January 15, 2021

Alaska Airlines, Inc.

19300 International Blvd.

Seattle, WA 98188

Re: Amendments to Loan and Guarantee Agreement

Reference is made to that certain Loan and Guarantee Agreement, dated as of September 

28, 2020, and amended and restated pursuant to that certain Restatement Agreement, dated as of 

October 30, 2020] (the “Existing Loan and Guarantee Agreement”, and as amended hereby and as may 

be further amended, supplemented and restated or otherwise modified from time to time, the “Loan and 

Guarantee Agreement”), among Alaska Airlines, Inc., a corporation organized under the laws of the 

State of Alaska (the “Borrower”), Alaska Air Group, Inc., a corporation organized under the laws of 

the State of Delaware (the “Parent”), the United States Department of the Treasury (“Treasury”) and 

The Bank of New York Mellon as Administrative Agent and Collateral Agent. Capitalized terms used 

herein but not otherwise defined shall have the meanings ascribed to such terms in the Loan and 

Guarantee Agreement.

WHEREAS, Pursuant to Section 11.02 of the Loan and Guarantee Agreement, the Borrower 

has requested amendments to the Existing Loan and Guarantee Agreement as set forth herein; and

WHEREAS, Treasury, as the Initial Lender and constituting the Required Lenders, has agreed 

to amend the Existing Loan and Guarantee Agreement as set forth herein.

NOW, THEREFORE, in consideration of the mutual promises contained herein and other 

good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the 

parties hereto agree as follows:

1. Effective as of the date hereof, Section 1.01 of the Existing Loan and Guarantee Agreement is 

hereby amended by inserting the following definition, in alphabetical order:

““PSP2 Warrant Agreement” means that certain warrant agreement, dated as of January 15, 

2021 between Parent and Treasury.”

2. Effective as of the date hereof, the definition of “Warrants” in Section 1.01 of the Existing 

Loan and Guarantee Agreement is hereby amended and restated in its entirety as follows:

““Warrants” means, collectively, those certain warrants issued to Treasury under the Warrant 

Agreement, the PSP Warrant Agreement or the PSP2 Warrant Agreement.”

3. Effective as of the date hereof, Section 2.07 of the Existing Loan and Guarantee Agreement is 

hereby amended by deleting the reference to “March 26, 2021” and replacing it with “May 28, 2021”.

4. This letter agreement shall be limited as written and nothing herein shall be deemed to 

constitute an amendment or waiver of any other term, provision or condition of the Loan and 

Guarantee Agreement or any of the other Loan Documents in any other instance than as expressly set

forth herein or prejudice any right or remedy that any Lender, the Administrative Agent or the 
Collateral Agent may now have or may in the future have under the Loan and Guarantee Agreement 

or any of the other Loan Documents. For the avoidance of doubt, this letter agreement is hereby 

deemed to be a Loan Document under the Loan and Guarantee Agreement. Except as herein 

provided, the Loan and Guarantee Agreement and the other Loan Documents shall remain unchanged 

and in full force and effect. This letter agreement shall not constitute a novation of the Loan and 

Guarantee Agreement or any other Loan Documents.

5. The Agents assume no responsibility for, and shall be entitled to rely on, without any 

obligation to ascertain or investigate, the correctness of the recitals and statements contained herein. 

The Agents shall not be liable or responsible in any manner whatsoever for, or in respect of, the 

validity or sufficiency of the amendments contained in this letter agreement.

6. Sections 11.06(b) (Electronic Execution), 11.09 (Governing Law; Jurisdiction; Etc.) and 

11.10 (Waiver of Jury Trial) of the Loan and Guarantee Agreement shall apply mutatis mutandis to 

this letter agreement as if set out herein.

7. This letter agreement may be executed in counterparts (and by different parties hereto in 

different counterparts), each of which shall constitute an original, but all of which when taken 

together shall constitute a single contract. Delivery of an executed counterpart of a signature page of 

this letter agreement by facsimile or in electronic (e.g., “pdf” or “tif”) format shall be effective as 

delivery of a manually executed counterpart of this letter agreement. 

The Lenders party hereto hereby authorize and direct the Administrative Agent and the Collateral 

Agent to acknowledge this letter agreement.

[Remainder of this page intentionally left blank.]


[Signature Page to Letter Agreement – Alaska] 

Acknowledged: 

THE BANK OF NEW YORK MELLON, as Administrative Agent 

By: _______________________ 

Name: 

Title: 

THE BANK OF NEW YORK MELLON, as Collateral Agent 

By: _______________________ 

Name: 

Title: 

Bret S. Derman

Vice President

Bret S. Derman

Vice President
EXECUTION VERSION 

RESTATEMENT AGREEMENT 

RESTATEMENT AGREEMENT, dated as of October 30, 2020 (this “Restatement 

Agreement”), to that certain Loan and Guarantee Agreement, dated as of September 28, 2020 (the 

“Existing Loan and Guarantee Agreement”, and as amended and restated by this Restatement 

Agreement, and as may be further amended, restated, amended and restated, supplemented or 

otherwise modified from time to time, the “Loan and Guarantee Agreement”), among ALASKA 

AIRLINES, INC., a corporation organized under the laws of the State of Alaska (the “Borrower”), 

ALASKA AIR GROUP, INC., a corporation organized under the laws of the State of Delaware 

(the “Parent”), the Guarantors party hereto from time to time, the UNITED STATES 

DEPARTMENT OF THE TREASURY (“Treasury”), as Initial Lender and THE BANK OF NEW 

YORK MELLON, as Administrative Agent and as Collateral Agent. Capitalized terms used and 

not otherwise defined herein shall have the meanings assigned to such terms in the Loan and 

Guarantee Agreement. 

W I T N E S S E T H: 

WHEREAS, the Parent, the Borrower, the Guarantors Treasury and the Agents are 

each party to the Existing Loan and Guarantee Agreement; 

 WHEREAS, the Borrower has requested that Treasury extend additional 

Commitments to the Borrower (the “Additional Commitments”) as is permissible under the 

Coronavirus Aid, Relief, and Economic Security Act, Pub. L. 116-136 (Mar. 27, 2020), as the 

same may be amended form time to time (the “CARES Act”) to the Borrower, and Treasury is 

willing to do so on the terms and conditions set forth herein; 

WHEREAS, pursuant to Section 4003(h)(1) of the CARES Act, for purposes of the 

Code, the Loans made pursuant to the Commitments (as increased by the Additional Commitments 

being provided hereby) shall be treated as indebtedness and as having been issued for their 

aggregate stated principal amount, and the interest payable pursuant to Section 2.09(a) of the Loan 

and Guarantee Agreement shall be treated as qualified stated interest; 

WHEREAS, Loans made pursuant to the Commitments (as increased by the 

Additional Commitments being provided hereby) will be secured by Liens on the Collateral 

securing the existing Obligations, together with Liens on any Additional Collateral, subject to the 

distribution priorities set forth in the Loan and Guarantee Agreement; 

WHEREAS, pursuant to Section 11.02 of the Loan and Guarantee Agreement, the 

Borrower has requested amendments to the Existing Loan and Guarantee Agreement as set forth 

in this Restatement Agreement; and 

WHEREAS, Treasury has agreed to amend the Existing Loan and Guarantee 

Agreement as more particularly set forth in this Restatement Agreement. 

NOW, THEREFORE, in consideration of the mutual promises contained herein 

and other good and valuable consideration, the receipt and sufficiency of which is hereby 

acknowledged, the parties hereto agree as follows: 
2 

Section 1. Additional Commitments. Treasury hereby agrees to provide 

Additional Commitments to the Borrower on the Restatement Effective Date on the terms set forth 

herein and in the Loan and Guarantee Agreement and the other Loan Documents, and subject to 

the conditions set forth below, in an aggregate principal amount, together with the Closing Date 

Commitment, not to exceed the amount of the Commitments as defined in the Loan and Guarantee 

Agreement (as amended hereby). The Additional Commitments shall be deemed to be 

“Commitments” under and as defined in the Loan and Guarantee Agreement (as amended hereby) 

for all purposes of the Loan and Guarantee Agreement and the other Loan Documents, and shall 

be secured by the applicable Liens granted to the Collateral Agent for the benefit of the Secured 

Parties and entitled to the benefits of the applicable Security Documents. 

Section 2. Amendments. Effective as of the Restatement Effective Date, (a) 

the Existing Loan and Guarantee Agreement is hereby amended and restated, in its entirety, to be 

in the form attached as Annex A hereto and (b) all of the other Schedules and Exhibits to the 

Existing Loan and Guarantee Agreement remain in the forms attached to the Existing Loan and 

Guarantee Agreement. 

Section 3. Representations and Warranties. The Credit Parties represent 

and warrant to the Administrative Agent, the Collateral Agent and the Lenders as of the 

Restatement Effective Date that:

(a) The execution, delivery and performance by each Credit Party of this 

Restatement Agreement and each other Loan Document to which it is party have been duly 

authorized by all necessary corporate or other organizational action, and do not and will not 

(a) contravene the terms of its Organizational Documents, (b) conflict with or result in any 

breach or contravention of, or the creation of any Lien under, or require any payment to be made 

under (i) any material Contractual Obligation to which each Credit Party is a party or affecting 

each Credit Party or the material properties of any Credit Party or (ii) any material order, 

injunction, writ or decree of any Governmental Authority or any arbitral award to which any 

Credit Party or its property is subject or (c) violate any Law, except to the extent such violation 

could not reasonably be expected to have a Material Adverse Effect. 

(b) No approval, consent, exemption, authorization, or other action by, or 

notice to, or filing with, any Governmental Authority or any other Person is necessary or required 

in connection with the execution, delivery or performance by, or enforcement against, each 

Credit Party of this Restatement Agreement or any other Loan Document, except for (i) such 

approvals, consents, exemptions, authorizations, actions or notices that have been duly obtained, 

taken or made and in full force and effect and (ii) filings and consents contemplated by the 

Security Documents or Section 5.14 of the Loan and Guarantee Agreement. 

(c) This Restatement Agreement has been, and each other Loan 

Document, when delivered hereunder, will have been, duly executed and delivered by each 

Credit Party set forth on the signature pages to this Restatement Agreement. This Restatement 

Agreement constitutes, and each other Loan Document when so delivered will constitute, the 

legal, valid and binding obligation of each Credit Party hereto enforceable against such Credit 

Party in accordance with its terms, except as such enforceability may be limited by bankruptcy, 
3 

insolvency, reorganization, receivership, moratorium or other Laws affecting the creditors’ 

rights generally and by general principles of equity. 

(d) No Default exists under the Loan and Guarantee Agreement. 

(e) All representations and warranties contained in the Loan and 

Guarantee Agreement and the other Loan Documents are true and correct in all material respects 

as of the date hereof, except to the extent that (A) such representations or warranties are qualified 

by a materiality standard, in which case they are true and correct in all respects, and (B) such 

representations or warranties expressly relate to an earlier date (in which case such 

representations and warranties are true and correct in all material respects as of such earlier date). 

Section 4. Conditions Precedent to Effectiveness. The effectiveness of this 

Restatement Agreement and the Additional Commitments provided hereby are subject to the 

satisfaction (or waiver in accordance with Section 11.02 of the Loan and Guarantee Agreement) 

of the following conditions (and, in the case of each document specified in this Section to be 

received by the Initial Lender (and the applicable Agent or Agents), such document shall be in 

form and substance satisfactory to the Initial Lender and/or the applicable Agent or Agents) (the 

date on which such conditions are satisfied or waived being the “Restatement Effective Date”) 

when: 

(a) Executed Counterparts. The Initial Lender and the Agents shall have 

received from each Credit Party hereto a counterpart of this Restatement Agreement and an 

Amended and Restated Horizon Aircraft, Engine and Propeller Pledge and Security Agreement, 

substantially in the form attached hereto as Annex B (such amended and restated agreement, the 

“Amended and Restated Horizon Pledge and Security Agreement”), each signed on behalf of 

such Credit Party. Notwithstanding anything herein to the contrary, delivery of an executed 

counterpart of a signature page of this Restatement Agreement or the Amended and Restated 

Horizon Pledge and Security Agreement by telecopy or other electronic means, or confirmation 

of the execution of this Restatement Agreement and the Amended and Restated Horizon Pledge 

and Security Agreement on behalf of a party by an email from an authorized signatory of such 

party shall be effective as delivery of a manually executed counterpart of this Restatement 

Agreement and the Amended and Restated Horizon Pledge and Security Agreement. 

(b) Certificates. The Initial Lender and any applicable Agent shall have 

received such customary certificates of resolutions or other action, incumbency certificates 

and/or other certificates of Responsible Officers of the Credit Parties as the Lenders may require 

evidencing the identity, authority and capacity of each Responsible Officer thereof authorized to 

act as a Responsible Officer in connection with the Loan Documents; 

(c) Organizational Documents. The Initial Lender shall have received 

customary resolutions or evidence of corporate authorization, secretary’s certificates and such 

other documents and certificates (including Organizational Documents and good standing 

certificates) as the Initial Lender may request relating to the organization, existence and good 

standing of each Credit Party and any other legal matters relating to the Credit Parties, the Loan 

Documents or the transactions contemplated thereby. 
4 

(d) Opinion of Counsel to Credit Parties. The Initial Lender and the 

applicable Agent or Agents shall have received opinions of counsel (including opinions of 

counsel covering the creation and perfection, or the continuing creation and perfection, of the 

security interests on Collateral, consistent with the opinions delivered on the Closing Date, and 

including substantially similar opinions with respect to any Additional Collateral) to the Credit 

Parties that are acceptable to the Initial Lender, addressed to the Initial Lender and the applicable 

Agent or Agents and dated as of the Restatement Effective Date, in form and substance 

satisfactory to the Initial Lender and the applicable Agent (and the Parent hereby instructs such 

counsel to deliver such opinions to such Persons). 

(e) Expenses. The Borrower shall have paid all reasonable fees, expenses 

(including the reasonable fees and expenses of legal counsel) and other amounts due to the Initial 

Lender, the Administrative Agent and the Collateral Agent (to the extent that statements for such 

expenses shall have been delivered to the Borrower on or prior to the Restatement Effective 

Date); provided that such expenses payable by the Borrower may be offset against the proceeds 

of any Loans funded on the Restatement Effective Date. 

(f) Officer’s Certificate. The Initial Lender shall have received a 

certificate executed by a Responsible Officer of the Parent and the Borrower confirming (i) that 

the representations and warranties contained in Section 3 of this Restatement Agreement are true 

and correct on and as of the Restatement Effective Date, (ii) that the information provided in the 

Loan Application Form submitted by the Borrower was true and correct on and as of the date of 

delivery thereof, (iii) the satisfaction of Sections 4(j) and (l) herein as of the Restatement 

Effective Date, (iv) the satisfaction of all other conditions precedent to the Restatement Effective 

Date described in this Section 4 and (v) that no Default or Event of Default exists or will result 

from the terms of this Restatement Agreement on the Restatement Effective Date. 

(g) Appraisals. The Initial Lender shall have received Appraisals of 

Additional Collateral satisfactory in form and substance and performed by an Eligible Appraiser 

dated as of a date no earlier than thirty (30) days prior to the Restatement Effective Date. 

(h) Consents and Authorizations. Each Credit Party shall have obtained 

all consents and authorizations from Governmental Authorities and all consents of other Persons 

(including shareholder approvals, if applicable) that are necessary or advisable in connection 

with this Restatement Agreement, any Loan Document, any of the transactions contemplated 

hereby or thereby or the continuing operations of the Credit Parties and each of the foregoing 

shall be in full force and effect and in form and substance satisfactory to the Initial Lender. 

(i) Lien Searches. The Initial Lender shall have received (i) UCC, 

Intellectual Property and other applicable lien searches, including tax and judgment liens 

searches, conducted in the jurisdictions and offices where such liens on material assets of the 

Credit Parties are required to be filed or recorded, in each case, as of the date that such lien 

searches were last conducted pursuant to the Loan and Guarantee Agreement and (ii) to the extent 

any Additional Collateral consists of (x) Aircraft and Engine Assets (as defined in the Pledge 

and Security Agreements), aircraft registry lien searches conducted with the FAA and the 

International Registry or (y) Spare Part Assets (as defined in the Pledge and Security 

Agreements), registry lien searches conducted with the FAA (with reference to each Designated 
5 

Spare Parts Location set forth on Schedule 2.1 of the Pledge and Security Agreements), in each 

case, reflecting the absence of Liens on the assets of the Credit Parties, other than Permitted 

Liens or Liens to be discharged on or prior to the Restatement Effective Date pursuant to 

documentation satisfactory to the Initial Lender. 

(j) Collateral Coverage Ratio. On the Restatement Effective Date (and 

after giving pro forma effect to any Borrowings on such date), the Collateral Coverage Ratio 

shall not be less than 2.0 to 1.0. 

(k) Solvency Certificate. The Initial Lender shall have received a 

certificate of the chief financial officer or treasurer (or other comparable officer) of the Parent 

certifying that the Borrower and its Subsidiaries (taken as a whole) are, and will be immediately 

after giving effect to the Restatement Agreement, Solvent. 

(l) No Material Adverse Effects. Since the Closing Date, (i) there has 

been no event or circumstance that, either individually or in the aggregate, has had or could 

reasonably be expected to have a Material Adverse Effect and (ii) none of the Credit Parties has 

made a Disposition (including any sale of Currency) of any assets of the type that would be 

included in the Collateral other than as would have been permitted under the Loan and Guarantee 

Agreement. 

(m) Audits. On the Restatement Effective Date, the opinion of the 

independent public accountants (after giving effect to any reissuance or revision of such opinion) 

on the most recent audited consolidated financial statements delivered by the Parent pursuant to 

Section 5.01(a) of the Loan and Guarantee Agreement shall not include a “going concern” 

qualification under GAAP as in effect on the date of this Restatement Agreement or, if there is 

a change in the relevant provisions of GAAP thereafter, any like qualification or exception under 

GAAP after giving effect to such change; and 

(n) Perfection Certificate. The Initial Lender and the Agents shall have 

received from each Credit Party hereto an amended and restated Perfection Certificate or 

supplement thereof, updated to include all Additional Collateral, signed on behalf of such Credit 

Party. Notwithstanding anything herein to the contrary, delivery of an executed signature page 

of an amended and restated Perfection Certificate or supplement thereof by telecopy or other 

electronic means, or confirmation of the execution of an amended and restated Perfection 

Certificate or supplement thereof on behalf of a party by an email from an authorized signatory 

of such party shall be effective as delivery of a manually executed counterpart of an amended 

and restated Perfection Certificate or supplement thereof. 

(o) Perfection of Liens on Collateral. On or prior to the Restatement 

Effective Date, in connection with the execution of the Pledge and Security Agreements, the 

Perfection Requirement (as defined in the Pledge and Security Agreements) shall have been 

satisfied and all of the perfection steps thereunder shall have been completed, and copies or 

evidence, if available, of any relevant filings, recordings and other perfection documentation 

shall have been provided to the Initial Lender, the Administrative Agent and the Collateral 

Agent. 
6 

Section 5. Miscellaneous. 

(a) Fees. The Borrower shall pay all fees required to be paid to the 

Administrative Agent, the Collateral Agent and the Lenders and all expenses (including fees and 

expenses of counsel) required to be paid to the Administrative Agent, Collateral Agent and the 

Lenders, in each case as required by and in accordance with the terms of the Loan and Guarantee 

Agreement, as they are due and payable in connection with this Restatement Agreement. 

(b) Continued Effectiveness. Notwithstanding anything contained herein, 

the terms of this Restatement Agreement shall not constitute a novation or termination of the 

Existing Loan and Guarantee Agreement or any other Loan Documents and are not intended to 

and do not serve to effect a novation or termination of the obligations outstanding under the 

Existing Loan and Guarantee Agreement or instruments guaranteeing or securing the same, 

which instruments shall remain and continue in full force and effect. 

(c) Governing Law; Jurisdiction, Etc. THIS RESTATEMENT 

AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE 

WITH, THE FEDERAL LAW OF THE UNITED STATES IF AND TO THE EXTENT SUCH 

LAW IS APPLICABLE, AND OTHERWISE IN ACCORDANCE WITH THE LAW OF THE 

STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE 

PERFORMED ENTIRELY WITHIN SUCH STATE. 

(d) WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED 

BY APPLICABLE LAW, EACH CREDIT PARTY AND EACH LENDER HEREBY 

UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY CIVIL LEGAL ACTION 

OR PROCEEDING RELATING TO THIS AGREEMENT, THE LOAN DOCUMENTS 

OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. 

(e) Entire Agreement. This Restatement Agreement, the Loan and 

Guarantee Agreement and the other Loan Documents constitute the entire contract among the 

parties relating to the subject matter hereof and supersede any and all previous agreements and 

understandings, oral or written, relating to the subject matter hereof. The Borrower and the 

Agents hereby designate this Restatement Agreement as a Loan Document. 

(f) Counterparts. This Restatement Agreement may be executed in 

counterparts (and by different parties hereto in different counterparts), each of which shall 

constitute an original, but all of which when taken together shall constitute a single contract. 

Delivery of an executed counterpart of a signature page of this Restatement Agreement by 

facsimile or in electronic (e.g., “pdf” or “tif”) format shall be effective as delivery of a manually 

executed counterpart of this Agreement. 

(g) Electronic Execution. The words “execution,” “signed,” “signature,” 

and words of like import in this Restatement Agreement shall be deemed to include electronic 

signatures or the keeping of records in electronic form, each of which shall be of the same legal 

effect, validity or enforceability as a manually executed signature or the use of a paper-based 

recordkeeping system, as the case may be, to the extent and as provided for in any Applicable 

Law, including the Federal Electronic Signatures in Global and National Commerce Act, the 
7 

New York State Electronic Signatures and Records Act, or any other similar state laws based on 

the Uniform Electronic Transactions Act. 

(h) Successors and Assigns. When this Restatement Agreement has been 

executed by the Parent, the Borrower, the Guarantors, the Agents and the Lenders party hereto, 

this Restatement Agreement shall thereafter be binding upon and inure to the benefit of the 

parties and their respective successors and assigns, in accordance with the terms of the Loan and 

Guarantee Agreement. 

(i) Severability. If any provision of this Restatement Agreement or the 

other Loan Documents is held to be illegal, invalid or unenforceable, (a) the legality, validity 

and enforceability of the remaining provisions of this Restatement Agreement and the other Loan 

Documents shall not be affected or impaired thereby and (b) the parties shall endeavor in good 

faith negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions 

the economic effect of which comes as close as possible to that of the illegal, invalid or 

unenforceable provisions. The invalidity of a provision in a particular jurisdiction shall not 

invalidate or render unenforceable such provision in any other jurisdiction. 

(j) Headings. The headings of this Restatement Agreement are for 

purposes of reference only and shall not limit or otherwise affect the meaning hereof. 

(k) Direction to Agents. The Lenders party hereto hereby authorize and 

direct the Administrative Agent and the Collateral Agent to execute and deliver this Restatement 

Agreement. 

(l) Release by Credit Parties. Each Credit Party hereto hereby 

acknowledges and agrees that it has no actual knowledge of any defenses or claims against any 

Lender, the Agents, any of their respective Affiliates or any of their respective officers, directors, 

employees, attorneys, representatives, predecessors, successors or assigns with respect to the 

Obligations, and that if such Credit Party now has, or ever did have, any defenses or claims with 

respect to the Obligations against any Lender, the Agents, any of the respective Affiliates or any 

of their respective officers, directors, employees, attorneys, representatives, predecessors, 

successors, or assigns, whether known or unknown, at law or in equity, from the beginning of 

the world through this date and through the time of effectiveness of this Restatement Agreement, 

all of them are hereby expressly WAIVED, and the Borrower hereby RELEASES each Lender, 

each Agent, their respective Affiliates and their respective officers, directors, employees, 

attorneys, representatives, predecessors, successors and assigns from any liability therefor. 

(m) No Liability of Agents. The Agents assume no responsibility for, and 

shall be entitled to rely on, without any obligation to ascertain or investigate, the correctness of 

the recitals and statements contained herein. The Agents shall not be liable or responsible in any 

manner whatsoever for, or in respect of, the validity or sufficiency of this Restatement 

Agreement. 

Section 6. Reaffirmation. 

(a) Each Credit Party hereto hereby consents to the execution, delivery 

and performance of this Restatement Agreement and agrees that each reference to “the Loan and 
8 

Guarantee Agreement,” “this Agreement,” “hereunder,” “hereof” or words of like import 

referring to the Loan and Guarantee Agreement in the Loan Documents shall, on and after the 

Restatement Effective Date, be deemed to be a reference to the Loan and Guarantee Agreement, 

as amended and restated by this Restatement Agreement. 

(b) Each Credit Party hereto hereby reaffirms all of its respective 

obligations and liabilities under the Loan Documents to which it is a party, as such obligations 

and liabilities have been amended by this Restatement Agreement, and acknowledges and agrees 

that such obligations and liabilities remain in full force and effect. 

(c) Each Credit Party hereto hereby irrevocably and unconditionally 

ratifies each Loan Document to which it is a party (as such Loan Documents are amended to and 

including the date hereof) and ratifies and reaffirms such Credit Party’s guarantee and grant of 

liens and security interests under the Security Documents and confirms that the guarantees, liens 

and security interests granted thereunder continue to secure the Obligations, including, without 

limitation, any additional Obligations resulting from or incurred pursuant to the Loan and 

Guarantee Agreement. 

Section 7. Post-Closing Matters. 

(a) Opinion of Crowe & Dunlevy. The Initial Lender and the applicable 

Agent or Agents shall receive all opinions of Crowe & Dunlevy (including opinions covering 

the creation and perfection, or the continuing creation and perfection, of the security interests on 

Collateral, consistent with the opinions delivered by Crowe & Dunlevy on the Closing Date, and 

including substantially similar opinions with respect to any Additional Collateral), aviation 

counsel to the Credit Parties, that are acceptable to the Initial Lender, addressed to the Initial 

Lender and the applicable Agent or Agents and dated no later than two (2) Business Days after 

the Restatement Effective Date, in form and substance satisfactory to the Initial Lender and the 

applicable Agent (and the Parent hereby instructs Crowe & Dunlevy to deliver such opinions to 

such Persons). Failure to comply with this Section 7(a) shall constitute a Default under the Loan 

and Guarantee Agreement. 

[Remainder of this page intentionally left blank.] 
IN WITNESS WHEREOF, the undersigned have caused this Restatement Agreement 

to be duly executed by their duly authorized representatives, all as of the day and year first 

above written. 

By: 

Name: 

Title: 

INC., as Borrower 

.. 

er 

esident Fleet, 

Fihance & Alliances, and Treasurer 

[Signature Page to Restatement Agreement - Alaska Airlines] 
ALASKAAIRG 

Guarantor 

By: 

, INC., as Parent and 

[Signature Page to Restatement Agreement-Alaska Airlines] 
HORIZON AIR USTRIES, INC., as 

By: 

[Signature Page to Restatement Agreement- Alaska Airlines] 

[Signature Page to Restatement Agreement – Alaska]

THE BANK OF NEW YORK MELLON, as 

Administrative Agent

By: _______________________

Name: 

Title: 

THE BANK OF NEW YORK MELLON, as 

Collateral Agent

By: _______________________

Name: 

Title: 

Bret S. Derman 

Vice President

Bret S. Derman 

Vice President
 Annex A 

Form of Amended and Restated Loan and Guarantee Agreement 
 

LOAN AND GUARANTEE AGREEMENT 

dated as of 

September 28, 2020, 

and as amended and restated as of 

October 30, 2020 

among 

ALASKA AIRLINES, INC., as Borrower, 

the Guarantors party hereto from time to time, 

THE UNITED STATES DEPARTMENT OF THE TREASURY, 

and 

THE BANK OF NEW YORK MELLON, 

as Administrative Agent and Collateral Agent 

__________ 
i 

TABLE OF CONTENTS 

Page 

ARTICLE I 

DEFINITIONS

SECTION 1.01 Defined Terms ............................................................................................................ 1

SECTION 1.02 Terms Generally ....................................................................................................... 34

SECTION 1.03 Accounting Terms; Changes in GAAP .................................................................... 35

SECTION 1.04 Rates ......................................................................................................................... 35

SECTION 1.05 Divisions ................................................................................................................... 35

ARTICLE II 

COMMITMENTS AND BORROWINGS

SECTION 2.01 Commitments ........................................................................................................... 35

SECTION 2.02 Loans and Borrowings .............................................................................................. 35

SECTION 2.03 Borrowing Requests ................................................................................................. 36

SECTION 2.04 [Reserved] ................................................................................................................. 36

SECTION 2.05 [Reserved] ................................................................................................................. 36

SECTION 2.06 Prepayments ............................................................................................................. 36

SECTION 2.07 Reduction and Termination of Commitments .......................................................... 38

SECTION 2.08 Repayment of Loans ................................................................................................. 38

SECTION 2.09 Interest ...................................................................................................................... 38

SECTION 2.10 Benchmark Replacement Setting .............................................................................. 39

SECTION 2.11 Evidence of Debt ...................................................................................................... 40

SECTION 2.12 Payments Generally .................................................................................................. 40

SECTION 2.13 Sharing of Payments ................................................................................................. 41

SECTION 2.14 Compensation for Losses.......................................................................................... 42

SECTION 2.15 Increased Costs ......................................................................................................... 42

SECTION 2.16 Taxes ........................................................................................................................ 43

SECTION 2.17 [Reserved] ................................................................................................................. 46

SECTION 2.18 [Reserved] ................................................................................................................. 46

SECTION 2.19 Mitigation Obligations; Replacement of Lenders ..................................................... 46

ARTICLE III 

REPRESENTATIONS AND WARRANTIES

SECTION 3.01 Existence, Qualification and Power .......................................................................... 47

SECTION 3.02 Authorization; No Contravention ............................................................................. 48

SECTION 3.03 Governmental Authorization; Other Consents ......................................................... 48

SECTION 3.04 Execution and Delivery; Binding Effect .................................................................. 48

SECTION 3.05 Financial Statements; No Material Adverse Change ................................................ 48

SECTION 3.06 Litigation .................................................................................................................. 48

SECTION 3.07 Contractual Obligations; No Default ........................................................................ 48

SECTION 3.08 Property .................................................................................................................... 49

SECTION 3.09 Taxes ........................................................................................................................ 49
ii 

SECTION 3.10 Disclosure ................................................................................................................. 49

SECTION 3.11 Compliance with Laws ............................................................................................. 49

SECTION 3.12 ERISA Compliance .................................................................................................. 50

SECTION 3.13 Environmental Matters ............................................................................................. 50

SECTION 3.14 Investment Company Act ......................................................................................... 51

SECTION 3.15 Sanctions; Export Controls; Anti-Corruption; AML Laws ...................................... 51

SECTION 3.16 Solvency ................................................................................................................... 51

SECTION 3.17 Subsidiaries ............................................................................................................... 51

SECTION 3.18 Senior Indebtedness .................................................................................................. 51

SECTION 3.19 Insurance Matters ..................................................................................................... 51

SECTION 3.20 Labor Matters ........................................................................................................... 51

SECTION 3.21 Insolvency Proceedings ............................................................................................ 52

SECTION 3.22 Margin Regulations .................................................................................................. 52

SECTION 3.23 Liens ......................................................................................................................... 52

SECTION 3.24 Perfected Security Interests ...................................................................................... 52

SECTION 3.25 US Citizenship .......................................................................................................... 52

SECTION 3.26 Air Carrier Status ...................................................................................................... 52

SECTION 3.27 Cybersecurity ............................................................................................................ 52

SECTION 3.28 Loyalty Program Agreements ................................................................................... 53

ARTICLE IV 

CONDITIONS

SECTION 4.01 Closing Date and Initial Borrowing .......................................................................... 53

SECTION 4.02 Each Borrowing ........................................................................................................ 55

ARTICLE V 

AFFIRMATIVE COVENANTS

SECTION 5.01 Financial Statements ................................................................................................. 56

SECTION 5.02 Certificates; Other Information ................................................................................ 57

SECTION 5.03 Notices ...................................................................................................................... 59

SECTION 5.04 Preservation of Existence, Etc. ................................................................................. 59

SECTION 5.05 Maintenance of Properties ........................................................................................ 59

SECTION 5.06 Maintenance of Insurance ......................................................................................... 60

SECTION 5.07 Payment of Obligations ............................................................................................ 60

SECTION 5.08 Compliance with Laws ............................................................................................. 60

SECTION 5.09 Environmental Matters ............................................................................................. 60

SECTION 5.10 Books and Records ................................................................................................... 60

SECTION 5.11 Inspection Rights ...................................................................................................... 60

SECTION 5.12 Sanctions; Export Controls; Anti-Corruption Laws and AML Laws ....................... 61

SECTION 5.13 Guarantors; Additional Collateral ............................................................................ 61

SECTION 5.14 Post-Closing Matters ................................................................................................ 62

SECTION 5.15 Further Assurances ................................................................................................... 62

SECTION 5.16 Delivery of Appraisals .............................................................................................. 62

SECTION 5.17 Ratings ...................................................................................................................... 62

SECTION 5.18 Regulatory Matters ................................................................................................... 62

SECTION 5.19 Loyalty Programs; Loyalty Program Agreements .................................................... 63

SECTION 5.20 Collections; Accounts; Payments ............................................................................. 63
iii 

ARTICLE VI 

NEGATIVE COVENANTS

SECTION 6.01 [Reserved]. ................................................................................................................ 64

SECTION 6.02 Liens ......................................................................................................................... 64

SECTION 6.03 Fundamental Changes .............................................................................................. 64

SECTION 6.04 Dispositions .............................................................................................................. 65

SECTION 6.05 Restricted Payments ................................................................................................. 66

SECTION 6.06 Investments ............................................................................................................... 67

SECTION 6.07 Transactions with Affiliates...................................................................................... 69

SECTION 6.08 [Reserved] ................................................................................................................. 69

SECTION 6.09 [Reserved] ................................................................................................................. 69

SECTION 6.10 Changes in Nature of Business ................................................................................. 69

SECTION 6.11 Sanctions; AML Laws .............................................................................................. 69

SECTION 6.12 Amendments to Organizational Documents ............................................................. 69

SECTION 6.13 [Reserved] ................................................................................................................. 70

SECTION 6.14 Prepayments of Junior Indebtedness ........................................................................ 70

SECTION 6.15 Lobbying................................................................................................................... 70

SECTION 6.16 Use of Proceeds ........................................................................................................ 70

SECTION 6.17 Financial Covenants ................................................................................................. 70

ARTICLE VII 

EVENTS OF DEFAULT

SECTION 7.01 Events of Default ...................................................................................................... 72

SECTION 7.02 Application of Payments .......................................................................................... 75

ARTICLE VIII 

AGENCY

SECTION 8.01 Appointment and Authority ...................................................................................... 76

SECTION 8.02 Collateral Matters. .................................................................................................... 76

SECTION 8.03 Removal or Resignation of Administrative Agent ................................................... 76

SECTION 8.04 Exculpatory Provisions ............................................................................................. 77

SECTION 8.05 Reliance by Agent .................................................................................................... 79

SECTION 8.06 Delegation of Duties ................................................................................................. 79

SECTION 8.07 Non-Reliance on Agents and Other Lenders ............................................................ 79

SECTION 8.08 Administrative Agent May File Proofs of Claim ..................................................... 79

ARTICLE IX

GUARANTEE

SECTION 9.01 Guarantee of the Obligations .................................................................................... 80

SECTION 9.02 Payment or Performance by a Guarantor ................................................................. 80

SECTION 9.03 Liability of Guarantors Absolute .............................................................................. 80

SECTION 9.04 Waivers by Guarantors ............................................................................................. 82

SECTION 9.05 Guarantors’ Rights of Subrogation, Contribution, etc. ............................................. 82
iv 

SECTION 9.06 Subordination ........................................................................................................... 82

SECTION 9.07 Continuing Guarantee ............................................................................................... 83

SECTION 9.08 Financial Condition of the Borrower ........................................................................ 83

SECTION 9.09 Reinstatement ........................................................................................................... 83

SECTION 9.10 Discharge of Guarantees ........................................................................................... 83

ARTICLE X 

CARES ACT REQUIREMENTS

SECTION 10.01 CARES Act Compliance .......................................................................................... 83

SECTION 10.02 Dividends and Buybacks .......................................................................................... 83

SECTION 10.03 Maintenance of Employment Levels ........................................................................ 84

SECTION 10.04 United States Business ............................................................................................. 84

SECTION 10.05 Limitations on Certain Compensation ...................................................................... 84

SECTION 10.06 Continuation of Certain Air Service ......................................................................... 85

SECTION 10.07 Treasury Access ........................................................................................................ 85

SECTION 10.08 Additional Defined Terms ........................................................................................ 85

ARTICLE XI 

MISCELLANEOUS

SECTION 11.01 Notices; Public Information...................................................................................... 86

SECTION 11.02 Waivers; Amendments ............................................................................................. 88

SECTION 11.03 Expenses; Indemnity; Damage Waiver .................................................................... 89

SECTION 11.04 Successors and Assigns ............................................................................................ 91

SECTION 11.05 Survival..................................................................................................................... 93

SECTION 11.06 Counterparts; Integration; Effectiveness; Electronic Execution ............................... 94

SECTION 11.07 Severability ............................................................................................................... 94

SECTION 11.08 Right of Setoff .......................................................................................................... 94

SECTION 11.09 Governing Law; Jurisdiction; Etc ............................................................................. 95

SECTION 11.10 Waiver of Jury Trial ................................................................................................. 95

SECTION 11.11 Headings ................................................................................................................... 95

SECTION 11.12 Treatment of Certain Information; Confidentiality .................................................. 95

SECTION 11.13 Money Laundering; Sanctions .................................................................................. 96

SECTION 11.14 Interest Rate Limitation ............................................................................................ 96

SECTION 11.15 Payments Set Aside .................................................................................................. 96

SECTION 11.16 No Advisory or Fiduciary Responsibility ................................................................. 96

SECTION 11.17 Acknowledgement and Consent to Bail-In of EEA Financial Institutions ............... 97
v 

SCHEDULES 

SCHEDULE 1.01(a) - Carrier Loyalty Programs 

SCHEDULE 1.01(b) - Loyalty Program Agreements 

SCHEDULE 1.01(c) - Loyalty Subscription Programs 

SCHEDULE 3.05 - Financial Statements 

SCHEDULE 3.17 - Subsidiaries 

SCHEDULE 5.14 - Post-Closing Matters 

SCHEDULE 6.05(i) - Restricted Payments 

SCHEDULE 6.06 - Investments 

SCHEDULE 6.07 - Affiliate Transactions 

EXHIBITS 

EXHIBIT A - Assignment and Assumption 

EXHIBIT B-1 - Form of U.S. Tax Compliance Certificate 

EXHIBIT B-2 - Form of U.S. Tax Compliance Certificate 

EXHIBIT B-3 - Form of U.S. Tax Compliance Certificate 

EXHIBIT B-4 - Form of U.S. Tax Compliance Certificate 

EXHIBIT C - Form of Note 

EXHIBIT D - Form of Direct Agreement 

EXHIBIT E - Form of Borrowing Request 

 
1 

 

LOAN AND GUARANTEE AGREEMENT dated as of September 28, 2020 (as amended 

and restated by the Restatement Agreement, this “Agreement”), among ALASKA AIRLINES, INC., a 

corporation organized under the laws of the State of Alaska (the “Borrower”), ALASKA AIR GROUP, 

INC., a corporation organized under the laws of the State of Delaware (the “Parent”), the Guarantors party 

hereto from time to time, the UNITED STATES DEPARTMENT OF THE TREASURY (“Treasury”) and 

THE BANK OF NEW YORK MELLON as Administrative Agent and Collateral Agent. 

WHEREAS, the Borrower has requested that the Initial Lender (as defined below) extend 

credit as is permissible under the Coronavirus Aid, Relief, and Economic Security Act, Pub. L. 116-136 

(Mar. 27, 2020), as the same may be amended form time to time (the “CARES Act”) to the Borrower, and 

the Initial Lender is willing to do so on the terms and conditions set forth herein; and 

WHEREAS, pursuant to Section 4003(h)(1) of the CARES Act, for purposes of the Code 

(as defined below) the Loans (as defined below) shall be treated as indebtedness and as having been issued 

for their aggregate stated principal amount, and the interest payable pursuant to Section 2.09(a) shall be 

treated as qualified stated interest. 

NOW, THEREFORE, in consideration of the mutual covenants and agreements herein 

contained, the parties hereto agree as follows: 

ARTICLE I 

DEFINITIONS 

SECTION 1.01 Defined Terms. As used in this Agreement, the following terms have the 

meanings specified below: 

“ABL Agreement” means that certain credit agreement dated as of March 31, 2010 (as 

amended, restated, amended and restated, supplemented or otherwise modified from time to time), by and 

among the Borrower, the lenders party thereto and Wells Fargo Capital Finance, LLC as agent. 

“Additional Collateral” shall mean (a) cash and Cash Equivalents pledged to the Collateral 

Agent for the benefit of the Secured Parties under the Security Documents (and subject to an account control 

agreement in form and substance satisfactory to the Appropriate Party), (b) airframes, aircraft, engines and 

Spare Parts, registered, habitually located, or located in a designated location, respectively, in the United 

States and that are eligible for the benefits of Section 1110 of the Bankruptcy Code, 11 U.S.C. § 1110 or 

otherwise acceptable to the Required Lenders (provided that any airframe must be less than 20 years old at 

the time of its designation as Additional Collateral), (c) Route Authorities for routes with at least one end 

point located in the United States and all Slots and Gate Leaseholds related from time to time thereto or 

otherwise acceptable to the Required Lenders, (d) real property, (e) ground support equipment, (f) flight 

simulators and (g) any other assets acceptable to the Required Lenders, and all of which assets shall (i) 

(other than Additional Collateral of the type described in clause (a)) be valued by a new Appraisal at the 

time the Parent designates such assets as Additional Collateral, (ii) as of any date of addition of such assets 

as Collateral, be subject, to the extent purported to be created by the applicable Security Document, to a 

perfected first priority Lien and/or mortgage (or comparable Lien), in favor of the Collateral Agent for the 

benefit of the Secured Parties and otherwise subject only to Permitted Liens (excluding those referred to in 

clause (4) of the definition of “Permitted Lien”), (iii) pledged to the Collateral Agent for the benefit of the 

Secured Parties pursuant to security agreement(s) or mortgage(s), as applicable, in a form satisfactory to 

the Appropriate Party and (iv) at the time of their designation as Additional Collateral, be accompanied by 

a legal opinion in form satisfactory to the Appropriate Party; provided that, in accordance with Section 8.06, 

the Collateral Agent may designate a sub-agent to accept the security interest in any Additional Collateral 

for the benefit of the Secured Parties; provided further that, with respect to Additional Collateral of the type 
2 

 

described in clauses (c), (d) and (g), the Borrower agrees to notify the Collateral Agent as promptly as 

practicable of any new categories of assets which are expected to be designated as Additional Collateral or 

any new jurisdictions in which any asset is to be secured or located; provided further that, with respect to 

Additional Collateral of the type described in clause (d), (e) or (f), (i) such assets are acceptable to the 

Required Lenders, (ii) the Borrower shall have delivered Appraisals acceptable in form and substance to 

the Required Lenders with respect to such assets, (iii) such assets are subject to a loan to value framework 

acceptable to the Required Lenders, (iv) such assets are pledged pursuant to documentation acceptable in 

form and substance to the Required Lenders and (v) the benefits of pledging such assets outweigh the 

associated cost, burden, difficulty or other consequences, as determined by the Required Lenders in their 

sole discretion. 

“Adjusted LIBO Rate” means, as to any Borrowing for any Interest Period, an interest rate 

per annum (rounded upwards, if necessary, to the next 1/100 of 1%) equal to (a) the LIBO Rate for such 

Interest Period divided by (b) one minus the Eurodollar Reserve Percentage. 

“Administrative Account” means the account opened with the Administrative Agent in the 

name of the Initial Lender as notified to the Borrower and the Initial Lender, or such other account as the 

Administrative Agent shall advise the Borrower and each Lender from time to time. 

“Administrative Agency Fee Letter” means any fee letter entered into between the 

Borrower, the Administrative Agent and the Collateral Agent, or with any successor administrative agent 

or collateral agent, in its capacity as administrative agent and in its capacity as collateral agent under any 

of the Loan Documents. 

“Administrative Agent” means The Bank of New York Mellon, in its capacity as 

administrative agent under any of the Loan Documents, or any successor administrative agent. 

“Administrative Questionnaire” means an Administrative Questionnaire in a form supplied 

by or otherwise acceptable to the Administrative Agent. 

“Affected Financial Institution” means (a) any EEA Financial Institution or (b) any UK 

Financial Institution. 

“Affiliate” means any Person that directly or indirectly controls, is controlled by, or is 

under common control with, any other Person. For purposes of this definition, “control” of a Person shall 

mean having the power, directly or indirectly, to direct or cause the direction of the management and 

policies of such Person, whether by ownership of voting equity, by contract, or otherwise. 

“Agent Parties” has the meaning specified in Section 11.01(d)(ii). 

“Agent Responsible Officer” means, when used with respect to an Agent, any vice 

president, assistant vice president, assistant treasurer or trust officer in the corporate trust and agency 

administration of the Agent or any other officer of the Agent customarily performing functions similar to 

those performed by any of the above-designated officers, and, in each case, who shall have direct 

responsibility for the administration of this Agreement and also means, with respect to a particular agency 

matter, any other officer to whom such matter is referred because of his or her knowledge of and familiarity 

with the particular subject. 

“Agents” means any of the Administrative Agent and the Collateral Agent. 

“Agreement” has the meaning specified in introductory paragraph hereof. 
3 

 

“Air Carrier” has the meaning such term has under Section 40102 of Title 49, United States 

Code. 

“Alternate Base Rate” means, for any day, a rate per annum equal to the highest of (a) the 

Prime Rate in effect on such day, (b) the Federal Funds Effective Rate in effect on such day plus 0.50% 

and (c) the Adjusted LIBO Rate for a one-month term in effect on such day (taking into account any LIBO 

Rate floor under the definition of “Adjusted LIBO Rate”) plus 1.00%. Any change in the Alternate Base 

Rate due to a change in the Prime Rate, the Federal Funds Effective Rate or such Adjusted LIBO Rate shall 

be effective from and including the effective date of such change in the Prime Rate, the Federal Funds 

Effective Rate or such Adjusted LIBO Rate, respectively. 

“AML Laws” means (a) the USA Patriot Act of 2001 (Pub. L. No. 107-56), (b) the U.S. 

Money Laundering Control Act of 1986, as amended, (c) the Bank Secrecy Act, 31 U.S.C. sections 5301 

et seq., (d) Laundering of Monetary Instruments, 18 U.S.C. section 1956, (e) Engaging in Monetary 

Transactions in Property Derived from Specified Unlawful Activity, 18 U.S.C. section 1957, (f) the 

Financial Recordkeeping and Reporting of Currency and Foreign Transactions Regulations (Title 31 Part 

103 of the US Code of Federal Regulations), or (g) any other applicable money laundering or financial 

recordkeeping Laws. 

“Amortization Date” means the date that is four (4) years and six (6) months after the 

Closing Date (except that, if such date is not a Business Day, the Amortization Date shall be the preceding 

Business Day); provided that to the extent either (x) any Material Loyalty Program Agreement (other than 

Material Loyalty Program Agreements that have been replaced as permitted under this Agreement) or (y) 

Loyalty Program Agreements representing 90% of Loyalty Program Revenues (excluding revenues 

generated under any Loyalty Subscription Program) in the aggregate over the immediately preceding twelve 

(12) calendar month period then ended, in each case, expires prior to the date that is six (6) months after 

the date that is four (4) years and six (6) months after the Closing Date, the Amortization Date shall be the 

date that is six (6) months prior to the earliest such expiration date. 

“Applicable Law” means, as to any Person, all applicable Laws binding upon such Person 

or to which such a Person is subject. 

“Applicable Percentage” means, with respect to any Lender, the percentage of the total 

Outstanding Amount of Loans of all Lenders represented by the aggregate Outstanding Amount of Loans 

of such Lender at such time. 

“Applicable Rate” means 2.50%. 

“Appraisal” means any appraisal specifying a value in Dollars (and not a range of values), 

dated as of the delivery thereof, prepared by an Eligible Appraiser that certifies, at the time of determination, 

in reasonable detail the Appraised Value of Eligible Collateral; provided that any methodology, form of 

presentation and all assumptions must be acceptable to the Appropriate Party; provided further that the 

methodology, form of presentation and assumptions in the Appraisal delivered on the Closing Date pursuant 

to Section 4.01(i) shall be satisfactory for any subsequent Appraisal with respect to the same category and 

specific type of Eligible Collateral, except that, for the avoidance of doubt, if any Appraisal provided one 

Appraised Value for a combination of items of Eligible Collateral and any item is later removed from the 

combination, any subsequent Appraisal shall either provide the Appraised Value of each item separately 

or, in the case where the item removed from the combination of Eligible Collateral cannot be appraised 

individually, the Appraised Value of the remaining combination of Eligible Collateral shall be zero until 

the next Appraisal conducted after the removed item has been restored to such combination. 

“Appraised Value” means, as of any date, (a) the specific value in Dollars (and not a range 

of values) of any property constituting Eligible Collateral (other than cash and Cash Equivalents) as 
4 

 

reflected in the most recent Appraisal, (b) with respect to any cash pledged or being pledged at such time 

as Collateral, 160% of the face amount and (c) with respect to any Cash Equivalents pledged or being 

pledged at such time as Collateral, 100% of the fair market value thereof as determined by the Parent in 

accordance with customary financial market practices determined no earlier than 45 days prior to such date; 

provided that (i) if no Appraisal relating to such Eligible Collateral has been delivered to the Collateral 

Agent prior to such date, the Appraised Value of such Eligible Collateral shall be deemed to be zero and 

(ii) in the case of any such property consisting of ground support equipment, the Appraised Value shall be 

deemed to be 50% of the value set forth in the most recent Appraisal. 

“Appropriate Party” means (i) while the Initial Lender holds any Commitment or Loan, the 

Initial Lender and (ii) if the Initial Lender is no longer a Lender, the Administrative Agent (acting at the 

direction of the Required Lenders). 

“Approved Fund” means any Fund that is administered or managed by (a) a Lender, (b) an 

Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender. 

“Assignment and Assumption” means an assignment and assumption entered into by a 

Lender and an Eligible Assignee (with the consent of any party whose consent is required by Section 11.04), 

and accepted by the Administrative Agent, in substantially the form of Exhibit A or any other form 

approved by the Administrative Agent. 

“Attributable Indebtedness” means, as of any date of determination, (a) in respect of any 

Capitalized Lease Obligations of any Person, the capitalized amount thereof that would appear on a balance 

sheet of such Person prepared as of such date in accordance with GAAP, and (b) in respect of any Synthetic 

Lease Obligation, the capitalized amount of the remaining lease payments under the relevant lease that 

would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP if such 

lease were accounted for as a capital lease. 

“Available Tenor” means, as of any date of determination and with respect to the thencurrent Benchmark, as applicable, any tenor for such Benchmark or payment period for interest 

calculated with reference to such Benchmark, as applicable, that is or may be used for determining the 

length of an Interest Period pursuant to this Agreement as of such date and not including, for the 

avoidance of doubt, any tenor for such Benchmark that is then-removed from the definition of “Interest 

Period” pursuant to clause (d) of Section 2.10. 

“Bail-In Action” means the exercise of any Write-Down and Conversion Powers by an 

applicable Resolution Authority in respect of any liability of any Affected Financial Institution. 

“Bail-In Legislation” means, (a) with respect to any EEA Member Country implementing 

Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, 

the implementing Law for such EEA Member Country from time to time which is described in the EU BailIn Legislation Schedule and (b) with respect to the United Kingdom, Part I of the United Kingdom Banking 

Act 2009 (as amended from time to time) and any other law, regulation or rule applicable in the United 

Kingdom relating to the resolution of unsound or failing banks, investment firms or other financial 

institutions or their affiliates (other than through liquidation, administration or other insolvency 

proceedings). 

“Benchmark” means, initially, USD LIBO Rate; provided that if a Benchmark Transition 

Event or an Early Opt-in Election, as applicable, and its related Benchmark Replacement Date have 

occurred with respect to USD LIBO Rate or the then-current Benchmark, then “Benchmark” means the 

applicable Benchmark Replacement to the extent that such Benchmark Replacement has replaced such 

prior benchmark rate pursuant to Section 2.10(a). 
5 

 

“Benchmark Replacement” means, for any Available Tenor, the first alternative set forth 

in the order below that can be determined by the Required Lenders for the applicable Benchmark 

Replacement Date: 

(1) the sum of: (a) Term SOFR and (b) the related Benchmark Replacement Adjustment; 

(2) the sum of: (a) Daily Simple SOFR and (b) the related Benchmark 

Replacement Adjustment; 

(3) the sum of: (a) the alternate benchmark rate that has been selected by (y) so long as the 

Initial Lender is a Lender, the Initial Lender and (z) otherwise, the Required Lenders and 

the Borrower, in each case, as the replacement for the then-current Benchmark for the 

applicable Corresponding Tenor giving due consideration to (i) any selection or 

recommendation of a replacement benchmark rate or the mechanism for determining 

such a rate by the Relevant Governmental Body or (ii) any evolving or then-prevailing 

market convention for determining a benchmark rate as a replacement for the thencurrent Benchmark for U.S. dollar-denominated syndicated credit facilities at such time 

and (b) the related Benchmark Replacement Adjustment; 

provided that, in the case of clause (1), such Unadjusted Benchmark Replacement is displayed on a 

screen or other information service that publishes such rate from time to time as selected by the 

Required Lenders in their reasonable discretion and such screen is administratively acceptable as 

determined by the Administrative Agent in its reasonable discretion. If the Benchmark Replacement 

as determined pursuant to clause (1), (2) or (3) above would be less than the Floor, the Benchmark 

Replacement will be deemed to be the Floor for the purposes of this Agreement and the other Loan 

Documents; provided further that any such Benchmark Replacement shall be administratively 

feasible as determined by the Administrative Agent in its reasonable discretion. 

“Benchmark Replacement Adjustment” means, with respect to any replacement of the 

then- current Benchmark with an Unadjusted Benchmark Replacement for any applicable Interest 

Period and Available Tenor for any setting of such Unadjusted Benchmark Replacement: 

(1) for purposes of clauses (1) and (2) of the definition of “Benchmark Replacement,” the first 

alternative set forth in the order below that can be determined by the Required Lenders: 

(a) the spread adjustment, or method for calculating or determining such spread 

adjustment, (which may be a positive or negative value or zero) as of the Reference 

Time such Benchmark Replacement is first set for such Interest Period that has been 

selected or recommended by the Relevant Governmental Body for the replacement 

of such Benchmark with the applicable Unadjusted Benchmark Replacement for the 

applicable Corresponding Tenor; 

(b) the spread adjustment (which may be a positive or negative value or zero) as of the 

Reference Time such Benchmark Replacement is first set for such Interest Period 

that would apply to the fallback rate for a derivative transaction referencing the 

ISDA Definitions to be effective upon an index cessation event with respect to such 

Benchmark for the applicable Corresponding Tenor; and 

(2) for purposes of clause (3) of the definition of “Benchmark Replacement,” the spread 

adjustment, or method for calculating or determining such spread adjustment, (which may be a 

positive or negative value or zero) that has been selected by (y) so long as the Initial Lender is 

a Lender, the Initial Lender and (z) otherwise, the Required Lenders and the Borrower, in each 

case, for the applicable Corresponding Tenor giving due consideration to (i) any selection or 

recommendation of a spread adjustment, or method for calculating or determining such spread 

adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark 

Replacement by the Relevant Governmental Body on the applicable Benchmark Replacement 
6 

 

Date or (ii) any evolving or then-prevailing market convention for determining a spread 

adjustment, or method for calculating or determining such spread adjustment, for the 

replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement for 

U.S. dollar- denominated syndicated credit facilities; 

provided that, in the case of clause (1) above, such adjustment is displayed on a screen or other 

information service that publishes such Benchmark Replacement Adjustment from time to time as 

selected by the Required Lenders in their reasonable discretion and such screen is administratively 

acceptable as determined by the Administrative Agent in its reasonable discretion; provided that, 

any such Benchmark Replacement Adjustment shall be administratively feasible as determined by 

the Administrative Agent in its reasonable discretion. 

“Benchmark Replacement Conforming Changes” means, with respect to any Benchmark 

Replacement, any technical, administrative or operational changes (including changes to the definition of 

“Alternate Base Rate,” the definition of “Business Day,” the definition of “Interest Period,” timing and 

frequency of determining rates and making payments of interest, timing of borrowing requests or 

prepayment, conversion or continuation notices, length of lookback periods, the applicability of breakage 

provisions, and other technical, administrative or operational matters) that the Administrative Agent (after 

consultation with the Required Lenders) decides may be appropriate to reflect the adoption and 

implementation of such Benchmark Replacement and to permit the administration thereof by the 

Administrative Agent in a manner substantially consistent with market practice (or, if the Administrative 

Agent (after consultation with the Required Lenders) decides that adoption of any portion of such market 

practice is not administratively feasible or if the Administrative Agent (after consultation with the 

Required Lenders) determines that no market practice for the administration of such Benchmark 

Replacement exists, in such other manner of administration as the Administrative Agent (after 

consultation with the Required Lenders) decides is reasonably necessary in connection with the 

administration of this Agreement and the other Loan Documents). The Required Lenders shall cooperate 

in good faith with the Administrative Agent so that the Administrative Agent may determine such 

Benchmark Replacement Conforming Changes. 

“Benchmark Replacement Date” means the earliest to occur of the following events with 

respect to the then-current Benchmark: 

(1) in the case of clause (1) or (2) of the definition of “Benchmark Transition Event,” the later of 

(a) the date of the public statement or publication of information referenced therein and (b) the 

date on which the administrator of such Benchmark (or the published component used in the 

calculation thereof) permanently or indefinitely ceases to provide all Available Tenors of such 

Benchmark (or such component thereof); 

(2) in the case of clause (3) of the definition of “Benchmark Transition Event,” the date of the 

public statement or publication of information referenced therein; or 

(3) in the case of an Early Opt-in Election, (y) so long as the Initial Lender is a Lender, the sixth 

(6th) Business Day after the date notice of such Early Opt-in Election is provided to the 

Administrative Agent and (z) otherwise, the sixth (6th) Business Day after the date notice of 

such Early Opt-in Election is provided to the Administrative Agent, so long as the 

Administrative Agent has not received, by 5:00 p.m. (New York City time) on the fifth (5th) 

Business Day after the date notice of such Early Opt-in Election is provided to the Lenders, 

written notice of objection to such Early Opt-in Election from Lenders comprising the Required 

Lenders. 

