-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CnWOW7LJ3pPBQG7WblzHEN49Keg0qyaTAACOKLcK4vAzf+B39pt8+aMFRNEWqfQk CjZdc/IIPRYwpwJxbZi3KA== 0000950153-96-000045.txt : 19960131 0000950153-96-000045.hdr.sgml : 19960131 ACCESSION NUMBER: 0000950153-96-000045 CONFORMED SUBMISSION TYPE: POS AM PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 19960130 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICA WEST AIRLINES INC CENTRAL INDEX KEY: 0000706270 STANDARD INDUSTRIAL CLASSIFICATION: AIR TRANSPORTATION, SCHEDULED [4512] IRS NUMBER: 860418245 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: POS AM SEC ACT: 1933 Act SEC FILE NUMBER: 033-54243 FILM NUMBER: 96508825 BUSINESS ADDRESS: STREET 1: 4000 E SKY HARBOR BLVD STREET 2: STE 2100 CITY: PHOENIX STATE: AZ ZIP: 85034 BUSINESS PHONE: 6026930800 MAIL ADDRESS: STREET 1: 4000 EAST SKY HARBOR BLVD CITY: PHOENIX STATE: AZ ZIP: 85034 POS AM 1 POST-EFFECTIVE AMENDMENT NO. 5 FOR AMERICA WEST 1 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 30, 1996 REGISTRATION NO. 33-54243 ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ POST-EFFECTIVE AMENDMENT NO. 5 TO FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 AMERICA WEST AIRLINES, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE 4512 86-0418245 (STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
4000 EAST SKY HARBOR BOULEVARD PHOENIX, ARIZONA 85034 (602) 693-0800 (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES) STEPHEN L. JOHNSON SENIOR VICE PRESIDENT AMERICA WEST AIRLINES, INC. 4000 EAST SKY HARBOR BOULEVARD PHOENIX, ARIZONA 85034 (602) 693-0800 (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE) ------------------------ With Copies to: DAVID J. GRAHAM ANDREWS & KURTH L.L.P. 4200 TEXAS COMMERCE TOWER HOUSTON, TEXAS 77002 (713) 220-4200 ------------------------ APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to time after this Registration Statement becomes effective, which time is to be determined by the Selling Securityholders. All of the Securities offered hereby are offered for the account of the Selling Securityholders. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. /X/ If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / / If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / / If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. / / ------------------------ THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE. ================================================================================ 2 EXPLANATORY NOTE America West Airlines, Inc. has prepared this Post Effective Amendment No. 5 to its Registration Statement on Form S-1 (No. 33-54243) for the purpose of filing with the Securities and Exchange Commission certain exhibits to the Registration Statement. Post Effective Amendment No. 5 does not modify any provision of the prospectus included in the registration statement; accordingly, the related cross reference sheet and such Prospectus have not been included herein. 3 PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION. The following table sets forth the estimated expenses, other than underwriting discounts and commissions, payable by the Registrant in connection with the issuance and distribution of the securities being registered hereby: Securities and Exchange Commission Filing Fee........................... $ 9,448.00 Blue Sky Filing Fees and Expenses....................................... 1,000.00 Printing Costs.......................................................... 52,500.00 Legal Fees and Expenses................................................. 27,500.00 Accounting Fees and Expenses............................................ 30,000.00 Miscellaneous........................................................... 1,052.00 ----------- Total(1)...................................................... $121,500.00 ==========
- --------------- (1) Total includes an estimated $76,500 of expenses related to the issuance and distribution of the securities registered hereby that were incurred prior to the filing of this post-effective amendment. Expenses related solely to this post-effective amendment total $45,000 and include: (i) Printing Costs -- $27,500; (ii) Legal Fees and Expenses ($7,500) and (iii) Accounting Fees and Expenses -- $10,000. ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS. Section 145 of the Delaware General Corporation Law ("DGCL") authorizes, inter alia, a corporation generally to indemnify any person ("indemnitee") who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding (other than an action by or in the right of the corporation) by reason of the fact that such person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation, in a similar position with another corporation or entity, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. With respect to actions or suits by or in the right of the corporation; however, an indemnitee who acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation is generally limited to attorneys' fees and other expenses, and no indemnification shall be made if such person is adjudged liable to the corporation unless and only to the extent that a court of competent jurisdiction determines that indemnification is appropriate. Section 145 further provides that any indemnification shall be made by the corporation only as authorized in each specific case upon a determination by the (i) stockholders, (ii) board of directors by a majority vote of a quorum of disinterested directors so directs, that indemnification of the indemnitee is proper because he has met the applicable standard of conduct. Section 145 provides that indemnification pursuant to its provisions is not exclusive of other rights of indemnification to which a person may be entitled under any by-law agreement, vote of stockholders or disinterested directors or otherwise. Section 8.02 of the Company's By-laws, a copy of which is filed as Exhibit 3.2 to this Registration Statement provides, in substance, that directors, officers, employees and agents shall be indemnified to the fullest extent permitted by Section 145 of the DGCL. Article 12.0 of the Company's Restated Certificate of Incorporation, a copy of which is filed as Exhibit 3.1 to this Registration Statement, limits the liability of directors of the Company to the Company or its stockholders (in their capacity as directors but not in their capacity as officers) to the fullest extent permitted by the DGCL. Specifically, directors of the Company will not be personally liable for monetary damages for breach of a director's fiduciary duty as a director, except for liability (i) for any breach of the director's duty of loyalty to the Company or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) for unlawful payments of dividends or unlawful stock repurchase or redemptions as provided in section 174 of the DGCL or (iv) for any transaction from which the director derived an improper personal benefit. The Restated Certificate of Incorporation also II-1 4 provides that if the DGCL is amended after the approval of the Restated Certificate of Incorporation to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the Company will be eliminated or limited to the full extent permitted by the DGCL, as so amended. The form of the Third Revised Investment Agreement filed as Exhibit 10.1 to this Registration Statement contains certain provisions for indemnification of directors and officers of the Company and the Selling Securityholder against civil liabilities under the Securities Act. Certain of these provisions are set forth in the form of the Registration Rights Agreement filed as Exhibit 4.6 to this Registration Rights Agreement. The Company intends to enter into indemnification agreements with certain of its directors providing for indemnification to the fullest extent permitted by the laws of the State of Delaware. These agreements provide for specific procedures to better assure the directors' rights to indemnification, including procedures for directors to submit claims, for determination of directors entitled to indemnification (including the allocation of the burden of proof and selection of a reviewing party) and for enforcement of directors' indemnification rights. ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES. The following summarizes transactions occurring within the last three years in which the Company has sold securities without registration under the Securities Act. On February 15, 1991, the Company sold 253,422 shares of its common stock to Transpacific Enterprises, Inc. for $1,393,821, or $5.50 per share, in reliance upon the exemption set forth in Section 4(2) of the Securities Act. On the Effective Date, the Company issued the following securities in connection with its Reorganization: 1. The Company issued 26,053,185 shares of Class B Common Stock to holders of approximately $310 million of allowed, general unsecured prepetition claims against the Company in satisfaction of such claims in reliance upon the exemption set forth in Section 1145 of the Bankruptcy Code. 2. The Company issued 3,865,179 shares of Class B Common Stock (1,615,179 of which shares are to be issued in exchange for cash, aggregating $14,357,326, provided by such equity holders upon the exercise of rights to subscribe for such shares at a price of $8.889 per share) and 6,230,769 Warrants to the holders of pre-existing equity interests in the Company in consideration of cancellation of such pre-existing equity interests in reliance upon the exemption set forth in Section 1145 of the Bankruptcy Code. 3. The Company issued 900,000 shares of Class B Common Stock and 1,384,615 Warrants to Guiness Peat Aviation and its affiliates ("GPA") in satisfaction of claims of GPA against the Company in reliance upon the exemption set forth in Section 1145 of the Bankruptcy Code. 4. The Company issued the following securities to partners of AmWest (or to Lehman Brothers Inc. or certain funds and accounts managed or advised by Fidelity Management Trust Company, in each case as assignees of AmWest's rights to acquire such securities) for new consideration paid to the Company in accordance with the Company's Plan: (i) 1,200,000 shares of Class A Common Stock for $7.467 per share; (ii) 12,981,636 shares of Class B Common Stock for $7.467 per share and 721,815 shares of Class B Common Stock for $8.889 per share; (iii) $100 million principal amount of Senior Notes for $100 million in cash; and (iv) 2,769,231 Warrants, separate consideration for which was not specified. The Company relied upon the exemption set forth in Section 4(2) of the Securities Act. In September, 1994 the Company issued 125,000 shares of Class B Common Stock to William A. Franke, the Chief Executive Officer of America West, as a reorganization success bonus. In October 1994, the Company issued Additional Senior Notes and cash to Fidelity and Lehman in exchange for full satisfaction of pre-existing secured claims and other interests. II-2 5 ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULE. (a) The following exhibits are filed as part of this Registration Statement:
EXHIBIT NUMBER TITLE ---------- ------------------------------------------------------------------------ *1.1 -- Form of Purchase Agreement. 2.1 -- The Company's Plan of Reorganization, as amended under Chapter 11 of the Bankruptcy Code -- Incorporated by reference to the Company's Report on Form 8-K dated September 9, 1994. 3.1 -- Restated Certificate of Incorporation of America West Airlines, Inc. -- Incorporated by reference to the Company's Report on Form 8-K dated September 8, 1994. 3.2 -- Restated By-laws of America West Airlines, Inc., as amended -- Incorporated by reference to the Company's Report on Form 10-K dated December 31, 1994. 4.1 -- Indenture for 10 3/4% Senior Unsecured Notes due 2003 -- Incorporated by reference to the Company's Form S-4 (No. 33-61099). 4.2 -- Form of Senior Note (included as Exhibit A to Exhibit 4.1 above). 4.3 -- Warrant Agreement dated August 25, 1994 between America West Airlines, Inc. and First Interstate, N.A., as Warrant Agent -- Incorporated by reference to the Company's Report on Form 8-K dated September 9, 1994. 4.4 -- Form of Warrant (included as Exhibit A to Exhibit 4.3 above). 4.5 -- Stockholders' Agreement for America West Airlines, Inc. dated August 25, 1994 among America West Airlines, Inc., AmWest Partners, L.P., GPA Group plc and certain other Stockholder Representatives -- Incorporated by reference to the Company's Report on Form 8-K dated September 9, 1994. 4.6 -- First Amendment to Stockholders' Agreement for America West Airlines, Inc. dated September 6, 1994 among Air Partners II, L.P., TPG Partners, L.P., TPG Parallel I, L.P., Continental Airlines, Inc., Mesa Airlines, Inc., GPA Group plc and certain other stockholder representatives -- Incorporated by reference to the Company's Report on Form 8-K dated September 9, 1994. 4.6 -- Registration Rights Agreement dated August 25, 1994 among America West Airlines, Inc., AmWest Partners, L.P. and other holders -- Incorporated by reference to the Company's Report on Form 8-K dated September 9, 1994. 4.7 -- Article 4.0 of the Company's Restated Certificate of Incorporation (included in Exhibit 3.1 above). 5.1 -- Opinion of Andrews & Kurth L.L.P. 10.1 -- Third Revised Investment Agreement dated April 21, 1994 between America West Airlines, Inc. and AmWest Partners, L.P. -- Incorporated by reference to Exhibit 10.A to the Company's Quarterly Report on Form 10-Q for the period ended March 31, 1994. 10.11 -- Third Revised Interim Procedures Agreement dated April 21, 1994 between America West Airlines and AmWest Partners, L.P. -- Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1993. 10.14 -- The GPA Term Sheet between America West Airlines, Inc. and GPA Group plc, dated June 13, 1994 -- Incorporated by Reference to the Company's Registration Statement on Form S-1 (No. 54243), as amended. 10.15 -- America West Airlines Management Resignation Allowance Guidelines, as amended, dated November 18, 1993 -- Incorporated by Reference to the Company's Registration Statement on Form S-1 (No. 54243), as amended. 10.16 -- Airbus A320 Purchase Agreement (including exhibits thereto), dated as of September 28, 1990 between AVSA, S.A.R.L. and the Company, together with Letter Agreement Nos. 1-10, inclusive -- Incorporated by reference to Exhibit 10-(D)(1) to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1990. 10.17 -- Loan Agreement, dated as of September 28, 1990, among the Company, AVSA and AVSA, as agent -- Incorporated by reference to Exhibit 10-(D)(2) to the Company's Quarterly Report on Form 10-Q for the period ended September 30, 1990.
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EXHIBIT NUMBER TITLE ---------- -------------------------------------------------------------------------- 10.19 -- V2500 Support Contract Between the Company and International Aero Engines AG, dated September 28, 1990, together with Side Letters Nos. 1-4, inclusive -- Incorporated by reference to Exhibit 10-(D)(3) to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1990. 10.20 -- Cash Management Agreement, dated September 28, 1991, among the Company, BT and First Interstate of Arizona, N.A. -- Incorporated by reference to Exhibit 10-D(21) to the Company's Annual Report on Form 10-K for the year ended December 31, 1991. 10.21 -- First Amendment to Cash Management Agreement, dated December 1, 1991, among the Company, BT and First Interstate of Arizona, N.A. -- Incorporated by reference to Exhibit 10-D(22) to the Company's Annual Report on Form 10-K for the year ended December 31, 1991. 10.22 -- Second Amendment to Cash Management Agreement, dated September 1, 1992, among the Company, BT and First Interstate of Arizona, N.A. -- Incorporated by reference to Exhibit 10-O(3) to the Company's Annual Report on Form 10-K for the year ended December 31, 1992. 10.23 -- Restructuring Agreement, dated December 1, 1991 between the Company and Kawasaki -- Incorporated by reference to Exhibit 10-D(24) to the Company's Annual Report on Form 10-K for the year ended December 31, 1991. 10.24 -- A320 Put Agreement, dated December 1, 1991 between the Company and Kawasaki -- Incorporated by reference to Exhibit 10-D(25) to the Company's Annual Report on Form 10-K for the year ended December 31, 1991. 10.25 -- First Amendment to A320 Put Agreement, dated September 1, 1992 -- Incorporated by reference to Exhibit 10-R(2) to the Company's Annual Report on Form 10-K for the year ended December 31, 1992. 10.26 -- A320 Put Agreement, dated as of June 25, 1991 between the Company and GPA Group plc -- Incorporated by reference to Exhibit 10-D(26) to the Company's Annual Report on Form 10-K for the year ended December 31, 1991. 10.27 -- First Amendment to A320 Put Agreement, dated as of September 1, 1992 -- Incorporated by reference to Exhibit 10-S(2) to the Company's Annual Report on Form 10-K for the year ended December 31, 1992. 10.28 -- Restructuring Agreement, dated as of June 25, 1991 among GPA Group plc, GPA Leasing USA I, Inc. GPA Leasing USA Sub I, and the Company -- Incorporated by reference to Exhibit 10-D(27) to the Company's Annual Report on Form 10-K for the year ended December 31, 1991. 10.29 -- Official Statement dated August 11, 1986 for the $54,000,000 Variable Rate Airport Facility Revenue Bonds -- Incorporated by reference to Exhibit 10.e to the Company's Quarterly Report on Form 10-Q for the period ended September 30, 1986. 10.30 -- Airport Use Agreement dated July 1, 1989 (the "Airport Use Agreement") among the City of Phoenix, The Industrial Development Authority of the City of Phoenix, Arizona and the Company -- Incorporated by reference to Exhibit 10-D(9) to the Company's Annual Report on Form 10-K for the year ended December 31, 1989. 10.31 -- First Amendment dated August 1, 1990 to Airport Use Agreement -- Incorporated by reference to Exhibit 10-(D)(9) to the Company's Quarterly Report on Form 10-Q for the period ended September 30, 1990. 10.32 -- Revolving Loan Agreement dated April 17, 1990, by and among the Company, the Bank signatories thereto, and Bank of America National Trust and Savings Association, as Agent for the Banks (the "Revolving Loan Agreement") -- Incorporated by reference to Exhibit 10-1 to the Company's Quarterly Report on Form 10-Q for the period ended March 31, 1990. 10.33 -- First Amendment dated April 17, 1990 to Revolving Loan Agreement -- Incorporated by reference to Exhibit 10-(D)(10) to the Company's Quarterly Report on Form 10-Q for the period ended September 30, 1990. 10.34 -- Second Amendment dated September 28, 1990 to the Revolving Loan Agreement -- Incorporated by reference to Exhibit 10-(D)(11) to the Company's Quarterly Report on Form 10-Q for the period ended September 30, 1990.
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EXHIBIT NUMBER TITLE ---------- -------------------------------------------------------------------------- 10.35 -- Third Amendment dated as of January 14, 1991 to the Revolving Loan Agreement -- Incorporated by reference to Exhibit 10-(D)(13) to the Company's Annual Report on Form 10-K for the year ended December 31, 1990. 10.36 -- Spares Credit Agreement, dated as of September 28, 1990, between the Company and IAE -- Incorporated by reference to Exhibit 10-(D)(4) to the Company's Quarterly Report on Form 10-Q for the period ended September 30, 1990. 10.37 -- Master Credit Modification Agreement dated as of October 1, 1992, among the Company, IAE International Aero Engines AG, Intlaero (Phoenix A320) Inc., Intlaero (Phoenix B737) Inc., CAE Electronics Ltd., and Hughes Rediffusion Simulation Limited -- Incorporated by reference to Exhibit 10-L to the Company's Annual Report on Form 10-K for the year ended December 31, 1992. 10.38 -- Credit Agreement, dated as of September 28, 1990 between the Company and IAE -- Incorporated by reference to Exhibit 10-(D)(5) to the Company's Quarterly Report on Form 10-Q for the period ended September 30, 1990. 10.39 -- Amendment No. 1 to the Credit Agreement, dated March 1, 1991 -- Incorporated by reference to Exhibit 10-(M)(2) to the Company's Annual Report on Form 10-K for the year ended December 31, 1992. 10.40 -- Amendment No. 2 to the Credit Agreement, dated May 15, 1991 -- Incorporated by reference to Exhibit 10-(M)(3) to the Company's Annual Report on Form 10-K for the year ended December 31, 1992. 10.41 -- Amendment No. 3 to the Credit Agreement, dated October 1, 1992 -- Incorporated by reference to Exhibit 10-(M)(4) to the Company's Annual Report on Form 10-K for the year ended December 31, 1992. 10.42 -- Form of Third Amended and Restated Credit Agreement dated September 30, 1993, among the Company, various lenders, and BT Commercial Corp. as Administrative Agent (without exhibits) -- Incorporated by reference to Exhibit 10-(N)(1) to the Company's Annual Report on Form 10-K for the year ended December 31, 1993. 10.43 -- Form of Amended and Restated Management Letter Agreement, dated as of September 30, 1993 from the Company to the Lenders -- Incorporated by reference to Exhibit 10-N(2) to the Company's Annual Report on Form 10-K for the year ended December 31, 1993. 10.44 -- Form of Amendment to Amended and Restated Management Letter Agreement; Consent to Amendment of By-laws dated February 8, 1994 from the Company to the Lenders -- Incorporated by reference to Exhibit 10-N(3) to the Company's Annual Report on Form 10-K for the year ended December 31, 1993. 10.45 -- Fourth Amended and Restated Credit Agreement dated June 30, 1994 -- Incorporated by reference to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 1994. 10.46 -- Key Employee Protection Agreement dated as of June 27, 1994 between America West Airlines, Inc. and William A. Franke -- Incorporated by reference to the Company's Registration Statement on Form S-1 (No. 54243), as amended. 10.47 -- Management Rights Agreement dated August 25, 1994 between TPG Partners L.P., TPG Genpar, L.P. and America West Airlines, Inc. -- Incorporated by reference to the Company's Registration Statement on Form S-1 (No. 54243), as amended. 10.48 -- V2500 Support Contract dated December 23, 1994 between America West Airlines, Inc. and International Aero Engineers, as amended -- Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1994. 10.49 -- Form of America West Airlines, Inc. 1994 Incentive Equity Plan Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1994. *10.50 -- Employment Agreement dated as of November 9, 1995 between America West Airlines, Inc. and William A. Franke. 11.1 -- Statement re: computation of net income (loss) per common share. 12.1 -- Statement re: computation of ratio of earnings to fixed charges. 23.1 -- Consent of Andrews & Kurth L.L.P. (included in Exhibit 5.1 above). *23.2 -- Consent of KPMG Peat Marwick LLP (independent auditors) -- Included at page S-1.
