Brian P. Leitch, Esq. Daniel M. Lewis, Esq. Michael J. Canning, Esq. ARNOLD & Porter LLP 370 Seventeenth Street, Suite 4500 Denver, CO 80202 (303) 863-1000 - and - 555 Twelfth Street, NW Washington, DC 20004 (202) 942-50000 - and - 399 Park Avenue New York, NY 10022 (212) 715-1000 Lawrence E. Rifken (VSB No. 29037) Douglas M. Foley (VSB No. 34364) McGUIREWOODS LLP 1750 Tysons Boulevard, Suite 1800 McLean, Virginia 22102-4215 (703) 712-5000 Counsel to Debtors and Debtors-in-Possession UNITED STATES BANKRUPTCY COURT EASTERN DISTRICT OF VIRGINIA ALEXANDRIA DIVISION In re: ) Case No. 04-13819-SSM ) Jointly Administered US AIRWAYS, INC., et al., 1 ) Chapter 11 ) Hon. Stephen S. Mitchell Debtors. ) ORDER GRANTING THE DEBTORS AUTHORIZATION TO PAY TRANSACTION COSTS TO FORTRESS INVESTMENT GROUP LLC AND APPROVING EXCLUSIVITY IN CONNECTION WITH SALE AND LEASEBACK TRANSACTION Note: The proposed form of order has been modified by the court. Upon the motion, dated August 30, 2005 (the Motion ) of the debtors and debtors-inpossession in the above captioned cases (collectively, the Debtors ) for (i) an order, the proposed form of which is attached to the Motion as Exhibit A authorizing the Debtors, pursuant to Sections 362, 363 and 1110 of Title 11 of the United States Code, 11 U.S.C. 101, et seq. and Rules 2002, 4001 and 6004 of the Federal Rules of Bankruptcy Procedure, to implement 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.
the sale and simultaneous leaseback of five (5) Airbus 330-300 aircraft under the terms and conditions set forth in the Term Sheet, a copy of which is attached to the Motion as Exhibit B, including the payment of liquidated damages; and (ii) an order, on an expedited basis, granting authorization for the Debtors to pay transaction costs, including an immediate expense advance on account thereof, in connection with the sale and leaseback transaction; the Court hereby finds, determines and decrees that: A. On September 12, 2004 (the Petition Date ), the Debtors commenced these chapter 11 cases (the Cases ) by filing voluntary petitions for relief under chapter 11 of the Bankruptcy Code in the Court. B. The Debtors have continued in the management and operation of their businesses as debtors in possession pursuant to sections 1107 and 1108 of the Bankruptcy Code. No trustee or examiner has been appointed in these Cases, and on September 21, 2004, the United States Trustee appointed an Official Committee of Unsecured Creditors (the Creditors Committee ) for these Cases. C. The Court has jurisdiction over the matters raised in the Motion pursuant to 28 U.S.C. 157 and 1334. This is a core proceeding pursuant to 28 U.S.C. 157(b)(2). The statutory predicates for relief sought herein are sections 362 and 363 of the Bankruptcy Code and Rules 2002, 4001 and 6004 of the Bankruptcy Rules. Venue of the cases in this Court is proper pursuant to 28 U.S.C. 1408 and 1409. D. Capitalized terms used herein and not otherwise defined herein shall have the meaning ascribed to them in the Motion. E. To the extent that any of the findings of fact set forth in this Order constitute conclusions of law, they are adopted as such. To the extent that any of the conclusions of law set forth in this Order constitute findings of fact, they are adopted as such. F. The purpose of this Order is solely to approve the Debtors payment of the Transaction Costs, including the Expense Advance on account thereof, and the Exclusivity 2
agreement reached among the parties, each as provided for in the Term Sheet. Nothing in this Order shall be construed as approving or authorizing the Debtors to enter into the Transaction, or as a ruling on any other relief requested in the Motion. G. Granting the Debtors authorization to pay the Transaction Costs, including the Expense Advance on account thereof, and approving the Exclusivity agreement among the parties provided for in the Term Sheet is in the best interests of the Debtors, their estates, creditors and other parties in interest and is a proper exercise of the Debtors business judgment. H. Payment of the Transaction Costs, including the Expense Advance on account thereof, and the Exclusivity agreements, were negotiated, proposed, and agreed to by the parties without collusion, in good faith, and from arms -length bargaining positions. Neither the Debtors or Fortress has engaged in any conduct that would cause or permit the transactions to be avoided under Section 363(n) of the Bankruptcy Code. I. The payment of the Transaction Costs, including the Expense Advance, on account thereof, in the agreed upon amount, is fair and reasonable. J. Approval of the Transaction Costs, including payment of the Expense Advance on account thereof, and the granting of Exclusivity is a condition to Fortress s willingness to pursue the Transaction. K. Notice of the relief requested in the Motion was given to: (i) the United States Trustee for the Eastern District of Virginia (the "U.S. Trustee"); (ii) Otterbourg, Steindler, Houston & Rosen, P.C., lead counsel to the Creditors' Committee (the Creditors' Committee ), Attn: Scott L. Hazan, Esq.; (iii) the Air Transportation Stabilization Board (the ATSB ); and (iv) those parties as required by, and in accordance with, the Order Establishing Omnibus Hearing Dates and Authorizing Certain Electronic Notice, Case Management and Administrative Procedures (entered on September 15, 2004 at Docket No. 121) (the Case Management Order ). Such notice constitutes good and sufficient notice of the Hearing in accordance with 3
