA.................................. Employee Travel Agreement SABENA.................................. Passenger Interline Agreement SAUDI ARABIAN AIRLINES.................. Passenger Interline Agreement SAUDI ARABIAN AIRLINES.................. Employee Travel Agreement SCANDINAVIAN AIRLINES SYSTEM................................ Employee Travel Agreement SCANDINAVIAN AIRLINES SYSTEM................................ Passenger Interline Agreement SCENIC AIRLINES, INC. .................. Employee Travel Agreement SCENIC AIRLINES, INC. .................. Passenger Interline Agreement SIMMONS AIRLINES, INC. ................. Employee Travel Agreement SINGAPORE AIRLINES...................... Passenger Interline Agreement SINGAPORE AIRLINES...................... Employee Travel Agreement SKYWEST AIRLINES INC. .................. Employee Travel Agreement SKYWEST AIRLINES INC. .................. Passenger Interline Agreement
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VENDOR NAME TITLE - - ---------------------------------------- --------------------------------------------------- SOUTH AFRICAN AIRLINES.................. Passenger Interline Agreement SOUTHWEST AIRLINES...................... Employee Travel Agreement SUNAIRE EXPRESS......................... Employee Travel Agreement SUNAIRE EXPRESS......................... Passenger Interline Agreement SWISSAIR................................ Employee Travel Agreement SWISSAIR................................ Cargo Interline Agreement SWISSAIR................................ Passenger Interline Agreement TACA INTERNATIONAL...................... Passenger Interline Agreement TAP AIR PORTUGAL........................ Employee Travel Agreement TAP AIR PORTUGAL........................ Cargo Interline Agreement TAP AIR PORTUGAL........................ Passenger Interline Agreement THAI AIRWAYS............................ Employee Travel Agreement THAI AIRWAYS............................ Cargo Interline Agreement THAI AIRWAYS............................ Passenger Interline Agreement TIME AIR................................ Passenger Interline Agreement TIME AIR................................ Employee Travel Agreement TOWER AIR............................... Passenger Interline Agreement TOWER AIR............................... Employee Travel Agreement TRANS WORLD AIRLINES, INC. ............. Cargo Interline Agreement TRANS WORLD AIRLINES, INC. ............. Passenger Interline Agreement TRANS WORLD AIRLINES, INC. ............. Employee Travel Agreement UNITED AIRLINES, INC. .................. Passenger Interline Agreement UNITED AIRLINES, INC. .................. Employee Interline Agreement UNITED AIRLINES, INC. .................. Cargo Interline Agreement US AIR INC. ............................ Employee Travel Agreement US AIR INC. ............................ Passenger Interline Agreement UTA FRENCH AIRLINES..................... Passenger Interline Agreement UTA FRENCH AIRLINES..................... Employee Travel Agreement VARIG BRAZILIAN AIRLINES................ Passenger Interline Agreement VENEZOLANA INTL. DE AVIACIO SC............................ Employee Travel Agreement VIASA................................... Passenger Interline Agreement VIRGIN ATLANTIC AIRWAYS................. Passenger Interline Agreement VIRGIN ATLANTIC AIRWAYS................. Employee Travel Agreement WESTAIR COMMUTER........................ Employee Travel Agreement WESTAIR COMMUTER........................ Passenger Interline Agreement WINGS WEST AIRLINES, INC. .............. Employee Travel Agreement CARGOLUX AIRLINES INT'L................. Interline Agreement
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VENDOR NAME TITLE - - ---------------------------------------- --------------------------------------------------- AIRPORT AUTH. OF WASHOE COUNTY.......... Airline Operat. Agrmnt & Terminal Bldng Lease dated 10/8/81 between Airport Authority of Washoe Cnty & Frontier Airlines (as predecessor in interest to AWA, Inc. which assumed the lease after Frontier's bnkrptcy) as amended on 4/20/89, 6/22/89, & 10/10/91 AIRPORT REVENUE FUND; STAPLETON INT......................... City and County of Denver Agreement and Lease at Stapleton International Airport between the City and County of Denver and AWA, Inc. ALBUQUERQUE INTERNATIONAL............... Air Freight Facility Lease and Agreement by and between the City of Albuquerque and AWA, Inc. ALBUQUERQUE, CITY OF.................... Scheduled Airline Operating & Terminal Building Lease dated 10/7/87 by and between the City of Albuquerque and AWA, Inc. AUSTIN, CITY OF......................... Austin Airport Use and Lease Agreement as amended 5/1/90 by and between the City of Austin and AWA, Inc. AVIATION DEPARTMENT..................... La Guardia Airport Agreements AGA-152, AGA-170, AGA-187, AGA-217 and AGA-153 BOSTON LOGAN INTL. AIRPORT.............. Airport Lease Agreement between the Massachusetts Port Authority and AWA, Inc. BURBANK-GLENDALE-PASADENA............... Airport Use Agreement dated 9/1/84 by and between Burbank-Glendale-Pasadena Airport Authority and AWA, Inc. CITY OF CHICAGO......................... Airport License and Agreement by and between the City of Chicago and AWA, Inc. CITY OF HOUSTON......................... Use and Lease Agreement dated 1/1/90 by and between the City of Houston and AWA, Inc. CITY OF KANSAS CITY..................... Kansas City International Airport Use and Lease Agreement, dated 12/9/88 by and between Kansas City, Missouri and AWA, Inc. CITY OF LONG BEACH...................... Commercial Use Permit by and between the City of Long Beach Airport Bureau and AWA, Inc. CITY OF SAN JOSE........................ Operations Space Lease dated 7/25/88 by and between the City of San Jose and AWA, Inc. CITY OF ST. LOUIS....................... Lambert -- St. Louis International Airport Preferential Use Gate Space Permit, dated 5/15/91 by and between the City of St. Louis and AWA, Inc. CLARK COUNTY DEPT OF AVIAT.............. Scheduled Airline Operating Agreement and Terminal Building Lease dated 9/11/87 between Clark County and AWA, Inc. COLORADO SPRINGS AIRPORT................ Lease Agreement dated 6/28/83 between City of Colorado Springs and AWA, Inc. COUNTY OF ORANGE........................ Certified Passenger Airline Lease dated 9/4/90 by and between County of Orange and AWA, Inc. as amended by First Amendment dated 6/1/91 DALLAS/FT. WORTH AIRPORT................ DFW Airport Board Permit No. 237633 dated 7/15/90 by and between the DFW Int'l Airport Board and AWA, Inc.
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VENDOR NAME TITLE - - ---------------------------------------- --------------------------------------------------- EL PASO INTERNATIONAL AIRPORT............................... Certified Passenger Airline Lease dated 10/1/89 by and between the City of El Paso and AWA, Inc. LOS ANGELES, CITY OF.................... Lease Agreement covering premises in Terminal One, LAX, by and between the City of Los Angeles and AWA, Inc. MARYLAND AVIATION ADMIN................. Lease Agreement dated 8/7/87 between State Aviation Administration of the Maryland Dept. of Transportation and AWA, Inc. as amended by Supplement No. 1, dated 3/24/88 MCKENZIE PROPERTIES..................... Lease Agreement for Reservation Facilities at Reno dated 6/1/87 between McKenzie Properties and AWA, Inc. METROPOLITAN WASHINGTON................. Airport Use Agreement and Premise Lease dated 2/27/90 by and between Metropolitan Washington Airports Authority and AWA, Inc. MINNEAPOLIS/ST PAUL INTL................ Terminal Building Agreement dated 5/15/88 by and between Metropolitan Airport Commission and AWA, Inc. as amended by 1989 Amendment to 1962 Airport Bldng Lease dated 11/1/90, and amendments 1 through 8 NORTHWEST AIRLINES, INC. ............... Cargo Bldng Sublease dated 11/1/88 by and between Northwest Airlines and AWA, Inc., for facilities located at 2121 Air Cargo Road NORTHWEST AIRLINES, INC. ............... Sublease Agreement for use of certain passenger handling and aircraft servicing facilities located at Minneapolis/St. Paul Int'l Airport dated 10/8/89 by and between Northwest Airlines, Inc. and AWA, Inc. NORTHWEST AIRLINES, INC. ............... Letter of Agreement for Concourse "E", O'Hare Int'l Airport between Northwest Airlines, Inc. and AWA, Inc. NORTHWEST AIRLINES, INC. ............... O'Hare Int'l Airport Gate Use Agreement dated 4/1/90 by and between Northwest Airlines and AWA, Inc. NORTHWEST AIRLINES, INC. ............... Cargo Building Sublease at Salt Lake City dated 1/1/89 by and between Northwest Airlines, Inc. and AWA, Inc. OMAHA AIRPORT AUTHORITY................. Omaha Agreement & Lease for Scheduled Airline Operations by and between Airport Authority of the City of Omaha and AWA, Inc. PORT AUTHORITY OF NY & NJ............... Newark Int'l Airport Agreements ANA-516, ANA-524, ANA-473 and AWA-525 PORT AUTHORITY OF NY & NJ............... John F. Kennedy Int'l Airport Agreements AYC-018 and AYB-881 PORT OF OAKLAND......................... License and Concession Agreement dated 1/1/91 by and between the Port of Oakland and AWA, Inc. PORT OF PORTLAND........................ Passenger Airline Operating and Lease Agreement by and between the Port of Portland and AWA, Inc. PORT OF SEATTLE......................... Basic Airline Lease and Agreement No. M-06181-0-BAS by and between the Port of Seattle and AWA, Inc. SACRAMENTO, COUNTY OF................... Scheduled Airline Operating Agreement and Terminal Building Lease dated 7/1/90 between the County of Sacramento and AWA, Inc.
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VENDOR NAME TITLE - - ---------------------------------------- --------------------------------------------------- SALT LAKE CITY TREASURER................ Airport Use Agreement dated 2/1/81 as assumed on 11/26/86 from Frontier Airlines by and between Salt Lake City Corp. and AWA, Inc. SAN DIEGO UNIFIED PORT DIST............. Rental Agreement and Landing Permit at San Diego Int'l Airport by and between the San Diego Unified Port District and AWA, Inc. SAN FRANCISCO AIRPORT COMM.............. Airline Operating Permit #1874 dated 5/1/90 by and between the City & County of San Francisco and AWA, Inc. and Airport Commission City and County of San Francisco, Space or Use Permit #1876, 1877, 1878, and 2031, dated 5/1/90 TUCSON AIRPORT AUTHORITY................ Air Cargo Sublease dated 12/1/86 between the Tucson Airport Authority and AWA, Inc. TUCSON AIRPORT AUTHORITY................ Airport Use Agreement dated 11/1/84 by and between the Tucson Airport Authority and AWA, Inc. WICHITA AIRPORT AUTHORITY............... Airline Airport Agreement dated 4/1/85 by and between the Wichita Airport Authority and AWA, Inc. AIRCRAFT SERVICES INT'L................. Into-plane Service Agreement dated 10/87 for Albuquerque, Burbank, Portland, and San Diego ALLIED AVIATION SERV INTL., dba......... Into-plane Service Agreement for airports located at Washington D.C., Dallas OGDEN ALLIED............................ Forth Worth, Newark, Houston, JFK, La Guardia, Kansas City, & St. Louis AMOCO OIL CO............................ Fuel Purchase Agreement for airports located at Columbus and Midway AMR COMBS............................... Into-plane Service Agreement for Denver ARCO PRODUCTS........................... Fueling Purchase Agreement dated 7/90 for Burbank, Los Angeles, Portland, San Diego, Seattle, San Jose, Orange County, and Tucson ARIZONA FUELING......................... Cost Sharing Agreement dated 9/29/79 as amended on 9/1/82, 3/4/86 and 12/1/91 by and among Arizona Fueling Facilities Corporation and America West Airlines, Inc. and certain other airlines. Option Agreement dated 12/14/90 by and between Arizona Fueling Facilities Corporation and America West Airlines, Inc. ATLANTIC AVIATION....................... Into-plane Service Agreement for San Jose CALNEV PIPE LINE CO..................... Pipeline Agreement dated 10/84 CHEVRON U.S.A., INC..................... Fuel Purchase Agreement for Long Beach, Orlando, Oakland, Tampa, Reno, and Las Vegas CITGO PETROLEUM CORP.................... Fuel Purchase Agreement for Newark and LaGuardia COLORADO JET CENTER..................... Into-plane Service Agreement for Colorado Springs CONOCO, INC............................. Fuel Purchase Agreement for Wichita, Kansas City, Omaha, and Minneapolis CONTRACTING AIRLINES AT................. Fuel Consortium Agreement for Minneapolis
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VENDOR NAME TITLE - - ---------------------------------------- --------------------------------------------------- DIAMOND SHAMROCK REFNG & MKTG........... Fuel Purchase Agreement for Colorado Springs and Denver DYNAIR FUELING INC...................... Into-plane Service Agreement for Phoenix, Las Vegas, Reno and Oakland EXXON................................... Fuel Purchase Agreement for Atlanta HUDSON GENERAL.......................... Into-plane Service Agreement for Boston, Los Angeles, and Salt Lake City KOCH REFINING........................... Fuel Purchase Agreement for Dallas-Forth Worth LAGUARDIA FUEL FAC CORP................. La Guardia Airline Fuel Consortium Agreement LASFUEL CORP............................ Las Vegas Airline Fuel Consortium Agreement LOCKHEED AIR TERMINAL, INC.............. Into-plane Service Agreement for Ontario MOBIL OIL CORPORATION................... Fuel Purchase Agreement for Boston, Baltimore, Phoenix, and Atlanta OAKLAND FUEL FACILITIES................. Oakland Airline Fuel Consortium Agreement OASIS AVIATION INC...................... Into-plane Service Agreement for El Paso ONTFUEL CORP............................ Ontario Airline Fuel Consortium Agreement RENO FUELING FACILITIES CORP.................................. Reno Airline Fuel Consortium Agreement SALT LAKE CITY CORPORATION AND.......... Salt Lake City Airline Fuel Consortium Agreement SHELL OIL COMPANY....................... Fuel Purchase Agreement for Washington DC, El Paso, Houston, Milwaukee, Ontario, and St. Louis SKY HARBOR AIR SERVICE.................. Into-plane Service Agreement for Omaha SNAFUEL INC............................. Orange County Airline Fuel Consortium Agreement TRANS WORLD AIRLINES, INC............... Into-plane Service Agreement for San Francisco TUCSON AIRPORT AUTHORITY................ Into-plane Service Agreement for Tucson VAN DUSEN AIRPORT SERVICES.............. Into-plane Service Agreement for Austin, Baltimore, Milwaukee, Minneapolis, and Seattle ABACUS DISTRIBUTION SYSTEMS............. Participating Carrier Agreement dated 1/1/90 between Abacus Distribution System PD LTD and AWA, Inc. AMADEUS MARKETING S.A.R.L............... Participating Carrier Agreement by and between Amadeus Marketing S.A.R.L. and AWA, Inc. GETS MARKETING CO....................... GETS Participation Agreement dated 9/28/90 between GETS Marketing Company and America West Airlines, Inc. INFINI TRAVEL INFORMATION INC....................... Infini Participating Carrier Agreement dated 12/1/90 between Infini Travel Information, Inc. and AWA, Inc. JAPAN AIRLINES.......................... Participation Agreement dated 12/1/90 between Japan Airlines Company, Ltd. and AWA, Inc. SABRE TRAVEL INFO. NETWORK.............. Sabre Participating Carrier Agreement dated 6/15/87 between American Airlines, Inc. and AWA, Inc. SYSTEM ONE HOLDINGS INC................. System One Participating Airline Agreement dated 11/1/88 by and between System One Direct Access, Inc. and AWA, Inc.
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VENDOR NAME TITLE - - ---------------------------------------- --------------------------------------------------- WORLDSPAN, L.P. ........................ Worldspan Participating Carrier Agreement dated February 1, 1991 between Worldspan L.P. and AWA, Inc. HONEYWELL INC........................... Credit Union Security Equipment Lease dated 11/22/89 between Honeywell Protection Services and AWA, Inc. HONEYWELL INC........................... Company Store Security Equipment Lease dated 11/22/89 between Honeywell Protection Services and AWA, Inc. PRO SERVE MARKETING, INC. .............. Advertising and Use Agreement dated 2/4/91 between Pro Serve Marketing, Inc. and AWA, Inc. for scoring and video system at McKale Center GPA..................................... Sublease Supplement No. 1 to Aircraft Sublease Agreement [GPA 1989 BN-1 (N620AW)], dated September 28, 1990, between GPA Leasing USA I, Inc. and America West Airlines, Inc. (such agreement not to be subject to the provisos set forth in subsection 5.1.1 or the provisions of subsections 5.1.3 or 5.1.4 of the Plan). Letter Agreement No. 1 relating to Aircraft Sublease Agreement [GPA 1989 BN-1 (N620AW)], dated as of September 21, 1990, by America West Airlines, Inc. and accepted and agreed to by GPA Leasing USA I, Inc. (such agreement not to be subject to the provisos set forth in subsection 5.1.1 or the provisions of subsections 5.1.3 or 5.1.4 of the Plan). Sublessee Consent and Agreement by America West Airlines, Inc. relating to Assignment of Sublease [GPA 1989 BN-1 (N620AW)], dated as of September 21, 1990, between GPA Leasing USA I, Inc. and Wilmington Trust Company (such agreement not to be subject to the provisos set forth in subsection 5.1.1 or the provisions of subsections 5.1.3 or 5.1.4 of the Plan). Sublease Tax Indemnification Agreement [GPA 1989 BN-1 (N620AW)], dated as of September 21, 1990, between GPA Leasing USA I, Inc. and America West Airlines, Inc. (such agreement not to be subject to the provisos set forth in subsection 5.1.1 or the provisions of subsections 5.1.3 or 5.1.4 of the Plan). Sublease Supplement No. 1 to Aircraft Sublease Agreement [GPA 1989 BN-2 (N622AW)], dated September 28, 1990, between GPA Leasing USA I, Inc. and America West Airlines, Inc. (such agreement not to be subject to the provisos set forth in subsection 5.1.1 or the provisions of subsections 5.1.3 or 5.1.4 of the Plan). Letter Agreement No. 1 relating to Aircraft Sublease Agreement [GPA 1989 BN-2 (N622AW)], dated as of September 21, 1990, by America West Airlines, Inc. and accepted and agreed to by GPA Leasing USA I, Inc. (such agreement not to be subject to the provisos set forth in subsection 5.1.1 or the provisions of subsections 5.1.3 or 5.1.4 of the Plan).
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VENDOR NAME TITLE - - ---------------------------------------- --------------------------------------------------- Sublessee Consent and Agreement by America West Airlines, Inc. relating to the Assignment of Sublease [GPA 1989 BN-2 (N622AW)], dated as of September 21, 1990, between GPA Leasing USA I, Inc. and Wilmington Trust Company (such agreement not to be subject to the provisos set forth in subsection 5.1.1 or the provisions of subsections 5.1.3 or 5.1.4 of the Plan). Sublease Tax Indemnification Agreement [GPA 1989 BN-2 (N622AW)], dated as of September 21, 1990, between GPA Leasing USA I, Inc. and America West Airlines, Inc. (such agreement not to be subject to the provisos set forth in subsection 5.1.1 or the provisions of subsections 5.1.3 or 5.1.4 of the Plan). Sublease Supplement No. 1 to Aircraft Sublease Agreement [GPA 1989 BN-3 (N621AW)], dated September 28, 1990, between GPA Leasing USA I, Inc. and America West Airlines, Inc. (such agreement not to be subject to the provisos set forth in subsection 5.1.1 or the provisions of subsections 5.1.3 or 5.1.4 of the Plan). Letter Agreement No. 1 relating to Aircraft Sublease Agreement [GPA 1989 BN-3 (N621AW)], dated as of September 21, 1990, by America West Airlines, Inc. and accepted and agreed to by GPA Leasing USA I, Inc. (such agreement not to be subject to the provisos set forth in subsection 5.1.1 or the provisions of subsections 5.1.3 or 5.1.4 of the Plan). Sublessee Consent and Agreement by America West Airlines, Inc. relating to the Assignment of Sublease [GPA 1989 BN-3 (N621AW)], dated as of September 21, 1990, between GPA Leasing USA I, Inc. and Wilmington Trust Company (such agreement not to be subject to the provisos set forth in subsection 5.1.1 or the provisions of subsections 5.1.3 or 5.1.4 of the Plan). Sublease Tax Indemnification Agreement [GPA 1989 BN-3 (N621AW)], dated as of September 21, 1990, between GPA Leasing USA I, Inc. and America West Airlines, Inc. (such agreement not to be subject to the provisos set forth in subsection 5.1.1 or the provisions of subsections 5.1.3 or 5.1.4 of the Plan). Sublease Supplement No. 1 to Aircraft Sublease Agreement [GPA 1989 BN-4 (N625AW)], dated September 28, 1990, between GPA Leasing USA I, Inc. and America West Airlines, Inc. (such agreement not to be subject to the provisos set forth in subsection 5.1.1 or the provisions of subsections 5.1.3 or 5.1.4 of the Plan). Letter Agreement No. 1 relating to Aircraft Sublease Agreement [GPA 1989 BN-4 (N625AW)], dated as of September 21, 1990, by America West Airlines, Inc. and accepted and agreed to by GPA Leasing USA I, Inc. (such agreement not to be subject to the provisos set forth in subsection 5.1.1 or the provisions of subsections 5.1.3 or 5.1.4 of the Plan).
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VENDOR NAME TITLE - - ---------------------------------------- --------------------------------------------------- Sublessee Consent and Agreement by America West Airlines, Inc. relating to the Assignment of Sublease [GPA 1989 BN-4 (N625AW)], dated as of September 21, 1990, between GPA Leasing USA I, Inc. and Wilmington Trust Company (such agreement not to be subject to the provisos set forth in subsection 5.1.1 or the provisions of subsections 5.1.3 or 5.1.4 of the Plan). Sublease Tax Indemnification Agreement [GPA 1989 BN-4 (N625AW)], dated as of September 21, 1990, between GPA Leasing USA I, Inc. and America West Airlines, Inc. (such agreement not to be subject to the provisos set forth in subsection 5.1.1 or the provisions of subsections 5.1.3 or 5.1.4 of the Plan). Sublease Supplement No. 1 to Aircraft Sublease Agreement [GPA 1989 BN-5 (N624AW)], dated September 28, 1990, between GPA Leasing USA I, Inc. and America West Airlines, Inc. (such agreement not to be subject to the provisos set forth in subsection 5.1.1 or the provisions of subsections 5.1.3 or 5.1.4 of the Plan). Letter Agreement No. 1 relating to Aircraft Sublease Agreement [GPA 1989 BN-5 (N624AW)], dated as of September 21, 1990, by America West Airlines, Inc. and accepted and agreed to by GPA Leasing USA I, Inc. (such agreement not to be subject to the provisos set forth in subsection 5.1.1 or the provisions of subsections 5.1.3 or 5.1.4 of the Plan). Sublessee Consent and Agreement by America West Airlines, Inc. relating to the Assignment of Sublease [GPA 1989 BN-5 (N624AW)], dated as of September 21, 1990, between GPA Leasing USA I, Inc. and Wilmington Trust Company (such agreement not to be subject to the provisos set forth in subsection 5.1.1 or the provisions of subsections 5.1.3 or 5.1.4 of the Plan). Sublessee Consent and Agreement to Amendment No. 1 to Assignment of Sublease [GPA 1989 BN-5 (N624AW)] by America West Airlines, Inc. relating to Amendment No. 1 to Assignment of Sublease [GPA 1989 BN-5], dated as of October 1, 1991, between GPA Leasing USA I, Inc. and Wilmington Trust Company (such agreement not to be subject to the provisos set forth in subsection 5.1.1 or the provisions of subsections 5.1.3 or 5.1.4 of the Plan). Sublease Tax Indemnification Agreement [GPA 1989 BN-5 (N624AW)], dated as of September 21, 1990, between GPA Leasing USA I, Inc. and America West Airlines, Inc. (such agreement not to be subject to the provisos set forth in subsection 5.1.1 or the provisions of subsections 5.1.3 or 5.1.4 of the Plan).
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VENDOR NAME TITLE - - ---------------------------------------- --------------------------------------------------- Sublease Supplement No. 1 to Aircraft Sublease Agreement [GPA 1989 BN-6 (N626AW)], dated September 28, 1990, between GPA Leasing USA Sub I, Inc. and America West Airlines, Inc. (such agreement not to be subject to the provisos set forth in subsection 5.1.1 or the provisions of subsections 5.1.3 or 5.1.4 of the Plan). Letter Agreement No. 1 relating to Aircraft Sublease Agreement [GPA 1989 BN-6 (N626AW)], dated as of September 21, 1990, by America West Airlines, Inc. and accepted and agreed to by GPA Leasing USA Sub I, Inc. (such agreement not to be subject to the provisos set forth in subsection 5.1.1 or the provisions of subsections 5.1.3 or 5.1.4 of the Plan). Sublessee Consent and Agreement by America West Airlines, Inc. relating to the Assignment of Sublease [GPA 1989 BN-6 (N626AW)], dated as of September 21, 1990, between GPA Leasing USA Sub I, Inc. and Wilmington Trust Company (such agreement not to be subject to the provisos set forth in subsection 5.1.1 or the provisions of subsections 5.1.3 or 5.1.4 of the Plan). Sublessee Consent and Agreement to Amendment No. 1 to Assignment of Sublease [GPA 1989 BN-6 (N626AW)] by America West Airlines, Inc. relating to Amendment No. 1 to Assignment of Sublease [GPA 1989 BN-6], dated as of October 1, 1991, between GPA Leasing USA Sub I, Inc. and Wilmington Trust Company (such agreement not to be subject to the provisos set forth in subsection 5.1.1 or the provisions of subsections 5.1.3 or 5.1.4 of the Plan). Sublease Tax Indemnification Agreement [GPA 1989 BN-6 (N626AW)], dated as of September 21, 1990, between GPA Leasing USA Sub I, Inc. and America West Airlines, Inc. (such agreement not to be subject to the provisos set forth in subsection 5.1.1 or the provisions of subsections 5.1.3 or 5.1.4 of the Plan). Sublease Supplement No. 1 to Aircraft Sublease Agreement [GPA 1989 BN-7 (N628AW)], dated September 28, 1990, between GPA Leasing USA Sub I, Inc. and America West Airlines, Inc. (such agreement not to be subject to the provisos set forth in subsection 5.1.1 or the provisions of subsections 5.1.3 or 5.1.4 of the Plan). Letter Agreement No. 1 relating to Aircraft Sublease Agreement [GPA 1989 BN-7 (N628AW)], dated as of September 21, 1990, by America West Airlines, Inc. and accepted and agreed to by GPA Leasing USA Sub I, Inc. (such agreement not to be subject to the provisos set forth in subsection 5.1.1 or the provisions of subsections 5.1.3 or 5.1.4 of the Plan).
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VENDOR NAME TITLE - - ---------------------------------------- --------------------------------------------------- Sublessee Consent and Agreement by America West Airlines, Inc. relating to the Assignment of Sublease [GPA 1989 BN-7 (N628AW)], dated as of September 21, 1990, between GPA Leasing USA Sub I, Inc. and Wilmington Trust Company (such agreement not to be subject to the provisos set forth in subsection 5.1.1 or the provisions of subsections 5.1.3 or 5.1.4 of the Plan). Sublease Tax Indemnification Agreement [GPA 1989 BN-7 (N628AW)], dated as of September 21, 1990, between GPA Leasing USA Sub I, Inc. and America West Airlines, Inc. (such agreement not to be subject to the provisos set forth in subsection 5.1.1 or the provisions of subsections 5.1.3 or 5.1.4 of the Plan). Sublease Supplement No. 1 to Aircraft Sublease Agreement [GPA 1989 BN-8 (N627AW)], dated September 28, 1990, between GPA Leasing USA Sub I, Inc. and America West Airlines, Inc. (such agreement not to be subject to the provisos set forth in subsection 5.1.1 or the provisions of subsections 5.1.3 or 5.1.4 of the Plan). Letter Agreement No. 1 relating to Aircraft Sublease Agreement [GPA 1989 BN-8 (N627AW)], dated as of September 21, 1990, by America West Airlines, Inc. and accepted and agreed to by GPA Leasing USA Sub I, Inc. (such agreement not to be subject to the provisos set forth in subsection 5.1.1 or the provisions of subsections 5.1.3 or 5.1.4 of the Plan). Sublessee Consent and Agreement by America West Airlines, Inc. relating to the Assignment of Sublease [GPA 1989 BN-8 (N627AW)], dated as of September 21, 1990, between GPA Leasing USA Sub I, Inc. and Wilmington Trust Company (such agreement not to be subject to the provisos set forth in subsection 5.1.1 or the provisions of subsections 5.1.3 or 5.1.4 of the Plan). Sublease Tax Indemnification Agreement [GPA 1989 BN-8 (N627AW)], dated as of September 21, 1990, between GPA Leasing USA Sub I, Inc. and America West Airlines, Inc. (such agreement not to be subject to the provisos set forth in subsection 5.1.1 or the provisions of subsections 5.1.3 or 5.1.4 of the Plan). Sublease Supplement No. 1 to Aircraft Sublease Agreement [GPA 1989 BN-9 (N629AW)], dated September 28, 1990, between GPA Leasing USA Sub I, Inc. and America West Airlines, Inc. (such agreement not to be subject to the provisos set forth in subsection 5.1.1 or the provisions of subsections 5.1.3 or 5.1.4 of the Plan).
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VENDOR NAME TITLE - - ---------------------------------------- --------------------------------------------------- Letter Agreement No. 1 relating to Aircraft Sublease Agreement [GPA 1989 BN-9 (N629AW)], dated as of September 21, 1990, by America West Airlines, Inc. and accepted and agreed to by GPA Leasing USA Sub I, Inc. (such agreement not to be subject to the provisos set forth in subsection 5.1.1 or the provisions of subsections 5.1.3 or 5.1.4 of the Plan). Sublessee Consent and Agreement by America West Airlines, Inc. relating to the Assignment of Sublease [GPA 1989 BN-9 (N629AW)], dated as of September 21, 1990, between GPA Leasing USA Sub I, Inc. and Wilmington Trust Company (such agreement not to be subject to the provisos set forth in subsection 5.1.1 or the provisions of subsections 5.1.3 or 5.1.4 of the Plan). Sublease Tax Indemnification Agreement [GPA 1989 BN-9 (N629AW)], dated as of September 21, 1990, between GPA Leasing USA Sub I, Inc. and America West Airlines, Inc. (such agreement not to be subject to the provisos set forth in subsection 5.1.1 or the provisions of subsections 5.1.3 or 5.1.4 of the Plan). Sublease Supplement No. 1 to Aircraft Sublease Agreement [GPA 1989 BN-10 (N631AW)], dated September 28, 1990, between GPA Leasing USA Sub I, Inc. and America West Airlines, Inc. (such agreement not to be subject to the provisos set forth in subsection 5.1.1 or the provisions of subsections 5.1.3 or 5.1.4 of the Plan). Letter Agreement No. 1 relating to Aircraft Sublease Agreement [GPA 1989 BN-10 (N631AW)], dated as of September 21, 1990, by America West Airlines, Inc. and accepted and agreed to by GPA Leasing USA Sub I, Inc. (such agreement not to be subject to the provisos set forth in subsection 5.1.1 or the provisions of subsections 5.1.3 or 5.1.4 of the Plan). Sublessee Consent and Agreement by America West Airlines, Inc. relating to the Assignment of Sublease [GPA 1989 BN-10 (N631AW)], dated as of September 21, 1990, between GPA Leasing USA Sub I, Inc. and Wilmington Trust Company (such agreement not to be subject to the provisos set forth in subsection 5.1.1 or the provisions of subsections 5.1.3 or 5.1.4 of the Plan). Sublessee Consent and Agreement to Amendment No. 1 to Assignment of Sublease [GPA 1989 BN-10 (N631AW)] by America West Airlines, Inc. relating to Amendment No. 1 to Assignment of Sublease [GPA 1989 BN-10], dated as of October 1, 1991, between GPA Leasing USA Sub I, Inc. and Wilmington Trust Company (such agreement not to be subject to the provisos set forth in subsection 5.1.1 or the provisions of subsections 5.1.3 or 5.1.4 of the Plan).
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VENDOR NAME TITLE - - ---------------------------------------- --------------------------------------------------- Sublease Tax Indemnification Agreement [GPA 1989 BN-10 (N631AW)], dated as of September 21, 1990, between GPA Leasing USA Sub I, Inc. and America West Airlines, Inc. (such agreement not to be subject to the provisos set forth in subsection 5.1.1 or the provisions of subsections 5.1.3 or 5.1.4 of the Plan). Sublease Supplement No. 1 to Aircraft Sublease Agreement [GPA 1989 BN-11 (N632AW)], dated September 28, 1990, between GPA Leasing USA Sub I, Inc. and America West Airlines, Inc. (such agreement not to be subject to the provisos set forth in subsection 5.1.1 or the provisions of subsections 5.1.3 or 5.1.4 of the Plan). Letter Agreement No. 1 relating to Aircraft Sublease Agreement [GPA 1989 BN-11 (N632AW)], dated as of September 21, 1990, by America West Airlines, Inc. and accepted and agreed to by GPA Leasing USA Sub I, Inc. (such agreement not to be subject to the provisos set forth in subsection 5.1.1 or the provisions of subsections 5.1.3 or 5.1.4 of the Plan). Sublessee Consent and Agreement by America West Airlines, Inc. relating to the Assignment of Sublease [GPA 1989 BN-11 (N632AW)], dated as of September 21, 1990, between GPA Leasing USA Sub I, Inc. and Wilmington Trust Company (such agreement not to be subject to the provisos set forth in subsection 5.1.1 or the provisions of subsections 5.1.3 or 5.1.4 of the Plan). Sublease Tax Indemnification Agreement [GPA 1989 BN-11 (N632AW)], dated as of September 21, 1990, between GPA Leasing USA Sub I, Inc. and America West Airlines, Inc. (such agreement not to be subject to the provisos set forth in subsection 5.1.1 or the provisions of subsections 5.1.3 or 5.1.4 of the Plan). Sublease Supplement No. 1 to Aircraft Sublease Agreement [GPA 1989 BN-12 (N633AW)], dated September 28, 1990, between GPA Leasing USA Sub I, Inc. and America West Airlines, Inc. (such agreement not to be subject to the provisos set forth in subsection 5.1.1 or the provisions of subsections 5.1.3 or 5.1.4 of the Plan). Letter Agreement No. 1 relating to Aircraft Sublease Agreement [GPA 1989 BN-12 (N633AW)], dated as of September 21, 1990, by America West Airlines, Inc. and accepted and agreed to by GPA Leasing USA Sub I, Inc. (such agreement not to be subject to the provisos set forth in subsection 5.1.1 or the provisions of subsections 5.1.3 or 5.1.4 of the Plan).
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VENDOR NAME TITLE - - ---------------------------------------- --------------------------------------------------- Sublessee Consent and Agreement by America West Airlines, Inc. relating to the Assignment of Sublease [GPA 1989 BN-12 (N633AW)], dated as of September 21, 1990, between GPA Leasing USA Sub I, Inc. and Wilmington Trust Company (such agreement not to be subject to the provisos set forth in subsection 5.1.1 or the provisions of subsections 5.1.3 or 5.1.4 of the Plan). Sublease Tax Indemnification Agreement [GPA 1989 BN-12 (N633AW)], dated as of September 21, 1990, between GPA Leasing USA Sub I, Inc. and America West Airlines, Inc. (such agreement not to be subject to the provisos set forth in subsection 5.1.1 or the provisions of subsections 5.1.3 or 5.1.4 of the Plan). Sublease Supplement No. 1 to Aircraft Sublease Agreement [GPA 1990 AWA-13 (N634AW)], dated September 28, 1990, between GPA Leasing USA Sub I, Inc. and America West Airlines, Inc. (such agreement not to be subject to the provisos set forth in subsection 5.1.1 or the provisions of subsections 5.1.3 or 5.1.4 of the Plan). Letter Agreement No. 1 relating to Aircraft Sublease Agreement [GPA 1990 AWA-13 (N634AW)], dated as of September 21, 1990, by America West Airlines, Inc. and accepted and agreed to by GPA Leasing USA Sub I, Inc. (such agreement not to be subject to the provisos set forth in subsection 5.1.1 or the provisions of subsections 5.1.3 or 5.1.4 of the Plan). Sublessee Consent and Agreement by America West Airlines, Inc. relating to the Assignment of Sublease [GPA 1990 AWA-13 (N634AW)], dated as of September 21, 1990, between GPA Leasing USA Sub I, Inc. and Wilmington Trust Company (such agreement not to be subject to the provisos set forth in subsection 5.1.1 or the provisions of subsections 5.1.3 or 5.1.4 of the Plan). Sublease Tax Indemnification Agreement [GPA 1990 AWA-13 (N634AW)], dated as of September 21, 1990, between GPA Leasing USA Sub I, Inc. and America West Airlines, Inc. (such agreement not to be subject to the provisos set forth in subsection 5.1.1 or the provisions of subsections 5.1.3 or 5.1.4 of the Plan). Sublease Supplement No. 1 to Aircraft Sublease Agreement [GPA 1990 AWA-14 (N635AW)], dated September 28, 1990, between GPA Leasing USA Sub I, Inc. and America West Airlines, Inc. (such agreement not to be subject to the provisos set forth in subsection 5.1.1 or the provisions of subsections 5.1.3 or 5.1.4 of the Plan).
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VENDOR NAME TITLE - - ---------------------------------------- --------------------------------------------------- Letter Agreement No. 1 relating to Aircraft Sublease Agreement [GPA 1990 AWA-14 (N635AW)], dated as of September 21, 1990, by America West Airlines, Inc. and accepted and agreed to by GPA Leasing USA Sub I, Inc. (such agreement not to be subject to the provisos set forth in subsection 5.1.1 or the provisions of subsections 5.1.3 or 5.1.4 of the Plan). Sublessee Consent and Agreement by America West Airlines, Inc. relating to the Assignment of Sublease [GPA 1990 AWA-14 (N635AW)], dated as of September 21, 1990, between GPA Leasing USA Sub I, Inc. and Wilmington Trust Company (such agreement not to be subject to the provisos set forth in subsection 5.1.1 or the provisions of subsections 5.1.3 or 5.1.4 of the Plan). Sublease Tax Indemnification Agreement [GPA 1990 AWA-14 (N635AW)], dated as of September 21, 1990, between GPA Leasing USA Sub I, Inc. and America West Airlines, Inc. (such agreement not to be subject to the provisos set forth in subsection 5.1.1 or the provisions of subsections 5.1.3 or 5.1.4 of the Plan). Sublease Supplement No. 1 to Aircraft Sublease Agreement [GPA 1990 AWA-15 (N636AW)], dated September 28, 1990, between GPA Leasing USA Sub I, Inc. and America West Airlines, Inc. (such agreement not to be subject to the provisos set forth in subsection 5.1.1 or the provisions of subsections 5.1.3 or 5.1.4 of the Plan). Letter Agreement No. 1 relating to Aircraft Sublease Agreement [GPA 1990 AWA-15 (N636AW)], dated as of September 21, 1990, by America West Airlines, Inc. and accepted and agreed to by GPA Leasing USA Sub I, Inc. (such agreement not to be subject to the provisos set forth in subsection 5.1.1 or the provisions of subsections 5.1.3 or 5.1.4 of the Plan). Sublessee Consent and Agreement by America West Airlines, Inc. relating to the Assignment of Sublease [GPA 1990 AWA-15 (N636AW)], dated as of September 21, 1990, between GPA Leasing USA Sub I, Inc. and Wilmington Trust Company (such agreement not to be subject to the provisos set forth in subsection 5.1.1 or the provisions of subsections 5.1.3 or 5.1.4 of the Plan). Sublease Tax Indemnification Agreement [GPA 1990 AWA-15 (N636AW)], dated as of September 21, 1990, between GPA Leasing USA Sub I, Inc. and America West Airlines, Inc. (such agreement not to be subject to the provisos set forth in subsection 5.1.1 or the provisions of subsections 5.1.3 or 5.1.4 of the Plan).