II-5 8
EXHIBIT NUMBER TITLE ---------- -------------------------------------------------------------------------- 24.1 -- Power of Attorney (included on the signature pages of this Registration Statement.) 27 -- Financial Data Schedule.
- --------------- * Filed herewith. (b) Financial Statement Schedule: The following financial statement schedule is filed as part of this Registration Statement, but not included in the Prospectus.
SCHEDULE PAGE ---------------------------------------------------------------------- ----- Independent Auditors' Report on Schedule and Consent.................. S-1 Schedule VIII -- Valuation and Qualifying Accounts.................... S-2
All other schedules for which provision is made in Regulation S-X of the Commission are not required under the related instructions or are inapplicable or the required information is included in the financial statements or notes thereto and, therefore, have been omitted. ITEM 17. UNDERTAKINGS. The undersigned registrant hereby undertakes: (1) to file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) to include any prospectus required by section 10(a)(3) of the Securities Act of 1933; (ii) to reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement; (iii) to include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. II-6 9 SIGNATURES PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE REGISTRANT HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF PHOENIX, STATE OF ARIZONA, ON THE 30TH DAY OF JANUARY, 1996. AMERICA WEST AIRLINES, INC. By: /s/ WILLIAM A. FRANKE ------------------------------------ William A. Franke Chief Executive Officer PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES INDICATED BELOW ON JANUARY 30TH, 1996.
SIGNATURE TITLE - ------------------------------------------ ---------------------------------------- /s/ WILLIAM A. FRANKE Chairman of the Board and Chief Executive - ------------------------------------------ Officer William A. Franke /s/ W. DOUGLAS PARKER Senior Vice President and Chief Financial - ------------------------------------------ Officer W. Douglas Parker * Director - ------------------------------------------ Julia Chang Bloch * Director - ------------------------------------------ Stephen F. Bollenbach * Director - ------------------------------------------ Frederick W. Bradley, Jr. * Director - ------------------------------------------ James G. Coulter * Director - ------------------------------------------ John F. Fraser * Director - ------------------------------------------ John L. Goolsby * Director - ------------------------------------------ Richard C. Kraemer * Director - ------------------------------------------ John R. Power, Jr. * Director - ------------------------------------------ Larry L. Risley
II-7 10
SIGNATURE TITLE - ------------------------------------------ --------------------------------------- * Director - ------------------------------------------ Frank B. Ryan * Director - ------------------------------------------ Richard P. Schifter * Director - ------------------------------------------ John F. Tierney * Director - ------------------------------------------ Raymond S. Troubh *By: /s/ WILLIAM A. FRANKE - ------------------------------------------ Attorney-in-fact
II-8 11 INDEPENDENT AUDITORS' REPORT ON SCHEDULE AND CONSENT The Board of Directors and Stockholders America West Airlines, Inc. Under date of February 24, 1995, we reported on the balance sheets of America West Airlines, Inc. as of December 31, 1994 and 1993, and the related statements of operations, cash flows and stockholders' equity (deficiency) for the period August 26, 1994 to December 31, 1994, the period January 1, 1994 to August 25, 1994 and for each of the years in the two-year period ended December 31, 1993, which are included herein. In connection with our audits of the aforementioned financial statements, we also audited the related financial statement schedule as included in the registration statements. The financial statement schedule is the responsibility of the Company's management. Our responsibility is to express an opinion on the financial statement schedule based on our audits. In our opinion, the financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein. We consent to the use of our reports included herein and to the reference to our firm under the heading "Experts" in the prospectus. The audit report on the financial statements of America West Airlines, Inc. referred to above contains an explanatory paragraph that states that as discussed in Notes 1 and 2 to the financial statements, on August 25, 1994, America West Airlines, Inc. emerged from bankruptcy. The financial statements of the Reorganized Company reflect the impact of adjustments to reflect the fair value of assets and liabilities under fresh start reporting. As a result, the financial statements of the Reorganized Company are presented on a different basis than those of the Predecessor Company and, therefore, are not comparable in all respects. KPMG Peat Marwick LLP Phoenix, Arizona January 30, 1996 S-1 12 AMERICA WEST AIRLINES, INC. SCHEDULE VIII -- VALUATION AND QUALIFYING ACCOUNTS FOR THE PERIODS AUGUST 26 TO DECEMBER 31, 1994, JANUARY 1 TO AUGUST 25, 1994 AND THE YEARS ENDED DECEMBER 31, 1993 AND 1992 (IN THOUSANDS)
BALANCE AT CHARGED TO CHARGED BALANCE BEGINNING COSTS AND TO OTHER AT END DESCRIPTION OF PERIOD EXPENSES ACCOUNTS DEDUCTIONS OF PERIOD - ---------------------------------------------- ---------- ---------- ---------- ---------- --------- Allowance for doubtful receivables: Period ended: August 26, 1994 to December 31, 1994........ $2,833 $1,074 $ -- $ 376 $ 3,531 ======== ======== ======== ======== ======= Allowance for doubtful receivables: Period ended: January 1, 1994 through August 25, 1994..... $3,030 $4,742 $ -- $4,939 $ 2,833 ======== ======== ======== ======== ======= Years ended: December 31, 1993........................... $2,542 $5,474 $ -- $4,986 $ 3,030 ======== ======== ======== ======== ======= December 31, 1992........................... $3,603 $3,800 $ -- $4,861 $ 2,542 ======== ======== ======== ======== ======= Reserve for obsolescence: Period ended: August 26, 1994 to December 31, 1994........ $ -- $ 483 $ -- $ -- $ 483 ======== ======== ======== ======== ======= Reserve for obsolescence: Period ended: January 1, 1994 through August 25, 1994..... $7,231 $ 794 $ -- $8,025(a) $ -- ======== ======== ======== ======== ======= Years ended: December 31, 1993........................... $6,921 $ 902 $ -- $ 592 $ 7,231 ======== ======== ======== ======== ======= December 31, 1992........................... $3,638 $3,283 $ -- $ -- $ 6,921 ======== ======== ======== ======== =======
- --------------- (a) Includes fresh start adjustment of approximately $7,885. S-2 13 EXHIBIT INDEX
EXHIBIT NUMBER TITLE ---------- ----------------------------------------------------------------- *1.1 -- Form of Purchase Agreement. 2.1 -- The Company's Plan of Reorganization, as amended under Chapter 11 of the Bankruptcy Code -- Incorporated by reference to the Company's Report on Form 8-K dated September 9, 1994. 3.1 -- Restated Certificate of Incorporation of America West Airlines, Inc. -- Incorporated by reference to the Company's Report on Form 8-K dated September 8, 1994. 3.2 -- Restated By-laws of America West Airlines, Inc., as amended -- Incorporated by reference to the Company's Report on Form 10-K dated December 31, 1994. 4.1 -- Indenture for 10 3/4% Senior Unsecured Notes due 2003 -- Incorporated by reference to the Company's Form S-4 (No. 33-61099). 4.2 -- Form of Senior Note (included as Exhibit A to Exhibit 4.1 above). 4.3 -- Warrant Agreement dated August 25, 1994 between America West Airlines, Inc. and First Interstate, N.A., as Warrant Agent -- Incorporated by reference to the Company's Report on Form 8-K dated September 9, 1994. 4.4 -- Form of Warrant (included as Exhibit A to Exhibit 4.3 above). 4.5 -- Stockholders' Agreement for America West Airlines, Inc. dated August 25, 1994 among America West Airlines, Inc., AmWest Partners, L.P., GPA Group plc and certain other Stockholder Representatives -- Incorporated by reference to the Company's Report on Form 8-K dated September 9, 1994. 4.6 -- First Amendment to Stockholders' Agreement for America West Airlines, Inc. dated September 6, 1994 among Air Partners II, L.P., TPG Partners, L.P., TPG Parallel I, L.P., Continental Airlines, Inc., Mesa Airlines, Inc., GPA Group plc and certain other stockholder representatives -- Incorporated by reference to the Company's Report on Form 8-K dated September 9, 1994. 4.6 -- Registration Rights Agreement dated August 25, 1994 among America West Airlines, Inc., AmWest Partners, L.P. and other holders -- Incorporated by reference to the Company's Report on Form 8-K dated September 9, 1994. 4.7 -- Article 4.0 of the Company's Restated Certificate of Incorporation (included in Exhibit 3.1 above). 5.1 -- Opinion of Andrews & Kurth L.L.P. 10.1 -- Third Revised Investment Agreement dated April 21, 1994 between America West Airlines, Inc. and AmWest Partners, L.P. -- Incorporated by reference to Exhibit 10.A to the Company's Quarterly Report on Form 10-Q for the period ended March 31, 1994. 10.11 -- Third Revised Interim Procedures Agreement dated April 21, 1994 between America West Airlines and AmWest Partners, L.P. -- Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1993. 10.14 -- The GPA Term Sheet between America West Airlines, Inc. and GPA Group plc, dated June 13, 1994 -- Incorporated by Reference to the Company's Registration Statement on Form S-1 (No. 54243), as amended. 10.15 -- America West Airlines Management Resignation Allowance Guidelines, as amended, dated November 18, 1993 -- Incorporated by Reference to the Company's Registration Statement on Form S-1 (No. 54243), as amended. 10.16 -- Airbus A320 Purchase Agreement (including exhibits thereto), dated as of September 28, 1990 between AVSA, S.A.R.L. and the Company, together with Letter Agreement Nos. 1-10, inclusive -- Incorporated by reference to Exhibit 10-(D)(1) to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1990.
14
EXHIBIT NUMBER TITLE ---------- ----------------------------------------------------------------- 10.17 -- Loan Agreement, dated as of September 28, 1990, among the Company, AVSA and AVSA, as agent -- Incorporated by reference to Exhibit 10-(D)(2) to the Company's Quarterly Report on Form 10-Q for the period ended September 30, 1990. 10.19 -- V2500 Support Contract Between the Company and International Aero Engines AG, dated September 28, 1990, together with Side Letters Nos. 1-4, inclusive -- Incorporated by reference to Exhibit 10-(D)(3) to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1990. 10.20 -- Cash Management Agreement, dated September 28, 1991, among the Company, BT and First Interstate of Arizona, N.A. -- Incorporated by reference to Exhibit 10-D(21) to the Company's Annual Report on Form 10-K for the year ended December 31, 1991. 10.21 -- First Amendment to Cash Management Agreement, dated December 1, 1991, among the Company, BT and First Interstate of Arizona, N.A. -- Incorporated by reference to Exhibit 10-D(22) to the Company's Annual Report on Form 10-K for the year ended December 31, 1991. 10.22 -- Second Amendment to Cash Management Agreement, dated September 1, 1992, among the Company, BT and First Interstate of Arizona, N.A. -- Incorporated by reference to Exhibit 10-O(3) to the Company's Annual Report on Form 10-K for the year ended December 31, 1992. 10.23 -- Restructuring Agreement, dated December 1, 1991 between the Company and Kawasaki -- Incorporated by reference to Exhibit 10-D(24) to the Company's Annual Report on Form 10-K for the year ended December 31, 1991. 10.24 -- A320 Put Agreement, dated December 1, 1991 between the Company and Kawasaki -- Incorporated by reference to Exhibit 10-D(25) to the Company's Annual Report on Form 10-K for the year ended December 31, 1991. 10.25 -- First Amendment to A320 Put Agreement, dated September 1, 1992 -- Incorporated by reference to Exhibit 10-R(2) to the Company's Annual Report on Form 10-K for the year ended December 31, 1992. 10.26 -- A320 Put Agreement, dated as of June 25, 1991 between the Company and GPA Group plc -- Incorporated by reference to Exhibit 10-D(26) to the Company's Annual Report on Form 10-K for the year ended December 31, 1991. 10.27 -- First Amendment to A320 Put Agreement, dated as of September 1, 1992 -- Incorporated by reference to Exhibit 10-S(2) to the Company's Annual Report on Form 10-K for the year ended December 31, 1992. 10.28 -- Restructuring Agreement, dated as of June 25, 1991 among GPA Group plc, GPA Leasing USA I, Inc. GPA Leasing USA Sub I, and the Company -- Incorporated by reference to Exhibit 10-D(27) to the Company's Annual Report on Form 10-K for the year ended December 31, 1991. 10.29 -- Official Statement dated August 11, 1986 for the $54,000,000 Variable Rate Airport Facility Revenue Bonds -- Incorporated by reference to Exhibit 10.e to the Company's Quarterly Report on Form 10-Q for the period ended September 30, 1986. 10.30 -- Airport Use Agreement dated July 1, 1989 (the "Airport Use Agreement") among the City of Phoenix, The Industrial Development Authority of the City of Phoenix, Arizona and the Company -- Incorporated by reference to Exhibit 10-D(9) to the Company's Annual Report on Form 10-K for the year ended December 31, 1989.
15
EXHIBIT NUMBER TITLE ---------- ----------------------------------------------------------------- 10.31 -- First Amendment dated August 1, 1990 to Airport Use Agreement -- Incorporated by reference to Exhibit 10-(D)(9) to the Company's Quarterly Report on Form 10-Q for the period ended September 30, 1990. 10.32 -- Revolving Loan Agreement dated April 17, 1990, by and among the Company, the Bank signatories thereto, and Bank of America National Trust and Savings Association, as Agent for the Banks (the "Revolving Loan Agreement") -- Incorporated by reference to Exhibit 10-1 to the Company's Quarterly Report on Form 10-Q for the period ended March 31, 1990. 10.33 -- First Amendment dated April 17, 1990 to Revolving Loan Agreement -- Incorporated by reference to Exhibit 10-(D)(10) to the Company's Quarterly Report on Form 10-Q for the period ended September 30, 1990. 10.34 -- Second Amendment dated September 28, 1990 to the Revolving Loan Agreement -- Incorporated by reference to Exhibit 10-(D)(11) to the Company's Quarterly Report on Form 10-Q for the period ended September 30, 1990. 10.35 -- Third Amendment dated as of January 14, 1991 to the Revolving Loan Agreement -- Incorporated by reference to Exhibit 10-(D)(13) to the Company's Annual Report on Form 10-K for the year ended December 31, 1990. 10.36 -- Spares Credit Agreement, dated as of September 28, 1990, between the Company and IAE -- Incorporated by reference to Exhibit 10-(D)(4) to the Company's Quarterly Report on Form 10-Q for the period ended September 30, 1990. 10.37 -- Master Credit Modification Agreement dated as of October 1, 1992, among the Company, IAE International Aero Engines AG, Intlaero (Phoenix A320) Inc., Intlaero (Phoenix B737) Inc., CAE Electronics Ltd., and Hughes Rediffusion Simulation Limited -- Incorporated by reference to Exhibit 10-L to the Company's Annual Report on Form 10-K for the year ended December 31, 1992. 10.38 -- Credit Agreement, dated as of September 28, 1990 between the Company and IAE -- Incorporated by reference to Exhibit 10-(D)(5) to the Company's Quarterly Report on Form 10-Q for the period ended September 30, 1990. 10.39 -- Amendment No. 1 to the Credit Agreement, dated March 1, 1991 -- Incorporated by reference to Exhibit 10-(M)(2) to the Company's Annual Report on Form 10-K for the year ended December 31, 1992. 10.40 -- Amendment No. 2 to the Credit Agreement, dated May 15, 1991 -- Incorporated by reference to Exhibit 10-(M)(3) to the Company's Annual Report on Form 10-K for the year ended December 31, 1992. 10.41 -- Amendment No. 3 to the Credit Agreement, dated October 1, 1992 -- Incorporated by reference to Exhibit 10-(M)(4) to the Company's Annual Report on Form 10-K for the year ended December 31, 1992. 10.42 -- Form of Third Amended and Restated Credit Agreement dated September 30, 1993, among the Company, various lenders, and BT Commercial Corp. as Administrative Agent (without exhibits) -- Incorporated by reference to Exhibit 10-(N)(1) to the Company's Annual Report on Form 10-K for the year ended December 31, 1993. 10.43 -- Form of Amended and Restated Management Letter Agreement, dated as of September 30, 1993 from the Company to the Lenders -- Incorporated by reference to Exhibit 10-N(2) to the Company's Annual Report on Form 10-K for the year ended December 31, 1993.
16
EXHIBIT NUMBER TITLE ---------- ----------------------------------------------------------------- 10.44 -- Form of Amendment to Amended and Restated Management Letter Agreement; Consent to Amendment of By-laws dated February 8, 1994 from the Company to the Lenders -- Incorporated by reference to Exhibit 10-N(3) to the Company's Annual Report on Form 10-K for the year ended December 31, 1993. 10.45 -- Fourth Amended and Restated Credit Agreement dated June 30, 1994 -- Incorporated by reference to the Company's Quarterly Report on Form 10-Q for the period ended June 30, 1994. 10.46 -- Key Employee Protection Agreement dated as of June 27, 1994 between America West Airlines, Inc. and William A. Franke -- Incorporated by reference to the Company's Registration Statement on Form S-1 (No. 54243), as amended. 10.47 -- Management Rights Agreement dated August 25, 1994 between TPG Partners L.P., TPG Genpar, L.P. and America West Airlines, Inc. -- Incorporated by reference to the Company's Registration Statement on Form S-1 (No. 54243), as amended. 10.48 -- V2500 Support Contract dated December 23, 1994 between America West Airlines, Inc. and International Aero Engineers, as amended -- Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1994. 10.49 -- Form of America West Airlines, Inc. 1994 Incentive Equity Plan -- Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1994. *10.50 -- Employment Agreement dated as of November 9, 1995 between America West Airlines, Inc. and William A. Franke. 11.1 -- Statement re: computation of net income (loss) per common share. 12.1 -- Statement re: computation of ratio of earnings to fixed charges. 23.1 -- Consent of Andrews & Kurth L.L.P. (included in Exhibit 5.1 above). *23.2 -- Consent of KPMG Peat Marwick LLP (independent auditors) -- Included at page S-1. 24.1 -- Power of Attorney (included on the signature pages of this Registration Statement.) 27 -- Financial Data Schedule.