Bankruptcy Rules 2002, 4001, and 6004 and section 102(1) of the Bankruptcy Code, as required by sections 362, 363, and 1110. No other or further notice is necessary. Accordingly, upon the record in these cases; and after due deliberation thereon; and good and sufficient cause appearing therefor, it is hereby ORDERED, ADJUDGED AND DECREED THAT: 1. Pursuant to Section 363 of the Bankruptcy Code, the Debtors are authorized to pay Fortress the Transaction Costs, including the Expense Advance on account thereof, subject to the conditions and limitations thereon as set forth in the Term Sheet, which is attached hereto. 2. The Exclusivity agreements reached among the parties, as set forth in the Term Sheet, are hereby approved. 3. The stay of orders authorizing the use, sale or lease of property of the estate as provided for in Bankruptcy Rule 6004(g) shall not apply to approval of the Transaction Costs and the payment of the Expense Advance on account thereof, and this Order is immediately effective and enforceable. 4. This Order is binding upon the Debtors and their successors and permitted assigns, including any trustee appointed for the Debtors under chapter 7 of the Bankruptcy Code or otherwise. 5. The Court retains jurisdiction to hear and determine all matters arising from or related to the implementation of this Order. Dated: Alexandria, Virginia September, 2005 HONORABLE STEPHEN S. MITCHELL UNITED STATES BANKRUPTCY JUDGE 4
WE ASK FOR THIS: Brian P. Leitch, Esq. Daniel M. Lewis, Esq. Michael J. Canning, Esq. ARNOLD & Porter LLP 370 Seventeenth Street, Suite 4500 Denver, CO 80202 (303) 863-1000 - and - 555 Twelfth Street, NW Washington, DC 20004 (202) 942-50000 - and - 399 Park Avenue New York, NY 10022 (212) 715-1000 - and - /s/ Douglas M. Foley Lawrence E. Rifken (VSB No. 29037) Douglas M. Foley (VSB No. 34364) McGUIREWOODS LLP 1750 Tysons Boulevard, Suite 1800 McLean, Virginia 22102-4215 (703) 712-5000 Counsel for Debtors and Debtors-in-Possession 5
US Airways Purchase and Lease-back of Five (5) A330-300 Aircraft Terms and Conditions Aircraft: Seller/ Lessee: Guarantor: Buyer/ Lessor: Lease: Purchase Date/Rent Commencement Date: Five (5) Airbus 330-300 aircraft manufactured in 2000 bearing manufacturer serial numbers 333, 337, 342, 370, and 375, each with two (2) Pratt & Whitney 4168 engines with specifications attached hereto as Attachment 1 (collectively and individually the Aircraft ). US Airways, Inc. ( US Airways ). Each direct or indirect parent(s) of Seller/ Lessee as of the Purchase Date/Rent Commencement Date, including, without limitation, US Airways Group, Inc ( Group ), and each of their respective successor(s) from and after the Effective Date of the Plan (defined below), and, from and after the Effective Date of the Plan, expressly including any parent company owning the shares of US Airways and America West Airlines (collectively, the Guarantors ), will guarantee all of Seller/ Lessee s obligations under the purchase and lease-back arrangements described herein (the Transaction ). One or more U.S. trust or other entity selected by Fortress Investment Group LLC or an affiliate ( Fortress ). Buyer will purchase each of the Aircraft from Seller and immediately enter into a triple net lease-back of such Aircraft with Lessee pursuant to the terms described herein (each, a Lease ). Subject to the Conditions Precedent noted below, on a date after the Confirmation Date (defined below), but prior to the Effective Date of US Airways plan of reorganization confirmed pursuant to section 1129 of the Bankruptcy Code which shall be substantially in the form of the Proposed Plan (defined below) (the Plan ), but in no event later than October 31, 2005. For purposes of this Term Sheet, the Effective Date of the Plan shall mean the earlier to occur of (a) the effective date as such term is defined in the Plan and (b) the date upon which substantial consummation of the Plan occurs. For purposes of this Term Sheet, the Confirmation Date shall mean the date an order of the Bankruptcy Court confirming the Plan as fulfilling all the requirements of confirmation pursuant to section 1129 of the Bankruptcy Code (the Confirmation Order ) is entered on the docket of the Chapter 11 Case. For 1