For the avoidance of doubt, (i) if the event giving rise to the Benchmark Replacement Date occurs on the 

same day as, but earlier than, the Reference Time in respect of any determination, the Benchmark 

Replacement Date will be deemed to have occurred prior to the Reference Time for such determination 

and (ii) the “Benchmark Replacement Date” will be deemed to have occurred in the case of clause (1) 
7 

 

or (2) with respect to any Benchmark upon the occurrence of the applicable event or events set forth 

therein with respect to all then-current Available Tenors of such Benchmark (or the published component 

used in the calculation thereof). 

“Benchmark Transition Event” means the occurrence of one or more of the following 

events with respect to the then-current Benchmark: 

(1) a public statement or publication of information by or on behalf of the administrator of such 

Benchmark (or the published component used in the calculation thereof) announcing that 

such administrator has ceased or will cease to provide all Available Tenors of such 

Benchmark (or such component thereof), permanently or indefinitely, provided that, at the 

time of such statement or publication, there is no successor administrator that will continue 

to provide any Available Tenor of such Benchmark (or such component thereof); 

(2) a public statement or publication of information by the regulatory supervisor for the 

administrator of such Benchmark (or the published component used in the calculation thereof), 

the Federal Reserve Board, the Federal Reserve Bank of New York, an insolvency official with 

jurisdiction over the administrator for such Benchmark (or such component), a resolution 

authority with jurisdiction over the administrator for such Benchmark (or such component) or 

a court or an entity with similar insolvency or resolution authority over the administrator for 

such Benchmark (or such component), which states that the administrator of such Benchmark 

(or such component) has ceased or will cease to provide all Available Tenors of such 

Benchmark (or such component thereof) permanently or indefinitely, provided that, at the time 

of such statement or publication, there is no successor administrator that will continue to provide 

any Available Tenor of such Benchmark (or such component thereof); or 

(3) a public statement or publication of information by the regulatory supervisor for the 

administrator of such Benchmark (or the published component used in the calculation 

thereof) announcing that all Available Tenors of such Benchmark (or such component 

thereof) are no longer representative. 

For the avoidance of doubt, a “Benchmark Transition Event” will be deemed to have occurred with respect 

to any Benchmark if a public statement or publication of information set forth above has occurred with 

respect to each then-current Available Tenor of such Benchmark (or the published component used in the 

calculation thereof). 

“Benchmark Unavailability Period” means the period (if any) (x) beginning at the time 

that a Benchmark Replacement Date pursuant to clauses (1) or (2) of that definition has occurred if, at 

such time, no Benchmark Replacement has replaced the then-current Benchmark for all purposes 

hereunder and under any Loan Document in accordance with Section 2.10 and (y) ending at the time that 

a Benchmark Replacement has replaced the then-current Benchmark for all purposes hereunder and under 

any Loan Document in accordance with Section 2.10. 

“Beneficial Owner” has the meaning assigned to such term in Rule 13d-3 and Rule 13d-5 

under the Exchange Act, except that in calculating the beneficial ownership of any particular “person” (as 

that term is used in Section 13(d)(3) of the Exchange Act), such “person” will be deemed to have beneficial 

ownership of all securities that such “person” has the right to acquire by conversion or exercise of other 

securities, whether such right is currently exercisable or is exercisable only after the passage of time. 

“Beneficial Ownership Certification” means a certification regarding beneficial ownership 

as required by the Beneficial Ownership Regulation. 

“Beneficial Ownership Regulation” means 31 C.F.R. § 1010.230. 
8 

 

“Blocked Account” means a deposit account in the name of a Credit Party noted as a 

Blocked Account on Schedule 2.1 (as supplemented from time to time) of the Pledge and Security 

Agreements that is, or is otherwise required under the terms thereof to be, subject to an agreement, in form 

and substance satisfactory to the Appropriate Party, establishing Control (as defined in the Pledge and 

Security Agreements) of such account by the Collateral Agent, and any replacement account thereof. 

“Borrower” has the meaning specified in introductory paragraph hereof. 

“Borrower Materials” has the meaning specified in Section 11.01(e). 

“Borrowing” means a borrowing of Loans. 

“Borrowing Request” means a request for a Borrowing in substantially the form of Exhibit 

E or any other form approved by the Administrative Agent. 

“Business Day” means any day on which Treasury and the Federal Reserve Bank of New 

York are both open for business that is not a Saturday, Sunday or other day that is a legal holiday under the 

laws of the State of New York or is a day on which banking institutions in such state are authorized or 

required by Law to close; provided that, when used in connection with a Loan, the term “Business Day” 

means any such day that is also a day on which dealings in Dollar deposits are conducted by and between 

banks in the London interbank market. 

“Capital Markets Offering” means any offering of “securities” (as defined under the 

Securities Act and, including, for the avoidance of doubt, any offering of pass-through certificates by any 

pass-through trust established by the Parent or any of its Subsidiaries) in (a) a public offering registered 

under the Securities Act, or (b) an offering not required to be registered under the Securities Act (including, 

without limitation, a private placement under Section 4(a)(2) of the Securities Act, an exempt offering 

pursuant to Rule 144A and/or Regulation S of the Securities Act and an offering of exempt securities). 

“Capitalized Lease Obligations” means, at the time any determination thereof is to be 

made, the amount of the liability in respect of a Capitalized Lease that would at such time be required to be 

capitalized and reflected as a liability on a balance sheet (excluding the footnotes thereto) prepared in 

accordance with GAAP; provided that all leases of such Person that are or would have been treated as 

operating leases for purposes of GAAP prior to the issuance of the ASU shall continue to be accounted for 

as operating leases for purposes of all financial definitions and calculations for purposes of this Agreement 

(whether or not such operating lease obligations were in effect on such date) notwithstanding the fact that 

such obligations are required in accordance with the ASU (on a prospective or retroactive basis or 

otherwise) to be treated as capitalized lease obligations for other purposes. 

“Capitalized Leases” means all leases that have been or should be, in accordance with 

GAAP as in effect on the Closing Date, recorded as capitalized leases; provided that for all purposes 

hereunder the amount of obligations under any Capitalized Lease shall be the amount thereof accounted for 

as a liability in accordance with GAAP; provided, further, that all leases of such Person that are or would 

have been treated as operating leases for purposes of GAAP prior to the issuance of the ASU shall continue 

to be accounted for as operating leases for purposes of all financial definitions and calculations for purposes 

of this Agreement (whether or not such operating lease obligations were in effect on such date) 

notwithstanding the fact that such obligations are required in accordance with the ASU (on a prospective 

or retroactive basis or otherwise) to be treated as capitalized lease obligations for other purposes. 

“CARES Act” has the meaning specified in the preamble to this Agreement. 

“Carrier Loyalty Programs” means the Loyalty Programs listed on Schedule 1.01(a) and 

any other Loyalty Program that is operated under a Trademark owned by any Credit Party, or that is 
9 

 

otherwise operated, owned or controlled, directly or indirectly by, or principally associated with, any Credit 

Party or any of its Affiliates, as such program may be in effect from time to time, in each case whether now 

existing or established, arising or acquired in the future and including any successor program of such 

program. The term “Carrier Loyalty Program” shall include the provision, operation and promotion of such 

program. 

“Cash Equivalents” means: 

(a) direct obligations of, or obligations the principal of and interest on which are 

unconditionally guaranteed by, the United States of America (or by any agency thereof to the extent such 

obligations are backed by the full faith and credit of the United States of America), in each case maturing 

within one year from the date of acquisition thereof; 

(b) investments in commercial paper maturing within one year from the date of 

acquisition thereof and having, at such date of acquisition, a rating of at least A-2 from S&P or at least P2 from Moody’s; 

(c) investments in certificates of deposit, banker’s acceptances and time deposits 

maturing within one year from the date of acquisition thereof issued or guaranteed by or placed with, and 

money market deposit accounts issued or offered by, any domestic office of any commercial bank 

organized under the laws of the United States of America or any State thereof that has a combined capital 

and surplus and undivided profits of not less than $250,000,000; 

(d) money market funds that (i) comply with the criteria set forth in SEC Rule 2a-7 

under the Investment Company Act of 1940, (ii) are rated AAA and Aaa (or equivalent rating) by at least 

two Credit Rating Agencies and (iii) have portfolio assets of at least $5,000,000,000; 

(e) deposits available for withdrawal on demand with commercial banks organized 

in the United States having capital and surplus in excess of $100,000,000; and 

(f) other short-term liquid investments held by the Parent and the Subsidiaries as of 

the Closing Date in accordance with their normal investment policies and practices for cash management. 

“CCR Certificate” has the meaning specified in Section 6.17(b). 

“CCR Certificate Delivery Date” has the meaning specified in Section 6.17(b). 

“CCR Reference Date” has the meaning specified in Section 6.17(b). 

“CFC” means a controlled foreign corporation within the meaning of Section 957 of the 

Code. 

“CFC Holdco” means any Domestic Subsidiary that has no material assets other than 

Equity Interests of one or more Foreign Subsidiaries that are CFCs. 

“Change in Law” means the occurrence, after the date of this Agreement, of any of the 

following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, 

rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by 

any Governmental Authority or (c) the making or issuance of any request, rule, guideline or directive 

(whether or not having the force of law) by any Governmental Authority; provided that notwithstanding 

anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and 

all requests, rules, guidelines or directives thereunder or issued in connection therewith and (y) all requests, 

rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee 
10 

 

on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory 

authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”, 

regardless of the date enacted, adopted or issued. 

“Change of Control” means the occurrence of any of the following: (a) the sale, lease, 

transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series 

of related transactions, of all or substantially all of the properties or assets of the Borrower and its 

Subsidiaries, or if the Borrower is a direct or indirect Subsidiary of the Parent, the Parent and its 

Subsidiaries, taken as a whole to any Person (including any “person” (as that term is used in 

Section 13(d)(3) of the Exchange Act)); (b) the consummation of any transaction (including, without 

limitation, any merger or consolidation), the result of which is that any Person (including any “person” (as 

defined above)) becomes the Beneficial Owner, directly or indirectly, of more than 50% of the Voting Stock 

of the Borrower or the Parent, as applicable, (measured by voting power rather than number of shares), 

other than (i) any such transaction where the Voting Stock of the Borrower or the Parent, as applicable, 

(measured by voting power rather than number of shares) outstanding immediately prior to such transaction 

constitutes or is converted into or exchanged for at least a majority of the outstanding shares of the Voting 

Stock of such Beneficial Owner (measured by voting power rather than number of shares), or (ii) the 

consummation of any merger or consolidation of the Borrower or the Parent, as applicable, with or into any 

Person (including any “person” (as defined above)) which owns or operates (directly or indirectly through 

a contractual arrangement) a Permitted Business (a “Permitted Person”) or a Subsidiary of a Permitted 

Person, in each case, if immediately after such transaction no Person (including any “person” (as defined 

above)) is the Beneficial Owner, directly or indirectly, of more than 50% of the total Voting Stock of such 

Permitted Person (measured by voting power rather than number of shares); (c) if the Borrower is a direct 

or indirect Subsidiary of the Parent, the Parent ceasing to own, directly or indirectly, 100% of the Equity 

Interests of the Borrower; (d) the adoption of a plan relating to the liquidation or dissolution of the Borrower 

or the Parent or (e) the occurrence of a “change of control”, “change in control” or similar event under any 

Material Indebtedness of the Borrower, the Parent or any parent entity of the foregoing.

“Closing Date” means the first date all the conditions precedent in Section 4.01 are 

satisfied. 

“Closing Date Commitment” means the commitment of the Initial Lender on the Closing 

Date to make Loans in the amount of $1,301,000,000, as such commitment may be reduced or terminated 

pursuant to Section 2.07. 

“Code” means the Internal Revenue Code of 1986, as amended from time to time. 

“Collateral” has the meaning assigned to such term in the Pledge and Security Agreements. 

“Collateral Account” means any of the Collection Account, the Blocked Account, the 

Payment Account and the Collateral Proceeds Account. 

“Collateral Agent” means The Bank of New York Mellon, in its capacity as collateral agent 

under any of the Loan Documents, or any successor collateral agent. 

“Collateral Cash Flow” means the funds that are deposited into a Collateral Account 

pursuant to the Direct Agreements or directly by a Credit Party. 

“Collateral Coverage Ratio” means, as of any date of determination, the ratio of (i) the 

Appraised Value of the Eligible Collateral as of the date of the Appraisal most recently delivered pursuant 

to Section 5.16 (or in the case of cash and Cash Equivalents, as of such date of determination) to (ii) the 

aggregate principal amount of all Loans and Commitments outstanding as of such date; provided that for 

the purposes of calculating clause (i) above, (x) no more than 25% of the Appraised Value of the Eligible 
11 

 

Collateral may correspond to ground support equipment and (y) any amounts held in the Blocked Account, 

Payment Account and Collateral Proceeds Account shall not be included; provided further that for the 

purposes of calculating clause (i) above, Loyalty Program Assets (other than any Loyalty Subscription 

Program) shall not be included unless (x) each Material Loyalty Program Agreement has and (y) Loyalty 

Program Agreements representing 90% of Loyalty Program Revenues (excluding revenues generated under 

any Loyalty Subscription Program) in the aggregate over the immediately preceding twelve (12) calendar 

month period then ended have, in each case, an expiration date that is at least six (6) months after the 

Maturity Date. 

 “Collateral Proceeds Account” means a deposit account in the name of the Borrower that 

is subject to an agreement in form and substance satisfactory to the Appropriate Party establishing Control 

(as defined in the Pledge and Security Agreements) of such account by the Collateral Agent. 

“Collection Account” means that certain concentration account at Bank of America, N.A. 

in the name of a Credit Party, and any replacement account, which, in each case, must be a segregated 

deposit account and subject at all times to an account control agreement in form and substance satisfactory 

to the Appropriate Party. 

“Commitment” means the commitment of the Initial Lender to make Loans in the amount 

of $1,928,000,000 (which, for the avoidance of doubt, is an increase of the Closing Date Commitment by 

$627,000,000, pursuant to that certain Restatement Agreement), as such commitment may be reduced or 

terminated pursuant to Section 2.07. 

 “Communications” has the meaning specified in Section 11.01(d)(ii). 

“Competitor” means (i) any Person operating an Air Carrier or a commercial passenger air 

carrier business and (ii) any Affiliate of any Person described in clause (i) (other than any Affiliate of such 

Person as a result of common control by a Governmental Authority or instrumentality thereof and any 

Affiliate of such Person under common control with such Person which Affiliate is not actively involved 

in the management and/or operations of such Person). 

“Connection Income Taxes” means Other Connection Taxes that are imposed on or 

measured by net income (however denominated) or that are franchise Taxes or branch profits Taxes. 

“Contingent Payment Event” means any indemnity, termination payment or liquidated 

damages under a Loyalty Program Agreement. 

“Contractual Obligation” means, as to any Person, any provision of any security issued by 

such Person or of any agreement, instrument or other undertaking to which such Person is a party or by 

which it or any of its property is bound. 

“Control” means the possession, directly or indirectly, of the power to direct or cause the 

direction of the management or policies of a Person, whether through the ability to exercise voting power, 

by contract or otherwise. “Controlling” and “Controlled” have meanings analogous thereto. 

“Convertible Indebtedness” means Indebtedness of the Parent that is convertible into 

common Equity Interests of the Parent (and cash in lieu of fractional shares) and/or cash (in an amount 

determined by reference to the price of such common Equity Interests). 

“Corresponding Tenor” with respect to any Available Tenor means, as applicable, either a 

tenor (including overnight) or an interest payment period having approximately the same length 

(disregarding business day adjustment) as such Available Tenor. 
12 

 

“Credit Parties” means the Borrower and the Guarantors. 

“Credit Rating” means a rating as determined by a Credit Rating Agency of the Parent’s 

non-credit-enhanced, senior unsecured long-term indebtedness. 

“Credit Rating Agency” means a nationally recognized credit rating agency that evaluates 

the financial condition of issuers of debt instruments and then assigns a rating that reflects its assessment 

of the issuer’s ability to make debt payments. 

“Currency” means miles, points or other units that are a medium of exchange constituting 

a convertible, virtual and private currency that is tradable property and that can be sold or issued to Persons. 

“Daily Simple SOFR” means, for any day, SOFR, with the conventions for this rate (which 

will include a lookback) being established by the Required Lenders in accordance with the conventions for 

this rate selected or recommended by the Relevant Governmental Body for determining “Daily Simple 

SOFR” for business loans; provided, that if the Administrative Agent decides that any such convention is 

not administratively feasible for the Administrative Agent, then the Required Lenders may establish another 

convention in its reasonable discretion, subject to the determination by the Administrative Agent of the 

administrative feasibility of such convention. 

“Debt Service Amount” means, as of any DSCR Determination Date or any other date of 

determination, the sum of all accrued interest on the Loans and any other Indebtedness secured by Liens on 

the Collateral in respect of the most recently ended DSCR Test Period. 

“Debt Service Coverage Ratio” means, as of any DSCR Determination Date or any other 

date of determination, the ratio of (a) the aggregate amount of Collateral Cash Flow received during the 

relevant DSCR Test Period that has been deposited into a Collateral Account (and for the avoidance of 

doubt, excluding any amounts on deposit in a Collateral Account in respect of prior periods) to (b) the Debt 

Service Amount for such DSCR Test Period; provided, however, that for (i) the first calendar quarter ending 

after the Closing Date, such ratio shall be calculated for the one calendar quarter ending on such date, (ii) 

the second calendar quarter ending after the Closing Date, such ratio shall be calculated for the two calendar 

quarters ending on such date and (iii) the third calendar quarter ending after the Closing Date, such ratio 

shall be calculated for the three calendar quarters ending on such date. 

“Debtor Relief Laws” means the Bankruptcy Code of the United States of America, and 

all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, 

rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the United States 

or other applicable jurisdictions from time to time in effect. 

“Default” means any event or condition that constitutes an Event of Default or that, with 

the giving of any notice, the passage of time, or both, would be an Event of Default. 

“Default Rate” means an interest rate (before as well as after judgment) equal to the 

applicable interest rate plus 2.00% per annum. 

“Direct Agreements” means those certain Loyalty Partner Direct Agreements entered into 

by and among the applicable Credit Party, the Collateral Agent, the Initial Lender and the applicable 

counterparty to the Material Loyalty Program Agreements, substantially in the form of Exhibit D hereto. 

“Disposition” or “Dispose” means the sale, transfer (including through a plan of division), 

license, lease or other disposition of any property by any Person (including (i) any sale and leaseback 

transaction, any issuance of Equity Interests by a Subsidiary of such Person, (ii) with respect to Intellectual 

Property, any covenant not to sue, release, abandonment, lapse, forfeiture, dedication to the public or other 
13 

 

similar disposition of Intellectual Property and (iii) with respect to any Personal Data, any deletion, deidentification, purging or other similar disposition of Personal Data), including any sale, assignment, 

transfer or other disposal, with or without recourse, of any notes or accounts receivable or any rights and 

claims associated therewith. 

“Disqualified Equity Interest” means any Equity Interest that, by its terms (or the terms of 

any security or other Equity Interests into which it is convertible or for which it is exchangeable), or upon 

the happening of any event or condition (a) matures or is mandatorily redeemable (other than solely for 

Equity Interests that are not Disqualified Equity Interests), pursuant to a sinking fund obligation or 

otherwise (except as a result of a change of control or asset sale so long as any rights of the holders thereof 

upon the occurrence of a change of control or asset sale event shall be subject to the prior repayment in full 

of the Loans and all other Obligations that are accrued and payable and the termination of the 

Commitments), (b) is redeemable at the option of the holder thereof, in whole or in part, (c) provides for 

scheduled payments of dividends in cash, or (d) is or becomes convertible into or exchangeable for 

Indebtedness or any other Equity Interests that would constitute Disqualified Equity Interests, in each case, 

prior to the date that is ninety-one (91) days after the Maturity Date; provided that if such Equity Interests 

are issued pursuant to a plan for the benefit of employees of the Parent or any Subsidiary or by any such 

plan to such employees, such Equity Interests shall not constitute Disqualified Equity Interests solely 

because they may be required to be repurchased by the Parent or its Subsidiaries in order to satisfy 

applicable statutory or regulatory obligations or as a result of such employee’s termination, death or 

disability. 

“Dollar” and “$” mean lawful money of the United States. 

“Domestic Subsidiary” means any Subsidiary that is organized under the Laws of the 

United States of America, any state thereof, or the District of Columbia. 

“DOT” means the U.S. Department of Transportation. 

“DSCR Determination Date” means the fifth Business Day following the last day of each 

March, June, September and December (beginning with December 2020). 

“DSCR Test Period” means, at any DSCR Determination Date or other date of 

determination, the period of twelve (12) calendar months ending on the last day of the calendar month 

ending immediately prior to such date. 

“DSCR Trigger Event” has the meaning specified in Section 6.17(c)(ii). 

“Early Opt-in Election” means, if the then-current Benchmark is USD LIBO Rate, the 

occurrence of: 

(a) (x) so long as the Initial Lender is a Lender, the Initial Lender and (y) otherwise, the Required 

Lenders, in each case notifying to the Administrative Agent that the Initial Lender or the Required 

Lenders have determined that at least five currently outstanding U.S. dollar-denominated syndicated 

credit facilities at such time contain (as a result of amendment or as originally executed) a SOFR-based 

rate (including SOFR, a term SOFR or any other rate based upon SOFR) as a benchmark rate (and such 

syndicated credit facilities are identified in such notice and are publicly available for review), and 

(b) (x) so long as the Initial Lender is a Lender, the election by the Initial Lender and (y) 

otherwise, the joint election by the Required Lenders and the Borrower to trigger a fallback from USD 

LIBO Rate and, in each case, the provision to the Administrative Agent and the other Lenders of written 

notice of such election. 
14 

 

“EEA Financial Institution” means (a) any credit institution or investment firm established 

in any EEA Member Country that is subject to the supervision of an EEA Resolution Authority, (b) any 

entity established in an EEA Member Country that is a parent of an institution described in clause (a) of 

this definition, or (c) any financial institution established in an EEA Member Country that is a subsidiary 

of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision 

with its parent. 

“EEA Member Country” means any of the member states of the European Union, Iceland, 

Liechtenstein, and Norway. 

“EEA Resolution Authority” means any public administrative authority or any person 

entrusted with public administrative authority of any EEA Member Country (including any delegee) having 

responsibility for the resolution of any EEA Financial Institution. 

“Eligible Appraiser” means (a) with respect to aircraft or engines: Morten Beyer & Agnew, 

International Bureau of Aviation, Ascend Worldwide Group, ICF International Inc., BK Associates, Inc., 

Aircraft Information Services Inc., AVITAS, Inc., PAC Appraisal Inc., Aviation Specialists Group, 

Aviation Asset Management Inc. or IBA Group Ltd., (b) with respect to slots, gates or routes: Morten Beyer 

& Agnew, ICF International Inc., PAC Appraisal Inc. or BK Associates, Inc., (c) with respect to parts, 

Morten Beyer & Agnew, ICF International Inc., Sage-Popovich, Inc., PAC Appraisal Inc., Aviation Asset 

Management Inc. or Alton Aviation Consultancy LLC, (d) with respect to any other type of property, 

Deloitte & Touche LLP, Andersen Tax LLC, BBC Aviation Enterprises Aviation Advisors Group, LLC, 

PricewaterhouseCoopers, CBRE Group Inc. and Jones Lang LaSalle Incorporated, and (e) any independent 

appraisal firm appointed by the Borrower and acceptable to the Appropriate Party. 

“Eligible Assignee” means any Person that meets the requirements to be an assignee under 

Section 11.04(b)(iii), 11.04(b)(v) and 11.04(b)(vi) (subject to such consents, if any, as may be required 

under Section 11.04(b)(iii)); provided that no Competitor shall be an Eligible Assignee. 

“Eligible Collateral” means, as of any date, all Collateral on which the Collateral Agent 

has, as of such date, to the extent purported to be created by the applicable Security Document, a valid and 

perfected first priority Lien and/or mortgage (or comparable Lien) for the benefit of the Secured Parties and 

which is otherwise subject only to Permitted Liens and satisfies the requirements set out in the Loan 

Documents for such type of Collateral. 

“Environmental Laws” means any and all federal, state, local, and foreign statutes, Laws, 

regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, 

agreements or governmental restrictions, including all common law, relating to pollution or the protection 

of health, safety or the environment or the release of any materials into the environment, including those 

related to Hazardous Materials, air emissions, discharges to waste or public systems and health and safety 

matters. 

“Environmental Liability” means any liability or obligation, contingent or otherwise 

(including any liability for damages, costs of environmental remediation, fines, penalties or indemnities), 

directly or indirectly, resulting from or based upon (a) violation of any Environmental Law, (b) the 

generation, use, handling, transportation, storage, treatment, disposal or permitting or arranging for the 

disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or threatened 

release of any Hazardous Materials or (e) any contract, agreement or other consensual arrangement pursuant 

to which liability is assumed or imposed with respect to any of the foregoing. 

“Equity Interests” means, as to any Person, all of the shares of capital stock of (or other 

ownership or profit interests in) such Person, all of the warrants, options or other rights for the purchase or 

acquisition from such Person of shares of capital stock of (or other ownership or profit interests in) such 
15 

 

Person, all of the securities convertible into or exchangeable for shares of capital stock of (or other 

ownership or profit interests in) such Person or warrants, rights or options for the purchase or acquisition 

from such Person of such shares (or such other interests), and all of the other ownership or profit interests 

in such Person (including partnership, member or trust interests therein), whether voting or nonvoting, and 

whether or not such shares, warrants, options, rights or other interests are outstanding on any date of 

determination (other than Convertible Indebtedness or any other debt security that is convertible into or 

exchangeable for Equity Interests of such Person and the Warrants). 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and 

the rules and regulations promulgated thereunder. 

“ERISA Affiliate” means any trade or business (whether or not incorporated) under 

common control with any Credit Party within the meaning of Section 414(b) or (c) of the Code (and 

Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the Code or 

Section 302 of ERISA). 

“ERISA Event” means (a) a Reportable Event with respect to a Pension Plan; (b) the failure 

by any Credit Party or any ERISA Affiliate to meet all applicable requirements under the Pension Funding 

Rules or the filing of an application for the waiver of the minimum funding standards under the Pension 

Funding Rules; (c) the incurrence by any Credit Party or any ERISA Affiliate of any liability pursuant to 

Section 4063 or 4064 of ERISA or a cessation of operations with respect to a Pension Plan within the 

meaning of Section 4062(e) of ERISA; (d) a complete or partial withdrawal by any Credit Party or any 

ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan is in reorganization 

or insolvent (within the meaning of Title IV of ERISA); (e) the filing of a notice of intent to terminate a 

Pension Plan under, or the treatment of a Pension Plan amendment as a termination under, Section 4041 of 

ERISA; (f) the institution by the PBGC of proceedings to terminate a Pension Plan; (g) any event or 

condition that constitutes grounds under Section 4042 of ERISA for the termination of, or the appointment 

of a trustee to administer, any Pension Plan; (h) the determination that any Pension Plan is in at-risk status 

(within the meaning of Section 430 of the Code or Section 303 of ERISA) or that a Multiemployer Plan is 

in endangered or critical status (within the meaning of Section 432 of the Code or Section 305 of ERISA); 

(i) the imposition or incurrence of any liability under Title IV of ERISA, other than for PBGC premiums 

due but not delinquent under Section 4007 of ERISA, upon any Credit Party or any ERISA Affiliate; (j) the 

engagement by any Credit Party or any ERISA Affiliate in a transaction that could be subject to 

Section 4069 or Section 4212(c) of ERISA; (k) the imposition of a lien upon any Credit Party pursuant to 

Section 430(k) of the Code or Section 303(k) of ERISA; or (l) the making of an amendment to a Pension 

Plan that could result in the posting of bond or security under Section 436(f)(1) of the Code. 

“EU Bail-In Legislation Schedule” means the EU Bail-In Legislation Schedule published 

by the Loan Market Association (or any successor person), as in effect from time to time. 

“Eurodollar Reserve Percentage” means, for any day during any Interest Period, the reserve 

percentage in effect on such day, whether or not applicable to any Lender, under regulations issued from 

time to time by the Federal Reserve Board for determining the maximum reserve requirement (including 

any emergency, special, supplemental or other marginal reserve requirement) with respect to eurocurrency 

funding (currently referred to as “Eurocurrency liabilities” in Regulation D). The Adjusted LIBO Rate for 

each outstanding Loan shall be adjusted automatically as of the effective date of any change in the 

Eurodollar Reserve Percentage. 

“Event of Default” has the meaning specified in Article VII. 

“Excluded Assets” has the meaning assigned to such term in the Pledge and Security 

Agreements. 
16 

 

“Excluded Subsidiary” means any Subsidiary of the Parent (other than the Borrower) that 

(i) is not wholly-owned, directly or indirectly, by the Parent, (ii) is a captive insurance company, (iii) is an 

Immaterial Subsidiary, (iv) is a Receivables Subsidiary or (v) is a Foreign Subsidiary or a CFC Holdco 

existing on the Closing Date; provided that, notwithstanding the foregoing, (1) a Subsidiary will not be an 

Excluded Subsidiary if it (x) owns assets of the type that would be included in the Collateral, (y) owns 

individually, or in the aggregate with other Subsidiaries (including any Subsidiary that would otherwise 

qualify as an Excluded Subsidiary), a majority of the Equity Interests of any Subsidiary that owns any assets 

of the type that would be included in the Collateral or is party to any agreements that constitute (or would 

constitute) Collateral or (z) guarantees Material Indebtedness of the Parent or any of its Subsidiaries (other 

than any acquired Subsidiary that guarantees assumed Indebtedness of a Person acquired pursuant to an 

acquisition permitted under this Agreement that is existing at the time of such acquisition or investment; 

provided that such Indebtedness was not created in contemplation of or in connection with such acquisition 

and the amount of such Indebtedness is not increased) and (2) Horizon Air Industries, Inc. shall not be an 

Excluded Subsidiary. 

“Excluded Taxes” means any of the following Taxes imposed on or with respect to a 

Recipient or required to be withheld or deducted from a payment to a Recipient, (a) Taxes imposed on or 

measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, 

(i) imposed as a result of such Recipient being organized under the laws of, or having its principal office 

or, in the case of any Lender, its applicable lending office located in, the jurisdiction imposing such Tax 

(or any political subdivision thereof) or (ii) that are Other Connection Taxes, (b) in the case of a Lender, 

U.S. federal withholding Taxes imposed on amounts payable to or for the account of such Lender with 

respect to an applicable interest in a Loan pursuant to a law in effect on the date on which (i) such Lender 

acquires such interest in the Loans (other than pursuant to an assignment request by the Borrower under 

Section 2.19(b)) or (ii) such Lender changes its lending office, except in each case to the extent that, 

pursuant to Section 2.16, amounts with respect to such Taxes were payable either to such Lender’s 

assignor immediately before such Lender became a party hereto or to such Lender immediately before it 

changed its lending office, (c) Taxes attributable to such Recipient’s failure to comply with 

Section 2.16(g) and (d) any withholding Taxes imposed under FATCA. 

“Export Control Laws” means any applicable export control Laws including the 

International Traffic in Arms Regulations (22 C.F.R. 120 et seq.) and the Export Administration 

Regulations (15 C.F.R. 730 et seq.). 

“FAA” means the United States Federal Aviation Administration and any successor 

thereto. 

“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this Agreement 

(or any amended or successor version that is substantively comparable and not materially more onerous to 

comply with), any current or future regulations or official interpretations thereof, any agreements entered 

into pursuant to Section 1471(b)(1) of the Code and any fiscal or regulatory legislation, rules or practices 

adopted pursuant to any intergovernmental agreement, treaty or convention among Governmental 

Authorities and implementing such Sections of the Code. 

“FCPA” has the meaning specified in Section 3.15(b). 

“Federal Funds Effective Rate” means, for any day, the greater of (a) the rate calculated by 

the Federal Reserve Bank of New York based on such day’s Federal funds transactions by depositary 

institutions (as determined in such manner as the Federal Reserve Bank of New York shall set forth on its 

public website from time to time) and published on the next succeeding Business Day by the Federal 

Reserve Bank of New York as the Federal funds effective rate and (b) 0%. 
17 

 

“Federal Reserve Board” means the Board of Governors of the Federal Reserve System of 

the United States. 

“Finance Entity” means any Person created or formed by or at the direction of the Parent 

or any of its Subsidiaries for the purpose of financing aircraft and aircraft related assets and related predelivery payment obligations of Parent or such Subsidiaries that; provided, that, such (i) Person holds no 

material assets other than the aircraft or aircraft related assets to be financed or assets pursuant to which 

related pre-delivery payment obligations arise, (ii) financing is in the ordinary course of business of the 

Parent and its Subsidiaries or otherwise customary for airlines based in the United States and (iii) Person 

holds no assets constituting, or otherwise intended to be included in, Collateral. 

“Financial Officer” means, as to any Person, the chief financial officer, principal 

accounting officer, treasurer or controller of such Person. 

“Fitch” means Fitch Ratings and any successor to its rating agency business. 

“Floor” means the benchmark rate floor, if any, provided in this Agreement initially (as of 

the execution of this Agreement, the modification, amendment or renewal of this Agreement or otherwise) 

with respect to USD LIBO Rate. As of the Closing Date, the Floor shall be 0%. 

“Foreign Lender” means any Lender that is not a U.S. Person. 

“Foreign Plan” means any employee pension benefit plan, program, policy, arrangement 

or agreement maintained or contributed to by the Parent or any Subsidiary with respect to employees 

employed outside the United States (other than any governmental arrangement). 

“Foreign Subsidiary” means any Subsidiary that is not a Domestic Subsidiary. 

“Fund” means any Person (other than a natural person) that is (or will be) engaged in 

making, purchasing, holding or otherwise investing in commercial loans, bonds and similar extensions of 

credit in the ordinary course of its activities. 

“GAAP” means, subject to Section 1.03, United States generally accepted accounting 

principles as in effect from time to time; provided that if at any time any change in GAAP would affect the 

computation of any financial ratio or financial requirement, or compliance with any covenant, set forth in 

any Loan Document, the Required Lenders and the Borrower will negotiate in good faith to amend such 

ratio, requirement or covenant to preserve the original intent thereof in light of such change in GAAP 

(subject to the approval of the Required Lenders); provided that until so amended, (a) such ratio, 

requirement or covenant will continue to be computed in accordance with GAAP prior to such change 

therein and (b) the Borrower will provide to the Administrative Agent and the Lenders reconciliation 

statements to the extent requested. 

“Gate Leasehold” has the meaning assigned to such term in the Pledge and Security 

Agreements. 

“Governmental Authority” means the government of the United States of America or any 

other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, 

instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, 

judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including 

any supra-national bodies such as the European Union or the European Central Bank). 

“Guarantee” means, as to any Person, (a) any obligation, contingent or otherwise, of such 

Person guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation 
18 

 

payable or performable by another Person (the “primary obligor”) in any manner, whether directly or 

indirectly, and including any obligation of such Person, direct or indirect, (i) to purchase or pay (or advance 

or supply funds for the purchase or payment of) such Indebtedness or other obligation, (ii) to purchase or 

lease property, securities or services for the purpose of assuring the obligee in respect of such Indebtedness 

or other obligation of the payment or performance of such Indebtedness or other obligation, (iii) to maintain 

working capital, equity capital or any other financial statement condition or liquidity or level of income or 

cash flow of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other 

obligation or (iv) entered into for the purpose of assuring in any other manner the obligee in respect of such 

Indebtedness or other obligation of the payment or performance thereof or to protect such obligee against 

loss in respect thereof (in whole or in part) or (b) any Lien on any assets of such Person securing any 

Indebtedness or other obligation of any other Person, whether or not such Indebtedness or other obligation 

is assumed by such Person (or any right, contingent or otherwise, of any holder of such Indebtedness to 

obtain any such Lien); provided that the term “Guarantee” shall not include endorsements for collection or 

deposit in the ordinary course of business. The amount of any Guarantee shall be deemed to be an amount 

equal to the stated or determinable amount of the related primary obligation, or portion thereof, in respect 

of which such Guarantee is made or, if not stated or determinable, the maximum reasonably anticipated 

liability in respect thereof as determined by the guaranteeing Person in good faith. The term “Guarantee” 

as a verb has a corresponding meaning. 

“Guaranteed Obligations” has the meaning specified in Section 9.01. 

“Guarantor” means the Parent and each other Guarantor listed on the signature page to this 

Agreement and any other Person that Guarantees the Obligations under this Agreement and any other Loan 

Document. 

“Hazardous Materials” means all explosive or radioactive substances or wastes and all 

hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum distillates, 

asbestos or asbestos-containing materials, polychlorinated biphenyls, radon gas, infectious or medical 

wastes, and other substances or wastes of any nature regulated under or with respect to which liability or 

standards of conduct are imposed pursuant to any Environmental Law. 

“Immaterial Subsidiaries” means one or more Subsidiaries, for which (a) the assets of all 

such Subsidiaries constitute, in the aggregate, no more than 7.50% of the total assets of the Parent and its 

Subsidiaries on a consolidated basis (determined as of the last day of the most recent fiscal quarter of Parent 

for which financial statements are available), and (b) the revenues of all such Subsidiaries account for, in 

the aggregate, no more than 7.50% of the total revenues of the Parent and its Subsidiaries on a consolidated 

basis for the four (4) fiscal quarter period ending on the last day of the most recent fiscal quarter of Parent 

for which financial statements are available; provided that (x) a Subsidiary will not be an Immaterial 

Subsidiary if it (i) directly or indirectly guarantees, or pledges any property or assets to secure, any 

Obligations, (ii) owns any assets of the type that are intended to be included in the Collateral or is party to 

any agreements that constitute (or would constitute) Collateral or (iii) owns a majority of the Equity 

Interests of any Subsidiary that owns any assets of the type that are intended to be included in the Collateral 

or is party to any agreements that constitute (or would constitute) Collateral, (y) the Borrower shall not be 

an Immaterial Subsidiary and (z) Horizon Air Industries, Inc. shall not be an Immaterial Subsidiary. 

“Indebtedness” means, as to any Person at a particular time, without duplication, all of the 

following, whether or not included as indebtedness or liabilities in accordance with GAAP: 

(a) all obligations of such Person for borrowed money and all obligations of such 

Person evidenced by bonds, debentures, notes, loan agreements or other similar instruments; 
19 

 

(b) all direct or contingent obligations of such Person arising under (i) letters of credit 

(including standby and commercial), bankers’ acceptances and bank guaranties and (ii) surety bonds, 

performance bonds and similar instruments issued or created by or for the account of such Person; 

(c) net obligations of such Person under any Swap Contract; 

(d) all obligations of such Person to pay the deferred purchase price of property or 

services (other than trade accounts payable in the ordinary course of business); 

(e) indebtedness (excluding prepaid interest thereon) secured by a Lien on property 

owned or being purchased by such Person (including indebtedness arising under conditional sales or other 

title retention agreements), whether or not such indebtedness shall have been assumed by such Person or is 

limited in recourse; 

(f) all Attributable Indebtedness; 

(g) all obligations of such Person in respect of Disqualified Equity Interests; and 

(h) all Guarantees of such Person in respect of any of the foregoing. 

For all purposes hereof, the Indebtedness of any Person shall include the Indebtedness of any partnership 

or joint venture (other than a joint venture that is itself a corporation or limited liability company) in which 

such Person is a general partner or a joint venturer, unless such Indebtedness is expressly made non-recourse 

to such Person. The amount of any net obligation under any Swap Contract on any date shall be deemed 

to be the Swap Termination Value thereof as of such date. The amount of any Indebtedness of any Person 

for purposes of clause (e) that is expressly made non-recourse or limited-recourse (limited solely to the 

assets securing such Indebtedness) to such Person shall be deemed to be equal to the lesser of (i) the 

aggregate principal amount of such Indebtedness and (ii) the fair market value of the property encumbered 

thereby as determined by such Person in good faith. 

“Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or with 

respect to any payment made by or on account of any obligation of the Borrower under any Loan Document 

and (b) to the extent not otherwise described in (a), Other Taxes. 

“Indemnitee” has the meaning specified in Section 11.03(b). 

“Information” has the meaning specified in Section 11.12. 

“Initial Lender” means Treasury or its designees (but, for the avoidance of doubt, excluding 

any assignee of the Loans). 

“Intellectual Property” has the meaning assigned to such term in the Pledge and Security 

Agreements. 

“Interest Payment Date” means the first Business Day following the 14th day of each 

March, June, September and December (beginning with September 15, 2021), and the Amortization Date 

and the Maturity Date. 

“Interest Period” means, as to any Borrowing, (a) for the initial Interest Period, the period 

commencing on the date of such Borrowing and ending on the next succeeding Interest Payment Date and 

(b) for each Interest Period thereafter, the period commencing on the last day of the next preceding Interest 

Period and ending on the next succeeding Interest Payment Date. 
20 

 

“International Registry” has the meaning assigned to such term in the Pledge and Security 

Agreements. 

“Interpolated Rate” means, at any time, the rate per annum determined by the 

Administrative Agent (which determination shall be conclusive and binding absent manifest error) to be 

equal to the rate that results from interpolating on a linear basis between: (a) the rate as displayed on the 

Bloomberg “LIBOR01” screen page (or any successor or replacement screen on such service; in each case 

the “Screen Rate”) for the longest period (for which that Screen Rate is available) that is shorter than three 

(3) months and (b) the Screen Rate for the shortest period (for which that Screen Rate is available) that is 

equal to or exceeds three (3) months, in each case, at approximately 11:00 a.m., London time, two (2) 

Business Days prior to the commencement of such Interest Period. 

“Investment” means, as to any Person, any direct or indirect acquisition or investment by 

such Person, whether by means of (a) the purchase or other acquisition of Equity Interests or debt or other 

securities of another Person, (b) a loan, advance or capital contribution to, Guarantee or assumption of debt 

of, or purchase or other acquisition of any other debt or equity participation or interest in, another Person, 

including any partnership or joint venture interest in such other Person and any arrangement pursuant to 

which the investor incurs Indebtedness of the type referred to in clause (h) of the definition of 

“Indebtedness” in respect of such other Person, or (c) the purchase or other acquisition (in one transaction 

or a series of transactions) of all or substantially all of the property and assets or business of another Person 

or assets constituting a business unit, line of business or division of such Person. For purposes of covenant 

compliance, the amount of any Investment shall be the amount actually invested, without adjustment for 

subsequent increases or decreases in the value of such Investment but giving effect to any returns or 

distributions of capital or repayment of principal actually received in case by such Person with respect 

thereto. 

“IP Licenses” has the meaning assigned to such term in the Pledge and Security 

Agreements. 

“IRS” means the United States Internal Revenue Service. 

“ISDA Definitions” means the 2006 ISDA Definitions published by the International 

Swaps and Derivatives Association, Inc. or any successor thereto, as amended or supplemented from time 

to time, or any successor definitional booklet for interest rate derivatives published from time to time by 

the International Swaps and Derivatives Association, Inc. or such successor thereto. 

“IT Systems” has the meaning specified in Section 3.27. 

“Laws” means, collectively, all international, foreign, federal, state and local statutes, 

treaties, rules, guidelines, regulations, ordinances, codes and administrative or judicial precedents or 

authorities, including the interpretation or administration thereof by any Governmental Authority charged 

with the enforcement, interpretation or administration thereof, and all applicable administrative orders, 

directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental 

Authority, in each case whether or not having the force of law. 

“Lenders” means the Initial Lender and any other Person that shall have become party 

hereto pursuant to an Assignment and Assumption, other than any such Person that ceases to be a party 

hereto pursuant to an Assignment and Assumption. 

“LIBO Rate” means, the greater of (a) the rate appearing on the Bloomberg “LIBOR01” 

screen page (or any successor or replacement screen on such service) at approximately 11:00 a.m., London 

time, two (2) Business Days prior to the commencement of such Interest Period, as the rate for dollar 

deposits with a maturity of three (3) months; provided that (i) if such rate is not available at such time for 
21 

 

any reason, then the “LIBO Rate” shall be the Interpolated Rate, and (ii) if the Interpolated Rate is not 

available (except as set forth in Section 2.10), the “LIBO Rate” shall be the LIBO Rate for the immediately 

preceding Interest Period, two (2) Business Days prior to the commencement of such Interest Period and 

(b) 0%. 

“Lien” means any mortgage, pledge, hypothecation, collateral assignment, deposit 

arrangement, encumbrance, lien (statutory or other), charge, any option or other agreement to sell or give a 

security interest in an asset, or preference, priority, or other security interest or preferential arrangement of 

any kind or nature whatsoever (including any conditional sale or other title retention agreement, any 

easement, right of way or other encumbrance on title to real property, and any financing lease having 

substantially the same economic effect as any of the foregoing). 

“Liquidity” means the sum of (i) all unrestricted cash and Cash Equivalents of Parent and 

its Subsidiaries, (ii) cash or Cash Equivalents of the Parent and its Subsidiaries restricted in favor of the 

Obligations or in connection with the Payroll Support Program Agreement (other than any amounts held in 

the Blocked Account, Payment Account and Collateral Proceeds Account), (iii) the aggregate principal 

amount committed and available to be drawn by the Parent and its Subsidiaries (taking into account all 

borrowing base limitations or other restrictions) under all revolving credit facilities of the Parent and its 

Subsidiaries, (iv) any remaining aggregate principal amount committed and available to be drawn (taking 

into account any applicable restrictions) by the Parent and its Subsidiaries in respect of the Loans and (v) 

the scheduled net proceeds (after giving effect to any expected repayment of existing Indebtedness using 

such proceeds) of any Capital Markets Offering of the Parent or any of its Subsidiaries that has priced but 

has not yet closed (until the earliest of the closing thereof, the termination thereof without closing or the 

date that falls five (5) Business Days after the initial scheduled closing date thereof). 

“Loan” means a loan made by a Lender to the Borrower pursuant to this Agreement. 

“Loan Application Form” means the application form and any related materials submitted 

by the Borrower to the Initial Lender in connection with an application for the Loans under Division A, 

Title IV, Subtitle A of the CARES Act. 

“Loan Documents” means, collectively, this Agreement, any Security Document, any 

promissory notes issued pursuant to Section 2.11(b) and any other documents entered into in connection 

herewith (including an Administrative Agency Fee Letter, if any). 

“Loyalty Program” means (a) any frequent flyer program, co-branded card program or any 

other program (whether now existing or established, arising or acquired in the future) that grants members 

in such program or co-branded cardholders Currency based on such member’s or co-branded cardholder’s 

purchasing or other behavior and that entitles a member or co-branded cardholder to accrue, redeem or 

otherwise exploit such Currency for a benefit or reward, including flights, priority access, lounge or “club” 

access, discounts, upgrades (including in seat or class) or other goods or services or (b) any Loyalty 

Subscription Program. 

 “Loyalty Program Agreement” means each contract, agreement, transaction or other 

undertaking described on Schedule 1.01(b) and any other current or future contract, agreement, transaction 

or other undertaking between any Credit Party (or any of its Affiliates, as applicable) and a Loyalty Program 

Participant entered into connection with any Carrier Loyalty Program, including any card marketing 

agreement with respect to credit cards co-branded by a Credit Party and a Loyalty Program Participant and 

any card network agreement, and any amendment, supplement or modification thereto, but excluding all 

reciprocal passenger Currency accrual and redemption agreements with other Air Carriers. 

“Loyalty Program Assets” has the meaning assigned to such term in the Pledge and 

Security Agreements. 
22 

 

“Loyalty Program Data” means all data (whether or not constituting Personal Data) 

Processed in connection with, or generated or produced in the course of the operation of, any Carrier 

Loyalty Program, but, with respect to Personal Data, solely to the extent Processed, generated or produced 

regarding Loyalty Program Members as Loyalty Program Members, including all such data consisting of 

(a) a list of all Loyalty Program Members and (b)data concerning each Loyalty Program Member as a 

member of any of the Carrier Loyalty Programs, including such Loyalty Program Member’s (i) name, 

mailing address, email address, date of birth, gender and phone number and other identifiers, (ii) 

communication and promotion opt-ins and opt-outs, (iii) financial information and transaction histories, 

(iv) total miles and awards, (v) third-party engagement history and customer experience, (vi) accrual and 

redemption activity, (vii) member tier and status designations and member tier and status activity and 

qualifications, (viii) internet or network activity (including information regarding interaction with a 

website), (ix) profile preferences, (x) login information, (xi) Loyalty Program Member spend activity, (xii) 

geolocation data and (xiii) any inferences drawn or enrichments created from any of the foregoing. Loyalty 

Program Data also includes any Proceeds relating to any of the foregoing (other than any such Proceeds to 

the extent arising from a Credit Party’s non-Loyalty Program operations). For the avoidance of doubt, the 

definition of “Loyalty Program Data” does not impose an obligation on any Credit Party to collect any data 

inconsistent with its past or current practices. 

“Loyalty Program Intellectual Property” has the meaning assigned to such term in the 

Pledge and Security Agreements. 

“Loyalty Program Member” means, as of any date, any individual who is an applicant or 

member of any Carrier Loyalty Program (or a legal guardian of such applicant or member). 

“Loyalty Program Participant” means (a) a financial institution or other Person that is a 

party to any card agreement with a Credit Party or (b) any other Person (i) to which a Credit Party or any 

of its Affiliates sells, leases or otherwise transfers Currency in connection with any Carrier Loyalty 

Program, including partner airline, co-branded card, hotel and car rental partners, (ii) that provides goods, 

services or other consideration to Loyalty Program Members in exchange for, or redemption of, Currency 

or (iii) that, in connection with the provision of goods, services or other consideration by such Person to 

Loyalty Program Members or the use of the services of such Person by Loyalty Program Members, such 

Person offers Currency to such Loyalty Program Members or provides any Credit Party (or any Affiliate 

thereof) with sufficient information so that such Credit Party (or any Affiliate thereof) may post Currency 

to such Loyalty Program Members’ accounts. 

“Loyalty Program Revenue” means all payments received by, or otherwise required to be 

paid to, the Credit Parties (and their Affiliates), and all other amounts the Credit Parties are entitled to, 

under the Loyalty Program Agreements and any Loyalty Subscription Program. 

“Loyalty Revenue Advance Transaction” means (i) any Pre-paid Currency Purchase or (ii) 

any other transaction between any Credit Party and a counterparty to a Loyalty Program Agreement 

providing for the advance of cash that is expected to be paid from or set off against future payments 

otherwise required to be made by the counterparty to such Credit Party. 

“Loyalty Subscription Program” means any program (whether now existing or established, 

arising or acquired in the future) that grants members in such program access to discounted goods or 

services in exchange for a periodic cash payment. The Loyalty Subscription Programs in existence as of 

the Closing Date are listed on Schedule 1.01(c) of this Agreement. 

“Margin Stock” means margin stock within the meaning of Regulations T, U and X. 

“Material Adverse Effect” means (a) a material adverse change in, or a material adverse 

effect on, the operations, business, properties, liabilities (actual or contingent), condition (financial or 
23 

 

otherwise) or prospects of the Parent and its Subsidiaries taken as a whole; or (b) a material adverse effect 

on (i) the ability of the Borrower or any Credit Party to perform its Obligations, (ii) the legality, validity, 

binding effect or enforceability against the Borrower or any Credit Party of any Loan Document to which 

it is a party or the validity, perfection and first priority of the Liens on the Collateral in favor of the Collateral 

Agent taken as a whole or with respect to a substantial portion of the Collateral, (iii) the rights, remedies 

and benefits available to, or conferred upon, the Lenders or the Agents under any Loan Documents, (iv) the 

ability of the Borrower or any Credit Party to perform its obligations under any Material Loyalty Program 

Agreement, (v) the legality, validity, binding effect or enforceability against the Borrower or any Credit 

Party of any Material Loyalty Program Agreement or (c) the business and operations of any Carrier Loyalty 

Program, in each case, taken as a whole; provided that the impacts of the COVID-19 disease outbreak will 

be disregarded for purposes of clauses (a)and (b)(vi) of this definition to the extent (i) publicly disclosed in 

any SEC filing of the Parent or otherwise provided to the Initial Lender prior to the Closing Date and (ii) 

the scope of such adverse effect is no greater than that which has been disclosed as of the Closing Date. 

“Material Indebtedness” means Indebtedness of the Parent or any of its Subsidiaries (other 

than the Loans) outstanding under the same agreement in a principal amount exceeding $50,000,000. 

“Material Loyalty Program Agreements” means (a) each Loyalty Program Agreement 

identified as a Material Loyalty Program Agreement as set forth on Schedule 1.01(b), as updated from time 

to time pursuant to the terms of the Pledge and Security Agreements and (b) any other Loyalty Program 

Agreements between a Credit Party and a Loyalty Program Participant such that, at all times, the Credit 

Parties have identified to Lender Loyalty Program Agreements then in full force and effect and generating 

not less than 90% of aggregate Loyalty Program Revenue (excluding revenues generated under any Loyalty 

Subscription Program). 

“Material Modification” means any amendment or waiver of, or modification or 

supplement to, any term or condition of a Loyalty Program Agreement agreed to, executed or effected on 

or after the Closing Date, which: 

(a) extends, waives, delays or contractually or structurally subordinates one or more 

payments due to any Credit Party with respect to such Loyalty Program Agreement; 

(b) reduces the rate or amount of payments due to any Credit Party with respect to 

such Loyalty Program Agreement or reduces the frequency or timing of payments due to any Credit Party; 

(c) gives any Person other than Credit Parties party to such Loyalty Program 

Agreement additional or improved termination rights with respect to such Loyalty Program Agreement; 

(d) shortens the term of such Loyalty Program Agreement (other than in connection 

with the replacement of such Loyalty Program Agreement with another Loyalty Program Agreement on 

terms at least as favorable to the Lenders, as determined by the Appropriate Party in its reasonable discretion 

(or in the case of the Initial Lender, its sole discretion)) or expands or improves any counterparty’s rights 

or remedies following a termination; 

(e) limits, or requires or results in the limitation of (x) the right or ability of any Credit 

Party, any of its Affiliates, any of its or their successors or assigns or the Collateral Agent to, or to authorized 

others to, use, exploit, share or transfer the Loyalty Program Intellectual Property or the IP Licenses 

included in the Collateral (other than third-party Intellectual Property that ceases to be required or useful 

for the conduct of any Carrier Loyalty Program as currently conducted and as currently contemplated to be 

conducted) or (y) the right or ability of any Credit Party, any of its Affiliates, any of its or their successors 

or assigns or the Collateral Agent to, or to authorized others to, Process any Loyalty Program Data, 

including such amendment, waiver, modification or supplement that removes or narrows, or requires or 

results in the removal or narrowing of any disclosure to individuals existing as of the date hereof regarding 
24 

 

the potential future transfer, sharing or disclosure of Loyalty Program Data, in each case other than pursuant 

to a change required under applicable Law; or 

(f) imposes new financial obligations on any Credit Party under such Loyalty Program 

Agreement, in each case, to the extent such amendment, waiver, modification or supplement would 

reasonably be expected to (1) be materially adverse to the Lenders or any Secured Party (as defined in the 

Pledge and Security Agreements) or (2) result in a Material Adverse Effect; provided that any amendment 

to a Loyalty Program Agreement that (i) shortens the scheduled maturity or term thereof (other than changes 

that are permitted under (d) above), (ii) amends, modifies or otherwise changes the calculation or rate of 

fees, expenses, guarantee payments or termination payments due and owing thereunder, including changes 

to interchange rates, in each case as defined in the applicable Loyalty Program Agreement and any other 

term related to the calculation of fees related to the purchase of the applicable Currency, and in a manner 

materially reducing the amount owed to the Credit Parties, (iii) changes the contractual subordination of 

payments thereunder in a manner materially adverse to the Lenders, reduces the frequency of payments 

thereunder or permits payments due to the applicable Credit Parties to be deposited to an account other than 

the Collection Account, (iv) changes the amendment standards applicable to such Loyalty Program 

Agreement in a manner that would reasonably be expected to result in a Material Adverse Effect, (v) 

materially impairs the rights of the Collateral Agent or the Initial Lender to enforce or consent to 

amendments to any provisions of a Loyalty Program Agreement in accordance therewith, or (vi) constitutes 

an action set forth in clause (e) shall be deemed to result in a Material Adverse Effect and shall be considered 

a Material Modification. 

“Material Subsidiary” means any Subsidiary that is not an Immaterial Subsidiary. 

“Maturity Date” means the date that is five (5) years after the Closing Date (except that, if 

such date is not a Business Day, the Maturity Date shall be the preceding Business Day). 

“Maximum Rate” has the meaning specified in Section 11.14. 

“Moody’s” means Moody’s Investors Service, Inc. and any successor to its rating agency 

business. 

“Multiemployer Plan” means any employee benefit plan of the type described in 

Section 4001(a)(3) of ERISA, to which any Credit Party or any ERISA Affiliate makes or is obligated to 

make contributions, during the preceding five (5) plan years has made or been obligated to make 

contributions, or has any liability. 

“Multiple Employer Plan” means a Plan with respect to which any Credit Party or any 

ERISA Affiliate is a contributing sponsor, and that has two (2) or more contributing sponsors at least two 

(2) of whom are not under common control, as such a plan is described in Section 4064 of ERISA. 

“Net Proceeds” means in connection with any Disposition, Recovery Event or Contingent 

Payment Event, the aggregate cash and Cash Equivalents received by the Parent or any of its Subsidiaries 

in respect of a Disposition of Collateral (including, without limitation, any cash or Cash Equivalents 

received in respect of or upon the Disposition of any non-cash consideration received in any such 

Disposition of Collateral) or Recovery Event or Contingent Payment Event, net of the direct costs and 

expenses relating to such Disposition and incurred by the Parent or a Subsidiary (including the sale or 

disposition of such non-cash consideration) or any such Recovery Event or Contingent Payment Event, 

including, without limitation, legal, accounting and investment banking fees, and sales commissions, and 

any relocation expenses incurred as a result of the Disposition, Recovery Event or Contingent Payment 

Event, taxes paid or reasonably estimated to be payable as a result of the Disposition, Recovery Event or 
25 

 

Contingent Payment Event, in each case, after taking into account any available tax credits or deductions 

and any tax sharing arrangements. 

“Non-Consenting Lender” means any Lender that does not approve any consent, waiver or 

amendment that (a) requires the approval of all or all affected Lenders in accordance with the terms of 

Section 11.02 and (b) has been approved by the Required Lenders. 

“Non-Loyalty Collateral Coverage Ratio” means, as of any date of determination, the ratio 

of (i) the Appraised Value of the Eligible Collateral as of the date of the Appraisal most recently delivered 

pursuant to Section 5.16 (or in the case of cash and Cash Equivalents, as of such date of determination) to 

(ii) the aggregate principal amount of all Loans and Commitments outstanding as of such date; provided 

that for the purposes of calculating clause (i) above, (x) no more than 25% of the Appraised Value of the 

Eligible Collateral may correspond to ground support equipment, (y) Loyalty Program Assets shall not be 

included and (z) any amounts held in the Blocked Account, Payment Account and Collateral Proceeds 

Account shall likewise not be included. 

“Note” means the promissory note executed by the Borrower pursuant to Section 2.11(b). 

