-----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, CURFLz7ovF72/VhJn4/f3kv4n5c8bzZEnRESahLBFCYciAYQnEga8QKrp7onuidk tzslrqIK1hEa1pOASG+24g== 0000950172-05-001719.txt : 20050611 0000950172-05-001719.hdr.sgml : 20050611 20050525172128 ACCESSION NUMBER: 0000950172-05-001719 CONFORMED SUBMISSION TYPE: DEFA14A PUBLIC DOCUMENT COUNT: 8 FILED AS OF DATE: 20050525 DATE AS OF CHANGE: 20050525 EFFECTIVENESS DATE: 20050525 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICA WEST HOLDINGS CORP CENTRAL INDEX KEY: 0001029863 STANDARD INDUSTRIAL CLASSIFICATION: AIR TRANSPORTATION, SCHEDULED [4512] IRS NUMBER: 860847214 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEFA14A SEC ACT: 1934 Act SEC FILE NUMBER: 001-12649 FILM NUMBER: 05857600 BUSINESS ADDRESS: STREET 1: 111 WEST RIO SALADO PARKWAY CITY: TEMPE STATE: AZ ZIP: 85281 BUSINESS PHONE: 4806930800 MAIL ADDRESS: STREET 1: 4000 E SKY HARBOR BLVD STREET 2: C/O AMERICA WEST AIRLINES CITY: PHOENIX STATE: AZ ZIP: 85034 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: DEFA14A SEC ACT: 1934 Act SEC FILE NUMBER: 000-12337 FILM NUMBER: 05857601 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 STREET 2: STE 2100 CITY: PHOENIX STATE: AZ ZIP: 85034 DEFA14A 1 ny542073_04.txt CURRENT REPORT PURSUANT TO '34 ACT UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 ____________________________ FORM 8-K ____________________________ CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 May 25, 2005 (May 19, 2005) DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) ____________________________ AMERICA WEST HOLDINGS CORPORATION (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) ____________________________ Delaware 1-12649 86-0847214 (STATE OR OTHER JURISDICTION (COMMISSION FILE NO.) (IRS EMPLOYER OF INCORPORATION) IDENTIFICATION NO.) 111 West Rio Salado Parkway, Tempe, Arizona 85281 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE) (480) 693-0800 (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE) NOT APPLICABLE (FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT) ____________________________ AMERICA WEST AIRLINES, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) ____________________________ Delaware 0-12337 86-0418245 (STATE OR OTHER JURISDICTION (COMMISSION FILE NO.) (IRS EMPLOYER OF INCORPORATION) IDENTIFICATION NO.) 4000 E. Sky Harbor Boulevard, Phoenix, Arizona 85034-3899 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE) (480) 693-0800 (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE) NOT APPLICABLE (FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT) ____________________________ Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: [x] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [x] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) 2 Item 1.01 Entry Into A Material Definitive Agreement. Merger Agreement On May 19, 2005, America West Holdings Corporation, a Delaware corporation ("America West Holdings"), US Airways Group, Inc., a Delaware corporation ("US Airways Group"), and Barbell Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of US Airways Group ("Merger Sub"), entered into an Agreement and Plan of Merger (the "Merger Agreement"). The Merger Agreement provides that, upon the terms and subject to the conditions set forth in the Merger Agreement, Merger Sub will merge with and into America West Holdings (the "Merger"), with America West Holdings continuing as the surviving corporation. At the effective time and as a result of the Merger, (i) America West Holdings will become a wholly owned subsidiary of US Airways Group, (ii) each share of America West Holdings Class A common stock will be converted into 0.5306 of a share of common stock of US Airways Group ("US Airways Group Common Stock") and (iii) each share of America West Holdings Class B common stock will be converted into 0.4082 of a share of US Airways Group Common Stock, on the terms specified in the Merger Agreement. The Merger Agreement also provides that if US Airways Group engages in certain business combination, reorganization or financing transactions in connection with the Merger that value US Airways Group on a basis such that the pre-investment equity value of US Airways Group (taking into account the completion of the Merger) exceeds $500 million, the Merger Agreement will be amended to adjust the exchange ratios for the America West Holdings Class A and Class B common stock in the Merger in accordance with the terms thereof. At the effective time of the Merger all outstanding options to purchase America West Holdings Class B common stock (whether vested or unvested) under America West Holdings' stock-based benefit plans and under individual employment agreements will be converted into options to acquire US Airways Group Common Stock in accordance with the Merger Agreement. The Merger is intended to qualify, for federal income tax purposes, as a reorganization under the provisions of Section 368(a) of the Internal Revenue Code of 1986, as amended. In addition, the Merger is expected to be effected as a principal component of a plan of reorganization (the "Plan") of US Airways Group and certain of its subsidiaries in connection with their voluntary petition for reorganization pursuant to chapter 11 of title 11 of the United States Code, 11 U.S.C. Sections 101 et seq. in the United States Bankruptcy Court for the Eastern District of Virginia, Alexandria Division (the "Bankruptcy Court"). The Plan is also expected to include (i) the approval of the Merger Agreement, (ii) the investment of up to $500 million in additional US Airways Group Common Stock by certain new equity investors, including pursuant to the Investment Agreements (as hereinafter defined) and (iii) the authorization of US Airways Group to consummate the transactions contemplated by the Merger and certain financing commitments. The Merger Agreement provides that following the effective time of the Merger the board of directors of US Airways Group will consist of up to 13 members. Assuming US Airways Group receives cash equity investments totaling $375 million prior to the effective time of the Merger, (i) 6 of such directors, including W. Douglas Parker, the current Chairman and Chief Executive Officer of America West Holdings (who will also serve as Chairman of the Board of US Airways Group after the Merger), will be appointed by America West Holdings, (ii) 4 of such directors, including Bruce Lakefield, the current Chief Executive Officer of US Airways Group (who will serve as Vice Chairman after the Merger), will be appointed by US Airways Group and (iii) 3 of such directors will be appointed by certain new equity investors in US Airways Group. In the event that US Airways Group receives cash equity investments totaling at least $500 million prior to the effective time of the Merger, the number of directors appointed by US Airways Group will be reduced to 3 and the number of directors to be appointed by the new equity investors will be increased to 4. The board of directors will be divided into three classes appointed to initial one, two or three year terms, as specified in the Merger Agreement. America West Holdings and US Airways Group have each made customary representations, warranties and covenants in the Merger Agreement, including, among others, covenants (i) to conduct its 3 businesses in the ordinary and usual course between the execution of the Merger Agreement and the consummation of the Merger and (ii) not to engage in certain kinds of transactions during such period. America West Holdings and US Airways Group have each made additional covenants relating to obtaining an order of the Bankruptcy Court approving (i) procedures for the consideration of Plan proposals, (ii) the form and manner of notice of competing offer procedures and (iii) break-up fee and related provisions (the "Bidding Procedures"). Until 35 days after the entry of such order or, if earlier, the date on which the Merger Agreement or another proposal becomes an approved proposal under the Bidding Procedures (an "Approved Proposal"), US Airways Group may solicit other proposals for alternative transactions in accordance with the Bidding Procedures. Following such time, US Airways Group has agreed not to solicit any other alternative business combination transactions. Subject to approval of the Bidding Procedures by the Bankruptcy Court, it is anticipated that if no other qualifying competing plan proposal is received or no other proposal is approved by the Bankruptcy Court within 40 days of the date of entry of the order approving the Bidding Procedures, the Merger Agreement will automatically become the approved proposal under the Bidding Procedures. America West Holdings has made certain additional customary covenants, including, among others, subject to certain exceptions (i) to cause a stockholder meeting to be held to consider adoption of the Merger Agreement, (ii) for its board of directors to recommend adoption of the Merger Agreement by America West Holdings' stockholders, (iii) to cause it not to solicit proposals relating to alternative business combination transactions and (iv) not to enter into discussions concerning, or provide confidential information in connection with, alternative business combination transactions. Consummation of the Merger is subject to customary conditions, including, among others, (i) approval of the stockholders of America West Holdings, (ii) expiration or termination of the applicable Hart-Scott-Rodino Act waiting period and the receipt of certain other regulatory approvals, (iii) absence of any order or injunction prohibiting the consummation of the Merger, (iv) Bankruptcy Court approval of the Plan, (v) the registration statement on Form S-4 of US Airways Group to be filed in connection with the Merger having become effective, (vi) the US Airways Group Common Stock to be issued in the Merger having been authorized for listing or quotation, as applicable, on the New York Stock Exchange or Nasdaq Stock Market, (vii) receipt by US Airways Group of additional equity investments of not less than $375 million on a pre-investment value of not less than $500 million, (viii) all agreements and Bankruptcy Court orders entered into, modified or otherwise effected pursuant to or in connection with the Merger Agreement or the Plan being in form and substance reasonably acceptable to each of America West Holdings and US Airways Group, (ix) subject to certain exceptions, the accuracy of representations and warranties with respect to the business of America West Holdings or US Airways Group, as applicable, (x) each of America West Holdings and US Airways Group having performed their respective obligations pursuant to the Merger Agreement, (xi) no governmental entity having instituted any proceeding seeking any order which would result in a failure of the condition described in (iii) above, (xii) subject to certain exceptions, America West Holdings and US Airways Group having obtained consents and approvals required under certain material contracts of America West Holdings or US Airways Group, as applicable, (xiii) receipt of customary tax opinions and (xiv) in the case of the obligation of America West Holdings to effect the Merger, the absence of administrative claims (including contingent liabilities) arising out of or relating to certain US Airways Group benefit plans. The Merger Agreement contains certain termination rights for both America West Holdings and US Airways Group, and further provides that, upon termination of the Merger Agreement under specified circumstances, (i) America West Holdings may be required to pay US Airways Group a termination fee of $15 million and (ii) US Airways Group may be required to pay America West Holdings a termination fee of $15 million. The foregoing description of the Merger Agreement does not purport to be complete and is qualified in its entirety by reference to the Merger Agreement, which is filed as Exhibit 2.1 hereto, and is incorporated into this report by reference. 4 Concurrently with the execution and delivery of the Merger Agreement and as a condition to the willingness of US Airways Group to enter into the Merger Agreement, TPG Partners, L.P., TPG Parallel I, L.P., Air Partners II, L.P. (collectively, the "TPG Entities"), which together beneficially own shares of Class A Common Stock of America West Holdings representing approximately 55% of the voting power of America West Holdings, entered into a Voting Agreement (the "Voting Agreement") with US Airways Group pursuant to which the TPG Entities have agreed to vote all shares of the America West Holdings' common stock beneficially owned by the TPG Entities in favor of the adoption of the Merger Agreement if the majority of the outstanding shares of Class B common stock of America West Holdings are voted in favor thereof and to vote against any amendment to America West Holdings' certificate of incorporation or bylaws or other proposal or transaction that would impede the Merger if a majority of the outstanding shares of Class B common stock of America West Holdings are voted against any such amendment, proposal or transaction. The TPG Entities have also agreed with US Airways Group not to sell or otherwise transfer any shares of Class A common stock of America West Holdings prior to the termination of the Voting Agreement other than in accordance with the terms of the Voting Agreement. The Voting Agreement terminates if the Merger Agreement is terminated and may be terminated by the TPG Entities if (i) the board of directors of America West Holdings withdraws its recommendation that the America West Holdings stockholders adopt the Merger Agreement or (ii) the TPG Entities are not able to procure an amendment to, or waiver of, the certain restrictions on the ability of the TPG Entities to transfer the Class A common stock contained in an agreement among America West Holdings and the TPG Entities for the benefit of the Air Transportation Stabilization Board. A copy of the Voting Agreement is attached hereto as Exhibit 99.1 and is incorporated herein by reference. The description of the Voting Agreement is qualified in its entirety by reference to the full text of the Voting Agreement. In addition, on May 19, 2005, America West Holdings entered into an advisory agreement (the "Advisory Agreement") with TPG Advisors, Inc. ("TPG Advisors"), an affiliate of the TPG Entities. Pursuant to the Advisory Agreement, TPG Advisors will provide financial consulting and advisory services to America West Holdings in connection with the transactions contemplated by the Merger Agreement. The Advisory Agreement provides that America West Holdings will pay TPG Advisors a fee of $6.4 million which fee is conditioned upon consummation of the Merger. A copy of the Advisory Agreement is attached hereto as Exhibit 10.1 and is incorporated herein by reference. The description of the Advisory Agreement is qualified in its entirety by reference to the full text of the Advisory Agreement. Consummation of the Merger will constitute a "Change of Control" under America West Airlines, Inc.'s outstanding 7.25% Senior Exchangeable Notes due 2023 and will require the surviving corporation in the Merger to make an offer to purchase such Notes within 30 days after the effective time of the Merger at a purchase price of $343.61 per $1,000 principal amount at maturity. Under the terms of the Notes and the related guarantee and exchange agreement, America West Airlines, Inc.'s obligation to purchase such Notes may be satisfied at America West Holdings' election by delivery of shares of US Airways Group Common Stock having a "fair market value" of not less than $343.61. For such purpose "fair market value" means 95% of the average market price of the US Airways Group Common Stock calculated over the 5 business days ending on the third business day before the purchase date. Investment Agreements and Participation Agreements On May 19, 2005, America West Holdings and US Airways Group entered into Investment Agreements (the "Investment Agreements"), with each of ACE Aviation Holdings Inc. ("ACE"), Eastshore Aviation, LLC ("Eastshore"), Par Investment Partners, L.P. ("Par") and Peninsula Investment Partners, L.P. ("Peninsula" and together with ACE, Eastshore and Par, the "Investors"). The Investment Agreements provide that, upon the terms and subject to the conditions set forth in the applicable Investment Agreement, at the closing under the Investment Agreement (which is expected to occur simultaneously with the Merger) US Airways Group will sell to and each of ACE, Eastshore, Par and Peninsula will purchase, shares of US Airways Group Common Stock for a purchase price of $75 million, $125 million, $100 million and $50 million, respectively. Except for Eastshore which will convert the principal owed to it pursuant to an existing Junior Secured Debtor-in-Possession Credit Facility (the "DIP Facility") in payment of the purchase price, the purchase price for such shares of US Airways Group Common Stock is payable in cash. 5 America West Holdings, US Airways Group and the Investors have each made customary representations, warranties and covenants in the Investment Agreements. US Airways Group has made certain additional covenants not to issue additional equity securities of US Airways Group prior to the closing under the Investment Agreement, other than (i) under the Investment Agreements and to other equity investors on terms and conditions no more favorable than those contained in the applicable Investment Agreement and the stockholders agreement to be entered into in connection with the closing under such Investment Agreement up to an aggregate amount of $500 million, (ii) pursuant to the Merger and the Plan, (iii) subject to certain limitations, pursuant to a rights offering for proceeds which, when taken together with proceeds from new equity investments, including pursuant to the Investment Agreements, do not exceed $650 million or (iv) subject to certain limitations and conditions, issuances of equity securities for up to an additional $200 million in proceeds to be used for redemption of equity securities of existing America West Holdings or US Airways Group stakeholders. America West Holdings and US Airways Group have also agreed, with respect to ACE, to work in good faith to negotiate certain commercial business agreements (the "ACE Commercial Agreements") specified in the Investment Agreement relating to the investment by ACE. In addition, America West Holdings and US Airways Group have agreed, subject to certain exceptions, not to (i) amend the Merger Agreement or waive any condition to consummation of the Merger without the consent of the Investors or (ii) solicit proposals relating to an alternative reorganization or business combination of US Airways Group (except in accordance with the Bidding Procedures) or with respect to ACE, any arrangement that would replace the ACE Commercial Agreements. Consummation of the transactions is subject to customary conditions, including, among others, (i) execution and delivery of definitive transaction documents related to the investment by the Investor, including in the case of ACE, the Commercial Agreements (the "Transaction Documents"), and approval of such documents, to the extent necessary, by the Bankruptcy Court, (ii) subject to certain exceptions, the accuracy of representations and warranties with respect to the business of America West Holdings or US Airways Group, as applicable, or with respect to certain matters by the applicable Investor, (iii) the absence of any law or order enjoining the performance of any of the Transaction Documents, (iv) no governmental entity having instituted any proceeding seeking any order which would prevent the performance of any of the Transaction Documents, (v) the absence of any pending or threatened litigation which if determined adversely to US Airways Group, would materially impair or limit the right of the Investors under the Transaction Documents, which the Investor reasonably determines has a reasonable likelihood of success, (vi) expiration or termination of the applicable Hart-Scott-Rodino Act waiting period and the receipt of certain other regulatory approvals, (vii) Bankruptcy Court approval of the Plan and such Plan not being in conflict with any of the Transaction Documents and being consistent with the financial plan provided to the Investor, and (viii) the Merger becoming effective simultaneously with the closing under the Investment Agreements. In addition, the obligation of the Investors to consummate the transactions contemplated by the Investment Agreement is subject to, among other things, (i) all material contracts necessary for the successful implementation of the Plan having been assumed, assigned, rejected or renegotiated, as applicable, (ii) receipt by US Airways Group of equity investments of not less than $375 million and not more than $500 million (including the conversion of the DIP Facility), subject to certain exceptions, (iii) the bankruptcy cases of US Airways Group and certain of its subsidiaries not having been converted to a case under chapter 7 of the bankruptcy code, (iv) in the case of Eastshore, Par, and, subject to certain limitations, ACE, the appointment of the designee of such Investor to the board of directors of US Airways Group as contemplated by the applicable Investment Agreement, (iv) US Airways Group having obtained directors and officers insurance of at least $100 million, (v) there not having occurred any change or event that could reasonably be expected to have a material adverse effect on the financial condition, assets, liabilities, business or results of operations of US Airways Group or America West Holdings, (vi) the amendment of US Airways Group's employee profit sharing plan in the manner specified in the Investment Agreement, (vii) in the case of ACE, America West Holdings and US Airways Group having not less than $280 million per year of maintenance, repair and overhaul services work immediately available to be outsourced to ACE or its affiliates as of the closing date under the Investment Agreement and (viii) in the case of Eastshore, the amendment to the Jet Servicing Agreement between US Airways, Inc. and Air Wisconsin Airlines 6 Corporation to provide a guarantee of payment by US Airways Group of the obligations of US Airways, Inc. thereunder. The Investment Agreements contain certain termination rights for US Airways Group and the Investors, and further provide that, except in the case of Eastshore, upon termination of the applicable Investment Agreement under specified circumstances US Airways Group may be required to pay a termination fee to the Investor. A copy of each of the Investment Agreements is attached hereto as Exhibits 10.2 to 10.5 and is incorporated herein by reference. The description of the Investment Agreements is qualified in its entirety by reference to the full text of the Investment Agreements. The Investment Agreements contemplate that at the closing thereunder, each Investor and US Airways Group will enter into the Stockholders Agreement. The Stockholders Agreement will provide that, subject to certain exceptions, each Investor will agree not to transfer any of the shares of US Airways Group Common Stock acquired pursuant to the Investment Agreement until six months following the closing under the Investment Agreement and that US Airways Group will provide certain customary registration rights to the Investors. The Stockholders Agreement will also provide for the appointment of certain individuals designated by the Investors to be appointed to the board of directors of US Airways Group as of the effective time of the Merger for a three-year term. In the case of ACE, the Stockholders Agreement will provide that (i) for so long as ACE holds at least 66.67% of the number of shares of US Airways Group Common Stock acquired pursuant to its Investment Agreement (the "ACE Director Threshold"), ACE will be entitled to designate a director nominee for successive three-year terms and (ii) if ACE falls below the ACE Director Threshold, ACE will cause its director designee to resign from the board of directors. In the case of Investors other than ACE which are entitled as of the effective time of the Merger to designate a director to the board of directors of US Airways Group, the Stockholders Agreement will provide that (i) for so long as such Investor holds at least 35% of the number of shares of US Airways Group Common Stock acquired pursuant to its Investment Agreement (the "Designating Investor Threshold"), such Investor will be entitled to designate a director nominee for successive three-year terms and (ii) if any such Investor falls below the Designating Director Threshold, the designee of such Investor will serve the remainder of such designee's term as a director, but such Investor will no longer have the right to designate a director nominee under the Stockholders Agreement. A copy of the form of Stockholders Agreement is attached hereto as Exhibit 99.2 and is incorporated herein by reference. The description of the Stockholders Agreement is qualified in its entirety by reference to the full text of the Stockholders Agreement. In addition, on May 19, 2005, in connection with the execution and delivery by Par and Peninsula of their respective Investment Agreements, each of Par and Peninsula entered into Participation Agreements (the "Participation Agreements") with America West Holdings. The Participation Agreements provide that, unless the Merger Agreement is terminated by US Airways Group or America West Holdings because America West Holdings enters into a superior alternative business combination transaction, neither Par nor Peninsula will make, directly or indirectly, any debt or equity investment in US Airways Group or provide, directly or indirectly, equity or debt financing for the purposes of funding a reorganization, business combination transaction or stand-alone plan of US Airways Group with respect to which America West Holdings is not involved. The Participation Agreements also provide that, subject to certain limitations, in the event America West Holdings is a party to a reorganization or business combination transaction involving US Airways Group as part of a plan of reorganization with respect to which the pre-investment equity value of US Airways Group (taking into account the Merger) (the "Alternative Pre-Investment Value") exceeds $500 million (an "Alternative Transaction"), America West Holdings will cause such Alternative Transaction to provide for Par and Peninsula to be issued US Airways Group Common Stock in the aggregate equal in value to 11.2% of the amount by which the Alternative Pre-Investment Value exceeds $500 million. 7 Item 7.01 Regulation FD Disclosure. On May 19, 2005, America West Holdings and US Airways Group issued a joint press release announcing the execution of the Merger Agreement. A copy of such press release is furnished pursuant to Item 7.01 as Exhibit 99.3 hereto and is incorporated herein by reference. * * * FORWARD-LOOKING STATEMENTS Certain of the statements contained herein should be considered "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward looking statements may be identified by words such as "may," "will," "expect," "intend," "anticipate," "believe," "estimate," "plan," "could," "should," and "continue" and similar terms used in connection with statements regarding the companies' outlook, expected fuel costs, the RASM environment, and the companies' respective expected 2005 financial performance. Such statements include, but are not limited to, statements about the benefits of the business combination transaction involving America West Holdings and US Airways Group (together, the "companies"), including future financial and operating results, the companies' plans, objectives, expectations and intentions and other statements that are not historical facts. Such statements are based upon the current beliefs and expectations of America West Holdings and US Airways Group's management and are subject to significant risks and uncertainties that could cause the companies' actual results and financial position to differ materially from these statements. Such risks and uncertainties include, but are not limited to, the following: the ability of the companies to obtain and maintain any necessary financing for operations and other purposes, whether debtor-in-possession financing, in the case of US Airways Group, or other financing; the ability of the companies to maintain adequate liquidity; the duration and extent of the current soft economic conditions; the impact of global instability including the continuing impact of the continued military presence in Iraq and Afghanistan and the terrorist attacks of Sept. 11, 2001 and the potential impact of future hostilities, terrorist attacks, infectious disease outbreaks or other global events; changes in prevailing interest rates; the ability to attract and retain qualified personnel; the ability of the companies to attract and retain customers; the cyclical nature of the airline industry; competitive practices in the industry, including significant fare restructuring activities by major airlines; the impact of changes in fuel prices; economic conditions; labor costs; security-related and insurance costs; weather conditions; government legislation and regulation; relations with unionized employees generally and the impact and outcome of the labor negotiations; US Airways Group's ability to continue as a going concern; US Airways Group's ability to obtain court approval with respect to motions in the Chapter 11 proceedings prosecuted by it from time to time; the ability of US Airways Group to develop, prosecute, confirm and consummate one or more plans of reorganization with respect to the Chapter 11 proceedings; risks associated with third parties seeking and obtaining court approval to terminate or shorten the exclusivity period for US Airways Group to propose and confirm one or more plans of reorganization, to appoint a Chapter 11 trustee or to convert the cases to Chapter 7 cases; the ability of US Airways Group to obtain and maintain normal terms with vendors and service providers; US Airways Group's ability to maintain contracts that are critical to its operations; the potential adverse impact of the Chapter 11 proceedings on US Airways Group's liquidity or results of operations; the ability of US Airways Group to operate pursuant to the terms of its financing facilities (particularly the financial covenants); the ability of US Airways Group to fund and execute its Transformation Plan during the Chapter 11 proceedings and in the context of a plan of reorganization and thereafter; and other risks and uncertainties listed from time to time in the companies' reports to the SEC. There may be other factors not identified above of which the companies are not currently aware that may affect matters discussed in the forward-looking statements, and may also cause actual results to differ materially from those discussed. The companies assume no obligation to publicly update any forward-looking statement to reflect actual results, changes in assumptions or changes in other factors affecting such estimates other than as required by law. Similarly, these and other factors, including the terms of any reorganization plan of US Airways Group ultimately 8 confirmed, can affect the value of the US Airways Group's various prepetition liabilities, common stock and/or other equity securities. Accordingly, the companies urge that the appropriate caution be exercised with respect to existing and future investments in any of these liabilities and/or securities. Additional factors that may affect the future results of America West Holdings and US Airways Group are set forth in their respective filings with the SEC, which are available at http://www.shareholder.com/americawest/edgar.cfm and http://investor.usairways.com/edgar.cfm, respectively. ADDITIONAL INFORMATION AND WHERE TO FIND IT In connection with the proposed transaction, a registration statement, including a proxy statement of America West Holdings, and other materials will be filed with the Securities and Exchange Commission (the "SEC"). WE URGE INVESTORS TO READ THE REGISTRATION STATEMENT AND PROXY STATEMENT AND THESE OTHER MATERIALS CAREFULLY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. Investors will be able to obtain free copies of the registration statement and proxy statement (when available) as well as other filed documents containing information about US Airways Group and America West Holdings at http://www.sec.gov, the SEC's website. Free copies of America West Holdings' SEC filings are also available on America West Holdings' website at http://www.shareholder.com/americawest/edgar.cfm, or by request to Investor Relations, America West Holdings Corporation, 111 West Rio Salado Pkwy, Tempe, Arizona 85281. Free copies of US Airways Group's SEC filings are also available on US Airways Group's website at http://investor.usairways.com/edgar.cfm or by request to Investor Relations, US Airways Group, Inc., 2345 Crystal Drive, Arlington, VA 22224. This communication shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there by any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended. PARTICIPANTS IN THE SOLICITATION America West Holdings, US Airways Group and their respective executive officers and directors may be deemed, under SEC rules, to be participants in the solicitation of proxies from America West Holdings' stockholders with respect to the proposed transaction. Information regarding the officers and directors of America West Holdings is included in its definitive proxy statement for its 2005 Annual Meeting filed with the SEC on April 15, 2005. Information regarding the officers and directors of US Airways Group is included in its 2004 Annual Report filed with the SEC on Form 10-K on March 1, 2005. More detailed information regarding the identity of potential participants, and their interests in the solicitation, will be set forth in the registration statement and proxy statement and other materials to be filed with the SEC in connection with the proposed transaction. Item 9.01 Financial Statements and Exhibits. (c) Exhibits. Exhibit Number Description - ------- ----------- 2.1 Agreement and Plan of Merger, dated May 19, 2005, among US Airways Group, Inc., America West Holdings Corporation and Barbell Acquisition Corp. 10.1 Advisory Agreement, dated May 19, 2005, between America West Holdings Corporation and TPG Advisory, Inc. 10.2 Investment Agreement, dated May 19, 2005, among Eastshore Aviation, LLC, America West 9 Holdings Corporation and U.S. Airways Group, Inc. (incorporated by reference to Exhibit 2.1 of this Form 8-K). 10.3 Investment Agreement, dated May 19, 2005, among Par Investment Partners, L.P., America West Holdings Corporation and U.S. Airways Group, Inc. (incorporated by reference to Exhibit 2.1 of this Form 8-K). 10.4 Investment Agreement, dated May 19, 2005, among Peninsula Investment Partners, L.P., America West Holdings Corporation and U.S. Airways Group, Inc. (incorporated by reference to Exhibit 2.1 of this Form 8-K). 10.5 Investment Agreement, dated May 19, 2005, among ACE Aviation Holdings, America West Holdings Corporation and U.S. Airways Group, Inc. (incorporated by reference to Exhibit 2.1 of this Form 8-K). 99.1 Voting Agreement, dated May 19, 2005, among TPG Partners, L.P., TPG Parallel I, L.P., Air Partners II, L.P. and U.S. Airways Group, Inc. (incorporated by reference to Exhibit 2.1 of this Form 8-K). 99.2 Form of Stockholders Agreement, among ACE Aviation Holdings, Par Investment Partners, L.P., Peninsula Investment Partners, L.P., Eastshore Aviation, LLC and U.S. Airways Group, Inc. 99.3 Joint press release, dated May 19, 2005, issued by America West Holdings Corporation and U.S. Airways Group, Inc. (incorporated by reference to the joint press release filed by America West Holdings pursuant to Rule 425 under the Securities Act of 1933 on May 19, 2005). 10 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, America West Holdings Corporation has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. America West Holdings Corporation Dated: May 25, 2005 By: /s/ Derek J. Kerr Derek J. Kerr Senior Vice President and Chief Financial Officer Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, America West Airlines, Inc. has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. America West Airlines, Inc. Dated: May 25, 2005 By: /s/ Derek J. Kerr Derek J. Kerr Senior Vice President and Chief Financial Officer 11 EXHIBIT INDEX Exhibit Number Description - ------- ----------- 2.1 Agreement and Plan of Merger, dated May 19, 2005, among US Airways Group, Inc., America West Holdings Corporation and Barbell Acquisition Corp. 10.1 Advisory Agreement, dated May 19, 2005, between America West Holdings Corporation and TPG Advisory, Inc. 10.2 Investment Agreement, dated May 19, 2005, among Eastshore Aviation, LLC, America West Holdings Corporation and U.S. Airways Group, Inc. (incorporated by reference to Exhibit 2.1 of this Form 8-K). 10.3 Investment Agreement, dated May 19, 2005, among Par Investment Partners, L.P., America West Holdings Corporation and U.S. Airways Group, Inc. (incorporated by reference to Exhibit 2.1 of this Form 8-K). 10.4 Investment Agreement, dated May 19, 2005, among Peninsula Investment Partners, L.P., America West Holdings Corporation and U.S. Airways Group, Inc. (incorporated by reference to Exhibit 2.1 of this Form 8-K). 10.5 Investment Agreement, dated May 19, 2005, among ACE Aviation Holdings, America West Holdings Corporation and U.S. Airways Group, Inc. (incorporated by reference to Exhibit 2.1 of this Form 8-K). 99.1 Voting Agreement, dated May 19, 2005, among TPG Partners, L.P., TPG Parallel I, L.P., Air Partners II, L.P. and U.S. Airways Group, Inc. (incorporated by reference to Exhibit 2.1 of this Form 8-K). 99.2 Form of Stockholders Agreement, among ACE Aviation Holdings, Par Investment Partners, L.P., Peninsula Investment Partners, L.P., Eastshore Aviation, LLC and U.S. Airways Group, Inc. 99.3 Joint press release, dated May 19, 2005, issued by America West Holdings Corporation and U.S. Airways Group, Inc. (incorporated by reference to the joint press release filed by America West Holdings pursuant to Rule 425 under the Securities Act of 1933 on May 19, 2005). 12 EX-2 2 mergeragmt.txt EXHIBIT 2.1 - AGREEMENT AND PLAN OF MERGER EXHIBIT 2.1 AGREEMENT AND PLAN OF MERGER among US AIRWAYS GROUP, INC., AMERICA WEST HOLDINGS CORPORATION and BARBELL ACQUISITION CORP. Dated as of May 19, 2005 TABLE OF CONTENTS
Page ---- ARTICLE I THE MERGER; CLOSING; EFFECTIVE TIME............................................................2 1.1 The Merger......................................................................................2 1.2 Closing.........................................................................................2 1.3 Effective Time..................................................................................2 1.4 Plan of Reorganization..........................................................................2 1.5 Effects of the Merger...........................................................................2 1.6 Certificates of Incorporation...................................................................2 1.7 By-Laws.........................................................................................3 1.8 Directors.......................................................................................3 1.9 Officers........................................................................................4 1.10 Headquarters....................................................................................4 ARTICLE II EFFECT OF THE MERGER ON CAPITAL STOCK; EXCHANGE OF CERTIFICATES...............................4 2.1 Effect on Capital Stock.........................................................................4 (a) Merger Consideration...................................................................4 (b) Cancellation of Shares.................................................................5 (c) Merger Sub.............................................................................5 2.2 Exchange of Certificates for Shares.............................................................5 (a) Exchange Agent.........................................................................5 (b) Exchange Procedures....................................................................6 (c) Distributions with Respect to Unexchanged Shares; Voting...............................7 (d) Transfers..............................................................................7 (e) No Fractional Shares...................................................................7 (f) Termination of Exchange Fund...........................................................7 (g) Lost, Stolen or Destroyed Certificates.................................................8 (h) Uncertificated Shares..................................................................8 2.3 Adjustments to Prevent Dilution.................................................................8 2.4 Withholding Rights..............................................................................8 2.5 West Stock Based Plans..........................................................................9 2.6 No Dissenters' Rights..........................................................................10 ARTICLE III REPRESENTATIONS AND WARRANTIES..............................................................10 3.1 Representations and Warranties of West.........................................................10 (a) Organization, Good Standing and Qualification.........................................11 (b) Capital Structure.....................................................................11 (c) Corporate Authority; Approval and Fairness............................................12 (d) Governmental Filings; No Violations; Certain Contracts................................13 (e) West Reports; Financial Statements....................................................14 (f) Absence of Certain Changes............................................................15
- i - (g) Litigation and Liabilities............................................................15 (h) Employee Benefits.....................................................................16 (i) Compliance with Laws; Licenses........................................................19 (j) Material Contracts....................................................................20 (k) Real Property.........................................................................20 (l) Takeover Statutes.....................................................................22 (m) Environmental Matters.................................................................23 (n) Taxes.................................................................................24 (o) Labor Matters.........................................................................25 (p) Intellectual Property and IT Assets...................................................26 (q) Foreign Corrupt Practices Act.........................................................28 (r) Aircraft..............................................................................28 (s) Slots.................................................................................29 (t) Equipment.............................................................................30 (u) U.S. Citizen; Air Carrier.............................................................30 (v) Insurance.............................................................................30 (w) Brokers and Finders...................................................................30 3.2 Representations and Warranties of East and Merger Sub..........................................31 (a) Organization, Good Standing and Qualification.........................................31 (b) Capital Structure of East.............................................................31 (c) Capitalization of Merger Sub..........................................................32 (d) Corporate Authority; Approval and Fairness............................................32 (e) Governmental Filings; No Violations; Certain Contracts................................32 (f) East Reports; Financial Statements....................................................33 (g) Absence of Changes....................................................................35 (h) Litigation and Liabilities............................................................35 (i) Employee Benefits.....................................................................36 (j) Compliance with Laws; Licenses........................................................38 (k) Material Contracts....................................................................39 (l) Real Property.........................................................................40 (m) Takeover Statutes.....................................................................42 (n) Environmental Matters.................................................................42 (o) Taxes.................................................................................43 (p) Labor Matters.........................................................................43 (q) Intellectual Property and IT Assets...................................................44 (r) Foreign Corrupt Practices Act.........................................................45 (s) Aircraft..............................................................................46 (t) Slots.................................................................................47 (u) Equipment.............................................................................48 (v) U.S. Citizen; Air Carrier.............................................................48 (w) Insurance.............................................................................48 (x) Brokers and Finders...................................................................48 (y) Merger Sub Constituent Documents......................................................48 ARTICLE IV COVENANTS....................................................................................48 4.1 Interim Operations.............................................................................48
- ii - 4.2 Bankruptcy Filings, Covenants and Agreements...................................................57 4.3 West Acquisition Proposals.....................................................................59 4.4 East Acquisition Proposals.....................................................................60 4.5 Information Supplied...........................................................................62 4.6 Shareholders Meeting...........................................................................62 4.7 Filings; Other Actions; Notification...........................................................62 4.8 Access and Reports.............................................................................64 4.9 Publicity......................................................................................65 4.10 Employee Benefits..............................................................................65 4.11 Expenses.......................................................................................66 4.12 Indemnification; Directors' and Officers' Insurance............................................66 4.13 Takeover Statutes..............................................................................68 4.14 Transfer Taxes.................................................................................68 4.15 Taxation.......................................................................................68 4.16 Stock Exchange Listing and De-listing..........................................................68 4.17 Affiliates.....................................................................................69 4.18 Section 16(b)..................................................................................69 4.19 Compliance with Indenture and Warrant..........................................................69 4.20 Adjustment for Increase in Pre-Investment Valuation of East....................................69 ARTICLE V CONDITIONS....................................................................................70 5.1 Conditions to Each Party's Obligation to Effect the Merger.....................................70 (a) Shareholder Approval..................................................................70 (b) Regulatory Consents...................................................................70 (c) Orders................................................................................71 (d) Bankruptcy............................................................................71 (e) S-4 Registration Statement............................................................71 (f) Listing...............................................................................71 (g) Additional East Equity................................................................71 (h) Further Agreements....................................................................71 5.2 Conditions to Obligations of East and Merger Sub...............................................72 (a) Representations and Warranties........................................................72 (b) Performance of Obligations of West....................................................72 (c) Certain Litigation....................................................................72 (d) Consents Under Agreements.............................................................72 (e) Tax Opinion...........................................................................72 5.3 Conditions to Obligation of West...............................................................73 (a) Representations and Warranties........................................................73 (b) Performance of Obligations of East and Merger Sub.....................................73 (c) Certain Litigation....................................................................73 (d) Consents Under Agreements.............................................................73 (e) Tax Opinion...........................................................................73 ARTICLE VI TERMINATION..................................................................................74 6.1 Termination by Mutual Consent..................................................................74
- iii - 6.2 Termination by Either East or West.............................................................74 6.3 Termination by West............................................................................75 6.4 Termination by East............................................................................75 6.5 Effect of Termination and Abandonment..........................................................76 ARTICLE VII MISCELLANEOUS AND GENERAL...................................................................78 7.1 Survival.......................................................................................78 7.2 Modification or Amendment......................................................................78 7.3 Waiver of Conditions...........................................................................78 7.4 Counterparts...................................................................................78 7.5 Governing Law And Venue; Waiver Of Jury Trial..................................................78 7.6 Notices........................................................................................79 7.7 Entire Agreement...............................................................................80 7.8 Third Party Beneficiaries......................................................................80 7.9 Obligations of East and of West................................................................80 7.10 Definitions....................................................................................81 7.11 Severability...................................................................................81 7.12 Interpretation; Construction...................................................................81 7.13 Assignment.....................................................................................82 Annex A Defined Terms........................................................................A-1
Exhibit A Financing Commitments Exhibit B Voting Agreement Exhibit C Form of Parent Charter Exhibit D Form of Parent Amended By-Laws Exhibit E Order Approving Bidding Procedures Exhibit F Affiliate Agreement - iv - AGREEMENT AND PLAN OF MERGER AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of May 19, 2005, among US Airways Group, Inc., a Delaware corporation, and its successors (including, as the context may require, on or after the effective date of the Plan, as reorganized pursuant to the Bankruptcy Code) ("East"), America West Holdings Corporation, a Delaware corporation ("West"), and Barbell Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of East ("Merger Sub"). RECITALS WHEREAS, the respective Boards of Directors of each of East, West and Merger Sub have, by resolutions duly adopted, declared that, the merger of Merger Sub with and into West (the "Merger"), upon the terms and subject to the conditions set forth in this Agreement and the other transactions contemplated by this Agreement are advisable, and approved and adopted this Agreement; WHEREAS, on September 12, 2004, East and certain of its Subsidiaries (each a "Debtor" and collectively, the "Debtors") filed a voluntary petition (the "Cases") for reorganization pursuant to chapter 11 of title 11 of the United States Code, 11 U.S.C. Sections 101 et seq. (the "Bankruptcy Code") in the United States Bankruptcy Court for the Eastern District of Virginia, Alexandria Division (the "Bankruptcy Court"); WHEREAS, the Debtors intend to seek the entry of an order of the Bankruptcy Court (the "Confirmation Order") to approve the restructuring of the Debtors pursuant to a plan of reorganization (the "Plan"), including the approval of this Agreement, the investment in additional East equity by certain new equity investors (the "Equity Investors") pursuant to financing commitments substantially in the form attached hereto as Exhibit A (the "Financing Commitments") and the authorization of East to consummate the transactions contemplated hereby and thereby; WHEREAS, it is intended that, for federal income tax purposes, the Merger shall qualify as a reorganization under the provisions of Section 368(a) of the Internal Revenue Code of 1986, as amended (the "Code"); WHEREAS, certain stockholders of West are concurrently herewith entering into a voting agreement in connection with the Merger in the form attached hereto as Exhibit B (the "Voting Agreement"); and WHEREAS, East, the other Debtors, West and Merger Sub desire to make certain representations, warranties, covenants and agreements in connection with this Agreement. NOW, THEREFORE, in consideration of the premises, and of the representations, warranties, covenants and agreements contained herein, the parties hereto agree as follows: ARTICLE I The Merger; Closing; Effective Time 1.1 The Merger. Upon the terms and subject to the conditions set forth in this Agreement, and in accordance with the Delaware General Corporation Law (the "DGCL"), at the Effective Time (as defined in Section 1.3) Merger Sub shall be merged with and into West and the separate corporate existence of Merger Sub shall thereupon cease. West shall be the surviving corporation in the Merger (sometimes hereinafter referred to as the "Surviving Corporation"), and the separate corporate existence of West, with all its rights, privileges, immunities, powers and franchises, shall continue unaffected by the Merger in accordance with the DGCL. 1.2 Closing. Subject to Section 1.4, the closing of the Merger (the "Closing") shall take place (i) at the offices of Arnold & Porter LLP, 555 12th St., NW, Washington, DC at 9:00 a.m., Washington DC time, on the fifth business day following the day on which the last to be satisfied or waived of the conditions set forth in Article V (other than those conditions that by their terms are to be satisfied at the Closing, but subject to the satisfaction or waiver of those conditions) shall be satisfied or waived in accordance with this Agreement or (ii) at such other place and time or on such other date as West and East may agree (the "Closing Date"). 1.3 Effective Time. As soon as practicable following the Closing, West and East will cause a Certificate of Merger (the "Certificate of Merger") to be executed, acknowledged and delivered to the Secretary of State of the State of Delaware in accordance with the relevant provisions of the DGCL and shall make all other filings or recordings required under the DGCL. The Merger shall become effective on the date on which the Certificate of Merger shall have been filed with the Secretary of State of the State of Delaware or at such later time as may be agreed by the parties in writing and specified in the Certificate of Merger (the "Effective Time"). 1.4 Plan of Reorganization. The Merger shall be effected as a principal component of the Plan. The Closing Date and the Effective Time hereunder shall occur on or as soon as practicable after the date the Confirmation Order is entered by the Bankruptcy Court. 1.5 Effects of the Merger. The Merger shall have the effects set forth in Section 259 of the DGCL. 1.6 Certificates of Incorporation. (a) East. At the Effective Time, pursuant to the Plan, the certificate of incorporation of East shall be amended and restated in its entirety to read substantially as set forth on Exhibit C hereto, until thereafter duly amended as provided therein or by applicable Laws (as defined in Section 3.1(i)) (the "Parent Charter"). (b) Surviving Corporation. The certificate of incorporation of Merger Sub in effect at the Effective Time shall be the certificate of incorporation of the -2- Surviving Corporation (the "Surviving Corporation Charter"), until thereafter amended as provided therein or by applicable Laws; provided, however, that the Surviving Corporation Charter shall be amended immediately following the Effective Time to change the name of Merger Sub to America West Holdings Corporation. 1.7 By-Laws. (a) East. At the Effective Time, the by-laws of East shall be amended and restated in their entirety to read substantially as set forth on Exhibit D hereto until duly amended as provided therein or by applicable Laws (the "Parent Amended By-Laws"). (b) Surviving Corporation. The by-laws of Merger Sub in effect at the Effective Time shall be the by-laws of the Surviving Corporation (the "Surviving Corporation By-Laws"), until thereafter amended as provided therein or by applicable Laws; provided, however, that the Surviving Corporation By-Laws shall be amended immediately following the Effective Time to change the name of Merger Sub to America West Holdings Corporation. 1.8 Directors. (a) East. Except as hereinafter provided, the number of directors comprising the full board of directors of East as of the Effective Time shall be no more than 13 directors. Initially, assuming East has received from the Equity Investors on or before the Effective Date cash equity investments totaling $375,000,000, (i) 2 of such directors shall be designated by East to an initial one-year term, all of whom shall be Independent Directors, (ii) 2 of such directors shall be designated by West to an initial one-year term, all of whom shall be Independent Directors, (iii) 1 of such directors shall be designated by East to an initial two-year term, which director shall be an Independent Director, (iv) 3 of such directors shall be designated by West to an initial two-year term, all of whom shall be Independent Directors, (v) 1 of such directors shall be W. Douglas Parker, Chief Executive Officer of West, who shall also serve as Chairman of the Board, appointed to an initial three-year term, (vi) 1 of such directors shall be Bruce Lakefield, Chief Executive Officer of East, who shall also serve as Vice Chairman of the Board, appointed to an initial three-year term and (vii) 3 of such directors shall be nominated by the Equity Investors to an initial three-year term pursuant to the terms of the Financing Commitments; provided, however, that in the event that East has received from the Equity Investors on or before the Effective Time cash equity investments totaling at least $500,000,000, then (i) 2 of such directors shall be designated by East to an initial one-year term, all of whom shall be Independent Directors, (ii) 2 of such directors shall be designated by West to an initial one-year term, all of whom shall be Independent Directors, (iii) 1 of such directors shall be Bruce Lakefield, Chief Executive Officer of East, who shall also serve as Vice Chairman of the Board, appointed to an initial two-year term, (iv) 3 of such directors shall be designated by West to an initial two-year term, all of whom shall be Independent Directors, (v) one of such directors shall be W. Douglas Parker, Chief Executive Officer of West, who shall also serve as Chairman of the Board, appointed to an initial three-year term and (vi) 4 of such directors shall be nominated by -3- the Equity Investors to an initial three-year term pursuant to the terms of the Financing Commitments. Each of East and West shall select their designees prior to the effectiveness of the S-4 Registration Statement (as defined in Section 4.5) from the current Independent Directors of their respective boards of directors with respect to all directors that are required to be Independent Directors, and each such designee shall be reasonably satisfactory to each of East and West. If any persons designated as directors pursuant to the two preceding sentences are unable to serve as directors for any reason prior to closing, the party who nominated such person shall designate a qualified replacement as soon as reasonably practicable. An "Independent Director" means a person who satisfies the requirements for independence under the rules of the New York Stock Exchange ("NYSE") as then in effect. (b) Surviving Corporation. The members of the Board of Directors of the Surviving Corporation at the Effective Time shall be the Chief Executive Officer of East immediately prior to the Effective Time and the Chief Executive Officer of West immediately prior to the Effective Time. On or prior to the Effective Time, the Board of Directors of each of East and the Surviving Corporation shall take such actions as are necessary to cause such persons to be elected to the Board of Directors of the Surviving Corporation. 1.9 Officers. (a) East. W. Douglas Parker, the Chief Executive Officer of West, shall serve as the Chief Executive Officer of East from and after the Effective Time. (b) Surviving Corporation. The officers of West at the Effective Time shall, from and after the Effective Time, be the officers of the Surviving Corporation until their successors shall have been duly elected or appointed and qualified or until their earlier death, resignation or removal in accordance with the Surviving Corporation Charter and the Surviving Corporation By-Laws. 1.10 Headquarters. East, Merger Sub and West agree that immediately following the Effective Time the headquarters of East and the Surviving Corporation shall be located at 111 W. Rio Salado Pkwy., Tempe, Arizona. ARTICLE II Effect of the Merger on Capital Stock; Exchange of Certificates 2.1 Effect on Capital Stock. At the Effective Time, as a result of the Merger and without any action on the part of the holder of any capital stock of West: (a) Merger Consideration. (i) Each share of Class A common stock, par value $0.01 per share, of West (each, a "Class A Share"), issued and outstanding immediately prior to the Effective Time (other than (i) Class A Shares owned by East or any direct or indirect -4- Subsidiary (as defined in Section 3.1(a)) of East and (ii) any Class A Shares owned by West or any direct or indirect Subsidiary of West, except, in the case of clauses (i) and (ii), for any such Class A Shares held on behalf of third parties (each, an "Excluded Class A Share")) (each such Class A Share not constituting an Excluded Class A Share, an "Outstanding Class A Share") shall be converted into, and become exchangeable for, 0.5306 (the "Class A Merger Exchange Ratio") common shares (the "Per Class A Share Merger Consideration"), par value $0.01 per share, of East ("East Common Stock"). (ii) Each share of Class B Common Stock, par value $0.01 per share, of West (each, a "Class B Share" and, together with the Class A Shares, the "Shares"), issued and outstanding immediately prior to the Effective Time (other than (i) Class B Shares owned by East or any direct or indirect Subsidiary of East and (ii) any Class B Shares owned by West or any direct or indirect Subsidiary of West except, in the case of clauses (i) and (ii), for any such Class B Shares held on behalf of third parties (each, an "Excluded Class B Share" and collectively with all Excluded Class A Shares, "Excluded Shares")) (each such Class B Share not constituting an Excluded Class B Share, an "Outstanding Class B Share" and, collectively with all Outstanding Class A Shares, the "Outstanding Shares") shall be converted into, and become exchangeable for, 0.4082 (the "Class B Merger Exchange Ratio") shares (the "Per Class B Share Merger Consideration") of East Common Stock. (iii) At the Effective Time, all of the Shares shall cease to be outstanding, shall be cancelled and retired and shall cease to exist, and each certificate (a "Certificate") formerly representing any of the Shares (other than Excluded Shares) shall thereafter represent only the right to receive either the Per Class A Share Merger Consideration or the Per Class B Share Merger Consideration, as applicable (the "Applicable Per Share Merger Consideration"), and the right, if any, to receive pursuant to Section 2.2(e) cash in lieu of fractional shares into which such Shares have been converted pursuant to this Section 2.1(a) and any dividend or distribution with respect to shares of East Common Stock pursuant to Section 2.2(c). (b) Cancellation of Shares. Each Excluded Share shall, by virtue of the Merger, and without any action on the part of the holder thereof, cease to be outstanding, shall be cancelled and retired without payment of any consideration therefor and shall cease to exist. (c) Merger Sub. At the Effective Time, by virtue of the Merger and without any action on the part of the holder thereof, each share of common stock, par value $0.01 per share, of Merger Sub issued and outstanding immediately prior to the Effective Time shall be converted into one fully paid and nonassessable share of common stock, par value $0.01 per share, of the Surviving Corporation. 2.2 Exchange of Certificates for Shares. (a) Exchange Agent. As of the Effective Time, East shall deposit, or shall cause to be deposited, with an exchange agent selected by East with West's prior approval, which shall not be unreasonably withheld or delayed (the "Exchange Agent"), -5- in trust for the benefit of the holders of Outstanding Shares, certificates representing the shares of East Common Stock to be exchanged for Outstanding Shares in respect of the Applicable Per Share Merger Consideration to be paid in the Merger and, after the Effective Time, if applicable, any cash and dividends or other distributions with respect to the East Common Stock to be paid or to be issued pursuant to Section 2.2(e) or 2.2(c) in exchange for Outstanding Shares (such certificates for shares of East Common Stock, together with the amount of any cash payable pursuant to Section 2.2(e) in lieu of fractional shares and dividends or other distributions payable with respect thereto pursuant to Section 2.2(c), being hereinafter referred to as the "Exchange Fund"). (b) Exchange Procedures. Appropriate transmittal materials, to be reasonably agreed upon by East and West, shall be provided as soon as practicable after the Effective Time by the Exchange Agent to holders of record of Outstanding Shares converted in the Merger, advising such holders of the effectiveness of the Merger and the procedure for surrendering the Certificates to the Exchange Agent. Such transmittal materials shall specify that delivery shall be effected and risk of loss and title to the Certificates held by any holder representing Shares, shall pass only upon proper delivery of the Certificates to the Exchange Agent. Upon the surrender of a Certificate (or affidavit of loss in lieu thereof) to the Exchange Agent in accordance with the terms of such transmittal materials, the holder of such Certificate shall be entitled to receive in exchange therefor (after giving effect to any required tax withholdings) (i) one or more shares of East Common Stock which shall be in uncertificated book-entry form unless a physical certificate is requested and which shall represent, in the aggregate, a certificate representing that number of whole shares of East Common Stock that such holder is entitled to receive pursuant to this Article II, (ii) a check in the amount of (A) any cash payable pursuant to Section 2.2(e) in lieu of fractional shares plus (B) any unpaid non-stock dividends and any other dividends or other distributions that such holder has the right to receive pursuant to Section 2.2(c), and, in each case, the Certificate so surrendered shall forthwith be cancelled. No interest will be paid or accrued on any amount payable upon due surrender of the Certificates. In the event of a transfer of ownership of Shares that is not registered in the transfer records of West, a certificate representing the proper number of shares of East Common Stock, together with a check for any cash to be paid upon due surrender of the Certificate and any other dividends or distributions in respect thereof, may be issued and/or paid to such a transferee if the Certificate formerly representing such Shares is presented to the Exchange Agent, accompanied by all documents required to evidence and effect such transfer and to evidence that any applicable stock transfer taxes have been paid or are not applicable. If any certificate for shares of East Common Stock is to be issued in a name other than that in which the Certificate surrendered in exchange therefor is registered, it shall be a condition of such exchange that the Person (as defined below) requesting such exchange shall pay any transfer or other taxes required by reason of the issuance of certificates for shares of East Common Stock in a name other than that of the registered holder of the Certificate surrendered, or shall establish to the satisfaction of East or the Exchange Agent that such taxes have been paid or are not applicable. For the purposes of this Agreement, the term "Person" shall mean any individual, corporation (including not-for-profit), general or limited partnership, limited -6- liability company, joint venture, estate, trust, association, organization, Governmental Entity (as defined in Section 3.1(d)(i)) or other entity of any kind or nature. (c) Distributions with Respect to Unexchanged Shares; Voting. (i) All shares of East Common Stock to be issued pursuant to the Merger shall be deemed issued and outstanding as of the Effective Time and whenever a dividend or other distribution is declared by East in respect of the East Common Stock, the record date for which is after the Effective Time, that declaration shall include dividends or other distributions in respect of all shares issuable pursuant to this Agreement. No dividends or other distributions in respect of the East Common Stock shall be paid to any holder of any unsurrendered Certificate until such Certificate is surrendered for exchange in accordance with this Article II. Subject to the effect of applicable Laws, following surrender of any such Certificate, there shall be issued and/or paid to the holder of the certificates representing whole shares of East Common Stock issued in exchange therefor, without interest, (A) at the time of such surrender, the dividends or other distributions with a record date after the Effective Time theretofore payable with respect to such whole shares of East Common Stock and not paid and (B) at the appropriate payment date, the dividends or other distributions payable with respect to such whole shares of East Common Stock with a record date after the Effective Time but with a payment date subsequent to surrender. (ii) Holders of unsurrendered Certificates shall be entitled to vote after the Effective Time at any meeting of East stockholders the number of whole shares of East Common Stock represented by such Certificates, regardless of whether such holders have exchanged their Certificates. (d) Transfers. After the Effective Time, there shall be no transfers on the stock transfer books of West of the Outstanding Shares. If, after the Effective Time, Outstanding Shares are presented for transfer to the Exchange Agent, they will be cancelled and exchanged for the Applicable Per Share Merger Consideration, as the case may be, as provided in this Article II. (e) No Fractional Shares. Notwithstanding any other provision of this Agreement, each holder of Common Shares exchanged pursuant to the Merger who would otherwise have been entitled to receive a fractional share of East Common Stock (after taking into account all Certificates delivered by such holder) shall receive, in lieu thereof, cash (without interest) in an amount equal to the product of (i) such fractional part of a share of East Common Stock multiplied by (ii) the average of the closing price for a share of East Common Stock on the NASDAQ Stock Market or NYSE Composite Transactions Tape, as applicable, for the three (3) trading days following the day on which the Effective Time occurs. (f) Termination of Exchange Fund. Any portion of the Exchange Fund (including the proceeds of any investments thereof and any shares of East Common Stock) that remains unclaimed by the shareholders of West for 180 days after the Effective Time shall be delivered to East. Any shareholders of West who have not -7- theretofore complied with this Article II shall thereafter look only to East for delivery of any cash or any shares of East Common Stock and payment of any cash, dividends and other distributions in respect thereof payable or deliverable pursuant to Section 2.1, Section 2.2(c) and Section 2.2(e) upon due surrender of their Certificates (or affidavits of loss in lieu thereof), in each case, without any interest thereon. Any such portion of the Exchange Fund remaining unclaimed by holders of Common Shares five (5) years after the Effective Time (or such earlier date immediately prior to such time as such amounts would otherwise escheat to or become property of any Governmental Entity) shall, to the extent permitted by applicable Law, become the property of East free and clear of any claims or interest of any Person previously entitled thereto. Notwithstanding the foregoing, none of East, the Surviving Corporation, the Exchange Agent or any other Person shall be liable to any former holder of Shares for any amount properly delivered to a public official pursuant to applicable abandoned property, escheat or similar Laws. (g) Lost, Stolen or Destroyed Certificates. In the event any Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the Person claiming such Certificate to be lost, stolen or destroyed and, if required by East, the posting by such Person of a bond in customary amount and upon such terms as may be required by East as indemnity against any claim that may be made against it or the Surviving Corporation with respect to such Certificate, the Exchange Agent will issue in exchange for such lost, stolen or destroyed Certificate the cash or the shares of East Common Stock and any cash, unpaid dividends or other distributions in respect thereof that would be payable or deliverable pursuant to this Agreement had such lost, stolen or destroyed Certificate been surrendered. (h) Uncertificated Shares. In the case of any Shares that are not represented by certificates, the Exchange Agent shall issue at the Effective Time East Common Stock to the holders of such shares without any action by such holders, and the parties shall make appropriate adjustments to this Section 2.2 to assure the equivalent treatment thereof. 2.3 Adjustments to Prevent Dilution. In the event that, as a result of a reclassification, stock split (including a reverse stock split), stock dividend or distribution, recapitalization, combination or exchange of shares, or other similar transaction, West changes the number of Shares or securities convertible or exchangeable into or exercisable for Shares issued and outstanding prior to the Effective Time, or East changes the number of shares of East Common Stock or securities convertible or exchangeable into or exercisable for shares of East Common Stock, issued and outstanding subsequent to the effective date of the Plan and prior to the Effective Time, the Class A Merger Exchange Ratio and Class B Merger Exchange Ratio shall be equitably adjusted. 2.4 Withholding Rights. East, the Surviving Corporation or the Exchange Agent shall be entitled to deduct and withhold from amounts otherwise payable under this Article II any amounts that it is required to deduct and withhold with respect to such payments under the Code, Treasury Regulations promulgated under the Code, or any provision of state, local or foreign tax law. Any amounts so deducted and withheld will -8- be treated for all purposes of this Agreement as having been paid to the Person in respect of which such deduction and withholding was made. 2.5 West Stock Based Plans. (a) At the Effective Time, each outstanding option to purchase Class B Shares (a "West Option") under West's stock-based benefit plans and under individual employment agreements to which West is a party (the "West Stock Plans"), whether vested or unvested, shall be converted into an option to acquire a number of shares of East Common Stock equal to the product (rounded up to the nearest whole number) of (x) the number of Class B Shares subject to the West Option immediately prior to the Effective Time and (y) the Class B Merger Exchange Ratio, at an exercise price per share (rounded down to the nearest whole cent) equal to (A) the exercise price per Share of such West Option immediately prior to the Effective Time divided by (B) the Class B Merger Exchange Ratio; provided, however, that the exercise price and the number of shares of East Common Stock purchasable pursuant to the West Options shall be determined in a manner consistent with the requirements of Section 409A of the Code; provided, further, that in the case of any West Option to which Section 422 of the Code applies, the exercise price and the number of shares of East Common Stock purchasable pursuant to such option shall be determined in accordance with the foregoing, subject to such adjustments as are necessary in order to satisfy the requirements of Section 424(a) of the Code. Except as specifically provided above and to the extent the terms, conditions and restrictions may be altered in accordance with their terms as a result of the transactions contemplated hereby, following the Effective Time, each West Option shall continue to be governed by the same terms and conditions as were applicable under such West Option immediately prior to the Effective Time, including its vesting schedule and expiration date. At or prior to the Effective Time, West shall adopt appropriate amendments to the West Stock Plans, if applicable, and the Board of Directors of West shall adopt appropriate resolutions, if applicable, to effectuate the provisions of this Section 2.5(a). East shall take all actions as are necessary for the assumption of the West Stock Plans pursuant to this Section 2.5, including the reservation, issuance (subject to Section 2.5(c)) and listing of East Common Stock as necessary to effect the transactions contemplated by this Section 2.5. (b) At the Effective Time, each right of any kind, contingent or accrued, to acquire or receive Class B Shares or benefits measured by the value of Class B Shares, and each award of any kind consisting of Class B Shares that may be held, awarded, outstanding, payable or reserved for issuance under the West Stock Plans and any other Compensation and Benefits Plans (as defined in Section 3.1(h)(i)), other than West Options (the "West Awards"), shall be deemed to be converted into the right to acquire or receive stock of East or benefits (as the case may be) measured by the value of the number of shares of East Common Stock equal to the product of (x) the number of Class B Shares subject to such West Award immediately prior to the Effective Time and (y) the Class B Merger Exchange Ratio, and each such right shall otherwise be subject to the terms and conditions applicable to such right under the relevant West Stock Plan or other West Compensation and Benefit Plan. At or prior to the Effective Time, West shall adopt appropriate amendments to the West Stock Plans and such Compensation and Benefits -9- Plans, if applicable, and the Board of Directors of West shall adopt appropriate resolutions, if applicable, to effectuate the provisions of this Section 2.5(b). (c) Promptly following the Effective Time, East shall file with the Securities and Exchange Commission (the "SEC") a registration statement on Form S-3 or Form S-8, as the case may be (or any successor form), or another appropriate form with respect to such interests or East Common Stock, and shall use its reasonable best efforts to have such registration statement declared effective by the SEC as of the Effective Time and to maintain the effectiveness of such registration statement (and maintain the current status of the prospectus or prospectuses contained therein and comply with any applicable state securities or "blue sky" laws) for so long as the relevant West Stock Plans or other West Compensation and Benefit Plans, as applicable, remain in effect and such registration of interests therein or the shares of East Common Stock issuable thereunder (and compliance with any such state laws) continues to be required. As soon as practicable after the registration of such interests or shares, as applicable, East shall deliver to the holders of West Options and West Awards appropriate notices setting forth such holders' rights pursuant to the respective West Stock Plans and agreements evidencing the grants of such West Options and West Awards, and stating that such West Options and West Awards and agreements have been assumed by East and shall continue in effect on the same terms and conditions (subject to the adjustments required by this Section 2.5 after giving effect to the Merger and the terms of the West Stock Plans). (d) Without limiting the applicability of the preceding paragraph, West and East shall take all necessary action to ensure that the Surviving Corporation will not be required to deliver Shares or other capital stock of West to any Person pursuant to or in settlement of West Options or West Awards after the Effective Time. At or prior to the Effective Time, West shall adopt appropriate amendments to all West Stock Plans conferring any rights to Shares or other capital stock of West, if applicable, and the Board of Directors of West shall adopt appropriate resolutions, if applicable, to effectuate the provisions of this Section 2.5(d). 2.6 No Dissenters' Rights. In accordance with Section 262 of the DGCL, no appraisal rights shall be available to holders of Class B Shares in connection with the Merger. ARTICLE III Representations and Warranties 3.1 Representations and Warranties of West. Except as set forth in the disclosure letter (subject to Section 7.12(c) of this Agreement) delivered to East by West prior to entering into this Agreement (the "West Disclosure Letter") or, to the extent the qualifying nature of such disclosure with respect to a specific representation and warranty is readily apparent therefrom, as set forth in the West Reports (as defined in Section 3.1(e)) filed on or after January 1, 2005 and prior to the date hereof (excluding any disclosures included in any such West Report that are predictive or forward-looking in nature), West hereby represents and warrants to East and Merger Sub that: -10- (a) Organization, Good Standing and Qualification. Each of West and its Subsidiaries is a legal entity duly organized, validly existing and in good standing under the Laws of its respective jurisdiction of organization and has all requisite corporate or similar power and authority to own, lease and operate its properties and assets and to carry on its business as presently conducted and is qualified to do business and is in good standing as a foreign corporation in each jurisdiction where the ownership, leasing or operation of its assets or properties or conduct of its business requires such qualification, except where the failure to be so organized, validly existing, qualified or in good standing, or to have such power or authority, would not, individually or in the aggregate, reasonably be expected to result in a West Material Adverse Effect (as defined below). West has made available to East complete and correct copies of West's certificate of incorporation and by-laws, each as amended to date. As used in this Agreement, the term (i) "Subsidiary" means, with respect to any Person, any other Person of which at least a majority of the securities or ownership interests having by their terms ordinary voting power to elect a majority of the board of directors or other persons performing similar functions is directly or indirectly owned or controlled by such Person or by one or more of its respective Subsidiaries or by such Person and any one or more of its respective Subsidiaries, and (ii) "West Material Adverse Effect" means (x) a material adverse effect on the financial condition, assets, liabilities, business or results of operations of West and its Subsidiaries taken as a whole, excluding any such effect resulting from (I) changes or conditions generally affecting the U.S. economy or financial markets, (II) changes or conditions generally affecting any of the segments of the airline industry in which West or any of its Subsidiaries operates, to the extent such conditions or changes do not disproportionately impact West or its subsidiaries, (III) changes or conditions resulting from divestiture required in order to satisfy Section 5.1(b) hereof or (IV) the announcement or consummation of this Agreement, or (y) an effect that would prevent, materially delay or materially impair the ability of West to consummate the Merger and the other transactions contemplated by this Agreement. (b) Capital Structure. The authorized capital stock of West consists of (x) 1,200,000 Class A Shares, of which 859,117 Class A Shares were outstanding as of the close of business on April 8, 2005, (y) 200,000,000 Class B Shares, of which 51,600,766 Class B Shares were outstanding as of the close of business on April 8, 2005, including 16,437,575 Class B Shares held by West as treasury shares, and (z) 48,800,000 shares of preferred stock, par value $0.01 per share, of West (the "West Preferred Shares"), of which no shares were outstanding as of the close of business on April 8, 2005. The Subsidiaries of West hold no shares of capital stock of West, or securities or obligations convertible or exchangeable into or exercisable for such capital stock. All of the outstanding Shares have been duly authorized and validly issued and are fully paid and nonassessable. West has no Shares or West Preferred Shares reserved for issuance, except that, as of April 8, 2005, there were an aggregate of 11,640,501 Shares reserved for issuance pursuant to the West Stock Plans, 19,692,000 Shares reserved for issuance pursuant to the Warrants dated as of January 18, 2002 (the "West Warrants"), 9,358,276 Shares reserved for issuance pursuant to West's 7.5% Convertible Senior Notes Due 2009 (the "2009 Notes") and 8,095,842 Shares reserved for issuance pursuant to America West Airlines, Inc.'s 7.25% Senior Exchangeable Notes due 2023 (the "2023 Notes" and, together with the 2009 Notes, the "West Convertible Debt"). From April 8, 2005 through -11- the date hereof West has not issued any shares of Common Stock except (i) pursuant to the exercise of West Options, (ii) the settlement of West Awards outstanding on March 31, 2005 in accordance with their terms, (iii) the West Warrants, (iv) the West Convertible Debt and (v) after the date hereof, as permitted by Section 4.1 hereof. Except pursuant to the West Stock Plans or as permitted by Section 4.1 hereof, from and after April 8, 2005, neither West nor its Subsidiaries has granted or issued any West Options or West Awards. Each of the outstanding shares of capital stock or other securities of each of West's Subsidiaries has been duly authorized and validly issued and is fully paid and nonassessable and, to the extent owned by West or by a direct or indirect wholly-owned Subsidiary of West, is owned free and clear of any lien, charge, pledge, security interest, claim or other encumbrance (each, a "Lien"). Except as set forth above, as of the date of this Agreement, there are no preemptive or other outstanding rights, options, warrants, conversion rights, stock appreciation rights, redemption rights, repurchase rights, agreements, arrangements, calls, commitments or rights of any kind that obligate West or any of its Subsidiaries to issue or sell any shares of capital stock or other securities of West or any of its Subsidiaries or any securities or obligations convertible or exchangeable into or exercisable for, or giving any Person a right to subscribe for or acquire, any securities of West or any of its Subsidiaries, and no securities or obligations evidencing such rights are authorized, issued or outstanding. Upon any issuance of any Shares in accordance with the terms of the West Stock Plans, such Shares will be duly authorized, validly issued, fully paid and nonassessable and free and clear of any Lien. Other than the West Convertible Debt, West does not have outstanding any bonds, debentures, notes or other obligations the holders of which have the right to vote (or which obligations are convertible into or exercisable for securities having the right to vote) with the shareholders of West on any matter. (c) Corporate Authority; Approval and Fairness. (i) West has all requisite corporate power and authority and has taken all corporate action necessary in order to execute, deliver and perform its obligations under this Agreement and to consummate the Merger, subject only to the adoption of this Agreement by the holders of a majority of the outstanding Shares entitled to vote on such matter at a shareholders' meeting duly called and held for the purpose (the "West Requisite Vote"). This Agreement is a valid and binding agreement of West enforceable against West in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles (the "Bankruptcy and Equity Exception"). (ii) The Board of Directors of West has (A) declared that the Merger and the other transactions contemplated hereby are advisable and has adopted this Agreement; (B) received an opinion of its financial advisors, Greenhill & Co., LLC, to the effect that the Per Class B Share Merger Consideration is fair from a financial point of view to the holders of Shares (other than Excluded Shares), which opinion has not been amended or rescinded as of the date of this Agreement; (C) resolved to recommend adoption of this Agreement to the holders of Shares (such recommendations being the -12- "Directors' Recommendation"); and (D) directed that this Agreement be submitted to the holders of Shares for their adoption. (d) Governmental Filings; No Violations; Certain Contracts. (i) Other than the notices, reports, filings, consents, registrations, approvals, permits or authorizations (A) pursuant to Section 1.3; (B) required under the Hart Scott Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), the Securities Act of 1933, as amended (the "Securities Act") and the Securities Exchange Act of 1934 (the "Exchange Act") and the rules and regulations promulgated thereunder; (C) with, from or to the Federal Aviation Administration (the "FAA"); (D) with, from or to the United States Department of Transportation (the "DOT"); (E) with, from or to the Federal Communications Commission (the "FCC"); (F) with, from or to the Department of Homeland Security (the "DHS"); (G) with, from or to the Air Transportation Stabilization Board (the "ATSB") and (H) with, from or to those foreign Governmental Entities regulating competition and the airline industry set forth in Section 3.1(d)(i)(H) of the West Disclosure Letter, no notices, reports or other filings are required to be made by West with, nor are any consents, registrations, approvals, permits or authorizations required to be obtained by West or any of its Subsidiaries from, any domestic or foreign governmental or regulatory authority, agency, commission, body, court or other legislative, executive or judicial governmental entity (each a "Governmental Entity"), in connection with the execution, delivery and performance of this Agreement by West and the consummation by West of the Merger and the other transactions contemplated hereby, except those that the failure to make or obtain would not, individually or in the aggregate, reasonably be expected to result in a West Material Adverse Effect. (ii) Except as set forth on Section 3.1(d)(ii) of the West Disclosure Letter, the execution, delivery and performance of this Agreement by West do not, and the consummation by West of the Merger and the other transactions contemplated hereby will not, constitute or result in (A) a breach or violation of, or a default under, the certificate of incorporation or by-laws of West or the comparable governing documents of any of its Subsidiaries; (B) with or without notice, lapse of time or both, a breach or violation of, a termination (or right of termination) or default under, the creation or acceleration of any obligations under or the creation of a Lien on any of the assets of West or any of its Subsidiaries pursuant to any agreement, lease, license, contract, note, mortgage, indenture or other legally binding obligation (a "Contract") binding upon West or any of its Subsidiaries or, assuming (solely with respect to performance of this Agreement and consummation by West of the Merger and the other transactions contemplated hereby) compliance with the matters referred to in Section 3.1(d)(i), any Law or governmental or non-governmental permit or license to which West or any of its Subsidiaries is subject; or (C) a default under any agreement or loan agreement or any other indebtedness agreement or instrument of indebtedness that is binding upon West or any of its Subsidiaries or assets; except, in the case of clause (B) or (C) above, for any such breach, violation, termination, default, creation, acceleration or change that would not, individually or in the aggregate, reasonably be expected to result in a West Material Adverse Effect. -13- (e) West Reports; Financial Statements. (i) West has made available to East each registration statement, report, proxy statement or information statement prepared by it or any Subsidiary since December 31, 2004 (the "Audit Date") and filed with the SEC, including West's Annual Report on Form 10-K for the year ended December 31, 2004, each in the form (including exhibits, annexes and any amendments thereto) filed with the SEC. West and each Subsidiary has filed or furnished all forms, statements, schedules, reports and documents required to be filed or furnished by it with the SEC pursuant to applicable securities statutes, regulations, policies and rules since the Audit Date (the forms, statements, schedules, reports and documents filed or furnished with the SEC since the Audit Date and those filed or furnished with the SEC subsequent to the date of this Agreement, if any, including any amendments thereto, the "West Reports"). Each of the West Reports, at the time of its filing, complied in all material respects with the applicable requirements of the Exchange Act and the rules and regulations thereunder and complied in all material respects with the then applicable accounting standards. As of their respective dates (or, if amended, as of the date of such amendment), the West Reports did not, and any West Reports filed with the SEC subsequent to the date hereof will not, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances in which they were made, not misleading. The West Reports included or will include all certificates required to be included therein pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002, as amended (the "SOX Act"), and the internal control report and attestation of West's outside auditors required by Section 404 of the SOX Act. (ii) Each of the consolidated balance sheets included in or incorporated by reference into the West Reports (including the related notes and schedules) fairly presents, or, in the case of West Reports filed after the date hereof, will fairly present, in all material respects, the consolidated financial position of West and any other entity included therein and their respective Subsidiaries as of its date, and each of the consolidated statements of income, changes in shareholders' equity and cash flows included in or incorporated by reference into the West Reports (including any related notes and schedules) fairly presents, or in the case of West Reports filed after the date hereof, will fairly present, in all material respects, the net income, total shareholders' equity and net increase (decrease) in cash and cash equivalents, as the case may be, of West and any other entity included therein and their respective Subsidiaries for the periods set forth therein (subject, in the case of unaudited statements, to notes and normal year-end audit adjustments that are not expected to be material in amount or effect), in each case in accordance with U.S. generally accepted accounting principles ("GAAP") consistently applied during the periods involved, except as may be noted therein and subject, in the case of any unaudited interim financial statements, to the absence of notes and normal year-end adjustments. (iii) The management of West has (x) established and maintained disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) designed to ensure that material information relating to West, including its consolidated Subsidiaries, is made known to the management of West by others within those entities, -14- and (y) has disclosed, based on its most recent evaluation, to West's outside auditors and the audit committee of the Board of Directors of West (A) all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) which are reasonably likely to adversely affect West's ability to record, process, summarize and report financial data and (B) any fraud, whether or not material, that involves management or other employees who have a significant role in West's internal controls over financial reporting. Since the Audit Date, any material change in internal control over financial reporting required to be disclosed in any West Report has been so disclosed. (iv) Since the Audit Date, neither West nor any of its Subsidiaries nor, to West's Knowledge (as defined below), any director, officer, employee, auditor, accountant or representative of West or any of its Subsidiaries has received or otherwise had or obtained knowledge of any material complaint, allegation, assertion or claim, whether written or oral, regarding the accounting or auditing practices, procedures, methodologies or methods of West or any of its Subsidiaries or their respective internal accounting controls relating to periods after the Audit Date, including any material complaint, allegation, assertion or claim that West or any of its Subsidiaries has engaged in questionable accounting or auditing practices (except for any of the foregoing after the date hereof which have no reasonable basis). "West's Knowledge" shall mean the knowledge of the Chief Executive Officer, Chief Operating Officer and each Executive Vice President and Senior Vice President of West, after reasonable