purposes of this Term Sheet, the Proposed Plan shall mean the proposed plan of reorganization entitled Joint Plan of Reorganization of US Airways, Inc. and Its Affiliated Debtors and Debtors-in-Possession, dated August 9, 2005, and filed in the Chapter 11 Case on that date. Purchase Price: $54,600,000 per aircraft, or $273,000,000 in the aggregate, payable in two installments for each Aircraft, as follows: (1) $49,600,000, less the first month s rent payable under the applicable Lease and that portion of any fees, costs and expenses payable by the Debtors incident to the Transaction and allocable to the sale-leaseback of such Aircraft, which net amount shall be payable on the Purchase Date for such Aircraft (the First Installment ) and (2) $5,000,000, less any Offset Amount (as defined and provided for below) if applicable, which amount shall be payable on the Effective Date of the Plan (the Second Installment ) if, and only if, (a) the Effective Date occurs on or before December 2, 2005, (b) before the occurrence of the Effective Date, Lessee has not rejected the Lease, sent a notice purporting to reject the Lease, or filed a motion seeking an order rejecting the Lease, and (c) before the occurrence of the Effective Date, the Lessor has not sent a notice of termination under the Lease for such Aircraft following a failure by Lessee to make any rental payment due under such Lease within the time period provided for such payment, subject to any applicable notice and cure. If the Effective Date does not occur on or before December 2, 2005 or if there has been a rejection sought or obtained by Lessee with respect to such Lease or notice of termination sent by the Lessor with respect to such Lease in the circumstances described in subclauses (b) and (c) of the preceding sentence, then the Second Installment for such Aircraft shall not be payable and no additional amount shall be due from Buyer on account of the Aircraft. Use of Proceeds: Delivery Conditions: The proceeds from the Transaction will be used first to pay in full the 2000-1 EETC financing, without any make-whole premium, and any other indebtedness secured by the Aircraft to the extent necessary to deliver the Aircraft free and clear of all liens, and second for general corporate purposes. As-is, where-is, subject to inspection and records review, as herein provided, satisfactory to Buyer. 2
Lease Term: An average of 84 months from the Rent Commencement Date, with the specific Lease Term for each Aircraft being agreed to in the Documentation. Lessee will have a one-time option to extend the Lease Term for each Aircraft (for that Aircraft, its Renewal Term ), for a period of six to twenty-four months (at Lessee s option), upon not less than 18 months advance notice (provided that no Event of Default in respect of that Aircraft has occurred and is then continuing); and provided further that in exercising the Renewal Term option for any Aircraft, Lessee will do so in a manner that gives effect to staggered return dates for the Aircraft. Rent: For each Aircraft, the amount specified below, payable monthly in advance, for the relevant period: Base Lease Term: described below. $[REDACTED], subject to adjustment as Renewal Lease Term: $[REDACTED], subject to adjustment as described below. The $[REDACTED] amount specified above is based upon the cost of five-year funds of [REDACTED]% per annum calculated at five-year swap rates on August 2, 2005, and the $[REDACTED] amount specified above is based upon the cost of two-year funds of [REDACTED]% per annum calculated at two-year swap rates on August 2, 2005, and each will be adjusted, as follows: The $[REDACTED] amount will be adjusted for each Aircraft if the offer five-year swap rate appearing on the Reuters ISDA fixing page (or a successor page or service) at 11:00 am, London time, two London banking days prior to the Delivery Date for that Aircraft is not equal to the cost of five-year funds set out above, with the amount of such adjustment being (i) the difference between the assumed rate and actual rate resulting (in basis points) multiplied by (ii) $[REDACTED]; but in no event shall the monthly rent be less than $[REDACTED] per Aircraft; and If applicable, the $[REDACTED] amount will be adjusted if the offer two-year swap rate appearing on the Reuters ISDA fixing page (or a successor page or service) at 11:00 am, London time, two London banking days prior to the commencement of the renewal Lease Term is not equal to the cost of two-year funds set out above, with the amount of such adjustment being (i) the difference between the assumed rate and actual rate resulting (in 3