“Obligations” means all advances to, and debts, liabilities, obligations, covenants and 

duties of, each Credit Party arising under any Loan Document or otherwise with respect to any Loan, 

whether direct or indirect (including those acquired by assumption), absolute or contingent, due or required 

to be performed, or to become due or to be performed, now existing or hereafter arising and including 

interest and fees that accrue after the commencement by or against any Credit Party or any Affiliate thereof 

of any proceeding under any Debtor Relief Laws naming such Person as the debtor in such proceeding, 

regardless of whether such interest and fees are allowed claims in such proceeding. Without limiting the 

foregoing, the Obligations include (a) the obligation to pay principal, interest, charges, expenses, fees, 

indemnities and other amounts payable by the Borrower or any other Credit Party under any Loan 

Document, (b) the obligation of any Credit Party to reimburse any amount in respect of any of the foregoing 

that the Lenders, in each case in their sole discretion, may elect to pay or advance on behalf of any Credit 

Party and (c) the obligation of any Credit Party or any of its Subsidiaries to take any action or refrain from 

taking any action as required by the covenants and other provisions contained in this Agreement and any 

other Loan Document. 

“Obligee Guarantor” has the meaning specified in Section 9.06. 

“Organizational Documents” means (a) as to any corporation, the charter or certificate or 

articles of incorporation and the bylaws (or equivalent or comparable constitutive documents with respect 

to any non-U.S. jurisdiction), (b) as to any limited liability company, the certificate or articles of formation 

or organization and operating or limited liability agreement and (c) as to any partnership, joint venture, trust 

or other form of business entity, the partnership, joint venture or other applicable agreement of formation 

or organization and any agreement, instrument, filing or notice with respect thereto filed in connection with 

its formation or organization with the applicable Governmental Authority in the jurisdiction of its formation 

or organization and, if applicable, any certificate or articles of formation or organization of such entity. 

“Other Connection Taxes” means, with respect to any Recipient, Taxes imposed as a result 

of a present or former connection between such Recipient and the jurisdiction imposing such Tax (other 

than connections arising from such Recipient having executed, delivered, become a party to, performed its 

obligations under, received payments under, received or perfected a security interest under, engaged in any 

other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in the Loans 

or Loan Document). 

“Other Taxes” means all present or future stamp, court or documentary, intangible, 

recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, 
26 

 

performance, enforcement or registration of, from the receipt or perfection of a security interest under, or 

otherwise with respect to, any Loan Document, except any such Taxes that are Other Connection Taxes 

imposed with respect to an assignment (other than an assignment made pursuant to Section 2.19(b)). 

“Outstanding Amount” means, with respect to Loans on any date, the aggregate 

outstanding principal amount thereof after giving effect to any borrowings and prepayments or repayments 

of Loans occurring on such date. 

“Parent” has the meaning specified in introductory paragraph hereof. 

“Participant” has the meaning specified in Section 11.04(d). 

“Participant Register” has the meaning specified in Section 11.04(d). 

“Payment Account” has the meaning specified in Section 5.20. 

“Payment Event” means (a), the Debt Service Coverage Ratio with respect to any DSCR 

Determination Date is less than or equal to 1.50 to 1.00 (including if the Debt Service Coverage Ratio is 

less than or equal to 1.25 to 1.00), or (b) an Event of Default or Term Trigger Event has occurred. A 

Payment Event shall be deemed continuing until (i) with respect to clause (a), the Debt Service Coverage 

Ratio is greater than 1.50 to 1.00 on a DSCR Determination Date or (ii) such Event of Default or Term 

Trigger Event shall no longer be continuing. 

“Payroll Support Program Agreement” means that certain Payroll Support Program 

Agreement dated as of April 23, 2020, between the Borrower and Treasury. 

“PBGC” means the Pension Benefit Guaranty Corporation. 

“Pension Act” means the Pension Protection Act of 2006. 

“Pension Funding Rules” means the rules of the Code and ERISA (as modified by the 

CARES Act) regarding minimum funding standards and minimum required contributions (including any 

installment payment thereof) to Pension Plans and Multiemployer Plans and set forth in, with respect to 

plan years ending prior to the effective date of the Pension Act, Section 412 of the Code and Section 302 

of ERISA, each as in effect prior to the Pension Act and, thereafter, Sections 412, 430, 431, 432 and 436 

of the Code and Sections 302, 303, 304 and 305 of ERISA. 

“Pension Plan” means any employee pension benefit plan (including a Multiple Employer 

Plan, but excluding a Multiemployer Plan) that is maintained or is contributed to by any Credit Party or any 

ERISA Affiliate and is either covered by Title IV of ERISA or is subject to the minimum funding standards 

under Section 412 of the Code. 

“Perfection Requirement” has the meaning specified in the Pledge and Security 

Agreements. 

“Permitted Bond Hedge Transaction” means any call or capped call option (or 

substantively equivalent derivative transaction) on the Parent’s common Equity Interests purchased by the 

Parent in connection with the issuance of any Convertible Indebtedness; provided that the purchase price 

for such Permitted Bond Hedge Transaction does not exceed the net proceeds received by the Parent from 

the sale of such Convertible Indebtedness issued in connection with the Permitted Bond Hedge Transaction. 
27 

 

“Permitted Business” means any business that is the same as, or reasonably related, 

ancillary, supportive or complementary to, the business in which the Parent and its Subsidiaries are engaged 

on the date of this Agreement. 

“Permitted Liens” means: 

(1) Liens created for the benefit of (or to secure the payment and performance of) the 

Obligations or any Guaranteed Obligations; 

(2) Liens for taxes, assessments or governmental charges or claims that are not yet delinquent 

or that are being contested in good faith by appropriate proceedings promptly instituted and diligently 

concluded; provided that any reserve or other appropriate provision as is required in conformity with GAAP 

has been made therefor; 

(3) Liens imposed by law, including carriers’, vendors’, materialmen’s, warehousemen’s, 

landlord’s, mechanics’ repairmen’s, employees’ or other like Liens, in each case, incurred in the ordinary 

course of business; 

(4) Liens arising by operation of law in connection with judgments, attachments or awards 

which do not constitute an Event of Default hereunder; 

(5) (A) any overdrafts and related liabilities arising from treasury, netting, depository and cash 

management services or in connection with any automated clearing house transfers of funds, in each case 

as it relates to cash or Cash Equivalents, if any, and (B) Liens arising by operation of law or that are 

contractual rights of set-off in favor of the depository bank or securities intermediary in respect of any 

deposit or securities accounts pledged in favor of the Collateral Agent; provided that, such Liens shall be 

subordinated to the Liens securing the Obligations (other than the Liens relating to amounts owed in 

connection with the maintenance of such account); 

(6) [reserved]; 

(7) [reserved]; 

(8) to the extent applicable, salvage or similar rights of insurers, in each case as it relates to 

Collateral; 

(9) any licenses or sublicenses (x) granted on a non-exclusive basis to customers or service 

providers in the ordinary course of business or to business partners in the ordinary course of business in a 

manner and subject to terms consistent with past practice or (y) granted pursuant to any Loyalty Program 

Agreement in full force and effect as of the Closing Date, any successor agreement thereto or any new 

Loyalty Program Agreement, in each case that is included in the Collateral (provided that any such grant 

pursuant to such new or successor agreement is made in the ordinary course of business in a manner and 

subject to terms substantially similar with those of the predecessor Loyalty Program Agreement or with any 

Loyalty Program Agreement in full force and effect as of the Closing Date, as the case may be); 

(10) to the extent constituting Liens on Collateral, Dispositions permitted pursuant to 

Section 6.04(b), (d)(2), (e), (f) or (h); and 

(11) Liens expressly permitted by the Pledge and Security Agreements. 

 “Permitted Refinancing” means with respect to any Person, any refinancings, renewals, or 

extensions of any Indebtedness of such Person so long as: (a) such refinancings, renewals, or extensions do 

not result in an increase in the principal amount of the Indebtedness so refinanced, renewed, or extended, 
28 

 

other than by the amount of premiums paid thereon and the fees and expenses incurred in connection 

therewith and by the amount of unfunded commitments with respect thereto; (b) such refinancings, 

renewals, or extensions do not result in a shortening of the average weighted maturity (measured as of the 

refinancing, renewal, or extension) of the Indebtedness so refinanced, renewed, or extended, nor are they 

on terms or conditions that, taken as a whole, are or could reasonably be expected to be materially adverse 

to the interests of the Lenders; (c) if the Indebtedness that is refinanced, renewed, or extended was 

subordinated in right of payment to the Obligations, then the terms and conditions of the refinancing, 

renewal, or extension must include subordination terms and conditions that are at least as favorable to the 

Lenders as those that were applicable to the refinanced, renewed, or extended Indebtedness; (d) the 

Indebtedness that is refinanced, renewed, or extended is not recourse to any Person that is liable on account 

of the Obligations other than those Persons which were obligated with respect to the Indebtedness that was 

refinanced, renewed, or extended and (e) to the extent the Indebtedness that is refinanced, renewed, or 

extended is unsecured, the Indebtedness resulting from such refinancing, renewal or extension must be 

unsecured. 

“Person” means any natural person, corporation, limited liability company, trust, joint 

venture, association, company, partnership, Governmental Authority or other entity. 

“Personal Data” means any information or data that identifies, relates to, describes, is 

reasonably capable of being associated with, or could reasonably be linked, directly or indirectly, with a 

particular consumer or household, or any other data or information that constitutes personal data, personally 

identifiable information, personal information or a similar defined term under any Privacy Law or any 

policy of a Credit Party or any of its Affiliates relating to privacy or the Loyalty Program Data. 

“Plan” means any employee benefit plan within the meaning of Section 3(3) of ERISA, 

maintained for employees of the Parent or any Subsidiary, or any such plan to which the Parent or any 

Subsidiary is required to contribute on behalf of any of its employees or with respect to which any Credit 

Party has any liability. 

“Platform” means Debt Domain, Intralinks, Syndtrak, DebtX or a substantially similar 

electronic transmission system. 

“Pledge and Security Agreements” means (a) that certain Alaska Airlines Loyalty Program 

Pledge and Security Agreement, dated as of September 28, 2020 (as amended, restated, amended and 

restated, supplemented, or otherwise modified from time to time), between the Borrower, as a Grantor (as 

defined therein) and the Collateral Agent; (b) that certain Alaska Airlines Aircraft and Engine Security 

Agreement, dated as of September 28, 2020 (as amended, restated, amended and restated, supplemented, 

or otherwise modified from time to time), between the Borrower, as a Grantor (as defined therein) and the 

Collateral Agent; and (c) that certain Amended and Restated Horizon Aircraft, Engine and Propeller Pledge 

and Security Agreement, dated as of October 30, 2020 (as amended, restated, amended and restated, 

supplemented, or otherwise modified from time to time), between Horizon Air Industries, Inc., as a Grantor 

(as defined therein) and the Collateral Agent. For the avoidance of doubt, the terms of the “Pledge and 

Security Agreements” shall include the terms of all Applicable Annexes (as defined in each Pledge and 

Security Agreement). 

“Pre-paid Currency Purchases” means the sale, lease or other transfer by any Credit Party 

or any Subsidiary of a Credit Party of pre-paid Currency to a counterparty of a Loyalty Program Agreement. 

“Prepayment Notice” means a notice by the Borrower to prepay Loans, which shall be in 

such form as the Appropriate Party may approve. 

“Prime Rate” means the rate of interest per annum last quoted by The Wall Street Journal 

as the “Prime Rate” in the U.S. or, if The Wall Street Journal ceases to quote such rate, the highest per 
29 

 

annum interest rate published by the Federal Reserve Board in Federal Reserve Statistical Release H.15 

(519) (Selected Interest Rates) as the “bank prime loan” rate or, if such rate is no longer quoted therein, any 

similar rate quoted therein (as determined by the Required Lenders) or any similar release by the Federal 

Reserve Board (as determined by the Required Lenders). Any change in the Prime Rate shall take effect at 

the opening of business on the day such change is publicly announced or quoted as being effective. 

“Privacy Law” means all Applicable Laws worldwide relating to the Processing, privacy 

or security of Personal Data and all regulations issued thereunder, including, to the extent applicable, the 

EU General Data Protection Regulation (EU) 2016/679 (and all Laws implementing it), Section 5 of the 

Federal Trade Commission Act, the California Consumer Privacy Act, the Children’s Online Privacy 

Protection Act, Title V, Subtitle A of the Gramm-Leach-Bliley Act, 15 U.S.C. 6801 et seq. (and the rules 

and regulations promulgated thereunder), state data breach notification Laws, state data security Laws, and 

any Law concerning requirements for website and mobile application privacy policies and practices, or any 

outbound communications (including e-mail marketing, telemarketing and text messaging), tracking and 

marketing. 

“Proceeds” means “proceeds,” as defined in Article 9 of the UCC. 

“Processed”, “Processing” or “Process”, with respect to data (including Loyalty Program 

Data), means collected, accessed, recorded, acquired, stored, organized, altered, adapted, retrieved, 

disclosed, used, disposed, erased, disclosed, destructed, transferred or otherwise processed; in each case, 

whether or not by automated means. 

“PSP Warrant Agreement” means that certain warrant agreement, dated as of April 23, 

2020 between Parent and Treasury. 

“Public Lender” has the meaning specified in Section 11.01(e). 

“Receivables Subsidiary” means (x) a Wholly-Owned Subsidiary of the Parent formed for 

the purpose of and which engages in no activities other than in connection with the financing or 

securitization of accounts receivables (a) no portion of the Indebtedness or any other obligations (contingent 

or otherwise) of which (1) is guaranteed by the Parent by any Subsidiary of the Parent, and excluding any 

guarantees of obligations (other than the principal of, and interest on, Indebtedness) pursuant to Standard 

Securitization Undertakings, (2) is recourse to or obligates the Parent or any Subsidiary of the Parent in any 

way other than pursuant to Standard Securitization Undertakings or (3) subjects any property or asset of the 

Parent or any Subsidiary of the Parent (other than accounts receivable and related assets) or any property 

or asset of the type that is intended to be include in the Collateral, directly or indirectly, contingently or 

otherwise, to the satisfaction thereof, other than pursuant to Standard Securitization Undertakings, (b) with 

which neither the Parent nor any Subsidiary of the Parent (other than another Receivables Subsidiary) has 

any material contract, agreement, arrangement or understanding (other than pursuant to the related 

financing of accounts receivable) other than on terms no less favorable to the Parent or such Subsidiary 

than those that might be obtained at the time from Persons who are not Affiliates of the Parent and (c) with 

which neither the Parent nor any Subsidiary of the Parent has any obligation to maintain or preserve such 

Subsidiary’s financial condition, other than a minimum capitalization in customary amounts, or to cause 

such Subsidiary to achieve certain levels of operating results or (y) any Subsidiary of a Receivables 

Subsidiary. For the avoidance of doubt, the Parent and any Subsidiary of the Parent may enter into Standard 

Securitization Undertakings for the benefit of a Receivables Subsidiary. 

“Recipient” means (a) the Administrative Agent, (b) the Collateral Agent or (c) any 

Lender, as applicable. 
30 

 

“Recovery Event” means any settlement of or payment in respect of any property or 

casualty insurance claim or any condemnation proceeding relating to any Collateral or any Event of Loss 

(as defined in the Pledge and Security Agreements). 

“Reference Time” with respect to any setting of the then-current Benchmark means (1) if 

such Benchmark is USD LIBO Rate, 11:00 a.m. (London time) on the day that is two London banking days 

preceding the date of such setting, and (2) if such Benchmark is not USD LIBO Rate, the time determined 

by the Required Lenders in their reasonable discretion, provided that such time is determined to be 

administratively feasible by the Administrative Agent. 

 “Register” has the meaning specified in Section 11.04(c). 

“Regulation D” means Regulation D of the Federal Reserve Board, as in effect from time 

to time and all official rulings and interpretations thereunder or thereof. 

“Regulation T” means Regulation T of the Federal Reserve Board, as in effect from time 

to time and all official rulings and interpretations thereunder or thereof. 

“Regulation U” means Regulation U of the Federal Reserve Board, as in effect from time 

to time and all official rulings and interpretations thereunder or thereof. 

“Regulation X” means Regulation X of the Federal Reserve Board, as in effect from time 

to time and all official rulings and interpretations thereunder or thereof. 

“Related Parties” means, with respect to any Person, such Person’s Affiliates and the 

partners, directors, officers, employees, agents, trustees, administrators, managers, advisors and 

representatives of such Person and of such Person’s Affiliates. 

“Relevant Governmental Body” means the Federal Reserve Board or the Federal Reserve 

Bank of New York, or a committee officially endorsed or convened by the Federal Reserve Board or the 

Federal Reserve Bank of New York, or any successor thereto. 

“Reportable Event” means any of the events set forth in Section 4043(c) of ERISA, other 

than events for which the thirty (30)-day notice period has been waived. 

“Required Filings” shall have the meaning specified in the Pledge and Security 

Agreements. 

“Required Lenders” means, at any time, Lenders having Loans representing more than 50% 

of the aggregate Outstanding Amount of Loans of all Lenders at such time. 

“Resolution Authority” means an EEA Resolution Authority or, with respect to any UK 

Financial Institution, a UK Resolution Authority. 

“Responsible Officer” means (a) the chief executive officer, president, executive vice 

president or a Financial Officer of the Borrower or such Credit Party, as applicable, (b) solely for purposes 

of the delivery of incumbency certificates and certified Organizational Documents and resolutions pursuant 

to Section 4.01, any vice president, secretary or assistant secretary of the Borrower or such Credit Party and 

(c) solely for purposes of Borrowing Requests, prepayment notices and notices for Commitment 

terminations or reductions given pursuant to Article II, any other officer or employee of the Borrower so 

designated from time to time by one of the officers described in clause (a) in a notice to the Administrative 

Agent (together with evidence of the authority and capacity of each such Person to so act in form and 

substance satisfactory to the Administrative Agent). Any document delivered hereunder that is signed by 
31 

 

a Responsible Officer of the a Credit Party shall be conclusively presumed to have been authorized by all 

necessary corporate, partnership or other action on the part of such Credit Party and such Responsible 

Officer shall be conclusively presumed to have acted on behalf of such Credit Party. 

“Restatement Agreement” means that certain Restatement Agreement, dated as of October 

30, 2020, to this Agreement, between the Borrower, the Parent, the Guarantors party thereto from time to 

time, Treasury, the Adminstrative Agent and the Collateral Agent. 

“Restricted Payment” means any dividend or other distribution (whether in cash, securities 

or other property) with respect to any Equity Interest of any Person, or any payment (whether in cash, 

securities or other property), including any sinking fund or similar deposit, on account of the purchase, 

redemption, retirement, acquisition, cancellation or termination of any such Equity Interest, or on account 

of any return of capital to such Person’s shareholders, partners or members (or the equivalent Persons 

thereof). 

“Route Authority” has the meaning assigned to such term in the Pledge and Security 

Agreements. 

“S&P” means S&P Global Ratings, and any successor to its rating agency business. 

“Sanctioned Country” has the meaning specified in Section 3.15(a). 

“Sanctioned Person” has the meaning specified in Section 3.15(a). 

“Sanctions” has the meaning specified in Section 3.15(a). 

“Screen Rate” has the meaning specified in the definition of the term “Interpolated Rate”. 

“SEC” means the Securities and Exchange Commission, or any Governmental Authority 

succeeding to any of its principal functions. 

“Secured Obligations” has the meaning assigned to such term in the Pledge and Security 

Agreements. 

“Secured Parties” has the meaning assigned to such term in the Pledge and Security 

Agreements. 

“Securities Act” means the Securities Act of 1933, as amended. 

“Security Document” means the Pledge and Security Agreements and any security or 

pledge agreement, mortgage, hypothecation or other agreement, instrument or document relating to 

collateral for the Loans (including any short form agreements, supplements, control agreements, collateral 

access agreements and registrations executed or made) that may exist at any time and from time to time, as 

amended from time to time. 

“Slot” has the meaning assigned to such term in the Pledge and Security Agreements. 

“SOFR” means, with respect to any Business Day, a rate per annum equal to the secured 

overnight financing rate for such Business Day published by the SOFR Administrator on the SOFR 

Administrator’s Website at approximately 8:00 a.m. (New York City time) on the immediately succeeding 

Business Day. 
32 

 

“SOFR Administrator” means the Federal Reserve Bank of New York (or a successor 

administrator of the secured overnight financing rate). 

“SOFR Administrator’s Website” means the website of the Federal Reserve Bank of New 

York, currently at http://www.newyorkfed.org, or any successor source for the secured overnight financing 

rate identified as such by the SOFR Administrator from time to time. 

“Solvent” means, as to any Person as of any date of determination, that on such date (a) the 

fair value of the property of such Person is greater than the total amount of liabilities, including contingent 

liabilities, of such Person, (b) the present fair saleable value of such Person is not less than the amount that 

will be required to pay the probable liability of such Person on its debts as they become absolute and 

matured, (c) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond 

such Person’s ability to pay such debts and liabilities as they mature and (d) such Person is not engaged in 

a business or a transaction, and is not about to engage in a business or a transaction, for which such Person’s 

property would constitute an unreasonably small capital. 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. For the 

avoidance of doubt, a Person shall not fail to be Solvent on any date solely as a result of such person’s audit 

having a “going concern” or like qualification, exception or explanatory paragraph or any qualification, 

exception or explanatory paragraph as to the scope of such audit solely due to the COVID-19 disease 

outbreak. 

“Spare Parts” has the meaning assigned to such term in the Pledge and Security 

Agreements. 

“Standard Securitization Undertakings” means all representations, warranties, covenants, 

indemnities, performance Guarantees and servicing obligations entered into by the Parent or any Subsidiary 

(other than a Receivables Subsidiary), which are customary in connection with any financing of accounts 

receivable. 

“Subsidiary” of a Person means a corporation, partnership, limited liability company, 

association or joint venture or other business entity of which a majority of the Equity Interests having 

ordinary voting power for the election of directors or other governing body (other than securities or interests 

having such power only by reason of the happening of a contingency) are at the time owned or the 

management of which is controlled, directly, or indirectly through one or more intermediaries, by such 

Person. Unless otherwise specified, all references herein to a “Subsidiary” or to “Subsidiaries” shall refer 

to a Subsidiary or Subsidiaries of the Parent. 

“Swap Contract” means (a) any and all rate swap transactions, basis swaps, credit 

derivative transactions, forward rate transactions, commodity swaps, commodity options, forward 

commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or 

options or forward bond or forward bond price or forward bond index transactions, interest rate options, 

forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency 

swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other 

similar transactions or any combination of any of the foregoing (including any options to enter into any of 

the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and 

(b) any and all transactions of any kind, and the related confirmations, that are subject to the terms and 

conditions of, or governed by, any form of master agreement published by the International Swaps and 

Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master 

agreement (any such master agreement, together with any related schedules, a “Master Agreement”), 

including any such obligations or liabilities under any Master Agreement. 
33 

 

“Swap Termination Value” means, as to any one or more Swap Contracts, after taking into 

account the effect of any legally enforceable netting agreement relating to such Swap Contracts, (a) for any 

date on or after the date such Swap Contracts have been closed out and termination value(s) determined in 

accordance therewith, such termination value(s), and (b) for any date prior to the date referenced in clause 

(a), the amount(s) determined as the mark-to-market value(s) for such Swap Contracts, as determined based 

upon one or more mid-market or other readily available quotations provided by any recognized dealer in 

such Swap Contracts (which may include a Lender or any Affiliate of a Lender). 

“Synthetic Lease Obligation” means the monetary obligation of a Person under (a) a socalled synthetic, off-balance sheet or tax retention lease or (b) an agreement for the use or possession of 

property creating obligations that do not appear on the balance sheet of such Person but, upon the insolvency 

or bankruptcy of such Person, would be characterized as the indebtedness of such Person (without regard 

to accounting treatment). 

“Taxes” means all present or future taxes, levies, imposts, duties, deductions, withholdings 

(including backup withholding), assessments, fees or other charges imposed by any Governmental 

Authority, including any interest, additions to tax or penalties applicable thereto. 

“Term SOFR” means, for the applicable Corresponding Tenor as of the applicable 

Reference Time, the forward-looking term rate based on SOFR that has been selected or recommended by 

the Relevant Governmental Body. 

“Term Trigger Event” has the meaning specified in Section 2.06(b). 

“Trade Date” means the date on which an assigning Lender enters into a binding agreement 

to sell and assign all or a portion of its rights and obligations under this Agreement to another Person. 

“Trade Secrets” has the meaning assigned to such term in the Pledge and Security 

Agreements. 

“Trademark” has the meaning assigned to such term in the Pledge and Security 

Agreements. 

“Treasury” has the meaning specified in the preamble to this Agreement. 

“UK Financial Institution” means any BRRD Undertaking (as such term is defined under 

the PRA Rulebook (as amended from time to time) promulgated by the United Kingdom Prudential 

Regulation Authority) or any Person falling within IFPRU 11.6 of the FCA Handbook (as amended from 

time to time) promulgated by the United Kingdom Financial Conduct Authority, which includes certain 

credit institutions and investment firms, and certain affiliates of such credit institutions or investment firms. 

“UK Resolution Authority” means the Bank of England or any other public administrative 

authority having responsibility for the resolution of any UK Financial Institution. 

“Unadjusted Benchmark Replacement” means the applicable Benchmark Replacement 

excluding the related Benchmark Replacement Adjustment. 

“Uniform Commercial Code” and “UCC” means the Uniform Commercial Code as in 

effect from time to time in the State of New York or, when the context implies, the Uniform Commercial 

Code as in effect from time to time in any other applicable jurisdiction. 

“United States” and “U.S.” mean the United States of America. 
34 

 

“USD LIBO Rate” means the LIBO Rate for U.S. dollars. 

“U.S. Person” means any Person that is a “United States Person” as defined in 

Section 7701(a)(30) of the Code. 

“U.S. Tax Compliance Certificate” has the meaning specified in Section 2.16(g). 

“Voting Stock” of any specified Person as of any date means the equity interests of such 

Person that is at the time entitled to vote in the election of the board of directors of such Person. 

“Warrant Agreement” means the warrant agreement, dated as of the date hereof between 

Parent and Treasury, pursuant to which Parent agrees to issue Warrants to Treasury upon each Borrowing. 

“Warrants” means, collectively, those certain warrants issued to Treasury under the 

Warrant Agreement or the PSP Warrant Agreement. 

“Wholly-Owned” means, as to a Subsidiary of a Person, a Subsidiary of such Person all of 

the outstanding Equity Interests of which (other than (a) director’s qualifying shares and (b) shares issued 

to foreign nationals to the extent required by Applicable Law) are owned by such Person and/or by one or 

more Wholly-Owned Subsidiaries of such Person. 

“Withholding Agent” means the Borrower and the Administrative Agent or other person 

making or transferring to any Lender any payment on behalf of the Borrower. 

“Write-Down and Conversion Powers” means, (a) with respect to any EEA Resolution 

Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time 

under the Bail-In Legislation for the applicable EEA Member Country, which powers are described in the 

EU Bail-In Legislation Schedule and (b) with respect to the United Kingdom, any powers of the applicable 

Resolution Authority under the Bail-In Legislation to cancel, reduce, modify or change the form of a 

liability of any UK Financial Institution or any contract or instrument under which that liability arises, to 

convert all or part of that liability into shares, securities or obligations of such Person or any other Person, 

to provide that any such contract or instrument is to have effect as if a right had been exercised under it or 

to suspend any obligation in respect of that liability or any of the powers under that Bail-In Legislation that 

are related to or ancillary to any of those power. 

SECTION 1.02 Terms Generally. The definitions of terms herein shall apply equally to the 

singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include 

the corresponding masculine, feminine and neuter forms. The words “include,” “includes” and “including” 

shall be deemed to be followed by the phrase “without limitation.” The word “will” shall be construed to 

have the same meaning and effect as the word “shall.” The word “or” is not exclusive. The word “year” 

shall refer (i) in the case of a leap year, to a year of three hundred sixty-six (366) days, and (ii) otherwise, to 

a year of three hundred sixty-five (365) days. Unless the context requires otherwise (a) any definition of or 

reference to any agreement, instrument or other document herein shall be construed as referring to such 

agreement, instrument or other document as from time to time amended, supplemented or otherwise modified 

(subject to any restrictions on such amendments, supplements or modifications set forth herein), (b) any 

reference herein to any Person shall be construed to include such Person’s successors and assigns, (c) the 

words “herein,” “hereof” and “hereunder,” and words of similar import, shall be construed to refer to this 

Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Articles, 

Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and 

Schedules to, this Agreement, (e) any reference to any law or regulation herein shall, unless otherwise 

specified, refer to such law or regulation as amended, modified or supplemented from time to time, and (f) the 

words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and 

all tangible and intangible assets and properties, including cash, securities, accounts and contract rights. 
35 

 

SECTION 1.03 Accounting Terms; Changes in GAAP. 

(a) Accounting Terms. Except as otherwise expressly provided herein, all accounting 

terms not otherwise defined herein shall be construed in conformity with GAAP. Financial statements and 

other information required to be delivered by the Parent to the Lenders pursuant to Sections 5.01(a) 

and 5.01(b) shall be prepared in accordance with GAAP as in effect at the time of such preparation. 

Notwithstanding the foregoing, for purposes of determining compliance with any covenant (including the 

computation of any financial covenant) contained herein, Indebtedness of the Parent and its Subsidiaries 

shall be deemed to be carried at 100% of the outstanding principal amount thereof, and the effects of FASB 

ASC 825 and FASB ASC 470-20 on financial liabilities shall be disregarded. 

(b) Changes in GAAP. If the Borrower notifies the Administrative Agent (who will 

forward such notification to the Lenders) that the Borrower requests an amendment to any provision hereof 

to eliminate the effect of any change occurring after the date hereof in GAAP or in the application thereof 

on the operation of such provision (or if the Administrative Agent notifies the Borrower that the Required 

Lenders request an amendment to any provision hereof for such purpose), regardless of whether any such 

notice is given before or after such change in GAAP or in the application thereof, then such provision shall 

be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have 

become effective until such notice shall have been withdrawn, the Required Lenders shall have notified the 

Borrower (with a copy to the Administrative Agent) of their objection to such amendment or such provision 

shall have been amended in accordance herewith. 

SECTION 1.04 Rates. The Administrative Agent does not warrant or accept responsibility 

for, and shall not have any liability with respect to, the administration, submission or any other matter related 

to the rates in the definition of “LIBO Rate” or with respect to any comparable or successor rate thereto. 

SECTION 1.05 Divisions. For all purposes under the Loan Documents, in connection with 

any division or plan of division under Delaware law (or any comparable event under a different jurisdiction’s 

laws): (a) if any asset, right, obligation or liability of any Person becomes the asset, right, obligation or 

liability of a different Person, then it shall be deemed to have been transferred from the original Person to the 

subsequent Person, and (b) if any new Person comes into existence, such new Person shall be deemed to have 

been organized on the first date of its existence by the holders of its Equity Interests at such time. 

ARTICLE II 

COMMITMENTS AND BORROWINGS 

SECTION 2.01 Commitments. Subject to the terms and conditions set forth herein, the 

Initial Lender agrees to make the Loans to the Borrower in one or more installments on or after the Closing 

Date in an aggregate principal amount not to exceed the Initial Lender’s Commitment. Amounts borrowed 

under this Section 2.01 and repaid or prepaid may not be reborrowed. 

SECTION 2.02 Loans and Borrowings. 

(a) Borrowings. The Borrower shall request the initial Borrowing of the Loans on the 

Closing Date and may request one or more subsequent Borrowings of the Loans; provided that the Borrower 

shall request no more than three (3) total Borrowings. 

(b) Minimum Amounts. Each Borrowing shall be in an aggregate amount of 

$135,000,000 or a larger multiple of $5,000,000; provided that, the final Borrowing may be in an amount 

equal to the aggregate remaining outstanding Commitment available to the Borrower under the terms and 

conditions of this Agreement. 
36 

 

(c) Funding of Borrowings. Each Lender shall make the amount of each Borrowing 

to be made by it hereunder available to the Administrative Agent by wire transfer of immediately available 

funds to the Administrative Account not later than 12:00 noon (New York City time) on the proposed date 

thereof. The Administrative Agent will make all such funds so received available to the Borrower in like 

funds, by wire transfer of such funds in accordance with the instructions provided in the applicable 

Borrowing Request; provided that if all such requested funds are not received by the Administrative Agent 

by 12:00 noon (New York City time) on the proposed date for such Borrowing, the Administrative Agent 

shall distribute such funds on the next succeeding Business Day. 

SECTION 2.03 Borrowing Requests. 

(a) Notice by Borrower. In order to request a Borrowing, the Borrower shall notify 

the Administrative Agent of such request in writing not later than 11:00 a.m. (New York City time) (i) with 

respect to the initial Borrowing under this Agreement, three (3) Business Days prior to the date of the 

requested Borrowing and (ii) for each subsequent Borrowing, five (5) Business Days before such 

Borrowing. Each such notice shall be irrevocable and shall be in the form of a written Borrowing Request, 

appropriately completed and signed by a Responsible Officer of the Borrower. The Administrative Agent 

shall promptly advise the applicable Lenders of any Borrowing Request given pursuant to this 

Section 2.03(a) (and the contents thereof), and of each Lender’s portion of the requested Borrowing. 

(b) Content of Borrowing Requests. Each Borrowing Request for a Borrowing 

pursuant to this Section shall specify the following information in compliance with Section 2.02: (i) the 

aggregate amount of the requested Borrowing; (ii) the date of such Borrowing (which shall be a Business 

Day); and (iii) the location and number of the Borrower’s account to which funds are to be disbursed. 

SECTION 2.04 [Reserved]. 

SECTION 2.05 [Reserved]. 

SECTION 2.06 Prepayments. 

(a) Optional Prepayments. The Borrower may, upon written notice to the 

Administrative Agent, at any time and from time to time prepay the Loans in whole or in part without 

premium or penalty, subject to the requirements of this Section. Partial prepayments of the Loans shall be 

in a minimum aggregate principal amount of $1,000,000 or a whole multiple of $100,000 in excess thereof. 

Notwithstanding anything herein to the contrary, the Borrower may at any time elect to prepay the loans 

with funds contained in the Collateral Proceeds Account. 

(b) Mandatory Prepayments. 

(i) Dispositions of Collateral. Within three (3) Business Days of the receipt 

by the Parent or any of its Subsidiaries of any Net Proceeds from a Disposition of Collateral not 

permitted by Section 6.04, the Borrower shall prepay the Loans in an amount equal to 100% of 

such Net Proceeds. 

(ii) Recovery Events. Within three (3) Business Days of the receipt by the 

Parent or any of its Subsidiaries of any Net Proceeds from a Recovery Event in respect of Collateral, 

the Borrower shall prepay the Loans in an amount equal to 100% of such Net Proceeds; provided 

that with respect to Collateral consisting of airframes, aircraft, engines and Spare Parts, the 

Borrower may deposit such Net Proceeds into the Collateral Proceeds Account for such purpose 

and thereafter such Net Proceeds shall be applied (to the extent not otherwise applied pursuant to 

the immediately succeeding proviso) to prepay the Loans; provided further that (I) the Borrower 

may use such Net Proceeds to (A) replace the assets which are the subject of such Recovery Event 
37 

 

with assets that are of the same type of Collateral or (B) repair the assets which are the subject of 

such Recovery Event, in each case, within 270 days after such deposit is made, (II) all such Net 

Proceeds amount may, at the option of the Borrower at any time, be applied to repay the Loans, 

and (III) upon the occurrence of an Event of Default, the amount of any such deposit may be applied 

by the Administrative Agent to repay the Loans. 

(iii) Certain Debt Issuances. Immediately upon receipt by the Parent or any of 

its Subsidiaries of any proceeds from the incurrence of any Indebtedness that is secured by Liens 

on the Collateral (other than Permitted Liens), the Borrower shall prepay the Loans in an amount 

equal to 100% of any such proceeds from any such Indebtedness. 

(iv) Contingent Payment Events. Within three (3) Business Days of the receipt 

by the Parent or any of its Subsidiaries of any Net Proceeds from a Contingent Payment Event 

under a Loyalty Program Agreement, which Net Proceeds, together with the aggregate amount of 

Net Proceeds previously received from Contingent Payment Events, are in excess of $5,000,000, 

the Borrower shall prepay the Loans in an amount equal to 100% of such Net Proceeds. 

(v) Loyalty Revenue Advance Transactions. Within three (3) Business Days 

of the receipt by the Parent or any of its Subsidiaries of any Net Proceeds from a Loyalty Revenue 

Advance Transaction, which Net Proceeds, together with the aggregate amount of Net Proceeds 

previously received from Loyalty Revenue Advance Transactions during the term of this 

Agreement, are in excess of an amount equal to the greater of (x) $10,000,000 and (y) 10% of the 

aggregate amount of Collateral Cash Flow received during the most recently ended DSCR Test 

Period that has been deposited into a Collateral Account, the Borrower shall prepay the Loans in 

an amount equal to 100% of such excess Net Proceeds. 

(vi) Payment Events. 

(A) The Loans shall be required to be repaid if the Debt Service 

Coverage Ratio with respect to any DSCR Determination Date is less than 1.50 to 1.00 or 

1.25 to 1.00, as the case may be, as set forth in Section 6.17(c). 

(B) After the occurrence and during the continuation of an Event of 

Default, the Loans shall be repaid in an amount equal to 100% of all Loyalty Program 

Revenue received thereafter, and the Parent and the Subsidiaries shall ACH or wire transfer 

daily such Loyalty Program Revenue to the Payment Account (from the Collection 

Account or otherwise) with all such amounts deposited into the Payment Account to be 

applied to the prepayment of any Loans then outstanding. 

(C) If at any time (x) any Material Loyalty Program Agreement has a 

remaining term of less than two (2) years (or, if the Lender ever provides Loans in a 

principal amount in excess of the Closing Date Commitment, thirty (30) calendar months) 

or (y) Loyalty Program Agreements representing 90% of Loyalty Program Revenues 

(excluding revenues generated under any Loyalty Subscription Program) in the aggregate 

over the immediately preceding twelve (12) calendar month period then ended have 

remaining terms of less than two (2) years (or, if the Lender ever provides Loans in a 

principal amount in excess of the Closing Date Commitment, thirty (30) calendar months) 

(a “Term Trigger Event”) and such Term Trigger Event is continuing, then the Loans shall 

be repaid in an amount equal to 100% of all Loyalty Program Revenue received thereafter, 

and the Parent and the Subsidiaries shall ACH or wire transfer daily such Loyalty Program 

Revenue to the Payment Account (from the Collection Account or otherwise) with all such 

amounts deposited into the Payment Account to be applied to the prepayment of any Loans 
38 

 

then outstanding; provided that this Section 2.06(b)(vi)(C) will not apply upon the 

satisfaction of the mandatory prepayment required by Section 2.06(b)(viii) below. 

(vii) Change of Control. Immediately upon the occurrence of a Change of 

Control, the Borrower shall prepay the Loans in an amount equal to 100% of the aggregate 

outstanding principal amount of Loans. 

(viii) Amortization Date. On the Amortization Date, the Borrower shall prepay 

the Loans in an aggregate principal amount (together with any accrued and unpaid interest thereon) 

such that the Non-Loyalty Collateral Coverage Ratio shall not be less than 2.00 to 1.00. 

(c) Notices. Each such notice pursuant to this Section shall be in the form of a written 

Prepayment Notice, appropriately completed and signed by a Responsible Officer of the Borrower, and 

must be received by the Administrative Agent not later than 11:00 a.m. (New York City time) three (3) 

Business Days before the date of prepayment (which delivery may initially be by electronic communication 

including fax or email and shall be followed by an original authentic counterpart thereof). Each Prepayment 

Notice shall specify (x) the prepayment date and (y) the principal amount of the Loans or portion thereof 

to be prepaid. Each Prepayment Notice shall be irrevocable. 

(d) Payments. Any prepayment of the Loans pursuant to this Section 2.06 shall be 

accompanied by accrued interest on the principal amount prepaid as set forth in Section 2.09(c). 

SECTION 2.07 Reduction and Termination of Commitments. The Initial Lender’s 

Commitment shall (x) automatically and permanently be reduced by the amount of any Borrowing of a Loan 

and (y) automatically and permanently terminate on March 26, 2021. The Borrower may, upon not less than 

three (3) Business Days’ notice to the Initial Lender and the Administrative Agent, terminate the Commitment 

or, from time to time, reduce the Commitment. Any such reduction in the Commitment shall be in an amount 

equal to $1,000,000 or a whole multiple thereof, and shall permanently reduce the Commitment. 

SECTION 2.08 Repayment of Loans. The Borrower shall repay to the Administrative Agent 

for the ratable account of the Lenders the aggregate principal amount of all Loans outstanding on the Maturity 

Date. 

SECTION 2.09 Interest. 

(a) Interest Rates. Subject to paragraph (b) of this Section, the Loans shall bear 

interest at a rate per annum equal to the Adjusted LIBO Rate plus the Applicable Rate. 

(b) Default Interest. If any amount payable by the Borrower under this Agreement or 

any other Loan Document (including principal of any Loan, interest, fees and other amount) is not paid 

when due, whether at stated maturity, by acceleration or otherwise, such amount shall thereafter bear 

interest at a rate per annum equal to the applicable Default Rate. Upon the request of the Required Lenders, 

while any Event of Default exists, the Borrower shall pay interest on the principal amount of all Loans 

outstanding hereunder at a rate per annum equal to the applicable Default Rate. 

(c) Payment Dates. Accrued interest on each Loan shall be payable in arrears on or 

before 12:00 noon (New York City time) on each Interest Payment Date applicable thereto and at such 

other times as may be specified herein; provided that (i) interest accrued pursuant to paragraph (b) of this 

Section shall be payable on demand and (ii) in the event of any repayment or prepayment of any Loan 

(including mandatory prepayments under Section 2.06(b)), accrued interest on the principal amount repaid 

or prepaid shall be payable on the date of such repayment or prepayment. 
39 

 

(d) Interest Computation. All interest hereunder shall be computed on the basis of a 

year of three hundred sixty (360) days and shall be payable for the actual number of days elapsed (including 

the first day but excluding the last day). The Adjusted LIBO Rate shall be determined by the Administrative 

Agent, and such determination shall be conclusive absent manifest error. 

SECTION 2.10 Benchmark Replacement Setting. 

(a) Benchmark Replacement. Notwithstanding anything to the contrary herein or in 

any other Loan Document, if a Benchmark Transition Event or an Early Opt-in Election, as applicable, and 

its related Benchmark Replacement Date have occurred prior to the Reference Time in respect of any setting 

of the then-current Benchmark, as notified by the Required Lenders to the Administrative Agent in writing, 

then (x) if a Benchmark Replacement is determined in accordance with clause (1) or (2) of the definition 

of “Benchmark Replacement” for such Benchmark Replacement Date, such Benchmark Replacement will 

replace such Benchmark for all purposes hereunder and under any Loan Document in respect of such 

Benchmark setting and subsequent Benchmark settings without any amendment to, or further action or 

consent of any other party to, this Agreement or any other Loan Document and (y) if a Benchmark 

Replacement is determined in accordance with clause (3) of the definition of “Benchmark Replacement” 

for such Benchmark Replacement Date, such Benchmark Replacement will replace such Benchmark for all 

purposes hereunder and under any Loan Document in respect of any Benchmark setting at or after 5:00 

p.m. (New York City time) on the fifth (5th) Business Day after the date notice of such Benchmark 

Replacement is provided to the Lenders and the Administrative Agent by the Required Lenders without any 

amendment to, or further action or consent of any other party to, this Agreement or any other Loan 

Document, so long as the Administrative Agent has not received, by such time, written notice of objection 

to such Benchmark Replacement from Lenders comprising the Required Lenders. 

(b) Benchmark Replacement Conforming Changes. In connection with the 

implementation of a Benchmark Replacement, the Administrative Agent (after consultation with the 

Required Lenders) will have the right to make Benchmark Replacement Conforming Changes from time to 

time and, notwithstanding anything to the contrary herein or in any other Loan Document, any amendments 

implementing such Benchmark Replacement Conforming Changes will become effective without any 

further action or consent of any other party to this Agreement or any other Loan Document. 

(c) Notices; Standards for Decisions and Determinations. The Initial Lender or the 

Required Lenders, as the case may be, will promptly notify the Administrative Agent, which will then 

promptly notify the Borrower and the Lenders of (i) any occurrence of a Benchmark Transition Event or an 

Early Opt-in Election, as applicable, and its related Benchmark Replacement Date, (ii) the implementation 

of any Benchmark Replacement, (iii) the removal or reinstatement of any tenor of a Benchmark pursuant 

to clause (d) below and (iv) the commencement or conclusion of any Benchmark Unavailability Period. 

The Administrative Agent will promptly notify the Borrower and the Lenders of the effectiveness of any 

Benchmark Replacement Conforming Changes. Any determination, decision or election that may be made 

by any Lender (or group of Lenders) or the Administrative Agent, if applicable, pursuant to this Section 2.10 

including any determination with respect to a tenor, rate or adjustment or of the occurrence or nonoccurrence of an event, circumstance or date and any decision to take or refrain from taking any action or 

any selection, will be conclusive and binding absent manifest error and may be made in its or their sole 

discretion and without consent from any other party to this Agreement or any other Loan Document, except, 

in each case, as expressly required pursuant to this Section 2.10. Notwithstanding anything in this 

Agreement to the contrary, the Administrative Agent does not warrant or accept any responsibility for, and 

shall not have any liability with respect to, any determination made by it in connection with the adoption 

of Benchmark Replacement Conforming Changes or for the impact of such Benchmark Replacement 

Conforming Changes, nor for the failure to adopt any Benchmark Replacement Conforming Changes due 

to the failure of the Required Lenders to cooperate in good faith in connection with the determination of 

any Benchmark Replacement Conforming Changes. 
40 

 

(d) Unavailability of Tenor of Benchmark. Notwithstanding anything to the contrary 

herein or in any other Loan Document, at any time (including in connection with the implementation of a 

Benchmark Replacement), (i) if the then-current Benchmark is a term rate (including Term SOFR or USD 

LIBO Rate) and either (A) any tenor for such Benchmark is not displayed on a screen or other information 

service that publishes such rate from time to time as selected by the Administrative Agent in its reasonable 

discretion or (B) the regulatory supervisor for the administrator of such Benchmark has provided a public 

statement or publication of information announcing that any tenor for such Benchmark is or will be no 

longer representative, then the definition of “Interest Period” may be modified for any Benchmark settings 

at or after such time to remove such unavailable or non-representative tenor and (ii) if a tenor that was 

removed pursuant to clause (i) above either (A) is subsequently displayed on a screen or information service 

for a Benchmark (including a Benchmark Replacement) used by the Administrative Agent or (B) is not, or 

is no longer, subject to an announcement that it is or will no longer be representative for a Benchmark 

(including a Benchmark Replacement), then the definition of “Interest Period” may be modified for all 

Benchmark settings at or after such time to reinstate such previously removed tenor. 

(e) Benchmark Unavailability Period. During any Benchmark Unavailability Period, 

all calculations of interest by reference to a LIBO Rate hereunder shall instead be made by reference to the 

Alternate Base Rate. 

SECTION 2.11 Evidence of Debt. 

(a) Maintenance of Records. The Administrative Agent shall maintain the Register in 

accordance with Section 11.04(c). The entries made in the records maintained pursuant to this 

paragraph (a) shall be prima facie evidence absent manifest error of the existence and amounts of the 

obligations recorded therein. Any failure of the Administrative Agent to maintain such records or make 

any entry therein or any error therein shall not in any manner affect the obligations of the Borrower under 

this Agreement and the other Loan Documents. 

(b) Promissory Notes. The Borrower shall prepare, execute and deliver to such Lender 

a promissory note of the Borrower payable to such Lender (or, if requested by such Lender, to such Lender 

and its registered assigns) and a form attached as Exhibit C hereto, which shall evidence such Lender’s 

Loan. 

SECTION 2.12 Payments Generally. 

(a) Payments by Borrower. All payments to be made by the Borrower hereunder and 

the other Loan Documents shall be made without condition or deduction for any counterclaim, defense, 

recoupment or setoff. Except as otherwise expressly provided herein, all such payments shall be made to 

the Administrative Agent, for the account of the respective Lenders to which such payment is owed, to the 

Administrative Account in immediately available funds not later than 12:00 noon (New York City time) on 

the date specified herein. All amounts received by a Lender or the Administrative Agent after such time 

on any date shall be deemed to have been received on the next succeeding Business Day and any applicable 

interest or fees shall continue to accrue. The Administrative Agent will promptly distribute to each Lender 

its ratable share (or other applicable share as provided herein) of such payment in like funds as received by 

wire transfer to such Lender’s applicable lending office (or otherwise distribute such payment in like funds 

as received to the Person or Persons entitled thereto as provided herein). If any payment to be made by the 

Borrower shall fall due on a day that is not a Business Day, payment shall be made on the next succeeding 

Business Day and such extension of time shall be reflected in computing interest or fees, as the case may 

be; provided that, if such next succeeding Business Day would fall after the Amortization Date or the 

Maturity Date, as applicable, payment shall be made on the immediately preceding Business Day. Except 

as otherwise expressly provided herein, all payments hereunder or under any other Loan Document shall 

be made in Dollars. 
41 

 

(b) Application of Insufficient Payments. Subject to Section 7.02, if at any time 

insufficient funds are received by and available to the Lenders or the Administrative Agent to pay fully all 

amounts of principal, interest, fees and other amounts then due hereunder, such funds shall be applied 

(i) first, to pay interest, fees and other amounts then due hereunder, ratably among the parties entitled thereto 

in accordance with the amounts of interest, fees and other amounts then due to such parties, and (ii) second, 

to pay principal then due hereunder, ratably among the parties entitled thereto in accordance with the 

amounts of principal then due to such parties. 

(c) Presumptions by Administrative Agent. Unless the Administrative Agent shall 

have received notice from the Borrower prior to the date on which any payment is due to the Administrative 

Agent for the account of the Lenders hereunder that the Borrower will not make such payment, the 

Administrative Agent may assume that the Borrower has made such payment on such date in accordance 

herewith and may, in reliance upon such assumption, but shall not be obligated to, distribute to the Lenders 

the amount due. In such event, if the Borrower has not in fact made such payment, then each of the Lenders 

severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to 

such Lender, with interest thereon, for each day from and including the date such amount is distributed to 

it to but excluding the date of payment to the Administrative Agent, at the greater of the Federal Funds 

Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules 

on interbank compensation. Notwithstanding the foregoing, the Administrative Agent is not required to 

make any payment to the Lenders until it is in possession of cleared funds from the Borrower. 

(d) Deductions by Administrative Agent. If any Lender (other than the Initial Lender) 

shall fail to make any payment required to be made by it pursuant to Section 2.13 or 11.03(c), then the 

Administrative Agent may, in its discretion and notwithstanding any contrary provision hereof, (i) apply 

any amounts thereafter received by the Administrative Agent for the account of such Lender for the benefit 

of the Administrative Agent to satisfy such Lender’s obligations to the Administrative Agent until all such 

unsatisfied obligations are fully paid or (ii) hold any such amounts in a segregated account as cash collateral 

for, and for application to, any future funding obligations of such Lender under any such Section, in the 

case of each of clauses (i) and (ii) above, in any order as determined by the Administrative Agent in its 

discretion. 

(e) Several Obligations of Lenders. The obligations of the Lenders hereunder to make 

Loans and to make payments pursuant to Section 11.03(c) are several and not joint. The failure of any 

Lender to make any Loan or to make any such payment on any date required hereunder shall not relieve 

any other Lender of its corresponding obligation to do so on such date, and no Lender shall be responsible 

for the failure of any other Lender to so make its Loan or to make its payment under Section 11.03(c). 

SECTION 2.13 Sharing of Payments. If any Lender shall, by exercising any right of setoff 

or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of its Loans or 

other obligations hereunder resulting in such Lender receiving payment of a proportion of the aggregate 

amount of its Loans and accrued interest thereon or other such obligations greater than its pro rata share 

thereof as provided herein, then the Lender receiving such greater proportion shall (a) notify the 

Administrative Agent of such fact, and (b) purchase (for cash at face value) participations in the Loans and 

such other obligations of the other Lenders, or make such other adjustments as shall be equitable, so that the 

benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount 

of principal of and accrued interest on their respective Loans and other amounts owing them; provided that: 

(i) if any such participations are purchased and all or any portion of the 

payment giving rise thereto is recovered, such participations shall be rescinded and the purchase 

price restored to the extent of such recovery, without interest; and 

(ii) the provisions of this paragraph shall not be construed to apply to (x) any 

payment made by the Borrower pursuant to and in accordance with the express terms of this 
42 

 

Agreement or (y) any payment obtained by a Lender as consideration for the assignment of or sale 

of a participation in any of its Loans to any assignee or participant, other than to the Borrower or 

any Subsidiary thereof (as to which the provisions of this paragraph shall apply). 

The Borrower consents to the foregoing and agrees, to the extent it may effectively do so under Applicable 

Law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against 

the Borrower rights of setoff and counterclaim with respect to such participation as fully as if such Lender 

were a direct creditor of the Borrower in the amount of such participation. 

SECTION 2.14 Compensation for Losses. In the event of (a) the payment of any principal 

of the Loans other than on the last day of an Interest Period (including as a result of an Event of Default), 

(b) the failure to borrow or prepay the Loans (or any portion thereof) on the date specified in any notice 

delivered pursuant hereto, or (c) the assignment of the Loans (or any portion thereof) other than on the last 

day of the Interest Period applicable thereto as a result of a request by the Borrower pursuant to 

Section 2.19(b), then, in any such event, the Borrower shall compensate each Lender for the loss, cost and 

expense attributable to such event. Such loss, cost or expense to any Lender shall be deemed to include an 

amount determined by such Lender to be the excess, if any, of (i) the amount of interest that would have 

accrued on the principal amount of such Loan had such event not occurred, at the Adjusted LIBO Rate that 

would have been applicable to such Loan, for the period from the date of such event to the last day of the then 

current Interest Period therefor (or, in the case of a failure to borrow, for the date that would have been the 

applicable Interest Period), over (ii) the amount of interest that would accrue on such principal amount for 

such period at the interest rate that such Lender would bid were it to bid, at the commencement of such period, 

for dollar deposits of a comparable amount and period from other banks in the London interbank eurodollar 

market. A certificate of any Lender setting forth any amount or amounts that such Lender is entitled to receive 

pursuant to this Section shall be delivered to the Borrower and shall be conclusive absent manifest error. The 

Borrower shall pay such Lender the amount shown as due on any such certificate promptly after receipt 

thereof. 

SECTION 2.15 Increased Costs. 

(a) Increased Costs Generally. If any Change in Law shall: 

(i) impose, modify or deem applicable any reserve, special deposit, 

compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the 

account of, or credit extended or participated in by, any Lender (except any reserve requirement 

reflected in the Adjusted LIBO Rate); 

(ii) subject any Recipient to any Taxes (other than (A) Indemnified Taxes, 

(B) Taxes described in clauses (b) through (d) of the definition of Excluded Taxes and 

(C) Connection Income Taxes) on its loans, loan principal, letters of credit, commitments, or other 

obligations, or its deposits, reserves, other liabilities or capital attributable thereto; or 

(iii) impose on any Lender or the London interbank market any other 

condition, cost or expense (other than Taxes) affecting this Agreement or Loans made by such 

Lender; 

and the result of any of the foregoing shall be to increase the cost to such Lender or such other Recipient of 

making or maintaining any Loan or to reduce the amount of any sum received or receivable by such Lender 

or other Recipient hereunder (whether of principal, interest or any other amount) then, upon request of such 

Lender or other Recipient, the Borrower will pay to such Lender or other Recipient, as the case may be, 

such additional amount or amounts as will compensate such Lender or other Recipient, as the case may be, 

for such additional costs incurred or reduction suffered. 
43 

 

(b) [Reserved]. 

(c) Certificates for Reimbursement. A certificate of a Lender setting forth the amount 

or amounts necessary to compensate such Lender or its holding company, as the case may be, as specified 

in paragraph (a) of this Section and delivered to the Borrower, shall be conclusive absent manifest error. 

The Borrower shall pay such Lender the amount shown as due on any such certificate within ten (10) days 

after receipt thereof. 

(d) Delay in Requests. Failure or delay on the part of any Lender to demand 

compensation pursuant to this Section shall not constitute a waiver of such Lender’s right to demand such 

compensation; provided that the Borrower shall not be required to compensate a Lender pursuant to this 

Section for any increased costs incurred or reductions suffered more than nine (9) months prior to the date 

that such Lender notifies the Borrower of the Change in Law giving rise to such increased costs or 

reductions, and of such Lender’s intention to claim compensation therefor (except that, if the Change in 

Law giving rise to such increased costs or reductions is retroactive, then the nine-month period referred to 

above shall be extended to include the period of retroactive effect thereof). 

SECTION 2.16 Taxes. 

(a) Defined Terms. For purposes of this Section, the term “Applicable Law” includes 

FATCA. 

(b) Payments Free of Taxes. Any and all payments by or on account of any obligation 

of the Borrower under any Loan Document shall be made without deduction or withholding for any Taxes, 

except as required by Applicable Law. If any Applicable Law (as determined in the good faith discretion 

of an applicable Withholding Agent) requires the deduction or withholding of any Tax from any such 

payment by a Withholding Agent, then the applicable Withholding Agent shall be entitled to make such 

deduction or withholding and shall timely pay the full amount deducted or withheld to the relevant 

Governmental Authority in accordance with Applicable Law and, if such Tax is an Indemnified Tax, then 

the sum payable by the Borrower shall be increased as necessary so that after such deduction or withholding 

has been made (including such deductions and withholdings applicable to additional sums payable under 

this Section) the applicable Recipient receives an amount equal to the sum it would have received had no 

such deduction or withholding been made. Borrower acknowledges and agrees that, absent a Change in 

Law, Borrower is not required to withhold or deduct from any such payments to the Initial Lender on 

account of any U.S. federal withholding taxes or Taxes imposed pursuant to FATCA. 

(c) Payment of Other Taxes by Borrower. The Borrower shall timely pay to the 

relevant Governmental Authority in accordance with Applicable Law, or at the option of the Initial Lender, 

the Required Lenders or the Administrative Agent timely reimburse it for the payment of, any Other Taxes. 

(d) Indemnification by Borrower. The Borrower shall indemnify each Recipient, 

within thirty (30) days after demand therefor, for the full amount of any Indemnified Taxes (including 

Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section) payable 

or paid by such Recipient or required to be withheld or deducted from a payment to such Recipient and any 

reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were 

correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the 

amount of such payment or liability delivered to the Borrower by a Lender (with a copy to the 

Administrative Agent if such Lender is not the Initial Lender), or by the Administrative Agent on its own 

behalf or on behalf of a Lender, shall be conclusive absent manifest error. 

