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Amended And Restated Term Loan Agreement

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EXECUTION VERSION


$89,855,433


AMENDED AND RESTATED TERM LOAN AGREEMENT


DATED AS OF JANUARY 18, 2002


AMONG


AMERICA WEST AIRLINES, INC.
AS THE COMPANY,


THE LENDERS LISTED HEREIN,
AS THE LENDERS,


THE INDUSTRIAL BANK OF JAPAN, LIMITED,
AS ARRANGER, CO-LEAD BOOK MANAGER,
AGENT AND LENDER,


CITICORP USA, INC., AS ARRANGER AND SYNDICATION AGENT,


SALOMON SMITH BARNEY INC., AS CO-LEAD BOOK MANAGER


AND


BANKERS TRUST COMPANY, AS DOCUMENTATION AGENT
TABLE OF CONTENTS


PAGE


SECTION 1. DEFINITIONS................................................................................... 2


1.1 CERTAIN DEFINED TERMS......................................................................... 2


1.2 ACCOUNTING TERMS; UTILIZATION OF GAAP FOR PURPOSES OF CALCULATIONS UNDER AGREEMENT............ 23


1.3 OTHER DEFINITIONAL PROVISIONS................................................................. 23


SECTION 2. AMOUNTS AND TERMS OF THE TERM LOAN............................................................ 24


2.1 THE TERM LOAN; NOTES; REGISTER................................................................ 24


2.2 INTEREST ON THE LOANS......................................................................... 25


2.3 FEES.......................................................................................... 28


2.4 PREPAYMENTS; GENERAL PROVISIONS REGARDING PAYMENTS............................................ 28


2.5 USE OF PROCEEDS............................................................................... 33


2.6 SPECIAL PROVISIONS GOVERNING EURODOLLAR RATE LOANS............................................ 33


2.7 INCREASED COSTS; TAXES; CAPITAL ADEQUACY...................................................... 35


2.8 OBLIGATION OF LENDERS TO MITIGATE............................................................. 39


2.9 [INTENTIONALLY OMITTED]....................................................................... 40


2.10 BORROWING BASE................................................................................ 40


SECTION 3. CONDITIONS TO LOANS........................................................................... 43


3.1 CONDITIONS TO CLOSING DATE.................................................................... 43


SECTION 4. COMPANY'S REPRESENTATIONS AND WARRANTIES...................................................... 48


4.1 ORGANIZATION, POWERS, QUALIFICATION, GOOD STANDING, BUSINESS AND SUBSIDIARIES................. 48


4.2 AUTHORIZATION OF BORROWING, ETC............................................................... 49


4.3 FINANCIAL CONDITION........................................................................... 50


4.4 NO MATERIAL ADVERSE CHANGE.................................................................... 50


4.5 TITLE TO PROPERTIES; LIENS.................................................................... 50


4.6 LITIGATION; ADVERSE FACTS..................................................................... 51


4.7 PAYMENT OF TAXES.............................................................................. 51


-i-
TABLE OF CONTENTS
(continued)
PAGE


4.8 PERFORMANCE OF AGREEMENTS; MATERIALLY ADVERSE AGREEMENTS...................................... 51


4.9 GOVERNMENTAL REGULATION....................................................................... 52


4.10 SECURITIES ACTIVITIES......................................................................... 52


4.11 EMPLOYEE BENEFIT PLANS........................................................................ 52


4.12 ENVIRONMENTAL PROTECTION...................................................................... 53


4.13 SOLVENCY...................................................................................... 54


4.14 DISCLOSURE.................................................................................... 54


4.15 YEAR 2000 MATTERS............................................................................. 54


SECTION 5. COMPANY'S AFFIRMATIVE COVENANTS............................................................... 55


5.1 FINANCIAL STATEMENTS AND OTHER REPORTS........................................................ 55


5.2 CORPORATE EXISTENCE........................................................................... 59


5.3 PAYMENT OF TAXES AND CLAIMS; TAX CONSOLIDATION................................................ 59


5.4 MAINTENANCE OF PROPERTIES; INSURANCE.......................................................... 60


5.5 INSPECTION.................................................................................... 60


5.6 COMPLIANCE WITH LAWS, ETC..................................................................... 61


5.7 COMPANY'S REMEDIAL ACTION REGARDING HAZARDOUS MATERIALS....................................... 61


5.8 FURTHER ASSURANCES............................................................................ 62