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VENDOR NAME TITLE - - ---------------------------------------- --------------------------------------------------- Sublease Supplement No. 1 to Aircraft Sublease Agreement [GPA 1990 AWA-16 (N637AW)], dated September 28, 1990, between GPA Leasing USA Sub I, Inc. and America West Airlines, Inc. (such agreement not to be subject to the provisos set forth in subsection 5.1.1 or the provisions of subsections 5.1.3 or 5.1.4 of the Plan). Letter Agreement No. 1 relating to Aircraft Sublease Agreement [GPA 1990 AWA-16 (N637AW)], dated as of September 21, 1990, by America West Airlines, Inc. and accepted and agreed to by GPA Leasing USA Sub I, Inc. (such agreement not to be subject to the provisos set forth in subsection 5.1.1 or the provisions of subsections 5.1.3 or 5.1.4 of the Plan). Sublessee Consent and Agreement by America West Airlines, Inc. relating to the Assignment of Sublease [GPA 1990 AWA-16 (N637AW)], dated as of September 21, 1990, between GPA Leasing USA Sub I, Inc. and Wilmington Trust Company (such agreement not to be subject to the provisos set forth in subsection 5.1.1 or the provisions of subsections 5.1.3 or 5.1.4 of the Plan). Sublease Tax Indemnification Agreement [GPA 1990 AWA-16 (N637AW)], dated as of September 21, 1990, between GPA Leasing USA Sub I, Inc. and America West Airlines, Inc. (such agreement not to be subject to the provisos set forth in subsection 5.1.1 or the provisions of subsections 5.1.3 or 5.1.4 of the Plan). Sublease Supplement No. 1 to Engine Sublease Agreement [GPA 1990 AWA-E1 (MSN V0025)], dated February 8, 1991, between GPA Leasing USA I, Inc. and America West Airlines, Inc. (such agreement not to be subject to the provisos set forth in subsection 5.1.1 or the provisions of subsections 5.1.3 or 5.1.4 of the Plan). Letter Agreement No. 1 relating to Engine Sublease Agreement [GPA 1990 AWA-E1 (MSN V0025], dated as of December 12, 1990, by America West Airlines, Inc. and accepted and agreed to by GPA Leasing USA I, Inc. (such agreement not to be subject to the provisos set forth in subsection 5.1.1 or the provisions of subsections 5.1.3 or 5.1.4 of the Plan). Sublessee Consent and Agreement by America West Airlines, Inc. relating to the Assignment of Sublease [GPA 1991 AWA-E1 (MSN V0025)], dated as of March 15, 1991, between GPA Leasing USA I, Inc. and Wilmington Trust Company (such agreement not to be subject to the provisos set forth in subsection 5.1.1 or the provisions of subsections 5.1.3 or 5.1.4 of the Plan).
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VENDOR NAME TITLE - - ---------------------------------------- --------------------------------------------------- Sublease Tax Indemnification Agreement [GPA 1991 AWA-E1 (MSN V0025)], dated as of March 15, 1991, between GPA Leasing USA I, Inc. and America West Airlines, Inc. (such agreement not to be subject to the provisos set forth in subsection 5.1.1 or the provisions of subsections 5.1.3 or 5.1.4 of the Plan). Purchase Agreement Warranties Assignment [GPA 1991 AWA-E1 (MSN V0025)], dated March 17, 1991, among GPA Leasing USA I, Inc., America West Airlines, Inc. and Wilmington Trust Company and accepted by IAE International Aero Engines, AG (such agreement not to be subject to the provisos set forth in subsection 5.1.1 or the provisions of subsections 5.1.3 or 5.1.4 of the Plan). Sublease Supplement No. 1 to Engine Sublease Agreement [GPA 1990 AWA-E2 (MSN V0049)], dated February 8, 1991, between GPA Leasing USA I, Inc. and America West Airlines, Inc. (such agreement not to be subject to the provisos set forth in subsection 5.1.1 or the provisions of subsections 5.1.3 or 5.1.4 of the Plan). Letter Agreement No. 1 relating to Engine Sublease Agreement [GPA 1990 AWA-E2 (MSN V0049)], dated as of December 12, 1990, by America West Airlines, Inc. and accepted and agreed to by GPA Leasing USA I, Inc. (such agreement not to be subject to the provisos set forth in subsection 5.1.1 or the provisions of subsections 5.1.3 or 5.1.4 of the Plan). Sublessee Consent and Agreement by America West Airlines, Inc. relating to the Assignment of Sublease [GPA 1991 AWA-E2 (MSN V0049)], dated as of March 15, 1991, between GPA Leasing USA I, Inc. and Wilmington Trust Company (such agreement not to be subject to the provisos set forth in subsection 5.1.1 or the provisions of subsections 5.1.3 or 5.1.4 of the Plan). Sublease Tax Indemnification Agreement [GPA 1991 AWA-E2 (MSN V0049)], dated as of March 15, 1991, between GPA Leasing USA I, Inc. and America West Airlines, Inc. (such agreement not to be subject to the provisos set forth in subsection 5.1.1 or the provisions of subsections 5.1.3 or 5.1.4 of the Plan). Purchase Agreement Warranties Assignment [GPA 1991 AWA-E2 (V0049)], dated March 17, 1991, among GPA Leasing USA I, Inc., America West Airlines, Inc. and Wilmington Trust Company and accepted by IAE International Aero Engines, AG (such agreement not to be subject to the provisos set forth in subsection 5.1.1 or the provisions of subsections 5.1.3 or 5.1.4 of the Plan).
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VENDOR NAME TITLE - - ---------------------------------------- --------------------------------------------------- Sublease Supplement No. 1 to Engine Sublease Agreement [GPA 1990 AWA-E3 (MSN V0019)], dated February 8, 1991, between GPA Leasing USA I, Inc. and America West Airlines, Inc. (such agreement not to be subject to the provisos set forth in subsection 5.1.1 or the provisions of subsections 5.1.3 or 5.1.4 of the Plan). Letter Agreement No. 1 relating to Engine Sublease Agreement [GPA 1990 AWA-E3 (MSN V0019)], dated as of December 12, 1990, by America West Airlines, Inc. and accepted and agreed to by GPA Leasing USA I, Inc. (such agreement not to be subject to the provisos set forth in subsection 5.1.1 or the provisions of subsections 5.1.3 or 5.1.4 of the Plan). Sublessee Consent and Agreement by America West Airlines, Inc. relating to the Assignment of Sublease [GPA 1991 AWA-E3 (MSN V0019)], dated as of March 15, 1991, between GPA Leasing USA I, Inc. and Wilmington Trust Company (such agreement not to be subject to the provisos set forth in subsection 5.1.1 or the provisions of subsections 5.1.3 or 5.1.4 of the Plan). Sublease Tax Indemnification Agreement [GPA 1991 AWA-E3 (MSN V0019)], dated as of March 15, 1991, between GPA Leasing USA I, Inc. and America West Airlines, Inc. (such agreement not to be subject to the provisos set forth in subsection 5.1.1 or the provisions of subsections 5.1.3 or 5.1.4 of the Plan). Purchase Agreement Warranties Assignment [GPA 1991 AWA-E3 (MSN V0019)], dated March 17, 1991, among GPA Leasing USA I, Inc., America West Airlines,Inc. and Wilmington Trust Company and accepted by IAE International Aero Engines, AG (such agreement not to be subject to the provisos set forth in subsection 5.1.1 or the provisions of subsections 5.1.3 or 5.1.4 of the Plan). Letter Agreement, dated April 15, 1994, by America West Airlines, Inc. and acknowledged, agreed and accepted by GPA Leasing USA I, Inc. and GPA Leasing USA Sub I, Inc. (such agreement not to be subject to the provisos set forth in subsection 5.1.1 or the provisions of subsections 5.1.3 or 5.1.4 of the Plan).
3-23 122
VENDOR NAME TITLE - - ---------------------------------------- --------------------------------------------------- Aircraft Finance Agreement dated as of August 25, 1990 between GPA Group plc and America West Airlines, Inc., as amended by Amendment No. 1 to Aircraft Finance Agreement dated as of September 21, 1990 between GPA Group plc and America West Airlines, Inc., and as supplemented and modified by Letter Agreement No. 1 dated August 25, 1990 from GPA Group plc and accepted and acknowledged by America West Airlines, Inc., Letter Agreement No. 2 dated August 25, 1990 from GPA Group plc and accepted and acknowledged by America West Airlines, Inc., Letter Agreement No. 3 dated August 25, 1990 from GPA Group plc and accepted and acknowledged by America West Airlines, Inc., Letter Agreement No. 4 dated August 25, 1990 from GPA Group plc and accepted and acknowledged by America West Airlines, Inc., and Waiver Letter dated February 8, 1991 from GPA Group plc, GPA Leasing USA I, Inc. and GPA Leasing USA Sub I, Inc. and accepted and agreed to by America West Airlines, Inc., to the extent that such Aircraft Finance Agreement, as so amended, modified and supplemented, is referenced in any of the Sublease Agreements assumed by America West Airlines, Inc. pursuant to that certain Stipulation Regarding Aircraft Leases and/or Agreements with GPA Group plc, GPA Leasing USA I, Inc., GPA Leasing USA Sub I, Inc. and Industrial Bank of Japan and Order approved September 5, 1991 and any of the agreements and instruments identified in this Schedule 3 to which either GPA Leasing USA I, Inc., GPA Leasing USA Sub I, Inc. or GPA Group plc is a party (such agreement not to be subject to the provisos set forth in subsection 5.1.1 or the provisions of subsections 5.1.3 or 5.1.4 of the Plan).
3-24 EX-10.1 3 4TH AMENDED & RESTATED CREDIT AGREEMENT 1 Exhibit 10.1 =============================================================================== $77,560,621.60 FOURTH AMENDED AND RESTATED CREDIT AGREEMENT among AMERICA WEST AIRLINES, INC. VARIOUS LENDERS and BT COMMERCIAL CORP. as ADMINISTRATIVE AGENT _______________________________ Dated as of June 30, 1994 _______________________________ ================================================================================ 2 TABLE OF CONTENTS
Page ---- SECTION 1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 1.01 Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 1.02 Other Definitional Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . 27 SECTION 2. LOANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 2.01 Commitments and Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 2.02 [Reserved] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 2.03 [Reserved] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 2.04 [Reserved] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 2.05 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 2.06 [Reserved] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 2.07 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 2.08 Principal Repayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 2.09 Interest Period Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . 29 2.10 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 2.11 Cost Indemnities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 2.12 Distribution of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 SECTION 3. FEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 3.01 Facility Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 3.02 Fees of Administrative Agent and Collateral Agent . . . . . . . . . . . . . . . . 37 SECTION 4. PREPAYMENTS; PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 4.01 Voluntary Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 4.02 Mandatory Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 4.03 Method and Place of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 4.04 Net Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 SECTION 5. CONDITIONS PRECEDENT AND RELATED PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 5.01 Conditions to the Effective Date . . . . . . . . . . . . . . . . . . . . . . . . 41 5.02 Conditions to All Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 5.03 Conditions Precedent to Amendment Effective Date . . . . . . . . . . . . . . . . 49 5.04 Conditions Precedent to Second Amendment Effective Date . . . . . . . . . . . . . 54 5.05 Conditions Precedent to Third Amendment Effective Date . . . . . . . . . . . . . 61 5.06 Conditions Precedent to Fourth Amendment Effective Date . . . . . . . . . . . . . 66 SECTION 6. REPRESENTATIONS, WARRANTIES AND AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 6.01 Corporate Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 6.02 Corporate Power and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . 70 6.03 No Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 6.04 Governmental Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 6.05 Priority; Security Interests . . . . . . . . . . . . . . . . . . . . . . . . . . 71
-i- 3
Page ---- 6.06 Financial Statements; Financial Condition; Undisclosed Liabilities; etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 6.07 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 6.08 True and Complete Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . 73 6.09 Use of Proceeds; Margin Regulations . . . . . . . . . . . . . . . . . . . . . . . 73 6.10 Tax Returns and Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 6.11 Compliance with ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 6.12 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 6.13 Compliance with Statutes, etc . . . . . . . . . . . . . . . . . . . . . . . . . . 75 6.14 Investment Company Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77 6.15 Public Utility Holding Company Act . . . . . . . . . . . . . . . . . . . . . . . 77 6.16 End of Fiscal Year; Fiscal Quarters . . . . . . . . . . . . . . . . . . . . . . . 77 6.17 The Orders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77 6.18 Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78 6.19 GPA Agreements/Kawasaki Agreements . . . . . . . . . . . . . . . . . . . . . . . 78 SECTION 7. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79 7.01 Information Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79 7.02 Books, Records and Inspections . . . . . . . . . . . . . . . . . . . . . . . . . 84 7.03 Maintenance of Property; Insurance . . . . . . . . . . . . . . . . . . . . . . . 84 7.04 Corporate Franchises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85 7.05 Compliance with Statutes, etc . . . . . . . . . . . . . . . . . . . . . . . . . . 85 7.06 End of Fiscal Years; Fiscal Quarters . . . . . . . . . . . . . . . . . . . . . . 86 7.07 Performance of Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . 86 7.08 Minimum Designated Collateral Balances . . . . . . . . . . . . . . . . . . . . . 86 7.09 Hazardous Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89 7.10 Cash Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90 7.11 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92 SECTION 8. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94 8.01 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94 8.02 Consolidation, Merger, Sale of Assets, etc . . . . . . . . . . . . . . . . . . . 97 8.03 Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99 8.04 Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99 8.05 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 8.06 Advances, Investments and Loans . . . . . . . . . . . . . . . . . . . . . . . . . 101 8.07 Capital Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102 8.08 Limitation on Repayments, etc . . . . . . . . . . . . . . . . . . . . . . . . . . 102 8.09 Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . 106 8.10 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106 8.11 Chapter 11 Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107 8.12 [Reserved] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107 8.13 Conversion to Chapter 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107 8.14 Operation of Specified Aircraft/Engines. . . . . . . . . . . . . . . . . . . . . 107 8.15 Operating Plan Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107 8.16 Slots and Routes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110 8.17 Seizures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110 8.18 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
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Page ---- SECTION 9. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111 9.01 Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111 9.02 Representations, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111 9.03 Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111 9.04 The Case, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112 9.05 Credit Documents and Kawasaki Credit Agreement . . . . . . . . . . . . . . . . . 112 9.06 Judgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113 9.07 GPA Agreements/Kawasaki Agreements . . . . . . . . . . . . . . . . . . . . . . . 114 9.08 Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114 9.09 Casualties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114 9.10 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115 9.11 Other Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115 9.12 Change of Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115 SECTION 10. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118 10.01 Payment of Expenses, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118 10.02 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119 10.03 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119 10.04 Benefit of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120 10.05 No Waiver; Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . 121 10.06 Payments Pro Rata . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122 10.07 Calculations; Computations . . . . . . . . . . . . . . . . . . . . . . . . . . . 122 10.08 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122 10.09 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123 10.10 Headings Descriptive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123 10.11 Amendment or Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123 10.12 Domicile of Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125 10.13 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125 10.14 Set-Off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125 10.15 WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126 10.16 Time of the Essence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127 10.17 Specified Lien Releases . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127 10.18 Administrative Agent; Collateral Agent . . . . . . . . . . . . . . . . . . . . . 127 10.19 Dating and Effectiveness . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128 10.20 Participation by Commerce and Economic Development Commission . . . . . . . . . 128 10.21 Covenants Do Not Preclude Negotiation of a Plan of Reorganization . . . . . . . 128 10.22 Certain Consents and Waivers. . . . . . . . . . . . . . . . . . . . . . . . . . 128
-iii- 5 ANNEX Annex 1 Lenders' Commitments and Addresses SCHEDULES Schedule 1 A320 Leases Schedule 2 Designated Collateral Schedule 3 [Reserved] Schedule 4 [Reserved] Schedule 5 Deferral Aircraft Schedule 6 Designated Aircraft Leases Schedule 7 Engine Leases Schedule 8 Real Property Schedule 9 Liabilities and Obligations Schedule 10 Litigation Schedule 11 Slots, Routes and Domestic Schedule Gates Schedule 12 Insurance Policies and Programs Schedule 13 [Reserved] Schedule 14 Permitted First Liens Schedule 15 Existing Debt Schedule 16 Existing Investments Schedule 17 Kawasaki Leases Schedule 18 Stipulations Schedule 19 Aircraft Rental and Loan Reductions and Deferrals Schedule 20 [Reserved] Schedule 21 [Reserved] EXHIBITS Exhibit A Promissory Note Exhibit B [Reserved] Exhibit C Officer's Certificate Exhibit D-1 Interim Order Exhibit D-2 Final Order Exhibit D-3 GPA Order Exhibit D-4 Northwest Order Exhibit D-5 Additional Loan Order and Kawasaki Order Exhibit D-6 Second Additional Loan Order Exhibit D-7 Interim Extension Loan Order Exhibit D-8 Final Extension Loan Order Exhibit D-9 Subsequent Extension Loan Order Exhibit E Action Plan Summary Exhibit F Security Agreement Exhibit G Aircraft/Engine Mortgage Exhibit H Parts Mortgage Exhibit I Initial Cash Management Agreement Exhibit J-1 Real Property Mortgage Exhibit J-2 Lessor Consent Agreement Exhibit J-3 Senior Lender Agreement Exhibit J-4 Assignment of Gate Leases Exhibit K Slot Deed of Conveyance
-iv- 6 Exhibit L Slot Lease Agreement Exhibit M Collateral Certificate Exhibit N Agency Agreement Exhibit O Daily Cash Management Report Exhibit P By-Law Letter Agreement Exhibit Q Officer's Certificate Exhibit R First Amendment to Cash Management Agreement Exhibit S First Amendment to Agency Agreement Exhibit T First Amendments to Deeds of Trust Exhibit U Amendment No. 1 to Assignment of Gate Leases Exhibit V-1 First Amendment to Consent of the City of Phoenix (Hangar) Exhibit V-2 First Amendment to Consent of the City of Phoenix (11 acre parcel) Exhibit W Consent of First Interstate Bank of Arizona, N.A. Exhibit X Kawasaki Letter Regarding Intercreditor Agreements Exhibit Y Officer's Certificate Exhibit Z Second Amendment to Cash Management Agreement Exhibit AA Second Amendment to Agency Agreement Exhibit BB Second Amendments to Deeds of Trust Exhibit CC Assignment of Gate Leases Amendment No. 2 Exhibit DD-1 Second Amendment to Consent of the City of Phoenix (Hangar) Exhibit DD-2 Second Amendment to Consent of the City of Phoenix (11 acre parcel) Exhibit EE Consent of First Interstate Bank of Arizona N.A. Exhibit FF Letter Regarding Intercreditor Agreements Exhibit GG First Amendment to Security Agreement Exhibit HH Amendment No. 3 to Aircraft/Engine Mortgage Exhibit II Amendment No. 1 to Parts Mortgage Exhibit JJ First Amendment to Slot Lease Agreement Exhibit KK Management Letter Agreement Exhibit LL Northwest Release and Termination Exhibit MM Third Amendments to Deeds of Trust Exhibit NN Assignment of Gate Leases Amendment No. 3 Exhibit OO Third Amendments to Consents of the City of Phoenix Exhibit PP Second Amendment to Slot Lease Agreement Exhibit QQ Ansett Release and Termination Exhibit RR Amended and Restated Management Letter Agreement Exhibit SS Amendment No. 2 to Parts Mortgage Exhibit TT Fourth Amendments to Deeds of Trust Exhibit UU Assignment of Gate Lease No. 4 Exhibit VV Dial Release and Termination
-v- 7 THIS FOURTH AMENDED AND RESTATED CREDIT AGREEMENT, dated as of June 30, 1994, is entered into among AMERICA WEST AIRLINES, INC. (the "Borrower"), a Delaware corporation, as debtor and debtor-in-possession under Chapter 11 of Title 11 of the United States Code entitled "Bankruptcy" (the "Bankruptcy Code"), the Lenders, and BT COMMERCIAL CORP., acting in the manner and to the extent described in the Agency Agreement (in such capacity, the "Administrative Agent"), and, subject to the terms and conditions set forth herein, amends and restates in its entirety the Credit Agreement, dated as of August 26, 1991, among the Borrower, the Existing Lenders (other than Kawasaki), Northwest and the Administrative Agent (the "Original Credit Agreement"), as heretofore amended and restated by the Amended and Restated Credit Agreement, dated as of December 1, 1991, among the Borrower, the Existing Lenders, Northwest and the Administrative Agent (such Amended and Restated Credit Agreement being referred to herein as the "First Amended and Restated Credit Agreement"), and as heretofore further amended and restated by the Second Amended and Restated Credit Agreement, dated as of September 1, 1992, among the Borrower, the Existing Lenders, the Second Amendment Lenders and the Administrative Agent (such Second Amended and Restated Credit Agreement being referred to herein as the "Second Amended and Restated Credit Agreement"), and as heretofore further amended and restated by the Third Amended and Restated Credit Agreement, dated as of September 30, 1993, among the Borrower, the Existing Lenders, the other Third Amendment Lenders and the Administrative Agent (such Third Amended and Restated Credit Agreement being referred to herein as the "Third Amended and Restated Credit Agreement") and the Third Amended and Restated Credit Agreement, as amended and restated hereby, and as further amended, modified or supplemented from time to time, being referred to herein as this "Agreement"). R E C I T A L S: WHEREAS, all capitalized terms used herein shall have the meanings provided in Section 1 below; WHEREAS, on June 27, 1991 (the "Filing Date"), the Borrower filed a voluntary petition with the Bankruptcy Court initiating the Case and has continued in the possession of its assets and in the management of its business pursuant to Sections 1107 and 1108 of the Bankruptcy Code; WHEREAS, pursuant to and subject to the terms and conditions of the Original Credit Agreement, the Existing Lenders (other than Kawasaki) and Northwest agreed to make Loans to the Borrower in an aggregate principal amount not to exceed $55,000,000; 8 WHEREAS, pursuant to the First Amended and Restated Credit Agreement, the Original Credit Agreement was amended and restated to, among other things, provide for the making of an additional Loan by Kawasaki to the Borrower in the principal amount of $23,000,000; WHEREAS, pursuant to the Second Amended and Restated Credit Agreement, the First Amended and Restated Credit Agreement was amended and restated to, among other things, provide for the making of additional Loans by GPA Sub and the Second Amendment Lenders to the Borrower in the principal amount of $53,000,000; WHEREAS, simultaneously with the making of such additional Loans by GPA Sub and the Second Amendment Lenders, the Borrower prepaid from the proceeds of such additional Loans all of the Loans made by Northwest under the Original Credit Agreement and outstanding under the First Amended and Restated Credit Agreement in an aggregate principal amount of $9,876,364; WHEREAS, after giving effect to the making of such additional Loans by GPA Sub and the Second Amendment Lenders and the prepayment of the Loans made by Northwest under the Original Credit Agreement, on the Second Amendment Effective Date, there were Loans outstanding under the Second Amended and Restated Credit Agreement in an aggregate principal amount of $110,783,636.00; WHEREAS, after giving effect to the making by the Borrower of scheduled payments and mandatory prepayments of Loans pursuant to and in accordance with the Second Amended and Restated Credit Agreement (including, without limitation, the waiving by the Lenders of certain mandatory prepayments), on the Third Amendment Effective Date, there were Loans outstanding under the Second Amended and Restated Credit Agreement in an aggregate principal amount of $91,913,239.20 (of which $8,296,641.93 were Ansett Loans); WHEREAS, pursuant to the Third Amended and Restated Credit Agreement, on the Third Amendment Effective Date, the Third Amendment Lenders extended the maturity of their Loans to the Maturity Date (as defined in the Third Amended and Restated Credit Agreement) and the Ansett Loans matured and were paid in full; WHEREAS, after giving effect to the maturity and payment of the Ansett Loans (as aforesaid) and the making by the Borrower of scheduled payments and mandatory prepayments of Loans pursuant to and in accordance with the Third Amended and Restated Credit Agreement, on the date hereof, -2- 9 there are Loans outstanding under the Third Amended and Restated Credit Agreement in an aggregate principal amount of $78,574,140.25 (of which $1,013,518.65 are Dial Loans); WHEREAS, the Borrower requested the Lenders to extend the maturity of the Loans to the Maturity Date (as hereinafter defined); WHEREAS, all of the Lenders are willing to extend the maturity of the Loans to the Maturity Date (as hereinafter defined) but Dial desires that the Dial Loans mature and be paid in full on June 30, 1994; WHEREAS, after giving effect to the foregoing extension of the maturity of the Loans to the Maturity Date (as hereinafter defined) and the foregoing payment of the Dial Loans, there will be Loans outstanding under the Third Amended and Restated Credit Agreement in an aggregate principal amount of $77,560,621.60; WHEREAS, subject to the terms and conditions set forth herein, the Borrower, the Lenders and the Administrative Agent desire that the Third Amended and Restated Credit Agreement be amended and restated in its entirety to provide (among other things) for the foregoing extension of the maturity of the Loans to the Maturity Date (as hereinafter defined) and the foregoing payment of the Dial Loans; NOW, THEREFORE, THE PARTIES HERETO AGREE THAT THE AMENDED AND RESTATED CREDIT AGREEMENT IS AMENDED AND RESTATED TO READ IN ITS ENTIRETY AS FOLLOWS: SECTION 1. DEFINITIONS. 1.01 Defined Terms. As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined): "A320 Leases" shall mean those certain Aircraft Sublease Agreements listed on Schedule 1 hereto, as the same may be amended, supplemented or otherwise modified. "Additional Credit" shall have the meaning provided in Section 5.02(c). "Additional Loan Order" shall mean an order of the Bankruptcy Court in the form of Exhibit D-5 (as such form may be modified in a manner acceptable to each of the -3- 10 Lenders, in their sole and absolute discretion) to the extent, and only to the extent, such order does not constitute the Kawasaki Order. "Administrative Agent" shall have the meaning provided in the first paragraph of this Agreement and includes any successor in such capacity. "Affiliate" shall mean, with respect to any Person, any other Person (i) directly or indirectly controlling (including, but not limited to, all directors and officers of such Person), controlled by, or under direct or indirect common control with, such Person or (ii) that directly or indirectly owns more than 25% of the voting securities of such Person; provided, however, in no event shall any of the GPA Entities, Kawasaki, Kawasaki Enterprises Inc., Kawasaki Steel Corporation or any other Lender be considered an Affiliate of the Borrower. A Person shall be deemed to control a corporation if such Person possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of such corporation, whether through the ownership of voting securities, by contract or otherwise. "Agency Agreement" shall mean the Agency Agreement among the Borrower, the Administrative Agent, the Collateral Agent and the Lenders in the form of Exhibit N hereto, as modified, supplemented or amended from time to time. "Agreement" shall mean this Fourth Amended and Restated Credit Agreement, as modified, supplemented or amended from time to time. "Aircraft/Engine Mortgage" shall mean, collectively, the Aircraft and Engine Chattel Mortgage and Security Agreement in the form of Exhibit G hereto, and the Spare Parts Chattel Mortgage and Security Agreement in the form of Exhibit H hereto, as same may be amended, modified or supplemented from time to time. "Amended and Restated Management Letter Agreement" shall mean a letter agreement in the form of Exhibit RR hereto, as the same may be amended, modified or supplemented from time to time. "Amendment Effective Date" shall have the meaning specified in Section 5.03. "Ansett" shall mean Ansett Worldwide Aviation, U.S.A., a Nevada partnership, and its successors and assigns. -4- 11 "Ansett Loans" shall mean all of the loans made by Ansett under the Second Amended and Restated Credit Agreement and outstanding immediately prior to the Third Amendment Effective Date in an aggregate principal amount of $8,296,641.93. "Asset Sale" shall mean the sale, transfer or other disposition to any Person after the Filing Date of any property or other assets of the Borrower; provided, however, Asset Sale shall not include the sale, transfer or other disposition of property or other assets referred to in Section 8.02(i) to the extent that the aggregate Net Proceeds in any one fiscal year of the Borrower from the sale, transfer or other disposition of all such property or other assets do not exceed $1,000,000. "Assignment of Gate Leases" shall mean an Assignment of Gate Leases in the form of Exhibit J-4 hereto, as same may be amended, modified or supplemented from time to time. "Authorized Officer" shall mean and include the Chief Executive Officer, the Chief Operating Officer, a Senior Vice President, an Executive Vice President, the Treasurer, an Assistant Treasurer, or the Vice President and Controller of the Borrower. "Aviation Act" shall mean the Federal Aviation Act of 1958, as amended from time to time, or any similar legislation of the United States enacted in substitution or replacement thereof. "Bankruptcy Code" shall have the meaning provided in the first paragraph of this Agreement. "Bankruptcy Court" shall mean the United States Bankruptcy Court, District of Arizona, or such other court having jurisdiction over the Case from time to time. "Borrower" shall have the meaning specified in the first paragraph of this Agreement. "Business Day" shall mean any day except Saturday, Sunday and any other day which shall be in New York City a legal holiday or a day on which banking institutions are authorized by law or other government action to close and, when used with respect to a Loan or interest thereon, shall include a London Business Day. -5- 12 "By-Law Letter Agreement" shall mean a letter agreement in the form of Exhibit P hereto, as same may be amended, modified or supplemented from time to time. "Capital Expenditures" shall have the meaning provided in Section 8.07. "Case" shall mean the Chapter 11 case of the Borrower pending in the Bankruptcy Court. "Cash Covenant Amount" shall have the meaning provided in Section 8.15(d). "Cash Equivalents" shall mean, as to any Person, (i) securities issued or directly and fully guaranteed or insured by the United States or any agency or instrumentality thereof (provided that the full faith and credit of the United States is pledged in support thereof) having maturities of not more than six months from the date of acquisition, (ii) domestic time deposits and certificates of deposit of any commercial bank incorporated in the United States of recognized standing having capital and surplus in excess of $500,000,000 and having unsecured debt rated at least A or the equivalent thereof from Standard & Poor's Corporation (an "Eligible Bank") on the date of making of the deposit with maturities of not more than six months from the date of acquisition by such Person, (iii) repurchase obligations entered into with an Eligible Bank with a term of not more than seven days for underlying securities of the types described in clause (i) above, (iv) commercial paper issued by the parent corporation of any Eligible Bank on the date of the acquisition of the commercial paper (provided that the parent corporation and the bank are both incorporated in the United States) and commercial paper issued by any Person incorporated in the United States rated, on the date of the acquisition of the commercial paper, at least A-1 or the equivalent thereof by Standard & Poor's Corporation or at least P-1 or the equivalent thereof by Moody's Investors Service, Inc., and in each case maturing not more than six months after the date of acquisition by such Person and (v) shares or interests in any money market mutual fund substantially all of the assets of which are required to be invested in securities of the type described in clause (i) above and which is rated AAA or the equivalent by Standard & Poor's Corporation and P-1 or the equivalent by Moody's Investors Service, Inc. "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time. Section references to the Code are to the Code, as in effect at the date of this Agreement, and to any subsequent provisions of the Code -6- 13 amendatory thereof, supplemental thereto or substituted therefor. "Collateral" shall mean all "Collateral" under, and as defined in, the Orders or any Security Document. "Collateral Agent" shall mean the Administrative Agent acting as collateral agent, or any Person engaged or otherwise designated by the Administrative Agent to act as collateral agent, pursuant to the Agency Agreement and the Security Documents. "Commitment" shall mean, with respect to each Lender, (i) at any time prior to the Second Amendment Effective Date, the amount (if any) of such Lender's aggregate commitment to make loans under the Original Credit Agreement, the First Amended and Restated Credit Agreement and/or the Second Amended and Restated Credit Agreement, as set forth opposite such Lender's name in Annex I thereto directly below the column entitled "Commitment", and (ii) at any time on or after the Second Amendment Effective Date, the Loans of such Lender outstanding under the Second Amended and Restated Credit Agreement, the Third Amended and Restated Credit Agreement and this Agreement. "Concentration Account" shall have the meaning provided in the Initial Cash Management Agreement or any other cash management arrangements entered into by the Borrower at the request of the Required Lenders pursuant to Section 7.10. "Confidential Material" shall have the meaning provided in Section 10.13. "Contingent Obligation" shall mean, as to any Person, any obligation of such Person guaranteeing any indebtedness, leases, dividends or other obligations ("primary obligations") of any other Person (the "primary obligor") in any manner, whether directly or indirectly, including, without limitation, any obligation of such Person, whether or not contingent, (i) to purchase any such primary obligation or any property constituting direct or indirect security therefor, (ii) to advance or supply funds (x) for the purchase or payment of any such primary obligation or (y) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (iii) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation, or (iv) otherwise to assure or hold -7- 14 harmless or give "comfort" to the holder of such primary obligation against loss in respect thereof; provided, however, that the term Contingent Obligation shall not include endorsements of instruments for deposit or collection in the ordinary course of business. The amount of any Contingent Obligation shall be deemed to be an amount equal to the stated or determinable amount of the primary obligation in respect of which such Contingent Obligation is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof (assuming such Person is required to perform thereunder) as determined by such Person in good faith. "Controlled Group" shall mean all members of a controlled group of corporations and all trades or businesses (whether or not incorporated) under common control which, together with and including the Borrower, are treated as a single employer under Section 414(b) or 414(c) of the Code. "Credit Documents" shall mean this Agreement, each Note, the Agency Agreement, each Security Document, each certificate delivered hereunder or thereunder and each other document designated as such. "Customary Permitted Liens" shall mean (i) Liens (other than Environmental Liens and any Lien imposed under ERISA) for taxes, assessments or charges of any Governmental Authority or claim not yet due or which are being contested in good faith by appropriate proceedings and with respect to which adequate reserves or other appropriate provisions are being maintained; (ii) Liens perfected after the Filing Date under Section 546 of the Bankruptcy Code, statutory Liens of landlords and Liens of carriers, warehousemen, mechanics, materialmen and other similar Liens (other than any Lien imposed under ERISA) imposed by law created in the ordinary course of business for amounts not yet due or which are being contested in good faith by appropriate proceedings and with respect to which adequate reserves or other appropriate provisions are being maintained; (iii) Liens (other than any Lien imposed under ERISA) incurred or deposits made in the ordinary course of business (including, without limitation, surety bonds and appeal bonds) in connection with workers' compensation, unemployment insurance and other types of -8- 15 social security benefits or to secure the performance of tenders, bids, contracts (other than for the repayment of Indebtedness or with respect to leases of real or personal property), statutory obligations and other similar obligations or arising as a result of progress payments under government contracts; (iv) easements (including, without limitation, reciprocal easement agreements and utility agreements), rights-of-way and land use covenants (whether or not recorded), which do not interfere materially with the ordinary conduct of the business of the Borrower and which do not materially detract from the value or transferability of the property to which they attach or impair the use thereof to the Borrower or as Collateral; (v) rights of tenants, subtenants, franchisees or parties in possession (other than a debtor in possession, trustee in bankruptcy or receiver of the Borrower of Real Property owned or leased by the Borrower), or options or rights of first refusal, whether pursuant to leases, subleases, franchise agreements, other occupancy agreements or otherwise, with respect to real property owned by the Borrower, if such rights were vested on the Filing Date or created thereafter in the ordinary course of business in transactions permitted under this Agreement; (vi) extensions, renewals or replacements of any Lien referred to in paragraphs (i) through (iv) above, provided, that the principal amount of the obligation secured thereby is not increased and that any such extension, renewal or replacement is limited to the property originally encumbered thereby; (vii) building restrictions, zoning laws and other statutes, laws, rules, regulations, ordinances and restrictions related to the use of Real Property, and any amendments thereto, now or at any time hereafter adopted by any Governmental Authority having jurisdiction; and (viii) pooling, interchange and other similar arrangements customary in the ordinary course of the Borrower's business as and to the extent permitted under the Permitted First Liens and the Security Documents. -9- 16 "Default" shall mean any event, act or condition which with notice or lapse of time, or both, would constitute an Event of Default. "Deferral Aircraft" shall mean the aircraft described on Schedule 5 hereto. "Designated Aircraft Leases" shall mean those certain Aircraft Lease Agreements listed on Schedule 6 hereto, as the same may be amended, supplemented or otherwise modified from time to time. "Designated Collateral" shall mean the Collateral described in Schedule 2. "Dial" shall mean The Dial Corp., a Delaware corporation. "Dial Loans" shall mean all of loans made by Dial under the Second Amended and Restated Credit Agreement and outstanding immediately prior to the Fourth Amendment Effective Date in an aggregate principal amount of $1,013,518.65. "Distribution", with respect to any Person, shall mean that such Person has declared or paid any dividend or returned any capital to, its stockholders or authorized or made any other distribution, payment or delivery of property or cash to its stockholders as such, or redeemed, retired, purchased, or otherwise acquired, directly or indirectly, for consideration, any shares of any class of its capital stock (or any options or warrants issued by such Person with respect to its capital stock), or set aside any funds for any of the foregoing purposes, or shall have permitted any of its Subsidiaries to purchase or otherwise acquire for a consideration any shares of any class of the capital stock of such Person (or any options or warrants issued by such Person with respect to its capital stock), or shall have paid or made provision for payment of any profit sharing arrangement. Without limiting the foregoing, "Distributions" with respect to any Person shall also include all payments made or required to be made by such Person with respect to any stock appreciation rights plans, equity incentive or achievement plans or any similar plans or the setting aside of any funds for the foregoing purposes. "Dollars" and the sign "$" shall each mean freely transferable lawful money of the United States (expressed in dollars). -10- 17 "Domestic Gates" shall mean each landing gate located at an airport within the United States. "DOT" shall mean the United States Department of Transportation or similar regulatory authority established in replacement thereof. "Effective Date" shall have the meaning provided in Section 5.01. "1110 Indebtedness" shall mean any Indebtedness secured by a Lien described in Section 1110 of the Bankruptcy Code. "Eligible Receivable" shall mean, at the time of any determination thereof, any Receivable (as defined in the Security Agreement) of the Borrower which meets the following standards of eligibility: (i) the Borrower has lawful and absolute title to such Receivable; (ii) such Receivable is a valid, binding and legally enforceable obligation of the Account Debtor (as defined in the Security Agreement) who is obligated under such Receivable; (iii) such Receivable is not subject to any litigation, or other proceeding, dispute, setoff, counterclaim or other claim or defense on the part of the Account Debtor denying liability under such Receivable in whole or in part; (iv) the Borrower has the full and unqualified right to assign and grant Liens in such Receivable to the Collateral Agent as security for the Obligations; (v) such Receivable is not subject to any Lien in favor of any other Person; (vi) such Receivable is a bona fide Receivable consisting of a proper and accurate amount due from the Account Debtor arising from the sale of goods or the rendering of services in the ordinary course of the Borrower's business and which does not consist of a prepaid expense, warranty payment or claim against any manufacturer, vendor, supplier or other Person or an adjustment for unreported -11- 18 sales or any other travel agency adjustment, except that 75% of the amount of an adjustment for unreported sales or any other travel agency adjustment may constitute an Eligible Receivable;] (vii) with respect to such Receivable, no Account Debtor is (a) incorporated in or primarily conducting business in any jurisdiction located outside the United States; (b) an Affiliate of the Borrower; (c) a foreign government or any agency, department, or instrumentality thereof; (d) the subject of any reorganization, bankruptcy, receivership, custodianship, insolvency, or other like condition, except an Account Debtor that is an airline whose Receivable is through the Airline Clearing House; (e) an agency, department, or instrumentality of the United States or any state or local governmental authority in the United States unless the requirements of the Assignment of Claims Act of 1940, as amended, and any similar state or local legislation shall have been satisfied in respect thereof and the Required Lenders are satisfied as to the absence of set-offs, counterclaims and other defenses to payment on the part of the United States or such state or local governmental authority; or (f) a Person as to which the Borrower has modified its standard terms of payment as a result of concerns about the creditworthiness of such Account Debtor (e.g., by requiring prepayment or cash on delivery); (viii) such Receivable is not outstanding more than 180 days; (ix) such Receivable is not a Receivable owing by an Account Debtor which, at the time of any -12- 19 determination of Eligible Receivables, owes any amount with respect to any Receivable that has been outstanding more than 180 days; (x) with respect to the Account Debtor under such Receivable, the Borrower is not indebted to such Account Debtor for any goods provided or services rendered by such Account Debtor or otherwise, except an Account Debtor that is an airline whose Receivable is through the Airline Clearing House; (xi) such Receivable is not payable in any consideration other than cash and in U.S. Dollars; and (xii) such Receivable is evidenced by an invoice or other writing, if any, customary and appropriate in the air transportation business, and is not evidenced by any instrument or chattel paper. A Receivable which is at any time an Eligible Receivable, but which subsequently fails to meet any of the foregoing requirements, shall forthwith cease to be an Eligible Receivable until such time as it once again meets all of the foregoing requirements. Notwithstanding the provisions of the preceding clause (iii), a Receivable which is at any time subject to a dispute on the part of the Account Debtor denying liability under such Receivable in part shall constitute an Eligible Receivable to the extent of the portion thereof which is not in dispute (so long as such Receivable otherwise satisfies all of the foregoing requirements). In addition, any such Receivable which is in dispute as to a portion thereof shall not preclude another Receivable of the same Account Debtor from constituting an Eligible Receivable pursuant to the provisions of the preceding clause (ix). "Engine Collateral" shall mean the three CFM 56-3B engines of the Borrower bearing manufacturer's serial numbers 720601, 720772 and 720867. "Engine Leases" shall mean those certain Engine Sublease Agreements listed on Schedule 7 hereto, as the same may be amended, supplemented or otherwise modified. "Environmental Lien" shall mean a Lien in favor of any Governmental Authority for (i) any liability under Hazardous Materials Laws or (ii) damages arising from or -13- 20 costs incurred by such Governmental Authority in response to a release or threatened release of Hazardous Materials. "ERISA" shall mean the Employees Retirement Income Security Act of 1974, as amended from time to time. Section references to ERISA, are to ERISA, as in effect at the date of this Agreement, and to any subsequent provisions of ERISA, amendatory thereof, supplemental thereto or substituted therefor. "Event of Default" shall have the meaning provided in Section 9. "Event of Default Collateralization Amount" shall have the meaning provided in Section 7.10(b). "Existing Debt" shall have the meaning provided in Section 8.05. "Existing Lenders" shall mean GPA Leasing USA I, Inc., GPA Sub and Kawasaki. "Existing Secured Debt" shall mean all Indebtedness of the Borrower secured on the Filing Date by Permitted First Liens. "FAA" shall mean the Federal Aviation Administration or similar regulatory authority established in replacement thereof. "Facility Fee" shall have the meaning provided in Section 3.01. "Fees" shall mean all amounts payable pursuant to or referred to in Section 3.01. "Filing Date" shall have the meaning provided in the second "Whereas" clause of the recitals in this Agreement. "Final Extension Loan Order" shall mean an order of the Bankruptcy Court in the form of Exhibit D-8 (as such form may be modified pursuant to Section 7.10(a) in a manner acceptable to the Required Lenders, in their sole and absolute discretion, and as such form may otherwise be modified in a manner acceptable to each of the Lenders, in its sole and absolute discretion). "Final Order" shall have the meaning provided in Section 5.02(c). -14- 21 "First Amended and Restated Credit Agreement" shall have the meaning specified in the first paragraph of this Agreement. "Foreign Lender" shall have the meaning provided in Section 2.10(a). "Fourth Amendment Effective Date" shall have the meaning specified in Section 5.06. "Governmental Actions" shall