- --------------- * Filed herewith. EX-1.1 2 FORM OF PURCHASE AGREEMENT 1 EXHIBIT 1.1 6,100,000 Shares AMERICA WEST AIRLINES, INC. (a Delaware corporation) Class B Common Stock (Par Value $.01 Per Share) PURCHASE AGREEMENT February [ ], 1996 MERRILL LYNCH & CO. Merrill Lynch, Pierce, Fenner & Smith Incorporated Donaldson, Lufkin & Jenrette Securities Corporation Lehman Brothers Inc. as Representatives of the several Underwriters Merrill Lynch World Headquarters North Tower World Financial Center New York, New York 10281 Dear Sirs: America West Airlines, Inc., a Delaware corporation (the "Company"), and the selling stockholders named in Schedule B hereto (each a "Selling Stockholder" and collectively, the "Selling Stockholders") confirm their agreement with Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch"), Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"), Lehman Brothers Inc. ("Lehman Brothers") and each of the other Underwriters named in Schedule A hereto (collectively, the "Underwriters," which term shall also include any underwriter substituted as hereinafter provided in Section 10 hereof), for whom Merrill Lynch, DLJ and Lehman Brothers are acting as representatives (in such capacity, Merrill Lynch, DLJ and Lehman Brothers shall hereinafter be referred to as the "Representatives"), with respect to the sale by the Selling Stockholders, acting severally and not jointly, and the purchase by the Underwriters, acting severally and not jointly, of the respective numbers of shares of Class B Common Stock, par value $.01 2 per share, of the Company ("Common Stock") set forth in said Schedule A (except as may otherwise be provided in the Pricing Agreement, as hereinafter defined) and with respect to the grant by two Selling Stockholders, acting severally and not jointly, as set forth in Schedule B hereto, to the Underwriters, acting severally and not jointly, of the option described in Section 2(b) hereof to purchase all or any part of 610,000 additional shares of Common Stock solely to cover over-allotments, if any, in each case except as may otherwise be provided in the Pricing Agreement. The aforesaid 6,100,000 shares of Common Stock (the "Initial Securities") to be purchased by the Underwriters and all or any part of the 610,000 shares of Common Stock subject to the option described in Section 2(b) hereof (the "Option Securities") are collectively hereinafter called the "Securities." Prior to the purchase and public offering of the Securities by the several Underwriters, the Company, the Selling Stockholders, acting severally and not jointly, and the Representatives, acting on behalf of the several Underwriters, shall enter into an agreement substantially in the form of Exhibit A hereto (the "Pricing Agreement"). The Pricing Agreement may take the form of an exchange of any standard form of written telecommunication among the Company, the Selling Stockholders and the Representatives and shall specify such applicable information as is indicated in Exhibit A hereto. The offering of the Securities will be governed by this Agreement, as supplemented by the Pricing Agreement. From and after the date of the execution and delivery of the Pricing Agreement, this Agreement shall be deemed to incorporate the Pricing Agreement. The Company has filed with the Securities and Exchange Commission (the "Commission") a registration statement on Form S-1 (No. 33-54243), for the registration of 26,447,326 shares of Common Stock, 1,200,000 shares of the Company's Class A Common Stock, par value $.01 (the "Class A Common Stock") and 5,872,108 warrants, each entitling the holder thereof to purchase one share of Common Stock (the "Warrants"), under the Securities Act of 1933 (the "1933 Act"), on June 23, 1994; and pre-effective amendments thereto on July 27, 1994, August 2, 1994, August 15, 1994 and August 23, 1994; and prospectus supplements thereto on August 29, 1994, June 21, 1995, October 5, 1995, November 13, 1995, and January 29, 1996; and Post-Effective Amendments thereto on November 15, 1994, April 19, 1995 and January 30, 1996 and will file such additional amendments thereto and such amended or supplemental prospectuses as may hereafter be required. Such registration statement (as amended, if applicable) and the prospectus constituting a part thereof (including in each case the information, if any, deemed to be part thereof pursuant to Rule 434 of the rules and regulations of the Commission under the 1933 Act (the "1933 Act Regulations")), as from time to time amended or supplemented pursuant to the 1933 Act, are hereinafter referred to as the "Registration Statement" and the "Prospectus," respectively, except that if any revised prospectus shall be provided to the Underwriters by the Company for use in connection with the offering of the Securities which differs from the Prospectus on file at the Commission (whether or not such revised prospectus is required to be filed by the Company pursuant to Rule 424(b) of the 1933 Act Regulations), the term "Prospectus" shall refer to such revised prospectus from and after the time it is first provided 2 3 to the Underwriters for such use. Additionally, if the Company has elected to rely upon Rule 434 of the 1933 Act Regulations, the Company will prepare and file a term sheet (a "term sheet"), in accordance with the provisions of Rules 434 and 424(b) of such Regulations, promptly after execution of the Pricing Agreement. The Company and the Selling Stockholders understand that the Underwriters propose to make a public offering of the Securities as soon as the Representatives deem advisable after the Pricing Agreement has been executed and delivered. Section 1. Representations and Warranties. (a) The Company represents and warrants to each Underwriter as of the date hereof and as of the date of the Pricing Agreement (such latter date being hereinafter referred to as the "Representation Date") as follows: (i) At the time the Registration Statement became effective and at the Representation Date (unless the term "Prospectus" refers to prospectuses which have been provided to the Underwriters by the Company for use in connection with the offering of Securities which differs from the Prospectus on file at the Commission, in which case at the time the Prospectus is first provided to the Underwriters for their use), the Registration Statement complied and will comply in all material respects with the requirements of the 1933 Act and the 1933 Act Regulations and did not contain and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading. The Prospectus, at the Representation Date, at the time it is first provided to the Underwriters for their use and at the Closing Time referred to in Section 2 hereof, will not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; and if Rule 434 is used, the Prospectus shall not be "materially different" as such term is used in Rule 434 of the 1933 Act Regulations, from the prospectus first provided to the Underwriters for their use; provided, however, that the representations and warranties in this subsection shall not apply to statements in or omissions from the Registration Statement or Prospectus made in reliance upon and in conformity with information furnished to the Company in writing by any Underwriter through the Representatives expressly for use in the Registration Statement or Prospectus. (ii) The accountants who certified the financial statements and supporting schedules included in the Registration Statement are independent public accountants as required by the 1933 Act and the 1933 Act Regulations. (iii) The financial statements included in the Registration Statement and the Prospectus present fairly the financial position of the Company as at 3 4 the dates indicated and the results of its operations for the periods specified; except as otherwise stated in the Registration Statement, said financial statements have been prepared in conformity with generally accepted accounting principles applied on a consistent basis; and the supporting schedules included in the Registration Statement present fairly the information required to be stated therein. (iv) Since the respective dates as of which information is given in the Registration Statement and the Prospectus, except as otherwise stated therein, (A) there has been no material adverse change in the condition, financial or otherwise, or in the earnings, business affairs or business prospects of the Company, whether or not arising in the ordinary course of business, (B) there have been no transactions entered into by the Company, other than those in the ordinary course of business, which are required to be disclosed therein under the 1933 Act and the 1933 Act Regulations and are not so disclosed, and (C) there has been no dividend or distribution of any kind declared, paid or made by the Company on any class of its capital stock, except for any distribution of securities upon the resolution of bankruptcy-related claims. (v) The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the state of Delaware with corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Prospectus and to enter into and perform its obligations under this Agreement and the Pricing Agreement; and the Company is duly qualified as a foreign corporation to transact business and is in good standing in each jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except where the failure to so qualify would not have a material adverse effect on the condition, financial or otherwise, or the earnings, business affairs or business prospects of the Company. (vi) The Company has no subsidiaries. (vii) The authorized, issued and outstanding capital stock of the Company is as set forth in the Prospectus under "Capitalization" (except for subsequent issuances, if any, pursuant to reservations, agreements, employee benefit plans or the exercise of convertible securities and the warrants referred to in the Prospectus); the shares of issued and outstanding Common Stock have been duly authorized and validly issued and are fully paid and nonassessable. (viii) The Company is not in violation of its charter or in default in the performance or observance of any material obligation, agreement, covenant or condition contained in any contract, indenture, mortgage, loan agreement, 4 5 note, lease or other instrument to which the Company is a party or by which it may be bound, or to which any of the property or assets of the Company is subject, excluding in each case, violations or defaults which, individually or in the aggregate would not have a material adverse effect on the condition, financial or otherwise, or in the earnings, business affairs or business prospects of the Company; and the execution, delivery and performance of this Agreement and the Pricing Agreement and the consummation of the transactions contemplated herein and therein and compliance by the Company with its obligations hereunder and thereunder have been duly authorized by all necessary corporate action and will not conflict with or constitute a breach of, or default under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company pursuant to, any contract, indenture, mortgage, loan agreement, note, lease or other instrument to which the Company is a party or by which it may be bound, or to which any of the property or assets of the Company is subject, excluding in each case, conflicts, breaches, defaults or liens which, individually or in the aggregate, would not have a material adverse effect on the condition, financial or otherwise, or in the earnings, business affairs or business prospects of the Company, nor will such action result in any violation of the provisions of the charter or bylaws of the Company or any applicable law, rule, administrative regulation, judgment, order, consent or decree of any government instrumentality or court, having jurisdiction over the Company or any of its properties. (ix) The Company is not in violation of any Federal, state or local law relating to discrimination in the hiring, promotion or pay of employees nor any applicable wage or hour laws that, singly or in the aggregate, could have a material adverse effect on the condition, financial or otherwise, or the earnings, business affairs or business prospects of the Company. There is (A) no significant unfair labor practice complaint pending against the Company or, to the best knowledge of the Company, threatened against the Company, before the National Labor Relations Board or any state or local labor relations board, and no significant grievance or significant arbitration proceeding arising out of or under any collective bargaining agreement is so pending against the Company or, to the best knowledge of the Company, threatened against the Company, and (B) no labor dispute in which the Company is involved nor, to the best knowledge of the Company, is any labor dispute imminent, other than routine disciplinary and grievance matters, except as disclosed in the Prospectus. The Company is in compliance in all material respects with all presently applicable provisions of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and the regulations and published interpretations thereunder, including but not limited to Sections 4975 and 4980B of the Internal Revenue Code of 1986, as amended (the "Code"). There are no "pension plans" established or maintained by the Company or "multi-employer 5 6 pension plans" to which the Company is a contributor that are intended to be qualified under Section 401(a) of the Code. (x) There is no action, suit or proceeding before or by any court or governmental agency or body, domestic or foreign, now pending, or, to the knowledge of the Company, threatened, against or affecting the Company which is required to be disclosed in the Registration Statement (other than as disclosed therein), or which is reasonably expected to result in any material adverse change in the condition, financial or otherwise, or in the earnings, business affairs or business prospects of the Company or is reasonably expected to materially and adversely affect the properties or assets thereof or which might materially and adversely affect the consummation of this Agreement; there are no contracts or documents of the Company which is required to be filed as exhibits to the Registration Statement by the 1933 Act or by the 1933 Act Regulations which have not been so filed. (xi) The Company (i) has been subject to the requirements of Section 12 of the 1934 Act for a period of at least 12 calendar months, (ii) has filed in a timely manner all reports required to be filed during the 12 calendar months preceding the Representation Date, and (iii) the aggregate market value of the voting stock held by non- affiliates of the Company is $75 million or more. (xii) No authorization, approval or consent of any court or governmental authority or agency is necessary in connection with the offering of and the sale of the Securities hereunder, except such as may be required under the 1933 Act or the 1933 Act Regulations or state securities laws. (xiii) The Company possesses such certificates, authorities or permits issued by the appropriate state, federal or foreign regulatory agencies or bodies necessary to conduct the business now operated by it [except as would not materially and adversely affect the condition, financial or otherwise, or the earnings, business affairs or business prospects of the Company], and the Company has not received any notice of proceedings relating to the revocation or modification of any such certificate, authority or permit which, singly or in the aggregate, if the subject of an unfavorable decision, ruling or finding, would materially and adversely affect the condition, financial or otherwise, or the earnings, business affairs or business prospects of the Company. (xiv) The Company has sufficient title for the use made and proposed to be made of all of its properties, whether real or personal, free and clear of all liens, encumbrances and defects, except as stated in the Prospectus or such as would not have a material adverse effect on the condition, financial or 6 7 otherwise, or in the earnings, business affairs or business prospects of the Company. (xv) There are no persons with registration or other similar rights to have any securities registered pursuant to the Registration Statement or to participate in the offering of the Securities contemplated by this Agreement, except such as have been waived in writing or complied with by the inclusion of such securities in the Registration Statement or the inclusion of such persons as Selling Stockholders in Schedule B hereto, as the case may be. (xvi) This Agreement has been, and, at the Representation Date the Pricing Agreement will have been, duly executed and delivered by the Company. (xvii) The Company has not and is not presently doing business with the government of Cuba or with any person or any affiliate located in Cuba. (xviii) The Company is an "air carrier" and after consummation of the transactions contemplated herein will be a "citizen of the United States," in each case within the meaning of the Federal Aviation Act of 1958, as amended. (xix) There is no pending or threatened action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company or its property and involving (A) licenses, certificates, permits or other governmental authorizations issued by or from the Department of Transportation, the Federal Aviation Administration, the Federal Communications Commission or any other federal or any state transportation or aviation regulatory authority or (B) the Federal Aviation Act of 1958, as amended ((A) and (B) together, "Aviation Laws") that is of a character required to be disclosed in the Prospectus. (xx) The descriptions in the Registration Statement of laws, regulations and rules, of legal and governmental proceedings and of contracts, agreements, leases and other documents including, without limitation, under the headings "Risk Factors -- Government Regulation," "Business -- Aircraft and -- Government Regulation" are accurate in all material respects, and comply as to form in all material respects with the applicable requirements of the 1933 Act and the 1933 Act Regulations. (xxi) The Company is not in violation of any Federal, state or local laws and regulations relating to pollution or protection of human health or the environment (including, without limitation, ambient air, surface water, ground 7 8 water, land surface or subsurface strata), including, without limitation, laws and regulations relating to emissions, discharges, releases or threatened releases of toxic or hazardous substances, materials or wastes, or petroleum and petroleum products ("Materials of Environmental Concern"), or otherwise relating to the protection of human health and safety, or the storage, disposal, transport or handling of Materials of Environmental Concern (collectively, "Environmental Laws"), which violation includes, but is not limited to, noncompliance with any permits or other governmental authorizations, excluding any violations which individually or in the aggregate would not have a material adverse effect on the condition, financial or otherwise, or in the earnings, business affairs or business prospects of the Company; the Company has not received any communication (written or oral), whether from a governmental authority or otherwise, alleging any such violation or noncompliance, and there are no circumstances, either past, present or that are reasonably foreseeable, that may lead to such violation in the future; there is no pending or threatened claim, action, investigation or notice (written or oral) by any person or entity alleging potential liability for investigatory, cleanup, or governmental responses costs, or natural resources or property damages, or personal injuries, attorney's fees or penalties relating to (x) the presence, or release into the environment, of any Material of Environmental Concern at any location owned or operated by the Company, now or in the past, or (y) circumstances forming the basis of any violation, or alleged violation, of any Environmental Law (collectively, "Environmental Claims"); and there are no past or present actions, activities, circumstances, conditions, events or incidents, that could form the basis of any Environmental Claim against the Company or against any person or entity whose liability for any Environmental Claim the Company has retained or assumed either contractually or by operation of law. In the ordinary course of its business, the Company conducts a periodic review of the effect of Environmental Laws on the business, operations and properties of the Company, in the course of which it identifies and evaluates associated costs and liabilities (including, without limitation, any capital or operating expenditures required for clean-up, closure of properties or compliance with Environmental Laws or any permit, license or approval, any related constraints on operating activities and any potential liabilities to third parties); on the basis of such review, the Company has reasonably concluded that such associated costs and liabilities could not singly or in the aggregate, have a material adverse effect on the condition, financial or otherwise, or in the earnings, business affairs or business prospects of the Company. (xxii) The Common Stock is listed on the New York Stock Exchange and has been registered under Section 12(b) of the Securities Exchange Act of 1934 Act, as amended (the "1934 Act"). 8 9 (xxiii) All tax returns required to be filed by the Company have been timely filed and such returns are true, complete and correct in all material respects. All taxes due or claimed to be due from the Company that are due and payable have been paid, other than those (i) being contested in good faith and for which an adequate reserve or accrual has been established in accordance with GAAP or (ii) those currently payable without penalty or interest for which an adequate reserve or accrual has been established or extensions duly paid. Except as described in the Prospectus, the Company does not know of (A) any actual or proposed material additional tax assessments or (B) any probable basis for the imposition of any material additional tax assessments for any fiscal period against the Company. (b) Each of the Selling Stockholders severally and not jointly represents and warrants to, and agrees with, each Underwriter as follows: (i) Such Selling Stockholder has reviewed and is familiar with the Registration Statement and the Pro- spectus contained therein or filed as supplements thereto and, such Selling Stockholder has no reason to believe that the Prospectus (and any amendment, supplement or term sheet thereto) does not (and, as of the Closing Time, as defined in Section 2 below, will not) include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; and such Selling Stockholder is not prompted to sell the Securities to be sold by such Selling Stockholder by any information concerning the Company that is not set forth in the Prospectus or the term sheet. (ii) On the date the Pricing Agreement is executed and at the Closing Time, as defined in Section 2 below (and if any Option Securities are purchased, at the Date of Delivery, as defined in Section 2 below), and, unless the Company has notified you as provided in Section 3(e) below, at all times between the first delivery of the Prospectus and the term sheet, if any, to the Underwriters for their use and the Closing Time, as defined in Section 2 below, (and, if any Option Securities are purchased, the Date of Delivery, as defined in Section 2 below), such parts of the Registration Statement and any amendments and supplements thereto as specifically refer to such Selling Stockholder will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading and such parts of the Prospectus or term sheet, if any, as specifically refer to such Selling Stockholder will not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. 9 10 (iii) Certificates for all of the Securities to be sold by such Selling Stockholder pursuant to this Agreement, in suitable form for transfer by delivery or accompanied by duly executed instruments of transfer or assignment in blank with signatures guaranteed have been deposited with First Interstate Bank of California, as custodian (the "Custodian") pursuant to a Custody Agreement dated as of January 31, 1996 (the "Custody Agreement") for the purpose of effecting delivery pursuant to this Agreement. (iv) This Agreement and the Custody Agreement have been duly authorized, executed and delivered by such Selling Stockholder. The execution and delivery of this Agreement and the Custody Agreement, by such Selling Stockholder and the sale and delivery of the Securities to be sold by such Selling Stockholder do not and will not conflict with, or result in a breach of any of the terms or provisions of, or constitute a default under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of such Selling Stockholder under any contract, indenture, mortgage, loan agreement, note, lease or other agreement or instrument to which such Selling Stockholder is a party or by which it may be bound or to which any of its properties may be subject (except for such conflicts, breaches or defaults or liens, charges or encumbrances that would not have a material adverse effect on the condition, financial or otherwise, or the earnings, business affairs or business prospects of such Selling Stockholder and its subsidiaries considered as one enterprise and would not materially and adversely affect the consummation of the transactions contemplated by this Agreement) or any existing applicable law, rule, regulation, judgment, order or decree of any government, governmental instrumentality or court, domestic or foreign, having jurisdiction over such Selling Stockholder or any of its respective properties. (v) Such Selling Stockholder will, at the Closing Time, as defined in Section 2 below, (and, if any Option Securities are purchased, on the Date of Delivery, as defined in Section 2 below), have good and valid title to the Securities to be sold by such Selling Stockholder pursuant to this Agreement, free and clear of any pledge, lien, security interest, charge, claim, equity or encumbrance of any kind, other than pursuant to this Agreement; such Selling Stockholder has full right, power and authority to sell, transfer and deliver such Securities pursuant to this Agreement; and, upon delivery of such Securities and payment of the purchase price therefor as contemplated in this Agreement, assuming each such Underwriter has no notice of any adverse claim, each of the Underwriters will receive good and valid title to the offered Securities purchased by it from such Selling Stockholder, free and clear of any pledge, lien, security interest, charge, claim, equity or encumbrance of any kind, other than any such pledge, lien, security interest, charge, claim, equity 10 11 or encumbrance created by such Underwriter or resulting from any actions taken by such Underwriter. (vi) For a period of 90 days from the date hereof, such Selling Stockholder will not, without Merrill Lynch's prior written consent, directly or indirectly, sell, offer to sell, grant any option for the sale of, or otherwise dispose of (whether directly or synthetically) or enter into any agreement to sell or otherwise dispose of (whether directly or synthetically) any Common Stock, Class A Common Stock or Warrants or any security convertible into or exchangeable or exercisable for Common Stock, Class A Common Stock or Warrants,except pursuant to a transaction in which all holders of Common Stock may participate on a pro rata basis at the same price per share and on the same economic terms, including without limitation, a tender offer or exchange offer and except for transfers to an affiliate (as such term is defined in Rule 405 of the 1933 Act Regulations. (vii) Such Selling Stockholder has not taken and will not take, directly or indirectly, any action designed to, or that might reasonably be expected to, cause or result in stabilization or manipulation of the price of the Common Stock . (viii) Neither the offer and sale of the Securities being sold by such Selling Stockholder, nor the consummation of any other of the transactions herein contemplated by such Selling Stockholder, will conflict with, or result in a breach or violation of, any Aviation Law. (ix) There are no transfer taxes or other similar fees or charges required under any Aviation Law to be paid in connection with the execution, delivery and performance of this Agreement or the sale by such Selling Stockholder of the Securities to be sold by such Selling Stockholder. (x) Such Selling Stockholder will furnish each of the Underwriters with any such certification or completed forms that may be required under applicable Federal or state tax laws. (c) Any certificate signed by any officer of the Company and delivered to the Representatives or to counsel for the Underwriters shall be deemed a representation and warranty by the Company to each Underwriter as to the matters covered thereby. (d) Any certificate signed by any officer or partner, as the case may be, of a Selling Stockholder and delivered to the Representatives or to counsel for the Underwriters shall be deemed a representation and warranty by such Selling Stockholder to each Underwriter as to the matters covered thereby. 