8-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the
Securities and Exchange Act of 1934

Date of Report (Date of earliest event reported): December 18, 2001

AMERICA WEST HOLDINGS CORPORATION

(Exact name of registrant as specified in its charter)

Delaware
(State of jurisdiction) 1-12649
(Commission File No.) 86-0847214
(IRS Employer Identification No.)

111 West Rio Salado Parkway
Tempe, Arizona 85281
(Address of principal executive offices and zip code)

Registrant’s telephone number, including area code: (480) 693-0800

AMERICA WEST AIRLINES, INC.

(Exact name of registrant as specified in its charter)

Delaware
(State of jurisdiction) 1-10140
(Commission File No.) 86-0418245
(IRS Employer Identification No.)

4000 E. Sky Harbor Boulevard
Phoenix, Arizona 85034-3899
(Address of principal executive offices and zip code)

Registrant’s telephone number, including area code: (480) 693-0800

ITEM 5.      OTHER EVENTS

On January 18, America West Holdings Corporation (“Holdings”) announced that its subsidiary, America West Airlines, Inc. (“Airlines” and together with Holdings, the “Company”), closed a $429 million loan supported by a $380 million government loan guarantee. This loan triggered over $600 million of concessions and additional financing (primarily aircraft rent reductions and future financing commitments), resulting in a restructuring of Airlines’ indebtedness and lease commitments valued at approximately $1 billion. The following summarizes the major components of this restructuring followed by its impacts on the Company’s balance sheet, cash flow, and earnings.

The major components of the restructuring are:

• Government Guaranteed Loan ($429 million)

• Aircraft Deferrals/Financing ($200 million)

• Aircraft Returns/Rent Reductions ($350 million)

• Term-out of Line of Credit ($90 million)

• State/City Financing ($11 million)

• TPG Undertaking

• Warrants/Convertible Senior Notes (issued in exchange for concessions/loan)

Government Guaranteed Loan

The catalyst for Airlines’ restructuring plan was a $429 million loan backed by a $380 million federal loan guarantee. The key terms of this loan are:

• 7-year term

• ratable amortization in years 3 through 7

• interest rate of LIBOR + 40 bps

• guarantee fees payable to the U.S. Treasury Department and other loan participants of 550 bps in year 1 and approximately 800 bps thereafter

Aircraft Deferrals/Financing

Seventeen new Airbus aircraft previously scheduled for delivery in 2003 and 2004 were deferred by a total of 505 aircraft-months to 2004 through 2007.

New financing totaling more than $200 million was obtained for eleven aircraft which were either already delivered in 2001 or scheduled to be delivered in 2002 and 2003. As a result, Airlines is now fully financed for all scheduled aircraft deliveries through the fourth quarter of 2004.

2.

Aircraft Returns/Rent Reductions

Through negotiations with approximately 20 aircraft lessors, Airlines has retired or plans to retire eleven aircraft in early 2002 to better size its fleet to the current industry demand environment. For the aircraft that remain, annual rent payments have been reduced by approximately $50 million per year for each of the next seven years.

Based on aircraft deferrals and retirements described above, Airlines’ current fleet plan through 2004 is as follows:

		Year-End
		2001		2002		2003		2004
737-200			14		12		12		12
A319			31		32		32		33
737-300			42		37		37		37
A320			46		49		53		54
	757		13		13		13		13
Total			146		143		147		149

Term-out of Line of Credit

Airlines’ $90 million secured line of credit, which had been fully drawn since late 2000, was converted into a secured term loan maturing at year-end 2007. Key terms of this loan are:

• 6-year term

• ratable amortization in years 4 through 6

• interest rate of approximately LIBOR + 450

State/City Financing

From the State of Arizona and the City of Phoenix, Airlines received $8.5 million through the sale and leaseback of jetways at Phoenix Sky Harbor International Airport, $1.25 million in job training grants and $1.5 million in other financing.

TPG Undertaking

TPG Partners, L.P. and its affiliates undertook not to dispose of their Class A common stock other than in connection with an offer to acquire all the shares of the Company's Class B common stock accepted or approved by the holders of a majority of the Class B common stock.

Warrants/Convertible Notes

As compensation for various elements of the restructuring plan, Holdings issued a warrant to purchase up to 18.8 million shares of its Class B common stock to the federal government and additional warrants to purchase up to 3.8 million shares of its Class B common stock to other loan participants, in each case at an exercise price of $3 per share and a term of 10 years.

Holdings also has issued or will issue approximately $120 million in convertible senior notes as partial compensation to aircraft lessors, the terms of which notes are as follows:

• 7-year term

• coupon of 7.5%

• interest paid in kind for years 1 through 3

• convertible after three years into Class B common stock at $12

3.

Balance Sheet Impact

Versus year-end 2001, the completion of the restructuring increased the Company’s liquidity by approximately $400 million ($429 million loan, less 550 basis point guarantee fee to the U.S. Treasury Department and other loan participants, and less other transaction fees).

Net debt, which is used for calculating credit ratios and commonly adjusted for airlines to reflect aircraft operating leases, was reduced by $200 million.

	Post Restructuring
	Better/(Worse)than Prior
	($ mil)
Book Debt		(550)
Cash		400
Annual Operating Leases x 7		350
Net Debt		200

Cash Flow Impact

Aside from the government-backed loan proceeds and the corresponding amortization, the restructuring is expected to improve future cash flows. Cash interest expense associated with the government-backed loan and the convertible bonds is expected to be offset by the reductions in aircraft rent and an increase in interest income.

	Post-Restructuring Better/(Worse) than Prior ($ mil)
	2002			2003			2004			2005			2006			2007			2008			Total
Govt Loan Interest		(40	)		(60	)		(55	)		(45	)		(35	)		(20	)		(10	)		(265	)
Convertible Bond Cash Interest		0			0			0			(10	)		(10	)		(10	)		(10	)		(40	)
Rent Reductions		50			50			50			50			50			50			50			350
Interest Income		10			10			10			10			5			0			0			45
Subtotal		20			0			5			5			10			20			30			90

Earnings Impact

In addition to the cash impact described above, the Company expects its income statement to be impacted in 2002 through 2004 by approximately $10 million per year in non-cash interest expense associated with the convertible notes. The Company expects it will incur approximately an additional $5-10 million per year in non-cash interest expense to account for the value of warrants related to the $429 million government backed loan.

Separately, the Company anticipates changes to its reported earnings beginning in 2002 related to FAS 142, a new accounting standard that impacts the accounting for Excess Reorganization Value, an intangible asset for the Company. The Company also anticipates special charges in the first quarter of 2002 related to its restructuring finalized on January 18.

4.

Dilution Impact

As previously disclosed, the issuance of warrants and convertible debt increased the fully diluted shares outstanding of the company. Using the Treasury Stock method for calculating fully diluted shares, in-the-money options, warrants, and convertible senior notes are assumed to be exercised with proceeds used to repurchase shares at the market price. As a result, the number of fully diluted shares outstanding will vary with changes in Holdings’ stock price.

Stock Price ($)	5		10		15		20
Shares (mil)	34		34		34		34
In-the-Money Options/Warrants/Notes (mil)	24		24		39		40
Treasury Stock Repurchase* (mil)	(15	)	(8	)	(18	)	(14	)
Fully Diluted Share (mil)	43		50		55		60
*Proceeds from Exercise of Options/Warrants/Bonds ($ mil)	75		75		270		280

Other Notes

The Company paid in full approximately $49 million in previously deferred aircraft lease payments simultaneously with the funding of the loan.

On December 18, 2001, the Company filed portions of its Application for federal loan guarantees available under the Air Transportation Safety and System Stabilization Act, which included a Seven Year Plan (the “Plan”) that was based on the Company’s assumptions at that time regarding the structure and terms of the loan as well as economic factors. Although the final terms of the loan changed subsequent to the filing of the Plan on December 18, 2001, and economic assumptions will change over time as well, the Company does not intend to update the Plan.

On January 31, 2002, Holdings issued a press release entitled, “America West Reports Fourth Quarter and Full-Year 2001 Financial Results.” A copy of the press release is attached hereto as Exhibit 99.1.

This Form 8-K contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties that could cause America West’s actual results and financial position to differ materially from these statements. The risks and uncertainties include, but are not limited to, the aftermath of the September 11 terrorist attacks, the resulting negative impacts on revenues due to airport closures and reduced demand for air travel, increased costs due to enhanced security measures and related government directives, the ability of the company to obtain sufficient additional financing if necessary to survive the adverse economic effects following the September 11 attacks, limitations on financing flexibility due to high levels of debt, financial and other covenants in debt instruments and cross default provisions and the potential dilutive impact of the warrants and convertible notes issued in connection with the term loan and related transactions, the cyclical nature of the airline industry, competitive practices in the industry, the impact of changes in fuel prices, relations with unionized employees generally and the impact of the process of negotiation of labor contracts on the company’s operations, the outcome of negotiations of collective bargaining

5.

agreements and the impact of these agreements on labor costs, the impact of industry regulations and other factors described from time to time in the company’s publicly available SEC reports. The company undertakes no obligation to publicly update any forward-looking statement to reflect events or circumstances that may arise after the date of this press release.

ITEM 7.      FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS

         (c)  Exhibits

Exhibit No.	Description
4.15	Indenture, dated as of January 18, 2002, between America West Holdings Corporation and Wilmington Trust Company, as Trustee and not in its individual capacity, for America West Holdings Corporation 7.5% Convertible Senior Notes due 2009.
4.16	Form of America West Holdings Corporation 7.5% Convertible Senior Notes due 2009.
4.17	Registration Rights Agreement, dated January 18, 2002, with respect to shares of Class B Common Stock underlying the America West Holdings Corporation 7.5% Convertible Senior Notes due 2009.
4.18	Guaranty, dated as of January 18, 2002, by America West Airlines, Inc., in favor of the Holders and the Trustee under the Indenture dated January 18, 2002.
4.19	Form of Warrant to Purchase Class B Common Stock, dated January 18, 2002, issued to the Air Transportation Stabilization Board and the other warrant recipients under the $429,000,000 Loan Agreement dated January 18, 2002.
4.20	Registration Rights Agreement, dated January 18, 2002, between America West Holdings Corporation and the Air Transportation Stabilization Board with respect to shares of Class B Common Stock underlying the Warrant to Purchase Class B Common Stock.
4.21	Warrant Registration Rights Agreement between America West Holdings Corporation and the other warrant recipients under the $429,000,000 Loan Agreement dated January 18, 2002, with respect to shares of Class B Common Stock underlying their Warrants to Purchase Class B Common Stock.
10.50(1)	Agreement (regarding restrictions on compensation), dated as of January 18, 2002, among America West Airlines, Inc., America West Holdings Corporation and the Air Transportation Stabilization Board.
10.51(1)	$429,000,000 Loan Agreement, dated as of January 18, 2002, among America West Airlines, Inc., Citibank, N.A., as Agent, KPMG Consulting, Inc., as Loan Administrator, Citibank, N.A., as Initial Lender and the Air Transportation Stabilization Board.
10.52	Amended and Restated Term Loan Agreement, dated as of January 18, 2002, among America West Airlines, Inc., the Lenders listed therein, The Industrial Bank of Japan, Limited, as Arranger, Co-

6.

Exhibit No.	Description
	Lead Book Manager, Agent and Lender, Citicorp USA, Inc., as Arranger and Syndication Agent, Salomon Smith Barney, as Co-Lead Book Manager and Bankers Trust Company, as Documentation Agent.
10.53	Undertaking (regarding restrictions on transfer of Class A Common Stock), dated as of January 18, 2002, among America West Holdings Corporation, TPG Partners, L.P., TPG Parallel I, L.P. and Air Partners II, L.P. for the benefit of the Air Transportation Stabilization Board.
99.1	Press Release, dated January 31, 2002.
(1)	The Company has sought confidential treatment for portions of the referenced exhibit.

7.

SIGNATURE

         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: January 31, 2002
	By:   /s/  Bernard L. Han Bernard L. Han Executive 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: January 31, 2002
	By:   /s/  Bernard L. Han Bernard L. Han Executive Vice President and Chief Financial Officer

8.

EXHIBIT INDEX

Exhibit No.	Description
4.15	Indenture, dated as of January 18, 2002, between America West Holdings Corporation and Wilmington Trust Company, as Trustee and not in its individual capacity, for America West Holdings Corporation 7.5% Convertible Senior Notes due 2009.
4.16	Form of America West Holdings Corporation 7.5% Convertible Senior Notes due 2009.
4.17	Registration Rights Agreement, dated January 18, 2002, with respect to shares of Class B Common Stock underlying the America West Holdings Corporation 7.5% Convertible Senior Notes due 2009.
4.18	Guaranty, dated as of January 18, 2002, by America West Airlines, Inc., in favor of the Holders and the Trustee under the Indenture dated January 18, 2002.
4.19	Form of Warrant to Purchase Class B Common Stock, dated January 18, 2002, issued to the Air Transportation Stabilization Board and the other warrant recipients under the $429,000,000 Loan Agreement dated January 18, 2002.
4.20	Registration Rights Agreement, dated January 18, 2002, between America West Holdings Corporation and the Air Transportation Stabilization Board with respect to shares of Class B Common Stock underlying the Warrant to Purchase Class B Common Stock.
4.21	Warrant Registration Rights Agreement between America West Holdings Corporation and the other warrant recipients under the $429,000,000 Loan Agreement dated January 18, 2002, with respect to shares of Class B Common Stock underlying their Warrants to Purchase Class B Common Stock.
10.50(1)	Agreement (regarding restrictions on compensation), dated as of January 18, 2002, among America West Airlines, Inc., America West Holdings Corporation and the Air Transportation Stabilization Board.
10.51(1)	$429,000,000 Loan Agreement, dated as of January 18, 2002, among America West Airlines, Inc., Citibank, N.A., as Agent, KPMG Consulting, Inc., as Loan Administrator, Citibank, N.A., as Initial Lender and the Air Transportation Stabilization Board.
10.52	Amended and Restated Term Loan Agreement, dated as of January 18, 2002, among America West Airlines, Inc., the Lenders listed therein, The Industrial Bank of Japan, Limited, as Arranger, Co-Lead Book Manager, Agent and Lender, Citicorp USA, Inc., as Arranger and Syndication

9.

Exhibit No.	Description
	Agent, Salomon Smith Barney, as Co-Lead Book Manager and Bankers Trust Company, as Documentation Agent.
10.53	Undertaking (regarding restrictions on transfer of Class A Common Stock), dated as of January 18, 2002, among America West Holdings Corporation, TPG Partners, L.P., TPG Parallel I, L.P. and Air Partners II, L.P. for the benefit of the Air Transportation Stabilization Board.
99.1	Press Release, dated January 31, 2002.
(1)	The Company has sought confidential treatment for portions of the referenced exhibit.

10. EX-4.15 3 p66064ex4-15.txt EX-4.15 Exhibit 4.15 ================================================================================ INDENTURE BETWEEN AMERICA WEST HOLDINGS CORPORATION AND WILMINGTON TRUST COMPANY, AS TRUSTEE AND NOT IN ITS INDIVIDUAL CAPACITY 7.5% CONVERTIBLE SENIOR NOTES DUE 2009 DATED AS OF JANUARY 18, 2002 ================================================================================ CROSS-REFERENCE TABLE*

Trust Indenture Indenture Act Section Section - ----------- ------- 310(a)(1)....................................................... 5.11 (a)(2)....................................................... 5.11 (a)(3)....................................................... n/a (a)(4)....................................................... n/a (a)(5)....................................................... 5.11 (b).......................................................... 5.3; 5.11 (c).......................................................... n/a 311(a).......................................................... 5.12 (b).......................................................... 5.12 (c).......................................................... n/a 312(a).......................................................... 2.9 (b).......................................................... 12.3 (c).......................................................... 12.3 313(a).......................................................... 5.7 (b)(1)....................................................... n/a (b)(2)....................................................... 5.7 (c).......................................................... 5.7; 12.2 (d).......................................................... 5.7 314(a)(1),(2),(3)............................................... 9.4; 12.2 (a)(4)....................................................... 9.5; 12.6 (b).......................................................... n/a (c)(1)....................................................... 12.5 (c)(2)....................................................... 12.5 (c)(3)....................................................... n/a (d).......................................................... n/a (e).......................................................... 12.6 (f).......................................................... n/a 315(a).......................................................... 5.1(a) (b).......................................................... 5.6; 12.2 (c).......................................................... 5.1(b) (d).......................................................... 5.1(c) (e).......................................................... 4.14 316(a)(last sentence)........................................... 2.13, 7.2 (a)(1)(A).................................................... 4.5 (a)(1)(B).................................................... 4.4 (a)(2)....................................................... n/a

i

Trust Indenture Indenture Act Section Section - ----------- ------- (b).......................................................... 4.7 (c).......................................................... 7.4 317(a)(1)....................................................... 4.8 (a)(2)....................................................... 4.9 (b).......................................................... 2.6 318(a).......................................................... 12.1 (b).......................................................... n/a (c).......................................................... 12.1

- ---------- "n/a" means not applicable. * This Cross-Reference Table shall not, for any purpose, be deemed to be a part of the Indenture. ii TABLE OF CONTENTS

PAGE ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE..................................... 1 Section 1.1. Definitions............................................................. 1 Section 1.2. Incorporation by Reference of Trust Indenture Act....................... 9 Section 1.3. Rules of Construction................................................... 10 ARTICLE 2 THE SECURITIES................................................................. 10 Section 2.1. Title and Terms; Issuable In Series..................................... 10 Section 2.2. Form of Securities...................................................... 13 Section 2.3. Security Legend......................................................... 14 Section 2.4. Execution, Authentication, Delivery and Dating of the Securities........ 17 Section 2.5. Registrar and Paying Agent.............................................. 18 Section 2.6. Paying Agent to Hold Assets in Trust.................................... 19 Section 2.7. General Provisions Relating to Registration, Transfer and Exchange...... 19 Section 2.8. Book-Entry Provisions for the Global Securities......................... 20 Section 2.9. Holder Lists............................................................ 22 Section 2.10. Persons Deemed Owners.................................................. 22 Section 2.11. Mutilated, Destroyed, Lost or Stolen Securities........................ 22 Section 2.12. Treasury Securities.................................................... 23 Section 2.13. Temporary Securities................................................... 23 Section 2.14. Cancellation........................................................... 24 Section 2.15. CUSIP Numbers.......................................................... 24 Section 2.16. Defaulted Interest..................................................... 24 ARTICLE 3 DISCHARGE OF INDENTURE......................................................... 24 Section 3.1. Discharge of Liability on Securities.................................... 24 Section 3.2. Repayment to the Company................................................ 25 ARTICLE 4 DEFAULTS AND REMEDIES.......................................................... 25 Section 4.1. Events of Default....................................................... 25 Section 4.2. Acceleration of Maturity; Rescission and Annulment...................... 27

iii Section 4.3. Other Remedies.......................................................... 27 Section 4.4. Waiver of Past Defaults................................................. 28 Section 4.5. Control by Majority..................................................... 28 Section 4.6. Limitation on Suit...................................................... 28 Section 4.7. Unconditional Rights of Holders to Receive Payment and to Convert....... 29 Section 4.8. Collection of Indebtedness and Suits for Enforcement by the Trustee..... 29 Section 4.9. Trustee May File Proofs of Claim........................................ 30 Section 4.10. Restoration of Rights and Remedies..................................... 31 Section 4.11. Rights and Remedies Cumulative......................................... 31 Section 4.12. Delay or Omission Not Waiver........................................... 31 Section 4.13. Priorities............................................................. 31 Section 4.14. Undertaking for Costs.................................................. 32 Section 4.15. Waiver of Stay or Extension Laws....................................... 32 ARTICLE 5 THE TRUSTEE.................................................................... 32 Section 5.1. Certain Duties and Responsibilities..................................... 32 Section 5.2. Certain Rights of Trustee............................................... 34 Section 5.3. Individual Rights of Trustee............................................ 35 Section 5.4. Money Held in Trust..................................................... 35 Section 5.5. Trustee's Disclaimer.................................................... 35 Section 5.6. Notice of Defaults...................................................... 35 Section 5.7. Reports by Trustee to Holders........................................... 36 Section 5.8. Compensation and Indemnification........................................ 36 Section 5.9. Replacement of Trustee.................................................. 36 Section 5.10. Successor Trustee by Merger, Etc....................................... 37 Section 5.11. Corporate Trustee Required; Eligibility................................ 38 Section 5.12. Collection of Claims Against the Company............................... 38 ARTICLE 6 CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE........................... 38 Section 6.1. Company and America West May Consolidate, Etc., Only on Certain Terms... 38 Section 6.2. Successor Person Substituted............................................ 39 ARTICLE 7 AMENDMENTS, SUPPLEMENTS AND WAIVERS............................................ 39 Section 7.1. Without Consent of Holders of Securities................................ 39 iv Section 7.2. With Consent of Holders of Securities................................... 40 Section 7.3. Compliance with Trust Indenture Act..................................... 41 Section 7.4. Revocation of Consents and Effect of Consents or Votes.................. 41 Section 7.5. Notation on or Exchange of Securities................................... 42 Section 7.6. Trustee to Sign Amendment, Etc.......................................... 42 ARTICLE 8 MEETING OF HOLDERS OF SECURITIES............................................... 42 Section 8.1. Purposes for Which Meetings May Be Called............................... 42 Section 8.2. Call Notice and Place of Meetings....................................... 43 Section 8.3. Persons Entitled to Vote at Meetings.................................... 43 Section 8.4. Quorum; Action.......................................................... 43 Section 8.5. Determination of Voting Rights; Conduct and Adjournment of Meetings..... 44 Section 8.6. Counting Votes and Recording Action of Meetings......................... 45 ARTICLE 9 COVENANTS...................................................................... 45 Section 9.1. Payment of Principal and Interest....................................... 45 Section 9.2. Maintenance of Offices or Agencies...................................... 45 Section 9.3. Corporate Existence..................................................... 46 Section 9.4. Reports................................................................. 46 Section 9.5. Compliance Certificate.................................................. 46 ARTICLE 10 REDEMPTION OF SECURITIES...................................................... 47 Section 10.1. Provisional and Optional Redemption.................................... 47 Section 10.2. Notice to Trustee...................................................... 48 Section 10.3. Selection of Securities to Be Redeemed................................. 48 Section 10.4. Notice of Redemption................................................... 49 Section 10.5. Effect of Notice of Redemption......................................... 50 Section 10.6. Deposit and Payment of Redemption Price................................ 50 Section 10.7. Securities Redeemed in Part............................................ 51 ARTICLE 11 CONVERSION OF SECURITIES...................................................... 51 Section 11.1. Conversion Right; Expiration of Conversion Right; Conversion Price..... 51 Section 11.2. Exercise of Conversion Right........................................... 52 Section 11.3. Fractions of Shares.................................................... 53 v Section 11.4. Adjustment of Conversion Price......................................... 53 Section 11.5. Notice of Adjustments of Conversion Price.............................. 62 Section 11.6. Notice Prior to Certain Actions........................................ 63 Section 11.7. Company to Reserve Common Stock........................................ 64 Section 11.8. Common Stock to be Fully Paid and Nonassessable........................ 64 Section 11.9. Taxes on Conversions................................................... 64 Section 11.10. Cancellation of Converted Securities.................................. 64 Section 11.11. Effect of Reclassification, Consolidation, Merger or Sale............. 64 Section 11.12. Responsibility of Trustee for Conversion Provisions................... 66 ARTICLE 12 OTHER PROVISIONS OF GENERAL APPLICATION....................................... 66 Section 12.1. Trust Indenture Act Controls........................................... 66 Section 12.2. Notices................................................................ 66 Section 12.3. Communication by Holders with Other Holders............................ 67 Section 12.4. Acts of Holders of Securities.......................................... 67 Section 12.5. Certificate and Opinion as to Conditions Precedent..................... 68 Section 12.6. Statements Required in Certificate or Opinion.......................... 69 Section 12.7. Effect of Headings and Table of Contents............................... 69 Section 12.8. Successors and Assigns................................................. 69 Section 12.9. Separability Clause.................................................... 69 Section 12.10. Benefits of Indenture................................................. 69 Section 12.11. Governing Law......................................................... 70 Section 12.12. Counterparts.......................................................... 70 Section 12.13. Legal Holidays........................................................ 70 Section 12.14. Recourse Against Others............................................... 70

EXHIBITS EXHIBIT A: Form of Security.............................................. A-1 EXHIBIT B: Assignment Form............................................... B-1 EXHIBIT C: Form of Conversion Notice..................................... C-1 EXHIBIT D: Form of Registration Rights Agreement......................... D-1

vi INDENTURE, dated as of JANUARY 18, 2002 (this "INDENTURE"), between AMERICA WEST HOLDINGS CORPORATION, a corporation duly organized and existing under the laws of the State of Delaware, having its principal office at 111 West Rio Salado Parkway, Tempe, Arizona 85281 (the "COMPANY") and WILMINGTON TRUST COMPANY, a Delaware banking corporation, as Trustee and not in its individual capacity (the "TRUSTEE"), having its principal corporate trust office at Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890. RECITALS OF THE COMPANY The Company has duly authorized the creation of an issue of its 7.5% Convertible Senior Notes due 2009 to be issued in one or more series (the "SECURITIES") having the terms, tenor, amount and other provisions hereinafter set forth, and, to provide therefor, the Company has duly authorized the execution and delivery of this Indenture. All things necessary to make the Securities, when the Securities are duly executed by the Company and authenticated and delivered hereunder and duly issued by the Company, the valid obligations of the Company, and to make this Indenture a valid and binding agreement of the Company, in accordance with their and its terms, have been done. NOW, THEREFORE, THIS INDENTURE WITNESSETH: For and in consideration of the premises and the purchase of the Securities by the Holders (as defined below) thereof, it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders of the Securities or of series thereof, as follows: ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE SECTION 1.1. Definitions. For all purposes of this Indenture and the Securities, the following terms are defined as follows: "ACT", when used with respect to any Holder of a Security, has the meaning specified in Section 12.4(a). "AFFILIATE" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, "control", when used with respect to any specified Person, means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. "AGENT MEMBER" has the meaning specified in Section 2.8. "AMERICA WEST" shall mean America West Airlines, Inc., a wholly-owned Subsidiary of the Company. "BANKRUPTCY LAW" means Title 11 of the U.S. Bankruptcy Code of 1978, as amended, or any similar federal or state law for the relief of debtors. "BOARD OF DIRECTORS" means either the board of directors of the Company or any committee of that board empowered to act for it with respect to this Indenture. "BOARD RESOLUTION" means a resolution duly adopted by the Board of Directors, a copy of which, certified by the Secretary or an Assistant Secretary of the Company to be in full force and effect on the date of such certification, shall have been delivered to the Trustee. "BUSINESS DAY", when used with respect to any Place of Payment or Place of Conversion, means each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which banking institutions in that Place of Payment or Place of Conversion, as applicable, are authorized or obligated by law to close. "CAPITAL STOCK" means, with respect to any Person, any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents of or interests (however designated) in equity of such Person, whether now outstanding or issued after the date of this Indenture, including, without limitation, all common stock and preferred stock. "CLEARSTREAM" means Clearstream Banking, societe anonyme (formerly Cedelbank). "COMMISSION" means the Securities and Exchange Commission or any successor agency. "COMMON STOCK" means the Class B common stock, par value $0.01 per share, of the Company or shares of any class or classes resulting from any reclassification or reclassifications thereof and which have no preference in respect of dividends or of amounts payable in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company and which are not subject to redemption by the Company; provided that if at any time there shall be more than one such resulting class, the shares of each such class then so issuable shall be substantially in the proportion which the total number of shares of such class resulting from all such reclassifications bears to the total number of shares of all such classes resulting from all such reclassifications; further provided that all references to "Common Stock" in connection with adjustments to Conversion Price in Section 11.4 shall be deemed to include any class of common stock of the Company, including without limitation, Class B common stock or Class A common stock of the Company. "COMPANY" means the corporation named as the "Company" in the first paragraph of this instrument until a successor Person shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Company" shall mean such 2. successor Person. "COMPANY ORDER" means a written order signed in the name of the Company by any Officer and delivered to the Trustee. "CONVERSION AGENT" means any Person authorized by the Company to convert Securities in accordance with Article 11. Initially, the Conversion Agent shall be Wilmington Trust Company. "CONVERSION DATE" means, with respect to any Holder, the date on which such Holder has satisfied all the requirements to convert its Securities pursuant to Section 11.2. "CONVERSION PRICE" has the meaning specified in Section 11.1(c). "CONVERSION RECORD DATE" has the meaning specified in Section 11.4(g). "CORPORATE TRUST OFFICE" means for purposes of presentation or surrender of Securities for payment, registration, transfer, exchange or conversion or for service of notices or demands upon the Company or for any other purpose of this Indenture, the office of the Trustee located in City of Wilmington at which at any particular time its corporate trust business shall be administered, which at the date of this Indenture is located at Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890. "CORPORATION" means any corporation, association, limited liability company, company and business trust. "CURRENT MARKET PRICE" has the meaning specified in Section 11.4(g). "CUSTODIAN" means any receiver, trustee, assignee, liquidator, sequestrator or similar official under any Bankruptcy Law. "DEFAULT" means an event which is, or after notice or lapse of time or both would be, an Event of Default. "DEFAULTED PAYMENT" has the meaning specified in Section 4.1(a). "DEFAULTED INTEREST" has the meaning specified in Section 2.16. "DEPOSITARY" means The Depository Trust Company, its nominees and their respective successors. "DOLLAR" or "$" means a U.S. dollar or other equivalent unit in such coin or currency of the United States as at the time shall be legal tender for the payment of public and private debts. "EUROCLEAR" means Morgan Guaranty Trust Company of New York, Brussels 3. office, as operator of the Euroclear System. "EVENT OF DEFAULT" has the meaning specified in Section 4.1. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission thereunder. "EXPIRATION TIME" has the meaning specified in Section 11.4(f). "FAIR MARKET VALUE" has the meaning specified in Section 11.4(g). "GAAP" has the meaning specified in Section 1.3. "GLOBAL SECURITY" has the meaning specified in Section 2.2. "GUARANTY" has the meaning specified in Section 2.1(a). "HOLDER", when used with respect to any Security, including any Global Security, means the Person in whose name such Security is registered in the Register. "INDENTURE" means this instrument as originally executed or as it may from time to time be supplemented or amended by one or more indentures supplemental hereto entered into pursuant to the applicable provisions hereof. "INTEREST" means, with respect to any Security, the interest payable on such Security based upon the applicable Interest Rate and, if applicable, any Defaulted Interest. "INTEREST PAYMENT DATE" means each of June 1 and December 1, provided, however, that if any such date is not a Business Day, the Interest Payment Date shall be the next succeeding Business Day. "INTEREST RATE" has the meaning specified in Section 2.1(c). "LIQUIDATED DAMAGES" means liquidated damages paid to all holders of Registrable Securities (as defined in the Registration Rights Agreement attached hereto as Exhibit D (the "REGISTRATION RIGHTS AGREEMENT")) in accordance with the provisions of Section 3 of the Registration Rights Agreement. "MATURITY" means the date on which the Principal with respect to any Outstanding Security becomes due and payable as therein or herein provided, whether at the Stated Maturity or by acceleration, conversion, call for redemption, exercise of a purchase right or otherwise. "NASDAQ NATIONAL MARKET" means the National Association of Securities Dealers Automated Quotation National Market or any successor national securities exchange or automated over-the-counter trading market in the United States. "NON-ELECTING SHARE" has the meaning specified in Section 11.11. 4. "NOTICE DATE" has the meaning specified in Section 10.1(a). "OFFICER" of the Company means the Chairman of the Board, the Chief Executive Officer, the President, the Chief Financial Officer, the Treasurer, any Assistant Treasurer, any Vice President, the Secretary or any Assistant Secretary of the Company. "OFFICERS' CERTIFICATE" means, with respect to the Company, a certificate signed by both (1) the Chairman of the Board, the Chief Executive Officer, the President or a Vice President and (2) so long as not the same as the officer signing pursuant to clause (1), the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the Secretary or any Assistant Secretary of the Company and delivered to the Trustee. "OPINION OF COUNSEL" means a written opinion of counsel, who may be counsel to the Company (and may include directors or employees of the Company) and in form and substance acceptable to the Trustee, which acceptance shall not be unreasonably withheld. "ORIGINAL PRINCIPAL AMOUNT" has the meaning specified in Section 2.1(a). "OUTSTANDING", when used with respect to Securities, means, as of the date of determination, all Securities theretofore authenticated and delivered under this Indenture, except Securities: (i) previously canceled by the Trustee or delivered to the Trustee for cancellation; (ii) for the payment or redemption of which money in the necessary amount has been previously deposited with the Trustee or any Paying Agent (other than the Company) in trust or set aside and segregated in trust by the Company (if the Company shall act as its own Paying Agent) for the Holders of such Securities; provided, however, that if such Securities are to be redeemed, notice of such redemption has been duly given pursuant to this Indenture; (iii) which have been paid in exchange for or in lieu of other Securities which have been authenticated and delivered pursuant to this Indenture, other than any such Securities in respect of which there shall have been presented to the Trustee proof satisfactory to it that such Securities are held by a bona fide purchaser in whose hands such Securities are valid obligations of the Company; and (iv) which have been converted pursuant to Article 11; provided, however, that in determining whether the Holders of the requisite Principal amount of Outstanding Securities of all series are present at a meeting of Holders of Securities for quorum purposes or have consented to or voted in favor of any request, demand, authorization, direction, notice, consent, waiver, amendment or modification hereunder, Securities held for the account of the Company or of any of its Affiliates shall be disregarded and deemed not to be Outstanding, except that in determining whether the 5. Trustee shall be protected in making such a determination or relying upon any such quorum, consent or vote, only Securities which a Responsible Officer of the Trustee actually knows to be so owned shall be so disregarded. Securities so owned which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee's right so to act with respect to such Securities and that the pledgee is not the Company or any other obligor upon the Securities or an Affiliate of the Company or of such other obligor. "PAYING AGENT" has the meaning specified in Section 2.5. "PERIODIC OFFERING" means an offering of Securities of a series from time to time, the specific terms of which Securities, including, without limitation, the rate or rates of Interest thereon, the Stated Maturity or maturities thereof and the redemption provisions with respect thereto, are to be determined by the Company or its agents upon the issuance of such Securities. "PERSON" means any individual, corporation, limited liability company, partnership, joint venture, association, joint-stock company, trust, estate, unincorporated organization or government or any agency or political subdivision thereof, or any entity whatsoever. "PIK LOANS" has the meaning specified in Section 2.1(c). "PHYSICAL SECURITIES" means Securities issued in definitive, fully registered form without interest coupons, substantially in the form of Exhibit A hereto, with the applicable legend as provided in Section 2.3. "PLACE OF CONVERSION" means any city in which any Conversion Agent is located. "PLACE OF PAYMENT" means any city in which any Paying Agent is located. "PREDECESSOR SECURITY" of any particular Security, means every previous Security evidencing all or a portion of the same debt as that evidenced by such particular Security; and, for the purposes of this definition, any Security authenticated and delivered under Section 2.11 in exchange for or in lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to evidence the same debt as the mutilated, destroyed, lost or stolen Security. "PRINCIPAL" means, with respect to any Outstanding Security, the principal amount of that Security, including the Redemption Price, if applicable, payable with respect to that Security. "PROVISIONAL REDEMPTION" has the meaning specified in Section 10.1(a). "PROVISIONAL REDEMPTION DATE" has the meaning specified in Section 10.1(a). "PROVISIONAL REDEMPTION PRICE" has the meaning specified in Section 10.1(a). 6. "PURCHASED SHARES" has the meaning specified in Section 11.4(f). "REDEMPTION DATE", when used with respect to any Security to be redeemed, means the date fixed for such redemption by or pursuant to this Indenture. "REDEMPTION PRICE", when used with respect to any Security to be redeemed, means the price per Security at which such Security may be redeemed pursuant to Section 10.1. "REFERENCE PERIOD" has the meaning specified in Section 11.4(d). "REGISTER" has the meaning specified in Section 2.5. "REGISTRAR" has the meaning specified in Section 2.5. "REGULAR RECORD DATE" for the Interest payable on the Securities on any Interest Payment Date means May 15 and November 15 (whether or not a Business Day), as applicable, next preceding the corresponding Interest Payment Date. "RESPONSIBLE OFFICER", when used with respect to the Trustee, means any officer of the Trustee, including any vice president, assistant vice president, any treasurer, any assistant treasurer, any trust officer, or any other officer of the Trustee customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of such officer's knowledge of and familiarity with the particular subject. "RESTRICTED SECURITY" means any Security required pursuant to Section 2.3(d) to bear the Restricted Security Legend. "RESTRICTED SECURITY LEGEND" has the meaning specified in Section 2.3(c). "RESTRICTION TERMINATION DATE" means, with respect to any Security, the earlier of: (1) the date on which a Restricted Security has been sold pursuant to a registration statement that is effective under the Securities Act at the time of such sale; and (2) the date that is two years after the later of: (A) the issue date of such Security, or, in the case of Common Stock, the issue date of such Security upon the conversion of which such Common Stock was issued; and (B) the last date on which the Company or any "affiliate," as defined in Rule 144 (or successor provision) under the Securities Act, of the Company was the owner of such Security or Common Stock. "SECURITIES" has the meaning ascribed to it in the first paragraph under the caption "Recitals of the Company". 7. "SECURITIES ACT" means the Securities Act of 1933, as amended, and the rules and regulations of the Commission thereunder. "STATED MATURITY" has the meaning specified in Section 2.1. "SUBSIDIARY" means a corporation or other entity more than 50% of the outstanding Voting Stock of which is owned, directly or indirectly, by the Company or by one or more other Subsidiaries, or by the Company and one or more other Subsidiaries. "TIA" means the Trust Indenture Act of 1939, as amended (15 U.S. Code Section 77aaa-77bbbb), as in effect on the date of this Indenture; provided, however, that in the event the TIA is amended after such date, "TIA" means, to the extent required by such amendment, the Trust Indenture Act of 1939, as so amended, or any successor statute. "TRADING DAY" means: (1) if the applicable security is listed or admitted for trading on the New York Stock Exchange, a day on which the New York Stock Exchange is open for business; (2) if that security is not listed on the New York Stock Exchange, a day on which trades may be made on the Nasdaq National Market; (3) if that security is not so listed on the New York Stock Exchange and not quoted on the Nasdaq National Market, a day on which the principal U.S. securities exchange on which the securities are listed is open for business; or (4) if the applicable security is not so listed, admitted for trading or quoted, any day other than a Saturday or a Sunday or a day on which banking institutions in the State of New York are authorized or obligated by law or executive order to close. "TRADING PRICE" of a security on any date of determination means: (1) the closing sale price (or, if no closing sale price is reported, the last reported sale price) of such security (regular way) on the New York Stock Exchange on such date; (2) if such security is not listed for trading on the New York Stock Exchange on any such date, the closing sale price as reported in the composite transactions for the principal U.S. securities exchange on which such security is so listed; (3) if such security is not listed on a U.S. national or regional securities exchange, the closing sales price as reported by the Nasdaq National Market; (4) if such security is not so reported, the last price quoted by Interactive Data Corporation for such security on such date or, if Interactive Data 8. Corporation is not quoting such price, a similar quotation service selected by the Company; (5) if such security is not so quoted, the average of the mid-point of the last bid and ask prices for such security on such date from at least two dealers recognized as market-makers for such security selected by the Company for this purpose; (6) if such security is not so quoted, the average of that last bid and ask prices for such security on such date from a dealer engaged in the trading of convertible securities selected by the Company for this purpose; or (7) if such a dealer engaged in the trading of convertible securities is not available, the price determined in good faith by the Board of Directors of the Company (as evidenced by a Board Resolution by the Board of Directors) as the price that would be paid for all such securities in an arm's-length transaction between a willing buyer and a willing seller (neither acting under compulsion). "TRIGGER EVENT" has the meaning specified in Section 11.4(d). "TRUSTEE" means the Person named as the "Trustee" in the first paragraph of this instrument until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Trustee" shall mean such successor Trustee. "VICE PRESIDENT", when used with respect to the Company, means any vice president, whether or not designated by a number or a word or words added before or after the title "vice president". "VOTING STOCK" means with respect to any Person, Capital Stock of any class or kind ordinarily having the power to vote for the election of directors, managers or other voting members of the governing body of such Person. SECTION 1.2. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT. Whenever this Indenture refers to a provision of the TIA, the provision is incorporated by reference in and made a part of this Indenture. The following TIA terms used in this Indenture have the following meanings: "INDENTURE SECURITIES" means the Securities; "INDENTURE SECURITY HOLDER" means a Holder; "INDENTURE TO BE QUALIFIED" means this Indenture; "INDENTURE TRUSTEE" or "INSTITUTIONAL TRUSTEE" means the Trustee; and "OBLIGOR" on the Securities means the Company and any other obligor on the 9. indenture securities. All other TIA terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by Commission rule have the meanings assigned to them by such definitions. SECTION 1.3. RULES OF CONSTRUCTION. For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires: (1) the terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular; (2) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles in the United States prevailing at the time of any relevant computation hereunder ("GAAP"); (3) the words "herein", "hereof" and "hereunder" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision; and (4) all references to section and article numbers in this Indenture shall refer to sections and articles hereof, unless otherwise specified. ARTICLE 2 THE SECURITIES SECTION 2.1. TITLE AND TERMS; ISSUABLE IN SERIES. (a) The Securities shall be designated as the "7.5% Convertible Senior Notes due 2009" of the Company. The aggregate principal amount of Securities which may be authenticated and delivered under this Indenture is limited to $150 million (the "ORIGINAL PRINCIPAL AMOUNT"), except for Securities authenticated and delivered upon registration of, transfer of, or in exchange for, or in lieu of other Securities pursuant to Sections 2.7, 2.8, 2.11, 7.5, 10.7 or 11.2 hereof and any outstanding PIK Loans. The Securities shall be issuable in denominations of $1,000 or integral multiples thereof. The Securities may be issued in one or more series and the Securities of each such series shall rank equally and pari passu with the Securities of each other series. Notwithstanding any provision to the contrary, any future series of Securities established in or pursuant to a Board Resolution or a supplemental indenture will be on the same terms as the Securities issued hereunder in all respects other than the date of issuance. There shall be established in or pursuant to one or more Board Resolutions (and to the extent established pursuant to rather than set forth in a Board Resolution, in an Officers' Certificate detailing such establishment) or established in one or more indentures supplemental hereto, prior to the initial issuance of Securities of any series, 10. (1) the designation of the Securities of the series, which shall distinguish the Securities of the series from the Securities of all other series; (2) any limit upon the aggregate Principal amount of the Securities of the series that may be authenticated and delivered under this Indenture (except for Securities authenticated and delivered upon registration of, transfer of, or in exchange for, or in lieu of, other Securities of the series pursuant to Sections 2.7, 2.8, 2.11, 7.5, 10.7 or 11.2 hereof); (3) the date or dates on which the Principal of the Securities of the series is payable; (4) the rate or rates of which the Securities of the series shall bear Interest, if any, the date or dates from which such Interest shall accrue, on which a record shall be taken for the determination of Holders to whom interest is payable and/or the method by which such rate or rates or date or dates shall be determined; (5) the place or places where the Principal of and any Interest on Securities of the series shall be payable (if other than as provided in Section 2.05); (6) the right of the Company to redeem Securities, in whole or in part, at its option and the period or periods within which, the price or prices at which and any terms and conditions; (7) if the Holders of the Securities of the series may convert or exchange the Securities of the series into or for securities of the Company or of other entities or other property (or the cash value thereof), the specific terms of and period during which such conversion or exchange may be made; (8) any restrictions applicable to the offer, sale, transfer, exchange or delivery of Restricted Securities; (9) if the Securities of such series are to be issuable in definitive form (whether upon the original issue or upon exchange of a temporary Security of such series) only upon receipt of certain certificates or other documents or satisfaction of other conditions, the form and terms of such certificates, documents or conditions; (10) any trustee, depositaries, authenticating or paying agents, transfer agents or registrars or any other agents with respect to the Securities of such series; and (11) any other terms of the series. All Securities of any one series need not be issued at the same time and may be issued from time to time, consistent with the terms of this Indenture, if so provided by or 11. pursuant to such Board Resolution, such Officers' Certificate or in any such indenture supplemental hereto. (b) The Securities shall mature on January 18, 2009 (the "STATED MATURITY"). (c) The Original Principal Amount and the aggregate outstanding PIK Loans (as defined below) shall bear Interest from January 18, 2002 until repayment in full at Stated Maturity, or until such date on which the Securities are converted, redeemed or purchased as provided herein, at a rate of 7.5% per annum (the "INTEREST RATE"). The payment of the Original Principal Amount, any aggregate outstanding PIK Loans, premium, if any, Interest and Liquidated Damages, if any, is fully guaranteed by America West pursuant to the terms of a certain Guaranty, dated as of the date hereof (the "GUARANTY"), made by America West in favor of the Trustee and the Holders. Interest shall be payable semiannually in arrears on each Interest Payment Date, subject to the Company's option to pay Interest in PIK Loans on the first six (6) Interest Payment Dates only and subject to such other terms as are set forth in the Securities. For all purposes herein, (i) references to the Principal amount of the Securities at any time of determination shall be deemed to be references to the outstanding balance of the Original Principal Amount, premium, if any, and the aggregate outstanding PIK Loans at such time of determination and (ii) references to payments of Interest on the Securities for any period of determination shall be deemed to be references to the payment of Interest on the outstanding balance of the Original Principal Amount during such period and any aggregate outstanding PIK Loans during such period. For all purposes of the Securities and the Indenture, Interest due on the first six (6) Interest Payment Dates shall be payable, at the election of the Company, in either (1) the form of cash or (2) the form of a deemed loan which shall be in addition to the Original Principal Amount of the Securities and shall for all purposes be Principal evidenced by the Securities and entitled to the benefits of the Indenture (in each case, a "PIK LOAN"). Unless the Company shall have delivered an Officers' Certificate to the Trustee within three Business Days of the applicable Interest Payment Date stating that the Company elects to make a payment of Interest in cash, it shall be deemed to have elected to make such payment of Interest in the form of a PIK Loan. (d) Interest on the Securities shall be computed (i) for any full semiannual period for which a particular Interest Rate is applicable, on the basis of a 360-day year of twelve 30-day months and (ii) for any period for which a particular Interest Rate is applicable for less than a full semiannual period for which Interest is calculated, on the basis of a 30-day month and, for such periods of less than a month, the actual number of days elapsed over a 30-day month. (e) Subject to the Company's option to pay Interest in cash or PIK Loans and subject to such other terms as are set forth in the Securities, Interest shall be due and payable on a Security as follows: (1) A registered Holder of any Security as of the close of business on a Regular Record Date shall be entitled (except as otherwise indicated in this Section 2.1(e)) to receive and shall receive, as the registered Holder as of such Regular Record Date, accrued and unpaid Interest on such Security on the 12. corresponding Interest Payment Date (other than any Security whose Stated Maturity is prior to such Interest Payment Date, in which case Interest shall be paid on such Stated Maturity). (2) In the event that a Security becomes subject to redemption pursuant to Article 10 and the Redemption Date occurs after a Regular Record Date but before an Interest Payment Date, the Person whose Securities become subject to redemption (and only such Person rather than the Holder as of such Regular Record Date) shall be entitled to receive and shall receive accrued and unpaid Interest from the preceding Interest Payment Date (or such earlier date on which Interest was last paid) to but not including the Redemption Date on such Security, even if such person is not the Holder of such Security. (3) In the event that a Security is converted pursuant to Article 11, the Holder who converts such Security on any date other than an Interest Payment Date shall be entitled to accrued and unpaid Interest from the preceding Interest Payment Date until the Conversion Date, or otherwise, on such Security. (f) Payment of any Principal of (to the extent paid in cash) and Interest on Global Securities shall be payable by the Company to the Depositary in immediately available funds. (g) Payment of any Principal on Physical Securities shall be made at the office or agency of the Company maintained for such purpose, initially the Corporate Trust Office of the Trustee. Payments of cash Interest on Physical Securities will be payable by (i) a U.S. Dollar check drawn on a bank in the City of Tempe mailed to the address of the Person entitled thereto as such address shall appear in the Register, or (ii) upon application to the Registrar not later than the relevant record date by a Holder of a Principal amount of Securities in excess of $2,000,000, wire transfer in immediately available funds, which application shall remain in effect until the Holder notifies, in writing, the Registrar to the contrary. (h) The Securities may be redeemable at the option of the Company as provided in and subject to Article 10. (i) The Securities shall be convertible at the option of the Holders as provided in and subject to Article 11. SECTION 2.2. FORM OF SECURITIES. (a) The Securities of each series are issuable in fully registered form, without coupons, in denominations of $1,000 and integral multiples of $1,000 above that amount, with applicable legends as are provided for in Section 2.3 and in the form which is contained in Exhibit A hereto (each a "PHYSICAL SECURITY" and, collectively, the "PHYSICAL SECURITY" and, if such a Physical Security is issued in the name of the Depositary, each a "GLOBAL SECURITY" and, collectively, the "GLOBAL SECURITIES") or as shall be established by or pursuant to one or more Board Resolutions (as set forth in a Board Resolution or, to the extent established pursuant to rather than set forth in a Board Resolution, an Officers' Certificate detailing such establishment) or in one or more indentures supplemental hereto, in each case with such appropriate insertions, 13 omissions, substitutions and other variations as are required or permitted by this Indenture and may have imprinted or otherwise reproduced thereon such legend or legends or endorsements, not inconsistent with the provisions of this Indenture, as may be required to comply with any law or with any rules or regulations pursuant thereto, or with any rules of any securities exchange or to conform to general usage, all as may be determined by the Officers executing such Security, as evidenced by their execution of such Security. The Securities are not issuable in bearer form. The terms and provisions contained in the form of Security shall constitute, and are hereby expressly made, a part of this Indenture and to the extent applicable, the Company, and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby. The Securities of each series shall be numbered, lettered or otherwise distinguished in such manner or in accordance with such plan as the Officers of the Company executing the same may determine. (b) By acceptance of a Restricted Security, each Holder, or beneficial owner thereof, represents and agrees for the benefit of the Company and America West that (1) it is (A) a Qualified Institutional Buyer within the meaning of Rule 144A, or (B) an "accredited investor" as defined in Rule 501(a) under the Securities Act and is holding this Security for investment purposes and not for distribution in violation of the Securities Act, (2) acknowledges that such Restricted Security, and the shares of Common Stock issuable upon conversion of such Restricted Security, have not been registered under the Securities Act or under any state securities laws, and (3) agrees that the Restricted Security must be held indefinitely unless subsequently registered under the Securities Act or unless an exemption from the registration requirements of the Securities Act is available. (c) If Securities are issued upon the transfer, exchange or replacement of Restricted Securities, or if a request is made to remove the Restricted Security Legend from a Restricted Security, such Security so issued shall bear the Restricted Security Legend, or the Restricted Security Legend shall not be removed, as the case may be, and such Security shall be a Restricted Security unless there is delivered to the Company and the Registrar such satisfactory evidence, which shall include a written opinion from counsel of the Holder requesting such transfer, exchange or replacement or the removal of the Restricted Security Legend, as the case may be, as may be reasonably required by the Company and the Registrar, that neither such legend nor the restrictions on transfer set forth therein are required to ensure that transfers thereof comply with the provisions of the Securities Act. Upon (i) provision of such satisfactory evidence, or (ii) notification by the Company to the Trustee and Registrar of the sale of such Security pursuant to a registration statement that is effective under the Securities Act at the time of such sale, the Trustee, at the written direction of the Company, shall authenticate and deliver a Security that does not bear the Restricted Security Legend. If the Restricted Security Legend is removed from the face of a Security and such Security is subsequently held by an Affiliate of the Company, the Company shall (a) inform the Trustee of such transfer, and (b) cause such Affiliate to deliver such Security to the Trustee for reinsertion of the Restricted Security Legend. SECTION 2.3. SECURITY LEGEND. (a) Global Security Legend. Each Global Security shall bear the following legend on the face thereof: 14 "UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO. HAS AN INTEREST HEREIN. THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY DTC OR BY A NOMINEE OF DTC TO DTC OR ANOTHER NOMINEE OF DTC OR BY DTC OR ANY SUCH NOMINEE TO A SUCCESSOR OF DTC OR A NOMINEE OF SUCH SUCCESSOR. THE FOREGOING LEGEND MAY BE REMOVED FROM THIS SECURITY ON SATISFACTION OF THE CONDITIONS SPECIFIED IN THE INDENTURE." (b) Legend for Physical Securities. Physical Securities will also bear a legend substantially in the following form: THIS SECURITY WILL NOT BE ACCEPTED IN EXCHANGE FOR A BENEFICIAL INTEREST IN A GLOBAL SECURITY UNLESS THE HOLDER OF THIS SECURITY, SUBSEQUENT TO SUCH EXCHANGE, WILL HOLD EITHER (A) NO SECURITIES OR (B) A MINIMUM AGGREGATE BENEFICIAL INTEREST IN THE SECURITIES OF AT LEAST (I) TWO HUNDRED FIFTY THOUSAND DOLLARS ($250,000), IF SUCH HOLDER IS A NON-INSTITUTIONAL ACCREDITED INVESTOR, OR (II) ONE HUNDRED THOUSAND DOLLARS ($100,000), IF SUCH HOLDER IS AN INSTITUTIONAL ACCREDITED INVESTOR. THE FOREGOING LEGEND MAY BE REMOVED FROM THIS SECURITY ON SATISFACTION OF THE CONDITIONS SPECIFIED IN THE INDENTURE." (c) Legend for Restricted Securities. Restricted Securities will also bear a legend substantially in the following form (the "RESTRICTED SECURITY LEGEND"): "EACH BENEFICIAL OWNER OF AN INTEREST IN ANY OF THE SECURITIES EVIDENCED BY THIS SECURITY (INCLUDING ANY 15 PARTICIPANT IN THE DEPOSITARY HOLDING THIS SECURITY THAT IS SHOWN AS HOLDING SUCH AN INTEREST ON THE RECORDS OF SUCH DEPOSITARY AND EACH BENEFICIAL OWNER THAT HOLDS THROUGH ANY SUCH PARTICIPANT) AGREES FOR THE BENEFIT OF AMERICA WEST HOLDINGS CORPORATION (THE "COMPANY") AND AMERICA WEST AIRLINES, INC. ("AMERICA WEST") THAT THIS SECURITY, ANY GUARANTEES THEREOF, AND ANY COMMON STOCK ISSUABLE UPON CONVERSION OF THIS SECURITY MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED (X) PRIOR TO THE SECOND ANNIVERSARY (OR SUCH SHORTER PERIOD AS MANY THEN BE APPLICABLE UNDER THE SECURITIES ACT REGARDING THE HOLDING PERIOD FOR NOTES OR THE COMMON STOCK ISSUABLE UPON CONVERSION THEREOF UNDER RULE 144(K) OF THE SECURITIES ACT OR ANY SUCCESSOR RULE) OF THE ISSUANCE HEREOF OR (Y) BY ANY HOLDER THAT WAS AN AFFILIATE OF THE COMPANY OR AMERICA WEST AT ANY TIME DURING THE THREE MONTHS PRECEDING THE DATE OF SUCH TRANSFER, IN EITHER CASE OTHER THAN (1) TO THE COMPANY, (2) SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A") TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE OFFER, SALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (3) TO AN INSTITUTION THAT IS AN "ACCREDITED INVESTOR" AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS ACQUIRING THIS SECURITY FOR INVESTMENT PURPOSES AND NOT FOR DISTRIBUTION, (4) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 (IF APPLICABLE) UNDER THE SECURITIES ACT, (5) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, OR (6) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR OTHER JURISDICTION. EACH BENEFICIAL OWNER OF AN INTEREST IN ANY OF THE SECURITIES EVIDENCED BY THIS SECURITY AGREES THAT IT WILL FURNISH TO THE COMPANY AND THE TRUSTEE SUCH CERTIFICATES AND OTHER INFORMATION AS THEY MAY REASONABLY REQUIRE TO CONFIRM THAT ANY TRANSFER BY IT OF THIS SECURITY COMPLIES WITH THE FOREGOING RESTRICTIONS. EACH BENEFICIAL OWNER WILL, AND EACH SUBSEQUENT BENEFICIAL OWNER OF AN INTEREST IN ANY OF THE SECURITIES EVIDENCED BY THIS SECURITY IS REQUIRED TO, NOTIFY ANY PURCHASER OF ANY BENEFICIAL INTEREST IN THE SECURITIES OR SUCH COMMON STOCK ISSUABLE UPON CONVERSION OF THE SECURITIES FROM IT OF THE RESALE RESTRICTIONS REFERRED TO ABOVE. 16 THE BENEFICIAL HOLDER OF AN INTEREST IN ANY OF THE SECURITIES EVIDENCED BY THIS SECURITY, BY PURCHASING THIS SECURITY (1) REPRESENTS AND AGREES FOR THE BENEFIT OF THE COMPANY AND AMERICA WEST THAT IT IS (A) A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A, OR (B) AN "ACCREDITED INVESTOR" AS DEFINED IN RULE 501(A) UNDER THE SECURITIES ACT AND IS HOLDING THIS SECURITY FOR INVESTMENT PURPOSES AND NOT FOR DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, AND (2) ACKNOWLEDGES THAT THE SECURITIES AND THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF SUCH SECURITY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OR UNDER ANY STATE SECURITIES LAWS." (d) Until the Restriction Termination Date, all Global Securities and all Physical Securities shall bear the Restricted Security Legend, unless such Securities have been transferred pursuant to a registration statement that has been declared effective under the Securities Act. Until the Restriction Termination Date, the Company covenants that any stock certificate representing shares of Common Stock delivered by the Company upon conversion of any Securities will bear the Restricted Security Legend, unless such shares have been sold pursuant to a registration statement that has been declared effective under the Securities Act. SECTION 2.4. EXECUTION, AUTHENTICATION, DELIVERY AND DATING OF THE SECURITIES. (a) Two Officers shall execute the Securities on behalf of the Company by manual or facsimile signature. Securities bearing the manual or facsimile signatures of individuals who were at the time of the execution of the Securities the proper Officers of the Company shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Securities or did not hold such offices at the date of authentication of such Securities. (b) At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Securities executed by the Company to the Trustee for authentication, together with a Company Order for the authentication and delivery of such Securities, and the Trustee in accordance with such Company Order shall authenticate and deliver such Securities as in this Indenture provided and not otherwise. With respect to Securities of a series subject to a Periodic Offering, (i) such Company Order may be delivered by the Company to the Trustee prior to the delivery to the Trustee of such Securities for authentication and delivery, (ii) the Trustee shall authenticate and deliver Securities of such series for original issue from time to time, up to an aggregate Principal amount as provided in Section 2.4(c), pursuant to an Company Order, and (iii) the maturity date or dates, original issue date or dates, interest rate or rates and any other terms of Securities of such series shall be determined by a Company Order. No Security shall be entitled to any benefit under this Indenture, or be valid or obligatory for any purpose, unless there appears on such Security a certificate of authentication substantially in the form provided for herein executed by or on behalf of the Trustee by manual signature, and such certificate upon any Security shall be 17 conclusive evidence, and the only evidence, that such Security has been duly authenticated and delivered hereunder. The Trustee may appoint an authenticating agent or agents reasonably acceptable to the Company with respect to the Securities. Unless limited by the terms of such appointment, an authenticating agent may authenticate Securities whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. (c) Each Security shall be dated the date of its authentication. The Trustee shall authenticate and deliver Securities for original issue in an aggregate principal amount of up to $150 million, upon one or more Company Orders without any further action by the Company. The aggregate Principal amount of Securities Outstanding at any time may not exceed the sum of the amount set forth in the foregoing sentence and any outstanding PIK Loans. SECTION 2.5. REGISTRAR AND PAYING AGENT. The Company shall maintain an office or agency where Securities may be presented for registration of transfer or for exchange (the "REGISTRAR") and an office or agency where Securities may be presented for payment (the "PAYING AGENT"). The Registrar shall keep a register of the Securities (the "REGISTER") and of their transfer and exchange. The Company may appoint one or more co-Registrars and one or more additional Paying Agents for the Securities. The term "Paying Agent" includes any additional paying agent and the term "Registrar" includes any additional registrar. The Company will cause each Paying Agent (other than the Trustee) to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this Section, that such Paying Agent will: (1) hold all sums of money or Common Stock held by it for the payment of any amounts due and payable in respect of the Securities in trust for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of as provided in this Indenture; (2) give the Trustee notice of any Default by the Company in the making of any such payment; and (3) at any time during the continuance of any such Default, upon the written request of the Trustee, forthwith pay to the Trustee all sums so held in trust by such Paying Agent. The Company shall give prompt written notice to the Trustee of the name and address of any Paying Agent who is not a party to this Indenture. If the Company fails to appoint or maintain another entity as Registrar or Paying Agent, the Trustee shall act as such. The Company or any Affiliate of the Company may act as Paying Agent or Registrar; provided, however, that none of the Company, its subsidiaries or the Affiliates of the foregoing shall act: (1) as Paying Agent in connection with redemptions, offers to purchase and discharges, except as otherwise specified in this Indenture, and 18 (2) as Paying Agent or Registrar if a Default or Event of Default has occurred and is continuing. The Company hereby initially appoints the Trustee as Registrar and Paying Agent for the Securities. SECTION 2.6. PAYING AGENT TO HOLD ASSETS IN TRUST. Not later than 2:00 p.m. (New York time) on or prior to each due date of payments in respect of any Security, the Company shall deposit with one or more Paying Agents a sum of money in immediately available funds or Common Stock (or PIK Loans to the extent permitted herein) sufficient to make such payments when so becoming due. The Company at any time may require a Paying Agent to pay all money or Common Stock (or PIK Loans to the extent permitted herein) held by it to the Trustee. Upon payment over to the Trustee, the Paying Agent (if other than the Company) shall have no further liability for the money or Common Stock (or PIK Loans to the extent permitted herein) so paid over to the Trustee. The Company shall require each Paying Agent (other than the Trustee) to agree in writing that the Paying Agent shall hold in trust for the benefit of Holders or the Trustee all money and Common Stock (or PIK Loans to the extent permitted herein) held by the Paying Agent for the making of payments in respect of the Securities and shall notify the Trustee of any Default by the Company in making any such payment. At any time during the continuance of any such Default, the Paying Agent shall, upon the written request of the Trustee, forthwith pay to the Trustee all money and Common Stock (or PIK Loans to the extent permitted herein) so held in trust. If the Company shall act as a Paying Agent, it shall, prior to or on each such due date, segregate and hold in trust for the benefit of the Holders a sum sufficient with monies held by all other Paying Agents, to pay such amounts so becoming due until such sums shall be paid to such Persons or otherwise disposed of as provided in this Indenture, and shall promptly notify the Trustee of its action or failure to act. SECTION 2.7. GENERAL PROVISIONS RELATING TO REGISTRATION, TRANSFER AND EXCHANGE. (a) The Securities are issuable only in registered form. A Holder may transfer a Security only by written application to the Registrar, the form of which is provided in Exhibit B, stating the name of the proposed transferee and otherwise complying with the terms of this Indenture. No such transfer shall be effected until, and such transferee shall succeed to the rights of a Holder only upon, final acceptance and registration of the transfer by the Registrar in the Register. Furthermore, any Holder of a Global Security shall, by acceptance of such Global Security, agree that transfers of beneficial interests in such Global Security may be effected only through a book-entry system maintained by the Holder of such Global Security (or its agent) and that ownership of a beneficial interest in such Global Security shall be required to be reflected in a book-entry. When Securities are presented to the Registrar with a request to register the transfer or to exchange them for an equal Principal amount of Securities of other authorized 19 denominations, the Registrar shall register the transfer or make the exchange as requested if the requirements hereunder for such transactions are met (including that such Securities are duly endorsed or accompanied by a written instrument of transfer duly executed by the Holder thereof or by an attorney who is authorized in writing to act on behalf of the Holder). Subject to Section 2.4, to permit registrations of transfers and exchanges, the Company shall execute and the Trustee shall authenticate Securities at the Registrar's request. No service charge shall be made for any registration of transfer or exchange or redemption of the Securities, but the Company may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than any such transfer taxes or other similar governmental charge payable upon exchanges pursuant to Sections 2.14, 7.5 or 10.7). Neither the Company nor the Registrar shall be required to exchange or register a transfer of any Securities: (1) for a period of 15 days prior to the day of any selection of Securities for redemption under Article 10 hereof; (2) so selected for redemption or, if a portion of any Security is selected for redemption, such portion thereof selected for redemption; or (3) surrendered for conversion or, if a portion of any Security is surrendered for conversion, such portion thereof surrendered for conversion. (b) Upon their original issuance, the Securities shall be Restricted Securities, shall bear the Restricted Security Legend and shall be issued in the form of a Global Security registered in the name of the Depositary or its nominee and deposited with the Trustee, as custodian for the Depositary, for credit by the Depositary to the respective accounts of beneficial owners of Securities represented thereby (or such other accounts as they may direct). SECTION 2.8. BOOK-ENTRY PROVISIONS FOR THE GLOBAL SECURITIES. (a) The Global Securities initially shall: (1) be registered in the name of the Depositary; and (2) be delivered to the Trustee as custodian for such Depositary, for credit to the accounts of the members of, participants in, the Depositary (the "AGENT MEMBERS") holding the Securities evidenced thereby (or in the case of Securities held for purchasers who acquired such Securities, registered with the Depositary for credit to the accounts of the Agent Members then holding such Securities on behalf of Euroclear or Clearstream, as applicable). Agent Members shall have no rights under this Indenture with respect to any Global Security held on their behalf by the Depositary, or the Trustee as its custodian, or under such Global Security, and the Depositary may be treated by the Company, the Trustee and any agent of the Company or the Trustee as the absolute owner of such Global Security for all purposes whatsoever. Notwithstanding the foregoing, nothing contained herein shall prevent the 20 Company, the Trustee or any agent of the Company or Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depositary or impair, as between the Depositary and the Agent Members, the operation of customary practices governing the exercise of the rights of a Holder of any Security. With respect to any Global Security deposited on behalf of the subscribers for the Securities represented thereby with the Trustee as custodian for the Depositary for credit to their respective accounts (or to such other accounts as they may direct) at Euroclear or Clearstream, the provisions of the "Operating Procedures of the Euroclear System" and the "Terms and Conditions Governing Use of Euroclear" and the "Management Regulations" and "Instructions to Participants" of Clearstream, respectively, shall be applicable to the Global Securities. (b) The registered Holder of a Global Security may grant proxies and otherwise authorize any Person, including Agent Members and Persons that may hold interests through Agent Members, to take any action which a Holder is entitled to take under this Indenture or the Securities. (c) A Global Security may not be transferred, in whole or in part, to any Person other than the Depositary, and no such transfer to any such other Person may be registered. Beneficial interests in a Global Security may be transferred in accordance with the rules and procedures of the Depositary. (d) If at any time: (1) the Depositary notifies the Company in writing that it is no longer willing or able to continue to act as Depositary for the Global Securities, or the Depositary ceases to be a "clearing agency" registered under the Exchange Act and a successor depositary for the Global Securities is not appointed by the Company within 90 days of such notice or cessation; (2) the Company, at its option, notifies the Trustee in writing that it elects to cause the issuance of the Physical Securities under this Indenture in exchange for all or any part of the Securities represented by a Global Security or Global Securities; or (3) an Event of Default has occurred and is continuing and the Registrar has received a request from the Depositary for the issuance of Physical Securities in exchange for such Global Security or Global Securities, then the Depositary shall surrender such Global Security or Global Securities to the Trustee for cancellation and the Company shall execute, and the Trustee, upon receipt of an Officers' Certificate and Company Order for the authentication and delivery of Securities, shall authenticate and deliver in exchange for such Global Security or Global Securities, Physical Securities in an aggregate Principal amount equal to the aggregate Principal amount of such Global Security or Global Securities. Such Physical Securities shall be registered in such names as the Depositary shall identify in writing as the beneficial owners of the Securities represented by such Global Security or Global Securities (or any nominee thereof). 21 (e) Notwithstanding the foregoing, in connection with any transfer of beneficial interests in a Global Security to the beneficial owners thereof pursuant to Section 2.8(d) hereof, the Registrar shall reflect on its books and records the date and a decrease in the aggregate Principal amount of such Global Security in an amount equal to the aggregate Principal amount of the beneficial interest in such Global Security to be transferred. SECTION 2.9. HOLDER LISTS. The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of Holders and shall otherwise comply with Section 312(a) of the TIA. If the Trustee is not the Registrar, the Company shall furnish to the Trustee prior to or on each Interest Payment Date and at such other times as the Trustee may request in writing a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of Holders relating to such Interest Payment Date or request, as applicable. SECTION 2.10. PERSONS DEEMED OWNERS. Prior to due presentment of a Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name such Security is registered as the owner of such Security for the purpose of receiving payment of Principal of such Security or the payment of any Redemption Price in respect thereof and Interest thereon, if any, for any purpose under this Indenture, whether or not such Security be overdue, and neither the Company, the Trustee nor any agent of the Company or the Trustee shall be affected by notice to the contrary. SECTION 2.11. MUTILATED, DESTROYED, LOST OR STOLEN SECURITIES. If any mutilated Security is surrendered to the Trustee, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a new Security of like tenor and aggregate Principal amount and bearing a number not contemporaneously outstanding. If there is delivered to the Company and the Trustee (1) evidence to their satisfaction of the destruction, loss or theft of any Security, and (2) such security or indemnity as may be required by them to save each of them and any agent of either of them harmless, then, in the absence of actual notice to the Company or the Trustee that such Security has been acquired by a protected purchaser (as defined in Section 8-303 of the New York Uniform Commercial Code), the Company shall execute and, upon request, the Trustee shall authenticate and deliver, in lieu of any such destroyed, lost or stolen Security, a new Security of like tenor and Principal amount, and bearing a number not contemporaneously outstanding. In case any such mutilated, destroyed, lost or stolen Security has become or is about to become due and payable, the Company in its discretion, but subject to any conversion 22 rights, may, instead of issuing a new Security, pay such Security, upon satisfaction of the condition set forth in the preceding paragraph. Upon the issuance of any new Security under this Section, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith. Every new Security issued pursuant to this Section 2.11 in lieu of any destroyed, lost or stolen Security shall constitute an original contractual obligation of the Company, whether or not the destroyed, lost or stolen Security shall be at any time enforceable by anyone, and such new Security shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Securities duly issued hereunder. The provisions of this Section 2.11 are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities. SECTION 2.12. TREASURY SECURITIES. In determining whether the Holders of the requisite Principal amount of Outstanding Securities are present at a meeting of Holders for quorum purposes or have consented to or voted in favor of any request, demand, authorization, direction, notice, consent, waiver, amendment or modification hereunder, Securities held for the account of the Company or any Affiliate of the Company shall be disregarded and deemed not to be Outstanding, except that, in determining whether the Trustee shall be protected in making such a determination or relying upon any such quorum, request, demand, authorization, direction, notice, consent or waiver, only such Securities of which a Responsible Officer of the Trustee actually knows to be so owned shall be so disregarded. SECTION 2.13. TEMPORARY SECURITIES. Pending the preparation of Securities in definitive form, the Company may execute and the Trustee shall, upon written request of the Company, authenticate and deliver temporary Securities (printed or lithographed). Temporary Securities shall be issuable in any authorized denomination, and substantially in the form of the Securities in definitive form but with such omissions, insertions and variations as may be appropriate for temporary Securities, all as may be determined by the Company. Every such temporary Security shall be executed by the Company and authenticated by the Trustee upon the same conditions and in substantially the same manner, and with the same effect, as the Securities in definitive form. Without unreasonable delay, the Company will execute and deliver to the Trustee Securities in definitive form (other than in the case of Securities in global form) and thereupon any or all temporary Securities (other than any such Securities in global form) may be surrendered in exchange therefor, at each office or agency maintained by the Company pursuant to Section 9.2 and the Trustee shall authenticate and deliver in exchange for such temporary Securities an equal Principal amount of Securities in definitive form. Such exchange shall be made by the Company at its own expense and without any charge therefor. Until so exchanged, the temporary 23 Securities shall in all respects be entitled to the same benefits and subject to the same limitations under this Indenture as Securities in definitive form authenticated and delivered hereunder. SECTION 2.14. CANCELLATION. All Securities surrendered for payment, redemption, purchase, conversion, registration of transfer or exchange shall, if surrendered to any Person other than the Trustee, be delivered to the Trustee. All Securities so delivered shall be canceled promptly by the Trustee, and no Securities shall be issued in lieu thereof except as expressly permitted by any of the provisions of this Indenture. Upon written instructions of the Company, the Trustee shall dispose of canceled Securities in accordance with its procedures for the disposition of cancelled securities in effect as of the date of such disposition. If the Company shall acquire any of the Securities, such acquisition shall not operate as a redemption or satisfaction of the indebtedness represented by such Securities unless the same are delivered to the Trustee for cancellation. SECTION 2.15. CUSIP NUMBERS. The Company in issuing the Securities may use "CUSIP" numbers (if then generally in use), and in such event the Trustee shall use CUSIP numbers in notices of redemption or exchange as a convenience to Holders; provided that any such notice shall state that no representation is made as to the correctness of such numbers either as printed on the Securities or as contained in any such notice and that reliance may be placed only on the other identification numbers printed on the Securities, and any such redemption shall not be affected by any defect in or omission of such numbers. The Company shall promptly notify the Trustee of any change in the CUSIP numbers. SECTION 2.16. DEFAULTED INTEREST. If the Company fails to make a payment of Principal of or Interest on any Security when due and payable, it shall pay such Interest on such amounts (to the extent lawful), which shall be calculated using the applicable Interest Rate (such amounts, the "DEFAULTED INTEREST"). It may elect to pay such Defaulted Interest, plus any other Interest payable on it, to the Persons who are Holders on which the Interest is due on a subsequent special record date. The Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each such Security. The Company shall fix any such special record date and payment date for such payment. At least 15 days before any such special record date, the Company shall mail to Holders affected thereby a notice that states the special record date, the interest payment date and amount to be paid. ARTICLE 3 DISCHARGE OF INDENTURE SECTION 3.1. Discharge of Liability on Securities. When (i) the Company delivers to the Trustee all outstanding Securities (other than Securities replaced pursuant to Section 2.11) for cancellation or (ii) all outstanding Securities have become due and payable at their scheduled maturity within one year or all outstanding Securities are scheduled for redemption within one year and the Company deposits with the Trustee cash or, in the event of a 24 conversion pursuant to Article 11, Common Stock, sufficient to pay all amounts due and owing on all outstanding Securities on the date of their scheduled maturity or the scheduled date of redemption (other than Securities replaced pursuant to Section 2.11), and if in either case the Company pays all other sums payable hereunder by the Company, then this Indenture shall, subject to Section 5.8, cease to be of further effect (except as to any surviving rights of conversion, registration or transfer or exchange of any Security expressly provided for herein or in the terms of such Security). The Trustee shall join in the execution of a document prepared by the Company acknowledging satisfaction and discharge of this Indenture on demand of the Company accompanied by an Officers' Certificate and at the cost and expense of the Company. SECTION 3.2. Repayment to the Company. The Trustee and the Paying Agent shall return to the Company upon written request any money or securities held by them for the payment of any amount with respect to the Securities that remains unclaimed for two years, subject to applicable unclaimed property law. After return to the Company, Holders entitled to the money or securities must look to the Company for payment as general creditors unless an applicable abandoned property law designates another person and the Trustee and the Paying Agent shall have no further liability to the Holders with respect to such money or securities for that period commencing after the return thereof. ARTICLE 4 DEFAULTS AND REMEDIES SECTION 4.1. EVENTS OF DEFAULT. An "EVENT OF DEFAULT", wherever used herein, means any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body): (a) the Company defaults in the payment of the Principal amount (a "DEFAULTED PAYMENT") on any Outstanding Security when the same becomes due and payable at its Stated Maturity, upon redemption or exercise of a repurchase right or otherwise; (b) the Company defaults in the payment of an installment of Interest (including Liquidated Damages, if any) on any Security when it becomes due and payable and such default continues for a period of 30 days; (c) the Company fails to perform or observe any other term, covenant or agreement contained in the Securities or this Indenture and the default continues for a period of 60 days after written notice of such failure, requiring the Company to remedy the same, shall have been given to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 25% in aggregate of the Principal amount of the Outstanding Securities; (d) any indebtedness under any bond, debenture, note or other evidence of indebtedness for money borrowed by the Company or America West or under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any indebtedness for money borrowed by the Company or America West with a 25 principal amount then outstanding in excess of U.S. $75,000,000, whether such indebtedness now exists or shall hereafter be created, is not paid at final maturity thereof (either at its stated maturity or upon acceleration thereof), and such indebtedness is not discharged, or such acceleration is not rescinded or annulled, within a period of 60 days after there shall have been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 25% in aggregate Principal amount of the Outstanding Securities a written notice specifying such default and requiring the Company to cause such indebtedness to be discharged or cause such default to be cured or waived or such acceleration to be rescinded or annulled and stating that such notice is a "Notice of Default" hereunder; (e) the Guaranty ceases to be in full force and effect (other than in accordance with its terms) or America West denies or disaffirms its obligations under the Guaranty; (f) the entry by a court having jurisdiction in the premises of (i) a decree or order for relief in respect of the Company or America West in an involuntary case or proceeding under any applicable U.S. federal or state bankruptcy, insolvency, reorganization or other similar law or (ii) a decree or order adjudging the Company or America West bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the Company or America West under any applicable U.S. federal or state law, or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or America West or of any substantial part of their respective property, or ordering the winding up or liquidation of their respective affairs, and the continuance of any such decree or order for relief or any such other decree or order unstayed and in effect for a period of 60 consecutive days; or (g) the commencement by the Company or America West of a voluntary case or proceeding under any applicable U.S. federal or state bankruptcy, insolvency, reorganization or other similar law or of any other case or proceeding to be adjudicated a bankrupt or insolvent, or the consent by the Company or America West to the entry of a decree or order for relief in respect of the Company or America West in an involuntary case or proceeding under any applicable U.S. federal or state bankruptcy, insolvency, reorganization or other similar law or to the commencement of any bankruptcy or insolvency case or proceeding against the Company or America West, or the filing by the Company or America West of a petition or answer or consent seeking reorganization or relief under any applicable U.S. federal or state law, or the consent by the Company or America West to the filing of such petition or to the appointment of or the taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or America West or of any substantial part of their respective property, or the making by the Company or America West of an assignment for the benefit of creditors, or the admission by the Company or America West in writing of either of their inability to pay their respective debts generally as they become due, or the taking of corporate action by the Company or America West expressly in furtherance of any such action. A Default under clause (c) above is not an Event of Default until the Trustee notifies the Company, or the Holders of at least 25% in aggregate of the Principal amount of the Securities at the time outstanding notify the Company and the Trustee, of the Default and the Company does not cure such Default (and such Default is not waived) within the time specified in clause (c) above after such notice has been given. Any such notice must specify the Default, 26 demand that it be remedied and state that such notice is a "Notice of Default". The Trustee shall, within 90 days of the occurrence of a Default, give to the Holders of the Securities notice of all uncured Defaults known to it and written notice of any event which with the giving of notice or the lapse of time, or both, would become an Event of Default, its status and what action the Company is taking or proposes to take with respect thereto; provided, however, the Trustee shall be protected in withholding such notice if it, in good faith, determines that the withholding of such notice is in the best interest of such Holders, except in the case of a Default in the payment of the Principal of or Interest on any of the Securities when due or in the payment of any redemption. SECTION 4.2. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT. If an Event of Default with respect to Outstanding Securities (other than an Event of Default specified in Section 4.1(f) or 4.1(g) hereof) occurs and is continuing, (1) the Trustee, upon the written direction of the Holders of at least 25% in aggregate Principal amount of the Outstanding Securities, or (2) the Holders of at least 25% in aggregate Principal amount of the Outstanding Securities, by written notice to the Company, may declare due and payable 100% of the Principal amount of all Outstanding Securities, plus any accrued and unpaid Interest to the date of payment. Upon a declaration of acceleration, such Principal amount and accrued and unpaid Interest to the date of payment shall be immediately due and payable. If an Event of Default specified in Section 4.1(f) and 4.1(g) occurs, the Principal and accrued and unpaid Interest on the Outstanding Securities shall become and be immediately due and payable, without any declaration or other act on the part of the Trustee or any Holder. The Holders either (a) through notice to the Trustee of not less than a majority of the Principal amount of the Outstanding Securities, or (b) by the adoption of a resolution, at a meeting of Holders of the Outstanding Securities at which a quorum is present, by the Holders of at least a majority of the Principal amount of the Outstanding Securities represented at such meeting, may, on behalf of the Holders of all of the Securities, rescind and annul an acceleration and its consequences (including waiver of any defaults) if: (1) all existing Events of Default, other than the nonpayment of a Defaulted Payment on the Securities which have become due solely because of the acceleration, have been remedied, cured or waived, and (2) the rescission would not conflict with any judgment or decree of a court of competent jurisdiction. SECTION 4.3. OTHER REMEDIES. If an Event of Default with respect to Outstanding Securities occurs and is continuing, the Trustee may pursue any available remedy by proceeding at law or in equity to collect the Defaulted Payment or Interest due and payable on the Securities or to enforce the performance of any provision of the Securities. The Trustee may maintain a proceeding in which it may prosecute and enforce all 27 rights of action and claims under this Indenture or the Securities, even if it does not possess any of the Securities or does not produce any of them in the proceeding. SECTION 4.4. WAIVER OF PAST DEFAULTS. The Holders, either (a) through the written consent of not less than a majority of the Principal amount of the Outstanding Securities, or (b) by the adoption of a resolution, at a meeting of Holders of the Outstanding Securities at which a quorum is present, by the Holders of at least a majority of the Principal amount of the Outstanding Securities represented at such meeting, may, on behalf of the Holders of all of the Securities, waive an existing Default or Event of Default, except a Default or Event of Default: (1) set forth in Sections 4.1(a) and (b), provided, however, that subject to Section 4.7, the Holders of a majority of the Principal amount of the Outstanding Securities may rescind an acceleration and its consequences, including any related payment default that resulted from such acceleration); or (2) in respect of a covenant or provision hereof which, under Section 7.2 hereof, cannot be modified or amended without the consent of the Holders of each Outstanding Security affected. Upon any such waiver, such Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Indenture; provided, however, that no such waiver shall extend to any subsequent or other Default or impair any right consequent thereon. SECTION 4.5. CONTROL BY MAJORITY. The Holders of a majority of the Principal amount of the Outstanding Securities (or such lesser amount as shall have acted at a meeting pursuant to the provisions of this Indenture) shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee. However, the Trustee may refuse to follow any direction that: (1) conflicts with any law or with this Indenture; (2) the Trustee determines may be unduly prejudicial to the rights of the Holders not joining therein; or (3) may expose the Trustee to personal liability. The Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction. SECTION 4.6. LIMITATION ON SUIT. No Holder of any Security shall have any right to pursue any remedy with respect to this Indenture or the Securities (including, instituting any proceeding, judicial or otherwise, 28 with respect to this Indenture or for the appointment of a receiver or trustee) unless: (1) such Holder has previously given written notice to the Trustee of an Event of Default that is continuing; (2) the Holders of at least 25% in aggregate of the Principal amount of the Outstanding Securities shall have made written request to the Trustee to pursue the remedy; (3) such Holder or Holders have offered to the Trustee indemnity reasonably satisfactory to it against any costs, expenses and liabilities incurred in complying with such request; (4) the Trustee has failed to comply with the request for 60 days after its receipt of such notice, request and offer of indemnity; and (5) during such 60-day period, no direction inconsistent with such written request has been given to the Trustee by the Holders of a majority of the Principal amount of the Outstanding Securities (or such amount as shall have acted at a meeting pursuant to the provisions of this Indenture); provided, however, that no one or more of such Holders may use this Indenture to prejudice the rights of another Holder or to obtain preference or priority over another Holder. SECTION 4.7. UNCONDITIONAL RIGHTS OF HOLDERS TO RECEIVE PAYMENT AND TO CONVERT. Notwithstanding any other provision in this Indenture, the Holder of any Security shall have the right, which is absolute and unconditional, to receive payment of the Principal on and Interest in respect of the Securities held by such Holder, on or after the respective due dates, to convert the Securities in accordance with Article 11 or to bring suit for the enforcement of any such payment on or after such respective dates or the right to convert, and such rights shall not be impaired or affected adversely without the consent of such Holder. SECTION 4.8. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY THE TRUSTEE. The Company covenants that if: (1) a Default or Event of Default is made in the payment of Interest (including Liquidated Damages, if any) on any Security when such Interest becomes due and payable and such Default or Event of Default continues for a period of 30 days; or (2) a Default or Event of Default is made in the payment of the Principal on any Security when the same becomes due and payable, then the Company will, upon demand of the Trustee, pay to it, for the benefit of 29 the Holders of such Securities, the entire Principal then due and payable (as expressed therein or as a result of any acceleration effected pursuant to Section 4.2 hereof) on such Securities for any such amounts and, to the extent legally enforceable, Interest on such Securities, and, in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel. If the Company fails to pay such amounts forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust, may institute a judicial proceeding for the collection of the sums so due and unpaid, may prosecute such proceeding to judgment or final decree and may enforce the same against the Company and collect the monies adjudged or decreed to be payable in the manner provided by law out of the property of the Company, wherever situated. If an Event of Default occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders of Securities by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy. SECTION 4.9. TRUSTEE MAY FILE PROOFS OF CLAIM. In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to the Company or any other obligor on the Securities or the property of the Company or of such other obligor or their creditors, the Trustee (irrespective of whether the Principal or Interest shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand on the Company for the payment of any such amount) shall be entitled and empowered, by intervention in such proceeding or otherwise: (1) to file and prove a claim for the whole amount of the Principal and Interest owing and unpaid in respect of the Securities and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and of the Holders of Securities allowed in such judicial proceeding and (2) to collect and receive any monies, Common Stock or other property payable or deliverable on any such claim and to distribute the same, and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceedings is hereby authorized by each Holder of Securities to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders of Securities, to pay to the Trustee any amount due to it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel and any other amounts due the Trustee under Section 5.8. 30 Nothing contained herein shall be deemed to authorize the Trustee to authorize or consent to or accept, or adopt on behalf of any Holder of a Security, any plan of reorganization, arrangement, adjustment or composition affecting the Securities or the rights of any Holder thereof or to authorize the Trustee to vote in respect of the claim of any Holder of a Security in any such proceeding. SECTION 4.10. RESTORATION OF RIGHTS AND REMEDIES. If the Trustee or any Holder of a Security has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every such case, subject to any determination in such proceeding, the Company, the Trustee and the Holders of Securities shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the Trustee and the Holders shall continue as though no such proceeding had been instituted. SECTION 4.11. RIGHTS AND REMEDIES CUMULATIVE. Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities in the last paragraph of Section 2.11, no right or remedy conferred in this Indenture upon or reserved to the Trustee or to the Holders of Securities is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. SECTION 4.12. DELAY OR OMISSION NOT WAIVER. No delay or omission of the Trustee or of any Holder of any Security to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or any acquiescence therein. Every right and remedy given by this Article or by law to the Trustee or to the Holders of Securities may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders of Securities, as applicable. SECTION 4.13. PRIORITIES. Any money collected by the Trustee pursuant to this Article shall be applied in the following order, at the date or dates fixed by the Trustee: FIRST: to the payment of all amounts due to the Trustee under Section 5.8; SECOND: to Holders for amounts due and unpaid on the Securities for the Principal or Interest (including Liquidated Damages, if any) as applicable, ratably, without preference or priority of any kind, according to such amounts due and payable on the Securities; and 31 THIRD: any remaining amounts shall be repaid to the Company. The Trustee may fix a special record date and payment date for any payment to Holders pursuant to this Section 4.13. At least 15 days before such special record date, the Trustee shall mail to each Holder and the Company a notice that states the special record date, the payment date and the amount to be paid. SECTION 4.14. UNDERTAKING FOR COSTS. All parties to this Indenture agree, and each Holder of any Security by such Holder's acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken, suffered or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys' fees, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section shall not apply to any suit instituted by the Trustee, to any suit instituted by any Holder, or group of Holders, holding in the aggregate more than 10% of the Principal amount of the Outstanding Securities, or to any suit instituted by any Holder of any Security for the enforcement of (i) payments pursuant to Section 4.7 or (ii) conversion rights in accordance with Article 11. This Section 4.14 shall be in lieu of Section 315(e) of the TIA and such Section 315(e) is hereby expressly excluded from this Indenture, as permitted by the TIA. SECTION 4.15. WAIVER OF STAY OR EXTENSION LAWS. The Company covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim to take the benefit or advantage of, any stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture; and the Company (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted. ARTICLE 5 THE TRUSTEE SECTION 5.1. CERTAIN DUTIES AND RESPONSIBILITIES. (a) Except during the continuance of an Event of Default, (1) The Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture or the TIA, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and (2) In the absence of bad faith on its part, the Trustee may conclusively 32 rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; provided, however, that in the case of any such certificates or opinions which by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall examine the certificates or opinions to determine whether or not, on their face, they conform to the requirements to this Indenture (but need not investigate or confirm the accuracy of any facts stated therein). (b) In case an Event of Default actually known to a Responsible Officer of the Trustee has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of such person's own affairs. (c) No provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that: (1) This paragraph (c) shall not be construed to limit the effect of paragraph (a) of this Section 5.1; (2) The Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts; and (3) The Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with a direction received by it of the Holders of a majority of the Principal amount of the Outstanding Securities (or such lesser amount as shall have acted at a meeting pursuant to the provisions of this Indenture) relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture. (d) Whether or not herein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section 5.1. (e) No provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers. The Trustee may refuse to perform any duty or exercise any right or power unless it receives indemnity reasonably satisfactory to it against any loss, liability, cost or expense (including, without limitation, reasonable fees and expenses of counsel). (f) The Trustee shall not be obligated to pay Interest on any money or other assets received by it unless otherwise agreed in writing with the Company. Assets held in trust by the Trustee need not be segregated from other funds except to the extent required by law. 33 (g) The Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, coupon, other evidence of indebtedness or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company, personally or by agent or attorney at the sole cost of the Company and shall incur no liability or additional liability of any kind by reason of such inquiry or investigation. (h) The Trustee shall not be deemed to have notice or actual knowledge of any Event of Default or other state of facts unless a Responsible Officer of the Trustee has actual knowledge thereof or unless written notice of any event which is in fact a Default or other state of facts is received by the Trustee pursuant to Section 12.2 hereof, and such notice references the Securities and this Indenture. (i) The rights, privileges, protections, immunities and benefits given to the Trustee hereunder, including, without limitation, its right to be indemnified, are extended to, and shall be enforceable by, the Trustee in each of its capacities hereunder, and each Paying Agent, authenticating agent, Conversion Agent or Registrar acting hereunder. (j) The Trustee may request that the Company deliver an Officers' Certificate setting forth the names of individuals and/or titles of officers authorized at such time to take specified actions pursuant to this Indenture, which Officers' Certificate may be signed by any person authorized to sign an Officers' Certificate, including any person specified as so authorized in any such certificate previously delivered and not superseded. SECTION 5.2. CERTAIN RIGHTS OF TRUSTEE. Subject to the provisions of Section 5.1 hereof and subject to Section 315(a) through (d) of the TIA: (1) The Trustee may conclusively rely on any document believed by it to be genuine and to have been signed or presented by the proper person. The Trustee need not investigate any fact or matter stated in the document. (2) Before the Trustee acts or refrains from acting, it may require an Officers' Certificate. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on the Officers' Certificate. (3) The Trustee may act through attorneys and agents and shall not be responsible for the misconduct or negligence of any attorney or agent appointed with due care. (4) The Trustee shall not be liable for any action taken or omitted to be taken by it in good faith which it believed to be authorized or within the discretion or rights or powers conferred upon it by this Indenture, unless the Trustee's conduct constitutes negligence. 34 (5) The Trustee may consult with counsel of its selection and the advice of such counsel as to matters of law or legal interpretation shall be full and complete authorization and protection in respect of any action taken, omitted or suffered by it hereunder in good faith and in accordance with the advice or opinion of such counsel. (6) Unless otherwise specifically provided in this Indenture, any demand, request, direction or notice from the Company shall be sufficient if signed by an Officer of the Company. (7) The permissive rights of the Trustee to do things enumerated in this Indenture shall not be construed as a duty unless so specified herein. SECTION 5.3. INDIVIDUAL RIGHTS OF TRUSTEE. The Trustee in its individual or any other capacity may become the owner or pledgee of Securities and may otherwise deal with the Company or any Affiliate of the Company with the same rights it would have if it were not Trustee. However, in the event that the Trustee acquires any conflicting interest (as such term is defined in Section 310(b) of the TIA), it must eliminate such conflict within 90 days, apply to the Commission for permission to continue as trustee (to the extent permitted under Section 310(b) of the TIA) or resign. Any agent may do the same with like rights and duties. The Trustee is also subject to Sections 5.11 and 5.12 hereof. SECTION 5.4. MONEY HELD IN TRUST. Money held by the Trustee in trust hereunder shall not be segregated from other funds except to the extent required by law. The Trustee shall be under no liability for interest on any money received by it hereunder except as otherwise expressly agreed with the Company. SECTION 5.5. TRUSTEE'S DISCLAIMER. The recitals contained herein and in the Securities (except for those in the certificate of authentication) shall be taken as the statements of the Company, and the Trustee assumes no responsibility for their correctness. The Trustee makes no representations as to the validity, sufficiency or priority of this Indenture or of the Securities. The Trustee shall not be accountable for the use or application by the Company of Securities or the proceeds thereof. SECTION 5.6. NOTICE OF DEFAULTS. Within 90 days after the occurrence of any Default or Event of Default hereunder of which a Responsible Officer of the Trustee has received written notice, the Trustee shall give notice to Holders, unless such Default or Event of Default shall have been cured or waived; provided, however, that, except in the case of a Default or Event of Default described in Sections 4.1(a) or (b), the Trustee shall be protected in withholding such notice if and so long as Responsible Officers of the Trustee in good faith determine that the withholding of such notice is in the interest of the Holders. The first sentence of this Section 5.6 shall be in lieu of the proviso to Section 315(b) of the TIA and such proviso is hereby expressly excluded from this Indenture, as permitted by the TIA. 35 SECTION 5.7. REPORTS BY TRUSTEE TO HOLDERS. The Trustee shall transmit to Holders such reports concerning the Trustee and its actions under this Indenture as may be required by Section 313 of the TIA at the times and in the manner provided by the TIA. A copy of each report at the time of its mailing to Holders shall be filed with the Commission, if required, and each stock exchange or the Nasdaq National Market, if any, on which the Securities and the Common Stock are listed or quoted or (provided the Trustee shall have been advised of such listing or quotation pursuant to the sentence immediately following) become listed or quoted. The Company shall promptly notify the Trustee when the Securities or the Common Stock become listed or quoted on any stock exchange or the Nasdaq National Market. SECTION 5.8. COMPENSATION AND INDEMNIFICATION. The Company covenants and agrees to pay to the Trustee from time to time, and the Trustee shall be entitled to, such compensation as agreed to in writing by the Trustee and the Company (which shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust) and the Company covenants and agrees to pay or reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by or on behalf of it in accordance with any of the provisions of this Indenture (including the reasonable compensation, expenses and disbursements of its counsel and of all agents and other persons not regularly in its employ), except to the extent that any such expense, disbursement or advance is due to its negligence or bad faith. When the Trustee incurs expenses or renders services in connection with an Event of Default specified in Section 4.1, the expenses (including the reasonable charges and expenses of its counsel) and the compensation for the services are intended to constitute expenses of administration under any bankruptcy law. The Company also covenants to indemnify the Trustee and its officers, directors, employees and agents for, and to hold such Persons harmless against, any loss, liability or expense incurred by them, arising out of or in connection with the acceptance or administration of this Indenture or the trusts hereunder or the performance of their duties hereunder, including the costs and expenses of defending themselves against or investigating any claim of liability in the premises, except to the extent that any such loss, liability or expense was due to the negligence or willful misconduct of such Persons. The obligations of the Company under this Section 5.8 to compensate and indemnify the Trustee and its officers, directors, employees and agents and to pay or reimburse such Persons for expenses, disbursements and advances shall constitute additional indebtedness hereunder and shall survive the satisfaction and discharge of this Indenture or the earlier resignation or removal of the Trustee. Such additional indebtedness shall be a lien prior to that of the Securities upon all property and funds held or collected by the Trustee as such, except funds held in trust for the benefit of the Holders of particular Securities, and the Securities are hereby subordinated to such senior claim. "Trustee" for purposes of this Section 5.8 shall include any predecessor Trustee, in its capacity as Trustee, but the negligence or willful misconduct of any Trustee shall not affect the indemnification of any other Trustee. SECTION 5.9. REPLACEMENT OF TRUSTEE. 36 A resignation or removal of the Trustee and appointment of a successor Trustee shall become effective only upon the successor Trustee's acceptance of appointment as provided in this Section 5.9. The Trustee may resign and be discharged from the trust hereby created by so notifying the Company in writing. The Holders of at least a majority of the Principal amount of Outstanding Securities may remove the Trustee by so notifying the Trustee and the Company in writing. The Company must remove the Trustee if: (i) the Trustee fails to comply with Section 5.1 or 5.11 hereof or Section 310 of the TIA; (ii) the Trustee becomes incapable of acting; (iii) the Trustee is adjudged a bankrupt or an insolvent or an order for relief is entered with respect to the Trustee under any Bankruptcy Law; or (iv) a Custodian or public officer takes charge of the Trustee or its property. If the Trustee resigns or is removed or if a vacancy exists in the office of the Trustee for any reason, the Company shall promptly appoint a successor Trustee. The Trustee shall be entitled to payment of its fees and reimbursement of its expenses while acting as Trustee. Within one year after the successor Trustee takes office, the Holders of at least a majority of the Principal amount of Outstanding Securities may appoint a successor Trustee to replace the successor Trustee appointed by the Company. Any Holder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee if the Trustee fails to comply with Section 5.1. If an instrument of acceptance by a successor Trustee shall not have been delivered to the Trustee within 30 days after the giving of such notice of resignation or removal, the resigning or removed Trustee, as applicable, may petition, at the expense of the Company, any court of competent jurisdiction for the appointment of a successor Trustee. A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company. Thereupon the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. The Company shall issue a notice of the successor Trustee's succession to the Holders. Upon payment of its charges, the retiring Trustee shall promptly transfer all property held by it as Trustee to the successor Trustee, subject nevertheless to its lien, if any, provided for in Section 5.8 hereof. Notwithstanding replacement of the Trustee pursuant to this Section 5.9 hereof, the Company's obligations under Section 5.8 hereof shall continue for the benefit of the retiring Trustee with respect to expenses, losses and liabilities incurred by it prior to such replacement. SECTION 5.10. SUCCESSOR TRUSTEE BY MERGER, ETC. 37 Subject to Section 5.11 hereof, if the Trustee consolidates with, merges or converts into, or transfers all or substantially all of its corporate trust business to, another corporation or national banking association, the successor entity without any further act shall be the successor Trustee as to the Securities. SECTION 5.11. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY. The Trustee shall at all times satisfy the requirements of Section 310(a)(1), (2) and (5) of the TIA. The Trustee shall at all times have (or, in the case of a corporation included in a bank holding company system, the related bank holding company shall at all times have), a combined capital and surplus of at least $50 million as set forth in its (or its related bank holding company's) most recent published annual report of condition. The Trustee is subject to Section 310(b) of the TIA. SECTION 5.12. COLLECTION OF CLAIMS AGAINST THE COMPANY. The Trustee is subject to Section 311(a) of the TIA, excluding any creditor relationship listed in Section 311(b) of the TIA. A Trustee who has resigned or been removed shall be subject to Section 311(a) of the TIA to the extent indicated therein. ARTICLE 6 CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE SECTION 6.1. COMPANY AND AMERICA WEST MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS. Neither the Company nor America West shall consolidate with or merge into any other Person or convey, transfer or lease its properties and assets substantially as an entirety to any Person, and neither the Company nor America West shall permit any Person to consolidate with or merge into the Company or America West or convey, transfer or lease its properties and assets substantially as an entirety to the Company or America West, unless: (1) in the event that the Company or America West shall consolidate with or merge into another Person or convey, transfer or lease its properties and assets as an entirety or substantially as an entirety to any Person, the Person formed by such consolidation or into which the Company or America West is merged or the Person which acquires by conveyance or transfer, or which leases, the properties and assets of the Company or America West substantially as an entirety shall be a corporation, limited liability company, partnership or trust organized and validly existing under the laws of the United States of America, any State thereof or the District of Columbia; (2) in the event that the Company or America West shall consolidate with or merge into another Person or convey, transfer or lease its properties and assets as an entirety or substantially as an entirety to any Person, and the entity surviving such transaction or transferee entity is not the Company or America West, then such surviving or transferee entity shall expressly assume, by an indenture 38 supplemental hereto, executed and delivered to the Trustee, in form reasonably satisfactory to the Trustee, the due and punctual payment of all and any amounts when due on all the Securities and the performance of every covenant and obligation of this Indenture and the Securities on the part of the Company to be performed or observed and shall have provided for conversion rights provided in Article 11; (3) immediately after giving effect to such transaction and treating any indebtedness which becomes an obligation of the Company or America West as a result of such transaction as having been incurred at the time of such transaction, no Event of Default, and no event which, after notice or lapse of time or both, would become an Event of Default, shall have occurred and be continuing; and (4) the Company shall have delivered to the Trustee an Officers' Certificate stating that such consolidation, merger, conveyance, transfer or lease and, if a supplemental indenture is required in connection with such transaction, such supplemental indenture, comply with this Article and that all conditions precedent herein provided for relating to such transaction have been complied with. SECTION 6.2. SUCCESSOR PERSON SUBSTITUTED. Upon any consolidation or merger by the Company or America West with or into any other Person or any conveyance, transfer or lease of the properties and assets of the Company or America West substantially as an entirety to any Person, in accordance with Section 6.1 hereof, the successor Person formed by such consolidation or into which the Company or America West is merged or to which such conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company or America West under this Indenture with the same effect as if such successor Person had been named as the Company or America West herein. In the event of any such conveyance or transfer, the Company or America West (which term shall for this purpose mean the Person named as the "Company" in the first paragraph of this Indenture or "America West" in Section 1.1 of this Indenture or any successor Person which shall theretofore become such in the manner described in Section 6.1 hereof), except in the case of a lease to another Person, the predecessor corporation shall be relieved of all obligations and covenants under this Indenture and the Securities and may be dissolved and liquidated. ARTICLE 7 AMENDMENTS, SUPPLEMENTS AND WAIVERS SECTION 7.1. WITHOUT CONSENT OF HOLDERS OF SECURITIES. Without the consent of any Holders of Securities, the Company, when authorized by a Board Resolution, and the Trustee, at any time and from time to time, may amend this Indenture and the Securities to: (a) add to the covenants of the Company for the benefit of the Holders of 39 Securities; (b) surrender any right or power herein conferred upon the Company; (c) provide for conversion rights of Holders of Securities if any reclassification or change of the Company's Common Stock or any consolidation, merger or sale of all or substantially all of the Company's assets occurs; (d) provide for the assumption of the Company's obligations to the Holders of Securities in the case of a merger, consolidation, conveyance, transfer or lease pursuant to Article 6 hereof; (e) reduce the Conversion Price; provided, however, that such reduction in the Conversion Price shall not adversely affect the interest of the Holders of Securities (after taking into account tax and other consequences of such reduction); (f) comply with the requirements of the Commission in order to effect or maintain the qualification of this Indenture under the TIA; (g) establish the forms or terms of Securities of any series as permitted by Section 2.01; (h) cure any ambiguity, to correct or supplement any provision herein which may be inconsistent with any other provision herein or which is otherwise defective, or to make any other provisions with respect to matters or questions arising under this Indenture which the Company may deem necessary or desirable and which shall not be inconsistent with the provisions of this Indenture; provided, however, that such action pursuant to this clause (h) does not, in the good faith opinion of the Board of Directors of the Company (as evidenced by a Board Resolution), adversely affect the interests of the Holders of Securities in any material respect; and (i) add or modify any other provisions herein with respect to matters or questions arising hereunder which the Company and the Trustee may deem necessary or desirable and which will not adversely affect the interests of the Holders of Securities. SECTION 7.2. WITH CONSENT OF HOLDERS OF SECURITIES. Except as provided below in this Section 7.2, this Indenture or the Securities may be amended, modified or supplemented, and noncompliance in any particular instance with any provision of this Indenture or the Securities may be waived, in each case (i) with the written consent of the Holders of at least a majority of the Principal amount of the Outstanding Securities or (ii) by the adoption of a resolution, at a meeting of Holders of the Outstanding Securities at which a quorum is present, by the Holders of a majority of the Principal amount of the Outstanding Securities represented and voting at such meeting pursuant to Section 8.4. Without the written consent or the affirmative vote of each Holder of Securities affected thereby, an amendment or waiver under this Section 7.2 may not: 40 (a) change the Stated Maturity of the Principal amount of, or any installment of Interest on, any Security; (b) reduce the Principal or Interest (including any Liquidated Damages) payable on any Security; (c) change the currency of any amount owed or owing under any Security or any interest thereon from U.S. Dollars; (d) alter or otherwise modify the Interest Rate on any Security, or the manner of calculation thereof, or extend time for payment of any amounts due and payable to the Holders of the Securities; (e) impair the right of any Holder to institute suit for the enforcement of any payment in or with respect to any Security; (f) modify the obligation of the Company to maintain an office or agency in the City of New York pursuant to Section 9.2; (g) adversely affect the right of the Holders of the Securities to convert any Security as provided in Article 11; (h) modify the provisions of Article 10 in a manner adverse to the Holders of the Securities; (i) modify any of the provisions of this Section, or reduce the percentage of voting interests required to waive a default, except to increase such percentage or to provide that certain other provisions of this Indenture cannot be modified or waived without the consent of the Holder of each Outstanding Security affected thereby; or (j) reduce the requirements of Section 8.4 hereof for quorum or voting, or reduce the percentage of the Principal amount of the Outstanding Securities the consent of whose Holders is required for any such supplemental indenture or the consent of whose Holders is required for any waiver provided for in this Indenture. It shall not be necessary for any Act of Holders of Securities under this Section 7.2 to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such Act shall approve the substance thereof. SECTION 7.3. COMPLIANCE WITH TRUST INDENTURE ACT. Every amendment to this Indenture or the Securities shall be set forth in a supplemental indenture that complies with the TIA as then in effect. SECTION 7.4. REVOCATION OF CONSENTS AND EFFECT OF CONSENTS OR VOTES. Until an amendment, supplement or waiver becomes effective, a written consent to it by a Holder is a continuing consent by the Holder and every subsequent Holder of a Security 41 or portion of a Security that evidences the same debt as the consenting Holder's Security, even if notation of the consent is not made on any Security. An amendment, supplement or waiver becomes effective on receipt by the Trustee of written consents from or affirmative votes by, as applicable, the Holders of the requisite percentage of the Principal amount of the Outstanding Securities, and thereafter shall bind every Holder of Securities; provided, however, if the amendment, supplement or waiver makes a change described in any of the clauses (a) through (j) of Section 7.2, the amendment, supplement or waiver shall bind only each Holder of a Security which has consented to it or voted for it, as applicable, and every subsequent Holder of a Security or portion of a Security that evidences the same indebtedness as such Security of the consenting or affirmatively voting Holder, as applicable. SECTION 7.5. NOTATION ON OR EXCHANGE OF SECURITIES. If an amendment, supplement or waiver changes the terms of a Security: (a) the Trustee may require the Holder of such Security of any series to deliver such Security to the Trustee, the Trustee may place an appropriate notation on such Security about the changed terms and return it to the Holder and the Trustee may place an appropriate notation on any Security of any series thereafter authenticated for such series as to any matter provided for by such supplemental indenture; or (b) if the Company or the Trustee so determines, the Company in exchange for such Security shall issue and the Trustee shall authenticate a new Security that reflects the changed terms. Failure to make the appropriate notation or issue a new Security shall not affect the validity and effect of such amendment, supplement or waiver. SECTION 7.6. TRUSTEE TO SIGN AMENDMENT, ETC. The Trustee shall sign any amendment authorized pursuant to this Article 7 if the Trustee reasonably determines the amendment does not adversely affect the rights, duties, liabilities or immunities of the Trustee. If the Trustee reasonably determines the amendment does adversely affect the rights, duties, liabilities or immunities of the Trustee, the Trustee may but need not sign it. In signing or refusing to sign any amendment hereunder, the Trustee shall be entitled to receive and shall be fully protected in relying upon an Officers' Certificate as conclusive evidence that such amendment is authorized or permitted by this Indenture and that all conditions precedent relating thereto have been complied with. ARTICLE 8 MEETING OF HOLDERS OF SECURITIES SECTION 8.1. PURPOSES FOR WHICH MEETINGS MAY BE CALLED. A meeting of Holders of Securities may be called at any time and from time to 42 time pursuant to this Article to make, give or take any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be made, given or taken by Holders of Securities. SECTION 8.2. CALL NOTICE AND PLACE OF MEETINGS. (a) The Trustee may at any time call a meeting of Holders of Securities for any purpose specified in Section 8.1, to be held at such time and at such place in the City of New York. Notice of every meeting of Holders of Securities, setting forth the time and the place of such meeting and in general terms the action proposed to be taken at such meeting, shall be given, in the manner provided in Section 12.2, not less than 21 nor more than 180 days prior to the date fixed for the meeting. (b) In case at any time the Company, pursuant to a Board Resolution, or the Holders of at least 10% of the Principal amount of the Outstanding Securities shall have requested the Trustee to call a meeting of the Holders of Securities for any purpose specified in Section 8.1 hereof, by written request setting forth in reasonable detail the action proposed to be taken at the meeting, and the Trustee shall not have made the first publication of the notice of such meeting within 21 days after receipt of such request or shall not thereafter proceed to cause the meeting to be held as provided herein, then the Company or the Holders of Securities in the amount specified, as applicable, may determine the time and the place in the City of New York for such meeting and may call such meeting for such purposes by giving notice thereof as provided in paragraph (a) of this Section 8.2. SECTION 8.3. PERSONS ENTITLED TO VOTE AT MEETINGS. To be entitled to vote at any meeting of Holders of Securities, a Person shall be (a) a Holder of one or more Outstanding Securities, or (b) a Person appointed by an instrument in writing as proxy for a Holder or Holders of one or more Outstanding Securities by such Holder or Holders. The only Persons who shall be entitled to be present or to speak at any meeting of Holders shall be the Persons entitled to vote at such meeting and their counsel, any representatives of the Trustee and its counsel and any representatives of the Company and its counsel. SECTION 8.4. QUORUM; ACTION. The Persons entitled to vote a majority of the Principal amount of the Outstanding Securities shall constitute a quorum. In the absence of a quorum within 30 minutes of the time appointed for any such meeting, the meeting shall, if convened at the request of Holders of Securities, be dissolved. In any other case, the meeting may be adjourned for a period of not less than 10 days as determined by the chairman of the meeting prior to the adjournment of such meeting. In the absence of a quorum at any such adjourned meeting, such adjourned meeting may be further adjourned for a period of not less than 10 days as determined by the chairman of the meeting prior to the adjournment of such adjourned meeting. Notice of the reconvening of any adjourned meeting shall be given as provided in Section 8.2(a), except that such notice need be given only once and not less than five days prior to the date on which the meeting is scheduled to be reconvened. Notice of the reconvening of an adjourned meeting shall state 43 expressly the percentage of the Principal amount of the Outstanding Securities which shall constitute a quorum. Subject to the foregoing, at the reconvening of any meeting adjourned for a lack of a quorum, the Persons entitled to vote 25% of the Principal amount of the Outstanding Securities at the time shall constitute a quorum for the taking of any action set forth in the notice of the original meeting. At a meeting or an adjourned meeting duly reconvened and at which a quorum is present as aforesaid, any resolution and all matters (except as limited by Section 7.2) shall be effectively passed and decided if passed or decided by the Persons entitled to vote not less than a majority of the Principal amount of Outstanding Securities represented and voting at such meeting. Any resolution passed or decisions taken at any meeting of Holders of Securities duly held in accordance with this Section shall be binding on all the Holders of Securities, whether or not present or represented at the meeting. SECTION 8.5. DETERMINATION OF VOTING RIGHTS; CONDUCT AND ADJOURNMENT OF MEETINGS. (a) Notwithstanding any other provisions of this Indenture, the Trustee may make such reasonable regulations as it may deem advisable for any meeting of Holders of Securities in regard to proof of the holding of Securities and of the appointment of proxies and in regard to the appointment and duties of inspectors of votes, the submission and examination of proxies, certificates and other evidence of the right to vote, and such other matters concerning the conduct of the meeting as it shall deem appropriate. Except as otherwise permitted or required by any such regulations, the holding of Securities shall be proved in the manner specified in Section 12.4 hereof and the appointment of any proxy shall be proved in the manner specified in Section 12.4 hereof. Such regulations may provide that written instruments appointing proxies, regular on their face, may be presumed valid and genuine without the proof specified in Section 12.4 hereof or other proof. (b) The Trustee shall, by an instrument in writing, appoint a temporary chairman (which may be the Trustee) of the meeting, unless the meeting shall have been called by the Company or by Holders of Securities as provided in Section 8.2(b), in which case the Company or the Holders of Securities calling the meeting, as applicable, shall in like manner appoint a temporary chairman. A permanent chairman and a permanent secretary of the meeting shall be elected by vote of the Persons entitled to vote a majority of the Principal amount of the Outstanding Securities represented at the meeting. (c) At any meeting, each Holder of a Security or proxy shall be entitled to one vote for each $1,000 Principal amount of Securities held or represented by him; provided, however, that no vote shall be cast or counted at any meeting in respect of any Security challenged as not Outstanding and ruled by the chairman of the meeting to be not Outstanding. The chairman of the meeting shall have no right to vote, except as a Holder of a Security or proxy. 44 (d) Any meeting of Holders of Securities duly called pursuant to Section 8.2 at which a quorum is present may be adjourned from time to time by Persons entitled to vote a majority of the Principal amount of the Outstanding Securities represented at the meeting, and the meeting may be held as so adjourned without further notice. SECTION 8.6. COUNTING VOTES AND RECORDING ACTION OF MEETINGS. The vote upon any resolution submitted to any meeting of Holders of Securities shall be by written ballots on which shall be subscribed the signatures of the Holders of Securities or of their representatives by proxy and the Principal amount and serial numbers of the Outstanding Securities held or represented by them. The permanent chairman of the meeting shall appoint two inspectors of votes who shall count all votes cast at the meeting for or against any resolution and who shall make and file with the secretary of the meeting their verified written reports in duplicate of all votes cast at the meeting. A record, at least in duplicate, of the proceedings of each meeting of Holders of Securities shall be prepared by the secretary of the meeting and there shall be attached to said record the original reports of the inspectors of votes on any vote by ballot taken thereat and affidavits by one or more Persons having knowledge of the facts setting forth a copy of the notice of the meeting and showing that said notice was given as provided in Section 8.2 and, if applicable, Section 8.4. Each copy shall be signed and verified by the affidavits of the permanent chairman and secretary of the meeting and one such copy shall be delivered to the Company and another to the Trustee to be preserved by the Trustee, the latter to have attached thereto the ballots voted at the meeting. Any record so signed and verified shall be conclusive evidence of the matters therein stated. ARTICLE 9 COVENANTS SECTION 9.1. PAYMENT OF PRINCIPAL AND INTEREST. The Company will duly and punctually pay the Principal of and Interest, including, Liquidated Damages, if any, on the Securities when and if at any time any such foregoing amounts are due and payable in accordance with the terms of the Securities and this Indenture. The Company will deposit or cause to be deposited such payment with the Trustee as directed by the Trustee, no later than the day of the Stated Maturity of any Security, the date of any installment of Interest or any other date such payment is otherwise due. SECTION 9.2. MAINTENANCE OF OFFICES OR AGENCIES. The Company hereby appoints the Trustee's Corporate Trust Office as its office in Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890: (i) where Securities may be presented or surrendered for payment; (ii) where Securities may be surrendered for registration of transfer or exchange; (iii) where Securities may be surrendered for conversion; and 45 (iv) where notices and demands to or upon the Company in respect of the Securities and this Indenture may be served. The Company will maintain in the City of New York, an office or agency where Securities may be presented or surrendered for payment, where Securities may be surrendered for registration of transfer or exchange, where Securities may be surrendered for conversion and where notices and demands to or upon the Company in respect of the Securities and this Indenture may be served. The Company will give prompt written notice to the Trustee, and notice to the Holders in accordance with Section 12.2 hereof, of the appointment or termination of any such agents and of the location and any change in the location of any such office or agency. If at any time the Company shall fail to maintain any such required office or agency in the City of New York, or shall fail to furnish the Trustee with the address thereof, presentations and surrenders may be made at, and notices and demands may be served on, the Corporate Trust Office of the Trustee. SECTION 9.3. CORPORATE EXISTENCE. Subject to Article 6 hereof, the Company will do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence, rights (charter and statutory) and franchises of the Company; provided, however, that the Company shall not be required to preserve any such right or franchise if the Board of Directors shall determine in good faith that the preservation thereof is no longer desirable in the conduct of the business of the Company and that the loss thereof is not disadvantageous in any material respect to the Holders. SECTION 9.4. REPORTS. (a) The Company shall deliver to the Trustee, within 15 days after it files them with the Commission, copies of the annual reports and of the information, documents and other reports (or copies of such portions of any of the foregoing as the Commission may by rules and regulations prescribe) which the Company is required to file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act; provided, however, the Company shall not be required to deliver to the Trustee any materials for which the Company has sought and received confidential treatment by the SEC. The Company also shall comply with the other provisions of Section 314(a) of the TIA. (b) If at any time the Company is not subject to Section 13 or 15(d) of the Exchange Act, upon the request of a Holder of a Security, the Company, will promptly furnish or cause to be furnished to such Holder or to a prospective purchaser of such Security designated by such Holder, as applicable, the information, if any, required to be delivered by it pursuant to Rule 144A(d)(4) under the Securities Act to permit compliance with Rule 144A in connection with the resale of such Security; provided, however, that the Company shall not be required to furnish such information in connection with any request made on or after the date which is two years from the date such security was last acquired from the Company or an "affiliate" (as defined under Rule 144 under the Securities Act) of the Company. SECTION 9.5. COMPLIANCE CERTIFICATE. 46 The Company shall deliver to the Trustee, within 90 days after the end of each fiscal year of the Company, an Officers' Certificate stating that in the course of the performance by the signers of their duties as an Officer of the Company, they would normally have knowledge of any failure by the Company to comply with all conditions, or Defaults by the Company with respect to any covenant, under this Indenture, and further stating whether or not they have knowledge of any such failure or Default and, if so, specifying each such failure or Default and the nature thereof. In the event an Officer of the Company comes to have knowledge of a Default, regardless of the date, the Company shall deliver an Officers' Certificate to the Trustee within five Business Days of obtaining such knowledge specifying such Default and the nature and status thereof. SECTION 9.6. REGISTRATION RIGHTS. (a) The Company agrees, for the benefit of the Holders from time to time of the Securities, to the terms set forth in the Registration Rights Agreement setting forth certain rights of the Holders, and obligations of the Company, with respect to the registration by the Company and America West of the Securities. (b) Other than the Company's failure to pay Liquidated Damages, if any, in accordance with the terms of Section 4.1(b) hereof, any other failure by the Company to perform or observe any term, covenant or agreement contained in the Registration Rights Agreement shall not constitute a Default or Event of Default hereunder. SECTION 9.7. LIQUIDATED DAMAGES. If at any time Liquidated Damages become payable by the Company pursuant to the Registration Rights Agreement, the Company shall promptly deliver to the Trustee a certificate to that effect stating (i) the amount of such Liquidated Damages that are payable and (ii) the date on which such damages are payable pursuant to the terms of the Registration Rights Agreement. If the Company has paid Liquidated Damages directly to the Persons entitled to them, the Company shall deliver a certificate to the Trustee setting forth the particulars of such payment. ARTICLE 10 REDEMPTION OF SECURITIES SECTION 10.1. PROVISIONAL AND OPTIONAL REDEMPTION. (a) The Securities may be redeemed at the election of the Company, as a whole or in part, at any time before January 18, 2005 (a "PROVISIONAL REDEMPTION"), upon at least 20 and not more than 60 days' notice by mail to the Holders of the Securities at a redemption price equal to $1,000 per $1,000 Principal amount of the Securities redeemed plus accrued and unpaid Interest, if any (such amount, the "PROVISIONAL REDEMPTION PRICE"), to but excluding the date of redemption (the "PROVISIONAL REDEMPTION DATE") if (1) the Trading Price of the Common Stock has exceeded 120% of the Conversion Price then in effect for at least 20 Trading Days within a period of 30 consecutive Trading Days ending on the Trading Day before the date of mailing of 47 the notice of Provisional Redemption (the "NOTICE DATE"), and (2) a shelf registration statement covering resales of the Securities and the Common Stock issuable upon conversion thereof is effective and available for use and is expected to remain effective and available for use for the 30 days following the Provisional Redemption Date, unless registration is no longer required. (b) At any time on or after January 18, 2005, except for Securities that are converted pursuant to Section 11.1, the Company may, at its option, redeem the Securities in whole at any time or in part from time to time, on any date prior to the Stated Maturity of such Securities, upon notice as set forth in Section 10.4, at the Redemption Price (expressed in percentages of the Principal amount) set forth below if, but only if, redeemed on a Redemption Date occurring during the 12-month period beginning on the dates indicated:

Redemption During the Twelve Months Commencing Price ----------------------------------------- -------------- January 18, 2005......................... 103.75% January 18, 2006......................... 102.50% January 18, 2007......................... 101.25% January 18, 2008......................... 100.00%

(c) If the Company exercises its option to redeem the Securities pursuant to this Section 10.1(a) or (b), a Holder may nevertheless exercise its right to convert such Securities when and to the extent permissible under Article 11, in each case, until the close of business two Business Days immediately preceding the Redemption Date. (d) The Company shall pay any Interest to the Holder of the Securities called for redemption (including those Securities which are converted into Common Stock after the date the notice of the redemption is mailed and prior to the Redemption Date) accrued but not paid to, but excluding, the Redemption Date pursuant to Section 2.1(e); provided, however, that if the Redemption Date is an Interest Payment Date, the Company shall pay the Interest to the Holder of such Security at the close of business on such Interest Payment Date. SECTION 10.2. NOTICE TO TRUSTEE. If the Company elects to redeem Securities pursuant to the provisions of Section 10.1 hereof (such election to be ordered by a Board Resolution), it shall notify the Trustee at least 20 days prior to the intended Redemption Date (unless a shorter notice shall be satisfactory to the Trustee) of (i) such intended Redemption Date, (ii) the Principal amount of Securities to be redeemed and (iii) the CUSIP numbers (if any) of the Securities to be redeemed. SECTION 10.3. SELECTION OF SECURITIES TO BE REDEEMED. If fewer than all the Securities are to be redeemed, the Trustee shall select the particular Securities to be redeemed from the Outstanding Securities by a method that complies with the requirements of any exchange on which the Securities are listed, or, if the Securities are not listed on an exchange, on a pro rata basis or by lot or in accordance with any other method the Trustee considers fair and appropriate. The Trustee may select for redemption portions of the Principal amount of Securities that have denominations larger than $1,000. 48 Securities and portions thereof that the Trustee selects shall be in Principal amounts in integral multiples of $1,000. Provisions of this Indenture that apply to Securities called for redemption also apply to portions of Securities called for redemption. The Trustee shall notify the Company promptly of the Securities or portions of Securities to be redeemed. The Trustee shall promptly notify the Company and the Registrar in writing of the Securities selected for redemption and, in the case of any Securities selected for partial redemption, the Principal amount thereof to be redeemed. If any Security selected for partial redemption is converted or elected to be purchased in part before termination of the conversion right with respect to the portion of such Security so selected, the converted or purchased portion of such Security shall be deemed to be the portion selected for redemption; provided, however, that the Holder of such Security so converted or purchased and deemed redeemed shall not be entitled to any additional interest payment as a result of such deemed redemption than such Holder would have otherwise been entitled to receive upon conversion or purchase of such Security subject to Section 2.1(e). Securities which have been converted or purchased during a selection of Securities to be redeemed may be treated by the Trustee as Outstanding for the purpose of such selection. For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Securities shall relate, in the case of any Securities redeemed or to be redeemed only in part, to the portion of the Principal amount of such Securities which has been or is to be redeemed. SECTION 10.4. NOTICE OF REDEMPTION. Notice of redemption shall be given in the manner provided in Section 12.2 to the Holders of Securities to be redeemed. Such notice shall be given not less than 20 nor more than 60 days prior to the intended Redemption Date. All notices of redemption shall state: (1) such intended Redemption Date; (2) the Redemption Price and Interest accrued and unpaid to, but excluding, the Redemption Date, if any; (3) if fewer than all the Outstanding Securities are to be redeemed, (i) the Principal amount of Securities to be redeemed and the Principal amount of Securities which will be Outstanding after such partial redemption and (ii) the designation of the Securities of the series to be redeemed; (4) that on the Redemption Date the Redemption Price and Interest accrued and unpaid to, but excluding, the Redemption Date, if any, will become due and payable upon each such Security to be redeemed; (5) the Conversion Price, the date on which the right to convert the Principal of the Securities to be redeemed will terminate and the places where 49 such Securities may be surrendered for conversion; (6) the place or places where such Securities are to be surrendered for payment of the Redemption Price and accrued and unpaid Interest, and (7) the CUSIP number (if any) of the Securities. The notice given shall specify the last date on which exchanges or transfers of Securities may be made pursuant to Section 2.7, and shall specify the serial numbers of Securities and the portions thereof called for redemption. Notice of redemption of Securities to be redeemed at the election of the Company shall be given by the Company or, at the Company's written requests delivered at least 20 days prior to the date of the mailing of such Notice (unless a shorter period shall be acceptable to the Trustee), by the Trustee in the name of and at the expense of the Company. SECTION 10.5. EFFECT OF NOTICE OF REDEMPTION. Notice of redemption having been given as provided in Section 10.4 hereof, the Securities so to be redeemed shall, on the Redemption Date, become due and payable at the Redemption Price therein specified and from and after such date (unless the Company shall default in the payment of the Redemption Price and accrued and unpaid Interest) such Securities shall cease to bear Interest. Upon surrender of any such Security for redemption in accordance with such notice, such Security shall be paid by the Company at the Redemption Price plus accrued and unpaid Interest, if any; provided, however, the installments of Interest on Securities whose Stated Maturity is prior to or on the Redemption Date shall be payable to the Holders of such Securities, or one or more Predecessor Securities, registered as such on the relevant Regular Record Date. If any Security called for redemption shall not be so paid upon surrender thereof for redemption, the Principal and premium, if any, shall, until paid, bear Interest from the Redemption Date at the Interest Rate. SECTION 10.6. DEPOSIT AND PAYMENT OF REDEMPTION PRICE. Prior to or on any Redemption Date, the Company shall deposit with the Trustee or with a Paying Agent (or, if the Company or a Subsidiary or an Affiliate of either of them is acting as the Paying Agent, shall segregate and hold in trust as provided in Section 2.4) an amount of money in immediately available funds sufficient to pay the Redemption Price, and accrued and unpaid Interest in respect of all the Securities to be redeemed on that Redemption Date from the last Interest Payment Date to but not including the Redemption Date, other than any Securities called for redemption on that date which have been converted prior to the date of such deposit, and accrued and unpaid Interest on such Securities. The Trustee and Paying Agent shall then cause such funds to be paid to the Holders of the Securities being redeemed in accordance with this Article. If any Security delivered for redemption shall not be so redeemed by payment to the Holders thereof on the Redemption Date, the Principal amount of such Security shall, until it 50 is redeemed, bear Interest on the Redemption Date to but not including the actual date of redemption at the applicable Interest Rate, and each such Security shall remain convertible into shares of Common Stock pursuant to Article 11 until such Security shall have been so redeemed. If any Security called for redemption is converted, any money deposited with the Trustee or with a Paying Agent or so segregated and held in trust for the redemption of such Security shall (subject to any right of the Holder of such Security or any Predecessor Security to receive Interest as provided in Section 2.1(e)) be paid to the Company upon request by the Company or, if then held by the Company, shall be discharged from such trust. SECTION 10.7. SECURITIES REDEEMED IN PART. Any Security which is to be redeemed only in part shall be surrendered at an office or agency of the Company designated for that purpose pursuant to Section 9.2 hereof (with, if the Company or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder thereof or the Holder's attorney duly authorized in writing), and the Company shall execute, and the Trustee shall authenticate and deliver to the Holder of such Security without service charge, a new Security or Securities of any authorized denomination as requested by such Holder in Principal amount equal to and in exchange for the unredeemed portion of such Security so surrendered. ARTICLE 11 CONVERSION OF SECURITIES SECTION 11.1. CONVERSION RIGHT; EXPIRATION OF CONVERSION RIGHT; CONVERSION PRICE. (a) Subject to and upon compliance with the provisions of this Article, at the option of the Holder at any time after January 18, 2005 or in connection with a redemption pursuant to Sections 10.1(a) or (b) or such earlier date as the Company shall have provided notice to the Holders by mail, any Security or any portion of the Principal amount thereof which is an integral multiple of $1,000 may be converted at the Principal amount thereof, or of such portion thereof, into duly authorized, fully paid and nonassessable shares of Common Stock, at the Conversion Price, determined as hereinafter provided, in effect at the time of conversion. (b) The conversion right set forth in clause (a) above shall expire at the close of business on the Stated Maturity. In case a Security or portion thereof is called for redemption pursuant to Article 10, such conversion right in respect of such Security or the portion so called, shall expire at the close of business on the second Business Day preceding the Redemption Date, unless the Company defaults in making the payment due upon redemption. (c) The price at which shares of Common Stock shall be delivered upon conversion (the "CONVERSION PRICE") shall be initially equal to $12.00 per share of Common Stock, subject to adjustment, in certain instances, as provided in Section 11.4. (d) No payment or adjustment will be made for dividends on, or other 51 distributions with respect to, any Common Stock except as provided in this Article 11. SECTION 11.2. EXERCISE OF CONVERSION RIGHT. (a) To exercise the conversion right with respect to a Security, a Holder must (1) (i) as to a Global Security, deliver a completed conversion notice, the form of which is provided in Exhibit C, to the Depositary stating that the Holder elects to convert such Global Security or, if less than the entire Principal amount thereof is to be converted, the portion thereof to be converted, and (ii) as to a Physical Security, deliver a duly signed completed conversion notice and such Physical Security duly endorsed or assigned to the Company or in blank, at the office of any Conversion Agent, and (2) pay any transfer taxes or other applicable taxes or duties, if required. (b) To convert interests in a Global Security, a Holder must deliver to DTC the appropriate instruction form for conversion pursuant to DTC's conversion program or must deliver instructions in accordance with Euroclear's or Clearstream's normal operating procedures after application has been made to make the underlying Common Stock eligible for trading on Euroclear or Clearstream, as applicable. (c) To the extent provided in Section 2.1, the Holders of such converted Securities shall be entitled to receive (and retain) any accrued Interest on the Principal amount of such surrendered Securities, if any. (d) Securities shall be deemed to have been converted immediately prior to the close of business on the day of surrender of such Securities for conversion in accordance with the foregoing provisions, and at such time the rights of the Holders of such Securities as Holders shall cease, and the Person or Persons entitled to receive the shares of Common Stock issuable upon conversion shall be treated for all purposes as the record holder or holders of such shares of Common Stock at such time. (e) In the case of any Security which is converted in part only, or a Holder converts less than the Principal amount it owns at such time, upon such conversion the Company shall execute and the Trustee shall authenticate and deliver to the Holder thereof, at the expense of the Company, a new Security or Securities of authorized denominations in Principal amount equal to the unconverted portion of the Principal amount of such Securities. (f) As promptly as practicable on or after the Conversion Date, the Company shall cause to be issued and delivered to such Conversion Agent a certificate or certificates for the number of full shares of Common Stock issuable upon conversion of such Securities, together with payment in lieu of any fraction of a share as provided in Section 11.3 hereof. The Company hereby initially appoints the Trustee as the Conversion Agent. (g) Securities shall be deemed to have been converted immediately prior to the close of business on the day of surrender of such Securities for conversion in accordance with the foregoing provisions, and at such time the rights of the Holders of such Securities as Holders shall cease, and the Person or Persons entitled to receive the shares of Common Stock issuable upon conversion shall be treated for all purposes as the record holder or holders of such shares of Common Stock at such time. 52 SECTION 11.3. FRACTIONS OF SHARES. No fractional shares of Common Stock shall be issued upon conversion of any Security or Securities. If more than one Security shall be surrendered for conversion at one time by the same Holder, the number of full shares of Common Stock which shall be issued upon conversion thereof shall be computed on the basis of the Principal amount of the Securities (or specified portions thereof) so surrendered. Instead of any fractional shares of Common Stock which would otherwise be issued upon conversion of any Security or Securities (or specified portions thereof), the Company shall pay a cash adjustment in respect of such fraction (calculated to the nearest one-100th of a share) in an amount equal to the same fraction of the Trading Price of the shares of Common Stock as of the Trading Day preceding the Conversion Date. SECTION 11.4. ADJUSTMENT OF CONVERSION PRICE. The Conversion Price shall be subject to adjustment, calculated in good faith by the Company, from time to time as follows: (a) In case the Company shall hereafter pay a dividend or make a distribution to all holders of the outstanding Common Stock in shares of Common Stock, the Conversion Price in effect at the opening of business on the date following the date fixed for the determination of stockholders entitled to receive such dividend or other distribution shall be reduced by multiplying such Conversion Price by a fraction: (1) the numerator of which shall be the number of shares of Common Stock outstanding at the close of business on the Conversion Record Date fixed for such determination; and (2) the denominator of which shall be the sum of such number of shares and the total number of shares constituting such dividend or other distribution. Such reduction shall become effective immediately after the opening of business on the day following the Conversion Record Date. If any dividend or distribution of the type described in this Section 11.4(a) is declared but not so paid or made, the Conversion Price shall again be adjusted to the Conversion Price which would then be in effect if such dividend or distribution had not been declared. (b) In case the outstanding shares of Common Stock shall be subdivided into a greater number of shares of Common Stock, the Conversion Price in effect at the opening of business on the day following the day upon which such subdivision becomes effective shall be proportionately reduced, and conversely, in case outstanding shares of Common Stock shall be combined into a smaller number of shares of Common Stock, the Conversion Price in effect at the opening of business on the day following the day upon which such combination becomes effective shall be proportionately increased, such reduction or increase, as applicable, to become effective immediately after the opening of business on the day following the day upon which such subdivision or combination becomes effective. (c) In case the Company shall issue rights or warrants (other than any rights or 53 warrants issued pursuant to a rights plan (commonly referred to as a "poison pill" plan) referred to in Section 11.4(d)) to all holders of its outstanding shares of Common Stock entitling them to subscribe for or purchase shares of Common Stock (or securities convertible into shares of Common Stock) at a price per share (or having a conversion price per share) less than the Current Market Price on the Conversion Record Date fixed for the determination of stockholders entitled to receive such rights or warrants, the Conversion Price shall be adjusted so that the same shall equal the price determined by multiplying the Conversion Price in effect at the opening of business on the date after such Conversion Record Date by a fraction: (1) the numerator of which shall be the number of shares of Common Stock outstanding at the close of business on the Conversion Record Date, plus the number of shares which the aggregate offering price of the total number of shares so offered for subscription or purchase (or the aggregate conversion price of the convertible securities so offered) would purchase at such Current Market Price; and (2) the denominator of which shall be the number of shares of Common Stock outstanding on the close of business on the Conversion Record Date, plus the total number of additional shares of Common Stock so offered for subscription or purchase (or into which the convertible securities so offered are convertible). Such adjustment shall become effective immediately after the opening of business on the day following the Conversion Record Date fixed for determination of stockholders entitled to receive such rights or warrants. To the extent that shares of Common Stock (or securities convertible into Common Stock) are not delivered pursuant to such rights or warrants, upon the expiration or termination of such rights or warrants, the Conversion Price shall be readjusted to the Conversion Price which would then be in effect had the adjustments made upon the issuance of such rights or warrants been made on the basis of the delivery of only the number of shares of Common Stock (or securities convertible into Common Stock) actually delivered. In the event that such rights or warrants are not so issued, the Conversion Price shall again be adjusted to be the Conversion Price which would then be in effect if such date fixed for the determination of stockholders entitled to receive such rights or warrants had not been fixed. In determining whether any rights or warrants entitle the holders to subscribe for or purchase Common Stock at less than such Current Market Price, and in determining the aggregate offering price of such shares of Common Stock, there shall be taken into account any consideration received for such rights or warrants, the value of such consideration if other than cash, to be determined by the Board of Directors. (d) (i) In case the Company shall, by dividend or otherwise, declare a distribution to all holders of its Common Stock of shares of any class of Capital Stock of the Company (other than any dividends or distributions to which Section 11.4(a) applies) or evidences of its indebtedness, cash or other assets, including securities, but excluding (1) any rights or warrants referred to in Section 11.4(c), (2) dividends or distributions of stock, securities or other property or assets (including cash) in connection with a reclassification, change, merger, consolidation, statutory share exchange, combination, sale or conveyance to which Section 11.11 applies and (3) dividends and distributions paid exclusively in cash (such Capital Stock, evidence 54 of its indebtedness, cash, other assets or securities being distributed hereinafter in this Section 11.4(d) called the "DISTRIBUTED assets"), then, in each such case, subject to clause (ii) of this Section 11.4(d), the Conversion Price shall be reduced so that the same shall be equal to the price determined by multiplying the Conversion Price in effect immediately prior to the close of business on the Conversion Record Date with respect to such distribution by a fraction: (1) the numerator of which shall be the Current Market Price on such date, less the Fair Market Value (as determined by the Board of Directors, whose determination shall be conclusive and set forth in a Board Resolution) on such date of the portion of the distributed assets so distributed applicable to one share of Common Stock (determined on the basis of the number of shares of Common Stock outstanding on the Conversion Record Date); and (2) the denominator of which shall be such Current Market Price. Such reduction shall become effective immediately prior to the opening of business on the day following the Conversion Record Date. However, in the event that the then Fair Market Value (as so determined) of the portion of the distributed assets so distributed applicable to one share of Common Stock is equal to or greater than the Current Market Price on the Conversion Record Date, in lieu of the foregoing adjustment, adequate provision shall be made so that each Holder shall have the right to receive upon conversion of a Security (or any portion thereof) the amount of distributed assets such Holder would have received had such Holder converted such Security (or portion thereof) immediately prior to such Conversion Record Date. In the event that such dividend or distribution is not so paid or made, the Conversion Price shall again be adjusted to be the Conversion Price which would then be in effect if such dividend or distribution had not been declared. (ii) If the Board of Directors determines the Fair Market Value of any distribution for purposes of this Section 11.4(d) by reference to the actual or when issued trading market for any distributed assets comprising all or part of such distribution, it must in doing so consider the prices in such market over the same period (the "REFERENCE PERIOD") used in computing the Current Market Price to the extent possible, unless the Board of Directors in a Board Resolution determines in good faith that determining the Fair Market Value during the Reference Period would not be in the best interest of the Holders. (iii) Rights or warrants distributed by the Company to all holders of Common Stock entitling the holders thereof to subscribe for or purchase shares of the Company's Capital Stock (either initially or under certain circumstances), which rights or warrants, until the occurrence of a specified event or events specified in such rights or warrants or related instruments or agreements governing the same (a "TRIGGER EVENT"): (1) are deemed to be transferred with such shares of Common Stock; (2) are not exercisable; and (3) are also issued in respect of future issuances of Common Stock; shall be deemed not to have been distributed for purposes of this Section 11.4(d) (and no 55 adjustment to the Conversion Price under this Section 11.4(d) will be required) until the occurrence of the earliest Trigger Event; provided that (1) if such right or warrant is subject to subsequent events, upon the occurrence of which such right or warrant shall become exercisable to purchase different distributed assets, evidences of indebtedness or other assets or entitle the holder to purchase a different number or amount of the foregoing or to purchase any of the foregoing at a different purchase price, then the occurrence of each such event shall be deemed to be the date of issuance and the Conversion Record Date with respect to a new right or warrant (and a termination or expiration of the existing right or warrant without exercise by the holder thereof); and (2) in the event of any distribution (or deemed distribution) of rights or warrants, or any Trigger Event or other event (of the type described in the preceding sentence) with respect thereto, that resulted in an adjustment to the Conversion Price under this Section 11.4(d): (1) in the case of any such rights or warrants which shall all have been redeemed or purchased without exercise by any holders thereof, the Conversion Price shall be readjusted upon such final redemption or purchase to give effect to such distribution or Trigger Event, as applicable, as though it were a cash distribution, equal to the per share redemption or purchase price received by a holder of Common Stock with respect to such rights or warrants (assuming such holder had retained such rights or warrants), made to all holders of Common Stock as of the date of such redemption or purchase; and (2) in the case of such rights or warrants which shall have expired or been terminated without exercise, the Conversion Price shall be readjusted as if such rights and warrants had never been issued. For purposes of this Section 11.4(d) and Sections 11.4(a), 11.4(b) and 11.4(c), any dividend or distribution to which this Section 11.4(d) is applicable that also includes shares of Common Stock, a subdivision or combination of Common Stock to which Section 11.4(b) applies, or rights or warrants to subscribe for or purchase shares of Common Stock to which Section 11.4(c) applies (or any combination thereof), shall be deemed instead to be: (B) a dividend or distribution of the evidences of indebtedness, assets, shares of Capital Stock, rights or warrants, other than such shares of Common Stock, such subdivision or combination or such rights or warrants to which Sections 11.4(a), 11.4(b) and 11.4(c) apply, respectively (and any Conversion Price reduction required by this Section 11.4(d) with respect to such dividend or distribution shall then be made), immediately followed by (C) a dividend or distribution of such shares of Common Stock, such subdivision or combination or such rights or warrants (and any further Conversion Price reduction required by Sections 11.4(a), 11.4(b) and 11.4(c) with respect to such dividend or distribution shall then be made), except: (I) the Conversion Record Date of such dividend or distribution shall be substituted as (x) "the date fixed for the determination of stockholders entitled to receive such dividend or other distribution", "Conversion Record Date fixed for such determinations" and "Conversion Record Date" within the meaning of Section 11.4(a), (y) "the day upon which such subdivision 56 becomes effective" and "the day upon which such combination becomes effective" within the meaning of Section 11.4(b), and (z) as "the date fixed for the determination of stockholders entitled to receive such rights or warrants", "the Conversion Record Date fixed for the determination of the stockholders entitled to receive such rights or warrants" and such "Conversion Record Date" within the meaning of Section 11.4(c); and (II) any shares of Common Stock included in such dividend or distribution shall not be deemed "outstanding at the close of business on the date fixed for such determination" within the meaning of Section 11.4(a) and any reduction or increase in the number of shares of Common Stock resulting from such subdivision or combination shall be disregarded in connection with such dividend or distribution. (e) In case the Company shall, by dividend or otherwise, declare a distribution to all holders of its Common Stock of cash (excluding any cash that is distributed upon a reclassification, change, merger, consolidation, statutory share exchange, combination, sale or conveyance to which Section 11.11 applies or as part of a distribution referred to in Section 11.4(d)), in an aggregate amount that, combined together with: (1) the aggregate amount of any other such distributions to all holders of Common Stock made exclusively in cash within the 12 months preceding the date of payment of such distribution, and in respect of which no adjustment pursuant to this Section 11.4(e) has been made; and (2) the aggregate of any cash plus the Fair Market Value (as determined by the Board of Directors, whose determination shall be conclusive and set forth in a Board Resolution) of consideration payable in respect of any tender offer by the Company or any of its Subsidiaries for all or any portion of the Common Stock concluded within the 12 months preceding the date of such distribution, and in respect of which no adjustment pursuant to Section 11.4(f) has been made; exceeds 10% of the product of the Current Market Price on the Conversion Record Date with respect to such distribution multiplied by the number of shares of Common Stock outstanding on such date, then and in each such case, immediately after the close of business on such date, the Conversion Price shall be reduced so that the same shall equal the price determined by multiplying the Conversion Price in effect immediately prior to the close of business on such Conversion Record Date by a fraction: (1) the numerator of which shall be equal to the Current Market Price on the Conversion Record Date less an amount equal to the quotient of (x) the excess of such combined amount over such 10% and (y) the number of shares of Common Stock outstanding on the Conversion Record Date, and (2) the denominator of which shall be equal to the Current Market Price on such date. 57 However, in the event that the then Fair Market Value (as so determined) of the portion of the securities so distributed applicable to one share of Common Stock is equal to or greater than the Current Market Price on the Conversion Record Date, in lieu of the foregoing adjustment, adequate provision shall be made so that each Holder shall have the right to receive upon conversion of a Security (or any portion thereof) the amount of cash such Holder would have received had such Holder converted such Security (or portion thereof) immediately prior to such Conversion Record Date. In the event that such dividend or distribution is not so paid or made, the Conversion Price shall again be adjusted to be the Conversion Price which would then be in effect if such dividend or distribution had not been declared. (f) In case a tender offer made by the Company or any of its Subsidiaries for all or any portion of the Common Stock shall expire and such tender offer (as amended upon the expiration thereof) shall require the payment to stockholders (based on the acceptance (up to any maximum specified in the terms of the tender offer) of Purchased Shares) of an aggregate consideration having a Fair Market Value (as determined by the Board of Directors, whose determination shall be conclusive and set forth in a Board Resolution) that combined together with: (1) the aggregate of the cash plus the Fair Market Value (as determined by the Board of Directors, whose determination shall be conclusive and set forth in a Board Resolution), as of the expiration of such tender offer, of consideration payable in respect of any other tender offers, by the Company or any of its Subsidiaries for all or any portion of the Common Stock expiring within the 12 months preceding the expiration of such tender offer and in respect of which no adjustment pursuant to this Section 11.4(f) has been made; and (2) the aggregate amount of any distributions to all holders of the Common Stock made exclusively in cash within 12 months preceding the expiration of such tender offer and in respect of which no adjustment pursuant to Section 11.4(e) has been made, exceeds 10% of the product of the Current Market Price as of the last time (the "EXPIRATION TIME") tenders could have been made pursuant to such tender offer (as it may be amended) multiplied by the number of shares of Common Stock outstanding (including any tendered shares) on the Expiration Time, then, and in each such case, immediately prior to the opening of business on the day after the date of the Expiration Time, the Conversion Price shall be adjusted so that the same shall equal the price determined by multiplying the Conversion Price in effect immediately prior to close of business on the date of the Expiration Time by a fraction: (1) the numerator of which shall be the number of shares of Common Stock outstanding (including any tendered shares) at the Expiration Time multiplied by the Current Market Price of the Common Stock on the Trading Day next succeeding the Expiration Time; and (2) the denominator shall be the sum of (x) the Fair Market Value (determined as aforesaid) of the aggregate consideration payable to stockholders 58 based on the acceptance (up to any maximum specified in the terms of the tender offer) of all shares validly tendered and not withdrawn as of the Expiration Time (the shares deemed so accepted, up to any such maximum, being referred to as the "PURCHASED SHARES") and (y) the product of the number of shares of Common Stock outstanding (less any Purchased Shares) on the Expiration Time and the Current Market Price of the Common Stock on the Trading Day next succeeding the Expiration Time. Such reduction (if any) shall become effective immediately prior to the opening of business on the day following the Expiration Time. In the event that the Company is obligated to purchase shares pursuant to any such tender offer, but the Company is permanently prevented by applicable law from effecting any such purchases or all such purchases are rescinded, the Conversion Price shall again be adjusted to be the Conversion Price which would then be in effect if such tender offer had not been made. (g) For purposes of this Section 11.4, the following terms shall have the meanings indicated: (1) "CURRENT MARKET PRICE" shall mean the average of the daily Trading Prices per share of Common Stock (or such other security as specified herein) for the ten consecutive Trading Days immediately prior to the date in question; provided, however, that if: (i) the "ex" date (as hereinafter defined) for any event (other than the issuance or distribution requiring such computation) that requires an adjustment to the Conversion Price pursuant to Section 11.4(a), (b), (c), (d), (e) or (f) occurs during such ten consecutive Trading Days, the Trading Price for each Trading Day prior to the "ex" date for such other event shall be adjusted by multiplying such Trading Price by the same fraction by which the Conversion Price is so required to be adjusted as a result of such other event; (ii) the "ex" date for any event (other than the issuance or distribution requiring such computation) that requires an adjustment to the Conversion Price pursuant to Section 11.4(a), (b), (c), (d), (e) or (f) occurs on or after the "ex" date for the issuance or distribution requiring such computation and prior to the day in question, the Trading Price for each Trading Day on and after the "ex" date for such other event shall be adjusted by multiplying such Trading Price by the reciprocal of the fraction by which the Conversion Price is so required to be adjusted as a result of such other event; and (iii) the "ex" date for the issuance or distribution requiring such computation is prior to the day in question, after taking into account any adjustment required pursuant to clause (i) or (ii) of this proviso, the Trading Price for each Trading Day on or after such "ex" date shall be adjusted by adding thereto the amount of any cash and the Fair Market 59 Value (as determined by the Board of Directors in a manner consistent with any determination of such value for purposes of Section 11.4(d) or (f), whose determination shall be conclusive and set forth in a Board Resolution) of the evidences of indebtedness, shares of Capital Stock or assets being distributed applicable to one share of Common Stock as of the close of business on the day before such "ex" date. For purposes of any computation under Section 11.4(f), the Current Market Price of the Common Stock on any date shall be deemed to be the average of the daily Trading Prices per share of Common Stock for such day and the two consecutive Trading Days immediately prior; provided, however, that if the "ex" date for any event (other than the tender offer requiring such computation) that requires an adjustment to the Conversion Price pursuant to Section 11.4(a), (b), (c), (d), (e) or (f) occurs on or after the Expiration Time for the tender or exchange offer requiring such computation and prior to the day in question, the Trading Price for each Trading Day on and after the "ex" date for such other event shall be adjusted by multiplying such Trading Price by the reciprocal of the fraction by which the Conversion Price is so required to be adjusted as a result of such other event. For purposes of this paragraph, the term "ex" date, when used: (I) with respect to any issuance or distribution, means the first date on which the Common Stock trades regular way on the relevant exchange or in the relevant market from which the Trading Price was obtained without the right to receive such issuance or distribution; (II) with respect to any subdivision or combination of shares of Common Stock, means the first date on which the shares of Common Stock trade regular way on such exchange or in such market after the time at which such subdivision or combination becomes effective; or (III) with respect to any tender or exchange offer, means the first date on which the Common Stock trades regular way on such exchange or in such market after the Expiration Time of such offer. Notwithstanding the foregoing, whenever successive adjustments to the Conversion Price are called for pursuant to this Section 11.4, such adjustments shall be made to the Current Market Price as may be necessary or appropriate to effectuate the intent of this Section 11.4 and to avoid unjust or inequitable results as determined in good faith by the Board of Directors. (2) "FAIR MARKET VALUE" shall mean, if there is a current market for the asset, debt or transaction in question, the amount that a willing buyer would pay a willing seller in an arm's length transaction or, in the absence of a current market for such asset, debt or transaction, the amount determined in good faith by the Board of Directors that represents its determination of the fair market value of the asset. (3) "CONVERSION RECORD DATE" shall mean, with respect to any dividend, distribution or other transaction or event in which the holders of Common Stock have the right to receive any cash, securities or other property or in which the Common Stock (or other applicable security) is exchanged for or converted into 60 any combination of cash, securities or other property, the date fixed for determination of stockholders entitled to receive such cash, securities or other property (whether such date is fixed by the Board of Directors or by statute, contract or otherwise). The Company may make such reductions in the Conversion Price, in addition to those required by Sections 11.4(a), (b), (c), (d), (e) or (f) as the Board of Directors considers to be advisable to avoid or diminish any income tax to holders of Common Stock or rights to purchase Common Stock resulting from any dividend or distribution of stock (or rights to acquire stock) or from any event treated as such for income tax purposes or otherwise. (h) No adjustment need be made for (i) a transaction referred to in Sections 11.4 or 11.11 if Holders participate in the transaction without conversion on a basis and with notice that the Board of Directors determines in good faith as evidenced in a Board Resolution to be fair and appropriate in light of the basis and notice on which holders of shares of Common Stock participate in the transaction; (ii) the issuance and distribution of rights to purchase shares of Common Stock pursuant to (A) a Company plan for reinvestment of dividends or interest, (B) a change in the par value or no par value of the shares of Common Stock or (C) to the extent the Securities become convertible pursuant to this Article 11 in whole or in part into cash, with respect to such cash after such cash is distributed to the Holders in satisfaction of such conversion right. (i) To the extent permitted by applicable law, the Company from time to time may reduce the Conversion Price by any amount for any period of time if the period is at least 20 days and the reduction is irrevocable during the period and the Board of Directors determines in good faith that such reduction would be in the best interests of the Holders, which determination shall be conclusive and set forth in a Board Resolution. Whenever the Conversion Price is reduced pursuant to the preceding sentence, the Company shall mail to the Trustee and the Conversion Agent and each Holder at the address of such Holder as it appears in the Register a notice of the reduction at least 15 days prior to the date the reduced Conversion Price takes effect, and such notice shall state the reduced Conversion Price and the period during which it will be in effect. (j) No adjustment in the Conversion Price shall be required unless such adjustment would require an increase or decrease of at least 1% in such price; provided, however, that any adjustments which by reason of this Section 11.4(j) are not required to be made shall be carried forward and taken into account in any subsequent adjustment. All calculations under this Article 11 shall be made by the Company in good faith and shall be made to the nearest cent or to the nearest one hundredth of a share, as applicable. No adjustment need be made for a change in the par value or no par value of the Common Stock. (k) No adjustment in Conversion Price shall be required if the Fair Market Value of any assets, debt securities or rights, warrants or options to purchase the securities of the Company, including but not limited to Common Stock, in each case applicable to each share of Common Stock are distributed to the Company's stockholders and such Fair Market Value either equals or exceeds the Current Market Price or such Current Market Price exceeds such Fair Market Value by an amount not exceeding $1.00; provided, however, that any adjustments which 61 by reason of this Section 11.4(k) are not required to be made shall be distributed upon conversion of any Security in an amount of assets, securities or rights, warrants or options comprising the distribution that a Holder would have received if such Holder had converted such Security immediately prior to the Conversion Record Date. (l) In any case in which this Section 11.4 provides that an adjustment shall become effective immediately after a Conversion Record Date for an event, the Company may defer until the occurrence of such event (i) issuing to the Holder of any security converted after such Conversion Record Date and before the occurrence of such event the additional shares of Common Stock issuable upon such conversion by reason of the adjustment required by such event over and above the Common Stock issuable upon such conversion before giving effect to such adjustment and (ii) paying to such Holder any amount in cash in lieu of any fraction pursuant to Section 11.3. (m) For purposes of this Section 11.4, the number of shares of Common Stock at any time outstanding shall not include shares held in the treasury of the Company but shall include shares issuable in respect of scrip certificates issued in lieu of fractions of shares of Common Stock. The Company will not pay any dividend or make any distribution on shares of Common Stock held in the treasury of the Company. (n) If the distribution date for the rights provided in the Company's rights agreement, if any, occurs prior to the date a Security is converted, the Holder of such Security who converts such Security after the distribution date is not entitled to receive the rights that would otherwise be attached (but for the date of conversion) to the shares of Common Stock received upon such conversion; provided, however, that an adjustment shall be made to the Conversion Price pursuant to clause 11.4(b) as if the rights were being distributed to the common stockholders of the Company immediately prior to such conversion. If such an adjustment is made and the rights are later redeemed, invalidated or terminated, then a corresponding reversing adjustment shall be made to the Conversion Price, on an equitable basis, to take account of such event. (o) In case the Company shall, by dividend or otherwise, distribute to all holders of its Common Stock shares of any class of Capital Stock of a Subsidiary of the Company, then the Conversion Price shall be reduced so that the same shall be equal to the price determined by multiplying the Conversion Price in effect immediately prior to the close of business on the Conversion Record Date with respect to such distribution by a fraction: (1) the numerator of which shall be the Current Market Price of the shares of Capital Stock of such Subsidiary (as determined by the Board of Directors, whose determination shall be conclusive and set forth in a Board Resolution), measured from the date of such distribution; and (2) the denominator of which shall be the Current Market Price of the Company's Common Stock, measured from the date of such distribution. SECTION 11.5. NOTICE OF ADJUSTMENTS OF CONVERSION PRICE. Whenever the Conversion Price is adjusted as herein provided (other than in the 62 case of an adjustment pursuant to the second paragraph of Section 11.4(i) for which the notice required by such paragraph has been provided), the Company shall promptly file with the Trustee and any Conversion Agent other than the Trustee an Officers' Certificate setting forth the adjusted Conversion Price and showing in reasonable detail the facts upon which such adjustment is based. Promptly after delivery of such Officers' Certificate, the Company shall prepare a notice stating that the Conversion Price has been adjusted and setting forth the adjusted Conversion Price and the date on which each adjustment becomes effective, and shall mail such notice to each Holder at the address of such Holder pursuant to Section 12.2 within 20 days prior to the effective date of such adjustment. SECTION 11.6. NOTICE PRIOR TO CERTAIN ACTIONS. In case at any time after the date hereof: (1) the Company shall declare a dividend (or any other distribution) on its Common Stock payable otherwise than in cash out of its capital surplus or its consolidated retained earnings; (2) the Company shall authorize the granting to the holders of its Common Stock of rights or warrants to subscribe for or purchase any shares of Capital Stock of any class (or of securities convertible into shares of Capital Stock of any class) or of any other rights; (3) there shall occur any reclassification of the Common Stock of the Company (other than a subdivision or combination of its outstanding Common Stock, a change in par value, a change from par value to no par value or a change from no par value to par value), or any merger, consolidation, statutory share exchange or combination to which the Company is a party and for which approval of any shareholders of the Company is required, or the sale, transfer or conveyance of all or substantially all of the assets of the Company; or (4) there shall occur the voluntary or involuntary dissolution, liquidation or winding up of the Company; the Company shall cause to be filed at each office or agency maintained for the purpose of conversion of securities pursuant to Section 9.2, and shall cause to be provided to the Trustee and all Holders in accordance with Section 12.2, at least 20 days (or 10 days in any case specified in clause (1) or (2) above) prior to the applicable record or effective date hereinafter specified, a notice stating: (B) the date on which a record is to be taken for the purpose of such dividend, distribution, rights or warrants, or, if a record is not to be taken, the date as of which the holders of shares of Common Stock of record to be entitled to such dividend, distribution, rights or warrants are to be determined; or (C) the date on which such reclassification, merger, consolidation, statutory share exchange, combination, sale, transfer, conveyance, dissolution, liquidation or winding up is expected to become effective, and the date as of which it is expected that holders of shares of 63 Common Stock of record shall be entitled to exchange their shares of Common Stock for securities, cash or other property deliverable upon such reclassification, merger, consolidation, statutory share exchange, sale, transfer, dissolution, liquidation or winding up. Neither the failure to give such notice nor any defect therein shall affect the legality or validity of the proceedings or actions described in clauses (1) through (4) of this Section 11.6. SECTION 11.7. COMPANY TO RESERVE COMMON STOCK. The Company shall at all times reserve and keep available, free from preemptive rights, out of its authorized but unissued Common Stock including treasury shares, for the purpose of effecting the conversion of the Securities (including PIK Loans), the full number of shares of fully paid and nonassessable Common Stock then issuable upon the conversion of all Outstanding Securities (including PIK Loans). SECTION 11.8. COMMON STOCK TO BE FULLY PAID AND NONASSESSABLE. The Company covenants that all Common Stock which may be issued upon conversion of Securities will upon issue be duly and validly issued, fully paid and nonassessable, free from preemptive rights and free of any lien or adverse claim and, except as provided in Section 11.9, the Company will pay all taxes, liens and charges with respect to the issue thereof. SECTION 11.9. TAXES ON CONVERSIONS. Except as provided in the next sentence, the Company will pay any and all taxes (other than taxes on income) and duties that may be payable in respect of the issue or delivery of shares of Common Stock on conversion of Securities pursuant to Article 11. A Holder delivering a Security for conversion shall be liable for and will be required to pay any tax or duty which may be payable in respect of any transfer involved in the issue and delivery of shares of Common Stock in a name other than that of the Holder of such Security or Securities to be converted, and no such issue or delivery shall be made unless the Person requesting such issue has paid to the Company the amount of any such tax or duty, or has established to the satisfaction of the Company that such tax or duty has been paid. SECTION 11.10. CANCELLATION OF CONVERTED SECURITIES. All Securities delivered for conversion shall be delivered to the Trustee to be canceled by or at the direction of the Trustee. SECTION 11.11. EFFECT OF RECLASSIFICATION, CONSOLIDATION, MERGER OR SALE. If any of following events occur: (1) any reclassification or change of the outstanding shares of Common Stock (other than a change in par value, or from par value to no par value, or from no par value to par value, or as a result of a subdivision or combination), as a result of which holders of Common Stock shall be entitled to receive Capital 64 Stock, securities or other property or assets (including cash) with respect to or in exchange for such Common Stock; (2) any merger, consolidation, statutory share exchange or combination of the Company with another Person as a result of which holders of Common Stock shall be entitled to receive stock, securities or other property or assets (including cash) with respect to or in exchange for such Common Stock; or (3) any sale or conveyance of the properties and assets of the Company as, or substantially as, an entirety to any other Person as a result of which holders of Common Stock shall be entitled to receive stock, securities or other property or assets (including cash) with respect to or in exchange for such Common Stock, then the Company or the successor or purchasing Person, as applicable, shall execute with the Trustee a supplemental indenture (which shall comply with this Indenture and the TIA as in force at the date of execution of such supplemental indenture if such supplemental indenture is then required to so comply) providing that such Security shall be convertible into the kind and amount of shares of capital stock and other securities or property or assets (including cash) which such Holder would have been entitled to receive upon such reclassification, change, merger, consolidation, statutory share exchange, combination, sale or conveyance had such Securities been converted into Common Stock immediately prior to such reclassification, change, merger, consolidation, statutory share exchange, combination, sale or conveyance assuming such holder of Common Stock did not exercise its rights of election, if any, as to the kind or amount of securities, cash or other property receivable upon such merger, consolidation, statutory share exchange, sale or conveyance (provided that, if the kind or amount of securities, cash or other property receivable upon such merger, consolidation, statutory share exchange, sale or conveyance is not the same for each share of Common Stock in respect of which such rights of election shall not have been exercised ("NON-ELECTING SHARE"), then for the purposes of this Section 11.11 the kind and amount of securities, cash or other property receivable upon such merger, consolidation, statutory share exchange, sale or conveyance for each Non-Electing Share shall be deemed to be the kind and amount so receivable per share by a plurality of the Non-Electing Shares). Such supplemental indenture shall provide for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Article 11. If, in the case of any such reclassification, change, merger, consolidation, statutory share exchange, combination, sale or conveyance, the stock or other securities and assets receivable thereupon by a holder of Common Stock includes shares of stock or other securities and assets of a corporation other than the successor or purchasing corporation, as applicable, in such reclassification, change, merger, consolidation, statutory share exchange, combination, sale or conveyance, then such supplemental indenture shall also be executed by such other corporation and shall contain such additional provisions to protect the interests of the Holders as the Board of Directors shall reasonably consider necessary by reason of the foregoing. The Company shall cause notice of the execution of such supplemental indenture to be mailed to each Holder, at the address of such Holder as it appears on the Register, within 20 days after execution thereof. Failure to deliver such notice shall not affect the legality or validity of such supplemental indenture. 65 The above provisions of this Section shall apply to successive or series of related reclassifications, mergers, consolidations, statutory share exchanges, combinations, sales and conveyances. If this Section 11.11 applies to any event or occurrence, Section 11.4 shall not apply. SECTION 11.12. RESPONSIBILITY OF TRUSTEE FOR CONVERSION PROVISIONS. (a) The Trustee, subject to the provisions of Section 5.1, and any Conversion Agent shall not at any time be under any duty or responsibility to any Holder of Securities to determine whether any facts exist which may require any adjustment of the Conversion Price, or with respect to the nature or intent of any such adjustments when made, or with respect to the method employed, or herein or in any supplemental indenture provided to be employed, in making the same. Neither the Trustee, subject to the provisions of Section 5.1, nor any Conversion Agent shall be accountable with respect to the validity or value (of the kind or amount) of any Common Stock or of any other securities or property, which may at any time be issued or delivered upon the conversion of any Security; and it or they do not make any representation with respect thereto. Neither the Trustee, subject to the provisions of Section 5.1, nor any Conversion Agent shall be responsible for any failure of the Company to make any cash payment or to issue, transfer or deliver any shares of stock or share certificates or other securities or property upon the surrender of any Security for the purpose of conversion; and the Trustee, subject to the provisions of Section 5.1, and any Conversion Agent shall not be responsible or liable for any failure of the Company to comply with any of the covenants of the Company contained in this Article. ARTICLE 12 OTHER PROVISIONS OF GENERAL APPLICATION SECTION 12.1. TRUST INDENTURE ACT CONTROLS. This Indenture is subject to the provisions of the TIA which are then applicable and required to be part of this Indenture, and shall, to the extent so applicable and required, be governed by such provisions. SECTION 12.2. NOTICES. Any notice or communication to the Company or the Trustee is duly given if in writing (which may be by facsimile with the original to follow) and delivered in person or mailed by first-class mail to the address set forth below: (a) if to the Company: America West Holdings Corporation 111 West Rio Salado Parkway Tempe, Arizona 85281 Attn: Executive Vice President and Chief Financial Officer 66 Fax: (480) 693-2899 With a copy to: Cooley Godward LLP One Maritime Plaza 20th Floor San Francisco, California 94111 Attn.: Samuel M. Livermore Fax: (415) 951-3699 (b) if to the Trustee: Wilmington Trust Company Rodney Square North 1100 North Market Street Wilmington, Delaware 19890 Attn: Corporate Trust Administration Fax: (302) 651-8882 The Company or the Trustee by notice to the other may designate additional or different addresses for subsequent notices or communications. Any notice or communication to a Holder shall be mailed by first class mail to his address shown on the Register kept by the Registrar. Failure to mail a notice or communication to a Holder or any defect in such notice or communication shall not affect its sufficiency with respect to other Holders. If the Company mails a notice or communication to Holders, it shall mail a copy to the Trustee at the same time. If a notice or communication is mailed or sent in the manner provided above within the time prescribed it is duly given as of the date it is mailed, whether or not the addressee receives it. SECTION 12.3. COMMUNICATION BY HOLDERS WITH OTHER HOLDERS. Holders may communicate pursuant to Section 312(b) of the TIA with other Holders with respect to their rights under the Securities or this Indenture. The Company, the Trustee, the Registrar and anyone else shall have the protection of Section 312(c) of the TIA. SECTION 12.4. ACTS OF HOLDERS OF SECURITIES. (a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Holders of Securities may be embodied in and evidenced by: (1) one or more instruments of substantially similar tenor signed by such Holders in person or by agent or proxy duly appointed in writing; 67 (2) the record of Holders of Securities voting in favor thereof, either in person or by proxies duly appointed in writing, at any meeting of Holders of Securities duly called and held in accordance with the provisions of Article 8; or (3) a combination of such instruments and any such record. Except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments or record or both are delivered to the Trustee and, where it is hereby expressly required, to the Company. Such instrument or instruments and record (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "ACT" of the Holders of Securities signing such instrument or instruments and so voting at such meeting. Proof of execution of any such instrument or of a writing appointing any such agent or proxy, or of the holding by any Person of a Security, shall be sufficient for any purpose of this Indenture and (subject to Section 5.1) conclusive in favor of the Trustee and the Company if made in the manner provided in this Section. The record of any meeting of Holders of Securities shall be proved in the manner provided in Section 8.6. (b) The fact and date of the execution by any Person of any such instrument or writing may be provided in any manner which the Trustee reasonably deems sufficient. (c) The Principal amount and serial numbers of Securities held by any Person, and the date of such Person holding the same, shall be proved by the Register. (d) Any request, demand, authorization, direction, notice, consent, election, waiver or other Act of the Holders of any Security shall bind every future Holder of the same Security and the Holder of every Security issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done, omitted or suffered to be done by the Trustee, the Company in reliance thereon, whether or not notation of such action is made upon such Security. SECTION 12.5. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT. In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents. Any certificate or opinion of an officer of the Company may be based, insofar as it relates to legal matters, upon an Opinion of Counsel, unless such officer knows, or in the exercise of reasonable care should know, that the Opinion of Counsel with respect to the matters upon which such certificate or opinion is based is erroneous. Any such Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or representations by, an officer or officers of the Company stating that the information with respect to such factual matters is in the possession of the Company unless such counsel knows, or in the exercise of reasonable care should know, that the certificate or representations with respect to such matters are erroneous. 68 Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument. Upon any application or request by the Company to the Trustee to take any action under any provision of this Indenture, the Company shall furnish to the Trustee an Officers' Certificate stating that all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with. SECTION 12.6. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION. Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture shall include: (1) a statement that each individual signing such certificate or opinion on behalf of the Company, has read such covenant or condition and the definitions herein relating thereto; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (3) a statement that, in the opinion of each such individual, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and (4) a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with. SECTION 12.7. EFFECT OF HEADINGS AND TABLE OF CONTENTS. The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof. SECTION 12.8. SUCCESSORS AND ASSIGNS. All covenants and agreements in this Indenture by the Company shall bind its successors and assigns, whether so expressed or not. SECTION 12.9. SEPARABILITY CLAUSE. In case any provision in this Indenture or the Securities shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 12.10. BENEFITS OF INDENTURE. 69 (a) Subject to clause (b) below, nothing contained in this Indenture or in the Securities, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder and the Holders of Securities, any benefit or legal or equitable right, remedy or claim under this Indenture. (b) The Registration Rights Agreement is being entered into by the Company in connection with the issuance of the Securities for the benefit of the Holders from time to time with the intention that the Holders may enforce their rights as if they are parties thereto. Notwithstanding any provision herein to the contrary, the Trustee shall not be deemed a party to the Registration Rights Agreement and any rights or remedies available to the Holders thereunder may be directly pursued by such Holders in accordance with the terms therein. SECTION 12.11. GOVERNING LAW. THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. SECTION 12.12. COUNTERPARTS. This instrument may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original but all such counterparts shall together constitute but one and the same instrument. SECTION 12.13. LEGAL HOLIDAYS. In any case where any Interest Payment Date, Redemption Date or Stated Maturity of any Security or the last day on which a Holder of a Security has a right to convert such Security shall not be a Business Day at any Place of Payment or Place of Conversion, then (notwithstanding any other provision of this Indenture or of the Securities) payment of Principal on or Interest on or conversion of the Securities, need not be made at such Place of Payment or Place of Conversion on such day, but may be made on the next succeeding Business Day at such Place of Payment or Place of Conversion with the same force and effect as if made on the Interest Payment Date, Redemption Date or at the Stated Maturity or on such last day for conversion; provided, however, that in the case that payment is made on such succeeding Business Day, no Interest shall accrue on the amount so payable for the period from and after such Interest Payment Date, Redemption Date or Stated Maturity, as applicable. SECTION 12.14. RECOURSE AGAINST OTHERS. Other than pursuant to the Guaranty, no recourse for the payment of the Principal of or Interest on any Securities, or for any claim based thereon or otherwise in respect thereof, shall be had against any incorporator, shareholder, officer or director or manager, as such, past, present or future, of the Company or any successor entity to the Company, whether by virtue of any constitution, statute or rule of law or by the enforcement of any assessment or penalty or otherwise, all such liability being, by the acceptance thereof and as part of the consideration for the issue thereof, expressly waived and released. 70 IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed all as of the day and year first above written. AMERICA WEST HOLDINGS CORPORATION By: /s/ Stephen L. Johnson Name: Stephen L. Johnson Title: Executive Vice President -- Corporate WILMINGTON TRUST COMPANY, AS TRUSTEE AND NOT IN ITS INDIVIDUAL CAPACITY By: /s/ W. Chris Sponenberg Name: W. Chris Sponenberg Title: Vice President 71 EXHIBIT A FORM OF SECURITY Reference is made to Exhibit 4.16 to the America West Holdings Corporation and America West Airlines, Inc. Form 8-K filed on January 31, 2002 with the Securities and Exchange Commission. EXHIBIT B ASSIGNMENT FORM To assign this Security, fill in the form below and have your signature guaranteed: (I) or (we) assign and transfer this Security to: ________________________________________________________________________________ (Insert assignee's soc. sec. or tax I.D. no.) ________________________________________________________________________________ (Print or type assignee's name, address and zip code) and irrevocably appoint _______________ to transfer this Security on the books of the Company. The agent may substitute another to act for him. Your Name:________________________________________________________________ (Print your name exactly as it appears on the face of this Security) Dated:____________________________________________________________________ Your Signature:___________________________________________________________ (Sign exactly as your name appears on the face of this Security) SIGNATURE GUARANTEE*:___________________________________________________________ _________________ * Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee). EXHIBIT C FORM OF CONVERSION NOTICE TO: America West Holdings Corporation 111 West Rio Salado Parkway Tempe, Arizona 85281 The undersigned registered owner of this Security hereby irrevocably exercises the option to convert this Security, or the portion hereof (which is $1,000 Principal amount or an integral multiple thereof) below designated, into shares of Common Stock in accordance with the terms of the Indenture referred to in this Security, and directs that the shares issuable and deliverable upon such conversion, together with any check in payment for fractional shares and any Securities representing any unconverted Principal amount hereof, be issued and delivered to the registered holder hereof unless a different name has been indicated below. If shares or any portion of this Security not converted are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto. Your Name:________________________________________________________________ (Print your name exactly as it appears on the face of this Security) Dated:____________________________________________________________________ Your Signature:___________________________________________________________ (Sign exactly as your name appears on the face of this Security) Signature Guarantee*:_____________________________________________________ Social Security or other Taxpayer Identification Number:__________________ Principal amount to be converted (if less than all):$_____________________ Fill in for registration of shares (if to be issued) and Securities (if to be delivered) other than to and in the name of the registered holder ________________________________________________________________________________ (Name) ________________________________________________________________________________ (Street Address) ________________________________________________________________________________ (City, State and Zip Code) _________________ * Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee). EXHIBIT D FORM OF REGISTRATION RIGHTS AGREEMENT Reference is made to Exhibit 4.17 to the America West Holdings Corporation and America West Airlines, Inc. Form 8-K filed on January 31, 2002 with the Securities and Exchange Commission. EX-4.16 4 p66064ex4-16.txt EX-4.16 EXHIBIT 4.16 [FACE OF SECURITY] FORM OF SECURITY UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO. HAS AN INTEREST HEREIN. THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY DTC OR BY A NOMINEE OF DTC TO DTC OR ANOTHER NOMINEE OF DTC OR BY DTC OR ANY SUCH NOMINEE TO A SUCCESSOR OF DTC OR A NOMINEE OF SUCH SUCCESSOR. THE FOREGOING LEGEND MAY BE REMOVED FROM THIS SECURITY ON SATISFACTION OF THE CONDITIONS SPECIFIED IN THE INDENTURE. EACH BENEFICIAL OWNER OF AN INTEREST IN ANY OF THE SECURITIES EVIDENCED BY THIS SECURITY (INCLUDING ANY PARTICIPANT IN THE DEPOSITARY HOLDING THIS SECURITY THAT IS SHOWN AS HOLDING SUCH AN INTEREST ON THE RECORDS OF SUCH DEPOSITARY AND EACH BENEFICIAL OWNER THAT HOLDS THROUGH ANY SUCH PARTICIPANT) AGREES FOR THE BENEFIT OF AMERICA WEST HOLDINGS CORPORATION (THE "COMPANY") AND AMERICA WEST AIRLINES, INC. ("AMERICA WEST") THAT THIS SECURITY, ANY GUARANTEES THEREOF, AND ANY COMMON STOCK ISSUABLE UPON CONVERSION OF THIS SECURITY MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED (X) PRIOR TO THE SECOND ANNIVERSARY (OR SUCH SHORTER PERIOD AS MANY THEN BE APPLICABLE UNDER THE SECURITIES ACT REGARDING THE HOLDING PERIOD FOR NOTES OR THE COMMON STOCK ISSUABLE UPON CONVERSION THEREOF UNDER RULE 144(K) OF THE SECURITIES ACT OR ANY SUCCESSOR RULE) OF THE ISSUANCE HEREOF OR (Y) BY ANY HOLDER THAT WAS AN AFFILIATE OF THE COMPANY OR AMERICA WEST AT ANY TIME DURING THE THREE MONTHS PRECEDING THE DATE OF SUCH TRANSFER, IN EITHER CASE OTHER THAN (1) TO THE COMPANY, (2) SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A") TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A A-1 QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE OFFER, SALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (3) TO AN INSTITUTION THAT IS AN "ACCREDITED INVESTOR" AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS ACQUIRING THIS SECURITY FOR INVESTMENT PURPOSES AND NOT FOR DISTRIBUTION, (4) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 (IF APPLICABLE) UNDER THE SECURITIES ACT, (5) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, OR (6) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR OTHER JURISDICTION. EACH BENEFICIAL OWNER OF AN INTEREST IN ANY OF THE SECURITIES EVIDENCED BY THIS SECURITY AGREES THAT IT WILL FURNISH TO THE COMPANY AND THE TRUSTEE SUCH CERTIFICATES AND OTHER INFORMATION AS THEY MAY REASONABLY REQUIRE TO CONFIRM THAT ANY TRANSFER BY IT OF THIS SECURITY COMPLIES WITH THE FOREGOING RESTRICTIONS. EACH BENEFICIAL OWNER WILL, AND EACH SUBSEQUENT BENEFICIAL OWNER OF AN INTEREST IN ANY OF THE SECURITIES EVIDENCED BY THIS SECURITY IS REQUIRED TO, NOTIFY ANY PURCHASER OF ANY BENEFICIAL INTEREST IN THE SECURITIES OR SUCH COMMON STOCK ISSUABLE UPON CONVERSION OF THE SECURITIES FROM IT OF THE RESALE RESTRICTIONS REFERRED TO ABOVE. THE BENEFICIAL HOLDER OF AN INTEREST IN ANY OF THE SECURITIES EVIDENCED BY THIS SECURITY, BY PURCHASING THIS SECURITY (1) REPRESENTS AND AGREES FOR THE BENEFIT OF THE COMPANY AND AMERICA WEST THAT IT IS (A) A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A, OR (B) AN "ACCREDITED INVESTOR" AS DEFINED IN RULE 501(A) UNDER THE SECURITIES ACT AND IS HOLDING THIS SECURITY FOR INVESTMENT PURPOSES AND NOT FOR DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, AND (2) ACKNOWLEDGES THAT THE SECURITIES AND THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF SUCH SECURITY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OR UNDER ANY STATE SECURITIES LAWS. A-2 AMERICA WEST HOLDINGS CORPORATION 7.5% CONVERTIBLE SENIOR NOTE DUE 2009 CUSIP NO. 023657 AA 7 NO. __ $___________ AMERICA WEST HOLDINGS CORPORATION, a Delaware corporation (including any successor Person under the Indenture hereinafter referred to, the "COMPANY"), for value received, hereby promises to pay to _____________, or its registered assigns, the principal sum of _____________ U.S. Dollars ($______________) (the "ORIGINAL PRINCIPAL AMOUNT") plus the aggregate of all outstanding PIK Loans (as defined in the Indenture) on January 18, 2009. Interest Payment Dates: June 1 and December 1, commencing June 1, 2002. Regular Record Dates: May 15 and November 15. Reference is hereby made to the further provisions of this Security set forth below, which further provisions shall for all purposes have the same effect as if set forth at this place. A-3 IN WITNESS WHEREOF, the Company has caused this Security to be duly executed manually or by facsimile by its duly authorized officers. AMERICA WEST HOLDINGS CORPORATION By: _____________________________________ Name: Title: By: _____________________________________ Name: Title: Dated: January __, 2002 Trustee's Certificate of Authentication This is one of the 7.5% Convertible Senior Notes due 2009 described in the within-named Indenture. Wilmington Trust Company, as Trustee and not in its individual capacity By: _____________________________ Name: Title: Dated: January ___, 2002 A-4 [REVERSE OF SECURITY] AMERICA WEST HOLDINGS CORPORATION 7.5% CONVERTIBLE SENIOR NOTE DUE 2009 1. INDENTURE; SECURITIES. This Security is one of a duly authorized series of the 7.5% Convertible Senior Notes due 2009 (the "SECURITIES") of America West Holdings Corporation, a Delaware corporation (including any successor Person under the Indenture hereinafter referred to, the "COMPANY"), issued under an Indenture, dated as of January 18, 2002 (the "INDENTURE"), between the Company and Wilmington Trust Company, as trustee and not in its individual capacity (the "TRUSTEE"). The Securities issued under the Indenture may be issued in one or more series and the Securities of each such series shall rank equally and pari passu with the Securities of each other series. Notwithstanding any provision to the contrary, any future series of Securities established in or pursuant to a Board Resolution or a supplemental indenture will be on the same terms as the Securities issued pursuant to the Indenture in all respects other than the date of issuance. The terms of this Security include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended ("TIA"). This Security is subject to all such terms, and Holders are referred to the Indenture and the TIA for a statement of all such terms. All Securities of any one series need not be issued at the same time and may be issued from time to time, consistent with the terms of the Indenture, if so provided by or pursuant to such Board Resolution, such Officers' Certificate or in any such indenture supplemental thereto. To the extent permitted by applicable law, in the event of any inconsistency between the terms of this Security and the terms of the Indenture, the terms of the Indenture shall control. Capitalized terms used but not defined herein have the meanings assigned to them in the Indenture referred to below unless otherwise indicated. 2. PRINCIPAL AND INTEREST. The Company promises to pay Interest on the Original Principal Amount and the aggregate outstanding PIK Loans at the Interest Rate from the date of issuance until repayment in full at Stated Maturity, or redemption. The payment of the Original Principal Amount, any aggregate outstanding PIK Loans, premium, if any, Interest and Liquidated Damages, if any, is fully guaranteed by America West pursuant to the terms of a certain Guaranty, dated as of the date hereof (the "GUARANTY"), made by America West in favor of the Trustee and the Holders. For all purposes herein, (i) references to the Principal amount of this Security at any time of determination shall be deemed to be references to the outstanding balance of the Original Principal Amount, premium, if any, and the aggregate outstanding PIK Loans at such time of determination and (ii) references to payments of Interest on this Security for any period of determination shall be deemed to be references to the payment of Interest on the outstanding balance of the Original Principal Amount during such period and any aggregate outstanding PIK Loans during such period. The Company will pay Interest on this Security semiannually in arrears on June 1 and December 1 of each year (each, an "INTEREST PAYMENT Date"), commencing June 1, 2002. A-5 The Securities shall bear Interest from January 18, 2002 until the Principal amount thereof is paid or made available for payment, or until such date on which the Securities are converted, redeemed or purchased as provided herein, at a rate of 7.5% per annum. Interest shall be payable semiannually in arrears on each Interest Payment Date. Interest on the Securities shall be computed (i) for any full semiannual period for which a particular Interest Rate is applicable, on the basis of a 360-day year of twelve 30-day months and (ii) for any period for which a particular Interest Rate is applicable for less than a full semiannual period for which Interest is calculated, on the basis of a 30-day month and, for such periods of less than a month, the actual number of days elapsed over a 30-day month. Subject to the Company's option to pay Interest in cash or PIK Loans and subject to such other terms as set forth herein, Interest shall be due and payable on the Securities as follows: (1) A registered Holder of any Security as of the close of business on a Regular Record Date shall be entitled (except as otherwise indicated in Section 2.1(e) of the Indenture) to receive and shall receive, as the registered Holder as of such Regular Record Date, accrued and unpaid Interest on such Security on the corresponding Interest Payment Date (other than any Security whose Stated Maturity is prior to such Interest Payment Date, in which case Interest shall be paid on such Stated Maturity). (2) In the event that a Security becomes subject to redemption pursuant to Article 10 of the Indenture and the Redemption Date occurs after a Regular Record Date but before an Interest Payment Date, the Person whose Securities become subject to redemption (and only such Person rather than the Holder as of such Regular Record Date) shall be entitled to receive and shall receive accrued and unpaid Interest from the preceding Interest Payment Date (or such earlier date on which Interest was last paid) to but not including the Redemption Date on such Security, even if such Person is not the Holder of such Security. (3) In the event that a Security is converted pursuant to Article 11 of the Indenture, the Holder who converts such Security on any date other than an Interest Payment Date shall be entitled to accrued and unpaid Interest from the preceding Interest Payment Date until the Conversion Date, or otherwise, on such Security. If the Company fails to make a payment of Principal of or Interest on any Security when due and payable, it shall pay such Interest on such amounts (to the extent lawful), which shall be calculated using the applicable Interest Rate (such amounts, the "DEFAULTED INTEREST"). It may elect to pay such Defaulted Interest, plus any other Interest payable on it, to the Persons who are Holders on which the Interest is due on a subsequent special record date. The Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each such Security. The Company shall fix any such special record date and payment date for such payment. At least 15 days before any such special record date, the Company shall mail to Holders affected thereby a notice that states the special record date, the interest payment date and amount to be paid. A-6 3. METHOD OF PAYMENT. Interest on this Security which is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name that Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such Interest. Principal, of and payments of cash Interest on, Global Securities will be payable, for the benefit of the holders of this Security, to the Depositary in immediately available funds. Principal on Physical Securities will be payable at the office or agency of the Company maintained for such purpose, initially the Corporate Trust Office of the Trustee. Payments of cash Interest on Physical Securities will be payable by (i) U.S. Dollar check drawn on a bank in the City of Tempe mailed to the address of the Person entitled thereto as such address shall appear in the Register, or (ii) upon application to the Registrar not later than the relevant record date by a Holder of a Principal amount of Securities in excess of $2,000,000, wire transfer in immediately available funds, which such application shall remain in effect until the Holder notifies, in writing, the Registrar to the contrary. For all purposes of this Security and the Indenture, Interest due on the first six (6) Interest Payment Dates shall be payable, at the election of the Company, in either (a) the form of cash or (b) the form of a deemed loan which shall be in addition to the Original Principal Amount of this Security and shall for all purposes be Principal evidenced by this Security and entitled to the benefits of the Indenture (in each case, a "PIK LOAN"). Unless the Company shall have delivered an Officers' Certificate to the Trustee within three Business Days of the applicable Interest Payment Date stating that the Company elects to make a payment of Interest in cash, it shall be deemed to have elected to make such payment of Interest in the form of a PIK Loan. 4. PAYING AGENT AND REGISTRAR. Initially, Wilmington Trust Company will act as Paying Agent and Registrar. 5. PROVISIONAL AND OPTIONAL REDEMPTION. The Securities may be redeemed at the election of the Company, as a whole or in part, at any time before January 18, 2005, upon at least 20 and not more than 60 days' notice by mail to the Holders of the Securities at the Provisional Redemption Price, to but excluding the Provisional Redemption Date if (1) the Trading Price of the Common Stock has exceeded 120% of the Conversion Price then in effect for at least 20 Trading Days within a period of 30 consecutive Trading Days ending on the Notice Date, and (2) a shelf registration statement covering resales of the Securities and the Common Stock issuable upon conversion thereof is effective and available for use and is expected to remain effective and available for use for the 30 days following the Provisional Redemption Date, unless registration is no longer required. At any time on or after January 18, 2005, except for Securities that are converted A-7 pursuant to Section 11.1 of the Indenture, the Company may, at its option, redeem the Securities in whole at any time or in part from time to time, on any date prior to the Stated Maturity of such Securities, upon notice as set forth in Section 10.4 of the Indenture, at the Redemption Price (expressed in percentages of the Principal amount) set forth below if, but only if, redeemed on a Redemption Date occurring during the 12-month period beginning on the dates indicated:

Redemption During the Twelve Months Commencing Price ----------------------------------- ----- January 18, 2005................. 103.75% January 18, 2006................. 102.50% January 18, 2007................. 101.25% January 18, 2008................. 100.00%