(e) Indemnification by the Lenders. Each Lender (other than the Initial Lender) shall 

severally indemnify the Administrative Agent, within thirty (30) days after demand therefor, for (i) any 

Indemnified Taxes attributable to such Lender (but only to the extent that the Borrower has not already 
44 

 

indemnified the Administrative Agent for such Indemnified Taxes and without limiting the obligation of 

the Borrower to do so), (ii) any Taxes attributable to such Lender’s failure to comply with the provisions 

of Section 11.04(d) relating to the maintenance of a Participant Register and (iii) any Excluded Taxes 

attributable to such Lender, in each case, that are payable or paid by the Administrative Agent in connection 

with any Loan Document, and any reasonable expenses arising therefrom or with respect thereto, whether 

or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. 

A certificate as to the amount of such payment or liability delivered to any such Lender by the 

Administrative Agent shall be conclusive absent manifest error. Each Lender (other than the Initial Lender) 

hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to 

such Lender under any Loan Document or otherwise payable by the Administrative Agent to such Lender 

from any other source against any amount due to the Administrative Agent under this paragraph (e). 

(f) Evidence of Payments. As soon as practicable after any payment of Taxes by the 

Borrower to a Governmental Authority pursuant to this Section, the Borrower shall deliver to the 

Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority 

evidencing such payment, a copy of the return reporting such payment or other evidence of such payment 

reasonably satisfactory to the Administrative Agent. 

(g) Status of Lenders. (i) Any Lender (other than the Initial Lender) that is entitled to 

an exemption from or reduction of withholding Tax with respect to payments made under any Loan 

Document shall deliver to the Borrower and the Administrative Agent, at the time or times reasonably 

requested by the Borrower or the Administrative Agent, such properly completed and executed 

documentation reasonably requested by the Borrower (or, if such Lender is not the Initial Lender, the 

Administrative Agent) as will permit such payments to be made without withholding or at a reduced rate 

of withholding. In addition, any Lender (other than the Initial Lender), if reasonably requested by the 

Borrower (or the Administrative Agent), shall deliver such other documentation prescribed by Applicable 

Law or reasonably requested by the Borrower (or the Administrative Agent) as will enable the Borrower 

(or the Administrative Agent) to determine whether or not such Lender is subject to backup withholding or 

information reporting requirements. Notwithstanding anything to the contrary in the preceding two 

sentences, the completion, execution and submission of such documentation (other than such 

documentation set forth in paragraphs (g)(ii)(A), (ii)(B)and (ii)(D) of this Section) shall not be required if 

in the Lender’s reasonable judgment such completion, execution or submission would subject such Lender 

to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position 

of such Lender. 

(ii) Without limiting the generality of the foregoing, 

(A) any Lender (other than the Initial Lender) that is a U.S. Person 

shall deliver to the Borrower and the Administrative Agent on or about the date on which 

such Lender becomes a Lender under this Agreement (and from time to time thereafter 

upon the reasonable request of the Borrower or the Administrative Agent), executed copies 

of IRS Form W-9 certifying that such Lender is exempt from U.S. federal backup 

withholding tax; 

(B) any Foreign Lender shall, to the extent it is legally entitled to do 

so, deliver to the Borrower and the Administrative Agent (in such number of copies as shall 

be requested by the recipient) on or prior to the date on which such Foreign Lender becomes 

a Lender under this Agreement (and from time to time thereafter upon the reasonable 

request of the Borrower or the Administrative Agent), whichever of the following is 

applicable: 

(1) in the case of a Foreign Lender claiming the benefits of 

an income tax treaty to which the United States is a party (x) with respect to 
45 

 

payments of interest under any Loan Document, executed copies of IRS Form W8BEN or IRS Form W-8BEN-E establishing an exemption from, or reduction of, 

U.S. federal withholding Tax pursuant to the “interest” article of such tax treaty 

and (y) with respect to any other applicable payments under any Loan Document, 

IRS Form W-8BEN or IRS Form W-8BEN-E establishing an exemption from, or 

reduction of, U.S. federal withholding Tax pursuant to the “business profits” or 

“other income” article of such tax treaty; 

(2) executed copies of IRS Form W-8ECI (or any successor 

forms) and, in the case of an Agent, a withholding certificate that satisfies the 

requirements of Treasury Regulation Sections 1.1441-1(b)(2)(iv) and 1.1441-

1(e)(3)(v) as applicable to a U.S. branch that has agreed to be treated as a U.S. 

Person for withholding tax purposes; 

(3) in the case of a Foreign Lender claiming the benefits of 

the exemption for portfolio interest under Section 881(c) of the Code, (x) a 

certificate substantially in the form of Exhibit B-1 to the effect that such Foreign 

Lender is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a 

“10 percent shareholder” of the Borrower within the meaning of 

Section 871(h)(3)(B) of the Code, or a “controlled foreign corporation” related to 

the Borrower as described in Section 881(c)(3)(C) of the Code (a “U.S. Tax 

Compliance Certificate”) and (y) executed copies of IRS Form W-8BEN or IRS 

Form W-8BEN-E; or 

(4) to the extent a Foreign Lender is not the beneficial owner, 

executed copies of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS 

Form W-8BEN, IRS Form W-8BEN-E, a U.S. Tax Compliance Certificate 

substantially in the form of Exhibit B-2 or Exhibit B-3, IRS Form W-9, and/or 

other certification documents from each beneficial owner, as applicable; provided 

that if the Foreign Lender is a partnership and one or more direct or indirect 

partners of such Foreign Lender are claiming the portfolio interest exemption, such 

Foreign Lender may provide a U.S. Tax Compliance Certificate substantially in 

the form of Exhibit B-4 on behalf of each such direct and indirect partner; 

(C) any Foreign Lender shall, to the extent it is legally entitled to do 

so, deliver to the Borrower and the Administrative Agent (in such number of copies as shall 

be requested by the recipient) on or about the date on which such Foreign Lender becomes 

a Lender under this Agreement (and from time to time thereafter upon the reasonable 

request of the Borrower or the Administrative Agent), executed copies of any other form 

prescribed by Applicable Law as a basis for claiming exemption from or a reduction in 

U.S. federal withholding Tax, duly completed, together with such supplementary 

documentation as may be prescribed by Applicable Law to permit the Borrower or the 

Administrative Agent to determine the withholding or deduction required to be made; and 

(D) if a payment made to a Lender (other than the Initial Lender) under 

any Loan Document would be subject to U.S. federal withholding Tax imposed by FATCA 

if such Lender were to fail to comply with the applicable reporting requirements of FATCA 

(including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such 

Lender shall deliver to the Borrower and the Administrative Agent at the time or times 

prescribed by law and at such time or times reasonably requested by the Borrower or the 

Administrative Agent such documentation prescribed by Applicable Law (including as 

prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation 

reasonably requested by the Borrower or the Administrative Agent as may be necessary 
46 

 

for the Borrower and the Administrative Agent to comply with their obligations under 

FATCA and to determine that such Lender has complied with such Lender’s obligations 

under FATCA or to determine the amount, if any, to deduct and withhold from such 

payment. Solely for purposes of this clause (D), “FATCA” shall include any amendments 

made to FATCA after the date of this Agreement. 

Each Lender agrees that if any form or certification it previously delivered expires or 

becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify 

the Borrower and the Administrative Agent in writing of its legal inability to do so. Notwithstanding 

anything to the contrary in this Agreement, the Initial Lender shall be entitled to the benefits of this 

Section 2.16 and all related provisions under this Agreement without regard to whether it provides any 

documentation described in Section 2.16(g). 

(h) Treatment of Certain Refunds. If any party determines, in its sole discretion 

exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified 

pursuant to this Section (including by the payment of additional amounts pursuant to this Section), it shall 

pay to the indemnifying party an amount equal to such refund (but only to the extent of indemnity payments 

made under this Section with respect to the Taxes giving rise to such refund), net of all out-of-pocket 

expenses (including Taxes) of such indemnified party and without interest (other than any interest paid by 

the relevant Governmental Authority with respect to such refund). Such indemnifying party, upon the 

request of such indemnified party, shall repay to such indemnified party the amount paid over pursuant to 

this paragraph (h) (plus any penalties, interest or other charges imposed by the relevant Governmental 

Authority) in the event that such indemnified party is required to repay such refund to such Governmental 

Authority. Notwithstanding anything to the contrary in this paragraph (h), in no event will the indemnified 

party be required to pay any amount to an indemnifying party pursuant to this paragraph (h) the payment 

of which would place the indemnified party in a less favorable net after-Tax position than the indemnified 

party would have been in if the Tax subject to indemnification and giving rise to such refund had not been 

deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with 

respect to such Tax had never been paid. This paragraph shall not be construed to require any indemnified 

party to make available its Tax returns (or any other information relating to its Taxes that it deems 

confidential) to the indemnifying party or any other Person. 

(i) Survival. Each party’s obligations under this Section shall survive the resignation 

or replacement of the Administrative Agent or any assignment of rights by, or the replacement of, a Lender, 

the termination of the Commitments and the repayment, satisfaction or discharge of all obligations under 

any Loan Document. 

SECTION 2.17 [Reserved]. 

SECTION 2.18 [Reserved]. 

SECTION 2.19 Mitigation Obligations; Replacement of Lenders. 

(a) Designation of a Different Lending Office. If any Lender requests compensation 

under Section 2.15, or requires the Borrower to pay any Indemnified Taxes or additional amounts to any 

Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.16, then such 

Lender shall (at the request of the Borrower) use reasonable efforts to designate a different lending office 

for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of 

its offices, branches or affiliates, if, in the judgment of such Lender, such designation or assignment 

(i) would eliminate or reduce amounts payable pursuant to Section 2.15 or 2.16, as the case may be, in the 

future, and (ii) would not subject such Lender to any unreimbursed cost or expense and would not otherwise 

be disadvantageous to such Lender. The Borrower hereby agrees to pay all reasonable costs and expenses 

incurred by any Lender in connection with any such designation or assignment. 
47 

 

(b) Replacement of Lenders. If any Lender requests compensation under Section 2.15, 

or if the Borrower is required to pay any Indemnified Taxes or additional amounts to any Lender or any 

Governmental Authority for the account of any Lender pursuant to Section 2.16 and, in each case, such 

Lender has declined or is unable to designate a different lending office in accordance with paragraph (a) of 

this Section, or if any Lender is a Non-Consenting Lender, then the Borrower may, at its sole expense and 

effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, 

without recourse (in accordance with and subject to the restrictions contained in, and consents required by, 

Section 11.04), all of its interests, rights (other than its existing rights to payments pursuant to Section 2.15 

or Section 2.16) and obligations under this Agreement and the related Loan Documents to an Eligible 

Assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts 

such assignment); provided that: 

(i) the Borrower shall have paid to the Administrative Agent the assignment 

fee (if any) specified in Section 11.04;

(ii) such Lender shall have received payment of an amount equal to the 

outstanding principal of its Loans, accrued interest thereon, accrued fees and all other amounts 

payable to it hereunder and under the other Loan Documents (including any amounts under 

Section 2.14) from the assignee (to the extent of such outstanding principal and accrued interest 

and fees) or the Borrower (in the case of all other amounts); 

(iii) in the case of any such assignment resulting from a claim for compensation 

under Section 2.15 or payments required to be made pursuant to Section 2.16, such assignment will 

result in a reduction in such compensation or payments thereafter;

(iv) such assignment does not conflict with Applicable Law; and 

(v) in the case of any assignment resulting from a Lender becoming a NonConsenting Lender, the applicable assignee shall have consented to the applicable amendment, 

waiver or consent. 

A Lender shall not be required to make any such assignment or delegation if, prior thereto, 

as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require 

such assignment and delegation cease to apply. 

ARTICLE III 

REPRESENTATIONS AND WARRANTIES 

The Credit Parties represent and warrant to the Administrative Agent, the Collateral Agent 

and the Lenders on the Closing Date and on the date of each Borrowing that: 

SECTION 3.01 Existence, Qualification and Power. Each of the Credit Parties and their 

respective Material Subsidiaries (a) is duly organized or formed, validly existing and, as applicable, in good 

standing under the Laws of the jurisdiction of its incorporation or organization, (b) has all requisite power 

and authority and all requisite governmental licenses, authorizations, consents and approvals to (i) own or 

lease its assets and carry on its business and (ii) execute, deliver and perform its obligations under the Loan 

Documents to which it is a party, and (c) is duly qualified and is licensed and, as applicable, in good standing 

under the Laws of each jurisdiction where its ownership, lease or operation of properties or the conduct of its 

business requires such qualification or license, except, in each case referred to in clause (a) (other than with 

respect to any Credit Party), (b)(i) or (c), to the extent that failure to do so could not reasonably be expected 

to have a Material Adverse Effect. 
48 

 

SECTION 3.02 Authorization; No Contravention. The execution, delivery and performance 

by each Credit Party of each Loan Document to which it is party have been duly authorized by all necessary 

corporate or other organizational action, and do not and will not (a) contravene the terms of its Organizational 

Documents, (b) conflict with or result in any breach or contravention of, or the creation of any Lien under, or 

require any payment to be made under (i) any material Contractual Obligation to which each Credit Party is 

a party or affecting each Credit Party or the material properties of any Credit Party or (ii) any material order, 

injunction, writ or decree of any Governmental Authority or any arbitral award to which any Credit Party or 

its property is subject or (c) violate any Law, except to the extent such violation could not reasonably be 

expected to have a Material Adverse Effect. 

SECTION 3.03 Governmental Authorization; Other Consents. No approval, consent, 

exemption, authorization, or other action by, or notice to, or filing with, any Governmental Authority or any 

other Person is necessary or required in connection with the execution, delivery or performance by, or 

enforcement against, each Credit Party of this Agreement or any other Loan Document, except for (i) such 

approvals, consents, exemptions, authorizations, actions or notices that have been duly obtained, taken or 

made and in full force and effect and (ii) filings and consents contemplated by the Security Documents or 

Section 5.14. 

SECTION 3.04 Execution and Delivery; Binding Effect. This Agreement has been, and each 

other Loan Document, when delivered hereunder, will have been, duly executed and delivered by each Credit 

Party. This Agreement constitutes, and each other Loan Document when so delivered will constitute, a legal, 

valid and binding obligation of each Credit Party, enforceable against each Credit Party in accordance with 

its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, 

receivership, moratorium or other Laws affecting creditors’ rights generally and by general principles of 

equity. 

SECTION 3.05 Financial Statements; No Material Adverse Change. 

(a) Financial Statements. The financial statements described in Schedule 3.05 were 

prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as 

otherwise expressly noted therein, and fairly present in all material respects the financial condition of the 

Parent and its Subsidiaries as of the date thereof and their results of operations and cash flows for the period 

covered thereby in accordance with GAAP consistently applied throughout the period covered thereby, 

except as otherwise expressly noted therein. 

(b) No Material Adverse Change. Since the date of the most recent audited balance 

sheet included in the financial statements described in Schedule 3.05, there has been no event or 

circumstance that, either individually or in the aggregate, has had or could reasonably be expected to have 

a Material Adverse Effect. 

SECTION 3.06 Litigation. Except for those matters which have been publicly disclosed in 

any SEC filing of the Parent filed prior to the Closing Date, there are no actions, suits, proceedings, claims, 

disputes or investigations pending or, to the knowledge of any Credit Party, threatened, at Law, in equity, in 

arbitration or before any Governmental Authority, by or against any Credit Party or any of its Subsidiaries or 

against any of their properties or revenues that (a) either individually or in the aggregate could reasonably be 

expected to have a Material Adverse Effect or (b) purport to affect or pertain to this Agreement or any other 

Loan Document or any of the transactions contemplated hereby. 

SECTION 3.07 Contractual Obligations; No Default. None of the Credit Parties and their 

respective Subsidiaries is in default under or with respect to any Contractual Obligation that, either 

individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. No Default 

has occurred and is continuing or would result from the consummation of the transactions contemplated by 

this Agreement or any other Loan Document. 
49 

 

SECTION 3.08 Property. 

(a) Ownership of Properties and Collateral. Each of the Credit Parties and their 

respective Subsidiaries has good record and marketable title in fee simple to, or valid leasehold interests in, 

all real property necessary or used in the ordinary conduct of its business, except for such defects in title 

that, either individually or in the aggregate, could not reasonably be expected to have a Material Adverse 

Effect. Each Credit Party has good title to the Collateral owned by it, free and clear of all Liens other than 

Permitted Liens. 

(b) Intellectual Property and Personal Data. Each of the Credit Parties and their 

respective Subsidiaries owns, licenses or possesses the valid and enforceable right to use all of the material 

Intellectual Property and data (including Personal Data) that is used in or necessary for the operation of 

each Carrier Loyalty Program. The use of Loyalty Program Intellectual Property and the Loyalty Program 

Data by the Credit Parties and the conduct of the Carrier Loyalty Programs as currently conducted do not 

materially infringe upon, misappropriate, dilute or otherwise violate any Privacy Law nor any rights held 

by any other Person. No claim or litigation regarding any of the foregoing, or challenging the ownership, 

validity or enforceability of any Loyalty Program Intellectual Property is pending or, to the knowledge of 

any of the Credit Parties, threatened that could reasonably be expected to be material to any of the Credit 

Parties, and to the knowledge of the Credit Parties, there is no basis for any such claim. 

SECTION 3.09 Taxes. The Credit Parties and their respective Subsidiaries have filed all 

federal, state and other tax returns and reports required to be filed, and have paid all federal, state and other 

taxes, assessments, fees and other governmental charges levied or imposed upon them or their properties, 

income or assets otherwise due and payable, except (a) Taxes that are being contested in good faith by 

appropriate proceedings diligently conducted and for which adequate reserves are being maintained in 

accordance with GAAP or (b) to the extent that the failure to do so could not reasonably be expected to have 

a Material Adverse Effect. 

SECTION 3.10 Disclosure. (a) The Credit Parties and their respective Subsidiaries have 

disclosed to the Administrative Agent, the Collateral Agent and the Lenders all agreements, instruments and 

corporate or other restrictions to which they are subject, and all other matters known to them, that, either 

individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. The Loan 

Application Form, reports, financial statements, certificates and other written information (other than 

projected or pro forma financial information) furnished by or on behalf of the Credit Parties and their 

respective Subsidiaries to any Agent or any Lender in connection with the transactions contemplated hereby 

and the negotiation of this Agreement or delivered hereunder or under any other Loan Document (as modified 

or supplemented by other information so furnished), taken as a whole, do not contain any material 

misstatement of fact or omit to state any material fact necessary to make the statements therein (when taken 

as a whole), in the light of the circumstances under which they were made, not misleading; provided that, 

with respect to projected or pro forma financial information, the Credit Parties represent only that such 

information was prepared in good faith based upon assumptions believed to be reasonable at the time of 

preparation and delivery (it being understood that such projected information may vary from actual results 

and that such variances may be material) and (b) as of the Closing Date, the information included in the 

Beneficial Ownership Certification is true and correct in all respects. 

SECTION 3.11 Compliance with Laws. Each of the Credit Parties and their respective 

Subsidiaries is in compliance with the requirements of all Laws (including Environmental Laws and Privacy 

Laws) and all orders, writs, injunctions and decrees applicable to it or to its properties, except in such instances 

in which (a) such requirement of Law or order, writ, injunction or decree is being contested in good faith by 

appropriate proceedings diligently conducted or (b) the failure to so comply, either individually or in the 

aggregate, could not reasonably be expected to have a Material Adverse Effect. 
50 

 

SECTION 3.12 ERISA Compliance. 

(a) Except as could not reasonably be expected, either individually or in the aggregate, 

to have a Material Adverse Effect, (i) each Plan is in compliance with the applicable provisions of ERISA, 

the Code and other federal or state Laws and (ii) each Plan that is intended to be a qualified plan under 

Section 401(a) of the Code has received a favorable determination letter, opinion letter or advisory letter 

from the IRS to the effect that the form of such Plan is qualified under Section 401(a) of the Code and the 

trust related thereto has been determined by the IRS to be exempt from federal income tax under 

Section 501(a) of the Code, or an application for such a letter is currently being processed by the IRS, and, 

to the knowledge of any Credit Party, nothing has occurred that would prevent or cause the loss of such 

tax-qualified status. 

(b) There are no pending or, to the knowledge of any Credit Party, threatened or 

contemplated claims, actions or lawsuits, or action by any Governmental Authority, with respect to any 

Plan that, either individually or in the aggregate, could reasonably be expected to have a Material Adverse 

Effect. There has been no prohibited transaction or violation of the fiduciary responsibility rules with 

respect to any Plan that, either individually or in the aggregate, has had or could reasonably be expected to 

have a Material Adverse Effect. 

(c) No ERISA Event has occurred, and neither any Credit Party nor any ERISA 

Affiliate is aware of any fact, event or circumstance that, either individually or in the aggregate, could 

reasonably be expected to constitute or result in an ERISA Event that, either individually or in the 

aggregate, has had or could reasonably be expected to have a Material Adverse Effect. 

(d) Except as would not reasonably be expected to have individually or in the 

aggregate, a Material Adverse Effect, the present value of all accrued benefits under each Pension Plan 

(based on those assumptions used to fund such Pension Plan) did not, as of the last annual valuation date 

prior to the date on which this representation is made or deemed made, exceed the value of the assets of 

such Pension Plan allocable to such accrued benefits by a material amount. 

(e) To the extent applicable, each Foreign Plan has been maintained in compliance 

with its terms and with the requirements of any and all applicable requirements of Law and has been 

maintained, where required, in good standing with applicable regulatory authorities, except to the extent 

that the failure so to comply could not reasonably be expected, either individually or in the aggregate, to 

have a Material Adverse Effect. Neither the Parent nor any Subsidiary has incurred any obligation in 

connection with the termination of or withdrawal from any Foreign Plan that, either individually or in the 

aggregate, would reasonably be expected to have individually or in the aggregate, a Material Adverse 

Effect. Except as would not reasonably be expected to have individually or in the aggregate, a Material 

Adverse Effect, the present value of the accrued benefit liabilities (whether or not vested) under each 

Foreign Plan that is funded, determined as of the end of the most recently ended fiscal year of the Parent or 

Subsidiary, as applicable, on the basis of actuarial assumptions, each of which is reasonable, did not exceed 

the current value of the property of such Foreign Plan by a material amount, and for each Foreign Plan that 

is not funded, the obligations of such Foreign Plan are properly accrued. 

SECTION 3.13 Environmental Matters. Except with respect to any matters that, either 

individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect, none of 

the Credit Parties and their respective Subsidiaries (a) has failed to comply with any Environmental Law or 

to obtain, maintain or comply with any permit, license or other approval required under any Environmental 

Law, (b) knows of any basis for any permit, license or other approval required under any Environmental Law 

to be revoked, canceled, limited, terminated, modified, appealed or otherwise challenged, (c) has or could 

reasonably be expected to become subject to any Environmental Liability, (d) has received notice of any 

claim, complaint, proceeding, investigation or inquiry with respect to any Environmental Liability (and no 

such claim, complaint, proceeding, investigation or inquiry is pending or, to the knowledge of the Parent, is 
51 

 

threatened or contemplated) or (e) knows of any facts, events or circumstances that could give rise to any 

basis for any Environmental Liability with respect thereto. 

SECTION 3.14 Investment Company Act. None of the Credit Parties is an “investment 

company” as defined in, or subject to regulation under, the Investment Company Act of 1940. 

SECTION 3.15 Sanctions; Export Controls; Anti-Corruption; AML Laws. 

(a) None of the Credit Parties and their respective Subsidiaries and no director, officer, 

or affiliate of the foregoing is a Person that is: (i) the subject of any sanctions administered or enforced by 

the United States (including, but not limited to, those administered by the U.S. Department of the Treasury’s 

Office of Foreign Assets Control, the U.S. Department of State, and the U.S. Department of Commerce’s 

Bureau of Industry and Security) (“Sanctions”), (ii) organized or resident in a country or territory that is 

the subject of country-wide or region-wide Sanctions (including, currently, Crimea, Cuba, Iran, North 

Korea, and Syria) (each a “Sanctioned Country”) or located in a Sanctioned Country except to the extent 

authorized under Sanctions or (iii) a Person with whom dealings are restricted or prohibited by Sanctions 

as a result of a relationship of ownership or control with a Person listed in (i) or (ii) (each of (i), (ii) and 

(iii) is a “Sanctioned Person”). 

(b) For the period beginning eight (8) years prior to the date hereof, each of the Credit 

Parties and their respective Subsidiaries and their respective directors, officers and employees and, to the 

knowledge of the Credit Parties, such respective affiliates, have been, in all material respects, in compliance 

with the Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations thereunder (the 

“FCPA”) and any other applicable anti-bribery or anti-corruption laws and regulations (collectively with 

the FCPA, the “Anticorruption Laws”) and all applicable Sanctions, Export Control Laws, and AML Laws. 

SECTION 3.16 Solvency. The Borrower and its Subsidiaries are Solvent on a consolidated 

basis after giving effect to the borrowing of the Loans. 

SECTION 3.17 Subsidiaries. Schedule 3.17 sets forth the name of, and the ownership 

interests of the Parent and each of its Subsidiaries and indicates which of such Subsidiaries are Excluded 

Subsidiaries as of the date hereof. 

SECTION 3.18 Senior Indebtedness. The Loans, the Obligations and the Guaranteed 

Obligations constitute “senior indebtedness” (or any other similar or comparable term) under and as defined 

in the documentation governing any Indebtedness of the Credit Parties that is subordinated in right of payment 

to any other Indebtedness thereof. 

SECTION 3.19 Insurance Matters. The properties of the Credit Parties are insured 

pursuant to Section 5.06 hereof. Each insurance policy required to be maintained by the Credit Parties 

pursuant to Section 5.06 is in full force and effect and all premiums in respect thereof that are due and payable 

have been paid. 

SECTION 3.20 Labor Matters. Except as would not reasonably be expected to have 

individually or in the aggregate, a Material Adverse Effect, (a) there are no strikes, lockouts, slowdowns or 

other material labor disputes against any Credit Party or any of its Subsidiary thereof pending or, to the 

knowledge of the Credit Parties, threatened, (b) the Credit Parties and their respective Subsidiaries have 

complied with all applicable federal, state, local and foreign Laws relating to the employment (or termination 

thereof), the hours worked by and payments made to employees of the Parent and its Subsidiaries comply 

with the Fair Labor Standards Act and any other applicable federal, state, local or foreign Law dealing with 

such matters and (c) all payments due from the Credit Parties and their respective Subsidiaries, or for which 

any claim may be made against the Credit Parties and their respective Subsidiaries, on account of wages and 

employee health and welfare insurance and other benefits, have been paid or properly accrued in accordance 
52 

 

with GAAP as a liability on the books of the Parent or such Subsidiary. There are no complaints, unfair labor 

practice charges, grievances, arbitrations, unfair employment practices charges or any other claims or 

complaints against the Credit Parties or their respective Subsidiaries pending or, to the knowledge of the 

Credit Parties, threatened to be filed with any Governmental Authority or arbitrator based on, arising out of, 

in connection with, or otherwise relating to the employment or termination of employment of any employee 

of the Credit Parties and their respective Subsidiaries that would, individually or in the aggregate, be 

reasonably expected to result in a Material Adverse Effect. 

SECTION 3.21 Insolvency Proceedings. None of the Credit Parties has taken, and none of 

the Credit Parties is currently evaluating taking, any action to seek relief or commence proceedings under any 

Debtor Relief Law in any applicable jurisdiction. 

SECTION 3.22 Margin Regulations. The Borrower is not engaged and will not engage, 

principally or as one of its important activities, in the business of purchasing or carrying Margin Stock, or 

extending credit for the purpose of purchasing or carrying Margin Stock, and no part of the proceeds of any 

Borrowing hereunder will be used to buy or carry any Margin Stock. Following the application of the 

proceeds of each Borrowing, not more than 25% of the value of the assets (either of the Borrower only or of 

the Borrower and its Subsidiaries on a consolidated basis) will be Margin Stock. 

SECTION 3.23 Liens. There are no Liens of any nature whatsoever on any Collateral other 

than Liens permitted under Section 6.02 hereof. 

SECTION 3.24 Perfected Security Interests. 

(a) As of the Closing Date (or such later date as permitted under Section 5.14) and as 

of the date of each Borrowing, the Security Documents, taken as a whole, are effective to create in favor of 

the Collateral Agent for the benefit of the Secured Parties a legal, valid and enforceable first priority security 

interest in all of the Collateral to the extent purported to be created thereby. 

(b) As of the Closing Date (or such later date as permitted under Section 5.15 and as 

of the date of each Borrowing, each Credit Party has or shall have satisfied the Perfection Requirement with 

respect to the Collateral. 

SECTION 3.25 US Citizenship. The Borrower is a “citizen of the United States” as defined 

in Section 40102(a)(15) of Title 49 and as that statutory provision has been interpreted by the DOT pursuant 

to its policies. 

SECTION 3.26 Air Carrier Status. The Borrower is an “air carrier” within the meaning of 

Section 40102 of Title 49, holds a certificate under Section 41102 of Title 49 and, during the time period 

from April 1, 2019 to September 30, 2019, derived more than 50% of its air transportation revenue from the 

transportation of passengers. The Borrower holds an air carrier operating certificate issued pursuant to 

Chapter 447 of Title 49. The Borrower possesses all necessary certificates, franchises, licenses, permits, 

rights, designations, authorizations, exemptions, concessions, frequencies and consents which relate to the 

operation of the routes flown by it and the conduct of its business and operations as currently conducted, 

except where failure to do so, either individually or in the aggregate, could not reasonably be expected to 

have a Material Adverse Effect. 

SECTION 3.27 Cybersecurity. Except as could not reasonably be expected, either 

individually or in the aggregate, to have a Material Adverse Effect, the information technology assets, 

equipment, systems, networks, software, hardware, and the computers, websites, applications and databases 

used by or on behalf of the Credit Parties in connection with any of the Carrier Loyalty Programs (collectively, 

“IT Systems”) (i) are adequate for the operation of the Carrier Loyalty Programs as currently conducted, and 

(ii) are free and clear of all bugs, errors, defects, Trojan horses, time bombs, malware and other corruptants. 
53 

 

Except as could not reasonably be expected, either individually or in the aggregate, to have a Material Adverse 

Effect, (i) the Credit Parties have implemented and maintained commercially reasonable (taking into account 

the nature, scope and sensitivity of the information) policies, procedures, and safeguards designed to maintain 

and protect all Loyalty Program Data and confidential information (including Trade Secrets) included in the 

Collateral and the integrity, continuous operation, redundancy and security of all IT Systems and data and (ii) 

there have been no breaches, cyberattacks (including ransomware attacks) or unauthorized uses of or accesses 

to the IT Systems or any Loyalty Program Data, Trade Secrets or confidential information stored therein or 

processed thereby, except for those that have been fully remedied. 

SECTION 3.28 Loyalty Program Agreements. The Credit Parties have delivered or made 

available to the Initial Lender complete and correct copies of each of the Material Loyalty Program 

Agreements. Each of the Material Loyalty Program Agreements is in full force and effect and except as could 

not reasonably be expected, either individually or in the aggregate, to have a Material Adverse Effect, none 

of the Credit Parties has knowledge of or has received notice of (i) any breach, (ii) change in law or (iii) force 

majeure event, in the case of (ii) and (iii) as defined under the applicable Material Loyalty Program 

Agreement, that would prevent such Credit Party and/or the applicable counterparty from performing its 

respective obligations under such Material Loyalty Program Agreement. 

ARTICLE IV 

CONDITIONS 

SECTION 4.01 Closing Date and Initial Borrowing. The effectiveness of this Agreement 

and the funding of the initial Borrowing hereunder are subject to the satisfaction (or waiver in accordance 

with Section 11.02) of the following conditions (and, in the case of each document specified in this Section 

to be received by the Initial Lender (and the applicable Agent or Agents), such document shall be in form and 

substance satisfactory to the Initial Lender and/or the applicable Agent or Agents): 

(a) Executed Counterparts. The Initial Lender and the Agents shall have received 

from each party hereto a counterpart of this Agreement, any Security Documents to which it is a 

party and the Note, each signed on behalf of such party. Notwithstanding anything herein to the 

contrary, delivery of an executed counterpart of a signature page of this Agreement or any Security 

Documents by telecopy or other electronic means, or confirmation of the execution of this 

Agreement on behalf of a party by an email from an authorized signatory of such party shall be 

effective as delivery of a manually executed counterpart of this Agreement. 

(b) Certificates. The Initial Lender and any applicable Agent shall have received such 

customary certificates of resolutions or other action, incumbency certificates and/or other 

certificates of Responsible Officers of the Credit Parties as the Lenders may require evidencing the 

identity, authority and capacity of each Responsible Officer thereof authorized to act as a 

Responsible Officer in connection with the Loan Documents; 

(c) Organizational Documents. The Initial Lender shall have received customary 

resolutions or evidence of corporate authorization, secretary’s certificates and such other 

documents and certificates (including Organizational Documents and good standing certificates) as 

the Initial Lender may request relating to the organization, existence and good standing of each 

Credit Party and any other legal matters relating to the Credit Parties, the Loan Documents or the 

transactions contemplated thereby. 

(d) Opinion of Counsel to Credit Parties. The Initial Lender and the applicable Agent 

or Agents shall have received all opinions of counsel (including any additional opinions of counsel 

as required under any Security Document) to the Credit Parties that is acceptable to the Initial 

Lender, addressed to the Initial Lender and the applicable Agent or Agents and dated the Closing 
54 

 

Date, in form and substance satisfactory to the Initial Lender and the applicable Agent (and the 

Parent hereby instructs such counsel to deliver such opinions to such Persons). 

(e) Beneficial Ownership Regulation Information. At least five (5) days prior to the 

Closing Date, the Borrower shall deliver to the Initial Lender a Beneficial Ownership Certification. 

(f) Expenses. The Borrower shall have paid all reasonable fees, expenses (including 

the fees and expenses of legal counsel) and other amounts due to the Initial Lender, the 

Administrative Agent and the Collateral Agent (to the extent that statements for such expenses shall 

have been delivered to the Borrower on or prior to the Closing Date); provided that such expenses 

payable by the Borrower may be offset against the proceeds of the Loans funded on the Closing 

Date. 

(g) Officer’s Certificate. The Initial Lender shall have received a certificate executed 

by a Responsible Officer of the Parent and the Borrower confirming (i) that the representations and 

warranties contained in Article III of this Agreement are true and correct on and as of the Closing 

Date, (ii) that the information provided in the Loan Application Form submitted by the Borrower 

was true and correct on and as of the date of delivery thereof, (iii) the satisfaction of such condition 

and (iv) that no Default or Event of Default exists or will result from the borrowing of the Loans 

on the Closing Date. 

(h) Other Documents. The Initial Lender and the Agents shall have received such 

other documents as it may request. 

(i) Appraisals. The Initial Lender shall have received Appraisals satisfactory in form 

and substance and performed by an Eligible Appraiser dated as of a date no earlier than thirty (30) 

days prior to the Closing Date. 

(j) Security Interests. Each Credit Party shall have, and caused its Subsidiaries to, 

take any action and execute and deliver, or cause to be executed and delivered, any agreement, 

document or instrument required in order to create a valid, perfected first priority security interest 

in the Collateral in favor of the Collateral Agent for the benefit of the Secured Parties (including 

delivery of UCC financing statements in appropriate form for filing under the UCC and of the 

Intellectual Property security agreements included in the Required Filings and entering into control 

agreements). Each Credit Party shall have satisfied, and caused its Subsidiaries to satisfy, the 

Perfection Requirement with respect to the Collateral. In addition, the Credit Parties shall have 

delivered a completed Perfection Certificate (as defined in the Pledge and Security Agreements). 

(k) Consents and Authorizations. Each Credit Party shall have obtained all consents 

and authorizations from Governmental Authorities and all consents of other Persons (including 

shareholder approvals, if applicable) that are necessary or advisable in connection with this 

Agreement, any Loan Document, any of the transactions contemplated hereby or thereby or the 

continuing operations of the Credit Parties and each of the foregoing shall be in full force and effect 

and in form and substance satisfactory to the Initial Lender. 

(l) Lien Searches. The Initial Lender shall have received (i) UCC, Intellectual 

Property and other lien searches conducted in the jurisdictions and offices where liens on material 

assets of the Credit Parties are required to be filed or recorded and (ii) to the extent Collateral 

consists of (x) Aircraft and Engine Assets (as defined in the Pledge and Security Agreements), 

aircraft registry lien searches conducted with the FAA and the International Registry, and (y) Spare 

Part Assets (as defined in the Pledge and Security Agreements), registry lien searches conducted 

with the FAA (with reference to each Designated Spare Parts Location set forth on Schedule 2.1 of 

the Pledge and Security Agreements), in each case, reflecting the absence of Liens on the assets of 
55 

 

the Credit Parties, other than Permitted Liens or Liens to be discharged on or prior to the Closing 

Date pursuant to documentation satisfactory to the Initial Lender. 

(m) Collateral Coverage Ratio. On the Closing Date (and after giving pro forma effect 

to any Borrowings on such date), the Collateral Coverage Ratio shall not be less than 2.0 to 1.0. 

(n) Solvency Certificate. The Initial Lender shall have received a certificate of the 

chief financial officer or treasurer (or other comparable officer) of the Parent certifying that the 

Borrower and its Subsidiaries (taken as a whole) are, and will be immediately after giving effect to 

any Loans borrowed on the Closing Date, Solvent. 

(o) Warrant Agreement. Treasury and Parent shall have entered into the Warrant 

Agreement. 

(p) Loyalty Revenue Advance Transactions. On the Closing Date, the aggregate 

outstanding balance of Loyalty Revenue Advance Transactions shall not exceed an aggregate 

amount equal to $15,000,000. 

(q) Control Agreements. The Initial Lender and the Collateral Agent shall have 

received fully executed copies of account control agreements in form and substance satisfactory to 

the Initial Lender with respect to the Collateral Accounts. 

(r) [Reserved]. 

(s) Loyalty Partner Direct Agreements. The Initial Lender and the Collateral Agent 

shall have received duly executed Direct Agreements from the counterparties to each Material 

Loyalty Program Agreement in effect on the Closing Date substantially in the form of Exhibit D 

hereto. 

(t) ABL Agreement. The Initial Lender shall have received satisfactory evidence that 

all Liens under the ABL Agreement encumbering any Loyalty Program Agreement, any other 

Loyalty Program Assets, any Collateral Account or any other property constituting Collateral for 

the Secured Obligations have been released and are no longer in effect. 

(u) Other Matters. Since August 5, 2020, (i) there has been no event or circumstance 

that, either individually or in the aggregate, has had or could reasonably be expected to have a 

Material Adverse Effect and (ii) none of the Credit Parties has made a Disposition (including any 

sale of Currency) of any assets of the type that would be included in the Collateral had this 

Agreement been in effect at such time other than as would have been permitted under 

Section 6.04(b), (d), (e) or (h). 

SECTION 4.02 Each Borrowing. The funding by the Lenders of each Borrowing (including 

the Borrowing to be requested on the Closing Date) is additionally subject to the satisfaction of the following 

conditions: 

(a) the Administrative Agent shall have received a written Borrowing Request in 

accordance with the requirements of Section 2.03(a), with a copy to the Initial Lender (solely to the 

extent the Initial Lender is a Lender at the time of such Borrowing); 

(b) the representations and warranties of the Credit Parties set forth in this Agreement 

and in any other Loan Document shall be true and correct in all material respects (or, in the case of 

any such representation or warranty already qualified by materiality, in all respects) on and as of 
56 

 

the date of such Borrowing (or, in the case of any such representation or warranty expressly stated 

to have been made as of a specific date, as of such specific date); 

(c) no Default shall have occurred and be continuing or would result from such 

Borrowing or from the application of proceeds thereof; 

(d) on the date of the funding of such Borrowing (and after giving pro forma effect 

thereto and the pledge of any Additional Collateral), the Collateral Coverage Ratio shall not be less 

than 2.0 to 1.0 as evidenced by a certificate of a Responsible Officer of the Parent; 

(e) [reserved]; 

(f) the Initial Lender shall have received satisfactory evidence that (x) each Material 

Loyalty Program Agreement has and (y) Loyalty Program Agreements representing 90% of 

Loyalty Program Revenues (excluding revenues generated under any Loyalty Subscription 

Program) in the aggregate over the immediately preceding twelve (12) calendar month period then 

ended have, in each case, an expiration date that is at least six (6) months after the Amortization 

Date (without giving effect to the proviso in the definition thereof); 

(g) on the date of such Borrowing, the opinion of the independent public accountants 

(after giving effect to any reissuance or revision of such opinion) on the most recent audited 

consolidated financial statements delivered by the Parent pursuant to Section 5.01(a) shall not 

include a “going concern” qualification under GAAP as in effect on the date of this Agreement or, 

if there is a change in the relevant provisions of GAAP thereafter, any like qualification or 

exception under GAAP after giving effect to such change; and 

(h) on or prior to the date of such Borrowing, each Credit Party shall have satisfied the 

Perfection Requirement with respect to the Collateral.

Each Borrowing Request by the Borrower hereunder and each Borrowing shall be deemed to constitute a 

representation and warranty by the Borrower on and as of the date of the applicable Borrowing as to the 

matters specified in clauses (b) and (c) above in this Section. 

ARTICLE V 

AFFIRMATIVE COVENANTS 

Until all the later of (i) the date on which all of the Obligations shall have been paid in full 

and (ii) such later date specified in this Agreement, the Credit Parties covenant and agree with the Lenders 

that: 

SECTION 5.01 Financial Statements. The Parent will furnish to the Administrative Agent 

and each Lender: 

(a) as soon as available, and in any event within ninety (90) days after the end of each 

fiscal year of the Parent (or, if earlier, five (5) days after the date required to be filed with the SEC) 

(commencing with the fiscal year ended prior to the Closing Date), a consolidated balance sheet of 

the Parent and its Subsidiaries as at the end of such fiscal year and the related consolidated 

statements of income or operations, shareholders’ equity and cash flows for such fiscal year, setting 

forth in each case in comparative form the figures for the previous fiscal year, audited and 

accompanied by a report and opinion of independent public accountants of nationally recognized 

standing, which report and opinion shall be prepared in accordance with generally accepted 

auditing standards (and shall not be subject to any “going concern” or like qualification (other than 
57 

 

a qualification solely resulting from (x) the impending maturity of any Indebtedness or (y) any 

prospective or actual default under any financial covenant), exception or explanatory paragraph or 

any qualification, exception or explanatory paragraph as to the scope of such audit) to the effect 

that such consolidated financial statements present fairly in all material respects the financial 

condition, results of operations, shareholders’ equity and cash flows of the Parent and its 

Subsidiaries on a consolidated basis in accordance with GAAP consistently applied; 

(b) as soon as available, but in any event within forty-five (45) days after the end of 

each of the first three (3) fiscal quarters of each fiscal year of the Parent (or, if earlier, five (5) days 

after the date required to be filed with the SEC) (commencing with the first of such fiscal quarters 

ended prior to the Closing Date), a consolidated balance sheet of the Parent and its Subsidiaries as 

at the end of such fiscal quarter, the related consolidated statements of income or operations, 

shareholders’ equity and cash flows for such fiscal quarter and for the portion of the Parent’s fiscal 

year then ended, in each case setting forth in comparative form, as applicable, the figures for the 

corresponding fiscal quarter of the previous fiscal year and the corresponding portion of the 

previous fiscal year, certified by a Financial Officer of the Parent as fairly presenting in all material 

respects the financial condition, results of operations, shareholders’ equity and cash flows of the 

Parent and its Subsidiaries on a consolidated basis in accordance with GAAP consistently applied, 

subject only to normal year-end audit adjustments and the absence of notes; 

(c) for so long as the Initial Lender is the only Lender, as soon as available, but in any 

event no later than seventy-five (75) days after the beginning of each fiscal year of the Parent, (i) 

forecasts prepared by management of the Parent and a summary of material assumptions used to 

prepare such forecasts, in form satisfactory to the Initial Lender, including projected consolidated 

balance sheets and statements of income or operations and cash flows of the Parent and its 

Subsidiaries on a quarterly basis for such fiscal year and (ii) reasonably detailed calculations in a 

form satisfactory to the Appropriate Party of (A) all Loyalty Program Revenues and related cash 

flows for the immediately preceding fiscal year and (B) projected Loyalty Program Revenues for 

the next two fiscal years; and 

(d) solely at the request of the Appropriate Party (which shall be no more than 

quarterly), at a time mutually agreed with the Appropriate Party and the Parent, participate in a 

conference call for Lenders to discuss the financial condition and results of operations of the Parent 

and its Subsidiaries and any forecasts which have been delivered pursuant to this Section 5.01. 

SECTION 5.02 Certificates; Other Information. The Parent will deliver to the 

Administrative Agent and each Lender: 

(a) [reserved];

(b) concurrently with the delivery of the financial statements referred to in 

Sections 5.01(a) and (b), a duly completed certificate signed by a Responsible Officer of the Parent 

certifying as to whether a Default has occurred and, if a Default has occurred, specifying the details 

thereof and any action taken or proposed to be taken with respect thereto; 

(c) [reserved]; 

(d) promptly after the furnishing thereof, copies of any notice of default or potential 

default or other material written notice received by the Parent or any Subsidiary from, or furnished by the 

Parent or any Subsidiary to, any holder of Material Indebtedness of the Parent or any Subsidiary; 

(e) promptly after receipt thereof by any Credit Party or any Subsidiary thereof, copies 

of each material notice or other material written correspondence received from the SEC (or 
58 

 

comparable agency in any applicable non-U.S. jurisdiction) concerning any investigation or 

possible investigation or other inquiry by such agency regarding material financial or other material 

operational results of any Credit Party or any Subsidiary thereof; 

(f) [reserved]; 

(g) promptly following any request therefor, (i) such other information regarding the 

operations, business, properties, liabilities (actual or contingent), condition (financial or otherwise) 

or prospects of any Credit Party or any Subsidiary, or compliance with the terms of the Loan 

Documents, as the Administrative Agent, the Initial Lender or any other Lender (acting through the 

Administrative Agent) may from time to time request; or (ii) beneficial ownership information and 

documentation reasonably requested by the Administrative Agent or any Lender from time to time 

for purposes of ensuring compliance with Sanctions and AML Laws. For purposes of determining 

whether or not a representation with respect to any indirect ownership is true or a covenant is being 

complied with under this Section, the Parent shall not be required to make any investigation into 

(i) the ownership of publicly traded stock or other publicly traded securities or (ii) the ownership 

of assets by a collective investment fund that holds assets for employee benefit plans or retirement 

arrangements; 

(h) concurrently with the delivery of the financial statements referred to in 

Sections 5.01(a) and (b), a duly completed certificate signed by a Responsible Officer of the 

Borrower certifying as to its compliance with Article X of this Agreement; 

(i) knowledge or notice of any event or circumstance that has had or is reasonably 

expected to (i) result in a material reduction or suspension of payments under any Material Loyalty 

Program Agreement or any Loyalty Subscription Program or (ii) have a material adverse effect on 

the ability of a Credit Party and/or any counterparty to a Material Loyalty Program Agreement to 

perform its material obligations thereunder; 

(j) certificates with reasonably detailed calculations of the Collateral Coverage Ratio 

on each CCR Certificate Delivery Date and the Debt Service Coverage Ratio on each DSCR 

Determination Date; and 

(k) no later than ten (10) Business Days following the last day of each March, June, 

September and December (commencing December 31, 2020), deliver a certificate of a Responsible 

Officer of the Parent (i) setting forth the name of each new Material Loyalty Program Agreement 

entered into as of such date and each of the parties thereto, (ii) certifying that all Loyalty Program 

Revenue for the immediately preceding calendar quarter were deposited, directly or indirectly, into 

the Collection Account or another Collateral Account (and at least 90% of all Loyalty Program 

Revenues (excluding revenues generated under any Loyalty Subscription Program) were deposited 

directly into a Collateral Account) and (iii) setting forth in reasonable detail and in form 

satisfactory to the Appropriate Party (x) all Loyalty Program Revenues and related cash flows for 

the immediately preceding calendar quarter and (y) for so long as the Initial Lender is the only 

Lender, projected Loyalty Program Revenues for the current calendar quarter. 

Documents required to be delivered pursuant to Section 5.01(a) or (b) or 

Section 5.02(c), (d) or (e) (to the extent any such documents are included in materials otherwise filed with 

the SEC) may be delivered electronically and, if so delivered, shall be deemed to have been delivered on 

the date (i) on which such materials are publicly available as posted on the Electronic Data Gathering, 

Analysis and Retrieval system (EDGAR); or (ii) on which such documents are posted on the Parent’s behalf 

on an Internet or intranet website, if any, to which each Lender and the Administrative Agent have access 

(whether a commercial, third-party website or whether sponsored by the Administrative Agent); provided 

that: (A) upon written request by the Administrative Agent, the Parent shall deliver paper copies of such 
59 

 

documents to the Administrative Agent or any Lender upon its request to the Parent to deliver such paper 

copies until a written request to cease delivering paper copies is given by the Administrative Agent or such 

Lender and (B) the Parent shall notify the Administrative Agent and each Lender (by facsimile or electronic 

mail) of the posting of any such documents and provide to the Lenders by electronic mail electronic versions 

(i.e., soft copies) of such documents. The Administrative Agent shall have no obligation to request the 

delivery of or to maintain paper copies of the documents referred to above. 

SECTION 5.03 Notices. The Parent will promptly notify the Administrative Agent and each 

Lender of: 

(a) promptly after any Responsible Officer of Parent or any of its Subsidiaries obtains 

knowledge thereof, the occurrence of any Default; 

(b) the filing or commencement of any action, suit, investigation or proceeding by or 

before any arbitrator or Governmental Authority against or affecting the Parent or any Controlled 

Affiliate thereof, including pursuant to any applicable Environmental Laws, that could reasonably 

be expected to be adversely determined, and, if so determined, could reasonably be expected to 

have a Material Adverse Effect; 

(c) the occurrence of any ERISA Event that, either individually or together with any 

other ERISA Events, could reasonably be expected to have a Material Adverse Effect;

(d) notice of any action arising under any Environmental Law or of any 

noncompliance by any Credit Party or any Subsidiary with any Environmental Law or any permit, 

approval, license or other authorization required thereunder that, if adversely determined, could 

reasonably be expected to have a Material Adverse Effect; 

(e) to the extent not publicly disclosed pursuant to an SEC filing of the Parent, any 

material change in accounting or financial reporting practices by the Parent, any Credit Party or 

any Subsidiary; 

(f) any change in the Credit Ratings from a Credit Rating Agency with negative 

implications, or the cessation by a Credit Rating Agency of, or its intent to cease, rating the 

Borrower’s or the Parent’s debt; and 

(g) any matter or development that has had or could reasonably be expected to have a 

Material Adverse Effect. 

Each notice delivered under this Section shall be accompanied by a statement of a 

Responsible Officer of the Parent setting forth the details of the occurrence requiring such notice and stating 

what action the Parent has taken and proposes to take with respect thereto. 

SECTION 5.04 Preservation of Existence, Etc. Each Credit Party will, and will cause each 

of its Subsidiaries to, (a) preserve, renew and maintain in full force and effect its legal existence and good 

standing under the Laws of the jurisdiction of its organization except in a transaction permitted by 

Section 6.03 or 6.04; (b) take all reasonable action to maintain all rights, licenses, permits, privileges and 

franchises necessary or desirable in the normal conduct of its business, except to the extent that failure to do 

so could not reasonably be expected to have a Material Adverse Effect; and (c) preserve or renew all of its 

registered patents, trademarks, trade names and service marks, the non-preservation of which could 

reasonably be expected to have a Material Adverse Effect. 

SECTION 5.05 Maintenance of Properties. Each Credit Party will, and will cause each of 

its Subsidiaries to, (a) maintain, preserve and protect all of its properties and equipment necessary in the 
60 

 

operation of its business in good working order and condition (ordinary wear and tear excepted) and (b) make 

all necessary repairs thereto and renewals and replacements thereof, except to the extent that the failure to do 

so could not reasonably be expected to have a Material Adverse Effect. 

SECTION 5.06 Maintenance of Insurance. Subject to any additional requirements under any 

Security Document, each Credit Party will maintain with financially sound and reputable insurance 

companies, insurance with respect to its properties and business against loss or damage of the kinds 

customarily insured against by Persons engaged in the same or similar business, of such types and in such 

amounts (after giving effect to any self-insurance reasonable and customary for similarly situated Persons 

engaged in the same or similar businesses as Parent and its Subsidiaries; provided that, insurance in respect 

of Collateral shall be maintained with such third party insurance companies except to the extent expressly 

permitted in the Pledge and Security Agreements) as are customarily carried under similar circumstances by 

such Persons. 

SECTION 5.07 Payment of Obligations. Each Credit Party will pay, discharge or otherwise 

satisfy as the same shall become due and payable, all of its obligations and liabilities, including Tax liabilities, 

except to the extent (a) the same are being contested in good faith by appropriate proceedings diligently 

conducted and adequate reserves in accordance with GAAP are being maintained by the Parent or such Credit 

Party or (b) the failure to do so could not reasonably be expected to have a Material Adverse Effect. 

SECTION 5.08 Compliance with Laws. Each Credit Party will, and will cause each of its 

Subsidiaries to, comply with the requirements of all Laws and all orders, writs, injunctions and decrees 

applicable to it or to its business or property, except to the extent that the failure to do so could not reasonably 

be expected to have a Material Adverse Effect. 

SECTION 5.09 Environmental Matters. Except to the extent that the failure to do so could 

not reasonably be expected to have a Material Adverse Effect, each Credit Party will, and will cause each of 

its Subsidiaries to, (a) comply with all Environmental Laws, (b) obtain, maintain in full force and effect and 

comply with any permits, licenses or approvals required for the facilities or operations of the Parent or any of 

its Subsidiaries, and (c) conduct and complete any investigation, study, sampling or testing, and undertake 

any corrective, cleanup, removal, response, remedial or other action necessary to identify, report, remove and 

clean up all Hazardous Materials present or released at, on, in, under or from any of the facilities or real 

properties of the Parent or any of its Subsidiaries. 

SECTION 5.10 Books and Records. Each Credit Party will maintain proper books of record 

and account, in which full, true and correct entries in conformity with GAAP consistently applied shall be 

made of all financial transactions and matters involving the assets and business of the Parent or such 

Subsidiary, as the case may be. 

SECTION 5.11 Inspection Rights. Each Credit Party will, and, to the extent relevant for 

inspections of Collateral will cause each of its Subsidiaries to, permit representatives, agents and independent 

contractors of the Administrative Agent, the Initial Lender and the Special Inspector General for Pandemic 

Recovery to visit and inspect any of its properties (including all Collateral), to examine its corporate, financial 

and operating records, and make copies thereof or abstracts therefrom, and to discuss its affairs, finances and 

accounts with its directors, officers, and independent public accountants, all at the reasonable expense of the 

Parent and at such reasonable times during normal business hours and as often as may be reasonably 

requested; provided that, other than with respect to such visits and inspections during the continuation of an 

Event of Default or by the Initial Lender or the Special Inspector General for Pandemic Recovery, (a) only 

the Administrative Agent (or its representatives, agents and independent contractors) at the direction of a 

Lender may exercise rights under this Section and (b) the Administrative Agent (or its representatives, agents 

and independent contractors) shall not exercise such rights more often than two (2) times during any calendar 

year; provided, further, that when an Event of Default exists the Administrative Agent, any Lender or the 

Special Inspector General for Pandemic Recovery (or any of their respective representatives, agents or 
61 

 

independent contractors) may do any of the foregoing under this Section at the expense of the Parent and at 

any time during normal business hours and without advance notice. 

SECTION 5.12 Sanctions; Export Controls; Anti-Corruption Laws and AML Laws. Each 

Credit Party and its Subsidiaries will remain in compliance in all material respects with applicable Sanctions, 

Export Control Laws, Anticorruption Laws, and AML Laws. Until all Obligations have been paid in full, 

neither any Credit Party, any Subsidiary of a Credit Party, nor any director or officer of any Credit Party or 

any Subsidiary of a Credit Party shall become a Sanctioned Person or a Person that is organized or resident 

in a Sanctioned Country or located in a Sanctioned Country except to the extent authorized under Sanctions. 

SECTION 5.13 Guarantors; Additional Collateral. 

(a) The Guarantors listed on the signature page to this Agreement hereby Guarantee 

the Guaranteed Obligations as set forth in Article IX. If any Subsidiary (other than an Excluded Subsidiary) 

is formed or acquired after the Closing Date, if any Subsidiary ceases to be an Excluded Subsidiary or if 

required in connection with the addition of Additional Collateral, then the Parent will cause such Subsidiary, 

promptly (in any event, within thirty (30) days of such Subsidiary being formed or acquired or of such 

Subsidiary ceasing to be an Excluded Subsidiary), (i) to become a Guarantor of the Loans pursuant to 

joinder documentation reasonably acceptable to the Appropriate Party and on the terms and conditions set 

forth in Article IX, (ii) to become a party to each applicable Security Document and all other agreements, 

instruments or documents that create or purport to create and perfect a first priority Lien (subject to 

Permitted Liens) in favor of the Collateral Agent for the benefit of the Secured Parties in its assets that are 

of a type that are intended to be included in the Collateral (other than any Excluded Assets), subject to and 

in accordance with the terms, conditions and provisions of the Loan Documents, (iii) to satisfy the 

Perfection Requirement, (iv) to deliver a secretary’s certificate of such Subsidiary, in form and substance 

reasonably acceptable to the Appropriate Party, with appropriate insertions and attachments, and (v) to 

deliver legal opinions relating to the matters described above, which opinions shall be in form and 

substance, and from counsel, satisfactory to the Appropriate Party. 

(b) If the Parent or any Subsidiary desires, or is required pursuant to the terms of this 

Agreement, to add Additional Collateral or, if any Subsidiary acquires any existing Collateral from a 

Grantor (as defined in the Pledge and Security Agreements) that it is required pursuant to the terms of this 

Agreement to maintain as Collateral, in each case, after the Closing Date, the Parent shall, in each case at 

its own expense, promptly (in any event, unless any other time period is specified in this Agreement or any 

other Loan Document, within thirty (30) days of the relevant date) (i) cause any such Subsidiary to become 

a Grantor (to the extent such Subsidiary is not already a Grantor) pursuant to joinder documentation 

acceptable to the Appropriate Party and on the terms and conditions set forth in the relevant Security 

Documents, (ii) cause any such Subsidiary to become a party to each applicable Security Document and all 

other agreements, instruments or documents that create or purport to create and perfect a first priority Lien 

(subject to Permitted Liens) in favor of the Collateral Agent for the benefit of the Secured Parties applicable 

to such Collateral, in form and substance satisfactory to the Appropriate Party (it being understood that in 

the case of any Additional Collateral of a type, or in a jurisdiction, that has not been theretofore included 

in the Collateral, such Additional Collateral may be subject to such additional terms and conditions as 

requested by the Appropriate Party), (iii) promptly execute and deliver (or cause such Subsidiary to execute 

and deliver) to the Collateral Agent such documents and take such actions to create, grant, establish, 

preserve and perfect the first priority Liens (subject to Permitted Liens) (including to obtain any release or 

termination of Liens not permitted under the definition of “Additional Collateral” in Section 1.01 or under 

Section 6.02 and to satisfy all Perfection Requirements, including the filing of UCC financing statements, 

filings with the FAA and registrations with the International Registry, as applicable) in favor of the 

Collateral Agent for the benefit of the Secured Parties on such assets of the Parent or such Subsidiary, as 

applicable, to secure the Obligations to the extent required under the applicable Security Documents or 

reasonably requested by the Appropriate Party, and to ensure that such Collateral shall be subject to no 

other Liens other than Permitted Liens and (iv) if requested by the Appropriate Party, deliver (or cause such 
62 

 

Subsidiary to deliver) legal opinions to the Collateral Agent, for the benefit of the Secured Parties, relating 

to the matters described above, which opinions shall be in form and substance, and from counsel, 

satisfactory to the Appropriate Party. 