11 12 Section 2. Sale and Delivery to Underwriters; Closing. (a) On the basis of the representations and warranties herein contained and subject to the terms and conditions herein set forth, the Selling Stockholders severally and not jointly agree to sell the number of Initial Securities set forth in Schedule B opposite the name of each Selling Stockholder to each Underwriter, severally and not jointly, and each Underwriter, severally and not jointly, agrees to purchase from the Selling Stockholders, at the price per share set forth in the Pricing Agreement, the number of Initial Securities set forth in Schedule A opposite the name of such Underwriter (except as otherwise provided in the Pricing Agreement), plus any additional number of Initial Securities which such Underwriter may become obligated to purchase pursuant to the provisions of Section 10 hereof. (b) In addition, on the basis of the representations and warranties herein contained and subject to the terms and conditions herein set forth, the two Selling Stockholders identified on Schedule B hereby severally and not jointly grant an option to the Underwriters to purchase up to all of the Option Securities set forth in Schedule B opposite the name of each such Selling Stockholder at the purchase price per share set forth in the Pricing Agreement. The option granted will expire 30 days after the Representation Date and may be exercised in whole or in part from time to time only for the purpose of covering over-allotments which may be made in connection with the offering and distribution of the Initial Securities upon notice by the Representatives to the Company and the Selling Stockholders setting forth the number of Option Securities as to which the several Underwriters are then exercising the option and the time and date of payment and delivery for such Option Securities. Any such time and date of delivery (a "Date of Delivery") shall be determined by the Representatives, but shall not be later than seven full business days after the exercise of said option, nor in any event prior to the Closing Time, as hereinafter defined, unless otherwise agreed by the Representatives, the Company and the Selling Stockholders. If the option is exercised as to all or any portion of the Option Securities, each of the Underwriters, acting severally and not jointly, will purchase that proportion of the total number of Option Securities then being purchased which the number of Initial Securities set forth in Schedule A opposite the name of such Underwriter bears to the total number of Initial Securities (except as otherwise provided in the Pricing Agreement), subject in each case to such adjustments as Merrill Lynch in its discretion shall make to eliminate any purchases of fractional interests, plus any additional number of Option Securities which such Underwriter may become obligated to purchase pursuant to the provisions of Section 10 hereof. If the option is exercised as to all or any portion of the Option Security, each Selling Stockholder, granting such option acting severally and not jointly, will sell that proportion of the total number of Option Securities then being purchased which is the ratio of the number of Option Securities set forth opposite the name of such Selling Stockholder on Schedule B bears to the total number of Option Securities. (c) Payment of the purchase price for the Securities shall be made at the office of Skadden, Arps, Slate, Meagher & Flom, 300 South Grand Avenue, Los Angeles, California, or at such other place as shall be agreed upon by the Representatives, the Selling Stockhold- 12 13 ers and the Company, at 7:00 A.M. California time on the third business day (unless postponed in accordance with the provisions of Section 10) after execution of the Pricing Agreement, or such other time not later than ten business days after such date as shall be agreed upon by the Representatives, the Selling Stockholders and the Company (such time and date of payment and delivery being herein called the "Closing Time"). Payment shall be made to the respective Selling Stockholders by certified or official bank check or checks drawn in New York Clearing House funds or similar next day funds payable to the order of the respective Selling Stockholders, against delivery to the Representatives at Merrill Lynch's World Headquarters, North Tower, World Financial Center, New York, New York 10281, for the respective accounts of the Underwriters of certificates for the Securities to be purchased by them. Certificates, if any, for the Securities shall be in such denominations and registered in such names as the Representatives may request in writing, of the Custodian on behalf of the Selling Stockholders, at least two business days before the Closing Time. It is understood that each Underwriter has authorized the Representatives, for their account, to accept delivery of, receipt for, and make payment of the purchase price for, the Securities which it has agreed to purchase. Merrill Lynch, individually and not as representative of the Underwriters, may (but shall not be obligated to) make payment of the purchase price for the Securities to be purchased by any Underwriter whose check has not been received by the Closing Time, but such payment shall not relieve such Underwriter from its obligations hereunder. The certificates, if any, for the Securities will be made available, by the Custodian on behalf of the Selling Stockholders, for examination and packaging by the Representatives not later than 10:00 A.M. on the last business day prior to the Closing Time at Merrill Lynch's World Headquarters, North Tower, World Financial Center, New York, New York 10281. (d) In addition, in the event that any or all of the Option Securities are purchased by the Underwriters, payment of the purchase price for such Option Securities shall be made at the above-mentioned offices of Skadden, Arps, Slate, Meagher & Flom, or at such other place as shall be agreed upon by the Representatives, the Selling Stockholders granting the option for the Option Securities and the Company, on each Date of Delivery as specified in the notice from the Representatives to the Company and the Selling Stockholders granting the option for the Option Securities. Payment shall be made to the respective Selling Stockholders by certified or official bank check or checks drawn in New York Clearing House funds or similar next day funds payable to the order of such Selling Stockholders, against delivery to the Representatives at the above mentioned offices of Merrill Lynch for such accounts of the Underwriters of certificates for the Option Securities to be purchased by them. Certificates for the Option Securities, if any, shall be in such denominations and registered in such names as the Representatives may request in writing of the Custodian at least two business days before the Closing Time or the relevant Date of Delivery, as the case may be. It is understood that each Underwriter has authorized the Representatives, for their accounts, to accept delivery of, receipt for, and make payment of the purchase price for the Option Securities, if any, which it has agreed to purchase. Merrill Lynch, individually and not as representative of the Underwriters, may (but shall not be obligated to) make payment of the 13 14 purchase price for the Option Securities, if any, to be purchased by any Underwriter whose check has not been received by the relevant Date of Delivery, as the case may be, but such payment shall not relieve such Underwriter from its obligations hereunder. The certificates, for the Option Securities, if any, will be made available, by the Custodian on behalf of the Selling Stockholders granting the option for the Option Securities, for examination and packaging by the Representatives not later than 10:00 A.M. on the last business day prior to the relevant Date of Delivery. For purposes of this agreement "business day" means a day on which the New York Stock Exchange is open for business. Section 3. Covenants of the Company. The Company covenants with each Underwriter as follows: (a) The Company will, for so long as the Underwriters are required to deliver a prospectus in connection with the offer and sale of the Securities, notify the Representatives immediately (i) of the effectiveness of any post-effective amendment to the Registration Statement filed in connection with the offering of the Securities, (ii) of the receipt of any comments from the Commission, (iii) of any request by the Commission for any amendment to the Registration Statement or any amendment or supplement to the Prospectus or for additional information, and (iv) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for that purpose. The Company will make every reasonable effort to prevent the issuance of any stop order and, if any stop order is issued, to obtain the lifting thereof at the earliest possible moment. (b) The Company will, for so long as the Underwriters are required to deliver a prospectus in connection with the offer and sale of the Securities, give the Representatives notice of its intention to file or prepare any post-effective amendment to the Registration Statement or any amendment or supplement to the Prospectus (including any revised prospectus which the Company proposes for use by the Underwriters in connection with the offering of the Securities or any term sheet (whether or not such revised prospectus or term sheet is required to be filed pursuant to Rules 424(b) or 434 of the 1933 Act Regulations), whether pursuant to the 1933 Act, the 1934 Act or otherwise), will furnish the Representatives with copies of any such amendment or supplement or term sheet a reasonable amount of time prior to such proposed filing or use, as the case may be, and will not file any such amendment or supplement or term sheet or use any such prospectus to which the Representatives or counsel for the Underwriters shall object. (c) The Company will deliver to each Representative a signed copy of any post-effective amendment to the Registration Statement made in connection with the offering of the Securities (including exhibits filed therewith or incorporated by reference therein and documents incorporated or deemed to be incorporated by reference therein) and will also deliver to the Representatives a conformed copy of the Regis- 14 15 tration Statement as originally filed and of each amendment, post-effective amendment or supplement or term sheet thereto (without exhibits) for each of the Underwriters. (d) The Company will furnish to each Underwriter, from time to time during the period when the Prospectus is required to be delivered under the 1933 Act or the 1934 Act, such number of copies of the Prospectus (as amended or supplemented) and the term sheet, if any, as such Underwriter may reasonably request for the purposes contemplated by the 1933 Act or the 1934 Act or the respective applicable rules and regulations of the Commission thereunder. (e) If any event shall occur as a result of which it is necessary, in the opinion of counsel for the Underwriters or counsel for the Company, to amend or supplement the Prospectus in order to make the Prospectus not misleading in the light of the circumstances existing at the time it is delivered to a purchaser, the Company will forthwith amend or supplement the Prospectus (in form and substance satisfactory to counsel for the Underwriters) so that, as so amended or supplemented, the Prospectus will not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances existing at the time it is delivered to a purchaser, not misleading, and the Company will furnish to the Underwriters [and the Selling Stockholders] a reasonable number of copies of such amendment or supplement. (f) The Company will endeavor, in cooperation with the Underwriters, to qualify the Securities for offering and sale under the applicable securities laws of such states and other jurisdictions of the United States as the Representatives may designate; provided, however, that the Company shall not be obligated to qualify as a foreign corporation in any jurisdiction in which it is not so qualified. In each jurisdiction in which the Securities have been so qualified, the Company will file such statements and reports as may be required by the laws of such jurisdiction to continue such qualification in effect for a period of not less than one year from the date of the Pricing Agreement. The Company will inform the Florida Department of Banking and Finance if prior to the completion of the distribution of the Securities by the Underwriters the Company commences engaging in business with the government of Cuba or with any person or affiliate located in Cuba. Such information will be provided within 90 days of the commencement thereof or after a change to any such previously reported information. (g) The Company will make generally available to its security holders as soon as practicable, but not later than 90 days after the close of the period covered thereby, an earnings statement (in form complying with the provisions of Rule 158 of the 1933 Act Regulations) covering a twelve-month period beginning not later than the first day of the Company's fiscal quarter next following the "effective date" (as defined in said Rule 158) of the Registration Statement. 15 16 (h) Immediately following the execution of the Pricing Agreement, the Company will prepare, and file or transmit for filing with the Commission in accordance with Rules 434 and 424(b) of the 1933 Act Regulations, copies of an amended Prospectus supplement and term sheet, if any, to the Registration Statement, containing all omitted information. (i) The Company, during the period when the Prospectus is required to be delivered under the 1933 Act or the 1934 Act, will file all documents required to be filed with the Commission pursuant to Section 13, 14 or 15 of the 1934 Act within the time periods required by the 1934 Act and the rules and regulations of the Commission under the 1934 Act. (j) During a period of 90 days from the Representation Date, the Company will not, without Merrill Lynch's prior written consent, directly or indirectly, sell, offer to sell, grant any option for the sale of, or otherwise dispose of (whether directly or synthetically) or enter into any agreement to sell or otherwise dispose of (whether directly or synthetically) any Common Stock, Class A Common Stock or Warrants or any security convertible into or exchangeable into or exercisable for Common Stock (except for Common Stock issued pursuant to reservations, agreements, employee benefit plans, the exercise of Warrants or the exercise of convertible securities referred to in Section 1(a)(vii) hereof), Class A Common Stock or Warrants. (k) If the Company uses Rule 434 of the 1933 Act Regulations, it will comply with the requirements of Rule 434 of such regulations and the Prospectus will not be "materially different," as such term is used in Rule 434 of the 1933 Act Regulations, from the Prospectus first given to the Underwriters for their use. (l) The Company will use its best efforts to cause the continued listing of the Common Stock on the New York Stock Exchange. Section 4. Payment of Expenses. The Company or the Selling Stockholders, as such parties may agree, will pay all expenses incident to the performance of its obligations under this Agreement, including (i) the printing and filing of any post-effective amendment to the Registration Statement required in connection with the sale of the Securities, (ii) the preparation, issuance and delivery of the certificates for the Securities to the Underwriters, (iii) the fees and disbursements of the Company's counsel and accountants, (iv) the qualification of the Securities under securities laws in accordance with the provisions of Section 3(f) hereof, including filing fees and the fees and disbursements of counsel for the Underwriters in connection therewith and in connection with the preparation of the Blue Sky Survey and any Legal Investment Survey, (v) the printing and delivery to the Underwriters of copies of the Registration Statement as originally filed and of each amendment thereto, of each preliminary prospectus supplement, and of the Prospectus and any amendments or supplements thereto, (vii) the printing and 16 17 delivery to the Underwriters of copies of the Blue Sky Survey and any Legal Investment Survey, (viii) the fees and expenses of continuing the listing of the Common Stock on the New York Stock Exchange and (ix) the fee of the National Association of Securities Dealers, Inc. If this Agreement is terminated by the Representatives in accordance with the provisions of Section 5 or Section 9(a)(i) hereof, the Company shall reimburse the Underwriters for all of their out-of-pocket expenses, including the reasonable fees and disbursements of counsel for the Underwriters. Section 5. Conditions of Underwriters' Obligations. The obligations of the Underwriters hereunder are subject to the accuracy of the representations and warranties of the Company and the Selling Stockholders herein contained, to the performance by the Company and the Selling Stockholders of their obligations hereunder, and to the following further conditions: (a) The Registration Statement, as amended, shall have become effective on or prior to the date of this Agreement. At the Closing Time, no stop order suspending the effectiveness of the Registration Statement shall have been issued under the 1933 Act or proceedings therefor initiated or threatened by the Commission. The price of the Securities and any price-related information previously omitted from the effective Registration Statement and any term sheet used pursuant to Rule 434 of the 1933 Act Regulations shall have been transmitted to the Commission for filing pursuant to Rule 424(b) of the 1933 Act Regulations within the prescribed time period and prior to the Closing Time the Company shall have provided evidence satisfactory to the Representatives of such timely filing, or a post-effective amendment providing such information shall have been promptly filed and declared effective. (b) At the Closing Time, the Representatives shall have received: (i) The favorable opinion, dated as of the Closing Time, of Andrews & Kurth, L.L.P., counsel for the Company, in form and substance satisfactory to counsel for the Underwriters, to the effect that: a. The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the state of Delaware. b. The Company has corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Registration Statement and to enter into and perform its obligations under this Agreement and the Pricing Agreement. 17 18 c. The Shares of Common Stock to be sold by the Selling Stockholders have been duly authorized and validly issued and are fully paid and nonassessable. d. The issuance of the Securities was not subject, at the date of issue, to statutory preemptive or, other similar rights arising by operation of law, under the charter or bylaws of the Company or, to the best of their knowledge and information, after due inquiry,. under any agreement to which the Company is a party. e. This Agreement and the Pricing Agreement have each been duly authorized, executed and delivered by the Company. f. The Registration Statement and all post effective amendments thereto were declared effective under the 1933 Act and, to the best of their knowledge and information, no stop order suspending the effectiveness of the Registration Statement has been issued under the 1933 Act or proceedings therefor initiated or threatened by the Commission. g. The Registration Statement at its effective time and at the Representation Date (other than the financial statements, financial and statistical information and supporting schedules included therein, as to which no opinion need be rendered) complied as to form in all material respects with the requirements of the 1933 Act and the 1933 Act Regulations. h. The Common Stock and the Class A Common Stock conform to the description thereof contained in the Prospectus under the caption "Description of Capital Stock" and the Warrants conform to the description thereof contained in the Prospectus under the caption "Description of Warrants" and the form of certificate used to evidence the Common Stock complies with the requirements of the Delaware General Corporation Law. i. To the best of their knowledge and information, the Company is not in violation of its charter or bylaws which violation could have a material adverse effect on the condition, financial or otherwise, or on the earnings, business affairs or business prospects of the Company. j. To the best of their knowledge and information, there are no contracts, indentures, mortgages, loan agreements, notes, leases or 18 19 other instruments required to be described or referred to in the Registration Statement or to be filed as exhibits thereto other than those described or referred to therein or filed as exhibits thereto, and the descriptions thereof or references thereto are fair and accurate summaries of such agreements or instruments. k. No authorization, approval, consent or order of any court or governmental authority or agency is required in connection with the offering or sale of the Securities to the Underwriters, except such as may be required under the 1933 Act or the 1933 Act Regulations or state securities law. l. To the best of their knowledge and information, the execution, delivery and performance of this Agreement and the Pricing Agreement and the consummation of the transactions contemplated herein and therein and compliance by the Company with its obligations hereunder and thereunder will not conflict with or constitute a breach of, or default under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company pursuant to any contract, indenture, mortgage, loan agreement, note, lease or other instrument to which the Company is a party or by which it is or it may be bound, or to which any of the property or assets of the Company is subject, nor will such action result in any violation of the provisions of the charter or bylaws of the Company, or any applicable law (applicable law for this purposes shall be limited to those United States statutes, laws or regulations currently in effect which, in such counsel's experience, are normally applicable to transactions of the type contemplated by this Agreement). m. To such counsel's knowledge, there are no persons with registration or other similar rights to have any securities registered pursuant to the Registration Statement or to participate in the offering of the Securities contemplated by this Agreement, except such as have been waived in writing or complied with by the inclusion of such Stockholders in the Registration Statement or the inclusion of such persons as Selling Stockholders in Schedule B hereto, as the case may be. In addition such counsel shall state that they have participated in conferences with directors, officers and other representatives of the Company, the Representatives, the Company's independent accountants, counsel for the Selling Stockholders and counsel for the Underwriters, at which conferences the contents of the Registration Statement 19 20 and the Prospectus and related matters were discussed and, although they are not passing upon, and do not assume any responsibility for, the accuracy, completeness or fairness of the statements contained in the Registration Statement or Prospectus, and they have not made any independent check or verification thereof, on the basis of the foregoing, nothing has come to their attention that would lead them to believe that the Registration Statement, as amended, (except for financial statements and other financial and statistical data included therein), at the time it became effective, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading or that the Prospectus (except for the financial statements and other financial and statistical data contained therein), at the Representation Date (unless the term "Prospectus" refers to a prospectus which has been provided to the Underwriters by the Company for use in connection with the offering of the Securities which differs from the Prospectus on file at the Commission at the Representation Date, in which case at the time it is first provided to the Underwriters for such use) or at the Closing Time, included