mean any regulations, authorizations, applications, approvals, consents, exemptions, filings, licenses, notices, registrations, orders, rulings, decrees, judgments, permits, guidance, policy or program and other requirements of, to or with any Governmental Authority. "Governmental Authority" shall mean any government (federal, foreign, state, local or other) and any governmental or quasi-governmental, regulatory, judicial or public authority, board, body, commission, bureau, agency or the like. "GPA Agreements" shall mean, collectively, the A320 Leases, the Engine Leases, the Put Agreement and the Designated Aircraft Leases. "GPA Entity" shall mean GPA Group plc or any Subsidiary thereof, and their successors and assigns. "GPA Order" shall have the meaning provided in Section 5.01(h). "GPA Sub" shall mean GPA Leasing USA Sub I, Inc., a Connecticut corporation, and its successors and assigns. "Hazardous Materials" shall mean (i) any oil, flammable substance, explosives, radioactive materials, hazardous wastes or substances, toxic wastes or substances, asbestos or any other materials or pollutants which because of characteristics of flammability, ignitibility, corrossivity or reactivity, or because they exist in such quantity or manner, are required by a Governmental Authority to be reported or remediated; (ii) any chemical, material substance or constituent defined as or included in the definition of "hazardous pollutants" (under Section 112 of the Clean Air Act, as it may be amended from time to time), "hazardous substance," "hazardous waste," "hazardous materials," "extremely hazardous waste," "restricted hazardous waste," or "toxic substances" or words of similar import under any applicable local, state or federal law or -15- 22 under the regulations adopted, or publications promulgated pursuant thereto, including, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. Section 9601, et seq.; the Hazardous Materials Transportation Act, as amended, 49 U.S.C. Section 1801, et seq.; the Resource Conservation and Recovery Act, as amended, 42 U.S.C. Section 6901, et seq.; the Clean Water Act, as amended, 33 U.S.C. Section 1251, et seq.; Toxic Substances Control Act, 15 U.S.C. Section Section 2601-2629; Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. Section 136-136y; or similar state statutes; and (iii) any other chemical, material or substance, release or discharge of which or exposure to which is prohibited, limited or regulated by any Governmental Authority or may or could pose a hazard to the health and safety of the occupants of any of the properties of the Borrower or the owners and/or occupants of property under, adjacent to or surrounding any such property. References herein to Collateral in respect of Hazardous Materials also include all property on (including but not limited to buildings, improvements, soils or ground waters) or under the surface thereof or adjacent thereto or surrounding the property on or under which the Collateral is located. "Hazardous Materials Claims" shall mean any and all enforcement, remediation, clean-up, removal or other Governmental Actions instituted or completed by any Person pursuant to any Hazardous Materials Laws, or any written notice of any enforcement, clean-up, removal or other Governmental Actions or orders pursuant to any Hazardous Materials Laws, together with all claims made by any third party against the Borrower or any of its properties relating to damage, contribution, cost recovery, compensation, loss or injury resulting from any Hazardous Materials. "Hazardous Materials Laws" shall mean any and all federal, state or local laws, ordinances, rules, regulations, or other enforceable requirements now or hereafter existing or enacted relating to the environment, health and safety, and Hazardous Materials (including, without limitation, the use, handling, transfer, consolidation, transportation, production, disposal, discharge or storage thereof) or to industrial hygiene or the environmental conditions on, under or about any of the property of the Borrower, including, without limitation, soil and groundwater conditions. "High Density Airport" shall mean and include each of John F. Kennedy, Washington National, Newark and O'Hare Airports. -16- 23 "Indebtedness" shall mean, as to any Person, without duplication, (i) all indebtedness (including principal, interest, fees and charges) of such Person for borrowed money or for the deferred purchase price of property or services, (ii) the face amount of all letters of credit issued for the account of such Person and all drafts drawn thereunder, (iii) all liabilities of the types described in clauses (i), (ii), (iv), (v), (vi) and (vii) of this definition and secured by any Lien on any property (including, without limitation, a leasehold interest) owned by such Person, whether or not such liabilities have been assumed by such Person, (iv) the aggregate amount required to be capitalized under leases under which such Person is the lessee, (v) all Contingent Obligations of such Person, (vi) all obligations of such Person under "take-or-pay" or other similar arrangements and (vii) all obligations of such Person under interest rate or currency exchange protection or other similar agreements, provided that Indebtedness shall not include trade payables and accrued expenses, in each case arising in the ordinary course of business, or the Permitted Expenses. "Initial Cash Management Agreement" shall mean the Cash Management Agreement among the Local Bank, the Collateral Agent and the Borrower in the form of Exhibit I hereto, as modified, supplemented or amended from time to time. "Inter-Creditor Agreement" means the Inter-Creditor Agreement dated as of August 26, 1991 between the Collateral Agent, the Lenders and First Interstate Bank of Arizona, N.A., as same may be amended, modified or supplemented from time to time. "Interest Payment Date" shall have the meaning provided in Section 2.07(c). "Interest Period" shall mean, with respect to each Loan, the period from the date of the disbursement of such Loan to the first Interest Payment Date and each period thereafter beginning and ending on successive Interest Payment Dates; provided, however, that in the event that any amount is not paid when due, "Interest Period" shall mean such period consisting of one Business Day, one week, one month or three months as the Administrative Agent may select in its sole and absolute discretion. The Administrative Agent shall notify the Lenders and the Borrower of any such selection. "Interim Extension Loan Order" shall mean an order of the Bankruptcy Court in the form of Exhibit D-7 (as such -17- 24 form may be modified in a manner acceptable to each of the Lenders, in its sole and absolute discretion). "Interim Order" shall have the meaning provided in Section 5.02(c). "Investment Account" shall have the meaning provided in the Initial Cash Management Agreement or any other cash management arrangements entered into by the Borrower at the request of the Required Lenders pursuant to Section 7.10. "Investment Account Minimum" shall have the meaning provided in Section 8.15(e). "Kawasaki" shall mean Kawasaki Leasing International Inc., a Delaware corporation. "Kawasaki Agreements" shall mean and include (i) the Kawasaki Leases, (ii) the Kawasaki Put Agreement, and (iii) all leases and subleases entered into from time to time under and pursuant to the Kawasaki Put Agreement. "Kawasaki Credit Agreement" shall mean the Loan Restructuring Agreement, dated as of December 1, 1991, between the Borrower and Kawasaki, as assigned by Kawasaki to Lehman Commercial Paper Inc. and as amended, supplemented or modified from time to time. "Kawasaki Leases" shall mean those certain agreements listed on Schedule 17 hereto, as the same may be amended, supplemented or modified from time to time. "Kawasaki Order" shall mean an order of the Bankruptcy Court in the form of Exhibit D-5 (as such form may be modified in a manner acceptable to Kawasaki, in its sole and absolute discretion) to the extent, and only to the extent, such order relates to the Kawasaki Agreements (and the authorization of the Borrower to enter into and perform its obligations under the Kawasaki Agreements). "Kawasaki Put Agreement" shall mean the Put Agreement, dated as of December 1, 1991, between the Borrower and Kawasaki, as amended, supplemented or modified from time to time. "Kawasaki Stipulations" shall mean and include (i) the Joint Stipulation with Respect to Bankruptcy Code Section 1110 . . . [N160AW], (ii) the Joint Stipulation with Respect to Bankruptcy Code Section 1110 . . . [N910AW], and -18- 25 (iii) the Joint Stipulation with Respect to Bankruptcy Code Section 1110 . . . [720-601, 720-772, 720-867]. "Lender" shall mean each institution listed in Annex I, as well as any Person that becomes a "Lender" hereunder pursuant to Section 10.04. "Lessor Lenders" shall mean (i) GPA Leasing USA I, Inc., GPA Sub and each other Subsidiary of GPA Group plc which is or hereafter becomes a Lender, and (ii) Kawasaki and each Subsidiary of Kawasaki Enterprises, Inc. which is or hereafter becomes a Lender; provided that each such Person shall only be a "Lessor Lender" at such times as such Person holds Loans hereunder. "LIBOR" shall mean for each Interest Period: (i) the rate of interest determined by the Administrative Agent as follows: (y) On the second London Business Day prior to the first day of an Interest Period (a "LIBOR Determination Date"), the Administrative Agent will determine the arithmetic mean of the offered rates for deposits in United States dollars for the period in its good faith judgment comparable to the Interest Period which appear on the Reuters Screen LIBO Page at approximately 11:00 A.M., London time, on such LIBOR Determination Date. "Reuters Screen LIBO Page" means the display designated as Page "LIBO" on the Reuters Monitor Money Rate Service (or such other page as may replace the LIBO page on that service for the purpose of displaying London interbank offered rates of major banks). If only one such rate is quoted, then LIBOR shall mean such quoted rate; or (z) If no offered rates appear on the Reuters Screen LIBO Page, the Administrative Agent will request the principal London offices of each of four major banks in the London interbank market, as selected by the Administrative Agent, to provide the Administrative Agent with its offered quotations, or the rate at which it would offer, for deposits in United States dollars for a period comparable to the Interest Period to prime banks in the London interbank market at approximately 11:00 A.M., London time, on such LIBOR Determination Date and in a principal amount equal to an amount of not less than U.S. $1 million that is representative of a single transaction in such market at such time, and LIBOR will be the arithmetic mean of -19- 26 all such quotations provided or, if only one quotation is provided, such quotation; in either case divided by (ii) an amount equal to one minus the aggregate (but without duplication) weighted average of the maximum rates (expressed as a decimal) of reserve requirements in effect from time to time (including, without limitation, basic, supplemental, marginal and emergency reserves under any regulations of the Board of Governors of the Federal Reserve System or other Governmental Authority having jurisdiction with respect thereto, as now and from time to time in effect) for Eurocurrency funding (currently referred to as "Eurocurrency liabilities" in Regulation D of such Board) as in effect from time to time or offshore Dollar liabilities which are required to be maintained by a member bank of such System (such rate to be adjusted to the next higher 1/100 of 1%). "Lien" shall mean any mortgage, pledge, hypothecation, encumbrance, lien (statutory or other), or other security agreement of any kind or nature whatsoever (including, without limitation, any conditional sale or other title retention agreement and any lease having substantially the same effect as any of the foregoing and any assignment or deposit arrangement in the nature of a security device). "Lien Termination Date" shall have the meaning provided in Section 10.17. "Loan" shall mean a loan by a Lender to the Borrower under and pursuant to the Original Credit Agreement, the First Amended and Restated Credit Agreement and/or the Second Amended and Restated Credit Agreement. "Local Bank" shall have the meaning provided in the Initial Cash Management Agreement. "London Business Day" shall mean any day on which dealings in deposits in United States dollars are transacted in the London interbank market. "Margin Stock" shall have the meaning provided in Regulation U of the Board of Governors of the Federal Reserve System. "Management Letter Agreement" shall mean a letter agreement in the form of Exhibit KK hereto, as the same may be amended, modified or supplemented from time to time. -20- 27 "Maturity Date" shall mean the earliest of (x) December 31, 1994, (y) the effective date of a confirmed plan of reorganization for the Borrower under Chapter 11 of the Bankruptcy Code and (z) the date of substantial consummation (as such term is defined in Section 1101 of the Bankruptcy Code) of a plan of reorganization for the Borrower under Chapter 11 of the Bankruptcy Code. "Merchant Agreement Supplement" shall mean an amendment to the Supplement to Merchant Agreement, dated as of March 15, 1991, between the Borrower and First Interstate Bank of Arizona, N.A., as modified, supplemented or amended from time to time with the prior written consent of the Required Lenders. "Mortgage" shall mean the Mortgages in the forms of Exhibit J-1 hereto, as same may be amended, modified or supplemented from time to time. "Mortgaged Property" shall have the meaning provided in Section 5.01(f). "Multiemployer Plan" shall mean a "multiemployer plan" as defined in Section 4001(a)(3) of ERISA. "Net Proceeds" shall mean for each Asset Sale the proceeds (net of expenses actually paid by the Borrower as a result thereof) received by the Borrower from such Asset Sale less any Existing Secured Debt or any Indebtedness secured by a Permitted First Lien, including, without limitation, interest period breakage or make-whole premiums payable in connection therewith, of the Borrower required, as permitted by the Bankruptcy Court, to be repaid with such proceeds. "Northwest" shall mean Northwest Airlines, Inc., a Minnesota corporation. "Northwest Order" shall have the meaning provided in Section 5.01(h). "Note" shall have the meaning provided in Section 2.05(a). "Notice Office" shall mean the office of the Administrative Agent shown opposite its name on the signature pages hereof, or such other office as the Administrative Agent may hereafter designate in writing as such to the other parties hereto. -21- 28 "Obligations" and "Credit Agreement Obligations" shall mean all amounts payable at any time or from time to time and all other liabilities and obligations of the Borrower owing to the Administrative Agent, the Collateral Agent or any Lender pursuant to the terms of this Agreement or any other Credit Document. "Official Committee" shall mean any official committee appointed in the Case with the approval of the Bankruptcy Court. "Operating Plan" shall mean the Borrower's Summary Pro Forma Financial Statements, Plan Revision No. 9, June 1993 through December 1994, dated July 15, 1993, a certified copy of which has been delivered to the Administrative Agent and each Lender, as the same has been amended, supplemented and modified by the Borrower's Plan Revision No. 9 Amendments, dated September 21, 1993, a certified copy of which has been delivered to the Administrative Agent and each Lender, and as the same may be further amended, supplemented or otherwise modified with the consent of the Required Lenders. "Operating Route" shall mean any Route which is being operated such that it is not likely to be deemed "dormant" by the DOT. "Orders" shall mean and include the Interim Order, the Final Order, the Additional Loan Order, the Second Additional Loan Order, the Interim Extension Loan Order, the Final Extension Loan Order and the Subsequent Extension Loan Order. "Original Credit Agreement" shall have the meaning specified in the first paragraph of this Agreement. "Payment Office" shall mean the account of the Administrative Agent located at One Bankers Trust Plaza, New York, New York 10006, or such other account as the Administrative Agent may hereafter designate in writing as such to the other parties hereto. "PBGC" shall mean the Pension Benefit Guaranty Corporation established pursuant to Section 4002 of ERISA or any successor thereto. "Pension Plan" shall mean any employee benefit plan which is subject to the provisions of Title IV of ERISA and which is maintained for employees of the Borrower or any member of the Controlled Group, other than a Multiemployer Plan. -22- 29 "Percentage" shall mean, for each Lender, a fraction (expressed as a percentage), the numerator of which is the outstanding principal amount of the Loans of such Lender, as in effect at the time of determination, and the denominator of which is the outstanding principal amount of the Loans of all of the Lenders, as in effect at such time. "Permitted Expenses" shall mean all fees and expenses of professionals retained pursuant to Section 327 of the Bankruptcy Code by the Borrower or by an Official Committee, and expenses of members of an Official Committee, and all compensation awarded under Sections 503(b)(2) through 503(b)(6) of the Bankruptcy Code, as such may be allowed by the Bankruptcy Court and paid by the Borrower from time to time, provided, however, that upon the occurrence of an Event of Default, then, from and after such event, Permitted Expenses shall mean the sum of (i) all amounts previously paid by the Borrower to professionals retained by the Borrower or an Official Committee, or Official Committee members' expenses, and all compensation awarded under Sections 503(b)(2) through 503(b)(6) of the Bankruptcy Code, as of the date of such Event of Default, and (ii) $1,000,000 of such expenses if such date occurs prior to January 1, 1992 and $2,000,000 of such expenses if such date occurs after December 31, 1991, and, provided, further, however, that Permitted Expenses shall not include expenses incurred in connection with any objection to the validity, priority or extent of any Lien or priority status granted to the Lenders hereunder or pursuant to any of the Orders or to the enforceability of any rights granted hereunder or under the other Credit Documents, the GPA Agreements or the Kawasaki Agreements or any of the Orders or the GPA Order or the Kawasaki Order. "Permitted First Liens" shall mean the Liens described in clauses (i), (v), (vii) and (viii) of Section 8.01. "Person" shall mean any individual, partnership, joint venture, firm, corporation, association, trust or other enterprise or Governmental Authority. "Projections" shall have the meaning provided in Section 6.06(e). "Put Agreement" shall mean that certain A320 Put Agreement, dated as of June 25, 1991, between GPA Group plc and the Borrower, as the same may be amended, supplemented or otherwise modified from time to time. -23- 30 "Real Property" shall mean all of the right, title and interest of the Borrower in and to land, improvements and fixtures, including leaseholds and Domestic Gates. "Required Lenders" at any time shall mean Lenders the principal amount of whose Loans outstanding exceed 75% of the total principal amount of Loans outstanding; provided, however, that if GPA Entities shall be the sole Lessor Lenders, the term "Required Lenders" shall mean Lenders the principal amount of whose Loans outstanding exceed 66% of the total principal amount of Loans outstanding; and provided further, however, that the use of the term "Required Lenders" shall be subject to the provisions of the first sentence of Section 10.11, which provisions may require the consent of or other action by Lenders whose Loans exceed a greater percentage than the applicable percentage stated in this definition. "Routes" shall mean international route authorities held by the Borrower. "SEC" shall have the meaning provided in Section 7.01(e). "Second Additional Loan Order" shall mean an order of the Bankruptcy Court in the form of Exhibit D-6 (as such form may be modified pursuant to Section 7.10(a) in a manner acceptable to the Required Lenders, in their sole and absolute discretion, and as such form may otherwise be modified in a manner acceptable to all of the Lenders, in their sole and absolute discretion). "Second Amended and Restated Credit Agreement" shall have the meaning specified in the first paragraph of this Agreement. "Second Amendment Effective Date" shall have the meaning specified in Section 5.04. "Second Amendment Lender" shall mean Ansett, Dial and each Lender (other than an Existing Lender) that became a Lender and made a Loan on the Second Amendment Effective Date. "Section 7.10(c) Amount" shall have the meaning provided in Section 7.10(c). "Secured Creditors" shall mean each of the Lenders, the Collateral Agent and the Administrative Agent. -24- 31 "Security Agreement" shall mean a Security Agreement in the form of Exhibit F hereto, as the same may be amended, modified or supplemented from time to time. "Security Documents" shall mean and include the Orders, the Security Agreement, the Inter-Creditor Agreement, the Mortgage, the Assignment of Gate Leases, the Aircraft/Engine Mortgage, the Slot Deed of Conveyance, the Slot Lease, the Initial Cash Management Agreement and the other agreements related to the Concentration Account and/or the Investment Account, and any ancillary documentation which is required or otherwise executed to evidence and/or perfect the liens and security interests and other rights granted to the Collateral Agent on behalf of the Lenders pursuant to this Agreement, the Orders, the Security Agreement, the Inter- Creditor Agreement, the Mortgage, the Aircraft/Engine Mortgage, the Slot Deed of Conveyance, the Slot Leases, the Initial Cash Management Agreement and the other agreements related to the Concentration Account and/or the Investment Account. "Slot" shall mean all of the rights, titles, interest and privileges of an air carrier in and to the primary operating authority granted by the FAA pursuant to Title 14, to conduct one Instrument Flight Rule (as defined under the Aviation Act) take-off or landing in a specified one-hour or half-hour period at a High Density Airport. The term "Slot" as used herein shall include all Slots created after the date hereof pursuant to Title 14. "Slot Collateral" means the Slots of the Borrower at O'Hare Airport and John F. Kennedy Airport. "Slot Deed of Conveyance" shall mean the Deed of Conveyance and Assignment of Allocated Instrument Flight Rules Operations Times of the Slots made by the Borrower in favor of the Collateral Agent in the form of Exhibit K, as modified, supplemented or amended from time to time. "Slot Lease" shall mean, collectively, the Slot Lease Agreement with respect to the Slots made by the Collateral Agent to the Borrower in form attached hereto as Exhibit L, as modified, supplemented or amended from time to time. "Specified Aircraft and Engines" shall mean and include the Aircraft and Engines described on Part A of Schedule 1 to the Aircraft and Engine Chattel Mortgage and Security Agreement in the form of Exhibit G hereto, as such Schedule may be modified, supplemented or amended from time to time. -25- 32 "Subsidiary" shall mean, as to any Person, (i) any corporation more than 50% of whose stock of any class or classes having by the terms thereof ordinary voting power to elect a majority of the directors of such corporation (irrespective of whether or not at the time stock of any class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency) is at the time owned by such Person and/or one or more subsidiaries of such Person and (ii) any partnership, association, joint venture or other entity in which such Person and/or one or more subsidiaries of such Person has more than a 50% equity interest at the time. Unless otherwise expressly provided, all references herein to "Subsidiary" shall mean a Subsidiary of the Borrower. "Subsequent Extension Loan Order" shall mean an order of the Bankruptcy Court in the form of Exhibit D-9 (as such form may be modified pursuant to Section 7.10(a) in a manner acceptable to the Required Lenders, in their sole and absolute discretion, and as such form may otherwise be modified in a manner acceptable to each of the Lenders, in its sole and absolute discretion). "Successor Merchant Bank Arrangement" shall have the meaning provided in Section 7.10(a). "Taxes" shall have the meaning provided in Section 2.10(a). "Termination Event" shall mean (i) a "Reportable Event" described in Section 4043 of ERISA and the regulations issued thereunder (other than a "Reportable Event" not subject to the provision for 30-day notice to the PBGC under such regulations), (ii) the withdrawal of the Borrower or any member of the Controlled Group from a Pension Plan during a plan year in which it was a "substantial employer", as defined in Section 4001(a)(2) of ERISA, (iii) the filing of a notice of intent to terminate a Pension Plan or the treatment of a Pension Plan amendment as a termination under Section 4041 of ERISA, (iv) the institution of proceedings to terminate a Pension Plan by the PBGC, or (v) any other event or condition which might constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan. "Third Amended and Restated Credit Agreement" shall have the meaning specified in the first paragraph of this Agreement. -26- 33 "Third Amendment Effective Date" shall have the meaning specified in Section 5.05. "Third Amendment Lender" shall mean Dial and each Lender that extended the maturity of its Loans on the Third Amendment Effective Date. "Title 14" shall mean Title 14 of the Code of Federal Regulations, Part 93, Subparts K and S, as amended from time to time or any recodification thereof. "UCC" shall mean the Uniform Commercial Code as from time to time in effect in the relevant jurisdiction. "United States" and "U.S." shall each mean the United States of America. "Written" or "in writing" shall mean any form of written communication or a communication by means of telex, telecopier or facsimile device, telegraph or cable. 1.02 Other Definitional Provisions. References herein to "Sections", "Exhibits" and "Schedules" shall be to Sections of, and Exhibits or Schedules attached to, this Agreement unless otherwise specifically provided. References herein to "this Agreement", "herein", "hereof" or "hereunder" shall be to this Agreement, as amended, supplemented or otherwise modified from time to time in accordance with Section 10.11. Except as otherwise expressly provided herein, references to other agreements or instruments shall mean such agreements or instruments as the same may be amended, supplemented or modified from time to time. SECTION 2. LOANS. 2.01 Commitments and Loans. (a) Subject to and upon the terms and conditions set forth in the Original Credit Agreement, the First Amended and Restated Credit Agreement and/or the Second Amended and Restated Credit Agreement, each Lender honored its Commitment and made its Loans (it being acknowledged and agreed that on and as of the date hereof the Loans of each Lender are outstanding in the aggregate principal amount set forth opposite such Lender's name in Annex I to this Agreement). (b) Amounts prepaid or repaid under the Original Credit Agreement, the First Amended and Restated Credit Agreement, the Second Amended and Restated Credit Agreement, -27- 34 the Third Amended and Restated Credit Agreement and this Agreement may not be reborrowed (it being acknowledged and agreed that the Lenders are not obligated to make any further or additional loans under this Agreement). 2.02 [Reserved]. 2.03 [Reserved]. 2.04 [Reserved]. 2.05 Notes. (a) The Borrower's obligation to pay the principal of, and interest on, all Loans made by each Lender is evidenced in part by a promissory note duly executed and delivered to such Lender by the Borrower substantially in the form of Exhibit A hereto (each a "Note" and collectively the "Notes"). (b) Each Note issued to each Lender (i) is payable to the order of such Lender and is dated the Effective Date or such later date on which such Lender acquired or increased its Commitment, (ii) is in a stated principal amount equal to the Commitment of such Lender as in effect on the date of issuance thereof or the increase in the Commitment of such Lender on the date of issuance thereof and is payable in the outstanding principal amount of the Loans evidenced thereby from time to time, (iii) matures on the Maturity Date, (iv) bears interest as provided in Section 2.07 in respect of the Loans evidenced thereby and (v) is entitled to the benefits of this Agreement and all other Credit Documents. (c) Each Lender will note on its internal records the amount of each Loan made by it and each payment in respect thereof and will, prior to any transfer, record the outstanding principal amount of Loans evidenced thereby. Failure to make any such notation shall not affect any of the Borrower's obligations in respect of such Loans. 2.06 [Reserved]. 2.07 Interest. (a) The Borrower agrees to pay interest in respect of the unpaid principal amount of each Loan from the date the proceeds thereof are made available to the Borrower until maturity thereof (whether by acceleration or otherwise) at a rate per annum which shall be 3-1/2% in excess of the applicable LIBOR in effect from time to time; provided, -28- 35 however, that the Borrower shall pay interest in respect of the unpaid principal amount of each Loan from and including July 1, 1994 to and including September 30, 1994 at a rate per annum which shall be 2-1/2% in excess of the applicable LIBOR in effect for such period. (b) Overdue principal and overdue interest in respect of each Loan and all other amounts not paid when due under the Credit Documents shall bear interest at a rate per annum which shall be 5-1/2% in excess of the applicable LIBOR for the Interest Period selected by the Administrative Agent in effect from time to time. Interest which accrues under this Section 2.07(b) shall be payable on demand. (c) Except as provided in Section 2.07(b), accrued (and theretofore unpaid) interest shall be payable in respect of each Loan in arrears (i) on the last Business Day of each calendar quarter, (ii) at maturity (whether by acceleration or otherwise) and (iii) after such maturity, on demand. Each date described in clauses (i), (ii) and (iii) of the preceding sentence of this Section 2.07(c) is referred to herein as an "Interest Payment Date". 2.08 Principal Repayments. On the Maturity Date, the Borrower shall repay in full the aggregate principal amount of the Loans then outstanding (together with all accrued and unpaid interest thereon and all other amounts due hereunder and under any other Credit Document). 2.09 Interest Period Indemnification. Without limiting Section 2.11 hereof, the Borrower agrees to indemnify each Lender and to hold each Lender harmless from any loss or expense, including, without limitation, any such loss or expense arising from interest, fees or indemnities payable by such Lender to lenders of funds obtained by it in order to maintain its Loans hereunder and any such loss or expense (including, without limitation, loss of anticipated profit) incurred in liquidating or reemploying swaps, loans or deposits from which such funds were obtained or priced, which such Lender may sustain or incur as a consequence of (i) default by the Borrower in the payment when due of the principal of or interest on any Loan hereunder, (ii) failure or default by the Borrower to repay or prepay after the Borrower has given a notice of repayment or prepayment or is required to make a prepayment pursuant to Section 4, and (iii) the making of any repayment or prepayment of a Loan or payment of interest in respect thereof (including, without limitation, pursuant to Sections 4.01 or 4.02) on a day which is not the last day of an applicable Interest Period. The Borrower shall pay to each Lender any amounts owing to such Lender pursuant to this Section 2.09 within five (5) -29- 36 Business Days after it receives the Lender's certificate certifying in reasonable detail the amount of such loss or expense, which certificate shall be conclusive in the absence of manifest error. Such Lender shall deliver a copy of any such certificate to the Administrative Agent at the same time such certificate is delivered to the Borrower. 2.10 Taxes. (a) The Borrower shall pay all amounts payable hereunder or under the Credit Documents to the Administrative Agent and each Lender free and clear of, and without deduction or withholding for or on account of, any present and future taxes, levies, imposts, duties, fees, assessments, deductions, withholdings or other charges imposed by any country, jurisdiction or any political subdivision or taxing authority thereof or therein, excluding (i) net income and franchise taxes (including minimum, net worth or capital taxes) imposed on such Person by any taxing authority of the United States of America (or the principal country of tax residence of the ultimate parent corporation of such Person pursuant to this Agreement) or political subdivision thereof or by any country, jurisdiction or any political subdivision or taxing authority thereof or therein in which the lending office with respect to the Loans of such Lender hereunder or principal office of such Person is located and (ii) withholding taxes described in the second paragraph of this Section 2.10(a) (all such nonexcluded taxes, levies, imposts, duties, fees, assessments, deductions, withholdings and other charges being hereinafter referred to as "Taxes"). If any Taxes shall be required by law to be deducted or withheld from any payment of an amount payable hereunder or under the other Credit Documents by the Borrower or the Administrative Agent (other than the withholding taxes described in the next paragraph), the Borrower shall increase the amount paid so that the Administrative Agent or such Lender receives when due (and is entitled to retain), after deduction or withholding for or on account of such Taxes (including, without limitation, any taxes, levies, imposts, duties, fees, deductions, withholdings (other than withholdings permitted pursuant to the next paragraph), assessments or other charges applicable to additional amounts payable under this Section), the full amount of the payment provided for herein or in the other Credit Documents. In the event the Borrower is required by a Lender to pay any additional amount to such Lender pursuant to this Section 2.10, such Lender will designate a different lending office if such designation will avoid the need for, or reduce, such additional amount and will not be otherwise disadvantageous to such Lender in its sole and absolute judgment. -30- 37 The Borrower or the Administrative Agent may properly as required by law deduct any withholding taxes from or in respect of any sum payable hereunder to any Lender or the Administrative Agent and such withholdings shall not be subject to indemnification (i) if any Lender which is organized under the laws of a jurisdiction outside of the United States (a "Foreign Lender") fails or is unable to furnish to the Borrower or the Administrative Agent a statement (for example, an Internal Revenue Service Form 1001 or Form 4224) when reasonably requested by the Borrower or the Administrative Agent which, had it been furnished, would have provided the Borrower or the Administrative Agent a complete exemption from any duty to withhold, (ii) if a Foreign Lender furnishes to the Borrower or Administrative Agent a statement of the type described in preceding clause (i), but only to the extent such statement does not provide the basis for a complete exemption from withholding, (iii) if a Foreign Lender notifies the Borrower or the Administrative Agent that circumstances on which such an exemption was based no longer exist or (iv) if the taxation authority notifies the Borrower or the Administrative Agent that the Borrower or the Administrative Agent, as the case may be, may not rely on such a statement, that such an exemption is not available, or that withholding is required. Each Foreign Lender further agrees to furnish to the Borrower and the Administrative Agent annually and before the first payment is made by the Borrower to or for the benefit of such Foreign Lender, an appropriate statement in duplicate that the income it receives hereunder, is, or is expected to be, either effectively connected with a United States trade or business or exempt from withholding pursuant to the terms of an income tax treaty (for example, an Internal Revenue Service Form 1001 or Form 4224) or otherwise is exempt from withholding tax. In addition, if (x) any Lender fails to provide its employer identification number (or otherwise qualify for exemption from back-up withholding), (y) there is a notified payee underreporting, or (z) there has been a payee certification failure, the Borrower or the Administrative Agent may properly treat itself as required by law to deduct any back-up withholding taxes for or in respect of any sum payable hereunder to any Lender or the Administrative Agent and such withholding taxes shall not be subject to indemnification hereunder. (b) The Borrower shall pay on or prior to the due date and in accordance with applicable law (i) all past, present and future Taxes imposed with respect to payments by the Borrower or amounts payable or deemed payable by the Borrower under the Credit Documents or the execution, delivery, acquisition, recordation, filing, registration, or enforcement of any Credit Document, (ii) all past, present -31- 38 and future stamp, documentary, transfer, recording, property (real or personal and including intangible personal property)), excise or other similar Taxes, levies, imposts, duties, fees, assessments and other charges imposed by any jurisdiction with respect to any payment by the Borrower under a Credit Document or the execution, delivery, acquisition, recordation, filing, registration, or enforcement of any Credit Document, (iii) all past, present and future Taxes, levies, imposts, duties, fees, assessments and other charges imposed by any jurisdiction with respect to any payment or reimbursement by the Borrower pursuant to this Section 2.10, and (iv) any interest, penalties, or additions to tax or other charges or expenses incurred in connection with any amount required to be paid under this Section 2.10, unless such interest, penalties or additions to tax are the result of the gross negligence of the applicable Lender or the Administrative Agent. (c) The Administrative Agent or any Lender may pay, but shall not be obligated to pay, any amount which is to be paid by the Borrower pursuant to this Section 2.10. The Administrative Agent or such Lender shall, to the extent practicable, give prior notice to the Borrower of the payment of any such amount (and, if practicable, the method of calculating such Tax), or, if not practicable to give prior notice, shall give notice to the Borrower of the payment of any such amount (and, if practicable, the method of calculating such Tax) promptly thereafter. The Borrower shall, within five (5) Business Days after demand of the Administrative Agent or any Lender and whether or not such amount shall have been correctly or legally asserted or imposed, reimburse the Administrative Agent or such Lender for such amount together with interest thereon at the rate for defaults on payments then in effect from and including the date paid by the Administrative Agent or such Lender to and excluding the date on which the Administrative Agent or such Lender is reimbursed by the Borrower in full. The Borrower shall also reimburse the Administrative Agent or any Lender for any and all Taxes and interest, penalties and expenses thereon or with regard thereto within five (5) Business Days after demand therefor. The Borrower may contest with the relevant taxing authorities, at the Borrower's expense, any Taxes (whether or not paid by the Administrative Agent or the Lender) that, in the Borrower's reasonable opinion, have been incorrectly calculated or imposed, provided, that the Borrower shall pay all amounts owing to the Administrative Agent or respective Lenders as provided above and shall not be permitted to await the outcome of the respective contest. The Administrative Agent or such Lender shall cooperate with the Borrower in any such tax contest. In the event that any amount paid by the -32- 39 Administrative Agent or any Lender pursuant to this Section 2.10 is found not to be owed by the Borrower and is repaid or reimbursed to the Administrative Agent or such Lender, the Administrative Agent or such Lender shall promptly reimburse such amount (and any additional related amounts paid by the Borrower to such Lender or the Administrative Agent pursuant to Section 2.10(a) hereof) to the Borrower. (d) Upon request of the Administrative Agent or any Lender, the Borrower shall provide to the Administrative Agent or such Lender original tax receipts, or notarized copies thereof, evidencing payment of all applicable Taxes (whether on interest, fees or other amounts) to the appropriate Governmental Authority within 10 Business Days of the earlier of the date on which any such payment is due or the date of such request of the Administrative Agent or such Lender. 2.11 Cost Indemnities. Within five (5) Business Days after demand therefor, the Borrower agrees to pay for, reimburse and indemnify and hold each Lender harmless from and against any and all losses, costs, expenses, claims, charges and indemnities of any type whatsoever which are directly related to the Loans of such Lender (including by any reasonable attribution or allocation) which are payable by, charged to or asserted against such Lender by any provider of funds to such Lender or provider of an interest or currency exchange agreement to such Lender, as a result of any increased costs or decreased rate of return applicable to such provider of funds or as a result of a Default or Event of Default hereunder, including, without limitation, make whole premiums, increased costs, capital adequacy charges, reserve charges, or withholding taxes. In addition, with respect to each Lender, the Borrower agrees to pay the following (without duplication): (a) Increased Costs. If any applicable law, rule or regulation or any change in any law, rule or regulation or in the interpretation or administration thereof by any Governmental Authority (including, without limitation, any central bank or comparable agency charged with the interpretation or administration thereof) or compliance by any Lender (or its lending office) with any request or directive of any such Governmental Authority, whether or not having the force of law: (i) shall subject any Lender (or its lending office) to any tax, duty or other charge with respect to its Loans or shall change the basis of taxation of payments to any Lender (or its lending office) of the principal of or interest with respect to its Loans or -33- 40 any other amounts due in respect of its Loans (except for changes in the rate of tax on the overall net income of such Lender or its lending office imposed by the jurisdiction in which such Lender's principal office or lending office is located); or (ii) shall impose, modify or deem applicable any reserve (including, without limitation, any imposed by the Board of Governors of the Federal Reserve System), special deposit, compulsory loan, capital adequacy or similar requirement against assets of, or deposits or other liabilities with or for the account of, or credit or credit commitments extended by, or any acquisition of funds by or for the account of, any Lender (or its lending office) or shall impose on any Lender (or its lending office) or the applicable interbank market any other condition affecting its Loans; and the result of any of the foregoing is to increase the cost to such Lender (or its lending office) of maintaining its Loans, or reduce the amount of any sum received or receivable by such Lender (or its lending office) under this Agreement, by an amount deemed by such Lender to be material, then, within five (5) Business Days after demand by such Lender, which demand shall be delivered in writing to the Borrower, with a copy to the Administrative Agent, the Borrower will pay to such Lender such additional amount or amounts as will compensate such Lender for such increased cost or reduction for so long as such Lender is subject to such increased cost or reduction. Such Lender will designate a different lending office if such designation will avoid the need for, or reduce the amount of, such compensation and will not be otherwise disadvantageous to such Lender in its sole and absolute judgment. A certificate of such Lender setting forth in reasonable detail such additional amount or amounts necessary to compensate such Lender shall be conclusive in the absence of manifest error. In determining such amount, such Lender may use any reasonable averaging or attribution methods. (b) Capital Adequacy. If any Lender shall have determined that compliance with any applicable law, rule or regulation regarding capital adequacy or any interpretation or administration thereof, of any Governmental Authority (including, without limitation, any central bank or comparable agency charged with the interpretation or administration thereof), or compliance by any Lender (or its lending office) or any corporation controlling such Lender with any request or directive regarding capital adequacy whether or not having the force of law of any such Governmental -34- 41 Authority, has or would have the effect of increasing the amount of capital required or expected to be maintained by such Lender or any corporation controlling such Lender and that the amount of such capital is increased by or based upon the existence of such Lender's obligations hereunder (including, without limitation, its Loans) or under other obligations of such type or otherwise have the effect of reducing the rate of return on such Lender's or any such controlling corporation's capital as a consequence of its obligations hereunder (including, without limitation, its Loans) or under other obligations of such type, then from time to time, within five (5) Business Days after demand by such Lender (with a copy to the Administrative Agent), the Borrower shall pay to such Lender such additional amount or amounts as will compensate such Lender or such corporation in such circumstances, to the extent such Lender determines such increase in capital or reduction is allocable to such Lender's obligations (including, without limitation, its Loans) hereunder. A certificate of any Lender claiming compensation under this Section and setting forth in reasonable detail the additional amount or amounts to be paid to it hereunder shall be conclusive in the absence of manifest error. In determining such amount, such Lender may use any reasonable averaging and attribution methods. 2.12 Distribution of Proceeds. Upon and after the occurrence and during the continuance of an Event of Default, if the Administrative Agent, the Collateral Agent or a Secured Creditor receives funds in respect of any sale, disposition, set-off or other realization on or with respect to the Collateral, the Administrative Agent, the Collateral Agent or such Secured Creditor shall distribute and each Secured Creditor shall apply such funds in the following order of priority: (i) first, to pay all fees, expenses and other amounts due the Administrative Agent or the Collateral Agent under the Credit Documents; (ii) second, to pay all accrued and unpaid interest on the Loans, pro rata, in accordance with the outstanding principal amounts of the Loans; (iii) third, to pay all principal of the Loans, pro rata, in accordance with the outstanding principal amounts of the Loans; and (iv) fourth, to pay all other Obligations, pro rata, in accordance with the respective amounts of such Obligations which are then due and payable to each Secured Creditor. -35- 42 Notwithstanding anything to the contrary in this Section 2.12: (i) if at the time of receipt by the Administrative Agent, the Collateral Agent or a Secured Creditor of funds in respect of any sale, disposition, set-off or other realization on or with respect to the Slot Collateral (or any part or portion thereof) any Loans held by the GPA Entities or any accrued interest thereon remains unpaid, the first $10 million of such funds shall be applied to pay Loans held by the GPA Entities and any accrued interest thereon to the holders thereof in such proportion or priority as they may agree among themselves or, in the absence of any such agreement, as may be directed by GPA Sub, and the balance of such funds shall be applied to pay all other Obligations in the order of priority set forth in the first paragraph of this Section 2.12; and (ii) if funds in respect of any sale, disposition, set-off or other realization on or with respect to any Collateral other than the Slot Collateral shall be distributed to the Secured Creditors pursuant to this Section 2.12 prior to the distribution to the Secured Creditors pursuant to this Section 2.12 of funds in respect of the sale, disposition, set-off or other realization on or with respect to the Slot Collateral (or any portion thereof), then, promptly after the final distribution to the Secured Creditors pursuant to this Section 2.12 of funds in respect of the final sale, disposition, set-off or other realization on or with respect to all of the Slot Collateral, GPA Sub shall pay to each other Lender an amount which, when added to the aggregate amount of funds theretofore received by such Lender pursuant to this Section 2.12, shall result in such Lender having received an aggregate amount of funds equal to the amount of funds such Lender would have received pursuant to this Section 2.12 had all of the proceeds of the sale, disposition, set-off or other realization on or with respect to all of the Slot Collateral (in the amount actually realized) been distributed to the Secured Creditors pursuant to this Section 2.12 prior to the distribution to the Secured Creditors pursuant to this Section 2.12 of any funds in respect of any sale, disposition, set-off or other realization on or with respect to any other Collateral. Any Secured Creditor may allocate internally amounts received hereunder in a different order, although for purposes of making subsequent distributions pursuant to -36- 43 this Section 2.12 all such amounts shall be deemed applied in the order required above, and any such different allocation shall have no effect on the rights or obligations of the Borrower, the Administrative Agent, the Collateral Agent or the other Secured Creditors hereunder. In making distributions hereunder, the Collateral Agent shall be entitled to rely conclusively on statements received by it from the respective Secured Creditors as to the respective amounts owing to them pursuant to, or as described in, the relevant provisions of this Section 2.12. Furthermore, the Collateral Agent shall be entitled to wait for its receipt of any such information before making a distribution in accordance with this Section 2.12. The parties expressly acknowledge and agree that the proceeds of any sale, disposition, set-off or other realization on or with respect to any Collateral that are referred to in this Section 2.12 shall not, and shall not be construed to, include any such proceeds that are received by a Secured Creditor in its capacity as the holder of a Permitted First Lien on such Collateral. SECTION 3. FEES. 3.01 Facility Fee. The Borrower shall pay to the Administrative Agent on September 30, 1994 (but only if all or any portion of the Loans are then outstanding), for the account of and distribution to each Lender, a fee in an amount equal to 0.75% of the principal amount of the Loans of such Lender outstanding on the Fourth Amendment Effective Date (such fee being referred to as the "Facility Fee"). 