If the Company exercises its option to redeem the Securities pursuant to Section 10.1(a) or (b) of the Indenture, a Holder may nevertheless exercise its right to convert such Securities when and to the extent permissible under Article 11 of the Indenture, in each case, until the close of business two Business Days immediately preceding the Redemption Date. The Company shall pay any Interest to the Holder of the Securities called for redemption (including those Securities which are converted into Common Stock after the date the notice of the redemption is mailed and prior to the Redemption Date) accrued but not paid to, but excluding, the Redemption Date pursuant to Section 2.1(e) of the Indenture; provided, however, that if the Redemption Date is an Interest Payment Date, the Company shall pay the Interest to the Holder of such Security at the close of business on such Interest Payment Date. The Company is required to furnish the notice of redemption to the Holders as provided in the Indenture. 6. CONVERSION RIGHT. Subject to and upon compliance with the provisions of the Indenture, the Holder of Securities is entitled, at such Holder's option, at any time after January 18, 2005 or in connection with a redemption pursuant to Section 10.1(a) or (b) of the Indenture or such earlier date as the Company shall have provided notice to the Holders by mail, to convert this Security (or any portion of the Principal amount hereof which is $1,000 or an integral multiple thereof), at the Principal amount thereof or of such portion, into duly authorized, fully paid and nonassessable shares of Common Stock of the Company at the Conversion Price in effect at the time of conversion. The conversion right shall expire at the close of business on the Stated Maturity. If this Security (or a portion thereof) is called for redemption, such conversion right in respect of such Security (or such portion thereof) so called, shall expire at the close of business on the second Business Day preceding the Redemption Date, unless the Company defaults in making the payment due upon redemption. The Conversion Price shall be initially equal to $12 per share of Common Stock, which may be adjusted under certain circumstances as provided in the Indenture. A-8 To exercise the conversion right with respect to a Security, a Holder must (1) as to a Global Security, deliver a completed conversion notice, the form of which is provided in Exhibit C to the Indenture, to the Depositary stating that the Holder elects to convert such Security or, if less than the entire Principal amount thereof is to be converted, the portion thereof to be converted, (2) as to a Physical Security, deliver a duly signed completed conversion notice and such Physical Security duly endorsed or assigned to the Company or in blank, at the office of any Conversion Agent, and (3) pay any transfer taxes or other applicable taxes or duties, if required. To convert interests in a Global Security, a Holder must deliver to DTC the appropriate instruction form for conversion pursuant to DTC's conversion program or must deliver instructions in accordance with Euroclear's or Clearstream's normal operating procedures after application has been made to make the underlying Common Stock eligible for trading on Euroclear or Clearstream, as applicable. To the extent provided in Section 2.1 of the Indenture, the Holders of such converted Securities shall be entitled to receive (and retain) any accrued Interest on the Principal of the surrendered Security, if at all. Securities shall be deemed to have been converted immediately prior to the close of business on the day of surrender of such Securities for conversion in accordance with the foregoing provisions, and at such time the rights of the Holders of such Securities as Holders shall cease, and the Person or Persons entitled to receive the shares of Common Stock issuable upon conversion shall be treated for all purposes as the record holder or holders of such shares of Common Stock at such time. No fractional shares of Common Stock will be issued upon conversion of any Securities. Instead of any fractional share of Common Stock which would otherwise be issued upon conversion of such Securities, the Company shall pay a cash adjustment as provided in the Indenture. Reference is made to the Indenture for other rights and obligations of the Holders of this Security with respect to their right to convert this Security or any portion hereof. 7. NO SINKING FUND. The Securities are not subject to a sinking fund. 8. ABSOLUTE OBLIGATION. No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company under the Indenture and this Security which is absolute and unconditional, to pay the Principal of or Interest, including Liquidated Damages, if any, on this Security at the place and time and in the coin or currency herein prescribed. 9. DENOMINATIONS; TRANSFER; EXCHANGE. The Securities of each series are issuable in fully registered form, without A-9 coupons, in denominations of $1,000 and integral multiples of $1,000 in excess thereof. A Holder may register the transfer or exchange of Securities in accordance with the Indenture. Pursuant to the Indenture, when this Security (or any portion thereof in integral multiples of $1,000 in principle amount) is presented to the Registrar with a request to register the transfer or to exchange it for an equal Principal amount or other authorized denominations, the Registrar shall register the transfer or make the exchange as requested if the requirements hereunder for such transactions are met (including that such portions thereof are duly endorsed or accompanied by a written instrument of transfer duly executed by the Holder thereof or by an attorney who is authorized in writing to act on behalf of the Holder). Subject to Section 2.4 of the Indenture, to permit registrations of transfers and exchanges, the Company shall execute and the Trustee shall authenticate Securities at the Registrar's request. No service charge shall be made for any registration of transfer or exchange or redemption of the Securities, but the Company may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than any such transfer taxes or other similar governmental charge payable upon exchanges pursuant to Sections 2.14, 7.5 or 10.7 of the Indenture). Pursuant to the Indenture, neither the Company nor the Registrar shall be required to exchange or register a transfer of this Security (or any portion thereof): (1) for a period of 15 days prior to the day of any selection of any portion of this Security for redemption under Article 10 hereof; (2) so selected for redemption or, if a portion of this Security is selected for redemption, such portion thereof selected for redemption; or (3) surrendered for conversion or, if a portion of this Security is surrendered for conversion, such portion thereof surrendered for conversion. In the event of redemption, conversion or purchase of the Securities in part only, a new Security or Securities for the unredeemed, unconverted or unpurchased portion thereof will be issued in the name of the Holder hereof. By acceptance of the Restricted Securities, each Holder (1) represents and agrees for the benefit of the Company and America West that it is (A) a Qualified Institutional Buyer within the meaning of Rule 144A, or (B) an "accredited investor" as defined in Rule 501(a) under the Securities Act and is holding this Security for investment purposes and not for distribution in violation of the Securities Act, (2) acknowledges that the Securities and the shares of Common Stock issuable upon conversion of such Security have not been registered under the Securities Act or under any state securities laws and (3) agrees that such Security must be held indefinitely unless subsequently registered under the Securities Act or an exemption from the registration requirements of the Securities Act is available. If the Securities are issued upon the transfer, exchange or replacement of the Securities subject to restrictions on transfer and bearing the legends as set forth on the front of this Security, or if a request is made to remove the legend on a Security, such Security so issued A-10 shall bear the Restricted Security Legend, or the Restricted Security Legend shall not be removed, as the case may be, and such Security shall be a Restricted Security unless there is delivered to the Company and the Registrar such satisfactory evidence, which shall include a written opinion from such Holder's counsel, as may be reasonably required by the Company and the Registrar, that neither the legend nor the restrictions on transfer set forth therein are required to ensure that transfers thereof comply with the provisions of the Securities Act. Upon (i) provision of such satisfactory evidence, or (ii) notification by the Company to the Trustee and Registrar of the sale of such Security pursuant to a registration statement that is effective at the time of such sale, the Trustee, at the written direction of the Company, shall authenticate and deliver a Security that does not bear the Restricted Security Legend. If the Restricted Security Legend is removed from the face of a Security and such Security is subsequently held by an Affiliate of the Company, the legend shall be reinstated. 10. PERSONS DEEMED OWNERS. The registered Holder of this Security shall be treated as its owner for all purposes. 11. DISCHARGE PRIOR TO REDEMPTION OR STATED MATURITY. Subject to certain conditions contained in the Indenture, the Company may discharge its obligations under the Securities and the Indenture if (1) (a) all of the Outstanding Securities shall become due and payable at their scheduled Stated Maturity within one year or (b) all of the Outstanding Securities are scheduled for redemption within one year, and (2) the Company shall have deposited with the Trustee cash or, in the event of a conversion pursuant to the terms of the Indenture, Common Stock, sufficient to pay all amounts due and owing on all outstanding Securities on the date of their scheduled maturity or the scheduled date of redemption, as the case may be. 12. AMENDMENT; SUPPLEMENT; WAIVER. The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Securities under the Indenture at any time by the Company and the Trustee with the consent of the Holders of a majority of the Principal amount of the Outstanding Securities. The Indenture also contains provisions permitting the Holders of specified percentages in Principal amount of the Securities at the time Outstanding, on behalf of the Holders of all the Securities, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security or such other Security. No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the Principal of and Interest on this Security at the times, places and rate, A-11 and in the coin or currency, herein prescribed or to convert this Security (or pay cash for fractional shares in lieu of conversion) as provided in the Indenture. 13. REGISTRATION RIGHTS AGREEMENT. The Holder of this Security and the Common Stock issuable upon conversion thereof is entitled to the benefits of a Registration Rights Agreement (subject to the provisions thereof), attached to the Indenture as Exhibit D. 14. DEFAULTS AND REMEDIES. The Indenture provides that an Event of Default with respect to the Securities occurs when any of the following occurs: (a) the Company defaults in the payment of the Principal amount (a "DEFAULTED PAYMENT") on any Outstanding Security when the same becomes due and payable at its Stated Maturity, upon redemption or exercise of a repurchase right or otherwise; (b) the Company defaults in the payment of an installment of Interest (including Liquidated Damages, if any) on any Security when it becomes due and payable and such default continues for a period of 30 days; (c) the Company fails to perform or observe any other term, covenant or agreement contained in the Securities or the Indenture and the default continues for a period of 60 days after written notice of such failure, requiring the Company to remedy the same, shall have been given to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 25% in aggregate Principal amount of the Outstanding Securities; (d) any indebtedness under any bond, debenture, note or other evidence of indebtedness for money borrowed by the Company or America West or under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any indebtedness for money borrowed by the Company or America West with a principal amount then outstanding in excess of U.S. $75,000,000, whether such indebtedness now exists or shall hereafter be created, is not paid at final maturity thereof (either at its stated maturity or upon acceleration thereof), and such indebtedness is not discharged, or such acceleration is not rescinded or annulled, within a period of 60 days after there shall have been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 25% in aggregate Principal amount of the Outstanding Securities a written notice specifying such default and requiring the Company to cause such indebtedness to be discharged or cause such default to be cured or waived or such acceleration to be rescinded or annulled and stating that such notice is a "Notice of Default" under the Indenture; (e) the Guaranty ceases to be in full force and effect (other than in accordance with its terms) or America West denies or disaffirms its obligations under the Guaranty; (f) the entry by a court having jurisdiction in the premises of (i) a decree or order A-12 for relief in respect of the Company or America West in an involuntary case or proceeding under any applicable U.S. federal or state bankruptcy, insolvency, reorganization or other similar law or (ii) a decree or order adjudging the Company or America West bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the Company or America West under any applicable U.S. federal or state law, or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or America West or of any substantial part of their respective property, or ordering the winding up or liquidation of their respective affairs, and the continuance of any such decree or order for relief or any such other decree or order unstayed and in effect for a period of 60 consecutive days; or (g) the commencement by the Company or America West of a voluntary case or proceeding under any applicable U.S. federal or state bankruptcy, insolvency, reorganization or other similar law or of any other case or proceeding to be adjudicated a bankrupt or insolvent, or the consent by the Company or America West to the entry of a decree or order for relief in respect of the Company or America West in an involuntary case or proceeding under any applicable U.S. federal or state bankruptcy, insolvency, reorganization or other similar law or to the commencement of any bankruptcy or insolvency case or proceeding against the Company or America West, or the filing by the Company or America West of a petition or answer or consent seeking reorganization or relief under any applicable U.S. federal or state law, or the consent by the Company or America West to the filing of such petition or to the appointment of or the taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or America West or of any substantial part of their respective property, or the making by the Company or America West of an assignment for the benefit of creditors, or the admission by the Company or America West in writing of either of their inability to pay their respective debts generally as they become due, or the taking of corporate action by the Company or America West expressly in furtherance of any such action. A Default under clause (c) above is not an Event of Default until the Trustee notifies the Company, or the Holders of at least 25% in aggregate of the Principal amount of the Securities at the time outstanding notify the Company and the Trustee, of the Default and the Company does not cure such Default (and such Default is not waived) within the time specified in clause (c) above after such notice has been given. Any such notice must specify the Default, demand that it be remedied and state that such notice is a "Notice of Default". If an Event of Default shall occur and be continuing, the Principal of all the Securities may be declared due and payable in the manner and with the effect, and the Holder of this Security shall have the remedies and rights related thereto, provided in the Indenture. 15. AUTHENTICATION. This Security shall not be valid until the Trustee executes the certificate of authentication in the space provided therefore on such Security. 16. ABBREVIATIONS. Customary abbreviations may be used in the name of a Holder or an assignee, A-13 such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian) and U/G/M/A (= Uniform Gifts to Minors Act). 17. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company may cause one or more CUSIP numbers, as appropriate, to be printed on this Security and the Trustee may use CUSIP numbers (if any) in notices of redemption as a convenience to Holders. No representation is made as to the accuracy of such numbers either as printed on this Security or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon. 18. GOVERNING LAW. The Indenture and this Security shall be governed by, and construed in accordance with, the laws of the State of New York. 19. SUCCESSOR PERSON. In the event a successor Person assumes all the obligations of the Company under this Security, pursuant to the terms hereof and of the Indenture, the Company will be released from all such obligations. A-14 ASSIGNMENT FORM To assign this Security, fill in the form below and have your signature guaranteed: (I) or (we) assign and transfer this Security to: ________________________________________________________________________________ (Insert assignee's social security or tax I.D. number) ________________________________________________________________________________ (Print or type assignee's name, address and zip code) and irrevocably appoint ____________ to transfer this Security on the books of the Company. The agent may substitute another to act for him. Your Name: ___________________________________________________ (Print your name exactly as it appears on the face of this Security) Dated: _______________________________________________________ Your Signature:_____________________________________________________ (Sign exactly as your name appears on the face of this Security) Signature Guarantee*:_____________________________________________________ _________________________ * Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee). A-15 CONVERSION NOTICE TO: America West Holdings Corporation 111 West Rio Salado Parkway Tempe, Arizona 85281 The undersigned registered owner of this Security hereby irrevocably exercises the option to convert this Security, or the portion hereof (which is $1,000 Principal amount or an integral multiple thereof) below designated, into shares of Common Stock in accordance with the terms of the Indenture referred to in this Security, and directs that the shares issuable and deliverable upon such conversion, together with any check in payment for fractional shares and any Securities representing any unconverted Principal amount hereof, be issued and delivered to the registered holder hereof unless a different name has been indicated below. If shares or any portion of this Security not converted are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto. Your Name:__________________________________________________________ (Print your name exactly as it appears on the face of this Security) Dated:______________________________________________________________ Your Signature:_____________________________________________________ (Sign exactly as your name appears on the face of this Security) Social Security or other Taxpayer Identification Number:____________ Principal amount to be converted (if less than all):$_______________ Signature Guarantee*:_______________________________________________ Fill in for registration of shares (if to be issued) and Securities (if to be delivered) other than to and in the name of the registered holder: ________________________________________________________________________________ (Name) ________________________________________________________________________________ (Street Address) ________________________________________________________________________________ (City, State and Zip Code) SCHEDULE OF EXCHANGES FOR PHYSICAL SECURITIES(1) * Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee). 1 This schedule should be included only if the Security is issued in physical form. A-16 The following exchanges of a part of this Global Security for Physical Securities have been made: Principal Amount of this Amount of decrease in Amount of increase in Global Security Signature of Principal Amount of Principal Amount of following such decrease authorized officer of Date of Exchange this Global Security this Global Security (or increase) Trustee - ---------------- -------------------- -------------------- ------------- ------- A-17 EX-4.17 5 p66064ex4-17.txt EX-4.17 EXHIBIT 4.17 FORM OF REGISTRATION RIGHTS AGREEMENT Each of America West Holdings Corporation (the "Company") and America West Airlines, Inc. (the "Guarantor") hereby agree, for the benefit of the holders from time to time of the Registrable Securities (as defined below) as follows: SECTION 1. DEFINITIONS. As used in this Exhibit, the following terms shall have the following meanings: AFFILIATE: An affiliate of any specified person shall mean any other person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified person. For the purposes of this definition, "control," when used with respect to any person, means the power to direct the management and policies of such person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise and the terms "affiliated," "controlling" and "controlled" have meanings correlative to the foregoing. AGREEMENT: This Exhibit D to the Indenture, as this Exhibit may be amended, supplemented or modified from time to time in accordance with the terms hereof. BUSINESS DAY: Each Monday, Tuesday, Wednesday, Thursday and Friday that is not a day on which banking institutions in New York, New York are authorized or obligated by law or executive order to close. CLOSING DATE: January 18, 2002. COMMON STOCK: The class B common stock, par value $0.01 per share, of the Company or shares of any class or classes resulting from any reclassification or reclassifications thereof and which have no preference in respect of dividends or of amounts payable in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company and which are not subject to redemption by the Company; provided that if at any time there shall be more than one such resulting class, the shares of each such class then so issuable shall be substantially in the proportion which the total number of shares of such class resulting from all such reclassifications bears to the total number of shares of all such classes resulting from all such reclassifications. COMPANY: America West Holdings Corporation, a Delaware corporation, and any successor entity thereto. DAMAGES PAYMENT DATE: Each of the semiannual interest payment dates provided in the Notes. EFFECTIVENESS PERIOD: As defined in Section 2(a) hereof. EFFECTIVENESS TARGET DATE: The 240th day following the Closing Date. 1. EXCHANGE ACT: The Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated by the SEC thereunder. FILING DATE: The 120th day after the Closing Date. GUARANTOR: America West Airlines, Inc., a Delaware corporation, and any successor entity thereto. HOLDER: Each owner of any Registrable Securities. INDENTURE: The Indenture, dated as of the date hereof, between the Company and Wilmington Trust Company, as Trustee, pursuant to which the Notes are to be issued, as the same may be amended, modified or supplemented from time to time in accordance with the terms thereof. INITIAL PURCHASERS: The initial purchasers of the Notes set forth on Schedule I hereto. LIQUIDATED DAMAGES: As defined in Section 3(a) hereof. NOTES: The Company's 7.5% Convertible Senior Notes due 2009. NOTICE AND QUESTIONNAIRE: The form of Notice and Questionnaire attached hereto as Exhibit A, as reasonably amended, supplemented, or otherwise modified from time to time by the Company upon reasonable notice to the Holders. PROSPECTUS: The prospectus included in the Registration Statement (including, without limitation, a prospectus that discloses information previously omitted from a prospectus filed in reliance upon Rule 430A), as amended or supplemented by any prospectus supplement, with respect to the resale of any of the Registrable Securities covered by such Registration Statement, and all other amendments and supplements to any such prospectus, including post-effective amendments, and all materials incorporated by reference or deemed to be incorporated by reference, if any, in such prospectus. RECORD HOLDER: (i) with respect to any Damages Payment Date relating to any shares of Common Stock as to which any such Liquidated Damages have accrued, the registered Holder of such shares 15 days prior to the next succeeding Damages Payment Date; and (ii) with respect to any Damages Payment Date relating to any Notes as to which any such Liquidated Damages has accrued, the registered Holder of such Notes 15 days prior to the next succeeding Damages Payment Date. REGISTRABLE SECURITIES: The Notes and such shares of Common Stock issued or issuable (whether currently or in the future) upon conversion of such Notes (including any shares of Common Stock issued or issuable thereon upon any stock split, stock combination, stock dividend or the like), upon original issuance thereof and at all times subsequent thereto, and associated related rights, including the Guaranty, until the earliest of (i) the date on which the resale thereof has been effectively registered under the Securities Act and such securities have been disposed of in accordance with the Registration Statement relating thereto, (ii) the date on which such securities have been distributed to the public pursuant to Rule 144 or are saleable 2. pursuant to paragraph (k) of Rule 144 or (iii) the date on which such securities cease to be outstanding. REGISTRATION DEFAULT: As defined in Section 3(a) hereof. REGISTRATION STATEMENT: Any registration statement of the Company filed with the SEC pursuant to the Securities Act that covers the resale of the Registrable Securities pursuant to the provisions of this Agreement, including the Prospectus, amendments and supplements to such registration statement or Prospectus (including pre- and post-effective amendments), all exhibits thereto, and all material incorporated by reference or deemed to be incorporated by reference, if any, in such registration statement. REQUIRED HOLDERS: Registered Holders of a number of shares of then outstanding Common Stock constituting Registrable Securities and an aggregate amount of then outstanding Notes constituting Registrable Securities, such that the sum of such shares of Common Stock and the shares of Common Stock issuable (whether currently or in the future) upon conversion of such Notes constitutes in excess of 50% of the sum of all of the then outstanding shares of Common Stock constituting Registrable Securities and the number of shares of Common Stock issuable (whether currently or in the future) upon conversion of then outstanding Notes constituting Registrable Securities. For purposes of the preceding sentence, Registrable Securities owned, directly or indirectly, by the Company or its Affiliates shall not be deemed outstanding. REQUISITE INFORMATION: As defined in Section 2(c) hereof. RULE 144: Rule 144 promulgated by the SEC pursuant to the Securities Act, as such rule may be amended from time to time, or any successor rule or regulation. RULE 144A: Rule 144A promulgated by the SEC pursuant to the Securities Act, as such rule may be amended from time to time, or any successor rule or regulation. RULE 415: Rule 415 promulgated by the SEC pursuant to the Securities Act, as such rule may be amended from time to time, or any successor rule or regulation. RULE 424: Rule 424 promulgated by the SEC pursuant to the Securities Act, as such rule may be amended from time to time, or any successor rule or regulation. RULE 430A: Rule 430A promulgated by the SEC pursuant to the Securities Act, as such rule may be amended from time to time, or any successor rule or regulation. SEC: The Securities and Exchange Commission, or any successor governmental agency or authority thereto. SECURITIES ACT: The Securities Act of 1933, as amended, and the rules and regulations promulgated by the SEC thereunder. TIA: The Trust Indenture Act of 1939, as amended, and the rules and regulations promulgated by the SEC thereunder. 3. TRANSFER AGENT: The registrar and transfer agent for the Company's Common Stock. TRUSTEE: The trustee under the Indenture. SECTION 2. REGISTRATION STATEMENT. (a) REGISTRATION RIGHTS. Subject to the conditions set forth in Section 2(c), the Company and the Guarantor, at their own expense, agree to, jointly and severally, file with the SEC a Registration Statement for an offering to be made on a continuous basis pursuant to Rule 415 covering all of the Common Stock and Notes constituting Registrable Securities. The Company shall use best efforts to cause the Registration Statement to be filed as soon as practicable but in no event later than the Filing Date. The Registration Statement shall be on Form S-3 under the Securities Act or another appropriate form selected by the Company or the Guarantor permitting registration of such Registrable Securities for resale by the Holders in the manner or manners reasonably designated by the Holders. The Company and the Guarantor shall use best efforts to cause the Registration Statement to be declared effective pursuant to the Securities Act as soon as reasonably practicable following the filing thereof, but in any event not later than the Effectiveness Target Date, and to keep such Registration Statement continuously effective under the Securities Act until the earlier of (i) the date that is two years (or for such longer period if extended pursuant to Section 2(d) below) after the effective date (the "Effectiveness Period"), (ii) the date when the Holders of Registrable Securities are able to sell all such securities immediately without restriction pursuant to the volume limitation provisions of Rule 144 under the Securities Act or any successor rule thereto or otherwise, or (iii) the sale pursuant to the Registration Statement of all securities registered thereunder. (b) SUPPLEMENTS AND AMENDMENTS. The Company and the Guarantor shall use best efforts to keep any Registration Statement continuously effective by supplementing and amending such Registration Statement if so required by the rules, regulations or instructions applicable to the registration form used for such Registration Statement, if required by the Securities Act or if reasonably requested by the Required Holders or by any underwriter of such Registrable Securities. If the Registration Statement under Section 2(a) ceases to be available for use by the Holders because the Company no longer qualifies to use such form of registration statement, the Company shall be required to file as promptly as reasonably practicable a new Registration Statement on an appropriate form and its obligations hereunder shall continue to apply in all respects. (c) SELLING SECURITYHOLDER INFORMATION. Each Holder wishing to register to sell Registrable Securities pursuant to the Registration Statement and related Prospectus agrees to deliver a Notice and Questionnaire, in a timely manner, that confirms such Holder's agreement to be bound by the terms of this Agreement and includes such information regarding it and the distribution of its Registrable Securities as is required by law to be disclosed by the Holder in the Registration Statement (the "Requisite Information") to the Company prior to any intended distribution of Registrable Securities under the Registration Statement. Neither the Company nor the Guarantor shall be required to include in the Registration Statement and related Prospectus the Registrable Securities of any Holder that does not provide the Company with a Notice and Questionnaire in accordance with this Section 2(c). If such completed Notice and Questionnaire is received by the Company before 10 days prior to the effective date of the 4. Registration Statement, such Holder shall be entitled to have its Registrable Securities included in the Registration Statement at the effective date thereof. If such completed Notice and Questionnaire is received thereafter, the Company will use best efforts to include such Holder's Registrable Securities as promptly as reasonably practicable thereafter, subject to the last two sentences of the next paragraph. Subject to the last two sentences of this paragraph, the Company and the Guarantor shall, jointly and severally, use best efforts to file, as soon as practicable after the receipt of a Notice and Questionnaire from any Holder which includes the Requisite Information or any changes in the Requisite Information with respect to such Holder (including, without limitation, any changes in the plan of distribution), a Prospectus supplement pursuant to Rule 424 or otherwise amend or supplement such Registration Statement to include in the Prospectus the Requisite Information as to such Holder (and the Registrable Securities held by such Holder), and the Company shall provide such Holder a copy of such Prospectus as so amended or supplemented containing the Requisite Information in order to permit such Holder to comply with the Prospectus delivery requirements of the Securities Act in a timely manner with respect to any proposed disposition of such Holder's Registrable Securities and to file the same with the SEC. Each Holder shall promptly notify the Company of any material changes to the Requisite Information contained in the Notice and Questionnaire provided to the Company by such Holder. Notwithstanding the foregoing, following the effective date of the Registration Statement, the Company shall not be required to file more than one such supplement or post-effective amendment to reflect changes in the amount of Notes or Common Stock constituting Registrable Securities held by any particular Holder in any 30-day period. The Company may take reasonable steps to aggregate the addition of Registrable Securities of more than one Holder for purposes of filing amendments to any Registration Statement or supplements to the Prospectus so as to reduce the need for multiple amendments or supplements; provided that the Company shall not use this sentence to delay the filing of any amendment or supplement beyond such 30-day period. (d) MATERIAL EVENTS; SUSPENSION OF SALES. Notwithstanding the provisions contained in this Section 2, with respect to the Registration Statement the Company and the Guarantor may (for a period not to exceed 60 consecutive days, and not in any event to exceed 90 days in the aggregate, during any 12 month period) suspend use of such Registration Statement at any time if, and for so long as, the continued effectiveness thereof would require the Company or the Guarantor to disclose a material financing, acquisition, other transaction or other material non-public information, which disclosure the Board of Directors of the Company or the Guarantor shall have determined in good faith is not in the best interests of the Company, the Guarantor and the Company's stockholders. The Company shall notify each registered Holder, the Trustee, the Transfer Agent and the managing underwriters, if any, that the use of the Prospectus is to be suspended until the Company shall deliver a written notice that the use of the Prospectus may be resumed. During such suspension the use of the Prospectus shall be suspended, and neither the Company nor the Guarantor shall be required to maintain the effectiveness of, or amend or update the Registration Statement, or amend or supplement the Prospectus. (e) ADDITIONAL AGREEMENTS OF HOLDERS. Each Holder agrees not to dispose of Registrable Securities pursuant to the Registration Statement without complying with the prospectus delivery requirements under the Securities Act and the provisions of paragraph (d) 5. above regarding use of the Prospectus. Each Holder further agrees that it will comply fully with applicable federal and state securities laws in connection with the distribution of any Registrable Securities pursuant to the Registration Statement. Each Holder further acknowledges having been advised by the Company and the Guarantor that applicable federal securities laws prohibit Holders from trading in securities of the Company or the Guarantor at any time while in possession of material non-public information about the Company or the Guarantor. SECTION 3. LIQUIDATED DAMAGES. (a) The Company, the Guarantor and the Initial Purchasers agree that the Holders will suffer damages if the Company fails to fulfill its obligations pursuant to Section 2 hereof and that it would not be possible to ascertain the extent of such damages with precision. Accordingly, the Company hereby agrees to pay liquidated damages ("Liquidated Damages") to each Holder under the circumstances and to the extent set forth below: (i) if the Registration Statement is not declared effective by the SEC on or prior to the Effectiveness Target Date; (ii) the aggregate duration of any suspension periods exceeds the number of days permitted by Section 2(d) hereof; or (iii) the Registration Statement ceases to be effective or the Prospectus ceases to be usable at any time during the Effectiveness Period without being succeeded within 30 days by a post-effective amendment or supplement to such Registration Statement or Prospectus that cures such failure to be effective or useable, as the case may be, and that is itself, in the case of post-effective amendment, declared effective within a reasonable period of time (each of the foregoing events in clauses (i), (ii) and (iii), a "Registration Default"). (b) In the event of a Registration Default, commencing on (and including) the date immediately following the date of any Registration Default and ending on (but excluding) the date on which the Registration Default is cured, the Company and the Guarantor agree to pay, as liquidated damages and not as a penalty, an amount payable on the Damages Payment Dates to the Record Holders of then outstanding Notes and Common Stock constituting Registrable Securities, as the case may be, at a rate per annum equal to one-quarter of one percent (0.25%) for the first 90-day period following such Registration Default, and thereafter at a rate per annum equal to one-half of one percent (0.5%) of the aggregate applicable principal amount of the then outstanding Notes or of the Notes converted to then outstanding shares of Common Stock. Following the cure of a Registration Default, Liquidated Damages will cease to accrue with respect to such Registration Default. All accrued Liquidated Damages shall be paid to the holders of (i) Notes constituting Registrable Securities, pursuant to the terms of the Indenture with respect to the payment of interest; and (ii) shares of Common Stock constituting Registrable Securities, in the same manner as interest payments on the Notes pursuant to the terms of the Indenture, on semiannual payment dates that correspond to the semiannual interest payment dates for the Notes. The parties hereto agree and acknowledge that the payment of Liquidated Damages to holders of Common Stock upon a Registration Default pursuant to this Agreement shall not be a dividend on such shares of Common Stock. 6. (c) Liquidated Damages shall be paid by the Company to the Record Holders of the Notes or Common Stock constituting Registrable Securities; provided, however, that any Liquidated Damages accrued with respect to any Notes or portion thereof called for redemption on a redemption date, repurchased on a repurchase date, or converted into shares of Common Stock on a conversion date, as the case may be, after the 15th day prior to the Damages Payment Date shall, in any such event, be paid nonetheless to the Record Holder of such Registrable Securities. SECTION 4. REGISTRATION PROCEDURES. In connection with the Company's and the Guarantor's registration obligations hereunder, the Company and the Guarantor shall effect such registrations on the appropriate form selected by the Company or the Guarantor to permit the resale of Registrable Securities in accordance with the Holder's intended method or methods of disposition thereof, and pursuant thereto the Company and the Guarantor shall as expeditiously as reasonably possible: (a) Furnish to the Holders and the managing underwriters, if any, copies of all such documents proposed to be filed (excluding, unless requested, those documents incorporated or deemed to be incorporated by reference and then only to the Holder who so requested) and use its commercially reasonable efforts to reflect in each such document, when so filed with the SEC, such comments as the Holders may reasonably propose. Neither the Company nor the Guarantor shall file any such Registration Statement or related Prospectus or any amendments or supplements thereto (excluding any document that would be incorporated or deemed incorporated by reference) to which the Holder or the managing underwriters, if any, shall reasonably object in writing (by hand-delivery, courier guaranteeing overnight delivery or telecopy) within five Business Days after the receipt of such documents. Notwithstanding the foregoing, neither the Company nor the Guarantor shall be required to furnish to the Holders or the managing underwriters, if any, any amendments or supplements to the Registration Statement or Prospectus filed solely to reflect changes to the amount of Notes or Common Stock constituting Registrable Securities held by any particular Holder or immaterial revisions to the information contained therein. (b) Prepare and file with the SEC such amendments, including post-effective amendments, to the Registration Statement as may be necessary to keep such Registration Statement continuously effective for the applicable time period set forth in Section 2(a) hereof; cause the related Prospectus to be supplemented by any required Prospectus supplement, and as so supplemented to be filed pursuant to Rule 424 (or any similar provisions then in force) under the Securities Act; and comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such Registration Statement and Prospectus during such period in accordance with the intended method or methods of disposition by the Holder set forth in such Registration Statement as so amended or in such Prospectus as so supplemented including, without limitation, the filing of any Prospectus supplement pursuant to Rule 424 in order to add or change any selling security holder information (including any such supplements or amendments pursuant to Section 2(c) hereof, provided such Holder to which such change applies complies with the Requisite Information requirements of Section 2(c) hereof in a timely manner). 7. (c) Notify the Holders and the managing underwriters, if any, promptly and, if requested by any such person, confirm such notice in writing: (i) (A) when a Prospectus or any Prospectus supplement or post-effective amendment is proposed to be filed and (B) with respect to a Registration Statement or any post-effective amendment, when the same has become effective; (ii) of any written comments from the SEC with respect to any filing and of any request by the SEC or any other Federal or state governmental authority for amendments or supplements to such Registration Statement or related Prospectus or for additional information related thereto; (iii) of the issuance by the SEC, any state securities commission, any other governmental agency or any court of any stop order, order or injunction suspending or enjoining the use or effectiveness of the Registration Statement or the initiation of any proceedings for that purpose; (iv) of the receipt by the Company or the Guarantor of any notification with respect to the suspension of qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction, or the initiation or threatening of any proceeding for such purpose; (v) of the existence of any fact or the happening of any event during the Effectiveness Period that makes any statement of material fact made in such Registration Statement or related Prospectus untrue in any material respect, or that requires the making of any changes in such Registration Statement or Prospectus so that, in the case of the Registration Statement, it will not 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 not misleading and that, in the case of the Prospectus, such Prospectus will not 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 (vi) of the determination by the Company or the Guarantor that a post effective amendment to the Registration Statement will be filed with the SEC. (d) Use commercially reasonable efforts to obtain the withdrawal of any stop order or order enjoining or suspending the use or effectiveness of a Registration Statement or the lifting of any suspension of the qualification (or exemption from qualification) of any of the Registrable Securities for sale in any jurisdiction, at the earliest practicable moment. (e) If reasonably requested by the Required Holders, or managing underwriters, if any, to: (i) promptly include in a Prospectus supplement or post-effective amendment such information as the Required Holders or managing underwriters, if any, may reasonably request to be included therein; and 8. (ii) make all required filings of such Prospectus supplement or such post-effective amendment as soon as reasonably practicable after the Company has received notification of the matters to be included in such Prospectus supplement or post-effective amendment. (f) Furnish to each Holder who so requests, and each managing underwriter, if any, without charge, at least one copy of the Registration Statement and each amendment thereto (but excluding schedules, all documents incorporated or deemed to be incorporated therein by reference and all exhibits, unless requested in writing by such Holder or any managing underwriter and then only to the person who so requested). (g) Deliver to each Holder and the underwriters, if any, without charge, as many copies of the Prospectus or Prospectuses (including each form of Prospectus) and each amendment or supplement thereto as such persons may reasonably request; and, unless the Company or the Guarantor shall have given notice to such Holder or underwriter pursuant to Section 2(d), the Company and the Guarantor hereby consent to the use of such Prospectus, and each amendment or supplement thereto, by each of the selling Holders of Registrable Securities and the underwriters, if any, in connection with the offering and sale of the Registrable Securities covered by such Prospectus and any amendment or supplement thereto. (h) Prior to any public offering of Registrable Securities, use all reasonable efforts to register or qualify, or cooperate with the Holders of Registrable Securities to be sold or tendered or the underwriters, if any, and their respective counsel in connection with the registration or qualification (or exemption from such registration or qualification) of such Registrable Securities for offer and sale under the securities or Blue Sky laws of such jurisdictions within the United States as any Holder or underwriter reasonably requests in writing, keep each such registration or qualification (or exemption therefrom) effective during the period the Registration Statement is required to be kept effective and do any and all other acts or things legally necessary to enable the disposition in such jurisdictions of the Registrable Securities covered by the Registration Statement; provided, however, that neither the Company nor the Guarantor shall be required to qualify generally to do business in any jurisdiction where it is not then so qualified, take any action that would subject it to general service of process in any such jurisdiction where it is not then so subject or subject the Company or the Guarantor to any tax in any such jurisdiction where it is not then so subject. (i) In connection with any sale or transfer of Registrable Securities that will result in such securities no longer being Registrable Securities, cooperate with the Holders and the managing underwriters, if any, to (i) facilitate the timely preparation and delivery of certificates representing Registrable Securities to be sold (unless the same shall be in book-entry form), which certificates shall not bear any restrictive legends, unless required by applicable securities laws, shall bear a CUSIP number different from the CUSIP number for the Registrable Securities and shall be in a form eligible for deposit with the Depositary Trust Company, and (ii) enable such Registrable Securities to be in such denominations and registered in such names as the managing underwriters, if any, or Holders may reasonably request at least two Business Days prior to any sale of Registrable Securities. 9. (j) Use best efforts to cause the offering of the Registrable Securities covered by the Registration Statement to be registered with or approved by such other governmental agencies or authorities within the United States as may be necessary to enable the Holder or managing underwriter, if any, to consummate the disposition of such Registrable Securities; provided, however, that neither the Company nor the Guarantor shall be required to register the Registrable Securities in any jurisdiction that would require the Company or the Guarantor to qualify to do business in any jurisdiction where it is not then so qualified, subject it to general service of process in any such jurisdiction where it is not then so subject or subject the Company or the Guarantor to any tax in any such jurisdiction where it is not then so subject. (k) Upon the occurrence of any event contemplated by Section 4(c)(iv) hereof, as promptly as reasonably practicable (subject to any suspension of sales pursuant to Section 2(d) hereof), prepare a supplement or amendment, including, if appropriate, a post-effective amendment, to the Registration Statement or a supplement to the related Prospectus or any document incorporated or deemed to be incorporated therein by reference, and file any other required document so that, as thereafter delivered, such Prospectus will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading (except, upon occurrence of an event contemplated by paragraph (v) of Section 4(c) above, to the extent that the Company and the Guarantor determine in good faith that the disclosure of such event at such time would not be in the best interests of the Company or the Guarantor and the Company's stockholders, provided that any such delay in disclosure pursuant to this Section 4(k) shall be considered a suspension of the Registration Statement subject to the limitation in Section 2(d)). (l) Prior to the effective date of the Registration Statement relating to the Registrable Securities, to provide a CUSIP number for the Registrable Securities to be sold pursuant to the Registration Statement. (m) Enter into such agreements (including any underwriting agreements in form, scope and substance as may be reasonably requested and as are customary in underwritten offerings) and take all such other appropriate actions in connection therewith (including those reasonably requested by the managing underwriters, if any, or the Holders of a majority in interest of the Registrable Securities being sold) in order to expedite or facilitate the sale of such Registrable Securities. In connection with any underwritten offering, the Company and the Guarantor will: (i) make such representations and warranties to the Holders of such Registrable Securities and the underwriters, if any, with respect to the business of the Company and the Guarantor and their subsidiaries (including with respect to businesses or assets acquired or to be acquired by any of them), and the Registration Statement, Prospectus and documents, if any, incorporated or deemed to be incorporated by reference therein, in each case, in form, substance and scope as are customarily made by issuers to underwriters in underwritten offerings, and confirm the same if and when requested; (ii) obtain, as may reasonably be required, opinions of counsel to the Company and the Guarantor (which may include in-house counsel) and updates thereof (which 10. counsel and opinions (in form, scope and substance) shall be reasonably satisfactory to the managing underwriters, if any), addressed to each selling Holder of Registrable Securities and each of the underwriters, if any, covering the matters customarily covered in opinions requested in underwritten offerings (including any such matters as may be reasonably requested by such underwriters); (iii) obtain, as may reasonably be required, customary "cold comfort" letters and updates thereof from the independent certified public accountants of the Company and the Guarantor (and, if necessary, any other independent certified public accountants of any subsidiary of the Company or the Guarantor or of any business acquired by the Company or the Guarantor for which financial statements and financial data are, or are required to be, included in the Registration Statement), addressed (where reasonably possible) to each selling Holder of Registrable Securities and each of the underwriters, if any, such letters to be in customary form and covering matters of the type customarily covered in "cold comfort" letters in connection with underwritten offerings; and (iv) deliver such documents and certificates as may be reasonably requested by the Holders of a majority in interest of the Registrable Securities being sold or the managing underwriters, if any, to evidence the continued validity of the representations and warranties made pursuant to clause (i) of this Section 4(m) and to evidence compliance with any customary conditions contained in the underwriting agreement or other agreement entered into by the Company or the Guarantor; (n) Make available for inspection by a representative of the Holders of Registrable Securities being sold, any underwriter participating in any such disposition of Registrable Securities, if any, and any attorney, consultant or accountant retained by such selling Holders or underwriter, at the offices where normally kept, during reasonable business hours, all financial and other records, pertinent corporate documents and properties of the Company and the Guarantor and their subsidiaries (other than records and documents that the Company and the Guarantor and their subsidiaries agreed contractually not to disclose and the disclosure of which would violate any such contractual agreement) as they may reasonably request, and cause the officers, directors, agents and employees of the Company and the Guarantor and their subsidiaries to supply all information (other than information that the Company and the Guarantor and their subsidiaries agreed contractually not to disclose and the disclosure of which would violate any such contractual agreement) in each case reasonably requested by any such representative, underwriter, attorney, consultant or accountant in connection with such Registration Statement and as shall be reasonably necessary to enable such persons to conduct a reasonable investigation within the meaning of Section 11 of the Securities Act; provided, however, that the foregoing inspection and information gathering shall be coordinated on behalf of the Holders and the other parties thereto by one counsel designated by and on behalf of such Holders and other parties and provided further, that such persons shall first agree in writing with the Company and the Guarantor that any information that is reasonably and in good faith designated by the Company or the Guarantor as confidential at the time of delivery or inspection (as the case may be) of such information shall be kept confidential by such persons, unless (i) disclosure of such information is required by court or administrative order or is necessary to respond to inquiries of regulatory authorities; (ii) disclosure of such information is required by law (including any disclosure requirements pursuant to Federal securities laws in connection 11. with the filing of any Registration Statement or the use of any Prospectus); (iii) such information becomes generally available to the public other than as a result of a disclosure or failure to safeguard by any such person; or (iv) such information becomes available to any such person from a source other than the Company or the Guarantor and such source is not known to be bound by a confidentiality agreement. (o) Use all reasonable efforts to cause the Indenture to be qualified under the TIA not later than the effective date of the Registration Statement relating to the Registrable Securities; and in connection therewith, cooperate with the Trustee and the Holders of Notes or Common Stock constituting Registrable Securities to effect such changes to the Indenture, if any, as may be required for such Indenture to be so qualified in accordance with the terms of the TIA; and execute, and use all reasonable efforts to cause the Trustee to execute, all customary documents as may be required to effect such changes, and all other forms and documents (including Form T-1) required to be filed with the SEC to enable the Indenture to be so qualified under the TIA in a timely manner. (p) (i) list all shares of Common Stock covered by any Registration Statements on any securities exchange on which the Common Stock is then listed; or (ii) authorize for quotation on the National Market of the National Association of Securities Dealers Automated Quotation System ("Nasdaq") all Common Stock covered by all such Registration Statements if the Common Stock is then so authorized for quotation. (q) Make all reasonable efforts to provide such information as is required for any filings required to be made with the National Association of Securities Dealers, Inc. ("NASD"). SECTION 5. REGISTRATION EXPENSES. All fees and expenses incident to the performance of or compliance with this Agreement by the Company and the Guarantor shall be borne by it whether or not any Registration Statement is filed or becomes effective. The fees and expenses referred to in the foregoing sentence shall include: (a) all registration, filing, securities exchange listing, rating agency and New York Stock Exchange fees and expenses; (b) printing expenses (including, without limitation, printing Prospectuses if the printing of Prospectuses is required by the managing underwriters, if any, or by the Holders of a majority in interest of the Registrable Securities); (c) messenger, copying, telephone and delivery expenses; (d) reasonable fees and disbursements of counsel for the Company and the Guarantor; (e) fees and disbursements of all independent certified public accountants referred to in Section 4(m)(iii) including, without limitation, the expenses of any special audits or "cold comfort" letters required by Section 4(m)(iii); 12. (f) fees and expenses of all other persons retained by the Company or the Guarantor; (g) all registration, filing, qualification and other fees and expenses of complying with securities or blue sky laws of all jurisdictions in which the Registrable Securities are to be registered and any legal fees and expenses incurred in connection with the blue sky qualifications of the Registrable Securities and the determination of their eligibility for investment under the laws of all such jurisdictions; and (h) the reasonable fees and disbursements incurred by the Holders of the Registrable Securities being registered (including, without limitation, the reasonable fees and disbursements for one counsel or firm of counsel selected by the Holders of a majority in interest of the Registrable Securities being registered). Notwithstanding anything in this Agreement to the contrary, the Holders shall be responsible for all expenses customarily borne by selling securityholders (including underwriting discounts, commissions and fees and expenses of counsel to the selling Holders to the extent not required to be paid pursuant to clause (h) above). SECTION 6. INDEMNIFICATION. (a) Each of the Company and the Guarantor agrees, jointly and severally, to indemnify and hold harmless each Holder of Registrable Securities, such Holder's affiliates, and their respective officers, directors, employees, representatives and agents and each person, if any, who controls any Holder of Registrable Securities within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act, against any and all loss, liability, claim or damage arising out of any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or the Prospectus (or any amendment or supplement thereto), or the omission or alleged omission to state therein any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that this indemnity agreement shall not apply to any loss, liability, claim or damage arising out of any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with written information furnished to the Company or the Guarantor by or on behalf of such Holder of Registrable Securities (which also acknowledges the indemnity provisions herein) or any person, if any, who controls any such Holder of Registrable Securities expressly for use in the Registration Statement (or any amendment thereto), or any preliminary prospectus or the Prospectus (or any amendment or supplement thereto); provided, further, that this indemnity agreement shall not apply to any loss, liability, claim or damage (i) arising from an offer or sale of Registrable Securities occurring during any suspension of sales pursuant to Section 2(d), (provided that the Company has given to the Holder notice of such suspension prior to such offer or sale) or (ii) if the Holder fails to deliver at or prior to the written confirmation of sale, the most recent Prospectus, as amended or supplemented, and such Prospectus, as amended or supplemented, would have corrected such untrue statement or omission or alleged untrue statement or omission of a material fact (provided that the Company has delivered to such Holder, or otherwise given notice to such Holder of the existence of, such most recent Prospectus, as supplemented or amended). Any amounts advanced by the Company or the 13. Guarantor to an indemnified party pursuant to this Agreement shall be returned to the Company or the Guarantor if it shall be finally determined in a judgment by a court of competent jurisdiction not subject to appeal, that such indemnified party was not entitled to indemnification. (b) In connection with the preparation of the Registration Statement in which a Holder of Registrable Securities is participating in furnishing information relating to such Holder of Registrable Securities to the Company or the Guarantor for use in such Registration Statement, any preliminary prospectus, the Prospectus or any amendments or supplements thereto, each such Holder agrees, severally and not jointly, to indemnify and hold harmless any other Holders of Registrable Securities, the Company and the Guarantor, their affiliates their respective officers, directors, employees representatives and agents and each person, if any, who controls such other Holders, the Company or the Guarantor within the meaning of either such Section, against any and all loss, liability, claim or damage described in the indemnity contained in subsection (a) of this Section, as incurred, but only with respect to untrue statements or omissions, or alleged untrue statements or omissions, made in the Registration Statement (or any amendment thereto), or any preliminary prospectus or the Prospectus (or any amendment or supplement thereto) in reliance upon and in conformity with written information furnished to the Company or the Guarantor by or on behalf of such Holder of Registrable Securities (which also acknowledges the indemnity provisions herein) or any person, if any, who controls any such Holder of Registrable Securities expressly for use in the Registration Statement (or any amendment thereto) or such preliminary prospectus or the Prospectus (or any amendment or supplement thereto). (c) Each indemnified party shall give notice as promptly as reasonably practicable to each indemnifying party of any action commenced against it in respect of which indemnity may be sought hereunder, but failure to so notify an indemnifying party shall not relieve such indemnifying party from any liability hereunder to the extent it is not materially prejudiced as a result thereof and in any event shall not relieve it from any liability which it may have otherwise than on account of this indemnity agreement. The indemnifying party, upon request of the indemnified party, shall retain counsel reasonably satisfactory to the indemnified party to represent the indemnified party and any others the indemnifying party may designate in such proceeding and shall pay the reasonable fees and disbursements of such counsel related to such proceeding. In any such proceeding, any indemnified party shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such indemnified party unless (i) the indemnifying party and the indemnified party shall have mutually agreed to the retention of such counsel or (ii) the named parties to any such proceeding (including any impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. It is understood that the indemnifying party shall not, in respect of the legal expenses of any indemnified party in connection with any proceeding or related proceedings in the same jurisdiction, be liable for (a) the fees and expenses of more than one separate firm (in addition to any local counsel), for the Holders of Registrable Securities, and all persons, if any, who control the Holders of Registrable Securities within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act, collectively (unless representation of all Holders and such parties by the same counsel would be inappropriate due to actual or potential differing interests between or among them), and (b) the fees and expenses of more than one separate firm (in addition to any local counsel), for the Company and the 14. Guarantor and each person, if any, who controls the Company or the Guarantor within the meaning of either such Section, and that all fees and expenses payable under (a) and (b) above shall be reimbursed as they are incurred. In the case of any such separate firm for the Holders of Registrable Securities, and control persons of the Holders of Registrable Securities, such firm shall be designated by the Required Holders and shall be reasonably acceptable to the Company and the Guarantor. In the case of any such separate firm for the Company and the Guarantor and control persons of the Company or the Guarantor, such firm shall be reasonably acceptable to the Holders of a majority in interest of the Registrable Securities. The indemnifying party shall not be liable for any settlement of any proceeding effected without its written consent (which consent shall not be unreasonably withheld or delayed), but if settled with such consent or if there be a final non-appealable judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party from and against any loss or liability by reason of such settlement or judgment. No indemnifying party shall, without the prior written consent of the indemnified parties (which consent shall not be unreasonably withheld or delayed), settle or compromise or consent to the entry of any judgment with respect to any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever in respect of which indemnification or contribution could be sought under this Section 6 (whether or not the indemnified parties are actual or potential parties thereto), unless such settlement, compromise or consent (i) includes an unconditional release of each indemnified party from all liability arising out of such litigation, investigation, proceeding or claim and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of any indemnified party. No indemnified party shall, without the prior written consent of the indemnifying party, settle or compromise or consent to the entry of any judgment with respect to any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever in respect of which indemnification or contribution could be sought under this Section 6 (whether or not the indemnified parties are actual or potential parties thereto). (d) If the indemnification to which an indemnified party is entitled under this Section 6 is for any reason unavailable to or insufficient although applicable in accordance with its terms to hold harmless an indemnified party in respect of any losses, liabilities, claims, damages or expenses referred to therein, then each indemnifying party shall contribute to the aggregate amount of such losses, liabilities, claims, damages and expenses incurred by such indemnified party, as incurred, in such proportion as is appropriate to reflect the relative fault of the indemnifying party or parties on the one hand and of the indemnified party on the other hand in connection with the statements or omissions which resulted in such losses, liabilities, claims, damages or expenses, as well as any other relevant equitable considerations. The relative fault of the Company or the Guarantor on the one hand and the Holders of the Registrable Securities on the other hand shall be determined by reference to, among other things, whether any such untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by the Company, the Guarantor or by the Holder of the Registrable Securities and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. 15. The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 6(d) were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to above in this Section 6(d). The aggregate amount of losses, liabilities, claims, damages, and expenses incurred by an indemnified party and referred to above in this Section 6(d) shall be deemed to include any out-of-pocket legal or other expenses reasonably incurred by such indemnified party in investigating, preparing or defending against any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based upon any such untrue or alleged untrue statement or omission or alleged omission. Notwithstanding the provisions of this Section 6, no Holder shall be required to indemnify or contribute any amount in excess of the amount by which the total price at which Registrable Securities were sold by such Holder exceeds the amount of any damages that such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission to alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The remedies provided in this Section 6 are not exclusive and shall not limit any rights or remedies which may otherwise be available to any indemnified party at law or in equity. For purposes of this Section 6(d), each person, if any, who controls any Holder of Registrable Securities within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act shall have the same rights to contribution as such Holder, and each person, if any, who controls the Company or the Guarantor within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act shall have the same rights to contribution as the Company or the Guarantor, as the case may be. No party shall be liable for contribution with respect to any action, suit, proceeding or claim settled, compromised, or with respect to which the party requesting contribution consented to the entry of a judgment, without such party's written consent, which consent shall not be unreasonably withheld or delayed. (e) The Company and the Guarantor may require as a condition to including the Registrable Securities in the Registration Statement, and to entering into any underwriting agreement with respect thereto, that the Company and the Guarantor shall have received an undertaking from the Holder and such underwriter to comply with the provisions of this Section 6. (f) The agreements contained in this Section 6 shall survive the transfer or sale of the Registrable Securities and shall remain in full force and effect, regardless of any termination or cancellation of this Agreement or any investigation made by or on behalf of any indemnified party. SECTION 7. INFORMATION REQUIREMENTS. 16. (a) Each of the Company and the Guarantor agree that, if at any time before the end of the Effectiveness Period the Company or the Guarantor, as the case may be, is not subject to the reporting requirements of the Exchange Act, it will cooperate with any Holder of Registrable Securities and use reasonable efforts to take such further reasonable action as any Holder of Registrable Securities may reasonably request in writing to enable such Holder to sell Registrable Securities without registration under the Securities Act within the limitation of the exemptions provided by Rule 144 and Rule 144A under the Securities Act (or any similar rule or regulation hereafter adopted by the SEC) and customarily taken in connection with sales pursuant to such exemptions, including, without limitation, making available adequate current public information within the meaning of paragraph (c)(2) of Rule 144 and delivering the information required by paragraph (d) of Rule 144A. Notwithstanding the foregoing, nothing in this Section 7 shall be deemed to require the Company or the Guarantor to register any of its securities under any section of the Exchange Act. (b) Each of the Company and the Guarantor shall file reports required to be filed by it under the Exchange Act and the New York Stock Exchange or any other securities exchanges or markets on which the Common Stock is listed or quoted. SECTION 8. UNDERWRITTEN REGISTRATION. If any of the Registrable Securities covered by the Registration Statement are to be sold in an underwritten offering, the investment banker or investment bankers and manager or managers that will administer the offering will be investment bankers of recognized national standing selected by the Required Holders, subject to the consent of the Company and the Guarantor (which will not be unreasonably withheld or delayed). No person may participate in any underwritten registration hereunder unless such person (i) agrees to sell such person's Registrable Securities on the basis reasonably provided in any underwriting arrangements approved by the Required Holders; and (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements, lock-up agreements and other documents reasonably required under the terms of such underwriting arrangements. Notwithstanding any other provision of this Agreement, if the underwriter determines in good faith that marketing factors require a limitation of the number of shares to be underwritten, the number of shares that may be included in the underwriting shall be allocated on a pro rata basis. SECTION 9. MISCELLANEOUS. (a) OTHER REGISTRATION RIGHTS. The Company and the Guarantor may in the future grant registration rights that would permit any person that is a third party the right to piggy-back on the Registration Statement; provided, however, that if the managing underwriter, if any, of such offering notifies the Holders that the total amount of Registrable Securities which they and the holders of such piggy-back rights intend to include in the Registration Statement is so large as to materially adversely affect the success of such offering (including the price at which such securities can be sold), then only the amount, the number or kind of securities offered for the account of holders of such piggy-back rights will be reduced to the extent necessary to reduce the total amount of securities to be included in such offering to the amount, number or kind recommended by the managing underwriter and the amount of Registrable Securities to be included shall not be reduced. 17. (b) NO INCONSISTENT AGREEMENTS. Neither the Company nor the Guarantor has entered or shall enter into any agreement that is inconsistent with the rights granted to the Holders in this Agreement or otherwise conflicts with the provisions hereof. The rights granted to the Holders hereunder do not in any way conflict with and are not inconsistent with the rights granted to the holders of the Company's or the Guarantor's other issued and outstanding securities under any such agreements. (c) NO ADVERSE ACTION AFFECTING THE REGISTRABLE SECURITIES. Neither the Company nor the Guarantor will take any action with respect to the Registrable Securities which would adversely affect the ability of any of the Holders to include such Registrable Securities in a registration undertaken pursuant to this Agreement. (d) AMENDMENTS AND WAIVERS. The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof, may not be given, without the written consent of the Company and the Guarantor and Holders of a majority in interest of Registrable Securities, provided, however, that, for the purposes of this Agreement, Registrable Securities that are owned, directly or indirectly, by either the Company, the Guarantor or an Affiliate of the Company or the Guarantor are not deemed outstanding. Notwithstanding the foregoing, a waiver or consent to depart from the provisions hereof with respect to a matter that relates exclusively to the rights of Holders whose Registrable Securities are being sold pursuant to the Registration Statement and that does not directly or indirectly affect the rights of other Holders may be given by Holders of a majority in interest of the Registrable Securities being sold by such Holders pursuant to such Registration Statement, provided, however, that the provisions of this sentence may not be amended, modified, or supplemented except in accordance with the provisions of the immediately preceding sentence. Each Holder of Registrable Securities outstanding at the time of any such amendment, modification, supplement, waiver or consent or thereafter shall be bound by any such amendment, modification, supplement, waiver or consent effected pursuant to this Section 9(d), whether or not any notice, writing or marking indicating such amendment, modification, supplement, waiver or consent appears on the Registrable Securities or is delivered to such Holder. (e) NOTICES. All notices and other communications provided for herein or permitted hereunder shall be made in writing by hand-delivery, courier guaranteeing overnight delivery, certified first-class mail, return receipt requested, or telecopy and shall be deemed given (i) when made, if made by hand delivery, (ii) upon confirmation, if made by telecopier, (iii) one Business Day after being deposited with such courier, if made by overnight courier or (iv) on the date indicated on the notice of receipt, if made by first-class mail, to the parties as follows: (i) if to a Holder, to the address of such Holder as it appears in the Notice and Questionnaire, or, if not so specified, in the Common Stock or Notes register of the Company, as applicable. Failure to mail a notice or communication to a Holder or any defect in such notice or communication shall not affect its sufficiency with respect to other Holders. 18. (ii) if to the Company or the Guarantor to: AMERICA WEST HOLDINGS CORPORATION 111 West Rio Salado Parkway Tempe, AZ 85281 Telephone No. (480) 693-0800 Facsimile No. (480) 693-5932 Attention: Vice President and General Counsel With a copy to: COOLEY GODWARD LLP One Maritime Plaza, 20th Floor San Francisco, CA 94111 Telephone No. (415) 693-2000 Facsimile No. (415) 951-3699 Attention: Samuel M. Livermore (iii) If to an Initial Purchaser, to the address of such Initial Purchaser set forth on Schedule I. (f) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of each existing and future Holder. Neither the Company nor the Guarantor may assign its rights or obligations hereunder without the prior written consent of the Holders of a majority in interest of the Registrable Securities, other than by operation of law pursuant to a merger or consolidation to which the Company or the Guarantor is a party. (g) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. (h) SEVERABILITY. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their best efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction, it being intended that all of the rights and privileges of the parties shall be enforceable to the fullest extent permitted by law. (i) HEADINGS. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. All references made in this Agreement to "Section" and "paragraph" refer to such Section or paragraph of this Agreement, unless expressly stated otherwise. (j) ENTIRE AGREEMENT. This Agreement is intended by the parties as a final expression of their agreement and is intended to be a complete and exclusive statement of the 19. agreement and understanding of the parties hereto in respect of the subject matter contained herein and the registration rights granted by the Company and the Guarantor with respect to the Registrable Securities. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein, with respect to the registration rights granted by the Company and the Guarantor with respect to the Registrable Securities. This Agreement supersedes all prior agreements and undertakings among the parties solely with respect to such registration rights. (k) TERMINATION. This Agreement and the obligations of the parties hereunder shall terminate upon the end of the Effectiveness Period, except for any liabilities or obligations under Sections 4, 5 or 6 hereof. (l) SPECIFIC PERFORMANCE. The Company and the Guarantor agree that, to the extent permitted by law, (i) the obligations imposed on them in this Agreement are special, unique and of an extraordinary character, and that in the event of a breach by the Company or the Guarantor would not be an adequate remedy; and (ii) the Holders shall be entitled to specific performance and injunctive and other equitable relief in addition to any other remedy to which they may be entitled at law or in equity. 20. SCHEDULE I Schedule of Initial Purchasers 21. EXHIBIT A TO REGISTRATION RIGHTS AGREEMENT Notice and Questionnaire 22. EX-4.18 6 p66064ex4-18.txt EX-4.18 Exhibit 4.18 GUARANTY THIS GUARANTY ("GUARANTY"), dated as of January 18, 2002, is made by AMERICA WEST AIRLINES, INC., a Delaware corporation (the "GUARANTOR"), in favor of the Holders and the Trustee (each such term as defined in the Indenture referred to below, with the Holders and the Trustee referred to herein as the "BENEFICIARIES"). RECITALS A. Reference is made to the Indenture, dated as of the date hereof (as amended, restated, supplemented, modified or waived from time to time, the "INDENTURE"), by and between America West Holdings Corporation, a Delaware corporation (the "COMPANY"), and Wilmington Trust Company, as Trustee, under which the Company is issuing its 7-1/2% Convertible Senior Notes due 2009 (the "NOTES"). Capitalized terms used and not defined herein shall have the meaning given to such terms in the Indenture. B. The Guarantor is a wholly-owned subsidiary of the Company. C. The Guarantor will obtain substantial direct and indirect benefit from the transactions contemplated by the Transaction Documents (as defined below). D. Under the terms of the Indenture, the Guarantor and the Company are required to enter into this Guaranty. GUARANTY NOW, THEREFORE, in consideration of the promises therein, the Guarantor hereby agrees as follows: 1. GUARANTY. (a) UNCONDITIONAL GUARANTY. The Guarantor hereby unconditionally, absolutely and irrevocably guarantees to each of the Beneficiaries the prompt and complete payment when due (whether at stated maturity, by acceleration or otherwise) of all Guaranteed Obligations. The term "GUARANTEED OBLIGATIONS" means all loans, advances, debts, liabilities and obligations for monetary amounts from time to time owing by the Company to the Holders or the Trustee in connection with the Notes or under the Indenture, whether due or to become due, matured or unmatured, liquidated or unliquidated, contingent or non-contingent, and all covenants and duties regarding such amounts, of any kind or nature, present or future, whether or not evidenced by any note, agreement or instrument, arising under or in respect of the Notes or under the Indenture. This term includes all Principal, Interest (including Interest that accrues after the commencement against the Company of any action under Bankruptcy Law), fees, expenses, costs or other sums (including, without limitation, all fees and disbursements of any law firm or other external counsel) chargeable to the Company under the Notes or under the Indenture. Notwithstanding the foregoing, Guaranteed Obligations shall not include any liabilities or obligations owing from the Company to the Holders in connection with the Registration Rights Agreement (as defined below). 1. (b) REIMBURSEMENT OF EXPENSES UNDER THIS GUARANTY. The Guarantor also agrees to pay any and all reasonable costs and expenses (including, without limitation, all reasonable fees and disbursements of any law firm or other external counsel) of any Holder or the Trustee in enforcing any rights under this Guaranty. (c) GUARANTEED OBLIGATIONS UNAFFECTED. No payment or payments made by any other guarantor or by any other Person, or received or collected by any of the Beneficiaries from any other guarantor or from any other Person by virtue of any action or proceeding or any appropriation or application at any time or from time to time in reduction of or in payment of the Guaranteed Obligations shall be deemed to modify, reduce, release or otherwise affect the liability of the Guarantor hereunder which shall, notwithstanding any such payments, remain liable for the Guaranteed Obligations, subject to Section 6 below, until this Guaranty shall have terminated pursuant to Section 4 hereof. (d) ENFORCEMENT OF GUARANTEED OBLIGATIONS. Upon the occurrence and during the continuance of an Event of Default (as defined in the Indenture), then and in any such event all or any part of the Guaranteed Obligations shall automatically become (in the case of an Event of Default described in clauses (f) or (g) of Section 4.1 of the Indenture) and may, at the option of the Beneficiaries as provided in the Indenture (in the case of any Event of Default described in Section 4.1 other than those described in clauses (f) or (g) of the Indenture) and without demand, notice or legal process of any kind, be declared, and immediately shall become, due and payable. (e) NOTICE OF PAYMENT UNDER GUARANTY. The Guarantor agrees that whenever, at any time, or from time to time, it shall make any payment to any of the Beneficiaries on account of its liability hereunder, it will notify such Beneficiary in writing that such payment is made under this Guaranty for such purpose. (f) RIGHT OF CONTRIBUTION; SUBORDINATION. The Company and the Guarantor hereby agree that, to the extent that the Guarantor shall have paid an amount hereunder to any of the Beneficiaries that is greater than the net value of the benefits received, directly or indirectly, by the Guarantor as a result of the issuance and sale of the Notes and the Transaction Documents (as hereinafter defined), the Guarantor shall be entitled to contribution from the Company. Any amount payable as a contribution under this Section 1(f) shall be determined as of the date on which the related payment or distribution is made by the Guarantor and the parties hereto acknowledge that the right to contribution hereunder shall constitute an asset of the Guarantor. Notwithstanding the foregoing, the provisions of this Section 1(f) shall in no respect limit the obligations and liabilities of the Guarantor to the Beneficiaries hereunder or under the Notes or the Indenture, and the Guarantor shall remain liable for the full amount guaranteed hereunder. Any debt or other obligation (including, without limitation, any obligation under this Section 1(f)) of the Company now or hereafter held by or owing to the Guarantor is hereby subordinated in time and right of payment to all obligations of the Company to the Beneficiaries. 2. SUBROGATION. Notwithstanding any payment or payments made by the Guarantor hereunder, the Guarantor hereby irrevocably waives, solely with respect to such payment or payments, any and all rights of subrogation to the rights of the Beneficiaries against the Company and any and all rights of reimbursement, assignment, indemnification or implied 2. contract or any similar rights against the Company, any endorser or other guarantor of all or any part of the Guaranteed Obligations, in each case until such time as the Guaranteed Obligations have been paid in full (subject to Section 6 below). If, notwithstanding the foregoing, any amount shall be paid to the Guarantor on account of such subrogation rights at any time when all of the Guaranteed Obligations shall not have been paid in full, such amount shall be held by the Guarantor in trust for the Beneficiaries, segregated from other funds of the Guarantor, and shall, forthwith upon receipt by the Guarantor, be turned over to each Beneficiary (ratably based on the amount of Guaranteed Obligations owed to such Beneficiary at such time as a percentage of the aggregate total amount of the Guaranteed Obligations at such time) in the exact form received by the Guarantor (duly endorsed by the Guarantor to such Beneficiary if required), to be applied against the Guaranteed Obligations, whether matured or unmatured, in such order as such Beneficiary may determine. 3. AMENDMENTS, ETC., WITH RESPECT TO THE GUARANTEED OBLIGATIONS. The Guarantor shall remain obligated hereunder notwithstanding that: (a) any demand for payment of any of the Guaranteed Obligations made by any Beneficiary may be rescinded by such Beneficiary, and any of the Guaranteed Obligations continued; (b) this Guaranty, the Guaranteed Obligations, or the liability of any other party upon or for any part of the Guaranteed Obligations, or any collateral security or guaranty therefor, may, from time to time, in whole or in part, be renewed, extended, amended, modified, accelerated, compromised, waived, surrendered or released by any Beneficiary or such other party; (c) the Indenture, the Notes and any other document executed in connection with any of them may be renewed, extended, amended, modified, supplemented or terminated, in whole or in part; or (d) any guaranty or collateral at any time held by any Person for the payment of the Guaranteed Obligations may be sold, exchanged, waived, surrendered or released. When making any demand hereunder against the Guarantor, each Beneficiary may, but shall be under no obligation to, make a similar demand on any other Person, and any failure by such Beneficiary to make any such demand or to collect any payments from any other Person or any release of any such other Person shall not impair or affect the rights and remedies, express or implied, or as a matter of law, of such Beneficiary against the Guarantor. For the purposes hereof "demand" shall include the commencement and continuance of any legal proceedings. 4. GUARANTY ABSOLUTE AND UNCONDITIONAL; TERMINATION. The Guarantor waives any and all notice of the creation, renewal, extension or accrual of any of the Guaranteed Obligations and notice of or proof of reliance by any Beneficiary upon this Guaranty or acceptance of this Guaranty. The Indenture, the Notes and the Guaranteed Obligations in respect of any of them, shall conclusively be deemed to have been created, contracted for or incurred in reliance upon this Guaranty; and all dealings between the Company or the Guarantor, on the one hand, and any of the Beneficiaries, on the other, shall likewise conclusively be presumed to have been had or consummated in reliance upon this Guaranty. The Guarantor waives diligence, presentment, protest, demand for payment and notice of default or nonpayment to or upon the Company, any other guarantor or itself with respect to the Guaranteed Obligations. This Guaranty shall be construed as a continuing, irrevocable, absolute and unconditional guaranty of payment, performance and compliance when due (and not of collection) and is a primary obligation of the Guarantor without regard to (a) the validity or enforceability of the Indenture, the Notes, any of the Guaranteed Obligations or any other guaranty with respect thereto at any time or from time to time held by any Beneficiary, (b) any defense or counterclaim (other than a 3. defense of payment or performance) which may at any time be available to or be asserted by the Company or the Guarantor against any Beneficiary, or (c) any other circumstance whatsoever (with or without notice to or knowledge of the Company, the Guarantor or any other guarantor) which constitutes, or might be construed to constitute, an equitable or legal discharge of the Company or a guarantor of the Guaranteed Obligations, in bankruptcy or in any other instance. When pursuing its rights and remedies hereunder against the Guarantor, any Beneficiary may, but shall be under no obligation to, pursue such rights and remedies as it may have against any other Person under a guaranty of the Guaranteed Obligations, and any failure by such Beneficiary to pursue such other rights or remedies or to collect any payments from any other Person or to realize upon any such guaranty, or any release of any such other Person or any such guaranty, shall not relieve the Guarantor of any liability hereunder, and shall not impair or affect the rights and remedies, whether express, implied or available as a matter of law, of each of the Beneficiaries against the Guarantor. This Guaranty shall remain in full force and effect and be binding in accordance with and to the extent of its terms upon the Guarantor and its successors and assigns, and shall inure to the benefit of each of the Beneficiaries and its successors, endorsees, transferees and assigns, until all Guaranteed Obligations shall have been satisfied by payment in full (including payment of any fees or expenses incurred, or interest accruing, on or after the commencement of any insolvency or bankruptcy proceeding with respect to the Company or the Guarantor), upon the occurrence of which this Guaranty shall, subject to Section 6 below, terminate. 5. REPRESENTATIONS AND WARRANTIES. The Guarantor and the Company hereby jointly and severally represent and warrant to each of the Beneficiaries that: (a) Each of the Guarantor and the Company: (i) is a corporation duly organized, validly existing and in good standing under the laws of the state of its formation; (ii) is duly qualified to do business and is in good standing in every jurisdiction where the nature of its business requires it to be so qualified (except where the failure to so qualify could not reasonably be expected to have a material adverse effect, individually or in the aggregate, on its business, financial condition or operations of the Company and its subsidiaries taken as a whole or on its ability to pay or perform its obligations under the Indenture, the Notes, the Registration Rights Agreement or this Guaranty (collectively, the "TRANSACTION DOCUMENTS") to which it is a party); (iii) has received all permits necessary to conduct the businesses now operated by it and has not received notice of proceedings relating to the revocation or modification of any permit that, if adversely determined, would reasonably be expected to have, individually or in the aggregate, a material adverse effect on its business, financial condition or operations of the Company and its subsidiaries taken as a whole, or on its ability to pay or perform its obligations under the Transaction Documents to which it is a party; (iv) has all requisite power and authority to own its properties and to carry on its business as now conducted and as proposed to be conducted, and to execute and deliver the Transaction Documents to which it is a party and to perform its obligations thereunder; and (v) is in compliance in all material respects with all applicable law, rules, regulations and orders; (b) The execution, delivery and performance by each of the Guarantor and the Company of the Transaction Documents to which it is a party: (i) are within its powers and have been duly authorized by all necessary corporate and stockholder action; (ii) do not contravene its charter documents or any law, rule, regulation or administrative or court order binding on or 4. affecting the Guarantor or the Company or their respective property; and (iii) do not conflict with or constitute a breach of, or default under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company or the Guarantor pursuant to any material contract, indenture, mortgage, loan agreement, note or other instrument by which either the Company or the Guarantor may be bound; (c) Each of the Transaction Documents to which either of the Guarantor or the Company is a party constitutes a valid and binding obligation of the Guarantor and the Company, as the case may be, enforceable against the Guarantor or the Company, as the case may be, in accordance with its terms, except as the enforceability thereof may be subject to or limited by bankruptcy, insolvency, reorganization, arrangement, moratorium or other similar laws relating to or affecting the rights of creditors generally and general equitable principles (whether applied in an action at law or a suit in equity); (d) There is no action, suit or proceeding affecting the Guarantor or the Company pending or, to either of their knowledge, threatened before any court, arbitrator, or governmental authority, domestic or foreign, which would reasonably be expected to have, individually or in the aggregate, a material adverse effect on its ability to pay or perform its obligations under the Transaction Documents to which it is a party or on the business, financial condition or operations of the Company and its subsidiaries taken as a whole; (e) The Guaranteed Obligations are not subject to any offset or defense of any kind against any Beneficiary or the Company; (f) Neither the Guarantor nor the Company nor any of their properties has any immunity from jurisdiction of any court or from any legal process (whether through service of process or notice, attachment prior to judgment, attachment in aid of execution, execution or otherwise) under applicable law; (g) The Notes have been duly authorized, executed, authenticated, issued and delivered by the Company and are entitled to the benefits of the Indenture; (h) The Notes are convertible into Common Stock of the Company in accordance with the terms of the Indenture. All of the outstanding shares of Common Stock have been duly authorized and validly issued, fully paid and nonassessable and free of any preemptive rights and the shares of Common Stock deliverable upon conversion of the Notes have been, and at all times will be, duly authorized and reserved for issuance upon such conversion, and, when delivered upon such conversion, will be validly issued, fully paid and nonassessable and free of any preemptive rights; (i) Each of the Indenture, the Registration Rights Agreement and this Guaranty has been duly executed and delivered by the Company and each of the Registration Rights Agreement and this Guaranty has been duly executed and delivered by the Guarantor; (j) The Guarantor is a wholly-owned subsidiary of the Company; (k) The offer, sale and issuance by the Company of the Notes and the guaranty by the Guarantor pursuant to this Guaranty are, and the issuance of the Common Stock 5. upon conversion of the Notes will be, exempt from the registration requirements of the Securities Act; (l) No authorization, approval, consent or order of any court or governmental authority or agency or any other Person is required in connection with the offer, sale or issuance by the Company of the Notes and the guaranty by the Guarantor pursuant to this Guaranty, or the consummation by the Company or the Guarantor of any of the transactions contemplated by the Transaction Documents; (m) The Company's and the Guarantor's filings under the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT") do not include any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading and complied, or will comply in all material respects as to form with the Exchange Act and the rules and regulations thereunder; (n) Neither the Company nor any affiliate (as defined in Rule 501(b) of Regulation D under the Securities Act, an "AFFILIATE") of the Company has directly, or though any agent, (i) sold, offered for sale, solicited offers to buy or otherwise negotiated in respect of any security (as defined in the Securities Act) which is or will be integrated with the sale of the Notes (as guaranteed by this Guaranty), or the shares of Common Stock issuable upon conversion of the Notes, in a manner that would require the registration under the Securities Act of the Notes, this Guaranty or the shares of Common Stock issuable upon the conversion of the Notes, or (ii) engaged in any form of general solicitation or general advertising in connection with the offering of the Notes (as guaranteed by this Guaranty) or the shares of Common Stock issuable upon conversion of the Notes (as those terms are used in Regulation D under the Securities Act) or in any manner involving a public offering within the meaning of Section 4(2) of the Securities Act; and (o) None of the Company, its Affiliates or any person acting on its or their behalf has engaged or will engage in any directed selling efforts (within the meaning of Regulation S) with respect to the Notes (as guaranteed by this Guaranty) and the Company and its Affiliates and any person acting on its or their behalf have complied and will comply with the offering restrictions requirements of Regulation S, except no representation, warranty or agreement is made by the Company in this paragraph with respect to the Beneficiaries. 6. REINSTATEMENT. This Guaranty shall continue to be effective, or be reinstated, as the case may be, if at any time the payment, or any part thereof, of any of the Guaranteed Obligations is rescinded or otherwise must be restored or returned by any Beneficiary in connection with the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Company, the Guarantor or any Subsidiary of the Company or the Guarantor, including, without limitation, upon or as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, the Company, the Guarantor or any Subsidiary of the Company or the Guarantor or any substantial part of their respective property, or otherwise, all as though such payments had not been made. 7. PAYMENTS. The Guarantor hereby agrees that the Guaranteed Obligations will be paid to each of the Beneficiaries in U.S. dollars in immediately available funds. 6. 8. SEVERABILITY. Whenever possible, each provision of this Guaranty shall be interpreted in such manner as to be effective and valid under all applicable laws and regulations. If, however, any provision of this Guaranty shall be prohibited by or invalid under any such law or regulation, it shall be deemed modified to conform to the minimum requirements of such law or regulation, or, if for any reason it is not deemed so modified, it shall be ineffective and invalid only to the extent of such prohibition or invalidity without the remainder thereof or any of the remaining provisions of this Guaranty being prohibited or invalid. 9. HEADINGS. Section headings in this Guaranty are included herein for convenience of reference only and shall not constitute a part of this Guaranty for any other purpose or be given any substantive effect. 10. APPLICABLE LAW. THIS GUARANTY SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES. 11. ENTIRE AGREEMENT. This Guaranty constitutes the final, entire agreement among the parties hereto relating to the subject matter hereof and supersedes any and all prior and contemporaneous commitments, agreements, representations, and understandings, whether written or oral, relating to the subject matter hereof and may not be contradicted or varied by evidence of prior, contemporaneous, or subsequent oral agreements or discussions of the parties hereto. There are no oral agreements between the parties hereto with respect to this Guaranty. 12. CONSTRUCTION. Each of the Guarantor and the Beneficiaries acknowledges that it has had the benefit of legal counsel of its own choice and has been afforded an opportunity to review this Guaranty with such legal counsel. 13. COUNTERPARTS; EFFECTIVENESS. This Guaranty and any amendments, waivers, consents, or supplements may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed an original, but all of which counterparts together shall constitute but one and the same instrument. 14. WAIVERS AND AMENDMENTS; SUCCESSORS AND ASSIGNS. Any and all amendments, consents and waivers to this Guaranty shall be subject to compliance with the requirements of Article 7 of the Indenture; provided that, for purpose of any contemplated amendment, consent or waiver of any provision of this Guaranty, all references the "the Company" in Article 7 of the Indenture shall be deemed to be references to "the Guarantor." This Guaranty shall be binding upon and inure to the benefit of the parties hereto and their respective successors, assigns and transferees. 15. ADDRESS FOR NOTICES. All written communications provided for hereunder shall be sent by facsimile or nationwide overnight delivery service (with charges prepaid) (a) if to the Guarantor, at its address set forth below its name on the signature pages hereto and (b) if to the Holders or the Trustee, as provided in the Indenture. 7. 16. FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE. No failure or delay on the part of any Beneficiary in the exercise of any power, right or privilege hereunder shall impair such power, right or privilege or be construed to be a waiver of any default or acquiescence therein, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privilege. All rights and remedies existing under this Guaranty are cumulative to, and not exclusive of, any rights or remedies otherwise available. 17. REGISTRATION RIGHTS. The Company and the Guarantor agree, for the benefit of the Holders from time to time of the Securities, to the terms set forth in Exhibit A attached hereto setting forth certain rights of the Holders, and obligations of the Company and the Guarantor, with respect to the registration by the Company and the Guarantor of the Securities (such terms, the "REGISTRATION RIGHTS AGREEMENT"). 18. JURISDICTION. The Company and the Guarantor specifically and irrevocably consent to the jurisdiction and venue of the federal and state courts of the State of New York with respect to all matters concerning this Guaranty or any of the other Transaction Documents to which they are a party or the enforcement of any of the foregoing. The Company and the Guarantor agree that the execution and performance of the Transaction Documents to which they are a party shall have a State of New York situs and accordingly, the Company and the Guarantor consent to personal jurisdiction in the State of New York. [THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK] 8. IN WITNESS WHEREOF, the undersigned have caused this Guaranty to be duly executed as of the date first above written. GUARANTOR: AMERICA WEST AIRLINES, INC., a Delaware corporation By: /s/ Stephen L. Johnson Title: Executive Vice President -- Corporate [c/o the Company at its address for notices set forth in the Indenture] ACKNOWLEDGED AND AGREED: AMERICA WEST HOLDINGS CORPORATION, a Delaware corporation By: /s/ Stephen L. Johnson Title: Executive Vice President -- Corporate EXHIBIT A REGISTRATION RIGHTS AGREEMENT Reference is made to Exhibit 4.17 to the America West Holdings Corporation and America West Airlines, Inc. Form 8-K filed on January 31, 2002 with the Securities and Exchange Commission. EX-4.19 7 p66064ex4-19.txt EX-4.19 Exhibit 4.19 THIS WARRANT AND THE UNDERLYING SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO SUCH SECURITIES UNDER THE SECURITIES ACT UNLESS AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE AMERICA WEST HOLDINGS CORPORATION WARRANT TO PURCHASE CLASS B COMMON STOCK NO. PW- January 18, 2002 VOID AFTER January 18, 2012 THIS CERTIFIES THAT, for value received, , with its principal office at , and/or its transferees and assigns (individually or collectively, the "HOLDER"), is entitled to purchase at the Exercise Price (defined below) from America West Holdings Corporation, a Delaware corporation, with its principal office at 111 West Rio Salado Parkway, Tempe, Arizona 85281 (the "COMPANY"), shares of Class B common stock, par value $0.01 per share, of the Company (the "CLASS B COMMON"), as provided herein. 1. DEFINITIONS. As used herein, the following terms shall have the following respective meanings: "AFFILIATE" shall mean, as to any specified Person, any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, "control," when used with respect to any Person, means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise and the terms "affiliated," "controlling" and "controlled" have meanings correlative to the foregoing. "APPLICABLE PRICE" shall mean: (i) for purposes of any issuance of Additional Shares of Common Stock (as defined below) under Section 5.4, the greater of (A) the Fair Market Value of a share of the class of Common Stock being issued (or, if being issued in an underwritten offering, the Market Price on the day that such offering is being priced), and (B) the then effective Exercise Price; and (ii) for purposes of any issuance under Section 5.1(b), the greater of (A) the Market Price on the date of such issuance, and (B) the then effective Exercise Price. "BUSINESS DAY" shall mean each Monday, Tuesday, Wednesday, Thursday and Friday that is not a day on which banking institutions in New York, New York are authorized or obligated by law or executive order to close. "COMMON STOCK" shall mean the Class B Common, the Class A common stock, par value $0.01 per share, of the Company, and all other stock of any class or classes (however designated) of the Company from time to time outstanding, the holders of which have the right, 1. without limitation as to amount, either to all or to a share of the balance of current dividends or liquidating distributions after the payment of dividends and distributions on any shares entitled to preference. "EXERCISE PERIOD" shall mean the time period commencing with the date hereof and ending at 5:00 p.m. New York time on the tenth anniversary of the date hereof. "EXERCISE PRICE" shall mean three dollars ($3.00) per share, subject to adjustment pursuant to Section 5 below. "EXERCISE SHARES" shall mean the shares of the Class B Common issuable upon exercise of this Warrant, subject to adjustment pursuant to the terms herein, including but not limited to adjustment pursuant to Section 5 below and shall also mean any other shares, securities, assets or property otherwise issuable upon exercise of this Warrant. "EXCLUDED ISSUANCE" shall mean: (a) shares of Class B Common issued upon exercise of this Warrant or the warrants issued concurrently to , , and (this Warrant and such other warrants, collectively, the "Loan Warrants") or upon conversion of the Company's outstanding 7.5% Convertible Senior Notes due 2009; (b) shares of Class B Common and/or options, warrants or other Class B Common purchase rights issued and the Class B Common issued pursuant to such options, warrants or other rights after the date hereof to employees, officers or directors of, or consultants or advisors to the Company or any subsidiary pursuant to stock purchase or stock option plans or other arrangements that are approved by the Board (the "PLANS"); provided that such shares, options, warrants or other Class B Common purchase rights and the Class B Common issued pursuant to such options, warrants or other rights shall not be Excluded Issuances in any case where the grantee acquires the shares, or options, warrants or other rights to purchase Class B Common at a price per share less than the Market Price on the date of grant; (c) shares of Class B Common issued pursuant to the exercise of rights, options, warrants or convertible securities outstanding as of the date hereof; and (d) shares of Class B Common issued to any charitable organization described in Section 170(c) of the Internal Revenue Code of 1986, as amended, provided that no more than 50,000 shares are issued in any fiscal year pursuant to this clause (d). "FAIR MARKET VALUE" shall mean, (i) with respect to a share of Common Stock, or any other security of the Company or any other issuer: (a) the average daily Market Price during the period of the most recent twenty (20) Trading Days, ending on the last Trading Day before the date of determination of Fair Market Value, if such class of Common Stock or other security is (i) traded on a national securities exchange or admitted to unlisted trading privileges on such an exchange, or (ii) is 2. quoted on the National Market System of the Nasdaq Stock Market (the "NATIONAL MARKET System") or the Nasdaq Small Cap Market (the "SMALL CAP MARKET"); or (b) if such class of Common Stock or other security is not then so listed, admitted to trading or quoted, the Fair Market Value shall be the Market Price on the last Business Day before the date of determination of Fair Market Value; or (ii) with respect to any assets or property other than cash or Common Stock or other securities, the fair market value as determined in accordance with the Valuation Procedure. "MARKET PRICE" shall be, as of any specified date with respect to any share of any class of Common Stock or any other security of the Company or any other issuer, if such class of Common Stock or other security is traded on a national securities exchange or admitted to unlisted trading privileges on such an exchange, or is quoted on the National Market System or the Small Cap Market, the last reported share or unit sale price of such class of Common Stock or other security on such exchange or on the National Market System or the Small Cap Market on such date or if no such sale is made on such day, the mean of the closing bid and asked prices for such day on such exchange or on the National Market System or the Small Cap Market; provided that if such class of Common Stock or other security is not so listed or admitted to unlisted trading privileges or quoted, the Market Price as of a specified date shall be the mean of the last bid and asked prices reported on such date (x) by the Nasdaq or (y) if reports are unavailable under clause (x) above by the National Quotation Bureau Incorporated; provided further that if such class of Common Stock or other security is not so listed or admitted to unlisted trading privileges or quoted and bid and ask prices are not reported, the Market Price shall be determined in accordance with the Valuation Procedure. "PARTICIPATING SECURITIES" shall mean, (i) any equity security (other than Common Stock) that entitles the holders thereof to participate in liquidations or other distributions with the holders of Common Stock or otherwise participate in the capital of the Company other than through a fixed or floating rate of return on capital loaned or invested, and (ii) any stock appreciation rights, phantom stock rights, or any other profit participation rights with respect to any of the Company's capital stock or other equity ownership interest, or any rights or options to acquire any such rights; provided that any stock appreciation rights, phantom stock rights or any other profit participation rights, or any rights or options to acquire such rights, issued pursuant to any of the Plans shall not be deemed a Participating Security if their grant or issuance would constitute an Excluded Issuance. "PERSON" shall mean any individual, corporation, limited liability company, partnership, joint venture, association, joint-stock company, trust, estate, unincorporated organization or government or any agency or political subdivision thereof, or any entity whatsoever. "RECORD DATE" shall mean, with respect to any dividend, other distribution or issuance, the record date for the determination of stockholders entitled to receive such dividend, distribution or issuance, or if no such record date exists, the date of such dividend, distribution or issuance. "TRADING DAY" shall mean, with respect to any class of Common Stock or any other security of the Company or any other issuer a day (i) on which the securities exchange or other trading platform applicable for purposes of determining the Market Price of a share or unit of 3. such class of Common Stock or other security shall be open for business or (ii) for which quotations from such securities exchange or other trading platform of the character specified for purposes of determining such Market Price shall be reported. "VALUATION PROCEDURE" shall mean a determination made in good faith by the Board of Directors of the Company (the "BOARD") that is set forth in resolutions of the Board that are certified by the Secretary of the Company, which certified resolutions (i) set forth the basis of the Board's determination, which, in the case of a valuation in excess of $10.0 million, shall include the Board's reliance on the valuation of a nationally recognized investment banking or appraisal firm, and (ii) are delivered to the Holder within ten (10) Business Days following such determination. A Valuation Procedure with respect to the value of any capital stock shall be based on the price that would be paid for all of the capital stock of the issuer in an arm's-length transaction between a willing buyer and a willing seller (neither acting under compulsion). 2. EXERCISE OF WARRANT. 2.1 EXERCISE. This Warrant may be exercised in whole or in part at any time during the Exercise Period, by delivery of the following to the Company at its address set forth above (or at such other address as it may designate by notice in writing to the Holder): (a) an executed Notice of Exercise in the form attached hereto; (b) payment of the Exercise Price (i) in cash or by check, (ii) by cancellation of indebtedness or (iii) pursuant to Section 2.2 hereof; and (c) this Warrant. Upon the exercise of this Warrant, a certificate or certificates for the Exercise Shares so purchased, registered in the name of the Holder or such other Person as may be designated by the Holder (to the extent such transfer is not validly restricted and upon payment of any transfer taxes that are required to be paid by the Holder in connection with any such transfer), shall be issued and delivered to the Holder or such other Person as soon as practicable (and in any event within five Business Days) after this Warrant shall have been exercised. If this Warrant shall not have been exercised in full, a new Warrant exercisable for the number of Exercise Shares remaining shall be executed by the Company and delivered at the same time as the certificate for the Exercise Shares that are being issued. The Person in whose name any certificate or certificates for the Exercise Shares are to be issued upon exercise of this Warrant shall be deemed to have become the holder of record of such shares on the date on which this Warrant was surrendered and payment of the Exercise Price was made, irrespective of the date of delivery of such certificate or certificates, except that, if the date of such surrender and payment is a date when the stock transfer books of the Company are closed, such Person shall be deemed to have become the holder of such shares at the close of business on the next succeeding date on which the stock transfer books are open (whether before or after the end of the Exercise Period). 2.2 NET EXERCISE. Notwithstanding any provision herein to the contrary, if the Market Price of one share of the Class B Common is greater than the Exercise Price (at the date of calculation as set forth below), in lieu of exercising this Warrant by payment of cash, check or cancellation of indebtedness, the Holder may elect (the "CONVERSION RIGHT") to receive shares 4. equal to the value (as determined below) of this Warrant (or the portion thereof being canceled) by surrender of this Warrant at the principal office of the Company together with the properly endorsed Notice of Exercise in which event the Company shall issue to the Holder a number of shares of Class B Common computed using the following formula: X = Y (A-B) ------- A Where X = the number of shares of Class B Common to be issued Y = the number of shares of Class B Common purchasable under this Warrant or, if only a portion of this Warrant is being exercised, the portion of this Warrant being exercised (at the date of such calculation) A = the Market Price of one share of the Class B Common (at the date of such calculation) B = Exercise Price (as adjusted pursuant to Section 5 hereof to the date of such calculation) The Company shall pay all reasonable administrative costs incurred by the Holder in connection with the exercise of the Conversion Right by the Holder pursuant to this Section 2.2. 3. COVENANTS AND REPRESENTATIONS OF THE COMPANY; SECURITIES MATTERS. 3.1. COVENANTS AS TO EXERCISE SHARES. (a) The Company covenants and agrees that all Exercise Shares that may be issued upon the exercise of this Warrant will, upon issuance, be validly authorized, issued and outstanding, fully paid and nonassessable, free of preemptive rights and free from all taxes, liens and charges with respect to the issuance thereof. If the Class B Common or the class of securities of any other Exercise Shares is then listed or quoted on a national securities exchange, the National Market System or the Small Cap Market, all such Exercise Shares upon issuance shall also be so listed or quoted. The Company further covenants and agrees that the Company will at all times during the Exercise Period, have authorized and reserved solely for purposes of the exercise of this Warrant, free from preemptive rights, a sufficient number of shares of its Class B Common or the class of securities of any other Exercise Shares to provide for the exercise in full of this Warrant (without taking into account any possible exercise pursuant to Section 2.2 hereof). If at any time during the Exercise Period the number of authorized but unissued shares of Class B Common or the class of securities of any other Exercise Shares shall not be sufficient to permit exercise in full of this Warrant (without taking into account any possible exercise pursuant to Section 2.2 hereof), the Company will take such corporate action as shall be necessary to increase its authorized but unissued shares of Class B Common or the class of securities of any other Exercise Shares to such number of shares as shall be sufficient for such purposes. (b) In the event that at any time, including as a result of any provision of Section 5, the Exercise Shares shall include any shares or other securities other than shares of Class B Common, or any other property or assets, the terms of this Warrant shall be modified or supplemented (in the absence of express written documentation thereof, shall be deemed to be so modified or supplemented), and the Company shall take all actions as may be necessary to preserve, in a manner and on terms as nearly equivalent as practicable to the provisions of this 5. Warrant as they apply to the Class B Common, the rights of the Holder hereunder (including, without limitation, the provisions of Section 5 hereof), including any equitable replacements of the term "Class B Common" with the term "Exercise Shares" and adjustments of any formula included herein. (c) The Company's filings under the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), will comply in all material respects as to form with the Exchange Act and the rules and regulations thereunder. The Company shall timely file a Form D in respect of the issuance of this Warrant, and if required pursuant to Regulation D or any successor regulation thereto, timely file a Form D or any other form required by such regulation in respect of the issuance of the Exercise Shares. (d) Without prior written consent of the holders of Loan Warrants exercisable for a majority of the securities issuable upon exercise of the outstanding Loan Warrants, the Company shall not permit America West Airlines, Inc. or any other Significant Subsidiary (as defined by Rule 1-02(w) of Regulation S-X under the Securities Act or any successor rule) to (i) issue or grant any capital stock or equity ownership interest, including any Participating Security; (ii) any rights, options, warrants or convertible security that is exercisable for or convertible into any capital stock or other equity ownership interest, including any Participating Security; or (iii) any stock appreciation rights, phantom stock rights, or any other profit participation rights, or any rights or options to acquire any such rights, in each case of clauses (i), (ii) and (iii) above, to any Person other than the Company or its wholly-owned subsidiaries. (e) Without prior written consent of the holders of Loan Warrants exercisable for a majority of the securities issuable upon exercise of the outstanding Loan Warrants, the Company shall not make grants of shares of restricted Common Stock or options, warrants or other rights to purchase Common Stock or other stock-based awards to employees, officers or directors of, or consultants or advisors to, the Company pursuant to the Plans during, or with respect to, the fiscal year ending December 31, 2002 covering shares in excess of the sum equal to (A) the number of shares, as of the date hereof, unissued but authorized for issuance under the Plans, plus (B) 2,000,000. 3.2. NO IMPAIRMENT. Except and to the extent as waived or consented to in writing by the Holder, the Company will not, by amendment of its Certificate of Incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company, but will at all times in good faith assist in the carrying out of all the provisions of this Warrant and in the taking of all such action as may be necessary or appropriate in order to protect the exercise rights of the Holder against impairment consistent with the intent and principles expressed in Section 5.9 below. 3.3. NOTICES OF RECORD DATE. In the event (i) the Company takes a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend or other distribution, (ii) the Company authorizes the granting to the holders of Class B Common (or holders of the class of securities of any other Exercise 6. Shares) of rights to subscribe to or purchase any shares of capital stock of any class or securities convertible into any shares of capital stock or of any other right, (iii) the Company authorizes any reclassification of, or any recapitalization involving, any class of Common Stock or any consolidation or merger to which the Company is a party and for which approval of the stockholders of the Company is required, or of the sale or transfer of all or substantially all of the assets of the Company, (iv) the Company authorizes or consents to or otherwise commences the voluntary or involuntary dissolution, liquidation or winding up of the Company or (v) the Company authorizes or takes any other action that would trigger an adjustment in the Exercise Price or the number or amount of shares of Class B Common or other Exercise Shares subject to this Warrant (other than a stock split or combination), the Company shall mail to the Holder, at least ten (10) days prior to the earlier of the record date for any such action or stockholder vote and the date of such action, a notice specifying (a) which action is to be taken and the date on which any such record is to be taken for the purpose of any such action, (b) the date that any such action is to take place and (c) the amount and character of any stock, other securities or property and amounts, or rights or options with respect thereto, proposed to be issued, granted or delivered to each holder of Class B Common (or holders of the class of securities of any other Exercise Shares). 3.4. REPRESENTATIONS AND WARRANTIES. The Company hereby represents and warrants to the Holder, as of the date hereof, that: (a) The Company: (i) is a corporation duly organized, validly existing and in good standing under the laws of the state of its formation; (ii) is duly qualified to do business and is in good standing in every jurisdiction where the nature of its business requires it to be so qualified (except where the failure to so qualify could not reasonably be expected to have a material adverse effect, individually or in the aggregate, on its business, financial condition or operations of the Company and its subsidiaries taken as a whole or on its ability to pay or perform its obligations under this Warrant and the Registration Rights Agreement (as defined below) (collectively, the "WARRANT DOCUMENTS")); (iii) has received all permits necessary to conduct the businesses now operated by it and has not received notice of proceedings relating to the revocation or modification of any permit that, if adversely determined, would reasonably be expected to have, individually or in the aggregate, a material adverse effect on its business, financial condition or operations of the Company and its subsidiaries taken as a whole, or on its ability to pay or perform its obligations under the Warrant Documents; (iv) has all requisite power and authority to own its properties and to carry on its business as now conducted and as proposed to be conducted, and to execute and deliver the Warrant Documents to which it is a party and to perform its obligations thereunder; and (v) is in compliance in all material respects with all applicable law, rules, regulations and orders; (b) The execution, delivery and performance by the Company of the Warrant Documents and the consummation of the transactions contemplated therein: (i) are within its powers and have been duly authorized by all necessary corporate and stockholder action; (ii) do not contravene its charter documents or any law, rule, regulation or administrative or court order binding on or affecting the Company or its property; and (iii) do not conflict with or constitute a breach of, or default under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company pursuant to any material contract, indenture, mortgage, loan agreement, note or other instrument to which it is a party, by which it may be bound or to which its assets may be subject; 7. (c) Each of the Warrant Documents has been duly authorized, executed, delivered and constitutes a valid and binding obligation of the Company, enforceable against it in accordance with its terms, except as the enforceability thereof may be subject to or limited by bankruptcy, insolvency, reorganization, arrangement, moratorium or other similar laws relating to or affecting the rights of creditors generally and general equitable principles (whether applied in an action at law or a suit in equity); (d) There is no action, suit or proceeding affecting the Company pending or, to its knowledge, threatened before any court, arbitrator, or governmental authority, domestic or foreign, which would reasonably be expected to have, individually or in the aggregate, a material adverse effect on its ability to pay or perform its obligations under the Warrant Documents or on the business, financial condition or operations of the Company and its subsidiaries taken as a whole; (e) The authorized capital stock of the Company consists of 1,200,000 shares of Class A Common Stock, par value $0.01 per share ("CLASS A COMMON"), 100,000,000 shares of Class B Common, and 48,800,000 shares of Preferred Stock, par value $0.01 per share (the "PREFERRED STOCK"), of which (i) 941,431 shares of Class A Common are outstanding, (ii) 32,786,410 shares of Class B Common are outstanding, and (iii) no shares of Preferred Stock are outstanding. All of the outstanding shares of Common Stock have been duly authorized and validly issued, fully paid and nonassessable and are free of any preemptive rights and the shares of Class B Common deliverable upon exercise of this Warrant have been, and at all times will be, duly authorized and reserved for issuance upon such exercise, and, when delivered upon such exercise, will be validly issued, fully paid and nonassessable and free of any preemptive rights; (f) Except as set forth on SCHEDULE 3.4(F), there are not outstanding nor are there any commitments or obligations to issue or grant (i) any securities, rights, options, warrants or subscriptions giving any Person the right to acquire from the Company, or requiring that the Company or any of its subsidiaries issue any capital stock or other equity interest in the Company or any of its subsidiaries; (ii) any stock appreciation rights, phantom stock rights, or any other profit participation rights with respect to any capital stock or other equity ownership interest in the Company or any of its subsidiaries, or any rights or options to acquire any such rights; or (iii) any contracts, agreements, arrangements or understandings to which the Company or any of its subsidiaries is party or by which any of them is bound, giving any Person any rights of exchange, preemptive rights (statutory or contractual), anti-dilution rights, rights of first refusal, rights of first offer or registration rights with respect to any capital stock of the Company or any of its subsidiaries; (g) The offer and issuance by the Company of this Warrant are, and the issuance of the Common Stock upon exercise of this Warrant will be, exempt from the registration requirements under the Securities Act; (h) No authorization, approval, consent or order of any court or governmental authority or agency or any other Person is required in connection with the issuance by the Company of this Warrant, or the consummation by the Company of any of the transactions contemplated by the Warrant Documents, and the Company has obtained from the New York Stock Exchange, Inc. a waiver under paragraph 312.05 of the Listed Company 8. Manual waiving any requirement to obtain stockholder approval of the transactions contemplated by the Warrant Documents or any requirement to deliver notice to the stockholders under said paragraph 312.05; (i) The Company's filings under the Exchange Act do not include any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading and complied, or will comply in all material respects as to form with the Exchange Act and the rules and regulations thereunder; and (j) Neither the Company nor any Affiliate of the Company has directly, or though any agent, (i) sold, offered for sale, solicited offers to buy or otherwise negotiated in respect of any security (as defined in the Securities Act) which is or will be integrated with the issuance of this Warrant, or the Exercise Shares issuable upon exercise of this Warrant, in a manner that would require the registration under the Securities Act of this Warrant or the Exercise Shares, or (ii) engaged in any form of general solicitation or general advertising in connection with the offering of this Warrant or the Exercise Shares (as those terms are used in Regulation D under the Securities Act) or in any manner involving a public offering within the meaning of Section 4(2) of the Securities Act. (k) (i) To the extent the initial Holder is not an "accredited investor" as defined in Rule 501(a) under the Securities Act, the Company has heretofore delivered to the initial Holder, at a reasonable time prior to the issuance hereof, the information required to be delivered to such Holder pursuant to Rule 502(b)(ii) under the Securities Act; and (ii) the Company has heretofore delivered to the initial Holder, the following financial statements and information: (A) the audited consolidated balance sheets of the Company as at December 31, 2000, and the related consolidated statements of income, stockholders' equity and cash flows for the fiscal year then ended, and (B) the unaudited consolidated balance sheet of the Company as at September 30, 2001 and the related unaudited statements of income, stockholders' equity and cash flows for the nine months then ended. All such consolidated statements were prepared in conformity with United States generally accepted accounting principles and fairly present the consolidated financial position of the Company as at the respective dates thereof and the consolidated results of operations and cash flows of the Company for each of the periods then ended subject, in the case of the unaudited consolidated statements, to year-end audit and adjustments. Except as disclosed in writing to the initial Holder prior to the date of this Warrant, the Company has no material contingent liability or liability for taxes, long-term lease or unusual forward or long-term commitment that is not reflected in the foregoing consolidated financial statements or the notes thereto and which in any such case is material in relation to the business, operations, properties, assets or condition (financial or otherwise) of the Company. (l) The representations and warranties made by America West Airlines, Inc. ("AWA") in that certain $429,000,000 Loan Agreement, dated as of January 18, 2002, among AWA, Citibank, N.A., as agent and initial lender, KPMG Consulting, Inc., as loan administrator, and the Air Transportation Stabilization Board are true and correct as of the date hereof. 9. (m) The authorized capital stock of AWA consists of 1,000 shares of Common Stock, par value $0.01 per share, all of which is issued and outstanding and is owned beneficially and of record by the Company. 4. REPRESENTATIONS OF HOLDER. 4.1. ACCREDITED INVESTOR; ACQUISITION OF WARRANT FOR PERSONAL ACCOUNT. The Holder is an "accredited investor" as defined in Rule 501(a) of the Securities Act, or alternatively, the Holder has received the information specified in Section 3(k)(i) above. The Holder represents and warrants that it is acquiring this Warrant and, to the extent this Warrant is exercised, the Exercise Shares solely for its account for investment and not with a view to or for sale or distribution of said Warrant or Exercise Shares or any part thereof, other than potential transfers between Affiliates (including affiliated funds) or transfers pursuant to an effective registration statement under, or an exemption from the registration requirements of, the Securities Act. 4.2. SECURITIES ARE NOT REGISTERED. (a) The Holder understands that this Warrant and the Exercise Shares have not been registered under the Securities Act, on the basis that no distribution or public offering is being effected. The Holder realizes that the basis for the exemption may not be present if, notwithstanding its representations, the Holder has a present intention of acquiring the securities for a fixed or determinable period in the future, selling (in connection with a distribution or otherwise), granting any participation in, or otherwise distributing the securities. The Holder has no such present intention, other than potential transfers between Affiliates (including affiliated funds). (b) The Holder recognizes that this Warrant and the Exercise Shares may not be sold unless they are subsequently registered under the Securities Act or an exemption from such registration is available. 4.3 DISPOSITION OF WARRANT AND EXERCISE SHARES. (a) The Holder further agrees not to make any disposition of all or any part of this Warrant or Exercise Shares in any event unless: (i) The Company shall have received a letter secured by the Holder from the Securities and Exchange Commission stating that no action will be recommended to the Commission with respect to the proposed disposition; (ii) There is then in effect a registration statement under the Act covering such proposed disposition and such disposition is made in accordance with said registration statement; (iii) Pursuant to Rule 144; or (iv) The Holder shall have notified the Company of the proposed disposition and shall have furnished the Company with a statement of the circumstances surrounding the proposed disposition and if reasonably requested by the 10. Company, the Holder shall have furnished the Company with an opinion of counsel for the Holder, reasonably satisfactory to the Company, to the effect that such disposition will not require registration of such Warrant or Exercise Shares under the Securities Act or any applicable state securities laws. (b) The Holder is aware that neither this Warrant nor the Exercise Shares may be sold pursuant to Rule 144 adopted under the Securities Act unless the applicable conditions thereof are met, including, among other things, the required holding period under Rule 144 and the number of shares being sold during any three month period not exceeding specified limitations. (c) The Holder understands and agrees that all certificates evidencing the Exercise Shares may bear the following legend (unless such shares have been disposed of in accordance with clause (a)(ii) or (iii) or such legend is no longer required to comply with applicable securities laws): "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO SUCH SECURITIES UNDER THE SECURITIES ACT UNLESS AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE." 5. ADJUSTMENT OF EXERCISE PRICE, SHARES OF CLASS B COMMON PURCHASABLE AND NUMBER OF WARRANTS 5.1. ADJUSTMENT OF EXERCISE PRICE. The Exercise Price as defined in Section 1 shall be subject to adjustment from time to time as follows: (a) If the Company after the date hereof shall (i) pay a dividend or make a distribution to holders of any class of Common Stock in shares of Class B Common, (ii) split or otherwise subdivide the outstanding shares of Class B Common, or (iii) combine the outstanding shares of Class B Common into a smaller number of shares, then in any such case the Exercise Price in effect immediately prior thereto shall be adjusted to a price obtained by multiplying such Exercise Price by a fraction of which the numerator shall be the number of shares of Class B Common outstanding prior to such action and the denominator shall be the number of shares of Class B Common outstanding after giving effect to such action. An adjustment made pursuant to clause (i) of this subsection (a) shall become effective retroactively immediately after the Record Date for such dividend or distribution, and an adjustment made pursuant to clause (ii) or (iii) of this subsection (a) shall become effective immediately after the effective date of such subdivision or combination. (b) If the Company after the date hereof shall issue rights, options or warrants to holders of any class of Common Stock to subscribe for or purchase shares of Common Stock or securities convertible into Common Stock at a price per share less than the Applicable Price per share on the issuance date thereof, the Exercise Price in effect immediately prior thereto shall be adjusted to a price obtained by multiplying such Exercise Price by a fraction of which (i) the numerator shall be the number of shares of Common Stock outstanding on the date of issuance of such rights, options or warrants plus the number of shares of the class 11. of Common Stock subject to such rights, options or warrants which the aggregate consideration for the total number of shares so to be offered would purchase at the Applicable Price of a share of the class of Common Stock subject to such rights, options or warrants, and (ii) the denominator shall be the number of shares of Common Stock outstanding on the date of issuance of such rights, options or warrants plus the number of additional shares of Common Stock to be offered for subscription or purchase; provided, however, that no adjustment shall be made if the Company issues or distributes to the Holder the rights, options or warrants which the Holder would have been entitled to receive had this Warrant been exercised prior to the Record Date (and, if applicable, had this Warrant been exercisable for the class of Common Stock receiving such issuance or distribution). Any such adjustments shall be made whenever such rights, options or warrants are issued and shall become effective retroactively immediately after the Record Date for the determination of stockholders entitled to receive such rights, options or warrants unless such rights, options or warrants are not immediately exercisable, in which case, any such adjustments shall be made at such time such rights, options or warrants become exercisable. Upon expiration of the period during which any such rights, options or warrants may be exercised, any adjustment previously made pursuant to the foregoing provisions shall be recalculated to take into consideration only those rights, options or warrants actually exercised during the applicable period for exercise and notice of any such further adjustment to the Exercise Price shall be given to Holder as herein provided. (c) If the Company after the date hereof shall issue or distribute to holders of any class of Common Stock evidences of its indebtedness, cash or other assets, shares of capital stock of any class or any other securities (other than the Class B Common) or rights to subscribe therefor (excluding those referred to in subsection (b) above), in each such case the Exercise Price in effect immediately prior thereto shall be adjusted to a price obtained by multiplying such Exercise Price by a fraction of which (i) the numerator shall be the sum of the amount, for each class of Common Stock then outstanding, of the Fair Market Value per share of such class of Common Stock, multiplied by the number of outstanding shares of such class of Common Stock, in each case on the Record Date, less the Fair Market Value of the assets, cash or evidences of indebtedness so distributed, or shares of capital stock or other securities or rights to subscribe therefor so issued, and (ii) the denominator shall be the sum of the amount, for each class of Common Stock then outstanding, of the Fair Market Value per share of such class of Common Stock, multiplied by the number of outstanding shares of such class of Common Stock, in each case on the Record Date; provided, however, that no adjustment shall be made if the Company issues or distributes to the Holder the evidence of indebtedness, cash, other assets, capital stock or other securities or subscription rights referred to above in this subsection (c) that the Holder would have been entitled to receive had this Warrant been exercised in full prior to the Record Date (and, if applicable, had this Warrant been exercisable for the class of Common Stock receiving such issuance or distribution). The Company shall provide the Holder, upon receipt of a written request therefor, with any indenture or other instrument defining the rights of the holders of any indebtedness, assets, capital stock or other securities or subscription rights referred to in this subsection 5.1(c). Any such adjustment shall be made whenever any such distribution is made, and shall become effective retroactively immediately after the Record Date. Upon expiration of the period during which any subscription rights granted pursuant to this subsection (c) may be exercised, any adjustment previously made pursuant to the foregoing provisions shall be recalculated to take into consideration only those subscription rights actually 12. exercised during the applicable period for exercise and notice of any such further adjustment to the Exercise Price shall be given to the Holder as herein provided. (d) For purposes of Sections 5.1(a), 5.1(b) and 5.1(c), any dividend or distribution to which Section 5.1(c) is applicable that also includes shares of Common Stock, a subdivision of Common Stock or a combination of Common Stock to which Section 5.1(a) applies, or rights or warrants to subscribe for or purchase shares of Common Stock to which Section 5.1(b) applies (or any combination thereof), shall be deemed instead to be: (i) a dividend or distribution of the evidences of indebtedness, cash, other assets, shares of capital stock, other securities or subscription rights, other than such shares of Common Stock, such subdivision or combination or such rights, options or warrants to which Sections 5.1(a) and 5.1(b) apply, respectively (and any Exercise Price reduction required by Section 5.1(c) with respect to such dividend or distribution shall then be made), immediately followed by (ii) a dividend or distribution of such shares of Common Stock, such subdivision or combination or such rights, options or warrants to which Sections 5.1(a) and 5.1(b) apply (and any further Exercise Price reduction required by Sections 5.1(a) and (b) with respect to such dividend or distribution shall then be made). (e) In case a tender or exchange offer (other than an odd lot offer) by the Company for any Common Stock is consummated at a price in excess of the Market Price of the Common Stock subject to such tender or exchange offer at the expiration of such tender or exchange offer, the Exercise Price in effect immediately prior thereto shall be adjusted to a price obtained by multiplying such Exercise Price by a fraction of which (i) the numerator shall be such Market Price, less the amount of the excess of the value of the tender or exchange offer price over the Market Price, and (ii) the denominator shall be the Market Price, such adjustment to become effective immediately prior to the opening of business on the day following such date of expiration. (f) In the case the Company shall, by dividend or otherwise, declare a distribution to holders of any class of Common Stock, of rights or warrants issued by the Company and having the characteristics described in Section 11.4(d)(iii) of the Indenture, dated as of January 18, 2002, between the Company and Wilmington Trust Company, as Trustee (the "Indenture") then upon the occurrence of a Trigger Event (as defined in Section 11.4(d)(iii) of the Indenture), the Company shall make such adjustments to the Exercise Price as as necessary to preserve, without dilution, the purchase rights represented by this Warrant, such adjustments to be substantially consistent with the adjustments that would have been made to the Conversion Price (as defined in the Indenture) upon such Trigger Event pursuant to Section 11.4(d) of the Indenture. 5.2. ADJUSTMENT OF SHARES OF EXERCISE SHARES PURCHASABLE UPON EXERCISE OF WARRANTS. Upon each adjustment of the Exercise Price pursuant to Section 5.1 or 5.4 hereof the number of Exercise Shares purchasable upon exercise of this Warrant shall be adjusted to the number of Exercise Shares, calculated to the nearest one-hundredth of a share, obtained by (i) multiplying the number of Exercise Shares purchasable immediately prior to such adjustment by 13. the Exercise Price in effect prior to such adjustment, and (ii) dividing the product so obtained by the Exercise Price in effect after such adjustment of the Exercise Price. 5.3. RIGHTS UPON CONSOLIDATION, MERGER, SALE, TRANSFER, RECLASSIFICATION OR RECAPITALIZATION. (a) In case of any consolidation or merger of the Company with another Person (other than a merger or consolidation in which the Company is the continuing Person and the Class B Common is not exchanged for securities, property or assets issued, delivered or paid by another Person), or in case of any lease, sale or conveyance to another Person of all or substantially all of the property or assets of the Company, this Warrant shall thereafter (until the end of the Exercise Period) evidence the right to receive, upon its exercise, in lieu of the shares of Class B Common deliverable upon such exercise immediately prior to such consolidation, merger, lease, sale or conveyance the kind and amount of shares and/or other securities and/or property and assets and/or cash that the Holder would have been entitled to receive upon such consolidation, merger, lease, sale or conveyance had the Holder exercised this Warrant immediately prior to such consolidation, merger, lease, sale or conveyance. (b) In case of any reclassification or change of, or recapitalization involving, the Class B Common issuable upon exercise of this Warrant (other than a change in par value, or from par value to no par value, or as a result of a subdivision or combination), including any such reclassification, change or recapitalization effected in connection with a consolidation or merger of the Company with another Person in which the Company is the continuing Person and the holders of Class B Common receive shares and/or other securities and/or property or assets and/or cash issued, delivered or paid by the Company in exchange for such shares of Class B Common (including for this purpose shares reflecting a change in par value or from par value to no par value or as a result of a subdivision or combination of the shares of Class B Common), this Warrant shall thereafter (until the end of the Exercise Period) evidence the right to receive, upon its exercise, in lieu of the shares of Class B Common deliverable upon such exercise immediately prior to such reclassification, change or recapitalization, the kind and amount of shares and/or other securities and/or property and assets and/or cash that the Holder would have been entitled to receive upon such reclassification, change, consolidation or merger had the Holder exercised this Warrant immediately prior to such reclassification, change, consolidation or merger. (c) The Company shall not consummate any transaction that effects or permits any such event or occurrence unless each Person whose shares of stock, securities or assets will be issued, delivered or paid to the holders of the Class B Common (including the Company with respect to clause (ii) below), prior to or simultaneously with the consummation of the transaction, (i) is a corporation organized and existing under the laws of the United States of America or any State or the District of Columbia, and (ii) expressly assumes, or in the case of the Company, acknowledges, by a Warrant Supplement or other document in a form substantially similar hereto, executed and delivered to the Holder hereof, the obligation to deliver to such Holder such shares of stock, securities or assets as, in accordance with the foregoing provisions of this Section 5.3, such Holder is entitled to purchase, and all other obligations and liabilities under this Warrant, including obligations and liabilities in respect of subsequent adjustments that are required under this Warrant. 14. (d) The above provisions of this Section 5.3 shall similarly apply to successive reclassifications and changes of Exercise Shares and to successive consolidations, mergers, leases, sales or conveyances, mutatis mutandis. 5.4. SALE OF SHARES BELOW APPLICABLE PRICE. (a) If at any time or from time to time after the date hereof, the Company issues or sells, or is deemed by the express provisions of this Section 5.4 to have issued or sold, Additional Shares of Common Stock (as defined below), other than as provided in Section 5.1, 5.2 or 5.3 above, for an Effective Price (as defined below) less than the Applicable Price (such issue, a "QUALIFYING DILUTIVE ISSUANCE"), then and in each such case, the then effective Exercise Price shall be reduced, effective as of the opening of business on the date of such issue or sale (or if earlier, the date on which a binding agreement providing for such issue or sale was entered into), to a price determined by multiplying the Exercise Price in effect immediately prior to such issuance or sale by a fraction: (i) the numerator of which shall be (A) the number of shares of Common Stock outstanding immediately prior to such issue or sale, plus (B) the number of shares of the class of Common Stock being issued or sold or deemed to be issued or sold which the aggregate consideration received by the Company for the total number of Additional Shares of Common Stock so issued or deemed to be so issued would purchase at the Applicable Price, and (ii) the denominator of which shall be the number of shares of Common Stock outstanding immediately prior to such issue or sale plus the total number of Additional Shares of Common Stock so issued or deemed to be so issued. (b) For the purpose of the adjustment required under this Section 5.4, if the Company issues or sells (x) stock or other securities convertible into, shares of Common Stock (such convertible stock or securities being herein referred to as "CONVERTIBLE SECURITIES") or (y) rights, options or warrants for the purchase of shares of Common Stock or Convertible Securities and if the Effective Price of such shares of Common Stock is less than the Applicable Price, in each case the Company shall be deemed to have issued at the time of the issuance of such rights, options or warrants or Convertible Securities the maximum number of Additional Shares of Common Stock issuable upon exercise or conversion thereof and to have received as consideration for the issuance of such shares an amount equal to the total amount of the consideration, if any, received by the Company for the issuance or sale of such rights, options or warrants or Convertible Securities plus the minimum amounts of consideration, if any, payable to the Company upon the exercise or conversion of such rights, options or warrants or Convertible Securities (other than by cancellation of liabilities or obligations evidenced by such Convertible Securities); provided that (i) subject to paragraph (d) below, if the minimum amounts of such consideration cannot be ascertained, but are a function of antidilution or similar protective clauses, the Company shall be deemed to have received the minimum amounts of consideration without reference to such clauses; and 15. (ii) if the minimum amount of consideration payable to the Company upon the exercise or conversion of such rights, options, warrants or Convertible Securities is reduced over time or on the occurrence or non-occurrence of specified events other than by reason of antidilution adjustments, the Effective Price shall be recalculated using the figure to which such minimum amount of consideration is reduced; provided further, that if the minimum amount of consideration payable to the Company upon the exercise or conversion of such rights, options, warrants or Convertible Securities is subsequently increased, the Effective Price shall be again recalculated using the increased minimum amount of consideration payable to the Company upon the exercise or conversion of such rights, options, warrants or Convertible Securities. No further adjustment of the Exercise Price, as adjusted upon the issuance of such rights, options, warrants or Convertible Securities, shall be made as a result of the actual issuance of Additional Shares of Common Stock upon the exercise of any such rights, options or warrants or the conversion of any such Convertible Securities. If any such rights, options or warrants or the conversion privilege represented by any such Convertible Securities shall expire without having been exercised, the Exercise Price as adjusted upon the issuance of such rights, options, or warrants or Convertible Securities shall be readjusted to the Exercise Price which would have been in effect had an adjustment been made on the basis of only the Additional Shares of Common Stock, if any, actually issued or sold on the exercise or conversion of such rights, options, warrants or Convertible Securities, and on the basis that such Additional Shares of Common Stock, if any, were issued or sold for the consideration actually received by the Company upon such exercise or conversion (other than by cancellation of liabilities or obligations evidenced by such Convertible Securities), plus the consideration, if any, actually received by the Company for the issue or sale of all such rights, options, warrants and Convertible Securities, whether or not exercised, provided that such readjustment shall not apply to prior exercises of this Warrant. (c) For the purpose of making any adjustment to the Exercise Price of the Exercise Shares required under this Section 5.4, "ADDITIONAL SHARES OF COMMON STOCK" shall mean all shares of Common Stock issued by the Company or deemed to be issued pursuant to this Section 5.4 (including shares of Common Stock subsequently reacquired or retired by the Company), other than any Excluded Issuance. References to Common Stock in the preceding sentence shall mean all shares of Common Stock issued by the Company or deemed to be issued pursuant to this Section 5.4. The "EFFECTIVE PRICE" of Additional Shares of Common Stock shall mean the quotient determined by dividing the total number of Additional Shares of Common Stock issued or sold, or deemed to have been issued or sold by the Company under this Section 5.4, into the aggregate consideration received, or deemed to have been received by the Company for such issue under this Section 5.4, for such Additional Shares of Common Stock. (d) In the event that the Company issues or sells, or is deemed to have issued or sold, Additional Shares of Common Stock in a Qualifying Dilutive Issuance (the "FIRST DILUTIVE ISSUANCE"), then in the event that the Company issues or sells, or is deemed to have issued or sold, Additional Shares of Common Stock in a Qualifying Dilutive Issuance other than the First Dilutive Issuance (a "SUBSEQUENT DILUTIVE ISSUANCE") pursuant to the same instruments 16. as the First Dilutive Issuance, then and in each such case upon a Subsequent Dilutive Issuance the Exercise Price shall be reduced to the Exercise Price that would have been in effect had the First Dilutive Issuance and each Subsequent Dilutive Issuance all occurred on the closing date of the First Dilutive Issuance. 5.5. ADDITIONAL ADJUSTMENTS TO EXERCISE PRICE. Notwithstanding anything to the contrary contained in this Section 5, but subject to Section 5.7, the Company shall be entitled, but not required, to make such reductions in the Exercise Price, in addition to those required by Section 5.1, 5.3 or 5.4, as it, in its sole discretion, shall determine to be advisable, including, without limitation, in order that any dividend in or distribution of shares of Class B Common or shares of capital stock of any class other than Class B Common, subdivision, reclassification or combination of shares of Class B Common, issuance of rights, options, or warrants, or any other transaction having a similar effect, shall not be treated as a distribution of property by the Company to its stockholders under Section 305 of the Internal Revenue Code of 1986, as amended, or any successor provision and shall not be taxable to them. 5.6. DE MINIMUS ADJUSTMENTS. No adjustment pursuant to Section 5.1, 5.3 or 5.4 hereof shall be required unless such adjustment would require an increase or decrease of at least $0.03 in the Exercise Price then subject to adjustment; provided, however, that any adjustments that are not made by reason of this Section 5.6 shall be carried forward and taken into account in any subsequent adjustment. In case the Company shall at any time issue Class B Common by way of dividend on any stock of the Company or split or otherwise subdivide or combine the outstanding shares of Class B Common, said amount of $0.03 specified in the preceding sentence (as theretofore increased or decreased, if said amount shall have been adjusted in accordance with the provisions of this Section 5.6) shall forthwith be proportionately increased in the case of such a combination or decreased in the case of such a subdivision or stock dividend so as appropriately to reflect the same. All calculations under this Section 5 shall be made to the nearest hundredth of a cent. 5.7. CONDITION PRECEDENT TO REDUCTION OF EXERCISE PRICE BELOW PAR VALUE OF SHARES OF CLASS B COMMON OR INCREASE IN PAR VALUE TO ABOVE EXERCISE PRICE. (a) Before taking any action that would cause an adjustment reducing the Exercise Price to below the then par value of any of the shares of Class B Common issuable upon exercise of this Warrant, the Company will take any corporate action that may, in the opinion of its counsel, be necessary in order that the Company may validly and legally issue fully paid and non-assessable shares of such Class B Common at such adjusted Exercise Price. (b) Before taking any action that would increase the par value of the Class B Common issuable upon exercise of this Warrant to an amount that is greater than the then effective Exercise Price, the Company will take such corporate action that is necessary in order that the Company may validly and legally issue fully paid and non-assessable shares of such Class B Common at such then effective Exercise Price. 5.8. CERTIFICATE OF ADJUSTMENT. In each case of an adjustment or readjustment of the Exercise Price, the Company, at its sole expense, shall compute such adjustment or readjustment in accordance with the provisions hereof and prepare a certificate showing such adjustment or readjustment, and shall mail such certificate, by first class mail, postage prepaid, to 17. the Holder at the Holder's address as shown in the Company's books no later than five (5) Business Days following the effective date of such adjustment or readjustment. The certificate shall set forth such adjustment or readjustment, showing in detail the facts upon which such adjustment or readjustment is based, including a statement of (i) the number of Additional Shares of Class B Common issued or sold or deemed to have been issued or sold; (ii) the consideration received or deemed to be received by the Company for any Additional Shares of Class B Common issued or sold or deemed to have been issued or sold, (iii) the Exercise Price at the time in effect, and (iv) the type and amount, if any, of other property which would be received upon exercise of this Warrant. 5.9. OTHER DILUTIVE EVENTS. If any event or occurrence shall occur as to which the provisions of this Section 5 are not strictly applicable but as to which the failure to make any adjustment to the Exercise Price and/or the number of shares or other assets or property subject to this Warrant would adversely affect the purchase rights or value represented by this Warrant in accordance with the essential intent and principles of this Section 5, including any issuance of Participating Securities, then, in each such case, the Company shall determine the adjustment, if any, on a basis consistent with the essential intent and principles established in this Section 5, necessary to preserve, without dilution, the purchase rights represented by this Warrant. If such determination involves or is based on a determination of the Fair Market Value of any securities or other assets or property, such determination shall be made in accordance with the Valuation Procedure. 5.10. GENERAL ADJUSTMENT PROVISIONS. (a) Notwithstanding anything to the contrary contained in this Warrant, no adjustments to the Exercise Price or the number of shares of Class B Common purchasable upon exercise of this Warrant shall be made solely as a result of any Excluded Issuance. (b) In any case in which this Section 5 shall require that an adjustment be made retroactively immediately following a Record Date, the Company may elect to defer (but only until five Business Days following the mailing by the Company to the Holder of the certificate as required by Section 5.8) issuing to the Holder, in the event of any exercise of this Warrant after such Record Date, the shares of the Class B Common issuable upon such exercise in excess of the shares of Class B Common issuable upon such exercise prior to such adjustment, if any. (c) The provisions and adjustments provided for in this Section 5 shall apply to successive events or occurrences of the types described in this Section 5. (d) For the purpose of making any adjustment required under this Section 5 that requires a determination of the aggregate consideration received by the Company for any sale, issue or distribution of securities, the aggregate consideration received by the Company shall equal the sum of: (i) to the extent it consists of cash, the net amount of cash received by the Company after deduction of any underwriting or similar commissions, compensation or concessions paid or allowed by the Company in connection with such issue or sale but without deduction of any expenses payable by the Company, and (ii) to the extent it consists of property or assets other than cash, the Fair Market Value of the property or assets. 18. 6. FRACTIONAL SHARES. No fractional shares shall be issued upon the exercise of this Warrant as a consequence of any adjustment pursuant hereto. All Exercise Shares (including fractions) issuable upon exercise of this Warrant may be aggregated for purposes of determining whether the exercise would result in the issuance of any fractional share. If, after aggregation, the exercise would result in the issuance of a fractional share, the Company shall, in lieu of issuance of any fractional share, pay the Holder otherwise entitled to such fraction a sum in cash equal to the product resulting from multiplying such fractional amount by the Fair Market Value of one share of Class B Common. 7. REGISTRATION RIGHTS. The Holder shall have the registration rights with respect to the Class B Common as set forth in that certain Registration Rights Agreement, dated as of January 18, 2002 (the "REGISTRATION RIGHTS AGREEMENT") between the Company and . To the extent that this Warrant becomes exercisable for Exercise Shares other than the Class B Common, the Company agrees to grant the Holder hereof the same registration rights with respect to such Exercise Shares as are currently granted to Holder in respect of the Class B Common pursuant to the Registration Rights Agreement. If permissible under the Securities Act, the Company shall provide the Holder with the same registration rights with respect to the resale of the Warrant and the issuance of the Exercise Shares upon exercise of the Warrant by Holders other than the initial Holder, as are currently granted to Holder pursuant to the Registration Rights Agreement. In addition, the Company shall use its best efforts, upon the reasonable request of the Holder, to cause the Warrant to be listed or quoted on a national securities exchange, the National Market System or the SmallCap Market. 8. NO STOCKHOLDER RIGHTS OR LIABILITIES. This Warrant in and of itself shall not entitle the Holder to any voting rights or other rights as a stockholder of the Company (subject to the provisions of Section 5 above). No provision of this Warrant, in the absence of affirmative action by the Holder to exercise this Warrant in exchange for shares of Class B Common, and no mere enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the Exercise Price or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company. 9. TRANSFER OF WARRANT. Subject to the restriction on transfers set forth in the legend on the first page of this Warrant and in Section 4.3 and applicable laws, this Warrant and all rights hereunder, in whole or in part, are transferable, by the Holder in person or by duly authorized attorney, upon delivery of this Warrant and the form of assignment attached hereto to any transferee designated by Holder. 10. PAYMENT OF TAXES ON STOCK CERTIFICATE ISSUES UPON EXERCISE. The initial issuance of certificates of Class B Common upon any exercise of this Warrant shall be made without charge to the exercising Holder for any transfer, stamp or similar tax or for any other governmental charges that may be imposed in respect of the issuance of such stock certificates, and such stock certificates shall be issued in the respective names of, or in such names as may be directed by, the Holder; provided, however, that the Company shall not be required to pay any tax or such other charges that may be payable in respect of any transfer involved in the issuance and delivery of any such stock certificate, any new Warrants or other securities in a name other than that of the Holder upon exercise of this Warrant (other than to an 19. Affiliate), and the Company shall not be required to issue or deliver such certificates or other securities unless and until the Person or Persons requesting the issuance thereof shall have paid to the Company the amount of such tax or shall have established to the satisfaction of the Company that such tax has been paid. 11. LOST, STOLEN, MUTILATED OR DESTROYED WARRANT. If this Warrant is lost, stolen, mutilated or destroyed, the Company may, on such terms as to indemnity or otherwise as it may reasonably impose (which shall, in the case of a mutilated Warrant, include the surrender thereof), issue a new Warrant of like denomination and tenor as this Warrant so lost, stolen, mutilated or destroyed. Any such new Warrant shall constitute an original contractual obligation of the Company, whether or not the allegedly lost, stolen, mutilated or destroyed Warrant shall be at any time enforceable by anyone. 12. EXCHANGE OF WARRANT; DIVISIBILITY OF WARRANT. Subject to compliance with Section 4.3 hereof, this Warrant is exchangeable, without charge to any Holder, upon the surrender hereof by the Holder at the office or agency of the Company, for one or more new Warrants of the tenor representing in the aggregate the right to subscribe for and purchase the number of shares of Class B Common which may be subscribed for and purchased hereunder, each of such new Warrants to represent the right to subscribe for and purchase such number of shares as shall be designated by said Holder at the time of such surrender. 13. CLOSING OF BOOKS. The Company will at no time close its transfer books against the transfer of any Warrant or of any shares of Class B Common issued or issuable upon the exercise or conversion of any Warrant in any manner which interferes with the timely exercise or conversion of this Warrant. 14. NOTICES, ETC. All notices required or permitted hereunder shall be in writing and shall be deemed effectively given: (a) upon personal delivery to the party to be notified, (b) when sent by confirmed telex or facsimile if sent during normal business hours of the recipient or if not, then on the next Business Day, (c) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (d) one (1) Business Day after deposit with a nationally recognized overnight courier, specifying next Business Day delivery, with written verification of receipt. All notices and other communications shall be sent to the Company at the address listed on the signature page and to Holder at the address set forth below or at such other address as the Company or Holder may designate by ten (10) days advance written notice to the other parties hereto: with a copy to: 20. 15. ACCEPTANCE. Receipt of this Warrant by the Holder shall constitute acceptance of and agreement to all of the terms and conditions contained herein. 16. BINDING EFFECT ON SUCCESSORS. This Warrant shall be binding upon any Person succeeding the Company by merger, consolidation or acquisition of all or substantially all of the Company's assets (to the extent provided in Section 5), and all of the obligations of the Company relating to the Class B Common issuable upon the exercise or conversion of this Warrant shall survive the exercise, conversion and termination of this Warrant and all of the covenants and agreements of the Company shall inure to the benefit of the successors and assigns of the Holder. 17. GOVERNING LAW. This Warrant and all rights, obligations and liabilities hereunder shall be governed and construed in accordance with Federal law, if and to the extent such Federal law is applicable, and otherwise in accordance with the law of the State of New York. 21. IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its duly authorized officer as of January 18, 2002. AMERICA WEST HOLDINGS CORPORATION By: ---------------------------------------- Name: -------------------------------------- Title: ------------------------------------- Address: 111 West Rio Salado Parkway, Tempe, Arizona 85281 NOTICE OF EXERCISE TO: AMERICA WEST HOLDINGS CORPORATION (1) [ ] The undersigned hereby elects to purchase ________ shares of the Class B Common of America West Holdings Corporation (the "COMPANY") pursuant to the terms of the attached Warrant, and tenders herewith or is delivering by wire transfer to account number __________ at _____________________ (bank) payment of the exercise price in full. [ ] The undersigned hereby elects to purchase ________ shares of the Class B Common of America West Holdings Corporation (the "COMPANY") pursuant to the terms of the net exercise provisions set forth in Section 2.2 of the attached Warrant. (2) Please issue a certificate or certificates representing said shares of Class B Common in the name of the undersigned or in such other name as is specified below: _________________________ (Name) _________________________ _________________________ (Address) ________________________ ___________________________________ (Date) (Signature) ___________________________________ (Print name) 1. ASSIGNMENT FORM (To assign the foregoing Warrant, execute this form and supply required information. Do not use this form to purchase shares.) FOR VALUE RECEIVED, the right to purchase _______ shares of Class B Common pursuant to the foregoing Warrant and all other rights evidenced thereby are hereby assigned to Name: ----------------------------------------------------------------------- (Please Print) Address: --------------------------------------------------------------------- (Please Print) Dated: ----------------- Holder's Signature: ------------------------------------- Holder's Address: --------------------------------------- NOTE: The signature to this Assignment Form must correspond with the name as it appears on the face of this Warrant, without alteration or enlargement or any change whatever. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant. EX-4.20 8 p66064ex4-20.txt EX-4.20 EXHIBIT 4.20 REGISTRATION RIGHTS AGREEMENT BY AND BETWEEN AMERICA WEST HOLDINGS CORPORATION AS THE ISSUER, AND THE WARRANT HOLDER REFERRED TO HEREIN WARRANTS TO PURCHASE CLASS B COMMON STOCK DATED AS OF JANUARY 18, 2002 REGISTRATION RIGHTS AGREEMENT THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and entered into as of January 18, 2002 by and between AMERICA WEST HOLDINGS CORPORATION, a Delaware corporation (the "COMPANY"), and the Warrant Holder (as hereinafter defined). WHEREAS, the Company and the Warrant Holder have entered into certain agreements; and WHEREAS, in order to induce the Warrant Holder to enter into such agreements with the Company, the Company agreed to issue to the Warrant Holder the Warrants (as hereinafter defined) and to provide the registration rights set forth in this Agreement to the Warrant Holder and its direct and indirect transferees. The parties hereby agree as follows: SECTION 1. DEFINITIONS. As used in this Agreement, the following terms shall have the following meanings: AFFILIATE: An affiliate of any specified person shall mean any other person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified person. For the purposes of this definition, "control," when used with respect to any person, means the power to direct the management and policies of such person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise and the terms "affiliated," "controlling" and "controlled" have meanings correlative to the foregoing. AGREEMENT: This Registration Rights Agreement, as the same may be amended, supplemented or modified from time to time in accordance with the terms hereof. BUSINESS DAY: Each Monday, Tuesday, Wednesday, Thursday and Friday that is not a day on which banking institutions in New York, New York are authorized or obligated by law or executive order to close. CLOSING DATE: January 18, 2002. COMMON STOCK: The class B common stock, par value $0.01 per share, of the Company or shares of any class or classes resulting from any reclassification or reclassifications thereof and which have no preference in respect of dividends or of amounts payable in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company and which are not subject to redemption by the Company; provided that if at any time there shall be more than one such resulting class, the shares of each such class then so issuable shall be substantially in the proportion which the total number of shares of such class resulting from all such reclassifications bears to the total number of shares of all such classes resulting from all such reclassifications. COMPANY: America West Holdings Corporation, a Delaware corporation, and any successor entity thereto. 1. EFFECTIVENESS TARGET DATE: The 240th day after the date of this Agreement. EXCHANGE ACT: The Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated by the SEC thereunder. FILING DATE: The 120th day after the date of this Agreement. HOLDER: Each owner of any Registrable Securities. NOTICE AND QUESTIONNAIRE: The form of Notice and Questionnaire attached hereto as EXHIBIT A, as reasonably amended, supplemented, or otherwise modified from time to time by the Company upon reasonable notice to the Holders. PROSPECTUS: The prospectus included in the Registration Statement (including, without limitation, a prospectus that discloses information previously omitted from a prospectus filed in reliance upon Rule 430A), as amended or supplemented by any prospectus supplement, with respect to the resale of any of the Registrable Securities covered by such Registration Statement, and all other amendments and supplements to any such prospectus, including post-effective amendments, and all materials incorporated by reference or deemed to be incorporated by reference, if any, in such prospectus. REGISTRABLE SECURITIES: The shares of Common Stock issued or issuable upon exercise of the Warrants (including any shares of Common Stock issued or issuable thereon upon any stock split, stock combination, stock dividend or the like or as a result of any anti-dilution adjustments under the Warrants), upon original issuance thereof and at all times subsequent thereto, and associated related rights, if any, until the earliest of (i) the date on which the resale thereof has been effectively registered under the Securities Act and such securities have been disposed of in accordance with the Registration Statement relating thereto, (ii) the date on which such securities have been distributed to the public pursuant to Rule 144 or are saleable pursuant to paragraph (k) of Rule 144 or (iii) the date on which such securities cease to be outstanding. REGISTRATION STATEMENT: Any registration statement of the Company filed with the SEC pursuant to the Securities Act that covers the resale of the Registrable Securities pursuant to the provisions of this Agreement, including the Prospectus, amendments and supplements to such registration statement or Prospectus (including pre- and post-effective amendments), all exhibits thereto, and all material incorporated by reference or deemed to be incorporated by reference, if any, in such registration statement. REQUIRED HOLDERS: Holders of more than 50% of the Registrable Securities. For purposes of the preceding sentence, Registrable Securities owned, directly or indirectly, by the Company or its Affiliates (other than persons who are Affiliates solely by virtue of being holders of the Registrable Securities) shall not be deemed outstanding. REQUISITE INFORMATION: As defined in Section 2(d) hereof. RULE 144: Rule 144 promulgated by the SEC pursuant to the Securities Act, as such rule may be amended from time to time, or any successor rule or regulation. 2. RULE 144A: Rule 144A promulgated by the SEC pursuant to the Securities Act, as such rule may be amended from time to time, or any successor rule or regulation. RULE 415: Rule 415 promulgated by the SEC pursuant to the Securities Act, as such rule may be amended from time to time, or any successor rule or regulation. RULE 424: Rule 424 promulgated by the SEC pursuant to the Securities Act, as such rule may be amended from time to time, or any successor rule or regulation. RULE 430A: Rule 430A promulgated by the SEC pursuant to the Securities Act, as such rule may be amended from time to time, or any successor rule or regulation. SEC: The Securities and Exchange Commission, or any successor governmental agency or authority thereto. SECURITIES ACT: The Securities Act of 1933, as amended, and the rules and regulations promulgated by the SEC thereunder. TRANSFER AGENT: The registrar and transfer agent for the Company's Common Stock. WARRANTS: The warrants issued to the Air Transportation Stabilization Board to purchase 18,754,000 shares of Common Stock. WARRANT HOLDER: The initial holder of the Warrants set forth on Schedule I hereto. SECTION 2. REGISTRATION STATEMENT. (a) REGISTRATION UNDER THE SECURITIES ACT. The Company, at its own expense, agrees to file with the SEC as soon as reasonably practicable, but in no event later than the Filing Date, a Registration Statement for an offering to be made on a continuous basis pursuant to Rule 415 covering all of the Common Stock constituting Registrable Securities. The Registration Statement shall be on Form S-3 under the Securities Act or another appropriate form selected by the Company permitting registration of such Registrable Securities for resale by the Holders in the manner or manners reasonably designated by such Holders. The Company shall use best efforts to cause the Registration Statement to be declared effective pursuant to the Securities Act as soon as reasonably practicable following the filing thereof, but in no event later than the Effectiveness Target Date, and to keep such Registration Statement continuously effective under the Securities Act until all of the securities covered by such Registration Statement cease to be Registrable Securities. (b) PIGGYBACK REGISTRATION RIGHTS. The Company shall afford each Holder of Registrable Securities the opportunity to include such Registrable Securities in any registration statement filed for purposes of a public offering of securities of the Company made on a continuous basis pursuant to Rule 415 (other than registration statements for which the Company has contractually agreed not to grant such rights), including any registration statement filed by the Company to register for resale its outstanding 7.5% Convertible Senior Notes due 2009. Each Holder desiring to include the Registrable Securities held by it in any such registration statement shall notify the Company in writing within 15 days after receipt of notice 3. from the Company of its intent to file such a registration statement. If a Holder decides not to include all of the Registrable Securities held by it in any registration statement thereafter filed by the Company, such Holder shall nevertheless continue to have the right to include any Registrable Securities in any subsequent registration statement or registration statements (other than registration statements for which the Company has contractually agreed not to grant such rights) as may be filed by the Company with respect to offerings of its securities made on a continuous basis pursuant to Rule 415, all upon the terms and conditions set forth herein. (c) SUPPLEMENTS AND AMENDMENTS. The Company shall use best efforts to keep any Registration Statement continuously effective by supplementing and amending such Registration Statement if so required by the rules, regulations or instructions applicable to the registration form used for such Registration Statement, if required by the Securities Act or if reasonably requested by the Required Holders or by any underwriter of such Registrable Securities. If the Registration Statement under Section 2(a) ceases to be available for use by the Holders because the Company no longer qualifies to use such form of registration statement, the Company shall be required to file, as promptly as reasonably practicable, a new Registration Statement on an appropriate form and its obligations hereunder shall continue to apply in all respects. (d) SELLING SECURITYHOLDER INFORMATION. Each Holder wishing to sell Registrable Securities pursuant to a Registration Statement and related Prospectus agrees to deliver a Notice and Questionnaire, in a timely manner, that confirms such Holder's agreement to be bound by the terms of this Agreement and includes such information regarding it and the distribution of its Registrable Securities as is required by law to be disclosed by the Holder in the Registration Statement (the "Requisite Information") to the Company prior to any intended distribution of Registrable Securities under the Registration Statement. The Company shall not be required to include in the Registration Statement and related Prospectus the Registrable Securities of any Holder that does not provide the Company with a Notice and Questionnaire in accordance with this Section 2(d). If such completed Notice and Questionnaire is received by the Company before 10 days prior to the effective date of a Registration Statement, such Holder shall be entitled to have its Registrable Securities included in such Registration Statement at the effective date thereof. If such completed Notice and Questionnaire is received thereafter, the Company will use best efforts to include such Holder's Registrable Securities as promptly as reasonably practicable thereafter, subject to the last two sentences of the next paragraph. Subject to the last two sentences of this paragraph, the Company shall use best efforts to file, as soon as practicable after the receipt of a Notice and Questionnaire from any Holder that includes the Requisite Information or any changes in the Requisite Information with respect to such Holder (including, without limitation, any changes in the plan of distribution), a Prospectus supplement pursuant to Rule 424 or otherwise amend or supplement such Registration Statement to include in the Prospectus the Requisite Information as to such Holder (and the Registrable Securities held by such Holder), and the Company shall provide such Holder a copy of such Prospectus as so amended or supplemented containing the Requisite Information in order to permit such Holder to comply with the Prospectus delivery requirements of the Securities Act in a timely manner with respect to any proposed disposition of such Holder's Registrable Securities and to file the same with the SEC. Each Holder requesting registration hereunder shall promptly notify the Company of any material changes to the Requisite Information contained in the Notice 4. and Questionnaire provided to the Company by such Holder. Notwithstanding the foregoing, following the effective date of any Registration Statement, the Company shall not be required to file more than one such supplement or post-effective amendment to reflect changes in the amount of Common Stock constituting Registrable Securities held by any particular Holder at the request of such Holder in any 30-day period. The Company may take reasonable steps to aggregate the addition of Registrable Securities of more than one Holder for purposes of filing amendments to any Registration Statement or supplements to the Prospectus so as to reduce the need for multiple amendments or supplements; provided that the Company shall not use this sentence to delay the filing of any amendment or supplement beyond any such 30-day period. (e) MATERIAL EVENTS; SUSPENSION OF SALES. Notwithstanding the provisions contained in this Section 2, with respect to any Registration Statement, the Company may (for a period not to exceed 60 consecutive days, and not in any event to exceed 90 days in the aggregate during any 12 month period) suspend use of such Registration Statement at any time if (and for so long as) the continued effectiveness thereof would require the Company to disclose a material financing, acquisition, other transaction or other material non-public information, which disclosure the Board of Directors of the Company shall have determined in good faith is not in the best interests of the Company and the Company's stockholders. The Company shall notify each registered Holder, the Transfer Agent and the managing underwriters, if any, that the use of the Prospectus is to be suspended until the Company shall deliver a written notice that the use of the Prospectus may be resumed. During such suspension, the use of the Prospectus shall be suspended, and the Company shall not be required to maintain the effectiveness of, or amend or update the Registration Statement, or amend or supplement the Prospectus. (f) ADDITIONAL AGREEMENTS OF HOLDERS. Each Holder agrees not to dispose of Registrable Securities pursuant to any Registration Statement without complying with the prospectus delivery requirements under the Securities Act and the provisions of paragraph (e) above regarding use of the Prospectus. Each Holder further agrees that it will comply fully with applicable federal and state securities laws in connection with the distribution of any Registrable Securities pursuant to the Registration Statement. Each Holder further acknowledges having been advised by the Company that applicable federal securities laws prohibit Holders from trading in securities of the Company at any time while in possession of material non-public information about the Company. SECTION 3. REGISTRATION PROCEDURES. In connection with the Company's registration obligations hereunder, the Company shall effect such registrations on the appropriate form selected by the Company to permit the resale of Registrable Securities in accordance with the Holder's intended method or methods of disposition thereof, and pursuant thereto the Company shall as expeditiously as reasonably possible: (a) Furnish to the Holders and the managing underwriters, if any, copies of all such documents proposed to be filed (excluding, unless requested, those documents incorporated or deemed to be incorporated by reference and then only to the Holder who so requested) and use its commercially reasonable efforts to reflect in each such document, when so filed with the SEC, such comments as the Holders may reasonably propose. The Company shall not file any such Registration Statement or related Prospectus or any amendments or supplements thereto (excluding any document that would be incorporated or deemed incorporated by reference) to 5. which the Holder or the managing underwriters, if any, shall reasonably object in writing (by hand-delivery, courier guaranteeing overnight delivery or telecopy) within five Business Days after the receipt of such documents. Notwithstanding the foregoing, the Company shall not be required to furnish to the Holders or the managing underwriters, if any, any amendments or supplements to the Registration Statement or Prospectus filed solely to reflect changes to the amount of Common Stock constituting Registrable Securities held by any particular Holder or immaterial revisions to the information contained therein. (b) Prepare and file with the SEC such amendments, including post-effective amendments, to the Registration Statement as may be necessary to keep such Registration Statement continuously effective for the applicable time period set forth in Section 2(a) hereof; cause the related Prospectus to be supplemented by any required Prospectus supplement, and as so supplemented to be filed pursuant to Rule 424 (or any similar provisions then in force) under the Securities Act; and comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such Registration Statement and Prospectus during such period in accordance with the intended method or methods of disposition by the Holder set forth in such Registration Statement as so amended or in such Prospectus as so supplemented including, without limitation, the filing of any Prospectus supplement pursuant to Rule 424 in order to add or change any selling security holder information (including any such supplements or amendments pursuant to Section 2(d) hereof, provided such Holder to which such change applies complies with the Requisite Information requirements of Section 2(d) hereof in a timely manner). (c) Notify the Holders and the managing underwriters, if any, promptly and, if requested by any such person, confirm such notice in writing: (i) (A) when a Prospectus or any Prospectus supplement or post-effective amendment is proposed to be filed and (B) with respect to a Registration Statement or any post-effective amendment, when the same has become effective; (ii) of any written comments from the SEC with respect to any filing and of any request by the SEC or any other Federal or state governmental authority for amendments or supplements to such Registration Statement or related Prospectus or for additional information related thereto; (iii) of the issuance by the SEC, any state securities commission, any other governmental agency or any court of any stop order, order or injunction suspending or enjoining the use or effectiveness of the Registration Statement or the initiation of any proceedings for that purpose; (iv) of the receipt by the Company of any notification with respect to the suspension of qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction, or the initiation or threatening of any proceeding for such purpose; (v) of the existence of any fact or the happening of any event that makes any statement of material fact made in such Registration Statement or related Prospectus 6. untrue in any material respect, or that requires the making of any changes in such Registration Statement or Prospectus so that, in the case of the Registration Statement, it will not 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 not misleading and that, in the case of the Prospectus, such Prospectus will not 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 (vi) of the determination by the Company that a post effective amendment to the Registration Statement will be filed with the SEC. (d) Use commercially reasonable efforts to obtain the withdrawal of any stop order or order enjoining or suspending the use or effectiveness of a Registration Statement or the lifting of any suspension of the qualification (or exemption from qualification) of any of the Registrable Securities for sale in any jurisdiction, at the earliest practicable moment. (e) If reasonably requested by the Required Holders, or managing underwriters, if any, to: (i) promptly include in a Prospectus supplement or post-effective amendment such information as the Required Holders or managing underwriters, if any, may reasonably request to be included therein; and (ii) make all required filings of such Prospectus supplement or such post-effective amendment as soon as reasonably practicable after the Company has received notification of the matters to be included in such Prospectus supplement or post-effective amendment. (f) Furnish to each Holder who so requests, and each managing underwriter, if any, without charge, at least one copy of the Registration Statement and each amendment thereto (but excluding schedules, all documents incorporated or deemed to be incorporated therein by reference and all exhibits, unless requested in writing by such Holder or any managing underwriter and then only to the person who so requested). (g) Deliver to each Holder and the underwriters, if any, without charge, as many copies of the Prospectus or Prospectuses (including each form of Prospectus) and each amendment or supplement thereto as such persons may reasonably request; and, unless the Company shall have given notice to such Holder or underwriter pursuant to Section 2(e), the Company hereby consents to the use of such Prospectus, and each amendment or supplement thereto, by each of the selling Holders of Registrable Securities and the underwriters, if any, in connection with the offering and sale of the Registrable Securities covered by such Prospectus and any amendment or supplement thereto. (h) Prior to any public offering of Registrable Securities, use all reasonable efforts to register or qualify, or cooperate with the Holders of Registrable Securities to be sold or tendered or the underwriters, if any, and their respective counsel in connection with the registration or qualification (or exemption from such registration or qualification) of such Registrable Securities for offer and sale under the securities or Blue Sky laws of such 7. jurisdictions within the United States as any Holder or underwriter reasonably requests in writing, keep each such registration or qualification (or exemption therefrom) effective during the period the Registration Statement is required to be kept effective and do any and all other acts or things legally necessary to enable the disposition in such jurisdictions of the Registrable Securities covered by the Registration Statement; provided, however, that the Company shall not be required to qualify generally to do business in any jurisdiction where it is not then so qualified, take any action that would subject it to general service of process in any such jurisdiction where it is not then so subject or subject the Company to any tax in any such jurisdiction where it is not then so subject. (i) In connection with any sale or transfer of Registrable Securities that will result in such securities no longer being Registrable Securities, cooperate with the Holders and the managing underwriters, if any, to (i) facilitate the timely preparation and delivery of certificates representing Registrable Securities to be sold, which certificates shall not bear any restrictive legends, unless required by applicable securities laws and (ii) enable such Registrable Securities to be in such denominations and registered in such names as the managing underwriters, if any, or Holders may reasonably request at least two Business Days prior to any sale of Registrable Securities. (j) Use best efforts to cause the offering of the Registrable Securities covered by the Registration Statement to be registered with or approved by such other governmental agencies or authorities within the United States as may be necessary to enable the Holder or managing underwriter, if any, to consummate the disposition of such Registrable Securities; provided, however, that the Company shall not be required to register the Registrable Securities in any jurisdiction that would require the Company to qualify to do business in any jurisdiction where it is not then so qualified, subject it to general service of process in any such jurisdiction where it is not then so subject or subject the Company to any tax in any such jurisdiction where it is not then so subject. (k) Upon the occurrence of any event contemplated by Section 3(c)(v) hereof, as promptly as reasonably practicable (subject to any suspension of sales pursuant to Section 2(e) hereof), prepare a supplement or amendment, including, if appropriate, a post-effective amendment, to the Registration Statement or a supplement to the related Prospectus or any document incorporated or deemed to be incorporated therein by reference, and file any other required document so that, as thereafter delivered, such Prospectus will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading (except, upon occurrence of an event contemplated by paragraph (v) of Section 3(c) above, to the extent that the Company determines in good faith that the disclosure of such event at such time would not be in the best interests of the Company and the Company's stockholders provided that any such delay in disclosure pursuant to this Section 3(k) shall be considered a suspension of the Registration Statement subject to the limitation in Section 2(e)). (l) Subject to the provisions of Section 7, enter into such agreements (including any underwriting agreements in form, scope and substance as may be reasonably requested and as are customary in underwritten offerings) and take all such other appropriate actions in connection therewith (including those reasonably requested by the managing 8. underwriters, if any, or the Holders of a majority in interest of the Registrable Securities being sold) in order to expedite or facilitate the sale of such Registrable Securities. In connection with any underwritten offering, the Company will: (i) make such representations and warranties to the Holders of such Registrable Securities and the underwriters, if any, with respect to the business of the Company and its subsidiaries (including with respect to businesses or assets acquired or to be acquired by any of them), and the Registration Statement, Prospectus and documents, if any, incorporated or deemed to be incorporated by reference therein, in each case, in form, substance and scope as are customarily made by issuers to underwriters in underwritten offerings, and confirm the same if and when requested; (ii) obtain, as may reasonably be required, opinions of counsel to the Company (which may include in-house counsel) and updates thereof (which counsel and opinions (in form, scope and substance) shall be reasonably satisfactory to the managing underwriters, if any, addressed to each selling Holder of Registrable Securities and each of the underwriters, if any, covering the matters customarily covered in opinions requested in underwritten offerings (including any such matters as may be reasonably requested by such underwriters)); (iii) obtain, as may reasonably be required, customary "cold comfort" letters and updates thereof from the independent certified public accountants of the Company (and, if necessary, any other independent certified public accountants of any subsidiary of the Company or of any business acquired by the Company for which financial statements and financial data are, or are required to be, included in the Registration Statement), addressed (where reasonably possible) to each selling Holder of Registrable Securities and each of the underwriters, if any, such letters to be in customary form and covering matters of the type customarily covered in "cold comfort" letters in connection with underwritten offerings; and (iv) deliver such documents and certificates as may be reasonably requested by the Holders of majority in interest of the Registrable Securities being sold or the managing underwriters, if any, to evidence the continued validity of the representations and warranties made pursuant to clause (i) of this Section 3(l) and to evidence compliance with any customary conditions contained in the underwriting agreement or other agreement entered into by the Company; (m) Make available for inspection by a representative of the Holders of Registrable Securities being sold, any underwriter participating in any such disposition of Registrable Securities, if any, and any attorney, consultant or accountant retained by such selling Holders or underwriter, at the offices where normally kept, during reasonable business hours, all financial and other records, pertinent corporate documents and properties of the Company and its subsidiaries (other than records and documents that the Company and its subsidiaries agreed contractually not to disclose and the disclosure of which would violate such contractual arrangement) as they may reasonably request, and cause the officers, directors, agents and employees of the Company and its subsidiaries to supply all information (other than information that the Company and its subsidiaries agreed contractually not to disclose and the disclosure of which would violate such contractual arrangement) in each case reasonably requested by any 9. such representative, underwriter, attorney, consultant or accountant in connection with such Registration Statement and as shall be reasonably necessary to enable such persons to conduct a reasonable investigation within the meaning of Section 11 of the Securities Act; provided, however, that the foregoing inspection and information gathering shall be coordinated on behalf of the Holders and the other parties thereto by one counsel designated by and on behalf of such Holders and other parties and provided further, that such persons shall first agree in writing with the Company that any information that is reasonably and in good faith designated by the Company as confidential at the time of delivery or inspection (as the case may be) of such information shall be kept confidential by such persons, unless (i) disclosure of such information is required by court or administrative order or is necessary to respond to inquiries of regulatory authorities; (ii) disclosure of such information is required by law (including any disclosure requirements pursuant to Federal securities laws in connection with the filing of any Registration Statement or the use of any Prospectus); (iii) such information becomes generally available to the public other than as a result of a disclosure or failure to safeguard by any such person; or (iv) such information becomes available to any such person from a source other than the Company and such source is not known to be bound by a confidentiality agreement. (n) (i) list all shares of Common Stock covered by any Registration Statements on any securities exchange on which the Common Stock is then listed; or (ii) authorize for quotation on the National Market of the National Association of Securities Dealers Automated Quotation System ("Nasdaq") all Common Stock covered by all such Registration Statements if the Common Stock is then so authorized for quotation. (o) Make all reasonable efforts to provide such information as is required for any filings required to be made with the National Association of Securities Dealers, Inc. ("NASD"). SECTION 4. REGISTRATION EXPENSES. All fees and expenses incident to the performance of or compliance with this Agreement by the Company shall be borne by it whether or not any Registration Statement is filed or becomes effective. The fees and expenses referred to in the foregoing sentence shall include: (a) all registration, filing, securities exchange listing, rating agency and New York Stock Exchange fees and expenses; (b) printing expenses (including, without limitation, printing Prospectuses if the printing of Prospectuses is required by the managing underwriters, if any, or by the Holders of a majority in interest of the Registrable Securities); (c) messenger, copying, telephone and delivery expenses; (d) reasonable fees and disbursements of counsel for the Company; (e) fees and disbursements of all independent certified public accountants referred to in Section 3(l)(iii) including, without limitation, the expenses of any special audits or "cold comfort" letters required by Section 3(l)(iii); (f) fees and expenses of all other persons retained by the Company; 10. (g) all registration, filing, qualification and other fees and expenses of complying with securities or blue sky laws of all jurisdictions in which the Registrable Securities are to be registered and any legal fees and expenses incurred in connection with the blue sky qualifications of the Registrable Securities and the determination of their eligibility for investment under the laws of all such jurisdictions; and (h) the reasonable fees and disbursements incurred by the Holders of the Registrable Securities being registered (including, without limitation, the reasonable fees and disbursements for one counsel or firm of counsel selected by the Holders of a majority in interest of the Registrable Securities being registered). Notwithstanding anything in this Agreement to the contrary, the Holders shall be responsible for all expenses customarily borne by selling securityholders (including underwriting discounts, commissions and fees and expenses of counsel to the selling Holders to the extent not required to be paid pursuant to clause (h) above). SECTION 5. INDEMNIFICATION. (a) The Company agrees to indemnify and hold harmless each Holder of Registrable Securities, such Holder's affiliates, and their respective officers, directors, employees, representatives and agents, and each person, if any, who controls any Holder of Registrable Securities within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act, or is under common control with, or is controlled by, any Holder, against any and all loss, liability, claim or damage arising out of any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or the Prospectus (or any amendment or supplement thereto), or the omission or alleged omission to state therein any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that this indemnity agreement shall not apply to any loss, liability, claim or damage arising out of any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with written information furnished to the Company by or on behalf of such Holder of Registrable Securities (which also acknowledges the indemnity provisions herein) or any person, if any, who controls any such Holder of Registrable Securities expressly for use in the Registration Statement (or any amendment thereto), or any preliminary prospectus or the Prospectus (or any amendment or supplement thereto); provided, further, that this indemnity agreement shall not apply to any loss, liability, claim or damage (i) arising from an offer or sale of Registrable Securities occurring during any suspension of sales pursuant to Section 2(e) (provided that the Company has given to the Holder notice of such suspension prior to such offer or sale), or (ii) if the Holder fails to deliver at or prior to the written confirmation of sale, the most recent Prospectus, as amended or supplemented, and such Prospectus, as amended or supplemented, would have corrected such untrue statement or omission or alleged untrue statement or omission of a material fact (provided that the Company has delivered to such Holder, or otherwise given notice to such Holder of the existence of, such most recent Prospectus, as supplemented or amended). Any amounts advanced by the Company to an indemnified party pursuant to this Agreement shall be returned to the Company if it shall be finally determined in a judgment by a court of competent jurisdiction not subject to appeal, that such indemnified party was not entitled to indemnification. 11. (b) In connection with the preparation of the Registration Statement in which a Holder of Registrable Securities is participating in furnishing information relating to such Holder of Registrable Securities to the Company for use in such Registration Statement, any preliminary prospectus, the Prospectus or any amendments or supplements thereto, each such Holder agrees, severally and not jointly, to indemnify and hold harmless any other Holders of Registrable Securities, the Company, its affiliates and their respective officers, directors, employees, representatives and agents, and each person, if any, who controls such other Holders or the Company within the meaning of either such Section, against any and all loss, liability, claim or damage described in the indemnity contained in subsection (a) of this Section, as incurred, but only with respect to untrue statements or omissions, or alleged untrue statements or omissions, made in the Registration Statement (or any amendment thereto), or any preliminary prospectus or the Prospectus (or any amendment or supplement thereto) in reliance upon and in conformity with written information furnished to the Company by or on behalf of such Holder of Registrable Securities (which also acknowledges the indemnity provisions herein) or any person, if any, who controls any such Holder of Registrable Securities expressly for use in the Registration Statement (or any amendment thereto) or such preliminary prospectus or the Prospectus (or any amendment or supplement thereto). (c) Each indemnified party shall give notice as promptly as reasonably practicable to each indemnifying party of any action commenced against it in respect of which indemnity may be sought hereunder, but failure to so notify an indemnifying party shall not relieve such indemnifying party from any liability hereunder to the extent it is not materially prejudiced as a result thereof and in any event shall not relieve it from any liability which it may have otherwise than on account of this indemnity agreement. The indemnifying party, upon request of the indemnified party, shall retain counsel reasonably satisfactory to the indemnified party to represent the indemnified party and any others the indemnifying party may designate in such proceeding and shall pay the reasonable fees and disbursements of such counsel related to such proceeding. In any such proceeding, any indemnified party shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such indemnified party unless (i) the indemnifying party and the indemnified party shall have mutually agreed to the retention of such counsel or (ii) the named parties to any such proceeding (including any impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. It is understood that the indemnifying party shall not, in respect of the legal expenses of any indemnified party in connection with any proceeding or related proceedings in the same jurisdiction, be liable for (a) the fees and expenses of more than one separate firm (in addition to any local counsel), for the Holders of Registrable Securities, and all persons, if any, who control the Holders of Registrable Securities within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act, collectively (unless representation of all Holders and such parties by the same counsel would be inappropriate due to actual or potential differing interests between or among them), and (b) the fees and expenses of more than one separate firm (in addition to any local counsel), for the Company and each person, if any, who controls the Company within the meaning of either such Section, and that all fees and expenses payable under (a) and (b) above shall be reimbursed as they are incurred. In the case of any such separate firm for the Holders of Registrable Securities, and control persons of the Holders of Registrable Securities, such firm shall be designated by the Holders of a majority in interest of the Registrable Securities and shall be reasonably acceptable to the Company. In 12. the case of any such separate firm for the Company and control persons of the Company, such firm shall be reasonably acceptable to the Holders of a majority in interest of the Registrable Securities. The indemnifying party shall not be liable for any settlement of any proceeding effected without its written consent (which consent shall not be unreasonably withheld or delayed), but if settled with such consent or if there be a final non-appealable judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party from and against any loss or liability by reason of such settlement or judgment. No indemnifying party shall, without the prior written consent of the indemnified parties (which consent shall not be unreasonably withheld or delayed), settle or compromise or consent to the entry of any judgment with respect to any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever in respect of which indemnification or contribution could be sought under this Section 5 (whether or not the indemnified parties are actual or potential parties thereto), unless such settlement, compromise or consent (i) includes an unconditional release of each indemnified party from all liability arising out of such litigation, investigation, proceeding or claim and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of any indemnified party. No indemnified party shall, without the prior written consent of the indemnifying party, settle or compromise or consent to the entry of any judgment with respect to any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever in respect of which indemnification or contribution could be sought under this Section 5 (whether or not the indemnified parties are actual or potential parties thereto). (d) If the indemnification to which an indemnified party is entitled under this Section 5 is for any reason unavailable to or insufficient although applicable in accordance with its terms to hold harmless an indemnified party in respect of any losses, liabilities, claims, damages or expenses referred to therein, then each indemnifying party shall contribute to the aggregate amount of such losses, liabilities, claims, damages and expenses incurred by such indemnified party, as incurred, in such proportion as is appropriate to reflect the relative fault of the indemnifying party or parties on the one hand and of the indemnified party on the other hand in connection with the statements or omissions which resulted in such losses, liabilities, claims, damages or expenses, as well as any other relevant equitable considerations. The relative fault of the Company on the one hand and the Holders of the Registrable Securities on the other hand shall be determined by reference to, among other things, whether any such untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by the Company or by the Holder of the Registrable Securities and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 5(d) were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to above in this Section 5(d). The aggregate amount of losses, liabilities, claims, damages, and expenses incurred by an indemnified party and referred to above in this Section 5(d) shall be deemed to include any out-of-pocket legal or other expenses reasonably incurred by such indemnified party in investigating, preparing or defending against any litigation, or any investigation or proceeding by any 13. governmental agency or body, commenced or threatened, or any claim whatsoever based upon any such untrue or alleged untrue statement or omission or alleged omission. Notwithstanding the provisions of this Section 5, no Holder shall be required to indemnify or contribute any amount in excess of the amount by which the total price at which Registrable Securities were sold by such Holder exceeds the amount of any damages that such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission to alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The remedies provided in this Section 5 are not exclusive and shall not limit any rights or remedies which may otherwise be available to any indemnified party at law or in equity. For purposes of this Section 5(d), each person, if any, who controls any Holder of Registrable Securities within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act shall have the same rights to contribution as such Holder, and each person, if any, who controls the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act shall have the same rights to contribution as the Company. No party shall be liable for contribution with respect to any action, suit, proceeding or claim settled, compromised, or with respect to which the party requesting contribution consented to the entry of a judgment, without such party's written consent, which consent shall not be unreasonably withheld or delayed. (e) The Company may require as a condition to including the Registrable Securities in the Registration Statement, and to entering into any underwriting agreement with respect thereto, that the Company shall have received an undertaking from the Holder and such underwriter to comply with the provisions of this Section 5. (f) The agreements contained in this Section 5 shall survive the transfer or sale of the Registrable Securities and shall remain in full force and effect, regardless of any termination or cancellation of this Agreement or any investigation made by or on behalf of any indemnified party. SECTION 6. INFORMATION REQUIREMENTS. (a) The Company agrees that, if at any time until the Registrable Securities cease to be Registrable Securities the Company is not subject to the reporting requirements of the Exchange Act, it will cooperate with any Holder of Registrable Securities and use reasonable efforts to take such further reasonable action as any Holder of Registrable Securities may reasonably request in writing to enable such Holder to sell Registrable Securities without registration under the Securities Act within the limitation of the exemptions provided by Rule 144 and Rule 144A under the Securities Act (or any similar rule or regulation hereafter adopted by the SEC) and customarily taken in connection with sales pursuant to such exemptions, including, without limitation, making available adequate current public information within the meaning of paragraph (c)(2) of Rule 144 and delivering the information required by paragraph 14. (d) of Rule 144A. Notwithstanding the foregoing, nothing in this Section 6 shall be deemed to require the Company to register any of its securities under any section of the Exchange Act. (b) The Company shall file reports required to be filed by it under the Exchange Act and the New York Stock Exchange or any other securities exchanges on which the Common Stock is listed. SECTION 7. UNDERWRITTEN REGISTRATION. The Required Holders may elect to sell any Registrable Securities in an underwritten offering; provided that (a) the investment banker or investment bankers and manager or managers that will administer the offering will be investment bankers of recognized national standing selected by the Required Holders, subject to the consent of the Company (which will not be unreasonably withheld or delayed); and (b) the Company shall not be required to agree to more than one (1) underwritten offering per year and five (5) underwritten offerings in the aggregate (it being understood that any underwritten offering commenced but not completed due to a suspension of sales by the Company pursuant to Section 2(e) hereof shall not be counted towards such limits on underwritten offerings). No person may participate in any underwritten registration hereunder unless such person (i) agrees to sell such person's Registrable Securities on the basis reasonably provided in any underwriting arrangements approved by the Required Holders; and (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements, lock-up agreements and other documents reasonably required under the terms of such underwriting arrangements. Notwithstanding any other provision of this Agreement, if the underwriter determines in good faith that marketing factors require a limitation of the number of shares to be underwritten, the number of shares that may be included in the underwriting shall be allocated on a pro rata basis. SECTION 8. MISCELLANEOUS. (a) OTHER REGISTRATION RIGHTS. The Company may in the future grant registration rights that would permit any person that is a third party the right to piggy-back on the Registration Statement; provided, however, that if the managing underwriter, if any, of such offering notifies the Holders that the total amount of Registrable Securities which they and the holders of such piggy-back rights intend to include in the Registration Statement is so large as to materially adversely affect the success of such offering (including the price at which such securities can be sold), then only the amount, the number or kind of securities offered for the account of holders of such piggy-back rights will be reduced to the extent necessary to reduce the total amount of securities to be included in such offering to the amount, number or kind recommended by the managing underwriter and the amount of Registrable Securities to be included shall not be reduced. (b) NO INCONSISTENT AGREEMENTS. The Company has not entered and shall not enter into any agreement that is inconsistent with the rights granted to the Holders in this Agreement or otherwise conflicts with the provisions hereof. The rights granted to the Holders hereunder do not in any way conflict with and are not inconsistent with the rights granted to the holders of the Company's other issued and outstanding securities under any such agreements. (c) NO ADVERSE ACTION AFFECTING THE REGISTRABLE SECURITIES. The Company will not take any action with respect to the Registrable Securities which would adversely affect 15. the ability of any of the Holders to include such Registrable Securities in a registration undertaken pursuant to this Agreement. (d) AMENDMENTS AND WAIVERS. The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof, may not be given, without the written consent of the Company and the Required Holders; provided, further, that any amendment, modification, supplement, waiver or consent that would disproportionately affect the rights of any Holder (as compared to the other Holders) shall not be effective against such Holder without such Holder's written consent. Notwithstanding the foregoing, a waiver or consent to depart from the provisions hereof with respect to a matter that relates exclusively to the rights of Holders whose Registrable Securities are being sold pursuant to the Registration Statement and that does not directly or indirectly affect the rights of other Holders may be given by Holders of a majority in interest of the Registrable Securities being sold by such Holders pursuant to such Registration Statement, provided, however, that the provisions of this sentence may not be amended, modified, or supplemented except in accordance with the provisions of the immediately preceding sentence. Each Holder of Registrable Securities outstanding at the time of any such amendment, modification, supplement, waiver or consent or thereafter shall be bound by any such amendment, modification, supplement, waiver or consent effected pursuant to this Section 8(d), whether or not any notice, writing or marking indicating such amendment, modification, supplement, waiver or consent appears on the Registrable Securities or is delivered to such Holder. (e) NOTICES. All notices and other communications provided for herein or permitted hereunder shall be made in writing by hand-delivery, courier guaranteeing overnight delivery, certified first-class mail, return receipt requested, or telecopy and shall be deemed given (i) when made, if made by hand delivery, (ii) upon confirmation, if made by telecopier, (iii) one Business Day after being deposited with such courier, if made by overnight courier or (iv) on the date indicated on the notice of receipt, if made by first-class mail, to the parties as follows: (i) if to a Holder, to the address of such Holder as it appears in the Notice and Questionnaire, or, if not so specified, in the Common Stock or Warrants register of the Company, as applicable. Failure to mail a notice or communication to a Holder or any defect in such notice or communication shall not affect its sufficiency with respect to other Holders. (ii) if to the Company to: AMERICA WEST HOLDINGS CORPORATION 111 West Rio Salado Parkway Tempe, AZ 85281 Telephone No. (480) 693-0800 Facsimile No. (480) 693-5932 Attention: Executive Vice President - Corporate With a copy to: COOLEY GODWARD LLP One Maritime Plaza, 20th Floor 16. San Francisco, CA 94111 Telephone No. (415) 693-2000 Facsimile No. (415) 951-3699 Attention: Samuel M. Livermore (iii) If to a Warrant Holder, to the address of such Warrant Holder set forth on Schedule I. (f) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of each of the parties and shall inure to the benefit of each existing and future Holder. The Company may not assign its rights or obligations hereunder without the prior written consent of the Holders of a majority in interest of the Registrable Securities, other than by operation of law pursuant to a merger or consolidation to which the Company is a party. (g) COUNTERPARTS. This Agreement may be executed in any number of counterparts by the parties hereto, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same instrument. (h) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH FEDERAL LAW, IF AND TO THE EXTENT SUCH FEDERAL LAW IS APPLICABLE, AND OTHERWISE THE LAW OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. (i) SEVERABILITY. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their best efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction, it being intended that all of the rights and privileges of the parties shall be enforceable to the fullest extent permitted by law. (j) HEADINGS. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. All references made in this Agreement to "Section" and "paragraph" refer to such Section or paragraph of this Agreement, unless expressly stated otherwise. (k) ENTIRE AGREEMENT. This Agreement is intended by the parties as a final expression of their agreement and is intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein and the registration rights granted by the Company with respect to the Registrable Securities. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein, with respect to the registration rights granted by the Company with respect to the Registrable Securities. This Agreement supersedes all prior agreements and undertakings among the parties solely with respect to such registration rights. 17. (l) TERMINATION. This Agreement and the obligations of the parties hereunder shall terminate when all of the securities issued or issuable upon exercise of the Warrants cease to be Registrable Securities, except for any liabilities or obligations under Sections 4 or 5 hereof. (m) SPECIFIC PERFORMANCE. The parties agree that, to the extent permitted by law, (i) the obligations imposed on them in this Agreement are special, unique and of an extraordinary character, and that in the event of a breach by any such party damages would not be an adequate remedy; and (ii) each of the other parties shall be entitled to specific performance and injunctive and other equitable relief in addition to any other remedy to which it may be entitled at law or in equity. 18. IN WITNESS WHEREOF, the parties have caused this Registration Rights Agreement to be duly executed as of the date first written above. AMERICA WEST HOLDINGS CORPORATION By: /s/ Douglas Parker ------------------------------ Name: W. Douglas Parker Title: President and Chief Executive Officer 19. WARRANT HOLDER: The Air Transportation Stabilization Board By: /s/ Joseph P. Adams -------------------------------------------------- Name: Joseph P. Adams Title: Executive Director 20. SCHEDULE I Schedule of Warrant Holder AIR TRANSPORTATION STABILIZATION BOARD 1120 Vermont Avenue, Suite 970 Washington, DC 20005 Attention: Executive Director WITH A COPY TO United States Department of the Treasury 1500 Pennsylvania Avenue, N.W. Washington, D.C. 20220 Attn: Deputy Assistant Secretary (Government Financial Policy EXHIBIT A AMERICA WEST HOLDINGS CORPORATION FORM OF SELLING SECURITYHOLDER NOTICE AND QUESTIONNAIRE The undersigned beneficial holder of a warrant (the "Warrant") to purchase Class B Common Stock of America West Holdings Corporation ("Holdings") or shares of Class B Common Stock, par value $0.01, of Holdings issuable upon exercise of the Warrant (the "Registrable Securities"), understands that Holdings has filed or intends to file with the Securities and Exchange Commission (the "Commission") a registration statement on Form S-3 (the "Shelf Registration Statement") for the registration and resale under Rule 415 of the Securities Act of 1933, as amended (the "Securities Act"), of the Registrable Securities in accordance with the terms of the Registration Rights Agreement (the "Registration Rights Agreement") among Holdings and certain holders of warrants to purchase Class B Common Stock of Holdings named therein. A copy of the Registration Rights Agreement is available from Holdings upon request at the address set forth below. All capitalized terms not otherwise defined herein shall have the meaning ascribed thereto in the Registration Rights Agreement. Each beneficial owner of Registrable Securities is entitled to the benefits of the Registration Rights Agreement. In order to sell or otherwise dispose of any Registrable Securities pursuant to the Shelf Registration Statement, a beneficial owner of Registrable Securities generally will be required to be named as a selling securityholder in the related prospectus, deliver a prospectus to purchasers of Registrable Securities and be bound by those provisions of the Registration Rights Agreement applicable to such beneficial owner (including certain indemnification provisions, as described below). Beneficial owners are encouraged to complete and deliver this Notice and Questionnaire prior to the effectiveness of the Shelf Registration Statement so that such beneficial owners may be named as selling securityholders in the related prospectus at the time of effectiveness. Upon receipt of a completed Notice and Questionnaire from a beneficial owner following the effectiveness of the Shelf Registration Statement, Holdings will, as promptly as practicable, file such amendments to the Shelf Registration Statement or supplements to the related prospectus as are necessary to permit such holder to deliver such prospectus to purchasers of Registrable Securities. Certain legal consequences arise from being named as a selling securityholder in the Shelf Registration Statement and the related prospectus. Accordingly, holders and beneficial owners of Registrable Securities are advised to consult their own securities law counsel regarding the consequences of being named or not being named as a selling securityholder in the Shelf Registration Statement and the related prospectus. 1. NOTICE The undersigned beneficial owner (the "Selling Securityholder") of Registrable Securities hereby gives notice to Holdings of its intention to sell or otherwise dispose of Registrable Securities beneficially owned by it and listed below in Item 3 (unless otherwise specified under Item 3) pursuant to the Shelf Registration Statement. The undersigned, by signing and returning this Notice and Questionnaire, understands that it will be bound by the terms and conditions of this Notice and Questionnaire and the Registration Rights Agreement. The undersigned hereby provides the following information to Holdings and represents and warrants that such information is accurate and complete: QUESTIONNAIRE 1. (a) Full Legal Name of Selling Securityholder: ______________________________________________________________ (b) Full Legal Name of Registered Holder (if not the same as (a) above) through which Registrable Securities listed in (3) below are held: ______________________________________________________________ (c) Full Legal Name of DTC Participant (if applicable and if not the same as (b) above) through which Registrable Securities listed in (3) below are held: ______________________________________________________________ 2. Address for Notices to Selling Securityholder: ________________________________________________________________________________ ________________________________________________________________________________ Telephone:______________________________________________________________________ Fax:____________________________________________________________________________ Contact Person:_________________________________________________________________ 3. Beneficial Ownership of Registrable Securities: (a) Type and Principal Amount of Registrable Securities beneficially owned: ______________________________________________________________ 2. (b) CUSIP No(s). of such Registrable Securities beneficially owned: ______________________________________________________________ 4. Beneficial Ownership of Holdings' securities owned by the Selling Securityholder: Except as set forth below in this Item (4), the undersigned is not the beneficial or registered owner of any securities of Holdings other than the Registrable Securities listed above in Item (3). (a) Type and Amount of Other Securities beneficially owned by the Selling Securityholder: ______________________________________________________________ (b) CUSIP No(s). of such Other Securities beneficially owned: ______________________________________________________________ 5. Relationship with Holdings: Except as set forth below, neither the undersigned nor any of its affiliates, directors or principal equity holders (5% or more) has held any position or office or has had any other material relationship with Holdings (or their predecessors or affiliates) during the past three years. State any exceptions here: ________________________________________________________________________________ ________________________________________________________________________________ 6. Plan of Distribution: Except as set forth below, the undersigned (including its donees or pledgees) intends to distribute the Registrable Securities listed above in Item (3) pursuant to the Shelf Registration Statement only as follows (if at all): Such Registrable Securities may be sold from time to time directly by the undersigned or alternatively, through underwriters, broker-dealers or agents. If the Registrable Securities are sold through underwriters or broker-dealers, the Selling Securityholder will be responsible for underwriting discounts or commissions or agent's commissions. Such Registrable Securities may be sold in one or more transactions at fixed prices, at prevailing market prices at the time of sale, at varying prices determined at the time of sale, or at negotiated prices. Such sales may be effected in transactions (which may involve block transactions) (i) on any national securities exchange or quotation service on which the Registrable Securities may be listed or quoted at the time of sale, (ii) in the over-the-counter market, (iii) in transactions otherwise than on such exchanges or services or in the over-the-counter market, or (iv) through the writing of options. In connection with sales of the Registrable Securities or otherwise, the undersigned may enter into hedging transactions with broker-dealers, which may in turn engage in short sales of the Registrable Securities, short and deliver 3. Registrable Securities to close out such short positions, or loan or pledge Registrable Securities to broker-dealers that in turn may sell such securities. State any exceptions here: ________________________________________________________________________________ ________________________________________________________________________________ The undersigned acknowledges that it understands its obligation to comply with the provisions of the Securities Exchange Act of 1934, as amended and the rules thereunder relating to stock manipulation, particularly Regulation M thereunder (or any successor rules or regulations), in connection with any offering of Registrable Securities pursuant to the Shelf Registration Statement. The undersigned agrees that neither it nor any person acting on its behalf will engage in any transaction in violation of such provisions. The Selling Securityholder hereby acknowledges its obligations under the Registration Rights Agreement to indemnify and hold harmless certain persons as set forth therein. Pursuant to the Registration Rights Agreement, Holdings has agreed under certain circumstances to indemnify and hold harmless the Selling Securityholders as set forth therein. The undersigned hereby agrees that, in connection with any sale of Registrable Securities pursuant to the Shelf Registration Statement, it will comply with the prospectus delivery requirements, if any, of the Securities Act of 1933, as amended (the "Securities Act"), and, at the time of any such sale, represents, warrants and agrees that the information regarding the undersigned included in this Notice and Questionnaire, as it may be supplemented shall be accurate and complete in all material respects. In accordance with the undersigned's obligation under the Registration Rights Agreement to provide such information as may be required by law for inclusion in the Shelf Registration Statement regarding the undersigned, the undersigned agrees to promptly notify Holdings of any inaccuracies or changes in the information provided herein that may occur subsequent to the date hereof at any time while the Shelf Registration Statement remains effective. All notices hereunder and pursuant to the Registration Rights Agreement shall be made in writing at the address set forth below. By signing below, the undersigned consents to the disclosure of the information contained herein in its answers to items (1) through (6) above and the inclusion of such information in the Shelf Registration Statement and the related prospectus. The undersigned understands that such information will be relied upon by Holdings in connection with the preparation or amendment of the Shelf Registration Statement and the related prospectus. By signing below, the undersigned agrees that the terms of this Notice and Questionnaire, and the representations and warranties contained herein, shall be binding on, shall inure to the benefit of and shall be enforceable by Holdings' respective successors and assigns. This Agreement shall be governed in all respects by the laws of the State of New York. 4. IN WITNESS WHEREOF, the undersigned, by authority duly given, has caused this Notice and Questionnaire to be executed and delivered either in person or by its duly authorized agent. Dated: Beneficial Owner By:____________________________ Name: Title: PLEASE RETURN THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE TO HOLDINGS AS SET FORTH BELOW: America West Holdings Corporation 111 West Rio Salado Parkway Tempe, AZ 85281 Attn: ______________ Tel: (480) 693-0800 Fax: (480) 693-5932 with a copy to: Cooley Godward LLP One Maritime Plaza San Francisco, CA 94111 Attn: Samuel M. Livermore Tel: (415) 693-2113 Fax: (415) 951-3699 5. EX-4.21 9 p66064ex4-21.txt EX-4.21 Exhibit 4.21 ================================================================================ REGISTRATION RIGHTS AGREEMENT BY AND BETWEEN AMERICA WEST HOLDINGS CORPORATION AS THE ISSUER, AND THE WARRANT HOLDERS REFERRED TO HEREIN WARRANTS TO PURCHASE CLASS B COMMON STOCK DATED AS OF JANUARY 18, 2002 ================================================================================ REGISTRATION RIGHTS AGREEMENT THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and entered into as of January 18, 2002 by and between AMERICA WEST HOLDINGS CORPORATION, a Delaware corporation (the "COMPANY"), and the Warrant Holders (as hereinafter defined). WHEREAS, the Company and the Warrant Holders have entered into certain agreements; and WHEREAS, in order to induce the Warrant Holders to enter into such agreements with the Company, the Company agreed to issue to the Warrant Holders the Warrants (as hereinafter defined) and to provide the registration rights set forth in this Agreement to the Warrant Holders and their respective direct and indirect transferees. The parties hereby agree as follows: SECTION 1. DEFINITIONS. As used in this Agreement, the following terms shall have the following meanings: AFFILIATE: An affiliate of any specified person shall mean any other person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified person. For the purposes of this definition, "control," when used with respect to any person, means the power to direct the management and policies of such person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise and the terms "affiliated," "controlling" and "controlled" have meanings correlative to the foregoing. AGREEMENT: This Registration Rights Agreement, as the same may be amended, supplemented or modified from time to time in accordance with the terms hereof. BUSINESS DAY: Each Monday, Tuesday, Wednesday, Thursday and Friday that is not a day on which banking institutions in New York, New York are authorized or obligated by law or executive order to close. CLOSING DATE: January 18, 2002. COMMON STOCK: The class B common stock, par value $0.01 per share, of the Company or shares of any class or classes resulting from any reclassification or reclassifications thereof and which have no preference in respect of dividends or of amounts payable in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company and which are not subject to redemption by the Company; provided that if at any time there shall be more than one such resulting class, the shares of each such class then so issuable shall be substantially in the proportion which the total number of shares of such class resulting from all such reclassifications bears to the total number of shares of all such classes resulting from all such reclassifications. COMPANY: America West Holdings Corporation, a Delaware corporation, and any successor entity thereto. 1. EFFECTIVENESS TARGET DATE: The 240th day after the date of this Agreement. EXCHANGE ACT: The Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated by the SEC thereunder. FILING DATE: The 120th day after the date of this Agreement. HOLDER: Each owner of any Registrable Securities. NOTICE AND QUESTIONNAIRE: The form of Notice and Questionnaire attached hereto as EXHIBIT A, as reasonably amended, supplemented, or otherwise modified from time to time by the Company upon reasonable notice to the Holders. PROSPECTUS: The prospectus included in the Registration Statement (including, without limitation, a prospectus that discloses information previously omitted from a prospectus filed in reliance upon Rule 430A), as amended or supplemented by any prospectus supplement, with respect to the resale of any of the Registrable Securities covered by such Registration Statement, and all other amendments and supplements to any such prospectus, including post-effective amendments, and all materials incorporated by reference or deemed to be incorporated by reference, if any, in such prospectus. REGISTRABLE SECURITIES: The shares of Common Stock issued or issuable upon exercise of the Warrants (including any shares of Common Stock issued or issuable thereon upon any stock split, stock combination, stock dividend or the like or as a result of any anti-dilution adjustments under the Warrants), upon original issuance thereof and at all times subsequent thereto, and associated related rights, if any, until the earliest of (i) the date on which the resale thereof has been effectively registered under the Securities Act and such securities have been disposed of in accordance with the Registration Statement relating thereto, (ii) the date on which such securities have been distributed to the public pursuant to Rule 144 or are saleable pursuant to paragraph (k) of Rule 144 or (iii) the date on which such securities cease to be outstanding. REGISTRATION STATEMENT: Any registration statement of the Company filed with the SEC pursuant to the Securities Act that covers the resale of the Registrable Securities pursuant to the provisions of this Agreement, including the Prospectus, amendments and supplements to such registration statement or Prospectus (including pre- and post-effective amendments), all exhibits thereto, and all material incorporated by reference or deemed to be incorporated by reference, if any, in such registration statement. REQUIRED HOLDERS: Holders of more than 50% of the Registrable Securities. For purposes of the preceding sentence, Registrable Securities owned, directly or indirectly, by the Company or its Affiliates (other than persons who are Affiliates solely by virtue of being holders of the Registrable Securities) shall not be deemed outstanding. REQUISITE INFORMATION: As defined in Section 2(d) hereof. RULE 144: Rule 144 promulgated by the SEC pursuant to the Securities Act, as such rule may be amended from time to time, or any successor rule or regulation. 2. RULE 144A: Rule 144A promulgated by the SEC pursuant to the Securities Act, as such rule may be amended from time to time, or any successor rule or regulation. RULE 415: Rule 415 promulgated by the SEC pursuant to the Securities Act, as such rule may be amended from time to time, or any successor rule or regulation. RULE 424: Rule 424 promulgated by the SEC pursuant to the Securities Act, as such rule may be amended from time to time, or any successor rule or regulation. RULE 430A: Rule 430A promulgated by the SEC pursuant to the Securities Act, as such rule may be amended from time to time, or any successor rule or regulation. SEC: The Securities and Exchange Commission, or any successor governmental agency or authority thereto. SECURITIES ACT: The Securities Act of 1933, as amended, and the rules and regulations promulgated by the SEC thereunder. TRANSFER AGENT: The registrar and transfer agent for the Company's Common Stock. WARRANTS: The warrants issued to to purchase shares of Common Stock; the warrants issued to to purchase shares of Common Stock; and the warrants issued to to purchase shares of Common Stock. WARRANT HOLDERS: The initial holders of the Warrants set forth on Schedule I hereto. SECTION 2. REGISTRATION STATEMENT. (a) REGISTRATION UNDER THE SECURITIES ACT. The Company, at its own expense, agrees to file with the SEC as soon as reasonably practicable, but in no event later than the Filing Date, a Registration Statement for an offering to be made on a continuous basis pursuant to Rule 415 covering all of the Common Stock constituting Registrable Securities. The Registration Statement shall be on Form S-3 under the Securities Act or another appropriate form selected by the Company permitting registration of such Registrable Securities for resale by the Holders in the manner or manners reasonably designated by such Holders. The Company shall use best efforts to cause the Registration Statement to be declared effective pursuant to the Securities Act as soon as reasonably practicable following the filing thereof, but in no event later than the Effectiveness Target Date, and to keep such Registration Statement continuously effective under the Securities Act until all of the securities covered by such Registration Statement cease to be Registrable Securities. (b) PIGGYBACK REGISTRATION RIGHTS. The Company shall afford each Holder of Registrable Securities the opportunity to include such Registrable Securities in any registration statement filed for purposes of a public offering of securities of the Company made on a continuous basis pursuant to Rule 415 (other than registration statements for which the Company has contractually agreed not to grant such rights), including any registration statement 3. filed by the Company to register for resale its outstanding 7.5% Convertible Senior Notes due 2009. Each Holder desiring to include the Registrable Securities held by it in any such registration statement shall notify the Company in writing within 15 days after receipt of notice from the Company of its intent to file such a registration statement. If a Holder decides not to include all of the Registrable Securities held by it in any registration statement thereafter filed by the Company, such Holder shall nevertheless continue to have the right to include any Registrable Securities in any subsequent registration statement or registration statements (other than registration statements for which the Company has contractually agreed not to grant such rights) as may be filed by the Company with respect to offerings of its securities made on a continuous basis pursuant to Rule 415, all upon the terms and conditions set forth herein. (c) SUPPLEMENTS AND AMENDMENTS. The Company shall use best efforts to keep any Registration Statement continuously effective by supplementing and amending such Registration Statement if so required by the rules, regulations or instructions applicable to the registration form used for such Registration Statement, if required by the Securities Act or if reasonably requested by the Required Holders or by any underwriter of such Registrable Securities. If the Registration Statement under Section 2(a) ceases to be available for use by the Holders because the Company no longer qualifies to use such form of registration statement, the Company shall be required to file, as promptly as reasonably practicable, a new Registration Statement on an appropriate form and its obligations hereunder shall continue to apply in all respects. (d) SELLING SECURITYHOLDER INFORMATION. Each Holder wishing to sell Registrable Securities pursuant to a Registration Statement and related Prospectus agrees to deliver a Notice and Questionnaire, in a timely manner, that confirms such Holder's agreement to be bound by the terms of this Agreement and includes such information regarding it and the distribution of its Registrable Securities as is required by law to be disclosed by the Holder in the Registration Statement (the "Requisite Information") to the Company prior to any intended distribution of Registrable Securities under the Registration Statement. The Company shall not be required to include in the Registration Statement and related Prospectus the Registrable Securities of any Holder that does not provide the Company with a Notice and Questionnaire in accordance with this Section 2(d). If such completed Notice and Questionnaire is received by the Company before 10 days prior to the effective date of a Registration Statement, such Holder shall be entitled to have its Registrable Securities included in such Registration Statement at the effective date thereof. If such completed Notice and Questionnaire is received thereafter, the Company will use best efforts to include such Holder's Registrable Securities as promptly as reasonably practicable thereafter, subject to the last two sentences of the next paragraph. Subject to the last two sentences of this paragraph, the Company shall use best efforts to file, as soon as practicable after the receipt of a Notice and Questionnaire from any Holder that includes the Requisite Information or any changes in the Requisite Information with respect to such Holder (including, without limitation, any changes in the plan of distribution), a Prospectus supplement pursuant to Rule 424 or otherwise amend or supplement such Registration Statement to include in the Prospectus the Requisite Information as to such Holder (and the Registrable Securities held by such Holder), and the Company shall provide such Holder a copy of such Prospectus as so amended or supplemented containing the Requisite Information in order to permit such Holder to comply with the Prospectus delivery requirements of the Securities Act in 4. a timely manner with respect to any proposed disposition of such Holder's Registrable Securities and to file the same with the SEC. Each Holder requesting registration hereunder shall promptly notify the Company of any material changes to the Requisite Information contained in the Notice and Questionnaire provided to the Company by such Holder. Notwithstanding the foregoing, following the effective date of any Registration Statement, the Company shall not be required to file more than one such supplement or post-effective amendment to reflect changes in the amount of Common Stock constituting Registrable Securities held by any particular Holder at the request of such Holder in any 30-day period. The Company may take reasonable steps to aggregate the addition of Registrable Securities of more than one Holder for purposes of filing amendments to any Registration Statement or supplements to the Prospectus so as to reduce the need for multiple amendments or supplements; provided that the Company shall not use this sentence to delay the filing of any amendment or supplement beyond any such 30-day period. (e) MATERIAL EVENTS; SUSPENSION OF SALES. Notwithstanding the provisions contained in this Section 2, with respect to any Registration Statement, the Company may (for a period not to exceed 60 consecutive days, and not in any event to exceed 90 days in the aggregate during any 12 month period) suspend use of such Registration Statement at any time if (and for so long as) the continued effectiveness thereof would require the Company to disclose a material financing, acquisition, other transaction or other material non-public information, which disclosure the Board of Directors of the Company shall have determined in good faith is not in the best interests of the Company and the Company's stockholders. The Company shall notify each registered Holder, the Transfer Agent and the managing underwriters, if any, that the use of the Prospectus is to be suspended until the Company shall deliver a written notice that the use of the Prospectus may be resumed. During such suspension, the use of the Prospectus shall be suspended, and the Company shall not be required to maintain the effectiveness of, or amend or update the Registration Statement, or amend or supplement the Prospectus. (f) ADDITIONAL AGREEMENTS OF HOLDERS. Each Holder agrees not to dispose of Registrable Securities pursuant to any Registration Statement without complying with the prospectus delivery requirements under the Securities Act and the provisions of paragraph (e) above regarding use of the Prospectus. Each Holder further agrees that it will comply fully with applicable federal and state securities laws in connection with the distribution of any Registrable Securities pursuant to the Registration Statement. Each Holder further acknowledges having been advised by the Company that applicable federal securities laws prohibit Holders from trading in securities of the Company at any time while in possession of material non-public information about the Company. SECTION 3. REGISTRATION PROCEDURES. In connection with the Company's registration obligations hereunder, the Company shall effect such registrations on the appropriate form selected by the Company to permit the resale of Registrable Securities in accordance with the Holder's intended method or methods of disposition thereof, and pursuant thereto the Company shall as expeditiously as reasonably possible: (a) Furnish to the Holders and the managing underwriters, if any, copies of all such documents proposed to be filed (excluding, unless requested, those documents incorporated or deemed to be incorporated by reference and then only to the Holder who so requested) and use its commercially reasonable efforts to reflect in each such document, when so filed with the 5. SEC, such comments as the Holders may reasonably propose. The Company shall not file any such Registration Statement or related Prospectus or any amendments or supplements thereto (excluding any document that would be incorporated or deemed incorporated by reference) to which the Holder or the managing underwriters, if any, shall reasonably object in writing (by hand-delivery, courier guaranteeing overnight delivery or telecopy) within five Business Days after the receipt of such documents. Notwithstanding the foregoing, the Company shall not be required to furnish to the Holders or the managing underwriters, if any, any amendments or supplements to the Registration Statement or Prospectus filed solely to reflect changes to the amount of Common Stock constituting Registrable Securities held by any particular Holder or immaterial revisions to the information contained therein. (b) Prepare and file with the SEC such amendments, including post-effective amendments, to the Registration Statement as may be necessary to keep such Registration Statement continuously effective for the applicable time period set forth in Section 2(a) hereof; cause the related Prospectus to be supplemented by any required Prospectus supplement, and as so supplemented to be filed pursuant to Rule 424 (or any similar provisions then in force) under the Securities Act; and comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such Registration Statement and Prospectus during such period in accordance with the intended method or methods of disposition by the Holder set forth in such Registration Statement as so amended or in such Prospectus as so supplemented including, without limitation, the filing of any Prospectus supplement pursuant to Rule 424 in order to add or change any selling security holder information (including any such supplements or amendments pursuant to Section 2(d) hereof, provided such Holder to which such change applies complies with the Requisite Information requirements of Section 2(d) hereof in a timely manner). (c) Notify the Holders and the managing underwriters, if any, promptly and, if requested by any such person, confirm such notice in writing: (i) (A) when a Prospectus or any Prospectus supplement or post-effective amendment is proposed to be filed and (B) with respect to a Registration Statement or any post-effective amendment, when the same has become effective; (ii) of any written comments from the SEC with respect to any filing and of any request by the SEC or any other Federal or state governmental authority for amendments or supplements to such Registration Statement or related Prospectus or for additional information related thereto; (iii) of the issuance by the SEC, any state securities commission, any other governmental agency or any court of any stop order, order or injunction suspending or enjoining the use or effectiveness of the Registration Statement or the initiation of any proceedings for that purpose; (iv) of the receipt by the Company of any notification with respect to the suspension of qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction, or the initiation or threatening of any proceeding for such purpose; 6. (v) of the existence of any fact or the happening of any event that makes any statement of material fact made in such Registration Statement or related Prospectus untrue in any material respect, or that requires the making of any changes in such Registration Statement or Prospectus so that, in the case of the Registration Statement, it will not 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 not misleading and that, in the case of the Prospectus, such Prospectus will not 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 (vi) of the determination by the Company that a post effective amendment to the Registration Statement will be filed with the SEC. (d) Use commercially reasonable efforts to obtain the withdrawal of any stop order or order enjoining or suspending the use or effectiveness of a Registration Statement or the lifting of any suspension of the qualification (or exemption from qualification) of any of the Registrable Securities for sale in any jurisdiction, at the earliest practicable moment. (e) If reasonably requested by the Required Holders, or managing underwriters, if any, to: (i) promptly include in a Prospectus supplement or post-effective amendment such information as the Required Holders or managing underwriters, if any, may reasonably request to be included therein; and (ii) make all required filings of such Prospectus supplement or such post-effective amendment as soon as reasonably practicable after the Company has received notification of the matters to be included in such Prospectus supplement or post-effective amendment. (f) Furnish to each Holder who so requests, and each managing underwriter, if any, without charge, at least one copy of the Registration Statement and each amendment thereto (but excluding schedules, all documents incorporated or deemed to be incorporated therein by reference and all exhibits, unless requested in writing by such Holder or any managing underwriter and then only to the person who so requested). (g) Deliver to each Holder and the underwriters, if any, without charge, as many copies of the Prospectus or Prospectuses (including each form of Prospectus) and each amendment or supplement thereto as such persons may reasonably request; and, unless the Company shall have given notice to such Holder or underwriter pursuant to Section 2(e), the Company hereby consents to the use of such Prospectus, and each amendment or supplement thereto, by each of the selling Holders of Registrable Securities and the underwriters, if any, in connection with the offering and sale of the Registrable Securities covered by such Prospectus and any amendment or supplement thereto. (h) Prior to any public offering of Registrable Securities, use all reasonable efforts to register or qualify, or cooperate with the Holders of Registrable Securities to be sold or tendered or the underwriters, if any, and their respective counsel in connection with the 7. registration or qualification (or exemption from such registration or qualification) of such Registrable Securities for offer and sale under the securities or Blue Sky laws of such jurisdictions within the United States as any Holder or underwriter reasonably requests in writing, keep each such registration or qualification (or exemption therefrom) effective during the period the Registration Statement is required to be kept effective and do any and all other acts or things legally necessary to enable the disposition in such jurisdictions of the Registrable Securities covered by the Registration Statement; provided, however, that the Company shall not be required to qualify generally to do business in any jurisdiction where it is not then so qualified, take any action that would subject it to general service of process in any such jurisdiction where it is not then so subject or subject the Company to any tax in any such jurisdiction where it is not then so subject. (i) In connection with any sale or transfer of Registrable Securities that will result in such securities no longer being Registrable Securities, cooperate with the Holders and the managing underwriters, if any, to (i) facilitate the timely preparation and delivery of certificates representing Registrable Securities to be sold, which certificates shall not bear any restrictive legends, unless required by applicable securities laws and (ii) enable such Registrable Securities to be in such denominations and registered in such names as the managing underwriters, if any, or Holders may reasonably request at least two Business Days prior to any sale of Registrable Securities. (j) Use best efforts to cause the offering of the Registrable Securities covered by the Registration Statement to be registered with or approved by such other governmental agencies or authorities within the United States as may be necessary to enable the Holder or managing underwriter, if any, to consummate the disposition of such Registrable Securities; provided, however, that the Company shall not be required to register the Registrable Securities in any jurisdiction that would require the Company to qualify to do business in any jurisdiction where it is not then so qualified, subject it to general service of process in any such jurisdiction where it is not then so subject or subject the Company to any tax in any such jurisdiction where it is not then so subject. (k) Upon the occurrence of any event contemplated by Section 3(c)(v) hereof, as promptly as reasonably practicable (subject to any suspension of sales pursuant to Section 2(e) hereof), prepare a supplement or amendment, including, if appropriate, a post-effective amendment, to the Registration Statement or a supplement to the related Prospectus or any document incorporated or deemed to be incorporated therein by reference, and file any other required document so that, as thereafter delivered, such Prospectus will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading (except, upon occurrence of an event contemplated by paragraph (v) of Section 3(c) above, to the extent that the Company determines in good faith that the disclosure of such event at such time would not be in the best interests of the Company and the Company's stockholders provided that any such delay in disclosure pursuant to this Section 3(k) shall be considered a suspension of the Registration Statement subject to the limitation in Section 2(e)). (l) Subject to the provisions of Section 7, enter into such agreements (including any underwriting agreements in form, scope and substance as may be reasonably 8. requested and as are customary in underwritten offerings) and take all such other appropriate actions in connection therewith (including those reasonably requested by the managing underwriters, if any, or the Holders of a majority in interest of the Registrable Securities being sold) in order to expedite or facilitate the sale of such Registrable Securities. In connection with any underwritten offering, the Company will: (i) make such representations and warranties to the Holders of such Registrable Securities and the underwriters, if any, with respect to the business of the Company and its subsidiaries (including with respect to businesses or assets acquired or to be acquired by any of them), and the Registration Statement, Prospectus and documents, if any, incorporated or deemed to be incorporated by reference therein, in each case, in form, substance and scope as are customarily made by issuers to underwriters in underwritten offerings, and confirm the same if and when requested; (ii) obtain, as may reasonably be required, opinions of counsel to the Company (which may include in-house counsel) and updates thereof (which counsel and opinions (in form, scope and substance) shall be reasonably satisfactory to the managing underwriters, if any, addressed to each selling Holder of Registrable Securities and each of the underwriters, if any, covering the matters customarily covered in opinions requested in underwritten offerings (including any such matters as may be reasonably requested by such underwriters)); (iii) obtain, as may reasonably be required, customary "cold comfort" letters and updates thereof from the independent certified public accountants of the Company (and, if necessary, any other independent certified public accountants of any subsidiary of the Company or of any business acquired by the Company for which financial statements and financial data are, or are required to be, included in the Registration Statement), addressed (where reasonably possible) to each selling Holder of Registrable Securities and each of the underwriters, if any, such letters to be in customary form and covering matters of the type customarily covered in "cold comfort" letters in connection with underwritten offerings; and (iv) deliver such documents and certificates as may be reasonably requested by the Holders of majority in interest of the Registrable Securities being sold or the managing underwriters, if any, to evidence the continued validity of the representations and warranties made pursuant to clause (i) of this Section 3(l) and to evidence compliance with any customary conditions contained in the underwriting agreement or other agreement entered into by the Company; (m) Make available for inspection by a representative of the Holders of Registrable Securities being sold, any underwriter participating in any such disposition of Registrable Securities, if any, and any attorney, consultant or accountant retained by such selling Holders or underwriter, at the offices where normally kept, during reasonable business hours, all financial and other records, pertinent corporate documents and properties of the Company and its subsidiaries (other than records and documents that the Company and its subsidiaries agreed contractually not to disclose and the disclosure of which would violate such contractual arrangement) as they may reasonably request, and cause the officers, directors, agents and employees of the Company and its subsidiaries to supply all information (other than information 9. that the Company and its subsidiaries agreed contractually not to disclose and the disclosure of which would violate such contractual arrangement) in each case reasonably requested by any such representative, underwriter, attorney, consultant or accountant in connection with such Registration Statement and as shall be reasonably necessary to enable such persons to conduct a reasonable investigation within the meaning of Section 11 of the Securities Act; provided, however, that the foregoing inspection and information gathering shall be coordinated on behalf of the Holders and the other parties thereto by one counsel designated by and on behalf of such Holders and other parties and provided further, that such persons shall first agree in writing with the Company that any information that is reasonably and in good faith designated by the Company as confidential at the time of delivery or inspection (as the case may be) of such information shall be kept confidential by such persons, unless (i) disclosure of such information is required by court or administrative order or is necessary to respond to inquiries of regulatory authorities; (ii) disclosure of such information is required by law (including any disclosure requirements pursuant to Federal securities laws in connection with the filing of any Registration Statement or the use of any Prospectus); (iii) such information becomes generally available to the public other than as a result of a disclosure or failure to safeguard by any such person; or (iv) such information becomes available to any such person from a source other than the Company and such source is not known to be bound by a confidentiality agreement. (n) (i) list all shares of Common Stock covered by any Registration Statements on any securities exchange on which the Common Stock is then listed; or (ii) authorize for quotation on the National Market of the National Association of Securities Dealers Automated Quotation System ("Nasdaq") all Common Stock covered by all such Registration Statements if the Common Stock is then so authorized for quotation. (o) Make all reasonable efforts to provide such information as is required for any filings required to be made with the National Association of Securities Dealers, Inc. ("NASD"). SECTION 4. REGISTRATION EXPENSES. All fees and expenses incident to the performance of or compliance with this Agreement by the Company shall be borne by it whether or not any Registration Statement is filed or becomes effective. The fees and expenses referred to in the foregoing sentence shall include: (a) all registration, filing, securities exchange listing, rating agency and New York Stock Exchange fees and expenses; (b) printing expenses (including, without limitation, printing Prospectuses if the printing of Prospectuses is required by the managing underwriters, if any, or by the Holders of a majority in interest of the Registrable Securities); (c) messenger, copying, telephone and delivery expenses; (d) reasonable fees and disbursements of counsel for the Company; (e) fees and disbursements of all independent certified public accountants referred to in Section 3(l)(iii) including, without limitation, the expenses of any special audits or "cold comfort" letters required by Section 3(l)(iii); 10. (f) fees and expenses of all other persons retained by the Company; (g) all registration, filing, qualification and other fees and expenses of complying with securities or blue sky laws of all jurisdictions in which the Registrable Securities are to be registered and any legal fees and expenses incurred in connection with the blue sky qualifications of the Registrable Securities and the determination of their eligibility for investment under the laws of all such jurisdictions; and (h) the reasonable fees and disbursements incurred by the Holders of the Registrable Securities being registered (including, without limitation, the reasonable fees and disbursements for one counsel or firm of counsel selected by the Holders of a majority in interest of the Registrable Securities being registered). Notwithstanding anything in this Agreement to the contrary, the Holders shall be responsible for all expenses customarily borne by selling securityholders (including underwriting discounts, commissions and fees and expenses of counsel to the selling Holders to the extent not required to be paid pursuant to clause (h) above). SECTION 5. INDEMNIFICATION. (a) The Company agrees to indemnify and hold harmless each Holder of Registrable Securities, such Holder's affiliates, and their respective officers, directors, employees, representatives and agents, and each person, if any, who controls any Holder of Registrable Securities within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act, or is under common control with, or is controlled by, any Holder, against any and all loss, liability, claim or damage arising out of any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or the Prospectus (or any amendment or supplement thereto), or the omission or alleged omission to state therein any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that this indemnity agreement shall not apply to any loss, liability, claim or damage arising out of any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with written information furnished to the Company by or on behalf of such Holder of Registrable Securities (which also acknowledges the indemnity provisions herein) or any person, if any, who controls any such Holder of Registrable Securities expressly for use in the Registration Statement (or any amendment thereto), or any preliminary prospectus or the Prospectus (or any amendment or supplement thereto); provided, further, that this indemnity agreement shall not apply to any loss, liability, claim or damage (i) arising from an offer or sale of Registrable Securities occurring during any suspension of sales pursuant to Section 2(e) (provided that the Company has given to the Holder notice of such suspension prior to such offer or sale), or (ii) if the Holder fails to deliver at or prior to the written confirmation of sale, the most recent Prospectus, as amended or supplemented, and such Prospectus, as amended or supplemented, would have corrected such untrue statement or omission or alleged untrue statement or omission of a material fact (provided that the Company has delivered to such Holder, or otherwise given notice to such Holder of the existence of, such most recent Prospectus, as supplemented or amended). Any amounts advanced by the Company to an indemnified party pursuant to this Agreement shall be returned to the Company if it shall be 11. finally determined in a judgment by a court of competent jurisdiction not subject to appeal, that such indemnified party was not entitled to indemnification. (b) In connection with the preparation of the Registration Statement in which a Holder of Registrable Securities is participating in furnishing information relating to such Holder of Registrable Securities to the Company for use in such Registration Statement, any preliminary prospectus, the Prospectus or any amendments or supplements thereto, each such Holder agrees, severally and not jointly, to indemnify and hold harmless any other Holders of Registrable Securities, the Company, its affiliates and their respective officers, directors, employees, representatives and agents, and each person, if any, who controls such other Holders or the Company within the meaning of either such Section, against any and all loss, liability, claim or damage described in the indemnity contained in subsection (a) of this Section, as incurred, but only with respect to untrue statements or omissions, or alleged untrue statements or omissions, made in the Registration Statement (or any amendment thereto), or any preliminary prospectus or the Prospectus (or any amendment or supplement thereto) in reliance upon and in conformity with written information furnished to the Company by or on behalf of such Holder of Registrable Securities (which also acknowledges the indemnity provisions herein) or any person, if any, who controls any such Holder of Registrable Securities expressly for use in the Registration Statement (or any amendment thereto) or such preliminary prospectus or the Prospectus (or any amendment or supplement thereto). (c) Each indemnified party shall give notice as promptly as reasonably practicable to each indemnifying party of any action commenced against it in respect of which indemnity may be sought hereunder, but failure to so notify an indemnifying party shall not relieve such indemnifying party from any liability hereunder to the extent it is not materially prejudiced as a result thereof and in any event shall not relieve it from any liability which it may have otherwise than on account of this indemnity agreement. The indemnifying party, upon request of the indemnified party, shall retain counsel reasonably satisfactory to the indemnified party to represent the indemnified party and any others the indemnifying party may designate in such proceeding and shall pay the reasonable fees and disbursements of such counsel related to such proceeding. In any such proceeding, any indemnified party shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such indemnified party unless (i) the indemnifying party and the indemnified party shall have mutually agreed to the retention of such counsel or (ii) the named parties to any such proceeding (including any impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. It is understood that the indemnifying party shall not, in respect of the legal expenses of any indemnified party in connection with any proceeding or related proceedings in the same jurisdiction, be liable for (a) the fees and expenses of more than one separate firm (in addition to any local counsel), for the Holders of Registrable Securities, and all persons, if any, who control the Holders of Registrable Securities within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act, collectively (unless representation of all Holders and such parties by the same counsel would be inappropriate due to actual or potential differing interests between or among them), and (b) the fees and expenses of more than one separate firm (in addition to any local counsel), for the Company and each person, if any, who controls the Company within the meaning of either such Section, and that all fees and expenses payable under (a) and (b) above shall be reimbursed as they are incurred. In the 12. case of any such separate firm for the Holders of Registrable Securities, and control persons of the Holders of Registrable Securities, such firm shall be designated by the Holders of a majority in interest of the Registrable Securities and shall be reasonably acceptable to the Company. In the case of any such separate firm for the Company and control persons of the Company, such firm shall be reasonably acceptable to the Holders of a majority in interest of the Registrable Securities. The indemnifying party shall not be liable for any settlement of any proceeding effected without its written consent (which consent shall not be unreasonably withheld or delayed), but if settled with such consent or if there be a final non-appealable judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party from and against any loss or liability by reason of such settlement or judgment. No indemnifying party shall, without the prior written consent of the indemnified parties (which consent shall not be unreasonably withheld or delayed), settle or compromise or consent to the entry of any judgment with respect to any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever in respect of which indemnification or contribution could be sought under this Section 5 (whether or not the indemnified parties are actual or potential parties thereto), unless such settlement, compromise or consent (i) includes an unconditional release of each indemnified party from all liability arising out of such litigation, investigation, proceeding or claim and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of any indemnified party. No indemnified party shall, without the prior written consent of the indemnifying party, settle or compromise or consent to the entry of any judgment with respect to any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever in respect of which indemnification or contribution could be sought under this Section 5 (whether or not the indemnified parties are actual or potential parties thereto). (d) If the indemnification to which an indemnified party is entitled under this Section 5 is for any reason unavailable to or insufficient although applicable in accordance with its terms to hold harmless an indemnified party in respect of any losses, liabilities, claims, damages or expenses referred to therein, then each indemnifying party shall contribute to the aggregate amount of such losses, liabilities, claims, damages and expenses incurred by such indemnified party, as incurred, in such proportion as is appropriate to reflect the relative fault of the indemnifying party or parties on the one hand and of the indemnified party on the other hand in connection with the statements or omissions which resulted in such losses, liabilities, claims, damages or expenses, as well as any other relevant equitable considerations. The relative fault of the Company on the one hand and the Holders of the Registrable Securities on the other hand shall be determined by reference to, among other things, whether any such untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by the Company or by the Holder of the Registrable Securities and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 5(d) were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to above in this Section 5(d). The aggregate amount of losses, liabilities, claims, damages, and expenses incurred by an indemnified party and referred to above in this Section 5(d) shall be deemed to include any out- 13. of-pocket legal or other expenses reasonably incurred by such indemnified party in investigating, preparing or defending against any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based upon any such untrue or alleged untrue statement or omission or alleged omission. Notwithstanding the provisions of this Section 5, no Holder shall be required to indemnify or contribute any amount in excess of the amount by which the total price at which Registrable Securities were sold by such Holder exceeds the amount of any damages that such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission to alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The remedies provided in this Section 5 are not exclusive and shall not limit any rights or remedies which may otherwise be available to any indemnified party at law or in equity. For purposes of this Section 5(d), each person, if any, who controls any Holder of Registrable Securities within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act shall have the same rights to contribution as such Holder, and each person, if any, who controls the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act shall have the same rights to contribution as the Company. No party shall be liable for contribution with respect to any action, suit, proceeding or claim settled, compromised, or with respect to which the party requesting contribution consented to the entry of a judgment, without such party's written consent, which consent shall not be unreasonably withheld or delayed. (e) The Company may require as a condition to including the Registrable Securities in the Registration Statement, and to entering into any underwriting agreement with respect thereto, that the Company shall have received an undertaking from the Holder and such underwriter to comply with the provisions of this Section 5. (f) The agreements contained in this Section 5 shall survive the transfer or sale of the Registrable Securities and shall remain in full force and effect, regardless of any termination or cancellation of this Agreement or any investigation made by or on behalf of any indemnified party. SECTION 6. INFORMATION REQUIREMENTS. (a) The Company agrees that, if at any time until the Registrable Securities cease to be Registrable Securities the Company is not subject to the reporting requirements of the Exchange Act, it will cooperate with any Holder of Registrable Securities and use reasonable efforts to take such further reasonable action as any Holder of Registrable Securities may reasonably request in writing to enable such Holder to sell Registrable Securities without registration under the Securities Act within the limitation of the exemptions provided by Rule 144 and Rule 144A under the Securities Act (or any similar rule or regulation hereafter adopted by the SEC) and customarily taken in connection with sales pursuant to such exemptions, 14. including, without limitation, making available adequate current public information within the meaning of paragraph (c)(2) of Rule 144 and delivering the information required by paragraph (d) of Rule 144A. Notwithstanding the foregoing, nothing in this Section 6 shall be deemed to require the Company to register any of its securities under any section of the Exchange Act. (b) The Company shall file reports required to be filed by it under the Exchange Act and the New York Stock Exchange or any other securities exchanges on which the Common Stock is listed. SECTION 7. UNDERWRITTEN REGISTRATION. The Required Holders may elect to sell any Registrable Securities in an underwritten offering; provided that (a) the investment banker or investment bankers and manager or managers that will administer the offering will be investment bankers of recognized national standing selected by the Required Holders, subject to the consent of the Company (which will not be unreasonably withheld or delayed); and (b) the Company shall not be required to agree to more than one (1) underwritten offering per year and five (5) underwritten offerings in the aggregate (it being understood that any underwritten offering commenced but not completed due to a suspension of sales by the Company pursuant to Section 2(e) hereof shall not be counted towards such limits on underwritten offerings). No person may participate in any underwritten registration hereunder unless such person (i) agrees to sell such person's Registrable Securities on the basis reasonably provided in any underwriting arrangements approved by the Required Holders; and (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements, lock-up agreements and other documents reasonably required under the terms of such underwriting arrangements. Notwithstanding any other provision of this Agreement, if the underwriter determines in good faith that marketing factors require a limitation of the number of shares to be underwritten, the number of shares that may be included in the underwriting shall be allocated on a pro rata basis. SECTION 8. MISCELLANEOUS. (a) OTHER REGISTRATION RIGHTS. The Company may in the future grant registration rights that would permit any person that is a third party the right to piggy-back on the Registration Statement; provided, however, that if the managing underwriter, if any, of such offering notifies the Holders that the total amount of Registrable Securities which they and the holders of such piggy-back rights intend to include in the Registration Statement is so large as to materially adversely affect the success of such offering (including the price at which such securities can be sold), then only the amount, the number or kind of securities offered for the account of holders of such piggy-back rights will be reduced to the extent necessary to reduce the total amount of securities to be included in such offering to the amount, number or kind recommended by the managing underwriter and the amount of Registrable Securities to be included shall not be reduced. (b) NO INCONSISTENT AGREEMENTS. The Company has not entered and shall not enter into any agreement that is inconsistent with the rights granted to the Holders in this Agreement or otherwise conflicts with the provisions hereof. The rights granted to the Holders hereunder do not in any way conflict with and are not inconsistent with the rights granted to the holders of the Company's other issued and outstanding securities under any such agreements. 15. (c) NO ADVERSE ACTION AFFECTING THE REGISTRABLE SECURITIES. The Company will not take any action with respect to the Registrable Securities which would adversely affect the ability of any of the Holders to include such Registrable Securities in a registration undertaken pursuant to this Agreement. (d) AMENDMENTS AND WAIVERS. The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof, may not be given, without the written consent of the Company and the Required Holders; provided, further, that any amendment, modification, supplement, waiver or consent that would disproportionately affect the rights of any Holder (as compared to the other Holders) shall not be effective against such Holder without such Holder's written consent. Notwithstanding the foregoing, a waiver or consent to depart from the provisions hereof with respect to a matter that relates exclusively to the rights of Holders whose Registrable Securities are being sold pursuant to the Registration Statement and that does not directly or indirectly affect the rights of other Holders may be given by Holders of a majority in interest of the Registrable Securities being sold by such Holders pursuant to such Registration Statement, provided, however, that the provisions of this sentence may not be amended, modified, or supplemented except in accordance with the provisions of the immediately preceding sentence. Each Holder of Registrable Securities outstanding at the time of any such amendment, modification, supplement, waiver or consent or thereafter shall be bound by any such amendment, modification, supplement, waiver or consent effected pursuant to this Section 8(d), whether or not any notice, writing or marking indicating such amendment, modification, supplement, waiver or consent appears on the Registrable Securities or is delivered to such Holder. (e) NOTICES. All notices and other communications provided for herein or permitted hereunder shall be made in writing by hand-delivery, courier guaranteeing overnight delivery, certified first-class mail, return receipt requested, or telecopy and shall be deemed given (i) when made, if made by hand delivery, (ii) upon confirmation, if made by telecopier, (iii) one Business Day after being deposited with such courier, if made by overnight courier or (iv) on the date indicated on the notice of receipt, if made by first-class mail, to the parties as follows: (i) if to a Holder, to the address of such Holder as it appears in the Notice and Questionnaire, or, if not so specified, in the Common Stock or Warrants register of the Company, as applicable. Failure to mail a notice or communication to a Holder or any defect in such notice or communication shall not affect its sufficiency with respect to other Holders. (ii) if to the Company to: AMERICA WEST HOLDINGS CORPORATION 111 West Rio Salado Parkway Tempe, AZ 85281 Telephone No. (480) 693-0800 Facsimile No. (480) 693-5932 Attention: Executive Vice President - Corporate With a copy to: 16. COOLEY GODWARD LLP One Maritime Plaza, 20th Floor San Francisco, CA 94111 Telephone No. (415) 693-2000 Facsimile No. (415) 951-3699 Attention: Samuel M. Livermore (iii) If to a Warrant Holder, to the address of such Warrant Holder set forth on Schedule I. (f) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of each of the parties and shall inure to the benefit of each existing and future Holder. The Company may not assign its rights or obligations hereunder without the prior written consent of the Holders of a majority in interest of the Registrable Securities, other than by operation of law pursuant to a merger or consolidation to which the Company is a party. (g) COUNTERPARTS. This Agreement may be executed in any number of counterparts by the parties hereto, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same instrument. (h) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. (i) SEVERABILITY. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their best efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction, it being intended that all of the rights and privileges of the parties shall be enforceable to the fullest extent permitted by law. (j) HEADINGS. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. All references made in this Agreement to "Section" and "paragraph" refer to such Section or paragraph of this Agreement, unless expressly stated otherwise. (k) ENTIRE AGREEMENT. This Agreement is intended by the parties as a final expression of their agreement and is intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein and the registration rights granted by the Company with respect to the Registrable Securities. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein, with respect to the registration rights granted by the Company with 17. respect to the Registrable Securities. This Agreement supersedes all prior agreements and undertakings among the parties solely with respect to such registration rights. (l) TERMINATION. This Agreement and the obligations of the parties hereunder shall terminate when all of the securities issued or issuable upon exercise of the Warrants cease to be Registrable Securities, except for any liabilities or obligations under Sections 4 or 5 hereof. (m) SPECIFIC PERFORMANCE. The parties agree that, to the extent permitted by law, (i) the obligations imposed on them in this Agreement are special, unique and of an extraordinary character, and that in the event of a breach by any such party damages would not be an adequate remedy; and (ii) each of the other parties shall be entitled to specific performance and injunctive and other equitable relief in addition to any other remedy to which it may be entitled at law or in equity. 18. IN WITNESS WHEREOF, the parties have caused this Registration Rights Agreement to be duly executed as of the date first written above. AMERICA WEST HOLDINGS CORPORATION By: _________________________________ Name: Title: Executive Vice President - Corporate 19. WARRANT HOLDERS: By: _________________________________ Name: Title: 20. SCHEDULE I Schedule of Warrant Holders EXHIBIT A AMERICA WEST HOLDINGS CORPORATION FORM OF SELLING SECURITYHOLDER NOTICE AND QUESTIONNAIRE The undersigned beneficial holder of a warrant (the "Warrant") to purchase Class B Common Stock of America West Holdings Corporation ("Holdings") or shares of Class B Common Stock, par value $0.01, of Holdings issuable upon exercise of the Warrant (the "Registrable Securities"), understands that Holdings has filed or intends to file with the Securities and Exchange Commission (the "Commission") a registration statement on Form S-3 (the "Shelf Registration Statement") for the registration and resale under Rule 415 of the Securities Act of 1933, as amended (the "Securities Act"), of the Registrable Securities in accordance with the terms of the Registration Rights Agreement (the "Registration Rights Agreement") among Holdings and certain holders of warrants to purchase Class B Common Stock of Holdings named therein. A copy of the Registration Rights Agreement is available from Holdings upon request at the address set forth below. All capitalized terms not otherwise defined herein shall have the meaning ascribed thereto in the Registration Rights Agreement. Each beneficial owner of Registrable Securities is entitled to the benefits of the Registration Rights Agreement. In order to sell or otherwise dispose of any Registrable Securities pursuant to the Shelf Registration Statement, a beneficial owner of Registrable Securities generally will be required to be named as a selling securityholder in the related prospectus, deliver a prospectus to purchasers of Registrable Securities and be bound by those provisions of the Registration Rights Agreement applicable to such beneficial owner (including certain indemnification provisions, as described below). Beneficial owners are encouraged to complete and deliver this Notice and Questionnaire prior to the effectiveness of the Shelf Registration Statement so that such beneficial owners may be named as selling securityholders in the related prospectus at the time of effectiveness. Upon receipt of a completed Notice and Questionnaire from a beneficial owner following the effectiveness of the Shelf Registration Statement, Holdings will, as promptly as practicable, file such amendments to the Shelf Registration Statement or supplements to the related prospectus as are necessary to permit such holder to deliver such prospectus to purchasers of Registrable Securities. Certain legal consequences arise from being named as a selling securityholder in the Shelf Registration Statement and the related prospectus. Accordingly, holders and beneficial owners of Registrable Securities are advised to consult their own securities law counsel regarding the consequences of being named or not being named as a selling securityholder in the Shelf Registration Statement and the related prospectus. 1. NOTICE The undersigned beneficial owner (the "Selling Securityholder") of Registrable Securities hereby gives notice to Holdings of its intention to sell or otherwise dispose of Registrable Securities beneficially owned by it and listed below in Item 3 (unless otherwise specified under Item 3) pursuant to the Shelf Registration Statement. The undersigned, by signing and returning this Notice and Questionnaire, understands that it will be bound by the terms and conditions of this Notice and Questionnaire and the Registration Rights Agreement. The undersigned hereby provides the following information to Holdings and represents and warrants that such information is accurate and complete: QUESTIONNAIRE 1. (a) Full Legal Name of Selling Securityholder: ______________________________________________________________ (b) Full Legal Name of Registered Holder (if not the same as (a) above) through which Registrable Securities listed in (3) below are held: ______________________________________________________________ (c) Full Legal Name of DTC Participant (if applicable and if not the same as (b) above) through which Registrable Securities listed in (3) below are held: ______________________________________________________________ 2. Address for Notices to Selling Securityholder: ________________________________________________________________________________ ________________________________________________________________________________ Telephone:______________________________________________________________________ Fax:____________________________________________________________________________ Contact Person:_________________________________________________________________ 3. Beneficial Ownership of Registrable Securities: (a) Type and Principal Amount of Registrable Securities beneficially owned: ______________________________________________________________ 2. (b) CUSIP No(s). of such Registrable Securities beneficially owned: ______________________________________________________________ 4. Beneficial Ownership of Holdings' securities owned by the Selling Securityholder: Except as set forth below in this Item (4), the undersigned is not the beneficial or registered owner of any securities of Holdings other than the Registrable Securities listed above in Item (3). (a) Type and Amount of Other Securities beneficially owned by the Selling Securityholder: ______________________________________________________________ (b) CUSIP No(s). of such Other Securities beneficially owned: ______________________________________________________________ 5. Relationship with Holdings: Except as set forth below, neither the undersigned nor any of its affiliates, directors or principal equity holders (5% or more) has held any position or office or has had any other material relationship with Holdings (or their predecessors or affiliates) during the past three years. State any exceptions here: ________________________________________________________________________________ ________________________________________________________________________________ 6. Plan of Distribution: Except as set forth below, the undersigned (including its donees or pledgees) intends to distribute the Registrable Securities listed above in Item (3) pursuant to the Shelf Registration Statement only as follows (if at all): Such Registrable Securities may be sold from time to time directly by the undersigned or alternatively, through underwriters, broker-dealers or agents. If the Registrable Securities are sold through underwriters or broker-dealers, the Selling Securityholder will be responsible for underwriting discounts or commissions or agent's commissions. Such Registrable Securities may be sold in one or more transactions at fixed prices, at prevailing market prices at the time of sale, at varying prices determined at the time of sale, or at negotiated prices. Such sales may be effected in transactions (which may involve block transactions) (i) on any national securities exchange or quotation service on which the Registrable Securities may be listed or quoted at the time of sale, (ii) in the over-the-counter market, (iii) in transactions otherwise than on such exchanges or services or in the over-the-counter market, or (iv) through the writing of options. In connection with sales of the Registrable Securities or otherwise, the undersigned may enter into hedging transactions with broker-dealers, which may in turn engage in short sales of the Registrable Securities, short and deliver 3. Registrable Securities to close out such short positions, or loan or pledge Registrable Securities to broker-dealers that in turn may sell such securities. State any exceptions here: ________________________________________________________________________________ ________________________________________________________________________________ The undersigned acknowledges that it understands its obligation to comply with the provisions of the Securities Exchange Act of 1934, as amended and the rules thereunder relating to stock manipulation, particularly Regulation M thereunder (or any successor rules or regulations), in connection with any offering of Registrable Securities pursuant to the Shelf Registration Statement. The undersigned agrees that neither it nor any person acting on its behalf will engage in any transaction in violation of such provisions. The Selling Securityholder hereby acknowledges its obligations under the Registration Rights Agreement to indemnify and hold harmless certain persons as set forth therein. Pursuant to the Registration Rights Agreement, Holdings has agreed under certain circumstances to indemnify and hold harmless the Selling Securityholders as set forth therein. The undersigned hereby agrees that, in connection with any sale of Registrable Securities pursuant to the Shelf Registration Statement, it will comply with the prospectus delivery requirements, if any, of the Securities Act of 1933, as amended (the "Securities Act"), and, at the time of any such sale, represents, warrants and agrees that the information regarding the undersigned included in this Notice and Questionnaire, as it may be supplemented shall be accurate and complete in all material respects. In accordance with the undersigned's obligation under the Registration Rights Agreement to provide such information as may be required by law for inclusion in the Shelf Registration Statement regarding the undersigned, the undersigned agrees to promptly notify Holdings of any inaccuracies or changes in the information provided herein that may occur subsequent to the date hereof at any time while the Shelf Registration Statement remains effective. All notices hereunder and pursuant to the Registration Rights Agreement shall be made in writing at the address set forth below. By signing below, the undersigned consents to the disclosure of the information contained herein in its answers to items (1) through (6) above and the inclusion of such information in the Shelf Registration Statement and the related prospectus. The undersigned understands that such information will be relied upon by Holdings in connection with the preparation or amendment of the Shelf Registration Statement and the related prospectus. By signing below, the undersigned agrees that the terms of this Notice and Questionnaire, and the representations and warranties contained herein, shall be binding on, shall inure to the benefit of and shall be enforceable by Holdings' respective successors and assigns. This Agreement shall be governed in all respects by the laws of the State of New York. 4. IN WITNESS WHEREOF, the undersigned, by authority duly given, has caused this Notice and Questionnaire to be executed and delivered either in person or by its duly authorized agent. Dated: Beneficial Owner By:____________________________ Name: Title: PLEASE RETURN THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE TO HOLDINGS AS SET FORTH BELOW: America West Holdings Corporation 111 West Rio Salado Parkway Tempe, AZ 85281 Attn: ______________ Tel: (480) 693-0800 Fax: (480) 693-5932 with a copy to: Cooley Godward LLP One Maritime Plaza San Francisco, CA 94111 Attn: Samuel M. Livermore Tel: (415) 693-2113 Fax: (415) 951-3699 5. EX-10.50 10 p66064ex10-50.txt EX-10.50 Exhibit 10.50 *** Text Omitted and Filed Separately Confidential Treatment Requested under 17 C.F.R. Sections 200.80(b)(4), 200.83 and 240.24b-2 AGREEMENT THIS AGREEMENT (the "Agreement") is made and entered into as of this 18th day of January 2002 by America West Airlines, Inc., a Delaware corporation ("AWA"), and America West Holdings Corporation, a Delaware corporation ("Holdings"), with the Air Transportation Stabilization Board (the "ATSB"). RECITALS WHEREAS, pursuant to the Air Transportation Safety and System Stabilization Act, P.L. 107-42 (the "Act") the ATSB is entering into a Guarantee Agreement with Citibank, N.A., as Lender and Agent, of even date herewith for the benefit of AWA (the "Guarantee"); and WHEREAS, Section 104(a) of the Act requires the execution and delivery of this Agreement as a condition to the issuance of the Guarantee. NOW, THEREFORE, in consideration of these premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the AWA and Holdings agree hereto as follows: 1. DEFINITIONS. 1.1 "CASH COMPENSATION" shall mean any compensation, other than Equity Compensation (as hereinafter defined), paid, including amounts deferred, by AWA and/or Holdings including: (i) base salary; (ii) cash bonus; (iii) employer contributions under any qualified retirement plan; (iv) perquisites, including automobile allowances, positive space travel benefits and any associated tax gross-ups, valued in a manner consistent with the valuation of such perquisites for purposes of reporting such perquisites in Holdings' proxy statement for its annual meetings of stockholders; (v) any other compensation required to be disclosed in Holdings' proxy statement for its annual meeting of stockholders; and (vi) other financial benefits, reasonably valued by the good faith determination of the Compensation Committee of the Board of Directors of AWA or Holdings, as the case may be, excluding Excluded Compensation (as hereinafter defined). 1.2 "COVERED EMPLOYEE" shall mean each of the employees listed on Exhibit A hereto who constitute all of AWA's and Holdings' employees that received Total Compensation, valued as set forth on Exhibit A hereto, that equaled or exceeded three hundred thousand dollars ($300,000) for calendar year 2000, excluding any employee whose compensation is determined 1. pursuant to a collective bargaining agreement that was entered into prior to September 11, 2001. 1.3 "EQUITY COMPENSATION" shall mean any compensation paid by AWA and/or Holdings in any of the following forms: (i) stock option grants, valued as of the date of grant by using the Black-Scholes method of valuation using assumptions consistent with those used or to be used in connection with the preparation of Holdings' audited financial statements for the relevant time period; and (ii) restricted stock awards, valued by multiplying the number of shares granted by the fair market value of such shares on the date of grant; and (iii) any other equity or equity-based compensation required to be disclosed in Holdings' proxy statement for its annual meeting of stockholders. 1.4 "EXCLUDED COMPENSATION" shall mean any health, life, disability and other welfare benefits whether or not insured. 1.5 "MAXIMUM COMPENSATION" with respect to a Covered Employee shall mean Total Compensation paid to, or for the benefit of, or granted to, or for the benefit of, such Covered Employee for calendar year 2000, as set forth on Exhibit A hereto; provided that if a Covered Employee was not employed for the full calendar year 2000, such Covered Employee's Maximum Compensation will be adjusted by (i) annualizing the amount of base salary paid to such Covered Employee for calendar year 2000 and (ii) if such Covered Employee did not receive a cash bonus or received a prorated cash bonus during calendar year 2000, as a result of not having been employed by AWA and/or Holdings for a period in calendar year 2000 sufficient to be eligible for a full year bonus, including in his Maximum Compensation such Covered Employee's assumed target bonus as set forth on Exhibit A hereto. 1.6 "TOTAL COMPENSATION" shall mean the sum of Cash Compensation and Equity Compensation. 2. RESTRICTIONS ON COMPENSATION. AWA and Holdings hereby covenant that during the two (2) year period beginning September 11, 2001 and ending September 11, 2003, no Covered Employee will receive from AWA and/or Holdings (i) Total Compensation which exceeds, during any twelve (12) consecutive months of such two (2) year period, the Maximum Compensation for such Covered Employee, or (ii) severance pay or other benefits upon termination of employment with AWA and/or Holdings the value of which exceeds twice the Maximum Compensation for such Covered Employee. 3. REPRESENTATIONS. Each of AWA and Holdings jointly and severally represent and warrant to the ATSB that: 2. (i) the employees listed on Exhibit A hereto constitute all of AWA's and Holdings' Covered Employees, that Exhibit A hereto is true and complete, and that with respect to Covered Employees whose Maximum Compensation includes an assumed target bonus pursuant to Section 1.5(ii) of the Agreement, such assumed target bonus was determined in a manner consistent with the Compensation Committee's of the Board of Directors of AWA or Holdings, as the case may be, usual compensation practices; (ii) each of AWA and Holdings is duly organized, validly existing and in good standing under the laws of Delaware; (iii) the execution, delivery and performance by AWA and Holdings of this Agreement; (a) is within AWA's and Holdings' respective powers, and has been duly authorized by all necessary corporate action; (b) does not contravene the constituent documents of AWA or Holdings, or any law, rule, regulation or administrative or court order binding on or affecting AWA or Holdings or their respective property; and (c) does not conflict with, or constitute a breach of, or default under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of AWA or Holdings pursuant to any contract, employment agreement, indenture, mortgage, loan agreement, note or other instrument to which AWA or Holdings is a party or by which AWA or Holdings may be bound or to which AWA's or Holdings' assets may be subject; (iv) this Agreement constitutes a valid and binding obligation of AWA and Holdings, enforceable against each of them in accordance with its terms, except as the enforceability thereof may be subject to or limited by bankruptcy, insolvency, reorganization, arrangement, moratorium or other similar laws relating to or affecting the rights of creditors generally and general principles (whether applied in an action at law or a suit in equity); and (v) no authorization, approval, consent or order of any court or governmental authority or agency or any other person or entity is required in connection with the execution and delivery by AWA or Holdings of this Agreement or their performance hereunder. 4. MISCELLANEOUS. 4.1 GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the Federal Law of the United States of America if and to the extent such Federal Law is applicable, and otherwise in accordance with the law of the State of New York. 4.2 AMENDMENT AND WAIVER. This Agreement may not be amended, discharged or terminated without the written consent of the parties hereto, and no provision hereof may be waived without the written consent of the ATSB. 4.3 SUCCESSORS. This Agreement and the rights and obligations of the parties hereunder shall inure to the benefit of, and be binding upon, their respective successors, assigns and legal representatives. 4.4 NOTICES. Each of AWA and Holdings shall have the obligation to notify the ATSB promptly, but in no event later than ten (10) days, following the occurrence of any event which constitutes a breach of this Agreement. All notices required or permitted hereunder shall 3. be in writing and shall be deemed effectively given: (i) upon personal delivery to the party to be notified, (ii) when sent by confirmed electronic mail or facsimile if sent during normal business hours of the recipient; if not, then on the next business day, (iii) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (iv) one (1) day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent to the party to be notified at the address as set forth on the signature page hereof or at such other address as such party may designate by ten (10) days advance written notice to the other parties hereto. 4.5 SEVERABILITY. In the event one or more of the provisions of this Agreement should, for any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provisions of this Agreement, and this Agreement shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein. 4.6 COUNTERPARTS. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. [Intentionally Left Blank] 4. The foregoing AGREEMENT is hereby executed as of the date first above written. AMERICA WEST HOLDINGS CORPORATION By: /s/ Douglas Parker -------------------------------------------------- Name: W. Douglas Parker ------------------------------------------------ Title: President and Chief Executive Officer ----------------------------------------------- Address: 111 West Rio Salado Parkway Tempe, AZ 85281 AMERICA WEST AIRLINES, INC. By: /s/ Douglas Parker -------------------------------------------------- Name: W. Douglas Parker ------------------------------------------------ Title: President and Chief Executive Officer ----------------------------------------------- Address: 4000 East Sky Harbor Boulevard Phoenix, AZ 85034 ACCEPTED AND AGREED: AIR TRANSPORTATION STABILIZATION BOARD By: /s/ Joseph P. Adams, Jr. -------------------------------------------------- Name: Joseph P. Adams, Jr. ------------------------------------------------ Title: Executive Director ----------------------------------------------- Address: 1120 Vermont Avenue, Suite 970 Washington, D.C. 20005 With a copy to: Address: United States Department of the Treasury 1500 Pennsylvania Avenue, N.W. Washington, D.C. 20220 Attn: Deputy Assistant Secretary (Government Financial Policy) 5. EXHIBIT A 2000 EXECUTIVE COMPENSATION ABOVE $300,000 (NEW HIRES ANNUALIZED)

CASH COMPENSATION --------------------------- ------------------------------ TOTAL OPTIONS GRANT HIRE DATE NAME TITLE EARNINGS BONUS TOTAL CASH GRANTED GRANTED DATE - --------- ---- ----- -------- ----- ---------- ------- ------- --------- 12-Jun-95 PARKER, W.DOUGLAS EXECUTIVE VP CORPORATE GROUP $398,658 $233,295 $631,953 195,000 115,000 26-Jul-00 [...***...] [...***...] [...***...] [...***...] 6-Feb-95 JOHNSON, STEPHEN L. SR VP CHIEF ADMINISTRATIVE OFFICER $286,429 $145,222 $431,651 25,000 0 [...***...] [...***...] [...***...] [...***...] 15-Sep-99 MCCLELLAND,JEFFREY SR VP OPERATIONS $287,933 $41,517 $329,450 22,000 0 [...***...] [...***...] [...***...] [...***...] [...***...] [...***...] [...***...] [...***...] [...***...]

LONG TERM INCENTIVES -------------------------------------------------------------------------------- BS OPTIONS GRANT BS TOTAL RESTRICTED TOTAL VALUE OF HIRE DATE NAME VALUE GRANTED DATE VALUE BS VALUE GRANTS LONG TERM PERQUISITES - --------- ---- ---------- ------- --------- -------- ---------- ---------- ---------- ----------- 12-Jun-95 PARKER, W.DOUGLAS $1,262,940 80,000 14-Dec-00 $581,758 $1,844,699 $331,250 $2,175,949 $13,566 [...***...] [...***...] [...***...] [...***...] 6-Feb-95 JOHNSON, STEPHEN L. $0 25,000 14-Dec-00 $181,799 $181,799 $0 $181,799 $15,722 [...***...] [...***...] [...***...] [...***...] 15-Sep-99 MCCLELLAND,JEFFREY $0 22,000 14-Dec-00 $159,984 $159,984 $0 $159,984 $15,862 [...***...] [...***...] [...***...] [...***...] [...***...] [...***...] [...***...] [...***...] [...***...]

TOTAL HIRE DATE NAME COMPENSATION - --------- ---- ------------ 12-Jun-95 PARKER, W.DOUGLAS $2,821,468 [...***...] [...***...] [...***...] [...***...] 6-Feb-95 JOHNSON, STEPHEN L. $629,172 [...***...] [...***...] [...***...] [...***...] 15-Sep-99 MCCLELLAND,JEFFREY $505,296 [...***...] [...***...] [...***...] [...***...] [...***...] [...***...] [...***...] [...***...] [...***...]

*** Confidential Treatment Requested EX-10.51 11 p66064ex10-51.txt EX-10.51 Exhibit 10.51 ***Text Omitted and Filed Separately Confidential Treatment Requested Under 17 C.F.R. Sections 200.80(b)(4), 200.83 and 240.24b-2 EXECUTION $429,000,000 LOAN AGREEMENT DATED AS OF JANUARY 18, 2002 AMONG AMERICA WEST AIRLINES, INC. AS BORROWER, CITIBANK, N.A., AS INITIAL LENDER, KPMG CONSULTING, INC., AS LOAN ADMINISTRATOR, CITIBANK, N.A., AS AGENT, AND AIR TRANSPORTATION STABILIZATION BOARD TABLE OF CONTENTS

Page ---- ARTICLE I DEFINITIONS, INTERPRETATION AND ACCOUNTING TERMS ............... 1 Section 1.1. Defined Terms ....................................... 1 Section 1.2. Computation of Time Periods ......................... 19 Section 1.3. Accounting Terms and Principles ..................... 19 Section 1.4. Certain Terms ....................................... 20 ARTICLE II THE LOAN ...................................................... 20 Section 2.1. The Loan ............................................ 20 Section 2.2. Borrowing Procedures ................................ 21 Section 2.3. Scheduled Repayment of the Loan ..................... 21 Section 2.4. Evidence of Debt; Use of Proceeds ................... 22 Section 2.5. Optional Prepayments ................................ 23 Section 2.6. Mandatory Prepayments ............................... 24 Section 2.7. Interest ............................................ 26 Section 2.8. Fees ................................................ 26 Section 2.9. Payments and Computations ........................... 28 Section 2.10. Certain Provisions Governing the Note ............... 30 Section 2.11. Capital Adequacy .................................... 32 Section 2.12. Taxes ............................................... 33 ARTICLE III CONDITIONS TO LOAN ........................................... 36 Section 3.1. Conditions Precedent to the Loan .................... 36 ARTICLE IV REPRESENTATIONS AND WARRANTIES ................................ 40 Section 4.1. Organization, Powers, Qualification, Good Standing, Business, Subsidiaries, the Act and the Regulations . 40 Section 4.2. Authorization of Borrowing, Etc ..................... 41 Section 4.3. Financial Condition ................................. 42 Section 4.4. No Material Adverse Change; No Restricted Payments .. 42 Section 4.5. Title To Properties; Liens .......................... 43 Section 4.6. Litigation; Adverse Facts ........................... 43 Section 4.7. Payment of Taxes .................................... 43 Section 4.8. Performance of Agreements; Materially Adverse Agreements .......................................... 44 Section 4.9. Governmental Regulation ............................. 44 Section 4.10. Securities Activities ............................... 44 Section 4.11. Employee Benefit Plans .............................. 44 Section 4.12. Environmental Protection ............................ 46 Section 4.13. Solvency ............................................ 46 Section 4.14. Disclosure .......................................... 46 Section 4.15. Compliance With Laws ................................ 47 Section 4.16. Concession Agreements ............................... 47 Section 4.17. Indebtedness ........................................ 47

(i) TABLE OF CONTENTS (CONTINUED) ARTICLE V COVENANTS ...................................................... 47 Section 5.1. Financial Statements and Other Reports .............. 48 Section 5.2. Corporate Existence ................................. 53 Section 5.3. Payment of Taxes and Claims; Tax Consolidation ...... 53 Section 5.4. Maintenance of Properties; Insurance ................ 53 Section 5.5. Inspection .......................................... 54 Section 5.6. Compliance With Laws, Etc ........................... 54 Section 5.7. Borrower's Remedial Action Regarding Hazardous Materials ........................................... 54 Section 5.8. Further Assurances .................................. 55 Section 5.9. Employee Benefit Plans .............................. 55 Section 5.10. FAA Matters; Citizenship ............................ 55 Section 5.11. Board Guarantee ..................................... 55 Section 5.12. Lower-Tier Covered Transaction ...................... 56 Section 5.13. Audits and Reviews .................................. 56 Section 5.14. Substitution of Collateral .......................... 56 ARTICLE VI NEGATIVE COVENANTS ............................................ 56 Section 6.1. Liens and Related Matters ........................... 57 Section 6.2. Investments ......................................... 57 Section 6.3. Restricted Payments ................................. 58 Section 6.4. Financial Covenant .................................. 58 Section 6.5. Restriction on Fundamental Changes; Asset Sales and Acquisitions; New Subsidiaries .................. 58 Section 6.6. Sales and Lease-Backs ............................... 60 Section 6.7. Transactions with Affiliates ........................ 60 Section 6.8. Conduct of Business ................................. 61 Section 6.9. Merger or Consolidation ............................. 61 Section 6.10. Limitation on Asset Sales ........................... 62 Section 6.11. Limitation on Issuances and Dispositions of Capital Stock of Subsidiaries ............................... 62 Section 6.12. Limitation on Creation of New Subsidiaries .......... 63 Section 6.13. Limitations on Amendments ........................... 63 Section 6.14. No Further Negative Pledges ......................... 64 Section 6.15. Incentive Equity Plan ............................... 64 ARTICLE VII EVENTS OF DEFAULT ............................................ 64 Section 7.1. Events of Default ................................... 64 Section 7.2. Remedies ............................................ 66 ARTICLE VIII THE LOAN ADMINISTRATOR ...................................... 67 Section 8.1. Acceptance of Appointment and Services .............. 67 Section 8.2. Loan Administrator's Reliance ....................... 70 Section 8.3. Indemnification ..................................... 71 (ii) TABLE OF CONTENTS (CONTINUED) Section 8.4. Successor Loan Administrator ........................ 71 Section 8.5. Conflict of Interest ................................ 72 Section 8.6. Representations, Warranties and Covenants of the Loan Administrator .................................. 73 ARTICLE IX THE AGENT ..................................................... 74 Section 9.1. Authorization and Action ............................ 74 Section 9.2. Agent's Reliance, Etc ............................... 74 Section 9.3. Agent and Affiliates ................................ 75 Section 9.4. Representations of the Lenders and of the Board ..... 75 Section 9.5. Events of Default; Termination of Board Guarantee ... 76 Section 9.6. Agent's Right to Indemnity .......................... 76 Section 9.7. Indemnification of Agent ............................ 76 Section 9.8. Successor Agent ..................................... 77 ARTICLE X MISCELLANEOUS ................................................. 77 Section 10.1. Amendments, Waivers, Etc ............................ 77 Section 10.2. Assignments and Participations ...................... 79 Section 10.3. Costs and Expenses .................................. 81 Section 10.4. Indemnities ......................................... 81 Section 10.5. Right of Set-off .................................... 82 Section 10.6. Sharing of Payments, Etc. ........................... 82 Section 10.7. Notices, Etc. ....................................... 83 Section 10.8. No Waiver; Remedies ................................. 83 Section 10.9. Independence of Covenants ........................... 83 Section 10.10. Governing Law ....................................... 84 Section 10.11. Submission to Jurisdiction; Service of Process ...... 84 Section 10.12. Waiver of Jury Trial ................................ 84 Section 10.13. Marshaling; Payments Set Aside ...................... 84 Section 10.14. Section Titles ...................................... 85 Section 10.15. Execution in Counterparts ........................... 85 Section 10.16. Third Party Beneficiary ............................. 85 Section 10.17. Severability ........................................ 85 Section 10.18. Confidentiality ..................................... 85 Annexes Annex A - Notice Addresses Annex B - Lending Office Annex C - Guarantee Rate Schedule Schedules (iii) TABLE OF CONTENTS (CONTINUED) Schedule 2.3(b) Adjusted Unit Employee Costs Schedule 2.8 Loan Administrator Fee Rate Schedule Schedule 4.1 Subsidiaries Schedule 4.7 Tax Agreements Schedule 4.17 Indebtedness Schedule 6.1 Liens and Payment Restrictions Schedule 6.7(b) Transactions with Affiliates Exhibits Exhibit A - Form of Assignment and Acceptance Exhibit B - Form of Note Exhibit C - Form of Notice of Borrowing Exhibit D - Form of Board Guarantee Exhibit E - Form of Warrant (iv) LOAN AGREEMENT, dated as of January 18, 2002, among AMERICA WEST AIRLINES, INC., a Delaware corporation (the "Borrower"); CITIBANK, N.A., (together with its successors, the "Initial Lender"); KPMG CONSULTING, INC., in its capacity as loan administrator hereunder (together with its successors and permitted assigns, the "Loan Administrator"); CITIBANK, N.A., as agent for the Lenders (in such capacity, together with its successors and permitted assigns, the "Agent"); and AIR TRANSPORTATION STABILIZATION BOARD, created pursuant to Section 102 of the Act referred to below (the "Board"). W I T N E S S E T H: WHEREAS, the Borrower has requested that the Initial Lender make available to the Borrower a Loan for such general corporate purposes as are permissible under the Air Transportation Safety and System Stabilization Act, P.L. 107-42, as the same may be amended from time to time (the "Act") and the regulations for Air Carrier Guarantee Loan Program issued pursuant to the Act, 14 C.F.R. Part 1300, as the same may be amended from time to time (the "Regulations"); and WHEREAS, the Initial Lender is willing to make available to the Borrower the Loan upon the terms and subject to the conditions set forth herein; NOW, THEREFORE, in consideration of the premises and the covenants and agreements contained herein, the parties hereto hereby agree as follows: ARTICLE I DEFINITIONS, INTERPRETATION AND ACCOUNTING TERMS SECTION 1.1. DEFINED TERMS. As used in this Agreement, the following terms have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined): "Act" has the meaning specified in the first recital to this Agreement. "Adjusted Unit Employee Costs" has the meaning specified in Schedule 2.3(b). "Affiliate" means, with respect to any Person, any other Person which, directly or indirectly, controls, is controlled by or is under common control with such Person. For the purposes of this definition, "control" means the possession, directly or indirectly, of the power to direct or cause the direction of management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise. "Agent" has the meaning specified in the preamble to this Agreement. "Agreement" means this Loan Agreement. "Airbus Counter-Guarantor " means AFS Cayman Limited, a company incorporated under the laws of the Cayman Islands. "Aircraft Related Equipment" has the meaning specified in the definition of "Asset Sale". "Alliance Agreements" means those certain business alliance agreements among the Borrower and any of Chautauqua Airlines, Inc., Continental Airlines, Inc. or Mesa Airlines, Inc. and such other parties or agreements from time to time that include, but are not limited to, code-sharing, frequent flyer, ground handling and marketing agreements that are entered into in the ordinary course of business. "Applicable Interest Rate" means a rate per annum equal to LIBOR plus 0.40% per annum. "Application" means the Amended and Restated Application of the Borrower to the Board for the issuance of a federal credit instrument under the Act and the Regulations dated the Closing Date. "Approved Fund" means, as of any date of determination and with respect to any Lender that is a fund engaged in the ordinary course of its business in commercial lending (including making loans which are not guaranteed by the Board), any other fund that is then engaged in the ordinary course of its business in commercial lending (including making loans which are not guaranteed by the Board) and is advised or managed by the same investment advisor as such Lender or by an Affiliate of such investment advisor. "ASM" means the "available seat miles" of the Borrower. "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 Borrower or any of its Subsidiaries to any Person other than the Borrower or any of its Subsidiaries of (i) all or any of the Capital Stock of any Subsidiary of the Borrower, (ii) all or substantially all of the property and assets of an operating unit or business of the Borrower or any of its Subsidiaries or (iii) any other property and assets of the Borrower or any of its Subsidiaries outside the ordinary course of business of the Borrower or such Subsidiary; provided that none of (A) sales or other dispositions of inventory, receivables and other current assets, or (B) sale leasebacks of aircraft (including aircraft engines installed thereon) in the Borrower's fleet, spare aircraft engines, aircraft parts, simulators and passenger loading bridges or other flight or ground equipment ("Aircraft Related Equipment") in connection with the acquisition of such Aircraft Related Equipment by the Borrower and entered into within eighteen months after such acquisition shall be included within the meaning of "Asset Sale." "Assignment and Acceptance" means an assignment and acceptance entered into by a Lender and an Eligible Lender, consented to by the Board and accepted 2 by the Agent (unless consummated pursuant to Section 10.2(d)), in substantially the form of Exhibit A. "Bankruptcy Code" means Title 11 of the United States Code as now and hereafter in effect, or any successor statute. "Board" has the meaning specified in the preamble to this Agreement. "Board Guarantee" means the Guarantee Agreement dated as of the date hereof and executed by the Board, the Initial Lender and the Agent, in substantially the form of Exhibit D. "Borrower" has the meaning specified in the preamble to this Agreement. "Borrowing" means the borrowing of the Loan. "Business Day" means a day of the year on which banks are not required or authorized to close in New York, New York or Phoenix, Arizona and, if the applicable Business Day relates to notices, determinations, fundings and payments in connection with LIBOR, a day on which dealings in Dollar deposits are also carried on in the London interbank market. "Business Plan" means the business plan of the Borrower submitted to the Board with its December 19, 2001 restated Application. "Capital Lease," as applied to any Person, means any lease of any property (whether real, personal or mixed) by that Person as lessee that, in conformity with GAAP, is required to be accounted for as a capital lease on the balance sheet of that Person, and the amount of Indebtedness represented by such lease shall be the capitalized amount of the obligations evidenced thereby determined in accordance with GAAP. "Capital Stock" means, with respect to any Person, any and all shares, interests, participations or other equivalents (however designated, whether voting or non-voting) of such Person's capital stock, whether now outstanding or issued after the date of this Agreement, including, without limitation, all Common Stock. "Cash" means money, currency or a credit balance. "Cash Equivalents" means, as at any date of determination, (i) marketable securities (a) issued or directly and unconditionally guaranteed as to interest and principal by the United States Government or (b) issued by any agency or instrumentality of the United States the obligations of which are backed by the full faith and credit of the United States, in each case maturing within one year after such date; (ii) marketable direct obligations issued by any state of the United States of America or any political subdivision of any such state or any instrumentality thereof, in each case maturing within one year after such date and having, at the time of the acquisition thereof, the highest rating obtainable from either S&P or Moody's; (iii) commercial paper not issued by the Borrower maturing no more than one year after such date and having, at the time of the 3 acquisition thereof, a rating of at least A-2 from S&P or at least P-2 from Moody's; (iv) certificates of deposit or bankers' acceptances maturing within one year after such date and issued or accepted by any Lender or by any commercial bank organized under the laws of the United States of America or any state thereof or the District of Columbia that (a) is at least "adequately capitalized" (as defined in the regulations of its primary Federal banking regulator) and (b) has Tier 1 capital (as defined in such regulations) of not less than $100,000,000; and (v) shares of any money market mutual fund that (a) has at least 95% of its assets invested continuously in the types of investments referred to in clauses (i) and (ii) above, (b) has net assets of not less than $500,000,000, and (c) has the highest rating obtainable from either S&P or Moody's. "Cash Proceeds" means, with respect to any Asset Sale, the proceeds of such Asset Sale in the form of Cash and Cash Equivalents, including payments of deferred payment obligations (to the extent corresponding to the principal, but not the interest component thereof) when received in the form of Cash or Cash Equivalents and proceeds from the conversion of other property received when converted to Cash or Cash Equivalents. "Change in Control" means (i) the acquisition at any time by any Person (other than TPG, L.P. or any of its Affiliates or Holdings) or two or more Persons acting in concert of "beneficial ownership" (within the meaning of Section 13(d) under the Exchange Act and the rules and regulations promulgated thereunder) in excess of 35% of the total voting power of the Voting Stock of the Borrower or Holdings; (ii) the sale, lease, transfer or other disposition, of all or substantially all of the assets of the Borrower or Holdings to any Person or two or more Persons acting in concert as an entirety or substantially as an entirety in one transaction or a series of related transactions; (iii) the merger or consolidation of the Borrower or Holdings, with or into another corporation, or the merger of another corporation into the Borrower or Holdings, or any other transaction, with the effect that a Person (other than TPG, L.P. or any of its Affiliates or Holdings) or two or more Persons acting in concert has "beneficial ownership" (within the meaning of Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder) in excess of 35% of the Voting Stock of the Borrower or Holdings, or (if the Borrower or Holdings is not the surviving corporation in such transaction) such other corporation (including, in any such case, indirect ownership through another Person); (iv) the liquidation or dissolution of the Borrower or Holdings; or (v) if a majority of the board of directors of such Person shall no longer be composed of individuals (a) who were members of said board on the date hereof, (b) whose election or nomination to said board was approved by individuals referred to in clause (a) above constituting at the time of such election or nomination at least a majority of said board or (c) whose election or nomination to said board was approved by individuals referred to in clauses (a) and (b) above constituting at the time of such election or nomination at least a majority of said board. For purposes of this definition, the term Person includes a "person" or "group" within the meaning of Rule 13d-3 under the Exchange Act. "Closing Date" means the date on which the Loan is made. "Commitment" has the meaning specified in Section 2.1. 4 "Commodity Agreement" means any agreement or arrangement designed to protect the Borrower or any of its Subsidiaries against fluctuations in the prices of commodities used by the Borrower or any of its Subsidiaries in the ordinary course of its business. "Common Stock" means, with respect to any Person, any and all shares, interests, participations or other equivalents (however designated, whether voting or non-voting) of such Person's common stock, whether now outstanding or issued after the date of this Agreement, including, without limitation, all series and classes of such common stock. "Compliance Certificate" means a certificate by the Borrower signed by a Responsible Officer on behalf of the Borrower and delivered in accordance with Section 5.1(iii) hereof. "Concessions" has the meaning specified in Section 3.1(c)(ii). "Contractual Obligation," as applied to any Person, means any provision of any equity security issued by that Person or of any material indenture, mortgage, deed of trust, contract, undertaking, agreement or other material instrument to which that Person is a party or by which it or any of its properties is bound or to which it or any of its properties is subject. "Counter-Guarantee" means, as the context may require, any or all of the Counter-Guarantee Agreements, each dated as of the date hereof and executed by the applicable Counter-Guarantor, the Initial Lender and the Agent, each substantially in form and substance satisfactory to the Agent and the Initial Lender. "Counter-Guarantee Fee" means, with respect to each date set forth in Annex C, the counter-guarantee fee payable to each Counter-Guarantor on such date in an amount equal to the product of (x) the Guarantee Rate for such date and (y) the average outstanding amount of the portion of the Loan covered by such Counter-Guarantor's Counter-Guarantee scheduled to be outstanding for the then succeeding twelve month period as determined by the Agent as of the date of payment of such fee and after giving effect to any payment of principal of the Loan made on such date or any prior prepayment of the Loan (and commencing with the anniversary date beginning the twelve-month period in which amortization of the principal of the Loan is first scheduled to begin, computed on the basis of a year of 360 days and actual number of days elapsed). "Counter-Guarantee Taxes" has the meaning specified in Section 2.12(b). "Counter-Guarantor" means, as the context may require, any or all of the Airbus Counter-Guarantor, the GECC Counter-Guarantor and the debis Counter-Guarantor. "Counter-Guarantor Letter of Credit" means, with respect to any applicable Counter-Guarantee, an irrevocable standby letter of credit issued by a "Letter 5 of Credit Bank" (as defined in such Counter-Guarantee), in favor of the Agent, in the form required under such Counter-Guarantee. "Currency Agreement" means any foreign exchange contract, currency swap agreement, futures contract, option contract, synthetic cap or other similar agreement or arrangement designed to protect the Borrower or any of its Subsidiaries against fluctuations in currency values. "debis Counter-Guarantor" means debis AirFinance Leasing USA I, Inc., a corporation organized under the laws of the state of Connecticut, and any Affiliate assignee thereof permitted under the relevant Counter-Guarantee. "Default" means any event which with the passing of time or the giving of notice or both would become an Event of Default. "Disclosed Defaults" means the events described in a letter dated the date hereof from the Borrower to the Agent, the Initial Lender, each Counter-Guarantor, the Loan Administrator and the Board. "Dollars" and the sign "$" each mean the lawful money of the United States of America. "Eligible Affiliate" means with respect to any Lender, an Affiliate of such Lender which is an Eligible Lender. "Eligible Lender" means any "lender" under and as defined in the Act and the Regulations. "Employee Compensation Agreement" has the meaning specified in Section 3.1(c)(i). "Environmental Claim" means any material investigation, notice, claim, suit, proceeding, demand or order, by any governmental authority or any Person arising in connection with any alleged or actual material violation of Environmental Laws or with any Hazardous Material, or any actual or alleged damage, or harm to health, safety or the environment. "Environmental Laws" means any and all current or future statutes, ordinances, orders, rules, regulations, guidance documents, judgments, governmental authorizations, or any other requirement of governmental authorities relating to (a) the prevention or control of pollution or protection of the environment, (b) solid, gaseous or liquid waste generation, handling, treatment, storage, disposal, discharge, release, emission or transportation, or (c) exposure to Hazardous Materials. "Environmental Laws" shall include, but not be limited to, the Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. 9601 et seq.), the Resource Conservation and Recovery Act (42 U.S.C. 6901 et seq.), the National Environmental Policy Act (42 U.S.C. 4321 et seq.), the Hazardous Materials Transportation Act (49 U.S.C. 1801 et seq.), the Toxic Substances Control Act (49 U.S.C. 2601 et seq.), the Clean Air Act (42 6 U.S.C. 7401 et seq.), the Federal Water Pollution Control Act (33 U.S.C. 1251 et seq.), the Safe Drinking Water Act (42 U.S.C. 3007 et seq.), the Emergency Planning and Community Right-to-Know Act (42 U.S.C. 11001 et seq.), the Occupational Safety and Health Act (29 U.S.C. 641 et seq.), and the State of Arizona Environmental Quality Act (A.R.S. 49-101 et seq.). "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time, and any successor statute. "ERISA Affiliate" means, as applied to the Borrower, (i) any corporation which is, or was at any time, a member of a controlled group of corporations within the meaning of Section 414(b) of the Internal Revenue Code of which the Borrower is a member; (ii) any trade or business (whether or not incorporated) which is a member of a group of trades or businesses under common control within the meaning of Section 414(c) of the Internal Revenue Code of which the Borrower is a member; and (iii) any member of an affiliated service group within the meaning of Section 414(m) or (o) of the Internal Revenue Code of which the Borrower, any corporation described in clause (i) above or any trade or business described in clause (ii) above is a member. "Event of Default" has the meaning specified in Section 7.1. "Excess Proceeds" has the meaning specified in Section 6.10. "Exchange Act" means the Securities Exchange Act of 1934, as amended from time to time, and any successor statute. "Facilities" means any and all real property now, hereafter or heretofore owned, leased, operated or used by the Borrower or any of its Subsidiaries and any of their respective predecessors. "Federal Reserve Board" means the Board of Governors of the Federal Reserve System, or any successor thereto. "Fiscal Year" means the Borrower's fiscal year referenced in the financial statements to be delivered by the Borrower pursuant to Section 5.1. "Future Issuance" means each (i) borrowing by Holdings or the Borrower or any of its respective Subsidiaries from any source, including in the debt capital markets or from commercial bank lenders after the date of this Agreement and (ii) issuance of any Capital Stock by Holdings, the Borrower or any of its Subsidiaries after the date of this Agreement. "GAAP" means, subject to the limitations on the application thereof set forth in Section 1.3, generally accepted accounting principles set forth in opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as may be approved by a significant segment of the accounting profession. Financial statements and 7 other information required to be delivered by the Borrower to the Lenders pursuant to Section 5.1 shall be prepared in accordance with GAAP as in effect at the time of such preparation. "GECC Counter-Guarantor " means General Electric Capital Corporation, a Delaware corporation and any Affiliate assignee thereof permitted under the relevant Counter-Guarantee. "Governmental Authority" means any nation or government, any state or other political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government. "Governmental Authorization" means any permit, license, certificate, authorization, plan, directive, consent order or consent decree of or from any Governmental Authority. "Guarantee" means any obligation, contingent or otherwise, of any Person directly or indirectly guaranteeing any Indebtedness or other obligation of any other Person and, without limiting the generality of the foregoing, any obligation, direct or indirect, contingent or otherwise, of such first Person (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation of such other Person (whether arising by virtue of partnership arrangements, or by agreement to keep-well, to purchase assets, goods, securities or services, to take-or-pay, or to maintain financial statement conditions or otherwise) or (ii) entered into for purposes of assuring in any other manner the obligee of such Indebtedness or other obligation of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part). The term "Guarantee" used as a verb has a corresponding meaning. "Guarantee Fee" means, with respect to each date set forth in Annex C, an amount equal to the product of (x) the Guarantee Rate set forth opposite such date in Annex C and (y) the average outstanding portion of the Guaranteed Percentage of the amount of the Loan scheduled to be outstanding for the then succeeding twelve month period as determined by the Agent as of the date of payment of such fee and after giving effect to any payment of the principal of the Loan made on such date or any prior prepayment of the Loan (and commencing with the anniversary date beginning the twelve-month period in which amortization of the principal of the Loan is first scheduled to begin, computed on the basis of a year of 360 days and actual number of days elapsed). "Guarantee Rate" means with respect to each date set forth in Annex C hereto, the percentage set forth opposite such date. "Guaranteed Percentage" means 88.473193473%, which is the percentage of the maximum principal amount of the Loan covered by the Board Guarantee. "Hazardous Materials" means any chemical or other material or substance, exposure to or Release of which is now or hereafter prohibited, limited or regulated under any law. 8 "Hazardous Materials Activity" means any past, current, proposed, or threatened use, storage, release, generation, treatment, remediation or transportation of any Hazardous Material (i) from, under, in, into or on the Facilities or surrounding property; and (ii) caused by, or undertaken by or on behalf of, the Borrower, any of its Subsidiaries or any of their respective predecessors. "Holdings" means America West Holdings Corporation, a Delaware corporation. "Indebtedness" means, with respect to any Person at any date of determination (without duplication), (i) all indebtedness of such Person for borrowed money; (ii) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments; (iii) all obligations of such Person in respect of letters of credit or other similar instruments (including reimbursement obligations with respect thereto); (iv) all obligations of such Person to pay the deferred and unpaid purchase price of property or services, which purchase price is due more than six months after the date of placing such property in service or taking delivery and title thereto or the completion of such services, except Trade Payables; (v) all Capital Lease obligations of such Person (the amount of the Indebtedness in respect of Capital Lease obligations to be determined as provided in the definition of Capital Lease in this Section 1.1); (vi) all Indebtedness of other Persons secured by a Lien on any asset of such Person, whether or not such Indebtedness is assumed by such Person; provided that the amount of such Indebtedness shall be the lesser of (A) the fair market value of such asset at such date of determination and (B) the stated principal amount of such Indebtedness; (vii) all Indebtedness of other Persons Guaranteed by such Person to the extent such Indebtedness is Guaranteed by such Person; and (viii) to the extent not otherwise included in this definition and to the extent treated as a liability under GAAP, obligations under Currency Agreements, Interest Rate Agreements and Commodity Agreements. The amount of Indebtedness of any Person at any date shall be the outstanding balance at such date of all unconditional obligations as described above and the maximum liability, upon the occurrence of the contingency giving rise to the obligation, of any contingent obligations at such date; provided that the amount outstanding at any time of any Indebtedness issued with original issue discount is the face amount of such Indebtedness less the remaining unamortized portion of the original issue discount of such Indebtedness at such time as determined in conformity with GAAP. "Indemnified Liabilities" has the meaning specified in Section 10.4. "Indemnified Taxes" has the meaning specified in Section 2.12(a). "Indemnitees" has the meaning specified in Section 10.4. "Initial Lender" has the meaning specified in the preamble to this Agreement. "Interest Payment Date" has the meaning specified in Section 2.7(b). 9 "Interest Period" means (a) initially, the period commencing on the Closing Date and ending on March 31, 2002, and (b) thereafter, a period commencing on the last day of the immediately preceding Interest Period therefor and ending three months thereafter; provided, however, that: (i) the Interest Period commencing in June, 2008 shall end on the Loan Maturity Date; (ii) if any Interest Period would otherwise end on a day which is not a Business Day, such Interest Period shall be extended to the next succeeding Business Day, unless the result of such extension would be to extend such Interest Period into another calendar month, in which event such Interest Period shall end on the immediately preceding Business Day; (iii) any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of a calendar month; and (iv) following a Default or an Event of Default, each "Interest Period" shall be for such duration of one month or less as shall be selected by the Agent by notice to the Borrower, each Lender and the Board on or prior to the start of such Interest Period (and in the absence of any such notice or selection, the applicable Interest Period shall be determined as provided above without regard to this clause (iv)). "Interest Rate Agreement" means any interest rate future agreement, interest rate option agreement, interest rate swap agreement, interest rate cap agreement, interest rate collar agreement, interest rate hedge agreement or other similar agreement or arrangement designed to protect the Borrower or any of its Subsidiaries against fluctuations in interest rates or under which the Borrower or any of its Subsidiaries is a party or a beneficiary on the date of this Agreement or becomes a party or a beneficiary thereafter. "Internal Revenue Code" means the Internal Revenue Code of 1986, as amended to the date hereof and from time to time hereafter. "Investment" means with respect to any Person, any direct or indirect advance, loan (other than advances to customers in the ordinary course of business consistent with past practices that are recorded as accounts receivable on the balance sheet of such Person or its Subsidiaries) or other extension of credit or capital contribution by such Person to any other Person by means of any transfer of cash or other property to others or any payment for property or services for the account or use of others or any purchase or acquisition by such person of Capital Stock, bonds, notes, debentures or other similar instruments issued by any other Person; provided, that advances or loans 10 by the Borrower to Holdings made in accordance with Section 6.3 shall not constitute an Investment. "IRS" means the Internal Revenue Service of the United States or any successor thereto. "Labor Cost Payment Amount" means, for any Fiscal Year, the product of (i) the positive difference between the actual salaries and benefits costs per ASM (computed based upon the Borrower's audited financial statements included in its Form 10-K for such Fiscal Year) and the Adjusted Unit Employee Cost for such Fiscal Year, multiplied by (ii) the actual ASMs flown in such Fiscal Year (as certified by the Chief Financial Officer of the Borrower to the Agent, the Lenders, each Counter-Guarantor and the Board). "Lease Indenture" means the Indenture dated as of the date hereof between Holdings and Wilmington Trust Company, as Trustee and not in its individual capacity, relating to the 7.5% Convertible Senior Notes due 2009. "Lender" means (a) (i) the Initial Lender, and (ii) each financial institution or other entity that from time to time becomes a party hereto by execution of an Assignment and Acceptance with any requisite consent required by Section 10.2 and/or (b) the Board to the extent it acquires any interest in the Loan as contemplated by Section 2.9(f) and the Board Guarantee. "Lending Office" means, with respect to any Lender, the office of such Lender specified as its "Lending Office" opposite its name on Annex B or on the Assignment and Acceptance by which it became a Lender or such other office of such Lender as such Lender may from time to time specify to the Borrower and the Agent. "LIBOR" means, with respect to any Interest Period, the offered rate in the London interbank market for deposits in United States dollars of amounts equal or comparable to the unpaid principal amount of the Loan offered for a term comparable to such Interest Period, as currently shown on the Bridge/Telerate page 3750 as of 11:00 a.m., London time, two Business Days prior to the first day of such Interest Period; provided, however, that (A) LIBOR for the initial Interest Period shall be 1.72375% per annum, (B) if more than one offered rate as described above appears on such Bridge/Telerate page, the rate used to determine LIBOR will be the arithmetic average (rounded upward, if necessary, to the next higher 1/100 of 1%) of such offered rates, or (C) if no such offered rates appear, the rate used for such Interest Period will be the arithmetic average (rounded upward, if necessary, to the next higher 1/100 of 1%) of rates quoted by the Reference Banks at approximately 10:00 a.m., New York time, two Business Days prior to the first day of such Interest Period for deposits in United States dollars offered to leading European banks for a period comparable to such Interest Period in an amount comparable to the unpaid principal amount of the Loan. If the Agent ceases generally to use such Bridge/Telerate page for determining interest rates based on eurodollar deposit rates, a comparable internationally recognized interest rate reporting service shall be used to determine such offered rates. 11 "Lien" means any lien, mortgage, pledge, assignment, security interest, charge, hypothecation, preference, priority, privilege, lease or encumbrance of any kind (including any conditional sale or other title retention agreement, any lease in the nature thereof, and any agreement to give any security interest). "Liquidity Certificate" has the meaning specified in Section 5.1(x). "Loan" has the meaning specified in Section 2.1. "Loan Administrator" has the meaning specified in the preamble to this Agreement. "Loan Documents" means, collectively, this Agreement, the Note, the Employee Compensation Agreement, the Warrants, the Registration Rights Agreements and each certificate, agreement or document executed by the Borrower and delivered to the Agent, the Lenders or the Board in connection with or pursuant to this Agreement. "Loan Maturity Date" means September 30, 2008, except that if such date is not a Business Day, then the Loan Maturity Date shall be the immediately preceding Business Day. "Margin Stock" has the meaning assigned to that term in Regulation T, U or X of the Board of Governors of the Federal Reserve System as in effect from time to time. "Net Cash Proceeds" means, with respect to any Asset Sale, the Cash Proceeds of such Asset Sale, net of (i) reasonable and customary brokerage commissions and other reasonable and customary fees and expenses (including reasonable fees and expenses of counsel and investment bankers) related to such Asset Sale, (ii) provisions for all taxes payable as a result of such Asset Sale without regard to the consolidated results of operations of the Borrower and its Subsidiaries, taken as a whole, (iii) payments made to repay Indebtedness or any other obligation outstanding at the time of such Asset Sale that (A) is secured by a Lien on the property or assets sold and (B) is required by its terms to be paid as a result of such Asset Sale, and (iv) appropriate amounts to be provided by the Borrower or any Subsidiary of the Borrower as a reserve against any liabilities associated with such Asset Sale, including, without limitation, pension and other post-employment benefit liabilities, liabilities related to environmental matters and liabilities under any indemnification obligations associated with such Asset Sale, all as determined in conformity with GAAP, but limited to the period of the required reserve. "Net Insurance Proceeds" means an amount equal to: (i) any Cash payments or proceeds received by Borrower or any of its Subsidiaries under any casualty insurance policy in respect of a covered loss thereunder with respect to tangible, real or personal property, minus (ii) (a) any actual and reasonable costs incurred by the Borrower or any of its Subsidiaries in connection with the adjustment or settlement of any claims of the Borrower or such Subsidiary in respect thereof, (b) any taxes payable in connection therewith, (c) the amount of any Indebtedness secured by a Lien on any property subject 12 to such covered loss and required to be discharged from the proceeds thereof and (d) any amounts required to be paid to any Person (other than the Borrower or any of its Subsidiaries) owning a beneficial interest in the property subject to such loss. "Non-Guaranteed Percentage" means 11.526806527%, which is the percentage of the maximum principal amount of the Loan not covered by the Board Guarantee. "Non-U.S. Person" means a Person that is not a United States person as defined in section 7701(a)(30) of the Internal Revenue Code. "Note" has the meaning specified in Section 2.4(d). "Notice of Borrowing" has the meaning specified in Section 2.2(a). "Obligations" means all payment and performance obligations of every nature of the Borrower from time to time owed to the Agent, the Lenders, the Loan Administrator, any Counter-Guarantor or the Board or any of their respective Affiliates, officers, directors, employees, agents and advisors in, under or in respect of this Agreement or the Note, whether for principal, interest, fees, expenses, indemnification or otherwise. "Obligor" has the meaning specified in the preamble to Article IV. "Officer's Certificate" means, as applied to any corporation, a certificate executed on behalf of such corporation by its chairman of the board (if an officer), president, one of its vice presidents, chief financial officer, controller, treasurer or assistant treasurer or an assistant secretary; provided that every Officer's Certificate shall include (i) a statement that the officer acting in such capacity making or giving such Officer's Certificate has read such condition and any definitions or other provisions contained in this Agreement relating thereto, (ii) a statement that, in the opinion of the signer, s/he has made or has caused to be made such examination or investigation as is necessary to enable her/him to express an informed opinion as to whether or not such condition has been complied with, and (iii) a statement as to whether, in the opinion of the signer, such condition has been complied with. "Operating Lease" means, as applied to any Person, any lease (including, without limitation, leases that may be terminated by the lessee at any time) of any property (whether real, personal or mixed) under which such Person is Lessee, that is not a Capital Lease. "Other Taxes" has the meaning specified in Section 2.12(c). "Participant" has the meaning specified in Section 10.2(e). "Payment Restriction" means, with respect to a Subsidiary of any Person, any encumbrance, restriction or limitation, whether by operation of the terms of its charter or by reason of any agreement or instrument, on the ability of (i) such Subsidiary 13 to (a) pay dividends or make other distributions on its Capital Stock or make payments on any obligation, liability or Indebtedness owed to such Person or any other Subsidiary of such Person, (b) make loans or advances to such Person or any other Subsidiary of such Person, or (c) transfer any of its property or assets to such Person or any other Subsidiary of such Person, or (ii) such Person or any other Subsidiary of such Person to receive or retain any such (a) dividend, distributions or payments, (b) loans or advances, or (c) property or assets. "Permitted Encumbrances" means the following types of Liens (other than any such Lien imposed pursuant to Section 401(a)(29) or 412(n) of the Internal Revenue Code or by ERISA) as applied to property: (i) Liens for taxes, assessments or governmental charges or claims the payment of which is either (a) not delinquent for a period of more than 30 days or (b) subject to a good faith contest as set forth in Section 5.3(a); (ii) statutory Liens of landlords and Liens of carriers, vendors, warehousemen, repairmen, mechanics and materialmen and other Liens imposed by law incurred in the ordinary course of business for sums either (a) not delinquent for a period of more than 30 days or (b) being contested in good faith by appropriate proceedings, if such reserve or other appropriate provision, if any, as shall required by GAAP shall have been made therefor; (iii) Liens incurred or deposits made in the ordinary course of business in connection with workers' compensation, unemployment insurance and other types of social security, or to secure the performance of tenders, statutory obligations, surety and appeal bonds, bids, leases, government contracts, trade contracts, performance and return-of-money bonds, reimbursement obligations and chargeback rights of Persons performing services for the Borrower or any of its Subsidiaries and other similar obligations (exclusive of obligations for the payment of borrowed money); (iv) easements, rights-of-way, restrictions, minor defects, encroachments or irregularities in title and other similar charges or encumbrances not interfering in any material respect with the ordinary conduct of the business of the Borrower or any of its Subsidiaries; (v) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods; (vi) Liens described in Schedule 6.1 annexed hereto; (vii) judgment and attachment Liens not giving rise to an Event of Default; (viii) Liens on the assets of any entity or on any asset existing at the time such entity or asset is acquired by the Borrower or any Subsidiary, whether by 14 merger, consolidation, purchase of assets or otherwise; provided that such Liens (i) are not created, incurred or assumed by such entity in contemplation of or in connection with the financing of such entity's being acquired by the Borrower or any Subsidiary; (ii) do not extend to any other assets of the Borrower or any Subsidiary; and (iii) the Indebtedness secured by such Lien is permitted pursuant to this Agreement; (ix) leases or subleases granted to others not interfering in any material respect with the business of the Borrower or any Subsidiary; (x) any interest or title of a lessor in property subject to any Capital Lease obligation or Operating Lease which, in each case, is not prohibited under this Agreement (disregarding for this purpose Section 6.1); (xi) Liens in favor of collecting or payor banks having a right of setoff, revocation, refund or chargeback with respect to money or instruments of the Borrower or any Subsidiary on deposit with or in possession of such bank; (xii) any renewal of or substitution for any Lien permitted by any of the preceding clauses; provided that the debt secured is not increased nor the Lien extended to any additional assets; and (xiii) Liens of creditors of any Person to whom any of the Borrower's assets are consigned for sale in the ordinary course of business. "Person" means an individual, partnership, corporation (including a business trust), joint stock company, estate, trust, limited liability company, unincorporated association, joint venture or other entity, or a Governmental Authority. "Plan" means any "employee benefit plan" as defined in section 3(3) of ERISA which is, or was at any time, maintained or contributed to by the Borrower or any of its ERISA Affiliates, other than a multiemployer plan, within the meaning of section 4001(a)(3) of ERISA. "Post-2002 Adjustment" means, for any Fiscal Year after 2002, an appropriate increase (as determined by the Borrower and the Board) in the Adjusted Unit Employee Costs to reflect any increase in employee costs which the Board, in its reasonable discretion, determines to be the result of unforeseen circumstances not wholly within the control of the Borrower or which otherwise should not result in prepayment of the Loan (including, without limitation, any change in applicable law affecting the manner in which the Borrower conducts it business, any material increase in the cost of employee benefits equivalent to those offered by the Borrower on January 1, 2002, inflation materially in excess of that assumed in the Business Plan, any increase in federal, state or local minimum wage laws affecting the Borrower, any increase in federal, state or local payroll tax affecting the Borrower, any change in accounting affecting accounting for wages, salaries, employee benefits or other form of employee 15 compensation and any material reduction in the amount of ASMs flown below those planned for such Fiscal Year). "Pro Forma Basis" means, with respect to compliance with any covenant hereunder, compliance with such covenant after giving effect to any proposed incurrence of Indebtedness by the Borrower or any of its Subsidiaries and the application of the proceeds thereof, the acquisition (whether by purchase, merger or otherwise) or disposition (whether by sale, merger or otherwise) of any company, entity or business or any asset by the Borrower or any of its Subsidiaries or any other related action which requires compliance on a Pro Forma Basis. In making any determination of compliance on a Pro Forma Basis, such determination shall be performed after good faith consultation with the Agent using the consolidated financial statements of the Borrower and its Subsidiaries which shall be reformulated as if any such incurrence of Indebtedness and the application of proceeds, acquisition, disposition or other related action had been consummated at the beginning of the period specified in the covenant with respect to which Pro Forma Basis compliance is required. "Redeemable Stock" means any class or series of Capital Stock of any Person that by its terms or otherwise (i) is required to be redeemed prior to the Loan Maturity Date, (ii) may be required to be redeemed at the option of the holder of such class or series of Capital Stock at any time prior to the Loan Maturity Date, or (iii) is convertible into or exchangeable for Capital Stock referred to in clause (i) or (ii) above or Indebtedness having a scheduled maturity prior to the Loan Maturity Date; provided that any Capital Stock that would not constitute Redeemable Stock but for provisions thereof offering holders thereof the right to require the Borrower to repurchase or redeem such Capital Stock upon the occurrence of an "asset sale" occurring prior to the Loan Maturity Date shall not constitute Redeemable Stock if the asset sale provisions contained in such Capital Stock specifically provide that in respect of any particular asset sale proceeds, the Borrower will not repurchase or redeem any such Capital Stock pursuant to such provisions prior to the Borrower's permanent reduction of the aggregate outstanding principal amount of the Loan by an amount at least equal to such asset sale proceeds (net of associated taxes and transaction costs). "Reference Banks" means Citibank, N.A., JPMorgan Chase Bank and Bank of America, N.A., and each of their respective successors. "Register" has the meaning specified in Section 2.4(e). "Registration Rights Agreements" means (i) the Registration Rights Agreement dated as of the date hereof and executed by Holdings and the Board, in form and substance satisfactory to the Board, and (ii) the Registration Rights Agreement dated as of the date hereof and executed by Holdings, the Initial Lender and the Counter-Guarantors, in form and substance satisfactory to the Initial Lender and the Counter-Guarantors. "Regulations" has the meaning specified in the first recital to this Agreement. 16 "Release" means any release, spill, emission, leaking, pumping, pouring, injection, escaping, deposit, disposal, discharge, dispersal, dumping, leaching or migration of Hazardous Materials into the indoor or outdoor environment (including, without limitation, the abandonment or disposal of any barrels, containers or other closed receptacles containing any Hazardous Materials), or into or out of any Facilities, including the movement of any Hazardous Material through the air, soil, surface water, groundwater or property. "Requisite Lenders" means, collectively, Lenders having not less than fifty-one percent (51%) of the principal amount of the Loan then outstanding or, prior to the making of the Loan, the Initial Lender. "Responsible Officer" means, with respect to any Person, any of the Chief Executive Officer, Executive Vice Presidents and Chief Financial Officer of such Person, but in any event, with respect to financial matters, the Chief Financial Officer, Treasurer or Controller of such Person. "Restricted Payment" means (i) any declaration or payment of dividends on or making of any distributions in respect of the Capital Stock of the Borrower (other than dividends or distributions payable solely in shares of Capital Stock (other than Redeemable Stock) or in options, warrants, or other rights to purchase Capital Stock (other than Redeemable Stock)) to holders of Capital Stock of the Borrower, (ii) any purchase, redemption or other acquisition or retirement for value (other than through the issuance solely of Capital Stock (other than Redeemable Stock) or options, warrants or other rights to purchase Capital Stock (other than Redeemable Stock)) of any Capital Stock or warrants, rights (other than exchangeable or convertible Indebtedness of the Borrower not prohibited under clause (iii) below) or options to acquire Capital Stock of the Borrower, (iii) any redemption, repurchase, defeasance (including, but not limited to, in substance or legal defeasance), or other acquisition or retirement for value (other than through the issuance solely of Capital Stock (other than Redeemable Stock) or warrants, rights or options to acquire Capital Stock (other than Redeemable Stock)) (collectively, a "prepayment"), directly or indirectly (including by way of amendment of the terms of any Indebtedness in connection with any retirement or acquisition of such Indebtedness) (other than at any scheduled maturity thereof or by any scheduled repayment or scheduled sinking fund payment) of any Indebtedness of the Borrower or any Subsidiary (other than (x) any mandatory prepayment with respect to a borrowing base deficiency under Section 2.4B(ii)(1) of the Term Loan Agreement, (y) repayment of the Loan or (z) repayment of Indebtedness relating to Aircraft Related Equipment with the proceeds from a sale-leaseback transaction of the type excepted from the definition of Asset Sales in this Agreement) and (iv) any advances, loans or other investments by the Borrower to or in Holdings. "Senior Notes" means the Borrower's 10-3/4% Senior Unsecured Notes Due September 1, 2005 issued pursuant to an Indenture, dated as of August 1995, between the Borrower and American Bank National Association, as trustee. 17 "Solvent" means, with respect to any Person, that as of the date of determination both (A) (i) the then fair saleable value of the property of such Person is (y) greater than the total amount of liabilities (including contingent liabilities) of such Person and (z) not less than the amount that will be required to pay the probable liabilities on such Person's then existing debts as they become absolute and matured considering all financing alternatives and potential asset sales reasonably available to such Person; (ii) such Person's capital is not unreasonably small in relation to its business or any contemplated or undertaken transaction; and (iii) such Person does not intend to incur, or believes that it will not incur, debts beyond its ability to pay such debts as they become due; and (B) such Person is "solvent" within the meaning given that term and similar terms under applicable laws relating to fraudulent transfers and conveyances. For purposes of this definition, the amount of any contingent liability at any time shall be computed as the amount that, in light of all of the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability. "Subsidiary" means, with respect to any Person, any corporation, partnership, association, limited liability company, trust or estate, joint venture or other business entity of which more than 50% of the issued and outstanding shares of Voting Stock at the time of determination are owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof. "Supplemental Facility Fee" means the supplemental facility fee payable to the Initial Lender on each of the dates specified in Annex C hereto in an amount equal to the product of (x) the rate equal to the applicable Guarantee Rate for such date and (y) the average outstanding portion of the Supplemental Facility Percentage of the amount of the Loan scheduled to be outstanding for the then succeeding twelve month period as determined by the Agent as of the date of payment of such fee and after giving effect to any payment of principal of the Loan made on such date or any prior prepayment of the Loan (and commencing with the anniversary date beginning the twelve-month period in which amortization of the principal of the Loan is first scheduled to begin, computed on the basis of a year of 360 days and actual number of days elapsed). "Supplemental Facility Percentage" means a fraction (expressed as a percentage) of which the numerator is $4,450,000 and the denominator is $429,000,000 (rounded to nine decimal places). "Taxes" means any and all present or future taxes, levies, fees, duties, imposts, deductions, charges or withholdings of any nature, and all interest, penalties and other liabilities thereon or computed by reference thereto imposed by any Governmental Authority. "Term Loan Agreement" means the Amended and Restated Term Loan Agreement, dated as of January 18, 2002, among the Borrower, the lenders party thereto, and Industrial Bank of Japan, Limited, as arranger and agent, as such agreement may be amended, restated, supplemented or otherwise modified from time to time. 18 "Title 49" shall mean Title 49 of the United States Code, as amended and in effect from time to time, and the regulations promulgated pursuant thereto. "Trade Payables" means, with respect to any Person, any accounts payable or any other indebtedness or monetary obligation to trade creditors created, assumed or Guaranteed by such Person or any of its Subsidiaries and arising in the ordinary course of business in connection with the acquisition of goods or services but limited to current liabilities in accordance with GAAP. "United States Citizen" has the meaning specified in Section 4.1(b). "Voting Stock" means any class or classes of Capital Stock pursuant to which the holders thereof have the general voting power under ordinary circumstances to vote for the election of directors, managers or trustees of any Person (or Persons performing similar functions) irrespective of whether or not at the time stock of any such class or classes will have or might have such voting power by the reason of the happening of any contingency. "Warrants" means collectively (i) the Warrant to purchase up to 18,750,000 shares of Holdings' Class B Common Stock issued by Holdings to the Board, (ii) the Warrant to purchase up to 938,000 shares of Holdings' Class B Common Stock issued by Holdings to the Airbus Counter-Guarantor, (iii) the Warrant to purchase up to 1,484,000 shares of Holdings' Class B Common Stock issued by Holdings to the GECC Counter-Guarantor, (iv) the Warrant to purchase up to 1,141,000 shares of Holdings' Class B Common Stock issued by Holdings to the debis Counter-Guarantor, and (v) the Warrant to purchase up to 220,000 shares of Holdings' Class B Common Stock issued by Holdings to the Initial Lender, in each case substantially in the form of Exhibit E. "Wholly-Owned" denotes a Subsidiary all of the Voting Stock of which (other than any director's qualifying shares or Investments by foreign nationals mandated by applicable law) is owned directly or indirectly by the Borrower. SECTION 1.2. COMPUTATION OF TIME PERIODS. In this Agreement, in the computation of periods of time from a specified date to a later specified date, the word "from" means "from and including" and the words "to" and "until" each mean "to but excluding" and the word "through" means "to and including." SECTION 1.3. ACCOUNTING TERMS AND PRINCIPLES. (a) All accounting terms not specifically defined herein shall be construed in conformity with GAAP and all accounting determinations required to be made pursuant hereto shall, unless expressly otherwise provided herein, be made in conformity with GAAP. (b) If any change in accounting principles used in the preparation of the most recent financial statements referred to in Section 5.1 is hereafter required or 19 permitted by the rules, regulations, pronouncements and opinions of the Financial Accounting Standards Board or the American Institute of Certified Public Accountants (or any successor thereto) and such change is adopted by the Borrower with the agreement of its independent public accountants and results in a change in any of the calculations required by Article VI had such accounting change not occurred, the parties hereto agree to enter into negotiations in order to amend such provisions so as to equitably reflect such change with the desired result that the criteria for evaluating compliance with such covenants by the Borrower shall be the same after such change as if such change had not been made; provided, however, that no change in GAAP that would affect a calculation that measures compliance with any covenant contained in Article VI shall be given effect until such provisions are amended to reflect such changes in GAAP. SECTION 1.4. CERTAIN TERMS. (a) The words "herein," "hereof" and "hereunder" and similar words refer to this Agreement as a whole, and not to any particular Article, Section, subsection or clause in, this Agreement. (b) References in this Agreement to an Exhibit, Schedule, Article, Section, subsection or clause refer to the appropriate Exhibit or Schedule to, or Article, Section, subsection or clause in this Agreement. (c) Each agreement defined in this Article I shall include all appendices, exhibits and schedules thereto. If the prior written consent of any Person is required hereunder for an amendment, restatement, supplement or other modification to any such agreement and the consent of each such Person is obtained, references in this Agreement to such agreement shall be to such agreement as so amended, restated, supplemented or modified. (d) References in this Agreement to any statute shall be to such statute as amended or modified and in effect at the time any such reference is operative. (e) The term "including" when used in any Loan Document means "including without limitation" except when used in the computation of time periods. ARTICLE II THE LOAN SECTION 2.1. THE LOAN. On the terms and subject to the conditions contained in this Agreement and in reliance upon the representations and warranties of the Borrower set forth herein, the Initial Lender agrees to make on or before January 18, 2002 a single term loan (the "Loan") to the Borrower in a single Borrowing not to exceed 20 the principal amount of $429,000,000. Any amount of the Loan repaid or prepaid may not be reborrowed. The obligation of the Initial Lender to participate in the making of the Loan up to the amount specified above on the terms and conditions hereof is hereinafter called its "Commitment". SECTION 2.2. BORROWING PROCEDURES. (a) The Borrowing shall be made on notice given by the Borrower to the Agent not later than 11:00 a.m. (New York City time) on the Closing Date. Each such notice shall be in substantially the form of Exhibit C (a "Notice of Borrowing"), specifying (A) the Closing Date and (B) the aggregate amount of the proposed Borrowing. The Notice of Borrowing shall be irrevocable, and duly executed and delivered on behalf of the Borrower by its Chief Financial Officer or President/Chief Executive Officer. (b) The Agent shall give to the Initial Lender, each Counter-Guarantor, the Board and the Loan Administrator prompt notice of the Agent's receipt of a Notice of Borrowing and the Applicable Interest Rate with respect thereto. The Initial Lender shall, before 11:00 a.m. (New York City time) on the date of the proposed Borrowing, make available to the Agent at Citibank, N.A., ABA #021000089, Account No. 3041-9849, Account Name: Project Finance, Ref: America West Airlines, in immediately available funds, an amount equal to its Commitment. After the Agent's receipt of such funds and upon fulfillment or waiver of the applicable conditions set forth in Section 3.1 (as confirmed in writing to the Agent by the Board, the Initial Lender and each Counter-Guarantor), the Agent will make such funds available to the Borrower. SECTION 2.3. SCHEDULED REPAYMENT OF THE LOAN. (a) The Borrower shall repay the Loan on the dates and in the amounts set forth below (calculated for each date by obtaining the product of the applicable percentage for such date set forth below and the original principal amount of the Loan):

Interest Payment Date falling on or about: Percentage of Original Principal Amount - ------------------------------------------ --------------------------------------- March 31, 2004 10.0 September 30, 2004 10.0 March 31, 2005 10.0 September 30, 2005 10.0 March 31, 2006 10.0 September 30, 2006 10.0 March 31, 2007 10.0 September 30, 2007 10.0 March 31, 2008 10.0 Loan Maturity Date 10.0