SECTION 5.14 Post-Closing Matters. As promptly as practicable, and in any event within 

the time periods after the Closing Date specified on Schedule 5.14 or such later date as the Initial Lender may 

agree to in writing in its sole discretion, the Parent shall deliver the documents or take the actions specified 

on Schedule 5.14 that would have been required to be delivered or taken on the Closing Date. 

SECTION 5.15 Further Assurances. In each case subject to the terms, conditions and 

limitations in the Loan Documents, (a) each Credit Party shall remain in compliance with the Perfection 

Requirement with respect to all Collateral (including any assets, rights and properties that (x) become 

Collateral after the Closing Date and (y) any permitted replacement or substitute assets, rights and properties 

thereof (including any Additional Collateral) and (b) each Credit Party shall, promptly and at its expense, 

execute any and all further documents and instruments and take all further actions, that may be required or 

advisable under applicable law or that the Initial Lender, the Administrative Agent or the Collateral Agent 

may request, in order to create, grant, establish, preserve, protect, renew or perfect the validity, perfection or 

first priority of the Liens and security interests created or intended to be created by the Security Documents, 

in each case to the extent required under this Agreement or the Security Documents (including with respect 

to any additions to the Collateral (including any Additional Collateral) or replacements, substitutes or 

proceeds thereof or with respect to any other property or assets hereafter acquired by any Credit Party that 

are of a type that are intended to be included in the Collateral). Promptly following the entry by any Credit 

Party into any Material Loyalty Program Agreement after the Closing Date, the Parent will enter into and 

cause the counterparty to enter into a Direct Agreement substantially in the form of Exhibit D hereto. 

SECTION 5.16 Delivery of Appraisals. The Parent shall (1) within ten (10) Business Days 

prior to the last Business Day of March and September of each year, beginning with March 31, 2021 and (2) 

promptly (but in any event within thirty (30) days) following request by the Administrative Agent (acting at 

the direction of the Required Lenders) if an Event of Default has occurred and is occurring, deliver to the 

Administrative Agent one or more Appraisals determining the Appraised Value of the Collateral. In addition, 

on the date upon which any Additional Collateral is pledged as Collateral to the Collateral Agent for the 

benefit of the Secured Parties to secure the Obligations, but only with respect to such Additional Collateral, 

the Parent shall deliver to the Administrative Agent one or more Appraisals determining the Appraised Value 

of such Additional Collateral. 

SECTION 5.17 Ratings. At any time when the Initial Lender is a Lender, the Borrower shall, 

upon request by the Initial Lender, use its reasonable best efforts to obtain a public rating in respect of the 

Loans by any two of S&P, Moody’s and Fitch in connection with any contemplated assignment of, or 

participation in, the Loans. 

SECTION 5.18 Regulatory Matters. 

(a) US Citizenship. The Borrower will at all times maintain its status as a “citizen of 

the United States” as defined in Section 40102(a)(15) of Title 49 and as that statutory provision has been 

interpreted by the DOT pursuant to its policies. 

(b) Air Carrier Status. The Borrower will at all times maintain its status as an “air 

carrier” within the meaning of Section 40102 of Title 49 and holds a certificate under Section 41102 of 

Title 49. The Borrower will at all times possess an air carrier operating certificate issued pursuant to 

Chapter 447 of Title 49. The Borrower will at all times possess all necessary certificates, franchises, 

licenses, permits, rights, designations, authorizations, exemptions, concessions, frequencies and consents 

which relate to the operation of the routes flown by it and the conduct of its business and operations as 
63 

 

currently conducted, except where failure to do so, either individually or in the aggregate, could not 

reasonably be expected to have a Material Adverse Effect. 

SECTION 5.19 Loyalty Programs; Loyalty Program Agreements. 

(a) Loyalty Programs. The Parent will, and will cause each of its Subsidiaries to, take 

all actions necessary to maintain the existence, business and operations of the Carrier Loyalty Programs as 

in effect on the Closing Date or on terms at least as favorable to the Lenders, as determined by the 

Appropriate Party in its sole discretion, except as otherwise expressly permitted under this Agreement. 

(b) Loyalty Program Agreements. The Parent will, and will cause each of its 

Subsidiaries to, take any action permitted under the Material Loyalty Program Agreements and applicable 

law that it, in its reasonable business judgment, determines is advisable, in order to diligently and promptly 

(i) enforce its rights and any remedies available to it under the Material Loyalty Program Agreements, (ii) 

perform its obligations under the Material Loyalty Program Agreements and (iii) use reasonable best efforts 

to cause the applicable counterparties to perform their obligations under the related Material Loyalty 

Program Agreements, including such counterparties’ obligations to make payments to and indemnify the 

applicable Credit Parties in accordance with the terms thereof, in each case except as would not (1) be 

materially adverse to the Lenders or (2) reasonably be expected to result in a Material Adverse Effect. 

SECTION 5.20 Collections; Accounts; Payments. 

(a) The Credit Parties shall (x) instruct and use their reasonable best efforts to cause 

counterparties to all Material Loyalty Program Agreements to direct payments of all Loyalty Program 

Revenue into the Collection Account and (y) cause sufficient counterparties to the Loyalty Program 

Agreements to direct payments of Loyalty Program Revenue into the Collection Account (in the case of 

Loyalty Program Revenue generated under any Material Loyalty Program Agreement, pursuant to a Direct 

Agreement) such that during any DSCR Test Period, at least 90% of Loyalty Program Revenue (excluding 

revenues generated under any Loyalty Subscription Program) for such period is deposited directly into the 

Collection Account. Promptly following the entry by any Credit Party into any Material Loyalty Program 

Agreement after the Closing Date, the applicable Credit Party will enter into and cause the counterparty to 

enter into a Direct Agreement with respect to such Material Loyalty Program Agreement. To the extent the 

Parent, any Subsidiary or any of their respective Controlled Affiliates receives any payments of Loyalty 

Program Revenues to an account other than the Collection Account, such Person shall ACH or wire transfer 

as soon as practicable, but in any event within three (3) Business Days of receipt, any such amounts to the 

Collection Account. All amounts in the Collection Account shall be conclusively presumed to be Collateral 

and proceeds of Collateral, and the Agents and the Lenders shall have no duty to inquire as to the source of 

the amounts on deposit in the Collection Account. No Credit Party shall revoke, or permit to be revoked, 

any payment direction included in any Direct Agreement other than in connection with a replacement 

Collection Account (which shall be at a depository institution satisfactory to the Appropriate Party). 

(b) Each account control agreement with respect to each Blocked Account shall 

require, after the occurrence and during the continuance of a Payment Event, the ACH or wire transfer no 

less frequently than once per Business Day (unless the Obligations are no longer outstanding), of all 

collected and available funds in such Blocked Account (net of such minimum balance, not to exceed 

$25,000, as may be required to be kept in the subject Blocked Account by the account bank), to an account 

in the name of the Borrower maintained by the Administrative Agent at The Bank of New York Mellon 

(the “Payment Account”) or such other account as directed by the Administrative Agent. The Payment 

Accounts and the Blocked Accounts shall be non-interest bearing accounts. Funds on deposit in the Blocked 

Accounts and the Payment Accounts shall be uninvested. All amounts in the Blocked Account shall be 

conclusively presumed to be Collateral and proceeds of Collateral, and the Agents and the Lenders shall 

have no duty to inquire as to the source of the amounts on deposit in the Blocked Account. The Borrower 
64 

 

may at any time elect to apply amounts on deposit in the Blocked Account to prepay the Loans, by 

requesting that the Collateral Agent instruct the account to withdraw such amounts for such prepayment. 

(c) The Payment Account shall at all times be under the sole dominion and control of 

the Collateral Agent and shall be subject to an account control agreement in form and substance satisfactory 

to the Appropriate Party. The Credit Parties hereby acknowledge and agree that (i) the Credit Parties have 

no right of withdrawal from the Payment Account, (ii) the funds on deposit in the Payment Account shall 

at all times be collateral security for all of the Obligations, and (iii) the funds on deposit in the Payment 

Account shall be applied to repay the Loans. All amounts in the Payment Account shall be conclusively 

presumed to be Collateral and proceeds of Collateral, and the Agents and the Lenders shall have no duty to 

inquire as to the source of the amounts on deposit in the Payment Account. Upon payment in full of the 

Loans and all Obligations under this Agreement (other than contingent indemnification or reimbursement 

obligations not yet accrued and payable) and termination of the Commitments, any remaining amounts in 

the Payment Account will be released and transferred to a deposit account of the Credit Parties as the 

Borrower shall direct. 

ARTICLE VI 

NEGATIVE COVENANTS 

Until all the later of (i) the date on which all of the Obligations shall have been paid in full 

and (ii) such later date specified in this Agreement, the Credit Parties covenant and agree with the Lenders 

that: 

SECTION 6.01 [Reserved]. 

SECTION 6.02 Liens. Parent will not, and will not permit any of its Subsidiaries to, create, 

incur, assume or suffer to exist any Lien upon any property or assets constituting Collateral, whether now 

owned or hereafter acquired, except for Permitted Liens. 

SECTION 6.03 Fundamental Changes. Parent will not, and will not permit any of its 

Subsidiaries to, merge, dissolve, liquidate, consolidate with or into another Person, or Dispose of (whether in 

one transaction or in a series of transactions) all or substantially all of its assets (whether now owned or 

hereafter acquired) to or in favor of any Person, except that, so long as no Default exists or would result 

therefrom: 

(a) any Subsidiary may merge with (i) the Borrower; provided that the Borrower shall 

be the continuing or surviving Person, or (ii) any one or more other Subsidiaries; provided that (x) 

when any Wholly-Owned Subsidiary is merging with another Subsidiary, a Wholly-Owned 

Subsidiary shall be the continuing or surviving Person and (y) when any Subsidiary that is a Credit 

Party is merging with another Subsidiary, then such other Subsidiary shall be a Credit Party; 

(b) any Subsidiary may Dispose of all or substantially all of its assets (upon voluntary 

liquidation or otherwise) to the Parent or to another Subsidiary; provided that (x) if the transferor 

in such a transaction is a Wholly-Owned Subsidiary, then the transferee shall either be the Parent 

or another Wholly-Owned Subsidiary and (y) if the transferor in such a transaction is a Credit Party, 

then the transferee shall be a Credit Party; 

(c) the Parent and its Subsidiaries may make Dispositions permitted by Section 6.04; 

(d) any Investment permitted by Section 6.06 may be structured as a merger, 

consolidation or amalgamation; 
65 

 

(e) any Subsidiary may dissolve, liquidate or wind up its affairs if it owns no material 

assets, engages in no business and otherwise has no activities other than activities related to the 

maintenance of its existence and good standing; and 

(f) any Subsidiary may Dispose of all or substantially all of its assets (upon voluntary 

liquidation or otherwise), provided that such assets do not constitute all or substantially all of the 

consolidated assets of the Parent and its Subsidiaries. 

SECTION 6.04 Dispositions. Parent will not, and will not permit any of its Subsidiaries to, 

sell or otherwise make any Disposition of Collateral or enter into any agreement to make any sale or other 

Disposition of Collateral (in each case, including, without limitation by way of any sale or other Disposition 

of any Guarantor), except, subject to Article X and so long as no Default shall have occurred and be continuing 

at the time of any action described below, or would result therefrom: 

(a) the Disposition of Collateral expressly permitted under the applicable Security 

Documents; 

(b) any licenses or sublicenses (i) granted on a non-exclusive basis to customers or 

service providers in the ordinary course of business or to business partners in the ordinary course of business 

in a manner and subject to terms consistent with past practice or (ii) granted pursuant to any Loyalty 

Program Agreement in full force and effect as of the Closing Date, any successor agreement thereto or any 

new Loyalty Program Agreement, in each case that is included in the Collateral (provided that any such 

grant pursuant to such new or successor agreement is made in the ordinary course of business in a manner 

and subject to terms substantially similar with those of the predecessor Loyalty Program Agreement or with 

any Loyalty Program Agreement in full force and effect as of the Closing Date, as the case may be); 

(c) any abandonment, lapse, forfeiture or dedication to the public, in the ordinary 

course of business, of any Intellectual Property that, in the applicable Credit Party’s reasonable 

good faith judgment, is no longer used and no longer useful in the business of the Borrower or its 

Subsidiaries; 

(d) any (1) deletion, de-identification or purge of any Personal Data that is required 

under applicable Privacy Laws, under any of the Credit Parties’ public-facing privacy policies in full force 

and effect as of the Closing Date or in the ordinary course of business (including in connection with 

terminating inactive Carrier Loyalty Program accounts) pursuant to the applicable Credit Party’s privacy 

and data retention policies in full force and effect as of the Closing Date consistent with past practice, (2) 

transfer of any Loyalty Program Data to services providers for their Processing of such data on behalf of 

any of the Credit Parties in the ordinary course of business, subject to a prohibition on deletion, deidentification and purging, except as permitted under clause (1) or (3) transfer of any Loyalty Program Data 

to a third party in the ordinary course of business to the extent such Credit Party also retains a copy of such 

Loyalty Program Data; 

(e) the sale, lease or other transfer any Currency under any Loyalty Program in 

accordance with any Loyalty Program Agreement as in existence on the Closing Date (or any (i) 

permitted successor agreement thereto or (ii) new Loyalty Program Agreement permitted under 

this Agreement, in each case that is included in the Collateral) or subsequently approved by the 

Appropriate Party; 

(f) Loyalty Revenue Advance Transactions (together with any Loyalty Revenue 

Advance Transactions outstanding on the Closing Date that remain outstanding) in an aggregate 

amount not to exceed an amount equal to the greater of (x) $15,000,000 and (y) 15% of the 

aggregate amount of Collateral Cash Flow received during the most recently ended DSCR Test 

Period that has been deposited into a Collateral Account; 
66 

 

(g) to the extent constituting a Disposition of Collateral, the incurrence of Liens that 

are permitted to be incurred pursuant to Section 6.02; 

(h) to the extent constituting a Disposition of Collateral, (1) the sale or other transfer 

of Currency in the ordinary course of business under the terms of the Loyalty Program Agreements 

and (2) transfers of Currency to Loyalty Program Members in the ordinary course of business in 

accordance with program terms; 

(i) Dispositions of Collateral among the Credit Parties (including any Person that shall 

become a Credit Party simultaneous with such Disposition in the manner contemplated by 

Section 5.13); provided that: 

(i) such Collateral remains at all times subject to a Lien with the same priority 

and level of perfection as was the case immediately prior to such Disposition (and otherwise subject 

only to Permitted Liens) in favor of the Collateral Agent for the benefit of the Secured Parties 

following such Disposition; 

(ii) concurrently therewith, the Credit Parties shall execute any documents and 

take any actions reasonably required to create, grant, establish, preserve or perfect such Lien in 

accordance with the other provisions of this Agreement or the Security Documents; 

(iii) if requested by the Appropriate Party, concurrently therewith the 

Appropriate Party shall receive an opinion of counsel to the applicable Credit Party as to the validity 

and perfection of such Lien on the Collateral, in each case in form and substance satisfactory to the 

Appropriate Party; and 

(iv) concurrently with any Disposition of Collateral to any Person that shall 

become a Credit Party simultaneous with such Disposition in the manner contemplated by 

Section 5.13, such Person shall have complied with the requirements of Section 5.13; 

(j) any Disposition of property resulting from an event of loss with respect to any 

aircraft, airframe, engine, spare engine or Spare Parts if the Credit Party is replacing such aircraft, airframe, 

engine, spare engine or Spare Parts in accordance with the terms of the Loan Documents; 

(k) any Disposition of Collateral permitted by any of the Security Documents; and

(l) Dispositions of cash or Cash Equivalents in exchange for other cash or Cash 

Equivalents constituting Collateral and having reasonably equivalent value therefor. 

SECTION 6.05 Restricted Payments. Parent will not, and will not permit any of its 

Subsidiaries to, declare or make, directly or indirectly, any Restricted Payment, or incur any obligation 

(contingent or otherwise) to do so, except, that, subject to additional restrictions set forth in Article X, so long 

as no Default shall have occurred and be continuing at the time of any action described below or would result 

therefrom:

(a) each Subsidiary may make Restricted Payments to the Parent and any other Person 

that owns an Equity Interest in such Subsidiary, ratably according to their respective holdings of 

such Equity Interests in respect of which such Restricted Payment is being made; 

(b) the Parent and each Subsidiary may declare and make dividend payments or other 

distributions payable solely in common Equity Interests of such Person; 
67 

 

(c) the Parent and each Subsidiary may purchase, redeem or otherwise acquire Equity 

Interests issued by it with the proceeds received from the substantially concurrent issue of new 

common Equity Interests; 

(d) the Parent and each Subsidiary may pay withholding or similar taxes payable by 

any future, present or former employee, director or officer (or any spouses, former spouses, 

successors, executors, administrators, heirs, legatees or distributees of any of the foregoing) in 

connection with any repurchases of Equity Interests or the exercise of stock options; 

(e) the repurchase of Equity Interests or other securities deemed to occur upon (A) the 

exercise of stock options, warrants or other securities convertible or exchangeable into Equity 

Interests or any other securities, to the extent such Equity Interests or other securities represent a 

portion of the exercise price of those stock options, warrants or other securities convertible or 

exchangeable into Equity Interests or any other securities or (B) the withholding of a portion of 

Equity Interests issued to employees and other participants under an equity compensation program 

of the Parent or its Subsidiaries to cover withholding tax obligations of such persons in respect of 

such issuance; 

(f) payments of cash, dividends, distributions, advances, common stock or other 

Restricted Payments by the Parent or any of its Subsidiaries to allow the payment of cash in lieu of 

the issuance of fractional shares upon (A) the exercise of options or warrants, (B) the conversion 

or exchange of capital stock of any such Person or (C) the conversion or exchange of Indebtedness 

or hybrid securities into capital stock of any such Person; 

(g) the Parent may make cash payments in connection with any conversion or 

exchange of Convertible Indebtedness in amount equal to the sum of (i) the principal amount of 

such Convertible Indebtedness and (ii) the proceeds of any payments received by the Parent or any 

of its Subsidiaries pursuant to the exercise, settlement or termination of any related Permitted Bond 

Hedge Transaction; 

(h) the Parent may make payments in connection with a Permitted Bond Hedge 

Transaction (i) by delivery of shares of the Parent’s Equity Interests upon net share settlement 

thereof or (ii) by (A) set-off against the related Permitted Bond Hedge Transaction and (B) payment 

of an early termination amount thereof in common Equity Interests of the Parent upon any early 

termination thereof; and 

(i) Restricted Payments not to exceed the amount allowable pursuant to Schedule 

6.05(i). 

SECTION 6.06 Investments. Parent will not, and will not permit any of its Subsidiaries to, 

make any Investments, except:

(a) Investments held by the Parent or such Subsidiary in the form of cash or Cash 

Equivalents; 

(b) (i) Investments in Subsidiaries in existence on the Closing Date, (ii) other 

Investments in existence on the Closing Date and listed in Section I to Schedule 6.06 and (iii) other 

Investments described on Section II of Schedule 6.06, and, in each case, any refinancing, refunding, 

renewal or extension of any such Investment that does not increase the amount thereof; 

(c) advances to officers, directors and employees of the Parent and its Subsidiaries in 

an aggregate amount not exceeding, at any time outstanding, an amount that is customary and 
68 

 

consistent with past practice, for travel, entertainment, relocation and similar ordinary business 

purposes; 

(d) (x) Investments of the Parent in the Borrower or any other Credit Party, (y) 

Investments of any Subsidiary in the Parent or any other Credit Party and (z) Investments made 

between Subsidiaries that are not Credit Parties; provided that any such Investments made pursuant 

to this clause (d) in the form of intercompany indebtedness incurred by a Credit Party and owed to 

a Subsidiary that is not a Credit Party shall be subordinated to the Obligations and the Guaranteed 

Obligations on customary terms (it being understood and agreed that any Investments permitted 

under this clause (d) in the form of intercompany indebtedness that are not already subordinated on 

such terms as of the Closing Date shall not be required to be so subordinated until the date that is 

thirty (30) days after the Closing Date); 

(e) Investments consisting of extensions of credit in the nature of accounts receivable 

or notes receivable arising from the grant of trade credit in the ordinary course of business, and 

Investments received in satisfaction or partial satisfaction thereof from financially troubled account 

debtors to the extent reasonably necessary in order to prevent or limit loss; 

(f) Investments consisting of the indorsement by the Parent or any Subsidiary of 

negotiable instruments payable to such Person for deposit or collection in the ordinary course of 

business; 

(g) to the extent constituting an Investment, transactions otherwise permitted by 

Sections 6.03 and 6.05; 

(h) any Investments received in compromise or resolution of (i) obligations of trade 

creditors or customers that were incurred in the ordinary course of business of Parent or any of its 

Subsidiaries, including pursuant to any plan of reorganization or similar arrangement upon the 

bankruptcy or insolvency of any trade creditor or customer or (ii) litigation, arbitration or other 

disputes; 

(i) Investments represented by obligations in respect of Swap Contracts that are not 

speculative in nature and that are entered into to hedge or mitigate risks to which the Parent or any 

of its Subsidiaries has (or will have) actual exposure (other than those in respect of the Equity 

Interests or Indebtedness of the Parent or any of its Subsidiaries); 

(j) accounts receivable arising in the ordinary course of business; 

(k) any guarantee of Indebtedness of Parent or any Subsidiary of Parent, other than 

any guarantee of Indebtedness secured by Liens that would not be permitted under Section 6.02; 

(l) Investments to the extent that payment for such Investment is made with the capital 

stock of the Parent; 

(m) Investments having an aggregate fair market value (measured on the date each such 

Investment was made and without giving effect to subsequent changes in value other than a 

reduction for all returns of principal in cash and capital dividends in cash), when taken together 

with all Investments made pursuant to this clause (n) that are at the time outstanding, not to exceed 

30% of the total consolidated assets of the Parent and its Subsidiaries at the time of such Investment; 

(n) Permitted Bond Hedge Transactions to the extent constituting Investments; and 
69 

 

(o) Investments in Finance Entities in the ordinary course of business of the Parent 

and its Subsidiaries or that are otherwise customary for airlines based in the United States. 

SECTION 6.07 Transactions with Affiliates. Parent will not, and will not permit any of its 

Subsidiaries to, enter into any transaction of any kind involving aggregate payments or consideration in excess 

of $50,000,000 with any Affiliate of the Parent, whether or not in the ordinary course of business, other than 

on fair and reasonable terms substantially as favorable to the Parent or such Subsidiary as would be obtainable 

by the Parent or such Subsidiary at the time in a comparable arm’s-length transaction with a Person other than 

an Affiliate, subject to delivery of (x) with respect to any transaction or series of related transactions involving 

aggregate consideration in excess of $100,000,000, a certificate of a Responsible Officer of the Parent 

certifying as to compliance with the foregoing and (y) with respect to any transaction or series of related 

transactions involving aggregate consideration in excess of $150,000,000, an opinion as to the fairness to the 

Parent or such Subsidiary of such transaction from a financial point of view issued by an accounting, appraisal 

or investment banking firm of national standing (provided that this clause (y) shall not apply to any transaction 

between or among the Parent or any of its Subsidiaries and any Finance Entities); provided that, subject to 

Article X, the foregoing restriction shall not apply to: 

(a) transactions between or among the Parent and any Wholly-Owned Subsidiaries, 

(b) Restricted Payments permitted by Section 6.05, 

(c) Investments permitted by Section 6.06(b), or (c) or (d), 

(d) transactions described in Schedule 6.07, 

(e) any employment agreement, confidentiality agreement, non-competition 

agreement, incentive plan, employee stock option agreement, long-term incentive plan, profit sharing plan, 

employee benefit plan, officer or director indemnification agreement or any similar arrangement entered 

into by the Parent or any of its Subsidiaries in the ordinary course of business and payments pursuant 

thereto, and 

(f) payment of fees, compensation, reimbursements of expenses (pursuant to 

indemnity arrangements or otherwise) and reasonable and customary indemnities provided to or on behalf 

of officers, directors, employees or consultants of the Parent or any of its Subsidiaries.

SECTION 6.08 [Reserved]. 

SECTION 6.09 [Reserved]. 

SECTION 6.10 Changes in Nature of Business. Parent will not, and will not permit any of 

its Subsidiaries to, engage to any material extent in any business other than those businesses conducted by 

the Parent and its Subsidiaries on the date hereof or any business reasonably related or incidental thereto or 

representing a reasonable expansion thereof. 

SECTION 6.11 Sanctions; AML Laws. Parent will not, and will not permit any of its 

Subsidiaries to, directly or knowingly indirectly, use the proceeds of the Loans, or lend, contribute or 

otherwise make available such proceeds to any Subsidiary, joint venture partner or other Person to fund any 

activities or business of or with any Person in a manner that would result in a violation of Sanctions or AML 

Laws by any Person. 

SECTION 6.12 Amendments to Organizational Documents. Parent will not, and will not 

permit any of its Subsidiaries to amend, modify, or grant any waiver or release under or terminate in any 
70 

 

manner, any Organizational Documents in any manner materially adverse to, or which would impair the rights 

of, the Lenders. 

SECTION 6.13 [Reserved]. 

SECTION 6.14 Prepayments of Junior Indebtedness. Parent will not, and will not permit 

any of its Subsidiaries to, make any principal payment on, or redeem, repurchase, defease or otherwise acquire 

or retire for value, in each case prior to any scheduled repayment, sinking fund payment or maturity, any 

Indebtedness secured by junior Liens on the Collateral or that is subordinated in right of payment to the 

Obligations, in each case other than in connection with a Permitted Refinancing of such Indebtedness. 

SECTION 6.15 Lobbying. Parent will not, and will not permit any of its Subsidiaries to, 

directly, or to the Parent or such Subsidiary’s knowledge, indirectly, use the proceeds of the Loans, or lend, 

contribute, or otherwise make available such proceeds to any other Person (i) for publicity or propaganda 

purposes designated to support or defeat legislation pending before the U.S. Congress or (ii) to fund any 

activities that would constitute “lobbying activities” as defined under 2 U.S.C. § 1602. The Parent shall, and 

shall cause its subsidiaries to, comply with the provisions of 31 U.S.C. § 1352, as amended, and with the 

regulations at 31 CFR Part 21. 

SECTION 6.16 Use of Proceeds. Parent will not, and will not permit any of its Subsidiaries 

to, use the proceeds of the Loans for any purpose other than for general corporate purposes and operating 

expenses (including payroll, rent, utilities, materials and supplies, repair and maintenance, and scheduled 

interest payments on other Indebtedness incurred before February 15, 2020), in each case in compliance with 

all applicable law to the extent permitted by the CARES Act; provided however that the proceeds of the Loans 

shall not be used for any non-operating expenses (including capital expenses, delinquent taxes and payments 

of principal on other Indebtedness), unless the Parent can demonstrate, to the satisfaction of the Initial Lender, 

that payment of any such non-operating expense is necessary to optimize the continued operations of the 

Parent’s business and does not merely constitute a transfer of risk from an existing creditor or investor to the 

Federal taxpayer.

SECTION 6.17 Financial Covenants.

(a) Liquidity. The Parent will not permit the aggregate amount of Liquidity at the 

close of any Business Day to be less than $500,000,000. 

(b) Collateral Coverage Ratio. 

(i) Within ten (10) Business Days after (x) the last day of March and 

September of each year (beginning with March 2021) or (y) any date on which an Appraisal is 

delivered pursuant to clause (2) of Section 5.16 (each such date in clauses (x) and (y), a “CCR 

Reference Date” and the tenth Business Day after a CCR Reference Date, a “CCR Certificate 

Delivery Date”), the Parent shall deliver to the Administrative Agent a certificate of a Responsible 

Officer of the Parent containing a calculation of the Collateral Coverage Ratio (a “CCR 

Certificate”). 

(ii) If the Collateral Coverage Ratio with respect to any CCR Reference Date 

is less than 1.60 to 1.00, the Borrower shall, no later than ten (10) Business Days after the applicable 

CCR Certificate Delivery Date, (x) prepay any outstanding Loans such that following such 

prepayment, the Collateral Coverage Ratio with respect to such CCR Reference Date, recalculated 

by subtracting any such prepaid portion of the Loans, shall be no less than 1.60 to 1.00 and/or (y) 

designate Additional Collateral as additional Eligible Collateral and comply with Sections 5.13 

and 5.15, collectively, in an amount such that following such designation, the Collateral Coverage 
71 

 

Ratio with respect to such CCR Reference Date, recalculated by adding such Additional Collateral, 

shall be no less than 1.60 to 1.00. 

(iii) At the Parent’s request, the Lien on the Loyalty Program Assets under the 

Security Documents will be released, provided, in each case, that the following conditions are 

satisfied or waived: (a) no Event of Default shall have occurred and be continuing, (b) either (x) 

after giving effect to such release and to any Commitment reductions pursuant to Section 2.07, the 

Collateral Coverage Ratio is not less than 2.00 to 1.00 or (y) the Parent shall prepay or cause to be 

prepaid the Loans and/or shall designate Eligible Collateral as Additional Collateral and comply 

with Sections 5.13 and 5.15, collectively, in an amount necessary to cause the Collateral Coverage 

Ratio to not be less than 2.00 to 1.00, (c) the Parent shall deliver a certificate executed by a 

Responsible Officer demonstrating compliance with this Section 6.17(b)(iii) and (d) the 

Administrative Agent (acting at the direction of the Required Lenders) has given notice to the 

Parent of such release in accordance with this Section 6.17(b)(iii). Upon any release in accordance 

with the terms of this Section 6.17(b)(iii), the IP License Agreement, the Trademark Security 

Agreement, Annex 1 of the Pledge and Security Agreements and each Direct Agreement with a 

Loyalty Program Participant will terminate automatically, and the agents (acting at the direction of 

the Required Lenders) shall take all actions reasonably requested by the Parent to evidence such 

releases, notify the parties to the Direct Agreements, and file any reasonably required public notices 

of such releases (and the Lenders shall instruct the Agents accordingly). 

(A) Upon notice from the Administrative Agent (acting at the 

direction of the Required Lenders) to the Borrower that all the requirements set forth in 

Section 6.17(b)(iii) have been complied with and the Liens on all Loyalty Program Assets 

have been released in accordance therewith, then: (1) the Credit Parties shall not be subject 

to the provisions of this Agreement set forth under 

Sections 2.06(b)(iv), 2.06(b)(v), 2.06(b)(vi), 3.08, 3.27, 3.28, 5.02(i), 5.19 5.20 and 6.17(c) 

and the last sentence of Section 5.15, in each case to the extent such provision relates to 

the Loyalty Program Assets or any other Loyalty Terms (as defined below); (2) the 

requirement to deliver a certificate pursuant to Section 5.02(j) with calculations of the Debt 

Service Coverage Ratio on each DSCR Determination Date shall no longer apply; (3) the 

requirement to deliver a certificate pursuant to Section 5.02(k) for any period during which 

no Liens on Loyalty Program Assets were in effect shall no longer apply; (4) the restrictions 

on Loyalty Revenue Advance Transactions set forth under 

Sections 6.04(b), 6.04(d), 6.04(e), 6.04(f) and 6.04(h) shall no longer apply; (5) the Events 

of Default set forth under Sections 7.01(p), 7.01(q), 7.01(r) and 7.01(s) shall no longer 

apply; and (6) the language “(iii) with respect to any Personal Data, any deletion, deidentification, purging or other similar disposition of Personal Data” shall be deemed 

deleted from the definition of the terms “Disposition” and “Dispose”. For purposes hereof, 

“Loyalty Terms” means Loyalty Program Data, Loyalty Program Intellectual Property, 

Loyalty Program Revenues, Loyalty Program Agreements, Material Loyalty Program 

Agreements, Loyalty Revenue Advance Transaction, Loyalty Subscription Program or any 

similar loyalty related term. 

(iv) At the Parent’s request, the Lien on any Additional Collateral will be 

released, provided, in each case, that the following conditions are satisfied or waived: (a) no Event 

of Default shall have occurred and be continuing, (b) either (x) after giving effect to such release, 

the Collateral Coverage Ratio is not less than 2.00 to 1.00 (or in the case of a swap or exchange of 

existing Additional Collateral with new Additional Collateral, less than 1.60 to 1.00) or (y) the 

Parent shall prepay or cause to be prepaid the Loans and/or shall designate Eligible Collateral as 

Additional Collateral and comply with Sections 5.13 and 5.15, collectively, in an amount necessary 

to cause the Collateral Coverage Ratio to not be less than 2.00 to 1.00 (or in the case of a swap or 

exchange of existing Additional Collateral with new Additional Collateral, less than 1.60 to 1.00) 
72 

 

and (c) the Parent shall deliver a certificate executed by a Responsible Officer demonstrating 

compliance with this Section 6.17(b)(iv). 

(c) Debt Service Coverage Ratio. 

(i) On each DSCR Determination Date, the Parent shall deliver to the 

Administrative Agent a certificate of a Responsible Officer of the Parent (x) containing a 

calculation of the Debt Service Coverage Ratio and (ii) certifying that all Loyalty Program Revenue 

for such DSCR Test Period has been deposited, directly or indirectly, into the Collection Account 

or another Collateral Account (and at least 90% of all Loyalty Program Revenues (excluding 

revenues generated under any Loyalty Subscription Program) were deposited directly into a 

Collateral Account); and 

(ii) if the Debt Service Coverage Ratio with respect to any DSCR 

Determination Date is less than 1.75 to 1.00 (a “DSCR Trigger Event”), then the Parent and the 

Subsidiaries shall cause an amount equal to at least 50% of all Loyalty Program Revenues received 

thereafter to be transferred (as such payments are received) from the Collection Account to a 

Blocked Account to be held for the benefit of the Lenders (which amounts on deposit in the Blocked 

Account may be used to prepay the Loans at the option of the Borrower, upon request to the 

Collateral Agent) until the first DSCR Determination Date on which the Debt Service Coverage 

Ratio is 1.75 to 1.00 or more, whereupon such amounts may be transferred from the Blocked 

Account to the Collection Account following a request to the Collateral Agent; 

(iii) if the Debt Service Coverage Ratio with respect to any DSCR 

Determination Date is less than or equal to 1.50 to 1.00 but greater than 1.25 to 1.00, then (x) all 

amounts then deposited in the Blocked Account shall be applied to prepay the Loans and (y) the 

Parent and the Subsidiaries shall cause an amount equal to at least 50% of all Loyalty Program 

Revenues received thereafter to be transferred (as such payments are received) from the Collection 

Account to the Payment Account with all such amounts deposited into the Payment Account to be 

applied to the prepayment of any Loans then outstanding until the first DSCR Determination Date 

on which the Debt Service Coverage Ratio is greater than 1.50 to 1.00; and 

(iv) if the Debt Service Coverage Ratio with respect to any DSCR 

Determination Date is less than or equal to 1.25 to 1.00, then (x) all amounts then deposited in the 

Blocked Account shall be applied to prepay the Loans and (y) the Parent and the Subsidiaries shall 

cause an amount equal to at least 75% of all Loyalty Program Revenues received thereafter to be 

transferred (as such payments are received) from the Collection Account to the Payment Account 

with all such amounts deposited into the Payment Account to be applied to the prepayment of any 

Loans then outstanding until the first DSCR Determination Date on which the Debt Service 

Coverage Ratio is greater than 1.25 to 1.00. 

ARTICLE VII 

EVENTS OF DEFAULT 

SECTION 7.01 Events of Default. If any of the following events (each, an “Event of 

Default”) shall occur: 

(a) the Borrower shall fail to pay any principal of any Loan when and as the same shall 

become due and payable, whether at the due date thereof or at a date fixed for prepayment thereof 

or otherwise; 
73 

 

(b) the Borrower shall fail to pay any interest on any Loan, or any fee or any other 

amount (other than an amount referred to in clause (a) of this Section) payable under this Agreement 

or under any other Loan Document, when and as the same shall become due and payable, and such 

failure shall continue unremedied for a period of two (2) or more Business Days; 

(c) any representation or warranty made or deemed made by or on behalf of any Credit 

Party, including those made prior to the Closing Date, in or in connection with this Agreement, the 

Loan Application Form or any other Loan Document or any amendment or modification hereof or 

thereof, or any waiver hereunder or thereunder, or in any report, certificate, financial statement or 

other document furnished pursuant to or in connection with this Agreement, the Loan Application 

Form or any other Loan Document or any amendment or modification hereof or thereof, or any 

waiver hereunder or thereunder, shall prove to have been incorrect in any material respect (or, in 

the case of any such representation or warranty under this Agreement, the Loan Application Form 

or any other Loan Document already qualified by materiality, such representation or warranty shall 

prove to have been incorrect) when made or deemed made; 

(d) any Credit Party shall fail to observe or perform any covenant, condition or 

agreement contained in Section 5.03(a), 5.04 (with respect to the Borrower’s existence) or in 

Article VI or Article X; 

(e) any Credit Party shall fail to observe or perform any covenant, condition or 

agreement contained in this Agreement or any other Loan Document (other than those specified in 

clause (a), (b) or (d) of this Section) and such failure shall continue unremedied for a period of 

thirty (30) or more days after notice thereof by the Administrative Agent or the Initial Lender to 

the Parent; 

(f) (i) Any Credit Party or any Subsidiary thereof shall fail to make any payment when 

due (whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise) in 

respect of any Material Indebtedness (other than Indebtedness under this Agreement) and such 

failure shall continue after the applicable grace period, if any, specified in the agreement or 

instrument governing such Material Indebtedness; or (ii) any Credit Party or any Subsidiary thereof 

shall fail to observe or perform any other agreement or condition relating to any such Indebtedness 

or contained in any instrument or agreement evidencing, securing or relating thereto, or any other 

event occurs, the effect of which default or other event results in the holder or holders or beneficiary 

or beneficiaries of such Indebtedness (or a trustee or agent on behalf of such holder or holders or 

beneficiary or beneficiaries) causing such Indebtedness to become due or to be repurchased, 

prepaid, defeased or redeemed (automatically or otherwise), or causing an offer to repurchase, 

prepay, defease or redeem such Indebtedness to be made, prior to its stated maturity; provided that 

this clause (f)(ii) shall not apply to secured Indebtedness that becomes due as a result of the 

voluntary sale or transfer (or disposition of property as a result of a casualty or condemnation event) 

of the property or assets securing such Indebtedness, if such sale or transfer is permitted hereunder 

and under the documents providing for such Indebtedness and such Indebtedness is repaid when 

required under the documents providing for such Indebtedness; 

(g) an involuntary proceeding shall be commenced or an involuntary petition shall be 

filed seeking (i) liquidation, reorganization or other relief in respect of any Credit Party or any 

Material Subsidiary thereof or its debts, or of a substantial part of its assets, under any Debtor Relief 

Law now or hereafter in effect or (ii) the appointment of a receiver, trustee, custodian, sequestrator, 

conservator or similar official for any Credit Party or any Material Subsidiary thereof or for a 

substantial part of its assets, and, in any such case, such proceeding or petition shall continue 

undismissed for a period of sixty (60) or more days or an order or decree approving or ordering any 

of the foregoing shall be entered; 
74 

 

(h) any Credit Party or any Material Subsidiary thereof shall (i) voluntarily commence 

any proceeding or file any petition seeking liquidation, reorganization or other relief under any 

Debtor Relief Law now or hereafter in effect, (ii) consent to the institution of, or fail to contest in 

a timely and appropriate manner, any proceeding or petition described in clause (g) of this Section, 

(iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, 

conservator or similar official for the Parent or any of its Subsidiaries or for a substantial part of its 

assets, (iv) file an answer admitting the material allegations of a petition filed against it in any such 

proceeding, (v) make a general assignment for the benefit of creditors or (vi) take any action for 

the purpose of effecting any of the foregoing; 

(i) any Credit Party or any Material Subsidiary thereof shall become unable, admit in 

writing its inability or fail generally to pay its debts as they become due; 

(j) there is entered against any Credit Party or any Material Subsidiary thereof (i) a 

final judgment or order for the payment of money in an aggregate amount (as to all such judgments 

and orders) exceeding $50,000,000 (to the extent not covered by independent third-party insurance 

as to which the insurer has been notified of such judgment or order and has not denied or failed to 

acknowledge coverage), or (ii) a non-monetary final judgment or order that, either individually or 

in the aggregate, has or could reasonably be expected to have a Material Adverse Effect and, in 

either case, (A) enforcement proceedings are commenced by any creditor upon such judgment or 

order, or (B) there is a period of thirty (30) consecutive days during which a stay of enforcement 

of such judgment, by reason of a pending appeal or otherwise, is not in effect; 

(k) an ERISA Event occurs with respect to a Pension Plan or Multiemployer Plan that 

has resulted or could reasonably be expected to result in liability of any Credit Party under Title IV 

of ERISA to the Pension Plan, Multiemployer Plan or the PBGC that, either individually or in the 

aggregate, has or could reasonably be expected to have a Material Adverse Effect; 

(l) [reserved]; 

(m) any material provision of any Loan Document, at any time after its execution and 

delivery and for any reason other than as expressly permitted hereunder or thereunder or 

satisfaction in full of all Obligations, ceases to be in full force and effect; or any Credit Party or 

any other Person who is a party to any Loan Document contests in writing the validity or 

enforceability of any provision of any Loan Document; or any Credit Party denies in writing that it 

has any or further liability or obligation under any Loan Document, or purports in writing to revoke, 

terminate or rescind any Loan Document; 

(n) any Lien purported to be created under any Security Document shall cease to be, 

or shall be asserted in writing by any Credit Party not to be, a legal, valid and perfected Lien on 

any material portion of the Collateral (individually or in the aggregate), with the priority required 

by the applicable Security Documents, except (i) as a result of the sale or other Disposition of the 

applicable Collateral to a Person that is not a Credit Party in a transaction not prohibited under the 

Loan Documents or (ii) as a result of either Agent’s failure to maintain possession of any stock 

certificates, promissory notes or other instruments delivered to it under the Security Documents or 

(iii) as a result of acts or omissions with respect to possessory collateral held by the Collateral 

Agent pursuant to this Agreement; 

(o) any Guarantee of any Obligations by any Credit Party under any Loan Document 

shall cease to be in full force in effect (other than in accordance with the terms of the Loan 

Documents); 
75 

 

(p) a default or breach by any Credit Party of its material obligations under a Material 

Loyalty Program Agreement beyond any applicable notice and cure periods thereunder; 

(q) an exit from, or a termination or cancellation of, any Carrier Loyalty Program (and 

in the case of any Loyalty Subscription Program, such program as a whole by a Credit Party, and 

not any individual cancellation or termination by a consumer) in effect on the Closing Date or any 

Material Loyalty Program Agreement other than in connection with any replacement expressly 

permitted hereunder; 

(r) any material provision of any Material Loyalty Program Agreement, at any time 

after its execution and delivery and for any reason other than as expressly permitted hereunder or 

thereunder or satisfaction in full of all Obligations, ceases to be in full force and effect; or any 

Credit Party contests in writing the validity or enforceability of any provision of any Material 

Loyalty Program Agreement; or any Credit Party denies in writing that it has any or further liability 

or obligation under any Material Loyalty Program Agreement, or purports in writing to revoke, 

terminate or rescind any Material Loyalty Program Agreement; or 

(s) any Credit Party makes a Material Modification to a Material Loyalty Program 

Agreement without the prior written consent of the Required Lenders. 

then, and in every such event (other than an event described in clause (g) or (h) of this Section), and at any 

time thereafter during the continuance of such event, the Initial Lender may, and the Administrative Agent 

may, and at the request of the Required Lenders or the Initial Lender shall, by notice to the Borrower, take 

any or all of the following actions, at the same or different times: 

(i) declare the Loans then outstanding to be due and payable in whole (or in 

part, in which case any principal not so declared to be due and payable may thereafter be declared 

to be due and payable), and thereupon the principal of the Loans so declared to be due and payable, 

together with accrued interest thereon and all fees and other Obligations of the Credit Parties 

accrued hereunder, shall become due and payable immediately, without presentment, demand, 

protest or other notice of any kind, all of which are hereby waived by the Borrower and the other 

Credit Parties; and 

(ii) exercise on behalf of itself and the Lenders all rights and remedies 

available to it and the Lenders under the Loan Documents and Applicable Law; 

provided that, in case of any event described in clause (g) or (h) of this Section, the principal of the Loans 

then outstanding, together with accrued interest thereon and all fees and other Obligations accrued 

hereunder, shall automatically become due and payable, in each case without presentment, demand, protest 

or other notice of any kind, all of which are hereby waived by the Credit Parties. 

SECTION 7.02 Application of Payments. Notwithstanding anything herein to the contrary, 

following the occurrence and during the continuance of an Event of Default, and notice thereof to the Initial 

Lender and the Administrative Agent by the Borrower or the Required Lenders, all payments received on 

account of the Obligations shall be applied by the Administrative Agent as follows: 

(i) first, to payment of that portion of the Obligations constituting fees, 

indemnities, expenses and other amounts (including fees and disbursements and other charges of 

counsel payable under Section 11.03 and amounts payable under an Administrative Agency Fee 

Letter (if any)) payable to the Administrative Agent and the Collateral Agent in their respective 

capacities as such; 
76 

 

(ii) second, to payment of that portion of the Obligations constituting fees, 

indemnities and other amounts (other than principal and interest) payable to the Lenders (including 

fees and disbursements and other charges of counsel payable under Section 11.03) arising under 

the Loan Documents, ratably among them in proportion to the respective amounts described in this 

clause (ii) payable to them; 

(iii) third, to payment of that portion of the Obligations constituting accrued 

and unpaid interest on the Loans, ratably among the Lenders in proportion to the respective amounts 

described in this clause (iii) payable to them; 

(iv) fourth, to payment of that portion of the Obligations constituting unpaid 

principal of the Loans ratably among the Lenders in proportion to the respective amounts described 

in this clause (iv) payable to them; 

(v) fifth, to the payment in full of all other Obligations, in each case ratably 

among the Administrative Agent and the Lenders based upon the respective aggregate amounts of 

all such Obligations owing to them in accordance with the respective amounts thereof then due and 

payable; and 

(vi) finally, the balance, if any, after all Obligations have been indefeasibly 

paid in full, to the Borrower or as otherwise required by Law. 

ARTICLE VIII 

AGENCY 

SECTION 8.01 Appointment and Authority. Each Lender hereby irrevocably appoints The 

Bank of New York Mellon to act on its behalf as the Administrative Agent and as the Collateral Agent 

hereunder and under the other Loan Documents and authorizes the Agents to take such actions on its behalf 

and to exercise such powers as are delegated to such Agent by the terms of the Loan Documents, together 

with such actions and powers as are reasonably incidental or related thereto; provided that notwithstanding 

anything in this Article VIII or this Agreement to the contrary, the terms and conditions of the relationship 

between the Initial Lender and the Agents shall be governed by a separate agreement between the Initial 

Lender and the Agents. The Borrower and the Guarantors acknowledge and agree that the Agents are 

Agents of the Lenders and not of the Borrower or the Guarantors. In connection with an assignment of the 

Loans by the Initial Lender, upon the Administrative Agent’s request, the Borrower and the Agents shall 

enter into an Administrative Agency Fee Letter. The provisions of this Article are solely for the benefit of 

the Agents and the Lenders, and the Borrower shall not have rights as a third-party beneficiary of any of 

such provisions. Without limiting the generality of the foregoing, the Agents are hereby expressly 

authorized to (i) execute any and all documents (including releases) with respect to the Collateral and the 

rights of the Secured Parties with respect thereto, as contemplated by and in accordance with the provisions 

of this Agreement and the other Loan Documents and (ii) negotiate, enforce or settle any claim, action or 

proceeding affecting the Lenders in their capacity as such, at the direction of the Required Lenders, which 

negotiation, enforcement or settlement will be binding upon each Lender. 

SECTION 8.02 Collateral Matters. Each of the Lenders hereby irrevocably appoints and 

authorizes the Collateral Agent to act as the agent of such Lender for purposes of acquiring, holding and 

enforcing any and all Liens on Collateral granted by any of the Credit Parties to secure any of the Obligations, 

together with such powers and discretion as are reasonably incidental thereto and to enter into and perform 

the other Loan Documents. 

SECTION 8.03 Removal or Resignation of Administrative Agent. While the Initial Lender 

is a Lender, the Administrative Agent may be removed or give notice of its resignation subject to any 
77 

 

conditions as separately agreed between the Initial Lender and the Administrative Agent. Any such 

resignation as Administrative Agent pursuant to this Section 8.03 shall also constitute its resignation as the 

Collateral Agent; provided that in the case of any collateral security held by the Collateral Agent on behalf 

of the Lenders under any of the Loan Documents, the retiring or removed Collateral Agent shall continue to 

hold such collateral security until such time as a successor Collateral Agent is appointed. Upon such removal 

or receipt of any such notice of resignation, the Initial Lender shall have the right to appoint a successor. 

After the Initial Lender is no longer a Lender, either Agent may resign at any time by notifying the Lenders 

and the Borrower in writing, and either Agent may be removed at any time with or without cause by an 

instrument or concurrent instruments in writing delivered to the Borrower and such Agent and signed by the 

Required Lenders. Upon any such resignation or removal, the Required Lenders shall have the right, with 

the consent of the Borrower (which consent shall not be required during the continuance of an Event of 

Default), to appoint a successor. If no successor shall have been so appointed by the Required Lenders (with 

the consent of the Borrower (which consent shall not be required during the continuance of an Event of 

Default)) and shall have accepted such appointment within 30 days after (i) the retiring Agent gives notice of 

its resignation or (ii) the Required Lenders deliver removal instructions, then the retiring or removed Agent 

may, on behalf of the Lenders (with the consent of the Borrower (which consent shall not be required during 

the continuance of an Event of Default)), appoint a successor Agent which shall be a bank with an office in 

New York, New York, or an Affiliate of any such bank. If no successor Agent has been appointed pursuant 

to the immediately preceding sentence, such Agent’s resignation or removal shall become effective and the 

Required Lenders shall thereafter perform all the duties of such Agent hereunder and/or under any other Loan 

Document until such time, if any, as the Required Lenders (with the consent of the Borrower (which consent 

shall not be required during the continuance of an Event of Default)) appoint a successor Administrative 

Agent and/or Collateral Agent, as the case may be. Upon the acceptance of its appointment as Agent 

hereunder by a successor, such successor shall succeed to and become vested with all the rights, powers, 

privileges and duties of its predecessor Agent, and its predecessor Agent shall be discharged from its duties 

and obligations hereunder. The fees payable by the Borrower to a successor Agent shall be the same as those 

payable to its predecessor unless otherwise agreed between the Borrower and such successor. After an 

Agent’s resignation hereunder, the provisions of this Article and Section 9.03 shall continue in effect for the 

benefit of such retiring Agent, its sub-agents and their respective Related Parties in respect of any actions 

taken or omitted to be taken by any of them while acting as Agent. 

SECTION 8.04 Exculpatory Provisions. 

(a) The Agents shall not have any duties or obligations except those expressly set forth 

herein and in the other Loan Documents or as separately agreed between the Initial Lender and the Agents, 

and its duties hereunder shall be administrative in nature. Without limiting the generality of the foregoing: 

(i) neither Agent shall be subject to any fiduciary or other implied duties, 

regardless of whether a Default has occurred and is continuing, except that The Bank of New York 

Mellon shall always have a fiduciary duty to Treasury while serving as its Agent in accordance 

with the provisions of the separate writing between The Bank of New York Mellon and Treasury; 

(ii) neither Agent shall have any duty to take any discretionary action or 

exercise any discretionary powers, except discretionary rights and powers expressly contemplated 

hereby or by the other Loan Documents that such Agent is required to exercise as directed in writing 

by the Required Lenders (or such other number or percentage of the Lenders as shall be expressly 

provided for herein or in the other Loan Documents); and 

(iii) except as expressly set forth herein and in the other Loan Documents, 

neither Agent shall have any duty to disclose, nor shall it be liable for the failure to disclose, any 

information relating to the Borrower or any of the Subsidiaries that is communicated to or obtained 

by the bank serving as Administrative Agent and/or Collateral Agent or any of its Affiliates in any 

capacity. 
78 

 

(b) Neither Agent shall be required to expend or risk its own funds or otherwise incur 

liability in the performance of any of its duties hereunder or under any other Loan Document or in the 

exercise of any of its rights or powers. Notwithstanding anything in any Loan Document to the contrary, 

prior to taking any action under this Agreement or any other Loan Document, each Agent shall be entitled 

to indemnification satisfactory to it in its sole discretion against all losses and expenses in connection with 

taking such action. Neither Agent shall be liable for any action taken or not taken by it with the consent or 

at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be 

necessary under the circumstances as provided in Sections 7.01 and 11.02) or in the absence of its own 

gross negligence or willful misconduct as determined by the final non-appealable judgment of a court of 

competent jurisdiction. Notwithstanding the foregoing, no action nor any omission to act, taken by either 

Agent at the direction of the Required Lenders (or such other number of percentage of Lenders as shall be 

expressly provided for herein or in the other Loan Documents) shall constitute gross negligence or willful 

misconduct. Neither Agent shall be deemed to have knowledge of any Default unless and until written 

notice thereof, conspicuously labeled as a “notice of default” and specifically describing such Default, is 

given to an Agent Responsible Officer by the Borrower or a Lender. 

(c) Neither Agent shall be responsible for or have any duty to ascertain or inquire into 

(i) any statement, warranty or representation made in or in connection with this Agreement or any other 

Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or 

thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the 

covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any 

Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan 

Document or any other agreement, instrument or document, or (v) the satisfaction of any condition set forth 

in Article IV or elsewhere herein, other than to confirm receipt of items expressly required to be delivered 

to the Administrative Agent. 

(d) In no event shall either Agent be responsible or liable for any failure or delay in 

the performance of its obligations hereunder or under any other Loan Document arising out of or caused 

by, directly or indirectly, forces beyond its control, including, without limitation, strikes, work stoppages, 

epidemics, accidents, acts of war or terrorism, civil or military disturbances, nuclear or natural catastrophes 

or acts of God, and interruptions, loss or malfunctions of utilities, communications or computer (software 

and hardware) services (it being understood that such Agent shall use reasonable efforts which are 

consistent with accepted practices in the banking industry to resume performance as soon as practicable 

under the circumstances). 

(e) Each Agent shall be entitled to rely upon, and shall not incur any liability for 

relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing 

believed by it in good faith to be genuine and to have been signed or sent by the proper Person. Each Agent 

may also rely upon any statement made to it orally or by telephone and believed by it in good faith to have 

been made by the proper Person, and shall not incur any liability for relying thereon. Delivery of reports, 

information and documents to an Agent is for informational purposes only and an Agent’s receipt of the 

foregoing will not constitute actual or constructive knowledge or notice of any information contained 

therein or determinable from information contained therein, including the Borrower’s compliance with any 

of its covenants hereunder. Each Agent may consult with legal counsel (who may be counsel for the 

Borrower), independent accountants and other experts selected by it, and shall not be liable for any action 

taken or not taken by it in reliance on the advice of any such counsel, accountants or experts. Any funds 

held by an Agent shall, unless otherwise agreed in writing with the Borrower, be held uninvested in a noninterest bearing account. 

(f) Neither Agent shall have any obligation to calculate or confirm the calculation of 

any financial covenant contained herein. 
79 

 

(g) Notwithstanding anything to the contrary in any Loan Document, neither Agent 

shall be responsible for the existence, genuineness or value of any of the Collateral; for filing any financing 

or continuation statements or recording any documents or instruments in any public office or otherwise 

perfecting or maintaining the perfection of any security interest in the Collateral (except, in the case of 

possessory Collateral, for the Collateral Agent maintaining possession of any such Collateral received by 

it in accordance with the terms of the Loan Documents); for the validity, perfection, priority or 

enforceability of the Liens in any of the Collateral; for the validity or sufficiency of the Collateral or any 

agreement or assignment contained therein; for the validity of the title of any grantor to the Collateral; for 

insuring the Collateral; or for the payment of taxes, charges or assessments on the Collateral. The Collateral 

Agent agrees that it will check any possessory Collateral received by it against any itemized list in the 

Pledge and Security Agreements of Collateral to be delivered to it in accordance with the Pledge and 

Security Agreements. 

SECTION 8.05 Reliance by Agents. Each Agent shall be entitled to rely upon, and shall 

not incur any liability for relying upon, any notice, request, certificate, opinion, consent, statement, 

instrument, document or other writing believed by it in good faith to be genuine and to have been signed or 

sent by the proper Person. Each Agent may also rely upon any statement made to it orally or by telephone 

and believed by it in good faith to have been made by the proper Person, and shall not incur any liability 

for relying thereon. Delivery of reports, information and documents to an Agent is for informational 

purposes only and an Agent’s receipt of the foregoing will not constitute actual or constructive knowledge 

or notice of any information contained therein or determinable from information contained therein, 

including the Borrower’s compliance with any of its covenants hereunder. Each Agent may consult with 

legal counsel (who may be counsel for the Borrower), independent accountants and other experts selected 

by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any 

such counsel, accountants or experts. 

SECTION 8.06 Delegation of Duties. Each Agent may perform any and all its duties and 

exercise its rights and powers by or through any one or more sub-agents or attorneys appointed by it and 

will not be responsible for the misconduct or negligence of any agent appointed with due care. Each Agent 

and any such sub-agent may perform any and all its duties and exercise its rights and powers by or through 

their respective Related Parties. 

SECTION 8.07 Non-Reliance on Agents and Other Lenders. Each Lender (other than the 

Initial Lender) acknowledges that it has, independently and without reliance upon the Administrative Agent 

or any other Lender or any of their Related Parties and based on such documents and information as it has 

deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender 

(other than the Initial Lender) also acknowledges that it will, independently and without reliance upon the 

Administrative Agent or any other Lender or any of their Related Parties and based on such documents and 

information as it shall from time to time deem appropriate, continue to make its own decisions in taking or 

not taking action under or based upon this Agreement, any other Loan Document or any related agreement 

or any document furnished hereunder or thereunder. 