basis points) multiplied by (ii) $[REDACTED]; but in no event shall the monthly rent be less than $[REDACTED] per Aircraft. Return Conditions: Detailed return conditions to be agreed upon prior to the Purchase Date/Rent Commencement Date, but the following basic principles will apply to the return of the Aircraft: (a) airframe will be fresh from an Airbus MPD block C check and lower-level checks inclusive of fatigue, item and CPC task cards cleared to the next C check interval; (b) each engine will have sufficient EGT margin and LLP life to allow a further 24 months of operation on-wing; (c) engines and APU will be video borescoped at Lessee s risk and expense and discrepancies will be corrected; (d) all repairs will be permanent repairs; (e) landing gear and all other components and items will allow for a minimum 24 months of operation; and (f) AD/SB compliance will allow for a minimum 6 months of operation. [REDACTED] Aircraft Operations: Events of Default: The Documentation shall include mutually satisfactory aircraft operational covenants, including, without limitation, relating to the maintenance, operations, registration, subleasing, event of loss, modifications and insurance (in each case, on the basis of a privately financed transaction). The Lessee will covenant to use the Aircraft in revenue service only internationally, subject to an annual allowance for domestic US revenue service not to exceed 5% of revenue flights, and provided that, promptly following the end of each calendar year during the Lease Term, Lessee shall provide such reports as Lessor may reasonably request in relation to the operation of the Aircraft. For each Aircraft: (a) (b) (c) Lessee shall not have made any scheduled rent payment within five days after the same shall have become due; Lessee shall not have made any other payment within ten days after the same shall have become due; Lessee shall fail to carry or maintain any insurance required under the Documentation, or shall have failed to return such Aircraft within a reasonable time, not to exceed seven days, after the last day of its Lease Term, provided, however, that 4
in the event that Lessee shall fail to deliver such Aircraft on the last day of its Lease Term, Lessee shall pay a per diem amount on account of the Lessee s rental obligations under the respective Lease until Lessee s return of such Aircraft. (d) (e) (f) Lessee shall have failed to perform or observe in any material respect any other covenant or agreement under any Documentation, and such failure shall continue unremedied for a period of thirty days; provided, however, that if Lessee shall have undertaken to cure any such failure, then so long as Lessee shall use all reasonable diligence to cure such failure, such failure shall not constitute an Event of Default under this clause (d) for a period of ninety days; any representation or warranty made by Lessee shall be incorrect in any material respect; commencement of bankruptcy or insolvency proceedings (other than the Chapter 11 Case) by or against Lessee or any Guarantor, as defined in a customary manner, and including a ninety-day cure period in the case of involuntary proceedings; (g) an Event of Default shall have occurred and be continuing under the lease Documentation in relation to any other Aircraft; (h) during the pendency of the Chapter 11 Case, (i) Lessee s or any Guarantor s case is converted to one under chapter 7 of the Bankruptcy Code, or (ii) a chapter 11 trustee or examiner with expanded powers is appointed for Lessee or any Guarantor; (i) (j) the Plan does not provide for the continued use of the Aircraft under the Leases and for the Leases to continue as a post-effective Date obligations of the reorganized Lessee and each Guarantor, including any permitted assignee or successor to any of them; During the pendency of the Chapter 11 Case, from and after the Confirmation Date (i) the Plan is amended, modified or otherwise altered so that it is in any material respect different from the Proposed Plan, or (ii) Lessee or Guarantor withdraws the Plan and proposes a new plan of reorganization or joint plan of reorganization which is different in any material respect from the Proposed Plan, and 5
in either case, any such amendment, modification, alteration or new plan or joint plan of reorganization has a material adverse effect on (A) the projected creditworthiness of the reorganized Lessee and any Guarantors, taken as a whole or (B) the ability of the Lessee or any Guarantor to perform its obligations under the Lease or any Guaranty; (k) The Effective Date of the Plan shall not have occurred before December 3, 2005; (l) After the Effective Date, the Confirmation Order is modified in any material respect, and such modification has a material adverse effect on (A) the projected creditworthiness of the reorganized Lessee and any Guarantors, taken as a whole or (B) the ability of the reorganized Lessee or any Guarantor to perform its obligations under the Lease or any Guaranty; or (m) After the Effective Date, the Confirmation Order is reversed on appeal, and (i) a revised, amended or new plan for US Airways is not confirmed within ninety (90) days after the entry of the reversal of the Confirmation Order and the Effective Date of such plan does not occur within one hundred twenty (120) days after the entry of the reversal of the Confirmation Order, or (ii) the revised, amended, or new plan for US Airways (x) does not provide