3.02 Fees of Administrative Agent and Collateral Agent. The Borrower shall pay to the Administrative Agent and to the Collateral Agent, for their respective own accounts, or shall reimburse the Lenders for payment of, such fees as the Administrative Agent or the Collateral Agent (including, without limitation, their respective successors and assigns), as the case may be, and the Borrower have agreed separately for performance of the services of the Administrative Agent and the Collateral Agent hereunder and under the other Credit Documents; provided, however, that the Borrower and the Administrative Agent or the Collateral Agent, as the case may be, shall obtain the prior written consent of the Required Lenders to such fees. -37- 44 SECTION 4. PREPAYMENTS; PAYMENTS. 4.01 Voluntary Prepayments. The Borrower shall have the right to prepay the Loans, without premium or penalty (except as provided in Section 2.09 or 2.11), in whole or in part from time to time on the following terms and conditions: (i) the Borrower shall give the Administrative Agent irrevocable notice in writing of its intent to make a prepayment at its Notice Office at least one Business Day prior to the date of such prepayment, which notice in each case shall indicate the amount of such prepayment and which notice the Administrative Agent shall promptly transmit to each of the Lenders; and (ii) each partial prepayment shall be in an aggregate principal amount of at least $1 million. Each prepayment pursuant to this Section 4.01 in respect of the Loans shall be applied pro rata to the Loans of each Lender. 4.02 Mandatory Prepayments. If on any date (i) the required amounts of rotables, equipment or receivables described in Section 7.08 are less in any category than as required in Section 7.08, the Borrower shall repay on such date that principal amount of Loans as is equal to such deficiency, provided that in lieu of prepayment of Loans by reason of each deficiency in the required amounts of rotables specified in Section 7.08, the Investment Account Minimum shall be increased, effective as of the 20th day next following the last day of the month to which such deficiency relates, by an amount equal to the amount of such deficiency (as the amount of such deficiency is determined on the basis of the report delivered pursuant to Section 7.01(h) and the amount of such increase is set forth in the report delivered pursuant to Section 7.01(o)); or (ii) an Asset Sale is consummated, the Borrower shall repay on the last Business Day of the month in which such Asset Sale is consummated the Loans in an amount equal to the Net Proceeds of such Asset Sale; provided, however, that in the event no Default or Event of Default has occurred and is continuing or would result therefrom and such Asset Sale is of property or other assets of the Borrower which is not Designated Collateral, Slot Collateral or Engine Collateral, the Collateral Agent or the Lenders shall release 30% of the Net Proceeds to the Borrower to be used as working capital and the remaining 70% of the Net Proceeds shall be used to prepay the Loans as aforesaid; and provided further, however, if the -38- 45 property which is the subject of the Asset Sale is Slot Collateral (or any part or portion thereof), the first $10 million of the Net Proceeds from such Asset Sale shall be used to repay the Loans (subject to and in accordance with clause (iv) of this Section 4.02) and the balance of such Net Proceeds shall be deposited in the Investment Account; and provided further, however, if the property which is the subject of the Asset Sale is Engine Collateral (or any part or portion thereof), the Net Proceeds from such Asset Sale shall be deposited in the Investment Account; and provided further, however, if such Asset Sale is of property or other assets of the Borrower which is not Slot Collateral or Engine Collateral, in lieu of prepayment of Loans by reason of such Asset Sale, the Investment Account Minimum shall be increased, effective as of the 20th day next following the last day of the month in which such Asset Sale occurs, by an amount equal to the principal amount of Loans which would otherwise be required to be prepaid pursuant to this clause (ii); or (iii) an Event of Loss (as defined in the Aircraft/Engine Mortgage or the Slot Lease) or other casualty or any condemnation, taking or requisition with respect to any Collateral occurs and (x) the property which is the subject of the loss is not repaired or replaced so as to be of at least equal value and utility as was the property subject thereto prior to the applicable Event of Loss, casualty, condemnation, taking or requisition (assuming it was in the condition required under the Credit Documents) and subjected to the Lien in favor of the Collateral Agent in the priority contemplated hereunder within the time period specified in and in accordance with the provisions of the applicable Security Document or, if no time is specified, within sixty (60) days of such casualty, the Borrower shall repay on such date the Loans in an amount equal to the greater of the value attributed to such Collateral on the most recent collateral certificate delivered pursuant to Section 7.01(h) or the proceeds of any insurance with respect thereto (after payment of any Existing Secured Debt of the Borrower or any Indebtedness secured by a Permitted First Lien required to be repaid with such proceeds) or (y) the property is so repaired or replaced, the Borrower shall repay the Loans in an amount equal to any insurance proceeds remaining after repair or replacement of the Collateral as above provided; provided, however, that if the Event of Loss is with respect to the Slot Collateral (or any part or portion thereof), the repayment of Loans shall be applied as if -39- 46 resulting from a sale of such Slot Collateral (or such part or portion thereof) in accordance with clause (iv) of this Section 4.02; and provided further, however, if the Event of Loss is with respect to the Engine Collateral (or any part or portion thereof), in lieu of repaying Loans as provided in this clause (iii), the Borrower shall deposit in the Investment Account an amount of moneys equal to the principal amount of Loans which would otherwise be required to be prepaid pursuant to this clause (iii); or (iv) Each prepayment pursuant to this Section 4.02 in respect of the Loans shall be applied pro rata to the Loans of each Lender; provided, however, that the first $10 million of Net Proceeds of any sale or other disposition of the Slot Collateral (or any part or portion thereof) shall be used to repay Loans held by the GPA Entities to the holders thereof in such proportion or priority as such holders may agree among themselves or, in the absence of any such agreement, as may be directed by GPA Sub. After Loans held by the GPA Entities have been repaid as provided in the immediately preceding sentence, all remaining Net Proceeds of any sale or other disposition of the Slot Collateral (or any part or portion thereof) shall be deposited in the Investment Account. The foregoing shall not be construed as a waiver of any of the provisions of this Agreement or the other Credit Documents; or (v) Notwithstanding anything in this Section 4.02 which may be to the contrary, no deposit of moneys to the Investment Account or increase in the Investment Account Minimum pursuant to this Section 4.02 shall result in an increase in the Investment Account Minimum for any day to an amount in excess of the aggregate principal amount of the Loans outstanding on such day. 4.03 Method and Place of Payment. Except as otherwise specifically provided herein, all payments under this Agreement or any Note shall be made to the Administrative Agent for the account of the Lender or Lenders entitled thereto not later than 12:00 Noon (New York time) on the date when due and shall be made in Dollars in immediately available funds at the Payment Office of the Administrative Agent. Whenever any payment to be made hereunder or under any Note shall be stated to be due on a day which is not a Business Day, the due date thereof shall be extended to the next succeeding Business Day and, with respect to payments of principal, interest shall be payable at the applicable rate during such extension. -40- 47 4.04 Net Payments. All payments made by the Borrower hereunder, under any Note or under any other Credit Document will be made without setoff, counterclaim or other defense. SECTION 5. CONDITIONS PRECEDENT AND RELATED PROVISIONS. 5.01 Conditions to the Effective Date. The obligation of the Lenders (such term and all other capitalized terms used in this Section 5.01 having the respective meanings stated or ascribed in the Original Credit Agreement and references in this Section 5.01 to "hereof" and "this Agreement" being references to the Original Credit Agreement) to make Loans under this Agreement became effective on the date (the "Effective Date") on which each of the following conditions was satisfied: (a) Execution of Agreement; Notes. (i) The Borrower, the Administrative Agent and each institution then a Lender hereunder shall have executed a counterpart hereof (whether the same or different counterpart) and shall have delivered the same to the Administrative Agent at its Notice Office or, in the case of the Lenders, shall have given to the Administrative Agent written notice (actually received) at such office that the same has been signed and mailed to it and (ii) there shall have been delivered to the Administrative Agent for the account of each of the Lenders the appropriate Note executed by the Borrower in the amount, maturity and as otherwise provided herein. (b) Corporate Documents; Proceedings; Officer's Certificates. The Lenders shall have received from the Borrower a certificate, dated the Effective Date, signed by the President and Chief Operating Officer, Senior Vice President-Finance or the Vice President and Controller of the Borrower and attested to by the Secretary or any Assistant Secretary of the Borrower in the form of Exhibit C with appropriate insertions, together with copies of the Certificate of Incorporation and By-Laws of the Borrower and the resolutions of the Borrower referred to in such certificate, together with such other certificate or certificates pertaining to the subject matter of the By-Law Letter Agreement as any Initial Lender shall have requested, and the foregoing shall be satisfactory to all of the Lenders. (c) Opinions of Counsel. The Lenders shall have received opinions, addressed to the Administrative Agent and -41- 48 each of the Lenders and dated the Effective Date, from (i) Daugherty, Bradford & Fowler, covering the filing, perfection and priority of the Aircraft/Engine Mortgages, (ii) from Streich Lang covering the due authority, legality, enforceability and other matters related to the Credit Documents and the requirements hereof, (iii) from Faegre & Benson covering the entry of the Interim Order, the Final Order, the GPA Order, the Northwest Order, the taking of any appeals therefrom and Liens on the property or other assets of the Borrower approved by the Bankruptcy Court, if any, and (iv) from Winthrop, Stimson, Putnam & Roberts covering the United States citizenship of the Borrower, the Slot Lease and other matters involving the DOT and FAA, and such other opinions with respect to other matters incident to transactions contemplated herein, as any Initial Lender may request and as are acceptable to all of the Lenders in their sole and absolute discretion. (d) Slots. Title to the Slots described on Annex A to the Slot Deed of Conveyance shall have been transferred to the Collateral Agent pursuant to the Slot Deed of Conveyance and the Borrower shall have duly authorized, executed and delivered the Slot Lease, which Slot Lease shall be in full force and effect. (e) Security Agreement. The Borrower shall have duly authorized, executed and delivered the Security Agreement, which shall be in full force and effect covering all of the "Collateral" referred to therein, together with: (i) proper Form UCC-1 financing statements and such other proper documents for filing or recording in the appropriate offices; (ii) certified copies of Requests for Information or Copies (Form UCC-11) or equivalent reports listing all effective financing statements or other recordations that name the Borrower as debtor that are filed in Arizona, Nevada, California, Hawaii and New York, together with copies of such other financing statements or other recordations (none of which shall cover the Collateral referred to in the Security Agreement except to the extent evidencing Permitted First Liens); (iii) evidence that all other actions necessary or, in the opinion of any Initial Lender, desirable to perfect and protect the security interests created by the Security Agreement have been taken; and -42- 49 (iv) any other documents, instruments or chattel paper required under the Security Agreement. (f) Mortgage. The Borrower shall have (i) duly authorized, executed, delivered and filed with the appropriate Governmental Authorities (a) the Mortgage, which Mortgage shall cover all of the Real Property owned or leased by the Borrower as listed in Schedule 8 (each, a "Mortgaged Property" and collectively the "Mortgaged Properties"), and (b) the Assignment of Gate Leases, (ii) obtained the consent of any landlord with respect to any Real Property leased to the Borrower by such landlord, which consent shall be substantially in the form of Exhibit J-2 hereto, and (iii) obtained the consent of any holder of a Permitted First Lien on such Real Property in substantially the form of Exhibit J-3 hereto and shall have provided to the Lenders A.L.T.A. surveys and title reports in form and substance, and showing title vested in the Borrower and the absence of Liens other than Permitted First Liens and Customary Permitted Liens which (except as described in clauses (iv) and (vii) of the definition thereof) are junior and subordinate to the Lien of the Mortgage, in form and substance acceptable to all of the Lenders in their sole and absolute discretion with respect to all of the Mortgaged Properties. (g) Aircraft/Engine Mortgage. The Borrower shall have duly authorized, executed and delivered the Aircraft/Engine Mortgage covering all aircraft, engines and spare parts then owned by the Borrower (other than any thereof the exclusion of which shall have been consented to by each Initial Lender acting in its sole and absolute discretion), together with evidence of filing for recording with the FAA of such Aircraft/Engine Mortgage and with the priority contemplated hereby and thereby, in form and substance acceptable to all of the Lenders in their sole and absolute discretion. (h) GPA Agreements/Northwest Agreements. The Bankruptcy Court shall have issued an order in the form of Exhibit D-3 hereto (as such form may be modified in a manner acceptable to each of the GPA Entities, in their sole and absolute discretion, the "GPA Order") authorizing the Borrower to assume each of the GPA Agreements pursuant to Section 365 of the Bankruptcy Code, and the Bankruptcy Court shall have issued a final order in the form of Exhibit D-4 hereto (as such form may be modified in a manner acceptable to Northwest in its sole and absolute discretion, the "Northwest Order") authorizing the Borrower to enter into and perform its obligations under each of the Northwest Agreements pursuant to applicable provisions of the -43- 50 Bankruptcy Code and each such Order shall be in full force and effect and not subject to any appeal, stay or injunction. The Borrower shall have (x) paid in full all payment obligations then due (after giving effect to the rent deferrals in the case of the Designated Aircraft Leases) under each of the GPA Agreements, and by doing so shall have satisfied the Borrower's obligations with respect thereto under Section 365 of the Bankruptcy Code and (y) executed and delivered each of the Northwest Agreements, each of which shall be in full force and effect. (i) Payment of Fees, etc. The Borrower shall have paid all costs, fees and expenses owing in connection with the Credit Documents and due to the Administrative Agent, the Collateral Agent or any Lender on or before the Effective Date (including, without limitation, legal fees and expenses). (j) Specified Aircraft. Immediately prior to the effectiveness of the filing of the Aircraft/Engines Mortgage with the FAA the Specified Aircraft and Engines shall be located in the United States of America. (k) Operating Plan. The Board of Directors of the Borrower shall have adopted the Operating Plan (as defined in the Credit Agreement) and the Borrower shall have provided evidence satisfactory to all of the Lenders in their sole and absolute discretion that the "Action Plan Summary" terms set forth on Exhibit E have been implemented and are in full force and effect and the Borrower is in compliance therewith. (l) Inter-Creditor Agreement. The Borrower and First Interstate Bank of Arizona shall have entered into the Merchant Agreement Supplement and the Collateral Agent, the Lenders and First Interstate Bank of Arizona, N.A. shall have entered into the Inter-Creditor Agreement, in each case, relating to and providing for the relative priorities of the Liens of First Interstate Bank of Arizona, N.A. and the Collateral Agent on certain of the Collateral, and the Bankruptcy Court shall have issued an order in substantially the form of Exhibit C to the Merchant Agreement Supplement authorizing the amendments effected by the Merchant Agreement Supplement; and the Merchant Agreement Supplement, the Inter-Creditor Agreement and such order shall be in form and substance acceptable to all of the Lenders in their sole and absolute discretion. (m) Lease Amendments. The A320 Leases and the Engine Leases shall have been amended in form and substance reasonably satisfactory to the GPA Entities party thereto to -44- 51 provide for the elimination of the "net worth" covenant during the Case and the reinstitution of a comparable "net worth" covenant upon the effective date of a confirmed plan of reorganization for the Borrower under Chapter 11 of the Bankruptcy Code. (n) Other Funds. The Borrower shall have received binding commitments or such other assurances, in each case as may be acceptable to all of the Lenders in their sole and absolute discretion, for the provision of additional funds to the Borrower, consisting of Indebtedness or equity or proceeds from the sale of the Nagoya Route, in an aggregate amount not less than $40 million, which, if Indebtedness, shall be (i) unsecured, but up to $30 million of which Indebtedness may have administrative priority under Section 364(c)(1) of the Bankruptcy Code which is pari passu with, but not senior to, the Obligations, or (ii) secured for an amount of up to $30 million subject to and in accordance with Section 8.01(vi) (and without the benefit of any administrative priority described in the preceding clause (i) of this paragraph), and in each case on terms and conditions acceptable to the Lenders in their sole and absolute discretion. (o) By-Laws and Related Actions. The Lenders (which did not include Kawasaki) shall have received evidence, satisfactory in form and substance to them, that all actions described in the By-Law Letter Agreement to be taken on or prior to the Effective Date shall have been taken, including, without limitation, the adoption of requisite resolutions of the Board of Directors of the Borrower with respect thereto, which resolutions shall be in full force and effect on and as of the Effective Date. (p) Initial Cash Management Arrangements. The Borrower, the Collateral Agent and the Local Bank shall have duly authorized, executed and delivered the Initial Cash Management Agreement and the Borrower shall have otherwise established an accounts receivables collection system (including, without limitation, lock box accounts) and cash concentration and management system, and entered into agreements related thereto, satisfactory to the Required Lenders in their sole and absolute discretion whereby the Investment Account has been established with the Collateral Agent in the name of the Collateral Agent for the benefit of the Secured Creditors and the Concentration Account has been established with the Local Bank in the name of the Collateral Agent for the benefit of the Secured Creditors to which all cash received by, or deposited by, or paid to the Borrower at accounts (including lock box accounts in the name of the Collateral Agent for the benefit of the Secured -45- 52 Creditors) at the Local Bank and all other financial institutions or otherwise are transferred on a daily basis, all of which accounts shall be subject to a first priority perfected security interest in favor of the Collateral Agent under the Security Agreement and the Orders, and which arrangements shall provide for minimum required balances in the Investment Account as set forth in Section 7.10. (q) Insurance Certificates and Opinions. The Borrower shall have provided the Lenders with all insurance certificates, opinions and schedules referred to in Section 7.03 and under the Security Documents. (r) Consents. The Borrower shall have provided to the Lenders the confirmation by the FAA of the transfer of the Slots as contemplated by Section 5.01(d), the notices to the Japanese lessors under all applicable Japanese leveraged leases, the filing under the Assignment of Claims Act of 1940 necessary or advisable to perfect the Borrower's assignment of claims against the United States Government and all other notices, consents, approvals, licenses or other action as may be necessary or advisable in the opinion of any Lender to provide the Secured Creditors with the benefits of the Collateral, in each case in form and substance acceptable to all of the Lenders in their sole and absolute discretion. 5.02 Conditions to All Loans. The obligation of each Lender to make any Loans was subject, at the time of the making of such Loans and after giving effect thereto, to the satisfaction of the following conditions (other than, in the case of the Loans made on the Second Amendment Effective Date, the condition set forth in the following paragraph (f)): (a) No Default. There shall exist no Default or Event of Default. (b) Representations and Warranties. All representations and warranties of or on behalf of the Borrower herein and in the other Credit Documents shall be true and correct in all material respects with the same effect as though such representations and warranties had been made on and as of the date of the making of such Loans. (c) Orders. The Lenders shall have received a certified copy of an order of the Bankruptcy Court in the form of Exhibit D-1 (as such form may be modified in a manner acceptable to each of the Lenders, in their sole and absolute discretion, the "Interim Order"), and the Interim Order shall be in full force and effect and shall not have -46- 53 been stayed, reversed, vacated, rescinded, modified or amended in any respect (other than modifications acceptable to each of the Lenders, in their sole and absolute discretion), provided that upon the earlier of (i) September 25, 1991 and (ii) the making of any Loan the aggregate amount of which, when added to the sum of the principal amount of all Loans then outstanding would exceed the credit availability amount authorized by the Bankruptcy Court in the Interim Order (collectively, the "Additional Credit"), each of the Lenders shall have received a certified copy of an order of the Bankruptcy Court in the form of Exhibit D-2, or as otherwise acceptable to each of the Lenders (the "Final Order"), and at the time of the extension of any Additional Credit the Final Order shall be in full force and effect, and shall not have been stayed, reversed, vacated, rescinded, modified or amended in any respect (other than modifications acceptable to each of the Lenders, in their sole and absolute discretion); and if either the Interim Order or the Final Order is the subject of a pending appeal in any respect, neither the making of the Loans nor the performance by the Borrower of any of its obligations under any of the Credit Documents or any other document or instrument referred to herein shall be the subject of a presently effective stay pending appeal. Neither the GPA Order nor the Northwest Order shall have been appealed, amended, stayed, vacated or rescinded. (d) Effective Date. The Effective Date shall have occurred. (e) Collateral Certificate. The Administrative Agent shall have received a certificate substantially in the form of Exhibit M executed by the Chief Financial Officer, Senior Vice President-Finance, Treasurer or Vice President and Controller of the Borrower of the description, value and location of the Collateral as of the date of the making of such Loans, the value of which Collateral shall, among other things, be equal to or in excess of the applicable value set forth in Section 7.08. (f) Deferrals. The Borrower shall have provided evidence in form and substance acceptable to the Required Lenders in their sole and absolute discretion that the Borrower has obtained from the lessors and debt holders in respect of the Deferral Aircraft rental and principal and interest moratoriums (or rebates with respect to such obligations to adjust for such obligations with respect to leases or debt for which rental or principal or interest, as the case may be, is not payable during such period) in an aggregate amount of not less than $100,000,000 (or such lesser amount as the Required Lenders shall approve in their -47- 54 sole and absolute discretion) and as are necessary to provide the Borrower with the minimum number of aircraft required under the Operating Plan; and the terms and conditions of such moratoriums shall be in full force and effect (without any unfulfilled conditions to the effectiveness thereof or subject only to such conditions to the effectiveness thereof as the Required Lenders shall approve in their sole and absolute discretion) and provide for repayment of the deferred amounts with an interest rate of not more than 10.5% per annum over a term of not less than four years commencing December 1991 or as otherwise approved by the Required Lenders in their sole and absolute discretion; and the terms of the stipulations with respect to, and the documentation evidencing, such moratoriums (or rebates) shall be satisfactory in form and substance to the Required Lenders in their sole and absolute discretion. (g) Governmental Action. No Governmental Action shall purport to, and no Governmental Action or other action or proceedings shall have been filed, instituted, threatened or issued which seeks to, enjoin or restrain or otherwise adversely affect the making of such Loans or the proposed use of the proceeds of any Loan or the Borrower's compliance with the terms of the Credit Documents. (h) Additional Corporate Documents. All corporate and legal proceedings and all instruments and agreements in connection with the transactions contemplated in this Agreement and the other Credit Documents shall be satisfactory in form and substance to the Required Lenders, and the Lenders shall have received all information and copies of all documents and papers, including records of corporate proceedings and governmental approvals, if any, and such additional certificates and opinions, which any Lender reasonably may have requested in connection therewith, such documents and papers where appropriate to be certified by proper corporate or governmental authorities. (i) Payment of Fees, etc. The Borrower shall have paid all costs, fees and expenses owing in connection with the Credit Documents and due to the Administrative Agent, the Collateral Agent or any Lender on or before the date of the making of such Loans (including, without limitation, legal fees and expenses). The request by the Borrower for the making of each Loan and the acceptance by the Borrower of each Loan constituted a representation and warranty by the Borrower to each of the Lenders making such Loan that all the representations and warranties in Section 6 of the Original Credit Agreement, the First Amended and Restated Credit Agreement or the -48- 55 Second Amended and Restated Credit Agreement, as applicable, were true and correct on and as of the date of such Loan as though repeated thereon, that after giving effect to such Loan no Default or Event of Default was in existence and that applicable conditions specified in Section 5 of the Original Credit Agreement, the First Amended and Restated Credit Agreement or the Second Amended and Restated Credit Agreement, as applicable, were satisfied or waived in writing as of that time. 5.03 Conditions Precedent to Amendment Effective Date. The amendment and restatement of the Original Credit Agreement (such term and all other capitalized terms used in this Section 5.03 having the respective meanings stated or ascribed in the First Amended and Restated Credit Agreement and references in this Section 5.03 to "hereof" and "this Agreement" being references to the First Amended and Restated Credit Agreement) pursuant to the First Amended and Restated Credit Agreement, and the obligation of each Lender under the First Amended and Restated Credit Agreement (including, without limitation, Kawasaki) to make Loans under the First Amended and Restated Credit Agreement (subject to the terms and conditions thereof), became effective on December 13, 1991 (the "Amendment Effective Date"), the date on which each of the following conditions was satisfied or waived in writing by all of the Lenders in their sole and absolute discretion: (a) Execution of Agreement; Note. (i) The Borrower, the Administrative Agent and the Lenders shall have executed a counterpart hereof (whether the same or different counterpart) and shall have delivered the same to the Administrative Agent at its Notice Office or, in the case of the Lenders, shall have given to the Administrative Agent written notice (actually received) at such office that the same has been signed and mailed to it and (ii) there shall have been delivered to the Administrative Agent for the account of Kawasaki a Note executed by the Borrower in the amount, maturity and as otherwise provided in this Agreement. (b) Corporate Documents; Proceedings; Officer's Certificate. The Lenders shall have received from the Borrower a certificate, dated the Amendment Effective Date, signed by the President and Chief Executive Officer, Senior Vice President- Finance or the Vice President and Controller of the Borrower and attested to by the Secretary or any Assistant Secretary of the Borrower in the form of Exhibit Q with appropriate insertions, together with copies of the Certificate of Incorporation and By-Laws of the Borrower and the resolutions of the Borrower referred to in such certifi- -49- 56 cate, and the foregoing shall be satisfactory to all of the Lenders. (c) Opinions of Counsel. The Lenders shall have received opinions, addressed to the Administrative Agent and each of the Lenders and dated the Amendment Effective Date, from (i) Streich Lang covering the due authority, legality, enforceability and other matters related to this Agreement and the other Credit Documents and the requirements hereof and thereof, and (ii) Faegre & Benson covering the entry of the Additional Loan Order and the Kawasaki Order and the taking of any appeals therefrom and Liens on the property or other assets of the Borrower approved by the Bankruptcy Court, and such other opinions with respect to other matters incident to transactions contemplated herein, as any Lender may request and as are acceptable to all of the Lenders in their sole and absolute discretion; and Kawasaki shall have received letters from Daugherty, Bradford & Fowler and from Winthrop, Stimson, Putnam & Roberts entitling Kawasaki to rely on the opinions delivered by such counsel pursuant to Section 5.01(c) of this Agreement. (d) Cash Management Agreement. The Borrower, the Collateral Agent and the Local Bank shall have duly authorized, executed and delivered the First Amendment to Cash Management Agreement in substantially the form of Exhibit R, amending the Initial Cash Management Agreement. (e) Agency Agreement. Each of the Borrower, the Administrative Agent, the Collateral Agent and the Lenders shall have authorized, executed and delivered the First Amendment to Agency Agreement in substantially the form of Exhibit S, amending the Agency Agreement. (f) Mortgage and Assignment of Gate Leases. The Borrower shall have (i) duly authorized, executed and delivered and filed with the appropriate Governmental Authorities (a) the First Amendments to Deeds of Trust in substantially the forms of Exhibits T-1, T-2 and T-3, amending each Mortgage encumbering the Mortgaged Properties, and (b) the First Amendment to Assignment of Gate Leases in substantially the form of Exhibit U, amending the Assignment of Gate Leases, and (ii) provided to the Lenders title reports in form and substance satisfactory to the Lenders, and showing title vested in the Borrower and the absence of Liens other than Liens shown on the title reports delivered on the Effective Date. (g) Mortgage Consents. The City of Phoenix, as landlord, and the Collateral Agent shall have duly authorized, executed and delivered the First Amendments to -50- 57 Consent Agreement in substantially the forms of Exhibits V-1 and V-2. First Interstate Bank of Arizona, N.A., as first mortgagee, shall have duly authorized, executed and delivered the consent letter in substantially the form of Exhibit W. (h) Additional Loan Order and Kawasaki Order. The Lenders shall have received a certified copy of an order of the Bankruptcy Court in the form of Exhibit D-5, and such order shall be in full force and effect and shall not have been stayed, reversed, vacated, rescinded, modified or amended in any respect (other than modifications acceptable to each of the Lenders, in their sole and absolute discretion). (i) Kawasaki Agreements and Kawasaki Stipulations. The Borrower and Kawasaki shall have executed and delivered each of the Kawasaki Agreements and each of the Kawasaki Agreements shall be acceptable in form and substance to each of the Lenders, in their sole and absolute discretion. Pursuant to the Kawasaki Credit Agreement, all of the credit advances payable under the Aircraft Finance Agreement shall have been restructured into the Loan (as defined in the Kawasaki Credit Agreement). Stipulations amending the Kawasaki Stipulations to permit Kawasaki to terminate the lease or financing which is the subject of each such Stipulation upon three months' notice, exercisable after December 15, 1991, and to permit rent payments and debt service thereunder to be brought current shall have been executed and delivered by the respective parties thereto and approved by the Bankruptcy Court. The Borrower shall have paid in full all payment obligations then due under each of the Kawasaki Agreements. (j) Intercreditor Agreements. Kawasaki shall have executed and delivered a letter in substantially the form of Exhibit X pursuant to which Kawasaki agrees to be bound by the provisions of the intercreditor agreements listed on Schedule 1 to such letter. (k) Consent of Certain Lessors. The lessors party to the stipulations with the Borrower listed on Schedule 18 hereto shall have consented to the lien of the Lenders pursuant to the Security Agreement on the Borrower's right, title and interest in and to the aircraft leases identified in such stipulations. (l) Insurance. The Borrower shall have provided to the Lenders all insurance certificates, opinions and schedules required by Section 7.03 and the Security Documents to be provided to the Lenders on the Effective -51- 58 Date (as if references therein to the Effective Date were to the Amendment Effective Date). (m) Operating Plan. The Operating Plan, in the form and with the content approved by each of the Lenders, acting in its sole and absolute discretion, shall have been adopted by the management of the Borrower; and the Borrower shall have provided evidence satisfactory to all of the Lenders in their sole and absolute discretion that the Borrower is in compliance with the Operating Plan (including, without limitation, the implementation of all plans and programs required by the terms of the Operating Plan to be implemented on or prior to the Amendment Effective Date). (n) Credit Documents. The Borrower shall have provided to Kawasaki (i) copies of each of the Credit Documents (including, without limitation, the Security Documents), certified by an appropriate officer of the Borrower as being true, correct and complete and in full force and effect on and as of the Amendment Effective Date and (ii) evidence, reasonably satisfactory to Kawasaki, in its sole and absolute discretion, that all actions described in Section 5.01 of the Credit Agreement and all other actions which, in the reasonable opinion of Kawasaki, are necessary or desirable to perfect and protect the Liens created by the Security Documents have been taken. (o) Payment of Fees, etc. The Borrower shall have paid all costs, fees and expenses owing in connection with this Agreement, the other Credit Documents and the documents referred to herein and therein and due to the Administrative Agent, the Collateral Agent and each Lender on or before the Amendment Effective Date (including, without limitation, legal fees and expenses). (p) Representations and Warranties. All representations and warranties of or on behalf of the Borrower in this Agreement and all the other Credit Documents shall be true and correct in all material respects with the same effect as though such representations and warranties had been made on and as of the Amendment Effective Date. (q) Other Action. There shall have been taken such other actions, and the Lenders shall have received such other documents, instruments, opinions, reliance letters, certifications and copies of governmental consents, permits, licenses and approvals, as any Lender shall have reasonably requested and which are acceptable to all of the Lenders in their sole and absolute discretion. -52- 59 On the Amendment Effective Date, Kawasaki became a Lender under the First Amended and Restated Credit Agreement, with a Commitment equal to the amount set forth opposite its name on Annex I attached thereto. The Borrower and each of the Existing Lenders acknowledged that, pursuant to the Original Credit Agreement and the By-Law Letter Agreement, the Borrower granted to each Existing Lender certain rights of approval with respect to members of the Board of Directors of the Borrower and the Executive Committee of such Board of Directors. The Borrower and each Existing Lender further acknowledged that Kawasaki was not then, and had not at any time been, a party to the Original Credit Agreement or to the By-Law Letter Agreement, and that the Borrower did not at any time grant to Kawasaki any rights of approval with respect to members of the Board of Directors of the Borrower or the Executive Committee of such Board of Directors. The Lenders, the Borrower and Kawasaki agreed that neither Kawasaki nor any of its officers, directors or advisors would be liable or responsible to any Person for any exercise of the rights of any Existing Lender under the Original Credit Agreement or the By-Law Letter Agreement or for any act or omission of any Director of the Borrower approved by any Existing Lender. The Borrower, each Existing Lender and Kawasaki agreed and acknowledged that no agency relationship has existed or was intended to be created by the First Amended and Restated Credit Agreement between Kawasaki on the one hand and any Existing Lender or any Director approved by such Existing Lender on the other hand. On the Amendment Effective Date, the By-Law Letter Agreement was terminated and became of no further force or effect. Subject to and upon the terms and conditions set forth in the First Amended and Restated Credit Agreement (including, without limitation, Section 5.02 thereof), on the Amendment Effective Date, each Lender made the Loan provided by clause (c) of Section 2.02 thereof to be made by such Lender on the Amendment Effective Date. All of such Loans were made simultaneously by the Lenders following acknowledgement and agreement by the Lenders that the Amendment Effective Date had occurred. Notwithstanding the amendment and restatement of the Original Credit Agreement by the First Amended and Restated Credit Agreement, all of the Obligations continued to be secured by the Collateral (as defined in the First Amended and Restated Credit Agreement) and the Borrower acknowledged and agreed that the Collateral (as defined in the Original Credit Agreement) remained subject to a lien and security interest in favor of the Collateral Agent for the benefit of the Lenders and Northwest. The First Amended and Restated -53- 60 Credit Agreement was intended as a substitution of, and not as payment of, the Obligations of the Borrower under the Original Credit Agreement and all amounts outstanding and owing by the Borrower under the Original Credit Agreement were deemed to be outstanding and owing by the Borrower under the First Amended and Restated Credit Agreement. 5.04 Conditions Precedent to Second Amendment Effective Date. The amendment and restatement of the First Amended and Restated Credit Agreement pursuant to the Second Amended and Restated Credit Agreement, and the obligation of GPA Sub and each Second Amendment Lender under the Second Amended and Restated Credit Agreement to make Loans referred to in clause (d) of Section 2.02 of the Second Amended and Restated Credit Agreement (subject to the terms and conditions of the Second Amended and Restated Credit Agreement), became effective on September 17, 1992 (the "Second Amendment Effective Date"), the date on which each of the following conditions was satisfied or waived in writing by all of the Lenders in their sole and absolute discretion (it being understood that all capitalized terms used in this Section 5.04 and defined in the Second Amended and Restated Credit Agreement have the meanings defined in the Second Amended and Restated Credit Agreement and that all references in this Section 5.04 to "hereof" and "this Agreement" are references to the Second Amended and Restated Credit Agreement): (a) Execution of Agreement; Notes. (i) The Borrower, the Administrative Agent and each Lender shall have executed a counterpart hereof (whether the same or a different counterpart) and shall have delivered the same to the Administrative Agent at its Notice Office or, in the case of the Lenders, shall have given to the Administrative Agent written notice (actually received) at such office that the same has been signed and mailed to it and (ii) there shall have been delivered to the Administrative Agent for the account of GPA Sub and each Second Amendment Lender Notes for such Lenders executed by the Borrower in the amounts, maturity and as otherwise provided in this Agreement. (b) Corporate Documents; Proceedings; Officer's Certificate. The Lenders shall have received from the Borrower a certificate, dated the Second Amendment Effective Date, signed by the President and Chief Executive Officer, Senior Vice President-Finance or the Vice President and Controller of the Borrower and attested to by the Secretary or any Assistant Secretary of the Borrower in the form of Exhibit Y with appropriate insertions, together with copies of the Certificate of Incorporation and By-Laws of the -54- 61 Borrower and the resolutions of the Borrower referred to in such certificate, and the foregoing shall be satisfactory to all of the Lenders in their sole and absolute discretion. (c) Opinions of Counsel. The Lenders shall have received opinions, addressed to the Administrative Agent and each of the Lenders and dated the Second Amendment Effective Date, from (i) Streich Lang covering the due authority, legality, enforceability and other matters related to this Agreement and the other Credit Documents and the requirements hereof and thereof, (ii) Faegre & Benson covering the entry of the Second Additional Loan Order and the taking of any appeals therefrom and Liens on the property or other assets of the Borrower approved by the Bankruptcy Court, (iii) Daugherty, Fowler & Peregrin, covering the filing, perfection and priority of the Aircraft/Engine Mortgage (and amendments thereto), and (iv) Winthrop, Stimson, Putnam & Roberts covering the United States citizenship of the Borrower, the Slot Lease (and amendments thereto) and other matters involving the DOT and the FAA, and such other opinions with respect to other matters incident to transactions contemplated herein, as any Lender may request and as are acceptable to all of the Lenders in their sole and absolute discretion. (d) Cash Management Agreement. The Borrower, the Collateral Agent and the Local Bank shall have duly authorized, executed and delivered the Second Amendment to Cash Management Agreement in substantially the form of Exhibit Z, amending the Initial Cash Management Agreement. (e) Agency Agreement. Each of the Borrower, the Administrative Agent, the Collateral Agent and the Lenders shall have authorized, executed and delivered the Second Amendment to Agency Agreement in substantially the form of Exhibit AA, amending the Agency Agreement. (f) Mortgage and Assignment of Gate Leases. The Borrower shall have (i) duly authorized, executed and delivered and filed with the appropriate Governmental Authorities (a) the Second Amendments to Deeds of Trust in substantially the forms of Exhibits BB-1, BB-2 and BB-3, amending each Mortgage encumbering the Mortgaged Properties, and (b) the Second Amendment to Assignment of Gate Leases in substantially the form of Exhibit CC, amending the Assignment of Gate Leases, and (ii) provided to the Lenders title reports in form and substance satisfactory to all of the Lenders in their sole and absolute discretion, and showing title vested in the Borrower and the absence of Liens other than Liens shown on the title reports delivered on the Effective Date. -55- 62 (g) Mortgage Consents. The City of Phoenix, as landlord, and the Collateral Agent shall have duly authorized, executed and delivered the Second Amendments to Consent Agreement in substantially the forms of Exhibits DD-1 and DD-2. First Interstate Bank of Arizona, N.A., as first mortgagee, shall have duly authorized, executed and delivered the consent letter in substantially the form of Exhibit EE. (h) Second Additional Loan Order. The Lenders shall have received a certified copy of the Second Additional Loan Order, and the Second Additional Loan Order shall be entered by the Court and in full force and effect and shall not have been stayed, reversed, vacated, rescinded, modified or amended in any respect (other than modifications acceptable to all of the Lenders, in their sole and absolute discretion), and no appeal shall been taken from the Second Additional Loan Order and the time to take any such appeal shall have expired. (i) Intercreditor Agreements. Each of the Lenders shall have executed and delivered a letter in substantially the form of Exhibit FF pursuant to which each Lender affirms or reaffirms, as the case may be, that it shall be bound by the provisions of the intercreditor agreements listed on Schedule 1 to such letter. (j) Consent of Certain Lessors. The lessors party to the stipulations with the Borrower listed on Schedule 18 hereto shall have consented to the lien of the Lenders pursuant to the Security Agreement on the Borrower's right, title and interest in and to the aircraft leases identified in such stipulations. (k) Insurance. The Borrower shall have provided to the Lenders all insurance certificates, opinions and schedules required by Section 7.03 and the Security Documents to be provided to the Lenders on the Effective Date (as if references therein to the Effective Date were to the Second Amendment Effective Date). (l) Operating Plan and Consultant's Report. The Operating Plan and the report thereon of Simat, Helliesen & Eichner, Inc., the Borrower's consultant, shall be satisfactory in form and content to all of the Lenders, acting in their sole and absolute discretion, and the Operating Plan shall have been adopted by the management and the Board of Directors of the Borrower; and the Borrower shall have provided evidence satisfactory to all of the Lenders in their sole and absolute discretion that the Borrower is in compliance with the Operating Plan (includ- -56- 63 ing, without limitation, the achievement and implementation of all actions required by, and the further cost reductions outlined in, the Operating Plan to be achieved or implemented on or prior to the Second Amendment Effective Date). (m) Security Agreement. The Borrower and the Collateral Agent shall have duly authorized, executed and delivered the First Amendment to Security Agreement in substantially the form of Exhibit GG, amending the Security Agreement. (n) Aircraft/Engine Mortgage and Spare Parts Mortgage. The Borrower and the Collateral Agent shall have duly authorized, executed and delivered (i) Amendment No. 3 to Aircraft/Engine Mortgage in substantially the form of Exhibit HH, amending the Aircraft/Engine Mortgage, and (ii) Amendment No. 1 to the Spare Parts Mortgage in substantially the form of Exhibit II, amending the Spare Parts Mortgage, together with evidence of filing for recording with the FAA of such amendments and with the priority contemplated hereby and thereby. (o) Slots. The Borrower and the Collateral Agent shall have duly