21 Notwithstanding anything herein to the contrary, the Borrower shall repay the entire unpaid principal amount of the Loan together with accrued and unpaid interest thereon and all other amounts owing hereunder in respect thereof on the Loan Maturity Date. (b) On or before April 30 of each year the Borrower shall repay the Loan in an amount equal to the Labor Cost Payment Amount, if any, for the immediately preceding Fiscal Year, together with accrued interest with respect thereto to the date of payment. Promptly upon the filing of the Borrower's Form 10-K for each Fiscal Year (but in no event later than 15 days thereafter), the Borrower, after consultation with the Board, shall provide to the Agent, the Lenders, the Counter-Guarantors, the Loan Administrator and the Board a certificate signed by the Chief Financial Officer of the Borrower certifying the amount of the Labor Cost Payment Amount and demonstrating in reasonable detail the calculations to determine the Labor Cost Payment Amount for such Fiscal Year. Any such payment of the Loan shall be applied to the then remaining installments of the outstanding principal balance of the Loan in the inverse order of maturity thereof. If any such payment is made on a date other than an Interest Payment Date, the Borrower shall also pay any amounts owing pursuant to Section 2.10(e). Any such payment shall be paid to the Agent for application as provided in Section 2.9. SECTION 2.4. EVIDENCE OF DEBT; USE OF PROCEEDS. (a) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing such Lender's portion of the Loan outstanding from time to time, including the amounts of principal and interest payable and paid to such Lender from time to time under this Agreement. (b) The Agent shall establish and maintain a register for recording with respect to the Loan (i) the date and amount of each payment on the Loan made by or on behalf of, or collected from, the Borrower, (ii) the amount of each such payment applied in accordance with each clause of Section 2.9(d) and (e) or other applicable terms hereof to scheduled principal of or interest on the Loan and to each of the fees identified in clauses (d) through (h) of Section 2.8 hereof, and (iii) the date and amount of each payment made by the Board under the Board Guarantee. (c) The entries made in the accounts maintained pursuant to clauses (a) and (b) of this Section 2.4 shall, to the extent permitted by applicable law, be prima facie evidence of the existence and amounts of the obligations recorded therein; provided, however, that the failure of any Lender or the Agent to maintain such accounts or any error therein shall not in any manner affect the obligations of the Borrower to repay the Loan in accordance with its terms. (d) The Borrower shall execute and deliver to the Agent on the Closing Date a single promissory note substantially in the form of Exhibit B in the principal amount of the Loan, dated the Closing Date and otherwise appropriately completed (such note, including any replacement note therefor issued in accordance with 22 the provisions of this Section 2.4(d), the "Note"). The Note shall be made payable to the Agent at the office of the Agent. If the Note is mutilated, lost, stolen or destroyed, the Borrower shall issue a new Note in the same principal amount and having the same interest rate, date and maturity as the Note so mutilated, lost, stolen or destroyed endorsed to indicate all payments thereon. In the case of any lost, stolen or destroyed Note, there shall first be furnished to the Borrower and the Board an instrument of indemnity from the Agent and evidence of such loss, theft or destruction reasonably satisfactory to each of them, together with an officer's certificate of the Borrower certifying and warranting as to the due authorization, execution and delivery of the new Note. (e) This Agreement and the Note are registered instruments. A manually signed copy of this Agreement and the original of the Note shall be evidence of (i) the rights of each Lender under this Agreement and the Note and (ii) the rights of the Agent under this Agreement. Neither this Agreement nor the Note is a bearer instrument. The Agent will establish and maintain a record of ownership (the "Register") in which the Agent agrees to register by book entry the Agent's and each Lender's interest in the Loan, the Note and this Agreement, and in the right to receive any payments hereunder or thereunder and any assignment of any such interest or rights. In connection with any assignment pursuant to Section 10.2, the Agent shall maintain a copy of each Assignment and Acceptance delivered to and accepted by it and shall record the names and addresses of the Lenders and principal amount of the Loan owing to each Lender from time to time. The entries in the Register shall be conclusive and binding for all purposes, absent manifest error, and the Borrower, the Board, the Agent and the Lenders may treat each Person whose name is recorded in the Register as a Lender for all purposes of this Agreement. The Register shall be available for inspection by the Borrower, the Agent, the Board or any Lender at any reasonable time and from time to time upon reasonable prior notice. (f) The Borrower shall apply the proceeds from the Loan as necessary to cure all Disclosed Defaults (and promptly following the Closing Date, shall confirm in writing such use to the Board), and thereafter may use the balance of such proceeds for such general corporate purposes as are permissible under the Act and Regulations but not for the prepayment or refinancing of any Indebtedness of the Borrower for borrowed money nor for the acquisition of the stock, or of all or any substantial part of the assets, of any Person. No portion of the proceeds from the Borrowing shall be used by the Borrower or any of its Subsidiaries in any manner that might cause the borrowing or the application of such proceeds to violate Regulation U, Regulation T or Regulation X of the Board of Governors of the Federal Reserve System or any other regulation of such Board of Governors or to violate Section 7(c) of the Exchange Act, in each case as in effect on the date or dates of such borrowing and such use of proceeds. SECTION 2.5. OPTIONAL PREPAYMENTS. 23 (a) The Borrower may, upon at least fifteen days' prior revocable notice to the Board, the Counter-Guarantors, the Loan Administrator and the Agent stating the proposed date and aggregate principal amount of the prepayment, elect to prepay the outstanding principal amount of the Loan, in whole or in part (but not less than a minimum amount of $2,500,000), together with accrued interest to the date of such prepayment on the principal amount prepaid; provided, however, that if any prepayment of all or a portion of the Loan is made by the Borrower other than on an Interest Payment Date or if the Borrower revokes such notice at any time within such fifteen days, the Borrower shall also pay any amounts owing pursuant to Section 2.10(e). The Borrower shall establish to the satisfaction of the Board and the Agent three Business Days in advance of any prepayment of the Loan its ability to pay the amount to be prepaid. (b) Upon the giving of any notice of prepayment under clause (a) of this Section 2.5, the principal amount of the Loan specified to be prepaid together with accrued and unpaid interest thereon shall become due and payable on the date specified for such prepayment; provided, however, that any failure to make any such prepayment in full on such date shall be deemed to be an automatic revocation of the notice of prepayment given under Section 2.5(a) and such failure shall not constitute a Default or an Event of Default hereunder; provided, further, however, that the Borrower shall be obligated to pay on such date any amounts owing under Section 2.10(e) due to such failure to prepay. (c) Any partial prepayment of the Loan under this Section 2.5 shall be applied to the then remaining installments of the outstanding principal amount of the Loan in the inverse order of maturity thereof. Any such prepayment shall be paid to the Agent for application as provided in Section 2.9. The Borrower shall have no right to optionally prepay the principal amount of the Loan other than as provided in this Section 2.5, Section 2.10(b) or Section 2.10(d). SECTION 2.6. MANDATORY PREPAYMENTS. (a) The Borrower shall give the Agent, the Lenders, the Loan Administrator and the Board not less than five Business Days' prior written notice of any anticipated Future Issuance and upon receipt by the Borrower of the proceeds of such Future Issuance, the Borrower shall prepay the Loan in the manner provided below in an amount equal to the amount of such proceeds net of any reasonable and customary brokers' and advisors' fees, any underwriting discounts and commissions and other costs incurred in connection with such transaction (provided that evidence of such fees, discounts, commissions and costs is provided to the Board and the Agent); provided, that, the Borrower shall not be obligated to so prepay the Loan if and to the extent that (i) the Borrower is prohibited from so prepaying the Loan under the terms of the Senior Notes and the Borrower applies such proceeds to repay the Senior Notes, (ii) the Borrower applies such proceeds from an issue or incurrence of Indebtedness to finance Aircraft Related Equipment in a transaction of the type excepted from the definition of Asset Sales in this Agreement, (iii) such Future Issuance involves only the exercise of options 24 or similar rights issued as compensation by existing or former officers, directors or employees of the Borrower, Holdings or any of their Subsidiaries or (iv) the Borrower applies such proceeds to purchase Aircraft Related Equipment. Any partial prepayments of the Loan made by the Borrower in accordance with this Section 2.6(a) shall be applied to the then remaining installments of the outstanding principal balance of the Loan in the inverse order of maturity thereof. If any such prepayment is made by the Borrower other than on an Interest Payment Date, the Borrower shall also pay any amounts owing pursuant to Section 2.10(e). Any such prepayment of the Loan shall be made on the date of the Borrower's receipt of the proceeds of the applicable Future Issuance, and shall be paid to the Agent for application as provided in Section 2.9. (b) Asset Sales. No later than three Business Days following the date on which any Excess Proceeds are not applied as set forth in Section 6.10, the Borrower shall prepay the Loan in an aggregate amount equal to such non-applied Excess Proceeds. Any partial prepayments of the Loan made by the Borrower in accordance with this Section 2.6(b) shall be applied to the then remaining installments of the outstanding principal balance of the Loan in the inverse order of maturity thereof. If any such prepayment is made by the Borrower other than on an Interest Payment Date, the Borrower shall also pay any amounts owing pursuant to Section 2.10(e). Any such prepayment of the Loan shall be paid to the Agent for application as provided in Section 2.9. (c) Insurance/Condemnation Proceeds. No later than three Business Days following the date of receipt by the Borrower or any of its Subsidiaries of any Net Insurance Proceeds, or if applicable, the end of the six-month period described in clause (ii) below, the Borrower shall prepay the Loan in an amount equal to the amount by which the aggregate amount of such Net Insurance Proceeds in any Fiscal Year exceeds $2,000,000; provided, (i) if and to the extent that the application of such Net Insurance Proceeds to the Loan are not permitted under the terms of the Senior Notes and are not used as in clause (ii) below, the Borrower shall apply such Net Insurance Proceeds to prepay the Senior Notes, and (ii) the Borrower shall not be obligated to so prepay the Loan if and to the extent that the Borrower certifies to the Board that it intends to repair, restore or replace the assets from which such Net Insurance Proceeds derived, and does so (or enters into a definitive agreement committing to do so) within 6 months of receipt thereof. Any partial prepayments of the Loan made by the Borrower in accordance with this Section 2.6(c) shall be applied to the then remaining installments of the outstanding principal balance of the Loan in the inverse order of maturity thereof. If any such prepayment is made by the Borrower other than on an Interest Payment Date, the Borrower shall also pay any amounts owing pursuant to Section 2.10(e). Any such prepayment of the Loan shall be paid to the Agent for application as provided in Section 2.9. (d) Change in Control. Upon the occurrence of a Change in Control with respect to either Holdings or the Borrower, the Borrower shall promptly give the Agent, the Lenders, the Loan Administrator and the Board written notice thereof, and the 25 Board shall have the right, by written notice to the Borrower (with a copy to the Agent and each Lender) delivered not more than 30 days following delivery of the notice of the Change in Control, to require the Borrower to prepay the Loan in full, together with accrued interest thereon to the date of such prepayment, on the date specified in such notice (which date shall be a Business Day not less than ten nor more than twenty Business Days' after the date of such notice), and upon the specified payment date, the Borrower shall so prepay the then outstanding principal amount of the Loan together with such accrued interest thereon. If any such prepayment is made on any date other than an Interest Payment Date, the Borrower shall also pay any amounts owing pursuant to Section 2.10(e). Any such prepayment shall be paid to the Agent for application as provided in Section 2.9. SECTION 2.7. INTEREST. (a) Rate of Interest. Except as otherwise provided in Section 2.7(c) and Section 2.10, the Loan shall bear interest on the unpaid principal amount thereof from the Closing Date until paid in full at the Applicable Interest Rate. (b) Interest Payments. Interest accrued on the Loan and the Note shall be payable in arrears on the last day of each Interest Period (an "Interest Payment Date"), upon the payment or prepayment thereof in whole or in part, and, if not previously paid in full, at maturity (whether by acceleration or otherwise). Interest on the Loan shall be calculated on the basis of a year of 360 days and actual number of days elapsed. (c) Default Interest. Notwithstanding the rate of interest specified in Section 2.7(a) or elsewhere herein, if any principal of or interest on the Loan or any fee or other amount payable by the Borrower hereunder is not paid when due, whether at stated maturity, upon acceleration, by mandatory prepayment or otherwise (but other than any voluntary prepayment), such overdue amount shall bear interest at a rate which is two percent per annum in excess of the Applicable Interest Rate as in effect from time to time. SECTION 2.8. FEES. (a) SSB Structuring Fee. The Borrower agrees to pay to the Agent for the account of Salomon Smith Barney Inc. on the Closing Date the structuring fee set forth in the December 26, 2001 version of the term sheet included in the Application. (b) Counter-Guarantor Closing Fee. The Borrower agrees to pay to the Agent for the account of each of (i) the Airbus Counter-Guarantor a closing fee of $[...***...], (ii) the GECC Counter-Guarantor a closing fee of $[...***...], and (iii) the debis Counter-Guarantor a closing fee of $[...***...], in each case, on the Closing Date. ***Confidential Treatment Requested 26 (c) Facility Fee. The Borrower agrees to pay to the Agent for the account of the Initial Lender on the Closing Date a facility fee in an amount equal to $[...***...]. (d) Agency Fee. The Borrower agrees to pay to the Agent on the Closing Date and annually thereafter an agency fee in an amount equal to $[...***...] per annum for so long as the Loan shall remain outstanding. (e) Loan Administrator Fee. (i) Basic Fee. Subject to subsection (ii) below, the Borrower agrees to pay to the Loan Administrator on the Closing Date and annually thereafter on each anniversary of the Closing Date a Loan Administrator fee in an amount equal to $[...***...] per annum for so long as the Loan shall remain outstanding. (ii) Annual Adjustment. On each anniversary of the Closing Date, the Loan Administrator shall provide the Borrower with a statement indicating (A) the total number of hours actually worked during the preceding year, (B) the hourly rates charged for such services in accordance with the rate schedule attached as Schedule 2.8 (increased annually on each anniversary of the Closing Date by not more than [...***...]%), and (C) the total value of the services rendered, determined by multiplying (A) times (B) (the "Actual Costs"). If the sum of (x) the Actual Costs for the preceding year and (y) the fee charged by the sub-servicer referred to in Section 8.1(b)(iv) for the preceding year (such sum referred to as "Total Costs") is less than $[...***...], the fee to be paid to the Loan Administrator on the next anniversary of the Closing Date in accordance with clause (i) of this subsection (e) shall be reduced by the difference. If the Total Costs for the preceding year is greater than $[...***...], the fee to be paid to the Loan Administrator on the next anniversary of the Closing Date shall be increased by the difference. (iii) Fee for Additional Services. In the event that a Requesting Party requests that the Loan Administrator provide any of the services described in Sections 8.1(b)(ix) and (x), the Loan Administrator's fee for each of such services shall be equal to the product of (A) the total number of hours actually worked performing such service, as set forth in a statement to be delivered by the Loan Administrator to the party at whose expense such service was performed, and (B) the agreed upon hourly rate charged for such services in accordance with the rate schedule attached as Schedule 2.8 (increased annually on each anniversary of the Closing Date by not more than [...***...]%). For the avoidance of doubt, the parties acknowledge and agree that the fees set forth in this Section 2.8(e)(iii) shall not be taken into account for purposes of determining the Total Costs of services provided by the Loan Administrator in any year. (f) Guarantee Fees. The Borrower agrees to pay to the Agent for the account of the Board on the Closing Date and annually thereafter for so long as the Board Guarantee shall remain in effect the Guarantee Fee set forth in Section 2.06 of the Board Guarantee. ***Confidential Treatment Requested 27 (g) Counter-Guarantee Fees. The Borrower agrees to pay the Counter-Guarantee Fees to the Agent for the account of each Counter-Guarantor on the Closing Date and annually thereafter for so long as the Loan and such Counter-Guarantor's Counter-Guarantee shall remain in effect. (h) Supplemental Facility Fees. The Borrower agrees to pay to the Agent for the account of the Initial Lender the Supplemental Facility Fees on the Closing Date and annually thereafter for so long as the Loan shall remain outstanding. (i) Liquidity Fee. The Borrower agrees that if (i) at any time after the Closing Date the Regulations are amended, modified or supplemented such that the Board's consent shall be necessary in order for a Lender to sell a participation in the Loan to any Person the sale of a participation to which would not require the Board's consent if the Regulations were then as in effect on the Closing Date and (ii) the Initial Lender seeks the Board's consent to sell such a participation and such consent is not granted, then the Initial Lender shall so notify the Borrower and the Agent and the Borrower shall thereafter pay to the Agent for the account of the Initial Lender a liquidity fee equal to [...***...]% per annum of the product of the principal amount of the Loan outstanding from time to time held by the Initial Lender and the Guaranteed Percentage, such liquidity fee to accrue from the date of such notice from the Initial Lender and to be payable on each Interest Payment Date. (j) Distribution of Fees. On the Closing Date, and upon its receipt thereof, the Agent shall distribute to the Person entitled thereto each of the fees referred to in Section 2.8 payable on such date. Thereafter, the Agent will distribute any and all fees payable under this Section 2.8 in accordance with Section 2.9(d) or (e) hereof, as applicable. (k) All fees payable under this Section 2.8 shall be non-refundable. SECTION 2.9. PAYMENTS AND COMPUTATIONS. (a) The Borrower shall make each payment hereunder (including fees and expenses) not later than 12:00 noon (New York City time) on the day when due, in Dollars, to the Agent at Citibank, N.A., ABA #021000089, Account No. 3041-9849, Account Name: Project Finance, Ref: America West Airlines in immediately available funds without set-off or counterclaim. All payments in respect of any Obligations shall at all times be made to the Agent, whether or not a demand shall have been made or paid under the Board Guarantee. The Agent will promptly cause all such payments received by it to be distributed to the Person entitled thereto in accordance with the priorities of payment set forth below in clause (d) or (e) of this Section 2.9 or both, as applicable. Payments received by the Agent after 12:00 noon (New York City time) shall be deemed to be received on the next Business Day. ***Confidential Treatment Requested 28 (b) Each determination by the Agent of an interest rate hereunder shall be conclusive and binding for all purposes, absent manifest error. (c) Whenever any payment hereunder shall be stated to be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of payment of interest or fees, as the case may be. (d) So long as no Event of Default under any of Sections 7.1(a) (including any failure to pay all amounts hereunder upon acceleration as a result of any other Event of Default), (f) and (g) has occurred and is continuing or would result therefrom, the Agent shall apply all payments in respect of any Obligations in the following order: (i) first, to pay any fees then due and payable under Section 2.8(d) and (e) hereof to the Agent and the Loan Administrator, as the case may be, on a pro rata basis; (ii) second, to pay interest then due and payable in respect of the Loan to the Lenders, on a pro rata basis (it being understood that following the Board's honoring of a demand for payment in accordance with the Board Guarantee, the Guaranteed Percentage thereof shall be distributed to the Board and the Non-Guaranteed Percentage thereof shall be distributed to the Lenders, on a pro rata basis); (iii) third, to pay principal then due and payable on the Loan to the Lenders, on a pro rata basis (it being understood that following the Board's honoring of a demand for payment in accordance with the Board Guarantee, the Guaranteed Percentage thereof shall be distributed to the Board and the Non-Guaranteed Percentage thereof shall be distributed to the Lenders, on a pro rata basis); (iv) fourth, to pay any fees then due and payable under Section 2.8(f), (g), (h) and (i) hereof to the Board, the Counter-Guarantors and the Initial Lender, as the case may be, on a pro rata basis; and (v) fifth, to pay any other Obligations then due and payable to the Agent, the Loan Administrator, the Board, the Counter-Guarantors and the Lenders, on a pro rata basis. Notwithstanding the foregoing, to the extent that any amounts received by the Agent constitutes interest accrued on any overdue principal of or interest on the Loan in excess of the interest that would have accrued thereon at the Applicable Rate, the Guaranteed Percentage of so much of such amount, if any, as exceeds the interest that would have so 29 accrued at the Applicable Rate shall be distributed to the Board under clause (ii) above and the balance shall be distributed to the Lenders under clause (ii) above. (e) After the occurrence and during the continuance of an Event of Default under any of Sections 7.1(a) (including any failure to pay all amounts hereunder upon acceleration as a result of any other Event of Default), (f) and (g), the Agent shall apply all payments in respect of any Obligations in the following order: (i) first, to pay Obligations in respect of any expenses, fees (other than any fees payable under clause (v) below), indemnities or other sums owing hereunder not referred to in clauses (ii) through (iv) below then due to the Agent and the Loan Administrator, on a pro rata basis; (ii) second, to pay Obligations in respect of any expenses, fees (other than any fees payable under clause (v) below), indemnities or other sums owing hereunder not referred to in clauses (iii) and (iv) below then due to the Board, the Lenders and the Counter-Guarantors, on a pro rata basis; (iii) third, to pay interest then due and payable in respect of the Loan to the Lenders, on a pro rata basis (it being understood that following the Board's honoring of a demand for payment in accordance with the Board Guarantee, the Guaranteed Percentage thereof shall be distributed to the Board and the Non-Guaranteed Percentage thereof shall be distributed to the Lenders, on a pro rata basis); (iv) fourth, to pay or prepay principal payments on the Loan to the Lenders, on a pro rata basis (it being understood that following the Board's honoring of a demand for payment in accordance with the Board Guarantee, the Guaranteed Percentage thereof shall be distributed to the Board and the Non-Guaranteed Percentage thereof shall be distributed to the Lenders, on a pro rata basis); and (v) fifth, to pay any fees payable under Section 2.8(f), (g), (h) and (i) hereof to the Board, the Counter-Guarantors and the Initial Lender, as the case may be, on a pro rata basis. Notwithstanding the foregoing, to the extent that any amounts received by the Agent constitutes interest accrued on any overdue principal of or interest on the Loan in excess of the interest that would have accrued thereon at the Applicable Rate, the Guaranteed Percentage of so much of such amount, if any, as exceeds the interest that would have so accrued at the Applicable Rate shall be distributed to the Board under clause (iii) above and the balance shall be distributed to the Lenders under clause (iii) above. 30 (f) Upon the assignment to the Board of any Lender's right, title and interest in and to its pro rata portion of the Guaranteed Percentage of the principal of and interest on the Loan in accordance with the Board Guarantee, the Board shall have the rights and privileges of a Lender with respect to such payment (to the extent of the interests in the Loan so assigned to the Board). Any statute or judicial decision to the contrary notwithstanding, no payment by the Board or any Counter-Guarantor to the Agent or any Lender under the Board Guarantee or any Counter-Guarantee, as the case may be, shall reduce, discharge, satisfy, modify or terminate the corresponding payment or any other obligation of Borrower under this Agreement or the Note, which shall remain in full force and effect. SECTION 2.10. CERTAIN PROVISIONS GOVERNING THE NOTE. (a) Determination of Interest Rate. LIBOR for each Interest Period for the Loan shall be determined by the Agent pursuant to the procedures set forth in the definition of "LIBOR", and shall promptly thereafter be notified to the Borrower and each Lender together with the Applicable Interest Rate for such Interest Period. (b) Interest Rate Unascertainable, Inadequate or Unfair. In the event that: (i) the Agent determines that adequate and fair means do not exist for ascertaining the applicable interest rates by reference to which the LIBOR then being determined is to be fixed; or (ii) the Requisite Lenders notify the Agent that the LIBOR for any Interest Period will not adequately reflect the cost to the relevant Lenders of making or maintaining the Loan for such Interest Period, the Agent shall forthwith so notify the Borrower, the Board and the Lenders, whereupon during the 30 days following the date of any such notice given to the Borrower, the Agent, the Board and the Borrower shall negotiate in good faith in order to arrive at a mutually acceptable alternative basis for determining the interest rate from time to time applicable to the Loan (the "Substitute Basis"). If within the 20 days following the date of any such notice to the Borrower, the Agent and the Borrower shall agree upon a Substitute Basis, such Substitute Basis shall be retroactive to and effective from the first day of the then current Interest Period until and including the last day of such Interest Period. If after 20 days from the date of such notice, the Agent and the Borrower shall have failed to agree upon a Substitute Basis, then the Agent (upon instructions from the Requisite Lenders) shall certify in writing to the Borrower (such certification to be conclusive and binding on all of the parties hereto absent manifest error) the interest rate at which such Lenders are prepared to maintain their portion of the Loan for such Interest Period, it being understood that such Lenders' interest rate shall be at a rate per annum equal to a rate which adequately and fairly reflects the cost to such Lenders of obtaining the funds necessary to maintain their portion of the Loan for such Interest Period. If no Substitute Basis is established, upon receipt of notice of the interest rates at which the Requisite Lenders are prepared to maintain their respective portion of the Loan, the Borrower shall have the right exercisable upon ten Business Days' prior notice to the Lenders and the Board through the Agent (i) to continue to borrow the Loan at the interest rate so advised by the Agent (as such rate may be modified, from time to time, at the outset of each subsequent Interest Period) or (ii) to prepay in full the Loan together with accrued but unpaid interest thereon 31 at the interest rate certified in writing by the Requisite Lenders as provided above and all other amounts due under the Loan Documents, whereupon the Loan shall become due and payable on the date specified by the Borrower in such notice. (c) Increased Costs. If at any time any Lender or Counter-Guarantor shall determine that the introduction of or any change after the date hereof in or in the interpretation of any law, treaty or governmental rule, regulation or order or the compliance by such Lender or Counter-Guarantor, with any guideline, request or directive after the date hereof from any central bank or other Governmental Authority (whether or not having the force of law), there shall be any increase in the cost to such Lender or Counter-Guarantor of agreeing to make or making, funding, guaranteeing or maintaining any portion of the Loan or its Counter-Guarantee (except in respect of Taxes based on the overall net income of such Lender or Counter-Guarantor), then the Borrower shall from time to time, upon demand (which demand shall be accompanied by a statement setting forth the basis for such demand and a calculation of the amount thereof in reasonable detail) by such Lender or Counter-Guarantor, as the case may be (with a copy of such demand to the Agent), pay to the Agent for the account of such Lender or Counter-Guarantor, as the case may be, additional amounts sufficient to compensate such Lender or Counter-Guarantor, as the case may be, for such increased cost. A certificate as to the amount of such increased cost, submitted to the Borrower and the Agent by such Lender or Counter-Guarantor, as the case may be, shall be conclusive and binding for all purposes, absent manifest error. (d) Illegality. Notwithstanding any other provision of this Agreement, if any Lender determines that the introduction of or any change in or in the interpretation of any law, treaty or governmental rule, regulation or order after the date of this Agreement shall make it unlawful, or any central bank or other Governmental Authority shall assert that it is unlawful, for such Lender to continue to fund or maintain its portion of the Loan, then, on notice thereof by such Lender to the Borrower through the Agent, the obligation of such Lender to continue to fund or maintain its portion of the Loan shall be terminated and the Borrower shall prepay such affected portion of the Loan to such Lender together with accrued but unpaid interest thereon and all other sums payable hereunder with respect thereto on the last day of the then current Interest Period or earlier if necessary to avoid such illegality. Any such partial prepayment of the Loan shall be applied ratably to the then unpaid installments thereof in accordance with the amount of each such unpaid installment. (e) Breakage Costs. In addition to all amounts required to be paid by the Borrower pursuant to Section 2.7, the Borrower shall compensate each Lender or each Counter-Guarantor, upon demand, for all losses, expenses and liabilities (including any loss or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by such Lender or Counter-Guarantor or the termination of any other financial arrangement it may have entered into to fund or maintain or support such Lender's portion of the Loan or its Counter-Guarantee, but excluding Taxes based on the overall net income of such Lender or Counter-Guarantor) which that Lender or Counter- 32 Guarantor, as the case may be, may sustain (i) if for any reason the proposed Borrowing does not occur on a date specified therefor in the Notice of Borrowing given by a Borrower, (ii) if for any reason any portion of the Loan is prepaid (including mandatorily pursuant to Section 2.6 or this Section 2.10) or payment made with respect to a Counter-Guarantee on a date which is not the last day of the applicable Interest Period, or (iii) as a consequence of any failure by a Borrower to repay any portion of the Loan or make payment with respect to a Counter-Guarantee when required by the terms hereof or by such Counter-Guarantee. The Lender or Counter-Guarantor making demand for such compensation shall deliver to the Borrower (with a copy to the Agent) concurrently with such demand a written statement as to such losses, expenses and liabilities, and this statement shall be conclusive as to the amount of compensation due to that Lender or Counter-Guarantor, as the case may be, absent manifest error, and such compensation shall be paid to the Agent for the account of such Lender or Counter-Guarantor, as the case may be. SECTION 2.11. CAPITAL ADEQUACY. If at any time any Lender or Counter-Guarantor determines that (a) the adoption of or any change in or in the interpretation of any law, treaty or governmental rule, regulation or order after the date of this Agreement regarding capital adequacy, (b) compliance with any such law, treaty, rule, regulation, or order, or (c) compliance with any guideline or request or directive from any central bank or other Governmental Authority (whether or not having the force of law) shall have the effect of reducing the rate of return on such Lender's or Counter-Guarantor's (or any corporation controlling such Lender's or Counter-Guarantor's) capital as a consequence of its obligations hereunder (other than as a result of changes in Taxes based on the overall net income of such Lender or Counter-Guarantor) to a level below that which such Lender or Counter-Guarantor, as the case may be, or such corporation could have achieved but for such adoption, change, compliance or interpretation, then, upon demand from time to time by such Lender or Counter-Guarantor, as the case may be (with a copy of such demand to the Agent), the Borrower shall pay to the Agent for the account of such Lender or Counter-Guarantor, as the case may be, from time to time as specified by such Lender or Counter-Guarantor, as the case may be, additional amounts sufficient to compensate such Lender for such reduction. A certificate as to such amounts submitted to the Borrower and the Agent by such Lender or Counter-Guarantor, as the case may be, shall be conclusive and binding for all purposes absent manifest error. SECTION 2.12. TAXES. (a) Except as otherwise provided in Section 10.2, any and all payments by the Borrower under each Loan Document shall be made free and clear of and without deduction for any and all Taxes, excluding (i) in the case of each Lender, the Loan Administrator, each Counter-Guarantor, each Participant and the Agent taxes measured by its net income, and franchise taxes imposed on it, by the jurisdiction under the laws of which such Lender, the Loan Administrator, such Counter-Guarantor, such Participant or the Agent (as the case may be) is organized, (ii) in the case of each Lender and each Participant, taxes measured by its net income, and franchise taxes imposed on it, 33 by the jurisdiction in which such Lender's Lending Office is located or in which such Participant booked its participation for tax accounting purposes, (iii) in the case of each Counter-Guarantor, net income and franchise taxes imposed by the jurisdiction to which the Borrower is directed to make payments to the Counter-Guarantor pursuant to the Loan Documents, (iv) in the case of each Lender, the Loan Administrator, each Participant, each Counter-Guarantor and the Agent, Taxes imposed as a result of such Person failing to comply with its obligations under Section 2.12(g) or 2.12(h) and (v) in the case of each Lender, the Loan Administrator, each Participant, each Counter-Guarantor and the Agent that is a party hereto, Counter-Guarantor or Participant, as the case may be, on the Closing Date, United States federal withholding taxes unless imposed as a result of a change in applicable law, including income tax conventions, after the Closing Date (all such non-excluded Taxes being hereinafter referred to as "Indemnified Taxes"). If any Indemnified Taxes shall be required by law to be deducted from or in respect of any sum payable under any Loan Document to any Lender, the Loan Administrator, any Counter-Guarantor or the Agent (i) the sum payable shall be increased as may be necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 2.12) such Lender, the Loan Administrator, such Counter-Guarantor or the Agent (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrower shall make such deductions, and (iii) the Borrower shall pay the full amount deducted to the relevant taxing authority or other authority in accordance with applicable law. (b) If any Taxes (other than Taxes imposed as a result of the failure of the Counter-Guarantor to comply with its obligations under Section 2.12(g)) shall be required by law to be deducted from or in respect of any sum payable under any Counter-Guarantee to any Counter-Guarantor ("Counter-Guarantee Taxes"), (i) the Agent shall make such deductions and shall so notify the Borrower (such notice shall be accompanied by a statement setting forth the basis for such deductions and a calculation of the amount thereof in reasonable detail), (ii) the Agent shall pay the full amount deducted to the relevant taxing authority or other authority in accordance with applicable law, and (iii) the Borrower shall pay to such Counter-Guarantor such amounts as may be necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 2.12) such Counter-Guarantor receives an amount equal to the sum it would have received had no such deductions been made. Further, if any Taxes are required by law to be deducted from or in respect to any sum payable under any Counter-Guarantee by any Counter-Guarantor to the Agent, any Lender or any Participant and such Counter-Guarantor in accordance with the terms of its Counter-Guarantee pays such amounts as may be necessary so that after making all required deductions the Agent, such Lender or such Participant, as the case may be, receives an amount equal to the sum it would have received had no such deduction been made, the Borrower shall pay the amount thereof to the Agent for the account of such Counter-Guarantor (together with any additional amounts such that the Counter-Guarantor receives, after deduction for all Taxes required to be withheld, the amount so paid by the Counter-Guarantor). 34 (c) In addition, the Borrower agrees to pay any present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies of the United States or any political subdivision thereof or any applicable foreign jurisdiction, and all liabilities with respect thereto, which arise from any payment made under any Loan Document or Counter-Guarantee or from the execution, delivery or registration of, or otherwise with respect to, any Loan Document or Counter-Guarantee (collectively, "Other Taxes") to the Agent for the account of the affected party. (d) The Borrower will indemnify each Lender, the Agent, the Loan Administrator and each Counter-Guarantor for the full amount of Indemnified Taxes, Counter-Guarantee Taxes or Other Taxes (including any Taxes imposed by any jurisdiction on amounts payable under this Section 2.12) paid by such Lender, the Loan Administrator, the Agent or Counter Guarantor (as the case may be) and any liability (including for penalties, interest and expenses) arising therefrom or with respect thereto. This indemnification shall be made to the Agent for account of the relevant Lender, the Loan Administrator, the relevant Counter-Guarantor or the Agent, as the case may be, within 30 days from the date such Lender, the Loan Administrator, such Counter-Guarantor or the Agent (as the case may be) makes written demand therefor (with a copy to the Agent if made by a Lender, the Loan Administrator or Counter-Guarantor and accompanied by a statement setting forth the basis for such taxation and the calculation of the amount thereof in reasonable detail). (e) Within 30 days after the date of any payment of Indemnified Taxes, Counter-Guarantee Taxes or Other Taxes, the Borrower will furnish to the Agent the original or a certified copy of a receipt evidencing payment thereof or other documentation reasonably satisfactory to the Agent. (f) Without prejudice to the survival of any other agreement of the Borrower hereunder, the agreements and obligations of the parties contained in this Section 2.12 shall survive the payment in full of the Obligations. (g) Each Lender, each Counter-Guarantor, each Participant, the Loan Administrator and the Agent that is a Non-U.S. Person and that is entitled at such time to an exemption from United States withholding tax, or that is subject to such tax at a reduced rate under an applicable tax treaty, shall, on or prior to the Closing Date or on or prior to the date of the Assignment and Acceptance pursuant to which it becomes a Lender or on or prior to the date such Person becomes a Counter-Guarantor, a Participant, the Loan Administrator or the Agent, as applicable, and from time to time thereafter if requested by the Agent, a Counter-Guarantor or the Borrower, provide the Agent and the Borrower, and, in the case of each Lender, each Participant and the Agent, provide each Counter-Guarantor, with two completed copies of either IRS Form W-8BEN or W-8ECI or other applicable form, certificate or document prescribed by the IRS certifying as to such Non-U.S. Person's entitlement to such exemption from United States withholding tax or reduced rate with respect to all payments to be made to such Non-U.S. Person under the Loan Documents. In addition, each Lender, each Counter-Guarantor, each 35 Participant, the Loan Administrator and the Agent that is a Non-U.S. Person, as the case may be, shall deliver to the Borrower and the Agent, and, in the case of each Lender, each Participant and the Agent, deliver to each Counter-Guarantor, notice of any event (other than a change in applicable law, including income tax conventions) requiring a change in the most recent form previously delivered by such Person to the Borrower and the Agent or the Counter-Guarantors, as the case may be. Unless the Agent and the Borrower have received forms or other documents satisfactory to them indicating that payments under the Loan Documents or Counter-Guarantee to or for a Non-U.S. Person are not subject to United States withholding tax or are subject to such tax at a rate reduced by an applicable tax treaty, the Agent or the Borrower shall, notwithstanding the provisions of Section 2.12(a), (b) and (d) and without impairing any obligation of the Borrower under this Section 2.12 with respect to such tax, withhold such United States withholding taxes from such payments at the appropriate rate. (h) Any Lender claiming any additional amounts payable pursuant to this Section 2.12 shall use its reasonable efforts (consistent with its internal policy and legal and regulatory restrictions) to change the jurisdiction of its Lending Office if the making of such a change would avoid the need for, or reduce the amount of, any such additional amounts which would be payable or may thereafter accrue and would not, in the sole determination of such Lender, be otherwise disadvantageous to such Lender. (i) Each Participant will be entitled to the benefits and subject to the requirements of this Section 2.12 to the same extent as if such Person were a Lender. ARTICLE III CONDITIONS TO LOAN SECTION 3.1. CONDITIONS PRECEDENT TO THE LOAN. The obligation of the Initial Lender to make the Loan requested to be made by it on the Closing Date is subject to the satisfaction (in the judgment of the Agent, the Board, each Counter-Guarantor and the Initial Lender) of all of the following conditions precedent before or concurrently with such Borrowing: (a) Certain Documents. The Agent, the Initial Lender, each Counter-Guarantor (except as to (iv), (vii)(F) through (K), (x) and (xi), for opinions of counsel to and documents relating to the other Counter-Guarantors) and the Board shall have received on the Closing Date each of the following, each dated as of the Closing Date, in form and substance satisfactory to the Agent, the Board, the Initial Lender and each Counter-Guarantor: (i) this Agreement, duly executed and delivered by the parties hereto; 36 (ii) the Note duly executed by the Borrower and conforming to the requirements set forth in Section 2.4(d) hereof; (iii) the Board Guarantee, duly executed and delivered by the parties thereto; (iv) each Counter-Guarantee, duly executed and delivered by the parties thereto, together with, to the extent required thereby, any and all Counter-Guarantor Letters of Credit and parent guarantees, in each instance duly executed and delivered by the relevant issuer thereof; (v) the Warrants, duly executed and delivered by Holdings; (vi) each Registration Rights Agreement, duly executed and delivered by the parties thereto; (vii) the favorable opinions of (A) Skadden, Arps, Slate, Meagher, and Flom LLP, special New York counsel to the Borrower, (B) Cooley Godward, special California counsel to the Borrower and Holdings, (C) Linda M. Mitchell, Esq., Vice President and General Counsel of the Borrower, (D) Curtis, Mallet-Prevost, Colt & Mosle LLP, special New York counsel to the Board, (E) David R. Schwiesow, Associate General Counsel of the Loan Administrator, (F) Maples and Calder, Cayman Islands counsel to the Airbus Counter-Guarantor, (G) A&L Goodbody, Irish counsel to the Airbus Counter-Guarantor, (H) Simpson Thacher & Bartlett, special New York counsel to the Airbus Counter-Guarantor, (I) Christopher Beers, Esq., internal counsel to the GECC Counter-Guarantor, (J) Weil, Gotshal & Manges LLP, special New York counsel to the GECC Counter-Guarantor, (K) Paul, Hastings, Janofsky & Walker LLP, special New York counsel to the debis Counter-Guarantor, and (L) Milbank, Tweed, Hadley & McCloy LLP, special New York counsel to the Initial Lender and the Agent; (viii) a copy of the articles or certificate of incorporation of each of the Borrower and Holdings, certified as of a recent date by the Secretary of State of the state of organization of such Person, together with a "long-form" certificate of such official attesting to the good standing of such Person; (ix) a certificate of each of the Borrower and Holdings signed on behalf of such Person by its Secretary or an Assistant Secretary certifying (A) the names and true signatures of each officer of such Person who has been authorized to execute and deliver each Loan Document required to be executed and delivered by or on behalf of such Person hereunder or thereunder, (B) the by-laws of such Person as in effect on the date of such certification, (C) the resolutions of such Person's board of directors approving and authorizing the execution, delivery and performance of each Loan Document to which it is a party and (D) that there have been no changes in the certificate of incorporation of such Person from the 37 certificate of incorporation delivered pursuant to the immediately preceding clause; (x) a copy of the articles or certificate of organization or comparable document of each Counter-Guarantor, certified, if available, as of a recent date by an appropriate official of the jurisdiction of organization of each Counter-Guarantor, together with, if available, a certificate or comparable document of such official attesting to the good standing of the applicable Counter-Guarantor; (xi) a certificate of each Counter-Guarantor signed on behalf of such Counter-Guarantor by an authorized official of such Counter-Guarantor certifying (A) the names and true signatures of each officer of such Counter-Guarantor who has been authorized to execute and deliver its Counter-Guarantee, (B) the by-laws of such Counter-Guarantor as in effect on the date of such certification, (C) the resolutions of the Counter-Guarantor's board of directors approving and authorizing the execution, delivery and performance of its Counter-Guarantee and (D) that there have been no changes in the certificate of organization of such Counter-Guarantor from the certificate of organization delivered pursuant to the immediately preceding clause; (xii) a certificate of the Borrower signed by the Chief Financial Officer of the Borrower on behalf of the Borrower, stating that the Borrower is Solvent after giving effect to the Loan, the application of the proceeds thereof in accordance with Section 2.4(f) and the payment of all estimated legal, accounting and other fees related hereto and thereto; (xiii) a certificate of the Borrower signed by a duly authorized officer certifying (i) that all representations and warranties are true and correct on and as of the Closing Date, before and after giving effect to the Borrowing and to the application of the proceeds therefrom, as though made on and as of such date, and (ii) that no Event of Default or event which, with the giving of notice or passage of time or both, would be an Event of Default, has occurred and is continuing, or would result from the Borrowing, other than the Disclosed Defaults which will be cured after giving effect to the Borrowing and to the application of the proceeds therefrom; (xiv) a true and correct copy of the Borrower's Application, as approved by the Board, together with a certificate signed by a duly authorized officer certifying that there are no written materials amending, varying, supplementing or otherwise modifying any of the terms of the Application other than as included in the Application; (xv) a certificate of the Borrower signed by a duly authorized officer certifying there has been no material adverse change in the business, condition (financial or otherwise), operations, prospects, performance, or properties of the Borrower or in the Borrower's ability to repay the Loan or with respect to any of 38 the matters covered by the representations and warranties of the Borrower in its Application to the Board since the original date of the Application; (xvi) a certificate of the Borrower signed by a duly authorized officer certifying that (i) it will use the proceeds from the Borrowing in compliance with Section 2.4(f) of this Agreement, (ii) the Borrower qualifies as an "eligible borrower" under the Act and the Regulations, and (iii) the Borrower does not have any outstanding delinquent Federal debt (including tax liabilities); and (xvii) such other certificates, documents, agreements and information respecting the Borrower and Holdings as the Agent, the Initial Lender, any Counter-Guarantor or the Board may reasonably request. (b) Warrants. The Warrants shall have been validly issued to the Board, each Counter-Guarantor and the Initial Lender. (c) Other Agreements. The Agent, the Board, the Initial Lender and each Counter-Guarantor shall have received evidence reasonably satisfactory to each of them that: (i) the Borrower has entered into an agreement (the "Employee Compensation Agreement") with the Board regarding certain employee compensation as required by Section 104(a) of the Act; (ii) the concessionary agreements with the Borrower's creditors, lessors and business partners referred to in the Application (the "Concessions") have been completed in a manner satisfactory to the Agent, the Board, the Initial Lender and each Counter-Guarantor (including, without limitation, the Lease Indenture relating to the convertible debentures (limited in aggregate principal amount to not more than $120 million) of Holdings to be issued to such lessors in consideration of such concessions (all as more fully described in the Application) with a conversion price of not less than $12.00 per share of Common Stock), (iii) the Borrower has entered into the Term Loan Agreement ; and (iv) each of TPG Partners, L.P., TPG Parallel I, L.P. and Air Partners II, L.P. has entered into an agreement with the Board under which it agrees not to sell, assign or otherwise dispose of any of its shares of the Class A Common Stock of Holdings in a transaction or series of transactions that does not provide for the opportunity of the holders of the Class B Common Stock of Holdings to approve such transaction or series of related transactions or to tender their shares unless the holders of greater than fifty percent (50%) of the Class B Common Stock of Holdings then outstanding either (x) vote their shares of Class B Common Stock of Holdings in favor or such transaction or series of related transactions or (y) tender their shares of Class B Common Stock for sale in such transaction or series of related transactions. (d) Fees and Expenses Paid. The Borrower shall have paid all fees due and payable on the Closing Date (including, without limitation, the fees referenced in Section 2.8 hereof), and all expenses of the Agent, the Initial Lender, the Loan Administrator and each Counter-Guarantor due and payable on or before the Closing Date. 39 (e) Consents, Etc. The Borrower and Holdings shall have received all consents and authorizations required pursuant to any Contractual Obligation with any other Person and shall have obtained all consents, waivers and authorizations of, and effected all notices to and filings with, the New York Stock Exchange, the Securities and Exchange Commission or any other Governmental Authority, in each case, as may be necessary to allow the Borrower and Holdings lawfully to execute, deliver and perform, in all material respects, its obligations under the Loan Documents to which it is, or shall be, a party and each other agreement or instrument to be executed and delivered by it, pursuant thereto or in connection therewith. (f) No Illegality. No law or regulation shall be applicable in the judgment of the Initial Lender that restrains, prevents or imposes materially adverse conditions upon the transactions contemplated hereby. (g) Representations and Warranties of Borrower. All representations and warranties of the Borrower set forth herein are true and correct on and as of the Closing Date, before and after giving effect to the Borrowing and to the application of the proceeds therefrom, as though made on and as of such date. (h) Representation and Warranties of Counter-Guarantors. All representations and warranties of each Counter-Guarantor in its Counter-Guarantee are true and correct on and as of the Closing Date, before and after giving effect to the Borrowing and to the application of the proceeds therefrom, as though made on and as of such date. (i) No Event of Default. No Event of Default or Default, has occurred and is continuing, or would result from the Borrowing, other than the Disclosed Defaults which will be cured after giving effect to the Borrowing and to the application of the proceeds therefrom. (j) Corporate and other proceedings. All corporate and other proceedings, and all documents, instruments and other legal matters in connection with the transactions contemplated hereby shall be satisfactory in form and substance to the Agent, the Board, the Initial Lender and each Counter-Guarantor. (k) Counter-Guarantees. Each Counter-Guarantee and any and all Counter-Guarantor Letters of Credit and parent guarantees, to the extent required thereby, shall be in full force and effect and no default in the performance of any thereof shall have occurred and be continuing. (l) No Material Adverse Change. No material adverse change occurring in the business, condition (financial or otherwise), operations, properties, performance or prospects of the Borrower or in the Borrower's ability to repay the Loan or with respect to any of the matters covered by the representations and warranties made in the Application since November 13, 2001. 40 ARTICLE IV REPRESENTATIONS AND WARRANTIES To induce the other parties to enter into this Agreement and to induce the Counter-Guarantors to enter into their respective Counter-Guarantees, the Borrower represents and warrants to each other party hereto and to each Counter-Guarantor that, on and as of the Closing Date (the Borrower and Holdings are each referred to as an "Obligor" and collectively referred to as the "Obligors"): SECTION 4.1. ORGANIZATION, POWERS, QUALIFICATION, GOOD STANDING, BUSINESS, SUBSIDIARIES, THE ACT AND THE REGULATIONS. (a) Each Obligor is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. Each Obligor has all requisite corporate power and authority to own and operate its properties, to carry on its business as now conducted and as proposed to be conducted, to enter into the Loan Documents to which it is a party and to carry out the transactions contemplated hereby and thereby. (b) Each Obligor is qualified to do business and in good standing in every jurisdiction where its assets are located and wherever necessary to carry out its business and operations, except in jurisdictions where the failure to be so qualified or in good standing would not in the reasonable determination of such Obligor be expected to impair the ability of such Obligor to perform its payment or other material obligations under the Loan Documents to which it is a party. The Borrower is an "air carrier" within the meaning of the Act and holds a certificate under Sections 41102(a)(1) and 41103 of Title 49. The Borrower is a "citizen of the United States" as defined in Section 40102(a)(15) of Title 49 (a "United States Citizen") and holds an air carrier operating certificate issued pursuant to Chapter 447 of Title 49 for aircraft capable of carrying 10 or more individuals or 6,000 pounds or more of cargo. The Borrower possesses all necessary certificates, franchises, licenses, permits, rights and concessions and consents which are material to the operation of the routes flown by it and the conduct of its business and operations as currently conducted. (c) All of the Subsidiaries of the Obligors as of the Closing Date are identified in Schedule 4.1 annexed hereto, as said Schedule 4.1 may be supplemented from time to time pursuant to the provisions of Section 5.l(xi). Each of the Subsidiaries of the Borrower identified in Schedule 4.1 annexed hereto (as so supplemented) is a corporation duly organized, validly existing and in good standing under the laws of its respective jurisdiction of incorporation set forth therein, has all requisite corporate power and authority to own and operate its properties and to carry on its business as now conducted and as proposed to be conducted, and is qualified to do business and in good standing in every jurisdiction where its assets are located and wherever necessary to carry out its business and operations, in each case except where failure to be so qualified or in good standing or a lack of such corporate power and authority would not in the 41 reasonable determination of the Borrower be expected to impair the ability of the Borrower to perform its payment or other material obligations under the Loan Documents. Schedule 4.1 annexed hereto (as so supplemented) correctly sets forth the ownership interest of the Obligors and each of their Subsidiaries in each of the Subsidiaries identified therein. (d) The Borrower is an "eligible borrower" within the meaning of the Act and the Regulations, it does not have any outstanding delinquent Federal debt (including tax liabilities), and the Application, the Loan and the transactions contemplated hereby (assuming each Initial Lender is an Eligible Lender) comply with the requirements of the Act and the Regulations. SECTION 4.2. AUTHORIZATION OF BORROWING, ETC. (a) Each Obligor has duly authorized by all necessary corporate action the execution, delivery and performance of the Loan Documents to which it is a party. (b) The execution, delivery and performance by each Obligor of the Loan Documents and the agreements effecting the Concessions to which it is a party and the consummation of the transactions contemplated by the Loan Documents and the agreements effecting the Concessions to which it is a party do not and will not (i) violate any provision of any law or any governmental rule or regulation applicable to such Obligor or any of its Subsidiaries, the Certificate or Articles of Incorporation or Bylaws of such Obligor or any of its Subsidiaries or any order, judgment or decree of any court or other agency of government binding on such Obligor or any of its Subsidiaries, (ii) conflict with, result in a breach of or constitute (with due notice or lapse of time or both) a default under any Contractual Obligation of such Obligor or any of its Subsidiaries, (iii) result in or require the creation or imposition of any Lien upon any of the properties or assets of such Obligor or any of its Subsidiaries, or (iv) require any approval of stockholders or any approval or consent of any Person under any Contractual Obligation of such Obligor or any of its Subsidiaries, except for such approvals or consents which will have been obtained on or before the Closing Date and have been disclosed in writing to the Agent, each Initial Lender, each Counter-Guarantor and the Board. (c) The execution, delivery and performance by each Obligor of the Loan Documents to which it is a party and the consummation of the transactions contemplated by the Loan Documents to which it is a party do not and will not require any registration with, consent or approval of, or notice to, or other action to, with or by, any federal, state or other Governmental Authority or regulatory body or any other Person which is required to be obtained or made on or prior to the Closing Date and which has not previously been obtained or made. (d) Each Obligor has duly executed and delivered each of the Loan Documents to which it is party and each such Loan Document is the legally valid and binding obligation of such Obligor, enforceable against such Obligor in accordance with 42 its respective terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or other similar laws relating to or affecting the enforcement of creditors' rights generally, including materiality, reasonableness, good faith and fair dealing, and by general principles of equity (regardless of whether considered in a proceeding in equity or at law). SECTION 4.3. FINANCIAL CONDITION. Each Obligor has heretofore delivered to the Lenders and the Counter-Guarantors, at the request of any of them, the following financial statements and information: (i) the audited consolidated balance sheets of such Obligor as at December 31, 2000, and the related consolidated statements of income, stockholders' equity and cash flows of such Obligor for the Fiscal Year then ended and (ii) the unaudited consolidated balance sheet of such Obligor as at September 30, 2001 and the related unaudited statements of income, stockholders' equity and cash flows of such Obligor for the nine months then ended. All such consolidated statements were prepared in conformity with GAAP and fairly present the consolidated financial position of such Obligor as at the respective dates thereof and the consolidated results of operations and cash flows of such Obligor for each of the periods then ended subject, in the case of the unaudited consolidated statements, to year-end audit and adjustments. Except as disclosed in writing to the Agent and the Counter-Guarantors prior to the date of this Agreement, neither Obligor has any material contingent liability or liability for taxes, long-term lease or unusual forward or long-term commitment that is not reflected in the foregoing consolidated financial statements (or, in the case of the Borrower, in the most recently delivered consolidated financial statements delivered pursuant to Section 5.1(i)(a) or (ii)) or the notes thereto and which in any such case is material in relation to the business, operations, properties, assets or condition (financial or otherwise) of such Obligor or, with respect to the initial borrowing hereunder only, the prospects of the Borrower. SECTION 4.4. NO MATERIAL ADVERSE CHANGE; NO RESTRICTED PAYMENTS. Since November 13, 2001, no material adverse change has occurred in the business, condition (financial or otherwise), operations, prospects, performance, or properties of either Obligor or in the Borrower's ability to repay the Loan or with respect to any of the matters covered by the representations and warranties made in the Borrower's Application. Since November 13, 2001, neither the Borrower nor any of its Subsidiaries has directly or indirectly declared, ordered, paid or made, or set apart any sum or property for, any Restricted Payment or agreed to do so except as would have been permitted by Section 6.3, as if such Section were in effect at all times after November 13, 2001 (except that for purposes of this Section 4.4 the terms "Default" and "Event of Default" therein shall exclude the Disclosed Defaults). SECTION 4.5. TITLE TO PROPERTIES; LIENS. Each Obligor and its Subsidiaries have (i) good, sufficient and legal title to (in the case of fee interests in real property), (ii) valid leasehold interests in (in the case of leasehold interests in real or personal property), or (iii) good title to (in the case of all other personal property), all of the properties and assets reflected in the financial statements referred to in Section 4.3 or, 43 in the case of the Borrower, in the most recent financial statements delivered pursuant to Section 5.1, in each case except for assets disposed of since the date of such financial statements in the ordinary course of business or as otherwise permitted under Section 6.5. Except as otherwise permitted by this Agreement, all such properties and assets are free and clear of Liens. SECTION 4.6. LITIGATION; ADVERSE FACTS. There are no actions, suits, proceedings, arbitrations or governmental investigations (whether or not purportedly on behalf of either Obligor or any of its Subsidiaries) at law or in equity or before or by any federal, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, pending or, to the knowledge of the Borrower, threatened against or affecting either Obligor or any of its Subsidiaries or any property of either Obligor or any of its Subsidiaries that, individually or in the aggregate, if adversely determined, could in the reasonable determination of the Borrower be expected to impair the ability of such Obligor to perform its payment or other material obligations under the Loan Documents to which it is a party or to otherwise have a material adverse effect on the business, condition (financial or otherwise), operations, prospects, performance or properties of such Obligor or any of its Subsidiaries or to challenge the legality, validity or binding effect of any Loan Document including, without limitation, this Agreement. Neither Obligor nor any of its Subsidiaries is (i) in violation of any applicable laws that, individually or in the aggregate, could in the reasonable determination of the Borrower be expected to impair the ability of such Obligor to perform its payment or other material obligations under the Loan Documents to which it is a party or (ii) subject to or in default with respect to any final judgments, writs, injunctions, decrees, rules or regulations of any court or any federal, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, that, individually or in the aggregate, could in the reasonable determination of the Borrower be expected to impair the ability of such Obligor to perform its payment or other material obligations under the Loan Documents to which it is a party. SECTION 4.7. PAYMENT OF TAXES. Except to the extent permitted by Section 5.3, all federal income tax returns and other material tax returns and reports of each Obligor and its Subsidiaries required to be filed by any of them have been timely filed (or extensions have been obtained with respect thereto), and all federal income taxes and material Taxes upon each Obligor and its Subsidiaries and upon their respective properties, assets, income, businesses and franchises which are due and payable have been paid before any penalty, fine or interest accrues thereon or are being contested in good faith through appropriate proceedings and with respect to which an adequate reserve has been established by the Borrower to the extent required by GAAP. Except as disclosed in Schedule 4.7, there are no closing, settlement or similar agreements with respect to Taxes of any material amount between any Obligor and any taxing agency or authority. 44 SECTION 4.8. PERFORMANCE OF AGREEMENTS; MATERIALLY ADVERSE AGREEMENTS. (a) Neither Obligor nor any of its Subsidiaries is in default in the performance, observance or fulfillment of any of the material obligations, covenants or conditions contained in any of its Contractual Obligations, and no condition exists that, with the giving of notice or the lapse of time or both, would constitute such a default, except for the Disclosed Defaults which will be cured after giving effect to the Borrowing and the application of the proceeds therefrom. (b) Neither Obligor nor any of its Subsidiaries is a party to or is otherwise subject to any agreements or instruments or any charter or other internal restrictions which, individually or in the aggregate, could in the reasonable determination of the Borrower be expected to impair the ability of such Obligor to perform its payment or other material obligations under the Loan Documents to which it is a party. SECTION 4.9. GOVERNMENTAL REGULATION. Neither Obligor nor any of its Subsidiaries is subject to regulation under the Public Utility Holding Company Act of 1935, the Federal Power Act, the Interstate Commerce Act or the Investment Company Act of 1940 or under any other federal or state statute or regulation which may limit its ability to incur Indebtedness or which may otherwise render all or any portion of the Obligations unenforceable. SECTION 4.10. SECURITIES ACTIVITIES. Neither the Borrower nor any of its Subsidiaries owns or is engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying any Margin Stock, nor shall any proceeds of the Loan be used to purchase or carry Margin Stock or to extend credit to any Person for the purpose of purchasing or carrying any Margin Stock in a manner that violates or causes a violation of Regulations T, U or X of the Board of Governors of the Federal Reserve System or any other regulation of such Board. SECTION 4.11. EMPLOYEE BENEFIT PLANS. Each Plan maintained by the Borrower or an ERISA Affiliate is in compliance in all material respects with all applicable laws. Except in such instances where an omission or failure would not in the reasonable determination of the Borrower impair the ability of the Borrower to perform its payment or other material obligations under the Loan Documents (a) all returns, reports and notices required to be filed with any regulatory agency with respect to any Plan have been filed timely and (b) neither the Borrower nor any ERISA Affiliate has failed to make any contribution or pay any amount due or owing as required by the terms of any Plan. There are no pending or, to the best of the Borrower's knowledge, threatened claims, lawsuits, investigations or actions (other than routine claims for benefits in the ordinary course) asserted or instituted against the assets of any Plan or its related trust or against any fiduciary of a Plan with respect to the operation of such Plan that are likely to result in liability of the Borrower that in the reasonable determination of the Borrower would impair the ability of the Borrower to perform its payment or other 45 material obligations under the Loan Documents. Except in such instances where an omission or failure would not in the reasonable determination of the Borrower impair the ability of the Borrower to perform its payment or other material obligations under the Loan Documents, each Plan maintained by the Borrower or an ERISA Affiliate that is intended to be "qualified" within the meaning of section 401(a) of the Internal Revenue Code is, and has been during the period from its adoption to date, so qualified, both as to form and operation and all necessary governmental approvals, including a favorable determination as to the qualification under the Internal Revenue Code of such Plan and each amendment thereto, have been or will be timely obtained. Neither the Borrower nor any ERISA Affiliate has engaged in any prohibited transaction, within the meaning of section 406 of ERISA or section 4975 of the Internal Revenue Code, in connection with any Plan which could result in liability of the Borrower that would in the reasonable determination of the Borrower impair the ability of the Borrower to perform its payment or other material obligations under the Loan Documents. Neither the Borrower nor any ERISA Affiliate has any contingent liability with respect to any post-retirement benefits under a welfare benefit plan as defined in ERISA other than a liability for continuation coverage described in Part 6 of Title I of ERISA, except where such liability could not in the reasonable determination of the Borrower be expected to impair the ability of the Borrower to perform its payment or other material obligations under the Loan Documents. Neither the Borrower nor any ERISA Affiliate maintains, has established or has ever participated in a multiple employer welfare benefit arrangement within the meaning of ERISA except to the extent that such participation would not in the reasonable determination of the Borrower be expected to impair the ability of the Borrower to perform its payment or other material obligations under the Loan Documents. The Borrower has not incurred any potential liability with respect to a multiemployer plan, as defined in section 3(37) of ERISA or a plan described in section 4063(a) of ERISA except to the extent that such liability would not in the reasonable determination of the Borrower be expected to impair the ability of the Borrower to perform its payment or other material obligations under the Loan Documents. Neither the Borrower nor any ERISA Affiliate has incurred any liability under Title IV of ERISA that has not been satisfied, and no condition exists that could reasonably be expected to result in the Borrower or an ERISA Affiliate incurring any liability under Title IV of ERISA that would in the reasonable determination of the Borrower impair the ability of the Borrower to perform its payment or other material obligations under the Loan Documents. 46 SECTION 4.12. ENVIRONMENTAL PROTECTION. (a) All Facilities and operations of each Obligor and its Subsidiaries are, and have been to the Borrower's knowledge, in compliance with all Environmental Laws except for any noncompliance which, individually or in the aggregate, could not in the reasonable determination of the Borrower be expected to impair the ability of the Borrower to perform its payment or other material obligations under the Loan Documents. (b) There are no, and have been no, conditions, occurrences, or Hazardous Materials Activity (a) arising at any Facilities or, to the knowledge of the Borrower, at any other location or (b) arising in connection with the operations of the Borrower or its Subsidiaries (including the transportation of Hazardous Materials in accordance with applicable regulations), which conditions, occurrences or Hazardous Materials Activity could reasonably be expected to form the basis of an Environmental Claim against the Borrower or any of its Subsidiaries and which, individually or in the aggregate, could in the reasonable determination of the Borrower be expected to impair the ability of the Borrower to perform its payment or other material obligations under the Loan Documents. (c) There are no pending or, to the Borrower's knowledge, threatened Environmental Claims against the Borrower or its Subsidiaries, and the Borrower and its Subsidiaries have received no notices, inquiries, or requests for information with respect to any Environmental Claims which in either case are reasonably likely to be adversely determined and could individually or in the aggregate in the reasonable determination of the Borrower be expected to impair the ability of the Borrower to perform its payment or other material obligations under the Loan Documents. (d) Except as disclosed to the Agent, the Board, the Counter-Guarantor and the Lenders in writing on or prior to the Closing Date, the Borrower is not currently operating or required to be operating under any compliance order, schedule, decree or agreement, any consent decree, order or agreement, and/or any corrective action decree, order or agreement issued or entered into under any Environmental Law the failure to comply with which could individually or in the aggregate in the reasonable determination of the Borrower be expected to impair the ability of the Borrower to perform its payment or other material obligations under the Loan Documents. SECTION 4.13. SOLVENCY. After giving effect to the Borrowing and to the application of the proceeds therefrom, each Obligor is and, upon the incurrence of any Obligations by the Borrower on any date on which this representation is deemed made, will be, Solvent. SECTION 4.14. DISCLOSURE. No representation or warranty of the Borrower contained in this Agreement, the Application or in any other document, certificate or written statement furnished to the Board, the Agent, the Lenders or Counter-Guarantors 47 by or on behalf of the Borrower or any of its Subsidiaries for use in connection with the transactions contemplated by this Agreement contains any untrue statement as and when made, or as any of such representations and warranties may be made from time to time in accordance with this Agreement and the other Loan Documents. Any projections and pro forma financial information contained in the Application are based upon good faith estimates and assumptions believed by the Borrower to be reasonable at the time made, it being recognized by the Board, the Agent and the Lenders that such projections as to future events are not to be viewed as facts and that actual results during the period or periods covered by any such projections may differ from the projected results. There are no facts known to any Responsible Officer of the Borrower (other than matters of a general economic nature) that, individually or in the aggregate, could in the reasonable determination of the Borrower be expected to have a material adverse effect on either Obligor and its Subsidiaries, taken as a whole or otherwise impair the ability of either Obligor to perform its payment or other material obligations under the Loan Documents to which it is a party. SECTION 4.15. COMPLIANCE WITH LAWS. Each Obligor and each of its Subsidiaries is in compliance with all laws, statutes, rules, regulations and orders binding on or applicable to such Obligor, its Subsidiaries and all of their respective properties, except to the extent failure to so comply could not (either individually or in the aggregate) reasonably be expected to have a material adverse effect on such Obligor and its Subsidiaries, taken as a whole or otherwise impair the ability of such Obligor to perform its payment or other material obligations under the Loan Documents to which it is a party. SECTION 4.16. CONCESSION AGREEMENTS. The Borrower has heretofore delivered to the Board and the Agent a true and correct schedule identifying the Concessions together with true and correct copies of the agreements effecting the Concessions which have not been amended, supplemented or otherwise modified prior to the date hereof. After giving effect to the Loan and application of the proceeds therefrom, the Concessions are in full force and effect. SECTION 4.17. INDEBTEDNESS. Schedule 4.17 correctly sets forth the consolidated Indebtedness of the Obligors and their Subsidiaries as of December 31, 2001. The Borrower has heretofore delivered to the Board and the Agent true and correct copies of the Lease Indenture and the Term Loan Agreement, each as amended, supplemented or otherwise modified through the date hereof. ARTICLE V COVENANTS To induce the other parties to enter into this Agreement and to induce the Counter-Guarantors to enter into their respective Counter-Guarantees, the Borrower 48 agrees with each other party hereto and the Counter-Guarantors that, as long as any of the Obligations remain outstanding: SECTION 5.1. FINANCIAL STATEMENTS AND OTHER REPORTS. The Borrower will maintain, and cause each of its Subsidiaries to maintain, a system of accounting established and administered in accordance with sound business practices to permit preparation of financial statements in conformity with GAAP. The Borrower will deliver to the Agent, the Lenders, each Counter-Guarantor, the Board and the Loan Administrator: (i) (a) Quarterly Financials: as soon as available and in any event within 60 days after the end of each fiscal quarter of each Fiscal Year (other than the last quarter of each Fiscal Year), (a) the consolidated balance sheets of each of the Borrower and Holdings as at the end of such fiscal quarter and the related consolidated statements of income and stockholders' equity of each such company for such fiscal quarter and consolidated cash flows of each such company for the period from the beginning of then current Fiscal Year to the end of such fiscal quarter, all in reasonable detail and certified by the chief financial officer, controller or treasurer of such company that they fairly present the consolidated financial condition of such company as at the dates indicated and the results of its operations and their cash flows for the periods indicated and (b) a narrative report describing the operations of such company in the form prepared for presentation to senior management for such fiscal quarter and for the period from the beginning of then current Fiscal Year to the end of such fiscal quarter; provided that delivery of such company's Form 10-Q for such fiscal quarter shall be deemed to satisfy all of the requirements of this Section 5.1(i)(a); (b) Monthly Reporting: as soon as available and in any event within 25 days after the end of each calendar month, the consolidated balance sheets of the Borrower as at the end of such month and the related consolidated statements of income and consolidated cash flows of Borrower for such calendar month and for the period from the beginning of the then current Fiscal Year to the end of such month, together with a unit-basis income statement (with per-ASM revenues and expenses (line by line)), variances from the monthly operating plan for each income statement line item and breakdowns of salary and benefits expenses in sufficient detail to facilitate monitoring; all such financial statements to be in the form prepared for the management of the Borrower and certified by the chief financial officer, controller or treasurer of such company being fairly stated in all material respects (subject to normal year-end audit adjustments); (ii) Year-End Financials: as soon as available and in any event within 105 days after the end of each Fiscal Year, (a) the consolidated balance sheets of each of the Borrower and Holdings at the end of such Fiscal Year and the related consolidated statements of income, stockholders' equity and cash flows of such company for such Fiscal Year, setting forth in each case in comparative form the corresponding figures for the previous Fiscal Year and, in the case of the 49 Borrower, the corresponding figures from the annual financial plan delivered pursuant to Section 5.1(viii) for the Fiscal Year covered by such financial statements of the Borrower, all in reasonable detail, (b) a narrative report describing the operations of such company in the form prepared for presentation to senior management for such Fiscal Year, and (c) an accountant's report thereon of PricewaterhouseCoopers L.L.P. or other independent certified public accountants of recognized national standing selected by such company, which report shall be unqualified, shall express no doubts about the ability of such company to continue as a going concern, and shall state that such consolidated financial statements fairly present the consolidated financial position of such company as at the dates indicated and the results of their operations and their cash flows for the periods indicated in conformity with GAAP applied on a basis consistent with prior years and that the examination by such accountants in connection with such consolidated financial statements has been made in accordance with generally accepted auditing standards; provided that (i) references in such report to changes in GAAP, changes in accounting standards, highlighting contents of footnotes, limitations in the scope of the audit or exclusions from the audit information not required by GAAP that are, in each case, customary in industry practice and not prejudicial to the opinion stated therein shall not be deemed to be "qualifications" for the purpose of this Section and (ii) delivery of such company's Form 10-K for such Fiscal Year shall be deemed to satisfy all of the requirements of this Section 5.1(ii); (iii) Officer's and Compliance Certificates: together with each delivery of financial statements of the Borrower pursuant to subdivisions (i) and (ii) above after the Closing Date, (a) an Officer's Certificate of the Borrower stating that the signer has reviewed the terms of this Agreement and has made, or caused to be made under his or her supervision, a review in reasonable detail of the transactions and condition of the Borrower during the accounting period covered by such financial statements and that such review has not disclosed the existence during or at the end of such accounting period, and that the signer does not have knowledge of the existence as at the date of such Officer's Certificate, of any condition or event that constitutes an Event of Default or Default, or, if any such condition or event existed or exists, specifying the nature and period of existence thereof and what action the Borrower has taken, is taking and proposes to take with respect thereto; and (b) a Compliance Certificate demonstrating in reasonable detail compliance (or noncompliance) during and at the end of the applicable quarterly and annual accounting periods with the restrictions contained in Sections 6.3 and 6.4; (iv) SEC Filings and Press Releases: promptly upon their becoming available, copies of (a) all financial statements, reports, notices and proxy statements sent or made available generally by the Borrower and Holdings to its security holders, (b) all regular and periodic reports and all registration statements and prospectuses, if any, filed by Holdings, the Borrower or any of their Subsidiaries with any securities exchange or with the Securities and Exchange Commission or any governmental or private regulatory authority, and (c) all 50 material press releases and other statements made available generally by Holdings, the Borrower or any of their Subsidiaries, to the public concerning material developments in the business of the Borrower or any of its Subsidiaries; (v) Events of Default, etc.: promptly upon any Responsible Officer of either Obligor obtaining knowledge (a) of any condition or event that constitutes an Event of Default or Default, (b) that any creditor has given any notice to the Borrower or any of its Subsidiaries or taken any other action with respect to a claimed default or event or condition of the type referred to in Section 7.1(b), (c) of any condition or event that would be required to be disclosed in a current report filed by the Borrower or Holdings with the Securities and Exchange Commission on Form 8-K if the Borrower were required to file such reports under the Exchange Act, or (d) of the occurrence of any event or change that has caused or evidences, either in any case or in the aggregate, in the reasonable determination of the Borrower, impairment of the ability of the Borrower to perform its payment or other material obligations under the Loan Documents, an Officer's Certificate specifying the nature and period of existence of such condition, event or change, or specifying the notice given or action taken by any such Person and the nature of such claimed Event of Default, Default, default, event or condition, and what action the Borrower has taken, is taking and proposes to take with respect thereto; (vi) Litigation or Other Proceedings: to the extent not disclosed pursuant to this subsection, (a) promptly upon any Responsible Officer of the Borrower obtaining knowledge of (X) the institution of, or threat of, any action, suit, proceeding (whether administrative, judicial or otherwise), governmental investigation or arbitration against or affecting the Borrower or any of its Subsidiaries or any property of the Borrower or any of its Subsidiaries (collectively, "Proceedings") or (Y) any material development in any Proceeding that, in any case: (1) is reasonably likely to be adversely determined and assuming that all damages demanded in such litigation are awarded, is in the reasonable determination of the Borrower likely to impair the ability of the Borrower to perform its payment or other material obligations under the Loan Documents; or (2) seeks to enjoin or otherwise prevent the consummation of, or to recover any damages or obtain relief as a result of the transactions contemplated hereby; written notice thereof together with such other information as may be reasonably available to the Borrower to enable the Agent, the Loan Administrator, the Board, each Counter-Guarantor and their respective counsel to evaluate such matters; and (b) within twenty days after the end of each Fiscal Year, a schedule of all Proceedings involving an alleged liability of, or claims against or affecting, the Borrower or any of its Subsidiaries the uninsured portion of which is equal to or greater than $5,000,000 and promptly after request by the Agent, the Loan 51 Administrator, the Board or any Counter-Guarantor such other information as may be reasonably requested by the Agent, the Loan Administrator, the Board or such Counter-Guarantor to enable the Agent, the Loan Administrator, the Board or such Counter-Guarantor and their respective counsel to evaluate any of such Proceedings; (vii) ERISA Reports: promptly after the receipt by the Borrower of a request therefor by the Agent, the Loan Administrator, the Board, any Lender or any Counter-Guarantor, the Borrower shall provide the Agent, the Loan Administrator, the Board, such Lender and such Counter-Guarantor copies of any annual and other reports (including Schedule B thereto) with respect to a Plan filed by the Borrower or any ERISA Affiliate with the United States Department of Labor, the Internal Revenue Service or the Pension Benefit Guaranty Corporation; (viii) Annual Financial Plan: annually, as soon as practicable after preparation thereof by the Borrower in the ordinary course of business but in no event later than January 31 of each year, the Borrower shall provide the Agent, the Loan Administrator, the Board, each Lender and each Counter-Guarantor copies of its annual financial plan; (ix) Environmental Audits and Reports: as soon as practicable following receipt thereof, the Borrower shall provide the Agent, the Loan Administrator, the Board, each Lender and each Counter-Guarantor copies of all environmental audits and reports, whether prepared by personnel of the Borrower or any of its Subsidiaries or by independent consultants, with respect to significant environmental matters at any Facility or which relate to an Environmental Claim which could in the reasonable determination of the Borrower be expected to impair the ability of the Borrower to perform its payment or other material obligations under the Loan Documents; (x) Liquidity Certificates: (a) within one Business Day after any public release by S&P or Moody's raising or lowering its credit rating on the Borrower's senior unsecured debt obligations and (b) at such additional times as the Borrower may elect, the Borrower shall provide the Agent, the Board, each Lender and each Counter-Guarantor a certificate setting forth the credit rating on the Borrower's senior unsecured debt obligations (each, a "Liquidity Certificate"); (xi) Additional Subsidiaries: to the extent permitted hereunder pursuant to Section 6.12, with reasonable promptness, upon the formation thereof, the Borrower shall provide the Agent, the Loan Administrator, the Board, each Lender and each Counter-Guarantor the name, corporate structure and allocation of Voting Stock of each Subsidiary of the Borrower, including, without limitation, providing a supplement Schedule 4.1 hereto with all relevant information included with respect to such new Subsidiary; 52 (xii) Insurance Proceeds: promptly notify the Agent, each Lender, each Counter-Guarantor, the Loan Administrator and the Board upon a Responsible Officer of the Borrower obtaining actual knowledge of the occurrence of an event of loss or damage to any equipment owned or operated by the Borrower that is reasonably expected to result in receipt of insurance proceeds to be received by the Borrower reasonably estimated by the Borrower to exceed $5,000,000; (xiii) Future Issuance and Asset Sales: prior to the Borrower consummating any Future Issuance (other than the exercise of options or similar rights by existing or former officers, directors or employees of the Borrower, Holdings or any of their Subsidiaries) or Asset Sale, the Borrower shall notify the Agent, each Lender, each Counter-Guarantor, the Loan Administrator and the Board of such event and what action the Borrower has taken, is taking and proposes to take with respect thereto, including the use of proceeds; (xiv) Plan Audits and Liabilities: promptly after the Borrower or any ERISA Affiliate (a) contacts the Internal Revenue Service for the purpose of participation in a closing agreement or any voluntary resolution program with respect to a Plan which could in the reasonable determination of the Borrower impair the ability of the Borrower to perform its payment or other material obligations under the Loan Documents or (b) knows or has reason to know that any event with respect to any Plan occurred that could in the reasonable determination of the Borrower impair the ability of the Borrower to perform its payment or other material obligations under the Loan Documents a notification thereof; (xv) Funding Changes and New Plan Benefits: promptly after the change, a notification of any material increases in the benefits, or material change in funding method, with respect to which the Borrower may have any liability, or the establishment of any material new Plan with respect to which the Borrower may have any liability or the commencement of contributions to any Plan to which the Borrower or any ERISA Affiliate was not previously contributing, except to the extent that such an event would not in the reasonable determination of the Borrower be expected to impair the ability of the Borrower to perform its payment or other material obligations under the Loan Documents; (xvi) Claims and Proceedings: promptly after receipt of written notice of commencement thereof, notification of all (i) claims made by participants or beneficiaries with respect to any Plan and (ii) actions, suits and proceedings before any court or governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, affecting the Borrower or any ERISA Affiliate with respect to any Plan, except those which, in the aggregate, if adversely determined could not in the reasonable determination of the Borrower impair the ability of the Borrower to perform its payment or other material obligations under the Loan Documents; 53 (xvii) ERISA Reportable Events: promptly after the occurrence of any reportable event (as defined in ERISA) relating to a Plan with respect to which the Borrower or an ERISA Affiliate may have any liability (other than any such event with respect to which the Pension Benefit Guaranty Corporation has waived the ERISA reportable event notification requirement by regulation or notice) notice thereof; and (xviii) Other Information: with reasonable promptness, such other information and data with respect to the Borrower or any of its Subsidiaries as from time to time may be reasonably requested by the Agent, any Lender, any Counter-Guarantor, the Board or the Loan Administrator. SECTION 5.2. CORPORATE EXISTENCE. Except as permitted under Section 6.5(v), the Borrower will do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence and the corporate, partnership or other existence of each Subsidiary of the Borrower and the rights (charter and statutory) and franchises of the Borrower and any Subsidiary of the Borrower; provided, that the Borrower shall not be required to preserve any such corporate, partnership or other existence of any Subsidiary or any such right or franchise, if the board of directors of the Borrower shall determine in the exercise of its business judgment that the preservation thereof is no longer desirable in the conduct of the business of the Borrower or any Subsidiary and that abandonment of any such right or franchise shall not in the reasonable determination of the Borrower impair the ability of the Borrower to perform its payment or other material obligations under the Loan Documents. SECTION 5.3. PAYMENT OF TAXES AND CLAIMS; TAX CONSOLIDATION. (a) The Borrower will, and will cause its Subsidiaries to, pay or discharge or cause to be paid or discharged, before the same shall become delinquent, (i) all taxes, assessments and governmental charges levied or imposed upon the Borrower or any Subsidiary or upon the income, profits or property of the Borrower or any Subsidiary, and (ii) all lawful claims for labor, materials and supplies that, if unpaid, might by law become a lien on the property of the Borrower or any Subsidiary; provided, however, that the Borrower shall not be required to pay or discharge or cause to be paid or discharged any such tax, assessment, charge or claim the amount, applicability or validity of which is being contested in good faith by appropriate proceedings and with respect to which an adequate reserve has been established by the Borrower to the extent required by GAAP. (b) The Borrower will not, and will not permit any of its Subsidiaries to, file or consent to the filing of any consolidated income tax return with any Person (other than the Borrower, Holdings and any Subsidiary of the Borrower or Holdings). SECTION 5.4. MAINTENANCE OF PROPERTIES; INSURANCE. The Borrower will, and will cause each of its Subsidiaries to, maintain all properties used or useful in the conduct of its business in good condition, repair and working order and supply such properties with all necessary equipment and make all necessary repairs, renewals, 54 replacements, betterments and improvements thereto, all as in the judgment of the Borrower may be necessary so that the business carried on in connection therewith may be properly and advantageously conducted at all times; provided, however, that nothing in this Section shall prevent the Borrower or any Subsidiary from discontinuing the operation and maintenance of any such properties if such discontinuance is, in the good faith judgment of the Borrower or such Subsidiary, as the case may be, desirable in the conduct of its respective business and shall not impair the ability of the Borrower to perform its payment or other material obligations under the Loan Documents. The Borrower will insure and keep insured, and will cause each of its Subsidiaries to insure and keep insured, with reputable insurance companies, such of their respective properties, to such an extent and against such risks, and will maintain liability insurance, to the extent that property of a similar character is usually so insured by companies engaged in a similar business and owning similar properties in accordance with good business practice. SECTION 5.5. INSPECTION. The Borrower will, and will cause its Subsidiaries to, permit any authorized representatives designated by the Agent, any Lender, any Counter-Guarantor, the Loan Administrator or the Board to visit and inspect any of the properties of the Borrower or any of its Subsidiaries, including its and their financial and accounting records, and to make copies and take extracts therefrom, and to discuss its and their affairs, finances and accounts with its and their officers and independent public accountants, all upon reasonable notice and at such reasonable times during normal business hours and as often as may be reasonably requested; provided that so long as no Default or Event of Default shall have occurred and be continuing, such inspection shall not be disruptive to the Borrower's business, as reasonably determined by the Borrower. SECTION 5.6. COMPLIANCE WITH LAWS, ETC. The Borrower will, and will cause each of its Subsidiaries to, comply with all applicable statutes, rules, regulations, orders and restrictions of the United States of America, all states and municipalities thereof, and of any governmental department, commission, board, regulatory authority, bureau, agency and instrumentality of the foregoing, in respect of the conduct of their respective businesses and the ownership of their respective properties, except such as are being contested in good faith by appropriate proceedings and except for such noncompliance as would not in any case or in the aggregate in the reasonable determination of the Borrower impair the ability of the Borrower to perform its payment or other material obligations under the Loan Documents. The Borrower shall not conduct any Hazardous Materials Activity at any Facility or at any other location in a manner that does not comply with Environmental Laws. SECTION 5.7. BORROWER'S REMEDIAL ACTION REGARDING HAZARDOUS MATERIALS. To the extent required by Environmental Laws, the Borrower will take, and will cause each of its Subsidiaries to take, any and all necessary remedial action (except to the extent that such remedial action is taken by other Persons responsible for such remedial action through contractual arrangements with the Borrower) in connection with the presence, storage, use, disposal, transportation or Release of any Hazardous Materials 55 on, under or about any Facility in order to comply timely with all applicable Environmental Laws and Governmental Authorizations except for such non-compliance as would not in any case or in the aggregate in the reasonable determination of the Borrower impair the ability of the Borrower to perform its payment and other material obligations under the Loan Documents. In the event the Borrower or any of its Subsidiaries undertakes any remedial action with respect to any Hazardous Materials on, under or about any Facility, the Borrower or such Subsidiary will conduct and complete such remedial action (or will cause such action to be taken pursuant to contractual rights of the Borrower against third parties) in compliance with all applicable Environmental Laws, and in accordance with the policies, orders and directives of all federal, state and local governmental authorities except when, and only to the extent that, the Borrower's or such Subsidiary's liability for such presence, storage, use, disposal, transportation or discharge of any Hazardous Materials is being contested in good faith and by appropriate proceedings diligently conducted by the Borrower or such Subsidiary or except for such non-compliance as would not in any case or in the aggregate in the reasonable determination of the Borrower impair the ability of the Borrower to perform its payment and other material obligations under the Loan Documents. SECTION 5.8. FURTHER ASSURANCES. At any time or from time to time upon the request of the Board, any Counter-Guarantor, the Loan Administrator or the Agent, the Obligors will, at their expense, promptly execute, acknowledge and deliver such further documents and do such other acts and things as the Board, such Counter-Guarantor, the Loan Administrator or the Agent may reasonably request in order to effect fully the purposes of the Loan Documents and to provide for payment of the Obligations in accordance with the terms of this Agreement, the Note and the other Loan Documents. SECTION 5.9. EMPLOYEE BENEFIT PLANS. The Borrower shall take such actions as are reasonably practicable to ensure that the Plans with respect to which it may have any liability are operated in material compliance with all applicable laws, except to the extent that the failure to do so could not in the reasonable determination of the Borrower be expected to impair the ability of the Borrower to perform its payment or other material obligations under the Loan Documents. Neither the Borrower nor a Subsidiary shall amend, adopt or terminate any Plan unless such action could not in the reasonable determination of the Borrower be expected to impair the ability of the Borrower to perform its payment or other material obligations under the Loan Documents. SECTION 5.10. FAA MATTERS; CITIZENSHIP. The Borrower will at all times hereunder be an "air carrier" within the meaning of the Act and hold a certificate under 49 U.S.C. Section 41102(a)(1) as currently in effect or as may be amended or recodified from time to time. The Borrower will at all times hereunder be a United States Citizen holding an air carrier operating certificate issued pursuant to Chapter 447 of the Act for aircraft capable of carrying 10 or more individuals or 6,000 pounds or more of cargo. The Borrower will possess and maintain all necessary consents, franchises, licenses, 56 permits, rights and concessions and consents which are material to the operation of the routes flown by it and the conduct of its business and operations as currently conducted. SECTION 5.11. BOARD GUARANTEE. The Borrower shall comply with all of the terms, requirements and conditions applicable to it under the Act and the Regulations, or as may otherwise be imposed by, or agreed with, the Board in connection with the issuance of the Board Guarantee, and shall promptly furnish the Board, the Loan Administrator and the Agent (with a copy to the Counter-Guarantors) all such information as may be requested by the Board, the Loan Administrator or the Agent in connection with the Board Guarantee. The Borrower shall execute such documents and take such actions in furtherance of its obligations under the Act and the Regulations as the Board, the Loan Administrator or the Agent may request. SECTION 5.12. LOWER-TIER COVERED TRANSACTION. The Borrower agrees that in the event that it enters into any "lower-tier covered transaction" (as such term is defined in 31 C.F.R. Section 19.110, as amended or modified from time to time and not excepted therefrom by 31 C.F.R. Section 19.200(c)) in respect of the transactions contemplated hereunder, it will include the clause entitled "Certificate Regarding Debarment, Suspension, Ineligibility and Voluntary Exclusion - Lower Tier Covered Transactions" as set forth in Appendix B to Part 19 of title 31 of the C.F.R. in such "lower-tier covered transaction", and that it will obtain a certification from the other Person or Persons party to such "lower-tier covered transaction" to the effect that each such other Person (and each "principal" thereof, as such term is defined in 31 C.F.R. Section 19.105, as amended or modified from time to time) is not presently debarred, suspended, proposed for debarment, declared ineligible, or voluntarily excluded from participation in such transaction by any Federal department or agency, or an explanation why such Person is unable to so certify. Further, Borrower agrees that it will not enter into a "lower-tier covered transaction" with a Person who has been proposed for debarment under 48 C.F.R. Section 9.4, debarred or suspended unless granted an exception for such "lower-tier covered transaction" pursuant to 31 C.F.R. Section 19.215. SECTION 5.13. AUDITS AND REVIEWS. The Borrower agrees to permit, and to cooperate in the conduct of, such audits and reviews during the period the Loan is outstanding and for three years thereafter, as the Board may deem appropriate, by an independent auditor acceptable to the Board or the United States Comptroller General. To the extent requested by the Board or the Loan Administrator, the Borrower shall provide access to the officers and employees, books, records, accounts, documents, correspondence, and other information of the Borrower, its Subsidiaries, Affiliates, financial advisors, consultants and independent certified accountants that the Board or the United States Comptroller General considers necessary. SECTION 5.14. ADDITIONAL COLLATERAL. The Borrower shall use commercially reasonable efforts to add to the collateral securing the loans under the Term Loan Agreement in any instance when the Borrower would otherwise be required under 57 the Term Loan Agreement to prepay such loans as a result of a borrowing base deficiency thereunder. ARTICLE VI NEGATIVE COVENANTS To induce the other parties to enter into this Agreement and to induce the Counter-Guarantors to enter into their respective Counter-Guarantees, the Borrower agrees with each other party hereto and the Counter-Guarantors that, as long as any of the Obligations remain outstanding: SECTION 6.1. LIENS AND RELATED MATTERS. A. Prohibition on Liens. The Borrower shall not, and shall not permit any of its Subsidiaries to, directly or indirectly create, incur, assume or permit to exist any Lien on or with respect to any property or asset of any kind (including any document or instrument in respect of goods or accounts receivable) of the Borrower or any of its Subsidiaries, whether now owned or hereafter acquired, or any income or profits therefrom, or file or permit the filing of, or permit to remain in effect, any financing statement or other similar notice of any Lien with respect to any such property, asset, income or profits under the Uniform Commercial Code of any state or under any similar recording or notice statute, except: (i) Permitted Encumbrances; and (ii) purchase money Liens securing Indebtedness used to acquire Aircraft Related Equipment or liens created or incurred in connection with refinancing of any Aircraft Related Equipment acquired by the Borrower which refinancing occurs within 18 months after the date of such acquisition; (iii) other Liens securing or relating to Indebtedness permitted pursuant to this Agreement and other liabilities and obligations permitted pursuant to this Agreement in an aggregate amount not to exceed $25,000,000 at any time outstanding; and (iv) Liens securing Indebtedness used to refinance the Loan. B. No Restrictions on Subsidiary Distributions to Borrower or Other Subsidiaries. Except (i) as provided herein and (ii) as described on Schedule 6.1 annexed hereto, the Borrower will not, and will not permit any of its Subsidiaries to, create or otherwise cause or suffer to exist or become effective any Payment Restriction. 58 SECTION 6.2. INVESTMENTS. Neither Obligor shall, nor shall permit any Subsidiary to make any Investment other than (i) Investments consisting of Cash Equivalents; (ii) accounts receivable if credited or acquired in the ordinary course of business and payable or dischargeable in accordance with customary trade terms; (iii) payroll advances and advances for business and travel expenses in the ordinary course of business; (iv) Investments by the Borrower in its Wholly-Owned Subsidiaries in the ordinary course of business and Investments by Holdings in its Wholly-Owned Subsidiaries in the ordinary course of business; (v) Investments by any Subsidiary of the Borrower in the Borrower or in any other Wholly-Owned Subsidiary and Investments by any Subsidiary of Holdings (but with respect to the Borrower and its Subsidiaries, only to the extent such Investment is not prohibited by any other provision of this Agreement) in Holdings or in any other Wholly-Owned Subsidiary of Holdings; (vi) Investments made by way of any endorsement of negotiable instruments received by Holdings, the Borrower or any Subsidiary in the ordinary course of its business and presented by it to any bank for collection or deposit; (vii) stock, obligations or securities received in settlement of debts created in the ordinary course of business owing to Holdings, the Borrower or any Subsidiary; (viii) Investments by Holdings and the Borrower in any Wholly-Owned Subsidiary for the purpose of receivables financing; (ix) in addition to any other permitted investments, any other Investments by Holdings or the Borrower in an aggregate amount not exceeding $1,000,000 at any time; and (x) Investments in travel or airline related businesses made in connection with marketing and promotion agreements, alliance agreements, distribution agreements, agreements relating to flight training and other similar agreements under which a portion of the consideration to Holdings or the Borrower includes an opportunity for Investment in the Capital Stock of other Persons, which Investments under this clause (x) shall not exceed $60,000,000 in the aggregate. SECTION 6.3. RESTRICTED PAYMENTS. The Borrower shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, declare, order, pay, make or set apart any sum for any Restricted Payment; provided, however, that the Borrower may, so long as no Default or Event of Default shall have occurred and be continuing make a Restricted Payment to Holdings (i) to pay or reimburse the Borrower's share of Holding's business expenses and overhead in a maximum amount of $2,500,000 per Fiscal Year, (ii) to pay or reimburse Holdings for Capital Stock (including options on any such Capital Stock or related stock appreciation rights or similar securities) purchases or redemptions from officers, directors or employees of the Borrower or Holdings (or their estates or beneficiaries under their estates) upon death, disability, retirement, termination of employment or pursuant to the terms of any plan or any other agreement under which such Capital Stock or related rights were issued, in an amount not to exceed $3,000,000 per Fiscal Year, (iii) to pay or reimburse Holdings for withholding taxes arising from cashless exercises of options or warrants by officers, directors or employees for Holdings' Capital Stock and (iv) to pay or reimburse Holdings for interest payments under the Lease Indenture in an amount not to exceed $11,000,000 in Fiscal Year 2002, $12,000,000 in Fiscal Year 2003, $13,000,000 in Fiscal Year 2004, and $14,000,000 in Fiscal Year 2005 and each fiscal year thereafter until the Loan Maturity Date; provided, 59 that repayments of the Senior Notes from proceeds of Future Issuances, Excess Proceeds or Net Insurance Proceeds to the extent permitted or required hereunder shall not be deemed a Restricted Payment. SECTION 6.4. FINANCIAL COVENANT. The Borrower shall not permit the reserve of unrestricted Cash and Cash Equivalents (that in either case are free from all Liens other than Permitted Encumbrances of the type described in clause (xi) of the definition of Permitted Encumbrances) of the Borrower and its Wholly-Owned Subsidiaries to be less than One Hundred Million Dollars ($100,000,000). SECTION 6.5. RESTRICTION ON FUNDAMENTAL CHANGES; ASSET SALES AND ACQUISITIONS; NEW SUBSIDIARIES. Neither Obligor shall, nor shall permit any of its Subsidiaries to, enter into any transaction of merger or consolidation, or liquidate, wind-up or dissolve itself (or suffer any liquidation or dissolution), or convey, sell, lease, sub-lease, transfer or otherwise dispose of, in one transaction or a series of transactions, all or any part of its business, property or fixed assets, whether now owned or hereafter acquired, or acquire by purchase or otherwise all or any portion of the business, property or fixed assets (excluding therefrom purchases and acquisitions in the ordinary course of business by Holdings, the Borrower and their Subsidiaries of property from any Person not constituting all or substantially all of the property of such Person), or stock or other evidence of beneficial ownership of, any Person or any division or line of business of any Person, except: (i) any Subsidiary of the Borrower may be merged with or into the Borrower or any Wholly-Owned Subsidiary of the Borrower or be liquidated, wound up or dissolved, or all or any part of its business, property or assets may be conveyed, sold, leased, transferred or otherwise disposed of, in one transaction or a series of transactions, to the Borrower or any such Wholly-Owned Subsidiary of the Borrower; provided that, in the case of such a merger, the Borrower or such Wholly-Owned Subsidiary shall be the continuing or surviving corporation, and any Subsidiary of Holdings (other than the Borrower and any of its Subsidiaries) may be merged with or into Holdings or any Wholly-Owned Subsidiary of Holdings or be liquidated, wound up or dissolved, or all or any part of its business, property or assets may be conveyed, sold, leased, transferred or otherwise disposed of, in one transaction or a series of transactions, to Holdings or any such Wholly-Owned Subsidiary of Holdings; provided, that, in the case of such a merger, Holdings or such Wholly-Owned Subsidiary shall be the continuing or surviving corporation; and (ii) Holdings, the Borrower and their Subsidiaries may sell or otherwise dispose of assets in transactions that are excepted from the definition of Asset Sales; provided that the consideration received for such assets shall be in an amount at least equal to the fair market value thereof; and (iii) Holdings, the Borrower and their Subsidiaries may make Asset Sales subject to Section 6.10 hereto; and 60 (iv) the Obligors may make acquisitions of Capital Stock, the assets and/or the business of another Person (including any division or line of business of such Person) provided that, (a) the acquisition primarily involves the acquisition of assets to be used in the business of the Obligors, (b) with respect to such acquisition any newly acquired Subsidiary of the Borrower shall be a Wholly-Owned Subsidiary, and any newly acquired Subsidiary of Holdings shall be a Wholly-Owned Subsidiary, (c) immediately before and after giving effect thereto, no Default or Event of Default shall have occurred and be continuing, (d) immediately after giving effect to the acquisition, the Borrower shall be in compliance on a Pro Forma Basis with Section 6.4 and such compliance shall be evidenced by an Officer's Certificate demonstrating such compliance, (e) immediately following such acquisition, the Borrower's credit rating is no lower than immediately prior thereto, (f) the aggregate purchase price in connection with all such acquisitions (excluding therefrom any Indebtedness assumed in connection with such acquisitions and any portion of the purchase price thereof paid with the Borrower's Common Stock) does not exceed $200,000,000, and (g) neither Obligor nor any Subsidiary shall assume any Indebtedness that was incurred or issued by any Person to finance such acquisition; provided, however, that prior to the date on which the outstanding principal amount of the Loan is equal to or less than $150,000,000, only Investments which are otherwise permitted under Section 6.2 shall be permitted under this clause (iv); (v) the Obligors may enter into a consolidation or merger that complies with Sections 6.9 and 6.11 hereof; and (vi) the Borrower will not change its Fiscal Year if such change will cause an unreasonable delay in the production of the financial statements required by Section 5.1(ii). SECTION 6.6. SALES AND LEASE-BACKS. The Borrower shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, become or remain liable as lessee or as a guarantor or other surety with respect to any lease, whether an Operating Lease or a Capital Lease, of any property (whether real, personal or mixed), whether now owned or hereafter acquired, other than aircraft (including aircraft engines installed thereon), spare aircraft engines, aircraft parts, simulators, passenger loading bridges or other flight or ground support equipment, in each case which (i) the Borrower or any of its Subsidiaries has sold or transferred or is to sell or transfer to any other Person (other than the Borrower or any of its Subsidiaries) or (ii) the Borrower or any of its Subsidiaries intends to use for substantially the same purpose as any other property which has been or is to be sold or transferred by the Borrower or any of its Subsidiaries to any Person (other than the Borrower or any of its Subsidiaries) in connection with such lease; provided that the Borrower and its Subsidiaries may become and remain liable as lessee, guarantor or other surety with respect to any such lease if and to the extent that the annual aggregate rentals under all such leases shall not exceed $20,000,000. 61 SECTION 6.7. TRANSACTIONS WITH AFFILIATES. (a) Neither the Borrower nor any Subsidiary of the Borrower shall, directly or indirectly (i) sell, lease, transfer or otherwise dispose of any of its properties or assets, or issue securities to, (ii) purchase any property, assets or securities from, (iii) make any Investment in, or (iv) enter into or suffer to exist any contract or agreement with or for the benefit of, an Affiliate or holder of 5% or more of any class of Capital Stock (and any Affiliate of such holder) of the Borrower (an "Affiliate Transaction"), other than (x) Affiliate Transactions permitted under Section 6.7(b) hereof and (y) Affiliate Transactions (including lease transactions) which are on fair and reasonable terms no less favorable to the Borrower or such Subsidiary, as the case may be, than those as might reasonably have been obtainable at such time from an unaffiliated party; provided that if an Affiliate Transaction or series of Affiliate Transactions involves or has a value in excess of $15,000,000, the Borrower or such Subsidiary, as the case may be, shall not enter into such Affiliate Transaction or series of Affiliate Transactions unless a majority of the disinterested members of the board of directors of the Borrower or such Subsidiary shall reasonably and in good faith determine that such Affiliate Transaction is fair and reasonable to the Borrower or such Subsidiary, as the case may be, or is on terms no less favorable to the Borrower or such Subsidiary, as the case may be, than those as might reasonably have been obtained at such time from an unaffiliated party. (b) The provisions of Section 6.7(a) shall not apply to (i) the agreements listed on Schedule 6.7(b) or any transaction contemplated thereby so long as any such agreement or transaction is not disadvantageous to the Board, the Lenders or (solely in respect of its interest in the transactions contemplated by this Agreement and its Counter-Guarantee) any Counter-Guarantor in any material respect; (ii) any transaction between the Borrower and any Wholly-Owned Subsidiary or between Wholly-Owned Subsidiaries, provided such transactions are not otherwise prohibited by this Agreement; (iii) reasonable and customary fees and compensation paid to, and indemnity provided on behalf of, officers, directors, employees or consultants of the Borrower or any Subsidiary, as determined by the board of directors of the Borrower or any Subsidiary or the senior management thereof in good faith; (iv) any Restricted Payments not prohibited by Section 6.3; (v) any payments or other transactions pursuant to any tax sharing agreement between the Borrower and any other Person with which the Borrower is required or permitted to file a consolidated, combined, affiliated, unitary or similar tax return or with which the Borrower is or could be part of a consolidated, combined, affiliated, unitary or similar group for tax purposes; (vi) transactions with Chautauqua Airlines, Inc., Continental Airlines, Inc., Mesa Airlines, Inc. and their respective Affiliates as contemplated by the Alliance Agreements; and (vii) the Loan Documents and the transactions contemplated thereby. SECTION 6.8. CONDUCT OF BUSINESS. From and after the date hereof, neither Obligor shall, nor shall permit any of its Subsidiaries to, engage in any business other than (i) the businesses engaged in by the Obligors and their Subsidiaries on the date hereof and similar or related businesses and (ii) such other lines of business as may be consented to by the Board and the Requisite Lenders. 62 SECTION 6.9. MERGER OR CONSOLIDATION. Neither Obligor shall consolidate with or merge with any other Person or convey, lease or transfer its properties and assets substantially as an entirety to any Person, unless: (i) in the case of a consolidation or merger involving the Borrower, the Borrower is the surviving entity or if the Borrower is not the surviving entity, such surviving entity or the Person that acquires by conveyance, lease or transfer the properties and assets of the Borrower substantially as an entirety, shall be a corporation organized and existing under the laws of the United States of America or any State or the District of Columbia, and shall expressly assume, by an agreement executed and delivered to the Agent, in form satisfactory to the Agent, the Borrower's Obligations to repay the Loan and all other Obligations of the Borrower, or in the case of a consolidation or merger involving Holdings, Holdings is the surviving entity or if Holdings is not the surviving entity, such surviving entity or the Person that acquires by conveyance, lease or transfer the properties and assets of Holdings substantially as an entirety, shall be a corporation organized and existing under the laws of the United States of America or any State or the District of Columbia; (ii) immediately before and after giving effect to such transaction, no Event of Default or Default shall have occurred and be continuing; (iii) immediately following such acquisition, the Borrower's credit rating is no lower than immediately prior thereto; (iv) neither Obligor nor any Subsidiary shall assume any Indebtedness that was incurred or issued by any Person to finance such transaction; (v) the Borrower has delivered to the Agent an Officer's Certificate and an opinion of counsel from counsel satisfactory to the Agent, in form and substance satisfactory to the Agent, stating that such consolidation, merger, conveyance, lease or transfer and such agreement comply with this Section and that all conditions precedent herein provided for relating to such transaction have been complied with and addressing such other matters as may be reasonably requested by the Board and the Agent; provided, however, that notwithstanding the foregoing provisions of this Section 6.9, prior to the date on which the outstanding principal amount of the Loan is equal to or less than $150,000,000, neither Obligor shall consolidate with or merge with any other Person or convey, lease or transfer its properties and assets substantially as an entirety to any Person. SECTION 6.10. LIMITATION ON ASSET SALES. In the event and to the extent that on any date after the Closing Date either Obligor or any of their Subsidiaries shall receive Net Cash Proceeds from one or more Asset Sales (other than Asset Sales by the Borrower or any Wholly-Owned Subsidiary of Borrower to the Borrower or another Wholly-Owned Subsidiary of Borrower or Asset Sales by Holdings or any Wholly-Owned Subsidiary (other than Borrower or any of its Subsidiaries) to Holdings or another Wholly-Owned Subsidiary of Holdings) in excess of $20,000,000 during any Fiscal Year, then Holdings or the Borrower, as the case may be, shall, or shall cause such Subsidiary to, promptly apply such excess amount while the Senior Notes are outstanding, to repay Indebtedness of the Borrower under the Senior Notes. The amount of such Net Cash Proceeds required to be applied (or to be committed to be applied) during such Fiscal Year as set forth in the preceding sentence shall constitute "Excess Proceeds." To the extent any Excess Proceeds are not applied as set forth above, such Excess Proceeds shall be applied as required by Section 2.6(b). 63 SECTION 6.11. LIMITATION ON ISSUANCES AND DISPOSITIONS OF CAPITAL STOCK OF SUBSIDIARIES. Each Subsidiary of the Borrower shall at all times be a Wholly-Owned Subsidiary of the Borrower. The Borrower (i) shall not, and shall not permit any Subsidiary to, transfer, convey, sell, encumber or otherwise dispose of any Capital Stock of a Subsidiary, or securities convertible or exchangeable into, or options, warrants, rights or any other interest with respect to, Capital Stock of a Subsidiary to any Person (other than the Borrower or a Wholly-Owned Subsidiary) and (ii) shall not permit any Subsidiary to issue shares of its Capital Stock (other than directors' qualifying shares), or securities convertible or exchangeable into, or options, warrants, rights or any other interest with respect to, its Capital Stock to any Person other than to the Borrower or a Wholly-Owned Subsidiary; provided, that the limitations of this Section shall not apply to any transaction between or among the Borrower and one or more direct or indirect Wholly-Owned Subsidiaries of the Borrower whereby the Borrower merges, consolidates or otherwise combines with such Wholly-Owned Subsidiary and pursuant to which all existing holders of Capital Stock of the Borrower receive, upon conversion or otherwise in exchange for securities owned by such holders, Capital Stock of a corporation which immediately prior to such exchange is a Wholly-Owned Subsidiary, and which securities have rights and preferences identical to those of the securities replaced, so long as (a) immediately before and after giving effect to such transaction no Default or Event of Default shall have occurred and be continuing, (b) such transaction is otherwise in conformity with and not prohibited by this Agreement and (c) immediately following such transaction, the Borrower's credit rating is no lower than immediately prior thereto. SECTION 6.12. LIMITATION ON CREATION OF NEW SUBSIDIARIES. Neither Obligor may create new Subsidiaries, except Wholly-Owned Subsidiaries and if (i) the total assets of such Subsidiaries in the aggregate (other than single purpose Subsidiaries created solely for the purpose of financing aircraft for use by the Borrower) do not at any time exceed five percent (5%) of the consolidated total assets of the Borrower, in each case determined in accordance with GAAP and (ii) the Borrower complies with the provisions of Section 5.1(xi) hereof, but can make Investments permitted under Section 6.2. SECTION 6.13. LIMITATIONS ON AMENDMENTS. Neither Obligor shall amend, waive or modify, nor shall it consent to or request any amendment, waiver or modification, of any of the material terms, conditions, representations and covenants contained in any Indebtedness for borrowed money that (i) shortens the final maturity date of such Indebtedness (without giving effect to any amendment, waiver or modification, the "Initial Indebtedness"; and after giving effect to any such amendment, waiver or modification, the "Amended Indebtedness"), (ii) requires the acceleration of the final scheduled maturity date and/or any principal payments, including but not limited to scheduled payments and mandatory prepayments, and/or increases the principal amount payable on any date (including, without limitation, pursuant to mandatory prepayments) prior to the dates of analogous payments of such Initial Indebtedness, (iii) provides for an interest rate applicable to such Amended Indebtedness, plus the interest rate equivalent of all remaining fees and costs associated with closing and servicing such 64 Amended Indebtedness higher than the greater of (x) (I) if such Amended Indebtedness bears interest at a floating rate of interest, 105% of the average remaining interest rate applicable to such Initial Indebtedness plus the average remaining fees and costs associated with servicing such Initial Indebtedness, or (II) if such Amended Indebtedness bears interest at a fixed rate of interest, the amount calculated as the sum of clause (I) above plus the appropriate fixed-for-floating swap rate for the Initial Indebtedness, and (y) 105% of the average remaining "all in" interest expense for such Initial Indebtedness as contemplated in the Business Plan. Neither Obligor shall agree to any amendment, waiver or modification of the Concessions if, after giving effect to such amendment, waiver or modification, the aggregate value of the Concessions as a whole that the Borrower realizes and is scheduled to realize during the term of the Loan would be reduced as a result of such amendments, waivers or modifications by more than $60.0 million in the aggregate, as determined in good faith by the Borrower. In connection with any amendment, waiver or modification to the Concessions which reduce the value of the Concessions taken as a whole, the Borrower shall provide the Board with an Officer's Certificate certifying that such amendment, waiver or modification complies with the conditions of the preceding sentence and, taken as a whole, are beneficial to the Borrower and such reduction shall not have a material adverse effect on the Borrower's ability to repay the Loan. The Obligors shall perform each of their material obligations under the Lease Indenture and the Concessions, in each case strictly in accordance with the terms thereof, and shall not reduce or agree to reduce the exercise price of the convertible debentures issued under the Lease Indenture to less than $12.00. The Borrower agrees to promptly notify the Agent, the Board and the Counter-Guarantors of any default under the Lease Indenture or the Concessions. Holdings may not issue convertible debentures under the Lease Indenture in excess of $120 million, except that Holdings may issue up to (but not more than) $30 million of additional convertible debentures under the Lease Indenture, provided that for each $1.00 so issued the Borrower receives and realizes during the term of the Loan concessions valued at at least $2.50. SECTION 6.14. NO FURTHER NEGATIVE PLEDGES. Except with respect to (a) specific property encumbered to secure payment of particular Indebtedness or to be sold pursuant to an executed agreement with respect to a permitted asset sale, and (b) restrictions by reason of customary provisions restricting assignments, subletting or other transfers contained in leases, licenses and similar agreements entered into in the ordinary course of business (provided that such restrictions are limited to the property or assets secured by such Liens or the property or assets subject to such leases, licenses or similar agreements, as the case may be), after the date hereof neither the Borrower nor any of its Subsidiaries shall enter into any agreement prohibiting the creation or assumption of any Lien upon any of its properties or assets, whether now owned or hereafter acquired. SECTION 6.15. INCENTIVE EQUITY PLAN. Any employee stock options granted under the America West 1994 Incentive Equity Plan on or prior to the Closing Date shall not have been, and shall not be, repriced from the date of the Borrower's initial Application for so long as the Loan shall remain outstanding). For purposes of this Section 6.15, "repricing" shall mean any repricing transaction required to be disclosed 65 under Item 402(i) of Regulation S-K under the Securities Act of 1933, as amended. Neither Obligor shall award or pay any compensation to any officer, director or employee who holds options that are subject to the restriction in this Section 6.15 which is intended to off-set the effect of the repricing restriction. ARTICLE VII EVENTS OF DEFAULT SECTION 7.1. EVENTS OF DEFAULT. Each of the following events shall be an Event of Default: (a) (i) Failure by the Borrower to pay any installment of principal of the Loan when due, whether at stated maturity, by acceleration, by notice of voluntary prepayment, by mandatory prepayment or otherwise; or (ii) failure by the Borrower to pay any interest on the Loan or any fee or any other amount due under this Agreement or any other Loan Document within five Business Days after the date due; or (b) Either Obligor or any Subsidiary (i) fails to make (whether as primary obligor or as guarantor or other surety) any principal payment of or interest or premium, if any, on any Indebtedness (other than Indebtedness referred to in Section 7.1(a)) or fails to make any payment under any one or more Operating Leases beyond any period of grace provided with respect thereto, provided that the aggregate amount of all Indebtedness and aggregate amounts under Operating Leases as to which such a payment default shall occur and be continuing is equal to or exceeds $10,000,000, or (ii) fails to duly observe, perform or comply with any agreement with any Person or any term or condition of any instrument, if such failure, either individually or in the aggregate, shall have caused or shall have the ability to cause the acceleration of the payment of Indebtedness with an aggregate face amount or payment under one or more Operating Leases in an aggregate amount which in each case is equal to or exceeds $10,000,000; or (c) Failure of the Borrower to perform or comply in any material respect with any term or condition contained in Sections 2.4(f), 5.2 and 5.10 of this Agreement; or (d) Any representation, warranty, certification or other statement made by either Obligor in any Loan Document or in any statement or certificate at any time given by either Obligor in writing pursuant hereto or thereto or in connection herewith or therewith shall be false in any material respect on the date as of which made; or (e) Any default in the performance of or compliance with any term contained in this Agreement (including, without limitation, any failure by Holdings to comply with any of the terms herein as if it were a party hereto) or any of the other Loan Documents (other than any such term referred to in any other subsection of this Section 7.1), and such default shall not have been remedied or waived (x) within 30 days after the 66 earlier of (a) a Responsible Officer of the Borrower becoming aware of such default or (b) receipt by the Borrower of notice from the Agent or the Board of such default or (y) with respect to a default under Section 6.4, the earlier of (a) an officer of the Borrower becoming aware of the default after the applicable measurement date and (b) the delivery of financial statements pursuant to Section 5.1; or (f) (i) A court shall enter a decree or order for relief in respect of either Obligor or any of its Subsidiaries in an involuntary case under the Bankruptcy Code or under any other applicable bankruptcy, insolvency or similar law now or hereafter in effect; or any other similar relief shall be granted under any applicable federal or state law; or (ii) an involuntary case shall be commenced against either Obligor or any of its Subsidiaries under the Bankruptcy Code or under any other applicable bankruptcy, insolvency or similar law now or hereafter in effect; or a decree or order of a court for the appointment of a receiver, liquidator, sequestrator, trustee, custodian or other officer having similar powers over either Obligor or any of its Subsidiaries, or over all or a substantial part of its property, shall have been entered; or there shall have occurred the involuntary appointment of an interim receiver, trustee or other custodian of either Obligor or any of its Subsidiaries for all or a substantial part of its property; or a warrant of attachment, execution or similar process shall have been issued against any substantial part of the property of either Obligor or any of its Subsidiaries, and any such event described in clause (i) above or this clause (ii) shall continue for 60 days unless dismissed, bonded or discharged; or (g) (i) Either Obligor or any of its Subsidiaries shall have an order for relief entered with respect to it or commence a voluntary case under the Bankruptcy Code or under any other applicable bankruptcy, insolvency or similar law now or hereafter in effect, or shall consent to the entry of an order for relief in an involuntary case, or to the conversion of an involuntary case to a voluntary case, under any such law, or shall consent to the appointment of or taking possession by a receiver, trustee or other custodian of all or a substantial part of its property; or either Obligor or any of its Subsidiaries shall make any assignment for the benefit of creditors; or (ii) either Obligor or any of its Subsidiaries shall be unable, or shall fail generally, or shall admit in writing its inability, to pay its debts as such debts become due; or the board of directors of either Obligor or any of its Subsidiaries (or any committee thereof) shall adopt any resolution or otherwise authorize any action to approve any of the actions referred to in clause (i) above or this clause (ii); or (h) Any final judgment or order (not covered by insurance) for the payment of money in excess of $25,000,000 in the aggregate for all such final judgments or orders against either Obligor or any of its Subsidiaries treating any deductibles, self-insurance or retention as not so covered shall be rendered against either Obligor or any Subsidiary and shall not be discharged, and there shall be any period of 60 consecutive days following entry of the final judgment or order that causes the aggregate amount for all such final judgments or orders outstanding against such Obligor or its Subsidiaries to 67 exceed $25,000,000 during which a stay of enforcement of such final judgment or order, by reason of a pending appeal or otherwise, shall not be in effect; or (i) Any order, judgment or decree shall be entered against either Obligor decreeing the dissolution or split up of such Obligor and such order shall remain undischarged or unstayed for a period in excess of 30 days; or (j) The Board Guarantee shall for any reason (other than by reason of Section 2.03, 2.04, 2.05 or 2.06 of the Board Guarantee) cease to be in full force and effect or the Board shall assert that any of its obligations thereunder are invalid or unenforceable; or (k) Any Counter-Guarantee shall for any reason cease to be in full force and effect or any Counter-Guarantor shall fail to perform its obligations under its Counter-Guarantee or shall, in writing, repudiate such Counter-Guarantee or deny that its obligations thereunder are valid, binding and enforceable; or (l) Any Counter-Guarantor Letter of Credit shall for any reason cease to be in full force and effect other than in accordance with its express terms and the terms of the related Counter-Guarantee or the issuer of such Counter-Guarantor Letter of Credit shall fail to perform its obligation thereunder or shall, in writing, repudiate such Counter-Guarantor Letter of Credit or deny that its obligations thereunder are valid, binding and enforceable. SECTION 7.2. REMEDIES. During the continuance of any Event of Default, the Agent shall, solely at the request of the Board or, if the Board Guarantee is no longer in full force and effect, the Requisite Lenders, by notice to the Borrower declare that the Loan, all interest thereon and all other amounts and Obligations payable under this Agreement to be immediately due and payable, whereupon the Loan, all such interest and all such amounts and Obligations shall become and be immediately due and payable, without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by the Borrower; provided, however, that upon the occurrence of the Event of Default specified in Section 7.1(f) or 7.1(g), the Loan, all such interest and all such amounts and Obligations shall automatically become and be immediately due and payable, without presentment, demand, protest or any notice of any kind, all of which are hereby expressly waived by the Borrower. For so long as the Board Guarantee shall remain in effect, remedies exercisable by the Agent hereunder shall be exercised solely upon instructions received by the Agent from the Board in writing. ARTICLE VIII THE LOAN ADMINISTRATOR 68 SECTION 8.1. ACCEPTANCE OF APPOINTMENT AND SERVICES. (a) The Lenders hereby appoint the Loan Administrator to provide the services described in Sections 8.1(b) and (c) below for the benefit of the Lenders and the Board in respect of the Loan and the Loan Documents. The Loan Administrator hereby accepts such appointment and agrees to perform such services in a professional, diligent and workmanlike manner for the benefit of the Lenders and the Board, on and subject to the terms and conditions set forth in this Agreement, but shall have no other obligations to the Lenders, the Board or any other Person except as expressly provided herein. (b) The Loan Administrator hereby agrees to perform at any time and from time to time, at the request of the Board or any Lender (any such person so requesting, a "Requesting Party") all of the following services: (i) monitor and promptly distribute to the Requesting Party any financial information, compliance certificates and other reports or written communications provided by or on behalf of the Borrower, Holdings or the Agent to the Loan Administrator hereunder or under any other Loan Document, and report to the Requesting Party whether such documents on their face comply with the requirements of the Loan Documents; (ii) based on the public reports of the Borrower and Holdings, monitor the performance of the Borrower and of Holdings under this Agreement and the other Loan Documents, as applicable, and promptly report to the Requesting Party any failure by Borrower or Holdings to comply with its respective obligations hereunder and thereunder; (iii) promptly notify the Requesting Party of (A) any downgrade in the senior unsecured credit rating of the Borrower by either S&P or Moody's, (B) any receipt by the Loan Administrator of a notice of a Default or Event of Default, or (C) any receipt by the Loan Administrator of notice of any prepayment of the Loan under Section 2.5 or Section 2.6 hereof; (iv) for each fiscal quarter of the Borrower, provide (a) a quarterly financial report, within two weeks of the Borrower's delivery of financial statements for such quarter to the Loan Administrator, analyzing the Borrower's financial statements and operations for such fiscal quarter, including a review of variances from targets identified in the operating plan of the Borrower set forth in the Application, revenue and expense performance, operating cash flow results, quarterly investment cash flows, net changes in Borrower's cash position, debt covenant compliance and such other financial matters as shall be reasonably requested in writing by a Requesting Party and (b) an indicative credit rating of the Borrower; it being acknowledged and agreed that the Loan Administrator may retain a sub-servicer reasonably acceptable to the Requesting Party to provide these services, in which event, the Loan Administrator shall not be in default of its obligations hereunder (x) if the sub-servicer fails to comply with its obligations to provide the quarterly financial reports or indicative credit rating of the Borrower described herein so long as the Loan Administrator had exercised reasonable 69 care and good faith in providing the financial statements to the sub-servicer and attempting to procure the report or indicative credit rating on behalf of the Requesting Party, or (y) if the Loan Administrator is unable, after exercising reasonable care and good faith, to retain a sub-servicer to provide an indicative credit rating of the Borrower; (v) review the periodic reports and other reports which the Borrower is obligated to provide to the Loan Administrator, the Lenders or the Board hereunder or under any other Loan Document, and report to the Requesting Party regarding such matters as are specifically identified in writing by such Requesting Party with respect to such reports; (vi) at the written direction of a Requesting Party, give notices or provide instructions on behalf of the Requesting Party to any Person under this Agreement or any of the other Loan Documents in accordance with the terms and conditions hereof and thereof; (vii) at the written request of a Requesting Party and at the expense of the Borrower, report to the Requesting Party on the business and financial substance of any proposed amendment to, or assignment of, this Agreement or any other Loan Document; (viii) at the written request of a Requesting Party and at the expense of the Borrower, visit the Borrower or Holdings, or both, and inspect the financial and accounting records and take extracts therefrom and make relevant inquiries of each such Person so as to respond to specific questions from the Requesting Party regarding such Person's financial condition and ability to perform its respective obligations under the other Loan Documents; (ix) at the direction and expense of the Requesting Party, procure and coordinate the advice of professional advisers necessary for such Requesting Party to perform its obligations and enforce its rights under the Loan Documents; and (x) subject to subsection (c) below, at the expense of the Requesting Party, take such other actions as may be reasonably requested in writing by the Requesting Party in respect of the Loan and the Loan Documents, such actions to be upon such terms and conditions as shall be mutually agreed to by the Requesting Party and the Loan Administrator. (c) With respect to the Loan Administrator's responsibilities under Sections 8.1(b) above, the Loan Administrator shall not be required to take any action which exposes the Loan Administrator to liability or which is contrary to this Agreement, any other Loan Document, the Board Guarantee or applicable law. The execution and delivery of this Agreement by the Loan Administrator shall not give rise to any implied duties or fiduciary obligations of the Loan Administrator to any Requesting Party or any other Person. The Board hereby acknowledges and agrees that the failure of the Loan 70 Administrator to perform any of its obligations hereunder shall not invalidate or otherwise affect the Board Guarantee. (d) Except as permitted in subsection (b)(iv) above, the Loan Administrator shall not be permitted to assign any of its obligations hereunder, enter into sub-servicing agreements or otherwise delegate any of its duties under this Agreement without the prior written consent of the Requisite Lenders and the Board. The Loan Administrator hereby acknowledges and agrees that the fees and expenses payable to any sub-servicer retained by it in accordance with this Agreement shall be paid out of the fees payable by the Borrower to the Loan Administrator under Section 2.8(e). (e) The Loan Administrator may retain legal counsel (including counsel for the Loan Administrator), independent public accountants and other experts or advisers as desirable to provide the services set forth in Section 8.1(b), and shall be reimbursed by the Borrower for the reasonable associated costs and such other reasonable expenses as the Loan Administrator shall incur in providing such services. The Borrower shall be responsible for such costs and expenses with respect to the services set forth in Section 8.1(b)(viii) hereof (calculated in the manner set forth in Section 2.8(e)(iv)), and a Requesting Party shall be responsible for the costs and expenses with respect to the services set forth in Section 8.1(b)(ix) and (x) if requested by such Requesting Party (calculated in the manner set forth in Section 2.8(e)(iv)). (f) In the event that any of the Lenders or the Board shall request that the Loan Administrator provide additional services to it under Section 8.1(b)(x) or which are otherwise outside the scope of the services to be provided by the Loan Administrator hereunder, the Loan Administrator shall, to the extent it agrees to provide such additional services to such party, be entitled to charge such party such additional fees. Unless otherwise agreed to by such Person and the Loan Administrator, the terms and conditions of this Article VIII shall apply to the provision by the Loan Administrator of such additional services to such party. SECTION 8.2. LOAN ADMINISTRATOR'S RELIANCE. (a) The Loan Administrator shall be entitled to rely upon any note, notice, consent, certificate, affidavit, letter, telegram, teletype message, facsimile transmission, statement, order or other document in good faith believed by it to be genuine and correct and to have been signed or sent by the proper person or persons and, in respect of legal matters, upon the opinion of counsel selected by the Loan Administrator. (b) Neither the Loan Administrator nor any of its directors, officers, agents or employees shall be liable to any Lender, the Board or any Counter-Guarantor for any action taken or omitted to be taken by it or by such directors, officers, agents or employees under or in connection with this Agreement or any other Loan Document, except for its or their own gross negligence or willful misconduct. Without limitation of the generality of the foregoing, the Loan Administrator: (i) may consult with legal counsel, independent public accountants and other experts selected by it and shall not be liable to any Lender or the Board for any action taken or omitted to be taken in good faith 71 by it in accordance with the advice of such experts; (ii) except as provided in Section 8.1(b) above, shall not have any duty to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions of this Agreement, the Note or any other Loan Document on the part of Holdings or the Borrower or to inspect the property (including the books and records) of Holdings, the Borrower or any of their respective Subsidiaries; (iii) except as otherwise provided in this Article VIII, shall not be responsible to any Lender or the Board for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement, the Note or any other Loan Document, or any other instrument or document furnished pursuant thereto; and (iv) shall incur no liability under or in respect to this Agreement, the Note or any other Loan Document by acting upon any notice, consent, certificate or other instrument or writing (which may be by telegram, facsimile transmission, cable or telex) in good faith believed by it to be genuine and signed or sent by the proper party or parties. (C) IN NO EVENT SHALL THE LOAN ADMINISTRATOR, ITS EMPLOYEES, OFFICERS, DIRECTORS OR AGENTS BE LIABLE FOR CONSEQUENTIAL, SPECIAL, INDIRECT, INCIDENTAL, PUNITIVE OR EXEMPLARY DAMAGES, COSTS, EXPENSES, OR LOSSES (INCLUDING, WITHOUT LIMITATION, LOST PROFITS AND OPPORTUNITY COSTS). THE LENDERS AND THE BOARD AGREE THAT THE LOAN ADMINISTRATOR, ITS EMPLOYEES, OFFICERS, DIRECTORS AND AGENTS SHALL NOT BE LIABLE TO THE LENDERS AND THE BOARD FOR ANY ACTIONS, DAMAGES, CLAIMS, LIABILITIES, COSTS, EXPENSES OR LOSSES IN ANY WAY ARISING OUT OF OR RELATING TO THE PERFORMANCE OR NONPERFORMANCE OF SERVICES HEREUNDER OR UNDER ANY OTHER LOAN DOCUMENT FOR AN AGGREGATE AMOUNT IN EXCESS OF THE FEES PAID BY THE LENDERS AND THE BOARD TO THE LOAN ADMINISTRATOR IN PERFORMING THE SERVICES DESCRIBED HEREIN. NO TERMS OF THIS AGREEMENT, OR ANY OTHER LOAN DOCUMENT SHALL BENEFIT OR CREATE ANY RIGHT OR CAUSE OF ACTION IN OR ON BEHALF OF ANY PERSON OR ENTITY OTHER THAN THE LENDERS AND THE BOARD. THE PROVISIONS OF THIS SUBSECTION SHALL APPLY REGARDLESS OF THE FORM OF ACTION, DAMAGE, CLAIM, LIABILITY, COST, EXPENSE, OR LOSS, WHETHER IN CONTRACT, STATUTE, TORT (INCLUDING, WITHOUT LIMITATION, NEGLIGENCE), OR OTHERWISE. SECTION 8.3. INDEMNIFICATION. The Borrower, Holdings and each Requesting Party (other than the Board) agrees to indemnify the Loan Administrator and its directors, officers, employees, advisors and representatives from and against any and all costs, losses, liabilities, claims, damages or expenses (excluding Taxes) which may be incurred by or asserted or awarded against the Loan Administrator in any way relating to or arising out of the services provided by the Loan Administrator on behalf of and at the request of such Requesting Party in connection with this Agreement or any action taken or omitted by the Loan Administrator under this Agreement or any Loan Document or both on behalf of and at the request of such Requesting Party; provided, however, that none of the Borrower, Holdings or any Requesting Party shall be liable for any portion of 72 such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from the Loan Administrator's gross negligence or willful misconduct. Without limitation of the foregoing, and to the extent that the Loan Administrator is not reimbursed therefore by the Borrower under any Loan Document, any Requesting Party requesting the Loan Administrator to take any action hereunder on its behalf agrees to reimburse the Loan Administrator promptly upon demand (but in all events within 30 days after written request) for any and all fees of the Loan Administrator, reasonable out-of-pocket costs and expenses (including counsel fees) incurred by the Loan Administrator in connection with the performance of the requested services requested by such Requesting Party hereunder and under the Loan Documents; provided that the Loan Administrator shall provide prompt written notice to the Requesting Party (a) at such time as the Actual Costs for the services provided by the Loan Administrator during any twelve month period beginning with the most recent anniversary of the Closing Date exceed eighty percent (80%) of the amount of fees actually paid by the Borrower to the Loan Administrator under Section 2.8(e)(i) for such period (including, for purposes of calculating the fees paid by the Borrower in any such period, the amount of fees carried over in accordance with Section 2.8(e)(ii) from a prior period in which the Actual Costs were less than $[...***...]), and (b) of the Borrower's failure to pay any outstanding fees, costs or expenses of the Loan Administrator. Except as provided in the preceding sentence regarding reimbursement, in no event shall the Board be obligated to indemnify the Loan Administrator or any of its directors, officers, employees, advisors, representatives or any other party under any circumstances. SECTION 8.4. SUCCESSOR LOAN ADMINISTRATOR. The Loan Administrator may resign at any time by giving 30 days prior written notice thereof to the Lenders and the Board and may be removed at any time with or without cause by the Requisite Lenders and the Board; provided, however, that the Loan Administrator shall continue to perform all Loan Administrator functions hereunder until a successor Loan Administrator shall have been appointed. Upon any such resignation or removal, the Requisite Lenders shall have the right to appoint a successor Loan Administrator, subject to confirmation by the Board. If no successor Loan Administrator shall have accepted such appointment within 120 days after the retiring Loan Administrator's giving of notice of resignation or the removal of the Loan Administrator, the Loan Administrator may appoint a successor Loan Administrator who shall be willing to accept such appointment. Upon the acceptance of any appointment as Loan Administrator hereunder by a successor Loan Administrator, such successor Loan Administrator shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring or removed Loan Administrator, and the retiring or removed Loan Administrator shall be discharged from its duties and obligations as Loan Administrator under this Agreement. After any Loan Administrator's resignation or removal hereunder as Loan Administrator the provisions of this Article VIII shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Loan Administrator under this Agreement. SECTION 8.5. CONFLICT OF INTEREST. (a) The Lenders and the Board acknowledge and agree that (i) there is an existing contract between the Department of the Treasury and KPMG Consulting, LLC (a wholly-owned subsidiary of the Loan ***Confidential Treatment Requested 73 Administrator), dated November 26, 2001 under which KPMG Consulting, LLC provides support for the Board's Air Carrier Loan Guarantee Program; (ii) the Loan Administrator may at any time and from time to time be an Affiliate of the Agent, any Lender, any Counter-Guarantor or any participant in the Loan; (iii) in addition to serving as Loan Administrator under this Agreement, the Loan Administrator may at any time and from time to time service, manage or enter into other commercial arrangements with respect to other property, loans and assets of the Agent, any Lender, any Counter-Guarantor or any participant in the Loan (each a "Loan Administrator Relationship"); (iv) in the course of conducting such activities or the services to be provided by it hereunder, or both, the Loan Administrator may from time to time have conflicts of interest by virtue of the Agent, any Lender, any Counter-Guarantor or any participant in the Loan being an Affiliate of the Loan Administrator or by virtue of a Loan Administrator Relationship or both; and (v) the Lenders and Board expressly recognize that such conflicts of interest may arise, do hereby waive such conflicts and agree that when such conflicts of interest arise the Loan Administrator shall perform the services to be provided by it hereunder in a professional, diligent and workmanlike fashion. The parties hereto further acknowledge and agree that the Loan Administrator, in its capacity as Loan Administrator, is not acting as an Affiliate of any of the parties hereto, and the performance of the Loan Administrator obligations hereunder shall not affect any right or remedy which the Agent, any Lender, any Counter-Guarantor or any participant in the Loan may have under any Loan Document, any Counter-Guarantee or the Board Guarantee whether or not any such Person is an Affiliate of the Loan Administrator. Each Requesting Party expressly acknowledges and agrees that at all times it shall take such action or omit to take such action hereunder based on its own independent analysis of the relevant transaction and attendant facts and circumstances. (b) Notwithstanding any provision herein to the contrary, if in connection with the provision of Services, a conflict of interest shall exist that, in the good faith opinion of the Loan Administrator, requires an arm's-length negotiation between the Loan Administrator, on the one hand, and any Affiliate of the Loan Administrator, Loan Administrator Relationship or a Requesting Party, on the other hand, and the Loan Administrator believes it would not be appropriate for the Loan Administrator to act on behalf of the Requesting Party in connection with such matter, then the Loan Administrator shall withdraw from acting as Loan Administrator in connection with the negotiation of the issue giving rise to such conflict of interest by giving written notice to the Requesting Party not more than ten (10) Business Days after it has made such determination. In such event, the Requesting Party shall be entitled to appoint an independent representative to act on its behalf and at its expense for purposes of the matter giving rise to such conflict of interest, and the Loan Administrator shall have no responsibility or liability to the Requesting Party with respect to such matter. During the period of such independent representative's appointment, the Loan Administrator shall continue to perform its ordinary functions as Loan Administrator to the extent that the performance of the Loan Administrator does not, in the reasonable opinion of the Requesting Party, directly or indirectly affect the matter giving rise to the conflict of interest. 74 SECTION 8.6. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE LOAN ADMINISTRATOR. The Loan Administrator hereby represents, warrants and covenants with the Lenders and the Board as follows: (a) it is duly incorporated and validly existing under the laws of its jurisdiction of incorporation; (b) it has the corporate power and authority to execute, deliver and perform its obligations under this Agreement, and this Agreement has been duly authorized by it by all necessary corporate action; (c) no authorization, consent or approval of any governmental authority, regulatory body or other Person is required for the due authorization, execution, delivery or performance by it of this Agreement; (d) this Agreement has been duly executed and delivered by it and constitutes a legal and binding obligation of it, enforceable against it in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereinafter in effect, relating to the enforcement of creditors' rights in general and except as such enforceability may be limited by general principles of equity (whether considered in a proceeding at law or in equity); (e) the execution, delivery and performance by it of this Agreement does not violate any provision of any existing law or regulation or any material agreement to which it is subject or to which it is a party or result in the creation of any Lien; (f) it has all corporate power and governmental licenses, authorizations, and consents and approvals required to carry on its business as now conducted, except where the failure to have such licenses, authorizations, and consents and approvals would not have a material adverse effect on its ability to perform its duties under this Agreement; and (g) it will maintain and implement administrative and operating procedures, and keep and maintain all documents, books, computer records and other information reasonably necessary or advisable for the performance of the services to be provided by it hereunder ARTICLE IX THE AGENT The parties hereto agree as follows: SECTION 9.1 AUTHORIZATION AND ACTION. Each Lender hereby appoints and authorizes the Agent to take such action as administrative agent on its behalf and to 75 exercise such powers under this Agreement and the Note as are delegated by such Lender to it as Agent by the terms hereof and thereof, together with such powers as are reasonably incidental thereto, and the Agent hereby accepts such authorization and appointment. As to any matters not expressly provided for by this Agreement and the Note or provided for with specific reference to this Section 9.1 (including, without limitation, enforcement or collection of the Note), the Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from action) upon the instructions of the Board or, if the Board Guarantee is no longer in full force and effect, the Requisite Lenders and such instructions shall be binding upon all Lenders; provided, however, that the Agent shall not be required to take any action which exposes the Agent to liability or which is contrary to this Agreement, the Board Guarantee, any Counter-Guarantee, any Counter-Guarantor Letter of Credit or the Note or applicable law. As to any provisions of this Agreement under which action may be taken or approval given by the Requisite Lenders or the Board or both, as the case may be, the action taken or approval given by the Requisite Lenders or the Board or both, as the case may be, shall be binding upon all Lenders to the same extent and with the same effect as if each Lender had joined therein. The Agent shall be entitled to rely upon any note, notice, consent, certificate, affidavit, letter, telegram, teletype message, facsimile transmission, statement, order or other document believed by it to be genuine and correct and to have been signed or sent by the proper person or persons and, in respect of legal matters, upon the opinion of counsel selected by the Agent. The Agent may deem and treat the payee of the Note as the owner thereof for all purposes hereof unless and until a written notice of the assignment or transfer thereof shall have been filed with the Agent. Any request, authority or consent of any Person who at the time of making such request or giving such authority or consent is the holder of the Note shall be conclusive and binding on any subsequent holder, transferee or assignee of the Note. SECTION 9.2. AGENT'S RELIANCE, ETC. Neither the Agent nor any of its directors, officers, agents or employees shall be liable to any Lender, the Loan Administrator or the Board for any action taken or omitted to be taken by it or by such directors, officers, agents or employees under or in connection with this Agreement, the Note or any other Loan Document, except for its or their own gross negligence or willful misconduct. Without limitation of the generality of the foregoing, the Agent: (i) may consult with legal counsel, independent public accountants and other experts selected by it and shall not be liable to any Lender, the Loan Administrator or the Board for any action taken or omitted to be taken in good faith by it in accordance with the advice of such experts; (ii) makes no warranty or representation to any Lender, the Loan Administrator or, except as expressly provided in the Board Guarantee, the Board and shall not be responsible to any Lender, the Loan Administrator or, except as expressly provided in the Board Guarantee, the Board for any statements, warranties or representations (whether oral or written) made in or in connection with this Agreement, the Note or any other Loan Document; (iii) shall not have any duty to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions of this Agreement, the Note or any other Loan Document on the part of Holdings or the Borrower or to inspect the property (including the books and records) of Holdings, the Borrower or any of their respective Subsidiaries; (iv) shall not be responsible to any 76 Lender, the Loan Administrator or the Board for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement, the Note or any other Loan Document, or any other instrument or document furnished pursuant thereto; (v) shall incur no liability under or in respect to this Agreement, the Note or any other Loan Document by acting upon any notice, consent, certificate or other instrument or writing (which may be by telegram, facsimile transmission, cable or telex) believed by it to be genuine and signed or sent by the proper party or parties; and (vi) may deem and treat each Lender which makes a loan hereunder as the holder of the indebtedness resulting therefrom for all purposes hereof until the Agent receives and accepts an Assignment and Acceptance Agreement entered into by such Lender, as assignor, and an eligible assignee as provided in Section 10.2 hereof. SECTION 9.3 AGENT AND AFFILIATES. If and so long as the Agent shall remain a Lender, the Agent shall have the same rights and powers under this Agreement as any other Lender and may exercise the same rights and powers under this Agreement as any other Lender and may exercise the same as though it were not the Agent; and the term "Lender" or "Lenders" shall, unless otherwise expressly indicated, include the Agent in its individual capacity. Unrelated to its role as Agent as set forth herein, the Agent and its affiliates may accept deposits from, lend money to, act as trustee under indentures of, and generally engage in any kind of business with, the Borrower, Holdings, any of its Subsidiaries and any Person who may do business with or own securities of the Borrower, all as if it were not the Agent hereunder and without any duty to account therefor to the Lenders. SECTION 9.4. REPRESENTATIONS OF THE LENDERS AND OF THE BOARD. Each Lender, the Loan Administrator and the Board has actively engaged in the negotiation of all of the terms of this Agreement. The Board has met with the Borrower and Holdings to discuss the business, affairs, financial condition and prospects of the Borrower. The Agent has no duty or responsibility, either initially or on a continuing basis, to provide any Lender, the Loan Administrator or the Board with any credit or other information with respect to the Borrower whether coming into its possession as of the date of this Agreement or at any time thereafter, or to notify any Lender, the Loan Administrator or the Board of any Event of Default except as provided in Section 9.5 hereof. This Agreement and all instruments or documents delivered in connection with this Agreement have been reviewed and approved by each Lender, the Loan Administrator and the Board and none of the Lenders, the Loan Administrator nor the Board have relied on the Agent as to any legal or factual matter in connection therewith or in connection with the transactions contemplated thereunder. SECTION 9.5. EVENTS OF DEFAULT; TERMINATION OF BOARD GUARANTEE. (a) In the event of the occurrence of any Default or Event of Default, any Lender, any Counter-Guarantor or the Board knowing of such event may (but shall have no duty to), or the Borrower pursuant to Section 5.1(v) hereof shall, give the Agent written notice specifying such Event of Default or other event and expressly stating that such notice is a "notice of default". The Agent shall not be deemed to have knowledge of such events unless the Agent has received such notice, or unless the Event of Default 77 consists of a failure of payment of principal or interest on the Note. In the event that the Agent receives such a notice of the occurrence of an Event of Default, the Agent shall give written notice thereof to the Lenders, the Counter-Guarantors, the Loan Administrator and the Board. The Agent shall take such action with respect to such Default or Event of Default as shall be reasonably directed in writing by the Board or, if the Board Guarantee is no longer in full force and effect, the Requisite Lenders, provided, however, that, unless and until the Agent shall have received such directions, the Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Event of Default as it shall deem advisable and in the best interest of the Lenders and of the Board. (b) In the event the Agent shall receive any notice from the Board to the effect that (i) the Board has the right to terminate the Board Guarantee under Section 2.05 thereof, (ii) any portion of the Board Guarantee has terminated under Section 2.04 thereof or otherwise, or (iii) the Board Guarantee shall for any reason have ceased to be in full force and effect or the Board shall have asserted that any of its obligations thereunder is invalid or unenforceable, the Agent shall promptly give written notice thereof to the Lenders. The Agent shall not be deemed to have knowledge of any such event unless the Agent has received such notice (except if any such event results from the failure of the Agent to perform any of its obligations under the Board Guarantee). SECTION 9.6. AGENT'S RIGHT TO INDEMNITY. Except for action expressly required of the Agent hereunder without instructions from any Person, the Agent shall be fully justified in failing or refusing to take any action hereunder on behalf of any Lender or the Board unless it shall first be indemnified to its satisfaction by such Lender or the Board, as the case may be, against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action. SECTION 9.7. INDEMNIFICATION OF AGENT. The Lenders hereby agree to indemnify the Agent and all affiliates, directors, officers, employees, advisors and representatives thereof (to the extent not reimbursed by the Borrower), ratably as most recently in effect prior to the date indemnification is sought, from and against any and all costs, losses, liabilities, claims, damages or expenses which may be incurred by or asserted or awarded against the Agent in any way relating to or arising out of this Agreement and/or the Note or any action taken or omitted by the Agent under this Agreement and/or the Note; provided, however, that no Lender shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from the Agent's gross negligence or willful misconduct. Without limitation of the foregoing, each Lender agrees to reimburse the Agent promptly upon demand for its ratable share of any out-of-pocket expenses (including counsel fees) incurred by the Agent in connection with the administration, or enforcement of, or the preservation of any rights under, this Agreement and/or the Note, to the extent that the Agent is not reimbursed for such expenses by the Borrower. 78 SECTION 9.8. SUCCESSOR AGENT. The Agent may with the consent (not to be unreasonably withheld), of the Lenders, the Board and the Counter-Guarantors, resign at any time by giving written notice thereof to the Lenders, the Board, the Counter-Guarantors and the Borrower and may be removed at any time with cause (or, following the Board's honoring of a demand for payment in accordance with the Board Guarantee, without cause) by the Board. Upon any such resignation or removal, the Borrower shall have the right to appoint a successor Agent, subject to confirmation by the Board, the Lenders and the Counter-Guarantors. If no successor Agent shall have accepted such appointment within 30 days after the retiring Agent's giving of notice of resignation or the Board's removal of the Agent the Agent may, with the consent (not to be unreasonably withheld) of the Board, the Lenders and the Counter-Guarantors, appoint a successor Agent who shall be willing to accept such appointment. In any event such successor Agent shall be a commercial bank organized under the laws of the United States of America or of any State thereof and shall have a combined capital and surplus of at least $1,000,000,000. Upon the acceptance of any appointment as Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring or removed Agent, and the retiring or removed Agent shall be discharged from its duties and obligations as agent under this Agreement. After any Agent's resignation or removal hereunder as Agent the provisions of this Article 9 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement. ARTICLE X MISCELLANEOUS SECTION 10.1. AMENDMENTS, WAIVERS, ETC. (a) No amendment, modification or waiver of any provision of this Agreement or any other Loan Document nor consent to any departure by the Borrower therefrom shall in any event be effective unless the same shall be in writing and (i) so long as the Board Guarantee is in full force and effect, signed by the Board or (ii) if the Board Guarantee is no longer in effect, signed by the Requisite Lenders, and then any such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that no amendment, modification, waiver or consent shall, unless in writing and signed by each Lender and each Counter-Guarantor, do any of the following: (i) subject the Lenders or the Counter-Guarantors to any additional obligations; (ii) change the scheduled final maturity of the Loan, or change the amount or date for payment of any date fixed for the payment or reduction of principal; 79 (iii) change the principal amount of the Loan (other than by the payment or prepayment thereof); (iv) change the rate of interest on the Loan or any fee, indemnity or other amount payable to any Lender or Counter-Guarantor; (v) change any date fixed for payment of such interest, indemnity or other amount or fees; (vi) amend the definition of "Requisite Lenders" or this Section 10.1(a); (vii) modify the application of payments to the Loan under Section 2.9; or (viii) amend or modify any material provision of Articles II, III, IV, IX, Sections 5.1 (other than 5.1(i)(b)), 5.2, 5.5, 6.1(A)(ii), 6.3, 6.4, 7.1 (other than to add Events of Default), 10.1, 10.2, 10.3, 10.4, 10.6, 10.7, 10.10, 10.11, 10.12, 10.13, 10.16 and 10.18 or any of the definitions as relevant thereto; and provided, further, that no amendment, modification, waiver or consent shall, unless in writing and signed by the Agent in addition to the Persons required above to take such action, affect the rights or duties of the Agent, as the case may be, under this Agreement, the other Loan Documents, any Counter-Guarantee or the Board Guarantee. (b) The Agent may, but shall have no obligation to, with the written concurrence of any Lender, execute amendments, modifications, waivers or consents on behalf of that Lender. Any waiver or consent shall be effective only in the specific instance and for the specific purpose for which it was given. No notice to or demand on the Borrower in any case shall entitle the Borrower to any other or further notice or demand in similar or other circumstances. (c) Notwithstanding anything herein to the contrary, in the event that the Borrower shall have requested each of the Lenders and the Counter-Guarantors, in writing, to agree to an amendment, modification, waiver or consent with respect to any particular provision or provisions hereof, and any such Lender or Counter-Guarantor shall have failed to state, in writing, that it either agrees or disagrees (in full or in part) with such request (in the case of its statement of agreement, subject to satisfactory documentation and such other conditions it may specify) within 30 days of such request, then such Lender or Counter-Guarantor hereby irrevocably authorizes the Agent to agree or disagree, in full or in part, and in the Agent's sole discretion, to such requests on behalf of such Lender or Counter-Guarantor as such Lender's or Counter-Guarantor's attorney-in-fact and to execute and deliver any writing approved by the Agent which evidences such agreement as such Lender's or Counter-Guarantor's duly authorized agent for such purposes. 80 (d) In connection with any proposed amendment, modification, waiver or termination (a "Proposed Change") requiring the consent of all affected Lenders, if the consent of Requisite Lenders is obtained, but the consent of other Lenders whose consent is required is not obtained (any such Lender whose consent is not obtained as described in this Section 10.1 being referred to as a "Non-Consenting Lender"), then, so long as the Lender that is acting as the Agent is not a Non-Consenting Lender, at the Borrower's request, the Agent or an Eligible Lender that is acceptable to the Agent and the Board shall have the right with the Agent's consent and in the Agent's sole discretion (but shall have no obligation) to purchase from such Non-Consenting Lender, and such Non-Consenting Lender agrees that it shall, upon the Agent's request, sell and assign to the Lender that is acting as the Agent or such Eligible Lender, all of the portion of the Loan of such Non-Consenting Lender for an amount equal to the principal balance of such portion of the Loan held by the Non-Consenting Lender and all accrued interest and fees with respect thereto through the date of sale, such purchase and sale to be consummated pursuant to an executed Assignment and Acceptance. SECTION 10.2. ASSIGNMENTS AND PARTICIPATIONS. (a) Each Lender may sell, transfer, negotiate or assign either in whole or in part to one or more Eligible Lenders its rights and obligations hereunder and under the Note and the other Loan Documents without the prior consent of the Borrower but with the consent, not to be unreasonably withheld, of the Agent, and, except as otherwise provided in Section 10.2(d), the prior written approval of the Board (such consent, in the case of an assignment to an Affiliate of the Initial Lender that is an Eligible Lender, not to be unreasonably withheld); provided, that (i) the assigning Lender shall give prompt written notice to the Agent and the Board of the terms of and the parties to any such assignment, (ii) the proposed assignee shall provide to the Agent and the Board all documentation and certificates as required by the Agent and the Board to confirm to the Agent's and the Board's satisfaction that such proposed assignee is an Eligible Lender, and (iii) the Borrower will not be obligated to pay any greater amount under Section 2.10(c) or Section 2.12(a) (in respect of increased costs or Indemnified Taxes imposed pursuant to applicable law in effect on the date of such assignment) to the assignee than the Borrower is then obligated to pay to the assigning Lender under such Sections; provided, however, that the consent of the Board shall not be required for any assignment which occurs after payment in full has been made under the Board Guarantee or the Board Guarantee shall have terminated. (b) The parties to each assignment shall execute and deliver to the Agent, for its acceptance and recording, an Assignment and Acceptance, and the assignee, if a Non-U.S. Person, shall deliver to the Borrower, the Agent and each Counter-Guarantor, on or prior to the date of the assignment, two completed copies of either IRS Form W-8BEN or W-8ECI or other applicable form, certificate or document required to satisfy the requirements of Section 2.12. Upon such execution, delivery and acceptance and the receipt by the Agent of an assignment fee in the amount of $10,000 (which shall be for the account of the Borrower), the Agent shall record such Assignment 81 and Acceptance and from and after the effective date specified in such Assignment and Acceptance (i) the assignee thereunder of all or any portion of the Loan shall become a party hereto and, to the extent that rights and obligations under the Loan Documents have been assigned to such assignee pursuant to such Assignment and Acceptance, have the rights and obligations of a Lender and (ii) the assignor thereunder shall, to the extent that rights and obligations under this Agreement have been assigned by it pursuant to such Assignment and Acceptance, relinquish its rights (except those which survive the payment in full of the Obligations) and be released from its obligations under the Loan Documents, other than those relating to events or circumstances occurring prior to such assignment (and, in the case of an Assignment and Acceptance covering all or the remaining portion of an assigning Lender's rights and obligations under the Loan Documents, such Lender shall cease to be a party hereto). (c) Upon its receipt of an Assignment and Acceptance executed by an assigning Lender and an assignee, the Agent shall, if such Assignment and Acceptance has been completed, (i) accept such Assignment and Acceptance, (ii) record the information contained therein in the Register, (iii) give prompt notice thereof to the Borrower and (iv) shall give prompt written notice of the terms of and parties to any such assignment. (d) In addition to the other assignment rights provided in this Section 10.2, each Lender may assign, without the prior consent of the Borrower, the Agent or the Board as collateral or otherwise, any of its rights under this Agreement to any Federal Reserve Bank pursuant to Regulation A of the Federal Reserve Board, provided, however, that no such assignment shall release the assigning Lender from any of its obligations hereunder. (e) Each Lender may, without the prior consent of the Borrower or any other Person, sell participations, to the extent permitted by the Regulations and except as provided in Section 5.04(b) of the Board Guarantee, in or to all or a portion of its rights and obligations hereunder and under the Note and the other Loan Documents (any such purchaser of a participation being referred to as a "Participant"); provided that (i) neither the Note nor the Board Guarantee is assigned, conveyed, sold or transferred in whole or in part, (ii) the Board's ability to assert any and all defenses available to it under the Board Guarantee and the law is not adversely affected and (iii) the Borrower will not be obligated to pay any greater amount under Section 2.10(c) or Section 2.12(a) (in respect of increased costs or Indemnified Taxes imposed pursuant to applicable law in effect on the date of such participation) to the Participant than the Borrower is then obligated to pay to any selling Lender under such Sections. In the event of the sale of any participation by any Lender, (A) such Lender's obligations under the Loan Documents shall remain unchanged, (B) such Lender shall remain solely responsible to the other parties for the performance of such obligations, (C) such Lender shall remain the holder of such Obligations for all purposes of this Agreement, (D) the Agent, the Board and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement, and (E) each Participant, if a Non-U.S. Person, shall deliver to the Borrower, the Agent and each Counter-Guarantor, 82 on or prior to the date of the sale of the participation, two completed copies of either IRS Form W-8BEN or W-8ECI or other applicable form, certificate or document required to satisfy the requirements of Section 2.12. Any Participant will be entitled to the benefits of Sections 2.10(c), 2.10(e), 2.11 and 2.12 to the same extent as if such Person were a Lender. SECTION 10.3. COSTS AND EXPENSES. Whether or not the transactions contemplated hereby shall be consummated, the Borrower agrees to pay promptly (i) all costs and expenses incurred by the Loan Administrator, the Initial Lender, each Counter-Guarantor and the Agent in connection with the negotiation, preparation, execution and delivery of the Loan Documents, the Servicing Agreement, each Counter-Guarantee, the Board Guarantee and all documents relating thereto (including reasonable legal fees and expenses), (ii) all costs and expenses incurred by the Loan Administrator, the Lenders, the Counter-Guarantors, any Participant and the Agent in connection with any consents, amendments, waivers or other modifications hereto or thereto (including reasonable legal fees and expenses), (iii) all costs and expenses incurred by the Agent in connection with the syndication of the Loan (if any), and (iv) all costs and expenses, including reasonable legal fees and expenses incurred by the Agent, Lenders, the Loan Administrator, each Counter-Guarantor and any Participant in enforcing any Obligations of, or in collecting any payments due from, the Borrower hereunder or under the other Loan Documents. SECTION 10.4. INDEMNITIES. Whether or not the transactions contemplated hereby shall be consummated, the Borrower agrees to defend, indemnify, pay and hold harmless the Board, the Agent, the Lenders, the Loan Administrator, each Counter-Guarantor and their respective Affiliates, officers, directors, employees, agents and advisors (collectively called the "Indemnitees") from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, claims, costs, expenses and disbursements of any kind or nature whatsoever (including without limitation the reasonable fees and disbursements of counsel for such Indemnitees, but excluding Taxes), whether direct, indirect or consequential and whether based on any federal, state or foreign laws, statutes, rules or regulations (including without limitation securities and commercial laws, statutes and rules or regulations), on common law or equitable cause or on contract or otherwise, that may be imposed on, incurred by, or asserted against any such Indemnitee, in any manner arising out of this Agreement, the other Loan Documents, any Counter-Guarantee or the transactions contemplated hereby or thereby (including, without limitation, the use or intended use of the proceeds of the Loan) or the syndication of the Loan or any statement contained in the Application or otherwise made by or on behalf of the Borrower to the Board or any breach or default by the Borrower of any provision of the Loan Documents (collectively called the "Indemnified Liabilities"); provided that the Borrower shall not have any obligation to any Indemnitee hereunder with respect to any Indemnified Liabilities to the extent such Indemnified Liabilities arise (i) from the gross negligence or willful misconduct of that Indemnitee (as actually and finally determined by a final, non-appealable judgment of a court of competent jurisdiction) and only to the extent such Indemnified Liabilities constitute direct (as opposed to special, indirect, consequential or punitive) damages or (ii) constitute ordinary and usual operating or overhead expenses of an Indemnitee (excluding, without 83 limitation, costs and expenses of any outside counsel, consultant or agent). To the extent that the undertaking to defend, indemnify, pay and hold harmless set forth in the preceding sentence may be unenforceable because it is violative of any law or public policy, the Borrower shall contribute the maximum portion that it is permitted to pay and satisfy under applicable law to the payment and satisfaction of all Indemnified Liabilities incurred by the Indemnitees or any of them. No Indemnitee shall have any liability (whether direct or indirect, in contract, tort or otherwise) to the Borrower or any of its security holders or creditors for or in connection with the transactions contemplated hereby, except to the extent such liability is determined in a final, non-appealable judgment by a court of competent jurisdiction to have resulted primarily from such Indemnitee's gross negligence or willful misconduct. In no event, however, shall any Indemnitee be liable on any theory of liability for any special, indirect, consequential or punitive damages (including, without limitation, any loss of profits, business or anticipated savings). SECTION 10.5. RIGHT OF SET-OFF. In addition to any rights now or hereafter granted under applicable law and not by way of limitation of any such rights, upon the occurrence and during the continuance of any Event of Default, to the fullest extent permitted by law, each Lender is hereby authorized by the Borrower at any time or from time to time, without notice to the Borrower or to any other Person, any such notice being hereby expressly waived, to set off and to appropriate and to apply any and all deposits (general or special, including, but not limited to, Indebtedness evidenced by certificates of deposit, whether matured or unmatured) and any other Indebtedness at any time held or owing by that Lender to or for the credit or the account of the Borrower against and on account of the obligations and liabilities of the Borrower to that Lender under this Agreement, the Note, and the other Loan Documents, including, but not limited to, all claims of any nature or description arising out of or connected with this Agreement, the Note, or any other Loan Document, irrespective of whether or not (i) that Lender shall have made any demand hereunder or (ii) the principal of or the interest on the Loan or any other amounts due hereunder shall have become due and payable pursuant to Section 7.2 and although said obligations and liabilities, or any of them, may be contingent or unmatured. SECTION 10.6. SHARING OF PAYMENTS, ETC. The Lenders hereby agree among themselves that if any of them shall, whether by voluntary payment, by realization upon security, through the exercise of any right of set-off or banker's lien, by counterclaim or cross action or by the enforcement of any right under the Loan Documents or otherwise, or as adequate protection of a deposit treated as cash collateral under the Bankruptcy Code, receive payment or reduction of a proportion of the aggregate amount of principal, interest, fees and other amounts then due and owing to that Lender hereunder or under the other Loan Documents (collectively, the "Aggregate Amounts Due" to each Lender) which is greater than the proportion received by any other Lender in respect of the Aggregate Amounts Due to such other Lender, then the Lender receiving such proportionately greater payment shall (i) notify the Agent and 84 each other Lender of the receipt of such payment and (ii) apply a portion of such payment to purchase participations (which it shall be deemed to have purchased from each seller of a participation simultaneously upon the receipt by such seller of its portion of such payment) in the Aggregate Amounts Due to the other Lenders so that all such recoveries of Aggregate Amounts Due shall be shared by all Lenders in proportion to the Aggregate Amounts Due to them, provided that if all or part of such proportionately greater payment received by such purchasing Lender is thereafter recovered from such Lender upon the bankruptcy or reorganization of the Borrower or otherwise, those purchases shall be rescinded and the purchase prices paid for such participations shall be returned to such purchasing Lender ratably to the extent of such recovery, but without interest. The Borrower expressly consents to the foregoing arrangement and agrees that any holder of a participation so purchased may exercise any and all rights of banker's lien, set-off or counterclaim with respect to any and all monies owing by the Borrower to that holder with respect thereto as fully as if that holder were owed the amount of the participation held by that holder. SECTION 10.7. NOTICES, ETC. Unless otherwise specifically provided herein, any notice, request or other communication herein required or permitted to be given shall be in writing and may be personally served or sent by telefacsimile or United States mail or courier service and shall be deemed to have been given when delivered in person or by courier service, or upon receipt of telefacsimile, or five Business Days after depositing it in the United States mail with postage prepaid and properly addressed; provided that notices shall not be effective until received. For the purposes hereof, the address of each party hereto and each Counter-Guarantor shall be as set forth under such party's name on Annex A, or (i) as to the Borrower and the Agent, such other address as shall be designated by such Person in a written notice delivered to the other parties hereto and (ii) as to each other party hereto, such other address as shall be designated by such party in a written notice delivered to the Agent. SECTION 10.8. NO WAIVER; REMEDIES. No failure on the part of the Board, any Lender or the Agent to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any such right preclude any other or further exercise thereof or the exercise of any other right. The remedies herein provided are cumulative and not exclusive of any remedies provided by law. SECTION 10.9. INDEPENDENCE OF COVENANTS. All covenants under this Agreement shall be given independent effect so that if a particular action or condition is not permitted by any of such covenants, the fact that it would be permitted by an exception to, or would otherwise be within the limitations of, another covenant shall not avoid the occurrence of an Event of Default or Default if such action is taken or condition exists. SECTION 10.10. GOVERNING LAW. This Agreement and the rights and obligations of the parties hereto shall be governed by, and construed in accordance with, 85 the law of the State of New York; provided, that in the event the Board becomes a Lender pursuant to the Board Guarantee, the rights and obligations of the Board hereunder shall be governed by, and construed in accordance with, the Federal law of the United States of America, if and to the extent such Federal law is applicable, and otherwise in accordance with the law of the State of New York. SECTION 10.11. SUBMISSION TO JURISDICTION; SERVICE OF PROCESS. (e) Any legal action or proceeding with respect to this Agreement or any other Loan Document may be brought in the courts of the State of New York or of the United States of America for the Southern District of New York, and, by execution and delivery of this Agreement, the Borrower hereby accepts for itself and in respect of its property, generally and unconditionally, the jurisdiction of the aforesaid courts. The parties hereto hereby irrevocably waive any objection, including any objection to the laying of venue or based on the grounds of forum non conveniens, which any of them may now or hereafter have to the bringing of any such action or proceeding in such respective jurisdictions. (f) The Borrower hereby irrevocably consents to the service of any and all legal process, summons, notices and documents in any suit, action or proceeding brought in the United States of America arising out of or in connection with this Agreement or any of the other Loan Documents by the mailing (by registered or certified mail, postage prepaid) or delivering of a copy of such process to the Borrower in accordance with the provisions of Section 10.7. The Borrower agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. (c) Nothing contained in this Section 10.11 shall affect the right of the Agent or any Lender to serve process in any other manner permitted by law or commence legal proceedings or otherwise proceed against the Borrower in any other jurisdiction. SECTION 10.12. WAIVER OF JURY TRIAL. The Borrower irrevocably waives trial by jury in any action or proceeding with respect to this Agreement or any other Loan Document. SECTION 10.13. MARSHALING; PAYMENTS SET ASIDE. Neither the Agent nor any Lender shall be under any obligation to marshal any assets in favor of the Borrower or any other party or against or in payment of any or all of the Obligations. To the extent that the Borrower makes a payment or payments to the Agent for the account of the Board, the Loan Administrator, any Lender or any Counter-Guarantor (each, a "Payee") or any Payee receives payment from exercise of their rights of setoff, and such payment or payments or the proceeds of such setoff or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside or required to be repaid to a trustee, receiver or any other party, then (i) to the extent of such recovery, the obligation or part thereof originally intended to be satisfied, and all rights and remedies 86 therefor, shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred, and (ii) each Payee shall pay and return such amount to the Agent as the Agent may be required to disgorge or otherwise pay to a trustee, receiver or any other party in respect of the portion of the payment from the Borrower distributed by the Agent to such Payee hereunder. SECTION 10.14. SECTION TITLES. The Section titles contained in this Agreement are and shall be without substantive meaning or content of any kind whatsoever and are not a part of the agreement between the parties hereto. SECTION 10.15. EXECUTION IN COUNTERPARTS. This Agreement may be executed in any number of counterparts and by different parties in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Signature pages may be detached from multiple separate counterparts and attached to a single counterpart so that all signature pages are attached to the same document. Delivery of an executed signature page of this Agreement by facsimile transmission shall be as effective as delivery of a manually executed counterpart hereof. A set of the copies of this Agreement signed by all parties shall be lodged with the Borrower and the Agent. SECTION 10.16. THIRD PARTY BENEFICIARY. Each Counter-Guarantor shall be an express third party beneficiary of this Agreement to the extent the provisions of this Agreement by their terms confer upon such Counter-Guarantor any right or remedy and shall be entitled to rely on each representation and warranty of the Borrower hereunder as fully and with the same force and effect as if made expressly to such Counter-Guarantor, and the execution and delivery of its Counter-Guarantee to the Agent shall constitute such Counter-Guarantor's agreement to the provisions of Section 10.18 and further agreement to be bound by the terms and conditions hereof applicable to the Counter-Guarantors (including, without limitation, Sections 2.8, 2.9, 10.13 and 10.18 hereof) in asserting any right or remedy hereunder. SECTION 10.17. SEVERABILITY. In case any provision in or obligation under this Agreement or the Note shall be invalid, illegal or unenforceable in any jurisdiction the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby. SECTION 10.18. CONFIDENTIALITY. Each party hereto (other than the Board) and each Counter-Guarantor shall, and shall procure that its respective officers, employees and agents shall, keep confidential and shall not, without the prior written consent of the other parties, disclose to any third party this Agreement, any other Loan Document or any of the information, reports or documents supplied by or on behalf of such other party not otherwise publicly available, except that a party shall be entitled to disclose this Agreement, any other Loan Document, and any such information, reports or documents: 87 (i) in connection with any proceeding arising out of or in connection with this Agreement, any of the other Loan Documents, the Board Guarantee or any Counter-Guarantee to the extent that such party may reasonable consider necessary to protect its interest; or (ii) to any potential assignee or transferee of any party's rights under this Agreement or any of the Loan Documents or any Counter-Guarantor's rights under its Counter-Guarantee or any other person proposing to enter into contractual arrangements with any party in relation to this Agreement, any of the other Loan Documents, the Board Guarantee or any Counter-Guarantee subject to the relevant party obtaining an undertaking from such potential assignee or transferee or other person in corresponding terms to this Section 10.18; or (iii) pursuant to any applicable laws, ordinances, judgments, decrees, injunctions, writs, rules, regulations, orders, interpretations, licenses, permits and orders of any competent court, arbitrator or governmental agency or authority in any relevant jurisdiction; or (iv) to bank examiners or any other regulatory authority or rating agencies or similar entities, if requested to do so; or (v) to its auditors, legal, tax or to other professional advisers; or (vi) to its Affiliates and their respective directors, officers, employees and agents. 88 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written. AMERICA WEST AIRLINES, INC. By: /s/ W. Douglas Parker ---------------------------------------- Name: W. Douglas Parker Title: Chairman, President and Chief Executive Officer CITIBANK, N.A., as Initial Lender By: /s/ S. Khettry ---------------------------------------- Name: S. Khettry Title: Managing Director KPMG CONSULTING, INC., as Loan Administrator By: /s/ Timothy F. Kerry ---------------------------------------- Name: Timothy F. Kerry Title: Managing Director CITIBANK, N.A., as Agent By: /s/ S. Khettry ---------------------------------------- Name: S. Khettry Title: Managing Director AIR TRANSPORTATION STABILIZATION BOARD By: /s/ Joseph P. Adams, Jr. ---------------------------------------- Name: Joseph P. Adams, Jr. Title: Executive Director EXHIBIT A ASSIGNMENT AND ACCEPTANCE ASSIGNMENT AND ACCEPTANCE dated as of _________, ____ between ______________ (the "Assignor") and ______________ (the "Assignee"). Reference is made to the Loan Agreement, dated as of January 18, 2002 (as the same may be amended, restated, supplemented or otherwise modified from time to time, the "Loan Agreement"), among the Borrower, Citibank, N.A.., as Initial Lender and as Agent, KPMG Consulting, Inc.. as the Loan Administrator, and Air Transportation Stabilization Board. Capitalized terms used herein and not otherwise defined herein are used herein as defined in the Loan Agreement. The Assignor and the Assignee hereby agree as follows: 1. The Assignor hereby sells and assigns to the Assignee, and the Assignee hereby purchases and assumes from the Assignor, [all of] [a __% interest in] the Assignor's rights and obligations under the Loan Agreement and the Note. The principal amount of the portion of the Loan and the Note assigned to the Assignee are set forth in Section 1 of Schedule I [and the principal amount of the Loan and the Note retained by the Assignor after giving effect to such sale and assignment are set forth in Section 2 of Schedule I.]. 2. The Assignor (i) represents and warrants that it is the legal and beneficial owner of the interest being assigned by it hereunder and that such interest is free and clear of any adverse claim; (ii) makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with the Loan Agreement or any other Loan Document or any other instrument or document furnished pursuant thereto or the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Loan Agreement or any other Loan Document or any other instrument or document furnished pursuant thereto; and (iii) makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Borrower or the performance or observance by the Borrower of any of its obligations under the Loan Agreement or any other Loan Document or any other instrument or document furnished pursuant thereto. 3. The Assignee (i) agrees that it will, independently and without reliance upon the Agent, the Assignor or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Agreement; (ii) appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers under the Loan Agreement and the other Loan Documents as are delegated to the Agent by the terms thereof, together with such powers as are reasonably incidental thereto; (iii) agrees that it will perform in accordance with their terms all of the obligations which by the terms of the Loan Agreement A-1 are required to be performed by it as a Lender; (iv) represents and warrants that it is an Eligible Lender; (v) confirms it has received such documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Acceptance; and (vi) specifies as its Lending Office (and address for notices) the office set forth beneath its name on the signature pages hereof. 4. Following the execution of this Assignment and Acceptance by the Assignor and the Assignee, it will be delivered to the Agent (with a copy to the Board) for acceptance and recording by the Agent, together with an assignment fee of $10,000. The effective date of this Assignment and Acceptance shall be __________ or such later date as of which the Board shall have consented to the sale and assignment of [all of] [a __% interest in] the Assignor's rights and obligations under the Loan Agreement and the Note to the Assignee as provided herein and as evidenced by its signed confirmation thereof set forth on the signature pages hereof (the "Effective Date"). 5. Upon such acceptance and recording by the Agent, then, as of the Effective Date, (i) the Assignee shall be a party to the Loan Agreement and, to the extent provided in this Assignment and Acceptance, have the rights and obligations under the Loan Agreement of a Lender and (ii) the Assignor shall, to the extent provided in this Assignment and Acceptance, relinquish its rights (except those which survive the payment in full of the Obligations) other than those relating to events or circumstances occurring prior to the Effective Date and be released from its obligations under the Loan Documents. 6. Upon such acceptance and recording by the Agent, from and after the Effective Date, the Agent shall make all payments under the Loan Documents in respect of the interest assigned hereby (i) to or for the account of the Assignee, in the case of amounts accrued with respect to any period on or after the Effective Date, and (ii) to or for the account of the Assignor, in the case of amounts accrued with respect to any period prior to the Effective Date. 7. This Assignment and Acceptance shall be governed by, and be construed in accordance with, the law of the State of New York. 8. This Assignment and Acceptance may be executed in any number of counterparts and by different parties on separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute but one and the same agreement. Delivery of an executed counterpart of this Assignment and Acceptance by telecopier shall be effective as delivery of a manually executed counterpart of this Assignment and Acceptance. A-2 In witness whereof, the parties hereto have caused this Assignment and Acceptance to be executed by their respective officers thereunto duly authorized, as of the date first above written. [Assignor] By:________________________ Name: Title: [Assignee] By:________________________ Name: Title: Lending Office (and address for notices): [Address] Accepted this_____________ day of ________________________, ____ [ ], as Agent By:___________________________ Name: Title: The Board hereby confirms its consent to this Assignment and Acceptance in accordance with the provisions of Section 10.2 of the Loan Agreement Air Transportation Stabilization Board By:________________________________ Name: Title: A-3 SCHEDULE I TO ASSIGNMENT AND ACCEPTANCE SECTION 1. Aggregate Outstanding Principal Amount of the Loan and of the Note Assigned to Assignee: $_________________ SECTION 2. Aggregate Outstanding Principal Amount of the Loan and the Note retained by Assignor: $_________________ A-4 EXHIBIT B FORM OF NOTE New York, New York $ __________ January __, 2002 FOR VALUE RECEIVED, the undersigned AMERICA WEST AIRLINES, INC., a Delaware corporation (the "Borrower"), hereby promises to pay to CITIBANK, N.A. as Agent, for the account of the Lenders, the principal amount set forth above, or, if less, the aggregate unpaid principal amount of the Loan, payable at such times, and in such amounts, as are specified in the Loan Agreement. The Borrower hereby promises to pay interest on the unpaid principal amount of the Loan from the date hereof until such principal amount is paid in full, at the rate or rates, and payable at such times as are specified in the Loan Agreement. This Note shall be payable at the principal office of the Agent presently located at 399 Park Avenue in New York City. This Note is the "Note" referred to in that certain Loan Agreement, dated as of January 18, 2002 (as the same may be amended, restated, supplemented or otherwise modified from time to time, the "Loan Agreement"), among the Borrower, Citibank, N.A., as the Initial Lender and as Agent, KMPG Consulting, Inc., as the Loan Administrator, and Air Transportation Stabilization Board and entitled to the benefits thereof. Capitalized terms used herein and not defined herein are used herein as defined in the Loan Agreement. Demand, diligence, presentment, protest and notice of non-payment and protest are hereby waived by the Borrower. This Note may be prepaid solely as provided in the Loan Agreement and may be accelerated in whole or in part as provided in the Loan Agreement. This Note shall be governed by, and construed in accordance with, the law of the State of New York; provided, that in the event the Board becomes a Lender pursuant to the Board Guarantee, the rights and obligations of the Board hereunder shall be governed by, and construed in accordance with, the Federal law of the United States of America, if and to the extent such Federal law is applicable, and otherwise in accordance with the law of the State of New York. IN WITNESS WHEREOF, the Borrower has caused this Note to be executed and delivered by its duly authorized officer as of the date and at the place set forth above. AMERICA WEST AIRLINES, INC. By: ______________________ Name: Title: EXHIBIT C NOTICE OF BORROWING Citibank, N.A., as Agent under the Loan Agreement referred to below Citibank, N.A. 399 Park Avenue, New York, New York 10043 January ___, 2002 Re: AMERICA WEST AIRLINES, INC. (the "Borrower") Reference is made to the Loan Agreement, dated as of January 18, 2002 (as the same may be amended, restated, supplemented or otherwise modified from time to time, the "Loan Agreement"), among the Borrower, Citibank, N.A., as Initial Lender and as Agent, KPMG Consulting, Inc., as the Loan Administrator, and Air Transportation Stabilization Board. Capitalized terms used herein and not otherwise defined herein are used herein as therein defined. The Borrower hereby gives you irrevocable notice, pursuant to Section 2.2 of the Loan Agreement, that the undersigned hereby requests a Borrowing under the Loan Agreement and, in that connection, sets forth below the information relating to such Borrowing (the "Proposed Borrowing") as required by Section 2.2 of the Loan Agreement: (i) The date of the Proposed Borrowing is January __, 2002 (the "Closing Date"). (ii) The aggregate amount of the Proposed Borrowing is $________. The undersigned hereby certifies that the following statements are true on the date hereof and shall be true on the Closing Date both before and after giving effect to the Proposed Borrowing and to the application of the proceeds therefrom: (i) the representations and warranties set forth in Article IV of the Loan Agreement and in the other Loan Documents are true and correct on and as of the Closing Date before and after giving effect to the Borrowing and to the application of the proceeds therefrom, with the same effect as though made on and as of such date, except to the extent such representations and warranties expressly relate to an earlier date; and (ii) no Event of Default or event which, with the giving of notice or passage of time or both, would be an Event of Default, has occurred and is continuing on the Closing Date, or would result from the Borrowing, other than C-1 the Disclosed Defaults which will be cured after giving effect to the Borrowing and to the application of the proceeds therefrom. AMERICA WEST AIRLINES, INC. By: ____________________________ Name: Title: [Chief Financial Officer/President/Chief Executive Officer] C-2 Exhibit D Form of Board Guarantee ================================================================================ GUARANTEE AGREEMENT dated as of January 18, 2002 among CITIBANK, N.A., as Lender, CITIBANK, N.A., as Agent, and AIR TRANSPORTATION STABILIZATION BOARD ================================================================================ ------------------------------------ Board Guarantee No. 2002/01 ------------------------------------ TABLE OF CONTENTS SECTION 1. DEFINITIONS AND PRINCIPLES OF CONSTRUCTION................. 3 1.01 Defined Terms................................................. 3 1.02 Principles of Construction.................................... 4 SECTION 2. THE GUARANTEE.............................................. 4 2.01 The Guarantee................................................. 4 2.02 Coverage of the Guarantee..................................... 4 2.03 Timely Demand................................................. 4 2.04 Prohibited Amendments or Transfers............................ 5 2.05 No Acceleration............................................... 5 2.06 Guarantee Fee................................................. 5 2.07 Revocation of Borrower's Payment.............................. 5 SECTION 3. REPRESENTATIONS AND WARRANTIES............................. 6 3.01 Representations and Warranties of the Agent................... 6 3.02 Representations and Warranties of the Lender.................. 6 SECTION 4. CLAIM PROCEDURES........................................... 6 4.01 Failure to Pay................................................ 6 4.02 Demand on the Board........................................... 7 4.03 Assignment to the Board....................................... 7 4.04 Conditions of Guarantee....................................... 7 4.05 Payment by the Board.......................................... 7 4.06 Board Payment Does Not Discharge Borrower..................... 8 SECTION 5. UNDERTAKINGS OF THE AGENT.................................. 8 5.01 Notices....................................................... 8 5.02 Register...................................................... 8 5.03 Prohibited Amendments......................................... 8 5.04 Prohibited Transfers.......................................... 8 5.05 Indemnification............................................... 9 SECTION 6. MISCELLANEOUS.............................................. 9 6.01 Governing Law................................................. 9 6.02 Notices....................................................... 10 6.03 Benefit of Agreement.......................................... 10 6.04 Entire Agreement.............................................. 10 6.05 Amendment or Waiver........................................... 10 6.06 Counterparts.................................................. 10 6.07 Severability.................................................. 10 GUARANTEE AGREEMENT This GUARANTEE AGREEMENT dated as of January 18, 2002 (this "Agreement") is made by and among Citibank, N.A., as Lender under and as defined in the Loan Agreement referred to below (together with its successors and permitted assigns, the "Lender"), Citibank, N.A., as agent for the Lender (together with its successors and permitted assigns, the "Agent"), and the Air Transportation Stabilization Board (the "Board"). WITNESSETH: WHEREAS, the Board was created pursuant to Section 102 of the Air Transportation Safety and System Stabilization Act, Pub. L. No. 107-42 (the "Act"); WHEREAS, the Act establishes the Air Carrier Guarantee Loan Program to be administered by the Board in accordance with the Regulations for Air Carrier Guarantee Loan Program, 14 C.F.R. Part 1300, as the same may be amended or modified from time to time (the "Regulations"); WHEREAS, pursuant to the Act, America West Airlines, Inc. (the "Borrower") has made an application (as set forth in the Amended and Restated Application dated January 18, 2002, the "Application") for the issuance by the Board of a Federal credit instrument (as defined in the Regulations) in the form of a guarantee of a portion of the principal of and interest on a loan to be made to the Borrower by the Lender; WHEREAS, the Lender, the Borrower, the Loan Administrator identified therein, the Board and the Agent have, on the date hereof, entered into a loan agreement (the "Loan Agreement") providing for the Lender to extend a loan (the "Loan") to the Borrower upon the terms and conditions specified therein in the aggregate principal amount of U.S. $429,000,000; WHEREAS, the Lender, the Borrower and the Agent have satisfied the conditions to the issuance of this Federal credit instrument (as such term is defined in the Act) by the Board set forth in Section 3.1 of the Loan Agreement (including, without limitation, payment of the initial installment of the Guarantee Fee referred to in Section 2.06); WHEREAS, it is a condition precedent to the making of the Loan that the Board execute and deliver this Agreement; and WHEREAS, subject to the terms and conditions of this Agreement, the Board is willing to guarantee to the Lender the payment of certain of the Borrower's obligations under the Loan Agreement. -2- NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, the parties hereto agree as follows: SECTION 1. DEFINITIONS AND PRINCIPLES OF CONSTRUCTION 1.01 Defined Terms. For the purposes of this Agreement, the following terms shall have the meanings specified below. "Act" shall have the meaning set forth in the recitals hereof. "Agent" shall have the meaning set forth in the introductory paragraph hereof. "Application" shall have the meaning set forth in the recitals hereof. "Board" shall have the meaning set forth in the introductory paragraph hereof. "Borrower" shall have the meaning set forth in the recitals hereof. "Business Day" shall mean any day on which the Federal Reserve Bank of New York is open for business. "Counter-Guarantee" shall have the meaning set forth in the Loan Agreement. "Demand Date" shall have the meaning set forth in Section 4.05(a) hereof. "Event of Default" shall have the meaning set forth in the Loan Agreement. "Guarantee" shall mean the guarantee of the Board set forth in Section 2.01 hereof. "Guaranteed Percentage" shall have the meaning set forth in Section 2.01(a). "Guarantee Fee" shall have the meaning set forth in Section 2.06. "Guaranteed Amount" shall have the meaning set forth in Section 2.01 hereof. "Guaranteed Interest Rate" shall mean the rate at which interest is payable by the Borrower under the terms of the Loan Agreement; provided, however, that the Guaranteed Interest Rate shall not include any increase in the rate of interest payable as the result of an Event of Default. "Lender" shall have the meaning set forth in the introductory paragraph hereof. "Loan" shall have the meaning set forth in the recitals hereof. "Loan Agreement" shall have the meaning set forth in the recitals hereof. "Note" shall mean any promissory note of the Borrower evidencing the Loan and issued in accordance with the provisions of the Loan Agreement. -3- "Regulations" shall have the meaning set forth in the recitals hereof. 1.02 Principles of Construction. (a) The meanings set forth for defined terms in Section 1.01 or elsewhere in this Agreement shall be equally applicable to both the singular and plural forms of the terms defined. (b) All references to "this Agreement" or "hereof" and other like terms mean, unless the context requires otherwise, this Agreement, including all annexes, appendices, exhibits, schedules and supplements hereto, all as amended, modified or supplemented from time to time. (c) The headings of the Sections in this Agreement are included for convenience only and shall not in any way affect the meaning or construction of any provision of this Agreement. (d) In the event of any inconsistency between the terms of this Agreement and the Loan Agreement, the terms of this Agreement shall govern. SECTION 2. THE GUARANTEE 2.01 The Guarantee. Subject to the terms and conditions set forth in this Agreement, the Board hereby guarantees, irrevocably and unconditionally (except to the extent expressly provided in Sections 2.03, 2.04, 2.05 and 2.06), to the Agent on behalf of the Lender (the "Guarantee") payment of the following (the sum of all amounts under (a), (b) and (c), the "Guaranteed Amount"): (a) eighty-eight and four hundred seventy-three million, one hundred ninety-three thousand, four hundred seventy-three billionths percent (88.473193473%) (the "Guaranteed Percentage") of the outstanding and unpaid principal amount of the Loan not in excess of Three-Hundred and Seventy-Nine Million Five Hundred and Fifty Thousand U.S. Dollars ($379,550,000) in the aggregate; (b) interest on the principal amount of the Loan specified in (a) above, accrued at the Guaranteed Interest Rate to and including the scheduled payment dates thereof; and (c) interest on any due and unpaid amounts described in Sections 2.01(a) and 2.01(b) above, accrued at the Guaranteed Interest Rate from the scheduled payment dates thereof to but not including the date of actual payment thereof by the Board. 2.02 Coverage of the Guarantee. Pursuant to Section 107(2) of the Act, the Guarantee is entitled to the full faith and credit of the United States of America. The Guarantee constitutes a guarantee of payment and not of collection. In no event shall the liability of the Board on the Guarantee exceed the Guaranteed Amount. For the avoidance of doubt, the Guarantee shall not extend to the repayment of any penalties, fees, indemnified amounts, costs, expenses or any other amount payable under the Loan Agreement or any Note other than the Guaranteed Amount. 2.03 Timely Demand. In the event that the Agent, on behalf of the Lender, fails to make demand on the Board within the time period required in Section 4.02(vi), the Guarantee of the unpaid installment of principal and/or interest as to which such timely demand was not made -4- shall automatically terminate with respect thereto. This termination shall be without prejudice to the right of the Agent, on behalf of the Lender, to make demand on the Board under this Agreement in respect of any other due and unpaid installments of principal or interest. 2.04 Prohibited Amendments or Transfers. In the event that the Agent or a Lender, without the Board's prior written consent, agrees to any material amendment, written modification or written waiver in violation of Section 5.03 or assigns, conveys, sell or otherwise transfers any interest in or right or obligation under this Agreement, the Loan Agreement or the Note in violation of Section 5.04, then the Board shall have the right to terminate the Guarantee with respect to all or a portion of the Guaranteed Amount by providing written notice thereof to the Agent, such termination to be effective as of the earlier of (a) the 30th calendar day after the date on which the Board delivers such notice to the Agent and (b) any Demand Date unless, prior to such earlier date, the Agent or such Lender, as the case may be, rescinds or otherwise remedies the effect of such prohibited action to the satisfaction of the Board, in which case the Guarantee shall remain in full force and effect. 2.05 No Acceleration. In the event that, without the prior written consent of the Board (whether given under this Agreement or under the terms of the Loan Agreement), the Agent shall declare all or any part of the Borrower's indebtedness under the Loan Agreement to be immediately due and payable or to be due and payable upon the demand of the Agent (it being understood that acceleration of the Loan upon an Event of Default under Section 7.1(f) or (g) of the Loan Agreement is not such a declaration), then the Board shall have the right to terminate the Guarantee with respect to all or a portion of the Guaranteed Amount. The Board shall exercise its right to terminate the Guarantee pursuant to this Section 2.05 by providing written notice thereof to the Agent. Any termination of the Guarantee by the Board under this Section 2.05 will be deemed effective as of the date of the relevant declaration by the Agent. 2.06 Guarantee Fee. The Agent, on behalf of Borrower, shall pay to the United States Department of the Treasury, in accordance with the priorities of payment specified in the Loan Agreement and to the extent sufficient funds are received by the Agent from the Borrower for application thereto, the following (collectively, the "Guarantee Fee"): (a) on the date hereof, the amount of Three Million Eight Hundred Thousand U.S. Dollars ($3,800,000), and (b) also on the date hereof and thereafter on each anniversary of the date hereof (or if any such anniversary date is not a Business Day, then the immediately preceding Business Day), the amount specified in Schedule I to this Agreement for such date. Payment of the Guarantee Fee due on the date hereof shall constitute a condition precedent to the effectiveness of this Agreement. The Agent shall make each payment pursuant to this Section 2.06 to such account at such bank in New York City as the Board shall instruct in writing from time to time. Prior to such payment, the Agent shall hold such funds in trust for the benefit of the Board, and the Agent hereby irrevocably waives and agrees not to exercise any banker's lien, right of setoff, right of recoupment, right to combine accounts or any similar lien, claim or right, it may have now or in the future against or on such funds, express or implied, statutory or otherwise, to satisfy any obligation which the Board or any other agency or instrumentality of the Federal government of the United States of America may owe to the Agent in any capacity. 2.07 Revocation of Borrower's Payment. Notwithstanding the provisions of Section 2.03, the Guarantee shall continue to be binding on the Board with respect to any payment, or any part -5- thereof, of principal of or interest on any Note that is rescinded or must otherwise be returned by the Agent or a Lender if such rescission or return of payment has been compelled by law as the result of the bankruptcy or insolvency of the Borrower or if such rescission or return of payment is a result of any law, regulation or decree applicable to the Borrower. A demand on the Board for payment pursuant to the Guarantee of any such returned amount must be made promptly but in no event later than thirty (30) days after the Agent or a Lender has been compelled to return such amount. SECTION 3. REPRESENTATIONS AND WARRANTIES 3.01 Representations and Warranties of the Agent. The Agent represents and warrants to the Board as follows: (a) Bring-down of Representations. All of its certifications set forth in writing in the Application were when made or given, and are as of the date hereof, true, correct and complete in all material respects, except as otherwise disclosed by the Agent in writing to the Board on or before the date hereof. (b) Agent Obligations. The Agent has the ability to perform each of its obligations as Agent under this Agreement and the Loan Agreement. 3.02 Representations and Warranties of the Lender. The Lender represents and warrants to the Board as follows: (a) Bring-down of Representations. All of its certifications set forth in writing in the Application were when made or given, and are as of the date hereof, true, correct and complete in all material respects, except as otherwise disclosed by the Lender in writing to the Board on or before the date hereof. (b) No Security. The Lender has no security for payment of any of the Borrower's obligations under the Loan Agreement or the Note, it being expressly acknowledged and agreed that none of (i) the fees referred to in the Loan Agreement, (ii) the Counter-Guarantees, or the cash collateral, letters of credit and guarantees referred to therein or at any time provided thereunder, or (iii) any guarantee or security given by any affiliate of the Borrower for the benefit of the Lender, in any such case, constitutes "security" within the meaning of this Section 3.02(b) or paragraph 3(b) of any Assignment and Certification delivered to the Board. SECTION 4. CLAIM PROCEDURES 4.01 Failure to Pay. In the event that (i) the Borrower for any reason fails to pay in full any installment of principal (other than any proposed voluntary prepayment under Section 2.5(a) of the Loan Agreement) or interest under the Loan Agreement or any Note for more than thirty (30) calendar days after the due date of such installment; and (ii) a period of fifteen (15) calendar days has elapsed since written demand for payment was made by the Agent on the Borrower (which demand may be omitted only if and to the extent that the making thereof would be prohibited by any applicable law), then the Agent, on behalf of the Lender, may make demand on the Board under this Agreement for payment (subject to Sections 2.03, 2.04 and 2.05) of the Guaranteed Amount. -6- 4.02 Demand on the Board. The Agent's demand on the Board must: (i) be in writing and delivered in accordance with Section 6.02; (ii) be made only by the Agent; (iii) identify the installment(s) of principal and/or interest unpaid as of the date of such demand; (iv) include a copy of the Agent's written demand for payment on the Borrower (or in the event that such demand was omitted with respect to the Borrower pursuant to Section 4.01, evidence of the applicable prohibition); (v) include an Assignment and Certification in the form of Annex A to this Agreement; and (vi) be made, subject to Section 2.07, not later than sixty (60) calendar days from the due date of the unpaid installment(s) of principal and/or interest on which the Agent's demand for payment is based. 4.03 Assignment to the Board. On and as of the date on which the Board pays the Guaranteed Amount in accordance with Section 4.05, the Board shall become subrogated to, and the Lender shall be deemed to have assigned to the Board, without recourse and without need of any further action, the Guaranteed Percentage of the Lender's right, title and interest in and to the principal of and interest on the Loan and under the Loan Agreement and the Note in respect thereof and, to such extent, the Board shall have the right to enforce or participate in any claim (including, without limitation, any claim in bankruptcy), right or remedy that the Lender then has or may thereafter acquire against the Borrower under the Loan Agreement or the Note. In addition to the Assignment and Certification required to be delivered under Section 4.02, the Agent and the Lender shall, upon request by the Board, execute and deliver such documents and take such other actions as the Board may reasonably request to evidence or give effect to such subrogation and assignment, it being understood and agreed that the execution and delivery of any such document or the taking of any such action (i) shall not be a condition to the Board's obligation to pay the Guaranteed Amount in accordance with this Section 4 and (ii) shall be at the expense of the Board. 4.04 Conditions of Guarantee. The Board hereby waives diligence, presentment, protest and any requirement that the Agent or the Lender exhaust any right or take any action against or give notice to the Borrower or the Board, except for the written demands for payment by the Agent on the Borrower and the Board required under this Agreement. 4.05 Payment by the Board. (a) After the date on which the Agent shall have properly documented its demand on the Board for payment pursuant to Section 4.02 (the "Demand Date"), the Board shall, subject to Sections 2.03, 2.04 and 2.05, pay to the Agent, within forty-five (45) Business Days after the Demand Date, for the benefit of the Lender, the Guaranteed Amount in a single payment calculated as of the date of actual payment thereof by the Board. (b) Payment of the Guaranteed Amount due under this Agreement shall be made by the Board to the Agent, for the benefit of the Lender, and such payment to the Agent shall discharge fully and completely the Board's liability under this Agreement. After the Demand Date, any funds received by the Agent or the Board from or on behalf of the Borrower in respect of any of the Borrower's obligations under the Loan Agreement shall be applied in accordance with the terms of the Loan Agreement. -7- (c) If the Guarantee terminates pursuant to Section 2.03, 2.04 or 2.05 with respect to one or more installments of principal and/or interest, all installments of principal and/or interest as to which the Guarantee has terminated shall be deemed to have been paid in full when and as due for the purposes of determining the amount payable by the Board under this Section 4.05. 4.06 Board Payment Does Not Discharge Borrower. Any statute or judicial decision to the contrary notwithstanding, no payment by the Board to the Agent on behalf of the Lender under this Agreement shall reduce, discharge, satisfy or terminate any obligation of Borrower under the Loan Agreement or any Note. SECTION 5. UNDERTAKINGS OF THE AGENT The Agent agrees that so long as the Board remains liable under this Agreement: 5.01 Notices. (a) The Agent shall notify the Board promptly but in no event later than seven (7) Business Days after the occurrence of an Event of Default arising by reason of a failure by the Borrower to make any scheduled payment of principal of or interest on the Loan when due in accordance with the terms of the Loan Agreement. (b) The Agent shall notify the Board promptly but in no event later than thirty (30) calendar days after (i) receipt of a notice of any other Event of Default under and in accordance with the provisions of Section 9.5 of the Loan Agreement, (ii) receipt of any prepayment of the Loan made by or on behalf of the Borrower under Section 2.5 or 2.6 of the Loan Agreement, and (iii) the return by the Agent of any payment previously made by the Borrower to the Agent or the Agent's receipt of any notice from a Lender of such Lender's return of any payment previously made by the Borrower, in either case, under the circumstances described in Section 2.07. 5.02 Register. The Agent shall establish and maintain a register for recording with respect to the Loan (i) the date and amount of each payment on the Loan made by or on behalf of, or collected from, the Borrower, (ii) the amount of each such payment applied in accordance with the terms of the Loan Agreement to scheduled principal of or interest on the Loan and to each of the fees identified in clauses (d) through (h) of Section 2.8 of the Loan Agreement, and (iii) the date and amount of each payment made by the Board hereunder. At any time upon request by the Board delivered in accordance with Section 6.02, the Agent shall make such register (or a copy thereof certified by the Agent as true, complete and correct copy) available to the Board. 5.03 Prohibited Amendments. Neither the Agent nor the Lender shall, without the prior written consent of the Board (whether given by the Board under this Agreement or the Loan Agreement), agree to any material amendment, written modification or written waiver of the terms of the Loan Agreement or the Note. 5.04 Prohibited Transfers. (a) The Agent shall not, without the Board's prior written consent, assign or otherwise transfer any of its rights, duties or responsibilities as Agent under this Agreement, except that the foregoing shall not restrict an assignment or transfer by operation of law. -8- (b) The Lender shall not assign, convey, sell or otherwise transfer any of its rights, interest or obligations under this Agreement, the Loan Agreement or the Note without the prior written consent of the Board (such consent, in the case of an assignment to an affiliate of Citibank, N.A. that is a "lender" (as defined in the Act), not to be unreasonably withheld); provided, however, that nothing in this Agreement shall prohibit (i) the Lender from pledging and/or assigning its rights, interests or obligations under the Loan Agreement, the Note and this Agreement to any Federal Reserve Bank and, in such instances, the Federal Reserve Bank, as pledgee or assignee, shall have all such rights and interests, including in the Guarantee, or (ii) the making and performance of the Counter-Guarantees and the provision of the cash collateral, letters of credit and guarantees referred to therein or at any time provided thereunder. Nothing in this Agreement shall be construed as limiting the Lender's rights under the provisions of Section 1300.23 of the Regulations; provided, however, that Citibank, N.A., as the initial Lender shall maintain and shall not sell any participation in that portion of the Loan which is not guaranteed either under this Agreement or any Counter-Guarantee. 5.05 Indemnification. In the event that (i) the Agent fails to perform any of its obligations under this Agreement (which failure shall not, except as provided in Section 2.03, 2.04 or 2.05, limit or otherwise affect the obligations of the Board under Section 2) or fails to perform any of its material obligations or covenants to the Board under the Loan Agreement, or (ii) any representation of the Agent or the Lender set forth in Section 3 or any certification of the Agent or the Lender set forth in the Application proves to have been incorrect in any material respect when made, then the Agent or Lender, as the case may be, shall be liable to the Board for all actual damages suffered and costs incurred by the Board as the result thereof, and shall indemnify the Board for such damages and costs (including, without limitation, counsel fees and expenses incurred by the Board in enforcing its rights under this Section 5.05). Neither the Agent nor the Lender shall, however, be liable for any incidental or consequential damages. The Board may enforce its rights hereunder, and pursue all remedies available with respect thereto, in any court of competent jurisdiction. Anything to the contrary contained herein notwithstanding, the obligation of the Agent and the Lender to indemnify the Board shall survive the termination of this Agreement and the payment of all or any portion of the Guaranteed Amount. 5.06 Multiple Lenders. In the event The Board shall at any time or from time to time consent to an assignment of a portion of the Loan by the Lender, each representation, warranty, certification, covenant or other obligation of the "Lender" in this Agreement thereafter made or given shall be deemed a several representation, warranty, certification, or covenant or other obligation of each Lender such that no Lender shall be liable for the acts or omissions of any other Lender, and the obligation of the Board to any Lender shall not be affected by the acts or omissions of any other Lender. SECTION 6. MISCELLANEOUS 6.01 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE FEDERAL LAW OF THE UNITED STATES OF AMERICA IF AND TO THE EXTENT SUCH FEDERAL LAW IS APPLICABLE, AND OTHERWISE IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK. -9- 6.02 Notices. Except as otherwise specified, all notices given hereunder shall be in writing, shall include the applicable Board guarantee number and shall be given by mail, telecopier or personal delivery and deemed to be given for the purposes of this Agreement on the day that such notice is received by the intended recipient thereof. Unless otherwise specified in a notice delivered in accordance with this Section 6.02, all notices shall be delivered: (i) to the Agent or to the Board at the address specified beneath its name on the signature page hereto; and (ii) to the Lender, in care of the Agent, at the Agent's address. 6.03 Benefit of Agreement. This Agreement shall be binding upon and inure to the benefit of and be enforceable by the respective successors and permitted assigns of the parties hereto. 6.04 Entire Agreement. This Agreement contains the entire agreement among the parties hereto regarding the subject matter hereof. In the event that any term of the Loan Agreement or any Note conflicts with any term of this Agreement, the terms and provisions of this Agreement shall control to the extent of such conflict. 6.05 Amendment or Waiver. This Agreement may not be changed, discharged or terminated (except as expressly provided herein) without the written consent of the parties hereto, and no provision hereof may be waived without the written consent of the party to be bound thereby. 6.06 Counterparts. This Agreement may be signed in separate counterparts, each of which shall be deemed to be an original and all of which together shall constitute one and the same instrument. 6.07 Severability. To the extent permitted by applicable law, the illegality or unenforceability of any provision of this Agreement shall not in any way affect or impair the legality or enforceability of the remaining provisions of this Agreement. [The Remainder of this Page is Intentionally Left Blank] -10- IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed, in duplicate, as of the date first above written. AIR TRANSPORTATION CITIBANK, N.A., STABILIZATION BOARD as Lender By: ___________________________ By: ______________________________ (Signature) (Signature) Name: _______________________________ Name: ___________________________ (Print) (Print) Title :______________________________ Title:____________________________ CITIBANK, N.A., as Agent By: ___________________________ (Signature) Name: ___________________________ (Print) Title:____________________________ 2 Penns Way Suite 200 1120 Vermont Avenue, Suite 970 New Castle, DE 19720 Washington, D.C. 20005 Attention: Roslyn Edge Attention: Executive Director Phone: 302-894-6006 Telephone: (202) 775-8030 Facsimile: 302-894-6120 Telefax: (to be notified to the Agent and Lender in writing) Copy to: Copy to: 388 Greenwich Street 20th Floor United States Department of the New York, New York 10013 Treasury Attention: Barbara Kobelt 1500 Pennsylvania Avenue, N.W. Phone: 212-816-1063 Washington, D.C. 20220 Facsimile: (212) 816-0263 Attention: Deputy Assistant Director for Government Financial Policy Telephone: (202) 622-7073 Telefax: (202) 622-0387 -11- SCHEDULE I In accordance with Section 2.06, the amount of the Guarantee Fee to be paid on the date hereof and on each of the anniversary dates scheduled below (or if any such anniversary date is not a Business Day, then the immediately preceding Business Day) shall be equal to the product of (i) the percentage set out below opposite such anniversary date and (ii) the average portion of the Guaranteed Amount of principal of the Loan scheduled to be outstanding for the then succeeding twelve-month period beginning on such anniversary date after giving effect to any payment of principal of the Loan on such anniversary date and any prior prepayment of principal (and commencing with the anniversary date beginning the twelve-month period in which amortization of the principal of the Loan is first scheduled to begin, computed on the basis of a year of 360 days and actual number of days elapsed). The Agent shall calculate the amount of each such payment of the Guarantee Fee and notify the Board and the Borrower thereof in writing, together with the Agent's calculation, not less than ten (10) Business Days prior to each anniversary date (or preceding Business Day).

ANNIVERSARY DATE APPLICABLE PERCENTAGE ---------------- --------------------- January 18, 2002 5.50% January 18, 2003 7.90% January 18, 2004 7.95% January 18, 2005 8.00% January 18, 2006 8.05% January 18, 2007 8.10% January 18, 2008 8.15%