5.9 EMPLOYEE BENEFIT PLANS........................................................................ 62


5.10 FAA MATTERS; CITIZENSHIP...................................................................... 62


5.11 CHANGES IN GAAP............................................................................... 62


SECTION 6. COMPANY'S NEGATIVE COVENANTS.................................................................. 63


6.1 RESERVED...................................................................................... 63


6.2 LIENS AND RELATED MATTERS..................................................................... 63


6.3 INVESTMENTS................................................................................... 64


6.4 RESTRICTED PAYMENTS........................................................................... 64


6.5 FINANCIAL COVENANTS........................................................................... 65


-ii-
TABLE OF CONTENTS
(continued)
PAGE
6.6 RESTRICTION ON FUNDAMENTAL CHANGES; ASSET SALES AND ACQUISITIONS; NEW SUBSIDIARIES............ 65


6.7 SALES AND LEASE-BACKS......................................................................... 66


6.8 TRANSACTIONS WITH AFFILIATES.................................................................. 66


6.9 CONDUCT OF BUSINESS........................................................................... 67


6.10 MERGER OR CONSOLIDATION....................................................................... 67


6.11 LIMITATION ON ASSET SALES..................................................................... 67


6.12 LIMITATION ON ISSUANCES AND DISPOSITIONS OF CAPITAL STOCK OF SUBSIDIARIES..................... 68


6.13 LIMITATION ON CREATION OF NEW SUBSIDIARIES.................................................... 68


6.14 LIMITATION ON AMENDMENTS TO INDEBTEDNESS; PERFORMANCE OF AGREEMENTS........................... 69


SECTION 7. EVENTS OF DEFAULT............................................................................. 69


7.1 FAILURE TO MAKE PAYMENTS WHEN DUE............................................................. 69


7.2 DEFAULT IN OTHER AGREEMENTS................................................................... 70


7.3 BREACH OF CERTAIN COVENANTS................................................................... 70


7.4 BREACH OF WARRANTY............................................................................ 70


7.5 OTHER DEFAULTS UNDER LOAN DOCUMENTS........................................................... 71


7.6 INVOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC.......................................... 71


7.7 VOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC............................................ 71


7.8 JUDGMENTS AND ATTACHMENTS..................................................................... 72


7.9 DISSOLUTION................................................................................... 72


7.10 RESERVED...................................................................................... 72


7.11 FAILURE OF SECURITY........................................................................... 72


SECTION 8. AGENT......................................................................................... 73


8.1 APPOINTMENT................................................................................... 73


8.2 POWERS AND DUTIES; GENERAL IMMUNITY........................................................... 73


8.3 REPRESENTATIONS AND WARRANTIES; NO RELIANCE................................................... 74


-iii-
TABLE OF CONTENTS
(continued)
PAGE
8.4 RIGHT TO INDEMNITY............................................................................ 75


8.5 SECURITY AGREEMENTS........................................................................... 75


8.6 SUCCESSOR AGENT............................................................................... 75


SECTION 9. MISCELLANEOUS................................................................................. 76


9.1 ASSIGNMENTS AND PARTICIPATIONS IN LOANS....................................................... 76


9.2 EXPENSES...................................................................................... 78


9.3 INDEMNITY..................................................................................... 79


9.4 SET-OFF....................................................................................... 79


9.5 RATABLE SHARING............................................................................... 80


9.6 AMENDMENTS AND WAIVERS........................................................................ 80


9.7 INDEPENDENCE OF COVENANTS..................................................................... 81


9.8 NOTICES....................................................................................... 82


9.9 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS........................................ 82