any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstance in which they are made, not misleading. (ii) The favorable opinion or opinions of counsel to each of the Selling Stockholders (such counsel may be counsel employed by such Selling Stockholder), dated as of the Closing Time, such counsel and the form and substance of such opinion being satisfactory to counsel for the Underwriters, to the effect that: a. Assuming that (i) each of the Underwriters acquired its interest in the Securities to be sold by the Selling Stockholders pursuant to this Agreement in good faith and without any notice of any adverse claim or restriction on transfer of any of the Securities imposed by the Company, except as disclosed in the Prospectus, and (ii) the certificates representing the Securities and registered in the names of the Underwriters do not contain a lien in favor of the Company or a restriction on transfer imposed by the Company, except as disclosed in the Prospectus, upon delivery to the Representatives as agent for the Underwriters in the State of New York of such Securities registered in such Underwriters' names, the Underwriters will acquire all of the Selling Stockholders rights in the Securities free and clear of any adverse claim (within the meaning of Section 8-302 of the New York Uniform Commercial Code) of any person, any lien in favor of the Company and any 20 21 restriction on transfer imposed by the Company, except as disclosed in the Prospectus. The owner of such Securities, if other than such Selling Stockholder, is precluded from asserting against the Underwriters the ineffectiveness of any unauthorized endorsements. b. This Agreement and the Custody Agreement have been duly authorized, executed and delivered by such Selling Stockholder. The execution and delivery of this Agreement by such Selling Stockholder and the sale and delivery of the Securities to be sold by such Selling Stockholder do not and will not conflict with, or result in a breach of any of the terms or provisions of, or constitute a default under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of such Selling Stockholder under any contract, indenture, mortgage, loan agreement, note, lease or other agreement or instrument to which such Selling Stockholder is a party or by which it may be bound or to which any of its properties may be subject or any existing applicable law, rule, regulation, judgment, order or decree of any government, governmental instrumentality or court, domestic or foreign, having jurisdiction over such Selling Stockholder or any of its respective properties (except for such conflicts, breaches or defaults or liens, charges or encumbrances that would not [have a material adverse effect on the condition, financial or otherwise, or the earnings, business affairs or business prospects of such Selling Stockholder and its subsidiaries considered as one enterprise and would not] materially and adversely affect the consummation of the transactions contemplated by this Agreement). (iii) The favorable opinion, dated as of the Closing Time, of Winthrop, Stimson, Putnam and Roberts, special aviation regulatory counsel for the Company, in form and substance satisfactory to counsel for the Underwriters, to the effect that: a. The Company is an "air carrier" and after consummation of the transactions contemplated herein will be a "citizen of the United States," within the meaning of the Federal Aviation Act of 1958, as amended; b. The Company has such licenses, certificates, permits and other governmental authorizations from the Department of Transportation, as successor to the Civil Aeronautics Board, the Federal Aviation Administration, the Federal Communications Commission and any other federal, state or local transportation or aviation regulatory authority as are necessary to own its properties and to conduct its business in 21 22 the manner described in the Prospectus, and no such license, certificate, permit or other governmental authorization is the subject of any "show cause" or other order of, or any proceeding before, or any investigation by, any such authority (other than proceedings for the renewal of temporary rights), which in the opinion of such counsel might reasonably result in a final order impairing the validity of such licenses, certificates, permits and other governmental authorizations; c. To the best knowledge of such counsel, there is no pending or threatened action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company or their property and involving (A) licenses, certificates, permits or other governmental authorizations issued by or from the Department of Transportation, the Federal Aviation Administration, the Federal Communications Commission or any other federal or any state transportation or aviation regulatory authority or (B) the Federal Aviation Act of 1958, as amended ((A) and (B) together, "Aviation Laws") that is of a character required to be disclosed in the Prospectus; and the statements in the Prospectus under the heading "Business -- Government Regulation" fairly summarize in all material respects the matters therein described as they relate to Aviation Laws; d. No consent, approval, authorization, filing with or order of any court or governmental agency or body involving Aviation Laws is required for consummation of the transactions contemplated herein, other than as has been obtained or performed; e. Neither the sale of the Securities being sold by the Selling Stockholders nor the consummation of any other of the transactions herein contemplated by the Company and the Selling Stockholders will conflict with, or result in a breach or violation of, any Aviation Law; f. There are no transfer taxes or other similar fees or charges required under any Aviation Law to be paid in connection with the execution, delivery and performance of this Agreement or the sale by the Selling Stockholders of the Securities; and g. The descriptions in the Registration Statement of laws, regulations and rules, of legal and governmental proceedings and of contracts, agreements, leases and other documents, in so far as they relate to Aviation Laws, including, without limitation, under the headings "Risk Factors -- Government Regulation," "Risk Factors -- Limitation on Voting by Foreign Owners," "Business -- Aircraft and -- 22 23 Government Regulation" have been reviewed by such counsel and are accurate in all material respects, and comply as to form in all material respects with the applicable requirements of the 1933 Act and the 1933 Act Regulations. In addition, solely in its capacity as special regulatory counsel for the Company such counsel shall state that they have no reason to believe that at the Closing Time the Registration Statement contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein not misleading or that the Prospectus, as of its date or the Closing Time, included or includes any untrue statement of a material fact or omitted or omits to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. In rendering such opinion, such counsel may rely as to matters of fact, to the extent they deem proper, on certificates of responsible officers of the Company and public officials. (iv) The favorable opinion, dated as of the Closing Time, of Stephen L. Johnson, Senior Vice President - Legal Affairs, in form and substance satisfactory to counsel for the Underwriters, addressed to the Representatives and each Selling Stockholder to the effect that: a. To the best of his knowledge and information, the Company is duly qualified as a foreign corporation to transact business and is in good standing in each jurisdiction in which such qualification is required. b. To the best of his knowledge and information, there are no legal or governmental proceedings pending or threatened which are required to be disclosed in the Registration Statement, other than those disclosed therein, and all pending legal or governmental proceedings to which the Company is a party or to which any of their property is subject which are not described in the Registration Statement, including ordinary routine litigation incidental to the business, are, considered in the aggregate, not material. c. The information in the Prospectus under "Risk Factors -- Labor Negotiations," "Business -- Labor Relations, -- Facilities and -- Government Regulation," to the extent that it constitutes matters of law, summaries of legal matters, documents or proceedings, or legal conclusions, has been reviewed by him and is correct in all material respects, except as to Aviation Laws as to which he need not express any opinion. 23 24 d. To the best of his knowledge and information, there are no contracts, indentures, mortgages, loan agreements, notes, leases or other instruments required to be described or referred to in the Registration Statement or to be filed as exhibits thereto other than those described or referred to therein or filed as exhibits thereto, the descriptions thereof or references thereto are correct, and no default (except for defaults which, individually or in the aggregate would not materially and adversely affect the condition, financial or otherwise, or the earnings, business affairs or business prospects of the Company) exists in the due performance or observance of any obligation, agreement, covenant or condition contained in any contract, indenture, mortgage, loan agreement, note, lease or other instrument so described, referred to, or filed. He and lawyers under his supervision have participated in conferences with directors, officers and other representatives of the Company, the Representatives, the Company's independent accountants, counsel for the Selling Stockholders and counsel for the Underwriters, at which conferences the contents of the Registration Statement and the Prospectus and related matters were discussed and, although he is not passing upon, and does not assume any responsibility for, the accuracy, completeness or fairness of the statements contained in the Registration Statement or Prospectus, and he has not made any independent check or verification thereof, on the basis of the foregoing, nothing has come to his attention that would lead him to believe that the Registration Statement, as amended (except for financial statements and other financial data included therein), at the time it became effective, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading or that the Prospectus (except for the financial statements and other financial information contained therein), at the Representation Date (unless the term "Prospectus" refers to a prospectus which has been provided to the Underwriters by the Company for use in connection with the offering of the Securities which differs from the Prospectus on file at the Commission at the Representation Date, in which case at the time it is first provided to the Underwriters for such use) or at the Closing Time, included any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. (v) The favorable opinion, dated as of the Closing Time, of Skadden, Arps, Slate, Meagher & Flom, counsel for the Underwriters, with respect to the matters set forth in (a), (d), (e) (solely as to preemptive rights arising by operation of law or under the charter or bylaws of the Company), (h), (i) and (j), of subsection (b)(i) of this Section, except that, with respect to the matters 24 25 referred to in (d), no opinion need be expressed as to whether any of the Company's outstanding shares of Common Stock, other than the Securities, have been duly authorized or validly issued or are fully paid or nonassessable. In giving their opinions required by subsection (b)(v) of this Section 5, Skadden, Arps, Slate, Meagher & Flom shall additionally state that nothing has come to their attention that would lead them to believe that the Registration Statement (except for financial statements and schedules and other financial or statistical data included therein, as to which counsel need make no statement), at the Representation Date, contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading or that the Prospectus (except for financial statements and schedules and other financial or statistical data included therein, as to which counsel need make no statement), at the time it is first provided to the Underwriters for such use or at the Closing Time, included or includes an untrue statement of a material fact or omitted or omits to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. (c) At the Closing Time there shall not have been, since the date hereof or since the respective dates as of which information is given in the Registration Statement and the Prospectus, any material adverse change in the condition, financial or otherwise, or in the earnings, business affairs or business prospects of the Company, whether or not arising in the ordinary course of business, and the Representatives shall have received a certificate of the chairman of the board and chief executive officer of the Company and of the chief financial officer of the Company, dated as of the Closing Time, to the effect that (i) there has been no such material adverse change, (ii) the representations and warranties in Section 1 hereof are true and correct with the same force and effect as though expressly made at and as of the Closing Time, (iii) the Company has complied with all agreements and satisfied all conditions on its part to be performed or satisfied at or prior to the Closing Time, and (iv) no stop order suspending the effectiveness of the Registration Statement has been issued and no proceedings for that purpose have been initiated or threatened by the Commission. (d) At the time of the execution of this Agreement, the Representatives shall have received from KPMG Peat Marwick, L.L.P. a letter dated such date, in form and substance satisfactory to the Representatives, to the effect that (i) they are independent public accountants with respect to the Company within the meaning of the 1933 Act and the 1933 Act Regulations; (ii) it is their opinion that the financial statements and supporting schedules included in the Registration Statement and covered by their opinions therein comply as to form in all material respects with the applicable accounting requirements of the 1933 Act and the 1933 Act Regulations; 25 26 (iii) based upon limited procedures set forth in detail in such letter, nothing has come to their attention which causes them to believe that (A) the unaudited financial statements and supporting schedules of the Company included in the Registration Statement do not comply as to form in all material respects with the applicable accounting requirements of the 1933 Act and the 1933 Act Regulations or are not presented in conformity with generally accepted accounting principles applied on a basis substantially consistent with that of the audited financial statements included in the Registration Statement, (B) the unaudited amounts of revenues, net income and net income per share set forth under "Selected Financial Data" in the Prospectus were not determined on a basis substantially consistent with that used in determining the corresponding amounts in the audited financial statements included in the Registration Statement, or (C) at a specified date not more than five days prior to the date of this Agreement, there has been any change in the capital stock of the Company or any increase in the long term debt of the Company or any decrease in net current assets or net assets as compared with the amounts shown in the balance sheet included in the Registration Statement or, during the period from September 30, 1995 to a specified date not more than five days prior to the date of this Agreement, there were any decreases, as compared with the corresponding period in the preceding year, in revenues, net income or net income per share of the Company, except in all instances for changes, increases or decreases which the Registration Statement and the Prospectus disclose have occurred or may occur; and (iv) in addition to the audit referred to in their opinions and the limited procedures referred to in clause (iii) above, they have carried out certain specified procedures, not constituting an audit, with respect to certain amounts, percentages and financial information which are included in the Registration Statement and Prospectus and which are specified by the Representatives, and have found such amounts, percentages and financial information to be in agreement with the relevant accounting, financial and other records of the Company identified in such letter. (e) At the Closing Time the Representatives shall have received from KPMG Peat Marwick, L.L.P. a letter, dated as of the Closing Time, to the effect that they reaffirm the statements made in the letter furnished pursuant to subsection (d) of this Section, except that the specified date referred to shall be a date not more than five days prior to the Closing Time and, to the further effect that they have carried out procedures as specified in clause (iv) of subsection (d) of this Section with respect to certain amounts, percentages and financial information specified by the Representatives and have found such amounts, percentages and financial information to be in agreement with the records specified in such clause (iv). (f) At the Closing Time and at each Date of Delivery, the Securities shall continue to be listed on the New York Stock Exchange. 26 27 (g) At the Closing Time and at each Date of Delivery, if any, counsel for the Underwriters shall have been furnished with such documents and opinions as they may reasonably require and have specifically requested prior to such time for the purpose of enabling them to pass upon the offer and sale of the Securities as herein contemplated and related proceedings, or in order to evidence the accuracy of any of the representations or warranties, or the fulfillment of any of the conditions, herein contained; and all proceedings taken by the Company and the Selling Stockholders in connection with the offer and sale of the Securities as herein contemplated shall be satisfactory in form and substance to the Representatives and counsel for the Underwriters. (h) In the event that the Underwriters exercise their option provided in Section 2(b) hereof to purchase all or any portion of the Option Securities, the representations and warranties of the Company contained herein and the statements in any certificates furnished by the Company hereunder shall be true and correct as of each Date of Delivery and, at the relevant Date of Delivery, the Representatives shall have received: (i) A certificate, dated such Date of Delivery, of the chairman and chief executive officer of the Company and of the chief financial officer of the Company confirming that the certificate delivered at the Closing Time pursuant to Section 5(c) hereof remains true and correct as of such Date of Delivery. (ii) The favorable opinion of Andrews & Kurth, L.L.P., counsel for the Company, in form and substance satisfactory to counsel for the Underwriters, dated such Date of Delivery, relating to the Option Securities to be purchased on such Date of Delivery and otherwise to the same effect as the opinion required by Section 5(b)(i) hereof. (iii) The favorable opinion or opinions of counsel for each of the Selling Stockholders (such counsel may be counsel employed by such Selling Stockholder), in form and substance satisfactory to counsel for the Underwriters, dated such Date of Delivery, relating to the Option Securities to be purchased on such Date of Delivery and otherwise to the same effect as the opinion required by Section 5(b)(ii) hereof. (iv) The favorable opinion of Winthrop, Stimson, Putnam & Roberts, special aviation regulatory counsel to the Company, in form and substance satisfactory to counsel to Underwriters confirming their opinion delivered at the Closing Time, pursuant to Section 5(b)(iii) hereof, remains their opinion on such Date of Delivery. 27 28 (v) The favorable opinion of Stephen L. Johnson, Senior Vice President Legal Affairs, in form and substance satisfactory to counsel for the Underwriters, dated such Date of Delivery, relating to the Option Securities to be purchased on such Date of Delivery and otherwise to the same effect as the statement required by Section 5(b)(iv) hereof. (vi) The favorable opinion of Skadden, Arps, Slate, Meagher & Flom, counsel for the Underwriters, dated such Date of Delivery, relating to the Option Securities to be purchased on such Date of Delivery and otherwise to the same effect as the opinion required by Section 5(b)(v) hereof. (vii) A letter from KPMG Peat Marwick, L.L.P., in form and substance satisfactory to the Representatives and dated such Date of Delivery, substantially the same in form and substance as the letter furnished to the Representatives and the Selling Stockholders pursuant to Section 5(e) hereof, except that the "specified date" in the letter furnished pursuant to this Section 5(h)(vii) shall be a date not more than five days prior to such Date of Delivery. If any condition specified in this Section shall not have been fulfilled when and as required to be fulfilled, this Agreement may be terminated by the Representatives by notice to the Company and each Selling Stockholder at any time at or prior to the Closing Time, and such termination shall be without liability of any party to any other party except as provided in Section 4 hereof. Section 6. Indemnification. (a) The Company agrees to indemnify and hold harmless each Underwriter and each person, if any, who controls any Underwriter within the meaning of Section 15 of the 1933 Act as follows: (i) against any and all loss, liability, claim, damage and expense whatsoever, as incurred, arising out of any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement (or any amendment thereto), or the omission or alleged omission therefrom of a material fact required to be stated therein or necessary to make the statements therein not misleading or arising out of any untrue statement or alleged untrue statement of a material fact contained in any preliminary prospectus, the Prospectus (or any amendment, supplement or term sheet thereto) or the omission or alleged omission therefrom of a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; (ii) against any and all loss, liability, claim, damage and expense whatsoever, as incurred, to the extent of the aggregate amount paid in settlement of any litigation, or any investigation or proceeding by any governmental 28 29 agency or body, commenced or threatened, or of any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission, if such settlement is effected with the written consent of the Company; and (iii) against any and all expense whatsoever, as incurred (including, subject to Section 6(c) hereof, the fees and disbursements of counsel chosen by Merrill Lynch), reasonably incurred in investigating, preparing or defending against any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based upon any such untrue statement or omission, to the extent that any such expense is not paid under (a)(i) or (a)(ii) above; provided, however, that this indemnity agreement shall not apply to any loss, liability, claim, damage or expense to the extent arising out of any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with written information furnished to the Company by any Underwriter through the Representatives expressly for use in the Registration Statement (or any amendment thereto) or any preliminary prospectus or the Prospectus (or any amendment, supplement or term sheet thereto). (b) Each Selling Stockholder jointly, and not severally, agrees to indemnify and hold harmless each Underwriter and each person, if any, who controls any Underwriter within the meaning of Section 15 of the 1933 Act as follows: (i) against any and all loss, liability, claim, damage and expense whatsoever, as incurred, arising out of any untrue statement or alleged untrue statement of a material fact made or omitted in reliance upon and in conformity with public documents, oral information furnished to the Company or written information furnished to the Company pertaining to such Selling Stockholder and included in or omitted from the Registration Statement (or any amendment thereto), and the omission or alleged omission therefrom of a material fact referring to such Selling Stockholder required to be stated therein or necessary to make the statements therein not misleading or arising out of any untrue statement or alleged untrue statement of a material fact contained in any preliminary prospectus, the Prospectus (or any amendment, supplement or term sheet thereto) or the omission or alleged omission therefrom of a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; (ii) against any and all loss, liability, claim, damage and expense whatsoever, as incurred, to the extent of the aggregate amount paid in settle- 29 30 ment of any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or of any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission, if such settlement is effected with the written consent of such Selling Stockholder; and (iii) against any and all expense whatsoever, as incurred (including, subject to Section 6(c) hereof, the fees and disbursements of counsel chosen by Merrill Lynch), reasonably incurred in investigating, preparing or defending against any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based upon any such untrue statement or omission, to the extent that any such expense is not paid under (b)(i) or (b)(ii) above; provided, however, that each Selling Stockholder's maximum aggregate liability to indemnify or otherwise make payments to the Underwriters and each person, if any, who controls any Underwriter within the meaning of Section 15 of the 1933 Act pursuant to the indemnity agreement under this Section 6(b) and for any breach of the representations and warranties of such Selling Stockholder set forth in Section 1(b)(ii) of this Agreement shall be limited to the aggregate amount of the gross proceeds (after deducting the Underwriters' discount but before deducting expenses) received by such Selling Stockholder from the sale of such Selling Stockholder's Securities pursuant to this Agreement. provided, further, that each Selling Stockholder agrees to indemnify and hold harmless each Underwriter and each person, if any, who controls andy Underwriter within the meaning of Section 15 of the 1933 Act against any all loss, liability, claim, damage and expense whatsoever, as incurred, arising out of a breach of such Selling Stockholder's representation and warranty set forth in Section 1(b)(i) and 1(b)(iii) through 1(b)(x). (c) The indemnity agreement contained in this Section 6, with respect to any preliminary prospectus, shall not inure to the benefit of any Underwriter, or any person who controls an Underwriter within the meaning of Section 15 of the 1933 Act to the extent that any loss, liability, claim, damage or expense results from the fact that a copy of the Prospectus was not sent or given, at or prior to the written confirmation of the sale of Common Stock, by or on behalf of such Underwriter to the person asserting such loss, claim, damage or liability to the extent that delivery of the Prospectus would have cured the defect giving rise to such loss, claim, damages, liability or expense if such Underwriter shall have been provided with copies of the Prospectus and it is determined that such delivery was required under the 1933 Act and was not so made. 30 31 (d) Each Underwriter severally agrees to indemnify and hold harmless the Company, its directors, each of its officers who signed the Registration Statement, and each person, if any, who controls the Company within the meaning of Section 15 of the 1933 Act and each Selling Stockholder and each person who controls such Selling Stockholder within the meaning of Section 15 of the 1933 Act against any and all loss, liability, claim, damage and expense described in the indemnity contained in subsection (a) of this Section, as incurred, but only with respect to untrue statements or omissions, or alleged untrue statements or omissions, made in the Registration Statement (or any amendment thereto) or any preliminary prospectus or the Prospectus (or any amendment, supplement or term sheet thereto) in reliance upon and in conformity with written information furnished to the Company by such Underwriter through the Representatives expressly for use in the Registration Statement (or any amendment thereto) or such preliminary prospectus or the Prospectus (or any amendment, supplement or term sheet thereto). In addition, each Underwriter severally agrees to indemnify and hold harmless the Company, its directors, each of its officers who signed the Registration Statement, and each person, if any, who controls the Company within the meaning of Section 15 of the 1933 Act and each Selling Stockholder and each person who controls such Selling Stockholder within the meaning of Section 15 of the 1933 Act against any and all loss, liability, claim, damage and expense described in the indemnity contained in subsection (a) of this Section, as incurred, but only with respect to any loss, liability claim, damage and expense to the extent that any loss, liability, claim, damage or expense results from the fact that a copy of the Prospectus was not sent or given by or on behalf of such Underwriter to the person asserting such loss, claim, damage or liability to the extent that delivery of the Prospectus would have cured the defect giving rise to such loss, claim, damage, liability or judgment if such Underwriter shall have been provided with copies of the Prospectus and it is determined that such delivery was required under the 1933 Act and was not so made. (e) Each indemnified party shall give notice as promptly as reasonably practicable to each indemnifying party of any action commenced against it in respect of which indemnity may be sought hereunder, but failure to so notify an indemnifying party shall not relieve such indemnifying party from any liability which it may have otherwise than on account of this indemnity agreement. An indemnifying party may participate at its own expense in the defense of any such action. In no event shall the indemnifying parties be liable for fees and expenses of more than one+ counsel (in addition to any local counsel) separate from their own counsel for all indemnified parties in connection with any one action or separate but similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances. (f) The provisions of this Section 6 and Section 7 hereof shall not affect any separate agreement among the Company and the Selling Stockholders with respect to indemnification and contribution. 