inquiry. (f) Absence of Certain Changes. Since the Audit Date, West and its Subsidiaries have conducted their respective businesses only in, and have not engaged in any material transaction other than in accordance with, the ordinary course of such businesses. Since the Audit Date, there has not been any West Material Adverse Effect or any event, occurrence, discovery or development which would, individually or in the aggregate, reasonably be expected to result in a West Material Adverse Effect. (g) Litigation and Liabilities. (i) Except as otherwise disclosed on West's Annual Report on Form 10-K for the year ended December 31, 2004 or as set forth on Section 3.1(g)(i) of the West Disclosure Letter, there are no (A) civil, criminal or administrative actions, suits, claims, hearings, arbitrations, investigations or proceedings pending or, to West's Knowledge, threatened against West or any of its Subsidiaries or (B) litigations, arbitrations, investigations or other proceedings, or injunctions or final judgments relating thereto, pending or, to West's Knowledge, threatened against West or any of its Subsidiaries before any Governmental Entity, including, without limitation, the FAA, except in the case of either clause (A) or (B), for those that would not, individually or in the aggregate, reasonably be expected to result in a West Material Adverse Effect. None of West or any of its Subsidiaries is a party to or subject to the provisions of any judgment, order, writ, injunction, decree or award of any Governmental Entity which would, individually or in the aggregate, reasonably be expected to result in a West Material Adverse Effect. -15- (ii) There are no liabilities or obligations of West or any Subsidiary of West, whether or not accrued, contingent or otherwise and whether or not required to be disclosed, or any other facts or circumstances that would reasonably be expected to result in any obligations or liabilities of, West or any of its Subsidiaries, other than: (A) liabilities or obligations to the extent (I) reflected on the consolidated balance sheet of West or (II) disclosed in the notes thereto, in accordance with GAAP, in each case included in West's quarterly report on Form 10-Q for the period ended March 31, 2005 or in West's annual report on Form 10-K for the period ended December 31, 2004; (B) liabilities or obligations incurred in the ordinary course of business since December 31, 2004; (C) performance obligations under contracts required in accordance with their terms, or performance obligations, to the extent required under applicable Law, in each case to the extent arising after the date hereof; or (D) liabilities or obligations that would not, individually or in the aggregate, reasonably be expected to result in a West Material Adverse Effect. (h) Employee Benefits. (i) Section 3.1(h)(i) of the West Disclosure Letter contains a true and complete list of each material West Compensation and Benefit Plan. "West Compensation and Benefit Plan" means each bonus, deferred compensation, incentive compensation, stock purchase, stock option, severance pay, medical, life or other insurance, profit-sharing, or pension plan, program, agreement or arrangement, and each other employee benefit or compensation plan, program, agreement or arrangement, sponsored, maintained or contributed to or required to be contributed to by West or any of its Subsidiaries or by any trade or business, whether or not incorporated, that together with West or any of its Subsidiaries would be deemed a "single employer" under Section 414 of the Code (a "West ERISA Affiliate") or to which West or any West ERISA Affiliate is a party, for the benefit of, with or relating to any current or former employee, officer or director of West or any West ERISA Affiliate. Except as would not result in a material liability, neither West nor any of its Subsidiaries has any formal plan or commitment, whether legally binding or not, to create any additional plan or modify or change any existing West Compensation and Benefit Plan (excluding any severance or retention bonus plan) that would affect any employee or director or former employee or former director of West or any of its Subsidiaries. (ii) With respect to each of the material West Compensation and Benefit Plans, West has heretofore delivered or made available to East true and complete copies of each of the following documents: (A) the West Compensation and Benefit Plan and related trust agreements and insurance contracts (including all amendments thereto), if any; (B) the most recent annual report, actuarial report, and financial statement, if any; (C) the most recent Summary Plan Description, together with each Summary of Material -16- Modifications, required under the Employee Retirement Income Security Act of 1974, as amended ("ERISA") with respect to such West Compensation and Benefit Plan, if any; and (D) the most recent determination letter received from the Internal Revenue Service (the "IRS") with respect to each West Compensation and Benefit Plan that is intended to be qualified under Section 401(a) of the Code. (iii) No liability under Title IV of ERISA, Section 302 of ERISA or Section 412 of the Code has been incurred by West or any of its Subsidiaries or any West ERISA Affiliate since the effective date of ERISA that has not been satisfied in full, and no condition exists that presents a risk to West or any of its Subsidiaries or any West ERISA Affiliate of incurring a liability under such Title or such Sections, in each case, which would, individually or in the aggregate, reasonably be expected to have a West Material Adverse Effect. (iv) Neither West, nor any of its Subsidiaries, nor any West ERISA Affiliate, nor any of the West Compensation and Benefit Plans, nor any trust created thereunder, nor, to West's Knowledge, any trustee or administrator thereof, has engaged in a prohibited transaction (within the meaning of Section 406 of ERISA and Section 4975 of the Code) in connection with which West, any of its Subsidiaries, or any of the West Compensation and Benefit Plans would, individually or in the aggregate, reasonably be expected to have a West Material Adverse Effect. (v) Except as would not, individually or in the aggregate, have a West Material Adverse Effect, (A) all contributions required to have been made under the terms of any West Compensation and Benefit Plan have been timely made, and (B) all obligations in respect of each West Compensation and Benefit Plan have been properly accrued and reflected on the most recent consolidated statement of operations and consolidated balance sheet filed or incorporated by reference in the West Reports to the extent required by GAAP. (vi) Except as set forth on Section 3.1(h)(vi) of the West Disclosure Letter, no West Compensation and Benefit Plan (other than any that is a "multiemployer plan" as such term is defined in Section 3(37) of ERISA) is subject to Section 412 of the Code or Section 302 of ERISA or Title IV of ERISA. (vii) None of the West Compensation and Benefit Plans is a "multiple employer welfare arrangement," as such term is defined in Section 3(40) of ERISA, or single employer plan that has two or more contributing sponsors, at least two of whom are not under common control, within the meaning of Section 4063(a) of ERISA. With respect to any West Compensation and Benefit Plan that is a "multiemployer plan" as such term is defined in Section 3(37) of ERISA (each of which is identified in Section 3.1(h)(vii) of the West Disclosure Letter), (A) neither West, any of its Subsidiaries nor any West ERISA Affiliate has made or suffered a "complete withdrawal" or a "partial withdrawal," as such terms are respectively defined in Section 4203 and 4205 of ERISA, (B) no event has occurred that presents a material risk of a partial withdrawal, (C) neither West, any of its Subsidiaries nor any West ERISA Affiliate has any contingent liability under Section 4204 of ERISA, and no circumstances exist that present a material risk that -17- any such plan will go into reorganization, and (D) neither West, any of its Subsidiaries nor any West ERISA Affiliates would have any material withdrawal liability if a complete withdrawal by West, its Subsidiaries and the West ERISA Affiliates occurred under each such plan on the date hereof. (viii) Except as set forth on Section 3.1(h) (viii) of the West Disclosure Letter, the IRS has issued a favorable determination letter in respect of each of the West Compensation and Benefit Plans that is intended to be "qualified" within the meaning of Section 401(a) of the Code and neither West nor any of its Subsidiaries is aware of any circumstances that could reasonably be expected to result in the revocation of such letter. Each of the West Compensation and Benefit Plans that is intended to satisfy the requirements of Section 125 or 501(c)(9) of the Code satisfies such requirements in all material respects, except as would not, either individually or in the aggregate, reasonably be expected to have a West Material Adverse Effect. Each of the West Compensation and Benefit Plans has been operated and administered in all material respects in accordance with its terms and applicable laws, including but not limited to ERISA and the Code, except as would not, either individually or in the aggregate, reasonably be expected to have a West Material Adverse Effect. (ix) Except as set forth on Section 3.1(h)(ix) of the West Disclosure Letter, there are no claims pending, or, to West's Knowledge, threatened or anticipated (other than routine claims for benefits) against any West Compensation and Benefit Plan, the assets of any West Compensation and Benefit Plan or against West, any of its Subsidiaries or any West ERISA Affiliate with respect to any West Compensation and Benefit Plan. There is no judgment, decree, injunction, rule or order of any court, governmental body, commission, agency or arbitrator outstanding against or in favor of any West Compensation and Benefit Plan or any fiduciary thereof (other than rules of general applicability). There are no pending or, to West's Knowledge, threatened audits or investigations by any governmental body, commission or agency involving any West Compensation and Benefit Plan, that would, individually or in the aggregate, reasonably be expected to have a West Material Adverse Effect. (x) Except as set forth on Section 3.1(h)(x) of the West Disclosure Letter, no West Compensation and Benefit Plan provides benefits, including without limitation death or medical benefits (whether or not insured), with respect to current or former employees or directors of West or any of its Subsidiaries after retirement or other termination of service (other than (A) coverage mandated by applicable law, (B) death benefit or retirement benefits under any "employee pension benefit plan," as that term is defined in Section 3(2) of ERISA, (C) deferred compensation benefits accrued as liabilities on the books of West, or (D) benefits, the full cost of which is borne by the current or former employee or director (or his beneficiary)), which would, individually or in the aggregate, reasonably be expected to result in a West Material Adverse Effect. (xi) West and its Subsidiaries have no unfunded liabilities with respect to any West Compensation and Benefit Plan that is a "pension plan" (within the meaning of Section 3(2) of ERISA) that covers current or former non-U.S. employees of West or -18- any of its Subsidiaries which, if funded, would, individually or in the aggregate, reasonably be expected to have a West Material Adverse Effect. (i) Compliance with Laws; Licenses. (i) The businesses of each of West and its Subsidiaries have not been conducted in violation of any material federal, state, local or foreign law, statute or ordinance, common law, or any rule, regulation, standard, judgment, order, writ, injunction, decree, arbitration award, agency requirement, license or permit, of any Governmental Entity (collectively, "Laws") or any applicable operating certificates, common carrier obligations, airworthiness directives ("ADs"), Federal Aviation Regulations ("FARs") or any other rules, regulations, directives or policies of the FAA, DOT, FCC, DHS or any other Governmental Entity, except for such violations that would not, individually or in the aggregate, reasonably be expected to result in a West Material Adverse Effect. Except as set forth on Section 3.1(i)(i) of the West Disclosure Letter, no investigation or review by any Governmental Entity with respect to West or any of its Subsidiaries is pending or, to West's Knowledge, threatened, nor has any Governmental Entity indicated an intention to conduct the same, except for any such investigations or reviews that would not, individually or in the aggregate, reasonably be expected to result in a West Material Adverse Effect. Each of West and its Subsidiaries has obtained and is in substantial compliance with all permits, licenses, certifications, approvals, registrations, consents, authorizations, franchises, variances, exemptions and orders required, issued or granted by the FAA, DOT or any other Governmental Entity applicable to it ("Licenses") necessary to conduct its business as presently conducted, except for any failures to have or to be in compliance with such Licenses which would not, individually or in the aggregate, reasonably be expected to result in a West Material Adverse Effect. The representations and warranties contained in this Section 3.1(i) shall not apply to the following applicable Laws to the extent applicable to West and its Subsidiaries (or Licenses required under such applicable Laws): (i) ERISA and other applicable Laws regarding employee benefit matters, which are exclusively governed by Section 3.1(h), (ii) applicable Laws regarding Taxes, which are exclusively governed by Section 3.1(n), (iii) Environmental Laws, which are exclusively governed by Section 3.1(m), and (iv) applicable Laws regarding labor matters, which are exclusively governed by Section 3.1(o). (ii) Each of West and its Subsidiaries is in compliance with (A) its obligations under each of the Licenses and (B) the rules and regulations of the Governmental Entity issuing such Licenses, except in each instance for any failures to be in compliance which would not, individually or in the aggregate, reasonably be expected to result in a West Material Adverse Effect. There is not pending or, to West's Knowledge, threatened before the FAA, DOT or any other Governmental Entity any material proceeding, notice of violation, order of forfeiture or complaint or investigation against West or any of its Subsidiaries relating to any of the Licenses, except for any of the foregoing that would not, individually or in the aggregate, reasonably be expected to result in a West Material Adverse Effect. The actions of the applicable Governmental Entities granting all Licenses have not been reversed, stayed, enjoined, annulled or suspended, and there is not pending or, to West's Knowledge, threatened, any material -19- application, petition, objection or other pleading with the FAA, DOT or any other Governmental Entity which challenges or questions the validity of or any rights of the holder under any License, except, for any of the foregoing that would not, individually or in the aggregate, reasonably be expected to result in a West Material Adverse Effect. (j) Material Contracts. (i) As of the date of this Agreement, neither West nor any of its Subsidiaries is a party to or bound by any Contract required pursuant to Item 601 of Regulation S-K under the Securities Act to be filed as an exhibit to West's Annual Report on Form 10-K for the year ended December 31, 2004, or on any Quarterly Report on Form 10-Q or Current Report on Form 8-K filed by West since December 31, 2004, which has not been so filed. (ii) As of the date of this Agreement, neither West nor any of its Subsidiaries is a party to or is bound by any non-competition Contract or other Contract (other than the West CBAs, as defined below, and the Loan Agreement, dated January 18, 2002 with the ATSB) that (I) purports to limit in any material respect either the type of business in which West or its Subsidiaries may engage or the manner or locations in which any of them may so engage in any business, or (II) could require the disposition of any material assets or line of business of West or any of its Subsidiaries. (iii) All Contracts that have been filed as an exhibit to West's Annual Report on Form 10-K for the year ended December 31, 2004, or on any Quarterly Report on Form 10-Q or Current Report on Form 8-K filed by West since December 31, 2004, and all Contracts listed on Section 3.1(j)(ii) of the West Disclosure Letter, together with all exhibits and schedules to such Contracts, shall constitute the "West Material Contracts". (iv) A true and complete copy of each West Material Contract has previously been delivered or made available to East (subject to applicable confidentiality restrictions) and each such Contract is a valid and binding agreement of West or one of its Subsidiaries, as the case may be, and is in full force and effect, except to the extent they have previously expired in accordance with their terms or if the failure to be in full force and effect, individually or in the aggregate, would not, individually or in the aggregate, reasonably be expected to have a West Material Adverse Effect. Neither West nor any of its Subsidiaries is in default or breach under the terms of any such West Material Contract which, individually or in the aggregate, would, individually or in the aggregate, reasonably be expected to result in a West Material Adverse Effect. (k) Real Property. (i) Except in any such case as would not, individually or in the aggregate, reasonably be expected to result in a West Material Adverse Effect, with respect to the real property, including the land and any and all buildings, structures and other improvements located thereon, owned by West or its Subsidiaries or as set forth in Section 3.1(k)(i) of the West Disclosure Letter (the "West Owned Real Property"), -20- (A) West or one of its Subsidiaries, as applicable, has good and marketable title to the West Owned Real Property, free and clear of any Encumbrance, and (B) there are no outstanding options or rights of first refusal to purchase the West Owned Real Property, or any portion thereof or interest therein. (ii) Section 3.1(k)(ii) of the West Disclosure Letter sets forth a true, correct and complete list of all the airport gates leased, occupied or otherwise used by West or any of its Subsidiaries (the "West Gates"), including, where applicable, the gate number and the airport and terminal or concourse location of each such West Gate. (iii) With respect to the real property leased or subleased to West or its Subsidiaries as lessee (the "West Leased Real Property" and, together with the West Gates and West Owned Real Property, the "West Real Property"), (A) the lease or sublease for such property is valid, legally binding, enforceable in accordance with its terms and in full force and effect, and none of West or any of its Subsidiaries is in breach of or default under such lease or sublease, and no event has occurred which, with notice, lapse of time or both, would constitute a breach or default by any of West or its Subsidiaries or permit termination, modification or acceleration by any third party thereunder, and (B) no third party lessor has repudiated or has the right to terminate or repudiate such lease or sublease (except for the normal exercise of remedies in connection with a default thereunder or any termination rights set forth in the lease or sublease) or any provision thereof, except in each case, for such invalidity, failures to be binding, unenforceability, ineffectiveness, breaches, defaults, terminations, modifications, accelerations, repudiations and rights to terminate or repudiate that would not, individually or in the aggregate, reasonably be expected to result in a West Material Adverse Effect. (iv) Section 3.1(k)(iv) of the West Disclosure Letter contains a true, correct and complete list of all material West Real Property, including the name of the owner of record thereof, a brief description of the use of such West Real Property, a list of any leases, subleases or other agreements, pursuant to which West or its Subsidiaries lease the West Real Property as lessor, in each case including identification of the lease expiration date, and a description of the lease, sublease or other agreement, for all West Leased Real Property. Except as would not, individually or in the aggregate, reasonably be expected to have a West Material Adverse Effect or as set forth in Section 3.1(k)(iv) of the West Disclosure Letter, as of the date hereof, no third party occupies or uses or has the right to occupy or use all or any part of any West Real Property. (v) Except as would not, individually or in the aggregate, reasonably be expected to result in a West Material Adverse Effect, all water, gas, electrical, steam, compressed air, telecommunication, sanitary and storm sewage lines and systems and other similar systems currently serving the West Real Property are installed and operating and are sufficient to enable the West Real Property to continue to be used and operated in the manner currently being used and operated, and to West's Knowledge there is no factor or condition that could result in the termination or material impairment of the furnishing thereof. -21- (vi) All Licenses required to have been issued to West to enable any West Real Property to be lawfully occupied and used for all of the purposes for which they are currently occupied and used have been lawfully issued and are in full force and effect, except as would not, individually or in the aggregate, reasonably be expected to result in a West Material Adverse Effect. (vii) West has not received any notice, nor to West's Knowledge is there any pending, threatened or contemplated condemnation or eminent domain proceeding affecting any West Real Property or any part thereof, or any proposed termination or impairment of any parking at any such West Real Property or denial of access to any such West Real Property from any current point of public access, or of any sale or other disposition of any such West Real Property or any part thereof in lieu of condemnation, except as would not, individually or in the aggregate, reasonably be expected to result in a West Material Adverse Effect. (viii) Except as set forth on Section 3.1(k)(viii) of the West Disclosure Letter, no portion of any West Real Property has suffered any damage by fire or other casualty loss which has not heretofore been completely repaired and restored to its original condition (ordinary wear and tear excepted), except as would not, individually or in the aggregate, reasonably be expected to result in a West Material Adverse Effect. (ix) For purposes of this Section 3.1(k) only, "Encumbrance" means any mortgage, lien, pledge, charge, security interest, easement, covenant, or other restriction or title matter or encumbrance of any kind in respect of such asset except for (A) specified encumbrances described in Section 3.1(k)(i) of the West Disclosure Letter; (B) leases or subleases by West or its Subsidiaries as lessor as described in Section 3.1(k)(iv) of the West Disclosure Letter; (C) encumbrances for current Taxes (as defined in Section 3.1(n)) or other governmental charges not yet due and payable; (D) mechanics', carriers', workmen's, repairmen's or other like encumbrances arising or incurred in the ordinary course of business consistent with past practice relating to obligations as to which there is no default on the part of West, or the validity or amount of which is being contested in good faith by appropriate proceedings; and (E) other encumbrances that do not, individually or in the aggregate, materially impair the continued use, operation, value or marketability of the specific parcel of West Owned Real Property or West Leased Real Property to which they relate or the conduct of the business of West and its Subsidiaries as presently conducted. (l) Takeover Statutes. The Board of Directors of West has approved this Agreement and the transactions contemplated hereby as required to render inapplicable to such agreements and transactions DGCL Section 203, to the extent applicable. No other state takeover or similar statute or regulation (each a "Takeover Statute") is applicable to West, the Shares, the Merger or the other transactions contemplated by this Agreement. -22- (m) Environmental Matters. (i) (a) West and its Subsidiaries have complied at all times with all applicable Environmental Laws (as defined below) except for such matters as would not, individually or in the aggregate, reasonably be expected to result in a West Material Adverse Effect; (b) no property currently owned, leased or operated by West or any of its Subsidiaries (including soils, groundwater, surface water, buildings or other structures) is contaminated with any Hazardous Substance (as defined below) in a manner that is or could reasonably be expected to be required to be Remediated or Removed (as such terms are defined below), that is in violation of any Environmental Law, or that is reasonably likely to give rise to any Environmental Liability (as defined below) except for any Environmental Liability that would not, individually or in the aggregate, reasonably be expected to result in a West Material Adverse Effect; (c) West and its Subsidiaries have no information that any property formerly owned, leased or operated by West or any of its Subsidiaries was contaminated with any Hazardous Substance during or prior to such period of ownership, leasehold, or operation; (d) neither West nor any of its Subsidiaries nor any prior owner or operator has incurred in the past or is now subject to any Environmental Liabilities except for such matters as would not, individually or in the aggregate, reasonably be expected to result in a West Material Adverse Effect; (e) except as set forth on Section 3.1(m)(i)(e) of the West Disclosure Letter, and except for such matters as would not, individually or in the aggregate, reasonably be expected to result in a West Material Adverse Effect, in the past five (5) years neither West nor any of its Subsidiaries has received any notice, demand, letter, claim or request for information alleging that West or any of its Subsidiaries may be in violation of or subject to liability under any Environmental Law; (f) neither West nor any of its Subsidiaries is subject to any order, decree, injunction or agreement with any Governmental Entity, or any indemnity or other agreement with any third party, concerning liability or obligations relating to any Environmental Law or otherwise relating to any Hazardous Substance or any environmental matter; (g) there is no Removal, Remedial or Response Action being undertaken on any property currently owned, leased or operated by West or any of its Subsidiaries; and (h) there are no other circumstances or conditions involving West or any of its Subsidiaries that could reasonably be expected to result in any Environmental Liability except for such matters as would not, individually or in the aggregate, reasonably be expected to result in a West Material Adverse Effect. (ii) As used herein, the term "Environmental Laws" means all Laws relating to: (A) the protection, investigation or restoration of the environment, health, safety, or natural resources, (B) the handling, use, presence, disposal, Release or threatened release of any Hazardous Substance or (C) noise, odor, indoor air, employee exposure, electromagnetic fields, wetlands, pollution, contamination or any injury or threat of injury to persons or property relating to any Hazardous Substance. (iii) As used herein, the term "Environmental Liability" means any obligations or liabilities (including any notices, claims, complaints, suits or other assertions of obligations or liabilities) that are: (A) related to environment, health or safety issues (including on-site or off-site contamination by Hazardous Substances of surface or subsurface soil or water, and occupational safety and health); and (B) based -23- upon (I) any provision of Environmental Laws or (II) any order, consent, decree, writ, injunction or judgment issued or otherwise imposed by any Governmental Entity. The term "Environmental Liabilities" includes, without limitation: (A) fines, penalties, judgments, awards, settlements, losses, damages (including consequential damages), costs, fees (including attorneys' and consultants' fees), expenses and disbursements relating to environmental, health or safety matters; (B) defense and other responses to any administrative or judicial action (including notices, claims, complaints, suits and other assertions of liability) relating to environmental, health or safety matters; and (C) financial responsibility for (x) cleanup costs and injunctive relief, including any Removal, Remedial or Response Actions, and natural resource damages, and (y) other Environmental Laws compliance or remedial measures. (iv) As used herein, the term "Hazardous Substance" means any "hazardous substance" and any "pollutant or contaminant" as those terms are defined in the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended ("CERCLA"); any "hazardous waste" as that term is defined in the Resource Conservation and Recovery Act ("RCRA"); and any "hazardous material" as that term is defined in the Hazardous Materials Transportation Act (49 U.S.C. Section 1801 et seq.), as amended (including as those terms are further defined, construed, or otherwise used in rules, regulations, standards, orders, guidelines, directives, and publications issued pursuant to, or otherwise in implementation of, said Laws); and including, without limitation, any petroleum product or byproduct, solvent, flammable or explosive material, radioactive material, asbestos, lead paint, polychlorinated biphenyls (or PCBs), dioxins, dibenzofurans, heavy metals, radon gas, mold, mold spores, and mycotoxins. (v) As used herein, the term "Release" means any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, placing, discarding, abandonment, or disposing into the environment (including the placing, discarding or abandonment of any barrel, container or other receptacle containing any Hazardous Substance or other material). (vi) As used herein, the term "Removal, Remedial or Response Actions" means all actions required to: (1) cleanup, remove, treat or remediate Hazardous Materials in the indoor or outdoor environment; (2) prevent the Release of Hazardous Materials so that they do not migrate, endanger or threaten to endanger public health or welfare or the indoor or outdoor environment; (3) perform pre-remedial studies and investigations and post-remedial monitoring and care; or (4) respond to any government requests for information or documents in any way relating to cleanup, removal, treatment or remediation or potential cleanup, removal, treatment or remediation of Hazardous Materials in the indoor or outdoor environment. (n) Taxes. Except as would not, individually or in the aggregate, reasonably be expected to result in a West Material Adverse Effect: West and each of its Subsidiaries (i) have prepared in good faith and duly and timely filed (taking into account any extension of time within which to file) all Tax Returns (as defined below) required to be filed by any of them and all such filed Tax Returns are complete and accurate in all material respects; and (ii) have paid all Taxes (as defined below) that are required to be -24- paid or that West or any of its Subsidiaries are obligated to withhold from amounts owing to any employee, creditor or third party, except with respect to matters contested in good faith or for which adequate reserves have been established on the most recent consolidated balance sheet included in or incorporated into the West Reports. As of the date hereof, except as would not, individually or in the aggregate, reasonably be expected to result in an increase in Taxes that is material to West, there are no audits, examinations, investigations or other proceedings, in each case, pending or threatened in writing, in respect of Taxes or Tax matters. West has made available to East true and correct copies of the United States federal income Tax Returns filed by West and its Subsidiaries for each of the fiscal years ended December 31, 2003 and 2002. None of West or its Subsidiaries has been a "distributing corporation" or "controlled corporation" in any distribution occurring during the last 30 months that was purported or intended to be governed by Section 355 of the Code (or any similar provision of state, local or foreign law). Neither West nor any of its Subsidiaries has taken any action or knows of any fact, agreement, plan or other circumstance that is reasonably likely to prevent the Merger from qualifying as a reorganization with the meaning of Section 368(a) of the Code. There are no Liens for Taxes on any asset of West or any of its Subsidiaries, except for Liens for Taxes not yet due and payable and Liens for Taxes that would not, individually or in the aggregate, reasonably be expected to result in a West Material Adverse Effect. As used in this Agreement, (i) the term "Tax" (including, with correlative meaning, the term "Taxes") includes all federal, state, local and foreign income, profits, franchise, gross receipts, environmental, customs duty, capital stock, severances, stamp, payroll, sales, employment, unemployment, disability, use, property, withholding, excise, escheat, production, value added, occupancy and other taxes, duties or assessments of any nature whatsoever, together with all interest, penalties and additions imposed with respect to such amounts and any interest in respect of such penalties and additions, and (ii) the term "Tax Return" includes all returns and reports (including elections, declarations, disclosures, schedules, estimates and information returns) required or permitted to be supplied to a Tax authority relating to Taxes. (o) Labor Matters. (i) West has made available to East true and complete copies of all collective bargaining agreements and other labor union contracts (including all amendments thereto) applicable to any employees of West or any of its Subsidiaries (the "West CBAs"). (ii) No labor union, labor organization or group of employees of West or any of its Subsidiaries has made a pending demand for recognition or certification, and there are no representation or certification proceedings or petitions seeking a representation proceeding presently pending or threatened in writing to be brought or filed with any labor relations tribunal or authority. To West's Knowledge, there are no labor union organizing activities pending or threatened with respect to any employees of West or any of its Subsidiaries. -25- (iii) There is no labor dispute, strike, slowdown, work stoppage or lockout, or to West's Knowledge, threat thereof by or with respect to any employee of West or any of its Subsidiaries. (iv) There are no arbitrations, written grievances or written complaints outstanding or, to West's Knowledge, threatened against West or any of its Subsidiaries under any West CBAs, except for such matters as would not, individually or in the aggregate, reasonably be expected to result in a West Material Adverse Effect. Neither West nor any of its Subsidiaries is in receipt of written notice of any material statutory disputes or unfair labor practice charges. (p) Intellectual Property and IT Assets. Except for such matters as would not, individually or in the aggregate, reasonably be expected to result in a West Material Adverse Effect: (i) All patents, patent applications, trademark and copyright registrations and applications for registration, and Internet domain name registrations claimed to be owned by West or its Subsidiaries are owned exclusively by West or such Subsidiaries and are subsisting and, to West's Knowledge, valid and enforceable. (ii) Except as set forth on Section 3.1(p)(ii) of the West Disclosure Letter, West and/or each of its Subsidiaries owns, or is licensed or otherwise possesses legally enforceable rights to use, all Intellectual Property (as defined below) necessary to conduct the business of West and its Subsidiaries as currently conducted, all of which rights shall in all material respects survive unchanged the execution and delivery of this Agreement and the consummation of the Merger and the other transactions contemplated hereunder. (iii) The conduct of the business as currently conducted by West and its Subsidiaries does not infringe, misappropriate or otherwise violate the Intellectual Property rights of any third Person and in the three (3) year period immediately preceding the date of this Agreement, there has been no such claim, action or proceeding asserted, or to West's Knowledge threatened against West or its Subsidiaries or any indemnitee thereof. There is no claim, action or proceeding asserted, or to West's Knowledge threatened, against West or its Subsidiaries or any indemnitees thereof concerning the ownership, validity, registerability, enforceability, infringement, use or licensed right to use any Intellectual Property claimed to be owned or held by West or its Subsidiaries or used or alleged to be used in the business of West or its Subsidiaries. (iv) To West's Knowledge, no third Person has, in the three (3) year period immediately preceding the date of this Agreement, infringed, misappropriated or otherwise violated the Intellectual Property rights of West or its Subsidiaries. There are no claims, actions or proceedings asserted or threatened by West, or decided by West to be asserted or threatened, that (A) a third Person infringes, misappropriates or otherwise violates, or in the three (3) year period immediately preceding the date of this Agreement, infringed, misappropriated or otherwise violated, the Intellectual Property rights of West or its Subsidiaries; or (B) a third Person's owned or claimed Intellectual Property -26- interferes with, infringes, dilutes or otherwise harms the Intellectual Property rights of West or its Subsidiaries. (v) West and its Subsidiaries have taken reasonable measures to protect the confidentiality of all material Trade Secrets (as defined below) that are owned, used or held by West and its Subsidiaries and, to West's Knowledge, such material Trade Secrets have not been used, disclosed to or discovered by any Person except pursuant to valid and appropriate non-disclosure and/or license agreements which have not been breached. (vi) The IT Assets (as defined below) of West and its Subsidiaries operate and perform in all material respects in accordance with their documentation and functional specifications and otherwise as required by West and its Subsidiaries for the operation of their respective businesses, and have not malfunctioned or failed within the three (3) year period immediately preceding the date of this Agreement. To West's Knowledge, no Person has gained unauthorized access to such IT Assets. West and its Subsidiaries have implemented and maintained for the three (3) year period immediately preceding the date of this Agreement reasonable and sufficient backup and disaster recovery technology consistent with industry practices. As used in this Agreement, (1) "Computer Software" means all computer software and databases (including, without limitation, source code, object code, and all related documentation). (2) "Intellectual Property" means, collectively, all United States and foreign (i) trademarks, service marks, brand names, certification marks, collective marks, d/b/a's, Internet domain names, logos, symbols, trade dress, assumed names, fictitious names, trade names, and other indicia of origin, all applications and registrations for the foregoing, and all goodwill associated therewith and symbolized thereby, including all renewals of same (collectively, "Trademarks"); (ii) inventions and discoveries, whether patentable or not, and all patents, registrations, invention disclosures and applications therefor, including divisions, continuations, continuations-in-part and renewal applications, and including renewals, extensions and reissues (collectively, "Patents"); (iii) trade secrets and confidential information and know-how, including confidential processes, schematics, business methods, formulae, drawings, prototypes, models, designs, customer lists and supplier lists (collectively, "Trade Secrets"); (iv) all rights in published and unpublished works of authorship, whether copyrightable or not (including without limitation Computer Software and other compilations of information), copyrights therein and thereto, and registrations and applications therefor, and all renewals, extensions, restorations and reversions thereof (collectively, "Copyrights"); (v) moral rights, rights of publicity and rights of privacy; and (vi) all other intellectual property or proprietary rights. (3) "IT Assets" means computers, Computer Software, firmware, middleware, servers, workstations, routers, hubs, switches, data communications lines, -27- and all other information technology equipment and elements, and all associated documentation. (q) Foreign Corrupt Practices Act. Except for such matters as would not, individually or in the aggregate, reasonably be expected to result in a material adverse impact on the ability of West and its Subsidiaries to conduct their operations in the ordinary course of business: (i) West and its Subsidiaries have developed and implemented a compliance program which includes corporate policies and procedures to ensure compliance with the Foreign Corrupt Practices Act, as amended (the "Foreign Corrupt Practices Act"). (ii) In connection with its compliance with the Foreign Corrupt Practices Act, there are no adverse or negative past performance evaluations or ratings by the U.S. Government, or any voluntary disclosures under the Foreign Corrupt Practices Act, any enforcement actions or threats of enforcement actions, or any facts that, in each case, could result in any adverse or negative performance evaluation related to the Foreign Corrupt Practices Act. (iii) Neither the U.S. Government nor any other Person has notified West or any of its Subsidiaries in writing of any actual or alleged violation or breach of the Foreign Corrupt Practices Act. (iv) None of West or its Subsidiaries has undergone and is undergoing any audit, review, inspection, investigation, survey or examination of records relating to West's or any of its Subsidiaries' compliance with the Foreign Corrupt Practice Act, and, to West's Knowledge, there is no basis for any such audit, review, inspection, investigation, survey or examination of records. (v) West and its Subsidiaries have not been and are not now under any administrative, civil or criminal investigation, charge or indictment involving alleged false statements, false claims or other improprieties relating to West's or any of its Subsidiaries' compliance with the Foreign Corrupt Practices Act, nor, to West's Knowledge, is there any basis for any such investigation or indictment. (vi) None of West or its Subsidiaries has been and is not now a party to any administrative or civil litigation involving alleged false statements, false claims or other improprieties relating to West's or any of its Subsidiaries' compliance with the Foreign Corrupt Practices Act, nor, to West's Knowledge, is there any basis for any such proceeding. (r) Aircraft. (i) Section 3.1(r)(i) of the West Disclosure Letter sets forth a true and complete list of all aircraft owned or leased by West or any of its Subsidiaries as of March 31, 2005 (the "West Aircraft"), including a description of the type and aircraft number of each such West Aircraft and the date West placed such West Aircraft in -28- service or proposes to place such West Aircraft in service. All West Aircraft owned or leased by West or any of its Subsidiaries are in airworthy condition and are being maintained according to applicable FAA regulatory standards and the FAA-approved maintenance program of West and its Subsidiaries. West and its Subsidiaries have implemented maintenance schedules with respect to their respective West Aircraft and engines that, if complied with, would result in the satisfaction of all requirements under all applicable ADs and FARs required to be complied with in accordance with the FAA-approved maintenance program of West and its Subsidiaries, and West and its Subsidiaries are in compliance with such maintenance schedules in all material respects and currently have no reason to believe that they will not satisfy any component of such maintenance schedules on or prior to the dates specified in such maintenance schedules. (ii) Section 3.1(r)(ii) of the West Disclosure Letter sets forth a true and complete list, as of the date hereof, containing all Contracts (other than existing aircraft leases) pursuant to which West or any of its Subsidiaries may purchase or lease aircraft, including the manufacturer and model of all aircraft subject to each Contract. West has delivered or made available to East true and complete copies of all Contracts listed on Section 3.1(r)(ii) of the West Disclosure Letter, including all amendments thereto. (iii) Each West Aircraft has a validly issued, current individual aircraft FAA Certificate of Airworthiness with respect to such West Aircraft which satisfies all requirements for the effectiveness of such FAA Certificate of Airworthiness. (iv) Each West Aircraft's structure, systems and components are functioning in accordance with its intended use as set forth in FAA-approved documentation, including any applicable manuals, technical standard orders or parts manufacturing approval certificates. (v) All deferred maintenance items and temporary repairs with respect to each such West Aircraft have been or will be made materially in accordance with FAA, manufacturer's and West's maintenance programs. (vi) Each West Aircraft is properly registered on the FAA aircraft registry. (vii) West is not a party to any interchange or pooling agreements with respect to its West Aircraft. (viii) No West Aircraft is subleased to or otherwise in the possession of another air carrier or other Person other than West or any of its Subsidiaries, to operate such West Aircraft in air transportation or otherwise. (s) Slots. Section 3.1(s) of the West Disclosure Letter sets forth a true, correct and complete list of all takeoff and landing slots and other similar takeoff and landing rights ("West Slots") used by West or any of its Subsidiaries on the date hereof at any domestic or international airport, including a true, correct and complete list of all West Slot lease agreements. West and its Subsidiaries will have complied in all material respects with the requirements of the regulations issued under the Federal -29- Aviation Act and any other Laws with respect to the West Slots. Neither West nor any of its Subsidiaries has received any notice of any proposed withdrawal of the West Slots by the FAA, the DOT or any other Governmental Entity. The West Slots have not been designated for the provision of essential air services in accordance with the regulations issued under the Federal Aviation Act, were not acquired pursuant to 14 C.F.R. Section 93.219 and have not been designated for international operations, as more fully detailed in 14 C.F.R. Section 93.217. To the extent covered by 14 C.F.R. Section 93.227, West and its Subsidiaries have used each West Slot either at least 80% of the maximum amount that each West Slot could have been used during each full and partial reporting period (as described in 14 C.F.R. Section 93.227(i)) or such greater or lesser amount of minimum usage as may have been required to protect such West Slot's authorization from termination or withdrawal under regulations established by any Governmental Entity or airport authority. All reports required by the FAA or any Governmental Entity relating to the West Slots have been filed in a timely manner. Neither West nor any of its Subsidiaries has agreed to any West Slot slide, West Slot trade, West Slot purchase, West Slot sale or other transfer of any of the West Slots. (t) Equipment. Section 3.1(t) of the West Disclosure Letter sets forth a true, correct and complete list of all passenger loading bridges owned by West or any of its subsidiaries. (u) U.S. Citizen; Air Carrier. West's primary subsidiary, America West Airlines, Inc., is a "citizen of the United States" as defined in the Federal Aviation Act and is an "air carrier" within the meaning of such Act operating under certificates issued pursuant to such Act (49 U.S.C. Sections 41101-41112). (v) Insurance. Section 3.1(v) of the West Disclosure Letter lists and briefly describes (including name of insurer, agent or broker, coverage and expiration date) each insurance policy maintained by, at the expense of or for the benefit of West or any of the Subsidiaries with respect to its properties and assets. All such insurance policies are in full force and effect and neither West nor any Subsidiary is in default with respect to its obligations under any such insurance policy. The insurance coverage of West and the Subsidiaries is customary for corporations of similar size engaged in similar lines of businesses. West has not received any notice or other communication regarding any actual or possible (a) cancellation or invalidation of any insurance policy, (b) refusal of any coverage or rejection of any material claim under any insurance policy or (c) material adjustment in the amount of premiums payable with respect to any insurance policy. (w) Brokers and Finders. Neither West nor any of its officers, directors or employees has employed any broker or finder or incurred any liability for any brokerage fees, commissions or finders, fees in connection with the Merger or the other transactions contemplated in this Agreement, except that West has employed, and is solely responsible for the fees and expenses of, Greenhill & Co., LLC and TPG Partners, L.P., or one of its affiliates, as its financial advisors that may be payable to them in connection with any of the transactions contemplated by this Agreement, and a copy of -30- the engagement letter with each such financial advisor has been provided to East prior to the date hereof. 3.2 Representations and Warranties of East and Merger Sub. Except as set forth in the disclosure letter (subject to Section 7.12(c) of this Agreement) delivered to West by East prior to entering into this Agreement (the "East Disclosure Letter") or, to the extent the qualifying nature of such disclosure with respect to a specific representation and warranty is readily apparent therefrom, as set forth in the East Reports (as defined in Section 3.2(f)) filed on or after January 1, 2005 and prior to the date hereof (excluding any disclosures included in any such East Report that are predictive or forward-looking in nature), East and Merger Sub each hereby represent and warrant to West that: (a) Organization, Good Standing and Qualification. Each of East and Merger Sub is a legal entity duly organized, validly existing and in good standing under the Laws of its respective jurisdiction of organization and, pursuant to Sections 1107 and 1108 of the Bankruptcy Code and the orders of the Bankruptcy Court, has all requisite corporate or similar power and authority to own and operate its properties and assets and to carry on its business as presently conducted and is qualified to do business and is in good standing as a foreign corporation in each jurisdiction where the ownership or operation of its assets or properties or conduct of its business requires such qualification, except where the failure to be so organized, validly existing, qualified or in good standing, or to have such power or authority, would not, individually or in the aggregate, reasonably be expected (x) to result in a material adverse effect on the financial condition, assets, liabilities, business or results of operations of East and its Subsidiaries taken as a whole, excluding any such effect resulting from (I) changes or conditions generally affecting the U.S. economy or financial markets, (II) changes or conditions generally affecting any of the segments of the airline industry in which East or any of its Subsidiaries operates, to the extent such conditions or changes do not disproportionately impact East or its Subsidiaries, (III) changes or conditions resulting from divestiture required in order to satisfy Section 5.1(b) hereof or (IV) the announcement or consummation of this Agreement, or (y) to prevent, materially delay or materially impair the ability of East and Merger Sub to consummate the Merger and the other transactions contemplated by this Agreement (a "East Material Adverse Effect"). (b) Capital Structure of East. Upon the Closing and after giving effect to the Confirmation Order and the Plan, the authorized common stock of East shall consist of 200,000,000 shares of East Common Stock, of which 47,475,729 shares will be outstanding, subject to the assumptions set forth on Section 3.2(b)(i) of the East Disclosure Letter. At the Effective Time, the East Common Stock to be issued and delivered pursuant to the terms hereof, shall have been duly authorized and validly issued, fully paid, nonassessable and not subject to preemptive or similar rights of third parties or reserved for issuance in accordance with the terms of the Plan and Confirmation Order. The rights, preferences and privileges of the capital stock of East shall be as set forth in the Parent Charter, as amended pursuant to the Plan and in effect at the Effective Time. Other than pursuant to the transactions contemplated by this Agreement, and except as set forth on Section 3.2(b)(ii) of the East Disclosure Letter, -31- upon the Closing and after giving effect to the Confirmation Order and the Plan, there will be no preemptive or other outstanding rights, options, warrants, conversion rights, stock appreciation rights, redemption rights, repurchase rights, agreements, arrangements, calls, commitments or rights of any kind that obligate East or any of its Subsidiaries to issue or sell any shares of capital stock or other securities of East or any of its Subsidiaries or any securities or obligations convertible or exchangeable into or exercisable for, or giving any Person a right to subscribe for or acquire, any securities of East or any of its Subsidiaries, and no securities or obligations evidencing such rights are authorized, issued or outstanding. (c) Capitalization of Merger Sub. The authorized capital stock of Merger Sub consists solely of 1,000 shares of Common Stock, par value $0.01 per share, all of which are validly issued and outstanding. All of the issued and outstanding capital stock of Merger Sub is, and at the Effective Time will be, directly owned by East. Merger Sub has not conducted any business prior to the date hereof and has no, and prior to the Effective Time will have no, assets, liabilities or obligations of any nature other than those incident to its formation and pursuant to this Agreement and the Merger and the other transactions contemplated by this Agreement. (d) Corporate Authority; Approval and Fairness. (i) Subject to entry by the Bankruptcy Court of the Confirmation Order, (x) each of East and Merger Sub has all requisite corporate power and authority and has taken all corporate action necessary in order to execute, deliver and perform its obligations under this Agreement and to consummate the Merger, and (y) this Agreement is a valid and binding agreement of East and Merger Sub, enforceable against each of East and Merger Sub in accordance with its terms. (ii) The Board of Directors of each of East and Merger Sub has declared that the Merger and the other transactions contemplated hereby are advisable, the Board of Directors of East has approved this Agreement and the Board of Directors and the sole shareholder of Merger Sub have adopted this Agreement. (e) Governmental Filings; No Violations; Certain Contracts. (i) Other than the reports, filings, registrations, consents, approvals, permits, authorizations and/or notices (A) pursuant to Section 1.3; (B) under the HSR Act, the Securities Act and the Exchange Act and the rules and regulations promulgated thereunder; (C) with, from or to the FAA; (D) with, from or to the DOT; (E) with, from or to the FCC; (F) with, from or to the DHS; (G) with, from or to the ATSB and (H) with, from or to those foreign Governmental Entities regulating competition and the airline industry set forth in Section 3.2(e)(i)(H) of the East Disclosure Letter, no notices, reports or other filings are required to be made by East with, nor are any consents, registrations, approvals, permits or authorizations required to be obtained by East or any of its Subsidiaries from any Governmental Entity (subject and after giving effect to any required approvals of the Bankruptcy Court (including, without limitation, to the extent applicable, the Confirmation Order) and the Plan) in connection with the execution, -32- delivery and performance of this Agreement by East and the consummation by East and Merger Sub of the Merger and the other transactions contemplated hereby, except those that the failure to make or obtain would not, individually or in the aggregate, reasonably be expected to result in an East Material Adverse Effect. (ii) The execution, delivery and performance of this Agreement by East and Merger Sub do not, and the consummation by East and Merger Sub of the Merger and the other transactions contemplated hereby will not, constitute or result in (A) a breach or violation of, or a default under, the certificate of incorporation or by-laws of East or Merger Sub; (B) with or without notice, lapse of time or both, a breach or violation of, a termination (or right of termination) or a default under, the creation or acceleration of any obligations under or the creation of a Lien on any of the assets of East or any of its Subsidiaries pursuant to any Contract binding upon East or any of its Subsidiaries or, assuming (solely with respect to performance of this Agreement and consummation by East and Merger Sub of the Merger and the other transactions contemplated hereby) compliance with the matters referred to in Section 3.2(e)(i), any Law or governmental or non-governmental permit or license to which East or any of its Subsidiaries is subject; or (C) a default under any agreement or loan agreement or any other indebtedness agreement or instrument of indebtedness that first occurred after the commencement of the Cases that is binding upon East or any of its Subsidiaries or assets, except, in the case of clause (B) or (C) above, for any breach, violation, termination, default, creation, acceleration or change that would not, individually or in the aggregate, reasonably be expected to prevent the ability of East or Merger Sub to consummate the Merger and the other transactions contemplated by this Agreement. (f) East Reports; Financial Statements. (i) East has made available to West each registration statement, report, proxy statement or information statement prepared by it since December 31, 2004 (the "East Audit Date") and filed with the SEC, including East's Annual Report on Form 10-K for the year ended December 31, 2004, each in the form (including exhibits, annexes and any amendments thereto) filed with the SEC. East has filed or furnished all forms, statements, schedules, reports and documents required to be filed or furnished by it with the SEC pursuant to applicable securities statutes, regulations, policies and rules since the East Audit Date (the forms, statements, schedules, reports and documents filed or furnished with the SEC since the East Audit Date and those filed or furnished with the SEC subsequent to the date of this Agreement, if any, including any amendments thereto, the "East Reports"). Each of the East Reports, at the time of its filing, complied in all material respects with the applicable requirements of the Exchange Act and the rules and regulations thereunder and complied in all material respects with the then applicable accounting standards. As of their respective dates (or, if amended, as of the date of such amendment), the East Reports did not, and any East Reports filed with the SEC subsequent to the date hereof will not, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances in which they were made, not misleading. The East Reports included or will include all certificates required to be included therein pursuant to Sections 302 and 906 of the SOX Act, and the internal -33- control report and attestation of East's outside auditors required by Section 404 of the SOX Act. (ii) Each of the consolidated balance sheets included in or incorporated by reference into the East Reports (including the related notes and schedules) fairly presents, or, in the case of East Reports filed after the date hereof, will fairly present, in all material respects, the consolidated financial position of East and any other entity included therein and their respective Subsidiaries as of its date and each of the consolidated statements of income, shareholders' equity and cash flows included in or incorporated by reference into the East Reports (including any related notes and schedules) fairly presents, or in the case of East Reports filed after the date hereof, will fairly present, in all material respects, the net income, total shareholders' equity and net increase in cash and cash equivalents, as the case may be, of East and any other entity included therein and their respective Subsidiaries for the periods set forth therein (subject, in the case of unaudited statements, to notes and normal year-end audit adjustments that are not expected to be material in amount or effect), in each case in accordance with GAAP consistently applied during the periods involved, except as may be noted therein and subject, in the case of any unaudited interim financial statements, to the absence of notes. (iii) The management of East has (x) established and maintains disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) designed to ensure that material information relating to East, including its consolidated Subsidiaries, is made known to the management of East by others within those entities, and (y) has disclosed, based on its most recent evaluation, to East's outside auditors and the audit committee of the Board of Directors of East (A) all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) which are reasonably likely to adversely affect East's ability to record, process, summarize and report financial data and (B) any fraud, whether or not material, that involves management or other employees who have a significant role in East's internal controls over financial reporting. Since the Audit Date, any material change in internal control over financial reporting required to be disclosed in any East Report has been so disclosed. (iv) Since the Audit Date, neither East nor any of its Subsidiaries nor, to East's Knowledge (as defined below), any director, officer, employee, auditor, accountant or representative of East or any of its Subsidiaries has received or otherwise had or obtained knowledge of any material complaint, allegation, assertion or claim, whether written or oral, regarding the accounting or auditing practices, procedures, methodologies or methods of East or any of its Subsidiaries or their respective internal accounting controls relating to periods after the Audit Date, including any material complaint, allegation, assertion or claim that East or any of its Subsidiaries has engaged in questionable accounting or auditing practices (except for any of the foregoing after the date hereof which have no reasonable basis), "East's Knowledge" shall mean the knowledge of the Chief Executive Officer and each Executive Vice President and Senior Vice President of East, after reasonable inquiry. -34- (g) Absence of Changes. Since the East Audit Date, East and its Subsidiaries have conducted their respective businesses only in accordance with, and have not engaged in any material transaction other than in accordance with, the orders of the Bankruptcy Court for the operation of East. Since the East Audit Date, there has not been any East Material Adverse Effect or any event, occurrence, discovery or development which would, individually or in the aggregate, reasonably be expected to result in an East Material Adverse Effect. (h) Litigation and Liabilities. (i) Other than the Cases and proceedings therein, or as otherwise disclosed on East's Annual Report on Form 10-K for the year ended December 31, 2004, or as set forth on Section 3.2(h)(i) of the East Disclosure Letter, there are no (A) civil, criminal or administrative actions, suits, claims, hearings, investigations or proceedings pending or, to East's Knowledge, threatened against East or its Subsidiaries or (B) litigations, arbitrations, investigations or other proceedings, or injunctions or final judgments relating to, pending or, to East's Knowledge, threatened against East or any of its Subsidiaries before any Governmental Entity, including without limitation the FAA, except in the case of either clause (A) or (B), for those that would not, individually or in the aggregate, reasonably be expected to result in an East Material Adverse Effect. Other than any order of the Bankruptcy Court, none of East or any of its Subsidiaries is a party to or subject to the provisions of any judgment, order, writ, injunction, decree or award of any Governmental Entity which would, individually or in the aggregate, reasonably be expected to result in an East Material Adverse Effect. (ii) Except as set forth in the Plan, there are no liabilities or obligations of East or any of its Subsidiaries, whether or not accrued, contingent or otherwise and whether or not required to be disclosed, or any other facts or circumstances that would reasonably be expected to result in any obligations or liabilities of, East or any of its Subsidiaries, other than: (A) liabilities or obligations to the extent (I) reflected on the consolidated balance sheet of East or (II) disclosed in the notes thereto, in accordance with GAAP, in each case included in East's quarterly report on Form 10-Q for the period ended March 31, 2005 or in East's annual report on Form 10-K for the period ended December 31, 2004; (B) liabilities or obligations incurred in the ordinary course of business since December 31, 2004; (C) performance obligations under contracts required in accordance with their terms, or performance obligations, to the extent required under applicable Law, in each case to the extent arising after the date hereof; or (D) liabilities or obligations that would not, individually or in the aggregate, reasonably be expected to result in an East Material Adverse Effect. -35- (i) Employee Benefits. (i) Section 3.2(i)(i) of the East Disclosure Letter contains a true and complete list of each material East Compensation and Benefit Plan. "East Compensation and Benefit Plan" means each bonus, deferred compensation, incentive compensation, stock purchase, stock option, severance pay, medical, life or other insurance, profit-sharing, or pension plan, program, agreement or arrangement, and each other employee benefit or compensation plan, program, agreement or arrangement, sponsored, maintained or contributed to or required to be contributed to by East or any of its Subsidiaries or by any trade or business, whether or not incorporated, that together with East or any of its Subsidiaries would be deemed a "single employer" under Section 414 of the Code (an "East ERISA Affiliate") or to which East or any East ERISA Affiliate is a party, for the benefit of, with or relating to any current or former employee, officer or director of East or any East ERISA Affiliate; provided, however, that "East Compensation and Benefit Plan" shall not include any plan, program or agreement that is, or has been, terminated or rejected at any time during the pendancy of the Cases. Except as would not result in a material liability, neither East nor any of its Subsidiaries has any formal plan or commitment, whether legally binding or not, to create any additional plan or modify or change any existing East Compensation and Benefit Plan (excluding any severance or retention bonus plan) that would affect any employee or director or former employee or former director of East or any of its Subsidiaries. (ii) With respect to each of the material East Compensation and Benefit Plans, East has heretofore delivered or made available to West true and complete copies of each of the following documents: (A) the East Compensation and Benefit Plan and related trust agreements and insurance contracts (including all amendments thereto), if any; (B) the most recent annual report, actuarial report, and financial statement, if any; (C) the most recent Summary Plan Description, together with each Summary of Material Modifications, required under ERISA with respect to such East Compensation and Benefit Plan, if any; and (D) the most recent determination letter received from the IRS with respect to each East Compensation and Benefit Plan that is intended to be qualified under Section 401(a) of the Code. (iii) Except with respect to claims covered by the Cases, and except as set forth on Section 3.2(i)(iii) of the East Disclosure Letter, (A) no liability under Title IV of ERISA, Section 302 of ERISA or Section 412 of the Code has been incurred by East or any of its Subsidiaries or any East ERISA Affiliate since the effective date of ERISA that has not been satisfied in full (or previously discharged under the Bankruptcy Code), and (B) no condition exists that presents a risk to East or any of its Subsidiaries or any East ERISA Affiliate of incurring a liability under such Title or such Sections, in each case, which would, individually or in the aggregate, reasonably be expected to have an East Material Adverse Effect. (iv) Neither East, nor any of its Subsidiaries, nor any East ERISA Affiliate, nor any of the East Compensation and Benefit Plans, nor any trust created thereunder, nor, to East's Knowledge, any trustee or administrator thereof, has engaged in a prohibited transaction (within the meaning of Section 406 of ERISA and Section 4975 -36- of the Code) in connection with which East, any of its Subsidiaries, or any of the East Compensation and Benefit Plans would, individually or in the aggregate, reasonably be expected to have an East Material Adverse Effect. (v) Except to the extent covered by the Plan or as would not, individually or in the aggregate, have an East Material Adverse Effect, and except as set forth on Section 3.2(i)(v) of the East Disclosure Letter, (A) all contributions required to have been made under the terms of any East Compensation and Benefit Plan have been timely made, and (B) all obligations in respect of each East Compensation and Benefit Plan have been properly accrued and reflected on the most recent consolidated statement of operations and consolidated balance sheet filed or incorporated by reference in the East Reports to the extent required by GAAP. (vi) Except as set forth on Section 3.2(i)(vi) of the East Disclosure Letter, no East Compensation and Benefit Plan (other than any that is a "multiemployer plan" as such term is defined in Section 3(37) of ERISA) is subject to Section 412 of the Code or Section 302 of ERISA or Title IV of ERISA. (vii) None of the East Compensation and Benefit Plans is a "multiple employer welfare arrangement," as such term is defined in Section 3(40) of ERISA, or single employer plan that has two or more contributing sponsors, at least two of whom are not under common control, within the meaning of Section 4063(a) of ERISA. With respect to any East Compensation and Benefit Plan that is a "multiemployer plan" as such term is defined in Section 3(37) of ERISA (each of which is identified in Section 3.2(i)(vii) of the East Disclosure Letter), (A) neither East, any of its Subsidiaries nor any East ERISA Affiliate has made or suffered a "complete withdrawal" or a "partial withdrawal," as such terms are respectively defined in Section 4203 and 4205 of ERISA, (B) no event has occurred that presents a material risk of a partial withdrawal, (C) neither East, any of its Subsidiaries nor any East ERISA Affiliate has any contingent liability under Section 4204 of ERISA, and no circumstances exist that present a material risk that any such plan will go into reorganization, and (D) neither East, any of its Subsidiaries nor any East ERISA Affiliates would have any material withdrawal liability if a complete withdrawal by East, its Subsidiaries and the East ERISA Affiliates occurred under each such plan on the date hereof. (viii) Except as set forth on Section 3.2(i)(viii) of the East Disclosure Letter, the IRS has issued a favorable determination letter in respect of each of the East Compensation and Benefit Plans that is intended to be "qualified" within the meaning of Section 401(a) of the Code and neither East nor any of its Subsidiaries is aware of any circumstances that could reasonably be expected to result in the revocation of such letter. Each of the East Compensation and Benefit Plans that is intended to satisfy the requirements of Section 125 or 501(c)(9) of the Code satisfies such requirements in all material respects, except as would not, either individually or in the aggregate, reasonably be expected to have an East Material Adverse Effect. Each of the East Compensation and Benefit Plans has been operated and administered in all material respects in accordance with its terms and applicable laws, including but not limited to ERISA and the Code, -37- except as would not, either individually or in the aggregate, reasonably be expected to have an East Material Adverse Effect. (ix) Except for claims filed in connection with the Cases, there are no claims pending, or, to East's Knowledge, threatened or anticipated (other than routine claims for benefits) against any East Compensation and Benefit Plan, the assets of any East Compensation and Benefit Plan or against East, any of its Subsidiaries or any East ERISA Affiliate with respect to any East Compensation and Benefit Plan. Except in connection with the Cases, there is no judgment, decree, injunction, rule or order of any court, governmental body, commission, agency or arbitrator outstanding against or in favor of any East Compensation and Benefit Plan or any fiduciary thereof (other than rules of general applicability). There are no pending or, to East's Knowledge, threatened audits or investigations by any governmental body, commission or agency involving any East Compensation and Benefit Plan, that would, individually or in the aggregate, reasonably be expected to have an East Material Adverse Effect. (x) Except as will be disclosed in, or covered by, the Plan, or as set forth on Section 3.2(i)(x) of the East Disclosure Letter, no East Compensation and Benefit Plan provides benefits, including without limitation death or medical benefits (whether or not insured), with respect to current or former employees or directors of East or any of its Subsidiaries after retirement or other termination of service (other than (A) coverage mandated by applicable law, (B) death benefit or retirement benefits under any "employee pension benefit plan," as that term is defined in Section 3(2) of ERISA, (C) deferred compensation benefits accrued as liabilities on the books of East, or (D) benefits, the full cost of which is borne by the current or former employee or director (or his beneficiary)), which would, individually or in the aggregate, reasonably be expected to result in an East Material Adverse Effect.. (xi) Except as set forth on Section 3.2(i)(xi) of the East Disclosure Letter, East and its Subsidiaries have no unfunded liabilities with respect to any East Compensation and Benefit Plan that is a "pension plan" (within the meaning of Section 3(2) of ERISA) that covers current or former non-U.S. employees of East or any of its Subsidiaries which, if funded, would, individually or in the aggregate, reasonably be expected to have an East Material Adverse Effect. (j) Compliance with Laws; Licenses. (i) The businesses of each of East and its Subsidiaries have not been conducted in violation of any material federal, state, local or foreign Laws or any applicable operating certificates, common carrier obligations, ADs, FARs or any other rules, regulations, directives or policies of the FAA, DOT, FCC, DHS or any other Governmental Entity, except for such violations that would not, individually or in the aggregate, reasonably be expected to result in an East Material Adverse Effect. No investigation or review by any Governmental Entity with respect to East or any of its Subsidiaries is pending or, to East's Knowledge, threatened, nor has any Governmental Entity indicated an intention to conduct the same, except for any such investigations or reviews that would not, individually or in the aggregate, reasonably be expected to result in an East Material Adverse Effect. Each of East and its Subsidiaries has obtained and is in substantial compliance with all Licenses necessary to conduct its business as presently conducted, except for any failures to have or to be in compliance with such Licenses which would not, individually or in the aggregate, reasonably be expected to result -38- in an East Material Adverse Effect. The representations and warranties contained in this Section 3.2(j) shall not apply to the following applicable Laws to the extent applicable to East and its Subsidiaries (or Licenses required under such applicable Laws): (i) ERISA and other applicable Laws regarding employee benefit matters, which are exclusively governed by Section 3.2(i), (ii) applicable Laws regarding Taxes, which are exclusively governed by Section 3.2(o), (iii) Environmental Laws, which are exclusively governed by Section 3.2(n), and (iv) applicable Laws regarding labor matters, which are exclusively governed by Section 3.2(p). (ii) Each of East and its Subsidiaries is in compliance with (A) its obligations under each of the Licenses and (B) the rules and regulations of the Governmental Entity issuing such Licenses, except in each instance for any failures to be in compliance which would not, individually or in the aggregate, reasonably be expected to result in an East Material Adverse Effect. There is not pending or, to East's Knowledge, threatened before the FAA, DOT or any other Governmental Entity any material proceeding, notice of violation, order of forfeiture or complaint or investigation against East or any of its Subsidiaries relating to any of the Licenses, except for any of the foregoing that would not, individually or in the aggregate, reasonably be expected to result in an East Material Adverse Effect. The actions of the applicable Governmental Entities granting all Licenses have not been reversed, stayed, enjoined, annulled or suspended, and there is not pending or, to East's Knowledge, threatened, any material application, petition, objection or other pleading with the FAA, DOT or any other Governmental Entity which challenges or questions the validity of or any rights of the holder under any License, except as set forth on Section 3.2(j)(ii) of the East Disclosure Letter and except, for any of the foregoing that would not, individually or in the aggregate, reasonably be expected to result in an East Material Adverse Effect. (k) Material Contracts. (i) As of the date of this Agreement, neither East nor any of its Subsidiaries is a party to or bound by any Contract, assumed or not rejected in connection with the Cases as of the date of this Agreement, required pursuant to Item 601 of Regulation S-K under the Securities Act to be filed as an exhibit to East's Annual Report on Form 10-K for the year ended December 31, 2004, or on any Quarterly Report on Form 10-Q or Current Report on Form 8-K filed by East since December 31, 2004, which has not been so filed. (ii) As of the date of this Agreement, neither East nor any of its Subsidiaries is a party to or is bound by any non-competition Contract or other Contract (other than the East CBAs, as defined below), assumed or not rejected in connection with the Cases as of the date of this Agreement, that (I) purports to limit in any material respect either the type of business in which East or its Subsidiaries may engage or the manner or locations in which any of them may so engage in any business, or (II) could -39- require the disposition of any material assets or line of business of East or any of its Subsidiaries. (iii) All Contracts that have been filed as an exhibit to East's Annual Report on Form 10-K for the year ended December 31, 2004, or on any Quarterly Report on Form 10-Q or Current Report on Form 8-K filed by East since December 31, 2004, and all Contracts listed on Section 3.2(k)(ii) of the East Disclosure Letter, together with all exhibits and schedules to such Contracts, shall constitute the "East Material Contracts". (iv) A true and complete copy of each East Material Contract has previously been delivered or made available to West (subject to applicable confidentiality restrictions) and each such Contract is a valid and binding agreement of East or one of its Subsidiaries, as the case may be, and is in full force and effect, except to the extent they have previously expired in accordance with their terms or if the failure to be in full force and effect, individually or in the aggregate, would not, individually or in the aggregate, reasonably be expected to have an East Material Adverse Effect. Neither East nor any of its Subsidiaries is in default or breach under the terms of any such East Material Contract which would, individually or in the aggregate, reasonably be expected to result in an East Material Adverse Effect. (l) Real Property. (i) Except in any such case as would not, individually or in the aggregate, reasonably be expected to result in an East Material Adverse Effect, with respect to the real property, including the land and any and all buildings, structures and other improvements located thereon, owned by East or its Subsidiaries or as set forth in Section 3.2(l)(i) of the East Disclosure Letter (the "East Owned Real Property"), (A) East, or any one of its Subsidiaries, as applicable, has good and marketable title to the East Owned Real Property, free and clear of any Encumbrance, and (B) there are no outstanding options or rights of first refusal to purchase the East Owned Real Property, or any portion thereof or interest therein. (ii) Section 3.2(l)(ii) of the East Disclosure Letter sets forth a true, correct and complete list of all the airport gates leased, occupied or otherwise used by East or any of its Subsidiaries (the "East Gates"), including, where applicable, the gate number and the airport and terminal or concourse location of each such East Gate. (iii) With respect to the real property leased or subleased to East or its Subsidiaries as lessee, assumed or not rejected in connection with the Cases as of the date of this Agreement, (the "East Leased Real Property" and, together with the East Gates and East Owned Real Property, the "East Real Property"), (A) the lease or sublease for such property is valid, legally binding, enforceable in accordance with its terms and in full force and effect, and none of East or any of its Subsidiaries is in breach of or default under such lease or sublease, and no event has occurred which, with notice, lapse of time or both, would constitute a breach or default by any of East or its Subsidiaries or permit termination, modification or acceleration by any third party thereunder, and (B) no third -40- party lessor has repudiated or has the right to terminate or repudiate such lease or sublease (except for the normal exercise of remedies in connection with a default thereunder or any termination rights set forth in the lease or sublease) or any provision thereof, except in each case, for such invalidity, failures to be binding, unenforceability, ineffectiveness, breaches, defaults, terminations, modifications, accelerations, repudiations and rights to terminate or repudiate that would not, individually or in the aggregate, reasonably be expected to result in an East Material Adverse Effect. (iv) Section 3.2(l)(iv) of the East Disclosure Letter contains a true, correct and complete list of all material East Real Property, including the name of the owner of record thereof, a brief description of the use of such East Real Property, a list of any leases, subleases or other agreements, pursuant to which East or its Subsidiaries lease any East Real Property as lessor, in each case including identification of the lease expiration date, and a description of the lease, sublease or other agreement for all East Leased Real Property. Except as would not, individually or in the aggregate, reasonably be expected to have an East Material Adverse Effect, or as set forth in Section 3.2(l)(iv) of the East Disclosure Letter, no third party occupies or uses or has the right to occupy or use all or any part of any East Real Property. (v) Except as would not, individually or in the aggregate, reasonably be expected to result in an East Material Adverse Effect, all water, gas, electrical, steam, compressed air, telecommunication, sanitary and storm sewage lines and systems and other similar systems currently serving the East Real Property are installed and operating and are sufficient to enable the East Real Property to continue to be used and operated in the manner currently being used and operated, and to East's Knowledge there is no factor or condition that could result in the termination or material impairment of the furnishing thereof. (vi) All Licenses required to have been issued to East to enable any East Real Property to be lawfully occupied and used for all of the purposes for which they are currently occupied and used have been lawfully issued and are in full force and effect, except as would not, individually or in the aggregate, reasonably be expected to result in an East Material Adverse Effect. (vii) East has not received any notice, nor to East's Knowledge is there any pending, threatened or contemplated condemnation or eminent domain proceeding affecting any East Real Property or any part thereof, or any proposed termination or impairment of any parking at any such East Real Property or denial of access to any such East Real Property from any current point of public access, or of any sale or other disposition of any such East Real Property or any part thereof in lieu of condemnation, except as would not, individually or in the aggregate, reasonably be expected to result in an East Material Adverse Effect. (viii) Except as set forth on Section 3.2(l)(viii) of the East Disclosure Letter, no portion of any East Real Property has suffered any damage by fire or other casualty loss which has not heretofore been completely repaired and restored to its -41- original condition (ordinary wear and tear excepted), except as would not, individually or in the aggregate, reasonably be expected to result in an East Material Adverse Effect. (ix) For purposes of this Section 3.2(l) only, "Encumbrance" means any mortgage, lien, pledge, charge, security interest, easement, covenant, or other restriction or title matter or encumbrance of any kind in respect of such asset except for (A) specified encumbrances described in Section 3.2(l)(i) of the East Disclosure Letter; (B) leases or subleases by East or its Subsidiaries as lessor as described in Section 3.2(l)(iv) of the East Disclosure Letter; (C) encumbrances for current Taxes or other governmental charges not yet due and payable; (D) mechanics', carriers', workmen's, repairmen's or other like encumbrances arising or incurred in the ordinary course of business consistent with past practice relating to obligations as to which there is no default on the part of East, or the validity or amount of which is being contested in good faith by appropriate proceedings; and (E) other encumbrances that do not, individually or in the aggregate, materially impair the continued use, operation, value or marketability of the specific parcel of East Owned Real Property or East Leased Real Property to which they relate or the conduct of the business of East and its Subsidiaries as presently conducted. (m) Takeover Statutes. The Board of Directors of East and Merger Sub have approved this Agreement and the transactions contemplated hereby as required to render inapplicable to such agreements and transactions DGCL Section 203. No other Takeover Statute is applicable to East, Merger Sub, the Shares, the Merger or the other transactions contemplated by this Agreement. (n) Environmental Matters. (i) (i) East and its Subsidiaries have complied at all times with all applicable Environmental Laws except for such matters as would not, individually or in the aggregate, reasonably be expected to result in an East Material Adverse Effect; (ii) no property currently owned, leased or operated by East or any of its Subsidiaries (including soils, groundwater, surface water, buildings or other structures) is contaminated with any Hazardous Substance in a manner that is or could reasonably be expected to be required to be Remediated or Removed, that is in violation of any Environmental Law, or that is reasonably likely to give rise to any Environmental Liability except for any Environmental Liability that would not, individually or in the aggregate, reasonably be expected to result in an East Material Adverse Effect; (iii) East and its Subsidiaries have no information that any property formerly owned, leased or operated by East or any of its Subsidiaries was contaminated with any Hazardous Substance during or prior to such period of ownership, leasehold, or operation; (iv) neither East nor any of its Subsidiaries nor any prior owner or operator has incurred in the past or is now subject to any Environmental Liabilities except for such matters as would not, individually or in the aggregate, reasonably be expected to result in an East Material Adverse Effect; (v) except as set forth on Section 3.2(n) of the East Disclosure Letter, and except for such matters as would not, individually or in the aggregate, reasonably be expected to result in an East Material Adverse Effect, in the past five (5) years neither East nor any of its Subsidiaries has received any notice, demand, letter, claim or request for information alleging that East or any of its Subsidiaries may be in violation of or subject to liability under any Environmental Law; (vi) neither East nor any -42- of its Subsidiaries is subject to any order, decree, injunction or agreement with any Governmental Entity, or any indemnity or other agreement with any third party, concerning liability or obligations relating to any Environmental Law or otherwise relating to any Hazardous Substance or any environmental matter; (vii) there is no Removal, Remediated or Required Action being undertaken on any property currently owned, leased or operated by East or any of its Subsidiaries; and (viii) there are no other circumstances or conditions involving East or any of its Subsidiaries that could reasonably be expected to result in any Environmental Liability except for such matters as would not, individually or in the aggregate, reasonably be expected to result in an East Material Adverse Effect. (o) Taxes. Except as would not, individually or in the aggregate, reasonably be expected to result in an East Material Adverse Effect: East and each of its Subsidiaries (i) have prepared in good faith and duly and timely filed (taking into account any extension of time within which to file) all Tax Returns required to be filed by any of them and all such filed Tax Returns are complete and accurate in all material respects; and (ii) have paid all Taxes that are required to be paid or that East or any of its Subsidiaries are obligated to withhold from amounts owing to any employee, creditor or third party, except with respect to matters contested in good faith or for which adequate reserves have been established on the most recent consolidated balance sheet included in or incorporated into the East Reports. As of the date hereof, except as would not, individually or in the aggregate, reasonably be expected to result in an increase in Taxes that is material to East, there are no audits, examinations, investigations or other proceedings, in each case, pending or threatened in writing, in respect of Taxes or Tax matters. East has made available to West true and correct copies of the United States federal income Tax Returns filed by East and their respective Subsidiaries for each of the fiscal years ended December 31, 2003 and 2002. None of East or its Subsidiaries has been a "distributing corporation" or "controlled corporation" in any distribution occurring during the last 30 months that was purported or intended to be governed by Section 355 of the Code (or any similar provision of state, local or foreign law). Neither East nor any of its Subsidiaries has taken any action or knows of any fact, agreement, plan or other circumstance that is reasonably likely to prevent the Merger from qualifying as a reorganization with the meaning of Section 368(a) of the Code. There are no Liens for Taxes on any asset of East or any of its Subsidiaries, except for Liens for Taxes not yet due and payable and Liens for Taxes that would not, individually or in the aggregate, reasonably be expected to result in an East Material Adverse Effect. (p) Labor Matters. (i) East has made available to West true and complete copies of all collective bargaining agreements and other labor union contracts (including all amendments thereto) applicable to any employees of East or any of its Subsidiaries (the "East CBAs"). (ii) No labor union, labor organization or group of employees of East or any of its Subsidiaries has made a pending demand for recognition or certification, and there are no representation or certification proceedings or petitions seeking a -43- representation proceeding presently pending or threatened in writing to be brought or filed with any labor relations tribunal or authority. To East's Knowledge, there are no labor union organizing activities pending or threatened with respect to any employees of East or any of its Subsidiaries. (iii) There is no labor dispute, strike, slowdown, work stoppage or lockout, or to East's Knowledge, threat thereof by or with respect to any employee of East or any of its Subsidiaries. (iv) There are no arbitrations, written grievances or written complaints outstanding or, to East's Knowledge, threatened against East or any of its Subsidiaries under any East CBAs, except for such matters as would not, individually or in the aggregate, reasonably be expected to result in an East Material Adverse Effect. Neither East nor any of its Subsidiaries is in receipt of written notice of any material statutory disputes or unfair labor practice charges. (q) Intellectual Property and IT Assets. Except for such matters as would not, individually or in the aggregate, reasonably be expected to result in an East Material Adverse Effect: (i) All patents, patent applications, trademark and copyright registrations and applications for registration, and Internet domain name registrations claimed to be owned by East or its Subsidiaries are owned exclusively by East or such Subsidiaries and are subsisting and, to East's Knowledge, valid and enforceable. (ii) Except as set forth on Section 3.2(q)(ii) of the East Disclosure Letter, East and/or each of its Subsidiaries owns, or is licensed or otherwise possesses legally enforceable rights to use, all Intellectual Property necessary to conduct the business of East and its Subsidiaries as currently conducted, all of which rights shall in all materials respects survive unchanged the execution and delivery of this Agreement and the consummation of the Merger and the other transactions contemplated hereunder. (iii) Except as set forth on Section 3.2(q)(iii) of the East Disclosure Letter, the conduct of the business as currently conducted by East and its Subsidiaries does not infringe, misappropriate or otherwise violate the Intellectual Property rights of any third Person and in the three (3) year period immediately preceding the date of this Agreement, there has been no such claim, action or proceeding asserted, or to East's Knowledge threatened against East or its Subsidiaries or any indemnitees thereof. There is no claim, action or proceeding asserted, or to East's Knowledge threatened, against East or its Subsidiaries or any indemnitees thereof concerning the ownership, validity, registerability, enforceability, infringement, use or licensed right to use any Intellectual Property claimed to be owned or held by East or its Subsidiaries or used or alleged to be used in the business of East or its Subsidiaries. (iv) To East's Knowledge, no third Person has, in the three (3) year period immediately preceding the date of this Agreement, infringed, misappropriated or otherwise violated the Intellectual Property rights of East or its Subsidiaries. There are -44- no claims, actions or proceedings asserted or threatened by East, or decided by East to be asserted or threatened, that (A) a third Person infringes, misappropriates or otherwise violates, or in the three (3) year period immediately preceding the date of this Agreement, infringed, misappropriated or otherwise violated, the Intellectual Property rights of East or its Subsidiaries; or (B) a third Person's owned or claimed Intellectual Property interferes with, infringes, dilutes or otherwise harms the Intellectual Property rights of East or its Subsidiaries. (v) East and its Subsidiaries have taken reasonable measures to protect the confidentiality of all material Trade Secrets that are owned, used or held by East and its Subsidiaries and, to East's Knowledge, such material Trade Secrets have not been used, disclosed to or discovered by any Person except pursuant to valid and appropriate non-disclosure and/or license agreements which have not been breached. (vi) Except as set forth on Section 3.2(q)(vi) of the East Disclosure Letter ,the IT Assets of East and its Subsidiaries operate and perform in all material respects in accordance with their documentation and functional specifications and otherwise as required by East and its Subsidiaries for the operation of their respective businesses, and have not malfunctioned or failed within the three (3) year period immediately preceding the date of this Agreement. To East's Knowledge, no Person has gained unauthorized access to such IT Assets. Except as set forth on Section 3.2(q)(vi) of the East Disclosure Letter, East and its Subsidiaries have implemented and maintained for the three (3) year period immediately preceding the date of this Agreement reasonable and sufficient backup and disaster recovery technology consistent with industry practices. (r) Foreign Corrupt Practices Act. Except for such matters as would not, individually or in the aggregate, reasonably be expected to result in a material adverse impact on the ability of East and its Subsidiaries to conduct their operations in the ordinary course of business: (i) East and its Subsidiaries have developed and implemented a compliance program which includes corporate policies and procedures to ensure compliance with the Foreign Corrupt Practices Act. (ii) In connection with its compliance with the Foreign Corrupt Practices Act, there are no adverse or negative past performance evaluations or ratings by the U.S. Government, or any voluntary disclosures under the Foreign Corrupt Practices Act, any enforcement actions or threats of enforcement actions, or any facts that, in each case, could result in any adverse or negative performance evaluation related to the Foreign Corrupt Practices Act. (iii) Neither the U.S. Government nor any other Person has notified East or its Subsidiaries in writing of any actual or alleged violation or breach of the Foreign Corrupt Practices Act. (iv) None of East or its Subsidiaries has undergone and is undergoing any audit, review, inspection, investigation, survey or examination of records relating to -45- East's or any of its Subsidiaries' compliance with the Foreign Corrupt Practice Act, and, to East's Knowledge, there is no basis for any such audit, review, inspection, investigation, survey or examination