9.10 FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE......................................... 82


9.11 MARSHALING; PAYMENTS SET ASIDE................................................................ 82


9.12 SEVERABILITY.................................................................................. 83


9.13 OBLIGATIONS SEVERAL; INDEPENDENT NATURE OF LENDERS' RIGHTS.................................... 83


9.14 HEADINGS...................................................................................... 83


9.15 APPLICABLE LAW................................................................................ 83


9.16 SUCCESSORS AND ASSIGNS........................................................................ 83


9.17 CONSENT TO JURISDICTION AND SERVICE OF PROCESS................................................ 83


9.18 WAIVER OF JURY TRIAL.......................................................................... 84


9.19 CONFIDENTIALITY............................................................................... 85


9.20 COUNTERPARTS; EFFECTIVENESS................................................................... 85


9.21 INTEGRATION................................................................................... 85


9.22 DISCLAIMER OF DAMAGES......................................................................... 85


-iv- Schedule 2.4 - Amortization Schedule; Lenders Pro Rata Share Schedule 2.10 - Eligible Assets Schedule 2.10A - Borrowing Base Collateral on the Closing Date Schedule 4.1 - Subsidiaries Schedule 6.2 - Payment Restrictions


Exhibits - --------


Exhibit A - Form of Aircraft Security Agreement Exhibit B - Form of Receivables Security Agreement Exhibit I - Reserved Exhibit II - Form of Notice of Conversion/Continuation Exhibit III - Form of Term Note Exhibit III-A - Form of PIK Note Exhibit IV - Form of Compliance Certificate Exhibit V-A - Form of Company's outside counsel legal opinion (Section 1110) Exhibit V-B - Form of Company's in-house counsel legal opinion Exhibit VI - Form of Assignment Agreement Exhibit VII - Reserved Exhibit VIII - Form of Financial Condition Certificate Exhibit IX - Form of Borrowing Base Certificate Exhibit X - Description of Joint Venture Terms


-v-
AMERICA WEST AIRLINES, INC.
AMENDED AND RESTATED TERM LOAN AGREEMENT


This AMENDED AND RESTATED TERM LOAN AGREEMENT is dated as of January 18, 2002 and entered into by and among AMERICA WEST AIRLINES, INC., a Delaware corporation (the "COMPANY"), THE FINANCIAL INSTITUTIONS LISTED ON THE SIGNATURE PAGES HEREOF (each individually referred to herein as a "LENDER" and collectively, together with the other institutions that become lenders pursuant to subsection 9.1, as the "LENDERS") and THE INDUSTRIAL BANK OF JAPAN, LIMITED as Arranger and Agent for the Lenders (in such last capacity, the "AGENT").


RECITALS


WHEREAS, the Company, the financial institutions from time to time party thereto and the Agent are parties to a Revolving Credit Agreement dated as of December 12, 1997 (the "1997 Credit Agreement"), pursuant to which such financial institutions and the Agent provided a revolving and term loan facility to the Company;


WHEREAS, the lenders party thereto, the Agent and the Company amended the 1997 Credit Agreement pursuant to that certain Amended and Restated Revolving Credit Agreement, dated as of December 10, 1999 (the "Amended and Restated Credit Agreement");


WHEREAS, the lenders party thereto, the Agent and Company have amended the Amended and Restated Credit Agreement pursuant to Amendment No. 1, dated as of April 16, 2001, Amendment No. 2 dated as of July 31, 2001 and Amendment No. 3 dated as of July 31, 2001 (as so amended, the "Existing Credit Agreement");


WHEREAS, certain Potential Events of Default and Events of Default have occurred and are continuing under the Existing Credit Agreement;


WHEREAS, the Company has requested and, subject to satisfaction of the conditions precedent set forth in Section 3.1 of this Agreement on or before January 31, 2002, the Agent and Lenders have agreed to restate and amend the Existing Credit Agreement as provided herein to provide the Company with a term loan facility;