authorized, executed and delivered the First Amendment to Slot Lease Agreement in substantially the form of Exhibit JJ, amending the Slot Lease Agreement, and all matters involving the DOT and the FAA relating to the Slots shall be acceptable to all of the Lenders in their sole and absolute discretion. (p) Financial Accommodations. The Borrower shall have received from third parties a minimum of $11 million in financial accommodations on terms acceptable to all of the Lenders in their sole and absolute discretion, including, without limitation, the financial accommodations set forth on Schedule 20 hereto; and the Borrower shall have provided evidence thereof in form and substance satisfactory to all of the Lenders in their sole and absolute discretion. (q) Prepayment of Northwest Loans and Release and Termination by Northwest. Simultaneously with the effectiveness of this Agreement and the funding by GPA Sub and the Second Amendment Lenders of the Loans referred to in clause (d) of Section 2.02 hereof, (i) all of the Loans made by Northwest under the Original Credit Agreement and outstanding under the Credit Agreement shall be prepaid in full, together with accrued and unpaid interest thereon, as provided in Section 2.04, and (ii) Northwest shall have duly authorized, executed and delivered a Release and Termination in substantially the form of Exhibit LL releasing all of its -57- 64 right, title and interest in and to the Collateral, the Loans and the Credit Documents. (r) Aircraft Rental and Loan Reductions and Deferrals. The Borrower shall have provided evidence in form and substance acceptable to all of the Lenders in their sole and absolute discretion that the Borrower shall have received from aircraft providers (other than the GPA Entities) rental and interest rate reductions, rental and principal payment deferrals and aircraft fleet reductions in the amounts, for the periods and otherwise as set forth in Schedule 19 (or on such other terms as all of the Lenders shall approve in their sole and absolute discretion); and the terms and conditions of such rental and interest rate reductions, rental and principal payment deferrals and aircraft fleet reductions shall be in full force and effect (without any unfulfilled conditions to the effectiveness thereof or subject only to such conditions to the effectiveness thereof as all of the Lenders shall approve in their sole and absolute discretion); and the terms of the stipulations with respect to, and the documentation evidencing, such interest rate reductions, rental and principal payment deferrals and aircraft fleet reductions shall be satisfactory in form and substance to all of the Lenders in their sole and absolute discretion. (s) Corporate Governance and Related Actions. The Borrower shall have duly authorized, executed and delivered the Management Letter Agreement substantially in the form of Exhibit KK and the Lenders (other than Kawasaki) shall have received evidence, satisfactory in form and substance to all of the Lenders (other than Kawasaki) in their sole and absolute discretion, that all actions described in the Management Letter Agreement to be taken on or prior to the Second Amendment Effective Date shall have been taken to the satisfaction of all of the Lenders (other than Kawasaki) in their sole and absolute discretion. (t) A320 Put Agreements. Pursuant to documentation, satisfactory in form and substance to all of the Lenders in their sole and absolute discretion, (i) each of Kawasaki and GPA Group plc shall have cancelled its right to put A320 aircraft to the Borrower pursuant to the Kawasaki Put Agreement and the Put Agreement, respectively, on or prior to December 31, 1993, (ii) the Borrower shall have agreed that, if in the discretion of its management, the Borrower increases its fleet of A320 aircraft on or after January 1, 1993 and on or prior to December 31, 1993, then (in lieu of taking A320 aircraft from other sources and subject to availability from Kawasaki and the GPA Entities) the Borrower will take A320 aircraft first from Kawasaki and -58- 65 then from the GPA Entities on the same terms and conditions as would have been applicable under the Kawasaki Put Agreement and the Put Agreement, respectively, had the put options thereunder not been so cancelled, and (iii) the Borrower shall have granted to Kawasaki the right to put four A320 aircraft (each of which shall have fewer than 100 flight hours of commercial operation) to the Borrower during the period January 1, 1994 through December 31, 1994 on the terms provided in the Kawasaki Put Agreement. (u) Directors' and Officers' Liability Insurance. The Borrower shall have provided the Lenders with evidence satisfactory to all of the Lenders in their sole and absolute discretion that the Borrower has in effect on the Second Amendment Effective Date (i) directors' and officers' liability insurance, and (ii) corporate indemnification of directors, in each case, sufficient to facilitate and support the changes in the corporate governance of the Borrower contemplated by the Management Letter Agreement. (v) No Material Adverse Change. In the opinion of the Lenders, no material adverse change shall have occurred since August 18, 1992 in (i) the financial condition, business or prospects of the Borrower or (ii) the airline industry. (w) Credit Documents. The Borrower shall have provided to each of the Second Amendment Lenders (i) copies of each of the Credit Documents (including, without limitation, all amendments thereto), certified by an appropriate officer of the Borrower as being true, correct and complete and in full force and effect on and as of the Second Amendment Effective Date and (ii) evidence, reasonably satisfactory to all of the Second Amendment Lenders, in their sole and absolute discretion, that all actions described in Section 5.01 of the Credit Agreement have been taken. (x) Payment of Fees, etc. The Borrower shall have paid all costs, fees and expenses owing in connection with this Agreement, the other Credit Documents and the documents referred to herein and therein and due to the Administrative Agent, the Collateral Agent and each Lender on or before the Second Amendment Effective Date (including, without limitation, legal fees and expenses). (y) Representations and Warranties. All representations and warranties of or on behalf of the Borrower in this Agreement and all the other Credit Documents shall be true and correct in all material respects on and as of the Second Amendment Effective Date with the same effect as -59- 66 though such representations and warranties had been made on and as of the Second Amendment Effective Date. (z) Retention of Consultant. The Lenders shall have received evidence, satisfactory to all of the Lenders in their sole and absolute discretion, that Simat, Helliesen & Eichner, Inc. has been retained by the Borrower as a consultant to advise and assist the Borrower with respect to the implementation of the Operating Plan. (aa) Other Action. There shall have been taken such other actions, and all of the Lenders shall have received such other documents, instruments, opinions, reliance letters, certifications and copies of governmental consents, permits, licenses and approvals, as any Lender shall have reasonably requested and which are acceptable to all of the Lenders in their sole and absolute discretion. On the Second Amendment Effective Date, each Second Amendment Lender became a Lender under the Second Amended and Restated Credit Agreement, with a Commitment equal to the amount set forth opposite its name on Annex I attached thereto and the Commitment of GPA Sub was increased to the amount set forth opposite its name on Annex I thereto. The Borrower and each of the Lenders (other than Kawasaki) acknowledged that, pursuant to the Second Amended and Restated Credit Agreement and the Management Letter Agreement, the Borrower granted to each Lender (other than Kawasaki) certain rights of approval with respect to members of the Board of Directors of the Borrower and the Executive Committee of such Board of Directors. The Borrower and each Lender (other than Kawasaki) further acknowledged that Kawasaki is not a party to the Management Letter Agreement, and that the Borrower did not grant to Kawasaki any rights of approval with respect to members of the Board of Directors of the Borrower or the Executive Committee of such Board of Directors. The Lenders (including Kawasaki) and the Borrower agreed that neither Kawasaki nor any of its officers, directors or advisors would be liable or responsible to any Person for any exercise of the rights of any other Lender under the Management Letter Agreement or for any act or omission of any Director of the Borrower approved by any such Lender. The Borrower and each Lender (including Kawasaki) agreed and acknowledged that no agency relationship has existed or was intended to be created by the Second Amended and Restated Credit Agreement, between Kawasaki on the one hand and any other Lender or any Director approved by such Lender on the other hand. Subject to and upon the terms and conditions set forth in the Second Amended and Restated Credit Agreement (including, -60- 67 without limitation, Section 5.02 thereof), on the Second Amendment Effective Date, GPA Sub and each Second Amendment Lender made the Loan provided by clause (d) of Section 2.02 of the Second Amended and Restated Credit Agreement to be made by such Lender on the Second Amendment Effective Date. All of such Loans were made simultaneously by GPA Sub and the Second Amendment Lenders following acknowledgement and agreement by GPA Sub and the Second Amendment Lenders that the Second Amendment Effective Date had occurred. Notwithstanding the amendment and restatement of the First Amended and Restated Credit Agreement by the Second Amended and Restated Credit Agreement, all of the Obligations continued to be secured by the Collateral (as defined in the First Amended and Restated Credit Agreement) and the Borrower acknowledged and agreed that the Collateral (as defined in the First Amended and Restated Credit Agreement) remained subject to a lien and security interest in favor of the Collateral Agent for the benefit of the Secured Creditors. The Second Amended and Restated Credit Agreement was intended as a substitution of, and not as payment of, the Obligations of the Borrower under the First Amended and Restated Credit Agreement and all amounts outstanding and owing by the Borrower under the First Amended Credit Agreement were deemed to be outstanding and owing by the Borrower under the Second Amended and Restated Credit Agreement. 5.05 Conditions Precedent to Third Amendment Effective Date. The amendment and restatement of the Second Amended and Restated Credit Agreement pursuant to the Third Amended and Restated Credit Agreement and the agreement of each Lender to extend the maturity of the Loans of such Lender to the Maturity Date (as defined in the Third Amended and Restated Credit Agreement) became effective on September 30, 1993 (the "Third Amendment Effective Date"), the date on which each of the following conditions was satisfied or waived in writing by all of the Lenders in their sole and absolute discretion (it being understood that all capitalized terms used in this Section 5.05 and defined in the Third Amended and Restated Credit Agreement have the meanings defined in the Third Amended and Restated Credit Agreement and that all references in this Section 5.05 to "hereof" and "this Agreement" are references to the Third Amended and Restated Credit Agreement): (a) Execution of Agreement. The Borrower, the Administrative Agent and each Lender shall have executed a counterpart hereof (whether the same or a different counterpart) and shall have delivered the same to the Administrative Agent at its Notice Office or, in the case of the -61- 68 Lenders, shall have given to the Administrative Agent written notice (actually received) at such office that the same has been signed and mailed to it. (b) Corporate Documents; Proceedings; Officer's Certificate. The Lenders shall have received from the Borrower a certificate, dated the Third Amendment Effective Date, signed by the Chairman of the Board of Directors, the President and Chief Executive Officer, the Senior Vice President-Finance or the Vice President and Controller of the Borrower and attested to by the Secretary or any Assistant Secretary of the Borrower in substantially the form of Exhibit Y with appropriate insertions, together with copies of the Certificate of Incorporation and By-Laws of the Borrower and the resolutions of the Borrower referred to in such certificate, and the foregoing shall be satisfactory to all of the Lenders in their sole and absolute discretion. (c) Opinions of Counsel. The Lenders shall have received opinions, addressed to the Administrative Agent and each of the Lenders and dated the Third Amendment Effective Date, from (i) Andrews & Kurth L.L.P. and Martin J. Whalen covering the due authority, legality, enforceability and other matters related to this Agreement and the other Credit Documents and the requirements hereof and thereof, (ii) Faegre & Benson covering the entry of the Interim Extension Loan Order and the taking of any appeals therefrom and Liens on the property or other assets of the Borrower approved by the Bankruptcy Court, and (iii) Winthrop, Stimson, Putnam & Roberts covering the United States citizenship of the Borrower and other matters involving the DOT and the FAA, and such other opinions with respect to other matters incident to transactions contemplated herein, as any Lender may request and as are acceptable to all of the Lenders in their sole and absolute discretion. (d) Mortgage and Assignment of Gate Leases. The Borrower shall have (i) duly authorized, executed and delivered and filed with the appropriate Governmental Authorities (a) the Third Amendments to Deeds of Trust in substantially the forms of Exhibits MM-1, MM-2 and MM-3, amending each Mortgage encumbering the Mortgaged Properties, and (b) the Third Amendment to Assignment of Gate Leases in substantially the form of Exhibit NN, amending the Assignment of Gate Leases, and (ii) provided to the Lenders title reports in form and substance satisfactory to all of the Lenders in their sole and absolute discretion, and showing title vested in the Borrower and the absence of Liens other than Liens shown on the title reports delivered on the Effective Date. -62- 69 (e) Mortgage Consents. The City of Phoenix, as landlord, and the Collateral Agent shall have duly authorized, executed and delivered the Third Amendments to Consent Agreement in substantially the forms of Exhibits OO-1 and OO-2. (f) Slots. The Borrower and the Collateral Agent shall have duly authorized, executed and delivered the Second Amendment to Slot Lease Agreement in substantially the form of Exhibit PP. (g) Interim Extension Loan Order. The Lenders shall have received a certified copy of the Interim Extension Loan Order, and the Interim Extension Loan Order shall have been entered by the Bankruptcy Court and shall be in full force and effect and shall not have been stayed, reversed, vacated, rescinded, modified or amended in any respect (other than modifications acceptable to all of the Lenders, in their sole and absolute discretion), and no appeal shall been taken from the Interim Extension Loan Order. (h) Operating Plan. The Operating Plan and the recommendations contained in the report thereon of Simat, Helliesen & Eichner, Inc., the Borrower's consultant, shall have been adopted by the management and the Board of Directors of the Borrower. (i) Payment of Ansett Loans and Release and Termination by Ansett. Prior to or simultaneously with the effectiveness of this Agreement and the extension of the maturity of the Loans to the Maturity Date, (i) all of the Ansett Loans shall be paid in full, together with accrued and unpaid interest thereon, and (ii) Ansett shall have duly authorized, executed and delivered a Release and Termination in substantially the form of Exhibit QQ releasing all of its right, title and interest in and to the Collateral, the Loans and the Credit Documents. (j) Corporate Governance and Related Actions. The Borrower shall have duly authorized, executed and delivered the Amended and Restated Management Letter Agreement substantially in the form of Exhibit RR and the Lenders (other than Kawasaki) shall have received evidence, satisfactory in form and substance to all of the Lenders (other than Kawasaki) in their sole and absolute discretion, that all actions described in the Amended and Restated Management Letter Agreement to be taken on or prior to the Third Amendment Effective Date shall have been taken to the satisfaction of all of the Lenders (other than Kawasaki) in their sole and absolute discretion. -63- 70 (k) No Material Adverse Change. In the opinion of the Lenders, no material adverse change shall have occurred since September 15, 1993 in the financial condition, business or prospects of the Borrower. (l) Payment of Fees, etc. The Borrower shall have paid all costs, fees and expenses owing in connection with this Agreement, the other Credit Documents and the documents referred to herein and therein and due to the Administrative Agent, the Collateral Agent and each Lender on or before the Third Amendment Effective Date (including, without limitation, legal fees and expenses). (m) No Default; Representations and Warranties. No Default or Event of Default shall have occurred and be continuing on and as of the Third Amendment Effective Date and all representations and warranties of or on behalf of the Borrower in this Agreement and all the other Credit Documents shall be true and correct in all material respects on and as of the Third Amendment Effective Date with the same effect as though such representations and warranties had been made on and as of the Third Amendment Effective Date (it being understood and agreed that in the event of any inconsistency between the representations and warranties of or on behalf of the Borrower in this Agreement and the representations and warranties of or on behalf of the Borrower in the other Credit Documents, the representations and warranties of or on behalf of the Borrower in this Agreement shall control); and the Lenders shall have received a certificate, dated the Third Amendment Effective Date, and signed by the Vice President and Controller of the Borrower, to such effect. (n) Governmental Action. No Governmental Action shall purport to, and no Governmental Action or other action or proceedings shall have been filed, instituted, threatened or issued which seeks to, enjoin or restrain or otherwise adversely affect the extension of the maturity of the Loans to the Maturity Date (as defined herein) or the other transactions provided for herein or contemplated hereby or the Borrower's compliance with the terms hereof or of the other Credit Documents. (o) Other Action. There shall have been taken such other actions, and all of the Lenders shall have received such other documents, instruments, opinions, reliance letters, certifications and copies of governmental consents, permits, licenses and approvals, as any Lender shall have reasonably requested and which are acceptable to all of the Lenders in their sole and absolute discretion. -64- 71 On the Third Amendment Effective Date, the maturity of the Loans of each Lender was extended to the Maturity Date and the Loans of each Lender remained outstanding in an aggregate principal amount equal to the amount set forth opposite such Lender's name on Annex I attached thereto (and each Lender was deemed to have waived any mandatory prepayments of the Loans of such Lender otherwise required pursuant to Sections 4.02(i), 4.02(ii) and 4.02(iv) of the Second Amended and Restated Credit Agreement during the period July 1, 1993 through September 30, 1993). The Borrower and each of the Lenders (other than Kawasaki) acknowledged that, pursuant to the Third Amended and Restated Credit Agreement and the Amended and Restated Management Letter Agreement, the Borrower granted to each Lender (other than Kawasaki) certain rights of approval with respect to members of the Board of Directors of the Borrower and the Executive Committee of such Board of Directors. The Borrower and each Lender (other than Kawasaki) further acknowledged that Kawasaki is not a party to the Amended and Restated Management Letter Agreement, and that the Borrower did not grant to Kawasaki any rights of approval with respect to members of the Board of Directors of the Borrower or the Executive Committee of such Board of Directors. The Lenders (including Kawasaki) and the Borrower agreed that neither Kawasaki nor any of its officers, directors or advisors would be liable or responsible to any Person for any exercise of the rights of any other Lender under the Amended and Restated Management Letter Agreement or for any act or omission of any Director of the Borrower approved by any such Lender. The Borrower and each Lender (including Kawasaki) agreed and acknowledged that no agency relationship has existed or was intended to be created by the Third Amended and Restated Credit Agreement between Kawasaki on the one hand and any other Lender or any Director approved by such Lender on the other hand. On the Third Amendment Effective Date, the Management Letter Agreement was amended and restated in its entirety as provided in the Amended and Restated Management Letter Agreement (and the Management Letter Agreement became of no further force or effect). Notwithstanding the amendment and restatement of the Second Amended and Restated Credit Agreement by the Third Amended and Restated Credit Agreement, all of the Obligations continued to be secured by the Collateral and the Borrower acknowledged and agreed that the Collateral remained subject to a lien and security interest in favor of the Collateral Agent for the benefit of the Secured Creditors. Except as provided in the Third Amended and Restated Credit Agreement and in the Release and Termination executed and delivered by Ansett pursuant to the Third Amended and Restated Credit -65- 72 Agreement, the Third Amended and Restated Credit Agreement was intended as a substitution of, and not as payment of, the Obligations of the Borrower under the Second Amended and Restated Credit Agreement and all amounts outstanding and owing by the Borrower under the Second Amended and Restated Credit Agreement were deemed to be outstanding and owing by the Borrower under the Third Amended and Restated Credit Agreement. 5.06 Conditions Precedent to Fourth Amendment Effective Date. The amendment and restatement of the Third Amended and Restated Credit Agreement pursuant to this Agreement, and the agreement of each Lender to extend the maturity of the Loans of such Lender to the Maturity Date shall become effective on the date (the "Fourth Amendment Effective Date"), which date must occur not later than June 30, 1994, on which each of the following conditions is satisfied unless waived in writing by all of the Lenders in their sole and absolute discretion: (a) Execution of Agreement. The Borrower, the Administrative Agent and each Lender shall have executed a counterpart hereof (whether the same or a different counterpart) and shall have delivered the same to the Administrative Agent at its Notice Office or, in the case of the Lenders, shall have given to the Administrative Agent written notice (actually received) at such office that the same has been signed and mailed to it. (b) Corporate Documents; Proceedings; Officer's Certificate. The Lenders shall have received from the Borrower a certificate, dated the Fourth Amendment Effective Date, signed by the Chairman of the Board of Directors and Chief Executive Officer, the President and Chief Operating Officer or the Vice President and Controller of the Borrower and attested to by the Secretary or any Assistant Secretary of the Borrower in substantially the form of Exhibit Y with appropriate insertions and modifications, together with copies of the Certificate of Incorporation and By-Laws of the Borrower and the resolutions of the Borrower referred to in such certificate, and the foregoing shall be satisfactory to all of the Lenders in their sole and absolute discretion. (c) Opinions of Counsel. The Lenders shall have received opinions, addressed to the Administrative Agent and each of the Lenders and dated the Fourth Amendment Effective Date, from (i) Andrews & Kurth L.L.P. and the Senior Vice President and General Counsel of the Borrower covering the due authority, legality, enforceability and other matters related to this Agreement and the other Credit Documents and the requirements hereof and thereof, (ii) LeBoeuf, Lamb, -66- 73 Greene & MacRae covering the entry of the Subsequent Extension Loan Order and the taking of any appeals therefrom and Liens on the property or other assets of the Borrower approved by the Bankruptcy Court, and (iii) Daugherty, Fowler & Peregrin, covering the filing, perfection and priority of the Aircraft/Engine Mortgage (and amendments thereto), and such other opinions with respect to other matters incident to the transactions contemplated herein, as any Lender may request and as are acceptable to all of the Lenders in their sole and absolute discretion. (d) Mortgage and Assignment of Gate Leases. The Borrower shall have (i) duly authorized, executed and delivered and filed with the appropriate Governmental Authorities (a) the Fourth Amendments to Deeds of Trust in substantially the forms of Exhibits TT-1, TT-2 and TT-3, amending each Mortgage encumbering the Mortgaged Properties, and (b) the Fourth Amendment to Assignment of Gate Leases in substantially the form of Exhibit UU, amending the Assignment of Gate Leases, and (ii) provided to the Lenders title reports in form and substance satisfactory to all of the Lenders in their sole and absolute discretion, and showing title vested in the Borrower and the absence of Liens other than Liens shown on the title reports delivered on the Effective Date. (e) Subsequent Extension Loan Order. The Lenders shall have received a certified copy of the Subsequent Extension Loan Order, and the Subsequent Extension Loan Order shall have been entered by the Bankruptcy Court and shall be in full force and effect and shall not have been stayed, reversed, vacated, rescinded, modified or amended in any respect (other than modifications acceptable to all of the Lenders, in their sole and absolute discretion), and no appeal shall been taken from the Subsequent Extension Loan Order. (f) Payment of Dial Loans and Release and Termination by Dial. Prior to or simultaneously with the effectiveness of this Agreement and the extension of the maturity of the Loans to the Maturity Date, (i) all of the Dial Loans shall be paid in full, together with accrued and unpaid interest thereon, and (ii) Dial shall have duly authorized, executed and delivered a Release and Termination in substantially the form of Exhibit VV releasing all of its right, title and interest in and to the Collateral, the Loans, the Credit Documents and the Amended and Restated Management Letter Agreement. (g) No Material Adverse Change. In the opinion of the Lenders, no material adverse change shall have -67- 74 occurred since May 2, 1994 in the financial condition, business or prospects of the Borrower. (h) Payment of Fees, etc. The Borrower shall have paid all costs, fees and expenses owing in connection with this Agreement, the other Credit Documents and the documents referred to herein and therein and due to the Administrative Agent, the Collateral Agent and each Lender on or before the Fourth Amendment Effective Date (including, without limitation, legal fees and expenses). (i) No Default; Representations and Warranties. No Default or Event of Default shall have occurred and be continuing on and as of the Fourth Amendment Effective Date and all representations and warranties of or on behalf of the Borrower in this Agreement and all the other Credit Documents shall be true and correct in all material respects on and as of the Fourth Amendment Effective Date with the same effect as though such representations and warranties had been made on and as of the Fourth Amendment Effective Date (it being understood and agreed that in the event of any inconsistency between the representations and warranties of or on behalf of the Borrower in this Agreement and the representations and warranties of or on behalf of the Borrower in the other Credit Documents, the representations and warranties of or on behalf of the Borrower in this Agreement shall control); and the Lenders shall have received a certificate, dated the Fourth Amendment Effective Date, and signed by the Vice President and Controller of the Borrower, to such effect. (j) Governmental Action. No Governmental Action shall purport to, and no Governmental Action or other action or proceedings shall have been filed, instituted, threatened or issued which seeks to, enjoin or restrain or otherwise adversely affect the extension of the maturity of the Loans to the Maturity Date or the other transactions provided for herein or contemplated hereby or the Borrower's compliance with the terms hereof or of the other Credit Documents. (k) Other Action. There shall have been taken such other actions, and all of the Lenders shall have received such other documents, instruments, opinions, reliance letters, certifications and copies of governmental consents, permits, licenses and approvals, as any Lender shall have reasonably requested and which are acceptable to all of the Lenders in their sole and absolute discretion. On the Fourth Amendment Effective Date, the maturity of the Loans of each Lender shall be extended to the Maturity Date and the Loans of each Lender shall continue to be outstand- -68- 75 ing in an aggregate principal amount equal to the amount set forth opposite its name on Annex I attached hereto. The Amended and Restated Management Letter Agreement (as executed and delivered on and as of the Third Amendment Effective Date and as amended pursuant to letter agreement dated February 8, 1994) shall remain in full force effect on and after the Fourth Amendment Effective Date and for so long as any obligation remains outstanding hereunder or under any of the other Credit Documents (except that Dial shall not have any rights thereunder). The Borrower and each of the Lenders (other than Kawasaki) hereby acknowledge that, pursuant to this Agreement and the Amended and Restated Management Letter Agreement, the Borrower has granted to each Lender (other than Kawasaki) certain rights of approval with respect to members of the Board of Directors of the Borrower. The Borrower and each Lender (other than Kawasaki) further acknowledge that Kawasaki is not a party to the Amended and Restated Management Letter Agreement, and that the Borrower has not granted to Kawasaki any rights of approval with respect to members of the Board of Directors of the Borrower. Neither Kawasaki nor any of its officers, directors or advisors shall be liable or responsible to any Person for any exercise of the rights of any other Lender under the Amended and Restated Management Letter Agreement or for any act or omission of any Director of the Borrower approved by any such Lender. The Borrower and each Lender (including Kawasaki) agree and acknowledge that no agency relationship exists or is intended to be created hereby between Kawasaki on the one hand and any other Lender or any Director approved by such Lender on the other hand. Notwithstanding the amendment and restatement of the Third Amended and Restated Credit Agreement by this Agreement, all of the Obligations shall continue to be secured by the Collateral and the Borrower acknowledges and agrees that the Collateral remains subject to a lien and security interest in favor of the Collateral Agent for the benefit of the Secured Creditors. Except as provided herein and in the Release and Termination executed and delivered by Dial pursuant hereto, this Agreement is intended as a substitution of, and not as payment of, the Obligations of the Borrower under the Third Amended and Restated Credit Agreement and all amounts outstanding and owing by the Borrower under the Third Amended and Restated Credit Agreement shall be deemed to be outstanding and owing by the Borrower hereunder. Notwithstanding anything herein or in any of the other Credit Documents which may be to the contrary, for all purposes hereof and thereof, the Maturity Date shall be as provided herein. -69- 76 SECTION 6. REPRESENTATIONS, WARRANTIES AND AGREEMENTS. In order to induce the Lenders to enter into this Agreement and to extend the maturity of the Loans to the Maturity Date, the Borrower makes the following representations, warranties and agreements as of the Fourth Amendment Effective Date, which shall survive the execution and delivery of this Agreement and the extension of the maturity of the Loans to the Maturity Date. 6.01 Corporate Status. The Borrower (i) is a duly organized and validly existing corporation in good standing under the laws of the jurisdiction of its incorporation, (ii) has the power and authority to own its property and assets and to transact the business in which it is engaged and (iii) is duly qualified as a foreign corporation and in good standing in each jurisdiction where the ownership, leasing or operation of its property or the conduct of its business requires such qualification except where the failure to be so qualified is not reasonably likely to have a material adverse effect on the business, operations, property or other assets or condition (financial or otherwise) of the Borrower or on the Collateral or the rights or remedies of the Collateral Agent in respect thereof. 6.02 Corporate Power and Authority. Subject to the entry of the Subsequent Extension Loan Order by the Bankruptcy Court, the Borrower has the corporate power to execute, deliver and perform the terms and provisions of each of the Credit Documents to which it is a party and has taken all necessary corporate action to authorize the execution, delivery and performance by it of each of such Credit Documents. The Borrower has duly executed and delivered each of the Credit Documents to which it is a party, and each of such Credit Documents constitutes its legal, valid and binding obligation enforceable against the Borrower in accordance with its terms. 6.03 No Violation. Neither the execution, delivery or performance by the Borrower of the Credit Documents to which it is a party, nor compliance by it with the terms and provisions thereof, (i) will contravene any provision of any law, statute, rule or regulation or any order, writ, injunction or decree of any court or governmental instrumentality, (ii) will conflict or be inconsistent with or result in any breach of any of the terms, covenants, conditions or provisions of, or constitute a default under, or result in the creation or imposition of (or the obligation to create or impose) any Lien (except -70- 77 pursuant to the Security Documents) upon any of the property or assets of the Borrower pursuant to the terms of any indenture, mortgage, deed of trust, credit agreement, loan agreement or any other material agreement, contract or instrument to which the Borrower is a party or by which its property or assets are bound or to which it may be subject, in each case to the extent entered into or assumed on or after the Filing Date, or (iii) will violate any provision of the Certificate of Incorporation or By-Laws of the Borrower. 6.04 Governmental Approvals. No order, consent, approval, license, authorization or validation of, or filing, recording or registration with (except the entry of the Orders and those which have been obtained or made or may be required to be made in the future under any Credit Document and cannot be obtained until such future time) or exemption by, any governmental or public body or authority, or any subdivision thereof, is required to authorize, or is required in connection with, (i) the execution, delivery and performance of any Credit Document or (ii) the legality, validity, binding effect or enforceability of any Credit Document. 6.05 Priority; Security Interests. (a) The Obligations constitute allowed administrative expense claims in the Case having priority over all administrative expenses of the kind specified in Section 503(b) or 507(b) of the Bankruptcy Code, except for the Permitted Expenses and except as expressly permitted by Section 8.05(vi). (b) The Obligations shall be at all times secured by a Lien on the Collateral in favor of the Collateral Agent for the benefit of the Secured Creditors, which Lien shall be a first priority Lien on all Collateral and perfected by operation of the Orders, except that the Lien securing the Obligations may be junior in priority to the Permitted First Liens with respect to the property encumbered thereby. The Borrower has good and marketable title to all Collateral owned by it free and clear of all Liens, except (i) Liens securing the Obligations, (ii) the Permitted First Liens and (iii) other Liens permitted by Section 8.01, all of which Liens referred to in this clause (iii) are and shall be junior and subordinate to the Liens securing the Obligations. All filings, notices, recordings and other actions taken or made in the United States or any State thereof or in any other jurisdiction necessary to perfect the Liens on the Collateral created pursuant to the Security -71- 78 Documents and the Orders have been made, given or accomplished. 6.06 Financial Statements; Financial Condition; Undisclosed Liabilities; etc. (a) The consolidated balance sheet of the Borrower at December 31, 1993 and the related consolidated statements of operations, shareholders' equity and cash flows of the Borrower for the fiscal year ended on such date and heretofore furnished to the Lenders present fairly in all material respects the financial position of the Borrower at the date of such balance sheet and the results of operations of the Borrower for such periods covered in the statements of operations except as expressly disclosed therein and in the notes thereto in conformity with generally accepted accounting principles and practices consistently applied. (b) The consolidated balance sheet of the Borrower at March 31, 1994 and the related consolidated statements of operations and cash flows of the Borrower for the three month period ended on such date and heretofore furnished to the Lenders present fairly in all material respects the financial position of the Borrower at the date of such balance sheet and the results of the operations of the Borrower for such periods covered in the statements of operations thereby, except as otherwise disclosed therein and in the notes thereto in conformity with generally accepted accounting principles and practices consistently applied, subject to appropriate year-end audit adjustments. (c) Since May 2, 1994, there has been no material adverse change in the business, operations, property or other assets or condition (financial or otherwise) of the Borrower, including, without limitation, as a result of any casualty, strike, lockout or labor dispute. (d) Except as fully reflected in the financial statements (including the footnotes thereto) referred to in Section 6.06(b) or in Schedule 9 hereto, there are no liabilities or obligations (excluding current obligations and liabilities incurred in the ordinary course of business) with respect to the Borrower of any nature whatsoever (whether absolute, accrued, contingent or otherwise and whether or not due), which either individually or in aggregate are or would be reasonably likely to be materially adverse to the ability of the Borrower to satisfy the Obligations in accordance with their terms or the ability of the Borrower to consummate the transactions contemplated by the Credit Documents. -72- 79 (e) The projections presented in the Operating Plan (the "Projections") are based on good faith estimates and assumptions made by the management of the Borrower on and as of the date of the Operating Plan; and the management of the Borrower believes that the Projections are reasonable and attainable, it being recognized by the Lenders, however, that projections as to future events are not to be viewed as facts and that the actual results during the period or periods covered by the Projections may differ from the projected results and that such differences may be material. (f) The property register furnished by the Borrower to the Lenders on and as of the Effective Date was a true, complete and accurate description of all aircraft, engines, rotables, Slots, Real Property and other material property or other material assets of the Borrower. 6.07 Litigation. Except as set forth in Schedule 10 hereto, there are no actions, suits or proceedings, other than the Case, pending or, to the knowledge of the Borrower, threatened that are reasonably likely to materially and adversely affect the business, operations, property or other assets or condition (financial or otherwise) of the Borrower or the ability of the Borrower to perform its obligations hereunder or under any of the other Credit Documents. 6.08 True and Complete Disclosure. All factual information (taken as a whole) furnished on or prior to the Fourth Amendment Effective Date by the Borrower in writing to any Lender (including, without limitation, all information contained in the Credit Documents but excluding (i) the Projections and any other forecasts and projections of financial information and results submitted to any Lender, and (ii) factual information which was superseded or replaced on or prior to the date hereof) for purposes of or in connection with this Agreement, or any transaction contemplated herein, is true and accurate as of the date hereof in all material respects and not incomplete by omitting to state any fact necessary to make such information (taken as a whole) not misleading in any material respect at such time in light of the circumstances under which such information was provided. 6.09 Use of Proceeds; Margin Regulations. (a) All proceeds of the Loans were used for the Borrower's working capital purposes in accordance with the Operating Plan (as defined in the Original Credit Agreement, the First Amended and Restated Credit Agreement and/or the Second Amended and Restated Credit Agreement, as applicable) -73- 80 including, without limitation, to pay amounts due under the A320 Leases, the Engine Leases and the Kawasaki Leases. (b) No part of the proceeds of any Loan were used by the Borrower to purchase or carry any Margin Stock or to extend credit to others for the purposes of purchasing or carrying any Margin Stock. Neither the making of any Loan nor the use of the proceeds thereof violated or was inconsistent with the provisions of Regulations G, T, U or X of the Board of Governors of the Federal Reserve System. 6.10 Tax Returns and Payments. The Borrower has filed all federal income tax returns and all other tax returns required to be filed by it and has paid all income and other taxes payable by it which have become due pursuant to such tax returns and all other taxes and assessments payable by it which have become due, other than those (x) not yet delinquent, (y) contested in good faith and for which adequate reserves have been established or (z) the payment of which is excused or stayed as a result of the Borrower's commencement of the Case. The Borrower has paid, or has provided adequate reserves for the payment of, all federal and state income taxes applicable for all prior fiscal years and for the current fiscal year to the date hereof. 6.11 Compliance with ERISA. (a) The Borrower and each member of the Controlled Group is in compliance in all respects with any applicable provisions of ERISA and the regulations and published interpretations thereunder including all procedural and fiduciary provisions. (b) No Pension Plan has an accumulated or waived funding deficiency within the meaning of Section 412 of the Code and no Pension Plan is insolvent or in reorganization. (c) No Termination Event has occurred or is reasonably expected to occur with respect to any Pension Plan administered by the Borrower or any member of the Controlled Group or any administrator designated by the Borrower or any member of the Controlled Group. (d) There are no unfunded vested liabilities under any Pension Plans administered by the Borrower or any member of the Controlled Group or any administrators designated by the Borrower or any member of the Controlled Group. -74- 81 (e) Neither the Borrower nor any member of the Controlled Group has incurred or reasonably expects to incur any withdrawal liability under ERISA to any Multiemployer Plan or any similar liability or exposure. (f) Neither the Borrower nor any member of the Controlled Group has incurred, or expects to incur, any material liability to or on account of any Pension Plan pursuant to Section 515, 4062, 4063, 4064, 4201, or 4204 of ERISA. (g) No Lien imposed under the Code or ERISA on the assets of the Borrower nor any member of the Controlled Group exists or is likely to arise on account of any Pension Plan. 6.12 Subsidiaries. There are no Subsidiaries of the Borrower and the Borrower does not hold, directly or indirectly, legally or beneficially, more than 5% of the outstanding voting stock or similar interests of any other Person. 6.13 Compliance with Statutes, etc. (a) The Borrower is in compliance with all applicable statutes, regulations and orders of, and all applicable restrictions imposed by, all Governmental Authorities, domestic or foreign, in respect of the conduct of its businesses and the ownership of its property, except (x) such noncompliances as are not likely to, in the aggregate, have a material adverse effect on the business, operations, property or other assets or condition (financial or otherwise) of the Borrower or on its ability to perform its obligations hereunder or under the other Credit Documents or on the Collateral or any rights or remedies of the Collateral Agent or the Lenders in respect thereof or (y) any statute, regulation, order or restriction with which the Borrower is not required to comply by virtue of the Bankruptcy Code, the pendency of the Case or of any order issued in the Case. (b) Without limiting the foregoing, no Hazardous Materials (i) exist on, under or about the Borrower's assets or otherwise with respect to the Collateral, or (ii) have at any time been transported to or from such property or used, generated, manufactured, stored or disposed of on, under or about such assets which, in the case of clauses (i) and (ii) above, would violate any permits, regulations or other Governmental Actions or would give rise to any Hazardous Materials Claim materially and adversely affecting any Collateral, including, without limitation, the economic -75- 82 value, use, operation or transferability of any Collateral or for which the Administrative Agent or any Lender could have any liability or obligation with respect thereto or would have a material adverse effect on the business, property or other assets, condition, financial or otherwise, or operations of the Borrower or could give rise to an Environmental Lien. The Borrower has obtained all permits, licenses and authorizations required under all Hazardous Materials Laws and is in compliance with the terms and conditions of such permits, licenses and authorizations and all applicable Hazardous Materials Laws except where the failure to obtain such permit, license or authorization or where such noncompliance would not affect any Collateral, would not result in any liability of the Administrative Agent or any Lender, and would not have a material adverse effect on the business, property or other assets, condition, financial or otherwise, or operations of the Borrower or on its ability to perform its obligations hereunder or under the other Credit Documents or on the Collateral or any rights or remedies of the Collateral Agent or the Lenders in respect thereof. The Borrower has not been notified that it is liable for any penalties, fines or forfeitures for failure to comply with any of the foregoing in the manner set forth above. The Borrower is in compliance with, and not in breach of or default under, any applicable writ, order, judgment, injunction, decree, lease, first mortgage, or other agreement or instrument to which the Borrower is a party which would materially and adversely affect the ability of the Borrower to operate any portion of the Real Property or personal property owned or leased by it and no event has occurred and is continuing which, with the passage of time or the giving of notice or both, would constitute noncompliance, breach of or default thereunder the breach of which is likely to have a material adverse effect on the property or other assets, business operation, condition (financial or otherwise) of the Borrower. There are no legal or governmental proceedings pending or, to the knowledge of the Borrower, threatened, which (a) question the validity, term or entitlement of the Borrower for any permit, license, order or registration required for the operation of any facility or personal property which the Borrower currently operates and (b) wherein an unfavorable decision, ruling or finding would have a material adverse effect on the business, operation, property or other assets or condition (financial or otherwise) of the Borrower or on its ability to perform its obligations hereunder or under the other Credit Documents or on the Collateral or any rights or remedies of the Collateral Agent or the Lenders in respect thereof. -76- 83 6.14 Investment Company Act. The Borrower is not an "investment company" within the meaning of the Investment Company Act of 1940, as amended. 6.15 Public Utility Holding Company Act. The Borrower is not a "holding company," or an "affiliate" of a "holding company" or of a "subsidiary company" of a "holding company" within the meaning of the Public Utility Holding Company Act of 1935, as amended. 6.16 End of Fiscal Year; Fiscal Quarters. The last day of the fiscal year of the Borrower shall be on December 31 and the last day of each of the fiscal quarters of the Borrower shall be on March 31, June 30, September 30 and December 31. 