ANNEX A FORM OF ASSIGNMENT ASSIGNMENT AND CERTIFICATION This Assignment and Certification is made pursuant to the terms of the Guarantee Agreement dated as of January 18, 2002 (the "Agreement") among Citibank, N.A., as Lender, Citibank, N.A., as Agent and the Air Transportation Stabilization Board. Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned in the Agreement. 1. Assignment. For value received, each Lender hereby assigns to the Board, without recourse, all of its right, title and interest in and to the principal of and interest on the Loan and under the Loan Agreement and the Note in respect thereof, to the extent, and only to the extent, of each such Lender's pro rata share of the Guaranteed Percentage of the Loan represented by the Guaranteed Amount paid by the Board to the Agent for each such Lender's account. 2. Certification. Each Lender hereby certifies that it has not, without the prior written consent of the Board: (i) agreed to any material amendment, written modification or written waiver in violation of Section 5.03 of the Agreement; or (ii) assigned, conveyed, sold or otherwise transferred any interest in or right or obligation under this Agreement, the Agreement or the Note in violation of Section 5.04 of the Agreement; or (iii) accelerated or caused the Agent to accelerate all or any part of the Loan or the Note in violation of Section 2.05 of the Agreement; or (iv) obtained any security (within the meaning of Section 3.02 of the Agreement) for payment of all or any part of the Borrower's obligations under the Loan Agreement or the Note; or (v) the Guaranteed Amount demanded to be paid by the Board to the Agent for each such Lender's account is properly calculated and due and owing to such Lender under the terms of the Agreement; it being expressly understood and agreed that the failure of any Lender to make any such certification or for any such certification of any Lender to be incorrect, shall not effect the obligation of the Board under Section 2 of the Agreement in respect of any other Lender. 3. Acknowledgement. Each of the Agent and the Lender acknowledges and agrees that this Assignment and Certification is subject to the terms of the Agreement, including, without limitation, the following: (a) After the Demand Date, any funds received by the Agent or the Board from or on behalf of the Borrower in respect of any of the Borrower's obligations under the Loan Agreement shall be applied in accordance with the terms of the Loan Agreement. (b) The Agent and the Lender shall, upon request by the Board, execute and deliver such documents and take such other actions as the Board may reasonably request to establish, preserve or enforce the rights, title and interest of the Board in, to and under the Loan Agreement and the Note, and any right or remedy that the Board has or may acquire against the Borrower thereunder, it being understood and agreed that the execution and delivery of any such document or the taking of any such action (i) shall not be a condition to the Board's obligation to pay the Guaranteed Amount and (ii) shall be at the expense of the Board. IN WITNESS WHEREOF, the Agent and the Lender have each caused this instrument to be sealed this _____ day of ________________, ____. CITIBANK, N.A., as Lender By: _____________________________ (Signature) (SEAL) Name: ___________________________ (Print) Attest_____________________ Title: ____________________________ Secretary CITIBANK, N.A., as Agent By: _____________________________ (Signature) (SEAL) Name: ___________________________ (Print) Attest_____________________ Title: ____________________________ Secretary -2- Exhibit E Form of Warrant Reference is made to Exhibit 4.19 to the America West Holdings Corporation and America West Airlines, Inc. Form 8-K filed on January 31, 2002 with the Securities and Exchange Commission. EX-10.52 12 p66064ex10-52.txt EX-10.52 Exhibit 10.52 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 Assignment Agreement in substantially the form of Exhibit VI annexed hereto. "BANKRUPTCY CODE" means Title 11 of the United States Code as now and hereafter in effect, or any successor statute. "BASE RATE" means, at any time, the higher of (x) the Prime Rate or (y) the rate which is 1/2 of 1% in excess of the Federal Funds Effective Rate. -4- "BASE RATE LOANS" means Loans bearing interest at rates determined by reference to the Base Rate as provided in subsection 2.2A. "BORROWING BASE" means an aggregate amount equal to: (A) 100% of the Dollar amount of Cash and Permitted Cash Equivalents held by the Agent at such time in the Cash Collateral Account, plus (B) with respect to Aircraft, the Fair Market Value of all Stage III Aircraft as stated in the then most recently delivered Approved Appraisal thereof, plus (C) with respect to Rotables, the lower of (x) the then Adjusted Fair Market Value of the Rotables (as hereinafter defined) and (y) the book value of the Rotables as certified by the Company in the then most recently delivered Borrowing Base Certificate; the "Adjusted Fair Market Value of the Rotables" (1) on any date from and after the date of the then most recently delivered Approved Appraisal (an "Appraisal Date") and prior to the next succeeding date on which the Company shall deliver a Borrowing Base Certificate, shall equal the Fair Market Value of the Rotables as set forth in such Approved Appraisal and (2) on any date thereafter and prior to the date of the next succeeding Approved Appraisal, shall equal the product of (x) the book value of the Rotables, as set forth in the then most recently delivered Borrowing Base Certificate, multiplied by (y) a fraction, of which the numerator shall be the Fair Market Value of the Rotables, as of the Appraisal Date referred to in clause (1) above, and the denominator shall be the book value of the Rotables, as set forth in the Borrowing Base Certificate delivered on or next preceding such Appraisal Date, plus (D) the Fair Market Value of the Maintenance Facility as stated in the most recently delivered Approved Appraisal thereof, plus (E) the Fair Market Value of the Simulators as stated in the then most recently delivered Approved Appraisal thereof, plus (F) the Fair Market Value of the Spare Engines as stated in the then most recently delivered Approved Appraisal thereof. "BORROWING BASE CERTIFICATE" means a certificate substantially in the form of Exhibit IX annexed hereto delivered by the Company pursuant to Section 2.10 with respect to the calculation of the Borrowing Base. "BORROWING BASE COLLATERAL" means, at any time, Eligible Assets that are subject to the Lien of a Security Agreement at such time; for the avoidance of doubt, Collateral pledged pursuant to the Receivables Security Agreement shall not constitute Borrowing Base Collateral. "BORROWING BASE DEFICIENCY" means any time and for so long as the ratio of (1) the aggregate outstanding principal amount of the Loans to (2) the Borrowing Base, is more than .58 to 1. -5- "BORROWING BASE VALUE" means, with respect to any Borrowing Base Collateral, the value attributed to such Borrowing Base Collateral from time to time pursuant to the definition of Borrowing Base. "BUSINESS DAY" means any day excluding Saturday, Sunday and any day which is a legal holiday under the laws of the States of New York, California or Arizona or is a day on which banking institutions located in any such state are authorized or required by law or other governmental action to close and, if the applicable Business Day relates to any Eurodollar Rate Loan, on which dealings are carried on in the London interbank market. "CAPITAL LEASE", as applied to any Person, means any lease of any property (whether real, personal or mixed) by that Person as lessee that, in conformity with GAAP, is required to be accounted for as a capital lease on the balance sheet of that Person, and the amount of Indebtedness represented by such lease shall be the capitalized amount of the obligations evidenced thereby determined in accordance with GAAP. "CAPITAL STOCK" means, with respect to any Person, any and all shares, interests, participations or other equivalents (however designated, whether voting or non-voting) of such Person's capital stock, whether now outstanding or issued after the date of this Agreement, including, without limitation, all Common Stock. "CASH" means money, currency or a credit balance. "CASH AND CASH EQUIVALENT SECURITY AGREEMENT" means the Cash and Cash Equivalent Security Agreement dated as of December 12, 1997 between the Company and the Agent, as amended by Amendment No. 1 dated as of December 10, 1999 and as such Cash and Cash Equivalent Security Agreement may be amended, restated, supplemented or otherwise modified from time to time in accordance with the terms hereof and thereof. "CASH COLLATERAL ACCOUNT" has the meaning given such term in the Cash and Cash Equivalent Security Agreement. "CASH EQUIVALENTS" means, as at any date of determination, (i) marketable securities (a) issued or directly and unconditionally guaranteed as to interest and principal by the United States Government or (b) issued by any agency or instrumentality of the United States the obligations of which are backed by the full faith and credit of the United States, in each case maturing within one year after such date; (ii) marketable direct obligations issued by any state of the United States of America or any political subdivision of any such state or any instrumentality thereof, in each case maturing within one year after such date and having, at the time of the acquisition thereof, the highest rating obtainable from either S&P or Moody's; (iii) commercial paper maturing no more than one year after such date and having, at the time of the acquisition thereof, a rating of at least A-2 from S&P or at least P-2 from Moody's; (iv) certificates of deposit or bankers' acceptances maturing within one year after such date and issued or accepted by any Lender or by any commercial bank organized under the laws of the United States of America or any state thereof or the District of Columbia that (a) is at least "adequately capitalized" (as defined in the regulations of its primary Federal banking regulator) and (b) has -6- Tier 1 capital (as defined in such regulations) of not less than $100,000,000; and (v) shares of any money market mutual fund that (a) has at least 95% of its assets invested continuously in the types of investments referred to in clauses (i) and (ii) above, (b) has net assets of not less than $500,000,000, and (c) has the highest rating obtainable from either S&P or Moody's. "CASH PROCEEDS" means, with respect to any Asset Sale, the proceeds of such Asset Sale in the form of Cash and Cash Equivalents, including payments in respect of deferred payment obligations (to the extent corresponding to the principal, but not the interest component thereof) when received in the form of Cash or Cash Equivalents (except to the extent such obligations are financed or sold with recourse to the Company or any Subsidiary of the Company) and proceeds from the conversion of other property received when converted to Cash or Cash Equivalents. "CHANGE OF CONTROL" means (i) the acquisition at any time by any Person (other than TPG, L.P. or any of its Affiliates or Holdings) or two or more Persons acting in concert of "beneficial ownership" (within the meaning of Section 13(d) under the Exchange Act and the rules and regulations promulgated thereunder) in excess of 40% of the total voting power of the Voting Stock of the Company or Holdings; (ii) the sale, lease, transfer or other disposition, of all or substantially all of the assets of the Company or Holdings to any Person (other than TPG, L.P. or any of its Affiliates or Holdings) or two or more Persons acting in concert as an entirety or substantially as an entirety in one transaction or a series of related transactions; (iii) the merger or consolidation of the Company or Holdings, with or into another corporation, or the merger of another corporation into the Company or Holdings, or any other transaction, with the effect that a Person (other than TPG, L.P. or any of its Affiliates or Holdings) or two or more Persons acting in concert has "beneficial ownership" (within the meaning of Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder) in excess of 40% of the Voting Stock of the Company or Holdings, or (if the Company or Holdings is not the surviving corporation in such transaction) such other corporation, as the case may be (including indirect ownership through another Person other than TPG, L.P. or any of its Affiliates or Holdings or through two or more Persons acting in concert); or (iv) the liquidation or dissolution of the Company or Holdings. For purposes of this definition, the term Person includes a "person" within the meaning of Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. "CLOSING DATE" means the date, if any, on or before January 31, 2002, when the conditions of Section 3.1 hereof have been satisfied and the Existing Credit Agreement has been restated and amended as provided in this Agreement. "CO-LEAD BOOK MANAGERS" means Salomon Smith Barney Inc. and The Industrial Bank of Japan, Limited. "COLLATERAL" means all of the properties and assets that are from time to time subject to the Liens purported to be granted by the Security Agreements (provided, for the avoidance of doubt, that "Collateral" shall not include any properties or assets subject to Liens granted pursuant to the Receivables Security Agreement unless and until the conditions to such Liens becoming effective, as set forth in the Receivables Security Agreement, have occurred). -7- "COMMODITY AGREEMENT" means any agreement or arrangement designed to protect the Company or any of its Subsidiaries against fluctuations in the prices of commodities used by the Company or any of its Subsidiaries in the ordinary course of its business. "COMMON STOCK" means, with respect to any Person, any and all shares, interests, participations or other equivalents (however designated, whether voting or non-voting) of such Person's common stock, whether now outstanding or issued after the date of this Agreement, including, without limitation, all series and classes of such common stock. "COMPANY" has the meaning assigned to that term in the introduction to this Agreement and its permitted successors and assigns. "COMPANY COMMON STOCK" means the Common Stock of the Company, par value $0.01 per share. "COMPLIANCE CERTIFICATE" means a certificate substantially in the form of Exhibit IV annexed hereto delivered to the Agent and the Lenders by the Company pursuant to subsection 5.1(iii). "CONCESSIONS" means the lessor, creditor and vendor concessions granted to the Company in connection with the Company's Restructuring Plan. "CONFIDENTIAL INFORMATION" means information that the Company furnishes to the Agent or any Lender in a writing designated as confidential, but does not include any such information that is or becomes generally available to the public or that is or becomes available to the Agent or such Lender from a source other than the Company. "CONTRACTUAL OBLIGATION", as applied to any Person, means any provision of any equity security issued by that Person or of any material indenture, mortgage, deed of trust, contract, undertaking, agreement or other material instrument to which that Person is a party or by which it or any of its properties is bound or to which it or any of its properties is subject. "CURRENCY AGREEMENT" means any foreign exchange contract, currency swap agreement, futures contract, option contract, synthetic cap or other similar agreement or arrangement designed to protect the Company or any of its Subsidiaries against fluctuations in currency values. "DESIGNATED LOCATIONS" has the meaning given such term in the Spare Parts Security Agreement. "DOCUMENTATION AGENT" means Bankers Trust Company. "DOLLARS" and the sign "$" mean the lawful money of the United States of America. "ELIGIBLE ASSETS" has the meaning given such term in Subsection 2.10. -8- "ELIGIBLE ASSIGNEE" means (A) (i) a commercial bank organized under the laws of the United States or any state thereof and having total assets on a consolidated basis in excess of $1,000,000,000; (ii) a savings and loan association or savings bank organized under the laws of the United States or any state thereof and having total assets on a consolidated basis in excess of $1,000,000,000; (iii) a commercial bank organized under the laws of any other country or a political subdivision thereof; provided that (x) such bank is acting through a branch or agency located in the United States or (y) such bank is organized under the laws of a country that is a member of the Organization for Economic Cooperation and Development or a political subdivision of such country; and (iv) any other institutional investor organized under the laws of the United States or any state thereof which extends credit or buys loans or notes as one of its businesses including, but not limited to, investment banks, insurance companies, mutual funds, money management companies, pension management companies and lease financing companies, in each case (under clauses (i) through (iv) above) that is reasonably acceptable to the Agent; and (B) any Lender and any Affiliate of any Lender; provided that neither the Company nor any Affiliate of the Company shall be an Eligible Assignee. "ELIGIBLE SIMULATOR" means a flight simulator of the type described in Schedule 2.10. "ELIGIBLE SPARE ENGINE" means an aircraft engine of the type described in Schedule 2.10. "ELIGIBLE STAGE III AIRCRAFT" means an aircraft, including engines, that meets the "Stage III" noise standards of the Federal Aviation Regulations, is of the type described in Schedule 2.10 and has met such standards either (x) in the case of an aircraft other than a 737-200A series aircraft, since it was originally manufactured and delivered or (y) in the case of a 737-200A series aircraft, either at the time such aircraft becomes subject to the Lien of an Aircraft Security Agreement or at the time such aircraft was originally manufactured and delivered. "ENGINE" means each aircraft engine from time to time subject to the Lien of the Aircraft Security Agreement. "ENVIRONMENTAL CLAIM" means any material investigation, notice, claim, suit, proceeding, demand or order, by any governmental authority or any Person arising in connection with any alleged or actual material violation of Environmental Laws or with any Hazardous Material, or any actual or alleged damage, or harm to health, safety or the environment. "ENVIRONMENTAL INDEMNITY AGREEMENT" means the Amended and Restated Environmental Indemnity Agreement dated as of December 10, 1999 and as such Environmental Indemnity Agreement may be amended, restated, supplemented or otherwise modified from time to time in accordance with the terms hereof or thereof. "ENVIRONMENTAL LAWS" means any and all current or future statutes, ordinances, orders, rules, regulations, guidance documents, judgments, governmental authorizations, or any other requirement of governmental authorities relating to (a) the prevention or control of -9- pollution or protection of the environment, (b) solid, gaseous or liquid waste generation, handling, treatment, storage, disposal, discharge, release, emission or transportation, or (c) exposure to Hazardous Materials. "Environmental Laws" shall include, but not be limited to, the Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. 9601 et seq.), the Resource Conservation and Recovery Act (42 U.S.C. 6901 et seq.), the National Environmental Policy Act (42 U.S.C. 4321 et seq.), the Hazardous Materials Transportation Act (49 U.S.C. 1801 et seq.), the Toxic Substances Control Act (49 U.S.C. 2601 et seq.), the Clean Air Act (42 U.S.C. 7401 et seq.), the Federal Water Pollution Control Act (33 U.S.C. 1251 et seq.), the Safe Drinking Water Act (42 U.S.C. 3007 et seq.), the Emergency Planning and Community Right-to-Know Act (42 U.S.C. 11001 et seq.), the Occupational Safety and Health Act (29 U.S.C. 641 et seq.), and the State of Arizona Environmental Quality Act (A.R.S. 49-101 et seq.). "EQUITY PROCEEDS" means the cash proceeds (net of underwriting discounts and commissions and other reasonable costs associated therewith) from the issuance of any equity securities of the Company including, without limitation, additional issuances of Company Common Stock. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time, and any successor statute. "ERISA AFFILIATE" means, as applied to the Company, (i) any corporation which is, or was at any time, a member of a controlled group of corporations within the meaning of Section 414(b) of the Internal Revenue Code of which the Company is a member; (ii) any trade or business (whether or not incorporated) which is a member of a group of trades or businesses under common control within the meaning of Section 414(c) of the Internal Revenue Code of which the Company is a member; and (iii) any member of an affiliated service group within the meaning of Section 414(m) or (o) of the Internal Revenue Code of which the Company, any corporation described in clause (i) above or any trade or business described in clause (ii) above is a member. "EURODOLLAR RATE LOANS" means Loans bearing interest at rates determined by reference to the Adjusted Eurodollar Rate as provided in subsection 2.2A. "EVENT OF DAMAGE" with respect to any Borrowing Base Collateral (other than Rotables) means any damage to such Borrowing Base Collateral the repair of which is reasonably estimated by the Company to cost more than 50% of the Fair Market Value of such Borrowing Base Collateral. "EVENT OF DEFAULT" means each of the events set forth in Section 7. "EVENT OF LOSS" with respect to any Borrowing Base Collateral (other than Cash and Cash Equivalents) has the meaning given in the Security Agreement to which such Borrowing Base Collateral is subject. -10- "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended from time to time, and any successor statute. "FACILITIES" means any and all real property now, hereafter or heretofore owned, leased, operated or used by the Company or any of its Subsidiaries and any of their respective predecessors. "FAIR MARKET VALUE" for any Borrowing Base Collateral means the value of such Borrowing Base Collateral, as determined by an Approved Appraiser in the most recently delivered Approved Appraisal thereof, obtainable by a seller at the time of determination in an arm's-length transaction between an informed and willing seller under no compulsion to sell and an informed and willing buyer-user (other than a lessee or other Person currently in possession and a used equipment dealer or broker) under no compulsion to buy and based on the then condition of such Borrowing Base Collateral. "FEDERAL AVIATION ADMINISTRATION" or "FAA" means the United States Federal Aviation Administration or any successor thereto administering the functions of the Federal Aviation Administration under the Act. "FEDERAL AVIATION REGULATIONS" means regulations issued by the FAA. "FEDERAL FUNDS EFFECTIVE RATE" means, for any period, a fluctuating interest rate equal for each day during such period to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day on which is a Business Day, the average of the quotations for such day on such transactions received by the Agent from three Federal funds brokers of recognized standing selected by the Agent. "FISCAL YEAR" means with respect to the financial statements to be delivered by the Company pursuant to subsection 5.1, the Company's fiscal year referenced in such financial statements; provided, that the Company will not change its Fiscal Year if such change will cause an unreasonable delay in the production of the financial statements required by subsection 5.1(ii). "FUNDING AND PAYMENT OFFICE" means the office of the Agent located at 1251 Avenue of the Americas, New York, New York 10020. "GAAP" means, subject to the limitations on the application thereof set forth in subsection 1.2, generally accepted accounting principles set forth in opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as may be approved by a significant segment of the accounting profession. Financial statements and other information required to be delivered by the Company to the Lenders pursuant to clauses (ii), (iii) and (xiii) of subsection 5.1 shall be -11- prepared in accordance with GAAP as in effect at the time of such preparation (and delivered together with the reconciliation statements provided for in subsection 5.1(v)). "GUARANTEE" means any obligation, contingent or otherwise, of any Person directly or indirectly guaranteeing any Indebtedness or other obligation of any other Person and, without limiting the generality of the foregoing, any obligation, direct or indirect, contingent or otherwise, of such first Person (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation of such other Person (whether arising by virtue of partnership arrangements, or by agreement to keep-well, to purchase assets, goods, securities or services, to take-or-pay, or to maintain financial statement conditions or otherwise) or (ii) entered into for purposes of assuring in any other manner the obligee of such Indebtedness or other obligation of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part). The term "Guarantee" used as a verb has a corresponding meaning. "GOVERNMENTAL AUTHORIZATION" means any permit, license, authorization, plan, directive, consent order or consent decree of or from any federal, state or local governmental authority, agency or court. "GOVERNMENT GUARANTEED LOAN" means the loan made to the Company pursuant to the Air Carrier Guarantee Loan Documents, a portion of which is guaranteed by the full faith and credit of the United States Government or an agency thereof and the balance of which may be guaranteed by one or more other third parties pursuant to the Air Carrier Guarantee Loan Documents. "GOVERNMENT GUARANTEED LOAN AGREEMENT" means the Loan Agreement, dated as of January 18, 2002, among the Company, the lenders, the loan administrator and agent party thereto and The Air Transportation Stabilization Board. "GOVERNMENT GUARANTEED LOAN TERM SHEET" means the term sheet provided by the Company to the Agent and the Lenders, setting forth the material economic and business terms and conditions of the Government Guaranteed Loan. "HAZARDOUS MATERIALS" means any chemical or other material or substance, exposure to which or Release of is now or hereafter prohibited, limited or regulated under any law. "HAZARDOUS MATERIALS ACTIVITY" means any past, current, proposed, or threatened use, storage, release, generation, treatment, remediation or transportation of any Hazardous Material (i) from, under, in, into or on the Facilities or surrounding property; and (ii) caused by, or undertaken by or on behalf of, the Company, any of its Subsidiaries or any of their respective predecessors. "HOLDINGS" means America West Holdings Corporation. "INDEBTEDNESS" means, with respect to any Person at any date of determination (without duplication), (i) all indebtedness of such Person for borrowed money; (ii) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments; (iii) all -12- obligations of such Person in respect of letters of credit or other similar instruments (including reimbursement obligations with respect thereto); (iv) all obligations of such Person to pay the deferred and unpaid purchase price of property or services, which purchase price is due more than six months after the date of placing such property in service or taking delivery and title thereto or the completion of such services, except Trade Payables; (v) all Capitalized Lease obligations of such Person (the amount of the Indebtedness with respect to Capitalized Lease obligations to be determined as provided in the definition of Capitalized Lease in this subsection 1.1); (vi) all Indebtedness of other Persons secured by a Lien on any asset of such Person, whether or not such Indebtedness is assumed by such Person; provided that the amount of such Indebtedness shall be the lesser of (A) the fair market value of such asset at such date of determination and (B) the stated principal amount of such Indebtedness; (vii) all Indebtedness of other Persons Guaranteed by such Person to the extent such Indebtedness is Guaranteed by such Person; and (viii) to the extent not otherwise included in this definition and to the extent treated as a liability under GAAP, obligations under Currency Agreements, Interest Rate Agreements and Commodity Agreements. The amount of Indebtedness of any Person at any date shall be the outstanding balance at such date of all unconditional obligations as described above and the maximum liability, upon the occurrence of the contingency giving rise to the obligation, of any contingent obligations at such date; provided that the amount outstanding at any time of any Indebtedness issued with original issue discount is the face amount of such Indebtedness less the remaining unamortized portion of the original issue discount of such Indebtedness at such time as determined in conformity with GAAP. "INDEMNITEE" has the meaning assigned to that term in subsection 9.3. "INSURANCE PROCEEDS" has the meaning assigned to that term in subsection 2.9B(iii)(c). "INTEREST PAYMENT DATE" means (i) with respect to any Base Rate Loan, the last day of each month of each year, commencing on the first such date to occur after the Closing Date, and (ii) with respect to any Eurodollar Rate Loan, the last day of each Interest Period applicable to such Loan. "INTEREST PERIOD" has the meaning assigned to that term in subsection 2.2B. "INTEREST RATE AGREEMENT" means any interest rate future agreement, interest rate option agreement, interest rate swap agreement, interest rate cap agreement, interest rate collar agreement, interest rate hedge agreement or other similar agreement or arrangement designed to protect the Company or any of its Subsidiaries against fluctuations in interest rates or under which the Company or any of its Subsidiaries is a party or a beneficiary on the date of this Agreement or becomes a party or a beneficiary thereafter. "INTEREST RATE DETERMINATION DATE" means, with respect to any Interest Period, the second Business Day prior to the first day of such Interest Period. "INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986, as amended to the date hereof and from time to time hereafter. -13- "INVESTMENT" means with respect to any Person, any direct or indirect advance, loan (other than advances to customers in the ordinary course of business consistent with past practices that are recorded as accounts receivable on the balance sheet of such Person or its Subsidiaries) or other extension of credit or capital contribution by such Person to any other Person (by means of any transfer of cash or other property to others or any payment for property or services for the account or use of others; provided, that any transfer of aircraft to a limited partnership or other entity in connection with the transaction in which the aircraft are leased to the Company shall not be an Investment), or any purchase or acquisition by such person of Capital Stock, bonds, notes, debentures or other similar instruments issued by any other Person; provided, that advances or loans by the Company to Holdings shall not constitute an Investment. "JOINT VENTURE" means a joint venture, partnership or other similar arrangement, whether in corporate, partnership or other legal form; provided that in no event shall any corporate Subsidiary of any Person be considered to be a Joint Venture to which such Person is a party. "LEASE INDENTURE" means the Indenture, dated as of January 18, 2002, between Wilmington Trust Company, as Indenture Trustee, and Holdings. "LEASE INDENTURE TERM SHEET" means the term sheet provided by the Company to the Agent and the Lenders, setting forth the material economic and business terms and conditions of the Lease Indenture. "LENDER" and "LENDERS" means the persons identified as "Lenders" and listed on the signature pages of this Agreement, together with their successors and permitted assigns pursuant to subsection 9.1. "LIEN" means any lien, mortgage, pledge, assignment, security interest, charge, hypothecation, preference, priority, privilege, lease or encumbrance of any kind (including any conditional sale or other title retention agreement, any lease in the nature thereof, and any agreement to give any security interest); provided, that neither negative pledges nor covenants to abstain from granting liens on or security interests in assets of the Company or any of its Subsidiaries shall constitute Liens. "LOAN" or "LOANS" means the term loans made by each Lender to the Company and evidenced by the Term Notes. "LOAN DOCUMENTS" means this Agreement, the Notes, the Environmental Indemnity Agreement, the Security Agreements and any letter agreement between the Company and the Agent establishing fees payable by the Company to the Agent in connection with this Agreement. "MAINTENANCE FACILITY" means an aircraft maintenance facility, all right, title and interest of the Company in and to the real property on which the maintenance facility is located and the other improvements on such real property, in each case that have been made subject to the Lien of the Maintenance Facility Security Agreement. -14- "MAINTENANCE FACILITY SECURITY AGREEMENT" means the Leasehold Deed of Trust, Security Agreement, Assignment of Rents, Financing Statement and Fixture Filing, dated as of December 12, 1997, by the Company to First American Title Insurance Company, as Trustee for the Agent, as such Maintenance Facility Security Agreement may be amended, restated, supplemented or otherwise modified from time to time in accordance with the terms hereof and thereof. "MARGIN STOCK" has the meaning assigned to that term in Regulation T, U or X of the Board of Governors of the Federal Reserve System as in effect from time to time. "MOODY'S" means Moody's Investors Service, Inc. "NET CASH PROCEEDS" means, with respect to any Asset Sale, the Cash Proceeds of such Asset Sale, net of (i) brokerage commissions and other fees and expenses (including fees and expenses of counsel and investment bankers) related to such Asset Sale, (ii) provisions for all taxes payable as a result of such Asset Sale without regard to the consolidated results of operations of the Company and its Subsidiaries, take as a whole, (iii) payments made to repay Indebtedness or any other obligation outstanding at the time of such Asset Sale that either (A) is secured by a Lien on the property or assets sold or (B) is required by its own terms to be paid as a result of such Asset Sale, and (iv) appropriate amounts to be provided by the Company or any Subsidiary of the Company as a reserve against any liabilities associated with such Asset Sale, including, without limitation, pension and other post-employment benefit liabilities, liabilities related to environmental matters and liabilities under any indemnification obligations associated with such Asset Sale, all as determined in conformity with GAAP. "NON-US LENDER" has the meaning assigned to that term in subsection 2.7B(iii)(a). "NOTES" means (i) the Term Notes of the Company issued pursuant to subsection 2.1D, (ii) any Term Notes issued by the Company pursuant to the last sentence of subsection 9.1B(i) in connection with assignments of the Loans of any Lenders, in each case substantially in the form of Exhibit III annexed hereto, as they may be amended, supplemented or otherwise modified from time to time and (iii) the PIK Notes. "NOTICE OF CONVERSION/CONTINUATION" means a notice substantially in the form of Exhibit II annexed hereto delivered by the Company to the Agent pursuant to subsection 2.2D with respect to a proposed conversion or continuation of the applicable basis for determining the interest rate with respect to the Loans specified therein. "OBLIGATIONS" means all payment and performance obligations of every nature of the Company from time to time owed to the Agent, the Lenders or any of them under the Loan Documents, whether for principal, interest, fees, expenses, indemnification or otherwise. "OFFICER'S CERTIFICATE" means, as applied to any corporation, a certificate executed on behalf of such corporation by its chairman of the board (if an officer), president, one of its vice presidents, chief financial officer, controller, treasurer or assistant treasurer or an assistant secretary; provided that every Officer's Certificate shall include (i) a statement that the -15- officer acting in such capacity making or giving such Officer's Certificate has read such condition and any definitions or other provisions contained in this Agreement relating thereto, (ii) a statement that, in the opinion of the signer, s/he has made or has caused to be made such examination or investigation as is necessary to enable her/him to express an informed opinion as to whether or not such condition has been complied with, and (iii) a statement as to whether, in the opinion of the signer, such condition has been complied with. "OPERATING LEASE" means, as applied to any Person, any lease (including, without limitation, leases that may be terminated by the lessee at any time) of any property (whether real, personal or mixed) under which such Person is Lessee, that is not a Capital Lease. "PARTS COLLATERAL" has the meaning given such term in the Spare Parts Security Agreement. "PAYMENT RESTRICTION" means, with respect to a Subsidiary of any Person, any encumbrance, restriction or limitation, whether by operation of the terms of its charter or by reason of any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation, on the ability of (i) such Subsidiary to (a) pay dividends or make other distributions on its Capital Stock or make payments on any obligation, liability or Indebtedness owed to such Person or any other Subsidiary of such Person, (b) make loans or advances to such Person or any other Subsidiary of such Person, or (c) transfer any of its property or assets to such Person or any other Subsidiary of such Person, or (ii) such Person or any other Subsidiary of such Person to receive or retain any such (a) dividend, distributions or payments, (b) loans or advances, or (c) property or assets. "PERMITTED CASH EQUIVALENTS" means, at any date of determination, (i) certificates of deposit or bankers' acceptances maturing within one year after such date and issued or accepted by the Agent and (ii) subject to agreement of the Agent and the Company to mutually satisfactory custodial arrangements, other Cash Equivalents (except that commercial paper described in clause (b)(iii) of the definition of Cash Equivalents shall have a rating of at least A-1 from S&P or P-1 from Moody's). "PERMITTED ENCUMBRANCES" means the following types of Liens (other than any such Lien imposed pursuant to Section 401(a)(29) or 412(n) of the Internal Revenue Code or by ERISA) as applied to property not constituting Collateral: (i) Liens for taxes, assessments or governmental charges or claims the payment of which is either (a) not delinquent for a period of more than 30 days or (b) subject to a good faith contest as set forth in subsection 5.3(A); (ii) statutory Liens of landlords and Liens of carriers, vendors, warehousemen, repairmen, mechanics and materialmen and other Liens imposed by law incurred in the ordinary course of business for sums either (a) not delinquent for a period of more than 30 days or (b) being contested in faith by appropriate proceedings that do not involve imminent danger of the sale, forfeiture or loss of any Collateral, if such reserve or other appropriate provision, if any, as shall required by GAAP shall have been made therefor; -16- (iii) Liens incurred or deposits made in the ordinary course of business in connection with workers' compensation, unemployment insurance and other types of social security, or to secure the performance of tenders, statutory obligations, surety and appeal bonds, bids, leases, government contracts, trade contracts, performance and return-of-money bonds, reimbursement obligations and chargeback rights of Persons performing services for the Company or any of its Subsidiaries and other similar obligations (exclusive of obligations for the payment of borrowed money); (iv) easements, rights-of-way, restrictions, minor defects, encroachments or irregularities in title and other similar charges or encumbrances not interfering in any material respect with the ordinary conduct of the business of the Company or any of its Subsidiaries; (v) Liens arising from filing effective Uniform Commercial Code financing statements relating solely to leases not prohibited by this Agreement; (vi) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods; (vii) Liens described in Schedule 6.2 annexed hereto; (viii) Liens granted pursuant to the Security Agreements; (ix) judgment and attachment Liens not giving rise to an Event of Default; (x) Liens on the assets of any entity or asset existing at the time such entity is acquired by the Company or any Subsidiary, whether by merger, consolidation, purchase of assets or otherwise; provided that such Liens (i) are not created, incurred or assumed by such entity in contemplation of such entity's being acquired by the Company or any Subsidiary; (ii) do not extend to any other assets of the Company or any Subsidiary; and (iii) the Indebtedness secured by such Lien is permitted pursuant to this Agreement; (xi) leases or subleases granted to others not interfering in any material respect with the business of the Company or any Subsidiary; (xii) any interest or title of a lessor in property subject to any Capital Lease obligation or Operating Lease which, in each case, is not prohibited under this Agreement (disregarding for this purpose subsection 6.2); (xiii) Liens in favor of collecting or payor banks having a right of setoff, revocation, refund or chargeback with respect to money or instruments of the Company or any Subsidiary on deposit with or in possession of such bank; (xiv) any renewal of or substitution for any Lien permitted by any of the preceding clauses; provided that the debt secured is not increased nor the Lien extended to any additional assets; and -17- (xv) Liens of creditors of any Person to whom any of the Company's assets are consigned for sale. "PERMITTED LIEN" with respect to any Collateral, has the meaning given such term in the Security Agreement to which such Collateral is subject. "PERSON" means and includes natural persons, corporations, limited partnerships, general partnerships, joint stock companies, limited liability companies, Joint Ventures, associations, companies, trusts, banks, trust companies, land trusts, business trusts or other organizations, whether or not legal entities, and governments and agencies and political subdivisions thereof. "PIK NOTES" means the promissory notes of the Company in favor of each Lender, in each case in substantially the form of Exhibit III-A hereto, with appropriate insertions and deletions, as they may be amended, supplemented or otherwise modified from time to time . "PLAN" means any "employee benefit plan" as defined in Section 3(3) of ERISA which is, or was at any time, maintained or contributed to by the Company or any of its ERISA Affiliates, other than a multiemployer plan, within the meaning of Section 4001(a)(3) of ERISA. "POTENTIAL EVENT OF DEFAULT" means a condition or event that, after notice or the passage of time or both, would constitute an Event of Default. "PRIME RATE" means the rate that The Industrial Bank of Japan, Limited, announces from time to time as its prime lending rate at its New York City office, as in effect from time to time. The Prime Rate is a reference rate and does not necessarily represent the lowest or best rate actually charged to any customer. The Industrial Bank of Japan, Limited or any Lender may make commercial loans or other loans at rates of interest at, above or below the Prime Rate. "PRINCIPAL PAYMENT DATE" means each of December 31, 2005, December 31, 2006 and the Termination Date. "PRO FORMA BASIS" means, with respect to compliance with any covenant hereunder, compliance with such covenant after giving effect to any proposed incurrence of Indebtedness by the Company or any of its Subsidiaries and the application of the proceeds thereof, the acquisition (whether by purchase, merger or otherwise) or disposition (whether by sale, merger or otherwise) of any company, entity or business or any asset by the Company or any of its Subsidiaries or any other related action which requires compliance on a Pro Forma Basis. In making any determination of compliance on a Pro Forma Basis, such determination shall be performed after good faith consultation with the Agent using the consolidated financial statements of the Company and its Subsidiaries which shall be reformulated as if any such incurrence of Indebtedness and the application of proceeds, acquisition, disposition or other related action had been consummated at the beginning of the period specified in the covenant with respect to which Pro Forma Basis compliance is required. "PRO RATA SHARE" means, with respect to each Lender, the percentage obtained by dividing the outstanding principal amount of the Loan of that Lender by the aggregate -18- outstanding principal amount of the Loans of all Lenders, as such percentage may be adjusted by assignments permitted pursuant to subsection 9.1. The initial Pro Rata Share of each Lender is set forth opposite the name of that Lender in Schedule 2.4 annexed hereto. "PROCEEDINGS" has the meaning assigned to that term in subsection 5.1(x). "RECEIVABLES SECURITY AGREEMENT" means a Receivables Security Agreement substantially in the form of Exhibit B hereto, as such Receivables Security Agreement may be amended, restated, supplemented or otherwise modified from time to time in accordance with the terms hereof and thereof. "REDEEMABLE STOCK" means any class or series of Capital Stock of any Person that by its terms or otherwise (i) is required to be redeemed prior to the Termination Date, (ii) may be required to be redeemed at the option of the holder of such class or series of Capital Stock at any time prior to the Termination Date, or (iii) is convertible into or exchangeable for Capital Stock referred to in clause (i) or (ii) above or Indebtedness having a scheduled maturity prior to the Termination Date; provided that any Capital Stock that would not constitute Redeemable Stock but for provisions thereof offering holders thereof the right to require the Company to repurchase or redeem such Capital Stock upon the occurrence of an "asset sale" occurring prior to the Termination Date shall not constitute Redeemable Stock if the asset sale provisions contained in such Capital Stock specifically provide that in respect of any particular asset sale proceeds, the Company will not repurchase or redeem any such Capital Stock pursuant to such provisions prior to the Company's permanent repayment of the Loans and other Obligations of the Lenders by an amount at least equal to such asset sale proceeds (net of associated taxes and transaction costs). "REFERENCE LENDERS" means the Agent, Citicorp USA, Inc. and Bankers Trust Company. "REFINANCING INDEBTEDNESS" means any Indebtedness of the Company or any of its Subsidiaries issued in exchange for, or the net proceeds of which are applied entirely to substantially concurrently repay, refinance, refund or replace, outstanding Indebtedness of the Company or any of its Subsidiaries (the "Refinanced Indebtedness"), to the extent such Refinancing Indebtedness: (a) is issued in a principal amount (or if such Indebtedness is issued at an original issue discount, is issued at an original issue price) not exceeding the outstanding principal amount (or, if such Refinanced Indebtedness was issued at an original issue discount, not exceeding the outstanding accreted principal amount) of such Refinanced Indebtedness; and (b) if the Refinanced Indebtedness is Indebtedness of the Company and ranks by contract, by its terms or otherwise junior in right of payment to the Obligations, (i) does not have a final scheduled maturity and is not subject to any principal payments, including but not limited to payments upon mandatory or optional redemption, prior to the dates of analogous payments under the Refinanced Indebtedness, and (ii) has subordination provisions effective to subordinate such Indebtedness to the Obligations at -19- least to the extent that such Refinanced Indebtedness is subordinated to the Obligations; and (c) if the Refinanced Indebtedness is Indebtedness of the Company which is pari passu in right of payment with the Obligations, (i) is pari passu or subordinated in right of payment to the Obligations, (ii) does not have a final scheduled maturity and is not subject to any principal payments, including but not limited to, payments upon mandatory or optional redemption, prior to the final scheduled maturity date of the Refinanced Indebtedness, and (iii) is not secured by any Lien on any property of the Company or any Subsidiary in addition to Liens securing the Refinanced Indebtedness; and (d) with respect to Refinancing Indebtedness that refinances the Government Guaranteed Loan or the debt issued pursuant to the Lease Indenture, such Refinancing Indebtedness shall not (i) shorten the final maturity date of such Refinanced Indebtedness, (ii) require the acceleration of the final scheduled maturity date or any principal payments, including but not limited to scheduled payments and mandatory prepayments, or increase the principal amount payable on any date (including, without limitation, pursuant to mandatory prepayments) prior to the dates of analogous payments under such Refinanced Indebtedness, (iii) provide for an interest rate applicable to such Refinancing Indebtedness, plus the interest rate equivalent of all fees and costs associated with closing and servicing such Refinancing Indebtedness higher than the greater of (x) (I) if such Refinancing Indebtedness bears interest at a floating rate of interest, 105% of the average remaining interest rate applicable to the Refinanced Indebtedness plus the average remaining fees and costs associated with servicing the Refinanced Indebtedness, or (II) if such Refinancing Indebtedness bears interest at a fixed rate of interest, the amount calculated as the sum of clause (I) above plus the appropriate fixed-for-floating swap rate for the Refinancing Indebtedness, and (y) 105% of the average remaining "all in" interest expense for the Refinanced Indebtedness as contemplated in the Restructuring Plan. "REGISTER" has the meaning assigned to that term in subsection 2.1.E. "REGULATION D" means Regulation D of the Board of Governors of the Federal Reserve System, as in effect from time to time. "RELEASE" means any release, spill, emission, leaking, pumping, pouring, injection, escaping, deposit, disposal, discharge, dispersal, dumping, leaching or migration of Hazardous Materials into the indoor or outdoor environment (including, without limitation, the abandonment or disposal of any barrels, containers or other closed receptacles containing any Hazardous Materials), or into or out of any Facilities, including the movement of any Hazardous Material through the air, soil, surface water, groundwater or property. "REPAIRABLE DAMAGE" with respect to any Borrowing Base Collateral (other than Rotables) means any damage to such Borrowing Base Collateral the repair of which is reasonably estimated by the Company to cost 50% or less of the Fair Market Value of such Borrowing Base Collateral. -20- "REQUISITE LENDERS" means at any time Lenders owed or holding a majority in interest of the aggregate principal amount of the Loans of all Lenders. "RESPONSIBLE OFFICER" means, with respect to the Company, its controller, treasurer, president or any vice president. "RESTRICTED PAYMENT" means (i) any declaration or payment of dividends on or making of any distributions in respect of the Capital Stock of the Company (other than dividends or distributions payable solely in shares of Capital Stock (other than Redeemable Stock) or in options, warrants, or other rights to purchase Capital Stock (other than Redeemable Stock)) to holders of Capital Stock of the Company, (ii) any purchase, redemption or other acquisition or retirement for value (other than through the issuance solely of Capital Stock (other than Redeemable Stock) or options, warrants or other rights to purchase Capital Stock (other than Redeemable Stock)) of any Capital Stock or warrants, rights (other than exchangeable or convertible Indebtedness of the Company not prohibited under clause (iii) below) or options to acquire Capital Stock of the Company; (iii) any redemption, repurchase, defeasance (including, but not limited to, in substance or legal defeasance), or other acquisition or retirement for value (other than through the issuance solely of Capital Stock (other than Redeemable Stock) or warrants, rights or options to acquire Capital Stock (other than Redeemable Stock)) (collectively, a "prepayment"), directly or indirectly (including by way of amendment of the terms of any Indebtedness in connection with any retirement or acquisition of such Indebtedness), other than at any scheduled maturity thereof or by any scheduled repayment or scheduled sinking fund payment or any mandatory prepayment, of any Indebtedness of the Company (other than a repayment of Indebtedness relating to aircraft (including aircraft engines installed thereon), spare aircraft engines, aircraft parts, simulators, passenger loading bridges or other flight or ground support equipment that is being repaid pursuant to a sale-leaseback transaction permitted by Section 6.7 of this Agreement) which is subordinated in right of payment to the Obligations or which matures after the Termination Date (except out of the proceeds of Refinancing Indebtedness) and (iv) any advances or loans by the Company to Holdings. "RESTRUCTURING PLAN" means the seven year plan of the Company, as provided by the Company to the Agent and the Lenders. "ROTABLES" means Parts Collateral at Designated Locations. "S&P" means Standard & Poor's Ratings Group, a division of McGraw Hill, Inc. "SECURITIES ACT" means the Securities Act of 1933, as amended from time to time, and any successor statute. "SECURITY AGREEMENTS" means, collectively, the Aircraft Security Agreements, Spare Engine Security Agreement, Cash and Cash Equivalent Security Agreement, Maintenance Facility Security Agreement, Spare Parts Security Agreement and the Receivables Security Agreement. -21- "SENIOR NOTES" means the Company's 10--3/4% Senior Unsecured Notes Due September 1, 2005 issued pursuant to an Indenture, dated as of August 1995, between the Company and American National Bank National Association, as trustee. "SIMULATORS" means each Eligible Simulator from time to time subject to the Lien of the Spare Engine Security Agreement. "SOLVENT" means, with respect to any Person, that as of the date of determination both (A) (i) the then fair saleable value of the property of such Person is (y) greater than the total amount of liabilities (including contingent liabilities) of such Person and (z) not less than the amount that will be required to pay the probable liabilities on such Person's then existing debts as they become absolute and matured considering all financing alternatives and potential asset sales reasonably available to such Person; (ii) such Person's capital is not unreasonably small in relation to its business or any contemplated or undertaken transaction; and (iii) such Person does not intend to incur, or believes that it will not incur, debts beyond its ability to pay such debts as they become due; and (B) such Person is "solvent" within the meaning given that term and similar terms under applicable laws relating to fraudulent transfers and conveyances. For purposes of this definition, the amount of any contingent liability at any time shall be computed as the amount that, in light of all of the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability. "SPARE ENGINE" means each Eligible Spare Engine from time to time subject to the Lien of the Spare Engine Security Agreement. "SPARE ENGINE SECURITY AGREEMENT" means the Spare Engine and Simulator Security Agreement dated as of December 12, 1997, between the Company and the Agent, as amended and supplemented as of the date hereof and as such Spare Engine Security Agreement may be amended, restated, supplemented or otherwise modified from time to time in accordance with the terms hereof and thereof. "SPARE PARTS SECURITY AGREEMENT" means the Spare Parts Security Agreement dated as of December 12, 1997, between the Company and the Agent, as amended and supplemented as of the date hereof and as such Spare Parts Security Agreement may be amended, restated, supplemented or otherwise modified from time to time in accordance with the terms hereof and thereof. "STAGE III AIRCRAFT" means each Eligible Stage III Aircraft that is an Aircraft. "SUBSIDIARY" means, with respect to any Person, any corporation, partnership, association, limited liability company, trust or estate, joint venture or other business entity of which more than 50% of the issued and outstanding shares of Voting Stock at the time of determination are owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof. "SYNDICATION AGENT" means Citicorp USA, Inc. -22- "TAX" or "TAXES" means any present or future tax, levy, impost, duty, charge, fee, deduction or withholding of any nature and whatever called, by whomsoever, on whomsoever and wherever imposed, levied, collected, withheld or assessed; provided that "TAX ON THE OVERALL NET INCOME" of a Person shall be construed as a reference to a tax imposed by the jurisdiction in which that Person's principal office (and/or, in the case of a Lender, its lending office) is located. "TERM NOTES" means the promissory notes of the Company in favor of each Lender, in each case in substantially the form of Exhibit III hereto, with appropriate insertions and deletions, as they may be amended, supplemented or otherwise modified from time to time "TERMINATION DATE" means the earlier of December 31, 2007 and the date of the acceleration of the Obligations pursuant to Section 7 hereof. "TRADE PAYABLES" means, with respect to any Person, any accounts payable or any other indebtedness or monetary obligation to trade creditors created, assumed or Guaranteed by such Person or any of its Subsidiaries and arising in the ordinary course or business in connection with the acquisition of goods or services. "UNITED STATES CITIZEN" has the meaning assigned to that term in subsection 4.1B. "VOTING STOCK" means any class or classes of Capital Stock pursuant to which the holders thereof have the general voting power under ordinary circumstances to vote for the election of directors, managers or trustees of any Person (or Persons performing similar functions) irrespective of whether or not at the time stock of any class or classes will have or might have such voting power by the reason of the happening of any contingency. "WHOLLY OWNED" denotes a Subsidiary all of the Voting Stock of which (other than any director's qualifying shares or Investments by foreign nationals mandated by applicable law) is owned directly or indirectly by the Company. 1.2 ACCOUNTING TERMS; UTILIZATION OF GAAP FOR PURPOSES OF CALCULATIONS UNDER AGREEMENT. Except as otherwise expressly provided in this Agreement, all accounting terms not otherwise defined herein shall have the meanings assigned to them in conformity with GAAP. Each reference to a consolidated balance sheet or other financial statement of the Company shall, at any time or for any period during which the Company has no Subsidiaries, be deemed to mean and refer to a balance sheet or other financial statement of the Company alone. 1.3 OTHER DEFINITIONAL PROVISIONS. References to "Sections" and "subsections" shall be to Sections and subsections, respectively, of this Agreement unless otherwise specifically provided. Any of the terms defined in subsection 1.1 may, unless the context otherwise requires, be used in the singular or the plural, depending on the reference. All references to the "Term Loan Agreement", "Amended and -23- Restated Credit Agreement" or any similar term of like meaning in any Loan Document shall mean and refer to this Agreement, as amended, modified, waived or restated from time to time. -24- SECTION 2. AMOUNTS AND TERMS OF THE TERM LOAN 2.1 THE TERM LOAN; NOTES; REGISTER. A. THE TERM LOAN. Subject to the terms and conditions of this Agreement and in reliance upon the representations and warranties of the Company herein set forth, each Lender hereby agrees to maintain the Loans all as described in this subsection 2.1A. Each Lender's Loan shall be deemed to have been advanced under the Existing Credit Agreement, and the principal amount owed to each Lender on the Closing Date under the Existing Credit Agreement shall be the principal amount of the Loan owed to such Lender, which such amount is set forth on Schedule 2.4 hereto. Amounts repaid or prepaid under this Agreement may not be reborrowed. B. NOTES. On the Closing Date, the Company shall execute and deliver to each Lender (or to the Agent on behalf of each Lender) Notes substantially in the form of Exhibit III and Exhibit III-A annexed hereto to evidence that Lender's Loans in the principal amount of the Loans attributable to such Lender outstanding under the Existing Credit Agreement and with other appropriate insertions and the Company's Obligations under the PIK Notes. C. THE REGISTER. (i) The Agent shall maintain, at its address referred to in subsection 9.8, a register for the registration of the names and addresses of the Lenders and Loans and PIK Notes of each Lender from time to time (the "REGISTER"). The Register shall be available for inspection by the Company or any Lender at any reasonable time and from time to time upon reasonable prior notice. (ii) The Agent shall record in the Register the Loans from time to time of each Lender and each repayment or prepayment in respect of the principal amount of the Loans and the PIK Notes. Any such recordation shall be conclusive and binding on the Company and each Lender, absent manifest error; provided that failure to make any such recordation, or any error in such recordation, shall not affect the Company's Obligations in respect of the applicable Loans and PIK Notes. (iii) Each Lender shall record on its internal records (including, without limitation the applicable Notes held by such Lender) the amount of the Loans made by it, PIK Notes held by it and each payment or other reduction in respect thereof. Any such recordation shall be conclusive and binding on the Company, absent manifest error; provided that failure to make any such recordation, or any error in such recordation, shall not affect the Company's Obligations in respect of the applicable Loans and PIK Notes; and provided, further, that in the event of any inconsistency between the Register and any Lender's records, the recordations in the Register shall govern. (iv) The Company, the Agent and the Lenders shall deem and treat the Persons listed as Lenders and holders of the PIK Notes in the Register as the holders and owners of the corresponding Loans and PIK Notes listed therein for all purposes hereof, and no -25- assignment or transfer of any such Loans or PIK Notes shall be effective, in each case unless and until an Assignment Agreement effecting the assignment or transfer thereof shall have been accepted by the Agent and recorded in the Register as provided in subsection 9.1B(ii). Prior to such recordation, all amounts owed with respect to the applicable Loans and PIK Notes shall be owed to the Lender and holders of PIK Notes listed in the Register as the owner thereof, and any request, authority or consent of any Person who, at the time of making such request or giving such authority or consent, is listed in the Register as a Lender or holder of a PIK Note shall be conclusive and binding on any subsequent holder, assignee or transferee of the corresponding Loans and PIK Notes. 2.2 INTEREST ON THE LOANS. A. RATE OF INTEREST. Subject to the provisions of subsections 2.6 and 2.7, the Loans shall bear interest on the unpaid principal amount thereof from the date made through maturity (whether by acceleration or otherwise) at a rate determined by reference to the Base Rate or the Adjusted Eurodollar Rate, as the case may be. The applicable basis for determining the rate of interest with respect to the Loans shall be selected by the Company; provided, however, that initially as of the Closing Date all of the Loans shall be Eurodollar Rate Loans. The basis for determining the interest rate with respect to the Loans may be changed from time to time pursuant to subsection 2.2D. If on any day a Loan is outstanding with respect to which notice has not been delivered to the Agent in accordance with the terms of this Agreement specifying the applicable basis for determining the rate of interest, then for that day that Loan shall bear interest determined by reference to the Base Rate. Subject to the provisions of subsection 2.2E and 2.7, the Loans shall bear interest through maturity as follows: (i) if a Base Rate Loan, then at a rate per annum equal to the sum of the Base Rate plus the Applicable Margin; or (ii) if a Eurodollar Rate Loan, then at a rate per annum equal to the sum of the Adjusted Eurodollar Rate plus the Applicable Margin. B. INTEREST PERIODS. In connection with each Eurodollar Rate Loan, the interest period (the "INTEREST PERIOD") to be applicable to such Loan, shall be a one-month period; provided that: (i) each Interest Period shall commence on the day on which the next preceding Interest Period expires, or on the date specified in the applicable Notice of Conversion/Continuation, in the case of a Loan converted to a Eurodollar Rate Loan, provided that the initial Interest Period shall commence on the Closing Date, and the Company shall pay any breakage amounts pursuant to Section 2.6D in connection with the termination of any Interest Period under the Existing Credit Agreement; -26- (ii) if an Interest Period would otherwise expire on a day that is not a Business Day, such Interest Period shall expire on the next succeeding Business Day; provided that, if any Interest Period would otherwise expire on a day that is not a Business Day but is a day of the month after which no further Business Day occurs in such month, such Interest Period shall expire on the next preceding Business Day; (iii) any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall, subject to clause (iv) of this subsection 2.2B, end on the last Business Day of a calendar month; and (iv) no Interest Period shall extend beyond the scheduled Termination Date. C. INTEREST PAYMENTS. Subject to the provisions of subsection 2.2E, interest on each Loan shall be payable in arrears on and to, but not including, each Interest Payment Date applicable to that Loan, upon any prepayment of that Loan (to the extent accrued on the amount being prepaid) and at maturity (including final maturity). D. CONVERSION OR CONTINUATION. Subject to the provisions of subsection 2.6, the Company shall have the option (i) to convert at any time all (but not less than all) of the outstanding Loans from Loans bearing interest at a rate determined by reference to one basis to Loans bearing interest at a rate determined by reference to an alternative basis or (ii) upon the expiration of any Interest Period applicable to a Eurodollar Rate Loan, to continue all (but not less than all) of the Loans as a Eurodollar Rate Loan. A Eurodollar Rate Loan converted into a Base Rate Loan on any day other than the last day of an Interest Period applicable thereto shall be subject to breakage fees in accordance with Section 2.6D. The Company shall deliver a Notice of Conversion/Continuation to the Agent no later than 12:00 noon (New York time) on the proposed conversion date (in the case of a conversion to a Base Rate Loan) and at least three Business Days in advance of the proposed conversion/continuation date (in the case of a conversion to, or a continuation of, a Eurodollar Rate Loan). A Notice of Conversion/Continuation shall specify (i) the proposed conversion/continuation date (which shall be a Business Day), (ii) the amount and type of the Loan to be converted/continued, (iii) the nature of the proposed conversion/continuation, and (iv) in the case of a conversion to, or a continuation of, a Eurodollar Rate Loan, that no Potential Event of Default or Event of Default has occurred and is continuing. Neither the Agent nor any Lender shall incur any liability to the Company in acting upon any notice referred to above that the Agent believes in good faith to have been given by a duly authorized officer or other person authorized to act on behalf of the Company or for otherwise acting in good faith under this subsection 2.2D, and upon conversion or continuation of the applicable basis for determining the interest rate with respect to any Loans in accordance with this Agreement pursuant to any such notice the Company shall have effected a conversion or continuation, as the case may be, hereunder. -27- Except as otherwise provided in subsections 2.6B, 2.6C and 2.6G, a Notice of Conversion/Continuation for conversion to, or continuation of, a Eurodollar Rate Loan shall be irrevocable on and after the related Interest Rate Determination Date, and the Company shall be bound to effect a conversion or continuation in accordance therewith. E. DEFAULT RATE. Any amounts not paid when due hereunder or under any other Loan Document, including, but not limited to, outstanding principal of a Loan or under a PIK Note and, to the extent permitted by applicable law, any interest payments thereon and any fees and other amounts, shall thereafter bear interest payable upon demand from the date when due until the date of payment at a rate which is 2% per annum in excess of the interest rate otherwise payable under this Agreement with respect to the applicable Loans or PIK Notes (or, in the case of any such fees and other amounts, at a rate which is 2% per annum in excess of the interest rate otherwise payable under this Agreement for Base Rate Loans); provided that, in the case of Eurodollar Rate Loans, upon the expiration of the Interest Period in effect at the time any such increase in interest rate is effective such Eurodollar Rate Loans shall thereupon become Base Rate Loans and shall thereafter bear interest payable upon demand at a rate which is 2% per annum in excess of the interest rate otherwise payable under this Agreement for Base Rate Loans. Payment or acceptance of the increased rates of interest provided for in this subsection 2.2E is not a permitted alternative to timely payment and shall not constitute a waiver of any Event of Default or otherwise prejudice or limit any rights or remedies of the Agent or any Lender. F. COMPUTATION OF INTEREST. Interest on each Loan shall be computed on the basis of a 360-day year, in each case for the actual number of days elapsed in the period during which it accrues, unless such Loan is a Base Rate Loan with a Base Rate based upon the Prime Rate, in which event interest shall be computed on the basis of a year of 365 or 366 days, as the case may be, for the actual number of days elapsed in the period during which it accrues. In computing interest on any Loan, the date of the making of such Loan or the first day of an Interest Period applicable to such Loan or, with respect to a Base Rate Loan being converted from a Eurodollar Rate Loan, the date of conversion of such Eurodollar Rate Loan to such Base Rate Loan, as the case may be, shall be included, and the date of payment of such Loan or the expiration date of an Interest Period applicable to such Loan or, with respect to a Base Rate Loan being converted to a Eurodollar Rate Loan, the date of conversion of such Base Rate Loan to such Eurodollar Rate Loan, as the case may be, shall be excluded provided that if a Loan is repaid on the same day on which it is made, one day's interest shall be paid on that Loan. G. PAYMENT IN KIND NOTES In addition to any other interest payable in respect of the Loans, the Company shall pay interest in kind on the aggregate outstanding principal amount of the Loans at a rate of two percent per annum (2%) from the Closing Date through December 31, 2004. The payment of interest in kind shall be made by the Company by executing and delivering PIK Notes to each Lender (or to the Agent on behalf of the Lenders) on the Closing Date. The principal amount of each PIK Note shall be set forth on the schedule thereto, which schedule shall be conclusive absent manifest error. The Company shall pay interest in kind on the PIK Notes on each Interest Payment Date at a rate equal to two percent per annum (2%), which interest shall be compounded -28- monthly and incorporated into the schedule to each PIK Note and shall be conclusive absent manifest error. On December 31, 2004, the Company shall pay the outstanding principal amount of the PIK Notes in the amount set forth on the schedule to each PIK Note; provided, that, so long as no Potential Event of Default or Event of Default shall then have occurred and be continuing, the Company may elect to add up to the entire principal amount of each Lender's PIK Note as of December 31, 2004 (as shown on the schedule to such PIK Note) to the principal amount of such Lender's Loan and the Company shall issue a new Term Note to such Lender reflecting such additional principal. 2.3 FEES. The Company and the Agent shall enter into one or more letter agreements establishing administrative fees payable by the Company to the Agent for its administrative services hereunder which fees shall be for the account of the Agent and not the Lenders. 2.4 PREPAYMENTS; GENERAL PROVISIONS REGARDING PAYMENTS A. REPAYMENT OF PRINCIPAL AMOUNT OF LOANS. On each Principal Payment Date, the Company shall pay to the Agent for the account of the Lenders the principal amount of thirty million Dollars ($30,000,000), or, in the case of the Termination Date, the aggregate outstanding principal amount of all Loans, together on each such date with all accrued and unpaid interest thereon and all fees and other amounts payable by the Company under this Agreement; provided, that the payment on the Termination Date shall be in amount sufficient to repay in full the PIK Notes and all other Obligations of the Company (other than those Obligations which are contingent Obligations not then due and payable, such as contingent indemnities). B. PREPAYMENTS. (i) Voluntary Prepayments. The Company may, with respect to Eurodollar Rate Loans, upon not less than three Business Days' prior written notice given to the Agent by 12:00 noon (New York time) on the date so required and, with respect to Base Rate Loans and the PIK Notes, upon prior written notice given to the Agent by 12:00 noon (New York time) on the date of prepayment, at any time and from time to time prepay, without premium or penalty (other than pursuant to subsection 2.6D, if applicable), any Loans and PIK Notes on any Business Day in whole or in part in an aggregate minimum amount of $3,000,000 and integral multiples of $100,000 in excess of that amount; provided, however, that a Eurodollar Rate Loan may only be prepaid prior to the expiration date of the Interest Period applicable thereto upon compliance with subsection 2.6D. Notice of prepayment having been given as aforesaid, the principal amount of the Loans and/or PIK Notes specified in such notice shall become due and payable on the prepayment date specified therein. Any such voluntary prepayment shall be applied as specified in subsection 2.4B(iii). (ii) Mandatory Prepayments and Mandatory Reductions of Loans. -29- (1) Prepayments Due to Reductions in Borrowing Base. (a) If at any time there exists a Borrowing Base Deficiency, the Company shall prepay, without premium or penalty (other than pursuant to subsection 2.6D), amounts outstanding under the Loans in a principal amount sufficient to eliminate the Borrowing Base Deficiency, together with accrued and unpaid interest thereon, provided, that, if no Potential Event of Default (other than a Potential Event of Default due to such Borrowing Base Deficiency) or Event of Default shall have then occurred and be continuing, pursuant to subsection 2.10B(ii)(2) the Company may pledge Eligible Assets having an aggregate appraised Fair Market Value sufficient to eliminate the Borrowing Base Deficiency. Such prepayment (and collateral arrangements, if any) shall be made not later than three (3) Business Days following the delivery of (x) a regularly scheduled Borrowing Base Certificate delivered pursuant to subsection 2.10D showing a Borrowing Base Deficiency or (y) an updated Borrowing Base Certificate delivered pursuant to subsection 2.4B(ii)(1)(b), 2.4B(ii)(1)(c) or 7.11 showing a Borrowing Base Deficiency. (b) In addition to any notice required by subsection 5.1(xii), if an event occurs that could reasonably be expected to cause loss of or substantial damage to Borrowing Base Collateral (excluding Rotables), the Company shall deliver to the Agent a written notice within three (3) Business Days after a Responsible Officer of the Company obtains actual knowledge of such event. Such notice shall identify the specific item(s) of such Borrowing Base Collateral subject to such event of loss or damage, describe the nature of the event of loss or damage and include an estimate of whether such loss or damage can reasonably be expected to exceed $1,000,000. As soon as it can reasonably determine whether such event is an Event of Loss, Event of Damage or Repairable Damage with respect to the affected Borrowing Base Collateral but in any event not later than 30 days after the Company's notice with respect to such event, the Company shall deliver to the Agent an updated Borrowing Base Certificate in which the Company shall certify that such event is either an Event of Loss, Event of Damage or Repairable Damage, with respect to the item(s) of affected Borrowing Base Collateral. If the Company fails to deliver such updated Borrowing Base Certificate by such date, it shall be deemed to have delivered an updated Borrowing Base Certificate as provided in this subsection 2.4B(ii)(1)(b) certifying that such event is an Event of Loss of the affected Borrowing Base Collateral. Such updated Borrowing Base Certificate shall exclude from the Borrowing Base any such Borrowing Base Collateral subject to an Event of Loss, Event of Damage or Repairable Damage, provided, however, that (1) any such Borrowing Base Collateral other than the Maintenance Facility that has suffered Repairable Damage shall not be excluded if (A) such Repairable Damage is covered by insurance which will pay proceeds in at least the amount of the repair costs (net of any permitted self-insurance and deductibles) and the Agent is the loss payee of such insurance pursuant to the terms of the relevant Security Agreement, each as certified by the Company in the updated Borrowing Base Certificate and (B) the Company elects to repair such Borrowing Base Collateral as certified in the updated Borrowing Base Certificate and (2) Borrowing Base Collateral comprising the Maintenance Facility that has suffered Repairable Damage shall not be excluded and the Borrower shall repair the Maintenance Facility unless (A) the cost of such repair is likely to exceed $1,000,000 as reasonably estimated by the Company, as certified by the Company in such updated Borrowing Base Certificate, or by the Agent (following consultation, in the case of the Agent, with an Approved Appraiser) by notice delivered by the Agent to the Company and (B) the Repairable Damage is not covered by insurance which will pay proceeds to -30- the Agent, as loss payee, in at least the amount of the repair costs (net of any permitted self-insurance and deductibles), as certified by the Company in such updated Borrowing Base Certificate. If such updated Borrowing Base Certificate shows a Borrowing Base Deficiency, the Company shall make a prepayment (and/or provide collateral) as provided in subsection 2.4B(ii)(1)(a). (c) If an event occurs that could reasonably be expected to cause an Adjustment Event (as reasonably determined by the Company), the Company shall deliver to the Agent a written notice within three (3) Business Days after a Responsible Officer of the Company obtains actual knowledge of such event. Such notice shall identify the location and type (to the extent reasonably possible) of the affected Rotables, describe the event of loss or damage and include an estimate of whether such loss or damage can reasonably be expected to exceed $1,000,000. As soon as it can reasonably determine whether such event is an Adjustment Event but in any event not later than 30 days after the Company's notice of such event, the Company shall deliver to the Agent an updated Borrowing Base Certificate in which the Company shall certify whether or not such event is an Adjustment Event. If the Company fails to deliver such updated Borrowing Base Certificate by such date, it shall be deemed to have delivered an updated Borrowing Base Certificate certifying that such event is an Adjustment Event of the affected Rotables. If such updated Borrowing Base Certificate certifies that an Adjustment Event has occurred, it shall exclude from the Borrowing Base the book value of the Rotables subject to the Adjustment Event and shall specify the amount of such book value excluded for purposes of calculating the Borrowing Base Value of the Rotables. If such updated Borrowing Base Certificate certifies that an Adjustment Event has not occurred, it shall make an appropriate adjustment in the book value of the affected Rotables, as certified in such Borrowing Base Certificate, to take into account the loss or damage to the affected Rotables and shall specify the amount of such adjustment for purposes of calculating the Borrowing Base Value of the Rotables. (For the avoidance of doubt, the Company shall make or not make adjustments to the book value of Rotables subject to events of loss or damage not covered by this subsection 2.4B(ii)(1)(c) in accordance with its normal accounting procedures as applied without regard to the procedures established in this subsection). If such updated Borrowing Base Certificate shows a Borrowing Base Deficiency, the Company shall make a prepayment (and/or provide collateral) as provided in subsection 2.4B(ii)(1)(a). (d) If the Company elects to repair any Borrowing Base Collateral (other than the Maintenance Facility) subject to Repairable Damage and so certifies in any Borrowing Base Certificate or, in the case of the Maintenance Facility only, is required to repair Repairable Damage to the Maintenance Facility, the Company shall complete such repair as soon as reasonably practicable. (e) In any Borrowing Base Certificate delivered as provided in Subsection 2.4B(ii)(1)(b) which requires the exclusion of any Borrowing Base Collateral pursuant to the terms of such Subsection, the Company may also request the release of the Lien of the Security Agreement to which such Borrowing Base Collateral is subject and, provided that no Potential Event of Default or Event of Default then exists, as certified by the Company in such Borrowing Base Certificate, and any Borrowing Base Deficiency certified in such Borrowing Base Certificate is timely paid and additional Collateral (if any) is provided as required by subsection 2.4B(ii)(1)(a), the Agent shall release such Lien on such Borrowing Base Collateral simultaneously with the satisfaction of -31- the conditions contained in this subsection 2.4B(ii)(1)(e) and the second sentence of subsection 2.10B(ii)(1) by executing and delivering such releases as may be reasonably requested by the Company. (2) Prepayments Due to Change of Control. Within five Business Days after the occurrence of a Change of Control, the Company will notify the Agent of such Change of Control (the giving of such notice not being a prerequisite to the Agent's giving its notice as provided in this subsection 2.4B(ii)(2)). The Agent shall, upon receipt of the notice from the Company required by the preceding sentence, give the Company and the Lenders notice delivered not more than 30 (thirty) days following the occurrence of a Change of Control or, if later, not more than 30 (thirty) days following delivery of the notice set forth in the immediately preceding sentence, except as provided in the last sentence of this subsection 2.4B(ii)(2), that the Company will be required to prepay all Obligations on a date specified by the Agent in such notice (which shall be not less than ten (10) days after the date of delivery of such notice). On the date specified in such notice, except as provided in the last sentence of this subsection 2.4B(ii)(2), the Company shall pay all outstanding principal and interest on all Loans and the PIK Notes and all other fees and amounts payable under any Loan Document. Notwithstanding the foregoing terms of this subsection 2.4B(ii)(2), by notice to the Company and the Agent within five Business Days after receipt by a Lender of a notice by the Agent as provided in this clause, such Lender may elect not to have its portion of the Obligations prepaid as provided in this clause, in which case such portion shall not be prepaid and its Pro Rata Share shall be adjusted in relationship to the other remaining outstanding Obligations. (3) Prepayments Due to Issuances of Indebtedness and Equity. All cash proceeds received by Holdings or the Company or any of their respective Subsidiaries (other than The Leisure Company) from any secured or unsecured Indebtedness for borrowed money (other than purchase money Indebtedness permitted under Section 6.2A(ii)) incurred by Holdings or the Company or any of their respective Subsidiaries (other than The Leisure Company) or from any Capital Stock (other than in connection with the exercise of any options, warrants or other rights) issued by Holdings or the Company or any of their respective Subsidiaries (other than The Leisure Company), in either case received after the Closing Date (net of usual and customary underwriting discounts, commissions and other transaction costs and expenses) shall be paid directly to the Agent for the benefit of the Lenders, to be applied pursuant to subsection 2.4B(iii), provided, however, that the Company shall not be obligated to pay such proceeds to the Agent if and to the extent that (i) the Company is then required pursuant to the Air Carrier Guarantee Loan Documents to pay such amounts to repay the Government Guaranteed Loan, or (ii) the Company is prohibited from so repaying the Obligations under the terms of the Senior Notes and the Company applies such proceeds to repay the Senior Notes, or (iii) such proceeds of Indebtedness are applied to refinance assets described in subsection 6.2A(ii) that were acquired by the Company for cash and not Indebtedness (for the avoidance of doubt, only to the extent of the Company's cash investment in such assets), or (iv) such proceeds of Indebtedness relate to the financing of the Company's training facility located in Phoenix, Arizona existing on the date hereof. (iii) Application of Prepayments. -32- (a) Application of Voluntary Prepayments. Any voluntary prepayments pursuant to subsection 2.4B(i) shall be applied ratably first among the Term Notes until paid in full and second among the PIK Notes. (b) Application of Mandatory Prepayments of Loans. Any mandatory prepayments of the Loans pursuant to subsection 2.4B(ii) shall be applied ratably among the Lenders according to their Pro Rata Share, in inverse order of maturity, first to the Term Notes until paid in full and second among the PIK Notes. C. GENERAL PROVISIONS REGARDING PAYMENTS. (i) Manner and Time of Payment. All payments by the Company of principal, interest, fees and other Obligations hereunder and under the Notes shall be made in Dollars in same day funds, without defense, set-off or counterclaim, free of any restriction or condition, and delivered to the Agent not later than 2:00 p.m. (New York time) on the date due at the Funding and Payment Office for the account of Lenders; funds received by the Agent after that time on such due date shall be deemed to have been paid by the Company on the next succeeding Business Day. (ii) Application of Payments to Principal and Interest. All payments in respect of the principal amount of any Loan or Note shall include payment of accrued interest on the principal amount being repaid or prepaid, and all such payments shall be applied to the payment of interest before application to principal. (iii) Apportionment of Payments. Except as otherwise provided in subsection 2.4B(ii)(2), aggregate principal and interest payments in respect of the Loans and Notes shall be apportioned in each case proportionately to each Lender's respective Pro Rata Share. The Agent shall promptly distribute to each Lender, at its primary address set forth below its name on the appropriate signature page hereof or at such other address as such Lender may request, its Pro Rata Share of all such payments received by the Agent. Notwithstanding the foregoing provisions of this subsection 2.4C(iii), if, pursuant to the provisions of subsection 2.6C, any Notice of Conversion/Continuation is withdrawn as to any Affected Lender or if any Affected Lender makes Base Rate Loans in lieu of its Pro Rata Share of any Eurodollar Rate Loans, the Agent shall give effect thereto in apportioning payments received thereafter. (iv) Payments on Business Days. Whenever any payment to be made hereunder shall be stated to be due on a day that is not a Business Day, such payment shall be made on the next succeeding Business Day and such extension of time shall be included in the computation of the payment of interest hereunder. (v) Notation of Payment. Each Lender agrees that before disposing of any Note held by it, or any part thereof (other than by granting participations therein), that Lender will make a notation thereon of the Loan evidenced by that Note and all principal payments previously made thereon and of the date to which interest thereon has been paid; provided that the failure to make (or any error in the making of) a notation made under such Note shall not -33- limit or otherwise affect the Obligations of the Company hereunder or under such Note with respect to the Loan or any payments of principal or interest on such Note. 2.5 USE OF PROCEEDS. A. GENERAL CORPORATE PURPOSES. The proceeds of the Loan shall be used by the Company for its general corporate purposes. B. MARGIN REGULATIONS. No portion of the proceeds of any borrowing under this Agreement shall be used by the Company or any of its Subsidiaries in any manner that might cause the borrowing or the application of such proceeds to violate Regulation U, Regulation T or Regulation X of the Board of Governors of the Federal Reserve System or any other regulation of such Board or to violate Section 7(c) of the Exchange Act, in each case as in effect on the date or dates of such borrowing and such use of proceeds. 2.6 SPECIAL PROVISIONS GOVERNING EURODOLLAR RATE LOANS. Notwithstanding any other provision of this Agreement to the contrary, the following provisions shall govern with respect to Eurodollar Rate Loans as to the matters covered: A. DETERMINATION OF APPLICABLE INTEREST RATE. As soon as practicable after 1:00 p.m. (New York time) on each Interest Rate Determination Date, the Agent shall determine (which determination shall, absent manifest error, be final, conclusive and binding upon all parties) the interest rate that shall apply to the Eurodollar Rate Loans for which an interest rate is then being determined for the applicable Interest Period and shall promptly give notice thereof (in writing or by telephone confirmed in writing) to the Company and each Lender. B. INABILITY TO DETERMINE APPLICABLE INTEREST RATE. In the event that the Agent shall have determined (which determination shall be final and conclusive and binding upon all parties hereto), on any Interest Rate Determination Date with respect to any Eurodollar Rate Loans, that by reason of circumstances affecting the interbank Eurodollar market adequate and fair means do not exist for ascertaining the interest rate applicable to such Loans on the basis provided for in the definition of Adjusted Eurodollar Rate, the Agent shall on such date give notice by telefacsimile to the Company and each Lender of such determination, whereupon (i) no Loans may be converted to, Eurodollar Rate Loans until such time as the Agent notifies the Company and Lenders that the circumstances giving rise to such notice no longer exist and (ii) any Notice of Conversion/Continuation given by the Company with respect to the Loans in respect of which such determination was made shall be deemed to be rescinded by the Company. C. ILLEGALITY OR IMPRACTICABILITY OF EURODOLLAR RATE LOANS. In the event that on any date any Lender shall have determined (which determination shall be final and conclusive and binding upon all parties hereto but shall be made only after consultation with the Company and the Agent) that the making, maintaining or continuation of its Eurodollar Rate Loans (i) has become unlawful as a result of compliance by such Lender in good faith with any law, treaty, governmental rule, regulation, guideline or order (or would conflict with any such treaty, governmental rule, regulation, guideline or order enacted, entered into or -34- promulgated after the date of this Agreement not having the force of law even though the failure to comply therewith would not be unlawful) or (ii) has become impracticable, or would cause such Lender material hardship, as a result of contingencies occurring after the date of this Agreement which materially and adversely affect the interbank Eurodollar market or the position of such Lender in that market, then, and in any such event, such Lender shall be an "AFFECTED LENDER" and it shall on that day give notice (by telefacsimile) to the Company and the Agent of such determination (which notice the Agent shall promptly transmit to each other Lender). Thereafter (a) the obligation of the Affected Lender to convert Loans to Eurodollar Rate Loans shall be suspended until such notice shall be withdrawn by the Affected Lender, (b) to the extent such determination by the Affected Lender relates to a Eurodollar Rate Loan then being requested by the Company pursuant to a Notice of Conversion/Continuation, the Affected Lender shall convert such Loan to a Base Rate Loan, (c) the Affected Lender's obligation to maintain its outstanding Eurodollar Rate Loans (the "AFFECTED LOANS") shall be terminated at the earlier to occur of the expiration of the Interest Period then in effect with respect to the Affected Loans or when required by law, and (d) the Affected Loans shall automatically convert into Base Rate Loans on the date of such termination. Notwithstanding the foregoing, to the extent a determination by an Affected Lender as described above relates to a Eurodollar Rate Loan then being requested by the Company pursuant to a Notice of Conversion/Continuation, the Company shall have the option, subject to the provisions of subsection 2.6D, to rescind such Notice of Conversion/Continuation as to all Lenders by giving notice (by telefacsimile) to the Agent of such rescission on the date on which the Affected Lender gives notice of its determination as described above (which notice of rescission the Agent shall promptly transmit to each other Lender). Except as provided in the immediately preceding sentence, nothing in this subsection 2.6C shall affect the obligation of any Lender other than an Affected Lender to maintain Loans as, or to convert Loans to, Eurodollar Rate Loans in accordance with the terms of this Agreement. In the event any Affected Lender shall give a notice to the Company pursuant to this subsection 2.6C, the Company may give notice to such Lender (with copies to the Agent) that it wishes to seek one or more Eligible Assignees to purchase its outstanding Loans, Obligations and Notes. Each Lender giving a notice to the Company pursuant to this subsection 2.6C agrees to sell its Loans, Obligations, Notes and interest in this Agreement and the other Loan Documents pursuant to subsection 9.1B to any such Eligible Assignee for an amount equal to the sum of the outstanding unpaid principal of and accrued interest on such Loans, Obligations and Notes plus all other fees and amounts due such Lender hereunder calculated, in each case, to the date such Loans, Obligations, Notes and interest are purchased, whereupon such Lender shall have no further rights or obligations hereunder. D. COMPENSATION FOR BREAKAGE OR NON-COMMENCEMENT OF INTEREST PERIODS. The Company shall compensate each Lender, upon written request by that Lender (which request shall set forth the basis for requesting such amounts), for all reasonable losses, expenses and liabilities (including, without limitation, any interest paid by that Lender to lenders of funds borrowed by it to carry its Eurodollar Rate Loans and any loss, expense or liability sustained by that Lender in connection with the liquidation or re-employment of such funds) which that Lender may sustain: (i) if for any reason (other than a default by that Lender) a conversion to or continuation of any Eurodollar Rate Loan does not occur on a date -35- specified therefor in a Notice of Conversion/Continuation, (ii) if any prepayment or other principal payment or any conversion of any of its Eurodollar Rate Loans occurs on a date prior to the last day of an Interest Period applicable to that Loan, (iii) if any prepayment of any of its Eurodollar Rate Loans is not made on any date specified in a notice of prepayment given by the Company, or (iv) as a consequence of any other default by the Company in the repayment of its Eurodollar Rate Loans when required by the terms of this Agreement. E. BOOKING OF EURODOLLAR RATE LOANS. Any Lender may carry or transfer Eurodollar Rate Loans at, to, or for the account of any of its branch offices or the office of an Affiliate of that Lender; provided that such action does not increase the Company's liability under subsection 2.7. F. ASSUMPTIONS CONCERNING FUNDING OF EURODOLLAR RATE LOANS. Calculation of all amounts payable to a Lender under this subsection 2.6 and under subsection 2.7A shall be made as though that Lender had actually funded each of its relevant Eurodollar Rate Loans through the purchase of a Eurodollar deposit bearing interest at the rate obtained pursuant to clause (i) of the definition of Adjusted Eurodollar Rate in an amount equal to the amount of such Eurodollar Rate Loan and having a maturity comparable to the relevant Interest Period and through the transfer of such Eurodollar deposit from an offshore office of that Lender to a domestic office of that Lender in the United States of America; provided, however, that each Lender may fund each of its Eurodollar Rate Loans in any manner it sees fit and the foregoing assumptions shall be utilized only for the purposes of calculating amounts payable under this subsection 2.6 and under subsection 2.7A. G. EURODOLLAR RATE LOANS AFTER DEFAULT. After the occurrence of and during the continuation of a Potential Event of Default or an Event of Default, (i) the Company may not elect to have the Loans be maintained as, or converted to, a Eurodollar Rate Loan after the expiration of any Interest Period then in effect for that Loan and (ii) subject to the provisions of subsection 2.6D, any Notice of Conversion/Continuation given by the Company with respect to a requested conversion/continuation that has not yet occurred shall be deemed to be rescinded by the Company. 2.7 INCREASED COSTS; TAXES; CAPITAL ADEQUACY. A. COMPENSATION FOR INCREASED COSTS AND TAXES. Subject to the provisions of subsection 2.7B, in the event that any Lender shall determine (which determination shall, absent manifest error, be final and conclusive and binding upon all parties hereto) that any law, treaty or governmental rule, regulation or order, or any change therein or in the interpretation, administration or application thereof (including the introduction of any new law, treaty or governmental rule, regulation or order), or any determination of a court or governmental authority, in each case that becomes effective after the date hereof, or compliance by such Lender with any guideline, request or directive issued or made after the date hereof by any central bank or other governmental or quasi-governmental authority (whether or not having the force of law): (i) subjects such Lender (or its applicable lending office) to any additional Tax (other than any Tax on the overall net income of such Lender) with respect to this -36- Agreement or any of its obligations hereunder or any payments to such Lender (or its applicable lending office) of principal, interest, fees or any other amount payable hereunder; (ii) imposes, modifies or holds applicable any reserve (including without limitation any marginal, emergency, supplemental, special or other reserve), special deposit, compulsory loan, FDIC insurance or similar requirement against assets held by, or deposits or other liabilities in or for the account of, or advances or loans by, or other credit extended by, or any other acquisition of funds by, any office of such Lender (other than any such reserve or other requirements with respect to Eurodollar Rate Loans that are reflected in the definition of Adjusted Eurodollar Rate); or (iii) imposes any other condition (other than with respect to a Tax matter) on or affecting such Lender (or its applicable lending office) or its obligations hereunder or the interbank Eurodollar market; and the result of any of the foregoing is to increase the cost to such Lender of maintaining Loans or Notes hereunder or to reduce any amount received or receivable by such Lender (or its applicable lending office) with respect thereto; then, in any such case, the Company shall promptly pay to such Lender, upon receipt of the statement referred to in the next sentence, such additional amount or amounts (in the form of an increased rate of, or a different method of calculating, interest or otherwise as such Lender in its sole discretion shall determine) as may be necessary to compensate such Lender for any such increased cost or reduction in amounts received or receivable hereunder. Such Lender shall deliver to the Company (with a copy to the Agent) a written statement, setting forth in reasonable detail the basis for calculating the additional amounts owed to such Lender under this subsection 2.7A, which statement shall be conclusive and binding upon all parties hereto absent manifest error. B. WITHHOLDING OF TAXES. (i) Payments to Be Free and Clear. All sums payable by the Company under this Agreement and the other Loan Documents shall be paid free and clear of and (except to the extent required by law) without any deduction or withholding on account of any Tax imposed, levied, collected, withheld or assessed by any governmental authority, domestic or foreign. (ii) Grossing-up of Payments. If the Company or any other Person is required by law to make any deduction or withholding on account of any Tax from any sum paid or payable by the Company to the Agent or any Lender under any of the Loan Documents: (a) the Company shall notify the Agent or such Lender of any such requirement or any change in any such requirement as soon as the Company becomes aware of it; (b) the Company shall remit any such Tax before the date on which penalties attach thereto, such remittance to be made (if the liability is imposed on the Company) for its own account or (if that liability is imposed on the Agent or such Lender, as the case may be) on behalf of and in the name of the Agent or such Lender; -37- (c) the sum payable by the Company in respect of which the relevant deduction, withholding or payment is required shall be increased to the extent necessary to ensure that, after the making of that deduction, withholding or payment, the Agent or such Lender, as the case may be, receives on the due date a net sum equal to what it would have received had no such deduction, withholding or payment been required or made; and (d) within 30 days after paying any sum from which it is required by law to make any deduction or withholding, and within 30 days after the due date of remittance of any Tax which it is required by clause (b) above to remit, the Company shall deliver to the Agent evidence satisfactory to the other affected parties of such deduction, withholding or payment and of the remittance thereof to the relevant taxing or other authority. (iii) Evidence of Exemption from U.S. Withholding Tax. (a) Each Lender that is organized under the laws of any jurisdiction other than the United States or any state or other political subdivision thereof (for purposes of this subsection 2.7B(iii), a "NON-US LENDER") shall deliver to the Agent for transmission to the Company, on or prior to the Closing Date (in the case of each Lender listed on the signature pages hereof) or on the date of the Assignment Agreement pursuant to which it becomes a Lender (in the case of each other Lender), and at such other times as may be necessary in the determination of the Company or the Agent (each in the reasonable exercise of its discretion), two original copies of Internal Revenue Service Form W-8BEN or W-8ECI (or any successor forms), properly completed and duly executed by such Lender, or any other form, certificate or statement of exemption required under the Internal Revenue Code or the regulations issued thereunder to establish that such Lender is not subject to deduction or withholding of United States federal income tax with respect to any payments to such Lender of principal, interest, fees or other amounts payable under any of the Loan Documents. (b) Each Lender required to deliver any forms, certificates or other evidence with respect to United States federal income tax withholding matters pursuant to subsection 2.7B(iii)(a) hereby agrees that, from time to time after the initial delivery by such Lender of such forms, certificates or other evidence, whenever a lapse in time or change in circumstances renders such forms, certificates or other evidence obsolete or inaccurate in any material respect, such Lender shall (l) deliver to the Agent for transmission to the Company two new original copies of Internal Revenue Service Form W-8BEN or W-8ECI, properly completed and duly executed by such Lender, or any other form, certificate or statement of exemption required in order to confirm or establish that such Lender is not subject to deduction or withholding of United States federal income tax with respect to payments to such Lender under the Loan Documents or (2) immediately notify the Agent and the Company of its inability to deliver any such forms, certificates or other evidence. -38- (c) The Company shall not be required to pay any additional amount to any Non-US lender under clause (c) of subsection 2.7B(ii) if such Lender shall have failed to satisfy the requirements of subsection 2.7B(iii)(a); provided that if such Lender shall have satisfied such requirements on the Closing Date (in the case of each Lender listed on the signature pages hereof) or on the date of the Assignment Agreement pursuant to which it became a Lender (in the case of each other Lender), nothing in this subsection 2.7B(iii)(c) shall relieve the Company of its obligation to pay any additional amounts pursuant to clause (c) of subsection 2.7B(ii) in the event that, as a result of any change in any applicable law, treaty or governmental rule, regulation or order, or any change in the interpretation, administration or application thereof, such Lender is no longer properly entitled to deliver forms, certificates or other evidence at a subsequent date establishing the fact that such Lender is not subject to withholding as described in subsection 2.7B(iii)(a). C. CAPITAL ADEQUACY ADJUSTMENT. If any Lender shall have determined that the adoption, effectiveness, phase-in or applicability after the date hereof of any law, rule or regulation (or any provision thereof) regarding capital adequacy, or any change therein or in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any Lender (or its applicable lending office) with any guideline, request or directive regarding capital adequacy (whether or not having the force of law) of any such governmental authority, central bank or comparable agency, has or would have the effect of reducing the rate of return on the capital of such Lender or any corporation controlling such Lender as a consequence of, or with reference to, such Lender's Loans or Notes or other obligations hereunder to a level below that which such Lender or such controlling corporation could have achieved but for such adoption, effectiveness, phase-in, applicability, change or compliance (taking into consideration the policies of such Lender or such controlling corporation with regard to capital adequacy), then from time to time, within five Business Days after receipt by the Company from such Lender of the statement referred to in the next sentence, the Company shall pay to such Lender such additional amount or amounts as will compensate such Lender or such controlling corporation on an after-tax basis for such reduction. Such Lender shall deliver to the Company (with a copy to the Agent) a written statement, setting forth in reasonable detail the basis of the calculation of such additional amounts, which statement shall be conclusive and binding upon all parties hereto absent manifest error. D. SUBSTITUTE LENDERS. In the event the Company is required under the provisions of this subsection 2.7 to make payments in a material amount to any Lender, the Company may, so long as no Event of Default or Potential Event of Default shall have occurred and be continuing, elect to terminate such Lender as a party to this Agreement; provided that, concurrently with such termination, (i) the Company shall pay that Lender all principal, interest and fees and other amounts (including without limitation, amounts, if any, owed under this subsection 2.7) owed to such Lender through such date of termination, and (ii) all documents and supporting materials necessary, in the judgment of the Agent (or if the Agent is also the Lender to be terminated, the successor Agent) to evidence the termination and/or substitution of such Lender (if applicable) shall have been received and approved by the Agent as of such date. -39- 2.8 OBLIGATION OF LENDERS TO MITIGATE. Each Lender agrees that, as promptly as practicable after the officer of such Lender responsible for administering the Loans of such Lender becomes aware of the occurrence of an event or the existence of a condition that would cause such Lender to become an Affected Lender or that would entitle such Lender to receive payments under subsection 2.7, it will, to the extent not inconsistent with the internal policies of such Lender and any applicable legal or regulatory restrictions, use reasonable efforts (i) to maintain the Loans of such Lender or the affected Loans of such Lender through another lending office of such Lender, or (ii) take such other measures as such Lender may deem reasonable, if as a result thereof the circumstances which would cause such Lender to be an Affected Lender would cease to exist or the additional amounts which would otherwise be required to be paid to such Lender pursuant to subsection 2.7 would be materially reduced and if, as determined by such Lender in its sole discretion, the maintaining of such Loans through such other lending office or in accordance with such other measures, as the case may be, would not otherwise materially adversely affect such Loans or the interests of such Lender; provided that such Lender will not be obligated to utilize such other lending office pursuant to this subsection 2.8 unless the Company agrees to pay all incremental expenses incurred by such Lender as a result of utilizing such other lending office as described in clause (i) above. A certificate as to the amount of any such expenses payable by the Company pursuant to this subsection 2.8 (setting forth in reasonable detail the basis for requesting such amount) submitted by such Lender to the Company (with a copy to the Agent) shall be conclusive absent manifest error. 2.9 [INTENTIONALLY OMITTED]. 2.10 BORROWING BASE. A. BORROWING BASE. The Borrowing Base shall be calculated based upon the Eligible Assets that from time to time are subject to the Liens of the Security Agreements and constitute Borrowing Base Collateral. The Borrowing Base shall exclude any Borrowing Base Collateral that has suffered loss or damage and is required to be excluded by subsection 2.4B(ii)(1). In addition, if the portion of the Borrowing Base attributable to the Rotables exceeds thirty five percent, rounded to the nearest whole percent (35%), of all Borrowing Base as determined in any calculation of the Borrowing Base contained in a Borrowing Base Certificate, such excess amount shall be excluded from the calculation of the Borrowing Base for such period. B. COLLATERAL. (i) Eligible Assets. The Eligible Assets may from time to time include the property of the types listed on Schedule 2.10 hereto, which schedule shall include, without limitation, (a) Cash and Permitted Cash Equivalents from time to time in the Cash Collateral Account, (b) Eligible Stage III Aircraft, (c) the Maintenance Facility, (d) Eligible Simulators, (e) Eligible Spare Engines and (f) Rotables (collectively, the Collateral identified in clauses (a) through (f) and on Schedule 2.10, the "ELIGIBLE ASSETS"). Initially the Borrowing Base Collateral shall include the Maintenance Facility, the Stage III Aircraft and the Spare Engines -40- specified in Schedule 2.10A hereto and the Rotables and the Company shall cause all such Collateral to be subject to the Liens of Security Agreements on the Closing Date. Thereafter, subject to subsection 2.10B(ii), the Borrowing Base Collateral may include the Maintenance Facility, Simulators, Spare Engines, Rotables and other Eligible Assets which the Company elects from time to time to make subject to the Liens of Security Agreements, provided, however, that no Eligible Assets shall be included in the calculation of the Borrowing Base unless the Lien of a Security Agreement has been perfected in such Collateral and such Collateral constitutes Borrowing Base Collateral. (ii) Release and Addition of Eligible Assets. (1) Release. Except under the circumstances set forth in the next sentence of this subsection 2.10B(ii)(1), the Agent shall not release the Liens of the Security Agreements on any Borrowing Base Collateral until payment in full of all outstanding Loans and all other amounts owed to the Lenders and the Agent under the Notes and other Loan Documents. Notwithstanding anything in this subsection 2.10B(ii)(1) to the contrary, the Agent acknowledges that (I) the Lien of the Spare Parts Security Agreement will be released from the Parts Collateral in accordance with the terms thereof (including, but not limited to, the sale in the ordinary course of the Company's business of not more than $5,000,000 of Parts Collateral in any six month period), and (II) (x) the Maintenance Facility may be released from the Lien of the Maintenance Facility Security Agreement if an Event of Loss or an Event of Damage has occurred with respect to the Maintenance Facility and (y) any Borrowing Base Collateral that the Company requests to be released pursuant to and in compliance with subsection 2.4B(ii)(1)(e) may be so released, in each case provided that the Company complies with the following requirements: (i) the Company shall make any prepayment and furnish additional collateral (if any) required by subsection 2.4B(ii)(1) if a Borrowing Base Deficiency would result from the reduction in the Borrowing Base that such release of such Lien would cause as calculated by the Borrowing Base Certificate delivered pursuant to clause (iv) below, (ii) no Event of Default or Potential Event of Default has occurred and is continuing, (iii) the Company has requested such release in writing and certified that it is entitled to such release under the applicable Security Agreement and this subsection 2.10 and (iv) the Company shall have delivered an updated Borrowing Base Certificate giving pro forma effect to such release and certifying that no Borrowing Base Deficiency will result therefrom (after taking into account any additional Eligible Assets added to the Borrowing Base Collateral pursuant to, and in compliance with, subsection 2.10B(ii)(2) concurrently with or prior to release of such Lien). Following the release of the Lien of a Security Agreement on any Borrowing Base Collateral pursuant to the terms of this subsection 2.10B(ii)(1), unless and until such Borrowing Base Collateral is again subjected to the Lien of a Security Agreement, such Borrowing Base Collateral shall no longer be included in the calculation of the Borrowing Base or in a future Borrowing Base Certificate. (2) Addition. The Company may from time to time subject Eligible Assets (other than Rotables) to the Lien of the relevant Security Agreements upon written notice thereof to the Agent and such additional Collateral shall be included in the calculation of the Borrowing Base delivered in an updated Borrowing Base Certificate after (A) except in the case of Cash and Cash Equivalents in the Cash Collateral Account, an Approved Appraisal has been delivered to the Agent for such Eligible Assets, (B) the Lien of the relevant Security Agreement -41- has been perfected in such Eligible Assets, (C) appropriate filings have been made to protect the Lien and rights of the Agent in any such Eligible Assets as are deemed necessary by the Agent, (D) the Agent shall have received such opinions as it shall reasonably request with respect to any such Eligible Assets, (E) the Agent shall have received insurance certificates and other documents required by the relevant Security Agreement and all other documents and actions required by the terms of such Security Agreement shall have been delivered or shall have occurred to the satisfaction of the Agent, (F) the Company shall have delivered all other documents and taken all other actions reasonably requested by the Agent with respect to any such Eligible Assets, (G) the Agent has satisfied itself that such Eligible Assets are "Aircraft", "Spare Engines" or "Simulators", as the case may be, within the meaning of this Agreement and as described in Schedule 2.10 hereof and (H) the Agent shall notify the Company in writing that it is satisfied that the conditions of this Section 2.10B(ii)(2) have been satisfied. Rotables shall become subject to the Lien of the Spare Parts Security Agreement as provided therein, without also being required to satisfy any of the requirements of this subsection applicable to Eligible Assets of other types. Expenses. The Company shall pay all expenses of the Agent in connection with the release and addition of Eligible Assets to the Borrowing Base and the release or granting and perfection of Liens of Security Agreements in connection therewith, including, but not limited to, reasonable fees and expenses of counsel for the Agent, reasonable fees and expenses of special FAA counsel and filing fees. C. APPROVED APPRAISAL AND APPRAISERS. (1) Approved Appraisal. An Approved Appraisal for any Borrowing Base Collateral shall mean (A) an appraisal and inspection report satisfactory to the Agent delivered to the Agent by an Approved Appraiser not later than the time that such Borrowing Base Collateral becomes subject to the perfected Lien of a Security Agreement, (B) an appraisal and inspection report satisfactory to the Agent delivered semi-annually thereafter to the Agent by an Approved Appraiser not later than six months after the delivery date of the last delivered Approved Appraisal (commencing with the appraisals delivered in November, 2001), and in any event by no later than May 20 and November 20 of each year so long as any Loan remains outstanding or any amount is owed under the PIK Notes, (C) an appraisal and inspection report satisfactory to the Agent delivered to the Agent at any time after the Company has notified the Agent that such Borrowing Base Collateral has been damaged, and (D) in the case of Rotables only, an appraisal and inspection report satisfactory to the Agent delivered to the Agent by an Approved Appraiser at the written request of the Company at any time. In the case of Rotables only, an inspection of the Rotables conducted as part of an Approved Appraisal shall mean an inspection of a sample of the Rotables by the Approved Appraiser for the purpose of determining the accuracy of the inventory reports maintained by the Company for the Rotables. The Approved Appraiser delivering any Approved Appraisal shall be selected by the Agent. The Company shall pay the fees and expenses of the Approved Appraiser in connection with delivery of an Approved Appraisal. Any inspection of Borrowing Base Collateral by an Approved Appraiser shall be conducted in compliance with the inspection provisions of the relevant Security Agreement. -42- (2) Approved Appraisers. Approved Appraisers for Borrowing Base Collateral shall mean AVITAS, Inc. and Simat Hellieson & Eichner Inc. or any other appraiser for such Eligible Assets approved in writing by the Agent and consented to by the Company, such consent not to be unreasonably withheld or delayed. D. BORROWING BASE CERTIFICATE. On the Closing Date and no later than the 25th day of each May and November thereafter until payment in full of all Loans outstanding hereunder and all other amounts payable to the Lenders and the Agent under the Notes and other Loan Documents, the Company shall deliver a Borrowing Base Certificate to the Agent relating to the then most recently ended six-month period; provided, however, that in addition to such regular certificates, the Company shall also deliver Borrowing Base Certificates when required, pursuant to subsection 2.4B(ii)(1) or 2.10B(ii)(1). Each Borrowing Base Certificate shall replace and supersede for all purposes of this Agreement the Borrowing Base Certificate then most recently delivered, and shall be based on the then most current Approved Appraisals. Such Borrowing Base Certificate shall (1) state each component of Borrowing Base Collateral then subject to perfected Liens of the Security Agreements, (2) state the portion of the Borrowing Base established by each component Borrowing Base Collateral, (3) state the Borrowing Base by aggregating each of the values stated pursuant to the preceding clause (2), and (4) state the then outstanding principal amount of the Loans. The Borrowing Base Certificate shall (A) certify that none of the Borrowing Base Collateral included in the calculation of the Borrowing Base is subject to an Event of Loss, Event of Damage, Repairable Event or Adjustment Event or, if any of such Borrowing Base Collateral is subject to an Event of Loss, Event of Damage, Repairable Damage or Adjustment Event, such Borrowing Base Certificate shall contain the relevant exclusions for any such Borrowing Base Collateral subject to such Event of Loss, Event of Damage, Repairable Damage or Adjustment Event as required by subsections 2.4B(ii)(1) and 2.10A hereof, (B) certify that no Borrowing Base Deficiency then exists or, if a Borrowing Base Deficiency then exists, the amount thereof, and (C) certify that the portion of the Borrowing Base attributable to Rotables stated in the Borrowing Base Certificate does not exceed thirty five percent, rounded to the nearest whole percent (35%), of the aggregate Borrowing Base stated in such certificate or that, if the portion of the Borrowing Base attributable to the Rotables does exceed thirty five percent, rounded to the nearest whole percent (35%), of the aggregate Borrowing Base, the portion of the Borrowing Base attributable to the Rotables in such certificate for purposes of calculating the Borrowing Base excludes such excess amount. In determining the book value of Rotables in any Borrowing Base Certificate, the Company shall use its normal accounting procedures except to the extent that the timing of such procedures may be shortened pursuant to subsection 2.4B(ii)(1)(c). The Borrowing Base Certificate shall be certified to be true and accurate by a Responsible Officer of the Company. Notwithstanding any Borrowing Base Certificate delivered by the Company, in the event of any dispute between the Company and the Agent regarding the then outstanding principal amount of the Loans, the records of the Agent shall determine such outstanding principal amounts, absent manifest error. SECTION 3. CONDITIONS TO LOANS The obligations of the Agent and the Lenders to maintain the Loans hereunder are subject to the satisfaction of the following conditions: -43- 3.1 CONDITIONS TO CLOSING DATE. The Existing Credit Agreement shall not be amended and restated as provided in this Agreement unless the following conditions have been satisfied or waived on or prior to January 31, 2002: A. COMPANY DOCUMENTS. The Company shall deliver or cause to be delivered to the Lenders (or to the Agent for the Lenders with sufficient originally executed copies, where appropriate, for each Lender) the following, each, unless otherwise noted, dated or certified on, as the case may be, the Closing Date: (i) certified copies of its Certificate of Incorporation, together with a good standing certificate from the Secretary of State of the State of Delaware and each other state in which it is qualified as a foreign corporation to do business and, to the extent generally available, a certificate or other evidence of good standing as to payment of any applicable franchise or similar taxes from the appropriate taxing authority of each of such states, each dated a recent date prior to the Closing Date; (ii) copies of its Bylaws, certified by its corporate secretary or an assistant secretary; (iii) resolutions of its Board of Directors approving and authorizing the execution, delivery and performance of this Agreement and the other Loan Documents, certified by its corporate secretary or an assistant secretary as being in full force and effect without modification or amendment; (iv) signature and incumbency certificates of its officers executing this Agreement and the other Loan Documents; (v) executed originals of this Agreement, the Notes (duly executed in accordance with subsection 2.1D, drawn to the order of each Lender and with appropriate insertions) and the other Loan Documents; and (vi) such other documents as the Agent may reasonably request. B. NECESSARY CONSENTS. The Company shall have obtained all consents necessary or reasonably advisable in connection with the transactions contemplated by the Loan Documents, and each of the foregoing shall be in full force and effect and in form and substance satisfactory to the Agent. C. FINANCIAL CONDITION CERTIFICATE. The Company shall have delivered to the Agent a Financial Condition Certificate dated the Closing Date, substantially in the form annexed hereto as Exhibit VIII, with appropriate attachments demonstrating that, after giving effect to the consummation of the financing transactions contemplated hereby, the Company and its Subsidiaries, taken as a whole, are Solvent. -44- D. OPINIONS OF COMPANY'S COUNSEL. The Agent and its counsel shall have received (i) executed copies of a favorable written opinion of Skadden Arps Slate Meagher & Flom LLP regarding the enforceability of this Agreement and the Notes and (ii) executed copies of a favorable written opinion of Cooley Godward LLP regarding Section 1110 of the Bankruptcy Code, in each case dated the Closing Date and setting forth substantially the matters in the opinions designated in Exhibits V-A1 and V-A2, respectively, annexed hereto. E. OPINIONS OF GENERAL COUNSEL. The Agent and its counsel shall have received executed copies of one or more favorable written opinions of Linda M. Mitchell, Esq., Vice President and General Counsel of the Company, in form and substance reasonably satisfactory to the Agent and its counsel, dated the Closing Date, and setting forth substantially the matters in the opinions designated in Exhibit V-B annexed hereto. F. RESERVED. G. OPINIONS OF FAA COUNSEL. The Agent and its counsel shall have received a form of a favorable written opinion of Daugherty, Fowler, Peregrin & Haught regarding perfection of the security interests in certain of the Collateral established by the Security Agreements filed with the FAA, dated as of the Closing Date; provided, that executed copies of such opinion may be delivered to the Agent and its counsel within five Business Days of the Closing Date. H. RESERVED. I. EVIDENCE OF INSURANCE. The Company shall have delivered to the Agent certificates of insurance with respect to Borrowing Base Collateral subject to Security Agreements as of the Closing Date, naming the Agent (on behalf of the Agent and the Lenders) as loss payee under the casualty insurance policies and as additional insured under the liability policies of the Company and a broker's report from the Company's insurance broker evidencing compliance with the requirements of each Security Agreement, all as required pursuant to subsection 5.4 hereof or pursuant to the Security Agreements. J. REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF AGREEMENTS. The representations and warranties of the Company contained herein and in the other Loan Documents are true, correct and complete in all material respects on and as of the Closing Date to the same extent as though made on and as of that date (except to the extent the same expressly relate to an earlier date, in which case such representations and warranties were true, correct and complete in all material respects as of such date) and that the Company shall have performed in all material respects all agreements and satisfied all conditions which this Agreement provides shall be performed or satisfied by it on or before the Closing Date. K. COMPLIANCE CERTIFICATE. The Company shall have delivered to the Agent a Compliance Certificate dated as of the Closing Date, substantially in the form annexed hereto as Exhibit IV. -45- L. COMPLETION OF PROCEEDINGS. All corporate and other proceedings taken or to be taken in connection with the transactions contemplated hereby and all documents incidental thereto shall be reasonably satisfactory in form and substance to the Agent and its counsel, and the Agent and such counsel shall have received all such counterpart originals or certified copies of such documents as the Agent may reasonably request. M. BORROWING BASE CERTIFICATE. The Company shall have delivered to the Agent the Borrowing Base Certificate contemplated to be delivered on the Closing Date by the terms of subsection 2.10. N. ELIGIBLE ASSETS. The Collateral as of the Closing Date shall include the Eligible Assets listed in Schedule 2.10A hereto which are included in the Borrowing Base on the Closing Date as certified in the Borrowing Base Certificate delivered on the Closing Date and, without limitation of the foregoing, such Eligible Assets shall be subject to the perfected Liens of the applicable Security Agreements. O. SECURITY AGREEMENTS. The Company shall have executed and delivered to the Agent the Receivables Security Agreement, in form and substance satisfactory to the Agent. All documents required to be delivered, filings required to be made and action required to be taken by the terms of any Security Agreement referred to in subsection 3.1N shall have been accomplished in accordance with such terms, including, without limitation, the delivery to the Agent for recording of UCC financing statements and FAA filings. The Company shall have executed and delivered to the Agent amendments, supplements and restatements, as the case may be, in form and substance reasonably satisfactory to the Agent, to the Security Agreements and the Environmental Indemnity Agreement. P. RESERVED. Q. RECEIVABLES DOCUMENTATION. The Agent shall have received copies of any and all documentation reasonably requested by the Agent relating to the receivables to be pledged pursuant to the Receivables Security Agreement, which such documentation shall be in form and substance reasonably satisfactory to the Agent. R. GOVERNMENT GUARANTEED LOAN DOCUMENTATION. The Company shall concurrently enter into the Air Carrier Guarantee Loan Documents evidencing the Government Guaranteed Loan, on terms and conditions consistent with the Government Guaranteed Loan Term Sheets, and the Company shall have delivered to the Agent a copy of the Air Carrier Guarantee Loan Documents and the Government Guaranteed Loan Term Sheet, together with an Officer's Certificate certifying that (1) attached thereto are a true, correct and complete copy of the Air Carrier Guarantee Loan Documents and the Government Guaranteed Loan Term Sheet, (2) the Air Carrier Guarantee Loan Documents are in full force and effect, (3) the Government Guaranteed Loan Term Sheet has not been supplemented, amended or revised in any way from that provided to the Agent and the Lenders on or about January 6, 2002, (4) the Government Guaranteed Loan Term Sheet contains all of the material business and economic terms and conditions of the Government Guaranteed Loan, (5) the Air Carrier Guarantee Loan Documents conform in all material respects to the Government Guaranteed Loan Term Sheet, -46- and (6) no default or event of default (or other similar term of like meaning) has occurred and is continuing under the Air Carrier Guarantee Loan Documents. S. TERM SHEETS. The Company shall have delivered to the Agent and the Lenders on or before the Closing Date evidence of the approval of the Government Guaranteed Loan by the Air Transportation Stabilization Board, which shall be in form and substance acceptable to the Agent and the Lenders, together with an Officer's Certificate certifying that attached thereto is a true, correct and complete copy of the approval of the Government Guaranteed Loan by the Air Transportation Stabilization Board and that no supplement, amendment, modification, withdrawal or other revision has been made to such approval. T. LESSOR CONCESSIONS. Holdings and Wilmington Trust Company, acting on behalf of the lessors leasing aircraft to the Company, shall have entered into the Lease Indenture, on terms and conditions consistent with the Lease Indenture Term Sheet, and the Company shall have delivered to the Agent a copy of the Lease Indenture and the Lease Indenture Term Sheet, together with an Officer's Certificate certifying that (1) attached thereto is a true, correct and complete copy of the Lease Indenture and the Lease Indenture Term Sheet, (2) the Lease Indenture is in full force and effect, (3) the Lease Indenture Term Sheet has not been supplemented, amended or revised in any way from that provided to the Agent and the Lenders on or about January 3, 2002, (4) the Lease Indenture Term Sheet contains all of the material business and economic terms and conditions of the Lease Indenture, (5) the Lease Indenture conforms in all material respects to the Lease Indenture Term Sheet, and (6) no default or event of default (or other similar term of like meaning) has occurred and is continuing under the Lease Indenture. U. RESERVED V. RECEIPT OF PROCEEDS OF GOVERNMENT GUARANTEED LOAN. The Company shall have received the proceeds of the Government Guaranteed Loan in a minimum principal amount of $254,000,000. W. CONCESSIONS RECEIVED. The Company shall have delivered an Officer's Certificate to the Agent that the Company has received Concessions (taken as a whole) consistent with the Restructuring Plan and containing such information regarding the Concessions as is reasonably satisfactory to the Agent, and the terms and conditions of such Concessions shall be satisfactory to the Agent and shall be in full force and effect on the Closing Date. X. RESTRUCTURING PLAN. The Company shall have furnished the Agent and the Lenders with a copy of the Restructuring Plan, and such Restructuring Plan shall be satisfactory to the Agent and the Lenders, together with an Officer's Certificate certifying that (1) attached thereto is a true, correct and complete copy of the Restructuring Plan, (2) the Restructuring Plan has not been materially supplemented, amended or revised in any way from that Restructuring Plan dated December 18, 2001 and furnished to the Air Transportation Stabilization Board on December 19, 2001, provided to the Agent and the Lenders on or about January 3, 2002. -47- Y. DOCUMENTS SATISFACTORY. The Loan Documents shall be satisfactory to the Agent and the Lenders. Z. PAYMENT OF FEES AND EXPENSES. The Company shall have paid all fees and expenses of the Agent and the Lenders, including, without limitation, fees and expenses of legal counsel to the Agent and the Lenders, and all fees and expenses of the financial and collateral consultants to the Agent and the Lenders. AA. RESERVED. BB. REPRESENTATIONS AND WARRANTIES, ETC. As of the Closing Date, after giving effect to the application of proceeds of the Government Guaranteed Loan: (i) the representations and warranties of the Company contained herein and in the other Loan Documents shall be true, correct and complete in all material respects on and as of the Closing Date to the same extent as though made on and as of that date (except to the extent the same expressly relate to an earlier date, in which case such representations and warranties were true, correct and complete in all material respects as of such date), and the Company shall be deliver a certificate to the Agent to such effect and as to the matters set forth in clauses (ii), (iii), and (iv) of this subsection 3.1(BB); (ii) no event shall have occurred and be continuing or would result from the consummation of the borrowing contemplated by this Agreement that would constitute an Event of Default or a Potential Event of Default; (iii) to the best knowledge of the Company, no injunction or other restraining order shall have been issued and no hearing to cause an injunction or other restraining order to be issued shall be pending or noticed with respect to any action, suit or proceeding seeking to enjoin or otherwise prevent the consummation of, or to recover any damages or obtain relief as a result of, the maintaining of the Loans hereunder, or with respect to the Government Guaranteed Loan, the Lease Indenture or the Restructuring Plan or otherwise relating to the Concessions; and (iv) to the best knowledge of the Company, the decision of the Air Transportation Stabilization Board to approve the Government Guaranteed Loan shall be final and not subject to appeal. SECTION 4. COMPANY'S REPRESENTATIONS AND WARRANTIES In order to induce the Lenders to enter into this Agreement and to maintain the Loans, the Company represents and warrants to the Agent and each Lender, as of the date of this Agreement and the Closing Date, that the following statements are true, correct and complete: -48- 4.1 ORGANIZATION, POWERS, QUALIFICATION, GOOD STANDING, BUSINESS AND SUBSIDIARIES. A. ORGANIZATION AND POWERS. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. The Company has all requisite corporate power and authority to own and operate its properties, to carry on its business as now conducted and as proposed to be conducted, to enter into the Loan Documents and to carry out the transactions contemplated hereby and thereby. B. QUALIFICATION AND GOOD STANDING; AIR CARRIER CERTIFICATION. The Company is qualified to do business and in good standing in every jurisdiction where its assets are located and wherever necessary to carry out its business and operations, except in jurisdictions where the failure to be so qualified or in good standing would not in the reasonable determination of the Company be expected to impair the ability of the Company to perform its payment or other material obligations under the Loan Documents. The Company is an "air carrier" within the meaning of the Act and holds a certificate under Sections 41102(a)(1) and 41103 of the Act. The Company is a "citizen of the United States" as defined in Section 40102(a)(15) of the Act (a "UNITED STATES CITIZEN") and holds an air carrier operating certificate issued pursuant to Chapter 447 under the Act for aircraft capable of carrying 10 or more individuals or 6,000 pounds or more of cargo. The Company possesses all necessary certificates, franchises, licenses, permits, rights and concessions and consents which are material to the operation of the routes flown by it and the conduct of its business and operations as currently conducted. C. SUBSIDIARIES. All of the Subsidiaries of the Company as of the Closing Date are identified in Schedule 4.1 annexed hereto, as said Schedule 4.1 may be supplemented from time to time pursuant to the provisions of subsection 5.1(xi). Each of the Subsidiaries of the Company identified in Schedule 4.1 annexed hereto (as so supplemented) is a corporation duly organized, validly existing and in good standing under the laws of its respective jurisdiction of incorporation set forth therein, has all requisite corporate power and authority to own and operate its properties and to carry on its business as now conducted and as proposed to be conducted, and is qualified to do business and in good standing in every jurisdiction where its assets are located and wherever necessary to carry out its business and operations, in each case except where failure to be so qualified or in good standing or a lack of such corporate power and authority would not in the reasonable determination of the Company be expected to impair the ability of the Company to perform its payment or other material obligations under the Loan Documents. Schedule 4.1 annexed hereto (as so supplemented) correctly sets forth the ownership interest of the Company and each of its Subsidiaries in each of the Subsidiaries of the Company identified therein. 4.2 AUTHORIZATION OF BORROWING, ETC. A. AUTHORIZATION OF BORROWING. The execution, delivery and performance of the Loan Documents have been duly authorized by all necessary corporate action on the part of the Company. -49- B. NO CONFLICT. The execution, delivery and performance by the Company of the Loan Documents and the consummation of the transactions contemplated by the Loan Documents do not and will not (i) violate any provision of any law or any governmental rule or regulation applicable to the Company or any of its Subsidiaries, the Certificate or Articles of Incorporation or Bylaws of the Company or any of its Subsidiaries or any order, judgment or decree of any court or other agency of government binding on the Company or any of its Subsidiaries, (ii) conflict with, result in a breach of or constitute (with due notice or lapse of time or both) a default under any Contractual Obligation of the Company or any of its Subsidiaries, (iii) result in or require the creation or imposition of any Lien upon any of the properties or assets of the Company or any of its Subsidiaries (other than any Liens created under any of the Loan Documents in favor of the Agent on behalf of Lenders), or (iv) require any approval of stockholders or any approval or consent of any Person under any Contractual Obligation of the Company or any of its Subsidiaries, except for such approvals or consents which will be obtained on or before the Closing Date and disclosed in writing to Lenders. C. GOVERNMENTAL CONSENTS. The execution, delivery and performance by the Company of the Loan Documents and the consummation of the transactions contemplated by the Loan Documents do not and will not require any registration with, consent or approval of, or notice to, or other action to, with or by, any federal, state or other governmental authority or regulatory body which has not been obtained or made on or prior to the date required to be obtained or made except for such matters relating to performance as would ordinarily be done in the ordinary course of business after the Closing Date or if not made or obtained would materially affect such performance. D. BINDING OBLIGATION. Each of the Loan Documents has been duly executed and delivered by the Company and is the legally valid and binding obligation of the Company, enforceable against the Company in accordance with its respective terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or other similar laws relating to or affecting the enforcement of creditors' rights generally, including materiality, reasonableness, good faith and fair dealing, and by general principles of equity (regardless of whether considered in a proceeding in equity or at law). 4.3 FINANCIAL CONDITION. The Company has heretofore delivered to the Lenders, at the Lenders' request, the following financial statements and information: (i) the audited balance sheets of the Company as at December 31, 2000, and the related statements of income, stockholders' equity and cash flows of the Company for the Fiscal Year then ended and (ii) the unaudited balance sheet of the Company as at September 30, 2001 and the related unaudited statements of income, stockholders' equity and cash flows of the Company for the nine months then ended. All such statements were prepared in conformity with GAAP and fairly present the financial position of the Company as at the respective dates thereof and the results of operations and cash flows of the Company for each of the periods then ended subject, in the case of the unaudited statements, to year-end audit and adjustments. Except as disclosed in writing to the Agent after the Closing Date, the Company does not have any material contingent liability or liability for taxes, long-term lease or unusual forward or long-term commitment that is not reflected in the foregoing financial -50- statements (or in the most recently delivered financial statements delivered pursuant to subsection 5.1((i) or (ii)) or the notes thereto and which in any such case is material in relation to the business, operations, properties, assets, condition (financial or otherwise) or, with respect to the Loans, the prospects of the Company. 4.4 NO MATERIAL ADVERSE CHANGE. Since December 31, 1998, after giving effect to the Government Guaranteed Loan, the Lease Indenture and the Concessions, no material adverse change has occurred in the financial condition or operations of the Company. For purposes of the previous sentence, the term "material adverse change" shall mean the material impairment of the Company's ability to perform its payment and other material obligations under the Loan Documents; this sentence is intended to pertain to substantial economic events such as (1) any actual or imminent regulatory or judicial order revoking or materially restricting the Company's ability to operate as an airline or to operate any of the aircraft types in its fleet that is not subject to judicial stay or (2) any labor strike action that causes operations to be substantially suspended for a period exceeding three weeks. 4.5 TITLE TO PROPERTIES; LIENS. Except for any property covered by any Security Agreement (the terms of which shall govern such property to the extent provided therein), the Company and its Subsidiaries have (i) good, sufficient and legal title to (in the case of fee interests in real property), (ii) valid leasehold interests in (in the case of leasehold interests in real or personal property), or (iii) good title to (in the case of all other personal property), all of the properties and assets reflected in the financial statements referred to in subsection 4.3 or in the most recent financial statements delivered pursuant to subsection 5.1, in each case except for assets disposed of since the date of such financial statements in the ordinary course of business or as otherwise permitted under subsection 6.6. Except as otherwise permitted by this Agreement, to the actual knowledge of the Company, all such properties and assets are free and clear of Liens. 4.6 LITIGATION; ADVERSE FACTS. There are no actions, suits, appeals, proceedings, arbitrations or governmental investigations (whether or not purportedly on behalf of the Company or any of its Subsidiaries) at law or in equity or before or by any federal, state, municipal or other governmental department, court, commission, board, bureau, agency or instrumentality, domestic or foreign, pending or, to the knowledge of the Company, threatened against or affecting the Company or any of its Subsidiaries or any property of the Company or any of its Subsidiaries that, individually or in the aggregate, are reasonably likely to materially impair the ability of the Company to perform its payment or other material obligations under the Loan Documents, the Lease Indenture or the Air Carrier Guarantee Loan Documents, or (taken as a whole) the Concessions. Neither the Company nor any of its Subsidiaries is (i) in violation of any applicable laws that, individually or in the aggregate, could in the reasonable determination of the Company be expected to impair the ability of the Company to perform its payment or other material obligations under the Loan Documents or (ii) subject to or in default with respect to any final judgments, writs, injunctions, -51- decrees, rules or regulations of any court or any federal, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, that, individually or in the aggregate, could in the reasonable determination of the Company be expected to impair the ability of the Company to perform its payment or other material obligations under the Loan Documents. 4.7 PAYMENT OF TAXES. Except to the extent permitted by subsection 5.3, all federal income tax returns and other material tax returns and reports of the Company and its Subsidiaries required to be filed by any of them have been timely filed (or extensions have been obtained with respect thereto), and all federal income taxes and material Taxes upon the Company and its Subsidiaries and upon their respective properties, assets, income, businesses and franchises which are due and payable have been paid when before any penalty, fine or interest accrues thereon. Except as disclosed in writing to the Agent after the Closing Date, there are no agreements with respect to Taxes between the Company and any taxing agency or authority. 4.8 PERFORMANCE OF AGREEMENTS; MATERIALLY ADVERSE AGREEMENTS. A. Neither the Company nor any of its Subsidiaries is in default in the performance, observance or fulfillment of any of the material obligations, covenants or conditions contained in any of its Contractual Obligations (after giving effect to the application of the proceeds of the Government Guaranteed Loan), and no condition exists that, with the giving of notice or the lapse of time or both, would constitute such a default. B. Neither the Company nor any of its Subsidiaries is a party to or is otherwise subject to any agreements or instruments or any charter or other internal restrictions which, individually or in the aggregate, could in the reasonable determination of the Company be expected to impair the ability of the Company to perform its payment or other material obligations under the Loan Documents or in connection with the Government Guaranteed Loan or the Lease Indenture, or (taken as a whole) the Concessions. 4.9 GOVERNMENTAL REGULATION. Neither the Company nor any of its Subsidiaries is subject to regulation under the Public Utility Holding Company Act of 1935, the Federal Power Act, the Interstate Commerce Act or the Investment Company Act of 1940 or under any other federal or state statute or regulation which may limit its ability to incur Indebtedness or which may otherwise render all or any portion of the Obligations unenforceable. 4.10 SECURITIES ACTIVITIES. Neither the Company nor any of its Subsidiaries owns or is engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying any Margin Stock, nor shall any proceeds of the Loans be used to purchase or carry Margin Stock or to extend credit to any Person for the purpose of purchasing or carrying any -52- Margin Stock in a manner that violates or causes a violation of Regulations T, U or X of the Board of Governors of the Federal Reserve System or any other regulation of such Board. 4.11 EMPLOYEE BENEFIT PLANS. Each Plan maintained by the Company or an ERISA Affiliate is in compliance in all material respects with all applicable laws. Except in such instances where an omission or failure would in the reasonable determination of the Company impair the ability of the Company to perform its payment or other material obligations under the Loan Documents (a) all returns, reports and notices required to be filed with any regulatory agency with respect to any Plan have been filed timely and (b) neither the Company nor any ERISA Affiliate has failed to make any contribution or pay any amount due or owing as required by the terms of any Plan. There are no pending or, to the best of the Company's knowledge, threatened claims, lawsuits, investigations or actions (other than routine claims for benefits in the ordinary course) asserted or instituted against the assets of any Plan or its related trust or against any fiduciary of a Plan with respect to the operation of such Plan that are likely to result in liability of the Company that in the reasonable determination of the Company would impair the ability of the Company to perform its payment or other material obligations under the Loan Documents. Except in such instances where an omission or failure would not in the reasonable determination of the Company impair the ability of the Company to perform its payment or other material obligations under the Loan Documents, each Plan maintained by the Company or an ERISA Affiliate that is intended to be "qualified" within the meaning of section 401(a) of the Code is, and has been during the period from its adoption to date, so qualified, both as to form and operation and all necessary governmental approvals, including a favorable determination as to the qualification under the Code of such Plan and each amendment thereto, have been or will be timely obtained. Neither the Company nor any ERISA Affiliate has engaged in any prohibited transaction, within the meaning of section 406 of ERISA or section 4975 of the Code, in connection with any Plan which could result in liability of the Company that would in the reasonable determination of the Company impair the ability of the Company to perform its payment or other material obligations under the Loan Documents. Neither the Company nor any ERISA Affiliate has any contingent liability with respect to any post-retirement benefits under a welfare benefit plan as defined in ERISA other than a liability for continuation coverage described in Part 6 of Title 1 of ERISA, except where such liability could not in the reasonable determination of the Company be expected to impair the ability of the Company to perform its payment or other material obligations under the Loan Documents. Neither the Company nor any ERISA Affiliate maintains, has established or has ever participated in a multiple employer welfare benefit arrangement within the meaning of ERISA except to the extent that such participation would not in the reasonable determination of the Company be expected to impair the ability of the Company to perform its payment or other material obligations under the Loan Documents. The Company has not incurred any potential liability with respect to a multiemployer plan, as defined in section 3(37) of ERISA or a plan described in section 4063(a) of ERISA except to the extent that such liability would not in the reasonable determination of the Company be expected to impair the ability of the Company to perform its payment or other material obligations under the Loan Documents. Neither the Company nor any ERISA Affiliate has incurred any liability under Title IV of ERISA that has not been satisfied, and no condition exists that could reasonably be expected to result in the Company or an ERISA Affiliate incurring any liability under Title IV of -53- ERISA that would in the reasonable determination of the Company impair the ability of the Company to perform its payment or other material obligations under the Loan Documents. 4.12 ENVIRONMENTAL PROTECTION. A. All Facilities and operations of the Company and its Subsidiaries are, and have been to the Company's knowledge, in compliance with all Environmental Laws except for any noncompliance which, individually or in the aggregate, could not in the reasonable determination of the Company be expected to impair the ability of the Company to perform its payment or other material obligations under the Loan Documents. B. There are no, and have been no, conditions, occurrences, or Hazardous Materials Activity (a) arising at any Facilities or, to the knowledge of the Company, at any other location or (b) arising in connection with the operations of the Company or its Subsidiaries (including the transportation of Hazardous Materials in accordance with applicable regulations), which conditions, occurrences or Hazardous Materials Activity could reasonably be expected to form the basis of an Environmental Claim against the Company or any of its Subsidiaries and which, individually or in the aggregate, could in the reasonable determination of the Company be expected to impair the ability of the Company to perform its payment or other material obligations under the Loan Documents. C. To the Company's knowledge, there are no pending or threatened Environmental Claims against the Company or its Subsidiaries, and the Company and its Subsidiaries have received no notices, inquiries, or requests for information with respect to any Environmental Claims which in either case are reasonably likely to be adversely determined and could individually or in the aggregate in the reasonable determination of the Company be expected to impair the ability of the Company to perform its payment or other material obligations under the Loan Documents. D. Except as disclosed to the Agent in writing, the Company is not currently operating or required to be operating under any compliance order, schedule, decree or agreement, any consent decree, order or agreement, and/or any corrective action decree, order or agreement issued or entered into under any Environmental Law the failure to comply with which could individually or in the aggregate in the reasonable determination of the Company be expected to impair the ability of the Company to perform its payment or other material obligations under the Loan Documents. E. The Company has provided the Agent copies of all environmental audits, assessments or other evaluations in its possession or subject to its control prepared with respect to the Maintenance Facility, except for audits, assessments or other evaluations that are confidential and privileged as attorney-client communication. 4.13 SOLVENCY. -54- As of the Closing Date, after giving effect to the application of proceeds of the Government Guaranteed Loan, the Company is and, upon the incurrence of any Obligations by the Company on any date on which this representation is made, will be, Solvent. 4.14 DISCLOSURE. No representation or warranty of the Company contained in any Loan Document or in any other document, certificate or written statement furnished to the Agent or Lenders by or on behalf of the Company or any of its Subsidiaries for use in connection with the transactions contemplated by this Agreement contains any untrue statement as and when made, as any of such representations and warranties may made from time to time in accordance with this Agreement and the other Loan Documents. Any projections and pro forma financial information contained in such materials are based upon good faith estimates and assumptions believed by the Company to be reasonable at the time made, it being recognized by Lenders that such projections as to future events are not to be viewed as facts and that actual results during the period or periods covered by any such projections may differ from the projected results. There are no facts known to any Responsible Officer of the Company (other than matters of a general economic nature) that, individually or in the aggregate, could in the reasonable determination of the Company be expected to impair the ability of the Company to perform its payment or other material obligations under the Loan Documents. 4.15 YEAR 2000 MATTERS. Any reprogramming required to permit the proper functioning (but only to the extent that such proper functioning would otherwise be impaired by the occurrence of the year 2000) in and following the year 2000 of computer systems and other equipment containing embedded microchips, whether owned or operated by the Company or any of its Subsidiaries or used or relied upon in the conduct of their business (including any such systems and other equipment supplied by others or with which the computer systems of the Company or any of its Subsidiaries interface), and the testing of all such systems and other equipment as so reprogrammed, has been completed on or prior to the Closing Date, except for such reprogramming the failure to perform any of which could not individually or in the aggregate in the reasonable determination of the Company be expected to impair the ability of the Company to perform its payment or other material obligations under the Loan Documents. 4.16 RECEIVABLES DOCUMENTATION. The documentation provided to the Agent relating to the receivables pledged to the Agent for the benefit of the Lenders pursuant to the Receivables Security Agreement is materially correct and complete, and sets forth all of the material terms and conditions relating to such receivables. -55- SECTION 5. COMPANY'S AFFIRMATIVE COVENANTS The Company covenants and agrees that, until payment in full of all of the Loans and other Obligations, the Company shall perform, and shall cause each of its Subsidiaries to perform, all covenants in this Section 5. 5.1 FINANCIAL STATEMENTS AND OTHER REPORTS. The Company will maintain, and cause each of its Subsidiaries to maintain, a system of accounting established and administered in accordance with sound business practices to permit preparation of financial statements in conformity with GAAP. The Company will deliver to the Agent and Lenders: (i) (a) Quarterly Financials: as soon as available and in any event within 60 days after the end of each fiscal quarter of each Fiscal Year (other than the last quarter of each Fiscal Year), (a) the consolidated balance sheets of each of the Company and Holdings as at the end of such fiscal quarter and the related consolidated statements of income and stockholders' equity of each such company for such fiscal quarter and consolidated cash flows of each such company for the period from the beginning of then current Fiscal Year to the end of such fiscal quarter, all in reasonable detail and certified by the chief financial officer, controller or treasurer of such company that they fairly present the consolidated financial condition of such company as at the dates indicated and the results of its operations and their cash flows for the periods indicated and (b) a narrative report describing the operations of such company in the form prepared for presentation to senior management for such fiscal quarter and for the period from the beginning of then current Fiscal Year to the end of such fiscal quarter; provided that delivery of such company's Form 10-Q for such fiscal quarter shall be deemed to satisfy all of the requirements of this subsection 5.1(i): (b) Monthly Reporting. as soon as available and in any event within 25 days after the end of each calendar month, the consolidated balance sheets of the Company as at the end of such month and the related consolidated statements of income and consolidated cash flows of the Company for such calendar month and for the period from the beginning of the then current Fiscal Year to the end of such month; all such financial statements to be in the form prepared for the management of the Company and certified by the chief financial officer, controller or treasurer of the Company being fairly stated in all material respects (subject to normal year-end audit adjustments). (ii) Year-End Financials: as soon as available and in any event within 105 days after the end of each Fiscal Year, (a) the consolidated balance sheets of each of the Company and Holdings at the end of such Fiscal Year and the related consolidated statements of income, stockholders' equity and cash flows of such company for such Fiscal Year, setting forth in each case in comparative form the corresponding figures for the previous Fiscal Year and, in the case of the Company, the corresponding figures from the annual financial plan delivered pursuant to -56- subsection 5.1(viii) for the Fiscal Year covered by such financial statements of the Company, all in reasonable detail, (b) a narrative report describing the operations of such company in the form prepared for presentation to senior management for such Fiscal Year, and (c) an accountant's report thereon of Pricewaterhouse Coopers L.L.P. or other independent certified public accountants of recognized national standing selected by such company, which report shall be unqualified, shall express no doubts about the ability of such company to continue as a going concern, and shall state that such consolidated financial statements fairly present the consolidated financial position of such company as at the dates indicated and the results of their operations and their cash flows for the periods indicated in conformity with GAAP applied on a basis consistent with prior years and that the examination by such accountants in connection with such consolidated financial statements has been made in accordance with generally accepted auditing standards; provided that (i) references in such opinion to changes in GAAP, changes in accounting standards, highlighting contents of footnotes, limitations in the scope of the audit or exclusions from the audit information not required by GAAP that are, in each case, customary in industry practice and not prejudicial to the opinion stated therein shall not be deemed to be "qualifications" for the purpose of this subsection and (ii) delivery of such company's Form 10-K for such Fiscal Year shall be deemed to satisfy all of the requirements of this subsection 5.1(ii); (iii) Officer's and Compliance Certificates: together with each delivery of financial statements of the Company pursuant to subdivisions (i) and (ii) above after the Closing Date, (a) an Officer's Certificate of the Company stating that the signer has reviewed the terms of this Agreement and has made, or caused to be made under his or her supervision, a review in reasonable detail of the transactions and condition of the Company during the accounting period covered by such financial statements and that such review has not disclosed the existence during or at the end of such accounting period, and that the signer does not have knowledge of the existence as at the date of such Officer's Certificate, of any condition or event that constitutes an Event of Default or Potential Event of Default, or, if any such condition or event existed or exists, specifying the nature and period of existence thereof and what action the Company has taken, is taking and proposes to take with respect thereto; and (b) a Compliance Certificate demonstrating in reasonable detail compliance (or non-compliance) during and at the end of the applicable accounting periods with the restrictions contained in subsections 6.4 and 6.5; (iv) SEC Filings and Press Releases: promptly upon their becoming available, copies of (a) all financial statements, reports, notices and proxy statements sent or made available generally by the Company to its security holders, (b) all regular and periodic reports and all registration statements and prospectuses, if any, filed by the Company or any of its Subsidiaries with any securities exchange or with the Securities and Exchange Commission or any governmental or private regulatory authority, and (c) all material press releases and other statements made available generally by the Company or any of its Subsidiaries to the public concerning material developments in the business of the Company or any of its Subsidiaries; (v) Events of Default, etc.: promptly upon any Responsible Officer of the Company obtaining knowledge (a) of any condition or event that constitutes an Event of Default or Potential Event of Default, (b) that any creditor has given any notice to the Company or any of its Subsidiaries or taken any other action with respect to a claimed default or event or condition of the type referred to in subsection 7.2, (c) of any condition or event that would be required to be -57- disclosed in a current report filed by the Company with the Securities and Exchange Commission on Form 8-K if the Company were required to file such reports under the Exchange Act, or (d) of the occurrence of any event or change that has caused or evidences, either in any case or in the aggregate, in the reasonable determination of the Company, impairment of the ability of the Company to perform its payment or other material obligations under the Loan Documents, an Officer's Certificate specifying the nature and period of existence of such condition, event or change, or specifying the notice given or action taken by any such Person and the nature of such claimed Event of Default, Potential Event of Default, default, event or condition, and what action the Company has taken, is taking and proposes to take with respect thereto; (vi) Litigation or Other Proceedings: To the extent not disclosed pursuant to this subsection, (a) promptly upon any Responsible Officer of the Company obtaining knowledge of (X) the institution of, or threat of, any action, suit, proceeding (whether administrative, judicial or otherwise), governmental investigation or arbitration against or affecting the Company or any of its Subsidiaries or any property of the Company or any of its Subsidiaries (collectively, "PROCEEDINGS") or (Y) any material development in any Proceeding that, in any case: (1) is reasonably likely to be adversely determined and assuming that all damages demanded in such litigation are awarded, is in the reasonable determination of the Company likely to impair the ability of the Company to perform its payment or other material obligations under the Loan Documents; or (2) seeks to enjoin or otherwise prevent the consummation of, or to recover any damages or obtain relief as a result of, the transactions contemplated hereby; written notice thereof together with such other information as may be reasonably available to the Company to enable the Agent and its counsel to evaluate such matters; and (b) within twenty days after the end of each Fiscal Year, a schedule of all Proceedings involving an alleged liability of, or claims against or affecting, the Company or any of its Subsidiaries equal to or greater than $20,000,000 and promptly after request by the Agent such other information as may be reasonably requested by the Agent to enable the Agent and its counsel to evaluate any of such Proceedings; (vii) ERISA Reports: promptly after the receipt by the Company of a request therefor by the Agent or a Lender copies of any annual and other reports (including Schedule B thereto) with respect to a Plan filed by the Company or any ERISA Affiliate with the United States Department of Labor, the Internal Revenue Service or the Pension Benefit Guaranty Corporation; (viii) Annual Financial Plan: annually, as soon as practicable after preparation thereof by the Company in the ordinary course of business but in no event later than January 31 of each year, the Company shall provide the Agent and each Lender copies of its annual financial plan; (ix) Environmental Audits and Reports: as soon as practicable following receipt thereof, copies of all environmental audits and reports, whether prepared by personnel of the Company or any of its Subsidiaries or by independent consultants, with respect to significant environmental matters at any Facility or which relate to an Environmental Claim which could in -58- the reasonable determination of the Company be expected to impair the ability of the Company to perform its payment or other material obligations under the Loan Documents; (x) Pricing Certificates: (a) within one Business Day after any public release by S&P or Moody's raising or lowering its credit rating on the Company's senior unsecured debt obligations and (b) at such additional times as the Company may elect, a certificate setting forth the credit rating on the Company's senior unsecured debt obligations (each, a "PRICING CERTIFICATE"); (xi) Additional Subsidiaries: to the extent permitted hereunder pursuant to subsection 6.13, with reasonable promptness, upon the formation thereof, the name, corporate structure and allocation of Voting Securities of each Subsidiary of the Company, including, without limitation, providing a supplement Schedule 4.1 hereto with all relevant information included with respect to such new Subsidiary; (xii) Insurance Proceeds: promptly notify the Agent upon a Responsible Officer of the Company obtaining actual knowledge of the occurrence of an event of loss or damage to any Collateral that is reasonably expected to result in receipt of insurance proceeds reasonably estimated by the Company to exceed $5,000,000. (xiii) Plan Audits and Liabilities: promptly after the Company or any ERISA Affiliate (a) contacts the Internal Revenue Service for the purpose of participation in a closing agreement or any voluntary resolution program with respect to a Plan which could in the reasonable determination of the Company impair the ability of the Company to perform its payment or other material obligations under the Loan Documents or (b) knows or has reason to know that any event with respect to any Plan occurred that could in the reasonable determination of the Company impair the ability of the Company to perform its payment or other material obligations under the Loan Documents a notification thereof; (xiv) Funding Changes and New Plan Benefits: promptly after the change, a notification of any material increases in the benefits, or material change in funding method, with respect to which the Company may have any liability, or the establishment of any material new Plan with respect to which the Company may have any liability or the commencement of contributions to any Plan to which the Company or any ERISA Affiliate was not previously contributing, except to the extent that such an event would not in the reasonable determination of the Company be expected to impair the ability of the Company to perform its payment or other material obligations under the Loan Documents; (xv) Claims and Proceedings: promptly after receipt of written notice of commencement thereof, notification of all (i) claims made by participants or beneficiaries with respect to any Plan and (ii) actions, suits and proceedings before any court or governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, affecting the Company or any ERISA Affiliate with respect to any Plan, except those which, in the aggregate, if adversely determined could not in the reasonable determination of the Company impair the ability of the Company to perform its payment or other material obligations under the Loan Documents; -59- (xvi) ERISA Reportable Events: promptly after the occurrence of any reportable event (as defined in ERISA) relating to a Plan with respect to which the Company or an ERISA Affiliate may have any liability (other than any such event with respect to which the Pension Benefit Guaranty Corporation has waived the ERISA reportable event notification requirement by regulation or notice); and (xvii) Other Information: with reasonable promptness, such other information and data with respect to the Company or any of its Subsidiaries as from time to time may be reasonably requested by the Agent or any Lender. 5.2 CORPORATE EXISTENCE. Except as permitted under subsection 6.6(v), the Company will do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence and the corporate, partnership or other existence of each Subsidiary of the Company and the rights (charter and statutory) and franchises of the Company and any Subsidiary of the Company; provided, that the Company shall not be required to preserve any such corporate, partnership or other existence of any Subsidiary or any such right or franchise, if the Board of Directors of the Company shall determine in the exercise of its business judgment that the preservation thereof is no longer desirable in the conduct of the business of the Company or any Subsidiary and that abandonment of any such right or franchise shall not in the reasonable determination of the Company impair the ability of the Company to perform its payment or other material obligations under the Loan Documents. 5.3 PAYMENT OF TAXES AND CLAIMS; TAX CONSOLIDATION. A. The Company will, and will cause its Subsidiaries to, pay or discharge or cause to be paid or discharged, before the same shall become delinquent, (i) all taxes, assessments and governmental charges levied or imposed upon the Company or any Subsidiary or upon the income, profits or property of the Company or any Subsidiary, and (ii) all lawful claims for labor, materials and supplies that, if unpaid, might by law become a lien on the property of the Company or any Subsidiary; provided, however, that the Company shall not be required to pay or discharge or cause to be paid or discharged any such tax, assessment, charge or claim the amount, applicability or validity of which is being contested in good faith by appropriate proceedings and with respect to which an adequate reserve has been established by the Company to the extent required by GAAP. B. The Company will not, and will not permit any of its Subsidiaries to, file or consent to the filing of any consolidated income tax return with any Person (other than any Subsidiary of the Company or the Company or Holdings). 5.4 MAINTENANCE OF PROPERTIES; INSURANCE. The Company will, and will cause each of its Subsidiaries to, maintain all properties used or useful in the conduct of its business in good condition, repair and working order and supply such properties with all necessary equipment and make all necessary repairs, renewals, -60- replacements, betterments and improvements thereto, all as in the judgment of the Company may be necessary so that the business carried on in connection therewith may be properly and advantageously conducted at all times; provided, however, that nothing in this subsection shall prevent the Company or any Subsidiary from discontinuing the operation and maintenance of any such properties if such discontinuance is, in the good faith judgment of the Company or such Subsidiary, as the case may be, desirable in the conduct of its respective business and shall not impair the ability of the Company to perform its payment or other material obligations under the Loan Documents. In addition to the insurance required pursuant to each of the Security Agreements, the Company will insure and keep insured, and will cause each of its Subsidiaries to insure and keep insured, with reputable insurance companies, such of their respective properties, to such an extent and against such risks, and will maintain liability insurance, to the extent that property of a similar character is usually so insured by companies engaged in a similar business and owning similar properties in accordance with good business practice. 5.5 INSPECTION. The Company will, and will cause its Subsidiaries to, permit any authorized representatives designated by the Agent or any Lender to visit and inspect any of the properties (other than with respect to Collateral, inspection of which is governed by the applicable Security Agreements) of the Company or any of its Subsidiaries, including its and their financial and accounting records, and to make copies and take extracts therefrom, and to discuss its and their affairs, finances and accounts with its and their officers and independent public accountants, all upon reasonable notice and at such reasonable times during normal business hours and as often as may be reasonably requested; provided that so long as no Potential Event of Default or Event of Default shall have occurred and be continuing, such inspection shall not be disruptive to the Company's business, as reasonably determined by the Company. 5.6 COMPLIANCE WITH LAWS, ETC. The Company will, and will cause each of its Subsidiaries to, comply with all applicable statutes, rules, regulations, orders and restrictions of the United States of America, all states and municipalities thereof, and of any governmental department, commission, board, regulatory authority, bureau, agency and instrumentality of the foregoing, in respect of the conduct of their respective businesses and the ownership of their respective properties, except such as are being contested in good faith by appropriate proceedings and except for such noncompliance as would not in any case or in the aggregate in the reasonable determination of the Company impair the ability of the Company to perform its payment or other material obligations under the Loan Documents. The Company shall not conduct, any Hazardous Materials Activity at any Facility or at any other location in a manner that does not comply with Environmental Laws. 5.7 COMPANY'S REMEDIAL ACTION REGARDING HAZARDOUS MATERIALS. A. MAINTENANCE FACILITY. To the extent required by Environmental Laws, the Company will promptly take, and will cause each of its Subsidiaries promptly to take, any and all necessary remedial action (except to the extent that such remedial action is taken by other Persons responsible for such remedial action through contractual arrangements with the -61- Company) in connection with the presence, storage, use, disposal, transportation or Release of any Hazardous Materials on, under or about the Maintenance Facility in order to comply with all applicable Environmental Laws and Governmental Authorizations. In the event the Company or any of its Subsidiaries undertakes any remedial action with respect to any Hazardous Materials on, under or about the Maintenance Facility, the Company or such Subsidiary will conduct and complete such remedial action (or will cause such action to be taken pursuant to contractual rights of the Company against third parties) in compliance with all applicable Environmental Laws, and in accordance with the policies, orders and directives of all federal, state and local governmental authorities except when, and only to the extent that, the Company's or such Subsidiary's liability for such presence, storage, use, disposal, transportation or discharge of any Hazardous Materials is being contested in good faith and by appropriate proceedings diligently conducted by the Company or such Subsidiary. B. COMPANY FACILITIES. To the extent required by Environmental Laws, the Company will take, and will cause each of its Subsidiaries to take, any and all necessary remedial action (except to the extent that such remedial action is taken by other Persons responsible for such remedial action through contractual arrangements with the Company) in connection with the presence, storage, use, disposal, transportation or Release of any Hazardous Materials on, under or about any Facility (other than the Maintenance Facility) in order to comply timely with all applicable Environmental Laws and Governmental Authorizations except for such non-compliance as would not in any case or in the aggregate in the reasonable determination of the Company impair the ability of the Company to perform its payment and other material obligations under the Loan Documents. In the event the Company or any of its Subsidiaries undertakes any remedial action with respect to any Hazardous Materials on, under or about any Facility (other than the Maintenance Facility), the Company or such Subsidiary will conduct and complete such remedial action (or will cause such action to be taken pursuant to contractual rights of the Company against third parties) in compliance with all applicable Environmental Laws, and in accordance with the policies, orders and directives of all federal, state and local governmental authorities except when, and only to the extent that, the Company's or such Subsidiary's liability for such presence, storage, use, disposal, transportation or discharge of any Hazardous Materials is being contested in good faith and by appropriate proceedings diligently conducted by the Company or such Subsidiary or except for such non-compliance as would not in any case or in the aggregate in the reasonable determination of the Company impair the ability of the Company to perform its payment and other material obligations under the Loan Documents. 5.8 FURTHER ASSURANCES. At any time or from time to time upon the request of the Agent, the Company will, at its expense, promptly execute, acknowledge and deliver such further documents and do such other acts and things as the Agent may reasonably request in order to effect fully the purposes of the Loan Documents and to provide for payment of the Obligations in accordance with the terms of this Agreement, the Notes and the other Loan Documents. 5.9 EMPLOYEE BENEFIT PLANS. -62- The Company shall take such actions as are reasonably practicable to ensure that the Plans with respect to which it may have any liability are operated in material compliance with all applicable laws, except to the extent that the failure to do so could not in the reasonable determination of the Company be expected to impair the ability of the Company to perform its payment or other material obligations under the Loan Documents. Neither the Company nor a Subsidiary shall amend, adopt or terminate any Plan unless such action could not in the reasonable determination of the Company be expected to impair the ability of the Company to perform its payment or other material obligations under the Loan Documents. 5.10 FAA MATTERS; CITIZENSHIP. The Company will at all times hereunder be an "air carrier" within the meaning of the Act and hold a certificate under Section 41102(a)(1) of the Act. The Company will at all times hereunder be a United States Citizen holding an air carrier operating certificate issued pursuant to Chapter 447 of the Act for aircraft capable of carrying 10 or more individuals or 6,000 pounds or more of cargo. The Company will possess and maintain all necessary consents, franchises, licenses, permits, rights and concessions and consents which are material to the operation of the routes flown by it and the conduct of its business and operations as currently conducted. 5.11 CHANGES IN GAAP. Should there be a change in GAAP from that in effect on the Closing Date, such that the defined terms set forth in subsection 1.1 or the covenants set forth in Section 6 would then be calculated in a different manner or with different components or would render the same not meaningful criteria for evaluating the matters contemplated to be evidenced by such covenants, the Company will, upon the request of the Agent and the Lenders, and the Agent and Lenders will, upon the request of the Company, within 30 days of such request, amend this Agreement as necessary to preserve the intent of the financial covenants contained herein on the Closing Date. In the event that the parties hereto are unable to agree upon such an amendment within such 30 day period, such defined terms and covenants shall be calculated in accordance with GAAP as in effect immediately prior to such change. 5.12 REFINANCING OF INDEBTEDNESS Any refinancing of Indebtedness for borrowed money shall be made only pursuant to Refinancing Indebtedness. The Company shall give the Agent prior written notice of any refinancing of the Air Carrier Guarantee Loan Documents and the Lease Indenture. 5.13 GUARANTY BY HOLDINGS Promptly after repaying in full all amounts owed by the Company under the Government Guaranteed Loan, the Company shall cause Holdings to enter into a guaranty, in form and substance reasonably satisfactory to the Agent, pursuant to which Holdings shall guaranty the Obligations under this Agreement and the other Loan Documents. SECTION 6. COMPANY'S NEGATIVE COVENANTS -63- The Company covenants and agrees that, until payment in full of all of the Loans and other Obligations, the Company shall perform, and shall cause each of its Subsidiaries to perform, all covenants in this Section 6. 6.1 RESERVED. 6.2 LIENS AND RELATED MATTERS. A. PROHIBITION ON LIENS. The Company shall not, and shall not permit any of its Subsidiaries to, directly or indirectly create, incur, assume or permit to exist any Lien on or with respect to any property or asset of any kind (other than Collateral) (including any document or instrument in respect of goods or accounts receivable) of the Company or any of its Subsidiaries, whether now owned or hereafter acquired, or any income or profits therefrom, or file or permit the filing of, or permit to remain in effect, any financing statement or other similar notice of any Lien with respect to any such property, asset, income or profits under the Uniform Commercial Code of any state or under any similar recording or notice statute, except: (i) Permitted Encumbrances; and (ii) purchase money Liens securing Indebtedness used to acquire aircraft (including aircraft engines installed thereon), spare aircraft engines, aircraft parts, simulators, passenger loading bridges or other flight or ground support equipment (collectively, "Aircraft Related Equipment") or refinancing of any Aircraft Related Equipment acquired by the Company with cash and not Indebtedness (for the avoidance of doubt, only to the extent of the Company's cash investment in such Aircraft Related Equipment); (iii) Liens on the Company's existing training facility located in Phoenix, Arizona; and (iv) other Liens securing or relating to Indebtedness and other liabilities and obligations in an aggregate amount not to exceed $50,000,000 at any time outstanding. B. NO RESTRICTIONS ON SUBSIDIARY DISTRIBUTIONS TO COMPANY OR OTHER SUBSIDIARIES. Except (i) as provided herein and (ii) as described on Schedule 6.2 annexed hereto, the Company will not, and will not permit any of its Subsidiaries to, create or otherwise cause or suffer to exist or become effective any Payment Restriction. 6.3 INVESTMENTS. The Company shall not, and shall not permit any Subsidiary to make any Investment other than (i) Investments made from proceeds from Asset Sales as permitted by subsection 6.11 or from other sales or other disposition of assets permitted under Section 6.6(ii); (ii) Investments consisting of Cash Equivalents; (iii) accounts receivable if credited or acquired in the ordinary course of business and payable or dischargeable in accordance with customary trade terms; (iv) payroll advances and advances for business and travel expenses in the ordinary course of business; (v) Investments by the Company in its Subsidiaries in the ordinary course of business or otherwise in accordance with Section 6.8; (vi) Investments by any Subsidiary of the Company in the Company or in any other Subsidiary; (vii) Investments made by way of any endorsement of -64- negotiable instruments received by the Company or any Subsidiary in the ordinary course of its business and presented by it to any bank for collection or deposit; (viii) stock, obligations or securities received in settlement of debts created in the ordinary course of business owing to the Company or any Subsidiary; (ix) Investments by the Company in any Subsidiary for the purpose of receivables financing; (x) in addition to any other permitted investments, any other Investments by the Company in an aggregate amount not exceeding $1,000,000 at any time; and (xi) Investments made in connection with marketing and promotion agreements, alliance agreements, distribution agreements and other similar agreements under which a portion of the consideration to the Company includes an opportunity for Investment in the Capital Stock of other Persons, which Investments shall not exceed $20,000,000 in any Fiscal Year. 6.4 RESTRICTED PAYMENTS. The Company shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, declare, order, pay, make or set apart any sum for any Restricted Payment; provided, however, that the Company may, so long as no Potential Event of Default or Event of Default shall have occurred and be continuing, make a Restricted Payment to Holdings (i) to pay or reimburse the Company's share of Holding's business expenses and overhead in a maximum amount of $2,500,000 per Fiscal Year, (ii) to pay or reimburse Holdings for Capital Stock (including options on any such Capital Stock or related stock appreciation rights or similar securities) purchases or redemptions from officers, directors or employees of the Company or Holdings (or their estates or beneficiaries under their estates) upon death, disability, retirement, termination of employment or pursuant to the terms of any plan or any other agreement under which such Capital Stock or related rights were issued, in an amount not to exceed $3,000,000 per Fiscal Year, (iii) to pay or reimburse Holdings for withholding taxes arising from cashless exercises of options or warrants for Holdings Capital Stock year and (iv) to pay or reimburse Holdings for interest payments under the Lease Indenture, in an amount not to exceed $11,000,000 in Fiscal Year 2002, $12,000,000 in Fiscal Year 2003, $13,000,000 in Fiscal Year 2004, and $14,000,000 in Fiscal Year 2005 and each fiscal year thereafter until the Termination Date. 6.5 FINANCIAL COVENANT. The Company shall not permit the reserve of Cash and Cash Equivalents (that in either case are free from all Liens other than Permitted Encumbrances of the type described in clause (xiii) of the definition of Permitted Encumbrances) of the Company and its Wholly Owned Subsidiaries (without regard to Cash and Cash Equivalents in the Cash Collateral Account) to be less than One Hundred Million Dollars ($100,000,000). 6.6 RESTRICTION ON FUNDAMENTAL CHANGES; ASSET SALES AND ACQUISITIONS; NEW SUBSIDIARIES. The Company shall not, and shall not permit any of its Subsidiaries to, enter into any transaction of merger or consolidation, or liquidate, wind-up or dissolve itself (or suffer any liquidation or dissolution), or convey, sell, lease, sub-lease, transfer or otherwise dispose of, in one transaction or a series of transactions, all or any part of its business, property or fixed assets, -65- whether now owned or hereafter acquired, or acquire by purchase or otherwise all or any portion of the business, property or fixed assets (excluding therefrom purchases and acquisitions in the ordinary course of business by the Company and its Subsidiaries of property from any Person not constituting all or substantially all of the property of such Person), or stock or other evidence of beneficial ownership of, any Person or any division or line of business of any Person, except: (i) any Subsidiary of the Company may be merged with or into the Company or any Wholly Owned Subsidiary of the Company or be liquidated, wound up or dissolved, or all or any part of its business, property or assets may be conveyed, sold, leased, transferred or otherwise disposed of, in one transaction or a series of transactions, to the Company or any such Wholly Owned Subsidiary of the Company; provided that, in the case of such a merger, the Company or such Wholly Owned Subsidiary shall be the continuing or surviving corporation; and (ii) the Company and its Subsidiaries may sell or otherwise dispose of assets in transactions that do not constitute Asset Sales; provided that the consideration received for such assets shall be in an amount at least equal to the fair market value thereof; and (iii) the Company and its Subsidiaries may make Asset Sales to the extent permitted by subsection 6.11 hereto; and (iv) the Company may make acquisitions of Capital Stock, the assets and/or the business of another Person (including any division or line of business of such Person) provided that, (a) the acquisition primarily involves the acquisition of assets to be used in the business of the Company, (b) with respect to such acquisition any newly acquired Subsidiary of the Company shall be a Wholly Owned Subsidiary, (c) immediately before and after giving effect thereto, no Potential Event of Default or Event of Default shall have occurred and be continuing, (d) immediately after giving effect to the acquisition, the Company shall be in compliance on a Pro Forma Basis with financial covenants in subsection 6.5 and such compliance shall be evidenced by an Officer's Certificate demonstrating such compliance and (e) the aggregate purchase price in connection with all such acquisitions (excluding therefrom any Indebtedness assumed in connection with such acquisitions and any portion of the purchase price thereof paid with the Company's Common Stock) does not exceed $200,000,000; and (v) the Company may enter into a consolidation or merger that complies with subsections 6.10 and 6.12 hereof. 6.7 SALES AND LEASE-BACKS. The Company shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, become or remain liable as lessee or as a guarantor or other surety with respect to any lease, whether an Operating Lease or a Capital Lease, of any property (whether real, personal or mixed), whether now owned or hereafter acquired, other than aircraft (including aircraft engines installed thereon), spare aircraft engines, aircraft parts, simulators, passenger loading bridges or other flight or ground support equipment, in each case which (i) the Company or any of its Subsidiaries has sold or transferred or is to sell or transfer to any other Person (other than the Company or any of its Subsidiaries) or (ii) the Company or any of its Subsidiaries intends to use -66- for substantially the same purpose as any other property which has been or is to be sold or transferred by the Company or any of its Subsidiaries to any Person (other than the Company or any of its Subsidiaries) in connection with such lease; provided that the Company and its Subsidiaries may become and remain liable as lessee, guarantor or other surety with respect to any such lease if and to the extent that the annual aggregate rentals under all such leases shall not exceed $20,000,000. 6.8 TRANSACTIONS WITH AFFILIATES. A. Neither the Company nor any Subsidiary of the Company shall, directly or indirectly (i) sell, lease, transfer or otherwise dispose of any of its properties or assets, or issue securities to, (ii) purchase any property, assets or securities from, (iii) make any Investment in, or (iv) enter into or suffer to exist any contract or agreement with or for the benefit of, an Affiliate or holder of 5% or more of any class of Capital Stock (and any Affiliate of such holder) of the Company (an "AFFILIATE TRANSACTION"), other than (x) Affiliate Transactions permitted under subsection 6.8B hereof and (y) Affiliate Transactions (including lease transactions) which are on fair and reasonable terms no less favorable to the Company or such Subsidiary, as the case may be, than those as might reasonably have been obtainable at such time from an unaffiliated party; provided that if an Affiliate Transaction or series of related Affiliate Transactions involves or has a value in excess of $15,000,000, the Company or such Subsidiary, as the case may be, shall not enter into such Affiliate Transaction or series of related Affiliate Transactions unless a majority of the disinterested members of the Board of Directors of the Company or such Subsidiary shall reasonably and in good faith determine that such Affiliate Transaction is fair to the Company or such Subsidiary, as the case may be, or is on terms no less favorable to the Company or such Subsidiary, as the case may be, than those as might reasonably have been obtained at such time from an unaffiliated party. B. The provisions of subsection 6.8A shall not apply to (i) any agreement as in effect as of the date hereof, or any amendment thereto in effect as of the date hereof or any transaction contemplated thereby (including pursuant to any amendment thereto) so long as any such agreement or amendment or transaction is not disadvantageous to the Lenders in any material respect; (ii) any transaction between the Company and any Wholly Owned Subsidiary or between Wholly Owned Subsidiaries, provided such transactions are not otherwise prohibited by this Agreement; (iii) reasonable and customary fees and compensation paid to, and indemnity provided on behalf of, officers, directors, employees or consultants of the Company or any Subsidiary, as determined by the Board of Directors of the Company or any Subsidiary or the senior management thereof in good faith; (iv) any Restricted Payments not prohibited by subsection 6.4; (v) any payments or other transactions pursuant to any tax sharing agreement between the Company and any other Person with which the Company is required or permitted to file a consolidated tax return or with which the Company is or could be part of a consolidated group for tax purposes; (vi) transactions with Chautauqua Airlines, Inc., Continental Airlines, Inc., Mesa Airlines, Inc. and their respective Affiliates as contemplated by the Alliance Agreements; and (vii) the Air Carrier Guarantee Loan Documents and the transactions contemplated thereby. 6.9 CONDUCT OF BUSINESS. -67- From and after the date hereof, the Company shall not, and shall not permit any of its Subsidiaries to, engage in any business other than (i) the businesses engaged in by the Company and its Subsidiaries on the date hereof and similar or related businesses and (ii) such other lines of business as may be consented to by Requisite Lenders. 6.10 MERGER OR CONSOLIDATION. The Company shall not consolidate with or merge into any other corporation or convey, lease or transfer its properties and assets substantially as an entirety to any Person, unless: (i) in the case of a consolidation or merger, the Company is the surviving entity, or (ii) if the Company is not the surviving entity, such surviving entity or the Person that acquires by conveyance, lease or transfer the properties and assets of the Company substantially as an entirety, shall be a corporation organized and existing under the laws of the United States of America or any State or the District of Columbia, and shall expressly assume, by an agreement executed and delivered to the Agent, in form satisfactory to the Agent, the Company's Obligations to repay the Loans and all other Obligations of the Company; (iii) immediately before and after giving effect to such transaction, no Event of Default or Potential Event of Default shall have occurred and be continuing; and (iv) the Company has delivered to the Agent an Officer's Certificate and, in the case of any transaction described in clause (ii) above, an opinion of counsel from counsel satisfactory to the Agent, in form and substance satisfactory to the Agent, stating that such consolidation, merger, conveyance, lease or transfer and such agreement comply with this subsection and that all conditions precedent herein provided for relating to such transaction have been complied with and addressing such other matters as may be reasonably requested by the Agent. 6.11 LIMITATION ON ASSET SALES. In the event and to the extent that on any date after the Closing Date the Company and its Subsidiaries shall receive Net Cash Proceeds from one or more Asset Sales (other than Asset Sales by the Company or any Subsidiary to the Company or another Subsidiary), then the Company shall, or shall cause such Subsidiary to, within 6 months after such date apply an amount equal to the amount by which the aggregate amount of Net Cash Proceeds for such 6 month period exceeds $10,000,000 (A) to repay Indebtedness of the Company or Indebtedness of any of its Subsidiaries, in each case owing to a Person other than the Company or any of its Subsidiaries, and/or (B) subject to subsection 6.6(iv), as an Investment (or enter into a definitive agreement committing to so invest within 6 months after the date of such agreement), in property or assets of a nature or type or that are used in a business (or in a Person having property and assets of a nature or type, or engaged in a business) similar or related to the nature or type of the property and assets of, or the business of, the Company and its Subsidiaries existing on the date thereof (as determined in good faith by the board of directors of the Company or such Subsidiary, as the case may be, whose determination shall be conclusive and evidenced by a resolution of the board of directors of the Company or such Subsidiary). The amount of such Net Cash Proceeds required to be applied (or to be committed to be applied) during such 6-month period as set forth in clause (A) or (B) of the preceding sentence shall constitute "EXCESS PROCEEDS." -68- 6.12 LIMITATION ON ISSUANCES AND DISPOSITIONS OF CAPITAL STOCK OF SUBSIDIARIES. Other than Subsidiaries which comply with Section 6.13, each Subsidiary of the Company shall at all times be a Wholly Owned Subsidiary of the Company. The Company (i) shall not, and shall not permit any Subsidiary to, transfer, convey, sell, encumber or otherwise dispose of any Capital Stock of a Subsidiary, or securities convertible or exchangeable into, or options, warrants, rights or any other interest with respect to, Capital Stock of a Subsidiary to any Person (other than the Company or a Wholly Owned Subsidiary) and (ii) shall not permit any Subsidiary to issue shares of its Capital Stock (other than directors' qualifying shares), or securities convertible or exchangeable into, or options, warrants, rights or any other interest with respect to, its Capital Stock to any Person other than to the Company or a Wholly Owned Subsidiary; provided, that the limitations of this subsection shall not apply to any transaction between or among the Company and one or more direct or indirect Wholly Owned Subsidiaries of the Company whereby the Company merges, consolidates or otherwise combines with such Wholly Owned Subsidiary and pursuant to which all existing holders of Capital Stock of the Company receive, upon conversion or otherwise in exchange for securities owned by such holders, Capital Stock of a corporation which immediately prior to such exchange is a Wholly Owned Subsidiary, and which securities have rights and preferences identical to those of the securities replaced, so long as (a) immediately before and after giving effect to such transaction no Potential Default or Event of Default shall have occurred and be continuing, and (ii) such transaction is otherwise in conformity with and not prohibited by this Agreement. 6.13 LIMITATION ON CREATION OF NEW SUBSIDIARIES. The Company may create new Subsidiaries provided that (i) the total assets of all Subsidiaries in the aggregate (other than (a) single purpose Subsidiaries created solely for the purpose of financing aircraft and (b) Subsidiaries created solely for the purpose of acquiring assets from Persons other than the Company or any of its Subsidiaries) does not at any time exceed ten percent (10%) of the consolidated total assets of the Company, in each case determined in accordance with GAAP and (ii) the Company complies with the provisions of subsection 5.1(xi) hereof. 6.14 LIMITATION ON AMENDMENTS TO INDEBTEDNESS; PERFORMANCE OF AGREEMENTS The Company shall not amend, waive or modify, nor shall it consent to or request any amendment, waiver or modification, of any of the material terms, conditions, representations and covenants contained in the Air Carrier Guarantee Loan Documents or the Lease Indenture that (i) shortens the final maturity date of the Government Guaranteed Loan or the debt issued pursuant to the Lease Indenture (collectively or individually, without giving effect to any amendment, waiver or modification, the "Initial Indebtedness"; and after giving effect to any such amendment, waiver or modification, the "Amended Indebtedness"), (ii) requires the acceleration of the final scheduled maturity date and/or any principal payments, including but not limited to scheduled payments and mandatory prepayments, and/or increases the principal amount payable on any date (including, without limitation, pursuant to mandatory prepayments) prior to the dates -69- of analogous payments of such Initial Indebtedness, (iii) provides for an interest rate applicable to such Amended Indebtedness, plus the interest rate equivalent of all remaining fees and costs associated with closing and servicing such Amended Indebtedness higher than the greater of (x) (I) if such Amended Indebtedness bears interest at a floating rate of interest, 105% of the average remaining interest rate applicable to such Initial Indebtedness plus the average remaining fees and costs associated with servicing such Initial Indebtedness, or (II) if such Amended Indebtedness bears interest at a fixed rate of interest, the amount calculated as the sum of clause (I) above plus the appropriate fixed-for-floating swap rate for the Initial Indebtedness, and (y) 105% of the average remaining "all in" interest expense for such Initial Indebtedness as contemplated in the Restructuring Plan.. The Company shall not agree to amend, waive or modify the Concessions if, after giving effect to the aggregate value of all such amendments, waivers or modifications to the Concessions, the value of the Concessions as a whole to the Company would be reduced as a result of such amendments, waivers or modifications by more than $120.0 million (on a net present value basis) in the aggregate, as determined in good faith by the Company. The Company shall perform each of its material obligations under the Air Carrier Guarantee Loan Documents, the Lease Indenture and the Concessions, in each case strictly in accordance with the terms thereof. SECTION 7. EVENTS OF DEFAULT If any of the following conditions or events ("EVENTS OF DEFAULT") shall occur: 7.1 FAILURE TO MAKE PAYMENTS WHEN DUE. (i) Failure by the Company to pay any installment of principal of any Loan or Note when due, whether at stated maturity, by acceleration, by notice of voluntary prepayment, by mandatory prepayment or otherwise; or (ii) failure by the Company to pay any interest on any Loan or Note or any fee or any other amount due under this Agreement or any other Loan Document within five Business Days after the date due; or 7.2 DEFAULT IN OTHER AGREEMENTS. (i) (a) The Company or any Subsidiary (1) fails to make (whether as primary obligor or as guarantor or other surety) any principal payment of or interest or premium, if any, on any Indebtedness (other than Indebtedness referred to in subsection 7.1) or any Operating Lease beyond any period of grace provided with respect thereto, provided that the aggregate amount of all Indebtedness and aggregate amounts under Operating Leases as to which such a payment default shall occur and be continuing is equal to or exceeds $10,000,000, or (2) fails to duly observe, perform or comply with any agreement with any Person or any term or condition of any instrument, if such failure, either individually or in the aggregate, shall have caused or shall have the ability to cause the acceleration of the payment of Indebtedness with an aggregate face amount which is equal to or exceeds $10,000,000; or (b) any Event of Default (as defined in the Government Guaranteed Loan Agreement or the Lease Indenture, as the case may be) has occurred and is continuing under the Government Guaranteed Loan Agreement or the Lease Indenture. -70- 7.3 BREACH OF CERTAIN COVENANTS. Failure of the Company to perform or comply in any material respect with any term or condition contained in subsections 2.5B, 5.2, 5.10, 6.2, 6.5, 6.7 and 6.9 of this Agreement and (excluding subsections 5.10, 6.2, 6.5 and 6.9) such failure shall not have been remedied within five days after a Responsible Officer of the Company knows (or, in the reasonable exercise of such Responsible Officer's discretion, should have known) of such failure; or 7.4 BREACH OF WARRANTY. Any representation, warranty, certification or other statement made by the Company or any of its Subsidiaries in any Loan Document or in any statement or certificate at any time given by the Company or any of its Subsidiaries in writing pursuant hereto or thereto or in connection herewith or therewith shall be false in any material respect on the date as of which made; or 7.5 OTHER DEFAULTS UNDER LOAN DOCUMENTS. (i) The Company shall default in the performance of or compliance with any term contained in this Agreement or any of the other Loan Documents, other than any such term referred to in any other subsection of this Section 7, and such default shall not have been remedied or waived (x) within 30 days after the earlier of (a) a Responsible Officer of the Company becoming aware of such default or (b) receipt by the Company of notice from the Agent or any Lender of such default or (y) with respect to a default under subsection 6.5, the earlier of (a) an officer of the Company becoming aware of the default after the applicable measurement date and (b) the delivery of financial statements pursuant to subsection 5.1 or (ii) a guaranty, if any, of the Obligations for any reason ceases to be in full force and effect; or 7.6 INVOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC. (i) A court shall enter a decree or order for relief in respect of the Company or any of its Subsidiaries in an involuntary case under the Bankruptcy Code or under any other applicable bankruptcy, insolvency or similar law now or hereafter in effect; or any other similar relief shall be granted under any applicable federal or state law; or (ii) an involuntary case shall be commenced against the Company or any of its Subsidiaries under the Bankruptcy Code or under any other applicable bankruptcy, insolvency or similar law now or hereafter in effect; or a decree or order of a court for the appointment of a receiver, liquidator, sequestrator, trustee, custodian or other officer having similar powers over the Company or any of its Subsidiaries, or over all or a substantial part of its property, shall have been entered; or there shall have occurred the involuntary appointment of an interim receiver, trustee or other custodian of the Company or any of its Subsidiaries for all or a substantial part of its property; or a warrant of attachment, execution or similar process shall have been issued against any substantial part of the property of the Company or any of its Subsidiaries, and any such event described in this clause (i) or clause (ii) shall continue for 60 days unless dismissed, bonded or discharged; or 7.7 VOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC. -71- (i) The Company or any of its Subsidiaries shall have an order for relief entered with respect to it or commence a voluntary case under the Bankruptcy Code or under any other applicable bankruptcy, insolvency or similar law now or hereafter in effect, or shall consent to the entry of an order for relief in an involuntary case, or to the conversion of an involuntary case to a voluntary case, under any such law, or shall consent to the appointment of or taking possession by a receiver, trustee or other custodian of all or a substantial part of its property; or the Company or any of its Subsidiaries shall make any assignment for the benefit of creditors; or (ii) the Company or any of its Subsidiaries shall be unable, or shall fail generally, or shall admit in writing its inability, to pay its debts as such debts become due; or the Board of Directors of the Company or any of its Subsidiaries (or any committee thereof) shall adopt any resolution or otherwise authorize any action to approve any of the actions referred to in clause (i) above or this clause (ii); or 7.8 JUDGMENTS AND ATTACHMENTS. Any final judgment or order (not covered by insurance) for the payment of money in excess of $25,000,000 in the aggregate for all such final judgments or orders against the Company or any of its Subsidiaries treating any deductibles, self-insurance or retention as not so covered shall be rendered against the Company or any Subsidiary and shall not be discharged, and there shall be any period of 60 consecutive days following entry of the final judgment or order that causes the aggregate amount for all such final judgements or orders outstanding against the Company or its Subsidiaries to exceed $25,000,000 during which a stay of enforcement of such final judgment or order, by reason of a pending appeal or otherwise, shall not be in effect; or 7.9 DISSOLUTION. Any order, judgment or decree shall be entered against the Company or any of its Subsidiaries decreeing the dissolution or split up of the Company or that Subsidiary and such order shall remain undischarged or unstayed for a period in excess of 30 days; or 7.10 RESERVED. 7.11 FAILURE OF SECURITY. Upon execution and delivery thereof, any Loan Document shall, at any time, cease to be in full force and effect in any material respect (other than by reason of a release of Collateral thereunder in accordance with the terms hereof or thereof, the satisfaction in full of the Obligations or any other termination of any Security Agreement in accordance with the terms hereof or thereof) or shall be declared null and void, or the validity or enforceability thereof shall be contested in writing by the Company, or the Agent shall not have or shall in any material respect cease to have a valid and perfected first priority security interest in any Collateral (or in the case of the Spare Parts Security Agreement, Rotables only) purported to be covered thereby, subject only to Permitted Liens and, in each case, the Company shall fail to (i) deliver a Borrowing Base Certificate excluding therefrom the Collateral subject to such Security Agreement within ten (10) days after a Responsible Officer of the Company knows of such -72- failure and (ii) make a prepayment (and/or provide collateral) in accordance with subsection 2.4B(ii)(1)(a); THEN (i) upon the occurrence of any Event of Default described in subsection 7.6 or 7.7, each of (a) the unpaid principal amount of and accrued interest on the Loans and Notes and (b) all other Obligations shall automatically become immediately due and payable, without presentment, demand, protest or other requirements of any kind, all of which are hereby expressly waived by the Company, and (ii) upon the occurrence and during the continuation of any other Event of Default, the Agent shall, upon the written request or with the written consent of Requisite Lenders, by written notice to the Company, declare all or any portion of the amounts described in clauses (a) and (b) above to be, and the same shall forthwith become, immediately due and payable. Following the occurrence and during the continuation of an Event of Default, the Agent may exercise any remedy provided in the Security Agreements or any other Loan Document or otherwise available to it. SECTION 8. AGENT 8.1 APPOINTMENT. The Industrial Bank of Japan, Limited, is hereby appointed the Agent hereunder and under the other Loan Documents and each Lender hereby authorizes the Agent to act as its agent in accordance with the terms of this Agreement and the other Loan Documents. The Agent agrees to act upon the express conditions contained in this Agreement and the other Loan Documents, as applicable. The provisions of this Section 8 (except subsections 8.5 and 8.6) are solely for the benefit of the Agent, and the Lenders, and the Company shall have no rights as a third party beneficiary of any of the provisions thereof. In performing its functions and duties under this Agreement, the Agent shall act solely as an agent of the Lenders and does not assume and shall not be deemed to have assumed any obligation towards or relationship of agency or trust with or for the Company or any of its Subsidiaries. 8.2 POWERS AND DUTIES; GENERAL IMMUNITY. A. POWERS; DUTIES SPECIFIED. Each Lender irrevocably authorizes the Agent to take such action on such Lender's behalf and to exercise such powers, rights and remedies hereunder and under the other Loan Documents as are specifically delegated or granted to the Agent by the terms hereof and thereof, together with such powers, rights and remedies as are reasonably incidental thereto. The Agent shall have only those duties and responsibilities that are expressly specified in this Agreement and the other Loan Documents. The Agent may exercise such powers, rights and remedies and perform such duties by or through its agents or employees. The Agent shall not have, by reason of this Agreement or any of the other Loan Documents, a fiduciary relationship in respect of any Lender; and nothing in this Agreement or any of the other Loan Documents, expressed or implied, is intended to or shall be so construed as to impose upon the Agent any obligations in respect of this Agreement or any of the other Loan Documents except as expressly set forth herein or therein. -73- B. NO RESPONSIBILITY FOR CERTAIN MATTERS. The Agent shall not be responsible to any Lender for the execution, effectiveness, genuineness, validity, enforceability, collectibility or sufficiency of this Agreement or any other Loan Document or for any representations, warranties, recitals or statements made herein or therein or made in any written or oral statements or in any financial or other statements, instruments, reports or certificates or any other documents furnished or made by the Agent to the Lenders or by or on behalf of the Company to the Agent or any Lender in connection with the Loan Documents and the transactions contemplated thereby or for the financial condition or business affairs of the Company or any other Person liable for the payment of any Obligations, nor shall the Agent be required to ascertain or inquire as to the performance or observance of any of the terms, conditions, provisions, covenants or agreements contained in any of the Loan Documents or as to the use of the proceeds of the Loans or as to the existence or possible existence of any Event of Default or Potential Event of Default. Anything contained in this Agreement to the contrary notwithstanding, the Agent shall not have any liability arising from confirmations of the amount of outstanding Loans or the component amounts thereof. C. EXCULPATORY PROVISIONS. Neither the Agent nor any of its officers, directors, employees or agents shall be liable to the Lenders for any action taken or omitted by the Agent under or in connection with any of the Loan Documents except to the extent caused by their respective gross negligence or willful misconduct. If the Agent shall request instructions from the Lenders with respect to any act or action (including the failure to take an action) in connection with this Agreement or any of the other Loan Documents, the Agent shall be entitled to refrain from such act or taking such action unless and until the Agent shall have received instructions from the Requisite Lenders. Without prejudice to the generality of the foregoing, (i) the Agent shall be entitled to rely, and shall be fully protected in relying, upon any communication, instrument or document believed by it to be genuine and correct and to have been signed or sent by the proper person or persons, and shall be entitled to rely and shall be protected in relying on opinions and judgments of attorneys (who may be attorneys for the Company and its Subsidiaries), accountants, experts and other professional advisors selected by it; and (ii) no Lender shall have any right of action whatsoever against the Agent as a result of the Agent acting or (where so instructed) refraining from acting under this Agreement or any of the other Loan Documents in accordance with the instructions of Requisite Lenders. The Agent shall be entitled to refrain from exercising any power, discretion or authority vested in it under this Agreement or any of the other Loan Documents unless and until it has obtained the instructions of the Requisite Lenders. D. AGENT ENTITLED TO ACT AS LENDER. The agency hereby created shall in no way impair or affect any of the rights and powers of, or impose any duties or obligations upon, the Agent in its individual capacity as a Lender hereunder. With respect to its participations in the Loans, the Agent shall have the same rights and powers hereunder as any other Lender and may exercise the same as though it were not performing the duties and functions delegated to it hereunder, and the term "Lender" or "Lenders" or any similar term shall, unless the context clearly otherwise indicates, include the Agent in its individual capacity. The Agent and its Affiliates may accept deposits from, lend money to and generally engage in any kind of banking, trust, financial advisory or other business with the Company or any of its Affiliates as if it were not performing the duties specified herein, and may accept fees and other consideration from the -74- Company for services in connection with this Agreement and otherwise without having to account for the same to the Lenders. 8.3 REPRESENTATIONS AND WARRANTIES; NO RELIANCE. Each Lender represents and warrants that it has made its own independent investigation of the financial condition and affairs of the Company and its Subsidiaries in connection with the making and maintaining of the Loans hereunder and that it has made and shall continue to make its own analysis of the creditworthiness of the Company and its Subsidiaries. The Agent shall not have any duty or responsibility, either initially or on a continuing basis, to make any such investigation or any such appraisal on behalf of Lenders or to provide any Lender with any credit or other information with respect thereto, whether coming into its possession before the making of the Loans on the Closing Date or at any time or times thereafter, and the Agent shall not have any responsibility with respect to the accuracy of or the completeness of any information provided to the Lenders. 8.4 RIGHT TO INDEMNITY. Each Lender, in proportion to its Pro Rata Share, severally agrees to indemnify the Agent (and their respective affiliates and partners), to the extent that the Agent shall not have been reimbursed by the Company, for and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses (including, without limitation, counsel fees and disbursements) or disbursements of any kind or nature whatsoever which may be imposed on, incurred by or asserted against the Agent in exercising their respective powers, rights and remedies or performing their respective duties hereunder or under the other Loan Documents or otherwise in its capacity as Agent, in any way relating to or arising out of this Agreement or the other Loan Documents; provided that no Lender shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from the Agent's gross negligence or willful misconduct. 8.5 SECURITY AGREEMENTS. Without limiting the generality of subsection 8.1, each Lender hereby further authorizes the Agent to enter into the Security Agreements as secured party on behalf of and for the benefit of such Lender and agrees to be bound by the terms of each of the Security Agreements; provided that, except as otherwise provided below, the Agent shall not enter into or consent to any amendment, modification, termination or waiver of any provision contained in any Security Agreement without prior written consent of the Requisite Lenders. Anything contained in any of the Loan Documents to the contrary notwithstanding, each Lender agrees that no Lender shall have any right individually to realize upon any of the Collateral under any Security Agreement, it being understood and agreed that all powers, rights and remedies under the Security Agreements may be exercised solely by the Agent for the benefit of Lenders in accordance with the terms thereof. Each Lender hereby authorizes the Agent (i) to release or subordinate Collateral as permitted or required under this Agreement or the Security Agreements, and agrees that a certificate executed by the Agent evidencing such release of Collateral shall be conclusive evidence of such release as to any third party and (ii) to enter into any amendments of the -75- Security Agreements to cure any ambiguity, defect or inconsistency or to amend provisions relating to ministerial or administrative matters which do not materially adversely affect the rights of the Lenders thereunder. 8.6 SUCCESSOR AGENT. The Agent may resign at any time by giving 30 days' prior written notice thereof to the Lenders and the Company and may be removed at any time with cause by the Required Lenders, such resignation or removal to be effective only upon acceptance of its appointment of a successor Agent as provided herein. Upon any such notice of resignation or removal, the Requisite Lenders shall have the right to appoint a successor Agent and shall notify the Company in writing of such appointment; provided, that, unless a Potential Event of Default or Event of Default shall have occurred and then be continuing, the Required Lenders shall obtain the Company's written consent to the appointment of such successor Agent (such consent not to be unreasonably withheld or delayed). Upon the acceptance of any appointment hereunder by a successor Agent, that successor Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent and the retiring or removed Agent shall be discharged from its duties and obligations under this Agreement. After any retiring Agent's resignation or removal hereunder as Agent, the provisions of this Section 8 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was the Agent under this Agreement. SECTION 9. MISCELLANEOUS 9.1 ASSIGNMENTS AND PARTICIPATIONS IN LOANS. A. GENERAL. Each Lender shall have the right at any time to (i) subject to compliance with subsection 9.1B(i), sell, assign or transfer to any Eligible Assignee, or (ii) sell participations to any Person in, all or any part of its Loans made by it or any other interest herein or in any other Obligations owed to it; provided that no such sale, assignment, transfer or participation shall require the Company to file a registration statement with the Securities and Exchange Commission or apply to qualify such sale, assignment, transfer or participation under the securities laws of any state; provided, further that no such sale, assignment or transfer described in clause (i) above shall be effective unless and until an Assignment Agreement effecting such sale, assignment or transfer shall have been accepted by the Agent and recorded in the Register as provided in subsection 9.1B(ii). Except as otherwise provided in this subsection 9.1, no Lender shall, as between the Company and such Lender, be relieved of any of its obligations hereunder as a result of any sale, assignment or transfer of, or any granting of participations in, all or any part of its Loans or the other Obligations owed to such Lender. B. ASSIGNMENTS. (i) Amounts and Terms of Assignments. Each Loan or other Obligation may (a) be assigned in any amount to another Lender, or to an Affiliate of the assigning Lender or another Lender, with the giving of notice to the Company and the Agent or (b) -76- be assigned in an aggregate amount of not less than $5,000,000 (or such lesser amount as shall constitute the aggregate amount of the Loans, and other Obligations of the assigning Lender) to any other Eligible Assignee with the consent of the Agent (which consent shall not be unreasonably withheld or delayed). To the extent of any such assignment in accordance with either clause (a) or (b) above, the assigning Lender shall be relieved of its obligations thereafter arising with respect to its Loans, or other Obligations or the portion thereof so assigned. The parties to each such assignment shall execute and deliver to the Agent, for its acceptance and recording in the Register, an Assignment Agreement, together with a processing and recordation fee of $3,500 and such forms, certificates or other evidence, if any, with respect to United States federal income tax withholding matters as the assignee under such Assignment Agreement may be required to deliver to the Agent pursuant to subsection 2.7B(iii)(a). Upon such execution, delivery and acceptance, from and after the effective date specified in such Assignment Agreement, (y) the assignee thereunder shall be a party hereto and, to the extent that rights and obligations hereunder have been assigned to it pursuant to such Assignment Agreement, shall have the rights and obligations of a Lender hereunder and (z) the assigning Lender thereunder shall, to the extent that rights and obligations hereunder have been assigned by it pursuant to such Assignment Agreement, relinquish its rights and be released from its obligations thereafter arising under this Agreement (and, in the case of an Assignment Agreement covering all or the remaining portion of an assigning Lender's rights and obligations under this Agreement, such Lender shall cease to be a party hereto). The assigning Lender shall, upon the effectiveness of such assignment or as promptly thereafter as practicable, surrender its applicable Notes to the Agent for cancellation, and thereupon new Notes shall be issued to the assignee substantially in the form of Exhibit III and Exhibit III-A annexed hereto, as the case may be, with appropriate insertions, to reflect the outstanding Loans, as the case may be, of the assignee and/or the assigning Lender. If a Lender assigns all some or of its Term Note, such Lender must also assign a like portion of such Lender's PIK Note to the same Eligible Assignee. No Lender may assign any of its PIK Note without an assignment of some or all of its Term Note as permitted hereunder. (ii) Acceptance by the Agent; Recordation in Register. Upon its receipt of an Assignment Agreement executed by an assigning Lender and an assignee representing that it is an Eligible Assignee, together with the processing and recordation fee referred to in subsection 9.1B(i) and any forms, certificates or other evidence with respect to United States federal income tax withholding matters that such assignee may be required to deliver to the Agent pursuant to subsection 2.7B(iii)(a), the Agent shall, if such Assignment Agreement has been completed and is in substantially the form of Exhibit VI hereto and if the Agent has consented to the assignment evidenced thereby, (a) accept such Assignment Agreement by executing a counterpart thereof as provided therein (which acceptance shall evidence any required consent of the Agent to such assignment), (b) record the information contained therein in the Register and (c) give prompt notice thereof to the Company. The Agent shall maintain a copy of each Assignment Agreement delivered to and accepted by it as provided in this subsection 9.1B(ii). -77- C. PARTICIPATIONS. No participation granted hereunder shall relieve the granting Lender from its obligations hereunder and the Agent, the Company and other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement and the other Loan Documents, provided, however, that (i) the selling Lender's obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, (iii) the participating banks or other entities shall be entitled to the provisions of subsections 2.6, 2.7, 9.3 and 9.5, provided, however, that the costs to which a participant shall be entitled to obtain pursuant thereto shall be determined by reference to such participant's selling Lender and shall be recoverable solely from such selling Lender and (iv) the Company, the Agent and the other Lenders shall continue to deal solely and directly with the selling Lender in connection with such Lender's rights and obligations under this Agreement and the other Loan Documents; provided, however, as between the selling Lender and any such participant, the selling Lender may grant such participant rights with respect to amendments, modifications or waivers with respect to any fees payable hereunder to such Lender (including the amount and the dates fixed for the payment of any such fees) or the amount of principal or the rate of interest payable on, or the release of any obligations of the Company hereunder and under the other Loan Documents. No participant shall be a third party beneficiary of this Agreement and shall not be entitled to enforce any rights provided to its selling Lender against the Company under this Agreement. D. ASSIGNMENTS TO FEDERAL RESERVE BANKS. In addition to the assignments and participations permitted under the foregoing provisions of this subsection 9.1, any Lender may assign and pledge all or any portion of its Loans, the other Obligations owed to such Lender, and its Notes to any Federal Reserve Bank as collateral security pursuant to Regulation A of the Board of Governors of the Federal Reserve System and any operating circular issued by such Federal Reserve Bank; provided that (i) no Lender shall, as between the Company and such Lender, be relieved of any of its obligations hereunder as result of any such assignment and pledge and (ii) in no event shall such Federal Reserve Bank be considered to be a "Lender" or be entitled to require the assigning Lender to take or omit to take any action hereunder. E. INFORMATION. Each Lender may furnish any information concerning the Company and its Subsidiaries in the possession of that Lender from time to time to assignees and participants (including prospective assignees and participants), subject to subsection 9.19. 9.2 EXPENSES. Whether or not the transactions contemplated hereby shall be consummated, the Company agrees to pay promptly (i) all the reasonable costs and expenses of preparation of the Loan Documents; (ii) all the costs of furnishing all opinions by counsel for the Company (including without limitation any opinions requested by the Agent or Lenders as to any legal matters arising hereunder) and of the Company's performance of and compliance with all agreements and conditions on its part to be performed or complied with under this Agreement and the other Loan Documents including, without limitation, with respect to confirming compliance with environmental and insurance requirements; (iii) the reasonable fees, expenses and disbursements of counsel to the Agent in connection with the negotiation, preparation, -78- execution and administration of the Loan Documents and the Loans and any consents, amendments, waivers or other modifications hereto or thereto, and any other documents or matters, requested by the Company; (iv) all the costs and expenses of creating and perfecting the Liens in favor of the Agent for the benefit of Lenders pursuant to the Loan Documents, including filing and recording fees and expenses, title insurance, reasonable fees and expenses of counsel for providing such opinions as Lenders may reasonably request and reasonable fees and expenses of legal counsel to the Agent (including local counsel); and (v) all costs and expenses, including reasonable attorneys' fees (including allocated costs of internal counsel) and costs of settlement incurred by the Agent and Lenders in enforcing any Obligations of or in collecting any payments due from the Company hereunder or under the other Loan Documents by reason of any Event of Default or Potential Event of Default or in connection with any refinancing or restructuring of the credit arrangements provided under this Agreement in the nature of a "work-out" or pursuant to any insolvency or bankruptcy proceedings. 9.3 INDEMNITY. Subject to the limitations in subsection 9.2 with respect to the matters specified therein, and without duplication of the provisions of the Environmental Indemnity Agreement, Section 2.11 of any Aircraft Security Agreement and Section 3.06 of the Spare Engine Security Agreement, whether or not the transactions contemplated hereby shall be consummated, the Company agrees to defend, indemnify, pay and hold harmless the Agent, the Lenders, the Co-Lead Book Managers, the Syndication Agent, the Arrangers and the Documentation Agent and the officers, directors, employees, agents and affiliates of the Agent, the Lenders, the Co-Lead Book Managers, the Syndication Agent, the Arrangers and the Documentation Agent (collectively called the "INDEMNITEES") from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, claims, costs, expenses and disbursements of any kind or nature whatsoever (including without limitation the reasonable fees and disbursements of counsel for such Indemnitees), whether direct, indirect or consequential and whether based on any federal, state or foreign laws, statutes, rules or regulations (including without limitation securities and commercial laws, statutes and rules or regulations), on common law or equitable cause or on contract or otherwise, that may be imposed on, incurred by, or asserted against any such Indemnitee, in any manner arising out of this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby (including without limitation the Lenders' agreement to maintain the Loans hereunder or the use or intended use of the proceeds of the Loans) or any breach or default by the Company of any provision of the Loan Documents (collectively called the "INDEMNIFIED LIABILITIES"); provided that the Company shall not have any obligation to any Indemnitee hereunder with respect to any Indemnified Liabilities to the extent such Indemnified Liabilities arise (i) from the gross negligence or willful misconduct of that Indemnitee, (ii) constitute ordinary and usual operating or overhead expenses of an Indemnitee (excluding , without limitation, costs and expenses of any outside counsel, consultant or agent) and (iii) arise out of the breach of any obligation or representation of an Indemnitee in this Agreement or any other Loan Document. To the extent that the undertaking to defend, indemnify, pay and hold harmless set forth in the preceding sentence may be unenforceable because it is violative of any law or public policy, the Company shall contribute the maximum portion that it is permitted to pay and satisfy under applicable law -79- to the payment and satisfaction of all Indemnified Liabilities incurred by the Indemnitees or any of them. 9.4 SET-OFF. In addition to any rights now or hereafter granted under applicable law and not by way of limitation of any such rights, upon the occurrence and during the continuance of any Event of Default, to the fullest consent permitted by law, each Lender and is hereby authorized by the Company at any time or from time to time, without notice to the Company or to any other Person, any such notice being hereby expressly waived, to set off and to appropriate and to apply any and all deposits (general or special, including, but not limited to, Indebtedness evidenced by certificates of deposit, whether matured or unmatured) and any other Indebtedness at any time held or owing by that Lender to or for the credit or the account of the Company against and on account of the obligations and liabilities of the Company to that Lender under this Agreement, the Notes, and the other Loan Documents, including, but not limited to, all claims of any nature or description arising out of or connected with this Agreement, the Notes, or any other Loan Document, irrespective of whether or not (i) that Lender shall have made any demand hereunder or (ii) the principal of or the interest on the Loans or any other amounts due hereunder shall have become due and payable pursuant to Section 7 and although said obligations and liabilities, or any of them, may be contingent or unmatured. 9.5 RATABLE SHARING. The Lenders hereby agree among themselves that if any of them shall, whether by voluntary payment, by realization upon security, through the exercise of any right of set-off or banker's lien, by counterclaim or cross action or by the enforcement of any right under the Loan Documents or otherwise, or as adequate protection of a deposit treated as cash collateral under the Bankruptcy Code, receive payment or reduction of a proportion of the aggregate amount of principal, interest, fees and other amounts then due and owing to that Lender hereunder or under the other Loan Documents (collectively, the "AGGREGATE AMOUNTS DUE" to such Lender) which is greater than the proportion received by any other Lender in respect of the Aggregate Amounts Due to such other Lender, then the Lender receiving such proportionately greater payment shall (i) notify the Agent and each other Lender of the receipt of such payment and (ii) apply a portion of such payment to purchase participations (which it shall be deemed to have purchased from each seller of a participation simultaneously upon the receipt by such seller of its portion of such payment) in the Aggregate Amounts Due to the other Lenders so that all such recoveries of Aggregate Amounts Due shall be shared by all Lenders in proportion to the Aggregate Amounts Due to them; provided that if all or part of such proportionately greater payment received by such purchasing Lender is thereafter recovered from such Lender upon the bankruptcy or reorganization of the Company or otherwise, those purchases shall be rescinded and the purchase prices paid for such participations shall be returned to such purchasing Lender ratably to the extent of such recovery, but without interest. The Company expressly consents to the foregoing arrangement and agrees that any holder of a participation so purchased may exercise any and all rights of banker's lien, set-off or counterclaim with respect to any and all monies owing by the Company to that holder with respect thereto as fully as if that holder were owed the amount of the participation held by that holder. -80- 9.6 AMENDMENTS AND WAIVERS. A. No amendment, modification, termination or waiver of any provision of this Agreement or of the Notes, or consent to any departure by the Company therefrom, shall in any event be effective without the written concurrence of Requisite Lenders; provided that any such amendment, modification, termination, waiver or consent which: increases the principal amount of any of the Loans; changes any Lender's Pro Rata Share; changes in any manner the definition of "Requisite Lenders"; changes in any manner any provision of this Agreement which, by its terms, expressly requires the approval or concurrence of all Lenders; postpones the scheduled final maturity date of any of the Loans; postpones the date or reduces the amount of any scheduled payment (but not prepayment) of principal of any of the Loans; postpones the date on which any interest or any fees are payable; waives a mandatory prepayment of principal owed as a result of a Borrowing Base Deficiency for a period in excess of 30 days from the date the Company notifies the Agent of the existence of a Borrowing Base Deficiency; decreases the interest rate borne by any of the Loans (other than any waiver of any increase in the interest rate applicable to any of the Loans pursuant to subsection 2.2E) or the amount of any fees payable hereunder; increases the maximum duration of Interest Periods permitted hereunder; releases all or substantially all of the Collateral (except as expressly provided in the Security Agreements); or changes in any manner the provisions contained in subsection 7.1 or this subsection 9.6 shall be effective only if evidenced by a writing signed by or on behalf of all Lenders to whom are owed Obligations being directly affected by such amendment, modification, termination, waiver or consent. In addition, (i) any amendment, modification, termination or waiver of any of the provisions contained in Section 3 shall be effective only if evidenced by a writing signed by or on behalf of the Agent and Requisite Lenders, (ii) no amendment, modification, termination or waiver of any provision of any Note shall be effective without the written concurrence of the Lender which is the holder of that Note, and (iii) no amendment, modification, termination or waiver of any provision of Section 8 or of any other provision of this Agreement which, by its terms, expressly requires the approval or concurrence of the Agent shall be effective without the written concurrence of the Agent. The Agent may, but shall have no obligation to, with the concurrence of any Lender, execute amendments, modifications, waivers or consents on behalf of that Lender. Any waiver or consent shall be effective only in the specific instance and for the specific purpose for which it was given. No notice to or demand on the Company in any case shall entitle the Company to any other or further notice or demand in similar or other circumstances. Any amendment, modification, termination, waiver or consent effected in accordance with this subsection 9.6 shall be binding upon each Lender at the time outstanding, each future Lender and, if signed by the Company, on the Company. B. If, in connection with any proposed change, waiver, discharge or termination to any of the provision of this Agreement as contemplated by the provision in the first sentence of this subsection 9.6, the consent of Requisite Lenders is obtained but consent of one or more of such other Lenders whose consent is required is not obtained, then the Company may, so long as all non-consenting Lenders are so treated, elect to terminate such Lender as a party to this Agreement; provided that, concurrently with such termination, (i) the Company shall pay that Lender all principal, interest and fees and other amounts owed to such Lender through such date of termination, (ii) another financial institution satisfactory to the Company and the Agent (or if the Agent is also the Lender to be terminated, the successor Agent) shall agree, as of such date, to -81- become a Lender for all purposes under this Agreement (whether by assignment or amendment) and to assume all obligations of the Lender to be terminated as of such date, and (iii) all documents and supporting materials necessary, in the judgment of the Agent (or if the Agent is also the Lender to be terminated, the successor Agent) to evidence the substitution of such Lender shall have been received and approved by the Agent as of such date. 9.7 INDEPENDENCE OF COVENANTS. All covenants under this Agreement shall be given independent effect so that if a particular action or condition is not permitted by any of such covenants, the fact that it would be permitted by an exception to, or would otherwise be within the limitations of, another covenant shall not avoid the occurrence of an Event of Default or Potential Event of Default if such action is taken or condition exists. 9.8 NOTICES. Unless otherwise specifically provided herein, any notice, request or other communication herein required or permitted to be given shall be in writing and may be personally served or sent by telefacsimile or United States mail or courier service and shall be deemed to have been given when delivered in person or by courier service, or upon receipt of telefacsimile, or five Business Days after depositing it in the United States mail with postage prepaid and properly addressed; provided that notices shall not be effective until received. For the purposes hereof, the address of each party hereto shall be as set forth under such party's name on the signature pages hereof or (i) as to the Company and the Agent, such other address as shall be designated by such Person in a written notice delivered to the other parties hereto and (ii) as to each other party, such other address as shall be designated by such party in a written notice delivered to the Agent. 9.9 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. A. All representations, warranties and agreements made herein shall survive the execution and delivery of this Agreement and the making of the Loans hereunder. B. Notwithstanding anything in this Agreement or implied by law to the contrary, (x) the agreements of the Company set forth in subsection 9.3 and the agreements of the Lenders set forth in subsections 8.2C, 8.4 and 9.5 shall survive the payment of the Loans, and the termination of this Agreement and (y) the agreements of the Company set forth in subsections 2.6D, 2.7, 9.2 and 9.4 shall survive the payment of the Loans, and the termination of this Agreement for a period of two years. 9.10 FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE. No failure or delay on the part of the Agent or any Lender in the exercise of any power, right or privilege hereunder or under any other Loan Document shall impair such power, right or privilege or be construed to be a waiver of any default or acquiescence therein, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other power, right or privilege. All rights and remedies existing under this -82- Agreement and the other Loan Documents are cumulative to, and not exclusive of, any rights or remedies otherwise available. 9.11 MARSHALING; PAYMENTS SET ASIDE. Neither the Agent nor any Lender shall be under any obligation to marshal any assets in favor of the Company or any other party or against or in payment of any or all of the Obligations. To the extent that the Company makes a payment or payments to the Agent or the Lenders (or to the Agent for the benefit of the Lenders), or the Agent or Lenders enforce any security interests or exercise their rights of set-off, and such payment or payments or the proceeds of such enforcement or set-off or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside and/or required to be repaid to a trustee, receiver or any other party under any bankruptcy law, any other state or federal law, common law or any equitable cause, then, to the extent of such recovery, the obligation or part thereof originally intended to be satisfied, and all Liens, rights and remedies therefor or related thereto, shall be revived and continued in full force and effect as if such payment or payments had not been made or such enforcement or set-off had not occurred. 9.12 SEVERABILITY. In case any provision in or obligation under this Agreement or the Notes shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby. 9.13 OBLIGATIONS SEVERAL; INDEPENDENT NATURE OF LENDERS' RIGHTS. The obligations of the Lenders hereunder are several and no Lender shall be responsible for the obligations of any other Lender hereunder. None of the Arrangers, Syndication Agent, Documentation Agent or the Co-Lead Book Managers in their respective capacities as such shall have any duties or responsibilities under this Agreement or the other Loan Documents. Nothing contained herein or in any other Loan Document, and no action taken by Lenders pursuant hereto or thereto, shall be deemed to constitute Lenders as a partnership, an association, a joint venture or any other kind of entity. The amounts payable at any time hereunder to each Lender shall be a separate and independent debt. 9.14 HEADINGS. Section and subsection headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose or be given any substantive effect. 9.15 APPLICABLE LAW. THIS AGREEMENT AND EACH OF THE LOAN DOCUMENTS SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE -83- WITH, THE LAWS OF THE STATE OF NEW YORK (EXCEPT, IN THE CASE OF SECURITY AGREEMENTS, AS OTHERWISE PROVIDED THEREIN). 9.16 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the parties hereto and their respective successors and assigns and shall inure to the benefit of the parties hereto and the successors and assigns of the Lenders. Except as provided in subsections 6.6(v), 6.10 and 6.12, neither the Company's rights or obligations hereunder nor any interest therein may be assigned or delegated by the Company without the prior written consent of all Lenders. 9.17 CONSENT TO JURISDICTION AND SERVICE OF PROCESS. ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY PARTY HERETO ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ANY OBLIGATION MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT EACH SUCH PARTY ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT, SUCH OTHER LOAN DOCUMENT OR SUCH OBLIGATION (SUBJECT TO ANY RIGHT OF APPEAL BY A HIGHER COURT). The Company hereby agrees that service of all process in any such proceeding in any such court may be made by registered or certified mail, return receipt requested, to the Company at its address provided in subsection 9.8, such service being hereby acknowledged by the Company to be sufficient for personal jurisdiction in any action against the Company in any such court and to be otherwise effective and binding service in every respect. The Company hereby appoints CT Corporation System, 1633 Broadway, New York, New York 10019, as its agent for service of process and agrees that service of process upon such agent shall be deemed to be service of process upon the Company with respect to any proceeding related to the Loan Documents. Nothing herein shall affect the right to serve process in any other manner permitted by law or shall limit the right of any Lender or the Agent to bring proceedings against the Company in the courts of any other jurisdiction. 9.18 WAIVER OF JURY TRIAL. EACH OF THE PARTIES TO THIS AGREEMENT HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION OR THE LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED. The scope of this waiver is intended to be all-encompassing of any and all disputes that may be filed in any court and that relate to the subject matter of this transaction, including without limitation contract claims, tort claims, breach -84- of duty claims and all other common law and statutory claims. Each party hereto acknowledges that this waiver is a material inducement to enter into a business relationship, that each has already relied on this waiver in entering into this Agreement, and that each will continue to rely on this waiver in their related future dealings. Each party hereto further warrants and represents that it has reviewed this waiver with its legal counsel and that it knowingly and voluntarily waives its jury trial rights following consultation with legal counsel. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY OTHER DOCUMENTS OR AGREEMENTS OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS MADE HEREUNDER. In the event of litigation, this Agreement may be filed as written consent to a trial by the court. 9.19 CONFIDENTIALITY. None of the Agent and the Lenders shall disclose any Confidential Information to any Person without the consent of the Company, such consent not to be unreasonably withheld or delayed, other than (a) to the Agent's or Lender's Affiliates and their respective officers, directors, employees, agents and advisors involved in the administration, monitoring or enforcement of the Loans and Notes hereunder (in such Person's reasonable judgment) and to actual or prospective Eligible Assignees and participants, and then only in each case on a confidential basis, (b) as required by any law, rule or regulation or judicial process and (c) as requested or required by any state, federal or foreign authority or examiner regulating banks or banking. 9.20 COUNTERPARTS; EFFECTIVENESS. This Agreement and any amendments, waivers, consents or supplements hereto or in connection herewith may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument; signature pages may be detached from multiple separate counterparts and attached to a single counterpart so that all signature pages are physically attached to the same document. 9.21 INTEGRATION. This Agreement, the Security Agreements, and the other agreements executed in connection therewith constitute the entire understanding among the parties hereto with respect to the matters covered thereby, and shall supersede any prior agreements covering such matters. 9.22 DISCLAIMER OF DAMAGES. No Indemnitee shall have any liability (whether direct or indirect, in contract, tort or otherwise) to the Company or any of its security holders or creditors for or in connection with the transactions contemplated hereby, except to the extent such liability is determined in a final, non-appealable judgment by a court of competent jurisdiction to be direct damages arising primarily -85- from such Indemnitee's gross negligence or willful misconduct. In no event shall any Indemnitee be liable to the Company or any of its security holders or creditors on any theory of liability for any special, indirect, consequential or punitive damages (including, without limitation, any loss of profits, business or anticipated savings). -86- IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their respective officers thereunto duly authorized as of the date first written above. COMPANY: AMERICA WEST AIRLINES, INC. By: /s/ Thomas T. Weir -------------------------------------------- Name: Thomas T. Weir Title: Vice President and Treasurer Notice Address: 111 West Rio Salado Parkway Tempe, Arizona 85281 Attention: Linda Mitchell, General Counsel -------------------------------------- Fax: (480)693-5153 -------------------------------------------- AGENT AND LENDER: THE INDUSTRIAL BANK OF JAPAN, LIMITED, as Agent and Lender By: /s/ Noel P. Purcell -------------------------------------------- Name: Noel P. Purcell Title: Senior Vice President Notice Address: 1251 Avenue of the Americas New York, New York 10020 Attention: Joseph Mitarotondo Fax: (212) 282-4479 -87- LENDERS: CITICORP USA, INC. By: /s/ Michael C. Becker ----------------------------------- Name: Michael C. Becker Title: Sr. Vice President Address: Fax: THE FUJI BANK, LIMITED By: /s/ Masahito Fukuda ----------------------------------- Name: Masahito Fukuda Title: Senior Vice President Address: 350 So. Grand Avenue, Suite 1500 Fax: (213) 253-4175 THE MITSUBISHI TRUST AND BANKING CORPORATION By: /s/ Scott J. Paige ----------------------------------- Name: Scott J. Paige Title: Executive Vice President Address: 520 Madison Avenue New York, NY 10022 Fax: (212) 244-6825 BANKERS TRUST COMPANY By: /s/ Margarite Sutton ----------------------------------- Name: Margarite Sutton Title: Vice President Address: 130 Liberty Street New York, New York 10006 Fax: (212) 250-7218 -88- BANK ONE NA (Successor by merger to BANK ONE, ARIZONA, NA) (Main Office: Chicago, Illinois) By: /s/ Dennis Warren ----------------------------------- Name: Dennis Warren Title: First Vice President Address: Fax: BANK OF SCOTLAND By: /s/ Joseph Fratus ----------------------------------- Name: Joseph Fratus Title: Vice President Address: Fax: -89- EXHIBIT A FORM OF AIRCRAFT SECURITY AGREEMENT dated as of ------------------- made by AMERICA WEST AIRLINES, INC. Company in favor of THE INDUSTRIAL BANK OF JAPAN, LIMITED, as Agent AIRCRAFT SECURITY AGREEMENT (the "Security Agreement"), dated as of , from AMERICA WEST AIRLINES, INC., a Delaware corporation (the "Company"), whose mailing address is 111 West Rio Salado Parkway, Tempe, Arizona 85281, to The Industrial Bank of Japan, Limited, as Agent under the Amended and Restated Term Loan Agreement referred to below (together with its successors and assigns in such capacity, the "Agent") for the benefit and on behalf of itself as such Agent and the lenders (the "Lenders", such term to include the Issuing Bank as defined in the Credit Agreement) from time to time party to that certain Amended and Restated Term Loan Agreement dated as of January , 2002 (as the same may be amended or waived from time to time the "Credit Agreement") among the Company, the Lenders and the Agent. WHEREAS: A. The Lenders have agreed to extend certain financial accommodations to the Company on the terms and subject to the conditions set forth in the Credit Agreement. B. Pursuant to the terms of the Credit Agreement, the Agent has been appointed as the agent of the Lenders to hold and enforce on their behalf the rights granted to the Agent herein with respect to the Subject Collateral. C. Pursuant to the Credit Agreement the Company has agreed to deliver this Security Agreement for the purposes of, among other things, securing all payment and performance obligations of every nature of the Company from time to time owed to the Agent, the Lenders or any of them under the Loan Documents, whether for principal, interest, fees, expenses, indemnification or otherwise (collectively, the "Obligations"), and subjecting the properties and assets hereinafter described to the lien of this Security Agreement as security for the performance of the Obligations. NOW, THEREFORE, in consideration of the benefits accruing to the Company, the receipt and sufficiency of which are hereby acknowledged, the PARTIES HERE TO AGREE: ARTICLE I DEFINITIONS AND INTERPRETATION; GRANTING CLAUSES; SUBSEQUENTLY MORTGAGED ENGINE; REPRESENTATIONS AND WARRANTIES SECTION 1.01. Definitions and Interpretation. Unless otherwise defined herein, all capitalized terms used in this Security Agreement that are defined in the Credit Agreement (including those terms incorporated by reference) shall have the respective meanings assigned to them in the Credit Agreement. The rules of interpretation set forth in Section 1 of the Credit Agreement shall apply to this Security Agreement. In addition, the following terms shall have the meanings assigned as follows: "Act" or "Federal Aviation Act" shall mean Subtitle VII of Title 49 of the United States Code, and the rules and regulations promulgated thereunder, as in effect on the date of this Security Agreement, and as modified or amended hereafter, or any subsequent legislation that supplements or supersedes such Subtitle. "Agreed Value" shall mean the value of the Aircraft as determined from time to time pursuant to an Approved Appraisal. "Air carrier", "aircraft", "aircraft engines", "appliances" and "spare parts" shall have the respective meanings given to these terms in the Act, as in effect on the date of this Security Agreement. "Airframe" has the meaning given in Section 1.02(a) hereof. "Approved Appraisal" has the meaning specified in Section 2.10 of the Credit Agreement. "Commitments" means the commitments of the Lenders to make and convert Loans as set forth in subsection 2.1A of the Credit Agreement and to issue Letters of Credit set forth in subsection 2.9 of the Credit Agreement. "Engine" has the meaning given in Section 1.02(a) hereof. "Event of Default" means each of the events set forth in Section 7 of the Credit Agreement. "Event of Loss" shall mean any of the following events with respect to the Aircraft, any Airframe or any Engine: (i) the loss of such property or of the use thereof for 45 days due to the destruction of or damage to such property which renders repair uneconomic or which renders such property permanently unfit for normal use by the Company; (ii) any damage to such property which results in the receipt of insurance proceeds with respect to such property on the basis of a total loss, or a constructive or compromised total loss; (iii) the theft or disappearance of such property for a period in excess of 30 days; (iv) the confiscation, condemnation, or seizure of, or requisition of title to, or use of, such property by any government or governmental authority which results in the loss of title or possession of such property by the Company for a period in excess of 30 consecutive days; (v) as a result of any law, rule, regulation, order or other action by the FAA or other government body having jurisdiction, use of such property in the normal course of the business of air transportation is prohibited for a period longer than one (1) month; and (vi) the Aircraft is removed from operational service and placed in short term storage for a period of more than 90 consecutive days or the Aircraft is placed in long term storage. "Federal Aviation Administration" or "FAA" shall mean the United States Federal Aviation Administration or any successor thereto administering the functions of the Federal Aviation Administration under the Act. "Joint Venture" means a joint venture, partnership or other similar arrangement, whether in corporate, partnership or other legal form; provided that in no event shall any corporate Subsidiary of any Person be considered to be a Joint Venture to which such Person is a party. "Letters of Credit" means each letter of credit that may be issued by the Issuing Bank under the terms of subsection 2.9 of the Credit Agreement. "Lien" shall mean any lien, mortgage, pledge, assignment, security interest, charge, hypothecation, preference, priority, privilege, lease or encumbrance of any kind (including any conditional sale or other title retention agreement, any lease in the nature thereof, and any agreement to give any security interest); provided that neither negative pledges nor covenants to abstain from granting liens on or security interests in assets of the Company or its Subsidiaries shall constitute Liens. "Loan" or "Loans" has the meaning given such term in the Credit Agreement. "Officer's Certificate" shall mean a certificate signed by a Responsible Officer and delivered to the Agent. "Parts" shall mean all appliances, components, parts, instruments, appurtenances, accessories, furnishings, and other equipment of whatever nature which may from time to time be incorporated or installed in or attached to the Airframe or any Engine so long as ownership thereof (subject to Permitted Liens) shall remain vested in the Company in accordance with the terms of Section 2.03C hereof and any replacement Part incorporated or installed in or attached to the Airframe or any Engine in accordance with the terms of Section. 2.03C. "Permitted Lessee" shall mean any United States "air carrier" (within the meaning of the Act) that is not subject to a proceeding under Title 7 or 11 of the United States Bankruptcy Code (as now and hereafter in effect or any successor statute), holds a certificate under Section 41102(a)(1) of the Act and operates under Federal Aviation Regulation Part 121. "Permitted Liens" shall mean (i) the Lien of this Security Agreement, (ii) Liens for taxes, assessments or governmental charges payable by the Company either not delinquent for a period of more than thirty (30) days or being contested in good faith by appropriate proceedings so long as during such thirty (30) day period there is not any material risk of the sale, forfeiture or loss of the Airframe or any Engine or any interest therein or during such proceeding there is not any material risk of the sale, forfeiture or loss of the Airframe or any Engine or any interest therein due to an effective stay or otherwise, (iii) any lien for the fees or charges of any airport or air navigation authority or any materialmen's, repairmen's, landlord's, workmen's, supplier's and other like Liens arising in the ordinary course of business, for amounts the payment of which is not overdue for a period of more than thirty (30) days or is being contested in good faith by appropriate proceedings so long as during such thirty (30) day period there is not any material risk of the sale, forfeiture or loss of the Airframe or any Engine or any interest therein or during such proceeding there is not any material risk of the sale, forfeiture or loss of the Airframe or any Engine or any interest therein due to an effective stay or otherwise, (iv) Liens which the Agent has specifically permitted in writing, (v) Liens (other than Liens for taxes) arising out of judgments or awards against the Company which are being appealed so long as there is not any material risk of the sale, forfeiture or loss of the Airframe, any Engine or any interest therein or during such proceeding there is not any material risk of the sale, forfeiture or loss of the Airframe, any Engine or any interest therein due to an effective stay or otherwise, (vi) rights of third parties under arrangements permitted pursuant to Section 2.01D and salvage rights of insurers expressly permitted by this Security Agreement and (vii) other rights of the Company and the Agent provided in this Security Agreement. "Person" means and includes natural persons, corporations, limited partnerships, general partnerships, joint stock companies, limited liability companies, Joint Ventures, associations, companies, trusts, banks, trust companies, land trusts, business trusts or other organizations, whether or not legal entities, and governments and agencies and political subdivisions thereof. "Potential Event of Default" means a condition or event that, after notice or the passage of time or both, would constitute an Event of Default. "Replacement Engine" shall mean any aircraft engine described in any Security Agreement Supplement from and after the date on which the same became subject to the Lien of this Security Agreement, unless and until the same shall be released from the Lien of this Security Agreement pursuant to the terms hereof. "Security Agreement" shall mean this instrument as originally executed as of the date hereof and as it thereafter may from time to time be supplemented through one or more Security Agreement Supplements or amended by one or more instruments supplementary or amendatory thereto and which are executed by the Company and the Agent. "Supplement" or "Security Agreement Supplement" shall mean a security agreement supplement in substantially the form of Appendix A hereto, subjecting any additional aircraft engine to the Lien of this Security Agreement. The following capitalized terms are defined in the applicable Recital or Granting Clause: Company First Paragraph Lenders First Paragraph Credit Agreement First Clause Subject Collateral Granting Clause Agent First Paragraph Obligations Recital "C" SECTION 1.02. Grant of Security Interest. The Company hereby grants to and charges in favor of the Agent a security interest in the following property (collectively the "Subject Collateral") as security for the due and prompt payment and performance by the Company of the Obligations: (a) the Airframe and Engines (each term as defined in and described in Schedule I hereto); (b) any Replacement Engine described in Schedule I to any Supplement from time to time hereafter executed and delivered by the Company pursuant to Section 1.02 hereof; (c) all proceeds receivable or received when any Airframe or Engine is sold, exchanged, collected, leased or otherwise disposed of, including, without limitation, all amounts payable or paid under insurance, requisition or other payments as the result of any loss (including an Event of Loss (as hereinafter defined) and Event of Damage) or Repairable Damage to such Airframe or Engine but (for avoidance of doubt) shall exclude amounts payable to the Company for operating a charter or wet lease permitted without the consent of the Agent pursuant to Section 2.01(D) hereof (collectively, "Proceeds"); (d) all issues from and income and interest on Proceeds, products, title, interest and claims whatsoever, at law, as well as in equity, now or hereafter existing, in or to any of the foregoing; [(e) the Aircraft Sale and Purchase Agreement, dated between the Company and (the "Purchase Agreement") and any bills of sale for the Aircraft delivered thereunder;]* and (f) to the extent not included in the foregoing, all and any proceeds (not expressly excluded in the definition of Proceeds) of any and all of the foregoing Subject Collateral. [It is expressly agreed that, anything herein contained to the contrary notwithstanding, the Company shall remain liable under the Purchase Agreement and the bills of sale delivered thereunder to perform all of its obligations thereunder in accordance with and pursuant to the terms and provisions thereof and the Agent and the Lenders shall have no obligation or liability under the Purchase Agreement or such bills of sale by reason of or arising out of the assignments hereunder nor shall the Agent or the Lenders be required or obligated in any manner to perform or fulfill any obligations of the Company under the Purchase Agreement or such bills of sale.]* Any lease of the Airframe together with the Engines, whether or not such Engines are installed on the Airframe or any other airframe and any and all logs, manuals and other records relating thereto (collectively, the "Aircraft") shall be subject and subordinate to all of the provisions of the Credit Agreement and this Security Agreement. Except with the prior written consent of the Agent or as permitted pursuant to Sections 2.01B, 2.01D, 2.02 and 2.03, the Company shall not sell or otherwise dispose of any part of, or any interest in, the Aircraft prior to payment and performance in full of the Obligations and expiration of the Commitments of the Lenders unless the same shall be released from the Lien hereof in accordance with Section 2.10(B)(ii)(1) of the Credit Agreement. If the Company complies with such provisions of Section 2.10B(ii)(1) of the Credit Agreement with respect to the Aircraft, the Agent shall, at the Company's written request and expense, promptly upon receipt thereof from the Company, execute and deliver to the Company a release of the Lien of this Security Agreement with respect to such Aircraft in such form as the Company shall reasonably request. SECTION 1.03. Subsequently Mortgaged Engine. A. Replacement Engine. The Company may at any time or from time to time subject to the Lien of this Security Agreement one or more Replacement Engines, in substitution for one or more of the Engines then constituting part of the Aircraft and subject to such Lien, provided that each Replacement Engine so subjected to the Lien of this Security Agreement shall be appropriate for installation on the Airframe. - ---------- *Subject to negotiation on a case by case basis. * Subject to negotiation on a case by case basis. B. Supplements. Whenever the Company shall subject any Replacement Engine to the Lien of this Security Agreement, the Company will on or prior thereto: (i) execute and deliver to the Agent a Supplement properly describing such Replacement Engine; (ii) deliver to the Agent an Officer's Certificate confirming (x) that the representations and warranties contained in Section 1.04 hereof are true and accurate on and as of the date of such Supplement with respect to such Replacement Engine and the Company as though made on and as of such date and (y) that the Company has complied with the conditions contained in Section 2.l0B(ii)(1) of the Credit Agreement; (iii) deliver an Approved Appraisal (which may be a desktop appraisal) with respect to the Airframe including the Replacement Engine; and (iv) if such Replacement Engine is Section 1110 Property (as hereinafter defined), furnish the Agent with an opinion of counsel reasonably satisfactory to the Agent in form and substance reasonably satisfactory to the Agent that the Agent will have the benefit of Section 1110 under this Security Agreement with respect to such Replacement Engine. Promptly upon the recordation of such Supplement with the FAA, the Company will cause to be delivered to the Agent an opinion of counsel acceptable to the Agent as to the due recording of such Supplement against such Replacement Engine in accordance with the Act. Upon satisfaction of the conditions of this Section 1.03B, the Replacement Engine shall become an "Engine" for all purposes hereof and the engine being substituted for shall cease to be an "Engine" and shall be released from the Lien of this Security Agreement. Upon written request and at the Company's expense, the Agent shall execute and deliver to the Company such releases as the Company may reasonably request to effectuate the release contemplated in the previous sentence. SECTION 1.04. Representations and Warranties of the Company. The Company represents and warrants that, in the case of the Airframe and each Engine mortgaged hereunder, on the date such Airframe or Engine is mortgaged hereunder: (i) the execution, delivery and performance by the Company of this Security Agreement are within the Company's corporate power, have been duly authorized by all necessary corporate action, and do not contravene (1) the Company's articles of incorporation or by-laws or (2) any law, rule, regulation, order, writ, judgment, injunction, decree, determination or award or any contractual restriction binding on the Company or any of its properties and do not result in or require the creation of any Lien (other than pursuant to the Loan Documents) upon or with respect to any of its properties other than that created hereunder; (ii) no authorization or approval or other action by, and no notice to or filing with, any governmental authority is required for the due execution and delivery by the Company of this Security Agreement, other than as have been duly obtained, taken, given or made; and (iii) the Company shall have good and marketable title to such Airframe or Engine, free and clear of all Liens created or incurred by it or permitted to exist by it other than the Lien of this Security Agreement and Permitted Liens. ARTICLE II COVENANTS SECTION 2.01. Registration; Maintenance and Operation. A. Registration. The Company, at its own expense, shall [upon delivery of the Aircraft under the Purchase Agreement,]* cause the Aircraft to be duly registered in the name of the Company, and to remain duly registered in the name of the Company, with the FAA. B. Maintenance. 1. General. The Company, at its own cost and expense shall (i) service, repair, maintain and overhaul or cause the same to be done to the Airframe and each Engine under the Company's FAA-approved Maintenance Program (the "Approved Maintenance Program") in the same manner and with the same care as used by the Company with similar aircraft and engines operated by the Company (except for care required pursuant to return conditions of lease agreements with respect to aircraft and engines leased by the Company) and so as to keep the Airframe and each Engine in good operating condition and in passenger configuration, (ii) maintain the manuals and technical records in an orderly manner in the English language in accordance with the Approved Maintenance Program and (iii) cause all heavy maintenance to be performed at a nationally recognized maintenance facility holding a valid FAA repair facility certificate and all other maintenance to be performed by FAA approved maintenance providers. 2. Specific Items of Maintenance. The Company agrees that maintenance and repairs shall include, but shall not be limited to, the following specific items: a. to perform or have performed in accordance with the Approved Maintenance Program all routine maintenance work, including on-line maintenance on the Aircraft, and to ensure that all such maintenance shall be in accordance with the regulations and directives of the FAA. The Company shall cause all maintenance and repairs to the Aircraft to be performed at repair facilities approved by the FAA, including, with respect to any lease permitted hereunder, any lessee's FAA approved maintenance facilities; - ---------- * Subject to negotiation on a case by case basis. b. to correct diligently deficiencies revealed at any time by any inspection by the Company which under the Approved Maintenance Program reasonably require repair, replacement, overhaul and adjustment; c. to maintain or cause to be maintained at all times in an orderly manner and in accordance with all applicable requirements of the FAA and any other governmental authority having jurisdiction with respect thereto, all Aircraft documentation, including, without limitation, all records relating to the location, service, inspection, maintenance, modification, repair and overhaul of the Airframe, Engines and all Parts installed therein and the manuals and technical records, and in accurate, current, up-to-date and complete status (if necessary, through manufacturers' revision service); d. if required by FAA regulations, to notify the manufacturer promptly of any modifications or configuration changes to the Airframe which would have a material effect on or be a material change to the detail specification and/or the manuals relating to the Airframe (such as flight, operations and maintenance); e. to maintain the Engines at all tines in accordance with the Approved Maintenance Program; and f. to make all structural repairs in accordance with the Approved Maintenance Program. 3. Airworthiness Directives. The Company agrees to carry out or cause to be carried out at its expense on the Aircraft, in accordance with the terms thereof, any airworthiness directive or any other mandatory F.A.R. or other regulation, directive or instruction (each, an "Airworthiness Directive") which the FAA may from time to time issue. All Airworthiness Directives shall be timely accomplished in accordance with the Approved Maintenance Program and the terms and conditions of such Airworthiness Directives (including by means of alternate compliance under the Airworthiness Directive and the Approved Maintenance Program). 4. Corrosion Control. The Company shall carry out at its expense such work as may be required for the control of corrosion in accordance with the Approved Maintenance Program. 5. Repairs. Any repair to the Aircraft shall be accomplished pursuant to the appropriate manufacturer's repair manual instructions, the Approved Maintenance Program, or other FAA-approved data. 6. Warranties. Any warranties, express or implied, of manufacturers, suppliers or subcontractors relating to the Aircraft or any of the Engines shall inure to the benefit of the Company and be exercised or enforced by the Company at the Company's sole expense. So long as the Loans have not been accelerated the Company shall have the right to exercise, enforce, compromise or release the same, and may apply the proceeds thereof in any manner it deems appropriate. The Company shall maintain the Aircraft in such a manner so as not to knowingly void any available warranties. Upon acceleration of the Loans, all warranties and all rights with respect to warranties shall revert to the Agent or its designee and, upon request of the Agent, the Company shall execute such documents and take such action as may be requested or required to enable the Agent or its designee to enforce or in any other way receive the benefit of such warranties. C. Operation. 1. The Company will not maintain, use, service, repair, overhaul or operate the Aircraft in violation of any law, rule, regulation, treaty or order of any government or governmental authority (domestic or foreign) having jurisdiction, or in violation of any airworthiness certificate, license or registration relating to the Aircraft issued by any such authority or for a purpose for which the Aircraft is not designed or reasonably suitable or in any configuration other than passenger configuration. 2. The Company will not operate the Aircraft: (i) in or to any area excluded from coverage by any insurance required to be maintained by the terms of this Agreement; or (ii) any areas of actual or threatened armed hostilities unless such operation is covered by and complies with the insurance required hereunder. D. Possession and Leases. The Company will not lease or otherwise in any manner deliver, transfer or relinquish possession of the Airframe or any Engine or install or permit any Engine to be installed on any airframe other than the Airframe without the prior written consent of the Agent; provided that, so long as no Event of Default exists at the time of such lease, delivery, transfer or relinquishment of possession or installation and the Company shall continue to maintain insurance in compliance with this Security Agreement, the Company may, without the prior written consent of the Agent: 1. deliver possession of the Airframe or any Engine to the manufacturer thereof or to any person for testing, service, repair, maintenance or overhaul work on the Airframe or any Engine or any part thereof or for alterations or modifications in or additions to the Airframe or Engine(s); 2. install an Engine on an airframe owned by the Company, leased to the Company or owned or purchased by the Company subject to a conditional sale or other security agreement, provided that (a) such airframe is free and clear of all Liens, except: (i) the rights of the parties to the lease or conditional sale or other security agreement covering such airframe, or their assignees, (ii) liens of the type described in the definition hereunder of "Permitted Liens", and (iii) the rights of other air carriers under normal interchange agreements which are customary in the airline industry and do not contemplate, permit or require the transfer of title to the airframe or engines installed thereon, and (b) any such lease, conditional sale or other security agreement provides that engines such as the Engine shall not become subject to the lien of such lease, conditional sale or other security agreement, notwithstanding the installation thereof on such airframe; and 3. lease the Aircraft to any Permitted Lessee provided that (A) such lease shall not have a term of more that six (6) months (or eighteen (18) months if at the time such lease is executed such Permitted Lessee has a long term unsecured credit rating of at least BB by Standard & Poor's Ratings Group), (B) the terms of such lease expressly provide that the lease is subject and subordinate to this Security Agreement and all rights of the Agent hereunder, including, but not limited to, the right of the Agent to repossess the Aircraft following the acceleration of the Loans, (C) the maintenance, insurance and other terms of the lease are consistent with the requirements of this Security Agreement, (D) the lease (1) requires that the Aircraft remain a U.S. registered aircraft and (2) prohibits further leasing by the Permitted Lessee and (E) concurrently with entering into such lease, the Company provides the Agent with a copy thereof together with insurance certificates and evidence complying with Section 2.04 (which insurance may be provided by the Permitted Lessee if it otherwise complies in all respects with Section 2.04 hereof). The Agent agrees for the benefit of a lessor or secured party under a lease, conditional sale or other security agreement containing an agreement complying with Section 2.01(D)(2)(b) which lease, conditional sale or security agreement also covers an engine or engines owned by the lessor under such lease or subject to a security interest in favor of the secured party under such conditional sale or other security agreement that the Agent will not acquire or claim, as against such lessor or secured party, any right, title or interest in any such engine or engines as the result of such engine or engines being installed on the Airframe at any time while such engine or engines is subject to such lease, conditional sale or other security agreement and owned by such lessor or subject to a security interest in favor of such secured party. The rights of any lessee or other transferee who receives possession by reason of a transfer permitted by this Section 2.01(D) shall be subject and subordinate to all the terms of this Security Agreement, including, without limitation, the covenants contained in Sections 2.01(A), (B) and (C) of this Security Agreement and the Agent's rights, powers and remedies under this Security Agreement, including the right to repossession pursuant thereto and to avoid such lease upon such repossession and the Company shall remain primarily liable under this Security Agreement for the performance of all of the terms thereof to the same extent as if such lease or transfer had not occurred. The terms of any such lease shall not permit any lessee to take any action not permitted to be taken by the Company under this Security Agreement with respect to the Aircraft. Any wet lease or similar arrangement under which the Company provides the crew and maintains operational control of the Aircraft shall not constitute a delivery, transfer or relinquishment of possession for purposes of this Section 2.1(D). E. Plates. On or before the date hereof, or as soon thereafter as practicable, the Company agrees to affix and maintain in the cockpit of the Airframe and on each Engine a nameplate bearing the inscription: SUBJECT TO A SECURITY INTEREST IN FAVOR OF THE INDUSTRIAL BANK OF JAPAN, LIMITED, AS AGENT, SECURED CREDITOR F. Insignia. Nothing contained in the Credit Agreement or this Security Agreement shall prohibit the Company from placing its customary colors and insignia on the Airframe or any Engine or from otherwise operating the Aircraft in its livery. SECTION 2.02. Liens. The Company will not directly or indirectly create, incur, assume or suffer to exist any Lien on or with respect to the Aircraft, title thereto or any interest therein or part thereof other than Permitted Liens. The Company will promptly, at its own expense, take (or cause to be taken) such actions as may be necessary duly to discharge any Lien not constituting a Permitted Lien if the same arise at any time. SECTION 2.03. Parts. A. Replacement of Parts. The Company, at its own cost and expense, will promptly replace or cause to be replaced all Parts which may from time to time become worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair or permanently rendered unfit for use for any reason whatsoever, except as otherwise provided in this Section 2.03(A) or Section 2.03(D) of this Security Agreement. All replacement parts (other than replacement parts temporarily installed as provided in Section 2.03(B) of this Security Agreement shall be free and clear of all Liens (except Permitted Liens), and shall be in as good an operating condition, and shall have a value and utility substantially equal to or greater than, the Parts replaced assuming such replaced Parts were in the condition and repair required to be maintained by the terms of this Security Agreement. All Parts at any time removed from the Airframe or any Engine shall remain the property of the Company, no matter where located, until such time as such Parts shall be replaced by parts which meet the requirements for replacement Parts specified above. Upon any replacement part becoming incorporated or installed in or attached to the Airframe or any Engine, without further act (subject only to Permitted Liens and any arrangement permitted by Section 2.03(B) of this Security Agreement), (i) such replacement part shall become the property of the Company and shall become subject to the Lien of this Security Agreement and be deemed a Part for all purposes of this Security Agreement to the same extent as the Parts originally incorporated or installed in or attached to the Airframe or such Engine and (ii) the replaced Part shall no longer be deemed a Part under this Security Agreement. Upon written request and at the Company's expense, the Agent shall execute and deliver to the Company such releases as the Company may reasonably request to effectuate the release contemplated in clause (ii) of the previous sentence. The Company may remove Parts which the Company determines in its reasonable judgment to be obsolete or no longer suitable or appropriate for use on the Airframe or any Engine (each, an "Obsolete Part"), provided that (i) such removal is being applied by the Company on a fleet-wide basis and does not discriminate against the Aircraft to the extent applicable having regard to the fleet and equipment type and the age of the Aircraft and (ii) removal of any such Obsolete Parts shall not diminish the value, utility or remaining useful life of the Airframe or such Engine, or materially impair the condition or impair the airworthiness thereof, below the value, utility, condition, airworthiness or remaining useful life thereof immediately prior to such removal assuming the Airframe or such Engine was then of the value and utility and in the condition and airworthiness required to be maintained by the terms of this Security Agreement. B. Pooling of Parts; Temporary Replacement Parts. Any Part removed from the Airframe or any Engine as provided in Section 2.03(A) of this Security Agreement may be subjected by the Company to a normal pooling or similar arrangement customary in the airline industry and entered into by the Company in the ordinary course of its business; provided, that a Part replacing such removed Part shall be incorporated or installed in or attached to such Airframe or Engine in accordance with Section 2.03(A) of this Security Agreement as promptly as practicable after the removal of such removed Part. In addition, the Company may use temporary parts or pooled parts on the Aircraft as temporary replacements for Parts, provided that the Company, at its expense as promptly thereafter as practicable, either (1) causes such pooled or replacement part to become the property of the Company free and clear of all Liens other than Permitted Liens or (2) replaces such replacement part with a further replacement part owned by the Company which meets the requirements of Section 2.03(A) of this Security Agreement and which shall become the property of the Company, free and clear of all Liens other than Permitted Liens. C. Modifications. 1. Except as provided in Section 2.01B(3) hereof, the Company shall at its expense make such alterations and modifications in and additions to the Airframe or any Engine as may be required to be made from time to time by applicable law ("Required Modifications"). 2. The Company shall not make any modifications, alterations or additions (collectively, "Modifications") to the Aircraft, (other than Required Modifications) which will result in adverse changes to the Aircraft structure or performance or which will either (a) materially decrease the utility, value or remaining useful life of the Aircraft or (b) adversely affect the Aircraft's airworthiness or use for transporting passengers or cargo in commercial service. 3. All Modifications shall be FAA-approved or in accordance with the Approved Maintenance Program. D. Additional Parts. All parts incorporated or installed in or attached or added to the Airframe or an Engine (other than passenger service items leased to or owned by the Company including, without limitation, telephone or video equipment, which such passenger service items shall not be considered "Parts") as the result of a Modification (the "Additional Part" or "Additional Parts") shall, without further act, become the property of the Company and subject to this Security Agreement. Notwithstanding the foregoing, the Company may, at any time, so long as no Event of Default shall have occurred and be continuing, remove or suffer to be removed any Additional Part, provided that such Additional Part (x) (i) is in addition to, and not in replacement of or substitution for, any Part originally incorporated or installed in or attached to the Airframe or any Engine at the time of delivery thereof hereunder or any Part in replacement of or substitution for any such Part and (ii) can be removed from the Airframe or such Engine without impairing the airworthiness of the Airframe or such Engine or diminishing the value, utility or remaining useful life of the Airframe or such Engine which the Airframe or such Engine would have had at such time had such alteration, modification or addition not occurred or (y) such Part is an Obsolete Part. Upon the removal thereof as provided above, such Additional Parts shall no longer be deemed part of the Airframe or the Engine from which it was removed. SECTION 2.04. Insurance. (a) Public Liability and Property Damage Liability Insurance. (i) The Company, at its own cost and expense, will maintain or cause to be maintained with respect to the Airframes and Engines, comprehensive aircraft liability insurance including, without limitation, bodily injury and/or property damage, inclusive of liability to third parties and/or passengers, passenger legal liability and property damage liability insurance and cargo legal liability in such amounts, against such risks (including, without limitation, contractual liability and war risk liability), with such retentions as the Company customarily maintains with respect to similar airframes and engines owned or operated by the Company (provided, however, that any self-insured retention and/or deductible shall not exceed [$1,000,000] per occurrence) (in the event that with the prior consent of the Agent such insurance contains the War, Hijacking, and Other Perils Exclusion Clause (AVN 48B), then there must be in place the Extended Coverage Endorsement protection offered by AVN 52 to include "Buy Back" of paragraphs C, D, E and G of AVN 48B (or coverage equal thereto under a separate policy)) and with such insurers or reinsurers (which shall be insurers or reinsurers of recognized responsibility), and insurance against such other risks as is usually carried by similar corporations engaged in the same or similar business and similarly situated as the Company and owning or operating airframes and engines similar to the Airframe and Engines; provided that such insurance shall not be in amounts less than $500,000,000 per occurrence. (ii) Notwithstanding Section 2.04(a)(i), in the event of the requisition for use by the United States government of any Airframe or Engine, the Company shall maintain throughout the period of such requisition such insurance as would otherwise be required under this Section 2.04, provided that the Agent shall accept, in lieu of such insurance coverage, indemnification or insurance from the United States government which is substantially the same as otherwise required under this Section 2.04. (ii) Any policy of insurance carried and maintained in accordance with this Section 2.04(a), and any policy taken out in substitution or replacement for any such policy subject to the terms, conditions and limitations thereof, shall: (A) name the initial Lenders and the Agent and their respective successors and permitted assigns as additional insureds (each an "Additional Insured"); (B) provide that, in respect of the interest of any such Additional Insured in such policies, the insurance shall not be invalidated by any action or inaction of the Company or any Additional Insured as defined under the policy of insurance required under this Section 2.04(a) (other than such Additional Insured) and shall insure each such Additional Insured regardless of any breach or violation of any warranty, declaration or condition contained in such policies by the Company or any other Additional Insured as defined under the policy of insurance required under this Section 2.04(a) (other than such Additional Insured); (C) provide that if such insurance is canceled for any reason, or any substantial change is made in the policies which adversely affect the coverage required herein, or if such insurance is allowed to lapse for nonpayment of premium, such cancellation, change or lapse shall not be effective as to any Additional Insured for 30 days (except in the case of war risk coverage in which event the applicable period shall be seven days or such other period as may be customary) after receipt by each such Additional Insured of written notice from such insurers of such cancellation, change or lapse; (D) provide that no such Additional Insured shall have any obligation or liability for premiums or other payments, if any, in connection with such insurance; (E) provide that the insurers shall waive any rights of subrogation against each such Additional Insured except to the extent that any insured event arises solely from the gross negligence or willful misconduct of such Additional Insured as determined by a final judgment of a court of competent jurisdiction; (F) provide that such insurer shall waive the right of such insurer to any set-off or counterclaim or any other deduction, whether by attachment or otherwise, in respect of any liability of any such Additional Insured; (G) provide that all of the provisions of such policy shall operate in the same manner as if there were a separate policy covering each such Additional Insured; provided that such policies shall not operate to increase any insurer's limit of liability; and (H) be primary, without right of contribution from any other insurance which is carried by any Additional Insured with respect to its interest in the Subject Collateral. (b) Insurance Against Loss or Damage to Subject Collateral. The Company, at its own cost and expense, shall maintain or cause to be maintained in effect, with insurers or reinsurers of recognized responsibility, all-risk coverage, including ground and flight insurance on the Aircraft (with flight, taxiing and ingestion coverages) with respect to any Aircraft, Engines and Parts temporarily removed from the Airframe pending installation of the same or similar Engines, engines, or Parts on the Airframe, including, war-risk and allied perils insurance on the Aircraft in an amount not less than the Agreed Value covering the perils of: 1. war, invasion, acts of foreign enemies, hostilities (whether war be declared or not), civil war, rebellion, revolution, insurrection, martial law, military or usurped power, or attempts at usurpation of power; 2. strikes, riots, civil commotions or labor disturbances; 3. any act of one or more persons, whether or not agents of a sovereign power, for political or terrorist purposes and whether the loss or damage therefrom is accidental or intentional; 4. any malicious act or act of sabotage; 5. confiscation, nationalization, seizure, restraint, detention, appropriation, requisition of title or use by or under the order of any government (whether civil, military or de facto) or public or local authority other than the government or any public or local authority of the country of registration; and 6. hijacking or any unlawful seizure or wrongful seizure or wrongful exercise of control of the Aircraft or crew in flight (including any attempt at such seizure or control) made by any person or persons on board this Aircraft acting without the consent of the Company. Such insurance shall be in such form and amounts and with such retentions as the Company customarily maintains with respect to similar airframes and engines owned or operated by the Company, provided, however, that (1) such retentions shall consist only of industry standard deductibles (determined by the deductible applicable to the aircraft type) and with no self insurance, (2) each Airframe and Engine shall be insured in an amount not less than its Agreed Value and (3) any reinsurance shall be on the same terms as the primary insurance. Any policies carried and maintained in accordance with this Section 3.04(b) and any policies taken out in substitution or replacement for any such policies subject to the terms, conditions and limitations thereof shall: (i) name or be amended to name the then Lenders and the Agent and their respective successors and assigns as additional insureds and to name the Agent as loss payee (the "Loss Payee"); (ii) provide with respect to coverage provided under this Section 3.04(b), that (A) in the event of a loss or damage involving proceeds in excess of $1,000,000, the proceeds in respect of such loss or damage shall be payable to the Agent and (B) the entire amount of any loss or damage involving proceeds in the aggregate of $1,000,000 or less shall be paid to the Company or its order unless an Event of Default or Potential Event of Default then exists and the insurers have been notified thereof by the Agent (in which case such payment shall be made to the Agent); (iii) provide that if such insurance is canceled for any reason or any substantial change is made in the policies which adversely affects the coverage required herein, or if such insurance is allowed to lapse for nonpayment of premium, such cancellation, change or lapse shall not be effective as to any such Additional Insured or the Loss Payee for 30 days (except in the case of war-risk coverage in which event the applicable period shall be seven days or such other period as may be customary) after receipt by each such Additional Insured or the Loss Payee of written notice from such insurer of such cancellation, change or lapse; (iv) provide that, in respect of the interest of any such Additional Insured or the Loss Payee in such policies the insurance shall not be invalidated by any action or inaction of the Company, the Loss Payee or any additional insured as defined under the policy of insurance required by this Section 2.04(b) (other than any action or inaction of the Loss Payee or such Additional Insured, as the case may be) and shall insure the Additional Insured and the Loss Payee regardless of any breach or violation of any warranty, declaration or condition in such policies by the Company or any other Additional Insured as defined under the policy of insurance required under this Section 2.04(b); (v) provide that the insurers shall waive any rights of subrogation against the Loss Payee and such Additional Insureds except to the extent that any insured event arises solely from the gross negligence or willful misconduct of such Additional Insured as determined by a final judgement of a court of competent jurisdiction; (vi) provide that such insurer shall waive any right of such insurer to any set-off or counterclaim or any other deduction, whether by attachment or otherwise, in respect of any liability of any such Additional Insured or Loss Payee; (vii) be primary and without rights of contribution from any other insurance which is carried by any such Additional Insured or the Loss Payee with respect to its interest in the Subject Collateral; (viii) provide that no such Additional Insured or Loss Payee shall have any obligation or liability for premiums or other payments, if any, in connection with such insurance; and (ix)) the reinsurer shall agree that in the event of any valid claim arising under such reinsurance policy the reinsurers shall in lieu of payment to the reinsured, its successors in interest and assigns will pay to the Persons named as Additional Insureds under the original insurance affected by the Company that portion of any loss for which the reinsurers would otherwise be liable to pay the reinsured (subject to proof of loss) it being understood and agreed that any such payment shall fully discharge and release the reinsurer from any and all further liability in connection with such claims. (c) Application of Insurance Proceeds. (i) Except as expressly provided in Section 2.04(c)(ii) or (iii) below, all insurance proceeds (other than proceeds from policies carried by the Agent or the Lenders) received under policies described in Section 2.04(b) will be paid to the Agent except as otherwise provided in Section 2.04(b)(ii) and paid by the Agent to the Company unless an Event of Default or Potential Event of Default exists, in which event such proceeds shall be retained by the Agent. If the Agent retains any such insurance proceeds pursuant to this Section 2.04(c), such proceeds shall, until applied by the Agent as provided in this Section 2.04(c)(i), Section 2.04(c)(ii) or Section 2.04(c)(iii) hereof, be maintained by the Agent in a segregated account and shall, at the Company's request therefor, be invested in Permitted Cash Equivalents. (ii) Insurance proceeds in respect of any Repairable Damage with respect to any Aircraft which is not required by subsection 2.4B(iii)(1) of the Credit Agreement to be excluded from the Borrowing Base shall be retained by the Agent pending repair thereof, and shall be applied by the Agent in payment (or to reimburse the Company) for repairs to the affected Aircraft upon receipt from the Company of an Officer's Certificate annexing copies of invoices relating to such repairs, provided, however, that the Agent shall not so apply any such proceeds during the occurrence and continuance of any Potential Event of Default or Event of Default. Any such insurance proceeds in excess of the total amount required to pay for repair of the affected Aircraft shall, upon certification by the Company to the Agent in an Officer's Certificate that such repair has been completed, be paid by the Agent to the Company provided, however, that the Agent shall not so pay any such insurance proceeds during the occurrence and continuance of any Potential Event of Default or Event of Default. (iii) If an Event of Default shall have occurred and be continuing, the Agent shall apply all insurance proceeds (including proceeds of any earnings on any Permitted Cash Equivalents in which such insurance proceeds have been invested) then on deposit with it pursuant to Section 2.04(c)(i) or Section 2.04(c)(ii) hereof (all such insurance and other proceeds and earnings being herein collectively called "Section 2.04(c) Proceeds") to payment of the Obligations then due. At such time as no Potential Event of Default or Event of Default shall be continuing, any Section 2.04(c) Proceeds remaining on deposit with the Agent shall be (x) applied as provided in Section 2.04(c)(ii), if then applicable, or (y) if Section 2.04(c)(ii) is not then applicable, shall be paid by the Agent to the Company. (iv) If any of the Lenders or the Agent becomes subject to any claim covered by any insurance policy maintained pursuant to this Section 2.04, the Company shall make available any information reasonably required by such Lender or the Agent in connection with such claim. (d) Reports. On or before the date hereof and thereafter annually on or before the scheduled expiration date for such policy, the Company's aviation insurance broker will furnish to the Agent a certificate and letter of undertaking, signed by the Company's independent aviation insurance broker, stating the types of coverage and limits carried and maintained on the Aircraft and certifying that such insurance complies with the terms and conditions of this Section 2.04. The Company will cause its aviation insurance broker to advise the Agent in writing promptly of any default in the payment of any premium and of any other act or omission on the part of the Company in any such case of which it has knowledge and which is likely to cause cancellation of all or any part of any insurance carried by the Company with respect to the Aircraft. The Company will cause such insurance broker to agree to advise the Agent in writing if and when it becomes evident to such broker that any insurance policy carried and maintained on the Aircraft pursuant to this Section 2.04 will not be renewed at the expiration date. The Company will also cause such insurance broker to deliver to the Agent, on or prior to the date of expiration of any insurance policy referenced in a previously delivered certificate of insurance, a new certificate of insurance, confirming to such parties that such insurance as certified on the date thereof continues in full force and effect. If the Company shall fail to maintain insurance as required hereby, the Agent may, at its option, provide such insurance, and in such event, the Company shall, upon demand, reimburse the Agent for the cost of such insurance; provided, however, that no exercise of said option shall affect the provisions of this Security Agreement, including the provisions that failure by the Company to maintain the prescribed insurance shall constitute an Event of Default, or otherwise constitute a waiver of any other rights the Agent may have against the Company. (e) Notice of Proceeds. The Company shall promptly notify the Agent upon a Responsible Officer of the Company obtaining actual knowledge thereof of the occurrence of an event of loss or damage to any Aircraft which is reasonably expected to result in the receipt of insurance proceeds reasonably estimated by the Company to exceed $1,000,000. SECTION 2.05. Infection. At reasonable times and upon reasonable notice, the Agent or its authorized representative may, at their own expense (unless an Event of Default then exists or a Potential Event of Default arising under the maintenance requirements of this Security Agreement, in which case the reasonable expenses of such inspection shall be paid by the Company or unless subsection 2.10 of the Credit Agreement provides that such inspection shall be at the expense of the Company), inspect the Aircraft and inspect of the books and records and FAA-required books and records of the Company in each case relating to the maintenance of the Aircraft. Any such inspection of the Aircraft shall be a visual, walk-around inspection (including on-board inspection) and may include inspection of areas exposed by any open panels, bays or the like, but shall not include opening any panels, bays or the like without the express written consent of the Company; provided that no exercise of such inspection right shall interfere with the normal operation of the Aircraft by, or the business of, the Company. The Agent shall have no duty to make any such inspection nor shall it incur any liability or obligation by reason of not making any such inspection. SECTION 2.06. Further Assurances. (a) The Company agrees from time to time, at its sole expense, to promptly execute and deliver all further instruments and documents, and take all further action, that the Agent may request, in order to perfect and protect any security interest granted or purported to be granted hereby or to enable the Agent to exercise and enforce its rights and remedies hereunder with respect to any of the Subject Collateral. Without limiting the generality of the foregoing, such further actions shall include executing and delivering such amendments or supplements to the schedules to this Security Agreement, executing and filing such financing or continuation statements, or amendments thereto, executing, filing and recording such documents or instruments with the Federal Aviation Administration, and executing and filing such other instruments or notices, in each case as the Agent on behalf of the Lenders may reasonably request, in order to perfect and preserve the security interest granted or purported to be granted hereby. (b) The Company hereby authorizes the Agent to file one or more financing or continuation statements or similar instruments or documents, and amendments thereto, relative to all or any part of the Subject Collateral without the signature of the Company where permitted by law. SECTION 2.07. Recording and Filing; Opinions of Counsel. The Company will bear the expense of and be responsible for recording and re-recording, registering and re-registering and filing and re-filing this Security Agreement and each and every Security Agreement Supplement and such other instruments from time to time as may be reasonably requested by the Agent in all such jurisdictions and offices as the Agent shall from tine to time require in order that (a) the Lien hereof be and continues to be a first priority Lien on all of the Subject Collateral to the fullest extent permitted under applicable law, subject to Permitted Liens, (b) all of the Subject Collateral is and remains security for the Obligations, and (c) the rights and remedies of the Agent may be established, confirmed, maintained and protected; and the Company will furnish to the Agent evidence satisfactory to the Agent of every such recording, registering and filing which is not filed, recorded or registered by the Agent. The foregoing includes, without limitation, the execution and delivery by the Company of all documents, financing statements and continuation statements deemed reasonably necessary by the Agent to perfect the Agent's rights as secured party. The Company, at its own cost and expense, shall on the date of this Security Agreement cause this Security Agreement to be duly filed for recordation with the FAA and shall make such other filings to perfect the Lien of this Security Agreement against the Subject Collateral as shall be reasonably requested by the Agent. The Company will furnish to the Agent an opinion of counsel reasonably satisfactory to the Agent or other evidence reasonably satisfactory to the Agent to the effect that such filings or refilings and such recordations or re-recordations have been duly accomplished and as to any Liens of record against the Aircraft or any Engine in the office where such filings or refilings or recordations or re-recordations have been accomplished. [SECTION 2.08. Section 1110. TO THE EXTENT PROVIDED THEREBY (OR TO THE FULLEST EXTENT IT MAY LAWFULLY SO AGREE, WHETHER OR NOT PROVIDED THEREBY), THE COMPANY HEREBY AGREES THAT ANY RIGHT OF THE AGENT TO TAKE POSSESSION OF THE SECTION 1110 PROPERTY IN COMPLIANCE WITH THE PROVISIONS OF THIS SECURITY AGREEMENT AND IN ACCORDANCE WITH SECTION 1110 OF TITLE 11 OF THE UNITED STATES CODE OR ANY SIMILAR PROVISION OF ANY SUPERSEDING STATUTE, AS AMENDED FROM TIME TO TIME, SHALL NOT BE AFFECTED BY THE PROVISIONS OF SECTIONS 362, 363 OR 1129 OF SAID TITLE, OR OTHER ANALOGOUS PART OF ANY SUPERSEDING STATUTE, AS AMENDED FROM TIME TO TIME, AND ACCORDINGLY, IT IS THE INTENTION OF THE PARTIES HERETO THAT WITH RESPECT TO THE SECTION 1110 PROPERTY, THIS SECURITY AGREEMENT BE AFFORDED THE BENEFITS OF SAID SECTION 1110.]** (a) [SECTION 2.09. First Placed in Service. Schedule I hereto specifically identifies, to the extent known to the Company with respect to Aircraft not first placed in service by the Company, if the Aircraft was first placed in service after October 22, 1994 or was acquired by the Company with the proceeds of the Credit Agreement ("Section 1110 Property"). Each Security Agreement Supplement adding a Replacement Engine to be subject to the Lien of this Security Agreement shall also identify to the extent known to the Company whether such Engine was first placed in service after October 22, 1994.]** SECTION 2.10. Power of Attorney. The Company hereby irrevocably appoints the Agent as the Company's attorney-in-fact and agent to the extent permitted by law, effective on or after the acceleration of the Loans, but prior to the Agent obtaining physical possession of - ---------- ** The Company agrees that this Security Agreement will grant to the Agent the benefits of Section 1110 if such Section applies to the Airframe, any Engine or any Replacement Engine. ** The Company agrees that this Security Agreement will grant to the Agent the benefits of Section 1110 if such Section applies to the Airframe, any Engine or any Replacement Engine. the Subject Collateral, in the Company's name and without any action on the part of the Company to do, at the Agent's option, any act the Agent reasonably believes necessary to protect the interests of the Agent in the Subject Collateral. The appointment of the Agent and the rights and powers in connection therewith, being coupled with an interest and with full power of substitution and resubstitution for the Company, are and shall remain irrevocable until all of the Obligations have been fully paid and performed and the Commitments of the Lenders under the Credit Agreement have expired or been terminated. SECTION 2.11. Indemnification. The Company shall assume liability for and will indemnify, protect, save, and keep harmless the Agent and each of the Lenders, and their respective agents, employees, successors and permitted assigns (collectively, the "Indemnified Parties") from and against any and all liabilities, losses, damages, taxes, claims, actions, suits, costs, demands and/or expenses of whatsoever kind, including, without limitation, legal expenses, imposed on, incurred by, or asserted against the Agent, the Company, the Subject Collateral (or any part thereof or interest therein), arising out of the [purchase]***, ownership, delivery, possession, use, operation, condition, performance, quality, suitability, airworthiness, maintenance, modification, registration, loss, confiscation, seizure, requisition, or lease of the Aircraft (collectively, the "Indemnified Events"). Notwithstanding the foregoing, the Company shall not indemnify an Indemnified Party in respect of (i) any Indemnified Events suffered or incurred after the release of the Lien of this Security Agreement pursuant to the terms hereof, (ii) Indemnified Events that consist of fees, costs or expenses which such Indemnified Party has expressly agreed to pay in any provision of this Security Agreement or constitute ordinary and usual operating or overhead expenses of an Indemnified Party (excluding, without limitation, costs and expenses of any outside counsel, consultant or agent), (iii) Indemnified Events arising from the gross negligence or willful misconduct of such Indemnified Party, (iv) any Indemnified Events arising out of any breach by the Agent of Section 2.12 hereof, (v) any tax arising as a result of a voluntary transfer of any Indemnified Party's interest pursuant to Section 9.1 of the Credit Agreement provided that no Event of Default exists at the time of such transfer, (vi) taxes, withholdings, imposts or duties imposed on, based on or measured by the gross or net income, receipts, maximum tax, profits, gains, capital, franchise, excess profits or net worth of an Indemnified Party other than, in each case, resulting from the activities or presence of the Company in the taxing jurisdiction or the use, location or registration of the Aircraft (or any part thereof) in such taxing jurisdiction, (vii) taxes on items of tax preference or any minimum tax imposed by the federal government of the United States, (viii) interest, penalties, fines or additions to taxes that would not have been imposed but for any failure to file any tax return or information return in a timely and proper manner after timely notice by the Company of such filing requirement and provision by the Company (at the Company's expense) of all properly completed forms necessary in connection therewith and (ix) any tax imposed as a result of a connection between an Indemnified Party and the jurisdiction imposing such taxes, including, without limitation, engaging or having engaged in business in, having or having had an office, branch or permanent establishment in, or being or having been a citizen or resident of, or present - ---------- *** Subject to negotiation on a case by case basis. in, or incorporated or created in or under the laws of such jurisdiction other than as a result of a connection arising from this transaction. Each Indemnified Party shall file its tax returns and deal with taxing authorities in good faith, and will honor all reasonable requests from the Company to file, or provide the Company with, such information (but excluding information such Indemnified Party considers confidential) as is necessary to complete forms or other documentation (in each case, prepared by the Company at its sole expense) as shall enable such Indemnified Party or the Company to claim a reduced rate of tax or exemption from tax with respect to any taxes subject to payment or indemnification by the Company hereunder to which it may be entitled. If the Company is or may be required to make any payment under this Section 2.11, any relevant Indemnified Party shall, at the reasonable request of the Company, consult with the Company in good faith to consider what action may be taken to resist payment of the amount claimed. Each indemnity pursuant to this Section 2.11 shall be in the amount which, after taking into account all taxes required to be paid by the Agent as a result of the receipt or accrual of such amount, shall be equal to the amount of the indemnity then due. The Company's obligations under this Section 2.11 shall survive the expiration or termination of this Security Agreement and the release of the Lien hereof from any or all of the Subject Collateral. SECTION 2.12. Use and Possession. Notwithstanding the terms of any provision contained in this Security Agreement or the Credit Agreement, except as provided in Section 3.01(e) of this Security Agreement, the Company shall have the exclusive right to use and possess the Aircraft, to collect, retain, use and enjoy all rents and accounts and to exercise its right, title and interest in contracts, leases, licenses, permits and governmental approvals subject at all times to (a) the right of the Agent to receive insurance proceeds pursuant to Section 2.04(c) hereof, (b) the applicable restrictions and limitations contained in Section 5.4 of the Credit Agreement and (c) such use, possession, retaining, enjoyment or exercise not otherwise constituting an Event of Default. ARTICLE III EVENTS OF DEFAULT AND REMEDIES SECTION 3.01. Remedies, Obtaining the Aircraft Upon Default. The Company agrees that, if the Loans have been accelerated, then, subject to any mandatory requirements of applicable law then in effect, the Agent, in addition to any rights now or hereafter existing under applicable law, shall have all rights as a secured creditor under the UCC in all relevant jurisdictions and may: (a) to the extent permitted by law, personally, or by agents or attorneys, immediately take possession of the Aircraft or any part thereof, from the Company with or without notice or process of law, and for that purpose may enter upon the Company's premises where all or any part of the Aircraft is located and remove the same; and (b) instruct the obligor or obligors on any agreement, instrument or other obligation relating to the Aircraft to make any payment included in the Subject Collateral required by the terms of such instrument or agreement directly to the Agent; and (c) sell or assign, or direct the Company to sell or assign, the Aircraft or any part thereof, and take possession of the proceeds of any such sale or assignment; and (d) take possession of the Aircraft or any part thereof, by directing the Company in writing to deliver the same to the Agent at any place or places designated by the Agent, in which event the Company shall at its own expense forthwith fly or cause to be flown all or any part of the Aircraft to such airport or airports in the United States so designated by the Agent and there delivered to the Agent, and the Company shall pay all reasonable and necessary expenses to (i) store and keep all or any part of the Aircraft so delivered to the Agent at such place or places pending further action by the Agent as provided in Section 4.02, and (ii) while all or any part of the Aircraft shall be so stored and kept, provide guards and maintenance services as shall be necessary to protect the same and to preserve and maintain them in good condition; and (e) revoke all or any of the rights of the Company provided for pursuant to Section 2.12 of this Security Agreement by written notice to the Company indicating which rights are revoked; it being understood that the Company's obligation so to deliver the Aircraft or any part thereof is of the essence of this Security Agreement and that, accordingly, upon application to a court of equity having jurisdiction, the Agent shall be entitled to a decree requiring specific performance by the Company of said obligation. SECTION 3.02. Remedies; Disposition of the Aircraft. (a) The Aircraft, or any part thereof repossessed by the Agent under or pursuant to Section 4.01, whether or not so repossessed by the Agent, may be sold, assigned, leased or otherwise disposed of under one or more contracts or as an entirety, and without the necessity of gathering at the place of sale the property to be sold, and in general in such manner, at such time or times, at such place or places and on such terms as the Agent may, in compliance with any mandatory requirements of applicable law, determine to be commercially reasonable. The Aircraft or any part thereof may be sold, leased or otherwise disposed of, in the condition in which the same existed when taken by the Agent or after any overhaul or repair which the Agent shall determine to be commercially reasonable. Any such disposition which shall be a private sale or other private proceedings permitted by such requirements shall be made upon not less than 10 days' written notice to the Company specifying the time at which such disposition is to be made and the intended sale price or other consideration therefor. Any such disposition which shall be a public sale permitted by such requirements shall be made upon not less than 10 days' written notice to the Company specifying the time and place of such sale. To the extent permitted by any such requirement of law, the Agent and the Lenders may bid for and become the purchaser of the Aircraft or any part thereof, offered for sale in accordance with this Section without accountability to the Company (except to the extent of surplus money received as provided in Section 3.03) and may bid the amount of the Obligations to be applied as credits against such purchase. If, under mandatory requirements of applicable law, the Agent shall be required to make disposition of the Aircraft or any part thereof within a period of time which does not permit the giving of notice to the Company as hereinabove specified, the Agent need give the Company only such notice of disposition as shall be required by such mandatory requirements of applicable law. Any sale of, or the grant of options to purchase, or any other realization upon, the Aircraft or any part thereof shall operate to divest all right, title, interest, claim and demand, either at law or in equity, of the Company therein and thereto, and shall be a perpetual bar both at law and in equity against the Company and against any and all Persons claiming or attempting to claim the Aircraft so sold, optioned or realized upon, or any part thereof, from, through and under the Company but without limitation of the Company's rights under Section 3.03 third hereof. At the request of the Agent, the Company shall deliver such instruments of title or other instruments to ratify or document such sale but such instruments shall not be necessary to make such sale final or binding. (b) The Company covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any appraisement, valuation, stay, extension or redemption law wherever enacted, nor at any time hereafter in force in any locality where any property subject to the Lien hereof may be situated, in order to prevent, hinder or delay the enforcement or foreclosure of this Security Agreement or the execution of any power granted herein to the Agent, or the absolute sale of the Aircraft, or any part thereof, or the final and absolute putting into possession thereof, immediately after such sale, by any purchaser at any sale under this Section 3.02 but without limitation of the Company's rights under Section 3.03 third hereof; and the Company, so far as it now or thereafter lawfully may, hereby waives the benefit of all such laws. The Company waives, to the extent that it lawfully may, all right to have the property in the Subject Collateral marshalled upon any foreclosure hereof, and agrees that any court having jurisdiction to foreclose this Security Agreement may order the sale of the Subject Collateral as an entirety. If the Agent seeks to take possession of any or all of the Subject Collateral or avail itself of any provisional remedy by court process, the Company hereby irrevocably waives (to the extent it may lawfully do so) any bonds and any surety or security required by any statute, court rule or otherwise as an incident to such possession, or remedy, and waives any demand for possession prior to the commencement of any suit or action to recover. (c) if the Loans are accelerated, at the request of the Agent, the Company shall promptly execute and deliver to the Agent such instruments of title and other documents as the Agent may deem necessary or advisable to enable the Agent or an agent or representative designated by the Agent, at such time or times and place or places as the Agent may specify, to obtain possession or control of all or any part of the Subject Collateral. To the extent permitted by law, if the Company shall for any reason fail to execute and deliver such instruments and documents after such request by the Agent, the Agent may (x) obtain a judgment conferring on the Agent the right to immediate possession and/or control and requiring the Company to deliver such instruments of title and other documents as the Agent may deem necessary or advisable to enable the Agent or an agent or representative designated by the Agent, at such time or times and place or places as the Agent may specify, to obtain possession and/or control of all or any part of the Subject Collateral, to the entry of which judgment the Company hereby specifically consents. SECTION 3.03. Application of Proceeds. Except as may otherwise be required by law, any moneys or property actually received by the Agent pursuant to the exercise of any rights or remedies referred to in Article III shall (subject to the determination of the Agent as to the incurrence of costs and expenses appropriate and the use of such moneys and property in connection with the exercise of such rights or remedies and as to the manner of such exercise) be applied in the following order: first, to the payment of costs and expenses incurred in the enforcement of rights and remedies under this Security Agreement; second, to the payment of all of the Obligations (except for such Obligations that shall have been paid pursuant to first item of this Section 3.03), ratably according to the then unpaid amounts thereof, without preference or priority of any kind among such various Obligations; and third, the remainder, if any, to the Company, its successors or assigns, to such Person as the Agent may be legally required to be paid to or as a court of competent jurisdiction may direct. SECTION 3.04. Remedies Cumulative. Each and every right, power and remedy hereby specifically given to the Agent shall be in addition to every other right, power and remedy specifically given under this Security Agreement or the Credit Agreement and other Loan Documents or now or hereafter existing at law or in equity, or by statute and each and every right, power and remedy whether specifically herein given or otherwise existing may be exercised from time to time or simultaneously and as often and in such order as may be deemed expedient by the Agent. All such rights, powers and remedies shall be cumulative and the exercise or the beginning of exercise of one shall not be deemed a waiver of the right to exercise of any other or others. No delay or omission of the Agent in the exercise of any such right, power or remedy shall impair any such right, power or remedy or shall be construed to be a waiver of any Event of Default or an acquiescence therein. ARTICLE IV AGENT SECTION 4.01. Agent As provided in Section 8 of the Credit Agreement, each Lender has appointed The Industrial Bank of Japan, Limited, as its Agent for purposes of this Security Agreement. In such capacity, The Industrial Bank of Japan, Limited, shall be entitled to all of the rights and benefits accorded the Agent by Section 8 of the Credit Agreement. Following the payment in full of all Obligations and the termination or expiration of the Loan Documents, the provisions of Section 8 of the Credit Agreement shall be deemed to continue in full force and effect for the benefit of the Agent under this Security Agreement. For the avoidance of doubt, nothing in this Section 4.01 is intended to create any liability or obligation on the Company. ARTICLE V MISCELLANEOUS PROVISIONS SECTION 5.01. Notices. All notices and communications to be given under this Security Agreement shall be given in the manner provided in the Credit Agreement. SECTION 5.02. Waiver. To the extent permitted by applicable law, no failure on the part of the Agent or any Lender to exercise and no delay in exercising, and no course of dealing with respect to, any right, remedy, power or privilege under this Security Agreement shall operate as a waiver of such right, remedy, power or privilege, nor shall any single or partial exercise of any right, remedy, power or privilege under this Security Agreement preclude any other or further exercise of any such right, remedy, power or privilege or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges provided in this Security Agreement are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law. SECTION 5.03. Expenses Etc. The Company agrees to pay or to reimburse the Agent and the Lenders for all reasonable costs and expenses (including reasonable attorney's fees and expenses) that may be incurred by the Agent or the Lenders for any expense or loss incurred in connection with any Event of Default, including, but not limited to, any effort to enforce any of the provisions of, or any of the obligations of the Company in respect of, this Security Agreement and the other Loan Documents (including in any bankruptcy, workout or similar proceeding). SECTION 5.04. Amendments, Etc. To the extent permitted by applicable law, any provision of this Security Agreement may be modified, supplemented or waived only by an instrument in writing duly executed by the Company and the Agent (after such consent as may be required, if any, by the Lenders pursuant to the Credit Agreement). Any such modification, supplement or waiver shall be for such period and subject to such conditions as shall be specified in the instrument effecting the same and shall be binding upon the Agent, the Lenders and the Company, and any such waiver shall be effective only in the specific instance and for the purposes for which given. SECTION 5.05. Successors and Assigns. This Security Agreement shall be binding upon and inure to the benefit of the Company, the Agent, the other Lenders and their respective successors and permitted assigns. Except as provided in subsections 6.6(v), 6.10 and 6.12 of the Credit Agreement, the Company shall not assign or transfer its rights under this Security Agreement without the prior written consent of the Agent. SECTION 5.06. Survival. All representations and warranties made in this Security Agreement or in any certificate or other document delivered pursuant to or in connection with this Security Agreement shall survive the execution and delivery of this Security Agreement or such certificate or other document (as the case may be) or any deemed repetition of any such representation or warranty. SECTION 5.07. Severability. To the extent permitted by applicable law, any provision of this Security Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions of this Security Agreement, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. SECTION 5.08. Captions. The captions and section headings appearing in this Security Agreement are included solely for convenience of reference and are not intended to affect the interpretation of any provision of this Security Agreement. SECTION 5.09. Counterparts. This Security Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument and any of the parties to this Security Agreement may execute this Security Agreement by signing any such counterpart. SECTION 5.10. GOVERNING LAW. THIS SECURITY AGREEMENT SHALL BE DELIVERED IN THE STATE OF NEW YORK AND GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. IN WITNESS WHEREOF, the Company and the Agent have caused this instrument to be duly executed as of the day and year first above written. AMERICA WEST AIRLINES, INC., a Delaware corporation By: ___________________________ Name: Title: THE INDUSTRIAL BANK OF JAPAN, LIMITED, as Agent By: ___________________________ Name: Title: SCHEDULE I to Aircraft Security Agreement The following aircraft and the aircraft engines listed below, which aircraft, together with the engines listed therewith below, shall constitute a single "Aircraft" as said term is defined in the Security Agreement to which this Schedule I is attached and made a part thereof: Airframe [Description] UNITED STATES REGISTRATION NUMBER: __________________ MANUFACTURER'S SERIAL NO.: ________________ Engines ___________________ ENGINES ENGINE SERIAL NOS.: _______________ (each of which engines has 750 or more rated takeoff horsepower or the equivalent thereof) APPENDIX A to Aircraft Security Agreement SUPPLEMENTAL AIRCRAFT SECURITY AGREEMENT SUPPLEMENTAL AIRCRAFT SECURITY AGREEMENT dated as of ________________, 19__ from AMERICA WEST AIRLINES, INC., a Delaware corporation (the "Company"), whose mailing address is 111 West Rio Salado Parkway, Tempe, Arizona 85281, to The Industrial Bank of Japan, Limited, as Agent under the Amended and Restated Revolving Credit Agreement referred to below (together with its successors and assigns in such capacity, the "Agent") for the benefit and on behalf of itself as such Agent and the lenders (the "Lenders", such term to include the Issuing Bank as defined in the Credit Agreement) from time to time party to that certain Amended and Restated Revolving Credit Agreement dated as of December , 1999 (as the same may be amended or waived from time to time the "Credit Agreement") among the Company, the Lenders and the Agent. WHEREAS, the Company has heretofore executed and delivered to the Agent an Aircraft Security Agreement dated as of _____________________ (the "Security Agreement"), covering an aircraft of the Company (terms used in this instrument having the meanings assigned thereto in the Security Agreement); WHEREAS, the Security Agreement has been duly recorded with the FAA on __________________ and assigned Conveyance No. __________________ pursuant to the Act; WHEREAS, this Supplemental Security Agreement relates to the aircraft engine described in Schedule I hereto; and WHEREAS, the Security Agreement provides for the execution and delivery from time to time of Supplemental Security Agreements, each substantially in the form hereof, for the purpose of subjecting a Replacement Engine to the Lien of the Security Agreement. NOW, THEREFORE, as contemplated by the Security Agreement, the Company hereby grants to the Agent for its benefit and the benefit of the Lenders a security interest in the property described in Schedule I hereto as security for the due and prompt payment of the Obligations. This Supplemental Security Agreement shall be construed as supplemental to the Security Agreement and shall form a part thereof; and the Security Agreement is hereby incorporated by reference herein to the same extent as if fully set forth herein and is hereby ratified, approved and confirmed in all respects. IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Security Agreement to be duly executed, as of the day and year first above written. AMERICA WEST AIRLINES, INC. a Delaware corporation By: ___________________________ Name: Title: THE INDUSTRIAL BANK OF JAPAN, LIMITED, as Agent By: ___________________________ Name: Title: SCHEDULE I to Supplemental Security Agreement The following aircraft and the aircraft engines listed below, which aircraft, together with the engines listed therewith below, shall constitute a single "Aircraft" as said term is defined in the Supplemental Security Agreement to which this Schedule I is attached and made a part thereof: Airframe [Description] UNITED STATES REGISTRATION NUMBER: ______________ MANUFACTURER'S SERIAL NO.: ______________ Engines ____________________________ ENGINES ENGINE SERIAL NOS.: ______________ (each of which engines has 750 or more rated takeoff horsepower or the equivalent thereof) Exhibit B EXECUTION VERSION RECEIVABLES SECURITY AGREEMENT THIS RECEIVABLES SECURITY AGREEMENT (this "Receivables Security Agreement") is made and entered into as of January 18, 2002 by AMERICA WEST AIRLINES, INC., a Delaware corporation (the "Debtor"), and THE INDUSTRIAL BANK OF JAPAN, LIMITED, as agent for the Lenders (as defined below) (in such capacity, the "Agent" or "Secured Party"). All capitalized terms used but not otherwise defined herein or pursuant to Section 1 hereof shall have the respective meanings assigned thereto in the Term Loan Agreement (as defined below). W I T N E S S E T H: WHEREAS, The Industrial Bank of Japan, Limited, as Agent (the "Agent") for each of the lenders (the "Lenders" and collectively with the Agent, the "Secured Parties") now or hereafter party to the Term Loan Agreement (as defined below) have agreed to provide to the Debtor a term loan facility pursuant to the Amended and Restated Term Loan Agreement dated as of January , 2002 (as from time to time amended, revised, modified, supplemented or amended and restated, the "Term Loan Agreement") by and among the Debtor, the Agent and the Lenders from time to time party thereto (the "Lenders"); and WHEREAS, as collateral security for payment and performance by the Debtor of its Obligations, and the payment and performance of its obligations and liabilities (whether now existing or hereafter arising) under the Term Loan Agreement or under any of the other Loan Documents to which it is now or hereafter becomes a party (collectively, the "Secured Obligations"), the Debtor is willing to grant to the Agent for the benefit of the Secured Parties a security interest in certain of its personal property and assets pursuant to the terms of this Receivables Security Agreement; and WHEREAS, the Secured Parties are unwilling to maintain the Loans to the Debtor under the Term Loan Agreement unless the Debtor enters into this Receivables Security Agreement; NOW, THEREFORE, in order to induce the Secured Parties to maintain the Loans under the Term Loan Agreement, and in further consideration of the premises and the mutual covenants contained herein, the parties hereto agree as follows: 1. CERTAIN DEFINITIONS. Terms used in this Receivables Security Agreement, not otherwise expressly defined herein or in the Term Loan Agreement, as the case may be, and for which meanings are provided in the Uniform Commercial Code of the State of New York (the WUCC"), shall have such meanings. 2. GRANT OF SECURITY INTEREST. Notwithstanding anything to the contrary contained herein, it is understood and agreed that the Receivables Collateral (as hereinafter defined) shall only include those receivables set forth on Schedule 9(a) hereto, as such schedule may be amended, supplemented or restated from time to time by the Debtor, which categories include, among others, the Debtor's charter services accounts receivable, ground handling accounts receivable, accounts receivable with respect to certain promotions (including, without limitation, frequent flyer promotions), in each case as set forth on such Schedule 9(a). Subject to occurrence of the conditions set forth in Section 3(d) hereof (and effective only if such conditions occur), the Debtor hereby grants to the Secured Party for the benefit of the Secured Parties as collateral security for the payment, performance and satisfaction of all of the Debtor's Secured Obligations a continuing first priority security interest in and to, and collaterally assigns to the Secured Party for the benefit of the Secured Parties, the following property of the Debtor or in which the Debtor has or may have or acquire an interest or the power to transfer rights therein, whether now owned or existing or hereafter created, acquired or arising and wheresoever located, including the following: (a) All accounts, and including accounts receivable, contracts, bills, acceptances, choses in action, and other forms of monetary obligations at any time owing to the Debtor arising out of property sold, leased, licensed, assigned or otherwise disposed of or for services rendered or to be rendered by the Debtor, and all of the Debtor's rights with respect to any property represented thereby, whether or not delivered, property returned by customers and all rights as an unpaid vendor or lienor, including rights of stoppage in transit and of recovering possession by proceedings including replevin and reclamation (collectively referred to hereinafter as "Accounts"), in each case only to the extent that such Accounts arise from, or are related to, the specified accounts receivable set forth on Schedule 9(a); (b) All chattel paper, including tangible chattel paper, electronic chattel paper, or any hybrid thereof (collectively referred to hereinafter as "Chattel Paper"), in each case only to the extent that such Chattel Paper arises from, or is related to, the specified accounts receivable set forth on Schedule 9(a); (c) All instruments, including all promissory notes (collectively referred to hereinafter as "Instruments"), in each case only to the extent that such Instruments arise from, or are related to, the specified accounts receivable set forth on Schedule 9(a); (d) All rights to payment or performance under letters of credit including rights to proceeds of letters of credit ("Letter-of-Credit Rights"), and all guaranties, endorsements, Liens, other contingent obligations or supporting obligations of any Person securing or supporting the payment, performance, value or liquidation of any of the foregoing (collectively, with Letter-of-Credit Rights, referred to hereinafter as "Supporting Obligations"), in each case only to the extent that such Supporting Obligations arise from, or are related to, the specified accounts receivable set forth on Schedule 9(a); (e) All books and records relating to any of the foregoing (including customer data, credit files, ledgers, computer programs, printouts, and other computer materials and records (and all media on which such data, files, programs, materials and records are or may be stored)); and 2 (f) All proceeds, products and replacements of, accessions to, and substitutions for, any of the foregoing, including without limitation proceeds of insurance policies insuring any of the foregoing. All of the property and interests in property described in subsections (a) through (f) are herein collectively referred to as the "Receivables Collateral." Notwithstanding the foregoing, "Receivables Collateral" shall not include any general intangibles or other rights arising under any contracts, instruments, licenses or other documents as to which the grant of a security interest would (i) constitute a violation of a valid and enforceable restriction in favor of a third party on such grant, unless and until any required consents shall have been obtained or (ii) give any other party to such contract, instrument, license or other document the right to terminate its obligations thereunder. 3. PERFECTION; CONDITIONS TO GRANT OF SECURITY INTEREST. (a) At the time of execution of this Receivables Security Agreement, the Debtor shall have furnished the Secured Party with financing statements in form, number and substance suitable for filing, and duly authorized by the Debtor, sufficient under applicable law, and satisfactory to the Secured Party in order that upon the filing of the same and occurrence of the conditions set forth in Section 3(d) hereof the Secured Party shall have a duly perfected security interest in all Receivables Collateral in which a security interest can be perfected by the filing of financing statements; (b) Upon the occurrence of the conditions set forth in Section 3(d) hereof, to the extent expressly required by the terms hereof, or otherwise as the Secured Party may reasonably request, the Debtor shall furnish the Secured Party with properly executed issuer acknowledgments of the Secured Party's interest in Letter-of-Credit Rights, and evidence of the placement of a restrictive legend on tangible chattel paper (and the tangible components, if any, of electronic Chattel Paper), and take appropriate action reasonably acceptable to the Secured Party sufficient to establish the Secured Party's control of electronic Chattel Paper (and the electronic components of hybrid Chattel Paper), as appropriate, with respect to Receivables Collateral in which either (i) a security interest can be perfected only by control or such restrictive legending, or (ii) a security interest perfected by control or accompanied by such restrictive legending shall have priority as against a lien creditor, a purchaser of such Receivables Collateral from the Debtor, or a security interest perfected by Persons not having control or not accompanied by such restrictive legending, in each case in form and substance reasonably acceptable to the Secured Party and sufficient under applicable law so that the Secured Party shall have a security interest in all such Receivables Collateral perfected by control; (c) Upon the occurrence of the conditions set forth in Section 3(d) hereof, to the extent expressly required by the terms hereof, or otherwise as the Secured Party may reasonably request, the Debtor shall deliver to the Secured Party or, if the Secured Party shall specifically consent in each instance, an agent or bailee of the Secured Party, possession of all Receivables Collateral with respect to which either a security interest can be perfected only by possession or a security interest perfected by possession shall have priority as against Persons not having possession, and including in the case of 3 Instruments, duly executed endorsements affixed thereto in form and substance reasonably acceptable to the Secured Party and sufficient under applicable law so that the Secured Party shall have a security interest in all such Receivables Collateral perfected by possession; subject in each case only to Permitted Liens (as defined in the next sentence). Permitted Liens, as used in this Receivables Security Agreement, shall mean (i) the Lien of this Receivables Security Agreement, (ii) Liens for taxes, assessments or governmental charges payable by the Debtor either not delinquent for a period of more than thirty (30) days or being contested in good faith by appropriate proceedings so long as during such thirty (30) day period there is not any material risk of the forfeiture or loss of any Receivables Collateral or any interest therein or during such proceeding there is not any material risk of the forfeiture or loss of the Receivables Collateral or any interest therein due to an effective stay or otherwise, (iii) any Lien for the fees or charges of any airport or air navigation authority or any materialmen's, repairmen's, landlord's, workmen's, supplier's and other like Liens arising in the ordinary course of business, for amounts the payment of which is not overdue for a period of more than thirty (30) days or is being contested in good faith by appropriate proceedings so long as during such thirty (30) day period there is not any material risk of the forfeiture or loss of any Receivables Collateral or any interest therein or during such proceeding there is not any material risk of the forfeiture or loss of the Receivables Collateral or any interest therein due to an effective stay or otherwise, (iv) Liens which the Secured Party has specifically permitted in writing, (v) Liens (other than Liens for taxes) arising out of judgments or awards against the Debtor which are being appealed so long as during such thirty (30) day period there is not any material risk of the forfeiture or loss of any Receivables Collateral or any interest therein or during such proceeding there is not any material risk of the forfeiture or loss of the Receivables Collateral or any interest therein due to an effective stay or otherwise, and (vi) other rights of the Debtor and the Secured Party provided in this Receivables Security Agreement. All financing statements (including all amendments thereto and continuations thereof), control agreements, acknowledgments and other documents, electronic identification, restrictive legends, and instruments furnished in connection with the creation, enforcement, protection, perfection or priority of the Secured Party's security interest in Receivables Collateral, including such items as are described above in this Section 3, are sometimes referred to herein as "Perfection Documents." The delivery of possession of items of or evidencing Receivables Collateral, causing other Persons to execute and deliver Perfection Documents as appropriate, the filing or recordation of Perfection Documents, the establishment of control over items of Receivables Collateral, and the taking of such other actions as may be necessary or advisable in the determination of the Secured Party to create, enforce, protect, perfect, or establish or maintain the priority of, the security interest of the Secured Party in the Receivables Collateral is sometimes referred to herein as "Perfection Action"; and (d) The security interest provided for in this Receivables Security Agreement shall be granted effective on the earlier of (i) the occurrence of an Event of Default and (ii) a Triggering Event (as defined in the next sentence). A Triggering Event shall occur at any time when the aggregate amount of Receivables Collateral, as set forth on Schedule 9(a) hereto (as such Schedule 9(a) is amended, restated, updated and revised from time to time) is $6,000,000 or less. 4 4. MAINTENANCE OF SECURITY INTEREST; FURTHER ASSURANCES. (a) The Debtor will from time to time at its own expense, deliver specific assignments of Receivables Collateral or such other Perfection Documents, and take such other or additional Perfection Action, as may be required by the terms of the Loan Documents or as the Secured Party may reasonably request in connection with the administration or enforcement of this Receivables Security Agreement or related to the Receivables Collateral or any part thereof in order to carry out the terms of this Receivables Security Agreement, to perfect, protect, maintain the priority of or enforce the Secured Party's security interest in the Receivables Collateral, subject only to Permitted Liens, or otherwise to better assure and confirm to the Secured Party its rights, powers and remedies. Without limiting the foregoing, upon the occurrence and during the continuance of an Event of Default, the Debtor hereby irrevocably authorizes the Secured Party to file (with, or to the extent permitted by applicable law, without the signature of the Debtor appearing thereon) financing statements (including amendments thereto and initial financing statements in lieu of continuation statements) or other Perfection Documents (including copies thereof) showing the Debtor as "debtor" at such time or times and in all filing offices as the Secured Party may from time to time reasonably determine to be necessary or advisable to perfect or protect the rights of the Secured Party, or otherwise to give effect to the transactions herein contemplated. (b) With respect to any and all Receivables Collateral, the Debtor agrees to do and cause to be done all things reasonably necessary to perfect, maintain the priority of and keep in full force the security interest granted in favor of the Secured Party, including, but not limited to, the prompt payment upon demand therefor by the Secured Party of all fees and expenses (including documentary stamp, excise or intangibles taxes) incurred in connection with the preparation, delivery, or filing of any Perfection Document or the taking of any Perfection Action to perfect, protect or enforce a security interest in Receivables Collateral in favor of the Secured Party, subject only to Permitted Liens. All amounts not so paid when due shall constitute additional Secured Obligations and (in addition to other rights and remedies resulting from such nonpayment) shall bear interest from the date of demand until paid in full at the default rate set forth in Section 2.2E of the Term Loan Agreement (the "Default Rate"). (c) Effective upon the occurrence of the conditions set forth in Section 3(d) hereof, the Debtor agrees to maintain among its books and records appropriate notations or evidence of, and to make or cause to be made appropriate disclosure upon its financial statements of, the security interest granted hereunder to the Secured Party. (d) Effective upon the occurrence of the conditions set forth in Section 3(d) hereof, the Debtor agrees that, in the event any proceeds (other than goods) of Receivables Collateral shall be or become commingled with other property not constituting Receivables Collateral, then such proceeds may, to the extent permitted by law, be identified by application of the lowest intermediate balance rule to such commingled property. 5 (e) The Debtor agrees that at all times it will not intentionally discriminate to the Secured Party's material detriment against the Receivables Collateral in its collection of the Debtor's accounts receivable generally. 5. RECEIPT OF PAYMENT. In the event an Event of Default shall occur and be continuing and the Debtor (or any of its affiliates, Subsidiaries, stockholders, directors, officers, employees or agents) shall receive any proceeds of Receivables Collateral, including without limitation monies, checks, notes, drafts or any other items of payment, the Debtor shall hold all such items of payment in trust for the Secured Party, and as the property of the Secured Party, separate from the funds and other property of the Debtor, and no later than the fifth Business Day following the receipt thereof, at the election of the Secured Party, the Debtor shall cause such Receivables Collateral to be forwarded to the Secured Party for its custody, possession and disposition in accordance with the terms hereof and of the other Loan Documents. 6. PRESERVATION AND PROTECTION OF RECEIVABLES COLLATERAL. (a) The Secured Party shall be under no duty or liability with respect to the collection, protection or preservation of the Receivables Collateral, or otherwise. The Debtor shall be responsible for the safekeeping of its Receivables Collateral, and in no event shall the Secured Party have any responsibility for (i) any loss or damage thereto or destruction thereof occurring or arising in any manner or fashion from any cause, (ii) any diminution in the value thereof, or (iii) any act or default of any carrier, warehouseman, bailee or forwarding agency thereof or other Person in any way dealing with or handling such Receivables Collateral. (b) The Debtor agrees (i) effective upon the occurrence of the conditions set forth in Section 3(d) hereof, to pay when due all taxes, charges and assessments against the Receivables Collateral in which it has any interest, unless being contested in good faith by appropriate proceedings diligently conducted and against which adequate reserves have been established in accordance with GAAP and evidenced to the satisfaction of the Secured Party and provided that all enforcement proceedings in the nature of levy or foreclosure are effectively stayed, and (ii) to cause to be terminated and released all Liens (other than Permitted Liens) on the Receivables Collateral. Upon the failure of the Debtor to so pay or contest such taxes, charges, or assessments, or cause such Liens to be terminated, the Secured Party at its option may pay or contest any of them or amounts relating thereto (the Secured Party having the sole right to determine the legality or validity and the amount necessary to discharge such taxes, charges, Liens or assessments) but shall not have any obligation to make any such payment or contest. All sums so disbursed by the Secured Party, including reasonable attorneys' fees, court costs, expenses and other charges related thereto, shall be payable promptly after demand by the Debtor to the Secured Party and shall be additional Secured Obligations secured by the Receivables Collateral and the other Loan Documents, and any amounts not so paid (in addition to other rights and remedies resulting from such nonpayment) shall bear interest from the date of demand until paid in full at the Default Rate. 6 7. STATUS OF DEBTOR AND RECEIVABLES COLLATERAL GENERALLY. The Debtor represents and warrants to, and covenants with, the Secured Party, with respect to itself and the Receivables Collateral as to which it has or acquires any interest as provided herein, that: (a) It is (or as to Receivables Collateral acquired after the date hereof will be upon the acquisition of the same) and, except as permitted by the Term Loan Agreement and subsection (b) of this Section 7, will continue to be, the owner of the Receivables Collateral, free and clear of all Liens, other than the security interest hereunder in favor of the Secured Party and Permitted Liens, and that it will at its own cost and expense defend such Receivables Collateral and any products and proceeds thereof against all claims and demands of all Persons (other than holders of Permitted Liens) at any time claiming the same or any interest therein adverse to the Secured Party. Upon the failure of the Debtor to so defend, the Secured Party may do so at its option but shall not have any obligation to do so. All sums so disbursed by the Secured Party, including reasonable attorneys' fees, court costs, expenses and other charges related thereto, shall be payable promptly after demand by the Debtor to the Secured Party and shall be additional Secured Obligations secured by the Receivables Collateral and the other Loan Documents, and any amounts not so paid on demand (in addition to other rights and remedies resulting from such nonpayment) shall bear interest from the date of demand until paid in full at the Default Rate. (b) It shall not (i) sell, assign, transfer, lease, license or otherwise dispose of any of, or grant any option with respect to, the Receivables Collateral, except that prior to the occurrence and continuance of an Event of Default, the Debtor may collect Receivables Collateral and use the proceeds thereof in the ordinary course of its business, (ii) create or suffer to exist any Lien upon or with respect to any of the Receivables Collateral except for the security interests created by this Receivables Security Agreement and Permitted Liens, or (iii) take any other action in connection with any of the Receivables Collateral that would materially impair the value of the interest or rights of the Debtor in the Receivables Collateral taken as a whole or that would materially impair the interest or rights of the Secured Party. (c) It has full power, legal right and lawful authority to enter into this Receivables Security Agreement and to perform its terms, including the grant of the security interests in the Receivables Collateral herein provided for. (d) No authorization, consent, approval or other action by, and no notice to or filing with, any Governmental Authority or any other Person is required either (i) for the grant by the Debtor of the security interests granted hereby or for the execution, delivery or performance of this Receivables Security Agreement by the Debtor, or (ii) for the perfection of or the exercise by the Secured Party, of its rights and remedies hereunder, except for any action required by the UCC to perfect the security interest conferred hereunder. (e) No effective financing statement or other Perfection Document similar in effect, nor any other Perfection Action, covering all or any part of the Receivables Collateral purported to be granted or taken by or on behalf of the Debtor (or by or on 7 behalf of any other Person and which remains effective as against all or any part of the Receivables Collateral) has been filed in any recording office, delivered to another Person for filing (whether upon the occurrence of a contingency or otherwise), or otherwise taken, as the case may be. (f) (i) The exact legal name of the Debtor as it appears in its organizational documents as of the date hereof and at any time during the five (5) year period ending as of the date hereof (the "Covered Period") is America West Airlines, Inc., (ii) the Debtor is a corporation organized and existing under the laws of the State of Delaware, (iii) the address of the chief executive office of the Debtor as of the date hereof and at any time during the Covered Period is 111 West Rio Salado Parkway, Tempe, Arizona, 85281, (iv) there are no trade names or trade styles used by the Debtor as of the date hereof and at any time during the Covered Period other than "America West". The Debtor shall not change its name, change its jurisdiction of formation (whether by reincorporation, merger or otherwise), change the location of its chief executive office, utilize any additional location where tangible personal property constituting Receivables Collateral (including Account Records and Account Documents) may be located, change or use any additional or different trade name or style, except in each case upon giving not less than thirty (30) days' prior written notice to the Secured Party and taking or causing to be taken at the Debtor's expense all such Perfection Action, including the delivery of such Perfection Documents, as may be reasonably requested by the Secured Party to perfect or protect, or maintain the perfection and priority of, the Lien of the Secured Party in Receivables Collateral contemplated hereunder. 8. INSPECTION. At reasonable times and upon reasonable notice, the Secured Party or its authorized representative may, at their own expense (unless an Event of Default then exists, in which case the reasonable expenses of such inspection shall be paid by the Debtor), inspect the books and records of the Debtor (and to make extracts or copies from such records), and the premises upon which any of the Receivables Collateral is located, to discuss the Debtor's affairs and finances with any Person (other than Persons obligated on any Accounts ("Account Debtors") and to verify with any Person other than Account Debtors the amount, quality, quantity, value and condition of, or any other matter relating to, the Receivables Collateral and, if an Event of Default has occurred and is continuing, to discuss the Debtor's affairs and finances with the Debtor's Account Debtors and to verify the amount, quality, value and condition of, or any other matter relating to, the Receivables Collateral with such Account Debtors. Any such inspection shall not interfere with the normal business of the Debtor. The Secured Party shall have no duty to make any such inspection nor shall it incur any liability or obligation by reason of not making any such inspection. 9. SPECIFIC COLLATERAL. (a) ACCOUNTS. With respect to its Accounts whether now existing or hereafter created or acquired and wheresoever located, the Debtor represents, warrants and covenants to the Secured Party, that: (i) The Debtor shall keep accurate and complete records of its Accounts constituting Receivables Collateral ("Account Records") and quarterly, 8 together with the Compliance Certificate, the Debtor shall provide the Secured Party with an updated Schedule 9(a) in form and substance reasonably acceptable to the Secured Party describing all such Accounts created or acquired by the Debtor ("Schedule of Accounts"); provided, however, that the Debtor's failure to execute and deliver any such Schedule of Accounts shall not affect or limit the Secured Party's security interest or other rights in and to any Accounts. If requested by the Secured Party, the Debtor shall furnish the Secured Party with copies of proof of delivery and other documents relating to the Accounts so scheduled, including without limitation repayment histories and present status reports (collectively, "Account Documents") and such other matter and information relating to the status of then existing Accounts as the Secured Party shall request. (ii) All Account Records and, Account Documents are and shall at all times be located only at the Debtor's current chief executive office, or a location as to which the Debtor has complied with Section 7(f) hereof: (iii) The Accounts constituting Receivables Collateral are genuine, are in all respects what they purport to be, are not evidenced by instrument or document or, if evidenced by an instrument or document, are only evidenced by one original instrument or document. (iv) The Accounts constituting Receivables Collateral cover bona fide sales, leases, licenses or other dispositions of property usually dealt in by the Debtor, or the rendition by the Debtor of services, to an Account Debtor in the ordinary course of business. (v) The amounts of the face value of any Account shown or reflected on any Schedule of Accounts, invoice statement, or certificate delivered to the Secured Party, are actually owing to the Debtor and are not contingent for any reason; and there are no setoffs, discounts, allowances, claims, counterclaims or disputes of any kind or description in an amount greater than $1,000,000 in the aggregate, or greater than $1,000,000 individually, existing or asserted with respect thereto and the Debtor has not made any agreement with any Account Debtor thereunder for any deduction therefrom, except as may be stated in the Schedule of Accounts and reflected in the calculation of the face value of each respective invoice related thereto. (vi) Except for conditions generally applicable to the Debtor's industry and markets, there are no facts, events, or occurrences known to the Debtor pertaining particularly to any Accounts constituting Receivables Collateral which are reasonably expected to materially impair in any way the validity, collectibility or enforcement of such Accounts that would reasonably be likely, in the aggregate, to be of material economic value, or in the aggregate materially reduce the amount payable thereunder from the amount of the invoice face value shown on any Schedule of Accounts, or on any certificate, contract, invoice or statement delivered to the Secured Party with respect thereto. 9 (vii) The goods or services giving rise thereto are not, and were not at the time of the sale or performance thereof, subject to any Lien, claim, encumbrance or security interest, except those of the Secured Party and Permitted Liens. (viii) Effective upon the occurrence of the conditions set forth in Section 3(d) hereof, in the event any amounts due and owing in excess of $1,000,000 individually, or $1,000,000 in the aggregate amount, are in dispute between any Account Debtor and the Debtor (which shall include without limitation any dispute in which an offset claim or counterclaim may result), the Debtor shall provide the Secured Party with written notice thereof as soon as practicable, explaining in detail the reason for the dispute, all claims related thereto and the amount in controversy. (b) SUPPORTING OBLIGATIONS. With respect to its Supporting Obligations whether now existing or hereafter created or acquired and wheresoever located, the Debtor represents, warrants and covenants to the Secured Party, that: (i) The Debtor shall (x) maintain at all times, and furnish to the Secured Party from time to time at the Secured Party's request, a current list identifying in reasonable detail each Supporting Obligation relating to any Receivables Collateral from a single obligor in excess of $1,000,000, and (y) upon the request of the Secured Party from time to time following the occurrence and during the continuance of any Event of Default, deliver to the Secured Party the originals of all documents evidencing or constituting Supporting Obligations, together with such other documentation (executed as appropriate by the Debtor) and information as may be necessary to enable the Secured Party to realize upon the Supporting Obligations in accordance with their respective terms or transfer the Supporting Obligations as may be permitted under the Loan Documents or by applicable law. (ii) With respect to each letter of credit giving rise to Letter-of-Credit Rights that has an aggregate stated amount available to be drawn in excess of $1,000,000, effective upon the occurrence of the conditions set forth in Section 3(d) hereof, the Debtor shall, at the request of the Secured Party cause the issuer thereof to execute and deliver to the Secured Party a Qualifying Control Agreement (as defined in Schedule 1 hereto). (iii) With respect to each transferable letter of credit giving rise to Letter-of-Credit Rights that has an aggregate stated amount available to be drawn in excess of $1,000,000, the Debtor shall, within thirty (30) days of the issuance of each such letter of credit at the Secured Party's request upon and during the continuance of any Event of Default, deliver to the Secured Party a duly executed, undated transfer form in blank sufficient in form and substance under the terms of the related letter of credit to effect, upon completion and delivery to the letter of credit issuer together with any required fee, the transfer of such letter of credit to the transferee identified in such form. The Debtor hereby expressly authorizes the 10 Secured Party following the occurrence and during the continuance of any Event of Default to complete and tender each such transfer form as transferor in its own name or in the name, place and stead of the Debtor in order to effect any such transfer, either to the Secured Party or to another transferee, as the case may be, in connection with any sale or other disposition of Receivables Collateral or for any other purpose permitted under the Loan Documents or by applicable law. (c) CHATTEL PAPER. With respect to its Chattel Paper constituting Receivables Collateral whether now existing or hereafter created or acquired and wheresoever located, the Debtor represents, warrants and covenants to the Secured Party, that: (i) The Debtor shall at all times retain sole physical possession of the originals of all Chattel Paper constituting Receivables Collateral (other than electronic Chattel Paper and the electronic components of hybrid Chattel Paper); provided, however, that (x) upon the request of the Secured Party upon the occurrence and during the continuance of any Event of Default, the Debtor shall immediately deliver physical possession of such Chattel Paper to the Secured Party or its designee, and (y) in the event that there shall be created more than one original counterpart of any physical document that alone or in conjunction with any other physical or electronic document constitutes Chattel Paper, then such counterparts shall be numbered consecutively starting with "1" and the Debtor shall retain the counterpart numbered "1". (ii) Effective upon the occurrence of the conditions set forth in Section 3(d) hereof, all counterparts of all tangible Chattel Paper constituting Receivables Collateral (and the tangible components of hybrid Chattel Paper) shall be conspicuously legended as follows: "A FIRST PRIORITY SECURITY INTEREST IN THIS CHATTEL PAPER HAS BEEN GRANTED TO THE INDUSTRIAL BANK OF JAPAN, LIMITED, FOR ITSELF AND AS AGENT FOR CERTAIN LENDERS PURSUANT TO A RECEIVABLES SECURITY AGREEMENT DATED AS OF JANUARY , 2002, AS AMENDED FROM TIME TO TIME. NO SECURITY INTEREST OR OTHER INTEREST IN FAVOR OF ANY OTHER PERSON MAY BE CREATED BY THE TRANSFER OF PHYSICAL POSSESSION OF THIS CHATTEL PAPER OR OF ANY COUNTERPART HEREOF EXCEPT BY OR WITH THE CONSENT OF THE AFORESAID THE INDUSTRIAL BANK OF JAPAN, LIMITED, AS AGENT AS PROVIDED IN AFORESAID RECEIVABLES SECURITY AGREEMENT." In the case of electronic Chattel Paper constituting Receivables Collateral (including the electronic components of hybrid Chattel Paper), the Debtor shall not create or acquire any such Chattel Paper unless, prior to such acquisition or creation, it shall have taken such Perfection Action as the Secured Party may require to perfect by control the security interest of the Secured Party in such Collateral. (ii) Other than in the ordinary course of business and in keeping with reasonable and customary practice, the Debtor shall not amend, modify, waive or terminate any provision of, or fail to exercise promptly and diligently each 11 material right or remedy conferred under or in connection with, any Chattel Paper constituting Receivables Collateral, in any case in such a manner as could reasonably be expected to materially adversely affect the value of such affected Chattel Paper as collateral. (d) INSTRUMENTS. With respect to its Instruments constituting Receivables Collateral whether now existing or hereafter created or acquired and wheresoever located, the Debtor represents, warrants and covenants to the Secured Party, that: (i) The Debtor shall (i) maintain at all times, and furnish to the Secured Party from time to time at the Secured Party's request, a current list identifying in reasonable detail Instruments constituting Receivables Collateral of which the Debtor is the payee or holder and having a face amount payable in excess of $1,000,000, and (ii) upon the request of the Secured Party from time to time following the occurrence and during the continuance of any Event of Default, deliver to the Secured Party the originals of all such Instruments, together with duly executed undated endorsements in blank affixed thereto and such other documentation and information as may be necessary to enable the Secured Party to realize upon such Instruments in accordance with their respective terms or transfer such Instruments as may be permitted under the Loan Documents or by applicable law. (ii) Other than in the ordinary course of business and in keeping with reasonable and customary practice, the Debtor shall not amend, modify, waive or terminate any provision of, or fail to exercise promptly and diligently each material right or remedy conferred under or in connection with, any Instrument constituting Receivables Collateral, in any case in such a manner as could reasonably be expected to materially adversely affect the value of such affected Instrument as collateral. 10. RIGHTS AND REMEDIES UPON EVENT OF DEFAULT. Upon the occurrence and during the continuance of an Event of Default, the Secured Party shall have the following rights and remedies in addition to any rights and remedies set forth elsewhere in this Receivables Security Agreement or the other Loan Documents, all of which may be exercised with or, if allowed by law, without notice to the Debtor: (a) All of the rights and remedies of a secured party under the UCC or under other applicable law, all of which rights and remedies shall be cumulative, and none of which shall be exclusive, to the extent permitted by law, in addition to any other rights and remedies contained in this Receivables Security Agreement or any other Loan Document; (b) The right to foreclose the Liens and security interests created under this Receivables Security Agreement by any available judicial procedure or without judicial process; 12 (c) The right to (i) enter upon the premises of the Debtor through self-help and without judicial process, without first obtaining a final judgment or giving the Debtor notice or opportunity for a hearing on the validity of the Secured Party's claim and without any obligation to pay rent to the Debtor, or any other place or places where any Receivables Collateral is located and kept, and remove the Receivables Collateral therefrom to the premises of the Secured Party or any agent of the Secured Party, for such time as the Secured Party may desire, in order effectively to collect or liquidate the Receivables Collateral, (ii) require the Debtor or any bailee or other agent of the Debtor to assemble the Receivables Collateral and make it available to the Secured Party at a place to be designated by the Secured Party that is reasonably convenient to both parties, and (iii) notify any or all Persons party to a Qualifying Control Agreement or who otherwise have possession of or control over any Receivables Collateral of the occurrence of an Event of Default and other appropriate circumstances, and exercise control over and take possession or custody of any or all Receivables Collateral in the possession, custody or control of such other Persons; (d) The right to (i) exercise all of the Debtor's rights and remedies with respect to the collection of Accounts, Chattel Paper, Instruments, Supporting Obligations and General Intangibles, in each case to the extent constituting Receivables Collateral (collectively, "Payment Collateral"), including the right to demand payment thereof and enforce payment, by legal proceedings or otherwise; (ii) settle, adjust, compromise, extend or renew all or any Payment Collateral or any legal proceedings pertaining thereto; (iii) discharge and release all or any Payment Collateral; (iv) take control, in any manner, of any item of payment or proceeds referred to in Section 5 above; (v) prepare, file and sign the Debtor's name on any Proof of Claim in bankruptcy, notice of Lien, assignment or satisfaction of Lien or similar document in any action or proceeding adverse to any obligor under any Payment Collateral or otherwise in connection with any Payment Collateral; (vi) endorse the name of the Debtor upon any chattel paper, document, instrument, invoice, freight bill, bill of lading or similar document or agreement relating to any Receivables Collateral; (vii) use the information recorded on or contained on the Debtor's internet website or otherwise in any data processing equipment and computer hardware and software relating to any Receivables Collateral to which the Debtor has access; (viii) open the Debtor's mail and collect any and all amounts due to the Debtor from any Account Debtors or other obligor in respect of Payment Collateral; (ix) take over the Debtor's post office boxes or make other arrangements as the Secured Party deems necessary to receive the Debtor's mail, including notifying the post office authorities to change the address for delivery of the Debtor's mail to such address as the Secured Party may designate; (x) notify any or all Account Debtors or other obligor on any Payment Collateral that such Payment Collateral has been assigned to the Secured Party and that Secured Party has a security interest therein (provided that the Secured Party may at any time give such notice to an Account Debtor that is a department, agency or authority of the United States government); the Debtor hereby agrees that any such notice, in the Secured Party's sole discretion, may (but need not) be sent on the Debtor's stationery, in which event the Debtor shall co-sign such notice with the Secured Party; and (xi) do all acts and things and execute all documents necessary, in the Secured Party's sole discretion, to collect the Payment Collateral; and 13 (e) The right to sell all or any Receivables Collateral in its then existing condition, at such time or tines, at public or private sale or sales, with such notice as may be required by law, in lots or in bulk, for cash or on credit, with or without representations and warranties, all as the Secured Party, in its sole discretion, may deem advisable. The Secured Party shall have the right to conduct such sales on the Debtor's premises or elsewhere and shall have the right to use the Debtor's premises without charge for such sales for such time or times as the Secured Party may see fit. The Secured Party may, if it deems it reasonable, postpone or adjourn any sale of the Receivables Collateral from time to time by an announcement at the time and place of such postponed or adjourned sale, and such sale may, without further notice, be made at the time and place to which it was so adjourned. The Debtor agrees that the Secured Party no obligation to preserve rights to the Receivables Collateral against prior parties or to marshal any Receivables Collateral for the benefit of any Person. The Secured Party is hereby granted a license or other right to use, without charge, the Debtor's labels, patents, copyrights, rights of use of any name, trade secrets, trade names, trademarks and advertising matter, or any property of a similar nature, as it pertains to the Receivables Collateral, in completing production of, advertising for sale and selling any Receivables Collateral and the Debtor's rights under any license and any franchise agreement shall inure to the Secured Party's benefit. In addition, the Debtor agrees that in the event notice is necessary under applicable law, written notice mailed to the Debtor in the manner specified herein ten (10) days prior to the date of public sale of any of the Receivables Collateral or prior to the date after which any private sale or other disposition of the Receivables Collateral will be made shall constitute commercially reasonable notice to the Debtor. All notice is hereby waived with respect to any of the Receivables Collateral which threatens to decline speedily in value or is of a type customarily sold on a recognized market. The Secured Party may purchase all or any part of the Receivables Collateral at public or, if permitted by law, private sale, free from any right of redemption which is hereby expressly waived by the Debtor and, in lieu of actual payment of such purchase price, may set off the amount of such price against the Secured Obligations. The net cash proceeds resulting from the collection, liquidation, sale, or other disposition of the Receivables Collateral shall be applied first to the expenses (including all reasonable attorneys' fees) of retaking, holding, storing, processing and preparing for sale, selling, collecting, liquidating and the like, and then to the satisfaction of all Secured Obligations in accordance with the terms of the Term Loan Agreement. The Debtor shall be liable to the Secured Party and shall pay to the Secured Party on demand any deficiency which may remain after such sale, disposition, collection or liquidation of the Receivables Collateral. 11. ATTORNEY-IN-FACT. The Debtor hereby appoints the Secured Party as the Debtor's attorney-in-fact for the purposes of carrying out the provisions of this Receivables Security Agreement and taking any action and executing any instrument which the Secured Party may deem necessary or advisable to accomplish the purposes hereof, which appointment is irrevocable and coupled with an interest; provided, that the Secured Party shall have and may exercise rights under this power of attorney only upon the occurrence and during the continuance of an Event of Default. Without limiting the generality of the foregoing, upon the occurrence 14 and during the continuance of an Event of Default, the Secured Party shall have the right and power (a) to ask, demand, collect, sue for, recover, compromise, receive and give acquittance and receipts for moneys due and to become due under or in respect of any of the Receivables Collateral; (b) to receive, endorse and collect any drafts or other instruments, documents and chattel paper in connection with clause (a) above; (c) to endorse the Debtor's name on any checks, notes, drafts or any other payment relating to or constituting proceeds of the Receivables Collateral which comes into the Secured Party's possession or the Secured Party's control, and deposit the same to the account of the Secured Party on account and for payment of the Secured Obligations. (d) to file any claims or take any action or institute any proceedings that the Secured Party may deem necessary or desirable for the collection of any of the Receivables Collateral or otherwise to enforce the rights of the Secured Party with respect to any of the Receivables Collateral; and (e) to execute, in connection with any sale or other disposition of Receivables Collateral provided for herein, any endorsement, assignments, or other instruments of conveyance or transfer with respect thereto. 12. REINSTATEMENT. The granting of a security interest in the Receivables Collateral and the other provisions hereof shall continue to be effective or be reinstated, as the case may be, if at any time any payment of any of the Secured Obligations is rescinded or must be remitted to or must otherwise be returned by the Secured Party or is repaid by the Secured Party in whole or in part in good faith settlement of a pending or threatened avoidance claim, whether upon the insolvency, bankruptcy or reorganization of the Debtor or otherwise, all as though such payment had not been made. The provisions of this Section 12 shall survive repayment of all of the Secured Obligations and the termination or expiration of this Receivables Security Agreement in any manner. 13. CERTAIN WAIVERS BY THE DEBTOR. The Debtor waives to the extent permitted by applicable law (a) any right to require the Secured Party or any other obligee of the Secured Obligations to (x) proceed against any Person or entity, (y) proceed against or exhaust any Receivables Collateral or other collateral for the Secured Obligations, or (z) pursue any other remedy in its power; (b) any defense arising by reason of any disability or other defense of any other Person, or by reason of the cessation from any cause whatsoever of the liability of any other Person or entity, (c) any right of subrogation, (d) any right to enforce any remedy which the Secured Party or any other obligee of the Secured Obligations now has or may hereafter have against any other Person and any benefit of and any right to participate in any collateral or security whatsoever now or hereafter held by the Secured Party. The Debtor authorizes the Secured Party and each other obligee of the Secured Obligations without notice (except notice required by applicable law) or demand and without affecting its liability hereunder or under the Loan Documents from time to time to: (i) take and hold security, other than the Receivables 15 Collateral herein described, for the payment of such Secured Obligations or any part thereof, and exchange, enforce, waive and release the Receivables Collateral herein described or any part thereof or any such other security; and (ii) apply such Receivables Collateral or other security and direct the order or manner of sale thereof as the Secured Party or such obligee in its discretion may determine. The Secured Party may at any time deliver (without representation, recourse or warranty) the Receivables Collateral or any part thereof to the Debtor and the receipt thereof by the Debtor shall be a complete and full acquittance for the Receivables Collateral so delivered, and the Secured Party shall thereafter be discharged from any liability or responsibility therefor. 14. CONTINUED POWERS. Until the Secured Obligations shall have been irrevocably paid in full, the power of sale and other rights, powers and remedies granted to the Secured Party hereunder shall continue to exist and may be exercised by the Secured Party at any time and from time to time irrespective of the fact that any of the Secured Obligations or any part thereof may have become barred by any statute of limitations or that any part of the liability of the Guarantor may have ceased. 15. OTHER RIGHTS. The rights, powers and remedies given to the Secured Party by this Receivables Security Agreement shall be in addition to all rights, powers and remedies given to the Secured Party under any Loan Document or by virtue of any statute or rule of law. Any forbearance or failure or delay by the Secured Party in exercising any right, power or remedy hereunder shall not be deemed to be a waiver of such right, power or remedy, and any single or partial exercise of any right, power or remedy hereunder shall not preclude the further exercise thereof; and every right, power and remedy of the Secured Party shall continue in full force and effect until such right, power or remedy is specifically waived in accordance with the terms of the Loan Documents. 16. ANTI-MARSHALING PROVISIONS. The right is hereby given by the Debtor to the Secured Party to make releases (whether in whole or in part) of all or any part of the Receivables Collateral agreeable to the Secured Party without notice to, or the consent, approval or agreement of other parties and interests, including junior lienors, which releases shall not impair in any manner the validity of or priority of the Liens and security interests in the remaining Receivables Collateral conferred hereunder, nor release the Debtor from personal liability for the Secured Obligations. Notwithstanding the existence of any other security interest in the Receivables Collateral held by the Secured Party, the Secured Party shall have the right to determine the order in which any or all of the Receivables Collateral shall be subjected to the remedies provided in this Receivables Security Agreement. The Debtor hereby waives any and all right to require the marshaling of assets in connection with the exercise of any of the remedies permitted by applicable law or provided herein or in any Loan Document. 17. ENTIRE AGREEMENT. This Receivables Security Agreement, together with the other Loan Documents, constitutes and expresses the entire understanding between the parties hereto with respect to the subject matter hereof, and supersedes all prior negotiations, agreements and understandings, inducements, commitments or conditions, express or implied, oral or written, except as contained in the Loan Documents. The express terms hereof control and supersede any course of performance or usage of the trade inconsistent with any of the terms hereof. Neither 16 this Receivables Security Agreement nor any portion or provision hereof may be changed, altered, modified, supplemented, discharged, canceled, terminated, or amended orally or in any manner other than as provided in the Loan Documents. 18. THIRD PARTY RELIANCE. The Debtor hereby consents and agrees that all issuers of or obligors in respect of any Receivables Collateral, and all securities intermediaries, warehousemen, bailees, public officials and other Persons having any interest in, possession of, control over or right, privilege, duty or discretion in respect of, any Receivables Collateral shall be entitled to accept the provisions hereof as conclusive evidence of the right of the Secured Party to exercise its rights hereunder with respect to the Receivables Collateral, notwithstanding any other notice or direction to the contrary heretofore or hereafter given by the Debtor or any other Person to any of such Persons. 19. BINDING AGREEMENT; ASSIGNMENT. This Receivables Security Agreement, and the terms, covenants and conditions hereof, shall be binding upon and inure to the benefit of the parties hereto, and to their respective successors and assigns, except that the Debtor shall not be permitted to assign this Receivables Security Agreement or any interest herein or, except as expressly permitted herein, in the Receivables Collateral or any part thereof, or otherwise, except as expressly permitted herein, pledge, encumber or grant any option with respect to the Receivables Collateral or any part thereof. All references herein to the Secured Party shall include any successor thereof or permitted assignee, and any other obligees from time to time of the Secured Obligations. 20. AGENT. As provided in Section 8 of the Term Loan Agreement, each Lender has appointed The Industrial Bank of Japan, Limited, as its Agent for purposes of this Receivables Security Agreement. In such capacity, The Industrial Bank of Japan, Limited, shall be entitled to all of the rights and benefits accorded the Agent by Section 8 of the Term Loan Agreement. Following the payment in full of all Secured Obligations and the termination or expiration of the Loan Documents, the provisions of Section 8 of the Term Loan Agreement shall be deemed to continue in full force and effect for the benefit of the Agent under this Receivables Security Agreement. For the avoidance of doubt, nothing in this Section 20 is intended to create any liability or obligation on the Debtor. 21. SEVERABILITY. The provisions of this Receivables Security Agreement are independent of and separable from each other. If any provision hereof shall for any reason be held invalid or unenforceable, such invalidity or unenforceability shall not affect the validity or enforceability of any other provision hereof, but this Receivables Security Agreement shall be construed as if such invalid or unenforceable provision had never been contained herein. 22. COUNTERPARTS. This Receivables Security Agreement may be executed in any number of counterparts each of which when so executed and delivered shall be deemed an original, and it shall not be necessary in making proof of this Receivables Security Agreement to produce or account for more than one such counterpart executed by the Debtor against whom enforcement is sought. 23. TERMINATION. Subject to the provisions of Section 12, this Receivables Security Agreement and all obligations of the Debtor hereunder (excluding those obligations and 17 liabilities that expressly survive such termination) shall terminate without delivery of any instrument or performance of any act by any party upon irrevocable payment and performance, in full, of the obligations of the Debtor provided for in the Loan Documents. Upon such termination of this Receivables Security Agreement, the Secured Party shall, at the request and sole expense of the Debtor, promptly deliver to the Debtor such termination statements and take such further actions as the Debtor may reasonably request to terminate of record, or otherwise to give appropriate notice of the termination of, any Lien conferred hereunder. 24. INDEMNIFICATION. Without limitation of any other indemnification provision in any Loan Document, the Debtor agrees to indemnify and hold harmless the Secured Party and each of his attorneys, agents and advisors (each, an "Indemnified Party"), from and against any and all claims, damages, losses, liabilities, costs, and expenses (including, without limitation, reasonable attorneys' fees) that may be incurred by or asserted or awarded against any Indemnified Party, in each case arising out of or in connection with or by reason of (including, without limitation, in connection with any investigation, litigation or proceeding or preparation of defense in connection therewith) the Loan Documents, any of the transactions contemplated herein or the actual or proposed use of the proceeds of the advances or other extension of credit under the Loan Documents, except to the extent such claim, damage, loss, liability, cost, or expense is found in a final, non-appealable judgment by a court of competent jurisdiction to have resulted from such Indemnified Party's gross negligence or willful misconduct. In the case of an investigation, litigation or other proceeding to which the indemnity in this Section 24 applies, such indemnity shall be effective whether or not such investigation, litigation or proceeding is brought by the Debtor, any of its directors, shareholders or creditors, or an Indemnified Party or any other Person, or any Indemnified Party is otherwise a party thereto and whether or not the transactions contemplated hereby are consummated. The Debtor agrees that no Indemnified Party shall have any liability (whether direct or indirect, in contract or tort or otherwise) to it, any of its subsidiaries or affiliates, or any security holders or creditors thereof arising out of, related to or in connection with the transactions contemplated herein or in the other Loan Documents, except to the extent that such liability is found in a final non-appealable judgment by a court of competent jurisdiction to have directly resulted from such Indemnified Party's gross negligence or willful misconduct. The Debtor agrees not to assert any claim against the Secured Party, any of his attorneys, agents or advisers, on any theory of liability, for special, indirect, consequential, or punitive damages arising out of or otherwise relating to the Loan Documents, any of the transactions contemplated therein or the actual or proposed use of the proceeds of the Loans or other extensions of credit under the Loan Documents. The agreements in this Section 24 shall survive repayment of all of the Secured Obligations and the termination or expiration of this Receivables Security Agreement in any manner. 25. NOTICES. Any notice required or permitted hereunder shall be given in accordance with Section 9.8 of the Term Loan Agreement. 26. RULES OF INTERPRETATION. The rules of interpretation contained in Section 1 of the Term Loan Agreement shall be applicable to this Receivables Security Agreement and are hereby incorporated by reference. All representations and warranties contained herein shall survive the delivery of documents and any extension of credit referred to herein or secured hereby. 18 27. WAIVER. To the extent permitted by applicable law, no failure on the part of the Agent or any Lender to exercise and no delay in exercising, and no course of dealing with respect to, any right, remedy, power or privilege under this Receivables Security Agreement shall operate as a waiver of such right, remedy, power or privilege, nor shall any single or partial exercise of any right, remedy, power or privilege under this Receivables Security Agreement preclude any other or further exercise of any such right, remedy, power or privilege or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges provided in this Receivables Security Agreement are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law. 28. GOVERNING LAW. THIS RECEIVABLES SECURITY AGREEMENT SHALL BE DELIVERED IN THE STATE OF NEW YORK AND GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. [SIGNATURE PAGES FOLLOW] 19 IN WITNESS WHEREOF, the parties have duly executed this Receivables Security Agreement on the day and year first written above. DEBTOR: AMERICA WEST AIRLINES, INC. By: -------------------------------- Name: ------------------------------ Title: ----------------------------- SECURED PARTY: THE INDUSTRIAL BANK OF JAPAN, LIMITED, AS AGENT ----------------------------------- By: -------------------------------- Name: ------------------------------ Title: ----------------------------- Signature Page EXHIBIT II [Date] The Industrial Bank of Japan, as Agent 1251 Avenue of the Americas New York, NY 10020 Attention: Joseph Mitarotondo Re: Form of Notice of Conversion/Continuation Under the Amended and Restated Term Loan Agreement dated as of January , 2002 Ladies and Gentlemen: We refer you to the Amended and Restated Term Loan Agreement as of January , 2002 by and among America West Airlines, Inc. (the "Company"), the lending institutions named therein and The Industrial Bank of Japan, Limited, as agent for itself and such other lending institutions (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement"). Capitalized terms used herein without definition have the meanings specified in the Credit Agreement. Pursuant to Section 2.2D of the Credit Agreement, the Company hereby notifies you of the following Conversion/Continuation: (a) Proposed Conversion/Continuation Date(1): (b) Amount of Loans to be Converted/Continued: (c) Type of Loans to be Converted/Continued (Base Rate Loans or Eurodollar Rate Loans): (d) Nature of the proposed Conversion/Continuation (Base Rate Loans or Eurodollar Rate Loans): - ----------------------------- (1) The Company shall deliver a Notice of Conversion/Continuation to the Agent no later than 12:00 noon (New York time) on the proposed Conversion Date with respect to a Base Rate Loan and three Business Days in advance of the proposed Conversion/Continuation date with respect to a Eurodollar Rate Loan. (e) No Potential Event of Default or Event of Default has occurred and is continuing and no Potential Event of Default or Event of Default would occur after giving effect to the proposed conversion/continuation(2): AMERICA WEST AIRLINES, INC. By: -------------------------------- Name: Title: - ------------------------------- (2) To be included only with respect to Eurodollar Rate Loans. EXHIBIT III FORM OF TERM NOTE $[ ] January , 2002 FOR VALUE RECEIVED, the undersigned AMERICA WEST AIRLINES, INC., a Delaware corporation (the "Company"), hereby promises to pay to the order of [ ] (the "Lender" ): (a) from time to time at the times and in the amounts provided in the Term Loan Agreement (as hereinafter defined) and prior to or on the Termination Date (as defined in the Term Loan Agreement) the principal amount of [$ ] maintained by the Lender pursuant to the Amended and Restated Term Loan Agreement dated as of January , 2002 (as amended and in effect from time to time, the "Term Loan Agreement"), among the Company, the Lender, the Agent and the other parties thereto; and (b) interest on the principal balance hereof from time to time outstanding from the Closing Date (as defined in the Term Loan Agreement) under the Term Loan Agreement through and including the date of repayment in full of the Obligations owed to the Lender at the times and at the rates provided in the Term Loan Agreement. All capitalized terms used in this Note and not otherwise defined herein shall have the same meanings herein as in the Term Loan Agreement. This Note evidences the Loan maintained under, and has been issued by the Company in accordance with, the terms of the Term Loan Agreement, and is issued in substitution for and replacement of the Revolving Note dated December 10, 1999 issued by the Company to the Lender pursuant to the Amended and Restated Revolving Credit Agreement dated as of December 10, 1999. The Lender and any Eligible Assignee of the Lender under Section 9.1 of the Term Loan Agreement is entitled to the benefits of the Term Loan Agreement, the Security Agreements and the other Loan Documents. The Company has the right in certain circumstances and the obligation under certain other circumstances to prepay the whole or part of the principal of this Note on the terms and conditions specified in the Term Loan Agreement; provided, that the Company may not repay or prepay the PIK Note issued to the Lender unless and until this Term Note has been repaid or prepaid in full (including, without limitation, repayment following acceleration of the Loans and the PIK Notes). If any one or more of the Events of Default shall occur, the entire unpaid principal amount of this Note and all of the unpaid interest accrued thereon may become or be declared due and payable in the manner and with the effect provided in the Term Loan Agreement. No delay or omission on the part of the Lender or any holder hereof in exercising any right hereunder shall operate as a waiver of such right or of any other rights of the Lender or such holder, nor shall any delay, omission or waiver on any one occasion be deemed a bar or waiver of the same or any other right on any further occasion. The Company and every endorser and guarantor of this Note or the obligation represented hereby waives to the full extent permitted by law, presentment, demand, notice, protest and all other demands and notices in connection with the delivery, acceptance, performance, default or enforcement of this Note, and assents to any extension or postponement of the time of payment or any other indulgence, to any release of collateral and to the addition or release of any other party or person primarily or secondarily liable. THIS NOTE AND THE OBLIGATIONS OF THE COMPANY HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. IN WITNESS WHEREOF, the undersigned has caused this Note to be signed in its corporate name by its duly authorized officer as of the day and year first above written. AMERICA WEST AIRLINES, INC. By: --------------------------------- Name: Title: EXHIBIT III-A FORM OF PIK NOTE January , 2002 FOR VALUE RECEIVED, the undersigned AMERICA WEST AIRLINES, INC., a Delaware corporation (the "Company"), hereby promises to pay to the order of [ ] (the "Lender"): (a) from time to time, at the times, in the amounts and in the manner provided in the Term Loan Agreement (as hereinafter defined) interest equal to two percent per annum of the outstanding principal amount of the Lender's Loan (as defined in the Term Loan Agreement as defined below) to the Company pursuant to the Amended and Restated Term Loan Agreement dated as of January _, 2002 (as amended and in effect from time to time, the "Term Loan Agreement"), among the Company, the Lender, the Agent and the other parties thereto, provided, however, that such interest shall be capitalized as the principal of this PIK Note from month to month as further set out in the Schedule hereto and paid in kind until this PIK Note is due and payable; and (b) on December 31, 2004, the aggregate principal amount owed under this PIK Note is due and payable, and (c) interest on the principal balance hereof from time to time outstanding from the Closing Date (as defined in the Term Loan Agreement) through and including December 31, 2004 shall accrue at the times, at the rates and in the manner provided in the Term Loan Agreement and shall be compounded monthly, provided, however, that such interest shall be added to the principal of this PIK Note from month to month as further set out in the Schedule hereto and paid in kind until this PIK Note is due and payable. All capitalized terms used in this PIK Note and not otherwise defined herein shall have the same meanings herein as in the Term Loan Agreement. This PIK Note evidences the Company's payment in kind of interest on the Loan maintained by the Lender under, and has been issued by the Company in accordance with, the terms of the Term Loan Agreement. The Lender and any Eligible Assignee of the Lender under Section 9.1 of the Term Loan Agreement is entitled to the benefits of the Term Loan Agreement, the Security Agreements and the other Loan Documents. The Company has the right in certain circumstances and the obligation under certain other circumstances to prepay the whole or part of the principal of this PIK Note on the terms and conditions specified in the Term Loan Agreement; provided, however, that the Company may not prepay this PIK Note unless and until the Lender's Term Note has been prepaid in full (including, without limitation, following acceleration of the Loans and the PIK Notes). If any one or more Events of Default shall occur, the entire unpaid principal amount of this PIK Note and all of the unpaid interest accrued thereon may become or be declared due and payable in the manner and with the effect provided in the Term Loan Agreement; provided, that, after such acceleration interest shall no longer be paid in kind under this PIK Note but shall be payable when accrued and shall continue to accrue on the outstanding principal amount of the Lender's Loan and this PIK Note and on all such unpaid and accrued interest at a rate per annum equal to the default rate set forth in Section 2.2E of the Term Loan Agreement (4% per annum). No delay or omission on the part of the Lender or any holder hereof in exercising any right hereunder shall operate as a waiver of such right or of any other rights of the Lender or such holder, nor shall any delay, omission or waiver on any one occasion be deemed a bar or waiver of the same or any other right on any further occasion. The Company and every endorser and guarantor of this PIK Note or the obligation represented hereby waives to the full extent permitted by law, presentment, demand, notice, protest and all other demands and notices in connection with the delivery, acceptance, performance, default or enforcement of this PIK Note, and assents to any extension or postponement of the time of payment or any other indulgence, to any release of collateral and to the addition or release of any other party or person primarily or secondarily liable. THIS PIK NOTE AND THE OBLIGATIONS OF THE COMPANY HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. IN WITNESS WHEREOF, the undersigned has caused this PIK Note to be signed in its corporate name by its duly authorized officer as of the day and year first above written. AMERICA WEST AIRLINES, INC. By: ----------------------------- Name: Title: EXHIBIT IV AMERICA WEST AIRLINES, INC., FORM OF COMPLIANCE CERTIFICATE Reference is made to the Amended and Restated Term Loan Agreement dated as of January , 2002 (as it may be amended, restated or supplemented or otherwise modified from time to time, the "Credit Agreement") among America West Airlines, Inc. (the "Company"), the lenders from time to time party thereto (the "Banks"), and The Industrial Bank of Japan, Limited, as agent for the Banks (in such capacity, the "Agent"). The undersigned, the Vice President & Treasurer of the Company, and acting on behalf of the Company, hereby certifies as of the date hereof that he is the officer named above of the Company, and is duly authorized to execute and deliver this Certificate to the Banks and the Agent on behalf of the Company, and that: 1. The undersigned has reviewed and is familiar with the terms of the Credit Agreement and has made, or has caused to be made under his supervision, a review of the provisions of the Credit Agreement and related definitions and the transactions and conditions (financial or otherwise) of the Company and its Subsidiaries, if any, during the period covered by this Certificate sufficient in his opinion to be able to provide this certification. 2. To the best knowledge of the undersigned, no Potential Event of Default or Event of Default exists. 3. The reserve of Cash and Cash Equivalents (that in either case are free from Liens) of the Company and its Wholly Owned Subsidiaries (without regard to Cash and Cash Equivalents in the Cash Collateral Account) is more than $100,000,000. 4. Attached hereto is a revised Schedule 9(a) to the Receivables Security Agreement, which such schedule shall replace Schedule 9(a) in full. The aggregate value of the Receivables Collateral as reflected on the Schedule 9(a) attached hereto exceeds $6,000,000. IN WITNESS WHEREOF, the undersigned has executed this Certificate on behalf of the Company as of 200 . AMERICA WEST AIRLINES, INC. By: ------------------------------- Name: Title: Vice President and Treasurer EXHIBIT VI FORM OF ASSIGNMENT AGREEMENT Dated as of _________________________ Reference is made to the Amended and Restated Term Loan Agreement, dated as of January __, 2002 (as from time to time amended and in effect, the "Credit Agreement"), by and among America West Airlines, Inc., a Delaware corporation (the "Company"), The Industrial Bank of Japan, Limited and the other banking institutions referred to therein as Lenders (collectively, the "Lenders"), and The Industrial Bank of Japan, Limited, as agent (hereinafter, in such capacity, the "Agent") for the Lenders. Capitalized terms used herein and not otherwise defined shall have the meanings assigned to such terms in the Credit Agreement. _____________________ (the "Assignor") and (the __________________ (the "Assignee") hereby agree as follows: 1. ASSIGNMENT. Subject to the terms and conditions of this Assignment and Acceptance, the Assignor hereby sells and assigns to the Assignee, and the Assignee hereby purchases and assumes without recourse to the Assignor, a $_____ interest in and to the rights, benefits, indemnities and obligations of the Assignor under the Credit Agreement equal to __% in respect of the Assignor's Loans as in effect immediately prior to the Effective Date (as hereinafter defined). 2. ASSIGNOR'S REPRESENTATIONS. The Assignor (i) represents and warrants that (A) it is legally authorized to enter into this Assignment Agreement, (B) as of the date hereof, its Pro Rata Share is __%, the aggregate outstanding principal balance of its Loans equals $__ [and the aggregate outstanding principal balance of its PIK Note is $__] (ii) makes no representation or warranty, express or implied, and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with the Credit Agreement or any of the other Loan Documents or the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Credit Agreement, the other Loan Documents or any other instrument or document furnished pursuant thereto or the attachment, perfection or priority of any security interest or mortgage, other than that it is the legal and beneficial owner of the interest being assigned by it hereunder free and clear of any claim or encumbrance; (iii) makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Company or any of its Subsidiaries or any other Person primarily or secondarily liable in respect of any of the Obligations, or the performance or observance by the Company or any of its Subsidiaries or any other Person primarily or secondarily liable in respect of any of the Obligations of any of its obligations under the Credit Agreement or any of the other Loan Documents or any other instrument or document delivered or executed pursuant thereto; and (iv) attaches hereto the Term Note [and PlK Note] delivered to it under the Credit Agreement. 3. The Assignor requests that the Company exchange the Assignor's Term Note [and PIK Note] for a new Term Note [and PIK Note] payable to the Assignor and the Assignee as follows:

Notes Payable to [Amount of PIK Note] Amount of Term the Order of: Note Assignor [$_______________] $_________ Assignee [$_______________] $_________

4. ASSIGNEE'S REPRESENTATIONS. The Assignee (i) represents and warrants that (A) it is duly and legally authorized to enter into this Assignment Agreement, (B) the execution, delivery and performance of this Assignment Agreement do not conflict with any provision of law or of the charter or by-laws of the Assignee, or of any agreement binding on the Assignee, (C) all acts, conditions and things required to be done and performed and to have occurred prior to the execution, delivery and performance of this Assignment Agreement, and to render the same the legal, valid and binding obligation of the Assignee, enforceable against it in accordance with its terms, have been done and performed and have occurred in due and strict compliance with all applicable laws; (ii) confirms that it has received a copy of the Credit Agreement, together with copies of the most recent financial statements delivered pursuant to Section 5.1(i) and (ii) thereof and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment Agreement; (iii) agrees that it will, independently and without reliance upon the Assignor, the Agent or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement; (iv) represents and warrants that it is an Eligible Assignee; (v) appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers under the Credit Agreement and the other Loan Documents as are delegated to the Agent by the terms thereof, together with such powers as are reasonably incidental thereto; (vi) represents and warrants that as of the date hereof, it is not entitled to any additional amounts payable under Section 2.7 of the Credit Agreement and as of the date hereof, no Tax would be imposed upon any amounts payable to it hereunder; (vii) agrees to be bound by the provisions of Section 8 of the Credit Agreement; and (viii) agrees that it will perform in accordance with their terms all the obligations which by the terms of the Credit Agreement are required to be performed by it as a Lender. 5. EFFECTIVE DATE. The effective date for this Assignment Agreement shall be _______ (the "Effective Date"). Following the execution of this Assignment Agreement, each party hereto shall deliver its duly executed counterpart hereof to the Agent for acceptance by the Agent and recording in the Register by the Agent. 6. RIGHTS UNDER CREDIT AGREEMENT. Upon such acceptance and recording, from and after the Effective Date, (i) the Assignee shall be a party to the Credit Agreement and, to the extent provided in this Assignment Agreement, have the rights and obligations of a Lender thereunder, and (ii) the Assignor shall, with respect to that portion of its interest under the Credit Agreement assigned hereunder, relinquish its rights and be released from its obligations under the Credit Agreement; provided, however, that the Assignor shall retain its rights to be indemnified pursuant to Section 9.3 of the Credit Agreement with respect to any claims or actions arising prior to the Effective Date. 7. PAYMENTS. Upon such acceptance of this Assignment Agreement by the Agent and such recording, from and after the Effective Date, the Agent shall make all payments in respect of the rights and interests assigned hereby (including payments of principal, interest, fees and other amounts) to the Assignee. The Assignor and the Assignee shall make any appropriate adjustments in payments for periods prior to the Effective Date by the Agent or with respect to the making of this assignment directly between themselves. 8. GOVERNING LAW. THIS ASSIGNMENT AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. 9. COUNTERPARTS. This Assignment Agreement may be executed in any number of counterparts which shall together constitute but one and the same agreement. IN WITNESS WHEREOF, intending to be legally bound, each of the undersigned has caused this Assignment and Acceptance to be executed on its behalf by its officer thereunto duly authorized, as of the date first above written. [THE ASSIGNOR] By: ---------------------------------- Name: Title: [THE ASSIGNEE] By: ---------------------------------- Name: Title: CONSENTED TO: THE INDUSTRIAL BANK OF JAPAN, LIMITED, as Agent By: ------------------------------------------ Name: Title: EXHIBIT VIII Financial Condition Certificate I, _________________________________, hereby certify that I am the __________________________________ of America West Airlines, Inc., a Delaware corporation (the "Company"), that I am familiar with its properties, businesses, assets, finances and operations and that I am duly authorized to execute this certificate on behalf of the Company, which is being delivered pursuant to Section 3.1C of the Amended and Restated Term Loan Agreement, dated as of January , 2002 (the "Credit Agreement") among the Lenders named therein (the "Lenders") and The Industrial Bank of Japan, as Agent for the Lenders (the "Agent"). Terms defined in the Credit Agreement are used herein as therein defined unless otherwise defined herein. For purposes of this certificate, the terms below shall have the following definitions: (a) "present fair saleable value" The amount that could be obtained by an independent willing seller from an independent willing buyer if the assets of the Company and its Subsidiaries taken as a whole are sold with reasonable promptness in an arm's-length transaction under present conditions for the sale of comparable business enterprises. (b) "contingent liabilities" The maximum estimated amount of liabilities reasonably likely to result from pending litigation, asserted claims and assessments, guaranties, uninsured risks and other contingent liabilities of the Company and its Subsidiaries taken as a whole after giving effect to the borrowing under the Credit Agreement. (c) "would constitute an unreasonably small capital" As of the date hereof, the Company and its Subsidiaries taken as a whole is a going concern and has sufficient capital to ensure that it will continue to be a going concern in the business in which it is engaged and proposes to be engaged. I further certify that I have reviewed the Loan Documents and the contents of this certificate and, in connection therewith, have made such investigation and inquiries as I deem necessary and appropriate therefor. I hereby further certify that: 1. On the date hereof, after giving effect to the transactions contemplated by the Credit Agreement, the Government Guaranteed Loan and the other Loan Documents, the present fair saleable value of any and all property of the Company and its Subsidiaries taken as a whole is greater than the total amount of liabilities, including contingent liabilities, of the Company and its Subsidiaries taken as a whole. 2. On the date hereof, after giving effect to the transactions contemplated by the Credit Agreement, the Government Guaranteed Loan and the other Loan Documents, the present fair saleable value of the assets of the Company and its Subsidiaries taken as a whole exceeds the amount that will be required to pay the probable liability of the Company and its Subsidiaries taken as a whole on its existing debts as they become absolute and matured considering all financing alternatives and potential asset sales reasonably available to the Company. 3. The Company and its Subsidiaries do not intend to or believe that they will incur debts and liabilities that will be beyond their ability to pay as such debts and liabilities mature. 4. On the date hereof, after giving effect to the transactions contemplated by the Credit Agreement, the Government Guaranteed Loan and the other Loan Documents, the Company and its Subsidiaries are not engaged in a transaction, and are not about to engage in business or a transaction, for which their property would constitute an unreasonably small capital. 5. The Company and its Subsidiaries taken as a whole is solvent within the meaning given that term and similar terms under applicable laws relating to fraudulent transfers and conveyances. This certificate is being delivered solely to satisfy the Company's obligations pursuant to Section 3.C of the Credit Agreement and in my capacity as of the Company (and not in my personal capacity). All statements made herein are to the best of my knowledge after making such inquiries and analyses as I have deemed necessary or appropriate for the opinions herein stated. IN WITNESS WHEREOF, the undersigned has executed this certificate on behalf of the Company this day of January, 2002. AMERICA WEST AIRLINES, INC. By: ------------------------------- Title: EXHIBIT IX Date: _________ BORROWING BASE CERTIFICATE ________________________________________________________________________________ Reference is made to the Amended and Restated Term Loan Agreement dated as of January __, 2002 (as may be amended, restated or supplemented or otherwise modified from time to time, the "Credit Agreement") among America West Airlines, Inc. (the "Company"), the lenders from time to time party thereto and The Industrial Bank of Japan Limited, Los Angeles Agency, as arranger, initial issuing bank and as agent for such lenders. Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Credit Agreement. The undersigned, being the Vice President and Treasurer of the Company, does hereby certify for and on behalf of the Company, as of __________ the following: ________________________________________________________________________________ BORROWING BASE COLLATERAL ________________________________________________________________________________ A CASH AND PERMITTED CASH A Collateral Balance: EQUIVALENTS _____________________________________ Borrowing Base Value: ________________________________________________________________________________ B STAGE III AIRCRAFT B Appraised Value: _____________________________________ Borrowing Base Value: ________________________________________________________________________________ C ROTABLES C Book Value: _____________________________________ Adjusted Fair Market Value: _____________________________________ Lower of Book Value or Adjusted Fair Market Value: _____________________________________ Borrowing Base Value: ________________________________________________________________________________ D MAINTENANCE FACILITY/HANGAR D Appraised Value: _____________________________________ Borrowing Base: ________________________________________________________________________________ F SPARE ENGINES F Appraised Value: _____________________________________ Borrowing Base Value: ________________________________________________________________________________ _____________________________________________________________________________ TOTAL BORROWING BASE VALUE: _____________________________________________________________________________ TOTAL LOANS $ __________ _____________________________________________________________________________ DEFICIENCY $ __________ _____________________________________________________________________________ In addition, the Company certifies that: (1) None of the Borrowing Base Collateral included in the calculation of the Borrowing Base is subject to an Event of Loss, Event of Damage, Repairable Event or Adjustment Event; (2) No reduction in the Borrowing Base is required pursuant to subsection 2.4B(ii)(1)(e) of the Credit Agreement; and (3) The portion of the Borrowing Base attributable to Rotables stated above does not exceed thirty five percent (35%) (rounded to the nearest whole number) of the aggregate Borrowing Base. AMERICA WEST AIRLINES, INC. By: _______________________________ Name: Title: Exhibit X America West Airlines, Inc. ("AWA") will be entering into a joint venture arrangement with GE Capital Aviation Training, Ltd. ("GECAT"), pursuant to which AWA and GECAT will enter into a limited liability company agreement (the "LLC Agreement") relating to a Delaware limited liability company (the "JV LLC"). AWA will make an initial capital contribution to the JV LLC in the amount of up to $500,000 and will make additional capital contributions to the JV LLC as may be required or allowed pursuant to the LLC Agreement. In connection with the joint venture arrangement, AWA will sublease a portion of its new Phoenix, Arizona facility that is currently under construction to the JV LLC. Following the formation of the JV LLC, AWA will assign lease agreements for six flight simulators to the JV LLC. The JV LLC may enter into additional lease agreements for flight simulators. Upon the expiration of the term of the JV LLC or the occurrence of certain dissolution events, the JV LLC will assign some or all of the lease agreements to AWA and, in certain circumstances, AWA will have the option to purchase the flight simulators. EX-10.53 13 p66064ex10-53.txt EX-10.53 Exhibit 10.53 UNDERTAKING THIS UNDERTAKING (the "Undertaking") is made and entered into as of this 18th day of January 2002 by TPG Partners, L.P., a Delaware limited partnership, TPG Parallel I L.P., a Delaware limited partnership, and Air Partners II, L.P., a Texas limited partnership (collectively, the "TPG Entities") and America West Holdings Corporation, a Delaware corporation (the "Company"), for the benefit of the Air Transportation Stabilization Board (the "ATSB"). RECITALS WHEREAS, the TPG Entities are the beneficial owners of an aggregate of nine hundred forty-one thousand four hundred thirty-one (941,431) shares (the "TPG Shares") of Class A Common Stock, par value $0.01 per share (the "Class A Common"), of the Company; WHEREAS, the ATSB is entering into a Guarantee Agreement of even date herewith for the benefit of the Company's subsidiary, America West Airlines, Inc. (the "Guarantee"); WHEREAS, the Company is issuing to the ATSB that certain warrant of even date herewith (the "Warrant") to purchase eighteen million seven hundred fifty thousand (18,750,000) shares (as adjusted pursuant to the terms of the Warrant, the "Warrant Shares") of the Class B Common Stock, par value $0.01 per share (the "Class B Common") of the Company; and WHEREAS, the ATSB has required the execution and delivery of this Undertaking as a condition to entering into the Guarantee. NOW, THEREFORE, in consideration of these premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the TPG Entities agree as follows: 1. REPRESENTATIONS. The TPG Entities jointly and severally represent and warrant that: (i) the TPG Entities are the beneficial owners of the TPG Shares, which represent all of the outstanding shares of Class A Common of the Company; (ii) each TPG Entity is duly organized, validly existing and in good standing under the laws of the state of its formation; (iii) the execution, delivery and performance by each TPG Entity of this Undertaking and the consummation of the transactions contemplated hereby: (a) are within the powers of each TPG Entity and have been duly authorized by all necessary partnership action on the part of the TPG Entities and all necessary corporate action on the part of any general partner of any TPG Entity or any general partner thereof; (b) do not contravene the constituent documents of any TPG Entity or any law, rule, regulation or administrative or court order binding on or affecting any TPG Entity or its property; and (c) do not conflict with or constitute a breach of, or default under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of any TPG Entity pursuant to any contract, indenture, mortgage, loan 1. agreement, note or other instrument to which any TPG Entity is a party or by which any TPG Entity may be bound or to which the assets of any TPG Entity may be subject; (iv) this Undertaking constitutes a valid and binding obligation of each TPG Entity, enforceable against it in accordance with its terms, except as the enforceability thereof may be subject to or limited by bankruptcy, insolvency, reorganization, arrangement, moratorium or other similar laws relating to or affecting the rights of creditors generally and general principles (whether applied in an action at law or a suit in equity); and (v) no authorization, approval, consent or order of any court or governmental authority or agency or any other person or entity is required in connection with the execution and delivery by any TPG Entity of this Undertaking or its performance hereunder. 2. RESTRICTIONS AGAINST TRANSFER. During the term of this Undertaking, the TPG Entities shall not assign, transfer, sell or otherwise dispose of, directly or indirectly, any TPG Shares, other than pursuant to or in connection with a transaction or series of related transactions in which the holders of all outstanding shares of the Class B Common are entitled to participate with respect to all shares of Class B Common in such transaction or series of related transactions and the holders of greater than fifty percent (50%) of the Company's Class B Common then outstanding either (i) vote their shares of Class B Common in favor of such transaction or series of related transactions or (ii) tender their shares of Class B Common for sale in such transaction or series of related transactions; provided, however, that nothing herein shall be deemed to require that the form or amount of consideration payable for the shares of Class B Common be the same as the form or amount of consideration payable to the TPG Entities for the TPG Shares. For purposes of determining whether the holders of greater than fifty percent (50%) of the outstanding Class B Common have voted in favor of the transaction or series of related transactions or tender their shares in such transaction or series of related transactions, if the ATSB consents in writing to the transaction or series of related transactions, the actual number of outstanding shares of Class B Common shall be deemed to be outstanding, and if the ATSB does not consent in writing to the transaction or series of related transactions, the number of outstanding shares deemed to be outstanding shall equal the sum of the actual number of shares outstanding plus the number of shares issuable upon exercise of the Warrant. The closing of any transaction or series of related transactions shall be simultaneous for the TPG Shares and any shares of Class B Common. The TPG Entities agree that the Company may instruct its transfer agent to impose transfer restrictions on the TPG Shares to enforce the provisions of this Agreement. 3. AGREEMENT OF THE COMPANY. The Company agrees to take all commercially reasonable actions not to permit any transfer by any TPG Entity, which does not comply with the provisions of Section 2 and 4 hereof. 4. EXEMPT TRANSFERS. Notwithstanding the foregoing but subject to the further provisions of this Section 4, the restriction against transfer set forth in Section 2 above shall not apply to (i) any transfer by a 2. TPG Entity to an affiliate (as defined below), (ii) any transfer by a TPG Entity, which is a limited or general partnership, limited liability company or similar entity, by way of a distribution to any or all of its partners or former partners or member or former members, (iii) any transfer without consideration to any descendants or spouse of a person to whom a transfer is permitted by clauses (i) or (ii) above or to trusts for the benefit such descendants or spouse, (iv) any transfer by a TPG Entity to the Company and (v) any conversion by a TPG Entity of the TPG Shares into shares of Class B Common and any subsequent transfer of such shares of Class B Common; provided that in the event of any transfer made pursuant to clauses (i), (ii) or (iii) above, (A) the TPG Entity shall inform the Company and the ATSB of such transfer prior to effecting it and (B) as a condition to any such transfer, the transferee(s) shall enter into a written agreement to be bound by and comply with all provisions of this Undertaking, as if it were an original signatory hereunder. Such transferred TPG Shares shall remain "TPG Shares" hereunder, and such transferee shall be treated as a "TPG Entity" for purposes of this Undertaking (including Section 3 hereof). An "affiliate" of a TPG Entity is a person or entity that directly or indirectly through one or more intermediaries controls, is controlled by, or is under common control with such TPG Entity. None of the TPG Entities shall pledge or otherwise encumber any of the TPG Shares unless the conditions set forth in clauses (A) and (B) above are satisfied. 5. MISCELLANEOUS. 5.1 GOVERNING LAW. This Undertaking shall be governed by and construed under the laws of the State of New York as applied to agreements among New York residents entered into and to be performed entirely within New York, provided that the rights of the ATSB hereunder shall be governed and construed in accordance with Federal law, if and to the extent such Federal law is applicable, and otherwise in accordance with the laws of the State of New York. 5.2 AMENDMENT AND WAIVER. Any provision of this Undertaking may be amended and the observance thereof may be waived (either generally or in a particular instance and either retroactively or prospectively), or this Undertaking terminated, only by the written consent of (i) with respect to rights of the ATSB (and its successors and assigns), only by the ATSB (and its successors and assigns) and (ii) with respect to rights of the TPG Entities, only by TPG Partners, L.P. To the extent that the Warrant becomes exercisable for shares other than shares of Class B Common or the shares of Class A Common are changed or reclassified into, or exchanged for other shares of the Company or any other issuer (other than shares of Class B Common or shares of the same security that the shares of Class B Common are changed or reclassified into or exchanged for) as a result of any reclassification, reorganization, merger, consolidation or other corporate transaction, the TPG Entities shall be subject to such undertakings and agreements with respect to such other shares and the holders thereof as shall be necessary to achieve the intended purposes of this Undertaking and shall enter into such amendments or additional undertakings as the ATSB (and its successors and assigns) may reasonably request. 5.3 ENTIRE AGREEMENT. This Undertaking constitutes the entire agreement between the parties relative to the specific subject matter hereof. Any previous agreement among the parties relative to the specific subject matter hereof is superseded by this Undertaking. 3. 5.4 SUCCESSORS. This Undertaking and the rights and obligations of the parties hereunder shall inure to the benefit of, and be binding upon the parties hereto and their respective successors, assigns and legal representatives. 5.5 NO THIRD PARTY BENEFICIARIES. None of the provisions of this Undertaking is intended to provide any rights or remedies to any person or entity other than the ATSB and its successors, assigns and legal representatives. 5.6 NOTICES. All notices required or permitted hereunder shall be in writing and shall be deemed effectively given: (i) upon personal delivery to the party to be notified, (ii) when sent by confirmed electronic mail or facsimile if sent during normal business hours of the recipient; if not, then on the next business day, (iii) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (iv) one (1) day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent to the party to be notified at the address as set forth on the signature page hereof or at such other address as such party may designate by ten (10) days advance written notice to the other parties hereto. 5.7 SEVERABILITY. In the event one or more of the provisions of this Undertaking should, for any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provisions of this Undertaking, and this Undertaking shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein, and the parties hereto shall use their best efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction, it being intended that all of the rights and privileges of the parties shall be enforceable to the fullest extent permitted by law. 5.8 COUNTERPARTS. This Undertaking may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 5.9 TERM. The provisions of this Undertaking shall continue in full force and effect until the earlier of (i) such time as the TPG Entities cease to own any shares of Class A Common, (ii) the expiration of the Warrant, and (iii) the exercise in full of the Warrant and the sale of all the Warrant Shares received upon exercise. 4. The foregoing UNDERTAKING is hereby executed as of the date first above written. 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 A. Ekleberry -------------------------------------------------- Name: Richard A. Ekleberry ------------------------------------------------ Title: Vice President ----------------------------------------------- Address: 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 A. Ekleberry -------------------------------------------------- Name: Richard A. Ekleberry ------------------------------------------------ Title: Vice President ----------------------------------------------- Address: 301 Commerce Street, Suite 3300 --------------------------------------------- Fort Worth, Texas, 76102 --------------------------------------------- --------------------------------------------- AIR PARTNERS II, 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 A. Ekleberry -------------------------------------------------- Name: Richard A. Ekleberry ------------------------------------------------ Title: Vice President ----------------------------------------------- Address: 301 Commerce Street, Suite 3300 --------------------------------------------- Fort Worth, Texas 76102 --------------------------------------------- --------------------------------------------- AMERICA WEST HOLDINGS CORPORATION By: /s/ Bernard Han -------------------------------------------------- Name: Bernard Han ------------------------------------------------ Title: Executive Vice President and Chief Financial ----------------------------------------------- Officer ----------------------------------------------- Address: 111 West Rio Salado Parkway Tempe, AZ 85281 ACKNOWLEDGED TO AND AGREED BY: AIR TRANSPORTATION STABILIZATION BOARD By: /s/ Joseph P. Adams, Jr. -------------------------------------------------- Name: Joseph P. Adams, Jr. ------------------------------------------------ Title: Executive Director ----------------------------------------------- Address: 1120 Vermont Avenue, Suite 970 Washington, D.C. 20005 With a copy to: United States Department of the Treasury 1500 Pennsylvania Avenue, N.W. Washington, D.C. 20220 Attn: Deputy Assistant Secretary (Government Financial Policy) EX-99.1 14 p66064ex99-1.txt EX-99.1 EXHIBIT 99.1 Contacts: (Media) Jim Sabourin 480/693-5729 (Investors) Derek Kerr 480/693-5710 FOR IMMEDIATE RELEASE: Thurs., Jan. 31, 2002 AMERICA WEST REPORTS FOURTH QUARTER AND FULL-YEAR 2001 FINANCIAL RESULTS - Net loss for the fourth quarter was $60.9 million or $1.81 per share, including non-recurring charges and federal financial assistance related to the September 11 terrorist attacks. - Passenger revenue per available seat mile (RASM) declined 17.7 percent from the fourth quarter of 2000 due to a reduction in demand for air travel following the September 11 attacks and a reduction in business travel driven by an already slowing economy. RASM improved consistently throughout the fourth quarter. - Cost per available seat mile (CASM) declined 2.3 percent due to a 33 percent drop in average fuel price. - Operating performance continued to improve. Percentage of flights cancelled declined 85 percent. On-time performance improved 33 percent. Mishandled baggage was reduced by 39 percent. PHOENIX (NYSE:AWA)--America West Holdings Corporation, parent company of America West Airlines, Inc. and The Leisure Company, today reported a fourth quarter net loss of $60.9 million and a diluted loss per share of $1.81. For the same period a year ago, America West reported a net loss of $41.7 million, or $1.24 per share. The results include approximately $8.8 million of pre-tax, non-recurring employee benefit expenses ($5.5 million after taxes) and $2.7 million of pre-tax special charges ($1.7 million after taxes) related to the early termination of aircraft leases offset by an $8.8 million pre-tax gain from an insurance settlement ($5.5 million after taxes). The results also include approximately $48 million of pre-tax federal financial assistance ($29.9 million after taxes) following the September 11 terrorist attacks. more... AMERICA WEST FINANCIAL RESULTS / 2 Excluding the non-recurring items and federal grant, the company's net loss for the quarter was $89.1 million, or $2.64 per share. "America West's fourth quarter results reflect the continued impact on the airline industry of the September 11 terrorist attacks," said W. Douglas Parker, chairman and chief executive officer. "Despite the difficult times facing the airline industry, we are encouraged by our improved liquidity position, our incredible turnaround in operations and the trends in revenue performance." Operating revenues for the quarter were $400 million, down 30 percent from the same period in 2000. Available seat miles (ASMs) declined 14.8 percent due to a reduction in scheduled flights after September 11, driven by reduced demand. Revenue passenger miles were 4.0 billion, down 14.8 percent from fourth quarter 2000, consistent with the reduction in capacity. The airline's passenger load factor was 68.5 percent. Passenger yields fell 17.8 percent to 9.38 cents due to an industry-wide decline in business travel and aggressive fare sales since September 11. The decrease in yields caused passenger revenue per available seat mile (RASM) to decline 17.7 percent to 6.42 cents. RASM improved throughout the quarter, however, as December's year-over-year decline in RASM of 15.1 percent was significantly better than the 21.1 percent recorded in October or 17.4 percent in November. Operating cost per available seat mile (CASM) for the fourth quarter of 2001 declined 2.3 percent due to a 33 percent decline in average fuel price. Average fuel price excluding tax was 71.8 cents per gallon versus $1.08 in the fourth quarter of 2000. Excluding fuel and non-recurring items, CASM increased 7.7 percent as ASMs were reduced significantly without a commensurate reduction in costs. For the full year 2001, America West reported a net loss of $147.9 million and a diluted loss per share of $4.39. Revenues for the full year decreased 11.9 percent to $2.1 billion. more... AMERICA WEST FINANCIAL RESULTS / 3 America West continued its dramatic climb in operating performance through the fourth quarter of 2001. For the fourth quarter, as reported to the Department of Transportation (DOT), 85.2 percent of America West flights arrived on-time, compared with 64.1 percent in the same quarter of 2000. Completion factor increased to 99.3 percent from 95.4 percent. Additionally, America West posted a 39 percent improvement in mishandled baggage. As a result of the dramatic improvements, the airline currently ranks near the top of the industry in these important service measurements, and customer complaints to the DOT have dropped 55 percent. "Our employees deserve credit for the outstanding job they've done in improving the airline's operations in 2001, and for maintaining this level of service while providing a heightened level of security for our customers," added Parker. "It's clear that America West is operating a far different airline today than it was 18 months ago." On January 18, 2002, America West closed a term loan in the amount of $429 million and completed arrangements for more than $600 million in concessions, financing and financial assistance following final approval by the Air Transportation Stabilization Board (ATSB) of approximately $380 million in loan guarantees under the Air Transportation Safety and Stabilization Act. Key terms of the loan agreement and related transactions are disclosed in the company's Form 8-K to be filed with the Securities and Exchange Commission today. America West will conduct a live audio webcast of its fourth quarter earnings conference call today at 1:00 p.m. EST (11:00 a.m. MST). The webcast will be available to the public on a listen-only basis at www.americawest.com. An archive will be available through Feb. 3, 2002. more... AMERICA WEST FINANCIAL RESULTS / 4 America West Holdings Corporation is an aviation and travel services company. Wholly owned subsidiary America West Airlines is the nation's eighth largest carrier serving 88 destinations in the U.S., Canada and Mexico. The Leisure Company, also a wholly owned subsidiary, is one of the nation's largest tour packagers. Financial and statistical tables follow: This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties that could cause America West's actual results and financial position to differ materially from these statements. The risks and uncertainties include, but are not limited to, the aftermath of the September 11 terrorist attacks, the resulting negative impacts on revenues due to airport closures and reduced demand for air travel, increased costs due to enhanced security measures and related government directives, the ability of the company to obtain sufficient additional financing if necessary to survive the adverse economic effects following the September 11 attacks, limitations on financing flexibility due to high levels of debt, financial and other covenants in debt instruments and cross default provisions and the potential dilutive impact of the warrants and convertible notes issued in connection with the term loan and related transactions, the cyclical nature of the airline industry, competitive practices in the industry, the impact of changes in fuel prices, relations with unionized employees generally and the impact of the process of negotiation of labor contracts on the company's operations, the outcome of negotiations of collective bargaining agreements and the impact of these agreements on labor costs, the impact of industry regulations and other factors described from time to time in the company's publicly available SEC reports. The company undertakes no obligation to publicly update any forward-looking statement to reflect events or circumstances that may arise after the date of this press release. America West Holdings Corporation Fourth Quarter 2001 Financial Results / 5 America West Holdings Corporation Condensed Consolidated Statements of Operations (in thousands except per share amounts) (unaudited)

3 Months Ended 3 Months Ended December 31, December 31, Percent 2001 2000 Change --------- --------- --------- Operating revenues: Passenger $ 378,338 $ 539,958 (29.9) Cargo 6,225 9,593 (35.1) Other 15,323 23,445 (34.6) --------- --------- Total operating revenues 399,886 572,996 (30.2) --------- --------- Operating expenses: Salaries and related costs 151,088 149,094 1.3 Aircraft rental 90,108 86,354 4.3 Rentals and landing fees 35,587 33,942 4.8 Aircraft fuel 64,547 115,863 (44.3) Agency commissions 13,068 18,775 (30.4) Aircraft maintenance materials and repairs 60,072 72,958 (17.7) Depreciation and amortization 16,516 15,125 9.2 Reorganization value amortization 4,974 4,974 -- Special charges 2,657 -- -- Other 98,918 148,125 (33.2) --------- --------- Total operating expenses 537,535 645,210 (16.7) --------- --------- Operating loss (137,649) (72,214) 90.6 --------- --------- Nonoperating income (expenses): Interest income 3,415 4,606 (25.9) Interest expense, net (7,209) (4,048) 78.1 Federal government assistance 47,964 -- -- Other, net (68) 620 -- --------- --------- Total nonoperating income (expenses), net 44,102 1,178 -- --------- --------- Loss before income taxes (93,547) (71,036) 31.7 --------- --------- Income tax benefit (32,675) (29,293) 11.5 --------- --------- Net loss $ (60,872) $ (41,743) 45.8 ========= ========= Earnings (loss) per share: Basic: $ (1.81) $ (1.24) 45.6 ========= ========= Diluted: $ (1.81) $ (1.24) 45.6 ========= ========= Shares used for computation: Basic: 33,720 33,784 (0.2) ========= ========= Diluted: 33,720 33,784 (0.2) ========= =========

America West Holdings Corporation Fourth Quarter 2001 Financial Results / 6 America West Airlines, Inc. Statements of Operations (in thousands) (unaudited)

3 Months Ended 3 Months Ended December 31, December 31, Percent 2001 2000 Change --------- --------- --------- Operating revenues: Passenger $ 378,338 $ 539,958 (29.9) Cargo 6,225 9,593 (35.1) Other 6,755 13,165 (48.7) --------- --------- Total operating revenues 391,318 562,716 (30.5) --------- --------- Operating expenses: Salaries and related costs 150,740 148,524 1.5 Aircraft rental 90,108 86,354 4.3 Rentals and landing fees 35,587 33,941 4.8 Aircraft fuel 64,547 115,863 (44.3) Agency commissions 13,068 18,775 (30.4) Aircraft maintenance materials and repairs 60,072 72,958 (17.7) Depreciation and amortization 16,516 15,125 9.2 Reorganization value amortization 4,974 4,974 -- Special charges 2,657 -- -- Other 91,135 139,150 (34.5) --------- --------- Total operating expenses 529,404 635,664 (16.7) --------- --------- Operating loss (138,086) (72,948) 89.3 --------- --------- Nonoperating income (expenses): Interest income 4,875 6,796 (28.3) Interest expense, net (8,581) (5,936) 44.6 Federal government assistance 47,964 -- -- Other, net 161 1,768 (90.9) --------- --------- Total nonoperating income (expenses), net 44,419 2,628 -- --------- --------- Loss before income taxes $(93,667) $ (70,320) 33.2 ========= =========

America West Holdings Corporation Fourth Quarter 2001 Financial Results / 7

3 Months Ended 3 Months Ended December 31, December 31, Percent 2001 2000 Change --------- --------- --------- Operating Statistics: Number of aircraft at end of period 146 138 5.8 Available seat miles/ASMs (in millions) 5,892 6,918 (14.8) Block hours 110,714 132,262 (16.3) Average stage length (miles) 901 885 1.8 Revenue passenger miles/RPMs (in millions) 4,034 4,733 (14.8) Load factor (%) 68.5 68.4 0.1 points Passenger enplanements (000) 4,144 4,958 (16.4) Passenger yield (cents) 9.38 11.41 (17.8) Passenger revenue per ASM (cents) 6.42 7.80 (17.7) Operating revenue per ASM (cents) 6.64 8.13 (18.3) Operating cost per ASM (cents) 8.98 9.19 (2.3) Operating cost per ASM excluding non-recurring charges (cents) 8.94 8.96 (0.2) Operating cost per ASM excluding fuel and 7.84 7.28 7.7 non-recurring charges (cents) Average fuel cost per gallon (cents) 71.81 107.81 (33.4) Fuel gallons consumed (in millions) 89.9 107.4 (16.3)

America West Holdings Corporation Adjustment for Amortization of Excess Reorganization Value (ERV)(a) (in thousands except per share data)

3 Months Ended 3 Months Ended December 31, 2001 December 31, 2000 ---------- ---------- Diluted EPS - as reported $ (1.81) $ (1.24) Pretax amortization of ERV (b) 5,373 5,373 After-tax amortization of ERV (c) 5,373 5,373 Diluted shares 33,720 33,784 Amortization of ERV per share $ 0.16 $ 0.16 Diluted EPS - as adjusted $ (1.65) $ (1.08)

(a) ERV is an intangible asset that was established upon the Company's emergence from financial restructuring in August 1994 and is being amortized over a 20-year period. (b) Includes $399,000 of ERV for the fourth quarter 2001 and 2000, respectively, classified as TLC expenses. (c) Amortization of ERV is not a tax-deductible expense. America West Holdings Corporation Fourth Quarter 2001 Financial Results / 8 America West Holdings Corporation Condensed Consolidated Balance Sheets (in thousands of dollars)

December 31, 2001 December 31, 2000 ---------- ---------- (Unaudited) Assets Current assets Cash equivalents and short-term investments $ 156,865 $ 194,824 Other current assets, net 204,533 236,276 ---------- ---------- Total current assets 361,398 431,100 ---------- ---------- Property and equipment, net 825,903 754,327 Other assets Restricted cash 54,546 34,554 Reorganization value in excess of amounts allocable to identifiable assets, net 272,283 293,780 Other assets 56,779 54,754 ---------- ---------- Total assets $1,570,909 $1,568,515 ========== ========== Liabilities and Stockholders' Equity Current liabilities Current maturities of long-term debt and capital leases $ 119,141 $ 159,667 Other liabilities 561,998 454,530 ---------- ---------- Total current liabilities 681,139 614,197 ---------- ---------- Long-term debt, less current maturities 222,955 145,578 Deferred credits and other noncurrent liabilities 133,779 101,122 Deferred tax liability, net 10,692 40,545 Stockholders' equity 522,344 667,073 ---------- ---------- Total liabilities and stockholders' equity $1,570,909 $1,568,515 ========== ==========

America West Holdings Corporation Fourth Quarter 2001 Financial Results / 9 America West Holdings Corporation Condensed Consolidated Statements of Operations (in thousands except per share amounts) (unaudited)

12 Months Ended 12 Months Ended Percent December 31, 2001 December 31, 2000 Change ----------- ----------- ----- Operating revenues: Passenger $ 1,941,877 $ 2,179,811 (10.9) Cargo 33,824 37,377 (9.5) Other 90,212 127,166 (29.1) ----------- ----------- Total operating revenues 2,065,913 2,344,354 (11.9) ----------- ----------- Operating expenses: Salaries and related costs 603,819 559,578 7.9 Aircraft rental 355,517 331,005 7.4 Rentals and landing fees 140,372 130,680 7.4 Aircraft fuel 343,224 373,313 (8.1) Agency commissions 75,085 86,469 (13.2) Aircraft maintenance materials and repairs 257,939 258,432 (0.2) Depreciation and amortization 63,178 54,313 16.3 Reorganization value amortization 19,896 19,896 -- Special charges 38,352 -- -- Other 483,116 543,305 (11.1) ----------- ----------- Total operating expenses 2,380,498 2,356,991 1.0 ----------- ----------- Operating loss (314,585) (12,637) -- ----------- ----------- Nonoperating income (expenses): Interest income 14,785 15,980 (7.5) Interest expense, net (26,349) (15,449) 70.6 Federal government assistance 108,246 -- Other, net (3,198) 36,849 -- ----------- ----------- Total nonoperating income (expenses), net 93,484 37,380 -- ----------- ----------- Income (loss) before income taxes (221,101) 24,743 -- ----------- ----------- Income taxes (benefit) (73,230) 17,064 -- ----------- ----------- Net income (loss) $ (147,871) $ 7,679 -- =========== =========== Earnings (loss) per share: Basic: $ (4.39) $ 0.22 -- =========== =========== Diluted: $ (4.39) $ 0.22 -- =========== =========== Shares used for computation: Basic: 33,670 35,139 (4.2) =========== =========== Diluted: 33,670 35,688 (5.7) =========== ===========

America West Holdings Corporation Fourth Quarter 2001 Financial Results / 10 America West Airlines, Inc. Statements of Operations (in thousands) (unaudited)

12 Months Ended 12 Months Ended Percent December 31, 2001 December 31, 2000 Change ----------- ----------- ----- Operating revenues: Passenger $ 1,941,877 $ 2,179,811 (10.9) Cargo 33,824 37,377 (9.5) Other 45,262 73,683 (38.6) ----------- ----------- Total operating revenues 2,020,963 2,290,871 (11.8) ----------- ----------- Operating expenses: Salaries and related costs 601,986 556,906 8.1 Aircraft rental 355,517 331,005 7.4 Rentals and landing fees 140,372 130,679 7.4 Aircraft fuel 343,224 373,313 (8.1) Agency commissions 75,085 86,469 (13.2) Aircraft maintenance materials and repairs 257,939 258,432 (0.2) Depreciation and amortization 63,178 54,313 16.3 Reorganization value amortization 19,896 19,896 -- Special charges 38,352 -- -- Other 445,525 492,596 (9.6) ----------- ----------- Total operating expenses 2,341,074 2,303,609 1.6 ----------- ----------- Operating loss (320,111) (12,738) -- ----------- ----------- Nonoperating income (expenses): Interest income 22,654 23,706 (4.4) Interest expense, net (33,789) (22,939) 47.3 Federal government assistance 108,246 -- -- Other, net 63 27,112 (99.8) ----------- ----------- Total nonoperating income (expenses), net 97,174 27,879 -- ----------- ----------- Income (loss) before income taxes $ (222,937) $ 15,141 -- =========== ===========

America West Holdings Corporation Fourth Quarter 2001 Financial Results / 11

12 Months Ended 12 Months Ended Percent December 31, 2001 December 31, 2000 Change ----------- ----------- ----- Operating Statistics: Number of aircraft at end of period 146 138 5.8 Available seat miles/ASMs (in millions) 26,539 27,112 (2.1) Block hours 508,036 516,757 (1.7) Average stage length (miles) 894 878 1.8 Revenue passenger miles/RPMs (in millions) 19,074 19,113 (0.2) Load factor (%) 71.9 70.5 1.4 points Passenger enplanements (000) 19,576 19,954 (1.9) Passenger yield (cents) 10.18 11.40 (10.7) Passenger revenue per ASM (cents) 7.32 8.04 (9.0) Operating revenue per ASM (cents) 7.61 8.45 (9.9) Operating cost per ASM (cents) 8.82 8.50 3.8 Operating cost per ASM excluding non-recurring charges (cents) 8.68 8.44 2.8 Operating cost per ASM excluding fuel and 7.38 4.5 non-recurring charges (cents) 7.06 Average fuel cost per gallon (cents) 83.0 88.08 (5.8) Fuel gallons consumed (in millions) 413.5 423.8 (2.4)

America West Holdings Corporation Adjustment for Amortization of Excess Reorganization Value (ERV)(a) (in thousands except per share data)

12 Months Ended 12 Months Ended December 31, 2001 December 31, 2000 ------------ ------------ Diluted EPS - as reported $ (4.39) $ 0.22 Pretax amortization of ERV (b) 21,496 21,496 After-tax amortization of ERV (c) 21,496 21,496 Diluted shares 33,670 35,688 Amortization of ERV per share $ 0.64 $ 0.60 Diluted EPS - as adjusted $ (3.75) $ 0.82

(a) ERV is an intangible asset that was established upon the Company's emergence from financial restructuring in August 1994 and is being amortized over a 20-year period. (b) Includes $1,600,000 of ERV for the twelve months ended December 31, 2001 and 2000, respectively, classified as TLC expenses. (c) Amortization of ERV is not a tax-deductible expense. -----END PRIVACY-ENHANCED MESSAGE-----

EX-4.15

                                                                    Exhibit 4.15


================================================================================



                                    INDENTURE


                                     BETWEEN


                        AMERICA WEST HOLDINGS CORPORATION

                                       AND

                            WILMINGTON TRUST COMPANY,
                  AS TRUSTEE AND NOT IN ITS INDIVIDUAL CAPACITY



                     7.5% CONVERTIBLE SENIOR NOTES DUE 2009




                          DATED AS OF JANUARY 18, 2002



================================================================================

                             CROSS-REFERENCE TABLE*



Trust Indenture                                                        Indenture
Act Section                                                             Section
- -----------                                                             -------
                                                                   
310(a)(1).......................................................           5.11
   (a)(2).......................................................           5.11
   (a)(3).......................................................            n/a
   (a)(4).......................................................            n/a
   (a)(5).......................................................           5.11
   (b)..........................................................      5.3; 5.11
   (c)..........................................................            n/a

311(a)..........................................................           5.12
   (b)..........................................................           5.12
   (c)..........................................................            n/a

312(a)..........................................................            2.9
   (b)..........................................................           12.3
   (c)..........................................................           12.3

313(a)..........................................................            5.7
   (b)(1).......................................................            n/a
   (b)(2).......................................................            5.7
   (c)..........................................................      5.7; 12.2
   (d)..........................................................            5.7

314(a)(1),(2),(3)...............................................      9.4; 12.2
   (a)(4).......................................................      9.5; 12.6
   (b)..........................................................            n/a
   (c)(1).......................................................           12.5
   (c)(2).......................................................           12.5
   (c)(3).......................................................            n/a
   (d)..........................................................            n/a
   (e)..........................................................           12.6
   (f)..........................................................            n/a

315(a)..........................................................         5.1(a)
   (b)..........................................................      5.6; 12.2
   (c)..........................................................         5.1(b)
   (d)..........................................................         5.1(c)
   (e)..........................................................           4.14

316(a)(last sentence)...........................................      2.13, 7.2
   (a)(1)(A)....................................................            4.5
   (a)(1)(B)....................................................            4.4
   (a)(2).......................................................            n/a



                                       i



Trust Indenture                                                        Indenture
Act Section                                                             Section
- -----------                                                             -------
                                                                   
   (b)..........................................................            4.7
   (c)..........................................................            7.4

317(a)(1).......................................................            4.8
   (a)(2).......................................................            4.9
   (b)..........................................................            2.6

318(a)..........................................................           12.1
   (b)..........................................................            n/a
   (c)..........................................................           12.1



- ----------
"n/a" means not applicable.

* This Cross-Reference Table shall not, for any purpose, be deemed to be a part
of the Indenture.


                                       ii

                                TABLE OF CONTENTS



                                                                                           PAGE
                                                                                        
ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE.....................................    1

    Section 1.1. Definitions.............................................................    1

    Section 1.2. Incorporation by Reference of Trust Indenture Act.......................    9

    Section 1.3. Rules of Construction...................................................   10

ARTICLE 2 THE SECURITIES.................................................................   10

    Section 2.1. Title and Terms; Issuable In Series.....................................   10

    Section 2.2. Form of Securities......................................................   13

    Section 2.3. Security Legend.........................................................   14

    Section 2.4. Execution, Authentication, Delivery and Dating of the Securities........   17

    Section 2.5. Registrar and Paying Agent..............................................   18

    Section 2.6. Paying Agent to Hold Assets in Trust....................................   19

    Section 2.7. General Provisions Relating to Registration, Transfer and Exchange......   19

    Section 2.8. Book-Entry Provisions for the Global Securities.........................   20

    Section 2.9. Holder Lists............................................................   22

    Section 2.10. Persons Deemed Owners..................................................   22

    Section 2.11. Mutilated, Destroyed, Lost or Stolen Securities........................   22

    Section 2.12. Treasury Securities....................................................   23

    Section 2.13. Temporary Securities...................................................   23

    Section 2.14. Cancellation...........................................................   24

    Section 2.15. CUSIP Numbers..........................................................   24

    Section 2.16. Defaulted Interest.....................................................   24

ARTICLE 3 DISCHARGE OF INDENTURE.........................................................   24

    Section 3.1. Discharge of Liability on Securities....................................   24

    Section 3.2. Repayment to the Company................................................   25

ARTICLE 4 DEFAULTS AND REMEDIES..........................................................   25

    Section 4.1. Events of Default.......................................................   25

    Section 4.2. Acceleration of Maturity; Rescission and Annulment......................   27



                                      iii

                                                                                         
    Section 4.3. Other Remedies..........................................................   27

    Section 4.4. Waiver of Past Defaults.................................................   28

    Section 4.5. Control by Majority.....................................................   28

    Section 4.6. Limitation on Suit......................................................   28

    Section 4.7. Unconditional Rights of Holders to Receive Payment and to Convert.......   29

    Section 4.8. Collection of Indebtedness and Suits for Enforcement by the Trustee.....   29

    Section 4.9. Trustee May File Proofs of Claim........................................   30

    Section 4.10. Restoration of Rights and Remedies.....................................   31

    Section 4.11. Rights and Remedies Cumulative.........................................   31

    Section 4.12. Delay or Omission Not Waiver...........................................   31

    Section 4.13. Priorities.............................................................   31

    Section 4.14. Undertaking for Costs..................................................   32

    Section 4.15. Waiver of Stay or Extension Laws.......................................   32

ARTICLE 5 THE TRUSTEE....................................................................   32

    Section 5.1. Certain Duties and Responsibilities.....................................   32

    Section 5.2. Certain Rights of Trustee...............................................   34

    Section 5.3. Individual Rights of Trustee............................................   35

    Section 5.4. Money Held in Trust.....................................................   35

    Section 5.5. Trustee's Disclaimer....................................................   35

    Section 5.6. Notice of Defaults......................................................   35

    Section 5.7. Reports by Trustee to Holders...........................................   36

    Section 5.8. Compensation and Indemnification........................................   36

    Section 5.9. Replacement of Trustee..................................................   36

    Section 5.10. Successor Trustee by Merger, Etc.......................................   37

    Section 5.11. Corporate Trustee Required; Eligibility................................   38

    Section 5.12. Collection of Claims Against the Company...............................   38

ARTICLE 6 CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE...........................   38

    Section 6.1. Company and America West May Consolidate, Etc., Only on Certain Terms...   38

    Section 6.2. Successor Person Substituted............................................   39

ARTICLE 7 AMENDMENTS, SUPPLEMENTS AND WAIVERS............................................   39

    Section 7.1. Without Consent of Holders of Securities................................   39




                                       iv

                                                                                         
    Section 7.2. With Consent of Holders of Securities...................................   40

    Section 7.3. Compliance with Trust Indenture Act.....................................   41

    Section 7.4. Revocation of Consents and Effect of Consents or Votes..................   41

    Section 7.5. Notation on or Exchange of Securities...................................   42

    Section 7.6. Trustee to Sign Amendment, Etc..........................................   42

ARTICLE 8 MEETING OF HOLDERS OF SECURITIES...............................................   42

    Section 8.1. Purposes for Which Meetings May Be Called...............................   42

    Section 8.2. Call Notice and Place of Meetings.......................................   43

    Section 8.3. Persons Entitled to Vote at Meetings....................................   43

    Section 8.4. Quorum; Action..........................................................   43

    Section 8.5. Determination of Voting Rights; Conduct and Adjournment of Meetings.....   44

    Section 8.6. Counting Votes and Recording Action of Meetings.........................   45

ARTICLE 9 COVENANTS......................................................................   45

    Section 9.1. Payment of Principal and Interest.......................................   45

    Section 9.2. Maintenance of Offices or Agencies......................................   45

    Section 9.3. Corporate Existence.....................................................   46

    Section 9.4. Reports.................................................................   46

    Section 9.5. Compliance Certificate..................................................   46

ARTICLE 10 REDEMPTION OF SECURITIES......................................................   47

    Section 10.1. Provisional and Optional Redemption....................................   47

    Section 10.2. Notice to Trustee......................................................   48

    Section 10.3. Selection of Securities to Be Redeemed.................................   48

    Section 10.4. Notice of Redemption...................................................   49

    Section 10.5. Effect of Notice of Redemption.........................................   50

    Section 10.6. Deposit and Payment of Redemption Price................................   50

    Section 10.7. Securities Redeemed in Part............................................   51

ARTICLE 11 CONVERSION OF SECURITIES......................................................   51

    Section 11.1. Conversion Right; Expiration of Conversion Right; Conversion Price.....   51

    Section 11.2. Exercise of Conversion Right...........................................   52

    Section 11.3. Fractions of Shares....................................................   53




                                       v

                                                                                         
    Section 11.4. Adjustment of Conversion Price.........................................   53

    Section 11.5. Notice of Adjustments of Conversion Price..............................   62

    Section 11.6. Notice Prior to Certain Actions........................................   63

    Section 11.7. Company to Reserve Common Stock........................................   64

    Section 11.8. Common Stock to be Fully Paid and Nonassessable........................   64

    Section 11.9. Taxes on Conversions...................................................   64

    Section 11.10. Cancellation of Converted Securities..................................   64

    Section 11.11. Effect of Reclassification, Consolidation, Merger or Sale.............   64

    Section 11.12. Responsibility of Trustee for Conversion Provisions...................   66

ARTICLE 12 OTHER PROVISIONS OF GENERAL APPLICATION.......................................   66

    Section 12.1. Trust Indenture Act Controls...........................................   66

    Section 12.2. Notices................................................................   66

    Section 12.3. Communication by Holders with Other Holders............................   67

    Section 12.4. Acts of Holders of Securities..........................................   67

    Section 12.5. Certificate and Opinion as to Conditions Precedent.....................   68

    Section 12.6. Statements Required in Certificate or Opinion..........................   69

    Section 12.7. Effect of Headings and Table of Contents...............................   69

    Section 12.8. Successors and Assigns.................................................   69

    Section 12.9. Separability Clause....................................................   69

    Section 12.10. Benefits of Indenture.................................................   69

    Section 12.11. Governing Law.........................................................   70

    Section 12.12. Counterparts..........................................................   70

    Section 12.13. Legal Holidays........................................................   70

    Section 12.14. Recourse Against Others...............................................   70





EXHIBITS
                                                                         
EXHIBIT A:  Form of Security..............................................  A-1
EXHIBIT B:  Assignment Form...............................................  B-1
EXHIBIT C:  Form of Conversion Notice.....................................  C-1
EXHIBIT D:  Form of Registration Rights Agreement.........................  D-1



                                       vi

            INDENTURE, dated as of JANUARY 18, 2002 (this "INDENTURE"), between
AMERICA WEST HOLDINGS CORPORATION, a corporation duly organized and existing
under the laws of the State of Delaware, having its principal office at 111 West
Rio Salado Parkway, Tempe, Arizona 85281 (the "COMPANY") and WILMINGTON TRUST
COMPANY, a Delaware banking corporation, as Trustee and not in its individual
capacity (the "TRUSTEE"), having its principal corporate trust office at Rodney
Square North, 1100 North Market Street, Wilmington, Delaware 19890.

                             RECITALS OF THE COMPANY

            The Company has duly authorized the creation of an issue of its 7.5%
Convertible Senior Notes due 2009 to be issued in one or more series (the
"SECURITIES") having the terms, tenor, amount and other provisions hereinafter
set forth, and, to provide therefor, the Company has duly authorized the
execution and delivery of this Indenture.

            All things necessary to make the Securities, when the Securities are
duly executed by the Company and authenticated and delivered hereunder and duly
issued by the Company, the valid obligations of the Company, and to make this
Indenture a valid and binding agreement of the Company, in accordance with their
and its terms, have been done.

                   NOW, THEREFORE, THIS INDENTURE WITNESSETH:

            For and in consideration of the premises and the purchase of the
Securities by the Holders (as defined below) thereof, it is mutually covenanted
and agreed, for the equal and proportionate benefit of all Holders of the
Securities or of series thereof, as follows:

                                   ARTICLE 1

                   DEFINITIONS AND INCORPORATION BY REFERENCE

            SECTION 1.1. Definitions.

            For all purposes of this Indenture and the Securities, the following
terms are defined as follows:

            "ACT", when used with respect to any Holder of a Security, has the
      meaning specified in Section 12.4(a).

            "AFFILIATE" of any specified Person means any other Person directly
      or indirectly controlling or controlled by or under direct or indirect
      common control with such specified Person. For the purposes of this
      definition, "control", when used with respect to any specified Person,
      means the power to direct the management and policies of such Person,
      directly or indirectly, whether through the ownership of voting
      securities, by contract or otherwise; and the terms "controlling" and
      "controlled" have meanings correlative to the foregoing.

            "AGENT MEMBER" has the meaning specified in Section 2.8.

            "AMERICA WEST" shall mean America West Airlines, Inc., a
      wholly-owned Subsidiary of the Company.

            "BANKRUPTCY LAW" means Title 11 of the U.S. Bankruptcy Code of 1978,
      as amended, or any similar federal or state law for the relief of debtors.

            "BOARD OF DIRECTORS" means either the board of directors of the
      Company or any committee of that board empowered to act for it with
      respect to this Indenture.

            "BOARD RESOLUTION" means a resolution duly adopted by the Board of
      Directors, a copy of which, certified by the Secretary or an Assistant
      Secretary of the Company to be in full force and effect on the date of
      such certification, shall have been delivered to the Trustee.

            "BUSINESS DAY", when used with respect to any Place of Payment or
      Place of Conversion, means each Monday, Tuesday, Wednesday, Thursday and
      Friday which is not a day on which banking institutions in that Place of
      Payment or Place of Conversion, as applicable, are authorized or obligated
      by law to close.

            "CAPITAL STOCK" means, with respect to any Person, any and all
      shares, interests, rights to purchase, warrants, options, participations
      or other equivalents of or interests (however designated) in equity of
      such Person, whether now outstanding or issued after the date of this
      Indenture, including, without limitation, all common stock and preferred
      stock.

            "CLEARSTREAM" means Clearstream Banking, societe anonyme (formerly
      Cedelbank).

            "COMMISSION" means the Securities and Exchange Commission or any
      successor agency.

            "COMMON STOCK" means the Class B common stock, par value $0.01 per
      share, of the Company or shares of any class or classes resulting from any
      reclassification or reclassifications thereof and which have no preference
      in respect of dividends or of amounts payable in the event of any
      voluntary or involuntary liquidation, dissolution or winding up of the
      Company and which are not subject to redemption by the Company; provided
      that if at any time there shall be more than one such resulting class, the
      shares of each such class then so issuable shall be substantially in the
      proportion which the total number of shares of such class resulting from
      all such reclassifications bears to the total number of shares of all such
      classes resulting from all such reclassifications; further provided that
      all references to "Common Stock" in connection with adjustments to
      Conversion Price in Section 11.4 shall be deemed to include any class of
      common stock of the Company, including without limitation, Class B common
      stock or Class A common stock of the Company.

            "COMPANY" means the corporation named as the "Company" in the first
      paragraph of this instrument until a successor Person shall have become
      such pursuant to the applicable provisions of this Indenture, and
      thereafter "Company" shall mean such


                                       2.

      successor Person.

            "COMPANY ORDER" means a written order signed in the name of the
      Company by any Officer and delivered to the Trustee.

            "CONVERSION AGENT" means any Person authorized by the Company to
      convert Securities in accordance with Article 11. Initially, the
      Conversion Agent shall be Wilmington Trust Company.

            "CONVERSION DATE" means, with respect to any Holder, the date on
      which such Holder has satisfied all the requirements to convert its
      Securities pursuant to Section 11.2.

            "CONVERSION PRICE" has the meaning specified in Section 11.1(c).

            "CONVERSION RECORD DATE" has the meaning specified in Section
      11.4(g).

            "CORPORATE TRUST OFFICE" means for purposes of presentation or
      surrender of Securities for payment, registration, transfer, exchange or
      conversion or for service of notices or demands upon the Company or for
      any other purpose of this Indenture, the office of the Trustee located in
      City of Wilmington at which at any particular time its corporate trust
      business shall be administered, which at the date of this Indenture is
      located at Rodney Square North, 1100 North Market Street, Wilmington,
      Delaware 19890.

            "CORPORATION" means any corporation, association, limited liability
      company, company and business trust.

            "CURRENT MARKET PRICE" has the meaning specified in Section 11.4(g).

            "CUSTODIAN" means any receiver, trustee, assignee, liquidator,
      sequestrator or similar official under any Bankruptcy Law.

            "DEFAULT" means an event which is, or after notice or lapse of time
      or both would be, an Event of Default.

            "DEFAULTED PAYMENT" has the meaning specified in Section 4.1(a).

            "DEFAULTED INTEREST" has the meaning specified in Section 2.16.

            "DEPOSITARY" means The Depository Trust Company, its nominees and
      their respective successors.

            "DOLLAR" or "$" means a U.S. dollar or other equivalent unit in such
      coin or currency of the United States as at the time shall be legal tender
      for the payment of public and private debts.

            "EUROCLEAR" means Morgan Guaranty Trust Company of New York,
      Brussels


                                       3.

      office, as operator of the Euroclear System.

            "EVENT OF DEFAULT" has the meaning specified in Section 4.1.

            "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
      amended, and the rules and regulations of the Commission thereunder.

            "EXPIRATION TIME" has the meaning specified in Section 11.4(f).

            "FAIR MARKET VALUE" has the meaning specified in Section 11.4(g).

            "GAAP" has the meaning specified in Section 1.3.

            "GLOBAL SECURITY" has the meaning specified in Section 2.2.

            "GUARANTY" has the meaning specified in Section 2.1(a).

            "HOLDER", when used with respect to any Security, including any
      Global Security, means the Person in whose name such Security is
      registered in the Register.

            "INDENTURE" means this instrument as originally executed or as it
      may from time to time be supplemented or amended by one or more indentures
      supplemental hereto entered into pursuant to the applicable provisions
      hereof.

            "INTEREST" means, with respect to any Security, the interest payable
      on such Security based upon the applicable Interest Rate and, if
      applicable, any Defaulted Interest.

            "INTEREST PAYMENT DATE" means each of June 1 and December 1,
      provided, however, that if any such date is not a Business Day, the
      Interest Payment Date shall be the next succeeding Business Day.

            "INTEREST RATE" has the meaning specified in Section 2.1(c).

            "LIQUIDATED DAMAGES" means liquidated damages paid to all holders of
      Registrable Securities (as defined in the Registration Rights Agreement
      attached hereto as Exhibit D (the "REGISTRATION RIGHTS AGREEMENT")) in
      accordance with the provisions of Section 3 of the Registration Rights
      Agreement.

            "MATURITY" means the date on which the Principal with respect to any
      Outstanding Security becomes due and payable as therein or herein
      provided, whether at the Stated Maturity or by acceleration, conversion,
      call for redemption, exercise of a purchase right or otherwise.

            "NASDAQ NATIONAL MARKET" means the National Association of
      Securities Dealers Automated Quotation National Market or any successor
      national securities exchange or automated over-the-counter trading market
      in the United States.

            "NON-ELECTING SHARE" has the meaning specified in Section 11.11.


                                       4.

            "NOTICE DATE" has the meaning specified in Section 10.1(a).

            "OFFICER" of the Company means the Chairman of the Board, the Chief
      Executive Officer, the President, the Chief Financial Officer, the
      Treasurer, any Assistant Treasurer, any Vice President, the Secretary or
      any Assistant Secretary of the Company.

            "OFFICERS' CERTIFICATE" means, with respect to the Company, a
      certificate signed by both (1) the Chairman of the Board, the Chief
      Executive Officer, the President or a Vice President and (2) so long as
      not the same as the officer signing pursuant to clause (1), the Chief
      Financial Officer, the Treasurer, any Assistant Treasurer, the Secretary
      or any Assistant Secretary of the Company and delivered to the Trustee.

            "OPINION OF COUNSEL" means a written opinion of counsel, who may be
      counsel to the Company (and may include directors or employees of the
      Company) and in form and substance acceptable to the Trustee, which
      acceptance shall not be unreasonably withheld.

            "ORIGINAL PRINCIPAL AMOUNT" has the meaning specified in Section
      2.1(a).

            "OUTSTANDING", when used with respect to Securities, means, as of
      the date of determination, all Securities theretofore authenticated and
      delivered under this Indenture, except Securities:

                  (i)   previously canceled by the Trustee or delivered to the
            Trustee for cancellation;

                  (ii)  for the payment or redemption of which money in the
            necessary amount has been previously deposited with the Trustee or
            any Paying Agent (other than the Company) in trust or set aside and
            segregated in trust by the Company (if the Company shall act as its
            own Paying Agent) for the Holders of such Securities; provided,
            however, that if such Securities are to be redeemed, notice of such
            redemption has been duly given pursuant to this Indenture;

                  (iii) which have been paid in exchange for or in lieu of other
            Securities which have been authenticated and delivered pursuant to
            this Indenture, other than any such Securities in respect of which
            there shall have been presented to the Trustee proof satisfactory to
            it that such Securities are held by a bona fide purchaser in whose
            hands such Securities are valid obligations of the Company; and

                  (iv)  which have been converted pursuant to Article 11;

            provided, however, that in determining whether the Holders of the
            requisite Principal amount of Outstanding Securities of all series
            are present at a meeting of Holders of Securities for quorum
            purposes or have consented to or voted in favor of any request,
            demand, authorization, direction, notice, consent, waiver, amendment
            or modification hereunder, Securities held for the account of the
            Company or of any of its Affiliates shall be disregarded and deemed
            not to be Outstanding, except that in determining whether the


                                       5.

            Trustee shall be protected in making such a determination or relying
            upon any such quorum, consent or vote, only Securities which a
            Responsible Officer of the Trustee actually knows to be so owned
            shall be so disregarded. Securities so owned which have been pledged
            in good faith may be regarded as Outstanding if the pledgee
            establishes to the satisfaction of the Trustee the pledgee's right
            so to act with respect to such Securities and that the pledgee is
            not the Company or any other obligor upon the Securities or an
            Affiliate of the Company or of such other obligor.

            "PAYING AGENT" has the meaning specified in Section 2.5.

            "PERIODIC OFFERING" means an offering of Securities of a series from
      time to time, the specific terms of which Securities, including, without
      limitation, the rate or rates of Interest thereon, the Stated Maturity or
      maturities thereof and the redemption provisions with respect thereto, are
      to be determined by the Company or its agents upon the issuance of such
      Securities.

            "PERSON" means any individual, corporation, limited liability
      company, partnership, joint venture, association, joint-stock company,
      trust, estate, unincorporated organization or government or any agency or
      political subdivision thereof, or any entity whatsoever.

            "PIK LOANS" has the meaning specified in Section 2.1(c).

            "PHYSICAL SECURITIES" means Securities issued in definitive, fully
      registered form without interest coupons, substantially in the form of
      Exhibit A hereto, with the applicable legend as provided in Section 2.3.

            "PLACE OF CONVERSION" means any city in which any Conversion Agent
      is located.

            "PLACE OF PAYMENT" means any city in which any Paying Agent is
      located.

            "PREDECESSOR SECURITY" of any particular Security, means every
      previous Security evidencing all or a portion of the same debt as that
      evidenced by such particular Security; and, for the purposes of this
      definition, any Security authenticated and delivered under Section 2.11 in
      exchange for or in lieu of a mutilated, destroyed, lost or stolen Security
      shall be deemed to evidence the same debt as the mutilated, destroyed,
      lost or stolen Security.

            "PRINCIPAL" means, with respect to any Outstanding Security, the
      principal amount of that Security, including the Redemption Price, if
      applicable, payable with respect to that Security.

            "PROVISIONAL REDEMPTION" has the meaning specified in Section
      10.1(a).

            "PROVISIONAL REDEMPTION DATE" has the meaning specified in Section
      10.1(a).

            "PROVISIONAL REDEMPTION PRICE" has the meaning specified in Section
      10.1(a).


                                       6.

            "PURCHASED SHARES" has the meaning specified in Section 11.4(f).

            "REDEMPTION DATE", when used with respect to any Security to be
      redeemed, means the date fixed for such redemption by or pursuant to this
      Indenture.

            "REDEMPTION PRICE", when used with respect to any Security to be
      redeemed, means the price per Security at which such Security may be
      redeemed pursuant to Section 10.1.

            "REFERENCE PERIOD" has the meaning specified in Section 11.4(d).

            "REGISTER" has the meaning specified in Section 2.5.

            "REGISTRAR" has the meaning specified in Section 2.5.

            "REGULAR RECORD DATE" for the Interest payable on the Securities on
      any Interest Payment Date means May 15 and November 15 (whether or not a
      Business Day), as applicable, next preceding the corresponding Interest
      Payment Date.

            "RESPONSIBLE OFFICER", when used with respect to the Trustee, means
      any officer of the Trustee, including any vice president, assistant vice
      president, any treasurer, any assistant treasurer, any trust officer, or
      any other officer of the Trustee customarily performing functions similar
      to those performed by any of the above designated officers and also means,
      with respect to a particular corporate trust matter, any other officer to
      whom such matter is referred because of such officer's knowledge of and
      familiarity with the particular subject.

            "RESTRICTED SECURITY" means any Security required pursuant to
      Section 2.3(d) to bear the Restricted Security Legend.

            "RESTRICTED SECURITY LEGEND" has the meaning specified in Section
      2.3(c).

            "RESTRICTION TERMINATION DATE" means, with respect to any Security,
      the earlier of:

                  (1)   the date on which a Restricted Security has been sold
            pursuant to a registration statement that is effective under the
            Securities Act at the time of such sale; and

                  (2)   the date that is two years after the later of: (A) the
            issue date of such Security, or, in the case of Common Stock, the
            issue date of such Security upon the conversion of which such Common
            Stock was issued; and (B) the last date on which the Company or any
            "affiliate," as defined in Rule 144 (or successor provision) under
            the Securities Act, of the Company was the owner of such Security or
            Common Stock.

            "SECURITIES" has the meaning ascribed to it in the first paragraph
      under the caption "Recitals of the Company".


                                       7.

            "SECURITIES ACT" means the Securities Act of 1933, as amended, and
      the rules and regulations of the Commission thereunder.

            "STATED MATURITY" has the meaning specified in Section 2.1.

            "SUBSIDIARY" means a corporation or other entity more than 50% of
      the outstanding Voting Stock of which is owned, directly or indirectly, by
      the Company or by one or more other Subsidiaries, or by the Company and
      one or more other Subsidiaries.

            "TIA" means the Trust Indenture Act of 1939, as amended (15 U.S.
      Code Section 77aaa-77bbbb), as in effect on the date of this Indenture;
      provided, however, that in the event the TIA is amended after such date,
      "TIA" means, to the extent required by such amendment, the Trust Indenture
      Act of 1939, as so amended, or any successor statute.

            "TRADING DAY" means:

                  (1)   if the applicable security is listed or admitted for
            trading on the New York Stock Exchange, a day on which the New York
            Stock Exchange is open for business;

                  (2)   if that security is not listed on the New York Stock
            Exchange, a day on which trades may be made on the Nasdaq National
            Market;

                  (3)   if that security is not so listed on the New York Stock
            Exchange and not quoted on the Nasdaq National Market, a day on
            which the principal U.S. securities exchange on which the securities
            are listed is open for business; or

                  (4)   if the applicable security is not so listed, admitted
            for trading or quoted, any day other than a Saturday or a Sunday or
            a day on which banking institutions in the State of New York are
            authorized or obligated by law or executive order to close.

            "TRADING PRICE" of a security on any date of determination means:

                  (1)   the closing sale price (or, if no closing sale price is
            reported, the last reported sale price) of such security (regular
            way) on the New York Stock Exchange on such date;

                  (2)   if such security is not listed for trading on the New
            York Stock Exchange on any such date, the closing sale price as
            reported in the composite transactions for the principal U.S.
            securities exchange on which such security is so listed;

                  (3)   if such security is not listed on a U.S. national or
            regional securities exchange, the closing sales price as reported by
            the Nasdaq National Market;

                  (4)   if such security is not so reported, the last price
            quoted by Interactive Data Corporation for such security on such
            date or, if Interactive Data


                                       8.

            Corporation is not quoting such price, a similar quotation service
            selected by the Company;

                  (5)   if such security is not so quoted, the average of the
            mid-point of the last bid and ask prices for such security on such
            date from at least two dealers recognized as market-makers for such
            security selected by the Company for this purpose;

                  (6)   if such security is not so quoted, the average of that
            last bid and ask prices for such security on such date from a dealer
            engaged in the trading of convertible securities selected by the
            Company for this purpose; or

                  (7)   if such a dealer engaged in the trading of convertible
            securities is not available, the price determined in good faith by
            the Board of Directors of the Company (as evidenced by a Board
            Resolution by the Board of Directors) as the price that would be
            paid for all such securities in an arm's-length transaction between
            a willing buyer and a willing seller (neither acting under
            compulsion).

            "TRIGGER EVENT" has the meaning specified in Section 11.4(d).

            "TRUSTEE" means the Person named as the "Trustee" in the first
      paragraph of this instrument until a successor Trustee shall have become
      such pursuant to the applicable provisions of this Indenture, and
      thereafter "Trustee" shall mean such successor Trustee.

            "VICE PRESIDENT", when used with respect to the Company, means any
      vice president, whether or not designated by a number or a word or words
      added before or after the title "vice president".

            "VOTING STOCK" means with respect to any Person, Capital Stock of
      any class or kind ordinarily having the power to vote for the election of
      directors, managers or other voting members of the governing body of such
      Person.

            SECTION 1.2. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.

            Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture.

            The following TIA terms used in this Indenture have the following
meanings:

            "INDENTURE SECURITIES" means the Securities;

            "INDENTURE SECURITY HOLDER" means a Holder;

            "INDENTURE TO BE QUALIFIED" means this Indenture;

            "INDENTURE TRUSTEE" or "INSTITUTIONAL TRUSTEE" means the Trustee;
      and

            "OBLIGOR" on the Securities means the Company and any other obligor
      on the


                                       9.

      indenture securities.

            All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by Commission rule
have the meanings assigned to them by such definitions.

            SECTION 1.3. RULES OF CONSTRUCTION.

            For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:

                  (1)   the terms defined in this Article have the meanings
            assigned to them in this Article and include the plural as well as
            the singular;

                  (2)   all accounting terms not otherwise defined herein have
            the meanings assigned to them in accordance with generally accepted
            accounting principles in the United States prevailing at the time of
            any relevant computation hereunder ("GAAP");

                  (3)   the words "herein", "hereof" and "hereunder" and other
            words of similar import refer to this Indenture as a whole and not
            to any particular Article, Section or other subdivision; and

                  (4)   all references to section and article numbers in this
            Indenture shall refer to sections and articles hereof, unless
            otherwise specified.

                                    ARTICLE 2

                                 THE SECURITIES

            SECTION 2.1. TITLE AND TERMS; ISSUABLE IN SERIES.

            (a) The Securities shall be designated as the "7.5% Convertible
Senior Notes due 2009" of the Company. The aggregate principal amount of
Securities which may be authenticated and delivered under this Indenture is
limited to $150 million (the "ORIGINAL PRINCIPAL AMOUNT"), except for Securities
authenticated and delivered upon registration of, transfer of, or in exchange
for, or in lieu of other Securities pursuant to Sections 2.7, 2.8, 2.11, 7.5,
10.7 or 11.2 hereof and any outstanding PIK Loans. The Securities shall be
issuable in denominations of $1,000 or integral multiples thereof. The
Securities may be issued in one or more series and the Securities of each such
series shall rank equally and pari passu with the Securities of each other
series. Notwithstanding any provision to the contrary, any future series of
Securities established in or pursuant to a Board Resolution or a supplemental
indenture will be on the same terms as the Securities issued hereunder in all
respects other than the date of issuance. There shall be established in or
pursuant to one or more Board Resolutions (and to the extent established
pursuant to rather than set forth in a Board Resolution, in an Officers'
Certificate detailing such establishment) or established in one or more
indentures supplemental hereto, prior to the initial issuance of Securities of
any series,


                                      10.

                  (1)   the designation of the Securities of the series, which
            shall distinguish the Securities of the series from the Securities
            of all other series;

                  (2)   any limit upon the aggregate Principal amount of the
            Securities of the series that may be authenticated and delivered
            under this Indenture (except for Securities authenticated and
            delivered upon registration of, transfer of, or in exchange for, or
            in lieu of, other Securities of the series pursuant to Sections 2.7,
            2.8, 2.11, 7.5, 10.7 or 11.2 hereof);

                  (3)   the date or dates on which the Principal of the
            Securities of the series is payable;

                  (4)   the rate or rates of which the Securities of the series
            shall bear Interest, if any, the date or dates from which such
            Interest shall accrue, on which a record shall be taken for the
            determination of Holders to whom interest is payable and/or the
            method by which such rate or rates or date or dates shall be
            determined;

                  (5)   the place or places where the Principal of and any
            Interest on Securities of the series shall be payable (if other than
            as provided in Section 2.05);

                  (6)   the right of the Company to redeem Securities, in whole
            or in part, at its option and the period or periods within which,
            the price or prices at which and any terms and conditions;

                  (7)   if the Holders of the Securities of the series may
            convert or exchange the Securities of the series into or for
            securities of the Company or of other entities or other property (or
            the cash value thereof), the specific terms of and period during
            which such conversion or exchange may be made;

                  (8)   any restrictions applicable to the offer, sale,
            transfer, exchange or delivery of Restricted Securities;

                  (9)   if the Securities of such series are to be issuable in
            definitive form (whether upon the original issue or upon exchange of
            a temporary Security of such series) only upon receipt of certain
            certificates or other documents or satisfaction of other conditions,
            the form and terms of such certificates, documents or conditions;

                  (10)  any trustee, depositaries, authenticating or paying
            agents, transfer agents or registrars or any other agents with
            respect to the Securities of such series; and

                  (11)  any other terms of the series.

            All Securities of any one series need not be issued at the same time
and may be issued from time to time, consistent with the terms of this
Indenture, if so provided by or


                                      11.

pursuant to such Board Resolution, such Officers' Certificate or in any such
indenture supplemental hereto.

            (b)   The Securities shall mature on January 18, 2009 (the "STATED
MATURITY").

            (c)   The Original Principal Amount and the aggregate outstanding
PIK Loans (as defined below) shall bear Interest from January 18, 2002 until
repayment in full at Stated Maturity, or until such date on which the Securities
are converted, redeemed or purchased as provided herein, at a rate of 7.5% per
annum (the "INTEREST RATE"). The payment of the Original Principal Amount, any
aggregate outstanding PIK Loans, premium, if any, Interest and Liquidated
Damages, if any, is fully guaranteed by America West pursuant to the terms of a
certain Guaranty, dated as of the date hereof (the "GUARANTY"), made by America
West in favor of the Trustee and the Holders. Interest shall be payable
semiannually in arrears on each Interest Payment Date, subject to the Company's
option to pay Interest in PIK Loans on the first six (6) Interest Payment Dates
only and subject to such other terms as are set forth in the Securities. For all
purposes herein, (i) references to the Principal amount of the Securities at any
time of determination shall be deemed to be references to the outstanding
balance of the Original Principal Amount, premium, if any, and the aggregate
outstanding PIK Loans at such time of determination and (ii) references to
payments of Interest on the Securities for any period of determination shall be
deemed to be references to the payment of Interest on the outstanding balance of
the Original Principal Amount during such period and any aggregate outstanding
PIK Loans during such period.

            For all purposes of the Securities and the Indenture, Interest due
on the first six (6) Interest Payment Dates shall be payable, at the election of
the Company, in either (1) the form of cash or (2) the form of a deemed loan
which shall be in addition to the Original Principal Amount of the Securities
and shall for all purposes be Principal evidenced by the Securities and entitled
to the benefits of the Indenture (in each case, a "PIK LOAN"). Unless the
Company shall have delivered an Officers' Certificate to the Trustee within
three Business Days of the applicable Interest Payment Date stating that the
Company elects to make a payment of Interest in cash, it shall be deemed to have
elected to make such payment of Interest in the form of a PIK Loan.

            (d)   Interest on the Securities shall be computed (i) for any full
semiannual period for which a particular Interest Rate is applicable, on the
basis of a 360-day year of twelve 30-day months and (ii) for any period for
which a particular Interest Rate is applicable for less than a full semiannual
period for which Interest is calculated, on the basis of a 30-day month and, for
such periods of less than a month, the actual number of days elapsed over a
30-day month.

            (e)   Subject to the Company's option to pay Interest in cash or PIK
Loans and subject to such other terms as are set forth in the Securities,
Interest shall be due and payable on a Security as follows:

                        (1)   A registered Holder of any Security as of the
            close of business on a Regular Record Date shall be entitled (except
            as otherwise indicated in this Section 2.1(e)) to receive and shall
            receive, as the registered Holder as of such Regular Record Date,
            accrued and unpaid Interest on such Security on the


                                      12.

            corresponding Interest Payment Date (other than any Security whose
            Stated Maturity is prior to such Interest Payment Date, in which
            case Interest shall be paid on such Stated Maturity).

                        (2)   In the event that a Security becomes subject to
            redemption pursuant to Article 10 and the Redemption Date occurs
            after a Regular Record Date but before an Interest Payment Date, the
            Person whose Securities become subject to redemption (and only such
            Person rather than the Holder as of such Regular Record Date) shall
            be entitled to receive and shall receive accrued and unpaid Interest
            from the preceding Interest Payment Date (or such earlier date on
            which Interest was last paid) to but not including the Redemption
            Date on such Security, even if such person is not the Holder of such
            Security.

                        (3)   In the event that a Security is converted pursuant
            to Article 11, the Holder who converts such Security on any date
            other than an Interest Payment Date shall be entitled to accrued and
            unpaid Interest from the preceding Interest Payment Date until the
            Conversion Date, or otherwise, on such Security.

            (f)   Payment of any Principal of (to the extent paid in cash) and
Interest on Global Securities shall be payable by the Company to the Depositary
in immediately available funds.

            (g)   Payment of any Principal on Physical Securities shall be made
at the office or agency of the Company maintained for such purpose, initially
the Corporate Trust Office of the Trustee. Payments of cash Interest on Physical
Securities will be payable by (i) a U.S. Dollar check drawn on a bank in the
City of Tempe mailed to the address of the Person entitled thereto as such
address shall appear in the Register, or (ii) upon application to the Registrar
not later than the relevant record date by a Holder of a Principal amount of
Securities in excess of $2,000,000, wire transfer in immediately available
funds, which application shall remain in effect until the Holder notifies, in
writing, the Registrar to the contrary.

            (h)   The Securities may be redeemable at the option of the Company
as provided in and subject to Article 10.

            (i)   The Securities shall be convertible at the option of the
Holders as provided in and subject to Article 11.

            SECTION 2.2. FORM OF SECURITIES.