for a reorganized Lessee and Guarantor(s) which are substantially similar to the reorganized Lessee and Guarantor(s) under the Proposed Plan, or (y) has a material adverse effect on (A) the projected creditworthiness of the reorganized Lessee and any Guarantors, taken as a whole or (B) the ability of the reorganized Lessee or any Guarantor to perform its obligations under the Lease or any Guaranty. Upon any Event of Default, Lessor shall be entitled to all of its rights and remedies under the Lease applicable to such Aircraft; provided, however, that, anything to the contrary notwithstanding in such Lease, in the event that on the Effective Date Lessee shall be in default of any of its rental obligations under such Lease and the Second Installment is otherwise payable, then Lessor shall be entitled to (at its sole discretion) offset an amount equal to such overdue rental obligation, as applicable (such amount, the Offset Amount ) against such Second Installment, with the balance of the Second Installment paid to the Seller. Indemnities: The Documentation shall contain customary general and tax indemnities. 6
Conditions Precedent: The Transaction will be subject to conditions precedent, including, but not limited to, the following: the entry of the Initial Order, which order has not been stayed, modified, amended, supplemented or overturned on appeal; the entry, on or prior to the earlier of the Effective Date and October 31, 2005, of an order in form and substance satisfactory to Seller/Lessee and Buyer/Lessor (the Transaction Order ) of the Bankruptcy Court, which is final and non-appealable, approving (a) this Term Sheet and the Transaction and (b) US Airways ability to prepay the 2000-1 EETC at par (i.e., without make-whole premium). The Transaction Order shall, among other things, (i) authorize and approve the sale of the Aircraft pursuant to section 363 of the Bankruptcy Code to Lessor free and clear of all liens, claims and encumbrances (other than the obligation to lease such Aircraft to Lessor as provided in this Term Sheet), and specifically free and clear of any and all liens, claims and encumbrances created under or securing any and all postpetition financing, loan or credit to US Airways, including pursuant to the ATSB Cash Collateral Order dated October 14, 2004 (docket no. 490) and the Junior Secured Debtor-in- Possession Credit Facility Agreement, dated as of February 18, 2005, among US Airways, Inc. and certain of its affiliated debtors in the Chapter 11 Case, and Eastshore Aviation, LLC, as each of the same has been or may be amended or supplemented (such financing and use of cash collateral, as amended, collectively, the DIP Financing ); (ii) find and order that (v) the Lessor is a good faith purchaser entitled to the protections of section 363(m) of the Bankruptcy Code, (x) each of the Leases, when executed, is a post-petition obligation of US Airways and a lease which entitles the Lessor thereunder to the benefits of section 1110 of the Bankruptcy Code in any subsequent bankruptcy case involving US Airways, and (y) the Transaction Order is binding upon US Airways and its successors and permitted assigns, including any trustee appointed for US Airways under chapter 7 of the Bankruptcy Code or otherwise; (iii) modify and lift the automatic stay created by Section 362 of the Bankruptcy Code to permit enforcement of remedies under the letter of intent, the Term Sheet and the Leases in accordance with the terms of each of them without further order of the Bankruptcy Court; and (iv) expressly approves and authorizes the payment of liquidated damages for failure to close the Transaction as provided in this Term Sheet; 7
clean Bankruptcy Code Section 1110 opinion from outside counsel to US Airways; mutually acceptable Documentation, expressly including that title to the Aircraft shall be conveyed by full-warranty bill of sale; tax, accounting and other opinions satisfactory to US Airways and Fortress; no Material Adverse Change having occurred since the date hereof, where Material Adverse Change means any circumstance(s) or event(s) which, collectively had, has or is reasonably likely to have a material adverse effect on the ability of Lessee or any Guarantor to perform their respective obligations under the Lease/guaranty documentation (including, without limitation, a terrorist event or war (whether declared or not) or an epidemic or outbreak of disease which adversely affects international travel); Fortress and US Airways/America West internal approvals, in each instance provided to the other parties on or before the commencement of the hearing on the Approval Motion; the Transaction Order shall not have been stayed, modified, amended or supplemented without the prior written consent of Lessor, given or withheld in its sole discretion, and Lessee (if such modification, amendment or supplement has not be requested by Lessee); Confirmation Date of the Plan shall have occurred on or before