6.17 The Orders. The Final Order has been entered and has not been amended, stayed, vacated or rescinded (except (i) to the extent superseded by the Final Order and (ii) as amended in a manner satisfactory to all of the Lenders in their sole and absolute discretion), and the obligations of the parties to the Credit Documents have not been stayed. Upon the maturity (whether by acceleration or otherwise) of any of the Obligations, the Lenders shall be entitled to immediate payment of such Obligations without further application to or order by the Bankruptcy Court. Upon any Event of Default the Collateral Agent shall be entitled to take the actions or enforce the remedies set forth in the Orders and the Security Documents without further application to or order by the Bankruptcy Court or any notice to (other than as expressly provided in the provisos to the third to last sentence of Section 9) or consent of any other Person. The GPA Order has been duly entered, and the GPA Order has not been appealed, amended, stayed, vacated or rescinded. The Additional Loan Order and the Kawasaki Order have been entered and have not been amended, stayed, vacated or rescinded (except as amended in a manner satisfactory to all of the Lenders in their sole and absolute discretion). The Second Additional Loan Order has been entered and has not been amended, stayed, vacated or rescinded (except as amended in a manner satisfactory to all of the Lenders in their sole and absolute discretion). The Interim Extension Loan Order and the Final Extension Loan Order have been entered and have not been amended, stayed, vacated or rescinded (except as amended in a manner satisfactory to all of the Lenders in their sole and absolute discretion). The Subsequent Extension Loan Order has been entered and has not been amended, stayed, vacated or rescinded (except as amended in a manner satisfactory to all of the Lenders in their sole and absolute discretion). -77- 84 6.18 Operations. (a) Set forth on Schedule 11 is a true, correct and complete list of (x) all Slots and Routes held or used by the Borrower and (y) all Domestic Gates owned or leased by the Borrower, in each case, as of the Fourth Amendment Effective Date. The Borrower represents and warrants that it holds the Slots held by it pursuant to Title 14, subject only to the regulations of the FAA, and that it has, at all times after obtaining such Slots, complied in all material respects with all of the terms, conditions and regulations set forth in Title 14, including, without limitation, the usage requirements set forth in Section 93.227 thereof, and that there exists no material violation of such terms, conditions and regulations that gives the FAA the right to terminate, cancel, withdraw or modify any such Slots. Furthermore, the Borrower shall not use any Slot which is to be used in essential air service operations (as defined by the FAA) for international or non-essential air service operations. (b) The Borrower is a "citizen of the United States" as defined in section 101(16) of the Aviation Act and a duly certificated "air carrier" within the meaning of the Aviation Act authorized to transport passengers and cargo in domestic and international air transportation and certificated under Sections 401 and 604(b) of the Aviation Act. All such certificates are in full force and effect and duly issued to the Borrower by the DOT (or the Civil Aeronautics Board) and the FAA, and the Borrower has in full force and effect and duly issued to it all licenses, permits, authorizations, certificates of compliance, certificates of public convenience and necessity and other certificates (including, without limitation, air carrier operating certificates and operations specifications issued by the FAA pursuant to Part 121 of the Regulations of the FAA and all applicable aircraft registration requirements of the FAA, including those set forth in Part 47 of the regulations of the FAA) which are required by the DOT or the FAA for the conduct of the business of the Borrower as now conducted. There are no license fees owed on the Borrower's DOT or FAA licenses. The Borrower is in compliance with all material requirements of the certificates and authorizations issued to it by the DOT and the FAA. 6.19 GPA Agreements/Kawasaki Agreements. Each of the GPA Agreements and the Kawasaki Agreements is in full force and effect, no "Default" or "Event of Default" under and as defined in any such agreement (other than an event of default which consists of the existence of the Case) has occurred and is continuing and each of the representations and warranties of the Borrower in the GPA Agreements and the -78- 85 Kawasaki Agreements is true and correct as if made on the Fourth Amendment Effective Date (except to the extent any such representation or warranty expressly refers to a prior date). SECTION 7. AFFIRMATIVE COVENANTS. The Borrower covenants and agrees that, unless the Required Lenders otherwise consent in their sole and absolute discretion, on and after the Fourth Amendment Effective Date and until the Loans and the Notes, together with all interest, fees and other Obligations payable hereunder or under the other Credit Documents, are paid in full: 7.01 Information Covenants. The Borrower will furnish to each Lender: (a) Weekly and Monthly Reports. By the Wednesday after the end of each week, beginning with the first week or part thereof in which the Fourth Amendment Effective Date occurs, internal reports on the operations of the Borrower in respect of such week and for the period from the beginning of the current fiscal year to the end of such week, in a format, and in a level of detail, reasonably acceptable to and agreed upon by the Required Lenders; and within 20 days after the end of each month, other than a month which ends a fiscal quarter or a fiscal year of the Borrower, the balance sheet of the Borrower as at the end of such month and the related statements of operations and cash flows for such month and for the elapsed portion of the fiscal year ended with the last day of such month, in each case setting forth comparative figures for the related periods in the prior fiscal year, all of which shall be certified on behalf of the Borrower by the Chief Financial Officer, Treasurer or Vice President and Controller of the Borrower (subject to year-end audit adjustments); and within 20 days after the end of each month, a report with respect to sales of assets during such month, in a format, and in a level of detail, reasonably acceptable to the Required Lenders and demonstrating compliance with the provisions of Sections 8.02(i), 8.02(iii) and 4.02(ii) of this Agreement; and within 20 days after the end of each month, a report with respect to leases entered into during such month, in a format, and in a level of detail, reasonably acceptable to the Required Lenders, and demonstrating compliance with the provisions of Section 8.04 of this Agreement. (b) Financial Statements. Within 50 days after the close of the first three fiscal quarters in each fiscal year of the Borrower and within 105 days after the last -79- 86 fiscal quarter in any fiscal year of the Borrower (or, if earlier, at the time of filing with the SEC in the case of any accounting period ending after the Effective Date), the balance sheet of the Borrower as at the end of such quarterly period and the related statements of operations, cash flows and stockholders' equity for such quarterly period and for the elapsed portion of the fiscal year ended with the last day of such quarterly period, in each case setting forth comparative figures for the related periods in the prior fiscal year, all of which shall be certified on behalf of the Borrower by the Chief Financial Officer, Treasurer or Vice President and Controller of the Borrower (subject to appropriate year-end audit adjustments in the case of statements relating to the first three quarters of any fiscal year) and, in the case of statements relating to the last quarter of the fiscal year and for such fiscal year, certified by KPMG Peat Marwick or another independent certified public accounting firm of recognized national standing selected by the Borrower and reasonably acceptable to the Required Lenders without qualification as to the scope of the audit or as to generally accepted accounting principles or practices. (c) Officer's Certificates. At the time of the delivery of the financial statements provided for in Section 7.01(b), a certificate of the Chief Financial Officer, Treasurer or Vice President and Controller of the Borrower, stating that he or she has reviewed the terms of this Agreement and the Credit Documents and has made or caused to be made under this provision a review in reasonable detail of the transactions and condition of the Borrower during the period covered thereby and is authorized to act on behalf of the Borrower, to the effect that to the best of his or her knowledge, no Default or Event of Default has occurred and is continuing, or if such Chief Financial Officer, Treasurer or Vice President and Controller is unable to make the certifications required herein, he or she shall supply a statement setting forth the reasons for such inability, specifying the nature and extent of such reasons. Such certificate shall also set forth the calculations required to establish whether the Borrower was in compliance with each of the provisions of Section 7.08 and Section 8, at the end of such fiscal quarter or year, as the case may be. (d) Notice of Default or Litigation. Promptly, and in any event within three Business Days after the Borrower obtains knowledge thereof, notice of (i) the occurrence of any Default or Event of Default or (ii) any litigation or governmental proceeding not filed in the Case commenced (x) against the Borrower which could materially -80- 87 and adversely affect the business, operations, property or other assets or condition (financial or otherwise) of the Borrower or its ability to perform its obligations hereunder or under the other Credit Documents or the Collateral or the rights or remedies of the Collateral Agent in respect thereof or (y) with respect to any Credit Document. (e) Other Reports and Filings. Promptly, copies of (i) all financial information, proxy materials and other information and reports concerning material developments in the business, operations, property or other assets or condition (financial or otherwise) of the Borrower, which the Borrower (x) has filed with the Securities and Exchange Commission or any governmental agencies substituted therefor (the "SEC") or any comparable agency outside of the United States, including periodic filings required as of the Effective Date by such agency, (y) has filed with the FAA or the DOT, or, in each case, any comparable agency outside of the United States or (z) has delivered to the Board of Directors, any member of an Official Committee (exclusive of materials delivered to members of an Official Committee in their individual non-representative capacity) or holders of, or to any agent or trustee with respect to, Indebtedness of the Borrower in its capacity as such a holder, agent or trustee (unless such information or materials have theretofore been delivered to the Lenders pursuant to this Section 7.01), and (ii) all financial and management reports regarding the Borrower in connection with any audit by its independent accountants, including, without limitation, any report making accounting control recommendations or noting deficiencies. (f) Pleadings, etc. Promptly after the same is available, (i) copies of all material pleadings, motions, applications, judicial information, financial information and other documents not generally noticed to all parties-in-interest on the official service list in the Case (x) filed by or on behalf of the Borrower with the Bankruptcy Court in the Case or (y) distributed by or on behalf of the Borrower to any Official Committee, except information which is publicly available and information which the Borrower reasonably believes is in the possession of, or generally available to, the Lenders and (ii) copies of all pleadings, motions and applications filed by third parties (it being understood that any of the foregoing relating to ordinary course of business matters and customary for bankruptcy proceedings shall not be deemed material for this clause (f)). (g) Slot Use; Notice of Slot Use Prohibition. (i) In the event that the Borrower shall have determined not -81- 88 to use any Operating Route or Slot held by it in accordance with Title 14 or any applicable law or regulation, the Borrower shall give written notice to the Lenders no later than three days following the date of such determination, which notice shall identify such Slot or Operating Route, and the extent of use of such Slot or Operating Route in the twelve months preceding such notice, and (ii) in the event of the proposal or imposition of any law, rule or regulation with respect to Routes or Slots, which law, rule or regulation could have the effect of (x) prohibiting or restricting in any respect the ability of the Borrower to acquire, hold, sell or otherwise transfer the right to hold or use the Operating Routes or Slots, or (y) in any other respect, adversely affecting the interests of the Lenders, the Borrower will, in each case, within three days of such event, give written notice of such proposal or imposition. (h) Collateral Schedules. On or before the 20th day of each month, a certificate executed by the Chief Financial Officer, Treasurer or Vice President and Controller of the Borrower of the existing Collateral, the value thereof (showing, among other things, by type and category of Collateral in detail reasonably acceptable to the Required Lenders, compliance with Section 7.08 and Sections 4.02(i) and 4.02(ii)) and all locations thereof, plus any additional filing, registration, or other action necessary or advisable to fully perfect the Collateral Agent's security interest therein under applicable law (other than under the Bankruptcy Code by reason of the Orders) in substantially the form of Exhibit M hereto. (i) ERISA. Promptly (and in no event later than 10 days) after becoming aware of the occurrence of any (i) Termination Event, or (ii) "prohibited transaction," as such term is defined in Section 4975 of the Code, in connection with any Pension Plan of the Borrower or any trust created thereunder, a written notice from an officer of the Borrower specifying the nature thereof, what action the Borrower proposes to take with respect thereto, and, when known, any action taken or threatened by the Internal Revenue Service or the PBGC with respect thereto; and with reasonable promptness copies of (iii) all notices received by the Borrower or any member of the Controlled Group of the PBGC's intent to terminate any Pension Plan or to have a trustee appointed to administer any Pension Plan; (iv) each Form 5500 annual report, including Schedule B thereto (Actuarial Information) filed by the Borrower or any member of the Controlled Group with the Internal Revenue Service with respect to each Pension Plan; and (v) all notices received by the Borrower or any member of the Controlled Group from a Multiemployer Plan sponsor concerning the imposition or -82- 89 amount of withdrawal liability pursuant to Section 4202 of ERISA. (j) Compliance Reports. Upon request of the Required Lenders, (x) reports of the type described in Section 5.01(e)(ii) in each jurisdiction in which the UCC-1 financing statements referred to in Section 5.01(e)(i) were filed and in which any other UCC-1 financing statements were subsequently filed (which shall show UCC-1 financing statements covering all applicable Collateral duly filed and none of which shall disclose evidence of any Liens other than Permitted First Liens), and (y) an opinion of FAA counsel referred to in Section 5.01(c)(i) (or other FAA counsel reasonably acceptable to the Required Lenders) showing the filing, perfection and priority of all Collateral covered by the Aircraft/Engine Mortgage and the absence of any Liens other than Permitted First Liens, such opinion to be in form and substance reasonably acceptable to the Required Lenders. (k) Other Information. From time to time, such other information or documents (financial or otherwise), including, without limitation, board papers and minutes, and further including, without limitation, revised cash flow statements and revised profit and loss statements, in each case, supporting or relating to transactions with respect to which the Borrower seeks or is required to obtain the consent, concurrence, approval and/or waiver of the Required Lenders, as the Administrative Agent or any Lender may request in its sole and absolute discretion. (l) Board and Committee Meetings. Upon the request of any Lender (other than Kawasaki), such Lender may (but shall be under no obligation to) attend (on a non-participating basis) portions of meetings of the Borrower's Board of Directors or committees thereof at which matters relating to the Operating Plan and its implementation, monitoring and oversight are discussed. (m) Monthly Projections. Within ten days after the end of each month, internal projections for the three-month period following the end of such month, which projections shall (i) be based upon the Borrower's most recent internal performance information, (ii) set forth profit and loss projections on no less than a monthly basis and cash flow projections on a daily basis, and (iii) otherwise be in a form acceptable to the Required Lenders. (n) Excess of "net available cash" Over $175,000,000. If on any date the amount of "net available cash" (as such term is defined in Section 8.15(d)) exceeds -83- 90 $175,000,000, then, within two Business Days of such date, the Borrower shall give written notice of such excess to the Lenders. (o) Increase in Investment Account Minimum pursuant to Sections 4.02(i) and 4.02(ii). On or before the 20th day of each month, a certificate executed by the Chief Financial Officer, Treasurer or Vice President and Controller of the Borrower and furnished to the Lenders, the Collateral Agent and the Administrative Agent, setting forth (i) the amounts by which the Investment Account Minimum is required to be increased pursuant to Sections 4.02(i) and 4.02(ii) by reason of any deficiencies in the value of rotables as of the last day of the preceding month and any Asset Sales during the preceding month, and (ii) the amount to which the Investment Account Minimum is increased by reason of such deficiencies and Asset Sales. 7.02 Books, Records and Inspections. The Borrower will keep proper books of record and account in which full, true and correct entries in conformity with generally accepted accounting principles and all requirements of applicable law shall be made of all dealings and transactions in relation to its business and activities. The Borrower will permit officers and designated representatives of the Administrative Agent, the Collateral Agent or any Lender to visit and inspect any of the properties of the Borrower to the extent permitted by law, and to examine the books of account of the Borrower and discuss the affairs, finances and accounts of the Borrower with, and be advised as to the same by, its and their officers, all at such reasonable times and intervals and to such reasonable extent as the Administrative Agent, the Collateral Agent or any Lender may request. 7.03 Maintenance of Property; Insurance. The Borrower shall maintain or cause to be maintained in good repair, working order and condition, excepting ordinary wear and tear and damage due to casualty, all of its aircraft, aircraft engines, ground equipment, simulators, terminals, offices and all other properties material to its operations and will make or cause to be made all appropriate repairs, renewals and replacements thereof, consistent with past practice as in effect prior to the Filing Date. The Borrower shall maintain or cause to be maintained, with financially sound and reputable insurers the liability and property insurance policies and programs listed on Schedule 12 hereto or substantially similar programs or policies and amounts or other programs, policies and amounts reasonably acceptable to the Administrative Agent and the Required Lenders. On or before the expiration or renewal date -84- 91 thereof, the Borrower shall deliver or cause to be delivered to the Lenders insurance certificates and opinions evidencing compliance with the requirements hereof and of each Credit Document for each such policy or program then in effect: (i) the amount of such policy, (ii) the risks insured against by such policy, (iii) the name of the insurer, each insured party under such policy and the loss payees under any property damage insurance and (iv) the policy number of such policy. All such policies shall contain an endorsement providing for naming of the Administrative Agent, the Collateral Agent and the other Secured Creditors as additional insureds, for payment to the Collateral Agent on behalf of the Lenders in the case of hull and other property damage insurance of all money due or to become due thereunder except to the extent the holder of a Permitted First Lien is the loss payee for such proceeds, prior notice to the Administrative Agent of cancellation or material changes in the terms of the insurance and such other terms as the Administrative Agent may reasonably request. The provisions of this Section 7.03 shall be deemed to be in addition to, but not in limitation of, the provisions of any of the Security Documents that require the maintenance of insurance. 7.04 Corporate Franchises. The Borrower will do or cause to be done all things necessary to preserve and keep in full force and effect its existence and its rights (including, franchises, licenses and patents), except in all cases with respect to such rights, other than with respect to Slots and Routes, where (x) the failure to do so is not reasonably likely to have a material adverse effect on the business, operations, property, assets or condition (financial or otherwise) of the Borrower or (y) the failure to do so is excused by virtue of the status of the Borrower as a debtor-in-possession in the Case or any order issued in the Case; provided, however, that in all cases the Borrower shall preserve and keep in full force and effect all rights which are applicable to the Collateral or the loss of which could have a material adverse effect on the Collateral, including, without limitation, on the value or transferability thereof. 7.05 Compliance with Statutes, etc. The Borrower will comply with all applicable laws, statutes, regulations and orders of, and all applicable restrictions imposed by, all Governmental Authorities, domestic or foreign, in respect of the conduct of its business and the ownership of its property (including applicable statutes, regulations, orders and restrictions relating to environmental standards and controls), except such noncompliances as (x) are not reasonably likely to (A) result in a forfeiture or -85- 92 cancellation of the right of the Borrower to use the Slots held or used by it or (B) in the aggregate, have a material adverse effect on the business, operations, property or other assets or condition (financial or otherwise) of the Borrower or (y) are excused by virtue of the status of the Borrower as the debtor-in-possession in the Case or any order issued in the Case; provided, however, that in all cases the Borrower shall comply with all laws, statutes, regulations, orders and restrictions which are applicable to the Collateral or if noncompliance therewith could have a material adverse affect on the Collateral, including, without limitation, on the value or transferability thereof. 7.06 End of Fiscal Years; Fiscal Quarters. After the Fourth Amendment Effective Date, the Borrower shall not change the date on which any of its fiscal quarters or its fiscal year shall end. 7.07 Performance of Obligations. The Borrower will perform all of its obligations arising after the Filing Date, and not stayed as a result of the Case, under the terms of each agreement by which it is bound, except such non-performances as are not reasonably likely to, in the aggregate, have a material adverse effect on the business, operations, property, assets or condition (financial or otherwise) of the Borrower or which are described in the Operating Plan as agreements that will not be assumed or otherwise performed. 7.08 Minimum Designated Collateral Balances. Without limiting any other provision of this Agreement or the other Credit Documents, the Borrower shall maintain at all times Collateral of the following types and with the following values as of the last day of each calendar month: (a) Rotables Minimum Value -------- ------------- B747-200 Rotables - $11 million B757-200 Rotables - $23 million B737-300 Rotables - $17 million B737-200 Rotables - $21 million Total Rotables - $72 million; less for each category of rotables the amounts by which the Investment Account Minimum is increased as the result of a deficiency in the required value of rotables in such category; and provided, however, that the amount (if any) by which the aggregate value of B757-200 and B737-300 rotables exceeds the -86- 93 aggregate minimum value specified above for B757-200 and B737-300 rotables may be added, without duplication, to (i) the value of B737-200 rotables for the purpose of determining compliance with the required minimum value of B737-200 rotables and/or (ii) the value of B747-200 rotables for the purpose of determining compliance with the required minimum value of B747-200 rotables; and provided further, however, that if rotables of any category are the subject of an Asset Sale, then the aggregate minimum value specified above for the rotables of such category and for total rotables shall be reduced by the greater of the net book value of the rotables that are the subject of such Asset Sale (calculated as provided in the succeeding paragraph of this Section 7.08(a)) and the gross proceeds of such Asset Sale. The value of rotables shall be deemed to be the net book value of the rotables after giving effect to depreciation thereof in accordance with the Borrower's accounting principles and practices in effect as of the date hereof (which principles and practices the Borrower represents and warrants were in effect for the Borrower's most recent full fiscal year and agrees shall not be changed); provided, however, that overhaul, refurbishment and other such costs may be capitalized and included in the net book value of the applicable rotables only to the extent such costs would be included in accordance with such accounting principles and practices and shall in any event be included only with respect to rotables for auxiliary power units, constant speed drives and landing gear and, provided further, however, that in all cases, as of the last day of each month, not less than 65% of the total value of all rotables shall be in serviceable condition with FAA tags and in the possession of the Borrower and no more than 35% of the total value of all rotables shall be in the possession of overhaul agencies, vendors or any Person other than the Borrower. -87- 94
(b) Certain Equipment Minimum Value --------- ------------- Ground support, $30 million, less maintenance, depreciation charges passenger service, properly taken with food service, respect thereto on and telecommunication, after August 1, 1991 surface transpor- and less the principal tation, office, amount of any Loans computer and repaid pursuant to storage Section 4.02(i) as the result of a deficiency in the required value of such equipment.
The value of such equipment shall be deemed to be the net book value thereof after deducting depreciation thereof in accordance with the Borrower's accounting principles and practices in effect as of the date hereof (which principles and practices the Borrower represents and warrants were in effect for the Borrower's most recent fiscal year and agrees shall not be changed).
(c) Receivables Minimum Value ----------- ------------- Non Offsettable $20 million Eligible Receivables Total Eligible $65 million Receivables less the principal (Offsettable amount of any Loans and Non- repaid pursuant to Offsettable Section 4.02(i) as a Receivables) result of a deficiency in the required value of total receivables;
provided, however, that the amount of cash or Cash Equivalents on deposit in or to the credit of the Investment Account which is in excess of the Investment Account Minimum may be added to the value of Total Eligible Receivables (but not Non-Offsettable Eligible Receivables) for the purpose of determining compliance with the required minimum value of total receivables (but not Non-Offsettable Receivables). The value of Eligible Receivables shall be deemed to be the net book value thereof after deducting an allowance for bad debts in accordance with the Borrower's accounting principles and practices in effect as of the date -88- 95 hereof (which principles and practices the Borrower represents and warrants were in effect for the Borrower's most recent fiscal year and agrees shall not be changed). The categorization of Non-Offsettable Receivables and Offsettable Receivables shall be made based on the Borrower's accounting principles and practices in effect as of the date hereof (which principles and practices the Borrower represents and warrants were in effect for the Borrower's most recent fiscal year and agrees shall not be changed), but in no event shall Non- Offsettable Receivables include Receivables for goods which have not been shipped or delivered or for services which have not been performed, Airline Clearing House Universal Air Travel Card Receivables, travel agency area settlement plan Receivables, travel agency non area settlement plan Receivables, or credit card Receivables; provided, however, that to the extent the Borrower demonstrates the sufficiency thereof through analyses and supportive documentation acceptable to the Required Lenders, the Required Lenders may in their sole and absolute discretion, agree to allow the Borrower to characterize a portion of such Receivables as Non- Offsettable Receivables. 7.09 Hazardous Materials. The Borrower will handle, store, utilize, dispose of, transport, discharge or emit any Hazardous Materials only in accordance with applicable laws or other requirements of any Governmental Authority. The Borrower will promptly take any and all necessary remedial action required by any Governmental Authority or by any Hazardous Material Law or prudent under the circumstances in response to the presence, storage, use, disposal, transportation or discharge of any Hazardous Materials on, under or about any of its assets which would affect the Collateral or could result in any liability or obligation to the Administrative Agent or any Lender with respect thereto or would have a material adverse effect upon the business, operations, property or other assets or condition (financial or otherwise) of the Borrower. In the event the Borrower undertakes any remedial action with respect to any Hazardous Material on, under or about any of its assets, the Borrower shall conduct and complete such remedial action in compliance with all applicable federal, state and local laws, regulations, rules, ordinances and policies, and in accordance with the orders and directives of all Governmental Authorities except in each case where such presence, storage, use, disposal, transportation or discharge of any Hazardous Materials is being contested in good faith. The Borrower shall promptly notify the Administrative Agent of any such remedial action and provide -89- 96 to the Administrative Agent such information or reports relating thereto as it may request. 7.10 Cash Management. (a) The Borrower shall comply with all terms and conditions of the Initial Cash Management Agreement and any other cash management arrangements entered into pursuant to Section 5.01(p). In addition, the Borrower shall institute and comply with such other account and cash management arrangements as the Required Lenders may request in their sole and absolute discretion, including, without limitation, changes in the banks at which the accounts are held, the existing lock box system, the collection of receivables and the concentration of cash. In furtherance of the foregoing, the Borrower shall execute and deliver such additional lock box and concentration account cash management agreements as are contemplated by the Initial Cash Management Agreement or as the Required Lenders may request in their sole and absolute discretion. The Borrower shall not enter into a new or revised merchant bank arrangement with respect to the VISA/Master Card credit card program (a "Successor Merchant Bank Arrangement") unless (i) the Borrower shall have given to all of the Lenders at least 20 days' prior written notice of such Successor Merchant Bank Arrangement, (ii) all documents evidencing and/or relating to such Successor Merchant Bank Arrangement shall be satisfactory in form and substance to the Required Lenders in their sole and absolute discretion, and (iii) prior to or simultaneously with the entry by the Borrower into such Successor Merchant Bank Arrangement, (a) the Borrower shall have delivered, and/or caused to be delivered, all such amendments, supplements and/or replacements of the Initial Cash Management Agreement and all documents relating thereto as the Required Lenders shall have requested, each in form and substance satisfactory to the Required Lenders in their sole and absolute discretion, and (b) to the extent deemed necessary or appropriate by the Required Lenders in their sole and absolute discretion, there shall have been entered an amendment, in form and substance satisfactory to the Required Lenders in their sole and absolute discretion, to the Second Additional Loan Order, the Loan Extension Order and/or the Subsequent Loan Extension Order which reflects and accommodates, on a basis no less favorable to the Lenders than that contained in the Second Additional Loan Order, the Loan Extension Order and/or the Subsequent Loan Extension Order in respect of the predecessor merchant bank arrangement, any Liens on cash collateral granted pursuant to the aforesaid documents relating to such Successor Merchant Bank Arrangement and the release of any Liens on -90- 97 cash collateral that secure the predecessor merchant bank arrangement. (b) The Borrower shall cause (i) to be deposited in the Concentration Account all unrestricted cash funds of the Borrower, (ii) to be transferred from the Concentration Account and deposited in the Investment Account from time to time any surplus of the moneys on deposit in the Concentration Account over an amount equal to $5 million (plus such other amounts as may be included in the "Concentration Account Maximum" as such term is defined in the Initial Cash Management Agreement), and (iii) to be deposited in the Investment Account from time to time all proceeds of the investment of moneys on deposit in the Investment Account in Cash Equivalents; provided, however, that the Borrower may cause to be withdrawn from the Investment Account and deposited in the Concentration Account from time to time amounts that are required to meet the operating cash flow requirements of the Borrower after application of amounts on deposit in the Concentration Account and available for such purpose, so long as no Default or Event of Default shall have occurred and be continuing on the date of each such withdrawal and so long as after giving effect to each such withdrawal the amount on deposit in the Investment Account shall be at least equal to the Investment Account Minimum for such day. Amounts deposited in the Concentration Account pursuant to this Section 7.10(b) shall be used by the Borrower to meet the cash flow requirements of the Borrower. (c) Notwithstanding the provisions of Section 7.10(b), the "Section 7.10(c) Amount" (required as a condition to the use of amounts on deposit in the Investment Account in accordance with the provisos to the remedies of the Lenders contained in Section 9) shall, as of any day, be an amount at least equal to the Investment Account Minimum for such day. (d) Notwithstanding the provisions of Section 7.10(b), if at any time following the occurrence and continuance of an Event of Default, there shall be on deposit in the Investment Account an amount (referred to as the "Event of Default Collateralization Amount") equal to the sum of (i) the outstanding principal amount of the Loans, (ii) interest accrued and to accrue on the Loans to the next Interest Payment Date for the Loans, and (iii) all other amounts due and to become due under this Agreement to the next Interest Payment Date for the Loans (as the Event of Default Collateralization Amount is confirmed by the Required Lenders to the Borrower, the Collateral Agent and the Local Bank), then the Borrower may, without the -91- 98 necessity to obtain the consent of the Required Lenders, (A) cause to be withdrawn from the Investment Account and deposited in the Concentration Account from time to time amounts that are in excess of the Event of Default Collateralization Amount and are required to meet the operating cash flow requirements of the Borrower after application of amounts on deposit in the Concentration Account and available for such purpose, and (B) cause to be withdrawn from the Concentration Account and used for such purpose amounts that are from time to time on deposit in the Concentration Account; and provided further, however, that the Borrower shall cause amounts to be withdrawn from the Concentration Account and used for such purpose prior to causing amounts on deposit in the Investment Account to be withdrawn and used for such purpose. (e) At any time the amount on deposit in the Investment Account shall be less than the Investment Account Minimum, the Borrower shall (i) cause the Local Bank and/or the Collateral Agent to notify the Lenders of the amount on deposit in the Investment Account and the Concentration Account as of the close of business on each day, and (ii) furnish to the Lenders on each day a certificate of the Chief Financial Officer, Treasurer or Vice President and Controller of the Borrower, in the form of Exhibit O, containing (x) a projection of the Borrower's cash inflow and cash outflow for the next succeeding day, (y) the amount of moneys withdrawn from the Concentration Account and the Investment Account on such day to meet the operating cash flow requirements of the Borrower, and (z) such other information as is set forth in and required by Exhibit O. (f) The covenants of the Borrower contained in Sections 7.10(b), (c), (d) and (e) shall not limit, alter or modify in any respect any provision of any cash management arrangement described or referred to in Section 7.10(a). 7.11 Further Assurances. (a) Whenever and so often as reasonably requested by the Administrative Agent, the Collateral Agent or the Required Lenders, the Borrower will promptly execute and deliver or cause to be executed and delivered, at its own expense, all such other and further instruments, documents or assurances, and promptly do or cause to be done all such other and further things as may be necessary and reasonably required, in order to further and more fully vest in the Collateral Agent all rights, interests, powers, benefits, privileges and advantages conferred or intended to be conferred by this Agreement, the other Credit Documents and the Orders. -92- 99 (b) The Borrower agrees that any time and from time to time, at the expense of the Borrower, it will promptly execute and deliver all further instruments and documents, including, without limitation, aircraft, aircraft engines, aircraft parts mortgages and gates assignments and take all further action that may be necessary or desirable, or that the Administrative Agent, the Collateral Agent or the Required Lenders may request, to perfect and protect any Lien granted or purported to be granted hereby, by the other Credit Documents or the Orders, and including in any event the execution and delivery of an amendment or supplement (including detailed property descriptions) to the Mortgage in respect of Real Property acquired after the Effective Date, or to enable the Collateral Agent to exercise and enforce its rights and remedies with respect to any Collateral. Without limiting the generality of the foregoing, the Borrower will record the Mortgages if not already recorded and provide promptly upon the request of the Required Lenders A.L.T.A. title insurance in an amount not less than the value of such Real Property as set forth in Schedule 8 hereto with respect to the Lien of the Collateral Agent on all or any Real Property, A.L.T.A. surveys, and a "phase I" environmental report on Hazardous Materials with respect to Real Property, in each case in form and substance reasonably acceptable to the Required Lenders. Also, without limiting the generality of the foregoing, the Borrower will execute and file such financing or continuation statements, or amendments thereto, and such other instruments or notices, as may be necessary or desirable, or that the Administrative Agent, the Collateral Agent or the Required Lenders may request, to protect and preserve the Liens granted or purported to be granted hereby and by the other Credit Documents and the Orders. (c) The Borrower hereby authorizes the Collateral Agent to file one or more financing or continuation statements or other applicable documents, and amendments thereto, relative to all or any part of the Collateral without the signature of the Borrower, where permitted by law. A carbon, photographic or other reproduction of the applicable Security Document or any financing statement covering the Collateral or any part thereof shall be sufficient as a financing statement or other applicable document where permitted by law. The Collateral Agent will promptly send to the Borrower any such documents which it files without the signature of the Borrower and the Collateral Agent will promptly send the filing or recordation information with respect thereto. (d) In the event that the Collateral Agent shall exercise any of its rights and remedies pursuant to the -93- 100 Orders or any Security Document with respect to a sale of any portion of the Collateral, the Borrower shall cooperate in good faith with the Collateral Agent in effecting such sale and execute such agreements, documents and instruments as requested by the Collateral Agent in connection therewith. (e) Upon the request of the Collateral Agent, the Borrower shall deliver certificates, chattel paper or instruments representing any Collateral covered by any Security Document and/or take such other action under any Security Document as the Collateral Agent may request in order to protect the security interests purported to be granted thereby. SECTION 8. NEGATIVE COVENANTS. The Borrower agrees that, unless the Required Lenders otherwise consent in their sole and absolute discretion, subject to the provisions of Section 10.21 of this Agreement, on and after the Fourth Amendment Effective Date and until the Loans, and the Notes, together with all interest, fees and other Obligations payable hereunder or under the other Credit Documents, are paid in full: 8.01 Liens. The Borrower will not create, incur, assume or suffer to exist any Lien upon or with respect to any property or other assets (real or personal, tangible or intangible) of the Borrower whether now owned or hereafter acquired, or sell any such property or assets subject to an understanding or agreement, contingent or otherwise, to repurchase such property or assets (including sales of accounts receivable with or without recourse to the Borrower), or assign any right to receive income or permit the filing of any financing statement under the UCC or any other similar notice of Lien under any recording or notice statute (except in connection with the Liens permitted below), or apply to the Bankruptcy Court for the authority to do any of the foregoing; provided that the creation, incurrence, assumption or existence of the following shall be permitted (and the Borrower may apply to the Bankruptcy Court for approval of): (i) valid and enforceable Liens in existence on the Filing Date to the extent described in Schedule 14 hereto and to the extent of the principal of the Indebtedness secured thereby on the Filing Date, together with interest, fees, expenses and other charges then and thereafter payable in respect of such Indebtedness in accordance with the terms of such -94- 101 Indebtedness as in effect on the Filing Date, and after giving effect to any cross-collateralization of such Indebtedness in accordance with the terms of such Indebtedness as in effect on the Filing Date, (including, without limitation, Liens securing Indebtedness consisting of the payment deferrals referred to in Section 5.02(f), but excluding in any event a Lien on any Collateral or any other Lien in favor of First Interstate Bank of Arizona, N.A., except Liens on Collateral as set forth on Schedule 14 attached hereto and a Lien on cash constituting part of the "Reserve" or the "Original Reserve" in accordance with the Merchant Agreement Supplement), without giving effect to any extensions or replacements of such Liens, only to the extent encumbering the assets described in such Schedule 14 on the Filing Date and proceeds and replacement assets of a similar type (A) if a Lien thereon was expressly provided in the security agreement providing for the Lien referred to in Schedule 14 and only to the extent of the principal of the Indebtedness secured thereby on the Filing Date, together with interest, fees, expenses and other charges then and thereafter payable in respect of such Indebtedness in accordance with the terms of such Indebtedness as in effect on the Filing Date, and after giving effect to any cross- collateralization of such Indebtedness in accordance with the terms of such Indebtedness as in effect on the Filing Date, or (B) if such Lien is approved after the Filing Date by an order of the Bankruptcy Court as a first or prior Lien; (ii) Liens securing the Obligations; (iii) Liens arising under capitalized leases to the extent permitted by Section 8.05(iii); (iv) Customary Permitted Liens; (v) Liens securing purchase money Indebtedness permitted under Sections 8.05(vii) and 8.07 incurred after the Filing Date to acquire the property subject to such Lien so long as such Lien attaches only to the property so acquired and the amount of the Indebtedness incurred in connection therewith and secured by such Lien does not exceed 95% of the acquisition price of the property subject to such Lien; (vi) Liens securing the Indebtedness under the Spares Credit Agreement, dated as of September 28, 1990, between the Borrower and IAE International Aero -95- 102 Engines AG, as amended and supplemented, and the Credit Agreement, dated as of September 28, 1990, between the Borrower and IAE International Aero Engines AG, as amended and supplemented, on assets of the Borrower not subject to the Liens of such Spares Credit Agreement and such Credit Agreement on the Filing Date but thereafter subjected to such Liens pursuant to Section 4.03 of such Spares Credit Agreement and Section 3.03 of such Credit Agreement, which Liens are subject and subordinate to the Liens securing the Obligations and all extensions, modifications, renewals and replacements thereof, provided that, in each case, (i) the respective documentation with respect to such Liens shall expressly provide that the holder or holders of such Liens shall not, and shall have no right to, exercise any right to foreclose or otherwise realize on the assets subject thereto, or exercise any remedies thereunder, prior to the occurrence of the Lien Termination Date hereunder, and (ii) the respective documentation with respect to such Liens shall expressly provide that such Liens shall terminate upon any release or termination (including any such releases or terminations pursuant to Section 8.02 hereof or as a result of any sale or other disposition of the Collateral as a result of the enforcement of the remedies contained herein and in the Security Documents) of the Liens created pursuant to the Security Documents (other than such releases occurring solely as a result of the occurrence of the Lien Termination Date hereunder), with the rights of the holders of such Liens in the event of any realization or foreclosure of the respective Collateral being only to receive any excess proceeds remaining from such realization or disposition after the repayment in full of all Obligations and the occurrence of the Lien Termination Date hereunder; (vii) Liens constituting security deposits, maintenance reserves and similar arrangements (a) in effect prior to the Filing Date, (b) approved by order of the Bankruptcy Court prior to the Effective Date, (c) approved in writing by the Required Lenders (as defined in the Original Credit Agreement, the First Amended and Restated Credit Agreement, the Second Amended and Restated Credit Agreement, the Third Amended and Restated Credit Agreement or this Agreement, whichever thereof was or is in effect on the date of such approval), and (d) granted on or after the Fourth Amendment Effective Date in the ordinary course of the Borrower's business and operations and aggregating not in excess of $1,500,000; and Liens on -96- 103 cash or investments constituting proceeds of drawings under letters of credit issued for the account of the Borrower prior to the Filing Date and held as, or in lieu of, security deposits, maintenance reserves or similar arrangements (it being understood and agreed that each security deposit, maintenance reserve and similar arrangement described in this clause (vii) shall be deemed to be a "Reserve Account" for purposes of the Initial Cash Management Agreement and shall not constitute "net available cash" for purposes of the covenants contained in Section 8.15(d) of this Agreement); and (viii) Liens on cash collateral securing the obligations of the Borrower in connection with any Successor Merchant Bank Arrangement, provided that such Liens are in replacement or substitution or otherwise in lieu of Liens on cash collateral securing the obligations of the Borrower in connection with a predecessor merchant bank arrangement, and provided further that all documents relating to such Liens are satisfactory to the Required Lenders, and provided further that all conditions precedent to such Successor Merchant Bank Arrangement set forth in Section 7.10(a) have been satisfied; and with respect to the Successor Merchant Bank Arrangement to which Electronic Data Systems Corporation is a party, the liens on Real Property (securing the obligations of the Borrower in connection therewith) to which the Required Lenders consented pursuant to letter agreement, dated April 14, 1993, with the Borrower. 