            (a)   The Securities of each series are issuable in fully registered
form, without coupons, in denominations of $1,000 and integral multiples of
$1,000 above that amount, with applicable legends as are provided for in Section
2.3 and in the form which is contained in Exhibit A hereto (each a "PHYSICAL
SECURITY" and, collectively, the "PHYSICAL SECURITY" and, if such a Physical
Security is issued in the name of the Depositary, each a "GLOBAL SECURITY" and,
collectively, the "GLOBAL SECURITIES") or as shall be established by or pursuant
to one or more Board Resolutions (as set forth in a Board Resolution or, to the
extent established pursuant to rather than set forth in a Board Resolution, an
Officers' Certificate detailing such establishment) or in one or more indentures
supplemental hereto, in each case with such appropriate insertions,


                                       13

omissions, substitutions and other variations as are required or permitted by
this Indenture and may have imprinted or otherwise reproduced thereon such
legend or legends or endorsements, not inconsistent with the provisions of this
Indenture, as may be required to comply with any law or with any rules or
regulations pursuant thereto, or with any rules of any securities exchange or to
conform to general usage, all as may be determined by the Officers executing
such Security, as evidenced by their execution of such Security. The Securities
are not issuable in bearer form. The terms and provisions contained in the form
of Security shall constitute, and are hereby expressly made, a part of this
Indenture and to the extent applicable, the Company, and the Trustee, by their
execution and delivery of this Indenture, expressly agree to such terms and
provisions and to be bound thereby. The Securities of each series shall be
numbered, lettered or otherwise distinguished in such manner or in accordance
with such plan as the Officers of the Company executing the same may determine.

            (b)   By acceptance of a Restricted Security, each Holder, or
beneficial owner thereof, represents and agrees for the benefit of the Company
and America West that (1) it is (A) a Qualified Institutional Buyer within the
meaning of Rule 144A, or (B) an "accredited investor" as defined in Rule 501(a)
under the Securities Act and is holding this Security for investment purposes
and not for distribution in violation of the Securities Act, (2) acknowledges
that such Restricted Security, and the shares of Common Stock issuable upon
conversion of such Restricted Security, have not been registered under the
Securities Act or under any state securities laws, and (3) agrees that the
Restricted Security must be held indefinitely unless subsequently registered
under the Securities Act or unless an exemption from the registration
requirements of the Securities Act is available.

            (c)   If Securities are issued upon the transfer, exchange or
replacement of Restricted Securities, or if a request is made to remove the
Restricted Security Legend from a Restricted Security, such Security so issued
shall bear the Restricted Security Legend, or the Restricted Security Legend
shall not be removed, as the case may be, and such Security shall be a
Restricted Security unless there is delivered to the Company and the Registrar
such satisfactory evidence, which shall include a written opinion from counsel
of the Holder requesting such transfer, exchange or replacement or the removal
of the Restricted Security Legend, as the case may be, as may be reasonably
required by the Company and the Registrar, that neither such legend nor the
restrictions on transfer set forth therein are required to ensure that transfers
thereof comply with the provisions of the Securities Act. Upon (i) provision of
such satisfactory evidence, or (ii) notification by the Company to the Trustee
and Registrar of the sale of such Security pursuant to a registration statement
that is effective under the Securities Act at the time of such sale, the
Trustee, at the written direction of the Company, shall authenticate and deliver
a Security that does not bear the Restricted Security Legend. If the Restricted
Security Legend is removed from the face of a Security and such Security is
subsequently held by an Affiliate of the Company, the Company shall (a) inform
the Trustee of such transfer, and (b) cause such Affiliate to deliver such
Security to the Trustee for reinsertion of the Restricted Security Legend.

            SECTION 2.3. SECURITY LEGEND.

            (a)   Global Security Legend.

            Each Global Security shall bear the following legend on the face
thereof:


                                       14

            "UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
            REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK
            CORPORATION ("DTC"), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF
            TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
            REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
            REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS
            MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
            AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE
            HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
            INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO. HAS AN INTEREST
            HEREIN.

            THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY DTC OR BY
            A NOMINEE OF DTC TO DTC OR ANOTHER NOMINEE OF DTC OR BY DTC OR ANY
            SUCH NOMINEE TO A SUCCESSOR OF DTC OR A NOMINEE OF SUCH SUCCESSOR.

            THE FOREGOING LEGEND MAY BE REMOVED FROM THIS SECURITY ON
            SATISFACTION OF THE CONDITIONS SPECIFIED IN THE INDENTURE."

            (b)   Legend for Physical Securities.

            Physical Securities will also bear a legend substantially in the
            following form:

            THIS SECURITY WILL NOT BE ACCEPTED IN EXCHANGE FOR A BENEFICIAL
            INTEREST IN A GLOBAL SECURITY UNLESS THE HOLDER OF THIS SECURITY,
            SUBSEQUENT TO SUCH EXCHANGE, WILL HOLD EITHER (A) NO SECURITIES OR
            (B) A MINIMUM AGGREGATE BENEFICIAL INTEREST IN THE SECURITIES OF AT
            LEAST (I) TWO HUNDRED FIFTY THOUSAND DOLLARS ($250,000), IF SUCH
            HOLDER IS A NON-INSTITUTIONAL ACCREDITED INVESTOR, OR (II) ONE
            HUNDRED THOUSAND DOLLARS ($100,000), IF SUCH HOLDER IS AN
            INSTITUTIONAL ACCREDITED INVESTOR.

            THE FOREGOING LEGEND MAY BE REMOVED FROM THIS SECURITY ON
            SATISFACTION OF THE CONDITIONS SPECIFIED IN THE INDENTURE."

            (c)   Legend for Restricted Securities.

            Restricted Securities will also bear a legend substantially in the
following form (the "RESTRICTED SECURITY LEGEND"):

            "EACH BENEFICIAL OWNER OF AN INTEREST IN ANY OF THE SECURITIES
EVIDENCED BY THIS SECURITY (INCLUDING ANY


                                       15

PARTICIPANT IN THE DEPOSITARY HOLDING THIS SECURITY THAT IS SHOWN AS HOLDING
SUCH AN INTEREST ON THE RECORDS OF SUCH DEPOSITARY AND EACH BENEFICIAL OWNER
THAT HOLDS THROUGH ANY SUCH PARTICIPANT) AGREES FOR THE BENEFIT OF AMERICA WEST
HOLDINGS CORPORATION (THE "COMPANY") AND AMERICA WEST AIRLINES, INC. ("AMERICA
WEST") THAT THIS SECURITY, ANY GUARANTEES THEREOF, AND ANY COMMON STOCK ISSUABLE
UPON CONVERSION OF THIS SECURITY MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED (X) PRIOR TO THE SECOND ANNIVERSARY (OR SUCH SHORTER PERIOD AS MANY
THEN BE APPLICABLE UNDER THE SECURITIES ACT REGARDING THE HOLDING PERIOD FOR
NOTES OR THE COMMON STOCK ISSUABLE UPON CONVERSION THEREOF UNDER RULE 144(K) OF
THE SECURITIES ACT OR ANY SUCCESSOR RULE) OF THE ISSUANCE HEREOF OR (Y) BY ANY
HOLDER THAT WAS AN AFFILIATE OF THE COMPANY OR AMERICA WEST AT ANY TIME DURING
THE THREE MONTHS PRECEDING THE DATE OF SUCH TRANSFER, IN EITHER CASE OTHER THAN
(1) TO THE COMPANY, (2) SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT
TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A") TO A PERSON WHOM THE SELLER
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF
RULE 144A PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE OFFER, SALE, PLEDGE OR
OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (3) TO AN INSTITUTION
THAT IS AN "ACCREDITED INVESTOR" AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7)
UNDER THE SECURITIES ACT THAT IS ACQUIRING THIS SECURITY FOR INVESTMENT PURPOSES
AND NOT FOR DISTRIBUTION, (4) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT PROVIDED BY RULE 144 (IF APPLICABLE) UNDER THE SECURITIES
ACT, (5) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT, OR (6) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR OTHER
JURISDICTION.

            EACH BENEFICIAL OWNER OF AN INTEREST IN ANY OF THE SECURITIES
EVIDENCED BY THIS SECURITY AGREES THAT IT WILL FURNISH TO THE COMPANY AND THE
TRUSTEE SUCH CERTIFICATES AND OTHER INFORMATION AS THEY MAY REASONABLY REQUIRE
TO CONFIRM THAT ANY TRANSFER BY IT OF THIS SECURITY COMPLIES WITH THE FOREGOING
RESTRICTIONS. EACH BENEFICIAL OWNER WILL, AND EACH SUBSEQUENT BENEFICIAL OWNER
OF AN INTEREST IN ANY OF THE SECURITIES EVIDENCED BY THIS SECURITY IS REQUIRED
TO, NOTIFY ANY PURCHASER OF ANY BENEFICIAL INTEREST IN THE SECURITIES OR SUCH
COMMON STOCK ISSUABLE UPON CONVERSION OF THE SECURITIES FROM IT OF THE RESALE
RESTRICTIONS REFERRED TO ABOVE.


                                       16

            THE BENEFICIAL HOLDER OF AN INTEREST IN ANY OF THE SECURITIES
EVIDENCED BY THIS SECURITY, BY PURCHASING THIS SECURITY (1) REPRESENTS AND
AGREES FOR THE BENEFIT OF THE COMPANY AND AMERICA WEST THAT IT IS (A) A
QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A, OR (B) AN
"ACCREDITED INVESTOR" AS DEFINED IN RULE 501(A) UNDER THE SECURITIES ACT AND IS
HOLDING THIS SECURITY FOR INVESTMENT PURPOSES AND NOT FOR DISTRIBUTION IN
VIOLATION OF THE SECURITIES ACT, AND (2) ACKNOWLEDGES THAT THE SECURITIES AND
THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF SUCH SECURITY HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OR UNDER ANY STATE SECURITIES LAWS."

            (d)   Until the Restriction Termination Date, all Global Securities
and all Physical Securities shall bear the Restricted Security Legend, unless
such Securities have been transferred pursuant to a registration statement that
has been declared effective under the Securities Act. Until the Restriction
Termination Date, the Company covenants that any stock certificate representing
shares of Common Stock delivered by the Company upon conversion of any
Securities will bear the Restricted Security Legend, unless such shares have
been sold pursuant to a registration statement that has been declared effective
under the Securities Act.

            SECTION 2.4. EXECUTION, AUTHENTICATION, DELIVERY AND DATING OF THE
SECURITIES.

            (a)   Two Officers shall execute the Securities on behalf of the
Company by manual or facsimile signature. Securities bearing the manual or
facsimile signatures of individuals who were at the time of the execution of the
Securities the proper Officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of authentication of such Securities.

            (b)   At any time and from time to time after the execution and
delivery of this Indenture, the Company may deliver Securities executed by the
Company to the Trustee for authentication, together with a Company Order for the
authentication and delivery of such Securities, and the Trustee in accordance
with such Company Order shall authenticate and deliver such Securities as in
this Indenture provided and not otherwise. With respect to Securities of a
series subject to a Periodic Offering, (i) such Company Order may be delivered
by the Company to the Trustee prior to the delivery to the Trustee of such
Securities for authentication and delivery, (ii) the Trustee shall authenticate
and deliver Securities of such series for original issue from time to time, up
to an aggregate Principal amount as provided in Section 2.4(c), pursuant to an
Company Order, and (iii) the maturity date or dates, original issue date or
dates, interest rate or rates and any other terms of Securities of such series
shall be determined by a Company Order. No Security shall be entitled to any
benefit under this Indenture, or be valid or obligatory for any purpose, unless
there appears on such Security a certificate of authentication substantially in
the form provided for herein executed by or on behalf of the Trustee by manual
signature, and such certificate upon any Security shall be


                                       17

conclusive evidence, and the only evidence, that such Security has been duly
authenticated and delivered hereunder. The Trustee may appoint an authenticating
agent or agents reasonably acceptable to the Company with respect to the
Securities. Unless limited by the terms of such appointment, an authenticating
agent may authenticate Securities whenever the Trustee may do so. Each reference
in this Indenture to authentication by the Trustee includes authentication by
such agent.

            (c)   Each Security shall be dated the date of its authentication.
The Trustee shall authenticate and deliver Securities for original issue in an
aggregate principal amount of up to $150 million, upon one or more Company
Orders without any further action by the Company. The aggregate Principal amount
of Securities Outstanding at any time may not exceed the sum of the amount set
forth in the foregoing sentence and any outstanding PIK Loans.

            SECTION 2.5. REGISTRAR AND PAYING AGENT.

            The Company shall maintain an office or agency where Securities may
be presented for registration of transfer or for exchange (the "REGISTRAR") and
an office or agency where Securities may be presented for payment (the "PAYING
AGENT"). The Registrar shall keep a register of the Securities (the "REGISTER")
and of their transfer and exchange. The Company may appoint one or more
co-Registrars and one or more additional Paying Agents for the Securities. The
term "Paying Agent" includes any additional paying agent and the term
"Registrar" includes any additional registrar.

            The Company will cause each Paying Agent (other than the Trustee) to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this Section, that
such Paying Agent will:

                  (1)   hold all sums of money or Common Stock held by it for
            the payment of any amounts due and payable in respect of the
            Securities in trust for the benefit of the Persons entitled thereto
            until such sums shall be paid to such Persons or otherwise disposed
            of as provided in this Indenture;

                  (2)   give the Trustee notice of any Default by the Company in
            the making of any such payment; and

                  (3)   at any time during the continuance of any such Default,
            upon the written request of the Trustee, forthwith pay to the
            Trustee all sums so held in trust by such Paying Agent.

            The Company shall give prompt written notice to the Trustee of the
name and address of any Paying Agent who is not a party to this Indenture. If
the Company fails to appoint or maintain another entity as Registrar or Paying
Agent, the Trustee shall act as such. The Company or any Affiliate of the
Company may act as Paying Agent or Registrar; provided, however, that none of
the Company, its subsidiaries or the Affiliates of the foregoing shall act:

                  (1)   as Paying Agent in connection with redemptions, offers
            to purchase and discharges, except as otherwise specified in this
            Indenture, and


                                       18

                  (2)   as Paying Agent or Registrar if a Default or Event of
            Default has occurred and is continuing.

            The Company hereby initially appoints the Trustee as Registrar and
Paying Agent for the Securities.

            SECTION 2.6. PAYING AGENT TO HOLD ASSETS IN TRUST.

            Not later than 2:00 p.m. (New York time) on or prior to each due
date of payments in respect of any Security, the Company shall deposit with one
or more Paying Agents a sum of money in immediately available funds or Common
Stock (or PIK Loans to the extent permitted herein) sufficient to make such
payments when so becoming due. The Company at any time may require a Paying
Agent to pay all money or Common Stock (or PIK Loans to the extent permitted
herein) held by it to the Trustee. Upon payment over to the Trustee, the Paying
Agent (if other than the Company) shall have no further liability for the money
or Common Stock (or PIK Loans to the extent permitted herein) so paid over to
the Trustee.

            The Company shall require each Paying Agent (other than the Trustee)
to agree in writing that the Paying Agent shall hold in trust for the benefit of
Holders or the Trustee all money and Common Stock (or PIK Loans to the extent
permitted herein) held by the Paying Agent for the making of payments in respect
of the Securities and shall notify the Trustee of any Default by the Company in
making any such payment. At any time during the continuance of any such Default,
the Paying Agent shall, upon the written request of the Trustee, forthwith pay
to the Trustee all money and Common Stock (or PIK Loans to the extent permitted
herein) so held in trust.

            If the Company shall act as a Paying Agent, it shall, prior to or on
each such due date, segregate and hold in trust for the benefit of the Holders a
sum sufficient with monies held by all other Paying Agents, to pay such amounts
so becoming due until such sums shall be paid to such Persons or otherwise
disposed of as provided in this Indenture, and shall promptly notify the Trustee
of its action or failure to act.

            SECTION 2.7. GENERAL PROVISIONS RELATING TO REGISTRATION, TRANSFER
AND EXCHANGE.

            (a)   The Securities are issuable only in registered form. A Holder
may transfer a Security only by written application to the Registrar, the form
of which is provided in Exhibit B, stating the name of the proposed transferee
and otherwise complying with the terms of this Indenture. No such transfer shall
be effected until, and such transferee shall succeed to the rights of a Holder
only upon, final acceptance and registration of the transfer by the Registrar in
the Register. Furthermore, any Holder of a Global Security shall, by acceptance
of such Global Security, agree that transfers of beneficial interests in such
Global Security may be effected only through a book-entry system maintained by
the Holder of such Global Security (or its agent) and that ownership of a
beneficial interest in such Global Security shall be required to be reflected in
a book-entry.

            When Securities are presented to the Registrar with a request to
register the transfer or to exchange them for an equal Principal amount of
Securities of other authorized


                                       19

denominations, the Registrar shall register the transfer or make the exchange as
requested if the requirements hereunder for such transactions are met (including
that such Securities are duly endorsed or accompanied by a written instrument of
transfer duly executed by the Holder thereof or by an attorney who is authorized
in writing to act on behalf of the Holder). Subject to Section 2.4, to permit
registrations of transfers and exchanges, the Company shall execute and the
Trustee shall authenticate Securities at the Registrar's request. No service
charge shall be made for any registration of transfer or exchange or redemption
of the Securities, but the Company may require payment of a sum sufficient to
cover any transfer tax or similar governmental charge payable in connection
therewith (other than any such transfer taxes or other similar governmental
charge payable upon exchanges pursuant to Sections 2.14, 7.5 or 10.7).

            Neither the Company nor the Registrar shall be required to exchange
or register a transfer of any Securities:

                  (1)   for a period of 15 days prior to the day of any
            selection of Securities for redemption under Article 10 hereof;

                  (2)   so selected for redemption or, if a portion of any
            Security is selected for redemption, such portion thereof selected
            for redemption; or

                  (3)   surrendered for conversion or, if a portion of any
            Security is surrendered for conversion, such portion thereof
            surrendered for conversion.

            (b)   Upon their original issuance, the Securities shall be
Restricted Securities, shall bear the Restricted Security Legend and shall be
issued in the form of a Global Security registered in the name of the Depositary
or its nominee and deposited with the Trustee, as custodian for the Depositary,
for credit by the Depositary to the respective accounts of beneficial owners of
Securities represented thereby (or such other accounts as they may direct).

            SECTION 2.8. BOOK-ENTRY PROVISIONS FOR THE GLOBAL SECURITIES.

            (a)   The Global Securities initially shall:

                  (1)   be registered in the name of the Depositary; and

                  (2)   be delivered to the Trustee as custodian for such
            Depositary, for credit to the accounts of the members of,
            participants in, the Depositary (the "AGENT MEMBERS") holding the
            Securities evidenced thereby (or in the case of Securities held for
            purchasers who acquired such Securities, registered with the
            Depositary for credit to the accounts of the Agent Members then
            holding such Securities on behalf of Euroclear or Clearstream, as
            applicable).

            Agent Members shall have no rights under this Indenture with respect
to any Global Security held on their behalf by the Depositary, or the Trustee as
its custodian, or under such Global Security, and the Depositary may be treated
by the Company, the Trustee and any agent of the Company or the Trustee as the
absolute owner of such Global Security for all purposes whatsoever.
Notwithstanding the foregoing, nothing contained herein shall prevent the


                                       20

Company, the Trustee or any agent of the Company or Trustee from giving effect
to any written certification, proxy or other authorization furnished by the
Depositary or impair, as between the Depositary and the Agent Members, the
operation of customary practices governing the exercise of the rights of a
Holder of any Security. With respect to any Global Security deposited on behalf
of the subscribers for the Securities represented thereby with the Trustee as
custodian for the Depositary for credit to their respective accounts (or to such
other accounts as they may direct) at Euroclear or Clearstream, the provisions
of the "Operating Procedures of the Euroclear System" and the "Terms and
Conditions Governing Use of Euroclear" and the "Management Regulations" and
"Instructions to Participants" of Clearstream, respectively, shall be applicable
to the Global Securities.

            (b)   The registered Holder of a Global Security may grant proxies
and otherwise authorize any Person, including Agent Members and Persons that may
hold interests through Agent Members, to take any action which a Holder is
entitled to take under this Indenture or the Securities.

            (c)   A Global Security may not be transferred, in whole or in part,
to any Person other than the Depositary, and no such transfer to any such other
Person may be registered. Beneficial interests in a Global Security may be
transferred in accordance with the rules and procedures of the Depositary.

            (d)   If at any time:

                  (1)   the Depositary notifies the Company in writing that it
            is no longer willing or able to continue to act as Depositary for
            the Global Securities, or the Depositary ceases to be a "clearing
            agency" registered under the Exchange Act and a successor depositary
            for the Global Securities is not appointed by the Company within 90
            days of such notice or cessation;

                  (2)   the Company, at its option, notifies the Trustee in
            writing that it elects to cause the issuance of the Physical
            Securities under this Indenture in exchange for all or any part of
            the Securities represented by a Global Security or Global
            Securities; or

                  (3)   an Event of Default has occurred and is continuing and
            the Registrar has received a request from the Depositary for the
            issuance of Physical Securities in exchange for such Global Security
            or Global Securities,

then the Depositary shall surrender such Global Security or Global Securities to
the Trustee for cancellation and the Company shall execute, and the Trustee,
upon receipt of an Officers' Certificate and Company Order for the
authentication and delivery of Securities, shall authenticate and deliver in
exchange for such Global Security or Global Securities, Physical Securities in
an aggregate Principal amount equal to the aggregate Principal amount of such
Global Security or Global Securities. Such Physical Securities shall be
registered in such names as the Depositary shall identify in writing as the
beneficial owners of the Securities represented by such Global Security or
Global Securities (or any nominee thereof).


                                       21

            (e)   Notwithstanding the foregoing, in connection with any transfer
of beneficial interests in a Global Security to the beneficial owners thereof
pursuant to Section 2.8(d) hereof, the Registrar shall reflect on its books and
records the date and a decrease in the aggregate Principal amount of such Global
Security in an amount equal to the aggregate Principal amount of the beneficial
interest in such Global Security to be transferred.

            SECTION 2.9. HOLDER LISTS.

            The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Holders and shall otherwise comply with Section 312(a) of the TIA. If the
Trustee is not the Registrar, the Company shall furnish to the Trustee prior to
or on each Interest Payment Date and at such other times as the Trustee may
request in writing a list in such form and as of such date as the Trustee may
reasonably require of the names and addresses of Holders relating to such
Interest Payment Date or request, as applicable.

            SECTION 2.10. PERSONS DEEMED OWNERS.

            Prior to due presentment of a Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name such Security is registered as the owner of such
Security for the purpose of receiving payment of Principal of such Security or
the payment of any Redemption Price in respect thereof and Interest thereon, if
any, for any purpose under this Indenture, whether or not such Security be
overdue, and neither the Company, the Trustee nor any agent of the Company or
the Trustee shall be affected by notice to the contrary.

            SECTION 2.11. MUTILATED, DESTROYED, LOST OR STOLEN SECURITIES.

            If any mutilated Security is surrendered to the Trustee, the Company
shall execute and the Trustee shall authenticate and deliver in exchange
therefor a new Security of like tenor and aggregate Principal amount and bearing
a number not contemporaneously outstanding.

            If there is delivered to the Company and the Trustee

                  (1)   evidence to their satisfaction of the destruction, loss
            or theft of any Security, and

                  (2)   such security or indemnity as may be required by them to
            save each of them and any agent of either of them harmless, then, in
            the absence of actual notice to the Company or the Trustee that such
            Security has been acquired by a protected purchaser (as defined in
            Section 8-303 of the New York Uniform Commercial Code), the Company
            shall execute and, upon request, the Trustee shall authenticate and
            deliver, in lieu of any such destroyed, lost or stolen Security, a
            new Security of like tenor and Principal amount, and bearing a
            number not contemporaneously outstanding.

            In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, the Company in its discretion, but
subject to any conversion


                                       22

rights, may, instead of issuing a new Security, pay such Security, upon
satisfaction of the condition set forth in the preceding paragraph.

            Upon the issuance of any new Security under this Section, the
Company may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.

            Every new Security issued pursuant to this Section 2.11 in lieu of
any destroyed, lost or stolen Security shall constitute an original contractual
obligation of the Company, whether or not the destroyed, lost or stolen Security
shall be at any time enforceable by anyone, and such new Security shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Securities duly issued hereunder.

            The provisions of this Section 2.11 are exclusive and shall preclude
(to the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Securities.

            SECTION 2.12. TREASURY SECURITIES.

            In determining whether the Holders of the requisite Principal amount
of Outstanding Securities are present at a meeting of Holders for quorum
purposes or have consented to or voted in favor of any request, demand,
authorization, direction, notice, consent, waiver, amendment or modification
hereunder, Securities held for the account of the Company or any Affiliate of
the Company shall be disregarded and deemed not to be Outstanding, except that,
in determining whether the Trustee shall be protected in making such a
determination or relying upon any such quorum, request, demand, authorization,
direction, notice, consent or waiver, only such Securities of which a
Responsible Officer of the Trustee actually knows to be so owned shall be so
disregarded.

            SECTION 2.13. TEMPORARY SECURITIES.

            Pending the preparation of Securities in definitive form, the
Company may execute and the Trustee shall, upon written request of the Company,
authenticate and deliver temporary Securities (printed or lithographed).
Temporary Securities shall be issuable in any authorized denomination, and
substantially in the form of the Securities in definitive form but with such
omissions, insertions and variations as may be appropriate for temporary
Securities, all as may be determined by the Company. Every such temporary
Security shall be executed by the Company and authenticated by the Trustee upon
the same conditions and in substantially the same manner, and with the same
effect, as the Securities in definitive form. Without unreasonable delay, the
Company will execute and deliver to the Trustee Securities in definitive form
(other than in the case of Securities in global form) and thereupon any or all
temporary Securities (other than any such Securities in global form) may be
surrendered in exchange therefor, at each office or agency maintained by the
Company pursuant to Section 9.2 and the Trustee shall authenticate and deliver
in exchange for such temporary Securities an equal Principal amount of
Securities in definitive form. Such exchange shall be made by the Company at its
own expense and without any charge therefor. Until so exchanged, the temporary


                                       23

Securities shall in all respects be entitled to the same benefits and subject to
the same limitations under this Indenture as Securities in definitive form
authenticated and delivered hereunder.

            SECTION 2.14. CANCELLATION.

            All Securities surrendered for payment, redemption, purchase,
conversion, registration of transfer or exchange shall, if surrendered to any
Person other than the Trustee, be delivered to the Trustee. All Securities so
delivered shall be canceled promptly by the Trustee, and no Securities shall be
issued in lieu thereof except as expressly permitted by any of the provisions of
this Indenture. Upon written instructions of the Company, the Trustee shall
dispose of canceled Securities in accordance with its procedures for the
disposition of cancelled securities in effect as of the date of such
disposition. If the Company shall acquire any of the Securities, such
acquisition shall not operate as a redemption or satisfaction of the
indebtedness represented by such Securities unless the same are delivered to the
Trustee for cancellation.

            SECTION 2.15. CUSIP NUMBERS.

            The Company in issuing the Securities may use "CUSIP" numbers (if
then generally in use), and in such event the Trustee shall use CUSIP numbers in
notices of redemption or exchange as a convenience to Holders; provided that any
such notice shall state that no representation is made as to the correctness of
such numbers either as printed on the Securities or as contained in any such
notice and that reliance may be placed only on the other identification numbers
printed on the Securities, and any such redemption shall not be affected by any
defect in or omission of such numbers. The Company shall promptly notify the
Trustee of any change in the CUSIP numbers.

            SECTION 2.16. DEFAULTED INTEREST.

            If the Company fails to make a payment of Principal of or Interest
on any Security when due and payable, it shall pay such Interest on such amounts
(to the extent lawful), which shall be calculated using the applicable Interest
Rate (such amounts, the "DEFAULTED INTEREST"). It may elect to pay such
Defaulted Interest, plus any other Interest payable on it, to the Persons who
are Holders on which the Interest is due on a subsequent special record date.
The Company shall notify the Trustee in writing of the amount of Defaulted
Interest proposed to be paid on each such Security. The Company shall fix any
such special record date and payment date for such payment. At least 15 days
before any such special record date, the Company shall mail to Holders affected
thereby a notice that states the special record date, the interest payment date
and amount to be paid.

                                   ARTICLE 3

                             DISCHARGE OF INDENTURE

            SECTION 3.1. Discharge of Liability on Securities. When (i) the
Company delivers to the Trustee all outstanding Securities (other than
Securities replaced pursuant to Section 2.11) for cancellation or (ii) all
outstanding Securities have become due and payable at their scheduled maturity
within one year or all outstanding Securities are scheduled for redemption
within one year and the Company deposits with the Trustee cash or, in the event
of a


                                       24

conversion pursuant to Article 11, Common Stock, sufficient to pay all amounts
due and owing on all outstanding Securities on the date of their scheduled
maturity or the scheduled date of redemption (other than Securities replaced
pursuant to Section 2.11), and if in either case the Company pays all other sums
payable hereunder by the Company, then this Indenture shall, subject to Section
5.8, cease to be of further effect (except as to any surviving rights of
conversion, registration or transfer or exchange of any Security expressly
provided for herein or in the terms of such Security). The Trustee shall join in
the execution of a document prepared by the Company acknowledging satisfaction
and discharge of this Indenture on demand of the Company accompanied by an
Officers' Certificate and at the cost and expense of the Company.

            SECTION 3.2. Repayment to the Company. The Trustee and the Paying
Agent shall return to the Company upon written request any money or securities
held by them for the payment of any amount with respect to the Securities that
remains unclaimed for two years, subject to applicable unclaimed property law.
After return to the Company, Holders entitled to the money or securities must
look to the Company for payment as general creditors unless an applicable
abandoned property law designates another person and the Trustee and the Paying
Agent shall have no further liability to the Holders with respect to such money
or securities for that period commencing after the return thereof.

                                    ARTICLE 4

                              DEFAULTS AND REMEDIES

            SECTION 4.1. EVENTS OF DEFAULT. An "EVENT OF DEFAULT", wherever used
herein, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):

            (a)   the Company defaults in the payment of the Principal amount (a
"DEFAULTED PAYMENT") on any Outstanding Security when the same becomes due and
payable at its Stated Maturity, upon redemption or exercise of a repurchase
right or otherwise;

            (b)   the Company defaults in the payment of an installment of
Interest (including Liquidated Damages, if any) on any Security when it becomes
due and payable and such default continues for a period of 30 days;

            (c)   the Company fails to perform or observe any other term,
covenant or agreement contained in the Securities or this Indenture and the
default continues for a period of 60 days after written notice of such failure,
requiring the Company to remedy the same, shall have been given to the Company
by the Trustee or to the Company and the Trustee by the Holders of at least 25%
in aggregate of the Principal amount of the Outstanding Securities;

            (d)   any indebtedness under any bond, debenture, note or other
evidence of indebtedness for money borrowed by the Company or America West or
under any mortgage, indenture or instrument under which there may be issued or
by which there may be secured or evidenced any indebtedness for money borrowed
by the Company or America West with a


                                       25

principal amount then outstanding in excess of U.S. $75,000,000, whether such
indebtedness now exists or shall hereafter be created, is not paid at final
maturity thereof (either at its stated maturity or upon acceleration thereof),
and such indebtedness is not discharged, or such acceleration is not rescinded
or annulled, within a period of 60 days after there shall have been given, by
registered or certified mail, to the Company by the Trustee or to the Company
and the Trustee by the Holders of at least 25% in aggregate Principal amount of
the Outstanding Securities a written notice specifying such default and
requiring the Company to cause such indebtedness to be discharged or cause such
default to be cured or waived or such acceleration to be rescinded or annulled
and stating that such notice is a "Notice of Default" hereunder;

            (e)   the Guaranty ceases to be in full force and effect (other than
in accordance with its terms) or America West denies or disaffirms its
obligations under the Guaranty;

            (f)   the entry by a court having jurisdiction in the premises of
(i) a decree or order for relief in respect of the Company or America West in an
involuntary case or proceeding under any applicable U.S. federal or state
bankruptcy, insolvency, reorganization or other similar law or (ii) a decree or
order adjudging the Company or America West bankrupt or insolvent, or approving
as properly filed a petition seeking reorganization, arrangement, adjustment or
composition of or in respect of the Company or America West under any applicable
U.S. federal or state law, or appointing a custodian, receiver, liquidator,
assignee, trustee, sequestrator or other similar official of the Company or
America West or of any substantial part of their respective property, or
ordering the winding up or liquidation of their respective affairs, and the
continuance of any such decree or order for relief or any such other decree or
order unstayed and in effect for a period of 60 consecutive days; or

            (g)   the commencement by the Company or America West of a voluntary
case or proceeding under any applicable U.S. federal or state bankruptcy,
insolvency, reorganization or other similar law or of any other case or
proceeding to be adjudicated a bankrupt or insolvent, or the consent by the
Company or America West to the entry of a decree or order for relief in respect
of the Company or America West in an involuntary case or proceeding under any
applicable U.S. federal or state bankruptcy, insolvency, reorganization or other
similar law or to the commencement of any bankruptcy or insolvency case or
proceeding against the Company or America West, or the filing by the Company or
America West of a petition or answer or consent seeking reorganization or relief
under any applicable U.S. federal or state law, or the consent by the Company or
America West to the filing of such petition or to the appointment of or the
taking possession by a custodian, receiver, liquidator, assignee, trustee,
sequestrator or other similar official of the Company or America West or of any
substantial part of their respective property, or the making by the Company or
America West of an assignment for the benefit of creditors, or the admission by
the Company or America West in writing of either of their inability to pay their
respective debts generally as they become due, or the taking of corporate action
by the Company or America West expressly in furtherance of any such action.

            A Default under clause (c) above is not an Event of Default until
the Trustee notifies the Company, or the Holders of at least 25% in aggregate of
the Principal amount of the Securities at the time outstanding notify the
Company and the Trustee, of the Default and the Company does not cure such
Default (and such Default is not waived) within the time specified in clause (c)
above after such notice has been given. Any such notice must specify the
Default,


                                       26

demand that it be remedied and state that such notice is a "Notice of Default".

            The Trustee shall, within 90 days of the occurrence of a Default,
give to the Holders of the Securities notice of all uncured Defaults known to it
and written notice of any event which with the giving of notice or the lapse of
time, or both, would become an Event of Default, its status and what action the
Company is taking or proposes to take with respect thereto; provided, however,
the Trustee shall be protected in withholding such notice if it, in good faith,
determines that the withholding of such notice is in the best interest of such
Holders, except in the case of a Default in the payment of the Principal of or
Interest on any of the Securities when due or in the payment of any redemption.

            SECTION 4.2. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT.

            If an Event of Default with respect to Outstanding Securities (other
than an Event of Default specified in Section 4.1(f) or 4.1(g) hereof) occurs
and is continuing, (1) the Trustee, upon the written direction of the Holders of
at least 25% in aggregate Principal amount of the Outstanding Securities, or (2)
the Holders of at least 25% in aggregate Principal amount of the Outstanding
Securities, by written notice to the Company, may declare due and payable 100%
of the Principal amount of all Outstanding Securities, plus any accrued and
unpaid Interest to the date of payment. Upon a declaration of acceleration, such
Principal amount and accrued and unpaid Interest to the date of payment shall be
immediately due and payable.

            If an Event of Default specified in Section 4.1(f) and 4.1(g)
occurs, the Principal and accrued and unpaid Interest on the Outstanding
Securities shall become and be immediately due and payable, without any
declaration or other act on the part of the Trustee or any Holder.

            The Holders either (a) through notice to the Trustee of not less
than a majority of the Principal amount of the Outstanding Securities, or (b) by
the adoption of a resolution, at a meeting of Holders of the Outstanding
Securities at which a quorum is present, by the Holders of at least a majority
of the Principal amount of the Outstanding Securities represented at such
meeting, may, on behalf of the Holders of all of the Securities, rescind and
annul an acceleration and its consequences (including waiver of any defaults)
if:

                  (1)   all existing Events of Default, other than the
            nonpayment of a Defaulted Payment on the Securities which have
            become due solely because of the acceleration, have been remedied,
            cured or waived, and

                  (2)   the rescission would not conflict with any judgment or
            decree of a court of competent jurisdiction.

            SECTION 4.3. OTHER REMEDIES.

            If an Event of Default with respect to Outstanding Securities occurs
and is continuing, the Trustee may pursue any available remedy by proceeding at
law or in equity to collect the Defaulted Payment or Interest due and payable on
the Securities or to enforce the performance of any provision of the Securities.

            The Trustee may maintain a proceeding in which it may prosecute and
enforce all


                                       27

rights of action and claims under this Indenture or the Securities, even if it
does not possess any of the Securities or does not produce any of them in the
proceeding.

            SECTION 4.4. WAIVER OF PAST DEFAULTS.

            The Holders, either (a) through the written consent of not less than
a majority of the Principal amount of the Outstanding Securities, or (b) by the
adoption of a resolution, at a meeting of Holders of the Outstanding Securities
at which a quorum is present, by the Holders of at least a majority of the
Principal amount of the Outstanding Securities represented at such meeting, may,
on behalf of the Holders of all of the Securities, waive an existing Default or
Event of Default, except a Default or Event of Default:

                  (1)   set forth in Sections 4.1(a) and (b), provided, however,
            that subject to Section 4.7, the Holders of a majority of the
            Principal amount of the Outstanding Securities may rescind an
            acceleration and its consequences, including any related payment
            default that resulted from such acceleration); or

                  (2)   in respect of a covenant or provision hereof which,
            under Section 7.2 hereof, cannot be modified or amended without the
            consent of the Holders of each Outstanding Security affected.

            Upon any such waiver, such Default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; provided, however, that no such waiver shall extend
to any subsequent or other Default or impair any right consequent thereon.

            SECTION 4.5. CONTROL BY MAJORITY.

            The Holders of a majority of the Principal amount of the Outstanding
Securities (or such lesser amount as shall have acted at a meeting pursuant to
the provisions of this Indenture) shall have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Trustee or exercising any trust or power conferred on the Trustee. However, the
Trustee may refuse to follow any direction that:

                  (1)   conflicts with any law or with this Indenture;

                  (2)   the Trustee determines may be unduly prejudicial to the
            rights of the Holders not joining therein; or

                  (3)   may expose the Trustee to personal liability.

            The Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction.

            SECTION 4.6. LIMITATION ON SUIT.

            No Holder of any Security shall have any right to pursue any remedy
with respect to this Indenture or the Securities (including, instituting any
proceeding, judicial or otherwise,


                                       28

with respect to this Indenture or for the appointment of a receiver or trustee)
unless:

                  (1)   such Holder has previously given written notice to the
            Trustee of an Event of Default that is continuing;

                  (2)   the Holders of at least 25% in aggregate of the
            Principal amount of the Outstanding Securities shall have made
            written request to the Trustee to pursue the remedy;

                  (3)   such Holder or Holders have offered to the Trustee
            indemnity reasonably satisfactory to it against any costs, expenses
            and liabilities incurred in complying with such request;

                  (4)   the Trustee has failed to comply with the request for 60
            days after its receipt of such notice, request and offer of
            indemnity; and

                  (5)   during such 60-day period, no direction inconsistent
            with such written request has been given to the Trustee by the
            Holders of a majority of the Principal amount of the Outstanding
            Securities (or such amount as shall have acted at a meeting pursuant
            to the provisions of this Indenture);

            provided, however, that no one or more of such Holders may use this
Indenture to prejudice the rights of another Holder or to obtain preference or
priority over another Holder.

            SECTION 4.7. UNCONDITIONAL RIGHTS OF HOLDERS TO RECEIVE PAYMENT AND
TO CONVERT.

            Notwithstanding any other provision in this Indenture, the Holder of
any Security shall have the right, which is absolute and unconditional, to
receive payment of the Principal on and Interest in respect of the Securities
held by such Holder, on or after the respective due dates, to convert the
Securities in accordance with Article 11 or to bring suit for the enforcement of
any such payment on or after such respective dates or the right to convert, and
such rights shall not be impaired or affected adversely without the consent of
such Holder.

            SECTION 4.8. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY
THE TRUSTEE.

            The Company covenants that if:

                  (1)   a Default or Event of Default is made in the payment of
            Interest (including Liquidated Damages, if any) on any Security when
            such Interest becomes due and payable and such Default or Event of
            Default continues for a period of 30 days; or

                  (2)   a Default or Event of Default is made in the payment of
            the Principal on any Security when the same becomes due and payable,

            then the Company will, upon demand of the Trustee, pay to it, for
the benefit of


                                       29

the Holders of such Securities, the entire Principal then due and payable (as
expressed therein or as a result of any acceleration effected pursuant to
Section 4.2 hereof) on such Securities for any such amounts and, to the extent
legally enforceable, Interest on such Securities, and, in addition thereto, such
further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel.

            If the Company fails to pay such amounts forthwith upon such demand,
the Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, may
prosecute such proceeding to judgment or final decree and may enforce the same
against the Company and collect the monies adjudged or decreed to be payable in
the manner provided by law out of the property of the Company, wherever
situated.

            If an Event of Default occurs and is continuing, the Trustee may in
its discretion proceed to protect and enforce its rights and the rights of the
Holders of Securities by such appropriate judicial proceedings as the Trustee
shall deem most effectual to protect and enforce any such rights, whether for
the specific enforcement of any covenant or agreement in this Indenture or in
aid of the exercise of any power granted herein, or to enforce any other proper
remedy.

            SECTION 4.9. TRUSTEE MAY FILE PROOFS OF CLAIM.

            In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or
other judicial proceeding relative to the Company or any other obligor on the
Securities or the property of the Company or of such other obligor or their
creditors, the Trustee (irrespective of whether the Principal or Interest shall
then be due and payable as therein expressed or by declaration or otherwise and
irrespective of whether the Trustee shall have made any demand on the Company
for the payment of any such amount) shall be entitled and empowered, by
intervention in such proceeding or otherwise:

                  (1)   to file and prove a claim for the whole amount of the
            Principal and Interest owing and unpaid in respect of the Securities
            and to file such other papers or documents as may be necessary or
            advisable in order to have the claims of the Trustee (including any
            claim for the reasonable compensation, expenses, disbursements and
            advances of the Trustee, its agents and counsel) and of the Holders
            of Securities allowed in such judicial proceeding and

                  (2)   to collect and receive any monies, Common Stock or other
            property payable or deliverable on any such claim and to distribute
            the same,

            and any custodian, receiver, assignee, trustee, liquidator,
sequestrator or other similar official in any such judicial proceedings is
hereby authorized by each Holder of Securities to make such payments to the
Trustee and, in the event that the Trustee shall consent to the making of such
payments directly to the Holders of Securities, to pay to the Trustee any amount
due to it for the reasonable compensation, expenses, disbursements and advances
of the Trustee, its agents and counsel and any other amounts due the Trustee
under Section 5.8.


                                       30

            Nothing contained herein shall be deemed to authorize the Trustee to
authorize or consent to or accept, or adopt on behalf of any Holder of a
Security, any plan of reorganization, arrangement, adjustment or composition
affecting the Securities or the rights of any Holder thereof or to authorize the
Trustee to vote in respect of the claim of any Holder of a Security in any such
proceeding.

            SECTION 4.10. RESTORATION OF RIGHTS AND REMEDIES.

            If the Trustee or any Holder of a Security has instituted any
proceeding to enforce any right or remedy under this Indenture and such
proceeding has been discontinued or abandoned for any reason, or has been
determined adversely to the Trustee or to such Holder, then and in every such
case, subject to any determination in such proceeding, the Company, the Trustee
and the Holders of Securities shall be restored severally and respectively to
their former positions hereunder and thereafter all rights and remedies of the
Trustee and the Holders shall continue as though no such proceeding had been
instituted.

            SECTION 4.11. RIGHTS AND REMEDIES CUMULATIVE.

            Except as otherwise provided with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities in the last paragraph
of Section 2.11, no right or remedy conferred in this Indenture upon or reserved
to the Trustee or to the Holders of Securities is intended to be exclusive of
any other right or remedy, and every right and remedy shall, to the extent
permitted by law, be cumulative and in addition to every other right and remedy
given hereunder or hereafter existing at law or in equity or otherwise. The
assertion or employment of any right or remedy hereunder, or otherwise, shall
not prevent the concurrent assertion or employment of any other appropriate
right or remedy.

            SECTION 4.12. DELAY OR OMISSION NOT WAIVER.

            No delay or omission of the Trustee or of any Holder of any Security
to exercise any right or remedy accruing upon any Event of Default shall impair
any such right or remedy or constitute a waiver of any such Event of Default or
any acquiescence therein. Every right and remedy given by this Article or by law
to the Trustee or to the Holders of Securities may be exercised from time to
time, and as often as may be deemed expedient, by the Trustee or by the Holders
of Securities, as applicable.

            SECTION 4.13. PRIORITIES.

            Any money collected by the Trustee pursuant to this Article shall be
applied in the following order, at the date or dates fixed by the Trustee:

            FIRST: to the payment of all amounts due to the Trustee under
      Section 5.8;

            SECOND: to Holders for amounts due and unpaid on the Securities for
      the Principal or Interest (including Liquidated Damages, if any) as
      applicable, ratably, without preference or priority of any kind, according
      to such amounts due and payable on the Securities; and


                                       31

            THIRD: any remaining amounts shall be repaid to the Company.

            The Trustee may fix a special record date and payment date for any
payment to Holders pursuant to this Section 4.13. At least 15 days before such
special record date, the Trustee shall mail to each Holder and the Company a
notice that states the special record date, the payment date and the amount to
be paid.

            SECTION 4.14. UNDERTAKING FOR COSTS.

            All parties to this Indenture agree, and each Holder of any Security
by such Holder's acceptance thereof shall be deemed to have agreed, that any
court may in its discretion require, in any suit for the enforcement of any
right or remedy under this Indenture, or in any suit against the Trustee for any
action taken, suffered or omitted by it as Trustee, the filing by any party
litigant in such suit of an undertaking to pay the costs of such suit, and that
such court may in its discretion assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in such suit, having due regard to
the merits and good faith of the claims or defenses made by such party litigant;
but the provisions of this Section shall not apply to any suit instituted by the
Trustee, to any suit instituted by any Holder, or group of Holders, holding in
the aggregate more than 10% of the Principal amount of the Outstanding
Securities, or to any suit instituted by any Holder of any Security for the
enforcement of (i) payments pursuant to Section 4.7 or (ii) conversion rights in
accordance with Article 11. This Section 4.14 shall be in lieu of Section 315(e)
of the TIA and such Section 315(e) is hereby expressly excluded from this
Indenture, as permitted by the TIA.

            SECTION 4.15. WAIVER OF STAY OR EXTENSION LAWS.

            The Company covenants (to the extent that it may lawfully do so)
that it will not at any time insist upon, or plead, or in any manner whatsoever
claim to take the benefit or advantage of, any stay or extension law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
or the performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such law
and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.

                                    ARTICLE 5

                                   THE TRUSTEE

            SECTION 5.1. CERTAIN DUTIES AND RESPONSIBILITIES.

            (a)   Except during the continuance of an Event of Default,

                  (1)   The Trustee undertakes to perform such duties and only
            such duties as are specifically set forth in this Indenture or the
            TIA, and no implied covenants or obligations shall be read into this
            Indenture against the Trustee; and

                  (2)   In the absence of bad faith on its part, the Trustee may
            conclusively


                                       32

            rely, as to the truth of the statements and the correctness of the
            opinions expressed therein, upon certificates or opinions furnished
            to the Trustee and conforming to the requirements of this Indenture;
            provided, however, that in the case of any such certificates or
            opinions which by any provision hereof are specifically required to
            be furnished to the Trustee, the Trustee shall examine the
            certificates or opinions to determine whether or not, on their face,
            they conform to the requirements to this Indenture (but need not
            investigate or confirm the accuracy of any facts stated therein).

            (b)   In case an Event of Default actually known to a Responsible
Officer of the Trustee has occurred and is continuing, the Trustee shall
exercise such of the rights and powers vested in it by this Indenture, and use
the same degree of care and skill in their exercise, as a prudent person would
exercise or use under the circumstances in the conduct of such person's own
affairs.

            (c)   No provision of this Indenture shall be construed to relieve
the Trustee from liability for its own negligent action, its own negligent
failure to act, or its own willful misconduct, except that:

                  (1)   This paragraph (c) shall not be construed to limit the
            effect of paragraph (a) of this Section 5.1;

                  (2)   The Trustee shall not be liable for any error of
            judgment made in good faith by a Responsible Officer, unless it
            shall be proved that the Trustee was negligent in ascertaining the
            pertinent facts; and

                  (3)   The Trustee shall not be liable with respect to any
            action taken or omitted to be taken by it in good faith in
            accordance with a direction received by it of the Holders of a
            majority of the Principal amount of the Outstanding Securities (or
            such lesser amount as shall have acted at a meeting pursuant to the
            provisions of this Indenture) relating to the time, method and place
            of conducting any proceeding for any remedy available to the
            Trustee, or exercising any trust or power conferred upon the
            Trustee, under this Indenture.

            (d)   Whether or not herein expressly so provided, every provision
of this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Section 5.1.

            (e)   No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any liability in the performance
of any of its duties hereunder, or in the exercise of any of its rights or
powers. The Trustee may refuse to perform any duty or exercise any right or
power unless it receives indemnity reasonably satisfactory to it against any
loss, liability, cost or expense (including, without limitation, reasonable fees
and expenses of counsel).

            (f)   The Trustee shall not be obligated to pay Interest on any
money or other assets received by it unless otherwise agreed in writing with the
Company. Assets held in trust by the Trustee need not be segregated from other
funds except to the extent required by law.


                                       33

            (g)   The Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
debenture, note, coupon, other evidence of indebtedness or other paper or
document, but the Trustee, in its discretion, may make such further inquiry or
investigation into such facts or matters as it may see fit, and, if the Trustee
shall determine to make such further inquiry or investigation, it shall be
entitled to examine the books, records and premises of the Company, personally
or by agent or attorney at the sole cost of the Company and shall incur no
liability or additional liability of any kind by reason of such inquiry or
investigation.

            (h)   The Trustee shall not be deemed to have notice or actual
knowledge of any Event of Default or other state of facts unless a Responsible
Officer of the Trustee has actual knowledge thereof or unless written notice of
any event which is in fact a Default or other state of facts is received by the
Trustee pursuant to Section 12.2 hereof, and such notice references the
Securities and this Indenture.

            (i)   The rights, privileges, protections, immunities and benefits
given to the Trustee hereunder, including, without limitation, its right to be
indemnified, are extended to, and shall be enforceable by, the Trustee in each
of its capacities hereunder, and each Paying Agent, authenticating agent,
Conversion Agent or Registrar acting hereunder.

            (j)   The Trustee may request that the Company deliver an Officers'
Certificate setting forth the names of individuals and/or titles of officers
authorized at such time to take specified actions pursuant to this Indenture,
which Officers' Certificate may be signed by any person authorized to sign an
Officers' Certificate, including any person specified as so authorized in any
such certificate previously delivered and not superseded.

            SECTION 5.2. CERTAIN RIGHTS OF TRUSTEE.

            Subject to the provisions of Section 5.1 hereof and subject to
Section 315(a) through (d) of the TIA:

                  (1)   The Trustee may conclusively rely on any document
            believed by it to be genuine and to have been signed or presented by
            the proper person. The Trustee need not investigate any fact or
            matter stated in the document.

                  (2)   Before the Trustee acts or refrains from acting, it may
            require an Officers' Certificate. The Trustee shall not be liable
            for any action it takes or omits to take in good faith in reliance
            on the Officers' Certificate.

                  (3)   The Trustee may act through attorneys and agents and
            shall not be responsible for the misconduct or negligence of any
            attorney or agent appointed with due care.

                  (4)   The Trustee shall not be liable for any action taken or
            omitted to be taken by it in good faith which it believed to be
            authorized or within the discretion or rights or powers conferred
            upon it by this Indenture, unless the Trustee's conduct constitutes
            negligence.


                                       34

                  (5)   The Trustee may consult with counsel of its selection
            and the advice of such counsel as to matters of law or legal
            interpretation shall be full and complete authorization and
            protection in respect of any action taken, omitted or suffered by it
            hereunder in good faith and in accordance with the advice or opinion
            of such counsel.

                  (6)   Unless otherwise specifically provided in this
            Indenture, any demand, request, direction or notice from the Company
            shall be sufficient if signed by an Officer of the Company.

                  (7)   The permissive rights of the Trustee to do things
            enumerated in this Indenture shall not be construed as a duty unless
            so specified herein.

            SECTION 5.3. INDIVIDUAL RIGHTS OF TRUSTEE.

            The Trustee in its individual or any other capacity may become the
owner or pledgee of Securities and may otherwise deal with the Company or any
Affiliate of the Company with the same rights it would have if it were not
Trustee. However, in the event that the Trustee acquires any conflicting
interest (as such term is defined in Section 310(b) of the TIA), it must
eliminate such conflict within 90 days, apply to the Commission for permission
to continue as trustee (to the extent permitted under Section 310(b) of the TIA)
or resign. Any agent may do the same with like rights and duties. The Trustee is
also subject to Sections 5.11 and 5.12 hereof.

            SECTION 5.4. MONEY HELD IN TRUST.

            Money held by the Trustee in trust hereunder shall not be segregated
from other funds except to the extent required by law. The Trustee shall be
under no liability for interest on any money received by it hereunder except as
otherwise expressly agreed with the Company.

            SECTION 5.5. TRUSTEE'S DISCLAIMER.

            The recitals contained herein and in the Securities (except for
those in the certificate of authentication) shall be taken as the statements of
the Company, and the Trustee assumes no responsibility for their correctness.
The Trustee makes no representations as to the validity, sufficiency or priority
of this Indenture or of the Securities. The Trustee shall not be accountable for
the use or application by the Company of Securities or the proceeds thereof.

            SECTION 5.6. NOTICE OF DEFAULTS.

            Within 90 days after the occurrence of any Default or Event of
Default hereunder of which a Responsible Officer of the Trustee has received
written notice, the Trustee shall give notice to Holders, unless such Default or
Event of Default shall have been cured or waived; provided, however, that,
except in the case of a Default or Event of Default described in Sections 4.1(a)
or (b), the Trustee shall be protected in withholding such notice if and so long
as Responsible Officers of the Trustee in good faith determine that the
withholding of such notice is in the interest of the Holders. The first sentence
of this Section 5.6 shall be in lieu of the proviso to Section 315(b) of the TIA
and such proviso is hereby expressly excluded from this Indenture, as permitted
by the TIA.


                                       35

            SECTION 5.7. REPORTS BY TRUSTEE TO HOLDERS.

            The Trustee shall transmit to Holders such reports concerning the
Trustee and its actions under this Indenture as may be required by Section 313
of the TIA at the times and in the manner provided by the TIA.

            A copy of each report at the time of its mailing to Holders shall be
filed with the Commission, if required, and each stock exchange or the Nasdaq
National Market, if any, on which the Securities and the Common Stock are listed
or quoted or (provided the Trustee shall have been advised of such listing or
quotation pursuant to the sentence immediately following) become listed or
quoted. The Company shall promptly notify the Trustee when the Securities or the
Common Stock become listed or quoted on any stock exchange or the Nasdaq
National Market.

            SECTION 5.8. COMPENSATION AND INDEMNIFICATION.

            The Company covenants and agrees to pay to the Trustee from time to
time, and the Trustee shall be entitled to, such compensation as agreed to in
writing by the Trustee and the Company (which shall not be limited by any
provision of law in regard to the compensation of a trustee of an express trust)
and the Company covenants and agrees to pay or reimburse the Trustee upon its
request for all reasonable expenses, disbursements and advances incurred or made
by or on behalf of it in accordance with any of the provisions of this Indenture
(including the reasonable compensation, expenses and disbursements of its
counsel and of all agents and other persons not regularly in its employ), except
to the extent that any such expense, disbursement or advance is due to its
negligence or bad faith. When the Trustee incurs expenses or renders services in
connection with an Event of Default specified in Section 4.1, the expenses
(including the reasonable charges and expenses of its counsel) and the
compensation for the services are intended to constitute expenses of
administration under any bankruptcy law. The Company also covenants to indemnify
the Trustee and its officers, directors, employees and agents for, and to hold
such Persons harmless against, any loss, liability or expense incurred by them,
arising out of or in connection with the acceptance or administration of this
Indenture or the trusts hereunder or the performance of their duties hereunder,
including the costs and expenses of defending themselves against or
investigating any claim of liability in the premises, except to the extent that
any such loss, liability or expense was due to the negligence or willful
misconduct of such Persons. The obligations of the Company under this Section
5.8 to compensate and indemnify the Trustee and its officers, directors,
employees and agents and to pay or reimburse such Persons for expenses,
disbursements and advances shall constitute additional indebtedness hereunder
and shall survive the satisfaction and discharge of this Indenture or the
earlier resignation or removal of the Trustee. Such additional indebtedness
shall be a lien prior to that of the Securities upon all property and funds held
or collected by the Trustee as such, except funds held in trust for the benefit
of the Holders of particular Securities, and the Securities are hereby
subordinated to such senior claim. "Trustee" for purposes of this Section 5.8
shall include any predecessor Trustee, in its capacity as Trustee, but the
negligence or willful misconduct of any Trustee shall not affect the
indemnification of any other Trustee.

            SECTION 5.9. REPLACEMENT OF TRUSTEE.


                                       36

            A resignation or removal of the Trustee and appointment of a
successor Trustee shall become effective only upon the successor Trustee's
acceptance of appointment as provided in this Section 5.9.

            The Trustee may resign and be discharged from the trust hereby
created by so notifying the Company in writing. The Holders of at least a
majority of the Principal amount of Outstanding Securities may remove the
Trustee by so notifying the Trustee and the Company in writing. The Company must
remove the Trustee if:

            (i)   the Trustee fails to comply with Section 5.1 or 5.11 hereof or
Section 310 of the TIA;

            (ii)  the Trustee becomes incapable of acting;

            (iii) the Trustee is adjudged a bankrupt or an insolvent or an order
for relief is entered with respect to the Trustee under any Bankruptcy Law; or

            (iv)  a Custodian or public officer takes charge of the Trustee or
its property.

            If the Trustee resigns or is removed or if a vacancy exists in the
office of the Trustee for any reason, the Company shall promptly appoint a
successor Trustee. The Trustee shall be entitled to payment of its fees and
reimbursement of its expenses while acting as Trustee. Within one year after the
successor Trustee takes office, the Holders of at least a majority of the
Principal amount of Outstanding Securities may appoint a successor Trustee to
replace the successor Trustee appointed by the Company.

            Any Holder may petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee if the Trustee
fails to comply with Section 5.1.

            If an instrument of acceptance by a successor Trustee shall not have
been delivered to the Trustee within 30 days after the giving of such notice of
resignation or removal, the resigning or removed Trustee, as applicable, may
petition, at the expense of the Company, any court of competent jurisdiction for
the appointment of a successor Trustee.

            A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The Company shall issue a notice of the successor
Trustee's succession to the Holders. Upon payment of its charges, the retiring
Trustee shall promptly transfer all property held by it as Trustee to the
successor Trustee, subject nevertheless to its lien, if any, provided for in
Section 5.8 hereof. Notwithstanding replacement of the Trustee pursuant to this
Section 5.9 hereof, the Company's obligations under Section 5.8 hereof shall
continue for the benefit of the retiring Trustee with respect to expenses,
losses and liabilities incurred by it prior to such replacement.

            SECTION 5.10. SUCCESSOR TRUSTEE BY MERGER, ETC.


                                       37

            Subject to Section 5.11 hereof, if the Trustee consolidates with,
merges or converts into, or transfers all or substantially all of its corporate
trust business to, another corporation or national banking association, the
successor entity without any further act shall be the successor Trustee as to
the Securities.

            SECTION 5.11. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY.

            The Trustee shall at all times satisfy the requirements of Section
310(a)(1), (2) and (5) of the TIA. The Trustee shall at all times have (or, in
the case of a corporation included in a bank holding company system, the related
bank holding company shall at all times have), a combined capital and surplus of
at least $50 million as set forth in its (or its related bank holding company's)
most recent published annual report of condition. The Trustee is subject to
Section 310(b) of the TIA.

            SECTION 5.12. COLLECTION OF CLAIMS AGAINST THE COMPANY.

            The Trustee is subject to Section 311(a) of the TIA, excluding any
creditor relationship listed in Section 311(b) of the TIA. A Trustee who has
resigned or been removed shall be subject to Section 311(a) of the TIA to the
extent indicated therein.

                                    ARTICLE 6

              CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE

            SECTION 6.1. COMPANY AND AMERICA WEST MAY CONSOLIDATE, ETC., ONLY ON
CERTAIN TERMS.

            Neither the Company nor America West shall consolidate with or merge
into any other Person or convey, transfer or lease its properties and assets
substantially as an entirety to any Person, and neither the Company nor America
West shall permit any Person to consolidate with or merge into the Company or
America West or convey, transfer or lease its properties and assets
substantially as an entirety to the Company or America West, unless:

                  (1)   in the event that the Company or America West shall
            consolidate with or merge into another Person or convey, transfer or
            lease its properties and assets as an entirety or substantially as
            an entirety to any Person, the Person formed by such consolidation
            or into which the Company or America West is merged or the Person
            which acquires by conveyance or transfer, or which leases, the
            properties and assets of the Company or America West substantially
            as an entirety shall be a corporation, limited liability company,
            partnership or trust organized and validly existing under the laws
            of the United States of America, any State thereof or the District
            of Columbia;

                  (2)   in the event that the Company or America West shall
            consolidate with or merge into another Person or convey, transfer or
            lease its properties and assets as an entirety or substantially as
            an entirety to any Person, and the entity surviving such transaction
            or transferee entity is not the Company or America West, then such
            surviving or transferee entity shall expressly assume, by an
            indenture


                                       38

            supplemental hereto, executed and delivered to the Trustee, in form
            reasonably satisfactory to the Trustee, the due and punctual payment
            of all and any amounts when due on all the Securities and the
            performance of every covenant and obligation of this Indenture and
            the Securities on the part of the Company to be performed or
            observed and shall have provided for conversion rights provided in
            Article 11;

                  (3)   immediately after giving effect to such transaction and
            treating any indebtedness which becomes an obligation of the Company
            or America West as a result of such transaction as having been
            incurred at the time of such transaction, no Event of Default, and
            no event which, after notice or lapse of time or both, would become
            an Event of Default, shall have occurred and be continuing; and

                  (4)   the Company shall have delivered to the Trustee an
            Officers' Certificate stating that such consolidation, merger,
            conveyance, transfer or lease and, if a supplemental indenture is
            required in connection with such transaction, such supplemental
            indenture, comply with this Article and that all conditions
            precedent herein provided for relating to such transaction have been
            complied with.

            SECTION 6.2. SUCCESSOR PERSON SUBSTITUTED.

            Upon any consolidation or merger by the Company or America West with
or into any other Person or any conveyance, transfer or lease of the properties
and assets of the Company or America West substantially as an entirety to any
Person, in accordance with Section 6.1 hereof, the successor Person formed by
such consolidation or into which the Company or America West is merged or to
which such conveyance, transfer or lease is made shall succeed to, and be
substituted for, and may exercise every right and power of, the Company or
America West under this Indenture with the same effect as if such successor
Person had been named as the Company or America West herein. In the event of any
such conveyance or transfer, the Company or America West (which term shall for
this purpose mean the Person named as the "Company" in the first paragraph of
this Indenture or "America West" in Section 1.1 of this Indenture or any
successor Person which shall theretofore become such in the manner described in
Section 6.1 hereof), except in the case of a lease to another Person, the
predecessor corporation shall be relieved of all obligations and covenants under
this Indenture and the Securities and may be dissolved and liquidated.

                                    ARTICLE 7

                       AMENDMENTS, SUPPLEMENTS AND WAIVERS

             SECTION 7.1. WITHOUT CONSENT OF HOLDERS OF SECURITIES.

            Without the consent of any Holders of Securities, the Company, when
authorized by a Board Resolution, and the Trustee, at any time and from time to
time, may amend this Indenture and the Securities to:

            (a)   add to the covenants of the Company for the benefit of the
Holders of


                                       39

Securities;

            (b)   surrender any right or power herein conferred upon the
Company;

            (c)   provide for conversion rights of Holders of Securities if any
reclassification or change of the Company's Common Stock or any consolidation,
merger or sale of all or substantially all of the Company's assets occurs;

            (d)   provide for the assumption of the Company's obligations to the
Holders of Securities in the case of a merger, consolidation, conveyance,
transfer or lease pursuant to Article 6 hereof;

            (e)   reduce the Conversion Price; provided, however, that such
reduction in the Conversion Price shall not adversely affect the interest of the
Holders of Securities (after taking into account tax and other consequences of
such reduction);

            (f)   comply with the requirements of the Commission in order to
effect or maintain the qualification of this Indenture under the TIA;

            (g)   establish the forms or terms of Securities of any series as
permitted by Section 2.01;

            (h)   cure any ambiguity, to correct or supplement any provision
herein which may be inconsistent with any other provision herein or which is
otherwise defective, or to make any other provisions with respect to matters or
questions arising under this Indenture which the Company may deem necessary or
desirable and which shall not be inconsistent with the provisions of this
Indenture; provided, however, that such action pursuant to this clause (h) does
not, in the good faith opinion of the Board of Directors of the Company (as
evidenced by a Board Resolution), adversely affect the interests of the Holders
of Securities in any material respect; and

            (i)   add or modify any other provisions herein with respect to
matters or questions arising hereunder which the Company and the Trustee may
deem necessary or desirable and which will not adversely affect the interests of
the Holders of Securities.

            SECTION 7.2. WITH CONSENT OF HOLDERS OF SECURITIES.

            Except as provided below in this Section 7.2, this Indenture or the
Securities may be amended, modified or supplemented, and noncompliance in any
particular instance with any provision of this Indenture or the Securities may
be waived, in each case (i) with the written consent of the Holders of at least
a majority of the Principal amount of the Outstanding Securities or (ii) by the
adoption of a resolution, at a meeting of Holders of the Outstanding Securities
at which a quorum is present, by the Holders of a majority of the Principal
amount of the Outstanding Securities represented and voting at such meeting
pursuant to Section 8.4.

            Without the written consent or the affirmative vote of each Holder
of Securities affected thereby, an amendment or waiver under this Section 7.2
may not:


                                       40

            (a)   change the Stated Maturity of the Principal amount of, or any
installment of Interest on, any Security;

            (b)   reduce the Principal or Interest (including any Liquidated
Damages) payable on any Security;

            (c)   change the currency of any amount owed or owing under any
Security or any interest thereon from U.S. Dollars;

            (d)   alter or otherwise modify the Interest Rate on any Security,
or the manner of calculation thereof, or extend time for payment of any amounts
due and payable to the Holders of the Securities;

            (e)   impair the right of any Holder to institute suit for the
enforcement of any payment in or with respect to any Security;

            (f)   modify the obligation of the Company to maintain an office or
agency in the City of New York pursuant to Section 9.2;

            (g)   adversely affect the right of the Holders of the Securities to
convert any Security as provided in Article 11;

            (h)   modify the provisions of Article 10 in a manner adverse to the
Holders of the Securities;

            (i)   modify any of the provisions of this Section, or reduce the
percentage of voting interests required to waive a default, except to increase
such percentage or to provide that certain other provisions of this Indenture
cannot be modified or waived without the consent of the Holder of each
Outstanding Security affected thereby; or

            (j)   reduce the requirements of Section 8.4 hereof for quorum or
voting, or reduce the percentage of the Principal amount of the Outstanding
Securities the consent of whose Holders is required for any such supplemental
indenture or the consent of whose Holders is required for any waiver provided
for in this Indenture.

            It shall not be necessary for any Act of Holders of Securities under
this Section 7.2 to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such Act shall approve the substance
thereof.

            SECTION 7.3. COMPLIANCE WITH TRUST INDENTURE ACT.

            Every amendment to this Indenture or the Securities shall be set
forth in a supplemental indenture that complies with the TIA as then in effect.

            SECTION 7.4. REVOCATION OF CONSENTS AND EFFECT OF CONSENTS OR VOTES.

            Until an amendment, supplement or waiver becomes effective, a
written consent to it by a Holder is a continuing consent by the Holder and
every subsequent Holder of a Security


                                       41

or portion of a Security that evidences the same debt as the consenting Holder's
Security, even if notation of the consent is not made on any Security.

            An amendment, supplement or waiver becomes effective on receipt by
the Trustee of written consents from or affirmative votes by, as applicable, the
Holders of the requisite percentage of the Principal amount of the Outstanding
Securities, and thereafter shall bind every Holder of Securities; provided,
however, if the amendment, supplement or waiver makes a change described in any
of the clauses (a) through (j) of Section 7.2, the amendment, supplement or
waiver shall bind only each Holder of a Security which has consented to it or
voted for it, as applicable, and every subsequent Holder of a Security or
portion of a Security that evidences the same indebtedness as such Security of
the consenting or affirmatively voting Holder, as applicable.

            SECTION 7.5. NOTATION ON OR EXCHANGE OF SECURITIES.

            If an amendment, supplement or waiver changes the terms of a
Security:

            (a)   the Trustee may require the Holder of such Security of any
series to deliver such Security to the Trustee, the Trustee may place an
appropriate notation on such Security about the changed terms and return it to
the Holder and the Trustee may place an appropriate notation on any Security of
any series thereafter authenticated for such series as to any matter provided
for by such supplemental indenture; or

            (b)   if the Company or the Trustee so determines, the Company in
exchange for such Security shall issue and the Trustee shall authenticate a new
Security that reflects the changed terms.

            Failure to make the appropriate notation or issue a new Security
shall not affect the validity and effect of such amendment, supplement or
waiver.

            SECTION 7.6. TRUSTEE TO SIGN AMENDMENT, ETC.

            The Trustee shall sign any amendment authorized pursuant to this
Article 7 if the Trustee reasonably determines the amendment does not adversely
affect the rights, duties, liabilities or immunities of the Trustee. If the
Trustee reasonably determines the amendment does adversely affect the rights,
duties, liabilities or immunities of the Trustee, the Trustee may but need not
sign it. In signing or refusing to sign any amendment hereunder, the Trustee
shall be entitled to receive and shall be fully protected in relying upon an
Officers' Certificate as conclusive evidence that such amendment is authorized
or permitted by this Indenture and that all conditions precedent relating
thereto have been complied with.

                                    ARTICLE 8

                        MEETING OF HOLDERS OF SECURITIES

            SECTION 8.1. PURPOSES FOR WHICH MEETINGS MAY BE CALLED.

            A meeting of Holders of Securities may be called at any time and
from time to


                                       42

time pursuant to this Article to make, give or take any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be made, given or taken by Holders of Securities.

            SECTION 8.2. CALL NOTICE AND PLACE OF MEETINGS.

            (a)   The Trustee may at any time call a meeting of Holders of
Securities for any purpose specified in Section 8.1, to be held at such time and
at such place in the City of New York. Notice of every meeting of Holders of
Securities, setting forth the time and the place of such meeting and in general
terms the action proposed to be taken at such meeting, shall be given, in the
manner provided in Section 12.2, not less than 21 nor more than 180 days prior
to the date fixed for the meeting.

            (b)   In case at any time the Company, pursuant to a Board
Resolution, or the Holders of at least 10% of the Principal amount of the
Outstanding Securities shall have requested the Trustee to call a meeting of the
Holders of Securities for any purpose specified in Section 8.1 hereof, by
written request setting forth in reasonable detail the action proposed to be
taken at the meeting, and the Trustee shall not have made the first publication
of the notice of such meeting within 21 days after receipt of such request or
shall not thereafter proceed to cause the meeting to be held as provided herein,
then the Company or the Holders of Securities in the amount specified, as
applicable, may determine the time and the place in the City of New York for
such meeting and may call such meeting for such purposes by giving notice
thereof as provided in paragraph (a) of this Section 8.2.

            SECTION 8.3. PERSONS ENTITLED TO VOTE AT MEETINGS.

            To be entitled to vote at any meeting of Holders of Securities, a
Person shall be (a) a Holder of one or more Outstanding Securities, or (b) a
Person appointed by an instrument in writing as proxy for a Holder or Holders of
one or more Outstanding Securities by such Holder or Holders. The only Persons
who shall be entitled to be present or to speak at any meeting of Holders shall
be the Persons entitled to vote at such meeting and their counsel, any
representatives of the Trustee and its counsel and any representatives of the
Company and its counsel.

            SECTION 8.4. QUORUM; ACTION.

            The Persons entitled to vote a majority of the Principal amount of
the Outstanding Securities shall constitute a quorum. In the absence of a quorum
within 30 minutes of the time appointed for any such meeting, the meeting shall,
if convened at the request of Holders of Securities, be dissolved. In any other
case, the meeting may be adjourned for a period of not less than 10 days as
determined by the chairman of the meeting prior to the adjournment of such
meeting. In the absence of a quorum at any such adjourned meeting, such
adjourned meeting may be further adjourned for a period of not less than 10 days
as determined by the chairman of the meeting prior to the adjournment of such
adjourned meeting. Notice of the reconvening of any adjourned meeting shall be
given as provided in Section 8.2(a), except that such notice need be given only
once and not less than five days prior to the date on which the meeting is
scheduled to be reconvened. Notice of the reconvening of an adjourned meeting
shall state


                                       43

expressly the percentage of the Principal amount of the Outstanding Securities
which shall constitute a quorum.

            Subject to the foregoing, at the reconvening of any meeting
adjourned for a lack of a quorum, the Persons entitled to vote 25% of the
Principal amount of the Outstanding Securities at the time shall constitute a
quorum for the taking of any action set forth in the notice of the original
meeting.

            At a meeting or an adjourned meeting duly reconvened and at which a
quorum is present as aforesaid, any resolution and all matters (except as
limited by Section 7.2) shall be effectively passed and decided if passed or
decided by the Persons entitled to vote not less than a majority of the
Principal amount of Outstanding Securities represented and voting at such
meeting.

            Any resolution passed or decisions taken at any meeting of Holders
of Securities duly held in accordance with this Section shall be binding on all
the Holders of Securities, whether or not present or represented at the meeting.

            SECTION 8.5. DETERMINATION OF VOTING RIGHTS; CONDUCT AND ADJOURNMENT
OF MEETINGS.

            (a)   Notwithstanding any other provisions of this Indenture, the
Trustee may make such reasonable regulations as it may deem advisable for any
meeting of Holders of Securities in regard to proof of the holding of Securities
and of the appointment of proxies and in regard to the appointment and duties of
inspectors of votes, the submission and examination of proxies, certificates and
other evidence of the right to vote, and such other matters concerning the
conduct of the meeting as it shall deem appropriate. Except as otherwise
permitted or required by any such regulations, the holding of Securities shall
be proved in the manner specified in Section 12.4 hereof and the appointment of
any proxy shall be proved in the manner specified in Section 12.4 hereof. Such
regulations may provide that written instruments appointing proxies, regular on
their face, may be presumed valid and genuine without the proof specified in
Section 12.4 hereof or other proof.

            (b)   The Trustee shall, by an instrument in writing, appoint a
temporary chairman (which may be the Trustee) of the meeting, unless the meeting
shall have been called by the Company or by Holders of Securities as provided in
Section 8.2(b), in which case the Company or the Holders of Securities calling
the meeting, as applicable, shall in like manner appoint a temporary chairman. A
permanent chairman and a permanent secretary of the meeting shall be elected by
vote of the Persons entitled to vote a majority of the Principal amount of the
Outstanding Securities represented at the meeting.

            (c)   At any meeting, each Holder of a Security or proxy shall be
entitled to one vote for each $1,000 Principal amount of Securities held or
represented by him; provided, however, that no vote shall be cast or counted at
any meeting in respect of any Security challenged as not Outstanding and ruled
by the chairman of the meeting to be not Outstanding. The chairman of the
meeting shall have no right to vote, except as a Holder of a Security or proxy.


                                       44

            (d)   Any meeting of Holders of Securities duly called pursuant to
Section 8.2 at which a quorum is present may be adjourned from time to time by
Persons entitled to vote a majority of the Principal amount of the Outstanding
Securities represented at the meeting, and the meeting may be held as so
adjourned without further notice.

            SECTION 8.6. COUNTING VOTES AND RECORDING ACTION OF MEETINGS.

            The vote upon any resolution submitted to any meeting of Holders of
Securities shall be by written ballots on which shall be subscribed the
signatures of the Holders of Securities or of their representatives by proxy and
the Principal amount and serial numbers of the Outstanding Securities held or
represented by them. The permanent chairman of the meeting shall appoint two
inspectors of votes who shall count all votes cast at the meeting for or against
any resolution and who shall make and file with the secretary of the meeting
their verified written reports in duplicate of all votes cast at the meeting. A
record, at least in duplicate, of the proceedings of each meeting of Holders of
Securities shall be prepared by the secretary of the meeting and there shall be
attached to said record the original reports of the inspectors of votes on any
vote by ballot taken thereat and affidavits by one or more Persons having
knowledge of the facts setting forth a copy of the notice of the meeting and
showing that said notice was given as provided in Section 8.2 and, if
applicable, Section 8.4. Each copy shall be signed and verified by the
affidavits of the permanent chairman and secretary of the meeting and one such
copy shall be delivered to the Company and another to the Trustee to be
preserved by the Trustee, the latter to have attached thereto the ballots voted
at the meeting. Any record so signed and verified shall be conclusive evidence
of the matters therein stated.

                                    ARTICLE 9

                                    COVENANTS

            SECTION 9.1. PAYMENT OF PRINCIPAL AND INTEREST.

            The Company will duly and punctually pay the Principal of and
Interest, including, Liquidated Damages, if any, on the Securities when and if
at any time any such foregoing amounts are due and payable in accordance with
the terms of the Securities and this Indenture. The Company will deposit or
cause to be deposited such payment with the Trustee as directed by the Trustee,
no later than the day of the Stated Maturity of any Security, the date of any
installment of Interest or any other date such payment is otherwise due.

            SECTION 9.2. MAINTENANCE OF OFFICES OR AGENCIES.

            The Company hereby appoints the Trustee's Corporate Trust Office as
its office in Rodney Square North, 1100 North Market Street, Wilmington,
Delaware 19890:

            (i)   where Securities may be presented or surrendered for payment;

            (ii)  where Securities may be surrendered for registration of
transfer or exchange;

            (iii) where Securities may be surrendered for conversion; and


                                       45

            (iv)  where notices and demands to or upon the Company in respect of
the Securities and this Indenture may be served.

            The Company will maintain in the City of New York, an office or
agency where Securities may be presented or surrendered for payment, where
Securities may be surrendered for registration of transfer or exchange, where
Securities may be surrendered for conversion and where notices and demands to or
upon the Company in respect of the Securities and this Indenture may be served.
The Company will give prompt written notice to the Trustee, and notice to the
Holders in accordance with Section 12.2 hereof, of the appointment or
termination of any such agents and of the location and any change in the
location of any such office or agency.

            If at any time the Company shall fail to maintain any such required
office or agency in the City of New York, or shall fail to furnish the Trustee
with the address thereof, presentations and surrenders may be made at, and
notices and demands may be served on, the Corporate Trust Office of the Trustee.

            SECTION 9.3. CORPORATE EXISTENCE.

            Subject to Article 6 hereof, the Company will do or cause to be done
all things necessary to preserve and keep in full force and effect its corporate
existence, rights (charter and statutory) and franchises of the Company;
provided, however, that the Company shall not be required to preserve any such
right or franchise if the Board of Directors shall determine in good faith that
the preservation thereof is no longer desirable in the conduct of the business
of the Company and that the loss thereof is not disadvantageous in any material
respect to the Holders.

            SECTION 9.4. REPORTS.

            (a)   The Company shall deliver to the Trustee, within 15 days after
it files them with the Commission, copies of the annual reports and of the
information, documents and other reports (or copies of such portions of any of
the foregoing as the Commission may by rules and regulations prescribe) which
the Company is required to file with the Commission pursuant to Section 13 or
15(d) of the Exchange Act; provided, however, the Company shall not be required
to deliver to the Trustee any materials for which the Company has sought and
received confidential treatment by the SEC. The Company also shall comply with
the other provisions of Section 314(a) of the TIA.

            (b)   If at any time the Company is not subject to Section 13 or
15(d) of the Exchange Act, upon the request of a Holder of a Security, the
Company, will promptly furnish or cause to be furnished to such Holder or to a
prospective purchaser of such Security designated by such Holder, as applicable,
the information, if any, required to be delivered by it pursuant to Rule
144A(d)(4) under the Securities Act to permit compliance with Rule 144A in
connection with the resale of such Security; provided, however, that the Company
shall not be required to furnish such information in connection with any request
made on or after the date which is two years from the date such security was
last acquired from the Company or an "affiliate" (as defined under Rule 144
under the Securities Act) of the Company.

            SECTION 9.5. COMPLIANCE CERTIFICATE.


                                       46

            The Company shall deliver to the Trustee, within 90 days after the
end of each fiscal year of the Company, an Officers' Certificate stating that in
the course of the performance by the signers of their duties as an Officer of
the Company, they would normally have knowledge of any failure by the Company to
comply with all conditions, or Defaults by the Company with respect to any
covenant, under this Indenture, and further stating whether or not they have
knowledge of any such failure or Default and, if so, specifying each such
failure or Default and the nature thereof. In the event an Officer of the
Company comes to have knowledge of a Default, regardless of the date, the
Company shall deliver an Officers' Certificate to the Trustee within five
Business Days of obtaining such knowledge specifying such Default and the nature
and status thereof.

            SECTION 9.6. REGISTRATION RIGHTS.

            (a)   The Company agrees, for the benefit of the Holders from time
to time of the Securities, to the terms set forth in the Registration Rights
Agreement setting forth certain rights of the Holders, and obligations of the
Company, with respect to the registration by the Company and America West of the
Securities.

            (b)   Other than the Company's failure to pay Liquidated Damages, if
any, in accordance with the terms of Section 4.1(b) hereof, any other failure by
the Company to perform or observe any term, covenant or agreement contained in
the Registration Rights Agreement shall not constitute a Default or Event of
Default hereunder.

            SECTION 9.7. LIQUIDATED DAMAGES.

            If at any time Liquidated Damages become payable by the Company
pursuant to the Registration Rights Agreement, the Company shall promptly
deliver to the Trustee a certificate to that effect stating (i) the amount of
such Liquidated Damages that are payable and (ii) the date on which such damages
are payable pursuant to the terms of the Registration Rights Agreement. If the
Company has paid Liquidated Damages directly to the Persons entitled to them,
the Company shall deliver a certificate to the Trustee setting forth the
particulars of such payment.

                                   ARTICLE 10

                            REDEMPTION OF SECURITIES

            SECTION 10.1. PROVISIONAL AND OPTIONAL REDEMPTION.

            (a)   The Securities may be redeemed at the election of the Company,
as a whole or in part, at any time before January 18, 2005 (a "PROVISIONAL
REDEMPTION"), upon at least 20 and not more than 60 days' notice by mail to the
Holders of the Securities at a redemption price equal to $1,000 per $1,000
Principal amount of the Securities redeemed plus accrued and unpaid Interest, if
any (such amount, the "PROVISIONAL REDEMPTION PRICE"), to but excluding the date
of redemption (the "PROVISIONAL REDEMPTION DATE") if (1) the Trading Price of
the Common Stock has exceeded 120% of the Conversion Price then in effect for at
least 20 Trading Days within a period of 30 consecutive Trading Days ending on
the Trading Day before the date of mailing of


                                       47

the notice of Provisional Redemption (the "NOTICE DATE"), and (2) a shelf
registration statement covering resales of the Securities and the Common Stock
issuable upon conversion thereof is effective and available for use and is
expected to remain effective and available for use for the 30 days following the
Provisional Redemption Date, unless registration is no longer required.

            (b)   At any time on or after January 18, 2005, except for
Securities that are converted pursuant to Section 11.1, the Company may, at its
option, redeem the Securities in whole at any time or in part from time to time,
on any date prior to the Stated Maturity of such Securities, upon notice as set
forth in Section 10.4, at the Redemption Price (expressed in percentages of the
Principal amount) set forth below if, but only if, redeemed on a Redemption Date
occurring during the 12-month period beginning on the dates indicated:




                                                            Redemption
               During the Twelve Months Commencing             Price
            -----------------------------------------     --------------
                                                       
            January 18, 2005.........................         103.75%
            January 18, 2006.........................         102.50%
            January 18, 2007.........................         101.25%
            January 18, 2008.........................         100.00%


            (c)   If the Company exercises its option to redeem the Securities
pursuant to this Section 10.1(a) or (b), a Holder may nevertheless exercise its
right to convert such Securities when and to the extent permissible under
Article 11, in each case, until the close of business two Business Days
immediately preceding the Redemption Date.

            (d)   The Company shall pay any Interest to the Holder of the
Securities called for redemption (including those Securities which are converted
into Common Stock after the date the notice of the redemption is mailed and
prior to the Redemption Date) accrued but not paid to, but excluding, the
Redemption Date pursuant to Section 2.1(e); provided, however, that if the
Redemption Date is an Interest Payment Date, the Company shall pay the Interest
to the Holder of such Security at the close of business on such Interest Payment
Date.

            SECTION 10.2. NOTICE TO TRUSTEE.

            If the Company elects to redeem Securities pursuant to the
provisions of Section 10.1 hereof (such election to be ordered by a Board
Resolution), it shall notify the Trustee at least 20 days prior to the intended
Redemption Date (unless a shorter notice shall be satisfactory to the Trustee)
of (i) such intended Redemption Date, (ii) the Principal amount of Securities to
be redeemed and (iii) the CUSIP numbers (if any) of the Securities to be
redeemed.

            SECTION 10.3. SELECTION OF SECURITIES TO BE REDEEMED.

            If fewer than all the Securities are to be redeemed, the Trustee
shall select the particular Securities to be redeemed from the Outstanding
Securities by a method that complies with the requirements of any exchange on
which the Securities are listed, or, if the Securities are not listed on an
exchange, on a pro rata basis or by lot or in accordance with any other method
the Trustee considers fair and appropriate. The Trustee may select for
redemption portions of the Principal amount of Securities that have
denominations larger than $1,000.


                                       48

            Securities and portions thereof that the Trustee selects shall be in
Principal amounts in integral multiples of $1,000. Provisions of this Indenture
that apply to Securities called for redemption also apply to portions of
Securities called for redemption. The Trustee shall notify the Company promptly
of the Securities or portions of Securities to be redeemed.

            The Trustee shall promptly notify the Company and the Registrar in
writing of the Securities selected for redemption and, in the case of any
Securities selected for partial redemption, the Principal amount thereof to be
redeemed.

            If any Security selected for partial redemption is converted or
elected to be purchased in part before termination of the conversion right with
respect to the portion of such Security so selected, the converted or purchased
portion of such Security shall be deemed to be the portion selected for
redemption; provided, however, that the Holder of such Security so converted or
purchased and deemed redeemed shall not be entitled to any additional interest
payment as a result of such deemed redemption than such Holder would have
otherwise been entitled to receive upon conversion or purchase of such Security
subject to Section 2.1(e). Securities which have been converted or purchased
during a selection of Securities to be redeemed may be treated by the Trustee as
Outstanding for the purpose of such selection.

            For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Securities shall relate,
in the case of any Securities redeemed or to be redeemed only in part, to the
portion of the Principal amount of such Securities which has been or is to be
redeemed.

            SECTION 10.4. NOTICE OF REDEMPTION.

            Notice of redemption shall be given in the manner provided in
Section 12.2 to the Holders of Securities to be redeemed. Such notice shall be
given not less than 20 nor more than 60 days prior to the intended Redemption
Date.

            All notices of redemption shall state:

                  (1)   such intended Redemption Date;

                  (2)   the Redemption Price and Interest accrued and unpaid to,
            but excluding, the Redemption Date, if any;

                  (3)   if fewer than all the Outstanding Securities are to be
            redeemed, (i) the Principal amount of Securities to be redeemed and
            the Principal amount of Securities which will be Outstanding after
            such partial redemption and (ii) the designation of the Securities
            of the series to be redeemed;

                  (4)   that on the Redemption Date the Redemption Price and
            Interest accrued and unpaid to, but excluding, the Redemption Date,
            if any, will become due and payable upon each such Security to be
            redeemed;

                  (5)   the Conversion Price, the date on which the right to
            convert the Principal of the Securities to be redeemed will
            terminate and the places where


                                       49

            such Securities may be surrendered for conversion;

                  (6)   the place or places where such Securities are to be
            surrendered for payment of the Redemption Price and accrued and
            unpaid Interest, and

                  (7)   the CUSIP number (if any) of the Securities.

            The notice given shall specify the last date on which exchanges or
transfers of Securities may be made pursuant to Section 2.7, and shall specify
the serial numbers of Securities and the portions thereof called for redemption.

            Notice of redemption of Securities to be redeemed at the election of
the Company shall be given by the Company or, at the Company's written requests
delivered at least 20 days prior to the date of the mailing of such Notice
(unless a shorter period shall be acceptable to the Trustee), by the Trustee in
the name of and at the expense of the Company.

            SECTION 10.5. EFFECT OF NOTICE OF REDEMPTION.

            Notice of redemption having been given as provided in Section 10.4
hereof, the Securities so to be redeemed shall, on the Redemption Date, become
due and payable at the Redemption Price therein specified and from and after
such date (unless the Company shall default in the payment of the Redemption
Price and accrued and unpaid Interest) such Securities shall cease to bear
Interest. Upon surrender of any such Security for redemption in accordance with
such notice, such Security shall be paid by the Company at the Redemption Price
plus accrued and unpaid Interest, if any; provided, however, the installments of
Interest on Securities whose Stated Maturity is prior to or on the Redemption
Date shall be payable to the Holders of such Securities, or one or more
Predecessor Securities, registered as such on the relevant Regular Record Date.

            If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the Principal and premium, if any, shall,
until paid, bear Interest from the Redemption Date at the Interest Rate.

            SECTION 10.6. DEPOSIT AND PAYMENT OF REDEMPTION PRICE.

            Prior to or on any Redemption Date, the Company shall deposit with
the Trustee or with a Paying Agent (or, if the Company or a Subsidiary or an
Affiliate of either of them is acting as the Paying Agent, shall segregate and
hold in trust as provided in Section 2.4) an amount of money in immediately
available funds sufficient to pay the Redemption Price, and accrued and unpaid
Interest in respect of all the Securities to be redeemed on that Redemption Date
from the last Interest Payment Date to but not including the Redemption Date,
other than any Securities called for redemption on that date which have been
converted prior to the date of such deposit, and accrued and unpaid Interest on
such Securities. The Trustee and Paying Agent shall then cause such funds to be
paid to the Holders of the Securities being redeemed in accordance with this
Article.

            If any Security delivered for redemption shall not be so redeemed by
payment to the Holders thereof on the Redemption Date, the Principal amount of
such Security shall, until it


                                       50

is redeemed, bear Interest on the Redemption Date to but not including the
actual date of redemption at the applicable Interest Rate, and each such
Security shall remain convertible into shares of Common Stock pursuant to
Article 11 until such Security shall have been so redeemed.

      If any Security called for redemption is converted, any money deposited
with the Trustee or with a Paying Agent or so segregated and held in trust for
the redemption of such Security shall (subject to any right of the Holder of
such Security or any Predecessor Security to receive Interest as provided in
Section 2.1(e)) be paid to the Company upon request by the Company or, if then
held by the Company, shall be discharged from such trust.

            SECTION 10.7. SECURITIES REDEEMED IN PART.

            Any Security which is to be redeemed only in part shall be
surrendered at an office or agency of the Company designated for that purpose
pursuant to Section 9.2 hereof (with, if the Company or the Trustee so requires,
due endorsement by, or a written instrument of transfer in form satisfactory to
the Company and the Trustee duly executed by, the Holder thereof or the Holder's
attorney duly authorized in writing), and the Company shall execute, and the
Trustee shall authenticate and deliver to the Holder of such Security without
service charge, a new Security or Securities of any authorized denomination as
requested by such Holder in Principal amount equal to and in exchange for the
unredeemed portion of such Security so surrendered.

                                   ARTICLE 11

                            CONVERSION OF SECURITIES

            SECTION 11.1. CONVERSION RIGHT; EXPIRATION OF CONVERSION RIGHT;
CONVERSION PRICE.

            (a)   Subject to and upon compliance with the provisions of this
Article, at the option of the Holder at any time after January 18, 2005 or in
connection with a redemption pursuant to Sections 10.1(a) or (b) or such earlier
date as the Company shall have provided notice to the Holders by mail, any
Security or any portion of the Principal amount thereof which is an integral
multiple of $1,000 may be converted at the Principal amount thereof, or of such
portion thereof, into duly authorized, fully paid and nonassessable shares of
Common Stock, at the Conversion Price, determined as hereinafter provided, in
effect at the time of conversion.

            (b)   The conversion right set forth in clause (a) above shall
expire at the close of business on the Stated Maturity. In case a Security or
portion thereof is called for redemption pursuant to Article 10, such conversion
right in respect of such Security or the portion so called, shall expire at the
close of business on the second Business Day preceding the Redemption Date,
unless the Company defaults in making the payment due upon redemption.

            (c)   The price at which shares of Common Stock shall be delivered
upon conversion (the "CONVERSION PRICE") shall be initially equal to $12.00 per
share of Common Stock, subject to adjustment, in certain instances, as provided
in Section 11.4.

            (d)   No payment or adjustment will be made for dividends on, or
other


                                       51

distributions with respect to, any Common Stock except as provided in this
Article 11.

            SECTION 11.2. EXERCISE OF CONVERSION RIGHT.

            (a)   To exercise the conversion right with respect to a Security, a
Holder must (1) (i) as to a Global Security, deliver a completed conversion
notice, the form of which is provided in Exhibit C, to the Depositary stating
that the Holder elects to convert such Global Security or, if less than the
entire Principal amount thereof is to be converted, the portion thereof to be
converted, and (ii) as to a Physical Security, deliver a duly signed completed
conversion notice and such Physical Security duly endorsed or assigned to the
Company or in blank, at the office of any Conversion Agent, and (2) pay any
transfer taxes or other applicable taxes or duties, if required.

            (b)   To convert interests in a Global Security, a Holder must
deliver to DTC the appropriate instruction form for conversion pursuant to DTC's
conversion program or must deliver instructions in accordance with Euroclear's
or Clearstream's normal operating procedures after application has been made to
make the underlying Common Stock eligible for trading on Euroclear or
Clearstream, as applicable.

            (c)   To the extent provided in Section 2.1, the Holders of such
converted Securities shall be entitled to receive (and retain) any accrued
Interest on the Principal amount of such surrendered Securities, if any.

            (d)   Securities shall be deemed to have been converted immediately
prior to the close of business on the day of surrender of such Securities for
conversion in accordance with the foregoing provisions, and at such time the
rights of the Holders of such Securities as Holders shall cease, and the Person
or Persons entitled to receive the shares of Common Stock issuable upon
conversion shall be treated for all purposes as the record holder or holders of
such shares of Common Stock at such time.

            (e)   In the case of any Security which is converted in part only,
or a Holder converts less than the Principal amount it owns at such time, upon
such conversion the Company shall execute and the Trustee shall authenticate and
deliver to the Holder thereof, at the expense of the Company, a new Security or
Securities of authorized denominations in Principal amount equal to the
unconverted portion of the Principal amount of such Securities.

            (f)   As promptly as practicable on or after the Conversion Date,
the Company shall cause to be issued and delivered to such Conversion Agent a
certificate or certificates for the number of full shares of Common Stock
issuable upon conversion of such Securities, together with payment in lieu of
any fraction of a share as provided in Section 11.3 hereof. The Company hereby
initially appoints the Trustee as the Conversion Agent.

            (g)   Securities shall be deemed to have been converted immediately
prior to the close of business on the day of surrender of such Securities for
conversion in accordance with the foregoing provisions, and at such time the
rights of the Holders of such Securities as Holders shall cease, and the Person
or Persons entitled to receive the shares of Common Stock issuable upon
conversion shall be treated for all purposes as the record holder or holders of
such shares of Common Stock at such time.


                                       52

                  SECTION 11.3. FRACTIONS OF SHARES.

                  No fractional shares of Common Stock shall be issued upon
conversion of any Security or Securities. If more than one Security shall be
surrendered for conversion at one time by the same Holder, the number of full
shares of Common Stock which shall be issued upon conversion thereof shall be
computed on the basis of the Principal amount of the Securities (or specified
portions thereof) so surrendered. Instead of any fractional shares of Common
Stock which would otherwise be issued upon conversion of any Security or
Securities (or specified portions thereof), the Company shall pay a cash
adjustment in respect of such fraction (calculated to the nearest one-100th of a
share) in an amount equal to the same fraction of the Trading Price of the
shares of Common Stock as of the Trading Day preceding the Conversion Date.

                  SECTION 11.4. ADJUSTMENT OF CONVERSION PRICE.

                  The Conversion Price shall be subject to adjustment,
calculated in good faith by the Company, from time to time as follows:

                  (a) In case the Company shall hereafter pay a dividend or make
a distribution to all holders of the outstanding Common Stock in shares of
Common Stock, the Conversion Price in effect at the opening of business on the
date following the date fixed for the determination of stockholders entitled to
receive such dividend or other distribution shall be reduced by multiplying such
Conversion Price by a fraction:

                           (1) the numerator of which shall be the number of
                  shares of Common Stock outstanding at the close of business on
                  the Conversion Record Date fixed for such determination; and

                           (2) the denominator of which shall be the sum of such
                  number of shares and the total number of shares constituting
                  such dividend or other distribution.

                  Such reduction shall become effective immediately after the
opening of business on the day following the Conversion Record Date. If any
dividend or distribution of the type described in this Section 11.4(a) is
declared but not so paid or made, the Conversion Price shall again be adjusted
to the Conversion Price which would then be in effect if such dividend or
distribution had not been declared.

                  (b) In case the outstanding shares of Common Stock shall be
subdivided into a greater number of shares of Common Stock, the Conversion Price
in effect at the opening of business on the day following the day upon which
such subdivision becomes effective shall be proportionately reduced, and
conversely, in case outstanding shares of Common Stock shall be combined into a
smaller number of shares of Common Stock, the Conversion Price in effect at the
opening of business on the day following the day upon which such combination
becomes effective shall be proportionately increased, such reduction or
increase, as applicable, to become effective immediately after the opening of
business on the day following the day upon which such subdivision or combination
becomes effective.

                  (c) In case the Company shall issue rights or warrants (other
than any rights or

                                       53



warrants issued pursuant to a rights plan (commonly referred to as a "poison
pill" plan) referred to in Section 11.4(d)) to all holders of its outstanding
shares of Common Stock entitling them to subscribe for or purchase shares of
Common Stock (or securities convertible into shares of Common Stock) at a price
per share (or having a conversion price per share) less than the Current Market
Price on the Conversion Record Date fixed for the determination of stockholders
entitled to receive such rights or warrants, the Conversion Price shall be
adjusted so that the same shall equal the price determined by multiplying the
Conversion Price in effect at the opening of business on the date after such
Conversion Record Date by a fraction:

                           (1) the numerator of which shall be the number of
                  shares of Common Stock outstanding at the close of business on
                  the Conversion Record Date, plus the number of shares which
                  the aggregate offering price of the total number of shares so
                  offered for subscription or purchase (or the aggregate
                  conversion price of the convertible securities so offered)
                  would purchase at such Current Market Price; and

                           (2) the denominator of which shall be the number of
                  shares of Common Stock outstanding on the close of business on
                  the Conversion Record Date, plus the total number of
                  additional shares of Common Stock so offered for subscription
                  or purchase (or into which the convertible securities so
                  offered are convertible).

                  Such adjustment shall become effective immediately after the
opening of business on the day following the Conversion Record Date fixed for
determination of stockholders entitled to receive such rights or warrants. To
the extent that shares of Common Stock (or securities convertible into Common
Stock) are not delivered pursuant to such rights or warrants, upon the
expiration or termination of such rights or warrants, the Conversion Price shall
be readjusted to the Conversion Price which would then be in effect had the
adjustments made upon the issuance of such rights or warrants been made on the
basis of the delivery of only the number of shares of Common Stock (or
securities convertible into Common Stock) actually delivered. In the event that
such rights or warrants are not so issued, the Conversion Price shall again be
adjusted to be the Conversion Price which would then be in effect if such date
fixed for the determination of stockholders entitled to receive such rights or
warrants had not been fixed. In determining whether any rights or warrants
entitle the holders to subscribe for or purchase Common Stock at less than such
Current Market Price, and in determining the aggregate offering price of such
shares of Common Stock, there shall be taken into account any consideration
received for such rights or warrants, the value of such consideration if other
than cash, to be determined by the Board of Directors.

                  (d) (i) In case the Company shall, by dividend or otherwise,
declare a distribution to all holders of its Common Stock of shares of any class
of Capital Stock of the Company (other than any dividends or distributions to
which Section 11.4(a) applies) or evidences of its indebtedness, cash or other
assets, including securities, but excluding (1) any rights or warrants referred
to in Section 11.4(c), (2) dividends or distributions of stock, securities or
other property or assets (including cash) in connection with a reclassification,
change, merger, consolidation, statutory share exchange, combination, sale or
conveyance to which Section 11.11 applies and (3) dividends and distributions
paid exclusively in cash (such Capital Stock, evidence

                                       54

of its indebtedness, cash, other assets or securities being distributed
hereinafter in this Section 11.4(d) called the "DISTRIBUTED assets"), then, in
each such case, subject to clause (ii) of this Section 11.4(d), the Conversion
Price shall be reduced so that the same shall be equal to the price determined
by multiplying the Conversion Price in effect immediately prior to the close of
business on the Conversion Record Date with respect to such distribution by a
fraction:

                           (1) the numerator of which shall be the Current
                  Market Price on such date, less the Fair Market Value (as
                  determined by the Board of Directors, whose determination
                  shall be conclusive and set forth in a Board Resolution) on
                  such date of the portion of the distributed assets so
                  distributed applicable to one share of Common Stock
                  (determined on the basis of the number of shares of Common
                  Stock outstanding on the Conversion Record Date); and

                           (2) the denominator of which shall be such Current
                  Market Price.

                  Such reduction shall become effective immediately prior to the
opening of business on the day following the Conversion Record Date. However, in
the event that the then Fair Market Value (as so determined) of the portion of
the distributed assets so distributed applicable to one share of Common Stock is
equal to or greater than the Current Market Price on the Conversion Record Date,
in lieu of the foregoing adjustment, adequate provision shall be made so that
each Holder shall have the right to receive upon conversion of a Security (or
any portion thereof) the amount of distributed assets such Holder would have
received had such Holder converted such Security (or portion thereof)
immediately prior to such Conversion Record Date. In the event that such
dividend or distribution is not so paid or made, the Conversion Price shall
again be adjusted to be the Conversion Price which would then be in effect if
such dividend or distribution had not been declared.

                  (ii) If the Board of Directors determines the Fair Market
Value of any distribution for purposes of this Section 11.4(d) by reference to
the actual or when issued trading market for any distributed assets comprising
all or part of such distribution, it must in doing so consider the prices in
such market over the same period (the "REFERENCE PERIOD") used in computing the
Current Market Price to the extent possible, unless the Board of Directors in a
Board Resolution determines in good faith that determining the Fair Market Value
during the Reference Period would not be in the best interest of the Holders.

                  (iii) Rights or warrants distributed by the Company to all
holders of Common Stock entitling the holders thereof to subscribe for or
purchase shares of the Company's Capital Stock (either initially or under
certain circumstances), which rights or warrants, until the occurrence of a
specified event or events specified in such rights or warrants or related
instruments or agreements governing the same (a "TRIGGER EVENT"):

                           (1) are deemed to be transferred with such shares of
                  Common Stock;

                           (2) are not exercisable; and

                           (3) are also issued in respect of future issuances of
                  Common Stock;

shall be deemed not to have been distributed for purposes of this Section
11.4(d) (and no

                                       55

adjustment to the Conversion Price under this Section 11.4(d) will be required)
until the occurrence of the earliest Trigger Event; provided that (1) if such
right or warrant is subject to subsequent events, upon the occurrence of which
such right or warrant shall become exercisable to purchase different distributed
assets, evidences of indebtedness or other assets or entitle the holder to
purchase a different number or amount of the foregoing or to purchase any of the
foregoing at a different purchase price, then the occurrence of each such event
shall be deemed to be the date of issuance and the Conversion Record Date with
respect to a new right or warrant (and a termination or expiration of the
existing right or warrant without exercise by the holder thereof); and (2) in
the event of any distribution (or deemed distribution) of rights or warrants, or
any Trigger Event or other event (of the type described in the preceding
sentence) with respect thereto, that resulted in an adjustment to the Conversion
Price under this Section 11.4(d):

                           (1) in the case of any such rights or warrants which
                  shall all have been redeemed or purchased without exercise by
                  any holders thereof, the Conversion Price shall be readjusted
                  upon such final redemption or purchase to give effect to such
                  distribution or Trigger Event, as applicable, as though it
                  were a cash distribution, equal to the per share redemption or
                  purchase price received by a holder of Common Stock with
                  respect to such rights or warrants (assuming such holder had
                  retained such rights or warrants), made to all holders of
                  Common Stock as of the date of such redemption or purchase;
                  and

                           (2) in the case of such rights or warrants which
                  shall have expired or been terminated without exercise, the
                  Conversion Price shall be readjusted as if such rights and
                  warrants had never been issued.

         For purposes of this Section 11.4(d) and Sections 11.4(a), 11.4(b) and
11.4(c), any dividend or distribution to which this Section 11.4(d) is
applicable that also includes shares of Common Stock, a subdivision or
combination of Common Stock to which Section 11.4(b) applies, or rights or
warrants to subscribe for or purchase shares of Common Stock to which Section
11.4(c) applies (or any combination thereof), shall be deemed instead to be:

                  (B) a dividend or distribution of the evidences of
indebtedness, assets, shares of Capital Stock, rights or warrants, other than
such shares of Common Stock, such subdivision or combination or such rights or
warrants to which Sections 11.4(a), 11.4(b) and 11.4(c) apply, respectively (and
any Conversion Price reduction required by this Section 11.4(d) with respect to
such dividend or distribution shall then be made), immediately followed by

                  (C) a dividend or distribution of such shares of Common Stock,
such subdivision or combination or such rights or warrants (and any further
Conversion Price reduction required by Sections 11.4(a), 11.4(b) and 11.4(c)
with respect to such dividend or distribution shall then be made), except:

                  (I)      the Conversion Record Date of such dividend or
                           distribution shall be substituted as (x) "the date
                           fixed for the determination of stockholders entitled
                           to receive such dividend or other distribution",
                           "Conversion Record Date fixed for such
                           determinations" and "Conversion Record Date" within
                           the meaning of Section 11.4(a), (y) "the day upon
                           which such subdivision

                                       56

                           becomes effective" and "the day upon which such
                           combination becomes effective" within the meaning of
                           Section 11.4(b), and (z) as "the date fixed for the
                           determination of stockholders entitled to receive
                           such rights or warrants", "the Conversion Record Date
                           fixed for the determination of the stockholders
                           entitled to receive such rights or warrants" and such
                           "Conversion Record Date" within the meaning of
                           Section 11.4(c); and

                  (II)     any shares of Common Stock included in such dividend
                           or distribution shall not be deemed "outstanding at
                           the close of business on the date fixed for such
                           determination" within the meaning of Section 11.4(a)
                           and any reduction or increase in the number of shares
                           of Common Stock resulting from such subdivision or
                           combination shall be disregarded in connection with
                           such dividend or distribution.

                  (e) In case the Company shall, by dividend or otherwise,
declare a distribution to all holders of its Common Stock of cash (excluding any
cash that is distributed upon a reclassification, change, merger, consolidation,
statutory share exchange, combination, sale or conveyance to which Section 11.11
applies or as part of a distribution referred to in Section 11.4(d)), in an
aggregate amount that, combined together with:

                           (1) the aggregate amount of any other such
                  distributions to all holders of Common Stock made exclusively
                  in cash within the 12 months preceding the date of payment of
                  such distribution, and in respect of which no adjustment
                  pursuant to this Section 11.4(e) has been made; and

                           (2) the aggregate of any cash plus the Fair Market
                  Value (as determined by the Board of Directors, whose
                  determination shall be conclusive and set forth in a Board
                  Resolution) of consideration payable in respect of any tender
                  offer by the Company or any of its Subsidiaries for all or any
                  portion of the Common Stock concluded within the 12 months
                  preceding the date of such distribution, and in respect of
                  which no adjustment pursuant to Section 11.4(f) has been made;

                  exceeds 10% of the product of the Current Market Price on the
Conversion Record Date with respect to such distribution multiplied by the
number of shares of Common Stock outstanding on such date, then and in each such
case, immediately after the close of business on such date, the Conversion Price
shall be reduced so that the same shall equal the price determined by
multiplying the Conversion Price in effect immediately prior to the close of
business on such Conversion Record Date by a fraction:

                           (1) the numerator of which shall be equal to the
                  Current Market Price on the Conversion Record Date less an
                  amount equal to the quotient of (x) the excess of such
                  combined amount over such 10% and (y) the number of shares of
                  Common Stock outstanding on the Conversion Record Date, and

                           (2) the denominator of which shall be equal to the
                  Current Market Price on such date.

                                       57

                  However, in the event that the then Fair Market Value (as so
determined) of the portion of the securities so distributed applicable to one
share of Common Stock is equal to or greater than the Current Market Price on
the Conversion Record Date, in lieu of the foregoing adjustment, adequate
provision shall be made so that each Holder shall have the right to receive upon
conversion of a Security (or any portion thereof) the amount of cash such Holder
would have received had such Holder converted such Security (or portion thereof)
immediately prior to such Conversion Record Date. In the event that such
dividend or distribution is not so paid or made, the Conversion Price shall
again be adjusted to be the Conversion Price which would then be in effect if
such dividend or distribution had not been declared.

                  (f) In case a tender offer made by the Company or any of its
Subsidiaries for all or any portion of the Common Stock shall expire and such
tender offer (as amended upon the expiration thereof) shall require the payment
to stockholders (based on the acceptance (up to any maximum specified in the
terms of the tender offer) of Purchased Shares) of an aggregate consideration
having a Fair Market Value (as determined by the Board of Directors, whose
determination shall be conclusive and set forth in a Board Resolution) that
combined together with:

                           (1) the aggregate of the cash plus the Fair Market
                  Value (as determined by the Board of Directors, whose
                  determination shall be conclusive and set forth in a Board
                  Resolution), as of the expiration of such tender offer, of
                  consideration payable in respect of any other tender offers,
                  by the Company or any of its Subsidiaries for all or any
                  portion of the Common Stock expiring within the 12 months
                  preceding the expiration of such tender offer and in respect
                  of which no adjustment pursuant to this Section 11.4(f) has
                  been made; and

                           (2) the aggregate amount of any distributions to all
                  holders of the Common Stock made exclusively in cash within 12
                  months preceding the expiration of such tender offer and in
                  respect of which no adjustment pursuant to Section 11.4(e) has
                  been made,

                  exceeds 10% of the product of the Current Market Price as of
the last time (the "EXPIRATION TIME") tenders could have been made pursuant to
such tender offer (as it may be amended) multiplied by the number of shares of
Common Stock outstanding (including any tendered shares) on the Expiration Time,
then, and in each such case, immediately prior to the opening of business on the
day after the date of the Expiration Time, the Conversion Price shall be
adjusted so that the same shall equal the price determined by multiplying the
Conversion Price in effect immediately prior to close of business on the date of
the Expiration Time by a fraction:

                           (1) the numerator of which shall be the number of
                  shares of Common Stock outstanding (including any tendered
                  shares) at the Expiration Time multiplied by the Current
                  Market Price of the Common Stock on the Trading Day next
                  succeeding the Expiration Time; and

                           (2) the denominator shall be the sum of (x) the Fair
                  Market Value (determined as aforesaid) of the aggregate
                  consideration payable to stockholders

                                       58

                  based on the acceptance (up to any maximum specified in the
                  terms of the tender offer) of all shares validly tendered and
                  not withdrawn as of the Expiration Time (the shares deemed so
                  accepted, up to any such maximum, being referred to as the
                  "PURCHASED SHARES") and (y) the product of the number of
                  shares of Common Stock outstanding (less any Purchased Shares)
                  on the Expiration Time and the Current Market Price of the
                  Common Stock on the Trading Day next succeeding the Expiration
                  Time.

                  Such reduction (if any) shall become effective immediately
prior to the opening of business on the day following the Expiration Time. In
the event that the Company is obligated to purchase shares pursuant to any such
tender offer, but the Company is permanently prevented by applicable law from
effecting any such purchases or all such purchases are rescinded, the Conversion
Price shall again be adjusted to be the Conversion Price which would then be in
effect if such tender offer had not been made.

                  (g) For purposes of this Section 11.4, the following terms
shall have the meanings indicated:

                           (1) "CURRENT MARKET PRICE" shall mean the average of
                  the daily Trading Prices per share of Common Stock (or such
                  other security as specified herein) for the ten consecutive
                  Trading Days immediately prior to the date in question;
                  provided, however, that if:

                                    (i) the "ex" date (as hereinafter defined)
                           for any event (other than the issuance or
                           distribution requiring such computation) that
                           requires an adjustment to the Conversion Price
                           pursuant to Section 11.4(a), (b), (c), (d), (e) or
                           (f) occurs during such ten consecutive Trading Days,
                           the Trading Price for each Trading Day prior to the
                           "ex" date for such other event shall be adjusted by
                           multiplying such Trading Price by the same fraction
                           by which the Conversion Price is so required to be
                           adjusted as a result of such other event;

                                    (ii) the "ex" date for any event (other than
                           the issuance or distribution requiring such
                           computation) that requires an adjustment to the
                           Conversion Price pursuant to Section 11.4(a), (b),
                           (c), (d), (e) or (f) occurs on or after the "ex" date
                           for the issuance or distribution requiring such
                           computation and prior to the day in question, the
                           Trading Price for each Trading Day on and after the
                           "ex" date for such other event shall be adjusted by
                           multiplying such Trading Price by the reciprocal of
                           the fraction by which the Conversion Price is so
                           required to be adjusted as a result of such other
                           event; and

                                    (iii) the "ex" date for the issuance or
                           distribution requiring such computation is prior to
                           the day in question, after taking into account any
                           adjustment required pursuant to clause (i) or (ii) of
                           this proviso, the Trading Price for each Trading Day
                           on or after such "ex" date shall be adjusted by
                           adding thereto the amount of any cash and the Fair
                           Market

                                       59

                           Value (as determined by the Board of Directors in a
                           manner consistent with any determination of such
                           value for purposes of Section 11.4(d) or (f), whose
                           determination shall be conclusive and set forth in a
                           Board Resolution) of the evidences of indebtedness,
                           shares of Capital Stock or assets being distributed
                           applicable to one share of Common Stock as of the
                           close of business on the day before such "ex" date.

                  For purposes of any computation under Section 11.4(f), the
Current Market Price of the Common Stock on any date shall be deemed to be the
average of the daily Trading Prices per share of Common Stock for such day and
the two consecutive Trading Days immediately prior; provided, however, that if
the "ex" date for any event (other than the tender offer requiring such
computation) that requires an adjustment to the Conversion Price pursuant to
Section 11.4(a), (b), (c), (d), (e) or (f) occurs on or after the Expiration
Time for the tender or exchange offer requiring such computation and prior to
the day in question, the Trading Price for each Trading Day on and after the
"ex" date for such other event shall be adjusted by multiplying such Trading
Price by the reciprocal of the fraction by which the Conversion Price is so
required to be adjusted as a result of such other event. For purposes of this
paragraph, the term "ex" date, when used:

                  (I) with respect to any issuance or distribution, means the
first date on which the Common Stock trades regular way on the relevant exchange
or in the relevant market from which the Trading Price was obtained without the
right to receive such issuance or distribution;

                  (II) with respect to any subdivision or combination of shares
of Common Stock, means the first date on which the shares of Common Stock trade
regular way on such exchange or in such market after the time at which such
subdivision or combination becomes effective; or

                  (III) with respect to any tender or exchange offer, means the
first date on which the Common Stock trades regular way on such exchange or in
such market after the Expiration Time of such offer.

                  Notwithstanding the foregoing, whenever successive adjustments
to the Conversion Price are called for pursuant to this Section 11.4, such
adjustments shall be made to the Current Market Price as may be necessary or
appropriate to effectuate the intent of this Section 11.4 and to avoid unjust or
inequitable results as determined in good faith by the Board of Directors.


                           (2) "FAIR MARKET VALUE" shall mean, if there is a
                  current market for the asset, debt or transaction in question,
                  the amount that a willing buyer would pay a willing seller in
                  an arm's length transaction or, in the absence of a current
                  market for such asset, debt or transaction, the amount
                  determined in good faith by the Board of Directors that
                  represents its determination of the fair market value of the
                  asset.

                           (3) "CONVERSION RECORD DATE" shall mean, with respect
                  to any dividend, distribution or other transaction or event in
                  which the holders of Common Stock have the right to receive
                  any cash, securities or other property or in which the Common
                  Stock (or other applicable security) is exchanged for or
                  converted into

                                       60

                  any combination of cash, securities or other property, the
                  date fixed for determination of stockholders entitled to
                  receive such cash, securities or other property (whether such
                  date is fixed by the Board of Directors or by statute,
                  contract or otherwise).

                  The Company may make such reductions in the Conversion Price,
in addition to those required by Sections 11.4(a), (b), (c), (d), (e) or (f) as
the Board of Directors considers to be advisable to avoid or diminish any income
tax to holders of Common Stock or rights to purchase Common Stock resulting from
any dividend or distribution of stock (or rights to acquire stock) or from any
event treated as such for income tax purposes or otherwise.

                  (h) No adjustment need be made for (i) a transaction referred
to in Sections 11.4 or 11.11 if Holders participate in the transaction without
conversion on a basis and with notice that the Board of Directors determines in
good faith as evidenced in a Board Resolution to be fair and appropriate in
light of the basis and notice on which holders of shares of Common Stock
participate in the transaction; (ii) the issuance and distribution of rights to
purchase shares of Common Stock pursuant to (A) a Company plan for reinvestment
of dividends or interest, (B) a change in the par value or no par value of the
shares of Common Stock or (C) to the extent the Securities become convertible
pursuant to this Article 11 in whole or in part into cash, with respect to such
cash after such cash is distributed to the Holders in satisfaction of such
conversion right.

                  (i) To the extent permitted by applicable law, the Company
from time to time may reduce the Conversion Price by any amount for any period
of time if the period is at least 20 days and the reduction is irrevocable
during the period and the Board of Directors determines in good faith that such
reduction would be in the best interests of the Holders, which determination
shall be conclusive and set forth in a Board Resolution. Whenever the Conversion
Price is reduced pursuant to the preceding sentence, the Company shall mail to
the Trustee and the Conversion Agent and each Holder at the address of such
Holder as it appears in the Register a notice of the reduction at least 15 days
prior to the date the reduced Conversion Price takes effect, and such notice
shall state the reduced Conversion Price and the period during which it will be
in effect.

                  (j) No adjustment in the Conversion Price shall be required
unless such adjustment would require an increase or decrease of at least 1% in
such price; provided, however, that any adjustments which by reason of this
Section 11.4(j) are not required to be made shall be carried forward and taken
into account in any subsequent adjustment. All calculations under this Article
11 shall be made by the Company in good faith and shall be made to the nearest
cent or to the nearest one hundredth of a share, as applicable. No adjustment
need be made for a change in the par value or no par value of the Common Stock.

                  (k) No adjustment in Conversion Price shall be required if the
Fair Market Value of any assets, debt securities or rights, warrants or options
to purchase the securities of the Company, including but not limited to Common
Stock, in each case applicable to each share of Common Stock are distributed to
the Company's stockholders and such Fair Market Value either equals or exceeds
the Current Market Price or such Current Market Price exceeds such Fair Market
Value by an amount not exceeding $1.00; provided, however, that any adjustments
which

                                       61

by reason of this Section 11.4(k) are not required to be made shall be
distributed upon conversion of any Security in an amount of assets, securities
or rights, warrants or options comprising the distribution that a Holder would
have received if such Holder had converted such Security immediately prior to
the Conversion Record Date.

                  (l) In any case in which this Section 11.4 provides that an
adjustment shall become effective immediately after a Conversion Record Date for
an event, the Company may defer until the occurrence of such event (i) issuing
to the Holder of any security converted after such Conversion Record Date and
before the occurrence of such event the additional shares of Common Stock
issuable upon such conversion by reason of the adjustment required by such event
over and above the Common Stock issuable upon such conversion before giving
effect to such adjustment and (ii) paying to such Holder any amount in cash in
lieu of any fraction pursuant to Section 11.3.

                  (m) For purposes of this Section 11.4, the number of shares of
Common Stock at any time outstanding shall not include shares held in the
treasury of the Company but shall include shares issuable in respect of scrip
certificates issued in lieu of fractions of shares of Common Stock. The Company
will not pay any dividend or make any distribution on shares of Common Stock
held in the treasury of the Company.

                  (n) If the distribution date for the rights provided in the
Company's rights agreement, if any, occurs prior to the date a Security is
converted, the Holder of such Security who converts such Security after the
distribution date is not entitled to receive the rights that would otherwise be
attached (but for the date of conversion) to the shares of Common Stock received
upon such conversion; provided, however, that an adjustment shall be made to the
Conversion Price pursuant to clause 11.4(b) as if the rights were being
distributed to the common stockholders of the Company immediately prior to such
conversion. If such an adjustment is made and the rights are later redeemed,
invalidated or terminated, then a corresponding reversing adjustment shall be
made to the Conversion Price, on an equitable basis, to take account of such
event.

                  (o) In case the Company shall, by dividend or otherwise,
distribute to all holders of its Common Stock shares of any class of Capital
Stock of a Subsidiary of the Company, then the Conversion Price shall be reduced
so that the same shall be equal to the price determined by multiplying the
Conversion Price in effect immediately prior to the close of business on the
Conversion Record Date with respect to such distribution by a fraction:

                           (1) the numerator of which shall be the Current
                  Market Price of the shares of Capital Stock of such Subsidiary
                  (as determined by the Board of Directors, whose determination
                  shall be conclusive and set forth in a Board Resolution),
                  measured from the date of such distribution; and

                           (2) the denominator of which shall be the Current
                  Market Price of the Company's Common Stock, measured from the
                  date of such distribution.

                  SECTION 11.5. NOTICE OF ADJUSTMENTS OF CONVERSION PRICE.

                  Whenever the Conversion Price is adjusted as herein provided
(other than in the


                                       62

case of an adjustment pursuant to the second paragraph of Section 11.4(i) for
which the notice required by such paragraph has been provided), the Company
shall promptly file with the Trustee and any Conversion Agent other than the
Trustee an Officers' Certificate setting forth the adjusted Conversion Price and
showing in reasonable detail the facts upon which such adjustment is based.
Promptly after delivery of such Officers' Certificate, the Company shall prepare
a notice stating that the Conversion Price has been adjusted and setting forth
the adjusted Conversion Price and the date on which each adjustment becomes
effective, and shall mail such notice to each Holder at the address of such
Holder pursuant to Section 12.2 within 20 days prior to the effective date of
such adjustment.

                  SECTION 11.6. NOTICE PRIOR TO CERTAIN ACTIONS.

                  In case at any time after the date hereof:

                           (1) the Company shall declare a dividend (or any
                  other distribution) on its Common Stock payable otherwise than
                  in cash out of its capital surplus or its consolidated
                  retained earnings;

                           (2) the Company shall authorize the granting to the
                  holders of its Common Stock of rights or warrants to subscribe
                  for or purchase any shares of Capital Stock of any class (or
                  of securities convertible into shares of Capital Stock of any
                  class) or of any other rights;

                           (3) there shall occur any reclassification of the
                  Common Stock of the Company (other than a subdivision or
                  combination of its outstanding Common Stock, a change in par
                  value, a change from par value to no par value or a change
                  from no par value to par value), or any merger, consolidation,
                  statutory share exchange or combination to which the Company
                  is a party and for which approval of any shareholders of the
                  Company is required, or the sale, transfer or conveyance of
                  all or substantially all of the assets of the Company; or

                           (4) there shall occur the voluntary or involuntary
                  dissolution, liquidation or winding up of the Company;

                  the Company shall cause to be filed at each office or agency
maintained for the purpose of conversion of securities pursuant to Section 9.2,
and shall cause to be provided to the Trustee and all Holders in accordance with
Section 12.2, at least 20 days (or 10 days in any case specified in clause (1)
or (2) above) prior to the applicable record or effective date hereinafter
specified, a notice stating:

                  (B) the date on which a record is to be taken for the purpose
of such dividend, distribution, rights or warrants, or, if a record is not to be
taken, the date as of which the holders of shares of Common Stock of record to
be entitled to such dividend, distribution, rights or warrants are to be
determined; or

                  (C) the date on which such reclassification, merger,
consolidation, statutory share exchange, combination, sale, transfer,
conveyance, dissolution, liquidation or winding up is expected to become
effective, and the date as of which it is expected that holders of shares of

                                       63

Common Stock of record shall be entitled to exchange their shares of Common
Stock for securities, cash or other property deliverable upon such
reclassification, merger, consolidation, statutory share exchange, sale,
transfer, dissolution, liquidation or winding up.

                  Neither the failure to give such notice nor any defect therein
shall affect the legality or validity of the proceedings or actions described in
clauses (1) through (4) of this Section 11.6.

                  SECTION 11.7. COMPANY TO RESERVE COMMON STOCK.

                  The Company shall at all times reserve and keep available,
free from preemptive rights, out of its authorized but unissued Common Stock
including treasury shares, for the purpose of effecting the conversion of the
Securities (including PIK Loans), the full number of shares of fully paid and
nonassessable Common Stock then issuable upon the conversion of all Outstanding
Securities (including PIK Loans).

                  SECTION 11.8. COMMON STOCK TO BE FULLY PAID AND NONASSESSABLE.

                  The Company covenants that all Common Stock which may be
issued upon conversion of Securities will upon issue be duly and validly issued,
fully paid and nonassessable, free from preemptive rights and free of any lien
or adverse claim and, except as provided in Section 11.9, the Company will pay
all taxes, liens and charges with respect to the issue thereof.

                  SECTION 11.9. TAXES ON CONVERSIONS.

                  Except as provided in the next sentence, the Company will pay
any and all taxes (other than taxes on income) and duties that may be payable in
respect of the issue or delivery of shares of Common Stock on conversion of
Securities pursuant to Article 11. A Holder delivering a Security for conversion
shall be liable for and will be required to pay any tax or duty which may be
payable in respect of any transfer involved in the issue and delivery of shares
of Common Stock in a name other than that of the Holder of such Security or
Securities to be converted, and no such issue or delivery shall be made unless
the Person requesting such issue has paid to the Company the amount of any such
tax or duty, or has established to the satisfaction of the Company that such tax
or duty has been paid.

                  SECTION 11.10. CANCELLATION OF CONVERTED SECURITIES.

                  All Securities delivered for conversion shall be delivered to
the Trustee to be canceled by or at the direction of the Trustee.

                  SECTION 11.11. EFFECT OF RECLASSIFICATION, CONSOLIDATION,
                  MERGER OR SALE.

                  If any of following events occur:

                           (1) any reclassification or change of the outstanding
                  shares of Common Stock (other than a change in par value, or
                  from par value to no par value, or from no par value to par
                  value, or as a result of a subdivision or combination), as a
                  result of which holders of Common Stock shall be entitled to
                  receive Capital

                                       64

                  Stock, securities or other property or assets (including cash)
                  with respect to or in exchange for such Common Stock;

                           (2) any merger, consolidation, statutory share
                  exchange or combination of the Company with another Person as
                  a result of which holders of Common Stock shall be entitled to
                  receive stock, securities or other property or assets
                  (including cash) with respect to or in exchange for such
                  Common Stock; or

                           (3) any sale or conveyance of the properties and
                  assets of the Company as, or substantially as, an entirety to
                  any other Person as a result of which holders of Common Stock
                  shall be entitled to receive stock, securities or other
                  property or assets (including cash) with respect to or in
                  exchange for such Common Stock,

then the Company or the successor or purchasing Person, as applicable, shall
execute with the Trustee a supplemental indenture (which shall comply with this
Indenture and the TIA as in force at the date of execution of such supplemental
indenture if such supplemental indenture is then required to so comply)
providing that such Security shall be convertible into the kind and amount of
shares of capital stock and other securities or property or assets (including
cash) which such Holder would have been entitled to receive upon such
reclassification, change, merger, consolidation, statutory share exchange,
combination, sale or conveyance had such Securities been converted into Common
Stock immediately prior to such reclassification, change, merger, consolidation,
statutory share exchange, combination, sale or conveyance assuming such holder
of Common Stock did not exercise its rights of election, if any, as to the kind
or amount of securities, cash or other property receivable upon such merger,
consolidation, statutory share exchange, sale or conveyance (provided that, if
the kind or amount of securities, cash or other property receivable upon such
merger, consolidation, statutory share exchange, sale or conveyance is not the
same for each share of Common Stock in respect of which such rights of election
shall not have been exercised ("NON-ELECTING SHARE"), then for the purposes of
this Section 11.11 the kind and amount of securities, cash or other property
receivable upon such merger, consolidation, statutory share exchange, sale or
conveyance for each Non-Electing Share shall be deemed to be the kind and amount
so receivable per share by a plurality of the Non-Electing Shares). Such
supplemental indenture shall provide for adjustments which shall be as nearly
equivalent as may be practicable to the adjustments provided for in this Article
11. If, in the case of any such reclassification, change, merger, consolidation,
statutory share exchange, combination, sale or conveyance, the stock or other
securities and assets receivable thereupon by a holder of Common Stock includes
shares of stock or other securities and assets of a corporation other than the
successor or purchasing corporation, as applicable, in such reclassification,
change, merger, consolidation, statutory share exchange, combination, sale or
conveyance, then such supplemental indenture shall also be executed by such
other corporation and shall contain such additional provisions to protect the
interests of the Holders as the Board of Directors shall reasonably consider
necessary by reason of the foregoing.

                  The Company shall cause notice of the execution of such
supplemental indenture to be mailed to each Holder, at the address of such
Holder as it appears on the Register, within 20 days after execution thereof.
Failure to deliver such notice shall not affect the legality or validity of such
supplemental indenture.

                                       65

                  The above provisions of this Section shall apply to successive
or series of related reclassifications, mergers, consolidations, statutory share
exchanges, combinations, sales and conveyances.

                  If this Section 11.11 applies to any event or occurrence,
Section 11.4 shall not apply.

                  SECTION 11.12. RESPONSIBILITY OF TRUSTEE FOR CONVERSION
                  PROVISIONS.

                  (a) The Trustee, subject to the provisions of Section 5.1, and
any Conversion Agent shall not at any time be under any duty or responsibility
to any Holder of Securities to determine whether any facts exist which may
require any adjustment of the Conversion Price, or with respect to the nature or
intent of any such adjustments when made, or with respect to the method
employed, or herein or in any supplemental indenture provided to be employed, in
making the same. Neither the Trustee, subject to the provisions of Section 5.1,
nor any Conversion Agent shall be accountable with respect to the validity or
value (of the kind or amount) of any Common Stock or of any other securities or
property, which may at any time be issued or delivered upon the conversion of
any Security; and it or they do not make any representation with respect
thereto. Neither the Trustee, subject to the provisions of Section 5.1, nor any
Conversion Agent shall be responsible for any failure of the Company to make any
cash payment or to issue, transfer or deliver any shares of stock or share
certificates or other securities or property upon the surrender of any Security
for the purpose of conversion; and the Trustee, subject to the provisions of
Section 5.1, and any Conversion Agent shall not be responsible or liable for any
failure of the Company to comply with any of the covenants of the Company
contained in this Article.

                                   ARTICLE 12

                     OTHER PROVISIONS OF GENERAL APPLICATION

                  SECTION 12.1. TRUST INDENTURE ACT CONTROLS.

                  This Indenture is subject to the provisions of the TIA which
are then applicable and required to be part of this Indenture, and shall, to the
extent so applicable and required, be governed by such provisions.

                  SECTION 12.2. NOTICES.

                  Any notice or communication to the Company or the Trustee is
duly given if in writing (which may be by facsimile with the original to follow)
and delivered in person or mailed by first-class mail to the address set forth
below:

                  (a) if to the Company:

                  America West Holdings Corporation
                  111 West Rio Salado Parkway
                  Tempe, Arizona 85281
                  Attn: Executive Vice President and Chief Financial Officer

                                       66

                  Fax:  (480) 693-2899

                  With a copy to:

                  Cooley Godward LLP
                  One Maritime Plaza
                  20th Floor
                  San Francisco, California 94111
                  Attn.:  Samuel M. Livermore
                  Fax: (415) 951-3699

                  (b) if to the Trustee:

                  Wilmington Trust Company
                  Rodney Square North
                  1100 North Market Street
                  Wilmington, Delaware 19890
                  Attn:  Corporate Trust Administration
                  Fax:  (302) 651-8882

                  The Company or the Trustee by notice to the other may
designate additional or different addresses for subsequent notices or
communications.

                  Any notice or communication to a Holder shall be mailed by
first class mail to his address shown on the Register kept by the Registrar.
Failure to mail a notice or communication to a Holder or any defect in such
notice or communication shall not affect its sufficiency with respect to other
Holders. If the Company mails a notice or communication to Holders, it shall
mail a copy to the Trustee at the same time.

                  If a notice or communication is mailed or sent in the manner
provided above within the time prescribed it is duly given as of the date it is
mailed, whether or not the addressee receives it.

                  SECTION 12.3. COMMUNICATION BY HOLDERS WITH OTHER HOLDERS.

                  Holders may communicate pursuant to Section 312(b) of the TIA
with other Holders with respect to their rights under the Securities or this
Indenture. The Company, the Trustee, the Registrar and anyone else shall have
the protection of Section 312(c) of the TIA.

                  SECTION 12.4. ACTS OF HOLDERS OF SECURITIES.

                  (a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Indenture to be given or taken
by Holders of Securities may be embodied in and evidenced by:

                           (1) one or more instruments of substantially similar
                  tenor signed by such Holders in person or by agent or proxy
                  duly appointed in writing;

                                       67

                           (2) the record of Holders of Securities voting in
                  favor thereof, either in person or by proxies duly appointed
                  in writing, at any meeting of Holders of Securities duly
                  called and held in accordance with the provisions of Article
                  8; or

                           (3) a combination of such instruments and any such
                  record.

                  Except as herein otherwise expressly provided, such action
shall become effective when such instrument or instruments or record or both are
delivered to the Trustee and, where it is hereby expressly required, to the
Company. Such instrument or instruments and record (and the action embodied
therein and evidenced thereby) are herein sometimes referred to as the "ACT" of
the Holders of Securities signing such instrument or instruments and so voting
at such meeting. Proof of execution of any such instrument or of a writing
appointing any such agent or proxy, or of the holding by any Person of a
Security, shall be sufficient for any purpose of this Indenture and (subject to
Section 5.1) conclusive in favor of the Trustee and the Company if made in the
manner provided in this Section. The record of any meeting of Holders of
Securities shall be proved in the manner provided in Section 8.6.

                  (b) The fact and date of the execution by any Person of any
such instrument or writing may be provided in any manner which the Trustee
reasonably deems sufficient.

                  (c) The Principal amount and serial numbers of Securities held
by any Person, and the date of such Person holding the same, shall be proved by
the Register.

                  (d) Any request, demand, authorization, direction, notice,
consent, election, waiver or other Act of the Holders of any Security shall bind
every future Holder of the same Security and the Holder of every Security issued
upon the registration of transfer thereof or in exchange therefor or in lieu
thereof in respect of anything done, omitted or suffered to be done by the
Trustee, the Company in reliance thereon, whether or not notation of such action
is made upon such Security.

                  SECTION 12.5. CERTIFICATE AND OPINION AS TO CONDITIONS
                  PRECEDENT.

                  In any case where several matters are required to be certified
by, or covered by an opinion of, any specified Person, it is not necessary that
all such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.

                  Any certificate or opinion of an officer of the Company may be
based, insofar as it relates to legal matters, upon an Opinion of Counsel,
unless such officer knows, or in the exercise of reasonable care should know,
that the Opinion of Counsel with respect to the matters upon which such
certificate or opinion is based is erroneous. Any such Opinion of Counsel may be
based, insofar as it relates to factual matters, upon a certificate or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or representations with respect to such matters are
erroneous.


                                       68

                  Where any Person is required to make, give or execute two or
more applications, requests, consents, certificates, statements, opinions or
other instruments under this Indenture, they may, but need not, be consolidated
and form one instrument.

                  Upon any application or request by the Company to the Trustee
to take any action under any provision of this Indenture, the Company shall
furnish to the Trustee an Officers' Certificate stating that all conditions
precedent, if any, provided for in this Indenture relating to the proposed
action have been complied with.

                  SECTION 12.6. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.

                  Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:

                           (1) a statement that each individual signing such
                  certificate or opinion on behalf of the Company, has read such
                  covenant or condition and the definitions herein relating
                  thereto;

                           (2) a brief statement as to the nature and scope of
                  the examination or investigation upon which the statements or
                  opinions contained in such certificate or opinion are based;

                           (3) a statement that, in the opinion of each such
                  individual, he has made such examination or investigation as
                  is necessary to enable him to express an informed opinion as
                  to whether or not such covenant or condition has been complied
                  with; and

                           (4) a statement as to whether, in the opinion of each
                  such individual, such condition or covenant has been complied
                  with.

                  SECTION 12.7. EFFECT OF HEADINGS AND TABLE OF CONTENTS.

                  The Article and Section headings herein and the Table of
Contents are for convenience only and shall not affect the construction hereof.

                  SECTION 12.8. SUCCESSORS AND ASSIGNS.

                  All covenants and agreements in this Indenture by the Company
shall bind its successors and assigns, whether so expressed or not.

                  SECTION 12.9. SEPARABILITY CLAUSE.

                  In case any provision in this Indenture or the Securities
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.

                  SECTION 12.10. BENEFITS OF INDENTURE.


                                       69

                  (a) Subject to clause (b) below, nothing contained in this
Indenture or in the Securities, express or implied, shall give to any Person,
other than the parties hereto and their successors hereunder and the Holders of
Securities, any benefit or legal or equitable right, remedy or claim under this
Indenture.

                  (b) The Registration Rights Agreement is being entered into by
the Company in connection with the issuance of the Securities for the benefit of
the Holders from time to time with the intention that the Holders may enforce
their rights as if they are parties thereto. Notwithstanding any provision
herein to the contrary, the Trustee shall not be deemed a party to the
Registration Rights Agreement and any rights or remedies available to the
Holders thereunder may be directly pursued by such Holders in accordance with
the terms therein.

                  SECTION 12.11. GOVERNING LAW.

                  THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

                  SECTION 12.12. COUNTERPARTS.

                  This instrument may be executed in any number of counterparts,
each of which when so executed shall be deemed to be an original but all such
counterparts shall together constitute but one and the same instrument.

                  SECTION 12.13. LEGAL HOLIDAYS.

                  In any case where any Interest Payment Date, Redemption Date
or Stated Maturity of any Security or the last day on which a Holder of a
Security has a right to convert such Security shall not be a Business Day at any
Place of Payment or Place of Conversion, then (notwithstanding any other
provision of this Indenture or of the Securities) payment of Principal on or
Interest on or conversion of the Securities, need not be made at such Place of
Payment or Place of Conversion on such day, but may be made on the next
succeeding Business Day at such Place of Payment or Place of Conversion with the
same force and effect as if made on the Interest Payment Date, Redemption Date
or at the Stated Maturity or on such last day for conversion; provided, however,
that in the case that payment is made on such succeeding Business Day, no
Interest shall accrue on the amount so payable for the period from and after
such Interest Payment Date, Redemption Date or Stated Maturity, as applicable.

                  SECTION 12.14. RECOURSE AGAINST OTHERS.

                  Other than pursuant to the Guaranty, no recourse for the
payment of the Principal of or Interest on any Securities, or for any claim
based thereon or otherwise in respect thereof, shall be had against any
incorporator, shareholder, officer or director or manager, as such, past,
present or future, of the Company or any successor entity to the Company,
whether by virtue of any constitution, statute or rule of law or by the
enforcement of any assessment or penalty or otherwise, all such liability being,
by the acceptance thereof and as part of the consideration for the issue
thereof, expressly waived and released.


                                       70

                  IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed all as of the day and year first above written.



                                AMERICA WEST HOLDINGS CORPORATION


                                By: /s/ Stephen L. Johnson
                                    Name:  Stephen L. Johnson
                                    Title: Executive Vice President -- Corporate




                                WILMINGTON TRUST COMPANY, AS TRUSTEE AND
                                NOT IN ITS INDIVIDUAL CAPACITY


                                    By: /s/ W. Chris Sponenberg
                                        Name:  W. Chris Sponenberg
                                        Title: Vice President



                                       71

                                                                       EXHIBIT A

                                FORM OF SECURITY




     Reference is made to Exhibit 4.16 to the America West Holdings Corporation
and America West Airlines, Inc. Form 8-K filed on January 31, 2002 with the
Securities and Exchange Commission.

                                                                       EXHIBIT B

                                 ASSIGNMENT FORM

                  To assign this Security, fill in the form below and have your
signature guaranteed:

                  (I) or (we) assign and transfer this Security to:

________________________________________________________________________________
                  (Insert assignee's soc. sec. or tax I.D. no.)


________________________________________________________________________________
              (Print or type assignee's name, address and zip code)


and irrevocably appoint _______________ to transfer this Security on the books
of the Company. The agent may substitute another to act for him.


      Your Name:________________________________________________________________
                (Print your name exactly as it appears on the face of this
                                        Security)

      Dated:____________________________________________________________________

      Your Signature:___________________________________________________________
                     (Sign exactly as your name appears on the  face of this
                                        Security)

SIGNATURE GUARANTEE*:___________________________________________________________



_________________
*        Participant in a recognized Signature Guarantee Medallion Program (or
         other signature guarantor acceptable to the Trustee).

                                                                       EXHIBIT C

                            FORM OF CONVERSION NOTICE

TO:   America West Holdings Corporation
      111 West Rio Salado Parkway
      Tempe, Arizona 85281

                  The undersigned registered owner of this Security hereby
irrevocably exercises the option to convert this Security, or the portion hereof
(which is $1,000 Principal amount or an integral multiple thereof) below
designated, into shares of Common Stock in accordance with the terms of the
Indenture referred to in this Security, and directs that the shares issuable and
deliverable upon such conversion, together with any check in payment for
fractional shares and any Securities representing any unconverted Principal
amount hereof, be issued and delivered to the registered holder hereof unless a
different name has been indicated below. If shares or any portion of this
Security not converted are to be issued in the name of a person other than the
undersigned, the undersigned will pay all transfer taxes payable with respect
thereto.

      Your Name:________________________________________________________________
                  (Print your name exactly as it appears on the face of this
                                        Security)

      Dated:____________________________________________________________________

      Your Signature:___________________________________________________________
                      (Sign exactly as your name appears on the face of this
                                       Security)

      Signature Guarantee*:_____________________________________________________

      Social Security or other Taxpayer Identification Number:__________________

      Principal amount to be converted (if less than all):$_____________________

      Fill in for registration of shares (if to be issued) and Securities (if
to be delivered) other than to and in the name of the registered holder


________________________________________________________________________________
                                     (Name)
________________________________________________________________________________
                                (Street Address)
________________________________________________________________________________
                           (City, State and Zip Code)


_________________

*        Participant in a recognized Signature Guarantee Medallion Program (or
         other signature guarantor acceptable to the Trustee).

                                                                       EXHIBIT D


                     FORM OF REGISTRATION RIGHTS AGREEMENT


Reference is made to Exhibit 4.17 to the America West Holdings Corporation and
America West Airlines, Inc. Form 8-K filed on January 31, 2002 with the
Securities and Exchange Commission.

EX-4.16

                                                                    EXHIBIT 4.16

                               [FACE OF SECURITY]

                                FORM OF SECURITY


                  UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"),
TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH
OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO. HAS AN INTEREST HEREIN.

                  THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY DTC
OR BY A NOMINEE OF DTC TO DTC OR ANOTHER NOMINEE OF DTC OR BY DTC OR ANY SUCH
NOMINEE TO A SUCCESSOR OF DTC OR A NOMINEE OF SUCH SUCCESSOR.

                  THE FOREGOING LEGEND MAY BE REMOVED FROM THIS SECURITY ON
SATISFACTION OF THE CONDITIONS SPECIFIED IN THE INDENTURE.

                  EACH BENEFICIAL OWNER OF AN INTEREST IN ANY OF THE SECURITIES
EVIDENCED BY THIS SECURITY (INCLUDING ANY PARTICIPANT IN THE DEPOSITARY HOLDING
THIS SECURITY THAT IS SHOWN AS HOLDING SUCH AN INTEREST ON THE RECORDS OF SUCH
DEPOSITARY AND EACH BENEFICIAL OWNER THAT HOLDS THROUGH ANY SUCH PARTICIPANT)
AGREES FOR THE BENEFIT OF AMERICA WEST HOLDINGS CORPORATION (THE "COMPANY") AND
AMERICA WEST AIRLINES, INC. ("AMERICA WEST") THAT THIS SECURITY, ANY GUARANTEES
THEREOF, AND ANY COMMON STOCK ISSUABLE UPON CONVERSION OF THIS SECURITY MAY NOT
BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED (X) PRIOR TO THE SECOND
ANNIVERSARY (OR SUCH SHORTER PERIOD AS MANY THEN BE APPLICABLE UNDER THE
SECURITIES ACT REGARDING THE HOLDING PERIOD FOR NOTES OR THE COMMON STOCK
ISSUABLE UPON CONVERSION THEREOF UNDER RULE 144(K) OF THE SECURITIES ACT OR ANY
SUCCESSOR RULE) OF THE ISSUANCE HEREOF OR (Y) BY ANY HOLDER THAT WAS AN
AFFILIATE OF THE COMPANY OR AMERICA WEST AT ANY TIME DURING THE THREE MONTHS
PRECEDING THE DATE OF SUCH TRANSFER, IN EITHER CASE OTHER THAN (1) TO THE
COMPANY, (2) SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE
144A UNDER THE SECURITIES ACT ("RULE 144A") TO A PERSON WHOM THE SELLER
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF
RULE 144A PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A

                                      A-1

QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE OFFER, SALE,
PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (3) TO AN
INSTITUTION THAT IS AN "ACCREDITED INVESTOR" AS DEFINED IN RULE 501(A)(1), (2),
(3) OR (7) UNDER THE SECURITIES ACT THAT IS ACQUIRING THIS SECURITY FOR
INVESTMENT PURPOSES AND NOT FOR DISTRIBUTION, (4) PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 (IF APPLICABLE) UNDER
THE SECURITIES ACT, (5) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT, OR (6) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH
ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR OTHER
JURISDICTION.

                  EACH BENEFICIAL OWNER OF AN INTEREST IN ANY OF THE SECURITIES
EVIDENCED BY THIS SECURITY AGREES THAT IT WILL FURNISH TO THE COMPANY AND THE
TRUSTEE SUCH CERTIFICATES AND OTHER INFORMATION AS THEY MAY REASONABLY REQUIRE
TO CONFIRM THAT ANY TRANSFER BY IT OF THIS SECURITY COMPLIES WITH THE FOREGOING
RESTRICTIONS. EACH BENEFICIAL OWNER WILL, AND EACH SUBSEQUENT BENEFICIAL OWNER
OF AN INTEREST IN ANY OF THE SECURITIES EVIDENCED BY THIS SECURITY IS REQUIRED
TO, NOTIFY ANY PURCHASER OF ANY BENEFICIAL INTEREST IN THE SECURITIES OR SUCH
COMMON STOCK ISSUABLE UPON CONVERSION OF THE SECURITIES FROM IT OF THE RESALE
RESTRICTIONS REFERRED TO ABOVE.

                  THE BENEFICIAL HOLDER OF AN INTEREST IN ANY OF THE SECURITIES
EVIDENCED BY THIS SECURITY, BY PURCHASING THIS SECURITY (1) REPRESENTS AND
AGREES FOR THE BENEFIT OF THE COMPANY AND AMERICA WEST THAT IT IS (A) A
QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A, OR (B) AN
"ACCREDITED INVESTOR" AS DEFINED IN RULE 501(A) UNDER THE SECURITIES ACT AND IS
HOLDING THIS SECURITY FOR INVESTMENT PURPOSES AND NOT FOR DISTRIBUTION IN
VIOLATION OF THE SECURITIES ACT, AND (2) ACKNOWLEDGES THAT THE SECURITIES AND
THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF SUCH SECURITY HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OR UNDER ANY STATE SECURITIES LAWS.


                                      A-2

                        AMERICA WEST HOLDINGS CORPORATION

                      7.5% CONVERTIBLE SENIOR NOTE DUE 2009


CUSIP NO. 023657 AA 7

NO. __
                                                                    $___________


                  AMERICA WEST HOLDINGS CORPORATION, a Delaware corporation
(including any successor Person under the Indenture hereinafter referred to, the
"COMPANY"), for value received, hereby promises to pay to _____________, or its
registered assigns, the principal sum of _____________ U.S. Dollars
($______________) (the "ORIGINAL PRINCIPAL AMOUNT") plus the aggregate of all
outstanding PIK Loans (as defined in the Indenture) on January 18, 2009.

                  Interest Payment Dates: June 1 and December 1, commencing June
1, 2002.

                  Regular Record Dates: May 15 and November 15.

                  Reference is hereby made to the further provisions of this
Security set forth below, which further provisions shall for all purposes have
the same effect as if set forth at this place.


                                      A-3

                  IN WITNESS WHEREOF, the Company has caused this Security to be
duly executed manually or by facsimile by its duly authorized officers.

                              AMERICA WEST HOLDINGS CORPORATION

                              By:  _____________________________________
                                   Name:
                                   Title:





                              By:  _____________________________________
                                   Name:
                                   Title:



                              Dated: January __, 2002


Trustee's Certificate of Authentication

This is one of the 7.5% Convertible Senior Notes due 2009 described in the
within-named Indenture.

Wilmington Trust Company, as Trustee and not in its individual capacity


By:  _____________________________
     Name:
     Title:


Dated: January ___, 2002



                                      A-4

                              [REVERSE OF SECURITY]

                        AMERICA WEST HOLDINGS CORPORATION

                      7.5% CONVERTIBLE SENIOR NOTE DUE 2009

                  1. INDENTURE; SECURITIES.

                  This Security is one of a duly authorized series of the 7.5%
Convertible Senior Notes due 2009 (the "SECURITIES") of America West Holdings
Corporation, a Delaware corporation (including any successor Person under the
Indenture hereinafter referred to, the "COMPANY"), issued under an Indenture,
dated as of January 18, 2002 (the "INDENTURE"), between the Company and
Wilmington Trust Company, as trustee and not in its individual capacity (the
"TRUSTEE"). The Securities issued under the Indenture may be issued in one or
more series and the Securities of each such series shall rank equally and pari
passu with the Securities of each other series. Notwithstanding any provision to
the contrary, any future series of Securities established in or pursuant to a
Board Resolution or a supplemental indenture will be on the same terms as the
Securities issued pursuant to the Indenture in all respects other than the date
of issuance. The terms of this Security include those stated in the Indenture
and those made part of the Indenture by reference to the Trust Indenture Act of
1939, as amended ("TIA"). This Security is subject to all such terms, and
Holders are referred to the Indenture and the TIA for a statement of all such
terms. All Securities of any one series need not be issued at the same time and
may be issued from time to time, consistent with the terms of the Indenture, if
so provided by or pursuant to such Board Resolution, such Officers' Certificate
or in any such indenture supplemental thereto. To the extent permitted by
applicable law, in the event of any inconsistency between the terms of this
Security and the terms of the Indenture, the terms of the Indenture shall
control. Capitalized terms used but not defined herein have the meanings
assigned to them in the Indenture referred to below unless otherwise indicated.

                  2. PRINCIPAL AND INTEREST.

                  The Company promises to pay Interest on the Original Principal
Amount and the aggregate outstanding PIK Loans at the Interest Rate from the
date of issuance until repayment in full at Stated Maturity, or redemption. The
payment of the Original Principal Amount, any aggregate outstanding PIK Loans,
premium, if any, Interest and Liquidated Damages, if any, is fully guaranteed by
America West pursuant to the terms of a certain Guaranty, dated as of the date
hereof (the "GUARANTY"), made by America West in favor of the Trustee and the
Holders. For all purposes herein, (i) references to the Principal amount of this
Security at any time of determination shall be deemed to be references to the
outstanding balance of the Original Principal Amount, premium, if any, and the
aggregate outstanding PIK Loans at such time of determination and (ii)
references to payments of Interest on this Security for any period of
determination shall be deemed to be references to the payment of Interest on the
outstanding balance of the Original Principal Amount during such period and any
aggregate outstanding PIK Loans during such period. The Company will pay
Interest on this Security semiannually in arrears on June 1 and December 1 of
each year (each, an "INTEREST PAYMENT Date"), commencing June 1, 2002.


                                      A-5

         The Securities shall bear Interest from January 18, 2002 until the
Principal amount thereof is paid or made available for payment, or until such
date on which the Securities are converted, redeemed or purchased as provided
herein, at a rate of 7.5% per annum. Interest shall be payable semiannually in
arrears on each Interest Payment Date.

         Interest on the Securities shall be computed (i) for any full
semiannual period for which a particular Interest Rate is applicable, on the
basis of a 360-day year of twelve 30-day months and (ii) for any period for
which a particular Interest Rate is applicable for less than a full semiannual
period for which Interest is calculated, on the basis of a 30-day month and, for
such periods of less than a month, the actual number of days elapsed over a
30-day month.

         Subject to the Company's option to pay Interest in cash or PIK Loans
and subject to such other terms as set forth herein, Interest shall be due and
payable on the Securities as follows:

                           (1) A registered Holder of any Security as of the
                  close of business on a Regular Record Date shall be entitled
                  (except as otherwise indicated in Section 2.1(e) of the
                  Indenture) to receive and shall receive, as the registered
                  Holder as of such Regular Record Date, accrued and unpaid
                  Interest on such Security on the corresponding Interest
                  Payment Date (other than any Security whose Stated Maturity is
                  prior to such Interest Payment Date, in which case Interest
                  shall be paid on such Stated Maturity).

                           (2) In the event that a Security becomes subject to
                  redemption pursuant to Article 10 of the Indenture and the
                  Redemption Date occurs after a Regular Record Date but before
                  an Interest Payment Date, the Person whose Securities become
                  subject to redemption (and only such Person rather than the
                  Holder as of such Regular Record Date) shall be entitled to
                  receive and shall receive accrued and unpaid Interest from the
                  preceding Interest Payment Date (or such earlier date on which
                  Interest was last paid) to but not including the Redemption
                  Date on such Security, even if such Person is not the Holder
                  of such Security.

                           (3) In the event that a Security is converted
                  pursuant to Article 11 of the Indenture, the Holder who
                  converts such Security on any date other than an Interest
                  Payment Date shall be entitled to accrued and unpaid Interest
                  from the preceding Interest Payment Date until the Conversion
                  Date, or otherwise, on such Security.

                  If the Company fails to make a payment of Principal of or
Interest on any Security when due and payable, it shall pay such Interest on
such amounts (to the extent lawful), which shall be calculated using the
applicable Interest Rate (such amounts, the "DEFAULTED INTEREST"). It may elect
to pay such Defaulted Interest, plus any other Interest payable on it, to the
Persons who are Holders on which the Interest is due on a subsequent special
record date. The Company shall notify the Trustee in writing of the amount of
Defaulted Interest proposed to be paid on each such Security. The Company shall
fix any such special record date and payment date for such payment. At least 15
days before any such special record date, the Company shall mail to Holders
affected thereby a notice that states the special record date, the interest
payment date and amount to be paid.


                                      A-6

                  3. METHOD OF PAYMENT.

                  Interest on this Security which is payable, and is punctually
paid or duly provided for, on any Interest Payment Date shall be paid to the
Person in whose name that Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such
Interest. Principal, of and payments of cash Interest on, Global Securities will
be payable, for the benefit of the holders of this Security, to the Depositary
in immediately available funds.

                  Principal on Physical Securities will be payable at the office
or agency of the Company maintained for such purpose, initially the Corporate
Trust Office of the Trustee. Payments of cash Interest on Physical Securities
will be payable by (i) U.S. Dollar check drawn on a bank in the City of Tempe
mailed to the address of the Person entitled thereto as such address shall
appear in the Register, or (ii) upon application to the Registrar not later than
the relevant record date by a Holder of a Principal amount of Securities in
excess of $2,000,000, wire transfer in immediately available funds, which such
application shall remain in effect until the Holder notifies, in writing, the
Registrar to the contrary.

                  For all purposes of this Security and the Indenture, Interest
due on the first six (6) Interest Payment Dates shall be payable, at the
election of the Company, in either (a) the form of cash or (b) the form of a
deemed loan which shall be in addition to the Original Principal Amount of this
Security and shall for all purposes be Principal evidenced by this Security and
entitled to the benefits of the Indenture (in each case, a "PIK LOAN"). Unless
the Company shall have delivered an Officers' Certificate to the Trustee within
three Business Days of the applicable Interest Payment Date stating that the
Company elects to make a payment of Interest in cash, it shall be deemed to have
elected to make such payment of Interest in the form of a PIK Loan.

                  4. PAYING AGENT AND REGISTRAR.

                  Initially, Wilmington Trust Company will act as Paying Agent
and Registrar.

                  5. PROVISIONAL AND OPTIONAL REDEMPTION.

                  The Securities may be redeemed at the election of the Company,
as a whole or in part, at any time before January 18, 2005, upon at least 20 and
not more than 60 days' notice by mail to the Holders of the Securities at the
Provisional Redemption Price, to but excluding the Provisional Redemption Date
if (1) the Trading Price of the Common Stock has exceeded 120% of the Conversion
Price then in effect for at least 20 Trading Days within a period of 30
consecutive Trading Days ending on the Notice Date, and (2) a shelf registration
statement covering resales of the Securities and the Common Stock issuable upon
conversion thereof is effective and available for use and is expected to remain
effective and available for use for the 30 days following the Provisional
Redemption Date, unless registration is no longer required.

                  At any time on or after January 18, 2005, except for
Securities that are converted


                                      A-7

pursuant to Section 11.1 of the Indenture, the Company may, at its option,
redeem the Securities in whole at any time or in part from time to time, on any
date prior to the Stated Maturity of such Securities, upon notice as set forth
in Section 10.4 of the Indenture, at the Redemption Price (expressed in
percentages of the Principal amount) set forth below if, but only if, redeemed
on a Redemption Date occurring during the 12-month period beginning on the dates
indicated:




                                                            Redemption
             During the Twelve Months Commencing              Price
             -----------------------------------              -----
                                                         
             January 18, 2005.................               103.75%
             January 18, 2006.................               102.50%
             January 18, 2007.................               101.25%
             January 18, 2008.................               100.00%



                  If the Company exercises its option to redeem the Securities
pursuant to Section 10.1(a) or (b) of the Indenture, a Holder may nevertheless
exercise its right to convert such Securities when and to the extent permissible
under Article 11 of the Indenture, in each case, until the close of business two
Business Days immediately preceding the Redemption Date.

                  The Company shall pay any Interest to the Holder of the
Securities called for redemption (including those Securities which are converted
into Common Stock after the date the notice of the redemption is mailed and
prior to the Redemption Date) accrued but not paid to, but excluding, the
Redemption Date pursuant to Section 2.1(e) of the Indenture; provided, however,
that if the Redemption Date is an Interest Payment Date, the Company shall pay
the Interest to the Holder of such Security at the close of business on such
Interest Payment Date.

                  The Company is required to furnish the notice of redemption to
the Holders as provided in the Indenture.

                  6. CONVERSION RIGHT.

                  Subject to and upon compliance with the provisions of the
Indenture, the Holder of Securities is entitled, at such Holder's option, at any
time after January 18, 2005 or in connection with a redemption pursuant to
Section 10.1(a) or (b) of the Indenture or such earlier date as the Company
shall have provided notice to the Holders by mail, to convert this Security (or
any portion of the Principal amount hereof which is $1,000 or an integral
multiple thereof), at the Principal amount thereof or of such portion, into duly
authorized, fully paid and nonassessable shares of Common Stock of the Company
at the Conversion Price in effect at the time of conversion.

                  The conversion right shall expire at the close of business on
the Stated Maturity. If this Security (or a portion thereof) is called for
redemption, such conversion right in respect of such Security (or such portion
thereof) so called, shall expire at the close of business on the second Business
Day preceding the Redemption Date, unless the Company defaults in making the
payment due upon redemption. The Conversion Price shall be initially equal to
$12 per share of Common Stock, which may be adjusted under certain circumstances
as provided in the Indenture.

                                      A-8

                  To exercise the conversion right with respect to a Security, a
Holder must (1) as to a Global Security, deliver a completed conversion notice,
the form of which is provided in Exhibit C to the Indenture, to the Depositary
stating that the Holder elects to convert such Security or, if less than the
entire Principal amount thereof is to be converted, the portion thereof to be
converted, (2) as to a Physical Security, deliver a duly signed completed
conversion notice and such Physical Security duly endorsed or assigned to the
Company or in blank, at the office of any Conversion Agent, and (3) pay any
transfer taxes or other applicable taxes or duties, if required. To convert
interests in a Global Security, a Holder must deliver to DTC the appropriate
instruction form for conversion pursuant to DTC's conversion program or must
deliver instructions in accordance with Euroclear's or Clearstream's normal
operating procedures after application has been made to make the underlying
Common Stock eligible for trading on Euroclear or Clearstream, as applicable.

                  To the extent provided in Section 2.1 of the Indenture, the
Holders of such converted Securities shall be entitled to receive (and retain)
any accrued Interest on the Principal of the surrendered Security, if at all.

                  Securities shall be deemed to have been converted immediately
prior to the close of business on the day of surrender of such Securities for
conversion in accordance with the foregoing provisions, and at such time the
rights of the Holders of such Securities as Holders shall cease, and the Person
or Persons entitled to receive the shares of Common Stock issuable upon
conversion shall be treated for all purposes as the record holder or holders of
such shares of Common Stock at such time.

                  No fractional shares of Common Stock will be issued upon
conversion of any Securities. Instead of any fractional share of Common Stock
which would otherwise be issued upon conversion of such Securities, the Company
shall pay a cash adjustment as provided in the Indenture.

                  Reference is made to the Indenture for other rights and
obligations of the Holders of this Security with respect to their right to
convert this Security or any portion hereof.

                  7. NO SINKING FUND.

                  The Securities are not subject to a sinking fund.

                  8. ABSOLUTE OBLIGATION.

                  No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation of the Company
under the Indenture and this Security which is absolute and unconditional, to
pay the Principal of or Interest, including Liquidated Damages, if any, on this
Security at the place and time and in the coin or currency herein prescribed.

                  9. DENOMINATIONS; TRANSFER; EXCHANGE.

                  The Securities of each series are issuable in fully registered
form, without


                                      A-9

coupons, in denominations of $1,000 and integral multiples of $1,000 in excess
thereof. A Holder may register the transfer or exchange of Securities in
accordance with the Indenture.

                  Pursuant to the Indenture, when this Security (or any portion
thereof in integral multiples of $1,000 in principle amount) is presented to the
Registrar with a request to register the transfer or to exchange it for an equal
Principal amount or other authorized denominations, the Registrar shall register
the transfer or make the exchange as requested if the requirements hereunder for
such transactions are met (including that such portions thereof are duly
endorsed or accompanied by a written instrument of transfer duly executed by the
Holder thereof or by an attorney who is authorized in writing to act on behalf
of the Holder). Subject to Section 2.4 of the Indenture, to permit registrations
of transfers and exchanges, the Company shall execute and the Trustee shall
authenticate Securities at the Registrar's request. No service charge shall be
made for any registration of transfer or exchange or redemption of the
Securities, but the Company may require payment of a sum sufficient to cover any
transfer tax or similar governmental charge payable in connection therewith
(other than any such transfer taxes or other similar governmental charge payable
upon exchanges pursuant to Sections 2.14, 7.5 or 10.7 of the Indenture).

                  Pursuant to the Indenture, neither the Company nor the
Registrar shall be required to exchange or register a transfer of this Security
(or any portion thereof):

                           (1) for a period of 15 days prior to the day of any
                  selection of any portion of this Security for redemption under
                  Article 10 hereof;

                           (2) so selected for redemption or, if a portion of
                  this Security is selected for redemption, such portion thereof
                  selected for redemption; or

                           (3) surrendered for conversion or, if a portion of
                  this Security is surrendered for conversion, such portion
                  thereof surrendered for conversion.

                  In the event of redemption, conversion or purchase of the
Securities in part only, a new Security or Securities for the unredeemed,
unconverted or unpurchased portion thereof will be issued in the name of the
Holder hereof.

                  By acceptance of the Restricted Securities, each Holder (1)
represents and agrees for the benefit of the Company and America West that it is
(A) a Qualified Institutional Buyer within the meaning of Rule 144A, or (B) an
"accredited investor" as defined in Rule 501(a) under the Securities Act and is
holding this Security for investment purposes and not for distribution in
violation of the Securities Act, (2) acknowledges that the Securities and the
shares of Common Stock issuable upon conversion of such Security have not been
registered under the Securities Act or under any state securities laws and (3)
agrees that such Security must be held indefinitely unless subsequently
registered under the Securities Act or an exemption from the registration
requirements of the Securities Act is available.

                  If the Securities are issued upon the transfer, exchange or
replacement of the Securities subject to restrictions on transfer and bearing
the legends as set forth on the front of this Security, or if a request is made
to remove the legend on a Security, such Security so issued

                                      A-10

shall bear the Restricted Security Legend, or the Restricted Security Legend
shall not be removed, as the case may be, and such Security shall be a
Restricted Security unless there is delivered to the Company and the Registrar
such satisfactory evidence, which shall include a written opinion from such
Holder's counsel, as may be reasonably required by the Company and the
Registrar, that neither the legend nor the restrictions on transfer set forth
therein are required to ensure that transfers thereof comply with the provisions
of the Securities Act. Upon (i) provision of such satisfactory evidence, or (ii)
notification by the Company to the Trustee and Registrar of the sale of such
Security pursuant to a registration statement that is effective at the time of
such sale, the Trustee, at the written direction of the Company, shall
authenticate and deliver a Security that does not bear the Restricted Security
Legend. If the Restricted Security Legend is removed from the face of a Security
and such Security is subsequently held by an Affiliate of the Company, the
legend shall be reinstated.

                  10. PERSONS DEEMED OWNERS.

                  The registered Holder of this Security shall be treated as its
owner for all purposes.

                  11. DISCHARGE PRIOR TO REDEMPTION OR STATED MATURITY.

                  Subject to certain conditions contained in the Indenture, the
Company may discharge its obligations under the Securities and the Indenture if
(1) (a) all of the Outstanding Securities shall become due and payable at their
scheduled Stated Maturity within one year or (b) all of the Outstanding
Securities are scheduled for redemption within one year, and (2) the Company
shall have deposited with the Trustee cash or, in the event of a conversion
pursuant to the terms of the Indenture, Common Stock, sufficient to pay all
amounts due and owing on all outstanding Securities on the date of their
scheduled maturity or the scheduled date of redemption, as the case may be.

                  12. AMENDMENT; SUPPLEMENT; WAIVER.

                  The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Company and the rights of the Holders of the Securities under
the Indenture at any time by the Company and the Trustee with the consent of the
Holders of a majority of the Principal amount of the Outstanding Securities. The
Indenture also contains provisions permitting the Holders of specified
percentages in Principal amount of the Securities at the time Outstanding, on
behalf of the Holders of all the Securities, to waive compliance by the Company
with certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the Holder of
this Security shall be conclusive and binding upon such Holder and upon all
future Holders of this Security and of any Security issued upon registration of
transfer hereof or in exchange herefor or in lieu hereof, whether or not
notation of such consent or waiver is made upon this Security or such other
Security.

                  No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the Principal of and
Interest on this Security at the times, places and rate,

                                      A-11

and in the coin or currency, herein prescribed or to convert this Security (or
pay cash for fractional shares in lieu of conversion) as provided in the
Indenture.

                  13. REGISTRATION RIGHTS AGREEMENT.

                  The Holder of this Security and the Common Stock issuable upon
conversion thereof is entitled to the benefits of a Registration Rights
Agreement (subject to the provisions thereof), attached to the Indenture as
Exhibit D.

                  14. DEFAULTS AND REMEDIES.

                  The Indenture provides that an Event of Default with respect
to the Securities occurs when any of the following occurs:

                  (a) the Company defaults in the payment of the Principal
amount (a "DEFAULTED PAYMENT") on any Outstanding Security when the same becomes
due and payable at its Stated Maturity, upon redemption or exercise of a
repurchase right or otherwise;

                  (b) the Company defaults in the payment of an installment of
Interest (including Liquidated Damages, if any) on any Security when it becomes
due and payable and such default continues for a period of 30 days;

                  (c) the Company fails to perform or observe any other term,
covenant or agreement contained in the Securities or the Indenture and the
default continues for a period of 60 days after written notice of such failure,
requiring the Company to remedy the same, shall have been given to the Company
by the Trustee or to the Company and the Trustee by the Holders of at least 25%
in aggregate Principal amount of the Outstanding Securities;

                  (d) any indebtedness under any bond, debenture, note or other
evidence of indebtedness for money borrowed by the Company or America West or
under any mortgage, indenture or instrument under which there may be issued or
by which there may be secured or evidenced any indebtedness for money borrowed
by the Company or America West with a principal amount then outstanding in
excess of U.S. $75,000,000, whether such indebtedness now exists or shall
hereafter be created, is not paid at final maturity thereof (either at its
stated maturity or upon acceleration thereof), and such indebtedness is not
discharged, or such acceleration is not rescinded or annulled, within a period
of 60 days after there shall have been given, by registered or certified mail,
to the Company by the Trustee or to the Company and the Trustee by the Holders
of at least 25% in aggregate Principal amount of the Outstanding Securities a
written notice specifying such default and requiring the Company to cause such
indebtedness to be discharged or cause such default to be cured or waived or
such acceleration to be rescinded or annulled and stating that such notice is a
"Notice of Default" under the Indenture;

                  (e) the Guaranty ceases to be in full force and effect (other
than in accordance with its terms) or America West denies or disaffirms its
obligations under the Guaranty;

                  (f) the entry by a court having jurisdiction in the premises
of (i) a decree or order

                                      A-12

for relief in respect of the Company or America West in an involuntary case or
proceeding under any applicable U.S. federal or state bankruptcy, insolvency,
reorganization or other similar law or (ii) a decree or order adjudging the
Company or America West bankrupt or insolvent, or approving as properly filed a
petition seeking reorganization, arrangement, adjustment or composition of or in
respect of the Company or America West under any applicable U.S. federal or
state law, or appointing a custodian, receiver, liquidator, assignee, trustee,
sequestrator or other similar official of the Company or America West or of any
substantial part of their respective property, or ordering the winding up or
liquidation of their respective affairs, and the continuance of any such decree
or order for relief or any such other decree or order unstayed and in effect for
a period of 60 consecutive days; or

                  (g) the commencement by the Company or America West of a
voluntary case or proceeding under any applicable U.S. federal or state
bankruptcy, insolvency, reorganization or other similar law or of any other case
or proceeding to be adjudicated a bankrupt or insolvent, or the consent by the
Company or America West to the entry of a decree or order for relief in respect
of the Company or America West in an involuntary case or proceeding under any
applicable U.S. federal or state bankruptcy, insolvency, reorganization or other
similar law or to the commencement of any bankruptcy or insolvency case or
proceeding against the Company or America West, or the filing by the Company or
America West of a petition or answer or consent seeking reorganization or relief
under any applicable U.S. federal or state law, or the consent by the Company or
America West to the filing of such petition or to the appointment of or the
taking possession by a custodian, receiver, liquidator, assignee, trustee,
sequestrator or other similar official of the Company or America West or of any
substantial part of their respective property, or the making by the Company or
America West of an assignment for the benefit of creditors, or the admission by
the Company or America West in writing of either of their inability to pay their
respective debts generally as they become due, or the taking of corporate action
by the Company or America West expressly in furtherance of any such action.

                  A Default under clause (c) above is not an Event of Default
until the Trustee notifies the Company, or the Holders of at least 25% in
aggregate of the Principal amount of the Securities at the time outstanding
notify the Company and the Trustee, of the Default and the Company does not cure
such Default (and such Default is not waived) within the time specified in
clause (c) above after such notice has been given. Any such notice must specify
the Default, demand that it be remedied and state that such notice is a "Notice
of Default".

                  If an Event of Default shall occur and be continuing, the
Principal of all the Securities may be declared due and payable in the manner
and with the effect, and the Holder of this Security shall have the remedies and
rights related thereto, provided in the Indenture.

                  15. AUTHENTICATION.

                  This Security shall not be valid until the Trustee executes
the certificate of authentication in the space provided therefore on such
Security.

                  16. ABBREVIATIONS.

                  Customary abbreviations may be used in the name of a Holder or
an assignee,


                                      A-13

such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties),
JT TEN (= joint tenants with right of survivorship and not as tenants in
common), CUST (= Custodian) and U/G/M/A (= Uniform Gifts to Minors Act).

                  17. CUSIP NUMBERS.

                  Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures, the Company may cause one or more
CUSIP numbers, as appropriate, to be printed on this Security and the Trustee
may use CUSIP numbers (if any) in notices of redemption as a convenience to
Holders. No representation is made as to the accuracy of such numbers either as
printed on this Security or as contained in any notice of redemption and
reliance may be placed only on the other identification numbers placed thereon.

                  18. GOVERNING LAW.

                  The Indenture and this Security shall be governed by, and
construed in accordance with, the laws of the State of New York.

                  19. SUCCESSOR PERSON.

                  In the event a successor Person assumes all the obligations of
the Company under this Security, pursuant to the terms hereof and of the
Indenture, the Company will be released from all such obligations.


                                      A-14

                                ASSIGNMENT FORM

                  To assign this Security, fill in the form below and have your
signature guaranteed: (I) or (we) assign and transfer this Security to:


________________________________________________________________________________
             (Insert assignee's social security or tax I.D. number)

________________________________________________________________________________
              (Print or type assignee's name, address and zip code)


and irrevocably appoint ____________ to transfer this Security on the books
of the Company.  The agent may substitute another to act for him.

                  Your Name: ___________________________________________________
                        (Print your name exactly as it appears on the face of
                        this Security)

                  Dated: _______________________________________________________

            Your Signature:_____________________________________________________
                          (Sign exactly as your name appears on the face of
                                         this Security)

      Signature Guarantee*:_____________________________________________________



_________________________
*        Participant in a recognized Signature Guarantee Medallion Program (or
         other signature guarantor acceptable to the Trustee).


                                      A-15

                                CONVERSION NOTICE


TO:   America West Holdings Corporation
      111 West Rio Salado Parkway
      Tempe, Arizona 85281


                  The undersigned registered owner of this Security hereby
irrevocably exercises the option to convert this Security, or the portion hereof
(which is $1,000 Principal amount or an integral multiple thereof) below
designated, into shares of Common Stock in accordance with the terms of the
Indenture referred to in this Security, and directs that the shares issuable and
deliverable upon such conversion, together with any check in payment for
fractional shares and any Securities representing any unconverted Principal
amount hereof, be issued and delivered to the registered holder hereof unless a
different name has been indicated below. If shares or any portion of this
Security not converted are to be issued in the name of a person other than the
undersigned, the undersigned will pay all transfer taxes payable with respect
thereto.


            Your Name:__________________________________________________________
                        (Print your name exactly as it appears on the face of
                                            this Security)

            Dated:______________________________________________________________

            Your Signature:_____________________________________________________
                          (Sign exactly as your name appears on the face of
                                             this Security)

            Social Security or other Taxpayer Identification Number:____________

            Principal amount to be converted (if less than all):$_______________

            Signature Guarantee*:_______________________________________________

            Fill in for registration of shares (if to be issued) and Securities
      (if to be delivered) other than to and in the name of the registered
      holder:

________________________________________________________________________________
                                     (Name)
________________________________________________________________________________
                                (Street Address)
________________________________________________________________________________
                           (City, State and Zip Code)


                 SCHEDULE OF EXCHANGES FOR PHYSICAL SECURITIES(1)



*        Participant in a recognized Signature Guarantee Medallion Program (or
         other signature guarantor acceptable to the Trustee).

1        This schedule should be included only if the Security is issued in
         physical form.


                                      A-16

                  The following exchanges of a part of this Global Security for
Physical Securities have been made:


                                                                                  
                                                                   Principal Amount of this
                   Amount of decrease in   Amount of increase in        Global Security           Signature of
                    Principal Amount of     Principal Amount of     following such decrease   authorized officer of
Date of Exchange   this Global Security    this Global Security         (or increase)              Trustee
- ----------------   --------------------    --------------------         -------------              -------





                                      A-17

EX-4.17

                                                                    EXHIBIT 4.17


                    FORM OF REGISTRATION RIGHTS AGREEMENT


Each of America West Holdings Corporation (the "Company") and America West
Airlines, Inc. (the "Guarantor") hereby agree, for the benefit of the holders
from time to time of the Registrable Securities (as defined below) as follows:

         SECTION 1. DEFINITIONS. As used in this Exhibit, the following terms
shall have the following meanings:

         AFFILIATE: An affiliate of any specified person shall mean any other
person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified person. For the purposes of this
definition, "control," when used with respect to any person, means the power to
direct the management and policies of such person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise and
the terms "affiliated," "controlling" and "controlled" have meanings correlative
to the foregoing.

         AGREEMENT: This Exhibit D to the Indenture, as this Exhibit may be
amended, supplemented or modified from time to time in accordance with the terms
hereof.

         BUSINESS DAY: Each Monday, Tuesday, Wednesday, Thursday and Friday that
is not a day on which banking institutions in New York, New York are authorized
or obligated by law or executive order to close.

         CLOSING DATE: January 18, 2002.

         COMMON STOCK: The class B common stock, par value $0.01 per share, of
the Company or shares of any class or classes resulting from any
reclassification or reclassifications thereof and which have no preference in
respect of dividends or of amounts payable in the event of any voluntary or
involuntary liquidation, dissolution or winding up of the Company and which are
not subject to redemption by the Company; provided that if at any time there
shall be more than one such resulting class, the shares of each such class then
so issuable shall be substantially in the proportion which the total number of
shares of such class resulting from all such reclassifications bears to the
total number of shares of all such classes resulting from all such
reclassifications.

         COMPANY: America West Holdings Corporation, a Delaware corporation, and
any successor entity thereto.

         DAMAGES PAYMENT DATE: Each of the semiannual interest payment dates
provided in the Notes.

         EFFECTIVENESS PERIOD: As defined in Section 2(a) hereof.

         EFFECTIVENESS TARGET DATE: The 240th day following the Closing Date.


                                       1.

         EXCHANGE ACT: The Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated by the SEC thereunder.

         FILING DATE: The 120th day after the Closing Date.

         GUARANTOR: America West Airlines, Inc., a Delaware corporation, and any
successor entity thereto.

         HOLDER: Each owner of any Registrable Securities.

         INDENTURE: The Indenture, dated as of the date hereof, between the
Company and Wilmington Trust Company, as Trustee, pursuant to which the Notes
are to be issued, as the same may be amended, modified or supplemented from time
to time in accordance with the terms thereof.

         INITIAL PURCHASERS: The initial purchasers of the Notes set forth on
Schedule I hereto.

         LIQUIDATED DAMAGES: As defined in Section 3(a) hereof.

         NOTES: The Company's 7.5% Convertible Senior Notes due 2009.

         NOTICE AND QUESTIONNAIRE: The form of Notice and Questionnaire attached
hereto as Exhibit A, as reasonably amended, supplemented, or otherwise modified
from time to time by the Company upon reasonable notice to the Holders.

         PROSPECTUS: The prospectus included in the Registration Statement
(including, without limitation, a prospectus that discloses information
previously omitted from a prospectus filed in reliance upon Rule 430A), as
amended or supplemented by any prospectus supplement, with respect to the resale
of any of the Registrable Securities covered by such Registration Statement, and
all other amendments and supplements to any such prospectus, including
post-effective amendments, and all materials incorporated by reference or deemed
to be incorporated by reference, if any, in such prospectus.

         RECORD HOLDER: (i) with respect to any Damages Payment Date relating to
any shares of Common Stock as to which any such Liquidated Damages have accrued,
the registered Holder of such shares 15 days prior to the next succeeding
Damages Payment Date; and (ii) with respect to any Damages Payment Date relating
to any Notes as to which any such Liquidated Damages has accrued, the registered
Holder of such Notes 15 days prior to the next succeeding Damages Payment Date.

         REGISTRABLE SECURITIES: The Notes and such shares of Common Stock
issued or issuable (whether currently or in the future) upon conversion of such
Notes (including any shares of Common Stock issued or issuable thereon upon any
stock split, stock combination, stock dividend or the like), upon original
issuance thereof and at all times subsequent thereto, and associated related
rights, including the Guaranty, until the earliest of (i) the date on which the
resale thereof has been effectively registered under the Securities Act and such
securities have been disposed of in accordance with the Registration Statement
relating thereto, (ii) the date on which such securities have been distributed
to the public pursuant to Rule 144 or are saleable

                                       2.

pursuant to paragraph (k) of Rule 144 or (iii) the date on which such securities
cease to be outstanding.

         REGISTRATION DEFAULT: As defined in Section 3(a) hereof.

         REGISTRATION STATEMENT: Any registration statement of the Company filed
with the SEC pursuant to the Securities Act that covers the resale of the
Registrable Securities pursuant to the provisions of this Agreement, including
the Prospectus, amendments and supplements to such registration statement or
Prospectus (including pre- and post-effective amendments), all exhibits thereto,
and all material incorporated by reference or deemed to be incorporated by
reference, if any, in such registration statement.

         REQUIRED HOLDERS: Registered Holders of a number of shares of then
outstanding Common Stock constituting Registrable Securities and an aggregate
amount of then outstanding Notes constituting Registrable Securities, such that
the sum of such shares of Common Stock and the shares of Common Stock issuable
(whether currently or in the future) upon conversion of such Notes constitutes
in excess of 50% of the sum of all of the then outstanding shares of Common
Stock constituting Registrable Securities and the number of shares of Common
Stock issuable (whether currently or in the future) upon conversion of then
outstanding Notes constituting Registrable Securities. For purposes of the
preceding sentence, Registrable Securities owned, directly or indirectly, by the
Company or its Affiliates shall not be deemed outstanding.

         REQUISITE INFORMATION: As defined in Section 2(c) hereof.

         RULE 144: Rule 144 promulgated by the SEC pursuant to the Securities
Act, as such rule may be amended from time to time, or any successor rule or
regulation.

         RULE 144A: Rule 144A promulgated by the SEC pursuant to the Securities
Act, as such rule may be amended from time to time, or any successor rule or
regulation.

         RULE 415: Rule 415 promulgated by the SEC pursuant to the Securities
Act, as such rule may be amended from time to time, or any successor rule or
regulation.

         RULE 424: Rule 424 promulgated by the SEC pursuant to the Securities
Act, as such rule may be amended from time to time, or any successor rule or
regulation.

         RULE 430A: Rule 430A promulgated by the SEC pursuant to the Securities
Act, as such rule may be amended from time to time, or any successor rule or
regulation.

         SEC: The Securities and Exchange Commission, or any successor
governmental agency or authority thereto.

         SECURITIES ACT: The Securities Act of 1933, as amended, and the rules
and regulations promulgated by the SEC thereunder.

         TIA: The Trust Indenture Act of 1939, as amended, and the rules and
regulations promulgated by the SEC thereunder.


                                       3.

         TRANSFER AGENT: The registrar and transfer agent for the Company's
Common Stock.

         TRUSTEE: The trustee under the Indenture.

         SECTION 2. REGISTRATION STATEMENT.

            (a) REGISTRATION RIGHTS. Subject to the conditions set forth in
Section 2(c), the Company and the Guarantor, at their own expense, agree to,
jointly and severally, file with the SEC a Registration Statement for an
offering to be made on a continuous basis pursuant to Rule 415 covering all of
the Common Stock and Notes constituting Registrable Securities. The Company
shall use best efforts to cause the Registration Statement to be filed as soon
as practicable but in no event later than the Filing Date. The Registration
Statement shall be on Form S-3 under the Securities Act or another appropriate
form selected by the Company or the Guarantor permitting registration of such
Registrable Securities for resale by the Holders in the manner or manners
reasonably designated by the Holders. The Company and the Guarantor shall use
best efforts to cause the Registration Statement to be declared effective
pursuant to the Securities Act as soon as reasonably practicable following the
filing thereof, but in any event not later than the Effectiveness Target Date,
and to keep such Registration Statement continuously effective under the
Securities Act until the earlier of (i) the date that is two years (or for such
longer period if extended pursuant to Section 2(d) below) after the effective
date (the "Effectiveness Period"), (ii) the date when the Holders of Registrable
Securities are able to sell all such securities immediately without restriction
pursuant to the volume limitation provisions of Rule 144 under the Securities
Act or any successor rule thereto or otherwise, or (iii) the sale pursuant to
the Registration Statement of all securities registered thereunder.

            (b) SUPPLEMENTS AND AMENDMENTS. The Company and the Guarantor shall
use best efforts to keep any Registration Statement continuously effective by
supplementing and amending such Registration Statement if so required by the
rules, regulations or instructions applicable to the registration form used for
such Registration Statement, if required by the Securities Act or if reasonably
requested by the Required Holders or by any underwriter of such Registrable
Securities. If the Registration Statement under Section 2(a) ceases to be
available for use by the Holders because the Company no longer qualifies to use
such form of registration statement, the Company shall be required to file as
promptly as reasonably practicable a new Registration Statement on an
appropriate form and its obligations hereunder shall continue to apply in all
respects.

            (c) SELLING SECURITYHOLDER INFORMATION. Each Holder wishing to
register to sell Registrable Securities pursuant to the Registration Statement
and related Prospectus agrees to deliver a Notice and Questionnaire, in a timely
manner, that confirms such Holder's agreement to be bound by the terms of this
Agreement and includes such information regarding it and the distribution of its
Registrable Securities as is required by law to be disclosed by the Holder in
the Registration Statement (the "Requisite Information") to the Company prior to
any intended distribution of Registrable Securities under the Registration
Statement. Neither the Company nor the Guarantor shall be required to include in
the Registration Statement and related Prospectus the Registrable Securities of
any Holder that does not provide the Company with a Notice and Questionnaire in
accordance with this Section 2(c). If such completed Notice and Questionnaire is
received by the Company before 10 days prior to the effective date of the


                                       4.

Registration Statement, such Holder shall be entitled to have its Registrable
Securities included in the Registration Statement at the effective date thereof.
If such completed Notice and Questionnaire is received thereafter, the Company
will use best efforts to include such Holder's Registrable Securities as
promptly as reasonably practicable thereafter, subject to the last two sentences
of the next paragraph.

         Subject to the last two sentences of this paragraph, the Company and
the Guarantor shall, jointly and severally, use best efforts to file, as soon as
practicable after the receipt of a Notice and Questionnaire from any Holder
which includes the Requisite Information or any changes in the Requisite
Information with respect to such Holder (including, without limitation, any
changes in the plan of distribution), a Prospectus supplement pursuant to Rule
424 or otherwise amend or supplement such Registration Statement to include in
the Prospectus the Requisite Information as to such Holder (and the Registrable
Securities held by such Holder), and the Company shall provide such Holder a
copy of such Prospectus as so amended or supplemented containing the Requisite
Information in order to permit such Holder to comply with the Prospectus
delivery requirements of the Securities Act in a timely manner with respect to
any proposed disposition of such Holder's Registrable Securities and to file the
same with the SEC. Each Holder shall promptly notify the Company of any material
changes to the Requisite Information contained in the Notice and Questionnaire
provided to the Company by such Holder. Notwithstanding the foregoing, following
the effective date of the Registration Statement, the Company shall not be
required to file more than one such supplement or post-effective amendment to
reflect changes in the amount of Notes or Common Stock constituting Registrable
Securities held by any particular Holder in any 30-day period. The Company may
take reasonable steps to aggregate the addition of Registrable Securities of
more than one Holder for purposes of filing amendments to any Registration
Statement or supplements to the Prospectus so as to reduce the need for multiple
amendments or supplements; provided that the Company shall not use this sentence
to delay the filing of any amendment or supplement beyond such 30-day period.

            (d) MATERIAL EVENTS; SUSPENSION OF SALES. Notwithstanding the
provisions contained in this Section 2, with respect to the Registration
Statement the Company and the Guarantor may (for a period not to exceed 60
consecutive days, and not in any event to exceed 90 days in the aggregate,
during any 12 month period) suspend use of such Registration Statement at any
time if, and for so long as, the continued effectiveness thereof would require
the Company or the Guarantor to disclose a material financing, acquisition,
other transaction or other material non-public information, which disclosure the
Board of Directors of the Company or the Guarantor shall have determined in good
faith is not in the best interests of the Company, the Guarantor and the
Company's stockholders. The Company shall notify each registered Holder, the
Trustee, the Transfer Agent and the managing underwriters, if any, that the use
of the Prospectus is to be suspended until the Company shall deliver a written
notice that the use of the Prospectus may be resumed. During such suspension the
use of the Prospectus shall be suspended, and neither the Company nor the
Guarantor shall be required to maintain the effectiveness of, or amend or update
the Registration Statement, or amend or supplement the Prospectus.

            (e) ADDITIONAL AGREEMENTS OF HOLDERS. Each Holder agrees not to
dispose of Registrable Securities pursuant to the Registration Statement without
complying with the prospectus delivery requirements under the Securities Act and
the provisions of paragraph (d)

                                       5.

above regarding use of the Prospectus. Each Holder further agrees that it will
comply fully with applicable federal and state securities laws in connection
with the distribution of any Registrable Securities pursuant to the Registration
Statement. Each Holder further acknowledges having been advised by the Company
and the Guarantor that applicable federal securities laws prohibit Holders from
trading in securities of the Company or the Guarantor at any time while in
possession of material non-public information about the Company or the
Guarantor.

         SECTION 3. LIQUIDATED DAMAGES.

            (a) The Company, the Guarantor and the Initial Purchasers agree that
the Holders will suffer damages if the Company fails to fulfill its obligations
pursuant to Section 2 hereof and that it would not be possible to ascertain the
extent of such damages with precision. Accordingly, the Company hereby agrees to
pay liquidated damages ("Liquidated Damages") to each Holder under the
circumstances and to the extent set forth below:

                 (i) if the Registration Statement is not declared effective by
the SEC on or prior to the Effectiveness Target Date;

                 (ii) the aggregate duration of any suspension periods exceeds
the number of days permitted by Section 2(d) hereof; or

                 (iii) the Registration Statement ceases to be effective or the
Prospectus ceases to be usable at any time during the Effectiveness Period
without being succeeded within 30 days by a post-effective amendment or
supplement to such Registration Statement or Prospectus that cures such failure
to be effective or useable, as the case may be, and that is itself, in the case
of post-effective amendment, declared effective within a reasonable period of
time (each of the foregoing events in clauses (i), (ii) and (iii), a
"Registration Default").

            (b) In the event of a Registration Default, commencing on (and
including) the date immediately following the date of any Registration Default
and ending on (but excluding) the date on which the Registration Default is
cured, the Company and the Guarantor agree to pay, as liquidated damages and not
as a penalty, an amount payable on the Damages Payment Dates to the Record
Holders of then outstanding Notes and Common Stock constituting Registrable
Securities, as the case may be, at a rate per annum equal to one-quarter of one
percent (0.25%) for the first 90-day period following such Registration Default,
and thereafter at a rate per annum equal to one-half of one percent (0.5%) of
the aggregate applicable principal amount of the then outstanding Notes or of
the Notes converted to then outstanding shares of Common Stock. Following the
cure of a Registration Default, Liquidated Damages will cease to accrue with
respect to such Registration Default. All accrued Liquidated Damages shall be
paid to the holders of (i) Notes constituting Registrable Securities, pursuant
to the terms of the Indenture with respect to the payment of interest; and (ii)
shares of Common Stock constituting Registrable Securities, in the same manner
as interest payments on the Notes pursuant to the terms of the Indenture, on
semiannual payment dates that correspond to the semiannual interest payment
dates for the Notes. The parties hereto agree and acknowledge that the payment
of Liquidated Damages to holders of Common Stock upon a Registration Default
pursuant to this Agreement shall not be a dividend on such shares of Common
Stock.


                                       6.

            (c) Liquidated Damages shall be paid by the Company to the Record
Holders of the Notes or Common Stock constituting Registrable Securities;
provided, however, that any Liquidated Damages accrued with respect to any Notes
or portion thereof called for redemption on a redemption date, repurchased on a
repurchase date, or converted into shares of Common Stock on a conversion date,
as the case may be, after the 15th day prior to the Damages Payment Date shall,
in any such event, be paid nonetheless to the Record Holder of such Registrable
Securities.

         SECTION 4. REGISTRATION PROCEDURES. In connection with the Company's
and the Guarantor's registration obligations hereunder, the Company and the
Guarantor shall effect such registrations on the appropriate form selected by
the Company or the Guarantor to permit the resale of Registrable Securities in
accordance with the Holder's intended method or methods of disposition thereof,
and pursuant thereto the Company and the Guarantor shall as expeditiously as
reasonably possible:

            (a) Furnish to the Holders and the managing underwriters, if any,
copies of all such documents proposed to be filed (excluding, unless requested,
those documents incorporated or deemed to be incorporated by reference and then
only to the Holder who so requested) and use its commercially reasonable efforts
to reflect in each such document, when so filed with the SEC, such comments as
the Holders may reasonably propose. Neither the Company nor the Guarantor shall
file any such Registration Statement or related Prospectus or any amendments or
supplements thereto (excluding any document that would be incorporated or deemed
incorporated by reference) to which the Holder or the managing underwriters, if
any, shall reasonably object in writing (by hand-delivery, courier guaranteeing
overnight delivery or telecopy) within five Business Days after the receipt of
such documents. Notwithstanding the foregoing, neither the Company nor the
Guarantor shall be required to furnish to the Holders or the managing
underwriters, if any, any amendments or supplements to the Registration
Statement or Prospectus filed solely to reflect changes to the amount of Notes
or Common Stock constituting Registrable Securities held by any particular
Holder or immaterial revisions to the information contained therein.

            (b) Prepare and file with the SEC such amendments, including
post-effective amendments, to the Registration Statement as may be necessary to
keep such Registration Statement continuously effective for the applicable time
period set forth in Section 2(a) hereof; cause the related Prospectus to be
supplemented by any required Prospectus supplement, and as so supplemented to be
filed pursuant to Rule 424 (or any similar provisions then in force) under the
Securities Act; and comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by such Registration
Statement and Prospectus during such period in accordance with the intended
method or methods of disposition by the Holder set forth in such Registration
Statement as so amended or in such Prospectus as so supplemented including,
without limitation, the filing of any Prospectus supplement pursuant to Rule 424
in order to add or change any selling security holder information (including any
such supplements or amendments pursuant to Section 2(c) hereof, provided such
Holder to which such change applies complies with the Requisite Information
requirements of Section 2(c) hereof in a timely manner).


                                       7.

            (c) Notify the Holders and the managing underwriters, if any,
promptly and, if requested by any such person, confirm such notice in writing:

                 (i) (A) when a Prospectus or any Prospectus supplement or
post-effective amendment is proposed to be filed and (B) with respect to a
Registration Statement or any post-effective amendment, when the same has become
effective;

                 (ii) of any written comments from the SEC with respect to any
filing and of any request by the SEC or any other Federal or state governmental
authority for amendments or supplements to such Registration Statement or
related Prospectus or for additional information related thereto;

                 (iii) of the issuance by the SEC, any state securities
commission, any other governmental agency or any court of any stop order, order
or injunction suspending or enjoining the use or effectiveness of the
Registration Statement or the initiation of any proceedings for that purpose;

                 (iv) of the receipt by the Company or the Guarantor of any
notification with respect to the suspension of qualification or exemption from
qualification of any of the Registrable Securities for sale in any jurisdiction,
or the initiation or threatening of any proceeding for such purpose;

                 (v) of the existence of any fact or the happening of any event
during the Effectiveness Period that makes any statement of material fact made
in such Registration Statement or related Prospectus untrue in any material
respect, or that requires the making of any changes in such Registration
Statement or Prospectus so that, in the case of the Registration Statement, it
will not 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 not misleading and that, in the case of the Prospectus, such Prospectus
will not 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

                 (vi) of the determination by the Company or the Guarantor that
a post effective amendment to the Registration Statement will be filed with the
SEC.

            (d) Use commercially reasonable efforts to obtain the withdrawal of
any stop order or order enjoining or suspending the use or effectiveness of a
Registration Statement or the lifting of any suspension of the qualification (or
exemption from qualification) of any of the Registrable Securities for sale in
any jurisdiction, at the earliest practicable moment.

            (e) If reasonably requested by the Required Holders, or managing
underwriters, if any, to:

                 (i) promptly include in a Prospectus supplement or
post-effective amendment such information as the Required Holders or managing
underwriters, if any, may reasonably request to be included therein; and


                                       8.

                 (ii) make all required filings of such Prospectus supplement or
such post-effective amendment as soon as reasonably practicable after the
Company has received notification of the matters to be included in such
Prospectus supplement or post-effective amendment.

            (f) Furnish to each Holder who so requests, and each managing
underwriter, if any, without charge, at least one copy of the Registration
Statement and each amendment thereto (but excluding schedules, all documents
incorporated or deemed to be incorporated therein by reference and all exhibits,
unless requested in writing by such Holder or any managing underwriter and then
only to the person who so requested).

            (g) Deliver to each Holder and the underwriters, if any, without
charge, as many copies of the Prospectus or Prospectuses (including each form of
Prospectus) and each amendment or supplement thereto as such persons may
reasonably request; and, unless the Company or the Guarantor shall have given
notice to such Holder or underwriter pursuant to Section 2(d), the Company and
the Guarantor hereby consent to the use of such Prospectus, and each amendment
or supplement thereto, by each of the selling Holders of Registrable Securities
and the underwriters, if any, in connection with the offering and sale of the
Registrable Securities covered by such Prospectus and any amendment or
supplement thereto.

            (h) Prior to any public offering of Registrable Securities, use all
reasonable efforts to register or qualify, or cooperate with the Holders of
Registrable Securities to be sold or tendered or the underwriters, if any, and
their respective counsel in connection with the registration or qualification
(or exemption from such registration or qualification) of such Registrable
Securities for offer and sale under the securities or Blue Sky laws of such
jurisdictions within the United States as any Holder or underwriter reasonably
requests in writing, keep each such registration or qualification (or exemption
therefrom) effective during the period the Registration Statement is required to
be kept effective and do any and all other acts or things legally necessary to
enable the disposition in such jurisdictions of the Registrable Securities
covered by the Registration Statement; provided, however, that neither the
Company nor the Guarantor shall be required to qualify generally to do business
in any jurisdiction where it is not then so qualified, take any action that
would subject it to general service of process in any such jurisdiction where it
is not then so subject or subject the Company or the Guarantor to any tax in any
such jurisdiction where it is not then so subject.

            (i) In connection with any sale or transfer of Registrable
Securities that will result in such securities no longer being Registrable
Securities, cooperate with the Holders and the managing underwriters, if any, to
(i) facilitate the timely preparation and delivery of certificates representing
Registrable Securities to be sold (unless the same shall be in book-entry form),
which certificates shall not bear any restrictive legends, unless required by
applicable securities laws, shall bear a CUSIP number different from the CUSIP
number for the Registrable Securities and shall be in a form eligible for
deposit with the Depositary Trust Company, and (ii) enable such Registrable
Securities to be in such denominations and registered in such names as the
managing underwriters, if any, or Holders may reasonably request at least two
Business Days prior to any sale of Registrable Securities.


                                       9.

            (j) Use best efforts to cause the offering of the Registrable
Securities covered by the Registration Statement to be registered with or
approved by such other governmental agencies or authorities within the United
States as may be necessary to enable the Holder or managing underwriter, if any,
to consummate the disposition of such Registrable Securities; provided, however,
that neither the Company nor the Guarantor shall be required to register the
Registrable Securities in any jurisdiction that would require the Company or the
Guarantor to qualify to do business in any jurisdiction where it is not then so
qualified, subject it to general service of process in any such jurisdiction
where it is not then so subject or subject the Company or the Guarantor to any
tax in any such jurisdiction where it is not then so subject.

            (k) Upon the occurrence of any event contemplated by Section
4(c)(iv) hereof, as promptly as reasonably practicable (subject to any
suspension of sales pursuant to Section 2(d) hereof), prepare a supplement or
amendment, including, if appropriate, a post-effective amendment, to the
Registration Statement or a supplement to the related Prospectus or any document
incorporated or deemed to be incorporated therein by reference, and file any
other required document so that, as thereafter delivered, such Prospectus will
not contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading
(except, upon occurrence of an event contemplated by paragraph (v) of Section
4(c) above, to the extent that the Company and the Guarantor determine in good
faith that the disclosure of such event at such time would not be in the best
interests of the Company or the Guarantor and the Company's stockholders,
provided that any such delay in disclosure pursuant to this Section 4(k) shall
be considered a suspension of the Registration Statement subject to the
limitation in Section 2(d)).

            (l) Prior to the effective date of the Registration Statement
relating to the Registrable Securities, to provide a CUSIP number for the
Registrable Securities to be sold pursuant to the Registration Statement.

            (m) Enter into such agreements (including any underwriting
agreements in form, scope and substance as may be reasonably requested and as
are customary in underwritten offerings) and take all such other appropriate
actions in connection therewith (including those reasonably requested by the
managing underwriters, if any, or the Holders of a majority in interest of the
Registrable Securities being sold) in order to expedite or facilitate the sale
of such Registrable Securities. In connection with any underwritten offering,
the Company and the Guarantor will:

                 (i) make such representations and warranties to the Holders of
such Registrable Securities and the underwriters, if any, with respect to the
business of the Company and the Guarantor and their subsidiaries (including with
respect to businesses or assets acquired or to be acquired by any of them), and
the Registration Statement, Prospectus and documents, if any, incorporated or
deemed to be incorporated by reference therein, in each case, in form, substance
and scope as are customarily made by issuers to underwriters in underwritten
offerings, and confirm the same if and when requested;

                 (ii) obtain, as may reasonably be required, opinions of counsel
to the Company and the Guarantor (which may include in-house counsel) and
updates thereof (which

                                      10.

counsel and opinions (in form, scope and substance) shall be reasonably
satisfactory to the managing underwriters, if any), addressed to each selling
Holder of Registrable Securities and each of the underwriters, if any, covering
the matters customarily covered in opinions requested in underwritten offerings
(including any such matters as may be reasonably requested by such
underwriters);

                 (iii) obtain, as may reasonably be required, customary "cold
comfort" letters and updates thereof from the independent certified public
accountants of the Company and the Guarantor (and, if necessary, any other
independent certified public accountants of any subsidiary of the Company or the
Guarantor or of any business acquired by the Company or the Guarantor for which
financial statements and financial data are, or are required to be, included in
the Registration Statement), addressed (where reasonably possible) to each
selling Holder of Registrable Securities and each of the underwriters, if any,
such letters to be in customary form and covering matters of the type
customarily covered in "cold comfort" letters in connection with underwritten
offerings; and

                 (iv) deliver such documents and certificates as may be
reasonably requested by the Holders of a majority in interest of the Registrable
Securities being sold or the managing underwriters, if any, to evidence the
continued validity of the representations and warranties made pursuant to clause
(i) of this Section 4(m) and to evidence compliance with any customary
conditions contained in the underwriting agreement or other agreement entered
into by the Company or the Guarantor;

            (n) Make available for inspection by a representative of the Holders
of Registrable Securities being sold, any underwriter participating in any such
disposition of Registrable Securities, if any, and any attorney, consultant or
accountant retained by such selling Holders or underwriter, at the offices where
normally kept, during reasonable business hours, all financial and other
records, pertinent corporate documents and properties of the Company and the
Guarantor and their subsidiaries (other than records and documents that the
Company and the Guarantor and their subsidiaries agreed contractually not to
disclose and the disclosure of which would violate any such contractual
agreement) as they may reasonably request, and cause the officers, directors,
agents and employees of the Company and the Guarantor and their subsidiaries to
supply all information (other than information that the Company and the
Guarantor and their subsidiaries agreed contractually not to disclose and the
disclosure of which would violate any such contractual agreement) in each case
reasonably requested by any such representative, underwriter, attorney,
consultant or accountant in connection with such Registration Statement and as
shall be reasonably necessary to enable such persons to conduct a reasonable
investigation within the meaning of Section 11 of the Securities Act; provided,
however, that the foregoing inspection and information gathering shall be
coordinated on behalf of the Holders and the other parties thereto by one
counsel designated by and on behalf of such Holders and other parties and
provided further, that such persons shall first agree in writing with the
Company and the Guarantor that any information that is reasonably and in good
faith designated by the Company or the Guarantor as confidential at the time of
delivery or inspection (as the case may be) of such information shall be kept
confidential by such persons, unless (i) disclosure of such information is
required by court or administrative order or is necessary to respond to
inquiries of regulatory authorities; (ii) disclosure of such information is
required by law (including any disclosure requirements pursuant to Federal
securities laws in connection

                                      11.

with the filing of any Registration Statement or the use of any Prospectus);
(iii) such information becomes generally available to the public other than as a
result of a disclosure or failure to safeguard by any such person; or (iv) such
information becomes available to any such person from a source other than the
Company or the Guarantor and such source is not known to be bound by a
confidentiality agreement.

            (o) Use all reasonable efforts to cause the Indenture to be
qualified under the TIA not later than the effective date of the Registration
Statement relating to the Registrable Securities; and in connection therewith,
cooperate with the Trustee and the Holders of Notes or Common Stock constituting
Registrable Securities to effect such changes to the Indenture, if any, as may
be required for such Indenture to be so qualified in accordance with the terms
of the TIA; and execute, and use all reasonable efforts to cause the Trustee to
execute, all customary documents as may be required to effect such changes, and
all other forms and documents (including Form T-1) required to be filed with the
SEC to enable the Indenture to be so qualified under the TIA in a timely manner.

            (p) (i) list all shares of Common Stock covered by any Registration
Statements on any securities exchange on which the Common Stock is then listed;
or (ii) authorize for quotation on the National Market of the National
Association of Securities Dealers Automated Quotation System ("Nasdaq") all
Common Stock covered by all such Registration Statements if the Common Stock is
then so authorized for quotation.

            (q) Make all reasonable efforts to provide such information as is
required for any filings required to be made with the National Association of
Securities Dealers, Inc. ("NASD").

         SECTION 5. REGISTRATION EXPENSES. All fees and expenses incident to the
performance of or compliance with this Agreement by the Company and the
Guarantor shall be borne by it whether or not any Registration Statement is
filed or becomes effective. The fees and expenses referred to in the foregoing
sentence shall include:

            (a) all registration, filing, securities exchange listing, rating
agency and New York Stock Exchange fees and expenses;

            (b) printing expenses (including, without limitation, printing
Prospectuses if the printing of Prospectuses is required by the managing
underwriters, if any, or by the Holders of a majority in interest of the
Registrable Securities);

            (c) messenger, copying, telephone and delivery expenses;

            (d) reasonable fees and disbursements of counsel for the Company and
the Guarantor;

            (e) fees and disbursements of all independent certified public
accountants referred to in Section 4(m)(iii) including, without limitation, the
expenses of any special audits or "cold comfort" letters required by Section
4(m)(iii);


                                      12.

            (f) fees and expenses of all other persons retained by the Company
or the Guarantor;

            (g) all registration, filing, qualification and other fees and
expenses of complying with securities or blue sky laws of all jurisdictions in
which the Registrable Securities are to be registered and any legal fees and
expenses incurred in connection with the blue sky qualifications of the
Registrable Securities and the determination of their eligibility for investment
under the laws of all such jurisdictions; and

            (h) the reasonable fees and disbursements incurred by the Holders of
the Registrable Securities being registered (including, without limitation, the
reasonable fees and disbursements for one counsel or firm of counsel selected by
the Holders of a majority in interest of the Registrable Securities being
registered).

Notwithstanding anything in this Agreement to the contrary, the Holders shall be
responsible for all expenses customarily borne by selling securityholders
(including underwriting discounts, commissions and fees and expenses of counsel
to the selling Holders to the extent not required to be paid pursuant to clause
(h) above).

         SECTION 6. INDEMNIFICATION.

            (a) Each of the Company and the Guarantor agrees, jointly and
severally, to indemnify and hold harmless each Holder of Registrable Securities,
such Holder's affiliates, and their respective officers, directors, employees,
representatives and agents and each person, if any, who controls any Holder of
Registrable Securities within the meaning of either Section 15 of the Securities
Act or Section 20 of the Exchange Act, against any and all loss, liability,
claim or damage arising out of any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement or the Prospectus (or
any amendment or supplement thereto), or the omission or alleged omission to
state therein any material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading; provided, however, that this indemnity agreement
shall not apply to any loss, liability, claim or damage arising out of any
untrue statement or omission or alleged untrue statement or omission made in
reliance upon and in conformity with written information furnished to the
Company or the Guarantor by or on behalf of such Holder of Registrable
Securities (which also acknowledges the indemnity provisions herein) or any
person, if any, who controls any such Holder of Registrable Securities expressly
for use in the Registration Statement (or any amendment thereto), or any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto); provided, further, that this indemnity agreement shall not apply to
any loss, liability, claim or damage (i) arising from an offer or sale of
Registrable Securities occurring during any suspension of sales pursuant to
Section 2(d), (provided that the Company has given to the Holder notice of such
suspension prior to such offer or sale) or (ii) if the Holder fails to deliver
at or prior to the written confirmation of sale, the most recent Prospectus, as
amended or supplemented, and such Prospectus, as amended or supplemented, would
have corrected such untrue statement or omission or alleged untrue statement or
omission of a material fact (provided that the Company has delivered to such
Holder, or otherwise given notice to such Holder of the existence of, such most
recent Prospectus, as supplemented or amended). Any amounts advanced by the
Company or the

                                      13.

Guarantor to an indemnified party pursuant to this Agreement shall be returned
to the Company or the Guarantor if it shall be finally determined in a judgment
by a court of competent jurisdiction not subject to appeal, that such
indemnified party was not entitled to indemnification.

            (b) In connection with the preparation of the Registration Statement
in which a Holder of Registrable Securities is participating in furnishing
information relating to such Holder of Registrable Securities to the Company or
the Guarantor for use in such Registration Statement, any preliminary
prospectus, the Prospectus or any amendments or supplements thereto, each such
Holder agrees, severally and not jointly, to indemnify and hold harmless any
other Holders of Registrable Securities, the Company and the Guarantor, their
affiliates their respective officers, directors, employees representatives and
agents and each person, if any, who controls such other Holders, the Company or
the Guarantor within the meaning of either such Section, against any and all
loss, liability, claim or damage described in the indemnity contained in
subsection (a) of this Section, as incurred, but only with respect to untrue
statements or omissions, or alleged untrue statements or omissions, made in the
Registration Statement (or any amendment thereto), or any preliminary prospectus
or the Prospectus (or any amendment or supplement thereto) in reliance upon and
in conformity with written information furnished to the Company or the Guarantor
by or on behalf of such Holder of Registrable Securities (which also
acknowledges the indemnity provisions herein) or any person, if any, who
controls any such Holder of Registrable Securities expressly for use in the
Registration Statement (or any amendment thereto) or such preliminary prospectus
or the Prospectus (or any amendment or supplement thereto).

            (c) Each indemnified party shall give notice as promptly as
reasonably practicable to each indemnifying party of any action commenced
against it in respect of which indemnity may be sought hereunder, but failure to
so notify an indemnifying party shall not relieve such indemnifying party from
any liability hereunder to the extent it is not materially prejudiced as a
result thereof and in any event shall not relieve it from any liability which it
may have otherwise than on account of this indemnity agreement. The indemnifying
party, upon request of the indemnified party, shall retain counsel reasonably
satisfactory to the indemnified party to represent the indemnified party and any
others the indemnifying party may designate in such proceeding and shall pay the
reasonable fees and disbursements of such counsel related to such proceeding. In
any such proceeding, any indemnified party shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in respect of the legal expenses of any indemnified party in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for (a) the fees and expenses of more than one separate firm (in
addition to any local counsel), for the Holders of Registrable Securities, and
all persons, if any, who control the Holders of Registrable Securities within
the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act, collectively (unless representation of all Holders and such
parties by the same counsel would be inappropriate due to actual or potential
differing interests between or among them), and (b) the fees and expenses of
more than one separate firm (in addition to any local counsel), for the Company
and the

                                      14.

Guarantor and each person, if any, who controls the Company or the Guarantor
within the meaning of either such Section, and that all fees and expenses
payable under (a) and (b) above shall be reimbursed as they are incurred. In the
case of any such separate firm for the Holders of Registrable Securities, and
control persons of the Holders of Registrable Securities, such firm shall be
designated by the Required Holders and shall be reasonably acceptable to the
Company and the Guarantor. In the case of any such separate firm for the Company
and the Guarantor and control persons of the Company or the Guarantor, such firm
shall be reasonably acceptable to the Holders of a majority in interest of the
Registrable Securities. The indemnifying party shall not be liable for any
settlement of any proceeding effected without its written consent (which consent
shall not be unreasonably withheld or delayed), but if settled with such consent
or if there be a final non-appealable judgment for the plaintiff, the
indemnifying party agrees to indemnify the indemnified party from and against
any loss or liability by reason of such settlement or judgment. No indemnifying
party shall, without the prior written consent of the indemnified parties (which
consent shall not be unreasonably withheld or delayed), settle or compromise or
consent to the entry of any judgment with respect to any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever in respect of which indemnification or
contribution could be sought under this Section 6 (whether or not the
indemnified parties are actual or potential parties thereto), unless such
settlement, compromise or consent (i) includes an unconditional release of each
indemnified party from all liability arising out of such litigation,
investigation, proceeding or claim and (ii) does not include a statement as to
or an admission of fault, culpability or a failure to act by or on behalf of any
indemnified party. No indemnified party shall, without the prior written consent
of the indemnifying party, settle or compromise or consent to the entry of any
judgment with respect to any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever in respect of which indemnification or contribution could be sought
under this Section 6 (whether or not the indemnified parties are actual or
potential parties thereto).

            (d) If the indemnification to which an indemnified party is entitled
under this Section 6 is for any reason unavailable to or insufficient although
applicable in accordance with its terms to hold harmless an indemnified party in
respect of any losses, liabilities, claims, damages or expenses referred to
therein, then each indemnifying party shall contribute to the aggregate amount
of such losses, liabilities, claims, damages and expenses incurred by such
indemnified party, as incurred, in such proportion as is appropriate to reflect
the relative fault of the indemnifying party or parties on the one hand and of
the indemnified party on the other hand in connection with the statements or
omissions which resulted in such losses, liabilities, claims, damages or
expenses, as well as any other relevant equitable considerations.

         The relative fault of the Company or the Guarantor on the one hand and
the Holders of the Registrable Securities on the other hand shall be determined
by reference to, among other things, whether any such untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a material
fact relates to information supplied by the Company, the Guarantor or by the
Holder of the Registrable Securities and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.


                                      15.

         The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 6(d) were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to above in this Section 6(d). The
aggregate amount of losses, liabilities, claims, damages, and expenses incurred
by an indemnified party and referred to above in this Section 6(d) shall be
deemed to include any out-of-pocket legal or other expenses reasonably incurred
by such indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue or alleged untrue statement or omission or alleged omission.

         Notwithstanding the provisions of this Section 6, no Holder shall be
required to indemnify or contribute any amount in excess of the amount by which
the total price at which Registrable Securities were sold by such Holder exceeds
the amount of any damages that such Holder has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission to alleged
omission.

         No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.

         The remedies provided in this Section 6 are not exclusive and shall not
limit any rights or remedies which may otherwise be available to any indemnified
party at law or in equity.

         For purposes of this Section 6(d), each person, if any, who controls
any Holder of Registrable Securities within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act shall have the same rights to
contribution as such Holder, and each person, if any, who controls the Company
or the Guarantor within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act shall have the same rights to contribution as the
Company or the Guarantor, as the case may be. No party shall be liable for
contribution with respect to any action, suit, proceeding or claim settled,
compromised, or with respect to which the party requesting contribution
consented to the entry of a judgment, without such party's written consent,
which consent shall not be unreasonably withheld or delayed.

            (e) The Company and the Guarantor may require as a condition to
including the Registrable Securities in the Registration Statement, and to
entering into any underwriting agreement with respect thereto, that the Company
and the Guarantor shall have received an undertaking from the Holder and such
underwriter to comply with the provisions of this Section 6.

            (f) The agreements contained in this Section 6 shall survive the
transfer or sale of the Registrable Securities and shall remain in full force
and effect, regardless of any termination or cancellation of this Agreement or
any investigation made by or on behalf of any indemnified party.



         SECTION 7. INFORMATION REQUIREMENTS.


                                      16.

            (a) Each of the Company and the Guarantor agree that, if at any time
before the end of the Effectiveness Period the Company or the Guarantor, as the
case may be, is not subject to the reporting requirements of the Exchange Act,
it will cooperate with any Holder of Registrable Securities and use reasonable
efforts to take such further reasonable action as any Holder of Registrable
Securities may reasonably request in writing to enable such Holder to sell
Registrable Securities without registration under the Securities Act within the
limitation of the exemptions provided by Rule 144 and Rule 144A under the
Securities Act (or any similar rule or regulation hereafter adopted by the SEC)
and customarily taken in connection with sales pursuant to such exemptions,
including, without limitation, making available adequate current public
information within the meaning of paragraph (c)(2) of Rule 144 and delivering
the information required by paragraph (d) of Rule 144A. Notwithstanding the
foregoing, nothing in this Section 7 shall be deemed to require the Company or
the Guarantor to register any of its securities under any section of the
Exchange Act.

            (b) Each of the Company and the Guarantor shall file reports
required to be filed by it under the Exchange Act and the New York Stock
Exchange or any other securities exchanges or markets on which the Common Stock
is listed or quoted.

         SECTION 8. UNDERWRITTEN REGISTRATION. If any of the Registrable
Securities covered by the Registration Statement are to be sold in an
underwritten offering, the investment banker or investment bankers and manager
or managers that will administer the offering will be investment bankers of
recognized national standing selected by the Required Holders, subject to the
consent of the Company and the Guarantor (which will not be unreasonably
withheld or delayed). No person may participate in any underwritten registration
hereunder unless such person (i) agrees to sell such person's Registrable
Securities on the basis reasonably provided in any underwriting arrangements
approved by the Required Holders; and (ii) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements,
lock-up agreements and other documents reasonably required under the terms of
such underwriting arrangements. Notwithstanding any other provision of this
Agreement, if the underwriter determines in good faith that marketing factors
require a limitation of the number of shares to be underwritten, the number of
shares that may be included in the underwriting shall be allocated on a pro rata
basis.

         SECTION 9. MISCELLANEOUS.

            (a) OTHER REGISTRATION RIGHTS. The Company and the Guarantor may in
the future grant registration rights that would permit any person that is a
third party the right to piggy-back on the Registration Statement; provided,
however, that if the managing underwriter, if any, of such offering notifies the
Holders that the total amount of Registrable Securities which they and the
holders of such piggy-back rights intend to include in the Registration
Statement is so large as to materially adversely affect the success of such
offering (including the price at which such securities can be sold), then only
the amount, the number or kind of securities offered for the account of holders
of such piggy-back rights will be reduced to the extent necessary to reduce the
total amount of securities to be included in such offering to the amount, number
or kind recommended by the managing underwriter and the amount of Registrable
Securities to be included shall not be reduced.


                                      17.

            (b) NO INCONSISTENT AGREEMENTS. Neither the Company nor the
Guarantor has entered or shall enter into any agreement that is inconsistent
with the rights granted to the Holders in this Agreement or otherwise conflicts
with the provisions hereof. The rights granted to the Holders hereunder do not
in any way conflict with and are not inconsistent with the rights granted to the
holders of the Company's or the Guarantor's other issued and outstanding
securities under any such agreements.

            (c) NO ADVERSE ACTION AFFECTING THE REGISTRABLE SECURITIES. Neither
the Company nor the Guarantor will take any action with respect to the
Registrable Securities which would adversely affect the ability of any of the
Holders to include such Registrable Securities in a registration undertaken
pursuant to this Agreement.

            (d) AMENDMENTS AND WAIVERS. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof,
may not be given, without the written consent of the Company and the Guarantor
and Holders of a majority in interest of Registrable Securities, provided,
however, that, for the purposes of this Agreement, Registrable Securities that
are owned, directly or indirectly, by either the Company, the Guarantor or an
Affiliate of the Company or the Guarantor are not deemed outstanding.
Notwithstanding the foregoing, a waiver or consent to depart from the provisions
hereof with respect to a matter that relates exclusively to the rights of
Holders whose Registrable Securities are being sold pursuant to the Registration
Statement and that does not directly or indirectly affect the rights of other
Holders may be given by Holders of a majority in interest of the Registrable
Securities being sold by such Holders pursuant to such Registration Statement,
provided, however, that the provisions of this sentence may not be amended,
modified, or supplemented except in accordance with the provisions of the
immediately preceding sentence. Each Holder of Registrable Securities
outstanding at the time of any such amendment, modification, supplement, waiver
or consent or thereafter shall be bound by any such amendment, modification,
supplement, waiver or consent effected pursuant to this Section 9(d), whether or
not any notice, writing or marking indicating such amendment, modification,
supplement, waiver or consent appears on the Registrable Securities or is
delivered to such Holder.

            (e) NOTICES. All notices and other communications provided for
herein or permitted hereunder shall be made in writing by hand-delivery, courier
guaranteeing overnight delivery, certified first-class mail, return receipt
requested, or telecopy and shall be deemed given (i) when made, if made by hand
delivery, (ii) upon confirmation, if made by telecopier, (iii) one Business Day
after being deposited with such courier, if made by overnight courier or (iv) on
the date indicated on the notice of receipt, if made by first-class mail, to the
parties as follows:

                 (i) if to a Holder, to the address of such Holder as it appears
in the Notice and Questionnaire, or, if not so specified, in the Common Stock or
Notes register of the Company, as applicable. Failure to mail a notice or
communication to a Holder or any defect in such notice or communication shall
not affect its sufficiency with respect to other Holders.


                                      18.

                 (ii) if to the Company or the Guarantor to:

                        AMERICA WEST HOLDINGS CORPORATION
                        111 West Rio Salado Parkway
                        Tempe, AZ 85281
                        Telephone No.  (480) 693-0800
                        Facsimile No.  (480) 693-5932
                        Attention:  Vice President and General Counsel

                        With a copy to:

                        COOLEY GODWARD LLP
                        One Maritime Plaza, 20th Floor
                        San Francisco, CA 94111
                        Telephone No. (415) 693-2000
                        Facsimile No. (415) 951-3699
                        Attention:  Samuel M. Livermore

                 (iii) If to an Initial Purchaser, to the address of such
Initial Purchaser set forth on Schedule I.

            (f) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of each existing and future Holder. Neither the Company nor the
Guarantor may assign its rights or obligations hereunder without the prior
written consent of the Holders of a majority in interest of the Registrable
Securities, other than by operation of law pursuant to a merger or consolidation
to which the Company or the Guarantor is a party.

            (g) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO
CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW.

            (h) SEVERABILITY. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their best efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction, it being intended that all of the
rights and privileges of the parties shall be enforceable to the fullest extent
permitted by law.

            (i) HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof. All
references made in this Agreement to "Section" and "paragraph" refer to such
Section or paragraph of this Agreement, unless expressly stated otherwise.

            (j) ENTIRE AGREEMENT. This Agreement is intended by the parties as a
final expression of their agreement and is intended to be a complete and
exclusive statement of the

                                      19.

agreement and understanding of the parties hereto in respect of the subject
matter contained herein and the registration rights granted by the Company and
the Guarantor with respect to the Registrable Securities. There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein, with respect to the registration rights granted by the
Company and the Guarantor with respect to the Registrable Securities. This
Agreement supersedes all prior agreements and undertakings among the parties
solely with respect to such registration rights.

            (k) TERMINATION. This Agreement and the obligations of the parties
hereunder shall terminate upon the end of the Effectiveness Period, except for
any liabilities or obligations under Sections 4, 5 or 6 hereof.

            (l) SPECIFIC PERFORMANCE. The Company and the Guarantor agree that,
to the extent permitted by law, (i) the obligations imposed on them in this
Agreement are special, unique and of an extraordinary character, and that in the
event of a breach by the Company or the Guarantor would not be an adequate
remedy; and (ii) the Holders shall be entitled to specific performance and
injunctive and other equitable relief in addition to any other remedy to which
they may be entitled at law or in equity.


                                      20.

                                   SCHEDULE I

                         Schedule of Initial Purchasers


                                      21.

                   EXHIBIT A TO REGISTRATION RIGHTS AGREEMENT

                            Notice and Questionnaire


                                       22.

EX-4.18

                                                                    Exhibit 4.18

                                    GUARANTY

      THIS GUARANTY ("GUARANTY"), dated as of January 18, 2002, is made by
AMERICA WEST AIRLINES, INC., a Delaware corporation (the "GUARANTOR"), in favor
of the Holders and the Trustee (each such term as defined in the Indenture
referred to below, with the Holders and the Trustee referred to herein as the
"BENEFICIARIES").

                                    RECITALS

      A.    Reference is made to the Indenture, dated as of the date hereof (as
amended, restated, supplemented, modified or waived from time to time, the
"INDENTURE"), by and between America West Holdings Corporation, a Delaware
corporation (the "COMPANY"), and Wilmington Trust Company, as Trustee, under
which the Company is issuing its 7-1/2% Convertible Senior Notes due 2009 (the
"NOTES"). Capitalized terms used and not defined herein shall have the meaning
given to such terms in the Indenture.

      B.    The Guarantor is a wholly-owned subsidiary of the Company.

      C.    The Guarantor will obtain substantial direct and indirect benefit
from the transactions contemplated by the Transaction Documents (as defined
below).

      D.    Under the terms of the Indenture, the Guarantor and the Company are
required to enter into this Guaranty.


                                    GUARANTY

      NOW, THEREFORE, in consideration of the promises therein, the Guarantor
hereby agrees as follows:

      1.    GUARANTY.

            (a)   UNCONDITIONAL GUARANTY. The Guarantor hereby unconditionally,
absolutely and irrevocably guarantees to each of the Beneficiaries the prompt
and complete payment when due (whether at stated maturity, by acceleration or
otherwise) of all Guaranteed Obligations. The term "GUARANTEED OBLIGATIONS"
means all loans, advances, debts, liabilities and obligations for monetary
amounts from time to time owing by the Company to the Holders or the Trustee in
connection with the Notes or under the Indenture, whether due or to become due,
matured or unmatured, liquidated or unliquidated, contingent or non-contingent,
and all covenants and duties regarding such amounts, of any kind or nature,
present or future, whether or not evidenced by any note, agreement or
instrument, arising under or in respect of the Notes or under the Indenture.
This term includes all Principal, Interest (including Interest that accrues
after the commencement against the Company of any action under Bankruptcy Law),
fees, expenses, costs or other sums (including, without limitation, all fees and
disbursements of any law firm or other external counsel) chargeable to the
Company under the Notes or under the Indenture. Notwithstanding the foregoing,
Guaranteed Obligations shall not include any liabilities or obligations owing
from the Company to the Holders in connection with the Registration Rights
Agreement (as defined below).


                                       1.

            (b)   REIMBURSEMENT OF EXPENSES UNDER THIS GUARANTY. The Guarantor
also agrees to pay any and all reasonable costs and expenses (including, without
limitation, all reasonable fees and disbursements of any law firm or other
external counsel) of any Holder or the Trustee in enforcing any rights under
this Guaranty.

            (c)   GUARANTEED OBLIGATIONS UNAFFECTED. No payment or payments made
by any other guarantor or by any other Person, or received or collected by any
of the Beneficiaries from any other guarantor or from any other Person by virtue
of any action or proceeding or any appropriation or application at any time or
from time to time in reduction of or in payment of the Guaranteed Obligations
shall be deemed to modify, reduce, release or otherwise affect the liability of
the Guarantor hereunder which shall, notwithstanding any such payments, remain
liable for the Guaranteed Obligations, subject to Section 6 below, until this
Guaranty shall have terminated pursuant to Section 4 hereof.

            (d)   ENFORCEMENT OF GUARANTEED OBLIGATIONS. Upon the occurrence and
during the continuance of an Event of Default (as defined in the Indenture),
then and in any such event all or any part of the Guaranteed Obligations shall
automatically become (in the case of an Event of Default described in clauses
(f) or (g) of Section 4.1 of the Indenture) and may, at the option of the
Beneficiaries as provided in the Indenture (in the case of any Event of Default
described in Section 4.1 other than those described in clauses (f) or (g) of the
Indenture) and without demand, notice or legal process of any kind, be declared,
and immediately shall become, due and payable.

            (e)   NOTICE OF PAYMENT UNDER GUARANTY. The Guarantor agrees that
whenever, at any time, or from time to time, it shall make any payment to any of
the Beneficiaries on account of its liability hereunder, it will notify such
Beneficiary in writing that such payment is made under this Guaranty for such
purpose.

            (f)   RIGHT OF CONTRIBUTION; SUBORDINATION. The Company and the
Guarantor hereby agree that, to the extent that the Guarantor shall have paid an
amount hereunder to any of the Beneficiaries that is greater than the net value
of the benefits received, directly or indirectly, by the Guarantor as a result
of the issuance and sale of the Notes and the Transaction Documents (as
hereinafter defined), the Guarantor shall be entitled to contribution from the
Company. Any amount payable as a contribution under this Section 1(f) shall be
determined as of the date on which the related payment or distribution is made
by the Guarantor and the parties hereto acknowledge that the right to
contribution hereunder shall constitute an asset of the Guarantor.
Notwithstanding the foregoing, the provisions of this Section 1(f) shall in no
respect limit the obligations and liabilities of the Guarantor to the
Beneficiaries hereunder or under the Notes or the Indenture, and the Guarantor
shall remain liable for the full amount guaranteed hereunder. Any debt or other
obligation (including, without limitation, any obligation under this Section
1(f)) of the Company now or hereafter held by or owing to the Guarantor is
hereby subordinated in time and right of payment to all obligations of the
Company to the Beneficiaries.

      2.    SUBROGATION. Notwithstanding any payment or payments made by the
Guarantor hereunder, the Guarantor hereby irrevocably waives, solely with
respect to such payment or payments, any and all rights of subrogation to the
rights of the Beneficiaries against the Company and any and all rights of
reimbursement, assignment, indemnification or implied


                                       2.

contract or any similar rights against the Company, any endorser or other
guarantor of all or any part of the Guaranteed Obligations, in each case until
such time as the Guaranteed Obligations have been paid in full (subject to
Section 6 below). If, notwithstanding the foregoing, any amount shall be paid to
the Guarantor on account of such subrogation rights at any time when all of the
Guaranteed Obligations shall not have been paid in full, such amount shall be
held by the Guarantor in trust for the Beneficiaries, segregated from other
funds of the Guarantor, and shall, forthwith upon receipt by the Guarantor, be
turned over to each Beneficiary (ratably based on the amount of Guaranteed
Obligations owed to such Beneficiary at such time as a percentage of the
aggregate total amount of the Guaranteed Obligations at such time) in the exact
form received by the Guarantor (duly endorsed by the Guarantor to such
Beneficiary if required), to be applied against the Guaranteed Obligations,
whether matured or unmatured, in such order as such Beneficiary may determine.

      3.    AMENDMENTS, ETC., WITH RESPECT TO THE GUARANTEED OBLIGATIONS. The
Guarantor shall remain obligated hereunder notwithstanding that: (a) any demand
for payment of any of the Guaranteed Obligations made by any Beneficiary may be
rescinded by such Beneficiary, and any of the Guaranteed Obligations continued;
(b) this Guaranty, the Guaranteed Obligations, or the liability of any other
party upon or for any part of the Guaranteed Obligations, or any collateral
security or guaranty therefor, may, from time to time, in whole or in part, be
renewed, extended, amended, modified, accelerated, compromised, waived,
surrendered or released by any Beneficiary or such other party; (c) the
Indenture, the Notes and any other document executed in connection with any of
them may be renewed, extended, amended, modified, supplemented or terminated, in
whole or in part; or (d) any guaranty or collateral at any time held by any
Person for the payment of the Guaranteed Obligations may be sold, exchanged,
waived, surrendered or released. When making any demand hereunder against the
Guarantor, each Beneficiary may, but shall be under no obligation to, make a
similar demand on any other Person, and any failure by such Beneficiary to make
any such demand or to collect any payments from any other Person or any release
of any such other Person shall not impair or affect the rights and remedies,
express or implied, or as a matter of law, of such Beneficiary against the
Guarantor. For the purposes hereof "demand" shall include the commencement and
continuance of any legal proceedings.

      4.    GUARANTY ABSOLUTE AND UNCONDITIONAL; TERMINATION. The Guarantor
waives any and all notice of the creation, renewal, extension or accrual of any
of the Guaranteed Obligations and notice of or proof of reliance by any
Beneficiary upon this Guaranty or acceptance of this Guaranty. The Indenture,
the Notes and the Guaranteed Obligations in respect of any of them, shall
conclusively be deemed to have been created, contracted for or incurred in
reliance upon this Guaranty; and all dealings between the Company or the
Guarantor, on the one hand, and any of the Beneficiaries, on the other, shall
likewise conclusively be presumed to have been had or consummated in reliance
upon this Guaranty. The Guarantor waives diligence, presentment, protest, demand
for payment and notice of default or nonpayment to or upon the Company, any
other guarantor or itself with respect to the Guaranteed Obligations. This
Guaranty shall be construed as a continuing, irrevocable, absolute and
unconditional guaranty of payment, performance and compliance when due (and not
of collection) and is a primary obligation of the Guarantor without regard to
(a) the validity or enforceability of the Indenture, the Notes, any of the
Guaranteed Obligations or any other guaranty with respect thereto at any time or
from time to time held by any Beneficiary, (b) any defense or counterclaim
(other than a


                                       3.

defense of payment or performance) which may at any time be available to or be
asserted by the Company or the Guarantor against any Beneficiary, or (c) any
other circumstance whatsoever (with or without notice to or knowledge of the
Company, the Guarantor or any other guarantor) which constitutes, or might be
construed to constitute, an equitable or legal discharge of the Company or a
guarantor of the Guaranteed Obligations, in bankruptcy or in any other instance.
When pursuing its rights and remedies hereunder against the Guarantor, any
Beneficiary may, but shall be under no obligation to, pursue such rights and
remedies as it may have against any other Person under a guaranty of the
Guaranteed Obligations, and any failure by such Beneficiary to pursue such other
rights or remedies or to collect any payments from any other Person or to
realize upon any such guaranty, or any release of any such other Person or any
such guaranty, shall not relieve the Guarantor of any liability hereunder, and
shall not impair or affect the rights and remedies, whether express, implied or
available as a matter of law, of each of the Beneficiaries against the
Guarantor. This Guaranty shall remain in full force and effect and be binding in
accordance with and to the extent of its terms upon the Guarantor and its
successors and assigns, and shall inure to the benefit of each of the
Beneficiaries and its successors, endorsees, transferees and assigns, until all
Guaranteed Obligations shall have been satisfied by payment in full (including
payment of any fees or expenses incurred, or interest accruing, on or after the
commencement of any insolvency or bankruptcy proceeding with respect to the
Company or the Guarantor), upon the occurrence of which this Guaranty shall,
subject to Section 6 below, terminate.

      5.    REPRESENTATIONS AND WARRANTIES. The Guarantor and the Company hereby
jointly and severally represent and warrant to each of the Beneficiaries that:

            (a)   Each of the Guarantor and the Company: (i) is a corporation
duly organized, validly existing and in good standing under the laws of the
state of its formation; (ii) is duly qualified to do business and is in good
standing in every jurisdiction where the nature of its business requires it to
be so qualified (except where the failure to so qualify could not reasonably be
expected to have a material adverse effect, individually or in the aggregate, on
its business, financial condition or operations of the Company and its
subsidiaries taken as a whole or on its ability to pay or perform its
obligations under the Indenture, the Notes, the Registration Rights Agreement or
this Guaranty (collectively, the "TRANSACTION DOCUMENTS") to which it is a
party); (iii) has received all permits necessary to conduct the businesses now
operated by it and has not received notice of proceedings relating to the
revocation or modification of any permit that, if adversely determined, would
reasonably be expected to have, individually or in the aggregate, a material
adverse effect on its business, financial condition or operations of the Company
and its subsidiaries taken as a whole, or on its ability to pay or perform its
obligations under the Transaction Documents to which it is a party; (iv) has all
requisite power and authority to own its properties and to carry on its business
as now conducted and as proposed to be conducted, and to execute and deliver the
Transaction Documents to which it is a party and to perform its obligations
thereunder; and (v) is in compliance in all material respects with all
applicable law, rules, regulations and orders;

            (b)   The execution, delivery and performance by each of the
Guarantor and the Company of the Transaction Documents to which it is a party:
(i) are within its powers and have been duly authorized by all necessary
corporate and stockholder action; (ii) do not contravene its charter documents
or any law, rule, regulation or administrative or court order binding on or


                                       4.

affecting the Guarantor or the Company or their respective property; and (iii)
do not conflict with or constitute a breach of, or default under, or result in
the creation or imposition of any lien, charge or encumbrance upon any property
or assets of the Company or the Guarantor pursuant to any material contract,
indenture, mortgage, loan agreement, note or other instrument by which either
the Company or the Guarantor may be bound;

            (c)   Each of the Transaction Documents to which either of the
Guarantor or the Company is a party constitutes a valid and binding obligation
of the Guarantor and the Company, as the case may be, enforceable against the
Guarantor or the Company, as the case may be, in accordance with its terms,
except as the enforceability thereof may be subject to or limited by bankruptcy,
insolvency, reorganization, arrangement, moratorium or other similar laws
relating to or affecting the rights of creditors generally and general equitable
principles (whether applied in an action at law or a suit in equity);

            (d)   There is no action, suit or proceeding affecting the Guarantor
or the Company pending or, to either of their knowledge, threatened before any
court, arbitrator, or governmental authority, domestic or foreign, which would
reasonably be expected to have, individually or in the aggregate, a material
adverse effect on its ability to pay or perform its obligations under the
Transaction Documents to which it is a party or on the business, financial
condition or operations of the Company and its subsidiaries taken as a whole;

            (e)   The Guaranteed Obligations are not subject to any offset or
defense of any kind against any Beneficiary or the Company;

            (f)   Neither the Guarantor nor the Company nor any of their
properties has any immunity from jurisdiction of any court or from any legal
process (whether through service of process or notice, attachment prior to
judgment, attachment in aid of execution, execution or otherwise) under
applicable law;

            (g)   The Notes have been duly authorized, executed, authenticated,
issued and delivered by the Company and are entitled to the benefits of the
Indenture;

            (h)   The Notes are convertible into Common Stock of the Company in
accordance with the terms of the Indenture. All of the outstanding shares of
Common Stock have been duly authorized and validly issued, fully paid and
nonassessable and free of any preemptive rights and the shares of Common Stock
deliverable upon conversion of the Notes have been, and at all times will be,
duly authorized and reserved for issuance upon such conversion, and, when
delivered upon such conversion, will be validly issued, fully paid and
nonassessable and free of any preemptive rights;

            (i)   Each of the Indenture, the Registration Rights Agreement and
this Guaranty has been duly executed and delivered by the Company and each of
the Registration Rights Agreement and this Guaranty has been duly executed and
delivered by the Guarantor;

            (j)   The Guarantor is a wholly-owned subsidiary of the Company;

            (k)   The offer, sale and issuance by the Company of the Notes and
the guaranty by the Guarantor pursuant to this Guaranty are, and the issuance of
the Common Stock


                                       5.

upon conversion of the Notes will be, exempt from the registration requirements
of the Securities Act;

                  (l)   No authorization, approval, consent or order of any
court or governmental authority or agency or any other Person is required in
connection with the offer, sale or issuance by the Company of the Notes and the
guaranty by the Guarantor pursuant to this Guaranty, or the consummation by the
Company or the Guarantor of any of the transactions contemplated by the
Transaction Documents;

            (m)   The Company's and the Guarantor's filings under the Securities
Exchange Act of 1934, as amended (the "EXCHANGE ACT") do not include any untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading and complied, or will comply in all material respects as to
form with the Exchange Act and the rules and regulations thereunder;

            (n)   Neither the Company nor any affiliate (as defined in Rule
501(b) of Regulation D under the Securities Act, an "AFFILIATE") of the Company
has directly, or though any agent, (i) sold, offered for sale, solicited offers
to buy or otherwise negotiated in respect of any security (as defined in the
Securities Act) which is or will be integrated with the sale of the Notes (as
guaranteed by this Guaranty), or the shares of Common Stock issuable upon
conversion of the Notes, in a manner that would require the registration under
the Securities Act of the Notes, this Guaranty or the shares of Common Stock
issuable upon the conversion of the Notes, or (ii) engaged in any form of
general solicitation or general advertising in connection with the offering of
the Notes (as guaranteed by this Guaranty) or the shares of Common Stock
issuable upon conversion of the Notes (as those terms are used in Regulation D
under the Securities Act) or in any manner involving a public offering within
the meaning of Section 4(2) of the Securities Act; and

            (o)   None of the Company, its Affiliates or any person acting on
its or their behalf has engaged or will engage in any directed selling efforts
(within the meaning of Regulation S) with respect to the Notes (as guaranteed by
this Guaranty) and the Company and its Affiliates and any person acting on its
or their behalf have complied and will comply with the offering restrictions
requirements of Regulation S, except no representation, warranty or agreement is
made by the Company in this paragraph with respect to the Beneficiaries.

      6.    REINSTATEMENT. This Guaranty shall continue to be effective, or be
reinstated, as the case may be, if at any time the payment, or any part thereof,
of any of the Guaranteed Obligations is rescinded or otherwise must be restored
or returned by any Beneficiary in connection with the insolvency, bankruptcy,
dissolution, liquidation or reorganization of the Company, the Guarantor or any
Subsidiary of the Company or the Guarantor, including, without limitation, upon
or as a result of the appointment of a receiver, intervenor or conservator of,
or trustee or similar officer for, the Company, the Guarantor or any Subsidiary
of the Company or the Guarantor or any substantial part of their respective
property, or otherwise, all as though such payments had not been made.

      7.    PAYMENTS. The Guarantor hereby agrees that the Guaranteed
Obligations will be paid to each of the Beneficiaries in U.S. dollars in
immediately available funds.


                                       6.

      8.    SEVERABILITY. Whenever possible, each provision of this Guaranty
shall be interpreted in such manner as to be effective and valid under all
applicable laws and regulations. If, however, any provision of this Guaranty
shall be prohibited by or invalid under any such law or regulation, it shall be
deemed modified to conform to the minimum requirements of such law or
regulation, or, if for any reason it is not deemed so modified, it shall be
ineffective and invalid only to the extent of such prohibition or invalidity
without the remainder thereof or any of the remaining provisions of this
Guaranty being prohibited or invalid.

      9.    HEADINGS. Section headings in this Guaranty are included herein for
convenience of reference only and shall not constitute a part of this Guaranty
for any other purpose or be given any substantive effect.

      10.   APPLICABLE LAW. THIS GUARANTY SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW
YORK, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.

      11.   ENTIRE AGREEMENT. This Guaranty constitutes the final, entire
agreement among the parties hereto relating to the subject matter hereof and
supersedes any and all prior and contemporaneous commitments, agreements,
representations, and understandings, whether written or oral, relating to the
subject matter hereof and may not be contradicted or varied by evidence of
prior, contemporaneous, or subsequent oral agreements or discussions of the
parties hereto. There are no oral agreements between the parties hereto with
respect to this Guaranty.

      12.   CONSTRUCTION. Each of the Guarantor and the Beneficiaries
acknowledges that it has had the benefit of legal counsel of its own choice and
has been afforded an opportunity to review this Guaranty with such legal
counsel.

      13.   COUNTERPARTS; EFFECTIVENESS. This Guaranty and any amendments,
waivers, consents, or supplements may be executed in any number of counterparts
and by different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all of which
counterparts together shall constitute but one and the same instrument.

      14.   WAIVERS AND AMENDMENTS; SUCCESSORS AND ASSIGNS. Any and all
amendments, consents and waivers to this Guaranty shall be subject to compliance
with the requirements of Article 7 of the Indenture; provided that, for purpose
of any contemplated amendment, consent or waiver of any provision of this
Guaranty, all references the "the Company" in Article 7 of the Indenture shall
be deemed to be references to "the Guarantor." This Guaranty shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors, assigns and transferees.

      15.   ADDRESS FOR NOTICES. All written communications provided for
hereunder shall be sent by facsimile or nationwide overnight delivery service
(with charges prepaid) (a) if to the Guarantor, at its address set forth below
its name on the signature pages hereto and (b) if to the Holders or the Trustee,
as provided in the Indenture.


                                       7.

      16.   FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE. No failure or
delay on the part of any Beneficiary in the exercise of any power, right or
privilege hereunder shall impair such power, right or privilege or be construed
to be a waiver of any default or acquiescence therein, nor shall any single or
partial exercise of any such power, right or privilege preclude other or further
exercise thereof or of any other right, power or privilege. All rights and
remedies existing under this Guaranty are cumulative to, and not exclusive of,
any rights or remedies otherwise available.

      17.   REGISTRATION RIGHTS. The Company and the Guarantor agree, for the
benefit of the Holders from time to time of the Securities, to the terms set
forth in Exhibit A attached hereto setting forth certain rights of the Holders,
and obligations of the Company and the Guarantor, with respect to the
registration by the Company and the Guarantor of the Securities (such terms, the
"REGISTRATION RIGHTS AGREEMENT").

      18.   JURISDICTION. The Company and the Guarantor specifically and
irrevocably consent to the jurisdiction and venue of the federal and state
courts of the State of New York with respect to all matters concerning this
Guaranty or any of the other Transaction Documents to which they are a party or
the enforcement of any of the foregoing. The Company and the Guarantor agree
that the execution and performance of the Transaction Documents to which they
are a party shall have a State of New York situs and accordingly, the Company
and the Guarantor consent to personal jurisdiction in the State of New York.


              [THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]


                                       8.

      IN WITNESS WHEREOF, the undersigned have caused this Guaranty to be duly
executed as of the date first above written.

GUARANTOR:

AMERICA WEST AIRLINES, INC.,
a Delaware corporation

By:    /s/ Stephen L. Johnson

Title: Executive Vice President -- Corporate

[c/o the Company at its address for notices set forth in the Indenture]



ACKNOWLEDGED AND AGREED:

AMERICA WEST HOLDINGS CORPORATION,
a Delaware corporation

By:    /s/ Stephen L. Johnson

Title: Executive Vice President -- Corporate

                                    EXHIBIT A


                          REGISTRATION RIGHTS AGREEMENT


Reference is made to Exhibit 4.17 to the America West Holdings Corporation and
America West Airlines, Inc. Form 8-K filed on January 31, 2002 with the
Securities and Exchange Commission.

EX-4.19

                                                                   Exhibit 4.19

THIS WARRANT AND THE UNDERLYING SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). THEY MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT AS TO SUCH SECURITIES UNDER THE SECURITIES ACT UNLESS AN
EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE

                        AMERICA WEST HOLDINGS CORPORATION
                   WARRANT TO PURCHASE CLASS B COMMON STOCK

NO. PW-                                                       January 18, 2002
                           VOID AFTER January 18, 2012

      THIS CERTIFIES THAT, for value received,
     , with its principal office at
        , and/or its transferees and assigns (individually or collectively, the
"HOLDER"), is entitled to purchase at the Exercise Price (defined below) from
America West Holdings Corporation, a Delaware corporation, with its principal
office at 111 West Rio Salado Parkway, Tempe, Arizona 85281 (the "COMPANY"),
           shares of Class B common stock, par value $0.01 per share, of the
Company (the "CLASS B COMMON"), as provided herein.

      1. DEFINITIONS. As used herein, the following terms shall have the
following respective meanings:

      "AFFILIATE" shall mean, as to any specified Person, any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this definition,
"control," when used with respect to any Person, means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise and the terms
"affiliated," "controlling" and "controlled" have meanings correlative to the
foregoing.

      "APPLICABLE PRICE" shall mean:

      (i) for purposes of any issuance of Additional Shares of Common Stock (as
defined below) under Section 5.4, the greater of (A) the Fair Market Value of a
share of the class of Common Stock being issued (or, if being issued in an
underwritten offering, the Market Price on the day that such offering is being
priced), and (B) the then effective Exercise Price; and

      (ii) for purposes of any issuance under Section 5.1(b), the greater of (A)
the Market Price on the date of such issuance, and (B) the then effective
Exercise Price.


      "BUSINESS DAY" shall mean each Monday, Tuesday, Wednesday, Thursday and
Friday that is not a day on which banking institutions in New York, New York are
authorized or obligated by law or executive order to close.

      "COMMON STOCK" shall mean the Class B Common, the Class A common stock,
par value $0.01 per share, of the Company, and all other stock of any class or
classes (however designated) of the Company from time to time outstanding, the
holders of which have the right,



                                       1.

without limitation as to amount, either to all or to a share of the balance of
current dividends or liquidating distributions after the payment of dividends
and distributions on any shares entitled to preference.

      "EXERCISE PERIOD" shall mean the time period commencing with the date
hereof and ending at 5:00 p.m. New York time on the tenth anniversary of the
date hereof.

      "EXERCISE PRICE" shall mean three dollars ($3.00) per share, subject to
adjustment pursuant to Section 5 below.

      "EXERCISE SHARES" shall mean the shares of the Class B Common issuable
upon exercise of this Warrant, subject to adjustment pursuant to the terms
herein, including but not limited to adjustment pursuant to Section 5 below and
shall also mean any other shares, securities, assets or property otherwise
issuable upon exercise of this Warrant.

      "EXCLUDED ISSUANCE" shall mean:

      (a) shares of Class B Common issued upon exercise of this Warrant or the
warrants issued concurrently to            ,               , and
(this Warrant and such other warrants, collectively, the "Loan Warrants") or
upon conversion of the Company's outstanding 7.5% Convertible Senior Notes due
2009;

      (b) shares of Class B Common and/or options, warrants or other Class B
Common purchase rights issued and the Class B Common issued pursuant to such
options, warrants or other rights after the date hereof to employees, officers
or directors of, or consultants or advisors to the Company or any subsidiary
pursuant to stock purchase or stock option plans or other arrangements that are
approved by the Board (the "PLANS"); provided that such shares, options,
warrants or other Class B Common purchase rights and the Class B Common issued
pursuant to such options, warrants or other rights shall not be Excluded
Issuances in any case where the grantee acquires the shares, or options,
warrants or other rights to purchase Class B Common at a price per share less
than the Market Price on the date of grant;

      (c) shares of Class B Common issued pursuant to the exercise of rights,
options, warrants or convertible securities outstanding as of the date hereof;
and

      (d) shares of Class B Common issued to any charitable organization
described in Section 170(c) of the Internal Revenue Code of 1986, as amended,
provided that no more than 50,000 shares are issued in any fiscal year pursuant
to this clause (d).

      "FAIR MARKET VALUE" shall mean,

      (i) with respect to a share of Common Stock, or any other security of the
Company or any other issuer:

            (a) the average daily Market Price during the period of the most
recent twenty (20) Trading Days, ending on the last Trading Day before the date
of determination of Fair Market Value, if such class of Common Stock or other
security is (i) traded on a national securities exchange or admitted to unlisted
trading privileges on such an exchange, or (ii) is


                                       2.

quoted on the National Market System of the Nasdaq Stock Market (the "NATIONAL
MARKET System") or the Nasdaq Small Cap Market (the "SMALL CAP MARKET"); or

            (b) if such class of Common Stock or other security is not then so
listed, admitted to trading or quoted, the Fair Market Value shall be the Market
Price on the last Business Day before the date of determination of Fair Market
Value; or

      (ii) with respect to any assets or property other than cash or Common
Stock or other securities, the fair market value as determined in accordance
with the Valuation Procedure.

      "MARKET PRICE" shall be, as of any specified date with respect to any
share of any class of Common Stock or any other security of the Company or any
other issuer, if such class of Common Stock or other security is traded on a
national securities exchange or admitted to unlisted trading privileges on such
an exchange, or is quoted on the National Market System or the Small Cap Market,
the last reported share or unit sale price of such class of Common Stock or
other security on such exchange or on the National Market System or the Small
Cap Market on such date or if no such sale is made on such day, the mean of the
closing bid and asked prices for such day on such exchange or on the National
Market System or the Small Cap Market; provided that if such class of Common
Stock or other security is not so listed or admitted to unlisted trading
privileges or quoted, the Market Price as of a specified date shall be the mean
of the last bid and asked prices reported on such date (x) by the Nasdaq or (y)
if reports are unavailable under clause (x) above by the National Quotation
Bureau Incorporated; provided further that if such class of Common Stock or
other security is not so listed or admitted to unlisted trading privileges or
quoted and bid and ask prices are not reported, the Market Price shall be
determined in accordance with the Valuation Procedure.


      "PARTICIPATING SECURITIES" shall mean, (i) any equity security (other than
Common Stock) that entitles the holders thereof to participate in liquidations
or other distributions with the holders of Common Stock or otherwise participate
in the capital of the Company other than through a fixed or floating rate of
return on capital loaned or invested, and (ii) any stock appreciation rights,
phantom stock rights, or any other profit participation rights with respect to
any of the Company's capital stock or other equity ownership interest, or any
rights or options to acquire any such rights; provided that any stock
appreciation rights, phantom stock rights or any other profit participation
rights, or any rights or options to acquire such rights, issued pursuant to any
of the Plans shall not be deemed a Participating Security if their grant or
issuance would constitute an Excluded Issuance.

      "PERSON" shall mean any individual, corporation, limited liability
company, partnership, joint venture, association, joint-stock company, trust,
estate, unincorporated organization or government or any agency or political
subdivision thereof, or any entity whatsoever.

      "RECORD DATE" shall mean, with respect to any dividend, other distribution
or issuance, the record date for the determination of stockholders entitled to
receive such dividend, distribution or issuance, or if no such record date
exists, the date of such dividend, distribution or issuance.

      "TRADING DAY" shall mean, with respect to any class of Common Stock or any
other security of the Company or any other issuer a day (i) on which the
securities exchange or other trading platform applicable for purposes of
determining the Market Price of a share or unit of


                                       3.

such class of Common Stock or other security shall be open for business or (ii)
for which quotations from such securities exchange or other trading platform of
the character specified for purposes of determining such Market Price shall be
reported.

      "VALUATION PROCEDURE" shall mean a determination made in good faith by the
Board of Directors of the Company (the "BOARD") that is set forth in resolutions
of the Board that are certified by the Secretary of the Company, which certified
resolutions (i) set forth the basis of the Board's determination, which, in the
case of a valuation in excess of $10.0 million, shall include the Board's
reliance on the valuation of a nationally recognized investment banking or
appraisal firm, and (ii) are delivered to the Holder within ten (10) Business
Days following such determination. A Valuation Procedure with respect to the
value of any capital stock shall be based on the price that would be paid for
all of the capital stock of the issuer in an arm's-length transaction between a
willing buyer and a willing seller (neither acting under compulsion).

      2. EXERCISE OF WARRANT.

            2.1 EXERCISE. This Warrant may be exercised in whole or in part at
any time during the Exercise Period, by delivery of the following to the Company
at its address set forth above (or at such other address as it may designate by
notice in writing to the Holder):
                  (a)   an executed Notice of Exercise in the form attached
hereto;

                  (b)   payment of the Exercise Price (i) in cash or by
check, (ii) by cancellation of indebtedness or (iii) pursuant to Section 2.2
hereof; and

                  (c)   this Warrant.

      Upon the exercise of this Warrant, a certificate or certificates for the
Exercise Shares so purchased, registered in the name of the Holder or such other
Person as may be designated by the Holder (to the extent such transfer is not
validly restricted and upon payment of any transfer taxes that are required to
be paid by the Holder in connection with any such transfer), shall be issued and
delivered to the Holder or such other Person as soon as practicable (and in any
event within five Business Days) after this Warrant shall have been exercised.
If this Warrant shall not have been exercised in full, a new Warrant exercisable
for the number of Exercise Shares remaining shall be executed by the Company and
delivered at the same time as the certificate for the Exercise Shares that are
being issued.

      The Person in whose name any certificate or certificates for the Exercise
Shares are to be issued upon exercise of this Warrant shall be deemed to have
become the holder of record of such shares on the date on which this Warrant was
surrendered and payment of the Exercise Price was made, irrespective of the date
of delivery of such certificate or certificates, except that, if the date of
such surrender and payment is a date when the stock transfer books of the
Company are closed, such Person shall be deemed to have become the holder of
such shares at the close of business on the next succeeding date on which the
stock transfer books are open (whether before or after the end of the Exercise
Period).

            2.2 NET EXERCISE. Notwithstanding any provision herein to the
contrary, if the Market Price of one share of the Class B Common is greater than
the Exercise Price (at the date of calculation as set forth below), in lieu of
exercising this Warrant by payment of cash, check or cancellation of
indebtedness, the Holder may elect (the "CONVERSION RIGHT") to receive shares


                                       4.

equal to the value (as determined below) of this Warrant (or the portion thereof
being canceled) by surrender of this Warrant at the principal office of the
Company together with the properly endorsed Notice of Exercise in which event
the Company shall issue to the Holder a number of shares of Class B Common
computed using the following formula:

            X = Y (A-B)
                -------
                   A

      Where X =   the number of shares of Class B Common to be issued

      Y = the number of shares of Class B Common purchasable under this Warrant
or, if only a portion of this Warrant is being exercised, the portion of this
Warrant being exercised (at the date of such calculation)

      A =   the Market Price of one share of the Class B Common (at the date
of such calculation)

      B = Exercise Price (as adjusted pursuant to Section 5 hereof to the date
of such calculation)

      The Company shall pay all reasonable administrative costs incurred by the
Holder in connection with the exercise of the Conversion Right by the Holder
pursuant to this Section 2.2.

      3. COVENANTS AND REPRESENTATIONS OF THE COMPANY; SECURITIES MATTERS.

            3.1. COVENANTS AS TO EXERCISE SHARES.

                  (a) The Company covenants and agrees that all Exercise Shares
that may be issued upon the exercise of this Warrant will, upon issuance, be
validly authorized, issued and outstanding, fully paid and nonassessable, free
of preemptive rights and free from all taxes, liens and charges with respect to
the issuance thereof. If the Class B Common or the class of securities of any
other Exercise Shares is then listed or quoted on a national securities
exchange, the National Market System or the Small Cap Market, all such Exercise
Shares upon issuance shall also be so listed or quoted. The Company further
covenants and agrees that the Company will at all times during the Exercise
Period, have authorized and reserved solely for purposes of the exercise of this
Warrant, free from preemptive rights, a sufficient number of shares of its Class
B Common or the class of securities of any other Exercise Shares to provide for
the exercise in full of this Warrant (without taking into account any possible
exercise pursuant to Section 2.2 hereof). If at any time during the Exercise
Period the number of authorized but unissued shares of Class B Common or the
class of securities of any other Exercise Shares shall not be sufficient to
permit exercise in full of this Warrant (without taking into account any
possible exercise pursuant to Section 2.2 hereof), the Company will take such
corporate action as shall be necessary to increase its authorized but unissued
shares of Class B Common or the class of securities of any other Exercise Shares
to such number of shares as shall be sufficient for such purposes.

                  (b) In the event that at any time, including as a result of
any provision of Section 5, the Exercise Shares shall include any shares or
other securities other than shares of Class B Common, or any other property or
assets, the terms of this Warrant shall be modified or supplemented (in the
absence of express written documentation thereof, shall be deemed to be so
modified or supplemented), and the Company shall take all actions as may be
necessary to preserve, in a manner and on terms as nearly equivalent as
practicable to the provisions of this


                                       5.

Warrant as they apply to the Class B Common, the rights of the Holder hereunder
(including, without limitation, the provisions of Section 5 hereof), including
any equitable replacements of the term "Class B Common" with the term "Exercise
Shares" and adjustments of any formula included herein.

                  (c) The Company's filings under the Securities Exchange Act of
1934, as amended (the "EXCHANGE ACT"), will comply in all material respects as
to form with the Exchange Act and the rules and regulations thereunder. The
Company shall timely file a Form D in respect of the issuance of this Warrant,
and if required pursuant to Regulation D or any successor regulation thereto,
timely file a Form D or any other form required by such regulation in respect of
the issuance of the Exercise Shares.

                  (d) Without prior written consent of the holders of Loan
Warrants exercisable for a majority of the securities issuable upon exercise of
the outstanding Loan Warrants, the Company shall not permit America West
Airlines, Inc. or any other Significant Subsidiary (as defined by Rule 1-02(w)
of Regulation S-X under the Securities Act or any successor rule) to (i) issue
or grant any capital stock or equity ownership interest, including any
Participating Security; (ii) any rights, options, warrants or convertible
security that is exercisable for or convertible into any capital stock or other
equity ownership interest, including any Participating Security; or (iii) any
stock appreciation rights, phantom stock rights, or any other profit
participation rights, or any rights or options to acquire any such rights, in
each case of clauses (i), (ii) and (iii) above, to any Person other than the
Company or its wholly-owned subsidiaries.

                  (e) Without prior written consent of the holders of Loan
Warrants exercisable for a majority of the securities issuable upon exercise of
the outstanding Loan Warrants, the Company shall not make grants of shares of
restricted Common Stock or options, warrants or other rights to purchase Common
Stock or other stock-based awards to employees, officers or directors of, or
consultants or advisors to, the Company pursuant to the Plans during, or with
respect to, the fiscal year ending December 31, 2002 covering shares in excess
of the sum equal to (A) the number of shares, as of the date hereof, unissued
but authorized for issuance under the Plans, plus (B) 2,000,000.


      3.2. NO IMPAIRMENT. Except and to the extent as waived or consented to in
writing by the Holder, the Company will not, by amendment of its Certificate of
Incorporation or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms to be
observed or performed hereunder by the Company, but will at all times in good
faith assist in the carrying out of all the provisions of this Warrant and in
the taking of all such action as may be necessary or appropriate in order to
protect the exercise rights of the Holder against impairment consistent with the
intent and principles expressed in Section 5.9 below.

      3.3. NOTICES OF RECORD DATE. In the event (i) the Company takes a record
of the holders of any class of securities for the purpose of determining the
holders thereof who are entitled to receive any dividend or other distribution,
(ii) the Company authorizes the granting to the holders of Class B Common (or
holders of the class of securities of any other Exercise


                                       6.

Shares) of rights to subscribe to or purchase any shares of capital stock of any
class or securities convertible into any shares of capital stock or of any other
right, (iii) the Company authorizes any reclassification of, or any
recapitalization involving, any class of Common Stock or any consolidation or
merger to which the Company is a party and for which approval of the
stockholders of the Company is required, or of the sale or transfer of all or
substantially all of the assets of the Company, (iv) the Company authorizes or
consents to or otherwise commences the voluntary or involuntary dissolution,
liquidation or winding up of the Company or (v) the Company authorizes or takes
any other action that would trigger an adjustment in the Exercise Price or the
number or amount of shares of Class B Common or other Exercise Shares subject to
this Warrant (other than a stock split or combination), the Company shall mail
to the Holder, at least ten (10) days prior to the earlier of the record date
for any such action or stockholder vote and the date of such action, a notice
specifying (a) which action is to be taken and the date on which any such record
is to be taken for the purpose of any such action, (b) the date that any such
action is to take place and (c) the amount and character of any stock, other
securities or property and amounts, or rights or options with respect thereto,
proposed to be issued, granted or delivered to each holder of Class B Common (or
holders of the class of securities of any other Exercise Shares).

      3.4. REPRESENTATIONS AND WARRANTIES. The Company hereby represents and
warrants to the Holder, as of the date hereof, that:

                  (a) The Company: (i) is a corporation duly organized, validly
existing and in good standing under the laws of the state of its formation; (ii)
is duly qualified to do business and is in good standing in every jurisdiction
where the nature of its business requires it to be so qualified (except where
the failure to so qualify could not reasonably be expected to have a material
adverse effect, individually or in the aggregate, on its business, financial
condition or operations of the Company and its subsidiaries taken as a whole or
on its ability to pay or perform its obligations under this Warrant and the
Registration Rights Agreement (as defined below) (collectively, the "WARRANT
DOCUMENTS")); (iii) has received all permits necessary to conduct the businesses
now operated by it and has not received notice of proceedings relating to the
revocation or modification of any permit that, if adversely determined, would
reasonably be expected to have, individually or in the aggregate, a material
adverse effect on its business, financial condition or operations of the Company
and its subsidiaries taken as a whole, or on its ability to pay or perform its
obligations under the Warrant Documents; (iv) has all requisite power and
authority to own its properties and to carry on its business as now conducted
and as proposed to be conducted, and to execute and deliver the Warrant
Documents to which it is a party and to perform its obligations thereunder; and
(v) is in compliance in all material respects with all applicable law, rules,
regulations and orders;

                  (b) The execution, delivery and performance by the Company of
the Warrant Documents and the consummation of the transactions contemplated
therein: (i) are within its powers and have been duly authorized by all
necessary corporate and stockholder action; (ii) do not contravene its charter
documents or any law, rule, regulation or administrative or court order binding
on or affecting the Company or its property; and (iii) do not conflict with or
constitute a breach of, or default under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets of the
Company pursuant to any material contract, indenture, mortgage, loan agreement,
note or other instrument to which it is a party, by which it may be bound or to
which its assets may be subject;


                                       7.

                  (c) Each of the Warrant Documents has been duly authorized,
executed, delivered and constitutes a valid and binding obligation of the
Company, enforceable against it in accordance with its terms, except as the
enforceability thereof may be subject to or limited by bankruptcy, insolvency,
reorganization, arrangement, moratorium or other similar laws relating to or
affecting the rights of creditors generally and general equitable principles
(whether applied in an action at law or a suit in equity);

                  (d) There is no action, suit or proceeding affecting the
Company pending or, to its knowledge, threatened before any court, arbitrator,
or governmental authority, domestic or foreign, which would reasonably be
expected to have, individually or in the aggregate, a material adverse effect on
its ability to pay or perform its obligations under the Warrant Documents or on
the business, financial condition or operations of the Company and its
subsidiaries taken as a whole;

                  (e) The authorized capital stock of the Company consists of
1,200,000 shares of Class A Common Stock, par value $0.01 per share ("CLASS A
COMMON"), 100,000,000 shares of Class B Common, and 48,800,000 shares of
Preferred Stock, par value $0.01 per share (the "PREFERRED STOCK"), of which (i)
941,431 shares of Class A Common are outstanding, (ii) 32,786,410 shares of
Class B Common are outstanding, and (iii) no shares of Preferred Stock are
outstanding. All of the outstanding shares of Common Stock have been duly
authorized and validly issued, fully paid and nonassessable and are free of any
preemptive rights and the shares of Class B Common deliverable upon exercise of
this Warrant have been, and at all times will be, duly authorized and reserved
for issuance upon such exercise, and, when delivered upon such exercise, will be
validly issued, fully paid and nonassessable and free of any preemptive rights;

                  (f) Except as set forth on SCHEDULE 3.4(F), there are not
outstanding nor are there any commitments or obligations to issue or grant (i)
any securities, rights, options, warrants or subscriptions giving any Person the
right to acquire from the Company, or requiring that the Company or any of its
subsidiaries issue any capital stock or other equity interest in the Company or
any of its subsidiaries; (ii) any stock appreciation rights, phantom stock
rights, or any other profit participation rights with respect to any capital
stock or other equity ownership interest in the Company or any of its
subsidiaries, or any rights or options to acquire any such rights; or (iii) any
contracts, agreements, arrangements or understandings to which the Company or
any of its subsidiaries is party or by which any of them is bound, giving any
Person any rights of exchange, preemptive rights (statutory or contractual),
anti-dilution rights, rights of first refusal, rights of first offer or
registration rights with respect to any capital stock of the Company or any of
its subsidiaries;

                  (g) The offer and issuance by the Company of this Warrant are,
and the issuance of the Common Stock upon exercise of this Warrant will be,
exempt from the registration requirements under the Securities Act;

                  (h) No authorization, approval, consent or order of any court
or governmental authority or agency or any other Person is required in
connection with the issuance by the Company of this Warrant, or the consummation
by the Company of any of the transactions contemplated by the Warrant Documents,
and the Company has obtained from the New York Stock Exchange, Inc. a waiver
under paragraph 312.05 of the Listed Company


                                       8.

Manual waiving any requirement to obtain stockholder approval of the
transactions contemplated by the Warrant Documents or any requirement to deliver
notice to the stockholders under said paragraph 312.05;

                  (i) The Company's filings under the Exchange Act do not
include any untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading and complied, or will comply in all
material respects as to form with the Exchange Act and the rules and regulations
thereunder; and

                  (j) Neither the Company nor any Affiliate of the Company has
directly, or though any agent, (i) sold, offered for sale, solicited offers to
buy or otherwise negotiated in respect of any security (as defined in the
Securities Act) which is or will be integrated with the issuance of this
Warrant, or the Exercise Shares issuable upon exercise of this Warrant, in a
manner that would require the registration under the Securities Act of this
Warrant or the Exercise Shares, or (ii) engaged in any form of general
solicitation or general advertising in connection with the offering of this
Warrant or the Exercise Shares (as those terms are used in Regulation D under
the Securities Act) or in any manner involving a public offering within the
meaning of Section 4(2) of the Securities Act.

                  (k) (i) To the extent the initial Holder is not an "accredited
investor" as defined in Rule 501(a) under the Securities Act, the Company has
heretofore delivered to the initial Holder, at a reasonable time prior to the
issuance hereof, the information required to be delivered to such Holder
pursuant to Rule 502(b)(ii) under the Securities Act; and (ii) the Company has
heretofore delivered to the initial Holder, the following financial statements
and information: (A) the audited consolidated balance sheets of the Company as
at December 31, 2000, and the related consolidated statements of income,
stockholders' equity and cash flows for the fiscal year then ended, and (B) the
unaudited consolidated balance sheet of the Company as at September 30, 2001 and
the related unaudited statements of income, stockholders' equity and cash flows
for the nine months then ended. All such consolidated statements were prepared
in conformity with United States generally accepted accounting principles and
fairly present the consolidated financial position of the Company as at the
respective dates thereof and the consolidated results of operations and cash
flows of the Company for each of the periods then ended subject, in the case of
the unaudited consolidated statements, to year-end audit and adjustments. Except
as disclosed in writing to the initial Holder prior to the date of this Warrant,
the Company has no material contingent liability or liability for taxes,
long-term lease or unusual forward or long-term commitment that is not reflected
in the foregoing consolidated financial statements or the notes thereto and
which in any such case is material in relation to the business, operations,
properties, assets or condition (financial or otherwise) of the Company.

                  (l) The representations and warranties made by America West
Airlines, Inc. ("AWA") in that certain $429,000,000 Loan Agreement, dated as of
January 18, 2002, among AWA, Citibank, N.A., as agent and initial lender, KPMG
Consulting, Inc., as loan administrator, and the Air Transportation
Stabilization Board are true and correct as of the date hereof.


                                       9.

                  (m) The authorized capital stock of AWA consists of 1,000
shares of Common Stock, par value $0.01 per share, all of which is issued and
outstanding and is owned beneficially and of record by the Company.


      4. REPRESENTATIONS OF HOLDER.

            4.1. ACCREDITED INVESTOR; ACQUISITION OF WARRANT FOR PERSONAL
ACCOUNT. The Holder is an "accredited investor" as defined in Rule 501(a) of the
Securities Act, or alternatively, the Holder has received the information
specified in Section 3(k)(i) above. The Holder represents and warrants that it
is acquiring this Warrant and, to the extent this Warrant is exercised, the
Exercise Shares solely for its account for investment and not with a view to or
for sale or distribution of said Warrant or Exercise Shares or any part thereof,
other than potential transfers between Affiliates (including affiliated funds)
or transfers pursuant to an effective registration statement under, or an
exemption from the registration requirements of, the Securities Act.

            4.2. SECURITIES ARE NOT REGISTERED.

                  (a) The Holder understands that this Warrant and the Exercise
Shares have not been registered under the Securities Act, on the basis that no
distribution or public offering is being effected. The Holder realizes that the
basis for the exemption may not be present if, notwithstanding its
representations, the Holder has a present intention of acquiring the securities
for a fixed or determinable period in the future, selling (in connection with a
distribution or otherwise), granting any participation in, or otherwise
distributing the securities. The Holder has no such present intention, other
than potential transfers between Affiliates (including affiliated funds).

                  (b) The Holder recognizes that this Warrant and the Exercise
Shares may not be sold unless they are subsequently registered under the
Securities Act or an exemption from such registration is available.

            4.3 DISPOSITION OF WARRANT AND EXERCISE SHARES.

                  (a) The Holder further agrees not to make any disposition of
all or any part of this Warrant or Exercise Shares in any event unless:

                        (i)   The Company shall have received a letter
secured by the Holder from the Securities and Exchange Commission stating that
no action will be recommended to the Commission with respect to the proposed
disposition;

                        (ii)  There is then in effect a registration
statement under the Act covering such proposed disposition and such disposition
is made in accordance with said registration statement;

                        (iii) Pursuant to Rule 144; or

                        (iv)  The Holder shall have notified the Company of
the proposed disposition and shall have furnished the Company with a statement
of the circumstances surrounding the proposed disposition and if reasonably
requested by the


                                      10.

Company, the Holder shall have furnished the Company with an opinion of counsel
for the Holder, reasonably satisfactory to the Company, to the effect that such
disposition will not require registration of such Warrant or Exercise Shares
under the Securities Act or any applicable state securities laws.

                  (b) The Holder is aware that neither this Warrant nor the
Exercise Shares may be sold pursuant to Rule 144 adopted under the Securities
Act unless the applicable conditions thereof are met, including, among other
things, the required holding period under Rule 144 and the number of shares
being sold during any three month period not exceeding specified limitations.

                  (c) The Holder understands and agrees that all certificates
evidencing the Exercise Shares may bear the following legend (unless such shares
have been disposed of in accordance with clause (a)(ii) or (iii) or such legend
is no longer required to comply with applicable securities laws):

      "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
      1933, AS AMENDED (THE "SECURITIES ACT"). THEY MAY NOT BE SOLD, OFFERED FOR
      SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
      STATEMENT AS TO SUCH SECURITIES UNDER THE SECURITIES ACT UNLESS AN
      EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE."

      5. ADJUSTMENT OF EXERCISE PRICE, SHARES OF CLASS B COMMON PURCHASABLE AND
NUMBER OF WARRANTS

            5.1. ADJUSTMENT OF EXERCISE PRICE. The Exercise Price as defined in
Section 1 shall be subject to adjustment from time to time as follows:

                  (a) If the Company after the date hereof shall (i) pay a
dividend or make a distribution to holders of any class of Common Stock in
shares of Class B Common, (ii) split or otherwise subdivide the outstanding
shares of Class B Common, or (iii) combine the outstanding shares of Class B
Common into a smaller number of shares, then in any such case the Exercise Price
in effect immediately prior thereto shall be adjusted to a price obtained by
multiplying such Exercise Price by a fraction of which the numerator shall be
the number of shares of Class B Common outstanding prior to such action and the
denominator shall be the number of shares of Class B Common outstanding after
giving effect to such action. An adjustment made pursuant to clause (i) of this
subsection (a) shall become effective retroactively immediately after the Record
Date for such dividend or distribution, and an adjustment made pursuant to
clause (ii) or (iii) of this subsection (a) shall become effective immediately
after the effective date of such subdivision or combination.