SECTION 8.08 Administrative Agent May File Proofs of Claim. In case of the pendency 

of any proceeding under any Debtor Relief Law or any other judicial proceeding relative to any Credit 

Party, the Administrative Agent (irrespective of whether the principal of any Loan shall then be due and 

payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative 

Agent shall have made any demand on the Borrower) shall be entitled and empowered (but not obligated) 

by intervention in such proceeding or otherwise: 

(a) to file and prove a claim for the whole amount of the principal and interest owing and 

unpaid in respect of the Loans and all other Obligations that are owing and unpaid and to file such 

other documents as may be necessary or advisable in order to have the claims of the Lenders and 

the Agents (including any claim for the reasonable compensation, expenses, disbursements and 
80 

 

advances of the Lenders and the Agents and their respective agents and counsel and all other 

amounts due the Lenders and the Agents under Section 11.03) allowed in such judicial proceeding; 

and 

(b) to collect and receive any monies or other property payable or deliverable on any such 

claims and to distribute the same; 

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such 

judicial proceeding is hereby authorized by each Lender to make such payments to the Administrative 

Agent and, in the event that the Administrative Agent shall consent to the making of such payments directly 

to the Lenders, to pay to the Administrative Agent any amount due for the reasonable compensation, 

expenses, disbursements and advances of the Agents and their respective agents and counsel, and any other 

amounts due the Agents under the Loan Documents. Nothing contained herein shall be deemed to authorize 

the Administrative Agent to authorize or consent to or accept or adopt on behalf of any Lender any plan of 

reorganization, arrangement, adjustment or composition affecting the Obligations or the rights of any 

Lender or to authorize the Administrative Agent to vote in respect of the claim of any Lender in any such 

proceeding. 

ARTICLE IX 

GUARANTEE 

SECTION 9.01 Guarantee of the Obligations. Each Guarantor jointly and severally hereby 

irrevocably and unconditionally guarantees to the Secured Parties, the due and punctual payment in full and 

performance of all Obligations (or such lesser amount as agreed by the Required Lenders in their sole 

discretion with respect to Obligations owed to the Lenders) when the same shall become due or required to 

be performed, whether at stated maturity, by required prepayment, declaration, acceleration, performance, 

demand or otherwise (including amounts that would become and any performance that would have been 

required to be taken due but for the operation of the automatic stay under Section 362(a) of the Bankruptcy 

Code, 11 U.S.C. § 362(a)) (collectively, the “Guaranteed Obligations”). 

SECTION 9.02 Payment or Performance by a Guarantor. Each Guarantor hereby jointly and 

severally agrees, in furtherance of the foregoing and the other terms of this Article IX and not in limitation of 

any other right which the Secured Parties may have at law or in equity against any Guarantor by virtue hereof, 

that upon the failure of the Borrower to pay or perform any of the Guaranteed Obligations when and as the 

same shall become due or required to be performed, whether at stated maturity, by required prepayment, 

declaration, acceleration, demand or otherwise (including amounts that would become due but for the 

operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. § 362(a)), such 

Guarantor will pay, or cause to be paid, in cash, or perform, or cause to be performed, to the Secured Parties 

an amount equal to the sum of the unpaid principal amount of all Guaranteed Obligations then due as 

aforesaid, accrued and unpaid interest on such Guaranteed Obligations (including interest which, but for the 

Borrower’s becoming the subject of a case under the Bankruptcy Code, would have accrued on such 

Guaranteed Obligations, whether or not a claim is allowed against the Borrower for such interest in the related 

bankruptcy case) and all other Guaranteed Obligations then owed or required to be performed to the Secured 

Parties as aforesaid. 

SECTION 9.03 Liability of Guarantors Absolute. Each Guarantor agrees that its obligations 

hereunder are irrevocable, absolute, independent and unconditional and shall not be affected by any 

circumstance which constitutes a legal or equitable discharge of a guarantor or surety other than payment and 

performance in full of the Guaranteed Obligations. In furtherance of the foregoing and without limiting the 

generality thereof, each Guarantor agrees as follows: 
81 

 

(a) this Guarantee is a guarantee of payment and performance when due and not 

merely of collection; 

(b) either Agent and any of the other Secured Parties may enforce this Guarantee upon 

the occurrence of an Event of Default notwithstanding the existence of any dispute between the Borrower 

and the Secured Parties with respect to the existence of such Event of Default; 

(c) a separate action or actions may be brought and prosecuted against such Guarantor 

whether or not any action is brought against the Borrower or any other Guarantors and whether or not 

Borrower or such Guarantors are joined in any such action or actions; 

(d) payment or performance by any Guarantor of a portion, but not all, of the 

Guaranteed Obligations shall in no way limit, affect, modify or abridge any other Guarantor’s liability for 

any portion of the Guaranteed Obligations which has not been paid or performed; 

(e) the Required Lenders, upon such terms as they deem appropriate, without notice 

or demand and without affecting the validity or enforceability hereof or giving rise to any reduction, 

limitation, impairment, discharge or termination of any Guarantor’s liability hereunder, from time to time 

may (i) renew, extend, accelerate, increase the rate of interest on, or otherwise change the time, place, 

manner or terms of payment or performance of the Guaranteed Obligations; (ii) settle, compromise, release 

or discharge, or accept or refuse any offer of performance with respect to, or substitutions for, the 

Guaranteed Obligations or subordinate the payment of the same to the payment of any other obligations; 

(iii) release, surrender, exchange, substitute, compromise, settle, rescind, waive, alter, subordinate or 

modify, with or without consideration, any security for payment or performance of the Guaranteed 

Obligations, any other guarantees of the Guaranteed Obligations, or any other obligation of any Person 

(including any other Guarantor) with respect to the Guaranteed Obligations; and (iv) enforce its rights and 

remedies even though such action may operate to impair or extinguish any right of reimbursement or 

subrogation or other right or remedy of any Guarantor against the Borrower or any security for the 

Guaranteed Obligations; and 

(f) this Guarantee and the obligations of each Guarantor hereunder shall be legal, valid 

and enforceable and shall not be subject to any reduction, limitation, impairment, discharge or termination 

for any reason (other than payment or performance in full of the Guaranteed Obligations), including any 

claim of waiver, release, surrender, alteration or compromise, and shall not be subject to any defense or setoff, counterclaim, recoupment or termination whatsoever by reason of the invalidity, illegality or 

unenforceability of any of the Guaranteed Obligations, any impossibility in the performance of any of the 

Guaranteed Obligations, or otherwise. Without limiting the generality of the foregoing, except for the 

payment and performance in full of the Guaranteed Obligations and to the fullest extent permitted by 

Applicable Law, the obligations of each Guarantor hereunder shall not be discharged or impaired or 

otherwise affected by: (i) any failure, delay or omission to assert or enforce or agreement or election not 

to assert or enforce, or the stay or enjoining, by order of court, by operation of law or otherwise, of the 

exercise or enforcement of, any claim or demand or any right, power or remedy with respect to the 

Guaranteed Obligations, or with respect to any security for the payment and performance of the Guaranteed 

Obligations; (ii) any rescission, waiver, amendment or modification of, or any consent to departure from, 

any of the terms or provisions hereof or any other Loan Document; (iii) the Guaranteed Obligations, or any 

agreement relating thereto, at any time being found to be illegal, invalid or unenforceable in any respect; 

(iv) the Lender’s consent to the change, reorganization or termination of the corporate structure or existence 

of the Borrower or any of its Subsidiaries and to any corresponding restructuring of the Guaranteed 

Obligations; (v) the release of, or any impairment of or failure to perfect or continue perfection of or protect 

a security interest in, any collateral which secures any of the Guaranteed Obligations; (vi) any defenses, 

set-offs or counterclaims which the Borrower or any Guarantor may allege or assert against either Agent or 

the Lenders in respect of the Guaranteed Obligations, including failure of consideration, lack of authority, 

validity or enforceability, breach of warranty, payment, statute of frauds, statute of limitations, accord and 
82 

 

satisfaction and usury; (vii) any change in the corporate existence, structure or ownership of any Credit 

Party, or any insolvency, bankruptcy, reorganization, examinership or other similar proceeding affecting 

any Credit Party or its assets or any resulting release or discharge of any of the Guaranteed Obligations; 

(viii) the fact that any Person that, pursuant to the Loan Documents, was required to become a party hereto 

may not have executed or is not effectually bound by this Agreement, whether or not this fact is known to 

the Secured Parties; (ix) any action permitted or authorized hereunder; (x) any other circumstance, or any 

existence of or reliance on any representation by the Agents, any Secured Party or any other Person, that 

might otherwise constitute a defense to, or a legal or equitable discharge of, the Borrower, any Guarantor 

or any other guarantor or surety; and (xi) any other event or circumstance that might in any manner vary 

the risk of any Guarantor as an obligor in respect of the Guaranteed Obligations. 

SECTION 9.04 Waivers by Guarantors. Each Guarantor hereby waives, for the benefit of 

the Lender: (a) any right to require the Lender, as a condition of payment or performance by such Guarantor, 

to (i) proceed against Borrower, any Guarantor or any other Person; (ii) proceed against or exhaust any 

security in favor of the Lender; or (iii) pursue any other remedy in the power of the Agents or Secured Parties 

whatsoever or (b) presentment to, demand for payment or performance from and protest to the Borrower or 

any Guarantor or notice of acceptance; and (c) any defenses or benefits that may be derived from or afforded 

by law which limit the liability of or exonerate guarantors or sureties, or which may conflict with the terms 

hereof. The Agents and the other Secured Parties may, at their election, foreclose on any security held by one 

or more of them by one or more judicial or nonjudicial sales, accept an assignment of any such security in 

lieu of foreclosure or exercise any other right or remedy available to them against the Borrower or any other 

Credit Party without affecting or impairing in any way the liability of any Guarantor hereunder except to the 

extent the Guaranteed Obligations have been paid in full. To the fullest extent permitted by Applicable Law, 

each Credit Party waives any defense arising out of any such election even though such election operates, 

pursuant to Applicable Law, to impair or to extinguish any right of reimbursement or subrogation or other 

right or remedy of such Credit Party against the Borrower or any other Credit Party, as the case may be, or 

any security. 

SECTION 9.05 Guarantors’ Rights of Subrogation, Contribution, etc. Until the Guaranteed 

Obligations shall have been paid in full, each Guarantor hereby waives any claim, right or remedy, direct or 

indirect, that such Guarantor now has or may hereafter have against the Borrower or any other Guarantor or 

any of its assets in connection with this Guarantee or the performance by such Guarantor of its obligations 

hereunder, including without limitation (a) any right of subrogation, reimbursement or indemnification that 

such Guarantor now has or may hereafter have against the Borrower with respect to the Guaranteed 

Obligations, (b) any right to enforce, or to participate in, any claim, right or remedy that the Agents or the 

Secured Parties now has or may hereafter have against the Borrower, and (c) any benefit of, and any right to 

participate in, any collateral or security now or hereafter held by the Agents or the Secured Parties. In 

addition, until the Guaranteed Obligations shall have been paid in full, each Guarantor shall withhold exercise 

of any right of contribution such Guarantor may have against any other guarantor (including any other 

Guarantor) of the Guaranteed Obligations. If any amount shall be paid to any Guarantor on account of any 

such subrogation, reimbursement, indemnification or contribution rights at any time when all Guaranteed 

Obligations shall not have been finally and paid in full, such amount shall be held in trust for the Secured 

Parties and shall forthwith be paid over to the Secured Parties to be credited and applied against the 

Guaranteed Obligations, whether matured or unmatured, in accordance with the terms hereof. 

SECTION 9.06 Subordination. Any Indebtedness of the Borrower or any Guarantor now or 

hereafter and all rights of indemnity, contribution or subrogation under Applicable Law or otherwise held by 

any Guarantor (the “Obligee Guarantor”) are hereby subordinated in right of payment or performance to the 

Guaranteed Obligations until the Guaranteed Obligations is paid and performed in full. Any amount in respect 

of such indebtedness or rights collected or received by the Obligee Guarantor after an Event of Default has 

occurred and is continuing shall be held in trust for the Secured Parties and shall forthwith be paid over to the 

Secured Parties to be credited and applied against the Guaranteed Obligations but without affecting, impairing 

or limiting in any manner the liability of the Obligee Guarantor under any other provision hereof. 
83 

 

SECTION 9.07 Continuing Guarantee. This Guarantee is a continuing guarantee and shall 

remain in effect until all of the Guaranteed Obligations shall have been paid and performed in full. Each 

Guarantor hereby irrevocably waives any right to revoke this Guarantee as to future transactions giving rise 

to any Guaranteed Obligations. 

SECTION 9.08 Financial Condition of the Borrower. The Loans may be made to the 

Borrower without notice to or authorization from any Guarantor regardless of the financial or other condition 

of the Borrower at the time of such grant. Each Guarantor has adequate means to obtain information from 

the Borrower on a continuing basis concerning the financial condition of the Borrower and its ability to 

perform its obligations under the Loan Documents, and each Guarantor assumes the responsibility for being 

and keeping informed of the financial condition of the Borrower and of all circumstances bearing upon the 

risk of nonpayment of the Guaranteed Obligations. 

SECTION 9.09 Reinstatement. In the event that all or any portion of the Guaranteed 

Obligations are paid by the Borrower or any Guarantor, the obligations of any other Guarantor hereunder 

shall continue and remain in full force and effect or be reinstated, as the case may be, in the event that all or 

any part of such payment(s) are rescinded or recovered directly or indirectly from the Secured Parties as a 

preference, fraudulent transfer or otherwise must be so recovered or returned, and any such payments and 

amounts which are so rescinded, recovered or returned shall constitute Guaranteed Obligations for all 

purposes hereunder. 

SECTION 9.10 Discharge of Guarantees. If, in compliance with the terms and provisions of 

the Loan Documents, (x) all of the Equity Interests of any Guarantor that is a Subsidiary of the Parent or any 

of its successors in interest hereunder shall be sold or otherwise disposed of (including by merger or 

consolidation) to any Person (other than to the Parent or to any other Subsidiary of Parent), the Guarantee of 

such Guarantor or such successor in interest, as the case may be, hereunder shall automatically be discharged 

and released without any further action by any beneficiary or any other Person effective as of the time of such 

asset sale or (y) a Guarantor becomes an Excluded Subsidiary (other than as a result of a Guarantor becoming 

a non-Wholly Owned Subsidiary), the Borrower may request the release of the Guarantee of such Guarantor, 

whereupon the Guarantee of such Guarantor shall be discharged and released. 

ARTICLE X 

CARES ACT REQUIREMENTS 

Notwithstanding anything in this Agreement to the contrary, the Credit Parties, on behalf of 

themselves and their Affiliates, represent, warrant, and agree with the Lenders that: 

SECTION 10.01 CARES Act Compliance. Each Credit Party and its Subsidiaries are in 

compliance, and will at all times comply, with all applicable requirements under Title IV of the CARES Act, 

including any applicable requirements pertaining to the Borrower’s eligibility to receive the Loans. The 

Parent, the Borrower and their Subsidiaries will provide any information requested by the Initial Lender or 

Agents to assess the Borrower’s compliance with applicable requirements under Title IV of the CARES Act, 

its obligations under this Article X or its eligibility to receive the Loans under the CARES Act. The Borrower 

is not a “covered entity” as defined in Section 4019 of the CARES Act. 

SECTION 10.02 Dividends and Buybacks 

(a) Until the date that is twelve (12) months after the date on which the Loans are no 

longer outstanding, neither any Borrower Air Carrier nor any of its Affiliates (other than an Affiliate that 

is a natural person) shall, in any transaction, purchase an equity security of any Borrower Air Carrier or of 

any direct or indirect parent company of a Borrower Air Carrier or of any Subsidiary of the Parent that, in 
84 

 

each case, is listed on a national securities exchange, except to the extent required under a contractual 

obligation in effect as of the date of enactment of the CARES Act. 

(b) Until the date that is twelve (12) months after the date on which the Loans are no 

longer outstanding, no Borrower Air Carrier shall pay dividends, or make any other capital distributions, 

with respect to the common stock of any Borrower Air Carrier. 

SECTION 10.03 Maintenance of Employment Levels. Until September 30, 2020, each 

Borrower Air Carrier shall maintain its employment levels as of March 24, 2020, to the extent practicable, 

and in any case shall not reduce its employment levels by more than ten percent (10%) from the levels on 

March 24, 2020. 

SECTION 10.04 United States Business. Each Borrower Air Carrier is created or organized 

in the United States or under the laws of the United States and has significant operations in and a majority of 

its employees based in the United States. 

SECTION 10.05 Limitations on Certain Compensation. 

(a) Beginning on the Closing Date, and ending on the date that is one (1) year after 

the date on which the Loans are no longer outstanding, each Borrower Air Carrier and its Affiliates shall 

not pay any of each Borrower Air Carrier’s Corporate Officers or Employees whose Total Compensation 

exceeded $425,000 in calendar year 2019 or the Subsequent Reference Period (other than an Employee 

whose compensation is determined through an existing collective bargaining agreement entered into before 

March 1, 2020): 

(i) Total Compensation which exceeds, during any twelve (12) consecutive 

months of the period beginning on the Closing Date and ending on the date that is one (1) year after 

the date on which the Loans are no longer outstanding, the Total Compensation the Corporate 

Officer or Employee received in calendar year 2019 or the Subsequent Reference Period; or 

(ii) Severance Pay or Other Benefits in connection with a termination of 

employment with any Borrower Air Carrier which exceed twice the maximum Total Compensation 

received by such Corporate Officer or Employee in calendar year 2019 or the Subsequent Reference 

Period. 

(b) Beginning on the Closing Date, and ending on the date that is one (1) year after 

the date on which the Loans are no longer outstanding, each Borrower Air Carrier and its Affiliates shall 

not pay any of each Borrower Air Carrier’s Corporate Officers or Employees whose Total Compensation 

exceeded $3,000,000 in calendar year 2019 or the Subsequent Reference Period, Total Compensation which 

exceeds, during any twelve (12) consecutive months of such period, in excess of the sum of: 

(i) $3,000,000; and 

(ii) Fifty percent (50%) of the excess over $3,000,000 of the Total 

Compensation received by such Corporate Officer or Employee in calendar year 2019 or the 

Subsequent Reference Period. 

(c) For purposes of determining applicable amounts under this Section with respect to 

any Corporate Officer or Employee who was employed by any Borrower Air Carrier or any of their 

Affiliates for less than all of calendar year 2019, the amount of Total Compensation in calendar year 2019 

shall mean such Corporate Officer’s or Employee’s Total Compensation on an annualized basis. 
85 

 

SECTION 10.06 Continuation of Certain Air Service. Until March 1, 2022, each Borrower 

Air Carrier shall comply with any applicable requirement issued by the Secretary of Transportation under 

section 4005 of the CARES Act to maintain scheduled air transportation service to any point served by any 

Borrower Air Carrier before March 1, 2020. The Borrower acknowledges that neither Treasury, nor any other 

actor, department, or agency of the Federal Government, shall condition the issuance of any loan under this 

Loan Agreement on the Borrower’s implementation of measures to enter into negotiations with the certified 

bargaining representative of a craft or class of employees of the Borrower Air Carrier under the Railway 

Labor Act (45 U.S.C. 151 et seq.) or the National Labor Relations Act (29 U.S.C. 151 et seq.), regarding pay 

or other terms and conditions of employment. 

SECTION 10.07 Treasury Access. Provide Treasury, the Treasury Inspector General, the 

Special Inspector General for Pandemic Recovery, and such other entities as authorized by Treasury timely 

and unrestricted access to all documents, papers, or other records, including electronic records, of the 

Borrower related to the Loans, to enable Treasury, the Treasury Inspector General, and the Special Inspector 

General for Pandemic Recovery to make audits, examinations, and otherwise evaluate the Borrower’s 

compliance with the terms of this Agreement. This right also includes timely and reasonable access to the 

Borrower’s and its Affiliates’ personnel for the purpose of interview and discussion related to such 

documents. 

SECTION 10.08 Additional Defined Terms. As used in this Article, the following terms 

have the meanings specified below: 

 “Borrower Air Carrier” means, collectively, the Borrower, its Affiliates that are Air 

Carriers, and their respective heirs, executors, administrators, successors, and assigns. Notwithstanding 

anything to the contrary herein, for purposes of this Article X, an “Affiliate” of the Borrower shall not 

include any Person(s) that become affiliated with the Borrower solely by virtue of the consummation of a 

Change of Control transaction resulting in repayment of the Loans in full. 

“Corporate Officer” means, with respect to any Borrower Air Carrier, its president; any 

vice president in charge of a principal business unit, division, or function (such as sales, administration or 

finance); any other officer who performs a policy-making function; or any other person who performs 

similar policy making functions for the Borrower Air Carrier. Executive officers of subsidiaries or parents 

of any Borrower Air Carrier may be deemed Corporate Officers of the Borrower Air Carrier if they perform 

such policy-making functions for the Borrower Air Carrier. 

“Employee” has the meaning given to the term in section 2 of the National Labor Relations 

Act (29 U.S.C. 152 and includes any individual employed by an employer subject to the Railway Labor 

Act (45 U.S.C. 151 et seq.), and for the avoidance of doubt includes all individuals who are employed by 

the Borrower Air Carrier who are not Corporate Officers. 

 “Severance Pay or Other Benefits” means any severance payment or other similar benefits, 

including cash payments, health care benefits, perquisites, the enhancement or acceleration of the payment 

or vesting of any payment or benefit or any other in-kind benefit payable (whether in lump sum or over 

time, including after March 24, 2022) by any Borrower Air Carrier or its Affiliates to a Corporate Officer 

or Employee in connection with any termination of such Corporate Officer’s or Employee’s employment 

(including, without limitation, resignation, severance, retirement, or constructive termination), which shall 

be determined and calculated in respect of any Employee or Corporate Officer of the Borrower Air Carrier 

in the manner prescribed in 17 CFR 229.402(j) (without regard to its limitation to the five (5) most highly 

compensated executives and using the actual date of termination of employment rather than the last business 

day of the Borrower Air Carrier’s last completed fiscal year as the trigger event). 

“Subsequent Reference Period” means (i) for a Corporate Officer or Employee whose 

employment with the Borrower Air Carrier or an Affiliate started during 2019 or later, the twelve (12) 
86 

 

month period starting from the end of the month in which the officer or employee commenced employment, 

if such officer’s or employee’s total compensation exceeds $425,000 (or $3,000,000) during such period 

and (ii) for a Corporate Officer or Employee whose Total Compensation first exceeds $425,000 during a 

12-month period ending after 2019, the 12-month period starting from the end of the month in which the 

Corporate Officer’s or Employee’s Total Compensation first exceeded $425,000 (or $3,000,000). 

“Total Compensation” means compensation including salary, wages, bonuses, awards of 

stock, and any other financial benefits provided by the Borrower Air Carrier or an Affiliate, as applicable, 

which shall be determined and calculated for the 2019 calendar year or any applicable twelve (12)-month 

period in respect of any Employee or Corporate Officer of the Borrower Air Carrier in the manner 

prescribed under paragraph e.5 of the award term in 2 CFR part 170, App. A, but excluding any Severance 

Pay or Other Benefits in connection with a termination of employment. 

ARTICLE XI 

MISCELLANEOUS 

SECTION 11.01 Notices; Public Information. 

(a) Notices Generally. Except in the case of notices and other communications 

expressly permitted to be given by telephone (and except as provided in paragraph (b) below), all notices 

and other communications provided for herein shall be in writing in English and shall be delivered by hand 

or overnight courier service, mailed by certified or registered mail or sent by facsimile or email as follows: 

(i) if to a Credit Party, to it at Alaska Air Group, Inc., 19300 International 

Blvd., Seattle, WA, 98188, Attention of Nathaniel Pieper (Facsimile No. (206) 392-5290; 

Telephone No. (206) 392-5062; Email: nat.pieper@alaskaair.com); 

(ii) if to the Administrative Agent or the Collateral Agent, to The Bank of New 

York Mellon at 240 Greenwich Street, 7th Floor, New York, NY 10286, Attention of Joanna 

Shapiro, Managing Director (Telephone No. 212-815-4949; Email: 

joanna.g.shapiro@bnymellon.com with a copy to UST.Cares.Program@bnymellon.com); 

(iii) if to Treasury, as the Initial Lender, to The Department of the Treasury of 

the United States at 1500 Pennsylvania Avenue, NW, Washington, D.C. 20220, Attention of 

Assistant General Counsel (Banking and Finance) (Telephone No. 202-622-0283; Email: 

eric.froman@treasury.gov); and 

(iv) if to any other Lender, to it at its address (or facsimile number or email 

address) set forth in its Administrative Questionnaire. 

Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed 

to have been given when received. Notices delivered through electronic communications, to the extent 

provided in paragraph (b) below, shall be effective as provided in said paragraph (b). 

(b) Electronic Communications. Notices and other communications to the Lenders 

hereunder may be delivered or furnished by electronic communication (including e-mail, FpML, and 

Internet or intranet websites) pursuant to procedures approved by the Lenders and reasonably acceptable to 

the Administrative Agent, provided that the foregoing shall not apply to notices to any Lender pursuant to 

Article II if such Lender has notified the Administrative Agent that it is incapable of receiving notices under 

such Article by electronic communication. The Administrative Agent, the Collateral Agent, the Parent or 

the Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by 
87 

 

electronic communications pursuant to procedures approved by it; provided that approval of such 

procedures may be limited to particular notices or communications. 

Unless the Administrative Agent, the Collateral Agent or a Lender otherwise prescribes, 

(i) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s 

receipt of an acknowledgement from the intended recipient (such as by return e-mail or other written 

acknowledgement), and (ii) notices or communications posted to an Internet or intranet website shall be 

deemed received upon the deemed receipt by the intended recipient, at its e-mail address as described in 

the foregoing clause (i), of notification that such notice or communication is available and identifying the 

website address therefor; provided that, for both clauses (i) and (ii) above, if such notice, email or other 

communication is not sent during the normal business hours of the recipient, such notice or communication 

shall be deemed to have been sent at the opening of business on the next Business Day for the recipient. 

(c) Change of Address, etc. Any party hereto may change its address or facsimile 

number for notices and other communications hereunder by notice to the other parties hereto. 

(d) Platform. 

(i) The Borrower and the Lenders agree that the Administrative Agent may, 

but shall not be obligated to, make the Communications (as defined below) available to the other 

Lenders by posting the Communications on the Platform. 

(ii) The Platform is provided “as is” and “as available.” The Agent Parties (as 

defined below) do not warrant the adequacy of the Platform and expressly disclaim liability for 

errors or omissions in the Communications. No warranty of any kind, express, implied or statutory, 

including any warranty of merchantability, fitness for a particular purpose, non-infringement of 

third-party rights or freedom from viruses or other code defects, is made by any Agent Party in 

connection with the Communications or the Platform. In no event shall the Administrative Agent 

or any of its Related Parties (collectively, the “Agent Parties”) have any liability to the Credit 

Parties, any Lender or any other Person or entity for damages of any kind, including direct or 

indirect, special, incidental or consequential damages, losses or expenses (whether in tort, contract 

or otherwise) arising out of the Borrower’s or the Administrative Agent’s transmission of 

communications through the Platform. “Communications” means, collectively, any notice, 

demand, communication, information, document or other material provided by or on behalf of the 

Credit Parties pursuant to any Loan Document or the transactions contemplated therein that is 

distributed to the Administrative Agent or any Lender by means of electronic communications 

pursuant to this Section, including through the Platform. 

(e) Public Information. The Borrower hereby acknowledges that certain of the 

Lenders (each, a “Public Lender”) may have personnel who do not wish to receive material non-public 

information with respect to the Borrower or its Affiliates, or the respective securities of any of the foregoing, 

and who may be engaged in investment and other market-related activities with respect to such Persons’ 

securities. The Borrower hereby agrees that it will use commercially reasonable efforts to identify that 

portion of the materials and information provided by or on behalf of the Borrower hereunder and under the 

other Loan Documents (collectively, “Borrower Materials”) that may be distributed to the Public Lenders 

and that (i) all such Borrower Materials shall be clearly and conspicuously marked “PUBLIC,” which, at a 

minimum, shall mean that the word “PUBLIC” shall appear prominently on the first page thereof; (ii) by 

marking Borrower Materials “PUBLIC,” the Borrower shall be deemed to have authorized the 

Administrative Agent and the Lenders to treat such Borrower Materials as not containing any material nonpublic information with respect to the Borrower or its securities for purposes of U.S. federal and state 

securities Laws (provided, however, that to the extent that such Borrower Materials constitute Information, 

they shall be subject to Section 11.12); (iii) all Borrower Materials marked “PUBLIC” are permitted to be 

made available through a portion of the Platform designated “Public Side Information;” and (iv) the 
88 

 

Administrative Agent shall be entitled to treat any Borrower Materials that are not marked “PUBLIC” as 

being suitable only for posting on a portion of the Platform not designated “Public Side Information”. Each 

Public Lender will designate one or more representatives that shall be permitted to receive information that 

is not designated as being available for Public Lenders. Notwithstanding the foregoing, financial statements 

and related documentation, in each case, provided pursuant to Section 5.01(a) or 5.01(b) shall be deemed 

to be marked “PUBLIC”, unless the Parent notifies the Administrative Agent promptly that any such 

document contains material non-public information. 

SECTION 11.02 Waivers; Amendments. 

(a) No Waiver; Remedies Cumulative; Enforcement. No failure or delay by the 

Administrative Agent, the Collateral Agent or any Lender in exercising any right, remedy, power or 

privilege hereunder or under any other Loan Document shall operate as a waiver thereof, nor shall any 

single or partial exercise of any such right, remedy, power or privilege, or any abandonment or 

discontinuance of steps to enforce such a right remedy, power or privilege, preclude any other or further 

exercise thereof or the exercise of any other right remedy, power or privilege. The rights, remedies, powers 

and privileges of the Administrative Agent, the Collateral Agent and the Lenders hereunder and under the 

Loan Documents are cumulative and are not exclusive of any rights, remedies, powers or privileges that 

any such Person would otherwise have. 

Notwithstanding anything to the contrary contained herein or in any other Loan Document, 

the authority to enforce rights and remedies hereunder and under the other Loan Documents against the 

Credit Parties shall be vested exclusively in, and all actions and proceedings at law in connection with such 

enforcement shall be instituted and maintained exclusively by, (i) so long as the Initial Lender is a Lender, 

either the Initial Lender or, at the Initial’s Lender’s option, the Administrative Agent in accordance with 

Section 7.01 for the benefit of all the Lenders and (ii) if the Initial Lender is no longer a Lender, the Required 

Lenders or the Administrative Agent (acting at the direction of the Required Lenders) in accordance with 

Section 7.01 for the benefit of all the Lenders; provided that the foregoing shall not prohibit (i) the 

Administrative Agent from exercising on its own behalf the rights and remedies that inure to its benefit 

(solely in its capacities as Administrative Agent and as Collateral Agent) hereunder and under the other 

Loan Documents, (ii) any Lender from exercising setoff rights in accordance with Section 11.08 (subject 

to the terms of Section 2.13) or (iii) any Lender from filing proofs of claim or appearing and filing pleadings 

on its own behalf during the pendency of a proceeding relative to a Credit Party under any Debtor Relief 

Law; provided, further, that if at any time there is no Person acting as Administrative Agent hereunder and 

under the other Loan Documents, then (x) the Required Lenders shall have the rights otherwise provided to 

the Administrative Agent pursuant to Section 7.01 and (y) in addition to the matters set forth in clauses (ii) 

and (iii) of the preceding proviso and subject to Section 2.13, any Lender may, with the consent of the 

Required Lenders, enforce any rights or remedies available to it and as authorized by the Required Lenders. 

(b) Amendments, Etc. Except as otherwise expressly set forth in this Agreement 

(including Section 2.10 and Section 8.01), no amendment or waiver of any provision of this Agreement or 

any other Loan Document, and no consent to any departure by the Borrower therefrom, shall be effective 

unless in writing executed by the Borrower and the Required Lenders, and acknowledged by the 

Administrative Agent, or by the Borrower and the Administrative Agent with the consent of the Required 

Lenders, and each such waiver or consent shall be effective only in the specific instance and for the specific 

purpose for which given; provided that no such amendment, waiver or consent shall: 

(i) extend or increase any Commitment of any Lender without the written 

consent of such Lender; 

(ii) reduce the principal of, or rate of interest specified herein on, any Loan, or 

any fees or other amounts payable hereunder or under any other Loan Document, without the 

written consent of each Lender directly and adversely affected thereby (provided that only the 
89 

 

consent of the Required Lenders shall be necessary (x) to amend the definition of “Default Rate” 

or to waive the obligation of the Borrower to pay interest at the Default Rate or (y) to amend any 

financial covenant (or any defined term directly or indirectly used therein), even if the effect of 

such amendment would be to reduce the rate of interest on any Loan or other Obligation or to 

reduce any fee payable hereunder); 

(iii) postpone any date scheduled for any payment of principal of, or interest 

on, any Loan, or any fees or other amounts payable hereunder or under any other Loan Document, 

or reduce the amount of, waive or excuse any such payment, without the written consent of each 

Lender directly and adversely affected thereby; 

(iv) change Section 2.12(b) or Section 2.13 in a manner that would alter the 

pro rata sharing of payments required thereby without the written consent of each Lender directly 

and adversely affected thereby; 

(v) waive any condition set forth in Section 4.01 without the written consent 

of the Initial Lender; or 

(vi) change any provision of this Section or the percentage in the definition of 

“Required Lenders” or any other provision hereof specifying the number or percentage of Lenders 

required to amend, waive or otherwise modify any rights hereunder or make any determination or 

grant any consent hereunder, without the written consent of each Lender; 

provided, further, that no such amendment, waiver or consent shall amend, modify or otherwise affect the 

rights or duties hereunder or under any other Loan Document of either of the Agents, unless in writing 

executed by such Agent, in each case in addition to the Borrower and the Lenders required above. 

In addition, notwithstanding anything in this Section to the contrary, (i) if the Borrower 

shall have identified an obvious error or any error or omission of a technical nature, in each case, in any 

provision of the Loan Documents, then, upon the delivery of a certificate of a Responsible Officer of the 

Borrower to the Administrative Agent identifying such error and directing the Administrative Agent to 

execute an amendment to correct such error, the Administrative Agent and the Borrower shall be permitted 

to amend such provision, and, in each case, such amendment shall become effective without any further 

action or consent of any other party to any Loan Document if the same is not objected to in writing by the 

Required Lenders to the Administrative Agent within ten (10) Business Days following receipt of notice 

thereof and (ii) that any Security Document may be amended, supplemented or otherwise modified with 

the consent of the applicable Grantor (as defined in the Pledge and Security Agreements) and the 

Administrative Agent to add assets (or categories of assets) to the Collateral covered by such Security 

Document, as contemplated by the definition of Additional Collateral, or to remove any assets or categories 

of assets (including after-acquired assets of that category) from the Collateral covered by such Security 

Document to the extent the release thereof is permitted by Section 6.17(b)(iii). 

SECTION 11.03 Expenses; Indemnity; Damage Waiver. 

(a) Costs and Expenses. The Borrower shall pay (i) all reasonable out-of-pocket 

expenses incurred by the Initial Lender, the Administrative Agent, the Collateral Agent and their Affiliates 

(including the reasonable fees, charges and disbursements of any counsel for the Initial Lender, the 

Administrative Agent or the Collateral Agent), and shall pay all fees and time charges and disbursements 

for attorneys who may be employees of the Administrative Agent or the Collateral Agent, in connection 

with the preparation, negotiation, execution, delivery and administration of this Agreement, the Loan 

Documents, any other agreements or documents executed in connection herewith or therewith or any 

amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions 

contemplated hereby or thereby shall be consummated), and (ii) all out-of-pocket expenses incurred by the 
90 

 

Administrative Agent, the Collateral Agent or any Lender (including the fees, charges and disbursements 

of any counsel for the Administrative Agent, the Collateral Agent or any Lender), and shall pay all fees and 

time charges for attorneys who may be employees of the Administrative Agent, the Collateral Agent or any 

Lender, in connection with the enforcement or protection of its rights (A) in connection with this Agreement 

and the Loan Documents, any other agreements or documents executed in connection herewith or therewith, 

or any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the 

transactions contemplated hereby or thereby shall be consummated) including its rights under this Section, 

or (B) in connection with the Loans made hereunder, including all such out-of-pocket expenses incurred 

during any workout, restructuring, negotiations or enforcement in respect of this Agreement, the Loan 

Documents and other agreements or documents executed in connection herewith or therewith. 

(b) Indemnification by the Borrower. The Borrower shall indemnify the 

Administrative Agent and Collateral Agent (and any sub-agents thereof) and each Lender, and each Related 

Party of any of the foregoing Persons (each such Person being called an “Indemnitee”) against, and hold 

each Indemnitee harmless from, any and all losses, claims, damages, liabilities, obligations, penalties, fines, 

settlements, judgments, disbursements and related costs and related expenses (including the fees, charges 

and disbursements of any counsel for any Indemnitee), and shall indemnify and hold harmless each 

Indemnitee from all fees and time charges and disbursements for attorneys who may be employees of any 

Indemnitee, incurred by any Indemnitee or asserted against any Indemnitee by any Person (including the 

Parent) arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement, 

any other Loan Document or any agreement or instrument contemplated hereby or thereby, the performance 

by the parties hereto of their respective obligations hereunder or thereunder or the consummation of the 

transactions contemplated hereby or thereby, (ii) any Loan or the use or proposed use of the proceeds 

therefrom, (iii) any actual or alleged presence or release of Hazardous Materials on or from any property 

owned or operated by the Parent or any of its Subsidiaries, or any Environmental Liability related in any 

way to the Parent or any of its Subsidiaries, or (iv) any actual or prospective claim, litigation, investigation 

or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether 

brought by a third party or by the Parent, and regardless of whether any Indemnitee is a party thereto; 

provided that such indemnity shall not, as to any Indemnitee other than the Initial Lender, be available to 

the extent that such losses, claims, damages, liabilities or related expenses are determined by a court of 

competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or 

willful misconduct of such Indemnitee. This paragraph (b) shall not apply with respect to Taxes other than 

any Taxes that represent losses, claims, damages, etc. arising from any non-Tax claim. 

(c) Reimbursement by Lenders. To the extent that the Borrower for any reason fails 

to indefeasibly pay any amount required under paragraph (a) or (b) of this Section to be paid by it to the 

Administrative Agent or Collateral Agent (or any sub-agents thereof) or any Related Party of any of the 

foregoing, each Lender (other than the Initial Lender) severally agrees to pay to the Administrative Agent 

or Collateral Agent (or any such sub-agents) or such Related Party, as the case may be, such Lender’s pro 

rata share (determined as of the time that the applicable unreimbursed expense or indemnity payment is 

sought based on each Lender’s Applicable Percentage at such time) of such unpaid amount (including any 

such unpaid amount in respect of a claim asserted by such Lender); provided that the unreimbursed expense 

or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or 

asserted against the Administrative Agent or Collateral Agent (or any such sub-agents), or against any 

Related Party of any of the foregoing acting for the Administrative Agent or Collateral Agent (or any such 

sub-agents) in connection with such capacity. The obligations of the Lenders under this paragraph (c) are 

subject to the provisions of Section 2.12(e). 

(d) Waiver of Consequential Damages, Etc. To the fullest extent permitted by 

Applicable Law, no Credit Party shall assert, and each hereby waives, any claim against any Indemnitee, 

on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or 

actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Loan 

Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or 
91 

 

thereby, any Loan, or the use of the proceeds thereof. No Indemnitee referred to in paragraph (b) above 

shall be liable for any damages arising from the use by unintended recipients of any information or other 

materials distributed by it through telecommunications, electronic or other information transmission 

systems in connection with this Agreement or the other Loan Documents or the transactions contemplated 

hereby or thereby. 

(e) Payments. All amounts due under this Section shall be payable not later than 

five (5) days after demand therefor; provided that the terms of this Section shall not apply to the Initial 

Lender. 

(f) Survival. Each party’s obligations under this Section shall survive the termination 

of the Loan Documents and payment of the obligations hereunder and the resignation or removal of the 

Administrative Agent or the Collateral Agent. 

SECTION 11.04 Successors and Assigns. 

(a) Successors and Assigns Generally. The provisions of this Agreement shall be 

binding upon and inure to the benefit of the parties hereto and their respective successors and assigns 

permitted hereby, except that the Borrower may not assign or otherwise transfer any of its rights or 

obligations hereunder without the prior written consent of the Administrative Agent and each Lender (and 

any other attempted assignment or transfer by any party hereto shall be null and void), and no Lender may 

assign or otherwise transfer any of its rights or obligations hereunder except (i) to an assignee in accordance 

with the provisions of paragraph (b) of this Section, (ii) by way of participation in accordance with the 

provisions of paragraph (d) of this Section, or (iii) by way of pledge or assignment of a security interest 

subject to the restrictions of paragraph (e) of this Section. Nothing in this Agreement, expressed or implied, 

shall be construed to confer upon any Person (other than the parties hereto, their respective successors and 

assigns permitted hereby, Participants to the extent provided in paragraph (d) of this Section and, to the 

extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent and the 

Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement. 

(b) Assignments by Lenders. Any Lender may at any time assign to one or more 

Eligible Assignees all or a portion of its rights and obligations under this Agreement (including all or a 

portion of the Loans at the time owing to it); provided that any such assignment by any Lender (other than 

the Initial Lender) shall be subject to the following conditions: 

(i) Minimum Amounts. 

(A) in the case of an assignment of the entire remaining amount of the 

assigning Lender’s Loans at the time owing to it or contemporaneous assignments to and/or 

by related Approved Funds (determined after giving effect to such assignments) that equal 

at least the amount specified in paragraph (b)(i)(B) of this Section in the aggregate or in 

the case of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund, no 

minimum amount need be assigned; and 

(B) in any case not described in paragraph (b)(i)(A) of this Section, 

the principal outstanding balance of the Loans of the assigning Lender subject to each such 

assignment (determined as of the date the Assignment and Assumption with respect to such 

assignment is delivered to the Administrative Agent or, if “Trade Date” is specified in the 

Assignment and Assumption, as of the Trade Date) shall not be less than $5,000,000, unless 

each of the Administrative Agent and, so long as no Default or Event of Default has 

occurred and is continuing, the Borrower otherwise consents (each such consent not to be 

unreasonably withheld or delayed). 
92 

 

(ii) Proportionate Amounts. Each partial assignment shall be made as an 

assignment of a proportionate part of all the assigning Lender’s rights and obligations under this 

Agreement with respect to the Loans assigned. 

(iii) Required Consents. No consent shall be required for any assignment by 

the Initial Lender. The consent of the Borrower (such consent not to be unreasonably withheld, 

delayed or conditioned) shall be required for any assignment by any Lender other than the Initial 

Lender unless (x) a Default or Event of Default has occurred and is continuing at the time of such 

assignment, or (y) such assignment is to a Lender or an Affiliate of a Lender; provided that the 

Borrower shall be deemed to have consented to any such assignment unless it shall object thereto 

by written notice to the Administrative Agent within five (5) Business Days after having received 

notice thereof. 

(iv) Assignment and Assumption. The parties to each assignment shall execute 

and deliver to the Administrative Agent an Assignment and Assumption, together with a processing 

and recordation fee of $3,500; provided that the Administrative Agent may, in its sole discretion, 

elect to waive such processing and recordation fee in the case of any assignment. The assignee, if 

it is not a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire. 

(v) No Assignment to Certain Persons. No such assignment shall be made 

to the Borrower or any of the Borrower’s Affiliates or Subsidiaries. 

(vi) No Assignment to Natural Persons. No such assignment shall be made to 

a natural person (or a holding company, investment vehicle or trust for, or owned and operated for 

the primary benefit of, a natural person). 

Subject to acceptance and recording thereof by the Administrative Agent pursuant to paragraph (c) of this 

Section, from and after the effective date specified in each Assignment and Assumption, the assignee 

thereunder shall be a party to this Agreement and, to the extent of the interest assigned by such Assignment 

and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning 

Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be 

released from its obligations under this Agreement (and, in the case of an Assignment and Assumption 

covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease 

to be a party hereto) but shall continue to be entitled to the benefits of Section 11.03 with respect to facts 

and circumstances occurring prior to the effective date of such assignment. Any assignment or transfer by 

a Lender other than the Initial Lender of rights or obligations under this Agreement that does not comply 

with this paragraph shall be treated for purposes of this Agreement as a sale by such Lender of a 

participation in such rights and obligations in accordance with paragraph (d) of this Section. 

(c) Register. The Administrative Agent, acting solely for this purpose as an agent of 

the Borrower, shall maintain at one of its offices a copy of each Assignment and Assumption delivered to 

it and a register for the recordation of the names and addresses of the Lenders, and the principal amounts 

(and stated interest) of the Loans owing to, each Lender pursuant to the terms hereof from time to time (the 

“Register”). The entries in the Register shall be conclusive absent manifest error, and the Borrower, the 

Administrative Agent, the Collateral Agent and the Lenders shall treat each Person whose name is recorded 

in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement. The 

Register shall be available for inspection by the Borrower and any Lender, at any reasonable time and from 

time to time upon reasonable prior notice. 

(d) Participations. Any Lender may at any time, without the consent of, or notice to, 

the Borrower or the Administrative Agent, sell participations to any Person (other than a Competitor, a 

natural person, or a holding company, investment vehicle or trust for, or owned and operated for the primary 

benefit of, a natural person, or the Borrower or any of the Borrower’s Affiliates or Subsidiaries) (each, a 
93 

 

“Participant”) in all or a portion of such Lender’s rights and/or obligations under this Agreement (including 

all or a portion of the Loans owing to it); provided that (i) such 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, and (iii) the Borrower, the Administrative Agent, the Collateral Agent and 

Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights 

and obligations under this Agreement. For the avoidance of doubt, each Lender shall be responsible for the 

indemnity under Section 11.03(b) with respect to any payments made by such Lender to its Participant(s). 

Any agreement or instrument pursuant to which a Lender sells such a participation shall 

provide that such Lender shall retain the sole right to enforce this Agreement and to approve any 

amendment, modification or waiver of any provision of this Agreement; provided that such agreement or 

instrument may provide that such Lender will not, without the consent of the Participant, agree to any 

amendment, modification or waiver described in Section 11.02(b)(i) through (v) that affects such 

Participant. The Borrower agrees that each Participant shall be entitled to the benefits of Sections 2.14, 2.15 

and 2.16 (subject to the requirements and limitations therein, including the requirements under 

Section 2.16(g) (it being understood that the documentation required under Section 2.16(g) shall be 

delivered to the participating Lender)) to the same extent as if it were a Lender and had acquired its interest 

by assignment pursuant to paragraph (b) of this Section; provided that such Participant (A) agrees to be 

subject to the provisions of Section 2.19 as if it were an assignee under paragraph (b) of this Section; and 

(B) shall not be entitled to receive any greater payment under Section 2.15 or 2.16, with respect to any 

participation, than its participating Lender would have been entitled to receive, except to the extent such 

entitlement to receive a greater payment results from a Change in Law that occurs after the Participant 

acquired the applicable participation. Each Lender that sells a participation agrees, at the Borrower’s 

request and expense, to use reasonable efforts to cooperate with the Borrower to effectuate the provisions 

of Section 2.19(b) with respect to any Participant. To the extent permitted by law, each Participant also 

shall be entitled to the benefits of Section 11.08 as though it were a Lender; provided that such Participant 

agrees to be subject to Section 2.13 as though it were a Lender. Each Lender that sells a participation shall, 

acting solely for this purpose as a non-fiduciary agent of the Borrower, maintain a register on which it 

enters the name and address of each Participant and the principal amounts (and stated interest) of each 

Participant’s interest in the Loans or other obligations under the Loan Documents (the “Participant 

Register”); provided that no Lender shall have any obligation to disclose all or any portion of the Participant 

Register (including the identity of any Participant or any information relating to a Participant’s interest in 

any loans or its other obligations under any Loan Document) to any Person except to the extent that such 

disclosure is necessary to establish that such loan or other obligation is in registered form under 

Section 5f.103-1(c) of the United States Treasury Regulations. The entries in the Participant Register shall 

be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the 

Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding 

any notice to the contrary. For the avoidance of doubt, the Administrative Agent (in its capacity as 

Administrative Agent) shall have no responsibility for maintaining a Participant Register. 

(e) Certain Pledges. Any Lender may at any time pledge or assign a security interest 

in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any 

pledge or assignment to secure obligations to a Federal Reserve Bank; provided that no such pledge or 

assignment shall release such Lender from any of its obligations hereunder or substitute any such pledgee 

or assignee for such Lender as a party hereto. 

SECTION 11.05 Survival. All covenants, agreements, representations and warranties made 

by any Credit Party herein and in any Loan Document or other documents delivered in connection herewith 

or therewith or pursuant hereto or thereto shall be considered to have been relied upon by the other parties 

hereto and shall survive the execution and delivery hereof and thereof and the making of the Borrowings 

hereunder, regardless of any investigation made by any such other party or on its behalf and notwithstanding 

that the Administrative Agent, the Collateral Agent or any Lender may have had notice or knowledge of any 

Default at the time of any Borrowing, and shall continue in full force and effect as long as any Loan or any 
94 

 

other Obligation hereunder shall remain unpaid or unsatisfied and so long as the Commitments have not 

expired or been terminated. The provisions of Sections 2.14, 2.15, 11.03, 11.15 and Article VIII shall survive 

and remain in full force and effect regardless of the consummation of the transactions contemplated hereby, 

the payment in full of the Obligations, the expiration or termination of the Commitments or the termination 

of this Agreement or any provision hereof. 

SECTION 11.06 Counterparts; Integration; Effectiveness; Electronic Execution. 

(a) Counterparts; Integration; Effectiveness. This Agreement may be executed in 

counterparts (and by different parties hereto in different counterparts), each of which shall constitute an 

original, but all of which when taken together shall constitute a single contract. This Agreement and the 

other Loan Documents, constitute the entire contract among the parties relating to the subject matter hereof 

and supersede any and all previous agreements and understandings, oral or written, relating to the subject 

matter hereof. Except as provided in Section 4.01, this Agreement shall become effective when it shall 

have been executed by the Administrative Agent and when the Administrative Agent shall have received 

counterparts hereof that, when taken together, bear the signatures of each of the other parties hereto. 

Delivery of an executed counterpart of a signature page of this Agreement by facsimile or in electronic 

(e.g., “pdf” or “tif”) format shall be effective as delivery of a manually executed counterpart of this 

Agreement. 

(b) Electronic Execution. The words “execution,” “signed,” “signature,” and words 

of like import in this Agreement and in any Assignment and Assumption shall be deemed to include 

electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal 

effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping 

system, as the case may be, to the extent and as provided for in any Applicable Law, including the Federal 

Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures 

and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act. 

Notwithstanding anything herein to the contrary, delivery of an executed counterpart of a signature page of 

this Agreement by telecopy or other electronic means, or confirmation of the execution of this Agreement 

on behalf of a party by an email from an authorized signatory of such party shall be effective as delivery of 

a manually executed counterpart of this Agreement. 

SECTION 11.07 Severability. If any provision of this Agreement or the other Loan 

Documents is held to be illegal, invalid or unenforceable, (a) the legality, validity and enforceability of the 

remaining provisions of this Agreement and the other Loan Documents shall not be affected or impaired 

thereby and (b) the parties shall endeavor in good faith negotiations to replace the illegal, invalid or 

unenforceable provisions with valid provisions the economic effect of which comes as close as possible to 

that of the illegal, invalid or unenforceable provisions. The invalidity of a provision in a particular jurisdiction 

shall not invalidate or render unenforceable such provision in any other jurisdiction. 

SECTION 11.08 Right of Setoff. If an Event of Default shall have occurred and be 

continuing, each Lender, and each of their respective Affiliates is hereby authorized at any time and from 

time to time, to the fullest extent permitted by Applicable Law, to set off and apply any and all deposits 

(general or special, time or demand, provisional or final, in whatever currency) at any time held, and other 

obligations (in whatever currency) at any time owing, by such Lender or any such Affiliate, to or for the credit 

or the account of the Borrower against any and all of the due and unpaid Obligations of the Borrower now or 

hereafter existing under this Agreement or any other Loan Document to such Lender or its respective 

Affiliates, irrespective of whether or not such Lender or Affiliate shall have made any demand under this 

Agreement or any other Loan Document and although such obligations of the Borrower may be contingent 

or unmatured or are owed to a branch office or Affiliate of such Lender different from the branch office or 

Affiliate holding such deposit or obligated on such indebtedness. The rights of each Lender and their 

respective Affiliates under this Section are in addition to other rights and remedies (including other rights of 

setoff) that such Lender or its respective Affiliates may have. Each Lender (other than the Initial Lender) 
95 

 

agrees to notify the Borrower and the Administrative Agent promptly after any such setoff and application; 

provided that the failure to give such notice shall not affect the validity of such setoff and application. 

SECTION 11.09 Governing Law; Jurisdiction; Etc. 

(a) Governing Law. This Agreement and the other Loan Documents will be governed 

by and construed in accordance with the federal law of the United States if and to the extent such law is 

applicable, and otherwise in accordance with the law of the State of New York applicable to contracts made 

and to be performed entirely within such State. 

(b) Jurisdiction and Venue. Each of the Credit Parties and each Lender agrees (a) to 

submit to the exclusive jurisdiction and venue of the United States District Court for the District of 

Columbia for any civil action, suit or proceeding arising out of or relating to this Agreement, the Loan 

Documents, or the transactions contemplated hereby or thereby. 

(c) Service of Process. Each party hereto irrevocably consents to service of process 

in the manner provided for notices in Section 11.01. Nothing in this Agreement will affect the right of any 

party hereto to serve process in any other manner permitted by Applicable Law. 

SECTION 11.10 Waiver of Jury Trial. To the extent permitted by Applicable Law, each 

Credit Party and each Lender hereby unconditionally waives trial by jury in any civil legal action or 

proceeding relating to this Agreement, the Loan Documents or the transactions contemplated hereby or 

thereby. 

SECTION 11.11 Headings. Article and Section headings and the Table of Contents used 

herein are for convenience of reference only, are not part of this Agreement and shall not affect the 

construction of, or be taken into consideration in interpreting, this Agreement. 

SECTION 11.12 Treatment of Certain Information; Confidentiality. Each of the Agents 

and the Lenders (other than the Initial Lender) agree to maintain the confidentiality of the Information (as 

defined below), except that Information may be disclosed (a) to its Affiliates and to its Related Parties (it 

being understood that the Persons to whom such disclosure is made will be informed of the confidential nature 

of such Information and instructed to keep such Information confidential); (b) to the extent required or request 

by any regulatory authority purporting to have jurisdiction over such Person or its Related Parties (including 

any self-regulatory authority, such as the National Association of Insurance Commissioners); (c) to the extent 

required by Applicable Laws or by any subpoena or similar legal process; (d) to any other party hereto; (e) in 

connection with the exercise of any remedies hereunder or under any other Loan Document or any action or 

proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or 

thereunder; (f) subject to an agreement containing provisions substantially the same as (or no less restrictive 

than) those of this Section, to (i) any assignee of or Participant in, or any prospective assignee of or Participant 

in, any of its rights and obligations under this Agreement, or (ii) any actual or prospective party (or its Related 

Parties) to any swap, derivative or other transaction under which payments are to be made by reference to the 

Borrower and its obligations, this Agreement or payments hereunder; provided that, in each case under this 

clause (f)(ii), such actual or prospective party is not a Competitor; (g) on a confidential basis to (i) any rating 

agency in connection with rating the Borrower or its Subsidiaries or the Loans or (ii) the CUSIP Service 

Bureau or any similar agency in connection with the issuance and monitoring of CUSIP numbers with respect 

to the Loans; (h) with the consent of the Borrower or (i) to the extent such Information (x) becomes publicly 

available other than as a result of a breach of this Section, or (y) becomes available to either Agent, any 

Lender or any of their respective Affiliates on a nonconfidential basis from a source other than the Borrower 

who did not acquire such information as a result of a breach of this Section. 

For purposes of this Section, “Information” means all information received from the Parent 

or any of its Subsidiaries relating to the Parent or any of its Subsidiaries or any of their respective businesses, 
96 

 

other than any such information that is available to the Administrative Agent or any Lender on a 

nonconfidential basis prior to disclosure by the Parent or any of its Subsidiaries; provided that, in the case 

of information received from the Parent or any of its Subsidiaries after the date hereof, such information is 

clearly identified at the time of delivery as confidential. Any Person required to maintain the confidentiality 

of Information as provided in this Section shall be considered to have complied with its obligation to do so 

if such Person has exercised the same degree of care to maintain the confidentiality of such Information as 

such Person would accord to its own confidential information. 

SECTION 11.13 Money Laundering; Sanctions. The Borrower shall provide to the 

Administrative Agent, the Collateral Agent, and the Lenders information and documentation that the Lenders 

may reasonably request that identifies the Borrower and its Affiliates, which information may include the 

name and address of the Borrower and its Affiliates and other information regarding beneficial ownership of 

the Borrower and its Affiliates that will allow the Lenders to ensure compliance with Sanctions and the AML 

Laws. For purposes of determining whether or not a representation with respect to any indirect ownership is 

true or a covenant is being complied with under this Section 11.13, the Borrower shall not be required to 

make any investigation into (i) the ownership of publicly traded stock or other publicly traded securities or 

(ii) the ownership of assets by a collective investment fund that holds assets for employee benefit plans or 

retirement arrangements. 

SECTION 11.14 Interest Rate Limitation. Notwithstanding anything herein to the contrary, 

if at any time the interest rate applicable to any Loan, together with all fees, charges and other amounts that 

are treated as interest on such Loan under Applicable Law (collectively, “charges”), shall exceed the 

maximum lawful rate (the “Maximum Rate”) that may be contracted for, charged, taken, received or reserved 

by the Lender holding such Loan in accordance with Applicable Law, the rate of interest payable in respect 

of such Loan hereunder, together with all charges payable in respect thereof, shall be limited to the Maximum 

Rate. To the extent lawful, the interest and charges that would have been paid in respect of such Loan but 

were not paid as a result of the operation of this Section shall be cumulated and the interest and charges 

payable to such Lender in respect of other Loans or periods shall be increased (but not above the amount 

collectible at the Maximum Rate therefor) until such cumulated amount, together with interest thereon at the 

Federal Funds Effective Rate for each day to the date of repayment, shall have been received by such Lender. 

Any amount collected by such Lender that exceeds the maximum amount collectible at the Maximum Rate 

shall be applied to the reduction of the principal balance of such Loan or refunded to the Borrower so that at 

no time shall the interest and charges paid or payable in respect of such Loan exceed the maximum amount 

collectible at the Maximum Rate. 

SECTION 11.15 Payments Set Aside. To the extent that any payment by or on behalf of 

the Borrower is made to the Administrative Agent or any Lender, or any Lender exercises its right of setoff, 

and such payment or the proceeds of such setoff or any part thereof is subsequently invalidated, declared to 

be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by the 

Administrative Agent or such Lender in its discretion) to be repaid to a trustee, receiver or any other party, in 

connection with any proceeding under any Debtor Relief Law or otherwise, then (a) to the extent of such 

recovery, the obligation or part thereof originally intended to be satisfied shall be revived and continued in 

full force and effect as if such payment had not been made or such setoff had not occurred, and (b) each 

Lender (other than the Initial Lender) severally agrees to pay to the Administrative Agent upon demand its 

applicable share (without duplication) of any amount so recovered from or repaid by the Administrative 

Agent, plus interest thereon from the date of such demand to the date such payment is made at a rate per 

annum equal to the Federal Funds Effective Rate from time to time in effect. 

