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.
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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.
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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:
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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.
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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.
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(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.
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(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
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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
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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,
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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.
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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
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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
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