                  (b) If the Company after the date hereof shall issue rights,
options or warrants to holders of any class of Common Stock to subscribe for or
purchase shares of Common Stock or securities convertible into Common Stock at a
price per share less than the Applicable Price per share on the issuance date
thereof, the Exercise Price in effect immediately prior thereto shall be
adjusted to a price obtained by multiplying such Exercise Price by a fraction of
which (i) the numerator shall be the number of shares of Common Stock
outstanding on the date of issuance of such rights, options or warrants plus the
number of shares of the class


                                      11.

of Common Stock subject to such rights, options or warrants which the aggregate
consideration for the total number of shares so to be offered would purchase at
the Applicable Price of a share of the class of Common Stock subject to such
rights, options or warrants, and (ii) the denominator shall be the number of
shares of Common Stock outstanding on the date of issuance of such rights,
options or warrants plus the number of additional shares of Common Stock to be
offered for subscription or purchase; provided, however, that no adjustment
shall be made if the Company issues or distributes to the Holder the rights,
options or warrants which the Holder would have been entitled to receive had
this Warrant been exercised prior to the Record Date (and, if applicable, had
this Warrant been exercisable for the class of Common Stock receiving such
issuance or distribution). Any such adjustments shall be made whenever such
rights, options or warrants are issued and shall become effective retroactively
immediately after the Record Date for the determination of stockholders entitled
to receive such rights, options or warrants unless such rights, options or
warrants are not immediately exercisable, in which case, any such adjustments
shall be made at such time such rights, options or warrants become exercisable.
Upon expiration of the period during which any such rights, options or warrants
may be exercised, any adjustment previously made pursuant to the foregoing
provisions shall be recalculated to take into consideration only those rights,
options or warrants actually exercised during the applicable period for exercise
and notice of any such further adjustment to the Exercise Price shall be given
to Holder as herein provided.

                  (c) If the Company after the date hereof shall issue or
distribute to holders of any class of Common Stock evidences of its
indebtedness, cash or other assets, shares of capital stock of any class or any
other securities (other than the Class B Common) or rights to subscribe therefor
(excluding those referred to in subsection (b) above), in each such case the
Exercise Price in effect immediately prior thereto shall be adjusted to a price
obtained by multiplying such Exercise Price by a fraction of which (i) the
numerator shall be the sum of the amount, for each class of Common Stock then
outstanding, of the Fair Market Value per share of such class of Common Stock,
multiplied by the number of outstanding shares of such class of Common Stock, in
each case on the Record Date, less the Fair Market Value of the assets, cash or
evidences of indebtedness so distributed, or shares of capital stock or other
securities or rights to subscribe therefor so issued, and (ii) the denominator
shall be the sum of the amount, for each class of Common Stock then outstanding,
of the Fair Market Value per share of such class of Common Stock, multiplied by
the number of outstanding shares of such class of Common Stock, in each case on
the Record Date; provided, however, that no adjustment shall be made if the
Company issues or distributes to the Holder the evidence of indebtedness, cash,
other assets, capital stock or other securities or subscription rights referred
to above in this subsection (c) that the Holder would have been entitled to
receive had this Warrant been exercised in full prior to the Record Date (and,
if applicable, had this Warrant been exercisable for the class of Common Stock
receiving such issuance or distribution). The Company shall provide the Holder,
upon receipt of a written request therefor, with any indenture or other
instrument defining the rights of the holders of any indebtedness, assets,
capital stock or other securities or subscription rights referred to in this
subsection 5.1(c). Any such adjustment shall be made whenever any such
distribution is made, and shall become effective retroactively immediately after
the Record Date. Upon expiration of the period during which any subscription
rights granted pursuant to this subsection (c) may be exercised, any adjustment
previously made pursuant to the foregoing provisions shall be recalculated to
take into consideration only those subscription rights actually


                                      12.

exercised during the applicable period for exercise and notice of any such
further adjustment to the Exercise Price shall be given to the Holder as herein
provided.

                  (d) For purposes of Sections 5.1(a), 5.1(b) and 5.1(c), any
dividend or distribution to which Section 5.1(c) is applicable that also
includes shares of Common Stock, a subdivision of Common Stock or a combination
of Common Stock to which Section 5.1(a) applies, or rights or warrants to
subscribe for or purchase shares of Common Stock to which Section 5.1(b) applies
(or any combination thereof), shall be deemed instead to be:

                        (i) a dividend or distribution of the evidences of
indebtedness, cash, other assets, shares of capital stock, other securities or
subscription rights, other than such shares of Common Stock, such subdivision or
combination or such rights, options or warrants to which Sections 5.1(a) and
5.1(b) apply, respectively (and any Exercise Price reduction required by Section
5.1(c) with respect to such dividend or distribution shall then be made),
immediately followed by

                        (ii)  a dividend or distribution of such shares of
Common Stock, such subdivision or combination or such rights, options or
warrants to which Sections 5.1(a) and 5.1(b) apply (and any further Exercise
Price reduction required by Sections 5.1(a) and (b) with respect to such
dividend or distribution shall then be made).


                  (e) In case a tender or exchange offer (other than an odd lot
offer) by the Company for any Common Stock is consummated at a price in excess
of the Market Price of the Common Stock subject to such tender or exchange offer
at the expiration of such tender or exchange offer, the Exercise Price in effect
immediately prior thereto shall be adjusted to a price obtained by multiplying
such Exercise Price by a fraction of which (i) the numerator shall be such
Market Price, less the amount of the excess of the value of the tender or
exchange offer price over the Market Price, and (ii) the denominator shall be
the Market Price, such adjustment to become effective immediately prior to the
opening of business on the day following such date of expiration.

                  (f) In the case the Company shall, by dividend or otherwise,
declare a distribution to holders of any class of Common Stock, of rights or
warrants issued by the Company and having the characteristics described in
Section 11.4(d)(iii) of the Indenture, dated as of January 18, 2002, between the
Company and Wilmington Trust Company, as Trustee (the "Indenture") then upon the
occurrence of a Trigger Event (as defined in Section 11.4(d)(iii) of the
Indenture), the Company shall make such adjustments to the Exercise Price as as
necessary to preserve, without dilution, the purchase rights represented by this
Warrant, such adjustments to be substantially consistent with the adjustments
that would have been made to the Conversion Price (as defined in the Indenture)
upon such Trigger Event pursuant to Section 11.4(d) of the Indenture.


            5.2. ADJUSTMENT OF SHARES OF EXERCISE SHARES PURCHASABLE UPON
EXERCISE OF WARRANTS. Upon each adjustment of the Exercise Price pursuant to
Section 5.1 or 5.4 hereof the number of Exercise Shares purchasable upon
exercise of this Warrant shall be adjusted to the number of Exercise Shares,
calculated to the nearest one-hundredth of a share, obtained by (i) multiplying
the number of Exercise Shares purchasable immediately prior to such adjustment
by


                                      13.

the Exercise Price in effect prior to such adjustment, and (ii) dividing the
product so obtained by the Exercise Price in effect after such adjustment of the
Exercise Price.

            5.3.  RIGHTS UPON CONSOLIDATION, MERGER, SALE, TRANSFER,
RECLASSIFICATION OR RECAPITALIZATION.

                  (a) In case of any consolidation or merger of the Company with
another Person (other than a merger or consolidation in which the Company is the
continuing Person and the Class B Common is not exchanged for securities,
property or assets issued, delivered or paid by another Person), or in case of
any lease, sale or conveyance to another Person of all or substantially all of
the property or assets of the Company, this Warrant shall thereafter (until the
end of the Exercise Period) evidence the right to receive, upon its exercise, in
lieu of the shares of Class B Common deliverable upon such exercise immediately
prior to such consolidation, merger, lease, sale or conveyance the kind and
amount of shares and/or other securities and/or property and assets and/or cash
that the Holder would have been entitled to receive upon such consolidation,
merger, lease, sale or conveyance had the Holder exercised this Warrant
immediately prior to such consolidation, merger, lease, sale or conveyance.

                  (b) In case of any reclassification or change of, or
recapitalization involving, the Class B Common issuable upon exercise of this
Warrant (other than a change in par value, or from par value to no par value, or
as a result of a subdivision or combination), including any such
reclassification, change or recapitalization effected in connection with a
consolidation or merger of the Company with another Person in which the Company
is the continuing Person and the holders of Class B Common receive shares and/or
other securities and/or property or assets and/or cash issued, delivered or paid
by the Company in exchange for such shares of Class B Common (including for this
purpose shares reflecting a change in par value or from par value to no par
value or as a result of a subdivision or combination of the shares of Class B
Common), this Warrant shall thereafter (until the end of the Exercise Period)
evidence the right to receive, upon its exercise, in lieu of the shares of Class
B Common deliverable upon such exercise immediately prior to such
reclassification, change or recapitalization, the kind and amount of shares
and/or other securities and/or property and assets and/or cash that the Holder
would have been entitled to receive upon such reclassification, change,
consolidation or merger had the Holder exercised this Warrant immediately prior
to such reclassification, change, consolidation or merger.

                  (c) The Company shall not consummate any transaction that
effects or permits any such event or occurrence unless each Person whose shares
of stock, securities or assets will be issued, delivered or paid to the holders
of the Class B Common (including the Company with respect to clause (ii) below),
prior to or simultaneously with the consummation of the transaction, (i) is a
corporation organized and existing under the laws of the United States of
America or any State or the District of Columbia, and (ii) expressly assumes, or
in the case of the Company, acknowledges, by a Warrant Supplement or other
document in a form substantially similar hereto, executed and delivered to the
Holder hereof, the obligation to deliver to such Holder such shares of stock,
securities or assets as, in accordance with the foregoing provisions of this
Section 5.3, such Holder is entitled to purchase, and all other obligations and
liabilities under this Warrant, including obligations and liabilities in respect
of subsequent adjustments that are required under this Warrant.




                                      14.

                  (d) The above provisions of this Section 5.3 shall similarly
apply to successive reclassifications and changes of Exercise Shares and to
successive consolidations, mergers, leases, sales or conveyances, mutatis
mutandis.

            5.4.  SALE OF SHARES BELOW APPLICABLE PRICE.

(a) If at any time or from time to time after the date hereof, the Company
issues or sells, or is deemed by the express provisions of this Section 5.4 to
have issued or sold, Additional Shares of Common Stock (as defined below), other
than as provided in Section 5.1, 5.2 or 5.3 above, for an Effective Price (as
defined below) less than the Applicable Price (such issue, a "QUALIFYING
DILUTIVE ISSUANCE"), then and in each such case, the then effective Exercise
Price shall be reduced, effective as of the opening of business on the date of
such issue or sale (or if earlier, the date on which a binding agreement
providing for such issue or sale was entered into), to a price determined by
multiplying the Exercise Price in effect immediately prior to such issuance or
sale by a fraction:

                        (i)   the numerator of which shall be (A) the number
of shares of Common Stock outstanding immediately prior to such issue or sale,
plus (B) the number of shares of the class of Common Stock being issued or sold
or deemed to be issued or sold which the aggregate consideration received by the
Company for the total number of Additional Shares of Common Stock so issued or
deemed to be so issued would purchase at the Applicable Price, and

                        (ii)  the denominator of which shall be the number of
shares of Common Stock outstanding immediately prior to such issue or sale plus
the total number of Additional Shares of Common Stock so issued or deemed to be
so issued.

                  (b) For the purpose of the adjustment required under this
Section 5.4, if the Company issues or sells (x) stock or other securities
convertible into, shares of Common Stock (such convertible stock or securities
being herein referred to as "CONVERTIBLE SECURITIES") or (y) rights, options or
warrants for the purchase of shares of Common Stock or Convertible Securities
and if the Effective Price of such shares of Common Stock is less than the
Applicable Price, in each case the Company shall be deemed to have issued at the
time of the issuance of such rights, options or warrants or Convertible
Securities the maximum number of Additional Shares of Common Stock issuable upon
exercise or conversion thereof and to have received as consideration for the
issuance of such shares an amount equal to the total amount of the
consideration, if any, received by the Company for the issuance or sale of such
rights, options or warrants or Convertible Securities plus the minimum amounts
of consideration, if any, payable to the Company upon the exercise or conversion
of such rights, options or warrants or Convertible Securities (other than by
cancellation of liabilities or obligations evidenced by such Convertible
Securities); provided that

                              (i)   subject to paragraph (d) below, if the
minimum amounts of such consideration cannot be ascertained, but are a function
of antidilution or similar protective clauses, the Company shall be deemed to
have received the minimum amounts of consideration without reference to such
clauses; and


                                      15.

                              (ii)  if the minimum amount of consideration
payable to the Company upon the exercise or conversion of such rights, options,
warrants or Convertible Securities is reduced over time or on the occurrence or
non-occurrence of specified events other than by reason of antidilution
adjustments, the Effective Price shall be recalculated using the figure to which
such minimum amount of consideration is reduced; provided further, that if the
minimum amount of consideration payable to the Company upon the exercise or
conversion of such rights, options, warrants or Convertible Securities is
subsequently increased, the Effective Price shall be again recalculated using
the increased minimum amount of consideration payable to the Company upon the
exercise or conversion of such rights, options, warrants or Convertible
Securities.

      No further adjustment of the Exercise Price, as adjusted upon the issuance
of such rights, options, warrants or Convertible Securities, shall be made as a
result of the actual issuance of Additional Shares of Common Stock upon the
exercise of any such rights, options or warrants or the conversion of any such
Convertible Securities. If any such rights, options or warrants or the
conversion privilege represented by any such Convertible Securities shall expire
without having been exercised, the Exercise Price as adjusted upon the issuance
of such rights, options, or warrants or Convertible Securities shall be
readjusted to the Exercise Price which would have been in effect had an
adjustment been made on the basis of only the Additional Shares of Common Stock,
if any, actually issued or sold on the exercise or conversion of such rights,
options, warrants or Convertible Securities, and on the basis that such
Additional Shares of Common Stock, if any, were issued or sold for the
consideration actually received by the Company upon such exercise or conversion
(other than by cancellation of liabilities or obligations evidenced by such
Convertible Securities), plus the consideration, if any, actually received by
the Company for the issue or sale of all such rights, options, warrants and
Convertible Securities, whether or not exercised, provided that such
readjustment shall not apply to prior exercises of this Warrant.

                  (c) For the purpose of making any adjustment to the Exercise
Price of the Exercise Shares required under this Section 5.4, "ADDITIONAL SHARES
OF COMMON STOCK" shall mean all shares of Common Stock issued by the Company or
deemed to be issued pursuant to this Section 5.4 (including shares of Common
Stock subsequently reacquired or retired by the Company), other than any
Excluded Issuance.

      References to Common Stock in the preceding sentence shall mean all shares
of Common Stock issued by the Company or deemed to be issued pursuant to this
Section 5.4. The "EFFECTIVE PRICE" of Additional Shares of Common Stock shall
mean the quotient determined by dividing the total number of Additional Shares
of Common Stock issued or sold, or deemed to have been issued or sold by the
Company under this Section 5.4, into the aggregate consideration received, or
deemed to have been received by the Company for such issue under this Section
5.4, for such Additional Shares of Common Stock.

                  (d) In the event that the Company issues or sells, or is
deemed to have issued or sold, Additional Shares of Common Stock in a Qualifying
Dilutive Issuance (the "FIRST DILUTIVE ISSUANCE"), then in the event that the
Company issues or sells, or is deemed to have issued or sold, Additional Shares
of Common Stock in a Qualifying Dilutive Issuance other than the First Dilutive
Issuance (a "SUBSEQUENT DILUTIVE ISSUANCE") pursuant to the same instruments


                                      16.

as the First Dilutive Issuance, then and in each such case upon a Subsequent
Dilutive Issuance the Exercise Price shall be reduced to the Exercise Price that
would have been in effect had the First Dilutive Issuance and each Subsequent
Dilutive Issuance all occurred on the closing date of the First Dilutive
Issuance.

            5.5. ADDITIONAL ADJUSTMENTS TO EXERCISE PRICE. Notwithstanding
anything to the contrary contained in this Section 5, but subject to Section
5.7, the Company shall be entitled, but not required, to make such reductions in
the Exercise Price, in addition to those required by Section 5.1, 5.3 or 5.4, as
it, in its sole discretion, shall determine to be advisable, including, without
limitation, in order that any dividend in or distribution of shares of Class B
Common or shares of capital stock of any class other than Class B Common,
subdivision, reclassification or combination of shares of Class B Common,
issuance of rights, options, or warrants, or any other transaction having a
similar effect, shall not be treated as a distribution of property by the
Company to its stockholders under Section 305 of the Internal Revenue Code of
1986, as amended, or any successor provision and shall not be taxable to them.

            5.6. DE MINIMUS ADJUSTMENTS. No adjustment pursuant to Section 5.1,
5.3 or 5.4 hereof shall be required unless such adjustment would require an
increase or decrease of at least $0.03 in the Exercise Price then subject to
adjustment; provided, however, that any adjustments that are not made by reason
of this Section 5.6 shall be carried forward and taken into account in any
subsequent adjustment. In case the Company shall at any time issue Class B
Common by way of dividend on any stock of the Company or split or otherwise
subdivide or combine the outstanding shares of Class B Common, said amount of
$0.03 specified in the preceding sentence (as theretofore increased or
decreased, if said amount shall have been adjusted in accordance with the
provisions of this Section 5.6) shall forthwith be proportionately increased in
the case of such a combination or decreased in the case of such a subdivision or
stock dividend so as appropriately to reflect the same. All calculations under
this Section 5 shall be made to the nearest hundredth of a cent.

            5.7. CONDITION PRECEDENT TO REDUCTION OF EXERCISE PRICE BELOW PAR
VALUE OF SHARES OF CLASS B COMMON OR INCREASE IN PAR VALUE TO ABOVE EXERCISE
PRICE.

                  (a) Before taking any action that would cause an adjustment
reducing the Exercise Price to below the then par value of any of the shares of
Class B Common issuable upon exercise of this Warrant, the Company will take any
corporate action that may, in the opinion of its counsel, be necessary in order
that the Company may validly and legally issue fully paid and non-assessable
shares of such Class B Common at such adjusted Exercise Price.

                  (b) Before taking any action that would increase the par value
of the Class B Common issuable upon exercise of this Warrant to an amount that
is greater than the then effective Exercise Price, the Company will take such
corporate action that is necessary in order that the Company may validly and
legally issue fully paid and non-assessable shares of such Class B Common at
such then effective Exercise Price.

            5.8. CERTIFICATE OF ADJUSTMENT. In each case of an adjustment or
readjustment of the Exercise Price, the Company, at its sole expense, shall
compute such adjustment or readjustment in accordance with the provisions hereof
and prepare a certificate showing such adjustment or readjustment, and shall
mail such certificate, by first class mail, postage prepaid, to


                                      17.

the Holder at the Holder's address as shown in the Company's books no later than
five (5) Business Days following the effective date of such adjustment or
readjustment. The certificate shall set forth such adjustment or readjustment,
showing in detail the facts upon which such adjustment or readjustment is based,
including a statement of (i) the number of Additional Shares of Class B Common
issued or sold or deemed to have been issued or sold; (ii) the consideration
received or deemed to be received by the Company for any Additional Shares of
Class B Common issued or sold or deemed to have been issued or sold, (iii) the
Exercise Price at the time in effect, and (iv) the type and amount, if any, of
other property which would be received upon exercise of this Warrant.

            5.9. OTHER DILUTIVE EVENTS. If any event or occurrence shall occur
as to which the provisions of this Section 5 are not strictly applicable but as
to which the failure to make any adjustment to the Exercise Price and/or the
number of shares or other assets or property subject to this Warrant would
adversely affect the purchase rights or value represented by this Warrant in
accordance with the essential intent and principles of this Section 5, including
any issuance of Participating Securities, then, in each such case, the Company
shall determine the adjustment, if any, on a basis consistent with the essential
intent and principles established in this Section 5, necessary to preserve,
without dilution, the purchase rights represented by this Warrant. If such
determination involves or is based on a determination of the Fair Market Value
of any securities or other assets or property, such determination shall be made
in accordance with the Valuation Procedure.

            5.10. GENERAL ADJUSTMENT PROVISIONS.

                  (a) Notwithstanding anything to the contrary contained in this
Warrant, no adjustments to the Exercise Price or the number of shares of Class B
Common purchasable upon exercise of this Warrant shall be made solely as a
result of any Excluded Issuance.

                  (b) In any case in which this Section 5 shall require that an
adjustment be made retroactively immediately following a Record Date, the
Company may elect to defer (but only until five Business Days following the
mailing by the Company to the Holder of the certificate as required by Section
5.8) issuing to the Holder, in the event of any exercise of this Warrant after
such Record Date, the shares of the Class B Common issuable upon such exercise
in excess of the shares of Class B Common issuable upon such exercise prior to
such adjustment, if any.

                  (c) The provisions and adjustments provided for in this
Section 5 shall apply to successive events or occurrences of the types described
in this Section 5.

                  (d) For the purpose of making any adjustment required under
this Section 5 that requires a determination of the aggregate consideration
received by the Company for any sale, issue or distribution of securities, the
aggregate consideration received by the Company shall equal the sum of: (i) to
the extent it consists of cash, the net amount of cash received by the Company
after deduction of any underwriting or similar commissions, compensation or
concessions paid or allowed by the Company in connection with such issue or sale
but without deduction of any expenses payable by the Company, and (ii) to the
extent it consists of property or assets other than cash, the Fair Market Value
of the property or assets.


                                      18.

            6. FRACTIONAL SHARES. No fractional shares shall be issued upon the
exercise of this Warrant as a consequence of any adjustment pursuant hereto. All
Exercise Shares (including fractions) issuable upon exercise of this Warrant may
be aggregated for purposes of determining whether the exercise would result in
the issuance of any fractional share. If, after aggregation, the exercise would
result in the issuance of a fractional share, the Company shall, in lieu of
issuance of any fractional share, pay the Holder otherwise entitled to such
fraction a sum in cash equal to the product resulting from multiplying such
fractional amount by the Fair Market Value of one share of Class B Common.

            7. REGISTRATION RIGHTS. The Holder shall have the registration
rights with respect to the Class B Common as set forth in that certain
Registration Rights Agreement, dated as of January 18, 2002 (the "REGISTRATION
RIGHTS AGREEMENT") between the Company and                               . To
the extent that this Warrant becomes exercisable for Exercise Shares other
than the Class B Common, the Company agrees to grant the Holder hereof the
same registration rights with respect to such Exercise Shares as are currently
granted to Holder in respect of the Class B Common pursuant to the Registration
Rights Agreement. If permissible under the Securities Act, the Company shall
provide the Holder with the same registration rights with respect to the resale
of the Warrant and the issuance of the Exercise Shares upon exercise of the
Warrant by Holders other than the initial Holder, as are currently granted to
Holder pursuant to the Registration Rights Agreement. In addition, the Company
shall use its best efforts, upon the reasonable request of the Holder, to cause
the Warrant to be listed or quoted on a national securities exchange, the
National Market System or the SmallCap Market.

            8. NO STOCKHOLDER RIGHTS OR LIABILITIES. This Warrant in and of
itself shall not entitle the Holder to any voting rights or other rights as a
stockholder of the Company (subject to the provisions of Section 5 above). No
provision of this Warrant, in the absence of affirmative action by the Holder to
exercise this Warrant in exchange for shares of Class B Common, and no mere
enumeration herein of the rights or privileges of the Holder, shall give rise to
any liability of the Holder for the Exercise Price or as a stockholder of the
Company, whether such liability is asserted by the Company or by creditors of
the Company.

            9. TRANSFER OF WARRANT. Subject to the restriction on transfers set
forth in the legend on the first page of this Warrant and in Section 4.3 and
applicable laws, this Warrant and all rights hereunder, in whole or in part, are
transferable, by the Holder in person or by duly authorized attorney, upon
delivery of this Warrant and the form of assignment attached hereto to any
transferee designated by Holder.

            10. PAYMENT OF TAXES ON STOCK CERTIFICATE ISSUES UPON EXERCISE. The
initial issuance of certificates of Class B Common upon any exercise of this
Warrant shall be made without charge to the exercising Holder for any transfer,
stamp or similar tax or for any other governmental charges that may be imposed
in respect of the issuance of such stock certificates, and such stock
certificates shall be issued in the respective names of, or in such names as may
be directed by, the Holder; provided, however, that the Company shall not be
required to pay any tax or such other charges that may be payable in respect of
any transfer involved in the issuance and delivery of any such stock
certificate, any new Warrants or other securities in a name other than that of
the Holder upon exercise of this Warrant (other than to an


                                      19.

Affiliate), and the Company shall not be required to issue or deliver such
certificates or other securities unless and until the Person or Persons
requesting the issuance thereof shall have paid to the Company the amount of
such tax or shall have established to the satisfaction of the Company that such
tax has been paid.

            11. LOST, STOLEN, MUTILATED OR DESTROYED WARRANT. If this Warrant is
lost, stolen, mutilated or destroyed, the Company may, on such terms as to
indemnity or otherwise as it may reasonably impose (which shall, in the case of
a mutilated Warrant, include the surrender thereof), issue a new Warrant of like
denomination and tenor as this Warrant so lost, stolen, mutilated or destroyed.
Any such new Warrant shall constitute an original contractual obligation of the
Company, whether or not the allegedly lost, stolen, mutilated or destroyed
Warrant shall be at any time enforceable by anyone.

            12. EXCHANGE OF WARRANT; DIVISIBILITY OF WARRANT. Subject to
compliance with Section 4.3 hereof, this Warrant is exchangeable, without charge
to any Holder, upon the surrender hereof by the Holder at the office or agency
of the Company, for one or more new Warrants of the tenor representing in the
aggregate the right to subscribe for and purchase the number of shares of Class
B Common which may be subscribed for and purchased hereunder, each of such new
Warrants to represent the right to subscribe for and purchase such number of
shares as shall be designated by said Holder at the time of such surrender.

            13. CLOSING OF BOOKS. The Company will at no time close its transfer
books against the transfer of any Warrant or of any shares of Class B Common
issued or issuable upon the exercise or conversion of any Warrant in any manner
which interferes with the timely exercise or conversion of this Warrant.

            14. NOTICES, ETC. All notices required or permitted hereunder shall
be in writing and shall be deemed effectively given: (a) upon personal delivery
to the party to be notified, (b) when sent by confirmed telex or facsimile if
sent during normal business hours of the recipient or if not, then on the next
Business Day, (c) five (5) days after having been sent by registered or
certified mail, return receipt requested, postage prepaid, or (d) one (1)
Business Day after deposit with a nationally recognized overnight courier,
specifying next Business Day delivery, with written verification of receipt. All
notices and other communications shall be sent to the Company at the address
listed on the signature page and to Holder at the address set forth below or at
such other address as the Company or Holder may designate by ten (10) days
advance written notice to the other parties hereto:





            with a copy to:




                                      20.

            15.   ACCEPTANCE.  Receipt of this Warrant by the Holder shall
constitute acceptance of and agreement to all of the terms and conditions
contained herein.

            16. BINDING EFFECT ON SUCCESSORS. This Warrant shall be binding upon
any Person succeeding the Company by merger, consolidation or acquisition of all
or substantially all of the Company's assets (to the extent provided in Section
5), and all of the obligations of the Company relating to the Class B Common
issuable upon the exercise or conversion of this Warrant shall survive the
exercise, conversion and termination of this Warrant and all of the covenants
and agreements of the Company shall inure to the benefit of the successors and
assigns of the Holder.

            17.   GOVERNING LAW.  This Warrant and all rights, obligations
and liabilities hereunder shall be governed and construed in accordance with
Federal law, if and to the extent such Federal law is applicable, and
otherwise in accordance with the law of the State of New York.




                                      21.

      IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by
its duly authorized officer as of January 18, 2002.

                                    AMERICA WEST HOLDINGS CORPORATION


                                    By:
                                        ----------------------------------------
                                    Name:
                                          --------------------------------------
                                    Title:
                                           -------------------------------------
                                    Address: 111 West Rio Salado Parkway,
                                             Tempe, Arizona 85281

                               NOTICE OF EXERCISE

TO:  AMERICA WEST HOLDINGS CORPORATION

      (1)  [ ]  The undersigned hereby elects to purchase ________ shares of the
Class B Common of America West Holdings Corporation (the "COMPANY") pursuant to
the terms of the attached Warrant, and tenders herewith or is delivering by wire
transfer to account number __________ at _____________________ (bank) payment of
the exercise price in full.

           [ ]  The undersigned hereby elects to purchase ________ shares of the
Class B Common of America West Holdings Corporation (the "COMPANY") pursuant to
the terms of the net exercise provisions set forth in Section 2.2 of the
attached Warrant.

      (2)  Please issue a certificate or certificates representing said shares
of Class B Common in the name of the undersigned or in such other name as is
specified below:

                           _________________________
                                    (Name)
                           _________________________

                           _________________________
                                   (Address)










________________________            ___________________________________
(Date)                              (Signature)

                                    ___________________________________
                                    (Print name)


                                       1.

                                 ASSIGNMENT FORM


                        (To assign the foregoing Warrant, execute this form and
                        supply required information. Do not use this form to
                        purchase shares.)


      FOR VALUE RECEIVED, the right to purchase _______ shares of Class B Common
pursuant to the foregoing Warrant and all other rights evidenced thereby are
hereby assigned to
Name:
        -----------------------------------------------------------------------
                                 (Please Print)

Address:
          ---------------------------------------------------------------------
                                 (Please Print)

Dated:
       -----------------
Holder's
Signature:
           -------------------------------------
Holder's
Address:
         ---------------------------------------

NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of this Warrant, without alteration or enlargement or any
change whatever. Officers of corporations and those acting in a fiduciary or
other representative capacity should file proper evidence of authority to assign
the foregoing Warrant.

EX-4.20

                                                                    EXHIBIT 4.20


                          REGISTRATION RIGHTS AGREEMENT


                                 BY AND BETWEEN


                        AMERICA WEST HOLDINGS CORPORATION

                             AS THE ISSUER, AND THE


                        WARRANT HOLDER REFERRED TO HEREIN


                    WARRANTS TO PURCHASE CLASS B COMMON STOCK


                          DATED AS OF JANUARY 18, 2002

                          REGISTRATION RIGHTS AGREEMENT

         THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and
entered into as of January 18, 2002 by and between AMERICA WEST HOLDINGS
CORPORATION, a Delaware corporation (the "COMPANY"), and the Warrant Holder (as
hereinafter defined).

         WHEREAS, the Company and the Warrant Holder have entered into certain
agreements; and

         WHEREAS, in order to induce the Warrant Holder to enter into such
agreements with the Company, the Company agreed to issue to the Warrant Holder
the Warrants (as hereinafter defined) and to provide the registration rights set
forth in this Agreement to the Warrant Holder and its direct and indirect
transferees.

         The parties hereby agree as follows:

         SECTION 1.        DEFINITIONS. As used in this Agreement, the following
terms shall have the following meanings:

         AFFILIATE: An affiliate of any specified person shall mean any other
person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified person. For the purposes of this
definition, "control," when used with respect to any person, means the power to
direct the management and policies of such person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise and
the terms "affiliated," "controlling" and "controlled" have meanings correlative
to the foregoing.

         AGREEMENT: This Registration Rights Agreement, as the same may be
amended, supplemented or modified from time to time in accordance with the terms
hereof.

         BUSINESS DAY: Each Monday, Tuesday, Wednesday, Thursday and Friday that
is not a day on which banking institutions in New York, New York are authorized
or obligated by law or executive order to close.

         CLOSING DATE:  January 18, 2002.

         COMMON STOCK: The class B common stock, par value $0.01 per share, of
the Company or shares of any class or classes resulting from any
reclassification or reclassifications thereof and which have no preference in
respect of dividends or of amounts payable in the event of any voluntary or
involuntary liquidation, dissolution or winding up of the Company and which are
not subject to redemption by the Company; provided that if at any time there
shall be more than one such resulting class, the shares of each such class then
so issuable shall be substantially in the proportion which the total number of
shares of such class resulting from all such reclassifications bears to the
total number of shares of all such classes resulting from all such
reclassifications.

         COMPANY: America West Holdings Corporation, a Delaware corporation, and
any successor entity thereto.


                                       1.

         EFFECTIVENESS TARGET DATE: The 240th day after the date of this
Agreement.

         EXCHANGE ACT: The Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated by the SEC thereunder.

         FILING DATE:  The 120th day after the date of this Agreement.

         HOLDER:  Each owner of any Registrable Securities.

         NOTICE AND QUESTIONNAIRE: The form of Notice and Questionnaire attached
hereto as EXHIBIT A, as reasonably amended, supplemented, or otherwise modified
from time to time by the Company upon reasonable notice to the Holders.

         PROSPECTUS: The prospectus included in the Registration Statement
(including, without limitation, a prospectus that discloses information
previously omitted from a prospectus filed in reliance upon Rule 430A), as
amended or supplemented by any prospectus supplement, with respect to the resale
of any of the Registrable Securities covered by such Registration Statement, and
all other amendments and supplements to any such prospectus, including
post-effective amendments, and all materials incorporated by reference or deemed
to be incorporated by reference, if any, in such prospectus.

         REGISTRABLE SECURITIES: The shares of Common Stock issued or issuable
upon exercise of the Warrants (including any shares of Common Stock issued or
issuable thereon upon any stock split, stock combination, stock dividend or the
like or as a result of any anti-dilution adjustments under the Warrants), upon
original issuance thereof and at all times subsequent thereto, and associated
related rights, if any, until the earliest of (i) the date on which the resale
thereof has been effectively registered under the Securities Act and such
securities have been disposed of in accordance with the Registration Statement
relating thereto, (ii) the date on which such securities have been distributed
to the public pursuant to Rule 144 or are saleable pursuant to paragraph (k) of
Rule 144 or (iii) the date on which such securities cease to be outstanding.

         REGISTRATION STATEMENT: Any registration statement of the Company filed
with the SEC pursuant to the Securities Act that covers the resale of the
Registrable Securities pursuant to the provisions of this Agreement, including
the Prospectus, amendments and supplements to such registration statement or
Prospectus (including pre- and post-effective amendments), all exhibits thereto,
and all material incorporated by reference or deemed to be incorporated by
reference, if any, in such registration statement.

         REQUIRED HOLDERS: Holders of more than 50% of the Registrable
Securities. For purposes of the preceding sentence, Registrable Securities
owned, directly or indirectly, by the Company or its Affiliates (other than
persons who are Affiliates solely by virtue of being holders of the Registrable
Securities) shall not be deemed outstanding.

         REQUISITE INFORMATION:  As defined in Section 2(d) hereof.

         RULE 144: Rule 144 promulgated by the SEC pursuant to the Securities
Act, as such rule may be amended from time to time, or any successor rule or
regulation.


                                       2.

         RULE 144A: Rule 144A promulgated by the SEC pursuant to the Securities
Act, as such rule may be amended from time to time, or any successor rule or
regulation.

         RULE 415: Rule 415 promulgated by the SEC pursuant to the Securities
Act, as such rule may be amended from time to time, or any successor rule or
regulation.

         RULE 424: Rule 424 promulgated by the SEC pursuant to the Securities
Act, as such rule may be amended from time to time, or any successor rule or
regulation.

         RULE 430A: Rule 430A promulgated by the SEC pursuant to the Securities
Act, as such rule may be amended from time to time, or any successor rule or
regulation.

         SEC: The Securities and Exchange Commission, or any successor
governmental agency or authority thereto.

         SECURITIES ACT: The Securities Act of 1933, as amended, and the rules
and regulations promulgated by the SEC thereunder.

         TRANSFER AGENT: The registrar and transfer agent for the Company's
Common Stock.

         WARRANTS: The warrants issued to the Air Transportation Stabilization
Board to purchase 18,754,000 shares of Common Stock.

         WARRANT HOLDER: The initial holder of the Warrants set forth on
Schedule I hereto.

         SECTION 2.        REGISTRATION STATEMENT.

                  (a)      REGISTRATION UNDER THE SECURITIES ACT. The Company,
at its own expense, agrees to file with the SEC as soon as reasonably
practicable, but in no event later than the Filing Date, a Registration
Statement for an offering to be made on a continuous basis pursuant to Rule 415
covering all of the Common Stock constituting Registrable Securities. The
Registration Statement shall be on Form S-3 under the Securities Act or another
appropriate form selected by the Company permitting registration of such
Registrable Securities for resale by the Holders in the manner or manners
reasonably designated by such Holders. The Company shall use best efforts to
cause the Registration Statement to be declared effective pursuant to the
Securities Act as soon as reasonably practicable following the filing thereof,
but in no event later than the Effectiveness Target Date, and to keep such
Registration Statement continuously effective under the Securities Act until all
of the securities covered by such Registration Statement cease to be Registrable
Securities.

                  (b)      PIGGYBACK REGISTRATION RIGHTS. The Company shall
afford each Holder of Registrable Securities the opportunity to include such
Registrable Securities in any registration statement filed for purposes of a
public offering of securities of the Company made on a continuous basis pursuant
to Rule 415 (other than registration statements for which the Company has
contractually agreed not to grant such rights), including any registration
statement filed by the Company to register for resale its outstanding 7.5%
Convertible Senior Notes due 2009. Each Holder desiring to include the
Registrable Securities held by it in any such registration statement shall
notify the Company in writing within 15 days after receipt of notice


                                       3.

from the Company of its intent to file such a registration statement. If a
Holder decides not to include all of the Registrable Securities held by it in
any registration statement thereafter filed by the Company, such Holder shall
nevertheless continue to have the right to include any Registrable Securities in
any subsequent registration statement or registration statements (other than
registration statements for which the Company has contractually agreed not to
grant such rights) as may be filed by the Company with respect to offerings of
its securities made on a continuous basis pursuant to Rule 415, all upon the
terms and conditions set forth herein.

                  (c)      SUPPLEMENTS AND AMENDMENTS. The Company shall use
best efforts to keep any Registration Statement continuously effective by
supplementing and amending such Registration Statement if so required by the
rules, regulations or instructions applicable to the registration form used for
such Registration Statement, if required by the Securities Act or if reasonably
requested by the Required Holders or by any underwriter of such Registrable
Securities. If the Registration Statement under Section 2(a) ceases to be
available for use by the Holders because the Company no longer qualifies to use
such form of registration statement, the Company shall be required to file, as
promptly as reasonably practicable, a new Registration Statement on an
appropriate form and its obligations hereunder shall continue to apply in all
respects.

                  (d)      SELLING SECURITYHOLDER INFORMATION. Each Holder
wishing to sell Registrable Securities pursuant to a Registration Statement and
related Prospectus agrees to deliver a Notice and Questionnaire, in a timely
manner, that confirms such Holder's agreement to be bound by the terms of this
Agreement and includes such information regarding it and the distribution of its
Registrable Securities as is required by law to be disclosed by the Holder in
the Registration Statement (the "Requisite Information") to the Company prior to
any intended distribution of Registrable Securities under the Registration
Statement. The Company shall not be required to include in the Registration
Statement and related Prospectus the Registrable Securities of any Holder that
does not provide the Company with a Notice and Questionnaire in accordance with
this Section 2(d). If such completed Notice and Questionnaire is received by the
Company before 10 days prior to the effective date of a Registration Statement,
such Holder shall be entitled to have its Registrable Securities included in
such Registration Statement at the effective date thereof. If such completed
Notice and Questionnaire is received thereafter, the Company will use best
efforts to include such Holder's Registrable Securities as promptly as
reasonably practicable thereafter, subject to the last two sentences of the next
paragraph.

Subject to the last two sentences of this paragraph, the Company shall use best
efforts to file, as soon as practicable after the receipt of a Notice and
Questionnaire from any Holder that includes the Requisite Information or any
changes in the Requisite Information with respect to such Holder (including,
without limitation, any changes in the plan of distribution), a Prospectus
supplement pursuant to Rule 424 or otherwise amend or supplement such
Registration Statement to include in the Prospectus the Requisite Information as
to such Holder (and the Registrable Securities held by such Holder), and the
Company shall provide such Holder a copy of such Prospectus as so amended or
supplemented containing the Requisite Information in order to permit such Holder
to comply with the Prospectus delivery requirements of the Securities Act in a
timely manner with respect to any proposed disposition of such Holder's
Registrable Securities and to file the same with the SEC. Each Holder requesting
registration hereunder shall promptly notify the Company of any material changes
to the Requisite Information contained in the Notice


                                       4.

and Questionnaire provided to the Company by such Holder. Notwithstanding the
foregoing, following the effective date of any Registration Statement, the
Company shall not be required to file more than one such supplement or
post-effective amendment to reflect changes in the amount of Common Stock
constituting Registrable Securities held by any particular Holder at the request
of such Holder in any 30-day period. The Company may take reasonable steps to
aggregate the addition of Registrable Securities of more than one Holder for
purposes of filing amendments to any Registration Statement or supplements to
the Prospectus so as to reduce the need for multiple amendments or supplements;
provided that the Company shall not use this sentence to delay the filing of any
amendment or supplement beyond any such 30-day period.

                  (e)      MATERIAL EVENTS; SUSPENSION OF SALES. Notwithstanding
the provisions contained in this Section 2, with respect to any Registration
Statement, the Company may (for a period not to exceed 60 consecutive days, and
not in any event to exceed 90 days in the aggregate during any 12 month period)
suspend use of such Registration Statement at any time if (and for so long as)
the continued effectiveness thereof would require the Company to disclose a
material financing, acquisition, other transaction or other material non-public
information, which disclosure the Board of Directors of the Company shall have
determined in good faith is not in the best interests of the Company and the
Company's stockholders. The Company shall notify each registered Holder, the
Transfer Agent and the managing underwriters, if any, that the use of the
Prospectus is to be suspended until the Company shall deliver a written notice
that the use of the Prospectus may be resumed. During such suspension, the use
of the Prospectus shall be suspended, and the Company shall not be required to
maintain the effectiveness of, or amend or update the Registration Statement, or
amend or supplement the Prospectus.

                  (f)      ADDITIONAL AGREEMENTS OF HOLDERS. Each Holder agrees
not to dispose of Registrable Securities pursuant to any Registration Statement
without complying with the prospectus delivery requirements under the Securities
Act and the provisions of paragraph (e) above regarding use of the Prospectus.
Each Holder further agrees that it will comply fully with applicable federal and
state securities laws in connection with the distribution of any Registrable
Securities pursuant to the Registration Statement. Each Holder further
acknowledges having been advised by the Company that applicable federal
securities laws prohibit Holders from trading in securities of the Company at
any time while in possession of material non-public information about the
Company.

         SECTION 3.        REGISTRATION PROCEDURES. In connection with the
Company's registration obligations hereunder, the Company shall effect such
registrations on the appropriate form selected by the Company to permit the
resale of Registrable Securities in accordance with the Holder's intended method
or methods of disposition thereof, and pursuant thereto the Company shall as
expeditiously as reasonably possible:

                  (a)      Furnish to the Holders and the managing underwriters,
if any, copies of all such documents proposed to be filed (excluding, unless
requested, those documents incorporated or deemed to be incorporated by
reference and then only to the Holder who so requested) and use its commercially
reasonable efforts to reflect in each such document, when so filed with the SEC,
such comments as the Holders may reasonably propose. The Company shall not file
any such Registration Statement or related Prospectus or any amendments or
supplements thereto (excluding any document that would be incorporated or deemed
incorporated by reference) to


                                       5.

which the Holder or the managing underwriters, if any, shall reasonably object
in writing (by hand-delivery, courier guaranteeing overnight delivery or
telecopy) within five Business Days after the receipt of such documents.
Notwithstanding the foregoing, the Company shall not be required to furnish to
the Holders or the managing underwriters, if any, any amendments or supplements
to the Registration Statement or Prospectus filed solely to reflect changes to
the amount of Common Stock constituting Registrable Securities held by any
particular Holder or immaterial revisions to the information contained therein.

                  (b)      Prepare and file with the SEC such amendments,
including post-effective amendments, to the Registration Statement as may be
necessary to keep such Registration Statement continuously effective for the
applicable time period set forth in Section 2(a) hereof; cause the related
Prospectus to be supplemented by any required Prospectus supplement, and as so
supplemented to be filed pursuant to Rule 424 (or any similar provisions then in
force) under the Securities Act; and comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
Registration Statement and Prospectus during such period in accordance with the
intended method or methods of disposition by the Holder set forth in such
Registration Statement as so amended or in such Prospectus as so supplemented
including, without limitation, the filing of any Prospectus supplement pursuant
to Rule 424 in order to add or change any selling security holder information
(including any such supplements or amendments pursuant to Section 2(d) hereof,
provided such Holder to which such change applies complies with the Requisite
Information requirements of Section 2(d) hereof in a timely manner).

                  (c)      Notify the Holders and the managing underwriters, if
any, promptly and, if requested by any such person, confirm such notice in
writing:

                  (i)      (A) when a Prospectus or any Prospectus supplement or
post-effective amendment is proposed to be filed and (B) with respect to a
Registration Statement or any post-effective amendment, when the same has become
effective;

                  (ii)     of any written comments from the SEC with respect to
any filing and of any request by the SEC or any other Federal or state
governmental authority for amendments or supplements to such Registration
Statement or related Prospectus or for additional information related thereto;

                  (iii)    of the issuance by the SEC, any state securities
commission, any other governmental agency or any court of any stop order, order
or injunction suspending or enjoining the use or effectiveness of the
Registration Statement or the initiation of any proceedings for that purpose;

                  (iv)     of the receipt by the Company of any notification
with respect to the suspension of qualification or exemption from qualification
of any of the Registrable Securities for sale in any jurisdiction, or the
initiation or threatening of any proceeding for such purpose;

                  (v)      of the existence of any fact or the happening of any
event that makes any statement of material fact made in such Registration
Statement or related Prospectus


                                       6.

untrue in any material respect, or that requires the making of any changes in
such Registration Statement or Prospectus so that, in the case of the
Registration Statement, it will not 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 not misleading and that, in the case of
the Prospectus, such Prospectus will not 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

                  (vi)     of the determination by the Company that a post
effective amendment to the Registration Statement will be filed with the SEC.

         (d)      Use commercially reasonable efforts to obtain the withdrawal
of any stop order or order enjoining or suspending the use or effectiveness of a
Registration Statement or the lifting of any suspension of the qualification (or
exemption from qualification) of any of the Registrable Securities for sale in
any jurisdiction, at the earliest practicable moment.

         (e)      If reasonably requested by the Required Holders, or managing
underwriters, if any, to:

                  (i)      promptly include in a Prospectus supplement or
post-effective amendment such information as the Required Holders or managing
underwriters, if any, may reasonably request to be included therein; and

                  (ii)     make all required filings of such Prospectus
supplement or such post-effective amendment as soon as reasonably practicable
after the Company has received notification of the matters to be included in
such Prospectus supplement or post-effective amendment.

         (f)      Furnish to each Holder who so requests, and each managing
underwriter, if any, without charge, at least one copy of the Registration
Statement and each amendment thereto (but excluding schedules, all documents
incorporated or deemed to be incorporated therein by reference and all exhibits,
unless requested in writing by such Holder or any managing underwriter and then
only to the person who so requested).

         (g)      Deliver to each Holder and the underwriters, if any, without
charge, as many copies of the Prospectus or Prospectuses (including each form of
Prospectus) and each amendment or supplement thereto as such persons may
reasonably request; and, unless the Company shall have given notice to such
Holder or underwriter pursuant to Section 2(e), the Company hereby consents to
the use of such Prospectus, and each amendment or supplement thereto, by each of
the selling Holders of Registrable Securities and the underwriters, if any, in
connection with the offering and sale of the Registrable Securities covered by
such Prospectus and any amendment or supplement thereto.

         (h)      Prior to any public offering of Registrable Securities, use
all reasonable efforts to register or qualify, or cooperate with the Holders of
Registrable Securities to be sold or tendered or the underwriters, if any, and
their respective counsel in connection with the registration or qualification
(or exemption from such registration or qualification) of such Registrable
Securities for offer and sale under the securities or Blue Sky laws of such


                                       7.

jurisdictions within the United States as any Holder or underwriter reasonably
requests in writing, keep each such registration or qualification (or exemption
therefrom) effective during the period the Registration Statement is required to
be kept effective and do any and all other acts or things legally necessary to
enable the disposition in such jurisdictions of the Registrable Securities
covered by the Registration Statement; provided, however, that the Company shall
not be required to qualify generally to do business in any jurisdiction where it
is not then so qualified, take any action that would subject it to general
service of process in any such jurisdiction where it is not then so subject or
subject the Company to any tax in any such jurisdiction where it is not then so
subject.

         (i)      In connection with any sale or transfer of Registrable
Securities that will result in such securities no longer being Registrable
Securities, cooperate with the Holders and the managing underwriters, if any, to
(i) facilitate the timely preparation and delivery of certificates representing
Registrable Securities to be sold, which certificates shall not bear any
restrictive legends, unless required by applicable securities laws and (ii)
enable such Registrable Securities to be in such denominations and registered in
such names as the managing underwriters, if any, or Holders may reasonably
request at least two Business Days prior to any sale of Registrable Securities.

         (j)      Use best efforts to cause the offering of the Registrable
Securities covered by the Registration Statement to be registered with or
approved by such other governmental agencies or authorities within the United
States as may be necessary to enable the Holder or managing underwriter, if any,
to consummate the disposition of such Registrable Securities; provided, however,
that the Company shall not be required to register the Registrable Securities in
any jurisdiction that would require the Company to qualify to do business in any
jurisdiction where it is not then so qualified, subject it to general service of
process in any such jurisdiction where it is not then so subject or subject the
Company to any tax in any such jurisdiction where it is not then so subject.

         (k)      Upon the occurrence of any event contemplated by Section
3(c)(v) hereof, as promptly as reasonably practicable (subject to any suspension
of sales pursuant to Section 2(e) hereof), prepare a supplement or amendment,
including, if appropriate, a post-effective amendment, to the Registration
Statement or a supplement to the related Prospectus or any document incorporated
or deemed to be incorporated therein by reference, and file any other required
document so that, as thereafter delivered, such Prospectus will not contain an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading (except, upon
occurrence of an event contemplated by paragraph (v) of Section 3(c) above, to
the extent that the Company determines in good faith that the disclosure of such
event at such time would not be in the best interests of the Company and the
Company's stockholders provided that any such delay in disclosure pursuant to
this Section 3(k) shall be considered a suspension of the Registration Statement
subject to the limitation in Section 2(e)).

         (l)      Subject to the provisions of Section 7, enter into such
agreements (including any underwriting agreements in form, scope and substance
as may be reasonably requested and as are customary in underwritten offerings)
and take all such other appropriate actions in connection therewith (including
those reasonably requested by the managing


                                       8.

underwriters, if any, or the Holders of a majority in interest of the
Registrable Securities being sold) in order to expedite or facilitate the sale
of such Registrable Securities. In connection with any underwritten offering,
the Company will:

                  (i)      make such representations and warranties to the
Holders of such Registrable Securities and the underwriters, if any, with
respect to the business of the Company and its subsidiaries (including with
respect to businesses or assets acquired or to be acquired by any of them), and
the Registration Statement, Prospectus and documents, if any, incorporated or
deemed to be incorporated by reference therein, in each case, in form, substance
and scope as are customarily made by issuers to underwriters in underwritten
offerings, and confirm the same if and when requested;

                  (ii)     obtain, as may reasonably be required, opinions of
counsel to the Company (which may include in-house counsel) and updates thereof
(which counsel and opinions (in form, scope and substance) shall be reasonably
satisfactory to the managing underwriters, if any, addressed to each selling
Holder of Registrable Securities and each of the underwriters, if any, covering
the matters customarily covered in opinions requested in underwritten offerings
(including any such matters as may be reasonably requested by such
underwriters));

                  (iii)    obtain, as may reasonably be required, customary
"cold comfort" letters and updates thereof from the independent certified public
accountants of the Company (and, if necessary, any other independent certified
public accountants of any subsidiary of the Company or of any business acquired
by the Company for which financial statements and financial data are, or are
required to be, included in the Registration Statement), addressed (where
reasonably possible) to each selling Holder of Registrable Securities and each
of the underwriters, if any, such letters to be in customary form and covering
matters of the type customarily covered in "cold comfort" letters in connection
with underwritten offerings; and

                  (iv)     deliver such documents and certificates as may be
reasonably requested by the Holders of majority in interest of the Registrable
Securities being sold or the managing underwriters, if any, to evidence the
continued validity of the representations and warranties made pursuant to clause
(i) of this Section 3(l) and to evidence compliance with any customary
conditions contained in the underwriting agreement or other agreement entered
into by the Company;

         (m)      Make available for inspection by a representative of the
Holders of Registrable Securities being sold, any underwriter participating in
any such disposition of Registrable Securities, if any, and any attorney,
consultant or accountant retained by such selling Holders or underwriter, at the
offices where normally kept, during reasonable business hours, all financial and
other records, pertinent corporate documents and properties of the Company and
its subsidiaries (other than records and documents that the Company and its
subsidiaries agreed contractually not to disclose and the disclosure of which
would violate such contractual arrangement) as they may reasonably request, and
cause the officers, directors, agents and employees of the Company and its
subsidiaries to supply all information (other than information that the Company
and its subsidiaries agreed contractually not to disclose and the disclosure of
which would violate such contractual arrangement) in each case reasonably
requested by any


                                       9.

such representative, underwriter, attorney, consultant or accountant in
connection with such Registration Statement and as shall be reasonably necessary
to enable such persons to conduct a reasonable investigation within the meaning
of Section 11 of the Securities Act; provided, however, that the foregoing
inspection and information gathering shall be coordinated on behalf of the
Holders and the other parties thereto by one counsel designated by and on behalf
of such Holders and other parties and provided further, that such persons shall
first agree in writing with the Company that any information that is reasonably
and in good faith designated by the Company as confidential at the time of
delivery or inspection (as the case may be) of such information shall be kept
confidential by such persons, unless (i) disclosure of such information is
required by court or administrative order or is necessary to respond to
inquiries of regulatory authorities; (ii) disclosure of such information is
required by law (including any disclosure requirements pursuant to Federal
securities laws in connection with the filing of any Registration Statement or
the use of any Prospectus); (iii) such information becomes generally available
to the public other than as a result of a disclosure or failure to safeguard by
any such person; or (iv) such information becomes available to any such person
from a source other than the Company and such source is not known to be bound by
a confidentiality agreement.

         (n)      (i) list all shares of Common Stock covered by any
Registration Statements on any securities exchange on which the Common Stock is
then listed; or (ii) authorize for quotation on the National Market of the
National Association of Securities Dealers Automated Quotation System ("Nasdaq")
all Common Stock covered by all such Registration Statements if the Common Stock
is then so authorized for quotation.

         (o)      Make all reasonable efforts to provide such information as is
required for any filings required to be made with the National Association of
Securities Dealers, Inc. ("NASD").

         SECTION 4.        REGISTRATION EXPENSES. All fees and expenses incident
to the performance of or compliance with this Agreement by the Company shall be
borne by it whether or not any Registration Statement is filed or becomes
effective. The fees and expenses referred to in the foregoing sentence shall
include:

         (a)      all registration, filing, securities exchange listing, rating
agency and New York Stock Exchange fees and expenses;

         (b)      printing expenses (including, without limitation, printing
Prospectuses if the printing of Prospectuses is required by the managing
underwriters, if any, or by the Holders of a majority in interest of the
Registrable Securities);

         (c)      messenger, copying, telephone and delivery expenses;

         (d)      reasonable fees and disbursements of counsel for the Company;

         (e)      fees and disbursements of all independent certified public
accountants referred to in Section 3(l)(iii) including, without limitation, the
expenses of any special audits or "cold comfort" letters required by Section
3(l)(iii);

         (f)      fees and expenses of all other persons retained by the
Company;


                                      10.

         (g)      all registration, filing, qualification and other fees and
expenses of complying with securities or blue sky laws of all jurisdictions in
which the Registrable Securities are to be registered and any legal fees and
expenses incurred in connection with the blue sky qualifications of the
Registrable Securities and the determination of their eligibility for investment
under the laws of all such jurisdictions; and

         (h)      the reasonable fees and disbursements incurred by the Holders
of the Registrable Securities being registered (including, without limitation,
the reasonable fees and disbursements for one counsel or firm of counsel
selected by the Holders of a majority in interest of the Registrable Securities
being registered).

Notwithstanding anything in this Agreement to the contrary, the Holders shall be
responsible for all expenses customarily borne by selling securityholders
(including underwriting discounts, commissions and fees and expenses of counsel
to the selling Holders to the extent not required to be paid pursuant to clause
(h) above).

         SECTION 5.        INDEMNIFICATION.

                  (a)      The Company agrees to indemnify and hold harmless
each Holder of Registrable Securities, such Holder's affiliates, and their
respective officers, directors, employees, representatives and agents, and each
person, if any, who controls any Holder of Registrable Securities within the
meaning of either Section 15 of the Securities Act or Section 20 of the Exchange
Act, or is under common control with, or is controlled by, any Holder, against
any and all loss, liability, claim or damage arising out of any untrue statement
or alleged untrue statement of a material fact contained in the Registration
Statement or the Prospectus (or any amendment or supplement thereto), or the
omission or alleged omission to state therein any material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided, however,
that this indemnity agreement shall not apply to any loss, liability, claim or
damage arising out of any untrue statement or omission or alleged untrue
statement or omission made in reliance upon and in conformity with written
information furnished to the Company by or on behalf of such Holder of
Registrable Securities (which also acknowledges the indemnity provisions herein)
or any person, if any, who controls any such Holder of Registrable Securities
expressly for use in the Registration Statement (or any amendment thereto), or
any preliminary prospectus or the Prospectus (or any amendment or supplement
thereto); provided, further, that this indemnity agreement shall not apply to
any loss, liability, claim or damage (i) arising from an offer or sale of
Registrable Securities occurring during any suspension of sales pursuant to
Section 2(e) (provided that the Company has given to the Holder notice of such
suspension prior to such offer or sale), or (ii) if the Holder fails to deliver
at or prior to the written confirmation of sale, the most recent Prospectus, as
amended or supplemented, and such Prospectus, as amended or supplemented, would
have corrected such untrue statement or omission or alleged untrue statement or
omission of a material fact (provided that the Company has delivered to such
Holder, or otherwise given notice to such Holder of the existence of, such most
recent Prospectus, as supplemented or amended). Any amounts advanced by the
Company to an indemnified party pursuant to this Agreement shall be returned to
the Company if it shall be finally determined in a judgment by a court of
competent jurisdiction not subject to appeal, that such indemnified party was
not entitled to indemnification.


                                      11.

                  (b)      In connection with the preparation of the
Registration Statement in which a Holder of Registrable Securities is
participating in furnishing information relating to such Holder of Registrable
Securities to the Company for use in such Registration Statement, any
preliminary prospectus, the Prospectus or any amendments or supplements thereto,
each such Holder agrees, severally and not jointly, to indemnify and hold
harmless any other Holders of Registrable Securities, the Company, its
affiliates and their respective officers, directors, employees, representatives
and agents, and each person, if any, who controls such other Holders or the
Company within the meaning of either such Section, against any and all loss,
liability, claim or damage described in the indemnity contained in subsection
(a) of this Section, as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, made in the Registration
Statement (or any amendment thereto), or any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto) in reliance upon and in
conformity with written information furnished to the Company by or on behalf of
such Holder of Registrable Securities (which also acknowledges the indemnity
provisions herein) or any person, if any, who controls any such Holder of
Registrable Securities expressly for use in the Registration Statement (or any
amendment thereto) or such preliminary prospectus or the Prospectus (or any
amendment or supplement thereto).

                  (c)      Each indemnified party shall give notice as promptly
as reasonably practicable to each indemnifying party of any action commenced
against it in respect of which indemnity may be sought hereunder, but failure to
so notify an indemnifying party shall not relieve such indemnifying party from
any liability hereunder to the extent it is not materially prejudiced as a
result thereof and in any event shall not relieve it from any liability which it
may have otherwise than on account of this indemnity agreement. The indemnifying
party, upon request of the indemnified party, shall retain counsel reasonably
satisfactory to the indemnified party to represent the indemnified party and any
others the indemnifying party may designate in such proceeding and shall pay the
reasonable fees and disbursements of such counsel related to such proceeding. In
any such proceeding, any indemnified party shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in respect of the legal expenses of any indemnified party in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for (a) the fees and expenses of more than one separate firm (in
addition to any local counsel), for the Holders of Registrable Securities, and
all persons, if any, who control the Holders of Registrable Securities within
the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act, collectively (unless representation of all Holders and such
parties by the same counsel would be inappropriate due to actual or potential
differing interests between or among them), and (b) the fees and expenses of
more than one separate firm (in addition to any local counsel), for the Company
and each person, if any, who controls the Company within the meaning of either
such Section, and that all fees and expenses payable under (a) and (b) above
shall be reimbursed as they are incurred. In the case of any such separate firm
for the Holders of Registrable Securities, and control persons of the Holders of
Registrable Securities, such firm shall be designated by the Holders of a
majority in interest of the Registrable Securities and shall be reasonably
acceptable to the Company. In


                                      12.

the case of any such separate firm for the Company and control persons of the
Company, such firm shall be reasonably acceptable to the Holders of a majority
in interest of the Registrable Securities. The indemnifying party shall not be
liable for any settlement of any proceeding effected without its written consent
(which consent shall not be unreasonably withheld or delayed), but if settled
with such consent or if there be a final non-appealable judgment for the
plaintiff, the indemnifying party agrees to indemnify the indemnified party from
and against any loss or liability by reason of such settlement or judgment. No
indemnifying party shall, without the prior written consent of the indemnified
parties (which consent shall not be unreasonably withheld or delayed), settle or
compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section 5 (whether or
not the indemnified parties are actual or potential parties thereto), unless
such settlement, compromise or consent (i) includes an unconditional release of
each indemnified party from all liability arising out of such litigation,
investigation, proceeding or claim and (ii) does not include a statement as to
or an admission of fault, culpability or a failure to act by or on behalf of any
indemnified party. No indemnified party shall, without the prior written consent
of the indemnifying party, settle or compromise or consent to the entry of any
judgment with respect to any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever in respect of which indemnification or contribution could be sought
under this Section 5 (whether or not the indemnified parties are actual or
potential parties thereto).

                  (d)      If the indemnification to which an indemnified party
is entitled under this Section 5 is for any reason unavailable to or
insufficient although applicable in accordance with its terms to hold harmless
an indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, in such proportion as is
appropriate to reflect the relative fault of the indemnifying party or parties
on the one hand and of the indemnified party on the other hand in connection
with the statements or omissions which resulted in such losses, liabilities,
claims, damages or expenses, as well as any other relevant equitable
considerations.

         The relative fault of the Company on the one hand and the Holders of
the Registrable Securities on the other hand shall be determined by reference
to, among other things, whether any such untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied by the Company or by the Holder of the Registrable
Securities and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.

         The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 5(d) were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to above in this Section 5(d). The
aggregate amount of losses, liabilities, claims, damages, and expenses incurred
by an indemnified party and referred to above in this Section 5(d) shall be
deemed to include any out-of-pocket legal or other expenses reasonably incurred
by such indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any


                                      13.

governmental agency or body, commenced or threatened, or any claim whatsoever
based upon any such untrue or alleged untrue statement or omission or alleged
omission.

         Notwithstanding the provisions of this Section 5, no Holder shall be
required to indemnify or contribute any amount in excess of the amount by which
the total price at which Registrable Securities were sold by such Holder exceeds
the amount of any damages that such Holder has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission to alleged
omission.

         No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.

         The remedies provided in this Section 5 are not exclusive and shall not
limit any rights or remedies which may otherwise be available to any indemnified
party at law or in equity.

         For purposes of this Section 5(d), each person, if any, who controls
any Holder of Registrable Securities within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act shall have the same rights to
contribution as such Holder, and each person, if any, who controls the Company
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act shall have the same rights to contribution as the Company. No party
shall be liable for contribution with respect to any action, suit, proceeding or
claim settled, compromised, or with respect to which the party requesting
contribution consented to the entry of a judgment, without such party's written
consent, which consent shall not be unreasonably withheld or delayed.

                  (e)      The Company may require as a condition to including
the Registrable Securities in the Registration Statement, and to entering into
any underwriting agreement with respect thereto, that the Company shall have
received an undertaking from the Holder and such underwriter to comply with the
provisions of this Section 5.

                  (f)      The agreements contained in this Section 5 shall
survive the transfer or sale of the Registrable Securities and shall remain in
full force and effect, regardless of any termination or cancellation of this
Agreement or any investigation made by or on behalf of any indemnified party.

         SECTION 6.        INFORMATION REQUIREMENTS.

                  (a)      The Company agrees that, if at any time until the
Registrable Securities cease to be Registrable Securities the Company is not
subject to the reporting requirements of the Exchange Act, it will cooperate
with any Holder of Registrable Securities and use reasonable efforts to take
such further reasonable action as any Holder of Registrable Securities may
reasonably request in writing to enable such Holder to sell Registrable
Securities without registration under the Securities Act within the limitation
of the exemptions provided by Rule 144 and Rule 144A under the Securities Act
(or any similar rule or regulation hereafter adopted by the SEC) and customarily
taken in connection with sales pursuant to such exemptions, including, without
limitation, making available adequate current public information within the
meaning of paragraph (c)(2) of Rule 144 and delivering the information required
by paragraph


                                      14.

(d) of Rule 144A. Notwithstanding the foregoing, nothing in this Section 6 shall
be deemed to require the Company to register any of its securities under any
section of the Exchange Act.

                  (b)      The Company shall file reports required to be filed
by it under the Exchange Act and the New York Stock Exchange or any other
securities exchanges on which the Common Stock is listed.

         SECTION 7.        UNDERWRITTEN REGISTRATION. The Required Holders may
elect to sell any Registrable Securities in an underwritten offering; provided
that (a) the investment banker or investment bankers and manager or managers
that will administer the offering will be investment bankers of recognized
national standing selected by the Required Holders, subject to the consent of
the Company (which will not be unreasonably withheld or delayed); and (b) the
Company shall not be required to agree to more than one (1) underwritten
offering per year and five (5) underwritten offerings in the aggregate (it being
understood that any underwritten offering commenced but not completed due to a
suspension of sales by the Company pursuant to Section 2(e) hereof shall not be
counted towards such limits on underwritten offerings). No person may
participate in any underwritten registration hereunder unless such person (i)
agrees to sell such person's Registrable Securities on the basis reasonably
provided in any underwriting arrangements approved by the Required Holders; and
(ii) completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements, lock-up agreements and other documents reasonably
required under the terms of such underwriting arrangements. Notwithstanding any
other provision of this Agreement, if the underwriter determines in good faith
that marketing factors require a limitation of the number of shares to be
underwritten, the number of shares that may be included in the underwriting
shall be allocated on a pro rata basis.

         SECTION 8.        MISCELLANEOUS.

                  (a)      OTHER REGISTRATION RIGHTS. The Company may in the
future grant registration rights that would permit any person that is a third
party the right to piggy-back on the Registration Statement; provided, however,
that if the managing underwriter, if any, of such offering notifies the Holders
that the total amount of Registrable Securities which they and the holders of
such piggy-back rights intend to include in the Registration Statement is so
large as to materially adversely affect the success of such offering (including
the price at which such securities can be sold), then only the amount, the
number or kind of securities offered for the account of holders of such
piggy-back rights will be reduced to the extent necessary to reduce the total
amount of securities to be included in such offering to the amount, number or
kind recommended by the managing underwriter and the amount of Registrable
Securities to be included shall not be reduced.

                  (b)      NO INCONSISTENT AGREEMENTS. The Company has not
entered and shall not enter into any agreement that is inconsistent with the
rights granted to the Holders in this Agreement or otherwise conflicts with the
provisions hereof. The rights granted to the Holders hereunder do not in any way
conflict with and are not inconsistent with the rights granted to the holders of
the Company's other issued and outstanding securities under any such agreements.

                  (c)      NO ADVERSE ACTION AFFECTING THE REGISTRABLE
SECURITIES. The Company will not take any action with respect to the Registrable
Securities which would adversely affect


                                      15.

the ability of any of the Holders to include such Registrable Securities in a
registration undertaken pursuant to this Agreement.

                  (d)      AMENDMENTS AND WAIVERS. The provisions of this
Agreement, including the provisions of this sentence, may not be amended,
modified or supplemented, and waivers or consents to departures from the
provisions hereof, may not be given, without the written consent of the Company
and the Required Holders; provided, further, that any amendment, modification,
supplement, waiver or consent that would disproportionately affect the rights of
any Holder (as compared to the other Holders) shall not be effective against
such Holder without such Holder's written consent. Notwithstanding the
foregoing, a waiver or consent to depart from the provisions hereof with respect
to a matter that relates exclusively to the rights of Holders whose Registrable
Securities are being sold pursuant to the Registration Statement and that does
not directly or indirectly affect the rights of other Holders may be given by
Holders of a majority in interest of the Registrable Securities being sold by
such Holders pursuant to such Registration Statement, provided, however, that
the provisions of this sentence may not be amended, modified, or supplemented
except in accordance with the provisions of the immediately preceding sentence.
Each Holder of Registrable Securities outstanding at the time of any such
amendment, modification, supplement, waiver or consent or thereafter shall be
bound by any such amendment, modification, supplement, waiver or consent
effected pursuant to this Section 8(d), whether or not any notice, writing or
marking indicating such amendment, modification, supplement, waiver or consent
appears on the Registrable Securities or is delivered to such Holder.

                  (e)      NOTICES. All notices and other communications
provided for herein or permitted hereunder shall be made in writing by
hand-delivery, courier guaranteeing overnight delivery, certified first-class
mail, return receipt requested, or telecopy and shall be deemed given (i) when
made, if made by hand delivery, (ii) upon confirmation, if made by telecopier,
(iii) one Business Day after being deposited with such courier, if made by
overnight courier or (iv) on the date indicated on the notice of receipt, if
made by first-class mail, to the parties as follows:

                           (i)      if to a Holder, to the address of such
Holder as it appears in the Notice and Questionnaire, or, if not so specified,
in the Common Stock or Warrants register of the Company, as applicable. Failure
to mail a notice or communication to a Holder or any defect in such notice or
communication shall not affect its sufficiency with respect to other Holders.

                           (ii)     if to the Company to:

                                    AMERICA WEST HOLDINGS CORPORATION

                                    111 West Rio Salado Parkway
                                    Tempe, AZ 85281
                                    Telephone No.  (480) 693-0800
                                    Facsimile No.  (480) 693-5932
                                    Attention:  Executive Vice President -
                                                Corporate With a copy to:

                                    COOLEY GODWARD LLP
                                    One Maritime Plaza, 20th Floor


                                      16.

                                    San Francisco, CA 94111
                                    Telephone No. (415) 693-2000
                                    Facsimile No. (415) 951-3699
                                    Attention:  Samuel M. Livermore

                           (iii)    If to a Warrant Holder, to the address of
such Warrant Holder set forth on Schedule I.

                  (f)      SUCCESSORS AND ASSIGNS. This Agreement shall inure to
the benefit of and be binding upon the successors and permitted assigns of each
of the parties and shall inure to the benefit of each existing and future
Holder. The Company may not assign its rights or obligations hereunder without
the prior written consent of the Holders of a majority in interest of the
Registrable Securities, other than by operation of law pursuant to a merger or
consolidation to which the Company is a party.

                  (g)      COUNTERPARTS. This Agreement may be executed in any
number of counterparts by the parties hereto, each of which when so executed
shall be deemed to be an original and all of which taken together shall
constitute one and the same instrument.

                  (h)      GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH FEDERAL LAW, IF AND TO THE EXTENT SUCH FEDERAL
LAW IS APPLICABLE, AND OTHERWISE THE LAW OF THE STATE OF NEW YORK, AS APPLIED TO
CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW.

                  (i)      SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their best efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction, it being intended that all of the
rights and privileges of the parties shall be enforceable to the fullest extent
permitted by law.

                  (j)      HEADINGS. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof. All references made in this Agreement to "Section" and
"paragraph" refer to such Section or paragraph of this Agreement, unless
expressly stated otherwise.

                  (k)      ENTIRE AGREEMENT. This Agreement is intended by the
parties as a final expression of their agreement and is intended to be a
complete and exclusive statement of the agreement and understanding of the
parties hereto in respect of the subject matter contained herein and the
registration rights granted by the Company with respect to the Registrable
Securities. There are no restrictions, promises, warranties or undertakings,
other than those set forth or referred to herein, with respect to the
registration rights granted by the Company with respect to the Registrable
Securities. This Agreement supersedes all prior agreements and undertakings
among the parties solely with respect to such registration rights.


                                      17.

                  (l)      TERMINATION. This Agreement and the obligations of
the parties hereunder shall terminate when all of the securities issued or
issuable upon exercise of the Warrants cease to be Registrable Securities,
except for any liabilities or obligations under Sections 4 or 5 hereof.

                  (m)      SPECIFIC PERFORMANCE. The parties agree that, to the
extent permitted by law, (i) the obligations imposed on them in this Agreement
are special, unique and of an extraordinary character, and that in the event of
a breach by any such party damages would not be an adequate remedy; and (ii)
each of the other parties shall be entitled to specific performance and
injunctive and other equitable relief in addition to any other remedy to which
it may be entitled at law or in equity.


                                      18.

         IN WITNESS WHEREOF, the parties have caused this Registration Rights
Agreement to be duly executed as of the date first written above.

                                               AMERICA WEST HOLDINGS CORPORATION

                                               By: /s/ Douglas Parker
                                                  ------------------------------
                                                   Name: W. Douglas Parker
                                                   Title: President and Chief
                                                          Executive Officer






                                      19.

WARRANT HOLDER:



The Air Transportation Stabilization Board

By: /s/ Joseph P. Adams
   --------------------------------------------------
   Name: Joseph P. Adams
   Title: Executive Director












                                      20.

                                   SCHEDULE I

                           Schedule of Warrant Holder

AIR TRANSPORTATION STABILIZATION
BOARD
1120 Vermont Avenue, Suite 970
Washington, DC  20005
Attention: Executive Director

WITH A COPY TO

United States Department of the Treasury
1500 Pennsylvania Avenue, N.W.
Washington, D.C.  20220
     Attn:  Deputy Assistant Secretary
     (Government Financial Policy


                                    EXHIBIT A

                        AMERICA WEST HOLDINGS CORPORATION

             FORM OF SELLING SECURITYHOLDER NOTICE AND QUESTIONNAIRE

         The undersigned beneficial holder of a warrant (the "Warrant") to
purchase Class B Common Stock of America West Holdings Corporation ("Holdings")
or shares of Class B Common Stock, par value $0.01, of Holdings issuable upon
exercise of the Warrant (the "Registrable Securities"), understands that
Holdings has filed or intends to file with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-3 (the "Shelf
Registration Statement") for the registration and resale under Rule 415 of the
Securities Act of 1933, as amended (the "Securities Act"), of the Registrable
Securities in accordance with the terms of the Registration Rights Agreement
(the "Registration Rights Agreement") among Holdings and certain holders of
warrants to purchase Class B Common Stock of Holdings named therein.

         A copy of the Registration Rights Agreement is available from Holdings
upon request at the address set forth below. All capitalized terms not otherwise
defined herein shall have the meaning ascribed thereto in the Registration
Rights Agreement. Each beneficial owner of Registrable Securities is entitled to
the benefits of the Registration Rights Agreement. In order to sell or otherwise
dispose of any Registrable Securities pursuant to the Shelf Registration
Statement, a beneficial owner of Registrable Securities generally will be
required to be named as a selling securityholder in the related prospectus,
deliver a prospectus to purchasers of Registrable Securities and be bound by
those provisions of the Registration Rights Agreement applicable to such
beneficial owner (including certain indemnification provisions, as described
below).

         Beneficial owners are encouraged to complete and deliver this Notice
and Questionnaire prior to the effectiveness of the Shelf Registration Statement
so that such beneficial owners may be named as selling securityholders in the
related prospectus at the time of effectiveness. Upon receipt of a completed
Notice and Questionnaire from a beneficial owner following the effectiveness of
the Shelf Registration Statement, Holdings will, as promptly as practicable,
file such amendments to the Shelf Registration Statement or supplements to the
related prospectus as are necessary to permit such holder to deliver such
prospectus to purchasers of Registrable Securities.

         Certain legal consequences arise from being named as a selling
securityholder in the Shelf Registration Statement and the related prospectus.
Accordingly, holders and beneficial owners of Registrable Securities are advised
to consult their own securities law counsel regarding the consequences of being
named or not being named as a selling securityholder in the Shelf Registration
Statement and the related prospectus.


                                       1.

                                     NOTICE

         The undersigned beneficial owner (the "Selling Securityholder") of
Registrable Securities hereby gives notice to Holdings of its intention to sell
or otherwise dispose of Registrable Securities beneficially owned by it and
listed below in Item 3 (unless otherwise specified under Item 3) pursuant to the
Shelf Registration Statement. The undersigned, by signing and returning this
Notice and Questionnaire, understands that it will be bound by the terms and
conditions of this Notice and Questionnaire and the Registration Rights
Agreement.

         The undersigned hereby provides the following information to Holdings
and represents and warrants that such information is accurate and complete:

                                  QUESTIONNAIRE

1.       (a)      Full Legal Name of Selling Securityholder:

                  ______________________________________________________________

         (b)      Full Legal Name of Registered Holder (if not the same as (a)
                  above) through which Registrable Securities listed in (3)
                  below are held:

                  ______________________________________________________________

         (c)      Full Legal Name of DTC Participant (if applicable and if not
                  the same as (b) above) through which Registrable Securities
                  listed in (3) below are held:

                  ______________________________________________________________


2.       Address for Notices to Selling Securityholder:

________________________________________________________________________________

________________________________________________________________________________

Telephone:______________________________________________________________________

Fax:____________________________________________________________________________

Contact Person:_________________________________________________________________

3.       Beneficial Ownership of Registrable Securities:

         (a)      Type and Principal Amount of Registrable Securities
                  beneficially owned:

                  ______________________________________________________________


                                       2.

         (b)      CUSIP No(s). of such Registrable Securities beneficially
                  owned:

                  ______________________________________________________________

4.       Beneficial Ownership of Holdings' securities owned by the Selling
         Securityholder:

Except as set forth below in this Item (4), the undersigned is not the
beneficial or registered owner of any securities of Holdings other than the
Registrable Securities listed above in Item (3).

         (a)      Type and Amount of Other Securities beneficially owned by the
                  Selling Securityholder:

                  ______________________________________________________________

         (b)      CUSIP No(s). of such Other Securities beneficially owned:

                  ______________________________________________________________

5.       Relationship with Holdings:

Except as set forth below, neither the undersigned nor any of its affiliates,
directors or principal equity holders (5% or more) has held any position or
office or has had any other material relationship with Holdings (or their
predecessors or affiliates) during the past three years.

State any exceptions here:

________________________________________________________________________________

________________________________________________________________________________

6. Plan of Distribution:

Except as set forth below, the undersigned (including its donees or pledgees)
intends to distribute the Registrable Securities listed above in Item (3)
pursuant to the Shelf Registration Statement only as follows (if at all): Such
Registrable Securities may be sold from time to time directly by the undersigned
or alternatively, through underwriters, broker-dealers or agents. If the
Registrable Securities are sold through underwriters or broker-dealers, the
Selling Securityholder will be responsible for underwriting discounts or
commissions or agent's commissions. Such Registrable Securities may be sold in
one or more transactions at fixed prices, at prevailing market prices at the
time of sale, at varying prices determined at the time of sale, or at negotiated
prices. Such sales may be effected in transactions (which may involve block
transactions) (i) on any national securities exchange or quotation service on
which the Registrable Securities may be listed or quoted at the time of sale,
(ii) in the over-the-counter market, (iii) in transactions otherwise than on
such exchanges or services or in the over-the-counter market, or (iv) through
the writing of options. In connection with sales of the Registrable Securities
or otherwise, the undersigned may enter into hedging transactions with
broker-dealers, which may in turn engage in short sales of the Registrable
Securities, short and deliver


                                       3.

Registrable Securities to close out such short positions, or loan or pledge
Registrable Securities to broker-dealers that in turn may sell such securities.

State any exceptions here:

________________________________________________________________________________

________________________________________________________________________________

         The undersigned acknowledges that it understands its obligation to
comply with the provisions of the Securities Exchange Act of 1934, as amended
and the rules thereunder relating to stock manipulation, particularly Regulation
M thereunder (or any successor rules or regulations), in connection with any
offering of Registrable Securities pursuant to the Shelf Registration Statement.
The undersigned agrees that neither it nor any person acting on its behalf will
engage in any transaction in violation of such provisions.

         The Selling Securityholder hereby acknowledges its obligations under
the Registration Rights Agreement to indemnify and hold harmless certain persons
as set forth therein.

         Pursuant to the Registration Rights Agreement, Holdings has agreed
under certain circumstances to indemnify and hold harmless the Selling
Securityholders as set forth therein.

         The undersigned hereby agrees that, in connection with any sale of
Registrable Securities pursuant to the Shelf Registration Statement, it will
comply with the prospectus delivery requirements, if any, of the Securities Act
of 1933, as amended (the "Securities Act"), and, at the time of any such sale,
represents, warrants and agrees that the information regarding the undersigned
included in this Notice and Questionnaire, as it may be supplemented shall be
accurate and complete in all material respects.

         In accordance with the undersigned's obligation under the Registration
Rights Agreement to provide such information as may be required by law for
inclusion in the Shelf Registration Statement regarding the undersigned, the
undersigned agrees to promptly notify Holdings of any inaccuracies or changes in
the information provided herein that may occur subsequent to the date hereof at
any time while the Shelf Registration Statement remains effective. All notices
hereunder and pursuant to the Registration Rights Agreement shall be made in
writing at the address set forth below.

         By signing below, the undersigned consents to the disclosure of the
information contained herein in its answers to items (1) through (6) above and
the inclusion of such information in the Shelf Registration Statement and the
related prospectus. The undersigned understands that such information will be
relied upon by Holdings in connection with the preparation or amendment of the
Shelf Registration Statement and the related prospectus.

         By signing below, the undersigned agrees that the terms of this Notice
and Questionnaire, and the representations and warranties contained herein,
shall be binding on, shall inure to the benefit of and shall be enforceable by
Holdings' respective successors and assigns. This Agreement shall be governed in
all respects by the laws of the State of New York.


                                       4.

         IN WITNESS WHEREOF, the undersigned, by authority duly given, has
caused this Notice and Questionnaire to be executed and delivered either in
person or by its duly authorized agent.



                                                 Dated:

                                                 Beneficial Owner

                                                 By:____________________________
                                                 Name:
                                                 Title:

PLEASE RETURN THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE TO HOLDINGS AS
SET FORTH BELOW:



America West Holdings Corporation
111 West Rio Salado Parkway
Tempe, AZ 85281
Attn: ______________
Tel: (480) 693-0800
Fax: (480) 693-5932

with a copy to:

Cooley Godward LLP
One Maritime Plaza
San Francisco, CA 94111
Attn: Samuel M. Livermore
Tel: (415) 693-2113
Fax: (415) 951-3699


                                       5.

EX-4.21

                                                                    Exhibit 4.21
================================================================================



                          REGISTRATION RIGHTS AGREEMENT



                                 BY AND BETWEEN



                        AMERICA WEST HOLDINGS CORPORATION

                             AS THE ISSUER, AND THE



                       WARRANT HOLDERS REFERRED TO HEREIN



                    WARRANTS TO PURCHASE CLASS B COMMON STOCK



                          DATED AS OF JANUARY 18, 2002



================================================================================

                          REGISTRATION RIGHTS AGREEMENT


         THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and
entered into as of January 18, 2002 by and between AMERICA WEST HOLDINGS
CORPORATION, a Delaware corporation (the "COMPANY"), and the Warrant Holders (as
hereinafter defined).

         WHEREAS, the Company and the Warrant Holders have entered into certain
agreements; and

         WHEREAS, in order to induce the Warrant Holders to enter into such
agreements with the Company, the Company agreed to issue to the Warrant Holders
the Warrants (as hereinafter defined) and to provide the registration rights set
forth in this Agreement to the Warrant Holders and their respective direct and
indirect transferees.

         The parties hereby agree as follows:

         SECTION 1. DEFINITIONS. As used in this Agreement, the following terms
shall have the following meanings:

         AFFILIATE: An affiliate of any specified person shall mean any other
person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified person. For the purposes of this
definition, "control," when used with respect to any person, means the power to
direct the management and policies of such person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise and
the terms "affiliated," "controlling" and "controlled" have meanings correlative
to the foregoing.

         AGREEMENT: This Registration Rights Agreement, as the same may be
amended, supplemented or modified from time to time in accordance with the terms
hereof.

         BUSINESS DAY: Each Monday, Tuesday, Wednesday, Thursday and Friday that
is not a day on which banking institutions in New York, New York are authorized
or obligated by law or executive order to close.

         CLOSING DATE: January 18, 2002.

         COMMON STOCK: The class B common stock, par value $0.01 per share, of
the Company or shares of any class or classes resulting from any
reclassification or reclassifications thereof and which have no preference in
respect of dividends or of amounts payable in the event of any voluntary or
involuntary liquidation, dissolution or winding up of the Company and which are
not subject to redemption by the Company; provided that if at any time there
shall be more than one such resulting class, the shares of each such class then
so issuable shall be substantially in the proportion which the total number of
shares of such class resulting from all such reclassifications bears to the
total number of shares of all such classes resulting from all such
reclassifications.

         COMPANY: America West Holdings Corporation, a Delaware corporation, and
any successor entity thereto.


                                       1.

         EFFECTIVENESS TARGET DATE: The 240th day after the date of this
Agreement.

         EXCHANGE ACT: The Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated by the SEC thereunder.

         FILING DATE: The 120th day after the date of this Agreement.

         HOLDER: Each owner of any Registrable Securities.

         NOTICE AND QUESTIONNAIRE: The form of Notice and Questionnaire attached
hereto as EXHIBIT A, as reasonably amended, supplemented, or otherwise modified
from time to time by the Company upon reasonable notice to the Holders.

         PROSPECTUS: The prospectus included in the Registration Statement
(including, without limitation, a prospectus that discloses information
previously omitted from a prospectus filed in reliance upon Rule 430A), as
amended or supplemented by any prospectus supplement, with respect to the resale
of any of the Registrable Securities covered by such Registration Statement, and
all other amendments and supplements to any such prospectus, including
post-effective amendments, and all materials incorporated by reference or deemed
to be incorporated by reference, if any, in such prospectus.

         REGISTRABLE SECURITIES: The shares of Common Stock issued or issuable
upon exercise of the Warrants (including any shares of Common Stock issued or
issuable thereon upon any stock split, stock combination, stock dividend or the
like or as a result of any anti-dilution adjustments under the Warrants), upon
original issuance thereof and at all times subsequent thereto, and associated
related rights, if any, until the earliest of (i) the date on which the resale
thereof has been effectively registered under the Securities Act and such
securities have been disposed of in accordance with the Registration Statement
relating thereto, (ii) the date on which such securities have been distributed
to the public pursuant to Rule 144 or are saleable pursuant to paragraph (k) of
Rule 144 or (iii) the date on which such securities cease to be outstanding.

         REGISTRATION STATEMENT: Any registration statement of the Company filed
with the SEC pursuant to the Securities Act that covers the resale of the
Registrable Securities pursuant to the provisions of this Agreement, including
the Prospectus, amendments and supplements to such registration statement or
Prospectus (including pre- and post-effective amendments), all exhibits thereto,
and all material incorporated by reference or deemed to be incorporated by
reference, if any, in such registration statement.

         REQUIRED HOLDERS: Holders of more than 50% of the Registrable
Securities. For purposes of the preceding sentence, Registrable Securities
owned, directly or indirectly, by the Company or its Affiliates (other than
persons who are Affiliates solely by virtue of being holders of the Registrable
Securities) shall not be deemed outstanding.

         REQUISITE INFORMATION: As defined in Section 2(d) hereof.

         RULE 144: Rule 144 promulgated by the SEC pursuant to the Securities
Act, as such rule may be amended from time to time, or any successor rule or
regulation.


                                       2.

         RULE 144A: Rule 144A promulgated by the SEC pursuant to the Securities
Act, as such rule may be amended from time to time, or any successor rule or
regulation.

         RULE 415: Rule 415 promulgated by the SEC pursuant to the Securities
Act, as such rule may be amended from time to time, or any successor rule or
regulation.

         RULE 424: Rule 424 promulgated by the SEC pursuant to the Securities
Act, as such rule may be amended from time to time, or any successor rule or
regulation.

         RULE 430A: Rule 430A promulgated by the SEC pursuant to the Securities
Act, as such rule may be amended from time to time, or any successor rule or
regulation.

         SEC: The Securities and Exchange Commission, or any successor
governmental agency or authority thereto.

         SECURITIES ACT: The Securities Act of 1933, as amended, and the rules
and regulations promulgated by the SEC thereunder.

         TRANSFER AGENT: The registrar and transfer agent for the Company's
Common Stock.

         WARRANTS: The warrants issued to
to purchase          shares of Common Stock; the warrants issued to
to purchase                      shares of Common Stock;
and the warrants issued to
to purchase                      shares of Common Stock.

         WARRANT HOLDERS: The initial holders of the Warrants set forth on
Schedule I hereto.

         SECTION 2. REGISTRATION STATEMENT.

                  (a)      REGISTRATION UNDER THE SECURITIES ACT. The Company,
at its own expense, agrees to file with the SEC as soon as reasonably
practicable, but in no event later than the Filing Date, a Registration
Statement for an offering to be made on a continuous basis pursuant to Rule 415
covering all of the Common Stock constituting Registrable Securities. The
Registration Statement shall be on Form S-3 under the Securities Act or another
appropriate form selected by the Company permitting registration of such
Registrable Securities for resale by the Holders in the manner or manners
reasonably designated by such Holders. The Company shall use best efforts to
cause the Registration Statement to be declared effective pursuant to the
Securities Act as soon as reasonably practicable following the filing thereof,
but in no event later than the Effectiveness Target Date, and to keep such
Registration Statement continuously effective under the Securities Act until all
of the securities covered by such Registration Statement cease to be Registrable
Securities.

                  (b)      PIGGYBACK REGISTRATION RIGHTS. The Company shall
afford each Holder of Registrable Securities the opportunity to include such
Registrable Securities in any registration statement filed for purposes of a
public offering of securities of the Company made on a continuous basis pursuant
to Rule 415 (other than registration statements for which the Company has
contractually agreed not to grant such rights), including any registration
statement


                                       3.

filed by the Company to register for resale its outstanding 7.5% Convertible
Senior Notes due 2009. Each Holder desiring to include the Registrable
Securities held by it in any such registration statement shall notify the
Company in writing within 15 days after receipt of notice from the Company of
its intent to file such a registration statement. If a Holder decides not to
include all of the Registrable Securities held by it in any registration
statement thereafter filed by the Company, such Holder shall nevertheless
continue to have the right to include any Registrable Securities in any
subsequent registration statement or registration statements (other than
registration statements for which the Company has contractually agreed not to
grant such rights) as may be filed by the Company with respect to offerings of
its securities made on a continuous basis pursuant to Rule 415, all upon the
terms and conditions set forth herein.

                  (c)      SUPPLEMENTS AND AMENDMENTS. The Company shall use
best efforts to keep any Registration Statement continuously effective by
supplementing and amending such Registration Statement if so required by the
rules, regulations or instructions applicable to the registration form used for
such Registration Statement, if required by the Securities Act or if reasonably
requested by the Required Holders or by any underwriter of such Registrable
Securities. If the Registration Statement under Section 2(a) ceases to be
available for use by the Holders because the Company no longer qualifies to use
such form of registration statement, the Company shall be required to file, as
promptly as reasonably practicable, a new Registration Statement on an
appropriate form and its obligations hereunder shall continue to apply in all
respects.

                  (d)      SELLING SECURITYHOLDER INFORMATION. Each Holder
wishing to sell Registrable Securities pursuant to a Registration Statement and
related Prospectus agrees to deliver a Notice and Questionnaire, in a timely
manner, that confirms such Holder's agreement to be bound by the terms of this
Agreement and includes such information regarding it and the distribution of its
Registrable Securities as is required by law to be disclosed by the Holder in
the Registration Statement (the "Requisite Information") to the Company prior to
any intended distribution of Registrable Securities under the Registration
Statement. The Company shall not be required to include in the Registration
Statement and related Prospectus the Registrable Securities of any Holder that
does not provide the Company with a Notice and Questionnaire in accordance with
this Section 2(d). If such completed Notice and Questionnaire is received by the
Company before 10 days prior to the effective date of a Registration Statement,
such Holder shall be entitled to have its Registrable Securities included in
such Registration Statement at the effective date thereof. If such completed
Notice and Questionnaire is received thereafter, the Company will use best
efforts to include such Holder's Registrable Securities as promptly as
reasonably practicable thereafter, subject to the last two sentences of the next
paragraph.

Subject to the last two sentences of this paragraph, the Company shall use best
efforts to file, as soon as practicable after the receipt of a Notice and
Questionnaire from any Holder that includes the Requisite Information or any
changes in the Requisite Information with respect to such Holder (including,
without limitation, any changes in the plan of distribution), a Prospectus
supplement pursuant to Rule 424 or otherwise amend or supplement such
Registration Statement to include in the Prospectus the Requisite Information as
to such Holder (and the Registrable Securities held by such Holder), and the
Company shall provide such Holder a copy of such Prospectus as so amended or
supplemented containing the Requisite Information in order to permit such Holder
to comply with the Prospectus delivery requirements of the Securities Act in


                                       4.

a timely manner with respect to any proposed disposition of such Holder's
Registrable Securities and to file the same with the SEC. Each Holder requesting
registration hereunder shall promptly notify the Company of any material changes
to the Requisite Information contained in the Notice and Questionnaire provided
to the Company by such Holder. Notwithstanding the foregoing, following the
effective date of any Registration Statement, the Company shall not be required
to file more than one such supplement or post-effective amendment to reflect
changes in the amount of Common Stock constituting Registrable Securities held
by any particular Holder at the request of such Holder in any 30-day period. The
Company may take reasonable steps to aggregate the addition of Registrable
Securities of more than one Holder for purposes of filing amendments to any
Registration Statement or supplements to the Prospectus so as to reduce the need
for multiple amendments or supplements; provided that the Company shall not use
this sentence to delay the filing of any amendment or supplement beyond any such
30-day period.

                  (e)      MATERIAL EVENTS; SUSPENSION OF SALES. Notwithstanding
the provisions contained in this Section 2, with respect to any Registration
Statement, the Company may (for a period not to exceed 60 consecutive days, and
not in any event to exceed 90 days in the aggregate during any 12 month period)
suspend use of such Registration Statement at any time if (and for so long as)
the continued effectiveness thereof would require the Company to disclose a
material financing, acquisition, other transaction or other material non-public
information, which disclosure the Board of Directors of the Company shall have
determined in good faith is not in the best interests of the Company and the
Company's stockholders. The Company shall notify each registered Holder, the
Transfer Agent and the managing underwriters, if any, that the use of the
Prospectus is to be suspended until the Company shall deliver a written notice
that the use of the Prospectus may be resumed. During such suspension, the use
of the Prospectus shall be suspended, and the Company shall not be required to
maintain the effectiveness of, or amend or update the Registration Statement, or
amend or supplement the Prospectus.

                  (f)      ADDITIONAL AGREEMENTS OF HOLDERS. Each Holder agrees
not to dispose of Registrable Securities pursuant to any Registration Statement
without complying with the prospectus delivery requirements under the Securities
Act and the provisions of paragraph (e) above regarding use of the Prospectus.
Each Holder further agrees that it will comply fully with applicable federal and
state securities laws in connection with the distribution of any Registrable
Securities pursuant to the Registration Statement. Each Holder further
acknowledges having been advised by the Company that applicable federal
securities laws prohibit Holders from trading in securities of the Company at
any time while in possession of material non-public information about the
Company.

         SECTION 3. REGISTRATION PROCEDURES. In connection with the Company's
registration obligations hereunder, the Company shall effect such registrations
on the appropriate form selected by the Company to permit the resale of
Registrable Securities in accordance with the Holder's intended method or
methods of disposition thereof, and pursuant thereto the Company shall as
expeditiously as reasonably possible:

                  (a)      Furnish to the Holders and the managing underwriters,
if any, copies of all such documents proposed to be filed (excluding, unless
requested, those documents incorporated or deemed to be incorporated by
reference and then only to the Holder who so requested) and use its commercially
reasonable efforts to reflect in each such document, when so filed with the


                                       5.

SEC, such comments as the Holders may reasonably propose. The Company shall not
file any such Registration Statement or related Prospectus or any amendments or
supplements thereto (excluding any document that would be incorporated or deemed
incorporated by reference) to which the Holder or the managing underwriters, if
any, shall reasonably object in writing (by hand-delivery, courier guaranteeing
overnight delivery or telecopy) within five Business Days after the receipt of
such documents. Notwithstanding the foregoing, the Company shall not be required
to furnish to the Holders or the managing underwriters, if any, any amendments
or supplements to the Registration Statement or Prospectus filed solely to
reflect changes to the amount of Common Stock constituting Registrable
Securities held by any particular Holder or immaterial revisions to the
information contained therein.

                  (b)      Prepare and file with the SEC such amendments,
including post-effective amendments, to the Registration Statement as may be
necessary to keep such Registration Statement continuously effective for the
applicable time period set forth in Section 2(a) hereof; cause the related
Prospectus to be supplemented by any required Prospectus supplement, and as so
supplemented to be filed pursuant to Rule 424 (or any similar provisions then in
force) under the Securities Act; and comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
Registration Statement and Prospectus during such period in accordance with the
intended method or methods of disposition by the Holder set forth in such
Registration Statement as so amended or in such Prospectus as so supplemented
including, without limitation, the filing of any Prospectus supplement pursuant
to Rule 424 in order to add or change any selling security holder information
(including any such supplements or amendments pursuant to Section 2(d) hereof,
provided such Holder to which such change applies complies with the Requisite
Information requirements of Section 2(d) hereof in a timely manner).

                  (c)      Notify the Holders and the managing underwriters, if
any, promptly and, if requested by any such person, confirm such notice in
writing:

                           (i)      (A) when a Prospectus or any Prospectus
supplement or post-effective amendment is proposed to be filed and (B) with
respect to a Registration Statement or any post-effective amendment, when the
same has become effective;

                           (ii)     of any written comments from the SEC with
respect to any filing and of any request by the SEC or any other Federal or
state governmental authority for amendments or supplements to such Registration
Statement or related Prospectus or for additional information related thereto;

                           (iii)    of the issuance by the SEC, any state
securities commission, any other governmental agency or any court of any stop
order, order or injunction suspending or enjoining the use or effectiveness of
the Registration Statement or the initiation of any proceedings for that
purpose;

                           (iv)     of the receipt by the Company of any
notification with respect to the suspension of qualification or exemption from
qualification of any of the Registrable Securities for sale in any jurisdiction,
or the initiation or threatening of any proceeding for such purpose;


                                       6.

                           (v)      of the existence of any fact or the
happening of any event that makes any statement of material fact made in such
Registration Statement or related Prospectus untrue in any material respect, or
that requires the making of any changes in such Registration Statement or
Prospectus so that, in the case of the Registration Statement, it will not
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
not misleading and that, in the case of the Prospectus, such Prospectus will not
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

                           (vi)     of the determination by the Company that a
post effective amendment to the Registration Statement will be filed with the
SEC.

                  (d)      Use commercially reasonable efforts to obtain the
withdrawal of any stop order or order enjoining or suspending the use or
effectiveness of a Registration Statement or the lifting of any suspension of
the qualification (or exemption from qualification) of any of the Registrable
Securities for sale in any jurisdiction, at the earliest practicable moment.

                  (e)      If reasonably requested by the Required Holders, or
managing underwriters, if any, to:

                           (i)      promptly include in a Prospectus supplement
or post-effective amendment such information as the Required Holders or managing
underwriters, if any, may reasonably request to be included therein; and

                           (ii)     make all required filings of such Prospectus
supplement or such post-effective amendment as soon as reasonably practicable
after the Company has received notification of the matters to be included in
such Prospectus supplement or post-effective amendment.

                  (f)      Furnish to each Holder who so requests, and each
managing underwriter, if any, without charge, at least one copy of the
Registration Statement and each amendment thereto (but excluding schedules, all
documents incorporated or deemed to be incorporated therein by reference and all
exhibits, unless requested in writing by such Holder or any managing underwriter
and then only to the person who so requested).

                  (g)      Deliver to each Holder and the underwriters, if any,
without charge, as many copies of the Prospectus or Prospectuses (including each
form of Prospectus) and each amendment or supplement thereto as such persons may
reasonably request; and, unless the Company shall have given notice to such
Holder or underwriter pursuant to Section 2(e), the Company hereby consents to
the use of such Prospectus, and each amendment or supplement thereto, by each of
the selling Holders of Registrable Securities and the underwriters, if any, in
connection with the offering and sale of the Registrable Securities covered by
such Prospectus and any amendment or supplement thereto.

                  (h)      Prior to any public offering of Registrable
Securities, use all reasonable efforts to register or qualify, or cooperate with
the Holders of Registrable Securities to be sold or tendered or the
underwriters, if any, and their respective counsel in connection with the


                                       7.

registration or qualification (or exemption from such registration or
qualification) of such Registrable Securities for offer and sale under the
securities or Blue Sky laws of such jurisdictions within the United States as
any Holder or underwriter reasonably requests in writing, keep each such
registration or qualification (or exemption therefrom) effective during the
period the Registration Statement is required to be kept effective and do any
and all other acts or things legally necessary to enable the disposition in such
jurisdictions of the Registrable Securities covered by the Registration
Statement; provided, however, that the Company shall not be required to qualify
generally to do business in any jurisdiction where it is not then so qualified,
take any action that would subject it to general service of process in any such
jurisdiction where it is not then so subject or subject the Company to any tax
in any such jurisdiction where it is not then so subject.

                  (i)      In connection with any sale or transfer of
Registrable Securities that will result in such securities no longer being
Registrable Securities, cooperate with the Holders and the managing
underwriters, if any, to (i) facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be sold, which certificates
shall not bear any restrictive legends, unless required by applicable securities
laws and (ii) enable such Registrable Securities to be in such denominations and
registered in such names as the managing underwriters, if any, or Holders may
reasonably request at least two Business Days prior to any sale of Registrable
Securities.

                  (j)      Use best efforts to cause the offering of the
Registrable Securities covered by the Registration Statement to be registered
with or approved by such other governmental agencies or authorities within the
United States as may be necessary to enable the Holder or managing underwriter,
if any, to consummate the disposition of such Registrable Securities; provided,
however, that the Company shall not be required to register the Registrable
Securities in any jurisdiction that would require the Company to qualify to do
business in any jurisdiction where it is not then so qualified, subject it to
general service of process in any such jurisdiction where it is not then so
subject or subject the Company to any tax in any such jurisdiction where it is
not then so subject.

                  (k)      Upon the occurrence of any event contemplated by
Section 3(c)(v) hereof, as promptly as reasonably practicable (subject to any
suspension of sales pursuant to Section 2(e) hereof), prepare a supplement or
amendment, including, if appropriate, a post-effective amendment, to the
Registration Statement or a supplement to the related Prospectus or any document
incorporated or deemed to be incorporated therein by reference, and file any
other required document so that, as thereafter delivered, such Prospectus will
not contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading
(except, upon occurrence of an event contemplated by paragraph (v) of Section
3(c) above, to the extent that the Company determines in good faith that the
disclosure of such event at such time would not be in the best interests of the
Company and the Company's stockholders provided that any such delay in
disclosure pursuant to this Section 3(k) shall be considered a suspension of the
Registration Statement subject to the limitation in Section 2(e)).

                  (l)      Subject to the provisions of Section 7, enter into
such agreements (including any underwriting agreements in form, scope and
substance as may be reasonably


                                       8.

requested and as are customary in underwritten offerings) and take all such
other appropriate actions in connection therewith (including those reasonably
requested by the managing underwriters, if any, or the Holders of a majority in
interest of the Registrable Securities being sold) in order to expedite or
facilitate the sale of such Registrable Securities. In connection with any
underwritten offering, the Company will:

                           (i)      make such representations and warranties to
the Holders of such Registrable Securities and the underwriters, if any, with
respect to the business of the Company and its subsidiaries (including with
respect to businesses or assets acquired or to be acquired by any of them), and
the Registration Statement, Prospectus and documents, if any, incorporated or
deemed to be incorporated by reference therein, in each case, in form, substance
and scope as are customarily made by issuers to underwriters in underwritten
offerings, and confirm the same if and when requested;

                           (ii)     obtain, as may reasonably be required,
opinions of counsel to the Company (which may include in-house counsel) and
updates thereof (which counsel and opinions (in form, scope and substance) shall
be reasonably satisfactory to the managing underwriters, if any, addressed to
each selling Holder of Registrable Securities and each of the underwriters, if
any, covering the matters customarily covered in opinions requested in
underwritten offerings (including any such matters as may be reasonably
requested by such underwriters));

                           (iii)    obtain, as may reasonably be required,
customary "cold comfort" letters and updates thereof from the independent
certified public accountants of the Company (and, if necessary, any other
independent certified public accountants of any subsidiary of the Company or of
any business acquired by the Company for which financial statements and
financial data are, or are required to be, included in the Registration
Statement), addressed (where reasonably possible) to each selling Holder of
Registrable Securities and each of the underwriters, if any, such letters to be
in customary form and covering matters of the type customarily covered in "cold
comfort" letters in connection with underwritten offerings; and

                           (iv)     deliver such documents and certificates as
may be reasonably requested by the Holders of majority in interest of the
Registrable Securities being sold or the managing underwriters, if any, to
evidence the continued validity of the representations and warranties made
pursuant to clause (i) of this Section 3(l) and to evidence compliance with any
customary conditions contained in the underwriting agreement or other agreement
entered into by the Company;

                  (m)      Make available for inspection by a representative of
the Holders of Registrable Securities being sold, any underwriter participating
in any such disposition of Registrable Securities, if any, and any attorney,
consultant or accountant retained by such selling Holders or underwriter, at the
offices where normally kept, during reasonable business hours, all financial and
other records, pertinent corporate documents and properties of the Company and
its subsidiaries (other than records and documents that the Company and its
subsidiaries agreed contractually not to disclose and the disclosure of which
would violate such contractual arrangement) as they may reasonably request, and
cause the officers, directors, agents and employees of the Company and its
subsidiaries to supply all information (other than information


                                       9.

that the Company and its subsidiaries agreed contractually not to disclose and
the disclosure of which would violate such contractual arrangement) in each case
reasonably requested by any such representative, underwriter, attorney,
consultant or accountant in connection with such Registration Statement and as
shall be reasonably necessary to enable such persons to conduct a reasonable
investigation within the meaning of Section 11 of the Securities Act; provided,
however, that the foregoing inspection and information gathering shall be
coordinated on behalf of the Holders and the other parties thereto by one
counsel designated by and on behalf of such Holders and other parties and
provided further, that such persons shall first agree in writing with the
Company that any information that is reasonably and in good faith designated by
the Company as confidential at the time of delivery or inspection (as the case
may be) of such information shall be kept confidential by such persons, unless
(i) disclosure of such information is required by court or administrative order
or is necessary to respond to inquiries of regulatory authorities; (ii)
disclosure of such information is required by law (including any disclosure
requirements pursuant to Federal securities laws in connection with the filing
of any Registration Statement or the use of any Prospectus); (iii) such
information becomes generally available to the public other than as a result of
a disclosure or failure to safeguard by any such person; or (iv) such
information becomes available to any such person from a source other than the
Company and such source is not known to be bound by a confidentiality agreement.

                  (n)      (i) list all shares of Common Stock covered by any
Registration Statements on any securities exchange on which the Common Stock is
then listed; or (ii) authorize for quotation on the National Market of the
National Association of Securities Dealers Automated Quotation System ("Nasdaq")
all Common Stock covered by all such Registration Statements if the Common Stock
is then so authorized for quotation.

                  (o)      Make all reasonable efforts to provide such
information as is required for any filings required to be made with the National
Association of Securities Dealers, Inc. ("NASD").

         SECTION 4. REGISTRATION EXPENSES. All fees and expenses incident to the
performance of or compliance with this Agreement by the Company shall be borne
by it whether or not any Registration Statement is filed or becomes effective.
The fees and expenses referred to in the foregoing sentence shall include:

                  (a)      all registration, filing, securities exchange
listing, rating agency and New York Stock Exchange fees and expenses;

                  (b)      printing expenses (including, without limitation,
printing Prospectuses if the printing of Prospectuses is required by the
managing underwriters, if any, or by the Holders of a majority in interest of
the Registrable Securities);

                  (c)      messenger, copying, telephone and delivery expenses;

                  (d)      reasonable fees and disbursements of counsel for the
Company;

                  (e)      fees and disbursements of all independent certified
public accountants referred to in Section 3(l)(iii) including, without
limitation, the expenses of any special audits or "cold comfort" letters
required by Section 3(l)(iii);


                                       10.

                  (f)      fees and expenses of all other persons retained by
the Company;

                  (g)      all registration, filing, qualification and other
fees and expenses of complying with securities or blue sky laws of all
jurisdictions in which the Registrable Securities are to be registered and any
legal fees and expenses incurred in connection with the blue sky qualifications
of the Registrable Securities and the determination of their eligibility for
investment under the laws of all such jurisdictions; and

                  (h)      the reasonable fees and disbursements incurred by the
Holders of the Registrable Securities being registered (including, without
limitation, the reasonable fees and disbursements for one counsel or firm of
counsel selected by the Holders of a majority in interest of the Registrable
Securities being registered).

Notwithstanding anything in this Agreement to the contrary, the Holders shall be
responsible for all expenses customarily borne by selling securityholders
(including underwriting discounts, commissions and fees and expenses of counsel
to the selling Holders to the extent not required to be paid pursuant to clause
(h) above).

         SECTION 5. INDEMNIFICATION.

                  (a)      The Company agrees to indemnify and hold harmless
each Holder of Registrable Securities, such Holder's affiliates, and their
respective officers, directors, employees, representatives and agents, and each
person, if any, who controls any Holder of Registrable Securities within the
meaning of either Section 15 of the Securities Act or Section 20 of the Exchange
Act, or is under common control with, or is controlled by, any Holder, against
any and all loss, liability, claim or damage arising out of any untrue statement
or alleged untrue statement of a material fact contained in the Registration
Statement or the Prospectus (or any amendment or supplement thereto), or the
omission or alleged omission to state therein any material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided, however,
that this indemnity agreement shall not apply to any loss, liability, claim or
damage arising out of any untrue statement or omission or alleged untrue
statement or omission made in reliance upon and in conformity with written
information furnished to the Company by or on behalf of such Holder of
Registrable Securities (which also acknowledges the indemnity provisions herein)
or any person, if any, who controls any such Holder of Registrable Securities
expressly for use in the Registration Statement (or any amendment thereto), or
any preliminary prospectus or the Prospectus (or any amendment or supplement
thereto); provided, further, that this indemnity agreement shall not apply to
any loss, liability, claim or damage (i) arising from an offer or sale of
Registrable Securities occurring during any suspension of sales pursuant to
Section 2(e) (provided that the Company has given to the Holder notice of such
suspension prior to such offer or sale), or (ii) if the Holder fails to deliver
at or prior to the written confirmation of sale, the most recent Prospectus, as
amended or supplemented, and such Prospectus, as amended or supplemented, would
have corrected such untrue statement or omission or alleged untrue statement or
omission of a material fact (provided that the Company has delivered to such
Holder, or otherwise given notice to such Holder of the existence of, such most
recent Prospectus, as supplemented or amended). Any amounts advanced by the
Company to an indemnified party pursuant to this Agreement shall be returned to
the Company if it shall be


                                      11.

finally determined in a judgment by a court of competent jurisdiction not
subject to appeal, that such indemnified party was not entitled to
indemnification.

                  (b)      In connection with the preparation of the
Registration Statement in which a Holder of Registrable Securities is
participating in furnishing information relating to such Holder of Registrable
Securities to the Company for use in such Registration Statement, any
preliminary prospectus, the Prospectus or any amendments or supplements thereto,
each such Holder agrees, severally and not jointly, to indemnify and hold
harmless any other Holders of Registrable Securities, the Company, its
affiliates and their respective officers, directors, employees, representatives
and agents, and each person, if any, who controls such other Holders or the
Company within the meaning of either such Section, against any and all loss,
liability, claim or damage described in the indemnity contained in subsection
(a) of this Section, as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, made in the Registration
Statement (or any amendment thereto), or any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto) in reliance upon and in
conformity with written information furnished to the Company by or on behalf of
such Holder of Registrable Securities (which also acknowledges the indemnity
provisions herein) or any person, if any, who controls any such Holder of
Registrable Securities expressly for use in the Registration Statement (or any
amendment thereto) or such preliminary prospectus or the Prospectus (or any
amendment or supplement thereto).

                  (c)      Each indemnified party shall give notice as promptly
as reasonably practicable to each indemnifying party of any action commenced
against it in respect of which indemnity may be sought hereunder, but failure to
so notify an indemnifying party shall not relieve such indemnifying party from
any liability hereunder to the extent it is not materially prejudiced as a
result thereof and in any event shall not relieve it from any liability which it
may have otherwise than on account of this indemnity agreement. The indemnifying
party, upon request of the indemnified party, shall retain counsel reasonably
satisfactory to the indemnified party to represent the indemnified party and any
others the indemnifying party may designate in such proceeding and shall pay the
reasonable fees and disbursements of such counsel related to such proceeding. In
any such proceeding, any indemnified party shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in respect of the legal expenses of any indemnified party in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for (a) the fees and expenses of more than one separate firm (in
addition to any local counsel), for the Holders of Registrable Securities, and
all persons, if any, who control the Holders of Registrable Securities within
the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act, collectively (unless representation of all Holders and such
parties by the same counsel would be inappropriate due to actual or potential
differing interests between or among them), and (b) the fees and expenses of
more than one separate firm (in addition to any local counsel), for the Company
and each person, if any, who controls the Company within the meaning of either
such Section, and that all fees and expenses payable under (a) and (b) above
shall be reimbursed as they are incurred. In the


                                      12.

case of any such separate firm for the Holders of Registrable Securities, and
control persons of the Holders of Registrable Securities, such firm shall be
designated by the Holders of a majority in interest of the Registrable
Securities and shall be reasonably acceptable to the Company. In the case of any
such separate firm for the Company and control persons of the Company, such firm
shall be reasonably acceptable to the Holders of a majority in interest of the
Registrable Securities. The indemnifying party shall not be liable for any
settlement of any proceeding effected without its written consent (which consent
shall not be unreasonably withheld or delayed), but if settled with such consent
or if there be a final non-appealable judgment for the plaintiff, the
indemnifying party agrees to indemnify the indemnified party from and against
any loss or liability by reason of such settlement or judgment. No indemnifying
party shall, without the prior written consent of the indemnified parties (which
consent shall not be unreasonably withheld or delayed), settle or compromise or
consent to the entry of any judgment with respect to any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever in respect of which indemnification or
contribution could be sought under this Section 5 (whether or not the
indemnified parties are actual or potential parties thereto), unless such
settlement, compromise or consent (i) includes an unconditional release of each
indemnified party from all liability arising out of such litigation,
investigation, proceeding or claim and (ii) does not include a statement as to
or an admission of fault, culpability or a failure to act by or on behalf of any
indemnified party. No indemnified party shall, without the prior written consent
of the indemnifying party, settle or compromise or consent to the entry of any
judgment with respect to any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever in respect of which indemnification or contribution could be sought
under this Section 5 (whether or not the indemnified parties are actual or
potential parties thereto).

                  (d)      If the indemnification to which an indemnified party
is entitled under this Section 5 is for any reason unavailable to or
insufficient although applicable in accordance with its terms to hold harmless
an indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, in such proportion as is
appropriate to reflect the relative fault of the indemnifying party or parties
on the one hand and of the indemnified party on the other hand in connection
with the statements or omissions which resulted in such losses, liabilities,
claims, damages or expenses, as well as any other relevant equitable
considerations.

         The relative fault of the Company on the one hand and the Holders of
the Registrable Securities on the other hand shall be determined by reference
to, among other things, whether any such untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied by the Company or by the Holder of the Registrable
Securities and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.

         The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 5(d) were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to above in this Section 5(d). The
aggregate amount of losses, liabilities, claims, damages, and expenses incurred
by an indemnified party and referred to above in this Section 5(d) shall be
deemed to include any out-


                                      13.


of-pocket legal or other expenses reasonably incurred by such indemnified party
in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.

         Notwithstanding the provisions of this Section 5, no Holder shall be
required to indemnify or contribute any amount in excess of the amount by which
the total price at which Registrable Securities were sold by such Holder exceeds
the amount of any damages that such Holder has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission to alleged
omission.

         No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.

         The remedies provided in this Section 5 are not exclusive and shall not
limit any rights or remedies which may otherwise be available to any indemnified
party at law or in equity.

         For purposes of this Section 5(d), each person, if any, who controls
any Holder of Registrable Securities within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act shall have the same rights to
contribution as such Holder, and each person, if any, who controls the Company
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act shall have the same rights to contribution as the Company. No party
shall be liable for contribution with respect to any action, suit, proceeding or
claim settled, compromised, or with respect to which the party requesting
contribution consented to the entry of a judgment, without such party's written
consent, which consent shall not be unreasonably withheld or delayed.

                  (e)      The Company may require as a condition to including
the Registrable Securities in the Registration Statement, and to entering into
any underwriting agreement with respect thereto, that the Company shall have
received an undertaking from the Holder and such underwriter to comply with the
provisions of this Section 5.

                  (f)      The agreements contained in this Section 5 shall
survive the transfer or sale of the Registrable Securities and shall remain in
full force and effect, regardless of any termination or cancellation of this
Agreement or any investigation made by or on behalf of any indemnified party.

         SECTION 6. INFORMATION REQUIREMENTS.

                  (a)      The Company agrees that, if at any time until the
Registrable Securities cease to be Registrable Securities the Company is not
subject to the reporting requirements of the Exchange Act, it will cooperate
with any Holder of Registrable Securities and use reasonable efforts to take
such further reasonable action as any Holder of Registrable Securities may
reasonably request in writing to enable such Holder to sell Registrable
Securities without registration under the Securities Act within the limitation
of the exemptions provided by Rule 144 and Rule 144A under the Securities Act
(or any similar rule or regulation hereafter adopted by the SEC) and customarily
taken in connection with sales pursuant to such exemptions,


                                      14.

including, without limitation, making available adequate current public
information within the meaning of paragraph (c)(2) of Rule 144 and delivering
the information required by paragraph (d) of Rule 144A. Notwithstanding the
foregoing, nothing in this Section 6 shall be deemed to require the Company to
register any of its securities under any section of the Exchange Act.

                  (b)      The Company shall file reports required to be filed
by it under the Exchange Act and the New York Stock Exchange or any other
securities exchanges on which the Common Stock is listed.

         SECTION 7. UNDERWRITTEN REGISTRATION. The Required Holders may elect to
sell any Registrable Securities in an underwritten offering; provided that (a)
the investment banker or investment bankers and manager or managers that will
administer the offering will be investment bankers of recognized national
standing selected by the Required Holders, subject to the consent of the Company
(which will not be unreasonably withheld or delayed); and (b) the Company shall
not be required to agree to more than one (1) underwritten offering per year and
five (5) underwritten offerings in the aggregate (it being understood that any
underwritten offering commenced but not completed due to a suspension of sales
by the Company pursuant to Section 2(e) hereof shall not be counted towards such
limits on underwritten offerings). No person may participate in any underwritten
registration hereunder unless such person (i) agrees to sell such person's
Registrable Securities on the basis reasonably provided in any underwriting
arrangements approved by the Required Holders; and (ii) completes and executes
all questionnaires, powers of attorney, indemnities, underwriting agreements,
lock-up agreements and other documents reasonably required under the terms of
such underwriting arrangements. Notwithstanding any other provision of this
Agreement, if the underwriter determines in good faith that marketing factors
require a limitation of the number of shares to be underwritten, the number of
shares that may be included in the underwriting shall be allocated on a pro rata
basis.

         SECTION 8. MISCELLANEOUS.

                  (a)      OTHER REGISTRATION RIGHTS. The Company may in the
future grant registration rights that would permit any person that is a third
party the right to piggy-back on the Registration Statement; provided, however,
that if the managing underwriter, if any, of such offering notifies the Holders
that the total amount of Registrable Securities which they and the holders of
such piggy-back rights intend to include in the Registration Statement is so
large as to materially adversely affect the success of such offering (including
the price at which such securities can be sold), then only the amount, the
number or kind of securities offered for the account of holders of such
piggy-back rights will be reduced to the extent necessary to reduce the total
amount of securities to be included in such offering to the amount, number or
kind recommended by the managing underwriter and the amount of Registrable
Securities to be included shall not be reduced.

                  (b)      NO INCONSISTENT AGREEMENTS. The Company has not
entered and shall not enter into any agreement that is inconsistent with the
rights granted to the Holders in this Agreement or otherwise conflicts with the
provisions hereof. The rights granted to the Holders hereunder do not in any way
conflict with and are not inconsistent with the rights granted to the holders of
the Company's other issued and outstanding securities under any such agreements.


                                      15.

                  (c)      NO ADVERSE ACTION AFFECTING THE REGISTRABLE
SECURITIES. The Company will not take any action with respect to the Registrable
Securities which would adversely affect the ability of any of the Holders to
include such Registrable Securities in a registration undertaken pursuant to
this Agreement.

                  (d)      AMENDMENTS AND WAIVERS. The provisions of this
Agreement, including the provisions of this sentence, may not be amended,
modified or supplemented, and waivers or consents to departures from the
provisions hereof, may not be given, without the written consent of the Company
and the Required Holders; provided, further, that any amendment, modification,
supplement, waiver or consent that would disproportionately affect the rights of
any Holder (as compared to the other Holders) shall not be effective against
such Holder without such Holder's written consent. Notwithstanding the
foregoing, a waiver or consent to depart from the provisions hereof with respect
to a matter that relates exclusively to the rights of Holders whose Registrable
Securities are being sold pursuant to the Registration Statement and that does
not directly or indirectly affect the rights of other Holders may be given by
Holders of a majority in interest of the Registrable Securities being sold by
such Holders pursuant to such Registration Statement, provided, however, that
the provisions of this sentence may not be amended, modified, or supplemented
except in accordance with the provisions of the immediately preceding sentence.
Each Holder of Registrable Securities outstanding at the time of any such
amendment, modification, supplement, waiver or consent or thereafter shall be
bound by any such amendment, modification, supplement, waiver or consent
effected pursuant to this Section 8(d), whether or not any notice, writing or
marking indicating such amendment, modification, supplement, waiver or consent
appears on the Registrable Securities or is delivered to such Holder.

                  (e)      NOTICES. All notices and other communications
provided for herein or permitted hereunder shall be made in writing by
hand-delivery, courier guaranteeing overnight delivery, certified first-class
mail, return receipt requested, or telecopy and shall be deemed given (i) when
made, if made by hand delivery, (ii) upon confirmation, if made by telecopier,
(iii) one Business Day after being deposited with such courier, if made by
overnight courier or (iv) on the date indicated on the notice of receipt, if
made by first-class mail, to the parties as follows:

                           (i)      if to a Holder, to the address of such
Holder as it appears in the Notice and Questionnaire, or, if not so specified,
in the Common Stock or Warrants register of the Company, as applicable. Failure
to mail a notice or communication to a Holder or any defect in such notice or
communication shall not affect its sufficiency with respect to other Holders.

                           (ii)     if to the Company to:

                                    AMERICA WEST HOLDINGS CORPORATION
                                    111 West Rio Salado Parkway
                                    Tempe, AZ 85281
                                    Telephone No. (480) 693-0800
                                    Facsimile No. (480) 693-5932
                                    Attention:  Executive Vice President -
                                                Corporate With a copy to:


                                      16.

                                    COOLEY GODWARD LLP
                                    One Maritime Plaza, 20th Floor
                                    San Francisco, CA 94111
                                    Telephone No. (415) 693-2000
                                    Facsimile No. (415) 951-3699
                                    Attention:  Samuel M. Livermore

                           (iii)    If to a Warrant Holder, to the address of
such Warrant Holder set forth on Schedule I.

                  (f)      SUCCESSORS AND ASSIGNS. This Agreement shall inure to
the benefit of and be binding upon the successors and permitted assigns of each
of the parties and shall inure to the benefit of each existing and future
Holder. The Company may not assign its rights or obligations hereunder without
the prior written consent of the Holders of a majority in interest of the
Registrable Securities, other than by operation of law pursuant to a merger or
consolidation to which the Company is a party.

                  (g)      COUNTERPARTS. This Agreement may be executed in any
number of counterparts by the parties hereto, each of which when so executed
shall be deemed to be an original and all of which taken together shall
constitute one and the same instrument.

                  (h)      GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED
TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW.

                  (i)      SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their best efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction, it being intended that all of the
rights and privileges of the parties shall be enforceable to the fullest extent
permitted by law.

                  (j)      HEADINGS. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof. All references made in this Agreement to "Section" and
"paragraph" refer to such Section or paragraph of this Agreement, unless
expressly stated otherwise.

                  (k)      ENTIRE AGREEMENT. This Agreement is intended by the
parties as a final expression of their agreement and is intended to be a
complete and exclusive statement of the agreement and understanding of the
parties hereto in respect of the subject matter contained herein and the
registration rights granted by the Company with respect to the Registrable
Securities. There are no restrictions, promises, warranties or undertakings,
other than those set forth or referred to herein, with respect to the
registration rights granted by the Company with


                                      17.

respect to the Registrable Securities. This Agreement supersedes all prior
agreements and undertakings among the parties solely with respect to such
registration rights.

                  (l)      TERMINATION. This Agreement and the obligations of
the parties hereunder shall terminate when all of the securities issued or
issuable upon exercise of the Warrants cease to be Registrable Securities,
except for any liabilities or obligations under Sections 4 or 5 hereof.

                  (m)      SPECIFIC PERFORMANCE. The parties agree that, to the
extent permitted by law, (i) the obligations imposed on them in this Agreement
are special, unique and of an extraordinary character, and that in the event of
a breach by any such party damages would not be an adequate remedy; and (ii)
each of the other parties shall be entitled to specific performance and
injunctive and other equitable relief in addition to any other remedy to which
it may be entitled at law or in equity.


                                      18.

         IN WITNESS WHEREOF, the parties have caused this Registration Rights
Agreement to be duly executed as of the date first written above.

                                            AMERICA WEST HOLDINGS CORPORATION


                                            By:
                                               _________________________________
                                               Name:
                                               Title: Executive Vice President -
                                                      Corporate


                                      19.

WARRANT HOLDERS:



By:
   _________________________________
   Name:
   Title:


                                      20.

                                   SCHEDULE I

                           Schedule of Warrant Holders



                                    EXHIBIT A

                        AMERICA WEST HOLDINGS CORPORATION

             FORM OF SELLING SECURITYHOLDER NOTICE AND QUESTIONNAIRE

         The undersigned beneficial holder of a warrant (the "Warrant") to
purchase Class B Common Stock of America West Holdings Corporation ("Holdings")
or shares of Class B Common Stock, par value $0.01, of Holdings issuable upon
exercise of the Warrant (the "Registrable Securities"), understands that
Holdings has filed or intends to file with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-3 (the "Shelf
Registration Statement") for the registration and resale under Rule 415 of the
Securities Act of 1933, as amended (the "Securities Act"), of the Registrable
Securities in accordance with the terms of the Registration Rights Agreement
(the "Registration Rights Agreement") among Holdings and certain holders of
warrants to purchase Class B Common Stock of Holdings named therein.

         A copy of the Registration Rights Agreement is available from Holdings
upon request at the address set forth below. All capitalized terms not otherwise
defined herein shall have the meaning ascribed thereto in the Registration
Rights Agreement. Each beneficial owner of Registrable Securities is entitled to
the benefits of the Registration Rights Agreement. In order to sell or otherwise
dispose of any Registrable Securities pursuant to the Shelf Registration
Statement, a beneficial owner of Registrable Securities generally will be
required to be named as a selling securityholder in the related prospectus,
deliver a prospectus to purchasers of Registrable Securities and be bound by
those provisions of the Registration Rights Agreement applicable to such
beneficial owner (including certain indemnification provisions, as described
below).

         Beneficial owners are encouraged to complete and deliver this Notice
and Questionnaire prior to the effectiveness of the Shelf Registration Statement
so that such beneficial owners may be named as selling securityholders in the
related prospectus at the time of effectiveness. Upon receipt of a completed
Notice and Questionnaire from a beneficial owner following the effectiveness of
the Shelf Registration Statement, Holdings will, as promptly as practicable,
file such amendments to the Shelf Registration Statement or supplements to the
related prospectus as are necessary to permit such holder to deliver such
prospectus to purchasers of Registrable Securities.

         Certain legal consequences arise from being named as a selling
securityholder in the Shelf Registration Statement and the related prospectus.
Accordingly, holders and beneficial owners of Registrable Securities are advised
to consult their own securities law counsel regarding the consequences of being
named or not being named as a selling securityholder in the Shelf Registration
Statement and the related prospectus.


                                       1.



                                     NOTICE

         The undersigned beneficial owner (the "Selling Securityholder") of
Registrable Securities hereby gives notice to Holdings of its intention to sell
or otherwise dispose of Registrable Securities beneficially owned by it and
listed below in Item 3 (unless otherwise specified under Item 3) pursuant to the
Shelf Registration Statement. The undersigned, by signing and returning this
Notice and Questionnaire, understands that it will be bound by the terms and
conditions of this Notice and Questionnaire and the Registration Rights
Agreement.

         The undersigned hereby provides the following information to Holdings
and represents and warrants that such information is accurate and complete:

                                  QUESTIONNAIRE

1.       (a)      Full Legal Name of Selling Securityholder:

                  ______________________________________________________________

         (b)      Full Legal Name of Registered Holder (if not the same as (a)
                  above) through which Registrable Securities listed in (3)
                  below are held:

                  ______________________________________________________________

         (c)      Full Legal Name of DTC Participant (if applicable and if not
                  the same as (b) above) through which Registrable Securities
                  listed in (3) below are held:

                  ______________________________________________________________


2.       Address for Notices to Selling Securityholder:

________________________________________________________________________________

________________________________________________________________________________

Telephone:______________________________________________________________________

Fax:____________________________________________________________________________

Contact Person:_________________________________________________________________

3.       Beneficial Ownership of Registrable Securities:

         (a)      Type and Principal Amount of Registrable Securities
                  beneficially owned:

                  ______________________________________________________________


                                       2.



         (b)      CUSIP No(s). of such Registrable Securities beneficially
                  owned:

                  ______________________________________________________________

4.       Beneficial Ownership of Holdings' securities owned by the Selling
         Securityholder:

Except as set forth below in this Item (4), the undersigned is not the
beneficial or registered owner of any securities of Holdings other than the
Registrable Securities listed above in Item (3).

         (a)      Type and Amount of Other Securities beneficially owned by the
                  Selling Securityholder:

                  ______________________________________________________________

         (b)      CUSIP No(s). of such Other Securities beneficially owned:

                  ______________________________________________________________

5.       Relationship with Holdings:

Except as set forth below, neither the undersigned nor any of its affiliates,
directors or principal equity holders (5% or more) has held any position or
office or has had any other material relationship with Holdings (or their
predecessors or affiliates) during the past three years.

State any exceptions here:

________________________________________________________________________________

________________________________________________________________________________

6. Plan of Distribution:

Except as set forth below, the undersigned (including its donees or pledgees)
intends to distribute the Registrable Securities listed above in Item (3)
pursuant to the Shelf Registration Statement only as follows (if at all): Such
Registrable Securities may be sold from time to time directly by the undersigned
or alternatively, through underwriters, broker-dealers or agents. If the
Registrable Securities are sold through underwriters or broker-dealers, the
Selling Securityholder will be responsible for underwriting discounts or
commissions or agent's commissions. Such Registrable Securities may be sold in
one or more transactions at fixed prices, at prevailing market prices at the
time of sale, at varying prices determined at the time of sale, or at negotiated
prices. Such sales may be effected in transactions (which may involve block
transactions) (i) on any national securities exchange or quotation service on
which the Registrable Securities may be listed or quoted at the time of sale,
(ii) in the over-the-counter market, (iii) in transactions otherwise than on
such exchanges or services or in the over-the-counter market, or (iv) through
the writing of options. In connection with sales of the Registrable Securities
or otherwise, the undersigned may enter into hedging transactions with
broker-dealers, which may in turn engage in short sales of the Registrable
Securities, short and deliver


                                       3.



Registrable Securities to close out such short positions, or loan or pledge
Registrable Securities to broker-dealers that in turn may sell such securities.

State any exceptions here:

________________________________________________________________________________

________________________________________________________________________________

         The undersigned acknowledges that it understands its obligation to
comply with the provisions of the Securities Exchange Act of 1934, as amended
and the rules thereunder relating to stock manipulation, particularly Regulation
M thereunder (or any successor rules or regulations), in connection with any
offering of Registrable Securities pursuant to the Shelf Registration Statement.
The undersigned agrees that neither it nor any person acting on its behalf will
engage in any transaction in violation of such provisions.

         The Selling Securityholder hereby acknowledges its obligations under
the Registration Rights Agreement to indemnify and hold harmless certain persons
as set forth therein.

         Pursuant to the Registration Rights Agreement, Holdings has agreed
under certain circumstances to indemnify and hold harmless the Selling
Securityholders as set forth therein.

         The undersigned hereby agrees that, in connection with any sale of
Registrable Securities pursuant to the Shelf Registration Statement, it will
comply with the prospectus delivery requirements, if any, of the Securities Act
of 1933, as amended (the "Securities Act"), and, at the time of any such sale,
represents, warrants and agrees that the information regarding the undersigned
included in this Notice and Questionnaire, as it may be supplemented shall be
accurate and complete in all material respects.

         In accordance with the undersigned's obligation under the Registration
Rights Agreement to provide such information as may be required by law for
inclusion in the Shelf Registration Statement regarding the undersigned, the
undersigned agrees to promptly notify Holdings of any inaccuracies or changes in
the information provided herein that may occur subsequent to the date hereof at
any time while the Shelf Registration Statement remains effective. All notices
hereunder and pursuant to the Registration Rights Agreement shall be made in
writing at the address set forth below.

         By signing below, the undersigned consents to the disclosure of the
information contained herein in its answers to items (1) through (6) above and
the inclusion of such information in the Shelf Registration Statement and the
related prospectus. The undersigned understands that such information will be
relied upon by Holdings in connection with the preparation or amendment of the
Shelf Registration Statement and the related prospectus.

         By signing below, the undersigned agrees that the terms of this Notice
and Questionnaire, and the representations and warranties contained herein,
shall be binding on, shall inure to the benefit of and shall be enforceable by
Holdings' respective successors and assigns. This Agreement shall be governed in
all respects by the laws of the State of New York.


                                       4.



         IN WITNESS WHEREOF, the undersigned, by authority duly given, has
caused this Notice and Questionnaire to be executed and delivered either in
person or by its duly authorized agent.



                                                 Dated:

                                                 Beneficial Owner

                                                 By:____________________________
                                                 Name:
                                                 Title:

PLEASE RETURN THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE TO HOLDINGS AS
SET FORTH BELOW:



America West Holdings Corporation
111 West Rio Salado Parkway
Tempe, AZ 85281
Attn: ______________
Tel: (480) 693-0800
Fax: (480) 693-5932

with a copy to:

Cooley Godward LLP
One Maritime Plaza
San Francisco, CA 94111
Attn: Samuel M. Livermore
Tel: (415) 693-2113
Fax: (415) 951-3699


                                       5.

EX-10.50

                                                                   Exhibit 10.50

                                           *** Text Omitted and Filed Separately
                                                Confidential Treatment Requested
                                          under 17 C.F.R. Sections 200.80(b)(4),
                                                            200.83 and 240.24b-2


                                    AGREEMENT

         THIS AGREEMENT (the "Agreement") is made and entered into as of this
18th day of January 2002 by America West Airlines, Inc., a Delaware corporation
("AWA"), and America West Holdings Corporation, a Delaware corporation
("Holdings"), with the Air Transportation Stabilization Board (the "ATSB").

                                    RECITALS

         WHEREAS, pursuant to the Air Transportation Safety and System
Stabilization Act, P.L. 107-42 (the "Act") the ATSB is entering into a Guarantee
Agreement with Citibank, N.A., as Lender and Agent, of even date herewith for
the benefit of AWA (the "Guarantee"); and

         WHEREAS, Section 104(a) of the Act requires the execution and delivery
of this Agreement as a condition to the issuance of the Guarantee.

         NOW, THEREFORE, in consideration of these premises and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the AWA and Holdings agree hereto as follows:

1.       DEFINITIONS.

         1.1 "CASH COMPENSATION" shall mean any compensation, other than Equity
Compensation (as hereinafter defined), paid, including amounts deferred, by AWA
and/or Holdings including:

                  (i) base salary;

                  (ii) cash bonus;

                  (iii) employer contributions under any qualified retirement
plan;

                  (iv) perquisites, including automobile allowances, positive
space travel benefits and any associated tax gross-ups, valued in a manner
consistent with the valuation of such perquisites for purposes of reporting such
perquisites in Holdings' proxy statement for its annual meetings of
stockholders;

                  (v) any other compensation required to be disclosed in
Holdings' proxy statement for its annual meeting of stockholders; and

                  (vi) other financial benefits, reasonably valued by the good
faith determination of the Compensation Committee of the Board of Directors of
AWA or Holdings, as the case may be, excluding Excluded Compensation (as
hereinafter defined).

         1.2 "COVERED EMPLOYEE" shall mean each of the employees listed on
Exhibit A hereto who constitute all of AWA's and Holdings' employees that
received Total Compensation, valued as set forth on Exhibit A hereto, that
equaled or exceeded three hundred thousand dollars ($300,000) for calendar year
2000, excluding any employee whose compensation is determined


                                       1.



pursuant to a collective bargaining agreement that was entered into prior to
September 11, 2001.

         1.3 "EQUITY COMPENSATION" shall mean any compensation paid by AWA
and/or Holdings in any of the following forms:

                  (i) stock option grants, valued as of the date of grant by
using the Black-Scholes method of valuation using assumptions consistent with
those used or to be used in connection with the preparation of Holdings' audited
financial statements for the relevant time period; and

                  (ii) restricted stock awards, valued by multiplying the number
of shares granted by the fair market value of such shares on the date of grant;
and

                  (iii) any other equity or equity-based compensation required
to be disclosed in Holdings' proxy statement for its annual meeting of
stockholders.

         1.4 "EXCLUDED COMPENSATION" shall mean any health, life, disability and
other welfare benefits whether or not insured.

         1.5 "MAXIMUM COMPENSATION" with respect to a Covered Employee shall
mean Total Compensation paid to, or for the benefit of, or granted to, or for
the benefit of, such Covered Employee for calendar year 2000, as set forth on
Exhibit A hereto; provided that if a Covered Employee was not employed for the
full calendar year 2000, such Covered Employee's Maximum Compensation will be
adjusted by (i) annualizing the amount of base salary paid to such Covered
Employee for calendar year 2000 and (ii) if such Covered Employee did not
receive a cash bonus or received a prorated cash bonus during calendar year
2000, as a result of not having been employed by AWA and/or Holdings for a
period in calendar year 2000 sufficient to be eligible for a full year bonus,
including in his Maximum Compensation such Covered Employee's assumed target
bonus as set forth on Exhibit A hereto.

         1.6 "TOTAL COMPENSATION" shall mean the sum of Cash Compensation and
Equity Compensation.

2.       RESTRICTIONS ON COMPENSATION.

         AWA and Holdings hereby covenant that during the two (2) year period
beginning September 11, 2001 and ending September 11, 2003, no Covered Employee
will receive from AWA and/or Holdings (i) Total Compensation which exceeds,
during any twelve (12) consecutive months of such two (2) year period, the
Maximum Compensation for such Covered Employee, or (ii) severance pay or other
benefits upon termination of employment with AWA and/or Holdings the value of
which exceeds twice the Maximum Compensation for such Covered Employee.

3.       REPRESENTATIONS.

         Each of AWA and Holdings jointly and severally represent and warrant to
the ATSB that:


                                       2.

         (i) the employees listed on Exhibit A hereto constitute all of AWA's
and Holdings' Covered Employees, that Exhibit A hereto is true and complete, and
that with respect to Covered Employees whose Maximum Compensation includes an
assumed target bonus pursuant to Section 1.5(ii) of the Agreement, such assumed
target bonus was determined in a manner consistent with the Compensation
Committee's of the Board of Directors of AWA or Holdings, as the case may be,
usual compensation practices;

         (ii) each of AWA and Holdings is duly organized, validly existing and
in good standing under the laws of Delaware;

         (iii) the execution, delivery and performance by AWA and Holdings of
this Agreement; (a) is within AWA's and Holdings' respective powers, and has
been duly authorized by all necessary corporate action; (b) does not contravene
the constituent documents of AWA or Holdings, or any law, rule, regulation or
administrative or court order binding on or affecting AWA or Holdings or their
respective property; and (c) does not conflict with, or constitute a breach of,
or default under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of AWA or Holdings pursuant to any
contract, employment agreement, indenture, mortgage, loan agreement, note or
other instrument to which AWA or Holdings is a party or by which AWA or Holdings
may be bound or to which AWA's or Holdings' assets may be subject;

         (iv) this Agreement constitutes a valid and binding obligation of AWA
and Holdings, enforceable against each of them in accordance with its terms,
except as the enforceability thereof may be subject to or limited by bankruptcy,
insolvency, reorganization, arrangement, moratorium or other similar laws
relating to or affecting the rights of creditors generally and general
principles (whether applied in an action at law or a suit in equity); and

         (v) no authorization, approval, consent or order of any court or
governmental authority or agency or any other person or entity is required in
connection with the execution and delivery by AWA or Holdings of this Agreement
or their performance hereunder.

4.       MISCELLANEOUS.

         4.1 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the Federal Law of the United States of America if and to the
extent such Federal Law is applicable, and otherwise in accordance with the law
of the State of New York.

         4.2 AMENDMENT AND WAIVER. This Agreement may not be amended, discharged
or terminated without the written consent of the parties hereto, and no
provision hereof may be waived without the written consent of the ATSB.

         4.3 SUCCESSORS. This Agreement and the rights and obligations of the
parties hereunder shall inure to the benefit of, and be binding upon, their
respective successors, assigns and legal representatives.

         4.4 NOTICES. Each of AWA and Holdings shall have the obligation to
notify the ATSB promptly, but in no event later than ten (10) days, following
the occurrence of any event which constitutes a breach of this Agreement. All
notices required or permitted hereunder shall


                                       3.

be in writing and shall be deemed effectively given: (i) upon personal delivery
to the party to be notified, (ii) when sent by confirmed electronic mail or
facsimile if sent during normal business hours of the recipient; if not, then on
the next business day, (iii) five (5) days after having been sent by registered
or certified mail, return receipt requested, postage prepaid, or (iv) one (1)
day after deposit with a nationally recognized overnight courier, specifying
next day delivery, with written verification of receipt. All communications
shall be sent to the party to be notified at the address as set forth on the
signature page hereof or at such other address as such party may designate by
ten (10) days advance written notice to the other parties hereto.

         4.5 SEVERABILITY. In the event one or more of the provisions of this
Agreement should, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality, or unenforceability
shall not affect any other provisions of this Agreement, and this Agreement
shall be construed as if such invalid, illegal or unenforceable provision had
never been contained herein.

         4.6 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.







                           [Intentionally Left Blank]


                                       4.

         The foregoing AGREEMENT is hereby executed as of the date first above
written.

AMERICA WEST HOLDINGS CORPORATION

By: /s/ Douglas Parker
   --------------------------------------------------

Name: W. Douglas Parker
     ------------------------------------------------

Title: President and Chief Executive Officer
      -----------------------------------------------

Address:     111 West Rio Salado Parkway
             Tempe, AZ  85281

AMERICA WEST AIRLINES, INC.

By: /s/ Douglas Parker
   --------------------------------------------------

Name: W. Douglas Parker
     ------------------------------------------------

Title: President and Chief Executive Officer
      -----------------------------------------------

Address:     4000 East Sky Harbor Boulevard
             Phoenix, AZ  85034

ACCEPTED AND AGREED:

AIR TRANSPORTATION STABILIZATION BOARD

By: /s/ Joseph P. Adams, Jr.
   --------------------------------------------------

Name: Joseph P. Adams, Jr.
     ------------------------------------------------

Title: Executive Director
      -----------------------------------------------

Address:     1120 Vermont Avenue, Suite 970
             Washington, D.C.  20005

With a copy to:

Address:     United States Department of the Treasury
             1500 Pennsylvania Avenue, N.W.
             Washington, D.C.  20220
             Attn:  Deputy Assistant Secretary (Government Financial Policy)



                                       5.

EXHIBIT A

                   2000 EXECUTIVE COMPENSATION ABOVE $300,000
                             (NEW HIRES ANNUALIZED)




                                                                             CASH COMPENSATION          ---------------------------
                                                                       ------------------------------    TOTAL   OPTIONS     GRANT
HIRE DATE  NAME                  TITLE                                 EARNINGS    BONUS   TOTAL CASH   GRANTED  GRANTED     DATE
- ---------  ----                  -----                                 --------    -----   ----------   -------  -------  ---------
                                                                                                  
12-Jun-95  PARKER, W.DOUGLAS     EXECUTIVE VP CORPORATE GROUP          $398,658  $233,295   $631,953    195,000  115,000  26-Jul-00
[...***...]
[...***...]
[...***...]
[...***...]
 6-Feb-95  JOHNSON, STEPHEN L.   SR VP CHIEF ADMINISTRATIVE OFFICER    $286,429  $145,222   $431,651     25,000        0
[...***...]
[...***...]
[...***...]
[...***...]
15-Sep-99  MCCLELLAND,JEFFREY    SR VP OPERATIONS                      $287,933   $41,517   $329,450     22,000        0
[...***...]
[...***...]
[...***...]
[...***...]
[...***...]
[...***...]
[...***...]
[...***...]
[...***...]




                                                              LONG TERM INCENTIVES
                                 --------------------------------------------------------------------------------
                                     BS       OPTIONS    GRANT       BS        TOTAL      RESTRICTED     TOTAL      VALUE OF
HIRE DATE  NAME                    VALUE      GRANTED    DATE       VALUE     BS VALUE      GRANTS     LONG TERM   PERQUISITES
- ---------  ----                  ----------   -------  ---------   --------   ----------  ----------   ----------  -----------
                                                                                        
12-Jun-95  PARKER, W.DOUGLAS     $1,262,940   80,000   14-Dec-00   $581,758   $1,844,699   $331,250    $2,175,949     $13,566
[...***...]
[...***...]
[...***...]
[...***...]
 6-Feb-95  JOHNSON, STEPHEN L.           $0   25,000   14-Dec-00   $181,799     $181,799         $0      $181,799     $15,722
[...***...]
[...***...]
[...***...]
[...***...]
15-Sep-99  MCCLELLAND,JEFFREY            $0   22,000   14-Dec-00   $159,984     $159,984         $0      $159,984     $15,862
[...***...]
[...***...]
[...***...]
[...***...]
[...***...]
[...***...]
[...***...]
[...***...]
[...***...]





                                    TOTAL
HIRE DATE  NAME                  COMPENSATION
- ---------  ----                  ------------
                           
12-Jun-95  PARKER, W.DOUGLAS      $2,821,468
[...***...]
[...***...]
[...***...]
[...***...]
 6-Feb-95  JOHNSON, STEPHEN L.      $629,172
[...***...]
[...***...]
[...***...]
[...***...]
15-Sep-99  MCCLELLAND,JEFFREY       $505,296
[...***...]
[...***...]
[...***...]
[...***...]
[...***...]
[...***...]
[...***...]
[...***...]
[...***...]



                                            *** Confidential Treatment Requested

EX-10.51

                                                                   Exhibit 10.51

                                            ***Text Omitted and Filed Separately
                                                Confidential Treatment Requested
                                          Under 17 C.F.R. Sections 200.80(b)(4),
                                                            200.83 and 240.24b-2

                                                                       EXECUTION




                                  $429,000,000

                                 LOAN AGREEMENT


                          DATED AS OF JANUARY 18, 2002

                                      AMONG

                           AMERICA WEST AIRLINES, INC.
                                  AS BORROWER,

                                 CITIBANK, N.A.,
                               AS INITIAL LENDER,

                             KPMG CONSULTING, INC.,
                             AS LOAN ADMINISTRATOR,

                                 CITIBANK, N.A.,
                                    AS AGENT,


                                       AND

                     AIR TRANSPORTATION STABILIZATION BOARD

                                TABLE OF CONTENTS



                                                                            Page
                                                                            ----
                                                                         
ARTICLE I DEFINITIONS, INTERPRETATION AND ACCOUNTING TERMS ...............    1

      Section 1.1.   Defined Terms .......................................    1
      Section 1.2.   Computation of Time Periods .........................   19
      Section 1.3.   Accounting Terms and Principles .....................   19
      Section 1.4.   Certain Terms .......................................   20

ARTICLE II THE LOAN ......................................................   20

      Section 2.1.   The Loan ............................................   20
      Section 2.2.   Borrowing Procedures ................................   21
      Section 2.3.   Scheduled Repayment of the Loan .....................   21
      Section 2.4.   Evidence of Debt; Use of Proceeds ...................   22
      Section 2.5.   Optional Prepayments ................................   23
      Section 2.6.   Mandatory Prepayments ...............................   24
      Section 2.7.   Interest ............................................   26
      Section 2.8.   Fees ................................................   26
      Section 2.9.   Payments and Computations ...........................   28
      Section 2.10.  Certain Provisions Governing the Note ...............   30
      Section 2.11.  Capital Adequacy ....................................   32
      Section 2.12.  Taxes ...............................................   33

ARTICLE III CONDITIONS TO LOAN ...........................................   36

      Section 3.1.   Conditions Precedent to the Loan ....................   36

ARTICLE IV REPRESENTATIONS AND WARRANTIES ................................   40

      Section 4.1.   Organization, Powers, Qualification, Good Standing,
                     Business, Subsidiaries, the Act and the Regulations .   40
      Section 4.2.   Authorization of Borrowing, Etc .....................   41
      Section 4.3.   Financial Condition .................................   42
      Section 4.4.   No Material Adverse Change; No Restricted Payments ..   42
      Section 4.5.   Title To Properties; Liens ..........................   43
      Section 4.6.   Litigation; Adverse Facts ...........................   43
      Section 4.7.   Payment of Taxes ....................................   43
      Section 4.8.   Performance of Agreements; Materially Adverse
                     Agreements ..........................................   44
      Section 4.9.   Governmental Regulation .............................   44
      Section 4.10.  Securities Activities ...............................   44
      Section 4.11.  Employee Benefit Plans ..............................   44
      Section 4.12.  Environmental Protection ............................   46
      Section 4.13.  Solvency ............................................   46
      Section 4.14.  Disclosure ..........................................   46
      Section 4.15.  Compliance With Laws ................................   47
      Section 4.16.  Concession Agreements ...............................   47
      Section 4.17.  Indebtedness ........................................   47



                                      (i)

                                TABLE OF CONTENTS
                                   (CONTINUED)

                                                                         
ARTICLE V COVENANTS ......................................................   47

      Section 5.1.   Financial Statements and Other Reports ..............   48
      Section 5.2.   Corporate Existence .................................   53
      Section 5.3.   Payment of Taxes and Claims; Tax Consolidation ......   53
      Section 5.4.   Maintenance of Properties; Insurance ................   53
      Section 5.5.   Inspection ..........................................   54
      Section 5.6.   Compliance With Laws, Etc ...........................   54
      Section 5.7.   Borrower's Remedial Action Regarding Hazardous
                     Materials ...........................................   54
      Section 5.8.   Further Assurances ..................................   55
      Section 5.9.   Employee Benefit Plans ..............................   55
      Section 5.10.  FAA Matters; Citizenship ............................   55
      Section 5.11.  Board Guarantee .....................................   55
      Section 5.12.  Lower-Tier Covered Transaction ......................   56
      Section 5.13.  Audits and Reviews ..................................   56
      Section 5.14.  Substitution of Collateral ..........................   56

ARTICLE VI NEGATIVE COVENANTS ............................................   56

      Section 6.1.   Liens and Related Matters ...........................   57
      Section 6.2.   Investments .........................................   57
      Section 6.3.   Restricted Payments .................................   58
      Section 6.4.   Financial Covenant ..................................   58
      Section 6.5.   Restriction on Fundamental Changes; Asset Sales
                     and Acquisitions; New Subsidiaries ..................   58
      Section 6.6.   Sales and Lease-Backs ...............................   60
      Section 6.7.   Transactions with Affiliates ........................   60
      Section 6.8.   Conduct of Business .................................   61
      Section 6.9.   Merger or Consolidation .............................   61
      Section 6.10.  Limitation on Asset Sales ...........................   62
      Section 6.11.  Limitation on Issuances and Dispositions of Capital
                     Stock of Subsidiaries ...............................   62
      Section 6.12.  Limitation on Creation of New Subsidiaries ..........   63
      Section 6.13.  Limitations on Amendments ...........................   63
      Section 6.14.  No Further Negative Pledges .........................   64
      Section 6.15.  Incentive Equity Plan ...............................   64

ARTICLE VII EVENTS OF DEFAULT ............................................   64

      Section 7.1.   Events of Default ...................................   64
      Section 7.2.   Remedies ............................................   66

ARTICLE VIII THE LOAN ADMINISTRATOR ......................................   67

      Section 8.1.   Acceptance of Appointment and Services ..............   67
      Section 8.2.   Loan Administrator's Reliance .......................   70
      Section 8.3.   Indemnification .....................................   71




                                      (ii)

                                TABLE OF CONTENTS
                                   (CONTINUED)

                                                                         
      Section 8.4.   Successor Loan Administrator ........................   71
      Section 8.5.   Conflict of Interest ................................   72
      Section 8.6.   Representations, Warranties and Covenants of the
                     Loan Administrator ..................................   73

ARTICLE IX THE AGENT .....................................................   74

      Section 9.1.   Authorization and Action ............................   74
      Section 9.2.   Agent's Reliance, Etc ...............................   74
      Section 9.3.   Agent and Affiliates ................................   75
      Section 9.4.   Representations of the Lenders and of the Board .....   75
      Section 9.5.   Events of Default; Termination of Board Guarantee ...   76
      Section 9.6.   Agent's Right to Indemnity ..........................   76
      Section 9.7.   Indemnification of Agent ............................   76
      Section 9.8.   Successor Agent .....................................   77

ARTICLE X  MISCELLANEOUS .................................................   77

      Section 10.1.  Amendments, Waivers, Etc ............................   77
      Section 10.2.  Assignments and Participations ......................   79
      Section 10.3.  Costs and Expenses ..................................   81
      Section 10.4.  Indemnities .........................................   81
      Section 10.5.  Right of Set-off ....................................   82
      Section 10.6.  Sharing of Payments, Etc. ...........................   82
      Section 10.7.  Notices, Etc. .......................................   83
      Section 10.8.  No Waiver; Remedies .................................   83
      Section 10.9.  Independence of Covenants ...........................   83
      Section 10.10. Governing Law .......................................   84
      Section 10.11. Submission to Jurisdiction; Service of Process ......   84
      Section 10.12. Waiver of Jury Trial ................................   84
      Section 10.13. Marshaling; Payments Set Aside ......................   84
      Section 10.14. Section Titles ......................................   85
      Section 10.15. Execution in Counterparts ...........................   85
      Section 10.16. Third Party Beneficiary .............................   85
      Section 10.17. Severability ........................................   85
      Section 10.18. Confidentiality .....................................   85



Annexes

Annex A     -     Notice Addresses
Annex B     -     Lending Office
Annex C     -     Guarantee Rate Schedule


Schedules


                                     (iii)

                               TABLE OF CONTENTS
                                  (CONTINUED)

Schedule 2.3(b)   Adjusted Unit Employee Costs
Schedule 2.8      Loan Administrator Fee Rate Schedule
Schedule 4.1      Subsidiaries
Schedule 4.7      Tax Agreements
Schedule 4.17     Indebtedness
Schedule 6.1      Liens and Payment Restrictions
Schedule 6.7(b)   Transactions with Affiliates


Exhibits

Exhibit A    -    Form of Assignment and Acceptance
Exhibit B    -    Form of Note
Exhibit C    -    Form of Notice of Borrowing
Exhibit D    -    Form of Board Guarantee
Exhibit E    -    Form of Warrant







                                      (iv)

                  LOAN AGREEMENT, dated as of January 18, 2002, among AMERICA
WEST AIRLINES, INC., a Delaware corporation (the "Borrower"); CITIBANK, N.A.,
(together with its successors, the "Initial Lender"); KPMG CONSULTING, INC., in
its capacity as loan administrator hereunder (together with its successors and
permitted assigns, the "Loan Administrator"); CITIBANK, N.A., as agent for the
Lenders (in such capacity, together with its successors and permitted assigns,
the "Agent"); and AIR TRANSPORTATION STABILIZATION BOARD, created pursuant to
Section 102 of the Act referred to below (the "Board").

                              W I T N E S S E T H:

                  WHEREAS, the Borrower has requested that the Initial Lender
make available to the Borrower a Loan for such general corporate purposes as are
permissible under the Air Transportation Safety and System Stabilization Act,
P.L. 107-42, as the same may be amended from time to time (the "Act") and the
regulations for Air Carrier Guarantee Loan Program issued pursuant to the Act,
14 C.F.R. Part 1300, as the same may be amended from time to time (the
"Regulations"); and

                  WHEREAS, the Initial Lender is willing to make available to
the Borrower the Loan upon the terms and subject to the conditions set forth
herein;

                  NOW, THEREFORE, in consideration of the premises and the
covenants and agreements contained herein, the parties hereto hereby agree as
follows:

                                   ARTICLE I

                DEFINITIONS, INTERPRETATION AND ACCOUNTING TERMS

                  SECTION 1.1.      DEFINED TERMS. As used in this Agreement,
the following terms have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):

                  "Act" has the meaning specified in the first recital to this
Agreement.

                  "Adjusted Unit Employee Costs" has the meaning specified in
Schedule 2.3(b).

                  "Affiliate" means, with respect to any Person, any other
Person which, directly or indirectly, controls, is controlled by or is under
common control with such Person. For the purposes of this definition, "control"
means the possession, directly or indirectly, of the power to direct or cause
the direction of management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.

                  "Agent" has the meaning specified in the preamble to this
Agreement.

                  "Agreement" means this Loan Agreement.

                  "Airbus Counter-Guarantor " means AFS Cayman Limited, a
company incorporated under the laws of the Cayman Islands.

                  "Aircraft Related Equipment" has the meaning specified in the
definition of "Asset Sale".

                  "Alliance Agreements" means those certain business alliance
agreements among the Borrower and any of Chautauqua Airlines, Inc., Continental
Airlines, Inc. or Mesa Airlines, Inc. and such other parties or agreements from
time to time that include, but are not limited to, code-sharing, frequent flyer,
ground handling and marketing agreements that are entered into in the ordinary
course of business.

                  "Applicable Interest Rate" means a rate per annum equal to
LIBOR plus 0.40% per annum.

                  "Application" means the Amended and Restated Application of
the Borrower to the Board for the issuance of a federal credit instrument under
the Act and the Regulations dated the Closing Date.

                  "Approved Fund" means, as of any date of determination and
with respect to any Lender that is a fund engaged in the ordinary course of its
business in commercial lending (including making loans which are not guaranteed
by the Board), any other fund that is then engaged in the ordinary course of its
business in commercial lending (including making loans which are not guaranteed
by the Board) and is advised or managed by the same investment advisor as such
Lender or by an Affiliate of such investment advisor.

                  "ASM" means the "available seat miles" of the Borrower.

                  "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
Borrower or any of its Subsidiaries to any Person other than the Borrower or any
of its Subsidiaries of (i) all or any of the Capital Stock of any Subsidiary of
the Borrower, (ii) all or substantially all of the property and assets of an
operating unit or business of the Borrower or any of its Subsidiaries or (iii)
any other property and assets of the Borrower or any of its Subsidiaries outside
the ordinary course of business of the Borrower or such Subsidiary; provided
that none of (A) sales or other dispositions of inventory, receivables and other
current assets, or (B) sale leasebacks of aircraft (including aircraft engines
installed thereon) in the Borrower's fleet, spare aircraft engines, aircraft
parts, simulators and passenger loading bridges or other flight or ground
equipment ("Aircraft Related Equipment") in connection with the acquisition of
such Aircraft Related Equipment by the Borrower and entered into within eighteen
months after such acquisition shall be included within the meaning of "Asset
Sale."

                  "Assignment and Acceptance" means an assignment and acceptance
entered into by a Lender and an Eligible Lender, consented to by the Board and
accepted


                                       2

by the Agent (unless consummated pursuant to Section 10.2(d)), in substantially
the form of Exhibit A.

                  "Bankruptcy Code" means Title 11 of the United States Code as
now and hereafter in effect, or any successor statute.

                  "Board" has the meaning specified in the preamble to this
Agreement.

                  "Board Guarantee" means the Guarantee Agreement dated as of
the date hereof and executed by the Board, the Initial Lender and the Agent, in
substantially the form of Exhibit D.

                  "Borrower" has the meaning specified in the preamble to this
Agreement.

                  "Borrowing" means the borrowing of the Loan.

                  "Business Day" means a day of the year on which banks are not
required or authorized to close in New York, New York or Phoenix, Arizona and,
if the applicable Business Day relates to notices, determinations, fundings and
payments in connection with LIBOR, a day on which dealings in Dollar deposits
are also carried on in the London interbank market.

                  "Business Plan" means the business plan of the Borrower
submitted to the Board with its December 19, 2001 restated Application.

                  "Capital Lease," as applied to any Person, means any lease of
any property (whether real, personal or mixed) by that Person as lessee that, in
conformity with GAAP, is required to be accounted for as a capital lease on the
balance sheet of that Person, and the amount of Indebtedness represented by such
lease shall be the capitalized amount of the obligations evidenced thereby
determined in accordance with GAAP.

                  "Capital Stock" means, with respect to any Person, any and all
shares, interests, participations or other equivalents (however designated,
whether voting or non-voting) of such Person's capital stock, whether now
outstanding or issued after the date of this Agreement, including, without
limitation, all Common Stock.

                  "Cash" means money, currency or a credit balance.

                  "Cash Equivalents" means, as at any date of determination, (i)
marketable securities (a) issued or directly and unconditionally guaranteed as
to interest and principal by the United States Government or (b) issued by any
agency or instrumentality of the United States the obligations of which are
backed by the full faith and credit of the United States, in each case maturing
within one year after such date; (ii) marketable direct obligations issued by
any state of the United States of America or any political subdivision of any
such state or any instrumentality thereof, in each case maturing within one year
after such date and having, at the time of the acquisition thereof, the highest
rating obtainable from either S&P or Moody's; (iii) commercial paper not issued
by the Borrower maturing no more than one year after such date and having, at
the time of the


                                       3

acquisition thereof, a rating of at least A-2 from S&P or at least P-2 from
Moody's; (iv) certificates of deposit or bankers' acceptances maturing within
one year after such date and issued or accepted by any Lender or by any
commercial bank organized under the laws of the United States of America or any
state thereof or the District of Columbia that (a) is at least "adequately
capitalized" (as defined in the regulations of its primary Federal banking
regulator) and (b) has Tier 1 capital (as defined in such regulations) of not
less than $100,000,000; and (v) shares of any money market mutual fund that (a)
has at least 95% of its assets invested continuously in the types of investments
referred to in clauses (i) and (ii) above, (b) has net assets of not less than
$500,000,000, and (c) has the highest rating obtainable from either S&P or
Moody's.

                  "Cash Proceeds" means, with respect to any Asset Sale, the
proceeds of such Asset Sale in the form of Cash and Cash Equivalents, including
payments of deferred payment obligations (to the extent corresponding to the
principal, but not the interest component thereof) when received in the form of
Cash or Cash Equivalents and proceeds from the conversion of other property
received when converted to Cash or Cash Equivalents.

                  "Change in Control" means (i) the acquisition at any time by
any Person (other than TPG, L.P. or any of its Affiliates or Holdings) or two or
more Persons acting in concert of "beneficial ownership" (within the meaning of
Section 13(d) under the Exchange Act and the rules and regulations promulgated
thereunder) in excess of 35% of the total voting power of the Voting Stock of
the Borrower or Holdings; (ii) the sale, lease, transfer or other disposition,
of all or substantially all of the assets of the Borrower or Holdings to any
Person or two or more Persons acting in concert as an entirety or substantially
as an entirety in one transaction or a series of related transactions; (iii) the
merger or consolidation of the Borrower or Holdings, with or into another
corporation, or the merger of another corporation into the Borrower or Holdings,
or any other transaction, with the effect that a Person (other than TPG, L.P. or
any of its Affiliates or Holdings) or two or more Persons acting in concert has
"beneficial ownership" (within the meaning of Section 13(d) of the Exchange Act
and the rules and regulations promulgated thereunder) in excess of 35% of the
Voting Stock of the Borrower or Holdings, or (if the Borrower or Holdings is not
the surviving corporation in such transaction) such other corporation
(including, in any such case, indirect ownership through another Person); (iv)
the liquidation or dissolution of the Borrower or Holdings; or (v) if a majority
of the board of directors of such Person shall no longer be composed of
individuals (a) who were members of said board on the date hereof, (b) whose
election or nomination to said board was approved by individuals referred to in
clause (a) above constituting at the time of such election or nomination at
least a majority of said board or (c) whose election or nomination to said board
was approved by individuals referred to in clauses (a) and (b) above
constituting at the time of such election or nomination at least a majority of
said board. For purposes of this definition, the term Person includes a "person"
or "group" within the meaning of Rule 13d-3 under the Exchange Act.

                  "Closing Date" means the date on which the Loan is made.

                  "Commitment" has the meaning specified in Section 2.1.


                                       4

                  "Commodity Agreement" means any agreement or arrangement
designed to protect the Borrower or any of its Subsidiaries against fluctuations
in the prices of commodities used by the Borrower or any of its Subsidiaries in
the ordinary course of its business.

                  "Common Stock" means, with respect to any Person, any and all
shares, interests, participations or other equivalents (however designated,
whether voting or non-voting) of such Person's common stock, whether now
outstanding or issued after the date of this Agreement, including, without
limitation, all series and classes of such common stock.

                  "Compliance Certificate" means a certificate by the Borrower
signed by a Responsible Officer on behalf of the Borrower and delivered in
accordance with Section 5.1(iii) hereof.

                  "Concessions" has the meaning specified in Section 3.1(c)(ii).

                  "Contractual Obligation," as applied to any Person, means any
provision of any equity security issued by that Person or of any material
indenture, mortgage, deed of trust, contract, undertaking, agreement or other
material instrument to which that Person is a party or by which it or any of its
properties is bound or to which it or any of its properties is subject.

                  "Counter-Guarantee" means, as the context may require, any or
all of the Counter-Guarantee Agreements, each dated as of the date hereof and
executed by the applicable Counter-Guarantor, the Initial Lender and the Agent,
each substantially in form and substance satisfactory to the Agent and the
Initial Lender.

                  "Counter-Guarantee Fee" means, with respect to each date set
forth in Annex C, the counter-guarantee fee payable to each Counter-Guarantor on
such date in an amount equal to the product of (x) the Guarantee Rate for such
date and (y) the average outstanding amount of the portion of the Loan covered
by such Counter-Guarantor's Counter-Guarantee scheduled to be outstanding for
the then succeeding twelve month period as determined by the Agent as of the
date of payment of such fee and after giving effect to any payment of principal
of the Loan made on such date or any prior prepayment of the Loan (and
commencing with the anniversary date beginning the twelve-month period in which
amortization of the principal of the Loan is first scheduled to begin, computed
on the basis of a year of 360 days and actual number of days elapsed).

                  "Counter-Guarantee Taxes" has the meaning specified in Section
2.12(b).

                  "Counter-Guarantor" means, as the context may require, any or
all of the Airbus Counter-Guarantor, the GECC Counter-Guarantor and the debis
Counter-Guarantor.
                  "Counter-Guarantor Letter of Credit" means, with respect to
any applicable Counter-Guarantee, an irrevocable standby letter of credit issued
by a "Letter


                                       5

of Credit Bank" (as defined in such Counter-Guarantee), in favor of the Agent,
in the form required under such Counter-Guarantee.

                  "Currency Agreement" means any foreign exchange contract,
currency swap agreement, futures contract, option contract, synthetic cap or
other similar agreement or arrangement designed to protect the Borrower or any
of its Subsidiaries against fluctuations in currency values.

                  "debis Counter-Guarantor" means debis AirFinance Leasing USA
I, Inc., a corporation organized under the laws of the state of Connecticut, and
any Affiliate assignee thereof permitted under the relevant Counter-Guarantee.

                  "Default" means any event which with the passing of time or
the giving of notice or both would become an Event of Default.

                  "Disclosed Defaults" means the events described in a letter
dated the date hereof from the Borrower to the Agent, the Initial Lender, each
Counter-Guarantor, the Loan Administrator and the Board.

                  "Dollars" and the sign "$" each mean the lawful money of the
United States of America.

                  "Eligible Affiliate" means with respect to any Lender, an
Affiliate of such Lender which is an Eligible Lender.

                  "Eligible Lender" means any "lender" under and as defined in
the Act and the Regulations.

                  "Employee Compensation Agreement" has the meaning specified in
Section 3.1(c)(i).

                  "Environmental Claim" means any material investigation,
notice, claim, suit, proceeding, demand or order, by any governmental authority
or any Person arising in connection with any alleged or actual material
violation of Environmental Laws or with any Hazardous Material, or any actual or
alleged damage, or harm to health, safety or the environment.

                  "Environmental Laws" means any and all current or future
statutes, ordinances, orders, rules, regulations, guidance documents, judgments,
governmental authorizations, or any other requirement of governmental
authorities relating to (a) the prevention or control of pollution or protection
of the environment, (b) solid, gaseous or liquid waste generation, handling,
treatment, storage, disposal, discharge, release, emission or transportation, or
(c) exposure to Hazardous Materials. "Environmental Laws" shall include, but not
be limited to, the Comprehensive Environmental Response, Compensation and
Liability Act (42 U.S.C. 9601 et seq.), the Resource Conservation and Recovery
Act (42 U.S.C. 6901 et seq.), the National Environmental Policy Act (42 U.S.C.
4321 et seq.), the Hazardous Materials Transportation Act (49 U.S.C. 1801 et
seq.), the Toxic Substances Control Act (49 U.S.C. 2601 et seq.), the Clean Air
Act (42


                                       6

U.S.C. 7401 et seq.), the Federal Water Pollution Control Act (33 U.S.C. 1251 et
seq.), the Safe Drinking Water Act (42 U.S.C. 3007 et seq.), the Emergency
Planning and Community Right-to-Know Act (42 U.S.C. 11001 et seq.), the
Occupational Safety and Health Act (29 U.S.C. 641 et seq.), and the State of
Arizona Environmental Quality Act (A.R.S. 49-101 et seq.).

                  "ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and any successor statute.

                  "ERISA Affiliate" means, as applied to the Borrower, (i) any
corporation which is, or was at any time, a member of a controlled group of
corporations within the meaning of Section 414(b) of the Internal Revenue Code
of which the Borrower is a member; (ii) any trade or business (whether or not
incorporated) which is a member of a group of trades or businesses under common
control within the meaning of Section 414(c) of the Internal Revenue Code of
which the Borrower is a member; and (iii) any member of an affiliated service
group within the meaning of Section 414(m) or (o) of the Internal Revenue Code
of which the Borrower, any corporation described in clause (i) above or any
trade or business described in clause (ii) above is a member.

                  "Event of Default" has the meaning specified in Section 7.1.

                  "Excess Proceeds" has the meaning specified in Section 6.10.

                  "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, and any successor statute.

                  "Facilities" means any and all real property now, hereafter or
heretofore owned, leased, operated or used by the Borrower or any of its
Subsidiaries and any of their respective predecessors.

                  "Federal Reserve Board" means the Board of Governors of the
Federal Reserve System, or any successor thereto.

                  "Fiscal Year" means the Borrower's fiscal year referenced in
the financial statements to be delivered by the Borrower pursuant to Section
5.1.

                  "Future Issuance" means each (i) borrowing by Holdings or the
Borrower or any of its respective Subsidiaries from any source, including in the
debt capital markets or from commercial bank lenders after the date of this
Agreement and (ii) issuance of any Capital Stock by Holdings, the Borrower or
any of its Subsidiaries after the date of this Agreement.

                  "GAAP" means, subject to the limitations on the application
thereof set forth in Section 1.3, generally accepted accounting principles set
forth in opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession. Financial statements and


                                       7

other information required to be delivered by the Borrower to the Lenders
pursuant to Section 5.1 shall be prepared in accordance with GAAP as in effect
at the time of such preparation.

                  "GECC Counter-Guarantor " means General Electric Capital
Corporation, a Delaware corporation and any Affiliate assignee thereof permitted
under the relevant Counter-Guarantee.

                  "Governmental Authority" means any nation or government, any
state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.

                  "Governmental Authorization" means any permit, license,
certificate, authorization, plan, directive, consent order or consent decree of
or from any Governmental Authority.

                  "Guarantee" means any obligation, contingent or otherwise, of
any Person directly or indirectly guaranteeing any Indebtedness or other
obligation of any other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or otherwise, of such
first Person (i) to purchase or pay (or advance or supply funds for the purchase
or payment of) such Indebtedness or other obligation of such other Person
(whether arising by virtue of partnership arrangements, or by agreement to
keep-well, to purchase assets, goods, securities or services, to take-or-pay, or
to maintain financial statement conditions or otherwise) or (ii) entered into
for purposes of assuring in any other manner the obligee of such Indebtedness or
other obligation of the payment thereof or to protect such obligee against loss
in respect thereof (in whole or in part). The term "Guarantee" used as a verb
has a corresponding meaning.

                  "Guarantee Fee" means, with respect to each date set forth in
Annex C, an amount equal to the product of (x) the Guarantee Rate set forth
opposite such date in Annex C and (y) the average outstanding portion of the
Guaranteed Percentage of the amount of the Loan scheduled to be outstanding for
the then succeeding twelve month period as determined by the Agent as of the
date of payment of such fee and after giving effect to any payment of the
principal of the Loan made on such date or any prior prepayment of the Loan (and
commencing with the anniversary date beginning the twelve-month period in which
amortization of the principal of the Loan is first scheduled to begin, computed
on the basis of a year of 360 days and actual number of days elapsed).

                  "Guarantee Rate" means with respect to each date set forth in
Annex C hereto, the percentage set forth opposite such date.

                  "Guaranteed Percentage" means 88.473193473%, which is the
percentage of the maximum principal amount of the Loan covered by the Board
Guarantee.

                  "Hazardous Materials" means any chemical or other material or
substance, exposure to or Release of which is now or hereafter prohibited,
limited or regulated under any law.


                                       8

                  "Hazardous Materials Activity" means any past, current,
proposed, or threatened use, storage, release, generation, treatment,
remediation or transportation of any Hazardous Material (i) from, under, in,
into or on the Facilities or surrounding property; and (ii) caused by, or
undertaken by or on behalf of, the Borrower, any of its Subsidiaries or any of
their respective predecessors.

                  "Holdings" means America West Holdings Corporation, a Delaware
corporation.

                  "Indebtedness" means, with respect to any Person at any date
of determination (without duplication), (i) all indebtedness of such Person for
borrowed money; (ii) all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments; (iii) all obligations of such
Person in respect of letters of credit or other similar instruments (including
reimbursement obligations with respect thereto); (iv) all obligations of such
Person to pay the deferred and unpaid purchase price of property or services,
which purchase price is due more than six months after the date of placing such
property in service or taking delivery and title thereto or the completion of
such services, except Trade Payables; (v) all Capital Lease obligations of such
Person (the amount of the Indebtedness in respect of Capital Lease obligations
to be determined as provided in the definition of Capital Lease in this Section
1.1); (vi) all Indebtedness of other Persons secured by a Lien on any asset of
such Person, whether or not such Indebtedness is assumed by such Person;
provided that the amount of such Indebtedness shall be the lesser of (A) the
fair market value of such asset at such date of determination and (B) the stated
principal amount of such Indebtedness; (vii) all Indebtedness of other Persons
Guaranteed by such Person to the extent such Indebtedness is Guaranteed by such
Person; and (viii) to the extent not otherwise included in this definition and
to the extent treated as a liability under GAAP, obligations under Currency
Agreements, Interest Rate Agreements and Commodity Agreements. The amount of
Indebtedness of any Person at any date shall be the outstanding balance at such
date of all unconditional obligations as described above and the maximum
liability, upon the occurrence of the contingency giving rise to the obligation,
of any contingent obligations at such date; provided that the amount outstanding
at any time of any Indebtedness issued with original issue discount is the face
amount of such Indebtedness less the remaining unamortized portion of the
original issue discount of such Indebtedness at such time as determined in
conformity with GAAP.

                  "Indemnified Liabilities" has the meaning specified in Section
10.4.

                  "Indemnified Taxes" has the meaning specified in Section
2.12(a).

                  "Indemnitees" has the meaning specified in Section 10.4.

                  "Initial Lender" has the meaning specified in the preamble to
this Agreement.

                  "Interest Payment Date" has the meaning specified in Section
2.7(b).


                                       9

                  "Interest Period" means (a) initially, the period commencing
on the Closing Date and ending on March 31, 2002, and (b) thereafter, a period
commencing on the last day of the immediately preceding Interest Period therefor
and ending three months thereafter; provided, however, that:

                  (i)      the Interest Period commencing in June, 2008 shall
         end on the Loan Maturity Date;

                  (ii)     if any Interest Period would otherwise end on a day
         which is not a Business Day, such Interest Period shall be extended to
         the next succeeding Business Day, unless the result of such extension
         would be to extend such Interest Period into another calendar month, in
         which event such Interest Period shall end on the immediately preceding
         Business Day;

                  (iii)    any Interest Period that begins on the last Business
         Day of a calendar month (or on a day for which there is no numerically
         corresponding day in the calendar month at the end of such Interest
         Period) shall end on the last Business Day of a calendar month; and

                  (iv)     following a Default or an Event of Default, each
         "Interest Period" shall be for such duration of one month or less as
         shall be selected by the Agent by notice to the Borrower, each Lender
         and the Board on or prior to the start of such Interest Period (and in
         the absence of any such notice or selection, the applicable Interest
         Period shall be determined as provided above without regard to this
         clause (iv)).

                  "Interest Rate Agreement" means any interest rate future
agreement, interest rate option agreement, interest rate swap agreement,
interest rate cap agreement, interest rate collar agreement, interest rate hedge
agreement or other similar agreement or arrangement designed to protect the
Borrower or any of its Subsidiaries against fluctuations in interest rates or
under which the Borrower or any of its Subsidiaries is a party or a beneficiary
on the date of this Agreement or becomes a party or a beneficiary thereafter.

                  "Internal Revenue Code" means the Internal Revenue Code of
1986, as amended to the date hereof and from time to time hereafter.

                  "Investment" means with respect to any Person, any direct or
indirect advance, loan (other than advances to customers in the ordinary course
of business consistent with past practices that are recorded as accounts
receivable on the balance sheet of such Person or its Subsidiaries) or other
extension of credit or capital contribution by such Person to any other Person
by means of any transfer of cash or other property to others or any payment for
property or services for the account or use of others or any purchase or
acquisition by such person of Capital Stock, bonds, notes, debentures or other
similar instruments issued by any other Person; provided, that advances or loans


                                       10

by the Borrower to Holdings made in accordance with Section 6.3 shall not
constitute an Investment.

                  "IRS" means the Internal Revenue Service of the United States
or any successor thereto.

                  "Labor Cost Payment Amount" means, for any Fiscal Year, the
product of (i) the positive difference between the actual salaries and benefits
costs per ASM (computed based upon the Borrower's audited financial statements
included in its Form 10-K for such Fiscal Year) and the Adjusted Unit Employee
Cost for such Fiscal Year, multiplied by (ii) the actual ASMs flown in such
Fiscal Year (as certified by the Chief Financial Officer of the Borrower to the
Agent, the Lenders, each Counter-Guarantor and the Board).

                  "Lease Indenture" means the Indenture dated as of the date
hereof between Holdings and Wilmington Trust Company, as Trustee and not in its
individual capacity, relating to the 7.5% Convertible Senior Notes due 2009.

                  "Lender" means (a) (i) the Initial Lender, and (ii) each
financial institution or other entity that from time to time becomes a party
hereto by execution of an Assignment and Acceptance with any requisite consent
required by Section 10.2 and/or (b) the Board to the extent it acquires any
interest in the Loan as contemplated by Section 2.9(f) and the Board Guarantee.

                  "Lending Office" means, with respect to any Lender, the office
of such Lender specified as its "Lending Office" opposite its name on Annex B or
on the Assignment and Acceptance by which it became a Lender or such other
office of such Lender as such Lender may from time to time specify to the
Borrower and the Agent.

                  "LIBOR" means, with respect to any Interest Period, the
offered rate in the London interbank market for deposits in United States
dollars of amounts equal or comparable to the unpaid principal amount of the
Loan offered for a term comparable to such Interest Period, as currently shown
on the Bridge/Telerate page 3750 as of 11:00 a.m., London time, two Business
Days prior to the first day of such Interest Period; provided, however, that (A)
LIBOR for the initial Interest Period shall be 1.72375% per annum, (B) if more
than one offered rate as described above appears on such Bridge/Telerate page,
the rate used to determine LIBOR will be the arithmetic average (rounded upward,
if necessary, to the next higher 1/100 of 1%) of such offered rates, or (C) if
no such offered rates appear, the rate used for such Interest Period will be the
arithmetic average (rounded upward, if necessary, to the next higher 1/100 of
1%) of rates quoted by the Reference Banks at approximately 10:00 a.m., New York
time, two Business Days prior to the first day of such Interest Period for
deposits in United States dollars offered to leading European banks for a period
comparable to such Interest Period in an amount comparable to the unpaid
principal amount of the Loan. If the Agent ceases generally to use such
Bridge/Telerate page for determining interest rates based on eurodollar deposit
rates, a comparable internationally recognized interest rate reporting service
shall be used to determine such offered rates.


                                       11

                  "Lien" means any lien, mortgage, pledge, assignment, security
interest, charge, hypothecation, preference, priority, privilege, lease or
encumbrance of any kind (including any conditional sale or other title retention
agreement, any lease in the nature thereof, and any agreement to give any
security interest).

                  "Liquidity Certificate" has the meaning specified in Section
5.1(x).

                  "Loan" has the meaning specified in Section 2.1.

                  "Loan Administrator" has the meaning specified in the preamble
to this Agreement.

                  "Loan Documents" means, collectively, this Agreement, the
Note, the Employee Compensation Agreement, the Warrants, the Registration Rights
Agreements and each certificate, agreement or document executed by the Borrower
and delivered to the Agent, the Lenders or the Board in connection with or
pursuant to this Agreement.

                  "Loan Maturity Date" means September 30, 2008, except that if
such date is not a Business Day, then the Loan Maturity Date shall be the
immediately preceding Business Day.

                  "Margin Stock" has the meaning assigned to that term in
Regulation T, U or X of the Board of Governors of the Federal Reserve System as
in effect from time to time.

                  "Net Cash Proceeds" means, with respect to any Asset Sale, the
Cash Proceeds of such Asset Sale, net of (i) reasonable and customary brokerage
commissions and other reasonable and customary fees and expenses (including
reasonable fees and expenses of counsel and investment bankers) related to such
Asset Sale, (ii) provisions for all taxes payable as a result of such Asset Sale
without regard to the consolidated results of operations of the Borrower and its
Subsidiaries, taken as a whole, (iii) payments made to repay Indebtedness or any
other obligation outstanding at the time of such Asset Sale that (A) is secured
by a Lien on the property or assets sold and (B) is required by its terms to be
paid as a result of such Asset Sale, and (iv) appropriate amounts to be provided
by the Borrower or any Subsidiary of the Borrower as a reserve against any
liabilities associated with such Asset Sale, including, without limitation,
pension and other post-employment benefit liabilities, liabilities related to
environmental matters and liabilities under any indemnification obligations
associated with such Asset Sale, all as determined in conformity with GAAP, but
limited to the period of the required reserve.

                  "Net Insurance Proceeds" means an amount equal to: (i) any
Cash payments or proceeds received by Borrower or any of its Subsidiaries under
any casualty insurance policy in respect of a covered loss thereunder with
respect to tangible, real or personal property, minus (ii) (a) any actual and
reasonable costs incurred by the Borrower or any of its Subsidiaries in
connection with the adjustment or settlement of any claims of the Borrower or
such Subsidiary in respect thereof, (b) any taxes payable in connection
therewith, (c) the amount of any Indebtedness secured by a Lien on any property
subject


                                       12

to such covered loss and required to be discharged from the proceeds thereof and
(d) any amounts required to be paid to any Person (other than the Borrower or
any of its Subsidiaries) owning a beneficial interest in the property subject to
such loss.

                  "Non-Guaranteed Percentage" means 11.526806527%, which is the
percentage of the maximum principal amount of the Loan not covered by the Board
Guarantee.

                  "Non-U.S. Person" means a Person that is not a United States
person as defined in section 7701(a)(30) of the Internal Revenue Code.

                  "Note" has the meaning specified in Section 2.4(d).

                  "Notice of Borrowing" has the meaning specified in Section
2.2(a).

                  "Obligations" means all payment and performance obligations of
every nature of the Borrower from time to time owed to the Agent, the Lenders,
the Loan Administrator, any Counter-Guarantor or the Board or any of their
respective Affiliates, officers, directors, employees, agents and advisors in,
under or in respect of this Agreement or the Note, whether for principal,
interest, fees, expenses, indemnification or otherwise.

                  "Obligor" has the meaning specified in the preamble to Article
IV.

                  "Officer's Certificate" means, as applied to any corporation,
a certificate executed on behalf of such corporation by its chairman of the
board (if an officer), president, one of its vice presidents, chief financial
officer, controller, treasurer or assistant treasurer or an assistant secretary;
provided that every Officer's Certificate shall include (i) a statement that the
officer acting in such capacity making or giving such Officer's Certificate has
read such condition and any definitions or other provisions contained in this
Agreement relating thereto, (ii) a statement that, in the opinion of the signer,
s/he has made or has caused to be made such examination or investigation as is
necessary to enable her/him to express an informed opinion as to whether or not
such condition has been complied with, and (iii) a statement as to whether, in
the opinion of the signer, such condition has been complied with.

                  "Operating Lease" means, as applied to any Person, any lease
(including, without limitation, leases that may be terminated by the lessee at
any time) of any property (whether real, personal or mixed) under which such
Person is Lessee, that is not a Capital Lease.

                  "Other Taxes" has the meaning specified in Section 2.12(c).

                  "Participant" has the meaning specified in Section 10.2(e).

                  "Payment Restriction" means, with respect to a Subsidiary of
any Person, any encumbrance, restriction or limitation, whether by operation of
the terms of its charter or by reason of any agreement or instrument, on the
ability of (i) such Subsidiary


                                       13

to (a) pay dividends or make other distributions on its Capital Stock or make
payments on any obligation, liability or Indebtedness owed to such Person or any
other Subsidiary of such Person, (b) make loans or advances to such Person or
any other Subsidiary of such Person, or (c) transfer any of its property or
assets to such Person or any other Subsidiary of such Person, or (ii) such
Person or any other Subsidiary of such Person to receive or retain any such (a)
dividend, distributions or payments, (b) loans or advances, or (c) property or
assets.

                  "Permitted Encumbrances" means the following types of Liens
(other than any such Lien imposed pursuant to Section 401(a)(29) or 412(n) of
the Internal Revenue Code or by ERISA) as applied to property:

                  (i)      Liens for taxes, assessments or governmental charges
         or claims the payment of which is either (a) not delinquent for a
         period of more than 30 days or (b) subject to a good faith contest as
         set forth in Section 5.3(a);

                  (ii)     statutory Liens of landlords and Liens of carriers,
         vendors, warehousemen, repairmen, mechanics and materialmen and other
         Liens imposed by law incurred in the ordinary course of business for
         sums either (a) not delinquent for a period of more than 30 days or (b)
         being contested in good faith by appropriate proceedings, if such
         reserve or other appropriate provision, if any, as shall required by
         GAAP shall have been made therefor;

                  (iii)    Liens incurred or deposits made in the ordinary
         course of business in connection with workers' compensation,
         unemployment insurance and other types of social security, or to secure
         the performance of tenders, statutory obligations, surety and appeal
         bonds, bids, leases, government contracts, trade contracts, performance
         and return-of-money bonds, reimbursement obligations and chargeback
         rights of Persons performing services for the Borrower or any of its
         Subsidiaries and other similar obligations (exclusive of obligations
         for the payment of borrowed money);

                  (iv)     easements, rights-of-way, restrictions, minor
         defects, encroachments or irregularities in title and other similar
         charges or encumbrances not interfering in any material respect with
         the ordinary conduct of the business of the Borrower or any of its
         Subsidiaries;

                  (v)      Liens in favor of customs and revenue authorities
         arising as a matter of law to secure payment of customs duties in
         connection with the importation of goods;

                  (vi)     Liens described in Schedule 6.1 annexed hereto;

                  (vii)    judgment and attachment Liens not giving rise to an
         Event of Default;

                  (viii)   Liens on the assets of any entity or on any asset
         existing at the time such entity or asset is acquired by the Borrower
         or any Subsidiary, whether by


                                       14

         merger, consolidation, purchase of assets or otherwise; provided that
         such Liens (i) are not created, incurred or assumed by such entity in
         contemplation of or in connection with the financing of such entity's
         being acquired by the Borrower or any Subsidiary; (ii) do not extend to
         any other assets of the Borrower or any Subsidiary; and (iii) the
         Indebtedness secured by such Lien is permitted pursuant to this
         Agreement;

                  (ix)     leases or subleases granted to others not interfering
         in any material respect with the business of the Borrower or any
         Subsidiary;

                  (x)      any interest or title of a lessor in property subject
         to any Capital Lease obligation or Operating Lease which, in each case,
         is not prohibited under this Agreement (disregarding for this purpose
         Section 6.1);

                  (xi)     Liens in favor of collecting or payor banks having a
         right of setoff, revocation, refund or chargeback with respect to money
         or instruments of the Borrower or any Subsidiary on deposit with or in
         possession of such bank;

                  (xii)    any renewal of or substitution for any Lien permitted
         by any of the preceding clauses; provided that the debt secured is not
         increased nor the Lien extended to any additional assets; and

                  (xiii)   Liens of creditors of any Person to whom any of the
         Borrower's assets are consigned for sale in the ordinary course of
         business.

                  "Person" means an individual, partnership, corporation
(including a business trust), joint stock company, estate, trust, limited
liability company, unincorporated association, joint venture or other entity, or
a Governmental Authority.

                  "Plan" means any "employee benefit plan" as defined in section
3(3) of ERISA which is, or was at any time, maintained or contributed to by the
Borrower or any of its ERISA Affiliates, other than a multiemployer plan, within
the meaning of section 4001(a)(3) of ERISA.

                  "Post-2002 Adjustment" means, for any Fiscal Year after 2002,
an appropriate increase (as determined by the Borrower and the Board) in the
Adjusted Unit Employee Costs to reflect any increase in employee costs which the
Board, in its reasonable discretion, determines to be the result of unforeseen
circumstances not wholly within the control of the Borrower or which otherwise
should not result in prepayment of the Loan (including, without limitation, any
change in applicable law affecting the manner in which the Borrower conducts it
business, any material increase in the cost of employee benefits equivalent to
those offered by the Borrower on January 1, 2002, inflation materially in excess
of that assumed in the Business Plan, any increase in federal, state or local
minimum wage laws affecting the Borrower, any increase in federal, state or
local payroll tax affecting the Borrower, any change in accounting affecting
accounting for wages, salaries, employee benefits or other form of employee


                                       15

compensation and any material reduction in the amount of ASMs flown below those
planned for such Fiscal Year).

                  "Pro Forma Basis" means, with respect to compliance with any
covenant hereunder, compliance with such covenant after giving effect to any
proposed incurrence of Indebtedness by the Borrower or any of its Subsidiaries
and the application of the proceeds thereof, the acquisition (whether by
purchase, merger or otherwise) or disposition (whether by sale, merger or
otherwise) of any company, entity or business or any asset by the Borrower or
any of its Subsidiaries or any other related action which requires compliance on
a Pro Forma Basis. In making any determination of compliance on a Pro Forma
Basis, such determination shall be performed after good faith consultation with
the Agent using the consolidated financial statements of the Borrower and its
Subsidiaries which shall be reformulated as if any such incurrence of
Indebtedness and the application of proceeds, acquisition, disposition or other
related action had been consummated at the beginning of the period specified in
the covenant with respect to which Pro Forma Basis compliance is required.

                  "Redeemable Stock" means any class or series of Capital Stock
of any Person that by its terms or otherwise (i) is required to be redeemed
prior to the Loan Maturity Date, (ii) may be required to be redeemed at the
option of the holder of such class or series of Capital Stock at any time prior
to the Loan Maturity Date, or (iii) is convertible into or exchangeable for
Capital Stock referred to in clause (i) or (ii) above or Indebtedness having a
scheduled maturity prior to the Loan Maturity Date; provided that any Capital
Stock that would not constitute Redeemable Stock but for provisions thereof
offering holders thereof the right to require the Borrower to repurchase or
redeem such Capital Stock upon the occurrence of an "asset sale" occurring prior
to the Loan Maturity Date shall not constitute Redeemable Stock if the asset
sale provisions contained in such Capital Stock specifically provide that in
respect of any particular asset sale proceeds, the Borrower will not repurchase
or redeem any such Capital Stock pursuant to such provisions prior to the
Borrower's permanent reduction of the aggregate outstanding principal amount of
the Loan by an amount at least equal to such asset sale proceeds (net of
associated taxes and transaction costs).

                  "Reference Banks" means Citibank, N.A., JPMorgan Chase Bank
and Bank of America, N.A., and each of their respective successors.

                  "Register" has the meaning specified in Section 2.4(e).

                  "Registration Rights Agreements" means (i) the Registration
Rights Agreement dated as of the date hereof and executed by Holdings and the
Board, in form and substance satisfactory to the Board, and (ii) the
Registration Rights Agreement dated as of the date hereof and executed by
Holdings, the Initial Lender and the Counter-Guarantors, in form and substance
satisfactory to the Initial Lender and the Counter-Guarantors.

                  "Regulations" has the meaning specified in the first recital
to this Agreement.


                                       16

                  "Release" means any release, spill, emission, leaking,
pumping, pouring, injection, escaping, deposit, disposal, discharge, dispersal,
dumping, leaching or migration of Hazardous Materials into the indoor or outdoor
environment (including, without limitation, the abandonment or disposal of any
barrels, containers or other closed receptacles containing any Hazardous
Materials), or into or out of any Facilities, including the movement of any
Hazardous Material through the air, soil, surface water, groundwater or
property.

                  "Requisite Lenders" means, collectively, Lenders having not
less than fifty-one percent (51%) of the principal amount of the Loan then
outstanding or, prior to the making of the Loan, the Initial Lender.

                  "Responsible Officer" means, with respect to any Person, any
of the Chief Executive Officer, Executive Vice Presidents and Chief Financial
Officer of such Person, but in any event, with respect to financial matters, the
Chief Financial Officer, Treasurer or Controller of such Person.

                  "Restricted Payment" means (i) any declaration or payment of
dividends on or making of any distributions in respect of the Capital Stock of
the Borrower (other than dividends or distributions payable solely in shares of
Capital Stock (other than Redeemable Stock) or in options, warrants, or other
rights to purchase Capital Stock (other than Redeemable Stock)) to holders of
Capital Stock of the Borrower, (ii) any purchase, redemption or other
acquisition or retirement for value (other than through the issuance solely of
Capital Stock (other than Redeemable Stock) or options, warrants or other rights
to purchase Capital Stock (other than Redeemable Stock)) of any Capital Stock or
warrants, rights (other than exchangeable or convertible Indebtedness of the
Borrower not prohibited under clause (iii) below) or options to acquire Capital
Stock of the Borrower, (iii) any redemption, repurchase, defeasance (including,
but not limited to, in substance or legal defeasance), or other acquisition or
retirement for value (other than through the issuance solely of Capital Stock
(other than Redeemable Stock) or warrants, rights or options to acquire Capital
Stock (other than Redeemable Stock)) (collectively, a "prepayment"), directly or
indirectly (including by way of amendment of the terms of any Indebtedness in
connection with any retirement or acquisition of such Indebtedness) (other than
at any scheduled maturity thereof or by any scheduled repayment or scheduled
sinking fund payment) of any Indebtedness of the Borrower or any Subsidiary
(other than (x) any mandatory prepayment with respect to a borrowing base
deficiency under Section 2.4B(ii)(1) of the Term Loan Agreement, (y) repayment
of the Loan or (z) repayment of Indebtedness relating to Aircraft Related
Equipment with the proceeds from a sale-leaseback transaction of the type
excepted from the definition of Asset Sales in this Agreement) and (iv) any
advances, loans or other investments by the Borrower to or in Holdings.

                  "Senior Notes" means the Borrower's 10-3/4% Senior Unsecured
Notes Due September 1, 2005 issued pursuant to an Indenture, dated as of August
1995, between the Borrower and American Bank National Association, as trustee.


                                       17

                  "Solvent" means, with respect to any Person, that as of the
date of determination both (A) (i) the then fair saleable value of the property
of such Person is (y) greater than the total amount of liabilities (including
contingent liabilities) of such Person and (z) not less than the amount that
will be required to pay the probable liabilities on such Person's then existing
debts as they become absolute and matured considering all financing alternatives
and potential asset sales reasonably available to such Person; (ii) such
Person's capital is not unreasonably small in relation to its business or any
contemplated or undertaken transaction; and (iii) such Person does not intend to
incur, or believes that it will not incur, debts beyond its ability to pay such
debts as they become due; and (B) such Person is "solvent" within the meaning
given that term and similar terms under applicable laws relating to fraudulent
transfers and conveyances. For purposes of this definition, the amount of any
contingent liability at any time shall be computed as the amount that, in light
of all of the facts and circumstances existing at such time, represents the
amount that can reasonably be expected to become an actual or matured liability.

                  "Subsidiary" means, with respect to any Person, any
corporation, partnership, association, limited liability company, trust or
estate, joint venture or other business entity of which more than 50% of the
issued and outstanding shares of Voting Stock at the time of determination are
owned or controlled, directly or indirectly, by that Person or one or more of
the other Subsidiaries of that Person or a combination thereof.

                  "Supplemental Facility Fee" means the supplemental facility
fee payable to the Initial Lender on each of the dates specified in Annex C
hereto in an amount equal to the product of (x) the rate equal to the applicable
Guarantee Rate for such date and (y) the average outstanding portion of the
Supplemental Facility Percentage of the amount of the Loan scheduled to be
outstanding for the then succeeding twelve month period as determined by the
Agent as of the date of payment of such fee and after giving effect to any
payment of principal of the Loan made on such date or any prior prepayment of
the Loan (and commencing with the anniversary date beginning the twelve-month
period in which amortization of the principal of the Loan is first scheduled to
begin, computed on the basis of a year of 360 days and actual number of days
elapsed).

                  "Supplemental Facility Percentage" means a fraction (expressed
as a percentage) of which the numerator is $4,450,000 and the denominator is
$429,000,000 (rounded to nine decimal places).

                  "Taxes" means any and all present or future taxes, levies,
fees, duties, imposts, deductions, charges or withholdings of any nature, and
all interest, penalties and other liabilities thereon or computed by reference
thereto imposed by any Governmental Authority.

                  "Term Loan Agreement" means the Amended and Restated Term Loan
Agreement, dated as of January 18, 2002, among the Borrower, the lenders party
thereto, and Industrial Bank of Japan, Limited, as arranger and agent, as such
agreement may be amended, restated, supplemented or otherwise modified from time
to time.


                                       18

                  "Title 49" shall mean Title 49 of the United States Code, as
amended and in effect from time to time, and the regulations promulgated
pursuant thereto.

                  "Trade Payables" means, with respect to any Person, any
accounts payable or any other indebtedness or monetary obligation to trade
creditors created, assumed or Guaranteed by such Person or any of its
Subsidiaries and arising in the ordinary course of business in connection with
the acquisition of goods or services but limited to current liabilities in
accordance with GAAP.

                  "United States Citizen" has the meaning specified in Section
4.1(b).

                  "Voting Stock" means any class or classes of Capital Stock
pursuant to which the holders thereof have the general voting power under
ordinary circumstances to vote for the election of directors, managers or
trustees of any Person (or Persons performing similar functions) irrespective of
whether or not at the time stock of any such class or classes will have or might
have such voting power by the reason of the happening of any contingency.

                  "Warrants" means collectively (i) the Warrant to purchase up
to 18,750,000 shares of Holdings' Class B Common Stock issued by Holdings to the
Board, (ii) the Warrant to purchase up to 938,000 shares of Holdings' Class B
Common Stock issued by Holdings to the Airbus Counter-Guarantor, (iii) the
Warrant to purchase up to 1,484,000 shares of Holdings' Class B Common Stock
issued by Holdings to the GECC Counter-Guarantor, (iv) the Warrant to purchase
up to 1,141,000 shares of Holdings' Class B Common Stock issued by Holdings to
the debis Counter-Guarantor, and (v) the Warrant to purchase up to 220,000
shares of Holdings' Class B Common Stock issued by Holdings to the Initial
Lender, in each case substantially in the form of Exhibit E.

                  "Wholly-Owned" denotes a Subsidiary all of the Voting Stock of
which (other than any director's qualifying shares or Investments by foreign
nationals mandated by applicable law) is owned directly or indirectly by the
Borrower.

                  SECTION 1.2.      COMPUTATION OF TIME PERIODS. In this
Agreement, in the computation of periods of time from a specified date to a
later specified date, the word "from" means "from and including" and the words
"to" and "until" each mean "to but excluding" and the word "through" means "to
and including."

                  SECTION 1.3.      ACCOUNTING TERMS AND PRINCIPLES.

                  (a)      All accounting terms not specifically defined herein
shall be construed in conformity with GAAP and all accounting determinations
required to be made pursuant hereto shall, unless expressly otherwise provided
herein, be made in conformity with GAAP.

                  (b)      If any change in accounting principles used in the
preparation of the most recent financial statements referred to in Section 5.1
is hereafter required or


                                       19

permitted by the rules, regulations, pronouncements and opinions of the
Financial Accounting Standards Board or the American Institute of Certified
Public Accountants (or any successor thereto) and such change is adopted by the
Borrower with the agreement of its independent public accountants and results in
a change in any of the calculations required by Article VI had such accounting
change not occurred, the parties hereto agree to enter into negotiations in
order to amend such provisions so as to equitably reflect such change with the
desired result that the criteria for evaluating compliance with such covenants
by the Borrower shall be the same after such change as if such change had not
been made; provided, however, that no change in GAAP that would affect a
calculation that measures compliance with any covenant contained in Article VI
shall be given effect until such provisions are amended to reflect such changes
in GAAP.

                  SECTION 1.4.      CERTAIN TERMS.

                  (a)      The words "herein," "hereof" and "hereunder" and
similar words refer to this Agreement as a whole, and not to any particular
Article, Section, subsection or clause in, this Agreement.

                  (b)      References in this Agreement to an Exhibit, Schedule,
Article, Section, subsection or clause refer to the appropriate Exhibit or
Schedule to, or Article, Section, subsection or clause in this Agreement.

                  (c)      Each agreement defined in this Article I shall
include all appendices, exhibits and schedules thereto. If the prior written
consent of any Person is required hereunder for an amendment, restatement,
supplement or other modification to any such agreement and the consent of each
such Person is obtained, references in this Agreement to such agreement shall be
to such agreement as so amended, restated, supplemented or modified.

                  (d)      References in this Agreement to any statute shall be
to such statute as amended or modified and in effect at the time any such
reference is operative.

                  (e)      The term "including" when used in any Loan Document
means "including without limitation" except when used in the computation of time
periods.

                                   ARTICLE II

                                    THE LOAN

                  SECTION 2.1.      THE LOAN. On the terms and subject to the
conditions contained in this Agreement and in reliance upon the representations
and warranties of the Borrower set forth herein, the Initial Lender agrees to
make on or before January 18, 2002 a single term loan (the "Loan") to the
Borrower in a single Borrowing not to exceed


                                       20

the principal amount of $429,000,000. Any amount of the Loan repaid or prepaid
may not be reborrowed. The obligation of the Initial Lender to participate in
the making of the Loan up to the amount specified above on the terms and
conditions hereof is hereinafter called its "Commitment".

                  SECTION 2.2.      BORROWING PROCEDURES.

                  (a)      The Borrowing shall be made on notice given by the
Borrower to the Agent not later than 11:00 a.m. (New York City time) on the
Closing Date. Each such notice shall be in substantially the form of Exhibit C
(a "Notice of Borrowing"), specifying (A) the Closing Date and (B) the aggregate
amount of the proposed Borrowing. The Notice of Borrowing shall be irrevocable,
and duly executed and delivered on behalf of the Borrower by its Chief Financial
Officer or President/Chief Executive Officer.

                  (b)      The Agent shall give to the Initial Lender, each
Counter-Guarantor, the Board and the Loan Administrator prompt notice of the
Agent's receipt of a Notice of Borrowing and the Applicable Interest Rate with
respect thereto. The Initial Lender shall, before 11:00 a.m. (New York City
time) on the date of the proposed Borrowing, make available to the Agent at
Citibank, N.A., ABA #021000089, Account No. 3041-9849, Account Name: Project
Finance, Ref: America West Airlines, in immediately available funds, an amount
equal to its Commitment. After the Agent's receipt of such funds and upon
fulfillment or waiver of the applicable conditions set forth in Section 3.1 (as
confirmed in writing to the Agent by the Board, the Initial Lender and each
Counter-Guarantor), the Agent will make such funds available to the Borrower.

                  SECTION 2.3.      SCHEDULED REPAYMENT OF THE LOAN. (a) The
Borrower shall repay the Loan on the dates and in the amounts set forth below
(calculated for each date by obtaining the product of the applicable percentage
for such date set forth below and the original principal amount of the Loan):



Interest Payment Date falling on or about:              Percentage of Original Principal Amount
- ------------------------------------------              ---------------------------------------
                                                     
              March 31, 2004                                              10.0

            September 30, 2004                                            10.0

              March 31, 2005                                              10.0

            September 30, 2005                                            10.0

              March 31, 2006                                              10.0

            September 30, 2006                                            10.0

              March 31, 2007                                              10.0

            September 30, 2007                                            10.0

              March 31, 2008                                              10.0

            Loan Maturity Date                                            10.0



                                       21

Notwithstanding anything herein to the contrary, the Borrower shall repay the
entire unpaid principal amount of the Loan together with accrued and unpaid
interest thereon and all other amounts owing hereunder in respect thereof on the
Loan Maturity Date.

                  (b)      On or before April 30 of each year the Borrower shall
repay the Loan in an amount equal to the Labor Cost Payment Amount, if any, for
the immediately preceding Fiscal Year, together with accrued interest with
respect thereto to the date of payment. Promptly upon the filing of the
Borrower's Form 10-K for each Fiscal Year (but in no event later than 15 days
thereafter), the Borrower, after consultation with the Board, shall provide to
the Agent, the Lenders, the Counter-Guarantors, the Loan Administrator and the
Board a certificate signed by the Chief Financial Officer of the Borrower
certifying the amount of the Labor Cost Payment Amount and demonstrating in
reasonable detail the calculations to determine the Labor Cost Payment Amount
for such Fiscal Year. Any such payment of the Loan shall be applied to the then
remaining installments of the outstanding principal balance of the Loan in the
inverse order of maturity thereof. If any such payment is made on a date other
than an Interest Payment Date, the Borrower shall also pay any amounts owing
pursuant to Section 2.10(e). Any such payment shall be paid to the Agent for
application as provided in Section 2.9.

                  SECTION 2.4.      EVIDENCE OF DEBT; USE OF PROCEEDS.

                  (a)      Each Lender shall maintain in accordance with its
usual practice an account or accounts evidencing such Lender's portion of the
Loan outstanding from time to time, including the amounts of principal and
interest payable and paid to such Lender from time to time under this Agreement.

                  (b)      The Agent shall establish and maintain a register for
recording with respect to the Loan (i) the date and amount of each payment on
the Loan made by or on behalf of, or collected from, the Borrower, (ii) the
amount of each such payment applied in accordance with each clause of Section
2.9(d) and (e) or other applicable terms hereof to scheduled principal of or
interest on the Loan and to each of the fees identified in clauses (d) through
(h) of Section 2.8 hereof, and (iii) the date and amount of each payment made by
the Board under the Board Guarantee.

                  (c)      The entries made in the accounts maintained pursuant
to clauses (a) and (b) of this Section 2.4 shall, to the extent permitted by
applicable law, be prima facie evidence of the existence and amounts of the
obligations recorded therein; provided, however, that the failure of any Lender
or the Agent to maintain such accounts or any error therein shall not in any
manner affect the obligations of the Borrower to repay the Loan in accordance
with its terms.

                  (d)      The Borrower shall execute and deliver to the Agent
on the Closing Date a single promissory note substantially in the form of
Exhibit B in the principal amount of the Loan, dated the Closing Date and
otherwise appropriately completed (such note, including any replacement note
therefor issued in accordance with


                                       22

the provisions of this Section 2.4(d), the "Note"). The Note shall be made
payable to the Agent at the office of the Agent. If the Note is mutilated, lost,
stolen or destroyed, the Borrower shall issue a new Note in the same principal
amount and having the same interest rate, date and maturity as the Note so
mutilated, lost, stolen or destroyed endorsed to indicate all payments thereon.
In the case of any lost, stolen or destroyed Note, there shall first be
furnished to the Borrower and the Board an instrument of indemnity from the
Agent and evidence of such loss, theft or destruction reasonably satisfactory to
each of them, together with an officer's certificate of the Borrower certifying
and warranting as to the due authorization, execution and delivery of the new
Note.

                  (e)      This Agreement and the Note are registered
instruments. A manually signed copy of this Agreement and the original of the
Note shall be evidence of (i) the rights of each Lender under this Agreement and
the Note and (ii) the rights of the Agent under this Agreement. Neither this
Agreement nor the Note is a bearer instrument. The Agent will establish and
maintain a record of ownership (the "Register") in which the Agent agrees to
register by book entry the Agent's and each Lender's interest in the Loan, the
Note and this Agreement, and in the right to receive any payments hereunder or
thereunder and any assignment of any such interest or rights. In connection with
any assignment pursuant to Section 10.2, the Agent shall maintain a copy of each
Assignment and Acceptance delivered to and accepted by it and shall record the
names and addresses of the Lenders and principal amount of the Loan owing to
each Lender from time to time. The entries in the Register shall be conclusive
and binding for all purposes, absent manifest error, and the Borrower, the
Board, the Agent and the Lenders may treat each Person whose name is recorded in
the Register as a Lender for all purposes of this Agreement. The Register shall
be available for inspection by the Borrower, the Agent, the Board or any Lender
at any reasonable time and from time to time upon reasonable prior notice.

                  (f)      The Borrower shall apply the proceeds from the Loan
as necessary to cure all Disclosed Defaults (and promptly following the Closing
Date, shall confirm in writing such use to the Board), and thereafter may use
the balance of such proceeds for such general corporate purposes as are
permissible under the Act and Regulations but not for the prepayment or
refinancing of any Indebtedness of the Borrower for borrowed money nor for the
acquisition of the stock, or of all or any substantial part of the assets, of
any Person. No portion of the proceeds from the Borrowing shall be used by the
Borrower or any of its Subsidiaries in any manner that might cause the borrowing
or the application of such proceeds to violate Regulation U, Regulation T or
Regulation X of the Board of Governors of the Federal Reserve System or any
other regulation of such Board of Governors or to violate Section 7(c) of the
Exchange Act, in each case as in effect on the date or dates of such borrowing
and such use of proceeds.

                  SECTION 2.5.      OPTIONAL PREPAYMENTS.


                                       23

                  (a)      The Borrower may, upon at least fifteen days' prior
revocable notice to the Board, the Counter-Guarantors, the Loan Administrator
and the Agent stating the proposed date and aggregate principal amount of the
prepayment, elect to prepay the outstanding principal amount of the Loan, in
whole or in part (but not less than a minimum amount of $2,500,000), together
with accrued interest to the date of such prepayment on the principal amount
prepaid; provided, however, that if any prepayment of all or a portion of the
Loan is made by the Borrower other than on an Interest Payment Date or if the
Borrower revokes such notice at any time within such fifteen days, the Borrower
shall also pay any amounts owing pursuant to Section 2.10(e). The Borrower shall
establish to the satisfaction of the Board and the Agent three Business Days in
advance of any prepayment of the Loan its ability to pay the amount to be
prepaid.

                  (b)      Upon the giving of any notice of prepayment under
clause (a) of this Section 2.5, the principal amount of the Loan specified to be
prepaid together with accrued and unpaid interest thereon shall become due and
payable on the date specified for such prepayment; provided, however, that any
failure to make any such prepayment in full on such date shall be deemed to be
an automatic revocation of the notice of prepayment given under Section 2.5(a)
and such failure shall not constitute a Default or an Event of Default
hereunder; provided, further, however, that the Borrower shall be obligated to
pay on such date any amounts owing under Section 2.10(e) due to such failure to
prepay.

                  (c)      Any partial prepayment of the Loan under this Section
2.5 shall be applied to the then remaining installments of the outstanding
principal amount of the Loan in the inverse order of maturity thereof. Any such
prepayment shall be paid to the Agent for application as provided in Section
2.9. The Borrower shall have no right to optionally prepay the principal amount
of the Loan other than as provided in this Section 2.5, Section 2.10(b) or
Section 2.10(d).

                  SECTION 2.6.      MANDATORY PREPAYMENTS.

                  (a)      The Borrower shall give the Agent, the Lenders, the
Loan Administrator and the Board not less than five Business Days' prior written
notice of any anticipated Future Issuance and upon receipt by the Borrower of
the proceeds of such Future Issuance, the Borrower shall prepay the Loan in the
manner provided below in an amount equal to the amount of such proceeds net of
any reasonable and customary brokers' and advisors' fees, any underwriting
discounts and commissions and other costs incurred in connection with such
transaction (provided that evidence of such fees, discounts, commissions and
costs is provided to the Board and the Agent); provided, that, the Borrower
shall not be obligated to so prepay the Loan if and to the extent that (i) the
Borrower is prohibited from so prepaying the Loan under the terms of the Senior
Notes and the Borrower applies such proceeds to repay the Senior Notes, (ii) the
Borrower applies such proceeds from an issue or incurrence of Indebtedness to
finance Aircraft Related Equipment in a transaction of the type excepted from
the definition of Asset Sales in this Agreement, (iii) such Future Issuance
involves only the exercise of options


                                       24

or similar rights issued as compensation by existing or former officers,
directors or employees of the Borrower, Holdings or any of their Subsidiaries or
(iv) the Borrower applies such proceeds to purchase Aircraft Related Equipment.
Any partial prepayments of the Loan made by the Borrower in accordance with this
Section 2.6(a) shall be applied to the then remaining installments of the
outstanding principal balance of the Loan in the inverse order of maturity
thereof. If any such prepayment is made by the Borrower other than on an
Interest Payment Date, the Borrower shall also pay any amounts owing pursuant to
Section 2.10(e). Any such prepayment of the Loan shall be made on the date of
the Borrower's receipt of the proceeds of the applicable Future Issuance, and
shall be paid to the Agent for application as provided in Section 2.9.

                  (b)      Asset Sales. No later than three Business Days
following the date on which any Excess Proceeds are not applied as set forth in
Section 6.10, the Borrower shall prepay the Loan in an aggregate amount equal to
such non-applied Excess Proceeds. Any partial prepayments of the Loan made by
the Borrower in accordance with this Section 2.6(b) shall be applied to the then
remaining installments of the outstanding principal balance of the Loan in the
inverse order of maturity thereof. If any such prepayment is made by the
Borrower other than on an Interest Payment Date, the Borrower shall also pay any
amounts owing pursuant to Section 2.10(e). Any such prepayment of the Loan shall
be paid to the Agent for application as provided in Section 2.9.

                  (c)      Insurance/Condemnation Proceeds. No later than three
Business Days following the date of receipt by the Borrower or any of its
Subsidiaries of any Net Insurance Proceeds, or if applicable, the end of the
six-month period described in clause (ii) below, the Borrower shall prepay the
Loan in an amount equal to the amount by which the aggregate amount of such Net
Insurance Proceeds in any Fiscal Year exceeds $2,000,000; provided, (i) if and
to the extent that the application of such Net Insurance Proceeds to the Loan
are not permitted under the terms of the Senior Notes and are not used as in
clause (ii) below, the Borrower shall apply such Net Insurance Proceeds to
prepay the Senior Notes, and (ii) the Borrower shall not be obligated to so
prepay the Loan if and to the extent that the Borrower certifies to the Board
that it intends to repair, restore or replace the assets from which such Net
Insurance Proceeds derived, and does so (or enters into a definitive agreement
committing to do so) within 6 months of receipt thereof. Any partial prepayments
of the Loan made by the Borrower in accordance with this Section 2.6(c) shall be
applied to the then remaining installments of the outstanding principal balance
of the Loan in the inverse order of maturity thereof. If any such prepayment is
made by the Borrower other than on an Interest Payment Date, the Borrower shall
also pay any amounts owing pursuant to Section 2.10(e). Any such prepayment of
the Loan shall be paid to the Agent for application as provided in Section 2.9.

                  (d)      Change in Control. Upon the occurrence of a Change in
Control with respect to either Holdings or the Borrower, the Borrower shall
promptly give the Agent, the Lenders, the Loan Administrator and the Board
written notice thereof, and the


                                       25

Board shall have the right, by written notice to the Borrower (with a copy to
the Agent and each Lender) delivered not more than 30 days following delivery of
the notice of the Change in Control, to require the Borrower to prepay the Loan
in full, together with accrued interest thereon to the date of such prepayment,
on the date specified in such notice (which date shall be a Business Day not
less than ten nor more than twenty Business Days' after the date of such
notice), and upon the specified payment date, the Borrower shall so prepay the
then outstanding principal amount of the Loan together with such accrued
interest thereon. If any such prepayment is made on any date other than an
Interest Payment Date, the Borrower shall also pay any amounts owing pursuant to
Section 2.10(e). Any such prepayment shall be paid to the Agent for application
as provided in Section 2.9.

                  SECTION 2.7.      INTEREST.

                  (a)      Rate of Interest. Except as otherwise provided in
Section 2.7(c) and Section 2.10, the Loan shall bear interest on the unpaid
principal amount thereof from the Closing Date until paid in full at the
Applicable Interest Rate.

                  (b)      Interest Payments. Interest accrued on the Loan and
the Note shall be payable in arrears on the last day of each Interest Period (an
"Interest Payment Date"), upon the payment or prepayment thereof in whole or in
part, and, if not previously paid in full, at maturity (whether by acceleration
or otherwise). Interest on the Loan shall be calculated on the basis of a year
of 360 days and actual number of days elapsed.

                  (c)      Default Interest. Notwithstanding the rate of
interest specified in Section 2.7(a) or elsewhere herein, if any principal of or
interest on the Loan or any fee or other amount payable by the Borrower
hereunder is not paid when due, whether at stated maturity, upon acceleration,
by mandatory prepayment or otherwise (but other than any voluntary prepayment),
such overdue amount shall bear interest at a rate which is two percent per annum
in excess of the Applicable Interest Rate as in effect from time to time.

                  SECTION 2.8.      FEES.

                  (a)      SSB Structuring Fee. The Borrower agrees to pay to
the Agent for the account of Salomon Smith Barney Inc. on the Closing Date the
structuring fee set forth in the December 26, 2001 version of the term sheet
included in the Application.

                  (b)      Counter-Guarantor Closing Fee. The Borrower agrees to
pay to the Agent for the account of each of (i) the Airbus Counter-Guarantor a
closing fee of $[...***...], (ii) the GECC Counter-Guarantor a closing fee of
$[...***...], and (iii) the debis Counter-Guarantor a closing fee of
$[...***...], in each case, on the Closing Date.

                                             ***Confidential Treatment Requested

                                       26

                  (c)      Facility Fee. The Borrower agrees to pay to the Agent
for the account of the Initial Lender on the Closing Date a facility fee in an
amount equal to $[...***...].

                  (d)      Agency Fee. The Borrower agrees to pay to the Agent
on the Closing Date and annually thereafter an agency fee in an amount equal to
$[...***...] per annum for so long as the Loan shall remain outstanding.

                  (e)      Loan Administrator Fee.

                  (i) Basic Fee. Subject to subsection (ii) below, the Borrower
agrees to pay to the Loan Administrator on the Closing Date and annually
thereafter on each anniversary of the Closing Date a Loan Administrator fee in
an amount equal to $[...***...] per annum for so long as the Loan shall remain
outstanding.

                  (ii) Annual Adjustment. On each anniversary of the Closing
Date, the Loan Administrator shall provide the Borrower with a statement
indicating (A) the total number of hours actually worked during the preceding
year, (B) the hourly rates charged for such services in accordance with the rate
schedule attached as Schedule 2.8 (increased annually on each anniversary of the
Closing Date by not more than [...***...]%), and (C) the total value of the
services rendered, determined by multiplying (A) times (B) (the "Actual Costs").
If the sum of (x) the Actual Costs for the preceding year and (y) the fee
charged by the sub-servicer referred to in Section 8.1(b)(iv) for the preceding
year (such sum referred to as "Total Costs") is less than $[...***...], the fee
to be paid to the Loan Administrator on the next anniversary of the Closing Date
in accordance with clause (i) of this subsection (e) shall be reduced by the
difference. If the Total Costs for the preceding year is greater than
$[...***...], the fee to be paid to the Loan Administrator on the next
anniversary of the Closing Date shall be increased by the difference.

                  (iii)    Fee for Additional Services. In the event that a
Requesting Party requests that the Loan Administrator provide any of the
services described in Sections 8.1(b)(ix) and (x), the Loan Administrator's fee
for each of such services shall be equal to the product of (A) the total number
of hours actually worked performing such service, as set forth in a statement to
be delivered by the Loan Administrator to the party at whose expense such
service was performed, and (B) the agreed upon hourly rate charged for such
services in accordance with the rate schedule attached as Schedule 2.8
(increased annually on each anniversary of the Closing Date by not more than
[...***...]%). For the avoidance of doubt, the parties acknowledge and agree
that the fees set forth in this Section 2.8(e)(iii) shall not be taken into
account for purposes of determining the Total Costs of services provided by the
Loan Administrator in any year.

                  (f)      Guarantee Fees. The Borrower agrees to pay to the
Agent for the account of the Board on the Closing Date and annually thereafter
for so long as the Board Guarantee shall remain in effect the Guarantee Fee set
forth in Section 2.06 of the Board Guarantee.

                                             ***Confidential Treatment Requested

                                       27


                  (g) Counter-Guarantee Fees. The Borrower agrees to pay the
Counter-Guarantee Fees to the Agent for the account of each Counter-Guarantor on
the Closing Date and annually thereafter for so long as the Loan and such
Counter-Guarantor's Counter-Guarantee shall remain in effect.

                  (h)      Supplemental Facility Fees. The Borrower agrees to
pay to the Agent for the account of the Initial Lender the Supplemental Facility
Fees on the Closing Date and annually thereafter for so long as the Loan shall
remain outstanding.

                  (i)      Liquidity Fee. The Borrower agrees that if (i) at any
time after the Closing Date the Regulations are amended, modified or
supplemented such that the Board's consent shall be necessary in order for a
Lender to sell a participation in the Loan to any Person the sale of a
participation to which would not require the Board's consent if the Regulations
were then as in effect on the Closing Date and (ii) the Initial Lender seeks the
Board's consent to sell such a participation and such consent is not granted,
then the Initial Lender shall so notify the Borrower and the Agent and the
Borrower shall thereafter pay to the Agent for the account of the Initial Lender
a liquidity fee equal to [...***...]% per annum of the product of the principal
amount of the Loan outstanding from time to time held by the Initial Lender and
the Guaranteed Percentage, such liquidity fee to accrue from the date of such
notice from the Initial Lender and to be payable on each Interest Payment Date.

                  (j)      Distribution of Fees. On the Closing Date, and upon
its receipt thereof, the Agent shall distribute to the Person entitled thereto
each of the fees referred to in Section 2.8 payable on such date. Thereafter,
the Agent will distribute any and all fees payable under this Section 2.8 in
accordance with Section 2.9(d) or (e) hereof, as applicable.

                  (k)      All fees payable under this Section 2.8 shall be
non-refundable.

                  SECTION 2.9.      PAYMENTS AND COMPUTATIONS.

                  (a)      The Borrower shall make each payment hereunder
(including fees and expenses) not later than 12:00 noon (New York City time) on
the day when due, in Dollars, to the Agent at Citibank, N.A., ABA #021000089,
Account No. 3041-9849, Account Name: Project Finance, Ref: America West Airlines
in immediately available funds without set-off or counterclaim. All payments in
respect of any Obligations shall at all times be made to the Agent, whether or
not a demand shall have been made or paid under the Board Guarantee. The Agent
will promptly cause all such payments received by it to be distributed to the
Person entitled thereto in accordance with the priorities of payment set forth
below in clause (d) or (e) of this Section 2.9 or both, as applicable. Payments
received by the Agent after 12:00 noon (New York City time) shall be deemed to
be received on the next Business Day.

                                             ***Confidential Treatment Requested

                                       28


                  (b)      Each determination by the Agent of an interest rate
hereunder shall be conclusive and binding for all purposes, absent manifest
error.

                  (c)      Whenever any payment hereunder shall be stated to be
due on a day other than a Business Day, such payment shall be made on the next
succeeding Business Day, and such extension of time shall in such case be
included in the computation of payment of interest or fees, as the case may be.

                  (d)      So long as no Event of Default under any of Sections
7.1(a) (including any failure to pay all amounts hereunder upon acceleration as
a result of any other Event of Default), (f) and (g) has occurred and is
continuing or would result therefrom, the Agent shall apply all payments in
respect of any Obligations in the following order:

                  (i)      first, to pay any fees then due and payable under
                           Section 2.8(d) and (e) hereof to the Agent and the
                           Loan Administrator, as the case may be, on a pro rata
                           basis;

                  (ii)     second, to pay interest then due and payable in
                           respect of the Loan to the Lenders, on a pro rata
                           basis (it being understood that following the Board's
                           honoring of a demand for payment in accordance with
                           the Board Guarantee, the Guaranteed Percentage
                           thereof shall be distributed to the Board and the
                           Non-Guaranteed Percentage thereof shall be
                           distributed to the Lenders, on a pro rata basis);

                  (iii)    third, to pay principal then due and payable on the
                           Loan to the Lenders, on a pro rata basis (it being
                           understood that following the Board's honoring of a
                           demand for payment in accordance with the Board
                           Guarantee, the Guaranteed Percentage thereof shall be
                           distributed to the Board and the Non-Guaranteed
                           Percentage thereof shall be distributed to the
                           Lenders, on a pro rata basis);

                  (iv)     fourth, to pay any fees then due and payable under
                           Section 2.8(f), (g), (h) and (i) hereof to the Board,
                           the Counter-Guarantors and the Initial Lender, as the
                           case may be, on a pro rata basis; and

                  (v)      fifth, to pay any other Obligations then due and
                           payable to the Agent, the Loan Administrator, the
                           Board, the Counter-Guarantors and the Lenders, on a
                           pro rata basis.

Notwithstanding the foregoing, to the extent that any amounts received by the
Agent constitutes interest accrued on any overdue principal of or interest on
the Loan in excess of the interest that would have accrued thereon at the
Applicable Rate, the Guaranteed Percentage of so much of such amount, if any, as
exceeds the interest that would have so


                                       29

accrued at the Applicable Rate shall be distributed to the Board under clause
(ii) above and the balance shall be distributed to the Lenders under clause (ii)
above.

                  (e)      After the occurrence and during the continuance of an
Event of Default under any of Sections 7.1(a) (including any failure to pay all
amounts hereunder upon acceleration as a result of any other Event of Default),
(f) and (g), the Agent shall apply all payments in respect of any Obligations in
the following order:

                  (i)      first, to pay Obligations in respect of any expenses,
                           fees (other than any fees payable under clause (v)
                           below), indemnities or other sums owing hereunder not
                           referred to in clauses (ii) through (iv) below then
                           due to the Agent and the Loan Administrator, on a pro
                           rata basis;

                  (ii)     second, to pay Obligations in respect of any
                           expenses, fees (other than any fees payable under
                           clause (v) below), indemnities or other sums owing
                           hereunder not referred to in clauses (iii) and (iv)
                           below then due to the Board, the Lenders and the
                           Counter-Guarantors, on a pro rata basis;

                  (iii)    third, to pay interest then due and payable in
                           respect of the Loan to the Lenders, on a pro rata
                           basis (it being understood that following the Board's
                           honoring of a demand for payment in accordance with
                           the Board Guarantee, the Guaranteed Percentage
                           thereof shall be distributed to the Board and the
                           Non-Guaranteed Percentage thereof shall be
                           distributed to the Lenders, on a pro rata basis);

                  (iv)     fourth, to pay or prepay principal payments on the
                           Loan to the Lenders, on a pro rata basis (it being
                           understood that following the Board's honoring of a
                           demand for payment in accordance with the Board
                           Guarantee, the Guaranteed Percentage thereof shall be
                           distributed to the Board and the Non-Guaranteed
                           Percentage thereof shall be distributed to the
                           Lenders, on a pro rata basis); and

                  (v)      fifth, to pay any fees payable under Section 2.8(f),
                           (g), (h) and (i) hereof to the Board, the
                           Counter-Guarantors and the Initial Lender, as the
                           case may be, on a pro rata basis.

Notwithstanding the foregoing, to the extent that any amounts received by the
Agent constitutes interest accrued on any overdue principal of or interest on
the Loan in excess of the interest that would have accrued thereon at the
Applicable Rate, the Guaranteed Percentage of so much of such amount, if any, as
exceeds the interest that would have so accrued at the Applicable Rate shall be
distributed to the Board under clause (iii) above and the balance shall be
distributed to the Lenders under clause (iii) above.


                                       30

                  (f)      Upon the assignment to the Board of any Lender's
right, title and interest in and to its pro rata portion of the Guaranteed
Percentage of the principal of and interest on the Loan in accordance with the
Board Guarantee, the Board shall have the rights and privileges of a Lender with
respect to such payment (to the extent of the interests in the Loan so assigned
to the Board). Any statute or judicial decision to the contrary notwithstanding,
no payment by the Board or any Counter-Guarantor to the Agent or any Lender
under the Board Guarantee or any Counter-Guarantee, as the case may be, shall
reduce, discharge, satisfy, modify or terminate the corresponding payment or any
other obligation of Borrower under this Agreement or the Note, which shall
remain in full force and effect.

                  SECTION 2.10.     CERTAIN PROVISIONS GOVERNING THE NOTE.

                  (a)      Determination of Interest Rate. LIBOR for each
Interest Period for the Loan shall be determined by the Agent pursuant to the
procedures set forth in the definition of "LIBOR", and shall promptly thereafter
be notified to the Borrower and each Lender together with the Applicable
Interest Rate for such Interest Period.

                  (b)      Interest Rate Unascertainable, Inadequate or Unfair.
In the event that: (i) the Agent determines that adequate and fair means do not
exist for ascertaining the applicable interest rates by reference to which the
LIBOR then being determined is to be fixed; or (ii) the Requisite Lenders notify
the Agent that the LIBOR for any Interest Period will not adequately reflect the
cost to the relevant Lenders of making or maintaining the Loan for such Interest
Period, the Agent shall forthwith so notify the Borrower, the Board and the
Lenders, whereupon during the 30 days following the date of any such notice
given to the Borrower, the Agent, the Board and the Borrower shall negotiate in
good faith in order to arrive at a mutually acceptable alternative basis for
determining the interest rate from time to time applicable to the Loan (the
"Substitute Basis"). If within the 20 days following the date of any such notice
to the Borrower, the Agent and the Borrower shall agree upon a Substitute Basis,
such Substitute Basis shall be retroactive to and effective from the first day
of the then current Interest Period until and including the last day of such
Interest Period. If after 20 days from the date of such notice, the Agent and
the Borrower shall have failed to agree upon a Substitute Basis, then the Agent
(upon instructions from the Requisite Lenders) shall certify in writing to the
Borrower (such certification to be conclusive and binding on all of the parties
hereto absent manifest error) the interest rate at which such Lenders are
prepared to maintain their portion of the Loan for such Interest Period, it
being understood that such Lenders' interest rate shall be at a rate per annum
equal to a rate which adequately and fairly reflects the cost to such Lenders of
obtaining the funds necessary to maintain their portion of the Loan for such
Interest Period. If no Substitute Basis is established, upon receipt of notice
of the interest rates at which the Requisite Lenders are prepared to maintain
their respective portion of the Loan, the Borrower shall have the right
exercisable upon ten Business Days' prior notice to the Lenders and the Board
through the Agent (i) to continue to borrow the Loan at the interest rate so
advised by the Agent (as such rate may be modified, from time to time, at the
outset of each subsequent Interest Period) or (ii) to prepay in full the Loan
together with accrued but unpaid interest thereon


                                       31

at the interest rate certified in writing by the Requisite Lenders as provided
above and all other amounts due under the Loan Documents, whereupon the Loan
shall become due and payable on the date specified by the Borrower in such
notice.

                  (c)      Increased Costs. If at any time any Lender or
Counter-Guarantor shall determine that the introduction of or any change after
the date hereof in or in the interpretation of any law, treaty or governmental
rule, regulation or order or the compliance by such Lender or Counter-Guarantor,
with any guideline, request or directive after the date hereof from any central
bank or other Governmental Authority (whether or not having the force of law),
there shall be any increase in the cost to such Lender or Counter-Guarantor of
agreeing to make or making, funding, guaranteeing or maintaining any portion of
the Loan or its Counter-Guarantee (except in respect of Taxes based on the
overall net income of such Lender or Counter-Guarantor), then the Borrower shall
from time to time, upon demand (which demand shall be accompanied by a statement
setting forth the basis for such demand and a calculation of the amount thereof
in reasonable detail) by such Lender or Counter-Guarantor, as the case may be
(with a copy of such demand to the Agent), pay to the Agent for the account of
such Lender or Counter-Guarantor, as the case may be, additional amounts
sufficient to compensate such Lender or Counter-Guarantor, as the case may be,
for such increased cost. A certificate as to the amount of such increased cost,
submitted to the Borrower and the Agent by such Lender or Counter-Guarantor, as
the case may be, shall be conclusive and binding for all purposes, absent
manifest error.

                  (d)      Illegality. Notwithstanding any other provision of
this Agreement, if any Lender determines that the introduction of or any change
in or in the interpretation of any law, treaty or governmental rule, regulation
or order after the date of this Agreement shall make it unlawful, or any central
bank or other Governmental Authority shall assert that it is unlawful, for such
Lender to continue to fund or maintain its portion of the Loan, then, on notice
thereof by such Lender to the Borrower through the Agent, the obligation of such
Lender to continue to fund or maintain its portion of the Loan shall be
terminated and the Borrower shall prepay such affected portion of the Loan to
such Lender together with accrued but unpaid interest thereon and all other sums
payable hereunder with respect thereto on the last day of the then current
Interest Period or earlier if necessary to avoid such illegality. Any such
partial prepayment of the Loan shall be applied ratably to the then unpaid
installments thereof in accordance with the amount of each such unpaid
installment.

                  (e)      Breakage Costs. In addition to all amounts required
to be paid by the Borrower pursuant to Section 2.7, the Borrower shall
compensate each Lender or each Counter-Guarantor, upon demand, for all losses,
expenses and liabilities (including any loss or expense incurred by reason of
the liquidation or reemployment of deposits or other funds acquired by such
Lender or Counter-Guarantor or the termination of any other financial
arrangement it may have entered into to fund or maintain or support such
Lender's portion of the Loan or its Counter-Guarantee, but excluding Taxes based
on the overall net income of such Lender or Counter-Guarantor) which that Lender
or Counter-


                                       32

Guarantor, as the case may be, may sustain (i) if for any reason the proposed
Borrowing does not occur on a date specified therefor in the Notice of Borrowing
given by a Borrower, (ii) if for any reason any portion of the Loan is prepaid
(including mandatorily pursuant to Section 2.6 or this Section 2.10) or payment
made with respect to a Counter-Guarantee on a date which is not the last day of
the applicable Interest Period, or (iii) as a consequence of any failure by a
Borrower to repay any portion of the Loan or make payment with respect to a
Counter-Guarantee when required by the terms hereof or by such
Counter-Guarantee. The Lender or Counter-Guarantor making demand for such
compensation shall deliver to the Borrower (with a copy to the Agent)
concurrently with such demand a written statement as to such losses, expenses
and liabilities, and this statement shall be conclusive as to the amount of
compensation due to that Lender or Counter-Guarantor, as the case may be, absent
manifest error, and such compensation shall be paid to the Agent for the account
of such Lender or Counter-Guarantor, as the case may be.

                  SECTION 2.11.     CAPITAL ADEQUACY. If at any time any Lender
or Counter-Guarantor determines that (a) the adoption of or any change in or in
the interpretation of any law, treaty or governmental rule, regulation or order
after the date of this Agreement regarding capital adequacy, (b) compliance with
any such law, treaty, rule, regulation, or order, or (c) compliance with any
guideline or request or directive from any central bank or other Governmental
Authority (whether or not having the force of law) shall have the effect of
reducing the rate of return on such Lender's or Counter-Guarantor's (or any
corporation controlling such Lender's or Counter-Guarantor's) capital as a
consequence of its obligations hereunder (other than as a result of changes in
Taxes based on the overall net income of such Lender or Counter-Guarantor) to a
level below that which such Lender or Counter-Guarantor, as the case may be, or
such corporation could have achieved but for such adoption, change, compliance
or interpretation, then, upon demand from time to time by such Lender or
Counter-Guarantor, as the case may be (with a copy of such demand to the Agent),
the Borrower shall pay to the Agent for the account of such Lender or
Counter-Guarantor, as the case may be, from time to time as specified by such
Lender or Counter-Guarantor, as the case may be, additional amounts sufficient
to compensate such Lender for such reduction. A certificate as to such amounts
submitted to the Borrower and the Agent by such Lender or Counter-Guarantor, as
the case may be, shall be conclusive and binding for all purposes absent
manifest error.

                  SECTION 2.12.     TAXES.

                  (a)      Except as otherwise provided in Section 10.2, any and
all payments by the Borrower under each Loan Document shall be made free and
clear of and without deduction for any and all Taxes, excluding (i) in the case
of each Lender, the Loan Administrator, each Counter-Guarantor, each Participant
and the Agent taxes measured by its net income, and franchise taxes imposed on
it, by the jurisdiction under the laws of which such Lender, the Loan
Administrator, such Counter-Guarantor, such Participant or the Agent (as the
case may be) is organized, (ii) in the case of each Lender and each Participant,
taxes measured by its net income, and franchise taxes imposed on it,


                                       33

by the jurisdiction in which such Lender's Lending Office is located or in which
such Participant booked its participation for tax accounting purposes, (iii) in
the case of each Counter-Guarantor, net income and franchise taxes imposed by
the jurisdiction to which the Borrower is directed to make payments to the
Counter-Guarantor pursuant to the Loan Documents, (iv) in the case of each
Lender, the Loan Administrator, each Participant, each Counter-Guarantor and the
Agent, Taxes imposed as a result of such Person failing to comply with its
obligations under Section 2.12(g) or 2.12(h) and (v) in the case of each Lender,
the Loan Administrator, each Participant, each Counter-Guarantor and the Agent
that is a party hereto, Counter-Guarantor or Participant, as the case may be, on
the Closing Date, United States federal withholding taxes unless imposed as a
result of a change in applicable law, including income tax conventions, after
the Closing Date (all such non-excluded Taxes being hereinafter referred to as
"Indemnified Taxes"). If any Indemnified Taxes shall be required by law to be
deducted from or in respect of any sum payable under any Loan Document to any
Lender, the Loan Administrator, any Counter-Guarantor or the Agent (i) the sum
payable shall be increased as may be necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section 2.12) such Lender, the Loan Administrator, such Counter-Guarantor
or the Agent (as the case may be) receives an amount equal to the sum it would
have received had no such deductions been made, (ii) the Borrower shall make
such deductions, and (iii) the Borrower shall pay the full amount deducted to
the relevant taxing authority or other authority in accordance with applicable
law.

                  (b)      If any Taxes (other than Taxes imposed as a result of
the failure of the Counter-Guarantor to comply with its obligations under
Section 2.12(g)) shall be required by law to be deducted from or in respect of
any sum payable under any Counter-Guarantee to any Counter-Guarantor
("Counter-Guarantee Taxes"), (i) the Agent shall make such deductions and shall
so notify the Borrower (such notice shall be accompanied by a statement setting
forth the basis for such deductions and a calculation of the amount thereof in
reasonable detail), (ii) the Agent shall pay the full amount deducted to the
relevant taxing authority or other authority in accordance with applicable law,
and (iii) the Borrower shall pay to such Counter-Guarantor such amounts as may
be necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section 2.12) such
Counter-Guarantor receives an amount equal to the sum it would have received had
no such deductions been made. Further, if any Taxes are required by law to be
deducted from or in respect to any sum payable under any Counter-Guarantee by
any Counter-Guarantor to the Agent, any Lender or any Participant and such
Counter-Guarantor in accordance with the terms of its Counter-Guarantee pays
such amounts as may be necessary so that after making all required deductions
the Agent, such Lender or such Participant, as the case may be, receives an
amount equal to the sum it would have received had no such deduction been made,
the Borrower shall pay the amount thereof to the Agent for the account of such
Counter-Guarantor (together with any additional amounts such that the
Counter-Guarantor receives, after deduction for all Taxes required to be
withheld, the amount so paid by the Counter-Guarantor).


                                       34

                  (c)      In addition, the Borrower agrees to pay any present
or future stamp or documentary taxes or any other excise or property taxes,
charges or similar levies of the United States or any political subdivision
thereof or any applicable foreign jurisdiction, and all liabilities with respect
thereto, which arise from any payment made under any Loan Document or
Counter-Guarantee or from the execution, delivery or registration of, or
otherwise with respect to, any Loan Document or Counter-Guarantee (collectively,
"Other Taxes") to the Agent for the account of the affected party.

                  (d)      The Borrower will indemnify each Lender, the Agent,
the Loan Administrator and each Counter-Guarantor for the full amount of
Indemnified Taxes, Counter-Guarantee Taxes or Other Taxes (including any Taxes
imposed by any jurisdiction on amounts payable under this Section 2.12) paid by
such Lender, the Loan Administrator, the Agent or Counter Guarantor (as the case
may be) and any liability (including for penalties, interest and expenses)
arising therefrom or with respect thereto. This indemnification shall be made to
the Agent for account of the relevant Lender, the Loan Administrator, the
relevant Counter-Guarantor or the Agent, as the case may be, within 30 days from
the date such Lender, the Loan Administrator, such Counter-Guarantor or the
Agent (as the case may be) makes written demand therefor (with a copy to the
Agent if made by a Lender, the Loan Administrator or Counter-Guarantor and
accompanied by a statement setting forth the basis for such taxation and the
calculation of the amount thereof in reasonable detail).

                  (e)      Within 30 days after the date of any payment of
Indemnified Taxes, Counter-Guarantee Taxes or Other Taxes, the Borrower will
furnish to the Agent the original or a certified copy of a receipt evidencing
payment thereof or other documentation reasonably satisfactory to the Agent.

                  (f)      Without prejudice to the survival of any other
agreement of the Borrower hereunder, the agreements and obligations of the
parties contained in this Section 2.12 shall survive the payment in full of the
Obligations.

                  (g)      Each Lender, each Counter-Guarantor, each
Participant, the Loan Administrator and the Agent that is a Non-U.S. Person and
that is entitled at such time to an exemption from United States withholding
tax, or that is subject to such tax at a reduced rate under an applicable tax
treaty, shall, on or prior to the Closing Date or on or prior to the date of the
Assignment and Acceptance pursuant to which it becomes a Lender or on or prior
to the date such Person becomes a Counter-Guarantor, a Participant, the Loan
Administrator or the Agent, as applicable, and from time to time thereafter if
requested by the Agent, a Counter-Guarantor or the Borrower, provide the Agent
and the Borrower, and, in the case of each Lender, each Participant and the
Agent, provide each Counter-Guarantor, with two completed copies of either IRS
Form W-8BEN or W-8ECI or other applicable form, certificate or document
prescribed by the IRS certifying as to such Non-U.S. Person's entitlement to
such exemption from United States withholding tax or reduced rate with respect
to all payments to be made to such Non-U.S. Person under the Loan Documents. In
addition, each Lender, each Counter-Guarantor, each


                                       35

Participant, the Loan Administrator and the Agent that is a Non-U.S. Person, as
the case may be, shall deliver to the Borrower and the Agent, and, in the case
of each Lender, each Participant and the Agent, deliver to each
Counter-Guarantor, notice of any event (other than a change in applicable law,
including income tax conventions) requiring a change in the most recent form
previously delivered by such Person to the Borrower and the Agent or the
Counter-Guarantors, as the case may be. Unless the Agent and the Borrower have
received forms or other documents satisfactory to them indicating that payments
under the Loan Documents or Counter-Guarantee to or for a Non-U.S. Person are
not subject to United States withholding tax or are subject to such tax at a
rate reduced by an applicable tax treaty, the Agent or the Borrower shall,
notwithstanding the provisions of Section 2.12(a), (b) and (d) and without
impairing any obligation of the Borrower under this Section 2.12 with respect to
such tax, withhold such United States withholding taxes from such payments at
the appropriate rate.

                  (h)      Any Lender claiming any additional amounts payable
pursuant to this Section 2.12 shall use its reasonable efforts (consistent with
its internal policy and legal and regulatory restrictions) to change the
jurisdiction of its Lending Office if the making of such a change would avoid
the need for, or reduce the amount of, any such additional amounts which would
be payable or may thereafter accrue and would not, in the sole determination of
such Lender, be otherwise disadvantageous to such Lender.

                  (i)      Each Participant will be entitled to the benefits and
subject to the requirements of this Section 2.12 to the same extent as if such
Person were a Lender.

                                  ARTICLE III

                               CONDITIONS TO LOAN

                  SECTION 3.1.      CONDITIONS PRECEDENT TO THE LOAN. The
obligation of the Initial Lender to make the Loan requested to be made by it on
the Closing Date is subject to the satisfaction (in the judgment of the Agent,
the Board, each Counter-Guarantor and the Initial Lender) of all of the
following conditions precedent before or concurrently with such Borrowing:

                  (a)      Certain Documents. The Agent, the Initial Lender,
each Counter-Guarantor (except as to (iv), (vii)(F) through (K), (x) and (xi),
for opinions of counsel to and documents relating to the other
Counter-Guarantors) and the Board shall have received on the Closing Date each
of the following, each dated as of the Closing Date, in form and substance
satisfactory to the Agent, the Board, the Initial Lender and each
Counter-Guarantor:

                  (i)      this Agreement, duly executed and delivered by the
         parties hereto;


                                       36

                  (ii)     the Note duly executed by the Borrower and conforming
         to the requirements set forth in Section 2.4(d) hereof;

                  (iii)    the Board Guarantee, duly executed and delivered by
         the parties thereto;

                  (iv)     each Counter-Guarantee, duly executed and delivered
         by the parties thereto, together with, to the extent required thereby,
         any and all Counter-Guarantor Letters of Credit and parent guarantees,
         in each instance duly executed and delivered by the relevant issuer
         thereof;

                  (v)      the Warrants, duly executed and delivered by
         Holdings;

                  (vi)     each Registration Rights Agreement, duly executed and
         delivered by the parties thereto;

                  (vii)    the favorable opinions of (A) Skadden, Arps, Slate,
         Meagher, and Flom LLP, special New York counsel to the Borrower, (B)
         Cooley Godward, special California counsel to the Borrower and
         Holdings, (C) Linda M. Mitchell, Esq., Vice President and General
         Counsel of the Borrower, (D) Curtis, Mallet-Prevost, Colt & Mosle LLP,
         special New York counsel to the Board, (E) David R. Schwiesow,
         Associate General Counsel of the Loan Administrator, (F) Maples and
         Calder, Cayman Islands counsel to the Airbus Counter-Guarantor, (G) A&L
         Goodbody, Irish counsel to the Airbus Counter-Guarantor, (H) Simpson
         Thacher & Bartlett, special New York counsel to the Airbus
         Counter-Guarantor, (I) Christopher Beers, Esq., internal counsel to the
         GECC Counter-Guarantor, (J) Weil, Gotshal & Manges LLP, special New
         York counsel to the GECC Counter-Guarantor, (K) Paul, Hastings,
         Janofsky & Walker LLP, special New York counsel to the debis
         Counter-Guarantor, and (L) Milbank, Tweed, Hadley & McCloy LLP, special
         New York counsel to the Initial Lender and the Agent;

                  (viii)   a copy of the articles or certificate of
         incorporation of each of the Borrower and Holdings, certified as of a
         recent date by the Secretary of State of the state of organization of
         such Person, together with a "long-form" certificate of such official
         attesting to the good standing of such Person;

                  (ix)     a certificate of each of the Borrower and Holdings
         signed on behalf of such Person by its Secretary or an Assistant
         Secretary certifying (A) the names and true signatures of each officer
         of such Person who has been authorized to execute and deliver each Loan
         Document required to be executed and delivered by or on behalf of such
         Person hereunder or thereunder, (B) the by-laws of such Person as in
         effect on the date of such certification, (C) the resolutions of such
         Person's board of directors approving and authorizing the execution,
         delivery and performance of each Loan Document to which it is a party
         and (D) that there have been no changes in the certificate of
         incorporation of such Person from the


                                       37

         certificate of incorporation delivered pursuant to the immediately
         preceding clause;

                  (x)      a copy of the articles or certificate of organization
         or comparable document of each Counter-Guarantor, certified, if
         available, as of a recent date by an appropriate official of the
         jurisdiction of organization of each Counter-Guarantor, together with,
         if available, a certificate or comparable document of such official
         attesting to the good standing of the applicable Counter-Guarantor;

                  (xi)     a certificate of each Counter-Guarantor signed on
         behalf of such Counter-Guarantor by an authorized official of such
         Counter-Guarantor certifying (A) the names and true signatures of each
         officer of such Counter-Guarantor who has been authorized to execute
         and deliver its Counter-Guarantee, (B) the by-laws of such
         Counter-Guarantor as in effect on the date of such certification, (C)
         the resolutions of the Counter-Guarantor's board of directors approving
         and authorizing the execution, delivery and performance of its
         Counter-Guarantee and (D) that there have been no changes in the
         certificate of organization of such Counter-Guarantor from the
         certificate of organization delivered pursuant to the immediately
         preceding clause;

                  (xii)    a certificate of the Borrower signed by the Chief
         Financial Officer of the Borrower on behalf of the Borrower, stating
         that the Borrower is Solvent after giving effect to the Loan, the
         application of the proceeds thereof in accordance with Section 2.4(f)
         and the payment of all estimated legal, accounting and other fees
         related hereto and thereto;

                  (xiii)   a certificate of the Borrower signed by a duly
         authorized officer certifying (i) that all representations and
         warranties are true and correct on and as of the Closing Date, before
         and after giving effect to the Borrowing and to the application of the
         proceeds therefrom, as though made on and as of such date, and (ii)
         that no Event of Default or event which, with the giving of notice or
         passage of time or both, would be an Event of Default, has occurred and
         is continuing, or would result from the Borrowing, other than the
         Disclosed Defaults which will be cured after giving effect to the
         Borrowing and to the application of the proceeds therefrom;

                  (xiv)    a true and correct copy of the Borrower's
         Application, as approved by the Board, together with a certificate
         signed by a duly authorized officer certifying that there are no
         written materials amending, varying, supplementing or otherwise
         modifying any of the terms of the Application other than as included in
         the Application;

                  (xv)     a certificate of the Borrower signed by a duly
         authorized officer certifying there has been no material adverse change
         in the business, condition (financial or otherwise), operations,
         prospects, performance, or properties of the Borrower or in the
         Borrower's ability to repay the Loan or with respect to any of


                                       38

         the matters covered by the representations and warranties of the
         Borrower in its Application to the Board since the original date of the
         Application;

                  (xvi)    a certificate of the Borrower signed by a duly
         authorized officer certifying that (i) it will use the proceeds from
         the Borrowing in compliance with Section 2.4(f) of this Agreement, (ii)
         the Borrower qualifies as an "eligible borrower" under the Act and the
         Regulations, and (iii) the Borrower does not have any outstanding
         delinquent Federal debt (including tax liabilities); and

                  (xvii)   such other certificates, documents, agreements and
         information respecting the Borrower and Holdings as the Agent, the
         Initial Lender, any Counter-Guarantor or the Board may reasonably
         request.

                  (b)      Warrants. The Warrants shall have been validly issued
to the Board, each Counter-Guarantor and the Initial Lender.

                  (c)      Other Agreements. The Agent, the Board, the Initial
Lender and each Counter-Guarantor shall have received evidence reasonably
satisfactory to each of them that: (i) the Borrower has entered into an
agreement (the "Employee Compensation Agreement") with the Board regarding
certain employee compensation as required by Section 104(a) of the Act; (ii) the
concessionary agreements with the Borrower's creditors, lessors and business
partners referred to in the Application (the "Concessions") have been completed
in a manner satisfactory to the Agent, the Board, the Initial Lender and each
Counter-Guarantor (including, without limitation, the Lease Indenture relating
to the convertible debentures (limited in aggregate principal amount to not more
than $120 million) of Holdings to be issued to such lessors in consideration of
such concessions (all as more fully described in the Application) with a
conversion price of not less than $12.00 per share of Common Stock), (iii) the
Borrower has entered into the Term Loan Agreement ; and (iv) each of TPG
Partners, L.P., TPG Parallel I, L.P. and Air Partners II, L.P. has entered into
an agreement with the Board under which it agrees not to sell, assign or
otherwise dispose of any of its shares of the Class A Common Stock of Holdings
in a transaction or series of transactions that does not provide for the
opportunity of the holders of the Class B Common Stock of Holdings to approve
such transaction or series of related transactions or to tender their shares
unless the holders of greater than fifty percent (50%) of the Class B Common
Stock of Holdings then outstanding either (x) vote their shares of Class B
Common Stock of Holdings in favor or such transaction or series of related
transactions or (y) tender their shares of Class B Common Stock for sale in such
transaction or series of related transactions.

                  (d)      Fees and Expenses Paid. The Borrower shall have paid
all fees due and payable on the Closing Date (including, without limitation, the
fees referenced in Section 2.8 hereof), and all expenses of the Agent, the
Initial Lender, the Loan Administrator and each Counter-Guarantor due and
payable on or before the Closing Date.


                                       39

                  (e)      Consents, Etc. The Borrower and Holdings shall have
received all consents and authorizations required pursuant to any Contractual
Obligation with any other Person and shall have obtained all consents, waivers
and authorizations of, and effected all notices to and filings with, the New
York Stock Exchange, the Securities and Exchange Commission or any other
Governmental Authority, in each case, as may be necessary to allow the Borrower
and Holdings lawfully to execute, deliver and perform, in all material respects,
its obligations under the Loan Documents to which it is, or shall be, a party
and each other agreement or instrument to be executed and delivered by it,
pursuant thereto or in connection therewith.

                  (f)      No Illegality. No law or regulation shall be
applicable in the judgment of the Initial Lender that restrains, prevents or
imposes materially adverse conditions upon the transactions contemplated hereby.

                  (g)      Representations and Warranties of Borrower. All
representations and warranties of the Borrower set forth herein are true and
correct on and as of the Closing Date, before and after giving effect to the
Borrowing and to the application of the proceeds therefrom, as though made on
and as of such date.

                  (h)      Representation and Warranties of Counter-Guarantors.
All representations and warranties of each Counter-Guarantor in its
Counter-Guarantee are true and correct on and as of the Closing Date, before and
after giving effect to the Borrowing and to the application of the proceeds
therefrom, as though made on and as of such date.

                  (i)      No Event of Default. No Event of Default or Default,
has occurred and is continuing, or would result from the Borrowing, other than
the Disclosed Defaults which will be cured after giving effect to the Borrowing
and to the application of the proceeds therefrom.

                  (j)      Corporate and other proceedings. All corporate and
other proceedings, and all documents, instruments and other legal matters in
connection with the transactions contemplated hereby shall be satisfactory in
form and substance to the Agent, the Board, the Initial Lender and each
Counter-Guarantor.

                  (k)      Counter-Guarantees. Each Counter-Guarantee and any
and all Counter-Guarantor Letters of Credit and parent guarantees, to the extent
required thereby, shall be in full force and effect and no default in the
performance of any thereof shall have occurred and be continuing.

                  (l)      No Material Adverse Change. No material adverse
change occurring in the business, condition (financial or otherwise),
operations, properties, performance or prospects of the Borrower or in the
Borrower's ability to repay the Loan or with respect to any of the matters
covered by the representations and warranties made in the Application since
November 13, 2001.


                                       40

                                   ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES

                  To induce the other parties to enter into this Agreement and
to induce the Counter-Guarantors to enter into their respective
Counter-Guarantees, the Borrower represents and warrants to each other party
hereto and to each Counter-Guarantor that, on and as of the Closing Date (the
Borrower and Holdings are each referred to as an "Obligor" and collectively
referred to as the "Obligors"):

                  SECTION 4.1.      ORGANIZATION, POWERS, QUALIFICATION, GOOD
STANDING, BUSINESS, SUBSIDIARIES, THE ACT AND THE REGULATIONS.

                  (a)      Each Obligor is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. Each
Obligor has all requisite corporate power and authority to own and operate its
properties, to carry on its business as now conducted and as proposed to be
conducted, to enter into the Loan Documents to which it is a party and to carry
out the transactions contemplated hereby and thereby.

                  (b)      Each Obligor is qualified to do business and in good
standing in every jurisdiction where its assets are located and wherever
necessary to carry out its business and operations, except in jurisdictions
where the failure to be so qualified or in good standing would not in the
reasonable determination of such Obligor be expected to impair the ability of
such Obligor to perform its payment or other material obligations under the Loan
Documents to which it is a party. The Borrower is an "air carrier" within the
meaning of the Act and holds a certificate under Sections 41102(a)(1) and 41103
of Title 49. The Borrower is a "citizen of the United States" as defined in
Section 40102(a)(15) of Title 49 (a "United States Citizen") and holds an air
carrier operating certificate issued pursuant to Chapter 447 of Title 49 for
aircraft capable of carrying 10 or more individuals or 6,000 pounds or more of
cargo. The Borrower possesses all necessary certificates, franchises, licenses,
permits, rights and concessions and consents which are material to the operation
of the routes flown by it and the conduct of its business and operations as
currently conducted.

                  (c)      All of the Subsidiaries of the Obligors as of the
Closing Date are identified in Schedule 4.1 annexed hereto, as said Schedule 4.1
may be supplemented from time to time pursuant to the provisions of Section
5.l(xi). Each of the Subsidiaries of the Borrower identified in Schedule 4.1
annexed hereto (as so supplemented) is a corporation duly organized, validly
existing and in good standing under the laws of its respective jurisdiction of
incorporation set forth therein, has all requisite corporate power and authority
to own and operate its properties and to carry on its business as now conducted
and as proposed to be conducted, and is qualified to do business and in good
standing in every jurisdiction where its assets are located and wherever
necessary to carry out its business and operations, in each case except where
failure to be so qualified or in good standing or a lack of such corporate power
and authority would not in the


                                       41

reasonable determination of the Borrower be expected to impair the ability of
the Borrower to perform its payment or other material obligations under the Loan
Documents. Schedule 4.1 annexed hereto (as so supplemented) correctly sets forth
the ownership interest of the Obligors and each of their Subsidiaries in each of
the Subsidiaries identified therein.

                  (d)      The Borrower is an "eligible borrower" within the
meaning of the Act and the Regulations, it does not have any outstanding
delinquent Federal debt (including tax liabilities), and the Application, the
Loan and the transactions contemplated hereby (assuming each Initial Lender is
an Eligible Lender) comply with the requirements of the Act and the Regulations.

                  SECTION 4.2.      AUTHORIZATION OF BORROWING, ETC.

                  (a)      Each Obligor has duly authorized by all necessary
corporate action the execution, delivery and performance of the Loan Documents
to which it is a party.

                  (b)      The execution, delivery and performance by each
Obligor of the Loan Documents and the agreements effecting the Concessions to
which it is a party and the consummation of the transactions contemplated by the
Loan Documents and the agreements effecting the Concessions to which it is a
party do not and will not (i) violate any provision of any law or any
governmental rule or regulation applicable to such Obligor or any of its
Subsidiaries, the Certificate or Articles of Incorporation or Bylaws of such
Obligor or any of its Subsidiaries or any order, judgment or decree of any court
or other agency of government binding on such Obligor or any of its
Subsidiaries, (ii) conflict with, result in a breach of or constitute (with due
notice or lapse of time or both) a default under any Contractual Obligation of
such Obligor or any of its Subsidiaries, (iii) result in or require the creation
or imposition of any Lien upon any of the properties or assets of such Obligor
or any of its Subsidiaries, or (iv) require any approval of stockholders or any
approval or consent of any Person under any Contractual Obligation of such
Obligor or any of its Subsidiaries, except for such approvals or consents which
will have been obtained on or before the Closing Date and have been disclosed in
writing to the Agent, each Initial Lender, each Counter-Guarantor and the Board.

                  (c)      The execution, delivery and performance by each
Obligor of the Loan Documents to which it is a party and the consummation of the
transactions contemplated by the Loan Documents to which it is a party do not
and will not require any registration with, consent or approval of, or notice
to, or other action to, with or by, any federal, state or other Governmental
Authority or regulatory body or any other Person which is required to be
obtained or made on or prior to the Closing Date and which has not previously
been obtained or made.

                  (d)      Each Obligor has duly executed and delivered each of
the Loan Documents to which it is party and each such Loan Document is the
legally valid and binding obligation of such Obligor, enforceable against such
Obligor in accordance with


                                       42

its respective terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or other similar laws relating
to or affecting the enforcement of creditors' rights generally, including
materiality, reasonableness, good faith and fair dealing, and by general
principles of equity (regardless of whether considered in a proceeding in equity
or at law).

                  SECTION 4.3.      FINANCIAL CONDITION. Each Obligor has
heretofore delivered to the Lenders and the Counter-Guarantors, at the request
of any of them, the following financial statements and information: (i) the
audited consolidated balance sheets of such Obligor as at December 31, 2000, and
the related consolidated statements of income, stockholders' equity and cash
flows of such Obligor for the Fiscal Year then ended and (ii) the unaudited
consolidated balance sheet of such Obligor as at September 30, 2001 and the
related unaudited statements of income, stockholders' equity and cash flows of
such Obligor for the nine months then ended. All such consolidated statements
were prepared in conformity with GAAP and fairly present the consolidated
financial position of such Obligor as at the respective dates thereof and the
consolidated results of operations and cash flows of such Obligor for each of
the periods then ended subject, in the case of the unaudited consolidated
statements, to year-end audit and adjustments. Except as disclosed in writing to
the Agent and the Counter-Guarantors prior to the date of this Agreement,
neither Obligor has any material contingent liability or liability for taxes,
long-term lease or unusual forward or long-term commitment that is not reflected
in the foregoing consolidated financial statements (or, in the case of the
Borrower, in the most recently delivered consolidated financial statements
delivered pursuant to Section 5.1(i)(a) or (ii)) or the notes thereto and which
in any such case is material in relation to the business, operations,
properties, assets or condition (financial or otherwise) of such Obligor or,
with respect to the initial borrowing hereunder only, the prospects of the
Borrower.

                  SECTION 4.4.      NO MATERIAL ADVERSE CHANGE; NO RESTRICTED
PAYMENTS. Since November 13, 2001, no material adverse change has occurred in
the business, condition (financial or otherwise), operations, prospects,
performance, or properties of either Obligor or in the Borrower's ability to
repay the Loan or with respect to any of the matters covered by the
representations and warranties made in the Borrower's Application. Since
November 13, 2001, neither the Borrower nor any of its Subsidiaries has directly
or indirectly declared, ordered, paid or made, or set apart any sum or property
for, any Restricted Payment or agreed to do so except as would have been
permitted by Section 6.3, as if such Section were in effect at all times after
November 13, 2001 (except that for purposes of this Section 4.4 the terms
"Default" and "Event of Default" therein shall exclude the Disclosed Defaults).

                  SECTION 4.5.      TITLE TO PROPERTIES; LIENS. Each Obligor and
its Subsidiaries have (i) good, sufficient and legal title to (in the case of
fee interests in real property), (ii) valid leasehold interests in (in the case
of leasehold interests in real or personal property), or (iii) good title to (in
the case of all other personal property), all of the properties and assets
reflected in the financial statements referred to in Section 4.3 or,


                                       43

in the case of the Borrower, in the most recent financial statements delivered
pursuant to Section 5.1, in each case except for assets disposed of since the
date of such financial statements in the ordinary course of business or as
otherwise permitted under Section 6.5. Except as otherwise permitted by this
Agreement, all such properties and assets are free and clear of Liens.

                  SECTION 4.6.      LITIGATION; ADVERSE FACTS. There are no
actions, suits, proceedings, arbitrations or governmental investigations
(whether or not purportedly on behalf of either Obligor or any of its
Subsidiaries) at law or in equity or before or by any federal, state, municipal
or other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, pending or, to the knowledge of the
Borrower, threatened against or affecting either Obligor or any of its
Subsidiaries or any property of either Obligor or any of its Subsidiaries that,
individually or in the aggregate, if adversely determined, could in the
reasonable determination of the Borrower be expected to impair the ability of
such Obligor to perform its payment or other material obligations under the Loan
Documents to which it is a party or to otherwise have a material adverse effect
on the business, condition (financial or otherwise), operations, prospects,
performance or properties of such Obligor or any of its Subsidiaries or to
challenge the legality, validity or binding effect of any Loan Document
including, without limitation, this Agreement. Neither Obligor nor any of its
Subsidiaries is (i) in violation of any applicable laws that, individually or in
the aggregate, could in the reasonable determination of the Borrower be expected
to impair the ability of such Obligor to perform its payment or other material
obligations under the Loan Documents to which it is a party or (ii) subject to
or in default with respect to any final judgments, writs, injunctions, decrees,
rules or regulations of any court or any federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, that, individually or in the aggregate, could in the
reasonable determination of the Borrower be expected to impair the ability of
such Obligor to perform its payment or other material obligations under the Loan
Documents to which it is a party.

                  SECTION 4.7.      PAYMENT OF TAXES. Except to the extent
permitted by Section 5.3, all federal income tax returns and other material tax
returns and reports of each Obligor and its Subsidiaries required to be filed by
any of them have been timely filed (or extensions have been obtained with
respect thereto), and all federal income taxes and material Taxes upon each
Obligor and its Subsidiaries and upon their respective properties, assets,
income, businesses and franchises which are due and payable have been paid
before any penalty, fine or interest accrues thereon or are being contested in
good faith through appropriate proceedings and with respect to which an adequate
reserve has been established by the Borrower to the extent required by GAAP.
Except as disclosed in Schedule 4.7, there are no closing, settlement or similar
agreements with respect to Taxes of any material amount between any Obligor and
any taxing agency or authority.


                                       44

                  SECTION 4.8.      PERFORMANCE OF AGREEMENTS; MATERIALLY
ADVERSE AGREEMENTS.

                  (a)      Neither Obligor nor any of its Subsidiaries is in
default in the performance, observance or fulfillment of any of the material
obligations, covenants or conditions contained in any of its Contractual
Obligations, and no condition exists that, with the giving of notice or the
lapse of time or both, would constitute such a default, except for the Disclosed
Defaults which will be cured after giving effect to the Borrowing and the
application of the proceeds therefrom.

                  (b)      Neither Obligor nor any of its Subsidiaries is a
party to or is otherwise subject to any agreements or instruments or any charter
or other internal restrictions which, individually or in the aggregate, could in
the reasonable determination of the Borrower be expected to impair the ability
of such Obligor to perform its payment or other material obligations under the
Loan Documents to which it is a party.

                  SECTION 4.9.      GOVERNMENTAL REGULATION. Neither Obligor nor
any of its Subsidiaries is subject to regulation under the Public Utility
Holding Company Act of 1935, the Federal Power Act, the Interstate Commerce Act
or the Investment Company Act of 1940 or under any other federal or state
statute or regulation which may limit its ability to incur Indebtedness or which
may otherwise render all or any portion of the Obligations unenforceable.

                  SECTION 4.10.     SECURITIES ACTIVITIES. Neither the Borrower
nor any of its Subsidiaries owns or is engaged principally, or as one of its
important activities, in the business of extending credit for the purpose of
purchasing or carrying any Margin Stock, nor shall any proceeds of the Loan be
used to purchase or carry Margin Stock or to extend credit to any Person for the
purpose of purchasing or carrying any Margin Stock in a manner that violates or
causes a violation of Regulations T, U or X of the Board of Governors of the
Federal Reserve System or any other regulation of such Board.

                  SECTION 4.11.     EMPLOYEE BENEFIT PLANS. Each Plan maintained
by the Borrower or an ERISA Affiliate is in compliance in all material respects
with all applicable laws. Except in such instances where an omission or failure
would not in the reasonable determination of the Borrower impair the ability of
the Borrower to perform its payment or other material obligations under the Loan
Documents (a) all returns, reports and notices required to be filed with any
regulatory agency with respect to any Plan have been filed timely and (b)
neither the Borrower nor any ERISA Affiliate has failed to make any contribution
or pay any amount due or owing as required by the terms of any Plan. There are
no pending or, to the best of the Borrower's knowledge, threatened claims,
lawsuits, investigations or actions (other than routine claims for benefits in
the ordinary course) asserted or instituted against the assets of any Plan or
its related trust or against any fiduciary of a Plan with respect to the
operation of such Plan that are likely to result in liability of the Borrower
that in the reasonable determination of the Borrower would impair the ability of
the Borrower to perform its payment or other


                                       45

material obligations under the Loan Documents. Except in such instances where an
omission or failure would not in the reasonable determination of the Borrower
impair the ability of the Borrower to perform its payment or other material
obligations under the Loan Documents, each Plan maintained by the Borrower or an
ERISA Affiliate that is intended to be "qualified" within the meaning of section
401(a) of the Internal Revenue Code is, and has been during the period from its
adoption to date, so qualified, both as to form and operation and all necessary
governmental approvals, including a favorable determination as to the
qualification under the Internal Revenue Code of such Plan and each amendment
thereto, have been or will be timely obtained. Neither the Borrower nor any
ERISA Affiliate has engaged in any prohibited transaction, within the meaning of
section 406 of ERISA or section 4975 of the Internal Revenue Code, in connection
with any Plan which could result in liability of the Borrower that would in the
reasonable determination of the Borrower impair the ability of the Borrower to
perform its payment or other material obligations under the Loan Documents.
Neither the Borrower nor any ERISA Affiliate has any contingent liability with
respect to any post-retirement benefits under a welfare benefit plan as defined
in ERISA other than a liability for continuation coverage described in Part 6 of
Title I of ERISA, except where such liability could not in the reasonable
determination of the Borrower be expected to impair the ability of the Borrower
to perform its payment or other material obligations under the Loan Documents.
Neither the Borrower nor any ERISA Affiliate maintains, has established or has
ever participated in a multiple employer welfare benefit arrangement within the
meaning of ERISA except to the extent that such participation would not in the
reasonable determination of the Borrower be expected to impair the ability of
the Borrower to perform its payment or other material obligations under the Loan
Documents. The Borrower has not incurred any potential liability with respect to
a multiemployer plan, as defined in section 3(37) of ERISA or a plan described
in section 4063(a) of ERISA except to the extent that such liability would not
in the reasonable determination of the Borrower be expected to impair the
ability of the Borrower to perform its payment or other material obligations
under the Loan Documents. Neither the Borrower nor any ERISA Affiliate has
incurred any liability under Title IV of ERISA that has not been satisfied, and
no condition exists that could reasonably be expected to result in the Borrower
or an ERISA Affiliate incurring any liability under Title IV of ERISA that would
in the reasonable determination of the Borrower impair the ability of the
Borrower to perform its payment or other material obligations under the Loan
Documents.





                                       46



      SECTION 4.12. ENVIRONMENTAL PROTECTION.

      (a) All Facilities and operations of each Obligor and its Subsidiaries
are, and have been to the Borrower's knowledge, in compliance with all
Environmental Laws except for any noncompliance which, individually or in the
aggregate, could not in the reasonable determination of the Borrower be expected
to impair the ability of the Borrower to perform its payment or other material
obligations under the Loan Documents.

      (b) There are no, and have been no, conditions, occurrences, or Hazardous
Materials Activity (a) arising at any Facilities or, to the knowledge of the
Borrower, at any other location or (b) arising in connection with the operations
of the Borrower or its Subsidiaries (including the transportation of Hazardous
Materials in accordance with applicable regulations), which conditions,
occurrences or Hazardous Materials Activity could reasonably be expected to form
the basis of an Environmental Claim against the Borrower or any of its
Subsidiaries and which, individually or in the aggregate, could in the
reasonable determination of the Borrower be expected to impair the ability of
the Borrower to perform its payment or other material obligations under the Loan
Documents.

      (c) There are no pending or, to the Borrower's knowledge, threatened
Environmental Claims against the Borrower or its Subsidiaries, and the Borrower
and its Subsidiaries have received no notices, inquiries, or requests for
information with respect to any Environmental Claims which in either case are
reasonably likely to be adversely determined and could individually or in the
aggregate in the reasonable determination of the Borrower be expected to impair
the ability of the Borrower to perform its payment or other material obligations
under the Loan Documents.

      (d) Except as disclosed to the Agent, the Board, the Counter-Guarantor and
the Lenders in writing on or prior to the Closing Date, the Borrower is not
currently operating or required to be operating under any compliance order,
schedule, decree or agreement, any consent decree, order or agreement, and/or
any corrective action decree, order or agreement issued or entered into under
any Environmental Law the failure to comply with which could individually or in
the aggregate in the reasonable determination of the Borrower be expected to
impair the ability of the Borrower to perform its payment or other material
obligations under the Loan Documents.

      SECTION 4.13. SOLVENCY. After giving effect to the Borrowing and to the
application of the proceeds therefrom, each Obligor is and, upon the incurrence
of any Obligations by the Borrower on any date on which this representation is
deemed made, will be, Solvent.

      SECTION 4.14. DISCLOSURE. No representation or warranty of the Borrower
contained in this Agreement, the Application or in any other document,
certificate or written statement furnished to the Board, the Agent, the Lenders
or Counter-Guarantors

                                       47

by or on behalf of the Borrower or any of its Subsidiaries for use in connection
with the transactions contemplated by this Agreement contains any untrue
statement as and when made, or as any of such representations and warranties may
be made from time to time in accordance with this Agreement and the other Loan
Documents. Any projections and pro forma financial information contained in the
Application are based upon good faith estimates and assumptions believed by the
Borrower to be reasonable at the time made, it being recognized by the Board,
the Agent and the Lenders that such projections as to future events are not to
be viewed as facts and that actual results during the period or periods covered
by any such projections may differ from the projected results. There are no
facts known to any Responsible Officer of the Borrower (other than matters of a
general economic nature) that, individually or in the aggregate, could in the
reasonable determination of the Borrower be expected to have a material adverse
effect on either Obligor and its Subsidiaries, taken as a whole or otherwise
impair the ability of either Obligor to perform its payment or other material
obligations under the Loan Documents to which it is a party.

      SECTION 4.15. COMPLIANCE WITH LAWS. Each Obligor and each of its
Subsidiaries is in compliance with all laws, statutes, rules, regulations and
orders binding on or applicable to such Obligor, its Subsidiaries and all of
their respective properties, except to the extent failure to so comply could not
(either individually or in the aggregate) reasonably be expected to have a
material adverse effect on such Obligor and its Subsidiaries, taken as a whole
or otherwise impair the ability of such Obligor to perform its payment or other
material obligations under the Loan Documents to which it is a party.