of records. (v) East and its Subsidiaries have not been and are not now under any administrative, civil or criminal investigation, charge or indictment involving alleged false statements, false claims or other improprieties relating to East's or any of its Subsidiaries' compliance with the Foreign Corrupt Practices Act, nor, to East's Knowledge, is there any basis for any such investigation or indictment. (vi) None of East or its Subsidiaries has been and is not now a party to any administrative or civil litigation involving alleged false statements, false claims or other improprieties relating to East's or any of its Subsidiaries' compliance with the Foreign Corrupt Practices Act, nor, to East's Knowledge, is there any basis for any such proceeding. (s) Aircraft. (i) Section 3.2(s)(i) of the East Disclosure Letter sets forth a true and complete list of all aircraft owned or leased by East or any of its Subsidiaries as of March 31, 2005 (the "East Aircraft"), including a description of the type and aircraft number of each such East Aircraft and the date East placed such East Aircraft in service or proposes to place such East Aircraft in service. All East Aircraft owned or leased by East or any of its Subsidiaries are in airworthy condition and are being maintained according to applicable FAA regulatory standards and the FAA-approved maintenance program of East and its Subsidiaries. East and its Subsidiaries have implemented maintenance schedules with respect to their respective East Aircraft and engines that, if complied with, would result in the satisfaction of all requirements under all applicable ADs and FARs required to be complied with in accordance with the FAA-approved maintenance program of East and its Subsidiaries, and East and its Subsidiaries are in compliance with such maintenance schedules in all material respects and currently have no reason to believe that they will not satisfy any component of such maintenance schedules on or prior to the dates specified in such maintenance schedules. (ii) Section 3.2(s)(ii) of the East Disclosure Letter sets forth a true and complete list, as of the date hereof, containing all Contracts, assumed or not rejected in connection with the Cases as of the date of this Agreement, (other than existing aircraft leases) pursuant to which East or any of its Subsidiaries may purchase or lease aircraft, including the manufacturer and model of all aircraft subject to each Contract. East has delivered or made available to West true and complete copies of all Contracts listed on Section 3.2(s)(ii) of the East Disclosure Letter, including all amendments thereto. (iii) Except as set forth on Section 3.2(s)(iii) of the East Disclosure Letter, each East Aircraft has a validly issued, current individual aircraft FAA Certificate of Airworthiness with respect to such East Aircraft which satisfies all requirements for the effectiveness of such FAA Certificate of Airworthiness. -46- (iv) Each East Aircraft's structure, systems and components are functioning in accordance with its intended use as set forth in FAA-approved documentation, including any applicable manuals, technical standard orders or parts manufacturing approval certificates. (v) All deferred maintenance items and temporary repairs with respect to each such East Aircraft have been or will be made materially in accordance with FAA, manufacturer's and East's maintenance programs. (vi) Each East Aircraft is properly registered on the FAA aircraft registry. (vii) East is not a party to any interchange or pooling agreements with respect to its East Aircraft. (viii) No East Aircraft is subleased to or otherwise in the possession of another air carrier or other Person other than East or any of its Subsidiaries, to operate such East Aircraft in air transportation or otherwise. (t) Slots. Section 3.2(t) of the East Disclosure Letter sets forth a true, correct and complete list of all takeoff and landing slots and other similar takeoff and landing rights ("East Slots") used by East or any of its Subsidiaries on the date hereof at any domestic or international airport, including a true, correct and complete list of all East Slot lease agreements. East and its Subsidiaries will have complied in all material respects with the requirements of the regulations issued under the Federal Aviation Act and any other Laws with respect to the East Slots. Neither East nor any of its Subsidiaries has received any notice of any proposed withdrawal of the East Slots by the FAA, the DOT or any other Governmental Entity. The East Slots have not been designated for the provision of essential air services in accordance with the regulations issued under the Federal Aviation Act, were not acquired pursuant to 14 C.F.R. Section 93.219 and have not been designated for international operations, as more fully detailed in 14 C.F.R. Section 93.217. To the extent covered by 14 C.F.R. Section 93.227, East and its Subsidiaries have used each East Slot either at least 80% of the maximum amount that each East Slot could have been used during each full and partial reporting period (as described in 14 C.F.R. Section 93.227(i)) or such greater or lesser amount of minimum usage as may have been required to protect such East Slot's authorization from termination or withdrawal under regulations established by any Governmental Entity or airport authority. All reports required by the FAA or any Governmental Entity relating to the East Slots have been filed in a timely manner. Neither East nor any of its Subsidiaries has agreed to any East Slot slide, East Slot trade, East Slot purchase, East Slot sale or other transfer of any of the East Slots. -47- (u) Equipment. Section 3.2(u) of the East Disclosure Letter sets forth a true, correct and complete list of all passenger loading bridges owned or utilized by East or any of its Subsidiaries. (v) U.S. Citizen; Air Carrier. East's primary subsidiary, US Airways, Inc., is a "citizen of the United States" as defined in the Federal Aviation Act and is an "air carrier" within the meaning of such Act operating under certificates issued pursuant to such Act (49 U.S.C. Sections 41101-41112). (w) Insurance. Section 3.2(w) of the East Disclosure Letter lists and briefly describes (including name of insurer, agent or broker, coverage and expiration date) each insurance policy maintained by, at the expense of or for the benefit of East or any of the Subsidiaries with respect to its properties and assets and describes any material claims made thereunder. All such insurance policies are in full force and effect and neither East nor any Subsidiary is in default with respect to its obligations under any such insurance policy. The insurance coverage of East and the Subsidiaries is customary for corporations of similar size engaged in similar lines of businesses. East has not received any notice or other communication regarding any actual or possible (a) cancellation or invalidation of any insurance policy, (b) refusal of any coverage or rejection of any material claim under any insurance policy or refusal of any coverage or rejection of any claim under any insurance policy or (c) material adjustment in the amount of premiums payable with respect to any insurance policy. (x) Brokers and Finders. Neither East nor any of its officers, directors or employees has employed any broker or finder or incurred any liability for any brokerage fees, commissions or finders, fees in connection with the Merger or the other transactions contemplated in this Agreement, except that East has employed, and is solely responsible for the fees and expenses of, Seabury Group, LLC as its financial advisor, and a copy of the engagement letter with such financial advisor has been provided to West prior to the date hereof. (y) Merger Sub Constituent Documents. True, correct and complete copies of the articles of incorporation and by-laws of Merger Sub have been made available to West. ARTICLE IV Covenants 4.1 Interim Operations. (i) West shall not knowingly take or permit any of its Subsidiaries to take any action or refrain from taking any action the result of which would be reasonably expected to result in any of the closing conditions set forth in Sections 5.1 and 5.3 hereof not to be satisfied. West covenants and agrees as to itself and its Subsidiaries that, after the date hereof and prior to the Effective Time, unless East shall otherwise approve in writing (such approval not to be unreasonably withheld or delayed), and except as -48- otherwise expressly contemplated by this Agreement or as required by applicable Laws, its business and that of its Subsidiaries shall be conducted in the ordinary and usual course and, to the extent consistent therewith, it shall, and shall cause its Subsidiaries to, use their respective reasonable best efforts to preserve their business organizations intact and maintain existing relations and goodwill with Governmental Entities, customers, suppliers, distributors, creditors, lessors, employees and business associates and keep available the services of the present employees and agents of West and its Subsidiaries. Without limiting the generality of the foregoing and in furtherance thereof, from the date of this Agreement until the Effective Time, except (A) as otherwise expressly required by this Agreement or applicable Laws, (B) as East may approve in writing (such approval not to be unreasonably withheld or delayed) or (C) as set forth in Section 4.1(i) of the West Disclosure Letter, West will not and will not permit its Subsidiaries to: (a) adopt or propose any change in its certificate of incorporation or by-laws or other applicable governing instruments or amend any term of the Shares; (b) merge or consolidate West or any of its Subsidiaries with any other Person, except for any such transactions among wholly-owned Subsidiaries of West that are not obligors or guarantors of third-party indebtedness, or adopt a plan of liquidation; (c) acquire assets outside of the ordinary course of business with a value or purchase price in excess of $10,000,000 in the aggregate, other than acquisitions pursuant to Contracts to the extent in effect immediately prior to the execution of this Agreement and as otherwise set forth in Section 4.1(i)(c) of the West Disclosure Letter, and other than capital expenditures within West's capital expenditure budget as set forth in Section 4.1(i)(j) of the West Disclosure Letter; (d) other than as set forth in Section 4.1(i)(d) of the West Disclosure Letter and other than the issuance of shares or options pursuant to West Stock Plans, West Awards, West Warrants or West Convertible Debt, issue, sell, pledge, dispose of, grant, transfer, lease, license, guarantee, encumber, or authorize the issuance, sale, pledge, disposition, grant, transfer, lease, license, guarantee or encumbrance of, any shares of capital stock of West or any its Subsidiaries (other than the issuance of shares by a wholly owned Subsidiary of West to West or another wholly owned Subsidiary), or securities convertible or exchangeable into or exercisable for any shares of such capital stock, or any options, warrants, conversion rights, stock appreciation rights, redemption rights, repurchase rights, agreements, arrangements, calls, commitments or other rights of any kind to acquire any shares of such capital stock or such convertible or exchangeable securities; (e) other than (A) specified encumbrances described in Section 4.1(i)(e) of the West Disclosure Letter; (B) encumbrances for current Taxes or other governmental charges not yet due and payable; (C) mechanics', carriers', workmen's, repairmen's or other like encumbrances arising or incurred in the ordinary course of business consistent with past practice relating to obligations as to which there is no default on the part of West, or the validity or amount of which is being contested in good faith by appropriate proceedings; and (D) other encumbrances that do not, individually or -49- in the aggregate, materially impair the continued use, operation, value or marketability of any West Aircraft, West Slots, West Gates or West Real Property or the conduct of the business of West and its Subsidiaries as presently conducted; create or incur any Lien material to West or any of its Subsidiaries on any assets of West or any of its Subsidiaries having a value in excess of $10,000,000; (f) other than as set forth in Section 4.1(i)(f) of the West Disclosure Letter, make any loans, advances or capital contributions to or investments in any Person (other than West or any direct or indirect wholly-owned Subsidiary of West) in excess of $10,000,000 in the aggregate; (g) declare, set aside or pay any dividend or distribution (whether in cash, stock or property or any combination thereof) on (i) any Shares or West Preferred Shares, or (ii) any shares of capital stock of any Subsidiary (other than wholly-owned Subsidiaries and pro rata dividends payable to holders of interests in non wholly-owned Subsidiaries); (h) reclassify, split, combine, subdivide or repurchase, redeem or otherwise acquire, directly or indirectly, any of its capital stock or securities convertible or exchangeable into or exercisable for any shares of its capital stock; (i) other than as set forth on Section 4.1(i)(i) of the West Disclosure Letter, incur any indebtedness for borrowed money or guarantee such indebtedness of another Person, or issue or sell any debt securities or warrants or other rights to acquire any debt security of West or any of its Subsidiaries, except for (i) indebtedness for borrowed money incurred in the ordinary course of business not to exceed $10,000,000 in the aggregate, (ii) indebtedness for borrowed money in replacement of existing indebtedness for borrowed money on customary commercial terms, (iii) guarantees by West of indebtedness of wholly-owned Subsidiaries of West or guarantees by Subsidiaries of indebtedness of West, or (iv) interest rate swaps on customary commercial terms consistent with past practice and not to exceed $10,000,000 of notional debt in the aggregate in addition to notional debt currently under swap or similar arrangements; (j) except as set forth in Section 4.1(i)(j) of the West Disclosure Letter, make or authorize any capital expenditure; (k) other than in the ordinary course of business, enter into any Contract that would have been a West Material Contract had it been entered into prior to the date of this Agreement (other than as permitted by Section 4.1(i)(d), (e), (i) or (j)); (l) make any changes with respect to accounting policies or procedures, except as required by changes in GAAP or by applicable Law or except as West, after consultation with East and each party's independent auditors, determines in good faith is preferable; (m) settle any litigation or other proceedings before or threatened to be brought before a Governmental Entity for an amount to be paid by West or any of its -50- Subsidiaries in excess of $10,000,000 or which would be reasonably likely to have a material adverse impact on the operations of West or any of its Subsidiaries; (n) other than in the ordinary course of business, (i) amend or modify in any material respect, or terminate or waive any material right or benefit under, any West Material Contract, or (ii) cancel, modify or waive any debts or claims held by it or waive any rights having in each case a value in excess of $10,000,000; (o) except as required by Law or by any currently effective tax sharing agreement listed in Section 4.1(i)(o) of the West Disclosure Letter, make any material Tax election or take any material position on any material Tax Return filed on or after the date of this Agreement or adopt any method therefor that is inconsistent with elections made, positions taken or methods used in preparing or filing similar Tax Returns in prior periods. (p) sell, lease, license, leaseback, abandon, or otherwise dispose of any assets of West or its Subsidiaries except (i) in the ordinary course of business or obsolete assets or (ii) sales, leases, licenses, leasebacks, abandonments or other dispositions of assets with a fair market value not in excess of $10,000,000 in respect of any one asset and not in excess of $15,000,000 in the aggregate other than (x) as set forth in Section 4.1(i)(p) of the West Disclosure Letter and (y) any dispositions of assets to the extent used as consideration for acquisitions that are permitted pursuant to Section 4.1(i)(c); (q) except in connection with the replacement of any existing employee, including any officer, on compensation terms that are not materially different from those of the replaced employee or officer, or except as required pursuant to existing written, binding agreements in effect prior to the date of this Agreement that have been provided to East, or except as West, based upon advice of its counsel, determines in good faith is preferable for purposes of compliance with Section 409A of the Code, or as otherwise required by applicable Law, (i) except with respect to any newly-hired employees (excluding officers), enter into any commitment to provide any severance or termination benefits to (or amend any existing arrangement with) any director, officer or employee of West or any of its Subsidiaries, (ii) increase the benefits payable under any existing severance or termination benefit policy or employment agreement, (iii) except with respect to any newly-hired employees (excluding officers), enter into any employment severance, change in control, termination, deferred compensation or other similar agreement (or amend any such existing agreement) with any director, officer or employee of West or any of its Subsidiaries, (iv) establish, adopt, amend or terminate any West Compensation and Benefit Plan, (v) increase the compensation, bonus or other benefits of, make any new awards under any West Compensation and Benefit Plan to, or pay any bonus to any director, officer, employee, consultant or independent contractor of West or any of its Subsidiaries, except for increases, new awards or payments in the ordinary course of business consistent with past practice for employees who are not among West's Section 16 Officers, (vi) take any action to fund or in any other way secure the payment of compensation or benefits under any West Compensation and Benefit Plan, except as required pursuant to the terms thereof, (vii) take any action to accelerate -51- the vesting or payment of any compensation or benefits under any West Compensation and Benefit Plans, to the extent not already required in any such West Compensation and Benefit Plan, (viii) materially change any actuarial or other assumptions used to calculate funding obligations with respect to any West Compensation and Benefit Plan or change the manner in which contributions to such plans are made or the basis on which such contributions are determined, except as may be required by GAAP, (ix) amend the terms of any outstanding equity-based award, (x) provide for accelerated vesting, removal of restrictions or exercisability of any stock based or stock related awards (including stock options, stock appreciation rights, performance units and restricted stock units) upon a change in control occurring on or prior to the Effective Time, or (xi) enter into any new collective bargaining agreements (or material amendments to existing collective bargaining agreements); (r) decrease or defer in any material respect the level of training provided to the employees of West or any of its Subsidiaries or the level of costs expended in connection therewith; (s) fail to keep in effect any governmental route authority in effect and used by any Subsidiary of West as of the date of this Agreement, provided that the restrictions set forth in this Section 4.1(i)(s) shall not apply to any such failure if such failure occurs in the ordinary course of business consistent with past practice; (t) make any material West Route changes, other than changes in the ordinary course of business consistent with past practice; (u) fail to maintain insurance at levels at least comparable to current levels or otherwise in a manner inconsistent with past practice; (v) take any action, or fail to take action, which action or failure could result in the loss of West Slots with an aggregate value in excess of $10,000,000; (w) fail to notify East in writing of any incidents or accidents occurring on or after the date hereof involving any property owned or operated by West that resulted or could reasonably be expected to result in damages or losses in excess of $10,000,000; (x) fail to continue, in respect of all West Aircraft, all material maintenance programs consistent with past practice (except as required or permitted by applicable Law), including using reasonable best efforts to keep all such West Aircraft in such condition as may be necessary to enable to airworthiness certification of such West Aircraft under the Federal Aviation Act to be maintained in good standing at all times; (y) agree or commit to do any of the foregoing. (ii) East shall not knowingly take or permit any of its Subsidiaries to take any action or refrain from taking any action the result of which would be reasonably expected to result in any of the closing conditions set forth in Sections 5.1 and 5.2 not to be satisfied. East covenants and agrees as to itself and its Subsidiaries that, after the date -52- hereof and prior to the Effective Time, unless West shall otherwise approve in writing (such approval not to be unreasonably withheld or delayed), and except as otherwise expressly contemplated by this Agreement or as required by applicable Laws, its business and that of its Subsidiaries shall be conducted in the ordinary and usual course and, to the extent consistent therewith, it shall, and shall cause its Subsidiaries to, use their respective reasonable best efforts to preserve their business organizations intact and maintain existing relations and goodwill with Governmental Entities, customers, suppliers, distributors, creditors, lessors, employees and business associates and keep available the services of the present employees and agents of East and its Subsidiaries. Without limiting the generality of the foregoing and in furtherance thereof, from the date of this Agreement until the Effective Time, except (A) as otherwise expressly required by this Agreement or applicable Laws, (B) as West may approve in writing (such approval not to be unreasonably withheld or delayed) or (C) as set forth in Section 4.1(ii) of the East Disclosure Letter, East will not and will not permit its Subsidiaries to: (a) adopt or propose any change in its certificate of incorporation or by-laws or other applicable governing instruments or amend any term of the East Common Stock; (b) merge or consolidate East or any of its Subsidiaries with any other Person, except for any such transactions among wholly-owned Subsidiaries of East that are not obligors or guarantors of third-party indebtedness, or adopt a plan of liquidation; (c) acquire assets outside of the ordinary course of business with a value or purchase price in excess of $10,000,000 in the aggregate, other than acquisitions pursuant to Contracts to the extent in effect immediately prior to the execution of this Agreement and as otherwise set forth in Section 4.1(ii)(c) of the East Disclosure Letter, and other than capital expenditures within East's capital expenditure budget as set forth in Section 4.1(ii)(j) of the East Disclosure Letter; (d) other than as set forth in Section 4.1(ii)(d) of the East Disclosure Letter and other than the issuance of shares or options pursuant to stock-based benefit plans and under individual employment agreements to which East is a party, issue, sell, pledge, dispose of, grant, transfer, lease, license, guarantee, encumber, or authorize the issuance, sale, pledge, disposition, grant, transfer, lease, license, guarantee or encumbrance of, any shares of capital stock of East or any its Subsidiaries (other than the issuance of shares by a wholly owned Subsidiary of East to East or another wholly owned Subsidiary), or securities convertible or exchangeable into or exercisable for any shares of such capital stock, or any options, warrants, conversion rights, stock appreciation rights, redemption rights, repurchase rights, agreements, arrangements, calls, commitments or other rights of any kind to acquire any shares of such capital stock or such convertible or exchangeable securities; (e) other than (A) specified encumbrances described in Section 4.1(ii)(e) of the East Disclosure Letter; (B) encumbrances for current Taxes or other governmental charges not yet due and payable; (C) mechanics', carriers', workmen's, repairmen's or other like encumbrances arising or incurred in the ordinary course of -53- business consistent with past practice relating to obligations as to which there is no default on the part of East, or the validity or amount of which is being contested in good faith by appropriate proceedings; and (D) other encumbrances that do not, individually or in the aggregate, materially impair the continued use, operation, value or marketability of any East Aircraft, East Slots, East Gates or East Real Property or the conduct of the business of East and its Subsidiaries as presently conducted; create or incur any Lien material to East or any of its Subsidiaries on any assets of East or any of its Subsidiaries having a value in excess of $10,000,000; (f) other than as set forth in Section 4.1(ii)(f) of the East Disclosure Letter, make any loans, advances or capital contributions to or investments in any Person (other than East or any direct or indirect wholly-owned Subsidiary of East) in excess of $10,000,000 in the aggregate; (g) declare, set aside or pay any dividend or distribution (whether in cash, stock or property or any combination thereof) on (i) any East Common Stock, or (ii) any shares of capital stock of any Subsidiary (other than wholly-owned Subsidiaries and pro rata dividends payable to holders of interests in non wholly-owned Subsidiaries); (h) reclassify, split, combine, subdivide or repurchase, redeem or otherwise acquire, directly or indirectly, any of its capital stock or securities convertible or exchangeable into or exercisable for any shares of its capital stock; (i) other than as set forth in Section 4.1(ii)(i) of the East Disclosure Letter, incur any indebtedness for borrowed money or guarantee such indebtedness of another Person, or issue or sell any debt securities or warrants or other rights to acquire any debt security of East or any of its Subsidiaries, except for (i) indebtedness for borrowed money incurred in the ordinary course of business not to exceed $10,000,000 in the aggregate, (ii) indebtedness for borrowed money in replacement of existing indebtedness for borrowed money on customary commercial terms, (iii) guarantees by East of indebtedness of wholly-owned Subsidiaries of East or guarantees by Subsidiaries of indebtedness of East, or (iv) interest rate swaps on customary commercial terms consistent with past practice and not to exceed $10,000,000 of notional debt in the aggregate in addition to notional debt currently under swap or similar arrangements; (j) except as set forth in Section 4.1(ii)(j) of the East Disclosure Letter, make or authorize any capital expenditure; (k) other than in the ordinary course of business, enter into any Contract that would have been an East Material Contract had it been entered into prior to the date of this Agreement (other than as permitted by Section 4.1(ii)(d), (e), (i) or (j)); (l) make any changes with respect to accounting policies or procedures, except as required by changes in GAAP or by applicable Law or except as East, after consultation with West and each party's independent auditors, determines in good faith is preferable; -54- (m) except as in connection with the Plan or as otherwise directed or authorized by the Bankruptcy Court, settle any litigation or other proceedings before or threatened to be brought before a Governmental Entity for an amount to be paid by East or any of its Subsidiaries in excess of $10,000,000 or which would be reasonably likely to have a material adverse impact on the operations of East or any of its Subsidiaries; (n) except as in connection with the Plan or as otherwise directed or authorized by the Bankruptcy Court, and other than in the ordinary course of business, (i) amend or modify in any material respect, or terminate or waive any material right or benefit under, any East Material Contract, or (ii) cancel, modify or waive any debts or claims held by it or waive any rights having in each case a value in excess of $10,000,000; (o) except as required by Law or by any currently effective tax sharing agreement listed in Section 4.1(ii)(o) of the East Disclosure Letter, make any material Tax election or take any material position on any material Tax Return filed on or after the date of this Agreement or adopt any method therefor that is inconsistent with elections made, positions taken or methods used in preparing or filing similar Tax Returns in prior periods. (p) sell, lease, license, leaseback, abandon, or otherwise dispose of any assets of East or its Subsidiaries except (i) in the ordinary course of business or obsolete assets or (ii) sales, leases, licenses, leasebacks, abandonments or other dispositions of assets with a fair market value not in excess of $10,000,000 in respect of any one asset and not in excess of $15,000,000 in the aggregate other than (x) as set forth in Section 4.1(ii)(p) of the East Disclosure Letter and (y) any dispositions of assets to the extent used as consideration for acquisitions that are permitted pursuant to Section 4.1(ii)(c); (q) other than as set forth in Section 4.1(ii)(q) of the East Disclosure Letter, or except in connection with the replacement of any existing employee, including any officer, on compensation terms that are not materially different from those of the replaced employee or officer, or except as required pursuant to existing written, binding agreements in effect prior to the date of this Agreement that have been provided to West, or except as East, based upon advice of its counsel, determines in good faith is preferable for purposes of compliance with Section 409A of the Code, or as otherwise required by applicable Law, or except as will be disclosed in, or covered by, the Plan, (i) with respect to any newly-hired employees (excluding officers), enter into any commitment to provide any severance or termination benefits to (or amend any existing arrangement with) any director, officer or employee of East or any of its Subsidiaries, (ii) increase the benefits payable under any existing severance or termination benefit policy or employment agreement, (iii) with respect to any newly-hired employees (excluding officers), enter into any employment severance, change in control, termination, deferred compensation or other similar agreement (or amend any such existing agreement) with any director, officer or employee of East or any of its Subsidiaries, (iv) establish, adopt, amend or terminate any East Compensation and Benefit Plan, (v) increase the compensation, bonus or other benefits of, make any new awards under any East Compensation and Benefit -55- Plan to, or pay any bonus to any director, officer, employee, consultant or independent contractor of East or any of its Subsidiaries, except for increases, new awards or payments in the ordinary course of business consistent with past practice for employees who are not among East's Section 16 Officers, (vi) take any action to fund or in any other way secure the payment of compensation or benefits under any East Compensation and Benefit Plan, except as required pursuant to the terms thereof, (vii) take any action to accelerate the vesting or payment of any compensation or benefits under any East Compensation and Benefit Plans, to the extent not already required in any such East Compensation and Benefit Plan, (viii) materially change any actuarial or other assumptions used to calculate funding obligations with respect to any East Compensation and Benefit Plan or change the manner in which contributions to such plans are made or the basis on which such contributions are determined, except as may be required by GAAP, (ix) amend the terms of any outstanding equity-based award, (x) provide for accelerated vesting, removal of restrictions or exercisability of any stock based or stock related awards (including stock options, stock appreciation rights, performance units and restricted stock units) upon a change in control occurring on or prior to the Effective Time, or (xi) enter into any new collective bargaining agreements (or material amendments to existing collective bargaining agreements); (r) decrease or defer in any material respect the level of training provided to the employees of East or any of its Subsidiaries or the level of costs expended in connection therewith; (s) other than as set forth in Section 4.1(ii)(s) of the East Disclosure Letter, fail to keep in effect any governmental route authority in effect and used by any Subsidiary of East as of the date of this Agreement, provided that the restrictions set forth in this Section 4.1(ii)(s) shall not apply to any such failure if such failure occurs in the ordinary course of business consistent with past practice; (t) make any material East Route changes, other than changes in the ordinary course of business consistent with past practice; (u) other than as set forth in Section 4.1(ii)(u) of the East Disclosure Letter, fail to maintain insurance at levels at least comparable to current levels or otherwise in a manner inconsistent with past practice; (v) other than as set forth in Section 4.1(ii)(v) of the East Disclosure Letter, take any action, or fail to take action, which action or failure could result in the loss of East Slots with an aggregate value in excess of $10,000,000; (w) fail to notify West in writing of any incidents or accidents occurring on or after the date hereof involving any property owned or operated by East that resulted or could reasonably be expected to result in damages or losses in excess of $10,000,000; (x) fail to continue, in respect of all East Aircraft, all material maintenance programs consistent with past practice (except as required by applicable -56- Law), including using reasonable best efforts to keep all such East Aircraft in such condition as may be necessary to enable to airworthiness certification of such East Aircraft under the Federal Aviation Act to be maintained in good standing at all times; (y) agree or commit to do any of the foregoing. 4.2 Bankruptcy Filings, Covenants and Agreements. (a) Within two (2) business days following execution of this Agreement, the Debtors shall file with the Bankruptcy Court a motion for an order (i) approving procedures for the consideration of Plan proposals, (ii) approving form and manner of notice of competing offer procedures, and (iii) approving break-up fee and related provisions (collectively, the "Bidding Procedures"), such order substantially in the form attached hereto as Exhibit E. The Debtors shall use their commercially reasonable efforts to obtain Bankruptcy Court approval of (x) the Bidding Procedures within eleven (11) days of the date of the filing of the Bidding Procedures and (y) the proposal it seeks to have determined to be the Approved Proposal (as defined in the Bidding Procedures) promptly following the Auction Termination Date (as defined in Section 4.2(b)). West agrees that it shall promptly take such actions as are reasonably requested by the Debtors to assist in obtaining approval of the Bidding Procedures and the Approved Proposal, including furnishing affidavits or other documents or information for filing with the Bankruptcy Court; provided that West shall not be required to take any actions to amend or modify the Bidding Procedures or the order approving the Approved Proposal. If entry of the orders approving the Bidding Procedures or the Approved Proposal is appealed or otherwise challenged (including a petition for certiorari or motion for modification, reconsideration, rehearing or reargument), West and the Debtors shall each use their reasonable best efforts to defend such appeal or challenge unless West or East has validly terminated this Agreement pursuant to its terms. (b) Until the earlier to occur of (i) the date that is thirty-five (35) days after entry of the order approving the Bidding Procedures and (ii) the date that this Agreement or any other proposal becomes the Approved Proposal (such earlier date, the "Auction Termination Date"), the Debtors shall be permitted to solicit inquiries, proposals, offers or bids from, and negotiate with, any Person regarding a Qualified Competing Plan Proposal (as defined in the Bidding Procedures) solely in accordance with the Bidding Procedures; provided, however, that none of the Debtors may enter into, or seek Bankruptcy Court approval of, any agreement with respect to such Qualified Competing Plan Proposal unless it has been determined to be the Best and Final Qualified Bid (as defined in the Bidding Procedures) pursuant to the Bidding Procedures and this Agreement has not become the Approved Proposal. Notwithstanding anything herein to the contrary, none of the Debtors shall offer, agree to, or seek approval from the Bankruptcy Court for, and shall use their best efforts to object to any request by any other party for, any break-up fee, work fee, expense reimbursement or any other benefit or protection for any Person other than West in connection with any proposed acquisition of or investment in any of the Debtors other than in connection with the Financing Commitments. East shall notify West in writing within one (1) Business Day following -57- East's determination that any Qualified Competing Plan Proposal is higher and better than this Agreement. (c) Each of the Debtors agrees that if this Agreement becomes the Approved Proposal, it shall use its best efforts to cause any order approving the Approved Proposal to prohibit the Debtors (and any Person purporting to act on behalf of the estate of any Debtor) from violating the provisions of Section 4.4(a) or from otherwise pursuing in any way any East Acquisition Proposal other than this Agreement unless this Agreement shall have previously been terminated in accordance with its terms. (d) In connection with any proceedings in the Bankruptcy Court related to the Bidding Procedures, the order approving the Approved Proposal or the transactions contemplated by this Agreement (or any Qualified Competing Plan Proposal) (a) East shall provide to West copies of all motions, objections, pleadings, notices, proposed orders and other documents that are filed by or on behalf of any Debtor as soon as reasonably practicable prior to filing thereof with the Bankruptcy Court and (b) West shall provide to East copies of all motions, objections, pleadings, notices, proposed orders and other documents that are filed by or on behalf of West as soon as reasonably practicable prior to filing thereof with the Bankruptcy Court. (e) Each of the Debtors and West shall make all reasonable efforts to (i) obtain as soon as possible the approvals of the Plan by majorities of any class defined in the Plan, and (ii) cause the Confirmation Order to be entered and become a Final Order no later than September 1, 2005, and take such further steps as may be necessary or appropriate so that the Confirmation Order shall become a Final Order of the Bankruptcy Court. Upon request of East, West agrees (x) to assist and cooperate with the Debtors in their negotiations with, and solicitation of approvals from, holders of Claims and Interests (as such terms are defined in the Plan) for the purpose of obtaining the approvals of majorities of any class defined in the Plan and/or (y) to assist the Debtors in obtaining entry of the Confirmation Order. For purposes of this Agreement, "Final Order" means an order or judgment of the Bankruptcy Court, or other court of competent jurisdiction, as entered on the docket in the Cases or the docket of any other court of competent jurisdiction, that has not been reversed, stayed, modified or amended, and as to which the time to appeal or seek reargument, reconsideration, or certiorari has expired and no appeal, motion for reconsideration or reargument or petition for certiorari has been timely taken, or as to which any appeal that has been taken or any petition for certiorari, motion for reconsideration or reargument that has been or may be filed has been resolved by the highest court to which the order or judgment was appealed or from which reargument, reconsideration, or certiorari was sought and the time to take any further appeal, petition for certiorari or move for reargument shall have expired. -58- 4.3 West Acquisition Proposals. (a) West agrees that, except as permitted by Section 4.1 hereof, neither it nor any of its Subsidiaries nor any of the officers and directors of it or any of its Subsidiaries shall, and that it shall not authorize or permit its and its Subsidiaries' employees, agents and representatives, including any investment banker, attorney or accountant retained by it or any of its Subsidiaries ("Representatives"), to, directly or indirectly, initiate, solicit or knowingly encourage or facilitate any inquiries or the making of any proposal or offer with respect to (1) a merger, reorganization, share exchange, consolidation or similar transaction involving the purchase or acquisition of West, (2) any purchase of an equity interest or interests in West or (3) any purchase of assets, securities or ownership interests of West and its Subsidiaries (any such inquiry, proposal or offer being hereinafter referred to as a "West Acquisition Proposal"). West further agrees that neither it nor any of its Subsidiaries nor any of the officers and directors of it or any of its Subsidiaries shall, and that it shall cause its and its Subsidiaries' Representatives not to, directly or indirectly, provide any confidential information or data to, or engage in any negotiations with, any Person relating to a West Acquisition Proposal, or otherwise knowingly encourage or facilitate any effort or attempt by any Person other than East and Merger Sub to make or implement a West Acquisition Proposal; provided, however, that, subject to Section 6.4(a) hereof, nothing contained in this Agreement shall prevent West or its Board of Directors from (i) complying with its disclosure obligations under applicable Law (including under Sections 14d-9 and 14e-2 of the Exchange Act) with regard to a West Acquisition Proposal; and (ii) at any time prior to, but not after, the time this Agreement is adopted by the West Requisite Vote, (A) provide information in response to a request therefor by a Person who has made an unsolicited bona fide written West Acquisition Proposal if the Board of Directors of West receives from the Person so requesting such information an executed confidentiality agreement (excluding standstill provisions) on customary terms; (B) engage in any discussions or negotiations with any Person who has made an unsolicited bona fide written West Acquisition Proposal if the Board of Directors of West receives from such Person an executed confidentiality agreement (excluding standstill provisions) on customary terms; or (C) recommend such an unsolicited bona fide written West Acquisition Proposal to the shareholders of West, if and only to the extent that, (x) in each such case referred to in clause (A) or (B) above, the Board of Directors of West reasonably determines such West Acquisition Proposal constitutes or is reasonably likely to lead to a West Superior Proposal (as defined below) (without having to take the actions referred to in clause (z) below); (y) in the case referred to in clause (C) above, the Board of Directors of West determines in good faith (after consultation with its financial advisor and outside counsel), taking into account all legal, financial and regulatory aspects of the proposal, the likelihood of obtaining financing, and the Person making the proposal, that such West Acquisition Proposal, if consummated, is more favorable, from a financial point of view (taking into account the likelihood of consummation), to West's shareholders than the transactions contemplated by this Agreement, in each case taking into account any revisions to the terms of the transactions contemplated by this Agreement pursuant to Section 4.3(c); and (z) East shall have had written notice of West's intention to take the action referred to in clause (C) (a "Notice of West Superior Proposal") at least five business days prior to the taking of such action by West and West -59- shall have complied with the provisions of Section 4.3(c); provided, that any more favorable West Acquisition Proposal referred to in clause (y) above must involve at least 50% of the assets or equity securities of West (any such more favorable West Acquisition Proposal being referred to in this Agreement as a "West Superior Proposal"). (b) West agrees that it will immediately cease and cause to be terminated any existing activities, discussions or negotiations with any Person conducted heretofore with respect to any West Acquisition Proposal. West will promptly request each Person that has heretofore executed a confidentiality agreement in connection with its consideration of a transaction with West to return or destroy all confidential information furnished prior to the execution of this Agreement to or for the benefit of such Person by or on behalf of West or any of its Subsidiaries. West agrees that it will take the necessary steps to promptly inform its Representatives of the obligations undertaken in this Section 4.3. (c) West agrees that it will notify East as promptly as practicable (and, in any event, within 24 hours) if any inquiries, proposals or offers with respect to any West Acquisition Proposal or potential West Acquisition Proposal are received by, any such information is requested from, or any such discussions or negotiations are sought to be initiated or continued with, it or any of its Representatives, indicating, in connection with such notice, the name of such Person and the material terms and conditions of any proposal or offer and thereafter shall keep East informed, on a current basis, on the status and terms of any such proposal or offer and the status of any such discussions or negotiations. West agrees that (i) during the five business day period prior to its taking any action referred to in clause (ii)(C) of the proviso in Section 4.3(a) with respect to a West Acquisition Proposal, West and its Representatives shall negotiate in good faith with East and its Representatives regarding any revisions to the terms of the transaction contemplated by this Agreement proposed by East and (ii) West may take any such action with respect to a West Acquisition Proposal that was a West Superior Proposal only if such West Acquisition Proposal continues to be a West Superior Proposal in light of any revisions to the terms of the transaction contemplated by this Agreement to which East shall have agreed prior to the expiration of such five business day period. West agrees that it will deliver to East a new Notice of West Superior Proposal with respect to each West Acquisition Proposal that has been materially revised or modified prior to taking any action to recommend or agreeing to recommend such West Acquisition Proposal to the shareholders of West and that a new five business day period shall commence, for purposes of this Section 4.3(c), with respect to each such materially revised or modified West Acquisition Proposal from the time East receives a Notice of West Superior Proposal with respect thereto. West also agrees to provide any information to East that it is providing to another Person pursuant to this Section 4.3 at the same time it provides it to such other Person. 4.4 East Acquisition Proposals. (a) From and after the Auction Termination Date, each of the Debtors agrees that, except as permitted by Section 4.1 hereof, neither it nor any of its officers and directors shall, and that it shall not authorize or permit its employees, agents and -60- representatives, including any investment banker, attorney or accountant retained by it ("Representatives"), to, directly or indirectly, initiate, solicit or knowingly encourage or facilitate any inquiries or the making of any proposal or offer with respect to (1) a merger, reorganization, share exchange, consolidation or similar transaction involving the purchase or acquisition of any Debtor, (2) any purchase of an equity interest or interests in any Debtor or (3) any purchase of assets, securities or ownership interests of any Debtor, (any such inquiry, proposal or offer being hereinafter referred to as an "East Acquisition Proposal"). Each Debtor further agrees that neither it nor any of its officers and directors shall, and that it shall cause its Representatives not to, directly or indirectly, provide any confidential information or data to, or engage in any negotiations with, any Person relating to an East Acquisition Proposal, or otherwise knowingly encourage or facilitate any effort or attempt by any Person other than West to make or implement an East Acquisition Proposal; provided, however, that, subject to Section 6.3(a) hereof, nothing contained in this Agreement shall prevent East or its Board of Directors from (i) complying with its disclosure obligations under applicable Law (including under Sections 14d-9 and 14e-2 of the Exchange Act) with regard to an East Acquisition Proposal. (b) Each Debtor agrees that from and after the Auction Termination Date, if this Agreement is the Approved Proposal, it will cease and cause to be terminated any existing activities, discussions or negotiations with any Person other than West with respect to any East Acquisition Proposal. Upon this Agreement becoming the Approved Proposal, the Debtors will promptly request each Person that has heretofore executed a confidentiality agreement in connection with its consideration of a transaction with any Debtor to return or destroy all confidential information furnished prior thereto. Each Debtor agrees that it will take the necessary steps to promptly inform its Representatives of the obligations undertaken in this Section 4.4. (c) East agrees that it will notify West as promptly as practicable (and, in any event, within 24 hours) if any inquiries, proposals or offers with respect to any East Acquisition Proposal or potential East Acquisition Proposal are received by, any such information is requested from, or any such discussions or negotiations are sought to be initiated or continued with, it or any of its Representatives, indicating, in connection with such notice, the name of such Person and the material terms and conditions of any proposal or offer and thereafter shall keep West informed, on a current basis, on the status and terms of any such proposal or offer and the status of any such discussions or negotiations. Each Debtor agrees that if, notwithstanding the provisions of Section 4.4(a) and 4.4(b), it becomes legally obligated to consider or enter into any discussions of any kind regarding an East Acquisition Proposal, it and its representatives shall negotiate in good faith with West and its Representatives to provide West with an opportunity to revise the terms of the transaction contemplated by this Agreement such that the Debtors and their Representatives agree that this Agreement (as so revised) constitutes the best transaction available to the Debtors and their estates. Each Debtor also agrees to provide any information to West that it is providing to another Person at the same time it provides it to such other Person. -61- 4.5 Information Supplied. Each of West and East agrees that none of the information supplied or to be supplied by it or any of its Subsidiaries for inclusion or incorporation by reference in (i) the Registration Statement on Form S-4 to be filed with the SEC by East in connection with the issuance of the shares of East Common Stock in the Merger (including the prospectus and proxy statement (the "Prospectus/Proxy Statement") constituting a part thereof) (the "S-4 Registration Statement") and any amendment or supplement thereto will, at the time the S-4 Registration Statement becomes effective under the Securities Act, contain any untrue statement of a material fact or omit to state any 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, and (ii) the Prospectus/Proxy Statement and any amendment or supplement thereto will, at the date of mailing to shareholders of West and at the time of the Shareholders Meeting (as defined in Section 4.6), contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. West and East will cause the S-4 Registration Statement to comply as to form in all material respects with the applicable provisions of the Securities Act and the rules and regulations thereunder. 4.6 Shareholders Meeting. West will take, in accordance with applicable Law and its certificate of incorporation and by-laws, all lawful and reasonable action necessary to call, give notice of, convene and hold a meeting of holders of Shares (the "Shareholders Meeting") as promptly as practicable after the S-4 Registration Statement is declared effective, and in any event will use its reasonable best efforts to convene the Shareholders Meeting not later than 120 days after the date of this Agreement (or, if later, not more than 60 days after effectiveness of the S-4 Registration Statement), to consider and vote upon the adoption of this Agreement. Subject to its fiduciary duties under applicable Law, the Board of Directors of West shall make the Directors' Recommendation, the Directors' Recommendation shall be included in the Prospectus/Proxy Statement and the Board of Directors of West shall take all lawful and reasonable action to solicit the adoption of this Agreement by the holders of Shares. In the event that subsequent to the date of this Agreement the Board of Directors of West determines after consultation with outside counsel that its fiduciary duties under applicable Law require it to withdraw, modify or qualify its adoption of this Agreement or the Directors' Recommendation in any manner, the Board of Directors of West may, subject to the requirements of Section 4.3, so withdraw, modify or qualify its adoption of this Agreement or the Directors' Recommendation, provided, however, that West shall nevertheless submit this Agreement to the holders of Shares for adoption at the Shareholders Meeting and shall use its reasonable best efforts to do so within the time period prescribed herein. 4.7 Filings; Other Actions; Notification. (a) East and West shall promptly after the date of this Agreement prepare and East shall file with the SEC the S-4 Registration Statement as promptly as practicable thereafter. East shall use its reasonable best efforts to have the S-4 Registration Statement declared effective under the Securities Act as promptly as practicable after -62- such filing, and in any event not later than 120 days after the date of this Agreement and West shall promptly thereafter mail the Prospectus/Proxy Statement to the holders of Shares. The parties shall notify each other promptly of the receipt of any comments from the SEC or the staff of the SEC and of any request by the SEC or the staff of the SEC for amendments or supplements to the Prospectus/Proxy Statements or the S-4 Registration Statement or for additional information and shall supply each other with copies of (i) all correspondence between it or any of its representatives, on the one hand, and the SEC or the staff of the SEC, on the other hand, with respect to the Prospectus/Proxy Statement, the S-4 Registration Statement or the Merger, and (iii) all orders of the SEC relating to the S-4 Registration Statement. (b) West and East shall cooperate with each other and use (and shall cause their respective Subsidiaries to use) their respective reasonable best efforts to take or cause to be taken all actions, and do or cause to be done all things, necessary, proper or advisable on its part under this Agreement and applicable Laws to consummate and make effective the Merger and the other transactions contemplated by this Agreement as soon as practicable, including preparing and filing as promptly as practicable all documentation to effect all necessary notices, reports and other filings and to obtain as promptly as practicable all consents, registrations, approvals, permits and authorizations necessary or advisable to be obtained from any third party and/or any Governmental Entity in order to consummate the Merger or any of the other transactions contemplated by this Agreement. Subject to applicable Laws relating to the exchange of information, East and West shall have the right to review in advance, and to the extent practicable each will consult the other on, all of the information relating to East or West, as the case may be, and any of their respective Subsidiaries, that appears in any filing made with, or written materials submitted to, any third party and/or any Governmental Entity in connection with the Merger and the other transactions contemplated by this Agreement (including the S-4 Registration Statement). To the extent permitted by Law, each party shall provide the other with copies of all correspondence between it (or its advisors) and any Governmental Entity relating to the transactions contemplated by this Agreement and, to the extent reasonably practicable, all telephone calls and meetings with a Governmental Entity regarding the transactions contemplated by this Agreement shall include Representatives of East and West. In exercising the foregoing rights, each of West and East shall act reasonably and as promptly as practicable. (c) To the extent permitted by applicable Law, West and East each shall, upon request by the other, furnish the other with all information concerning itself, its Subsidiaries, directors, officers and stockholders and such other matters as may be reasonably necessary or advisable in connection with the S-4 Registration Statement or any other statement, filing, notice or application made by or on behalf of East, West or any of their respective Subsidiaries to any third party and/or any Governmental Entity in connection with the Merger and the transactions contemplated by this Agreement. (d) Subject to applicable Laws and the instructions of any Governmental Entity, West and East each shall keep the other apprised of the status of matters relating to completion of the transactions contemplated hereby, including promptly furnishing the other with copies of notices or other communications received by East or West, as the -63- case may be, or any of its Subsidiaries, from any third party and/or any Governmental Entity with respect to the Merger and the other transactions contemplated by this Agreement. West shall give prompt notice to East of any change, fact or condition of which, to West's Knowledge, is reasonably expected to result in a West Material Adverse Effect or of any failure of any condition to East's obligations to effect the Merger. East shall give prompt notice to West of any change, fact or condition of which, to East's Knowledge, is reasonably expected to result in an East Material Adverse Effect or of any failure of any condition to West's obligations to effect the Merger. (e) East's and West's obligations under this Section 4.7(e) shall include, without limitation, the obligation to use their respective reasonable best efforts to defend any lawsuits or legal proceedings, whether judicial or administrative, or any actions by a Governmental Entity, challenging the consummation of the Merger or the other transactions contemplated hereby, including using reasonable best efforts to seek to have any stay or other injunctive relief which would prevent or materially delay or impair the consummation of the transactions contemplated by this Agreement entered by any court or other Governmental Entity reversed on appeal or vacated. For purposes of this Section 4.7(e), "reasonable best efforts" shall include each of East's and West's agreement to (i) sell, hold separate or otherwise dispose of its assets or the assets of its Subsidiaries or conduct its business in a specified manner, or (ii) permit its assets or the assets of its Subsidiaries to be sold, held separate or disposed of or permit its business to be conducted in a specified manner; provided however, that nothing in this Agreement will require, or be deemed to require, East or West to agree to or effect any divestiture or take any other action if doing so would, individually or in the aggregate, reasonably be expected to result in a Newco Material Adverse Effect. "Newco Material Adverse Effect" means a material adverse effect on the financial condition, assets, liabilities, business or results of operations of Newco and its Subsidiaries taken as a whole. "Newco" refers to East after the Effective Time. (f) Each of West and East will promptly notify the other if it becomes aware of any significant deficiencies in its internal control over financial reporting that, alone or combined with other significant deficiencies, would constitute a material weakness in its internal control over financial reporting. (g) Each of East and West agree that, without the prior consent of the other party, it will not enter into, amend, modify or waive any of its rights under (i) any definitive agreements relating to the Financing Commitments, (ii) any agreements with the ATSB (other than the Undertaking, dated as of January 18, 2002, among West, the ATSB and TPG Partners, L.P. and certain of its affiliates) or (iii) any agreements with General Electric Company or any of its Subsidiaries. 4.8 Access and Reports. Subject to applicable Law, upon reasonable notice, each Party shall (and shall cause its Subsidiaries to) afford the other party's officers and other authorized Representatives (including environmental consultants) reasonable access, during normal business hours throughout the period prior to the Effective Time, to its properties, books, contracts and records and, during such period, each Party shall (and shall cause its Subsidiaries to) furnish promptly to the other party -64- all information concerning its business, properties and personnel as may reasonably be requested. 4.9 Publicity. The initial press release disclosing this Agreement shall be a joint press release and thereafter West and East each shall consult with each other prior to issuing any press releases or otherwise making public announcements with respect to the Merger and the other transactions contemplated by this Agreement and prior to making any filings with any third party or any Governmental Entity (including any national securities exchange) with respect thereto, except as may be required by applicable Law or by obligations pursuant to any listing agreement with or rules of any national securities exchange or by the request of any Governmental Entity. 4.10 Employee Benefits. (a) East shall cause the Surviving Corporation to honor all West Compensation and Benefit Plans in accordance with their terms as in effect immediately before the Effective Time, subject to any amendment or termination thereof that may be permitted by the terms of such plan and applicable Law. (b) Subject to the terms of any applicable collective bargaining agreement, East shall cause any East Compensation and Benefit Plans that cover the employees of West and its Subsidiaries who are employed by East or any of its Subsidiaries at or after the Effective Time (the "Continuing Employees") to treat the employment and service of the Continuing Employees with West and its Subsidiaries and any predecessor employers through the Closing Date as employment and service with East and its Subsidiaries for eligibility and vesting purposes (but not benefit accrual purposes under any defined benefit pension plan) under the East Compensation and Benefit Plans. Subject to the terms of any applicable collective bargaining agreement, the Continuing Employees and their dependents and beneficiaries shall not be required for the calendar year that includes the Closing Date to satisfy any deductible, co-payment, out-of pocket maximum or similar requirements under any East Compensation and Benefit Plan that provides medical, dental and other welfare benefits to the Continuing Employees (and their beneficiaries) to the extent of amounts previously credited for such purposes under the medical, dental and other welfare benefit plans of West and its Subsidiaries that covered the Continuing Employees prior to the Closing Date, and any waiting periods, pre-existing condition exclusions and requirements to show evidence of good health contained in such East Compensation and Benefit Plan shall not apply with respect to the Continuing Employees and their dependents and beneficiaries (except to the extent such waiting periods, exclusions or requirements were applicable under the West Compensation and Benefit Plans at the Effective Time). (c) No provision of this Section 4.10 shall create any third party beneficiary rights in any Continuing Employee or any other employee or former employee (including any beneficiary or dependent of any Continuing Employee or other employee or former employee) of West or any of its Subsidiaries in respect of continued employment (or resumed employment) or any other matter. -65- 4.11 Expenses. Except as otherwise provided in Section 6.5, whether or not the Merger is consummated, all costs and expenses incurred in connection with this Agreement and the Merger and the other transactions contemplated by this Agreement shall be paid by the party incurring such expense; provided, however, that East and West shall each be responsible for half of the costs and expenses incurred in connection with any filings required to be made under the HSR Act, as contemplated by Sections 3.1(d)(i)(B) and 3.2(e)(i)(B) hereof. 4.12 Indemnification; Directors' and Officers' Insurance. (a) From and after the Effective Time, each of East and the Surviving Corporation agrees that it will jointly and severally indemnify and hold harmless each present director and officer of West or any of its Subsidiaries (in each case, for acts or failures to act in such capacity), determined as of the Effective Time (the "Indemnified Parties"), against any costs or expenses (including reasonable attorneys' fees), judgments, fines, losses, claims, damages or liabilities (collectively, "Costs") incurred in connection with any claim, action, suit, proceeding or investigation, whether civil, criminal, administrative or investigative, arising out of matters existing or occurring at or prior to the Effective Time, whether asserted or claimed prior to, at or after the Effective Time (including any matters arising in connection with the transactions contemplated by this Agreement), to the fullest extent permitted by applicable Law (and East or the Surviving Corporation shall also advance expenses as incurred to the fullest extent permitted under applicable Law, provided that the Person to whom expenses are advanced provides an undertaking to repay such advances if it is ultimately determined that such Person is not entitled to indemnification); and provided, further, that any determination as to whether an Indemnified Person is entitled to indemnification or advancement of expenses hereunder shall be made by independent counsel selected by East or the Surviving Corporation and such Person. (b) Any Indemnified Party wishing to claim indemnification under paragraph (a) of this Section 4.12, upon learning of any such claim, action, suit, proceeding or investigation, shall promptly notify East thereof, but the failure to so notify shall not relieve East of any liability it may have to such Indemnified Party except to the extent such failure materially and actually prejudices the indemnifying party. In the event of any such claim, action, suit, proceeding or investigation (whether arising before or after the Effective Time), (i) East or the Surviving Corporation shall have the right to assume the defense thereof and East shall not be liable to such Indemnified Parties for any legal expenses of other counsel or any other expenses subsequently incurred by such Indemnified Parties in connection with the defense thereof, except that if East or the Surviving Corporation does not elect to assume such defense or counsel for the Indemnified Parties advises that there are issues which raise conflicts of interest between East or the Surviving Corporation and the Indemnified Parties, the Indemnified Parties may retain counsel satisfactory to them, and East and the Surviving Corporation shall jointly and severally be obligated to pay all reasonable fees and expenses of such counsel for the Indemnified Parties promptly as statements therefor are received; provided, however, that East and the Surviving Corporation shall be obligated pursuant to this paragraph (b) to pay for only one firm of counsel for all Indemnified Parties in any -66- jurisdiction unless the use of one counsel for such Indemnified Parties would present such counsel with a conflict of interest; (ii) the Indemnified Parties will use their reasonable efforts to cooperate in the defense of any such matter, and (iii) East and the Surviving Corporation shall not be liable for any settlement effected without their prior written consent (such consent not to be unreasonably withheld or delayed); and provided, further, that East and the Surviving Corporation shall not have any obligation under this Agreement to any Indemnified Party if and when a court of competent jurisdiction shall ultimately determine, and such determination shall have become final, that the indemnification of such Indemnified Party in the manner contemplated hereby is prohibited by applicable law. (c) The Surviving Corporation shall, and East shall cause the Surviving Corporation to, maintain West's existing officers' and directors' liability insurance ("D&O Insurance") (including for acts or omissions occurring in connection with this Agreement and the consummation of the transactions contemplated hereby) covering each such Indemnified Person covered as of the Effective Time by West's officers' and directors' liability insurance policy on terms with respect to coverage and amount no less favorable than those of such policy in effect on the date hereof, for a period of six years after the Effective Time; provided, however, that in no event shall the Surviving Corporation be required to expend in any one year an amount in excess of 150% of the current annual premium paid by West (which annual premium is set forth in Section 4.12(c) of the West Disclosure Letter) for such insurance (such 150% amount, the "Maximum Annual Premium"); provided, further, that if the annual premiums of such insurance coverage exceed such amount, the Surviving Corporation shall be obligated to obtain a policy with the greatest coverage available for a cost not exceeding the Maximum Annual Premium. In addition, West may purchase a six-year "tail" prepaid policy prior to the Effective Time on terms and conditions no less advantageous to the Indemnified Parties than the existing directors' and officers' liability insurance maintained by West; provided, that the amount paid by West shall not exceed six times the Maximum Annual Premium. If such "tail" prepaid policy has been obtained by West prior to the Closing, the Surviving Corporation shall, and East shall cause the Surviving Corporation to, maintain such policy in full force and effect, for its full term, and continue to honor their respective obligations thereunder, and all other obligations under this Section 4.12(c) shall terminate. (d) The obligations of East and the Surviving Corporation under this Section 4.12 shall not be terminated or modified by such parties in a manner so as to adversely affect any Indemnified Party to whom this Section 4.12 applies without the consent of such affected Indemnified Party. If East or the Surviving Corporation or any of their respective successors or assigns (i) shall consolidate with or merge into any other corporation or entity and shall not be the continuing or surviving corporation or entity of such consolidation or merger or (ii) shall transfer all or substantially all of its properties and assets to any individual, corporation or other entity, then, and in each such case, proper provisions shall be made so that the successors and assigns of East or the Surviving Corporation, as the case may be, shall assume all of the obligations set forth in this Section. -67- (e) The provisions of this Section 4.12 are intended to be for the benefit of, and shall be enforceable by, each of the Indemnified Parties and their heirs and legal representatives. (f) The rights of the Indemnified Parties and their heirs and legal representatives under this Section 4.12 shall be in addition to any rights such Indemnified Parties may have under the certificate of incorporation or by-laws of West or any of its Subsidiaries, or under any other applicable Laws. 4.13 Takeover Statutes. If any Takeover Statute becomes applicable to the Merger or the other transactions contemplated by this Agreement, each of East and West and their respective Board of Directors shall grant such approvals and take such actions as are necessary so that such transactions may be consummated as promptly as practicable on the terms contemplated by this Agreement and by the Merger and otherwise act to eliminate or minimize the effects of such statute or regulation on such transactions. 4.14 Transfer Taxes. Each of East, West, Merger Sub and the shareholders of West shall pay any sales, use, ad valorem, property, transfer (including real property transfer) and similar Taxes imposed on such Person as a result of or in connection with the Merger and the other transactions contemplated hereby, except to the extent such taxes may not be assessed pursuant to section 1146(c) of the Bankruptcy Code; provided, however, that West shall be liable for any such Tax that is imposed on its shareholders in respect of assets that are owned directly or indirectly by West. 4.15 Taxation. The parties intend that the Merger qualify as a reorganization within the meaning of Section 386(a) of the Code and shall use their reasonable best efforts (and shall cause their respective Subsidiaries to use their reasonable best efforts) to cause the Merger to so qualify. Neither East nor West shall take, cause or permit to be taken, or fail to take, any action, whether before or after the Effective Time, which action or failure to act would disqualify the Merger as a reorganization within the meaning of Section 368(a) of the Code. Each of East, Merger Sub and West shall cooperate with each other in obtaining opinions of Skadden, Arps, Slate, Meagher & Flom LLP, counsel to West, and Arnold & Porter LLP, counsel to East and Merger Sub, to satisfy the conditions set forth in Sections 5.2(e) and 5.3(e). In connection therewith, each of East, Merger Sub and West shall deliver to such counsel customary representation letters in form and substance reasonably satisfactory to such counsel. 4.16 Stock Exchange Listing and De-listing. East shall use its reasonable best efforts to cause the shares of East Common Stock to be issued in the Merger to be authorized for listing or quotations, as applicable, on the NYSE or the NASDAQ Stock Market upon official notice of issuance, prior to the Closing Date. The Surviving Corporation shall use its best efforts to cause the Shares to be no longer listed on the NYSE and de-registered under the Exchange Act as soon as practicable following the Effective Time. -68- 4.17 Affiliates. West shall deliver to East prior to the Closing Date a letter identifying all persons who are, at the time this Agreement is submitted for adoption by the stockholders of West, "affiliates" of West for purposes of Rule 145 of the rules and regulations promulgated under the Securities Act. West shall use reasonable best efforts to cause each such person to deliver to East on or prior to the Closing Date a written agreement substantially in the form attached as Exhibit F hereto. 4.18 Section 16(b). East and West shall take all steps reasonably necessary to cause the transactions contemplated hereby and any other dispositions of Shares or acquisitions of East Common Stock in connection with this Agreement by each individual who is a director or officer of West to be exempt under Rule 16b-3 under the Exchange Act. 4.19 Compliance with Indenture and Warrant. As soon as practicable, East shall take or cause to be taken all actions, and do or cause to be done all things, necessary, proper or advisable on its part to comply with the terms of (i) the Indenture governing the 2009 Notes, dated January 18, 2002, between America West Airlines, Inc. and Wilmington Trust Company, as Trustee, (ii) the Guarantee of the 2009 Notes, dated January 18, 2002, by America West Airlines, Inc., (iii) the Indenture governing the 2023 Notes, dated July 30, 2003, between America West Airlines, Inc. and U.S Bank National Association, as Trustee, (iv) the Guarantee and Exchange Agreement governing the 2023 Notes, dated July 30, 2003, between West and U.S. Bank National Association, as Exchange Agent and Trustee, and (v) the Warrant to Purchase Class B Common Stock issued to the ATSB on January 18, 2002, including preparing, executing and delivering as promptly as practicable all documentation to effect all necessary notices, supplements, amendments, reports and other documents. 4.20 Adjustment for Increase in Pre-Investment Valuation of East. (a) In the event that, prior to the Effective Time, East enters into an Alternative Transaction in connection with the Merger, the parties shall cause this Agreement to be amended to adjust the Class A Merger Exchange Ratio and the Class B Merger Exchange Ratio appropriately such that 40% of the Additional Pre-Investment Value (the "West Additional Pre-Investment Value") will, in the aggregate, be allocated to (i) the aggregate Class A Per Share Merger Consideration, (y) the aggregate Class B Per Share Merger Consideration and (z) the value of the Equity Participation, if any; provided, however, that any adjustments to the Class A Merger Exchange Ratio and the Class B Merger Exchange Ratio shall be made on a proportionate basis. In the event that, prior to the Effective Time, East enters into an Alternative Transaction other than the Merger with respect to which West or one of its affiliates is a party or otherwise involved, the parties shall cause the applicable agreement relating to such Alternative Transaction to provide for the allocation of such portion of the West Additional Pre-Investment Value as is necessary to fully satisfy the value of the Equity Participation. At West's request, East shall cause this Agreement or, in the case of an Alternative Transaction other than the Merger, such other applicable agreement, or the Plan to provide that at the Effective Time (or at the closing of such other Alternative Transaction, as the case may be) shares of East Common Stock representing 28% (or such other -69- percentage as West may advise East in writing prior to the Effective Time or such closing) of the West Additional Pre-Investment Value be delivered to such Person or Persons as West may designate in its sole discretion (the "Equity Participation"). (b) For purposes of this Agreement: (i) "Additional Pre-Investment Value" means the excess of (A) the pre-investment equity valuation of East pursuant to such Alternative Transaction (after giving effect to the Plan and the closing of such Alternative Transaction (which, in the case of the Merger, would include the value of West) and determined on the same basis as the Financing Commitments) over (B) $500,000,000. (ii) "Alternative Transaction" means a reorganization, sale, merger, consolidation, joint venture, recapitalization, stand-alone plan, sale of assets or equity interests, or other combination or disposition or similar transaction (including the Merger) involving East as part of the Plan with respect to which the pre-investment equity valuation of East (after giving effect to the Plan and the closing of such Alternative Transaction (which, in the case of the Merger, would include the value of West) and determined on the same basis as the Financing Commitments) exceeds $500,000,000. ARTICLE V Conditions 5.1 Conditions to Each Party's Obligation to Effect the Merger. The respective obligation of each party to effect the Merger is subject to the satisfaction or waiver at or prior to the Effective Time of each of the following conditions: (a) Shareholder Approval. This Agreement shall have been duly adopted by holders of Shares constituting the West Requisite Vote in accordance with applicable Law and West's certificate of incorporation and by-laws. (b) Regulatory Consents. The waiting period (and any extension thereof) applicable to the consummation of the Merger under the HSR Act shall have expired or been earlier terminated, (ii) all approvals and authorizations required to be obtained from the ATSB, DOT and FAA for the consummation of the Merger shall have been obtained, (iii) all approvals and authorizations required to be obtained for the consummation of the Merger from the foreign Governmental Entities set forth on Section 5.1(b)(iii) of the East Disclosure Letter shall have been obtained, (iv) all other Governmental Consents (as defined below) required to be obtained from any Governmental Entities for the consummation of the Merger shall have been obtained, except for any failures to obtain such consents that would not, individually or in the aggregate, reasonably be expected to result in a Newco Material Adverse Effect, and (v) all other Governmental Consents the failure of which to make or obtain would, individually or in the aggregate, provide a reasonable basis to conclude that West or its directors or officers would be subject to the risk of criminal liability, shall have been -70- made or obtained. For purposes of this Agreement, the term "Governmental Consents" shall mean all notices, reports, filings, consents, registrations, approvals, permits or authorizations required to be made prior to the Effective Time by West, East or any of their respective Subsidiaries with, or obtained prior to the Effective Time by West, East or any of their respective Subsidiaries from, any Governmental Entity in connection with the execution and delivery of this Agreement and the consummation of the Merger and the other transactions contemplated hereby. All Governmental Consents that have been obtained shall have been obtained without the imposition of any term, condition or consequence the acceptance of which would, individually or in the aggregate, reasonably be expected to have or result in a Newco Material Adverse Effect. (c) Orders. No Governmental Entity of competent jurisdiction shall have enacted, issued, promulgated, enforced or entered any Law (whether temporary, preliminary or permanent) that is in effect and restrains, enjoins, makes illegal or otherwise prohibits consummation of the Merger or the other transactions contemplated by this Agreement (collectively, an "Order"), except for such Orders of Governmental Entities outside the United States as would not, individually or in the aggregate, reasonably be expected to have a Newco Material Adverse Effect and which do not provide a reasonable basis to conclude that West, East or their respective directors or officers would be subject to the risk of criminal liability. (d) Bankruptcy. The Plan, in form and substance reasonably acceptable to each of East and West, shall have been confirmed by the Bankruptcy Court pursuant to a Confirmation Order in form and substance reasonably acceptable to each of East and West, and such Confirmation Order shall have become a Final Order. (e) S-4 Registration Statement. The S-4 Registration Statement shall have become effective under the Securities Act. No stop order suspending effectiveness of the S-4 Registration Statement shall have been issued, and no proceedings for that purpose shall have been initiated or threatened, by the SEC. (f) Listing. The shares of East Common Stock to be issued in the Merger shall have been authorized for listing or quotation, as applicable, on the NYSE or NASDAQ Stock Market upon official notice of issuance. (g) Additional East Equity. In connection with the emergence of East from bankruptcy and the consummation of the Plan, East will have received from the Equity Investors on or before the Effective Time cash equity investments of not less than $375,000,000 on a pre-investment value of not less than $500,000,000, such equity investments to be made substantially on the basis set forth in the Financing Commitments. (h) Further Agreements. All agreements and Bankruptcy Court orders entered into, modified or otherwise effected pursuant to or in connection with this Agreement or the Plan shall be in form and substance reasonably acceptable to each of East and West. -71- 5.2 Conditions to Obligations of East and Merger Sub. The obligations of East and Merger Sub to effect the Merger are also subject to the satisfaction or waiver by East at or prior to the Effective Time of the following conditions: (a) Representations and Warranties. (i) Each of the representations and warranties of West set forth in this Agreement (without giving effect to any materiality or West Material Adverse Effect qualifications contained therein) shall be true and correct in all respects as of the date of this Agreement and as of the Closing Date as though made on and as of the Closing Date (except to the extent any such representation and warranty expressly speaks as of an earlier date, in which case such representation and warranty shall be true and correct as of such earlier date), except where the failure of such representations and warranties to be true and correct would not, individually or in the aggregate, reasonably be expected to have a West Material Adverse Effect; and (ii) East shall have received a certificate signed on behalf of West by the Chief Executive Officer or Chief Financial Officer of West as to the matters set forth in clause (i) of this Section 5.2(a). (b) Performance of Obligations of West. West shall have performed in all material respects all obligations required to be performed by it under this Agreement at or prior to the Closing Date, and East shall have received a certificate signed on behalf of West by the Chief Executive Officer or Chief Financial Officer of West to such effect. (c) Certain Litigation. No Governmental Entity of competent jurisdiction shall have instituted (or if instituted, shall not have withdrawn) any suit, action or proceeding seeking any Order which would, in the reasonable judgment of East, individually or in the aggregate, be reasonably likely to result in a failure of the condition set forth in Section 5.1(c). (d) Consents Under Agreements. West shall have obtained the consent or approval of each Person whose consent or approval shall be required under any West Material Contract to which West or any of its Subsidiaries is a party in connection with the transactions contemplated by this Agreement, except where the failure to obtain such consents or approvals would not, individually or in the aggregate, reasonably be expected to have a West Material Adverse Effect. (e) Tax Opinion. East shall have received the opinion of Arnold & Porter LLP, counsel to East, in form and substance reasonably satisfactory to East, dated the Closing Date, substantially to the effect that, on the basis of facts, representations and assumptions set forth or referred to in such opinion which are consistent with the state of facts existing at the Effective Time, the Merger will be treated for United States federal income tax purposes as a reorganization within the meaning of Section 368(a) of the Code. In rendering the opinion described in this Section 5.2(e), Arnold & Porter LLP -72- may rely on customary representation letters as provided by East, Merger Sub and West, in form and substance reasonably satisfactory to Arnold & Porter LLP. 5.3 Conditions to Obligation of West. The obligation of West to effect the Merger is also subject to the satisfaction or waiver by West at or prior to the Effective Time of the following conditions: (a) Representations and Warranties. (i) Each of the representations and warranties of East and Merger Sub set forth in this Agreement (without giving effect to any materiality or East Material Adverse Effect qualifications contained therein) shall be true and correct in all material respects as of the date of this Agreement and as of the Closing Date as though made on and as of the Closing Date (except to the extent any such representation and warranty expressly speaks as of an earlier date, in which case such representation and warranty shall be true and correct as of such earlier date), except where the failure of such representations and warranties to be true and correct would not, individually or in the aggregate, reasonably be expected to have an East Material Adverse Effect; and (ii) West shall have received a certificate signed on behalf of East and Merger Sub by the Chief Executive Officer or Chief Financial Officer of East as to the matters set forth in clause (a) of this Section 5.3. (b) Performance of Obligations of East and Merger Sub. Each of East and Merger Sub shall have performed in all material respects all obligations required to be performed by it under this Agreement at or prior to the Closing Date, and West shall have received a certificate signed on behalf of East and Merger Sub by the Chief Executive Officer or Chief Financial Officer of East to such effect. (c) Certain Litigation. No Governmental Entity of competent jurisdiction shall have instituted (or if instituted, shall not have withdrawn) any suit, action or proceeding seeking any Order which would, in the reasonable judgment of West, individually or in the aggregate, be reasonably likely to result in a failure of the condition set forth in Section 5.1(c). (d) Consents Under Agreements. East shall have obtained the consent or approval of each Person whose consent or approval shall be required under any East Material Contract to which East or any of its Subsidiaries is a party in connection with the transactions contemplated by this Agreement, except where the failure to obtain such consents or approvals would not, individually or in the aggregate, reasonably be expected to have an East Material Adverse Effect. (e) Tax Opinion. West shall have received the opinion of Skadden, Arps, Slate, Meagher & Flom LLP, counsel to West, in form and substance reasonably satisfactory to West, dated the Closing Date, substantially to the effect that, on the basis of facts, representations and assumptions set forth or referred to in such opinion which are consistent with the state of facts existing at the Effective Time, the Merger will be treated for United States federal income tax purposes as a reorganization within the -73- meaning of Section 368(a) of the Code. In rendering the opinion described in this Section 5.3(e), Skadden, Arps, Slate, Meagher & Flom LLP may rely on customary representation letters provided by East, Merger Sub and West, in form and substance reasonably satisfactory to Skadden, Arps, Slate, Meagher & Flom LLP. (f) Immediately prior to the Effective Time there shall not exist more than $5,000,000 of administrative claims (including contingent liabilities) arising out of or related to (i) any East Compensation and Benefit Plan that is subject to Section 302 of ERISA or Section 412 of the Code, other than any claims relating to amounts incurred in the ordinary course of East's business including, but not limited to, plan contributions or (ii) any East Compensation and Benefit Plan not listed in Section 3.2(i)(i) of the East Disclosure Letter. ARTICLE VI Termination 6.1 Termination by Mutual Consent. This Agreement may be terminated and the Merger may be abandoned at any time prior to the Effective Time, whether before or after the adoption of this Agreement by the shareholders of West referred to in Section 5.1(a) or the entry of the Confirmation Order, by mutual written consent of West and East by duly authorized action. 6.2 Termination by Either East or West. This Agreement may be terminated and the Merger may be abandoned at any time prior to the Effective Time by duly authorized action of either East or West if (a) the Merger shall not have been consummated by October 31, 2005, whether such date is before or after the date of the adoption of this Agreement by the shareholders of West referred to in Section 5.1(a) or the entry of the Confirmation Order, provided, however, that in the event that, as of October 31, 2005, the conditions set forth in Sections 5.1(b), (d) and (e) have not been satisfied, the termination date may be extended from time to time by East or West one or more times to a date not beyond December 31, 2005 (such date, including any such extensions thereof, the "Termination Date"), (b) the adoption of this Agreement by the shareholders of West referred to in Section 5.1(a) shall not have been obtained at the Shareholders Meeting or at any adjournment or postponement thereof, (c) any Order permanently restraining, enjoining or otherwise prohibiting consummation of the Merger shall become final and non-appealable, except for any Orders the existence of which would not result in the failure of the condition set forth in Section 5.1(c) (whether before or after the adoption of this Agreement by the shareholders of West referred to in Section 5.1(a)), (d) the Bidding Procedures shall not have been approved by the Bankruptcy Court within fifteen (15) days of the date of this Agreement, or (e) the Merger and the transactions contemplated under this Agreement shall not have been determined by the Bankruptcy Court to be the Approved Proposal within forty-five (45) days after the entry of the order approving the Bidding Procedures by the Bankruptcy Court; provided, however, that the right to terminate this Agreement pursuant to this Section 6.2 shall not be available to any party that has breached its obligations under this Agreement in any manner that shall have proximately contributed to the occurrence of -74- the failure of a condition to the consummation of the Merger; provided, further, that in the case of clauses (d) and (e) of this Section 6.2, each of East and West shall have the right, but not the obligation, to terminate this Agreement for up to five (5) business days following the time period specified in such clause, after which time, if this Agreement is not terminated by either East or West, the time period for obtaining approval of the Bidding Procedures in clause (d) of this Section 6.2 and the time period for receiving a determination that the Merger and transactions contemplated under this Agreement constitute the Approved Proposal in clause (e) of this Section 6.2 shall be extended for ten (10) business days, during which time this Agreement may not be terminated. If, upon the expiration of the extension period contemplated in the preceding sentence, the Bidding Procedures shall not have been approved by the Bankruptcy Court or the Merger and the transactions contemplated under this Agreement shall not have been determined by the Bankruptcy Court to be the Approved Proposal, then this Agreement shall be deemed to have terminated pursuant to Section 6.2(d) or (e), as applicable. 6.3 Termination by West. This Agreement may be terminated and the Merger may be abandoned at any time prior to the Effective Time, whether before or after the adoption of this Agreement by the shareholders of West referred to in Section 5.1(a), by action of the Board of Directors of West if (a) without the consent of West, East shall have entered into or seeks authority from the Bankruptcy Court to enter into (or does not object to efforts by any other party to have East enter into) a binding written agreement concerning any Qualified Competing Plan Proposal, (b) the Board of Directors of West authorizes West, subject to complying with the terms of this Agreement, to enter into a binding written agreement concerning a transaction that constitutes a West Superior Proposal, (c) there has been a breach of any representation, warranty, covenant or agreement made by East, any other Debtor or Merger Sub in this Agreement, or any such representation or warranty shall have become untrue or incorrect after the execution of this Agreement, such that Section 5.3(a) or 5.3(b), as the case may be, would not be satisfied and such breach or failure to be true and correct is not curable within sixty (60) days of West providing written notice of such breach or failure to East, (d) East shall have knowingly and materially and not inadvertently breached any of its obligations under Section 4.4 of this Agreement, or (e) East withdraws the Plan after it has been filed with the Bankruptcy Court, East ceases to seek actively to have the Plan confirmed by the Bankruptcy Court (or does not actively contest efforts by another Person to cause the Plan not to be so confirmed) or twenty days after the Bankruptcy Court enters an order denying confirmation of the Plan. 6.4 Termination by East. This Agreement may be terminated and the Merger may be abandoned at any time prior to the Effective Time, whether before or after the adoption of this Agreement by the shareholders of West referred to in Section 5.1(a), by duly authorized action of East if (a) the Board of Directors of West shall have withdrawn, modified or qualified, or shall have agreed to withdraw, modify or qualify, in fact or in substance, its adoption of this Agreement or the Directors' Recommendation in a manner adverse to East, (b) West shall have entered into a binding written agreement concerning a transaction that constitutes a West Superior Proposal, (c) East, by duly authorized action, is authorized to enter into a binding written agreement concerning a transaction that constitutes an Approved Proposal, (d) there has been a -75- breach of any representation, warranty, covenant or agreement made by West in this Agreement, or any such representation or warranty shall have become untrue or incorrect after the execution of this Agreement, such that Section 5.2(a) or 5.2(b), as the case may be, would not be satisfied and such breach or failure to be true or correct is not curable within sixty (60) days of East providing written notice of such breach or failure to West, (e) by the later of 120 days after the date of this Agreement or 60 days after effectiveness of the S-4 Registration Statement, the Shareholders Meeting shall not have been held, or the vote of West's shareholders contemplated by Section 4.6 has not been taken, unless West has used its reasonable best efforts to convene the Shareholders Meeting and hold such vote by the later of such dates, or (f) West shall have knowingly and materially and not inadvertently breached any of its obligations under Section 4.3 of this Agreement. 