8.02 Consolidation, Merger, Sale of Assets, etc. The Borrower will not wind up, liquidate or dissolve its affairs or enter into any transaction of merger or consolidation, or convey, sell, lease or otherwise dispose of (or agree to do any of the foregoing at any future time) all or any part of its property or other assets, or enter into any partnerships, joint ventures or sale-leaseback transactions, or purchase or otherwise acquire (in one or a series of related transactions) any part of the property or other assets (other than purchases or other acquisitions of inventory, materials, equipment and other property in the ordinary course of business) of any Person, or apply to the Bankruptcy Court to do any of the foregoing, except that the foregoing shall not preclude (and the Borrower may apply to the Bankruptcy Court for approval of): (i) subject to maintaining the required levels of certain types of Collateral described in Section 7.08, sales and leases by the Borrower of -97- 104 inventory, materials, equipment and other property (exclusive in any case of aircraft, engines, Real Property, Slots and receivables), in the ordinary course of business not required to be approved by the Bankruptcy Court under Section 363 of the Bankruptcy Code; (ii) Capital Expenditures to the extent not in violation of Section 8.07; (iii) Asset Sales (exclusive of Designated Collateral except to the extent permitted by clause (i) above) by the Borrower for cash at fair market value (as approved by the Board of Directors of the Borrower), so long as (x) prior to any such Asset Sale, the Borrower shall have received written consent of the Required Lenders with respect thereto, which consent may be withheld or granted in their sole and absolute discretion, provided that the written consent of the Required Lenders shall not be required with respect to any such Asset Sale or Asset Sales if (I) (A) the net book value of each item of the property subject to such Asset Sale or Asset Sales is less than $50,000, (B) the proceeds of the sale or other disposition of each such item is at least equal to 40% of the net book value of such item, and (C) the Net Proceeds of all such Asset Sales effected in any one month without the prior written consent of the Required Lenders do not exceed $250,000, or (II) such Asset Sale or Asset Sales consist of the sale or sales by the Borrower in the ordinary course of the Borrower's business and operations to other air carriers of rotable or expendable spare parts for aircraft or engines under circumstances in which such other air carriers require such parts to resolve "aircraft on the ground" situations, (y) after giving effect to any such Asset Sale (including any such Asset Sale effected without the written consent of the Required Lenders), the requirements of Sections 4.02 and 7.08 are satisfied and no Default or Event of Default shall have occurred and be continuing or would result therefrom after giving effect thereto, and (z) the proceeds received from the consummation of such Asset Sale are applied as provided in Section 4.02; (iv) terminations of leases by way of rejection under the Bankruptcy Code and in accordance with the Operating Plan and terminations of leases of aircraft by reason of the exercise of call rights under such leases in accordance with the terms of such call rights as set forth on Schedule 19; or -98- 105 (v) to the extent expressly indicated on Schedule 19 with respect to particular aircraft, transfers of such aircraft to the holders of the Permitted First Liens on such aircraft or to the lessors of such aircraft. To the extent the Required Lenders waive the provisions of this Section 8.02 with respect to the sale of any Collateral, or any Collateral is sold as permitted by this Section 8.02 and/or the definition of the term "Asset Sale" contained in Section 1.01, the Collateral Agent shall (following the application of proceeds, if required, as provided in Section 4.02) take such action, at the Borrower's expense, as the Borrower may reasonably request to release the Collateral Agent's lien on the Collateral subject to the Asset Sale, but not the proceeds thereof, so that it may be free and clear of the Liens created by the applicable Security Document and the Orders. Nothing contained in this Section 8.02 shall preclude the Borrower from entering into agreements or transactions which contemplate or provide for the payment in full of all Obligations and the occurrence of the Lien Termination Date so long as such repayment and occurrence are conditions precedent to the consummation of such agreements or transactions and such conditions precedent are fulfilled (and not waived). 8.03 Distributions. The Borrower shall not authorize, declare or pay any Distributions or apply to the Bankruptcy Court for the authority to do so. 8.04 Leases. The Borrower will not permit the aggregate annual minimum or base rent payments (excluding (i) any property taxes, insurance costs, maintenance charges or other amounts paid as additional rent or lease payments and (ii) payments arising from capitalized lease obligations), and net of income arising from subleases to third parties entered into or existing in the ordinary course of business to the extent permitted by the Operating Plan, by the Borrower under agreements to rent or lease any real or personal property to exceed 110% of the applicable amount set forth in the Operating Plan for the applicable period set forth therein, provided that in any event the Borrower will not, on or after the Fourth Amendment Effective Date, enter into any agreement (including, without limitation, any agreement in the nature of an extension or renewal) to rent or lease any aircraft or engines (but excluding any leases entered into in accordance with or pursuant to the Put Agreement or the Kawasaki Put Agreement or any amendment or modification to either thereof which is referred to in Section 5.04) or any real property (other than as -99- 106 hereinafter permitted) unless, in each case, the Required Lenders shall have consented thereto in writing; and provided further that in any event the Borrower will not, on or after the Fourth Amendment Effective Date, enter into any agreement (including, without limitation, any agreement in the nature of an extension or renewal) to rent or lease any equipment or other personal property (not described in the preceding proviso), whether pursuant to an operating lease, a capitalized lease or otherwise, unless (i) the aggregate amount of all payments required or provided to be made by the Borrower during the term of such agreement does not exceed $500,000, or (ii) the Required Lenders have consented thereto in writing; and provided further, however, that notwithstanding anything to the contrary contained in this Section 8.04, on and after the Fourth Amendment Effective Date, the Borrower may enter into agreements providing for the extension or renewal of leases of space at airports that are not hubs of the Borrower without the necessity to obtain the prior written consent of the Required Lenders to such agreements. 8.05 Indebtedness. The Borrower will not contract, create, incur, assume or suffer to exist any Indebtedness, or apply to the Bankruptcy Court for the authority to do so, except (and the Borrower may apply to the Bankruptcy Court for approval of): (i) Indebtedness of the Borrower incurred pursuant to this Agreement and the other Credit Documents; (ii) Indebtedness of the Borrower incurred prior to, and outstanding on, the Filing Date (including Indebtedness arising from reimbursement obligations for letter of credit drawings occurring after the Filing Date on letters of credit outstanding on the Filing Date) and listed on Schedule 15 hereto ("Existing Debt"), without giving effect to any extensions, renewals or refinancings thereof; (iii) Indebtedness secured by Liens consisting of (a) capitalized lease obligations outstanding on the Filing Date and (b) capitalized lease obligations permitted under Section 8.07 up to an aggregate principal amount at any one time outstanding of $5 million; (iv) surety bonds and appeal bonds arising in the ordinary course of business or in connection with the enforcement of rights or claims of the Borrower or -100- 107 arising out of any judgment not constituting an Event of Default; (v) Indebtedness consisting of the payment deferrals referred to in Section 5.02(f) and Section 5.04(r); (vi) Indebtedness of the Borrower incurred pursuant to the Kawasaki Credit Agreement; and (vii) Indebtedness consisting of purchase money Indebtedness secured by a Lien permitted under Sections 8.01(v) and otherwise permitted under Section 8.07 up to an aggregate principal amount of $5 million. 8.06 Advances, Investments and Loans. The Borrower will not lend money or credit or make advances to any Person, or purchase or acquire any stock, obligations or securities of, or any other interest in, or make any capital contribution to, any other Person, or apply to the Bankruptcy Court for the authority to do any of the foregoing, except that the following shall be permitted (and the Borrower may apply to the Bankruptcy Court for approval thereof): (i) the Borrower may acquire receivables owing to it, if created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary trade terms; (ii) cash and Cash Equivalents to or for the credit of the Concentration Account and the Investment Account; (iii) the loans, advances and other investments made by the Borrower prior to, and outstanding on, the Filing Date and listed on Schedule 16 hereto; (iv) the Borrower may make advances to employees for moving, relocation and travelling expenses, drawing accounts and similar expenditures in the ordinary course of business not to exceed $1,000,000 at any time outstanding; (v) cash and Cash Equivalents held as cash collateral constituting (a) Liens permitted under Section 8.01(i) which are not greater than the amount held on the Filing Date, except in the case of the Lien on cash collateral in favor of First Interstate Bank of Arizona, N.A. as and to the extent provided in Section -101- 108 8.01(i), and (b) Liens permitted under Section 8.01(vii); and (vi) credit extended by the Borrower (other than by means of cash payment) in the ordinary course of business to employees in connection with share purchases under employee benefit programs applicable to all or substantially all employees. 8.07 Capital Expenditures. The Borrower will not make any expenditure for fixed or capital assets (excluding expenditures for the maintenance and repair of aircraft, engines and parts which should be capitalized in accordance with generally accepted accounting principles, but including capitalized lease obligations) (collectively, "Capital Expenditures"), in excess of 110% of the applicable amount (exclusive of such maintenance and repairs) set forth in the Operating Plan for the applicable period set forth therein, provided that in any event the Borrower will not, on or after the Fourth Amendment Effective Date, make any Capital Expenditure, or enter into any agreement relating to or providing for the making of a Capital Expenditure, unless (i) the amount of such Capital Expenditure does not exceed $500,000, or (ii) the Required Lenders have consented thereto in writing. 8.08 Limitation on Repayments, etc. Except for (i) payments in respect of the A320 Leases, the Engine Leases, the Put Agreement and any leases entered into in connection with the Put Agreement or any amendment or modification thereto which is referred to in Section 5.04, (ii) payments in respect of the Kawasaki Leases, the Kawasaki Put Agreement and any leases entered into in connection with the Kawasaki Put Agreement or any amendment or modification thereto which is referred to in Section 5.04, (iii) payments of scheduled lease payments under capitalized and operating leases of the Borrower existing on the Filing Date to the extent such leases are assumed by Borrower pursuant to the Case and in accordance with the Operating Plan and only if the lessors or lenders thereunder have (x) agreed to the deferral described in Section 5.02(f) or such other deferral arrangements as may have been disclosed to and approved by the Required Lenders as provided in Section 5.02(f), and (y) agreed to the rental reductions and deferrals described in Section 5.04(r) or such other -102- 109 arrangements as may have been disclosed to and approved by the Lenders as provided in Section 5.04(r) and, in each case, the same is in full force and effect, provided that, except as expressly set forth on Schedule 19 with respect to a particular lease of particular aircraft, scheduled lease payments shall not include, or be deemed to include, any amounts payable as or constituting or representing termination or other liquidated damage payments, but scheduled lease payments shall include amounts necessary to meet return condition requirements upon termination of leases upon expiration of the stated terms thereof or upon exercise of call rights thereunder in accordance with the terms of such call rights as set forth on Schedule 19, and provided further that scheduled lease payments shall not include payments (or portions thereof) that are deferred as provided in Sections 5.02(f) and 5.04(r) (unless and until such payments (or portions thereof) are payable in accordance with the terms of the deferrals referred to in such Sections), and provided further that scheduled payments with respect to a particular lease of a particular aircraft (determined as aforesaid) may be reduced from those provided for in Schedule 19 and the Operating Plan if (I) such reduction (x) is agreed to in writing by the Borrower and the applicable aircraft lessor, (y) does not involve, require or result in the payment by the Borrower, whether on a particular payment date or over the term of the lease or otherwise, of any amount or amounts in excess of those otherwise provided for in Schedule 19 and the Operating Plan, and (z) does not, cannot and will not result in a Default or an Event of Default, and (II) the agreement relating to such reduction, together with such other documents and information reasonably requested by the Required Lenders, has been reviewed by the Required Lenders and approved by the Required Lenders for purposes of ensuring compliance with the provisions of this Section 8.08(iii) (it being understood and agreed that the approval rights of the Required Lenders shall be limited to such purposes), (iv) payments initially of defaulted amounts owing, and thereafter of amounts when due, under 1110 Indebtedness outstanding on the Filing Date to the extent such Indebtedness has been assumed by Borrower and in accordance with the Operating Plan and then only if lenders thereunder have (x) agreed to the deferral described in Section 5.02(f) or such other deferral arrangements as may have been disclosed to and approved by the Required Lenders as provided in Section 5.02(f), -103- 110 and (y) agreed to the rental reductions and deferrals described in Section 5.04(r) or such other arrangements as may have been disclosed to and approved by the Lenders as provided in Section 5.04(r) and, in each case, the same is in full force and effect, provided that, except as expressly set forth on Schedule 19 with respect to particular 1110 Indebtedness secured by particular aircraft, the foregoing amounts shall not include any amounts payable or accruing after or by reason of the return, redelivery or repossession of the aircraft which secures any 1110 Indebtedness, and provided further that the foregoing amounts shall not include any amounts (or portions thereof) that are deferred as provided in Sections 5.02(f) and 5.04(r) (unless and until such payments (or portions thereof) are payable in accordance with the terms of the deferrals referred to in such Sections), and provided further that the foregoing amounts payable with respect to particular 1110 Indebtedness secured by particular aircraft (determined as aforesaid) may be reduced from those provided for in Schedule 19 and the Operating Plan if (I) such reduction (x) is agreed to in writing by the Borrower and the applicable lender, (y) does not involve, require or result in the payment by the Borrower, whether on a particular payment date or over the term of the 1110 Indebtedness or otherwise, of any amount or amounts in excess of those otherwise provided for in Schedule 19 and the Operating Plan, and (z) does not, cannot and will not result in a Default or an Event of Default, and (II) the agreement relating to such reduction, together with such other documents and information reasonably requested by the Required Lenders, has been reviewed by the Required Lenders and approved by the Required Lenders for purposes of ensuring compliance with the provisions of this Section 8.08(iv) (it being understood and agreed that the approval rights of the Required Lenders shall be limited to such purposes), (v) payments in respect of Existing Secured Debt from the proceeds of Asset Sales (to the extent such Asset Sales are permitted in accordance with the terms of this Agreement), (vi) payments in respect of prepetition obligations owing to Persons who because they are not citizens of, or resident in, the United States are not subject to the jurisdiction of the Bankruptcy Court not to exceed $4,800,000 in aggregate amount at any time after the Effective Date and to the extent provided for in the Operating Plan (as defined in the Original -104- 111 Credit Agreement at all times prior to the Amendment Effective Date, the First Amended and Restated Credit Agreement at all times prior to the Second Amendment Effective Date, the Second Amended and Restated Credit Agreement at all times prior to the Third Amendment Effective Date and this Agreement at all times after the Third Amendment Effective Date), (vii) payments of interest and payments of other amounts not exceeding $53,015 per month under Existing Secured Debt with respect to property necessary for the Borrower's operations in accordance with the Operating Plan approved by the Bankruptcy Court for adequate protection required under Sections 362 and 363 of the Bankruptcy Code, (viii) payments not exceeding $2,000,000 in aggregate amount at any time after the Effective Date which are made in accordance with the Operating Plan (as defined in the Original Credit Agreement at all times prior to the Amendment Effective Date, the First Amended and Restated Credit Agreement at all times prior to the Second Amendment Effective Date, the Second Amended and Restated Credit Agreement at all times prior to the Third Amendment Effective Date and this Agreement at all times after the Third Amendment Effective Date) in respect of prepetition obligations (including any such payments required pursuant to order of the Bankruptcy Court and any such payments in respect of the Borrower's leasehold interest in Real Property), and (ix) scheduled payments of principal and interest under Existing Secured Debt not otherwise described in the preceding clauses (i) through (viii) which (A) do not exceed $21,000,000 in principal, plus interest thereon, during 1994, and (B) are made in accordance with the Operating Plan on a monthly basis without increase in any monthly payment by more than 5% of the monthly payment provided for in the Operating Plan, and, in each case, only so long as no Default or Event of Default has occurred and is continuing or would result therefrom, the Borrower will not pay or apply to the Bankruptcy Court for the authority to (w) assume or make any payments (including, without limitation, for settlement payments) in respect of any leases of real or personal property and executory contracts except for leases and executory contracts (1) entered into after the Filing Date or (2) which do not relate to aircraft and have been or will -105- 112 be assumed, and in each case in accordance with the Operating Plan on a monthly basis without increase in any monthly payment by more than 5% of the monthly payment provided for in the Operating Plan, (x) make any payment or prepayment on or redemption or acquisition for value (including, without limitation, by way of depositing with the trustee with respect thereto money or securities before due for the purpose of paying when due) of any Indebtedness of the Borrower incurred or created prior to the Filing Date, (y) pay any interest on any Indebtedness or other obligations of the Borrower incurred or created prior to the Filing Date (whether in cash, in kind securities or otherwise) or (z) pay any amounts with respect to trade or ordinary course of business payables or other obligations (other than payments contemplated under the Operating Plan pursuant to and authorized by the Bankruptcy Court pursuant to its orders styled (A) "Order Authorizing Payment or Honoring of Prepetitions Obligations to America West Ticketholders, Other Airlines With Whom America West Has Interline Arrangements, Travel Agents, Clearing Houses, Tour Service Providers, Foreign Vendors, Fuel Suppliers, and Other Essential Suppliers" dated June 27, 1991; (B) "Order Authorizing Payment of Prepetition Wages, Salaries and Commissions, Employee Business Expense Reimbursement Contributions to Employee Benefit Plans, and other Employee Benefits" dated June 27, 1991; (C) "Order Authorizing Payment on Honoring of Certain Prepetition Claims of Outside Mechanics and Repairmen" dated June 27, 1991; and (D) any amended orders or further orders with respect to the matters addressed in the orders listed above) of the Borrower incurred or created prior to the Filing Date. Nothing in this Section shall prevent the Borrower from paying post-petition trade payables (including required utility deposits and aircraft maintenance) or post-petition accrued expenses arising in the ordinary course of business. 8.09 Transactions with Affiliates. The Borrower will not, and will not apply to the Bankruptcy Court for the authority to, enter into any transaction or series of related transactions, whether or not in the ordinary course of business, with any Affiliate of the Borrower, other than on terms and conditions substantially as favorable to such Person as would be obtainable by such Person at the time in a comparable arm's-length transaction with a Person other an Affiliate. Nothing in this Section 8.09 shall prohibit any transactions permitted under Sections 8.05 and 8.06. 8.10 Subsidiaries. The Borrower will not establish, create, permit to exist or acquire any Subsidiary. -106- 113 8.11 Chapter 11 Claims. Except as expressly permitted by Section 8.05(vi), the Borrower will not apply to the Bankruptcy Court for the authority to incur, create, assume, suffer or permit any administrative expense claim under Section 364, 503 or 507 of the Bankruptcy Code, Lien against the Borrower or its property or other assets in the Case to be pari passu with, or senior to, the Obligations and the Liens of the Collateral Agent and Secured Creditors hereunder, except for the Permitted Expenses. 8.12 [Reserved]. 8.13 Conversion to Chapter 7. The Borrower shall not without giving the Lenders 10 Business Days prior written notice, apply to the Bankruptcy Court to convert the Case to a case under Chapter 7 of the Bankruptcy Code pursuant to Section 1112(a) of the Bankruptcy Code. After giving the Lenders such notice, the Borrower shall take all actions requested by the Lenders in connection with the protection of the Collateral and the security interests therein securing the Obligations. 8.14 Operation of Specified Aircraft/Engines. The Borrower shall not (i) operate any Specified Aircraft and Engines outside the United States, Canada, Mexico or Japan, except for occasional other foreign use on charters where the pilots used are the pilots of the Borrower and all operational control and possession remains with the Borrower and maintenance and insurance continue to be provided by the Borrower, or lease the same to any other Person, or (ii) except as otherwise agreed in writing by the Required Lenders, allow any Specified Aircraft and Engines to undergo any major maintenance or structural work by any Person other than employees of the Borrower or an FAA certified repair station in the United States the location of which is set forth in Annex B to the Security Agreement (so long as it shall have no Lien rights against any Collateral except for Liens subordinate to the Liens in favor of the Collateral Agent contemplated hereunder to the extent (if any) provided for in the Bankruptcy Code) or (iii) except as otherwise agreed in writing by the Required Lenders, allow any parts covered by the Aircraft/Engine, Mortgage or other Collateral covered by the Security Agreement to be located any where other than the locations provided for in such Security Document. 8.15 Operating Plan Covenants. The Borrower shall: (a) Aircraft. Not have in its fleet on or after the Fourth Amendment Effective Date in excess of 86 aircraft -107- 114 (exclusive of aircraft under leases entered into in accordance with or pursuant to the Put Agreement or the Kawasaki Put Agreement or any amendment or modification to either thereof which is referred to in Section 5.04). (b) Operating Profit/Loss. Cause its "operating loss" or "operating profit" to be not greater in the case of an operating loss and not less in the case of an operating profit than (i) $7.5 million more in the case of a loss or $7.5 million less in the case of a profit than that projected in the Operating Plan for any calendar month including in any applicable month operating profit for the cumulative number of prior months in such period in excess of that projected for such period on a cumulative basis, and (ii) $15 million more in the case of a loss or $15 million less in the case of a profit than that projected in the Operating Plan for any quarter ending March 31, June 30, September 30 or December 31. Operating profit and operating loss have the same meanings set forth in the Operating Plan and shall be calculated in the same manner as in the Operating Plan. (c) Net Income/Loss. Cause its "net income" or "net loss" to be not less in the case of income or more in the case of loss by the same applicable variance amount set forth in clause (b) above than the amount projected in the Operating Plan for such monthly or quarterly period described in clause (b) above after, as the case may be, adjusting the projected net losses during each such period by excluding losses resulting from provisions for pre-petition claims made in the Case and other losses and write-offs which result from the Case which do not at any time result in a cash expenditure by the Borrower. Net income and net loss shall have the meanings set forth in the Operating Plan and shall be calculated in the same manner as in the Operating Plan. (d) Cash Balance. Maintain "net available cash" (which term shall have the same meaning as set forth in the Operating Plan and shall be calculated in the same manner as in the Operating Plan, but shall in any event exclude all deposits, advance payments not enumerated on Schedule 20, holdbacks, reserves, cash collateral and other amounts held by Persons other than the Borrower and all other cash to which the Borrower's access is legally restricted in any way except that cash and Cash Equivalents in or to the credit of the Investment Account shall be included in "net available cash") as of the end of each day occurring after the Fourth Amendment Effective Date in an amount not less than the sum of (A) $74,000,000, (B) the aggregate amount of any Net Proceeds of the Slot Collateral (or any part or portion -108- 115 thereof) and/or the Engine Collateral (or any part or portion thereof) theretofore required to be deposited in the Investment Account pursuant to Section 4.02(ii), (iii) or (iv), (C) if such day is a day other than a day on which the Loans are repaid to the full extent required pursuant to Section 4.02(ii), the aggregate amount of the Net Proceeds of Asset Sales that are required to be applied to the repayment of the Loans pursuant to Section 4.02(ii) but that have not been so applied, and (D) the aggregate amount of all increases in the Investment Account Minimum theretofore required and effective pursuant to Sections 4.01(i) and (ii) (other than by reason of the deposit in the Investment Account of the Net Proceeds of all or any portion of the Slot Collateral and/or the Engine Collateral); and in the event that as of the end of any day occurring after the Fourth Amendment Effective Date, the amount of "net available cash" exceeds $175,000,000, notify the Lenders as provided in Section 7.01(n). The amount of "net available cash" required to be maintained pursuant to this Section 8.15(d) on a given day is referred to herein as the "Cash Covenant Amount" for such day. Notwithstanding anything herein which may be to the contrary and without creating any obligation on the part of any Lender to extend, or to consent to the extension of, the Maturity Date, the Cash Covenant Amount for each day occurring after the Maturity Date shall be determined simultaneously with, or prior to, any extension of the Maturity Date. (e) Investment Account Balance. Maintain cash and Cash Equivalents on deposit in the Investment Account as of the end of each day occurring after the Fourth Amendment Effective Date in an amount not less than the lesser of (i) the sum of (A) $58,930,000, (B) the aggregate amount of any Net Proceeds of the Slot Collateral (or any part or portion thereof) and/or the Engine Collateral (or any part or portion thereof) theretofore required to be deposited in the Investment Account pursuant to Section 4.02(ii), (iii) or (iv), (C) if such day is a day other than a day on which Loans are repaid to the full extent required pursuant to Section 4.02(ii), the aggregate amount of the Net Proceeds of Asset Sales that are required to be applied to the repayment of Loans pursuant to Section 4.02(ii) but that have not been so applied, and (D) the aggregate amount of all increases in the Investment Account Minimum theretofore required and effective pursuant to Sections 4.02(i) and 4.02(ii) (other than by reason of the deposit in the Investment Account of the Net Proceeds of all or any portion of the Slot Collateral and/or the Engine Collateral), and (ii) an amount equal to the aggregate principal amount of the Loans outstanding on such day. The amount of cash and Cash Equivalents required to be on deposit in the Investment -109- 116 Account on a given day pursuant to this Section 8.15(e) is referred to herein as the "Investment Account Minimum" for such day. Notwithstanding anything herein which may be to the contrary and without creating any obligation on the part of any Lender to extend, or to consent to the extension of, the Maturity Date, the Investment Account Minimum for each day occurring after the Maturity Date shall be determined simultaneously with, or prior to, any extension of the Maturity Date. 8.16 Slots and Routes. Except in the case of Slots and Routes subject to an Asset Sale permitted in accordance with this Agreement, the Borrower shall not fail to take all actions necessary or, in the reasonable judgment of the Collateral Agent or Required Lenders, advisable in order to maintain the value and utility of its respective Slots and Routes. In addition to any other remedies for a violation of this Section 8.16, if the Borrower does not utilize any Slots in a manner, and with a degree of frequency, needed to assure their continued status as assets of the Borrower, then the Collateral Agent shall be entitled (but shall not be required) to use or contract for the use of such Slots so that same are not forfeited until such time as the Borrower determines to fully utilize same or until same are sold by the Collateral Agent pursuant to the exercise of its rights pursuant to the Security Documents. 8.17 Seizures. The Borrower shall not cause, permit or suffer to occur any seizure or similar restraint of any aircraft or other assets owned or leased by the Borrower intended to be used or operated under and in accordance with the Operating Plan. 8.18 ERISA. The Borrower shall not, and shall not permit any member of the Controlled Group to: (a) engage in any transaction in connection with which the Borrower or any member of the Controlled Group could be subject to either a civil penalty assessed pursuant to Section 502(i) of ERISA or a tax imposed by Section 4975 of the Code; (b) terminate any employee benefit plan within the meaning of Section 3 of ERISA in a manner, or take any other action, which could result in any liability of the Borrower or any member of the Controlled Group to the PBGC; (c) fail to make full payment when due of all amounts which, under the provisions of any Pension Plan, the Borrower or any member of the Controlled Group is required to pay as contributions thereto, or permit to exist any -110- 117 accumulated funding deficiency, whether or not waived, with respect to any Pension Plan; (d) permit the current value of all vested accrued benefits under all Pension Plans which are subject to Title IV of ERISA to exceed the current value of the assets of such Pension Plans allocable to such vested accrued benefits; or (e) fail to make any payments to any Multiemployer Plan that the Borrower or any member of the Controlled Group may be required to make under any agreement relating to such Multiemployer Plan, or any law pertaining thereto. As used in this Section 8.18, the term "accumulated funding deficiency" has the meaning specified in Section 302 of ERISA and Section 412 of the Code, the term "accrued benefit" has the meaning specified in Section 3 of ERISA and the term "current value" has the meaning specified in Section 4062(b)(1)(A) of ERISA. SECTION 9. EVENTS OF DEFAULT. Upon the occurrence of any of the following specified events (each an "Event of Default"): 9.01 Payments. The Borrower shall (i) default in the payment when due of any payment of principal of its Loans or Notes or (ii) default, and such default shall continue for at least two Business Days, in any payment of interest on its Loans or any Fees or any other amounts owing by it hereunder or the Credit Documents; or 9.02 Representations, etc. Any representation, warranty or statement made by the Borrower herein or in any other Credit Document or in any certificate delivered pursuant hereto or thereto shall prove to be untrue in any material respect when made; or 9.03 Covenants. The Borrower shall (i) default in the due performance or observance by it of any term, covenant or agreement contained in Section 7.01(d)(i), 7.08, 7.10, 7.11 or Section 8 or in any Security Document or (ii) default in the due performance or observance by it of any term, covenant or agreement (other than those referred to in Sections 9.01 and 9.02 and clause (i) of this Section 9.03) contained in this Agreement or any other Credit Document and such default shall continue unremedied for a period of 15 days after written notice to the Borrower and -111- 118 each Official Committee by the Administrative Agent or the Required Lenders; or 9.04 The Case, etc. (a) The Case shall be dismissed or converted to a case under Chapter 7 of the Bankruptcy Code; a Chapter 11 trustee shall be appointed in the Case; or an application shall be filed by the Borrower for the approval of, or there shall arise, (i) any claims for recovery for amounts under Section 506(c) of the Bankruptcy Code arising pursuant to a final, nonappealable order of the Bankruptcy Court from the preservation or disposal of Collateral or (ii) any other administrative expense claim (except for the Permitted Expenses) having any priority over, or being pari passu with, the administrative expenses priority of the Obligations in the Case; or (b) The Bankruptcy Court shall enter an order granting relief from the automatic stay applicable under Section 362 of the Bankruptcy Code to the holder or holders of any security interest in any assets which constitute Designated Collateral or are otherwise not expressly contemplated to be disposed of or returned by the Borrower under the Operating Plan of the Borrower and allowing such holder or holders to foreclose or otherwise realize upon any such security interests; or (c) An order of the Bankruptcy Court shall be entered in the Case appointing an examiner with powers beyond investigatory powers under Section 1106(b) of the Bankruptcy Code; or (d) An order of the Bankruptcy Court or any other court shall be entered amending, supplementing, staying, vacating or otherwise modifying any of the Orders, provided, that no Event of Default shall occur under this clause (d) to the extent that any such amendment, supplement or other modification is made in compliance with this Agreement and is not adverse, in the sole and absolute judgment of the Required Lenders, to the rights and interests of the Lenders under this Agreement and the other Credit Documents; or 9.05 Credit Documents and Kawasaki Credit Agreement. Any Credit Document shall, except in accordance with its terms, cease to be in full force and effect, any Lien purported to be created by any Credit Document or any of the Orders in any of the Collateral purported to be covered thereby shall, for any reason, cease to be valid and perfected with the priority contemplated hereby or the Borrower or any Official Committee shall contest, deny or -112- 119 seek to disaffirm any of the Borrower's obligations under any Credit Document, or, on any date which is prior to the Maturity Date, any principal of or interest on any loan outstanding under the Kawasaki Credit Agreement shall be paid or prepaid without the written consent of the Required Lenders (not including Kawasaki) or any term or provision of Section 7, 8 or 10 of the Kawasaki Credit Agreement (as in effect on the Amendment Effective Date) or of the proviso at the end of Section 9 of the Kawasaki Credit Agreement (as in effect on the Amendment Effective Date) shall be amended without the written consent of the Required Lenders (not including Kawasaki), provided that a good faith dispute regarding the factual existence of an Event of Default shall not be considered to be an Event of Default under this Section 9.05; or 9.06 Judgments. (a) One or more judgments as to a post-petition liability shall be entered against the Borrower in an amount in the aggregate (to the extent not paid or fully covered (subject to a deductible not in excess of 10% of such liability) by insurance) of (i) $2,500,000 or more outstanding at any one time in regard to such liability constituting or giving rise to an administrative expense claim in the Case (not having priority over, or being pari passu with, the administrative expenses priority of the Obligations in the Case), or (ii) $250,000 or more outstanding at any one time in regard to any other such liability, and either (x) enforcement by any creditor upon such judgments occurs or is authorized pursuant to order of the Bankruptcy Court or (y) there shall be any period of 10 consecutive days during which a stay of enforcement of such judgments, by reason of a pending appeal or otherwise, shall not be in effect; or (b) Any non-monetary judgment or order with respect to a post-petition event shall be rendered against the Borrower which could reasonably be expected to (i) cause a material adverse change in the condition (financial or otherwise), business, operations or properties or other assets of the Borrower, (ii) have a material adverse effect on the ability of the Borrower to perform its obligations under any Credit Document, or (iii) have a material adverse effect on the Collateral (including, without limitation, the value or transferability thereof) or the rights and remedies of the Administrative Agent, the Collateral Agent or any Lender under any Credit Document, and there shall be any period of 10 consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect; or -113- 120 9.07 GPA Agreements/Kawasaki Agreements. (i) Any of the GPA Agreements or the Kawasaki Agreements is terminated, or purported in writing to be terminated, or otherwise ceases to be in full force and effect other than pursuant to an express termination thereof by the applicable GPA Entity or by Kawasaki, as the case may be (except as a result of the Borrower's breach thereunder or an "Event of Default" thereunder), or an "Event of Default" (other than an "Event of Default" which consists of the existence of the Case) under and as defined in any of the GPA Agreements or the Kawasaki Agreements (other than the Kawasaki Credit Agreement) occurs and continues thereunder; or (ii) an order of the Bankruptcy Court or any other court is entered amending, supplementing, staying, vacating or otherwise modifying the GPA Order or the Kawasaki Order to the extent adverse, in the sole and absolute judgment of the GPA Entities or Kawasaki, as the case may be; or (iii) the Borrower or any Person (including, without limitation, an Official Committee) acting by or on behalf of the Borrower or such Person, shall contest, deny or seek to disaffirm the Borrower's or its obligations under any GPA Agreement or any Kawasaki Agreement; or 9.08 Governance. The By-Laws or the Certificate of Incorporation of the Borrower shall be amended or modified after the Fourth Amendment Effective Date without the prior written consent of the Required Lenders (which consent may be withheld in their sole and absolute discretion); or the Borrower or the Board of Directors or the stockholders of the Borrower shall take or authorize any action in contravention of the By-Laws or the Certificate of Incorporation of the Borrower or the Amended and Restated Management Letter Agreement, in any case, without the prior written consent of the Required Lenders (which consent may be withheld in their sole and absolute discretion); or for any reason, without the prior written consent of the Required Lenders (which consent may be withheld in their sole and absolute discretion), the membership of the Board of Directors of the Borrower shall not be in compliance with any term, condition or provision of the second paragraph of the Amended and Restated Management Letter Agreement; or 9.09 Casualties. Any "Event of Loss" as defined in the Aircraft/Engine Mortgage shall occur with respect to any aircraft or engine or parts covered thereby (without giving effect to the grace periods contained in such definitions) or any other casualty with respect to any other Designated Collateral shall occur and the insurer of such property shall not have paid the claim on such loss in full within 90 days of such Event of Loss; or -114- 121 9.10 ERISA. Any Pension Plan maintained by the Borrower or any member of the Controlled Group shall be terminated within the meaning of Title IV of ERISA or a trustee shall be appointed by an appropriate United States district court to administer any Pension Plan, or the PBGC shall institute proceedings to terminate any Pension Plan or to appoint a trustee to administer any Pension Plan if as of the date thereof the Borrower's liability or any member of the Controlled Group's liability (after giving effect to the tax consequences thereof) to the PBGC for unfunded guaranteed vested benefits under the Pension Plans not covered by insurance exceeds the then current value of assets accumulated in such Pension Plan (or in the case of a termination involving the Borrower or any member of the Controlled Group as a "substantial employer" (as defined in Section 4001(a)(2) of ERISA)) the withdrawing employer's proportionate share of such excess; or the Borrower or any member of the Controlled Group as employer under a Multiemployer Plan shall have made a complete or partial withdrawal from such Multiemployer Plan and the Plan sponsor of such Multiemployer Plan shall have notified such withdrawing employer that such employer has incurred a withdrawal liability; or 9.11 Other Indebtedness. Any "event of default" under the terms of any Indebtedness permitted by Section 8.05(vi), or other similar event or condition which under the terms thereof would permit any holder of such Indebtedness or Trustee on behalf of such holder, to accelerate or require mandatory prepayment of such Indebtedness, occurs and is continuing; or 9.12 Change of Control. The acquisition, whether directly or indirectly, by any Person or "group" (as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended) (other than an employee benefit or stock ownership plan of the Borrower) of more than 30% of the voting stock of the Borrower shall have occurred; THEN, and in any such event, and at any time thereafter if any Event of Default shall then be continuing and without further order of or application to the Bankruptcy Court, the Administrative Agent shall upon the written request of the Required Lenders or, in the case of an Event of Default described in Section 9.01, 9.04 (except clause (c) thereof), 9.05 or 9.07 any Lessor Lender (but in each case, only to the extent the respective Event of Default is adverse with respect to such Lessor Lender or its Obligations), without notice to the Borrower, take any or all of the following actions, without prejudice to any other rights of the Administrative Agent, any Lender or the holder of any Note -115- 122 to enforce its claims against the Borrower hereunder, under the other Credit Documents or at law or in equity: (i) declare the principal of and any accrued interest in respect of any and all Loans and all other Obligations owing hereunder or under any other Credit Document to be, whereupon the same shall become, forthwith due and payable without presentment, demand, protest or notice of any kind, all of which are hereby waived by the Borrower; (ii) instruct the Collateral Agent to exercise any rights or remedies in its capacity as Collateral Agent under the Credit Documents, including, without limitation, to sell Collateral, and to set off and apply any amounts in or to the credit of any account to the Obligations (except for such cash as may be required to pay unpaid Permitted Expenses then outstanding); and (iii) terminate the ability of the Borrower to maintain Loans hereunder, whereupon such ability shall forthwith terminate immediately and the Borrower shall repay all Loans, unpaid accrued interest and other Obligations owing hereunder or under any other Credit Document; provided, however, that prior to taking any action described in the preceding clause (ii), other than any action which precludes the withdrawal by or for the benefit of the Borrower of any funds from the Investment Account, the Concentration Account or any other account referred to in the Initial Cash Management Agreement (but which does not constitute set off against such funds), the Administrative Agent, the Collateral Agent or such Lessor Lender, as the case may be, shall have given to the Borrower and each Official Committee not less than two Business Days' prior written notice thereof; provided further, however, that promptly after taking any action which precludes the withdrawal by or for the benefit of the Borrower of any funds from the Investment Account, the Concentration Account or any other account referred to in the Initial Cash Management Agreement, the Administrative Agent, the Collateral Agent or such Lessor Lender, as the case may be, shall give to the Borrower and each Official Committee written notice thereof; and provided further, however, that the failure to give any of the foregoing notices shall not impair or otherwise affect any action taken pursuant to the preceding clause (ii); and provided further, however, that notwithstanding any provision of this Agreement or the Security Documents which may be to the contrary, the Borrower may, without further order of the Bankruptcy Court or further consent of the Required Lenders, use amounts on deposit in the Concentration Account and/or amounts on deposit in the Investment Account which are in excess of the Section 7.10(c) Amount, during the period of two Business Days after the taking by the Administrative Agent, the Collateral Agent or any Required Lender of any action which (but for this proviso) would preclude the withdrawal by or -116- 123 for the benefit of the Borrower of such amounts, for the purpose of making such payments as (i) are necessary (a) to avoid immediate and irreparable harm to property of or in the possession of the Borrower, and/or (b) to protect the public health and safety, and (ii) do not exceed in the aggregate $2,000,000; and provided further, however, that notwithstanding any provision of this Agreement or the Security Documents which may be to the contrary, the Borrower may, without further order of the Bankruptcy Court or further consent of the Required Lenders, use amounts on deposit in the Concentration Account and/or amounts on deposit in the Investment Account which are in excess of the Section 7.10(c) Amount for the purpose of making such payments as (i) are claimed against the Borrower by (present or former) directors of the Borrower for reimbursement of the costs of defending claims against such directors which are not covered by directors' and officers' liability insurance, and (ii) do not exceed $100,000 in the aggregate; and provided further, however, that the Borrower shall use amounts on deposit in the Concentration Account for the purpose described in the next preceding provisos prior to using amounts on deposit in the Investment Account for such purpose. Nothing contained herein or in any of the Security Documents shall be deemed to impair or restrict the right of the Borrower to apply to the Bankruptcy Court, upon motion, notice and hearing, to use cash collateral, other than the Section 7.10(c) Amount, subject to and in accordance with the applicable provisions of the Bankruptcy Code (it being acknowledged that, pursuant to the Orders, the Borrower is expressly prohibited from seeking to use cash collateral on deposit in the Investment Account which is not in excess of the Section 7.10(c) Amount). If any Lessor Lender directs the Administrative Agent to take the actions described in clause (i) of the preceding sentence, then such Lessor Lender may, except as provided in clause (iii) of the proviso to Section 3.03(b) of the Agency Agreement, instruct the Administrative Agent and the Collateral Agent as to the disposition and other action to be taken in the exercise of remedies pursuant to the Security Documents, provided that the Required Lenders may at any time furnish such instructions with respect thereto (although the Administrative Agent shall follow all instructions received from the respective Lessor Lender until it receives any additional or contrary instructions from the Required Lenders with respect thereto) so long as such instructions by the Required Lenders will not have the effect of materially delaying such disposition or other action, and the Administrative Agent and the Collateral Agent shall not incur any liability from relying on any such instructions of any Lessor Lender or the Required Lenders, as the case may be. -117- 124 SECTION 10. MISCELLANEOUS. 