      SECTION 4.16. CONCESSION AGREEMENTS. The Borrower has heretofore delivered
to the Board and the Agent a true and correct schedule identifying the
Concessions together with true and correct copies of the agreements effecting
the Concessions which have not been amended, supplemented or otherwise modified
prior to the date hereof. After giving effect to the Loan and application of the
proceeds therefrom, the Concessions are in full force and effect.

      SECTION 4.17. INDEBTEDNESS. Schedule 4.17 correctly sets forth the
consolidated Indebtedness of the Obligors and their Subsidiaries as of December
31, 2001. The Borrower has heretofore delivered to the Board and the Agent true
and correct copies of the Lease Indenture and the Term Loan Agreement, each as
amended, supplemented or otherwise modified through the date hereof.

                                   ARTICLE V

                                    COVENANTS

      To induce the other parties to enter into this Agreement and to induce the
Counter-Guarantors to enter into their respective Counter-Guarantees, the
Borrower


                                       48

agrees with each other party hereto and the Counter-Guarantors that, as long as
any of the Obligations remain outstanding:

      SECTION 5.1. FINANCIAL STATEMENTS AND OTHER REPORTS. The Borrower will
maintain, and cause each of its Subsidiaries to maintain, a system of accounting
established and administered in accordance with sound business practices to
permit preparation of financial statements in conformity with GAAP. The Borrower
will deliver to the Agent, the Lenders, each Counter-Guarantor, the Board and
the Loan Administrator:


            (i) (a) Quarterly Financials: as soon as available and in any event
      within 60 days after the end of each fiscal quarter of each Fiscal Year
      (other than the last quarter of each Fiscal Year), (a) the consolidated
      balance sheets of each of the Borrower and Holdings as at the end of such
      fiscal quarter and the related consolidated statements of income and
      stockholders' equity of each such company for such fiscal quarter and
      consolidated cash flows of each such company for the period from the
      beginning of then current Fiscal Year to the end of such fiscal quarter,
      all in reasonable detail and certified by the chief financial officer,
      controller or treasurer of such company that they fairly present the
      consolidated financial condition of such company as at the dates indicated
      and the results of its operations and their cash flows for the periods
      indicated and (b) a narrative report describing the operations of such
      company in the form prepared for presentation to senior management for
      such fiscal quarter and for the period from the beginning of then current
      Fiscal Year to the end of such fiscal quarter; provided that delivery of
      such company's Form 10-Q for such fiscal quarter shall be deemed to
      satisfy all of the requirements of this Section 5.1(i)(a);

            (b) Monthly Reporting: as soon as available and in any event within
      25 days after the end of each calendar month, the consolidated balance
      sheets of the Borrower as at the end of such month and the related
      consolidated statements of income and consolidated cash flows of Borrower
      for such calendar month and for the period from the beginning of the then
      current Fiscal Year to the end of such month, together with a unit-basis
      income statement (with per-ASM revenues and expenses (line by line)),
      variances from the monthly operating plan for each income statement line
      item and breakdowns of salary and benefits expenses in sufficient detail
      to facilitate monitoring; all such financial statements to be in the form
      prepared for the management of the Borrower and certified by the chief
      financial officer, controller or treasurer of such company being fairly
      stated in all material respects (subject to normal year-end audit
      adjustments);

            (ii) Year-End Financials: as soon as available and in any event
      within 105 days after the end of each Fiscal Year, (a) the consolidated
      balance sheets of each of the Borrower and Holdings at the end of such
      Fiscal Year and the related consolidated statements of income,
      stockholders' equity and cash flows of such company for such Fiscal Year,
      setting forth in each case in comparative form the corresponding figures
      for the previous Fiscal Year and, in the case of the


                                       49

      Borrower, the corresponding figures from the annual financial plan
      delivered pursuant to Section 5.1(viii) for the Fiscal Year covered by
      such financial statements of the Borrower, all in reasonable detail, (b) a
      narrative report describing the operations of such company in the form
      prepared for presentation to senior management for such Fiscal Year, and
      (c) an accountant's report thereon of PricewaterhouseCoopers L.L.P. or
      other independent certified public accountants of recognized national
      standing selected by such company, which report shall be unqualified,
      shall express no doubts about the ability of such company to continue as a
      going concern, and shall state that such consolidated financial statements
      fairly present the consolidated financial position of such company as at
      the dates indicated and the results of their operations and their cash
      flows for the periods indicated in conformity with GAAP applied on a basis
      consistent with prior years and that the examination by such accountants
      in connection with such consolidated financial statements has been made in
      accordance with generally accepted auditing standards; provided that (i)
      references in such report to changes in GAAP, changes in accounting
      standards, highlighting contents of footnotes, limitations in the scope of
      the audit or exclusions from the audit information not required by GAAP
      that are, in each case, customary in industry practice and not prejudicial
      to the opinion stated therein shall not be deemed to be "qualifications"
      for the purpose of this Section and (ii) delivery of such company's Form
      10-K for such Fiscal Year shall be deemed to satisfy all of the
      requirements of this Section 5.1(ii);

            (iii) Officer's and Compliance Certificates: together with each
      delivery of financial statements of the Borrower pursuant to subdivisions
      (i) and (ii) above after the Closing Date, (a) an Officer's Certificate of
      the Borrower stating that the signer has reviewed the terms of this
      Agreement and has made, or caused to be made under his or her supervision,
      a review in reasonable detail of the transactions and condition of the
      Borrower during the accounting period covered by such financial statements
      and that such review has not disclosed the existence during or at the end
      of such accounting period, and that the signer does not have knowledge of
      the existence as at the date of such Officer's Certificate, of any
      condition or event that constitutes an Event of Default or Default, or, if
      any such condition or event existed or exists, specifying the nature and
      period of existence thereof and what action the Borrower has taken, is
      taking and proposes to take with respect thereto; and (b) a Compliance
      Certificate demonstrating in reasonable detail compliance (or
      noncompliance) during and at the end of the applicable quarterly and
      annual accounting periods with the restrictions contained in Sections 6.3
      and 6.4;

            (iv) SEC Filings and Press Releases: promptly upon their becoming
      available, copies of (a) all financial statements, reports, notices and
      proxy statements sent or made available generally by the Borrower and
      Holdings to its security holders, (b) all regular and periodic reports and
      all registration statements and prospectuses, if any, filed by Holdings,
      the Borrower or any of their Subsidiaries with any securities exchange or
      with the Securities and Exchange Commission or any governmental or private
      regulatory authority, and (c) all


                                       50

      material press releases and other statements made available generally by
      Holdings, the Borrower or any of their Subsidiaries, to the public
      concerning material developments in the business of the Borrower or any of
      its Subsidiaries;

            (v) Events of Default, etc.: promptly upon any Responsible Officer
      of either Obligor obtaining knowledge (a) of any condition or event that
      constitutes an Event of Default or Default, (b) that any creditor has
      given any notice to the Borrower or any of its Subsidiaries or taken any
      other action with respect to a claimed default or event or condition of
      the type referred to in Section 7.1(b), (c) of any condition or event that
      would be required to be disclosed in a current report filed by the
      Borrower or Holdings with the Securities and Exchange Commission on Form
      8-K if the Borrower were required to file such reports under the Exchange
      Act, or (d) of the occurrence of any event or change that has caused or
      evidences, either in any case or in the aggregate, in the reasonable
      determination of the Borrower, impairment of the ability of the Borrower
      to perform its payment or other material obligations under the Loan
      Documents, an Officer's Certificate specifying the nature and period of
      existence of such condition, event or change, or specifying the notice
      given or action taken by any such Person and the nature of such claimed
      Event of Default, Default, default, event or condition, and what action
      the Borrower has taken, is taking and proposes to take with respect
      thereto;

            (vi) Litigation or Other Proceedings: to the extent not disclosed
      pursuant to this subsection, (a) promptly upon any Responsible Officer of
      the Borrower obtaining knowledge of (X) the institution of, or threat of,
      any action, suit, proceeding (whether administrative, judicial or
      otherwise), governmental investigation or arbitration against or affecting
      the Borrower or any of its Subsidiaries or any property of the Borrower or
      any of its Subsidiaries (collectively, "Proceedings") or (Y) any material
      development in any Proceeding that, in any case:

                  (1) is reasonably likely to be adversely determined and
            assuming that all damages demanded in such litigation are awarded,
            is in the reasonable determination of the Borrower likely to impair
            the ability of the Borrower to perform its payment or other material
            obligations under the Loan Documents; or

                  (2) seeks to enjoin or otherwise prevent the consummation of,
            or to recover any damages or obtain relief as a result of the
            transactions contemplated hereby;

      written notice thereof together with such other information as may be
      reasonably available to the Borrower to enable the Agent, the Loan
      Administrator, the Board, each Counter-Guarantor and their respective
      counsel to evaluate such matters; and (b) within twenty days after the end
      of each Fiscal Year, a schedule of all Proceedings involving an alleged
      liability of, or claims against or affecting, the Borrower or any of its
      Subsidiaries the uninsured portion of which is equal to or greater than
      $5,000,000 and promptly after request by the Agent, the Loan



                                       51

      Administrator, the Board or any Counter-Guarantor such other information
      as may be reasonably requested by the Agent, the Loan Administrator, the
      Board or such Counter-Guarantor to enable the Agent, the Loan
      Administrator, the Board or such Counter-Guarantor and their respective
      counsel to evaluate any of such Proceedings;

            (vii) ERISA Reports: promptly after the receipt by the Borrower of a
      request therefor by the Agent, the Loan Administrator, the Board, any
      Lender or any Counter-Guarantor, the Borrower shall provide the Agent, the
      Loan Administrator, the Board, such Lender and such Counter-Guarantor
      copies of any annual and other reports (including Schedule B thereto) with
      respect to a Plan filed by the Borrower or any ERISA Affiliate with the
      United States Department of Labor, the Internal Revenue Service or the
      Pension Benefit Guaranty Corporation;

            (viii) Annual Financial Plan: annually, as soon as practicable after
      preparation thereof by the Borrower in the ordinary course of business but
      in no event later than January 31 of each year, the Borrower shall provide
      the Agent, the Loan Administrator, the Board, each Lender and each
      Counter-Guarantor copies of its annual financial plan;

            (ix) Environmental Audits and Reports: as soon as practicable
      following receipt thereof, the Borrower shall provide the Agent, the Loan
      Administrator, the Board, each Lender and each Counter-Guarantor copies of
      all environmental audits and reports, whether prepared by personnel of the
      Borrower or any of its Subsidiaries or by independent consultants, with
      respect to significant environmental matters at any Facility or which
      relate to an Environmental Claim which could in the reasonable
      determination of the Borrower be expected to impair the ability of the
      Borrower to perform its payment or other material obligations under the
      Loan Documents;

            (x) Liquidity Certificates: (a) within one Business Day after any
      public release by S&P or Moody's raising or lowering its credit rating on
      the Borrower's senior unsecured debt obligations and (b) at such
      additional times as the Borrower may elect, the Borrower shall provide the
      Agent, the Board, each Lender and each Counter-Guarantor a certificate
      setting forth the credit rating on the Borrower's senior unsecured debt
      obligations (each, a "Liquidity Certificate");

            (xi) Additional Subsidiaries: to the extent permitted hereunder
      pursuant to Section 6.12, with reasonable promptness, upon the formation
      thereof, the Borrower shall provide the Agent, the Loan Administrator, the
      Board, each Lender and each Counter-Guarantor the name, corporate
      structure and allocation of Voting Stock of each Subsidiary of the
      Borrower, including, without limitation, providing a supplement Schedule
      4.1 hereto with all relevant information included with respect to such new
      Subsidiary;




                                       52

            (xii) Insurance Proceeds: promptly notify the Agent, each Lender,
      each Counter-Guarantor, the Loan Administrator and the Board upon a
      Responsible Officer of the Borrower obtaining actual knowledge of the
      occurrence of an event of loss or damage to any equipment owned or
      operated by the Borrower that is reasonably expected to result in receipt
      of insurance proceeds to be received by the Borrower reasonably estimated
      by the Borrower to exceed $5,000,000;

            (xiii) Future Issuance and Asset Sales: prior to the Borrower
      consummating any Future Issuance (other than the exercise of options or
      similar rights by existing or former officers, directors or employees of
      the Borrower, Holdings or any of their Subsidiaries) or Asset Sale, the
      Borrower shall notify the Agent, each Lender, each Counter-Guarantor, the
      Loan Administrator and the Board of such event and what action the
      Borrower has taken, is taking and proposes to take with respect thereto,
      including the use of proceeds;

            (xiv) Plan Audits and Liabilities: promptly after the Borrower or
      any ERISA Affiliate (a) contacts the Internal Revenue Service for the
      purpose of participation in a closing agreement or any voluntary
      resolution program with respect to a Plan which could in the reasonable
      determination of the Borrower impair the ability of the Borrower to
      perform its payment or other material obligations under the Loan Documents
      or (b) knows or has reason to know that any event with respect to any Plan
      occurred that could in the reasonable determination of the Borrower impair
      the ability of the Borrower to perform its payment or other material
      obligations under the Loan Documents a notification thereof;

            (xv) Funding Changes and New Plan Benefits: promptly after the
      change, a notification of any material increases in the benefits, or
      material change in funding method, with respect to which the Borrower may
      have any liability, or the establishment of any material new Plan with
      respect to which the Borrower may have any liability or the commencement
      of contributions to any Plan to which the Borrower or any ERISA Affiliate
      was not previously contributing, except to the extent that such an event
      would not in the reasonable determination of the Borrower be expected to
      impair the ability of the Borrower to perform its payment or other
      material obligations under the Loan Documents;

            (xvi) Claims and Proceedings: promptly after receipt of written
      notice of commencement thereof, notification of all (i) claims made by
      participants or beneficiaries with respect to any Plan and (ii) actions,
      suits and proceedings before any court or governmental department,
      commission, board, bureau, agency or instrumentality, domestic or foreign,
      affecting the Borrower or any ERISA Affiliate with respect to any Plan,
      except those which, in the aggregate, if adversely determined could not in
      the reasonable determination of the Borrower impair the ability of the
      Borrower to perform its payment or other material obligations under the
      Loan Documents;




                                       53

            (xvii) ERISA Reportable Events: promptly after the occurrence of any
      reportable event (as defined in ERISA) relating to a Plan with respect to
      which the Borrower or an ERISA Affiliate may have any liability (other
      than any such event with respect to which the Pension Benefit Guaranty
      Corporation has waived the ERISA reportable event notification requirement
      by regulation or notice) notice thereof; and

            (xviii) Other Information: with reasonable promptness, such other
      information and data with respect to the Borrower or any of its
      Subsidiaries as from time to time may be reasonably requested by the
      Agent, any Lender, any Counter-Guarantor, the Board or the Loan
      Administrator.

      SECTION 5.2. CORPORATE EXISTENCE. Except as permitted under Section
6.5(v), the Borrower will do or cause to be done all things necessary to
preserve and keep in full force and effect its corporate existence and the
corporate, partnership or other existence of each Subsidiary of the Borrower and
the rights (charter and statutory) and franchises of the Borrower and any
Subsidiary of the Borrower; provided, that the Borrower shall not be required to
preserve any such corporate, partnership or other existence of any Subsidiary or
any such right or franchise, if the board of directors of the Borrower shall
determine in the exercise of its business judgment that the preservation thereof
is no longer desirable in the conduct of the business of the Borrower or any
Subsidiary and that abandonment of any such right or franchise shall not in the
reasonable determination of the Borrower impair the ability of the Borrower to
perform its payment or other material obligations under the Loan Documents.

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

      (a) The Borrower will, and will cause its Subsidiaries to, pay or
discharge or cause to be paid or discharged, before the same shall become
delinquent, (i) all taxes, assessments and governmental charges levied or
imposed upon the Borrower or any Subsidiary or upon the income, profits or
property of the Borrower or any Subsidiary, and (ii) all lawful claims for
labor, materials and supplies that, if unpaid, might by law become a lien on the
property of the Borrower or any Subsidiary; provided, however, that the Borrower
shall not be required to pay or discharge or cause to be paid or discharged any
such tax, assessment, charge or claim the amount, applicability or validity of
which is being contested in good faith by appropriate proceedings and with
respect to which an adequate reserve has been established by the Borrower to the
extent required by GAAP.

      (b) The Borrower will not, and will not permit any of its Subsidiaries to,
file or consent to the filing of any consolidated income tax return with any
Person (other than the Borrower, Holdings and any Subsidiary of the Borrower or
Holdings).

      SECTION 5.4. MAINTENANCE OF PROPERTIES; INSURANCE. The Borrower will, and
will cause each of its Subsidiaries to, maintain all properties used or useful
in the conduct of its business in good condition, repair and working order and
supply such properties with all necessary equipment and make all necessary
repairs, renewals,


                                       54

replacements, betterments and improvements thereto, all as in the judgment of
the Borrower may be necessary so that the business carried on in connection
therewith may be properly and advantageously conducted at all times; provided,
however, that nothing in this Section shall prevent the Borrower or any
Subsidiary from discontinuing the operation and maintenance of any such
properties if such discontinuance is, in the good faith judgment of the Borrower
or such Subsidiary, as the case may be, desirable in the conduct of its
respective business and shall not impair the ability of the Borrower to perform
its payment or other material obligations under the Loan Documents. The Borrower
will insure and keep insured, and will cause each of its Subsidiaries to insure
and keep insured, with reputable insurance companies, such of their respective
properties, to such an extent and against such risks, and will maintain
liability insurance, to the extent that property of a similar character is
usually so insured by companies engaged in a similar business and owning similar
properties in accordance with good business practice.

      SECTION 5.5. INSPECTION. The Borrower will, and will cause its
Subsidiaries to, permit any authorized representatives designated by the Agent,
any Lender, any Counter-Guarantor, the Loan Administrator or the Board to visit
and inspect any of the properties of the Borrower or any of its Subsidiaries,
including its and their financial and accounting records, and to make copies and
take extracts therefrom, and to discuss its and their affairs, finances and
accounts with its and their officers and independent public accountants, all
upon reasonable notice and at such reasonable times during normal business hours
and as often as may be reasonably requested; provided that so long as no Default
or Event of Default shall have occurred and be continuing, such inspection shall
not be disruptive to the Borrower's business, as reasonably determined by the
Borrower.

      SECTION 5.6. COMPLIANCE WITH LAWS, ETC. The Borrower will, and will cause
each of its Subsidiaries to, comply with all applicable statutes, rules,
regulations, orders and restrictions of the United States of America, all states
and municipalities thereof, and of any governmental department, commission,
board, regulatory authority, bureau, agency and instrumentality of the
foregoing, in respect of the conduct of their respective businesses and the
ownership of their respective properties, except such as are being contested in
good faith by appropriate proceedings and except for such noncompliance as would
not in any case or in the aggregate in the reasonable determination of the
Borrower impair the ability of the Borrower to perform its payment or other
material obligations under the Loan Documents. The Borrower shall not conduct
any Hazardous Materials Activity at any Facility or at any other location in a
manner that does not comply with Environmental Laws.

      SECTION 5.7. BORROWER'S REMEDIAL ACTION REGARDING HAZARDOUS MATERIALS. To
the extent required by Environmental Laws, the Borrower will take, and will
cause each of its Subsidiaries to take, any and all necessary remedial action
(except to the extent that such remedial action is taken by other Persons
responsible for such remedial action through contractual arrangements with the
Borrower) in connection with the presence, storage, use, disposal,
transportation or Release of any Hazardous Materials


                                       55

on, under or about any Facility in order to comply timely with all applicable
Environmental Laws and Governmental Authorizations except for such
non-compliance as would not in any case or in the aggregate in the reasonable
determination of the Borrower impair the ability of the Borrower to perform its
payment and other material obligations under the Loan Documents. In the event
the Borrower or any of its Subsidiaries undertakes any remedial action with
respect to any Hazardous Materials on, under or about any Facility, the Borrower
or such Subsidiary will conduct and complete such remedial action (or will cause
such action to be taken pursuant to contractual rights of the Borrower against
third parties) in compliance with all applicable Environmental Laws, and in
accordance with the policies, orders and directives of all federal, state and
local governmental authorities except when, and only to the extent that, the
Borrower's or such Subsidiary's liability for such presence, storage, use,
disposal, transportation or discharge of any Hazardous Materials is being
contested in good faith and by appropriate proceedings diligently conducted by
the Borrower or such Subsidiary or except for such non-compliance as would not
in any case or in the aggregate in the reasonable determination of the Borrower
impair the ability of the Borrower to perform its payment and other material
obligations under the Loan Documents.

      SECTION 5.8. FURTHER ASSURANCES. At any time or from time to time upon the
request of the Board, any Counter-Guarantor, the Loan Administrator or the
Agent, the Obligors will, at their expense, promptly execute, acknowledge and
deliver such further documents and do such other acts and things as the Board,
such Counter-Guarantor, the Loan Administrator or the Agent may reasonably
request in order to effect fully the purposes of the Loan Documents and to
provide for payment of the Obligations in accordance with the terms of this
Agreement, the Note and the other Loan Documents.

      SECTION 5.9. EMPLOYEE BENEFIT PLANS. The Borrower shall take such actions
as are reasonably practicable to ensure that the Plans with respect to which it
may have any liability are operated in material compliance with all applicable
laws, except to the extent that the failure to do so could not in the reasonable
determination of the Borrower be expected to impair the ability of the Borrower
to perform its payment or other material obligations under the Loan Documents.
Neither the Borrower nor a Subsidiary shall amend, adopt or terminate any Plan
unless such action could not in the reasonable determination of the Borrower be
expected to impair the ability of the Borrower to perform its payment or other
material obligations under the Loan Documents.

      SECTION 5.10. FAA MATTERS; CITIZENSHIP. The Borrower will at all times
hereunder be an "air carrier" within the meaning of the Act and hold a
certificate under 49 U.S.C. Section 41102(a)(1) as currently in effect or as may
be amended or recodified from time to time. The Borrower will at all times
hereunder be a United States Citizen holding an air carrier operating
certificate issued pursuant to Chapter 447 of the Act for aircraft capable of
carrying 10 or more individuals or 6,000 pounds or more of cargo. The Borrower
will possess and maintain all necessary consents, franchises, licenses,


                                       56

permits, rights and concessions and consents which are material to the operation
of the routes flown by it and the conduct of its business and operations as
currently conducted.

      SECTION 5.11. BOARD GUARANTEE. The Borrower shall comply with all of the
terms, requirements and conditions applicable to it under the Act and the
Regulations, or as may otherwise be imposed by, or agreed with, the Board in
connection with the issuance of the Board Guarantee, and shall promptly furnish
the Board, the Loan Administrator and the Agent (with a copy to the
Counter-Guarantors) all such information as may be requested by the Board, the
Loan Administrator or the Agent in connection with the Board Guarantee. The
Borrower shall execute such documents and take such actions in furtherance of
its obligations under the Act and the Regulations as the Board, the Loan
Administrator or the Agent may request.

      SECTION 5.12. LOWER-TIER COVERED TRANSACTION. The Borrower agrees that in
the event that it enters into any "lower-tier covered transaction" (as such term
is defined in 31 C.F.R. Section 19.110, as amended or modified from time to time
and not excepted therefrom by 31 C.F.R. Section 19.200(c)) in respect of the
transactions contemplated hereunder, it will include the clause entitled
"Certificate Regarding Debarment, Suspension, Ineligibility and Voluntary
Exclusion - Lower Tier Covered Transactions" as set forth in Appendix B to Part
19 of title 31 of the C.F.R. in such "lower-tier covered transaction", and that
it will obtain a certification from the other Person or Persons party to such
"lower-tier covered transaction" to the effect that each such other Person (and
each "principal" thereof, as such term is defined in 31 C.F.R. Section 19.105,
as amended or modified from time to time) is not presently debarred, suspended,
proposed for debarment, declared ineligible, or voluntarily excluded from
participation in such transaction by any Federal department or agency, or an
explanation why such Person is unable to so certify. Further, Borrower agrees
that it will not enter into a "lower-tier covered transaction" with a Person who
has been proposed for debarment under 48 C.F.R. Section 9.4, debarred or
suspended unless granted an exception for such "lower-tier covered transaction"
pursuant to 31 C.F.R. Section 19.215.

      SECTION 5.13. AUDITS AND REVIEWS. The Borrower agrees to permit, and to
cooperate in the conduct of, such audits and reviews during the period the Loan
is outstanding and for three years thereafter, as the Board may deem
appropriate, by an independent auditor acceptable to the Board or the United
States Comptroller General. To the extent requested by the Board or the Loan
Administrator, the Borrower shall provide access to the officers and employees,
books, records, accounts, documents, correspondence, and other information of
the Borrower, its Subsidiaries, Affiliates, financial advisors, consultants and
independent certified accountants that the Board or the United States
Comptroller General considers necessary.

      SECTION 5.14. ADDITIONAL COLLATERAL. The Borrower shall use commercially
reasonable efforts to add to the collateral securing the loans under the Term
Loan Agreement in any instance when the Borrower would otherwise be required
under


                                       57

the Term Loan Agreement to prepay such loans as a result of a borrowing base
deficiency thereunder.

                                   ARTICLE VI

                               NEGATIVE COVENANTS

      To induce the other parties to enter into this Agreement and to induce the
Counter-Guarantors to enter into their respective Counter-Guarantees, the
Borrower agrees with each other party hereto and the Counter-Guarantors that, as
long as any of the Obligations remain outstanding:

      SECTION 6.1. LIENS AND RELATED MATTERS.

      A. Prohibition on Liens. The Borrower shall not, and shall not permit any
of its Subsidiaries to, directly or indirectly create, incur, assume or permit
to exist any Lien on or with respect to any property or asset of any kind
(including any document or instrument in respect of goods or accounts
receivable) of the Borrower or any of its Subsidiaries, whether now owned or
hereafter acquired, or any income or profits therefrom, or file or permit the
filing of, or permit to remain in effect, any financing statement or other
similar notice of any Lien with respect to any such property, asset, income or
profits under the Uniform Commercial Code of any state or under any similar
recording or notice statute, except:

            (i) Permitted Encumbrances; and

            (ii) purchase money Liens securing Indebtedness used to acquire
      Aircraft Related Equipment or liens created or incurred in connection with
      refinancing of any Aircraft Related Equipment acquired by the Borrower
      which refinancing occurs within 18 months after the date of such
      acquisition;

            (iii) other Liens securing or relating to Indebtedness permitted
      pursuant to this Agreement and other liabilities and obligations permitted
      pursuant to this Agreement in an aggregate amount not to exceed
      $25,000,000 at any time outstanding; and

            (iv) Liens securing Indebtedness used to refinance the Loan.

      B. No Restrictions on Subsidiary Distributions to Borrower or Other
Subsidiaries. Except (i) as provided herein and (ii) as described on Schedule
6.1 annexed hereto, the Borrower will not, and will not permit any of its
Subsidiaries to, create or otherwise cause or suffer to exist or become
effective any Payment Restriction.


                                       58

            SECTION 6.2. INVESTMENTS.

      Neither Obligor shall, nor shall permit any Subsidiary to make any
Investment other than (i) Investments consisting of Cash Equivalents; (ii)
accounts receivable if credited or acquired in the ordinary course of business
and payable or dischargeable in accordance with customary trade terms; (iii)
payroll advances and advances for business and travel expenses in the ordinary
course of business; (iv) Investments by the Borrower in its Wholly-Owned
Subsidiaries in the ordinary course of business and Investments by Holdings in
its Wholly-Owned Subsidiaries in the ordinary course of business; (v)
Investments by any Subsidiary of the Borrower in the Borrower or in any other
Wholly-Owned Subsidiary and Investments by any Subsidiary of Holdings (but with
respect to the Borrower and its Subsidiaries, only to the extent such Investment
is not prohibited by any other provision of this Agreement) in Holdings or in
any other Wholly-Owned Subsidiary of Holdings; (vi) Investments made by way of
any endorsement of negotiable instruments received by Holdings, the Borrower or
any Subsidiary in the ordinary course of its business and presented by it to any
bank for collection or deposit; (vii) stock, obligations or securities received
in settlement of debts created in the ordinary course of business owing to
Holdings, the Borrower or any Subsidiary; (viii) Investments by Holdings and the
Borrower in any Wholly-Owned Subsidiary for the purpose of receivables
financing; (ix) in addition to any other permitted investments, any other
Investments by Holdings or the Borrower in an aggregate amount not exceeding
$1,000,000 at any time; and (x) Investments in travel or airline related
businesses made in connection with marketing and promotion agreements, alliance
agreements, distribution agreements, agreements relating to flight training and
other similar agreements under which a portion of the consideration to Holdings
or the Borrower includes an opportunity for Investment in the Capital Stock of
other Persons, which Investments under this clause (x) shall not exceed
$60,000,000 in the aggregate.

      SECTION 6.3. RESTRICTED PAYMENTS. The Borrower shall not, and shall not
permit any of its Subsidiaries to, directly or indirectly, declare, order, pay,
make or set apart any sum for any Restricted Payment; provided, however, that
the Borrower may, so long as no Default or Event of Default shall have occurred
and be continuing make a Restricted Payment to Holdings (i) to pay or reimburse
the Borrower's share of Holding's business expenses and overhead in a maximum
amount of $2,500,000 per Fiscal Year, (ii) to pay or reimburse Holdings for
Capital Stock (including options on any such Capital Stock or related stock
appreciation rights or similar securities) purchases or redemptions from
officers, directors or employees of the Borrower or Holdings (or their estates
or beneficiaries under their estates) upon death, disability, retirement,
termination of employment or pursuant to the terms of any plan or any other
agreement under which such Capital Stock or related rights were issued, in an
amount not to exceed $3,000,000 per Fiscal Year, (iii) to pay or reimburse
Holdings for withholding taxes arising from cashless exercises of options or
warrants by officers, directors or employees for Holdings' Capital Stock and
(iv) to pay or reimburse Holdings for interest payments under the Lease
Indenture in an amount not to exceed $11,000,000 in Fiscal Year 2002,
$12,000,000 in Fiscal Year 2003, $13,000,000 in Fiscal Year 2004, and
$14,000,000 in Fiscal Year 2005 and each fiscal year thereafter until the Loan
Maturity Date; provided,


                                       59

that repayments of the Senior Notes from proceeds of Future Issuances, Excess
Proceeds or Net Insurance Proceeds to the extent permitted or required hereunder
shall not be deemed a Restricted Payment.

      SECTION 6.4. FINANCIAL COVENANT. The Borrower shall not permit the reserve
of unrestricted Cash and Cash Equivalents (that in either case are free from all
Liens other than Permitted Encumbrances of the type described in clause (xi) of
the definition of Permitted Encumbrances) of the Borrower and its Wholly-Owned
Subsidiaries to be less than One Hundred Million Dollars ($100,000,000).

      SECTION 6.5. RESTRICTION ON FUNDAMENTAL CHANGES; ASSET SALES AND
ACQUISITIONS; NEW SUBSIDIARIES. Neither Obligor shall, nor shall permit any of
its Subsidiaries to, enter into any transaction of merger or consolidation, or
liquidate, wind-up or dissolve itself (or suffer any liquidation or
dissolution), or convey, sell, lease, sub-lease, transfer or otherwise dispose
of, in one transaction or a series of transactions, all or any part of its
business, property or fixed assets, whether now owned or hereafter acquired, or
acquire by purchase or otherwise all or any portion of the business, property or
fixed assets (excluding therefrom purchases and acquisitions in the ordinary
course of business by Holdings, the Borrower and their Subsidiaries of property
from any Person not constituting all or substantially all of the property of
such Person), or stock or other evidence of beneficial ownership of, any Person
or any division or line of business of any Person, except:

            (i) any Subsidiary of the Borrower may be merged with or into the
      Borrower or any Wholly-Owned Subsidiary of the Borrower or be liquidated,
      wound up or dissolved, or all or any part of its business, property or
      assets may be conveyed, sold, leased, transferred or otherwise disposed
      of, in one transaction or a series of transactions, to the Borrower or any
      such Wholly-Owned Subsidiary of the Borrower; provided that, in the case
      of such a merger, the Borrower or such Wholly-Owned Subsidiary shall be
      the continuing or surviving corporation, and any Subsidiary of Holdings
      (other than the Borrower and any of its Subsidiaries) may be merged with
      or into Holdings or any Wholly-Owned Subsidiary of Holdings or be
      liquidated, wound up or dissolved, or all or any part of its business,
      property or assets may be conveyed, sold, leased, transferred or otherwise
      disposed of, in one transaction or a series of transactions, to Holdings
      or any such Wholly-Owned Subsidiary of Holdings; provided, that, in the
      case of such a merger, Holdings or such Wholly-Owned Subsidiary shall be
      the continuing or surviving corporation; and

            (ii) Holdings, the Borrower and their Subsidiaries may sell or
      otherwise dispose of assets in transactions that are excepted from the
      definition of Asset Sales; provided that the consideration received for
      such assets shall be in an amount at least equal to the fair market value
      thereof; and

            (iii) Holdings, the Borrower and their Subsidiaries may make Asset
      Sales subject to Section 6.10 hereto; and


                                       60

            (iv) the Obligors may make acquisitions of Capital Stock, the assets
      and/or the business of another Person (including any division or line of
      business of such Person) provided that, (a) the acquisition primarily
      involves the acquisition of assets to be used in the business of the
      Obligors, (b) with respect to such acquisition any newly acquired
      Subsidiary of the Borrower shall be a Wholly-Owned Subsidiary, and any
      newly acquired Subsidiary of Holdings shall be a Wholly-Owned Subsidiary,
      (c) immediately before and after giving effect thereto, no Default or
      Event of Default shall have occurred and be continuing, (d) immediately
      after giving effect to the acquisition, the Borrower shall be in
      compliance on a Pro Forma Basis with Section 6.4 and such compliance shall
      be evidenced by an Officer's Certificate demonstrating such compliance,
      (e) immediately following such acquisition, the Borrower's credit rating
      is no lower than immediately prior thereto, (f) the aggregate purchase
      price in connection with all such acquisitions (excluding therefrom any
      Indebtedness assumed in connection with such acquisitions and any portion
      of the purchase price thereof paid with the Borrower's Common Stock) does
      not exceed $200,000,000, and (g) neither Obligor nor any Subsidiary shall
      assume any Indebtedness that was incurred or issued by any Person to
      finance such acquisition; provided, however, that prior to the date on
      which the outstanding principal amount of the Loan is equal to or less
      than $150,000,000, only Investments which are otherwise permitted under
      Section 6.2 shall be permitted under this clause (iv);

            (v) the Obligors may enter into a consolidation or merger that
      complies with Sections 6.9 and 6.11 hereof; and

            (vi) the Borrower will not change its Fiscal Year if such change
      will cause an unreasonable delay in the production of the financial
      statements required by Section 5.1(ii).

      SECTION 6.6. SALES AND LEASE-BACKS. The Borrower shall not, and shall not
permit any of its Subsidiaries to, directly or indirectly, become or remain
liable as lessee or as a guarantor or other surety with respect to any lease,
whether an Operating Lease or a Capital Lease, of any property (whether real,
personal or mixed), whether now owned or hereafter acquired, other than aircraft
(including aircraft engines installed thereon), spare aircraft engines, aircraft
parts, simulators, passenger loading bridges or other flight or ground support
equipment, in each case which (i) the Borrower or any of its Subsidiaries has
sold or transferred or is to sell or transfer to any other Person (other than
the Borrower or any of its Subsidiaries) or (ii) the Borrower or any of its
Subsidiaries intends to use for substantially the same purpose as any other
property which has been or is to be sold or transferred by the Borrower or any
of its Subsidiaries to any Person (other than the Borrower or any of its
Subsidiaries) in connection with such lease; provided that the Borrower and its
Subsidiaries may become and remain liable as lessee, guarantor or other surety
with respect to any such lease if and to the extent that the annual aggregate
rentals under all such leases shall not exceed $20,000,000.



                                       61

      SECTION 6.7. TRANSACTIONS WITH AFFILIATES.

      (a) Neither the Borrower nor any Subsidiary of the Borrower shall,
directly or indirectly (i) sell, lease, transfer or otherwise dispose of any of
its properties or assets, or issue securities to, (ii) purchase any property,
assets or securities from, (iii) make any Investment in, or (iv) enter into or
suffer to exist any contract or agreement with or for the benefit of, an
Affiliate or holder of 5% or more of any class of Capital Stock (and any
Affiliate of such holder) of the Borrower (an "Affiliate Transaction"), other
than (x) Affiliate Transactions permitted under Section 6.7(b) hereof and (y)
Affiliate Transactions (including lease transactions) which are on fair and
reasonable terms no less favorable to the Borrower or such Subsidiary, as the
case may be, than those as might reasonably have been obtainable at such time
from an unaffiliated party; provided that if an Affiliate Transaction or series
of Affiliate Transactions involves or has a value in excess of $15,000,000, the
Borrower or such Subsidiary, as the case may be, shall not enter into such
Affiliate Transaction or series of Affiliate Transactions unless a majority of
the disinterested members of the board of directors of the Borrower or such
Subsidiary shall reasonably and in good faith determine that such Affiliate
Transaction is fair and reasonable to the Borrower or such Subsidiary, as the
case may be, or is on terms no less favorable to the Borrower or such
Subsidiary, as the case may be, than those as might reasonably have been
obtained at such time from an unaffiliated party.

      (b) The provisions of Section 6.7(a) shall not apply to (i) the agreements
listed on Schedule 6.7(b) or any transaction contemplated thereby so long as any
such agreement or transaction is not disadvantageous to the Board, the Lenders
or (solely in respect of its interest in the transactions contemplated by this
Agreement and its Counter-Guarantee) any Counter-Guarantor in any material
respect; (ii) any transaction between the Borrower and any Wholly-Owned
Subsidiary or between Wholly-Owned Subsidiaries, provided such transactions are
not otherwise prohibited by this Agreement; (iii) reasonable and customary fees
and compensation paid to, and indemnity provided on behalf of, officers,
directors, employees or consultants of the Borrower or any Subsidiary, as
determined by the board of directors of the Borrower or any Subsidiary or the
senior management thereof in good faith; (iv) any Restricted Payments not
prohibited by Section 6.3; (v) any payments or other transactions pursuant to
any tax sharing agreement between the Borrower and any other Person with which
the Borrower is required or permitted to file a consolidated, combined,
affiliated, unitary or similar tax return or with which the Borrower is or could
be part of a consolidated, combined, affiliated, unitary or similar group for
tax purposes; (vi) transactions with Chautauqua Airlines, Inc., Continental
Airlines, Inc., Mesa Airlines, Inc. and their respective Affiliates as
contemplated by the Alliance Agreements; and (vii) the Loan Documents and the
transactions contemplated thereby.

      SECTION 6.8. CONDUCT OF BUSINESS. From and after the date hereof, neither
Obligor shall, nor shall permit any of its Subsidiaries to, engage in any
business other than (i) the businesses engaged in by the Obligors and their
Subsidiaries on the date hereof and similar or related businesses and (ii) such
other lines of business as may be consented to by the Board and the Requisite
Lenders.




                                       62

      SECTION 6.9. MERGER OR CONSOLIDATION. Neither Obligor shall consolidate
with or merge with any other Person or convey, lease or transfer its properties
and assets substantially as an entirety to any Person, unless: (i) in the case
of a consolidation or merger involving the Borrower, the Borrower is the
surviving entity or if the Borrower is not the surviving entity, such surviving
entity or the Person that acquires by conveyance, lease or transfer the
properties and assets of the Borrower substantially as an entirety, shall be a
corporation organized and existing under the laws of the United States of
America or any State or the District of Columbia, and shall expressly assume, by
an agreement executed and delivered to the Agent, in form satisfactory to the
Agent, the Borrower's Obligations to repay the Loan and all other Obligations of
the Borrower, or in the case of a consolidation or merger involving Holdings,
Holdings is the surviving entity or if Holdings is not the surviving entity,
such surviving entity or the Person that acquires by conveyance, lease or
transfer the properties and assets of Holdings substantially as an entirety,
shall be a corporation organized and existing under the laws of the United
States of America or any State or the District of Columbia; (ii) immediately
before and after giving effect to such transaction, no Event of Default or
Default shall have occurred and be continuing; (iii) immediately following such
acquisition, the Borrower's credit rating is no lower than immediately prior
thereto; (iv) neither Obligor nor any Subsidiary shall assume any Indebtedness
that was incurred or issued by any Person to finance such transaction; (v) the
Borrower has delivered to the Agent an Officer's Certificate and an opinion of
counsel from counsel satisfactory to the Agent, in form and substance
satisfactory to the Agent, stating that such consolidation, merger, conveyance,
lease or transfer and such agreement comply with this Section and that all
conditions precedent herein provided for relating to such transaction have been
complied with and addressing such other matters as may be reasonably requested
by the Board and the Agent; provided, however, that notwithstanding the
foregoing provisions of this Section 6.9, prior to the date on which the
outstanding principal amount of the Loan is equal to or less than $150,000,000,
neither Obligor shall consolidate with or merge with any other Person or convey,
lease or transfer its properties and assets substantially as an entirety to any
Person.

      SECTION 6.10. LIMITATION ON ASSET SALES. In the event and to the extent
that on any date after the Closing Date either Obligor or any of their
Subsidiaries shall receive Net Cash Proceeds from one or more Asset Sales (other
than Asset Sales by the Borrower or any Wholly-Owned Subsidiary of Borrower to
the Borrower or another Wholly-Owned Subsidiary of Borrower or Asset Sales by
Holdings or any Wholly-Owned Subsidiary (other than Borrower or any of its
Subsidiaries) to Holdings or another Wholly-Owned Subsidiary of Holdings) in
excess of $20,000,000 during any Fiscal Year, then Holdings or the Borrower, as
the case may be, shall, or shall cause such Subsidiary to, promptly apply such
excess amount while the Senior Notes are outstanding, to repay Indebtedness of
the Borrower under the Senior Notes. The amount of such Net Cash Proceeds
required to be applied (or to be committed to be applied) during such Fiscal
Year as set forth in the preceding sentence shall constitute "Excess Proceeds."
To the extent any Excess Proceeds are not applied as set forth above, such
Excess Proceeds shall be applied as required by Section 2.6(b).


                                       63

      SECTION 6.11. LIMITATION ON ISSUANCES AND DISPOSITIONS OF CAPITAL STOCK OF
SUBSIDIARIES. Each Subsidiary of the Borrower shall at all times be a
Wholly-Owned Subsidiary of the Borrower. The Borrower (i) shall not, and shall
not permit any Subsidiary to, transfer, convey, sell, encumber or otherwise
dispose of any Capital Stock of a Subsidiary, or securities convertible or
exchangeable into, or options, warrants, rights or any other interest with
respect to, Capital Stock of a Subsidiary to any Person (other than the Borrower
or a Wholly-Owned Subsidiary) and (ii) shall not permit any Subsidiary to issue
shares of its Capital Stock (other than directors' qualifying shares), or
securities convertible or exchangeable into, or options, warrants, rights or any
other interest with respect to, its Capital Stock to any Person other than to
the Borrower or a Wholly-Owned Subsidiary; provided, that the limitations of
this Section shall not apply to any transaction between or among the Borrower
and one or more direct or indirect Wholly-Owned Subsidiaries of the Borrower
whereby the Borrower merges, consolidates or otherwise combines with such
Wholly-Owned Subsidiary and pursuant to which all existing holders of Capital
Stock of the Borrower receive, upon conversion or otherwise in exchange for
securities owned by such holders, Capital Stock of a corporation which
immediately prior to such exchange is a Wholly-Owned Subsidiary, and which
securities have rights and preferences identical to those of the securities
replaced, so long as (a) immediately before and after giving effect to such
transaction no Default or Event of Default shall have occurred and be
continuing, (b) such transaction is otherwise in conformity with and not
prohibited by this Agreement and (c) immediately following such transaction, the
Borrower's credit rating is no lower than immediately prior thereto.

      SECTION 6.12. LIMITATION ON CREATION OF NEW SUBSIDIARIES. Neither Obligor
may create new Subsidiaries, except Wholly-Owned Subsidiaries and if (i) the
total assets of such Subsidiaries in the aggregate (other than single purpose
Subsidiaries created solely for the purpose of financing aircraft for use by the
Borrower) do not at any time exceed five percent (5%) of the consolidated total
assets of the Borrower, in each case determined in accordance with GAAP and (ii)
the Borrower complies with the provisions of Section 5.1(xi) hereof, but can
make Investments permitted under Section 6.2.

      SECTION 6.13. LIMITATIONS ON AMENDMENTS. Neither Obligor shall amend,
waive or modify, nor shall it consent to or request any amendment, waiver or
modification, of any of the material terms, conditions, representations and
covenants contained in any Indebtedness for borrowed money that (i) shortens the
final maturity date of such Indebtedness (without giving effect to any
amendment, waiver or modification, the "Initial Indebtedness"; and after giving
effect to any such amendment, waiver or modification, the "Amended
Indebtedness"), (ii) requires the acceleration of the final scheduled maturity
date and/or any principal payments, including but not limited to scheduled
payments and mandatory prepayments, and/or increases the principal amount
payable on any date (including, without limitation, pursuant to mandatory
prepayments) prior to the dates of analogous payments of such Initial
Indebtedness, (iii) provides for an interest rate applicable to such Amended
Indebtedness, plus the interest rate equivalent of all remaining fees and costs
associated with closing and servicing such


                                       64

Amended Indebtedness higher than the greater of (x) (I) if such Amended
Indebtedness bears interest at a floating rate of interest, 105% of the average
remaining interest rate applicable to such Initial Indebtedness plus the average
remaining fees and costs associated with servicing such Initial Indebtedness, or
(II) if such Amended Indebtedness bears interest at a fixed rate of interest,
the amount calculated as the sum of clause (I) above plus the appropriate
fixed-for-floating swap rate for the Initial Indebtedness, and (y) 105% of the
average remaining "all in" interest expense for such Initial Indebtedness as
contemplated in the Business Plan. Neither Obligor shall agree to any amendment,
waiver or modification of the Concessions if, after giving effect to such
amendment, waiver or modification, the aggregate value of the Concessions as a
whole that the Borrower realizes and is scheduled to realize during the term of
the Loan would be reduced as a result of such amendments, waivers or
modifications by more than $60.0 million in the aggregate, as determined in good
faith by the Borrower. In connection with any amendment, waiver or modification
to the Concessions which reduce the value of the Concessions taken as a whole,
the Borrower shall provide the Board with an Officer's Certificate certifying
that such amendment, waiver or modification complies with the conditions of the
preceding sentence and, taken as a whole, are beneficial to the Borrower and
such reduction shall not have a material adverse effect on the Borrower's
ability to repay the Loan. The Obligors shall perform each of their material
obligations under the Lease Indenture and the Concessions, in each case strictly
in accordance with the terms thereof, and shall not reduce or agree to reduce
the exercise price of the convertible debentures issued under the Lease
Indenture to less than $12.00. The Borrower agrees to promptly notify the Agent,
the Board and the Counter-Guarantors of any default under the Lease Indenture or
the Concessions. Holdings may not issue convertible debentures under the Lease
Indenture in excess of $120 million, except that Holdings may issue up to (but
not more than) $30 million of additional convertible debentures under the Lease
Indenture, provided that for each $1.00 so issued the Borrower receives and
realizes during the term of the Loan concessions valued at at least $2.50.

      SECTION 6.14. NO FURTHER NEGATIVE PLEDGES. Except with respect to (a)
specific property encumbered to secure payment of particular Indebtedness or to
be sold pursuant to an executed agreement with respect to a permitted asset
sale, and (b) restrictions by reason of customary provisions restricting
assignments, subletting or other transfers contained in leases, licenses and
similar agreements entered into in the ordinary course of business (provided
that such restrictions are limited to the property or assets secured by such
Liens or the property or assets subject to such leases, licenses or similar
agreements, as the case may be), after the date hereof neither the Borrower nor
any of its Subsidiaries shall enter into any agreement prohibiting the creation
or assumption of any Lien upon any of its properties or assets, whether now
owned or hereafter acquired.

      SECTION 6.15. INCENTIVE EQUITY PLAN. Any employee stock options granted
under the America West 1994 Incentive Equity Plan on or prior to the Closing
Date shall not have been, and shall not be, repriced from the date of the
Borrower's initial Application for so long as the Loan shall remain
outstanding). For purposes of this Section 6.15, "repricing" shall mean any
repricing transaction required to be disclosed



                                       65

under Item 402(i) of Regulation S-K under the Securities Act of 1933, as
amended. Neither Obligor shall award or pay any compensation to any officer,
director or employee who holds options that are subject to the restriction in
this Section 6.15 which is intended to off-set the effect of the repricing
restriction.

                                  ARTICLE VII

                                EVENTS OF DEFAULT

      SECTION 7.1. EVENTS OF DEFAULT. Each of the following events shall be an
Event of Default:

      (a) (i) Failure by the Borrower to pay any installment of principal of the
Loan when due, whether at stated maturity, by acceleration, by notice of
voluntary prepayment, by mandatory prepayment or otherwise; or (ii) failure by
the Borrower to pay any interest on the Loan or any fee or any other amount due
under this Agreement or any other Loan Document within five Business Days after
the date due; or

      (b) Either Obligor or any Subsidiary (i) fails to make (whether as primary
obligor or as guarantor or other surety) any principal payment of or interest or
premium, if any, on any Indebtedness (other than Indebtedness referred to in
Section 7.1(a)) or fails to make any payment under any one or more Operating
Leases beyond any period of grace provided with respect thereto, provided that
the aggregate amount of all Indebtedness and aggregate amounts under Operating
Leases as to which such a payment default shall occur and be continuing is equal
to or exceeds $10,000,000, or (ii) fails to duly observe, perform or comply with
any agreement with any Person or any term or condition of any instrument, if
such failure, either individually or in the aggregate, shall have caused or
shall have the ability to cause the acceleration of the payment of Indebtedness
with an aggregate face amount or payment under one or more Operating Leases in
an aggregate amount which in each case is equal to or exceeds $10,000,000; or

      (c) Failure of the Borrower to perform or comply in any material respect
with any term or condition contained in Sections 2.4(f), 5.2 and 5.10 of this
Agreement; or

      (d) Any representation, warranty, certification or other statement made by
either Obligor in any Loan Document or in any statement or certificate at any
time given by either Obligor in writing pursuant hereto or thereto or in
connection herewith or therewith shall be false in any material respect on the
date as of which made; or

      (e) Any default in the performance of or compliance with any term
contained in this Agreement (including, without limitation, any failure by
Holdings to comply with any of the terms herein as if it were a party hereto) or
any of the other Loan Documents (other than any such term referred to in any
other subsection of this Section 7.1), and such default shall not have been
remedied or waived (x) within 30 days after the


                                       66

earlier of (a) a Responsible Officer of the Borrower becoming aware of such
default or (b) receipt by the Borrower of notice from the Agent or the Board of
such default or (y) with respect to a default under Section 6.4, the earlier of
(a) an officer of the Borrower becoming aware of the default after the
applicable measurement date and (b) the delivery of financial statements
pursuant to Section 5.1; or

      (f) (i) A court shall enter a decree or order for relief in respect of
either Obligor or any of its Subsidiaries in an involuntary case under the
Bankruptcy Code or under any other applicable bankruptcy, insolvency or similar
law now or hereafter in effect; or any other similar relief shall be granted
under any applicable federal or state law; or (ii) an involuntary case shall be
commenced against either Obligor or any of its Subsidiaries under the Bankruptcy
Code or under any other applicable bankruptcy, insolvency or similar law now or
hereafter in effect; or a decree or order of a court for the appointment of a
receiver, liquidator, sequestrator, trustee, custodian or other officer having
similar powers over either Obligor or any of its Subsidiaries, or over all or a
substantial part of its property, shall have been entered; or there shall have
occurred the involuntary appointment of an interim receiver, trustee or other
custodian of either Obligor or any of its Subsidiaries for all or a substantial
part of its property; or a warrant of attachment, execution or similar process
shall have been issued against any substantial part of the property of either
Obligor or any of its Subsidiaries, and any such event described in clause (i)
above or this clause (ii) shall continue for 60 days unless dismissed, bonded or
discharged; or

      (g) (i) Either Obligor or any of its Subsidiaries shall have an order for
relief entered with respect to it or commence a voluntary case under the
Bankruptcy Code or under any other applicable bankruptcy, insolvency or similar
law now or hereafter in effect, or shall consent to the entry of an order for
relief in an involuntary case, or to the conversion of an involuntary case to a
voluntary case, under any such law, or shall consent to the appointment of or
taking possession by a receiver, trustee or other custodian of all or a
substantial part of its property; or either Obligor or any of its Subsidiaries
shall make any assignment for the benefit of creditors; or (ii) either Obligor
or any of its Subsidiaries shall be unable, or shall fail generally, or shall
admit in writing its inability, to pay its debts as such debts become due; or
the board of directors of either Obligor or any of its Subsidiaries (or any
committee thereof) shall adopt any resolution or otherwise authorize any action
to approve any of the actions referred to in clause (i) above or this clause
(ii); or

      (h) Any final judgment or order (not covered by insurance) for the payment
of money in excess of $25,000,000 in the aggregate for all such final judgments
or orders against either Obligor or any of its Subsidiaries treating any
deductibles, self-insurance or retention as not so covered shall be rendered
against either Obligor or any Subsidiary and shall not be discharged, and there
shall be any period of 60 consecutive days following entry of the final judgment
or order that causes the aggregate amount for all such final judgments or orders
outstanding against such Obligor or its Subsidiaries to


                                       67

exceed $25,000,000 during which a stay of enforcement of such final judgment or
order, by reason of a pending appeal or otherwise, shall not be in effect; or

      (i) Any order, judgment or decree shall be entered against either Obligor
decreeing the dissolution or split up of such Obligor and such order shall
remain undischarged or unstayed for a period in excess of 30 days; or

      (j) The Board Guarantee shall for any reason (other than by reason of
Section 2.03, 2.04, 2.05 or 2.06 of the Board Guarantee) cease to be in full
force and effect or the Board shall assert that any of its obligations
thereunder are invalid or unenforceable; or

      (k) Any Counter-Guarantee shall for any reason cease to be in full force
and effect or any Counter-Guarantor shall fail to perform its obligations under
its Counter-Guarantee or shall, in writing, repudiate such Counter-Guarantee or
deny that its obligations thereunder are valid, binding and enforceable; or

      (l) Any Counter-Guarantor Letter of Credit shall for any reason cease to
be in full force and effect other than in accordance with its express terms and
the terms of the related Counter-Guarantee or the issuer of such
Counter-Guarantor Letter of Credit shall fail to perform its obligation
thereunder or shall, in writing, repudiate such Counter-Guarantor Letter of
Credit or deny that its obligations thereunder are valid, binding and
enforceable.

      SECTION 7.2. REMEDIES. During the continuance of any Event of Default, the
Agent shall, solely at the request of the Board or, if the Board Guarantee is no
longer in full force and effect, the Requisite Lenders, by notice to the
Borrower declare that the Loan, all interest thereon and all other amounts and
Obligations payable under this Agreement to be immediately due and payable,
whereupon the Loan, all such interest and all such amounts and Obligations shall
become and be immediately due and payable, without presentment, demand, protest
or further notice of any kind, all of which are hereby expressly waived by the
Borrower; provided, however, that upon the occurrence of the Event of Default
specified in Section 7.1(f) or 7.1(g), the Loan, all such interest and all such
amounts and Obligations shall automatically become and be immediately due and
payable, without presentment, demand, protest or any notice of any kind, all of
which are hereby expressly waived by the Borrower. For so long as the Board
Guarantee shall remain in effect, remedies exercisable by the Agent hereunder
shall be exercised solely upon instructions received by the Agent from the Board
in writing.


                                  ARTICLE VIII

                             THE LOAN ADMINISTRATOR


                                       68

      SECTION 8.1. ACCEPTANCE OF APPOINTMENT AND SERVICES. (a) The Lenders
hereby appoint the Loan Administrator to provide the services described in
Sections 8.1(b) and (c) below for the benefit of the Lenders and the Board in
respect of the Loan and the Loan Documents. The Loan Administrator hereby
accepts such appointment and agrees to perform such services in a professional,
diligent and workmanlike manner for the benefit of the Lenders and the Board, on
and subject to the terms and conditions set forth in this Agreement, but shall
have no other obligations to the Lenders, the Board or any other Person except
as expressly provided herein.

      (b) The Loan Administrator hereby agrees to perform at any time and from
time to time, at the request of the Board or any Lender (any such person so
requesting, a "Requesting Party") all of the following services:

            (i) monitor and promptly distribute to the Requesting Party any
financial information, compliance certificates and other reports or written
communications provided by or on behalf of the Borrower, Holdings or the Agent
to the Loan Administrator hereunder or under any other Loan Document, and report
to the Requesting Party whether such documents on their face comply with the
requirements of the Loan Documents;

            (ii) based on the public reports of the Borrower and Holdings,
monitor the performance of the Borrower and of Holdings under this Agreement and
the other Loan Documents, as applicable, and promptly report to the Requesting
Party any failure by Borrower or Holdings to comply with its respective
obligations hereunder and thereunder;

            (iii) promptly notify the Requesting Party of (A) any downgrade in
the senior unsecured credit rating of the Borrower by either S&P or Moody's, (B)
any receipt by the Loan Administrator of a notice of a Default or Event of
Default, or (C) any receipt by the Loan Administrator of notice of any
prepayment of the Loan under Section 2.5 or Section 2.6 hereof;

            (iv) for each fiscal quarter of the Borrower, provide (a) a
quarterly financial report, within two weeks of the Borrower's delivery of
financial statements for such quarter to the Loan Administrator, analyzing the
Borrower's financial statements and operations for such fiscal quarter,
including a review of variances from targets identified in the operating plan of
the Borrower set forth in the Application, revenue and expense performance,
operating cash flow results, quarterly investment cash flows, net changes in
Borrower's cash position, debt covenant compliance and such other financial
matters as shall be reasonably requested in writing by a Requesting Party and
(b) an indicative credit rating of the Borrower; it being acknowledged and
agreed that the Loan Administrator may retain a sub-servicer reasonably
acceptable to the Requesting Party to provide these services, in which event,
the Loan Administrator shall not be in default of its obligations hereunder (x)
if the sub-servicer fails to comply with its obligations to provide the
quarterly financial reports or indicative credit rating of the Borrower
described herein so long as the Loan Administrator had exercised reasonable


                                       69

care and good faith in providing the financial statements to the sub-servicer
and attempting to procure the report or indicative credit rating on behalf of
the Requesting Party, or (y) if the Loan Administrator is unable, after
exercising reasonable care and good faith, to retain a sub-servicer to provide
an indicative credit rating of the Borrower;

            (v) review the periodic reports and other reports which the Borrower
is obligated to provide to the Loan Administrator, the Lenders or the Board
hereunder or under any other Loan Document, and report to the Requesting Party
regarding such matters as are specifically identified in writing by such
Requesting Party with respect to such reports;

            (vi) at the written direction of a Requesting Party, give notices or
provide instructions on behalf of the Requesting Party to any Person under this
Agreement or any of the other Loan Documents in accordance with the terms and
conditions hereof and thereof;

            (vii) at the written request of a Requesting Party and at the
expense of the Borrower, report to the Requesting Party on the business and
financial substance of any proposed amendment to, or assignment of, this
Agreement or any other Loan Document;

            (viii) at the written request of a Requesting Party and at the
expense of the Borrower, visit the Borrower or Holdings, or both, and inspect
the financial and accounting records and take extracts therefrom and make
relevant inquiries of each such Person so as to respond to specific questions
from the Requesting Party regarding such Person's financial condition and
ability to perform its respective obligations under the other Loan Documents;

            (ix) at the direction and expense of the Requesting Party, procure
and coordinate the advice of professional advisers necessary for such Requesting
Party to perform its obligations and enforce its rights under the Loan
Documents; and

            (x) subject to subsection (c) below, at the expense of the
Requesting Party, take such other actions as may be reasonably requested in
writing by the Requesting Party in respect of the Loan and the Loan Documents,
such actions to be upon such terms and conditions as shall be mutually agreed to
by the Requesting Party and the Loan Administrator.


      (c) With respect to the Loan Administrator's responsibilities under
Sections 8.1(b) above, the Loan Administrator shall not be required to take any
action which exposes the Loan Administrator to liability or which is contrary to
this Agreement, any other Loan Document, the Board Guarantee or applicable law.
The execution and delivery of this Agreement by the Loan Administrator shall not
give rise to any implied duties or fiduciary obligations of the Loan
Administrator to any Requesting Party or any other Person. The Board hereby
acknowledges and agrees that the failure of the Loan


                                       70

Administrator to perform any of its obligations hereunder shall not invalidate
or otherwise affect the Board Guarantee.

      (d) Except as permitted in subsection (b)(iv) above, the Loan
Administrator shall not be permitted to assign any of its obligations hereunder,
enter into sub-servicing agreements or otherwise delegate any of its duties
under this Agreement without the prior written consent of the Requisite Lenders
and the Board. The Loan Administrator hereby acknowledges and agrees that the
fees and expenses payable to any sub-servicer retained by it in accordance with
this Agreement shall be paid out of the fees payable by the Borrower to the Loan
Administrator under Section 2.8(e).

      (e) The Loan Administrator may retain legal counsel (including counsel for
the Loan Administrator), independent public accountants and other experts or
advisers as desirable to provide the services set forth in Section 8.1(b), and
shall be reimbursed by the Borrower for the reasonable associated costs and such
other reasonable expenses as the Loan Administrator shall incur in providing
such services. The Borrower shall be responsible for such costs and expenses
with respect to the services set forth in Section 8.1(b)(viii) hereof
(calculated in the manner set forth in Section 2.8(e)(iv)), and a Requesting
Party shall be responsible for the costs and expenses with respect to the
services set forth in Section 8.1(b)(ix) and (x) if requested by such Requesting
Party (calculated in the manner set forth in Section 2.8(e)(iv)).

      (f) In the event that any of the Lenders or the Board shall request that
the Loan Administrator provide additional services to it under Section 8.1(b)(x)
or which are otherwise outside the scope of the services to be provided by the
Loan Administrator hereunder, the Loan Administrator shall, to the extent it
agrees to provide such additional services to such party, be entitled to charge
such party such additional fees. Unless otherwise agreed to by such Person and
the Loan Administrator, the terms and conditions of this Article VIII shall
apply to the provision by the Loan Administrator of such additional services to
such party.

      SECTION 8.2. LOAN ADMINISTRATOR'S RELIANCE. (a) The Loan Administrator
shall be entitled to rely upon any note, notice, consent, certificate,
affidavit, letter, telegram, teletype message, facsimile transmission,
statement, order or other document in good faith believed by it to be genuine
and correct and to have been signed or sent by the proper person or persons and,
in respect of legal matters, upon the opinion of counsel selected by the Loan
Administrator.

      (b) Neither the Loan Administrator nor any of its directors, officers,
agents or employees shall be liable to any Lender, the Board or any
Counter-Guarantor for any action taken or omitted to be taken by it or by such
directors, officers, agents or employees under or in connection with this
Agreement or any other Loan Document, except for its or their own gross
negligence or willful misconduct. Without limitation of the generality of the
foregoing, the Loan Administrator: (i) may consult with legal counsel,
independent public accountants and other experts selected by it and shall not be
liable to any Lender or the Board for any action taken or omitted to be taken in
good faith


                                       71

by it in accordance with the advice of such experts; (ii) except as provided in
Section 8.1(b) above, shall not have any duty to ascertain or to inquire as to
the performance or observance of any of the terms, covenants or conditions of
this Agreement, the Note or any other Loan Document on the part of Holdings or
the Borrower or to inspect the property (including the books and records) of
Holdings, the Borrower or any of their respective Subsidiaries; (iii) except as
otherwise provided in this Article VIII, shall not be responsible to any Lender
or the Board for the due execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Agreement, the Note or any other Loan
Document, or any other instrument or document furnished pursuant thereto; and
(iv) shall incur no liability under or in respect to this Agreement, the Note or
any other Loan Document by acting upon any notice, consent, certificate or other
instrument or writing (which may be by telegram, facsimile transmission, cable
or telex) in good faith believed by it to be genuine and signed or sent by the
proper party or parties.

      (C) IN NO EVENT SHALL THE LOAN ADMINISTRATOR, ITS EMPLOYEES, OFFICERS,
DIRECTORS OR AGENTS BE LIABLE FOR CONSEQUENTIAL, SPECIAL, INDIRECT, INCIDENTAL,
PUNITIVE OR EXEMPLARY DAMAGES, COSTS, EXPENSES, OR LOSSES (INCLUDING, WITHOUT
LIMITATION, LOST PROFITS AND OPPORTUNITY COSTS). THE LENDERS AND THE BOARD AGREE
THAT THE LOAN ADMINISTRATOR, ITS EMPLOYEES, OFFICERS, DIRECTORS AND AGENTS SHALL
NOT BE LIABLE TO THE LENDERS AND THE BOARD FOR ANY ACTIONS, DAMAGES, CLAIMS,
LIABILITIES, COSTS, EXPENSES OR LOSSES IN ANY WAY ARISING OUT OF OR RELATING TO
THE PERFORMANCE OR NONPERFORMANCE OF SERVICES HEREUNDER OR UNDER ANY OTHER LOAN
DOCUMENT FOR AN AGGREGATE AMOUNT IN EXCESS OF THE FEES PAID BY THE LENDERS AND
THE BOARD TO THE LOAN ADMINISTRATOR IN PERFORMING THE SERVICES DESCRIBED HEREIN.
NO TERMS OF THIS AGREEMENT, OR ANY OTHER LOAN DOCUMENT SHALL BENEFIT OR CREATE
ANY RIGHT OR CAUSE OF ACTION IN OR ON BEHALF OF ANY PERSON OR ENTITY OTHER THAN
THE LENDERS AND THE BOARD. THE PROVISIONS OF THIS SUBSECTION SHALL APPLY
REGARDLESS OF THE FORM OF ACTION, DAMAGE, CLAIM, LIABILITY, COST, EXPENSE, OR
LOSS, WHETHER IN CONTRACT, STATUTE, TORT (INCLUDING, WITHOUT LIMITATION,
NEGLIGENCE), OR OTHERWISE.

      SECTION 8.3. INDEMNIFICATION. The Borrower, Holdings and each Requesting
Party (other than the Board) agrees to indemnify the Loan Administrator and its
directors, officers, employees, advisors and representatives from and against
any and all costs, losses, liabilities, claims, damages or expenses (excluding
Taxes) which may be incurred by or asserted or awarded against the Loan
Administrator in any way relating to or arising out of the services provided by
the Loan Administrator on behalf of and at the request of such Requesting Party
in connection with this Agreement or any action taken or omitted by the Loan
Administrator under this Agreement or any Loan Document or both on behalf of and
at the request of such Requesting Party; provided, however, that none of the
Borrower, Holdings or any Requesting Party shall be liable for any portion of



                                       72

such liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from the Loan Administrator's
gross negligence or willful misconduct. Without limitation of the foregoing, and
to the extent that the Loan Administrator is not reimbursed therefore by the
Borrower under any Loan Document, any Requesting Party requesting the Loan
Administrator to take any action hereunder on its behalf agrees to reimburse the
Loan Administrator promptly upon demand (but in all events within 30 days after
written request) for any and all fees of the Loan Administrator, reasonable
out-of-pocket costs and expenses (including counsel fees) incurred by the Loan
Administrator in connection with the performance of the requested services
requested by such Requesting Party hereunder and under the Loan Documents;
provided that the Loan Administrator shall provide prompt written notice to the
Requesting Party (a) at such time as the Actual Costs for the services provided
by the Loan Administrator during any twelve month period beginning with the most
recent anniversary of the Closing Date exceed eighty percent (80%) of the amount
of fees actually paid by the Borrower to the Loan Administrator under Section
2.8(e)(i) for such period (including, for purposes of calculating the fees paid
by the Borrower in any such period, the amount of fees carried over in
accordance with Section 2.8(e)(ii) from a prior period in which the Actual Costs
were less than $[...***...]), and (b) of the Borrower's failure to pay any
outstanding fees, costs or expenses of the Loan Administrator. Except as
provided in the preceding sentence regarding reimbursement, in no event shall
the Board be obligated to indemnify the Loan Administrator or any of its
directors, officers, employees, advisors, representatives or any other party
under any circumstances.

      SECTION 8.4. SUCCESSOR LOAN ADMINISTRATOR. The Loan Administrator may
resign at any time by giving 30 days prior written notice thereof to the Lenders
and the Board and may be removed at any time with or without cause by the
Requisite Lenders and the Board; provided, however, that the Loan Administrator
shall continue to perform all Loan Administrator functions hereunder until a
successor Loan Administrator shall have been appointed. Upon any such
resignation or removal, the Requisite Lenders shall have the right to appoint a
successor Loan Administrator, subject to confirmation by the Board. If no
successor Loan Administrator shall have accepted such appointment within 120
days after the retiring Loan Administrator's giving of notice of resignation or
the removal of the Loan Administrator, the Loan Administrator may appoint a
successor Loan Administrator who shall be willing to accept such appointment.
Upon the acceptance of any appointment as Loan Administrator hereunder by a
successor Loan Administrator, such successor Loan Administrator shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring or removed Loan Administrator, and the retiring or removed Loan
Administrator shall be discharged from its duties and obligations as Loan
Administrator under this Agreement. After any Loan Administrator's resignation
or removal hereunder as Loan Administrator the provisions of this Article VIII
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Loan Administrator under this Agreement.

      SECTION 8.5. CONFLICT OF INTEREST. (a) The Lenders and the Board
acknowledge and agree that (i) there is an existing contract between the
Department of the Treasury and KPMG Consulting, LLC (a wholly-owned subsidiary
of the Loan

                                             ***Confidential Treatment Requested

                                       73


Administrator), dated November 26, 2001 under which KPMG Consulting, LLC
provides support for the Board's Air Carrier Loan Guarantee Program; (ii) the
Loan Administrator may at any time and from time to time be an Affiliate of the
Agent, any Lender, any Counter-Guarantor or any participant in the Loan; (iii)
in addition to serving as Loan Administrator under this Agreement, the Loan
Administrator may at any time and from time to time service, manage or enter
into other commercial arrangements with respect to other property, loans and
assets of the Agent, any Lender, any Counter-Guarantor or any participant in the
Loan (each a "Loan Administrator Relationship"); (iv) in the course of
conducting such activities or the services to be provided by it hereunder, or
both, the Loan Administrator may from time to time have conflicts of interest by
virtue of the Agent, any Lender, any Counter-Guarantor or any participant in the
Loan being an Affiliate of the Loan Administrator or by virtue of a Loan
Administrator Relationship or both; and (v) the Lenders and Board expressly
recognize that such conflicts of interest may arise, do hereby waive such
conflicts and agree that when such conflicts of interest arise the Loan
Administrator shall perform the services to be provided by it hereunder in a
professional, diligent and workmanlike fashion. The parties hereto further
acknowledge and agree that the Loan Administrator, in its capacity as Loan
Administrator, is not acting as an Affiliate of any of the parties hereto, and
the performance of the Loan Administrator obligations hereunder shall not affect
any right or remedy which the Agent, any Lender, any Counter-Guarantor or any
participant in the Loan may have under any Loan Document, any Counter-Guarantee
or the Board Guarantee whether or not any such Person is an Affiliate of the
Loan Administrator. Each Requesting Party expressly acknowledges and agrees that
at all times it shall take such action or omit to take such action hereunder
based on its own independent analysis of the relevant transaction and attendant
facts and circumstances.

      (b) Notwithstanding any provision herein to the contrary, if in connection
with the provision of Services, a conflict of interest shall exist that, in the
good faith opinion of the Loan Administrator, requires an arm's-length
negotiation between the Loan Administrator, on the one hand, and any Affiliate
of the Loan Administrator, Loan Administrator Relationship or a Requesting
Party, on the other hand, and the Loan Administrator believes it would not be
appropriate for the Loan Administrator to act on behalf of the Requesting Party
in connection with such matter, then the Loan Administrator shall withdraw from
acting as Loan Administrator in connection with the negotiation of the issue
giving rise to such conflict of interest by giving written notice to the
Requesting Party not more than ten (10) Business Days after it has made such
determination. In such event, the Requesting Party shall be entitled to appoint
an independent representative to act on its behalf and at its expense for
purposes of the matter giving rise to such conflict of interest, and the Loan
Administrator shall have no responsibility or liability to the Requesting Party
with respect to such matter. During the period of such independent
representative's appointment, the Loan Administrator shall continue to perform
its ordinary functions as Loan Administrator to the extent that the performance
of the Loan Administrator does not, in the reasonable opinion of the Requesting
Party, directly or indirectly affect the matter giving rise to the conflict of
interest.




                                       74

      SECTION 8.6. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE LOAN
ADMINISTRATOR. The Loan Administrator hereby represents, warrants and covenants
with the Lenders and the Board as follows:

      (a) it is duly incorporated and validly existing under the laws of its
jurisdiction of incorporation;

      (b) it has the corporate power and authority to execute, deliver and
perform its obligations under this Agreement, and this Agreement has been duly
authorized by it by all necessary corporate action;

      (c) no authorization, consent or approval of any governmental authority,
regulatory body or other Person is required for the due authorization,
execution, delivery or performance by it of this Agreement;

      (d) this Agreement has been duly executed and delivered by it and
constitutes a legal and binding obligation of it, enforceable against it in
accordance with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereinafter in effect, relating to the enforcement of creditors' rights in
general and except as such enforceability may be limited by general principles
of equity (whether considered in a proceeding at law or in equity);

      (e) the execution, delivery and performance by it of this Agreement does
not violate any provision of any existing law or regulation or any material
agreement to which it is subject or to which it is a party or result in the
creation of any Lien;

      (f) it has all corporate power and governmental licenses, authorizations,
and consents and approvals required to carry on its business as now conducted,
except where the failure to have such licenses, authorizations, and consents and
approvals would not have a material adverse effect on its ability to perform its
duties under this Agreement; and

      (g) it will maintain and implement administrative and operating
procedures, and keep and maintain all documents, books, computer records and
other information reasonably necessary or advisable for the performance of the
services to be provided by it hereunder

                                   ARTICLE IX

                                    THE AGENT

      The parties hereto agree as follows:


      SECTION 9.1 AUTHORIZATION AND ACTION. Each Lender hereby appoints and
authorizes the Agent to take such action as administrative agent on its behalf
and to


                                       75

exercise such powers under this Agreement and the Note as are delegated by such
Lender to it as Agent by the terms hereof and thereof, together with such powers
as are reasonably incidental thereto, and the Agent hereby accepts such
authorization and appointment. As to any matters not expressly provided for by
this Agreement and the Note or provided for with specific reference to this
Section 9.1 (including, without limitation, enforcement or collection of the
Note), the Agent shall not be required to exercise any discretion or take any
action, but shall be required to act or to refrain from acting (and shall be
fully protected in so acting or refraining from action) upon the instructions of
the Board or, if the Board Guarantee is no longer in full force and effect, the
Requisite Lenders and such instructions shall be binding upon all Lenders;
provided, however, that the Agent shall not be required to take any action which
exposes the Agent to liability or which is contrary to this Agreement, the Board
Guarantee, any Counter-Guarantee, any Counter-Guarantor Letter of Credit or the
Note or applicable law. As to any provisions of this Agreement under which
action may be taken or approval given by the Requisite Lenders or the Board or
both, as the case may be, the action taken or approval given by the Requisite
Lenders or the Board or both, as the case may be, shall be binding upon all
Lenders to the same extent and with the same effect as if each Lender had joined
therein. The Agent shall be entitled to rely upon any note, notice, consent,
certificate, affidavit, letter, telegram, teletype message, facsimile
transmission, statement, order or other document believed by it to be genuine
and correct and to have been signed or sent by the proper person or persons and,
in respect of legal matters, upon the opinion of counsel selected by the Agent.
The Agent may deem and treat the payee of the Note as the owner thereof for all
purposes hereof unless and until a written notice of the assignment or transfer
thereof shall have been filed with the Agent. Any request, authority or consent
of any Person who at the time of making such request or giving such authority or
consent is the holder of the Note shall be conclusive and binding on any
subsequent holder, transferee or assignee of the Note.

      SECTION 9.2. AGENT'S RELIANCE, ETC. Neither the Agent nor any of its
directors, officers, agents or employees shall be liable to any Lender, the Loan
Administrator or the Board for any action taken or omitted to be taken by it or
by such directors, officers, agents or employees under or in connection with
this Agreement, the Note or any other Loan Document, except for its or their own
gross negligence or willful misconduct. Without limitation of the generality of
the foregoing, the Agent: (i) may consult with legal counsel, independent public
accountants and other experts selected by it and shall not be liable to any
Lender, the Loan Administrator or the Board for any action taken or omitted to
be taken in good faith by it in accordance with the advice of such experts; (ii)
makes no warranty or representation to any Lender, the Loan Administrator or,
except as expressly provided in the Board Guarantee, the Board and shall not be
responsible to any Lender, the Loan Administrator or, except as expressly
provided in the Board Guarantee, the Board for any statements, warranties or
representations (whether oral or written) made in or in connection with this
Agreement, the Note or any other Loan Document; (iii) shall not have any duty to
ascertain or to inquire as to the performance or observance of any of the terms,
covenants or conditions of this Agreement, the Note or any other Loan Document
on the part of Holdings or the Borrower or to inspect the property (including
the books and records) of Holdings, the Borrower or any of their respective
Subsidiaries; (iv) shall not be responsible to any


                                       76

Lender, the Loan Administrator or the Board for the due execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement,
the Note or any other Loan Document, or any other instrument or document
furnished pursuant thereto; (v) shall incur no liability under or in respect to
this Agreement, the Note or any other Loan Document by acting upon any notice,
consent, certificate or other instrument or writing (which may be by telegram,
facsimile transmission, cable or telex) believed by it to be genuine and signed
or sent by the proper party or parties; and (vi) may deem and treat each Lender
which makes a loan hereunder as the holder of the indebtedness resulting
therefrom for all purposes hereof until the Agent receives and accepts an
Assignment and Acceptance Agreement entered into by such Lender, as assignor,
and an eligible assignee as provided in Section 10.2 hereof.

      SECTION 9.3 AGENT AND AFFILIATES. If and so long as the Agent shall remain
a Lender, the Agent shall have the same rights and powers under this Agreement
as any other Lender and may exercise the same rights and powers under this
Agreement as any other Lender and may exercise the same as though it were not
the Agent; and the term "Lender" or "Lenders" shall, unless otherwise expressly
indicated, include the Agent in its individual capacity. Unrelated to its role
as Agent as set forth herein, the Agent and its affiliates may accept deposits
from, lend money to, act as trustee under indentures of, and generally engage in
any kind of business with, the Borrower, Holdings, any of its Subsidiaries and
any Person who may do business with or own securities of the Borrower, all as if
it were not the Agent hereunder and without any duty to account therefor to the
Lenders.

      SECTION 9.4. REPRESENTATIONS OF THE LENDERS AND OF THE BOARD. Each Lender,
the Loan Administrator and the Board has actively engaged in the negotiation of
all of the terms of this Agreement. The Board has met with the Borrower and
Holdings to discuss the business, affairs, financial condition and prospects of
the Borrower. The Agent has no duty or responsibility, either initially or on a
continuing basis, to provide any Lender, the Loan Administrator or the Board
with any credit or other information with respect to the Borrower whether coming
into its possession as of the date of this Agreement or at any time thereafter,
or to notify any Lender, the Loan Administrator or the Board of any Event of
Default except as provided in Section 9.5 hereof. This Agreement and all
instruments or documents delivered in connection with this Agreement have been
reviewed and approved by each Lender, the Loan Administrator and the Board and
none of the Lenders, the Loan Administrator nor the Board have relied on the
Agent as to any legal or factual matter in connection therewith or in connection
with the transactions contemplated thereunder.

      SECTION 9.5. EVENTS OF DEFAULT; TERMINATION OF BOARD GUARANTEE.

      (a) In the event of the occurrence of any Default or Event of Default, any
Lender, any Counter-Guarantor or the Board knowing of such event may (but shall
have no duty to), or the Borrower pursuant to Section 5.1(v) hereof shall, give
the Agent written notice specifying such Event of Default or other event and
expressly stating that such notice is a "notice of default". The Agent shall not
be deemed to have knowledge of such events unless the Agent has received such
notice, or unless the Event of Default


                                       77

consists of a failure of payment of principal or interest on the Note. In the
event that the Agent receives such a notice of the occurrence of an Event of
Default, the Agent shall give written notice thereof to the Lenders, the
Counter-Guarantors, the Loan Administrator and the Board. The Agent shall take
such action with respect to such Default or Event of Default as shall be
reasonably directed in writing by the Board or, if the Board Guarantee is no
longer in full force and effect, the Requisite Lenders, provided, however, that,
unless and until the Agent shall have received such directions, the Agent may
(but shall not be obligated to) take such action, or refrain from taking such
action, with respect to such Event of Default as it shall deem advisable and in
the best interest of the Lenders and of the Board.

      (b) In the event the Agent shall receive any notice from the Board to the
effect that (i) the Board has the right to terminate the Board Guarantee under
Section 2.05 thereof, (ii) any portion of the Board Guarantee has terminated
under Section 2.04 thereof or otherwise, or (iii) the Board Guarantee shall for
any reason have ceased to be in full force and effect or the Board shall have
asserted that any of its obligations thereunder is invalid or unenforceable, the
Agent shall promptly give written notice thereof to the Lenders. The Agent shall
not be deemed to have knowledge of any such event unless the Agent has received
such notice (except if any such event results from the failure of the Agent to
perform any of its obligations under the Board Guarantee).

      SECTION 9.6. AGENT'S RIGHT TO INDEMNITY. Except for action expressly
required of the Agent hereunder without instructions from any Person, the Agent
shall be fully justified in failing or refusing to take any action hereunder on
behalf of any Lender or the Board unless it shall first be indemnified to its
satisfaction by such Lender or the Board, as the case may be, against any and
all liability and expense which may be incurred by it by reason of taking or
continuing to take any such action.

      SECTION 9.7. INDEMNIFICATION OF AGENT. The Lenders hereby agree to
indemnify the Agent and all affiliates, directors, officers, employees, advisors
and representatives thereof (to the extent not reimbursed by the Borrower),
ratably as most recently in effect prior to the date indemnification is sought,
from and against any and all costs, losses, liabilities, claims, damages or
expenses which may be incurred by or asserted or awarded against the Agent in
any way relating to or arising out of this Agreement and/or the Note or any
action taken or omitted by the Agent under this Agreement and/or the Note;
provided, however, that no Lender shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from the Agent's gross negligence or
willful misconduct. Without limitation of the foregoing, each Lender agrees to
reimburse the Agent promptly upon demand for its ratable share of any
out-of-pocket expenses (including counsel fees) incurred by the Agent in
connection with the administration, or enforcement of, or the preservation of
any rights under, this Agreement and/or the Note, to the extent that the Agent
is not reimbursed for such expenses by the Borrower.





                                       78

      SECTION 9.8. SUCCESSOR AGENT. The Agent may with the consent (not to be
unreasonably withheld), of the Lenders, the Board and the Counter-Guarantors,
resign at any time by giving written notice thereof to the Lenders, the Board,
the Counter-Guarantors and the Borrower and may be removed at any time with
cause (or, following the Board's honoring of a demand for payment in accordance
with the Board Guarantee, without cause) by the Board. Upon any such resignation
or removal, the Borrower shall have the right to appoint a successor Agent,
subject to confirmation by the Board, the Lenders and the Counter-Guarantors. If
no successor Agent shall have accepted such appointment within 30 days after the
retiring Agent's giving of notice of resignation or the Board's removal of the
Agent the Agent may, with the consent (not to be unreasonably withheld) of the
Board, the Lenders and the Counter-Guarantors, appoint a successor Agent who
shall be willing to accept such appointment. In any event such successor Agent
shall be a commercial bank organized under the laws of the United States of
America or of any State thereof and shall have a combined capital and surplus of
at least $1,000,000,000. Upon the acceptance of any appointment as Agent
hereunder by a successor Agent, such successor Agent shall thereupon succeed to
and become vested with all the rights, powers, privileges and duties of the
retiring or removed Agent, and the retiring or removed Agent shall be discharged
from its duties and obligations as agent under this Agreement. After any Agent's
resignation or removal hereunder as Agent the provisions of this Article 9 shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Agent under this Agreement.


                                    ARTICLE X

                                  MISCELLANEOUS


      SECTION 10.1. AMENDMENTS, WAIVERS, ETC.

      (a) No amendment, modification or waiver of any provision of this
Agreement or any other Loan Document nor consent to any departure by the
Borrower therefrom shall in any event be effective unless the same shall be in
writing and (i) so long as the Board Guarantee is in full force and effect,
signed by the Board or (ii) if the Board Guarantee is no longer in effect,
signed by the Requisite Lenders, and then any such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given; provided, however, that no amendment, modification, waiver or consent
shall, unless in writing and signed by each Lender and each Counter-Guarantor,
do any of the following:

            (i) subject the Lenders or the Counter-Guarantors to any additional
      obligations;

            (ii) change the scheduled final maturity of the Loan, or change the
      amount or date for payment of any date fixed for the payment or reduction
      of principal;


                                       79

            (iii) change the principal amount of the Loan (other than by the
      payment or prepayment thereof);

            (iv) change the rate of interest on the Loan or any fee, indemnity
      or other amount payable to any Lender or Counter-Guarantor;

            (v) change any date fixed for payment of such interest, indemnity or
      other amount or fees;

            (vi) amend the definition of "Requisite Lenders" or this Section
      10.1(a);

            (vii) modify the application of payments to the Loan under Section
      2.9; or

            (viii) amend or modify any material provision of Articles II, III,
      IV, IX, Sections 5.1 (other than 5.1(i)(b)), 5.2, 5.5, 6.1(A)(ii), 6.3,
      6.4, 7.1 (other than to add Events of Default), 10.1, 10.2, 10.3, 10.4,
      10.6, 10.7, 10.10, 10.11, 10.12, 10.13, 10.16 and 10.18 or any of the
      definitions as relevant thereto;

and provided, further, that no amendment, modification, waiver or consent shall,
unless in writing and signed by the Agent in addition to the Persons required
above to take such action, affect the rights or duties of the Agent, as the case
may be, under this Agreement, the other Loan Documents, any Counter-Guarantee or
the Board Guarantee.

      (b) The Agent may, but shall have no obligation to, with the written
concurrence of any Lender, execute amendments, modifications, waivers or
consents on behalf of that Lender. Any waiver or consent shall be effective only
in the specific instance and for the specific purpose for which it was given. No
notice to or demand on the Borrower in any case shall entitle the Borrower to
any other or further notice or demand in similar or other circumstances.

      (c) Notwithstanding anything herein to the contrary, in the event that the
Borrower shall have requested each of the Lenders and the Counter-Guarantors, in
writing, to agree to an amendment, modification, waiver or consent with respect
to any particular provision or provisions hereof, and any such Lender or
Counter-Guarantor shall have failed to state, in writing, that it either agrees
or disagrees (in full or in part) with such request (in the case of its
statement of agreement, subject to satisfactory documentation and such other
conditions it may specify) within 30 days of such request, then such Lender or
Counter-Guarantor hereby irrevocably authorizes the Agent to agree or disagree,
in full or in part, and in the Agent's sole discretion, to such requests on
behalf of such Lender or Counter-Guarantor as such Lender's or
Counter-Guarantor's attorney-in-fact and to execute and deliver any writing
approved by the Agent which evidences such agreement as such Lender's or
Counter-Guarantor's duly authorized agent for such purposes.




                                       80

      (d) In connection with any proposed amendment, modification, waiver or
termination (a "Proposed Change") requiring the consent of all affected Lenders,
if the consent of Requisite Lenders is obtained, but the consent of other
Lenders whose consent is required is not obtained (any such Lender whose consent
is not obtained as described in this Section 10.1 being referred to as a
"Non-Consenting Lender"), then, so long as the Lender that is acting as the
Agent is not a Non-Consenting Lender, at the Borrower's request, the Agent or an
Eligible Lender that is acceptable to the Agent and the Board shall have the
right with the Agent's consent and in the Agent's sole discretion (but shall
have no obligation) to purchase from such Non-Consenting Lender, and such
Non-Consenting Lender agrees that it shall, upon the Agent's request, sell and
assign to the Lender that is acting as the Agent or such Eligible Lender, all of
the portion of the Loan of such Non-Consenting Lender for an amount equal to the
principal balance of such portion of the Loan held by the Non-Consenting Lender
and all accrued interest and fees with respect thereto through the date of sale,
such purchase and sale to be consummated pursuant to an executed Assignment and
Acceptance.


      SECTION 10.2. ASSIGNMENTS AND PARTICIPATIONS.

      (a) Each Lender may sell, transfer, negotiate or assign either in whole or
in part to one or more Eligible Lenders its rights and obligations hereunder and
under the Note and the other Loan Documents without the prior consent of the
Borrower but with the consent, not to be unreasonably withheld, of the Agent,
and, except as otherwise provided in Section 10.2(d), the prior written approval
of the Board (such consent, in the case of an assignment to an Affiliate of the
Initial Lender that is an Eligible Lender, not to be unreasonably withheld);
provided, that (i) the assigning Lender shall give prompt written notice to the
Agent and the Board of the terms of and the parties to any such assignment, (ii)
the proposed assignee shall provide to the Agent and the Board all documentation
and certificates as required by the Agent and the Board to confirm to the
Agent's and the Board's satisfaction that such proposed assignee is an Eligible
Lender, and (iii) the Borrower will not be obligated to pay any greater amount
under Section 2.10(c) or Section 2.12(a) (in respect of increased costs or
Indemnified Taxes imposed pursuant to applicable law in effect on the date of
such assignment) to the assignee than the Borrower is then obligated to pay to
the assigning Lender under such Sections; provided, however, that the consent of
the Board shall not be required for any assignment which occurs after payment in
full has been made under the Board Guarantee or the Board Guarantee shall have
terminated.

      (b) The parties to each assignment shall execute and deliver to the Agent,
for its acceptance and recording, an Assignment and Acceptance, and the
assignee, if a Non-U.S. Person, shall deliver to the Borrower, the Agent and
each Counter-Guarantor, on or prior to the date of the assignment, two completed
copies of either IRS Form W-8BEN or W-8ECI or other applicable form, certificate
or document required to satisfy the requirements of Section 2.12. Upon such
execution, delivery and acceptance and the receipt by the Agent of an assignment
fee in the amount of $10,000 (which shall be for the account of the Borrower),
the Agent shall record such Assignment


                                       81

and Acceptance and from and after the effective date specified in such
Assignment and Acceptance (i) the assignee thereunder of all or any portion of
the Loan shall become a party hereto and, to the extent that rights and
obligations under the Loan Documents have been assigned to such assignee
pursuant to such Assignment and Acceptance, have the rights and obligations of a
Lender and (ii) the assignor thereunder shall, to the extent that rights and
obligations under this Agreement have been assigned by it pursuant to such
Assignment and Acceptance, relinquish its rights (except those which survive the
payment in full of the Obligations) and be released from its obligations under
the Loan Documents, other than those relating to events or circumstances
occurring prior to such assignment (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender's rights
and obligations under the Loan Documents, such Lender shall cease to be a party
hereto).

      (c) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an assignee, the Agent shall, if such Assignment and
Acceptance has been completed, (i) accept such Assignment and Acceptance, (ii)
record the information contained therein in the Register, (iii) give prompt
notice thereof to the Borrower and (iv) shall give prompt written notice of the
terms of and parties to any such assignment.

      (d) In addition to the other assignment rights provided in this Section
10.2, each Lender may assign, without the prior consent of the Borrower, the
Agent or the Board as collateral or otherwise, any of its rights under this
Agreement to any Federal Reserve Bank pursuant to Regulation A of the Federal
Reserve Board, provided, however, that no such assignment shall release the
assigning Lender from any of its obligations hereunder.

      (e) Each Lender may, without the prior consent of the Borrower or any
other Person, sell participations, to the extent permitted by the Regulations
and except as provided in Section 5.04(b) of the Board Guarantee, in or to all
or a portion of its rights and obligations hereunder and under the Note and the
other Loan Documents (any such purchaser of a participation being referred to as
a "Participant"); provided that (i) neither the Note nor the Board Guarantee is
assigned, conveyed, sold or transferred in whole or in part, (ii) the Board's
ability to assert any and all defenses available to it under the Board Guarantee
and the law is not adversely affected and (iii) the Borrower will not be
obligated to pay any greater amount under Section 2.10(c) or Section 2.12(a) (in
respect of increased costs or Indemnified Taxes imposed pursuant to applicable
law in effect on the date of such participation) to the Participant than the
Borrower is then obligated to pay to any selling Lender under such Sections. In
the event of the sale of any participation by any Lender, (A) such Lender's
obligations under the Loan Documents shall remain unchanged, (B) such Lender
shall remain solely responsible to the other parties for the performance of such
obligations, (C) such Lender shall remain the holder of such Obligations for all
purposes of this Agreement, (D) the Agent, the Board and the other Lenders shall
continue to deal solely and directly with such Lender in connection with such
Lender's rights and obligations under this Agreement, and (E) each Participant,
if a Non-U.S. Person, shall deliver to the Borrower, the Agent and each
Counter-Guarantor,


                                       82

on or prior to the date of the sale of the participation, two completed copies
of either IRS Form W-8BEN or W-8ECI or other applicable form, certificate or
document required to satisfy the requirements of Section 2.12. Any Participant
will be entitled to the benefits of Sections 2.10(c), 2.10(e), 2.11 and 2.12 to
the same extent as if such Person were a Lender.


      SECTION 10.3. COSTS AND EXPENSES. Whether or not the transactions
contemplated hereby shall be consummated, the Borrower agrees to pay promptly
(i) all costs and expenses incurred by the Loan Administrator, the Initial
Lender, each Counter-Guarantor and the Agent in connection with the negotiation,
preparation, execution and delivery of the Loan Documents, the Servicing
Agreement, each Counter-Guarantee, the Board Guarantee and all documents
relating thereto (including reasonable legal fees and expenses), (ii) all costs
and expenses incurred by the Loan Administrator, the Lenders, the
Counter-Guarantors, any Participant and the Agent in connection with any
consents, amendments, waivers or other modifications hereto or thereto
(including reasonable legal fees and expenses), (iii) all costs and expenses
incurred by the Agent in connection with the syndication of the Loan (if any),
and (iv) all costs and expenses, including reasonable legal fees and expenses
incurred by the Agent, Lenders, the Loan Administrator, each Counter-Guarantor
and any Participant in enforcing any Obligations of, or in collecting any
payments due from, the Borrower hereunder or under the other Loan Documents.


      SECTION 10.4. INDEMNITIES. Whether or not the transactions contemplated
hereby shall be consummated, the Borrower agrees to defend, indemnify, pay and
hold harmless the Board, the Agent, the Lenders, the Loan Administrator, each
Counter-Guarantor and their respective Affiliates, officers, directors,
employees, agents and advisors (collectively called the "Indemnitees") from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, claims, costs, expenses and disbursements of any kind
or nature whatsoever (including without limitation the reasonable fees and
disbursements of counsel for such Indemnitees, but excluding Taxes), whether
direct, indirect or consequential and whether based on any federal, state or
foreign laws, statutes, rules or regulations (including without limitation
securities and commercial laws, statutes and rules or regulations), on common
law or equitable cause or on contract or otherwise, that may be imposed on,
incurred by, or asserted against any such Indemnitee, in any manner arising out
of this Agreement, the other Loan Documents, any Counter-Guarantee or the
transactions contemplated hereby or thereby (including, without limitation, the
use or intended use of the proceeds of the Loan) or the syndication of the Loan
or any statement contained in the Application or otherwise made by or on behalf
of the Borrower to the Board or any breach or default by the Borrower of any
provision of the Loan Documents (collectively called the "Indemnified
Liabilities"); provided that the Borrower shall not have any obligation to any
Indemnitee hereunder with respect to any Indemnified Liabilities to the extent
such Indemnified Liabilities arise (i) from the gross negligence or willful
misconduct of that Indemnitee (as actually and finally determined by a final,
non-appealable judgment of a court of competent jurisdiction) and only to the
extent such Indemnified Liabilities constitute direct (as opposed to special,
indirect, consequential or punitive) damages or (ii) constitute ordinary and
usual operating or overhead expenses of an Indemnitee (excluding, without

                                       83

limitation, costs and expenses of any outside counsel, consultant or agent). To
the extent that the undertaking to defend, indemnify, pay and hold harmless set
forth in the preceding sentence may be unenforceable because it is violative of
any law or public policy, the Borrower shall contribute the maximum portion that
it is permitted to pay and satisfy under applicable law to the payment and
satisfaction of all Indemnified Liabilities incurred by the Indemnitees or any
of them. No Indemnitee shall have any liability (whether direct or indirect, in
contract, tort or otherwise) to the Borrower or any of its security holders or
creditors for or in connection with the transactions contemplated hereby, except
to the extent such liability is determined in a final, non-appealable judgment
by a court of competent jurisdiction to have resulted primarily from such
Indemnitee's gross negligence or willful misconduct. In no event, however, shall
any Indemnitee be liable on any theory of liability for any special, indirect,
consequential or punitive damages (including, without limitation, any loss of
profits, business or anticipated savings).


      SECTION 10.5. RIGHT OF SET-OFF. In addition to any rights now or hereafter
granted under applicable law and not by way of limitation of any such rights,
upon the occurrence and during the continuance of any Event of Default, to the
fullest extent permitted by law, each Lender is hereby authorized by the
Borrower at any time or from time to time, without notice to the Borrower or to
any other Person, any such notice being hereby expressly waived, to set off and
to appropriate and to apply any and all deposits (general or special, including,
but not limited to, Indebtedness evidenced by certificates of deposit, whether
matured or unmatured) and any other Indebtedness at any time held or owing by
that Lender to or for the credit or the account of the Borrower against and on
account of the obligations and liabilities of the Borrower to that Lender under
this Agreement, the Note, and the other Loan Documents, including, but not
limited to, all claims of any nature or description arising out of or connected
with this Agreement, the Note, or any other Loan Document, irrespective of
whether or not (i) that Lender shall have made any demand hereunder or (ii) the
principal of or the interest on the Loan or any other amounts due hereunder
shall have become due and payable pursuant to Section 7.2 and although said
obligations and liabilities, or any of them, may be contingent or unmatured.


      SECTION 10.6. SHARING OF PAYMENTS, ETC.


      The Lenders hereby agree among themselves that if any of them shall,
whether by voluntary payment, by realization upon security, through the exercise
of any right of set-off or banker's lien, by counterclaim or cross action or by
the enforcement of any right under the Loan Documents or otherwise, or as
adequate protection of a deposit treated as cash collateral under the Bankruptcy
Code, receive payment or reduction of a proportion of the aggregate amount of
principal, interest, fees and other amounts then due and owing to that Lender
hereunder or under the other Loan Documents (collectively, the "Aggregate
Amounts Due" to each Lender) which is greater than the proportion received by
any other Lender in respect of the Aggregate Amounts Due to such other Lender,
then the Lender receiving such proportionately greater payment shall (i) notify
the Agent and


                                       84

each other Lender of the receipt of such payment and (ii) apply a portion of
such payment to purchase participations (which it shall be deemed to have
purchased from each seller of a participation simultaneously upon the receipt by
such seller of its portion of such payment) in the Aggregate Amounts Due to the
other Lenders so that all such recoveries of Aggregate Amounts Due shall be
shared by all Lenders in proportion to the Aggregate Amounts Due to them,
provided that if all or part of such proportionately greater payment received by
such purchasing Lender is thereafter recovered from such Lender upon the
bankruptcy or reorganization of the Borrower or otherwise, those purchases shall
be rescinded and the purchase prices paid for such participations shall be
returned to such purchasing Lender ratably to the extent of such recovery, but
without interest. The Borrower expressly consents to the foregoing arrangement
and agrees that any holder of a participation so purchased may exercise any and
all rights of banker's lien, set-off or counterclaim with respect to any and all
monies owing by the Borrower to that holder with respect thereto as fully as if
that holder were owed the amount of the participation held by that holder.


      SECTION 10.7. NOTICES, ETC. Unless otherwise specifically provided herein,
any notice, request or other communication herein required or permitted to be
given shall be in writing and may be personally served or sent by telefacsimile
or United States mail or courier service and shall be deemed to have been given
when delivered in person or by courier service, or upon receipt of
telefacsimile, or five Business Days after depositing it in the United States
mail with postage prepaid and properly addressed; provided that notices shall
not be effective until received. For the purposes hereof, the address of each
party hereto and each Counter-Guarantor shall be as set forth under such party's
name on Annex A, or (i) as to the Borrower and the Agent, such other address as
shall be designated by such Person in a written notice delivered to the other
parties hereto and (ii) as to each other party hereto, such other address as
shall be designated by such party in a written notice delivered to the Agent.


      SECTION 10.8. NO WAIVER; REMEDIES. No failure on the part of the Board,
any Lender or the Agent to exercise, and no delay in exercising, any right
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any such right preclude any other or further exercise thereof or the
exercise of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.


      SECTION 10.9. INDEPENDENCE OF COVENANTS. All covenants under this
Agreement shall be given independent effect so that if a particular action or
condition is not permitted by any of such covenants, the fact that it would be
permitted by an exception to, or would otherwise be within the limitations of,
another covenant shall not avoid the occurrence of an Event of Default or
Default if such action is taken or condition exists.


      SECTION 10.10. GOVERNING LAW. This Agreement and the rights and
obligations of the parties hereto shall be governed by, and construed in
accordance with,


                                       85

the law of the State of New York; provided, that in the event the Board becomes
a Lender pursuant to the Board Guarantee, the rights and obligations of the
Board hereunder shall be governed by, and construed in accordance with, the
Federal law of the United States of America, if and to the extent such Federal
law is applicable, and otherwise in accordance with the law of the State of New
York.


      SECTION 10.11. SUBMISSION TO JURISDICTION; SERVICE OF PROCESS.

      (e) Any legal action or proceeding with respect to this Agreement or any
other Loan Document may be brought in the courts of the State of New York or of
the United States of America for the Southern District of New York, and, by
execution and delivery of this Agreement, the Borrower hereby accepts for itself
and in respect of its property, generally and unconditionally, the jurisdiction
of the aforesaid courts. The parties hereto hereby irrevocably waive any
objection, including any objection to the laying of venue or based on the
grounds of forum non conveniens, which any of them may now or hereafter have to
the bringing of any such action or proceeding in such respective jurisdictions.

      (f) The Borrower hereby irrevocably consents to the service of any and all
legal process, summons, notices and documents in any suit, action or proceeding
brought in the United States of America arising out of or in connection with
this Agreement or any of the other Loan Documents by the mailing (by registered
or certified mail, postage prepaid) or delivering of a copy of such process to
the Borrower in accordance with the provisions of Section 10.7. The Borrower
agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law.


      (c) Nothing contained in this Section 10.11 shall affect the right of the
Agent or any Lender to serve process in any other manner permitted by law or
commence legal proceedings or otherwise proceed against the Borrower in any
other jurisdiction.


      SECTION 10.12. WAIVER OF JURY TRIAL. The Borrower irrevocably waives trial
by jury in any action or proceeding with respect to this Agreement or any other
Loan Document.


      SECTION 10.13. MARSHALING; PAYMENTS SET ASIDE. Neither the Agent nor any
Lender shall be under any obligation to marshal any assets in favor of the
Borrower or any other party or against or in payment of any or all of the
Obligations. To the extent that the Borrower makes a payment or payments to the
Agent for the account of the Board, the Loan Administrator, any Lender or any
Counter-Guarantor (each, a "Payee") or any Payee receives payment from exercise
of their rights of setoff, and such payment or payments or the proceeds of such
setoff or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside or required to be repaid to a trustee,
receiver or any other party, then (i) to the extent of such recovery, the
obligation or part thereof originally intended to be satisfied, and all rights
and remedies


                                       86

therefor, shall be revived and continued in full force and effect as if such
payment had not been made or such enforcement or setoff had not occurred, and
(ii) each Payee shall pay and return such amount to the Agent as the Agent may
be required to disgorge or otherwise pay to a trustee, receiver or any other
party in respect of the portion of the payment from the Borrower distributed by
the Agent to such Payee hereunder.


      SECTION 10.14. SECTION TITLES. The Section titles contained in this
Agreement are and shall be without substantive meaning or content of any kind
whatsoever and are not a part of the agreement between the parties hereto.


      SECTION 10.15. EXECUTION IN COUNTERPARTS. This Agreement may be executed
in any number of counterparts and by different parties in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement. Signature
pages may be detached from multiple separate counterparts and attached to a
single counterpart so that all signature pages are attached to the same
document. Delivery of an executed signature page of this Agreement by facsimile
transmission shall be as effective as delivery of a manually executed
counterpart hereof. A set of the copies of this Agreement signed by all parties
shall be lodged with the Borrower and the Agent.


      SECTION 10.16. THIRD PARTY BENEFICIARY. Each Counter-Guarantor shall be an
express third party beneficiary of this Agreement to the extent the provisions
of this Agreement by their terms confer upon such Counter-Guarantor any right or
remedy and shall be entitled to rely on each representation and warranty of the
Borrower hereunder as fully and with the same force and effect as if made
expressly to such Counter-Guarantor, and the execution and delivery of its
Counter-Guarantee to the Agent shall constitute such Counter-Guarantor's
agreement to the provisions of Section 10.18 and further agreement to be bound
by the terms and conditions hereof applicable to the Counter-Guarantors
(including, without limitation, Sections 2.8, 2.9, 10.13 and 10.18 hereof) in
asserting any right or remedy hereunder.


      SECTION 10.17. SEVERABILITY. In case any provision in or obligation under
this Agreement or the Note shall be invalid, illegal or unenforceable in any
jurisdiction the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.


      SECTION 10.18. CONFIDENTIALITY. Each party hereto (other than the Board)
and each Counter-Guarantor shall, and shall procure that its respective
officers, employees and agents shall, keep confidential and shall not, without
the prior written consent of the other parties, disclose to any third party this
Agreement, any other Loan Document or any of the information, reports or
documents supplied by or on behalf of such other party not otherwise publicly
available, except that a party shall be entitled to disclose this Agreement, any
other Loan Document, and any such information, reports or documents:


                                       87

            (i) in connection with any proceeding arising out of or in
      connection with this Agreement, any of the other Loan Documents, the Board
      Guarantee or any Counter-Guarantee to the extent that such party may
      reasonable consider necessary to protect its interest; or

            (ii) to any potential assignee or transferee of any party's rights
      under this Agreement or any of the Loan Documents or any
      Counter-Guarantor's rights under its Counter-Guarantee or any other person
      proposing to enter into contractual arrangements with any party in
      relation to this Agreement, any of the other Loan Documents, the Board
      Guarantee or any Counter-Guarantee subject to the relevant party obtaining
      an undertaking from such potential assignee or transferee or other person
      in corresponding terms to this Section 10.18; or


            (iii) pursuant to any applicable laws, ordinances, judgments,
      decrees, injunctions, writs, rules, regulations, orders, interpretations,
      licenses, permits and orders of any competent court, arbitrator or
      governmental agency or authority in any relevant jurisdiction; or

            (iv) to bank examiners or any other regulatory authority or rating
      agencies or similar entities, if requested to do so; or

            (v) to its auditors, legal, tax or to other professional advisers;
      or

            (vi) to its Affiliates and their respective directors, officers,
      employees and agents.




                                       88

                  IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly authorized,
as of the date first above written.

                                       AMERICA WEST AIRLINES, INC.


                                       By: /s/ W. Douglas Parker
                                       ----------------------------------------
                                       Name: W. Douglas Parker
                                       Title: Chairman, President and Chief
                                              Executive Officer


                                       CITIBANK, N.A.,
                                       as Initial Lender

                                       By: /s/ S. Khettry
                                       ----------------------------------------

                                       Name: S. Khettry
                                       Title: Managing Director


                                       KPMG CONSULTING, INC.,
                                       as Loan Administrator

                                       By: /s/ Timothy F. Kerry
                                       ----------------------------------------
                                       Name: Timothy F. Kerry
                                       Title: Managing Director


                                       CITIBANK, N.A.,
                                       as Agent

                                       By: /s/ S. Khettry
                                       ----------------------------------------
                                       Name: S. Khettry
                                       Title: Managing Director


                                       AIR TRANSPORTATION
                                       STABILIZATION BOARD


                                       By:  /s/ Joseph P. Adams, Jr.
                                       ----------------------------------------
                                       Name: Joseph P. Adams, Jr.
                                       Title: Executive Director

                                    EXHIBIT A

                            ASSIGNMENT AND ACCEPTANCE

                  ASSIGNMENT AND ACCEPTANCE dated as of _________, ____ between
______________ (the "Assignor") and ______________ (the "Assignee").

         Reference is made to the Loan Agreement, dated as of January 18, 2002
(as the same may be amended, restated, supplemented or otherwise modified from
time to time, the "Loan Agreement"), among the Borrower, Citibank, N.A.., as
Initial Lender and as Agent, KPMG Consulting, Inc.. as the Loan Administrator,
and Air Transportation Stabilization Board. Capitalized terms used herein and
not otherwise defined herein are used herein as defined in the Loan Agreement.

         The Assignor and the Assignee hereby agree as follows:

1.       The Assignor hereby sells and assigns to the Assignee, and the Assignee
         hereby purchases and assumes from the Assignor, [all of] [a __%
         interest in] the Assignor's rights and obligations under the Loan
         Agreement and the Note. The principal amount of the portion of the Loan
         and the Note assigned to the Assignee are set forth in Section 1 of
         Schedule I [and the principal amount of the Loan and the Note retained
         by the Assignor after giving effect to such sale and assignment are set
         forth in Section 2 of Schedule I.].

2.       The Assignor (i) represents and warrants that it is the legal and
         beneficial owner of the interest being assigned by it hereunder and
         that such interest is free and clear of any adverse claim; (ii) makes
         no representation or warranty and assumes no responsibility with
         respect to any statements, warranties or representations made in or in
         connection with the Loan Agreement or any other Loan Document or any
         other instrument or document furnished pursuant thereto or the
         execution, legality, validity, enforceability, genuineness, sufficiency
         or value of the Loan Agreement or any other Loan Document or any other
         instrument or document furnished pursuant thereto; and (iii) makes no
         representation or warranty and assumes no responsibility with respect
         to the financial condition of the Borrower or the performance or
         observance by the Borrower of any of its obligations under the Loan
         Agreement or any other Loan Document or any other instrument or
         document furnished pursuant thereto.

3.       The Assignee (i) agrees that it will, independently and without
         reliance upon the Agent, the Assignor or any other Lender and based on
         such documents and information as it shall deem appropriate at the
         time, continue to make its own credit decisions in taking or not taking
         action under the Loan Agreement; (ii) appoints and authorizes the Agent
         to take such action as agent on its behalf and to exercise such powers
         under the Loan Agreement and the other Loan Documents as are delegated
         to the Agent by the terms thereof, together with such powers as are
         reasonably incidental thereto; (iii) agrees that it will perform in
         accordance with their terms all of the obligations which by the terms
         of the Loan Agreement


                                      A-1

         are required to be performed by it as a Lender; (iv) represents and
         warrants that it is an Eligible Lender; (v) confirms it has received
         such documents and information as it has deemed appropriate to make its
         own credit analysis and decision to enter into this Assignment and
         Acceptance; and (vi) specifies as its Lending Office (and address for
         notices) the office set forth beneath its name on the signature pages
         hereof.

4.       Following the execution of this Assignment and Acceptance by the
         Assignor and the Assignee, it will be delivered to the Agent (with a
         copy to the Board) for acceptance and recording by the Agent, together
         with an assignment fee of $10,000. The effective date of this
         Assignment and Acceptance shall be __________ or such later date as of
         which the Board shall have consented to the sale and assignment of [all
         of] [a __% interest in] the Assignor's rights and obligations under the
         Loan Agreement and the Note to the Assignee as provided herein and as
         evidenced by its signed confirmation thereof set forth on the signature
         pages hereof (the "Effective Date").

5.       Upon such acceptance and recording by the Agent, then, as of the
         Effective Date, (i) the Assignee shall be a party to the Loan Agreement
         and, to the extent provided in this Assignment and Acceptance, have the
         rights and obligations under the Loan Agreement of a Lender and (ii)
         the Assignor shall, to the extent provided in this Assignment and
         Acceptance, relinquish its rights (except those which survive the
         payment in full of the Obligations) other than those relating to events
         or circumstances occurring prior to the Effective Date and be released
         from its obligations under the Loan Documents.

6.       Upon such acceptance and recording by the Agent, from and after the
         Effective Date, the Agent shall make all payments under the Loan
         Documents in respect of the interest assigned hereby (i) to or for the
         account of the Assignee, in the case of amounts accrued with respect to
         any period on or after the Effective Date, and (ii) to or for the
         account of the Assignor, in the case of amounts accrued with respect to
         any period prior to the Effective Date.

7.       This Assignment and Acceptance shall be governed by, and be construed
         in accordance with, the law of the State of New York.

8.       This Assignment and Acceptance may be executed in any number of
         counterparts and by different parties on separate counterparts, each of
         which when so executed shall be deemed to be an original and all of
         which taken together shall constitute but one and the same agreement.
         Delivery of an executed counterpart of this Assignment and Acceptance
         by telecopier shall be effective as delivery of a manually executed
         counterpart of this Assignment and Acceptance.


                                      A-2

                  In witness whereof, the parties hereto have caused this
Assignment and Acceptance to be executed by their respective officers thereunto
duly authorized, as of the date first above written.

                                                     [Assignor]



                                                     By:________________________
                                                        Name:
                                                        Title:


                                                     [Assignee]

                                                     By:________________________
                                                        Name:
                                                        Title:

                                                     Lending Office (and
                                                           address for notices):


                                                     [Address]


Accepted this_____________ day
of ________________________, ____

[               ],
as Agent


By:___________________________
   Name:
   Title:


The Board hereby confirms its consent to this Assignment and Acceptance in
accordance with the provisions of Section 10.2 of the Loan Agreement

Air Transportation Stabilization Board


By:________________________________
   Name:
   Title:



                                      A-3

                                   SCHEDULE I
                                       TO
                            ASSIGNMENT AND ACCEPTANCE

SECTION 1.

Aggregate Outstanding Principal Amount of the Loan
and of the Note Assigned to Assignee:                     $_________________

SECTION 2.

Aggregate Outstanding Principal Amount of the Loan
and the Note retained by Assignor:                        $_________________



                                      A-4

                                    EXHIBIT B

                                  FORM OF NOTE

                                                              New York, New York
$ __________                                                    January __, 2002

               FOR VALUE RECEIVED, the undersigned AMERICA WEST AIRLINES,
INC., a Delaware corporation (the "Borrower"), hereby promises to pay to
CITIBANK, N.A. as Agent, for the account of the Lenders, the principal amount
set forth above, or, if less, the aggregate unpaid principal amount of the
Loan, payable at such times, and in such amounts, as are specified in the Loan
Agreement. The Borrower hereby promises to pay interest on the unpaid
principal amount of the Loan from the date hereof until such principal amount
is paid in full, at the rate or rates, and payable at such times as are
specified in the Loan Agreement.

               This Note shall be payable at the principal office of the Agent
presently located at 399 Park Avenue in New York City.

               This Note is the "Note" referred to in that certain Loan
Agreement, dated as of January 18, 2002 (as the same may be amended, restated,
supplemented or otherwise modified from time to time, the "Loan Agreement"),
among the Borrower, Citibank, N.A., as the Initial Lender and as Agent, KMPG
Consulting, Inc., as the Loan Administrator, and Air Transportation
Stabilization Board and entitled to the benefits thereof. Capitalized terms
used herein and not defined herein are used herein as defined in the Loan
Agreement.

               Demand, diligence, presentment, protest and notice of
non-payment and protest are hereby waived by the Borrower. This Note may be
prepaid solely as provided in the Loan Agreement and may be accelerated in
whole or in part as provided in the Loan Agreement.

               This Note shall be governed by, and construed in accordance
with, the law of the State of New York; provided, that in the event the Board
becomes a Lender pursuant to the Board Guarantee, the rights and obligations of
the Board hereunder shall be governed by, and construed in accordance with, the
Federal law of the United States of America, if and to the extent such Federal
law is applicable, and otherwise in accordance with the law of the State of New
York.


               IN WITNESS WHEREOF, the Borrower has caused this Note to be
executed and delivered by its duly authorized officer as of the date and at the
place set forth above.



                                           AMERICA WEST AIRLINES, INC.

                                           By:  ______________________
                                                Name:
                                                Title:




                                    EXHIBIT C

                               NOTICE OF BORROWING

Citibank, N.A.,
    as Agent under the
    Loan Agreement referred to below Citibank, N.A.
399 Park Avenue,
New York, New York 10043


                                                               January ___, 2002

            Re: AMERICA WEST AIRLINES, INC. (the "Borrower")

         Reference is made to the Loan Agreement, dated as of January 18, 2002
(as the same may be amended, restated, supplemented or otherwise modified from
time to time, the "Loan Agreement"), among the Borrower, Citibank, N.A., as
Initial Lender and as Agent, KPMG Consulting, Inc., as the Loan Administrator,
and Air Transportation Stabilization Board. Capitalized terms used herein and
not otherwise defined herein are used herein as therein defined.

         The Borrower hereby gives you irrevocable notice, pursuant to Section
2.2 of the Loan Agreement, that the undersigned hereby requests a Borrowing
under the Loan Agreement and, in that connection, sets forth below the
information relating to such Borrowing (the "Proposed Borrowing") as required by
Section 2.2 of the Loan Agreement:

            (i) The date of the Proposed Borrowing is January __, 2002 (the
      "Closing Date").

            (ii) The aggregate amount of the Proposed Borrowing is $________.

         The undersigned hereby certifies that the following statements are true
on the date hereof and shall be true on the Closing Date both before and after
giving effect to the Proposed Borrowing and to the application of the proceeds
therefrom:

            (i) the representations and warranties set forth in Article IV of
      the Loan Agreement and in the other Loan Documents are true and correct on
      and as of the Closing Date before and after giving effect to the Borrowing
      and to the application of the proceeds therefrom, with the same effect as
      though made on and as of such date, except to the extent such
      representations and warranties expressly relate to an earlier date; and

            (ii) no Event of Default or event which, with the giving of notice
      or passage of time or both, would be an Event of Default, has occurred and
      is continuing on the Closing Date, or would result from the Borrowing,
      other than


                                      C-1

      the Disclosed Defaults which will be cured after giving effect to the
      Borrowing and to the application of the proceeds therefrom.


                                               AMERICA WEST AIRLINES, INC.


                                               By:  ____________________________
                                               Name:
                                               Title: [Chief Financial
                                               Officer/President/Chief Executive
                                               Officer]

                                      C-2

                                                                       Exhibit D


                            Form of Board Guarantee



================================================================================

                              GUARANTEE AGREEMENT

                          dated as of January 18, 2002

                                     among

                                CITIBANK, N.A.,
                                   as Lender,

                                CITIBANK, N.A.,
                                   as Agent,

                                      and

                     AIR TRANSPORTATION STABILIZATION BOARD

================================================================================

                      ------------------------------------
                          Board Guarantee No. 2002/01
                      ------------------------------------


                                TABLE OF CONTENTS

                                                                         
SECTION 1. DEFINITIONS AND PRINCIPLES OF CONSTRUCTION.................       3

  1.01  Defined Terms.................................................       3
  1.02  Principles of Construction....................................       4

SECTION 2. THE GUARANTEE..............................................       4

  2.01  The Guarantee.................................................       4
  2.02  Coverage of the Guarantee.....................................       4
  2.03  Timely Demand.................................................       4
  2.04  Prohibited Amendments or Transfers............................       5
  2.05  No Acceleration...............................................       5
  2.06  Guarantee Fee.................................................       5
  2.07  Revocation of Borrower's Payment..............................       5

SECTION 3. REPRESENTATIONS AND WARRANTIES.............................       6

  3.01  Representations and Warranties of the Agent...................       6
  3.02  Representations and Warranties of the Lender..................       6

SECTION 4. CLAIM PROCEDURES...........................................       6

  4.01  Failure to Pay................................................       6
  4.02  Demand on the Board...........................................       7
  4.03  Assignment to the Board.......................................       7
  4.04  Conditions of Guarantee.......................................       7
  4.05  Payment by the Board..........................................       7
  4.06  Board Payment Does Not Discharge Borrower.....................       8

SECTION 5. UNDERTAKINGS OF THE AGENT..................................       8

  5.01  Notices.......................................................       8
  5.02  Register......................................................       8
  5.03  Prohibited Amendments.........................................       8
  5.04  Prohibited Transfers..........................................       8
  5.05  Indemnification...............................................       9

SECTION 6. MISCELLANEOUS..............................................       9

  6.01  Governing Law.................................................       9
  6.02  Notices.......................................................      10
  6.03  Benefit of Agreement..........................................      10
  6.04  Entire Agreement..............................................      10
  6.05  Amendment or Waiver...........................................      10
  6.06  Counterparts..................................................      10
  6.07  Severability..................................................      10



                               GUARANTEE AGREEMENT




      This GUARANTEE AGREEMENT dated as of January 18, 2002 (this "Agreement")
is made by and among Citibank, N.A., as Lender under and as defined in the Loan
Agreement referred to below (together with its successors and permitted assigns,
the "Lender"), Citibank, N.A., as agent for the Lender (together with its
successors and permitted assigns, the "Agent"), and the Air Transportation
Stabilization Board (the "Board").

                                   WITNESSETH:


      WHEREAS, the Board was created pursuant to Section 102 of the Air
Transportation Safety and System Stabilization Act, Pub. L. No. 107-42 (the
"Act");

      WHEREAS, the Act establishes the Air Carrier Guarantee Loan Program to be
administered by the Board in accordance with the Regulations for Air Carrier
Guarantee Loan Program, 14 C.F.R. Part 1300, as the same may be amended or
modified from time to time (the "Regulations");

      WHEREAS, pursuant to the Act, America West Airlines, Inc. (the "Borrower")
has made an application (as set forth in the Amended and Restated Application
dated January 18, 2002, the "Application") for the issuance by the Board of a
Federal credit instrument (as defined in the Regulations) in the form of a
guarantee of a portion of the principal of and interest on a loan to be made to
the Borrower by the Lender;

      WHEREAS, the Lender, the Borrower, the Loan Administrator identified
therein, the Board and the Agent have, on the date hereof, entered into a loan
agreement (the "Loan Agreement") providing for the Lender to extend a loan (the
"Loan") to the Borrower upon the terms and conditions specified therein in the
aggregate principal amount of U.S. $429,000,000;

      WHEREAS, the Lender, the Borrower and the Agent have satisfied the
conditions to the issuance of this Federal credit instrument (as such term is
defined in the Act) by the Board set forth in Section 3.1 of the Loan Agreement
(including, without limitation, payment of the initial installment of the
Guarantee Fee referred to in Section 2.06);

      WHEREAS, it is a condition precedent to the making of the Loan that the
Board execute and deliver this Agreement; and

      WHEREAS, subject to the terms and conditions of this Agreement, the Board
is willing to guarantee to the Lender the payment of certain of the Borrower's
obligations under the Loan Agreement.


                                      -2-

      NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties hereto agree as follows:

SECTION 1. DEFINITIONS AND PRINCIPLES OF CONSTRUCTION

1.01 Defined Terms. For the purposes of this Agreement, the following terms
shall have the meanings specified below.

      "Act" shall have the meaning set forth in the recitals hereof.

      "Agent" shall have the meaning set forth in the introductory paragraph
hereof.

      "Application" shall have the meaning set forth in the recitals hereof.

      "Board" shall have the meaning set forth in the introductory paragraph
hereof.

      "Borrower" shall have the meaning set forth in the recitals hereof.

      "Business Day" shall mean any day on which the Federal Reserve Bank of New
York is open for business.

      "Counter-Guarantee" shall have the meaning set forth in the Loan
Agreement.

      "Demand Date" shall have the meaning set forth in Section 4.05(a) hereof.

      "Event of Default" shall have the meaning set forth in the Loan Agreement.

      "Guarantee" shall mean the guarantee of the Board set forth in Section
2.01 hereof.

      "Guaranteed Percentage" shall have the meaning set forth in Section
2.01(a).

      "Guarantee Fee" shall have the meaning set forth in Section 2.06.

      "Guaranteed Amount" shall have the meaning set forth in Section 2.01
hereof.

      "Guaranteed Interest Rate" shall mean the rate at which interest is
payable by the Borrower under the terms of the Loan Agreement; provided,
however, that the Guaranteed Interest Rate shall not include any increase in the
rate of interest payable as the result of an Event of Default.

      "Lender" shall have the meaning set forth in the introductory paragraph
hereof.

      "Loan" shall have the meaning set forth in the recitals hereof.

      "Loan Agreement" shall have the meaning set forth in the recitals hereof.

      "Note" shall mean any promissory note of the Borrower evidencing the Loan
and issued in accordance with the provisions of the Loan Agreement.


                                      -3-

      "Regulations" shall have the meaning set forth in the recitals hereof.

1.02 Principles of Construction.

      (a) The meanings set forth for defined terms in Section 1.01 or elsewhere
in this Agreement shall be equally applicable to both the singular and plural
forms of the terms defined.

      (b) All references to "this Agreement" or "hereof" and other like terms
mean, unless the context requires otherwise, this Agreement, including all
annexes, appendices, exhibits, schedules and supplements hereto, all as amended,
modified or supplemented from time to time.

      (c) The headings of the Sections in this Agreement are included for
convenience only and shall not in any way affect the meaning or construction of
any provision of this Agreement.

      (d) In the event of any inconsistency between the terms of this Agreement
and the Loan Agreement, the terms of this Agreement shall govern.

                            SECTION 2. THE GUARANTEE

2.01 The Guarantee. Subject to the terms and conditions set forth
in this Agreement, the Board hereby guarantees, irrevocably and unconditionally
(except to the extent expressly provided in Sections 2.03, 2.04, 2.05 and 2.06),
to the Agent on behalf of the Lender (the "Guarantee") payment of the following
(the sum of all amounts under (a), (b) and (c), the "Guaranteed Amount"):

      (a) eighty-eight and four hundred seventy-three million, one hundred
ninety-three thousand, four hundred seventy-three billionths percent
(88.473193473%) (the "Guaranteed Percentage") of the outstanding and unpaid
principal amount of the Loan not in excess of Three-Hundred and Seventy-Nine
Million Five Hundred and Fifty Thousand U.S. Dollars ($379,550,000) in the
aggregate;

      (b) interest on the principal amount of the Loan specified in (a) above,
accrued at the Guaranteed Interest Rate to and including the scheduled payment
dates thereof; and

      (c) interest on any due and unpaid amounts described in Sections 2.01(a)
and 2.01(b) above, accrued at the Guaranteed Interest Rate from the scheduled
payment dates thereof to but not including the date of actual payment thereof by
the Board.

2.02 Coverage of the Guarantee. Pursuant to Section 107(2) of the Act, the
Guarantee is entitled to the full faith and credit of the United States of
America. The Guarantee constitutes a guarantee of payment and not of collection.
In no event shall the liability of the Board on the Guarantee exceed the
Guaranteed Amount. For the avoidance of doubt, the Guarantee shall not extend to
the repayment of any penalties, fees, indemnified amounts, costs, expenses or
any other amount payable under the Loan Agreement or any Note other than the
Guaranteed Amount.

2.03 Timely Demand. In the event that the Agent, on behalf of the Lender, fails
to make demand on the Board within the time period required in Section 4.02(vi),
the Guarantee of the unpaid installment of principal and/or interest as to which
such timely demand was not made


                                      -4-

shall automatically terminate with respect thereto. This termination shall be
without prejudice to the right of the Agent, on behalf of the Lender, to make
demand on the Board under this Agreement in respect of any other due and unpaid
installments of principal or interest.

2.04 Prohibited Amendments or Transfers. In the event that the Agent or a
Lender, without the Board's prior written consent, agrees to any material
amendment, written modification or written waiver in violation of Section 5.03
or assigns, conveys, sell or otherwise transfers any interest in or right or
obligation under this Agreement, the Loan Agreement or the Note in violation of
Section 5.04, then the Board shall have the right to terminate the Guarantee
with respect to all or a portion of the Guaranteed Amount by providing written
notice thereof to the Agent, such termination to be effective as of the earlier
of (a) the 30th calendar day after the date on which the Board delivers such
notice to the Agent and (b) any Demand Date unless, prior to such earlier date,
the Agent or such Lender, as the case may be, rescinds or otherwise remedies the
effect of such prohibited action to the satisfaction of the Board, in which case
the Guarantee shall remain in full force and effect.

2.05 No Acceleration. In the event that, without the prior written consent of
the Board (whether given under this Agreement or under the terms of the Loan
Agreement), the Agent shall declare all or any part of the Borrower's
indebtedness under the Loan Agreement to be immediately due and payable or to be
due and payable upon the demand of the Agent (it being understood that
acceleration of the Loan upon an Event of Default under Section 7.1(f) or (g) of
the Loan Agreement is not such a declaration), then the Board shall have the
right to terminate the Guarantee with respect to all or a portion of the
Guaranteed Amount. The Board shall exercise its right to terminate the Guarantee
pursuant to this Section 2.05 by providing written notice thereof to the Agent.
Any termination of the Guarantee by the Board under this Section 2.05 will be
deemed effective as of the date of the relevant declaration by the Agent.

2.06 Guarantee Fee. The Agent, on behalf of Borrower, shall pay to the United
States Department of the Treasury, in accordance with the priorities of payment
specified in the Loan Agreement and to the extent sufficient funds are received
by the Agent from the Borrower for application thereto, the following
(collectively, the "Guarantee Fee"): (a) on the date hereof, the amount of Three
Million Eight Hundred Thousand U.S. Dollars ($3,800,000), and (b) also on the
date hereof and thereafter on each anniversary of the date hereof (or if any
such anniversary date is not a Business Day, then the immediately preceding
Business Day), the amount specified in Schedule I to this Agreement for such
date. Payment of the Guarantee Fee due on the date hereof shall constitute a
condition precedent to the effectiveness of this Agreement. The Agent shall make
each payment pursuant to this Section 2.06 to such account at such bank in New
York City as the Board shall instruct in writing from time to time. Prior to
such payment, the Agent shall hold such funds in trust for the benefit of the
Board, and the Agent hereby irrevocably waives and agrees not to exercise any
banker's lien, right of setoff, right of recoupment, right to combine accounts
or any similar lien, claim or right, it may have now or in the future against or
on such funds, express or implied, statutory or otherwise, to satisfy any
obligation which the Board or any other agency or instrumentality of the Federal
government of the United States of America may owe to the Agent in any capacity.

2.07 Revocation of Borrower's Payment. Notwithstanding the provisions of Section
2.03, the Guarantee shall continue to be binding on the Board with respect to
any payment, or any part


                                      -5-

thereof, of principal of or interest on any Note that is rescinded or must
otherwise be returned by the Agent or a Lender if such rescission or return of
payment has been compelled by law as the result of the bankruptcy or insolvency
of the Borrower or if such rescission or return of payment is a result of any
law, regulation or decree applicable to the Borrower. A demand on the Board for
payment pursuant to the Guarantee of any such returned amount must be made
promptly but in no event later than thirty (30) days after the Agent or a Lender
has been compelled to return such amount.

                   SECTION 3. REPRESENTATIONS AND WARRANTIES

3.01 Representations and Warranties of the Agent. The Agent represents and
warrants to the Board as follows:

      (a) Bring-down of Representations. All of its certifications set forth in
writing in the Application were when made or given, and are as of the date
hereof, true, correct and complete in all material respects, except as otherwise
disclosed by the Agent in writing to the Board on or before the date hereof.

      (b) Agent Obligations. The Agent has the ability to perform each of its
obligations as Agent under this Agreement and the Loan Agreement.

3.02 Representations and Warranties of the Lender. The Lender represents and
warrants to the Board as follows:

      (a) Bring-down of Representations. All of its certifications set forth in
writing in the Application were when made or given, and are as of the date
hereof, true, correct and complete in all material respects, except as otherwise
disclosed by the Lender in writing to the Board on or before the date hereof.

      (b) No Security. The Lender has no security for payment of any of the
Borrower's obligations under the Loan Agreement or the Note, it being expressly
acknowledged and agreed that none of (i) the fees referred to in the Loan
Agreement, (ii) the Counter-Guarantees, or the cash collateral, letters of
credit and guarantees referred to therein or at any time provided thereunder, or
(iii) any guarantee or security given by any affiliate of the Borrower for the
benefit of the Lender, in any such case, constitutes "security" within the
meaning of this Section 3.02(b) or paragraph 3(b) of any Assignment and
Certification delivered to the Board.

                          SECTION 4. CLAIM PROCEDURES

4.01 Failure to Pay. In the event that (i) the Borrower for any reason fails to
pay in full any installment of principal (other than any proposed voluntary
prepayment under Section 2.5(a) of the Loan Agreement) or interest under the
Loan Agreement or any Note for more than thirty (30) calendar days after the due
date of such installment; and (ii) a period of fifteen (15) calendar days has
elapsed since written demand for payment was made by the Agent on the Borrower
(which demand may be omitted only if and to the extent that the making thereof
would be prohibited by any applicable law), then the Agent, on behalf of the
Lender, may make demand on the Board under this Agreement for payment (subject
to Sections 2.03, 2.04 and 2.05) of the Guaranteed Amount.


                                      -6-

4.02 Demand on the Board. The Agent's demand on the Board must: (i) be in
writing and delivered in accordance with Section 6.02; (ii) be made only by the
Agent; (iii) identify the installment(s) of principal and/or interest unpaid as
of the date of such demand; (iv) include a copy of the Agent's written demand
for payment on the Borrower (or in the event that such demand was omitted with
respect to the Borrower pursuant to Section 4.01, evidence of the applicable
prohibition); (v) include an Assignment and Certification in the form of Annex A
to this Agreement; and (vi) be made, subject to Section 2.07, not later than
sixty (60) calendar days from the due date of the unpaid installment(s) of
principal and/or interest on which the Agent's demand for payment is based.

4.03 Assignment to the Board. On and as of the date on which the Board pays the
Guaranteed Amount in accordance with Section 4.05, the Board shall become
subrogated to, and the Lender shall be deemed to have assigned to the Board,
without recourse and without need of any further action, the Guaranteed
Percentage of the Lender's right, title and interest in and to the principal of
and interest on the Loan and under the Loan Agreement and the Note in respect
thereof and, to such extent, the Board shall have the right to enforce or
participate in any claim (including, without limitation, any claim in
bankruptcy), right or remedy that the Lender then has or may thereafter acquire
against the Borrower under the Loan Agreement or the Note. In addition to the
Assignment and Certification required to be delivered under Section 4.02, the
Agent and the Lender shall, upon request by the Board, execute and deliver such
documents and take such other actions as the Board may reasonably request to
evidence or give effect to such subrogation and assignment, it being understood
and agreed that the execution and delivery of any such document or the taking of
any such action (i) shall not be a condition to the Board's obligation to pay
the Guaranteed Amount in accordance with this Section 4 and (ii) shall be at the
expense of the Board.

4.04 Conditions of Guarantee. The Board hereby waives diligence, presentment,
protest and any requirement that the Agent or the Lender exhaust any right or
take any action against or give notice to the Borrower or the Board, except for
the written demands for payment by the Agent on the Borrower and the Board
required under this Agreement.

4.05 Payment by the Board.

      (a) After the date on which the Agent shall have properly documented its
demand on the Board for payment pursuant to Section 4.02 (the "Demand Date"),
the Board shall, subject to Sections 2.03, 2.04 and 2.05, pay to the Agent,
within forty-five (45) Business Days after the Demand Date, for the benefit of
the Lender, the Guaranteed Amount in a single payment calculated as of the date
of actual payment thereof by the Board.

      (b) Payment of the Guaranteed Amount due under this Agreement shall be
made by the Board to the Agent, for the benefit of the Lender, and such payment
to the Agent shall discharge fully and completely the Board's liability under
this Agreement. After the Demand Date, any funds received by the Agent or the
Board from or on behalf of the Borrower in respect of any of the Borrower's
obligations under the Loan Agreement shall be applied in accordance with the
terms of the Loan Agreement.


                                      -7-

      (c) If the Guarantee terminates pursuant to Section 2.03, 2.04 or 2.05
with respect to one or more installments of principal and/or interest, all
installments of principal and/or interest as to which the Guarantee has
terminated shall be deemed to have been paid in full when and as due for the
purposes of determining the amount payable by the Board under this Section 4.05.

4.06 Board Payment Does Not Discharge Borrower. Any statute or judicial decision
to the contrary notwithstanding, no payment by the Board to the Agent on behalf
of the Lender under this Agreement shall reduce, discharge, satisfy or terminate
any obligation of Borrower under the Loan Agreement or any Note.

SECTION 5. UNDERTAKINGS OF THE AGENT

      The Agent agrees that so long as the Board remains liable under this
Agreement:

5.01  Notices.

      (a) The Agent shall notify the Board promptly but in no event later than
seven (7) Business Days after the occurrence of an Event of Default arising by
reason of a failure by the Borrower to make any scheduled payment of principal
of or interest on the Loan when due in accordance with the terms of the Loan
Agreement.

      (b) The Agent shall notify the Board promptly but in no event later than
thirty (30) calendar days after (i) receipt of a notice of any other Event of
Default under and in accordance with the provisions of Section 9.5 of the Loan
Agreement, (ii) receipt of any prepayment of the Loan made by or on behalf of
the Borrower under Section 2.5 or 2.6 of the Loan Agreement, and (iii) the
return by the Agent of any payment previously made by the Borrower to the Agent
or the Agent's receipt of any notice from a Lender of such Lender's return of
any payment previously made by the Borrower, in either case, under the
circumstances described in Section 2.07.

5.02 Register. The Agent shall establish and maintain a register for recording
with respect to the Loan (i) the date and amount of each payment on the Loan
made by or on behalf of, or collected from, the Borrower, (ii) the amount of
each such payment applied in accordance with the terms of the Loan Agreement to
scheduled principal of or interest on the Loan and to each of the fees
identified in clauses (d) through (h) of Section 2.8 of the Loan Agreement, and
(iii) the date and amount of each payment made by the Board hereunder. At any
time upon request by the Board delivered in accordance with Section 6.02, the
Agent shall make such register (or a copy thereof certified by the Agent as
true, complete and correct copy) available to the Board.

5.03 Prohibited Amendments. Neither the Agent nor the Lender shall, without the
prior written consent of the Board (whether given by the Board under this
Agreement or the Loan Agreement), agree to any material amendment, written
modification or written waiver of the terms of the Loan Agreement or the Note.

5.04  Prohibited Transfers.

      (a) The Agent shall not, without the Board's prior written consent, assign
or otherwise transfer any of its rights, duties or responsibilities as Agent
under this Agreement, except that the foregoing shall not restrict an assignment
or transfer by operation of law.


                                      -8-

      (b) The Lender shall not assign, convey, sell or otherwise transfer any of
its rights, interest or obligations under this Agreement, the Loan Agreement or
the Note without the prior written consent of the Board (such consent, in the
case of an assignment to an affiliate of Citibank, N.A. that is a "lender" (as
defined in the Act), not to be unreasonably withheld); provided, however, that
nothing in this Agreement shall prohibit (i) the Lender from pledging and/or
assigning its rights, interests or obligations under the Loan Agreement, the
Note and this Agreement to any Federal Reserve Bank and, in such instances, the
Federal Reserve Bank, as pledgee or assignee, shall have all such rights and
interests, including in the Guarantee, or (ii) the making and performance of the
Counter-Guarantees and the provision of the cash collateral, letters of credit
and guarantees referred to therein or at any time provided thereunder. Nothing
in this Agreement shall be construed as limiting the Lender's rights under the
provisions of Section 1300.23 of the Regulations; provided, however, that
Citibank, N.A., as the initial Lender shall maintain and shall not sell any
participation in that portion of the Loan which is not guaranteed either under
this Agreement or any Counter-Guarantee.

5.05 Indemnification. In the event that (i) the Agent fails to perform any of
its obligations under this Agreement (which failure shall not, except as
provided in Section 2.03, 2.04 or 2.05, limit or otherwise affect the
obligations of the Board under Section 2) or fails to perform any of its
material obligations or covenants to the Board under the Loan Agreement, or (ii)
any representation of the Agent or the Lender set forth in Section 3 or any
certification of the Agent or the Lender set forth in the Application proves to
have been incorrect in any material respect when made, then the Agent or Lender,
as the case may be, shall be liable to the Board for all actual damages suffered
and costs incurred by the Board as the result thereof, and shall indemnify the
Board for such damages and costs (including, without limitation, counsel fees
and expenses incurred by the Board in enforcing its rights under this Section
5.05). Neither the Agent nor the Lender shall, however, be liable for any
incidental or consequential damages. The Board may enforce its rights hereunder,
and pursue all remedies available with respect thereto, in any court of
competent jurisdiction. Anything to the contrary contained herein
notwithstanding, the obligation of the Agent and the Lender to indemnify the
Board shall survive the termination of this Agreement and the payment of all or
any portion of the Guaranteed Amount.

5.06 Multiple Lenders. In the event The Board shall at any time or from time to
time consent to an assignment of a portion of the Loan by the Lender, each
representation, warranty, certification, covenant or other obligation of the
"Lender" in this Agreement thereafter made or given shall be deemed a several
representation, warranty, certification, or covenant or other obligation of each
Lender such that no Lender shall be liable for the acts or omissions of any
other Lender, and the obligation of the Board to any Lender shall not be
affected by the acts or omissions of any other Lender.

                            SECTION 6. MISCELLANEOUS

6.01 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE FEDERAL LAW OF THE UNITED STATES OF AMERICA IF AND TO THE
EXTENT SUCH FEDERAL LAW IS APPLICABLE, AND OTHERWISE IN ACCORDANCE WITH THE LAW
OF THE STATE OF NEW YORK.


                                      -9-

6.02 Notices. Except as otherwise specified, all notices given hereunder shall
be in writing, shall include the applicable Board guarantee number and shall be
given by mail, telecopier or personal delivery and deemed to be given for the
purposes of this Agreement on the day that such notice is received by the
intended recipient thereof. Unless otherwise specified in a notice delivered in
accordance with this Section 6.02, all notices shall be delivered: (i) to the
Agent or to the Board at the address specified beneath its name on the signature
page hereto; and (ii) to the Lender, in care of the Agent, at the Agent's
address.

6.03 Benefit of Agreement. This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the respective successors and permitted assigns
of the parties hereto.

6.04 Entire Agreement. This Agreement contains the entire agreement among the
parties hereto regarding the subject matter hereof. In the event that any term
of the Loan Agreement or any Note conflicts with any term of this Agreement, the
terms and provisions of this Agreement shall control to the extent of such
conflict.

6.05 Amendment or Waiver. This Agreement may not be changed, discharged or
terminated (except as expressly provided herein) without the written consent of
the parties hereto, and no provision hereof may be waived without the written
consent of the party to be bound thereby.

6.06 Counterparts. This Agreement may be signed in separate counterparts, each
of which shall be deemed to be an original and all of which together shall
constitute one and the same instrument.

6.07 Severability. To the extent permitted by applicable law, the illegality or
unenforceability of any provision of this Agreement shall not in any way affect
or impair the legality or enforceability of the remaining provisions of this
Agreement.


            [The Remainder of this Page is Intentionally Left Blank]



                                      -10-

            IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, in duplicate, as of the date first above written.

                                         AIR TRANSPORTATION
CITIBANK, N.A.,                          STABILIZATION BOARD
  as Lender

By:   ___________________________        By:    ______________________________
      (Signature)                               (Signature)

                                         Name:  _______________________________
Name:  ___________________________              (Print)
      (Print)
                                         Title  :______________________________
Title:____________________________


CITIBANK, N.A.,
  as Agent

By:   ___________________________
      (Signature)

Name: ___________________________
      (Print)

Title:____________________________

2 Penns Way Suite 200                 1120 Vermont Avenue, Suite 970
New Castle, DE  19720                 Washington, D.C.  20005
Attention:  Roslyn Edge               Attention:  Executive Director
Phone: 302-894-6006                   Telephone: (202) 775-8030
Facsimile:  302-894-6120              Telefax: (to be notified to the Agent
                                      and Lender in writing)
Copy to:
                                      Copy to:
388 Greenwich Street
20th Floor                            United States Department of the
New York, New York  10013             Treasury
Attention:  Barbara Kobelt            1500 Pennsylvania Avenue, N.W.
Phone: 212-816-1063                   Washington, D.C.  20220
Facsimile: (212) 816-0263             Attention:  Deputy Assistant Director for
                                      Government Financial Policy
                                      Telephone: (202) 622-7073
                                      Telefax: (202)  622-0387



                                      -11-

                                   SCHEDULE I


      In accordance with Section 2.06, the amount of the Guarantee Fee to be
paid on the date hereof and on each of the anniversary dates scheduled below (or
if any such anniversary date is not a Business Day, then the immediately
preceding Business Day) shall be equal to the product of (i) the percentage set
out below opposite such anniversary date and (ii) the average portion of the
Guaranteed Amount of principal of the Loan scheduled to be outstanding for the
then succeeding twelve-month period beginning on such anniversary date after
giving effect to any payment of principal of the Loan on such anniversary date
and any prior prepayment of principal (and commencing with the anniversary date
beginning the twelve-month period in which amortization of the principal of the
Loan is first scheduled to begin, computed on the basis of a year of 360 days
and actual number of days elapsed). The Agent shall calculate the amount of each
such payment of the Guarantee Fee and notify the Board and the Borrower thereof
in writing, together with the Agent's calculation, not less than ten (10)
Business Days prior to each anniversary date (or preceding Business Day).




                 ANNIVERSARY DATE          APPLICABLE PERCENTAGE
                 ----------------          ---------------------
                                        
                 January 18, 2002                  5.50%

                 January 18, 2003                  7.90%

                 January 18, 2004                  7.95%

                 January 18, 2005                  8.00%

                 January 18, 2006                  8.05%

                 January 18, 2007                  8.10%

                 January 18, 2008                  8.15%


                                     ANNEX A

                               FORM OF ASSIGNMENT



                          ASSIGNMENT AND CERTIFICATION

      This Assignment and Certification is made pursuant to the terms of the
Guarantee Agreement dated as of January 18, 2002 (the "Agreement") among
Citibank, N.A., as Lender, Citibank, N.A., as Agent and the Air Transportation
Stabilization Board. Capitalized terms used herein and not otherwise defined
herein shall have the meanings assigned in the Agreement.

      1. Assignment. For value received, each Lender hereby assigns to the
Board, without recourse, all of its right, title and interest in and to the
principal of and interest on the Loan and under the Loan Agreement and the Note
in respect thereof, to the extent, and only to the extent, of each such Lender's
pro rata share of the Guaranteed Percentage of the Loan represented by the
Guaranteed Amount paid by the Board to the Agent for each such Lender's account.

      2. Certification. Each Lender hereby certifies that it has not, without
the prior written consent of the Board:

            (i)   agreed to any material amendment, written modification or
      written waiver in violation of Section 5.03 of the Agreement; or

            (ii) assigned, conveyed, sold or otherwise transferred any interest
      in or right or obligation under this Agreement, the Agreement or the Note
      in violation of Section 5.04 of the Agreement; or

            (iii) accelerated or caused the Agent to accelerate all or any part
      of the Loan or the Note in violation of Section 2.05 of the Agreement; or

            (iv) obtained any security (within the meaning of Section 3.02 of
      the Agreement) for payment of all or any part of the Borrower's
      obligations under the Loan Agreement or the Note; or

            (v) the Guaranteed Amount demanded to be paid by the Board to the
      Agent for each such Lender's account is properly calculated and due and
      owing to such Lender under the terms of the Agreement;

it being expressly understood and agreed that the failure of any Lender to make
any such certification or for any such certification of any Lender to be
incorrect, shall not effect the obligation of the Board under Section 2 of the
Agreement in respect of any other Lender.

      3. Acknowledgement. Each of the Agent and the Lender acknowledges and
agrees that this Assignment and Certification is subject to the terms of the
Agreement, including, without limitation, the following:

      (a) After the Demand Date, any funds received by the Agent or the Board
from or on behalf of the Borrower in respect of any of the Borrower's
obligations under the Loan Agreement shall be applied in accordance with the
terms of the Loan Agreement.

      (b) The Agent and the Lender shall, upon request by the Board, execute and
deliver such documents and take such other actions as the Board may reasonably
request to establish, preserve or enforce the rights, title and interest of the
Board in, to and under the Loan Agreement and the Note, and any right or remedy
that the Board has or may acquire against the Borrower thereunder, it being
understood and agreed that the execution and delivery of any such document or
the taking of any such action (i) shall not be a condition to the Board's
obligation to pay the Guaranteed Amount and (ii) shall be at the expense of the
Board.

      IN WITNESS WHEREOF, the Agent and the Lender have each caused this
instrument to be sealed this _____ day of ________________, ____.

CITIBANK, N.A.,
as Lender

By: _____________________________
(Signature)

(SEAL) Name: ___________________________
(Print)

Attest_____________________ Title: ____________________________
Secretary



CITIBANK, N.A.,
as Agent

By: _____________________________
(Signature)

(SEAL) Name: ___________________________
(Print)

Attest_____________________ Title: ____________________________
Secretary


                                      -2-

                                                                       Exhibit E





                                Form of Warrant


     Reference is made to Exhibit 4.19 to the America West Holdings Corporation
and America West Airlines, Inc. Form 8-K filed on January 31, 2002 with the
Securities and Exchange Commission.

EX-10.52

                                                                   Exhibit 10.52

                                                               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 Assignment Agreement in substantially
the form of Exhibit VI annexed hereto.

         "BANKRUPTCY CODE" means Title 11 of the United States Code as now and
hereafter in effect, or any successor statute.

         "BASE RATE" means, at any time, the higher of (x) the Prime Rate or (y)
the rate which is 1/2 of 1% in excess of the Federal Funds Effective Rate.

                                      -4-

         "BASE RATE LOANS" means Loans bearing interest at rates determined by
reference to the Base Rate as provided in subsection 2.2A.

         "BORROWING BASE" means an aggregate amount equal to:

(A) 100% of the Dollar amount of Cash and Permitted Cash Equivalents held by the
Agent at such time in the Cash Collateral Account, plus

(B) with respect to Aircraft, the Fair Market Value of all Stage III Aircraft as
stated in the then most recently delivered Approved Appraisal thereof, plus

(C) with respect to Rotables, the lower of (x) the then Adjusted Fair Market
Value of the Rotables (as hereinafter defined) and (y) the book value of the
Rotables as certified by the Company in the then most recently delivered
Borrowing Base Certificate; the "Adjusted Fair Market Value of the Rotables" (1)
on any date from and after the date of the then most recently delivered Approved
Appraisal (an "Appraisal Date") and prior to the next succeeding date on which
the Company shall deliver a Borrowing Base Certificate, shall equal the Fair
Market Value of the Rotables as set forth in such Approved Appraisal and (2) on
any date thereafter and prior to the date of the next succeeding Approved
Appraisal, shall equal the product of (x) the book value of the Rotables, as set
forth in the then most recently delivered Borrowing Base Certificate, multiplied
by (y) a fraction, of which the numerator shall be the Fair Market Value of the
Rotables, as of the Appraisal Date referred to in clause (1) above, and the
denominator shall be the book value of the Rotables, as set forth in the
Borrowing Base Certificate delivered on or next preceding such Appraisal Date,
plus

(D) the Fair Market Value of the Maintenance Facility as stated in the most
recently delivered Approved Appraisal thereof, plus

(E) the Fair Market Value of the Simulators as stated in the then most recently
delivered Approved Appraisal thereof, plus

(F) the Fair Market Value of the Spare Engines as stated in the then most
recently delivered Approved Appraisal thereof.

         "BORROWING BASE CERTIFICATE" means a certificate substantially in the
form of Exhibit IX annexed hereto delivered by the Company pursuant to Section
2.10 with respect to the calculation of the Borrowing Base.

         "BORROWING BASE COLLATERAL" means, at any time, Eligible Assets that
are subject to the Lien of a Security Agreement at such time; for the avoidance
of doubt, Collateral pledged pursuant to the Receivables Security Agreement
shall not constitute Borrowing Base Collateral.

         "BORROWING BASE DEFICIENCY" means any time and for so long as the ratio
of (1) the aggregate outstanding principal amount of the Loans to (2) the
Borrowing Base, is more than .58 to 1.

                                      -5-

         "BORROWING BASE VALUE" means, with respect to any Borrowing Base
Collateral, the value attributed to such Borrowing Base Collateral from time to
time pursuant to the definition of Borrowing Base.

         "BUSINESS DAY" means any day excluding Saturday, Sunday and any day
which is a legal holiday under the laws of the States of New York, California or
Arizona or is a day on which banking institutions located in any such state are
authorized or required by law or other governmental action to close and, if the
applicable Business Day relates to any Eurodollar Rate Loan, on which dealings
are carried on in the London interbank market.

         "CAPITAL LEASE", as applied to any Person, means any lease of any
property (whether real, personal or mixed) by that Person as lessee that, in
conformity with GAAP, is required to be accounted for as a capital lease on the
balance sheet of that Person, and the amount of Indebtedness represented by such
lease shall be the capitalized amount of the obligations evidenced thereby
determined in accordance with GAAP.

         "CAPITAL STOCK" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated, whether
voting or non-voting) of such Person's capital stock, whether now outstanding or
issued after the date of this Agreement, including, without limitation, all
Common Stock.

         "CASH" means money, currency or a credit balance.

         "CASH AND CASH EQUIVALENT SECURITY AGREEMENT" means the Cash and Cash
Equivalent Security Agreement dated as of December 12, 1997 between the Company
and the Agent, as amended by Amendment No. 1 dated as of December 10, 1999 and
as such Cash and Cash Equivalent Security Agreement may be amended, restated,
supplemented or otherwise modified from time to time in accordance with the
terms hereof and thereof.

         "CASH COLLATERAL ACCOUNT" has the meaning given such term in the Cash
and Cash Equivalent Security Agreement.

         "CASH EQUIVALENTS" means, as at any date of determination, (i)
marketable securities (a) issued or directly and unconditionally guaranteed as
to interest and principal by the United States Government or (b) issued by any
agency or instrumentality of the United States the obligations of which are
backed by the full faith and credit of the United States, in each case maturing
within one year after such date; (ii) marketable direct obligations issued by
any state of the United States of America or any political subdivision of any
such state or any instrumentality thereof, in each case maturing within one year
after such date and having, at the time of the acquisition thereof, the highest
rating obtainable from either S&P or Moody's; (iii) commercial paper maturing no
more than one year after such date and having, at the time of the acquisition
thereof, a rating of at least A-2 from S&P or at least P-2 from Moody's; (iv)
certificates of deposit or bankers' acceptances maturing within one year after
such date and issued or accepted by any Lender or by any commercial bank
organized under the laws of the United States of America or any state thereof or
the District of Columbia that (a) is at least "adequately capitalized" (as
defined in the regulations of its primary Federal banking regulator) and (b) has

                                      -6-

Tier 1 capital (as defined in such regulations) of not less than $100,000,000;
and (v) shares of any money market mutual fund that (a) has at least 95% of its
assets invested continuously in the types of investments referred to in clauses
(i) and (ii) above, (b) has net assets of not less than $500,000,000, and (c)
has the highest rating obtainable from either S&P or Moody's.

         "CASH PROCEEDS" means, with respect to any Asset Sale, the proceeds of
such Asset Sale in the form of Cash and Cash Equivalents, including payments in
respect of deferred payment obligations (to the extent corresponding to the
principal, but not the interest component thereof) when received in the form of
Cash or Cash Equivalents (except to the extent such obligations are financed or
sold with recourse to the Company or any Subsidiary of the Company) and proceeds
from the conversion of other property received when converted to Cash or Cash
Equivalents.

         "CHANGE OF CONTROL" means (i) the acquisition at any time by any Person
(other than TPG, L.P. or any of its Affiliates or Holdings) or two or more
Persons acting in concert of "beneficial ownership" (within the meaning of
Section 13(d) under the Exchange Act and the rules and regulations promulgated
thereunder) in excess of 40% of the total voting power of the Voting Stock of
the Company or Holdings; (ii) the sale, lease, transfer or other disposition, of
all or substantially all of the assets of the Company or Holdings to any Person
(other than TPG, L.P. or any of its Affiliates or Holdings) or two or more
Persons acting in concert as an entirety or substantially as an entirety in one
transaction or a series of related transactions; (iii) the merger or
consolidation of the Company or Holdings, with or into another corporation, or
the merger of another corporation into the Company or Holdings, or any other
transaction, with the effect that a Person (other than TPG, L.P. or any of its
Affiliates or Holdings) or two or more Persons acting in concert has "beneficial
ownership" (within the meaning of Section 13(d) of the Exchange Act and the
rules and regulations promulgated thereunder) in excess of 40% of the Voting
Stock of the Company or Holdings, or (if the Company or Holdings is not the
surviving corporation in such transaction) such other corporation, as the case
may be (including indirect ownership through another Person other than TPG, L.P.
or any of its Affiliates or Holdings or through two or more Persons acting in
concert); or (iv) the liquidation or dissolution of the Company or Holdings. For
purposes of this definition, the term Person includes a "person" within the
meaning of Section 13(d) of the Exchange Act and the rules and regulations
promulgated thereunder.

         "CLOSING DATE" means the date, if any, on or before January 31, 2002,
when the conditions of Section 3.1 hereof have been satisfied and the Existing
Credit Agreement has been restated and amended as provided in this Agreement.

         "CO-LEAD BOOK MANAGERS" means Salomon Smith Barney Inc. and The
Industrial Bank of Japan, Limited.

         "COLLATERAL" means all of the properties and assets that are from time
to time subject to the Liens purported to be granted by the Security Agreements
(provided, for the avoidance of doubt, that "Collateral" shall not include any
properties or assets subject to Liens granted pursuant to the Receivables
Security Agreement unless and until the conditions to such Liens becoming
effective, as set forth in the Receivables Security Agreement, have occurred).

                                      -7-

         "COMMODITY AGREEMENT" means any agreement or arrangement designed to
protect the Company or any of its Subsidiaries against fluctuations in the
prices of commodities used by the Company or any of its Subsidiaries in the
ordinary course of its business.

         "COMMON STOCK" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated, whether
voting or non-voting) of such Person's common stock, whether now outstanding or
issued after the date of this Agreement, including, without limitation, all
series and classes of such common stock.

         "COMPANY" has the meaning assigned to that term in the introduction to
this Agreement and its permitted successors and assigns.

         "COMPANY COMMON STOCK" means the Common Stock of the Company, par value
$0.01 per share.

         "COMPLIANCE CERTIFICATE" means a certificate substantially in the form
of Exhibit IV annexed hereto delivered to the Agent and the Lenders by the
Company pursuant to subsection 5.1(iii).

         "CONCESSIONS" means the lessor, creditor and vendor concessions granted
to the Company in connection with the Company's Restructuring Plan.

         "CONFIDENTIAL INFORMATION" means information that the Company furnishes
to the Agent or any Lender in a writing designated as confidential, but does not
include any such information that is or becomes generally available to the
public or that is or becomes available to the Agent or such Lender from a source
other than the Company.

         "CONTRACTUAL OBLIGATION", as applied to any Person, means any provision
of any equity security issued by that Person or of any material indenture,
mortgage, deed of trust, contract, undertaking, agreement or other material
instrument to which that Person is a party or by which it or any of its
properties is bound or to which it or any of its properties is subject.

         "CURRENCY AGREEMENT" means any foreign exchange contract, currency swap
agreement, futures contract, option contract, synthetic cap or other similar
agreement or arrangement designed to protect the Company or any of its
Subsidiaries against fluctuations in currency values.

         "DESIGNATED LOCATIONS" has the meaning given such term in the Spare
Parts Security Agreement.

         "DOCUMENTATION AGENT" means Bankers Trust Company.

         "DOLLARS" and the sign "$" mean the lawful money of the United States
of America.

         "ELIGIBLE ASSETS" has the meaning given such term in Subsection 2.10.

                                      -8-

         "ELIGIBLE ASSIGNEE" means (A) (i) a commercial bank organized under the
laws of the United States or any state thereof and having total assets on a
consolidated basis in excess of $1,000,000,000; (ii) a savings and loan
association or savings bank organized under the laws of the United States or any
state thereof and having total assets on a consolidated basis in excess of
$1,000,000,000; (iii) a commercial bank organized under the laws of any other
country or a political subdivision thereof; provided that (x) such bank is
acting through a branch or agency located in the United States or (y) such bank
is organized under the laws of a country that is a member of the Organization
for Economic Cooperation and Development or a political subdivision of such
country; and (iv) any other institutional investor organized under the laws of
the United States or any state thereof which extends credit or buys loans or
notes as one of its businesses including, but not limited to, investment banks,
insurance companies, mutual funds, money management companies, pension
management companies and lease financing companies, in each case (under clauses
(i) through (iv) above) that is reasonably acceptable to the Agent; and (B) any
Lender and any Affiliate of any Lender; provided that neither the Company nor
any Affiliate of the Company shall be an Eligible Assignee.

         "ELIGIBLE SIMULATOR" means a flight simulator of the type described in
Schedule 2.10.

         "ELIGIBLE SPARE ENGINE" means an aircraft engine of the type described
in Schedule 2.10.

         "ELIGIBLE STAGE III AIRCRAFT" means an aircraft, including engines,
that meets the "Stage III" noise standards of the Federal Aviation Regulations,
is of the type described in Schedule 2.10 and has met such standards either (x)
in the case of an aircraft other than a 737-200A series aircraft, since it was
originally manufactured and delivered or (y) in the case of a 737-200A series
aircraft, either at the time such aircraft becomes subject to the Lien of an
Aircraft Security Agreement or at the time such aircraft was originally
manufactured and delivered.

         "ENGINE" means each aircraft engine from time to time subject to the
Lien of the Aircraft Security Agreement.

         "ENVIRONMENTAL CLAIM" means any material investigation, notice, claim,
suit, proceeding, demand or order, by any governmental authority or any Person
arising in connection with any alleged or actual material violation of
Environmental Laws or with any Hazardous Material, or any actual or alleged
damage, or harm to health, safety or the environment.

         "ENVIRONMENTAL INDEMNITY AGREEMENT" means the Amended and Restated
Environmental Indemnity Agreement dated as of December 10, 1999 and as such
Environmental Indemnity Agreement may be amended, restated, supplemented or
otherwise modified from time to time in accordance with the terms hereof or
thereof.

         "ENVIRONMENTAL LAWS" means any and all current or future statutes,
ordinances, orders, rules, regulations, guidance documents, judgments,
governmental authorizations, or any other requirement of governmental
authorities relating to (a) the prevention or control of

                                      -9-

pollution or protection of the environment, (b) solid, gaseous or liquid waste
generation, handling, treatment, storage, disposal, discharge, release, emission
or transportation, or (c) exposure to Hazardous Materials. "Environmental Laws"
shall include, but not be limited to, the Comprehensive Environmental Response,
Compensation and Liability Act (42 U.S.C. 9601 et seq.), the Resource
Conservation and Recovery Act (42 U.S.C. 6901 et seq.), the National
Environmental Policy Act (42 U.S.C. 4321 et seq.), the Hazardous Materials
Transportation Act (49 U.S.C. 1801 et seq.), the Toxic Substances Control Act
(49 U.S.C. 2601 et seq.), the Clean Air Act (42 U.S.C. 7401 et seq.), the
Federal Water Pollution Control Act (33 U.S.C. 1251 et seq.), the Safe Drinking
Water Act (42 U.S.C. 3007 et seq.), the Emergency Planning and Community
Right-to-Know Act (42 U.S.C. 11001 et seq.), the Occupational Safety and Health
Act (29 U.S.C. 641 et seq.), and the State of Arizona Environmental Quality Act
(A.R.S. 49-101 et seq.).

         "EQUITY PROCEEDS" means the cash proceeds (net of underwriting
discounts and commissions and other reasonable costs associated therewith) from
the issuance of any equity securities of the Company including, without
limitation, additional issuances of Company Common Stock.

         "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor statute.

         "ERISA AFFILIATE" means, as applied to the Company, (i) any corporation
which is, or was at any time, a member of a controlled group of corporations
within the meaning of Section 414(b) of the Internal Revenue Code of which the
Company is a member; (ii) any trade or business (whether or not incorporated)
which is a member of a group of trades or businesses under common control within
the meaning of Section 414(c) of the Internal Revenue Code of which the Company
is a member; and (iii) any member of an affiliated service group within the
meaning of Section 414(m) or (o) of the Internal Revenue Code of which the
Company, any corporation described in clause (i) above or any trade or business
described in clause (ii) above is a member.

         "EURODOLLAR RATE LOANS" means Loans bearing interest at rates
determined by reference to the Adjusted Eurodollar Rate as provided in
subsection 2.2A.

         "EVENT OF DAMAGE" with respect to any Borrowing Base Collateral (other
than Rotables) means any damage to such Borrowing Base Collateral the repair of
which is reasonably estimated by the Company to cost more than 50% of the Fair
Market Value of such Borrowing Base Collateral.

         "EVENT OF DEFAULT" means each of the events set forth in Section 7.

         "EVENT OF LOSS" with respect to any Borrowing Base Collateral (other
than Cash and Cash Equivalents) has the meaning given in the Security Agreement
to which such Borrowing Base Collateral is subject.

                                      -10-

         "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended
from time to time, and any successor statute.

         "FACILITIES" means any and all real property now, hereafter or
heretofore owned, leased, operated or used by the Company or any of its
Subsidiaries and any of their respective predecessors.

         "FAIR MARKET VALUE" for any Borrowing Base Collateral means the value
of such Borrowing Base Collateral, as determined by an Approved Appraiser in the
most recently delivered Approved Appraisal thereof, obtainable by a seller at
the time of determination in an arm's-length transaction between an informed and
willing seller under no compulsion to sell and an informed and willing
buyer-user (other than a lessee or other Person currently in possession and a
used equipment dealer or broker) under no compulsion to buy and based on the
then condition of such Borrowing Base Collateral.

         "FEDERAL AVIATION ADMINISTRATION" or "FAA" means the United States
Federal Aviation Administration or any successor thereto administering the
functions of the Federal Aviation Administration under the Act.

         "FEDERAL AVIATION REGULATIONS" means regulations issued by the FAA.

         "FEDERAL FUNDS EFFECTIVE RATE" means, for any period, a fluctuating
interest rate equal for each day during such period to the weighted average of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day on which is a Business Day, the average of the quotations for such day on
such transactions received by the Agent from three Federal funds brokers of
recognized standing selected by the Agent.

         "FISCAL YEAR" means with respect to the financial statements to be
delivered by the Company pursuant to subsection 5.1, the Company's fiscal year
referenced in such financial statements; provided, that the Company will not
change its Fiscal Year if such change will cause an unreasonable delay in the
production of the financial statements required by subsection 5.1(ii).

         "FUNDING AND PAYMENT OFFICE" means the office of the Agent located at
1251 Avenue of the Americas, New York, New York 10020.

         "GAAP" means, subject to the limitations on the application thereof set
forth in subsection 1.2, generally accepted accounting principles set forth in
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession. Financial statements and other information required to be delivered
by the Company to the Lenders pursuant to clauses (ii), (iii) and (xiii) of
subsection 5.1 shall be

                                      -11-

prepared in accordance with GAAP as in effect at the time of such preparation
(and delivered together with the reconciliation statements provided for in
subsection 5.1(v)).

         "GUARANTEE" means any obligation, contingent or otherwise, of any
Person directly or indirectly guaranteeing any Indebtedness or other obligation
of any other Person and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of such first Person
(i) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness or other obligation of such other Person (whether arising
by virtue of partnership arrangements, or by agreement to keep-well, to purchase
assets, goods, securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise) or (ii) entered into for purposes of assuring
in any other manner the obligee of such Indebtedness or other obligation of the
payment thereof or to protect such obligee against loss in respect thereof (in
whole or in part). The term "Guarantee" used as a verb has a corresponding
meaning.

         "GOVERNMENTAL AUTHORIZATION" means any permit, license, authorization,
plan, directive, consent order or consent decree of or from any federal, state
or local governmental authority, agency or court.

         "GOVERNMENT GUARANTEED LOAN" means the loan made to the Company
pursuant to the Air Carrier Guarantee Loan Documents, a portion of which is
guaranteed by the full faith and credit of the United States Government or an
agency thereof and the balance of which may be guaranteed by one or more other
third parties pursuant to the Air Carrier Guarantee Loan Documents.

         "GOVERNMENT GUARANTEED LOAN AGREEMENT" means the Loan Agreement, dated
as of January 18, 2002, among the Company, the lenders, the loan administrator
and agent party thereto and The Air Transportation Stabilization Board.

         "GOVERNMENT GUARANTEED LOAN TERM SHEET" means the term sheet provided
by the Company to the Agent and the Lenders, setting forth the material economic
and business terms and conditions of the Government Guaranteed Loan.

         "HAZARDOUS MATERIALS" means any chemical or other material or
substance, exposure to which or Release of is now or hereafter prohibited,
limited or regulated under any law.

         "HAZARDOUS MATERIALS ACTIVITY" means any past, current, proposed, or
threatened use, storage, release, generation, treatment, remediation or
transportation of any Hazardous Material (i) from, under, in, into or on the
Facilities or surrounding property; and (ii) caused by, or undertaken by or on
behalf of, the Company, any of its Subsidiaries or any of their respective
predecessors.

         "HOLDINGS" means America West Holdings Corporation.

         "INDEBTEDNESS" means, with respect to any Person at any date of
determination (without duplication), (i) all indebtedness of such Person for
borrowed money; (ii) all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments; (iii) all

                                      -12-

obligations of such Person in respect of letters of credit or other similar
instruments (including reimbursement obligations with respect thereto); (iv) all
obligations of such Person to pay the deferred and unpaid purchase price of
property or services, which purchase price is due more than six months after the
date of placing such property in service or taking delivery and title thereto or
the completion of such services, except Trade Payables; (v) all Capitalized
Lease obligations of such Person (the amount of the Indebtedness with respect to
Capitalized Lease obligations to be determined as provided in the definition of
Capitalized Lease in this subsection 1.1); (vi) all Indebtedness of other
Persons secured by a Lien on any asset of such Person, whether or not such
Indebtedness is assumed by such Person; provided that the amount of such
Indebtedness shall be the lesser of (A) the fair market value of such asset at
such date of determination and (B) the stated principal amount of such
Indebtedness; (vii) all Indebtedness of other Persons Guaranteed by such Person
to the extent such Indebtedness is Guaranteed by such Person; and (viii) to the
extent not otherwise included in this definition and to the extent treated as a
liability under GAAP, obligations under Currency Agreements, Interest Rate
Agreements and Commodity Agreements. The amount of Indebtedness of any Person at
any date shall be the outstanding balance at such date of all unconditional
obligations as described above and the maximum liability, upon the occurrence of
the contingency giving rise to the obligation, of any contingent obligations at
such date; provided that the amount outstanding at any time of any Indebtedness
issued with original issue discount is the face amount of such Indebtedness less
the remaining unamortized portion of the original issue discount of such
Indebtedness at such time as determined in conformity with GAAP.

         "INDEMNITEE" has the meaning assigned to that term in subsection 9.3.

         "INSURANCE PROCEEDS" has the meaning assigned to that term in
subsection 2.9B(iii)(c).

         "INTEREST PAYMENT DATE" means (i) with respect to any Base Rate Loan,
the last day of each month of each year, commencing on the first such date to
occur after the Closing Date, and (ii) with respect to any Eurodollar Rate Loan,
the last day of each Interest Period applicable to such Loan.

         "INTEREST PERIOD" has the meaning assigned to that term in subsection
2.2B.

         "INTEREST RATE AGREEMENT" means any interest rate future agreement,
interest rate option agreement, interest rate swap agreement, interest rate cap
agreement, interest rate collar agreement, interest rate hedge agreement or
other similar agreement or arrangement designed to protect the Company or any of
its Subsidiaries against fluctuations in interest rates or under which the
Company or any of its Subsidiaries is a party or a beneficiary on the date of
this Agreement or becomes a party or a beneficiary thereafter.

         "INTEREST RATE DETERMINATION DATE" means, with respect to any Interest
Period, the second Business Day prior to the first day of such Interest Period.

         "INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986, as
amended to the date hereof and from time to time hereafter.

                                      -13-

         "INVESTMENT" means with respect to any Person, any direct or indirect
advance, loan (other than advances to customers in the ordinary course of
business consistent with past practices that are recorded as accounts receivable
on the balance sheet of such Person or its Subsidiaries) or other extension of
credit or capital contribution by such Person to any other Person (by means of
any transfer of cash or other property to others or any payment for property or
services for the account or use of others; provided, that any transfer of
aircraft to a limited partnership or other entity in connection with the
transaction in which the aircraft are leased to the Company shall not be an
Investment), or any purchase or acquisition by such person of Capital Stock,
bonds, notes, debentures or other similar instruments issued by any other
Person; provided, that advances or loans by the Company to Holdings shall not
constitute an Investment.

         "JOINT VENTURE" means a joint venture, partnership or other similar
arrangement, whether in corporate, partnership or other legal form; provided
that in no event shall any corporate Subsidiary of any Person be considered to
be a Joint Venture to which such Person is a party.

         "LEASE INDENTURE" means the Indenture, dated as of January 18, 2002,
between Wilmington Trust Company, as Indenture Trustee, and Holdings.

         "LEASE INDENTURE TERM SHEET" means the term sheet provided by the
Company to the Agent and the Lenders, setting forth the material economic and
business terms and conditions of the Lease Indenture.

         "LENDER" and "LENDERS" means the persons identified as "Lenders" and
listed on the signature pages of this Agreement, together with their successors
and permitted assigns pursuant to subsection 9.1.

         "LIEN" means any lien, mortgage, pledge, assignment, security interest,
charge, hypothecation, preference, priority, privilege, lease or encumbrance of
any kind (including any conditional sale or other title retention agreement, any
lease in the nature thereof, and any agreement to give any security interest);
provided, that neither negative pledges nor covenants to abstain from granting
liens on or security interests in assets of the Company or any of its
Subsidiaries shall constitute Liens.

         "LOAN" or "LOANS" means the term loans made by each Lender to the
Company and evidenced by the Term Notes.

         "LOAN DOCUMENTS" means this Agreement, the Notes, the Environmental
Indemnity Agreement, the Security Agreements and any letter agreement between
the Company and the Agent establishing fees payable by the Company to the Agent
in connection with this Agreement.

         "MAINTENANCE FACILITY" means an aircraft maintenance facility, all
right, title and interest of the Company in and to the real property on which
the maintenance facility is located and the other improvements on such real
property, in each case that have been made subject to the Lien of the
Maintenance Facility Security Agreement.

                                      -14-

         "MAINTENANCE FACILITY SECURITY AGREEMENT" means the Leasehold Deed of
Trust, Security Agreement, Assignment of Rents, Financing Statement and Fixture
Filing, dated as of December 12, 1997, by the Company to First American Title
Insurance Company, as Trustee for the Agent, as such Maintenance Facility
Security Agreement may be amended, restated, supplemented or otherwise modified
from time to time in accordance with the terms hereof and thereof.

         "MARGIN STOCK" has the meaning assigned to that term in Regulation T, U
or X of the Board of Governors of the Federal Reserve System as in effect from
time to time.

         "MOODY'S" means Moody's Investors Service, Inc.

         "NET CASH PROCEEDS" means, with respect to any Asset Sale, the Cash
Proceeds of such Asset Sale, net of (i) brokerage commissions and other fees and
expenses (including fees and expenses of counsel and investment bankers) related
to such Asset Sale, (ii) provisions for all taxes payable as a result of such
Asset Sale without regard to the consolidated results of operations of the
Company and its Subsidiaries, take as a whole, (iii) payments made to repay
Indebtedness or any other obligation outstanding at the time of such Asset Sale
that either (A) is secured by a Lien on the property or assets sold or (B) is
required by its own terms to be paid as a result of such Asset Sale, and (iv)
appropriate amounts to be provided by the Company or any Subsidiary of the
Company as a reserve against any liabilities associated with such Asset Sale,
including, without limitation, pension and other post-employment benefit
liabilities, liabilities related to environmental matters and liabilities under
any indemnification obligations associated with such Asset Sale, all as
determined in conformity with GAAP.

         "NON-US LENDER" has the meaning assigned to that term in subsection
2.7B(iii)(a).

         "NOTES" means (i) the Term Notes of the Company issued pursuant to
subsection 2.1D, (ii) any Term Notes issued by the Company pursuant to the last
sentence of subsection 9.1B(i) in connection with assignments of the Loans of
any Lenders, in each case substantially in the form of Exhibit III annexed
hereto, as they may be amended, supplemented or otherwise modified from time to
time and (iii) the PIK Notes.

         "NOTICE OF CONVERSION/CONTINUATION" means a notice substantially in the
form of Exhibit II annexed hereto delivered by the Company to the Agent pursuant
to subsection 2.2D with respect to a proposed conversion or continuation of the
applicable basis for determining the interest rate with respect to the Loans
specified therein.

         "OBLIGATIONS" means all payment and performance obligations of every
nature of the Company from time to time owed to the Agent, the Lenders or any of
them under the Loan Documents, whether for principal, interest, fees, expenses,
indemnification or otherwise.

         "OFFICER'S CERTIFICATE" means, as applied to any corporation, a
certificate executed on behalf of such corporation by its chairman of the board
(if an officer), president, one of its vice presidents, chief financial officer,
controller, treasurer or assistant treasurer or an assistant secretary; provided
that every Officer's Certificate shall include (i) a statement that the

                                      -15-

officer acting in such capacity making or giving such Officer's Certificate has
read such condition and any definitions or other provisions contained in this
Agreement relating thereto, (ii) a statement that, in the opinion of the signer,
s/he has made or has caused to be made such examination or investigation as is
necessary to enable her/him to express an informed opinion as to whether or not
such condition has been complied with, and (iii) a statement as to whether, in
the opinion of the signer, such condition has been complied with.

         "OPERATING LEASE" means, as applied to any Person, any lease
(including, without limitation, leases that may be terminated by the lessee at
any time) of any property (whether real, personal or mixed) under which such
Person is Lessee, that is not a Capital Lease.

         "PARTS COLLATERAL" has the meaning given such term in the Spare Parts
Security Agreement.

         "PAYMENT RESTRICTION" means, with respect to a Subsidiary of any
Person, any encumbrance, restriction or limitation, whether by operation of the
terms of its charter or by reason of any agreement, instrument, judgment,
decree, order, statute, rule or governmental regulation, on the ability of (i)
such Subsidiary to (a) pay dividends or make other distributions on its Capital
Stock or make payments on any obligation, liability or Indebtedness owed to such
Person or any other Subsidiary of such Person, (b) make loans or advances to
such Person or any other Subsidiary of such Person, or (c) transfer any of its
property or assets to such Person or any other Subsidiary of such Person, or
(ii) such Person or any other Subsidiary of such Person to receive or retain any
such (a) dividend, distributions or payments, (b) loans or advances, or (c)
property or assets.

         "PERMITTED CASH EQUIVALENTS" means, at any date of determination, (i)
certificates of deposit or bankers' acceptances maturing within one year after
such date and issued or accepted by the Agent and (ii) subject to agreement of
the Agent and the Company to mutually satisfactory custodial arrangements, other
Cash Equivalents (except that commercial paper described in clause (b)(iii) of
the definition of Cash Equivalents shall have a rating of at least A-1 from S&P
or P-1 from Moody's).

         "PERMITTED ENCUMBRANCES" means the following types of Liens (other than
any such Lien imposed pursuant to Section 401(a)(29) or 412(n) of the Internal
Revenue Code or by ERISA) as applied to property not constituting Collateral:

                  (i) Liens for taxes, assessments or governmental charges or
         claims the payment of which is either (a) not delinquent for a period
         of more than 30 days or (b) subject to a good faith contest as set
         forth in subsection 5.3(A);

                  (ii) statutory Liens of landlords and Liens of carriers,
         vendors, warehousemen, repairmen, mechanics and materialmen and other
         Liens imposed by law incurred in the ordinary course of business for
         sums either (a) not delinquent for a period of more than 30 days or (b)
         being contested in faith by appropriate proceedings that do not involve
         imminent danger of the sale, forfeiture or loss of any Collateral, if
         such reserve or other appropriate provision, if any, as shall required
         by GAAP shall have been made therefor;

                                      -16-

                  (iii) Liens incurred or deposits made in the ordinary course
         of business in connection with workers' compensation, unemployment
         insurance and other types of social security, or to secure the
         performance of tenders, statutory obligations, surety and appeal bonds,
         bids, leases, government contracts, trade contracts, performance and
         return-of-money bonds, reimbursement obligations and chargeback rights
         of Persons performing services for the Company or any of its
         Subsidiaries and other similar obligations (exclusive of obligations
         for the payment of borrowed money);

                  (iv) easements, rights-of-way, restrictions, minor defects,
         encroachments or irregularities in title and other similar charges or
         encumbrances not interfering in any material respect with the ordinary
         conduct of the business of the Company or any of its Subsidiaries;

                  (v) Liens arising from filing effective Uniform Commercial
         Code financing statements relating solely to leases not prohibited by
         this Agreement;

                  (vi) Liens in favor of customs and revenue authorities arising
         as a matter of law to secure payment of customs duties in connection
         with the importation of goods;

                  (vii) Liens described in Schedule 6.2 annexed hereto;

                  (viii) Liens granted pursuant to the Security Agreements;

                  (ix) judgment and attachment Liens not giving rise to an Event
         of Default;

                  (x) Liens on the assets of any entity or asset existing at the
         time such entity is acquired by the Company or any Subsidiary, whether
         by merger, consolidation, purchase of assets or otherwise; provided
         that such Liens (i) are not created, incurred or assumed by such entity
         in contemplation of such entity's being acquired by the Company or any
         Subsidiary; (ii) do not extend to any other assets of the Company or
         any Subsidiary; and (iii) the Indebtedness secured by such Lien is
         permitted pursuant to this Agreement;

                  (xi) leases or subleases granted to others not interfering in
         any material respect with the business of the Company or any
         Subsidiary;

                  (xii) any interest or title of a lessor in property subject to
         any Capital Lease obligation or Operating Lease which, in each case, is
         not prohibited under this Agreement (disregarding for this purpose
         subsection 6.2);

                  (xiii) Liens in favor of collecting or payor banks having a
         right of setoff, revocation, refund or chargeback with respect to money
         or instruments of the Company or any Subsidiary on deposit with or in
         possession of such bank;

                  (xiv) any renewal of or substitution for any Lien permitted by
         any of the preceding clauses; provided that the debt secured is not
         increased nor the Lien extended to any additional assets; and

                                      -17-

                  (xv) Liens of creditors of any Person to whom any of the
         Company's assets are consigned for sale.

         "PERMITTED LIEN" with respect to any Collateral, has the meaning given
such term in the Security Agreement to which such Collateral is subject.

         "PERSON" means and includes natural persons, corporations, limited
partnerships, general partnerships, joint stock companies, limited liability
companies, Joint Ventures, associations, companies, trusts, banks, trust
companies, land trusts, business trusts or other organizations, whether or not
legal entities, and governments and agencies and political subdivisions thereof.

         "PIK NOTES" means the promissory notes of the Company in favor of each
Lender, in each case in substantially the form of Exhibit III-A hereto, with
appropriate insertions and deletions, as they may be amended, supplemented or
otherwise modified from time to time .

         "PLAN" means any "employee benefit plan" as defined in Section 3(3) of
ERISA which is, or was at any time, maintained or contributed to by the Company
or any of its ERISA Affiliates, other than a multiemployer plan, within the
meaning of Section 4001(a)(3) of ERISA.

         "POTENTIAL EVENT OF DEFAULT" means a condition or event that, after
notice or the passage of time or both, would constitute an Event of Default.

         "PRIME RATE" means the rate that The Industrial Bank of Japan, Limited,
announces from time to time as its prime lending rate at its New York City
office, as in effect from time to time. The Prime Rate is a reference rate and
does not necessarily represent the lowest or best rate actually charged to any
customer. The Industrial Bank of Japan, Limited or any Lender may make
commercial loans or other loans at rates of interest at, above or below the
Prime Rate.

         "PRINCIPAL PAYMENT DATE" means each of December 31, 2005, December 31,
2006 and the Termination Date.

         "PRO FORMA BASIS" means, with respect to compliance with any covenant
hereunder, compliance with such covenant after giving effect to any proposed
incurrence of Indebtedness by the Company or any of its Subsidiaries and the
application of the proceeds thereof, the acquisition (whether by purchase,
merger or otherwise) or disposition (whether by sale, merger or otherwise) of
any company, entity or business or any asset by the Company or any of its
Subsidiaries or any other related action which requires compliance on a Pro
Forma Basis. In making any determination of compliance on a Pro Forma Basis,
such determination shall be performed after good faith consultation with the
Agent using the consolidated financial statements of the Company and its
Subsidiaries which shall be reformulated as if any such incurrence of
Indebtedness and the application of proceeds, acquisition, disposition or other
related action had been consummated at the beginning of the period specified in
the covenant with respect to which Pro Forma Basis compliance is required.

         "PRO RATA SHARE" means, with respect to each Lender, the percentage
obtained by dividing the outstanding principal amount of the Loan of that Lender
by the aggregate

                                      -18-

outstanding principal amount of the Loans of all Lenders, as such percentage may
be adjusted by assignments permitted pursuant to subsection 9.1. The initial Pro
Rata Share of each Lender is set forth opposite the name of that Lender in
Schedule 2.4 annexed hereto.

         "PROCEEDINGS" has the meaning assigned to that term in subsection
5.1(x).

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

         "REDEEMABLE STOCK" means any class or series of Capital Stock of any
Person that by its terms or otherwise (i) is required to be redeemed prior to
the Termination Date, (ii) may be required to be redeemed at the option of the
holder of such class or series of Capital Stock at any time prior to the
Termination Date, or (iii) is convertible into or exchangeable for Capital Stock
referred to in clause (i) or (ii) above or Indebtedness having a scheduled
maturity prior to the Termination Date; provided that any Capital Stock that
would not constitute Redeemable Stock but for provisions thereof offering
holders thereof the right to require the Company to repurchase or redeem such
Capital Stock upon the occurrence of an "asset sale" occurring prior to the
Termination Date shall not constitute Redeemable Stock if the asset sale
provisions contained in such Capital Stock specifically provide that in respect
of any particular asset sale proceeds, the Company will not repurchase or redeem
any such Capital Stock pursuant to such provisions prior to the Company's
permanent repayment of the Loans and other Obligations of the Lenders by an
amount at least equal to such asset sale proceeds (net of associated taxes and
transaction costs).

         "REFERENCE LENDERS" means the Agent, Citicorp USA, Inc. and Bankers
Trust Company.

         "REFINANCING INDEBTEDNESS" means any Indebtedness of the Company or any
of its Subsidiaries issued in exchange for, or the net proceeds of which are
applied entirely to substantially concurrently repay, refinance, refund or
replace, outstanding Indebtedness of the Company or any of its Subsidiaries (the
"Refinanced Indebtedness"), to the extent such Refinancing Indebtedness:

                  (a) is issued in a principal amount (or if such Indebtedness
         is issued at an original issue discount, is issued at an original issue
         price) not exceeding the outstanding principal amount (or, if such
         Refinanced Indebtedness was issued at an original issue discount, not
         exceeding the outstanding accreted principal amount) of such Refinanced
         Indebtedness; and

                  (b) if the Refinanced Indebtedness is Indebtedness of the
         Company and ranks by contract, by its terms or otherwise junior in
         right of payment to the Obligations, (i) does not have a final
         scheduled maturity and is not subject to any principal payments,
         including but not limited to payments upon mandatory or optional
         redemption, prior to the dates of analogous payments under the
         Refinanced Indebtedness, and (ii) has subordination provisions
         effective to subordinate such Indebtedness to the Obligations at

                                      -19-

         least to the extent that such Refinanced Indebtedness is subordinated
         to the Obligations; and

                  (c) if the Refinanced Indebtedness is Indebtedness of the
         Company which is pari passu in right of payment with the Obligations,
         (i) is pari passu or subordinated in right of payment to the
         Obligations, (ii) does not have a final scheduled maturity and is not
         subject to any principal payments, including but not limited to,
         payments upon mandatory or optional redemption, prior to the final
         scheduled maturity date of the Refinanced Indebtedness, and (iii) is
         not secured by any Lien on any property of the Company or any
         Subsidiary in addition to Liens securing the Refinanced Indebtedness;
         and

                  (d) with respect to Refinancing Indebtedness that refinances
         the Government Guaranteed Loan or the debt issued pursuant to the Lease
         Indenture, such Refinancing Indebtedness shall not (i) shorten the
         final maturity date of such Refinanced Indebtedness, (ii) require the
         acceleration of the final scheduled maturity date or any principal
         payments, including but not limited to scheduled payments and mandatory
         prepayments, or increase the principal amount payable on any date
         (including, without limitation, pursuant to mandatory prepayments)
         prior to the dates of analogous payments under such Refinanced
         Indebtedness, (iii) provide for an interest rate applicable to such
         Refinancing Indebtedness, plus the interest rate equivalent of all fees
         and costs associated with closing and servicing such Refinancing
         Indebtedness higher than the greater of (x) (I) if such Refinancing
         Indebtedness bears interest at a floating rate of interest, 105% of the
         average remaining interest rate applicable to the Refinanced
         Indebtedness plus the average remaining fees and costs associated with
         servicing the Refinanced Indebtedness, or (II) if such Refinancing
         Indebtedness bears interest at a fixed rate of interest, the amount
         calculated as the sum of clause (I) above plus the appropriate
         fixed-for-floating swap rate for the Refinancing Indebtedness, and (y)
         105% of the average remaining "all in" interest expense for the
         Refinanced Indebtedness as contemplated in the Restructuring Plan.

         "REGISTER" has the meaning assigned to that term in subsection 2.1.E.

         "REGULATION D" means Regulation D of the Board of Governors of the
Federal Reserve System, as in effect from time to time.

         "RELEASE" means any release, spill, emission, leaking, pumping,
pouring, injection, escaping, deposit, disposal, discharge, dispersal, dumping,
leaching or migration of Hazardous Materials into the indoor or outdoor
environment (including, without limitation, the abandonment or disposal of any
barrels, containers or other closed receptacles containing any Hazardous
Materials), or into or out of any Facilities, including the movement of any
Hazardous Material through the air, soil, surface water, groundwater or
property.

         "REPAIRABLE DAMAGE" with respect to any Borrowing Base Collateral
(other than Rotables) means any damage to such Borrowing Base Collateral the
repair of which is reasonably estimated by the Company to cost 50% or less of
the Fair Market Value of such Borrowing Base Collateral.

                                      -20-

         "REQUISITE LENDERS" means at any time Lenders owed or holding a
majority in interest of the aggregate principal amount of the Loans of all
Lenders.

         "RESPONSIBLE OFFICER" means, with respect to the Company, its
controller, treasurer, president or any vice president.

         "RESTRICTED PAYMENT" means (i) any declaration or payment of dividends
on or making of any distributions in respect of the Capital Stock of the Company
(other than dividends or distributions payable solely in shares of Capital Stock
(other than Redeemable Stock) or in options, warrants, or other rights to
purchase Capital Stock (other than Redeemable Stock)) to holders of Capital
Stock of the Company, (ii) any purchase, redemption or other acquisition or
retirement for value (other than through the issuance solely of Capital Stock
(other than Redeemable Stock) or options, warrants or other rights to purchase
Capital Stock (other than Redeemable Stock)) of any Capital Stock or warrants,
rights (other than exchangeable or convertible Indebtedness of the Company not
prohibited under clause (iii) below) or options to acquire Capital Stock of the
Company; (iii) any redemption, repurchase, defeasance (including, but not
limited to, in substance or legal defeasance), or other acquisition or
retirement for value (other than through the issuance solely of Capital Stock
(other than Redeemable Stock) or warrants, rights or options to acquire Capital
Stock (other than Redeemable Stock)) (collectively, a "prepayment"), directly or
indirectly (including by way of amendment of the terms of any Indebtedness in
connection with any retirement or acquisition of such Indebtedness), other than
at any scheduled maturity thereof or by any scheduled repayment or scheduled
sinking fund payment or any mandatory prepayment, of any Indebtedness of the
Company (other than a repayment of Indebtedness relating to aircraft (including
aircraft engines installed thereon), spare aircraft engines, aircraft parts,
simulators, passenger loading bridges or other flight or ground support
equipment that is being repaid pursuant to a sale-leaseback transaction
permitted by Section 6.7 of this Agreement) which is subordinated in right of
payment to the Obligations or which matures after the Termination Date (except
out of the proceeds of Refinancing Indebtedness) and (iv) any advances or loans
by the Company to Holdings.

         "RESTRUCTURING PLAN" means the seven year plan of the Company, as
provided by the Company to the Agent and the Lenders.

         "ROTABLES" means Parts Collateral at Designated Locations.

         "S&P" means Standard & Poor's Ratings Group, a division of McGraw Hill,
Inc.

         "SECURITIES ACT" means the Securities Act of 1933, as amended from time
to time, and any successor statute.

         "SECURITY AGREEMENTS" means, collectively, the Aircraft Security
Agreements, Spare Engine Security Agreement, Cash and Cash Equivalent Security
Agreement, Maintenance Facility Security Agreement, Spare Parts Security
Agreement and the Receivables Security Agreement.

                                      -21-

         "SENIOR NOTES" means the Company's 10--3/4% Senior Unsecured Notes Due
September 1, 2005 issued pursuant to an Indenture, dated as of August 1995,
between the Company and American National Bank National Association, as trustee.

         "SIMULATORS" means each Eligible Simulator from time to time subject to
the Lien of the Spare Engine Security Agreement.

         "SOLVENT" means, with respect to any Person, that as of the date of
determination both (A) (i) the then fair saleable value of the property of such
Person is (y) greater than the total amount of liabilities (including contingent
liabilities) of such Person and (z) not less than the amount that will be
required to pay the probable liabilities on such Person's then existing debts as
they become absolute and matured considering all financing alternatives and
potential asset sales reasonably available to such Person; (ii) such Person's
capital is not unreasonably small in relation to its business or any
contemplated or undertaken transaction; and (iii) such Person does not intend to
incur, or believes that it will not incur, debts beyond its ability to pay such
debts as they become due; and (B) such Person is "solvent" within the meaning
given that term and similar terms under applicable laws relating to fraudulent
transfers and conveyances. For purposes of this definition, the amount of any
contingent liability at any time shall be computed as the amount that, in light
of all of the facts and circumstances existing at such time, represents the
amount that can reasonably be expected to become an actual or matured liability.

         "SPARE ENGINE" means each Eligible Spare Engine from time to time
subject to the Lien of the Spare Engine Security Agreement.

         "SPARE ENGINE SECURITY AGREEMENT" means the Spare Engine and Simulator
Security Agreement dated as of December 12, 1997, between the Company and the
Agent, as amended and supplemented as of the date hereof and as such Spare
Engine Security Agreement may be amended, restated, supplemented or otherwise
modified from time to time in accordance with the terms hereof and thereof.

         "SPARE PARTS SECURITY AGREEMENT" means the Spare Parts Security
Agreement dated as of December 12, 1997, between the Company and the Agent, as
amended and supplemented as of the date hereof and as such Spare Parts Security
Agreement may be amended, restated, supplemented or otherwise modified from time
to time in accordance with the terms hereof and thereof.

         "STAGE III AIRCRAFT" means each Eligible Stage III Aircraft that is an
Aircraft.

         "SUBSIDIARY" means, with respect to any Person, any corporation,
partnership, association, limited liability company, trust or estate, joint
venture or other business entity of which more than 50% of the issued and
outstanding shares of Voting Stock at the time of determination are owned or
controlled, directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof.

         "SYNDICATION AGENT" means Citicorp USA, Inc.

                                      -22-

         "TAX" or "TAXES" means any present or future tax, levy, impost, duty,
charge, fee, deduction or withholding of any nature and whatever called, by
whomsoever, on whomsoever and wherever imposed, levied, collected, withheld or
assessed; provided that "TAX ON THE OVERALL NET INCOME" of a Person shall be
construed as a reference to a tax imposed by the jurisdiction in which that
Person's principal office (and/or, in the case of a Lender, its lending office)
is located.

         "TERM NOTES" means the promissory notes of the Company in favor of each
Lender, in each case in substantially the form of Exhibit III hereto, with
appropriate insertions and deletions, as they may be amended, supplemented or
otherwise modified from time to time

         "TERMINATION DATE" means the earlier of December 31, 2007 and the date
of the acceleration of the Obligations pursuant to Section 7 hereof.

         "TRADE PAYABLES" means, with respect to any Person, any accounts
payable or any other indebtedness or monetary obligation to trade creditors
created, assumed or Guaranteed by such Person or any of its Subsidiaries and
arising in the ordinary course or business in connection with the acquisition of
goods or services.

         "UNITED STATES CITIZEN" has the meaning assigned to that term in
subsection 4.1B.

         "VOTING STOCK" means any class or classes of Capital Stock pursuant to
which the holders thereof have the general voting power under ordinary
circumstances to vote for the election of directors, managers or trustees of any
Person (or Persons performing similar functions) irrespective of whether or not
at the time stock of any class or classes will have or might have such voting
power by the reason of the happening of any contingency.

         "WHOLLY OWNED" denotes a Subsidiary all of the Voting Stock of which
(other than any director's qualifying shares or Investments by foreign nationals
mandated by applicable law) is owned directly or indirectly by the Company.

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

         Except as otherwise expressly provided in this Agreement, all
accounting terms not otherwise defined herein shall have the meanings assigned
to them in conformity with GAAP. Each reference to a consolidated balance sheet
or other financial statement of the Company shall, at any time or for any period
during which the Company has no Subsidiaries, be deemed to mean and refer to a
balance sheet or other financial statement of the Company alone.

1.3      OTHER DEFINITIONAL PROVISIONS.

         References to "Sections" and "subsections" shall be to Sections and
subsections, respectively, of this Agreement unless otherwise specifically
provided. Any of the terms defined in subsection 1.1 may, unless the context
otherwise requires, be used in the singular or the plural, depending on the
reference. All references to the "Term Loan Agreement", "Amended and

                                      -23-

Restated Credit Agreement" or any similar term of like meaning in any Loan
Document shall mean and refer to this Agreement, as amended, modified, waived or
restated from time to time.

                                      -24-

                                   SECTION 2.
                       AMOUNTS AND TERMS OF THE TERM LOAN

2.1      THE TERM LOAN; NOTES; REGISTER.

         A. THE TERM LOAN. Subject to the terms and conditions of this Agreement
and in reliance upon the representations and warranties of the Company herein
set forth, each Lender hereby agrees to maintain the Loans all as described in
this subsection 2.1A. Each Lender's Loan shall be deemed to have been advanced
under the Existing Credit Agreement, and the principal amount owed to each
Lender on the Closing Date under the Existing Credit Agreement shall be the
principal amount of the Loan owed to such Lender, which such amount is set forth
on Schedule 2.4 hereto. Amounts repaid or prepaid under this Agreement may not
be reborrowed.

         B. NOTES. On the Closing Date, the Company shall execute and deliver to
each Lender (or to the Agent on behalf of each Lender) Notes substantially in
the form of Exhibit III and Exhibit III-A annexed hereto to evidence that
Lender's Loans in the principal amount of the Loans attributable to such Lender
outstanding under the Existing Credit Agreement and with other appropriate
insertions and the Company's Obligations under the PIK Notes.

         C. THE REGISTER.

                  (i) The Agent shall maintain, at its address referred to in
         subsection 9.8, a register for the registration of the names and
         addresses of the Lenders and Loans and PIK Notes of each Lender from
         time to time (the "REGISTER"). The Register shall be available for
         inspection by the Company or any Lender at any reasonable time and from
         time to time upon reasonable prior notice.

                  (ii) The Agent shall record in the Register the Loans from
         time to time of each Lender and each repayment or prepayment in respect
         of the principal amount of the Loans and the PIK Notes. Any such
         recordation shall be conclusive and binding on the Company and each
         Lender, absent manifest error; provided that failure to make any such
         recordation, or any error in such recordation, shall not affect the
         Company's Obligations in respect of the applicable Loans and PIK Notes.

                  (iii) Each Lender shall record on its internal records
         (including, without limitation the applicable Notes held by such
         Lender) the amount of the Loans made by it, PIK Notes held by it and
         each payment or other reduction in respect thereof. Any such
         recordation shall be conclusive and binding on the Company, absent
         manifest error; provided that failure to make any such recordation, or
         any error in such recordation, shall not affect the Company's
         Obligations in respect of the applicable Loans and PIK Notes; and
         provided, further, that in the event of any inconsistency between the
         Register and any Lender's records, the recordations in the Register
         shall govern.

                  (iv) The Company, the Agent and the Lenders shall deem and
         treat the Persons listed as Lenders and holders of the PIK Notes in the
         Register as the holders and owners of the corresponding Loans and PIK
         Notes listed therein for all purposes hereof, and no

                                      -25-

         assignment or transfer of any such Loans or PIK Notes shall be
         effective, in each case unless and until an Assignment Agreement
         effecting the assignment or transfer thereof shall have been accepted
         by the Agent and recorded in the Register as provided in subsection
         9.1B(ii). Prior to such recordation, all amounts owed with respect to
         the applicable Loans and PIK Notes shall be owed to the Lender and
         holders of PIK Notes listed in the Register as the owner thereof, and
         any request, authority or consent of any Person who, at the time of
         making such request or giving such authority or consent, is listed in
         the Register as a Lender or holder of a PIK Note shall be conclusive
         and binding on any subsequent holder, assignee or transferee of the
         corresponding Loans and PIK Notes.

2.2      INTEREST ON THE LOANS.

         A. RATE OF INTEREST. Subject to the provisions of subsections 2.6 and
2.7, the Loans shall bear interest on the unpaid principal amount thereof from
the date made through maturity (whether by acceleration or otherwise) at a rate
determined by reference to the Base Rate or the Adjusted Eurodollar Rate, as the
case may be. The applicable basis for determining the rate of interest with
respect to the Loans shall be selected by the Company; provided, however, that
initially as of the Closing Date all of the Loans shall be Eurodollar Rate
Loans. The basis for determining the interest rate with respect to the Loans may
be changed from time to time pursuant to subsection 2.2D. If on any day a Loan
is outstanding with respect to which notice has not been delivered to the Agent
in accordance with the terms of this Agreement specifying the applicable basis
for determining the rate of interest, then for that day that Loan shall bear
interest determined by reference to the Base Rate.

         Subject to the provisions of subsection 2.2E and 2.7, the Loans shall
bear interest through maturity as follows:

                  (i) if a Base Rate Loan, then at a rate per annum equal to the
         sum of the Base Rate plus the Applicable Margin; or

                  (ii) if a Eurodollar Rate Loan, then at a rate per annum equal
         to the sum of the Adjusted Eurodollar Rate plus the Applicable Margin.

         B. INTEREST PERIODS. In connection with each Eurodollar Rate Loan, the
interest period (the "INTEREST PERIOD") to be applicable to such Loan, shall be
a one-month period; provided that:

                  (i) each Interest Period shall commence on the day on which
         the next preceding Interest Period expires, or on the date specified in
         the applicable Notice of Conversion/Continuation, in the case of a Loan
         converted to a Eurodollar Rate Loan, provided that the initial Interest
         Period shall commence on the Closing Date, and the Company shall pay
         any breakage amounts pursuant to Section 2.6D in connection with the
         termination of any Interest Period under the Existing Credit Agreement;

                                      -26-

                  (ii) if an Interest Period would otherwise expire on a day
         that is not a Business Day, such Interest Period shall expire on the
         next succeeding Business Day; provided that, if any Interest Period
         would otherwise expire on a day that is not a Business Day but is a day
         of the month after which no further Business Day occurs in such month,
         such Interest Period shall expire on the next preceding Business Day;

                  (iii) any Interest Period that begins on the last Business Day
         of a calendar month (or on a day for which there is no numerically
         corresponding day in the calendar month at the end of such Interest
         Period) shall, subject to clause (iv) of this subsection 2.2B, end on
         the last Business Day of a calendar month; and

                  (iv) no Interest Period shall extend beyond the scheduled
         Termination Date.

         C. INTEREST PAYMENTS. Subject to the provisions of subsection 2.2E,
interest on each Loan shall be payable in arrears on and to, but not including,
each Interest Payment Date applicable to that Loan, upon any prepayment of that
Loan (to the extent accrued on the amount being prepaid) and at maturity
(including final maturity).

         D. CONVERSION OR CONTINUATION. Subject to the provisions of subsection
2.6, the Company shall have the option (i) to convert at any time all (but not
less than all) of the outstanding Loans from Loans bearing interest at a rate
determined by reference to one basis to Loans bearing interest at a rate
determined by reference to an alternative basis or (ii) upon the expiration of
any Interest Period applicable to a Eurodollar Rate Loan, to continue all (but
not less than all) of the Loans as a Eurodollar Rate Loan. A Eurodollar Rate
Loan converted into a Base Rate Loan on any day other than the last day of an
Interest Period applicable thereto shall be subject to breakage fees in
accordance with Section 2.6D.

         The Company shall deliver a Notice of Conversion/Continuation to the
Agent no later than 12:00 noon (New York time) on the proposed conversion date
(in the case of a conversion to a Base Rate Loan) and at least three Business
Days in advance of the proposed conversion/continuation date (in the case of a
conversion to, or a continuation of, a Eurodollar Rate Loan). A Notice of
Conversion/Continuation shall specify (i) the proposed conversion/continuation
date (which shall be a Business Day), (ii) the amount and type of the Loan to be
converted/continued, (iii) the nature of the proposed conversion/continuation,
and (iv) in the case of a conversion to, or a continuation of, a Eurodollar Rate
Loan, that no Potential Event of Default or Event of Default has occurred and is
continuing.

         Neither the Agent nor any Lender shall incur any liability to the
Company in acting upon any notice referred to above that the Agent believes in
good faith to have been given by a duly authorized officer or other person
authorized to act on behalf of the Company or for otherwise acting in good faith
under this subsection 2.2D, and upon conversion or continuation of the
applicable basis for determining the interest rate with respect to any Loans in
accordance with this Agreement pursuant to any such notice the Company shall
have effected a conversion or continuation, as the case may be, hereunder.

                                      -27-

         Except as otherwise provided in subsections 2.6B, 2.6C and 2.6G, a
Notice of Conversion/Continuation for conversion to, or continuation of, a
Eurodollar Rate Loan shall be irrevocable on and after the related Interest Rate
Determination Date, and the Company shall be bound to effect a conversion or
continuation in accordance therewith.

         E. DEFAULT RATE. Any amounts not paid when due hereunder or under any
other Loan Document, including, but not limited to, outstanding principal of a
Loan or under a PIK Note and, to the extent permitted by applicable law, any
interest payments thereon and any fees and other amounts, shall thereafter bear
interest payable upon demand from the date when due until the date of payment at
a rate which is 2% per annum in excess of the interest rate otherwise payable
under this Agreement with respect to the applicable Loans or PIK Notes (or, in
the case of any such fees and other amounts, at a rate which is 2% per annum in
excess of the interest rate otherwise payable under this Agreement for Base Rate
Loans); provided that, in the case of Eurodollar Rate Loans, upon the expiration
of the Interest Period in effect at the time any such increase in interest rate
is effective such Eurodollar Rate Loans shall thereupon become Base Rate Loans
and shall thereafter bear interest payable upon demand at a rate which is 2% per
annum in excess of the interest rate otherwise payable under this Agreement for
Base Rate Loans. Payment or acceptance of the increased rates of interest
provided for in this subsection 2.2E is not a permitted alternative to timely
payment and shall not constitute a waiver of any Event of Default or otherwise
prejudice or limit any rights or remedies of the Agent or any Lender.

         F. COMPUTATION OF INTEREST. Interest on each Loan shall be computed on
the basis of a 360-day year, in each case for the actual number of days elapsed
in the period during which it accrues, unless such Loan is a Base Rate Loan with
a Base Rate based upon the Prime Rate, in which event interest shall be computed
on the basis of a year of 365 or 366 days, as the case may be, for the actual
number of days elapsed in the period during which it accrues. In computing
interest on any Loan, the date of the making of such Loan or the first day of an
Interest Period applicable to such Loan or, with respect to a Base Rate Loan
being converted from a Eurodollar Rate Loan, the date of conversion of such
Eurodollar Rate Loan to such Base Rate Loan, as the case may be, shall be
included, and the date of payment of such Loan or the expiration date of an
Interest Period applicable to such Loan or, with respect to a Base Rate Loan
being converted to a Eurodollar Rate Loan, the date of conversion of such Base
Rate Loan to such Eurodollar Rate Loan, as the case may be, shall be excluded
provided that if a Loan is repaid on the same day on which it is made, one day's
interest shall be paid on that Loan.

         G. PAYMENT IN KIND NOTES

         In addition to any other interest payable in respect of the Loans, the
Company shall pay interest in kind on the aggregate outstanding principal amount
of the Loans at a rate of two percent per annum (2%) from the Closing Date
through December 31, 2004. The payment of interest in kind shall be made by the
Company by executing and delivering PIK Notes to each Lender (or to the Agent on
behalf of the Lenders) on the Closing Date. The principal amount of each PIK
Note shall be set forth on the schedule thereto, which schedule shall be
conclusive absent manifest error. The Company shall pay interest in kind on the
PIK Notes on each Interest Payment Date at a rate equal to two percent per annum
(2%), which interest shall be compounded

                                      -28-

monthly and incorporated into the schedule to each PIK Note and shall be
conclusive absent manifest error.

         On December 31, 2004, the Company shall pay the outstanding principal
amount of the PIK Notes in the amount set forth on the schedule to each PIK
Note; provided, that, so long as no Potential Event of Default or Event of
Default shall then have occurred and be continuing, the Company may elect to add
up to the entire principal amount of each Lender's PIK Note as of December 31,
2004 (as shown on the schedule to such PIK Note) to the principal amount of such
Lender's Loan and the Company shall issue a new Term Note to such Lender
reflecting such additional principal.

2.3      FEES.

         The Company and the Agent shall enter into one or more letter
agreements establishing administrative fees payable by the Company to the Agent
for its administrative services hereunder which fees shall be for the account of
the Agent and not the Lenders.

2.4      PREPAYMENTS; GENERAL PROVISIONS REGARDING PAYMENTS

         A. REPAYMENT OF PRINCIPAL AMOUNT OF LOANS. On each Principal Payment
Date, the Company shall pay to the Agent for the account of the Lenders the
principal amount of thirty million Dollars ($30,000,000), or, in the case of the
Termination Date, the aggregate outstanding principal amount of all Loans,
together on each such date with all accrued and unpaid interest thereon and all
fees and other amounts payable by the Company under this Agreement; provided,
that the payment on the Termination Date shall be in amount sufficient to repay
in full the PIK Notes and all other Obligations of the Company (other than those
Obligations which are contingent Obligations not then due and payable, such as
contingent indemnities).

B.       PREPAYMENTS.

         (i) Voluntary Prepayments. The Company may, with respect to Eurodollar
Rate Loans, upon not less than three Business Days' prior written notice given
to the Agent by 12:00 noon (New York time) on the date so required and, with
respect to Base Rate Loans and the PIK Notes, upon prior written notice given to
the Agent by 12:00 noon (New York time) on the date of prepayment, at any time
and from time to time prepay, without premium or penalty (other than pursuant to
subsection 2.6D, if applicable), any Loans and PIK Notes on any Business Day in
whole or in part in an aggregate minimum amount of $3,000,000 and integral
multiples of $100,000 in excess of that amount; provided, however, that a
Eurodollar Rate Loan may only be prepaid prior to the expiration date of the
Interest Period applicable thereto upon compliance with subsection 2.6D. Notice
of prepayment having been given as aforesaid, the principal amount of the Loans
and/or PIK Notes specified in such notice shall become due and payable on the
prepayment date specified therein. Any such voluntary prepayment shall be
applied as specified in subsection 2.4B(iii).

         (ii) Mandatory Prepayments and Mandatory Reductions of Loans.

                                      -29-

(1)      Prepayments Due to Reductions in Borrowing Base.

(a) If at any time there exists a Borrowing Base Deficiency, the Company shall
prepay, without premium or penalty (other than pursuant to subsection 2.6D),
amounts outstanding under the Loans in a principal amount sufficient to
eliminate the Borrowing Base Deficiency, together with accrued and unpaid
interest thereon, provided, that, if no Potential Event of Default (other than a
Potential Event of Default due to such Borrowing Base Deficiency) or Event of
Default shall have then occurred and be continuing, pursuant to subsection
2.10B(ii)(2) the Company may pledge Eligible Assets having an aggregate
appraised Fair Market Value sufficient to eliminate the Borrowing Base
Deficiency. Such prepayment (and collateral arrangements, if any) shall be made
not later than three (3) Business Days following the delivery of (x) a regularly
scheduled Borrowing Base Certificate delivered pursuant to subsection 2.10D
showing a Borrowing Base Deficiency or (y) an updated Borrowing Base Certificate
delivered pursuant to subsection 2.4B(ii)(1)(b), 2.4B(ii)(1)(c) or 7.11 showing
a Borrowing Base Deficiency.

(b) In addition to any notice required by subsection 5.1(xii), if an event
occurs that could reasonably be expected to cause loss of or substantial damage
to Borrowing Base Collateral (excluding Rotables), the Company shall deliver to
the Agent a written notice within three (3) Business Days after a Responsible
Officer of the Company obtains actual knowledge of such event. Such notice shall
identify the specific item(s) of such Borrowing Base Collateral subject to such
event of loss or damage, describe the nature of the event of loss or damage and
include an estimate of whether such loss or damage can reasonably be expected to
exceed $1,000,000. As soon as it can reasonably determine whether such event is
an Event of Loss, Event of Damage or Repairable Damage with respect to the
affected Borrowing Base Collateral but in any event not later than 30 days after
the Company's notice with respect to such event, the Company shall deliver to
the Agent an updated Borrowing Base Certificate in which the Company shall
certify that such event is either an Event of Loss, Event of Damage or
Repairable Damage, with respect to the item(s) of affected Borrowing Base
Collateral. If the Company fails to deliver such updated Borrowing Base
Certificate by such date, it shall be deemed to have delivered an updated
Borrowing Base Certificate as provided in this subsection 2.4B(ii)(1)(b)
certifying that such event is an Event of Loss of the affected Borrowing Base
Collateral. Such updated Borrowing Base Certificate shall exclude from the
Borrowing Base any such Borrowing Base Collateral subject to an Event of Loss,
Event of Damage or Repairable Damage, provided, however, that (1) any such
Borrowing Base Collateral other than the Maintenance Facility that has suffered
Repairable Damage shall not be excluded if (A) such Repairable Damage is covered
by insurance which will pay proceeds in at least the amount of the repair costs
(net of any permitted self-insurance and deductibles) and the Agent is the loss
payee of such insurance pursuant to the terms of the relevant Security
Agreement, each as certified by the Company in the updated Borrowing Base
Certificate and (B) the Company elects to repair such Borrowing Base Collateral
as certified in the updated Borrowing Base Certificate and (2) Borrowing Base
Collateral comprising the Maintenance Facility that has suffered Repairable
Damage shall not be excluded and the Borrower shall repair the Maintenance
Facility unless (A) the cost of such repair is likely to exceed $1,000,000 as
reasonably estimated by the Company, as certified by the Company in such updated
Borrowing Base Certificate, or by the Agent (following consultation, in the case
of the Agent, with an Approved Appraiser) by notice delivered by the Agent to
the Company and (B) the Repairable Damage is not covered by insurance which will
pay proceeds to

                                      -30-

the Agent, as loss payee, in at least the amount of the repair costs (net of any
permitted self-insurance and deductibles), as certified by the Company in such
updated Borrowing Base Certificate. If such updated Borrowing Base Certificate
shows a Borrowing Base Deficiency, the Company shall make a prepayment (and/or
provide collateral) as provided in subsection 2.4B(ii)(1)(a).

(c) If an event occurs that could reasonably be expected to cause an Adjustment
Event (as reasonably determined by the Company), the Company shall deliver to
the Agent a written notice within three (3) Business Days after a Responsible
Officer of the Company obtains actual knowledge of such event. Such notice shall
identify the location and type (to the extent reasonably possible) of the
affected Rotables, describe the event of loss or damage and include an estimate
of whether such loss or damage can reasonably be expected to exceed $1,000,000.
As soon as it can reasonably determine whether such event is an Adjustment Event
but in any event not later than 30 days after the Company's notice of such
event, the Company shall deliver to the Agent an updated Borrowing Base
Certificate in which the Company shall certify whether or not such event is an
Adjustment Event. If the Company fails to deliver such updated Borrowing Base
Certificate by such date, it shall be deemed to have delivered an updated
Borrowing Base Certificate certifying that such event is an Adjustment Event of
the affected Rotables. If such updated Borrowing Base Certificate certifies that
an Adjustment Event has occurred, it shall exclude from the Borrowing Base the
book value of the Rotables subject to the Adjustment Event and shall specify the
amount of such book value excluded for purposes of calculating the Borrowing
Base Value of the Rotables. If such updated Borrowing Base Certificate certifies
that an Adjustment Event has not occurred, it shall make an appropriate
adjustment in the book value of the affected Rotables, as certified in such
Borrowing Base Certificate, to take into account the loss or damage to the
affected Rotables and shall specify the amount of such adjustment for purposes
of calculating the Borrowing Base Value of the Rotables. (For the avoidance of
doubt, the Company shall make or not make adjustments to the book value of
Rotables subject to events of loss or damage not covered by this subsection
2.4B(ii)(1)(c) in accordance with its normal accounting procedures as applied
without regard to the procedures established in this subsection). If such
updated Borrowing Base Certificate shows a Borrowing Base Deficiency, the
Company shall make a prepayment (and/or provide collateral) as provided in
subsection 2.4B(ii)(1)(a).

(d) If the Company elects to repair any Borrowing Base Collateral (other than
the Maintenance Facility) subject to Repairable Damage and so certifies in any
Borrowing Base Certificate or, in the case of the Maintenance Facility only, is
required to repair Repairable Damage to the Maintenance Facility, the Company
shall complete such repair as soon as reasonably practicable.

(e) In any Borrowing Base Certificate delivered as provided in Subsection
2.4B(ii)(1)(b) which requires the exclusion of any Borrowing Base Collateral
pursuant to the terms of such Subsection, the Company may also request the
release of the Lien of the Security Agreement to which such Borrowing Base
Collateral is subject and, provided that no Potential Event of Default or Event
of Default then exists, as certified by the Company in such Borrowing Base
Certificate, and any Borrowing Base Deficiency certified in such Borrowing Base
Certificate is timely paid and additional Collateral (if any) is provided as
required by subsection 2.4B(ii)(1)(a), the Agent shall release such Lien on such
Borrowing Base Collateral simultaneously with the satisfaction of

                                      -31-

the conditions contained in this subsection 2.4B(ii)(1)(e) and the second
sentence of subsection 2.10B(ii)(1) by executing and delivering such releases as
may be reasonably requested by the Company.

(2) Prepayments Due to Change of Control. Within five Business Days after the
occurrence of a Change of Control, the Company will notify the Agent of such
Change of Control (the giving of such notice not being a prerequisite to the
Agent's giving its notice as provided in this subsection 2.4B(ii)(2)). The Agent
shall, upon receipt of the notice from the Company required by the preceding
sentence, give the Company and the Lenders notice delivered not more than 30
(thirty) days following the occurrence of a Change of Control or, if later, not
more than 30 (thirty) days following delivery of the notice set forth in the
immediately preceding sentence, except as provided in the last sentence of this
subsection 2.4B(ii)(2), that the Company will be required to prepay all
Obligations on a date specified by the Agent in such notice (which shall be not
less than ten (10) days after the date of delivery of such notice). On the date
specified in such notice, except as provided in the last sentence of this
subsection 2.4B(ii)(2), the Company shall pay all outstanding principal and
interest on all Loans and the PIK Notes and all other fees and amounts payable
under any Loan Document. Notwithstanding the foregoing terms of this subsection
2.4B(ii)(2), by notice to the Company and the Agent within five Business Days
after receipt by a Lender of a notice by the Agent as provided in this clause,
such Lender may elect not to have its portion of the Obligations prepaid as
provided in this clause, in which case such portion shall not be prepaid and its
Pro Rata Share shall be adjusted in relationship to the other remaining
outstanding Obligations.

(3) Prepayments Due to Issuances of Indebtedness and Equity. All cash proceeds
received by Holdings or the Company or any of their respective Subsidiaries
(other than The Leisure Company) from any secured or unsecured Indebtedness for
borrowed money (other than purchase money Indebtedness permitted under Section
6.2A(ii)) incurred by Holdings or the Company or any of their respective
Subsidiaries (other than The Leisure Company) or from any Capital Stock (other
than in connection with the exercise of any options, warrants or other rights)
issued by Holdings or the Company or any of their respective Subsidiaries (other
than The Leisure Company), in either case received after the Closing Date (net
of usual and customary underwriting discounts, commissions and other transaction
costs and expenses) shall be paid directly to the Agent for the benefit of the
Lenders, to be applied pursuant to subsection 2.4B(iii), provided, however, that
the Company shall not be obligated to pay such proceeds to the Agent if and to
the extent that (i) the Company is then required pursuant to the Air Carrier
Guarantee Loan Documents to pay such amounts to repay the Government Guaranteed
Loan, or (ii) the Company is prohibited from so repaying the Obligations under
the terms of the Senior Notes and the Company applies such proceeds to repay the
Senior Notes, or (iii) such proceeds of Indebtedness are applied to refinance
assets described in subsection 6.2A(ii) that were acquired by the Company for
cash and not Indebtedness (for the avoidance of doubt, only to the extent of the
Company's cash investment in such assets), or (iv) such proceeds of Indebtedness
relate to the financing of the Company's training facility located in Phoenix,
Arizona existing on the date hereof.

         (iii) Application of Prepayments.

                                      -32-

(a) Application of Voluntary Prepayments. Any voluntary prepayments pursuant to
subsection 2.4B(i) shall be applied ratably first among the Term Notes until
paid in full and second among the PIK Notes.

(b) Application of Mandatory Prepayments of Loans. Any mandatory prepayments of
the Loans pursuant to subsection 2.4B(ii) shall be applied ratably among the
Lenders according to their Pro Rata Share, in inverse order of maturity, first
to the Term Notes until paid in full and second among the PIK Notes.

         C. GENERAL PROVISIONS REGARDING PAYMENTS.

         (i) Manner and Time of Payment. All payments by the Company of
principal, interest, fees and other Obligations hereunder and under the Notes
shall be made in Dollars in same day funds, without defense, set-off or
counterclaim, free of any restriction or condition, and delivered to the Agent
not later than 2:00 p.m. (New York time) on the date due at the Funding and
Payment Office for the account of Lenders; funds received by the Agent after
that time on such due date shall be deemed to have been paid by the Company on
the next succeeding Business Day.

         (ii) Application of Payments to Principal and Interest. All payments in
respect of the principal amount of any Loan or Note shall include payment of
accrued interest on the principal amount being repaid or prepaid, and all such
payments shall be applied to the payment of interest before application to
principal.

         (iii) Apportionment of Payments. Except as otherwise provided in
subsection 2.4B(ii)(2), aggregate principal and interest payments in respect of
the Loans and Notes shall be apportioned in each case proportionately to each
Lender's respective Pro Rata Share. The Agent shall promptly distribute to each
Lender, at its primary address set forth below its name on the appropriate
signature page hereof or at such other address as such Lender may request, its
Pro Rata Share of all such payments received by the Agent. Notwithstanding the
foregoing provisions of this subsection 2.4C(iii), if, pursuant to the
provisions of subsection 2.6C, any Notice of Conversion/Continuation is
withdrawn as to any Affected Lender or if any Affected Lender makes Base Rate
Loans in lieu of its Pro Rata Share of any Eurodollar Rate Loans, the Agent
shall give effect thereto in apportioning payments received thereafter.

         (iv) Payments on Business Days. Whenever any payment to be made
hereunder shall be stated to be due on a day that is not a Business Day, such
payment shall be made on the next succeeding Business Day and such extension of
time shall be included in the computation of the payment of interest hereunder.

         (v) Notation of Payment. Each Lender agrees that before disposing of
any Note held by it, or any part thereof (other than by granting participations
therein), that Lender will make a notation thereon of the Loan evidenced by that
Note and all principal payments previously made thereon and of the date to which
interest thereon has been paid; provided that the failure to make (or any error
in the making of) a notation made under such Note shall not

                                      -33-

limit or otherwise affect the Obligations of the Company hereunder or under such
Note with respect to the Loan or any payments of principal or interest on such
Note.

2.5      USE OF PROCEEDS.

         A. GENERAL CORPORATE PURPOSES. The proceeds of the Loan shall be used
by the Company for its general corporate purposes.

         B. MARGIN REGULATIONS. No portion of the proceeds of any borrowing
under this Agreement shall be used by the Company or any of its Subsidiaries in
any manner that might cause the borrowing or the application of such proceeds to
violate Regulation U, Regulation T or Regulation X of the Board of Governors of
the Federal Reserve System or any other regulation of such Board or to violate
Section 7(c) of the Exchange Act, in each case as in effect on the date or dates
of such borrowing and such use of proceeds.

2.6      SPECIAL PROVISIONS GOVERNING EURODOLLAR RATE LOANS.

         Notwithstanding any other provision of this Agreement to the contrary,
the following provisions shall govern with respect to Eurodollar Rate Loans as
to the matters covered:

         A. DETERMINATION OF APPLICABLE INTEREST RATE. As soon as practicable
after 1:00 p.m. (New York time) on each Interest Rate Determination Date, the
Agent shall determine (which determination shall, absent manifest error, be
final, conclusive and binding upon all parties) the interest rate that shall
apply to the Eurodollar Rate Loans for which an interest rate is then being
determined for the applicable Interest Period and shall promptly give notice
thereof (in writing or by telephone confirmed in writing) to the Company and
each Lender.

         B. INABILITY TO DETERMINE APPLICABLE INTEREST RATE. In the event that
the Agent shall have determined (which determination shall be final and
conclusive and binding upon all parties hereto), on any Interest Rate
Determination Date with respect to any Eurodollar Rate Loans, that by reason of
circumstances affecting the interbank Eurodollar market adequate and fair means
do not exist for ascertaining the interest rate applicable to such Loans on the
basis provided for in the definition of Adjusted Eurodollar Rate, the Agent
shall on such date give notice by telefacsimile to the Company and each Lender
of such determination, whereupon (i) no Loans may be converted to, Eurodollar
Rate Loans until such time as the Agent notifies the Company and Lenders that
the circumstances giving rise to such notice no longer exist and (ii) any Notice
of Conversion/Continuation given by the Company with respect to the Loans in
respect of which such determination was made shall be deemed to be rescinded by
the Company.

         C. ILLEGALITY OR IMPRACTICABILITY OF EURODOLLAR RATE LOANS. In the
event that on any date any Lender shall have determined (which determination
shall be final and conclusive and binding upon all parties hereto but shall be
made only after consultation with the Company and the Agent) that the making,
maintaining or continuation of its Eurodollar Rate Loans (i) has become unlawful
as a result of compliance by such Lender in good faith with any law, treaty,
governmental rule, regulation, guideline or order (or would conflict with any
such treaty, governmental rule, regulation, guideline or order enacted, entered
into or

                                      -34-

promulgated after the date of this Agreement not having the force of law even
though the failure to comply therewith would not be unlawful) or (ii) has become
impracticable, or would cause such Lender material hardship, as a result of
contingencies occurring after the date of this Agreement which materially and
adversely affect the interbank Eurodollar market or the position of such Lender
in that market, then, and in any such event, such Lender shall be an "AFFECTED
LENDER" and it shall on that day give notice (by telefacsimile) to the Company
and the Agent of such determination (which notice the Agent shall promptly
transmit to each other Lender). Thereafter (a) the obligation of the Affected
Lender to convert Loans to Eurodollar Rate Loans shall be suspended until such
notice shall be withdrawn by the Affected Lender, (b) to the extent such
determination by the Affected Lender relates to a Eurodollar Rate Loan then
being requested by the Company pursuant to a Notice of Conversion/Continuation,
the Affected Lender shall convert such Loan to a Base Rate Loan, (c) the
Affected Lender's obligation to maintain its outstanding Eurodollar Rate Loans
(the "AFFECTED LOANS") shall be terminated at the earlier to occur of the
expiration of the Interest Period then in effect with respect to the Affected
Loans or when required by law, and (d) the Affected Loans shall automatically
convert into Base Rate Loans on the date of such termination. Notwithstanding
the foregoing, to the extent a determination by an Affected Lender as described
above relates to a Eurodollar Rate Loan then being requested by the Company
pursuant to a Notice of Conversion/Continuation, the Company shall have the
option, subject to the provisions of subsection 2.6D, to rescind such Notice of
Conversion/Continuation as to all Lenders by giving notice (by telefacsimile) to
the Agent of such rescission on the date on which the Affected Lender gives
notice of its determination as described above (which notice of rescission the
Agent shall promptly transmit to each other Lender). Except as provided in the
immediately preceding sentence, nothing in this subsection 2.6C shall affect the
obligation of any Lender other than an Affected Lender to maintain Loans as, or
to convert Loans to, Eurodollar Rate Loans in accordance with the terms of this
Agreement.

         In the event any Affected Lender shall give a notice to the Company
pursuant to this subsection 2.6C, the Company may give notice to such Lender
(with copies to the Agent) that it wishes to seek one or more Eligible Assignees
to purchase its outstanding Loans, Obligations and Notes. Each Lender giving a
notice to the Company pursuant to this subsection 2.6C agrees to sell its Loans,
Obligations, Notes and interest in this Agreement and the other Loan Documents
pursuant to subsection 9.1B to any such Eligible Assignee for an amount equal to
the sum of the outstanding unpaid principal of and accrued interest on such
Loans, Obligations and Notes plus all other fees and amounts due such Lender
hereunder calculated, in each case, to the date such Loans, Obligations, Notes
and interest are purchased, whereupon such Lender shall have no further rights
or obligations hereunder.

         D. COMPENSATION FOR BREAKAGE OR NON-COMMENCEMENT OF INTEREST PERIODS.
The Company shall compensate each Lender, upon written request by that Lender
(which request shall set forth the basis for requesting such amounts), for all
reasonable losses, expenses and liabilities (including, without limitation, any
interest paid by that Lender to lenders of funds borrowed by it to carry its
Eurodollar Rate Loans and any loss, expense or liability sustained by that
Lender in connection with the liquidation or re-employment of such funds) which
that Lender may sustain: (i) if for any reason (other than a default by that
Lender) a conversion to or continuation of any Eurodollar Rate Loan does not
occur on a date

                                      -35-

specified therefor in a Notice of Conversion/Continuation, (ii) if any
prepayment or other principal payment or any conversion of any of its Eurodollar
Rate Loans occurs on a date prior to the last day of an Interest Period
applicable to that Loan, (iii) if any prepayment of any of its Eurodollar Rate
Loans is not made on any date specified in a notice of prepayment given by the
Company, or (iv) as a consequence of any other default by the Company in the
repayment of its Eurodollar Rate Loans when required by the terms of this
Agreement.

         E. BOOKING OF EURODOLLAR RATE LOANS. Any Lender may carry or transfer
Eurodollar Rate Loans at, to, or for the account of any of its branch offices or
the office of an Affiliate of that Lender; provided that such action does not
increase the Company's liability under subsection 2.7.

         F. ASSUMPTIONS CONCERNING FUNDING OF EURODOLLAR RATE LOANS. Calculation
of all amounts payable to a Lender under this subsection 2.6 and under
subsection 2.7A shall be made as though that Lender had actually funded each of
its relevant Eurodollar Rate Loans through the purchase of a Eurodollar deposit
bearing interest at the rate obtained pursuant to clause (i) of the definition
of Adjusted Eurodollar Rate in an amount equal to the amount of such Eurodollar
Rate Loan and having a maturity comparable to the relevant Interest Period and
through the transfer of such Eurodollar deposit from an offshore office of that
Lender to a domestic office of that Lender in the United States of America;
provided, however, that each Lender may fund each of its Eurodollar Rate Loans
in any manner it sees fit and the foregoing assumptions shall be utilized only
for the purposes of calculating amounts payable under this subsection 2.6 and
under subsection 2.7A.

         G. EURODOLLAR RATE LOANS AFTER DEFAULT. After the occurrence of and
during the continuation of a Potential Event of Default or an Event of Default,
(i) the Company may not elect to have the Loans be maintained as, or converted
to, a Eurodollar Rate Loan after the expiration of any Interest Period then in
effect for that Loan and (ii) subject to the provisions of subsection 2.6D, any
Notice of Conversion/Continuation given by the Company with respect to a
requested conversion/continuation that has not yet occurred shall be deemed to
be rescinded by the Company.

2.7      INCREASED COSTS; TAXES; CAPITAL ADEQUACY.

         A. COMPENSATION FOR INCREASED COSTS AND TAXES. Subject to the
provisions of subsection 2.7B, in the event that any Lender shall determine
(which determination shall, absent manifest error, be final and conclusive and
binding upon all parties hereto) that any law, treaty or governmental rule,
regulation or order, or any change therein or in the interpretation,
administration or application thereof (including the introduction of any new
law, treaty or governmental rule, regulation or order), or any determination of
a court or governmental authority, in each case that becomes effective after the
date hereof, or compliance by such Lender with any guideline, request or
directive issued or made after the date hereof by any central bank or other
governmental or quasi-governmental authority (whether or not having the force of
law):

         (i) subjects such Lender (or its applicable lending office) to any
additional Tax (other than any Tax on the overall net income of such Lender)
with respect to this

                                      -36-

Agreement or any of its obligations hereunder or any payments to such Lender (or
its applicable lending office) of principal, interest, fees or any other amount
payable hereunder;

         (ii) imposes, modifies or holds applicable any reserve (including
without limitation any marginal, emergency, supplemental, special or other
reserve), special deposit, compulsory loan, FDIC insurance or similar
requirement against assets held by, or deposits or other liabilities in or for
the account of, or advances or loans by, or other credit extended by, or any
other acquisition of funds by, any office of such Lender (other than any such
reserve or other requirements with respect to Eurodollar Rate Loans that are
reflected in the definition of Adjusted Eurodollar Rate); or

         (iii) imposes any other condition (other than with respect to a Tax
matter) on or affecting such Lender (or its applicable lending office) or its
obligations hereunder or the interbank Eurodollar market;

and the result of any of the foregoing is to increase the cost to such Lender of
maintaining Loans or Notes hereunder or to reduce any amount received or
receivable by such Lender (or its applicable lending office) with respect
thereto; then, in any such case, the Company shall promptly pay to such Lender,
upon receipt of the statement referred to in the next sentence, such additional
amount or amounts (in the form of an increased rate of, or a different method of
calculating, interest or otherwise as such Lender in its sole discretion shall
determine) as may be necessary to compensate such Lender for any such increased
cost or reduction in amounts received or receivable hereunder. Such Lender shall
deliver to the Company (with a copy to the Agent) a written statement, setting
forth in reasonable detail the basis for calculating the additional amounts owed
to such Lender under this subsection 2.7A, which statement shall be conclusive
and binding upon all parties hereto absent manifest error.

         B. WITHHOLDING OF TAXES.

         (i) Payments to Be Free and Clear. All sums payable by the Company
under this Agreement and the other Loan Documents shall be paid free and clear
of and (except to the extent required by law) without any deduction or
withholding on account of any Tax imposed, levied, collected, withheld or
assessed by any governmental authority, domestic or foreign.

         (ii) Grossing-up of Payments. If the Company or any other Person is
required by law to make any deduction or withholding on account of any Tax from
any sum paid or payable by the Company to the Agent or any Lender under any of
the Loan Documents:

                  (a) the Company shall notify the Agent or such Lender of any
         such requirement or any change in any such requirement as soon as the
         Company becomes aware of it;

                  (b) the Company shall remit any such Tax before the date on
         which penalties attach thereto, such remittance to be made (if the
         liability is imposed on the Company) for its own account or (if that
         liability is imposed on the Agent or such Lender, as the case may be)
         on behalf of and in the name of the Agent or such Lender;

                                      -37-

                  (c) the sum payable by the Company in respect of which the
         relevant deduction, withholding or payment is required shall be
         increased to the extent necessary to ensure that, after the making of
         that deduction, withholding or payment, the Agent or such Lender, as
         the case may be, receives on the due date a net sum equal to what it
         would have received had no such deduction, withholding or payment been
         required or made; and

                  (d) within 30 days after paying any sum from which it is
         required by law to make any deduction or withholding, and within 30
         days after the due date of remittance of any Tax which it is required
         by clause (b) above to remit, the Company shall deliver to the Agent
         evidence satisfactory to the other affected parties of such deduction,
         withholding or payment and of the remittance thereof to the relevant
         taxing or other authority.

(iii)    Evidence of Exemption from U.S. Withholding Tax.

         (a) Each Lender that is organized under the laws of any jurisdiction
other than the United States or any state or other political subdivision thereof
(for purposes of this subsection 2.7B(iii), a "NON-US LENDER") shall deliver to
the Agent for transmission to the Company, on or prior to the Closing Date (in
the case of each Lender listed on the signature pages hereof) or on the date of
the Assignment Agreement pursuant to which it becomes a Lender (in the case of
each other Lender), and at such other times as may be necessary in the
determination of the Company or the Agent (each in the reasonable exercise of
its discretion), two original copies of Internal Revenue Service Form W-8BEN or
W-8ECI (or any successor forms), properly completed and duly executed by such
Lender, or any other form, certificate or statement of exemption required under
the Internal Revenue Code or the regulations issued thereunder to establish that
such Lender is not subject to deduction or withholding of United States federal
income tax with respect to any payments to such Lender of principal, interest,
fees or other amounts payable under any of the Loan Documents.

         (b) Each Lender required to deliver any forms, certificates or other
evidence with respect to United States federal income tax withholding matters
pursuant to subsection 2.7B(iii)(a) hereby agrees that, from time to time after
the initial delivery by such Lender of such forms, certificates or other
evidence, whenever a lapse in time or change in circumstances renders such
forms, certificates or other evidence obsolete or inaccurate in any material
respect, such Lender shall (l) deliver to the Agent for transmission to the
Company two new original copies of Internal Revenue Service Form W-8BEN or
W-8ECI, properly completed and duly executed by such Lender, or any other form,
certificate or statement of exemption required in order to confirm or establish
that such Lender is not subject to deduction or withholding of United States
federal income tax with respect to payments to such Lender under the Loan
Documents or (2) immediately notify the Agent and the Company of its inability
to deliver any such forms, certificates or other evidence.

                                      -38-

                  (c) The Company shall not be required to pay any additional
         amount to any Non-US lender under clause (c) of subsection 2.7B(ii) if
         such Lender shall have failed to satisfy the requirements of subsection
         2.7B(iii)(a); provided that if such Lender shall have satisfied such
         requirements on the Closing Date (in the case of each Lender listed on
         the signature pages hereof) or on the date of the Assignment Agreement
         pursuant to which it became a Lender (in the case of each other
         Lender), nothing in this subsection 2.7B(iii)(c) shall relieve the
         Company of its obligation to pay any additional amounts pursuant to
         clause (c) of subsection 2.7B(ii) in the event that, as a result of any
         change in any applicable law, treaty or governmental rule, regulation
         or order, or any change in the interpretation, administration or
         application thereof, such Lender is no longer properly entitled to
         deliver forms, certificates or other evidence at a subsequent date
         establishing the fact that such Lender is not subject to withholding as
         described in subsection 2.7B(iii)(a).

         C. CAPITAL ADEQUACY ADJUSTMENT. If any Lender shall have determined
that the adoption, effectiveness, phase-in or applicability after the date
hereof of any law, rule or regulation (or any provision thereof) regarding
capital adequacy, or any change therein or in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by any Lender (or its applicable lending office) with any guideline, request or
directive regarding capital adequacy (whether or not having the force of law) of
any such governmental authority, central bank or comparable agency, has or would
have the effect of reducing the rate of return on the capital of such Lender or
any corporation controlling such Lender as a consequence of, or with reference
to, such Lender's Loans or Notes or other obligations hereunder to a level below
that which such Lender or such controlling corporation could have achieved but
for such adoption, effectiveness, phase-in, applicability, change or compliance
(taking into consideration the policies of such Lender or such controlling
corporation with regard to capital adequacy), then from time to time, within
five Business Days after receipt by the Company from such Lender of the
statement referred to in the next sentence, the Company shall pay to such Lender
such additional amount or amounts as will compensate such Lender or such
controlling corporation on an after-tax basis for such reduction. Such Lender
shall deliver to the Company (with a copy to the Agent) a written statement,
setting forth in reasonable detail the basis of the calculation of such
additional amounts, which statement shall be conclusive and binding upon all
parties hereto absent manifest error.

         D. SUBSTITUTE LENDERS. In the event the Company is required under the
provisions of this subsection 2.7 to make payments in a material amount to any
Lender, the Company may, so long as no Event of Default or Potential Event of
Default shall have occurred and be continuing, elect to terminate such Lender as
a party to this Agreement; provided that, concurrently with such termination,
(i) the Company shall pay that Lender all principal, interest and fees and other
amounts (including without limitation, amounts, if any, owed under this
subsection 2.7) owed to such Lender through such date of termination, and (ii)
all documents and supporting materials necessary, in the judgment of the Agent
(or if the Agent is also the Lender to be terminated, the successor Agent) to
evidence the termination and/or substitution of such Lender (if applicable)
shall have been received and approved by the Agent as of such date.

                                      -39-




2.8 OBLIGATION OF LENDERS TO MITIGATE.

         Each Lender agrees that, as promptly as practicable after the officer
of such Lender responsible for administering the Loans of such Lender becomes
aware of the occurrence of an event or the existence of a condition that would
cause such Lender to become an Affected Lender or that would entitle such Lender
to receive payments under subsection 2.7, it will, to the extent not
inconsistent with the internal policies of such Lender and any applicable legal
or regulatory restrictions, use reasonable efforts (i) to maintain the Loans of
such Lender or the affected Loans of such Lender through another lending office
of such Lender, or (ii) take such other measures as such Lender may deem
reasonable, if as a result thereof the circumstances which would cause such
Lender to be an Affected Lender would cease to exist or the additional amounts
which would otherwise be required to be paid to such Lender pursuant to
subsection 2.7 would be materially reduced and if, as determined by such Lender
in its sole discretion, the maintaining of such Loans through such other lending
office or in accordance with such other measures, as the case may be, would not
otherwise materially adversely affect such Loans or the interests of such
Lender; provided that such Lender will not be obligated to utilize such other
lending office pursuant to this subsection 2.8 unless the Company agrees to pay
all incremental expenses incurred by such Lender as a result of utilizing such
other lending office as described in clause (i) above. A certificate as to the
amount of any such expenses payable by the Company pursuant to this subsection
2.8 (setting forth in reasonable detail the basis for requesting such amount)
submitted by such Lender to the Company (with a copy to the Agent) shall be
conclusive absent manifest error.

2.9 [INTENTIONALLY OMITTED].

2.10 BORROWING BASE.

         A. BORROWING BASE. The Borrowing Base shall be calculated based upon
the Eligible Assets that from time to time are subject to the Liens of the
Security Agreements and constitute Borrowing Base Collateral. The Borrowing Base
shall exclude any Borrowing Base Collateral that has suffered loss or damage and
is required to be excluded by subsection 2.4B(ii)(1). In addition, if the
portion of the Borrowing Base attributable to the Rotables exceeds thirty five
percent, rounded to the nearest whole percent (35%), of all Borrowing Base as
determined in any calculation of the Borrowing Base contained in a Borrowing
Base Certificate, such excess amount shall be excluded from the calculation of
the Borrowing Base for such period.

B. COLLATERAL.

         (i) Eligible Assets. The Eligible Assets may from time to time include
the property of the types listed on Schedule 2.10 hereto, which schedule shall
include, without limitation, (a) Cash and Permitted Cash Equivalents from time
to time in the Cash Collateral Account, (b) Eligible Stage III Aircraft, (c) the
Maintenance Facility, (d) Eligible Simulators, (e) Eligible Spare Engines and
(f) Rotables (collectively, the Collateral identified in clauses (a) through (f)
and on Schedule 2.10, the "ELIGIBLE ASSETS"). Initially the Borrowing Base
Collateral shall include the Maintenance Facility, the Stage III Aircraft and
the Spare Engines


                                      -40-

specified in Schedule 2.10A hereto and the Rotables and the Company shall cause
all such Collateral to be subject to the Liens of Security Agreements on the
Closing Date. Thereafter, subject to subsection 2.10B(ii), the Borrowing Base
Collateral may include the Maintenance Facility, Simulators, Spare Engines,
Rotables and other Eligible Assets which the Company elects from time to time to
make subject to the Liens of Security Agreements, provided, however, that no
Eligible Assets shall be included in the calculation of the Borrowing Base
unless the Lien of a Security Agreement has been perfected in such Collateral
and such Collateral constitutes Borrowing Base Collateral.

         (ii) Release and Addition of Eligible Assets.

                  (1) Release. Except under the circumstances set forth in the
next sentence of this subsection 2.10B(ii)(1), the Agent shall not release the
Liens of the Security Agreements on any Borrowing Base Collateral until payment
in full of all outstanding Loans and all other amounts owed to the Lenders and
the Agent under the Notes and other Loan Documents. Notwithstanding anything in
this subsection 2.10B(ii)(1) to the contrary, the Agent acknowledges that (I)
the Lien of the Spare Parts Security Agreement will be released from the Parts
Collateral in accordance with the terms thereof (including, but not limited to,
the sale in the ordinary course of the Company's business of not more than
$5,000,000 of Parts Collateral in any six month period), and (II) (x) the
Maintenance Facility may be released from the Lien of the Maintenance Facility
Security Agreement if an Event of Loss or an Event of Damage has occurred with
respect to the Maintenance Facility and (y) any Borrowing Base Collateral that
the Company requests to be released pursuant to and in compliance with
subsection 2.4B(ii)(1)(e) may be so released, in each case provided that the
Company complies with the following requirements: (i) the Company shall make any
prepayment and furnish additional collateral (if any) required by subsection
2.4B(ii)(1) if a Borrowing Base Deficiency would result from the reduction in
the Borrowing Base that such release of such Lien would cause as calculated by
the Borrowing Base Certificate delivered pursuant to clause (iv) below, (ii) no
Event of Default or Potential Event of Default has occurred and is continuing,
(iii) the Company has requested such release in writing and certified that it is
entitled to such release under the applicable Security Agreement and this
subsection 2.10 and (iv) the Company shall have delivered an updated Borrowing
Base Certificate giving pro forma effect to such release and certifying that no
Borrowing Base Deficiency will result therefrom (after taking into account any
additional Eligible Assets added to the Borrowing Base Collateral pursuant to,
and in compliance with, subsection 2.10B(ii)(2) concurrently with or prior to
release of such Lien). Following the release of the Lien of a Security Agreement
on any Borrowing Base Collateral pursuant to the terms of this subsection
2.10B(ii)(1), unless and until such Borrowing Base Collateral is again subjected
to the Lien of a Security Agreement, such Borrowing Base Collateral shall no
longer be included in the calculation of the Borrowing Base or in a future
Borrowing Base Certificate.

                  (2) Addition. The Company may from time to time subject
Eligible Assets (other than Rotables) to the Lien of the relevant Security
Agreements upon written notice thereof to the Agent and such additional
Collateral shall be included in the calculation of the Borrowing Base delivered
in an updated Borrowing Base Certificate after (A) except in the case of Cash
and Cash Equivalents in the Cash Collateral Account, an Approved Appraisal has
been delivered to the Agent for such Eligible Assets, (B) the Lien of the
relevant Security Agreement

                                      -41-

has been perfected in such Eligible Assets, (C) appropriate filings have been
made to protect the Lien and rights of the Agent in any such Eligible Assets as
are deemed necessary by the Agent, (D) the Agent shall have received such
opinions as it shall reasonably request with respect to any such Eligible
Assets, (E) the Agent shall have received insurance certificates and other
documents required by the relevant Security Agreement and all other documents
and actions required by the terms of such Security Agreement shall have been
delivered or shall have occurred to the satisfaction of the Agent, (F) the
Company shall have delivered all other documents and taken all other actions
reasonably requested by the Agent with respect to any such Eligible Assets, (G)
the Agent has satisfied itself that such Eligible Assets are "Aircraft", "Spare
Engines" or "Simulators", as the case may be, within the meaning of this
Agreement and as described in Schedule 2.10 hereof and (H) the Agent shall
notify the Company in writing that it is satisfied that the conditions of this
Section 2.10B(ii)(2) have been satisfied. Rotables shall become subject to the
Lien of the Spare Parts Security Agreement as provided therein, without also
being required to satisfy any of the requirements of this subsection applicable
to Eligible Assets of other types.

                  Expenses. The Company shall pay all expenses of the Agent in
connection with the release and addition of Eligible Assets to the Borrowing
Base and the release or granting and perfection of Liens of Security Agreements
in connection therewith, including, but not limited to, reasonable fees and
expenses of counsel for the Agent, reasonable fees and expenses of special FAA
counsel and filing fees.

         C. APPROVED APPRAISAL AND APPRAISERS.

                  (1) Approved Appraisal. An Approved Appraisal for any
         Borrowing Base Collateral shall mean (A) an appraisal and inspection
         report satisfactory to the Agent delivered to the Agent by an Approved
         Appraiser not later than the time that such Borrowing Base Collateral
         becomes subject to the perfected Lien of a Security Agreement, (B) an
         appraisal and inspection report satisfactory to the Agent delivered
         semi-annually thereafter to the Agent by an Approved Appraiser not
         later than six months after the delivery date of the last delivered
         Approved Appraisal (commencing with the appraisals delivered in
         November, 2001), and in any event by no later than May 20 and November
         20 of each year so long as any Loan remains outstanding or any amount
         is owed under the PIK Notes, (C) an appraisal and inspection report
         satisfactory to the Agent delivered to the Agent at any time after the
         Company has notified the Agent that such Borrowing Base Collateral has
         been damaged, and (D) in the case of Rotables only, an appraisal and
         inspection report satisfactory to the Agent delivered to the Agent by
         an Approved Appraiser at the written request of the Company at any
         time. In the case of Rotables only, an inspection of the Rotables
         conducted as part of an Approved Appraisal shall mean an inspection of
         a sample of the Rotables by the Approved Appraiser for the purpose of
         determining the accuracy of the inventory reports maintained by the
         Company for the Rotables. The Approved Appraiser delivering any
         Approved Appraisal shall be selected by the Agent. The Company shall
         pay the fees and expenses of the Approved Appraiser in connection with
         delivery of an Approved Appraisal. Any inspection of Borrowing Base
         Collateral by an Approved Appraiser shall be conducted in compliance
         with the inspection provisions of the relevant Security Agreement.


                                      -42-

                  (2) Approved Appraisers. Approved Appraisers for Borrowing
         Base Collateral shall mean AVITAS, Inc. and Simat Hellieson & Eichner
         Inc. or any other appraiser for such Eligible Assets approved in
         writing by the Agent and consented to by the Company, such consent not
         to be unreasonably withheld or delayed.

         D. BORROWING BASE CERTIFICATE. On the Closing Date and no later than
the 25th day of each May and November thereafter until payment in full of all
Loans outstanding hereunder and all other amounts payable to the Lenders and the
Agent under the Notes and other Loan Documents, the Company shall deliver a
Borrowing Base Certificate to the Agent relating to the then most recently ended
six-month period; provided, however, that in addition to such regular
certificates, the Company shall also deliver Borrowing Base Certificates when
required, pursuant to subsection 2.4B(ii)(1) or 2.10B(ii)(1). Each Borrowing
Base Certificate shall replace and supersede for all purposes of this Agreement
the Borrowing Base Certificate then most recently delivered, and shall be based
on the then most current Approved Appraisals. Such Borrowing Base Certificate
shall (1) state each component of Borrowing Base Collateral then subject to
perfected Liens of the Security Agreements, (2) state the portion of the
Borrowing Base established by each component Borrowing Base Collateral, (3)
state the Borrowing Base by aggregating each of the values stated pursuant to
the preceding clause (2), and (4) state the then outstanding principal amount of
the Loans. The Borrowing Base Certificate shall (A) certify that none of the
Borrowing Base Collateral included in the calculation of the Borrowing Base is
subject to an Event of Loss, Event of Damage, Repairable Event or Adjustment
Event or, if any of such Borrowing Base Collateral is subject to an Event of
Loss, Event of Damage, Repairable Damage or Adjustment Event, such Borrowing
Base Certificate shall contain the relevant exclusions for any such Borrowing
Base Collateral subject to such Event of Loss, Event of Damage, Repairable
Damage or Adjustment Event as required by subsections 2.4B(ii)(1) and 2.10A
hereof, (B) certify that no Borrowing Base Deficiency then exists or, if a
Borrowing Base Deficiency then exists, the amount thereof, and (C) certify that
the portion of the Borrowing Base attributable to Rotables stated in the
Borrowing Base Certificate does not exceed thirty five percent, rounded to the
nearest whole percent (35%), of the aggregate Borrowing Base stated in such
certificate or that, if the portion of the Borrowing Base attributable to the
Rotables does exceed thirty five percent, rounded to the nearest whole percent
(35%), of the aggregate Borrowing Base, the portion of the Borrowing Base
attributable to the Rotables in such certificate for purposes of calculating the
Borrowing Base excludes such excess amount. In determining the book value of
Rotables in any Borrowing Base Certificate, the Company shall use its normal
accounting procedures except to the extent that the timing of such procedures
may be shortened pursuant to subsection 2.4B(ii)(1)(c). The Borrowing Base
Certificate shall be certified to be true and accurate by a Responsible Officer
of the Company. Notwithstanding any Borrowing Base Certificate delivered by the
Company, in the event of any dispute between the Company and the Agent regarding
the then outstanding principal amount of the Loans, the records of the Agent
shall determine such outstanding principal amounts, absent manifest error.

                                   SECTION 3.
                               CONDITIONS TO LOANS

         The obligations of the Agent and the Lenders to maintain the Loans
hereunder are subject to the satisfaction of the following conditions:

                                      -43-

3.1 CONDITIONS TO CLOSING DATE.

         The Existing Credit Agreement shall not be amended and restated as
provided in this Agreement unless the following conditions have been satisfied
or waived on or prior to January 31, 2002:

         A. COMPANY DOCUMENTS. The Company shall deliver or cause to be
delivered to the Lenders (or to the Agent for the Lenders with sufficient
originally executed copies, where appropriate, for each Lender) the following,
each, unless otherwise noted, dated or certified on, as the case may be, the
Closing Date:

                  (i) certified copies of its Certificate of Incorporation,
together with a good standing certificate from the Secretary of State of the
State of Delaware and each other state in which it is qualified as a foreign
corporation to do business and, to the extent generally available, a certificate
or other evidence of good standing as to payment of any applicable franchise or
similar taxes from the appropriate taxing authority of each of such states, each
dated a recent date prior to the Closing Date;

                  (ii) copies of its Bylaws, certified by its corporate
secretary or an assistant secretary;

                  (iii) resolutions of its Board of Directors approving and
authorizing the execution, delivery and performance of this Agreement and the
other Loan Documents, certified by its corporate secretary or an assistant
secretary as being in full force and effect without modification or amendment;

                  (iv) signature and incumbency certificates of its officers
executing this Agreement and the other Loan Documents;

                  (v) executed originals of this Agreement, the Notes (duly
executed in accordance with subsection 2.1D, drawn to the order of each Lender
and with appropriate insertions) and the other Loan Documents; and

                  (vi) such other documents as the Agent may reasonably request.

         B. NECESSARY CONSENTS. The Company shall have obtained all consents
necessary or reasonably advisable in connection with the transactions
contemplated by the Loan Documents, and each of the foregoing shall be in full
force and effect and in form and substance satisfactory to the Agent.

         C. FINANCIAL CONDITION CERTIFICATE. The Company shall have delivered to
the Agent a Financial Condition Certificate dated the Closing Date,
substantially in the form annexed hereto as Exhibit VIII, with appropriate
attachments demonstrating that, after giving effect to the consummation of the
financing transactions contemplated hereby, the Company and its Subsidiaries,
taken as a whole, are Solvent.


                                      -44-

         D. OPINIONS OF COMPANY'S COUNSEL. The Agent and its counsel shall have
received (i) executed copies of a favorable written opinion of Skadden Arps
Slate Meagher & Flom LLP regarding the enforceability of this Agreement and the
Notes and (ii) executed copies of a favorable written opinion of Cooley Godward
LLP regarding Section 1110 of the Bankruptcy Code, in each case dated the
Closing Date and setting forth substantially the matters in the opinions
designated in Exhibits V-A1 and V-A2, respectively, annexed hereto.

         E. OPINIONS OF GENERAL COUNSEL. The Agent and its counsel shall have
received executed copies of one or more favorable written opinions of Linda M.
Mitchell, Esq., Vice President and General Counsel of the Company, in form and
substance reasonably satisfactory to the Agent and its counsel, dated the
Closing Date, and setting forth substantially the matters in the opinions
designated in Exhibit V-B annexed hereto.

         F. RESERVED.

         G. OPINIONS OF FAA COUNSEL. The Agent and its counsel shall have
received a form of a favorable written opinion of Daugherty, Fowler, Peregrin &
Haught regarding perfection of the security interests in certain of the
Collateral established by the Security Agreements filed with the FAA, dated as
of the Closing Date; provided, that executed copies of such opinion may be
delivered to the Agent and its counsel within five Business Days of the Closing
Date.

         H. RESERVED.

         I. EVIDENCE OF INSURANCE. The Company shall have delivered to the Agent
certificates of insurance with respect to Borrowing Base Collateral subject to
Security Agreements as of the Closing Date, naming the Agent (on behalf of the
Agent and the Lenders) as loss payee under the casualty insurance policies and
as additional insured under the liability policies of the Company and a broker's
report from the Company's insurance broker evidencing compliance with the
requirements of each Security Agreement, all as required pursuant to subsection
5.4 hereof or pursuant to the Security Agreements.

         J. REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF AGREEMENTS. The
representations and warranties of the Company contained herein and in the other
Loan Documents are true, correct and complete in all material respects on and as
of the Closing Date to the same extent as though made on and as of that date
(except to the extent the same expressly relate to an earlier date, in which
case such representations and warranties were true, correct and complete in all
material respects as of such date) and that the Company shall have performed in
all material respects all agreements and satisfied all conditions which this
Agreement provides shall be performed or satisfied by it on or before the
Closing Date.

         K. COMPLIANCE CERTIFICATE. The Company shall have delivered to the
Agent a Compliance Certificate dated as of the Closing Date, substantially in
the form annexed hereto as Exhibit IV.


                                      -45-

         L. COMPLETION OF PROCEEDINGS. All corporate and other proceedings taken
or to be taken in connection with the transactions contemplated hereby and all
documents incidental thereto shall be reasonably satisfactory in form and
substance to the Agent and its counsel, and the Agent and such counsel shall
have received all such counterpart originals or certified copies of such
documents as the Agent may reasonably request.

         M. BORROWING BASE CERTIFICATE. The Company shall have delivered to the
Agent the Borrowing Base Certificate contemplated to be delivered on the Closing
Date by the terms of subsection 2.10.

         N. ELIGIBLE ASSETS. The Collateral as of the Closing Date shall include
the Eligible Assets listed in Schedule 2.10A hereto which are included in the
Borrowing Base on the Closing Date as certified in the Borrowing Base
Certificate delivered on the Closing Date and, without limitation of the
foregoing, such Eligible Assets shall be subject to the perfected Liens of the
applicable Security Agreements.

         O. SECURITY AGREEMENTS. The Company shall have executed and delivered
to the Agent the Receivables Security Agreement, in form and substance
satisfactory to the Agent. All documents required to be delivered, filings
required to be made and action required to be taken by the terms of any Security
Agreement referred to in subsection 3.1N shall have been accomplished in
accordance with such terms, including, without limitation, the delivery to the
Agent for recording of UCC financing statements and FAA filings. The Company
shall have executed and delivered to the Agent amendments, supplements and
restatements, as the case may be, in form and substance reasonably satisfactory
to the Agent, to the Security Agreements and the Environmental Indemnity
Agreement.

         P. RESERVED.

         Q. RECEIVABLES DOCUMENTATION. The Agent shall have received copies of
any and all documentation reasonably requested by the Agent relating to the
receivables to be pledged pursuant to the Receivables Security Agreement, which
such documentation shall be in form and substance reasonably satisfactory to the
Agent.

         R. GOVERNMENT GUARANTEED LOAN DOCUMENTATION. The Company shall
concurrently enter into the Air Carrier Guarantee Loan Documents evidencing the
Government Guaranteed Loan, on terms and conditions consistent with the
Government Guaranteed Loan Term Sheets, and the Company shall have delivered to
the Agent a copy of the Air Carrier Guarantee Loan Documents and the Government
Guaranteed Loan Term Sheet, together with an Officer's Certificate certifying
that (1) attached thereto are a true, correct and complete copy of the Air
Carrier Guarantee Loan Documents and the Government Guaranteed Loan Term Sheet,
(2) the Air Carrier Guarantee Loan Documents are in full force and effect, (3)
the Government Guaranteed Loan Term Sheet has not been supplemented, amended or
revised in any way from that provided to the Agent and the Lenders on or about
January 6, 2002, (4) the Government Guaranteed Loan Term Sheet contains all of
the material business and economic terms and conditions of the Government
Guaranteed Loan, (5) the Air Carrier Guarantee Loan Documents conform in all
material respects to the Government Guaranteed Loan Term Sheet,

                                      -46-

and (6) no default or event of default (or other similar term of like meaning)
has occurred and is continuing under the Air Carrier Guarantee Loan Documents.

         S. TERM SHEETS. The Company shall have delivered to the Agent and the
Lenders on or before the Closing Date evidence of the approval of the Government
Guaranteed Loan by the Air Transportation Stabilization Board, which shall be in
form and substance acceptable to the Agent and the Lenders, together with an
Officer's Certificate certifying that attached thereto is a true, correct and
complete copy of the approval of the Government Guaranteed Loan by the Air
Transportation Stabilization Board and that no supplement, amendment,
modification, withdrawal or other revision has been made to such approval.

         T. LESSOR CONCESSIONS. Holdings and Wilmington Trust Company, acting on
behalf of the lessors leasing aircraft to the Company, shall have entered into
the Lease Indenture, on terms and conditions consistent with the Lease Indenture
Term Sheet, and the Company shall have delivered to the Agent a copy of the
Lease Indenture and the Lease Indenture Term Sheet, together with an Officer's
Certificate certifying that (1) attached thereto is a true, correct and complete
copy of the Lease Indenture and the Lease Indenture Term Sheet, (2) the Lease
Indenture is in full force and effect, (3) the Lease Indenture Term Sheet has
not been supplemented, amended or revised in any way from that provided to the
Agent and the Lenders on or about January 3, 2002, (4) the Lease Indenture Term
Sheet contains all of the material business and economic terms and conditions of
the Lease Indenture, (5) the Lease Indenture conforms in all material respects
to the Lease Indenture Term Sheet, and (6) no default or event of default (or
other similar term of like meaning) has occurred and is continuing under the
Lease Indenture.

         U. RESERVED

         V. RECEIPT OF PROCEEDS OF GOVERNMENT GUARANTEED LOAN. The Company shall
have received the proceeds of the Government Guaranteed Loan in a minimum
principal amount of $254,000,000.

         W. CONCESSIONS RECEIVED. The Company shall have delivered an Officer's
Certificate to the Agent that the Company has received Concessions (taken as a
whole) consistent with the Restructuring Plan and containing such information
regarding the Concessions as is reasonably satisfactory to the Agent, and the
terms and conditions of such Concessions shall be satisfactory to the Agent and
shall be in full force and effect on the Closing Date.

         X. RESTRUCTURING PLAN. The Company shall have furnished the Agent and
the Lenders with a copy of the Restructuring Plan, and such Restructuring Plan
shall be satisfactory to the Agent and the Lenders, together with an Officer's
Certificate certifying that (1) attached thereto is a true, correct and complete
copy of the Restructuring Plan, (2) the Restructuring Plan has not been
materially supplemented, amended or revised in any way from that Restructuring
Plan dated December 18, 2001 and furnished to the Air Transportation
Stabilization Board on December 19, 2001, provided to the Agent and the Lenders
on or about January 3, 2002.


                                      -47-

         Y. DOCUMENTS SATISFACTORY. The Loan Documents shall be satisfactory to
the Agent and the Lenders.

         Z. PAYMENT OF FEES AND EXPENSES. The Company shall have paid all fees
and expenses of the Agent and the Lenders, including, without limitation, fees
and expenses of legal counsel to the Agent and the Lenders, and all fees and
expenses of the financial and collateral consultants to the Agent and the
Lenders.

         AA. RESERVED.

         BB. REPRESENTATIONS AND WARRANTIES, ETC. As of the Closing Date, after
giving effect to the application of proceeds of the Government Guaranteed Loan:

                           (i) the representations and warranties of the Company
                  contained herein and in the other Loan Documents shall be
                  true, correct and complete in all material respects on and as
                  of the Closing Date to the same extent as though made on and
                  as of that date (except to the extent the same expressly
                  relate to an earlier date, in which case such representations
                  and warranties were true, correct and complete in all material
                  respects as of such date), and the Company shall be deliver a
                  certificate to the Agent to such effect and as to the matters
                  set forth in clauses (ii), (iii), and (iv) of this subsection
                  3.1(BB);

                           (ii) no event shall have occurred and be continuing
                  or would result from the consummation of the borrowing
                  contemplated by this Agreement that would constitute an Event
                  of Default or a Potential Event of Default;

                           (iii) to the best knowledge of the Company, no
                  injunction or other restraining order shall have been issued
                  and no hearing to cause an injunction or other restraining
                  order to be issued shall be pending or noticed with respect to
                  any action, suit or proceeding seeking to enjoin or otherwise
                  prevent the consummation of, or to recover any damages or
                  obtain relief as a result of, the maintaining of the Loans
                  hereunder, or with respect to the Government Guaranteed Loan,
                  the Lease Indenture or the Restructuring Plan or otherwise
                  relating to the Concessions; and

                           (iv) to the best knowledge of the Company, the
                  decision of the Air Transportation Stabilization Board to
                  approve the Government Guaranteed Loan shall be final and not
                  subject to appeal.

                                   SECTION 4.
                    COMPANY'S REPRESENTATIONS AND WARRANTIES

         In order to induce the Lenders to enter into this Agreement and to
maintain the Loans, the Company represents and warrants to the Agent and each
Lender, as of the date of this Agreement and the Closing Date, that the
following statements are true, correct and complete:


                                      -48-

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

         A. ORGANIZATION AND POWERS. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. The Company has all requisite corporate power and authority to own and
operate its properties, to carry on its business as now conducted and as
proposed to be conducted, to enter into the Loan Documents and to carry out the
transactions contemplated hereby and thereby.

         B. QUALIFICATION AND GOOD STANDING; AIR CARRIER CERTIFICATION. The
Company is qualified to do business and in good standing in every jurisdiction
where its assets are located and wherever necessary to carry out its business
and operations, except in jurisdictions where the failure to be so qualified or
in good standing would not in the reasonable determination of the Company be
expected to impair the ability of the Company to perform its payment or other
material obligations under the Loan Documents. The Company is an "air carrier"
within the meaning of the Act and holds a certificate under Sections 41102(a)(1)
and 41103 of the Act. The Company is a "citizen of the United States" as defined
in Section 40102(a)(15) of the Act (a "UNITED STATES CITIZEN") and holds an air
carrier operating certificate issued pursuant to Chapter 447 under the Act for
aircraft capable of carrying 10 or more individuals or 6,000 pounds or more of
cargo. The Company possesses all necessary certificates, franchises, licenses,
permits, rights and concessions and consents which are material to the operation
of the routes flown by it and the conduct of its business and operations as
currently conducted.

         C. SUBSIDIARIES. All of the Subsidiaries of the Company as of the
Closing Date are identified in Schedule 4.1 annexed hereto, as said Schedule 4.1
may be supplemented from time to time pursuant to the provisions of subsection
5.1(xi). Each of the Subsidiaries of the Company identified in Schedule 4.1
annexed hereto (as so supplemented) is a corporation duly organized, validly
existing and in good standing under the laws of its respective jurisdiction of
incorporation set forth therein, has all requisite corporate power and authority
to own and operate its properties and to carry on its business as now conducted
and as proposed to be conducted, and is qualified to do business and in good
standing in every jurisdiction where its assets are located and wherever
necessary to carry out its business and operations, in each case except where
failure to be so qualified or in good standing or a lack of such corporate power
and authority would not in the reasonable determination of the Company be
expected to impair the ability of the Company to perform its payment or other
material obligations under the Loan Documents. Schedule 4.1 annexed hereto (as
so supplemented) correctly sets forth the ownership interest of the Company and
each of its Subsidiaries in each of the Subsidiaries of the Company identified
therein.

4.2 AUTHORIZATION OF BORROWING, ETC.

         A. AUTHORIZATION OF BORROWING. The execution, delivery and performance
of the Loan Documents have been duly authorized by all necessary corporate
action on the part of the Company.


                                      -49-

         B. NO CONFLICT. The execution, delivery and performance by the Company
of the Loan Documents and the consummation of the transactions contemplated by
the Loan Documents do not and will not (i) violate any provision of any law or
any governmental rule or regulation applicable to the Company or any of its
Subsidiaries, the Certificate or Articles of Incorporation or Bylaws of the
Company or any of its Subsidiaries or any order, judgment or decree of any court
or other agency of government binding on the Company or any of its Subsidiaries,
(ii) conflict with, result in a breach of or constitute (with due notice or
lapse of time or both) a default under any Contractual Obligation of the Company
or any of its Subsidiaries, (iii) result in or require the creation or
imposition of any Lien upon any of the properties or assets of the Company or
any of its Subsidiaries (other than any Liens created under any of the Loan
Documents in favor of the Agent on behalf of Lenders), or (iv) require any
approval of stockholders or any approval or consent of any Person under any
Contractual Obligation of the Company or any of its Subsidiaries, except for
such approvals or consents which will be obtained on or before the Closing Date
and disclosed in writing to Lenders.

         C. GOVERNMENTAL CONSENTS. The execution, delivery and performance by
the Company of the Loan Documents and the consummation of the transactions
contemplated by the Loan Documents do not and will not require any registration
with, consent or approval of, or notice to, or other action to, with or by, any
federal, state or other governmental authority or regulatory body which has not
been obtained or made on or prior to the date required to be obtained or made
except for such matters relating to performance as would ordinarily be done in
the ordinary course of business after the Closing Date or if not made or
obtained would materially affect such performance.

         D. BINDING OBLIGATION. Each of the Loan Documents has been duly
executed and delivered by the Company and is the legally valid and binding
obligation of the Company, enforceable against the Company in accordance with
its respective terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or other similar laws relating
to or affecting the enforcement of creditors' rights generally, including
materiality, reasonableness, good faith and fair dealing, and by general
principles of equity (regardless of whether considered in a proceeding in equity
or at law).

4.3 FINANCIAL CONDITION.

         The Company has heretofore delivered to the Lenders, at the Lenders'
request, the following financial statements and information: (i) the audited
balance sheets of the Company as at December 31, 2000, and the related
statements of income, stockholders' equity and cash flows of the Company for the
Fiscal Year then ended and (ii) the unaudited balance sheet of the Company as at
September 30, 2001 and the related unaudited statements of income, stockholders'
equity and cash flows of the Company for the nine months then ended. All such
statements were prepared in conformity with GAAP and fairly present the
financial position of the Company as at the respective dates thereof and the
results of operations and cash flows of the Company for each of the periods then
ended subject, in the case of the unaudited statements, to year-end audit and
adjustments. Except as disclosed in writing to the Agent after the Closing Date,
the Company does not have any material contingent liability or liability for
taxes, long-term lease or unusual forward or long-term commitment that is not
reflected in the foregoing financial

                                      -50-

statements (or in the most recently delivered financial statements delivered
pursuant to subsection 5.1((i) or (ii)) or the notes thereto and which in any
such case is material in relation to the business, operations, properties,
assets, condition (financial or otherwise) or, with respect to the Loans, the
prospects of the Company.

4.4 NO MATERIAL ADVERSE CHANGE.

         Since December 31, 1998, after giving effect to the Government
Guaranteed Loan, the Lease Indenture and the Concessions, no material adverse
change has occurred in the financial condition or operations of the Company. For
purposes of the previous sentence, the term "material adverse change" shall mean
the material impairment of the Company's ability to perform its payment and
other material obligations under the Loan Documents; this sentence is intended
to pertain to substantial economic events such as (1) any actual or imminent
regulatory or judicial order revoking or materially restricting the Company's
ability to operate as an airline or to operate any of the aircraft types in its
fleet that is not subject to judicial stay or (2) any labor strike action that
causes operations to be substantially suspended for a period exceeding three
weeks.

4.5 TITLE TO PROPERTIES; LIENS.

         Except for any property covered by any Security Agreement (the terms of
which shall govern such property to the extent provided therein), the Company
and its Subsidiaries have (i) good, sufficient and legal title to (in the case
of fee interests in real property), (ii) valid leasehold interests in (in the
case of leasehold interests in real or personal property), or (iii) good title
to (in the case of all other personal property), all of the properties and
assets reflected in the financial statements referred to in subsection 4.3 or in
the most recent financial statements delivered pursuant to subsection 5.1, in
each case except for assets disposed of since the date of such financial
statements in the ordinary course of business or as otherwise permitted under
subsection 6.6. Except as otherwise permitted by this Agreement, to the actual
knowledge of the Company, all such properties and assets are free and clear of
Liens.

4.6 LITIGATION; ADVERSE FACTS.

         There are no actions, suits, appeals, proceedings, arbitrations or
governmental investigations (whether or not purportedly on behalf of the Company
or any of its Subsidiaries) at law or in equity or before or by any federal,
state, municipal or other governmental department, court, commission, board,
bureau, agency or instrumentality, domestic or foreign, pending or, to the
knowledge of the Company, threatened against or affecting the Company or any of
its Subsidiaries or any property of the Company or any of its Subsidiaries that,
individually or in the aggregate, are reasonably likely to materially impair the
ability of the Company to perform its payment or other material obligations
under the Loan Documents, the Lease Indenture or the Air Carrier Guarantee Loan
Documents, or (taken as a whole) the Concessions. Neither the Company nor any of
its Subsidiaries is (i) in violation of any applicable laws that, individually
or in the aggregate, could in the reasonable determination of the Company be
expected to impair the ability of the Company to perform its payment or other
material obligations under the Loan Documents or (ii) subject to or in default
with respect to any final judgments, writs, injunctions,

                                      -51-

decrees, rules or regulations of any court or any federal, state, municipal or
other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, that, individually or in the aggregate,
could in the reasonable determination of the Company be expected to impair the
ability of the Company to perform its payment or other material obligations
under the Loan Documents.

4.7 PAYMENT OF TAXES.

         Except to the extent permitted by subsection 5.3, all federal income
tax returns and other material tax returns and reports of the Company and its
Subsidiaries required to be filed by any of them have been timely filed (or
extensions have been obtained with respect thereto), and all federal income
taxes and material Taxes upon the Company and its Subsidiaries and upon their
respective properties, assets, income, businesses and franchises which are due
and payable have been paid when before any penalty, fine or interest accrues
thereon. Except as disclosed in writing to the Agent after the Closing Date,
there are no agreements with respect to Taxes between the Company and any taxing
agency or authority.