6.5 Effect of Termination and Abandonment. (a) In the event of termination of this Agreement and the abandonment of the Merger pursuant to this Article VI, this Agreement (other than as set forth in Section 7.1) shall become void and of no effect with no liability on the part of any party hereto (or of any of its directors, officers or other Representatives). (b) In the event that (i) a bona fide West Acquisition Proposal relating to at least 40% of the assets or equity interests of West and its Subsidiaries taken as a whole (a "Covered Proposal") shall have been made to West or any of its Subsidiaries or its shareholders and shall have become publicly known or any Person shall have publicly announced an intention (whether or not conditional) to make a Covered Proposal with respect to West or any of its Subsidiaries (and such Covered Proposal or publicly announced intention shall not have been withdrawn at the time of the Shareholders Meeting) and thereafter this Agreement is terminated by either East or West pursuant to Section 6.2(b), (ii) this Agreement is terminated by East pursuant to Section 6.4(e), (iii) this Agreement is terminated by East (A) pursuant to Section 6.4(a), (b) or (f) or (B) pursuant to Section 6.4(d) with respect to any knowing, material and not inadvertent breach of any covenant or agreement made by West or (iv) this Agreement is terminated by West pursuant to Section 6.3(b), then West shall promptly, but in no event later than two days after the date of such termination, pay East a termination fee of $15,000,000 (the "East Termination Fee"), payable by wire transfer of same day funds; provided, however, that no East Termination Fee shall be payable to East pursuant to clause (i) of this paragraph (b) unless and until (I) any Person (other than East) (a "West Acquiring Party") has acquired, by purchase, sale, assignment, lease, transfer or otherwise, in one transaction or any series of related transactions within 18 months of such termination, a majority of the voting power of the outstanding securities of West or all or substantially all of the assets of West or shall have entered into an agreement with West for such an acquisition within 18 months of such termination or (II) there has been consummated a merger, consolidation or similar business combination between West or one of its Subsidiaries and a West Acquiring Party within such 18 month period. West acknowledges that the agreements contained in this Section 6.5(b) are an integral part of the transactions contemplated by this Agreement, and that, without these agreements, East and Merger Sub would not enter into this Agreement; accordingly, if West fails to promptly pay any amount due pursuant to this Section 6.5(b), and, in order to obtain such -76- payment, East or Merger Sub commences a suit which results in a judgment against West for the fee, charges or expenses to which reference is made in this paragraph (b), West shall pay to East or Merger Sub its costs and expenses (including attorneys' fees) in connection with such suit, together with interest on the amount of the fee at the prime rate of Citibank, N.A. in effect on the date such payment was required to be made. Notwithstanding anything to the contrary in this Agreement, the parties hereby acknowledge that payment of the East Termination Fee shall be the sole and exclusive remedy available to East, Merger Sub or any of the Debtors' or their estates under this Agreement and none of such parties shall have any other rights or remedies in law or equity against West. Notwithstanding anything to the contrary in this Agreement, no East Termination Fee (when payable under this Agreement) shall be payable under any circumstances unless and until the order approving the Bidding Procedures is entered by the Bankruptcy Court and has become final and non-appealable. (c) In the event that this Agreement is terminated (i) by West pursuant to Section 6.3(a), (d) or (e), (ii) pursuant to Section 6.2(e), (iii) by East pursuant to Section 6.4(c), or (iv) by West pursuant to Section 6.3(c) with respect to any knowing, material and not inadvertent breach of any covenant or agreement by East, then East shall, promptly, but in no event later than two days after the date of such termination, pay to West a termination fee of $15,000,000 (the "West Termination Fee"), payable by wire transfer of same day funds. East acknowledges that the agreements contained in this Section 6.5(c) are an integral part of the transactions contemplated by this Agreement, and that, without these agreements, West would not enter into this Agreement; accordingly, if East fails to promptly pay any amount due pursuant to this Section 6.5(c), and, in order to obtain such payment, West commences a suit which results in a judgment against East for the fee, charges or expenses to which reference is made in this paragraph (c), East shall pay to West its costs and expenses (including attorneys' fees) in connection with such suit, together with interest on the amount of the fee at the prime rate of Citibank, N.A. in effect on the date such payment was required to be made. Notwithstanding anything to the contrary in this Agreement, the parties hereby acknowledge that payment of the West Termination Fee shall be West's sole and exclusive remedy under this Agreement and West shall have no other rights or remedies in law or equity against East. (d) Notwithstanding the foregoing Section 6.5(c), the parties hereby acknowledge that in the event that this Agreement is validly terminated by West pursuant to Section 6.3(d), then in addition to East paying the West Termination Fee as set forth in Section 6.5(c), West shall also be entitled to seek any other additional remedy at law or equity, including, but not limited to, injunctive relief from the Bankruptcy Court and damages sustained by West (to the extent the amount of such damages exceeds the West Termination Fee). (e) East's obligations pursuant to this Section 6.5 shall survive termination of this Agreement and shall constitute an allowed administrative expense of East. -77- ARTICLE VII Miscellaneous and General 7.1 Survival. This Article VII and the agreements of West, East and Merger Sub contained in Article II and Sections 4.10 (Employee Benefits) and 4.12 (Indemnification; Directors' and Officers' Insurance) shall survive the consummation of the Merger. This Article VII and the agreements of West, East and Merger Sub contained in Section 4.11 (Expenses) and Section 6.5 (Effect of Termination and Abandonment) and the Confidentiality Agreement (as defined in Section 7.7) shall survive the termination of this Agreement. All other representations, warranties, covenants and agreements in this Agreement shall not survive the consummation of the Merger or the termination of this Agreement. 7.2 Modification or Amendment. Subject to the provisions of the applicable Laws, at any time prior to the Effective Time, the parties hereto may modify or amend this Agreement, by written agreement executed and delivered by duly authorized officers of the respective parties. 7.3 Waiver of Conditions. The conditions to each of the parties' obligations to consummate the Merger are for the sole benefit of such party and may be waived by such party in whole or in part to the extent permitted by applicable Laws. 7.4 Counterparts. This Agreement may be executed in any number of counterparts, each such counterpart being deemed to be an original instrument, and all such counterparts shall together constitute the same agreement. 7.5 Governing Law And Venue; Waiver Of Jury Trial. (A) THIS AGREEMENT SHALL BE DEEMED TO BE MADE IN AND IN ALL RESPECTS SHALL BE INTERPRETED, CONSTRUED AND GOVERNED BY AND IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICTS OF LAW PRINCIPLES THEREOF. The parties hereby irrevocably submit to the jurisdiction of the Bankruptcy Court, or if such court will not hear any such suit, the courts of the State of New York and the federal courts of the United States of America located in the State of New York, solely in respect of the interpretation and enforcement of the provisions of this Agreement and of the documents referred to in this Agreement, and in respect of the transactions contemplated hereby, and hereby waive, and agree not to assert, as a defense in any action, suit or proceeding for the interpretation or enforcement hereof or of any such document, that it is not subject thereto or that such action, suit or proceeding may not be brought or is not maintainable in said courts or that the venue thereof may not be appropriate or that this Agreement or any such document may not be enforced in or by such courts, and the parties hereto irrevocably agree that all claims with respect to such action or proceeding shall be heard and determined in such courts. The parties hereby consent to and grant any such court jurisdiction over the person of such parties and consent to the jurisdiction of any such court over the subject matter of such dispute and agree that mailing of process or other papers in connection with any such action or proceeding in the manner provided in -78- Section 7.6 or in such other manner as may be permitted by Law shall be valid and sufficient service thereof. (B) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii) EACH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 7.5. 7.6 Notices. Any notice, request, instruction or other document to be given hereunder by any party to the others shall be in writing and delivered personally or sent by registered or certified mail, postage prepaid, by facsimile or by overnight courier: If to East or Merger Sub: US Airways Group, Inc. 2345 Crystal Drive Arlington, Virginia 22227 Attention: Elizabeth K. Lanier Fax: 703-872-5208 With a copy to: Arnold & Porter LLP 1600 Tysons Boulevard Suite 900 McLean, Virginia 22102 Attention: Kevin Lavin, Esq. Fax: 202-942-5999 Arnold & Porter LLP 370 Seventeenth Street Suite 4500 Denver, Colorado 80202 Attention: Brian Leitch, Esq. Fax: 303-832-0428 -79- If to West: America West Holdings Corporation 111 West Rio Salado Parkway Tempe, Arizona 85281 Attention: James E. Walsh III Fax: 480-693-5155 With a copy to: Skadden, Arps, Slate, Meagher & Flom LLP 333 West Wacker Drive Suite 2100 Chicago, Illinois 60606 Attention: Peter Krupp, Esq. Timothy Pohl, Esq. Kimberly deBeers, Esq. Fax: 312-407-0411 or to such other persons or addresses as may be designated in writing by the party to receive such notice as provided above. Any notice, request, instruction or other document given as provided above shall be deemed given to the receiving party upon actual receipt, if delivered personally; three business days after deposit in the mail, if sent by registered or certified mail; upon confirmation of successful transmission if sent by facsimile (provided that if given by facsimile such notice, request, instruction or other document shall be followed up within one business day by dispatch pursuant to one of the other methods described herein); or on the next business day after deposit with an overnight courier, if sent by an overnight courier. 7.7 Entire Agreement. This Agreement (including any exhibits hereto), the West Disclosure Letter, the East Disclosure Letter and the Confidentiality Agreement, dated February 24, 2004, as amended on January 7, 2005, between East and West (the "Confidentiality Agreement") constitute the entire agreement, and supersede all other prior agreements, understandings, representations and warranties both written and oral, among the parties, with respect to the subject matter hereof. 7.8 Third Party Beneficiaries. Except as provided in Section 4.12 (Indemnification; Directors' and Officers' Insurance), this Agreement is not intended to, and does not, confer upon any Person other than the parties hereto any rights or remedies hereunder; provided, however, that the shareholders of West shall be deemed third party beneficiaries solely with respect to the right to receive the Applicable Per Share Merger Consideration pursuant to Article II hereof. 7.9 Obligations of East and of West. Whenever this Agreement requires a Subsidiary of East to take any action, such requirement shall be deemed to include an undertaking on the part of East to cause such Subsidiary to take such action. Whenever -80- this Agreement requires a Subsidiary of West to take any action, such requirement shall be deemed to include an undertaking on the part of West to cause such Subsidiary to take such action and, after the Effective Time, on the part of the Surviving Corporation to cause such Subsidiary to take such action. 7.10 Definitions. Each of the terms set forth in Annex A is defined in the Section of this Agreement set forth opposite such term. 7.11 Severability. The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof. If any provision of this Agreement, or the application thereof to any Person or any circumstance, is invalid or unenforceable, (a) a suitable and equitable provision shall be substituted therefor in order to carry out, so far as may be valid and enforceable, the intent and purpose of such invalid or unenforceable provision and (b) the remainder of this Agreement and the application of such provision to other Persons or circumstances shall not be affected by such invalidity or unenforceability, nor shall such invalidity or unenforceability affect the validity or enforceability of such provision, or the application thereof, in any other jurisdiction. 7.12 Interpretation; Construction. (a) The table of contents and headings herein are for convenience of reference only, do not constitute part of this Agreement and shall not be deemed to limit or otherwise affect any of the provisions hereof. Where a reference in this Agreement is made to a Section or Exhibit, such reference shall be to a Section of or Exhibit to this Agreement unless otherwise indicated. Whenever the words "include," "includes" or "including" are used in this Agreement, they shall be deemed to be followed by the words "without limitation." (b) The parties have participated jointly in negotiating and drafting this Agreement. In the event that an ambiguity or a question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provision of this Agreement. (c) Each of West and East has or may have set forth information in its respective disclosure letter in a section thereof that corresponds to the section of this Agreement to which it relates. A matter set forth in one section of a disclosure letter need not be set forth in any other section of the disclosure letter so long as its relevance to the latter section of the disclosure letter or section of the Agreement is readily apparent on the face of the information disclosed in the disclosure letter to the Person to which such disclosure is being made. The fact that any item of information is disclosed in a disclosure letter to this Agreement shall not be construed to mean that such information is required to be disclosed by this Agreement. Such information and the dollar thresholds set forth herein shall not be used as a basis for interpreting the terms "material," "West -81- Material Adverse Effect," "East Material Adverse Effect" or other similar terms in this Agreement. 7.13 Assignment. This Agreement shall not be assignable by operation of law or otherwise. Any purported assignment in violation of this Agreement will be void ab initio. -82- IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the duly authorized officers of the parties hereto as of the date first written above. US AIRWAYS GROUP, INC. By /s/ Bruce R. Lakefield ------------------------------------ Name: Bruce R. Lakefield Title: Chief Executive Officer AMERICA WEST HOLDINGS CORPORATION By /s/ W. Douglas Parker ------------------------------------ Name: W. Douglas Parker Title: Chairman and Chief Executive Officer BARBELL ACQUISITION CORP. By /s/ Stephen Morrell ------------------------------------ Name: Stephen Morrell Title: Chief Executive Officer -83- ANNEX A DEFINED TERMS Terms Section - ----- ------- ADs.................................................................3.1(i)(i) Additional Pre-Investment Value.......................................4.20(b) Agreement............................................................Preamble Alternative Transaction...............................................4.20(b) Applicable Per Share Merger Consideration.........................2.1(a)(iii) ATSB................................................................3.1(d)(i) Audit Date..........................................................3.1(e)(i) Auction Termination Date...............................................4.2(b) Bankruptcy and Equity Exception.....................................3.1(c)(i) Bankruptcy Code......................................................Recitals Bankruptcy Court.....................................................Recitals Bidding Procedures.....................................................4.2(a) Cases................................................................Recitals CERCLA.............................................................3.1(m)(iv) Certificate.......................................................2.1(a)(iii) Certificate of Merger.....................................................1.3 Class A Share.......................................................2.1(a)(i) Class A Merger Exchange Ratio.......................................2.1(a)(i) Class B Share......................................................2.1(a)(ii) Class B Merger Exchange Ratio......................................2.1(a)(ii) Closing...................................................................1.2 Closing Date..............................................................1.2 Code.................................................................Recitals Computer Software......................................................3.1(p) Confidentiality Agreement.................................................7.7 Confirmation Order...................................................Recitals Continuing Employees..................................................4.10(b) Contract...........................................................3.1(d)(ii) Copyrights.............................................................3.1(p) Costs.................................................................4.12(a) D&O Insurance.........................................................4.12(c) Debtor...............................................................Recitals Debtors..............................................................Recitals DGCL......................................................................1.1 DHS.................................................................3.1(d)(i) Directors' Recommendation..........................................3.1(c)(ii) DOT.................................................................3.1(d)(i) East.................................................................Preamble East Acquisition Proposal..............................................4.4(a) East Aircraft.......................................................3.2(s)(i) A-1 East Audit Date.....................................................3.2(f)(i) East CBAs...........................................................3.2(p)(i) East Common Stock...................................................2.1(a)(i) East Compensation and Benefit Plan..................................3.2(i)(i) East Disclosure Letter....................................................3.2 East ERISA Affiliate................................................3.2(i)(i) East Gates.........................................................3.2(l)(ii) East Leased Real Property.........................................3.2(l)(iii) East Material Adverse Effect...........................................3.2(a) East Material Contracts...........................................3.2(k)(iii) East Owned Real Property............................................3.2(l)(i) East Real Property................................................3.2(l)(iii) East Reports........................................................3.2(f)(i) East Slots.............................................................3.2(t) East Termination Fee...................................................6.5(b) East's Knowledge...................................................3.2(f)(iv) Effective Time............................................................1.3 Encumbrance............................................3.1(k)(ix), 3.2(l)(ix) Environmental Laws.................................................3.1(m)(ii) Environmental Liability...........................................3.1(m)(iii) Equity Investors.....................................................Recitals Equity Participation..................................................4.20(a) ERISA..............................................................3.1(h)(ii) Exchange Act........................................................3.1(d)(i) Exchange Agent.........................................................2.2(a) Exchange Fund..........................................................2.2(a) Excluded Class A Share..............................................2.1(a)(i) Excluded Class B Share.............................................2.1(a)(ii) Excluded Shares....................................................2.1(a)(ii) FAA.................................................................3.1(d)(i) FARs................................................................3.1(i)(i) FCC.................................................................3.1(d)(i) Final Order............................................................4.2(e) Financing Commitments................................................Recitals Foreign Corrupt Practices Act.......................................3.1(q)(i) GAAP...............................................................3.1(e)(ii) Governmental Consents..................................................5.1(b) Governmental Entity.................................................3.1(d)(i) Hazardous Substance................................................3.1(m)(iv) HSR Act.............................................................3.1(d)(i) Indemnified Parties...................................................4.12(a) Independent Director...................................................1.8(a) Intellectual Property..................................................3.1(p) IRS.................................................................3.1(h)(2) IT Assets..............................................................3.1(p) Laws................................................................3.1(i)(i) A-2 Licenses............................................................3.1(i)(i) Lien...................................................................3.1(b) Maximum Annual Premium................................................4.12(c) Merger...............................................................Recitals Merger Sub...........................................................Preamble Newco..................................................................4.7(e) Newco Material Adverse Effect..........................................4.7(e) Notice of West Superior Proposal.......................................4.3(a) NYSE...................................................................1.8(a) Order..................................................................5.1(c) Outstanding Class A Share...........................................2.1(a)(i) Outstanding Class B Share..........................................2.1(a)(ii) Outstanding Shares.................................................2.1(a)(ii) Parent Amended By-Laws.................................................1.7(a) Parent Charter.........................................................1.6(a) Patents................................................................3.1(p) Per Share Class A Merger Consideration..............................2.1(a)(i) Per Share Class B Merger Consideration.............................2.1(a)(ii) Person.................................................................2.2(b) Plan.................................................................Recitals Prospectus/Proxy Statement................................................4.5 RCRA...............................................................3.1(m)(iv) Release.............................................................3.1(m)(v) Removal, Remedial or Response Actions..............................3.1(m)(vi) Representatives................................................4.3(a), 4.4(a) S-4 Registration Statement................................................4.5 SEC....................................................................2.5(c) Securities Act......................................................3.1(d)(i) Shareholders Meeting......................................................4.6 Shares.............................................................2.1(a)(ii) SOX Act.............................................................3.1(e)(i) Subsidiary.............................................................3.1(a) Surviving Corporation.....................................................1.1 Surviving Corporation By-Laws..........................................1.7(b) Surviving Corporation Charter..........................................1.6(b) Takeover Statute.......................................................3.1(l) Tax....................................................................3.1(n) Tax Return.............................................................3.1(n) Taxes..................................................................3.1(n) Termination Date..........................................................6.2 Trade Secrets..........................................................3.1(p) Trademarks.............................................................3.1(p) Voting Agreement.....................................................Recitals West.................................................................Preamble West Acquisition Proposal..............................................4.3(a) West Additional Pre-Investment Value..................................4.20(a) A-3 West Aircraft.......................................................3.1(r)(i) West Awards............................................................2.5(b) West CBAs...........................................................3.1(o)(i) West Compensation and Benefit Plan..................................3.1(h)(i) West Convertible Debt..................................................3.1(b) West Disclosure Letter....................................................3.1 West ERISA Affiliate................................................3.1(h)(i) West Gates.........................................................3.1(k)(ii) West Leased Real Property.........................................3.1(k)(iii) West Material Adverse Effect...........................................3.1(a) West Material Contracts...........................................3.1(j)(iii) West Owned Real Property............................................3.1(k)(i) West Option............................................................2.5(a) West Preferred Shares..................................................3.1(b) West Real Property................................................3.1(k)(iii) West Reports........................................................3.1(e)(i) West Requisite Vote.................................................3.1(c)(i) West Slots.............................................................3.1(s) West Stock Plans.......................................................2.5(a) West Superior Proposal.................................................4.3(a) West Termination Fee...................................................6.5(c) West Warrants..........................................................3.1(b) West's Knowledge.................................................. 3.1(e)(iv) 2009 Notes.............................................................3.1(b) 2023 Notes.............................................................3.1(b) A-4 EX-99 3 ex_a-mergeragmt.txt EXHIBIT A TO MERGER AGREEMENT Exhibit A-1 to the Merger Agreement INVESTMENT AGREEMENT dated as of May 19, 2005 among US AIRWAYS GROUP, INC., AMERICA WEST HOLDINGS CORPORATION and ACE AVIATION HOLDINGS INC. TABLE OF CONTENTS
Page ---- ARTICLE I DEFINITIONS.............................................................................................2 Section 1.01 Definitions.....................................................................................2 ARTICLE II ISSUANCE AND PURCHASE OF NEW COMMON STOCK..............................................................8 Section 2.01 Issuance and Purchase of New Common Stock.......................................................8 Section 2.02 Closing.........................................................................................8 ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY.........................................................8 Section 3.01 Incorporation by Reference of Representations and Warranties in the Merger Agreement............8 Section 3.02 Authorization; No Contravention.................................................................9 Section 3.03 Consents; No Conflicts..........................................................................9 Section 3.04 Court Orders....................................................................................9 Section 3.05 Capitalization; Securities.....................................................................10 Section 3.06 Information Provided...........................................................................10 Section 3.07 Financial Advisors and Brokers.................................................................10 Section 3.08 Regulatory Status..............................................................................10 Section 3.09 Commercial Opportunity.........................................................................10 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF WEST................................................................11 Section 4.01 Incorporation by Reference of Representations and Warranties in the Merger Agreement...........11 Section 4.02 Authorization; No Contravention................................................................11 Section 4.03 Consents; No Conflicts.........................................................................11 Section 4.04 Court Orders...................................................................................12 Section 4.05 Information Provided...........................................................................12 Section 4.06 Financial Advisors and Brokers.................................................................12 Section 4.07 Commercial Opportunity.........................................................................12 ARTICLE V REPRESENTATIONS AND WARRANTIES OF INVESTOR.............................................................12 Section 5.01 Organization...................................................................................12 Section 5.02 Authorization; No Contravention................................................................12 Section 5.03 Consents; No Conflicts.........................................................................12 Section 5.04 Financial Advisors and Brokers.................................................................13 Section 5.05 Ownership of Equity Securities; Purpose of Investment..........................................13 Section 5.06 Financing......................................................................................13 ARTICLE VI PRE-CLOSING COVENANTS.................................................................................13 Section 6.01 Taking of Necessary Action.....................................................................13 Section 6.02 Notifications..................................................................................15 Section 6.03 Financial and Other Information................................................................15 Section 6.04 Delivery of Reports............................................................................15
i Section 6.05 Amendments to Merger Agreement; Etc............................................................15 Section 6.06 Publicity......................................................................................16 Section 6.07 Investor Financing.............................................................................16 Section 6.08 Issuances of Equity Securities.................................................................16 Section 6.09 Transfer Taxes.................................................................................17 Section 6.10 Bankruptcy Covenants...........................................................................17 ARTICLE VII CONDITIONS...........................................................................................18 Section 7.01 Conditions to Investor's Obligations...........................................................18 Section 7.02 Conditions to the Company's Obligations........................................................22 ARTICLE VIII TERMINATION.........................................................................................24 Section 8.01 Termination of Agreement.......................................................................24 Section 8.02 Effect of Termination..........................................................................25 ARTICLE IX MISCELLANEOUS.........................................................................................25 Section 9.01 Fees and Expenses..............................................................................25 Section 9.02 Survival of Representations, Warranties and Covenants..........................................25 Section 9.03 Specific Performance...........................................................................26 Section 9.04 General Interpretive Principles................................................................26 Section 9.05 Notices........................................................................................26 Section 9.06 Entire Agreement; Amendment....................................................................26 Section 9.07 No Other Representations or Warranties.........................................................26 Section 9.08 Counterparts...................................................................................27 Section 9.09 Governing Law..................................................................................27 Section 9.10 Successors and Assigns.........................................................................27 Section 9.11 No Third-Party Beneficiaries...................................................................27 Section 9.12 Confidentiality................................................................................27 EXHIBIT A Merger Agreement EXHIBIT B Commercial Agreements EXHIBIT C Stockholders Agreement Schedule 1 New Common Stock Schedule 3.05 Capitalization Schedule 7.01(q) Terms of Revised Profit Sharing Plan Schedule 9.05 Notices Information
ii INVESTMENT AGREEMENT THIS INVESTMENT AGREEMENT (together with all exhibits and schedules hereto and as the same may be amended, supplemented or otherwise modified from time to time in accordance with the terms hereof, the "Agreement"), dated as of May 19, 2005, by and among ACE Aviation Holdings Inc., a company organized under the laws of Canada (the "Investor"), US Airways Group, Inc., a Delaware corporation, and its successors (including, as the context may require, on or after the Effective Date, as reorganized pursuant to the Bankruptcy Code) (the "Company"), and America West Holdings Corporation, a Delaware corporation ("West"). W I T N E S S E T H: WHEREAS, on September 12, 2004, the Company and certain of its Subsidiaries (the "Debtor Subsidiaries" and together with the Company, the "Debtors") filed voluntary petitions (the "Cases") for protection under chapter 11 of the United States Bankruptcy Code (the "Bankruptcy Code") in the United States Bankruptcy Court for the Eastern District of Virginia, Alexandria Division (the "Bankruptcy Court") to enable the Debtors to be restructured pursuant to one or more plans of reorganization (collectively, the "Plan"); WHEREAS, the Debtors have continued in the possession of their assets and in the management of their businesses pursuant to Sections 1107 and 1108 of the Bankruptcy Code; WHEREAS, pursuant to the Plan, the Company intends to cancel all of the existing outstanding Equity Securities of the Company upon the Effective Date and issue the New Common Stock; WHEREAS, pursuant to the Plan, the Company, Barbell Acquisition Corp., a Delaware corporation ("Merger Sub"), and West have entered into an Agreement and Plan of Merger (together with all of the schedules, exhibits and other attachments thereto, the "Merger Agreement"), attached as Exhibit A hereto; WHEREAS, subject to the other terms and conditions contained herein, the Investor desires to commit to provide equity financing to the Company; WHEREAS, the Company intends to issue and sell to Investor, and Investor intends to purchase from the Company, shares of New Common Stock (such purchase, issuance and sale, the "Investment") in exchange for the Investment Price, all on the terms provided in this Agreement; WHEREAS, the Company and the Investor intend to enter into certain commercial arrangements, on terms substantially as set forth in Exhibits B-1 through B-4, and in form and substance satisfactory to the Company and Investor ("Commercial Agreements"); WHEREAS, pursuant to the Other Investment Agreements, the Company intends to issue and sell to Par Investment Partners, L.P., Peninsula Investment Partners, L.P. and Eastshore Aviation, LLC (the "Other Investors") shares of New Common Stock pursuant to 1 investment agreements entered into by the Other Investors in the forms previously provided to Investor; WHEREAS, the Investor intends to enter into a Stockholders Agreement (the "Stockholders Agreement"), substantially in the form of Exhibit C hereto, with the Company and the Other Investors; WHEREAS, the parties intend that the transactions contemplated hereby will be implemented by and take effect simultaneously with the implementation of the Plan on the Effective Date (except as to those transactions that are expressly intended to take effect at another date); WHEREAS, the parties intend that all of the transactions contemplated hereby are intended to be treated as a single integrated transaction subject to the approval of the Bankruptcy Court as soon as reasonably practicable after the date hereof; and WHEREAS, the Company, West and the Investor desire to make certain representations, warranties, covenants and agreements in connection with the transactions contemplated herein. NOW, THEREFORE, in consideration of the premises and the mutual representations, warranties, covenants and agreements contained herein, the parties hereto agree as follows, in the case of the Company, subject to Bankruptcy Court approval of this Agreement: ARTICLE I DEFINITIONS Section 1.01 Definitions. As used in this Agreement, the following terms shall have the meanings set forth below: "Affiliate" means, with respect to any specified Person, a Person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the specified Person, where "control" (including the terms "controlling," "controlled by" and "under common control with") means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract, or otherwise; provided, however, that when used with respect to the Company, "Affiliate" shall not include Investor or any Affiliate thereof. "Agreement" has the meaning set forth in the preamble hereto. "Air Wisconsin DIP Agreement" means the Junior Secured Debtor-in-Possession Credit Facility Agreement, dated as of February 18, 2005, by and among US Airways, Inc., as Borrower, certain affiliates thereof as guarantors, and Eastshore Aviation, LLC, as lender, as amended, supplemented or otherwise modified from time to time. 2 "Alternative Transaction" means (a) any reorganization of the Company or (b) any sale, merger, consolidation, joint venture, recapitalization, sale of assets or equity interests or other combination or disposition or similar transaction or series of transactions involving at least 40%, on a fair market value basis, of the assets of the Company and its Operating Subsidiaries, taken as a whole, or 40% of the equity securities of the Company. "Approvals" has the meaning set forth in Section 7.01(e) hereof. "ATSB" means the Air Transportation Stabilization Board, created pursuant to Section 102 of the Air Transportation Safety and System Stabilization Act, P.L. 107-42, as the same may be amended from time to time. "Bankruptcy Code" has the meaning set forth in the recitals hereto. "Bankruptcy Court" has the meaning set forth in the recitals hereto. "Board" means the board of directors of the Company (including, with respect to periods following the Effective Date, the Company). "Business Day" means any day other than a Saturday, Sunday or a day on which banking institutions of the State of New York are authorized by law or executive order to close. "Bylaws" means the bylaws of the Company, as amended from time to time (including, with respect to periods following the Effective Date). "Cases" has the meaning set forth in the recitals hereto. "Certificate of Incorporation" means the Certificate of Incorporation of the Company, as amended from time to time, including any certificate of designation relating to any Equity Securities of the Company (including, in each case, with respect to periods following the Effective Date). "Certificated Air Carrier" means a Citizen of the United States holding an aircraft operating certificate issued pursuant to Chapter 447 of Title 49 of the United States Code or any analogous successor provision of the United States Code, for aircraft capable of carrying ten or more individuals or 6,000 pounds or more of cargo or that otherwise is certified or registered to the extent required to fall within the purview of 11 U.S.C. Section 1110 or any analogous successor provision of the Bankruptcy Code. "Chapter 11" means Chapter 11 of the Bankruptcy Code. "Citizen of the United States" has the meaning given to such term in Section 40102(a)(15) of Title 49 of the Transportation Code, or any subsequent legislation that amends, supplements or supersedes such provisions. "Closing" means the closing of the issuance, sale and purchase of the New Common Stock pursuant to Section 2.01 hereof. 3 "Closing Date" has the meaning set forth in Section 2.02(a) hereof. "Company" has the meaning set forth in the preamble hereto. "Confirmation Order" means a Final Order of the Bankruptcy Court approving the Plan. "Debtors" has the meaning set forth in the recitals hereto. "Debtor Subsidiaries" has the meaning set forth in the recitals hereto. "Disclosure Statement" means a disclosure statement with respect to the Plan. "Effective Date" means the effective date of the Plan. "Equity Securities" shall mean (i) capital stock of, or other equity interests in, any Person, (ii) securities or other instruments convertible into or exchangeable for shares of capital stock, voting securities or other equity interests in such Person or (iii) options, warrants, investment agreements or other rights to acquire the securities described in clauses (i) and (ii), whether fixed or contingent, matured or unmatured, contractual, legal, equitable or otherwise. "Fair Market Value" shall mean the fair market value of the New Common Stock, as determined by the Board. If the New Common Stock is traded on an over-the-counter securities market or national securities exchange, "Fair Market Value" shall mean the closing sales price of the New Common Stock reported on such over-the-counter market or such national securities exchange on the applicable date or, if no sales of New Common Stock have been reported for that date, on the next preceding date for which sales where reported. "Final Order" means an order or judgment of the Bankruptcy Court, or other court of competent jurisdiction, as entered on the docket in the Cases or the docket of any other court of competent jurisdiction, that has not been reversed, stayed, modified or amended, and as to which the time to appeal or seek reargument, reconsideration, or certiorari has expired and no appeal, motion for reconsideration or reargument or petition for certiorari has been timely taken, or as to which any appeal that has been taken or any petition for certiorari, motion for reconsideration or reargument that has been or may be filed has been resolved by the highest court to which the order or judgment was appealed or from which reargument, reconsideration, or certiorari was sought and the time to take any further appeal, petition for certiorari or move for reargument shall have expired. "Fully Diluted Basis" means the number of shares of New Common Stock, without duplication, which are issued and outstanding or owned or held, as applicable, at the date of determination plus the number of shares of New Common Stock issuable pursuant to any Equity Securities then outstanding convertible into or exchangeable or exercisable for (whether or not subject to contingencies or passage of time, or both) shares of New Common Stock. "Governmental Authority" means the government of the United States of America, any other nation or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising 4 executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government. "Hearing" means the hearing conducted in the Cases in the Bankruptcy Court seeking approval of the Motion. "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the regulations promulgated thereunder. "Investor" has the meaning set forth in the preamble hereto. "Investor Director" means any member of the Board of the Company nominated by Investor in accordance with the Stockholders Agreement. "Investment" has the meaning set forth in the recitals hereto. "Investment Price" has the meaning set forth in Section 2.01 hereof. "Law" means any law, treaty, statute, ordinance, code, rule or regulation of a Governmental Authority or judgment, decree, order, writ, award, injunction or determination of a court or other Governmental Authority. "Lien" means any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge, or preference, priority or other security interest or preferential arrangement of any kind or nature whatsoever intended for security (including any conditional sale or other title retention agreement, any easement, right of way or other encumbrance on title to real property, and any financing lease having substantially the same economic effect as any of the foregoing). "Material Adverse Effect" on any Person means (x) a material adverse effect on the financial condition, assets, liabilities, business or results of operations of such Person and its Subsidiaries taken as a whole, excluding any such effect resulting from (I) changes or conditions generally affecting the U.S. economy or financial markets, (II) changes or conditions generally affecting any of the segments of the airline industry in which such Person or any of its Subsidiaries operates, to the extent such conditions or changes do not disproportionately impact such Person or its Subsidiaries (III) changes or conditions resulting from divestiture required in order to satisfy Section 5.1(b) of the Merger Agreement or (IV) the announcement or consummation of the Merger Agreement, or (y) an effect that would prevent, materially delay or materially impair the ability of such Person to consummate the Merger or the ability of such Person or the Investor to consummate the transactions contemplated by this Agreement or to enter into or perform obligations under the Commercial Agreements. For purposes of this definition, any suspension of commercial air travel in the United States for a period of 72 hours or more shall be deemed to have a Material Adverse Effect on the Company and West. "Merger" has the meaning assigned to such term in the Merger Agreement. "Merger Agreement" has the meaning set forth in the recitals hereto. 5 "Merger Sub" has the meaning set forth in the recitals hereto. "Motion" means the motion and any supporting papers seeking approval of the Transactions, in form and substance reasonably acceptable to Investor and providing, inter alia, not less than a ten (10) day notice period prior to the Hearing and providing for confidential treatment of portions of the Transaction Documents as mutually agreed by the Company and the Investor. "New Common Stock" means the class of common stock of the Company authorized under the Certificate of Incorporation attached as Exhibit C to the Merger Agreement and to be issued to West shareholders pursuant to the Merger. "Operating Companies" means, with respect to the Company, US Airways, PSA Airlines, Inc., a Pennsylvania corporation, Piedmont Airlines, Inc., a Maryland corporation and Material Services Company, Inc., a Delaware corporation. "Other Investors" has the meaning set forth in the recitals hereto. "Other Investments" means the purchase, issuance and sale by the Company to the Other Investors of shares of New Common Stock pursuant to the Other Investment Agreements. "Other Investment Agreements" means the investment agreements among the Company, West and each of the Other Investors. "Person" means any individual, corporation, company, association, partnership, limited liability company, joint venture, trust, unincorporated organization, or Governmental Authority. "Plan" has the meaning set forth in the recitals hereto. "Postpetition," when used with respect to any agreement, instrument or any obligation arising thereunder, any claim or proceeding or any other matter, means an agreement or instrument that was first entered into or first became effective, an obligation, claim or proceeding that first arose or was first instituted, or another matter that first occurred, after the commencement of the Cases, or that was entered into or became effective, or arose, was instituted or occurred, before commencement of the Cases but has been assumed in the Cases. "Regulatory Approvals" means, to the extent necessary in connection with the consummation of the transactions contemplated by the Transaction Documents, any and all certificates, permits, licenses, franchises, concessions, grants, consents, approvals, orders, registrations, authorizations, waivers, variances or clearances from, or filings or registrations with, Governmental Authorities (and shall not include clearance or approval under the HSR Act or any other Law that may require waiting periods prior to consummation of the Transactions). "Representatives" means, with respect to any Person, such Person's officers, directors, employees, agents, attorneys, accountants, consultants, equity financing partners or financial advisors or other Person associated with, or acting on behalf of, such a Person. 6 "Republic" means Republic Airways Holdings Inc., a Delaware corporation. "SEC" means the U.S. Securities and Exchange Commission. "Securities Act" means the U.S. Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder. "Stockholders Agreement" has the meaning set forth in the recitals hereto. "Subsidiary" means as to any Person, any other Person of which more than fifty percent (50%) of the shares of the voting stock or other ownership interests are owned or controlled, or the ability to select or elect more than fifty percent (50%) of the directors or similar managers is held, directly or indirectly, by such first Person or one or more of its Subsidiaries or by such first Person and one or more of its Subsidiaries. "Title 49" means Title 49 of the Code of Federal Regulations, as amended and in effect from time to time. "Transactions" means the Merger, the execution, delivery and performance of this Agreement and each Other Investment Agreement (including the issuance of New Common Stock hereunder and thereunder), the Stockholders Agreement, the Commercial Agreements and the execution, delivery and performance of the documents described in Articles II and VI hereof, in each case by the applicable party thereto. "Transaction Contracts" means all of the Transaction Documents other than the Plan, the Confirmation Order and the order of the Bankruptcy Court approving the break-up fee set forth in Section 8.02(b). "Transaction Documents" means this Agreement, the Plan, the Confirmation Order, the Merger Agreement, the Commercial Agreements, each Other Investment Agreement, the Stockholders Agreement, the order of the Bankruptcy Court approving the break-up fee set forth in Section 8.02(b), the documents described in Articles II and VI and all other documents necessary to consummate the Transactions and other arrangements contemplated hereby. "Transportation Code" means Title 49 of the United States Code which, among other things, recodified and replaced the U.S. Transportation Code of 1958 and the regulations promulgated thereunder, or any subsequent legislation that amends, supplements or supersedes such provisions. "US Airways" means US Airways, Inc., a Delaware corporation. "West" has the meaning set forth in the preamble hereto. 7 ARTICLE II ISSUANCE AND PURCHASE OF NEW COMMON STOCK Section 2.01 Issuance and Purchase of New Common Stock. Upon the terms and subject to the conditions set forth in this Agreement, at the Closing, the Company will issue, sell and deliver to Investor, and Investor will purchase from the Company, that number of shares of New Common Stock set forth opposite Investor's name on Schedule 1 hereto, for the aggregate purchase price set forth opposite Investor's name on Schedule 1 hereto (the "Investment Price"). Section 2.02 Closing. (a) Subject to the satisfaction or, if permissible, waiver of the conditions set forth in Sections 7.01 and 7.02 hereof, the Closing shall take place at the offices of Arnold & Porter LLP, 555 Twelfth Street, NW, Washington D.C. 20004, at 10:00 a.m., Washington D.C. time, on the first Business Day following the Effective Time (as such term is defined in the Merger Agreement) or at such other time, date and place as the parties may agree (the date on which the Closing occurs, the "Closing Date"); provided that the parties shall use reasonable best efforts to have the Closing take place on the first Business Day following the Effective Time. (b) At the Closing, (i) the Company shall deliver to Investor certificates representing the shares of New Common Stock to be purchased by, and sold to, Investor pursuant to Section 2.01 hereof (registered in the names and in the denominations designated by Investor at least two Business Days prior to the Closing Date), together with the other documents, certificates and opinions to be delivered pursuant to Section 7.01 hereof, and (ii) Investor, in full payment for the shares of New Common Stock to be purchased by, and sold to, Investor pursuant to Section 2.01 hereof, shall pay to the Company as provided in Section 2.01 hereof (in immediately available funds by wire transfer to the account designated by the Company, or by such other means as may be agreed between the parties hereto), Investor's Investment Price (less any amounts due as of the Closing Date to Investor pursuant to Section 9.01 hereof), and shall deliver the certificate required pursuant to Section 7.02(b) hereof. ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY The Company hereby represents and warrants to Investor as follows: Section 3.01 Incorporation by Reference of Representations and Warranties in the Merger Agreement. The Company hereby incorporates by reference, for the benefit of Investor as though set forth herein, the following representations and warranties (including the defined terms and disclosure items included therein and related thereto) in the Merger Agreement: Sections 3.2(a), (f), (g), (h), (i), (j), (k), (l), (n), (o), (p), (q), (r), (s), (t), (u), (v), (w) and (x). Each such representation which states that "East" (i.e., US Airways Group, Inc.) "has made available to West" certain materials shall be deemed to read "has made available to Investor" for purposes of this incorporation by reference. 8 Section 3.02 Authorization; No Contravention. The Transactions to be consummated by the Company and the Operating Companies and the performance of the Transaction Contracts are within the respective corporate power and authority of the Company and the Operating Companies (subject and after giving effect to any required approvals of the Bankruptcy Court (including, without limitation, to the extent applicable, the Confirmation Order) and the Plan) and have been, and each of the Commercial Agreements will be when executed and at Closing, duly authorized by all necessary corporate and, if required, stockholder action. This Agreement, the Merger Agreement, each Other Investment Agreement, the Stockholders Agreement and each other Transaction Contract entered into as of the date hereof have been duly executed and delivered by the Company and the Operating Companies party thereto (as applicable) and constitute (subject and after giving effect to any required approvals of the Bankruptcy Court (including, without limitation, to the extent applicable, the Confirmation Order) and the Plan), a legal, valid and binding obligation of the Company and such Operating Companies, respectively, enforceable in accordance with its terms. Section 3.03 Consents; No Conflicts. Other than the notices, reports, filings, consents, registrations, approvals, permits or authorizations required under the Hart Scott Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), with respect to the Company and the Operating Companies, the execution and delivery of each of the Transaction Contracts and the consummation of the Transactions (i) does not require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority (subject and after giving effect to any required approvals of the Bankruptcy Court (including, without limitation, to the extent applicable, the Confirmation Order) and the Plan), except such as have been obtained or made and are in full force and effect and except where failure to obtain such consent, approval, registration, filing or other action would not reasonably be expected to have a Material Adverse Effect on the Company, (ii) will not violate, conflict with or result in a breach, violation or default under (A) any applicable law, rule or regulation or any order of or restriction imposed by any Governmental Authority and except, in each case, where such violation of applicable law or regulation would not reasonably be expected to have a Material Adverse Effect on the Company or (B) the Certificate of Incorporation or Bylaws or any other organizational documents of the Company or any of its Subsidiaries, (iii) will not violate, conflict with or result in a breach, or default under any Postpetition agreement, contract or obligation or Postpetition loan agreement or any other Postpetition indebtedness agreement or instrument of indebtedness binding upon the Company, any Operating Company or any of their respective Subsidiaries or its assets except where such default, breach or violation would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on the Company and (iv) will not result in the creation or acceleration of any obligations or imposition of any Lien on any assets or properties of the Company or any of its Subsidiaries. Section 3.04 Court Orders. Subject and after giving effect to any required approvals of the Bankruptcy Court (including, without limitation, to the extent applicable, the Confirmation Order) and the Plan, the performance of any action by the Company or the Operating Companies required or contemplated by this Agreement or any other Transaction Document is not restrained or enjoined by any order of the Bankruptcy Court or by any Governmental Authority (either temporarily, preliminarily or permanently). 9 Section 3.05 Capitalization; Securities. Upon the Closing and after giving effect to the Confirmation Order, the Plan, the Merger, the Investment and the Other Investments, the issued and outstanding capital stock of the Company shall consist solely of New Common Stock as provided on Schedule 3.05. Except as set forth on Schedule 3.05, upon the Closing and after giving effect to the Confirmation Order, the Plan, the Merger, the Investment and the Other Investments, there will not be any outstanding subscriptions, options, warrants, commitments, agreements or arrangements related to the issuance or sale of outstanding Equity Securities or securities or other instruments convertible into or exchangeable for any Equity Securities of the Company Upon the Closing Date, the New Common Stock to be issued and delivered to the Investor pursuant to the terms hereof, shall have been duly authorized and validly issued, fully paid, nonassessable and not subject to preemptive or similar rights of third parties or reserved for issuance in accordance with the terms of the Plan and Confirmation Order. The rights, preferences and privileges of the capital stock of the Company shall be as set forth in the Certificate of Incorporation of the Company, as amended pursuant to the Plan and in effect upon the Closing in the form attached as Exhibit C to the Merger Agreement. Section 3.06 Information Provided. A true and correct copy of the Merger Agreement, and of each Other Investment Agreement, including each schedule, exhibit and other attachment or related agreement thereto and including in each case any amendments, supplements and modifications through the date hereof, has been provided to Investor. There are no other agreements, arrangements, understandings or commitments, written or oral, of any nature, between any of the Other Investors or their affiliates, on the one hand, and the Company, West or any of their affiliates on the other, relating to the transactions contemplated by the Transaction Documents. Section 3.07 Financial Advisors and Brokers. Except for Seabury Aviation Advisors LLC and/or its Affiliates ("Seabury"), no Person has acted, directly or indirectly, as a broker, finder or financial advisor of the Company or any of the Operating Companies in connection with the Transaction Documents or the transactions contemplated thereby, and except for fees payable to Seabury by the Company, no Person acting for or on behalf of the Company or any of the Operating Companies is entitled to receive any broker's, finder's or similar fee or commission in respect thereof based in any way on any agreement, arrangement or understanding made by or on behalf of the Company or any of the Operating Companies. Section 3.08 Regulatory Status. Neither the Company, nor any Operating Company nor any of their respective Subsidiaries is (i) an "investment company" as defined in, or subject to regulation under, the Investment Company Act of 1940 or (ii) a "holding company" as defined in, or subject to regulation under, the Public Utility Holding Company Act of 1935. US Airways is a Certificated Air Carrier. Section 3.09 Commercial Opportunity. The Company believes in good faith (after consultation with West) that the Company, West and their Subsidiaries will have, in the aggregate, not less than US$280,000,000 per annum of Maintenance, Repair and Overhaul services work immediately available to be outsourced to Investor or its affiliates as of the Closing Date. 10 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF WEST West hereby represents and warrants to Investor as follows: Section 4.01 Incorporation by Reference of Representations and Warranties in the Merger Agreement. West hereby incorporates by reference, for the benefit of Investor as though set forth herein, the following representations and warranties (including the defined terms and disclosure items related thereto) in the Merger Agreement: Sections 3.1(a), (b), (e), (f), (g), (h), (i), (j), (k), (m), (n), (o), (p), (q), (r), (s), (t), (u), (v) and (w). Each such representation which states that "West" (i.e., America West Holdings Corporation) "has made available to East" certain materials shall be deemed to read "has made available to Investor" for purposes of this incorporation by reference. Section 4.02 Authorization; No Contravention. The Transactions to be consummated by West and performance of the Transaction Contracts to which West is or will be a party are within the corporate power and authority of West and have been, and each of the Commercial Agreements to which West will be a party will be, when executed and at Closing, duly authorized by all necessary corporate and, if required, stockholder action. This Agreement, the Merger Agreement, each Other Investment Agreement, and each other Transaction Contract to which West is a party, entered into as of the date hereof, have been duly executed and delivered by West and constitute a legal, valid and binding obligation of West, enforceable in accordance with its terms. Section 4.03 Consents; No Conflicts. Other than the notices, reports, filings, consents, registrations, approvals, permits or authorizations required under the HSR Act, with respect to West, the execution and delivery of each of the Transaction Contracts to which West is or will be a party and the consummation of the Transactions (i) does not require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority (subject and after giving effect to any required approvals of the Bankruptcy Court (including, without limitation, to the extent applicable, the Confirmation Order) and the Plan), except such as have been obtained or made and are in full force and effect and except where failure to obtain such consent, approval, registration, filing or other action would not reasonably be expected to have a Material Adverse Effect on West, (ii) will not violate, conflict with or result in a breach, violation or default under (A) any applicable law, rule or regulation or any order of or restriction imposed by any Governmental Authority and except, in each case, where such violation of applicable law or regulation would not reasonably be expected to have a Material Adverse Effect on West or (B) the Certificate of Incorporation or Bylaws or any other organizational documents of West or any of its Subsidiaries, (iii) will not violate, conflict with or result in a breach, or default under any agreement, contract or obligation or loan agreement or any other indebtedness agreement or instrument of indebtedness binding upon West or any of its Subsidiaries or its assets except where such default, breach or violation would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on West and (iv) will not result in the creation or acceleration of any obligations or imposition of any Lien on any assets or properties of West or any of its Subsidiaries. 11 Section 4.04 Court Orders. Subject and after giving effect to any required approvals of the Bankruptcy Court (including, without limitation, to the extent applicable, the Confirmation Order) and the Plan, the performance of any action by West required or contemplated by this Agreement or any other Transaction Document is not restrained or enjoined by any order of the Bankruptcy Court or by any Governmental Authority (either temporarily, preliminarily or permanently). Section 4.05 Information Provided. West has delivered to Investor a true and correct copy of the Merger Agreement, including any amendments, supplements and modifications through the date hereof. Section 4.06 Financial Advisors and Brokers. Except for Greenhill & Co., LLC and/or its Affiliates ("Greenhill") and TPG Partners, L.P. and/or its Affiliates ("TPG"), no Person has acted, directly or indirectly, as a broker, finder or financial advisor of West in connection with the Transaction Documents or the transactions contemplated thereby, and except for fees payable to Greenhill and TPG by West, no Person acting for or on behalf of West is entitled to receive any broker's, finder's or similar fee or commission in respect thereof based in any way on any agreement, arrangement or understanding made by or on behalf of West. Section 4.07 Commercial Opportunity. West believes in good faith (after consultation with the Company) that the Company, West and their Subsidiaries will have, in the aggregate, not less than US$280,000,000 per annum of Maintenance, Repair and Overhaul services work immediately available to be outsourced to Investor or its affiliates as of the Closing Date. ARTICLE V REPRESENTATIONS AND WARRANTIES OF INVESTOR Investor represents and warrants to the Company as follows: Section 5.01 Organization. It is an entity duly organized under the laws of the jurisdiction of its formation having all requisite power and authority and all requisite governmental licenses, authorizations, consents and approvals to execute, deliver and perform its obligations under this Agreement and the Stockholders Agreement. Section 5.02 Authorization; No Contravention. The Transactions to be consummated by Investor and performance of the Transaction Contracts to which Investor is or will be a party are within the corporate power and authority of Investor and each of the Commercial Agreements to which Investor will be a party will be, when executed and at Closing, duly authorized by all necessary corporate and, if required, stockholder action. This Agreement, and each other Transaction Contract to which Investor is a party, entered into as of the date hereof, have been duly executed and delivered by Investor and constitute a legal, valid and binding obligation of Investor, enforceable in accordance with its terms. Section 5.03 Consents; No Conflicts. Except for (i) the filing of a notification and report form under the HSR Act and the termination or expiration of the waiting period under the HSR Act, (ii) the filing of any other required applications or notices with any Governmental 12 Authority and approval of such applications and notices, and (iii) approval by the Bankruptcy Court, no Approval is necessary or required in connection with the execution, delivery or performance by, or enforcement against, Investor of this Agreement or the Transaction Contracts to which Investor is or will be a party and the consummation of the Transactions contemplated hereby and thereby, except for such Approvals that would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of Investor to consummate the Investment, and all of which have been duly obtained, taken, given or made and are in full force and effect, except for Approvals that would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of Investor to consummate the Investment. Section 5.04 Financial Advisors and Brokers. Except for Goldman, Sachs & Co. and/or its Affiliates ("Goldman") and Affiliates of Investor, no Person has acted directly or indirectly as a broker, finder or financial advisor of the Investor in connection with this Agreement, the Stockholders Agreement or the transactions contemplated hereby or thereby, and, other than fees that may be payable to Goldman or Affiliates of Investor by Investor, no Person acting for or on behalf of Investor is entitled to receive any broker's, finder's or similar fee or commission in respect thereof based in any way on any agreement, arrangement or understanding made by or on behalf of Investor. Section 5.05 Ownership of Equity Securities; Purpose of Investment. Investor is acquiring the New Common Stock under this Agreement solely for the purpose of investment and not with a view to, or for sale in connection with, any distribution thereof in violation of the Securities Act and applicable state securities or "blue sky laws". Investor is an "Accredited Investor" as such term is defined in Regulation D of the Securities Act. Section 5.06 Financing. Investor (or its assignee, as permitted by Section 9.10 who acquires the New Common Stock hereunder at the Closing) has sufficient and adequate resources to consummate the transactions contemplated by this Agreement. ARTICLE VI PRE-CLOSING COVENANTS Section 6.01 Taking of Necessary Action. (a) The Company, West and Investor (solely with respect to the Investment) shall cooperate with each other and use (and shall cause their respective Subsidiaries to use) their respective reasonable best efforts to take or cause to be taken all actions, and do or cause to be done all things, necessary, proper or advisable on its part under this Agreement and applicable Law to consummate and make effective the Transactions as soon as practicable, including preparing and filing as promptly as practicable all documentation to effect all necessary notices, reports and other filings (including, without limitation, appropriate filings pursuant to the HSR Act) and to obtain as promptly as practicable all consents, registrations, approvals, permits and authorizations necessary or advisable to be obtained from any third party and/or any Governmental Authority in order to consummate the Transactions. In exercising the foregoing rights, the Company, West and Investor shall act reasonably and as promptly as practicable. The Company's, West's and (solely with respect to the Investment) Investor's obligations under this Section 6.01 shall include, without limitation, 13 the obligation to use their respective reasonable best efforts to defend any lawsuits or legal proceedings, whether judicial or administrative, or any other actions by a Governmental Authority, challenging the Transactions, including using reasonable best efforts to seek to have any stay or other injunctive relief which would prevent or materially delay or impair the consummation of the Transactions entered by any court or other Governmental Authority reversed on appeal or vacated. For purposes of this Section 6.01, as it relates to Investor, "reasonable best efforts" shall include Investor's agreement to (i) hold the Investor's equity interest in the Company in one or more subsidiaries separate from the company that holds its airline assets, if any, and (ii) nominate an Investor Director (as defined in the Stockholders Agreement) whose service would not conflict with applicable law. Except as provided in the immediately preceding sentence, Investor shall not be required (1) to divest, or agree to divest, any of its businesses or assets or any interest therein, or (2) to take or agree to take any other action or agree to any limitation, restriction or condition that could reasonably be expected to materially impair the benefits to Investor expected, as of the date of this Agreement, to be realized from the transactions contemplated hereby. (b) Without limiting the foregoing, the parties hereto agree to work in good faith to negotiate and document definitive Commercial Agreements having the terms set forth on Exhibits B-1 through B-4 hereto, and with such additional terms as may be necessary to give effect thereto, as promptly as practicable and, if possible, within the timeframe specified in any such Exhibits. All parties agree that claims by Investor and its Affiliates, on the one hand, and claims by East, West and/or their respective Affiliates, on the other hand, may be offset and netted against one another as if Investor and its Affiliates were one entity and East, West and their respective Affiliates were one entity, and the definitive Commercial Agreement shall so provide. (c) Each of the Company, West and Investor shall, in connection with obtaining the approvals referenced in Section 6.01(a), unless unrelated to the Investor, the Investment or the Commercial Agreements, use its reasonable best efforts to (i) subject to applicable law, permit the other party or the other party's outside counsel to review in advance any proposed written communication between it and any Governmental Authority, (ii) promptly inform each other of any communication (or other correspondence or memoranda) received by such party from, or given by such party to, any other Governmental Authority and of any material communication received or given in connection with any proceeding by a private party, in each case regarding any of the transactions contemplated hereby, (iii) consult with each other in advance to the extent practicable of any meeting or conference with any Governmental Authority or, in connection with any proceeding by a private party, with any other Person, and to the extent permitted by the applicable Governmental Authority or other Person, give the other party the opportunity to attend and participate in such meetings and conferences, and (iv) furnish each other with copies of all correspondence, filings and written communications between them or their Subsidiaries or Affiliates on one hand, and any such Governmental Authority or its respective staff on the other hand, with respect to this Agreement and the transactions contemplated hereby, except that (A) any materials concerning Investor's valuation of the transaction may be redacted and (B) any proprietary information of one party not previously disclosed to the other party may be disclosed only to the other party's outside counsel, at the option of the disclosing party. 14 (d) The Company shall, in coordination with Investor (i) file with the Bankruptcy Court a bidding procedures motion, reasonably satisfactory to Investor, seeking approval of the break-up fee set forth in Section 8.02(b) hereof and the expense reimbursement provisions set forth in Section 9.01 hereof, (ii) diligently seek approval of the Transactions (consistent with the Bidding Procedures, as hereinafter defined), and (ii) if the Company has determined that the Merger represents a highest and best Qualified Competing Plan Proposal (as defined in the order approving the bidding procedures), (A) file with the Bankruptcy Court, and diligently seek approval of, the Disclosure Statement (with the Plan attached as an exhibit thereto) reasonably satisfactory to Investor and (B) seek to obtain, as expeditiously as possible, a Confirmation Order with respect to the Plan that is reasonably satisfactory to the Investors. Section 6.02 Notifications. At all times prior to the Closing Date, Investor shall promptly notify the Company and each of the Company and West shall promptly notify Investor in writing of any fact, change, condition, circumstance or occurrence or nonoccurrence of any event that will or is reasonably likely to result in such party's representations and warranties to be untrue or inaccurate in any material respect or the failure to satisfy the conditions to be complied with or satisfied by it hereunder; provided, however, that the delivery of any notice pursuant to this Section 6.02 shall not be deemed to alter or amend such party's representations or warranties or limit or otherwise affect the remedies available hereunder to any party giving or receiving such notice. Section 6.03 Financial and Other Information. From and after the date hereof, each of the Company and West shall, and shall cause each of their respective Subsidiaries and Representatives to, afford to Investor, its Affiliates and their respective Representatives, including qualified prospective lenders to Investor that sign appropriate confidentiality agreements, complete access, upon reasonable notice and in such manner as will not unreasonably interfere with the conduct of such companies' respective businesses, to their and their respective Subsidiaries respective facilities, properties, books, contracts, commitments, records (including information regarding any material pending or threatened legal proceeding to which any of such companies is, or reasonably expects to be, a party and negotiations relating to any labor agreements or labor disputes involving the Company, West or any of their respective Subsidiaries), key personnel, officers, independent accountants and legal counsel; provided, however, that neither the Company nor West will be required to provide access to employee personnel files if providing such files would be unreasonable or a violation of applicable Law. Section 6.04 Delivery of Reports. Each of the Company and West and their respective Subsidiaries shall deliver to Investor, promptly following delivery to the ATSB, the reports concerning the weekly and monthly operating and financial data of the Company or West, as applicable, and their respective Subsidiaries that are delivered to the ATSB. Section 6.05 Amendments to Merger Agreement; Etc. Other than pursuant to and in accordance with Section 4.20 of the Merger Agreement, the Company and West will not amend the Merger Agreement, the Plan, any Other Investment Agreement or any other Transaction Document, in each case without the prior written approval of the Investor, such approval not to be unreasonably withheld (it being understood that in such connection Investor is not required to consider the interests of any other person), and, notwithstanding the foregoing, neither the Company nor West shall waive any condition to the consummation of the Merger or the Plan without the prior written approval of Investor. 15 Section 6.06 Publicity. Prior to the Closing, except as required by Law or by obligations pursuant to any listing agreement with or requirement of any national securities exchange or national quotation system on which the Common Stock, New Common Stock or the common stock of West is listed, admitted to trading or quoted, neither the Company (nor any of its Subsidiaries), West (nor any of its Subsidiaries) nor Investor (nor any of its Affiliates) shall, without the prior written consent of each other party hereto, which consent shall not be unreasonably withheld or delayed, make any public announcement or issue any press release with respect to the transactions contemplated by this Agreement or the Transaction Documents. Prior to making any public disclosure required by applicable Law or pursuant to any listing agreement with or requirement of any relevant national exchange or national quotation system, the disclosing party shall consult with the other parties hereto, to the extent feasible, as to the content and timing of such public announcement or press release. To the extent any party is required to file this Agreement or any Transaction Document with the SEC or any other Governmental Authority (including the Bankruptcy Court), the parties shall consult with each other concerning information for which confidential treatment will be requested. Section 6.07 Investor Financing. Investor shall maintain sufficient and adequate resources to consummate the transactions contemplated by this Agreement at the Closing. Section 6.08 Issuances of Equity Securities. The Company shall not accept subscriptions for, offer, issue, sell, or agree, commit or obligate itself to offer, issue or sell, any Equity Securities other than New Common Stock (a) issued to Investor pursuant to this Agreement, (b) issued to other Persons pursuant to other investment agreements entered into on terms and conditions, including without limitation purchase price, that are no more favorable to such Persons than the terms and conditions provided herein and in the Stockholders Agreement are to the Investor up to an aggregate amount of $500,000,000 including the investments of the Investor and the Other Investors, (c) issued to West's equityholders pursuant to the Merger Agreement as set forth on Schedule 3.05, and (d) issued to existing equityholders and creditors of the Company pursuant to the Plan, (e) issued by the Company on or prior to the Effective Date pursuant to a rights offering by the Company to existing Company and West stakeholders to purchase shares of New Common Stock at a price per share no less than the purchase price per share of New Common Stock paid by Investor under this Agreement and in an aggregate amount not to exceed the difference between $650,000,000 and the aggregate amount of the Investment and the Other Investments, and (f) issued by the Company on or prior to the Effective Date at a purchase price that is no less than the purchase price per share of New Common Stock paid by Investor under this Agreement and for proceeds in excess of $650,000,000 provided that (i) the sole use of such proceeds is the redemption or repurchase of Equity Securities from existing Company and West stakeholders at a repurchase or redemption price that values the Equity Securities redeemed or repurchased (on an as-converted basis in the case of convertible securities and, in the case of Equity Securities of West, taking into account the Class B Merger Exchange Ratio (as such term is defined in the Merger Agreement)) at a price per share no more than the purchase price per share of New Common Stock paid by Investor under this Agreement, (ii) the aggregate value of the New Common Stock (valued on the same basis as the New Common Stock to be issued pursuant to this Agreement) issued pursuant to this clause (f) shall not exceed $200,000,000 and (iii) Investor is provided the right to purchase, at its option, up to $15,000,000 of the New Common Stock to be issued pursuant to this clause (f) at a price per share equal to the purchase price per share of New Common Stock paid by Investor under this Agreement. 16 Notwithstanding the foregoing, in connection with the implementation of the Plan, the Company may authorize and reserve for issuance under the Company's equity incentive plan a number of shares of New Common Stock not to exceed 12.5% of the outstanding number of shares of New Common Stock on a Fully Diluted Basis as of the Effective Date, provided that any awards of such shares of New Common Stock made or committed to be made at anytime before the second anniversary of the Effective Date, (x) may only consist of options with an exercise price not less than the lesser of (a) Fair Market Value as of the date of grant and (b) the Investment Price (as appropriately adjusted to reflect stock splits, stock dividends, reverse splits and similar changes with respect to the New Common Stock effected after the Closing Date); provided that the exercise price for any options granted as of or immediately following the Effective Date shall be not less than the Investment Price and (y) shall not be effective unless such awards are approved or ratified by the Board (as constituted from and after the Effective Date as set forth in Section 1.8(a) of the Merger Agreement) or by a committee with appropriate authority granted by such Board. Section 6.09 Transfer Taxes. All transfer taxes, fees and duties under applicable law incurred in connection with the Investment under this Agreement will be borne and paid by the Company and it shall promptly reimburse Investor for any such tax, fee or duty which Investor is required to pay under applicable law. Section 6.10 Bankruptcy Covenants. (a)Notwithstanding anything herein to the contrary, the Company shall not, and shall cause each of the other Debtors not to, offer, agree to, or seek approval from the Bankruptcy Court for, and shall use their best efforts to object to any request by any other party for, any break-up fee, work fee, expense reimbursement or any other benefit or protection for any Person in connection with any proposed acquisition of or investment in any of the Debtors, other than (i) West, (ii) Investor, (iii) any Other Investor, and (iv) any other Person making an investment pursuant to Section 6.08(b); provided that (A) such other Person is purchasing at least $50,000,000 of New Common Stock on terms, and conditions, including without limitation purchase price, that are no more favorable to such other Person than the terms and conditions provided herein and in the Stockholders Agreement are to the Investor and (B) without limitation of the preceding clause (A), any break-up or similar fee payable to such other Person shall not exceed three percent (3.0%) of the aggregate amount of financing to be provided by such other Person. (b) Each of the Debtors agrees that if the Merger Agreement becomes the Approved Proposal (as defined in the Merger Agreement), it shall use its best efforts to cause any order approving the Approved Proposal to prohibit the Debtors (and any Person purporting to act on behalf of the estate of any Debtor) from violating the provisions of Section 4.4(a) of the Merger Agreement or from otherwise pursuing in any way any East Acquisition Proposal (as defined in the Merger Agreement) other than the Merger Agreement unless the Merger Agreement shall have previously been terminated in accordance with its terms. (c) In connection with any proceedings in the Bankruptcy Court related to the Bidding Procedures (as hereinafter defined), the order approving the Approved Proposal or the transactions contemplated by the Merger Agreement or this Agreement (or any Qualified Competing Plan Proposal (as defined in the Bidding Procedures)) (a) the Company shall provide to Investor copies of all motions, objections, pleadings, notices, proposed orders and other 17 documents that are filed by or on behalf of any Debtor as soon as reasonably practicable prior to filing thereof with the Bankruptcy Court and (b) West shall provide to Investor copies of all motions, objections, pleadings, notices, proposed orders and other documents that are filed by or on behalf of West as soon as reasonably practicable prior to filing thereof with the Bankruptcy Court. (d) Except in connection with a Qualified Competing Plan Proposal in accordance with the Bidding Procedures, (a) the Company and West shall not, and shall not authorize or permit any of their Subsidiaries or any of the Company's or West's or such Subsidiaries' Representatives, directly or indirectly, to, solicit, negotiate or enter into any letter of intent, agreement in principle, term sheet, agreement or other similar arrangement that would be or is intended to be an alternative to, or in lieu of, or to replace any portion of any of the Commercial Agreements. (e) Except in accordance with the Bidding Procedures, the Company and West shall not, and shall not authorize or permit any of their Subsidiaries or any of the Company's or West's or such Subsidiaries' Representatives, directly or indirectly, to, (i) solicit, initiate, or take any action designed to induce a proposal or offer for an Alternative Proposal, (ii) participate in any discussions or negotiations regarding any Alternative Proposal, or (iii) enter into any letter of intent, agreement in principle, acquisition agreement or other similar agreement related to any Alternative Proposal. "Alternative Proposal" means (x) any Alternative Transaction, or proposal therefor, or (y) any proposed investment that would, or is intended to, replace all or a material portion of the investment contemplated by this Agreement. ARTICLE VII CONDITIONS Section 7.01 Conditions to Investor's Obligations. The obligation of Investor to make the Investment pursuant to Section 2.01 hereof is subject to satisfaction or waiver of each of the following conditions precedent: (a) Definitive Documents. Definitive Transaction Documents (in form and substance reasonably satisfactory to Investor) shall have been prepared, negotiated and, to the extent applicable, duly executed by the parties (or, as applicable, their Affiliates), and approval by the Bankruptcy Court of such documents pursuant to a Final Order, to the extent necessary, shall have been obtained. Such Transaction Documents shall not have been modified, amended, waived or supplemented without the consent of Investor, shall be in effect and the consummation of the transactions contemplated thereby shall not be stayed, and, except with respect to conditions in the Commercial Agreements intended or permitted under the terms thereof to be satisfied after the Closing, all conditions to the obligations of the parties under such Transaction Documents shall have been satisfied or waived. All corporate and other proceedings to be taken by the Company, West or any of their respective Subsidiaries in connection with such Transaction Documents and the transactions contemplated thereby to be completed at the Closing and documents incident thereto shall have been completed in form and substance reasonably satisfactory to Investor, and Investor shall have received all such counterpart originals or certified or other copies of such Transaction Documents and such other documents 18 as it may reasonably request. Without limiting the generality of the foregoing, in connection with the consummation of the Plan, the Company and the Other Investors and shall have entered into the Stockholders Agreement. (b) Company Representations and Warranties; Covenants. The representations and warranties of the Company set forth in Article III hereof (without giving effect to any material adverse effect, materiality or similar qualifier) shall have been true and correct in all respects on and as of the date hereof and at the Closing as if made on the Closing Date (except where such representation and warranty speaks by its terms of a different date, in which case it shall be true and correct as of such date), except to the extent that such inaccuracies in any such representation or warranty have not had, and would not, individually or in the aggregate, have a Material Adverse Effect on the Company. The Company shall have performed in all material respects all obligations and complied in all material respects with all agreements, undertakings, covenants and conditions required to be performed by it hereunder at or prior to the Closing, and the Company shall have delivered to Investor at the Closing a certificate dated the Closing Date and signed by the chief executive officer and the chief financial officer of the Company to the effect that the conditions set forth in this Section 7.01(b) and in Section 7.01(r) have been satisfied. (c) West Representations and Warranties; Covenants. The representations and warranties of West set forth in Article IV hereof (without giving effect to any material adverse effect, materiality or similar qualifier) shall have been true and correct in all respects on and as of the date hereof and at the Closing as if made on the Closing Date (except where such representation and warranty speaks by its terms of a different date, in which case it shall be true and correct as of such date), except to the extent that such inaccuracies in any such representation or warranty have not had, and would not, individually or in the aggregate, have a Material Adverse Effect on West. West shall have performed in all material respects all obligations and complied in all material respects with all agreements, undertakings, covenants and conditions required to be performed by it hereunder at or prior to the Closing, and West shall have delivered to Investor at the Closing a certificate dated the Closing Date and signed by the chief executive officer and the chief financial officer of West to the effect that the conditions set forth in this Section 7.01(c) and in Section 7.01(r) have been satisfied. (d) Compliance with Laws, No Adverse Action or Decision. Since the date hereof, (i) no Law shall have been promulgated, enacted or entered that restrains, enjoins, prevents, materially delays, prohibits or otherwise makes illegal the performance of any of the Transaction Documents; (ii) no preliminary or permanent injunction or other order by any Governmental Authority that restrains, enjoins, prevents, delays, prohibits or otherwise makes illegal the performance of any of the Transaction Documents shall have been issued and remain in effect, except for such injunctions that, if obtained, could not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of Investor, the Company or West or their respective Affiliates to consummate the Transactions; (iii) no Governmental Authority shall have instituted any legal proceeding that seeks to restrain, enjoin, prevent, delay, prohibit or otherwise make illegal the performance of any of the Transaction Documents, except for any such legal proceedings which have a significant possibility of being brought to a conclusion which could not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of Investor, the Company or West or their respective 19 Affiliates to consummate the Transactions, and (iv) there is no pending or threatened investigation or litigation by any other Person relating to the Transactions which, if determined adversely to the Company, West or Investor, would materially impair or limit the rights and benefits of Investor under the Transaction Documents or the economic benefits to Investor of the Transactions in the aggregate and which Investor reasonably believes, based on the advice of counsel, has a reasonable likelihood of success. (e) Approvals. The Company, Investor and West shall have received (i) all material Regulatory Approvals, which shall have become final (provided that, if an appeal of such Regulatory Approval is pending and such appeal has a significant possibility of being resolved adversely to the Company, Investor or West in a manner that would reasonably be expected to have a material adverse effect on the ability of Investor, the Company or West or their respective Affiliates to consummate the Transactions, this clause (i) shall be deemed not to be satisfied), and (ii) all other material approvals, permits, authorizations, exemptions, consents, licenses and agreements from other third parties that are necessary to permit the Transactions to be completed or performed as contemplated by the Transaction Documents and to permit the Investor and its Affiliates and Company and its Affiliates (including West and its Subsidiaries) to carry on its business after such transactions in a manner not materially inconsistent with the manner in which it was carried on prior to the Effective Date (together with the Regulatory Approvals, the "Approvals"), which Approvals shall not contain any condition or restriction that materially impairs the ability of the Investor and its Affiliates or the ability of the Company (including West and its Subsidiaries) to carry on its business. All waiting periods imposed by applicable Law (including, without limitation, under the HSR Act) in connection with the Transactions shall have expired or been terminated without any action having been taken by any court of competent jurisdiction restraining, preventing or imposing materially adverse conditions upon such transactions or upon the conduct of the business of Investor, East, West or their respective Affiliates. (f) Plan of Reorganization. The Plan shall be in a form reasonably acceptable to the Investor, such Plan shall have been confirmed by the Bankruptcy Court, and such Plan shall among other things (i) not conflict with any material term of this Agreement, the Commercial Agreements, the Stockholders Agreement or the other Transaction Documents, (ii) be substantially consistent in all material respects with the terms of the Financial Plan including, without limitation, concessions obtained and to be obtained from the Debtors' employees, creditors, lessors and other claimants, and (iii) reflect a corporate and capital structure (including liabilities) of the Company consistent with the Financial Plan. All conditions to the effectiveness of the Plan, other than the consummation of this Agreement, shall have been satisfied, and a Confirmation Order in a form reasonably acceptable to the Investor shall have been entered and become a Final Order no later than December 31, 2005. (g) Additional East Equity. In connection with the emergence of the Company and the Operating Companies from chapter 11 and the consummation of the Plan, the Company will have received on the Effective Date cash equity investments aggregating not less than $375,000,000 and not more than $500,000,000 pursuant to this Agreement and the Other Investment Agreements (and including any loans converted into equity under the Air Wisconsin DIP Agreement), all on terms, including without limitation purchase price, no more favorable to the Other Investors and Eastshore Aviation LLC than the terms of the Investment being made by 20 Investor pursuant to this Agreement and the Stockholders Agreement, which with all other equity capital of the Company, will be invested only in a single class of common stock, the New Common Stock, with all such New Common Stock having the same voting rights, and shall have no other class of capital stock authorized in its charter other than the New Common Stock. The Company alone, and not any Affiliate of the Company, shall have issued Equity Securities in connection with the consummation of the Plan. (h) Contracts. All material executory contracts and unexpired leases, the assumption, assignment, rejection or renegotiation of which is necessary for the successful implementation of the Plan and the operation of the Company's business as such business is contemplated in the Financial Plan to be conducted, shall have been assumed, assigned, rejected or renegotiated, as applicable. (i) Effective Date and Merger. The Effective Time (as defined in the Merger Agreement) shall have occurred, or shall occur concurrently with the Closing, and the Merger shall have been, or will concurrently with the Closing be, consummated in accordance with the terms of the Merger Agreement without amendment or waiver other than as permitted in accordance with Section 6.05 of this Agreement. (j) Conversion of Air Wisconsin DIP. Eastshore Aviation LLC shall have converted the existing debt owed to it pursuant to the Air Wisconsin DIP Agreement into New Common Stock in an amount not less than $125,000,000 and on terms, including without limitation valuation of the New Common Stock, no more favorable than the terms of the Investment in New Common Stock being made by Investor pursuant to this Agreement and the Stockholders Agreement. (k) No Conversion to Chapter 7. Neither the Company's Chapter 11 Case nor US Airways Chapter 11 Case shall have been converted to