SECTION 11.16 No Advisory or Fiduciary Responsibility. In connection with all aspects 

of each transaction contemplated hereby (including in connection with any amendment, waiver or other 

modification hereof or of any other Loan Document), the Borrower acknowledges and agrees, and 

acknowledges its Affiliates’ understanding, that: (a) (i) no fiduciary, advisory or agency relationship between 

any Credit Party and any of their respective Subsidiaries and the Administrative Agent, the Collateral Agent 
97 

 

or any Lender is intended to be or has been created in respect of the transactions contemplated hereby or by 

the other Loan Documents, irrespective of whether the Administrative Agent, the Collateral Agent, or any 

Lender has advised or is advising any Credit Party or any of their respective Subsidiaries on other matters, 

(ii) the lending and other services regarding this Agreement provided by the Administrative Agent, the 

Collateral Agent and the Lenders are arm’s-length commercial transactions between Credit Parties and their 

Affiliates, on the one hand, and the Administrative Agent, the Collateral Agent and the Lenders, on the other 

hand, (iii) the Credit Parties have consulted their own legal, accounting, regulatory and tax advisors to the 

extent that they has deemed appropriate and (iv) the Credit Parties are capable of evaluating, and understands 

and accepts, the terms, risks and conditions of the transactions contemplated hereby and by the other Loan 

Documents; and (b) (i) the Administrative Agent, the Collateral Agent and the Lenders each is and has been 

acting solely as a principal and, except as expressly agreed in writing by the relevant parties, has not been, is 

not, and will not be acting as an advisor, agent or fiduciary for the Credit Parties or any of their respective 

Affiliates, or any other Person; (ii) none of the Administrative Agent, the Collateral Agent and the Lenders 

has any obligation to the Credit Parties or any of their respective Affiliates with respect to the transactions 

contemplated hereby except those obligations expressly set forth herein and in the other Loan Documents; 

and (iii) the Administrative Agent, the Collateral Agent and the Lenders and their respective Affiliates may 

be engaged, in a broad range of transactions that involve interests that differ from those of the Credit Parties 

and their respective Affiliates, and none of the Administrative Agent, the Collateral Agent and the Lenders 

has any obligation to disclose any of such interests to the Credit Parties or any of their respective Affiliates. 

To the fullest extent permitted by Law, the Credit Parties hereby waive and release any claims that they may 

have against any of the Administrative Agent, the Collateral Agent and the Lenders with respect to any breach 

or alleged breach of agency or fiduciary duty in connection with any aspect of any transaction contemplated 

hereby. 

SECTION 11.17 Acknowledgement and Consent to Bail-In of EEA Financial Institutions. 

Notwithstanding anything to the contrary in any Loan Document or in any other agreement, arrangement or 

understanding among the parties, each party hereto (including each Credit Party) acknowledges that any 

liability arising under a Loan Document of any Credit Party that is an Affected Financial Institution, to the 

extent such liability is unsecured, may be subject to the write-down and conversion powers of the applicable 

Resolution Authority, and agrees and consents to, and acknowledges and agrees to be bound by: (a) the 

application of any Write-Down and Conversion Powers by the applicable Resolution Authority to any such 

liabilities arising under any Loan Documents which may be payable to it by any Credit Party that is an 

Affected Financial Institution; and (b) the effects of any Bail-In Action on any such liability, including (i) a 

reduction in full or in part or cancellation of any such liability, (ii) a conversion of all, or a portion of, such 

liability into shares or other instruments of ownership in such Affected Financial Institution, its parent 

undertaking, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares 

or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability 

under any Loan Document, or (iii) the variation of the terms of such liability in connection with the exercise 

of the write-down and conversion powers of the applicable Resolution Authority. 

[Signature pages follow.] 
98 

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly 

executed by their respective authorized officers as of the day and year first above written. 

ALASKA AIRLINES, INC., as Borrower 

By_________________________ 

Name: 

Title: 

 
99 

 

ALASKA AIR GROUP, INC., 

as Parent and Guarantor 

By_________________________ 

Name: 

Title: 

 
100 

 

HORIZON AIR INDUSTRIES, INC., as Guarantor 

By_________________________ 

Name: 

Title: 

 
101 

 

THE BANK OF NEW YORK MELLON, 

as Administrative Agent 

By_________________________ 

Name: 

Title: 

THE BANK OF NEW YORK MELLON, 

as Collateral Agent 

By_________________________ 

Name: 

Title: 

 
102 

 

UNITED STATES DEPARTMENT OF THE 

TREASURY, as the Initial Lender 

By_________________________ 

Name: 

Title: 
 Annex B 

Form of Amended and Restated Horizon Pledge and Security Agreement 
EXECUTION VERSION

WEIL:\97681611\4\13173.0005

 

AMENDED AND RESTATED HORIZON AIRCRAFT, ENGINE AND PROPELLER PLEDGE 

AND SECURITY AGREEMENT

dated as of October 30, 2020

between

EACH OF THE GRANTORS PARTY HERETO

and 

THE BANK OF NEW YORK MELLON

as Collateral Agent
WEIL:\97681611\4\13173.0005

TABLE OF CONTENTS

PAGE

Section 1. DEFINITIONS...................................................................................................................... 1

General Definitions.......................................................................................................................1

Definitions; Interpretation.............................................................................................................5

Section 2. GRANT OF SECURITY INTERESTS. ............................................................................... 5

Grant of Security...........................................................................................................................5

Section 3. SECURITY FOR OBLIGATIONS; GRANTORS REMAIN LIABLE. .............................. 7

Security for Obligations................................................................................................................7

Continuing Liability Under Collateral ..........................................................................................7

Section 4. REPRESENTATIONS AND WARRANTIES..................................................................... 7

Generally.......................................................................................................................................7

Section 5. COVENANTS AND AGREEMENTS................................................................................. 9

Affirmative Covenants..................................................................................................................9

Negative Covenants. ...................................................................................................................10

Section 6. FURTHER ASSURANCES; ADDITIONAL GRANTORS. ............................................. 10

Further Assurances......................................................................................................................10

Additional Grantors ....................................................................................................................11

Section 7. COLLATERAL AGENT APPOINTED PROXY ATTORNEY-IN-FACT....................... 11

Power of Attorney.......................................................................................................................11

No Duty on the Part of Collateral Agent or Secured Parties.......................................................13

Standard of Care; Collateral Agent May Perform.......................................................................13

Section 8. REMEDIES......................................................................................................................... 14

Generally.....................................................................................................................................14

Application of Proceeds..............................................................................................................17

Sales on Credit ............................................................................................................................17

Section 9. CONTINUING SECURITY INTEREST; TRANSFER OF LOANS; Reinstatement. ...... 17

Continuing Security Interest; Transfer of Loans.........................................................................17

Reinstatement..............................................................................................................................18

Section 10. MISCELLANEOUS. .......................................................................................................... 18

Notices. .......................................................................................................................................18

Waiver; Amendment...................................................................................................................18

Relation to Other Security Documents. ......................................................................................19

Collateral Agent’s Fees and Expenses........................................................................................19

Survival of Agreement................................................................................................................19

Counterparts; Effectiveness, Successors and Assigns. ...............................................................19

Severability. ................................................................................................................................20

Governing Law; Jurisdiction, Etc. ..............................................................................................20
ii

WEIL:\97681611\4\13173.0005

Schedules

Schedule 1.1 (Excluded Intellectual Property)

Schedule 2.1 (Certain Listed Collateral)

Schedule 4.1 (General Information)

Exhibits

Exhibit A (Form of Pledge Supplement)

Exhibit B (Form of Perfection Certificate)

Annexes

Annex 1 (Loyalty Program Assets)

Annex 2 (Control Collateral)

Annex 3A (Propeller Assets) 

Annex 3B (Aircraft and Engine Assets)

Annex 4 (Slots, Gates and Routes)

Annex 5 (Pledged Collateral)

Annex 6 (Spare Parts Assets)
1

WEIL:\97681611\4\13173.0005

This AMENDED AND RESTATED HORIZON AIRCRAFT, ENGINE AND PROPELLER 

PLEDGE AND SECURITY AGREEMENT, dated as of October 30, 2020 (together with the Annexes and 

Schedules, and as may be further amended, restated, amended and restated, supplemented or otherwise 

modified from time to time, this “Agreement”), between each Grantor, whether as an original signatory 

hereto or as an Additional Grantor, and The Bank of New York Mellon, as collateral agent for the Secured 

Parties (in such capacity as collateral agent, together with its successors and assigns, the “Collateral 

Agent”).

W I T N E S S E T H:

WHEREAS, each Grantor has entered into a Restatement Agreement (the “Restatement 

Agreement”), dated as the date hereof, to that certain Loan and Guarantee Agreement, dated as of 

September 28, 2020 (the “Existing Loan and Guarantee Agreement”, and as restated by the Restatement 

Agreement, and as may be further amended, restated, amended and restated, supplemented or otherwise 

modified from time to time, the “Loan Agreement”), between ALASKA AIRLINES, INC. (the 

“Borrower”), ALASKA AIR GROUP, INC. (the “Parent”), the Guarantors party thereto from time to 

time, the UNITED STATES DEPARTMENT OF THE TREASURY (“Treasury”), as Initial Lender, and 

THE BANK OF NEW YORK MELLON, as Administrative Agent and Collateral Agent;

WHEREAS, each Grantor had entered into that certain Horizon Aircraft and Engine Pledge and 

Security Agreement, dated as of September 28, 2020 and filed for recordation with the FAA Registry 

pursuant to and in accordance with the provisions of Section 44107 of the Transportation Code on 

September 28, 2020 at 8:17 A.M., C.D.T. but has not yet been recorded, between each Grantor and the 

Collateral Agent (the “Existing Horizon Security Agreement”);

WHEREAS, the Borrower has requested, and Treasury has agreed to, extend additional 

Commitments to the Borrower as is permissible under the CARES Act to the Borrower;

WHEREAS, Loans made pursuant to the Commitments (as increased by the Additional 

Commitments being provided by the Restatement Agreement to the Existing Loan and Guarantee 

Agreement) will be secured by Liens on the Collateral securing the existing Obligations, together with 

Liens on any Additional Collateral, subject to the distribution priorities set forth in the Loan Agreement;

WHEREAS, in connection with the foregoing, each Grantor and the Collateral Agent on behalf of 

the Secured Parties wish to amend and restate the Existing Horizon Security Agreement to (i) add the Annex 

3A to this Agreement covering any and all Propeller Assets as Additional Collateral and (ii) renumber the 

existing Annex 3 (Aircraft and Engine Assets) as Annex 3B (Aircraft and Engine Assets);

NOW, THEREFORE, in consideration of the mutual promises contained herein and other good and 

valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto 

agree as follows: 

SECTION 1. DEFINITIONS 

General Definitions.

All capitalized terms used herein (including the preamble and recitals hereto) shall have the 

meanings assigned to such terms as set forth below or in any Applicable Annex, in the Loan Agreement, or 

if not defined therein, in the UCC. 

“Additional Grantor” shall have the meaning assigned in Section 6.2.
2

WEIL:\97681611\4\13173.0005

“Agreement” shall have the meaning set forth in the preamble.

“Aircraft Protocol” means the official English language text of the Protocol to the Convention on 

International Interests in Mobile Equipment on Matters Specific to Aircraft Equipment adopted on 

November 16, 2001, at a diplomatic conference in Cape Town, South Africa, and all amendments, 

supplements and revisions thereto, as in effect in the United States.

“Annex Remedies Section” shall mean, with respect to an Applicable Annex, the section in such 

Applicable Annex named “Defaults and Remedies”.

“Applicable Annex” shall mean, with respect to any Collateral and any Grantor, (i) each of Annex 

1 (Loyalty Program Assets), Annex 2 (Control Collateral), Annex 3A (Propellers), Annex 3B (Aircraft and 

Engine Assets), Annex 4 (Slots, Gates and Routes), Annex 5 (Pledged Collateral), and Annex 6 (Spare Parts 

Assets) that is applicable to such Collateral and such Grantor and any other Annexes incorporated by 

reference in such Annex and (ii) any other Annexes attached hereto.

“Cape Town Convention” shall mean the official English language text of the Convention on

International Interests in Mobile Equipment, adopted on November 16, 2001 at a diplomatic conference in 

Cape Town, South Africa, and all amendments, supplements and revisions thereto, as in effect in the United 

States.

“Cape Town Treaty” shall mean, collectively, (a) the Cape Town Convention, (b) the Aircraft

Protocol, and (c) all rules and regulations (including the Regulations and Procedures for the International

Registry) adopted pursuant thereto and all amendments, supplements and revisions thereto.

“Collateral” shall have the meaning assigned in Section 2.1.

“Collateral Agent” shall have the meaning set forth in the preamble.

“Control” shall mean the completion and satisfaction of those conditions and steps necessary for 

the secured party to have “control” when used with respect to any (i) Certificated Security, under UCC 

Section 8-106(a) or (b), as applicable, (ii) Securities Account, including any Financial Asset credited to 

such Securities Account and all related Security Entitlements, under UCC Section 8-106(d) and (iii) Deposit 

Account, under UCC Section 9-104(a).

“Control Collateral” shall mean Collateral consisting of the Deposit Accounts and Securities 

Accounts identified in Schedule 2.1.

“Copyrights” shall mean all United States and foreign (A) copyrights, whether registered or

unregistered, whether in published or unpublished works of authorship, (B) copyright registrations or

applications in any IP Filing Office, (C) copyright renewals or extensions and (D) rights corresponding,

derived from or analogous to any of the foregoing.

“Excluded Asset” shall mean (i) any asset of a Grantor subject to a Permitted Lien, if, to the extent 

and only for so long as the grant of a Lien on such asset to secure the Secured Obligations is prohibited by, 

or requires additional action (that has not been taken) under, any agreement permitted under Section 6.02

of the Loan Agreement (unless the counterparty to such agreement is an Affiliate of any Grantor), (ii) any 

lease, license, contract, property right or agreement to which any Grantor is a party to the extent any such 

lease, license, contract, property right or agreement by its terms in effect on the date hereof or applicable 

Law, prohibits, or requires consent (unless such consent has been received or is of an Affiliate of any 

Grantor) to the granting of a Lien in the rights of such Grantor thereunder or which Lien would be invalid 
3

WEIL:\97681611\4\13173.0005

or unenforceable upon any such grant, in each case in this clause (ii) except to the extent that the UCC or 

any other applicable Law provides that such grant of Lien is effective irrespective of any prohibitions to 

such grant (iii) any “intent-to-use” application for registration of a Trademark filed with the United States 

Patent and Trademark Office, pursuant to Section 1(b) of the Lanham Act, 15 U.S.C. §1051, prior to the 

filing of a “Statement of Use” pursuant to Section 1(d) of the Lanham Act or an “Amendment to Allege 

Use” pursuant to Section 1(c) of the Lanham Act with respect thereto, but solely to the extent, if any, that, 

and solely during the period, if any, in which, the grant of a security interest therein would impair the 

validity or enforceability of any registration that issues from such “intent-to-use” application under 

applicable federal law, (iv) motor vehicles subject to certificates of title (other than to the extent a Lien 

thereon can be perfected by the filing of a financing statement under the UCC), (v) margin stock (within 

the meaning of Regulation U of the Board of Governors, as in effect from time to time), (vi) any Deposit 

Account or Securities Account that is used solely as a pension fund, escrow (including any escrow accounts 

for the benefit of customers), trust, or similar account, in each case, for the benefit of third parties and (vii) 

any Equity Interest of an Excluded Subsidiary; provided, however, that Excluded Assets shall not include 

any Material Loyalty Program Agreement, and licenses and property rights thereunder and, for the 

avoidance of doubt, any other Loyalty Program Agreement as to which consent to the grant of the security 

interest hereunder has been obtained and provided further that Excluded Assets shall not include any 

Control Collateral or Proceeds, substitutions or replacements of any Excluded Assets referred to in clauses 

(i) through (vii) (unless such Proceeds, substitutions or replacements would independently constitute 

Excluded Assets referred to in clauses (i) through (vii)).

“Grantor” shall mean each of the signatories hereto (including any Additional Grantor) other than 

the Collateral Agent.

“Loan Agreement” shall have the meaning set forth in the recitals.

“Insurance” shall mean (i) all insurance policies covering any or all of the Collateral (regardless 

of whether the Collateral Agent is the loss payee thereof), (ii) any key man life insurance policies and (iii) 

in each case, all claims thereunder.

“Intellectual Property” shall mean all intellectual property rights or other similar proprietary

rights, whether registered or unregistered, arising out of the laws of any jurisdiction throughout the world,

including such rights in and to: (A) Copyrights, (B) Patents, (C) Trademarks, (D) Trade Secrets, (E)

software, firmware and computer programs and applications, whether in source code, object code, humanreadable or other form, including data files, algorithms, analytical models, computerized databases, plugins, 

subroutines, tools, application programming interfaces and libraries, and development documentation, 

programming tools, drawings, specifications and data, (F) designs and databases, (G) IP addresses and (H) 

all tangible embodiments and fixations thereof and documentation related thereto. “International Registry” 

shall mean the “International Registry” as defined in the Cape Town Treaty.

“IP Filing Office” means, as applicable, the United States Patent and Trademark Office, the United 

States Copyright Office or any similar office or agency in any jurisdiction.

“Patents” shall mean all United States and foreign issued patents (whether utility, design, or plant) 

and certificates of invention, and similar industrial property rights, and applications for any of the foregoing, 

including: (A) all reissues, divisions, continuations, continuations-in-part, extensions, renewals and 

reexaminations thereof, (B) all rights corresponding, derived from or analogous thereto throughout the 

world and (C) all inventions and improvements described or claimed therein.
4

WEIL:\97681611\4\13173.0005

“Perfection Certificate” shall mean a perfection certificate, executed and delivered by each of the 

Grantors, dated as of the date hereof, in substantially the form of Exhibit B attached hereto (as supplemented 

from time to time).

“Perfection Requirement” shall mean, at any time and with respect to any property, the 

requirement that:

(i) each Grantor, at its sole cost and expense, shall have executed a grant of a security 

interest in such property in one or more applicable Security Documents (as specified in this Agreement) in 

favor of the Collateral Agent for the benefit of the Secured Parties;

(ii) each Grantor, at its sole cost and expense, shall have prepared and duly and timely 

filed, registered, recorded or made, or shall have caused to be prepared and duly and timely filed, registered, 

recorded or made, the Required Filings in favor of the Collateral Agent for the benefit of the Secured Parties 

with respect to the security interest in such property;

(iii) each Grantor shall have completed and satisfied, or shall have caused to be 

completed and satisfied, all conditions and steps constituting the Perfection Requirement under the terms 

of any Applicable Annex with respect to such property; and

(iv) each Grantor shall have obtained all consents and approvals required to be obtained 

by it in connection with the execution and delivery of this Agreement and any other Security Documents 

to which it is a party, the performance of its obligations thereunder and the granting by it of the Liens 

hereunder and thereunder and delivered such consent or approval to the Collateral Agent.

“Pledge Supplement” shall mean any supplement to this Agreement in substantially the form of 

Exhibit A attached hereto. 

“Required Filing” shall mean each (i) UCC financing statement (including any fixture filing, as 

applicable) in favor of the Collateral Agent for the benefit of the Secured Parties with respect to the 

Collateral (based upon the information provided to the Collateral Agent in the Perfection Certificate) and

for filing in each governmental, municipal or other office specified in Schedule 5 to the Perfection 

Certificate and (ii) any Required Filing under each Applicable Annex in favor of the Collateral Agent for 

the benefit of the Secured Parties.

“Secured Obligations” shall have the meaning assigned in Section 3.1.

“Secured Parties” shall mean the Lenders (including the Treasury as the Initial Lender), the 

Administrative Agent and the Collateral Agent.

“Spare Parts” shall mean all accessories, appurtenances, or parts of (A) an aircraft (except an 

engine or propeller), (B) an engine (except a propeller), (C) a propeller, or (D) an Appliance, that are to be 

installed at a later time in an aircraft, engine, propeller or Appliance (including “spare parts” (as defined in 

Section 40102 of Title 49)) including, in all cases, any replacements, substitutions or renewals therefor, and 

accessions thereto.

“Title 14” shall mean Title 14 of the United States Code, as amended from time to time.

“Title 49” shall mean Title 49 of the United States Code, as amended from time to time.
5

WEIL:\97681611\4\13173.0005

“Trademarks” shall mean all United States, and foreign trademarks, trade names, corporate

names, company names, business names, fictitious business names, Internet domain names, trade dress,

service marks, certification marks, collective marks, logos, social media identifiers, handles, other source

or business identifiers, designs and general intangibles of a like nature, whether arising under a statute,

common law, or the laws of any jurisdiction throughout the world, whether registered or unregistered,

including: (A) all registrations, applications, extensions, renewals or other filings of any of the foregoing

and (B) all of the goodwill of the business connected with the use of or symbolized by the foregoing.

“Trade Secrets” shall mean all trade secrets and all other confidential or proprietary information,

data and know-how, whether arising under a statute, common law, or the Laws of any jurisdiction

throughout the world, whether or not such trade secret has been reduced to a writing or other tangible form, 

including all documents and things embodying, incorporating, or referring in any way to such trade secret.

“Treasury” shall have the meaning set forth in the recitals.

“UCC” shall mean the Uniform Commercial Code as in effect from time to time in the State of 

New York or, when the context implies, the Uniform Commercial Code as in effect from time to time in 

any other applicable jurisdiction.

Definitions; Interpretation

References to “Annexes,” “Sections,” “Exhibits” and “Schedules” shall be to Annexes, Sections, 

Exhibits and Schedules, as the case may be, of this Agreement unless otherwise specifically provided. 

References to “Schedules” shall be as supplemented from time to time. References to this “Agreement” 

shall include all Annexes, Exhibits and Schedules hereto. Section, Annex, Exhibit and Schedule headings 

and the Table of Contents in this Agreement are included herein for convenience of reference only, are not 

part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, 

this Agreement. Any of the terms defined herein may, unless the context otherwise requires, be used in the 

singular or the plural, depending on the reference. The use herein of the word “include” or “including”, 

when following any general statement, term or matter, shall not be construed to limit such statement, term 

or matter to the specific items or matters set forth immediately following such word or to similar items or 

matters, whether or not non-limiting language (such as “without limitation” or “but not limited to” or words 

of similar import) is used with reference thereto, but rather shall be deemed to refer to all other items or 

matters that fall within the broadest possible scope of such general statement, term or matter. The word 

“or” is not exclusive. If any conflict or inconsistency exists between this Agreement and the Loan 

Agreement, the Loan Agreement shall govern. All references herein to provisions of the UCC shall include 

all successor provisions under any subsequent version or amendment to any Article of the UCC.

SECTION 2. GRANT OF SECURITY INTERESTS. 

Grant of Security

(a) As security for the payment and performance in full of all Secured Obligations, 

each Grantor hereby grants to the Collateral Agent for the benefit of the Secured Parties a security interest 

in and continuing lien on all of such Grantor’s right, title and interest in, to and under the following personal 

property of such Grantor, in each case, whether now owned or existing or hereafter acquired, developed, 

created or arising and wherever located (all of which being hereinafter collectively referred to as the 

“Collateral”):
6

WEIL:\97681611\4\13173.0005

(i) all Loyalty Program Assets (including the Loyalty Program Assets 

described on Schedule 2.1);

(ii) all Aircraft and Engine Assets described on Schedule 2.1;

(iii) all Spare Parts Assets described on Schedule 2.1;

(iv) all Propeller Assets described on Schedule 2.1;

(v) all Route Authorities and (w) all FAA Route Slots, (x) all Foreign Route 

Slots, (y) all Domestic Gate Leaseholds and (z) all Foreign Gate 

Leaseholds, in the case of each of (w), (x), (y) and (z), held, acquired, used, 

allocated to or available for use by any Grantor in connection with any 

such Route Authority described on Schedule 2.1;

(vi) Grantor’s rights under any leasing, licensing and use agreements with

respect to any of the foregoing Slots and Gate Leaseholds and under swap 

or similar agreements or arrangements with respect to any of the foregoing 

Slots;

(vii) all General Intangibles that are owned by such Grantor related to the 

foregoing;

(viii) the Deposit Accounts and Securities Accounts described on Schedule 2.1

(which shall include the Collateral Proceeds Account) and all cash 

deposited or held therein and financial assets credited thereto, as 

applicable;

(ix) all Pledged Collateral described on Schedule 2.1;

(x) all Documents (including the Documents described on Schedule 2.1) 

relating to assets described in the foregoing;

(xi) all Accounts (including the Accounts described on Schedule 2.1) relating 

to assets described in the foregoing;

(xii) to the extent not otherwise included above, all books and records and 

Supporting Obligations relating to any of the foregoing; and

(xiii) to the extent not otherwise included above, all Proceeds (including all

Proceeds (of any kind) received or to be received by the Grantors upon the 

transfer or other such disposition of any of the foregoing), products, 

accessions, rents and profits of or with respect to any of the foregoing.

(b) Notwithstanding anything herein to the contrary, in no event shall the Collateral 

include, or the security interest granted under this Section 2.1 attach to, any Excluded Asset.

(c) Each Grantor shall file and make all Required Filings and also hereby authorizes 

the Collateral Agent to file or make all Required Filings, including any financing or continuation statements, 

and amendments thereto, in any jurisdictions and with any filing offices as the Collateral Agent may 

determine, in its sole discretion, are necessary or advisable to perfect the security interest granted to the 
7

WEIL:\97681611\4\13173.0005

Collateral Agent herein. Such Required Filings may describe the Collateral in the same manner as described 

herein or may contain an indication or description of collateral that describes such property in any other 

manner as the Collateral Agent may determine, in its sole discretion, is necessary, advisable or prudent to 

ensure the perfection of the security interest in all of the Collateral granted to the Collateral Agent herein. 

Each Grantor shall furnish to the Collateral Agent from time to time statements and schedules further 

identifying and describing the Collateral and such other reports in connection with the Collateral as the 

Appropriate Party may request, all in such detail as the Appropriate Party may require.

(d) If any Collateral (or any portion thereof) constitutes a type of asset covered by an 

Applicable Annex, the Applicable Annex for such type of asset shall apply and be deemed to have been 

incorporated in its entirety into this Agreement as if such Applicable Annex constituted a part of this 

Agreement.

SECTION 3. SECURITY FOR OBLIGATIONS; GRANTORS REMAIN LIABLE.

Security for Obligations

This Agreement secures, and the Collateral is collateral security for, the prompt and complete 

payment and performance in full when due, whether at stated maturity, by required prepayment, declaration, 

acceleration, demand or otherwise (including amounts that would become due but for the operation of the 

automatic stay under any Debtor Relief Law), of all Obligations and Guaranteed Obligations of the 

Borrower and each Grantor (collectively, the “Secured Obligations”).

Continuing Liability Under Collateral

Notwithstanding anything herein to the contrary:

(a) nothing contained herein is intended or shall be a delegation of duties to any 

Secured Party;

(b) each Grantor shall remain liable under each agreement included in or relating to

the Collateral and observe and perform all of the obligations undertaken by it thereunder all in accordance 

with and pursuant to the terms and provisions thereof, and neither the Collateral Agent nor any other 

Secured Party shall have any obligation or liability under any of such agreements by reason of or arising

out of this Agreement or any other document related thereto nor shall the Collateral Agent nor any other 

Secured Party have any obligation to make any inquiry as to the nature or sufficiency of any payment 

received by it or have any obligation to take any action to collect or enforce any rights under any agreement 

included in or relating to the Collateral; and

(c) the exercise by the Collateral Agent of any of its rights or remedies hereunder, any 

other Security Document or the Loan Agreement, shall not release any Grantor from any of its duties or 

obligations under the contracts and agreements included in the Collateral.

SECTION 4. REPRESENTATIONS AND WARRANTIES. 

Generally.

Each Grantor hereby represents and warrants, on the Closing Date and on the date of each 

Borrowing (and, in the case of an Additional Grantor or Additional Collateral, on the date of such Grantor’s 

execution and delivery of a Pledge Supplement, or the date such Additional Collateral becomes subject to 

the security interest created hereby, as applicable, provided that if Additional Collateral becomes subject to 
8

WEIL:\97681611\4\13173.0005

the security interest created hereby without the execution and delivery of a Pledge Supplement, the 

following representations and warranties are repeated only with respect to such Additional Collateral): 

(a) It owns and has good and valid rights in all Collateral free and clear of any Lien 

except for Permitted Liens.

(b) Subject to applicable Privacy Laws, it has the full corporate power, authority and 

right to pledge, sell, assign or transfer the Collateral pursuant to, and as provided in, this Agreement.

(c) All information supplied by the Grantors with respect to Collateral, including

Schedules 2.1 and 4.1, is true, correct and complete in all material respects; provided that the Grantors may, 

to the extent applicable, deliver to the Collateral Agent certified supplements to (or restated versions of) 

Schedules 2.1 and 4.1 and the Perfection Certificate in advance of any making of this representation.

(d) The Perfection Certificate has been duly prepared, completed and executed and the 

information set forth therein is true, correct and complete.

(e) This Agreement grants to the Collateral Agent for the benefit of the Secured Parties 

a legal, valid and enforceable security interest in all of the Collateral and, upon the filing, recording or 

registration of the UCC financing statements and any Required Filing set forth in any Applicable Annex, 

the security interest granted hereunder constitute a perfected first priority security interest in all of the 

Collateral, subject to no Liens other than Permitted Liens.

(f) The UCC financing statements and the Required Filing set forth in the Applicable 

Annexes are all the financing statements, filings, recordings and registrations that are necessary to publish 

notice of, protect the validity of and to establish a legal, valid and perfected first priority security interest 

in favor of the Collateral Agent for the benefit of the Secured Parties with respect to all Collateral, and no 

further or subsequent filing, refiling, recording, rerecording, registration or reregistration nor any other 

steps or actions is necessary in any such jurisdiction in connection with the grant, perfection or first priority 

status of the security interest of the Collateral Agent in any Collateral, except as provided (y) under 

applicable Law with respect to the filing of continuation statements and (z) expressly (by reference to this 

Section 4.1(f)) in any Applicable Annex.

(g) Other than the financing statements, filings, recordings or registrations filed or to 

be filed in favor of the Collateral Agent for the benefit of the Secured Parties, no financing statement, filing, 

recordings, registrations or other document similar in effect under any applicable Law covering or 

purporting to cover any security interest in Collateral is on file or of record in any filing or recording office 

except for (x) financing statements for which proper termination statements have been properly filed and 

(y) financing statements filed in connection with Permitted Liens.

(h) No authorization, approval, consent or other action by, and no notice to or filing 

with, any Person, Governmental Authority or regulatory body is required for either (A) the pledge or grant 

by any Grantor of the security interest purported to be created hereunder to be legal, valid and enforceable 

or (B) the exercise by the Collateral Agent of any rights or remedies with respect to any Collateral (whether 

specifically granted or created hereunder or created or provided for by applicable Law), except (w) such as 

have been obtained, (x) the filing of UCC financing statements and filing or recordation of any Required 

Filings set forth in any Applicable Annex, in each case, in favor of the Collateral Agent for the benefit of 

the Secured Parties,(y) any required continuation statements and (z) with respect to clause (B), to the extent 

expressly specified (by reference to this Section 4.1(h)) in any Applicable Annex.
9

WEIL:\97681611\4\13173.0005

SECTION 5. COVENANTS AND AGREEMENTS

Affirmative Covenants.

Each Grantor hereby covenants and agrees that:

(a) It shall have satisfied the Perfection Requirement (i) with respect to the Collateral 

now owned or existing, on or prior to the Closing Date or, in the case of an Additional Grantor or Additional 

Collateral, on the date of execution and delivery of a Pledge Supplement, or the date such Additional 

Collateral becomes subject to the security interest created hereby, as applicable (except that the Perfection 

Requirement with respect to UCC financing statements and any FAA or International Registry filings may 

be satisfied by filing thereof by such Grantor on the Closing Date or such date of execution and delivery of 

a Pledge Supplement, or the date such Additional Collateral becomes subject to the security interest created 

hereby, as applicable, or, in each case, within one (1) Business Day thereafter) and (ii) with respect to any 

Collateral acquired or arising after the Closing Date requiring satisfaction of any Perfection Requirement 

that has not already been undertaken, as promptly as practicable after the date on which such Collateral was 

acquired or arose (in any event, unless any other timeframe is specifically provided, within thirty (30) days).

(b) On the Closing Date and at any time at which an additional Perfection Requirement 

is required with respect to any Collateral of any Grantor, such Grantor shall deliver opinions of counsel that 

are acceptable to the Appropriate Party, addressed to the Secured Parties and dated the Closing Date or the 

date at which such Perfection Requirement is required, as applicable, in form and substance satisfactory to 

the Appropriate Party with respect to the validity and perfection of the Lien granted hereunder and under 

the other Security Documents in the applicable item(s) of Collateral, fulfillment of all Perfection 

Requirements, no governmental or third-party consents that have not been obtained, U.S. Bankruptcy Code 

Section 1110 treatment for any Aircraft and Engine Assets or Spare Parts, in each case, constituting 

Collateral, no contravention of agreements and such other matters relating to the Collateral as the 

Appropriate Party requests.

(c) Concurrently with the Appraisals required to be delivered under Section 5.16 of 

the Loan Agreement, it shall provide to the Collateral Agent:

(i) a certificate of a Responsible Officer of the applicable Grantor confirming 

that Schedules 2.1 and 4.1 (after giving effect to the supplements and 

restatements in clause (ii) below) with respect to Collateral remain true, 

correct and complete in all material respects; and

(ii) to the extent applicable, supplements to (or restated versions of) Schedules

2.1 and 4.1 and the Perfection Certificate.

(d) At the expense of such Grantor, it shall maintain the security interest created by 

this Agreement as a perfected first-priority security interest and shall defend such security interest against 

claims and demands of all Persons at any time claiming any interest therein and the priority of such security 

interest against any Lien (other than Permitted Liens). Without limiting the foregoing, the applicable 

Grantor, at its sole cost and expense, will cause the Required Filings to be prepared and duly and timely 

filed and recorded.

(e) It shall provide to the Collateral Agent statements and schedules (or supplements 

thereto) further identifying and describing in detail the assets and property of such Grantor constituting 

Collateral and such other reports therewith as the Appropriate Party may request from time to time.
10

WEIL:\97681611\4\13173.0005

(f) Concurrently with any supplementing or changing of the Schedules to this 

Agreement, it shall, at its expense, cause to be delivered to the Collateral Agent, at the request of the 

Appropriate Party, (i) an opinion of counsel, in form and substance satisfactory to the Appropriate Party, 

to the effect that all Perfection Requirements have been made, including that all Required Filings and any 

amendments or supplements thereto or continuation statements in respect thereof (except any continuation 

statements specified in such opinion of counsel that are to be filed more than six (6) months after the date 

thereof), have been filed or recorded in each office necessary to create and perfect the Liens of the Secured 

Parties and (ii) a certificate of a Responsible Officer as to any additional matters set forth in any Applicable 

Annex. 

(g) Grantor is an air carrier certificated under Section 44705 of Title 49, United States 

Code.

Negative Covenants.

Each Grantor hereby covenants and agrees that:

(a) It shall not change the information provided in Schedule 2.1, Schedule 4.1 or the 

Perfection Certificate delivered to the Collateral Agent or the Lenders at any time unless (i) prior to such 

change or within the time period specified herein, it shall have satisfied all conditions and taken all actions, 

if not already satisfied and taken, necessary or advisable to maintain the continuous legality, validity, 

enforceability, perfection and the first priority (subject to Permitted Liens) of the Collateral Agent’s security 

interest (for the benefit of the Secured Parties) in the Collateral (including making any and all filings under 

the UCC or any other applicable Law that are required to have a valid, legal, perfected first-priority (subject 

to Permitted Liens) security interest in the Collateral and satisfying any applicable Perfection Requirement, 

any other action required under any Applicable Annex and any other actions requested by the Collateral 

Agent or an Appropriate Party in connection therewith) and (ii) in connection with a change at any time to 

remove any Collateral identified at that time on Schedule 2.1, Schedule 4.1 or the Perfection Certificate, 

such change shall have been made in connection with a release or disposition permitted under, and made in 

accordance with, Section 6.17(b)(iii) of the Loan Agreement or otherwise in accordance with the applicable 

Loan Documents. 

(b) It shall not authorize the filing of any financing statements or other registrations, 

recordations or filings naming it as debtor covering all or any portion of the Collateral, except to cover 

security interests created hereunder or other Permitted Liens.

SECTION 6. FURTHER ASSURANCES; ADDITIONAL GRANTORS.

Further Assurances.

(a) Each Grantor shall from time to time, at the sole expense of such Grantor, promptly 

execute and deliver, or cause to be executed and delivered, all further instruments and documents, and take

or cause to be taken all further action, that may be necessary or advisable, or that the Appropriate Party or 

the Collateral Agent may request, in order to create or maintain the validity, perfection or priority of and 

protect any security interest granted hereby or to enable the Collateral Agent to obtain, preserve, exercise 

and enforce its rights and remedies hereunder with respect to any Collateral (including the satisfaction and 

completion of all conditions and steps constituting any applicable Perfection Requirement and any other 

steps required under any Applicable Annex). Without limiting the generality of the foregoing, each Grantor 

shall file or deliver to the Collateral Agent such Required Filings, or continuation statements or amendments 

thereto, and execute and deliver, or cause to be executed and delivered, such other agreements, instruments, 
11

WEIL:\97681611\4\13173.0005

endorsements, powers of attorney or notices, as may be necessary or advisable, or as the Appropriate Party

may request, in order to perfect and preserve the security interests granted or purported to be granted hereby.

(b) Each Grantor shall provide any information on the Collateral that the Appropriate 

Party or the Collateral Agent may request in order to ensure the Collateral Agent’s security interest in all 

of the Collateral is perfected and is first priority.

(c) Notwithstanding anything herein to the contrary, with respect to pledges of, or 

grants of security interests in, assets acquired by a Grantor after the Closing Date or that cease to be an 

Excluded Asset and thereby become an item of Collateral after the Closing Date, unless any other timeframe 

is specifically provided, within thirty (30) days after the date of such acquisition (or after the date such 

assets cease to be Excluded Asset), the applicable Grantor shall satisfy the requirements of clause (a) above 

(including the satisfaction and completion of all conditions and steps constituting any applicable Perfection 

Requirement and any other action required under any Applicable Annex).

Additional Grantors; Additional Collateral

From time to time after the Closing Date, additional Persons may become parties hereto as 

additional Grantors (each, an “Additional Grantor”) or assets eligible to be Additional Collateral may be 

added to the Collateral, in each case, by an Additional Grantor or applicable Grantor, as relevant, by 

executing a Pledge Supplement and, as applicable, satisfying the Perfection Requirements. Upon delivery 

of such Pledge Supplement to the Collateral Agent, notice of which is hereby waived by the Grantors, each 

Additional Grantor shall be a Grantor and shall be as fully a party hereto as if such Additional Grantor were 

an original signatory hereto as a Grantor. Each Grantor expressly agrees that its obligations arising 

hereunder shall not be affected or diminished by the addition or release of any other Grantor hereunder, nor 

by any election of Collateral Agent (acting at the direction of the Required Lenders) not to cause any 

Subsidiary of the Parent or any Grantor to become an Additional Grantor hereunder. This Agreement shall 

be fully effective as to any Grantor that is or becomes a party hereto regardless of whether any other Person 

becomes or fails to become or ceases to be a Grantor hereunder.

SECTION 7. COLLATERAL AGENT APPOINTED PROXY ATTORNEY-IN-FACT.

Power of Attorney

Each Grantor hereby irrevocably appoints the Collateral Agent (such appointment being coupled 

with an interest and terminable only upon the payment in full of the Secured Obligations (other than 

contingent indemnification or reimbursement obligations not yet accrued and payable) as such Grantor’s 

proxy and attorney-in-fact) with full authority in the place and stead of such Grantor and in the name of 

such Grantor, the Collateral Agent or otherwise, from time to time in the Collateral Agent’s discretion to 

take any action and to execute any instrument that the Appropriate Party may deem necessary or advisable 

to accomplish the purposes of this Agreement, all of which shall be at the Grantors’ expense and constitute 

Secured Obligations, including, the following: 

(a) to prepare and file any UCC financing statements and any other Required Filing 

against such Grantor as debtor;

(b) to prepare, sign and file any documents with the United States Patent and 

Trademark Office, the United States Copyright Office or any Governmental Authority in any jurisdiction 

that the Collateral Agent deems appropriate in connection with the perfection, protection, priority or 

enforcement of the security interest on the Collateral, and to remove any ineffective filings;
12

WEIL:\97681611\4\13173.0005

(c) upon the occurrence and during the continuance of any Event of Default:

(i) to take any actions set forth in any Applicable Annex;

(ii) to do, at the Collateral Agent’s option, at any time or from time to time, 

all acts and things that the Appropriate Party deems necessary or advisable 

to protect, preserve, perfect, establish the first priority of or realize upon 

the Collateral and the Collateral Agent’s security interest therein in order 

to effect the intent of this Agreement, all as fully and effectively as such 

Grantor might do, including any access to pay or discharge Taxes or Liens 

levied or placed upon or threatened against the Collateral, the legality or 

validity thereof and the amounts necessary to discharge the same to be 

determined by the Collateral Agent (acting at the direction of the Required 

Lenders), any such payments made by the Collateral Agent to become 

obligations of such Grantor to the Collateral Agent, due and payable 

immediately without demand;

(iii) to exercise control in respect of any Deposit Account or Securities 

Account that is part of the Collateral, and issue instructions and 

entitlement orders to any bank or securities intermediary in respect 

thereof;

(iv) to obtain and adjust insurance required to be maintained by such Grantor 

or paid to the Collateral Agent pursuant to the Loan Agreement; 

(v) to ask for, demand, collect, sue for, recover, compound, receive and give 

acquittance and receipts for moneys due and to become due under or with 

respect to any of the Collateral; 

(vi) to receive, endorse and collect any drafts or other instruments, documents 

and chattel paper; 

(vii) to file any claims or take any action or institute any proceedings that the 

Required Lenders may deem necessary or desirable for the collection of 

any of the Collateral or otherwise to enforce the rights of the Collateral 

Agent with respect to any of the Collateral; 

(viii) to use information relating to the Collateral for purposes of Disposing or 

collecting the Collateral; provided that with respect to any information 

granted to a Grantor by a third party, the Collateral Agent shall comply 

with any of such Grantor’s existing contractual obligations and restrictions 

that, in each case, such Grantor places the Collateral Agent on written

notice of (in reasonable detail); and

(ix) to Dispose, pledge, make any agreement with respect to or otherwise deal 

with any of the Collateral as fully and completely as though the Collateral 

Agent were the absolute owner thereof for all purposes, including to file 

any documents necessary or advisable to implement, effectuate or reflect 

the Disposition.
13

WEIL:\97681611\4\13173.0005

None of the rights granted in this Section 7.1 shall be construed as duties, and the Collateral Agent shall 

have no liability for omitting to take such actions.

No Duty on the Part of Collateral Agent or Secured Parties.

(a) The powers conferred on the Collateral Agent hereunder are solely to protect the 

interests of the Secured Parties in the Collateral and shall not impose any duty upon the Collateral Agent

or any Secured Party to exercise any such powers. The Collateral Agent and the other Secured Parties shall 

be accountable only for amounts that they actually receive as a result of the exercise of such powers, and 

neither they nor any of their officers, directors, employees or agents shall be responsible to any Grantor for 

any act or failure to act hereunder, except for their own gross negligence or willful misconduct. The failure 

to act in the absence of any duty to act shall not be deemed an act of gross negligence or willful misconduct.

(b) The Collateral Agent has been appointed to act as Collateral Agent hereunder by 

the Lenders and, by their acceptance of the benefits hereof, the other Secured Parties. The Collateral Agent

shall be obligated, and shall have the right hereunder, to make demands, to give notices, to exercise or 

refrain from exercising any rights, and to take or refrain from taking any action (including any release or 

substitution of Collateral), solely in accordance with this Agreement and the Loan Agreement.

(c) Notwithstanding any rights granted to the Collateral Agent hereunder to file or 

make filings to perfect the security interest granted to the Collateral Agent herein, the Collateral Agent shall 

not be responsible for the existence, genuineness or value of any of the Collateral; for filing any financing 

or continuation statements or recording any documents or instruments in any public office or otherwise 

perfecting or maintaining the perfection of any security interest in the Collateral (all of which shall be each 

Grantor’s responsibility); for the validity, perfection, priority or enforceability of the Liens in any of the 

Collateral; for the validity or sufficiency of the Collateral or any agreement or assignment contained therein; 

for the validity of the title of any grantor to the Collateral; for insuring the Collateral; or for the payment of 

taxes, charges or assessments on the Collateral.

Standard of Care; Collateral Agent May Perform.

(a) Except for the exercise of reasonable care in the custody of any Collateral in its 

possession and the accounting for moneys actually received by it hereunder, the Collateral Agent shall have 

no duty as to any Collateral or any income therefrom or as to the taking of any necessary steps to preserve 

rights against prior parties or any other rights pertaining to any Collateral.

(b) The Collateral Agent shall be deemed to have exercised reasonable care in the 

custody and preservation of Collateral in its possession if such Collateral is accorded treatment substantially 

equal to that which the Collateral Agent accords its own property.

(c) The Collateral Agent shall not be liable or responsible for any loss or damage to 

any Collateral, or for any diminution in the value thereof, by reason of any act or omission of any sub-agent 

or bailee selected by the Collateral Agent in good faith, except to the extent that such liability arises from 

the Collateral Agent’s gross negligence or willful misconduct.

(d) Neither the Collateral Agent nor any of its directors, officers, employees or agents 

shall be liable for failure to demand, collect or realize upon all or any part of the Collateral or for any delay 

in doing so or shall be under any obligation to sell or otherwise Dispose of any Collateral upon the request 

of any Grantor or otherwise.
14

WEIL:\97681611\4\13173.0005

(e) If any Grantor fails to perform any agreement contained herein, the Collateral 

Agent may itself (but shall have no obligation to) perform, or cause performance of, such agreement, and 

the expenses of the Collateral Agent incurred in connection therewith shall be payable by each Grantor in 

a manner consistent with Section 11.03 of the Loan Agreement.

(f) The Collateral Agent has been appointed by the Lenders under the Loan 

Agreement and has the benefit of the rights and protections set forth therein, including without limitation, 

that, notwithstanding any discretion given to it in any Loan Document, the Collateral Agent need not 

exercise discretion, but shall act as directed by the Required Lenders.

SECTION 8. REMEDIES.

Generally. 

(a) If any Event of Default shall have occurred and be continuing, the Collateral Agent

may exercise (at the direction of the Required Lenders) with respect to the Collateral, in addition to all other 

rights and remedies provided for herein or otherwise available to it at law or in equity, all the rights and 

remedies that the Collateral Agent may have or that are afforded to a secured party under the UCC or any 

other applicable Law to collect, enforce or satisfy any Secured Obligations then owing, whether by 

acceleration or otherwise, and also may pursue any of the following separately, successively or 

simultaneously, subject to applicable Laws, including applicable Privacy Laws:

(i) require any Grantor to, and each Grantor hereby agrees that it shall, at its 

expense and promptly upon request of the Appropriate Party or the 

Collateral Agent forthwith, (A) provide to the Appropriate Party or the 

Collateral Agent additional information concerning the Collateral and (B) 

assemble all or part of the Collateral as directed by the Appropriate Party

or the Collateral Agent and make it available to the Collateral Agent at a 

place to be designated by the Collateral Agent; 

(ii) enter onto the property where any Collateral is located, if applicable and 

take possession thereof with or without judicial process (to the extent 

possession is not otherwise granted to the Collateral Agent by the 

applicable Grantors), with or without prior notice or demand for 

performance and without liability for trespass to enter any premises where 

any Collateral may be located for the purposes of taking possession of or 

removing any Collateral; provided that the Collateral Agent shall take 

commercially reasonable measures to protect the confidentiality of any 

Trade Secrets and other confidential information contained thereon;

(iii) prior to the Disposition of the Collateral, store, process, repair or 

recondition the Collateral or otherwise prepare the Collateral for 

Disposition in any manner to the extent the Collateral Agent deems 

appropriate;

(iv) give notice of exclusive control or any other instruction under any control 

agreement, collateral access agreement or other similar agreement and 

take any action provided therein with respect to the applicable Collateral;

(v) seek the appointment of a receiver, keeper or any agent to take possession 

of the Collateral and enforce any of the Collateral Agent’s remedies (for 
15

WEIL:\97681611\4\13173.0005

the benefit of the Collateral Agent and the Secured Parties) with respect to 

such appointment without prior notice or hearing as to such appointment;

(vi) subject to compliance with the terms of Section 8.1(f), without notice 

except as specified below or under the UCC, sell, assign, lease, license (on 

an exclusive or non-exclusive basis), sublicense or otherwise Dispose of 

the Collateral or any part thereof in one or more parcels at public or private 

sale or on any securities exchange, at any of the Collateral Agent’s offices 

or elsewhere, for cash, on credit or for future delivery, at such time or times 

and at such price or prices and upon such other terms as the Collateral 

Agent may deem appropriate (provided that such direct licenses or 

sublicenses survive even when the Event of Default no longer exists); 

(vii) require any applicable Grantor, and each applicable Grantor hereby agrees 

that it shall, in connection with any foreclosure, collection, sale or other 

enforcement of the Liens granted hereunder: (1) to cooperate with the 

Collateral Agent to obtain all regulatory licenses, consents and other 

governmental approvals necessary or advisable to conduct all aviation 

operations with respect to the Collateral, as applicable, (2) to continue to 

operate and manage the Collateral and maintain all applicable licenses 

until the Collateral Agent or its designee does so and (3) to cooperate with 

the transition of the operations to a new operator; and

(viii) take any other actions specified in any Applicable Annex.

(b) The Collateral Agent, the Administrative Agent or any other Secured Party may 

be the purchaser of any or all of the Collateral at any public or private (to the extent the portion of the 

Collateral being privately sold is of a kind that is customarily sold on a recognized market or the subject of 

widely distributed standard price quotations) sale in accordance with the UCC, and the Collateral Agent, as 

collateral agent for and representative of the Secured Parties, shall be entitled, for the purpose of bidding 

and making settlement or payment of the purchase price for all or any portion of the Collateral sold at any 

such sale made in accordance with the UCC, to use and apply any of the Secured Obligations as a credit on 

account of the purchase price for any Collateral payable by the Collateral Agent at such sale. Each 

purchaser at any such sale shall hold the property sold absolutely free from any claim or right on the part 

of any Grantor, and each Grantor hereby waives (to the extent permitted by applicable Law) all rights of 

redemption, stay or appraisal which it now has or may at any time in the future have under any rule of law 

or statute now existing or hereafter enacted. Each Grantor agrees that, to the extent notice of sale shall be 

required by law, at least ten (10) days’ notice to such Grantor of the time and place of any public sale or 

the time after which any private sale is to be made shall constitute reasonable notification. The Collateral 

Agent shall not be obligated to make any sale of Collateral regardless of notice of sale having been given. 

The Collateral Agent may adjourn any public or private sale from time to time by announcement at the time 

and place fixed therefor, and such sale may, without further notice, be made at the time and place to which 

it was so adjourned. Each Grantor agrees that it would not be commercially unreasonable for the Collateral 

Agent to Dispose of the Collateral or any portion thereof by using Internet sites that provide for the auction 

of assets of the types included in the Collateral or that have the reasonable capability of doing so, or that 

match buyers and sellers of assets. Each Grantor hereby waives any claims against the Collateral Agent

arising by reason of the fact that the price at which any Collateral may have been sold at such a private sale 

was less than the price which might have been obtained at a public sale, even if the Collateral Agent accepts 

the first offer received and does not offer such Collateral to more than one offeree. If the proceeds of any 

Disposition of the Collateral are insufficient to pay all the Secured Obligations, the Grantors shall be liable 

for the deficiency and the fees of any attorneys employed by the Collateral Agent to collect such deficiency. 
16

WEIL:\97681611\4\13173.0005

Each Grantor further agrees that a breach of any of its covenants contained in this Section will cause 

irreparable injury to the Secured Parties, that the Secured Parties have no adequate remedy at law with 

respect to such breach and, as a consequence, that each and every covenant contained in this Section shall 

be specifically enforceable against such Grantor, and such Grantor hereby waives and agrees not to assert 

any defenses against an action for specific performance of such covenants except for a defense that no 

default has occurred giving rise to the Secured Obligations becoming due and payable prior to their stated 

maturities. Nothing in this Section shall in any way alter the rights of the Secured Parties hereunder. 

(c) The Collateral Agent may sell the Collateral without giving any warranties as to 

the Collateral. The Collateral Agent may specifically disclaim or modify any warranties of title or the like. 

This procedure will not be considered to adversely affect the commercial reasonableness of any sale of the 

Collateral.

(d) To the maximum extent permitted by the applicable Law, each Grantor absolutely 

and irrevocably waives (which waiver may not be withdrawn without the written consent of the Collateral 

Agent acting at the direction of the Required Lenders):

(i) all claims, damages, and demands against the Collateral Agent or any other 

Secured Party arising out of the repossession, retention or Disposition of 

the Collateral (after the occurrence of and during the continuance of an 

Event of Default), except such as arise out of the gross negligence or 

willful misconduct of the Collateral Agent or such Secured Party as finally 

determined by a court of competent jurisdiction; and

(ii) the benefit and advantage of, and covenants not to assert against the 

Collateral Agent or any other Secured Party, any valuation, stay, appraisal, 

extension, moratorium, redemption or similar laws and any and all rights 

or defenses it may have as a surety now or hereafter existing which, but 

for this provision, might be applicable to the sale of any Collateral (after 

the occurrence of and during the continuance of an Event of Default), 

made under the judgment, order or decree of any court, or privately under 

the power of sale conferred by this Agreement, or otherwise.

(e) The Collateral Agent shall have no obligation to marshal any of the Collateral. 

(f) Each Grantor hereby grants each Secured Party a non-exclusive, irrevocable, 

worldwide, transferable license (or sublicense) to use, license, sublicense and otherwise exercise such 

Grantor’s rights in or to any Intellectual Property and any data (in each case, (i) whether or not included in 

the Collateral, (ii) subject to applicable Laws, including applicable Privacy Laws and (iii) to the extent not 

in conflict with such Grantor’s contractual obligations (not otherwise overridden by the UCC or applicable 

Law) that exist as of the Closing Date with third parties), without payment of royalty or other compensation 

to such Grantor, solely to enable the Collateral Agent to exercise its rights and remedies under Section 8 of 

this Agreement and under the Annex Remedies Section of any Applicable Annex after the occurrence, and 

solely during the continuance, of an Event of Default. For the avoidance of doubt, the license granted 

pursuant to this Section 8.1(f) may be exercised by the Collateral Agent solely during the continuance of 

an Event of Default. This license is in addition to the Secured Parties’ other rights with respect to the 

Collateral and is subject to the following:

(i) to the extent that this license is a sublicense of such Grantor’s rights as a 

licensee under any license, this license is subject to any limitations in the 

primary license;
17

WEIL:\97681611\4\13173.0005

(ii) without limiting the foregoing, this license does not include Intellectual 

Property if the primary license for such Intellectual Property by its terms 

or as a matter of law prohibits sublicenses, requires the licensor’s consent 

or entails additional consideration; 

(iii) for licensed Trademarks, this license is subject to such Grantor’s standards 

of quality control and inspection, as necessary to avoid the risk of 

invalidation of the Trademarks;

(iv) the Collateral Agent shall take commercially reasonable measures to 

protect the confidentiality of any Trade Secrets and other confidential 

information licensed pursuant to this Section 8.1(f); and

(v) the termination or expiration of the license granted pursuant to this Section 

8.1(f) shall not terminate the rights of the sublicensees of any sublicenses 

granted by the Collateral Agent or its assignee in connection with and in 

accordance with this Section 8.1(f).

(g) Solely to the extent required to exploit or exercise the license rights granted in 

Section 8.1(f) and solely to the extent not already in the possession of the Collateral Agent, each Grantor 

shall provide to the Collateral Agent any Intellectual Property and data, including any embodiments thereof, 

licensed pursuant to Section 8.1(f) that are in the possession or control of such Grantor, and shall not 

interfere with the rights provided in Section 8.1(f) to such Intellectual Property (including such 

embodiments) including any right to obtain such Intellectual Property (or such embodiments) from another 

entity, in each case subject to applicable Laws, including applicable Privacy Laws.

Application of Proceeds

Upon the occurrence of an Event of Default, all proceeds received by the Collateral Agent with 

respect to any sale, any collection from, or other realization upon all or any part of the Collateral shall be 

applied in full or in part by the Collateral Agent against the Secured Obligations in accordance with Section 

7.02 of the Loan Agreement.

Sales on Credit

If the Collateral Agent sells any of the Collateral upon credit, the Collateral Agent may retain such 

Collateral until the sale price is paid by the purchaser thereof, and the Grantors will be credited only with 

payments actually made by the purchaser and received by the Collateral Agent and applied to indebtedness 

of such purchaser. In the event such purchaser fails to pay for the Collateral, neither the Collateral Agent

nor any other Secured Party shall incur any liability, and such Collateral may be sold again upon like notice, 

and the Collateral Agent may resell the Collateral and Grantor shall be credited with proceeds of the sale.

SECTION 9. CONTINUING SECURITY INTEREST; TRANSFER OF LOANS; 

REINSTATEMENT.

Continuing Security Interest; Transfer of Loans

This Agreement shall create a continuing security interest in all of the Collateral and shall remain 

in full force and effect until the payment in full of all Secured Obligations (other than contingent 

indemnification or reimbursement obligations not yet accrued and payable) and the Lender no longer having

a commitment to make any Loan to the Borrower, be binding upon each Grantor, its successors and assigns, 
18

WEIL:\97681611\4\13173.0005

and inure, together with the rights and remedies of the Collateral Agent hereunder, to the benefit of the 

Collateral Agent and its successors, transferees and assigns. Without limiting the generality of the 

foregoing, but subject to the terms of the Loan Agreement, the Lender may assign or otherwise transfer any 

Loans held by it to any other Person, and such other Person shall thereupon become vested with all the 

benefits with respect thereto granted to the Lender herein or otherwise. Upon the payment in full of all 

Secured Obligations (other than contingent indemnification or reimbursement obligations not yet accrued 

and payable) and the Lender no longer has a commitment to make any loan to the Borrower, the security 

interest granted hereby shall automatically terminate hereunder and of record and all rights to the Collateral 

shall revert to Grantors. Upon any Disposition of property expressly permitted by the Loan Agreement, the 

security interest granted herein shall be deemed to be automatically released and such property shall 

automatically revert to the applicable Grantor with no further action on the part of any Person. Upon any 

such termination or Disposition or any release of Collateral pursuant to the provisions of any Applicable 

Annex or otherwise expressly permitted by the Loan Agreement, the Collateral Agent shall, at the Grantors’ 

expense, execute and deliver or otherwise authorize the filing of such documents as Grantors shall 

reasonably request (including financing statement amendments to evidence such release) and return to the 

applicable Grantors any corresponding possessory Collateral held by the Collateral Agent. Releases of the 

Collateral may also be made in accordance with the express terms of any Applicable Annexes. 