4.8 PERFORMANCE OF AGREEMENTS; MATERIALLY ADVERSE AGREEMENTS.

         A. Neither the Company nor any of its Subsidiaries is in default in the
performance, observance or fulfillment of any of the material obligations,
covenants or conditions contained in any of its Contractual Obligations (after
giving effect to the application of the proceeds of the Government Guaranteed
Loan), and no condition exists that, with the giving of notice or the lapse of
time or both, would constitute such a default.

         B. Neither the Company nor any of its Subsidiaries is a party to or is
otherwise subject to any agreements or instruments or any charter or other
internal restrictions which, individually or in the aggregate, could in the
reasonable determination of the Company be expected to impair the ability of the
Company to perform its payment or other material obligations under the Loan
Documents or in connection with the Government Guaranteed Loan or the Lease
Indenture, or (taken as a whole) the Concessions.

4.9 GOVERNMENTAL REGULATION.

         Neither the Company nor any of its Subsidiaries is subject to
regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act, the Interstate Commerce Act or the Investment Company Act of 1940 or
under any other federal or state statute or regulation which may limit its
ability to incur Indebtedness or which may otherwise render all or any portion
of the Obligations unenforceable.

4.10 SECURITIES ACTIVITIES.

         Neither the Company nor any of its Subsidiaries owns or is engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying any Margin Stock, nor shall any
proceeds of the Loans be used to purchase or carry Margin Stock or to extend
credit to any Person for the purpose of purchasing or carrying any

                                      -52-

Margin Stock in a manner that violates or causes a violation of Regulations T, U
or X of the Board of Governors of the Federal Reserve System or any other
regulation of such Board.

4.11 EMPLOYEE BENEFIT PLANS.

         Each Plan maintained by the Company or an ERISA Affiliate is in
compliance in all material respects with all applicable laws. Except in such
instances where an omission or failure would in the reasonable determination of
the Company impair the ability of the Company to perform its payment or other
material obligations under the Loan Documents (a) all returns, reports and
notices required to be filed with any regulatory agency with respect to any Plan
have been filed timely and (b) neither the Company nor any ERISA Affiliate has
failed to make any contribution or pay any amount due or owing as required by
the terms of any Plan. There are no pending or, to the best of the Company's
knowledge, threatened claims, lawsuits, investigations or actions (other than
routine claims for benefits in the ordinary course) asserted or instituted
against the assets of any Plan or its related trust or against any fiduciary of
a Plan with respect to the operation of such Plan that are likely to result in
liability of the Company that in the reasonable determination of the Company
would impair the ability of the Company to perform its payment or other material
obligations under the Loan Documents. Except in such instances where an omission
or failure would not in the reasonable determination of the Company impair the
ability of the Company to perform its payment or other material obligations
under the Loan Documents, each Plan maintained by the Company or an ERISA
Affiliate that is intended to be "qualified" within the meaning of section
401(a) of the Code is, and has been during the period from its adoption to date,
so qualified, both as to form and operation and all necessary governmental
approvals, including a favorable determination as to the qualification under the
Code of such Plan and each amendment thereto, have been or will be timely
obtained. Neither the Company nor any ERISA Affiliate has engaged in any
prohibited transaction, within the meaning of section 406 of ERISA or section
4975 of the Code, in connection with any Plan which could result in liability of
the Company that would in the reasonable determination of the Company impair the
ability of the Company to perform its payment or other material obligations
under the Loan Documents. Neither the Company nor any ERISA Affiliate has any
contingent liability with respect to any post-retirement benefits under a
welfare benefit plan as defined in ERISA other than a liability for continuation
coverage described in Part 6 of Title 1 of ERISA, except where such liability
could not in the reasonable determination of the Company be expected to impair
the ability of the Company to perform its payment or other material obligations
under the Loan Documents. Neither the Company nor any ERISA Affiliate maintains,
has established or has ever participated in a multiple employer welfare benefit
arrangement within the meaning of ERISA except to the extent that such
participation would not in the reasonable determination of the Company be
expected to impair the ability of the Company to perform its payment or other
material obligations under the Loan Documents. The Company has not incurred any
potential liability with respect to a multiemployer plan, as defined in section
3(37) of ERISA or a plan described in section 4063(a) of ERISA except to the
extent that such liability would not in the reasonable determination of the
Company be expected to impair the ability of the Company to perform its payment
or other material obligations under the Loan Documents. Neither the Company nor
any ERISA Affiliate has incurred any liability under Title IV of ERISA that has
not been satisfied, and no condition exists that could reasonably be expected to
result in the Company or an ERISA Affiliate incurring any liability under Title
IV of


                                      -53-

ERISA that would in the reasonable determination of the Company impair the
ability of the Company to perform its payment or other material obligations
under the Loan Documents.

4.12 ENVIRONMENTAL PROTECTION.

         A. All Facilities and operations of the Company and its Subsidiaries
are, and have been to the Company's knowledge, in compliance with all
Environmental Laws except for any noncompliance which, individually or in the
aggregate, could not in the reasonable determination of the Company be expected
to impair the ability of the Company to perform its payment or other material
obligations under the Loan Documents.

         B. There are no, and have been no, conditions, occurrences, or
Hazardous Materials Activity (a) arising at any Facilities or, to the knowledge
of the Company, at any other location or (b) arising in connection with the
operations of the Company or its Subsidiaries (including the transportation of
Hazardous Materials in accordance with applicable regulations), which
conditions, occurrences or Hazardous Materials Activity could reasonably be
expected to form the basis of an Environmental Claim against the Company or any
of its Subsidiaries and which, individually or in the aggregate, could in the
reasonable determination of the Company be expected to impair the ability of the
Company to perform its payment or other material obligations under the Loan
Documents.

         C. To the Company's knowledge, there are no pending or threatened
Environmental Claims against the Company or its Subsidiaries, and the Company
and its Subsidiaries have received no notices, inquiries, or requests for
information with respect to any Environmental Claims which in either case are
reasonably likely to be adversely determined and could individually or in the
aggregate in the reasonable determination of the Company be expected to impair
the ability of the Company to perform its payment or other material obligations
under the Loan Documents.

         D. Except as disclosed to the Agent in writing, the Company is not
currently operating or required to be operating under any compliance order,
schedule, decree or agreement, any consent decree, order or agreement, and/or
any corrective action decree, order or agreement issued or entered into under
any Environmental Law the failure to comply with which could individually or in
the aggregate in the reasonable determination of the Company be expected to
impair the ability of the Company to perform its payment or other material
obligations under the Loan Documents.

         E. The Company has provided the Agent copies of all environmental
audits, assessments or other evaluations in its possession or subject to its
control prepared with respect to the Maintenance Facility, except for audits,
assessments or other evaluations that are confidential and privileged as
attorney-client communication.

4.13 SOLVENCY.


                                      -54-

         As of the Closing Date, after giving effect to the application of
proceeds of the Government Guaranteed Loan, the Company is and, upon the
incurrence of any Obligations by the Company on any date on which this
representation is made, will be, Solvent.

4.14 DISCLOSURE.

         No representation or warranty of the Company contained in any Loan
Document or in any other document, certificate or written statement furnished to
the Agent or Lenders by or on behalf of the Company or any of its Subsidiaries
for use in connection with the transactions contemplated by this Agreement
contains any untrue statement as and when made, as any of such representations
and warranties may made from time to time in accordance with this Agreement and
the other Loan Documents. Any projections and pro forma financial information
contained in such materials are based upon good faith estimates and assumptions
believed by the Company to be reasonable at the time made, it being recognized
by Lenders that such projections as to future events are not to be viewed as
facts and that actual results during the period or periods covered by any such
projections may differ from the projected results. There are no facts known to
any Responsible Officer of the Company (other than matters of a general economic
nature) that, individually or in the aggregate, could in the reasonable
determination of the Company be expected to impair the ability of the Company to
perform its payment or other material obligations under the Loan Documents.

4.15 YEAR 2000 MATTERS.

         Any reprogramming required to permit the proper functioning (but only
to the extent that such proper functioning would otherwise be impaired by the
occurrence of the year 2000) in and following the year 2000 of computer systems
and other equipment containing embedded microchips, whether owned or operated by
the Company or any of its Subsidiaries or used or relied upon in the conduct of
their business (including any such systems and other equipment supplied by
others or with which the computer systems of the Company or any of its
Subsidiaries interface), and the testing of all such systems and other equipment
as so reprogrammed, has been completed on or prior to the Closing Date, except
for such reprogramming the failure to perform any of which could not
individually or in the aggregate in the reasonable determination of the Company
be expected to impair the ability of the Company to perform its payment or other
material obligations under the Loan Documents.

4.16 RECEIVABLES DOCUMENTATION.

         The documentation provided to the Agent relating to the receivables
pledged to the Agent for the benefit of the Lenders pursuant to the Receivables
Security Agreement is materially correct and complete, and sets forth all of the
material terms and conditions relating to such receivables.


                                      -55-

                                   SECTION 5.
                         COMPANY'S AFFIRMATIVE COVENANTS

         The Company covenants and agrees that, until payment in full of all of
the Loans and other Obligations, the Company shall perform, and shall cause each
of its Subsidiaries to perform, all covenants in this Section 5.

5.1 FINANCIAL STATEMENTS AND OTHER REPORTS.

         The Company will maintain, and cause each of its Subsidiaries to
maintain, a system of accounting established and administered in accordance with
sound business practices to permit preparation of financial statements in
conformity with GAAP. The Company will deliver to the Agent and Lenders:

         (i) (a) Quarterly Financials: as soon as available and in any event
within 60 days after the end of each fiscal quarter of each Fiscal Year (other
than the last quarter of each Fiscal Year), (a) the consolidated balance sheets
of each of the Company and Holdings as at the end of such fiscal quarter and the
related consolidated statements of income and stockholders' equity of each such
company for such fiscal quarter and consolidated cash flows of each such company
for the period from the beginning of then current Fiscal Year to the end of such
fiscal quarter, all in reasonable detail and certified by the chief financial
officer, controller or treasurer of such company that they fairly present the
consolidated financial condition of such company as at the dates indicated and
the results of its operations and their cash flows for the periods indicated and
(b) a narrative report describing the operations of such company in the form
prepared for presentation to senior management for such fiscal quarter and for
the period from the beginning of then current Fiscal Year to the end of such
fiscal quarter; provided that delivery of such company's Form 10-Q for such
fiscal quarter shall be deemed to satisfy all of the requirements of this
subsection 5.1(i):

         (b) Monthly Reporting. as soon as available and in any event within 25
days after the end of each calendar month, the consolidated balance sheets of
the Company as at the end of such month and the related consolidated statements
of income and consolidated cash flows of the Company for such calendar month and
for the period from the beginning of the then current Fiscal Year to the end of
such month; all such financial statements to be in the form prepared for the
management of the Company and certified by the chief financial officer,
controller or treasurer of the Company being fairly stated in all material
respects (subject to normal year-end audit adjustments).

         (ii) Year-End Financials: as soon as available and in any event within
105 days after the end of each Fiscal Year, (a) the consolidated balance sheets
of each of the Company and Holdings at the end of such Fiscal Year and the
related consolidated statements of income, stockholders' equity and cash flows
of such company for such Fiscal Year, setting forth in each case in comparative
form the corresponding figures for the previous Fiscal Year and, in the case of
the Company, the corresponding figures from the annual financial plan delivered
pursuant to

                                      -56-

subsection 5.1(viii) for the Fiscal Year covered by such financial statements of
the Company, all in reasonable detail, (b) a narrative report describing the
operations of such company in the form prepared for presentation to senior
management for such Fiscal Year, and (c) an accountant's report thereon of
Pricewaterhouse Coopers L.L.P. or other independent certified public accountants
of recognized national standing selected by such company, which report shall be
unqualified, shall express no doubts about the ability of such company to
continue as a going concern, and shall state that such consolidated financial
statements fairly present the consolidated financial position of such company as
at the dates indicated and the results of their operations and their cash flows
for the periods indicated in conformity with GAAP applied on a basis consistent
with prior years and that the examination by such accountants in connection with
such consolidated financial statements has been made in accordance with
generally accepted auditing standards; provided that (i) references in such
opinion to changes in GAAP, changes in accounting standards, highlighting
contents of footnotes, limitations in the scope of the audit or exclusions from
the audit information not required by GAAP that are, in each case, customary in
industry practice and not prejudicial to the opinion stated therein shall not be
deemed to be "qualifications" for the purpose of this subsection and (ii)
delivery of such company's Form 10-K for such Fiscal Year shall be deemed to
satisfy all of the requirements of this subsection 5.1(ii);

         (iii) Officer's and Compliance Certificates: together with each
delivery of financial statements of the Company pursuant to subdivisions (i) and
(ii) above after the Closing Date, (a) an Officer's Certificate of the Company
stating that the signer has reviewed the terms of this Agreement and has made,
or caused to be made under his or her supervision, a review in reasonable detail
of the transactions and condition of the Company during the accounting period
covered by such financial statements and that such review has not disclosed the
existence during or at the end of such accounting period, and that the signer
does not have knowledge of the existence as at the date of such Officer's
Certificate, of any condition or event that constitutes an Event of Default or
Potential Event of Default, or, if any such condition or event existed or
exists, specifying the nature and period of existence thereof and what action
the Company has taken, is taking and proposes to take with respect thereto; and
(b) a Compliance Certificate demonstrating in reasonable detail compliance (or
non-compliance) during and at the end of the applicable accounting periods with
the restrictions contained in subsections 6.4 and 6.5;

         (iv) SEC Filings and Press Releases: promptly upon their becoming
available, copies of (a) all financial statements, reports, notices and proxy
statements sent or made available generally by the Company to its security
holders, (b) all regular and periodic reports and all registration statements
and prospectuses, if any, filed by the Company or any of its Subsidiaries with
any securities exchange or with the Securities and Exchange Commission or any
governmental or private regulatory authority, and (c) all material press
releases and other statements made available generally by the Company or any of
its Subsidiaries to the public concerning material developments in the business
of the Company or any of its Subsidiaries;

         (v) Events of Default, etc.: promptly upon any Responsible Officer of
the Company obtaining knowledge (a) of any condition or event that constitutes
an Event of Default or Potential Event of Default, (b) that any creditor has
given any notice to the Company or any of its Subsidiaries or taken any other
action with respect to a claimed default or event or condition of the type
referred to in subsection 7.2, (c) of any condition or event that would be
required to be

                                      -57-

disclosed in a current report filed by the Company with the Securities and
Exchange Commission on Form 8-K if the Company were required to file such
reports under the Exchange Act, or (d) of the occurrence of any event or change
that has caused or evidences, either in any case or in the aggregate, in the
reasonable determination of the Company, impairment of the ability of the
Company to perform its payment or other material obligations under the Loan
Documents, an Officer's Certificate specifying the nature and period of
existence of such condition, event or change, or specifying the notice given or
action taken by any such Person and the nature of such claimed Event of Default,
Potential Event of Default, default, event or condition, and what action the
Company has taken, is taking and proposes to take with respect thereto;

         (vi) Litigation or Other Proceedings: To the extent not disclosed
pursuant to this subsection, (a) promptly upon any Responsible Officer of the
Company obtaining knowledge of (X) the institution of, or threat of, any action,
suit, proceeding (whether administrative, judicial or otherwise), governmental
investigation or arbitration against or affecting the Company or any of its
Subsidiaries or any property of the Company or any of its Subsidiaries
(collectively, "PROCEEDINGS") or (Y) any material development in any Proceeding
that, in any case:

(1) is reasonably likely to be adversely determined and assuming that all
damages demanded in such litigation are awarded, is in the reasonable
determination of the Company likely to impair the ability of the Company to
perform its payment or other material obligations under the Loan Documents; or

(2) seeks to enjoin or otherwise prevent the consummation of, or to recover any
damages or obtain relief as a result of, the transactions contemplated hereby;

written notice thereof together with such other information as may be reasonably
available to the Company to enable the Agent and its counsel to evaluate such
matters; and (b) within twenty days after the end of each Fiscal Year, a
schedule of all Proceedings involving an alleged liability of, or claims against
or affecting, the Company or any of its Subsidiaries equal to or greater than
$20,000,000 and promptly after request by the Agent such other information as
may be reasonably requested by the Agent to enable the Agent and its counsel to
evaluate any of such Proceedings;

         (vii) ERISA Reports: promptly after the receipt by the Company of a
request therefor by the Agent or a Lender copies of any annual and other reports
(including Schedule B thereto) with respect to a Plan filed by the Company or
any ERISA Affiliate with the United States Department of Labor, the Internal
Revenue Service or the Pension Benefit Guaranty Corporation;

         (viii) Annual Financial Plan: annually, as soon as practicable after
preparation thereof by the Company in the ordinary course of business but in no
event later than January 31 of each year, the Company shall provide the Agent
and each Lender copies of its annual financial plan;

         (ix) Environmental Audits and Reports: as soon as practicable following
receipt thereof, copies of all environmental audits and reports, whether
prepared by personnel of the Company or any of its Subsidiaries or by
independent consultants, with respect to significant environmental matters at
any Facility or which relate to an Environmental Claim which could in

                                      -58-

the reasonable determination of the Company be expected to impair the ability of
the Company to perform its payment or other material obligations under the Loan
Documents;

         (x) Pricing Certificates: (a) within one Business Day after any public
release by S&P or Moody's raising or lowering its credit rating on the Company's
senior unsecured debt obligations and (b) at such additional times as the
Company may elect, a certificate setting forth the credit rating on the
Company's senior unsecured debt obligations (each, a "PRICING CERTIFICATE");

         (xi) Additional Subsidiaries: to the extent permitted hereunder
pursuant to subsection 6.13, with reasonable promptness, upon the formation
thereof, the name, corporate structure and allocation of Voting Securities of
each Subsidiary of the Company, including, without limitation, providing a
supplement Schedule 4.1 hereto with all relevant information included with
respect to such new Subsidiary;

         (xii) Insurance Proceeds: promptly notify the Agent upon a Responsible
Officer of the Company obtaining actual knowledge of the occurrence of an event
of loss or damage to any Collateral that is reasonably expected to result in
receipt of insurance proceeds reasonably estimated by the Company to exceed
$5,000,000.

         (xiii) Plan Audits and Liabilities: promptly after the Company or any
ERISA Affiliate (a) contacts the Internal Revenue Service for the purpose of
participation in a closing agreement or any voluntary resolution program with
respect to a Plan which could in the reasonable determination of the Company
impair the ability of the Company to perform its payment or other material
obligations under the Loan Documents or (b) knows or has reason to know that any
event with respect to any Plan occurred that could in the reasonable
determination of the Company impair the ability of the Company to perform its
payment or other material obligations under the Loan Documents a notification
thereof;

         (xiv) Funding Changes and New Plan Benefits: promptly after the change,
a notification of any material increases in the benefits, or material change in
funding method, with respect to which the Company may have any liability, or the
establishment of any material new Plan with respect to which the Company may
have any liability or the commencement of contributions to any Plan to which the
Company or any ERISA Affiliate was not previously contributing, except to the
extent that such an event would not in the reasonable determination of the
Company be expected to impair the ability of the Company to perform its payment
or other material obligations under the Loan Documents;

         (xv) Claims and Proceedings: promptly after receipt of written notice
of commencement thereof, notification of all (i) claims made by participants or
beneficiaries with respect to any Plan and (ii) actions, suits and proceedings
before any court or governmental department, commission, board, bureau, agency
or instrumentality, domestic or foreign, affecting the Company or any ERISA
Affiliate with respect to any Plan, except those which, in the aggregate, if
adversely determined could not in the reasonable determination of the Company
impair the ability of the Company to perform its payment or other material
obligations under the Loan Documents;


                                      -59-

         (xvi) ERISA Reportable Events: promptly after the occurrence of any
reportable event (as defined in ERISA) relating to a Plan with respect to which
the Company or an ERISA Affiliate may have any liability (other than any such
event with respect to which the Pension Benefit Guaranty Corporation has waived
the ERISA reportable event notification requirement by regulation or notice);
and

         (xvii) Other Information: with reasonable promptness, such other
information and data with respect to the Company or any of its Subsidiaries as
from time to time may be reasonably requested by the Agent or any Lender.

5.2 CORPORATE EXISTENCE.

         Except as permitted under subsection 6.6(v), the Company will do or
cause to be done all things necessary to preserve and keep in full force and
effect its corporate existence and the corporate, partnership or other existence
of each Subsidiary of the Company and the rights (charter and statutory) and
franchises of the Company and any Subsidiary of the Company; provided, that the
Company shall not be required to preserve any such corporate, partnership or
other existence of any Subsidiary or any such right or franchise, if the Board
of Directors of the Company shall determine in the exercise of its business
judgment that the preservation thereof is no longer desirable in the conduct of
the business of the Company or any Subsidiary and that abandonment of any such
right or franchise shall not in the reasonable determination of the Company
impair the ability of the Company to perform its payment or other material
obligations under the Loan Documents.

5.3 PAYMENT OF TAXES AND CLAIMS; TAX CONSOLIDATION.

         A. The Company will, and will cause its Subsidiaries to, pay or
discharge or cause to be paid or discharged, before the same shall become
delinquent, (i) all taxes, assessments and governmental charges levied or
imposed upon the Company or any Subsidiary or upon the income, profits or
property of the Company or any Subsidiary, and (ii) all lawful claims for labor,
materials and supplies that, if unpaid, might by law become a lien on the
property of the Company or any Subsidiary; provided, however, that the Company
shall not be required to pay or discharge or cause to be paid or discharged any
such tax, assessment, charge or claim the amount, applicability or validity of
which is being contested in good faith by appropriate proceedings and with
respect to which an adequate reserve has been established by the Company to the
extent required by GAAP.

         B. The Company will not, and will not permit any of its Subsidiaries
to, file or consent to the filing of any consolidated income tax return with any
Person (other than any Subsidiary of the Company or the Company or Holdings).

5.4 MAINTENANCE OF PROPERTIES; INSURANCE.

         The Company will, and will cause each of its Subsidiaries to, maintain
all properties used or useful in the conduct of its business in good condition,
repair and working order and supply such properties with all necessary equipment
and make all necessary repairs, renewals,


                                      -60-

replacements, betterments and improvements thereto, all as in the judgment of
the Company may be necessary so that the business carried on in connection
therewith may be properly and advantageously conducted at all times; provided,
however, that nothing in this subsection shall prevent the Company or any
Subsidiary from discontinuing the operation and maintenance of any such
properties if such discontinuance is, in the good faith judgment of the Company
or such Subsidiary, as the case may be, desirable in the conduct of its
respective business and shall not impair the ability of the Company to perform
its payment or other material obligations under the Loan Documents. In addition
to the insurance required pursuant to each of the Security Agreements, the
Company will insure and keep insured, and will cause each of its Subsidiaries to
insure and keep insured, with reputable insurance companies, such of their
respective properties, to such an extent and against such risks, and will
maintain liability insurance, to the extent that property of a similar character
is usually so insured by companies engaged in a similar business and owning
similar properties in accordance with good business practice.

5.5 INSPECTION.

         The Company will, and will cause its Subsidiaries to, permit any
authorized representatives designated by the Agent or any Lender to visit and
inspect any of the properties (other than with respect to Collateral, inspection
of which is governed by the applicable Security Agreements) of the Company or
any of its Subsidiaries, including its and their financial and accounting
records, and to make copies and take extracts therefrom, and to discuss its and
their affairs, finances and accounts with its and their officers and independent
public accountants, all upon reasonable notice and at such reasonable times
during normal business hours and as often as may be reasonably requested;
provided that so long as no Potential Event of Default or Event of Default shall
have occurred and be continuing, such inspection shall not be disruptive to the
Company's business, as reasonably determined by the Company.

5.6 COMPLIANCE WITH LAWS, ETC.

         The Company will, and will cause each of its Subsidiaries to, comply
with all applicable statutes, rules, regulations, orders and restrictions of the
United States of America, all states and municipalities thereof, and of any
governmental department, commission, board, regulatory authority, bureau, agency
and instrumentality of the foregoing, in respect of the conduct of their
respective businesses and the ownership of their respective properties, except
such as are being contested in good faith by appropriate proceedings and except
for such noncompliance as would not in any case or in the aggregate in the
reasonable determination of the Company impair the ability of the Company to
perform its payment or other material obligations under the Loan Documents. The
Company shall not conduct, any Hazardous Materials Activity at any Facility or
at any other location in a manner that does not comply with Environmental Laws.

5.7 COMPANY'S REMEDIAL ACTION REGARDING HAZARDOUS MATERIALS.

         A. MAINTENANCE FACILITY. To the extent required by Environmental Laws,
the Company will promptly take, and will cause each of its Subsidiaries promptly
to take, any and all necessary remedial action (except to the extent that such
remedial action is taken by other Persons responsible for such remedial action
through contractual arrangements with the

                                      -61-

Company) in connection with the presence, storage, use, disposal, transportation
or Release of any Hazardous Materials on, under or about the Maintenance
Facility in order to comply with all applicable Environmental Laws and
Governmental Authorizations. In the event the Company or any of its Subsidiaries
undertakes any remedial action with respect to any Hazardous Materials on, under
or about the Maintenance Facility, the Company or such Subsidiary will conduct
and complete such remedial action (or will cause such action to be taken
pursuant to contractual rights of the Company against third parties) in
compliance with all applicable Environmental Laws, and in accordance with the
policies, orders and directives of all federal, state and local governmental
authorities except when, and only to the extent that, the Company's or such
Subsidiary's liability for such presence, storage, use, disposal, transportation
or discharge of any Hazardous Materials is being contested in good faith and by
appropriate proceedings diligently conducted by the Company or such Subsidiary.

         B. COMPANY FACILITIES. To the extent required by Environmental Laws,
the Company will take, and will cause each of its Subsidiaries to take, any and
all necessary remedial action (except to the extent that such remedial action is
taken by other Persons responsible for such remedial action through contractual
arrangements with the Company) in connection with the presence, storage, use,
disposal, transportation or Release of any Hazardous Materials on, under or
about any Facility (other than the Maintenance Facility) in order to comply
timely with all applicable Environmental Laws and Governmental Authorizations
except for such non-compliance as would not in any case or in the aggregate in
the reasonable determination of the Company impair the ability of the Company to
perform its payment and other material obligations under the Loan Documents. In
the event the Company or any of its Subsidiaries undertakes any remedial action
with respect to any Hazardous Materials on, under or about any Facility (other
than the Maintenance Facility), the Company or such Subsidiary will conduct and
complete such remedial action (or will cause such action to be taken pursuant to
contractual rights of the Company against third parties) in compliance with all
applicable Environmental Laws, and in accordance with the policies, orders and
directives of all federal, state and local governmental authorities except when,
and only to the extent that, the Company's or such Subsidiary's liability for
such presence, storage, use, disposal, transportation or discharge of any
Hazardous Materials is being contested in good faith and by appropriate
proceedings diligently conducted by the Company or such Subsidiary or except for
such non-compliance as would not in any case or in the aggregate in the
reasonable determination of the Company impair the ability of the Company to
perform its payment and other material obligations under the Loan Documents.

5.8 FURTHER ASSURANCES.

         At any time or from time to time upon the request of the Agent, the
Company will, at its expense, promptly execute, acknowledge and deliver such
further documents and do such other acts and things as the Agent may reasonably
request in order to effect fully the purposes of the Loan Documents and to
provide for payment of the Obligations in accordance with the terms of this
Agreement, the Notes and the other Loan Documents.

5.9 EMPLOYEE BENEFIT PLANS.


                                      -62-

         The Company shall take such actions as are reasonably practicable to
ensure that the Plans with respect to which it may have any liability are
operated in material compliance with all applicable laws, except to the extent
that the failure to do so could not in the reasonable determination of the
Company be expected to impair the ability of the Company to perform its payment
or other material obligations under the Loan Documents. Neither the Company nor
a Subsidiary shall amend, adopt or terminate any Plan unless such action could
not in the reasonable determination of the Company be expected to impair the
ability of the Company to perform its payment or other material obligations
under the Loan Documents.

5.10 FAA MATTERS; CITIZENSHIP.

         The Company will at all times hereunder be an "air carrier" within the
meaning of the Act and hold a certificate under Section 41102(a)(1) of the Act.
The Company will at all times hereunder be a United States Citizen holding an
air carrier operating certificate issued pursuant to Chapter 447 of the Act for
aircraft capable of carrying 10 or more individuals or 6,000 pounds or more of
cargo. The Company will possess and maintain all necessary consents, franchises,
licenses, permits, rights and concessions and consents which are material to the
operation of the routes flown by it and the conduct of its business and
operations as currently conducted.

5.11 CHANGES IN GAAP.

         Should there be a change in GAAP from that in effect on the Closing
Date, such that the defined terms set forth in subsection 1.1 or the covenants
set forth in Section 6 would then be calculated in a different manner or with
different components or would render the same not meaningful criteria for
evaluating the matters contemplated to be evidenced by such covenants, the
Company will, upon the request of the Agent and the Lenders, and the Agent and
Lenders will, upon the request of the Company, within 30 days of such request,
amend this Agreement as necessary to preserve the intent of the financial
covenants contained herein on the Closing Date. In the event that the parties
hereto are unable to agree upon such an amendment within such 30 day period,
such defined terms and covenants shall be calculated in accordance with GAAP as
in effect immediately prior to such change.

5.12 REFINANCING OF INDEBTEDNESS

         Any refinancing of Indebtedness for borrowed money shall be made only
pursuant to Refinancing Indebtedness. The Company shall give the Agent prior
written notice of any refinancing of the Air Carrier Guarantee Loan Documents
and the Lease Indenture.

5.13 GUARANTY BY HOLDINGS

         Promptly after repaying in full all amounts owed by the Company under
the Government Guaranteed Loan, the Company shall cause Holdings to enter into a
guaranty, in form and substance reasonably satisfactory to the Agent, pursuant
to which Holdings shall guaranty the Obligations under this Agreement and the
other Loan Documents.

                                   SECTION 6.
                          COMPANY'S NEGATIVE COVENANTS


                                      -63-

         The Company covenants and agrees that, until payment in full of all of
the Loans and other Obligations, the Company shall perform, and shall cause each
of its Subsidiaries to perform, all covenants in this Section 6.

6.1 RESERVED.

6.2 LIENS AND RELATED MATTERS.

         A. PROHIBITION ON LIENS. The Company shall not, and shall not permit
any of its Subsidiaries to, directly or indirectly create, incur, assume or
permit to exist any Lien on or with respect to any property or asset of any kind
(other than Collateral) (including any document or instrument in respect of
goods or accounts receivable) of the Company or any of its Subsidiaries, whether
now owned or hereafter acquired, or any income or profits therefrom, or file or
permit the filing of, or permit to remain in effect, any financing statement or
other similar notice of any Lien with respect to any such property, asset,
income or profits under the Uniform Commercial Code of any state or under any
similar recording or notice statute, except:

         (i) Permitted Encumbrances; and

         (ii) purchase money Liens securing Indebtedness used to acquire
aircraft (including aircraft engines installed thereon), spare aircraft engines,
aircraft parts, simulators, passenger loading bridges or other flight or ground
support equipment (collectively, "Aircraft Related Equipment") or refinancing of
any Aircraft Related Equipment acquired by the Company with cash and not
Indebtedness (for the avoidance of doubt, only to the extent of the Company's
cash investment in such Aircraft Related Equipment);

         (iii) Liens on the Company's existing training facility located in
Phoenix, Arizona; and

         (iv) other Liens securing or relating to Indebtedness and other
liabilities and obligations in an aggregate amount not to exceed $50,000,000 at
any time outstanding.

         B. NO RESTRICTIONS ON SUBSIDIARY DISTRIBUTIONS TO COMPANY OR OTHER
SUBSIDIARIES. Except (i) as provided herein and (ii) as described on Schedule
6.2 annexed hereto, the Company will not, and will not permit any of its
Subsidiaries to, create or otherwise cause or suffer to exist or become
effective any Payment Restriction.

6.3 INVESTMENTS.

         The Company shall not, and shall not permit any Subsidiary to make any
Investment other than (i) Investments made from proceeds from Asset Sales as
permitted by subsection 6.11 or from other sales or other disposition of assets
permitted under Section 6.6(ii); (ii) Investments consisting of Cash
Equivalents; (iii) accounts receivable if credited or acquired in the ordinary
course of business and payable or dischargeable in accordance with customary
trade terms; (iv) payroll advances and advances for business and travel expenses
in the ordinary course of business; (v) Investments by the Company in its
Subsidiaries in the ordinary course of business or otherwise in accordance with
Section 6.8; (vi) Investments by any Subsidiary of the Company in the Company or
in any other Subsidiary; (vii) Investments made by way of any endorsement of

                                      -64-

negotiable instruments received by the Company or any Subsidiary in the ordinary
course of its business and presented by it to any bank for collection or
deposit; (viii) stock, obligations or securities received in settlement of debts
created in the ordinary course of business owing to the Company or any
Subsidiary; (ix) Investments by the Company in any Subsidiary for the purpose of
receivables financing; (x) in addition to any other permitted investments, any
other Investments by the Company in an aggregate amount not exceeding $1,000,000
at any time; and (xi) Investments made in connection with marketing and
promotion agreements, alliance agreements, distribution agreements and other
similar agreements under which a portion of the consideration to the Company
includes an opportunity for Investment in the Capital Stock of other Persons,
which Investments shall not exceed $20,000,000 in any Fiscal Year.

6.4 RESTRICTED PAYMENTS.

         The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, declare, order, pay, make or set apart any sum for any
Restricted Payment; provided, however, that the Company may, so long as no
Potential Event of Default or Event of Default shall have occurred and be
continuing, make a Restricted Payment to Holdings (i) to pay or reimburse the
Company's share of Holding's business expenses and overhead in a maximum amount
of $2,500,000 per Fiscal Year, (ii) to pay or reimburse Holdings for Capital
Stock (including options on any such Capital Stock or related stock appreciation
rights or similar securities) purchases or redemptions from officers, directors
or employees of the Company or Holdings (or their estates or beneficiaries under
their estates) upon death, disability, retirement, termination of employment or
pursuant to the terms of any plan or any other agreement under which such
Capital Stock or related rights were issued, in an amount not to exceed
$3,000,000 per Fiscal Year, (iii) to pay or reimburse Holdings for withholding
taxes arising from cashless exercises of options or warrants for Holdings
Capital Stock year and (iv) to pay or reimburse Holdings for interest payments
under the Lease Indenture, in an amount not to exceed $11,000,000 in Fiscal Year
2002, $12,000,000 in Fiscal Year 2003, $13,000,000 in Fiscal Year 2004, and
$14,000,000 in Fiscal Year 2005 and each fiscal year thereafter until the
Termination Date.

6.5 FINANCIAL COVENANT.

         The Company shall not permit the reserve of Cash and Cash Equivalents
(that in either case are free from all Liens other than Permitted Encumbrances
of the type described in clause (xiii) of the definition of Permitted
Encumbrances) of the Company and its Wholly Owned Subsidiaries (without regard
to Cash and Cash Equivalents in the Cash Collateral Account) to be less than One
Hundred Million Dollars ($100,000,000).

6.6 RESTRICTION ON FUNDAMENTAL CHANGES; ASSET SALES AND ACQUISITIONS; NEW
SUBSIDIARIES.

         The Company shall not, and shall not permit any of its Subsidiaries to,
enter into any transaction of merger or consolidation, or liquidate, wind-up or
dissolve itself (or suffer any liquidation or dissolution), or convey, sell,
lease, sub-lease, transfer or otherwise dispose of, in one transaction or a
series of transactions, all or any part of its business, property or fixed
assets,


                                      -65-

whether now owned or hereafter acquired, or acquire by purchase or otherwise all
or any portion of the business, property or fixed assets (excluding therefrom
purchases and acquisitions in the ordinary course of business by the Company and
its Subsidiaries of property from any Person not constituting all or
substantially all of the property of such Person), or stock or other evidence of
beneficial ownership of, any Person or any division or line of business of any
Person, except:

         (i) any Subsidiary of the Company may be merged with or into the
Company or any Wholly Owned Subsidiary of the Company or be liquidated, wound up
or dissolved, or all or any part of its business, property or assets may be
conveyed, sold, leased, transferred or otherwise disposed of, in one transaction
or a series of transactions, to the Company or any such Wholly Owned Subsidiary
of the Company; provided that, in the case of such a merger, the Company or such
Wholly Owned Subsidiary shall be the continuing or surviving corporation; and

         (ii) the Company and its Subsidiaries may sell or otherwise dispose of
assets in transactions that do not constitute Asset Sales; provided that the
consideration received for such assets shall be in an amount at least equal to
the fair market value thereof; and

         (iii) the Company and its Subsidiaries may make Asset Sales to the
extent permitted by subsection 6.11 hereto; and

         (iv) the Company may make acquisitions of Capital Stock, the assets
and/or the business of another Person (including any division or line of
business of such Person) provided that, (a) the acquisition primarily involves
the acquisition of assets to be used in the business of the Company, (b) with
respect to such acquisition any newly acquired Subsidiary of the Company shall
be a Wholly Owned Subsidiary, (c) immediately before and after giving effect
thereto, no Potential Event of Default or Event of Default shall have occurred
and be continuing, (d) immediately after giving effect to the acquisition, the
Company shall be in compliance on a Pro Forma Basis with financial covenants in
subsection 6.5 and such compliance shall be evidenced by an Officer's
Certificate demonstrating such compliance and (e) the aggregate purchase price
in connection with all such acquisitions (excluding therefrom any Indebtedness
assumed in connection with such acquisitions and any portion of the purchase
price thereof paid with the Company's Common Stock) does not exceed
$200,000,000; and

         (v) the Company may enter into a consolidation or merger that complies
with subsections 6.10 and 6.12 hereof.

6.7 SALES AND LEASE-BACKS.

         The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, become or remain liable as lessee or as a guarantor or
other surety with respect to any lease, whether an Operating Lease or a Capital
Lease, of any property (whether real, personal or mixed), whether now owned or
hereafter acquired, other than aircraft (including aircraft engines installed
thereon), spare aircraft engines, aircraft parts, simulators, passenger loading
bridges or other flight or ground support equipment, in each case which (i) the
Company or any of its Subsidiaries has sold or transferred or is to sell or
transfer to any other Person (other than the Company or any of its Subsidiaries)
or (ii) the Company or any of its Subsidiaries intends to use

                                      -66-

for substantially the same purpose as any other property which has been or is to
be sold or transferred by the Company or any of its Subsidiaries to any Person
(other than the Company or any of its Subsidiaries) in connection with such
lease; provided that the Company and its Subsidiaries may become and remain
liable as lessee, guarantor or other surety with respect to any such lease if
and to the extent that the annual aggregate rentals under all such leases shall
not exceed $20,000,000.

6.8 TRANSACTIONS WITH AFFILIATES.

         A. Neither the Company nor any Subsidiary of the Company shall,
directly or indirectly (i) sell, lease, transfer or otherwise dispose of any of
its properties or assets, or issue securities to, (ii) purchase any property,
assets or securities from, (iii) make any Investment in, or (iv) enter into or
suffer to exist any contract or agreement with or for the benefit of, an
Affiliate or holder of 5% or more of any class of Capital Stock (and any
Affiliate of such holder) of the Company (an "AFFILIATE TRANSACTION"), other
than (x) Affiliate Transactions permitted under subsection 6.8B hereof and (y)
Affiliate Transactions (including lease transactions) which are on fair and
reasonable terms no less favorable to the Company or such Subsidiary, as the
case may be, than those as might reasonably have been obtainable at such time
from an unaffiliated party; provided that if an Affiliate Transaction or series
of related Affiliate Transactions involves or has a value in excess of
$15,000,000, the Company or such Subsidiary, as the case may be, shall not enter
into such Affiliate Transaction or series of related Affiliate Transactions
unless a majority of the disinterested members of the Board of Directors of the
Company or such Subsidiary shall reasonably and in good faith determine that
such Affiliate Transaction is fair to the Company or such Subsidiary, as the
case may be, or is on terms no less favorable to the Company or such Subsidiary,
as the case may be, than those as might reasonably have been obtained at such
time from an unaffiliated party.

         B. The provisions of subsection 6.8A shall not apply to (i) any
agreement as in effect as of the date hereof, or any amendment thereto in effect
as of the date hereof or any transaction contemplated thereby (including
pursuant to any amendment thereto) so long as any such agreement or amendment or
transaction is not disadvantageous to the Lenders in any material respect; (ii)
any transaction between the Company and any Wholly Owned Subsidiary or between
Wholly Owned Subsidiaries, provided such transactions are not otherwise
prohibited by this Agreement; (iii) reasonable and customary fees and
compensation paid to, and indemnity provided on behalf of, officers, directors,
employees or consultants of the Company or any Subsidiary, as determined by the
Board of Directors of the Company or any Subsidiary or the senior management
thereof in good faith; (iv) any Restricted Payments not prohibited by subsection
6.4; (v) any payments or other transactions pursuant to any tax sharing
agreement between the Company and any other Person with which the Company is
required or permitted to file a consolidated tax return or with which the
Company is or could be part of a consolidated group for tax purposes; (vi)
transactions with Chautauqua Airlines, Inc., Continental Airlines, Inc., Mesa
Airlines, Inc. and their respective Affiliates as contemplated by the Alliance
Agreements; and (vii) the Air Carrier Guarantee Loan Documents and the
transactions contemplated thereby.

6.9 CONDUCT OF BUSINESS.


                                      -67-

         From and after the date hereof, the Company shall not, and shall not
permit any of its Subsidiaries to, engage in any business other than (i) the
businesses engaged in by the Company and its Subsidiaries on the date hereof and
similar or related businesses and (ii) such other lines of business as may be
consented to by Requisite Lenders.

6.10 MERGER OR CONSOLIDATION.

         The Company shall not consolidate with or merge into any other
corporation or convey, lease or transfer its properties and assets substantially
as an entirety to any Person, unless: (i) in the case of a consolidation or
merger, the Company is the surviving entity, or (ii) if the Company is not the
surviving entity, such surviving entity or the Person that acquires by
conveyance, lease or transfer the properties and assets of the Company
substantially as an entirety, shall be a corporation organized and existing
under the laws of the United States of America or any State or the District of
Columbia, and shall expressly assume, by an agreement executed and delivered to
the Agent, in form satisfactory to the Agent, the Company's Obligations to repay
the Loans and all other Obligations of the Company; (iii) immediately before and
after giving effect to such transaction, no Event of Default or Potential Event
of Default shall have occurred and be continuing; and (iv) the Company has
delivered to the Agent an Officer's Certificate and, in the case of any
transaction described in clause (ii) above, an opinion of counsel from counsel
satisfactory to the Agent, in form and substance satisfactory to the Agent,
stating that such consolidation, merger, conveyance, lease or transfer and such
agreement comply with this subsection and that all conditions precedent herein
provided for relating to such transaction have been complied with and addressing
such other matters as may be reasonably requested by the Agent.

6.11 LIMITATION ON ASSET SALES.

         In the event and to the extent that on any date after the Closing Date
the Company and its Subsidiaries shall receive Net Cash Proceeds from one or
more Asset Sales (other than Asset Sales by the Company or any Subsidiary to the
Company or another Subsidiary), then the Company shall, or shall cause such
Subsidiary to, within 6 months after such date apply an amount equal to the
amount by which the aggregate amount of Net Cash Proceeds for such 6 month
period exceeds $10,000,000 (A) to repay Indebtedness of the Company or
Indebtedness of any of its Subsidiaries, in each case owing to a Person other
than the Company or any of its Subsidiaries, and/or (B) subject to subsection
6.6(iv), as an Investment (or enter into a definitive agreement committing to so
invest within 6 months after the date of such agreement), in property or assets
of a nature or type or that are used in a business (or in a Person having
property and assets of a nature or type, or engaged in a business) similar or
related to the nature or type of the property and assets of, or the business of,
the Company and its Subsidiaries existing on the date thereof (as determined in
good faith by the board of directors of the Company or such Subsidiary, as the
case may be, whose determination shall be conclusive and evidenced by a
resolution of the board of directors of the Company or such Subsidiary). The
amount of such Net Cash Proceeds required to be applied (or to be committed to
be applied) during such 6-month period as set forth in clause (A) or (B) of the
preceding sentence shall constitute "EXCESS PROCEEDS."


                                      -68-

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

         Other than Subsidiaries which comply with Section 6.13, each Subsidiary
of the Company shall at all times be a Wholly Owned Subsidiary of the Company.
The Company (i) shall not, and shall not permit any Subsidiary to, transfer,
convey, sell, encumber or otherwise dispose of any Capital Stock of a
Subsidiary, or securities convertible or exchangeable into, or options,
warrants, rights or any other interest with respect to, Capital Stock of a
Subsidiary to any Person (other than the Company or a Wholly Owned Subsidiary)
and (ii) shall not permit any Subsidiary to issue shares of its Capital Stock
(other than directors' qualifying shares), or securities convertible or
exchangeable into, or options, warrants, rights or any other interest with
respect to, its Capital Stock to any Person other than to the Company or a
Wholly Owned Subsidiary; provided, that the limitations of this subsection shall
not apply to any transaction between or among the Company and one or more direct
or indirect Wholly Owned Subsidiaries of the Company whereby the Company merges,
consolidates or otherwise combines with such Wholly Owned Subsidiary and
pursuant to which all existing holders of Capital Stock of the Company receive,
upon conversion or otherwise in exchange for securities owned by such holders,
Capital Stock of a corporation which immediately prior to such exchange is a
Wholly Owned Subsidiary, and which securities have rights and preferences
identical to those of the securities replaced, so long as (a) immediately before
and after giving effect to such transaction no Potential Default or Event of
Default shall have occurred and be continuing, and (ii) such transaction is
otherwise in conformity with and not prohibited by this Agreement.

6.13 LIMITATION ON CREATION OF NEW SUBSIDIARIES.

         The Company may create new Subsidiaries provided that (i) the total
assets of all Subsidiaries in the aggregate (other than (a) single purpose
Subsidiaries created solely for the purpose of financing aircraft and (b)
Subsidiaries created solely for the purpose of acquiring assets from Persons
other than the Company or any of its Subsidiaries) does not at any time exceed
ten percent (10%) of the consolidated total assets of the Company, in each case
determined in accordance with GAAP and (ii) the Company complies with the
provisions of subsection 5.1(xi) hereof.

6.14 LIMITATION ON AMENDMENTS TO INDEBTEDNESS; PERFORMANCE OF AGREEMENTS

         The Company shall not amend, waive or modify, nor shall it consent to
or request any amendment, waiver or modification, of any of the material terms,
conditions, representations and covenants contained in the Air Carrier Guarantee
Loan Documents or the Lease Indenture that (i) shortens the final maturity date
of the Government Guaranteed Loan or the debt issued pursuant to the Lease
Indenture (collectively or individually, without giving effect to any amendment,
waiver or modification, the "Initial Indebtedness"; and after giving effect to
any such amendment, waiver or modification, the "Amended Indebtedness"), (ii)
requires the acceleration of the final scheduled maturity date and/or any
principal payments, including but not limited to scheduled payments and
mandatory prepayments, and/or increases the principal amount payable on any date
(including, without limitation, pursuant to mandatory prepayments) prior to the
dates

                                      -69-

of analogous payments of such Initial Indebtedness, (iii) provides for an
interest rate applicable to such Amended Indebtedness, plus the interest rate
equivalent of all remaining fees and costs associated with closing and servicing
such Amended Indebtedness higher than the greater of (x) (I) if such Amended
Indebtedness bears interest at a floating rate of interest, 105% of the average
remaining interest rate applicable to such Initial Indebtedness plus the average
remaining fees and costs associated with servicing such Initial Indebtedness, or
(II) if such Amended Indebtedness bears interest at a fixed rate of interest,
the amount calculated as the sum of clause (I) above plus the appropriate
fixed-for-floating swap rate for the Initial Indebtedness, and (y) 105% of the
average remaining "all in" interest expense for such Initial Indebtedness as
contemplated in the Restructuring Plan.. The Company shall not agree to amend,
waive or modify the Concessions if, after giving effect to the aggregate value
of all such amendments, waivers or modifications to the Concessions, the value
of the Concessions as a whole to the Company would be reduced as a result of
such amendments, waivers or modifications by more than $120.0 million (on a net
present value basis) in the aggregate, as determined in good faith by the
Company. The Company shall perform each of its material obligations under the
Air Carrier Guarantee Loan Documents, the Lease Indenture and the Concessions,
in each case strictly in accordance with the terms thereof.

                                   SECTION 7.
                                EVENTS OF DEFAULT

         If any of the following conditions or events ("EVENTS OF DEFAULT")
shall occur:

7.1 FAILURE TO MAKE PAYMENTS WHEN DUE.

         (i) Failure by the Company to pay any installment of principal of any
Loan or Note when due, whether at stated maturity, by acceleration, by notice of
voluntary prepayment, by mandatory prepayment or otherwise; or (ii) failure by
the Company to pay any interest on any Loan or Note or any fee or any other
amount due under this Agreement or any other Loan Document within five Business
Days after the date due; or

7.2 DEFAULT IN OTHER AGREEMENTS.

         (i) (a) The Company or any Subsidiary (1) fails to make (whether as
primary obligor or as guarantor or other surety) any principal payment of or
interest or premium, if any, on any Indebtedness (other than Indebtedness
referred to in subsection 7.1) or any Operating Lease beyond any period of grace
provided with respect thereto, provided that the aggregate amount of all
Indebtedness and aggregate amounts under Operating Leases as to which such a
payment default shall occur and be continuing is equal to or exceeds
$10,000,000, or (2) fails to duly observe, perform or comply with any agreement
with any Person or any term or condition of any instrument, if such failure,
either individually or in the aggregate, shall have caused or shall have the
ability to cause the acceleration of the payment of Indebtedness with an
aggregate face amount which is equal to or exceeds $10,000,000; or (b) any Event
of Default (as defined in the Government Guaranteed Loan Agreement or the Lease
Indenture, as the case may be) has occurred and is continuing under the
Government Guaranteed Loan Agreement or the Lease Indenture.


                                      -70-

7.3 BREACH OF CERTAIN COVENANTS.

         Failure of the Company to perform or comply in any material respect
with any term or condition contained in subsections 2.5B, 5.2, 5.10, 6.2, 6.5,
6.7 and 6.9 of this Agreement and (excluding subsections 5.10, 6.2, 6.5 and 6.9)
such failure shall not have been remedied within five days after a Responsible
Officer of the Company knows (or, in the reasonable exercise of such Responsible
Officer's discretion, should have known) of such failure; or

7.4 BREACH OF WARRANTY.

         Any representation, warranty, certification or other statement made by
the Company or any of its Subsidiaries in any Loan Document or in any statement
or certificate at any time given by the Company or any of its Subsidiaries in
writing pursuant hereto or thereto or in connection herewith or therewith shall
be false in any material respect on the date as of which made; or

7.5 OTHER DEFAULTS UNDER LOAN DOCUMENTS.

         (i) The Company shall default in the performance of or compliance with
any term contained in this Agreement or any of the other Loan Documents, other
than any such term referred to in any other subsection of this Section 7, and
such default shall not have been remedied or waived (x) within 30 days after the
earlier of (a) a Responsible Officer of the Company becoming aware of such
default or (b) receipt by the Company of notice from the Agent or any Lender of
such default or (y) with respect to a default under subsection 6.5, the earlier
of (a) an officer of the Company becoming aware of the default after the
applicable measurement date and (b) the delivery of financial statements
pursuant to subsection 5.1 or (ii) a guaranty, if any, of the Obligations for
any reason ceases to be in full force and effect; or

7.6 INVOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC.

         (i) A court shall enter a decree or order for relief in respect of the
Company or any of its Subsidiaries in an involuntary case under the Bankruptcy
Code or under any other applicable bankruptcy, insolvency or similar law now or
hereafter in effect; or any other similar relief shall be granted under any
applicable federal or state law; or (ii) an involuntary case shall be commenced
against the Company or any of its Subsidiaries under the Bankruptcy Code or
under any other applicable bankruptcy, insolvency or similar law now or
hereafter in effect; or a decree or order of a court for the appointment of a
receiver, liquidator, sequestrator, trustee, custodian or other officer having
similar powers over the Company or any of its Subsidiaries, or over all or a
substantial part of its property, shall have been entered; or there shall have
occurred the involuntary appointment of an interim receiver, trustee or other
custodian of the Company or any of its Subsidiaries for all or a substantial
part of its property; or a warrant of attachment, execution or similar process
shall have been issued against any substantial part of the property of the
Company or any of its Subsidiaries, and any such event described in this clause
(i) or clause (ii) shall continue for 60 days unless dismissed, bonded or
discharged; or

7.7 VOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC.


                                      -71-

         (i) The Company or any of its Subsidiaries shall have an order for
relief entered with respect to it or commence a voluntary case under the
Bankruptcy Code or under any other applicable bankruptcy, insolvency or similar
law now or hereafter in effect, or shall consent to the entry of an order for
relief in an involuntary case, or to the conversion of an involuntary case to a
voluntary case, under any such law, or shall consent to the appointment of or
taking possession by a receiver, trustee or other custodian of all or a
substantial part of its property; or the Company or any of its Subsidiaries
shall make any assignment for the benefit of creditors; or (ii) the Company or
any of its Subsidiaries shall be unable, or shall fail generally, or shall admit
in writing its inability, to pay its debts as such debts become due; or the
Board of Directors of the Company or any of its Subsidiaries (or any committee
thereof) shall adopt any resolution or otherwise authorize any action to approve
any of the actions referred to in clause (i) above or this clause (ii); or

7.8 JUDGMENTS AND ATTACHMENTS.

         Any final judgment or order (not covered by insurance) for the payment
of money in excess of $25,000,000 in the aggregate for all such final judgments
or orders against the Company or any of its Subsidiaries treating any
deductibles, self-insurance or retention as not so covered shall be rendered
against the Company or any Subsidiary and shall not be discharged, and there
shall be any period of 60 consecutive days following entry of the final judgment
or order that causes the aggregate amount for all such final judgements or
orders outstanding against the Company or its Subsidiaries to exceed $25,000,000
during which a stay of enforcement of such final judgment or order, by reason of
a pending appeal or otherwise, shall not be in effect; or

7.9 DISSOLUTION.

         Any order, judgment or decree shall be entered against the Company or
any of its Subsidiaries decreeing the dissolution or split up of the Company or
that Subsidiary and such order shall remain undischarged or unstayed for a
period in excess of 30 days; or

7.10 RESERVED.

7.11 FAILURE OF SECURITY.

         Upon execution and delivery thereof, any Loan Document shall, at any
time, cease to be in full force and effect in any material respect (other than
by reason of a release of Collateral thereunder in accordance with the terms
hereof or thereof, the satisfaction in full of the Obligations or any other
termination of any Security Agreement in accordance with the terms hereof or
thereof) or shall be declared null and void, or the validity or enforceability
thereof shall be contested in writing by the Company, or the Agent shall not
have or shall in any material respect cease to have a valid and perfected first
priority security interest in any Collateral (or in the case of the Spare Parts
Security Agreement, Rotables only) purported to be covered thereby, subject only
to Permitted Liens and, in each case, the Company shall fail to (i) deliver a
Borrowing Base Certificate excluding therefrom the Collateral subject to such
Security Agreement within ten (10) days after a Responsible Officer of the
Company knows of such


                                      -72-

failure and (ii) make a prepayment (and/or provide collateral) in accordance
with subsection 2.4B(ii)(1)(a);

THEN (i) upon the occurrence of any Event of Default described in subsection 7.6
or 7.7, each of (a) the unpaid principal amount of and accrued interest on the
Loans and Notes and (b) all other Obligations shall automatically become
immediately due and payable, without presentment, demand, protest or other
requirements of any kind, all of which are hereby expressly waived by the
Company, and (ii) upon the occurrence and during the continuation of any other
Event of Default, the Agent shall, upon the written request or with the written
consent of Requisite Lenders, by written notice to the Company, declare all or
any portion of the amounts described in clauses (a) and (b) above to be, and the
same shall forthwith become, immediately due and payable. Following the
occurrence and during the continuation of an Event of Default, the Agent may
exercise any remedy provided in the Security Agreements or any other Loan
Document or otherwise available to it.

                                   SECTION 8.
                                      AGENT

8.1 APPOINTMENT.

         The Industrial Bank of Japan, Limited, is hereby appointed the Agent
hereunder and under the other Loan Documents and each Lender hereby authorizes
the Agent to act as its agent in accordance with the terms of this Agreement and
the other Loan Documents. The Agent agrees to act upon the express conditions
contained in this Agreement and the other Loan Documents, as applicable. The
provisions of this Section 8 (except subsections 8.5 and 8.6) are solely for the
benefit of the Agent, and the Lenders, and the Company shall have no rights as a
third party beneficiary of any of the provisions thereof. In performing its
functions and duties under this Agreement, the Agent shall act solely as an
agent of the Lenders and does not assume and shall not be deemed to have assumed
any obligation towards or relationship of agency or trust with or for the
Company or any of its Subsidiaries.

8.2 POWERS AND DUTIES; GENERAL IMMUNITY.

         A. POWERS; DUTIES SPECIFIED. Each Lender irrevocably authorizes the
Agent to take such action on such Lender's behalf and to exercise such powers,
rights and remedies hereunder and under the other Loan Documents as are
specifically delegated or granted to the Agent by the terms hereof and thereof,
together with such powers, rights and remedies as are reasonably incidental
thereto. The Agent shall have only those duties and responsibilities that are
expressly specified in this Agreement and the other Loan Documents. The Agent
may exercise such powers, rights and remedies and perform such duties by or
through its agents or employees. The Agent shall not have, by reason of this
Agreement or any of the other Loan Documents, a fiduciary relationship in
respect of any Lender; and nothing in this Agreement or any of the other Loan
Documents, expressed or implied, is intended to or shall be so construed as to
impose upon the Agent any obligations in respect of this Agreement or any of the
other Loan Documents except as expressly set forth herein or therein.


                                      -73-

         B. NO RESPONSIBILITY FOR CERTAIN MATTERS. The Agent shall not be
responsible to any Lender for the execution, effectiveness, genuineness,
validity, enforceability, collectibility or sufficiency of this Agreement or any
other Loan Document or for any representations, warranties, recitals or
statements made herein or therein or made in any written or oral statements or
in any financial or other statements, instruments, reports or certificates or
any other documents furnished or made by the Agent to the Lenders or by or on
behalf of the Company to the Agent or any Lender in connection with the Loan
Documents and the transactions contemplated thereby or for the financial
condition or business affairs of the Company or any other Person liable for the
payment of any Obligations, nor shall the Agent be required to ascertain or
inquire as to the performance or observance of any of the terms, conditions,
provisions, covenants or agreements contained in any of the Loan Documents or as
to the use of the proceeds of the Loans or as to the existence or possible
existence of any Event of Default or Potential Event of Default. Anything
contained in this Agreement to the contrary notwithstanding, the Agent shall not
have any liability arising from confirmations of the amount of outstanding Loans
or the component amounts thereof.

         C. EXCULPATORY PROVISIONS. Neither the Agent nor any of its officers,
directors, employees or agents shall be liable to the Lenders for any action
taken or omitted by the Agent under or in connection with any of the Loan
Documents except to the extent caused by their respective gross negligence or
willful misconduct. If the Agent shall request instructions from the Lenders
with respect to any act or action (including the failure to take an action) in
connection with this Agreement or any of the other Loan Documents, the Agent
shall be entitled to refrain from such act or taking such action unless and
until the Agent shall have received instructions from the Requisite Lenders.
Without prejudice to the generality of the foregoing, (i) the Agent shall be
entitled to rely, and shall be fully protected in relying, upon any
communication, instrument or document believed by it to be genuine and correct
and to have been signed or sent by the proper person or persons, and shall be
entitled to rely and shall be protected in relying on opinions and judgments of
attorneys (who may be attorneys for the Company and its Subsidiaries),
accountants, experts and other professional advisors selected by it; and (ii) no
Lender shall have any right of action whatsoever against the Agent as a result
of the Agent acting or (where so instructed) refraining from acting under this
Agreement or any of the other Loan Documents in accordance with the instructions
of Requisite Lenders. The Agent shall be entitled to refrain from exercising any
power, discretion or authority vested in it under this Agreement or any of the
other Loan Documents unless and until it has obtained the instructions of the
Requisite Lenders.

         D. AGENT ENTITLED TO ACT AS LENDER. The agency hereby created shall in
no way impair or affect any of the rights and powers of, or impose any duties or
obligations upon, the Agent in its individual capacity as a Lender hereunder.
With respect to its participations in the Loans, the Agent shall have the same
rights and powers hereunder as any other Lender and may exercise the same as
though it were not performing the duties and functions delegated to it
hereunder, and the term "Lender" or "Lenders" or any similar term shall, unless
the context clearly otherwise indicates, include the Agent in its individual
capacity. The Agent and its Affiliates may accept deposits from, lend money to
and generally engage in any kind of banking, trust, financial advisory or other
business with the Company or any of its Affiliates as if it were not performing
the duties specified herein, and may accept fees and other consideration from
the


                                      -74-

Company for services in connection with this Agreement and otherwise without
having to account for the same to the Lenders.

8.3 REPRESENTATIONS AND WARRANTIES; NO RELIANCE.

         Each Lender represents and warrants that it has made its own
independent investigation of the financial condition and affairs of the Company
and its Subsidiaries in connection with the making and maintaining of the Loans
hereunder and that it has made and shall continue to make its own analysis of
the creditworthiness of the Company and its Subsidiaries. The Agent shall not
have any duty or responsibility, either initially or on a continuing basis, to
make any such investigation or any such appraisal on behalf of Lenders or to
provide any Lender with any credit or other information with respect thereto,
whether coming into its possession before the making of the Loans on the Closing
Date or at any time or times thereafter, and the Agent shall not have any
responsibility with respect to the accuracy of or the completeness of any
information provided to the Lenders.

8.4 RIGHT TO INDEMNITY.

         Each Lender, in proportion to its Pro Rata Share, severally agrees to
indemnify the Agent (and their respective affiliates and partners), to the
extent that the Agent shall not have been reimbursed by the Company, for and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses (including, without limitation,
counsel fees and disbursements) or disbursements of any kind or nature
whatsoever which may be imposed on, incurred by or asserted against the Agent in
exercising their respective powers, rights and remedies or performing their
respective duties hereunder or under the other Loan Documents or otherwise in
its capacity as Agent, in any way relating to or arising out of this Agreement
or the other Loan Documents; provided that no Lender shall be liable for any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from the Agent's
gross negligence or willful misconduct.

8.5 SECURITY AGREEMENTS.

         Without limiting the generality of subsection 8.1, each Lender hereby
further authorizes the Agent to enter into the Security Agreements as secured
party on behalf of and for the benefit of such Lender and agrees to be bound by
the terms of each of the Security Agreements; provided that, except as otherwise
provided below, the Agent shall not enter into or consent to any amendment,
modification, termination or waiver of any provision contained in any Security
Agreement without prior written consent of the Requisite Lenders. Anything
contained in any of the Loan Documents to the contrary notwithstanding, each
Lender agrees that no Lender shall have any right individually to realize upon
any of the Collateral under any Security Agreement, it being understood and
agreed that all powers, rights and remedies under the Security Agreements may be
exercised solely by the Agent for the benefit of Lenders in accordance with the
terms thereof. Each Lender hereby authorizes the Agent (i) to release or
subordinate Collateral as permitted or required under this Agreement or the
Security Agreements, and agrees that a certificate executed by the Agent
evidencing such release of Collateral shall be conclusive evidence of such
release as to any third party and (ii) to enter into any amendments of the


                                      -75-

Security Agreements to cure any ambiguity, defect or inconsistency or to amend
provisions relating to ministerial or administrative matters which do not
materially adversely affect the rights of the Lenders thereunder.

8.6 SUCCESSOR AGENT.

         The Agent may resign at any time by giving 30 days' prior written
notice thereof to the Lenders and the Company and may be removed at any time
with cause by the Required Lenders, such resignation or removal to be effective
only upon acceptance of its appointment of a successor Agent as provided herein.
Upon any such notice of resignation or removal, the Requisite Lenders shall have
the right to appoint a successor Agent and shall notify the Company in writing
of such appointment; provided, that, unless a Potential Event of Default or
Event of Default shall have occurred and then be continuing, the Required
Lenders shall obtain the Company's written consent to the appointment of such
successor Agent (such consent not to be unreasonably withheld or delayed). Upon
the acceptance of any appointment hereunder by a successor Agent, that successor
Agent shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Agent and the retiring or removed Agent
shall be discharged from its duties and obligations under this Agreement. After
any retiring Agent's resignation or removal hereunder as Agent, the provisions
of this Section 8 shall inure to its benefit as to any actions taken or omitted
to be taken by it while it was the Agent under this Agreement.

                                   SECTION 9.
                                  MISCELLANEOUS

9.1 ASSIGNMENTS AND PARTICIPATIONS IN LOANS.

         A. GENERAL. Each Lender shall have the right at any time to (i) subject
to compliance with subsection 9.1B(i), sell, assign or transfer to any Eligible
Assignee, or (ii) sell participations to any Person in, all or any part of its
Loans made by it or any other interest herein or in any other Obligations owed
to it; provided that no such sale, assignment, transfer or participation shall
require the Company to file a registration statement with the Securities and
Exchange Commission or apply to qualify such sale, assignment, transfer or
participation under the securities laws of any state; provided, further that no
such sale, assignment or transfer described in clause (i) above shall be
effective unless and until an Assignment Agreement effecting such sale,
assignment or transfer shall have been accepted by the Agent and recorded in the
Register as provided in subsection 9.1B(ii). Except as otherwise provided in
this subsection 9.1, no Lender shall, as between the Company and such Lender, be
relieved of any of its obligations hereunder as a result of any sale, assignment
or transfer of, or any granting of participations in, all or any part of its
Loans or the other Obligations owed to such Lender.

         B. ASSIGNMENTS.

                  (i) Amounts and Terms of Assignments. Each Loan or other
         Obligation may (a) be assigned in any amount to another Lender, or to
         an Affiliate of the assigning Lender or another Lender, with the giving
         of notice to the Company and the Agent or (b)


                                      -76-

         be assigned in an aggregate amount of not less than $5,000,000 (or such
         lesser amount as shall constitute the aggregate amount of the Loans,
         and other Obligations of the assigning Lender) to any other Eligible
         Assignee with the consent of the Agent (which consent shall not be
         unreasonably withheld or delayed). To the extent of any such assignment
         in accordance with either clause (a) or (b) above, the assigning Lender
         shall be relieved of its obligations thereafter arising with respect to
         its Loans, or other Obligations or the portion thereof so assigned. The
         parties to each such assignment shall execute and deliver to the Agent,
         for its acceptance and recording in the Register, an Assignment
         Agreement, together with a processing and recordation fee of $3,500 and
         such forms, certificates or other evidence, if any, with respect to
         United States federal income tax withholding matters as the assignee
         under such Assignment Agreement may be required to deliver to the Agent
         pursuant to subsection 2.7B(iii)(a). Upon such execution, delivery and
         acceptance, from and after the effective date specified in such
         Assignment Agreement, (y) the assignee thereunder shall be a party
         hereto and, to the extent that rights and obligations hereunder have
         been assigned to it pursuant to such Assignment Agreement, shall have
         the rights and obligations of a Lender hereunder and (z) the assigning
         Lender thereunder shall, to the extent that rights and obligations
         hereunder have been assigned by it pursuant to such Assignment
         Agreement, relinquish its rights and be released from its obligations
         thereafter arising under this Agreement (and, in the case of an
         Assignment Agreement covering all or the remaining portion of an
         assigning Lender's rights and obligations under this Agreement, such
         Lender shall cease to be a party hereto). The assigning Lender shall,
         upon the effectiveness of such assignment or as promptly thereafter as
         practicable, surrender its applicable Notes to the Agent for
         cancellation, and thereupon new Notes shall be issued to the assignee
         substantially in the form of Exhibit III and Exhibit III-A annexed
         hereto, as the case may be, with appropriate insertions, to reflect the
         outstanding Loans, as the case may be, of the assignee and/or the
         assigning Lender. If a Lender assigns all some or of its Term Note,
         such Lender must also assign a like portion of such Lender's PIK Note
         to the same Eligible Assignee. No Lender may assign any of its PIK Note
         without an assignment of some or all of its Term Note as permitted
         hereunder.

                  (ii) Acceptance by the Agent; Recordation in Register. Upon
         its receipt of an Assignment Agreement executed by an assigning Lender
         and an assignee representing that it is an Eligible Assignee, together
         with the processing and recordation fee referred to in subsection
         9.1B(i) and any forms, certificates or other evidence with respect to
         United States federal income tax withholding matters that such assignee
         may be required to deliver to the Agent pursuant to subsection
         2.7B(iii)(a), the Agent shall, if such Assignment Agreement has been
         completed and is in substantially the form of Exhibit VI hereto and if
         the Agent has consented to the assignment evidenced thereby, (a) accept
         such Assignment Agreement by executing a counterpart thereof as
         provided therein (which acceptance shall evidence any required consent
         of the Agent to such assignment), (b) record the information contained
         therein in the Register and (c) give prompt notice thereof to the
         Company. The Agent shall maintain a copy of each Assignment Agreement
         delivered to and accepted by it as provided in this subsection
         9.1B(ii).


                                      -77-

         C. PARTICIPATIONS. No participation granted hereunder shall relieve the
granting Lender from its obligations hereunder and the Agent, the Company and
other Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement and
the other Loan Documents, provided, however, that (i) the selling Lender's
obligations under this Agreement shall remain unchanged, (ii) such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations, (iii) the participating banks or other entities shall be
entitled to the provisions of subsections 2.6, 2.7, 9.3 and 9.5, provided,
however, that the costs to which a participant shall be entitled to obtain
pursuant thereto shall be determined by reference to such participant's selling
Lender and shall be recoverable solely from such selling Lender and (iv) the
Company, the Agent and the other Lenders shall continue to deal solely and
directly with the selling Lender in connection with such Lender's rights and
obligations under this Agreement and the other Loan Documents; provided,
however, as between the selling Lender and any such participant, the selling
Lender may grant such participant rights with respect to amendments,
modifications or waivers with respect to any fees payable hereunder to such
Lender (including the amount and the dates fixed for the payment of any such
fees) or the amount of principal or the rate of interest payable on, or the
release of any obligations of the Company hereunder and under the other Loan
Documents. No participant shall be a third party beneficiary of this Agreement
and shall not be entitled to enforce any rights provided to its selling Lender
against the Company under this Agreement.

         D. ASSIGNMENTS TO FEDERAL RESERVE BANKS. In addition to the assignments
and participations permitted under the foregoing provisions of this subsection
9.1, any Lender may assign and pledge all or any portion of its Loans, the other
Obligations owed to such Lender, and its Notes to any Federal Reserve Bank as
collateral security pursuant to Regulation A of the Board of Governors of the
Federal Reserve System and any operating circular issued by such Federal Reserve
Bank; provided that (i) no Lender shall, as between the Company and such Lender,
be relieved of any of its obligations hereunder as result of any such assignment
and pledge and (ii) in no event shall such Federal Reserve Bank be considered to
be a "Lender" or be entitled to require the assigning Lender to take or omit to
take any action hereunder.

         E. INFORMATION. Each Lender may furnish any information concerning the
Company and its Subsidiaries in the possession of that Lender from time to time
to assignees and participants (including prospective assignees and
participants), subject to subsection 9.19.

9.2 EXPENSES.

         Whether or not the transactions contemplated hereby shall be
consummated, the Company agrees to pay promptly (i) all the reasonable costs and
expenses of preparation of the Loan Documents; (ii) all the costs of furnishing
all opinions by counsel for the Company (including without limitation any
opinions requested by the Agent or Lenders as to any legal matters arising
hereunder) and of the Company's performance of and compliance with all
agreements and conditions on its part to be performed or complied with under
this Agreement and the other Loan Documents including, without limitation, with
respect to confirming compliance with environmental and insurance requirements;
(iii) the reasonable fees, expenses and disbursements of counsel to the Agent in
connection with the negotiation, preparation,

                                      -78-

execution and administration of the Loan Documents and the Loans and any
consents, amendments, waivers or other modifications hereto or thereto, and any
other documents or matters, requested by the Company; (iv) all the costs and
expenses of creating and perfecting the Liens in favor of the Agent for the
benefit of Lenders pursuant to the Loan Documents, including filing and
recording fees and expenses, title insurance, reasonable fees and expenses of
counsel for providing such opinions as Lenders may reasonably request and
reasonable fees and expenses of legal counsel to the Agent (including local
counsel); and (v) all costs and expenses, including reasonable attorneys' fees
(including allocated costs of internal counsel) and costs of settlement incurred
by the Agent and Lenders in enforcing any Obligations of or in collecting any
payments due from the Company hereunder or under the other Loan Documents by
reason of any Event of Default or Potential Event of Default or in connection
with any refinancing or restructuring of the credit arrangements provided under
this Agreement in the nature of a "work-out" or pursuant to any insolvency or
bankruptcy proceedings.

9.3 INDEMNITY.

         Subject to the limitations in subsection 9.2 with respect to the
matters specified therein, and without duplication of the provisions of the
Environmental Indemnity Agreement, Section 2.11 of any Aircraft Security
Agreement and Section 3.06 of the Spare Engine Security Agreement, whether or
not the transactions contemplated hereby shall be consummated, the Company
agrees to defend, indemnify, pay and hold harmless the Agent, the Lenders, the
Co-Lead Book Managers, the Syndication Agent, the Arrangers and the
Documentation Agent and the officers, directors, employees, agents and
affiliates of the Agent, the Lenders, the Co-Lead Book Managers, the Syndication
Agent, the Arrangers and the Documentation Agent (collectively called the
"INDEMNITEES") from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, claims, costs, expenses and
disbursements of any kind or nature whatsoever (including without limitation the
reasonable fees and disbursements of counsel for such Indemnitees), whether
direct, indirect or consequential and whether based on any federal, state or
foreign laws, statutes, rules or regulations (including without limitation
securities and commercial laws, statutes and rules or regulations), on common
law or equitable cause or on contract or otherwise, that may be imposed on,
incurred by, or asserted against any such Indemnitee, in any manner arising out
of this Agreement or the other Loan Documents or the transactions contemplated
hereby or thereby (including without limitation the Lenders' agreement to
maintain the Loans hereunder or the use or intended use of the proceeds of the
Loans) or any breach or default by the Company of any provision of the Loan
Documents (collectively called the "INDEMNIFIED LIABILITIES"); provided that the
Company shall not have any obligation to any Indemnitee hereunder with respect
to any Indemnified Liabilities to the extent such Indemnified Liabilities arise
(i) from the gross negligence or willful misconduct of that Indemnitee, (ii)
constitute ordinary and usual operating or overhead expenses of an Indemnitee
(excluding , without limitation, costs and expenses of any outside counsel,
consultant or agent) and (iii) arise out of the breach of any obligation or
representation of an Indemnitee in this Agreement or any other Loan Document.
To the extent that the undertaking to defend, indemnify, pay and hold harmless
set forth in the preceding sentence may be unenforceable because it is violative
of any law or public policy, the Company shall contribute the maximum portion
that it is permitted to pay and satisfy under applicable law


                                      -79-

to the payment and satisfaction of all Indemnified Liabilities incurred by the
Indemnitees or any of them.

9.4 SET-OFF.

         In addition to any rights now or hereafter granted under applicable law
and not by way of limitation of any such rights, upon the occurrence and during
the continuance of any Event of Default, to the fullest consent permitted by
law, each Lender and is hereby authorized by the Company at any time or from
time to time, without notice to the Company or to any other Person, any such
notice being hereby expressly waived, to set off and to appropriate and to apply
any and all deposits (general or special, including, but not limited to,
Indebtedness evidenced by certificates of deposit, whether matured or unmatured)
and any other Indebtedness at any time held or owing by that Lender to or for
the credit or the account of the Company against and on account of the
obligations and liabilities of the Company to that Lender under this Agreement,
the Notes, and the other Loan Documents, including, but not limited to, all
claims of any nature or description arising out of or connected with this
Agreement, the Notes, or any other Loan Document, irrespective of whether or not
(i) that Lender shall have made any demand hereunder or (ii) the principal of or
the interest on the Loans or any other amounts due hereunder shall have become
due and payable pursuant to Section 7 and although said obligations and
liabilities, or any of them, may be contingent or unmatured.

9.5 RATABLE SHARING.

         The Lenders hereby agree among themselves that if any of them shall,
whether by voluntary payment, by realization upon security, through the exercise
of any right of set-off or banker's lien, by counterclaim or cross action or by
the enforcement of any right under the Loan Documents or otherwise, or as
adequate protection of a deposit treated as cash collateral under the Bankruptcy
Code, receive payment or reduction of a proportion of the aggregate amount of
principal, interest, fees and other amounts then due and owing to that Lender
hereunder or under the other Loan Documents (collectively, the "AGGREGATE
AMOUNTS DUE" to such Lender) which is greater than the proportion received by
any other Lender in respect of the Aggregate Amounts Due to such other Lender,
then the Lender receiving such proportionately greater payment shall (i) notify
the Agent and each other Lender of the receipt of such payment and (ii) apply a
portion of such payment to purchase participations (which it shall be deemed to
have purchased from each seller of a participation simultaneously upon the
receipt by such seller of its portion of such payment) in the Aggregate Amounts
Due to the other Lenders so that all such recoveries of Aggregate Amounts Due
shall be shared by all Lenders in proportion to the Aggregate Amounts Due to
them; provided that if all or part of such proportionately greater payment
received by such purchasing Lender is thereafter recovered from such Lender upon
the bankruptcy or reorganization of the Company or otherwise, those purchases
shall be rescinded and the purchase prices paid for such participations shall be
returned to such purchasing Lender ratably to the extent of such recovery, but
without interest. The Company expressly consents to the foregoing arrangement
and agrees that any holder of a participation so purchased may exercise any and
all rights of banker's lien, set-off or counterclaim with respect to any and all
monies owing by the Company to that holder with respect thereto as fully as if
that holder were owed the amount of the participation held by that holder.


                                      -80-

9.6 AMENDMENTS AND WAIVERS.

         A. No amendment, modification, termination or waiver of any provision
of this Agreement or of the Notes, or consent to any departure by the Company
therefrom, shall in any event be effective without the written concurrence of
Requisite Lenders; provided that any such amendment, modification, termination,
waiver or consent which: increases the principal amount of any of the Loans;
changes any Lender's Pro Rata Share; changes in any manner the definition of
"Requisite Lenders"; changes in any manner any provision of this Agreement
which, by its terms, expressly requires the approval or concurrence of all
Lenders; postpones the scheduled final maturity date of any of the Loans;
postpones the date or reduces the amount of any scheduled payment (but not
prepayment) of principal of any of the Loans; postpones the date on which any
interest or any fees are payable; waives a mandatory prepayment of principal
owed as a result of a Borrowing Base Deficiency for a period in excess of 30
days from the date the Company notifies the Agent of the existence of a
Borrowing Base Deficiency; decreases the interest rate borne by any of the Loans
(other than any waiver of any increase in the interest rate applicable to any of
the Loans pursuant to subsection 2.2E) or the amount of any fees payable
hereunder; increases the maximum duration of Interest Periods permitted
hereunder; releases all or substantially all of the Collateral (except as
expressly provided in the Security Agreements); or changes in any manner the
provisions contained in subsection 7.1 or this subsection 9.6 shall be effective
only if evidenced by a writing signed by or on behalf of all Lenders to whom are
owed Obligations being directly affected by such amendment, modification,
termination, waiver or consent. In addition, (i) any amendment, modification,
termination or waiver of any of the provisions contained in Section 3 shall be
effective only if evidenced by a writing signed by or on behalf of the Agent and
Requisite Lenders, (ii) no amendment, modification, termination or waiver of any
provision of any Note shall be effective without the written concurrence of the
Lender which is the holder of that Note, and (iii) no amendment, modification,
termination or waiver of any provision of Section 8 or of any other provision of
this Agreement which, by its terms, expressly requires the approval or
concurrence of the Agent shall be effective without the written concurrence of
the Agent. The Agent may, but shall have no obligation to, with the concurrence
of any Lender, execute amendments, modifications, waivers or consents on behalf
of that Lender. Any waiver or consent shall be effective only in the specific
instance and for the specific purpose for which it was given. No notice to or
demand on the Company in any case shall entitle the Company to any other or
further notice or demand in similar or other circumstances. Any amendment,
modification, termination, waiver or consent effected in accordance with this
subsection 9.6 shall be binding upon each Lender at the time outstanding, each
future Lender and, if signed by the Company, on the Company.

         B. If, in connection with any proposed change, waiver, discharge or
termination to any of the provision of this Agreement as contemplated by the
provision in the first sentence of this subsection 9.6, the consent of Requisite
Lenders is obtained but consent of one or more of such other Lenders whose
consent is required is not obtained, then the Company may, so long as all
non-consenting Lenders are so treated, elect to terminate such Lender as a party
to this Agreement; provided that, concurrently with such termination, (i) the
Company shall pay that Lender all principal, interest and fees and other amounts
owed to such Lender through such date of termination, (ii) another financial
institution satisfactory to the Company and the Agent (or if the Agent is also
the Lender to be terminated, the successor Agent) shall agree, as of such date,
to

                                      -81-

become a Lender for all purposes under this Agreement (whether by assignment or
amendment) and to assume all obligations of the Lender to be terminated as of
such date, and (iii) all documents and supporting materials necessary, in the
judgment of the Agent (or if the Agent is also the Lender to be terminated, the
successor Agent) to evidence the substitution of such Lender shall have been
received and approved by the Agent as of such date.

9.7 INDEPENDENCE OF COVENANTS.

         All covenants under this Agreement shall be given independent effect so
that if a particular action or condition is not permitted by any of such
covenants, the fact that it would be permitted by an exception to, or would
otherwise be within the limitations of, another covenant shall not avoid the
occurrence of an Event of Default or Potential Event of Default if such action
is taken or condition exists.

9.8 NOTICES.

         Unless otherwise specifically provided herein, any notice, request or
other communication herein required or permitted to be given shall be in writing
and may be personally served or sent by telefacsimile or United States mail or
courier service and shall be deemed to have been given when delivered in person
or by courier service, or upon receipt of telefacsimile, or five Business Days
after depositing it in the United States mail with postage prepaid and properly
addressed; provided that notices shall not be effective until received. For the
purposes hereof, the address of each party hereto shall be as set forth under
such party's name on the signature pages hereof or (i) as to the Company and the
Agent, such other address as shall be designated by such Person in a written
notice delivered to the other parties hereto and (ii) as to each other party,
such other address as shall be designated by such party in a written notice
delivered to the Agent.

9.9 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.

         A. All representations, warranties and agreements made herein shall
survive the execution and delivery of this Agreement and the making of the Loans
hereunder.

         B. Notwithstanding anything in this Agreement or implied by law to the
contrary, (x) the agreements of the Company set forth in subsection 9.3 and the
agreements of the Lenders set forth in subsections 8.2C, 8.4 and 9.5 shall
survive the payment of the Loans, and the termination of this Agreement and (y)
the agreements of the Company set forth in subsections 2.6D, 2.7, 9.2 and 9.4
shall survive the payment of the Loans, and the termination of this Agreement
for a period of two years.

9.10 FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE.

         No failure or delay on the part of the Agent or any Lender in the
exercise of any power, right or privilege hereunder or under any other Loan
Document shall impair such power, right or privilege or be construed to be a
waiver of any default or acquiescence therein, nor shall any single or partial
exercise of any such power, right or privilege preclude other or further
exercise thereof or of any other power, right or privilege. All rights and
remedies existing under this

                                      -82-

Agreement and the other Loan Documents are cumulative to, and not exclusive of,
any rights or remedies otherwise available.

9.11 MARSHALING; PAYMENTS SET ASIDE.

         Neither the Agent nor any Lender shall be under any obligation to
marshal any assets in favor of the Company or any other party or against or in
payment of any or all of the Obligations. To the extent that the Company makes a
payment or payments to the Agent or the Lenders (or to the Agent for the benefit
of the Lenders), or the Agent or Lenders enforce any security interests or
exercise their rights of set-off, and such payment or payments or the proceeds
of such enforcement or set-off or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside and/or required to be
repaid to a trustee, receiver or any other party under any bankruptcy law, any
other state or federal law, common law or any equitable cause, then, to the
extent of such recovery, the obligation or part thereof originally intended to
be satisfied, and all Liens, rights and remedies therefor or related thereto,
shall be revived and continued in full force and effect as if such payment or
payments had not been made or such enforcement or set-off had not occurred.

9.12 SEVERABILITY.

         In case any provision in or obligation under this Agreement or the
Notes shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.

9.13 OBLIGATIONS SEVERAL; INDEPENDENT NATURE OF LENDERS' RIGHTS.

         The obligations of the Lenders hereunder are several and no Lender
shall be responsible for the obligations of any other Lender hereunder. None of
the Arrangers, Syndication Agent, Documentation Agent or the Co-Lead Book
Managers in their respective capacities as such shall have any duties or
responsibilities under this Agreement or the other Loan Documents. Nothing
contained herein or in any other Loan Document, and no action taken by Lenders
pursuant hereto or thereto, shall be deemed to constitute Lenders as a
partnership, an association, a joint venture or any other kind of entity. The
amounts payable at any time hereunder to each Lender shall be a separate and
independent debt.

9.14 HEADINGS.

         Section and subsection headings in this Agreement are included herein
for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose or be given any substantive effect.

9.15 APPLICABLE LAW.

         THIS AGREEMENT AND EACH OF THE LOAN DOCUMENTS SHALL BE GOVERNED BY, AND
SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE

                                      -83-

WITH, THE LAWS OF THE STATE OF NEW YORK (EXCEPT, IN THE CASE OF SECURITY
AGREEMENTS, AS OTHERWISE PROVIDED THEREIN).

9.16 SUCCESSORS AND ASSIGNS.

         This Agreement shall be binding upon the parties hereto and their
respective successors and assigns and shall inure to the benefit of the parties
hereto and the successors and assigns of the Lenders. Except as provided in
subsections 6.6(v), 6.10 and 6.12, neither the Company's rights or obligations
hereunder nor any interest therein may be assigned or delegated by the Company
without the prior written consent of all Lenders.

9.17 CONSENT TO JURISDICTION AND SERVICE OF PROCESS.

         ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY PARTY HERETO ARISING OUT
OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ANY OBLIGATION
MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE
STATE OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT EACH SUCH
PARTY ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND
UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND
WAIVES ANY DEFENSE OF FORUM NON CONVENIENS AND IRREVOCABLY AGREES TO BE BOUND BY
ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT, SUCH OTHER LOAN
DOCUMENT OR SUCH OBLIGATION (SUBJECT TO ANY RIGHT OF APPEAL BY A HIGHER COURT).
The Company hereby agrees that service of all process in any such proceeding in
any such court may be made by registered or certified mail, return receipt
requested, to the Company at its address provided in subsection 9.8, such
service being hereby acknowledged by the Company to be sufficient for personal
jurisdiction in any action against the Company in any such court and to be
otherwise effective and binding service in every respect. The Company hereby
appoints CT Corporation System, 1633 Broadway, New York, New York 10019, as its
agent for service of process and agrees that service of process upon such agent
shall be deemed to be service of process upon the Company with respect to any
proceeding related to the Loan Documents. Nothing herein shall affect the right
to serve process in any other manner permitted by law or shall limit the right
of any Lender or the Agent to bring proceedings against the Company in the
courts of any other jurisdiction.

9.18 WAIVER OF JURY TRIAL.

         EACH OF THE PARTIES TO THIS AGREEMENT HEREBY AGREES TO WAIVE ITS
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR ANY DEALINGS
BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION OR THE
LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED. The scope of this waiver
is intended to be all-encompassing of any and all disputes that may be filed in
any court and that relate to the subject matter of this transaction, including
without limitation contract claims, tort claims, breach

                                      -84-

of duty claims and all other common law and statutory claims. Each party hereto
acknowledges that this waiver is a material inducement to enter into a business
relationship, that each has already relied on this waiver in entering into this
Agreement, and that each will continue to rely on this waiver in their related
future dealings. Each party hereto further warrants and represents that it has
reviewed this waiver with its legal counsel and that it knowingly and
voluntarily waives its jury trial rights following consultation with legal
counsel. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS OR TO ANY OTHER DOCUMENTS OR AGREEMENTS OR TO ANY OTHER DOCUMENTS OR
AGREEMENTS RELATING TO THE LOANS MADE HEREUNDER. In the event of litigation,
this Agreement may be filed as written consent to a trial by the court.

9.19 CONFIDENTIALITY.

         None of the Agent and the Lenders shall disclose any Confidential
Information to any Person without the consent of the Company, such consent not
to be unreasonably withheld or delayed, other than (a) to the Agent's or
Lender's Affiliates and their respective officers, directors, employees, agents
and advisors involved in the administration, monitoring or enforcement of the
Loans and Notes hereunder (in such Person's reasonable judgment) and to actual
or prospective Eligible Assignees and participants, and then only in each case
on a confidential basis, (b) as required by any law, rule or regulation or
judicial process and (c) as requested or required by any state, federal or
foreign authority or examiner regulating banks or banking.

9.20 COUNTERPARTS; EFFECTIVENESS.

         This Agreement and any amendments, waivers, consents or supplements
hereto or in connection herewith may be executed in any number of counterparts
and by different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document.

9.21 INTEGRATION.

         This Agreement, the Security Agreements, and the other agreements
executed in connection therewith constitute the entire understanding among the
parties hereto with respect to the matters covered thereby, and shall supersede
any prior agreements covering such matters.

9.22 DISCLAIMER OF DAMAGES.

         No Indemnitee shall have any liability (whether direct or indirect, in
contract, tort or otherwise) to the Company or any of its security holders or
creditors for or in connection with the transactions contemplated hereby, except
to the extent such liability is determined in a final, non-appealable judgment
by a court of competent jurisdiction to be direct damages arising primarily

                                      -85-

from such Indemnitee's gross negligence or willful misconduct. In no event shall
any Indemnitee be liable to the Company or any of its security holders or
creditors on any theory of liability for any special, indirect, consequential or
punitive damages (including, without limitation, any loss of profits, business
or anticipated savings).


                                      -86-

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.


         COMPANY:               AMERICA WEST AIRLINES, INC.


                                By: /s/ Thomas T. Weir
                                    --------------------------------------------
                                    Name: Thomas T. Weir
                                    Title: Vice President and Treasurer

                                Notice Address:

                                111 West Rio Salado Parkway
                                Tempe, Arizona 85281
                                Attention:  Linda Mitchell, General Counsel
                                          --------------------------------------
                                Fax:  (480)693-5153
                                    --------------------------------------------

         AGENT AND LENDER:

                                THE INDUSTRIAL BANK OF JAPAN, LIMITED, as Agent
                                and Lender


                                By: /s/ Noel P. Purcell
                                    --------------------------------------------
                                    Name: Noel P. Purcell
                                    Title: Senior Vice President

                                Notice Address:

                                1251 Avenue of the Americas
                                New York, New York 10020
                                Attention:  Joseph Mitarotondo
                                Fax:  (212) 282-4479


                                      -87-

         LENDERS:               CITICORP USA, INC.


                                         By: /s/ Michael C. Becker
                                             -----------------------------------
                                             Name: Michael C. Becker
                                             Title: Sr. Vice President

                                             Address:

                                             Fax:


                                         THE FUJI BANK, LIMITED


                                         By: /s/ Masahito Fukuda
                                             -----------------------------------
                                             Name: Masahito Fukuda
                                             Title: Senior Vice President

                                             Address: 350 So. Grand Avenue,
                                                      Suite 1500

                                             Fax: (213) 253-4175


                                         THE MITSUBISHI TRUST AND BANKING
                                         CORPORATION

                                         By: /s/ Scott J. Paige
                                             -----------------------------------
                                             Name: Scott J. Paige
                                             Title: Executive Vice President

                                             Address: 520 Madison Avenue
                                                      New York, NY  10022
                                             Fax: (212) 244-6825


                                         BANKERS TRUST COMPANY

                                         By: /s/ Margarite Sutton
                                             -----------------------------------
                                             Name: Margarite Sutton
                                             Title: Vice President

                                             Address: 130 Liberty Street
                                                      New York, New York 10006
                                             Fax:  (212) 250-7218


                                      -88-

                                         BANK ONE NA (Successor by merger to
                                         BANK ONE, ARIZONA, NA) (Main Office:
                                         Chicago, Illinois)


                                         By: /s/ Dennis Warren
                                             -----------------------------------
                                             Name: Dennis Warren
                                             Title: First Vice President

                                         Address:



                                         Fax:


                                         BANK OF SCOTLAND


                                         By: /s/ Joseph Fratus
                                             -----------------------------------
                                             Name: Joseph Fratus
                                             Title: Vice President

                                         Address:

                                         Fax:


                                      -89-

                                                                       EXHIBIT A



                      FORM OF AIRCRAFT SECURITY AGREEMENT

                                   dated as of


                               -------------------

                                     made by

                           AMERICA WEST AIRLINES, INC.

                                     Company

                                   in favor of

                     THE INDUSTRIAL BANK OF JAPAN, LIMITED,

                                    as Agent

                  AIRCRAFT SECURITY AGREEMENT (the "Security Agreement"), dated
as of         ,      from AMERICA WEST AIRLINES, INC., a Delaware corporation
(the "Company"), whose mailing address is 111 West Rio Salado Parkway, Tempe,
Arizona 85281, to The Industrial Bank of Japan, Limited, as Agent under the
Amended and Restated Term Loan Agreement referred to below (together with its
successors and assigns in such capacity, the "Agent") for the benefit and on
behalf of itself as such Agent and the lenders (the "Lenders", such term to
include the Issuing Bank as defined in the Credit Agreement) from time to time
party to that certain Amended and Restated Term Loan Agreement dated as of
January   , 2002 (as the same may be amended or waived from time to time the
"Credit Agreement") among the Company, the Lenders and the Agent.

                                    WHEREAS:

A.                The Lenders have agreed to extend certain financial
accommodations to the Company on the terms and subject to the conditions set
forth in the Credit Agreement.

B.                Pursuant to the terms of the Credit Agreement, the Agent has
been appointed as the agent of the Lenders to hold and enforce on their behalf
the rights granted to the Agent herein with respect to the Subject Collateral.

C.                Pursuant to the Credit Agreement the Company has agreed to
deliver this Security Agreement for the purposes of, among other things,
securing all payment and performance obligations of every nature of the Company
from time to time owed to the Agent, the Lenders or any of them under the Loan
Documents, whether for principal, interest, fees, expenses, indemnification or
otherwise (collectively, the "Obligations"), and subjecting the properties and
assets hereinafter described to the lien of this Security Agreement as security
for the performance of the Obligations.

                  NOW, THEREFORE, in consideration of the benefits accruing to
the Company, the receipt and sufficiency of which are hereby acknowledged, the
PARTIES HERE TO AGREE:

                                    ARTICLE I

         DEFINITIONS AND INTERPRETATION; GRANTING CLAUSES; SUBSEQUENTLY
                MORTGAGED ENGINE; REPRESENTATIONS AND WARRANTIES

                  SECTION 1.01. Definitions and Interpretation. Unless otherwise
defined herein, all capitalized terms used in this Security Agreement that are
defined in the Credit Agreement (including those terms incorporated by
reference) shall have the respective meanings assigned to them in the Credit
Agreement. The rules of interpretation set forth in Section 1 of the Credit
Agreement shall apply to this Security Agreement. In addition, the following
terms shall have the meanings assigned as follows:

                  "Act" or "Federal Aviation Act" shall mean Subtitle VII of
Title 49 of the United States Code, and the rules and regulations promulgated
thereunder, as in effect on the date of this Security Agreement, and as modified
or amended hereafter, or any subsequent legislation that supplements or
supersedes such Subtitle.

                  "Agreed Value" shall mean the value of the Aircraft as
determined from time to time pursuant to an Approved Appraisal.

                  "Air carrier", "aircraft", "aircraft engines", "appliances"
and "spare parts" shall have the respective meanings given to these terms in the
Act, as in effect on the date of this Security Agreement.

                  "Airframe" has the meaning given in Section 1.02(a) hereof.

                  "Approved Appraisal" has the meaning specified in Section 2.10
of the Credit Agreement.

                  "Commitments" means the commitments of the Lenders to make and
convert Loans as set forth in subsection 2.1A of the Credit Agreement and to
issue Letters of Credit set forth in subsection 2.9 of the Credit Agreement.

                  "Engine" has the meaning given in Section 1.02(a) hereof.

                  "Event of Default" means each of the events set forth in
Section 7 of the Credit Agreement.

                  "Event of Loss" shall mean any of the following events with
respect to the Aircraft, any Airframe or any Engine:

                           (i) the loss of such property or of the use thereof
for 45 days due to the destruction of or damage to such property which renders
repair uneconomic or which renders such property permanently unfit for normal
use by the Company;

                           (ii) any damage to such property which results in the
receipt of insurance proceeds with respect to such property on the basis of a
total loss, or a constructive or compromised total loss;

                           (iii) the theft or disappearance of such property for
a period in excess of 30 days;

                           (iv) the confiscation, condemnation, or seizure of,
or requisition of title to, or use of, such property by any government or
governmental authority which results in the loss of title or possession of such
property by the Company for a period in excess of 30 consecutive days;

                           (v) as a result of any law, rule, regulation, order
or other action by the FAA or other government body having jurisdiction, use of
such property in the normal course of the business of air transportation is
prohibited for a period longer than one (1) month; and

                           (vi) the Aircraft is removed from operational service
and placed in short term storage for a period of more than 90 consecutive days
or the Aircraft is placed in long term storage.

                  "Federal Aviation Administration" or "FAA" shall mean the
United States Federal Aviation Administration or any successor thereto
administering the functions of the Federal Aviation Administration under the
Act.

                  "Joint Venture" means a joint venture, partnership or other
similar arrangement, whether in corporate, partnership or other legal form;
provided that in no event shall any corporate Subsidiary of any Person be
considered to be a Joint Venture to which such Person is a party.

                  "Letters of Credit" means each letter of credit that may be
issued by the Issuing Bank under the terms of subsection 2.9 of the Credit
Agreement.

                  "Lien" shall mean any lien, mortgage, pledge, assignment,
security interest, charge, hypothecation, preference, priority, privilege, lease
or encumbrance of any kind (including any conditional sale or other title
retention agreement, any lease in the nature thereof, and any agreement to give
any security interest); provided that neither negative pledges nor covenants to
abstain from granting liens on or security interests in assets of the Company
or its Subsidiaries shall constitute Liens.

                  "Loan" or "Loans" has the meaning given such term in the
Credit Agreement.

                  "Officer's Certificate" shall mean a certificate signed by a
Responsible Officer and delivered to the Agent.

                  "Parts" shall mean all appliances, components, parts,
instruments, appurtenances, accessories, furnishings, and other equipment of
whatever nature which may from time to time be incorporated or installed in or
attached to the Airframe or any Engine so long as ownership thereof (subject to
Permitted Liens) shall remain vested in the Company in accordance with the terms
of Section 2.03C hereof and any replacement Part incorporated or installed in or
attached to the Airframe or any Engine in accordance with the terms of Section.
2.03C.

                  "Permitted Lessee" shall mean any United States "air carrier"
(within the meaning of the Act) that is not subject to a proceeding under Title
7 or 11 of the United States Bankruptcy Code (as now and hereafter in effect or
any successor statute), holds a certificate under Section 41102(a)(1) of the
Act and operates under Federal Aviation Regulation Part 121.

                  "Permitted Liens" shall mean (i) the Lien of this Security
Agreement, (ii) Liens for taxes, assessments or governmental charges payable by
the Company either not delinquent for a period of more than thirty (30) days or
being contested in good faith by appropriate proceedings so long as during such
thirty (30) day period there is not any material risk of the sale, forfeiture or
loss of the Airframe or any Engine or any interest therein or during such
proceeding there is not any material risk of the sale, forfeiture or loss of the
Airframe or any Engine or any interest therein due to an effective stay or
otherwise, (iii) any lien for the fees or charges of any airport or air
navigation authority or any materialmen's, repairmen's, landlord's, workmen's,
supplier's and other like Liens arising in the ordinary course of business, for
amounts the payment of which is not overdue for a period of more than thirty
(30) days or is being contested in good faith by appropriate proceedings so long
as during such thirty (30) day period there is not any material risk of the
sale, forfeiture or loss of the Airframe or any Engine or any interest therein
or during such proceeding there is not any material risk of the sale, forfeiture
or loss of the Airframe or any Engine or any interest therein due to an
effective stay or otherwise, (iv) Liens which the Agent has specifically
permitted in writing, (v) Liens (other than Liens for taxes) arising out of
judgments or awards against the Company which are being appealed so long as
there is not any material risk of the sale, forfeiture or loss of the Airframe,
any Engine or any interest therein or during such proceeding there is not any
material risk of the sale, forfeiture or loss of the Airframe, any Engine or any
interest therein due to an effective stay or otherwise, (vi) rights of third
parties under arrangements permitted pursuant to Section 2.01D and salvage
rights of insurers expressly permitted by this Security Agreement and (vii)
other rights of the Company and the Agent provided in this Security Agreement.

                  "Person" means and includes natural persons, corporations,
limited partnerships, general partnerships, joint stock companies, limited
liability companies, Joint Ventures, associations, companies, trusts, banks,
trust companies, land trusts, business trusts or other organizations, whether or
not legal entities, and governments and agencies and political subdivisions
thereof.

                  "Potential Event of Default" means a condition or event that,
after notice or the passage of time or both, would constitute an Event of
Default.

                  "Replacement Engine" shall mean any aircraft engine described
in any Security Agreement Supplement from and after the date on which the same
became subject to the Lien of this Security Agreement, unless and until the same
shall be released from the Lien of this Security Agreement pursuant to the terms
hereof.

                  "Security Agreement" shall mean this instrument as originally
executed as of the date hereof and as it thereafter may from time to time be
supplemented through one or more Security Agreement Supplements or amended by
one or more instruments supplementary or amendatory thereto and which are
executed by the Company and the Agent.

                  "Supplement" or "Security Agreement Supplement" shall mean a
security agreement supplement in substantially the form of Appendix A hereto,
subjecting any additional aircraft engine to the Lien of this Security
Agreement.

                  The following capitalized terms are defined in the applicable
Recital or Granting Clause:

                                                         
Company                                                     First Paragraph

Lenders                                                     First Paragraph

Credit Agreement                                            First Clause

Subject Collateral                                          Granting Clause

Agent                                                       First Paragraph

Obligations                                                 Recital "C"



                  SECTION 1.02. Grant of Security Interest. The Company hereby
grants to and charges in favor of the Agent a security interest in the following
property (collectively the "Subject Collateral") as security for the due and
prompt payment and performance by the Company of the Obligations:

                  (a)      the Airframe and Engines (each term as defined in and
         described in Schedule I hereto);

                  (b)      any Replacement Engine described in Schedule I to any
         Supplement from time to time hereafter executed and delivered by the
         Company pursuant to Section 1.02 hereof;

                  (c)      all proceeds receivable or received when any Airframe
         or Engine is sold, exchanged, collected, leased or otherwise disposed
         of, including, without limitation, all amounts payable or paid under
         insurance, requisition or other payments as the result of any loss
         (including an Event of Loss (as hereinafter defined) and Event of
         Damage) or Repairable Damage to such Airframe or Engine but (for
         avoidance of doubt) shall exclude amounts payable to the Company for
         operating a charter or wet lease permitted without the consent of the
         Agent pursuant to Section 2.01(D) hereof (collectively, "Proceeds");

                  (d)      all issues from and income and interest on Proceeds,
         products, title, interest and claims whatsoever, at law, as well as in
         equity, now or hereafter existing, in or to any of the foregoing;

                  [(e)     the Aircraft Sale and Purchase Agreement, dated
                  between the Company and           (the "Purchase Agreement")
                  and any bills of sale for the Aircraft delivered thereunder;]*
                  and

                  (f)      to the extent not included in the foregoing, all and
         any proceeds (not expressly excluded in the definition of Proceeds) of
         any and all of the foregoing Subject Collateral.

         [It is expressly agreed that, anything herein contained to the contrary
notwithstanding, the Company shall remain liable under the Purchase Agreement
and the bills of sale delivered thereunder to perform all of its obligations
thereunder in accordance with and pursuant to the terms and provisions thereof
and the Agent and the Lenders shall have no obligation or liability under the
Purchase Agreement or such bills of sale by reason of or arising out of the
assignments hereunder nor shall the Agent or the Lenders be required or
obligated in any manner to perform or fulfill any obligations of the Company
under the Purchase Agreement or such bills of sale.]*

         Any lease of the Airframe together with the Engines, whether or not
such Engines are installed on the Airframe or any other airframe and any and all
logs, manuals and other records relating thereto (collectively, the "Aircraft")
shall be subject and subordinate to all of the provisions of the Credit
Agreement and this Security Agreement. Except with the prior written consent of
the Agent or as permitted pursuant to Sections 2.01B, 2.01D, 2.02 and 2.03, the
Company shall not sell or otherwise dispose of any part of, or any interest in,
the Aircraft prior to payment and performance in full of the Obligations and
expiration of the Commitments of the Lenders unless the same shall be released
from the Lien hereof in accordance with Section 2.10(B)(ii)(1) of the Credit
Agreement. If the Company complies with such provisions of Section 2.10B(ii)(1)
of the Credit Agreement with respect to the Aircraft, the Agent shall, at the
Company's written request and expense, promptly upon receipt thereof from the
Company, execute and deliver to the Company a release of the Lien of this
Security Agreement with respect to such Aircraft in such form as the Company
shall reasonably request.

                  SECTION 1.03. Subsequently Mortgaged Engine.

         A.       Replacement Engine. The Company may at any time or from time
to time subject to the Lien of this Security Agreement one or more Replacement
Engines, in substitution for one or more of the Engines then constituting part
of the Aircraft and subject to such Lien, provided that each Replacement Engine
so subjected to the Lien of this Security Agreement shall be appropriate for
installation on the Airframe.

- ----------

*Subject to negotiation on a case by case basis.

* Subject to negotiation on a case by case basis.

         B.       Supplements. Whenever the Company shall subject any
Replacement Engine to the Lien of this Security Agreement, the Company will on
or prior thereto:

                  (i)      execute and deliver to the Agent a Supplement
         properly describing such Replacement Engine;

                  (ii)     deliver to the Agent an Officer's Certificate
         confirming (x) that the representations and warranties contained in
         Section 1.04 hereof are true and accurate on and as of the date of such
         Supplement with respect to such Replacement Engine and the Company as
         though made on and as of such date and (y) that the Company has
         complied with the conditions contained in Section 2.l0B(ii)(1) of the
         Credit Agreement;

                  (iii)    deliver an Approved Appraisal (which may be a desktop
         appraisal) with respect to the Airframe including the Replacement
         Engine; and

                  (iv)     if such Replacement Engine is Section 1110 Property
         (as hereinafter defined), furnish the Agent with an opinion of counsel
         reasonably satisfactory to the Agent in form and substance reasonably
         satisfactory to the Agent that the Agent will have the benefit of
         Section 1110 under this Security Agreement with respect to such
         Replacement Engine.

                  Promptly upon the recordation of such Supplement with the FAA,
the Company will cause to be delivered to the Agent an opinion of counsel
acceptable to the Agent as to the due recording of such Supplement against such
Replacement Engine in accordance with the Act. Upon satisfaction of the
conditions of this Section 1.03B, the Replacement Engine shall become an
"Engine" for all purposes hereof and the engine being substituted for shall
cease to be an "Engine" and shall be released from the Lien of this Security
Agreement. Upon written request and at the Company's expense, the Agent shall
execute and deliver to the Company such releases as the Company may reasonably
request to effectuate the release contemplated in the previous sentence.

                  SECTION 1.04. Representations and Warranties of the Company.
The Company represents and warrants that, in the case of the Airframe and each
Engine mortgaged hereunder, on the date such Airframe or Engine is mortgaged
hereunder:

                  (i)      the execution, delivery and performance by the
         Company of this Security Agreement are within the Company's corporate
         power, have been duly authorized by all necessary corporate action, and
         do not contravene (1) the Company's articles of incorporation or
         by-laws or (2) any law, rule, regulation, order, writ, judgment,
         injunction, decree, determination or award or any contractual
         restriction binding on the Company or any of its properties and do not
         result in or require the creation of any Lien (other than pursuant to
         the Loan Documents) upon or with respect to any of its properties other
         than that created hereunder;

                  (ii)     no authorization or approval or other action by, and
         no notice to or filing with, any governmental authority is required for
         the due execution and delivery by the Company of this Security
         Agreement, other than as have been duly obtained, taken, given or made;
         and

                  (iii)    the Company shall have good and marketable title to
          such Airframe or Engine, free and clear of all Liens created or
          incurred by it or permitted to exist by it other than the Lien of this
          Security Agreement and Permitted Liens.

                               ARTICLE II COVENANTS

                  SECTION 2.01. Registration; Maintenance and Operation.

         A. Registration. The Company, at its own expense, shall [upon delivery
of the Aircraft under the Purchase Agreement,]* cause the Aircraft to be duly
registered in the name of the Company, and to remain duly registered in the name
of the Company, with the FAA.

         B. Maintenance.

                  1. General. The Company, at its own cost and expense shall (i)
service, repair, maintain and overhaul or cause the same to be done to the
Airframe and each Engine under the Company's FAA-approved Maintenance Program
(the "Approved Maintenance Program") in the same manner and with the same care
as used by the Company with similar aircraft and engines operated by the Company
(except for care required pursuant to return conditions of lease agreements with
respect to aircraft and engines leased by the Company) and so as to keep the
Airframe and each Engine in good operating condition and in passenger
configuration, (ii) maintain the manuals and technical records in an orderly
manner in the English language in accordance with the Approved Maintenance
Program and (iii) cause all heavy maintenance to be performed at a nationally
recognized maintenance facility holding a valid FAA repair facility certificate
and all other maintenance to be performed by FAA approved maintenance providers.

                  2. Specific Items of Maintenance. The Company agrees that
maintenance and repairs shall include, but shall not be limited to, the
following specific items:

                           a. to perform or have performed in accordance with
the Approved Maintenance Program all routine maintenance work, including on-line
maintenance on the Aircraft, and to ensure that all such maintenance shall be in
accordance with the regulations and directives of the FAA. The Company shall
cause all maintenance and repairs to the Aircraft to be performed at repair
facilities approved by the FAA, including, with respect to any lease permitted
hereunder, any lessee's FAA approved maintenance facilities;

- ----------

* Subject to negotiation on a case by case basis.

                           b. to correct diligently deficiencies revealed at any
time by any inspection by the Company which under the Approved Maintenance
Program reasonably require repair, replacement, overhaul and adjustment;

                           c. to maintain or cause to be maintained at all times
in an orderly manner and in accordance with all applicable requirements of the
FAA and any other governmental authority having jurisdiction with respect
thereto, all Aircraft documentation, including, without limitation, all records
relating to the location, service, inspection, maintenance, modification, repair
and overhaul of the Airframe, Engines and all Parts installed therein and the
manuals and technical records, and in accurate, current, up-to-date and complete
status (if necessary, through manufacturers' revision service);

                           d. if required by FAA regulations, to notify the
manufacturer promptly of any modifications or configuration changes to the
Airframe which would have a material effect on or be a material change to the
detail specification and/or the manuals relating to the Airframe (such as
flight, operations and maintenance);

                           e. to maintain the Engines at all tines in accordance
with the Approved Maintenance Program; and

                           f. to make all structural repairs in accordance with
the Approved Maintenance Program.

                  3. Airworthiness Directives. The Company agrees to carry out
or cause to be carried out at its expense on the Aircraft, in accordance with
the terms thereof, any airworthiness directive or any other mandatory F.A.R. or
other regulation, directive or instruction (each, an "Airworthiness Directive")
which the FAA may from time to time issue. All Airworthiness Directives shall be
timely accomplished in accordance with the Approved Maintenance Program and the
terms and conditions of such Airworthiness Directives (including by means of
alternate compliance under the Airworthiness Directive and the Approved
Maintenance Program).

                  4. Corrosion Control. The Company shall carry out at its
expense such work as may be required for the control of corrosion in accordance
with the Approved Maintenance Program.

                  5. Repairs. Any repair to the Aircraft shall be accomplished
pursuant to the appropriate manufacturer's repair manual instructions, the
Approved Maintenance Program, or other FAA-approved data.

                  6. Warranties. Any warranties, express or implied, of
manufacturers, suppliers or subcontractors relating to the Aircraft or any of
the Engines shall inure to the benefit of the Company and be exercised or
enforced by the Company at the Company's sole expense. So long as the Loans have
not been accelerated the Company shall have the right to exercise, enforce,
compromise or release the same, and may apply the proceeds thereof in any manner
it deems

appropriate. The Company shall maintain the Aircraft in such a manner so as not
to knowingly void any available warranties. Upon acceleration of the Loans, all
warranties and all rights with respect to warranties shall revert to the Agent
or its designee and, upon request of the Agent, the Company shall execute such
documents and take such action as may be requested or required to enable the
Agent or its designee to enforce or in any other way receive the benefit of such
warranties.

         C. Operation.

                  1. The Company will not maintain, use, service, repair,
overhaul or operate the Aircraft in violation of any law, rule, regulation,
treaty or order of any government or governmental authority (domestic or
foreign) having jurisdiction, or in violation of any airworthiness certificate,
license or registration relating to the Aircraft issued by any such authority or
for a purpose for which the Aircraft is not designed or reasonably suitable or
in any configuration other than passenger configuration.

                  2. The Company will not operate the Aircraft: (i) in or to any
area excluded from coverage by any insurance required to be maintained by the
terms of this Agreement; or (ii) any areas of actual or threatened armed
hostilities unless such operation is covered by and complies with the insurance
required hereunder.

         D. Possession and Leases. The Company will not lease or otherwise in
any manner deliver, transfer or relinquish possession of the Airframe or any
Engine or install or permit any Engine to be installed on any airframe other
than the Airframe without the prior written consent of the Agent; provided that,
so long as no Event of Default exists at the time of such lease, delivery,
transfer or relinquishment of possession or installation and the Company shall
continue to maintain insurance in compliance with this Security Agreement, the
Company may, without the prior written consent of the Agent:

                  1. deliver possession of the Airframe or any Engine to the
         manufacturer thereof or to any person for testing, service, repair,
         maintenance or overhaul work on the Airframe or any Engine or any part
         thereof or for alterations or modifications in or additions to the
         Airframe or Engine(s);

                  2. install an Engine on an airframe owned by the Company,
         leased to the Company or owned or purchased by the Company subject to a
         conditional sale or other security agreement, provided that (a) such
         airframe is free and clear of all Liens, except: (i) the rights of the
         parties to the lease or conditional sale or other security agreement
         covering such airframe, or their assignees, (ii) liens of the type
         described in the definition hereunder of "Permitted Liens", and (iii)
         the rights of other air carriers under normal interchange agreements
         which are customary in the airline industry and do not contemplate,
         permit or require the transfer of title to the airframe or engines
         installed thereon, and (b) any such lease, conditional sale or other
         security agreement provides that engines such as the Engine shall not
         become subject to the lien of such lease, conditional

         sale or other security agreement, notwithstanding the installation
         thereof on such airframe; and

                  3. lease the Aircraft to any Permitted Lessee provided that
         (A) such lease shall not have a term of more that six (6) months (or
         eighteen (18) months if at the time such lease is executed such
         Permitted Lessee has a long term unsecured credit rating of at least BB
         by Standard & Poor's Ratings Group), (B) the terms of such lease
         expressly provide that the lease is subject and subordinate to this
         Security Agreement and all rights of the Agent hereunder, including,
         but not limited to, the right of the Agent to repossess the Aircraft
         following the acceleration of the Loans, (C) the maintenance, insurance
         and other terms of the lease are consistent with the requirements of
         this Security Agreement, (D) the lease (1) requires that the Aircraft
         remain a U.S. registered aircraft and (2) prohibits further leasing by
         the Permitted Lessee and (E) concurrently with entering into such
         lease, the Company provides the Agent with a copy thereof together with
         insurance certificates and evidence complying with Section 2.04 (which
         insurance may be provided by the Permitted Lessee if it otherwise
         complies in all respects with Section 2.04 hereof).

                  The Agent agrees for the benefit of a lessor or secured party
under a lease, conditional sale or other security agreement containing an
agreement complying with Section 2.01(D)(2)(b) which lease, conditional sale or
security agreement also covers an engine or engines owned by the lessor under
such lease or subject to a security interest in favor of the secured party under
such conditional sale or other security agreement that the Agent will not
acquire or claim, as against such lessor or secured party, any right, title or
interest in any such engine or engines as the result of such engine or engines
being installed on the Airframe at any time while such engine or engines is
subject to such lease, conditional sale or other security agreement and owned by
such lessor or subject to a security interest in favor of such secured party.

                  The rights of any lessee or other transferee who receives
possession by reason of a transfer permitted by this Section 2.01(D) shall be
subject and subordinate to all the terms of this Security Agreement, including,
without limitation, the covenants contained in Sections 2.01(A), (B) and (C) of
this Security Agreement and the Agent's rights, powers and remedies under this
Security Agreement, including the right to repossession pursuant thereto and to
avoid such lease upon such repossession and the Company shall remain primarily
liable under this Security Agreement for the performance of all of the terms
thereof to the same extent as if such lease or transfer had not occurred. The
terms of any such lease shall not permit any lessee to take any action not
permitted to be taken by the Company under this Security Agreement with respect
to the Aircraft.

                  Any wet lease or similar arrangement under which the Company
provides the crew and maintains operational control of the Aircraft shall not
constitute a delivery, transfer or relinquishment of possession for purposes of
this Section 2.1(D).

         E. Plates. On or before the date hereof, or as soon thereafter as
practicable, the Company agrees to affix and maintain in the cockpit of the
Airframe and on each Engine a nameplate bearing the inscription:

        SUBJECT TO A SECURITY INTEREST IN FAVOR OF THE INDUSTRIAL BANK OF
                   JAPAN, LIMITED, AS AGENT, SECURED CREDITOR

         F. Insignia. Nothing contained in the Credit Agreement or this Security
Agreement shall prohibit the Company from placing its customary colors and
insignia on the Airframe or any Engine or from otherwise operating the Aircraft
in its livery.

                  SECTION 2.02. Liens. The Company will not directly or
indirectly create, incur, assume or suffer to exist any Lien on or with respect
to the Aircraft, title thereto or any interest therein or part thereof other
than Permitted Liens. The Company will promptly, at its own expense, take (or
cause to be taken) such actions as may be necessary duly to discharge any Lien
not constituting a Permitted Lien if the same arise at any time.

                  SECTION 2.03. Parts.

         A. Replacement of Parts. The Company, at its own cost and expense, will
promptly replace or cause to be replaced all Parts which may from time to time
become worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond
repair or permanently rendered unfit for use for any reason whatsoever, except
as otherwise provided in this Section 2.03(A) or Section 2.03(D) of this
Security Agreement. All replacement parts (other than replacement parts
temporarily installed as provided in Section 2.03(B) of this Security Agreement
shall be free and clear of all Liens (except Permitted Liens), and shall be in
as good an operating condition, and shall have a value and utility substantially
equal to or greater than, the Parts replaced assuming such replaced Parts were
in the condition and repair required to be maintained by the terms of this
Security Agreement. All Parts at any time removed from the Airframe or any
Engine shall remain the property of the Company, no matter where located, until
such time as such Parts shall be replaced by parts which meet the requirements
for replacement Parts specified above. Upon any replacement part becoming
incorporated or installed in or attached to the Airframe or any Engine, without
further act (subject only to Permitted Liens and any arrangement permitted by
Section 2.03(B) of this Security Agreement), (i) such replacement part shall
become the property of the Company and shall become subject to the Lien of this
Security Agreement and be deemed a Part for all purposes of this Security
Agreement to the same extent as the Parts originally incorporated or installed
in or attached to the Airframe or such Engine and (ii) the replaced Part shall
no longer be deemed a Part under this Security Agreement. Upon written request
and at the Company's expense, the Agent shall execute and deliver to the Company
such releases as the Company may reasonably request to effectuate the release
contemplated in clause (ii) of the previous sentence.

                  The Company may remove Parts which the Company determines in
its reasonable judgment to be obsolete or no longer suitable or appropriate for
use on the Airframe or any

Engine (each, an "Obsolete Part"), provided that (i) such removal is being
applied by the Company on a fleet-wide basis and does not discriminate against
the Aircraft to the extent applicable having regard to the fleet and equipment
type and the age of the Aircraft and (ii) removal of any such Obsolete Parts
shall not diminish the value, utility or remaining useful life of the Airframe
or such Engine, or materially impair the condition or impair the airworthiness
thereof, below the value, utility, condition, airworthiness or remaining useful
life thereof immediately prior to such removal assuming the Airframe or such
Engine was then of the value and utility and in the condition and airworthiness
required to be maintained by the terms of this Security Agreement.

         B. Pooling of Parts; Temporary Replacement Parts. Any Part removed from
the Airframe or any Engine as provided in Section 2.03(A) of this Security
Agreement may be subjected by the Company to a normal pooling or similar
arrangement customary in the airline industry and entered into by the Company in
the ordinary course of its business; provided, that a Part replacing such
removed Part shall be incorporated or installed in or attached to such Airframe
or Engine in accordance with Section 2.03(A) of this Security Agreement as
promptly as practicable after the removal of such removed Part. In addition, the
Company may use temporary parts or pooled parts on the Aircraft as temporary
replacements for Parts, provided that the Company, at its expense as promptly
thereafter as practicable, either (1) causes such pooled or replacement part to
become the property of the Company free and clear of all Liens other than
Permitted Liens or (2) replaces such replacement part with a further replacement
part owned by the Company which meets the requirements of Section 2.03(A) of
this Security Agreement and which shall become the property of the Company, free
and clear of all Liens other than Permitted Liens.

         C. Modifications.

                  1. Except as provided in Section 2.01B(3) hereof, the Company
shall at its expense make such alterations and modifications in and additions to
the Airframe or any Engine as may be required to be made from time to time by
applicable law ("Required Modifications").

                  2. The Company shall not make any modifications, alterations
or additions (collectively, "Modifications") to the Aircraft, (other than
Required Modifications) which will result in adverse changes to the Aircraft
structure or performance or which will either (a) materially decrease the
utility, value or remaining useful life of the Aircraft or (b) adversely affect
the Aircraft's airworthiness or use for transporting passengers or cargo in
commercial service.

                  3. All Modifications shall be FAA-approved or in accordance
with the Approved Maintenance Program.

         D. Additional Parts. All parts incorporated or installed in or attached
or added to the Airframe or an Engine (other than passenger service items leased
to or owned by the Company including, without limitation, telephone or video
equipment, which such passenger service items

shall not be considered "Parts") as the result of a Modification (the
"Additional Part" or "Additional Parts") shall, without further act, become the
property of the Company and subject to this Security Agreement. Notwithstanding
the foregoing, the Company may, at any time, so long as no Event of Default
shall have occurred and be continuing, remove or suffer to be removed any
Additional Part, provided that such Additional Part (x) (i) is in addition to,
and not in replacement of or substitution for, any Part originally incorporated
or installed in or attached to the Airframe or any Engine at the time of
delivery thereof hereunder or any Part in replacement of or substitution for any
such Part and (ii) can be removed from the Airframe or such Engine without
impairing the airworthiness of the Airframe or such Engine or diminishing the
value, utility or remaining useful life of the Airframe or such Engine which the
Airframe or such Engine would have had at such time had such alteration,
modification or addition not occurred or (y) such Part is an Obsolete Part. Upon
the removal thereof as provided above, such Additional Parts shall no longer be
deemed part of the Airframe or the Engine from which it was removed.

                  SECTION 2.04. Insurance.

         (a)      Public Liability and Property Damage Liability Insurance.

                  (i)      The Company, at its own cost and expense, will
         maintain or cause to be maintained with respect to the Airframes and
         Engines, comprehensive aircraft liability insurance including, without
         limitation, bodily injury and/or property damage, inclusive of
         liability to third parties and/or passengers, passenger legal liability
         and property damage liability insurance and cargo legal liability in
         such amounts, against such risks (including, without limitation,
         contractual liability and war risk liability), with such retentions as
         the Company customarily maintains with respect to similar airframes and
         engines owned or operated by the Company (provided, however, that any
         self-insured retention and/or deductible shall not exceed [$1,000,000]
         per occurrence) (in the event that with the prior consent of the Agent
         such insurance contains the War, Hijacking, and Other Perils Exclusion
         Clause (AVN 48B), then there must be in place the Extended Coverage
         Endorsement protection offered by AVN 52 to include "Buy Back" of
         paragraphs C, D, E and G of AVN 48B (or coverage equal thereto under a
         separate policy)) and with such insurers or reinsurers (which shall be
         insurers or reinsurers of recognized responsibility), and insurance
         against such other risks as is usually carried by similar corporations
         engaged in the same or similar business and similarly situated as the
         Company and owning or operating airframes and engines similar to the
         Airframe and Engines; provided that such insurance shall not be in
         amounts less than $500,000,000 per occurrence.

                  (ii)     Notwithstanding Section 2.04(a)(i), in the event of
         the requisition for use by the United States government of any Airframe
         or Engine, the Company shall maintain throughout the period of such
         requisition such insurance as would otherwise be required under this
         Section 2.04, provided that the Agent shall accept, in lieu of such
         insurance

         coverage, indemnification or insurance from the United States
         government which is substantially the same as otherwise required under
         this Section 2.04.

                  (ii)     Any policy of insurance carried and maintained in
         accordance with this Section 2.04(a), and any policy taken out in
         substitution or replacement for any such policy subject to the terms,
         conditions and limitations thereof, shall:

                                    (A)      name the initial Lenders and the
                  Agent and their respective successors and permitted assigns as
                  additional insureds (each an "Additional Insured");

                                    (B)      provide that, in respect of the
                  interest of any such Additional Insured in such policies, the
                  insurance shall not be invalidated by any action or inaction
                  of the Company or any Additional Insured as defined under the
                  policy of insurance required under this Section 2.04(a) (other
                  than such Additional Insured) and shall insure each such
                  Additional Insured regardless of any breach or violation of
                  any warranty, declaration or condition contained in such
                  policies by the Company or any other Additional Insured as
                  defined under the policy of insurance required under this
                  Section 2.04(a) (other than such Additional Insured);

                                    (C)      provide that if such insurance is
                  canceled for any reason, or any substantial change is made in
                  the policies which adversely affect the coverage required
                  herein, or if such insurance is allowed to lapse for
                  nonpayment of premium, such cancellation, change or lapse
                  shall not be effective as to any Additional Insured for 30
                  days (except in the case of war risk coverage in which event
                  the applicable period shall be seven days or such other period
                  as may be customary) after receipt by each such Additional
                  Insured of written notice from such insurers of such
                  cancellation, change or lapse;

                                    (D)      provide that no such Additional
                  Insured shall have any obligation or liability for premiums or
                  other payments, if any, in connection with such insurance;

                                    (E)      provide that the insurers shall
                  waive any rights of subrogation against each such Additional
                  Insured except to the extent that any insured event arises
                  solely from the gross negligence or willful misconduct of
                  such Additional Insured as determined by a final judgment of a
                  court of competent jurisdiction;

                                    (F)      provide that such insurer shall
                  waive the right of such insurer to any set-off or counterclaim
                  or any other deduction, whether by attachment or otherwise, in
                  respect of any liability of any such Additional Insured;

                                    (G)      provide that all of the provisions
                  of such policy shall operate in the same manner as if there
                  were a separate policy covering each such Additional Insured;
                  provided that such policies shall not operate to increase any
                  insurer's limit of liability; and

                                    (H)      be primary, without right of
                  contribution from any other insurance which is carried by any
                  Additional Insured with respect to its interest in the Subject
                  Collateral.

         (b)      Insurance Against Loss or Damage to Subject Collateral. The
Company, at its own cost and expense, shall maintain or cause to be maintained
in effect, with insurers or reinsurers of recognized responsibility, all-risk
coverage, including ground and flight insurance on the Aircraft (with flight,
taxiing and ingestion coverages) with respect to any Aircraft, Engines and Parts
temporarily removed from the Airframe pending installation of the same or
similar Engines, engines, or Parts on the Airframe, including, war-risk and
allied perils insurance on the Aircraft in an amount not less than the Agreed
Value covering the perils of:

                  1. war, invasion, acts of foreign enemies, hostilities
(whether war be declared or not), civil war, rebellion, revolution,
insurrection, martial law, military or usurped power, or attempts at usurpation
of power;

                  2. strikes, riots, civil commotions or labor disturbances;

                  3. any act of one or more persons, whether or not agents of a
sovereign power, for political or terrorist purposes and whether the loss or
damage therefrom is accidental or intentional;

                  4. any malicious act or act of sabotage;

                  5. confiscation, nationalization, seizure, restraint,
detention, appropriation, requisition of title or use by or under the order of
any government (whether civil, military or de facto) or public or local
authority other than the government or any public or local authority of the
country of registration; and

                  6. hijacking or any unlawful seizure or wrongful seizure or
wrongful exercise of control of the Aircraft or crew in flight (including any
attempt at such seizure or control) made by any person or persons on board this
Aircraft acting without the consent of the Company.

                  Such insurance shall be in such form and amounts and with
such retentions as the Company customarily maintains with respect to similar
airframes and engines owned or operated by the Company, provided, however, that
(1) such retentions shall consist only of industry standard deductibles
(determined by the deductible applicable to the aircraft type) and with no

self insurance, (2) each Airframe and Engine shall be insured in an amount not
less than its Agreed Value and (3) any reinsurance shall be on the same terms as
the primary insurance.

                  Any policies carried and maintained in accordance with this
Section 3.04(b) and any policies taken out in substitution or replacement for
any such policies subject to the terms, conditions and limitations thereof
shall:

                  (i)      name or be amended to name the then Lenders and the
         Agent and their respective successors and assigns as additional
         insureds and to name the Agent as loss payee (the "Loss Payee");

                  (ii)     provide with respect to coverage provided under this
         Section 3.04(b), that (A) in the event of a loss or damage involving
         proceeds in excess of $1,000,000, the proceeds in respect of such loss
         or damage shall be payable to the Agent and (B) the entire amount of
         any loss or damage involving proceeds in the aggregate of $1,000,000 or
         less shall be paid to the Company or its order unless an Event of
         Default or Potential Event of Default then exists and the insurers have
         been notified thereof by the Agent (in which case such payment shall be
         made to the Agent);

                  (iii)    provide that if such insurance is canceled for any
         reason or any substantial change is made in the policies which
         adversely affects the coverage required herein, or if such insurance is
         allowed to lapse for nonpayment of premium, such cancellation, change
         or lapse shall not be effective as to any such Additional Insured or
         the Loss Payee for 30 days (except in the case of war-risk coverage in
         which event the applicable period shall be seven days or such other
         period as may be customary) after receipt by each such Additional
         Insured or the Loss Payee of written notice from such insurer of such
         cancellation, change or lapse;

                  (iv)     provide that, in respect of the interest of any such
         Additional Insured or the Loss Payee in such policies the insurance
         shall not be invalidated by any action or inaction of the Company, the
         Loss Payee or any additional insured as defined under the policy of
         insurance required by this Section 2.04(b) (other than any action or
         inaction of the Loss Payee or such Additional Insured, as the case may
         be) and shall insure the Additional Insured and the Loss Payee
         regardless of any breach or violation of any warranty, declaration or
         condition in such policies by the Company or any other Additional
         Insured as defined under the policy of insurance required under this
         Section 2.04(b);

                  (v)      provide that the insurers shall waive any rights of
         subrogation against the Loss Payee and such Additional Insureds except
         to the extent that any insured event arises solely from the gross
         negligence or willful misconduct of such Additional Insured as
         determined by a final judgement of a court of competent jurisdiction;

                  (vi)     provide that such insurer shall waive any right of
         such insurer to any set-off or counterclaim or any other deduction,
         whether by attachment or otherwise, in respect of any liability of any
         such Additional Insured or Loss Payee;

                  (vii)    be primary and without rights of contribution from
         any other insurance which is carried by any such Additional Insured or
         the Loss Payee with respect to its interest in the Subject Collateral;

                  (viii)   provide that no such Additional Insured or Loss Payee
         shall have any obligation or liability for premiums or other payments,
         if any, in connection with such insurance; and

                  (ix))    the reinsurer shall agree that in the event of any
         valid claim arising under such reinsurance policy the reinsurers shall
         in lieu of payment to the reinsured, its successors in interest and
         assigns will pay to the Persons named as Additional Insureds under the
         original insurance affected by the Company that portion of any loss for
         which the reinsurers would otherwise be liable to pay the reinsured
         (subject to proof of loss) it being understood and agreed that any such
         payment shall fully discharge and release the reinsurer from any and
         all further liability in connection with such claims.

         (c)      Application of Insurance Proceeds.

                  (i)      Except as expressly provided in Section 2.04(c)(ii)
or (iii) below, all insurance proceeds (other than proceeds from policies
carried by the Agent or the Lenders) received under policies described in
Section 2.04(b) will be paid to the Agent except as otherwise provided in
Section 2.04(b)(ii) and paid by the Agent to the Company unless an Event of
Default or Potential Event of Default exists, in which event such proceeds shall
be retained by the Agent. If the Agent retains any such insurance proceeds
pursuant to this Section 2.04(c), such proceeds shall, until applied by the
Agent as provided in this Section 2.04(c)(i), Section 2.04(c)(ii) or Section
2.04(c)(iii) hereof, be maintained by the Agent in a segregated account and
shall, at the Company's request therefor, be invested in Permitted Cash
Equivalents.

                  (ii)     Insurance proceeds in respect of any Repairable
Damage with respect to any Aircraft which is not required by subsection
2.4B(iii)(1) of the Credit Agreement to be excluded from the Borrowing Base
shall be retained by the Agent pending repair thereof, and shall be applied by
the Agent in payment (or to reimburse the Company) for repairs to the affected
Aircraft upon receipt from the Company of an Officer's Certificate annexing
copies of invoices relating to such repairs, provided, however, that the Agent
shall not so apply any such proceeds during the occurrence and continuance of
any Potential Event of Default or Event of Default. Any such insurance proceeds
in excess of the total amount required to pay for repair of the affected
Aircraft shall, upon certification by the Company to the Agent in an Officer's
Certificate that such repair has been completed, be paid by the Agent to the
Company provided, however, that the Agent shall not so pay any such insurance
proceeds during the occurrence and continuance of any Potential Event of Default
or Event of Default.

                  (iii)    If an Event of Default shall have occurred and be
continuing, the Agent shall apply all insurance proceeds (including proceeds of
any earnings on any Permitted Cash Equivalents in which such insurance proceeds
have been invested) then on deposit with it pursuant to Section 2.04(c)(i) or
Section 2.04(c)(ii) hereof (all such insurance and other proceeds and earnings
being herein collectively called "Section 2.04(c) Proceeds") to payment of the
Obligations then due. At such time as no Potential Event of Default or Event of
Default shall be continuing, any Section 2.04(c) Proceeds remaining on deposit
with the Agent shall be (x) applied as provided in Section 2.04(c)(ii), if then
applicable, or (y) if Section 2.04(c)(ii) is not then applicable, shall be paid
by the Agent to the Company.

                  (iv)     If any of the Lenders or the Agent becomes subject to
any claim covered by any insurance policy maintained pursuant to this Section
2.04, the Company shall make available any information reasonably required by
such Lender or the Agent in connection with such claim.

                  (d)      Reports. On or before the date hereof and thereafter
annually on or before the scheduled expiration date for such policy, the
Company's aviation insurance broker will furnish to the Agent a certificate and
letter of undertaking, signed by the Company's independent aviation insurance
broker, stating the types of coverage and limits carried and maintained on the
Aircraft and certifying that such insurance complies with the terms and
conditions of this Section 2.04. The Company will cause its aviation insurance
broker to advise the Agent in writing promptly of any default in the payment of
any premium and of any other act or omission on the part of the Company in any
such case of which it has knowledge and which is likely to cause cancellation of
all or any part of any insurance carried by the Company with respect to the
Aircraft. The Company will cause such insurance broker to agree to advise the
Agent in writing if and when it becomes evident to such broker that any
insurance policy carried and maintained on the Aircraft pursuant to this Section
2.04 will not be renewed at the expiration date. The Company will also cause
such insurance broker to deliver to the Agent, on or prior to the date of
expiration of any insurance policy referenced in a previously delivered
certificate of insurance, a new certificate of insurance, confirming to such
parties that such insurance as certified on the date thereof continues in full
force and effect. If the Company shall fail to maintain insurance as required
hereby, the Agent may, at its option, provide such insurance, and in such event,
the Company shall, upon demand, reimburse the Agent for the cost of such
insurance; provided, however, that no exercise of said option shall affect the
provisions of this Security Agreement, including the provisions that failure by
the Company to maintain the prescribed insurance shall constitute an Event of
Default, or otherwise constitute a waiver of any other rights the Agent may have
against the Company.

                  (e)      Notice of Proceeds. The Company shall promptly notify
the Agent upon a Responsible Officer of the Company obtaining actual knowledge
thereof of the occurrence of an event of loss or damage to any Aircraft which is
reasonably expected to result in the receipt of insurance proceeds reasonably
estimated by the Company to exceed $1,000,000.



                  SECTION 2.05. Infection. At reasonable times and upon
reasonable notice, the Agent or its authorized representative may, at their own
expense (unless an Event of Default then exists or a Potential Event of Default
arising under the maintenance requirements of this Security Agreement, in which
case the reasonable expenses of such inspection shall be paid by the Company or
unless subsection 2.10 of the Credit Agreement provides that such inspection
shall be at the expense of the Company), inspect the Aircraft and inspect of the
books and records and FAA-required books and records of the Company in each case
relating to the maintenance of the Aircraft. Any such inspection of the Aircraft
shall be a visual, walk-around inspection (including on-board inspection) and
may include inspection of areas exposed by any open panels, bays or the like,
but shall not include opening any panels, bays or the like without the express
written consent of the Company; provided that no exercise of such inspection
right shall interfere with the normal operation of the Aircraft by, or the
business of, the Company. The Agent shall have no duty to make any such
inspection nor shall it incur any liability or obligation by reason of not
making any such inspection.

                  SECTION 2.06. Further Assurances. (a) The Company agrees from
time to time, at its sole expense, to promptly execute and deliver all further
instruments and documents, and take all further action, that the Agent may
request, in order to perfect and protect any security interest granted or
purported to be granted hereby or to enable the Agent to exercise and enforce
its rights and remedies hereunder with respect to any of the Subject Collateral.
Without limiting the generality of the foregoing, such further actions shall
include executing and delivering such amendments or supplements to the schedules
to this Security Agreement, executing and filing such financing or continuation
statements, or amendments thereto, executing, filing and recording such
documents or instruments with the Federal Aviation Administration, and executing
and filing such other instruments or notices, in each case as the Agent on
behalf of the Lenders may reasonably request, in order to perfect and preserve
the security interest granted or purported to be granted hereby.

                           (b) The Company hereby authorizes the Agent to file
one or more financing or continuation statements or similar instruments or
documents, and amendments thereto, relative to all or any part of the Subject
Collateral without the signature of the Company where permitted by law.

                  SECTION 2.07. Recording and Filing; Opinions of Counsel. The
Company will bear the expense of and be responsible for recording and
re-recording, registering and re-registering and filing and re-filing this
Security Agreement and each and every Security Agreement Supplement and such
other instruments from time to time as may be reasonably requested by the Agent
in all such jurisdictions and offices as the Agent shall from tine to time
require in order that (a) the Lien hereof be and continues to be a first
priority Lien on all of the Subject Collateral to the fullest extent permitted
under applicable law, subject to Permitted Liens, (b) all of the Subject
Collateral is and remains security for the Obligations, and (c) the rights and
remedies of the Agent may be established, confirmed, maintained and protected;
and the Company will furnish to the Agent evidence satisfactory to the Agent of
every such recording, registering and filing which is not filed, recorded or
registered by the Agent. The

foregoing includes, without limitation, the execution and delivery by the
Company of all documents, financing statements and continuation statements
deemed reasonably necessary by the Agent to perfect the Agent's rights as
secured party. The Company, at its own cost and expense, shall on the date of
this Security Agreement cause this Security Agreement to be duly filed for
recordation with the FAA and shall make such other filings to perfect the Lien
of this Security Agreement against the Subject Collateral as shall be reasonably
requested by the Agent. The Company will furnish to the Agent an opinion of
counsel reasonably satisfactory to the Agent or other evidence reasonably
satisfactory to the Agent to the effect that such filings or refilings and such
recordations or re-recordations have been duly accomplished and as to any Liens
of record against the Aircraft or any Engine in the office where such filings or
refilings or recordations or re-recordations have been accomplished.

                  [SECTION 2.08. Section 1110. TO THE EXTENT PROVIDED THEREBY
(OR TO THE FULLEST EXTENT IT MAY LAWFULLY SO AGREE, WHETHER OR NOT PROVIDED
THEREBY), THE COMPANY HEREBY AGREES THAT ANY RIGHT OF THE AGENT TO TAKE
POSSESSION OF THE SECTION 1110 PROPERTY IN COMPLIANCE WITH THE PROVISIONS OF
THIS SECURITY AGREEMENT AND IN ACCORDANCE WITH SECTION 1110 OF TITLE 11 OF THE
UNITED STATES CODE OR ANY SIMILAR PROVISION OF ANY SUPERSEDING STATUTE, AS
AMENDED FROM TIME TO TIME, SHALL NOT BE AFFECTED BY THE PROVISIONS OF SECTIONS
362, 363 OR 1129 OF SAID TITLE, OR OTHER ANALOGOUS PART OF ANY SUPERSEDING
STATUTE, AS AMENDED FROM TIME TO TIME, AND ACCORDINGLY, IT IS THE INTENTION OF
THE PARTIES HERETO THAT WITH RESPECT TO THE SECTION 1110 PROPERTY, THIS
SECURITY AGREEMENT BE AFFORDED THE BENEFITS OF SAID SECTION 1110.]**

(a) [SECTION 2.09. First Placed in Service. Schedule I hereto specifically
identifies, to the extent known to the Company with respect to Aircraft not
first placed in service by the Company, if the Aircraft was first placed in
service after October 22, 1994 or was acquired by the Company with the proceeds
of the Credit Agreement ("Section 1110 Property"). Each Security Agreement
Supplement adding a Replacement Engine to be subject to the Lien of this
Security Agreement shall also identify to the extent known to the Company
whether such Engine was first placed in service after October 22, 1994.]**

                  SECTION 2.10. Power of Attorney. The Company hereby
irrevocably appoints the Agent as the Company's attorney-in-fact and agent to
the extent permitted by law, effective on or after the acceleration of the
Loans, but prior to the Agent obtaining physical possession of


- ----------

**       The Company agrees that this Security Agreement will grant to the Agent
         the benefits of Section 1110 if such Section applies to the Airframe,
         any Engine or any Replacement Engine.

**       The Company agrees that this Security Agreement will grant to the Agent
         the benefits of Section 1110 if such Section applies to the Airframe,
         any Engine or any Replacement Engine.

the Subject Collateral, in the Company's name and without any action on the part
of the Company to do, at the Agent's option, any act the Agent reasonably
believes necessary to protect the interests of the Agent in the Subject
Collateral. The appointment of the Agent and the rights and powers in connection
therewith, being coupled with an interest and with full power of substitution
and resubstitution for the Company, are and shall remain irrevocable until all
of the Obligations have been fully paid and performed and the Commitments of the
Lenders under the Credit Agreement have expired or been terminated.

                  SECTION 2.11. Indemnification. The Company shall assume
liability for and will indemnify, protect, save, and keep harmless the Agent and
each of the Lenders, and their respective agents, employees, successors and
permitted assigns (collectively, the "Indemnified Parties") from and against any
and all liabilities, losses, damages, taxes, claims, actions, suits, costs,
demands and/or expenses of whatsoever kind, including, without limitation, legal
expenses, imposed on, incurred by, or asserted against the Agent, the Company,
the Subject Collateral (or any part thereof or interest therein), arising out of
the [purchase]***, ownership, delivery, possession, use, operation, condition,
performance, quality, suitability, airworthiness, maintenance, modification,
registration, loss, confiscation, seizure, requisition, or lease of the Aircraft
(collectively, the "Indemnified Events"). Notwithstanding the foregoing, the
Company shall not indemnify an Indemnified Party in respect of (i) any
Indemnified Events suffered or incurred after the release of the Lien of this
Security Agreement pursuant to the terms hereof, (ii) Indemnified Events that
consist of fees, costs or expenses which such Indemnified Party has expressly
agreed to pay in any provision of this Security Agreement or constitute ordinary
and usual operating or overhead expenses of an Indemnified Party (excluding,
without limitation, costs and expenses of any outside counsel, consultant or
agent), (iii) Indemnified Events arising from the gross negligence or willful
misconduct of such Indemnified Party, (iv) any Indemnified Events arising out of
any breach by the Agent of Section 2.12 hereof, (v) any tax arising as a result
of a voluntary transfer of any Indemnified Party's interest pursuant to Section
9.1 of the Credit Agreement provided that no Event of Default exists at the time
of such transfer, (vi) taxes, withholdings, imposts or duties imposed on, based
on or measured by the gross or net income, receipts, maximum tax, profits,
gains, capital, franchise, excess profits or net worth of an Indemnified Party
other than, in each case, resulting from the activities or presence of the
Company in the taxing jurisdiction or the use, location or registration of the
Aircraft (or any part thereof) in such taxing jurisdiction, (vii) taxes on items
of tax preference or any minimum tax imposed by the federal government of the
United States, (viii) interest, penalties, fines or additions to taxes that
would not have been imposed but for any failure to file any tax return or
information return in a timely and proper manner after timely notice by the
Company of such filing requirement and provision by the Company (at the
Company's expense) of all properly completed forms necessary in connection
therewith and (ix) any tax imposed as a result of a connection between an
Indemnified Party and the jurisdiction imposing such taxes, including, without
limitation, engaging or having engaged in business in, having or having had an
office, branch or permanent establishment in, or being or having been a citizen
or resident of, or present


- ----------

***      Subject to negotiation on a case by case basis.

in, or incorporated or created in or under the laws of such jurisdiction other
than as a result of a connection arising from this transaction. Each Indemnified
Party shall file its tax returns and deal with taxing authorities in good faith,
and will honor all reasonable requests from the Company to file, or provide the
Company with, such information (but excluding information such Indemnified Party
considers confidential) as is necessary to complete forms or other documentation
(in each case, prepared by the Company at its sole expense) as shall enable such
Indemnified Party or the Company to claim a reduced rate of tax or exemption
from tax with respect to any taxes subject to payment or indemnification by the
Company hereunder to which it may be entitled. If the Company is or may be
required to make any payment under this Section 2.11, any relevant Indemnified
Party shall, at the reasonable request of the Company, consult with the Company
in good faith to consider what action may be taken to resist payment of the
amount claimed. Each indemnity pursuant to this Section 2.11 shall be in the
amount which, after taking into account all taxes required to be paid by the
Agent as a result of the receipt or accrual of such amount, shall be equal to
the amount of the indemnity then due. The Company's obligations under this
Section 2.11 shall survive the expiration or termination of this Security
Agreement and the release of the Lien hereof from any or all of the Subject
Collateral.

                  SECTION 2.12. Use and Possession. Notwithstanding the terms of
any provision contained in this Security Agreement or the Credit Agreement,
except as provided in Section 3.01(e) of this Security Agreement, the Company
shall have the exclusive right to use and possess the Aircraft, to collect,
retain, use and enjoy all rents and accounts and to exercise its right, title
and interest in contracts, leases, licenses, permits and governmental approvals
subject at all times to (a) the right of the Agent to receive insurance proceeds
pursuant to Section 2.04(c) hereof, (b) the applicable restrictions and
limitations contained in Section 5.4 of the Credit Agreement and (c) such use,
possession, retaining, enjoyment or exercise not otherwise constituting an Event
of Default.

                   ARTICLE III EVENTS OF DEFAULT AND REMEDIES

                  SECTION 3.01. Remedies, Obtaining the Aircraft Upon Default.
The Company agrees that, if the Loans have been accelerated, then, subject to
any mandatory requirements of applicable law then in effect, the Agent, in
addition to any rights now or hereafter existing under applicable law, shall
have all rights as a secured creditor under the UCC in all relevant
jurisdictions and may:

                  (a) to the extent permitted by law, personally, or by agents
         or attorneys, immediately take possession of the Aircraft or any part
         thereof, from the Company with or without notice or process of law, and
         for that purpose may enter upon the Company's premises where all or any
         part of the Aircraft is located and remove the same; and

                  (b) instruct the obligor or obligors on any agreement,
         instrument or other obligation relating to the Aircraft to make any
         payment included in the Subject Collateral required by the terms of
         such instrument or agreement directly to the Agent; and

                  (c) sell or assign, or direct the Company to sell or assign,
         the Aircraft or any part thereof, and take possession of the proceeds
         of any such sale or assignment; and

                  (d) take possession of the Aircraft or any part thereof, by
         directing the Company in writing to deliver the same to the Agent at
         any place or places designated by the Agent, in which event the Company
         shall at its own expense forthwith fly or cause to be flown all or any
         part of the Aircraft to such airport or airports in the United States
         so designated by the Agent and there delivered to the Agent, and the
         Company shall pay all reasonable and necessary expenses to (i) store
         and keep all or any part of the Aircraft so delivered to the Agent at
         such place or places pending further action by the Agent as provided in
         Section 4.02, and (ii) while all or any part of the Aircraft shall be
         so stored and kept, provide guards and maintenance services as shall be
         necessary to protect the same and to preserve and maintain them in good
         condition; and

                  (e) revoke all or any of the rights of the Company provided
         for pursuant to Section 2.12 of this Security Agreement by written
         notice to the Company indicating which rights are revoked;

it being understood that the Company's obligation so to deliver the Aircraft or
any part thereof is of the essence of this Security Agreement and that,
accordingly, upon application to a court of equity having jurisdiction, the
Agent shall be entitled to a decree requiring specific performance by the
Company of said obligation.

                  SECTION 3.02. Remedies; Disposition of the Aircraft. (a) The
Aircraft, or any part thereof repossessed by the Agent under or pursuant to
Section 4.01, whether or not so repossessed by the Agent, may be sold, assigned,
leased or otherwise disposed of under one or more contracts or as an entirety,
and without the necessity of gathering at the place of sale the property to be
sold, and in general in such manner, at such time or times, at such place or
places and on such terms as the Agent may, in compliance with any mandatory
requirements of applicable law, determine to be commercially reasonable. The
Aircraft or any part thereof may be sold, leased or otherwise disposed of, in
the condition in which the same existed when taken by the Agent or after any
overhaul or repair which the Agent shall determine to be commercially
reasonable. Any such disposition which shall be a private sale or other private
proceedings permitted by such requirements shall be made upon not less than 10
days' written notice to the Company specifying the time at which such
disposition is to be made and the intended sale price or other consideration
therefor. Any such disposition which shall be a public sale permitted by such
requirements shall be made upon not less than 10 days' written notice to the
Company specifying the time and place of such sale. To the extent permitted by
any such requirement of law, the Agent and the Lenders may bid for and become
the purchaser of the Aircraft or any part thereof, offered for sale in
accordance with this Section without accountability to the Company (except to
the extent of surplus money received as provided in Section 3.03) and may bid
the amount of the Obligations to be applied as credits against such purchase.
If, under mandatory requirements of applicable law, the Agent shall be required
to make disposition of the Aircraft or any part thereof within a period of time
which does not permit the giving of notice to the

Company as hereinabove specified, the Agent need give the Company only such
notice of disposition as shall be required by such mandatory requirements of
applicable law. Any sale of, or the grant of options to purchase, or any other
realization upon, the Aircraft or any part thereof shall operate to divest all
right, title, interest, claim and demand, either at law or in equity, of the
Company therein and thereto, and shall be a perpetual bar both at law and in
equity against the Company and against any and all Persons claiming or
attempting to claim the Aircraft so sold, optioned or realized upon, or any part
thereof, from, through and under the Company but without limitation of the
Company's rights under Section 3.03 third hereof. At the request of the Agent,
the Company shall deliver such instruments of title or other instruments to
ratify or document such sale but such instruments shall not be necessary to make
such sale final or binding.

                  (b) The Company covenants (to the extent that it may lawfully
         do so) that it will not at any time insist upon, or plead, or in any
         manner whatsoever claim or take the benefit or advantage of, any
         appraisement, valuation, stay, extension or redemption law wherever
         enacted, nor at any time hereafter in force in any locality where any
         property subject to the Lien hereof may be situated, in order to
         prevent, hinder or delay the enforcement or foreclosure of this
         Security Agreement or the execution of any power granted herein to the
         Agent, or the absolute sale of the Aircraft, or any part thereof, or
         the final and absolute putting into possession thereof, immediately
         after such sale, by any purchaser at any sale under this Section 3.02
         but without limitation of the Company's rights under Section 3.03 third
         hereof; and the Company, so far as it now or thereafter lawfully may,
         hereby waives the benefit of all such laws. The Company waives, to the
         extent that it lawfully may, all right to have the property in the
         Subject Collateral marshalled upon any foreclosure hereof, and agrees
         that any court having jurisdiction to foreclose this Security Agreement
         may order the sale of the Subject Collateral as an entirety. If the
         Agent seeks to take possession of any or all of the Subject Collateral
         or avail itself of any provisional remedy by court process, the Company
         hereby irrevocably waives (to the extent it may lawfully do so) any
         bonds and any surety or security required by any statute, court rule or
         otherwise as an incident to such possession, or remedy, and waives any
         demand for possession prior to the commencement of any suit or action
         to recover.

                  (c) if the Loans are accelerated, at the request of the Agent,
         the Company shall promptly execute and deliver to the Agent such
         instruments of title and other documents as the Agent may deem
         necessary or advisable to enable the Agent or an agent or
         representative designated by the Agent, at such time or times and place
         or places as the Agent may specify, to obtain possession or control of
         all or any part of the Subject Collateral. To the extent permitted by
         law, if the Company shall for any reason fail to execute and deliver
         such instruments and documents after such request by the Agent, the
         Agent may (x) obtain a judgment conferring on the Agent the right to
         immediate possession and/or control and requiring the Company to
         deliver such instruments of title and other documents as the Agent may
         deem necessary or advisable to enable the Agent or an agent or
         representative designated by the Agent, at such time or times and place
         or places as the Agent may specify, to obtain possession and/or control
         of all or any part of the Subject Collateral, to the entry of which
         judgment the Company hereby specifically consents.

                  SECTION 3.03. Application of Proceeds. Except as may otherwise
be required by law, any moneys or property actually received by the Agent
pursuant to the exercise of any rights or remedies referred to in Article III
shall (subject to the determination of the Agent as to the incurrence of costs
and expenses appropriate and the use of such moneys and property in connection
with the exercise of such rights or remedies and as to the manner of such
exercise) be applied in the following order:

                  first, to the payment of costs and expenses incurred in the
         enforcement of rights and remedies under this Security Agreement;

                  second, to the payment of all of the Obligations (except for
         such Obligations that shall have been paid pursuant to first item of
         this Section 3.03), ratably according to the then unpaid amounts
         thereof, without preference or priority of any kind among such various
         Obligations; and

                  third, the remainder, if any, to the Company, its successors
         or assigns, to such Person as the Agent may be legally required to be
         paid to or as a court of competent jurisdiction may direct.

                  SECTION 3.04. Remedies Cumulative. Each and every right, power
and remedy hereby specifically given to the Agent shall be in addition to every
other right, power and remedy specifically given under this Security Agreement
or the Credit Agreement and other Loan Documents or now or hereafter existing at
law or in equity, or by statute and each and every right, power and remedy
whether specifically herein given or otherwise existing may be exercised from
time to time or simultaneously and as often and in such order as may be deemed
expedient by the Agent. All such rights, powers and remedies shall be cumulative
and the exercise or the beginning of exercise of one shall not be deemed a
waiver of the right to exercise of any other or others. No delay or omission of
the Agent in the exercise of any such right, power or remedy shall impair any
such right, power or remedy or shall be construed to be a waiver of any Event of
Default or an acquiescence therein.

                                ARTICLE IV AGENT

                  SECTION 4.01. Agent As provided in Section 8 of the Credit
Agreement, each Lender has appointed The Industrial Bank of Japan, Limited, as
its Agent for purposes of this Security Agreement. In such capacity, The
Industrial Bank of Japan, Limited, shall be entitled to all of the rights and
benefits accorded the Agent by Section 8 of the Credit Agreement. Following the
payment in full of all Obligations and the termination or expiration of the
Loan Documents, the provisions of Section 8 of the Credit Agreement shall be
deemed to continue in full force and effect for the benefit of the Agent under
this Security Agreement. For the avoidance of doubt, nothing in this Section
4.01 is intended to create any liability or obligation on the Company.

                       ARTICLE V MISCELLANEOUS PROVISIONS


                  SECTION 5.01. Notices. All notices and communications to be
given under this Security Agreement shall be given in the manner provided in the
Credit Agreement.

                  SECTION 5.02. Waiver. To the extent permitted by applicable
law, no failure on the part of the Agent or any Lender to exercise and no delay
in exercising, and no course of dealing with respect to, any right, remedy,
power or privilege under this Security Agreement shall operate as a waiver of
such right, remedy, power or privilege, nor shall any single or partial exercise
of any right, remedy, power or privilege under this Security Agreement preclude
any other or further exercise of any such right, remedy, power or privilege or
the exercise of any other right, remedy, power or privilege. The rights,
remedies, powers and privileges provided in this Security Agreement are
cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.

                  SECTION 5.03. Expenses Etc. The Company agrees to pay or to
reimburse the Agent and the Lenders for all reasonable costs and expenses
(including reasonable attorney's fees and expenses) that may be incurred by the
Agent or the Lenders for any expense or loss incurred in connection with any
Event of Default, including, but not limited to, any effort to enforce any of
the provisions of, or any of the obligations of the Company in respect of, this
Security Agreement and the other Loan Documents (including in any bankruptcy,
workout or similar proceeding).

                  SECTION 5.04. Amendments, Etc. To the extent permitted by
applicable law, any provision of this Security Agreement may be modified,
supplemented or waived only by an instrument in writing duly executed by the
Company and the Agent (after such consent as may be required, if any, by the
Lenders pursuant to the Credit Agreement). Any such modification, supplement or
waiver shall be for such period and subject to such conditions as shall be
specified in the instrument effecting the same and shall be binding upon the
Agent, the Lenders and the Company, and any such waiver shall be effective only
in the specific instance and for the purposes for which given.

                  SECTION 5.05. Successors and Assigns. This Security Agreement
shall be binding upon and inure to the benefit of the Company, the Agent, the
other Lenders and their respective successors and permitted assigns. Except as
provided in subsections 6.6(v), 6.10 and 6.12 of the Credit Agreement, the
Company shall not assign or transfer its rights under this Security Agreement
without the prior written consent of the Agent.

                  SECTION 5.06. Survival. All representations and warranties
made in this Security Agreement or in any certificate or other document
delivered pursuant to or in connection with this Security Agreement shall
survive the execution and delivery of this Security Agreement or such
certificate or other document (as the case may be) or any deemed repetition of
any such representation or warranty.

                  SECTION 5.07. Severability. To the extent permitted by
applicable law, any provision of this Security Agreement that is prohibited or
unenforceable in any jurisdiction shall,

as to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of this Security
Agreement, and any such prohibition or unenforceability in any jurisdiction
shall not invalidate or render unenforceable such provision in any other
jurisdiction.

                  SECTION 5.08. Captions. The captions and section headings
appearing in this Security Agreement are included solely for convenience of
reference and are not intended to affect the interpretation of any provision of
this Security Agreement.

                  SECTION 5.09. Counterparts. This Security Agreement may be
executed in any number of counterparts, all of which taken together shall
constitute one and the same instrument and any of the parties to this Security
Agreement may execute this Security Agreement by signing any such counterpart.

                  SECTION 5.10. GOVERNING LAW. THIS SECURITY AGREEMENT
SHALL BE DELIVERED IN THE STATE OF NEW YORK AND GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

                  IN WITNESS WHEREOF, the Company and the Agent have caused this
instrument to be duly executed as of the day and year first above written.



                                             AMERICA WEST AIRLINES, INC.,
                                             a Delaware corporation



                                             By: ___________________________
                                                    Name:
                                                    Title:



                                             THE INDUSTRIAL BANK OF JAPAN,
                                             LIMITED, as Agent



                                             By: ___________________________
                                                    Name:
                                                    Title:

                                                                      SCHEDULE I
                                                                              to
                                                     Aircraft Security Agreement

         The following aircraft and the aircraft engines listed below, which
aircraft, together with the engines listed therewith below, shall constitute a
single "Aircraft" as said term is defined in the Security Agreement to which
this Schedule I is attached and made a part thereof:

Airframe

        [Description]
        UNITED STATES REGISTRATION NUMBER: __________________
        MANUFACTURER'S SERIAL NO.: ________________

Engines

        ___________________ ENGINES
        ENGINE SERIAL NOS.: _______________
        (each of which engines has 750 or more
        rated takeoff horsepower or the equivalent thereof)

                                                                      APPENDIX A
                                                                              to
                                                     Aircraft Security Agreement

                    SUPPLEMENTAL AIRCRAFT SECURITY AGREEMENT

                  SUPPLEMENTAL AIRCRAFT SECURITY AGREEMENT dated as of
________________, 19__ from AMERICA WEST AIRLINES, INC., a Delaware corporation
(the "Company"), whose mailing address is 111 West Rio Salado Parkway, Tempe,
Arizona 85281, to The Industrial Bank of Japan, Limited, as Agent under the
Amended and Restated Revolving Credit Agreement referred to below (together with
its successors and assigns in such capacity, the "Agent") for the benefit and on
behalf of itself as such Agent and the lenders (the "Lenders", such term to
include the Issuing Bank as defined in the Credit Agreement) from time to time
party to that certain Amended and Restated Revolving Credit Agreement dated as
of December    , 1999 (as the same may be amended or waived from time to time
the "Credit Agreement") among the Company, the Lenders and the Agent.

                  WHEREAS, the Company has heretofore executed and delivered to
the Agent an Aircraft Security Agreement dated as of _____________________ (the
"Security Agreement"), covering an aircraft of the Company (terms used in this
instrument having the meanings assigned thereto in the Security Agreement);

                  WHEREAS, the Security Agreement has been duly recorded with
the FAA on __________________ and assigned Conveyance No. __________________
pursuant to the Act;

                  WHEREAS, this Supplemental Security Agreement relates to the
aircraft engine described in Schedule I hereto; and

                  WHEREAS, the Security Agreement provides for the execution and
delivery from time to time of Supplemental Security Agreements, each
substantially in the form hereof, for the purpose of subjecting a Replacement
Engine to the Lien of the Security Agreement.

                  NOW, THEREFORE, as contemplated by the Security Agreement, the
Company hereby grants to the Agent for its benefit and the benefit of the
Lenders a security interest in the property described in Schedule I hereto as
security for the due and prompt payment of the Obligations.

                  This Supplemental Security Agreement shall be construed as
supplemental to the Security Agreement and shall form a part thereof; and the
Security Agreement is hereby incorporated by reference herein to the same extent
as if fully set forth herein and is hereby ratified, approved and confirmed in
all respects.

         IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Security Agreement to be duly executed, as of the day and year first above
written.

                                             AMERICA WEST AIRLINES, INC.
                                             a Delaware corporation



                                             By: ___________________________
                                                    Name:
                                                    Title:



                                             THE INDUSTRIAL BANK OF JAPAN,
                                             LIMITED, as Agent



                                             By: ___________________________
                                                    Name:
                                                    Title:

                                                                      SCHEDULE I
                                                                              to
                                                 Supplemental Security Agreement

         The following aircraft and the aircraft engines listed below, which
aircraft, together with the engines listed therewith below, shall constitute a
single "Aircraft" as said term is defined in the Supplemental Security
Agreement to which this Schedule I is attached and made a part thereof:

Airframe

        [Description]
        UNITED STATES REGISTRATION NUMBER: ______________
        MANUFACTURER'S SERIAL NO.: ______________

Engines

        ____________________________ ENGINES
        ENGINE SERIAL NOS.: ______________
        (each of which engines has 750 or more rated
        takeoff horsepower or the equivalent thereof)



                                                                       Exhibit B

                                                               EXECUTION VERSION



                         RECEIVABLES SECURITY AGREEMENT

         THIS RECEIVABLES SECURITY AGREEMENT (this "Receivables Security
Agreement") is made and entered into as of January 18, 2002 by AMERICA WEST
AIRLINES, INC., a Delaware corporation (the "Debtor"), and THE INDUSTRIAL BANK
OF JAPAN, LIMITED, as agent for the Lenders (as defined below) (in such
capacity, the "Agent" or "Secured Party"). All capitalized terms used but not
otherwise defined herein or pursuant to Section 1 hereof shall have the
respective meanings assigned thereto in the Term Loan Agreement (as defined
below).

                              W I T N E S S E T H:

         WHEREAS, The Industrial Bank of Japan, Limited, as Agent (the "Agent")
for each of the lenders (the "Lenders" and collectively with the Agent, the
"Secured Parties") now or hereafter party to the Term Loan Agreement (as defined
below) have agreed to provide to the Debtor a term loan facility pursuant to the
Amended and Restated Term Loan Agreement dated as of January  , 2002 (as from
time to time amended, revised, modified, supplemented or amended and restated,
the "Term Loan Agreement") by and among the Debtor, the Agent and the Lenders
from time to time party thereto (the "Lenders"); and

         WHEREAS, as collateral security for payment and performance by the
Debtor of its Obligations, and the payment and performance of its obligations
and liabilities (whether now existing or hereafter arising) under the Term Loan
Agreement or under any of the other Loan Documents to which it is now or
hereafter becomes a party (collectively, the "Secured Obligations"), the Debtor
is willing to grant to the Agent for the benefit of the Secured Parties a
security interest in certain of its personal property and assets pursuant to the
terms of this Receivables Security Agreement; and

         WHEREAS, the Secured Parties are unwilling to maintain the Loans to the
Debtor under the Term Loan Agreement unless the Debtor enters into this
Receivables Security Agreement;

         NOW, THEREFORE, in order to induce the Secured Parties to maintain the
Loans under the Term Loan Agreement, and in further consideration of the
premises and the mutual covenants contained herein, the parties hereto agree as
follows:

         1. CERTAIN DEFINITIONS. Terms used in this Receivables Security
Agreement, not otherwise expressly defined herein or in the Term Loan Agreement,
as the case may be, and for which meanings are provided in the Uniform
Commercial Code of the State of New York (the WUCC"), shall have such meanings.

         2. GRANT OF SECURITY INTEREST. Notwithstanding anything to the contrary
contained herein, it is understood and agreed that the Receivables Collateral
(as hereinafter defined) shall only include those receivables set forth on
Schedule 9(a) hereto, as such schedule may be amended, supplemented or restated
from time to time by the Debtor, which categories include,

among others, the Debtor's charter services accounts receivable, ground handling
accounts receivable, accounts receivable with respect to certain promotions
(including, without limitation, frequent flyer promotions), in each case as set
forth on such Schedule 9(a). Subject to occurrence of the conditions set forth
in Section 3(d) hereof (and effective only if such conditions occur), the Debtor
hereby grants to the Secured Party for the benefit of the Secured Parties as
collateral security for the payment, performance and satisfaction of all of the
Debtor's Secured Obligations a continuing first priority security interest in
and to, and collaterally assigns to the Secured Party for the benefit of the
Secured Parties, the following property of the Debtor or in which the Debtor has
or may have or acquire an interest or the power to transfer rights therein,
whether now owned or existing or hereafter created, acquired or arising and
wheresoever located, including the following:

                  (a) All accounts, and including accounts receivable,
         contracts, bills, acceptances, choses in action, and other forms of
         monetary obligations at any time owing to the Debtor arising out of
         property sold, leased, licensed, assigned or otherwise disposed of or
         for services rendered or to be rendered by the Debtor, and all of the
         Debtor's rights with respect to any property represented thereby,
         whether or not delivered, property returned by customers and all rights
         as an unpaid vendor or lienor, including rights of stoppage in transit
         and of recovering possession by proceedings including replevin and
         reclamation (collectively referred to hereinafter as "Accounts"), in
         each case only to the extent that such Accounts arise from, or are
         related to, the specified accounts receivable set forth on Schedule
         9(a);

                  (b) All chattel paper, including tangible chattel paper,
         electronic chattel paper, or any hybrid thereof (collectively referred
         to hereinafter as "Chattel Paper"), in each case only to the extent
         that such Chattel Paper arises from, or is related to, the specified
         accounts receivable set forth on Schedule 9(a);

                  (c) All instruments, including all promissory notes
         (collectively referred to hereinafter as "Instruments"), in each case
         only to the extent that such Instruments arise from, or are related to,
         the specified accounts receivable set forth on Schedule 9(a);

                  (d) All rights to payment or performance under letters of
         credit including rights to proceeds of letters of credit
         ("Letter-of-Credit Rights"), and all guaranties, endorsements, Liens,
         other contingent obligations or supporting obligations of any Person
         securing or supporting the payment, performance, value or liquidation
         of any of the foregoing (collectively, with Letter-of-Credit Rights,
         referred to hereinafter as "Supporting Obligations"), in each case only
         to the extent that such Supporting Obligations arise from, or are
         related to, the specified accounts receivable set forth on Schedule
         9(a);

                  (e) All books and records relating to any of the foregoing
         (including customer data, credit files, ledgers, computer programs,
         printouts, and other computer materials and records (and all media on
         which such data, files, programs, materials and records are or may be
         stored)); and


                                       2

                  (f) All proceeds, products and replacements of, accessions to,
         and substitutions for, any of the foregoing, including without
         limitation proceeds of insurance policies insuring any of the
         foregoing.

         All of the property and interests in property described in subsections
(a) through (f) are herein collectively referred to as the "Receivables
Collateral." Notwithstanding the foregoing, "Receivables Collateral" shall not
include any general intangibles or other rights arising under any contracts,
instruments, licenses or other documents as to which the grant of a security
interest would (i) constitute a violation of a valid and enforceable restriction
in favor of a third party on such grant, unless and until any required consents
shall have been obtained or (ii) give any other party to such contract,
instrument, license or other document the right to terminate its obligations
thereunder.

         3.    PERFECTION; CONDITIONS TO GRANT OF SECURITY INTEREST.

                  (a) At the time of execution of this Receivables Security
         Agreement, the Debtor shall have furnished the Secured Party with
         financing statements in form, number and substance suitable for filing,
         and duly authorized by the Debtor, sufficient under applicable law, and
         satisfactory to the Secured Party in order that upon the filing of the
         same and occurrence of the conditions set forth in Section 3(d) hereof
         the Secured Party shall have a duly perfected security interest in all
         Receivables Collateral in which a security interest can be perfected by
         the filing of financing statements;

                  (b) Upon the occurrence of the conditions set forth in Section
         3(d) hereof, to the extent expressly required by the terms hereof, or
         otherwise as the Secured Party may reasonably request, the Debtor shall
         furnish the Secured Party with properly executed issuer acknowledgments
         of the Secured Party's interest in Letter-of-Credit Rights, and
         evidence of the placement of a restrictive legend on tangible chattel
         paper (and the tangible components, if any, of electronic Chattel
         Paper), and take appropriate action reasonably acceptable to the
         Secured Party sufficient to establish the Secured Party's control of
         electronic Chattel Paper (and the electronic components of hybrid
         Chattel Paper), as appropriate, with respect to Receivables Collateral
         in which either (i) a security interest can be perfected only by
         control or such restrictive legending, or (ii) a security interest
         perfected by control or accompanied by such restrictive legending shall
         have priority as against a lien creditor, a purchaser of such
         Receivables Collateral from the Debtor, or a security interest
         perfected by Persons not having control or not accompanied by such
         restrictive legending, in each case in form and substance reasonably
         acceptable to the Secured Party and sufficient under applicable law so
         that the Secured Party shall have a security interest in all such
         Receivables Collateral perfected by control;

                  (c) Upon the occurrence of the conditions set forth in Section
         3(d) hereof, to the extent expressly required by the terms hereof, or
         otherwise as the Secured Party may reasonably request, the Debtor shall
         deliver to the Secured Party or, if the Secured Party shall
         specifically consent in each instance, an agent or bailee of the
         Secured Party, possession of all Receivables Collateral with respect to
         which either a security interest can be perfected only by possession or
         a security interest perfected by possession shall have priority as
         against Persons not having possession, and including in the case of


                                       3

         Instruments, duly executed endorsements affixed thereto in form and
         substance reasonably acceptable to the Secured Party and sufficient
         under applicable law so that the Secured Party shall have a security
         interest in all such Receivables Collateral perfected by possession;
         subject in each case only to Permitted Liens (as defined in the next
         sentence). Permitted Liens, as used in this Receivables Security
         Agreement, shall mean (i) the Lien of this Receivables Security
         Agreement, (ii) Liens for taxes, assessments or governmental charges
         payable by the Debtor either not delinquent for a period of more than
         thirty (30) days or being contested in good faith by appropriate
         proceedings so long as during such thirty (30) day period there is not
         any material risk of the forfeiture or loss of any Receivables
         Collateral or any interest therein or during such proceeding there is
         not any material risk of the forfeiture or loss of the Receivables
         Collateral or any interest therein due to an effective stay or
         otherwise, (iii) any Lien for the fees or charges of any airport or air
         navigation authority or any materialmen's, repairmen's, landlord's,
         workmen's, supplier's and other like Liens arising in the ordinary
         course of business, for amounts the payment of which is not overdue for
         a period of more than thirty (30) days or is being contested in good
         faith by appropriate proceedings so long as during such thirty (30) day
         period there is not any material risk of the forfeiture or loss of any
         Receivables Collateral or any interest therein or during such
         proceeding there is not any material risk of the forfeiture or loss of
         the Receivables Collateral or any interest therein due to an effective
         stay or otherwise, (iv) Liens which the Secured Party has specifically
         permitted in writing, (v) Liens (other than Liens for taxes) arising
         out of judgments or awards against the Debtor which are being appealed
         so long as during such thirty (30) day period there is not any material
         risk of the forfeiture or loss of any Receivables Collateral or any
         interest therein or during such proceeding there is not any material
         risk of the forfeiture or loss of the Receivables Collateral or any
         interest therein due to an effective stay or otherwise, and (vi) other
         rights of the Debtor and the Secured Party provided in this Receivables
         Security Agreement. All financing statements (including all amendments
         thereto and continuations thereof), control agreements, acknowledgments
         and other documents, electronic identification, restrictive legends,
         and instruments furnished in connection with the creation, enforcement,
         protection, perfection or priority of the Secured Party's security
         interest in Receivables Collateral, including such items as are
         described above in this Section 3, are sometimes referred to herein as
         "Perfection Documents." The delivery of possession of items of or
         evidencing Receivables Collateral, causing other Persons to execute and
         deliver Perfection Documents as appropriate, the filing or recordation
         of Perfection Documents, the establishment of control over items of
         Receivables Collateral, and the taking of such other actions as may be
         necessary or advisable in the determination of the Secured Party to
         create, enforce, protect, perfect, or establish or maintain the
         priority of, the security interest of the Secured Party in the
         Receivables Collateral is sometimes referred to herein as "Perfection
         Action"; and

                  (d) The security interest provided for in this Receivables
         Security Agreement shall be granted effective on the earlier of (i) the
         occurrence of an Event of Default and (ii) a Triggering Event (as
         defined in the next sentence). A Triggering Event shall occur at any
         time when the aggregate amount of Receivables Collateral, as set forth
         on Schedule 9(a) hereto (as such Schedule 9(a) is amended, restated,
         updated and revised from time to time) is $6,000,000 or less.


                                       4

         4. MAINTENANCE OF SECURITY INTEREST; FURTHER ASSURANCES.

                  (a) The Debtor will from time to time at its own expense,
         deliver specific assignments of Receivables Collateral or such other
         Perfection Documents, and take such other or additional Perfection
         Action, as may be required by the terms of the Loan Documents or as the
         Secured Party may reasonably request in connection with the
         administration or enforcement of this Receivables Security Agreement or
         related to the Receivables Collateral or any part thereof in order to
         carry out the terms of this Receivables Security Agreement, to perfect,
         protect, maintain the priority of or enforce the Secured Party's
         security interest in the Receivables Collateral, subject only to
         Permitted Liens, or otherwise to better assure and confirm to the
         Secured Party its rights, powers and remedies. Without limiting the
         foregoing, upon the occurrence and during the continuance of an Event
         of Default, the Debtor hereby irrevocably authorizes the Secured Party
         to file (with, or to the extent permitted by applicable law, without
         the signature of the Debtor appearing thereon) financing statements
         (including amendments thereto and initial financing statements in lieu
         of continuation statements) or other Perfection Documents (including
         copies thereof) showing the Debtor as "debtor" at such time or times
         and in all filing offices as the Secured Party may from time to time
         reasonably determine to be necessary or advisable to perfect or protect
         the rights of the Secured Party, or otherwise to give effect to the
         transactions herein contemplated.

                  (b) With respect to any and all Receivables Collateral, the
         Debtor agrees to do and cause to be done all things reasonably
         necessary to perfect, maintain the priority of and keep in full force
         the security interest granted in favor of the Secured Party, including,
         but not limited to, the prompt payment upon demand therefor by the
         Secured Party of all fees and expenses (including documentary stamp,
         excise or intangibles taxes) incurred in connection with the
         preparation, delivery, or filing of any Perfection Document or the
         taking of any Perfection Action to perfect, protect or enforce a
         security interest in Receivables Collateral in favor of the Secured
         Party, subject only to Permitted Liens. All amounts not so paid when
         due shall constitute additional Secured Obligations and (in addition to
         other rights and remedies resulting from such nonpayment) shall bear
         interest from the date of demand until paid in full at the default rate
         set forth in Section 2.2E of the Term Loan Agreement (the "Default
         Rate").

                  (c) Effective upon the occurrence of the conditions set forth
         in Section 3(d) hereof, the Debtor agrees to maintain among its books
         and records appropriate notations or evidence of, and to make or cause
         to be made appropriate disclosure upon its financial statements of, the
         security interest granted hereunder to the Secured Party.

                  (d) Effective upon the occurrence of the conditions set forth
         in Section 3(d) hereof, the Debtor agrees that, in the event any
         proceeds (other than goods) of Receivables Collateral shall be or
         become commingled with other property not constituting Receivables
         Collateral, then such proceeds may, to the extent permitted by law, be
         identified by application of the lowest intermediate balance rule to
         such commingled property.


                                       5

                  (e) The Debtor agrees that at all times it will not
         intentionally discriminate to the Secured Party's material detriment
         against the Receivables Collateral in its collection of the Debtor's
         accounts receivable generally.

         5. RECEIPT OF PAYMENT. In the event an Event of Default shall occur and
be continuing and the Debtor (or any of its affiliates, Subsidiaries,
stockholders, directors, officers, employees or agents) shall receive any
proceeds of Receivables Collateral, including without limitation monies, checks,
notes, drafts or any other items of payment, the Debtor shall hold all such
items of payment in trust for the Secured Party, and as the property of the
Secured Party, separate from the funds and other property of the Debtor, and no
later than the fifth Business Day following the receipt thereof, at the election
of the Secured Party, the Debtor shall cause such Receivables Collateral to be
forwarded to the Secured Party for its custody, possession and disposition in
accordance with the terms hereof and of the other Loan Documents.

         6.    PRESERVATION AND PROTECTION OF RECEIVABLES COLLATERAL.

                  (a) The Secured Party shall be under no duty or liability with
         respect to the collection, protection or preservation of the
         Receivables Collateral, or otherwise. The Debtor shall be responsible
         for the safekeeping of its Receivables Collateral, and in no event
         shall the Secured Party have any responsibility for (i) any loss or
         damage thereto or destruction thereof occurring or arising in any
         manner or fashion from any cause, (ii) any diminution in the value
         thereof, or (iii) any act or default of any carrier, warehouseman,
         bailee or forwarding agency thereof or other Person in any way dealing
         with or handling such Receivables Collateral.

                  (b) The Debtor agrees (i) effective upon the occurrence of the
         conditions set forth in Section 3(d) hereof, to pay when due all taxes,
         charges and assessments against the Receivables Collateral in which it
         has any interest, unless being contested in good faith by appropriate
         proceedings diligently conducted and against which adequate reserves
         have been established in accordance with GAAP and evidenced to the
         satisfaction of the Secured Party and provided that all enforcement
         proceedings in the nature of levy or foreclosure are effectively
         stayed, and (ii) to cause to be terminated and released all Liens
         (other than Permitted Liens) on the Receivables Collateral. Upon the
         failure of the Debtor to so pay or contest such taxes, charges, or
         assessments, or cause such Liens to be terminated, the Secured Party at
         its option may pay or contest any of them or amounts relating thereto
         (the Secured Party having the sole right to determine the legality or
         validity and the amount necessary to discharge such taxes, charges,
         Liens or assessments) but shall not have any obligation to make any
         such payment or contest. All sums so disbursed by the Secured Party,
         including reasonable attorneys' fees, court costs, expenses and other
         charges related thereto, shall be payable promptly after demand by the
         Debtor to the Secured Party and shall be additional Secured Obligations
         secured by the Receivables Collateral and the other Loan Documents, and
         any amounts not so paid (in addition to other rights and remedies
         resulting from such nonpayment) shall bear interest from the date of
         demand until paid in full at the Default Rate.


                                       6

         7. STATUS OF DEBTOR AND RECEIVABLES COLLATERAL GENERALLY. The Debtor
         represents and warrants to, and covenants with, the Secured Party, with
         respect to itself and the Receivables Collateral as to which it has or
         acquires any interest as provided herein, that:

                  (a) It is (or as to Receivables Collateral acquired after the
         date hereof will be upon the acquisition of the same) and, except as
         permitted by the Term Loan Agreement and subsection (b) of this Section
         7, will continue to be, the owner of the Receivables Collateral, free
         and clear of all Liens, other than the security interest hereunder in
         favor of the Secured Party and Permitted Liens, and that it will at its
         own cost and expense defend such Receivables Collateral and any
         products and proceeds thereof against all claims and demands of all
         Persons (other than holders of Permitted Liens) at any time claiming
         the same or any interest therein adverse to the Secured Party. Upon the
         failure of the Debtor to so defend, the Secured Party may do so at its
         option but shall not have any obligation to do so. All sums so
         disbursed by the Secured Party, including reasonable attorneys' fees,
         court costs, expenses and other charges related thereto, shall be
         payable promptly after demand by the Debtor to the Secured Party and
         shall be additional Secured Obligations secured by the Receivables
         Collateral and the other Loan Documents, and any amounts not so paid on
         demand (in addition to other rights and remedies resulting from such
         nonpayment) shall bear interest from the date of demand until paid in
         full at the Default Rate.

                  (b) It shall not (i) sell, assign, transfer, lease, license or
         otherwise dispose of any of, or grant any option with respect to, the
         Receivables Collateral, except that prior to the occurrence and
         continuance of an Event of Default, the Debtor may collect Receivables
         Collateral and use the proceeds thereof in the ordinary course of its
         business, (ii) create or suffer to exist any Lien upon or with respect
         to any of the Receivables Collateral except for the security interests
         created by this Receivables Security Agreement and Permitted Liens, or
         (iii) take any other action in connection with any of the Receivables
         Collateral that would materially impair the value of the interest or
         rights of the Debtor in the Receivables Collateral taken as a whole or
         that would materially impair the interest or rights of the Secured
         Party.

                  (c) It has full power, legal right and lawful authority to
         enter into this Receivables Security Agreement and to perform its
         terms, including the grant of the security interests in the Receivables
         Collateral herein provided for.

                  (d) No authorization, consent, approval or other action by,
         and no notice to or filing with, any Governmental Authority or any
         other Person is required either (i) for the grant by the Debtor of the
         security interests granted hereby or for the execution, delivery or
         performance of this Receivables Security Agreement by the Debtor, or
         (ii) for the perfection of or the exercise by the Secured Party, of its
         rights and remedies hereunder, except for any action required by the
         UCC to perfect the security interest conferred hereunder.

                  (e) No effective financing statement or other Perfection
         Document similar in effect, nor any other Perfection Action, covering
         all or any part of the Receivables Collateral purported to be granted
         or taken by or on behalf of the Debtor (or by or on


                                       7

         behalf of any other Person and which remains effective as against all
         or any part of the Receivables Collateral) has been filed in any
         recording office, delivered to another Person for filing (whether upon
         the occurrence of a contingency or otherwise), or otherwise taken, as
         the case may be.

                  (f) (i) The exact legal name of the Debtor as it appears in
         its organizational documents as of the date hereof and at any time
         during the five (5) year period ending as of the date hereof (the
         "Covered Period") is America West Airlines, Inc., (ii) the Debtor is a
         corporation organized and existing under the laws of the State of
         Delaware, (iii) the address of the chief executive office of the Debtor
         as of the date hereof and at any time during the Covered Period is 111
         West Rio Salado Parkway, Tempe, Arizona, 85281, (iv) there are no trade
         names or trade styles used by the Debtor as of the date hereof and at
         any time during the Covered Period other than "America West". The
         Debtor shall not change its name, change its jurisdiction of formation
         (whether by reincorporation, merger or otherwise), change the location
         of its chief executive office, utilize any additional location where
         tangible personal property constituting Receivables Collateral
         (including Account Records and Account Documents) may be located,
         change or use any additional or different trade name or style, except
         in each case upon giving not less than thirty (30) days' prior written
         notice to the Secured Party and taking or causing to be taken at the
         Debtor's expense all such Perfection Action, including the delivery of
         such Perfection Documents, as may be reasonably requested by the
         Secured Party to perfect or protect, or maintain the perfection and
         priority of, the Lien of the Secured Party in Receivables Collateral
         contemplated hereunder.

         8. INSPECTION. At reasonable times and upon reasonable notice, the
Secured Party or its authorized representative may, at their own expense (unless
an Event of Default then exists, in which case the reasonable expenses of such
inspection shall be paid by the Debtor), inspect the books and records of the
Debtor (and to make extracts or copies from such records), and the premises upon
which any of the Receivables Collateral is located, to discuss the Debtor's
affairs and finances with any Person (other than Persons obligated on any
Accounts ("Account Debtors") and to verify with any Person other than Account
Debtors the amount, quality, quantity, value and condition of, or any other
matter relating to, the Receivables Collateral and, if an Event of Default has
occurred and is continuing, to discuss the Debtor's affairs and finances with
the Debtor's Account Debtors and to verify the amount, quality, value and
condition of, or any other matter relating to, the Receivables Collateral with
such Account Debtors. Any such inspection shall not interfere with the normal
business of the Debtor. The Secured Party shall have no duty to make any such
inspection nor shall it incur any liability or obligation by reason of not
making any such inspection.

         9. SPECIFIC COLLATERAL.

                  (a) ACCOUNTS. With respect to its Accounts whether now
         existing or hereafter created or acquired and wheresoever located, the
         Debtor represents, warrants and covenants to the Secured Party, that:

                           (i) The Debtor shall keep accurate and complete
                  records of its Accounts constituting Receivables Collateral
                  ("Account Records") and quarterly,

                                       8


                  together with the Compliance Certificate, the Debtor shall
                  provide the Secured Party with an updated Schedule 9(a) in
                  form and substance reasonably acceptable to the Secured Party
                  describing all such Accounts created or acquired by the Debtor
                  ("Schedule of Accounts"); provided, however, that the Debtor's
                  failure to execute and deliver any such Schedule of Accounts
                  shall not affect or limit the Secured Party's security
                  interest or other rights in and to any Accounts. If
                  requested by the Secured Party, the Debtor shall furnish the
                  Secured Party with copies of proof of delivery and other
                  documents relating to the Accounts so scheduled, including
                  without limitation repayment histories and present status
                  reports (collectively, "Account Documents") and such other
                  matter and information relating to the status of then existing
                  Accounts as the Secured Party shall request.

                           (ii) All Account Records and, Account Documents are
                  and shall at all times be located only at the Debtor's current
                  chief executive office, or a location as to which the Debtor
                  has complied with Section 7(f) hereof:

                           (iii) The Accounts constituting Receivables
                  Collateral are genuine, are in all respects what they purport
                  to be, are not evidenced by instrument or document or, if
                  evidenced by an instrument or document, are only evidenced by
                  one original instrument or document.

                           (iv) The Accounts constituting Receivables Collateral
                  cover bona fide sales, leases, licenses or other dispositions
                  of property usually dealt in by the Debtor, or the rendition
                  by the Debtor of services, to an Account Debtor in the
                  ordinary course of business.

                           (v) The amounts of the face value of any Account
                  shown or reflected on any Schedule of Accounts, invoice
                  statement, or certificate delivered to the Secured Party, are
                  actually owing to the Debtor and are not contingent for any
                  reason; and there are no setoffs, discounts, allowances,
                  claims, counterclaims or disputes of any kind or description
                  in an amount greater than $1,000,000 in the aggregate, or
                  greater than $1,000,000 individually, existing or asserted
                  with respect thereto and the Debtor has not made any agreement
                  with any Account Debtor thereunder for any deduction
                  therefrom, except as may be stated in the Schedule of Accounts
                  and reflected in the calculation of the face value of each
                  respective invoice related thereto.

                           (vi) Except for conditions generally applicable to
                  the Debtor's industry and markets, there are no facts, events,
                  or occurrences known to the Debtor pertaining particularly to
                  any Accounts constituting Receivables Collateral which are
                  reasonably expected to materially impair in any way the
                  validity, collectibility or enforcement of such Accounts that
                  would reasonably be likely, in the aggregate, to be of
                  material economic value, or in the aggregate materially reduce
                  the amount payable thereunder from the amount of the invoice
                  face value shown on any Schedule of Accounts, or on any
                  certificate, contract, invoice or statement delivered to the
                  Secured Party with respect thereto.


                                       9

                           (vii) The goods or services giving rise thereto are
                  not, and were not at the time of the sale or performance
                  thereof, subject to any Lien, claim, encumbrance or security
                  interest, except those of the Secured Party and Permitted
                  Liens.

                           (viii) Effective upon the occurrence of the
                  conditions set forth in Section 3(d) hereof, in the event any
                  amounts due and owing in excess of $1,000,000 individually, or
                  $1,000,000 in the aggregate amount, are in dispute between any
                  Account Debtor and the Debtor (which shall include without
                  limitation any dispute in which an offset claim or
                  counterclaim may result), the Debtor shall provide the Secured
                  Party with written notice thereof as soon as practicable,
                  explaining in detail the reason for the dispute, all claims
                  related thereto and the amount in controversy.

                  (b) SUPPORTING OBLIGATIONS. With respect to its Supporting
         Obligations whether now existing or hereafter created or acquired and
         wheresoever located, the Debtor represents, warrants and covenants to
         the Secured Party, that:

                           (i) The Debtor shall (x) maintain at all times, and
                  furnish to the Secured Party from time to time at the Secured
                  Party's request, a current list identifying in reasonable
                  detail each Supporting Obligation relating to any Receivables
                  Collateral from a single obligor in excess of $1,000,000, and
                  (y) upon the request of the Secured Party from time to time
                  following the occurrence and during the continuance of any
                  Event of Default, deliver to the Secured Party the originals
                  of all documents evidencing or constituting Supporting
                  Obligations, together with such other documentation (executed
                  as appropriate by the Debtor) and information as may be
                  necessary to enable the Secured Party to realize upon the
                  Supporting Obligations in accordance with their respective
                  terms or transfer the Supporting Obligations as may be
                  permitted under the Loan Documents or by applicable law.

                           (ii) With respect to each letter of credit giving
                  rise to Letter-of-Credit Rights that has an aggregate stated
                  amount available to be drawn in excess of $1,000,000,
                  effective upon the occurrence of the conditions set forth in
                  Section 3(d) hereof, the Debtor shall, at the request of the
                  Secured Party cause the issuer thereof to execute and deliver
                  to the Secured Party a Qualifying Control Agreement (as
                  defined in Schedule 1 hereto).

                           (iii) With respect to each transferable letter of
                  credit giving rise to Letter-of-Credit Rights that has an
                  aggregate stated amount available to be drawn in excess of
                  $1,000,000, the Debtor shall, within thirty (30) days of the
                  issuance of each such letter of credit at the Secured Party's
                  request upon and during the continuance of any Event of
                  Default, deliver to the Secured Party a duly executed, undated
                  transfer form in blank sufficient in form and substance under
                  the terms of the related letter of credit to effect, upon
                  completion and delivery to the letter of credit issuer
                  together with any required fee, the transfer of such letter of
                  credit to the transferee identified in such form. The Debtor
                  hereby expressly authorizes the


                                       10

                  Secured Party following the occurrence and during the
                  continuance of any Event of Default to complete and tender
                  each such transfer form as transferor in its own name or in
                  the name, place and stead of the Debtor in order to effect any
                  such transfer, either to the Secured Party or to another
                  transferee, as the case may be, in connection with any sale or
                  other disposition of Receivables Collateral or for any other
                  purpose permitted under the Loan Documents or by applicable
                  law.

                  (c) CHATTEL PAPER. With respect to its Chattel Paper
         constituting Receivables Collateral whether now existing or hereafter
         created or acquired and wheresoever located, the Debtor represents,
         warrants and covenants to the Secured Party, that:

                           (i) The Debtor shall at all times retain sole
                  physical possession of the originals of all Chattel Paper
                  constituting Receivables Collateral (other than electronic
                  Chattel Paper and the electronic components of hybrid Chattel
                  Paper); provided, however, that (x) upon the request of the
                  Secured Party upon the occurrence and during the continuance
                  of any Event of Default, the Debtor shall immediately deliver
                  physical possession of such Chattel Paper to the Secured Party
                  or its designee, and (y) in the event that there shall be
                  created more than one original counterpart of any physical
                  document that alone or in conjunction with any other physical
                  or electronic document constitutes Chattel Paper, then such
                  counterparts shall be numbered consecutively starting with "1"
                  and the Debtor shall retain the counterpart numbered "1".

                           (ii) Effective upon the occurrence of the conditions
                  set forth in Section 3(d) hereof, all counterparts of all
                  tangible Chattel Paper constituting Receivables Collateral
                  (and the tangible components of hybrid Chattel Paper) shall be
                  conspicuously legended as follows: "A FIRST PRIORITY SECURITY
                  INTEREST IN THIS CHATTEL PAPER HAS BEEN GRANTED TO THE
                  INDUSTRIAL BANK OF JAPAN, LIMITED, FOR ITSELF AND AS AGENT FOR
                  CERTAIN LENDERS PURSUANT TO A RECEIVABLES SECURITY AGREEMENT
                  DATED AS OF JANUARY  , 2002, AS AMENDED FROM TIME TO TIME. NO
                  SECURITY INTEREST OR OTHER INTEREST IN FAVOR OF ANY OTHER
                  PERSON MAY BE CREATED BY THE TRANSFER OF PHYSICAL POSSESSION
                  OF THIS CHATTEL PAPER OR OF ANY COUNTERPART HEREOF EXCEPT BY
                  OR WITH THE CONSENT OF THE AFORESAID THE INDUSTRIAL BANK OF
                  JAPAN, LIMITED, AS AGENT AS PROVIDED IN AFORESAID RECEIVABLES
                  SECURITY AGREEMENT." In the case of electronic Chattel Paper
                  constituting Receivables Collateral (including the electronic
                  components of hybrid Chattel Paper), the Debtor shall not
                  create or acquire any such Chattel Paper unless, prior to such
                  acquisition or creation, it shall have taken such Perfection
                  Action as the Secured Party may require to perfect by control
                  the security interest of the Secured Party in such Collateral.

                           (ii) Other than in the ordinary course of business
                  and in keeping with reasonable and customary practice, the
                  Debtor shall not amend, modify, waive or terminate any
                  provision of, or fail to exercise promptly and diligently each


                                       11

                  material right or remedy conferred under or in connection
                  with, any Chattel Paper constituting Receivables Collateral,
                  in any case in such a manner as could reasonably be expected
                  to materially adversely affect the value of such affected
                  Chattel Paper as collateral.

                  (d) INSTRUMENTS. With respect to its Instruments constituting
         Receivables Collateral whether now existing or hereafter created or
         acquired and wheresoever located, the Debtor represents, warrants and
         covenants to the Secured Party, that:

                           (i) The Debtor shall (i) maintain at all times, and
                  furnish to the Secured Party from time to time at the Secured
                  Party's request, a current list identifying in reasonable
                  detail Instruments constituting Receivables Collateral of
                  which the Debtor is the payee or holder and having a face
                  amount payable in excess of $1,000,000, and (ii) upon the
                  request of the Secured Party from time to time following the
                  occurrence and during the continuance of any Event of Default,
                  deliver to the Secured Party the originals of all such
                  Instruments, together with duly executed undated endorsements
                  in blank affixed thereto and such other documentation and
                  information as may be necessary to enable the Secured Party to
                  realize upon such Instruments in accordance with their
                  respective terms or transfer such Instruments as may be
                  permitted under the Loan Documents or by applicable law.

                           (ii) Other than in the ordinary course of business
                  and in keeping with reasonable and customary practice, the
                  Debtor shall not amend, modify, waive or terminate any
                  provision of, or fail to exercise promptly and diligently each
                  material right or remedy conferred under or in connection
                  with, any Instrument constituting Receivables Collateral, in
                  any case in such a manner as could reasonably be expected to
                  materially adversely affect the value of such affected
                  Instrument as collateral.

         10. RIGHTS AND REMEDIES UPON EVENT OF DEFAULT. Upon the occurrence and
during the continuance of an Event of Default, the Secured Party shall have the
following rights and remedies in addition to any rights and remedies set forth
elsewhere in this Receivables Security Agreement or the other Loan Documents,
all of which may be exercised with or, if allowed by law, without notice to the
Debtor:

                  (a) All of the rights and remedies of a secured party under
         the UCC or under other applicable law, all of which rights and remedies
         shall be cumulative, and none of which shall be exclusive, to the
         extent permitted by law, in addition to any other rights and remedies
         contained in this Receivables Security Agreement or any other Loan
         Document;

                  (b) The right to foreclose the Liens and security interests
         created under this Receivables Security Agreement by any available
         judicial procedure or without judicial process;


                                       12

         (c) The right to (i) enter upon the premises of the Debtor through
self-help and without judicial process, without first obtaining a final judgment
or giving the Debtor notice or opportunity for a hearing on the validity of the
Secured Party's claim and without any obligation to pay rent to the Debtor, or
any other place or places where any Receivables Collateral is located and kept,
and remove the Receivables Collateral therefrom to the premises of the Secured
Party or any agent of the Secured Party, for such time as the Secured Party may
desire, in order effectively to collect or liquidate the Receivables Collateral,
(ii) require the Debtor or any bailee or other agent of the Debtor to assemble
the Receivables Collateral and make it available to the Secured Party at a place
to be designated by the Secured Party that is reasonably convenient to both
parties, and (iii) notify any or all Persons party to a Qualifying Control
Agreement or who otherwise have possession of or control over any Receivables
Collateral of the occurrence of an Event of Default and other appropriate
circumstances, and exercise control over and take possession or custody of any
or all Receivables Collateral in the possession, custody or control of such
other Persons;

                  (d) The right to (i) exercise all of the Debtor's rights and
         remedies with respect to the collection of Accounts, Chattel Paper,
         Instruments, Supporting Obligations and General Intangibles, in each
         case to the extent constituting Receivables Collateral (collectively,
         "Payment Collateral"), including the right to demand payment thereof
         and enforce payment, by legal proceedings or otherwise; (ii) settle,
         adjust, compromise, extend or renew all or any Payment Collateral or
         any legal proceedings pertaining thereto; (iii) discharge and release
         all or any Payment Collateral; (iv) take control, in any manner, of any
         item of payment or proceeds referred to in Section 5 above; (v)
         prepare, file and sign the Debtor's name on any Proof of Claim in
         bankruptcy, notice of Lien, assignment or satisfaction of Lien or
         similar document in any action or proceeding adverse to any obligor
         under any Payment Collateral or otherwise in connection with any
         Payment Collateral; (vi) endorse the name of the Debtor upon any
         chattel paper, document, instrument, invoice, freight bill, bill of
         lading or similar document or agreement relating to any Receivables
         Collateral; (vii) use the information recorded on or contained on the
         Debtor's internet website or otherwise in any data processing equipment
         and computer hardware and software relating to any Receivables
         Collateral to which the Debtor has access; (viii) open the Debtor's
         mail and collect any and all amounts due to the Debtor from any
         Account Debtors or other obligor in respect of Payment Collateral; (ix)
         take over the Debtor's post office boxes or make other arrangements as
         the Secured Party deems necessary to receive the Debtor's mail,
         including notifying the post office authorities to change the address
         for delivery of the Debtor's mail to such address as the Secured Party
         may designate; (x) notify any or all Account Debtors or other obligor
         on any Payment Collateral that such Payment Collateral has been
         assigned to the Secured Party and that Secured Party has a security
         interest therein (provided that the Secured Party may at any time give
         such notice to an Account Debtor that is a department, agency or
         authority of the United States government); the Debtor hereby agrees
         that any such notice, in the Secured Party's sole discretion, may (but
         need not) be sent on the Debtor's stationery, in which event the Debtor
         shall co-sign such notice with the Secured Party; and (xi) do all acts
         and things and execute all documents necessary, in the Secured Party's
         sole discretion, to collect the Payment Collateral; and


                                       13

                  (e) The right to sell all or any Receivables Collateral in its
         then existing condition, at such time or tines, at public or private
         sale or sales, with such notice as may be required by law, in lots or
         in bulk, for cash or on credit, with or without representations and
         warranties, all as the Secured Party, in its sole discretion, may deem
         advisable. The Secured Party shall have the right to conduct such sales
         on the Debtor's premises or elsewhere and shall have the right to use
         the Debtor's premises without charge for such sales for such time or
         times as the Secured Party may see fit. The Secured Party may, if it
         deems it reasonable, postpone or adjourn any sale of the Receivables
         Collateral from time to time by an announcement at the time and place
         of such postponed or adjourned sale, and such sale may, without further
         notice, be made at the time and place to which it was so adjourned. The
         Debtor agrees that the Secured Party no obligation to preserve rights
         to the Receivables Collateral against prior parties or to marshal any
         Receivables Collateral for the benefit of any Person. The Secured Party
         is hereby granted a license or other right to use, without charge, the
         Debtor's labels, patents, copyrights, rights of use of any name, trade
         secrets, trade names, trademarks and advertising matter, or any
         property of a similar nature, as it pertains to the Receivables
         Collateral, in completing production of, advertising for sale and
         selling any Receivables Collateral and the Debtor's rights under any
         license and any franchise agreement shall inure to the Secured Party's
         benefit. In addition, the Debtor agrees that in the event notice is
         necessary under applicable law, written notice mailed to the Debtor in
         the manner specified herein ten (10) days prior to the date of public
         sale of any of the Receivables Collateral or prior to the date after
         which any private sale or other disposition of the Receivables
         Collateral will be made shall constitute commercially reasonable notice
         to the Debtor. All notice is hereby waived with respect to any of the
         Receivables Collateral which threatens to decline speedily in value or
         is of a type customarily sold on a recognized market. The Secured Party
         may purchase all or any part of the Receivables Collateral at public
         or, if permitted by law, private sale, free from any right of
         redemption which is hereby expressly waived by the Debtor and, in lieu
         of actual payment of such purchase price, may set off the amount of
         such price against the Secured Obligations.

         The net cash proceeds resulting from the collection, liquidation, sale,
or other disposition of the Receivables Collateral shall be applied first to the
expenses (including all reasonable attorneys' fees) of retaking, holding,
storing, processing and preparing for sale, selling, collecting, liquidating and
the like, and then to the satisfaction of all Secured Obligations in accordance
with the terms of the Term Loan Agreement. The Debtor shall be liable to the
Secured Party and shall pay to the Secured Party on demand any deficiency which
may remain after such sale, disposition, collection or liquidation of the
Receivables Collateral.

         11. ATTORNEY-IN-FACT. The Debtor hereby appoints the Secured Party as
the Debtor's attorney-in-fact for the purposes of carrying out the provisions of
this Receivables Security Agreement and taking any action and executing any
instrument which the Secured Party may deem necessary or advisable to accomplish
the purposes hereof, which appointment is irrevocable and coupled with an
interest; provided, that the Secured Party shall have and may exercise rights
under this power of attorney only upon the occurrence and during the continuance
of an Event of Default. Without limiting the generality of the foregoing, upon
the occurrence


                                       14

and during the continuance of an Event of Default, the Secured Party shall have
the right and power

                  (a) to ask, demand, collect, sue for, recover, compromise,
         receive and give acquittance and receipts for moneys due and to become
         due under or in respect of any of the Receivables Collateral;

                  (b) to receive, endorse and collect any drafts or other
         instruments, documents and chattel paper in connection with clause (a)
         above;

                  (c) to endorse the Debtor's name on any checks, notes, drafts
         or any other payment relating to or constituting proceeds of the
         Receivables Collateral which comes into the Secured Party's possession
         or the Secured Party's control, and deposit the same to the account of
         the Secured Party on account and for payment of the Secured
         Obligations.

                  (d) to file any claims or take any action or institute any
         proceedings that the Secured Party may deem necessary or desirable for
         the collection of any of the Receivables Collateral or otherwise to
         enforce the rights of the Secured Party with respect to any of the
         Receivables Collateral; and

                  (e) to execute, in connection with any sale or other
         disposition of Receivables Collateral provided for herein, any
         endorsement, assignments, or other instruments of conveyance or
         transfer with respect thereto.

         12. REINSTATEMENT. The granting of a security interest in the
Receivables Collateral and the other provisions hereof shall continue to be
effective or be reinstated, as the case may be, if at any time any payment of
any of the Secured Obligations is rescinded or must be remitted to or must
otherwise be returned by the Secured Party or is repaid by the Secured Party in
whole or in part in good faith settlement of a pending or threatened avoidance
claim, whether upon the insolvency, bankruptcy or reorganization of the Debtor
or otherwise, all as though such payment had not been made. The provisions of
this Section 12 shall survive repayment of all of the Secured Obligations and
the termination or expiration of this Receivables Security Agreement in any
manner.

         13. CERTAIN WAIVERS BY THE DEBTOR. The Debtor waives to the extent
permitted by applicable law (a) any right to require the Secured Party or any
other obligee of the Secured Obligations to (x) proceed against any Person or
entity, (y) proceed against or exhaust any Receivables Collateral or other
collateral for the Secured Obligations, or (z) pursue any other remedy in its
power; (b) any defense arising by reason of any disability or other defense of
any other Person, or by reason of the cessation from any cause whatsoever of the
liability of any other Person or entity, (c) any right of subrogation, (d) any
right to enforce any remedy which the Secured Party or any other obligee of the
Secured Obligations now has or may hereafter have against any other Person and
any benefit of and any right to participate in any collateral or security
whatsoever now or hereafter held by the Secured Party. The Debtor authorizes the
Secured Party and each other obligee of the Secured Obligations without notice
(except notice required by applicable law) or demand and without affecting its
liability hereunder or under the Loan Documents from time to time to: (i) take
and hold security, other than the Receivables


                                       15

Collateral herein described, for the payment of such Secured Obligations or any
part thereof, and exchange, enforce, waive and release the Receivables
Collateral herein described or any part thereof or any such other security; and
(ii) apply such Receivables Collateral or other security and direct the order or
manner of sale thereof as the Secured Party or such obligee in its discretion
may determine.

         The Secured Party may at any time deliver (without representation,
recourse or warranty) the Receivables Collateral or any part thereof to the
Debtor and the receipt thereof by the Debtor shall be a complete and full
acquittance for the Receivables Collateral so delivered, and the Secured Party
shall thereafter be discharged from any liability or responsibility therefor.

         14. CONTINUED POWERS. Until the Secured Obligations shall have been
irrevocably paid in full, the power of sale and other rights, powers and
remedies granted to the Secured Party hereunder shall continue to exist and may
be exercised by the Secured Party at any time and from time to time irrespective
of the fact that any of the Secured Obligations or any part thereof may have
become barred by any statute of limitations or that any part of the liability of
the Guarantor may have ceased.

         15. OTHER RIGHTS. The rights, powers and remedies given to the Secured
Party by this Receivables Security Agreement shall be in addition to all rights,
powers and remedies given to the Secured Party under any Loan Document or by
virtue of any statute or rule of law. Any forbearance or failure or delay by the
Secured Party in exercising any right, power or remedy hereunder shall not be
deemed to be a waiver of such right, power or remedy, and any single or partial
exercise of any right, power or remedy hereunder shall not preclude the further
exercise thereof; and every right, power and remedy of the Secured Party shall
continue in full force and effect until such right, power or remedy is
specifically waived in accordance with the terms of the Loan Documents.

         16. ANTI-MARSHALING PROVISIONS. The right is hereby given by the Debtor
to the Secured Party to make releases (whether in whole or in part) of all or
any part of the Receivables Collateral agreeable to the Secured Party without
notice to, or the consent, approval or agreement of other parties and interests,
including junior lienors, which releases shall not impair in any manner the
validity of or priority of the Liens and security interests in the remaining
Receivables Collateral conferred hereunder, nor release the Debtor from personal
liability for the Secured Obligations. Notwithstanding the existence of any
other security interest in the Receivables Collateral held by the Secured Party,
the Secured Party shall have the right to determine the order in which any or
all of the Receivables Collateral shall be subjected to the remedies provided in
this Receivables Security Agreement. The Debtor hereby waives any and all right
to require the marshaling of assets in connection with the exercise of any of
the remedies permitted by applicable law or provided herein or in any Loan
Document.

         17. ENTIRE AGREEMENT. This Receivables Security Agreement, together
with the other Loan Documents, constitutes and expresses the entire
understanding between the parties hereto with respect to the subject matter
hereof, and supersedes all prior negotiations, agreements and understandings,
inducements, commitments or conditions, express or implied, oral or written,
except as contained in the Loan Documents. The express terms hereof control and
supersede any course of performance or usage of the trade inconsistent with any
of the terms hereof. Neither


                                       16

 this Receivables Security Agreement nor any portion or provision hereof may be
 changed, altered, modified, supplemented, discharged, canceled, terminated, or
 amended orally or in any manner other than as provided in the Loan Documents.

         18. THIRD PARTY RELIANCE. The Debtor hereby consents and agrees that
all issuers of or obligors in respect of any Receivables Collateral, and all
securities intermediaries, warehousemen, bailees, public officials and other
Persons having any interest in, possession of, control over or right, privilege,
duty or discretion in respect of, any Receivables Collateral shall be entitled
to accept the provisions hereof as conclusive evidence of the right of the
Secured Party to exercise its rights hereunder with respect to the Receivables
Collateral, notwithstanding any other notice or direction to the contrary
heretofore or hereafter given by the Debtor or any other Person to any of such
Persons.

         19. BINDING AGREEMENT; ASSIGNMENT. This Receivables Security Agreement,
and the terms, covenants and conditions hereof, shall be binding upon and inure
to the benefit of the parties hereto, and to their respective successors and
assigns, except that the Debtor shall not be permitted to assign this
Receivables Security Agreement or any interest herein or, except as expressly
permitted herein, in the Receivables Collateral or any part thereof, or
otherwise, except as expressly permitted herein, pledge, encumber or grant any
option with respect to the Receivables Collateral or any part thereof. All
references herein to the Secured Party shall include any successor thereof or
permitted assignee, and any other obligees from time to time of the Secured
Obligations.

         20. AGENT. As provided in Section 8 of the Term Loan Agreement, each
Lender has appointed The Industrial Bank of Japan, Limited, as its Agent for
purposes of this Receivables Security Agreement. In such capacity, The
Industrial Bank of Japan, Limited, shall be entitled to all of the rights and
benefits accorded the Agent by Section 8 of the Term Loan Agreement. Following
the payment in full of all Secured Obligations and the termination or expiration
of the Loan Documents, the provisions of Section 8 of the Term Loan Agreement
shall be deemed to continue in full force and effect for the benefit of the
Agent under this Receivables Security Agreement. For the avoidance of doubt,
nothing in this Section 20 is intended to create any liability or obligation on
the Debtor.

         21. SEVERABILITY. The provisions of this Receivables Security Agreement
are independent of and separable from each other. If any provision hereof shall
for any reason be held invalid or unenforceable, such invalidity or
unenforceability shall not affect the validity or enforceability of any other
provision hereof, but this Receivables Security Agreement shall be construed as
if such invalid or unenforceable provision had never been contained herein.

         22. COUNTERPARTS. This Receivables Security Agreement may be executed
in any number of counterparts each of which when so executed and delivered shall
be deemed an original, and it shall not be necessary in making proof of this
Receivables Security Agreement to produce or account for more than one such
counterpart executed by the Debtor against whom enforcement is sought.

         23. TERMINATION. Subject to the provisions of Section 12, this
Receivables Security Agreement and all obligations of the Debtor hereunder
(excluding those obligations and


                                       17

liabilities that expressly survive such termination) shall terminate without
delivery of any instrument or performance of any act by any party upon
irrevocable payment and performance, in full, of the obligations of the Debtor
provided for in the Loan Documents. Upon such termination of this Receivables
Security Agreement, the Secured Party shall, at the request and sole expense of
the Debtor, promptly deliver to the Debtor such termination statements and take
such further actions as the Debtor may reasonably request to terminate of
record, or otherwise to give appropriate notice of the termination of, any Lien
conferred hereunder.

         24. INDEMNIFICATION. Without limitation of any other indemnification
provision in any Loan Document, the Debtor agrees to indemnify and hold harmless
the Secured Party and each of his attorneys, agents and advisors (each, an
"Indemnified Party"), from and against any and all claims, damages, losses,
liabilities, costs, and expenses (including, without limitation, reasonable
attorneys' fees) that may be incurred by or asserted or awarded against any
Indemnified Party, in each case arising out of or in connection with or by
reason of (including, without limitation, in connection with any investigation,
litigation or proceeding or preparation of defense in connection therewith) the
Loan Documents, any of the transactions contemplated herein or the actual or
proposed use of the proceeds of the advances or other extension of credit under
the Loan Documents, except to the extent such claim, damage, loss, liability,
cost, or expense is found in a final, non-appealable judgment by a court of
competent jurisdiction to have resulted from such Indemnified Party's gross
negligence or willful misconduct. In the case of an investigation, litigation or
other proceeding to which the indemnity in this Section 24 applies, such
indemnity shall be effective whether or not such investigation, litigation or
proceeding is brought by the Debtor, any of its directors, shareholders or
creditors, or an Indemnified Party or any other Person, or any Indemnified Party
is otherwise a party thereto and whether or not the transactions contemplated
hereby are consummated. The Debtor agrees that no Indemnified Party shall have
any liability (whether direct or indirect, in contract or tort or otherwise) to
it, any of its subsidiaries or affiliates, or any security holders or creditors
thereof arising out of, related to or in connection with the transactions
contemplated herein or in the other Loan Documents, except to the extent that
such liability is found in a final non-appealable judgment by a court of
competent jurisdiction to have directly resulted from such Indemnified Party's
gross negligence or willful misconduct. The Debtor agrees not to assert any
claim against the Secured Party, any of his attorneys, agents or advisers, on
any theory of liability, for special, indirect, consequential, or punitive
damages arising out of or otherwise relating to the Loan Documents, any of the
transactions contemplated therein or the actual or proposed use of the proceeds
of the Loans or other extensions of credit under the Loan Documents. The
agreements in this Section 24 shall survive repayment of all of the Secured
Obligations and the termination or expiration of this Receivables Security
Agreement in any manner.

         25. NOTICES. Any notice required or permitted hereunder shall be given
in accordance with Section 9.8 of the Term Loan Agreement.

         26. RULES OF INTERPRETATION. The rules of interpretation
contained in Section 1 of the Term Loan Agreement shall be applicable to this
Receivables Security Agreement and are hereby incorporated by reference. All
representations and warranties contained herein shall survive the delivery of
documents and any extension of credit referred to herein or secured hereby.


                                       18

         27. WAIVER. To the extent permitted by applicable law, no failure on
the part of the Agent or any Lender to exercise and no delay in exercising, and
no course of dealing with respect to, any right, remedy, power or privilege
under this Receivables Security Agreement shall operate as a waiver of such
right, remedy, power or privilege, nor shall any single or partial exercise of
any right, remedy, power or privilege under this Receivables Security Agreement
preclude any other or further exercise of any such right, remedy, power or
privilege or the exercise of any other right, remedy, power or privilege. The
rights, remedies, powers and privileges provided in this Receivables Security
Agreement are cumulative and not exclusive of any rights, remedies, powers and
privileges provided by law.

         28. GOVERNING LAW. THIS RECEIVABLES SECURITY AGREEMENT SHALL BE
DELIVERED IN THE STATE OF NEW YORK AND GOVERNED BY, AND CONSTRUED AND ENFORCED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

                            [SIGNATURE PAGES FOLLOW]


                                       19

         IN WITNESS WHEREOF, the parties have duly executed this Receivables
Security Agreement on the day and year first written above.

                                            DEBTOR:


                                            AMERICA WEST AIRLINES, INC.


                                            By:
                                               --------------------------------
                                            Name:
                                                 ------------------------------
                                            Title:
                                                  -----------------------------



                                            SECURED PARTY:


                                            THE INDUSTRIAL BANK OF JAPAN,
                                            LIMITED, AS AGENT


                                            -----------------------------------
                                            By:
                                               --------------------------------
                                            Name:
                                                 ------------------------------
                                            Title:
                                                  -----------------------------



                                 Signature Page

                                                                      EXHIBIT II


                                                     [Date]


The Industrial Bank of Japan,
as Agent
1251 Avenue of the Americas
New York, NY 10020
Attention: Joseph Mitarotondo

         Re:      Form of Notice of Conversion/Continuation Under the Amended
                  and Restated Term Loan Agreement dated as of January    , 2002

Ladies and Gentlemen:

         We refer you to the Amended and Restated Term Loan Agreement as of
January  , 2002 by and among America West Airlines, Inc. (the "Company"), the
lending institutions named therein and The Industrial Bank of Japan, Limited, as
agent for itself and such other lending institutions (as amended, supplemented
or otherwise modified from time to time, the "Credit Agreement"). Capitalized
terms used herein without definition have the meanings specified in the Credit
Agreement.

         Pursuant to Section 2.2D of the Credit Agreement, the Company hereby
notifies you of the following Conversion/Continuation:

         (a)      Proposed Conversion/Continuation Date(1):

         (b)      Amount of Loans to be Converted/Continued:

         (c)      Type of Loans to be Converted/Continued (Base Rate Loans or
                  Eurodollar Rate Loans):

         (d)      Nature of the proposed Conversion/Continuation (Base Rate
                  Loans or Eurodollar Rate Loans):

- -----------------------------
(1) The Company shall deliver a Notice of Conversion/Continuation to the Agent
no later than 12:00 noon (New York time) on the proposed Conversion Date with
respect to a Base Rate Loan and three Business Days in advance of the proposed
Conversion/Continuation date with respect to a Eurodollar Rate Loan.

(e)      No Potential Event of Default or Event of Default has occurred and is
         continuing and no Potential Event of Default or Event of Default would
         occur after giving effect to the proposed conversion/continuation(2):




                                         AMERICA WEST AIRLINES, INC.


                                         By:
                                               --------------------------------
                                         Name:
                                         Title:

- -------------------------------
(2) To be included only with respect to Eurodollar Rate Loans.

                                                                     EXHIBIT III



                                FORM OF TERM NOTE


$[              ]                                               January  , 2002

         FOR VALUE RECEIVED, the undersigned AMERICA WEST AIRLINES, INC., a
Delaware corporation (the "Company"), hereby promises to pay to the order of
[               ] (the "Lender" ):

                  (a) from time to time at the times and in the amounts provided
         in the Term Loan Agreement (as hereinafter defined) and prior to or on
         the Termination Date (as defined in the Term Loan Agreement) the
         principal amount of [$          ] maintained by the Lender pursuant to
         the Amended and Restated Term Loan Agreement dated as of January  ,
         2002 (as amended and in effect from time to time, the "Term Loan
         Agreement"), among the Company, the Lender, the Agent and the other
         parties thereto; and

                  (b) interest on the principal balance hereof from time to time
         outstanding from the Closing Date (as defined in the Term Loan
         Agreement) under the Term Loan Agreement through and including the date
         of repayment in full of the Obligations owed to the Lender at the times
         and at the rates provided in the Term Loan Agreement.

         All capitalized terms used in this Note and not otherwise defined
herein shall have the same meanings herein as in the Term Loan Agreement. This
Note evidences the Loan maintained under, and has been issued by the Company in
accordance with, the terms of the Term Loan Agreement, and is issued in
substitution for and replacement of the Revolving Note dated December 10, 1999
issued by the Company to the Lender pursuant to the Amended and Restated
Revolving Credit Agreement dated as of December 10, 1999. The Lender and any
Eligible Assignee of the Lender under Section 9.1 of the Term Loan Agreement is
entitled to the benefits of the Term Loan Agreement, the Security Agreements and
the other Loan Documents.

         The Company has the right in certain circumstances and the obligation
under certain other circumstances to prepay the whole or part of the principal
of this Note on the terms and conditions specified in the Term Loan Agreement;
provided, that the Company may not repay or prepay the PIK Note issued to the
Lender unless and until this Term Note has been repaid or prepaid in full
(including, without limitation, repayment following acceleration of the Loans
and the PIK Notes).

         If any one or more of the Events of Default shall occur, the entire
unpaid principal amount of this Note and all of the unpaid interest accrued
thereon may become or be declared due and payable in the manner and with the
effect provided in the Term Loan Agreement.

         No delay or omission on the part of the Lender or any holder hereof in
exercising any right hereunder shall operate as a waiver of such right or of any
other rights of the Lender or such holder, nor shall any delay, omission or
waiver on any one occasion be deemed a bar or waiver of the same or any other
right on any further occasion.

         The Company and every endorser and guarantor of this Note or the
obligation represented hereby waives to the full extent permitted by law,
presentment, demand, notice, protest and all other demands and notices in
connection with the delivery, acceptance, performance, default or enforcement of
this Note, and assents to any extension or postponement of the time of payment
or any other indulgence, to any release of collateral and to the addition or
release of any other party or person primarily or secondarily liable.

         THIS NOTE AND THE OBLIGATIONS OF THE COMPANY HEREUNDER SHALL BE
GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK.

         IN WITNESS WHEREOF, the undersigned has caused this Note to be signed
in its corporate name by its duly authorized officer as of the day and year
first above written.

                                            AMERICA WEST AIRLINES, INC.


                                            By:
                                               ---------------------------------
                                                     Name:
                                                     Title:

                                                                   EXHIBIT III-A



                                FORM OF PIK NOTE

                                                                 January  , 2002


         FOR VALUE RECEIVED, the undersigned AMERICA WEST AIRLINES, INC., a
Delaware corporation (the "Company"), hereby promises to pay to the order of
[                           ] (the "Lender"):

                  (a) from time to time, at the times, in the amounts and in the
         manner provided in the Term Loan Agreement (as hereinafter defined)
         interest equal to two percent per annum of the outstanding principal
         amount of the Lender's Loan (as defined in the Term Loan Agreement as
         defined below) to the Company pursuant to the Amended and Restated Term
         Loan Agreement dated as of January _, 2002 (as amended and in effect
         from time to time, the "Term Loan Agreement"), among the Company, the
         Lender, the Agent and the other parties thereto, provided, however,
         that such interest shall be capitalized as the principal of this PIK
         Note from month to month as further set out in the Schedule hereto and
         paid in kind until this PIK Note is due and payable; and

                  (b) on December 31, 2004, the aggregate principal amount owed
         under this PIK Note is due and payable, and

                  (c) interest on the principal balance hereof from time to time
         outstanding from the Closing Date (as defined in the Term Loan
         Agreement) through and including December 31, 2004 shall accrue at the
         times, at the rates and in the manner provided in the Term Loan
         Agreement and shall be compounded monthly, provided, however, that such
         interest shall be added to the principal of this PIK Note from month to
         month as further set out in the Schedule hereto and paid in kind until
         this PIK Note is due and payable.

         All capitalized terms used in this PIK Note and not otherwise defined
herein shall have the same meanings herein as in the Term Loan Agreement. This
PIK Note evidences the Company's payment in kind of interest on the Loan
maintained by the Lender under, and has been issued by the Company in accordance
with, the terms of the Term Loan Agreement. The Lender and any Eligible Assignee
of the Lender under Section 9.1 of the Term Loan Agreement is entitled to the
benefits of the Term Loan Agreement, the Security Agreements and the other Loan
Documents.

         The Company has the right in certain circumstances and the obligation
under certain other circumstances to prepay the whole or part of the principal
of this PIK Note on the terms and conditions specified in the Term Loan
Agreement; provided, however, that the Company may not prepay this PIK Note
unless and until the Lender's Term Note has been prepaid in full (including,
without limitation, following acceleration of the Loans and the PIK Notes).

         If any one or more Events of Default shall occur, the entire unpaid
principal amount of this PIK Note and all of the unpaid interest accrued thereon
may become or be declared due and payable in the manner and with the effect
provided in the Term Loan Agreement; provided, that, after such acceleration
interest shall no longer be paid in kind under this PIK Note but shall be
payable when accrued and shall continue to accrue on the outstanding principal
amount of the Lender's Loan and this PIK Note and on all such unpaid and accrued
interest at a rate per annum equal to the default rate set forth in Section 2.2E
of the Term Loan Agreement (4% per annum).

         No delay or omission on the part of the Lender or any holder hereof in
exercising any right hereunder shall operate as a waiver of such right or of any
other rights of the Lender or such holder, nor shall any delay, omission or
waiver on any one occasion be deemed a bar or waiver of the same or any other
right on any further occasion.

         The Company and every endorser and guarantor of this PIK Note or the
obligation represented hereby waives to the full extent permitted by law,
presentment, demand, notice, protest and all other demands and notices in
connection with the delivery, acceptance, performance, default or enforcement of
this PIK Note, and assents to any extension or postponement of the time of
payment or any other indulgence, to any release of collateral and to the
addition or release of any other party or person primarily or secondarily
liable.

         THIS PIK NOTE AND THE OBLIGATIONS OF THE COMPANY HEREUNDER SHALL BE
GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK.

         IN WITNESS WHEREOF, the undersigned has caused this PIK Note to be
signed in its corporate name by its duly authorized officer as of the day and
year first above written.

                                         AMERICA WEST AIRLINES, INC.


                                         By:
                                            -----------------------------
                                              Name:
                                              Title:

                                                                      EXHIBIT IV


                          AMERICA WEST AIRLINES, INC.,

                         FORM OF COMPLIANCE CERTIFICATE



         Reference is made to the Amended and Restated Term Loan Agreement dated
as of January   , 2002 (as it may be amended, restated or supplemented or
otherwise modified from time to time, the "Credit Agreement") among America West
Airlines, Inc. (the "Company"), the lenders from time to time party thereto (the
"Banks"), and The Industrial Bank of Japan, Limited, as agent for the Banks (in
such capacity, the "Agent").

         The undersigned, the Vice President & Treasurer of the Company, and
acting on behalf of the Company, hereby certifies as of the date hereof that he
is the officer named above of the Company, and is duly authorized to execute and
deliver this Certificate to the Banks and the Agent on behalf of the Company,
and that:

         1. The undersigned has reviewed and is familiar with the terms of the
Credit Agreement and has made, or has caused to be made under his supervision, a
review of the provisions of the Credit Agreement and related definitions and the
transactions and conditions (financial or otherwise) of the Company and its
Subsidiaries, if any, during the period covered by this Certificate sufficient
in his opinion to be able to provide this certification.

         2. To the best knowledge of the undersigned, no Potential Event of
Default or Event of Default exists.

         3. The reserve of Cash and Cash Equivalents (that in either case are
free from Liens) of the Company and its Wholly Owned Subsidiaries (without
regard to Cash and Cash Equivalents in the Cash Collateral Account) is more than
$100,000,000.

         4. Attached hereto is a revised Schedule 9(a) to the Receivables
Security Agreement, which such schedule shall replace Schedule 9(a) in full. The
aggregate value of the Receivables Collateral as reflected on the Schedule 9(a)
attached hereto exceeds $6,000,000.

         IN WITNESS WHEREOF, the undersigned has executed this Certificate on
behalf of the Company as of            200 .

                                             AMERICA WEST AIRLINES, INC.

                                             By:
                                                 -------------------------------
                                             Name:

                                             Title: Vice President and Treasurer

                                                                      EXHIBIT VI

                          FORM OF ASSIGNMENT AGREEMENT

                     Dated as of _________________________

         Reference is made to the Amended and Restated Term Loan Agreement,
dated as of January __, 2002 (as from time to time amended and in effect, the
"Credit Agreement"), by and among America West Airlines, Inc., a Delaware
corporation (the "Company"), The Industrial Bank of Japan, Limited and the other
banking institutions referred to therein as Lenders (collectively, the
"Lenders"), and The Industrial Bank of Japan, Limited, as agent (hereinafter, in
such capacity, the "Agent") for the Lenders. Capitalized terms used herein and
not otherwise defined shall have the meanings assigned to such terms in the
Credit Agreement.

         _____________________ (the "Assignor") and (the __________________ (the
"Assignee") hereby agree as follows:

1. ASSIGNMENT. Subject to the terms and conditions of this Assignment and
Acceptance, the Assignor hereby sells and assigns to the Assignee, and the
Assignee hereby purchases and assumes without recourse to the Assignor, a $_____
interest in and to the rights, benefits, indemnities and obligations of the
Assignor under the Credit Agreement equal to __% in respect of the Assignor's
Loans as in effect immediately prior to the Effective Date (as hereinafter
defined).

2. ASSIGNOR'S REPRESENTATIONS. The Assignor (i) represents and warrants that (A)
it is legally authorized to enter into this Assignment Agreement, (B) as of the
date hereof, its Pro Rata Share is __%, the aggregate outstanding principal
balance of its Loans equals $__ [and the aggregate outstanding principal balance
of its PIK Note is $__] (ii) makes no representation or warranty, express or
implied, and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with the Credit Agreement
or any of the other Loan Documents or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of the Credit Agreement, the
other Loan Documents or any other instrument or document furnished pursuant
thereto or the attachment, perfection or priority of any security interest or
mortgage, other than that it is the legal and beneficial owner of the interest
being assigned by it hereunder free and clear of any claim or encumbrance; (iii)
makes no representation or warranty and assumes no responsibility with respect
to the financial condition of the Company or any of its Subsidiaries or any
other Person primarily or secondarily liable in respect of any of the
Obligations, or the performance or observance by the Company or any of its
Subsidiaries or any other Person primarily or secondarily liable in respect of
any of the Obligations of any of its obligations under the Credit Agreement or
any of the other Loan Documents or any other instrument or document delivered or
executed pursuant thereto; and (iv) attaches hereto the Term Note [and PlK Note]
delivered to it under the Credit Agreement.

3. The Assignor requests that the Company exchange the Assignor's Term Note [and
PIK Note] for a new Term Note [and PIK Note] payable to the Assignor and the
Assignee as follows:



Notes Payable to            [Amount of PIK Note]                Amount of Term
 the Order of:                                                       Note
                                                          
      Assignor                [$_______________]                   $_________
      Assignee                [$_______________]                   $_________


4. ASSIGNEE'S REPRESENTATIONS. The Assignee (i) represents and warrants that (A)
it is duly and legally authorized to enter into this Assignment Agreement, (B)
the execution, delivery and performance of this Assignment Agreement do not
conflict with any provision of law or of the charter or by-laws of the Assignee,
or of any agreement binding on the Assignee, (C) all acts, conditions and things
required to be done and performed and to have occurred prior to the execution,
delivery and performance of this Assignment Agreement, and to render the same
the legal, valid and binding obligation of the Assignee, enforceable against it
in accordance with its terms, have been done and performed and have occurred in
due and strict compliance with all applicable laws; (ii) confirms that it has
received a copy of the Credit Agreement, together with copies of the most recent
financial statements delivered pursuant to Section 5.1(i) and (ii) thereof and
such other documents and information as it has deemed appropriate to make its
own credit analysis and decision to enter into this Assignment Agreement; (iii)
agrees that it will, independently and without reliance upon the Assignor, the
Agent or any other Lender and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under the Credit Agreement; (iv) represents and
warrants that it is an Eligible Assignee; (v) appoints and authorizes the Agent
to take such action as agent on its behalf and to exercise such powers under the
Credit Agreement and the other Loan Documents as are delegated to the Agent by
the terms thereof, together with such powers as are reasonably incidental
thereto; (vi) represents and warrants that as of the date hereof, it is not
entitled to any additional amounts payable under Section 2.7 of the Credit
Agreement and as of the date hereof, no Tax would be imposed upon any amounts
payable to it hereunder; (vii) agrees to be bound by the provisions of Section 8
of the Credit Agreement; and (viii) agrees that it will perform in accordance
with their terms all the obligations which by the terms of the Credit Agreement
are required to be performed by it as a Lender.

5. EFFECTIVE DATE. The effective date for this Assignment Agreement shall be
_______ (the "Effective Date"). Following the execution of this Assignment
Agreement, each party hereto shall deliver its duly executed counterpart hereof
to the Agent for acceptance by the Agent and recording in the Register by the
Agent.

6. RIGHTS UNDER CREDIT AGREEMENT. Upon such acceptance and recording, from and
after the Effective Date, (i) the Assignee shall be a party to the Credit
Agreement and, to the extent provided in this Assignment Agreement, have the
rights and obligations of a Lender thereunder, and (ii) the Assignor shall, with
respect to that portion of its interest under the Credit Agreement assigned
hereunder, relinquish its rights and be released from its obligations under

the Credit Agreement; provided, however, that the Assignor shall retain its
rights to be indemnified pursuant to Section 9.3 of the Credit Agreement with
respect to any claims or actions arising prior to the Effective Date.

7. PAYMENTS. Upon such acceptance of this Assignment Agreement by the Agent and
such recording, from and after the Effective Date, the Agent shall make all
payments in respect of the rights and interests assigned hereby (including
payments of principal, interest, fees and other amounts) to the Assignee. The
Assignor and the Assignee shall make any appropriate adjustments in payments for
periods prior to the Effective Date by the Agent or with respect to the making
of this assignment directly between themselves.

8. GOVERNING LAW. THIS ASSIGNMENT AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

9. COUNTERPARTS. This Assignment Agreement may be executed in any number of
counterparts which shall together constitute but one and the same agreement.

         IN WITNESS WHEREOF, intending to be legally bound, each of the
undersigned has caused this Assignment and Acceptance to be executed on its
behalf by its officer thereunto duly authorized, as of the date first above
written.

                                          [THE ASSIGNOR]



                                          By:
                                             ----------------------------------
                                              Name:
                                              Title:


                                          [THE ASSIGNEE]


                                          By:
                                             ----------------------------------
                                              Name:
                                              Title:

CONSENTED TO:

THE INDUSTRIAL BANK OF
   JAPAN, LIMITED, as Agent


By:
    ------------------------------------------
     Name:
     Title:

                                                                    EXHIBIT VIII


                         Financial Condition Certificate


         I, _________________________________, hereby certify that I am the
__________________________________ of America West Airlines, Inc., a Delaware
corporation (the "Company"), that I am familiar with its properties, businesses,
assets, finances and operations and that I am duly authorized to execute this
certificate on behalf of the Company, which is being delivered pursuant to
Section 3.1C of the Amended and Restated Term Loan Agreement, dated as of
January   , 2002 (the "Credit Agreement") among the Lenders named therein (the
"Lenders") and The Industrial Bank of Japan, as Agent for the Lenders (the
"Agent"). Terms defined in the Credit Agreement are used herein as therein
defined unless otherwise defined herein.

         For purposes of this certificate, the terms below shall have the
following definitions:

                  (a)      "present fair saleable value"
                           The amount that could be obtained by an independent
                           willing seller from an independent willing buyer if
                           the assets of the Company and its Subsidiaries taken
                           as a whole are sold with reasonable promptness in an
                           arm's-length transaction under present conditions for
                           the sale of comparable business enterprises.

                  (b)      "contingent liabilities"
                           The maximum estimated amount of liabilities
                           reasonably likely to result from pending litigation,
                           asserted claims and assessments, guaranties,
                           uninsured risks and other contingent liabilities of
                           the Company and its Subsidiaries taken as a whole
                           after giving effect to the borrowing under the Credit
                           Agreement.

                  (c)      "would constitute an unreasonably small capital"
                           As of the date hereof, the Company and its
                           Subsidiaries taken as a whole is a going concern and
                           has sufficient capital to ensure that it will
                           continue to be a going concern in the business in
                           which it is engaged and proposes to be engaged.

                  I further certify that I have reviewed the Loan Documents and
the contents of this certificate and, in connection therewith, have made such
investigation and inquiries as I deem necessary and appropriate therefor.

                  I hereby further certify that:

                  1. On the date hereof, after giving effect to the transactions
contemplated by the Credit Agreement, the Government Guaranteed Loan and the
other Loan Documents, the


present fair saleable value of any and all property of the Company and its
Subsidiaries taken as a whole is greater than the total amount of liabilities,
including contingent liabilities, of the Company and its Subsidiaries taken as a
whole.

                  2. On the date hereof, after giving effect to the transactions
contemplated by the Credit Agreement, the Government Guaranteed Loan and the
other Loan Documents, the present fair saleable value of the assets of the
Company and its Subsidiaries taken as a whole exceeds the amount that will be
required to pay the probable liability of the Company and its Subsidiaries taken
as a whole on its existing debts as they become absolute and matured considering
all financing alternatives and potential asset sales reasonably available to the
Company.

                  3. The Company and its Subsidiaries do not intend to or
believe that they will incur debts and liabilities that will be beyond their
ability to pay as such debts and liabilities mature.

                  4. On the date hereof, after giving effect to the transactions
contemplated by the Credit Agreement, the Government Guaranteed Loan and the
other Loan Documents, the Company and its Subsidiaries are not engaged in a
transaction, and are not about to engage in business or a transaction, for which
their property would constitute an unreasonably small capital.

                  5. The Company and its Subsidiaries taken as a whole is
solvent within the meaning given that term and similar terms under applicable
laws relating to fraudulent transfers and conveyances.

                  This certificate is being delivered solely to satisfy the
Company's obligations pursuant to Section 3.C of the Credit Agreement and in my
capacity as          of the Company (and not in my personal capacity). All
statements made herein are to the best of my knowledge after making such
inquiries and analyses as I have deemed necessary or appropriate for the
opinions herein stated.

                  IN WITNESS WHEREOF, the undersigned has executed this
certificate on behalf of the Company this      day of January, 2002.

                                             AMERICA WEST AIRLINES, INC.


                                             By:
                                                -------------------------------
                                                 Title:

                                                                      EXHIBIT IX

                                                                 Date: _________

                           BORROWING BASE CERTIFICATE
________________________________________________________________________________

     Reference is made to the Amended and Restated Term Loan Agreement dated as
of January __, 2002 (as may be amended, restated or supplemented or otherwise
modified from time to time, the "Credit Agreement") among America West
Airlines, Inc. (the "Company"), the lenders from time to time party thereto and
The Industrial Bank of Japan Limited, Los Angeles Agency, as arranger, initial
issuing bank and as agent for such lenders. Capitalized terms used herein and
not otherwise defined herein shall have the meanings assigned to such terms in
the Credit Agreement. The undersigned, being the Vice President and Treasurer
of the Company, does hereby certify for and on behalf of the Company, as of
__________ the following:
________________________________________________________________________________

                           BORROWING BASE COLLATERAL
________________________________________________________________________________

A  CASH AND PERMITTED CASH              A  Collateral Balance:
   EQUIVALENTS                             _____________________________________

                                           Borrowing Base Value:
________________________________________________________________________________

B  STAGE III AIRCRAFT                   B  Appraised Value:
                                           _____________________________________

                                           Borrowing Base Value:
________________________________________________________________________________

C  ROTABLES                             C  Book Value:
                                           _____________________________________

                                           Adjusted Fair Market Value:
                                           _____________________________________

                                           Lower of Book Value or Adjusted
                                             Fair Market Value:
                                           _____________________________________

                                           Borrowing Base Value:
________________________________________________________________________________

D  MAINTENANCE FACILITY/HANGAR          D  Appraised Value:
                                           _____________________________________

                                           Borrowing Base:
________________________________________________________________________________

F  SPARE ENGINES                        F  Appraised Value:
                                           _____________________________________

                                           Borrowing Base Value:
________________________________________________________________________________
   _____________________________________________________________________________

   TOTAL BORROWING BASE VALUE:
   _____________________________________________________________________________

   TOTAL LOANS                  $ __________
   _____________________________________________________________________________

                                DEFICIENCY                    $ __________
   _____________________________________________________________________________

     In addition, the Company certifies that:

(1) None of the Borrowing Base Collateral included in the calculation of the
    Borrowing Base is subject to an Event of Loss, Event of Damage, Repairable
    Event or Adjustment Event;

(2) No reduction in the Borrowing Base is required pursuant to subsection
    2.4B(ii)(1)(e) of the Credit Agreement; and

(3) The portion of the Borrowing Base attributable to Rotables stated above
    does not exceed thirty five percent (35%) (rounded to the nearest whole
    number) of the aggregate Borrowing Base.

                                             AMERICA WEST AIRLINES, INC.


                                             By: _______________________________
                                                 Name:
                                                 Title:


                                                                       Exhibit X


         America West Airlines, Inc. ("AWA") will be entering into a joint
venture arrangement with GE Capital Aviation Training, Ltd. ("GECAT"), pursuant
to which AWA and GECAT will enter into a limited liability company agreement
(the "LLC Agreement") relating to a Delaware limited liability company (the "JV
LLC"). AWA will make an initial capital contribution to the JV LLC in the amount
of up to $500,000 and will make additional capital contributions to the JV LLC
as may be required or allowed pursuant to the LLC Agreement.

         In connection with the joint venture arrangement, AWA will sublease a
portion of its new Phoenix, Arizona facility that is currently under
construction to the JV LLC. Following the formation of the JV LLC, AWA will
assign lease agreements for six flight simulators to the JV LLC. The JV LLC may
enter into additional lease agreements for flight simulators. Upon the
expiration of the term of the JV LLC or the occurrence of certain dissolution
events, the JV LLC will assign some or all of the lease agreements to AWA and,
in certain circumstances, AWA will have the option to purchase the flight
simulators.

EX-10.53

                                                                   Exhibit 10.53

                                   UNDERTAKING

         THIS UNDERTAKING (the "Undertaking") is made and entered into as of
this 18th day of January 2002 by TPG Partners, L.P., a Delaware limited
partnership, TPG Parallel I L.P., a Delaware limited partnership, and Air
Partners II, L.P., a Texas limited partnership (collectively, the "TPG
Entities") and America West Holdings Corporation, a Delaware corporation (the
"Company"), for the benefit of the Air Transportation Stabilization Board (the
"ATSB").

                                    RECITALS

         WHEREAS, the TPG Entities are the beneficial owners of an aggregate of
nine hundred forty-one thousand four hundred thirty-one (941,431) shares (the
"TPG Shares") of Class A Common Stock, par value $0.01 per share (the "Class A
Common"), of the Company;

         WHEREAS, the ATSB is entering into a Guarantee Agreement of even date
herewith for the benefit of the Company's subsidiary, America West Airlines,
Inc. (the "Guarantee");

         WHEREAS, the Company is issuing to the ATSB that certain warrant of
even date herewith (the "Warrant") to purchase eighteen million seven hundred
fifty thousand (18,750,000) shares (as adjusted pursuant to the terms of the
Warrant, the "Warrant Shares") of the Class B Common Stock, par value $0.01 per
share (the "Class B Common") of the Company; and

         WHEREAS, the ATSB has required the execution and delivery of this
Undertaking as a condition to entering into the Guarantee.

         NOW, THEREFORE, in consideration of these premises and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the TPG Entities agree as follows:

1.       REPRESENTATIONS.

         The TPG Entities jointly and severally represent and warrant that:

         (i) the TPG Entities are the beneficial owners of the TPG Shares, which
represent all of the outstanding shares of Class A Common of the Company;

         (ii) each TPG Entity is duly organized, validly existing and in good
standing under the laws of the state of its formation;

         (iii) the execution, delivery and performance by each TPG Entity of
this Undertaking and the consummation of the transactions contemplated hereby:
(a) are within the powers of each TPG Entity and have been duly authorized by
all necessary partnership action on the part of the TPG Entities and all
necessary corporate action on the part of any general partner of any TPG Entity
or any general partner thereof; (b) do not contravene the constituent documents
of any TPG Entity or any law, rule, regulation or administrative or court order
binding on or affecting any TPG Entity or its property; and (c) do not conflict
with or constitute a breach of, or default under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets of any
TPG Entity pursuant to any contract, indenture, mortgage, loan


                                       1.



agreement, note or other instrument to which any TPG Entity is a party or by
which any TPG Entity may be bound or to which the assets of any TPG Entity may
be subject;

         (iv) this Undertaking constitutes a valid and binding obligation of
each TPG Entity, enforceable against it in accordance with its terms, except as
the enforceability thereof may be subject to or limited by bankruptcy,
insolvency, reorganization, arrangement, moratorium or other similar laws
relating to or affecting the rights of creditors generally and general
principles (whether applied in an action at law or a suit in equity); and

         (v) no authorization, approval, consent or order of any court or
governmental authority or agency or any other person or entity is required in
connection with the execution and delivery by any TPG Entity of this Undertaking
or its performance hereunder.

2.       RESTRICTIONS AGAINST TRANSFER.

         During the term of this Undertaking, the TPG Entities shall not assign,
transfer, sell or otherwise dispose of, directly or indirectly, any TPG Shares,
other than pursuant to or in connection with a transaction or series of related
transactions in which the holders of all outstanding shares of the Class B
Common are entitled to participate with respect to all shares of Class B Common
in such transaction or series of related transactions and the holders of greater
than fifty percent (50%) of the Company's Class B Common then outstanding either
(i) vote their shares of Class B Common in favor of such transaction or series
of related transactions or (ii) tender their shares of Class B Common for sale
in such transaction or series of related transactions; provided, however, that
nothing herein shall be deemed to require that the form or amount of
consideration payable for the shares of Class B Common be the same as the form
or amount of consideration payable to the TPG Entities for the TPG Shares. For
purposes of determining whether the holders of greater than fifty percent (50%)
of the outstanding Class B Common have voted in favor of the transaction or
series of related transactions or tender their shares in such transaction or
series of related transactions, if the ATSB consents in writing to the
transaction or series of related transactions, the actual number of outstanding
shares of Class B Common shall be deemed to be outstanding, and if the ATSB does
not consent in writing to the transaction or series of related transactions, the
number of outstanding shares deemed to be outstanding shall equal the sum of the
actual number of shares outstanding plus the number of shares issuable upon
exercise of the Warrant. The closing of any transaction or series of related
transactions shall be simultaneous for the TPG Shares and any shares of Class B
Common. The TPG Entities agree that the Company may instruct its transfer agent
to impose transfer restrictions on the TPG Shares to enforce the provisions of
this Agreement.

3.       AGREEMENT OF THE COMPANY.

         The Company agrees to take all commercially reasonable actions not to
permit any transfer by any TPG Entity, which does not comply with the provisions
of Section 2 and 4 hereof.

4.       EXEMPT TRANSFERS.

         Notwithstanding the foregoing but subject to the further provisions of
this Section 4, the restriction against transfer set forth in Section 2 above
shall not apply to (i) any transfer by a


                                       2.



TPG Entity to an affiliate (as defined below), (ii) any transfer by a TPG
Entity, which is a limited or general partnership, limited liability company or
similar entity, by way of a distribution to any or all of its partners or former
partners or member or former members, (iii) any transfer without consideration
to any descendants or spouse of a person to whom a transfer is permitted by
clauses (i) or (ii) above or to trusts for the benefit such descendants or
spouse, (iv) any transfer by a TPG Entity to the Company and (v) any conversion
by a TPG Entity of the TPG Shares into shares of Class B Common and any
subsequent transfer of such shares of Class B Common; provided that in the event
of any transfer made pursuant to clauses (i), (ii) or (iii) above, (A) the TPG
Entity shall inform the Company and the ATSB of such transfer prior to effecting
it and (B) as a condition to any such transfer, the transferee(s) shall enter
into a written agreement to be bound by and comply with all provisions of this
Undertaking, as if it were an original signatory hereunder. Such transferred TPG
Shares shall remain "TPG Shares" hereunder, and such transferee shall be treated
as a "TPG Entity" for purposes of this Undertaking (including Section 3 hereof).
An "affiliate" of a TPG Entity is a person or entity that directly or indirectly
through one or more intermediaries controls, is controlled by, or is under
common control with such TPG Entity. None of the TPG Entities shall pledge or
otherwise encumber any of the TPG Shares unless the conditions set forth in
clauses (A) and (B) above are satisfied.

5.       MISCELLANEOUS.

         5.1 GOVERNING LAW. This Undertaking shall be governed by and construed
under the laws of the State of New York as applied to agreements among New York
residents entered into and to be performed entirely within New York, provided
that the rights of the ATSB hereunder shall be governed and construed in
accordance with Federal law, if and to the extent such Federal law is
applicable, and otherwise in accordance with the laws of the State of New York.

         5.2 AMENDMENT AND WAIVER. Any provision of this Undertaking may be
amended and the observance thereof may be waived (either generally or in a
particular instance and either retroactively or prospectively), or this
Undertaking terminated, only by the written consent of (i) with respect to
rights of the ATSB (and its successors and assigns), only by the ATSB (and its
successors and assigns) and (ii) with respect to rights of the TPG Entities,
only by TPG Partners, L.P. To the extent that the Warrant becomes exercisable
for shares other than shares of Class B Common or the shares of Class A Common
are changed or reclassified into, or exchanged for other shares of the Company
or any other issuer (other than shares of Class B Common or shares of the same
security that the shares of Class B Common are changed or reclassified into or
exchanged for) as a result of any reclassification, reorganization, merger,
consolidation or other corporate transaction, the TPG Entities shall be subject
to such undertakings and agreements with respect to such other shares and the
holders thereof as shall be necessary to achieve the intended purposes of this
Undertaking and shall enter into such amendments or additional undertakings as
the ATSB (and its successors and assigns) may reasonably request.

         5.3 ENTIRE AGREEMENT. This Undertaking constitutes the entire agreement
between the parties relative to the specific subject matter hereof. Any previous
agreement among the parties relative to the specific subject matter hereof is
superseded by this Undertaking.


                                       3.


         5.4 SUCCESSORS. This Undertaking and the rights and obligations of the
parties hereunder shall inure to the benefit of, and be binding upon the parties
hereto and their respective successors, assigns and legal representatives.

         5.5 NO THIRD PARTY BENEFICIARIES. None of the provisions of this
Undertaking is intended to provide any rights or remedies to any person or
entity other than the ATSB and its successors, assigns and legal
representatives.

         5.6 NOTICES. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (i) upon personal delivery to the
party to be notified, (ii) when sent by confirmed electronic mail or facsimile
if sent during normal business hours of the recipient; if not, then on the next
business day, (iii) five (5) days after having been sent by registered or
certified mail, return receipt requested, postage prepaid, or (iv) one (1) day
after deposit with a nationally recognized overnight courier, specifying next
day delivery, with written verification of receipt. All communications shall be
sent to the party to be notified at the address as set forth on the signature
page hereof or at such other address as such party may designate by ten (10)
days advance written notice to the other parties hereto.

         5.7 SEVERABILITY. In the event one or more of the provisions of this
Undertaking should, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality, or unenforceability
shall not affect any other provisions of this Undertaking, and this Undertaking
shall be construed as if such invalid, illegal or unenforceable provision had
never been contained herein, and the parties hereto shall use their best efforts
to find and employ an alternative means to achieve the same or substantially the
same result as that contemplated by such term, provision, covenant or
restriction, it being intended that all of the rights and privileges of the
parties shall be enforceable to the fullest extent permitted by law.

         5.8 COUNTERPARTS. This Undertaking may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

         5.9 TERM. The provisions of this Undertaking shall continue in full
force and effect until the earlier of (i) such time as the TPG Entities cease to
own any shares of Class A Common, (ii) the expiration of the Warrant, and (iii)
the exercise in full of the Warrant and the sale of all the Warrant Shares
received upon exercise.


                                       4.




         The foregoing UNDERTAKING is hereby executed as of the date first above
written.

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 A. Ekleberry
   --------------------------------------------------

Name:   Richard A. Ekleberry
     ------------------------------------------------

Title:  Vice President
      -----------------------------------------------

Address: 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 A. Ekleberry
   --------------------------------------------------

Name:   Richard A. Ekleberry
     ------------------------------------------------

Title:  Vice President
      -----------------------------------------------

Address: 301 Commerce Street, Suite 3300
        ---------------------------------------------
         Fort Worth, Texas, 76102
        ---------------------------------------------

        ---------------------------------------------

AIR PARTNERS II, 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 A. Ekleberry
   --------------------------------------------------

Name:   Richard A. Ekleberry
     ------------------------------------------------

Title:  Vice President
      -----------------------------------------------

Address: 301 Commerce Street, Suite 3300
        ---------------------------------------------
         Fort Worth, Texas 76102
        ---------------------------------------------

        ---------------------------------------------

AMERICA WEST HOLDINGS CORPORATION

By: /s/ Bernard Han
   --------------------------------------------------

Name: Bernard Han
     ------------------------------------------------

Title: Executive Vice President and Chief Financial
      -----------------------------------------------
       Officer
      -----------------------------------------------

Address:   111 West Rio Salado Parkway
           Tempe, AZ  85281

ACKNOWLEDGED TO AND AGREED BY:

AIR TRANSPORTATION STABILIZATION BOARD

By: /s/ Joseph P. Adams, Jr.
   --------------------------------------------------

Name: Joseph P. Adams, Jr.
     ------------------------------------------------

Title: Executive Director
      -----------------------------------------------

Address:   1120 Vermont Avenue, Suite 970
           Washington, D.C.  20005

With a copy to:
           United States Department of the Treasury
           1500 Pennsylvania Avenue, N.W.
           Washington, D.C.  20220
           Attn:  Deputy Assistant Secretary (Government Financial Policy)

EX-99.1

                                                                    EXHIBIT 99.1



                                             Contacts:  (Media)     Jim Sabourin
                                                                    480/693-5729

                                                        (Investors) Derek Kerr
                                                                    480/693-5710

FOR IMMEDIATE RELEASE: Thurs., Jan. 31, 2002

                      AMERICA WEST REPORTS FOURTH QUARTER
                      AND FULL-YEAR 2001 FINANCIAL RESULTS

         -        Net loss for the fourth quarter was $60.9 million or $1.81 per
                  share, including non-recurring charges and federal financial
                  assistance related to the September 11 terrorist attacks.

         -        Passenger revenue per available seat mile (RASM) declined 17.7
                  percent from the fourth quarter of 2000 due to a reduction in
                  demand for air travel following the September 11 attacks and a
                  reduction in business travel driven by an already slowing
                  economy. RASM improved consistently throughout the fourth
                  quarter.

         -        Cost per available seat mile (CASM) declined 2.3 percent due
                  to a 33 percent drop in average fuel price.

         -        Operating performance continued to improve. Percentage of
                  flights cancelled declined 85 percent. On-time performance
                  improved 33 percent. Mishandled baggage was reduced by 39
                  percent.

         PHOENIX (NYSE:AWA)--America West Holdings Corporation, parent
company of America West Airlines, Inc. and The Leisure Company, today reported a
fourth quarter net loss of $60.9 million and a diluted loss per share of $1.81.
For the same period a year ago, America West reported a net loss of $41.7
million, or $1.24 per share.

         The results include approximately $8.8 million of pre-tax,
non-recurring employee benefit expenses ($5.5 million after taxes) and $2.7
million of pre-tax special charges ($1.7 million after taxes) related to the
early termination of aircraft leases offset by an $8.8 million pre-tax gain from
an insurance settlement ($5.5 million after taxes). The results also include
approximately $48 million of pre-tax federal financial assistance ($29.9 million
after taxes) following the September 11 terrorist attacks.
                                                                         more...

AMERICA WEST FINANCIAL RESULTS / 2

         Excluding the non-recurring items and federal grant, the company's net
loss for the quarter was $89.1 million, or $2.64 per share.

         "America West's fourth quarter results reflect the continued impact on
the airline industry of the September 11 terrorist attacks," said W. Douglas
Parker, chairman and chief executive officer. "Despite the difficult times
facing the airline industry, we are encouraged by our improved liquidity
position, our incredible turnaround in operations and the trends in revenue
performance."

         Operating revenues for the quarter were $400 million, down 30 percent
from the same period in 2000. Available seat miles (ASMs) declined 14.8 percent
due to a reduction in scheduled flights after September 11, driven by reduced
demand. Revenue passenger miles were 4.0 billion, down 14.8 percent from fourth
quarter 2000, consistent with the reduction in capacity. The airline's passenger
load factor was 68.5 percent.

         Passenger yields fell 17.8 percent to 9.38 cents due to an
industry-wide decline in business travel and aggressive fare sales since
September 11. The decrease in yields caused passenger revenue per available seat
mile (RASM) to decline 17.7 percent to 6.42 cents. RASM improved throughout the
quarter, however, as December's year-over-year decline in RASM of 15.1 percent
was significantly better than the 21.1 percent recorded in October or 17.4
percent in November.

         Operating cost per available seat mile (CASM) for the fourth quarter of
2001 declined 2.3 percent due to a 33 percent decline in average fuel price.
Average fuel price excluding tax was 71.8 cents per gallon versus $1.08 in the
fourth quarter of 2000. Excluding fuel and non-recurring items, CASM increased
7.7 percent as ASMs were reduced significantly without a commensurate reduction
in costs.

         For the full year 2001, America West reported a net loss of $147.9
million and a diluted loss per share of $4.39. Revenues for the full year
decreased 11.9 percent to $2.1 billion.

                                                                         more...

AMERICA WEST FINANCIAL RESULTS / 3

         America West continued its dramatic climb in operating performance
through the fourth quarter of 2001. For the fourth quarter, as reported to the
Department of Transportation (DOT), 85.2 percent of America West flights arrived
on-time, compared with 64.1 percent in the same quarter of 2000. Completion
factor increased to 99.3 percent from 95.4 percent. Additionally, America West
posted a 39 percent improvement in mishandled baggage.

         As a result of the dramatic improvements, the airline currently ranks
near the top of the industry in these important service measurements, and
customer complaints to the DOT have dropped 55 percent.

         "Our employees deserve credit for the outstanding job they've done in
improving the airline's operations in 2001, and for maintaining this level of
service while providing a heightened level of security for our customers," added
Parker. "It's clear that America West is operating a far different airline today
than it was 18 months ago."

         On January 18, 2002, America West closed a term loan in the amount of
$429 million and completed arrangements for more than $600 million in
concessions, financing and financial assistance following final approval by the
Air Transportation Stabilization Board (ATSB) of approximately $380 million in
loan guarantees under the Air Transportation Safety and Stabilization Act. Key
terms of the loan agreement and related transactions are disclosed in the
company's Form 8-K to be filed with the Securities and Exchange Commission
today.

         America West will conduct a live audio webcast of its fourth quarter
earnings conference call today at 1:00 p.m. EST (11:00 a.m. MST). The webcast
will be available to the public on a listen-only basis at www.americawest.com.
An archive will be available through Feb. 3, 2002.

                                                                         more...

AMERICA WEST FINANCIAL RESULTS / 4

         America West Holdings Corporation is an aviation and travel services
company. Wholly owned subsidiary America West Airlines is the nation's eighth
largest carrier serving 88 destinations in the U.S., Canada and Mexico. The
Leisure Company, also a wholly owned subsidiary, is one of the nation's largest
tour packagers.

         Financial and statistical tables follow:

          This press release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995 that involve
risks and uncertainties that could cause America West's actual results and
financial position to differ materially from these statements. The risks and
uncertainties include, but are not limited to, the aftermath of the September 11
terrorist attacks, the resulting negative impacts on revenues due to airport
closures and reduced demand for air travel, increased costs due to enhanced
security measures and related government directives, the ability of the company
to obtain sufficient additional financing if necessary to survive the adverse
economic effects following the September 11 attacks, limitations on financing
flexibility due to high levels of debt, financial and other covenants in debt
instruments and cross default provisions and the potential dilutive impact of
the warrants and convertible notes issued in connection with the term loan and
related transactions, the cyclical nature of the airline industry, competitive
practices in the industry, the impact of changes in fuel prices, relations with
unionized employees generally and the impact of the process of negotiation of
labor contracts on the company's operations, the outcome of negotiations of
collective bargaining agreements and the impact of these agreements on labor
costs, the impact of industry regulations and other factors described from time
to time in the company's publicly available SEC reports. The company undertakes
no obligation to publicly update any forward-looking statement to reflect events
or circumstances that may arise after the date of this press release.

America West Holdings Corporation
Fourth Quarter 2001 Financial Results / 5

                        America West Holdings Corporation
                 Condensed Consolidated Statements of Operations
                     (in thousands except per share amounts)
                                   (unaudited)



                                                   3 Months Ended    3 Months Ended
                                                    December 31,       December 31,             Percent
                                                         2001              2000                 Change
                                                      ---------         ---------             ---------
                                                                                     
Operating revenues:
    Passenger                                         $ 378,338         $ 539,958               (29.9)
    Cargo                                                 6,225             9,593               (35.1)
    Other                                                15,323            23,445               (34.6)
                                                      ---------         ---------
    Total operating revenues                            399,886           572,996               (30.2)
                                                      ---------         ---------
Operating expenses:
    Salaries and related costs                          151,088           149,094                 1.3
    Aircraft rental                                      90,108            86,354                 4.3
    Rentals and landing fees                             35,587            33,942                 4.8
    Aircraft fuel                                        64,547           115,863               (44.3)
    Agency commissions                                   13,068            18,775               (30.4)
    Aircraft maintenance materials and repairs           60,072            72,958               (17.7)
    Depreciation and amortization                        16,516            15,125                 9.2
    Reorganization value amortization                     4,974             4,974                  --
    Special charges                                       2,657                --                  --
    Other                                                98,918           148,125               (33.2)
                                                      ---------         ---------
    Total operating expenses                            537,535           645,210               (16.7)
                                                      ---------         ---------
    Operating loss                                     (137,649)          (72,214)               90.6
                                                      ---------         ---------
Nonoperating income (expenses):
    Interest income                                       3,415             4,606               (25.9)
    Interest expense, net                                (7,209)           (4,048)               78.1
    Federal government assistance                        47,964                --                  --
    Other, net                                              (68)              620                  --
                                                      ---------         ---------
    Total nonoperating income (expenses), net            44,102             1,178                  --
                                                      ---------         ---------

Loss before income taxes                                (93,547)          (71,036)               31.7
                                                      ---------         ---------
Income tax benefit                                      (32,675)          (29,293)               11.5
                                                      ---------         ---------
Net loss                                              $ (60,872)        $ (41,743)               45.8
                                                      =========         =========
Earnings (loss) per share:
    Basic:                                            $   (1.81)        $   (1.24)               45.6
                                                      =========         =========
    Diluted:                                          $   (1.81)        $   (1.24)               45.6
                                                      =========         =========
Shares used for computation:
    Basic:                                               33,720            33,784                (0.2)
                                                      =========         =========
    Diluted:                                             33,720            33,784                (0.2)
                                                      =========         =========


America West Holdings Corporation
Fourth Quarter 2001 Financial Results / 6

                           America West Airlines, Inc.
                            Statements of Operations
                                 (in thousands)
                                   (unaudited)



                                                    3 Months Ended      3 Months Ended
                                                      December 31,        December 31,            Percent
                                                         2001                2000                 Change
                                                       ---------           ---------             ---------
                                                                                        
Operating revenues:
   Passenger                                           $ 378,338           $ 539,958               (29.9)
   Cargo                                                   6,225               9,593               (35.1)
   Other                                                   6,755              13,165               (48.7)
                                                       ---------           ---------
   Total operating revenues                              391,318             562,716               (30.5)
                                                       ---------           ---------
Operating expenses:
   Salaries and related costs                            150,740             148,524                 1.5
   Aircraft rental                                        90,108              86,354                 4.3
   Rentals and landing fees                               35,587              33,941                 4.8
   Aircraft fuel                                          64,547             115,863               (44.3)
   Agency commissions                                     13,068              18,775               (30.4)
   Aircraft maintenance materials and repairs             60,072              72,958               (17.7)
   Depreciation and amortization                          16,516              15,125                 9.2
   Reorganization value amortization                       4,974               4,974                  --
   Special charges                                         2,657                  --                  --
   Other                                                  91,135             139,150               (34.5)
                                                       ---------           ---------
   Total operating expenses                              529,404             635,664               (16.7)
                                                       ---------           ---------

   Operating loss                                       (138,086)            (72,948)               89.3
                                                       ---------           ---------
Nonoperating income (expenses):
   Interest income                                         4,875               6,796               (28.3)
   Interest expense, net                                  (8,581)             (5,936)               44.6
   Federal government assistance                          47,964                  --                  --
   Other, net                                                161               1,768               (90.9)
                                                       ---------           ---------
   Total nonoperating income (expenses), net              44,419               2,628                  --
                                                       ---------           ---------
Loss before income taxes                                $(93,667)          $ (70,320)               33.2
                                                       =========           =========


America West Holdings Corporation
Fourth Quarter 2001 Financial Results / 7






                                                    3 Months Ended      3 Months Ended
                                                      December 31,        December 31,        Percent
                                                         2001                2000             Change
                                                       ---------           ---------         ---------
                                                                                    
Operating Statistics:

Number of aircraft at end of period                          146               138               5.8
Available seat miles/ASMs (in millions)                    5,892             6,918             (14.8)
Block hours                                              110,714           132,262             (16.3)
Average stage length (miles)                                 901               885               1.8
Revenue passenger miles/RPMs (in millions)                 4,034             4,733             (14.8)
Load factor (%)                                             68.5              68.4               0.1 points
Passenger enplanements (000)                               4,144             4,958             (16.4)
Passenger yield (cents)                                     9.38             11.41             (17.8)
Passenger revenue per ASM (cents)                           6.42              7.80             (17.7)
Operating revenue per ASM (cents)                           6.64              8.13             (18.3)
Operating cost per ASM (cents)                              8.98              9.19              (2.3)
Operating cost per ASM excluding non-recurring
     charges (cents)                                        8.94              8.96              (0.2)
Operating cost per ASM excluding fuel and                   7.84              7.28               7.7
     non-recurring charges (cents)
Average fuel cost per gallon (cents)                       71.81            107.81             (33.4)
Fuel gallons consumed (in millions)                         89.9             107.4             (16.3)


                        America West Holdings Corporation
      Adjustment for Amortization of Excess Reorganization Value (ERV)(a)
                      (in thousands except per share data)



                                           3 Months Ended         3 Months Ended
                                         December 31, 2001       December 31, 2000
                                             ----------             ----------
                                                           
Diluted EPS - as reported                    $    (1.81)            $    (1.24)
Pretax amortization of ERV (b)                    5,373                  5,373
After-tax amortization of ERV (c)                 5,373                  5,373
Diluted shares                                   33,720                 33,784
Amortization of ERV per share                $     0.16             $     0.16

Diluted EPS - as adjusted                    $    (1.65)            $    (1.08)


(a)  ERV is an intangible asset that was established upon the Company's
     emergence from financial restructuring in August 1994 and is being
     amortized over a 20-year period.

(b)  Includes $399,000 of ERV for the fourth quarter 2001 and 2000,
     respectively, classified as TLC expenses.

(c)  Amortization of ERV is not a tax-deductible expense.

America West Holdings Corporation
Fourth Quarter 2001 Financial Results / 8

                        America West Holdings Corporation
                      Condensed Consolidated Balance Sheets
                            (in thousands of dollars)



                                                           December 31, 2001     December 31, 2000
                                                               ----------            ----------
                                                               (Unaudited)
                                                                           
Assets

Current assets
  Cash equivalents and short-term investments                  $  156,865            $  194,824
  Other current assets, net                                       204,533               236,276
                                                               ----------            ----------
    Total current assets                                          361,398               431,100
                                                               ----------            ----------

Property and equipment, net                                       825,903               754,327

Other assets
  Restricted cash                                                  54,546                34,554
  Reorganization value in excess of amounts
    allocable to identifiable assets, net                         272,283               293,780
  Other assets                                                     56,779                54,754
                                                               ----------            ----------
    Total assets                                               $1,570,909            $1,568,515
                                                               ==========            ==========

Liabilities and Stockholders' Equity

Current liabilities
  Current maturities of long-term debt and
    capital leases                                             $  119,141            $  159,667
  Other liabilities                                               561,998               454,530
                                                               ----------            ----------
    Total current liabilities                                     681,139               614,197
                                                               ----------            ----------
  Long-term debt, less current maturities                         222,955               145,578
  Deferred credits and other noncurrent liabilities               133,779               101,122
  Deferred tax liability, net                                      10,692                40,545
  Stockholders' equity                                            522,344               667,073
                                                               ----------            ----------
  Total liabilities and stockholders' equity                   $1,570,909            $1,568,515
                                                               ==========            ==========


America West Holdings Corporation
Fourth Quarter 2001 Financial Results / 9

                        America West Holdings Corporation
                 Condensed Consolidated Statements of Operations
                     (in thousands except per share amounts)
                                   (unaudited)



                                                       12 Months Ended       12 Months Ended          Percent
                                                      December 31, 2001     December 31, 2000         Change
                                                        -----------           -----------              -----
                                                                                            
Operating revenues:
    Passenger                                           $ 1,941,877           $ 2,179,811              (10.9)
    Cargo                                                    33,824                37,377               (9.5)
    Other                                                    90,212               127,166              (29.1)
                                                        -----------           -----------
    Total operating revenues                              2,065,913             2,344,354              (11.9)
                                                        -----------           -----------

Operating expenses:
    Salaries and related costs                              603,819               559,578                7.9
    Aircraft rental                                         355,517               331,005                7.4
    Rentals and landing fees                                140,372               130,680                7.4
    Aircraft fuel                                           343,224               373,313               (8.1)
    Agency commissions                                       75,085                86,469              (13.2)
    Aircraft maintenance materials and repairs              257,939               258,432               (0.2)
    Depreciation and amortization                            63,178                54,313               16.3
    Reorganization value amortization                        19,896                19,896                 --
    Special charges                                          38,352                    --                 --
    Other                                                   483,116               543,305              (11.1)
                                                        -----------           -----------
    Total operating expenses                              2,380,498             2,356,991                1.0
                                                        -----------           -----------

    Operating loss                                         (314,585)              (12,637)                --
                                                        -----------           -----------

Nonoperating income (expenses):
    Interest income                                          14,785                15,980               (7.5)
    Interest expense, net                                   (26,349)              (15,449)              70.6
    Federal government assistance                           108,246                    --
    Other, net                                               (3,198)               36,849                 --
                                                        -----------           -----------
    Total nonoperating income (expenses), net                93,484                37,380                 --
                                                        -----------           -----------

Income (loss) before income taxes                          (221,101)               24,743                 --
                                                        -----------           -----------

Income taxes (benefit)                                      (73,230)               17,064                 --
                                                        -----------           -----------
Net income (loss)                                       $  (147,871)          $     7,679                 --
                                                        ===========           ===========

Earnings (loss) per share:
    Basic:                                              $     (4.39)          $      0.22                 --
                                                        ===========           ===========
    Diluted:                                            $     (4.39)          $      0.22                 --
                                                        ===========           ===========
Shares used for computation:
    Basic:                                                   33,670                35,139               (4.2)
                                                        ===========           ===========
    Diluted:                                                 33,670                35,688               (5.7)
                                                        ===========           ===========


America West Holdings Corporation
Fourth Quarter 2001 Financial Results / 10

                           America West Airlines, Inc.
                            Statements of Operations
                                 (in thousands)
                                   (unaudited)





                                                       12 Months Ended      12 Months Ended           Percent
                                                      December 31, 2001    December 31, 2000          Change
                                                        -----------           -----------             -----
                                                                                             
Operating revenues:
    Passenger                                           $ 1,941,877           $ 2,179,811             (10.9)
    Cargo                                                    33,824                37,377              (9.5)
    Other                                                    45,262                73,683             (38.6)
                                                        -----------           -----------
    Total operating revenues                              2,020,963             2,290,871             (11.8)
                                                        -----------           -----------
Operating expenses:
    Salaries and related costs                              601,986               556,906               8.1
    Aircraft rental                                         355,517               331,005               7.4
    Rentals and landing fees                                140,372               130,679               7.4
    Aircraft fuel                                           343,224               373,313              (8.1)
    Agency commissions                                       75,085                86,469             (13.2)
    Aircraft maintenance materials and repairs              257,939               258,432              (0.2)
    Depreciation and amortization                            63,178                54,313              16.3
    Reorganization value amortization                        19,896                19,896                --
    Special charges                                          38,352                    --                --
    Other                                                   445,525               492,596              (9.6)
                                                        -----------           -----------
    Total operating expenses                              2,341,074             2,303,609               1.6
                                                        -----------           -----------

    Operating loss                                         (320,111)              (12,738)               --
                                                        -----------           -----------
Nonoperating income (expenses):
    Interest income                                          22,654                23,706              (4.4)
    Interest expense, net                                   (33,789)              (22,939)             47.3
    Federal government assistance                           108,246                    --                --
    Other, net                                                   63                27,112             (99.8)
                                                        -----------           -----------
    Total nonoperating income (expenses), net                97,174                27,879                --
                                                        -----------           -----------

Income (loss) before income taxes                        $ (222,937)          $    15,141                --
                                                        ===========           ===========



America West Holdings Corporation
Fourth Quarter 2001 Financial Results / 11





                                                       12 Months Ended      12 Months Ended           Percent
                                                      December 31, 2001    December 31, 2000          Change
                                                        -----------           -----------             -----
                                                                                             
Operating Statistics:

Number of aircraft at end of period                            146                 138                 5.8
Available seat miles/ASMs (in millions)                     26,539              27,112                (2.1)
Block hours                                                508,036             516,757                (1.7)
Average stage length (miles)                                   894                 878                 1.8

Revenue passenger miles/RPMs (in millions)                  19,074              19,113                (0.2)
Load factor (%)                                               71.9                70.5                 1.4 points
Passenger enplanements (000)                                19,576              19,954                (1.9)

Passenger yield (cents)                                      10.18               11.40               (10.7)
Passenger revenue per ASM (cents)                             7.32                8.04                (9.0)
Operating revenue per ASM (cents)                             7.61                8.45                (9.9)

Operating cost per ASM (cents)                                8.82                8.50                 3.8
Operating cost per ASM excluding non-recurring
     charges (cents)                                          8.68                8.44                 2.8
Operating cost per ASM excluding fuel and                     7.38                                     4.5
     non-recurring charges (cents)                                                7.06
Average fuel cost per gallon (cents)                          83.0               88.08                (5.8)
Fuel gallons consumed (in millions)                          413.5               423.8                (2.4)


                        America West Holdings Corporation
      Adjustment for Amortization of Excess Reorganization Value (ERV)(a)
                      (in thousands except per share data)



                                               12 Months Ended              12 Months Ended
                                              December 31, 2001            December 31, 2000
                                                 ------------                 ------------
                                                                     
Diluted EPS - as reported                        $      (4.39)                $       0.22
Pretax amortization of ERV (b)                         21,496                       21,496
After-tax amortization of ERV (c)                      21,496                       21,496
Diluted shares                                         33,670                       35,688
Amortization of ERV per share                    $       0.64                 $       0.60
Diluted EPS - as adjusted                        $      (3.75)                $       0.82


(a)  ERV is an intangible asset that was established upon the Company's
     emergence from financial restructuring in August 1994 and is being
     amortized over a 20-year period.

(b)  Includes $1,600,000 of ERV for the twelve months ended December 31, 2001
     and 2000, respectively, classified as TLC expenses.

(c)  Amortization of ERV is not a tax-deductible expense.