31 32 Section 7. Contribution. In order to provide for just and equitable contribution in circumstances in which the indemnity agreement provided for in Section 6 hereof is for any reason held to be unenforceable by the indemnified parties although applicable in accordance with its terms, the Company, the Selling Stockholders and the Underwriters shall contribute to the aggregate losses, liabilities, claims, damages and expenses of the nature contemplated by said indemnity agreement incurred by the Company and the Selling Stockholders and one or more of the Underwriters as incurred, in such proportions that the Underwriters are responsible for that portion represented by the percentage that the underwriting discount appearing on the cover page of the Prospectus or term sheet, if applicable, bears to the initial public offering price appearing thereon and the Company and the Selling Stockholders are responsible for the balance, provided that the aggregate liability of each Selling Stockholder under this Section 7 and for any breach of any representation and warranty set forth in Section 1(b) of this Agreement (to the extent such breach does not also constitute a breach of any other representation and warranty of such Selling Stockholder) shall be limited to an amount equal to the net proceeds (after deducting the aggregate Underwriters' discount or commission, but before deducting expenses) received by such Selling Stockholder from the sale of its Securities pursuant to this Agreement; provided, however, that no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation, and provided that the contribution provisions of this Section 7 shall not inure to the benefit of any Underwriter to the extent that the aggregate losses, liabilities, claims, damages and expenses result from the circumstances described in Section 6(c). For purposes of this Section, each person, if any, who controls an Underwriter within the meaning of Section 15 of the 1933 Act shall have the same rights to contribution as such Underwriter, and each director of the Company, each officer of the Company who signed the Registration Statement, and each person, if any, who controls the Company within the meaning of Section 15 of the 1933 Act shall have the same rights to contribution as the Company and each person, if any, who controls a Selling Stockholder within the meaning of Section 15 of the 1933 Act shall have the same rights to contribution as such Selling Stockholder. Section 8. Representations, Warranties and Agreements to Survive Delivery. All representations, warranties and agreements contained in this Agreement and the Pricing Agreement, or contained in certificates of officers of the Company or the Selling Stockholders submitted pursuant hereto, shall remain operative and in full force and effect, regardless of any investigation made by or on behalf of any Underwriter or controlling person, or by or on behalf of the Company or the Selling Stockholders, and shall survive delivery of the Securities to the Underwriters. Section 9. Termination of Agreement. (a) The Representatives may terminate this Agreement, by notice to the Company and each Selling Stockholder, at any time at or prior to the Closing Time (i) if there has been, since the date of this Agreement or since the respective dates as of which information is given in the Registration Statement, any 32 33 material adverse change in the condition, financial or otherwise, or in the earnings, business affairs or business prospects of the Company, whether or not arising in the ordinary course of business, or (ii) if there has occurred any material adverse change in the financial markets in the United States or elsewhere or any outbreak of hostilities or escalation thereof or other calamity or crisis the effect of which is such as to make it, in the judgment of the Representatives, impracticable to market the Securities or to enforce contracts for the sale of the Securities, or (iii) if trading in the Common Stock or the Warrants has been suspended by the Commission, or if trading generally on either the American Stock Exchange or the New York Stock Exchange has been suspended, or minimum or maximum prices for trading have been fixed, or maximum ranges for prices for securities have been required, by either of said Exchanges or by order of the Commission or any other governmental authority, or if a banking moratorium has been declared by either Federal, New York or Arizona authorities. (b) If this Agreement is terminated pursuant to this Section, such termination shall be without liability of any party to any other party except as provided in Section 4 hereof. Section 10. Default by One or More of the Underwriters. If one or more of the Underwriters shall fail at the Closing Time to purchase the Securities which it or they are obligated to purchase under this Agreement and the Pricing Agreement (the "Defaulted Securities"), the Representatives shall have the right, within 24 hours thereafter, to make arrangements for one or more of the non-defaulting Underwriters, or any other underwriters, to purchase all, but not less than all, of the Defaulted Securities in such amounts as may be agreed upon and upon the terms herein set forth; if, however, the Representatives shall not have completed such arrangements within such 24-hour period, then: (a) if the number of Defaulted Securities does not exceed 10% of the Securities, each of the non-defaulting Underwriters shall be obligated, severally and not jointly, to purchase the full amount thereof in the proportions that their respective underwriting obligations hereunder bear to the underwriting obligations of all non-defaulting Underwriters, or (b) if the number of Defaulted Securities exceeds 10% of the Securities, this Agreement shall terminate without liability on the part of any non-defaulting Underwriter. No action taken pursuant to this Section shall relieve any defaulting Underwriter from liability in respect of its default. In the event of any such default which does not result in a termination of this Agreement, any of the Representatives, the Selling Stockholders (acting unanimously) or the Company shall have the right to postpone the Closing Time for a period not exceeding seven days in order to effect any required changes in the Registration Statement or Prospectus or in any other documents or arrangements. 33 34 Section 11. Notices. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given if mailed or transmitted by any standard form of telecommunication. Notices to the Underwriters shall be directed to the Representatives c/o Merrill Lynch & Co. at 10900 Wilshire Boulevard, Suite 900, Los Angeles, California 90024, attention of Robert Woolway, Director; notices to the Company shall be directed to the Company at 4000 East Sky Harbor Boulevard, Phoenix, Arizona 85034, attention of Stephen L. Johnson, Esquire, Senior Vice President; notices to TPG, TPG Parallel and Air Partners II shall be directed to Rick Shifter, Texas Pacific Group Partners, L.P., 1133 Connecticut Avenue N.W., Suite 800, Washington, DC 20036; notices to Continental Airlines, Inc. shall be directed to Continental Airlines, Inc.at 2929 Allen Parkway, Houston, Texas, 77019 attention of Jeff Smisek, Esquire, General Counsel; notices to Lehman Brothers Holdings Inc. shall be directed to Lehman Brothers Inc. at 3 World Financial Center, New York, New York 10285, attention of Kevin Genirs, Esquire, Vice President and notices to Mesa Airlines Group, Inc. shall be directed to Mesa Airlines, at 2323 30th Street, Farmington, New Mexico, 87401, attention of Larry Risley, Chairman and Chief Executive Officer. Section 12. Parties. This Agreement and the Pricing Agreement shall each inure to the benefit of and be binding upon the Underwriters, the Selling Stockholders and the Company and their respective successors. Nothing expressed or mentioned in this Agreement or the Pricing Agreement is intended or shall be construed to give any person, firm or corporation, other than the Underwriters, the Selling Stockholders and the Company and their respective successors and the controlling persons and officers and directors referred to in Sections 6 and 7 and their heirs and legal representatives, any legal or equitable right, remedy or claim under or in respect of this Agreement or the Pricing Agreement or any provision herein or therein contained. This Agreement and the Pricing Agreement and all conditions and provisions hereof and thereof are intended to be for the sole and exclusive benefit of the Underwriters, the Selling Stockholders and the Company and their respective successors, and said controlling persons and officers and directors and their heirs and legal representatives, and for the benefit of no other person, firm or corporation. No purchaser of Securities from any Underwriter shall be deemed to be a successor by reason merely of such purchase. Section 13. Governing Law and Time. THIS AGREEMENT AND THE PRICING AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN SAID STATE. Except as otherwise set forth herein, specified times of day refer to New York City time. 34 35 If the foregoing is in accordance with your understanding of our agreement, please sign and return to the Company a counterpart hereof, whereupon this instrument, along with all counterparts, will become a binding agreement among the Underwriters, the Selling Stockholders and the Company in accordance with its terms. Very truly yours, AMERICA WEST AIRLINES, INC. By:________________________ Name: Title: TPG PARTNERS, L.P. By: TPG Genpar, L.P. General Partner By: TPG Advisors, Inc. General Partner By:_________________________ Name: Title: TPG PARALLEL II, L.P. By: TPG Genpar, L.P. General Partner By: TPG Advisors, Inc. General Partner By:_________________________ Name: Title: 35 36 AIR PARTNERS II, L.P. By: TPG Genpar, L.P. General Partner By: TPG Advisors, Inc. General Partner By:_________________________ Name: Title: CONTINENTAL AIRLINES, INC. By:_________________________ Name: Title: MESA AIR GROUP, INC. By:_________________________ Name: Title: LEHMAN BROTHERS HOLDINGS INC. By:_________________________ Name: Title: CONFIRMED AND ACCEPTED, as of the date first above written: MERRILL LYNCH PIERCE FENNER & SMITH INCORPORATED DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION LEHMAN BROTHERS INC. By: Merrill Lynch, Pierce, Fenner & Smith Incorporated By__________________________________ Authorized Signatory For each of themselves and as Representatives of the other Underwriters named in Schedule A hereto. 36 37 SCHEDULE A
Number Name of Underwriter of Securities ------------------- ------------- Merrill Lynch, Pierce, Fenner & Smith Incorporated . . . . . . . . Donaldson, Lufkin & Jenrette Securities Corporation . . . . . . . . Lehman Brothers Inc . . . . . . . . . . . . . . . . . . . . . . ------------- Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -------------
37 38 SCHEDULE B
Number of Name of Selling Stockholder Option Securities Number of Option --------------------------- ----------------- ---------------- TPG Partners, L.P. . . . . . . . . 2,072,567 0 TPG Parallel I, L.P. . . . . . . . 208,843 0 Air Partners II, L.P. . . . . . . . 218,590 0 Contingental Airlines, Inc. . . . . 1,100,000 258,030 Mesa Air Group, Inc. . . . . . . . 1,500,000 351,970 Lehman Brothers Holding Inc . . . . 1,000,000 0 --------- ------- Total . . . . . . . . . . . . . . . 6,100,000 610,000 ========= =======
Sch B - 1 39 Exhibit A 6,100,000 Shares AMERICA WEST AIRLINES, INC. (a Delaware corporation) Class B Common Stock (Par Value $.01 Per Share) PRICING AGREEMENT February [ ], 1996 MERRILL LYNCH & CO. Merrill Lynch, Pierce, Fenner & Smith Incorporated Donaldson, Lufkin & Jenrette Securities Corporation Lehman Brothers Inc. as Representatives of the several Underwriters named in the within- mentioned Purchase Agreement Merrill Lynch World Headquarters North Tower World Financial Center New York, New York 10281 Dear Sirs: Reference is made to the Purchase Agreement dated February [ ], 1996 (the "Purchase Agreement") relating to the purchase by the several Underwriters named in Schedule A thereto, for whom Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Donaldson, Lufkin & Jenrette Securities Corporation and Lehman Brothers Inc. are acting as representatives (the "Representatives"), of the above shares of Class B Common Stock (the "Securities"), of America West Airlines, Inc., a Delaware corporation (the "Company"), to be sold by certain stockholders named in Schedule B thereto (the "Selling Stockholders"). 1 40 Pursuant to Section 2 of the Purchase Agreement, the Selling Stockholders severally and not jointly agree with each Underwriter as follows: 1. The initial public offering price per share for the Securities, determined as provided in said Section 2, shall be $ . 2. The purchase price per share for the Securities to be paid by the several Underwriters shall be $ , being an amount equal to the initial public offering price set forth above less $ per share; provided that the purchase price per share for any Option Securities (as defined in the Purchase Agreement) purchased upon exercise of the over-allotment option described in Section 2(b) of the Purchase Agreement shall be reduced by an amount per share equal to any dividends declared by the Company and payable on the Initial Securities (as defined in the Purchase Agreement) but not payable on the Option Securities. 2 41 If the foregoing is in accordance with your understanding of our agreement, please sign and return to the Company a counterpart hereof, whereupon this instrument, along with all counterparts, will become a binding agreement among the Underwriters, the Selling Stockholders and the Company in accordance with its terms. Very truly yours, TPG PARTNERS, L.P. By: TPG Genpar, L.P. General Partner By: TPG Advisors, Inc. General Partner By: _________________________ Name: Title: TPG PARALLEL I, L.P. By: TPG Genpar, L.P. General Partner By: TPG Advisors, Inc. General Partner By: _________________________ Name: Title: AIR PARTNERS II, L.P. By: TPG Genpar, L.P. General Partner By: TPG Advisors, Inc. General Partner 3 42 By: _________________________ Name: Title: CONTINENTAL AIRLINES, INC. By: _________________________ Name: Title: MESA AIR GROUP, INC. By: _________________________ Name: Title: LEHMAN BROTHERS HOLDINGS INC. By: _________________________ Name: Title: CONFIRMED AND ACCEPTED, as of the date first above written: MERRILL LYNCH PIERCE FENNER & SMITH INCORPORATED DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION LEHMAN BROTHERS INC. By: Merrill Lynch, Pierce, Fenner & Smith Incorporated By__________________________________ Authorized Signatory For each of themselves and as Representatives of the other Underwriters named in Schedule A of the Purchase Agreement 4 43 ACKNOWLEDGED as of the date first above written AMERICA WEST AIRLINES, INC. By: ________________________ Name: Title: 5 EX-10.50 3 EMPLOYMENT AGREEMENT WITH WILLIAM A. FRANKE 1 EXHIBIT 10.50 EMPLOYMENT AGREEMENT This Employment Agreement ("Agreement"), dated November 9, 1995, by and between AMERICA WEST AIRLINES, INC., a Delaware corporation ("Company"), and WILLIAM A. FRANKE ("Franke"). WHEREAS, Franke currently serves the Company as its Chairman of the Board ("COB") and Chief Executive Officer ("CEO"); and WHEREAS, the Company desires for Franke to continue serving (i) as COB through the Expiration Date (defined below) and (ii) as CEO until the earlier of the Expiration Date and the date on which another person is appointed CEO and assumes the responsibilities of such office, and Franke is willing to continue serving in such capacities, all on the terms and conditions herein set forth. NOW, THEREFORE, in consideration of the mutual covenants, representations, warranties, and agreements contained herein, and for other valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows: ARTICLE I Definitions and Interpretations 1.1. Definitions For purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires, the following terms shall have the following respective meanings: "AmWest Registration Agreement" shall have the meaning specified in Section 6.1. "Bankruptcy Code" shall mean Title 11 of the United States Code entitled "Bankruptcy", as from time to time amended, and any successor statute thereto. "Base Salary" shall have the meaning specified in Section 3.1. "Board" shall mean the Board of Directors of the Company. "CEO" shall have the meaning specified in the first recital of this Agreement. "Change in Control" shall occur if, after the Transition Date: (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 2 approved by a vote of at least two-thirds 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 (directly or indirectly) the beneficial ownership (within the meaning of Rule 13d-3 promulgated under such Act) of more than 50% of the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors ("Voting Power"); or (iii) any Shares or other voting securities of the Company shall be purchased pursuant to a tender or exchange offer (other than a tender or exchange offer made by the Company); or (iv) the Company's stockholders shall approve a merger or consolidation involving the Company other than (A) a merger or consolidation in which the voting securities of the Company outstanding immediately prior thereto will become (by operation of law), or are to be converted into, voting securities of the surviving corporation or its parent corporation immediately after such merger or consolidation that are owned by the same person or entity or persons or entities as immediately prior thereto and possess at least 75% of the Voting Power held by the voting securities of the surviving corporation or its parent corporation, (B) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no person acquires more than 50% of the Voting Power or (C) a merger or consolidation in which the Company is the surviving corporation and such transaction was determined not to be a Change in Control, which transaction and determination was approved by a majority of the Board in actions taken prior to, and with respect to, such transaction; or (v) the Company's stockholders shall approve a merger, consolidation, reorganization, disposition of assets, liquidation or other transaction (or series of related transactions) in which the Company will not survive as a publicly-owned corporation. "COB" shall have the meaning specified in the first recital of this Agreement. "Code" shall mean the Internal Revenue Code of 1986, as in effect from time to time. "Confidential Information" shall have the meaning specified in Section 5.1(a). "Disability" shall mean a physical or mental condition of Franke that, in the good faith judgment of not less than a majority of the entire membership of the Board, based upon -2- 3 certification by a licensed physician reasonably acceptable to Franke and the Board, (i) prevents Franke from being able to perform the services required under this Agreement, (ii) has continued for a period of at least six months during any period of twelve consecutive months and (iii) is expected to continue. "Dispute" shall have the meaning specified in Article VII. "Employment Period" shall mean that the period commencing on the Transition Date and ending on the Expiration Date; provided, however, that if either party gives a Notice of Termination pursuant to Section 4.1 or 4.2, then the Employment Period shall not extend beyond the relevant Termination Date. "Expiration Date" shall mean December 31, 1998. "Good Reason" shall mean any of the following: (1) without Franke's express written consent, a material alteration during Phase I in the nature or status of Franke's positions, functions, duties or responsibilities with the Company applicable to Phase I, including any change which would (i) alter Franke's reporting responsibilities, (ii) cause Franke's position with the Company to become of less dignity or importance than the positions and attributes of COB and CEO and/or (iii) cause Franke not to have all of the powers, functions, duties and responsibilities described in the first sentence of Section 2.2(a); (2) without Franke's express written consent, a material alteration during Phase II in the nature or status of Franke's position, functions, duties or responsibilities with the Company applicable to Phase II, including any alteration which would (i) change Franke's reporting responsibilities, (ii) cause Franke's position with the Company to become of less dignity or importance than the position and attributes of COB and/or (iii) cause Franke not to have all of the powers, functions, duties and responsibilities described in the first and last sentences of Section 2.2(b); provided, however, that each such alteration shall cease to be a Good Reason on the date which is 90 days after the occurrence of such alteration unless, prior to such date, Franke gives a Notice of Termination pursuant to Section 4.1 on account of such alteration; (3) without Franke's express written consent, the failure of the Company to perform any of its obligations under this Agreement in any material regard, but only if such failure shall continue unremedied for more than 15 days after written notice thereof is given by Franke to the Company; (4) without Franke's express written consent, the relocation of the principal executive offices of the Company outside the greater Phoenix, Arizona metropolitan area or the Company's requiring Franke to be based other than at such principal -3- 4 executive offices; provided, however, that such relocation shall cease to be a Good Reason on the date which is 90 days after the occurrence of such relocation unless, prior to such date, Franke gives a Notice of Termination pursuant to Section 4.1 on account of such relocation; (5) the failure the Company at any time during Phase I to elect or re-elect, or to appoint or re-appoint, Franke to the offices of COB and CEO; (6) the failure the Company at any time during Phase II to elect or re-elect, or to appoint or re-appoint, Franke to the office of COB; (7) any purported termination by the Company of Franke's employment not in accordance with the provisions of this Agreement; (8) the failure of the Company to obtain any assumption agreement required by Section 9.5(a); or (9) the failure of Franke to be elected or appointed, or to be re-elected or re-appointed, as a director of the Company at any time during the Employment Period. "Holders" shall have the meaning specified in Section 6.1. "Incentive Plan" shall mean the Company's 1994 Incentive Equity Plan effective as of December 1, 1994. "Market Value per Share" means, at any date, the closing price per Share on that date (or, if there are no sales on that date, the last preceding date on which there was sale) in the principal market in which the Shares are traded. "Misconduct" shall mean one or more of the following: (i) the willful and continued failure by Franke to perform his duties described in Section 2.2 (other than any such failure resulting from Franke's incapacity due to physical or mental illness) after written notice of such failure has been given to Franke by the Company and Franke has had a reasonable period to correct such failure; (ii) the willful commission by Franke of acts that are both dishonest and demonstrably injurious to the Company (monetarily or otherwise) in any material respect, provided that no act taken by Franke shall be deemed to constitute Misconduct if such act was taken by Franke in good faith and in the reasonable belief that such act was in the best interest of the Company or in furtherance of Franke's duties and responsibilities described in Section 2.2; -4- 5 (iii) the conviction of Franke for a felony offense involving moral turpitude; or (iv) a material breach by Franke of any of the covenants set forth in this Agreement, but only if such breach shall continue unremedied for more than 15 days after written notice thereof is given to Franke by the Company. "New Stock Grant" shall have the meaning specified in Section 3.2(a). "New Stock Option" shall have the meaning specified in Section 3.3(b). "Notice of Termination" shall mean a notice purporting to terminate Franke's employment in accordance with Section 4.1 or 4.2, which notice shall set forth in reasonable detail the reason for such termination and the facts and circumstances claimed to provide a basis for such termination. "Person" shall mean and include an individual, a partnership, a joint venture, a corporation, a trust and an unincorporated organization. "Phase I" shall mean the period commencing on the Transition Date and ending on the earlier of the Expiration Date and the date on which Franke's successor as CEO assumes the responsibilities of such office. "Phase II" shall mean that portion of the Employment Period following Phase I. "Piggyback Registration Notice" shall have the meaning specified in Section 6.2(a). "Registrable Securities" shall have the meaning specified in Section 6.1. "Restricted Period" shall have the meaning specified in Section 5.2(a). "Restricted Shares" shall have the meaning specified in Section 3.2(a). "SEC" shall mean the Securities and Exchange Commission. "Share" shall mean a share of the Class B common stock, $.01 par value, of the Company. "Termination Date" shall mean the termination date specified in a Notice of Termination delivered in accordance with Article IV, provided that in no event shall such termination date be less than 30 nor more than 60 days after the date such Notice of Termination is given. -5- 6 "Transfer Restriction" shall have the meaning specified in Section 3.2(c). "Transitition Date" shall mean January 1, 1996, being the date from and after which Franke's employment by the Company will be governed by this Agreement rather than the 1994 Agreement. "1994 Agreement" shall mean the Employment Agreement between Franke and the Company dated as of December 1, 1994. 