a case under Chapter 7 of the Bankruptcy Code and no trustee shall have been appointed under any chapter of the Bankruptcy Code in respect of either such case. (l) Certificate of Incorporation and Bylaws. The Certificate of Incorporation and Bylaws, substantially in the forms attached as Exhibits C and D, respectively, to the Merger Agreement, shall have been filed with and accepted by the Secretary of State of the State of Delaware and shall have become effective. As of the Closing Date, the Company shall have delivered to Investor a complete and correct copy of the certificates of incorporation and the bylaws or comparable governing instruments of each of the Operating Companies, in full force and effect as of the Closing Date. (m) Delivery. The Company shall have executed and delivered to Investor the shares of New Common Stock pursuant to and in accordance with Section 2.01 hereof. (n) Board Representation. The composition of the Board shall be as set forth in Section 1.8(a) of the Merger Agreement and, as contemplated by the Stockholders Agreement, the Investor Director designated by Investor, if so designated, shall have been elected or appointed to the Board for an initial term of three years, with such election or 21 appointment effective as of the date that is two business days following the Closing Date; provided, however, that Investor shall not be entitled to designate an Investor Director if any Person other than the Other Investors shall have invested more than $75,000,000 in the Company (other than by virtue of the Merger), in which case the condition in this Section 7.01(n) shall be automatically waived. (o) Directors' and Officers' Insurance. The Company shall have procured and maintained in full force and effect directors' and officers' liability insurance with respect to members of the Board of Directors of the Company, which insurance shall be at least $100 million, and shall cover such risks, as is customary for a corporation in the Company's and its Affiliates respective businesses or other similar businesses. (p) Absence of Changes. From the date of this Agreement through the Closing Date, there shall not have occurred any change, event, occurrence, condition or development that has or could reasonably be expected to have a material adverse effect on the financial condition, assets, liabilities, business or results of operations of East or West or that would prevent, materially delay or materially impair the ability of such East, West or Investor to consummate the transactions contemplated by this Agreement or to enter into or perform obligations under the Commercial Agreements. The Company's financial and operational performance from the period from March 31, 2005 to the Closing Date shall not have deviated materially and adversely from the performance indicated in the Financial Plan. (q) Profit Sharing Plan. The Company's employee profit sharing plan shall have been amended on terms no less favorable to Investor than those set forth on Schedule 7.01(q). (r) Commercial Opportunity. The Company and West shall have not less than US$280,000,000 per annum of Maintenance, Repair and Overhaul services work immediately available to be outsourced to Investor or its affiliates as of the Closing Date in accordance with the term sheet governing such services set forth on Exhibit B-1. Section 7.02 Conditions to the Company's Obligations. The obligation of the Company to issue and sell the New Common Stock pursuant to Section 2.01 hereof at the Closing is subject to the satisfaction or waiver of each of the following conditions precedent: (a) Definitive Documents. Definitive Transaction Documents (in form and substance reasonably satisfactory to the Company) necessary to consummate the transactions contemplated herein shall have been prepared, negotiated and, to the extent applicable, executed by the parties (or, as applicable, their Affiliates), and approval by the Bankruptcy Court of such documents, as necessary, shall have been obtained. Such Transaction Documents shall not have been modified, shall be in effect and the consummation of the transactions contemplated thereby shall not be stayed, and, except with respect to conditions in the Commercial Agreements intended or permitted under the terms thereof to be satisfied after the Closing, all conditions to the obligations of the parties under the Transaction Documents shall have been satisfied or effectively waived. All corporate and other proceedings to be taken by Investor its Affiliates in connection with the Transaction Documents and the transactions contemplated thereby to be completed at the Closing and documents incident thereto shall have been completed in form and 22 substance reasonably satisfactory to the Company, and the Company shall have received all such counterpart originals or certified or other copies of the Transaction Documents and such other documents as it may reasonably request. (b) Investor Representations and Warranties; Covenants. The representations and warranties of Investor set forth in Article V hereof (without giving effect to any material adverse effect, materiality or similar qualifier) shall have been true and correct in all respects, on and as of the date hereof and at the Closing as if made on the Closing Date (except where such representation and warranty speaks by its terms as of a different date, in which case it shall be true and correct as of such date), except to the extent that such inaccuracies have not had, and would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of Investor or its Affiliates to consummate the Transactions. Investor shall have performed in all material respects all obligations and complied in all material respects with all agreements, undertakings, covenants and conditions required to be performed by it at or prior to the Closing, and Investor shall have delivered to the Company and West at the Closing a certificate dated the Closing Date and signed on behalf of a member of Investor to the effect that the conditions set forth in this Section 7.02(b) have been satisfied. (c) Compliance with Laws; No Adverse Action or Decision. Since the date hereof, (i) no Law shall have been promulgated, enacted or entered that restrains, enjoins, prevents, materially delays, prohibits or otherwise makes illegal the performance of any of the Transaction Documents with respect to the transactions contemplated thereby to be completed at the Closing; (ii) no preliminary or permanent injunction or other order by any Governmental Authority or other Person that restrains, enjoins, prevents, delays, prohibits or otherwise makes illegal the performance of any of the Transaction Documents shall have been issued and remain in effect, except for such injunctions that, if obtained, could not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of Investor, the Company or West or their respective Affiliates to consummate the Transactions; and (iii) no Governmental Authority shall have instituted any legal proceeding that seeks to restrain, enjoin, prevent, delay, prohibit or otherwise make illegal the performance of any of the Transaction Documents, except for any legal proceedings which have a significant possibility of being brought to a conclusion which could not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of Investor, the Company or West or their respective Affiliates to consummate the Transactions. (d) Approvals. The Company and West shall have received (i) all material Regulatory Approvals (other than waiting periods imposed by applicable Law as referred to later in this paragraph), which shall have become final (provided that, if an appeal of such Regulatory Approval is pending and such appeal has a significant possibility of being resolved adversely to the Company or West in a manner that would reasonably be expected to have a material adverse effect on the ability of Investor, the Company or West or their respective Affiliates to consummate the Transactions, this clause (i) shall be deemed not to be satisfied), and (ii) all other Approvals, which Approvals shall not contain any condition or restriction that, in the Company's reasonable judgment, materially impairs the Company's ability to carry on its business. Without limiting the generality of clause (ii), any and all required approvals under any material financing agreements to which the Company, West or any of their respective Subsidiaries is a party shall have been obtained. All waiting periods imposed by applicable Law 23 (including, without limitation, under the HSR Act) in connection with the transactions contemplated by the Transaction Documents shall have expired or been terminated without any action having been taken by any court of competent jurisdiction restraining, preventing or imposing materially adverse conditions upon such transactions. (e) Confirmation Order. The Confirmation Order, satisfactory in form and substance in all respects to the Company, shall have been entered by the Bankruptcy Court and, once entered, shall not have been modified without the Company's and West's prior written consent in any manner materially adverse to the Company, shall be in effect and shall not have been stayed. (f) Effective Date and the Merger. The Effective Date and the satisfaction or waiver of all conditions to the closing of the Merger shall have occurred not later than the Closing. ARTICLE VIII TERMINATION Section 8.01 Termination of Agreement. Subject to Section 8.02 hereof, this Agreement may be terminated by notice in writing at any time prior to the Closing by: (a) Investor or the Company, if (i) the Closing shall not have occurred on or before December 31, 2005 or (ii) the Merger Agreement shall have been terminated in accordance with its terms on or before December 31, 2005; (b) Investor, if (i) a bidding procedures order approving the break-up fee set forth in Section 8.02(b) hereof and the expense reimbursement provisions set forth in Section 9.01 (the "Bidding Procedures") hereof shall not have been entered within thirty (30) days following the date hereof, but in no event later than June 30, 2005, (ii) the Merger and the transactions contemplated by the Merger Agreement and this Agreement shall not have been determined by the Bankruptcy Court to be the Approved Proposal within sixty-five (65) days after the entry by the Bankruptcy Court of the order approving the Bidding Procedures contemplated by the preceding clause (i), (iii) there shall have been a breach by the Company or West of any material representation, warranty, covenant or agreement contained in this Agreement, which breach would result in the failure to satisfy any condition set forth in Section 7.01 hereof to Investor's obligations and that has not been cured within thirty (30) days following receipt by the Company or West of written notice from Investor of such breach, (iv) any condition set forth in Section 7.01 hereof to Investor's obligations is not capable of being satisfied, (v) the Company shall enter into a written agreement or letter of intent or agreement in principle providing for an Alternative Proposal, or (vi) the Bankruptcy Court shall have ordered the Company to terminate this Agreement in order to accept an Alternative Proposal; (c) the Company, if (i) there shall have been a breach by Investor of any material representation, warranty, covenant or agreement contained in this Agreement which breach would result in the failure to satisfy any condition set forth in Section 7.02 hereof to the Company's obligations and that has not been cured within thirty (30) days following receipt by 24 Investor of written notice from the Company of such breach, or (ii) any condition set forth in Section 7.02 hereof to the Company's obligations is not capable of being satisfied; or (d) mutual agreement in writing by the Company and Investor. Section 8.02 Effect of Termination (a) If this Agreement is terminated in accordance with Section 8.01 hereof and the transactions contemplated hereby are not consummated, this Agreement shall become null and void and of no further force and effect except that (i) the terms and provisions of this Section 8.02 and Article IX hereof shall survive the termination of this Agreement, and (ii) any termination of this Agreement shall not relieve any party hereto from any liability for any willful breach of its obligations hereunder. A termination shall not void or affect any of the constituent transactions consummated prior to such termination or any sections hereof which by their terms survive termination. (b) In the event that (i) the Investment is not consummated, (ii) Investor is not in breach of any material representation, warranty, covenant or agreement contained in this Agreement and (iii) an Alternative Transaction is effectuated, with or without a merger with West, the Company shall on the date of the closing of such Alternative Transaction pay to Investor, by wire transfer of immediately available funds, a break-up fee equal to $2,250,000. ARTICLE IX MISCELLANEOUS Section 9.01 Fees and Expenses. (a) Except as expressly provided herein or in any Transaction Document, each party shall bear its own costs and expenses incurred in connection with this Agreement or any of the Transactions. Notwithstanding the foregoing, at the Closing, the Company shall reimburse Investor for the reasonable out-of-pocket expenses of Investor relating to: (i) Investor's due diligence investigation of the Debtors and West; (ii) the negotiation of this Agreement, the Stockholders Agreement, the Plan and any draft term sheets related thereto; (iii) participation in the Bankruptcy Court proceedings; (iv) the consummation of the transactions contemplated by this Agreement, the Stockholders Agreement, the Term Sheet, the Plan and the Merger; and (v) the enforcement of Investor's rights under the Term Sheet, this Agreement and/or the Stockholders Agreement; provided, however, that reimbursement pursuant to clause (i) through (iv) above shall not exceed the sum of (x) $350,000 plus (y) filing fees, incurred in connection with any required filings under the HSR Act. (b) All amounts payable under this Agreement shall be paid in immediately available funds to an account or accounts designated by the recipient of such amounts, except as otherwise provided herein. Section 9.02 Survival of Representations, Warranties and Covenants. None of the representations, warranties or covenants contained in this Agreement shall survive the Closing Date. 25 Section 9.03 Specific Performance. The parties hereto specifically acknowledge that monetary damages are not an adequate remedy for violations of this Agreement, and that any party hereto may, in its sole discretion, apply to a court of competent jurisdiction for specific performance or injunctive or such other relief as such court may deem just and proper in order to enforce this Agreement or prevent any violation hereof and, to the extent permitted by applicable Law and to the extent the party seeking such relief would be entitled to the merits to obtain such relief, each party waives any objection to the imposition of such relief. Section 9.04 General Interpretive Principles. Whenever used in this Agreement, except as otherwise expressly provided or unless the context otherwise requires, any noun or pronoun shall be deemed to include the plural as well as the singular and to cover all genders. The name assigned this Agreement and the Section captions used herein are for convenience of reference only and shall not be construed to affect the meaning, construction or effect hereof. Unless otherwise specified, any references to a party's "judgment", "satisfaction" or words of a similar import shall mean in such party's sole judgment. Unless otherwise specified, the terms "hereof," "herein" and similar terms refer to this Agreement as a whole (including the Exhibits and Schedules hereto), and references herein to Articles or Sections refer to Articles or Sections of this Agreement. Section 9.05 Notices. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given, if delivered personally, by telecopier or sent by first class mail, postage prepaid, to the addresses set forth on Schedule 9.05. Section 9.06 Entire Agreement; Amendment. The Commerical Agreements and this Agreement effectuate one integrated and non-severable transaction. This Agreement and the documents described herein (including the Plan) or attached or delivered pursuant hereto (including, without limitation, the other Transaction Documents) set forth the entire agreement between the parties hereto with respect to the transactions contemplated by this Agreement. Any provision of this Agreement may only be amended, modified or supplemented in whole or in part at any time by an agreement in writing among the parties hereto executed in the same manner as this Agreement. No failure on the part of any party to exercise, and no delay in exercising, any right shall operate as waiver thereof, nor shall any single or partial exercise by either party of any right preclude any other or future exercise thereof or the exercise of any other right. Section 9.07 No Other Representations or Warranties. Except for the representations and warranties contained in this Agreement, neither East nor West, nor any agent, Affiliate, officer, director, employee or representative of either or them, nor any other Person, makes, or shall be deemed to make, any representation or warranty to Investor, express or implied, at law or in equity, on behalf of East or West, and East and West hereby exclude and disclaim any such representation or warranty whether by either East or West or any or their respective agents, Affiliates, officers, directors, employees or representatives or any other Person, notwithstanding the delivery or disclosure to Investor or any of their respective officers, directors, partners, employees or representatives or any other Person of any documentation or other information by East or West or any of their respective agents, Affiliates, officers, directors, employees or representatives or any other Person with respect to any one or more of the foregoing. 26 Section 9.08 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed to constitute an original, but all of which together shall constitute one and the same document. Section 9.09 Governing Law. To the extent not governed by the Bankruptcy Code, this Agreement shall be governed by, and interpreted in accordance with, the Laws of the State of New York applicable to contracts made and to be performed in that State without reference to its conflict of laws rules. The parties hereto agree that the appropriate and exclusive forum for any disputes arising out of this Agreement solely between the Company and Investor shall be the Bankruptcy Court, or if such court will not hear any such suit, the U.S. District Court for the Southern District of New York, and, the parties hereto irrevocably consent to the exclusive jurisdiction of such courts, and agree to comply with all requirements necessary to give such courts jurisdiction. The parties hereto further agree that the parties will not bring suit with respect to any disputes arising out of this Agreement except as expressly set forth below for the execution or enforcement of judgment, in any jurisdiction other than the above specified courts. Each of the parties hereto irrevocably consents to the service of process in any action or proceeding hereunder by the mailing of copies thereof by registered or certified airmail, postage prepaid, to the address specified in Section 9.05 hereof. The foregoing shall not limit the rights of any party hereto to serve process in any other manner permitted by the Law or to obtain execution of judgment in any other jurisdiction. The parties further agree, to the extent permitted by Law, that final and non-appealable judgment against any of them in any action or proceeding contemplated above shall be conclusive and may be enforced in any other jurisdiction within or outside the United States by suit on the judgment, a certified or exemplified copy of which shall be conclusive evidence of the fact and the amount of indebtedness. THE PARTIES AGREE TO WAIVE ANY AND ALL RIGHTS THAT THEY MAY HAVE TO A JURY TRIAL WITH RESPECT TO DISPUTES ARISING OUT OF THIS AGREEMENT. Section 9.10 Successors and Assigns. Except as otherwise expressly provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the Company's, West's and Investor's successors and permitted assigns. Neither this Agreement nor any rights or obligations hereunder shall be assignable by any party hereto without the prior written consent of the other parties hereto. Section 9.11 No Third-Party Beneficiaries. This Agreement is for the sole benefit of the parties hereto and their respective successors and permitted assigns and nothing herein, express or implied, is intended or shall confer upon any other Person any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement. Section 9.12 Confidentiality. A version of this Agreement with certain competitively sensitive information redacted will be filed by the Company with the Motion. Each party hereto agrees not to disclose the unredacted version of this Agreement to any third parties (other than disclosure required by the SEC or any other Governmental Authority (including the Bankruptcy Court) or pursuant to any listing agreement with or requirement of any relevant national exchange or national quotation system) without appropriate confidentiality agreements with such third parties being in place that are reasonably acceptable to the other parties hereto. 27 IN WITNESS WHEREOF, this Agreement has been executed on behalf of the parties hereto by their respective duly authorized officers, all as of the date first above written. ACE AVIATION HOLDINGS INC. By: /s/ Sydney John Isaacs ----------------------------------- Name: Sydney John Isaacs Title: SVP Corporate Development US AIRWAYS GROUP, INC. By: /s/ Bruce R. Lakefield ----------------------------------- Name: Bruce R. Lakefield Title: Chief Executive Officer AMERICA WEST HOLDINGS CORPORATION By: /s/ W. Douglas Parker ----------------------------------- Name: W. Douglas Parker Title: Chairman and Chief Executive Officer 28 Exhibit A-2 to the Merger Agreement INVESTMENT AGREEMENT dated as of May 19, 2005 among US AIRWAYS GROUP, INC., AMERICA WEST HOLDINGS, INC. and PAR INVESTMENT PARTNERS, L.P. TABLE OF CONTENTS
Page ---- ARTICLE I DEFINITIONS.............................................................................................2 Section 1.01 Definitions.....................................................................................2 ARTICLE II ISSUANCE AND PURCHASE OF NEW COMMON STOCK..............................................................7 Section 2.01 Issuance and Purchase of New Common Stock.......................................................7 Section 2.02 Closing.........................................................................................8 ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY.........................................................8 Section 3.01 Incorporation by Reference of Representations and Warranties in the Merger Agreement.......................................................................................8 Section 3.02 Authorization; No Contravention.................................................................8 Section 3.03 Consents; No Conflicts..........................................................................9 Section 3.04 Court Orders....................................................................................9 Section 3.05 Capitalization; Securities......................................................................9 Section 3.06 Information Provided...........................................................................10 Section 3.07 Financial Advisors and Brokers.................................................................10 Section 3.08 Regulatory Status..............................................................................10 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF WEST................................................................10 Section 4.01 Incorporation by Reference of Representations and Warranties in the Merger Agreement......................................................................................10 Section 4.02 Authorization; No Contravention................................................................11 Section 4.03 Consents; No Conflicts.........................................................................11 Section 4.04 Court Orders...................................................................................11 Section 4.05 Information Provided...........................................................................11 Section 4.06 Financial Advisors and Brokers.................................................................11 Section 4.07 Financial Plan.................................................................................12 ARTICLE V REPRESENTATIONS AND WARRANTIES OF INVESTOR.............................................................12 Section 5.01 Organization...................................................................................12 Section 5.02 Authorization; No Contravention................................................................12 Section 5.03 Consents; No Conflicts.........................................................................12 Section 5.04 Financial Advisors and Brokers.................................................................12 Section 5.05 Ownership of Equity Securities; Purpose of Investment..........................................13 Section 5.06 Financing......................................................................................13 Section 5.07 Citizenship....................................................................................13 ARTICLE VI PRE-CLOSING COVENANTS.................................................................................13 Section 6.01 Taking of Necessary Action.....................................................................13 Section 6.02 Notifications..................................................................................14 Section 6.03 Financial and Other Information................................................................14 Section 6.04 Delivery of Reports............................................................................15
i Section 6.05 Amendments to Merger Agreement; Etc............................................................15 Section 6.06 Publicity......................................................................................15 Section 6.07 Investor Financing.............................................................................15 Section 6.08 Issuances of Equity Securities.................................................................15 Section 6.09 Transfer Taxes.................................................................................16 Section 6.10 Bankruptcy Covenants...........................................................................17 ARTICLE VII CONDITIONS...........................................................................................18 Section 7.01 Conditions to Investor's Obligations...........................................................18 Section 7.02 Conditions to the Company's Obligations........................................................22 ARTICLE VIII TERMINATION.........................................................................................23 Section 8.01 Termination of Agreement.......................................................................23 Section 8.02 Effect of Termination..........................................................................24 ARTICLE IX MISCELLANEOUS.........................................................................................25 Section 9.01 Fees and Expenses..............................................................................25 Section 9.02 Survival of Representations, Warranties and Covenants..........................................25 Section 9.03 Specific Performance...........................................................................25 Section 9.04 General Interpretive Principles................................................................25 Section 9.05 Notices........................................................................................26 Section 9.06 Entire Agreement; Amendment....................................................................26 Section 9.07 No Other Representations or Warranties.........................................................26 Section 9.08 Counterparts...................................................................................26 Section 9.09 Governing Law..................................................................................26 Section 9.10 Successors and Assigns.........................................................................27 Section 9.11 No Third-Party Beneficiaries...................................................................27 Section 9.12 Confidentiality................................................................................27 EXHIBIT A Merger Agreement EXHIBIT B Stockholders Agreement Schedule 1 New Common Stock Schedule 3.05 Capitalization Schedule 7.01(q) Terms of Revised Profit Sharing Plan Schedule 9.05 Notices Information
ii INVESTMENT AGREEMENT THIS INVESTMENT AGREEMENT (together with all exhibits and schedules hereto and as the same may be amended, supplemented or otherwise modified from time to time in accordance with the terms hereof, the "Agreement"), dated as of May 19, 2005, by and among Par Investment Partners, L.P., a Delaware limited partnership (the "Investor"), US Airways Group, Inc., a Delaware corporation, and its successors (including, as the context may require, on or after the Effective Date, as reorganized pursuant to the Bankruptcy Code) (the "Company"), and America West Holdings Corporation, a Delaware corporation ("West"). W I T N E S S E T H: WHEREAS, on September 12, 2004, the Company and certain of its Subsidiaries (the "Debtor Subsidiaries" and together with the Company, the "Debtors") filed voluntary petitions (the "Cases") for protection under chapter 11 of the United States Bankruptcy Code (the "Bankruptcy Code") in the United States Bankruptcy Court for the Eastern District of Virginia, Alexandria Division (the "Bankruptcy Court") to enable the Debtors to be restructured pursuant to one or more plans of reorganization (collectively, the "Plan"); WHEREAS, the Debtors have continued in the possession of their assets and in the management of their businesses pursuant to Sections 1107 and 1108 of the Bankruptcy Code; WHEREAS, pursuant to the Plan, the Company intends to cancel all of the existing outstanding Equity Securities of the Company upon the Effective Date and issue the New Common Stock; WHEREAS, pursuant to the Plan, the Company, Barbell Acquisition Corp., a Delaware corporation ("Merger Sub"), and West have entered into an Agreement and Plan of Merger (together with all of the schedules, exhibits and other attachments thereto, the "Merger Agreement"), attached as Exhibit A hereto; WHEREAS, subject to the other terms and conditions contained herein, the Investor desires to commit to provide equity financing to the Company; WHEREAS, the Company intends to issue and sell to Investor, and Investor intends to purchase from the Company, shares of New Common Stock (such purchase, issuance and sale, the "Investment") in exchange for the Investment Price, all on the terms provided in this Agreement; WHEREAS, pursuant to the Other Investment Agreements, the Company intends to issue and sell to ACE Aviation Holdings Inc., Peninsula Investment Partners, L.P. and Eastshore Aviation, LLC (the "Other Investors") shares of New Common Stock pursuant to investment agreements entered into by the Other Investors in the forms previously provided to Investor and on terms and conditions, including without limitation purchase price, that are no more favorable to the Other Investors than the terms and conditions provided herein and in the Stockholders Agreement are to the Investor; 1 WHEREAS, the Investor intends to enter into a Stockholders Agreement (the "Stockholders Agreement"), substantially in the form of Exhibit B hereto, with the Company and the Other Investors; WHEREAS, the parties intend that the transactions contemplated hereby will be implemented by and take effect simultaneously with the implementation of the Plan on the Effective Date (except as to those transactions that are expressly intended to take effect at another date); WHEREAS, the parties intend that all of the transactions contemplated hereby are intended to be treated as a single integrated transaction subject to the approval of the Bankruptcy Court as soon as reasonably practicable after the date hereof; and WHEREAS, the Company, West and the Investor desire to make certain representations, warranties, covenants and agreements in connection with the transactions contemplated herein. NOW, THEREFORE, in consideration of the premises and the mutual representations, warranties, covenants and agreements contained herein, the parties hereto agree as follows, in the case of the Company, subject to Bankruptcy Court approval of this Agreement: ARTICLE I DEFINITIONS Section 1.01 Definitions. As used in this Agreement, the following terms shall have the meanings set forth below: "Affiliate" means, with respect to any specified Person, a Person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the specified Person, where "control" (including the terms "controlling," "controlled by" and "under common control with") means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract, or otherwise; provided, however, that when used with respect to the Company, "Affiliate" shall not include Investor or any Affiliate thereof. "Agreement" has the meaning set forth in the preamble hereto. "Air Wisconsin DIP Agreement" means the Junior Secured Debtor-in-Possession Credit Facility Agreement, dated as of February 18, 2005, by and among US Airways, Inc., as Borrower, certain affiliates thereof as guarantors, and Eastshore Aviation, LLC, as lender, as amended, supplemented or otherwise modified from time to time. "Alternative Transaction" means (a) any reorganization of the Company or (b) any sale, merger, consolidation, joint venture, recapitalization, sale of assets or equity interests or other combination or disposition or similar transaction or series of transactions involving at least 2 40%, on a fair market value basis, of the assets of the Company and its Operating Subsidiaries, taken as a whole, or 40% of the equity securities of the Company. "Approvals" has the meaning set forth in Section 7.01(e) hereof. "ATSB" means the Air Transportation Stabilization Board, created pursuant to Section 102 of the Air Transportation Safety and System Stabilization Act, P.L. 107-42, as the same may be amended from time to time. "Bankruptcy Code" has the meaning set forth in the recitals hereto. "Bankruptcy Court" has the meaning set forth in the recitals hereto. "Board" means the board of directors of the Company (including, with respect to periods following the Effective Date, the Company). "Business Day" means any day other than a Saturday, Sunday or a day on which banking institutions of the State of New York are authorized by law or executive order to close. "Bylaws" means the bylaws of the Company, as amended from time to time (including, with respect to periods following the Effective Date). "Cases" has the meaning set forth in the recitals hereto. "Certificate of Incorporation" means the Certificate of Incorporation of the Company, as amended from time to time, including any certificate of designation relating to any Equity Securities of the Company (including, in each case, with respect to periods following the Effective Date). "Certificated Air Carrier" means a Citizen of the United States holding an aircraft operating certificate issued pursuant to Chapter 447 of Title 49 of the United States Code or any analogous successor provision of the United States Code, for aircraft capable of carrying ten or more individuals or 6,000 pounds or more of cargo or that otherwise is certified or registered to the extent required to fall within the purview of 11 U.S.C. Section 1110 or any analogous successor provision of the Bankruptcy Code. "Chapter 11" means Chapter 11 of the Bankruptcy Code. "Citizen of the United States" has the meaning given to such term in Section 40102(a)(15) of Title 49 of the Transportation Code, or any subsequent legislation that amends, supplements or supersedes such provisions. "Closing" means the closing of the issuance, sale and purchase of the New Common Stock pursuant to Section 2.01 hereof. "Closing Date" has the meaning set forth in Section 2.02(a) hereof. "Company" has the meaning set forth in the preamble hereto. 3 "Confirmation Order" means a Final Order of the Bankruptcy Court approving the Plan. "Debtors" has the meaning set forth in the recitals hereto. "Debtor Subsidiaries" has the meaning set forth in the recitals hereto. "Disclosure Statement" means a disclosure statement with respect to the Plan. "Effective Date" means the effective date of the Plan. "Equity Securities" shall mean (i) capital stock of, or other equity interests in, any Person, (ii) securities or other instruments convertible into or exchangeable for shares of capital stock, voting securities or other equity interests in such Person or (iii) options, warrants, investment agreements or other rights to acquire the securities described in clauses (i) and (ii), whether fixed or contingent, matured or unmatured, contractual, legal, equitable or otherwise. "Fair Market Value" shall mean the fair market value of the New Common Stock, as determined by the Board. If the New Common Stock is traded on an over-the-counter securities market or national securities exchange, "Fair Market Value" shall mean the closing sales price of the New Common Stock reported on such over-the-counter market or such national securities exchange on the applicable date or, if no sales of New Common Stock have been reported for that date, on the next preceding date for which sales where reported. "Final Order" means an order or judgment of the Bankruptcy Court, or other court of competent jurisdiction, as entered on the docket in the Cases or the docket of any other court of competent jurisdiction, that has not been reversed, stayed, modified or amended, and as to which the time to appeal or seek reargument, reconsideration, or certiorari has expired and no appeal, motion for reconsideration or reargument or petition for certiorari has been timely taken, or as to which any appeal that has been taken or any petition for certiorari, motion for reconsideration or reargument that has been or may be filed has been resolved by the highest court to which the order or judgment was appealed or from which reargument, reconsideration, or certiorari was sought and the time to take any further appeal, petition for certiorari or move for reargument shall have expired. "Fully Diluted Basis" means the number of shares of New Common Stock, without duplication, which are issued and outstanding or owned or held, as applicable, at the date of determination plus the number of shares of New Common Stock issuable pursuant to any Equity Securities then outstanding convertible into or exchangeable or exercisable for (whether or not subject to contingencies or passage of time, or both) shares of New Common Stock. "Governmental Authority" means the government of the United States of America, any other nation or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government. 4 "Hearing" means the hearing conducted in the Cases in the Bankruptcy Court seeking approval of the Motion. "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the regulations promulgated thereunder. "Investor" has the meaning set forth in the preamble hereto. "Investor Director" means any member of the Board of the Company nominated by Investor in accordance with the Stockholders Agreement. "Investment" has the meaning set forth in the recitals hereto. "Investment Price" has the meaning set forth in Section 2.01 hereof. "Law" means any law, treaty, statute, ordinance, code, rule or regulation of a Governmental Authority or judgment, decree, order, writ, award, injunction or determination of a court or other Governmental Authority. "Lien" means any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge, or preference, priority or other security interest or preferential arrangement of any kind or nature whatsoever intended for security (including any conditional sale or other title retention agreement, any easement, right of way or other encumbrance on title to real property, and any financing lease having substantially the same economic effect as any of the foregoing). "Material Adverse Effect" on any Person means (x) a material adverse effect on the financial condition, assets, liabilities, business or results of operations of such Person and its Subsidiaries taken as a whole, excluding any such effect resulting from (I) changes or conditions generally affecting the U.S. economy or financial markets, (II) changes or conditions generally affecting any of the segments of the airline industry in which such Person or any of its Subsidiaries operates, to the extent such conditions or changes do not disproportionately impact such Person or its Subsidiaries (III) changes or conditions resulting from divestiture required in order to satisfy Section 5.1(b) of the Merger Agreement or (IV) the announcement or consummation of the Merger Agreement, or (y) an effect that would prevent, materially delay or materially impair the ability of such Person to consummate the Merger or the ability of such Person or the Investor to consummate the transactions contemplated by this Agreement. For purposes of this definition, any suspension of commercial air travel in the United States for a period of 72 hours or more shall be deemed to have a Material Adverse Effect on the Company and West. "Merger" has the meaning assigned to such term in the Merger Agreement. "Merger Agreement" has the meaning set forth in the recitals hereto. "Merger Sub" has the meaning set forth in the recitals hereto. 5 "Motion" means the motion and any supporting papers seeking approval of the Transactions, in form and substance reasonably acceptable to Investor and providing, inter alia, not less than a ten (10) day notice period prior to the Hearing and providing for confidential treatment of portions of the Transaction Documents as mutually agreed by the Company and the Investor. "New Common Stock" means the class of common stock of the Company authorized under the Certificate of Incorporation attached as Exhibit C to the Merger Agreement and to be issued to West shareholders pursuant to the Merger. "Operating Companies" means, with respect to the Company, US Airways, PSA Airlines, Inc., a Pennsylvania corporation, Piedmont Airlines, Inc., a Maryland corporation and Material Services Company, Inc., a Delaware corporation. "Other Investors" has the meaning set forth in the recitals hereto. "Other Investments" means the purchase, issuance and sale by the Company to the Other Investors of shares of New Common Stock pursuant to the Other Investment Agreements. "Other Investment Agreements" means the investment agreements among the Company, West and each of the Other Investors. "Person" means any individual, corporation, company, association, partnership, limited liability company, joint venture, trust, unincorporated organization, or Governmental Authority. "Plan" has the meaning set forth in the recitals hereto. "Postpetition," when used with respect to any agreement, instrument or any obligation arising thereunder, any claim or proceeding or any other matter, means an agreement or instrument that was first entered into or first became effective, an obligation, claim or proceeding that first arose or was first instituted, or another matter that first occurred, after the commencement of the Cases, or that was entered into or became effective, or arose, was instituted or occurred, before commencement of the Cases but has been assumed in the Cases. "Regulatory Approvals" means, to the extent necessary in connection with the consummation of the transactions contemplated by the Transaction Documents, any and all certificates, permits, licenses, franchises, concessions, grants, consents, approvals, orders, registrations, authorizations, waivers, variances or clearances from, or filings or registrations with, Governmental Authorities (and shall not include clearance or approval under the HSR Act or any other Law that may require waiting periods prior to consummation of the Transactions). "Representatives" means, with respect to any Person, such Person's officers, directors, employees, agents, attorneys, accountants, consultants, equity financing partners or financial advisors or other Person associated with, or acting on behalf of, such a Person. "Republic" means Republic Airways Holdings Inc., a Delaware corporation. 6 "SEC" means the U.S. Securities and Exchange Commission. "Securities Act" means the U.S. Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder. "Stockholders Agreement" has the meaning set forth in the recitals hereto. "Subsidiary" means as to any Person, any other Person of which more than fifty percent (50%) of the shares of the voting stock or other ownership interests are owned or controlled, or the ability to select or elect more than fifty percent (50%) of the directors or similar managers is held, directly or indirectly, by such first Person or one or more of its Subsidiaries or by such first Person and one or more of its Subsidiaries. "Title 49" means Title 49 of the Code of Federal Regulations, as amended and in effect from time to time. "Transactions" means the Merger, the execution, delivery and performance of this Agreement and each Other Investment Agreement (including the issuance of New Common Stock hereunder and thereunder), the Stockholders Agreement, and the execution, delivery and performance of the documents described in Articles II and VI hereof, in each case by the applicable party thereto. "Transaction Contracts" means all of the Transaction Documents other than the Plan, the Confirmation Order and the order of the Bankruptcy Court approving the break-up fee set forth in Section 8.02(b). "Transaction Documents" means this Agreement, the Plan, the Confirmation Order, the Merger Agreement, each Other Investment Agreement, the Stockholders Agreement, the order of the Bankruptcy Court approving the break-up fee set forth in Section 8.02(b), the documents described in Articles II and VI and all other documents necessary to consummate the Transactions and other arrangements contemplated hereby. "Transportation Code" means Title 49 of the United States Code which, among other things, recodified and replaced the U.S. Transportation Code of 1958 and the regulations promulgated thereunder, or any subsequent legislation that amends, supplements or supersedes such provisions. "US Airways" means US Airways, Inc., a Delaware corporation. "West" has the meaning set forth in the preamble hereto. ARTICLE II ISSUANCE AND PURCHASE OF NEW COMMON STOCK Section 2.01 Issuance and Purchase of New Common Stock. Upon the terms and subject to the conditions set forth in this Agreement, at the Closing, the Company will issue, sell and deliver to Investor, and Investor will purchase from the Company, that number of shares 7 of New Common Stock set forth opposite Investor's name on Schedule 1 hereto, for the aggregate purchase price set forth opposite Investor's name on Schedule 1 hereto (the "Investment Price"). Section 2.02 Closing. (a) Subject to the satisfaction or, if permissible, waiver of the conditions set forth in Sections 7.01 and 7.02 hereof, the Closing shall take place at the offices of Arnold & Porter LLP, 555 Twelfth Street, NW, Washington D.C. 20004, at 10:00 a.m., Washington D.C. time, on the first Business Day following the Effective Time (as such term is defined in the Merger Agreement) or at such other time, date and place as the parties may agree (the date on which the Closing occurs, the "Closing Date"); provided that the parties shall use reasonable best efforts to have the Closing take place on the first Business Day following the Effective Time. (b) At the Closing, (i) the Company shall deliver to Investor certificates representing the shares of New Common Stock to be purchased by, and sold to, Investor pursuant to Section 2.01 hereof (registered in the names and in the denominations designated by Investor at least two Business Days prior to the Closing Date), together with the other documents, certificates and opinions to be delivered pursuant to Section 7.01 hereof, and (ii) Investor, in full payment for the shares of New Common Stock to be purchased by, and sold to, Investor pursuant to Section 2.01 hereof, shall pay to the Company as provided in Section 2.01 hereof (in immediately available funds by wire transfer to the account designated by the Company, or by such other means as may be agreed between the parties hereto), Investor's Investment Price (less any amounts due as of the Closing Date to Investor pursuant to Section 9.01 hereof), and shall deliver the certificate required pursuant to Section 7.02(b) hereof. ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY The Company hereby represents and warrants to Investor as follows: Section 3.01 Incorporation by Reference of Representations and Warranties in the Merger Agreement. The Company hereby incorporates by reference, for the benefit of Investor as though set forth herein, the following representations and warranties (including the defined terms and disclosure items included therein and related thereto) in the Merger Agreement: Sections 3.2(a), (f), (g), (h), (i), (j), (k), (l), (n), (o), (p), (q), (r), (s), (t), (u), (v), (w) and (x). Each such representation which states that "East" (i.e., US Airways Group, Inc.) "has made available to West" certain materials shall be deemed to read "has made available to Investor" for purposes of this incorporation by reference. Section 3.02 Authorization; No Contravention. The Transactions to be consummated by the Company and the Operating Companies and the performance of the Transaction Contracts are within the respective corporate power and authority of the Company and the Operating Companies (subject and after giving effect to any required approvals of the Bankruptcy Court (including, without limitation, to the extent applicable, the Confirmation Order) and the Plan) and have been duly authorized by all necessary corporate and, if required, stockholder action. This Agreement, the Merger Agreement, each Other Investment Agreement, 8 the Stockholders Agreement and each other Transaction Contract entered into as of the date hereof have been duly executed and delivered by the Company and the Operating Companies party thereto (as applicable) and constitute (subject and after giving effect to any required approvals of the Bankruptcy Court (including, without limitation, to the extent applicable, the Confirmation Order) and the Plan), a legal, valid and binding obligation of the Company and such Operating Companies, respectively, enforceable in accordance with its terms. Section 3.03 Consents; No Conflicts. Other than the notices, reports, filings, consents, registrations, approvals, permits or authorizations required under the Hart Scott Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), with respect to the Company and the Operating Companies, the execution and delivery of each of the Transaction Contracts and the consummation of the Transactions (i) does not require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority (subject and after giving effect to any required approvals of the Bankruptcy Court (including, without limitation, to the extent applicable, the Confirmation Order) and the Plan), except such as have been obtained or made and are in full force and effect and except where failure to obtain such consent, approval, registration, filing or other action would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on the Company, (ii) will not violate, conflict with or result in a breach, violation or default under (A) any applicable law, rule or regulation or any order of or restriction imposed by any Governmental Authority and except, in each case, where such violation of applicable law or regulation would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on the Company or (B) the Certificate of Incorporation or Bylaws or any other organizational documents of the Company or any of its Subsidiaries, (iii) will not violate, conflict with or result in a breach, or default under any Postpetition agreement, contract or obligation or Postpetition loan agreement or any other Postpetition indebtedness agreement or instrument of indebtedness binding upon the Company, any Operating Company or any of their respective Subsidiaries or its assets except where such default, breach or violation would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on the Company and (iv) will not result in the creation or acceleration of any obligations or imposition of any Lien on any assets or properties of the Company or any of its Subsidiaries. Section 3.04 Court Orders. Subject and after giving effect to any required approvals of the Bankruptcy Court (including, without limitation, to the extent applicable, the Confirmation Order) and the Plan, the performance of any action by the Company or the Operating Companies required or contemplated by this Agreement or any other Transaction Document is not restrained or enjoined by any order of the Bankruptcy Court or by any Governmental Authority (either temporarily, preliminarily or permanently). Section 3.05 Capitalization; Securities. Upon the Closing and after giving effect to the Confirmation Order, the Plan, the Merger, the Investment and the Other Investments, the issued and outstanding capital stock of the Company shall consist solely of New Common Stock as provided on Schedule 3.05. Except as set forth on Schedule 3.05, upon the Closing and after giving effect to the Confirmation Order, the Plan, the Merger, the Investment and the Other Investments, there will not be any outstanding subscriptions, options, warrants, commitments, agreements or arrangements related to the issuance or sale of outstanding Equity Securities or securities or other instruments convertible into or exchangeable for any Equity Securities of the 9 Company Upon the Closing Date, the New Common Stock to be issued and delivered to the Investor pursuant to the terms hereof, shall have been duly authorized and validly issued, fully paid, nonassessable and not subject to preemptive or similar rights of third parties or reserved for issuance in accordance with the terms of the Plan and Confirmation Order. The rights, preferences and privileges of the capital stock of the Company shall be as set forth in the Certificate of Incorporation of the Company, as amended pursuant to the Plan and in effect upon the Closing in the form attached as Exhibit C to the Merger Agreement. Section 3.06 Information Provided. A true and correct copy of the Merger Agreement, and of each Other Investment Agreement, including each schedule, exhibit and other attachment or related agreement thereto and including in each case any amendments, supplements and modifications through the date hereof, has been provided to Investor. There are no other agreements, arrangements, understandings or commitments, written or oral, of any nature, between any of the Other Investors or their affiliates, on the one hand, and the Company, West or any of their affiliates on the other, relating to the transactions contemplated by the Transaction Documents. Section 3.07 Financial Advisors and Brokers. Except for Seabury Aviation Advisors LLC and/or its Affiliates ("Seabury"), no Person has acted, directly or indirectly, as a broker, finder or financial advisor of the Company or any of the Operating Companies in connection with the Transaction Documents or the transactions contemplated thereby, and except for fees payable to Seabury by the Company, no Person acting for or on behalf of the Company or any of the Operating Companies is entitled to receive any broker's, finder's or similar fee or commission in respect thereof based in any way on any agreement, arrangement or understanding made by or on behalf of the Company or any of the Operating Companies. Section 3.08 Regulatory Status. Neither the Company, nor any Operating Company nor any of their respective Subsidiaries is (i) an "investment company" as defined in, or subject to regulation under, the Investment Company Act of 1940 or (ii) a "holding company" as defined in, or subject to regulation under, the Public Utility Holding Company Act of 1935. US Airways is a Certificated Air Carrier. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF WEST West hereby represents and warrants to Investor as follows: Section 4.01 Incorporation by Reference of Representations and Warranties in the Merger Agreement. West hereby incorporates by reference, for the benefit of Investor as though set forth herein, the following representations and warranties (including the defined terms and disclosure items related thereto) in the Merger Agreement: Sections 3.1(a), (b), (e), (f), (g), (h), (i), (j), (k), (m), (n), (o), (p), (q), (r), (s), (t), (u), (v) and (w). Each such representation which states that "West" (i.e., America West Holdings Corporation) "has made available to East" certain materials shall be deemed to read "has made available to Investor" for purposes of this incorporation by reference. 10 Section 4.02 Authorization; No Contravention. The Transactions to be consummated by West and performance of the Transaction Contracts to which West is or will be a party are within the corporate power and authority of West and have been duly authorized by all necessary corporate and, if required, stockholder action. This Agreement, the Merger Agreement, each Other Investment Agreement, and each other Transaction Contract to which West is a party, entered into as of the date hereof, have been duly executed and delivered by West and constitute a legal, valid and binding obligation of West, enforceable in accordance with its terms. Section 4.03 Consents; No Conflicts. Other than the notices, reports, filings, consents, registrations, approvals, permits or authorizations required under the HSR Act, with respect to West, the execution and delivery of each of the Transaction Contracts to which West is or will be a party and the consummation of the Transactions (i) does not require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority (subject and after giving effect to any required approvals of the Bankruptcy Court (including, without limitation, to the extent applicable, the Confirmation Order) and the Plan), except such as have been obtained or made and are in full force and effect and except where failure to obtain such consent, approval, registration, filing or other action would not reasonably be expected to have a Material Adverse Effect on West, (ii) will not violate, conflict with or result in a breach, violation or default under (A) any applicable law, rule or regulation or any order of or restriction imposed by any Governmental Authority and except, in each case, where such violation of applicable law or regulation would not reasonably be expected to have a Material Adverse Effect on West or (B) the Certificate of Incorporation or Bylaws or any other organizational documents of West or any of its Subsidiaries, (iii) will not violate, conflict with or result in a breach, or default under any agreement, contract or obligation or loan agreement or any other indebtedness agreement or instrument of indebtedness binding upon West or any of its Subsidiaries or its assets except where such default, breach or violation would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on West and (iv) will not result in the creation or acceleration of any obligations or imposition of any Lien on any assets or properties of West or any of its Subsidiaries. Section 4.04 Court Orders. Subject and after giving effect to any required approvals of the Bankruptcy Court (including, without limitation, to the extent applicable, the Confirmation Order) and the Plan, the performance of any action by West required or contemplated by this Agreement or any other Transaction Document is not restrained or enjoined by any order of the Bankruptcy Court or by any Governmental Authority (either temporarily, preliminarily or permanently). Section 4.05 Information Provided. West has delivered to Investor a true and correct copy of the Merger Agreement, including any amendments, supplements and modifications through the date hereof. Section 4.06 Financial Advisors and Brokers. Except for Greenhill & Co., LLC and/or its Affiliates ("Greenhill") and TPG Partners, L.P. and/or its Affiliates ("TPG"), no Person has acted, directly or indirectly, as a broker, finder or financial advisor of West in connection with the Transaction Documents or the transactions contemplated thereby, and except for fees payable to Greenhill and TPG by West, no Person acting for or on behalf of West is 11 entitled to receive any broker's, finder's or similar fee or commission in respect thereof based in any way on any agreement, arrangement or understanding made by or on behalf of West. Section 4.07 Financial Plan. The financial plan provided to Investor on May 12, 2005 (the "Financial Plan") was prepared by West in good faith using assumptions believed by West to be reasonable, and, as of the date hereof, the Financial Plan represents West's reasonable, good faith estimate of the future financial performance of the Company. ARTICLE V REPRESENTATIONS AND WARRANTIES OF INVESTOR Investor represents and warrants to the Company as follows: Section 5.01 Organization. It is an entity duly organized under the laws of the jurisdiction of its formation having all requisite power and authority and all requisite governmental licenses, authorizations, consents and approvals to execute, deliver and perform its obligations under this Agreement and the Stockholders Agreement. Section 5.02 Authorization; No Contravention. The execution, delivery and performance by Investor of this Agreement and the Stockholders Agreement and the consummation of the transactions contemplated hereby and thereby, are within Investor's powers and have been duly authorized by all necessary action and do not and will not contravene the terms of Investor's Agreement of Limited Partnership. This Agreement constitutes and, when executed and delivered by Investor at Closing the Stockholders Agreement will constitute, a legal, valid and binding obligation of Investor, enforceable against Investor in accordance with its terms. Section 5.03 Consents; No Conflicts. Except for (i) the filing of a notification and report form under the HSR Act and the termination or expiration of the waiting period under the HSR Act, (ii) the filing of any other required applications or notices with any Governmental Authority and approval of such applications and notices, and (iii) approval by the Bankruptcy Court, no Approval is necessary or required in connection with the execution, delivery or performance by, or enforcement against, Investor of this Agreement or the Stockholders Agreement or for the consummation of the transactions contemplated hereby and thereby, except for such Approvals that would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of Investor to consummate the Investment, and all of which have been duly obtained, taken, given or made and are in full force and effect, except for Approvals that would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of Investor to consummate the Investment. Section 5.04 Financial Advisors and Brokers. Other than Affiliates of Investor, no Person has acted directly or indirectly as a broker, finder or financial advisor of the Investor in connection with this Agreement, the Stockholders Agreement or the transactions contemplated hereby or thereby, and, other than fees that may be payable to Affiliates of Investor by Investor, no Person acting for or on behalf of Investor is entitled to receive any broker's, finder's or 12 similar fee or commission in respect thereof based in any way on any agreement, arrangement or understanding made by or on behalf of Investor. Section 5.05 Ownership of Equity Securities; Purpose of Investment. Investor is acquiring the New Common Stock under this Agreement solely for the purpose of investment and not with a view to, or for sale in connection with, any distribution thereof in violation of the Securities Act and applicable state securities or "blue sky laws". Investor is an "Accredited Investor" as such term is defined in Regulation D of the Securities Act. Section 5.06 Financing. Investor (or its assignee, as permitted by Section 9.10 who acquires the New Common Stock hereunder at the Closing) has sufficient and adequate resources to consummate the transactions contemplated by this Agreement. Section 5.07 Citizenship. Investor (or its assignee, as permitted by Section 9.10 who acquires the New Common Stock hereunder at the Closing) is a Citizen of the Untied States. ARTICLE VI PRE-CLOSING COVENANTS Section 6.01 Taking of Necessary Action. (a) The Company, West and Investor (solely with respect to the Investment) shall cooperate with each other and use (and shall cause their respective Subsidiaries to use) their respective reasonable best efforts to take or cause to be taken all actions, and do or cause to be done all things, necessary, proper or advisable on its part under this Agreement and applicable Law to consummate and make effective the Transactions as soon as practicable, including preparing and filing as promptly as practicable all documentation to effect all necessary notices, reports and other filings (including, without limitation, appropriate filings pursuant to the HSR Act) and to obtain as promptly as practicable all consents, registrations, approvals, permits and authorizations necessary or advisable to be obtained from any third party and/or any Governmental Authority in order to consummate the Transactions. In exercising the foregoing rights, the Company, West and Investor shall act reasonably and as promptly as practicable. The Company's, West's and (solely with respect to the Investment) Investor's obligations under this Section 6.01 shall include, without limitation, the obligation to use their respective reasonable best efforts to defend any lawsuits or legal proceedings, whether judicial or administrative, or any other actions by a Governmental Authority, challenging the Transactions, including using reasonable best efforts to seek to have any stay or other injunctive relief which would prevent or materially delay or impair the consummation of the Transactions entered by any court or other Governmental Authority reversed on appeal or vacated. For purposes of this Section 6.01, as it relates to Investor, "reasonable best efforts" shall include Investor's agreement to (i) hold its airline assets, if any, in one or more subsidiaries separate from the company that will hold the Investor's equity interest in the Company, and (ii) nominate an Investor Director (as defined in the Stockholders Agreement) whose service would not conflict with applicable law. Except as provided in the immediately preceding sentence, Investor shall not be required (1) to divest, or agree to divest, any of its businesses or assets or any interest therein, or (2) to take or agree to take any other action or agree to any limitation, restriction or condition that could reasonably be expected to 13 materially impair the benefits to Investor expected, as of the date of this Agreement, to be realized from the transactions contemplated hereby. (b) Each of the Company, West and Investor shall, to the extent related to the Investment, in connection with obtaining the approvals referenced in Section 6.01(a), use its reasonable best efforts to (i) subject to applicable law, permit the other party or the other party's outside counsel to review in advance any proposed written communication between it and any Governmental Authority, (ii) promptly inform each other of any communication (or other correspondence or memoranda) received by such party from, or given by such party to, any other Governmental Authority and of any material communication received or given in connection with any proceeding by a private party, in each case regarding any of the transactions contemplated hereby, (iii) consult with each other in advance to the extent practicable of any meeting or conference with any Governmental Authority or, in connection with any proceeding by a private party, with any other Person, and to the extent permitted by the applicable Governmental Authority or other Person, give the other party the opportunity to attend and participate in such meetings and conferences, and (iv) furnish each other with copies of all correspondence, filings and written communications between them or their Subsidiaries or Affiliates on one hand, and any such Governmental Authority or its respective staff on the other hand, with respect to this Agreement and the transactions contemplated hereby, except that (A) any materials concerning Investor's valuation of the transaction may be redacted and (B) any proprietary information of one party not previously disclosed to the other party may be disclosed only to the other party's outside counsel, at the option of the disclosing party. (c) The Company shall, in coordination with Investor (i) file with the Bankruptcy Court a bidding procedures motion, reasonably satisfactory to Investor, seeking approval of the break-up fee set forth in Section 8.02(b) hereof, the expense reimbursement provisions set forth in Section 9.01 hereof and the provisions of Section 4.20 of the Merger Agreement, and (ii) diligently seek approval of the Transactions (consistent with the Bidding Procedures, as hereinafter defined), and (iii) if the Company has determined that the Merger represents a highest and best Qualified Competing Plan Proposal (as defined in the order approving the bidding procedures), (A) file with the Bankruptcy Court, and diligently seek approval of, the Disclosure Statement (with the Plan attached as an exhibit thereto) reasonably satisfactory to Investor and (B) seek to obtain, as expeditiously as possible, a Confirmation Order with respect to the Plan that is reasonably satisfactory to the Investors. Section 6.02 Notifications. At all times prior to the Closing Date, Investor shall promptly notify the Company and each of the Company and West shall promptly notify Investor in writing of any fact, change, condition, circumstance or occurrence or nonoccurrence of any event that will or is reasonably likely to result in such party's representations and warranties to be untrue or inaccurate in any material respect or the failure to satisfy the conditions to be complied with or satisfied by it hereunder; provided, however, that the delivery of any notice pursuant to this Section 6.02 shall not be deemed to alter or amend such party's representations or warranties or limit or otherwise affect the remedies available hereunder to any party giving or receiving such notice. Section 6.03 Financial and Other Information. From and after the date hereof, each of the Company and West shall, and shall cause each of their respective Subsidiaries and 14 Representatives to, afford to Investor, its Affiliates and their respective Representatives, including qualified prospective lenders to Investor that sign appropriate confidentiality agreements, complete access, upon reasonable notice and in such manner as will not unreasonably interfere with the conduct of such companies' respective businesses, to their and their respective Subsidiaries respective facilities, properties, books, contracts, commitments, records (including information regarding any material pending or threatened legal proceeding to which any of such companies is, or reasonably expects to be, a party and negotiations relating to any labor agreements or labor disputes involving the Company, West or any of their respective Subsidiaries), key personnel, officers, independent accountants and legal counsel; provided, however, that neither the Company nor West will be required to provide access to employee personnel files if providing such files would be unreasonable or a violation of applicable Law. Section 6.04 Delivery of Reports. Each of the Company and West and their respective Subsidiaries shall deliver to Investor, promptly following delivery to the ATSB, the reports concerning the weekly and monthly operating and financial data of the Company or West, as applicable, and their respective Subsidiaries that are delivered to the ATSB. Section 6.05 Amendments to Merger Agreement; Etc. Other than pursuant to and in accordance with Section 4.20 of the Merger Agreement, the Company and West will not amend the Merger Agreement, the Plan, any Other Investment Agreement or any other Transaction Document, in each case without the prior written approval of the Investor, such approval not to be unreasonably withheld (it being understood that in such connection Investor is not required to consider the interests of any other Person), and, notwithstanding the foregoing, neither the Company nor West shall waive any condition to the consummation of the Merger or the Plan without the prior written approval of Investor. Section 6.06 Publicity. Prior to the Closing, except as required by Law or by obligations pursuant to any listing agreement with or requirement of any national securities exchange or national quotation system on which the Common Stock, New Common Stock or the common stock of West is listed, admitted to trading or quoted, neither the Company (nor any of its Subsidiaries), West (nor any of its Subsidiaries) nor Investor (nor any of its Affiliates) shall, without the prior written consent of each other party hereto, which consent shall not be unreasonably withheld or delayed, make any public announcement or issue any press release with respect to the transactions contemplated by this Agreement or the Transaction Documents. Prior to making any public disclosure required by applicable Law or pursuant to any listing agreement with or requirement of any relevant national exchange or national quotation system, the disclosing party shall consult with the other parties hereto, to the extent feasible, as to the content and timing of such public announcement or press release. To the extent any party is required to file this Agreement or any Transaction Document with the SEC or any other Governmental Authority (including the Bankruptcy Court), the parties shall consult with each other concerning information for which confidential treatment will be requested. Section 6.07 Investor Financing. Investor shall maintain sufficient and adequate resources to consummate the transactions contemplated by this Agreement at the Closing. Section 6.08 Issuances of Equity Securities. The Company shall not accept subscriptions for, offer, issue, sell, or agree, commit or obligate itself to offer, issue or sell, any 15 Equity Securities other than New Common Stock (a) issued to Investor pursuant to this Agreement, (b) issued to other Persons pursuant to other investment agreements entered into on terms and conditions, including without limitation purchase price, that are no more favorable to such Persons than the terms and conditions provided herein and in the Stockholders Agreement are to the Investor up to an aggregate amount of $500,000,000 including the investments of the Investor and the Other Investors, (c) issued to West's equityholders pursuant to the Merger Agreement as set forth on Schedule 3.05, and (d) issued to existing equityholders and creditors of the Company pursuant to the Plan as set forth on Schedule 3.05, (e) issued by the Company on or prior to the Effective Date pursuant to a rights offering by the Company to existing Company and West stakeholders to purchase shares of New Common Stock at a price per share no less than the purchase price per share of New Common Stock paid by Investor under this Agreement and in an aggregate amount not to exceed the difference between $650,000,000 and the aggregate amount of the Investment, the Other Investments and the investment of any other Person under clause (b) above, and (f) issued by the Company on or prior to the Effective Date at a purchase price per share no less than the purchase price per share of New Common Stock paid by Investor under this Agreement and otherwise on terms and conditions that are no more favorable than the terms and conditions provided herein and in the Stockholders Agreement, for proceeds in excess of $650,000,000 provided that (i) the sole use of such proceeds is the redemption or repurchase of Equity Securities from existing Company and West stakeholders at a repurchase or redemption price that values the Equity Securities redeemed or repurchased (on an as-converted basis, in the case of convertible securities, and, in the case of Equity Securities of West, taking into account the Class B Merger Exchange Ratio (as defined in the Merger Agreement)) at a price per share no more than the purchase price per share of New Common Stock paid by Investor under this Agreement, (ii) the aggregate value of the New Common Stock (valued on the same basis as the New Common Stock to be issued pursuant to this Agreement) issued pursuant to this clause (f) shall not exceed $200,000,000 and (iii) Investor is provided the right to purchase, at its option, up to $20,000,000 of the New Common Stock to be issued pursuant to this clause (f) at a price per share equal to the purchase price per share of New Common Stock paid by Investor under this Agreement. Notwithstanding the foregoing, in connection with the implementation of the Plan, the Company may authorize and reserve for issuance under the Company's equity incentive plan a number of shares of New Common Stock not to exceed 12.5% of the outstanding number of shares of New Common Stock on a Fully Diluted Basis as of the Effective Date, provided that any awards of such shares of New Common Stock made or committed to be made at anytime before the second anniversary of the Effective Date, (x) may only consist of options with an exercise price not less than the lesser of (a) Fair Market Value as of the date of grant and (b) the Investment Price (as appropriately adjusted to reflect stock splits, stock dividends, reverse splits and similar changes with respect to the New Common Stock effected after the Closing Date); provided that the exercise price for any options granted as of or immediately following the Effective Date shall be not less than the Investment Price and (y) shall not be effective unless such awards are approved or ratified by the Board (as constituted from and after the Effective Date as set forth in Section 1.8(a) of the Merger Agreement) or by a committee with appropriate authority granted by such Board. Section 6.09 Transfer Taxes. All transfer taxes, fees and duties under applicable law incurred in connection with the Investment under this Agreement will be borne and paid by the Company and it shall promptly reimburse Investor for any such tax, fee or duty which Investor is required to pay under applicable law. 16 Section 6.10 Bankruptcy Covenants. (a)Notwithstanding anything herein to the contrary, the Company shall not, and shall cause each of the other Debtors not to, offer, agree to, or seek approval from the Bankruptcy Court for, and shall use their best efforts to object to any request by any other party for, any break-up fee, work fee, expense reimbursement or any other benefit or protection for any Person in connection with any proposed acquisition of or investment in any of the Debtors, other than (i) West, (ii) Investor, (iii) any Other Investor, and (iv) any other Person making an investment pursuant to Section 6.08(b); provided that (A) such other Person is purchasing at least $50,000,000 of New Common Stock on terms, and conditions, including without limitation purchase price, that are no more favorable to such other Person than the terms and conditions provided herein and in the Stockholders Agreement are to the Investor and (B) without limitation of the preceding clause (A), any break-up or similar fee payable to such other Person shall not exceed three percent (3.0%) of the aggregate amount of financing to be provided by such other Person. (b) Each of the Debtors agrees that if the Merger Agreement becomes the Approved Proposal (as defined in the Merger Agreement), it shall use its best efforts to cause any order approving the Approved Proposal to prohibit the Debtors (and any Person purporting to act on behalf of the estate of any Debtor) from violating the provisions of Section 4.4(a) of the Merger Agreement or from otherwise pursuing in any way any East Acquisition Proposal (as defined in the Merger Agreement) other than the Merger Agreement unless the Merger Agreement shall have previously been terminated in accordance with its terms. (c) In connection with any proceedings in the Bankruptcy Court related to the Bidding Procedures (as hereinafter defined), the order approving the Approved Proposal or the transactions contemplated by the Merger Agreement or this Agreement (or any Qualified Competing Plan Proposal (as defined in the Bidding Procedures)) (a) the Company shall provide to Investor copies of all motions, objections, pleadings, notices, proposed orders and other documents that are filed by or on behalf of any Debtor as soon as reasonably practicable prior to filing thereof with the Bankruptcy Court and (b) West shall provide to Investor copies of all motions, objections, pleadings, notices, proposed orders and other documents that are filed by or on behalf of West as soon as reasonably practicable prior to filing thereof with the Bankruptcy Court. (d) Except in accordance with the Bidding Procedures, the Company and West shall not, and shall not authorize or permit any of their Subsidiaries or any of the Company's or West's or such Subsidiaries' Representatives, directly or indirectly, to, (i) solicit, initiate, or take any action designed to induce a proposal or offer for an Alternative Proposal, (ii) participate in any discussions or negotiations regarding any Alternative Proposal, or (iii) enter into any letter of intent, agreement in principle, acquisition agreement or other similar agreement related to any Alternative Proposal. "Alternative Proposal" means (x) any Alternative Transaction, or proposal therefor, or (y) any proposed investment that would, or is intended to, replace all or a material portion of the investment contemplated by this Agreement. 17 ARTICLE VII CONDITIONS Section 7.01 Conditions to Investor's Obligations. The obligation of Investor to make the Investment pursuant to Section 2.01 hereof is subject to satisfaction or waiver of each of the following conditions precedent: (a) Definitive Documents. Definitive Transaction Documents (in form and substance reasonably satisfactory to Investor) shall have been prepared, negotiated and, to the extent applicable, duly executed by the parties (or, as applicable, their Affiliates), and approval by the Bankruptcy Court of such documents pursuant to a Final Order, to the extent necessary, shall have been obtained. All such Transaction Documents shall have been executed by the parties thereto (other than Investor and its Affiliates) on or prior to the Effective Date, shall not have been modified, amended, waived or supplemented without the consent of Investor, shall be in effect and the consummation of the transactions contemplated thereby shall not be stayed, and all conditions to the obligations of the parties under such Transaction Documents shall have been satisfied or waived. All corporate and other proceedings to be taken by the Company, West or any of their respective Subsidiaries in connection with such Transaction Documents and the transactions contemplated thereby to be completed at the Closing and documents incident thereto shall have been completed in form and substance reasonably satisfactory to Investor, and Investor shall have received all such counterpart originals or certified or other copies of such Transaction Documents and such other documents as it may reasonably request. Without limiting the generality of the foregoing, in connection with the consummation of the Plan, the Company and the Other Investors and shall have entered into the Stockholders Agreement. (b) Company Representations and Warranties; Covenants. The representations and warranties of the Company set forth in Article III hereof (without giving effect to any material adverse effect, materiality or similar qualifier) shall have been true and correct in all respects on and as of the date hereof and at the Closing as if made on the Closing Date (except where such representation and warranty speaks by its terms of a different date, in which case it shall be true and correct as of such date), except to the extent that such inaccuracies in any such representation or warranty have not had, and would not, individually or in the aggregate, have a Material Adverse Effect on the Company. The Company shall have performed in all material respects all obligations and complied in all material respects with all agreements, undertakings, covenants and conditions required to be performed by it hereunder at or prior to the Closing, and the Company shall have delivered to Investor at the Closing a certificate dated the Closing Date and signed by the chief executive officer and the chief financial officer of the Company to the effect that the conditions set forth in this Section 7.01(b) have been satisfied. (c) West Representations and Warranties; Covenants. The representations and warranties of West set forth in Article IV hereof (without giving effect to any material adverse effect, materiality or similar qualifier) shall have been true and correct in all respects on and as of the date hereof and at the Closing as if made on the Closing Date (except where such representation and warranty speaks by its terms of a different date, in which case it shall be true and correct as of such date), except to the extent that such inaccuracies in any such 18 representation or warranty have not had, and would not, individually or in the aggregate, have a Material Adverse Effect on West. West shall have performed in all material respects all obligations and complied in all material respects with all agreements, undertakings, covenants and conditions required to be performed by it hereunder at or prior to the Closing, and West shall have delivered to Investor at the Closing a certificate dated the Closing Date and signed by the chief executive officer and the chief financial officer of West to the effect that the conditions set forth in this Section 7.01(c) have been satisfied. (d) Compliance with Laws, No Adverse Action or Decision. Since the date hereof, (i) no Law shall have been promulgated, enacted or entered that restrains, enjoins, prevents, materially delays, prohibits or otherwise makes illegal the performance of any of the Transaction Documents; (ii) no preliminary or permanent injunction or other order by any Governmental Authority that restrains, enjoins, prevents, delays, prohibits or otherwise makes illegal the performance of any of the Transaction Documents shall have been issued and remain in effect, except for such injunctions that, if obtained, could not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of Investor, the Company or West or their respective Affiliates to consummate the Transactions; (iii) no Governmental Authority shall have instituted any legal proceeding that seeks to restrain, enjoin, prevent, delay, prohibit or otherwise make illegal the performance of any of the Transaction Documents, except for any such legal proceedings which have a significant possibility of being brought to a conclusion which could not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of Investor, the Company or West or their respective Affiliates to consummate the Transactions, and (iv) there is no pending or threatened investigation or litigation by any other Person relating to the Transactions which, if determined adversely to the Company, West or Investor, would materially impair or limit the rights and benefits of Investor under the Transaction Documents or the economic benefits to Investor of the Transactions in the aggregate and which Investor reasonably believes, based on the advice of counsel, has a reasonable likelihood of success. (e) Approvals. The Company, Investor and West shall have received (i) all material Regulatory Approvals, which shall have become final (provided that, if an appeal of such Regulatory Approval is pending and such appeal has a significant possibility of being resolved adversely to the Company, Investor or West in a manner that would reasonably be expected to have a material adverse effect on the ability of Investor, the Company or West or their respective Affiliates to consummate the Transactions, this clause (i) shall be deemed not to be satisfied), and (ii) all other material approvals, permits, authorizations, exemptions, consents, licenses and agreements from other third parties that are necessary to permit the Transactions to be completed or performed as contemplated by the Transaction Documents and to permit the Investor and its Affiliates and Company and its Affiliates (including West and its Subsidiaries) to carry on its business after such transactions in a manner not materially inconsistent with the manner in which it was carried on prior to the Effective Date (together with the Regulatory Approvals, the "Approvals"), which Approvals shall not contain any condition or restriction that materially impairs the ability of the Investor and its Affiliates or the ability of the Company (including West and its Subsidiaries) to carry on its business. All waiting periods imposed by applicable Law (including, without limitation, under the HSR Act) in connection with the Transactions shall have expired or been terminated without any action having been taken by any court of competent jurisdiction restraining, preventing or imposing materially adverse conditions 19 upon such transactions or upon the conduct of the business of Investor, East, West or their respective Affiliates. (f) Plan of Reorganization. The Plan shall be in a form reasonably acceptable to the Investor, such Plan shall have been confirmed by the Bankruptcy Court, and such Plan shall among other things (i) not conflict with any material term of this Agreement, the Stockholders Agreement or the other Transaction Documents, (ii) be substantially consistent in all material respects with the terms of the Financial Plan including, without limitation, concessions obtained and to be obtained from the Debtors' employees, creditors, lessors and other claimants, and (iii) reflect a corporate and capital structure (including liabilities) of the Company consistent with the Financial Plan. All conditions to the effectiveness of the Plan, other than the consummation of this Agreement, shall have been satisfied, and a Confirmation Order in a form reasonably acceptable to the Investor shall have been entered and become a Final Order no later than December 31, 2005. (g) Additional East Equity. In connection with the emergence of the Company and the Operating Companies from chapter 11 and the consummation of the Plan, the Company will have received on the Effective Date cash equity investments aggregating not less than $375,000,000 and not more than $500,000,000 pursuant to this Agreement and the Other Investment Agreements (and including any loans converted into equity under the Air Wisconsin DIP Agreement), all on terms, including without limitation purchase price, no more favorable to the Other Investors and Eastshore Aviation LLC than the terms of this Agreement and the Stockholders Agreement are to the Investor, which with all other equity capital of the Company, will be invested only in a single class of common stock, the New Common Stock, with all such New Common Stock having the same voting rights, and shall have no other class of capital stock authorized in its charter other than the New Common Stock. The Company alone, and not any Affiliate of the Company, shall have issued Equity Securities in connection with the consummation of the Plan. (h) Contracts. All material executory contracts and unexpired leases, the assumption, assignment, rejection or renegotiation of which is necessary for the successful implementation of the Plan and the operation of the Company's business as such business is contemplated in the Financial Plan to be conducted, shall have been assumed, assigned, rejected or renegotiated, as applicable. (i) Effective Date and Merger. The Effective Time (as defined in the Merger Agreement) shall have occurred, or shall occur concurrently with the Closing, and the Merger shall have been, or will concurrently with the Closing be, consummated in accordance with the terms of the Merger Agreement without amendment or waiver other than as permitted in accordance with Section 6.05 of this Agreement. (j) Conversion of Air Wisconsin DIP. Eastshore Aviation LLC shall have converted the existing debt owed to it pursuant to the Air Wisconsin DIP Agreement into New Common Stock in an amount not less than $125,000,000 and on terms, including without limitation valuation of the New Common Stock, no more favorable than the terms of the Investment in New Common Stock being made by Investor pursuant to this Agreement and the Stockholders Agreement. 20 (k) No Conversion to Chapter 7. Neither the Company's Chapter 11 Case nor US Airways Chapter 11 Case shall have been converted to a case under Chapter 7 of the Bankruptcy Code and no trustee shall have been appointed under any chapter of the Bankruptcy Code in respect of either such case. (l) Certificate of Incorporation and Bylaws. The Certificate of Incorporation and Bylaws, substantially in the forms attached as Exhibits C and D, respectively, to the Merger Agreement, shall have been filed with and accepted by the Secretary of State of the State of Delaware and shall have become effective. As of the Closing Date, the Company shall have delivered to Investor a complete and correct copy of the certificates of incorporation and the bylaws or comparable governing instruments of each of the Operating Companies, in full force and effect as of the Closing Date. (m) Delivery. The Company shall have executed and delivered to Investor the shares of New Common Stock pursuant to and in accordance with Section 2.01 hereof. (n) Board Representation. The composition of the Board shall be as set forth in Section 1.8(a) of the Merger Agreement and, as contemplated by the Stockholders Agreement, the Investor Director designated by Investor, if so designated, shall have been elected or appointed to the Board for an initial term of three years, with such election or appointment effective as of the date that is two business days following the Closing Date. (o) Directors' and Officers' Insurance. The Company shall have procured and maintained in full force and effect directors' and officers' liability insurance with respect to members of the Board of Directors of the Company, which insurance shall be at least $100 million, and shall cover such risks, as is customary for a corporation in the Company's and its Affiliates respective businesses or other similar businesses. (p) Absence of Changes. From the date of this Agreement through the Closing Date, there shall not have occurred any change, event, occurrence, condition or development that has or could reasonably be expected to have a material adverse effect on the financial condition, assets, liabilities, business or results of operations of the Company or West or that would prevent, materially delay or materially impair the ability of the Company, West or Investor to consummate the transactions contemplated by this Agreement. The Company's financial and operational performance from the period from March 31, 2005 to the Closing Date shall not have deviated materially and adversely from the performance indicated in the Financial Plan. (q) Profit Sharing Plan. The Company's employee profit sharing plan shall have been amended on terms no less favorable to Investor than those set forth on Schedule 7.01(q). (r) Listing. The shares of New Common Stock to be issued to Investor under this Agreement shall have been authorized for listing or quotation, as applicable, on the New York Stock Exchange or NASDAQ Stock Market upon official notice of issuance. 