10.01 Payment of Expenses, etc. The Borrower agrees to: (i) whether or not the transactions herein contemplated are consummated, pay all reasonable out-of-pocket costs and expenses of the Lenders party hereto on the Fourth Amendment Effective Date and the Administrative Agent and the Collateral Agent and their designees, or reimburse each of them therefor, in connection with the preparation, execution and delivery of the Credit Documents and the documents and instruments referred to therein, and the ongoing administration thereof (including, without limitation, the reasonable fees and disbursements of Paul, Hastings, Janofsky & Walker; Milbank, Tweed, Hadley & McCloy; Snell & Wilmer; and of any local counsel, syndication expenses, the cost of inspections, field examinations and collateral audits, the fees and expenses of Simat, Helliesen & Eichner, Inc. (upon application to the Bankruptcy Court), the costs of the receivables management arrangements described in Section 5.01(p)), and the reasonable fees and expenses of financial advisors to each of the Lessor Lenders); (ii) pay all reasonable out-of-pocket costs and expenses of the Lenders party hereto on the Fourth Amendment Effective Date and the Administrative Agent and the Collateral Agent and their designees in connection with any amendment, waiver or consent relating to the Credit Documents and the documents and instruments referred to therein (including, without limitation, the reasonable fees and disbursements of Paul, Hastings, Janofsky & Walker; Milbank Tweed, Hadley & McCloy; Snell & Wilmer; and of any local counsel) and of the Administrative Agent and the Collateral Agent and their designees and each of the Lenders in connection with the enforcement of the Credit Documents and the documents and instruments referred to therein (including, without limitation, the reasonable fees and disbursements of counsel for the Administrative Agent and the Collateral Agent and their designees and for each of the Lenders); (iii) pay and hold each of the Lenders harmless from and against any and all present and future stamp and other similar taxes with respect to the foregoing matters and save each of the Lenders harmless from and against any and all liabilities with respect to or resulting from any delay or omission (other than to the extent attributable to such Lender) to pay such taxes; (iv) indemnify the Administrative Agent and the Collateral Agent and their designees and each Lender, and its Affiliates, and each of their officers, directors, employees, representatives and agents from and hold each of them harmless against any and all losses, liabilities, claims, damages, or expenses incurred by any of them as a result of, or arising out of, or in any way related to, or by reason of, any investiga- -118- 125 tion, litigation or other proceeding (whether or not any such Person is a party thereto) related to the entering into and/or performance of any Credit Document or the use or proposed use of the proceeds of any Loans hereunder or the transactions contemplated in any Credit Document, including, without limitation, the reasonable fees and disbursements of counsel incurred in connection with any such investigation, litigation or other proceeding (but excluding any such losses, liabilities, claims, damages or expenses to the extent incurred by reason of the gross negligence or willful misconduct of the Person to be indemnified); and (v) indemnify Kawasaki and its Affiliates, and each of their officers, directors, employees, representatives and agents from and hold each of them harmless against any and all losses, liabilities, claims, damages, or expenses incurred by any of them as a result of, or arising out of, or in any way related to, or by reason of, the By-Law Letter Agreement, the Management Letter Agreement, the Amended and Restated Management Letter Agreement or any rights of approval with respect to members of the Board of Directors of the Borrower and the Executive Committee of such Board of Directors granted to, or exercised by, the Lenders at any time party to the Original Credit Agreement, the Amended and Restated Credit Agreement, the Second Amended and Restated Credit Agreement, the Third Amended and Restated Credit Agreement and this Agreement (other than Kawasaki) or any act or omission of any Director of the Borrower approved by any such Lenders. 10.02 Survival. All indemnities set forth herein including, without limitation, in Sections 2.09, 2.10, 2.11 and 10.01 shall survive the execution and delivery of this Agreement and the Notes and the making and repayment of the Loans and the termination of this Agreement. 10.03 Notices. Except as otherwise expressly provided herein, all notices and other communications provided for hereunder shall be in writing (including telegraphic, telex, telecopier) and mailed (by certified or registered mail), telegraphed, telexed, telecopied, cabled or delivered, if to the Borrower, at its address specified opposite its signature below or in any Credit Document executed by it; if to any Lender, at its address specified on Annex I attached hereto; and if the Administrative Agent, at its Notice Office; or, as to the Borrower or the Administrative Agent, at such other address as shall be designated by such party in a written notice to the other parties hereto and, as to each other party, at such other address as shall be designated by such party in a written notice to the Borrower and the Administrative Agent. All such notices and communications shall, when mailed (by -119- 126 certified or registered mail), telegraphed, telexed, telecopied, or cabled or sent by overnight courier, be effective upon receipt. 10.04 Benefit of Agreement. (a) This Agreement shall be binding upon and inure to the benefit of and be enforceable by the respective parties hereto and the successors and assigns of the parties hereto, but no benefits hereunder shall inure to or be enforceable by any other Person; provided however, that the Borrower may not assign or transfer any of its rights and obligations under any Credit Document without the prior written consent of all of the Lenders; and provided further, however, that, although any Lender may grant participations in its rights and obligations hereunder and under the Notes, such Lender shall remain a "Lender" for all purposes hereunder (and may not transfer or assign its Loans hereunder) and the participant shall not constitute a "Lender" hereunder; and provided further, however, that no Lender shall grant any participation under which the participant shall have rights to approve any amendment to or waiver of this Agreement except to the extent such amendment or waiver would (i) extend the final maturity of the Loans in which such participant is participating, or reduce the rate of interest or Fees thereon, or reduce the principal amount thereof, or change the date for payment of any such amounts, or increase such participant's participating interest in any Loan over the amount thereof then in effect, or (ii) consent to the assignment or transfer by the Borrower of any of its rights and obligations under this Agreement, or (iii) consent to the release of all or substantially all of the Collateral or to the release of any cash Collateral if the effect of such release of such cash Collateral is to cause or permit the amount of cash and Cash Equivalents on deposit in or to the credit of the Investment Account to be reduced below an amount equal to 33- 1/3% of the aggregate principal amount of the Loans then outstanding. In the case of any such participation, the participant shall not have any rights under this Agreement or any of the other Credit Documents (the participant's rights against such Lender in respect of such participation to be those set forth in the agreement executed by such Lender in favor of the participant relating thereto and to be monitored solely by the participant and such Lender) and all amounts payable by the Borrower hereunder shall be determined as if such Lender had not sold such participation. (b) Notwithstanding anything to the contrary in Section 10.04(a), (x) any Lender may assign a portion of its Loans and its rights and obligations to any of its -120- 127 Affiliates or to one or more Lenders or any of their Affiliates, and (y) any Lender may assign a portion, in an amount of at least $1 million of its Loans and its rights and obligations hereunder to another Person (including, without limitation, a leasing company or credit corporation) which is not an "air carrier" certificated under Section 401 of the Aviation Act or any Person of which such "air carrier" is a Subsidiary, each of which assignees agrees to become a party to this Agreement as a Lender prior to or after the date thereof by executing an amendment to this Agreement or by executing a supplemental agreement with the assigning Lender, provided that, in the case of each such assignment, (i) at the time it receives a copy of the aforesaid amendment or agreement, together with the processing fee referred to below, Annex I shall be modified by the Administrative Agent to reflect the Loans of such assignee Lender and of the existing Lenders, (ii) the Administrative Agent shall have received from the parties to such assignment a processing fee of $2,500 and (iii) the Borrower shall, if such assignee Lender so requests, issue new Notes to such assignee Lender and to the assigning Lender in conformity with the requirements of Section 2.05 to the extent needed to reflect the revised Loans of the Lenders. To the extent of any assignment pursuant to this Section 10.04(b), the assigning Lender shall be relieved of its obligations hereunder with respect to its assigned Loans. 10.05 No Waiver; Remedies Cumulative. No failure or delay on the part of the Administrative Agent, the Collateral Agent or any Lender or any holder of a Note in exercising any right, power or privilege hereunder or under any other Credit Document and no course of dealing between the Borrower and the Administrative Agent or any Lender or the holder of any Note shall operate as a waiver thereof; nor shall any single or partial exercise of any right, power or privilege hereunder or under any other Credit Document preclude any other or further exercise thereof or the exercise of any other right, power or privilege hereunder or thereunder. The rights and remedies herein expressly provided are cumulative and not exclusive of any rights or remedies which the Administrative Agent, or any Lender or the holder of any Note would otherwise have. No notice to or demand on the Borrower in any case shall entitle the Borrower to any other or further notice or demand in similar or other circumstances or constitute a waiver of the rights of the Administrative Agent, the Lenders or the holder of any Note to any other or further action in any circumstances without notice or demand. -121- 128 10.06 Payments Pro Rata. (a) Except as otherwise provided in Sections 2.12 and 4.02, the Administrative Agent agrees that promptly after its receipt of each payment from or on behalf of the Borrower in respect of any Obligations of the Borrower hereunder or under any Credit Document, it shall distribute such payment to the Lenders pro rata based upon their respective shares, if any, of the Obligations with respect to which such payment was received. (b) Except as otherwise provided in Sections 2.12 and 4.02, each of the Lenders agrees that, if it should receive any amount hereunder (whether by voluntary payment, by realization upon security, by the exercise of the right of setoff or banker's lien, by counterclaim or cross action, by the enforcement of any right under the Credit Documents, or otherwise), which is applicable to the payment of the principal of, or interest on, the Loans, or Facility Fee, of a sum which with respect to the related sum or sums received by other Lenders is in a greater proportion than the total of such Obligation then owed and due to such Lender bears to the total of such Obligation then owed and due to all of the Lenders immediately prior to such receipt, then such Lender receiving such excess payment shall purchase for cash without recourse or warranty from the other Lenders an interest in the Obligations of the Borrower to such Lenders in such amount as shall result in a proportional participation by all the Lenders in such amount; provided that if all or any portion of such excess amount is thereafter recovered from such Lender, such purchase shall be rescinded and the purchase price restored to the extent of such recovery, but without interest. 10.07 Calculations; Computations. (a) The financial statements to be furnished to the Lenders pursuant hereto shall be made and prepared in accordance with generally accepted accounting policies and principles consistently applied throughout the periods involved (except as set forth in the notes thereto). (b) All computations of interest and Fees hereunder shall be made on the actual number of days elapsed over a period of 360 days. 10.08 GOVERNING LAW. THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE UNITED -122- 129 STATES OF AMERICA, TO THE EXTENT APPLICABLE, AND THE STATE OF NEW YORK. 10.09 Counterparts. This Agreement may be executed in any number of counterparts and by the different parties hereto on separate counterparts, each of which when so executed and delivered shall be an original, but all of which shall together constitute one and the same instrument. A set of counterparts executed by all the parties hereto shall be lodged with the Borrower, the Administrative Agent and each Lender. 10.10 Headings Descriptive. The headings of the several sections and subsections of this Agreement are inserted for convenience only and shall not in any way affect the meaning or construction of any provision of this Agreement. 10.11 Amendment or Waiver. Neither this Agreement nor any other Credit Document nor any terms hereof or thereof may be changed, waived, discharged or terminated unless such change, waiver, discharge or termination is in writing signed by the Required Lenders; provided, however, that no such change, waiver, discharge or termination shall, without the written consent of each Lender affected thereby, (i) extend the Maturity Date or reduce the rate of interest or Fees thereon, or reduce the principal amount thereof, or change the date for payment of any such amounts, or increase the Loans of any Lender over the amount thereof then in effect, (ii) amend, modify or waive any provision of this Section, or Sections 2, 3, 4 (except as permitted by the following proviso to this sentence), 7.02, 7.06, 8.03, 8.11, 10.01, 10.04, 10.06, 10.07(b), 10.14 or 10.17 or any provision in the Credit Documents which provides for a determination by all of the Lenders (including the definitions of terms as used in the Sections and provisions referred to in this clause (ii)), (iii) change the definition of Required Lenders or (iv) consent to the assignment or transfer by the Borrower of any of its rights and obligations under this Agreement; and provided further, however, that no such change, waiver, discharge or termination shall, at any time at which GPA Entities are not the sole Lessor Lenders, without the written consent of Lenders the principal amount of whose Loans outstanding at the time exceed 85% of the total principal amount of Loans outstanding at the time, permit or result in (a) the amount of cash and Cash Equivalents on deposit in or to the credit of the Investment Account to be reduced below such amount as equals 33-1/3% of the aggregate principal amount of the Loans then outstanding, or (b) the release to the Borrower or other application for a purpose other than, or in a -123- 130 manner inconsistent with, the repayment of Loans or the increase of the Investment Account Minimum as provided in Sections 4.02(ii) and (iv), of any portion of the Net Proceeds of an Asset Sale of Designated Collateral which is in excess of 20% of the amount of such Net Proceeds; and provided further, however, that (i) each Lessor Lender shall have the exclusive right to waive for itself any Event of Default under Section 9.01, 9.04, 9.05 or 9.07 or its right to exercise remedies in respect of such Event of Default, (ii) the rights of the Lessor Lenders under Section 9 may be amended only with the written consent of each Lessor Lender, and (iii) no provision of Section 9.01, 9.04, 9.05 or 9.07 (or the definitions of terms as used therein) may be amended without the written consent of each Lender. The Borrower shall give each Lender a copy of each report, notice or other information furnished to any other Lender pursuant to an express requirement of this Agreement; and the Borrower shall give each Lender written notice of any amendment or waiver of any provision of this Agreement or the other Credit Documents (which notice shall be accompanied by a copy of such amendment or waiver). The Borrower shall give each Official Committee written notice of any material amendment or waiver of any provision of this Agreement. No amendments of the Agency Agreement, or amendments of the other Credit Documents which increase, change or modify the rights or duties of the Administrative Agent, may be made without the consent of the Administrative Agent. No amendments of the Agency Agreement, or amendments of the other Credit Documents which increase, change or modify the duties of the Collateral Agent, may be made without the consent of the Collateral Agent. Notwithstanding anything to the contrary contained herein, the modifications contemplated by Section 10.04, to the extent needed to make new Lenders party to this Agreement, shall be permitted in accordance with the terms thereof. Notwithstanding anything to the contrary contained herein, no change, waiver, amendment or modification of this sentence or of Section 2.12 or clauses (ii), (iii) and (iv) of Section 4.02 shall in any case be effective without the prior written consent of GPA Sub. Notwithstanding anything to the contrary contained herein or in the Kawasaki Credit Agreement, if all Obligations shall not have been paid in full on or prior to the Maturity Date, the priority of the lien on and security interest in the Collateral for the benefit of the lenders under the Kawasaki Credit Agreement shall be subject to the prior written consent of each of the Required Lenders (not including Kawasaki). All amendments effected in compliance with this Section 10.11 shall be effective and enforceable against all parties hereto without further application to, or order of, the Bankruptcy Court. -124- 131 10.12 Domicile of Loans. Except as otherwise provided in Section 2.10(a) or 2.11(a), each Lender may transfer and carry its Loans at, to or for the account of any branch, office, or Affiliate of such Lender. 10.13 Confidentiality. Each Lender shall hold all non-public information furnished by or on behalf of the Borrower in connection with such Lender's evaluation of whether to become a Lender hereunder or obtained pursuant to the requirements of this Agreement, which has been expressly identified as such by the Borrower by the conspicuous designation thereof as "confidential" (collectively, the "Confidential Material"), in accordance with its customary procedure for handling confidential information of this nature and in any event may make disclosure reasonably required by any bona fide transferee or participant in connection with the contemplated transfer of any Loans or participation therein or to its accountants, professional advisors, lawyers, investment bankers and others as required or requested by any Governmental Authority or representative thereof or pursuant to legal process, provided that, unless specifically prohibited by applicable law or court order, each Lender shall notify the Borrower of any request by any Governmental Authority or representative thereof (other than any such request in connection with an examination of the financial condition of such Lender by such Governmental Authority) for disclosure of any such non-public information prior to disclosure of such information, and provided, further, that in no event shall any Lender be obligated or required to return any materials furnished by or on behalf of the Borrower. Each of the Lenders and the Administrative Agent agrees that it will not provide to prospective assignees, transferees or participants any of the Confidential Material unless such Person has executed an agreement to be bound by this Section 10.13. 10.14 Set-Off. The Borrower hereby acknowledges and agrees that any participation referred to in this Agreement will give rise to a direct obligation of the Borrower to the participant. The Borrower hereby authorizes the Collateral Agent, the Administrative Agent, each Lender, and each participant, in case of an Event of Default, at any time and from time to time, without notice or demand, to set off and apply all deposits (general, special, custodial or for safekeeping, time or demand, provisional or final) and other property (including, without limitation, money and securities) at any time held by or in the possession of or to the account of the Administrative Agent, the Collateral Agent (including any lock box accounts, the Concentration Account, the Investment Account and any other account or cash Collateral), such Lender or participant, and other -125- 132 obligations at any time owing by the Administrative Agent, the Collateral Agent, such Lender or such participant to or for the credit or account of the Borrower, in each of which deposits, property and other obligations the Collateral Agent, such Lender or such participant for the ratable benefit of the Administrative Agent, and (except to the extent prohibited by the Orders) each Lender is hereby granted a security interest as security for any and all obligations of the Borrower now or hereafter existing under the Credit Documents (irrespective of whether or not the Administrative Agent, the Collateral Agent, such Lender or participant shall have made any demand for payment and although the Borrower's obligations may be contingent and unmatured). The rights of the Administrative Agent, the Collateral Agent, the Lenders and their participants under this Section are in addition to other rights and remedies (including other rights of set-off) which the Collateral Agent, the Lenders or any such participants may have. Promptly after effecting any such set-off, the Collateral Agent shall give the Borrower notice thereof, but a failure to give such notice shall not impair or otherwise affect the effectiveness of the set-off. Notwithstanding any of the foregoing, the Administrative Agent, the Collateral Agent, the Lenders, or any participant shall not in any event set off amounts such that the amounts remaining in all accounts are not sufficient to cover all of the unpaid Permitted Expenses then outstanding. By acceptance of any interest in the Indebtedness of the Borrower outstanding under this Agreement or any rights under any other Credit Document, a participant agrees to share proceeds obtained by it pursuant to the foregoing sentence in accordance with the provisions of this Agreement. 10.15 WAIVER OF JURY TRIAL. THE BORROWER, THE ADMINISTRATIVE AGENT AND EACH LENDER HEREBY AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THE CREDIT DOCUMENTS OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION AND THE LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED, including, without limitation, contract claims, tort claims, breach of duty claims, and all other common law and statutory claims. The Administrative Agent, each Lender and the Borrower warrant and represent that each has reviewed this waiver with its legal counsel, and that each knowingly and voluntarily waives its jury trial rights following consultation with such legal counsel. THIS WAIVER IS IRREVOCABLE, AND CANNOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, -126- 133 SUPPLEMENTS OR MODIFICATIONS TO THE LOAN DOCUMENTS. In the event of litigation, this Agreement may be filed as a written consent to a trial by the court. 10.16 Time of the Essence. Time is of the essence as to each provision herein or in the other Credit Documents in which time is a factor. 10.17 Specified Lien Releases. Each of the Administrative Agent and the Secured Creditors agrees that (i) the Collateral Agent shall release its Lien on Collateral consisting of cash to the extent necessary to pay Permitted Expenses, (ii) to the extent expressly provided in the penultimate sentence of Section 8.02, the Lien of the Collateral Agent on the assets described therein shall be released as provided therein and (iii) the Lien of the Collateral Agent shall be released upon the first date (such date, the "Lien Termination Date") upon which all principal of, and interest accrued on, the Loans has been repaid in full and all other Obligations have been repaid in full. In determining whether the test set forth in clause (iii) of the immediately preceding sentence has been met, the Collateral Agent shall be entitled to rely upon the Required Lenders in determining whether such test has been met and shall be entitled to refrain from taking any action until it has received a response to its request from the Required Lenders, and upon receiving such response shall be entitled to rely thereon with no liability hereunder. The occurrence of the Lien Termination Date as provided above shall in no event affect the Borrower's obligation to pay any Obligations which thereafter become due and payable, and shall in no event affect the administrative expense priority granted to the Obligations by the Bankruptcy Court. Nothing contained in this Agreement or in any Security Document shall be construed to secure the obligations of the Borrower under the GPA Agreements or the Kawasaki Agreements by the Collateral. 10.18 Administrative Agent; Collateral Agent. In acting pursuant to this Agreement and the other Credit Documents, the Administrative Agent and Collateral Agent shall act in the manner, and shall be subject to the rights and duties, provided in the Agency Agreement, the provisions of which are incorporated by reference herein as fully as if the terms thereof were set forth herein in their entirety. Each Person which becomes a Secured Creditor agrees to such provisions, and to the rights and duties of the Administrative Agent and Collateral Agent as set forth in the Agency Agreement, and to the indemnities contained therein, as fully as if said Secured Creditor were an original party thereto. -127- 134 10.19 Dating and Effectiveness. Although this Agreement is dated as of the date first written above for convenience, the actual dates of execution hereof by the parties hereto are respectively the dates set forth under the signatures hereto, and this Agreement shall be effective on the Fourth Amendment Effective Date. 10.20 Participation by Commerce and Economic Development Commission. Participation by Commerce and Economic Development Commission in the transactions contemplated by this Agreement and the other Credit Documents is subject to the provisions of Arizona Revised Statutes Section 38-511; and by this reference, each of the other Credit Documents to which Commerce and Economic Development Commission is or becomes a party shall be deemed to include a statement to such effect. 10.21 Covenants Do Not Preclude Negotiation of a Plan of Reorganization. Nothing contained in the covenants of the Borrower set forth in Section 8 of this Agreement (including, without limitation, the covenants in Section 8.08 which restrict payments by the Borrower to aircraft lessors and financiers) shall, or shall be construed to, (i) preclude the Borrower from negotiating any plan of reorganization or any financial or other accommodation in anticipation of any plan or reorganization (including, without limitation, any modification of payments by the Borrower to its aircraft lessors or financiers) so long as, without the prior written consent of the Required Lenders, no breach of any of such covenants and no related Default or Event of Default occurs prior to the occurrence of the Maturity Date and the repayment in full of the Loans and the payment in full of all of the other Obligations, or (ii) preclude the Borrower from entering into agreements or other contractual arrangements evidencing the results of such negotiations so long as, pursuant to express terms, such agreements or other contractual arrangements do not and cannot become effective prior to the confirmation of such plan of reorganization and the repayment in full of the Loans and all other amounts payable under the Credit Documents. 10.22 Certain Consents and Waivers. The Lenders, in their capacities as Lenders hereunder, and as lenders under the Third Amended and Restated Credit Agreement, hereby (i) consent to the entry by the Borrower into, and waive any Default or Event of Default arising under the Third Amended and Restated Credit Agreement as a consequence of the entry by the Borrower prior to the Fourth Amendment Effective Date into, the leases of airport space described on Schedule 22 hereto, and (ii) consent to the leasing by -128- 135 the Borrower to Strottmann International of an x-ray machine for the scanning of cargo which is surplus to the needs of the Borrower and the subsequent sale by the Borrower to Strottman International of such x-ray machine for a sale price of $19,000, payable in eleven monthly installments of $1,550 (with interest at the rate of 12% per annum) and a twelfth balloon payment of $3,439) under circumstances in which the proceeds of such sale are retained by the Borrower without prepayment of Loans or increase in the Investment Account Minimum (and waive any Default or Event of Default arising under the Third Amended and Restated Credit Agreement and/or this Agreement as a consequence of such lease and such sale of such x-ray machine under such circumstances). [The balance of this page is intentionally left blank.] - 128A - 136 IN WITNESS WHEREOF, the parties hereto have caused their duly authorized officers to execute and deliver this Agreement as of the respective dates set forth below. "Borrower" Notice Address: AMERICA WEST AIRLINES, INC. 4000 East Sky Harbor Blvd. Phoenix, Arizona 85034 Attention: Senior Vice By:_________________________ President-Finance Title:______________________ Date: ______________________ "Administrative Agent" Notice Office: BT COMMERCIAL CORP., 14 Wall Street, 3rd Fl. as Administrative Agent New York, New York 10005 Attention: Albert Fischetti By:___________________________ Title:________________________ Date: ________________________ "Lenders" GPA LEASING USA I, INC. By:__________________________ Title:_______________________ Date: _______________________ GPA LEASING USA SUB I, INC By:_________________________ Title:______________________ Date: ______________________ - 129 - 137 KAWASAKI LEASING INTERNATIONAL INC. By:_________________________ Title:______________________ Date: ______________________ B&B HOLDINGS, INC. d/b/a PHOENIX CARDINALS By:________________________ Title:_____________________ Date: _____________________ BANK OF AMERICA ARIZONA By:________________________ Title:_____________________ Date: _____________________ BANK ONE, ARIZONA, N.A. By:________________________ Title:_____________________ Date: _____________________ COMMERCE AND ECONOMIC DEVELOPMENT COMMISSION By:________________________ Title:_____________________ Date: _____________________ - 130 - 138 DMB HOLDING LIMITED PARTNERSHIP By:________________________ Title:_____________________ Date: _____________________ EL DORADO INVESTMENT COMPANY By:________________________ Title:_____________________ Date: _____________________ FIRST INTERSTATE BANK OF ARIZONA, N.A. By:________________________ Title:_____________________ Date: _____________________ PHELPS DODGE CORPORATION By:________________________ Title:_____________________ Date: _____________________ PHOENIX NEWSPAPERS, INC. By:________________________ Title:_____________________ Date: _____________________ - 131 - 139 PHOENIX SUNS LTD. PARTNERSHIP By:________________________ Title:_____________________ Date: _____________________ - 132 - 140 ANNEX I List of Loan Amounts and Addresses ----------------------------------
Outstanding Principal Amount of Loans as of the Fourth Amendment Effective Date -------------- GPA Leasing USA I, Inc. $9,297,748.45 Address: - - ------- c/o GPA Capital, Incorporated 9 West 57th Street New York, New York 10019 Attention: General Counsel Telephone: (212) 980-3313 Telecopy: (212) 980-6655 GPA Leasing USA Sub I, Inc $45,107,799.78 Address: - - ------- c/o GPA Capital, Incorporated 9 West 57th Street New York, New York 10019 Attention: General Counsel Telephone: (212) 980-3313 Telecopy: (212) 980-6655 Kawasaki Leasing International Inc. $17,931,536.73 Address: - - ------- 65 East 55th Street New York New York 10022 Attention: President Telephone: (212) 223-1800 Telecopy: (212) 223-2199 B&B Holdings, Inc. $194,912.79 d/b/a Phoenix Cardinals Address: - - ------- 8701 S. Hardy Drive Tempe, Arizona 85284 Attention: Mr. William V. Bidwill Telephone: (602) 379-1804 Telecopy: (602) 379-1819
- 1 - 141 Bank of America Arizona $779,629.16 Address: - - ------- 101 North First Avenue 31st Floor Phoenix, Arizona 85003 Attention: Mr. David S. Hanna Telephone: (602) 262-4136 Telecopy: (602) 262-4354 Bank One, Arizona, N.A. $1,013,518.65 Address: - - ------- 36th Floor 241 North Central Avenue Phoenix, Arizona 85004 Attention: Mr. John T. Byrd Telephone: (602) 221-2173 Telecopy: (602) 221-1535 Commerce and Economic $779,629.16 Development Commission Address: - - ------- 3800 N. Central Avenue Suite 1500 Phoenix, Arizona 85007 Attention: Mr. Jim Tuvell Telephone: (602) 280-1369 Telecopy: (602) 280-1358 DMB Holding Limited Partnership $194,912.79 Address: - - ------- 4201 North 24th Street Phoenix, Arizona 85018 Attention: Mr. Drew Brown Telephone: (602) 956-7877 Telecopy: (602) 956-7961 El Dorado Investment Company $194,912.79 Address: - - ------- 400 E. Van Buren, Suite 650 Phoenix, Arizona 85072-2132 Attention: Mr. Gregory S. Anderson Telephone: (602) 252-1450 Telecopy: (602) 252-3444
- 2 - 142 First Interstate Bank of $1,013,518.65 Arizona, N.A. Address: - - ------- 100 West Washington Phoenix, Arizona 85003 Attention: Mr. William S. Randall Telephone: (602) 229-4547 Telecopy: (602) 229-4525 Phelps Dodge Corporation $428,794.93 Address: - - ------- 2600 North Central Avenue Phoenix, Arizona 85004-3014 Attention: Mr. Thomas M. St. Claire Telephone: (602) 234-8131 Telecopy: (602) 234-8150 Phoenix Newspapers, Inc. $428,794.93 Address: - - ------- 120 East Van Buren Phoenix, Arizona 85004 Attention: Mr. Louis A. (Chip) Weil, III Telephone: (602) 271-8478 Telecopy: (602) 271-8340 Phoenix Suns Ltd. Partnership $194,912.79 Address: - - ------- 201 East Jefferson, 4th Floor Phoenix, Arizona 85004 Attention: Mr. Jerry Colangelo Telephone: (602) 379-7999 Telecopy: (602) 379-7990
EX-10.2 4 AWA MANAGEMENT RESIGNATION ALLOWANCE GUIDELINE 1 EXHIBIT 10.2 MANAGEMENT RESIGNATION ALLOWANCE GUIDELINES NOVEMBER 18, 1993 PROGRAM PURPOSE The plan is intended to provide eligible employees with reasonable transition support in order for them to seek career opportunities outside the company. Management can use the plan after other reasonable alternatives for dealing with the situation have been exhausted. ELIGIBILITY Eligibility for the program is determined by the Company and is intended to apply to management employees who permanently end their employment relationship with AWA. Eligible management employees include those whose positions are eliminated or downgraded in conjunction with a reorganization of responsibilities or priorities within the Company or whose particular services no longer fit the needs of the Company. All or some of the functions may be transferred to another position or eliminated as a result of the reorganization. All resignation allowances are subject to case-by-case review by the Compensation Committee of the Board of Directors. All resignation allowances for directors, senior directors and officers of the corporation and all resignation allowances for other management personnel in amounts in excess of twenty-six (26) weeks pay must be approved by the Compensation Committee. The plan is not intended to relieve management of its responsibility to appropriately deal with individual performance issues on a firm and constructive basis. Specifically, the plan is not available for: - Employees with less than one full year of AWA service. - Employees subject to termination for cause, for example, an employee with an ongoing non-performance problem. - Employees guilty of serious misconduct, for example, stealing or willful or negligent destruction of AWA property. PLAN DESIGN - The resignation allowance payments are based on Current Annual Compensation of three (3) weeks pay for each year of full-time AWA service (partial years to be pro-rated to date of termination) with a four (4) week minimum and a fifty-two (52) week maximum. If applicable, any unearned portion of a salary advance will be reimbursed to the company or will be deducted from the resignation allowance. - Five percent (5%) increase in allowance period for each year over age 40, not to exceed 52-weeks combined maximum payment. - Group medical/life coverages continue during the allowance period at the same cost paid by active employees. - Travel privileges on AWA continue during the allowance period. Travel privileges with other carriers vary based on the agreements with those carriers. All travel privileges cease if the resigned employee becomes employed by another airline. - The resignation date is the termination date for purposes of 401(k) and incentive stock options. - Outplacement services through an outplacement agency approved by Human Resources will be made available on a case-by-case basis with a maximum per employee cost to AWA of $5,000. 2 PROCESS 1. Before discussing the resignation program with a potential candidate, the supervising Officer or Director will review the situation with the Senior Director, Human Resources, to confirm plan eligibility. The Senior Director, Human Resources, will then coordinate approval of the resignation package as required. Any exceptions to these guidelines require the advance review by Human Resources and the approval of the CEO and the Compensation Committee of the Board of Directors. 2. Human Resources will prepare the resignation agreement documents, including the resignation allowance payment calculation and employee benefits summary. 3. The supervising Officer or Director will make the offer to the employee with appropriate coordination from Human Resources. 4. The resigned employee is "out-processed" by Human Resources, Payroll and the various employee benefits departments. EX-10.3 5 KEY EMPLOYEE PROTECTION AGREEMENT 1 EXHIBIT 10.3 KEY EMPLOYEE PROTECTION AGREEMENT KEY EMPLOYEE PROTECTION AGREEMENT ("Agreement"), dated June 27, 1994, by and between AMERICA WEST AIRLINES, INC., a Delaware corporation (the "Company"), and WILLIAM A. FRANKE ("Franke"). WHEREAS, Franke is the Chairman of the Board and Chief Executive Officer of the Company; and WHEREAS, at the time of Franke's employment as Chairman of the Board in 1992, the Company's Board of Directors and debtor-in-possession lenders agreed, among other things, to use their best efforts to cause any plan of reorganization filed with the Bankruptcy Court (as hereinafter defined) relating to the Company to provide for the payment to Franke, upon substantial consummation of such plan of reorganization, of a confirmation success bonus of not less than $500,000; and WHEREAS, with significant contribution from Franke in his capacities as Chairman of the Board and Chief Executive Officer of the Company, significant financial and operating progress has been made by the Company and other actions have been taken which have enhanced, and in the future are expected to further enhance, the value of the Company's estate for the benefit of its creditors and other constituencies; and WHEREAS, under Franke's leadership, the Company is currently endeavoring to develop and finalize a confirmable Plan of Reorganization (as hereinafter defined); and WHEREAS, the services and knowledge of Franke are valuable to the Company in many respects, including (without limitation) the rendering of advice to the Company and its Board of Directors with respect to the difficult and complex process of developing and finalizing a confirmable Plan of Reorganization; and WHEREAS, the Company considers it prudent to enter into this Agreement in order to (i) better secure Franke's continued services, (ii) ensure Franke's continued objectivity in the event of negotiations or actions that might lead to a Change in Control (as hereinafter defined) and (iii) define the nature and terms of Franke's severance benefits following a Change in Control. NOW THEREFORE, for and in consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties (intending to be legally bound) hereby covenant and agree as follows: 1. Definitions. As used in this Agreement, the following terms shall have the respective meanings set forth below: (a) "Bankruptcy Court" means the Bankruptcy Court for the District of Arizona. (b) "Board" means the Board of Directors of the Company. (c) "Change in Control" shall occur if either: (i) the individuals who, as of the date hereof, constitute the Board (the "Incumbent Board"), cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company's stockholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board; or (ii) any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended) acquires the beneficial ownership (within the meaning of Rule 13d-3 promulgated under such Act) of 51% or more of the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors. 2 (d) "Company Affiliate" means any corporation, partnership or other business entity directly or indirectly controlling, controlled by or under common control with, the Company. As used in this definition, the term "control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a corporation, partnership or other business entity, whether through ownership of voting securities, by contract or otherwise. (e) "Confirmation Bonus" means any reorganization success bonus payable to Franke pursuant to a Plan of Reorganization in the event such Plan of Reorganization is confirmed and consummated. (f) "Confirmation Date" means the date a Plan of Reorganization is confirmed by the Bankruptcy Court. (g) "Plan of Reorganization" means any plan of reorganization which (i) is filed with the Bankruptcy Court and (ii) contemplates and, if confirmed and consummated, would result in the emergence of the Company from its Chapter 11 bankruptcy proceedings. (h) "Severance Payment" means as specified in Section 2 below. (i) "Termination Date" means as specified in Section 2 below. 2. Severance Payment. (a) If a Change in Control occurs in connection with the consummation of a Plan of Reorganization and if, for any reason (including, without limitation, a voluntary resignation or an involuntary removal but excluding death), Franke ceases to serve as the Chairman of the Board and the Chief Executive Officer of the Company at any time during the period of 180 days beginning on the Confirmation Date, the Company agrees to pay to Franke, promptly after the date on which Franke ceases to be the Chairman of the Board and the Chief Executive Officer of the Company ("Termination Date"), a lump sum amount (the "Severance Payment") equal to 200% of the sum of (i) Franke's annual base salary as in effect immediately prior to the Termination Date and (ii) Franke's annual administrative expense allowance as in effect immediately prior to the Termination Date; provided, however, that the Severance Payment shall be reduced by the amount of any Confirmation Bonus actually paid to Franke prior to the Termination Date. (b) If all or any portion of the Severance Payment is actually paid to Franke, any Confirmation Bonus thereafter payable to Franke shall be reduced by the amount of the Severance Payment actually paid to Franke unless the payment of such amount to Franke was taken into account in determining the amount of such Confirmation Bonus. 3. Medical Insurance. During the 12-month period following the Termination Date, the Company, at its cost, shall maintain in full force and effect for the continued benefit of Franke and Franke's dependents all benefits available to Franke and Franke's dependents under all medical plans and programs of the Company, provided that (i) Franke's continued participation is possible under the terms and provisions of such plans and programs and (ii) Franke pays the regular employee contribution, if any, required by such plans and programs. In the event that participation by Franke (or his dependents) in any such plan or program after the Termination Date is barred pursuant to the terms thereof, or in the event the Company shall terminate any such plan or program, the Company shall obtain for Franke (and/or his dependents) comparable coverage under individual policies. 4. Life Insurance. During the 12-month period following the Termination Date, the Company, at its cost, shall continue to provide Franke all life insurance coverages (and in the same amounts) provided to him by the Company immediately prior to the Termination Date. 5. Travel Privileges. The Company shall provide Franke (and wife and his dependents) such lifetime on-line and interline, positive space travel privileges subject to the terms of the Company's non-revenue travel policy for retired executives as from time to time in effect. 6. Accrued Vacation Pay, etc. Promptly after the Termination Date, the Company shall pay to Franke a lump sum amount for (i) all unused vacation time accrued by Franke as of the Termination Date and (ii) all unpaid benefits earned by Franke as of the Termination Date under any and all incentive compensation plans or programs of the Company. 2 3 7. Tax Withholdings. The Company shall be entitled to withhold from all payments hereunder all applicable taxes (federal, state or other) which it is required to withhold therefrom. 8. Successors; Binding Agreement. (a) This Agreement shall not be terminated by the merger or consolidation of the Company whereby the Company is or is not the surviving or resulting corporation or as a result of any transfer of all or substantially all the assets of the Company. In the event of any such merger, consolidation or transfer of assets, the provisions of this Agreement shall be binding upon the surviving or resulting corporation or the person or entity to which such assets are transferred. (b) The Company agrees that concurrently with any merger, consolidation or transfer referred to in paragraph (a) above, it will cause any successor or transferee to unconditionally assume in writing all of the obligations of the Company hereunder on terms and conditions reasonably satisfactory to Franke. Failure of the Company to obtain such assumption prior to the effectiveness of any such merger, consolidation or transfer shall be a breach of this Agreement and shall entitle Franke to immediately receive the Severance Payment from the Company and, for purposes of implementing the foregoing, the date on which such merger, consolidation or transfer becomes effective shall be deemed to be the Termination Date. (c) This Agreement shall inure to the benefit of and be enforceable by Franke's personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If Franke should die while any amounts would still be payable to Franke hereunder if Franke had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to such person or persons appointed in writing by Franke to receive such amounts or, if no person is so appointed, to Franke's estate. 9. No Mitigation. The provisions of this Agreement are not intended to, nor shall they be construed to, require that Franke seek or accept other employment following a termination of employment. Except as provided in Section 1(a), the Company's obligations to make the payments to Franke required under this Agreement or any other agreement and otherwise to perform its obligations hereunder shall not be affected by any set off, counterclaim, recoupment, defense or other claim, right or action that the Company may have against Franke. 10. Expense Reimbursement. If any litigation, contest or dispute shall arise under this Agreement involving the failure or refusal of the Company to fully perform in accordance with the terms hereof, the Company shall reimburse Franke, on a current basis, for all legal fees and expenses, if any, incurred by Franke, on a current basis, for all legal fees and expenses, if any incurred by Franke in connection with such litigation, contest or dispute, together with interest thereon at the rate of 10% per annum, such interest to accrue from the date the Company receives Franke's statement for such fees and expenses through the date of payment thereof; provided, however, that in the event the final resolution of such litigation, contest or dispute includes a finding denying, in total, Franke's claims in such litigation, contest or dispute, Franke shall be required to refund to the Company, over a period not to exceed 12 months from the date of such resolution, all sums advanced to Franke pursuant to this Section 10. 11. Assignability. The Company shall have the right to assign this Agreement and to delegate all rights, duties and obligations hereunder, either in whole or in part, to any affiliate of the Comapny, provided that no such assignment or delegation shall relieve the Company of its obligations under this Agreement. 12. Notices. All notices and all other communications to the parties shall be in writing and addressed (i) if to the Company, at its principal office address or such other address as it may have designated by written notice to Franks for purposes hereof, directed to the attention of the Board with a copy to the Secretary of the Company and (ii) if to Franke, at his residence address on the records of the Company or to such other address as he may have designated to the Company in writing for purposes hereof. Each such notice or other communication shall be deemed to have been duly given when delivered or mailed by United States registered mail, return receipt requested, postage prepaid, except that any notice of change of address shall be effective only upon receipt. 3 4 13. Severability. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect. 14. Amendments and Waivers. No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by Franke and a duly authorized officer of the Company. No waiver by either party hereto at any time of any breach by the other party hereto of, or in compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. 15. Benefits Not Exclusive. The rights of and benefits payable to Franke or his beneficiaries under this Agreement are not exclusive and are in addition to any rights of and benefits payable to Franke or such beneficiaries under any other agreement between Franke and the Company or under any employee benefit plan or compensation program of the Company. 16. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument. IN WITNESS WHEREOF, the Company and Franke have executed this Agreement as of the date first above written. AMERICA WEST AIRLINES, INC. By: /s/ RICHARD O'BRIEN ________________________ /s/ WILLIAM A. FRANKE ________________________ William A. Franke 4 -----END PRIVACY-ENHANCED MESSAGE-----