1.2. Interpretations (a) In this Agreement, unless a clear 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 Article, Section or other subdivision, (ii) reference to any Article or Section, means such Article or Section hereof, (iii) the words "including" (and with correlative meaning "include") means including, without limiting the generality of any description preceding such term, and (iv) where any provision of this Agreement refers to action to be taken by either party, or which such party is prohibited from taking, such provision shall be applicable whether such action is taken directly or indirectly by such party. (b) The Article and Section headings herein are for convenience only and shall not affect the construction hereof. (c) No provision of this Agreement shall be interpreted or construed against either party solely because that party or its legal representative drafted such provision. ARTICLE II Employment; Term; Positions and Duties 2.1. Employment; Term The Company agrees to continue Franke's employment as COB and CEO during Phase I and Franke agrees to remain employed by the Company in such capacities during Phase I, all on the terms and conditions set forth in this Agreement. The Company agrees to continue Franke's employment as COB during Phase II and Franke agrees to remain employed by the Company in such capacity during Phase II, all on the terms and conditions set forth in this Agreement. 2.2. Positions and Duties (a) During Phase I, Franke shall serve as COB and CEO and shall have and may exercise all of the powers, functions, duties and responsibilities normally attributable to the positions -6- 7 of COB and CEO, including (without limitation) such duties and responsibilities as are set forth with respect to such offices in the Company's certificate of incorporation and bylaws (as from time to time in effect). During Phase I, Franke shall have such additional duties and responsibilities commensurate with the offices of COB and CEO as from time to time may be reasonably assigned to him by the Board. (b) During Phase II, Franke shall serve as COB and shall have and may exercise all of the powers, functions, duties and responsibilities normally attributable to the position of COB, including (without limitation) such duties and responsibilities as are set forth with respect to such office in the Company's certificate of incorporation and bylaws (as from time to time in effect). During Phase II, Franke shall have such additional duties and responsibilities commensurate with the office of COB (but not the office of CEO) as from time to time may be reasonably assigned to him by the Board. During Phase II, the CEO shall report directly to Franke. (c) While employed hereunder, Franke shall report directly and exclusively to the Board and shall observe and comply with all lawful policies, directions and instructions of the Board which are consistent with paragraphs (a) and (b) above. (d) The Company agrees to use its reasonable best efforts to cause Franke to be elected or appointed, or re-elected or re-appointed, as director of the Company at all times during the Employment Period. (e) During Phase I, Franke agrees to devote a substantial portion of his business time, attention, skill and efforts to the faithful and efficient performance of his duties hereunder as COB and CEO. During Phase II, Franke agrees to devote a reasonable portion (which need not constitute a substantial portion) of his business time, attention, skill and efforts to the faithful and efficient performance of his duties hereunder as COB. (f) During Phase I, Franke shall not accept employment with or for any Person other than the Company and, during Phase II, Franke shall not accept employment with or for any Person in violation of Section 5.2; provided, however, that Franke may engage in the following activities so long as they do not interfere in any material respect with the performance of Franke's duties and responsibilities hereunder: (i) serve on corporate, civic or charitable boards or committees, (ii) deliver lectures, fulfill speaking engagements or teach on a part-time basis at educational institutions, (iii) manage his personal investments and (iv) render consultation and financial advisory services to third parties. The Company acknowledges that Franke is the principal owner of Franke & Company, Inc. through which Franke owns and oversees equity interests in several enterprises and provides consultation and financial advisory services to third parties. -7- 8 2.3. Place of Employment Franke's place of employment hereunder shall be at the Company's principal executive offices in the greater Phoenix, Arizona metropolitan area. ARTICLE III Compensation and Benefits 3.1. Base Salary (a) For services rendered by Franke under this Agreement, the Company shall pay to Franke an annual cash base salary ("Base Salary") in the amount (i) $500,000 during Phase I and (ii) $100,00 during Phase II. The Base Salary shall be payable semi-monthly as earned. (b) The amount of the Base Salary may be increased at any time as the Board may deem appropriate. If the Base Salary is increased as aforesaid, it may not thereafter be decreased unless a proportionally similar decrease is made to the base compensation of all other senior executives of the Company; provided that in no event may the Base Salary be decreased below the applicable amount specified in the first sentence of paragraph (a) above. 3.2. Stock Grant (a) On the Transition Date, the Company shall issue and deliver to Franke 108,000 Shares (the "Restricted Shares") as additional compensation for services rendered under this Agreement. The grant of the Restricted Shares in accordance with this paragraph (a) (the "New Stock Grant") shall be in lieu of, and not in addition to, the stock grants described in Section 3.2(a)(3) of the 1994 Agreement. (b) Except as expressly set forth below in this Section 3.2, (i) the New Stock Grant shall be irrevocable and unconditional and (ii) none of the Restricted Shares shall be subject to forfeiture or surrender for any reason. (c) Franke will not sell, transfer or otherwise dispose of any of the Restricted Shares other than by will or by laws of descent and distribution; provided, however, that the foregoing restriction (the "Transfer Restriction") shall lapse with respect to any Restricted Shares which are no longer subject to forfeiture by Franke pursuant to paragraph (d) below and, provided further, that the Transfer Restriction shall automatically lapse in full (i) upon the occurrence of a Change in Control, (ii) in the event of Franke's death or (iii) in the event Franke's employment is terminated by Franke for Good Reason or on account of Disability or by the Company for any reason other than Misconduct on account of the conviction of Franke for a felony. (d) In the event Franke's employment is terminated by Franke pursuant to Section 4.1 other than for Good Reason or by the Company pursuant to Section 4.2 for Misconduct, then -8- 9 Franke shall forfeit and be obligated, for no consideration, to surrender to the Company that number of Restricted Shares determined by multiplying 108,000 by a fraction the numerator of which shall be the number of whole calendar months within the period beginning on the Termination Date and ending on the Expiration Date and the denominator of which shall be 36. (e) The New Stock Grant shall be made pursuant to the Incentive Plan and shall become vested when the Transfer Restriction has lapsed with respect thereto. (f) Certificates evidencing the Restricted Shares will be issued by the Company in Franke's name. The Company may cause such certificates to bear a legend setting forth or incorporating the Transfer Restriction, and the Company may cause such certificates to be delivered upon issuance to the Secretary of the Company (or such other depositary as may be designated by the committee which administers the Incentive Plan) as a depositary for safe-keeping until the Transfer Restriction lapses with respect thereto or until forfeiture occurs with respect thereto pursuant to paragraph (d) above. If such certificates bear a legend setting forth or incorporating the Transfer Restriction, then upon the lapse of the Transfer Restriction without forfeiture, the Company will cause a new certificate or certificates to be issued in the name of Franke without such legend. The Company may require Franke to execute and deliver stock powers in the event of forfeiture. (g) Franke shall be entitled to receive all dividends and distributions in respect of the Restricted Shares (subject to applicable tax withholding), to vote the Restricted Shares and to give consents, waivers and ratifications with respect to the Restricted Shares; provided, however, that distributions applicable to any Restricted Shares shall be held by the Company until (i) the Transfer Restriction lapses with respect to such Shares, at which time such distributions shall be paid to Franke or his designee without interest or (ii) forfeiture occurs with respect to such Shares pursuant to paragraph (d) above, at which time such distributions shall be forfeited. (h) If requested by Franke at any time, the Company shall promptly request, and diligently seek in good faith to obtain, a no action letter from the SEC to the effect that the date of purchase, within the meaning and for the purposes of the short-swing profit provisions of Section 16(b) of the Securities Exchange Act of 1934 (as amended), of the Restricted Shares is the grant date thereof. (i) If requested by Franke, the Company will loan Franke up to $860,000 solely for the purpose of enabling Franke to pay all or portion of the taxes (Federal and state) attributable to the New Stock Grant. Such loan shall be evidenced by, and subject to the terms and conditions of, a promissory note duly executed by Franke and payable to the order of the Company (the "Promissory Note"). The Promissory Note shall be in form and substance reasonably satisfactory to the Company and shall be secured by a pledge agreement (the "Pledge Agreement") initially covering that number of the Restricted Shares determined by dividing 150% of the principal amount of the Promissory Note by the Market Value per Share on the day prior to the date the loan is funded. The Pledge Agreement shall be in form and substance (including release of collateral provisions based on a collateral value to loan ratio of 1.5 to 1.0) reasonably satisfactory to the Company and -9- 10 shall be accompanied by appropriate stock powers. The Promissory Note shall be payable in two equal installments on September 26, 2000 and September 26, 2001 and shall bear interest, compounded monthly, at the applicable federal rate determined in accordance with section 1274(d) of the Code. Franke shall not be personally liable for payments due under the Promissory Note, it being expressly understood and agreed that the sole recourse of the Company for satisfaction of the Promissory Note shall be against the Restricted Shares pledged as collateral for the Promissory Note under the Pledge Agreement. 3.3. Stock Options (a) Pursuant to the 1994 Agreement, the Company has previously granted to Franke certain options to purchase Shares, including the following: (i) two 50,000 Share options awarded pursuant to Section 3.3(b) of the 1994 Agreement; (ii) one 50,000 Share option awarded pursuant to Section 3.3(c) of the 1994 Agreement; and (iii) one 100,000 Share option awarded pursuant to Section 3.3(c) of the 1994 Agreement. It is agreed that the vesting requirements set forth with respect to the foregoing options in the 1994 Agreement are hereby rescinded and terminated so that such options shall be fully exercisable as of the date hereof. (b) Franke is hereby granted pursuant to the Incentive Plan an option (the "New Stock Option") to purchase 150,000 Shares, with an exercise price per Share equal to $16.50, being the Market Value per Share on the date hereof. The New Stock Option shall become exercisable as to one-third of the Shares covered thereby on the December 31 immediately preceding each anniversary of the Transition Date, so that the New Stock Option will be exercisable in full on December 31, 1998. (c) Upon the exercise of the New Stock Option, Franke shall pay to the Company an amount equal to the relevant exercise price, such amount to be paid (i) in cash, (ii) by delivering to the Shares already owned by Franke which have an aggregate Market Value per Share at the date of exercise equal to the relevant exercise price, (iii) by directing the Company to sell a sufficient number of Shares to be acquired on exercise of the New Stock Option through a broker approved by the Company, in which event the proceeds of such sale shall be applied by the Company to the payment of the relevant exercise price, with any surplus then remaining to be paid to Franke or his designee, or (iv) by any combination of the foregoing. -10- 11 (d) Upon the occurrence of a Change in Control, the New Stock Option shall become automatically vested in full and may be exercised at any time thereafter; provided, however, in no event shall the New Stock Option be exercisable after the tenth anniversary of the date of this Agreement. (e) In the event Franke's employment is terminated by Franke pursuant to Section 4.1 other than for Good Reason or on account of Disability or by the Company pursuant to Section 4.2 for Misconduct, the New Stock Option, to the extent then vested, may be exercised by Franke at any time within six months following the Termination Date, but not thereafter; provided, however, in no event shall the New Stock Option be exercisable after the tenth anniversary of the date of this Agreement. To the extent the New Stock Option is not vested on such Termination Date, the New Stock Option (or the portion thereof that is not vested on such Termination Date) shall automatically lapse and be cancelled unexercised as of such Termination Date. (f) The New Stock Option shall become automatically vested in full on the date of Franke's death and may be exercised by the person to whom Franke's rights shall pass by will or by the laws of descent and distribution at any time within the one-year period beginning on the date of Franke's death, but not thereafter, and in no event shall the New Stock Option be exercisable after the tenth anniversary of the date of this Agreement. (g) In the event Franke's employment is terminated by reason of Disability, the New Stock Option shall become automatically vested in full on the date of such Disability and may be exercised at any time within the 36-month period beginning on the date of such Disability, but not thereafter, and in no event shall the New Stock Option be exercisable after the tenth anniversary of the date of this Agreement. (h) Except as otherwise provided herein, the New Stock Option may be exercised in whole or in part or in two or more successive parts. (i) The New Stock Option shall not be transferrable by Franke, otherwise than by will or by laws of descent and distribution. During the lifetime of Franke, the New Stock Option may not be exercised by anyone other than Franke. (j) The New Stock Option may be exercised from time to time by a notice in writing which identifies the New Stock Option and specifies the number of Shares in respect of which it is being exercised. Such notice shall be delivered to the Secretary of the Company or addressed to the Secretary of the Company at its principal corporate offices. The date of exercise of the New Stock Option shall be the date the exercise notice is hand delivered or mailed to the Secretary of the Company, whichever is applicable. An election to exercise the New Stock Option shall be irrevocable. (k) The New Stock Option is not intended to qualify as an incentive stock option under Section 422 of the Code. -11- 12 (l) The New Stock Option shall be in lieu of, and not in addition to, the stock options to be granted to Franke on August 25, 1996 pursuant to Section 3.3(c) of the 1994 Agreement. 3.4. Life Insurance During the Employment Period, the Company agrees to maintain, at all times and without cost to Franke, a term life insurance policy on the life of Franke in the amount of $2 million, the proceeds of which, in the event of Franke's death, shall be payable to one or more beneficiaries designated by Franke or, in the absence of any such designation, to his estate. Such policy shall be issued by a solvent insurance company reasonably acceptable to Franke. 3.5. Annual Administrative Expense Allowance (a) During the Employment Period, the Company shall continue to pay to Franke or his designee, in accordance with past practices, an annual allowance of $50,000 (subject to adjustment as provided in paragraph (b) below) for administrative expenses incurred by Franke in connection with the performance of his duties and responsibilities and the exercise of his powers and authority under this Agreement. Each such annual allowance shall be paid to Franke in twelve equal monthly installments. So long as the Company is not in default under this Section 3.5, Franke shall be responsible for providing, in accordance with past practices, at least one administrative assistant/secretary. (b) The amount of the annual allowance referred to in paragraph (a) above shall be adjusted upwards or downwards, as the case may be, for each calendar year commencing on or after January 1, 1996 by the amount of the change, if any, in the Cost of Living during the prior calendar year based on the Consumer Price Index for Urban Consumers All Items - Less Shelter - Index (1967=100) as published with respect to the Phoenix metropolitan area by the Bureau of Labor Statistics for the United States Department of Labor; provided, however, than in no event shall the amount of any such annual adjustment exceed 6%. If such Index is discontinued or revised in any material respect, the parties shall mutually agree upon a substitute index which shall thereafter be used in order to obtain substantially the same result as would have been obtained had such Index had not been so discontinued or revised. 3.6. Business Expenses The Company shall, in accordance with the rules and policies that it may establish from time to time for senior executives, reimburse Franke for business expenses reasonably incurred in the performance of Franke's duties hereunder. It is understood that Franke is authorized to incur reasonable business expenses for promoting the business and reputation of the Company, including reasonable expenditures for travel, lodging, meals and client and/or business associate entertainment. Requests for reimbursement for such expenses must be accompanied by appropriate documentation. -12- 13 3.7. Other Benefits Franke shall be entitled to receive all fringe benefits and other perquisites that may be offered by the Company to its senior executives as a group or to any of its senior executives individually or to the members of the Board, including, without limitation, (i) participation in the various employee benefit plans or programs provided to senior executives of the Company in general (including the Company's split-dollar life insurance and disability insurance programs), subject to meeting the eligibility requirements with respect to each of such benefit plans or programs, (ii) tax/financial planning assistance, (iii) automobile allowances, (iv) club memberships, (v) on-line and interline, positive space travel privileges and (vi) participation in the Company's retiree medical insurance program, subject to meeting the eligibility requirements of such program other than the requirement relating to five years service with the Company, which requirement is hereby waived. However, nothing in this Section 3.7 shall be deemed to prohibit the Company from making any changes in any of the plans, programs or benefits described herein, provided the change similarly affects all senior executives of the Company or members of the Board, as the case may be, similarly situated. Notwithstanding the foregoing, Franke shall not be entitled to participate in the Incentive Plan or any other incentive plans offered to key employees of the Company, except as expressly provided herein. ARTICLE IV Termination of Employment 4.1. Termination by Franke Franke may, at any time prior to the Expiration Date, terminate his employment hereunder for any reason by delivering a Notice of Termination to the Board. 4.2. Termination by the Company The Company may, at any time prior to the Expiration Date, terminate Franke's employment hereunder for any reason by delivering a Notice of Termination to Franke; provided, however, that in no event shall the Company be entitled to terminate Franke's employment prior to the Expiration Date unless the Board shall duly adopt, by the affirmative vote of at least a majority of the entire membership of the Board, a resolution authorizing such termination and stating that, in the opinion of the Board, sufficient reason exists therefor. Nothing in this Agreement shall preclude the Company from replacing Franke as CEO at any time after the Transition Date, and such replacement alone shall not be considered a termination of Franke's employment hereunder. -13- 14 4.3. Accrued Base Salary, Vacation Pay, etc. (a) Promptly upon the termination of Franke's employment hereunder for any reason, the Company shall pay to Franke a lump sum amount for (i) any unpaid Base Salary earned hereunder prior to the termination date, (ii) all unused vacation time accrued by Franke as of the termination date in accordance with the Company's vacation policy for senior executives, (iii) all unpaid benefits earned by Franke as of the termination date under any and all incentive compensation plans or programs of the Company, (iv) all amounts owing to Franke under Sections 3.5 and 3.6 and (v) any additional amounts or benefits which may be required to be paid in a lump sum by applicable law. (b) A termination of Franke's employment in accordance with this Agreement shall not alter or impair (i) any of Franke's rights or benefits under any issued and outstanding stock options except as provided with respect to the New Stock Option in Section 3.3, (ii) any of Franke's rights or benefits under the 1994 Agreement except as expressly provided in Section 9.8(a) or (iii) any of Franke's rights or benefits, if any, under employee benefit plans or programs maintained by the Company. 