21 Section 7.02 Conditions to the Company's Obligations. The obligation of the Company to issue and sell the New Common Stock pursuant to Section 2.01 hereof at the Closing is subject to the satisfaction or waiver of each of the following conditions precedent: (a) Definitive Documents. Definitive Transaction Documents (in form and substance reasonably satisfactory to the Company) necessary to consummate the transactions contemplated herein shall have been prepared, negotiated and, to the extent applicable, executed by the parties (or, as applicable, their Affiliates), and approval by the Bankruptcy Court of such documents, as necessary, shall have been obtained. All Transaction Documents shall not have been modified, shall be in effect and the consummation of the transactions contemplated thereby shall not be stayed, and all conditions to the obligations of the parties under the Transaction Contracts shall have been satisfied or effectively waived. All corporate and other proceedings to be taken by Investor its Affiliates in connection with the Transaction Documents and the transactions contemplated thereby to be completed at the Closing and documents incident thereto shall have been completed in form and substance reasonably satisfactory to the Company, and the Company shall have received all such counterpart originals or certified or other copies of the Transaction Documents and such other documents as it may reasonably request. (b) Investor Representations and Warranties; Covenants. The representations and warranties of Investor set forth in Article V hereof (without giving effect to any material adverse effect, materiality or similar qualifier) shall have been true and correct in all respects, on and as of the date hereof and at the Closing as if made on the Closing Date (except where such representation and warranty speaks by its terms as of a different date, in which case it shall be true and correct as of such date), except to the extent that such inaccuracies have not had, and would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of Investor or its Affiliates to consummate the Transactions. Investor shall have performed in all material respects all obligations and complied in all material respects with all agreements, undertakings, covenants and conditions required to be performed by it at or prior to the Closing, and Investor shall have delivered to the Company and West at the Closing a certificate dated the Closing Date and signed on behalf of a member of Investor to the effect that the conditions set forth in this Section 7.02(b) have been satisfied. (c) Compliance with Laws; No Adverse Action or Decision. Since the date hereof, (i) no Law shall have been promulgated, enacted or entered that restrains, enjoins, prevents, materially delays, prohibits or otherwise makes illegal the performance of any of the Transaction Documents with respect to the transactions contemplated thereby to be completed at the Closing; (ii) no preliminary or permanent injunction or other order by any Governmental Authority or other Person that restrains, enjoins, prevents, delays, prohibits or otherwise makes illegal the performance of any of the Transaction Documents shall have been issued and remain in effect, except for such injunctions that, if obtained, could not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of Investor, the Company or West or their respective Affiliates to consummate the Transactions; and (iii) no Governmental Authority shall have instituted any legal proceeding that seeks to restrain, enjoin, prevent, delay, prohibit or otherwise make illegal the performance of any of the Transaction Documents, except for any legal proceedings which have a significant possibility of being brought to a conclusion which could not, individually or in the aggregate, reasonably be expected to have a material 22 adverse effect on the ability of Investor, the Company or West or their respective Affiliates to consummate the Transactions. (d) Approvals. The Company and West shall have received (i) all material Regulatory Approvals (other than waiting periods imposed by applicable Law as referred to later in this paragraph), which shall have become final (provided that, if an appeal of such Regulatory Approval is pending and such appeal has a significant possibility of being resolved adversely to the Company or West in a manner that would reasonably be expected to have a material adverse effect on the ability of Investor, the Company or West or their respective Affiliates to consummate the Transactions, this clause (i) shall be deemed not to be satisfied), and (ii) all other Approvals, which Approvals shall not contain any condition or restriction that, in the Company's reasonable judgment, materially impairs the Company's ability to carry on its business. Without limiting the generality of clause (ii), any and all required approvals under any material financing agreements to which the Company, West or any of their respective Subsidiaries is a party shall have been obtained. All waiting periods imposed by applicable Law (including, without limitation, under the HSR Act) in connection with the transactions contemplated by the Transaction Documents shall have expired or been terminated without any action having been taken by any court of competent jurisdiction restraining, preventing or imposing materially adverse conditions upon such transactions. (e) Confirmation Order. The Confirmation Order, satisfactory in form and substance in all respects to the Company, shall have been entered by the Bankruptcy Court and, once entered, shall not have been modified without the Company's and West's prior written consent in any manner materially adverse to the Company, shall be in effect and shall not have been stayed. (f) Effective Date and the Merger. The Effective Date and the satisfaction or waiver of all conditions to the closing of the Merger shall have occurred not later than the Closing. (g) Citizenship. The Company and West shall have received reasonably satisfactory assurances as it may request that Investor is a Citizen of the United States. ARTICLE VIII TERMINATION Section 8.01 Termination of Agreement. Subject to Section 8.02 hereof, this Agreement may be terminated by notice in writing at any time prior to the Closing by: (a) Investor or the Company, if (i) closing of the Transactions (including the Closing) shall not have occurred on or before December 31, 2005 or (ii) the Merger Agreement shall have been terminated in accordance with its terms on or before December 31, 2005; (b) Investor, if (i) a bidding procedures order (substantially in the form attached as Exhibit E to the Merger Agreement) approving the break-up fee set forth in Section 8.02(b) hereof, the expense reimbursement provisions set forth in Section 9.01 and the provisions 23 of Section 4.20 of the Merger Agreement (in the form attached as Exhibit A to this Agreement) (the "Bidding Procedures") hereof shall not have been entered by the Bankruptcy Court within thirty (30) days following the date hereof, but in no event later than June 30, 2005, (ii) the Merger and the transactions contemplated by the Merger Agreement and this Agreement shall not have been determined by the Bankruptcy Court to be the Approved Proposal within sixty-five (65) days after the entry by the Bankruptcy Court of the order approving the Bidding Procedures contemplated by the preceding clause (i), (iii) there shall have been a breach by the Company or West of any material representation, warranty, covenant or agreement contained in this Agreement, which breach would result in the failure to satisfy any condition set forth in Section 7.01 hereof to Investor's obligations and that has not been cured within thirty (30) days following receipt by the Company or West of written notice from Investor of such breach, (iv) any condition set forth in Section 7.01 hereof to Investor's obligations is not capable of being satisfied, (v) the Company shall enter into a written agreement or letter of intent or agreement in principle providing for an Alternative Proposal, or (vi) the Bankruptcy Court shall have ordered the Company to terminate this Agreement in order to accept an Alternative Proposal; (c) the Company, if (i) there shall have been a breach by Investor of any material representation, warranty, covenant or agreement contained in this Agreement which breach would result in the failure to satisfy any condition set forth in Section 7.02 hereof to the Company's obligations and that has not been cured within thirty (30) days following receipt by Investor of written notice from the Company of such breach, or (ii) any condition set forth in Section 7.02 hereof to the Company's obligations is not capable of being satisfied; or (d) mutual agreement in writing by the Company and Investor. Section 8.02 Effect of Termination. (a) If this Agreement is terminated in accordance with Section 8.01 hereof and the transactions contemplated hereby are not consummated, this Agreement shall become null and void and of no further force and effect except that (i) the terms and provisions of this Section 8.02 and Article IX hereof shall survive the termination of this Agreement, and (ii) any termination of this Agreement shall not relieve any party hereto from any liability for any willful breach of its obligations hereunder. A termination shall not void or affect any of the constituent transactions consummated prior to such termination or any sections hereof which by their terms survive termination. (b) In the event that (i) the Investment is not consummated, (ii) Investor is not in breach of any material representation, warranty, covenant or agreement contained in this Agreement and (iii) an Alternative Transaction is effectuated, with or without a merger with West, the Company shall on the date of the closing of such Alternative Transaction pay to Investor, by wire transfer of immediately available funds, a break-up fee equal to $3,000,000. 24 ARTICLE IX MISCELLANEOUS Section 9.01 Fees and Expenses. (a) Except as expressly provided herein or in any Transaction Document, each party shall bear its own costs and expenses incurred in connection with this Agreement or any of the Transactions. Notwithstanding the foregoing, at the Closing, the Company shall reimburse Investor for the reasonable out-of-pocket expenses of Investor relating to: (i) Investor's due diligence investigation of the Debtors and West; (ii) the negotiation of this Agreement, the Stockholders Agreement, the Plan and the Term Sheet dated as of May 9, 2005 (the "Term Sheet"); (iii) participation in the Bankruptcy Court proceedings; (iv) the consummation of the transactions contemplated by this Agreement, the Stockholders Agreement, the Term Sheet, the Plan and the Merger; and (v) the enforcement of Investor's rights under the Term Sheet, this Agreement and/or the Stockholders Agreement; provided, however, that reimbursement pursuant to clause (i) through (iv) above shall not exceed the sum of (x) $350,000 plus (y) filing fees, incurred in connection with any required filings under the HSR Act. (b) All amounts payable under this Agreement shall be paid in immediately available funds to an account or accounts designated by the recipient of such amounts, except as otherwise provided herein. Section 9.02 Survival of Representations, Warranties and Covenants. None of the representations, warranties or covenants contained in this Agreement shall survive the Closing Date. Section 9.03 Specific Performance. The parties hereto specifically acknowledge that monetary damages are not an adequate remedy for violations of this Agreement, and that any party hereto may, in its sole discretion, apply to a court of competent jurisdiction for specific performance or injunctive or such other relief as such court may deem just and proper in order to enforce this Agreement or prevent any violation hereof and, to the extent permitted by applicable Law and to the extent the party seeking such relief would be entitled to the merits to obtain such relief, each party waives any objection to the imposition of such relief. Section 9.04 General Interpretive Principles. Whenever used in this Agreement, except as otherwise expressly provided or unless the context otherwise requires, any noun or pronoun shall be deemed to include the plural as well as the singular and to cover all genders. The name assigned this Agreement and the Section captions used herein are for convenience of reference only and shall not be construed to affect the meaning, construction or effect hereof. Unless otherwise specified, any references to a party's "judgment", "satisfaction" or words of a similar import shall mean in such party's sole judgment. Unless otherwise specified, the terms "hereof," "herein" and similar terms refer to this Agreement as a whole (including the Exhibits and Schedules hereto), and references herein to Articles or Sections refer to Articles or Sections of this Agreement. 25 Section 9.05 Notices. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given, if delivered personally, by telecopier or sent by first class mail, postage prepaid, to the addresses set forth on Schedule 9.05. Section 9.06 Entire Agreement; Amendment. This Agreement and the documents described herein (including the Plan) or attached or delivered pursuant hereto (including, without limitation, the other Transaction Documents) set forth the entire agreement between the parties hereto with respect to the transactions contemplated by this Agreement. Any provision of this Agreement may only be amended, modified or supplemented in whole or in part at any time by an agreement in writing among the parties hereto executed in the same manner as this Agreement. No failure on the part of any party to exercise, and no delay in exercising, any right shall operate as waiver thereof, nor shall any single or partial exercise by either party of any right preclude any other or future exercise thereof or the exercise of any other right. Section 9.07 No Other Representations or Warranties. Except for the representations and warranties contained in this Agreement, neither East nor West, nor any agent, Affiliate, officer, director, employee or representative of either or them, nor any other Person, makes, or shall be deemed to make, any representation or warranty to Investor, express or implied, at law or in equity, on behalf of East or West, and East and West hereby exclude and disclaim any such representation or warranty whether by either East or West or any or their respective agents, Affiliates, officers, directors, employees or representatives or any other Person, notwithstanding the delivery or disclosure to Investor or any of their respective officers, directors, partners, employees or representatives or any other Person of any documentation or other information by East or West or any of their respective agents, Affiliates, officers, directors, employees or representatives or any other Person with respect to any one or more of the foregoing. Section 9.08 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed to constitute an original, but all of which together shall constitute one and the same document. Section 9.09 Governing Law. To the extent not governed by the Bankruptcy Code, this Agreement shall be governed by, and interpreted in accordance with, the Laws of the State of New York applicable to contracts made and to be performed in that State without reference to its conflict of laws rules. The parties hereto agree that the appropriate and exclusive forum for any disputes arising out of this Agreement solely between the Company and Investor shall be the Bankruptcy Court, or if such court will not hear any such suit, the U.S. District Court for the Southern District of New York, and, the parties hereto irrevocably consent to the exclusive jurisdiction of such courts, and agree to comply with all requirements necessary to give such courts jurisdiction. The parties hereto further agree that the parties will not bring suit with respect to any disputes arising out of this Agreement except as expressly set forth below for the execution or enforcement of judgment, in any jurisdiction other than the above specified courts. Each of the parties hereto irrevocably consents to the service of process in any action or proceeding hereunder by the mailing of copies thereof by registered or certified airmail, postage prepaid, to the address specified in Section 9.05 hereof. The foregoing shall not limit the rights of any party hereto to serve process in any other manner permitted by the Law or to obtain execution of judgment in any other jurisdiction. The parties further agree, to the extent permitted 26 by Law, that final and non-appealable judgment against any of them in any action or proceeding contemplated above shall be conclusive and may be enforced in any other jurisdiction within or outside the United States by suit on the judgment, a certified or exemplified copy of which shall be conclusive evidence of the fact and the amount of indebtedness. THE PARTIES AGREE TO WAIVE ANY AND ALL RIGHTS THAT THEY MAY HAVE TO A JURY TRIAL WITH RESPECT TO DISPUTES ARISING OUT OF THIS AGREEMENT. Section 9.10 Successors and Assigns. Except as otherwise expressly provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the Company's, West's and Investor's successors and permitted assigns. Neither this Agreement nor any rights or obligations hereunder shall be assignable by any party hereto without the prior written consent of the other parties hereto. Section 9.11 No Third-Party Beneficiaries. This Agreement is for the sole benefit of the parties hereto and their respective successors and permitted assigns and nothing herein, express or implied, is intended or shall confer upon any other Person any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement. Section 9.12 Confidentiality. A version of this Agreement with certain competitively sensitive information redacted will be filed by the Company with the Motion. Each party hereto agrees not to disclose the unredacted version of this Agreement to any third parties (other than disclosure required by the SEC or any other Governmental Authority (including the Bankruptcy Court) or pursuant to any listing agreement with or requirement of any relevant national exchange or national quotation system) without appropriate confidentiality agreements with such third parties being in place that are reasonably acceptable to the other parties hereto. 27 IN WITNESS WHEREOF, this Agreement has been executed on behalf of the parties hereto by their respective duly authorized officers, all as of the date first above written. PAR INVESTMENT PARTNERS, L.P. By: PAR GROUP, L.P. its general partner By: PAR CAPITAL MANAGEMENT, INC. its general partner /s/ Edward L. Shapiro By: ------------------------------------------- Name: Edward L. Shapiro Title: Vice President US AIRWAYS GROUP, INC. By: /s/ Bruce R. Lakefield ------------------------------------------- Name: Bruce R. Lakefield Title: Chief Executive Officer AMERICA WEST HOLDINGS CORPORATION By: /s/ W. Douglas Parker ------------------------------------------- Name: W. Douglas Parker Title: Chairman and Chief Executive Officer 28 Exhibit A-3 to the Merger Agreement INVESTMENT AGREEMENT dated as of May 19, 2005 among US AIRWAYS GROUP, INC., AMERICA WEST HOLDINGS, INC. and PENINSULA INVESTMENT PARTNERS, L.P. TABLE OF CONTENTS
Page ---- ARTICLE I DEFINITIONS.............................................................................................2 Section 1.01 Definitions.................................................................................2 ARTICLE II ISSUANCE AND PURCHASE OF NEW COMMON STOCK..............................................................7 Section 2.01 Issuance and Purchase of New Common Stock...................................................7 Section 2.02 Closing.....................................................................................8 ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY.........................................................8 Section 3.01 Incorporation by Reference of Representations and Warranties in the Merger Agreement............................................................................8 Section 3.02 Authorization; No Contravention.............................................................8 Section 3.03 Consents; No Conflicts......................................................................9 Section 3.04 Court Orders................................................................................9 Section 3.05 Capitalization; Securities..................................................................9 Section 3.06 Information Provided.......................................................................10 Section 3.07 Financial Advisors and Brokers.............................................................10 Section 3.08 Regulatory Status..........................................................................10 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF WEST................................................................10 Section 4.01 Incorporation by Reference of Representations and Warranties in the Merger Agreement...........................................................................10 Section 4.02 Authorization; No Contravention............................................................11 Section 4.03 Consents; No Conflicts.....................................................................11 Section 4.04 Court Orders...............................................................................11 Section 4.05 Information Provided.......................................................................11 Section 4.06 Financial Advisors and Brokers.............................................................11 Section 4.07 Financial Plan.............................................................................12 ARTICLE V REPRESENTATIONS AND WARRANTIES OF INVESTOR.............................................................12 Section 5.01 Organization...............................................................................12 Section 5.02 Authorization; No Contravention............................................................12 Section 5.03 Consents; No Conflicts.....................................................................12 Section 5.04 Financial Advisors and Brokers.............................................................12 Section 5.05 Ownership of Equity Securities; Purpose of Investment......................................13 Section 5.06 Financing..................................................................................13 ARTICLE VI PRE-CLOSING COVENANTS.................................................................................13 Section 6.01 Taking of Necessary Action.................................................................13 Section 6.02 Notifications..............................................................................14 Section 6.03 Financial and Other Information............................................................14 Section 6.04 Delivery of Reports........................................................................15 Section 6.05 Amendments to Merger Agreement; Etc........................................................15
i Section 6.06 Publicity..................................................................................15 Section 6.07 Investor Financing.........................................................................15 Section 6.08 Issuances of Equity Securities.............................................................15 Section 6.09 Transfer Taxes.............................................................................16 Section 6.10 Bankruptcy Covenants.......................................................................16 ARTICLE VII CONDITIONS...........................................................................................18 Section 7.01 Conditions to Investor's Obligations.......................................................18 Section 7.02 Conditions to the Company's Obligations....................................................21 ARTICLE VIII TERMINATION.........................................................................................23 Section 8.01 Termination of Agreement...................................................................23 Section 8.02 Effect of Termination......................................................................24 ARTICLE IX MISCELLANEOUS.........................................................................................24 Section 9.01 Fees and Expenses..........................................................................24 Section 9.02 Survival of Representations, Warranties and Covenants......................................25 Section 9.03 Specific Performance.......................................................................25 Section 9.04 General Interpretive Principles............................................................25 Section 9.05 Notices....................................................................................25 Section 9.06 Entire Agreement; Amendment................................................................25 Section 9.07 No Other Representations or Warranties.....................................................25 Section 9.08 Counterparts...............................................................................26 Section 9.09 Governing Law..............................................................................26 Section 9.10 Successors and Assigns.....................................................................26 Section 9.11 No Third-Party Beneficiaries...............................................................26 Section 9.12 Confidentiality............................................................................27 EXHIBIT A Merger Agreement EXHIBIT B Stockholders Agreement Schedule 1 New Common Stock Schedule 3.05 Capitalization Schedule 7.01(q) Terms of Revised Profit Sharing Plan Schedule 9.05 Notices Information
ii INVESTMENT AGREEMENT THIS INVESTMENT AGREEMENT (together with all exhibits and schedules hereto and as the same may be amended, supplemented or otherwise modified from time to time in accordance with the terms hereof, the "Agreement"), dated as of May 19, 2005, by and among Peninsula Investment Partners, L.P., a Delaware limited partnership (the "Investor"), US Airways Group, Inc., a Delaware corporation, and its successors (including, as the context may require, on or after the Effective Date, as reorganized pursuant to the Bankruptcy Code) (the "Company"), and America West Holdings Corporation, a Delaware corporation ("West"). W I T N E S S E T H: WHEREAS, on September 12, 2004, the Company and certain of its Subsidiaries (the "Debtor Subsidiaries" and together with the Company, the "Debtors") filed voluntary petitions (the "Cases") for protection under chapter 11 of the United States Bankruptcy Code (the "Bankruptcy Code") in the United States Bankruptcy Court for the Eastern District of Virginia, Alexandria Division (the "Bankruptcy Court") to enable the Debtors to be restructured pursuant to one or more plans of reorganization (collectively, the "Plan"); WHEREAS, the Debtors have continued in the possession of their assets and in the management of their businesses pursuant to Sections 1107 and 1108 of the Bankruptcy Code; WHEREAS, pursuant to the Plan, the Company intends to cancel all of the existing outstanding Equity Securities of the Company upon the Effective Date and issue the New Common Stock; WHEREAS, pursuant to the Plan, the Company, Barbell Acquisition Corp., a Delaware corporation ("Merger Sub"), and West have entered into an Agreement and Plan of Merger (together with all of the schedules, exhibits and other attachments thereto, the "Merger Agreement"), attached as Exhibit A hereto; WHEREAS, subject to the other terms and conditions contained herein, the Investor desires to commit to provide equity financing to the Company; WHEREAS, the Company intends to issue and sell to Investor, and Investor intends to purchase from the Company, shares of New Common Stock (such purchase, issuance and sale, the "Investment") in exchange for the Investment Price, all on the terms provided in this Agreement; WHEREAS, pursuant to the Other Investment Agreements, the Company intends to issue and sell to ACE Aviation Holdings Inc., Par Investment Partners, L.P. and Eastshore Aviation, LLC (the "Other Investors") shares of New Common Stock pursuant to investment agreements entered into by the Other Investors in the forms previously provided to Investor and on terms and conditions, including without limitation purchase price, that are no more favorable to the Other Investors than the terms and conditions provided herein and in the Stockholders Agreement are to the Investor; 1 WHEREAS, the Investor intends to enter into a Stockholders Agreement (the "Stockholders Agreement"), substantially in the form of Exhibit B hereto, with the Company and the Other Investors; WHEREAS, the parties intend that the transactions contemplated hereby will be implemented by and take effect simultaneously with the implementation of the Plan on the Effective Date (except as to those transactions that are expressly intended to take effect at another date); WHEREAS, the parties intend that all of the transactions contemplated hereby are intended to be treated as a single integrated transaction subject to the approval of the Bankruptcy Court as soon as reasonably practicable after the date hereof; and WHEREAS, the Company, West and the Investor desire to make certain representations, warranties, covenants and agreements in connection with the transactions contemplated herein. NOW, THEREFORE, in consideration of the premises and the mutual representations, warranties, covenants and agreements contained herein, the parties hereto agree as follows, in the case of the Company, subject to Bankruptcy Court approval of this Agreement: ARTICLE I DEFINITIONS Section 1.01 Definitions. As used in this Agreement, the following terms shall have the meanings set forth below: "Affiliate" means, with respect to any specified Person, a Person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the specified Person, where "control" (including the terms "controlling," "controlled by" and "under common control with") means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract, or otherwise; provided, however, that when used with respect to the Company, "Affiliate" shall not include Investor or any Affiliate thereof. "Agreement" has the meaning set forth in the preamble hereto. "Air Wisconsin DIP Agreement" means the Junior Secured Debtor-in-Possession Credit Facility Agreement, dated as of February 18, 2005, by and among US Airways, Inc., as Borrower, certain affiliates thereof as guarantors, and Eastshore Aviation, LLC, as lender, as amended, supplemented or otherwise modified from time to time. "Alternative Transaction" means (a) any reorganization of the Company or (b) any sale, merger, consolidation, joint venture, recapitalization, sale of assets or equity interests or other combination or disposition or similar transaction or series of transactions involving at least 2 40%, on a fair market value basis, of the assets of the Company and its Operating Subsidiaries, taken as a whole, or 40% of the equity securities of the Company. "Approvals" has the meaning set forth in Section 7.01(e) hereof. "ATSB" means the Air Transportation Stabilization Board, created pursuant to Section 102 of the Air Transportation Safety and System Stabilization Act, P.L. 107-42, as the same may be amended from time to time. "Bankruptcy Code" has the meaning set forth in the recitals hereto. "Bankruptcy Court" has the meaning set forth in the recitals hereto. "Board" means the board of directors of the Company (including, with respect to periods following the Effective Date, the Company). "Business Day" means any day other than a Saturday, Sunday or a day on which banking institutions of the State of New York are authorized by law or executive order to close. "Bylaws" means the bylaws of the Company, as amended from time to time (including, with respect to periods following the Effective Date). "Cases" has the meaning set forth in the recitals hereto. "Certificate of Incorporation" means the Certificate of Incorporation of the Company, as amended from time to time, including any certificate of designation relating to any Equity Securities of the Company (including, in each case, with respect to periods following the Effective Date). "Certificated Air Carrier" means a Citizen of the United States holding an aircraft operating certificate issued pursuant to Chapter 447 of Title 49 of the United States Code or any analogous successor provision of the United States Code, for aircraft capable of carrying ten or more individuals or 6,000 pounds or more of cargo or that otherwise is certified or registered to the extent required to fall within the purview of 11 U.S.C. Section 1110 or any analogous successor provision of the Bankruptcy Code. "Chapter 11" means Chapter 11 of the Bankruptcy Code. "Citizen of the United States" has the meaning given to such term in Section 40102(a)(15) of Title 49 of the Transportation Code, or any subsequent legislation that amends, supplements or supersedes such provisions. "Closing" means the closing of the issuance, sale and purchase of the New Common Stock pursuant to Section 2.01 hereof. "Closing Date" has the meaning set forth in Section 2.02(a) hereof. "Company" has the meaning set forth in the preamble hereto. 3 "Confirmation Order" means a Final Order of the Bankruptcy Court approving the Plan. "Debtors" has the meaning set forth in the recitals hereto. "Debtor Subsidiaries" has the meaning set forth in the recitals hereto. "Disclosure Statement" means a disclosure statement with respect to the Plan. "Effective Date" means the effective date of the Plan. "Equity Securities" shall mean (i) capital stock of, or other equity interests in, any Person, (ii) securities or other instruments convertible into or exchangeable for shares of capital stock, voting securities or other equity interests in such Person or (iii) options, warrants, investment agreements or other rights to acquire the securities described in clauses (i) and (ii), whether fixed or contingent, matured or unmatured, contractual, legal, equitable or otherwise. "Fair Market Value" shall mean the fair market value of the New Common Stock, as determined by the Board. If the New Common Stock is traded on an over-the-counter securities market or national securities exchange, "Fair Market Value" shall mean the closing sales price of the New Common Stock reported on such over-the-counter market or such national securities exchange on the applicable date or, if no sales of New Common Stock have been reported for that date, on the next preceding date for which sales where reported. "Final Order" means an order or judgment of the Bankruptcy Court, or other court of competent jurisdiction, as entered on the docket in the Cases or the docket of any other court of competent jurisdiction, that has not been reversed, stayed, modified or amended, and as to which the time to appeal or seek reargument, reconsideration, or certiorari has expired and no appeal, motion for reconsideration or reargument or petition for certiorari has been timely taken, or as to which any appeal that has been taken or any petition for certiorari, motion for reconsideration or reargument that has been or may be filed has been resolved by the highest court to which the order or judgment was appealed or from which reargument, reconsideration, or certiorari was sought and the time to take any further appeal, petition for certiorari or move for reargument shall have expired. "Fully Diluted Basis" means the number of shares of New Common Stock, without duplication, which are issued and outstanding or owned or held, as applicable, at the date of determination plus the number of shares of New Common Stock issuable pursuant to any Equity Securities then outstanding convertible into or exchangeable or exercisable for (whether or not subject to contingencies or passage of time, or both) shares of New Common Stock. "Governmental Authority" means the government of the United States of America, any other nation or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government. 4 "Hearing" means the hearing conducted in the Cases in the Bankruptcy Court seeking approval of the Motion. "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the regulations promulgated thereunder. "Investor" has the meaning set forth in the preamble hereto. "Investor Director" means any member of the Board of the Company nominated by Investor in accordance with the Stockholders Agreement. "Investment" has the meaning set forth in the recitals hereto. "Investment Price" has the meaning set forth in Section 2.01 hereof. "Law" means any law, treaty, statute, ordinance, code, rule or regulation of a Governmental Authority or judgment, decree, order, writ, award, injunction or determination of a court or other Governmental Authority. "Lien" means any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge, or preference, priority or other security interest or preferential arrangement of any kind or nature whatsoever intended for security (including any conditional sale or other title retention agreement, any easement, right of way or other encumbrance on title to real property, and any financing lease having substantially the same economic effect as any of the foregoing). "Material Adverse Effect" on any Person means (x) a material adverse effect on the financial condition, assets, liabilities, business or results of operations of such Person and its Subsidiaries taken as a whole, excluding any such effect resulting from (I) changes or conditions generally affecting the U.S. economy or financial markets, (II) changes or conditions generally affecting any of the segments of the airline industry in which such Person or any of its Subsidiaries operates, to the extent such conditions or changes do not disproportionately impact such Person or its Subsidiaries (III) changes or conditions resulting from divestiture required in order to satisfy Section 5.1(b) of the Merger Agreement or (IV) the announcement or consummation of the Merger Agreement, or (y) an effect that would prevent, materially delay or materially impair the ability of such Person to consummate the Merger or the ability of such Person or the Investor to consummate the transactions contemplated by this Agreement. For purposes of this definition, any suspension of commercial air travel in the United States for a period of 72 hours or more shall be deemed to have a Material Adverse Effect on the Company and West. "Merger" has the meaning assigned to such term in the Merger Agreement. "Merger Agreement" has the meaning set forth in the recitals hereto. "Merger Sub" has the meaning set forth in the recitals hereto. 5 "Motion" means the motion and any supporting papers seeking approval of the Transactions, in form and substance reasonably acceptable to Investor and providing, inter alia, not less than a ten (10) day notice period prior to the Hearing and providing for confidential treatment of portions of the Transaction Documents as mutually agreed by the Company and the Investor. "New Common Stock" means the class of common stock of the Company authorized under the Certificate of Incorporation attached as Exhibit C to the Merger Agreement and to be issued to West shareholders pursuant to the Merger. "Operating Companies" means, with respect to the Company, US Airways, PSA Airlines, Inc., a Pennsylvania corporation, Piedmont Airlines, Inc., a Maryland corporation and Material Services Company, Inc., a Delaware corporation. "Other Investors" has the meaning set forth in the recitals hereto. "Other Investments" means the purchase, issuance and sale by the Company to the Other Investors of shares of New Common Stock pursuant to the Other Investment Agreements. "Other Investment Agreements" means the investment agreements among the Company, West and each of the Other Investors. "Person" means any individual, corporation, company, association, partnership, limited liability company, joint venture, trust, unincorporated organization, or Governmental Authority. "Plan" has the meaning set forth in the recitals hereto. "Postpetition," when used with respect to any agreement, instrument or any obligation arising thereunder, any claim or proceeding or any other matter, means an agreement or instrument that was first entered into or first became effective, an obligation, claim or proceeding that first arose or was first instituted, or another matter that first occurred, after the commencement of the Cases, or that was entered into or became effective, or arose, was instituted or occurred, before commencement of the Cases but has been assumed in the Cases. "Regulatory Approvals" means, to the extent necessary in connection with the consummation of the transactions contemplated by the Transaction Documents, any and all certificates, permits, licenses, franchises, concessions, grants, consents, approvals, orders, registrations, authorizations, waivers, variances or clearances from, or filings or registrations with, Governmental Authorities (and shall not include clearance or approval under the HSR Act or any other Law that may require waiting periods prior to consummation of the Transactions). "Representatives" means, with respect to any Person, such Person's officers, directors, employees, agents, attorneys, accountants, consultants, equity financing partners or financial advisors or other Person associated with, or acting on behalf of, such a Person. "Republic" means Republic Airways Holdings Inc., a Delaware corporation. 6 "SEC" means the U.S. Securities and Exchange Commission. "Securities Act" means the U.S. Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder. "Stockholders Agreement" has the meaning set forth in the recitals hereto. "Subsidiary" means as to any Person, any other Person of which more than fifty percent (50%) of the shares of the voting stock or other ownership interests are owned or controlled, or the ability to select or elect more than fifty percent (50%) of the directors or similar managers is held, directly or indirectly, by such first Person or one or more of its Subsidiaries or by such first Person and one or more of its Subsidiaries. "Title 49" means Title 49 of the Code of Federal Regulations, as amended and in effect from time to time. "Transactions" means the Merger, the execution, delivery and performance of this Agreement and each Other Investment Agreement (including the issuance of New Common Stock hereunder and thereunder), the Stockholders Agreement, and the execution, delivery and performance of the documents described in Articles II and VI hereof, in each case by the applicable party thereto. "Transaction Contracts" means all of the Transaction Documents other than the Plan, the Confirmation Order and the order of the Bankruptcy Court approving the break-up fee set forth in Section 8.02(b). "Transaction Documents" means this Agreement, the Plan, the Confirmation Order, the Merger Agreement, each Other Investment Agreement, the Stockholders Agreement, the order of the Bankruptcy Court approving the break-up fee set forth in Section 8.02(b), the documents described in Articles II and VI and all other documents necessary to consummate the Transactions and other arrangements contemplated hereby. "Transportation Code" means Title 49 of the United States Code which, among other things, recodified and replaced the U.S. Transportation Code of 1958 and the regulations promulgated thereunder, or any subsequent legislation that amends, supplements or supersedes such provisions. "US Airways" means US Airways, Inc., a Delaware corporation. "West" has the meaning set forth in the preamble hereto. ARTICLE II ISSUANCE AND PURCHASE OF NEW COMMON STOCK Section 2.01 Issuance and Purchase of New Common Stock. Upon the terms and subject to the conditions set forth in this Agreement, at the Closing, the Company will issue, sell and deliver to Investor, and Investor will purchase from the Company, that number of shares 7 of New Common Stock set forth opposite Investor's name on Schedule 1 hereto, for the aggregate purchase price set forth opposite Investor's name on Schedule 1 hereto (the "Investment Price"). Section 2.02 Closing. (a) Subject to the satisfaction or, if permissible, waiver of the conditions set forth in Sections 7.01 and 7.02 hereof, the Closing shall take place at the offices of Arnold & Porter LLP, 555 Twelfth Street, NW, Washington D.C. 20004, at 10:00 a.m., Washington D.C. time, on the first Business Day following the Effective Time (as such term is defined in the Merger Agreement) or at such other time, date and place as the parties may agree (the date on which the Closing occurs, the "Closing Date"); provided that the parties shall use reasonable best efforts to have the Closing take place on the first Business Day following the Effective Time. (b) At the Closing, (i) the Company shall deliver to Investor certificates representing the shares of New Common Stock to be purchased by, and sold to, Investor pursuant to Section 2.01 hereof (registered in the names and in the denominations designated by Investor at least two Business Days prior to the Closing Date), together with the other documents, certificates and opinions to be delivered pursuant to Section 7.01 hereof, and (ii) Investor, in full payment for the shares of New Common Stock to be purchased by, and sold to, Investor pursuant to Section 2.01 hereof, shall pay to the Company as provided in Section 2.01 hereof (in immediately available funds by wire transfer to the account designated by the Company, or by such other means as may be agreed between the parties hereto), Investor's Investment Price (less any amounts due as of the Closing Date to Investor pursuant to Section 9.01 hereof), and shall deliver the certificate required pursuant to Section 7.02(b) hereof. ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY The Company hereby represents and warrants to Investor as follows: Section 3.01 Incorporation by Reference of Representations and Warranties in the Merger Agreement. The Company hereby incorporates by reference, for the benefit of Investor as though set forth herein, the following representations and warranties (including the defined terms and disclosure items included therein and related thereto) in the Merger Agreement: Sections 3.2(a), (f), (g), (h), (i), (j), (k), (l), (n), (o), (p), (q), (r), (s), (t), (u), (v), (w) and (x). Each such representation which states that "East" (i.e., US Airways Group, Inc.) "has made available to West" certain materials shall be deemed to read "has made available to Investor" for purposes of this incorporation by reference. Section 3.02 Authorization; No Contravention. The Transactions to be consummated by the Company and the Operating Companies and the performance of the Transaction Contracts are within the respective corporate power and authority of the Company and the Operating Companies (subject and after giving effect to any required approvals of the Bankruptcy Court (including, without limitation, to the extent applicable, the Confirmation Order) and the Plan) and have been duly authorized by all necessary corporate and, if required, stockholder action. This Agreement, the Merger Agreement, each Other Investment Agreement, 8 the Stockholders Agreement and each other Transaction Contract entered into as of the date hereof have been duly executed and delivered by the Company and the Operating Companies party thereto (as applicable) and constitute (subject and after giving effect to any required approvals of the Bankruptcy Court (including, without limitation, to the extent applicable, the Confirmation Order) and the Plan), a legal, valid and binding obligation of the Company and such Operating Companies, respectively, enforceable in accordance with its terms. Section 3.03 Consents; No Conflicts. Other than the notices, reports, filings, consents, registrations, approvals, permits or authorizations required under the Hart Scott Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), with respect to the Company and the Operating Companies, the execution and delivery of each of the Transaction Contracts and the consummation of the Transactions (i) does not require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority (subject and after giving effect to any required approvals of the Bankruptcy Court (including, without limitation, to the extent applicable, the Confirmation Order) and the Plan), except such as have been obtained or made and are in full force and effect and except where failure to obtain such consent, approval, registration, filing or other action would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on the Company, (ii) will not violate, conflict with or result in a breach, violation or default under (A) any applicable law, rule or regulation or any order of or restriction imposed by any Governmental Authority and except, in each case, where such violation of applicable law or regulation would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on the Company or (B) the Certificate of Incorporation or Bylaws or any other organizational documents of the Company or any of its Subsidiaries, (iii) will not violate, conflict with or result in a breach, or default under any Postpetition agreement, contract or obligation or Postpetition loan agreement or any other Postpetition indebtedness agreement or instrument of indebtedness binding upon the Company, any Operating Company or any of their respective Subsidiaries or its assets except where such default, breach or violation would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on the Company and (iv) will not result in the creation or acceleration of any obligations or imposition of any Lien on any assets or properties of the Company or any of its Subsidiaries. Section 3.04 Court Orders. Subject and after giving effect to any required approvals of the Bankruptcy Court (including, without limitation, to the extent applicable, the Confirmation Order) and the Plan, the performance of any action by the Company or the Operating Companies required or contemplated by this Agreement or any other Transaction Document is not restrained or enjoined by any order of the Bankruptcy Court or by any Governmental Authority (either temporarily, preliminarily or permanently). Section 3.05 Capitalization; Securities. Upon the Closing and after giving effect to the Confirmation Order, the Plan, the Merger, the Investment and the Other Investments, the issued and outstanding capital stock of the Company shall consist solely of New Common Stock as provided on Schedule 3.05. Except as set forth on Schedule 3.05, upon the Closing and after giving effect to the Confirmation Order, the Plan, the Merger, the Investment and the Other Investments, there will not be any outstanding subscriptions, options, warrants, commitments, agreements or arrangements related to the issuance or sale of outstanding Equity Securities or securities or other instruments convertible into or exchangeable for any Equity Securities of the 9 Company Upon the Closing Date, the New Common Stock to be issued and delivered to the Investor pursuant to the terms hereof, shall have been duly authorized and validly issued, fully paid, nonassessable and not subject to preemptive or similar rights of third parties or reserved for issuance in accordance with the terms of the Plan and Confirmation Order. The rights, preferences and privileges of the capital stock of the Company shall be as set forth in the Certificate of Incorporation of the Company, as amended pursuant to the Plan and in effect upon the Closing in the form attached as Exhibit C to the Merger Agreement. Section 3.06 Information Provided. A true and correct copy of the Merger Agreement, and of each Other Investment Agreement, including each schedule, exhibit and other attachment or related agreement thereto and including in each case any amendments, supplements and modifications through the date hereof, has been provided to Investor. There are no other agreements, arrangements, understandings or commitments, written or oral, of any nature, between any of the Other Investors or their affiliates, on the one hand, and the Company, West or any of their affiliates on the other, relating to the transactions contemplated by the Transaction Documents. Section 3.07 Financial Advisors and Brokers. Except for Seabury Aviation Advisors LLC and/or its Affiliates ("Seabury"), no Person has acted, directly or indirectly, as a broker, finder or financial advisor of the Company or any of the Operating Companies in connection with the Transaction Documents or the transactions contemplated thereby, and except for fees payable to Seabury by the Company, no Person acting for or on behalf of the Company or any of the Operating Companies is entitled to receive any broker's, finder's or similar fee or commission in respect thereof based in any way on any agreement, arrangement or understanding made by or on behalf of the Company or any of the Operating Companies. Section 3.08 Regulatory Status. Neither the Company, nor any Operating Company nor any of their respective Subsidiaries is (i) an "investment company" as defined in, or subject to regulation under, the Investment Company Act of 1940 or (ii) a "holding company" as defined in, or subject to regulation under, the Public Utility Holding Company Act of 1935. US Airways is a Certificated Air Carrier. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF WEST West hereby represents and warrants to Investor as follows: Section 4.01 Incorporation by Reference of Representations and Warranties in the Merger Agreement. West hereby incorporates by reference, for the benefit of Investor as though set forth herein, the following representations and warranties (including the defined terms and disclosure items related thereto) in the Merger Agreement: Sections 3.1(a), (b), (e), (f), (g), (h), (i), (j), (k), (m), (n), (o), (p), (q), (r), (s), (t), (u), (v) and (w). Each such representation which states that "West" (i.e., America West Holdings Corporation) "has made available to East" certain materials shall be deemed to read "has made available to Investor" for purposes of this incorporation by reference. 10 Section 4.02 Authorization; No Contravention. The Transactions to be consummated by West and performance of the Transaction Contracts to which West is or will be a party are within the corporate power and authority of West and have been duly authorized by all necessary corporate and, if required, stockholder action. This Agreement, the Merger Agreement, each Other Investment Agreement, and each other Transaction Contract to which West is a party, entered into as of the date hereof, have been duly executed and delivered by West and constitute a legal, valid and binding obligation of West, enforceable in accordance with its terms. Section 4.03 Consents; No Conflicts. Other than the notices, reports, filings, consents, registrations, approvals, permits or authorizations required under the HSR Act, with respect to West, the execution and delivery of each of the Transaction Contracts to which West is or will be a party and the consummation of the Transactions (i) does not require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority (subject and after giving effect to any required approvals of the Bankruptcy Court (including, without limitation, to the extent applicable, the Confirmation Order) and the Plan), except such as have been obtained or made and are in full force and effect and except where failure to obtain such consent, approval, registration, filing or other action would not reasonably be expected to have a Material Adverse Effect on West, (ii) will not violate, conflict with or result in a breach, violation or default under (A) any applicable law, rule or regulation or any order of or restriction imposed by any Governmental Authority and except, in each case, where such violation of applicable law or regulation would not reasonably be expected to have a Material Adverse Effect on West or (B) the Certificate of Incorporation or Bylaws or any other organizational documents of West or any of its Subsidiaries, (iii) will not violate, conflict with or result in a breach, or default under any agreement, contract or obligation or loan agreement or any other indebtedness agreement or instrument of indebtedness binding upon West or any of its Subsidiaries or its assets except where such default, breach or violation would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on West and (iv) will not result in the creation or acceleration of any obligations or imposition of any Lien on any assets or properties of West or any of its Subsidiaries. Section 4.04 Court Orders. Subject and after giving effect to any required approvals of the Bankruptcy Court (including, without limitation, to the extent applicable, the Confirmation Order) and the Plan, the performance of any action by West required or contemplated by this Agreement or any other Transaction Document is not restrained or enjoined by any order of the Bankruptcy Court or by any Governmental Authority (either temporarily, preliminarily or permanently). Section 4.05 Information Provided. West has delivered to Investor a true and correct copy of the Merger Agreement, including any amendments, supplements and modifications through the date hereof. Section 4.06 Financial Advisors and Brokers. Except for Greenhill & Co., LLC and/or its Affiliates ("Greenhill") and TPG Partners, L.P. and/or its Affiliates ("TPG"), no Person has acted, directly or indirectly, as a broker, finder or financial advisor of West in connection with the Transaction Documents or the transactions contemplated thereby, and except for fees payable to Greenhill and TPG by West, no Person acting for or on behalf of West is 11 entitled to receive any broker's, finder's or similar fee or commission in respect thereof based in any way on any agreement, arrangement or understanding made by or on behalf of West. Section 4.07 Financial Plan. The financial plan provided to Investor on May 12, 2005 (the "Financial Plan") was prepared by West in good faith using assumptions believed by West to be reasonable, and, as of the date hereof, the Financial Plan represents West's reasonable, good faith estimate of the future financial performance of the Company. ARTICLE V REPRESENTATIONS AND WARRANTIES OF INVESTOR Investor represents and warrants to the Company as follows: Section 5.01 Organization. It is an entity duly organized under the laws of the jurisdiction of its formation having all requisite power and authority and all requisite governmental licenses, authorizations, consents and approvals to execute, deliver and perform its obligations under this Agreement and the Stockholders Agreement. Section 5.02 Authorization; No Contravention. The execution, delivery and performance by Investor of this Agreement and the Stockholders Agreement and the consummation of the transactions contemplated hereby and thereby, are within Investor's powers and have been duly authorized by all necessary action and do not and will not contravene the terms of Investor's Agreement of Limited Partnership. This Agreement constitutes and, when executed and delivered by Investor at Closing the Stockholders Agreement will constitute, a legal, valid and binding obligation of Investor, enforceable against Investor in accordance with its terms. Section 5.03 Consents; No Conflicts. Except for (i), if required, the filing of a notification and report form under the HSR Act and the termination or expiration of the waiting period under the HSR Act, (ii) the filing of any other required applications or notices with any Governmental Authority and approval of such applications and notices, and (iii) approval by the Bankruptcy Court, no Approval is necessary or required in connection with the execution, delivery or performance by, or enforcement against, Investor of this Agreement or the Stockholders Agreement or for the consummation of the transactions contemplated hereby and thereby, except for such Approvals that would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of Investor to consummate the Investment, and all of which have been duly obtained, taken, given or made and are in full force and effect, except for Approvals that would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of Investor to consummate the Investment. Section 5.04 Financial Advisors and Brokers. Other than Affiliates of Investor, no Person has acted directly or indirectly as a broker, finder or financial advisor of the Investor in connection with this Agreement, the Stockholders Agreement or the transactions contemplated hereby or thereby, and, other than fees that may be payable to Affiliates of Investor by Investor, no Person acting for or on behalf of Investor is entitled to receive any broker's, finder's or 12 similar fee or commission in respect thereof based in any way on any agreement, arrangement or understanding made by or on behalf of Investor. Section 5.05 Ownership of Equity Securities; Purpose of Investment. Investor is acquiring the New Common Stock under this Agreement solely for the purpose of investment and not with a view to, or for sale in connection with, any distribution thereof in violation of the Securities Act and applicable state securities or "blue sky laws". Investor is an "Accredited Investor" as such term is defined in Regulation D of the Securities Act. Section 5.06 Financing. Investor (or its assignee, as permitted by Section 9.10 who acquires the New Common Stock hereunder at the Closing) has sufficient and adequate resources to consummate the transactions contemplated by this Agreement. ARTICLE VI PRE-CLOSING COVENANTS Section 6.01 Taking of Necessary Action. (a) The Company, West and Investor (solely with respect to the Investment) shall cooperate with each other and use (and shall cause their respective Subsidiaries to use) their respective reasonable best efforts to take or cause to be taken all actions, and do or cause to be done all things, necessary, proper or advisable on its part under this Agreement and applicable Law to consummate and make effective the Transactions as soon as practicable, including preparing and filing as promptly as practicable all documentation to effect all necessary notices, reports and other filings (including, without limitation, appropriate filings pursuant to the HSR Act) and to obtain as promptly as practicable all consents, registrations, approvals, permits and authorizations necessary or advisable to be obtained from any third party and/or any Governmental Authority in order to consummate the Transactions. In exercising the foregoing rights, the Company, West and Investor shall act reasonably and as promptly as practicable. The Company's, West's and (solely with respect to the Investment) Investor's obligations under this Section 6.01 shall include, without limitation, the obligation to use their respective reasonable best efforts to defend any lawsuits or legal proceedings, whether judicial or administrative, or any other actions by a Governmental Authority, challenging the Transactions, including using reasonable best efforts to seek to have any stay or other injunctive relief which would prevent or materially delay or impair the consummation of the Transactions entered by any court or other Governmental Authority reversed on appeal or vacated. For purposes of this Section 6.01, as it relates to Investor, "reasonable best efforts" shall include Investor's agreement to (i) hold its airline assets, if any, in one or more subsidiaries separate from the company that will hold the Investor's equity interest in the Company, and (ii) nominate an Investor Director (as defined in the Stockholders Agreement) whose service would not conflict with applicable law. Except as provided in the immediately preceding sentence, Investor shall not be required (1) to divest, or agree to divest, any of its businesses or assets or any interest therein, or (2) to take or agree to take any other action or agree to any limitation, restriction or condition that could reasonably be expected to materially impair the benefits to Investor expected, as of the date of this Agreement, to be realized from the transactions contemplated hereby. 13 (b) Each of the Company, West and Investor shall, to the extent related to the Investment, in connection with obtaining the approvals referenced in Section 6.01(a), use its reasonable best efforts to (i) subject to applicable law, permit the other party or the other party's outside counsel to review in advance any proposed written communication between it and any Governmental Authority, (ii) promptly inform each other of any communication (or other correspondence or memoranda) received by such party from, or given by such party to, any other Governmental Authority and of any material communication received or given in connection with any proceeding by a private party, in each case regarding any of the transactions contemplated hereby, (iii) consult with each other in advance to the extent practicable of any meeting or conference with any Governmental Authority or, in connection with any proceeding by a private party, with any other Person, and to the extent permitted by the applicable Governmental Authority or other Person, give the other party the opportunity to attend and participate in such meetings and conferences, and (iv) furnish each other with copies of all correspondence, filings and written communications between them or their Subsidiaries or Affiliates on one hand, and any such Governmental Authority or its respective staff on the other hand, with respect to this Agreement and the transactions contemplated hereby, except that (A) any materials concerning Investor's valuation of the transaction may be redacted and (B) any proprietary information of one party not previously disclosed to the other party may be disclosed only to the other party's outside counsel, at the option of the disclosing party. (c) The Company shall, in coordination with Investor (i) file with the Bankruptcy Court a bidding procedures motion, reasonably satisfactory to Investor, seeking approval of the break-up fee set forth in Section 8.02(b) hereof, the expense reimbursement provisions set forth in Section 9.01 hereof and the provisions of Section 4.20 of the Merger Agreement, and (ii) diligently seek approval of the Transactions (consistent with the Bidding Procedures, as hereinafter defined), and (iii) if the Company has determined that the Merger represents a highest and best Qualified Competing Plan Proposal (as defined in the order approving the bidding procedures), (A) file with the Bankruptcy Court, and diligently seek approval of, the Disclosure Statement (with the Plan attached as an exhibit thereto) reasonably satisfactory to Investor and (B) seek to obtain, as expeditiously as possible, a Confirmation Order with respect to the Plan that is reasonably satisfactory to the Investors. Section 6.02 Notifications. At all times prior to the Closing Date, Investor shall promptly notify the Company and each of the Company and West shall promptly notify Investor in writing of any fact, change, condition, circumstance or occurrence or nonoccurrence of any event that will or is reasonably likely to result in such party's representations and warranties to be untrue or inaccurate in any material respect or the failure to satisfy the conditions to be complied with or satisfied by it hereunder; provided, however, that the delivery of any notice pursuant to this Section 6.02 shall not be deemed to alter or amend such party's representations or warranties or limit or otherwise affect the remedies available hereunder to any party giving or receiving such notice. Section 6.03 Financial and Other Information. From and after the date hereof, each of the Company and West shall, and shall cause each of their respective Subsidiaries and Representatives to, afford to Investor, its Affiliates and their respective Representatives, including qualified prospective lenders to Investor that sign appropriate confidentiality agreements, complete access, upon reasonable notice and in such manner as will not 14 unreasonably interfere with the conduct of such companies' respective businesses, to their and their respective Subsidiaries respective facilities, properties, books, contracts, commitments, records (including information regarding any material pending or threatened legal proceeding to which any of such companies is, or reasonably expects to be, a party and negotiations relating to any labor agreements or labor disputes involving the Company, West or any of their respective Subsidiaries), key personnel, officers, independent accountants and legal counsel; provided, however, that neither the Company nor West will be required to provide access to employee personnel files if providing such files would be unreasonable or a violation of applicable Law. Section 6.04 Delivery of Reports. Each of the Company and West and their respective Subsidiaries shall deliver to Investor, promptly following delivery to the ATSB, the reports concerning the weekly and monthly operating and financial data of the Company or West, as applicable, and their respective Subsidiaries that are delivered to the ATSB. Section 6.05 Amendments to Merger Agreement; Etc. Other than pursuant to and in accordance with Section 4.20 of the Merger Agreement, the Company and West will not amend the Merger Agreement, the Plan, any Other Investment Agreement or any other Transaction Document, in each case without the prior written approval of the Investor, such approval not to be unreasonably withheld (it being understood that in such connection Investor is not required to consider the interests of any other Person), and, notwithstanding the foregoing, neither the Company nor West shall waive any condition to the consummation of the Merger or the Plan without the prior written approval of Investor. Section 6.06 Publicity. Prior to the Closing, except as required by Law or by obligations pursuant to any listing agreement with or requirement of any national securities exchange or national quotation system on which the Common Stock, New Common Stock or the common stock of West is listed, admitted to trading or quoted, neither the Company (nor any of its Subsidiaries), West (nor any of its Subsidiaries) nor Investor (nor any of its Affiliates) shall, without the prior written consent of each other party hereto, which consent shall not be unreasonably withheld or delayed, make any public announcement or issue any press release with respect to the transactions contemplated by this Agreement or the Transaction Documents. Prior to making any public disclosure required by applicable Law or pursuant to any listing agreement with or requirement of any relevant national exchange or national quotation system, the disclosing party shall consult with the other parties hereto, to the extent feasible, as to the content and timing of such public announcement or press release. To the extent any party is required to file this Agreement or any Transaction Document with the SEC or any other Governmental Authority (including the Bankruptcy Court), the parties shall consult with each other concerning information for which confidential treatment will be requested. Section 6.07 Investor Financing. Investor shall maintain sufficient and adequate resources to consummate the transactions contemplated by this Agreement at the Closing. Section 6.08 Issuances of Equity Securities. The Company shall not accept subscriptions for, offer, issue, sell, or agree, commit or obligate itself to offer, issue or sell, any Equity Securities other than New Common Stock (a) issued to Investor pursuant to this Agreement, (b) issued to other Persons pursuant to other investment agreements entered into on terms and conditions, including without limitation purchase price, that are no more favorable to 15 such Persons than the terms and conditions provided herein and in the Stockholders Agreement are to the Investor up to an aggregate amount of $500,000,000 including the investments of the Investor and the Other Investors, (c) issued to West's equityholders pursuant to the Merger Agreement as set forth on Schedule 3.05, and (d) issued to existing equityholders and creditors of the Company pursuant to the Plan as set forth on Schedule 3.05, (e) issued by the Company on or prior to the Effective Date pursuant to a rights offering by the Company to existing Company and West stakeholders to purchase shares of New Common Stock at a price per share no less than the purchase price per share of New Common Stock paid by Investor under this Agreement and in an aggregate amount not to exceed the difference between $650,000,000 and the aggregate amount of the Investment, the Other Investments and the investment of any other Person under clause (b) above, and (f) issued by the Company on or prior to the Effective Date at a purchase price per share no less than the purchase price per share of New Common Stock paid by Investor under this Agreement and otherwise on terms and conditions that are no more favorable than the terms and conditions provided herein and in the Stockholders Agreement, for proceeds in excess of $650,000,000 provided that (i) the sole use of such proceeds is the redemption or repurchase of Equity Securities from existing Company and West stakeholders at a repurchase or redemption price that values the Equity Securities redeemed or repurchased (on an as-converted basis, in the case of convertible securities, and, in the case of Equity Securities of West, taking into account the Class B Merger Exchange Ratio (as defined in the Merger Agreement)) at a price per share no more than the purchase price per share of New Common Stock paid by Investor under this Agreement, (ii) the aggregate value of the New Common Stock (valued on the same basis as the New Common Stock to be issued pursuant to this Agreement) issued pursuant to this clause (f) shall not exceed $200,000,000 and (iii) Investor is provided the right to purchase, at its option, up to $10,000,000 of the New Common Stock to be issued pursuant to this clause (f) at a price per share equal to the purchase price per share of New Common Stock paid by Investor under this Agreement. Notwithstanding the foregoing, in connection with the implementation of the Plan, the Company may authorize and reserve for issuance under the Company's equity incentive plan a number of shares of New Common Stock not to exceed 12.5% of the outstanding number of shares of New Common Stock on a Fully Diluted Basis as of the Effective Date, provided that any awards of such shares of New Common Stock made or committed to be made at anytime before the second anniversary of the Effective Date, (x) may only consist of options with an exercise price not less than the lesser of (a) Fair Market Value as of the date of grant and (b) the Investment Price (as appropriately adjusted to reflect stock splits, stock dividends, reverse splits and similar changes with respect to the New Common Stock effected after the Closing Date); provided that the exercise price for any options granted as of or immediately following the Effective Date shall be not less than the Investment Price and (y) shall not be effective unless such awards are approved or ratified by the Board (as constituted from and after the Effective Date as set forth in Section 1.8(a) of the Merger Agreement) or by a committee with appropriate authority granted by such Board. Section 6.09 Transfer Taxes. All transfer taxes, fees and duties under applicable law incurred in connection with the Investment under this Agreement will be borne and paid by the Company and it shall promptly reimburse Investor for any such tax, fee or duty which Investor is required to pay under applicable law. Section 6.10 Bankruptcy Covenants. (a) Notwithstanding anything herein to the contrary, the Company shall not, and shall cause each of the other Debtors not to, offer, agree 16 to, or seek approval from the Bankruptcy Court for, and shall use their best efforts to object to any request by any other party for, any break-up fee, work fee, expense reimbursement or any other benefit or protection for any Person in connection with any proposed acquisition of or investment in any of the Debtors, other than (i) West, (ii) Investor, (iii) any Other Investor, and (iv) any other Person making an investment pursuant to Section 6.08(b); provided that (A) such other Person is purchasing at least $50,000,000 of New Common Stock on terms, and conditions, including without limitation purchase price, that are no more favorable to such other Person than the terms and conditions provided herein and in the Stockholders Agreement are to the Investor and (B) without limitation of the preceding clause (A), any break-up or similar fee payable to such other Person shall not exceed three percent (3.0%) of the aggregate amount of financing to be provided by such other Person. (b) Each of the Debtors agrees that if the Merger Agreement becomes the Approved Proposal (as defined in the Merger Agreement), it shall use its best efforts to cause any order approving the Approved Proposal to prohibit the Debtors (and any Person purporting to act on behalf of the estate of any Debtor) from violating the provisions of Section 4.4(a) of the Merger Agreement or from otherwise pursuing in any way any East Acquisition Proposal (as defined in the Merger Agreement) other than the Merger Agreement unless the Merger Agreement shall have previously been terminated in accordance with its terms. (c) In connection with any proceedings in the Bankruptcy Court related to the Bidding Procedures (as hereinafter defined), the order approving the Approved Proposal or the transactions contemplated by the Merger Agreement or this Agreement (or any Qualified Competing Plan Proposal (as defined in the Bidding Procedures)) (a) the Company shall provide to Investor copies of all motions, objections, pleadings, notices, proposed orders and other documents that are filed by or on behalf of any Debtor as soon as reasonably practicable prior to filing thereof with the Bankruptcy Court and (b) West shall provide to Investor copies of all motions, objections, pleadings, notices, proposed orders and other documents that are filed by or on behalf of West as soon as reasonably practicable prior to filing thereof with the Bankruptcy Court. (d) Except in accordance with the Bidding Procedures, the Company and West shall not, and shall not authorize or permit any of their Subsidiaries or any of the Company's or West's or such Subsidiaries' Representatives, directly or indirectly, to, (i) solicit, initiate, or take any action designed to induce a proposal or offer for an Alternative Proposal, (ii) participate in any discussions or negotiations regarding any Alternative Proposal, or (iii) enter into any letter of intent, agreement in principle, acquisition agreement or other similar agreement related to any Alternative Proposal. "Alternative Proposal" means (x) any Alternative Transaction, or proposal therefor, or (y) any proposed investment that would, or is intended to, replace all or a material portion of the investment contemplated by this Agreement. 17 ARTICLE VII CONDITIONS Section 7.01 Conditions to Investor's Obligations. The obligation of Investor to make the Investment pursuant to Section 2.01 hereof is subject to satisfaction or waiver of each of the following conditions precedent: (a) Definitive Documents. Definitive Transaction Documents (in form and substance reasonably satisfactory to Investor) shall have been prepared, negotiated and, to the extent applicable, duly executed by the parties (or, as applicable, their Affiliates), and approval by the Bankruptcy Court of such documents pursuant to a Final Order, to the extent necessary, shall have been obtained. All such Transaction Documents shall have been executed by the parties thereto (other than Investor and its Affiliates) on or prior to the Effective Date, shall not have been modified, amended, waived or supplemented without the consent of Investor, shall be in effect and the consummation of the transactions contemplated thereby shall not be stayed, and all conditions to the obligations of the parties under such Transaction Documents shall have been satisfied or waived. All corporate and other proceedings to be taken by the Company, West or any of their respective Subsidiaries in connection with such Transaction Documents and the transactions contemplated thereby to be completed at the Closing and documents incident thereto shall have been completed in form and substance reasonably satisfactory to Investor, and Investor shall have received all such counterpart originals or certified or other copies of such Transaction Documents and such other documents as it may reasonably request. Without limiting the generality of the foregoing, in connection with the consummation of the Plan, the Company and the Other Investors and shall have entered into the Stockholders Agreement. (b) Company Representations and Warranties; Covenants. The representations and warranties of the Company set forth in Article III hereof (without giving effect to any material adverse effect, materiality or similar qualifier) shall have been true and correct in all respects on and as of the date hereof and at the Closing as if made on the Closing Date (except where such representation and warranty speaks by its terms of a different date, in which case it shall be true and correct as of such date), except to the extent that such inaccuracies in any such representation or warranty have not had, and would not, individually or in the aggregate, have a Material Adverse Effect on the Company. The Company shall have performed in all material respects all obligations and complied in all material respects with all agreements, undertakings, covenants and conditions required to be performed by it hereunder at or prior to the Closing, and the Company shall have delivered to Investor at the Closing a certificate dated the Closing Date and signed by the chief executive officer and the chief financial officer of the Company to the effect that the conditions set forth in this Section 7.01(b) have been satisfied. (c) West Representations and Warranties; Covenants. The representations and warranties of West set forth in Article IV hereof (without giving effect to any material adverse effect, materiality or similar qualifier) shall have been true and correct in all respects on and as of the date hereof and at the Closing as if made on the Closing Date (except where such representation and warranty speaks by its terms of a different date, in which case it shall be true and correct as of such date), except to the extent that such inaccuracies in any such 18 representation or warranty have not had, and would not, individually or in the aggregate, have a Material Adverse Effect on West. West shall have performed in all material respects all obligations and complied in all material respects with all agreements, undertakings, covenants and conditions required to be performed by it hereunder at or prior to the Closing, and West shall have delivered to Investor at the Closing a certificate dated the Closing Date and signed by the chief executive officer and the chief financial officer of West to the effect that the conditions set forth in this Section 7.01(c) have been satisfied. (d) Compliance with Laws, No Adverse Action or Decision. Since the date hereof, (i) no Law shall have been promulgated, enacted or entered that restrains, enjoins, prevents, materially delays, prohibits or otherwise makes illegal the performance of any of the Transaction Documents; (ii) no preliminary or permanent injunction or other order by any Governmental Authority that restrains, enjoins, prevents, delays, prohibits or otherwise makes illegal the performance of any of the Transaction Documents shall have been issued and remain in effect, except for such injunctions that, if obtained, could not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of Investor, the Company or West or their respective Affiliates to consummate the Transactions; (iii) no Governmental Authority shall have instituted any legal proceeding that seeks to restrain, enjoin, prevent, delay, prohibit or otherwise make illegal the performance of any of the Transaction Documents, except for any such legal proceedings which have a significant possibility of being brought to a conclusion which could not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of Investor, the Company or West or their respective Affiliates to consummate the Transactions, and (iv) there is no pending or threatened investigation or litigation by any other Person relating to the Transactions which, if determined adversely to the Company, West or Investor, would materially impair or limit the rights and benefits of Investor under the Transaction Documents or the economic benefits to Investor of the Transactions in the aggregate and which Investor reasonably believes, based on the advice of counsel, has a reasonable likelihood of success. (e) Approvals. The Company, Investor and West shall have received (i) all material Regulatory Approvals, which shall have become final (provided that, if an appeal of such Regulatory Approval is pending and such appeal has a significant possibility of being resolved adversely to the Company, Investor or West in a manner that would reasonably be expected to have a material adverse effect on the ability of Investor, the Company or West or their respective Affiliates to consummate the Transactions, this clause (i) shall be deemed not to be satisfied), and (ii) all other material approvals, permits, authorizations, exemptions, consents, licenses and agreements from other third parties that are necessary to permit the Transactions to be completed or performed as contemplated by the Transaction Documents and to permit the Investor and its Affiliates and Company and its Affiliates (including West and its Subsidiaries) to carry on its business after such transactions in a manner not materially inconsistent with the manner in which it was carried on prior to the Effective Date (together with the Regulatory Approvals, the "Approvals"), which Approvals shall not contain any condition or restriction that materially impairs the ability of the Investor and its Affiliates or the ability of the Company (including West and its Subsidiaries) to carry on its business. All waiting periods imposed by applicable Law (including, without limitation, under the HSR Act) in connection with the Transactions shall have expired or been terminated without any action having been taken by any court of competent jurisdiction restraining, preventing or imposing materially adverse conditions 19 upon such transactions or upon the conduct of the business of Investor, East, West or their respective Affiliates. (f) Plan of Reorganization. The Plan shall be in a form reasonably acceptable to the Investor, such Plan shall have been confirmed by the Bankruptcy Court, and such Plan shall among other things (i) not conflict with any material term of this Agreement, the Stockholders Agreement or the other Transaction Documents, (ii) be substantially consistent in all material respects with the terms of the Financial Plan including, without limitation, concessions obtained and to be obtained from the Debtors' employees, creditors, lessors and other claimants, and (iii) reflect a corporate and capital structure (including liabilities) of the Company consistent with the Financial Plan. All conditions to the effectiveness of the Plan, other than the consummation of this Agreement, shall have been satisfied, and a Confirmation Order in a form reasonably acceptable to the Investor shall have been entered and become a Final Order no later than December 31, 2005. (g) Additional East Equity. In connection with the emergence of the Company and the Operating Companies from chapter 11 and the consummation of the Plan, the Company will have received on the Effective Date cash equity investments aggregating not less than $375,000,000 and not more than $500,000,000 pursuant to this Agreement and the Other Investment Agreements (and including any loans converted into equity under the Air Wisconsin DIP Agreement), all on terms, including without limitation purchase price, no more favorable to the Other Investors and Eastshore Aviation LLC than the terms of this Agreement and the Stockholders Agreement are to the Investor, which with all other equity capital of the Company, will be invested only in a single class of common stock, the New Common Stock, with all such New Common Stock having the same voting rights, and shall have no other class of capital stock authorized in its charter other than the New Common Stock. The Company alone, and not any Affiliate of the Company, shall have issued Equity Securities in connection with the consummation of the Plan. (h) Contracts. All material executory contracts and unexpired leases, the assumption, assignment, rejection or renegotiation of which is necessary for the successful implementation of the Plan and the operation of the Company's business as such business is contemplated in the Financial Plan to be conducted, shall have been assumed, assigned, rejected or renegotiated, as applicable. (i) Effective Date and Merger. The Effective Time (as defined in the Merger Agreement) shall have occurred, or shall occur concurrently with the Closing, and the Merger shall have been, or will concurrently with the Closing be, consummated in accordance with the terms of the Merger Agreement without amendment or waiver other than as permitted in accordance with Section 6.05 of this Agreement. (j) Conversion of Air Wisconsin DIP. Eastshore Aviation LLC shall have converted the existing debt owed to it pursuant to the Air Wisconsin DIP Agreement into New Common Stock in an amount not less than $125,000,000 and on terms, including without limitation valuation of the New Common Stock, no more favorable than the terms of the Investment in New Common Stock being made by Investor pursuant to this Agreement and the Stockholders Agreement. 20 (k) No Conversion to Chapter 7. Neither the Company's Chapter 11 Case nor US Airways Chapter 11 Case shall have been converted to a case under Chapter 7 of the Bankruptcy Code and no trustee shall have been appointed under any chapter of the Bankruptcy Code in respect of either such case. (l) Certificate of Incorporation and Bylaws. The Certificate of Incorporation and Bylaws, substantially in the forms attached as Exhibits C and D, respectively, to the Merger Agreement, shall have been filed with and accepted by the Secretary of State of the State of Delaware and shall have become effective. As of the Closing Date, the Company shall have delivered to Investor a complete and correct copy of the certificates of incorporation and the bylaws or comparable governing instruments of each of the Operating Companies, in full force and effect as of the Closing Date. (m) Delivery. The Company shall have executed and delivered to Investor the shares of New Common Stock pursuant to and in accordance with Section 2.01 hereof. (n) Board Representation. The composition of the Board shall be as set forth in Section 1.8(a) of the Merger Agreement. (o) Directors' and Officers' Insurance. The Company shall have procured and maintained in full force and effect directors' and officers' liability insurance with respect to members of the Board of Directors of the Company, which insurance shall be at least $100 million, and shall cover such risks, as is customary for a corporation in the Company's and its Affiliates respective businesses or other similar businesses. (p) Absence of Changes. From the date of this Agreement through the Closing Date, there shall not have occurred any change, event, occurrence, condition or development that has or could reasonably be expected to have a material adverse effect on the financial condition, assets, liabilities, business or results of operations of the Company or West or that would prevent, materially delay or materially impair the ability of the Company, West or Investor to consummate the transactions contemplated by this Agreement. The Company's financial and operational performance from the period from March 31, 2005 to the Closing Date shall not have deviated materially and adversely from the performance indicated in the Financial Plan. (q) Profit Sharing Plan. The Company's employee profit sharing plan shall have been amended on terms no less favorable to Investor than those set forth on Schedule 7.01(q). (r) Listing. The shares of New Common Stock to be issued to Investor under this Agreement shall have been authorized for listing or quotation, as applicable, on the New York Stock Exchange or NASDAQ Stock Market upon official notice of issuance. Section 7.02 Conditions to the Company's Obligations. The obligation of the Company to issue and sell the New Common Stock pursuant to Section 2.01 hereof at the Closing is subject to the satisfaction or waiver of each of the following conditions precedent: 21 (a) Definitive Documents. Definitive Transaction Documents (in form and substance reasonably satisfactory to the Company) necessary to consummate the transactions contemplated herein shall have been prepared, negotiated and, to the extent applicable, executed by the parties (or, as applicable, their Affiliates), and approval by the Bankruptcy Court of such documents, as necessary, shall have been obtained. All Transaction Documents shall not have been modified, shall be in effect and the consummation of the transactions contemplated thereby shall not be stayed, and all conditions to the obligations of the parties under the Transaction Contracts shall have been satisfied or effectively waived. All corporate and other proceedings to be taken by Investor its Affiliates in connection with the Transaction Documents and the transactions contemplated thereby to be completed at the Closing and documents incident thereto shall have been completed in form and substance reasonably satisfactory to the Company, and the Company shall have received all such counterpart originals or certified or other copies of the Transaction Documents and such other documents as it may reasonably request. (b) Investor Representations and Warranties; Covenants. The representations and warranties of Investor set forth in Article V hereof (without giving effect to any material adverse effect, materiality or similar qualifier) shall have been true and correct in all respects, on and as of the date hereof and at the Closing as if made on the Closing Date (except where such representation and warranty speaks by its terms as of a different date, in which case it shall be true and correct as of such date), except to the extent that such inaccuracies have not had, and would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of Investor or its Affiliates to consummate the Transactions. Investor shall have performed in all material respects all obligations and complied in all material respects with all agreements, undertakings, covenants and conditions required to be performed by it at or prior to the Closing, and Investor shall have delivered to the Company and West at the Closing a certificate dated the Closing Date and signed on behalf of a member of Investor to the effect that the conditions set forth in this Section 7.02(b) have been satisfied. (c) Compliance with Laws; No Adverse Action or Decision. Since the date hereof, (i) no Law shall have been promulgated, enacted or entered that restrains, enjoins, prevents, materially delays, prohibits or otherwise makes illegal the performance of any of the Transaction Documents with respect to the transactions contemplated thereby to be completed at the Closing; (ii) no preliminary or permanent injunction or other order by any Governmental Authority or other Person that restrains, enjoins, prevents, delays, prohibits or otherwise makes illegal the performance of any of the Transaction Documents shall have been issued and remain in effect, except for such injunctions that, if obtained, could not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of Investor, the Company or West or their respective Affiliates to consummate the Transactions; and (iii) no Governmental Authority shall have instituted any legal proceeding that seeks to restrain, enjoin, prevent, delay, prohibit or otherwise make illegal the performance of any of the Transaction Documents, except for any legal proceedings which have a significant possibility of being brought to a conclusion which could not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of Investor, the Company or West or their respective Affiliates to consummate the Transactions. (d) Approvals. The Company and West shall have received (i) all material Regulatory Approvals (other than waiting periods imposed by applicable Law as referred to later 22 in this paragraph), which shall have become final (provided that, if an appeal of such Regulatory Approval is pending and such appeal has a significant possibility of being resolved adversely to the Company or West in a manner that would reasonably be expected to have a material adverse effect on the ability of Investor, the Company or West or their respective Affiliates to consummate the Transactions, this clause (i) shall be deemed not to be satisfied), and (ii) all other Approvals, which Approvals shall not contain any condition or restriction that, in the Company's reasonable judgment, materially impairs the Company's ability to carry on its business. Without limiting the generality of clause (ii), any and all required approvals under any material financing agreements to which the Company, West or any of their respective Subsidiaries is a party shall have been obtained. All waiting periods imposed by applicable Law (including, without limitation, under the HSR Act) in connection with the transactions contemplated by the Transaction Documents shall have expired or been terminated without any action having been taken by any court of competent jurisdiction restraining, preventing or imposing materially adverse conditions upon such transactions. (e) Confirmation Order. The Confirmation Order, satisfactory in form and substance in all respects to the Company, shall have been entered by the Bankruptcy Court and, once entered, shall not have been modified without the Company's and West's prior written consent in any manner materially adverse to the Company, shall be in effect and shall not have been stayed. (f) Effective Date and the Merger. The Effective Date and the satisfaction or waiver of all conditions to the closing of the Merger shall have occurred not later than the Closing. ARTICLE VIII TERMINATION Section 8.01 Termination of Agreement. Subject to Section 8.02 hereof, this Agreement may be terminated by notice in writing at any time prior to the Closing by: (a) Investor or the Company, if (i) closing of the Transactions (including the Closing) shall not have occurred on or before December 31, 2005 or (ii) the Merger Agreement shall have been terminated in accordance with its terms on or before December 31, 2005; (b) Investor, if (i) a bidding procedures order (substantially in the form attached as Exhibit E to the Merger Agreement) approving the break-up fee set forth in Section 8.02(b) hereof, the expense reimbursement provisions set forth in Section 9.01 and the provisions of Section 4.20 of the Merger Agreement (in the form attached as Exhibit A to this Agreement) (the "Bidding Procedures") hereof shall not have been entered by the Bankruptcy Court within thirty (30) days following the date hereof, but in no event later than June 30, 2005, (ii) the Merger and the transactions contemplated by the Merger Agreement and this Agreement shall not have been determined by the Bankruptcy Court to be the Approved Proposal within sixty-five (65) days after the entry by the Bankruptcy Court of the order approving the Bidding Procedures contemplated by the preceding clause (i), (iii) there shall have been a breach by the 23 Company or West of any material representation, warranty, covenant or agreement contained in this Agreement, which breach would result in the failure to satisfy any condition set forth in Section 7.01 hereof to Investor's obligations and that has not been cured within thirty (30) days following receipt by the Company or West of written notice from Investor of such breach, (iv) any condition set forth in Section 7.01 hereof to Investor's obligations is not capable of being satisfied, (v) the Company shall enter into a written agreement or letter of intent or agreement in principle providing for an Alternative Proposal, or (vi) the Bankruptcy Court shall have ordered the Company to terminate this Agreement in order to accept an Alternative Proposal; (c) the Company, if (i) there shall have been a breach by Investor of any material representation, warranty, covenant or agreement contained in this Agreement which breach would result in the failure to satisfy any condition set forth in Section 7.02 hereof to the Company's obligations and that has not been cured within thirty (30) days following receipt by Investor of written notice from the Company of such breach, or (ii) any condition set forth in Section 7.02 hereof to the Company's obligations is not capable of being satisfied; or (d) mutual agreement in writing by the Company and Investor. Section 8.02 Effect of Termination. (a) If this Agreement is terminated in accordance with Section 8.01 hereof and the transactions contemplated hereby are not consummated, this Agreement shall become null and void and of no further force and effect except that (i) the terms and provisions of this Section 8.02 and Article IX hereof shall survive the termination of this Agreement, and (ii) any termination of this Agreement shall not relieve any party hereto from any liability for any willful breach of its obligations hereunder. A termination shall not void or affect any of the constituent transactions consummated prior to such termination or any sections hereof which by their terms survive termination. (b) In the event that (i) the Investment is not consummated, (ii) Investor is not in breach of any material representation, warranty, covenant or agreement contained in this Agreement and (iii) an Alternative Transaction is effectuated, with or without a merger with West, the Company shall on the date of the closing of such Alternative Transaction pay to Investor, by wire transfer of immediately available funds, a break-up fee equal to $1,500,000. ARTICLE IX MISCELLANEOUS Section 9.01 Fees and Expenses. (a) Except as expressly provided herein or in any Transaction Document, each party shall bear its own costs and expenses incurred in connection with this Agreement or any of the Transactions. Notwithstanding the foregoing, at the Closing, the Company shall reimburse Investor for (i) the reasonable out-of-pocket expenses of Investor relating to the enforcement of Investor's rights under the Term Sheet dated as of May 9, 2005, this Agreement and/or the Stockholders Agreement and (ii) filing fees incurred in connection with any required filings under the HSR Act. 24 (b) All amounts payable under this Agreement shall be paid in immediately available funds to an account or accounts designated by the recipient of such amounts, except as otherwise provided herein. Section 9.02 Survival of Representations, Warranties and Covenants. None of the representations, warranties or covenants contained in this Agreement shall survive the Closing Date. Section 9.03 Specific Performance. The parties hereto specifically acknowledge that monetary damages are not an adequate remedy for violations of this Agreement, and that any party hereto may, in its sole discretion, apply to a court of competent jurisdiction for specific performance or injunctive or such other relief as such court may deem just and proper in order to enforce this Agreement or prevent any violation hereof and, to the extent permitted by applicable Law and to the extent the party seeking such relief would be entitled to the merits to obtain such relief, each party waives any objection to the imposition of such relief. Section 9.04 General Interpretive Principles. Whenever used in this Agreement, except as otherwise expressly provided or unless the context otherwise requires, any noun or pronoun shall be deemed to include the plural as well as the singular and to cover all genders. The name assigned this Agreement and the Section captions used herein are for convenience of reference only and shall not be construed to affect the meaning, construction or effect hereof. Unless otherwise specified, any references to a party's "judgment", "satisfaction" or words of a similar import shall mean in such party's sole judgment. Unless otherwise specified, the terms "hereof," "herein" and similar terms refer to this Agreement as a whole (including the Exhibits and Schedules hereto), and references herein to Articles or Sections refer to Articles or Sections of this Agreement. Section 9.05 Notices. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given, if delivered personally, by telecopier or sent by first class mail, postage prepaid, to the addresses set forth on Schedule 9.05. Section 9.06 Entire Agreement; Amendment. This Agreement and the documents described herein (including the Plan) or attached or delivered pursuant hereto (including, without limitation, the other Transaction Documents) set forth the entire agreement between the parties hereto with respect to the transactions contemplated by this Agreement. Any provision of this Agreement may only be amended, modified or supplemented in whole or in part at any time by an agreement in writing among the parties hereto executed in the same manner as this Agreement. No failure on the part of any party to exercise, and no delay in exercising, any right shall operate as waiver thereof, nor shall any single or partial exercise by either party of any right preclude any other or future exercise thereof or the exercise of any other right. Section 9.07 No Other Representations or Warranties. Except for the representations and warranties contained in this Agreement, neither East nor West, nor any agent, Affiliate, officer, director, employee or representative of either or them, nor any other Person, makes, or shall be deemed to make, any representation or warranty to Investor, express or implied, at law or in equity, on behalf of East or West, and East and West hereby exclude and disclaim any such representation or warranty whether by either East or West or any or their 25 respective agents, Affiliates, officers, directors, employees or representatives or any other Person, notwithstanding the delivery or disclosure to Investor or any of their respective officers, directors, partners, employees or representatives or any other Person of any documentation or other information by East or West or any of their respective agents, Affiliates, officers, directors, employees or representatives or any other Person with respect to any one or more of the foregoing. Section 9.08 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed to constitute an original, but all of which together shall constitute one and the same document. Section 9.09 Governing Law. To the extent not governed by the Bankruptcy Code, this Agreement shall be governed by, and interpreted in accordance with, the Laws of the State of New York applicable to contracts made and to be performed in that State without reference to its conflict of laws rules. The parties hereto agree that the appropriate and exclusive forum for any disputes arising out of this Agreement solely between the Company and Investor shall be the Bankruptcy Court, or if such court will not hear any such suit, the U.S. District Court for the Southern District of New York, and, the parties hereto irrevocably consent to the exclusive jurisdiction of such courts, and agree to comply with all requirements necessary to give such courts jurisdiction. The parties hereto further agree that the parties will not bring suit with respect to any disputes arising out of this Agreement except as expressly set forth below for the execution or enforcement of judgment, in any jurisdiction other than the above specified courts. Each of the parties hereto irrevocably consents to the service of process in any action or proceeding hereunder by the mailing of copies thereof by registered or certified airmail, postage prepaid, to the address specified in Section 9.05 hereof. The foregoing shall not limit the rights of any party hereto to serve process in any other manner permitted by the Law or to obtain execution of judgment in any other jurisdiction. The parties further agree, to the extent permitted by Law, that final and non-appealable judgment against any of them in any action or proceeding contemplated above shall be conclusive and may be enforced in any other jurisdiction within or outside the United States by suit on the judgment, a certified or exemplified copy of which shall be conclusive evidence of the fact and the amount of indebtedness. THE PARTIES AGREE TO WAIVE ANY AND ALL RIGHTS THAT THEY MAY HAVE TO A JURY TRIAL WITH RESPECT TO DISPUTES ARISING OUT OF THIS AGREEMENT. Section 9.10 Successors and Assigns. Except as otherwise expressly provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the Company's, West's and Investor's successors and permitted assigns. Neither this Agreement nor any rights or obligations hereunder shall be assignable by any party hereto without the prior written consent of the other parties hereto. Section 9.11 No Third-Party Beneficiaries. This Agreement is for the sole benefit of the parties hereto and their respective successors and permitted assigns and nothing herein, express or implied, is intended or shall confer upon any other Person any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement. 26 Section 9.12 Confidentiality. A version of this Agreement with certain competitively sensitive information redacted will be filed by the Company with the Motion. Each party hereto agrees not to disclose the unredacted version of this Agreement to any third parties (other than disclosure required by the SEC or any other Governmental Authority (including the Bankruptcy Court) or pursuant to any listing agreement with or requirement of any relevant national exchange or national quotation system) without appropriate confidentiality agreements with such third parties being in place that are reasonably acceptable to the other parties hereto. 27 IN WITNESS WHEREOF, this Agreement has been executed on behalf of the parties hereto by their respective duly authorized officers, all as of the date first above written. PENINSULA INVESTMENT PARTNERS, L.P. By: PENINSULA CAPITAL APPRECIATION LLC its general partner By: /s/ Ted Weschler ------------------------------------------- Name: Ted Weschler Title: Managing Member US AIRWAYS GROUP, INC. By: /s/ Bruce R. Lakefield ------------------------------------------- Name: Bruce R. Lakefield Title: Chief Executive Officer AMERICA WEST HOLDINGS CORPORATION By: /s/ W. Douglas Parker ------------------------------------------- Name: W. Douglas Parker Title: Chairman and Chief Executive Officer 28 Exhibit A-4 to the Merger Agreement INVESTMENT AGREEMENT dated as of May 19, 2005 among US AIRWAYS GROUP, INC., AMERICA WEST HOLDINGS, INC. and EASTSHORE AVIATION, LLC TABLE OF CONTENTS