October 31, 2005, provided that such Plan shall be the Proposed Plan, with no amendment, modification or alteration (prior to, on or after the Confirmation Date) other than an amendment, modification or alteration which, individually or in the aggregate, shall not have a material adverse effect on (a) the projected creditworthiness of the reorganized US Airways or any Guarantors, taken as a whole or (b) the ability of Lessee or any Guarantor to perform any of their respective obligations under the Leases or any guaranty; and satisfactory inspection of the Aircraft and their records having been completed on or before on or before the commencement of the hearing on the Approval Motion. Funding/ Syndication: US Airways shall reasonably cooperate to enable Fortress to finance/back-lever/ syndicate the Transaction both prior to and after the Effective Date of the Plan (collectively, the Funding ). This will include, without limitation, (a) the issuance of debt secured by the Aircraft and the Leases, whether in the form of notes or otherwise, with multiple series, levels of subordination and interest rates and (b) participating in an EETC financing of 8
secured debt or any replacement thereto pursuant to clause (a) above, and, in connection therewith, entering into offering document indemnities comparable to those entered into in connection with previous US Airways EETCs. The Buyer/ Lessor will be permitted to sell its interest in the Aircraft subject only to a prospective purchaser or its guarantor having $25 million net worth. Notwithstanding the foregoing, this offer is not contingent upon the availability of financing to Buyer/Lessor. Documentation: Transaction Costs: Documentation shall be prepared by Buyer/ Lessor s counsel and be governed by New York law. US Airways will be responsible for all costs and expenses (including Fortress legal fees and expenses) associated with the Transaction and related documents (whether or not the Transaction shall be consummated) subject to a cap of $300,000, except that (i) Fortress shall be responsible for all costs related to any Funding/Syndication and (ii) the cap shall not apply to costs and expenses of Fortress incurred in connection with any appeal of the Initial Order or the Transaction Order, with any such costs and expenses to be separately agreed to between US Airways and Fortress. Upon the acceptance of this term sheet by US Airways and entry of the Initial Order, US Airways shall pay to Fortress an advance against costs and expenses of $250,000. Liquidated Damages for Failure to Close: Exclusivity: Subject only to entry of the Transaction Order and provided that the closing of the Transaction is not prevented by a stay of the Transaction Order or by an injunction issued by a court of competent jurisdiction, US Airways agrees to pay Fortress, as liquidated damages, a non-refundable fee in the event the Transaction fails to close on or prior to October 31, 2005, for any reason other than a wrongful refusal of Fortress to close, in an amount of 1.5% of the aggregate Purchase Price for all Aircraft, which payment shall be non-refundable and not subject to clawback or disgorgement for any reason whatsoever. Upon the acceptance of this Term Sheet and through the later of October 31, 2005, and the date Fortress terminates the Transaction in accordance with its terms (such period, the Exclusivity Period ), US Airways agrees that it will negotiate exclusively with Fortress, and will not solicit, consider, or negotiate any other 9
financing, sale, sale/leaseback or similar proposals with respect to the Aircraft (each a Proposal ), and will promptly provide copies to Fortress of any written communication with respect to a Proposal that it may receive. Right of First Offer: Termination: During the period from the last day of the Exclusivity Period though the one year anniversary of the acceptance of this term sheet, if US Airways determines to finance or sell any of the Aircraft, then prior to seeking any Proposal from any other entity with respect to the Aircraft, it shall provide to Fortress the opportunity to provide to Lessee a Proposal with respect to the Aircraft. This Letter of Intent shall terminate and be of no further force and effect if (a) the Initial Order is not entered on or before September 2, 2005, (b) the transaction cost advance provided for in the Transaction Costs paragraph of the Term Sheet is not actually paid to Fortress in immediately available funds on or before the second business day following entry of the Initial Order, (c) US Airways fails to file the Approval Motion in a timely fashion so that it can be heard by the Bankruptcy Court on or before September 15, 2005, or (d) the Approval Motion is denied or is not granted by entry of a final and non-appealable order on or before the later to occur of the Effective Date and October 31, 2005, in all respects satisfying the condition precedent for the Transaction Order in the Term Sheet. 10