WHEREAS, unless and until the conditions precedent set forth in Section 3.1 of this Agreement are satisfied on or before January 31, 2002, the Existing Credit Agreement shall remain in full force and effect and the Agent and Lenders are not waiving and, by this Agreement or otherwise, shall not be deemed to waive any Potential Events of Default or Events of Default thereunder;


NOW THEREFORE, in consideration of the premises and agreements, provisions and covenants herein contained, the Company, the Lenders, and the Agent hereby agree as follows:


-1-
SECTION 1.
DEFINITIONS


1.1 CERTAIN DEFINED TERMS.


The following terms used in this Agreement shall have the following meanings:


"ACT" means Subtitle VII of Title 49 of the United States Code, and the rules and regulations promulgated thereunder, as in effect on the date hereof, and as modified or amended hereafter, or any subsequent legislation that supplements or supersedes such Subtitle.


"ADJUSTED EURODOLLAR RATE" means, for any Interest Rate Determination Date, the rate per annum obtained by dividing (i) the arithmetic average of the quotes (expressed as a rate per annum and rounded upward to the nearest l/16 of one percent) appearing on the Reuters LIBO Screen (or such other screen as may, in the opinion of the Agent, replace such screen on that system for the purpose of displaying such rate) at or about 11:00 a.m. (London time) on such Interest Rate Determination Date for U.S. dollar deposits of amounts in same day funds comparable to the principal amount of the Eurodollar Rate Loans for which the Adjusted Eurodollar Rate is then being determined with maturities comparable to the Interest Period for which such Adjusted Eurodollar Rate will apply by (ii) a percentage equal to 100% minus the stated maximum rate of all reserve requirements (including, without limitation, any marginal, emergency, supplemental, special or other reserves) applicable on such Interest Rate Determination Date to any member bank of the Federal Reserve System in respect of "Eurodollar liabilities" as defined in Regulation D (or any successor category of liabilities under Regulation D) for such Interest Period, and if such rate quotation cannot be obtained by the Agent, the rate per annum obtained by dividing (i) the arithmetic average (rounded upward to the nearest l/16 of one percent) of the offered quotation, if any, to first class banks in the London interbank Eurodollar market by each of the Reference Lenders for U.S. dollar deposits of amounts in same day funds comparable to the principal amount of the Eurodollar Rate Loans for which the Adjusted Eurodollar Rate is then being determined with maturities comparable to such Interest Period as of approximately 10:00 A.M. (New York time) on such Interest Rate Determination Date by (ii) a percentage equal to 100% minus the stated maximum rate of all reserve requirements (including, without limitation, any marginal, emergency, supplemental, special or other reserves) applicable on such Interest Rate Determination Date to any member bank of the Federal Reserve System in respect of "Eurocurrency liabilities" as defined in Regulation D (or any successor category of liabilities under Regulation D) for such Interest Period; provided that if any Reference Lender fails to provide the Agent with its aforementioned quotation then the Adjusted Eurodollar Rate shall be determined based on the quotation provided by the Agent, and that, if any, provided to the Agent by the other Reference Lender.


"ADJUSTMENT EVENT" means any event of loss or damage to Rotables which causes a reduction in the book value of Rotables, as reasonably determined by the Company, in excess of $1,000,000.


"AFFECTED LENDER" has the meaning assigned to that term in subsection 2.6C.


-2-
"AFFECTED LOANS" has the meaning assigned to that term in subsection 2.6C.


"AFFILIATE" means, as applied to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with, that Person. For the purposes of this definition, "control" (including, with correlative meanings, the terms "controlling", "controlled by" and "under common control with"), as applied to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of that Person, whether through the ownership of voting securities or by contract or otherwise.


"AGENT" has the meaning assigned to that term in the introduction to this Agreement and also means and includes any successor Agent appointed pursuant to subsection 8.6.


"AGREEMENT" means this Amended and Restated Term Loan Agreement, as it may be amended, supplemented or otherwise modified from time to time.