Page ---- ARTICLE I DEFINITIONS.............................................................................................2 Section 1.01 Definitions.....................................................................................2 ARTICLE II ISSUANCE AND PURCHASE OF NEW COMMON STOCK..............................................................7 Section 2.01 Issuance and Purchase of New Common Stock.......................................................7 Section 2.02 Closing.........................................................................................7 ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY.........................................................8 Section 3.01 Incorporation by Reference of Representations and Warranties in the Merger Agreement...................................................................................8 Section 3.02 Authorization; No Contravention.................................................................8 Section 3.03 Consents; No Conflicts..........................................................................9 Section 3.04 Court Orders....................................................................................9 Section 3.05 Capitalization; Securities......................................................................9 Section 3.06 Information Provided...........................................................................10 Section 3.07 Financial Advisors and Brokers.................................................................10 Section 3.08 Regulatory Status..............................................................................10 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF WEST................................................................10 Section 4.01 Incorporation by Reference of Representations and Warranties in the Merger Agreement..................................................................................10 Section 4.02 Authorization; No Contravention................................................................10 Section 4.03 Consents; No Conflicts.........................................................................11 Section 4.04 Court Orders...................................................................................11 Section 4.05 Information Provided...........................................................................11 Section 4.06 Financial Advisors and Brokers.................................................................11 Section 4.07 Financial Plan.................................................................................12 ARTICLE V REPRESENTATIONS AND WARRANTIES OF INVESTOR.............................................................12 Section 5.01 Organization...................................................................................12 Section 5.02 Authorization; No Contravention................................................................12 Section 5.03 Consents; No Conflicts.........................................................................12 Section 5.04 Citizenship....................................................................................12 ARTICLE VI PRE-CLOSING COVENANTS.................................................................................12 Section 6.01 Taking of Necessary Action.....................................................................12 Section 6.02 Notifications..................................................................................14 Section 6.03 Financial and Other Information................................................................14 Section 6.04 Delivery of Reports............................................................................14 Section 6.05 Amendments to Merger Agreement; Etc............................................................14 Section 6.06 Publicity......................................................................................15 Section 6.07 Issuances of Equity Securities.................................................................15
i Section 6.08 Transfer Taxes.................................................................................16 Section 6.09 Bankruptcy Covenants...........................................................................16 ARTICLE VII CONDITIONS...........................................................................................17 Section 7.01 Conditions to Investor's Obligations...........................................................17 Section 7.02 Conditions to the Company's Obligations........................................................21 ARTICLE VIII TERMINATION.........................................................................................23 Section 8.01 Termination of Agreement.......................................................................23 Section 8.02 Effect of Termination..........................................................................23 ARTICLE IX MISCELLANEOUS.........................................................................................24 Section 9.01 Fees and Expenses..............................................................................24 Section 9.02 Survival of Representations, Warranties and Covenants..........................................24 Section 9.03 Specific Performance...........................................................................24 Section 9.04 General Interpretive Principles................................................................24 Section 9.05 Notices........................................................................................24 Section 9.06 Entire Agreement; Amendment....................................................................24 Section 9.07 No Other Representations or Warranties.........................................................25 Section 9.08 Counterparts...................................................................................25 Section 9.09 Governing Law..................................................................................25 Section 9.10 Successors and Assigns.........................................................................26 Section 9.11 No Third-Party Beneficiaries...................................................................26 Section 9.12 Confidentiality................................................................................26 EXHIBIT A Merger Agreement EXHIBIT B Stockholders Agreement Schedule 1 New Common Stock Schedule 3.05 Capitalization Schedule 7.01(q) Terms of Revised Profit Sharing Plan Schedule 9.05 Notices Information
ii INVESTMENT AGREEMENT THIS INVESTMENT AGREEMENT (together with all exhibits and schedules hereto and as the same may be amended, supplemented or otherwise modified from time to time in accordance with the terms hereof, the "Agreement"), dated as of May 19, 2005, by and among Eastshore Aviation, L.L.C., a Delaware limited liability company (the "Investor"), US Airways Group, Inc., a Delaware corporation, and its successors (including, as the context may require, on or after the Effective Date, as reorganized pursuant to the Bankruptcy Code) (the "Company"), and America West Holdings Corporation, a Delaware corporation ("West"). W I T N E S S E T H: WHEREAS, on September 12, 2004, the Company and certain of its Subsidiaries (the "Debtor Subsidiaries" and together with the Company, the "Debtors") filed voluntary petitions (the "Cases") for protection under chapter 11 of the United States Bankruptcy Code (the "Bankruptcy Code") in the United States Bankruptcy Court for the Eastern District of Virginia, Alexandria Division (the "Bankruptcy Court") to enable the Debtors to be restructured pursuant to one or more plans of reorganization (collectively, the "Plan"); WHEREAS, the Debtors have continued in the possession of their assets and in the management of their businesses pursuant to Sections 1107 and 1108 of the Bankruptcy Code; WHEREAS, pursuant to the Plan, the Company intends to cancel all of the existing outstanding Equity Securities of the Company upon the Effective Date and issue the New Common Stock; WHEREAS, pursuant to the Plan, the Company, Barbell Acquisition Corp. a Delaware corporation ("Merger Sub"), and West have entered into an Agreement and Plan of Merger (together with all of the schedules, exhibits and other attachments thereto, the "Merger Agreement"), attached as Exhibit A hereto; WHEREAS, the Investor, US Airways, as Borrower, and certain affiliates thereof as guarantors, including the Company, are parties to the Junior Secured Debtor-in-Possession Credit Facility Agreement, dated as of February 18, 2005, as amended by Amendment No. 1 to the Junior Secured Debtor-in-Possession Credit Facility Agreement dated as of the date hereof (the "Credit Facility"), providing for, among other things, a DIP Credit Facility to be provided by the Investor to US Airways; WHEREAS, subject to the other terms and conditions contained herein and in the Credit Facility, the Investor will convert the principal owed to it pursuant to the Credit Facility into shares of New Common Stock (such conversion, the "Investment") at the Investment Price; WHEREAS, pursuant to the Other Investment Agreements, the Company intends to issue and sell to ACE Aviation Holdings Inc., Par Investment Partners, L.P. and Peninsula Investment Partners, L.P. (the "Other Investors") shares of New Common Stock pursuant to investment agreements entered into by the Other Investors in the forms previously provided to 1 Investor and on terms and conditions, including without limitation purchase price, that are no more favorable to the Other Investors than the terms and conditions provided herein and in the Stockholders Agreement are to the Investor; WHEREAS, at the Closing, the Investor will enter into a Stockholders Agreement (the "Stockholders Agreement"), substantially in the form of Exhibit B hereto, with the Company and the Other Investors; WHEREAS, the parties intend that the transactions contemplated hereby will be implemented by and take effect simultaneously with the implementation of the Plan on the Effective Date (except as to those transactions that are expressly intended to take effect at another date); WHEREAS, the parties intend that all of the transactions contemplated hereby are intended to be treated as a single integrated transaction subject to the approval of the Bankruptcy Court as soon as reasonably practicable after the date hereof; and WHEREAS, the Company, West and the Investor desire to make certain representations, warranties, covenants and agreements in connection with the transactions contemplated herein. NOW, THEREFORE, in consideration of the premises and the mutual representations, warranties, covenants and agreements contained herein, the parties hereto agree as follows, in the case of the Company, subject to Bankruptcy Court approval of this Agreement: ARTICLE I DEFINITIONS Section 1.01 Definitions. As used in this Agreement, the following terms shall have the meanings set forth below: "Affiliate" means, with respect to any specified Person, a Person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the specified Person, where "control" (including the terms "controlling," "controlled by" and "under common control with") means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract, or otherwise; provided, however, that when used with respect to the Company, "Affiliate" shall not include Investor or any Affiliate thereof. "Agreement" has the meaning set forth in the preamble hereto. "Approvals" has the meaning set forth in Section 7.01(e) hereof. "ATSB" means the Air Transportation Stabilization Board, created pursuant to Section 102 of the Air Transportation Safety and System Stabilization Act, P.L. 107-42, as the same may be amended from time to time. 2 "Bankruptcy Code" has the meaning set forth in the recitals hereto. "Bankruptcy Court" has the meaning set forth in the recitals hereto. "Board" means the board of directors of the Company (including, with respect to periods following the Effective Date, the Company). "Business Day" means any day other than a Saturday, Sunday or a day on which banking institutions of the State of New York are authorized by law or executive order to close. "Bylaws" means the bylaws of the Company, as amended from time to time (including, with respect to periods following the Effective Date). "Cases" has the meaning set forth in the recitals hereto. "Certificate of Incorporation" means the Certificate of Incorporation of the Company, as amended from time to time, including any certificate of designation relating to any Equity Securities of the Company (including, in each case, with respect to periods following the Effective Date). "Certificated Air Carrier" means a Citizen of the United States holding an aircraft operating certificate issued pursuant to Chapter 447 of Title 49 of the United States Code or any analogous successor provision of the United States Code, for aircraft capable of carrying ten or more individuals or 6,000 pounds or more of cargo or that otherwise is certified or registered to the extent required to fall within the purview of 11 U.S.C. Section 1110 or any analogous successor provision of the Bankruptcy Code. "Chapter 11" means Chapter 11 of the Bankruptcy Code. "Citizen of the United States" has the meaning given to such term in Section 40102(a)(15) of Title 49 of the Transportation Code, or any subsequent legislation that amends, supplements or supersedes such provisions. "Closing" means the closing of the issuance, sale and purchase of the New Common Stock pursuant to Section 2.01 hereof. "Closing Date" has the meaning set forth in Section 2.02(a) hereof. "Company" has the meaning set forth in the preamble hereto. "Confirmation Order" means a Final Order of the Bankruptcy Court approving the Plan. "Debtors" has the meaning set forth in the recitals hereto. "Debtor Subsidiaries" has the meaning set forth in the recitals hereto. "Disclosure Statement" means a disclosure statement with respect to the Plan. 3 "Effective Date" means the effective date of the Plan. "Equity Securities" shall mean (i) capital stock of, or other equity interests in, any Person, (ii) securities or other instruments convertible into or exchangeable for shares of capital stock, voting securities or other equity interests in such Person or (iii) options, warrants, investment agreements or other rights to acquire the securities described in clauses (i) and (ii), whether fixed or contingent, matured or unmatured, contractual, legal, equitable or otherwise. "Fair Market Value" shall mean the fair market value of the New Common Stock, as determined by the Board. If the New Common Stock is traded on an over-the-counter securities market or national securities exchange, "Fair Market Value" shall mean the closing sales price of the New Common Stock reported on such over-the-counter market or such national securities exchange on the applicable date or, if no sales of New Common Stock have been reported for that date, on the next preceding date for which sales where reported. "Final Order" means an order or judgment of the Bankruptcy Court, or other court of competent jurisdiction, as entered on the docket in the Cases or the docket of any other court of competent jurisdiction, that has not been reversed, stayed, modified or amended, and as to which the time to appeal or seek reargument, reconsideration, or certiorari has expired and no appeal, motion for reconsideration or reargument or petition for certiorari has been timely taken, or as to which any appeal that has been taken or any petition for certiorari, motion for reconsideration or reargument that has been or may be filed has been resolved by the highest court to which the order or judgment was appealed or from which reargument, reconsideration, or certiorari was sought and the time to take any further appeal, petition for certiorari or move for reargument shall have expired. "Fully Diluted Basis" means the number of shares of New Common Stock, without duplication, which are issued and outstanding or owned or held, as applicable, at the date of determination plus the number of shares of New Common Stock issuable pursuant to any Equity Securities then outstanding convertible into or exchangeable or exercisable for (whether or not subject to contingencies or passage of time, or both) shares of New Common Stock. "Governmental Authority" means the government of the United States of America, any other nation or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government. "Hearing" means the hearing conducted in the Cases in the Bankruptcy Court seeking approval of the Motion. "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the regulations promulgated thereunder. "Investor" has the meaning set forth in the preamble hereto. "Investor Director" means any member of the Board of the Company nominated by Investor in accordance with the Stockholders Agreement. 4 "Investment" has the meaning set forth in the recitals hereto. "Investment Price" has the meaning set forth in Section 2.01 hereof. "JSA Agreement" means that certain Jet Service Agreement, dated February 18, 2005, as amended, between U.S. Airways and Air Wisconsin Airlines Corporation, regarding the use and operation of up to seventy (70) CRJ-200 aircraft. "Law" means any law, treaty, statute, ordinance, code, rule or regulation of a Governmental Authority or judgment, decree, order, writ, award, injunction or determination of a court or other Governmental Authority. "Lien" means any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge, or preference, priority or other security interest or preferential arrangement of any kind or nature whatsoever intended for security (including any conditional sale or other title retention agreement, any easement, right of way or other encumbrance on title to real property, and any financing lease having substantially the same economic effect as any of the foregoing). "Material Adverse Effect" on any Person means (x) a material adverse effect on the financial condition, assets, liabilities, business or results of operations of such Person and its Subsidiaries taken as a whole, excluding any such effect resulting from (I) changes or conditions generally affecting the U.S. economy or financial markets, (II) changes or conditions generally affecting any of the segments of the airline industry in which such Person or any of its Subsidiaries operates, to the extent such conditions or changes do not disproportionately impact such Person or its Subsidiaries (III) changes or conditions resulting from divestiture required in order to satisfy Section 5.1(b) of the Merger Agreement or (IV) the announcement or consummation of the Merger Agreement, or (y) an effect that would prevent, materially delay or materially impair the ability of such Person to consummate the Merger or the ability of such Person or the Investor to consummate the transactions contemplated by this Agreement. For purposes of this definition, any suspension of commercial air travel in the United States for a period of 72 hours or more shall be deemed to have a Material Adverse Effect on the Company and West. "Merger" has the meaning assigned to such term in the Merger Agreement. "Merger Agreement" has the meaning set forth in the recitals hereto. "Merger Sub" has the meaning set forth in the recitals hereto. "Motion" means the motion and any supporting papers seeking approval of the Transactions, in form and substance reasonably acceptable to Investor and providing, inter alia, not less than a ten (10) day notice period prior to the Hearing and providing for confidential treatment of portions of the Transaction Documents as mutually agreed by the Company and the Investor. 5 "New Common Stock" means the class of common stock of the Company authorized under the Certificate of Incorporation attached as Exhibit C to the Merger Agreement and to be issued to West shareholders pursuant to the Merger. "Operating Companies" means, with respect to the Company, US Airways, PSA Airlines, Inc., a Pennsylvania corporation, Piedmont Airlines, Inc., a Maryland corporation and Material Services Company, Inc., a Delaware corporation. "Other Investors" has the meaning set forth in the recitals hereto. "Other Investments" means the purchase, issuance and sale by the Company to the Other Investors of shares of New Common Stock pursuant to the Other Investment Agreements. "Other Investment Agreements" means the investment agreements entered into by the Company with any of the Other Investors. "Person" means any individual, corporation, company, association, partnership, limited liability company, joint venture, trust, unincorporated organization, or Governmental Authority. "Plan" has the meaning set forth in the recitals hereto. "Postpetition," when used with respect to any agreement, instrument or any obligation arising thereunder, any claim or proceeding or any other matter, means an agreement or instrument that was first entered into or first became effective, an obligation, claim or proceeding that first arose or was first instituted, or another matter that first occurred, after the commencement of the Cases, or that was entered into or became effective, or arose, was instituted or occurred, before commencement of the Cases but has been assumed in the Cases. "Regulatory Approvals" means, to the extent necessary in connection with the consummation of the transactions contemplated by the Transaction Documents, any and all certificates, permits, licenses, franchises, concessions, grants, consents, approvals, orders, registrations, authorizations, waivers, variances or clearances from, or filings or registrations with, Governmental Authorities (and shall not include clearance or approval under the HSR Act or any other Law that may require waiting periods prior to consummation of the Transactions). "Representatives" means, with respect to any Person, such Person's officers, directors, employees, agents, attorneys, accountants, consultants, equity financing partners or financial advisors or other Person associated with, or acting on behalf of, such a Person. "Republic" means Republic Airways Holdings Inc., a Delaware corporation. "SEC" means the U.S. Securities and Exchange Commission. "Securities Act" means the U.S. Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder. 6 "Stockholders Agreement" has the meaning set forth in the recitals hereto. "Subsidiary" means as to any Person, any other Person of which more than fifty percent (50%) of the shares of the voting stock or other ownership interests are owned or controlled, or the ability to select or elect more than fifty percent (50%) of the directors or similar managers is held, directly or indirectly, by such first Person or one or more of its Subsidiaries or by such first Person and one or more of its Subsidiaries. "Title 49" means Title 49 of the Code of Federal Regulations, as amended and in effect from time to time. "Transactions" means the Merger, the execution, delivery and performance of this Agreement and each Other Investment Agreement (including the issuance of New Common Stock hereunder and thereunder), the Stockholders Agreement, and the execution, delivery and performance of the documents described in Articles II and VI hereof, in each case by the applicable party thereto. "Transaction Contracts" means all of the Transaction Documents other than the Plan, the Confirmation Order. "Transaction Documents" means this Agreement, the Plan, the Confirmation Order, the Merger Agreement, each Other Investment Agreement, the Stockholders Agreement, the documents described in Articles II and VI and all other documents necessary to consummate the Transactions and other arrangements contemplated hereby. "Transportation Code" means Title 49 of the United States Code which, among other things, recodified and replaced the U.S. Transportation Code of 1958 and the regulations promulgated thereunder, or any subsequent legislation that amends, supplements or supersedes such provisions. "US Airways" means US Airways, Inc., a Delaware corporation. "West" has the meaning set forth in the preamble hereto. ARTICLE II ISSUANCE AND PURCHASE OF NEW COMMON STOCK Section 2.01 Issuance and Purchase of New Common Stock. Upon the terms and subject to the conditions set forth in this Agreement, at the Closing, the Company will issue, sell and deliver to Investor, and Investor will purchase from the Company, that number of shares of New Common Stock set forth opposite Investor's name on Schedule 1 hereto, through the conversion of the amount of the principal outstanding as of the Closing under the Credit Facility divided by the aggregate purchase price set forth opposite Investor's name on Schedule 1 hereto (the "Investment Price"). Section 2.02 Closing. (a) Subject to the satisfaction or, if permissible, waiver of the conditions set forth in Sections 7.01 and 7.02 hereof, the Closing shall take place at the 7 offices of Arnold & Porter LLP, 555 Twelfth Street, NW, Washington D.C. 20004, at 10:00 a.m., Washington D.C. time, on the first Business Day following the Effective Time (as such term is defined in the Merger Agreement) or at such other time, date and place as the parties may agree (the date on which the Closing occurs, the "Closing Date"); provided that the parties shall use reasonable best efforts to have the Closing take place on the first Business Day following the Effective Time. (b) At the Closing, (i) the Company shall deliver to Investor certificates representing the shares of New Common Stock to be purchased by, and sold to, Investor pursuant to Section 2.01 hereof (registered in the names and in the denominations designated by Investor at least two Business Days prior to the Closing Date), together with the other documents, certificates and opinions to be delivered pursuant to Section 7.01 hereof, and (ii) the Company shall pay to the Investor (in immediately available funds by wire transfer to the account designated by the Investor, or by such other means as may be agreed between the parties hereto) all accrued and unpaid interest under the Credit Facility as of the Closing and (iii) Investor, in full payment for the shares of New Common Stock to be purchased by, and sold to, Investor pursuant to Section 2.01 hereof, shall deliver to the Company for cancellation the promissory notes issued to Investor pursuant to the Credit Facility, and shall deliver the certificate required pursuant to Section 7.02(b) hereof. ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY The Company hereby represents and warrants to Investor as follows: Section 3.01 Incorporation by Reference of Representations and Warranties in the Merger Agreement. The Company hereby incorporates by reference, for the benefit of Investor as though set forth herein, the following representations and warranties (including the defined terms and disclosure items included therein and related thereto) in the Merger Agreement: Sections 3.2(a), (f), (g), (h), (i), (j), (k), (l), (n), (o), (p), (q), (r), (s), (t), (u), (v), (w) and (x). Each such representation which states that "East" (i.e., US Airways Group, Inc.) "has made available to West" certain materials shall be deemed to read "has made available to Investor" for purposes of this incorporation by reference. Section 3.02 Authorization; No Contravention. The Transactions to be consummated by the Company and the Operating Companies and the performance of the Transaction Contracts are within the respective corporate power and authority of the Company and the Operating Companies (subject and after giving effect to any required approvals of the Bankruptcy Court (including, without limitation, to the extent applicable, the Confirmation Order) and the Plan) and have been duly authorized by all necessary corporate and, if required, stockholder action. This Agreement, the Merger Agreement, each Other Investment Agreement, the Stockholders Agreement and each other Transaction Contract entered into as of the date hereof have been duly executed and delivered by the Company and the Operating Companies party thereto (as applicable) and constitute (subject and after giving effect to any required approvals of the Bankruptcy Court (including, without limitation, to the extent applicable, the 8 Confirmation Order) and the Plan), a legal, valid and binding obligation of the Company and such Operating Companies, respectively, enforceable in accordance with its terms. Section 3.03 Consents; No Conflicts. Other than the notices, reports, filings, consents, registrations, approvals, permits or authorizations required under the Hart Scott Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), with respect to the Company and the Operating Companies, the execution and delivery of each of the Transaction Contracts and the consummation of the Transactions (i) does not require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority (subject and after giving effect to any required approvals of the Bankruptcy Court (including, without limitation, to the extent applicable, the Confirmation Order) and the Plan), except such as have been obtained or made and are in full force and effect and except where failure to obtain such consent, approval, registration, filing or other action would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on the Company, (ii) will not violate, conflict with or result in a breach, violation or default under (A) any applicable law, rule or regulation or any order of or restriction imposed by any Governmental Authority and except, in each case, where such violation of applicable law or regulation would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on the Company or (B) the Certificate of Incorporation or Bylaws or any other organizational documents of the Company or any of its Subsidiaries, (iii) will not violate, conflict with or result in a breach, or default under any Postpetition agreement, contract or obligation or Postpetition loan agreement or any other Postpetition indebtedness agreement or instrument of indebtedness binding upon the Company, any Operating Company or any of their respective Subsidiaries or its assets except where such default, breach or violation would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on the Company and (iv) will not result in the creation or acceleration of any obligations or imposition of any Lien on any assets or properties of the Company or any of its Subsidiaries. Section 3.04 Court Orders. Subject and after giving effect to any required approvals of the Bankruptcy Court (including, without limitation, to the extent applicable, the Confirmation Order) and the Plan, the performance of any action by the Company or the Operating Companies required or contemplated by this Agreement or any other Transaction Document is not restrained or enjoined by any order of the Bankruptcy Court or by any Governmental Authority (either temporarily, preliminarily or permanently). Section 3.05 Capitalization; Securities. Upon the Closing and after giving effect to the Confirmation Order, the Plan, the Merger, the Investment and the Other Investments, the issued and outstanding capital stock of the Company shall consist solely of New Common Stock as provided on Schedule 3.05. Except as set forth on Schedule 3.05, upon the Closing and after giving effect to the Confirmation Order, the Plan, the Merger, the Investment and the Other Investments, there will not be any outstanding subscriptions, options, warrants, commitments, agreements or arrangements related to the issuance or sale of outstanding Equity Securities or securities or other instruments convertible into or exchangeable for any Equity Securities of the Company Upon the Closing Date, the New Common Stock to be issued and delivered to the Investor pursuant to the terms hereof, shall have been duly authorized and validly issued, fully paid, nonassessable and not subject to preemptive or similar rights of third parties or reserved for issuance in accordance with the terms of the Plan and Confirmation Order. The rights, 9 preferences and privileges of the capital stock of the Company shall be as set forth in the Certificate of Incorporation of the Company, as amended pursuant to the Plan and in effect upon the Closing in the form attached as Exhibit C to the Merger Agreement. Section 3.06 Information Provided. A true and correct copy of the Merger Agreement, and of each Other Investment Agreement, including each schedule, exhibit and other attachment or related agreement thereto and including in each case any amendments, supplements and modifications through the date hereof, has been provided to Investor. There are no other agreements, arrangements, understandings or commitments, written or oral, of any nature, between any of the Other Investors or their affiliates, on the one hand, and the Company, West or any of their affiliates on the other, relating to the transactions contemplated by the Transaction Documents. Section 3.07 Financial Advisors and Brokers. Except for Seabury Aviation Advisors LLC and/or its Affiliates ("Seabury"), no Person has acted, directly or indirectly, as a broker, finder or financial advisor of the Company or any of the Operating Companies in connection with the Transaction Documents or the transactions contemplated thereby, and except for fees payable to Seabury by the Company, no Person acting for or on behalf of the Company or any of the Operating Companies is entitled to receive any broker's, finder's or similar fee or commission in respect thereof based in any way on any agreement, arrangement or understanding made by or on behalf of the Company or any of the Operating Companies. Section 3.08 Regulatory Status. Neither the Company, nor any Operating Company nor any of their respective Subsidiaries is (i) an "investment company" as defined in, or subject to regulation under, the Investment Company Act of 1940 or (ii) a "holding company" as defined in, or subject to regulation under, the Public Utility Holding Company Act of 1935. US Airways is a Certificated Air Carrier. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF WEST West hereby represents and warrants to Investor as follows: Section 4.01 Incorporation by Reference of Representations and Warranties in the Merger Agreement. West hereby incorporates by reference, for the benefit of Investor as though set forth herein, the following representations and warranties (including the defined terms and disclosure items related thereto) in the Merger Agreement: Sections 3.1(a), (b), (e), (f), (g), (h), (i), (j), (k), (m), (n), (o), (p), (q), (r), (s), (t), (u), (v) and (w). Each such representation which states that "West" (i.e., America West Holdings Corporation) "has made available to East" certain materials shall be deemed to read "has made available to Investor" for purposes of this incorporation by reference. Section 4.02 Authorization; No Contravention. The Transactions to be consummated by West and performance of the Transaction Contracts to which West is or will be a party are within the corporate power and authority of West and have been duly authorized by all necessary corporate and, if required, stockholder action. This Agreement, the Merger 10 Agreement, each Other Investment Agreement, and each other Transaction Contract to which West is a party, entered into as of the date hereof, have been duly executed and delivered by West and constitute a legal, valid and binding obligation of West, enforceable in accordance with its terms. Section 4.03 Consents; No Conflicts. Other than the notices, reports, filings, consents, registrations, approvals, permits or authorizations required under the HSR Act, with respect to West, the execution and delivery of each of the Transaction Contracts to which West is or will be a party and the consummation of the Transactions (i) does not require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority (subject and after giving effect to any required approvals of the Bankruptcy Court (including, without limitation, to the extent applicable, the Confirmation Order) and the Plan), except such as have been obtained or made and are in full force and effect and except where failure to obtain such consent, approval, registration, filing or other action would not reasonably be expected to have a Material Adverse Effect on West, (ii) will not violate, conflict with or result in a breach, violation or default under (A) any applicable law, rule or regulation or any order of or restriction imposed by any Governmental Authority and except, in each case, where such violation of applicable law or regulation would not reasonably be expected to have a Material Adverse Effect on West or (B) the Certificate of Incorporation or Bylaws or any other organizational documents of West or any of its Subsidiaries, (iii) will not violate, conflict with or result in a breach, or default under any agreement, contract or obligation or loan agreement or any other indebtedness agreement or instrument of indebtedness binding upon West or any of its Subsidiaries or its assets except where such default, breach or violation would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on West and (iv) will not result in the creation or acceleration of any obligations or imposition of any Lien on any assets or properties of West or any of its Subsidiaries. Section 4.04 Court Orders. Subject and after giving effect to any required approvals of the Bankruptcy Court (including, without limitation, to the extent applicable, the Confirmation Order) and the Plan, the performance of any action by West required or contemplated by this Agreement or any other Transaction Document is not restrained or enjoined by any order of the Bankruptcy Court or by any Governmental Authority (either temporarily, preliminarily or permanently). Section 4.05 Information Provided. West has delivered to Investor a true and correct copy of the Merger Agreement, including any amendments, supplements and modifications through the date hereof. Section 4.06 Financial Advisors and Brokers. Except for Greenhill & Co., LLC and/or its Affiliates ("Greenhill") and TPG Partners, L.P. and/or its Affiliates ("TPG"), no Person has acted, directly or indirectly, as a broker, finder or financial advisor of West in connection with the Transaction Documents or the transactions contemplated thereby, and except for fees payable to Greenhill and TPG by West, no Person acting for or on behalf of West is entitled to receive any broker's, finder's or similar fee or commission in respect thereof based in any way on any agreement, arrangement or understanding made by or on behalf of West. 11 Section 4.07 Financial Plan. The financial plan provided to Investor on May 12, 2005 (the "Financial Plan") was prepared by West in good faith using assumptions believed by West to be reasonable, and, as of the date hereof, the Financial Plan represents West's reasonable, good faith estimate of the future financial performance of the Company. ARTICLE V REPRESENTATIONS AND WARRANTIES OF INVESTOR Investor represents and warrants to the Company as follows: Section 5.01 Organization. It is an entity duly organized under the laws of the jurisdiction of its formation having all requisite power and authority and all requisite governmental licenses, authorizations, consents and approvals to execute, deliver and perform its obligations under this Agreement and the Stockholders Agreement. Section 5.02 Authorization; No Contravention. The execution, delivery and performance by Investor of this Agreement and the Stockholders Agreement and the consummation of the transactions contemplated hereby and thereby, are within Investor's powers and have been duly authorized by all necessary action and do not and will not contravene the terms of Investor's Operating Agreement. This Agreement constitutes and, when executed and delivered by Investor at Closing the Stockholders Agreement will constitute, a legal, valid and binding obligation of Investor, enforceable against Investor in accordance with its terms. Section 5.03 Consents; No Conflicts. Except for (i) the filing of a notification and report form under the HSR Act and the termination or expiration of the waiting period under the HSR Act, (ii) the filing of any other required applications or notices with any Governmental Authority and approval of such applications and notices, and (iii) approval by the Bankruptcy Court, no Approval is necessary or required in connection with the execution, delivery or performance by, or enforcement against, Investor of this Agreement or the Stockholders Agreement or for the consummation of the transactions contemplated hereby and thereby, except for such Approvals that would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of Investor to consummate the Investment, and all of which have been duly obtained, taken, given or made and are in full force and effect, except for Approvals that would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of Investor to consummate the Investment. Section 5.04 Citizenship. Investor (or its assignee, as permitted by Section 9.10 who acquires the New Common Stock hereunder at the Closing) is a Citizen of the Untied States. ARTICLE VI PRE-CLOSING COVENANTS Section 6.01 Taking of Necessary Action. (a) The Company, West and Investor (solely with respect to the Investment) shall cooperate with each other and use (and shall cause their respective Subsidiaries to use) their respective reasonable best efforts to take or cause to be taken all actions, and do or cause to be done all things, necessary, proper or advisable 12 on its part under this Agreement and applicable Law to consummate and make effective the Transactions as soon as practicable, including preparing and filing as promptly as practicable all documentation to effect all necessary notices, reports and other filings (including, without limitation, appropriate filings pursuant to the HSR Act) and to obtain as promptly as practicable all consents, registrations, approvals, permits and authorizations necessary or advisable to be obtained from any third party and/or any Governmental Authority in order to consummate the Transactions. In exercising the foregoing rights, the Company, West and Investor shall act reasonably and as promptly as practicable. The Company's, West's and (solely with respect to the Investment) Investor's obligations under this Section 6.01 shall include, without limitation, the obligation to use their respective reasonable best efforts to defend any lawsuits or legal proceedings, whether judicial or administrative, or any other actions by a Governmental Authority, challenging the Transactions, including using reasonable best efforts to seek to have any stay or other injunctive relief which would prevent or materially delay or impair the consummation of the Transactions entered by any court or other Governmental Authority reversed on appeal or vacated. For purposes of this Section 6.01, as it relates to Investor, "reasonable best efforts" shall include Investor's agreement to (i) hold its airline assets, if any, in one or more subsidiaries separate from the company that will hold the Investor's equity interest in the Company, and (ii) nominate an Investor Director (as defined in the Stockholders Agreement) whose service would not conflict with applicable law. Except as provided in the immediately preceding sentence, Investor shall not be required (1) to divest, or agree to divest, any of its businesses or assets or any interest therein, or (2) to take or agree to take any other action or agree to any limitation, restriction or condition that could reasonably be expected to materially impair the benefits to Investor expected, as of the date of this Agreement, to be realized from the transactions contemplated hereby. (b) Each of the Company, West and Investor shall, to the extent related to the Investment, in connection with obtaining the approvals referenced in Section 6.01(a), use its reasonable best efforts to (i) subject to applicable law, permit the other party or the other party's outside counsel to review in advance any proposed written communication between it and any Governmental Authority, (ii) promptly inform each other of any communication (or other correspondence or memoranda) received by such party from, or given by such party to, any other Governmental Authority and of any material communication received or given in connection with any proceeding by a private party, in each case regarding any of the transactions contemplated hereby, (iii) consult with each other in advance to the extent practicable of any meeting or conference with any Governmental Authority or, in connection with any proceeding by a private party, with any other Person, and to the extent permitted by the applicable Governmental Authority or other Person, give the other party the opportunity to attend and participate in such meetings and conferences, and (iv) furnish each other with copies of all correspondence, filings and written communications between them or their Subsidiaries or Affiliates on one hand, and any such Governmental Authority or its respective staff on the other hand, with respect to this Agreement and the transactions contemplated hereby, except that (A) any materials concerning Investor's valuation of the transaction may be redacted and (B) any proprietary information of one party not previously disclosed to the other party may be disclosed only to the other party's outside counsel, at the option of the disclosing party. (c) The Company shall, in coordination with Investor (i) file with the Bankruptcy Court a bidding procedures motion, reasonably satisfactory to Investor, the expense 13 reimbursement provisions set forth in Section 9.01 hereof and the provisions of Section 4.20 of the Merger Agreement, and (ii) diligently seek approval of the Transactions (consistent with the Bidding Procedures, as hereinafter defined), and (iii) if the Company has determined that the Merger represents a highest and best Qualified Competing Plan Proposal (as defined in the order approving the bidding procedures), (A) file with the Bankruptcy Court, and diligently seek approval of, the Disclosure Statement (with the Plan attached as an exhibit thereto) reasonably satisfactory to Investor and (B) seek to obtain, as expeditiously as possible, a Confirmation Order with respect to the Plan that is reasonably satisfactory to the Investor. Section 6.02 Notifications. At all times prior to the Closing Date, Investor shall promptly notify the Company and each of the Company and West shall promptly notify Investor in writing of any fact, change, condition, circumstance or occurrence or nonoccurrence of any event that will or is reasonably likely to result in such party's representations and warranties to be untrue or inaccurate in any material respect or the failure to satisfy the conditions to be complied with or satisfied by it hereunder; provided, however, that the delivery of any notice pursuant to this Section 6.02 shall not be deemed to alter or amend such party's representations or warranties or limit or otherwise affect the remedies available hereunder to any party giving or receiving such notice. Section 6.03 Financial and Other Information. From and after the date hereof, each of the Company and West shall, and shall cause each of their respective Subsidiaries and Representatives to, afford to Investor, its Affiliates and their respective Representatives, including qualified prospective lenders to Investor that sign appropriate confidentiality agreements, complete access, upon reasonable notice and in such manner as will not unreasonably interfere with the conduct of such companies' respective businesses, to their and their respective Subsidiaries respective facilities, properties, books, contracts, commitments, records (including information regarding any material pending or threatened legal proceeding to which any of such companies is, or reasonably expects to be, a party and negotiations relating to any labor agreements or labor disputes involving the Company, West or any of their respective Subsidiaries), key personnel, officers, independent accountants and legal counsel; provided, however, that neither the Company nor West will be required to provide access to employee personnel files if providing such files would be unreasonable or a violation of applicable Law. Section 6.04 Delivery of Reports. Each of the Company and West and their respective Subsidiaries shall deliver to Investor, promptly following delivery to the ATSB, the reports concerning the weekly and monthly operating and financial data of the Company or West, as applicable, and their respective Subsidiaries that are delivered to the ATSB. Section 6.05 Amendments to Merger Agreement; Etc. Other than pursuant to and in accordance with Section 4.20 of the Merger Agreement, the Company and West will not amend the Merger Agreement, the Plan, any Other Investment Agreement or any other Transaction Document, in each case without the prior written approval of the Investor, such approval not to be unreasonably withheld (it being understood that in such connection Investor is not required to consider the interests of any other Person), and, notwithstanding the foregoing, neither the Company nor West shall waive any condition to the consummation of the Merger or the Plan without the prior written approval of Investor. 14 Section 6.06 Publicity. Prior to the Closing, except as required by Law or by obligations pursuant to any listing agreement with or requirement of any national securities exchange or national quotation system on which the Common Stock, New Common Stock or the common stock of West is listed, admitted to trading or quoted, neither the Company (nor any of its Subsidiaries), West (nor any of its Subsidiaries) nor Investor (nor any of its Affiliates) shall, without the prior written consent of each other party hereto, which consent shall not be unreasonably withheld or delayed, make any public announcement or issue any press release with respect to the transactions contemplated by this Agreement or the Transaction Documents. Prior to making any public disclosure required by applicable Law or pursuant to any listing agreement with or requirement of any relevant national exchange or national quotation system, the disclosing party shall consult with the other parties hereto, to the extent feasible, as to the content and timing of such public announcement or press release. To the extent any party is required to file this Agreement or any Transaction Document with the SEC or any other Governmental Authority (including the Bankruptcy Court), the parties shall consult with each other concerning information for which confidential treatment will be requested. Section 6.07 Issuances of Equity Securities. The Company shall not accept subscriptions for, offer, issue, sell, or agree, commit or obligate itself to offer, issue or sell, any Equity Securities other than New Common Stock (a) issued to Investor pursuant to this Agreement, (b) issued to other Persons pursuant to other investment agreements entered into on terms and conditions, including without limitation purchase price, that are no more favorable to such Persons than the terms and conditions provided herein and in the Stockholders Agreement are to the Investor up to an aggregate amount of $500,000,000 including the investments of the Investor and the Other Investors, (c) issued to West's equityholders pursuant to the Merger Agreement as set forth on Schedule 3.05, and (d) issued to existing equityholders and creditors of the Company pursuant to the Plan as set forth on Schedule 3.05, (e) issued by the Company on or prior to the Effective Date pursuant to a rights offering by the Company to existing Company and West stakeholders to purchase shares of New Common Stock at a price per share no less than the purchase price per share of New Common Stock paid by Investor under this Agreement and in an aggregate amount not to exceed the difference between $650,000,000 and the aggregate amount of the Investment, the Other Investments and the investment of any other Person under clause (b) above, and (f) issued by the Company on or prior to the Effective Date at a purchase price per share no less than the purchase price per share of New Common Stock paid by Investor under this Agreement and otherwise on terms and conditions that are no more favorable than the terms and conditions provided herein and in the Stockholders Agreement, for proceeds in excess of $650,000,000 provided that (i) the sole use of such proceeds is the redemption or repurchase of Equity Securities from existing Company and West stakeholders at a repurchase or redemption price that values the Equity Securities redeemed or repurchased (on an as-converted basis in the case of convertible securities and, in the case of Equity Securities of West, taking into account the Class B Merger Exchange Ratio (as defined in the Merger Agreement)) at a price per share no more than the purchase price per share of New Common Stock paid by Investor under this Agreement, (ii) the aggregate value of the New Common Stock (valued on the same basis as the New Common Stock to be issued pursuant to this Agreement) issued pursuant to this clause (f) shall not exceed $200,000,000 and (iii) Investor is provided the right to purchase, at its option, up to $25,000,000 of the New Common Stock to be issued pursuant to this clause (f) at a price per share equal to the purchase price per share of New Common Stock paid by Investor under this Agreement. Notwithstanding the foregoing, in 15 connection with the implementation of the Plan, the Company may authorize and reserve for issuance under the Company's equity incentive plan a number of shares of New Common Stock not to exceed 12.5% of the outstanding number of shares of New Common Stock on a Fully Diluted Basis as of the Effective Date, provided that any awards of such shares of New Common Stock made or committed to be made at anytime before the second anniversary of the Effective Date, (x) may only consist of options with an exercise price not less than the lesser of (a) Fair Market Value as of the date of grant and (b) the Investment Price (as appropriately adjusted to reflect stock splits, stock dividends, reverse splits and similar changes with respect to the New Common Stock effected after the Closing Date); provided that the exercise price for any options granted as of or immediately following the Effective Date shall be not less than the Investment Price and (y) shall not be effective unless such awards are approved or ratified by the Board (as constituted from and after the Effective Date as set forth in Section 1.8(a) of the Merger Agreement) or by a committee with appropriate authority granted by such Board. Section 6.08 Transfer Taxes. All transfer taxes, fees and duties under applicable law incurred in connection with the Investment under this Agreement will be borne and paid by the Company and it shall promptly reimburse Investor for any such tax, fee or duty which Investor is required to pay under applicable law. Section 6.09 Bankruptcy Covenants. (a)Notwithstanding anything herein to the contrary, the Company shall not, and shall cause each of the other Debtors not to, offer, agree to, or seek approval from the Bankruptcy Court for, and shall use their best efforts to object to any request by any other party for, any break-up fee, work fee, expense reimbursement or any other benefit or protection for any Person in connection with any proposed acquisition of or investment in any of the Debtors, other than (i) West, (ii) Investor, (iii) any Other Investor, and (iv) any other Person making an investment pursuant to Section 6.08(b); provided that (A) such other Person is purchasing at least $50,000,000 of New Common Stock on terms, and conditions, including without limitation purchase price, that are no more favorable to such other Person than the terms and conditions provided herein and in the Stockholders Agreement are to the Investor and (B) without limitation of the preceding clause (A), any break-up or similar fee payable to such other Person shall not exceed three percent (3.0%) of the aggregate amount of financing to be provided by such other Person. (b) Each of the Debtors agrees that if the Merger Agreement becomes the Approved Proposal (as defined in the Merger Agreement), it shall use its best efforts to cause any order approving the Approved Proposal to prohibit the Debtors (and any Person purporting to act on behalf of the estate of any Debtor) from violating the provisions of Section 4.4(a) of the Merger Agreement or from otherwise pursuing in any way any East Acquisition Proposal (as defined in the Merger Agreement) other than the Merger Agreement unless the Merger Agreement shall have previously been terminated in accordance with its terms. (c) In connection with any proceedings in the Bankruptcy Court related to the Bidding Procedures (as hereinafter defined), the order approving the Approved Proposal or the transactions contemplated by the Merger Agreement or this Agreement (or any Qualified Competing Plan Proposal (as defined in the Bidding Procedures)) (a) the Company shall provide to Investor copies of all motions, objections, pleadings, notices, proposed orders and other documents that are filed by or on behalf of any Debtor as soon as reasonably practicable prior to 16 filing thereof with the Bankruptcy Court and (b) West shall provide to Investor copies of all motions, objections, pleadings, notices, proposed orders and other documents that are filed by or on behalf of West as soon as reasonably practicable prior to filing thereof with the Bankruptcy Court. (d) Except in accordance with the Bidding Procedures, the Company and West shall not, and shall not authorize or permit any of their Subsidiaries or any of the Company's or West's or such Subsidiaries' Representatives, directly or indirectly, to, (i) solicit, initiate, or take any action designed to induce a proposal or offer for an Alternative Proposal, (ii) participate in any discussions or negotiations regarding any Alternative Proposal, or (iii) enter into any letter of intent, agreement in principle, acquisition agreement or other similar agreement related to any Alternative Proposal. "Alternative Proposal" means (x) any Alternative Transaction, or proposal therefor, or (y) any proposed investment that would, or is intended to, replace all or a material portion of the investment contemplated by this Agreement. ARTICLE VII CONDITIONS Section 7.01 Conditions to Investor's Obligations. The obligation of Investor to make the Investment pursuant to Section 2.01 hereof is subject to satisfaction or waiver of each of the following conditions precedent: (a) Definitive Documents. Definitive Transaction Documents (in form and substance reasonably satisfactory to Investor) shall have been prepared, negotiated and, to the extent applicable, duly executed by the parties (or, as applicable, their Affiliates), and approval by the Bankruptcy Court of such documents pursuant to a Final Order, to the extent necessary, shall have been obtained. All such Transaction Documents shall have been executed by the parties thereto (other than Investor and its Affiliates) on or prior to the Effective Date, shall not have been modified, amended, waived or supplemented without the consent of Investor, shall be in effect and the consummation of the transactions contemplated thereby shall not be stayed, and all conditions to the obligations of the parties under such Transaction Documents shall have been satisfied or waived. All corporate and other proceedings to be taken by the Company, West or any of their respective Subsidiaries in connection with such Transaction Documents and the transactions contemplated thereby to be completed at the Closing and documents incident thereto shall have been completed in form and substance reasonably satisfactory to Investor, and Investor shall have received all such counterpart originals or certified or other copies of such Transaction Documents and such other documents as it may reasonably request. Without limiting the generality of the foregoing, in connection with the consummation of the Plan, the Company and the Other Investors and shall have entered into the Stockholders Agreement. (b) Company Representations and Warranties; Covenants. The representations and warranties of the Company set forth in Article III hereof (without giving effect to any material adverse effect, materiality or similar qualifier) shall have been true and correct in all respects on and as of the date hereof and at the Closing as if made on the Closing Date (except where such representation and warranty speaks by its terms of a different date, in 17 which case it shall be true and correct as of such date), except to the extent that such inaccuracies in any such representation or warranty have not had, and would not, individually or in the aggregate, have a Material Adverse Effect on the Company. The Company shall have performed in all material respects all obligations and complied in all material respects with all agreements, undertakings, covenants and conditions required to be performed by it hereunder at or prior to the Closing, and the Company shall have delivered to Investor at the Closing a certificate dated the Closing Date and signed by the chief executive officer and the chief financial officer of the Company to the effect that the conditions set forth in this Section 7.01(b) have been satisfied. (c) West Representations and Warranties; Covenants. The representations and warranties of West set forth in Article IV hereof (without giving effect to any material adverse effect, materiality or similar qualifier) shall have been true and correct in all respects on and as of the date hereof and at the Closing as if made on the Closing Date (except where such representation and warranty speaks by its terms of a different date, in which case it shall be true and correct as of such date), except to the extent that such inaccuracies in any such representation or warranty have not had, and would not, individually or in the aggregate, have a Material Adverse Effect on West. West shall have performed in all material respects all obligations and complied in all material respects with all agreements, undertakings, covenants and conditions required to be performed by it hereunder at or prior to the Closing, and West shall have delivered to Investor at the Closing a certificate dated the Closing Date and signed by the chief executive officer and the chief financial officer of West to the effect that the conditions set forth in this Section 7.01(c) have been satisfied. (d) Compliance with Laws, No Adverse Action or Decision. Since the date hereof, (i) no Law shall have been promulgated, enacted or entered that restrains, enjoins, prevents, materially delays, prohibits or otherwise makes illegal the performance of any of the Transaction Documents; (ii) no preliminary or permanent injunction or other order by any Governmental Authority that restrains, enjoins, prevents, delays, prohibits or otherwise makes illegal the performance of any of the Transaction Documents shall have been issued and remain in effect, except for such injunctions that, if obtained, could not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of Investor, the Company or West or their respective Affiliates to consummate the Transactions; (iii) no Governmental Authority shall have instituted any legal proceeding that seeks to restrain, enjoin, prevent, delay, prohibit or otherwise make illegal the performance of any of the Transaction Documents, except for any such legal proceedings which have a significant possibility of being brought to a conclusion which could not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of Investor, the Company or West or their respective Affiliates to consummate the Transactions, and (iv) there is no pending or threatened investigation or litigation by any other Person relating to the Transactions which, if determined adversely to the Company, West or Investor, would materially impair or limit the rights and benefits of Investor under the Transaction Documents or the economic benefits to Investor of the Transactions in the aggregate and which Investor reasonably believes, based on the advice of counsel, has a reasonable likelihood of success. (e) Approvals. The Company, Investor and West shall have received (i) all material Regulatory Approvals, which shall have become final (provided that, if an appeal of such Regulatory Approval is pending and such appeal has a significant possibility of being 18 resolved adversely to the Company, Investor or West in a manner that would reasonably be expected to have a material adverse effect on the ability of Investor, the Company or West or their respective Affiliates to consummate the Transactions, this clause (i) shall be deemed not to be satisfied), and (ii) all other material approvals, permits, authorizations, exemptions, consents, licenses and agreements from other third parties that are necessary to permit the Transactions to be completed or performed as contemplated by the Transaction Documents and to permit the Investor and its Affiliates and Company and its Affiliates (including West and its Subsidiaries) to carry on its business after such transactions in a manner not materially inconsistent with the manner in which it was carried on prior to the Effective Date (together with the Regulatory Approvals, the "Approvals"), which Approvals shall not contain any condition or restriction that materially impairs the ability of the Investor and its Affiliates or the ability of the Company (including West and its Subsidiaries) to carry on its business. All waiting periods imposed by applicable Law (including, without limitation, under the HSR Act) in connection with the Transactions shall have expired or been terminated without any action having been taken by any court of competent jurisdiction restraining, preventing or imposing materially adverse conditions upon such transactions or upon the conduct of the business of Investor, East, West or their respective Affiliates. (f) Plan of Reorganization. The Plan shall be in a form reasonably acceptable to the Investor, such Plan shall have been confirmed by the Bankruptcy Court, and such Plan shall among other things (i) not conflict with any material term of this Agreement, the Stockholders Agreement or the other Transaction Documents, (ii) be substantially consistent in all material respects with the terms of the Financial Plan including, without limitation, concessions obtained and to be obtained from the Debtors' employees, creditors, lessors and other claimants, and (iii) reflect a corporate and capital structure (including liabilities) of the Company consistent with the Financial Plan. All conditions to the effectiveness of the Plan, other than the consummation of this Agreement, shall have been satisfied, and a Confirmation Order in a form reasonably acceptable to the Investor shall have been entered and become a Final Order no later than December 31, 2005. (g) Additional East Equity. In connection with the emergence of the Company and the Operating Companies from chapter 11 and the consummation of the Plan, the Company will have received on the Effective Date cash equity investments aggregating not less than $375,000,000 and not more than $500,000,000 pursuant to the Other Investment Agreements (and this Agreement through the conversion of Investor's loans under the Credit Facility pursuant hereto), all on terms, including without limitation purchase price, no more favorable to the Other Investors than the terms of this Agreement and the Stockholders Agreement are to the Investor, which with all other equity capital of the Company, will be invested only in a single class of common stock, the New Common Stock, with all such New Common Stock having the same voting rights, and shall have no other class of capital stock authorized in its charter other than the New Common Stock. The Company alone, and not any Affiliate of the Company, shall have issued Equity Securities in connection with the consummation of the Plan. (h) Contracts. All material executory contracts and unexpired leases, the assumption, assignment, rejection or renegotiation of which is necessary for the successful implementation of the Plan and the operation of the Company's business as such business is 19 contemplated in the Financial Plan to be conducted, shall have been assumed, assigned, rejected or renegotiated, as applicable. (i) Effective Date and Merger. The Effective Time (as defined in the Merger Agreement) shall have occurred, or shall occur concurrently with the Closing, and the Merger shall have been, or will concurrently with the Closing be, consummated in accordance with the terms of the Merger Agreement without amendment or waiver other than as permitted in accordance with Section 6.05 of this Agreement. (j) No Conversion to Chapter 7. Neither the Company's Chapter 11 Case nor US Airways Chapter 11 Case shall have been converted to a case under Chapter 7 of the Bankruptcy Code and no trustee shall have been appointed under any chapter of the Bankruptcy Code in respect of either such case. (k) Certificate of Incorporation and Bylaws. The Certificate of Incorporation and Bylaws, substantially in the forms attached as Exhibits C and D, respectively, to the Merger Agreement, shall have been filed with and accepted by the Secretary of State of the State of Delaware and shall have become effective. As of the Closing Date, the Company shall have delivered to Investor a complete and correct copy of the certificates of incorporation and the bylaws or comparable governing instruments of each of the Operating Companies, in full force and effect as of the Closing Date. (l) Delivery. The Company shall have executed and delivered to Investor the shares of New Common Stock pursuant to and in accordance with Section 2.01 hereof. (m) Board Representation. The composition of the Board shall be as set forth in Section 1.8(a) of the Merger Agreement, which shall be included in a staggered board consisting of three classes with the directors in class three having a term of at least three years from the Effective Date, and, as contemplated by the Stockholders Agreement, the Investor Director designated by Investor, if so designated, shall have been elected or appointed to the Board for an initial term of three years. (n) Directors' and Officers' Insurance. The Company shall have procured and maintained in full force and effect directors' and officers' liability insurance with respect to members of the Board of Directors of the Company, which insurance shall be at least $100 million, and shall cover such risks, as is customary for a corporation in the Company's and its Affiliates respective businesses or other similar businesses. (o) Absence of Changes. From the date of this Agreement through the Closing Date, there shall not have occurred any change, event, occurrence, condition or development that has or could reasonably be expected to have a material adverse effect on the financial condition, assets, liabilities, business or results of operations of the Company or West or that would prevent, materially delay or materially impair the ability of the Company, West or Investor to consummate the transactions contemplated by this Agreement. The Company's financial and operational performance from the period from March 31, 2005 to the Closing Date shall not have deviated materially and adversely from the performance indicated in the Financial Plan. 20 (p) Profit Sharing Plan. The Company's employee profit sharing plan shall have been amended on terms no less favorable to Investor than those set forth on Schedule 7.01(q). (q) Listing. The shares of New Common Stock to be issued to Investor under this Agreement shall have been authorized for listing or quotation, as applicable, on the New York Stock Exchange or NASDAQ Stock Market upon official notice of issuance. (r) Amendment to JSA Agreement. An amendment to the JSA Agreement, in form and substance reasonably satisfactory to the Investor, providing for a guarantee of payment by the Company with respect to the obligations of US Airways under the JSA Agreement (excluding any consequential damages), if US Airways is in breach thereof, shall be duly executed and delivered to US Airways and the Company. Section 7.02 Conditions to the Company's Obligations. The obligation of the Company to issue and sell the New Common Stock pursuant to Section 2.01 hereof at the Closing is subject to the satisfaction or waiver of each of the following conditions precedent: (a) Definitive Documents. Definitive Transaction Documents (in form and substance reasonably satisfactory to the Company) necessary to consummate the transactions contemplated herein shall have been prepared, negotiated and, to the extent applicable, executed by the parties (or, as applicable, their Affiliates), and approval by the Bankruptcy Court of such documents, as necessary, shall have been obtained. All Transaction Documents shall not have been modified, shall be in effect and the consummation of the transactions contemplated thereby shall not be stayed, and all conditions to the obligations of the parties under the Transaction Contracts shall have been satisfied or effectively waived. All corporate and other proceedings to be taken by Investor its Affiliates in connection with the Transaction Documents and the transactions contemplated thereby to be completed at the Closing and documents incident thereto shall have been completed in form and substance reasonably satisfactory to the Company, and the Company shall have received all such counterpart originals or certified or other copies of the Transaction Documents and such other documents as it may reasonably request. (b) Investor Representations and Warranties; Covenants. The representations and warranties of Investor set forth in Article V hereof (without giving effect to any material adverse effect, materiality or similar qualifier) shall have been true and correct in all respects, on and as of the date hereof and at the Closing as if made on the Closing Date (except where such representation and warranty speaks by its terms as of a different date, in which case it shall be true and correct as of such date), except to the extent that such inaccuracies have not had, and would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of Investor or its Affiliates to consummate the Transactions. Investor shall have performed in all material respects all obligations and complied in all material respects with all agreements, undertakings, covenants and conditions required to be performed by it at or prior to the Closing, and Investor shall have delivered to the Company and West at the Closing a certificate dated the Closing Date and signed on behalf of a member of Investor to the effect that the conditions set forth in this Section 7.02(b) have been satisfied. 21 (c) Compliance with Laws; No Adverse Action or Decision. Since the date hereof, (i) no Law shall have been promulgated, enacted or entered that restrains, enjoins, prevents, materially delays, prohibits or otherwise makes illegal the performance of any of the Transaction Documents with respect to the transactions contemplated thereby to be completed at the Closing; (ii) no preliminary or permanent injunction or other order by any Governmental Authority or other Person that restrains, enjoins, prevents, delays, prohibits or otherwise makes illegal the performance of any of the Transaction Documents shall have been issued and remain in effect, except for such injunctions that, if obtained, could not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of Investor, the Company or West or their respective Affiliates to consummate the Transactions; and (iii) no Governmental Authority shall have instituted any legal proceeding that seeks to restrain, enjoin, prevent, delay, prohibit or otherwise make illegal the performance of any of the Transaction Documents, except for any legal proceedings which have a significant possibility of being brought to a conclusion which could not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of Investor, the Company or West or their respective Affiliates to consummate the Transactions. (d) Approvals. The Company and West shall have received (i) all material Regulatory Approvals (other than waiting periods imposed by applicable Law as referred to later in this paragraph), which shall have become final (provided that, if an appeal of such Regulatory Approval is pending and such appeal has a significant possibility of being resolved adversely to the Company or West in a manner that would reasonably be expected to have a material adverse effect on the ability of Investor, the Company or West or their respective Affiliates to consummate the Transactions, this clause (i) shall be deemed not to be satisfied), and (ii) all other Approvals, which Approvals shall not contain any condition or restriction that, in the Company's reasonable judgment, materially impairs the Company's ability to carry on its business. Without limiting the generality of clause (ii), any and all required approvals under any material financing agreements to which the Company, West or any of their respective Subsidiaries is a party shall have been obtained. All waiting periods imposed by applicable Law (including, without limitation, under the HSR Act) in connection with the transactions contemplated by the Transaction Documents shall have expired or been terminated without any action having been taken by any court of competent jurisdiction restraining, preventing or imposing materially adverse conditions upon such transactions. (e) Confirmation Order. The Confirmation Order, satisfactory in form and substance in all respects to the Company, shall have been entered by the Bankruptcy Court and, once entered, shall not have been modified without the Company's and West's prior written consent in any manner materially adverse to the Company, shall be in effect and shall not have been stayed. (f) Effective Date and the Merger. The Effective Date and the satisfaction or waiver of all conditions to the closing of the Merger shall have occurred not later than the Closing. (g) Citizenship. The Company and West shall have received reasonably satisfactory assurances as it may request that Investor is a Citizen of the United States. 22 ARTICLE VIII TERMINATION Section 8.01 Termination of Agreement. Subject to Section 8.02 hereof, this Agreement may be terminated by notice in writing at any time prior to the Closing by: (a) Investor or the Company, if (i) closing of the Transactions (including the Closing) shall not have occurred on or before December 31, 2005 or (ii) the Merger Agreement shall have been terminated in accordance with its terms on or before December 31, 2005; (b) Investor, if (i) a bidding procedures order (substantially in the form attached as Exhibit E to the Merger Agreement) approving the expense reimbursement provisions set forth in Section 9.01 and the provisions of Section 4.20 of the Merger Agreement (in the form attached as Exhibit A to this Agreement) (the "Bidding Procedures") hereof shall not have been entered by the Bankruptcy Court within thirty (30) days following the date hereof, but in no event later than June 30, 2005, (ii) the Merger and the transactions contemplated by the Merger Agreement and this Agreement shall not have been determined by the Bankruptcy Court to be the Approved Proposal within sixty-five (65) days after the entry by the Bankruptcy Court of the order approving the Bidding Procedures contemplated by the preceding clause (i), (iii) there shall have been a breach by the Company or West of any material representation, warranty, covenant or agreement contained in this Agreement, which breach would result in the failure to satisfy any condition set forth in Section 7.01 hereof to Investor's obligations and that has not been cured within thirty (30) days following receipt by the Company or West of written notice from Investor of such breach, (iv) any condition set forth in Section 7.01 hereof to Investor's obligations is not capable of being satisfied, (v) the Company shall enter into a written agreement or letter of intent or agreement in principle providing for an Alternative Proposal, or (vi) the Bankruptcy Court shall have ordered the Company to terminate this Agreement in order to accept an Alternative Proposal; (c) the Company, if (i) there shall have been a breach by Investor of any material representation, warranty, covenant or agreement contained in this Agreement which breach would result in the failure to satisfy any condition set forth in Section 7.02 hereof to the Company's obligations and that has not been cured within thirty (30) days following receipt by Investor of written notice from the Company of such breach, or (ii) any condition set forth in Section 7.02 hereof to the Company's obligations is not capable of being satisfied; or (d) mutual agreement in writing by the Company and Investor. Section 8.02 Effect of Termination. If this Agreement is terminated in accordance with Section 8.01 hereof and the transactions contemplated hereby are not consummated, this Agreement shall become null and void and of no further force and effect except that (i) the terms and provisions of this Section 8.02 and Article IX hereof shall survive the termination of this Agreement, and (ii) any termination of this Agreement shall not relieve any party hereto from any liability for any willful breach of its obligations hereunder. A termination shall not void or affect any of the constituent transactions consummated prior to 23 such termination or any sections hereof which by their terms survive termination. If this Agreement is terminated in accordance with Section 8.01 hereof and the transactions contemplated hereby are not consummated, Amendment No. 1 to the Credit Facility shall automatically terminate and be of no further effect; however, such termination shall not otherwise void or affect any other terms of the Credit Facility. ARTICLE IX MISCELLANEOUS Section 9.01 Fees and Expenses. (a) Except as expressly provided herein or in any Transaction Document, each party shall bear its own costs and expenses incurred in connection with this Agreement or any of the Transactions. (b) All amounts payable under this Agreement shall be paid in immediately available funds to an account or accounts designated by the recipient of such amounts, except as otherwise provided herein. Section 9.02 Survival of Representations, Warranties and Covenants. None of the representations, warranties or covenants contained in this Agreement shall survive the Closing Date. Section 9.03 Specific Performance. The parties hereto specifically acknowledge that monetary damages are not an adequate remedy for violations of this Agreement, and that any party hereto may, in its sole discretion, apply to a court of competent jurisdiction for specific performance or injunctive or such other relief as such court may deem just and proper in order to enforce this Agreement or prevent any violation hereof and, to the extent permitted by applicable Law and to the extent the party seeking such relief would be entitled to the merits to obtain such relief, each party waives any objection to the imposition of such relief. Section 9.04 General Interpretive Principles. Whenever used in this Agreement, except as otherwise expressly provided or unless the context otherwise requires, any noun or pronoun shall be deemed to include the plural as well as the singular and to cover all genders. The name assigned this Agreement and the Section captions used herein are for convenience of reference only and shall not be construed to affect the meaning, construction or effect hereof. Unless otherwise specified, any references to a party's "judgment", "satisfaction" or words of a similar import shall mean in such party's sole judgment. Unless otherwise specified, the terms "hereof," "herein" and similar terms refer to this Agreement as a whole (including the Exhibits and Schedules hereto), and references herein to Articles or Sections refer to Articles or Sections of this Agreement. Section 9.05 Notices. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given, if delivered personally, by telecopier or sent by first class mail, postage prepaid, to the addresses set forth on Schedule 9.05. Section 9.06 Entire Agreement; Amendment. This Agreement and the documents described herein (including the Plan and the Credit Facility) or attached or delivered pursuant hereto (including, without limitation, the other Transaction Documents) set forth the 24 entire agreement between the parties hereto with respect to the transactions contemplated by this Agreement. Any provision of this Agreement may only be amended, modified or supplemented in whole or in part at any time by an agreement in writing among the parties hereto executed in the same manner as this Agreement. No failure on the part of any party to exercise, and no delay in exercising, any right shall operate as waiver thereof, nor shall any single or partial exercise by either party of any right preclude any other or future exercise thereof or the exercise of any other right. Section 9.07 No Other Representations or Warranties. Except for the representations and warranties contained in this Agreement, neither East nor West, nor any agent, Affiliate, officer, director, employee or representative of either or them, nor any other Person, makes, or shall be deemed to make, any representation or warranty to Investor, express or implied, at law or in equity, on behalf of East or West, and East and West hereby exclude and disclaim any such representation or warranty whether by either East or West or any or their respective agents, Affiliates, officers, directors, employees or representatives or any other Person, notwithstanding the delivery or disclosure to Investor or any of their respective officers, directors, partners, employees or representatives or any other Person of any documentation or other information by East or West or any of their respective agents, Affiliates, officers, directors, employees or representatives or any other Person with respect to any one or more of the foregoing. Section 9.08 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed to constitute an original, but all of which together shall constitute one and the same document. Section 9.09 Governing Law. To the extent not governed by the Bankruptcy Code, this Agreement shall be governed by, and interpreted in accordance with, the Laws of the State of New York applicable to contracts made and to be performed in that State without reference to its conflict of laws rules. The parties hereto agree that the appropriate and exclusive forum for any disputes arising out of this Agreement solely between the Company and Investor shall be the Bankruptcy Court, or if such court will not hear any such suit, the U.S. District Court for the Southern District of New York, and, the parties hereto irrevocably consent to the exclusive jurisdiction of such courts, and agree to comply with all requirements necessary to give such courts jurisdiction. The parties hereto further agree that the parties will not bring suit with respect to any disputes arising out of this Agreement except as expressly set forth below for the execution or enforcement of judgment, in any jurisdiction other than the above specified courts. Each of the parties hereto irrevocably consents to the service of process in any action or proceeding hereunder by the mailing of copies thereof by registered or certified airmail, postage prepaid, to the address specified in Section 9.05 hereof. The foregoing shall not limit the rights of any party hereto to serve process in any other manner permitted by the Law or to obtain execution of judgment in any other jurisdiction. The parties further agree, to the extent permitted by Law, that final and non-appealable judgment against any of them in any action or proceeding contemplated above shall be conclusive and may be enforced in any other jurisdiction within or outside the United States by suit on the judgment, a certified or exemplified copy of which shall be conclusive evidence of the fact and the amount of indebtedness. THE PARTIES AGREE TO WAIVE ANY AND ALL RIGHTS THAT THEY MAY HAVE TO A JURY TRIAL WITH RESPECT TO DISPUTES ARISING OUT OF THIS AGREEMENT. 25 Section 9.10 Successors and Assigns. Except as otherwise expressly provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the Company's, West's and Investor's successors and permitted assigns. Neither this Agreement nor any rights or obligations hereunder shall be assignable by any party hereto without the prior written consent of the other parties hereto. Section 9.11 No Third-Party Beneficiaries. This Agreement is for the sole benefit of the parties hereto and their respective successors and permitted assigns and nothing herein, express or implied, is intended or shall confer upon any other Person any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement. Section 9.12 Confidentiality. A version of this Agreement with certain competitively sensitive information redacted will be filed by the Company with the Motion. Each party hereto agrees not to disclose the unredacted version of this Agreement to any third parties (other than disclosure required by the SEC or any other Governmental Authority (including the Bankruptcy Court) or pursuant to any listing agreement with or requirement of any relevant national exchange or national quotation system) without appropriate confidentiality agreements with such third parties being in place that are reasonably acceptable to the other parties hereto. 26 IN WITNESS WHEREOF, this Agreement has been executed on behalf of the parties hereto by their respective duly authorized officers, all as of the date first above written. EASTSHORE AVIATION, LLC By: /s/ Geoffrey T. Crowley ------------------------------------------- Name: Geoffrey T. Crowley Title: President US AIRWAYS GROUP, INC. By: /s/ Bruce R. Lakefield ------------------------------------------- Name: Bruce R. Lakefield Title: Chief Executive Officer AMERICA WEST HOLDINGS CORPORATION By: /s/ W. Douglas Parker ------------------------------------------- Name: W. Douglas Parker Title: Chairman and Chief Executive Officer 27 EX-99 4 ex_b-mergeragmt.txt EX B TO MERGER AGREEMENT Exhibit B to the Merger Agreement VOTING AGREEMENT This Voting Agreement (this "Agreement") is made and entered into as of May 19, 2005, by and among US Airways Group, Inc., a Delaware corporation, ("East"), and each of the parties identified on Schedule A hereto (individually a "Stockholder" and collectively the "Stockholders"). WHEREAS, concurrently with the execution of this Agreement, America West Holdings Corporation, a Delaware corporation ("West"), East and Barbell Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of East ("Merger Sub"), have entered into an Agreement and Plan of Merger (the "Merger Agreement") that provides for the merger (the "Merger") of Merger Sub with and into West pursuant to the terms thereof; WHEREAS, as an essential condition and inducement to East to enter into the Merger Agreement and in consideration therefor, the undersigned Stockholders and East have agreed to enter into this Agreement; WHEREAS, as of the date hereof, the Stockholders are the record holders and beneficial owners of the shares of Class A common stock, par value $0.01 per share of West (the "Class A Shares") set forth opposite their respective names on Schedule A hereto and desire to enter into this Agreement with respect to such Class A Shares (for purposes of this Agreement, "beneficial ownership" shall have the meaning given to such term in Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the "Exchange Act")); and WHEREAS, East desires the Stockholders to agree, and the Stockholders are willing to agree, (i) not to transfer or otherwise dispose of any of the Class A Shares prior to the Expiration Date (as defined in Section 1.1 below) and (ii) to vote the Class A Shares so as to facilitate consummation of the Merger. NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements contained herein and in the Merger Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties hereto hereby agree as follows: ARTICLE I Agreement to Retain and Vote Shares. 