4.4. Other Termination Benefits and Privileges The following provisions shall apply if Franke terminates his employment hereunder for Good Reason or if the Company terminates Franke's employment hereunder for any reason other than Misconduct or Disability: (i) Severance Payment. The Company shall promptly pay to Franke a severance payment (in cash or other immediately available funds) in the amount of (A) $1.5 million, if the Termination Date is during Phase I and (B) $1 million, if the Termination Date occurs during Phase II; provided, however, that such severance payment shall be reduced to the extent necessary so that no portion of such payment (or of any other payment or benefit which constitutes a "parachute payment" within the meaning of Section 280G of the Code and which Franke has received or is entitled to receive shall be subject to the excise tax imposed by Section 4999 of the Code, but only if, by reason of such reduction, Franke's net after tax benefit shall exceed the net after tax benefit if such reduction were not made. (ii) Medical Insurance. During the 24-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 (a) Franke's continued participation is possible under the terms and provisions of such plans and programs and (b) Franke pays the regular employee premium, 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. -14- 15 (iii) 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 date on which the relevant Notice of Termination is given in accordance with this Article IV. (iv) Travel Privileges. The Company shall provide Franke (and his wife and dependents) lifetime on-line and interline, positive space travel privileges in accordance with the terms of the Company's non-revenue travel policy as in effect on the date hereof; provided, however, that the travel privileges to be provided to Franke (and his wife and dependents) under this clause (iv) shall be at least as favorable to Franke (and his wife and dependents) as the travel priviledges generally provided by the Company to its senior executives from time to time. 4.5. Company to Pay Benefits During Pendency of Dispute Either party may, within 10 days after its receipt of a Notice of Termination given by the other party, provide notice to the other party that a dispute exists concerning the termination, in which event such dispute shall be resolved in accordance with Article VII. Notwithstanding the pendency of any such dispute and notwithstanding any provision herein to the contrary, the Company will (i) continue to pay Franke the Base Salary in effect when the notice giving rise to the dispute was given, (ii) make the New Stock Grant in accordance with Section 3.2 and (iii) continue Franke as a participant in all compensation and benefit plans in which Franke was participating when the notice giving rise to the dispute was given, until the dispute is finally resolved or, with respect to a Notice of Termination given by Franke, the date of termination specified in such notice, if earlier, but, in each case, not past the Expiration Date. If (i) the Company gives a Notice of Termination to Franke, (ii) Franke disputes the termination as contemplated by this Section 4.5 and (iii) such dispute is finally resolved in favor of the Company in accordance with Article VII, then Franke shall be required to refund to the Company any amounts paid to Franke under this Section 4.5 but only if, and then only to the extent, Franke is not otherwise entitled to receive such amounts under this Agreement. -15- 16 ARTICLE V Confidential Information and Non-Competition 5.1. Confidential Information (a) Franke recognizes that the services to be performed by him hereunder are special, unique and extraordinary and that, by reason of his employment with the Company, he may acquire Confidential Information (defined below) concerning the Company, the use or disclosure of which would cause the Company substantial loss and damages which could not be readily calculated and for which no remedy at law would be adequate. Accordingly, Franke agrees that he will not (directly or indirectly) at any time, whether during or after his employment hereunder, disclose any such Confidential Information to any Person except (i) in the performance of his obligations to the Company hereunder, (ii) as required by applicable law, (iii) in connection with the enforcement of his rights under this Agreement, the 1994 Agreement or any other agreement, (iv) in connection with any disagreement, dispute or litigation (pending or threatened) between Franke and the Company or (v) with the prior written consent of the Board. As used herein, "Confidential Information" includes information with respect to the Company's services, facilities and methods, research and development, trade secrets and other intellectual property, systems, patents and patent applications, procedures, manuals, confidential reports, financial information, business plans, prospects or opportunities; provided, however, that such term shall not include any information that (x) is or becomes generally known or available other than as a result of a disclosure by Franke or (y) is or becomes known or available to Franke on a nonconfidential basis from a source (other than the Company) which, to Franke's knowledge, is not prohibited from disclosing such information to Franke by a legal, contractual, fiduciary or other obligation to the Company. (b) Franke confirms that all Confidential Information is the exclusive property of the Company. All business records, papers and documents kept or made by Franke while employed by the Company relating to the business of the Company shall be and remain the property of the Company at all times. Upon the request of the Company at any time, Franke shall promptly deliver to the Company, and shall retain no copies of, any written materials, records and documents made by Franke or coming into his possession while employed by the Company concerning the business or affairs of the Company other than personal materials, records and documents (including notes and correspondence) of Franke not containing proprietary information relating to such business or affairs. Notwithstanding the foregoing, Franke shall be permitted to retain copies of, or have access to, all such materials, records and documents relating to any disagreement, dispute or litigation (pending or threatened) between Franke and the Company. 5.2. Non-Competition (a) While employed hereunder and for a period of 18 months thereafter (the "Restricted Period"), Franke shall not, unless he receives the prior written consent of the Board, own an interest in, manage, operate, join, control, lend money or render financial or other assistance to or participate in or be connected with, as an officer, employee, partner, stockholder, consultant or otherwise, any Person which competes with the Company in the United States other than Alaska Airlines, American Airlines, Continental Airlines, Delta Airlines, Northwest Airlines, TWA, United -16- 17 Airlines, USAir and ValueJet; provided, however, that the foregoing restriction shall not apply at any time if Franke's employment is terminated by Employee for Good Reason or by the Company for any reason other than Misconduct. (b) Franke has carefully read and considered the provisions of this Section 5.2 and, having done so, agrees that the restrictions set forth in this Section 5.2 (including the Restricted Period, scope of activity to be restrained and the geographical scope) are fair and reasonable and are reasonably required for the protection of the interests of the Company, its officers, directors, employees, creditors and shareholders. Franke understands that the restrictions contained in this Section 5.2 may limit his ability to engage in a business similar to the Company's business, but acknowledges that he will receive sufficiently high remuneration and other benefits from the Company hereunder to justify such restrictions. (c) During the Restricted Period, Franke shall not, whether for his own account or for the account of any other Person (excluding the Company), intentionally (i) solicit, endeavor to entice or induce any employee of the Company to terminate his employment with the Company or accept employment with anyone else or (ii) interfere in a similar manner with the business of the Company. (d) In the event that any provision of this Section 5.2 relating to the Restricted Period and/or the areas of restriction shall be declared by a court of competent jurisdiction to exceed the maximum time period or areas such court deems reasonable and enforceable, the Restricted Period and/or areas of restriction deemed reasonable and enforceable by the court shall become and thereafter be the maximum time period and/or areas. 5.3. Stock Ownership Nothing in this Agreement shall prohibit Franke from acquiring or holding any issue of stock or securities of any Person that has any securities registered under Section 12 of the Exchange Act, listed on a national securities exchange or quoted on the automated quotation system of the National Association of Securities Dealers, Inc. so long as (i) Franke is not deemed to be an "affiliate" of such Person as such term is used in paragraphs (c) and (d) of Rule 145 under the Securities Act of 1933, as amended, and (ii) Franke and members of his immediate family do not own or hold more than 5% of any voting securities of any such Person. 5.4. Injunctive Relief Franke acknowledges that a breach of any of the covenants contained in this Article V may result in material irreparable injury to the Company for which there is no adequate remedy at law, that it will not be possible to measure damages for such injuries precisely and that, in the event of such a breach, any payments remaining under the terms of this Agreement shall cease and the Company shall be entitled to obtain a temporary restraining order and/or a preliminary or permanent injunction restraining Franke from engaging in activities prohibited by this Article V or such other -17- 18 relief as may required to specifically enforce any of the covenants contained in this Article V. Franke agrees to and hereby does submit to in personam jurisdiction before each and every such court for that purpose. ARTICLE VI Piggyback Registration Rights 6.1. Definitions Capitalized terms used herein and in Exhibit A hereto that are not otherwise defined herein shall have the meanings ascribed to them in that certain Registration Rights Agreement dated August 25, 1994 among the Company, AmWest Partners, L.P., and others therein named ("AmWest Registration Rights Agreement"), to which agreement reference is made for such definitions and for all purposes. In addition, the following terms, as used in this Article VI, have the following meanings: "Holders" shall mean (i) Franke, his heirs and personal representatives and (ii) any direct or indirect transferee of Registrable Securities. "Registrable Securities" means (1) the 125,000 Shares heretofore granted to Franke as a bonus for his efforts relating to the successful reorganization of the Company under the Bankruptcy Code, (2) all equity securities of the Company acquired by Franke pursuant to the 1994 Agreement and (3) all equity securities of the Company acquired by Franke pursuant to this Agreement, including, without limitation, (a) the New Stock Grant, (b) the New Stock Option, (c) any Shares issued on exercise of the New Stock Option and (d) any securities issued or issuable with respect to any such securities by way of stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation or other reorganization or otherwise. As to any particular Registrable Securities, once issued such securities shall cease to be Registrable Securities when (i) a registration statement with respect to the sale of such securities shall have become effective under the Securities Act and such securities shall have been disposed of in accordance with the plan of distribution set forth in such registration statement, (ii) such securities shall have been distributed in accordance with Rule 144, (iii) the Company has caused to be delivered an opinion of counsel in accordance with Section 6.2(c) that such securities are distributable in accordance with Rule 144 or (iv) such securities shall have been otherwise transferred, new certificates therefor not bearing a legend restricting further transfer shall have been delivered in exchange therefor by the Company and subsequent disposition of such securities shall not require registration or qualification under the Securities Act or any similar state law then in force. -18- 19 6.2. Piggybank Registration (a) Right to Include Registrable Securities. If the Company at any time proposes to register any of its equity securities under the Securities Act (other than by a registration (i) on Form S-4 or Form S-8, or any successor or similar form then in effect or (ii) pursuant to Section 2.1 of the AmWest Registration Rights Agreement) in a form and in a manner that would permit registration of the Registrable Securities, whether or not for sale for its own account, it will give prompt (but in no event less than 30 days prior to the proposed date of filing the registration statement relating to such registration) notice to all Holders of Registrable Securities of the Company's intention to do so and of such Holders' rights under this Section 6.2. Upon the request of any such Holder made within 20 days after the receipt by such Holder of any such notice (which request shall specify the Registrable Securities intended to be disposed of by such Holder and the intended method or methods of disposition thereof) (the "Piggyback Registration Notice"), the Company will use Commercially Reasonable Efforts to effect the registration under the Securities Act of all Registrable Securities which the Company has been so requested to register by the Holders thereof, to the extent required to permit the disposition (in accordance with the intended method or methods thereof as aforesaid) of the Registrable Securities so to be registered, provided that if, at any time after giving notice of its intention to register any equity securities and prior to the effective date of the registration statement filed in connection with such registration, the Company shall determine for any reason not to register or to delay registration of such equity securities, the Company may, at its election, give notice of such determination to each such Holder and, thereupon, (i) in the case of a determination not to register, shall be relieved of its obligation to register any Registrable Securities in connection with such registration (but not from its obligation to pay all Registration Expenses in connection therewith) and (ii) in the case of a determination to delay registering, shall be permitted to delay registering any Registrable Securities for the same period as the delay in registering such other equity securities. (b) Priority in Piggyback Registration. If (i) a registration pursuant to this Section 6.2 involves an underwritten offering of the securities being registered, whether or not for sale for the account of the Company, to be distributed (on a firm commitment basis) by or through one or more underwriters of recognized standing under underwriting terms appropriate for such a transaction and (ii) the managing underwriter of such underwritten offering shall inform the Company and the Holders requesting such registration by letter of its belief that the amount of securities requested to be included in such registration exceeds the amount which can be sold in (or during the time of) such offering within a price range acceptable to the Company, then the Company will include in such registration such amount of securities which the Company is so advised can be sold in (or during the time of) such offering as follows: first, all securities proposed by the Company to be sold for its own account; second, such securities of the Company requested to be included in such registration pursuant to the terms of the AmWest Registration Rights Agreement and the GPA Registration Rights Agreement; third, such Registrable Securities requested to be included in such registration by all Holders pro rata on the basis of the amount of such securities so proposed to be sold and so requested to be included by such Holders; and fourth, all other securities of the Company requested to be included in such registration pro rata on the basis of the amount of such securities so proposed to be sold and so requested to be included. -19- 20 (c) The Holders shall be entitled to exercise their registration rights pursuant to this Section 6.2 at any time or times until all of the Registrable Securities have been sold pursuant to an effective registration statement under the Securities Act, or until the Company shall have obtained an opinion of counsel reasonably acceptable to the Company and Holders that such Registrable Securities may be sold without registration pursuant to available exemptions under Rule 144 without limitation on amount. 6.3. Registration Procedures Each registration pursuant to Section 6.2 shall be effected in accordance with the procedures, and subject to the indemnification and other provisions, set forth in Exhibit A hereto. ARTICLE VII Dispute Resolution (a) In the event a dispute shall arise between the parties as to whether the provisions of this Agreement have been complied with (a "Dispute"), the parties agree to resolve such Dispute in accordance with the following procedure: (1) A meeting shall be held promptly between the parties, attended by (in the case of the Company) by one or more individuals with decision-making authority regarding the Dispute, to attempt in good faith to negotiate a resolution of the Dispute. (2) If, within 10 days after such meeting, the parties have not succeeded in negotiating a resolution of the Dispute, the parties agree to submit the Dispute to mediation in accordance with the Commercial Mediation Rules of the American Arbitration Association. (3) The parties will jointly appoint a mutually acceptable mediator, seeking assistance in such regard from the American Arbitration Association if they have been unable to agree upon such appointment within 10 days following the 10-day period referred to in clause (2) above. (4) Upon appointment of the mediator, the parties agree to participate in good faith in the mediation and negotiations relating thereto for 15 days. (5) If the parties are not successful in resolving the Dispute through mediation within such 15-day period, the parties agree that the Dispute shall be settled by arbitration in accordance with the Expedited Procedures of the Commercial Arbitration Rules of the American Arbitration Association. -20- 21 (6) The fees and expenses of the mediator/arbitrators shall be borne solely by the non-prevailing party or, in the event there is no clear prevailing party, as the mediator/arbitrators deem appropriate. (7) If any dispute shall arise under this Agreement involving termination of Franke's employment with the Company or 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 in connection with such dispute, together with interest thereon at the rate of 8% 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 resolution of such dispute in accordance with this Article VII includes a finding denying, in all material respects, Franke's claims in such dispute, Franke shall be required to reimburse the Company, over a period not to exceed 12 months from the date of such resolution, for all sums advanced to Franke with respect to such dispute pursuant to this paragraph (7). (8) Except as provided above, each party shall pay its own costs and expenses (including, without limitation, attorneys' fees) relating to any mediation/arbitration proceeding conducted under this Article VII. (9) All mediation/arbitration conferences and hearings will be held in Phoenix, Arizona. (b) In the event there is any disputed question of law involved in any arbitration proceeding, such as the proper legal interpretation of any provision of this Agreement, the arbitrators shall make separate and distinct findings of all facts material to the disputed question of law to be decided and, on the basis of the facts so found, express their conclusion of the question of law. The facts so found shall be conclusive and binding on the parties, but any legal conclusion reached by the arbitrators from such facts may be submitted by either party to a court of law for final determination by initiation of a civil action in the manner provided by law. Such action, to be valid, must be commenced within 20 days after receipt of the arbitrators' decision. If no such civil action is commenced within such 20-day period, the legal conclusion reached by the arbitrators shall be conclusive and binding on the parties. Any such civil action shall be submitted, heard and determined solely on the basis of the facts found by the arbitrators. Neither of the parties shall, or shall be entitled to, submit any additional or different facts for consideration by the court. In the event any civil action is commenced under this paragraph (b), the party who prevails or substantially prevails (as determined by the court) in such civil action shall be entitled to recover from the other party all costs, expenses and reasonable attorneys' fees incurred in connection with such action and on appeal. (c) Except as limited by paragraph (b) above, the parties agree that judgment upon the award rendered by the arbitrators may be entered in any court of competent jurisdiction. In the event legal proceedings are commenced to enforce the rights awarded in an arbitration proceeding, -21- 22 the party who prevails or substantially prevails in such legal proceeding shall be entitled to recover from the other party all costs, expenses and reasonable attorneys' fees incurred in connection with such legal proceeding and on appeal. (d) Except as provided above, (i) no legal action may be brought by either party with respect to any Dispute and (ii) all Disputes shall be determined only in accordance with the procedures set forth above. ARTICLE VIII Antidilution Provisions and Reservation of Shares 8.1. Antidilution (a) In the event of any change after the date hereof in the number of issued shares of common stock (or any class thereof) of the Company by reason of any stock dividend, split-up, recapitalization, merger, combination, conversion, exchange of shares or other change in the corporate or capital structure of the Company, then there shall be appropriate and equitable adjustments made (with adjustments being cumulative if more than one of such events shall have occurred) in the number and kind of shares of stock or other securities of the Company (i) thereafter issued to Franke pursuant to Section 3.2(a) and (ii) thereafter issued upon exercise of the New Stock Option. Whenever an adjustment is made as required or permitted by the provisions of this paragraph (a), the Company shall promptly deliver to Franke written notice thereof setting forth a brief statement of the facts requiring such adjustment and the computation thereof. (b) In case of any liquidation, dissolution or winding up of the affairs of the Company, the Company shall make prompt, proportionate, equitable, lawful and adequate provision as part of the terms of such dissolution, liquidation or winding up such that Franke may thereafter receive, in lieu of each Share which Franke would have been entitled to receive under Section 3.2(a) or upon exercise of the New Stock Option, the same kind and amount of any stock, securities or assets as may be issuable, distributable or payable on any such dissolution, liquidation or winding up with respect to each outstanding Share. 8.2. Covenant to Reserve Shares for Issuance The Company covenants that it will at all times reserve and keep available (free of preemptive rights) out of its authorized and unissued Shares, solely for the purpose of issuance pursuant to Section 3.2 or upon exercise of the New Stock Option, the full number of Shares, if any, then issuable under Section 3.2 or upon exercise of the New Stock Option. The Company further covenants that all Shares which shall be so issuable shall be duly and validly issued and fully paid and non-assessable. -22- 23 ARTICLE IX Miscellaneous 9.1. No Mitigation The provisions of this Agreement are not intended to, nor shall they be construed to, require that Franke mitigate the amount of any payment provided for in this Agreement by seeking or accepting other employment, nor shall the amount of any payment provided for in this Agreement be reduced by any compensation earned by Franke as the result of employment by another employer or otherwise. Without limitation of the foregoing, the Company's obligations to make the payments to Franke required under this 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. 9.2. Assignability The obligations of Franke hereunder are personal and may not be assigned or delegated by Franke or transferred in any manner whatsoever, nor are such obligations subject to involuntary alienation, assignment or transfer. The Company shall have the right to assign this Agreement and to delegate all rights, duties and obligations hereunder as provided in Section 9.5. 9.3. Notices All notices and all other communications provided for in the Agreement 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 Franke 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. 9.4. 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. -23- 24 9.5. Successors; Binding Agreement (a) The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company, by agreement in form and substance reasonably acceptable to Franke, to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. Failure of the Company to obtain such agreement prior to the effectiveness of any such succession shall be a breach of this Agreement. As used herein, the term "Company" shall include any successor to its business and/or assets as aforesaid which executes and delivers the Agreement provided for in this Section 9.5 or which otherwise becomes bound by all terms and provisions of this Agreement by operation of law. (b) This Agreement and all rights of Franke hereunder 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 be payable to him hereunder if he had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to Franke's devisee, legatee, or other designee or, if there be no such designee, to Franke's estate. 9.6. Tax Withholdings The Company shall withhold from all payments hereunder all applicable taxes (federal, state or other) which it is required to withhold therefrom unless Franke has otherwise paid to the Company the amount of such taxes. 9.7. 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 such member of the Board as may be specifically authorized by the Board. 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. 9.8. Entire Agreement; Termination of Employment under 1994 Agreement (a) The parties acknowledge, confirm and agree that Franke's employment under the 1994 Agreement shall automatically terminate on December 31, 1995 and shall not be subject to extension as contemplated by Section 2.3 of the 1994 Agreement. (b) This Agreement is an integration of the parties agreement and no agreement or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not set forth expressly in this Agreement. -24- 25 9.9. Governing Law THE VALIDITY, INTERPRETATION, CONSTRUCTION AND PERFORMANCE OF THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF ARIZONA WITHOUT REGARD TO ITS CONFLICT OF LAWS PROVISION. 9.10. 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. 9.11. Payment of Certain Taxes The Company will from time to time promptly pay all transfer, stamp or similar taxes that may be imposed in respect of the initial issuance of any Shares hereunder, but the Company shall not be obligated to pay any such taxes in respect of any transfer of Shares effected by Franke. 9.12. Indemnification Without Franke's prior written consent, the Company will not amend, modify or repeal any provision of its certificate of incorporation or bylaws if such amendment, modification or repeal would materially adversely affect Franke's rights to indemnification by the Company. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. AMERICA WEST AIRLINES, INC. By: -------------------------------------- Chairman of Compensation/Human Resources Committee ----------------------------------------- William A. Franke -25- -----END PRIVACY-ENHANCED MESSAGE-----