"AIR CARRIER GUARANTEE LOAN DOCUMENTS" means, collectively, (1) the Government Guaranteed Loan Agreement, (2) the Promissory Note issued by the Company to the initial lender in connection therewith, (3) the Warrants, dated as of January 18, 2002, issued to Holdings, The Air Transportation Stabilization Board, the initial lender, and the counter-guarantors, (4) the Registration Rights Agreement, dated as of January 18, 2002, among the Company, Holdings, The Air Transportation Stabilization Board, the initial lender and the counter-guarantors named therein, and (5) the Guaranty of The Air Transportation Stabilization Board dated as of January 18, 2002; in each case, as any of the foregoing may be amended, supplemented or otherwise modified from time to time (subject to Section 6.14 hereof).


"AIRCRAFT" means an Airframe together with the Engines identified therewith in Schedule I of, or a supplement to, an Aircraft Security Agreement, whether or not any of such Engines may at any time of determination be installed on such Airframe or installed on any other airframe.


"AIRCRAFT SECURITY AGREEMENT" means an Aircraft Security Agreement substantially in the form of Exhibit A hereto, as such Aircraft Security Agreement may be amended, restated, supplemented or otherwise modified from time to time in accordance with the terms hereof and thereof.


"AIRFRAME" means each Airframe as defined in and from time to time subject to the Aircraft Security Agreement.


"ALLIANCE AGREEMENTS" means those certain business alliance agreements among the Company, Chautauqua Airlines, Inc., Continental Airlines, Inc. and Mesa Airlines, Inc. and such other parties from time to time that include, but are not limited to, code-sharing, frequent flyer, ground handling and marketing agreements.


"APPLICABLE MARGIN" for each Base Rate Loan and Eurodollar Rate Loan shall be the percentage set forth below for that type of Loan for the periods set forth below:


-3-
Period LIBOR Margin/Base Rate Margin
------ -----------------------------


Closing Date through December 31, 2004 2.25% /2.75% January 1, 2005 and after 4.75% / 2.75%


"APPROVED APPRAISAL" has the meaning given such term in subsection 2.10(C)(1).


"APPROVED APPRAISER" has the meaning given such term in subsection 2.10(C)(2).


"ARRANGERS" means Citicorp USA, Inc. and The Industrial Bank of Japan, Limited.


"ASSET SALE" means any sale, transfer or other disposition (including by way of merger, consolidation, exchange of assets or sale-leaseback transactions), in one transaction or a series of related transactions, by the Company or any of its Subsidiaries to any Person other than the Company or any of its Subsidiaries of (i) all or any of the Capital Stock of any Subsidiary of the Company, (ii) all or substantially all of the property and assets of an operating unit or business of the Company or any of its Subsidiaries or (iii) any other property and assets of the Company or any of its Subsidiaries outside the ordinary course of business of the Company or such Subsidiary and, in each case, that is not governed by the provisions of subsection 6.8; provided that none of (A) sales or other dispositions of inventory (other than Spare Parts), receivables (after the conditions to the Liens on the identified receivables pursuant to the Receivables Security Agreement have occurred, as set forth in the Receivables Security Agreement, other than the receivables pledged to the Agent under the Receivables Security Agreement) and other current assets (other than Collateral), (B) sale or other dispositions of surplus equipment, spare parts (pursuant to and subject to subsection 2.10 of this Agreement and the Spare Parts Security Agreement), expendable inventories, furniture or fixtures in an aggregate amount not to exceed $10,000,000 in any Fiscal Year of the Company, (C) sale leasebacks of aircraft (including aircraft engines installed thereon) in the Company's fleet (other than the Aircraft), spare aircraft engines (other than the Spare Engines), aircraft parts (other than Spare Parts), simulators (other than the Simulators) and passenger loading bridges or other flight or ground equipment or the Company's office building located at 111 West Rio Salado, Tempe, Arizona or (D) $20,000,000 of other sales in any Fiscal Year of the Company shall be included within the meaning of "Asset Sale."


"ASSIGNMENT AGREEMENT" means an Assignm
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