1.1 Transfer and Encumbrance. The Stockholders agree not to transfer (except as may be specifically required by court order), sell, exchange, pledge or otherwise dispose of or encumber any of the Class A Shares or to make any offer or agreement relating thereto other than in connection with the Merger, at any time prior to the Expiration Date; provided, however, that nothing herein shall prevent the Stockholders from tendering their Class A Shares into any tender or exchange offer or otherwise selling their Class A Shares to the bidder in any tender offer or exchange offer, if a majority of the outstanding Class B shares have been validly tendered and not withdrawn into such offer and all other conditions to such offer (other than a condition relating to the sale or tender of the Class B Shares) have been satisfied or waived As used herein, the term "Expiration Date" shall mean the earlier to occur of: (a) such date and time as the Merger shall become effective in accordance with the terms and provisions of the Merger Agreement and (b) such date as the Merger Agreement is terminated pursuant to the terms and provisions thereof. 1.2 Agreement to Vote Shares. From the date hereof until the Expiration Date, at every meeting of the stockholders of West called with respect to the Merger Agreement and/or the Merger, and at every adjournment or postponement thereof, and on every action or approval by written consent of the stockholders of West with respect to the Merger Agreement and/or the Merger, the Stockholders shall vote the Class A Shares (i) in favor of adoption and approval of the Merger Agreement, the Merger and any matter that could reasonably be expected to facilitate the Merger if a majority of the outstanding Class B Shares are voted in favor thereof, and (ii) against any amendment of West's Certificate of Incorporation or Bylaws or other proposal or transaction involving West or any of its subsidiaries which amendment or other proposal or transaction would in any manner impede, frustrate, prevent or nullify, or result in a breach of any covenant, representation or warranty or any other obligation or agreement of West under or with respect to, the Merger, the Merger Agreement or any of the other transactions contemplated by the Merger Agreement if a majority of the outstanding Class B Shares are voted against such amendment, proposal or transaction. The Stockholders agree not to take any actions contrary to the Stockholders' obligations under this Agreement. 1.3 Representations, Warranties and Covenants of the Stockholders. The Stockholders hereby represent, warrant and covenant to East as follows: (a) Ownership of Class A Shares; Authority. The Stockholders (i) are the record and beneficial owners of the Class A Shares, which at the date hereof and at all times up until the Expiration Date will be free and clear of any liens, claims, options, charges or other encumbrances; and (ii) have full power and authority to make, enter into and carry out the terms of this Agreement. In addition, in the case of a Stockholder that is a partnership, the general partners of such Stockholder have full power and authority to make, enter into and carry out the terms of this Agreement. (b) No Conflicts or Consents. The execution and delivery of this Agreement by the Stockholders do not, and the performance by the Stockholders of the Stockholders' obligations under this Agreement will not: (i) conflict with or violate any law, rule, regulation, order, decree or judgment applicable to the Stockholders or by which their properties are bound or affected; (ii) in the case of a Stockholder that is a partnership, conflict with or violate any partnership agreement or other partnership document applicable to the Stockholder or by which its properties are bound or affected; (iii) result in a violation of, or a default under, or conflict with, any contract, trust, commitment, agreement, understanding, arrangement or restriction of any kind to which either Stockholder is a party or bound or to which the Class A Shares are subject which would materially impair the ability of either Stockholder to perform hereunder; or (iv) result in or constitute any breach or default under, or give any person or entity rights of termination, amendment or acceleration in, the creation of an encumbrance or restriction applicable to any of the Class A Shares. (c) Transfer of Voting Rights. The Stockholders agree that, until the Expiration Date, the Stockholders shall ensure that: (i) none of the Class A Shares are deposited into -2- a voting trust and (ii) no proxy is granted, and no voting agreement or similar agreement is entered into, with respect to the Class A Shares. (d) No Proxy Solicitations. From the date of this Agreement until the Expiration Date, the Stockholders, in their capacity as stockholders of West, will not, and will not permit any individual or entity under the Stockholders' control to: (i) solicit proxies with respect to (A) an approval of any proposal made in opposition to or competition with consummation of the Merger, (B) the adoption of any merger agreement or approval of any merger, consolidation, sale of assets, reorganization or recapitalization with any party other than with East or East's affiliates (as defined in Rule 405 of the Securities Act of 1933, as amended) or (C) any liquidation or winding up of West (each of the foregoing is hereinafter referred to as an "Opposing Proposal"); (ii) encourage or assist any party in taking or planning any action that would compete with, restrain or otherwise serve to interfere with or inhibit the timely consummation of the Merger in accordance with the terms of the Merger Agreement; or (iii) initiate a stockholders' vote or action by consent of West stockholders with respect to an Opposing Proposal. (e) Stockholder Capacity Only. East acknowledges that the Stockholders do not make any agreement in any capacity other than as stockholders of West and, in particular, nothing in this Agreement shall limit or affect any actions taken by a Stockholder or an affiliate or designee of a Stockholder in his or her capacity as a director of the Company in conformity with the Merger Agreement. 1.4 Consent and Waiver. The Stockholders hereby give any consents or waivers that are reasonably required for the consummation of the Merger under the terms of any agreements to which the Stockholders are a party as stockholders or pursuant to any rights the Stockholders may have as stockholders. 2. Miscellaneous. 2.1 Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, then the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated. 2.2 Binding Effect and Assignment. This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns, but, except as otherwise specifically provided herein, neither this Agreement nor any of the rights, interests or obligations of the Stockholders may be assigned by the Stockholders without prior written consent of East. 2.3 Expenses. All costs and expenses incurred in connection with this Agreement shall be paid by the party incurring such cost or expense. 2.4 Specific Performance; Injunctive Relief. The parties hereto acknowledge that East will be irreparably harmed and that there will be no adequate remedy at law for a violation of any of the covenants or agreement of the Stockholders set forth herein. Therefore, it is agreed that, -3- in addition to any other remedies that may be available to East upon any such violation, East shall have the right to enforce such covenants and agreements by specific performance, injunctive relief or by any other means available to East at law or in equity. 2.5 Notices. All notices, requests, claims, demands and other communications hereunder shall be deemed duly delivered: (a) four business days after being sent by registered or certified mail, return receipt requested, postage prepaid or (b) one business day after being sent for next business day delivery, fees prepaid, via a reputable nationwide overnight courier service to the intended recipient as set forth below. -4- If to East: Attention: Telecopy: With a copy to: Arnold & Porter LLP 1600 Tysons Boulevard Suite 900 McLean, Virginia 22102 Attention: Kevin Lavin, Esq. Telecopy No. 202-942-5999 Arnold & Porter LLP 370 Seventeenth Street Suite 4500 Denver, Colorado 80202 Attention: Brian Leitch, Esq. Telecopy No. 303-832-0428 If to the Stockholders: To the address for notice set forth on the last page hereof. With a copy to: Cleary Gottlieb Steen & Hamilton LLP One Liberty Plaza New York, NY 10006 Attention: Michael Ryan, Esq. Telecopy No. 212-225-3999 Any party to this Agreement may give any notice or other communication hereunder using any other means (including personal delivery, messenger service, telecopy, or ordinary mail), but no such notice or other communication shall be deemed to have been duly given unless and until it actually is received by the party for whom it is intended. Any party to this Agreement may change the address to which notices and other communications hereunder are to be delivered by giving the other parties to this Agreement notice in the manner herein set forth. 2.6 Amendments; Termination; Expiration. This Agreement may not be modified, amended, altered or supplemented, except upon the execution and delivery of a written agreement executed by the parties hereto. This Agreement may be terminated by East upon written notice to the Stockholders1. This Agreement may be terminated by the Stockholders if (i) the Board of Directors of West shall have withdrawn, modified or qualified, or shall have agreed to withdraw, modify or qualify, in fact or in substance, its adoption of the Merger Agreement or the Directors' Recommendation (as such term is defined in the Merger Agreement) in a manner adverse to East, or (ii) the Stockholders are not able to procure an amendment to, or waiver of, the restrictions on transfer contained in the Undertaking, dated January 18, 2002, by and among West, TPG Partners, L.P., TPG Parallel I, L.P., and Air Partners II, L.P. for the benefit of the Air Transportation Stabilization Board. This Agreement and the Stockholders' obligations hereunder shall expire on the -5- Expiration Date; provided, however, that each party shall remain liable for any breach of this Agreement by such party occurring prior to such termination. 2.7 Governing Law. This Agreement shall be governed by, and construed and enforced in accordance with, the internal laws of the State of Delaware without giving effect to any choice or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of laws of any jurisdiction other than those of the State of Delaware. 2.8 Entire Agreement. This Agreement contains the entire understanding of the parties in respect of the subject matter hereof, and supersedes all prior negotiations and understandings between the parties with respect to such subject matter. 2.9 Counterparts. This Agreement may be executed via facsimile in several counterparts, each of which shall be an original, but all of which together shall constitute one and the same agreement. 2.10 Effect of Headings. The section headings herein are for convenience only and shall not affect the construction or interpretation of this Agreement. 2.11 Further Assurances. Except as otherwise provided in the Merger Agreement, the Stockholders will execute and deliver or cause to be executed and delivered all further documents and instruments and use its best efforts to secure such consents and take all such further action as may be reasonably necessary to fulfill their obligations hereunder. 2.12 Additional Actions. Subject to the terms and conditions of this Agreement, each of the parties hereto agrees to use all reasonable efforts to take, or cause to be taken, all action and to do, or cause to be done, all things necessary, proper or advisable under applicable laws and regulations and which may be required under any agreements, contracts, commitments, instruments, understandings, arrangements or restrictions of any kind to which such party is a party or by which such party is governed or bound, to fulfill its obligations hereunder. [REMAINDER OF THE PAGE INTENTIONALLY LEFT BLANK] -6- IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed on the date and year first above written. US AIRWAYS GROUP, INC. By: /s/ Bruce R. Lakefield ---------------------------------------- Name: Bruce R. Lakefield Title: Chief Executive Officer TPG PARTNERS, L.P. By: TPG Genpar, a Delaware limited partnership, its General Partner By: TPG Advisors, Inc. a Delaware corporation, its General Partner By: /s/ Richard P. Schifter --------------------------------------- Name: Richard P. Schifter Title: Stockholder's Address for Notice: 301 Commerce Street, Suite 3300 Fort Worth, Texas 76102 TPG PARALLEL I, L.P. By: TPG Genpar, a Delaware limited partnership, its General Partner By: TPG Advisors, Inc. a Delaware corporation, its General Partner By: /s/ Richard P. Schifter ---------------------------------------- Name: Richard P. Schifter Title: Stockholder's Address for Notice: 301 Commerce Street, Suite 3300 Fort Worth, Texas 76102 -7- SCHEDULE A STOCKHOLDER CLASS A SHARES OWNED -------------------- -------------------- TPG Partners, L.P. 780,473 TPG Parallel I, L.P. 78,644 -8- EX-99 5 ex_e-mergeragmt.txt EX E TO MERGER AGREEMENT Exhibit E to the Merger Agreement Brian P. Leitch, Esq. Daniel M. Lewis, Esq. Michael J. Canning, Esq. ARNOLD & PORTER LLP 370 Seventeenth Street, Suite 4500 Denver, Colorado 80202 (303) 863-1000 - and - 555 Twelfth Street, NW Washington, DC 20004 (202) 942-5000 - and - 399 Park Avenue New York, New York 10022 (212) 715-1000 Lawrence E. Rifken, Esq. (VSB No. 29037) Douglas M. Foley, Esq. (VSB No. 34364) David I. Swan, Esq. McGUIREWOODS LLP 1750 Tysons Boulevard, Suite 1800 McLean, Virginia 22102-4215 (703) 712-5000 Counsel to the Debtors and Debtors-in-Possession IN THE UNITED STATES BANKRUPTCY COURT FOR THE EASTERN DISTRICT OF VIRGINIA ALEXANDRIA DIVISION In re: ) ) Case No. 04-13819 ) Jointly Administered US AIRWAYS, INC., et al.,(1) ) Chapter 11 ) Hon. Stephen S. Mitchell Debtors. ) _________________________________ ) ORDER (A) APPROVING PROCEDURES FOR THE CONSIDERATION OF PLAN FUNDING PROPOSALS, (B) APPROVING FORM AND MANNER OF NOTICE OF COMPETING OFFER PROCEDURES, AND (C) APPROVING BREAK-UP FEE AND RELATED PROVISIONS ----------------------------------------------------- ___________________ (1) The Debtors are the following entities: US Airways, Inc., US Airways Group, Inc., PSA Airlines, Inc., Piedmont Airlines, Inc. and Material Services Company, Inc. 1 This matter comes before the Court upon the Debtors' Motion For An Order (a) Approving Procedures for the Consideration of Plan Funding Proposals, (b) Approving Form and Manner of Notice of Competing Offer Procedures, and (c) Approving Break-Up Fee and Related Provisions (the "Procedures Motion"). Upon consideration of the Procedures Motion and any timely response or opposition thereto, and upon consideration of the arguments of counsel and the evidence presented at a hearing that took place before this Court on the ___ day of ___________, 2005, and upon further consideration of the entire record in these Chapter 11 cases, the Court hereby finds as follows(2): A. Notice of the Procedures Motion was sufficient and complied with all applicable provisions of the Bankruptcy Code, the Federal Rules of Bankruptcy Procedure, and the Local Rules of this Court. No additional notice of the Procedures Motion is required. B. This Court has jurisdiction over the Procedures Motion pursuant to 28 USC ss. 1334. The Procedures Motion constitutes a core proceeding pursuant to 28 USC ss. 157(b). C. The relief sought by the Debtors in the Procedures Motion is (i) reasonably calculated to maximize the value of the Debtors and their businesses and assets, (ii) an appropriate exercise of the Debtors' business judgment, and (iii) in the best interest of the estates and their creditors. ___________________ (2) Findings of fact shall be construed as conclusions of law and conclusions of law shall be construed as findings of fact when appropriate. See Fed. R. Bankr. P 7052. 2 D. The Debtors' selection of the merger proposal made by America West Holdings Corporation ("America West"), and supported by Eastshore Aviation LLC, Par Investment Partners, L.P. ("Par"), Peninsula Investment Partners, L.P. ("Peninsula") and Ace Aviation Holding Inc. ("Ace") (hereafter collectively the "Plan Investors") as described in the proposed Agreement and Plan of Merger between US Airways Group, Inc. and America West (the "Merger Agreement"), as agreed in the Investment Agreement by and among Par, America West and US Airways Group, Inc. (including any exhibits, schedules or attachments thereto, the "Par Investment Agreement") the Investment Agreement by and among Peninsula, America West and US Airways Group, Inc. (including any exhibits, schedules or attachments thereto, the "Peninsula Investment Agreement") and the Investment Agreement by and among Ace, America West and US Airways Group, Inc. (including any exhibits, schedules or attachments thereto, the "Ace Investment Agreement," and, collectively with the Par Investment Agreement and the Peninsula Investment Agreement, the "Investment Agreements"), and as further described in the Procedures Motion, as the basis for their Plan of Reorganization, subject to consideration of higher or better alternatives in accordance with the procedures set forth in this Order, is a reasonable and appropriate exercise of the Debtors' business judgment. E. The Debtors are receiving fair and reasonably equivalent value in exchange for the payments and commitments that may be made to America West and/or the Plan Investors under the terms of this Order. THEREFORE, it is hereby ORDERED as follows: 3 1. The Procedures Motion shall be, and hereby is, GRANTED, and the procedures described therein are approved.(3) 2. The Notice of Opportunity to Submit Competing Offers to Fund and Facilitate a Plan of Reorganization for the Debtors (the "Procedures Notice"), a copy of which is attached to this Order as Exhibit A, is hereby approved, and the Debtors are authorized and directed to: (i) mail a copy of the Procedures Notice, along with a copy of this Order, to potential plan sponsors identified by the Debtors and all persons or entities on the Master Service List within five (5) days from the date on which this Order is entered, and (ii) cause the Procedures Notice to be published one time in the Wall Street Journal (National Edition), as soon as reasonably practicable, and in such other publications, if any, as the Debtors may from time-to-time determine. Such service shall constitute good and sufficient notice of this Order and Procedures Notice, and no additional notice shall be required. 3. The Debtors shall comply with the following procedures for the consideration of plan funding proposals, and the implementation of the best proposal as part of a plan of reorganization for the Debtors, and such procedures shall be binding upon all parties in these cases: A. Eligibility To Make Competing Plan Proposal ------------------------------------------- Any person other than America West who desires to make a competing proposal regarding a plan of reorganization for the Debtors (a "Competing Plan Sponsor") must satisfy all of the requirements set forth below. (A person who satisfies all such requirements is referred to as a "Qualified Competing Plan Sponsor.") Any proposal ___________________ (3) In the event of any discrepancy between the procedures described in the Procedures Motion and the terms of this Order, the terms of this Order shall govern and control. 4 from a person who is not a Qualified Competing Plan Sponsor shall not be considered by the Debtors or by the Court. (i) Confidentiality. Any Competing Plan Sponsor must execute a confidentiality agreement substantially in the form, and no less restrictive on the Competing Plan Sponsor, than the form attached hereto as Exhibit ___. (ii) Disclosure. Any Competing Plan Sponsor must disclose to the Debtors in its proposal (1) the identity of all participants providing funding for the proposal, (2) the specific amount, source, and type of funding to be provided by each such participant, (3) the identity of any person or entity who will participate in any way in the proposal without providing funding, and the nature of such participation, and (4) the principals of each entity that will participate in the Competing Plan Sponsor's proposal. (iii) Deposit. Any Competing Plan Sponsor must either (a) make a cash deposit at the time of submission of its proposal in the amount of $25 million (the "Deposit Amount"), which cash deposit shall be held in an escrow account at a financial institution designated by the Debtors and subject to an escrow agreement in form and substance satisfactory to the Debtors, or (b) provide an irrevocable letter of credit for the benefit of the Debtors in the Deposit Amount, in a form and issued by a financial institution acceptable to the Debtors. Any such deposit shall be subject to the jurisdiction of the Court. (iv) Capacity to Consummate Transaction. Any Competing Plan Sponsor must demonstrate to the Debtors' satisfaction(4) its financial, legal, and managerial capacity to consummate and complete the transactions it proposes. B. Requirements for Any Competing Plan Proposal -------------------------------------------- The Debtors may consider proposals that satisfy all of the following requirements. (A proposal that satisfies all such requirements is referred to as a "Qualified Competing Plan Proposal"): (i) Proponent. The proposal must be submitted by a Qualified Competing Plan Sponsor, as defined above. ___________________ (4) All deliberations, decisions and/or matters left to the Debtors' discretion referenced in this Order shall be in consultation with the Committee Professionals. 5 (ii) How and When Submitted. The proposal must (a) be in writing, (b) include a cover letter summarizing all of the material provisions of the proposed transactions (including, without limitation, any closing conditions), (c) include the proposed form of each of the primary documents and agreements necessary to implement the proposed transactions (such as investment agreements, asset purchase agreements, merger agreement and the like), and (d) be submitted to the Debtors and to America West, (with a simultaneous copy to the Official Committee of Unsecured Creditors) so as to be received by no later than 5:00 p.m. prevailing eastern time, on the date that is thirty (30) days after the date of entry of this Order (the "Qualified Competing Plan Proposal Deadline"). The copy submitted to the Debtors shall be sent to Bruce Lakefield, Chief Executive Officer, US Airways Group, Inc., 2345 Crystal Drive, Arlington, Virginia 22227 with a copy to each of: John E. Luth, President and CEO, Seabury Securities LLC, 540 Madison Avenue, 17th Floor, New York, New York 10022; and Brian P. Leitch, Arnold & Porter LLP, 370 Seventeenth Street, Suite 4500, Denver, Colorado 80202. The copy submitted to America West shall be sent to Douglas Parker, Chief Executive Officer, America West Holding Corporation, 111 West Rio Salado Parkway, Tempe, AZ 85281 with a copy to Timothy R. Pohl, Skadden, Arps, Slate, Meagher & Flom LLP, 333 West Wacker Drive, Chicago, Illinois 60606. The copy submitted to the Official Committee of Unsecured Creditors (the "Committee") shall be sent to Scott L. Hazan, Otterbourg, Steindler, Houston & Rosen, P.C., 230 Park Avenue, New York, New York 10169. The Debtors will provide copies of all Qualified Competing Plan Proposals to the Plan Investors. (iii) Comprehensive Plan. The proposal should provide for adequate funding and a mechanism that will facilitate confirmation and implementation of a Chapter 11 plan for all of the Debtors in these cases and treatment of each of the major creditor classes, including general unsecured creditors, the Pension Benefit Guaranty Corporation, the Air Transportation Stabilization Board, General Electric Company and General Electric Capital Corporation, and aircraft lenders and lessors. Asset sale proposals under 11 U.S.C. ss. 363 are not preferred but may be entertained, provided however, that the proposal must, in such event, (1) identify the assets to be sold, (2) state who will purchase such assets and the terms of the sale, (3) provide credible evidence demonstrating the capacity of such purchaser to close the transaction, and (4) disclose the impacts that any such asset sales may have on the Debtors' principal stakeholders, including the impacts on employees and creditors, as well as the amount and status of the claims generated or occurring, if any, as a result of each such proposed asset sale. (iv) Fees and Expenses. The proposal shall not require the payment of any break-up fee, termination fee, or similar fee or expense reimbursement to the proponent. (v) Treatment of Plan Investors. The proposal must identify how the agreements between the Debtors and the Plan Investors will be treated. 6 (vi) Cash Investment. The proposal must specify the amount of cash that will be invested in the Debtors under the Competing Plan Proposal and identify all sources of such investment. (vii) Feasibility. The proposal must include evidence sufficient in the reasonable judgment of the Debtors to demonstrate the feasibility of the proposal including, without limitation, the capacity of the proponent to consummate the transactions within the time frame specified in the proposal, and a substantial likelihood that the proposal will obtain any antitrust or other required regulatory approvals without material delay. Notwithstanding the foregoing, at any time prior to the Qualified Competing Plan Proposal Deadline, the Debtors retain the right, in their discretion, to consider prior to such bidding deadline, any non-conforming bids or, any proposals to substitute one or more of the Plan Investors and otherwise implement the terms of the Merger Agreement and any such proposals, if considered by the Debtors, shall be deemed Qualified Competing Plan Proposals for purposes of this Order, provided, however, that any non-conforming bids so considered must, at a minimum, meet the requirements of Sections B(i), (ii) and (iii), above. C. Selection of Highest and Best Qualified Competing Plan Proposal --------------------------------------------------------------- The proposal that will be selected as the best proposal and serve as the basis for the Debtors' Plan of Reorganization shall be determined in accordance with the following procedures: (i) If No Qualified Competing Plan Proposals. If there are no Qualified Competing Plan Proposals, then the Debtors shall proceed to seek confirmation of a Plan implementing the Merger Agreement and Investment Agreements. (ii) Best and Final Proposals/Auction. If any Qualified Competing Plan Proposals are received by the Qualified Competing Plan Proposal Deadline, then the Debtors shall allow any party that has submitted a Qualified Competing Plan Proposal to submit to the Debtors their best and final plan funding proposal (the "Best and Final Qualified Bids"), or in the alternative, the Debtors may hold an auction, on terms and within a time frame deemed appropriate by the Debtors after reasonable notice to America West and the Plan Investors, provided that in no event shall any such Best and Final Qualified Bid be submitted, nor any auction conclude, after the date that is thirty-five (35) days after entry of this Order. Best 7 and Final Qualified Bids may be submitted only by the Plan Investors or a person who submitted a Qualified Competing Plan Proposal. The only parties that may attend and/or participate in an auction will be America West, Qualified Competing Plan Sponsors, and Plan Investors. (iii) Determination of Winner. If there are any Qualified Competing Plan Proposals, the Board of Directors of Group, after consulting with the Committee's Professionals, will determine which of the Qualified Competing Plan Proposals (including any Best and Final Qualified Bids) or the Merger Agreement is the best proposal, based on all factors it deems relevant (which factors may include, without limitation, the structure of the proposed transaction, the reputation and credibility of the proponent, the strategic benefits of the transaction, any estimated cost and revenue synergies, the financial capacity of the proponent to consummate the transaction, the nature of any closing conditions and likelihood of timely satisfaction of such conditions, the timing of the closing, the ability to satisfy obligations (if any) to the Plan Investors and their affiliates, the antitrust and other regulatory considerations, and the value of the transaction to each stakeholder group), subject to the Court's approval. In determining the best proposal, the Debtors shall take into account the Break-up Fees that would be payable and the revenue synergies and consequent valuation enhancements resulting from the commercial arrangements with Ace contemplated by the Ace Investment Agreement. (iv) Approval Hearing. The Debtors shall seek the Court's approval of its selection of the best proposal at a hearing that will take place before the Court at ____ a.m./p.m. on the date that is no later than forty (40) days after entry of this Order (the "Approval Deadline"), which proposal shall, upon such approval be deemed the "Approved Proposal". Each of the Investment Agreements, which comprise part of the Approved Proposal, shall be separately approved. If no Qualified Competing Plan Proposal is received by the Qualified Competing Plan Proposal Deadline, or if no proposal is approved by this Court by the Approval Deadline, the Merger Agreement and Investment Agreements shall automatically be deemed to be the Approved Proposal without any further action by the Court or any other party. D. Access to Information --------------------- The Debtors shall provide America West and the Plan Investors, and any potential Competing Plan Sponsor that satisfies the requirements of Sections A(i), (ii), and (iv) above, with immediate reasonable access during normal business hours to the Debtors' books, records, facilities, key personnel, officers, independent accountants and legal counsel for the purpose of completing all due diligence investigations reasonably 8 deemed necessary by such parties, and shall otherwise cooperate with such entities in connection with their due diligence, provided, however, that the Debtors shall not be required to provide confidential or proprietary information to a competitor if the Debtors reasonably believe that disclosure of such information would be detrimental to the Debtors' interests or operations. Any information provided by or on behalf of the Debtors or their estates to potential Competing Plan Sponsors (regardless of whether they have made a Qualified Competing Proposal) shall also be provided at the same time to America West and the Plan Investors if such information has not previously been provided to such persons. The Debtors may satisfy their requirements set forth in the immediately preceding sentence by maintaining a data room (or virtual data room), access to which is available to America West and the Plan Investors, and by providing to such persons any information that is not in such data room but is provided to other potential Competing Plan Sponsors, at the same time that such information is provided to such other potential Competing Plan Sponsors. Notwithstanding the obligations set forth above, the Debtors shall not provide confidential information obtained by Debtors from America West in connection with this transaction (or information that is based upon or reflects such confidential commercial information) to any party without the consent of America West. E. Incorporation of Approved Proposal into Plan of Reorganization -------------------------------------------------------------- After the Merger Agreement or a Qualified Competing Plan Proposal is designated or becomes the Approved Proposal, the Debtors shall proceed expeditiously to incorporate such Approved Proposal (which term as used herein shall include the related Investment Agreements if the Merger Agreement is the Approved Proposal) into 9 a plan of reorganization, and shall seek confirmation of such plan of reorganization. In addition to the provisions of the Merger Agreement and the Investment Agreements that are approved and made binding pursuant to this Order, after the Approval Hearing, neither the Debtors, nor their respective directors, officers, employees, agents, representatives, or affiliates, will solicit, entertain, discuss, review, negotiate, make, accept, approve, cooperate with, provide information in connection with or support any offer, proposal, bid or indication of interest to or from, or any transaction with, any person or entity other than the Approved Proposal, involving any restructuring, recapitalization of, or sale of assets of, any Debtor, including without limitation, the issuance or distribution of capital stock, options, warrants, or convertible securities exercisable for or convertible into the Debtors' capital stock, debt instrument or any other infusions of equity or debt capital, any commercial contract or arrangement materially inconsistent with the Approved Proposal or any material asset sale outside the ordinary course of business or any other material transaction, provided, however, that foregoing restrictions shall not apply (i) to asset dispositions contemplated or permitted under the Approved Proposal or (ii) from and after the date on which (A) the Court denies confirmation of the plan of reorganization incorporating the Approved Proposal or (B) any event occurs that makes consummation of the Approved Proposal impossible or that gives the Debtors the right to decline to proceed with the transaction under the terms of the Approved Proposal or under any Court order or applicable law. F. Termination Fees and Related Provisions --------------------------------------- Notwithstanding Section 5.1(d) of the Merger Agreement, the Debtors' and America West's rights and obligations under Sections 4.2, 4.3, 4.4, 4.20, 6.1, 6.2, 6.3, 10 6.4 and 6.5 of the Merger Agreement shall be and hereby are made binding on the Debtors and their estates effective immediately upon entry of this order and shall survive termination of the Merger Agreement.(5) In addition, the Debtors' obligations under Sections 8.01 and 8.02 of each of the Investment Agreements and Section 3 of the Junior DIP Amendment shall be and hereby are made binding on the Debtors and their estates immediately upon entry of this order and shall survive termination of such Investment Agreements. If America West becomes entitled to the West Termination Fee (as defined in the Merger Agreement) under the terms thereof, or if any of the Plan Investors becomes entitled to a breakup fee or expense reimbursement under the terms of the applicable Investment Agreement, such fees or expense reimbursement rights will be treated as an allowed administrative priority expense pursuant to sections 503(b) and 507(a)(1) of the Bankruptcy Code without the need for any application, motion or further order of this Court. The Debtors shall pay such fees and expenses by wire transfer to America West, Par, Ace and/or Peninsula, if applicable, within two (2) business days after their right to receive such fees arise pursuant to the terms of the Merger Agreement, the applicable Investment Agreement or the terms hereof. If the Debtors become entitled to the East Termination Fee (as defined in the Merger Agreement), America West shall pay such fee by wire transfer to the Debtors within two (2) business days after the Debtors' right to receive the East Termination Fee arises pursuant to the terms of the Merger Agreement. The automatic stay provisions of section 362 of the ___________________ (5) In the event of any discrepancy between the provisions of the Merger Agreement and the terms of this Order, the terms of the Merger Agreement shall govern and control. In the event of any discrepancy between the provisions of any Investment Agreement and the terms of this Order, the terms of such Investment Agreement shall govern and control. 11 Bankruptcy Code shall not apply to (1) America West's rights under the Merger Agreement, including, without limitation, the right to terminate the Merger Agreement and the right to receive the West Termination Fee under the terms thereof, or (2) the Plan Investors' rights under the Investment Agreements. If the Merger Agreement becomes the Approved Proposal, from and after such time: (a) no person shall take any action to prevent, interfere with, or otherwise enjoin consummation of the transactions contemplated in accordance with the Merger Agreement; (b) America West shall be entitled to seek injunctive relief from this Court to enforce the provisions of Sections 4.4 and 6.5(d) of the Merger Agreement and the provisions of this Order and (c) the Plan Investors shall be entitled to seek injunctive relief from this Court to enforce the provisions of the Investment Agreement and the provisions of this Order. G. Disposition of Deposit ---------------------- Any deposits made by a Competing Plan Sponsor pursuant to Section A(iii) above, shall be: (i) promptly returned to such Competing Plan Sponsor if (x) the Debtors select a proposal other than such Competing Plan Proposal as the Approved Proposal, or (y) the Competing Plan Proposal becomes the Approved Proposal but then is not consummated for any reason other than such Competing Plan Sponsor's material breach of such Competing Plan Sponsor's obligations, agreements or undertakings; (ii) retained by the Debtors and applied to the funding obligations of such Competing Plan Sponsor's Proposal if such proposal becomes the Approved Proposal and a plan incorporating such transaction with such Competing Plan Sponsor is confirmed; or (iii) retained by the Debtors in the event that the Debtors select the Competing Plan Proposal as the Approved Proposal but such Competing Plan Sponsor subsequently fails or refuses to close all or any part of the transaction it proposed for any reason other than the failure to occur of one or more specific closing conditions set forth in such Competing Plan Sponsor's proposal which failure was not caused by any breach of such Competing Plan Sponsor's obligations, undertakings or agreements, in which event the Debtors shall remain free, in addition to retaining such Competing Plan 12 Sponsor's deposit, to assert any claims or causes of action the Debtors or their estates may have against such Competing Plan Sponsor. H. Publicity --------- Neither the Debtors nor America West shall issue or cooperate in the issuance of any public announcement of any agreement or potential transaction involving the Debtors and America West, except to the extent that any such announcement is required by applicable law, without the consent of the other party and such other party's approval of the form and substance of any such press release or announcement. The Court shall retain jurisdiction to hear and determine all matters arising from or relating to the implementation of this Order. Dated: Alexandria, Virginia __________ __, 2005 __________________________________ United States Bankruptcy Judge 13 EX-99 6 ex_f-mergeragmt.txt EX F TO MERGER AGREEMENT Exhibit F to the Merger Agreement FORM OF AFFILIATE AGREEMENT This Affiliate Agreement (this "Agreement") is made and entered into as of [________], 2005, by and between [East], a Delaware corporation, and its successors (including, as the context may require, on or after the effective date of the Plan, as reorganized pursuant to the Bankruptcy Code) ("East") and the undersigned stockholder (the "Affiliate"), who may be deemed an affiliate of [West], a Delaware corporation (the "West"), under applicable Law. Capitalized1 terms used herein and not otherwise defined shall have the meanings ascribed thereto in the Merger Agreement (as defined below). Recitals: WHEREAS, pursuant to an Agreement and Plan of Merger, dated as of [ ], 2005 (the "Merger Agreement"), by and among East, West and [Merger Sub], a Delaware corporation and a direct wholly owned subsidiary of East ("Merger Sub"), Merger Sub is merging with and into West (the "Merger") and whereby West will be the surviving corporation and a direct wholly owned subsidiary of East; WHEREAS, the Affiliate has been advised that the Affiliate may be deemed to be an "affiliate" of West, as the term "affiliate" is used for purposes of Rule 144 and Rule 145 of the rules and regulations of the Securities and Exchange Commission (the "SEC"); and WHEREAS, the execution and delivery of this Agreement by the Affiliate is a material inducement to, and in consideration of, the willingness of East to enter into the Merger Agreement. NOW, THEREFORE, in consideration of the foregoing and the representations, warranties, covenants and agreements contained in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties hereto agree as follows: 1. Certain Acknowledgments by Affiliate. The Affiliate hereby represents and warrants to East that the Affiliate has carefully read this Agreement and the Merger Agreement and, to the extent the Affiliate felt necessary, has discussed the requirements of this Agreement with the Affiliate's professional advisors who are qualified to advise the Affiliate with regard to such matters. Execution of this Agreement shall not be considered an admission by the Affiliate that he or it is an "affiliate", or as a waiver of any rights the Affiliate may have to object to any claim that the Affiliate is such an "affiliate" on or after the date of this Agreement. 2. Compliance with Rule 145 and the Securities Act. (a) The Affiliate understands and hereby acknowledges that the Affiliate has been advised that (A) the issuance of East Common Stock in connection with the Merger is expected to be effected pursuant to a registration statement on Form S-4 promulgated under the Securities Act of 1933, as amended (the "Securities Act") and the resale of such shares of East Common Stock will be subject to restrictions set forth in Rule 145 under the Securities Act; and (B) Affiliate may be deemed to be an "affiliate" of West as the term "affiliate" is used for purposes of Rule 144 and Rule 145 under the Securities Act. Accordingly, the Affiliate hereby agrees not to sell, transfer or otherwise dispose of any East Common Stock issued to the Affiliate in the Merger, or otherwise acquired by the Affiliate subsequent to the date hereof, unless (i) such sale, transfer or other disposition is made in conformity with the requirements of Rule 145 promulgated under the Securities Act; (ii) such sale, transfer or other disposition is made pursuant to a registration statement declared or ordered effective under the Securities Act, or an appropriate exemption from the registration and prospectus delivery requirements of the Securities Act; (iii) the Affiliate delivers to East a written opinion of legal counsel, reasonably acceptable to East in form and substance, that such sale, transfer or other disposition is otherwise exempt from the registration and prospectus delivery requirements of the Securities Act; or (iv) an authorized representative of the SEC shall have rendered written advice to the Affiliate to the effect that the SEC would take no action, or that the staff of the SEC would not recommend that the SEC take any action, with respect to the proposed disposition if consummated. (b) The Affiliate understands and hereby acknowledges that East will give stop transfer instructions to its transfer agent with respect to any East Common Stock issued to the Affiliate pursuant to the Merger, and there shall be placed on the certificates representing such East Common Stock, or any substitutions therefor, a legend stating in substance: "THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), APPLIES AND MAY ONLY BE TRANSFERRED IN CONFORMITY WITH SUCH RULE 145 OR PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, OR IN ACCORDANCE WITH A WRITTEN OPINION OF COUNSEL, REASONABLY ACCEPTABLE TO THE ISSUER IN FORM AND SUBSTANCE, THAT SUCH TRANSFER IS EXEMPT FROM REGISTRATION UNDER THE ACT OR PURSUANT TO WRITTEN ADVICE FROM AN AUTHORIZED REPRESENTATIVE OF THE SEC TO THE EFFECT THAT THE SEC WOULD TAKE NO ACTION, OR THAT THE STAFF OF THE SEC WOULD NOT RECOMMEND THAT THE SEC TAKE ANY ACTION, WITH RESPECT TO THE PROPOSED TRANSFER IF CONSUMMATED." 2 (c) The Affiliate also understands that unless a sale or transfer is made in conformity with the provisions of Rule 145, or pursuant to an effective registration statement, East reserves the right to place, as applicable, on the certificates issued to the Affiliate's transferee with respect to East Common Stock a legend stating in substance: "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND WERE ACQUIRED FROM A PERSON WHO RECEIVED SUCH SHARES IN A TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE ACT APPLIES. THE SHARES HAVE BEEN ACQUIRED BY THE HOLDER NOT WITH A VIEW TO, OR FOR RESALE IN CONNECTION WITH, ANY DISTRIBUTION THEREOF WITHIN THE MEANING OF THE ACT AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT." (d) The legends set forth in paragraphs 2(b) and 2(c) above shall be removed (by delivery of a substitute certificate without such legend), if (i) one year shall have elapsed from the date the undersigned acquired East Common Stock received in the Merger and the provisions of Rule 145(d)(2) are then available to the Affiliate, (ii) two years shall have elapsed from the date the Affiliate acquired the East Common Stock received in the Merger and the provisions of Rule 145(d)(3) are then applicable to the Affiliate or (iii) the Affiliate delivers to East (A) satisfactory written evidence that the Shares have been sold in compliance with Rule 145 (in which case, the substitute certificate shall be issued in the name of the transferee); or (B) an opinion of counsel, in form and substance reasonably satisfactory to East, or written advice from an authorized representative of the SEC to the effect that the restrictions imposed by Rule 144 and Rule 145 under the Securities Act no longer apply to the Affiliate. 3. Miscellaneous. (a) Waiver. No waiver by any party hereto of any condition or any breach of any term or provision set forth in this Agreement shall be effective unless in writing and signed by each party hereto. The waiver of a condition or any breach of any term or provision of this Agreement shall not operate as or be construed to be a waiver of any other previous or subsequent breach of any term or provision of this Agreement. (b) Severability. In the event that any term, provision, covenant or restriction set forth in this Agreement, or the application of any such term, provision, covenant or restriction to any Person, entity or set of circumstances, shall be determined by a court of competent jurisdiction to be invalid, unlawful, void or unenforceable to any extent, the remainder of the terms, provisions, covenants and restrictions set forth in this Agreement, and the application of such terms, provisions, covenants and restrictions to persons, entities or circumstances other than those as to which it is determined to be invalid, 3 unlawful, void or unenforceable, shall remain in full force and effect, shall not be impaired, invalidated or otherwise affected and shall continue to be valid and enforceable to the fullest extent permitted by applicable Law. (c) Binding Effect and Assignment. This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. (d) Amendment and Modification. This Agreement may not be modified, amended, altered or supplemented except by the execution and delivery of a written agreement executed by the parties hereto. (e) Governing Law. This Agreement shall be governed by and construed, interpreted and enforced in accordance with the laws of the State of New York without giving effect to any conflict of law provision. (f) Jurisdiction. The parties hereby irrevocably submit to the jurisdiction of the Bankruptcy Court, or if such court will not hear any such suit, the courts of the State of New York and the federal courts of the United States of America located in the State of New York, solely in respect of the interpretation and enforcement of the provisions of this Agreement and of the documents referred to in this Agreement, and in respect of the transactions contemplated hereby, and hereby waive, and agree not to assert, as a defense in any action, suit or proceeding for the interpretation or enforcement hereof or of any such document, that it is not subject thereto or that such action, suit or proceeding may not be brought or is not maintainable in said courts or that the venue thereof may not be appropriate or that this Agreement or any such document may not be enforced in or by such courts, and the parties hereto irrevocably agree that all claims with respect to such action or proceeding shall be heard and determined in such courts. The parties hereby consent to and grant any such court jurisdiction over the person of such parties and consent to the jurisdiction of any such court over the subject matter of such dispute and agree that mailing of process or other papers in connection with any such action or proceeding in the manner provided in Section 4(h) below or in such other manner as may be permitted by applicable Law shall be valid and sufficient service thereof. (g) Entire Agreement. This Agreement contains the entire understanding of the parties in respect of the subject matter hereof, and supersedes all prior negotiations and understandings between the parties with respect to the subject matter hereof. (h) Notices. All notices and other communications pursuant to this Agreement shall be in writing and deemed to be sufficient if contained in a written instrument and shall be deemed given if delivered personally, telecopied, sent by nationally-recognized overnight courier or mailed by registered or certified mail (return receipt requested), postage prepaid, to the parties at the following address (or at such other address for a party as shall be specified by like notice): If to East: US Airways Group, Inc. 2345 Crystal Drive Arlington, Virginia 22227 Attention: Elizabeth K. Lanier Fax: 703-872-5208 4 with a copy to: Arnold & Porter LLP 370 Seventeenth Street Suite 4500 Denver, Colorado 80202 Attention: Brian Leitch, Esq. Fax: 303-832-0428 If to the Affiliate: To the address for notice set forth on the signature page hereof. (i) Waiver of Jury Trial. EACH PARTY HERETO IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. (j) Counterparts. This Agreement may be executed in any number of counterparts and delivered by facsimile, each of which when so executed and delivered shall be deemed an original, but all of which together shall constitute but one and the same instrument and the delivering party covenants and agrees that an original will be sent immediately thereafter by registered or certified mail. (k) Effect of Headings. The section headings herein are for convenience only and shall not affect the construction or interpretation of this Agreement. (l) Third Party Reliance. Legal counsel to East and West shall be entitled to rely upon this Agreement. (m) Survival. The representations, warranties, covenants and other terms and provisions set forth in this Agreement shall survive the consummation of the Merger. [REMAINDER OF THE PAGE INTENTIONALLY LEFT BLANK] 5 In Witness Whereof, the undersigned have caused this Affiliate Agreement to be duly executed as of the date first written above. EAST: By:______________________________ Name:____________________________ Title:___________________________ AFFILIATE: By:______________________________ Name:____________________________ Title:___________________________ Affiliate's Address for Notice: _____________________________________________________ _____________________________________________________ _____________________________________________________ 6 EX-10 7 tpgagmt.txt EXHIBIT 10.1 Exhibit 10.1 TPG ADVISORS, INC. 301 Commerce Street, Suite 3300 Fort Worth, Texas 76102 May 19, 2005 America West Holdings Corporation 111 West Rio Salado Parkway Tempe, Arizona 85281 Attention: W. Douglas Parker Chairman, President and Chief Executive Officer Gentlemen, Pursuant to our recent conversations, we are pleased to confirm the arrangements under which TPG Advisors, Inc. ("TPG") will continue to provide certain consulting and advisory services to, and will receive certain contributions and reimbursements from, America West Holdings Corporation (the "Company") in connection with the Agreement and Plan of Merger, dated as of May 19, 2005, among the Company, US Airways Group, Inc., a Delaware corporation, and a subsidiary to be formed by US Airways Group, Inc., a Delaware corporation and a wholly owned subsidiary of US Airways Group, Inc. (the "Agreement"}. 1. Scope of Engagement. As your non-exclusive financial consultant and advisor, TPG will continue to perform such financial consulting and advisory services for the Company in connection with (i) the transactions contemplated by the Agreement (the "Transactions") and (ii) certain other matters, as you may reasonably request, including without limitation assisting the Company in analyzing, structuring, negotiating and effecting the Transactions on the terms and conditions of this letter agreement (collectively, the "Services"). 2. Payment Amount. The Company agrees to pay to TPG in consideration of TPG providing the Services, and in contribution for and reimbursement of certain expenses incurred by TPG in connection with the Transactions and providing the Services, a contingent payment of $6,400,000 (the "Payment Amount"), payable in a lump sum at, and subject to the occurrence of, the Effective Time (as such term is defined in the Agreement). No fee or expense reimbursement payable to any other person, whether payable by the Company or any other party, in connection with the subject matter of this engagement shall reduce or otherwise affect any amount payable hereunder. The Payment Amount shall be the sole and complete compensation to TPG for its consulting and advisory services rendered to the Company and all expenses incurred in connection with the Transactions and providing the Services. In the event that the Effective Time does not occur for any reason, the Company shall have no further obligations to TPG with respect to the subject matter of this letter agreement. The Payment Amount payable hereunder shall be net of all applicable withholding and similar taxes. 3. Disclosure. Any advice, opinion or analysis provided by TPG hereunder will be solely for the use and benefit of the Board of Directors, any committee thereof and senior management of the Company, and wilt not be quoted, reproduced, summarized, or otherwise disclosed without TPG's prior written consent. 4. Independent Contractor. TPG has been retained to act solely as financial consultant and advisor to the Company in providing the Services and, in such capacity, shall act as an independent contractor and in no other capacity, and any duties of TPG arising out of its engagement pursuant to this letter agreement shall be owed solely to the Company and to no other party. TPG shall have no obligation to the Company other than to provide the Services as described hereunder. 5. Termination. TPG's engagement under this letter agreement will continue until the earlier of (i) the Effective Time, (ii) termination of the Agreement for any reason, or (iii) written notice given by either the Company to TPG or TPG to the Company; provided that the Company's obligations to pay the Payment Amount provided by Section 2 above shall survive any such termination. 6. Miscellaneous. (a) TPG in providing the Services is acting solely as a financial consultant and advisor to the Company and is not an expert on, and cannot render opinions regarding, legal, accounting, regulatory or tax matters. You should consult with your other professional advisors concerning these matters before undertaking the Transactions or other actions. TPG makes no representations or warranties in respect of the Services, express or implied, and in no event shall TPG be liable to the Company or any affiliate for any act, alleged act, omission or alleged omission in connection with the Services that does not constitute willful misconduct as determined by a final, non-appealable determination of a court of competent jurisdiction. (b) No waiver, amendment or other modification of this letter agreement shall be effective unless in writing and signed by each party to be bound thereby. This letter agreement shall inure to the benefit of and be binding on the Company, TPG and their respective successors. (c) Nothing in this letter is intended to confer upon any other person (including the stockholders, employees or creditors of the Company) any rights or remedies hereunder or by reason hereof. (d) In case any provision of this letter agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions of this letter agreement shall not in any way be affected or impaired thereby and such provision shall be construed by limiting it so as to be valid and enforceable to the maximum extent consistent with and possible under applicable law. (e) This Agreement contains the entire understanding of the parties with respect to the subject matter hereof and supersedes any prior communication or agreement with respect thereto. (f) This letter agreement shall be governed by, and construed and interpreted in accordance with, the laws of the State of New York. (g) Any action or proceeding against the parties relating in any way to this letter agreement shall, be brought exclusively in the United States District Court for the Southern District of New York sitting in Manhattan or the Supreme Court of the State of New York for the County of New York (the "Chosen Courts") (to the extent subject matter jurisdiction exists therefore), and the parties (i) irrevocably submit to the jurisdiction of the Chosen Courts, (ii) waive any objection, to the fullest extent permitted by law, to laying venue in any such action or proceeding in the Chosen Courts, (iii) waive any objection, to the fullest extent permitted by law, that the Chosen Courts are an inconvenient forum or do not have jurisdiction over any party hereto and (iv) agree that any actions or proceedings to enforce a judgment issued by one of the foregoing courts may be enforced in any jurisdiction. (h) To the extent not prohibited by applicable law that cannot be waived, each party to this letter agreement waives, and covenants that such party Will not assert (whether as plaintiff, defendant or otherwise), any right to trial by jury in any forum in respect of any issue, claim or proceeding arising out of this letter agreement or the subject matter hereof, in each case whether now existing or hereafter arising and whether in contract, tort or otherwise. Any party to this letter agreement may file an original counterpart or a copy of this provision with any court as written evidence of the consent of the parties to the waiver of their rights to trial by jury. (i) This Agreement may be executed in any number of counterparts and by each of the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which together shall constitute one and the same agreement. Please confirm that the foregoing correctly sets forth our agreement by signing and returning to TPG the duplicate copy of this letter agreement enclosed herewith. We are delighted to accept this engagement and look forward to working with you towards successful consummation of the Transactions. Very truly yours, TPG ADVISORS, INC. By: /s/ Richard Schifter -------------------------- Name: Richard Schifter Title: Vice President Accepted and Agreed to as of the date first written above: AMERICA WEST HOLDINGS CORPORATION By: /s/ W. Douglas Parker ------------------------------------ Name: W. Douglas Parker Title: Chairman and Chief Executive Officer Title: EX-99 8 stockagmt.txt EXHIBIT 99.2 - FORM OF STOCKHOLDERS' AGREEMENT Exhibit 99.2 FORM OF STOCKHOLDERS' AGREEMENT THIS STOCKHOLDERS' AGREEMENT (this "Agreement") is made and entered into as of this ___ day of _______, 2005, by and among US Airways Group, Inc., a Delaware corporation, and its successors (including, as the context may require, on or after the effective date of the Plan, as reorganized pursuant to chapter 11 of the United States Bankruptcy Code) (the "Company") and the purchasers of the Company's Common Stock listed on Exhibit A hereto (the "Investors"). RECITALS WHEREAS, the Investors are purchasing shares of the Company's common stock, par value $0.01 per share (the "Common Stock"), pursuant to those certain Investment Agreements (the "Investment Agreements") as well as, in the case of Eastshore Aviation, LLC, pursuant to that certain DIP Credit Facility, as amended, (the "Credit Facility") (collectively, the "Financing"); WHEREAS, the obligations in the Investment Agreements and Credit Facility are conditioned upon the execution and delivery of this Agreement; and WHEREAS, in connection with the consummation of the Financing, the Company and the Investors have agreed to the provisions as set forth below. NOW, THEREFORE, in consideration of these premises and intending to be legally bound, the parties hereto agree as follows: 1. Certain Definitions. As used in this Agreement, the following terms shall have the following respective meanings: "Affiliate" means, with respect to any specified Person, a Person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the specified Person, where "control" (including the terms "controlling," "controlled by" and "under common control with") means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract, or otherwise; provided, however, that when used with respect to the Company, "Affiliate" shall not include any Investor or Affiliate thereof. "Cases" shall mean the voluntary petitions for protection under chapter 11 of the United States Bankruptcy Code filed by the Company and certain of its subsidiaries in the United States Bankruptcy Court for the Eastern District of Virginia, Alexandria Division to enable such debtors to be restructured pursuant to one or more plans of reorganization. "Closing Date" means the date of the closing of the purchase and sale of Common Stock under the Investment Agreements. "Commission" means the Securities and Exchange Commission or any other federal agency at the time administering the Securities Act. "Exchange Act" means the Securities Exchange Act of 1934, as amended, or any similar federal rule or statute and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the time. "Plan" shall mean the plan of reorganization to be filed in connection with the Cases upon the Company's emergence from bankruptcy. "Preferred Stock" shall mean any series of preferred stock of the Company issued in the future by the Company. "Registrable Securities" means any (i) Common Stock purchased by the Investors pursuant to the Investment Agreements and, in the case of Eastshore Aviation, LLC, the Credit Facility, (ii) Common Stock of the Company held by an Investor as of the date of this Agreement and (iii) Common Stock issued or issuable in respect of any of the foregoing upon any stock split, stock dividend, recapitalization or similar event; provided, however, that securities shall only be treated as Registrable Securities if and so long as they have not been sold pursuant to a registration or in accordance with Rule 144. The terms "register," "registered" and "registration" refer to a registration effected by preparing and filing a registration statement in compliance with the Securities Act, and the declaration or ordering of the effectiveness of such registration statement. "Registration Expenses" shall mean all expenses, except as otherwise stated below, incurred by the Company in complying with Section 6(a) and 6(c) hereof, including without limitation, all registration, qualification and filing fees, printing expenses, escrow fees, fees and disbursements of counsel for the Company, blue sky fees and expenses, the expense of any special audits incident to or required by any such registration (but excluding the compensation of regular employees of the Company which shall be paid in any event by the Company and excluding any underwriters discounts or commissions which may be applicable). Registration Expenses shall also include the reasonable fees and disbursements for one special counsel to the selling stockholders reasonably acceptable to the Company. "Restricted Securities" shall mean the Common Stock purchased by the Investors pursuant to the Investment Agreements or any other securities issued in respect of such stock upon any stock split, stock dividend, recapitalization, merger or similar event until such Common Stock is registered or until such Common Stock is sold or is eligible to be sold pursuant to Rule 144, including pursuant to subsection (k) of Rule 144. "Rule 144" and "Rule 145" shall mean Rules 144 and 145, respectively, promulgated under the Securities Act, or any similar federal rules thereunder, all as the same shall be in effect at the time. "Securities Act" shall mean the Securities Act of 1933, as amended, or any similar federal rule or statute and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the time. 2. Restrictions on Transferability. The Common Stock and any other securities issued in respect of such stock upon any stock split, stock dividend, recapitalization, merger or similar event, shall not be sold, assigned, transferred or pledged except upon the conditions specified in this Section 2 and in Section 4 of this Agreement, which conditions are intended to ensure compliance with the provisions of the Securities Act. Each Investor or its transferee will cause any proposed purchaser, assignee, transferee or pledgee of any Restricted Securities held by the Investor or transferee to agree, if such Securities would be Restricted Securities in the hands of such purchaser, assignee, transferee or pledgee, to take and hold such securities subject to the restrictions and upon the conditions specified in this Agreement. Without limiting the generality of the foregoing, each Investor agrees not to sell any Common Stock prior to the date that is six (6) months after the Closing Date; provided, that notwithstanding the foregoing, such Investor may transfer any of its Common Stock (i) to any of its Affiliates or (ii) in a transaction involving a distribution without consideration to its constituent partners or members in proportion to their ownership interests in Investor, in each case so long as such Affiliate or constituent partners or members agree in writing to be bound by the terms of this Agreement and, if requested by the Company, such Investor's counsel provides the Company with an opinion that such transfer is exempt from the registration requirements of the Securities Act. 3. Restrictive Legend. Each certificate representing Restricted Securities shall (unless otherwise permitted by the provisions of Section 4 below) be stamped or otherwise imprinted with legends in substantially the following form (in addition to any legends required by applicable state securities laws): THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). SUCH SECURITIES MAY NOT BE TRANSFERRED UNLESS A REGISTRATION STATEMENT UNDER THE ACT IS IN EFFECT AS TO SUCH TRANSFER OR SUCH TRANSFER MAY BE MADE PURSUANT TO RULE 144 OR ANOTHER EXEMPTION FROM THE ACT. THE SHARES REPRESENTED BY THE CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER CONTAINED IN THE STOCKHOLDERS' AGREEMENT BY AND BETWEEN THE ISSUER AND THE ORIGINAL HOLDER HEREOF, A COPY OF WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF THE ISSUER. SUCH RESTRICTIONS ARE BINDING ON TRANSFEREES OF THESE SHARES. Each Investor consents to the Company making a notation on its records and giving stop transfer instructions to any transfer agent of its capital stock in order to implement the restrictions on transfer established in this Agreement. 4. Transfer of Restricted Securities. (a) Notice of Proposed Transfers. The holder of each certificate representing Restricted Securities by acceptance thereof agrees to comply in all respects with the provisions of this Section 4. Prior to any proposed sale, assignment, transfer or pledge of any Restricted Securities, unless there is in effect a registration statement under the Securities Act covering the proposed transfer, the holder thereof shall give written notice to the Company of such holder's intention to effect such transfer, sale, assignment or pledge. Each such notice shall describe the manner and circumstances of the proposed transfer, sale, assignment or pledge in sufficient detail, and, if requested by the Company, the holder shall also provide, at such holder's election and expense, either (i) a written opinion of legal counsel who shall be, and whose legal opinion shall be reasonably satisfactory to the Company, addressed to the Company, to the effect that the proposed transfer of the Restricted Securities may be effected without registration under the Securities Act, or (ii) a "no action" letter from the Commission to the effect that the transfer of such securities without registration will not result in a recommendation by the staff of the Commission that action be taken with respect thereto, whereupon the holder of such Restricted Securities shall be entitled to transfer such Restricted Securities in accordance with the terms of the notice delivered by the holder to the Company; provided, however, that no opinion of counsel or "no action" letter shall be required with respect to (i) a transfer not involving a change in beneficial ownership, (ii) a transaction involving the distribution without consideration of Restricted Securities by the holder to its constituent partners or members in proportion to their ownership interests in the holder, or (iii) a transaction involving the transfer without consideration of Restricted Securities by an individual holder during such holder's lifetime by way of gift or on death by will or intestacy. Each certificate evidencing the Restricted Securities transferred as above provided shall bear, except if such transfer is made pursuant to Rule 144, the appropriate restrictive legend set forth in Section 3 above, except that such certificate shall not bear such restrictive legend if in the opinion of counsel for such holder and counsel for the Company such legend is not required in order to establish compliance with any provision of the Securities Act. (b) Removal of Legends. If any shares of Common Stock that were Restricted Securities become eligible for sale pursuant to Rule 144(k) or otherwise cease to be Restricted Securities, the Company shall, upon the request of the holder of such Common Stock, promptly remove the first legend set forth in Section 3 from the certificates for such Common Stock. At any time following the date that is six months after the Closing Date, the Company shall, upon the request of any Investor, promptly remove the second legend set forth in Section 3 from any certificates representing shares of Common Stock. 5. Transfer Of Rights. The rights granted to the Investors hereunder may be assigned to any transferee of any shares of Common Stock, including any constituent partner or member of an Investor which is a partnership or limited liability company, or to an Affiliate of a holder which is a corporation, partnership or limited liability company, provided that: (i) such transferee or assignee has acquired at least twenty percent (20%) of the Common Stock previously purchased by the transferring Investor pursuant to the applicable Investment Agreement; (ii) such transfer is effected in accordance with applicable securities laws and the terms of this Agreement; (iii) written notice is promptly given to the Company; and (iv) such transferee or assignee agrees in writing to be bound by the provisions of this Agreement; provided, further, that clause (i) in the foregoing proviso shall not apply with respect to the provisions of Section 6 hereof. 6. Registration Rights. (a) Company Registration. The Company shall (i) cause a shelf registration statement on Form S-3 (or other appropriate form) covering the resale of all of the Registrable Securities to be filed with the Commission within forty-five (45) days after the Closing Date, (ii) cause such registration statement to be declared effective by the Commission no later than six (6) months after the Closing Date and (iii) keep such registration statement continuously effective until the Investors no longer hold any Registrable Securities that may not be sold either pursuant to (x) Rule 144(k) or (y) in their entirety in a single transaction pursuant to Rule 144. The Company will include in such registration (and any related qualifications including compliance with blue sky laws), and in any underwriting involved therein, all Registrable Securities specified by any Investor in a written request or requests to the Company, made within ten days after the date of written notice of such registration from the Company to the Investors. If the Company proposes to register any of its shares of Common Stock (other than any registration for the account of the Company of securities issued pursuant to any employee benefit plan or in any acquisition by the Company), the Company will include in such registration all shares of Common Stock held by the holders of Registrable Securities requested to be so included; provided, however, that if, in the case of an underwritten offering, the managing underwriter informs the Company that the number of shares held by the holders of Registrable Securities requested to be included exceeds the amount which can be sold in such offering without adversely affecting the distribution of the shares being offered, the Company shall include, first, all of the shares the Company has proposed to register; second, as many of the Registrable Securities as can be included without adversely affecting such distribution; and, third, any other shares of Common Stock proposed to be included in such offering. With respect to terms and conditions not provided for in this paragraph or in this Section 6, the "piggyback" rights provided for in this paragraph are intended to be on customary terms. (b) Expenses of Registration. All Registration Expenses incurred in connection with the registration described in Section 6(a) shall be borne by the Company. All other registration expenses, if any, shall be borne by the Investors pro rata on the basis of the number of shares so registered or proposed to be so registered. (c) Registration Procedures. The Company will keep each Investor advised in writing as to the initiation of the registration described in Section 6(a) and as to the completion thereof. The Company will: (i) Registration Statement. Prepare and file with the Commission a registration statement with respect to such Registrable Securities and use all reasonable best efforts to cause such registration statement to become effective and remain effective, in each case in accordance with the timeframes provided in Section 6(a). (ii) Amendments and Supplements. Prepare and file with the Commission such amendments and supplements to such registration statement and the prospectus used in connection with such registration statement as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement for the period set forth in Section 6(a) above. (iii) Prospectus. Furnish to the Investors such number of copies of the registration statement, any amendments thereto, any documents incorporated by reference therein, a prospectus, including a preliminary prospectus, in conformity with the requirements of the Securities Act, and such other documents as they may reasonably request in order to facilitate the disposition of Registrable Securities owned by them. (iv) Qualification. Use its reasonable best efforts to register and qualify the securities covered by such registration statement under such other securities or blue sky laws of such jurisdictions as shall be reasonably requested by the Investors; provided that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such states or jurisdictions, unless the Company is already subject to service in such jurisdiction and except as may be required by the Securities Act. (v) Underwriting Obligations. In the event of any underwritten public offering of Registrable Securities, enter into and perform its obligations under an underwriting agreement, in usual and customary form, with the managing underwriter(s) of such offering. Each Investor participating in such underwriting shall also enter into and perform its obligations under such an underwriting agreement. The Company shall, if requested by the managing underwriter or underwriters, if any, counsel to Investors, or any holder of Registrable Securities included in such offering, promptly incorporate in a prospectus supplement or post-effective amendment such information as such managing underwriter or underwriters, counsel to Investors or any holder of Registrable Securities reasonably requests to be included therein, and which is reasonably related to the offering of such Registrable Securities, including, without limitation, with respect to the Registrable Securities being sold by such holder to such underwriter or underwriters, the purchase price being paid therefor by such underwriter or underwriters and any other terms of an underwritten offering of the Registrable Securities to be sold in such offering, and the Company shall promptly make all required filings of such prospectus supplement or post-effective amendment. (vi) Notice. Immediately notify each Investor holding Registrable Securities covered by such registration statement at any time when a prospectus relating thereto is required to be delivered under the Securities Act of the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing (a "Suspension Notice"); provided, however, that (i) the Company shall not give more than two Suspension Notices during any period of twelve consecutive months, (ii) any such Suspension Notice shall not be given within 120 days of the end of the Suspension Notice period under the prior Suspension Notice and (iii) in no event shall the period from the date on which any holder of Registrable Securities receives a Suspension Notice until the date on which such holder receives copies of the supplemented or amended prospectus or is advised in writing by the Company that the use of the prospectus may be resumed exceed for all Suspension Notices in the aggregate, 60 days in any 365 day period. The Company will use reasonable best efforts to promptly amend or supplement such prospectus in order to cause such prospectus not to include any 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 in the light of the circumstances then existing. (vii) Listing. Cause all such Registrable Securities registered pursuant hereto to be listed on each securities exchange or automated quotation system on which similar securities issued by the Company are then listed or, if no securities are then listed, on the NASDAQ Stock Market Inc.'s National Market or on the New York Stock Exchange. (viii) Transfer Agent; CUSIP Number. Provide a transfer agent and registrar for all Registrable Securities registered pursuant hereunder and a CUSIP number for all such Registrable Securities not later than the effective date of such registration. (ix) Opinion, Comfort Letter. Cause to be furnished, on the date that such Registrable Securities are delivered to the underwriters for sale, if such securities are being sold through underwriters, (i) an opinion, dated as of such date, of the counsel representing the Company for the purposes of such registration, in form and substance as is customarily given to underwriters in an underwritten public offering, addressed to the underwriters, if any, and (ii) a letter dated as of such date, from the independent registered public accountants of the Company, in form and substance as is customarily given by independent certified public accountants to underwriters in an underwritten public offering addressed to the underwriters. (x) Stop Orders. Use its reasonable best efforts to prevent the issuance of any order suspending the effectiveness of a registration statement relating to Registrable Securities, and if one is issued, use its best efforts to obtain the withdrawal of any order suspending the effectiveness of such registration statement at the earliest possible moment. (xi) Company Records. Make available to each Investor, any underwriter participating in any disposition pursuant to a registration statement relating to Registrable Securities, and any attorney, accountant or other agent or representative retained by any such Investor or underwriter (collectively, the "Inspectors"), all financial and other records, pertinent corporate documents and properties of the Company (collectively, the "Records") reasonably necessary to enable them to exercise their due diligence responsibility, and cause the Company's officers, directors and employees to supply all information requested by any such Inspector in connection with such registration statement, provided that each such Investor and Inspector has entered into a customary confidentiality agreement with respect to such Records. (xii) NASD Matters. Cooperate with each Investor and each underwriter participating in the disposition of Registrable Securities and their respective counsel in connection with any filings required to be made with the National Association of Securities Dealers, Inc. ("NASD"), including, if appropriate, the pre-filing of a prospectus as part of a registration statement in advance of an underwritten offering. (d) Indemnification. (i) Company Indemnification. The Company will indemnify each holder (if Registrable Securities held by such holder are included in the securities as to which such registration is being effected), each of its officers and directors and partners, and each person controlling such holder within the meaning of Section 15 of the Securities Act, with respect to which registration has been effected pursuant to this Agreement, against all expenses, claims, losses, damages or liabilities (or actions in respect thereof), including any of the foregoing incurred in settlement of any litigation, commenced or threatened, arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any registration statement, prospectus, offering circular or other document, or any amendment or supplement thereto, incident to any such registration, or based on any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading, or any violation by the Company of the Securities Act, the Exchange Act, state securities laws or any rule or regulation promulgated under such laws applicable to the Company in connection with any such registration, and the Company will reimburse each such holder, each of its officers and directors, and each person controlling such holder, for any legal and any other expenses reasonably incurred, as such expenses are incurred, in connection with investigating, preparing or defending any such claim, loss, damage, liability or action, provided that the Company will not be liable in any such case to the extent that any such claim, loss, damage, liability or expense arises out of or is based on 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 an instrument duly executed by such holder or controlling person, and stated to be specifically for use therein; provided, further, that the indemnity agreement contained in this subsection 6(d)(i) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld). (ii) Investor Indemnification. Each holder will, if Registrable Securities held by such holder are included in the securities as to which such registration is being effected, indemnify the Company, each of its directors and officers, other holders of the Company's securities covered by such registration statement, each person who controls the Company within the meaning of Section 15 of the Securities Act, and each such holder, each of its officers and directors and each person controlling such holder within the meaning of Section 15 of the Securities Act, against all claims, losses, damages and liabilities (or actions in respect thereof) arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any such registration statement, prospectus, offering circular or other document, or any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, or any violation by such holder of the Securities Act, the Exchange Act, state securities laws or any rule or regulation promulgated under such laws applicable to such holder, and will reimburse the Company, each such Investor, such directors, officers, persons, underwriters or control persons for any legal or any other expenses reasonably incurred, as such expenses are incurred, in connection with investigating or defending any such claim, loss, damage, liability or action, but in the case of the Company or such Investors or their officers, directors or controlling persons, only to the extent that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in such registration statement, prospectus, offering circular or other document in reliance upon and in conformity with written information furnished to the Company by an instrument duly executed by such holder and stated to be specifically for use therein; provided, further, that the indemnity agreement contained in this Subsection 6(d)(ii) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of such indemnifying holder (which consent shall not be unreasonably withheld or delayed). The liability of any holder for indemnification under this Section 6(d) in its capacity as a seller of Registrable Securities shall not exceed the lesser of (i) that proportion of the total of such losses, claims, damages, expenses or liabilities indemnified against equal to the proportion of the total securities sold under such registration statement by such holder, and (ii) the amount equal to the net proceeds to such holder of the securities sold in any such registration. (iii) Notice. Each party entitled to indemnification under this Section 6(d) (the "Indemnified Party") shall give notice to the party required to provide indemnification (the "Indemnifying Party") promptly after such Indemnified Party has actual knowledge of any claim as to which indemnity may be sought, and shall permit the Indemnifying Party to assume the defense of any such claim or any litigation resulting therefrom, provided that counsel for the Indemnifying Party, who shall conduct the defense of such claim or litigation, shall be approved by the Indemnified Party (whose approval shall not unreasonably be withheld), and the Indemnified Party may participate in such defense at such party's expense, and provided further that the failure of any Indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party of its obligations under this Agreement unless the failure to give such notice is materially prejudicial to an Indemnifying Party's ability to defend such action and provided further, that the Indemnifying Party shall not assume the defense for matters as to which there is a conflict of interest or there are separate and different defenses. No Indemnifying Party, in the defense of any such claim or litigation, shall, except with the consent of each Indemnified Party (whose consent shall not be unreasonably withheld), consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect to such claim or litigation. (iv) Contribution. If the indemnification provided for in this Section 6(d) is held by a court of competent jurisdiction to be unavailable to an Indemnified Party with respect to any losses, claims, damages or liabilities referred to herein, the Indemnifying Party, in lieu of indemnifying such Indemnified Party thereunder, shall to the extent permitted by applicable law contribute to the amount paid or payable by such Indemnified Party as a result of such loss, claim, damage or liability in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party on the one hand and of the Indemnified Party on the other in connection with the untrue statement or omission that resulted in such loss, claim, damage or liability, as well as any other relevant equitable considerations. The relative fault of the Indemnifying Party and of the Indemnified Party shall be determined by a court of law by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact relates to information supplied by the Indemnifying Party or by the Indemnified Party and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission; provided, that in no event shall any contribution by an Investor hereunder exceed the proceeds from the offering received by such Investor. (v) Survival. The obligations of the Company and the Investors under this Section 6(d) shall survive completion of any offering of Registrable Securities in a registration statement and the termination of this agreement. The provisions of this Section 6(d) shall survive any termination of this Agreement. (e) Information by Investor. The Investor or Investors holding Registrable Securities included in any registration shall furnish to the Company such information regarding such Investor or Investors, the Registrable Securities held by them and the distribution proposed by such Investor or Investors as the Company may request in writing and as shall be required in connection with any registration referred to in this Agreement. (f) Rule 144 Reporting. With a view to making available the benefits of certain rules and regulations of the Commission which may at any time permit the sale of the Restricted Securities to the public without registration, the Company agrees to use reasonable best efforts to: (i) Public Information. Make and keep public information available, as those terms are understood and defined in Rule 144 under the Securities Act; (ii) Filing. File with the Commission in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act; and (iii) Rule 144 Statement. So long as an Investor owns any Restricted Securities, to furnish to such Investor forthwith upon request a written statement by the Company as to its compliance with the reporting requirements of said Rule 144 (at any time after 90 days after the effective date of the first registration statement filed by the Company for an offering of its securities to the general public), a copy of the most recent annual or quarterly report of the Company, and such other reports and documents of the Company and other information in the possession of or reasonably obtainable by the Company as such Investor may reasonably request in availing itself of any rule or regulation of the Commission allowing such Investor to sell any such securities without registration. 7. Election of Directors. (i) At or prior to the effective time of the Merger (as such term is defined in the Investment Agreement), the Board of Directors of the Company (as such term is defined in the Investment Agreement) shall take such actions as are necessary to cause the persons indicated on Exhibit B (each an "Investor Director") to be elected to the Board of Directors of the Company, for an initial three-year term, at the effective time of the Merger; provided, however, that the director nominated by Par Investment Partners, L.P. shall be appointed to the Board of Directors of the Company on the date which is two business days after the effective time of the Merger. (ii) In the event that ACE Aviation Holdings, Inc. ("ACE") is entitled to designate an Investor Director pursuant to terms of its Investment Agreement, for so long as ACE, together with its Affiliates, holds not less than 66.67% of the number of shares of Common Stock (after accounting for any reverse stock split, pro rata repurchases or similar actions by the Company) acquired by it pursuant to its Investment Agreement (the "ACE Director Threshold"), the Company agrees to nominate, at the expiration of the term of ACE's Investor Director, a director nominee designated by ACE for a successive three year term and, in the event ACE's Investor Director resigns, dies or become incapacitated, the Company shall cause the vacancy so created to be filled by a designee of ACE to serve the unexpired term of the director being replaced, provided that, in either such case, the director designated or nominated by ACE meets the basic qualifications for directors, if any, contained in the Company's bylaws applicable to all directors of the Company. If ACE, together with its Affiliates, falls below the ACE Director Threshold, it shall cause its Investor Director (as indicated on Exhibit B) to resign from the Board of Directors of the Company. (iii) With respect to any Investors other than ACE who are entitled to designate directors to the Company's Board of Directors as of the Closing Date (each a "Designating Investor"), for so long as the Designating Investor, together with its Affiliates and any of their respective shareholders, partners or members, collectively, holds not less than 35% of the number of shares of Common Stock (after accounting for any reverse stock split, pro rata repurchases or similar actions by the Company) acquired by it pursuant to its Investment Agreement (the "Designating Investor Threshold"), the Company agrees to nominate, at the expiration of the term of the Designating Investor's designee, a director nominee designated by the Designating Investor for a successive three year term and, in the event the Designating Investor's designee resigns, dies or become incapacitated, the Company shall cause the vacancy so created to be filled by a designee of the Designating Investor to serve the unexpired term of the director being replaced, provided that, in either such case, the director designated or nominated by the Designating Investor meets the basic qualifications for directors, if any, contained in the Company's bylaws applicable to all directors of the Company. If the Designating Investor, together with its Affiliates and any of their respective shareholders, partners or members, collectively, falls below the Designating Investor Threshold, its designee shall serve out his or her term, but such Designating Investor shall no longer have a right to designate a director to the Company's Board of Directors. 8. Amendment. Except as otherwise provided herein, additional parties may be added to this Agreement and any provision of this Agreement may be amended or the observance thereof may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and each Investor. Any amendment or waiver effected in accordance with this Section 8 shall be binding upon each Investor, any transferee thereof and the Company. 9. Governing Law. This Agreement shall be governed in all respects by the internal laws of the State of Delaware without regard to conflict of laws provisions. 10. Entire Agreement. This Agreement constitutes the full and entire understanding and Agreement among the parties regarding the matters set forth herein. Except as otherwise expressly provided herein, the provisions hereof shall inure to the benefit of, and be binding upon the successors, assigns, heirs, executors and administrators of the parties hereto. 11. Successors and Assigns. Except as otherwise expressly provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the Company's and each Investor's successors, assigns and transferees, including, without limitation and without the need for an express assignment, subsequent holders of Registrable Securities; provided that such assignee or transferee is not a "major airline" or "low cost carrier", as such terms are commonly understood in the airline industry, or an Affiliate thereof. If any assignee or transferee of any Investor shall acquire Registrable Securities in any manner, whether by operation of law or otherwise, such Registrable Securities shall be held subject to all of the terms of this Agreement, and by taking and holding such Registrable Securities such person shall be deemed to have agreed to be bound by and to perform all of the terms and provisions of this Agreement and such person shall be entitled to receive the benefits hereof. 12. Notices, etc. All notices and other communications required or permitted hereunder shall be in writing and shall be mailed by registered or certified mail, postage prepaid, or otherwise delivered by facsimile transmission, by hand or by messenger, addressed: (a) Stockholder. If to an Investor, at such Investor's address as set forth in either Exhibit A, or at such other address as such Investor shall have furnished to the Company. (b) Company. If to the Company, to: US Airways Group, Inc. 2345 Crystal Drive Arlington, Virginia 22227 Attention: General Counsel Telecopy No. 703-872-5936 With a copy to: Arnold & Porter LLP 555 Twelfth Street, NW Washington, D.C. 20004 Attention: Brian Leitch, Esq. Telecopier No. 202-942-5999 and with a copy to: America West Holdings Corporation 111 W. Rio Salado Blvd. Tempe, Arizona 85281 Attention: General Counsel Telecopy No. [___] or at such other address as the Company shall have furnished to the Stockholders, with a copy to: Each such notice or other communication shall for all purposes of this Agreement be treated as effective or having been given when delivered if delivered personally, if sent by facsimile, the first business day after the date of confirmation that the facsimile has been successfully transmitted to the facsimile number for the party notified, or, if sent by mail, at the earlier of its receipt or 72 hours after the same has been deposited in a regularly maintained receptacle for the deposit of the United States mail, addressed and mailed as aforesaid. 13. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original and all of which together shall constitute one instrument. 14. Ownership. Each Investor represents and warrants to the other Investors and the Company that (a) such Investor now owns the Common Stock, free and clear of liens or encumbrances, and has not, prior to or on the date of this Agreement, executed or delivered any proxy or entered into any other voting agreement or similar arrangement other than one which has expired or terminated prior to the date hereof, and (b) such Investor has full power and capacity to execute, deliver and perform this Agreement, which has been duly executed and delivered by, and evidences the valid and binding obligation of, such Investor enforceable in accordance with its terms. 15. Specific Performance. The parties hereto specifically acknowledge that monetary damages are not an adequate remedy for violations of this Agreement, and that any party hereto may, in its sole discretion, apply to a court of competent jurisdiction for specific performance or injunctive or such other relief as such court may deem just and proper in order to enforce this Agreement or prevent any violation hereof and, to the extent permitted by applicable law and to the extent the party seeking such relief would be entitled to the merits to obtain such relief, each party waives any objection to the imposition of such relief. 16. Designation of Forum and Consent to Jurisdiction. The parties hereto (i) designate the courts of the State of Delaware as the forum where all matters pertaining to this Agreement may be adjudicated, and (ii) by the foregoing designation, consent to the exclusive jurisdiction and venue of such courts for the purpose of adjudicating all matters pertaining to this Agreement. 17. Waiver of Jury Trial. EACH OF THE PARTIES HERETO WAIVES ANY RIGHT IT MAY HAVE TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE ARISING OUT OF OR RELATED TO THIS AGREEMENT. INSTEAD, ANY SUCH DISPUTES RESOLVED IN COURT SHALL BE RESOLVED IN A BENCH TRIAL WITHOUT A JURY. 18. Stock Split. All references to numbers of shares in this Agreement shall be appropriately adjusted to reflect any stock dividend, split, combination or other recapitalization of shares by the Company occurring after the date of this Agreement. [Signatures Next Page] IN WITNESS WHEREOF, the parties hereto have executed this Stockholders' Agreement as of the date first set forth above. US AIRWAYS GROUP, INC. By: -------------------------------- Name: Bruce R. Lakefield Title: Chief Executive Officer ACE AVIATION HOLDINGS, INC. By: -------------------------------- Name: Title: EASTSHORE AVIATION, LLC By: -------------------------------- Name: Title: PAR INVESTMENT PARTNERS, L.P. By: PAR GROUP, L.P. its general partner By: PAR CAPITAL MANAGEMENT, INC. its general partner By: -------------------------------- Name: Title: PENINSULA INVESTMENT PARTNERS, L.P. By: -------------------------------- Name: Title: EXHIBIT A INVESTORS NAME AND ADDRESS SHARES PURCHASED ACE Aviation Holdings, Inc. ___________________________________ Eastshore Aviation, LLC ___________________________________ Par Investment Partners, L.P. ___________________________________ Peninsula Investment Partners, L.P. ___________________________________ EXHIBIT B BOARD OF DIRECTORS -----END PRIVACY-ENHANCED MESSAGE-----