Reinstatement

This Agreement shall remain in full force and effect and continue to be effective should any petition 

be filed by or against the Parent, any Grantor or any Affiliates thereof for liquidation or reorganization, 

should the Borrower or any Grantor become insolvent or make an assignment for the benefit of any creditor 

or creditors or should a receiver or trustee be appointed for all or any significant part of the Borrower’s or 

such Grantor’s assets, and shall continue to be effective or be reinstated, as the case may be, if at any time 

payment and performance of the Secured Obligations, or any part thereof, is, pursuant to Applicable Law, 

rescinded or reduced in amount, or must otherwise be restored or returned by any obligee of the Secured 

Obligations, whether as a “voidable preference,” “fraudulent conveyance,” or otherwise, all as though such 

payment or performance had not been made. In the event that any payment, or any part thereof, is rescinded, 

reduced, restored or returned, the Secured Obligations shall be reinstated and deemed reduced only by such 

amount paid and not so rescinded, reduced, restored or returned.

SECTION 10. MISCELLANEOUS.

Notices. 

All notices and other communications provided hereunder shall be given in a manner consistent 

with Section 11.01 of the Loan Agreement (i) if to any Grantor, as it applies to a Credit Party and (ii) if to 

the Collateral Agent, as it applies to the Collateral Agent.

Waiver; Amendment. 

(a) No failure or delay by the Collateral Agent in exercising any right, remedy, power 

or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such 

right, remedy, power or privilege, or any abandonment or discontinuance of steps to enforce such a right 

remedy, power or privilege, preclude any other or further exercise thereof or the exercise of any other right 

remedy, power or privilege. The rights, remedies, powers and privileges of the Collateral Agent hereunder 

are cumulative and are not exclusive of any rights, remedies, powers or privileges that any such Person 

would otherwise have.
19

WEIL:\97681611\4\13173.0005

(b) Neither this Agreement nor any provision hereof may be waived, amended or 

modified except pursuant to an agreement or agreements in writing entered into by the Collateral Agent 

and the Grantors with respect to which such waiver, amendment or modification is to apply. This 

Agreement shall be construed as a separate agreement with respect to each Grantor and may be amended, 

modified, supplemented, waived or released with respect to any Grantor without the approval of any other 

Grantor and without affecting the obligations of any other Grantor hereunder.

Relation to Other Security Documents.

The provisions of this Agreement supplement the provisions of any Security Document or any other 

mortgage granted by any Grantor, which secure the payment or performance of any of the Secured 

Obligations. Nothing contained in any such Security Document or mortgage shall derogate from any of the 

rights or remedies of the Secured Parties hereunder. In all other conflicts between this Agreement and any 

other Security Document, this Agreement shall govern.

Collateral Agent’s Fees and Expenses.

(a) The Grantors jointly and severally agree to reimburse the Collateral Agent for its 

fees and expenses incurred hereunder as provided in Section 11.03 of the Loan Agreement; provided that, 

each reference therein to the “Borrower” shall be deemed to include a reference to the Grantors.

(b) Any such amounts payable as provided hereunder shall be additional Secured 

Obligations secured hereby and by the other Security Documents. 

Survival of Agreement. 

All covenants, agreements, representations and warranties made by any Grantor herein and in any 

Loan Document or other documents delivered in connection herewith or therewith or pursuant hereto or 

thereto shall be considered to have been relied upon by the other parties hereto and shall survive the 

execution and delivery hereof and thereof and the making of the Loan hereunder, regardless of any 

investigation made by any such other party or on its behalf and notwithstanding that the Secured Parties 

may have had notice or knowledge of any Default at the time of the Loan, and shall continue in full force 

and effect as long as any Loan or any other Secured Obligation hereunder shall remain unpaid or unsatisfied. 

The provisions of this Section 10 shall survive and remain in full force and effect regardless of the 

termination of this Agreement or any other Loan Document, the consummation of the transactions 

contemplated hereby or thereby, the repayment of any of the Secured Obligations, the invalidity or 

unenforceability of any term or provision of this Agreement or any other Loan Document or any 

investigation made by or on behalf of the Collateral Agent or any other Secured Party.

Counterparts; Effectiveness, Successors and Assigns. 

(a) This Agreement may be executed in counterparts (and by different parties hereto 

in different counterparts), each of which shall constitute an original, but all of which when taken together 

shall constitute a single contract. This Agreement and the other Loan Documents, constitute the entire 

contract among the parties relating to the subject matter hereof and supersede any and all previous 

agreements and understandings, oral or written, relating to the subject matter hereof. This Agreement shall 

become effective when it shall have been executed by the Collateral Agent and when the Collateral Agent

shall have received counterparts hereof that, when taken together, bear the signatures of each of the other 

parties hereto. Delivery of an executed counterpart of a signature page of this Agreement by facsimile or 

in electronic (e.g., “pdf” or “tif”) format shall be effective as delivery of a manually executed counterpart 

of this Agreement.
20

WEIL:\97681611\4\13173.0005

(b) The words “execution,” “signed,” “signature,” and words of like import shall be 

deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be 

of the same legal effect, validity or enforceability as a manually executed signature or the use of a paperbased recordkeeping system, as the case may be, to the extent and as provided for in any Applicable Law, 

including the Federal Electronic Signatures in Global and National Commerce Act, the New York State 

Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic 

Transactions Act. Notwithstanding anything herein to the contrary, delivery of an executed counterpart of 

a signature page of this Agreement by telecopy or other electronic means, or confirmation of the execution 

of this Agreement on behalf of a party by an email from an authorized signatory of such party shall be 

effective as delivery of a manually executed counterpart of this Agreement.

Severability.

If any provision of this Agreement is held to be illegal, invalid or unenforceable, (a) the legality, 

validity and enforceability of the remaining provisions of this Agreement shall not be affected or impaired 

thereby and (b) the parties shall endeavor in good faith negotiations to replace the illegal, invalid or 

unenforceable provisions with valid provisions the economic effect of which comes as close as possible to 

that of the illegal, invalid or unenforceable provisions. The invalidity of a provision in a particular 

jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

Governing Law; Jurisdiction, Etc. 

(a) This Agreement will be governed by and construed in accordance with the law of 

the State of New York.

(b) Each of the parties hereto agrees to submit to the exclusive jurisdiction and venue 

of the United States District Court for the District of Columbia for any civil action, suit or proceeding 

arising out of or relating to this Agreement, the Loan Documents, or the transactions contemplated hereby 

or thereby.

(c) To the extent permitted by Applicable Law, each parties hereto hereby 

unconditionally waives trial by jury in any civil legal action or proceeding relating to this Agreement or the 

transactions contemplated hereby.

(d) The Collateral Agent hereby notifies the Borrower and the Lenders that pursuant 

to the requirements of The Uniting and Strengthening America by Providing Appropriate Tools Required 

to Intercept and Obstruct Terrorism Act of 2001, it is required to obtain, verify and record information that 

identifies the Borrower and the Lenders, which information includes the name and address of the Borrower 

and the Lenders and other information that will allow the Collateral Agent to identify the Borrower and the 

Lenders, in accordance with The Uniting and Strengthening America by Providing Appropriate Tools 

Required to Intercept and Obstruct Terrorism Act of 2001.

[Signature Pages Follow]
[Signature Page to A&R Pledge and Security Agreement]

IN WITNESS WHEREOF, each Grantor and the Collateral Agent have caused this Agreement to 

be duly executed and delivered by their respective officers thereunto duly authorized as of the date first 

written above.

HORIZON AIR INDUSTRIES, INC., as Grantor

By: 

Name: Nathaniel Pieper

Title: Treasurer

THE BANK OF NEW YORK MELLON,

as Collateral Agent

By: 

Name:

Title:
[Signature Page to A&R Pledge and Security Agreement]

IN WITNESS WHEREOF, each Grantor and the Collateral Agent have caused this Agreement to 

be duly executed and delivered by their respective officers thereunto duly authorized as of the date first 

written above.

HORIZON AIR INDUSTRIES, INC., as Grantor

By: 

Name: Nathaniel Pieper

Title: Treasurer

THE BANK OF NEW YORK MELLON,

as Collateral Agent

By: 

Name:

Title:
Schedule 1.1 - 1

WEIL:\97681611\4\13173.0005

Schedule 1.1 (Excluded Intellectual Property)

to Agreement

EXCLUDED INTELLECTUAL PROPERTY (IF ANY)

None. 
Schedule 2.1 - 1

WEIL:\97681611\4\13173.0005

Schedule 2.1 (Certain Listed Collateral)

to Agreement

CERTAIN LISTED COLLATERAL

a. Aircraft

Embraer S.A. aircraft more specifically described below:

Aircraft Model Aircraft Generic 

Model Airframe Serial No. U.S. Registration No.

1. ERJ 170-200 LR ERJ 170-200 17000769 N646QX

2. ERJ 170-200 LR ERJ 170-200 17000773 N647QX

3. ERJ 170-200 LR ERJ 170-200 17000789 N648QX

4. ERJ 170-200 LR ERJ 170-200 17000794 N649QX

5. ERJ 170-200 LR ERJ 170-200 17000809 N650QX

6. ERJ 170-200 LR ERJ 170-200 17000812 N651QX

Bombardier Inc. aircraft more specifically described below:

Aircraft Model Aircraft Generic 

Model Airframe Serial No. U.S. Registration No.

1. DHC-8-402 DASH 8-Q400 4149 N421QX

2. DHC-8-402 DASH 8-Q400 4150 N422QX

3. DHC-8-402 DASH 8-Q400 4154 N426QX

4. DHC-8-402 DASH 8-Q400 4156 N427QX

5. DHC-8-402 DASH 8-Q400 4163 N430QX

6. DHC-8-402 DASH 8-Q400 4166 N432QX

7. DHC-8-402 DASH 8-Q400 4240 N437QX

8. DHC-8-402 DASH 8-Q400 4246 N439QX

9. DHC-8-402 DASH 8-Q400 4243 N438QX

10. DHC-8-402 DASH 8-Q400 4347 N440QX

11. DHC-8-402 DASH 8-Q400 4348 N441QX

12. DHC-8-402 DASH 8-Q400 4353 N443QX

13. DHC-8-402 DASH 8-Q400 4352 N442QX

14. DHC-8-402 DASH 8-Q400 4358 N445QX

15. DHC-8-402 DASH 8-Q400 4363 N446QX

16. DHC-8-402 DASH 8-Q400 4364 N447QX

17. DHC-8-402 DASH 8-Q400 4355 N444QX

18. DHC-8-402 DASH 8-Q400 4409 N448QX

19. DHC-8-402 DASH 8-Q400 4489 N453QX

20. DHC-8-4-2 DASH 8-Q400 4227 N434MK
Schedule 2.1 - 2

WEIL:\97681611\4\13173.0005

21. DHC-8-402 DASH 8-Q400 4236 N436QX

b. Engines

General Electric engines as more specifically described below:

Engine Model Engine Generic Model Engine Serial No.

1. CF34-8E5 CF34-8E 902879

2. CF34-8E5 CF34-8E 902880

3. CF34-8E5 CF34-8E 902888

4. CF34-8E5 CF34-8E 902889

5. CF34-8E5 CF34-8E 902924

6. CF34-8E5 CF34-8E 902925

7. CF34-8E5 CF34-8E 902850

8. CF34-8E5 CF34-8E 902937

9. CF34-8E5 CF34-8E 902973

10. CF34-8E5 CF34-8E 902974

11. CF34-8E5 CF34-8E 902978

12. CF34-8E5 CF34-8E 902979

13. CF34-8E5 CF34-8E 902599

14. CF34-8E5 CF34-8E 902836

15. CF34-8E5 CF34-8E 902933

Pratt & Whitney Canada engines as more specifically described below:

Engine Model Engine Generic Model Engine Serial No.

1. PW150A PW150 SERIES PCEFA0116

2. PW150A PW150 SERIES PCEFA0133

3. PW150A PW150 SERIES PCEFA0374

4. PW150A PW150 SERIES PCEFA0343

5. PW150A PW150 SERIES PCEFA0084

6. PW150A PW150 SERIES PCEFA0103

7. PW150A PW150 SERIES PCEFA0346

8. PW150A PW150 SERIES PCEFA0354

9. PW150A PW150 SERIES PCEFA0355

10. PW150A PW150 SERIES PCEFA0351

11. PW150A PW150 SERIES PCEFA0353

12. PW150A PW150 SERIES PCEFA0371

13. PW150A PW150 SERIES PCEFA0192

14. PW150A PW150 SERIES PCEFA0377

15. PW150A PW150 SERIES PCEFA0378

16. PW150A PW150 SERIES PCEFA0536

17. PW150A PW150 SERIES PCEFA0537
Schedule 2.1 - 3

WEIL:\97681611\4\13173.0005

18. PW150A PW150 SERIES PCEFA0551

19. PW150A PW150 SERIES PCEFA0312

20. PW150A PW150 SERIES PCEFA0541

21. PW150A PW150 SERIES PCEFA0340

22. PW150A PW150 SERIES PCEFA0763

23. PW150A PW150 SERIES PCEFA0184

24. PW150A PW150 SERIES PCEFA0118

25. PW150A PW150 SERIES PCEFA0792

26. PW150A PW150 SERIES PCEFA0365

27. PW150A PW150 SERIES PCEFA0778

28. PW150A PW150 SERIES PCEFA0776

29. PW150A PW150 SERIES PCEFA0769

30. PW150A PW150 SERIES PCEFA0785

31. PW150A PW150 SERIES PCEFA0786

32. PW150A PW150 SERIES PCEFA0366

33. PW150A PW150 SERIES PCEFA0800

34. PW150A PW150 SERIES PCEFA0470

35. PW150A PW150 SERIES PCEFA0803

36. PW150A PW150 SERIES PCEFA0903

37. PW150A PW150 SERIES PCEFA0904

38. PW150A PW150 SERIES PCEFA0902

39. PW150A PW150 SERIES PCEFA0373

40. PW150A PW150 SERIES PCEFA1090

41. PW150A PW150 SERIES PCEFA1094

42. PW150A PW150 SERIES PCEFA0507

43. PW150A PW150 SERIES PCEFA0552

44. PW150A PW150 SERIES PCEFA0526

45. PW150A PW150 SERIES PCEFA0529

46. PW150A PW150 SERIES PCEFA0110

47. PW150A PW150 SERIES PCEFA0174

48. PW150A PW150 SERIES PCEFA0367

49. PW150A PW150 SERIES PCEFA1077

50. PW150A PW150 SERIES PCEFA1342

Each of the above described Engines is of 550 or more “rated take-off horsepower” or the equivalent of 

such horsepower.

c. Propellers

Dowty Aerospace model R408/6-123-F/17 propellers with the manufacturer's serial numbers described 

below:

Propeller Serial No.

1. DAP0334
Schedule 2.1 - 4

WEIL:\97681611\4\13173.0005

2. DAP0193

3. DAP0094

4. DAP0362

5. DAP0366

6. DAP0117

7. DAP0711

8. DAP0141

9. DAP0042

10. DAP0142

11. DAP0349

12. DAP0076

13. DAP0247

14. DAP0470

15. DAP0181

16. DAP0327

17. DAP0192

18. DAP0849

19. DAP0237

20. DAP0329

21. DAP0337

22. DAP0332

23. DAP0341

24. DAP0085

25. DAP0857

26. DAP0346

27. DAP0326

28. DAP0365

29. DAP0372

30. DAP0112

31. DAP0359

32. DAP0793

33. DAP0363

34. DAP0792

35. DAP0115

36. DAP0364

37. DAP0899

38. DAP0904

39. DAP0507

40. DAP0511

41. DAP0532

42. DAP0535

Each Propeller is capable of absorbing 750 or more “rated take-off shaft horsepower”.
Schedule 2.1 - 5

WEIL:\97681611\4\13173.0005

d. Loyalty Program Assets – None1

e. Spare Parts Assets – None2

f. Slots, Gates and Routes – None3

 

1

If any collateral of this type is pledged or added to this Schedule after the closing date, then the UCC-1 financing statement 

collateral description may need to be amended to reflect this additional asset(s).

2

If any collateral of this type is pledged or added to this Schedule after the closing date, then the UCC-1 financing statement 

collateral description may need to be amended to reflect this additional asset(s).

3

If any collateral of this type is pledged or added to this Schedule after the closing date, then the UCC-1 financing statement 

collateral description may need to be amended to reflect this additional asset(s).
Schedule 4.1 - 1

WEIL:\97681611\4\13173.0005

Schedule 4.1 (General Information)

to Agreement

GENERAL INFORMATION

No. Legal Name Entity Type

Jurisdiction 

of 

Organization

Address of Chief 

Executive Office/Principal 

Place of Business

Federal Taxpayer 

Identification 

Number or 

Organizational 

Identification 

Number

1. Horizon Air 

Industries, Inc. Corporation Washington 19300 International Blvd.Seattle, WA 98188 91-1201373
Exhibit A - 1

WEIL:\97681611\4\13173.0005

Exhibit A

to Agreement

[FORM OF] PLEDGE SUPPLEMENT

This PLEDGE SUPPLEMENT, dated [●], is executed and delivered by the undersigned (a 

“Grantor”) pursuant to the Amended and Restated Horizon Aircraft, Engine and Propeller Pledge and 

Security Agreement, dated as of October 30, 2020 (as it may be from time to time amended, restated, 

modified or supplemented, the “Security Agreement”), among the Grantors and The Bank of New York 

Mellon, as Collateral Agent. Capitalized terms used herein not otherwise defined herein shall have the 

meanings ascribed thereto in the Security Agreement. 

By executing and delivering this Pledge Supplement, the Grantor hereby confirms the grant to the 

Collateral Agent set forth in the Security Agreement of, and does hereby grant to the Collateral Agent, a 

security interest in all of such Grantor’s right, title and interest in, to and under all Collateral pledged by it 

to secure the Secured Obligations, in each case whether now or hereafter existing or in which such Grantor 

now has or hereafter acquires an interest and wherever the same may be located. If the Grantor is not an 

existing Grantor under the Security Agreement, such Grantor hereby becomes a party to the Security 

Agreement as an Additional Grantor and a Grantor under the Security Agreement, in each case with the 

same force and effect as if originally named therein as a Grantor under the Security Agreement and subject 

to all Annexes applicable to the Collateral being pledged by it (which for the avoidance of doubt are hereby 

incorporated by reference). If the Grantor is an existing Grantor under the Security Agreement and is 

providing, as Additional Collateral thereunder, the items specified in the attached Schedule hereto, such 

Additional Collateral is subject to the Security Agreement with the same force and effect as if originally a 

part thereof and to all Annexes applicable to such Additional Collateral (which for the avoidance of doubt 

are hereby incorporated by reference).

The Grantor represents and warrants that each of the representations and warranties contained in 

Section 4 of the Security Agreement and all Applicable Annexes are true, correct and complete on and as 

of the date hereof (after giving effect to this Pledge Supplement) and agrees that the Schedule attached 

hereto shall supplement the equivalent schedules of the Security Agreement and the Perfection Certificate. 

The Grantor hereby additionally represents and warrants that the Grantor has taken the perfection actions 

with respect to the Collateral specified in the Security Agreement and all Applicable Annexes, including 

the Perfection Requirement.

This Pledge Supplement will be governed by and construed in accordance with the law of the State 

of New York.

IN WITNESS WHEREOF, the Grantor has caused this Pledge Supplement to be duly executed 

and delivered by its duly authorized officer as of the date hereof.

[NAME OF GRANTOR]

By:_____________________________

Name:

Title:
Schedule to Pledge Supplement - 1

WEIL:\97681611\4\13173.0005

[FORM OF] SCHEDULE TO PLEDGE SUPPLEMENT

[FORM OF] SUPPLEMENT TO SCHEDULES

TO AGREEMENT

i. Loyalty Program Assets (certain non-Loyalty Program Agreement components):

a. Loyalty Program Agreements (please denote any Loyalty Program Agreement which 

is a Material Loyalty Program Agreement with a ‡and include the expiration date for 

each Material Loyalty Program Agreement)

b. Trademark Registration

No. Mark Registration 

Number

Registration 

Date

Jurisdiction Owner

1. [●] [●] [●] [●] [●]

c. Trademark Application

No. Mark Application 

Number

Filing Date Jurisdiction Owner

1. [●] [●] [●] [●] [●]

d. Issued Patents

No. Title Patent 

Number

Date Issued Jurisdiction Owner

1. [●] [●] [●] [●] [●]

e. Patent Applications

No. Title Application 

Number

Filing Date Jurisdiction Owner

1. [●] [●] [●] [●] [●]

f. Copyright Registration

No. Title Registration 

Number

Registration 

Date

Jurisdiction Owner

1. [●] [●] [●] [●] [●]

g. Copyright Applications

 

‡ Denotes a Material Loyalty Program Agreement.
Schedule to Pledge Supplement - 2

WEIL:\97681611\4\13173.0005

No. Title Registration 

Number

Registration 

Date

Owner

1. [●] [●] [●] [●]

h. Exclusive Copyright Licenses

i. Internet Domain Names

No. Domain Name Owner

1. [●] [●]

j. Material Unregistered Trademarks

k. IP Licenses

__________________________________________________________________________

(i) Aircraft and Engine Assets:

a. Airframes

No. U.S. Registration No. Airframe Manufacturer Airframe 

Model

Airframe Serial 

No.

1. [●] [●] [●] [●]

b. Engines

No. Manufacturer Model Generic Manufacturer and 

Model

Manufacturer’s 

Serial No.

1. [●] [●] [●] [●]

c. Insurance

__________________________________________________________________________

(i) Spare Parts Assets:

a. Spare Parts

No. Grantor Type of Spare Part Manufacturer Part 

Number

Designated 

Spare Parts 

Location 

(and address)

1. [●] [●] [●] [●]

b. Insurance
Schedule to Pledge Supplement - 3

WEIL:\97681611\4\13173.0005

__________________________________________________________________________

(i) SGR Assets:

a. Route Authorities

b. Scheduled Service

c. Slots

d. Copies of Routes Certificates and Orders

__________________________________________________________________________

COMPLETE FOR ALL COLLATERAL PACKAGES:

(ii) Control Collateral

a. Deposit Accounts

No. Grantor Name of Account Bank Account Number Type of Account

1. Horizon Air Industries, 

Inc. Bank of America, N.A 138110458058 Collateral Proceeds Account

b. Securities Accounts†

No. Grantor Name of Securities 

Intermediary Account Number Account Name

1. [●] [●] [●] [●]

(iii) Pledged Collateral

a. Pledged Debt

No

.

Grantor Issuer

Original 

Principal 

Amount

Outstanding 

Principal 

Balance

Issue Date Maturity 

Date

1. [●] [●] [●] [●] [●] [●]

b. Pledged Equity Interests

 

 Denotes a Blocked Account.

† Denotes a Collection Account.

No. Domestic Airport Foreign Airport 

1. [●] [●]
Schedule to Pledge Supplement - 4

WEIL:\97681611\4\13173.0005

No. Grantor Issuer

Type of 

issuer

If 

Stock, 

Class of 

Stock

Certifica

ted 

(Y/N)

Certifi

cate 

No.

Par 

Value

No. of 

Share

s or 

Intere

sts

% of 

Outstand

ing 

Equity 

Interest 

of the 

issuer

1. [●] [●] [●] [●] [●] [●] [●] [●] [●]

Schedule 4.1 – General Information

No. Legal Name Entity Type

Jurisdiction 

of 

Organization

Address of Chief 

Executive Office/Principal 

Place of Business

Federal Taxpayer 

Identification 

Number or 

Organizational 

Identification 

Number

1. [●] [●] [●] [●] [●]
Exhibit B - 1

WEIL:\97681611\4\13173.0005

Exhibit B

to Agreement

Form of Perfection Certificate

[Intentionally Omitted from the FAA Filing Counterpart as the Parties Deem it to Contain Confidential 

Information]
Annex 1 - 1

WEIL:\97681611\4\13173.0005

Annex 1 (Loyalty Program Assets)

Each Grantor and the Collateral Agent hereby agree that (i) the terms of this Annex shall apply with respect 

to Collateral consisting of Loyalty Program Assets and Grantors of such Collateral and (ii) the terms of 

Annexes 2 (for Control Collateral) and 5 (for Pledged Collateral) (each, an “Incorporated Annex”, and 

collectively, the “Incorporated Annexes”) shall apply to the Collateral consisting of assets noted in the 

parenthetical for such Annex and the Grantors of such Collateral.

1. Perfection Requirement. The following requirements shall be included in the definition of 

“Perfection Requirement” and shall constitute an additional “Perfection Requirement”:

(a) Notwithstanding anything to the contrary herein or in the Loan Agreement, in no event 

shall any Grantor be required to make any Intellectual Property filing in a jurisdiction other 

than the United States (or any state thereof) to perfect the Secured Parties’ security interest 

in the Loyalty Program Intellectual Property.

(b) Notwithstanding anything to the contrary herein or in the Loan Agreement, in no event 

shall any Grantor be required to make any Required Filings for any Loyalty Program Assets 

set forth in Section 7(a)(ix)(H) of this Annex other than the filing of UCC financing 

statements (including any fixture filing, as applicable) in each governmental, municipal or 

other office specified in Schedules 2(a) and 2(b) to the Perfection Certificate.

2. Required Filings. Each of the following financing statement, filing, recording or other document 

shall be included in the definition of Required Filing and shall constitute an additional “Required 

Filing”:

(a) A copy (or short-form memorialization) of all exclusive licenses (i) granted to any Grantor 

under any registered or applied-for United States Copyrights and (ii) included in the 

Collateral, for filing with the United States Copyright Office in favor of Grantor;

(b) With respect to each Grantor’s United States registered and applied-for Copyrights and any 

exclusive IP License granted to any Grantor under any registered or applied-for United 

States Copyrights, in each case, included in the Collateral, a Copyright security agreement 

substantially in the form attached hereto as Exhibit 1, for filing with the United States 

Copyright Office;

(c) With respect to such Grantor’s issued and applied-for United States Patents included in the 

Collateral, a Patent Security Agreement substantially in the form attached hereto as Exhibit 

2, for filing with the United States Patent and Trademark Office; and

(d) With respect to such Grantor’s registered and applied-for United States Trademarks

included in the Collateral, a Trademark Security Agreement in the form attached hereto as 

Exhibit 3, for filing with the United States Patent and Trademark Office.

3. Representations and Warranties. Each Grantor (as applicable) hereby represents and warrants, 

on the Closing Date and on the date of each Borrowing (or, in the case of an Additional Grantor or 

Additional Collateral, on the date of such Grantor’s execution and delivery of a Pledge Supplement, 

or the date such Additional Collateral becomes subject to the security interest created hereby, as 

applicable) as set forth below:

Relevant IP & Data Representations
Annex 1 - 2

WEIL:\97681611\4\13173.0005

(a) The Loyalty Program Intellectual Property, the Loyalty Program Data and the IP Licenses 

included in the Collateral are fully transferable and alienable by such Grantor without 

restriction and without payment of any kind to any Person (other than, with respect to the 

Loyalty Program Intellectual Property, the fees and costs necessary to record such transfers 

with an IP Filing Office, as applicable and other than off-the-shelf inbound third-party 

computer software IP Licenses).

Relevant Data Representations

(b) Except as set forth on Schedule 3(b), such Grantor is, and at all times has been, in 

compliance in all material respects with (i) all Privacy Laws, (ii) its and its Affiliates’ 

internal and public-facing privacy policies, notices and statements and (iii) its contractual 

commitments and obligations, in each case in connection with the Loyalty Program Data. 

Such public-facing policies are accurate, not misleading and consistent with the actual 

practices of such Grantor.

(c) The consummation of the transactions contemplated by this Agreement, the Loan 

Agreement and the other Security Documents will not cause any Grantor to be in material 

violation or breach of any internal or public-facing privacy policy, notice or statement of 

such Grantor, any Privacy Law or any Loyalty Program Agreement.

(d) Except as set forth on Schedule 3(d), none of such Grantor’s current or previous privacy 

policies, notices or statements include or included any restrictions on, or fail or failed to 

include any disclosures to permit, the potential transfer, sharing and disclosure of Loyalty 

Program Data to an unaffiliated third party in connection with a bankruptcy or in 

connection with an asset sale.

(e) Except as set forth on Schedule 3(e), to such Grantor’s knowledge, no notice of 

enforcement or investigation, or prohibition, warning or audit requests have been served in 

relation to the Processing by or on behalf of any Grantor or its Affiliates of any Loyalty 

Program Data and no fact or circumstance exists which would reasonably be expected to 

give rise to an such notice, warning or audit request. No judgment, decree, ruling, writ, 

award, injunction or order of any Governmental Authority is pending, threatened or active 

against any Grantor, its Affiliates or any of its or their service providers relating to the 

Processing of Loyalty Program Data.

Relevant IP Representations

(f) Schedule 2.1 hereto sets forth a true and accurate list of (i) all United States and foreign 

registrations of, issuances of and applications for Patents, Trademarks (including Internet 

domain names) and Copyrights, in each case owned by a Grantor and included in the 

Collateral, (ii) all exclusive IP Licenses included in the Collateral granted to any Grantor 

under any Copyrights registered with or applied for at the United States Copyright Office,

(iii) all United States and foreign Trademarks that are material to any Carrier Loyalty 

Program that are not registered or applied for in any IP Filing Office and (iv) all proprietary 

software that is material to the Carrier Loyalty Program whether registered or unregistered. 

Each item of Intellectual Property listed on Schedule 2.1 is valid and enforceable.

(g) It is the record owner of all of its Intellectual Property listed on Schedule 2.1, and there are 

no gaps or inaccuracies in the chain of title of such Intellectual Property. It has the full 

power, right and authority to grant the licenses set forth in the IP License Agreement, and 

the licenses granted thereunder do not and the rights granted to Treasury thereunder if 
Annex 1 - 3

WEIL:\97681611\4\13173.0005

exercised by the Treasury would not conflict with or breach any prior agreements or 

understandings entered into between such Grantor and any third party.

(h) It has sole and exclusive rights to sue third parties for the infringement, misappropriation 

or other violation of its Loyalty Program Intellectual Property and Licensed Trademarks 

and to collect royalties, revenues, income, damages or other payments arising therefrom. 

(i) Schedule 2.1 is a true and complete list of all IP Licenses included in the Collateral that (i) 

involve payments in excess of $1 million per year, (ii) contain a grant of exclusivity or (iii) 

are otherwise material.

(j) To such Grantor’s knowledge, no Person is materially infringing, diluting, 

misappropriating or otherwise violating any Grantors’ Loyalty Program Intellectual 

Property or Licensed Trademarks, and such Grantor has not made any such claim that has 

not been resolved.

(k) No holding, decision, judgment, order, or other final determination has been rendered by 

any Governmental Authority that would materially limit, cancel or question the validity or 

enforceability of, or such Grantor’s right, title or interest in, any material Loyalty Program 

Intellectual Property or any of the Licensed Trademarks.

(l) It uses standards of quality sufficient to protect the validity and enforceability of the 

Loyalty Program Trademarks in all products marketed and sold, and in the performance of 

services provided, under the Loyalty Program Trademarks. To the extent applicable, such 

Grantor has taken all reasonable actions necessary to ensure that all licensees of such 

Grantor’s Loyalty Program Trademarks adhere to such Grantor’s established standards of 

quality for the goods and services provided by the licensee using such licensed Loyalty 

Program Trademarks.

Loyalty Program Agreement Representations

(m) Schedule 2.1 to this Agreement sets forth all Loyalty Program Agreements (including

Material Loyalty Program Agreements and the expiration date for each Material Loyalty 

Program Agreement) that constitute Collateral and all Collateral Accounts.

(n) [Reserved.]

(o) With respect to each Material Loyalty Program Agreement:

(i) [Reserved.];

(ii) to the knowledge of the Grantors, no default by any party thereto exists and no 

party thereto is delinquent in payment of any other amounts required to be paid 

thereunder that (x) would be materially adverse to any Secured Party or (y) would, 

or would be reasonably expected to, result in a Material Adverse Effect;

(iii) [Reserved.];

(iv) except as disclosed to the Collateral Agent, such Loyalty Program Agreement

permits such Grantor to grant a security interest in such Grantor’s rights therein 

granted to the Collateral Agent and permits the Collateral Agent’s exercise of its 

rights and remedies as secured party, including its rights of Disposition; and
Annex 1 - 4

WEIL:\97681611\4\13173.0005

(v) the Collateral includes substantially all of the Loyalty Program Revenue.

Other Collateral Representations

(p) [Reserved.]

(q) The Collateral to which the Collateral Agent has been granted a security interest hereunder 

together with the rights the Collateral Agent has been granted under the Loan Documents 

(including Section 6 of this Annex) and the IP License Agreement constitute all the assets, 

properties and rights (other than off-the-shelf third-party computer software that is 

generally available and Equipment) reasonably necessary for the operation of the Carrier 

Loyalty Programs as currently conducted in all material respects.

2. Covenants. Each Grantor (as applicable) hereby covenants and agrees as set forth below:

(a) [Reserved].

Affirmative Covenants - Data

(b) It will take all reasonable action requested by the Appropriate Party or any of its or their 

successors or assigns for purposes of complying with applicable Privacy Laws, including 

in issuing notices, opt-outs and similar communications to data subjects, including to 

Loyalty Program Members, to allow the full use and transfer of Loyalty Program Data, 

including full use by and transfer to an unaffiliated third party, in the Event of a Default.

(c) Within sixty (60) days of the Closing Date, the Loyalty Program Data shall be physically 

segregated, compiled, hosted and maintained on a database that is separated and segregated 

from each of Grantor’s databases that store data not included in the Loyalty Program Data, 

and each of the applicable Grantors shall provide the Collateral Agent with a signed 

certification certifying that the requirements of this Section 4(c) have been satisfied, 

provided that if there is any Loyalty Program Data with respect to which there is 

concurrently, (i) with respect to any Loyalty Program Data collected on or prior to the 

Closing Date, (x) at least one copy stored in connection with Grantor’s Carrier Loyalty 

Program immediately prior to the Closing Date and (y) at least one copy stored in 

connection with Grantor’s non-Loyalty Program operations immediately prior to the 

Closing Date as a result of such Grantor’s collection or usage of such data in connection 

with such Grantor’s non-Loyalty Program operations, or (ii) with respect to any Loyalty 

Program Data collected following the Closing Date, (x) at least one copy stored in 

connection with Grantor’s Carrier Loyalty Program and (y) at least one copy stored in 

connection with Grantor’s non-Loyalty Program operations as a result of such Grantor’s 

collection or usage of such data in connection with such Grantor’s non-Loyalty Program 

operations (such copies in clauses (i)(y) and (ii)(y), the “Non-Loyalty Copies”), this 

Section 4(c) shall not apply to the Non-Loyalty Copies.

(d) It will maintain and be in compliance with commercially reasonable disaster recovery, 

backup and security plans and procedures, and have taken reasonable steps to test such 

plans and procedures on no less than an annual basis and to ensure that all employees and 

any other Persons acting on behalf of such Grantor or any of its Affiliates in connection 

with the Processing of the Loyalty Program Data are aware of and adhere to such plans and 

procedures.
Annex 1 - 5

WEIL:\97681611\4\13173.0005

(e) It shall maintain in effect and implement commercially reasonable privacy and data 

security policies and procedures and administrative, physical and technical safeguards, and 

shall comply in all material respects with (i) all applicable Privacy Laws, (ii) its internal 

and public-facing privacy policies, notices and statements and (iii) its contractual 

commitments and obligations, in each case in connection with Loyalty Program Data.

(f) It shall (i) promptly notify the Appropriate Party and the Collateral Agent, in accordance 

with Section 10.1 of this Agreement, providing such details as the Appropriate Party or the 

Collateral Agent may require, of (x) the institution of any enforcement or investigation, or 

prohibition, warning or audit request that has been served, or judgment, decree, ruling, writ, 

award, injunction or order of any Governmental Authority pending, threatened or active 

against any Grantor, its Affiliates or any of its or, to such Grantor’s knowledge, their 

service providers, related to the Processing of any Loyalty Program Data or (y) any material 

breaches, cyberattacks (including ransomware attacks), violations or unauthorized uses of 

or accesses to the IT Systems or any Loyalty Program Data, Trade Secrets or confidential 

information stored therein or processed thereby and (ii) take all commercially reasonable 

steps to (x) defend its rights in the Loyalty Program Data in any such enforcement, 

investigation, audit or other proceeding and (y) as promptly as practicable, fully remediate 

any such breaches, attacks, violations or unauthorized uses or accesses and, to the extent 

required under applicable Law, including applicable Privacy Laws, notify the applicable 

data subjects thereof.

(g) It shall maintain and, to the extent not already in its possession, obtain cyber liability 

insurance covering breaches to or compromises of third party components of the Loyalty 

Program Data and shall ensure that at all times the Collateral Agent, for the benefit of the 

Secured Parties, shall be named as an additional insured and lender loss payee under such 

cyber insurance, in each case to the fullest extent permitted under such insurance policy 

and by the applicable insurance provider, with respect to any Loyalty Program Data.

Notwithstanding anything herein or in any other Loan Document to the contrary, the 

applicable Grantor shall be permitted to obtain first-party coverage for cyber liability 

insurance through its in-house captive insurance team to the extent that obtaining such firstparty coverage through a third-party insurance provider is commercially unviable. 

(h) Notwithstanding anything to the contrary herein or in the other Loan Documents, any 

reference to “Loyalty Program Data” in this Annex (including in Section 3(q)(F)) will not 

include Non-Loyalty Copies.

Affirmative Covenants – Intellectual Property

(i) To the extent not already registered or issued or the subject of a pending application (for 

the avoidance of doubt, including to the extent not already registered or the subject of a 

pending application in a material class of goods and services), each Grantor will take 

commercially reasonable efforts to promptly register all material Trademarks (other than 

the “MILEAGE PLAN” Trademark) included in the Collateral or in the Licensed 

Trademarks with the applicable IP Filing Office, including those set forth on Schedule 4(i). 

It shall promptly (i) file (A) a “Statement of Use” with the United States Patent and 

Trademark Office pursuant to Section 1(d) of the Lanham Act or (B) an “Amendment to 

Allege Use” whereby such intent-to-use trademark application is converted to a “use in 

commerce” application pursuant to Section 1(c) of the Lanham Act, in each case of (A) 

and (B) against all Loyalty Program Trademarks or Licensed Trademarks to the extent such 

Trademarks have been used in commerce by Grantor or any of its Affiliates and (ii) take 
Annex 1 - 6

WEIL:\97681611\4\13173.0005

all other actions necessary to facilitate the acceptance of such “Statement of Use” or 

“Amendment to Allege Use” by the United States Patent and Trademark Office.

(j) It shall (i) promptly notify in the manner set forth in Section 10.1 of this Agreement the 

Appropriate Party and the Collateral Agent, providing such details as the Appropriate Party

or the Collateral Agent may require, of the institution of any material proceeding before a 

Governmental Authority regarding the validity or enforceability of, or such Grantor’s right 

to register, own or use, any Loyalty Program Intellectual Property or any Licensed 

Trademarks, and of any adverse determination on the merits in any such proceeding (in 

each case, other than “office actions” by IP Filing Office examiners in the ordinary course 

of prosecution of applications), (ii) take all reasonable steps to defend its rights in the 

Loyalty Program Intellectual Property (other than any Loyalty Program Intellectual 

Property that is, and immediately prior to the institution of such proceeding was, no longer 

used and no longer useful in the business of any Grantor or its Subsidiaries) or the Licensed 

Trademarks, as applicable, in such proceedings and other interference, reexamination, 

opposition, cancellation, infringement, dilution, misappropriation and other proceedings

and (iii) take all reasonable steps to protect the security, integrity and confidentiality of all 

Trade Secrets and any other confidential or proprietary information or data included in the 

Collateral.

(k) It shall defend all material challenges to the validity and enforceability of, and its title to 

and ownership of, any Loyalty Program Intellectual Property (other than any Loyalty

Program Intellectual Property that is, and immediately prior to the initiation of such

challenge was, no longer used and no longer useful in the business of any Grantor or its

Subsidiaries)and any Licensed Trademarks, and in the event that any Loyalty Program 

Intellectual Property or, subject to the IP License Agreement, any Licensed Trademarks is 

materially infringed, misappropriated, diluted or otherwise violated by a third party, 

promptly take all reasonable actions, as permitted by applicable Law, to stop such 

infringement, misappropriation, dilution or other violation and protect its rights in such 

Intellectual Property, including any initiation of a suit for injunctive relief, and to recover 

damages; for the avoidance of doubt, the Collateral Agent hereby permits Grantors to take 

the actions set forth in this Section 4(k) of this Annex prior to an Event of Default

notwithstanding the IP License Agreement.

(l) It will maintain the standards of quality of all products marketed or sold, and in the 

performance of services provided, under the Loyalty Program Trademarks, at a level at 

least as high as on the date hereof and will take all reasonable actions necessary to ensure 

that all licensees of its Loyalty Program Trademarks adhere to such Grantor’s thenestablished standards of quality for the services provided by the licensee using such 

licensed Trademarks.

(m) Within sixty (60) days of the Closing Date, a copy of all software code (in both object code 

and source code form) included in the Loyalty Program Intellectual Property, and all 

associated documentation, in each case (i) owned by any Grantor or any of its Affiliates or

(ii) in any Grantor’s or any of its Affiliates’ possession or control, shall be stored in 

physically separated and segregated media from any of Grantors’ other software code not 

included in the Loyalty Program Intellectual Property, and each of the applicable Grantors 

shall provide the Collateral Agent with a signed certification certifying that the 

requirements of this Section 4(m) have been satisfied. For the avoidance of doubt, 

additional copies of such software code and associated documentation can concurrently 

remain stored in their current locations.
Annex 1 - 7

WEIL:\97681611\4\13173.0005

(n) For the avoidance of doubt, Section 6.1(c) of this Agreement shall apply to any and all 

“intent-to-use” Loyalty Program Trademark applications included in the Excluded Assets 

with respect to which any Grantor files with the United States Patent and Trademark Office

a “Statement of Use” pursuant to Section 1(d) of the Lanham Act or an “Amendment to 

Allege Use” pursuant to Section 1(c) of the Lanham Act.

Affirmative Covenants - Other

(o) It shall notify the Collateral Agent of any Loyalty Program Agreement entered into after 

the Closing Date, together with copies if such agreement constitutes a Material Loyalty 

Program Agreement, (x) immediately after the execution thereof (in the case of a Material 

Loyalty Program Agreement), at which time Schedule 1.01(b) of the Loan Agreement will 

be deemed updated to include such agreement designated as a Material Loyalty Program 

Agreement, or (y) within ten (10) Business Days thereof (in the case of any Loyalty 

Program Agreement that is not a Material Loyalty Program Agreement).

(p) It shall honor Currency according to the Loyalty Program Rules, except to the extent that 

would not, or would not be reasonably expected to, cause a Material Adverse Effect.

(q) It shall promptly give notice to the Appropriate Party and the Collateral Agent (it being 

understood that such requirement will constitute a notice required under Section 5.03 of 

the Loan Agreement) of (i) a default or breach by any Grantor or counterparty to a Material 

Loyalty Program Agreement of its material obligations under such agreement and (ii) 

knowledge or notice of any event or circumstance that would, or would reasonably be 

expected to, reduce or offset the rate or amount of payments due to any Grantor under any 

Material Loyalty Program Agreement, including an explanation of impact of such event or 

circumstance on such Grantor’s portion of the Loyalty Program Revenue in form and 

substance reasonably satisfactory to the Collateral Agent.

(r) Concurrently with the Appraisals required to be delivered under Section 5.16 of the Loan 

Agreement, it shall additionally identify any material change to the terms of the Loyalty 

Program Agreements since the date of delivering the latest Appraisal and, to the extent 

such changes affect any Loyalty Program Agreements that constitute Material Loyalty 

Program Agreements, provide to the Collateral Agent copies of such change (including the 

relevant amendment, supplement, restatement or other modification).

(s) [Reserved.]

Negative Covenants - Data

(t) Except to the extent required by applicable Law, it will not modify, publish, provide or 

deliver any privacy policies, notices or statements in a manner that impairs (as compared 

with the last updated policies, notices or statements, as applicable, existing as of the date 

hereof) the right or ability of any Grantor, any of its Affiliates, any of its or their successors 

or assigns or the Collateral Agent to Process any Loyalty Program Data substantially in the 

manner Processed as of the Closing Date or removes or narrows any disclosure existing as 

of the date hereof regarding the potential future transfer, sharing or disclosure of Loyalty 

Program Data.

Negative Covenants – Data & Intellectual Property
Annex 1 - 8

WEIL:\97681611\4\13173.0005

(u) It will not enter into any agreement (i) with respect to the Loyalty Program Data, Loyalty 

Program Intellectual Property or outbound IP Licenses included in the Collateral, after the 

Closing Date, that prohibits the assignment of, grant of a security interest in, or license of 

any such Collateral (other than to Treasury or the Collateral Agent) or (ii) that conflicts 

with or breaches any of the terms of the IP License Agreement or that would conflict with 

or breach the rights granted to Treasury thereunder if exercised by Treasury.

(v) It will not take any action or omit to take any action (other than such Grantor’s actions or 

omissions of action that are in the ordinary course of business and consistent with past 

practice) that could reasonably be expected to have a material negative effect on the 

Loyalty Program Data, the Loyalty Program Intellectual Property or the IP Licenses 

included in the Collateral (other than any Loyalty Program Intellectual Property that is no 

longer used and no longer useful), including diminishing, diluting, tarnishing, invalidating 

or rendering unenforceable Loyalty Program Trademarks, or otherwise materially 

impairing or harming the value or reputation thereof or the goodwill associated therewith.

Negative Covenants - Other

(w) No Grantor nor any of its Affiliates shall create, establish, operate or otherwise permit to 

exist any other Loyalty Program or Loyalty Subscription Program unless (i) substantially 

all Loyalty Program Assets (including all income and revenue, Intellectual Property, data 

(including Personal Data) and third-party contracts and intercompany agreements, related 

to such other Loyalty Program) are Collateral (to the extent not already constituting 

Collateral pursuant to Section 2.1) and (ii) the Perfection Requirements with respect to 

such Collateral are satisfied (A) immediately (in the case of a Material Loyalty Program 

Agreement and related Loyalty Program Assets (other than Loyalty Program Intellectual 

Property)), (B) as promptly as practicable and in any event within thirty (30) days (in the 

case of the Loyalty Program Intellectual Property related to a Material Loyalty Program 

Agreement) or (C) within thirty (30) days (in the case of any Loyalty Program Agreement 

that is not a Material Loyalty Program Agreement and related Loyalty Program Assets), 

upon the creation, establishment or existence thereof, in the same manner and to the same 

extent as other Loyalty Program Assets constituting Collateral, on a first-priority basis (in 

each case, subject only to Permitted Liens); provided that (x) for purposes of this Section 

4(w), the definition “Carrier Loyalty Program” included in the definition of “Loyalty 

Program Assets” shall refer to such new Loyalty Program or Loyalty Subscription Program 

and the definition of “Grantor” included in the definition of “Loyalty Program Assets” shall 

refer to Grantor or any of its Affiliates and (y) any Trademarks under which such new 

Loyalty Program or Loyalty Subscription Program are primarily operated shall be deemed 

to be removed from Schedule 1.1.

(x) [Reserved.]

(y) It shall not substantially reduce, or permit any of its Subsidiaries to reduce, the Carrier 

Loyalty Programs business as of the Closing Date.

3. Defaults and Remedies. Without limiting the generality of Section 8.1 of this Agreement and in 

addition to any rights and remedies that the Collateral Agent may have under the Loan Documents 

and the applicable Law:

(a) If any Event of Default shall have occurred and be continuing, the Collateral Agent (acting 

at the direction of the Required Lenders) may, and each Grantor hereby irrevocably 

appoints the Collateral Agent (such appointment being coupled with an interest and 
Annex 1 - 9

WEIL:\97681611\4\13173.0005

terminable only upon the payment in full of the Secured Obligations as such Grantor’s 

proxy and attorney-in-fact) with full authority in the place and stead of such Grantor and 

in the name of such Grantor, to:

(i) Subject to applicable Privacy Laws and consistent with Grantor’s public-facing 

privacy policies in effect at the time of issuance, issue and circulate notices, optouts and similar communications to data subjects, including Loyalty Program 

Members, to allow the full use and transfer of Loyalty Program Data in the Event 

of a Default, including full use by and transfer to an unaffiliated third-party 

purchaser;

(ii) bring suit or otherwise commence any action or proceeding in the name of any 

Grantor, as directed by the Required Lenders to the Collateral Agent, to enforce 

any Loyalty Program Intellectual Property, in which event such Grantor shall, at 

the request of the Appropriate Party or the Collateral Agent, do any and all lawful 

acts and execute any and all documents required by the Appropriate Party or the 

Collateral Agent in aid of such enforcement and such Grantor shall promptly, upon 

demand, reimburse and indemnify the Appropriate Party and the Collateral Agent

in connection with the exercise of its rights under this Section 5 or Section 8 of 

this Agreement, and, to the extent that the Appropriate Party or the Collateral 

Agent shall elect not to bring suit to enforce any Loyalty Program Intellectual 

Property as provided in this Section 5 or Section 8 of this Agreement, each Grantor 

agrees to use all commercially reasonable measures, whether by action, suit, 

proceeding or otherwise, to prevent the infringement, misappropriation, dilution or 

other violation of any of such Grantor’s rights in the Loyalty Program Intellectual 

Property by others and for that purpose agrees to diligently maintain any action, 

suit or proceeding against any Person so infringing as shall be necessary to prevent 

such infringement, misappropriation, dilution or violation;

(iii) notify, or require each Grantor to notify, any obligors with respect to amounts due 

or to become due to such Grantor in respect of the Loyalty Program Intellectual 

Property or the IP Licenses included in the Collateral, of the existence of the 

security interest created herein, to direct such obligors to make payment of all such 

amounts directly to the Collateral Agent, and, upon such notification and at the 

expense of such Grantor, to enforce collection of any such amounts and to adjust, 

settle or compromise the amount or payment thereof, in the same manner and to 

the same extent as such Grantor might have done;

(iv) take any actions that the Appropriate Party deems appropriate to maintain the 

applicable Grantor’s standards of quality, as referenced in Section 3(l) of this 

Annex, for products marketed or sold, or in the performance of services provided, 

under the Loyalty Program Trademarks; and

(v) institute, defend or settle legal proceedings to collect on or enforce the applicable 

Grantor’s rights and remedies against third parties, including account debtors, 

licensors, licensees, sublicensors, sublicensees and other parties to IP Licenses, 

under or on account of any Loyalty Program Intellectual Property or IP License 

included in the Collateral, without becoming a party to or incurring any liability 

under any IP License.

(b) In connection with the Collateral Agent’s exercise of its rights and remedies under of this 

Section 5 or Section 8 of this Agreement, each Grantor will, at the Collateral Agent’s or 
Annex 1 - 10

WEIL:\97681611\4\13173.0005

the Appropriate Party’s request and to the extent within such Grantor’s power and authority

and subject to Grantor’s existing third-party contractual restrictions, give the Collateral 

Agent or the Appropriate Party access to:

(i) all software, technology, networks, systems, databases, information technology 

environments and other tangible assets used for the management of the Collateral 

or any Intellectual Property licensed under Section 8(e) of this Agreement or under 

the IP License Agreement, and access to and possession of all media and files in 

which any of such Collateral or Intellectual Property may be recorded or stored;

(ii) such Grantor’s know-how and expertise regarding the Collateral or the 

manufacture, sale, distribution or provision of any goods or services in connection 

with any Carrier Loyalty Program; and 

(iii) such Grantor’s personnel responsible for either of the foregoing matters.

(c) The Collateral Agent shall take commercially reasonable measures to protect the 

confidentiality of any Trade Secrets and other confidential information accessed pursuant 

to Section 5(b) of this Annex. 

4. Provision of Services.

(i) Until the time of an Event of Default and following an Event of Default, each 

Grantor shall, and shall cause its Affiliates to, provide to the Collateral Agent, at 

such Grantor’s cost and expense, any (i) services and (ii) access to any technology, 

networks, systems, databases or other tangible assets, in the case of (i) or (ii), that 

are required for, the operation of any Carrier Loyalty Program as such Carrier 

Loyalty Program was operated prior to the occurrence of such Event of Default, 

solely to enable the Collateral Agent to exercise its rights and remedies under 

Section 8 of this Agreement and Section 5 of this Annex after the occurrence, and 

solely during the continuance, of an Event of Default; provided that (x) with 

respect to any such services or assets which, at the time of the Collateral Agent’s 

exercise of the right described in this paragraph, were provided to such Grantor by 

any third party and with respect to which the consent of such third party is 

necessary for such third party or such Grantor to provide such services or access 

to the Collateral Agent, such Grantor shall use its commercially reasonable efforts 

to obtain the consent of such third party to provide such services to the Collateral 

Agent and (y) this Section 6(i) of Annex 1 is exercisable solely upon and during 

the continuance of an Event of Default.

(ii) Each Grantor shall work together, and cause its Affiliates, as applicable, to work 

together in good faith with any assignee of any Collateral and any applicable thirdparty service providers to provide the services and access set forth in clause (i) and 

Section 5(b) above to such assignee on commercially reasonable terms until such 

assignee is able to secure an adequate replacement or substitute for such services 

or access from a third party and such Grantor shall continue to provide such 

services and access to such assignee, on an actual cost basis, for the duration of a 

reasonable negotiation period.

5. Closing Deliverables. On the Closing Date, (a) the Grantors shall deliver to the Treasury and the 

Collateral Agent counterparts of the IP License Agreement duly executed by each of the applicable 
Annex 1 - 11

WEIL:\97681611\4\13173.0005

Grantors and (b) the Treasury shall deliver to a Grantor a counterpart of the IP License Agreement 

duly executed by the Treasury.

6. Miscellaneous. Each Grantor and the Collateral Agent agree that:

(a) The terms of this Annex shall be deemed incorporated into and part of this Agreement.

(b) The terms of this Annex cumulative in nature and shall not limit the applicability or scope 

of the other terms of this Agreement.

7. Terms. 

(a) The following capitalized terms used in this Agreement shall have the following meanings:

(i) “Collateral Support” shall mean all property (real or personal) assigned or 

securing any Collateral and shall include any agreement granting a Lien in such 

real or personal property.

(ii) [Reserved]. 

(iii) [Reserved]. 

(iv) [Reserved]. 

(v) “IP License Agreement” shall mean that certain perpetual, transferable, 

worldwide, royalty-free Intellectual Property license agreement, dated as of the 

date hereof, by and among each of the Grantors that owns Loyalty Program 

Intellectual Property, on the one hand, and Treasury, on the other hand.

(vi) “IP Licenses” shall mean any and all agreements, whether or not styled as a 

“license,” that (A) grant a Person an exclusive or non-exclusive license or other 

right to use or exercise any Intellectual Property, (B) that obligate a Person to 

refrain from using or enforcing any Intellectual Property, including settlements, 

co-existence agreements, consents-to-use, non-assertion agreements and 

covenants not to sue and (C) any option or right of first refusal or first offer on any 

of the foregoing in clauses (A) or (B).

(vii) “IP-Related Rights” shall mean, (A) with respect to any Loyalty Program 

Intellectual Property or IP Licenses included in the Collateral, any Proceeds 

thereof, and (B) with respect to any Loyalty Program Intellectual Property, Loyalty 

Program Data or IP Licenses included in the Collateral, (1) all rights to royalties, 

revenues, income, payments, claims, damages and proceeds of suit and other 

payments arising therefrom and (2) all other accrued and unaccrued causes of 

action (whether in contract, tort or otherwise) or rights to claim, sue or collect 

damages for or enjoin or obtain other legal or equitable relief for, an infringement, 

misuse, misappropriation, dilution, violation, unfair competition, injury to 

goodwill or other impairment (whether past, present or future) thereof, including 

expired items.

(viii) “Licensed Trademarks” shall mean the Carrier Licensed Trademarks as defined 

in the IP License Agreement.
Annex 1 - 12

WEIL:\97681611\4\13173.0005

(ix) “Loyalty Program Assets” shall mean each Grantor’s right, title and interest in, 

to and under the following, in each case, whether now owned or existing or 

hereafter acquired, developed, created or arising:

(A) [Reserved];

(B) the Loyalty Program Agreements, including all Loyalty Program Revenues and 

all:

a. Accounts;

b. Instruments; and

c. Receivables and Receivable Records

in each case, representing such Grantor’s rights and claims arising under or in 

connection with any Carrier Loyalty Program (including the Loyalty Program 

Agreements) and the Loyalty Program Revenues; 

(C) All Trademarks used or held for use in a material respect in connection with any 

Carrier Loyalty Program and owned by a Grantor or any of its Affiliates (other 

than the items set forth on Schedule 1.1, the Licensed Trademarks and the 

Transitional Trademarks (as defined in the IP License Agreement)), and all

Trademarks set forth on Schedule 2.1, in each case and any successor or 

replacement Trademarks thereto;

(D) All:

a. Intellectual Property (other than Trademarks); 

b. General Intangibles (other than Intellectual Property);

c. IT Systems; and

d. Equipment;

in each case, (i) owned by a Grantor or any of its Affiliates (A) exclusively 

used or held for use in connection with any Carrier Loyalty Program or (B) 

primarily used in, and required to operate, any Carrier Loyalty Program

(which, for the avoidance of doubt, shall not include any aircraft, airframe, 

engines, Spare Parts or SGR Assets unless otherwise specified on Schedule 

2.1 or in any Pledge Supplement), or (ii) as set forth on Schedule 2.1;

(E) All IP Licenses (x) set forth on Schedule 7(a)(ix)(E)(x), (y) exclusively used or 

held for use in connection with any Carrier Loyalty Program (other than such 

Grantor’s rights under the IP License Agreement) or (z) granted by a Grantor to a 

third party under any Loyalty Program Intellectual Property (other than nonexclusive trademark licenses, non-disclosure agreements and similar agreements 

entered into in the ordinary course of business, in each case that do not provide for 

the payment of royalties for the use of such Loyalty Program Intellectual Property), 

in each case other than all reciprocal passenger Currency accrual and redemption 

agreements with other Air Carriers and any IP License set forth on Schedule 

7(a)(ix)(E)(y);
Annex 1 - 13

WEIL:\97681611\4\13173.0005

(F) All Loyalty Program Data;

(G) All IP-Related Rights; 

(H) Any other assets or property (i) exclusively used or held for use in connection with 

any Carrier Loyalty Program or (ii) primarily used in, and required to operate, any 

Carrier Loyalty Program (which, for the avoidance of doubt, shall not include any 

Intellectual Property, IT Systems, aircraft, airframe, engines, Spare Parts or SGR 

Assets unless otherwise specified in this Section 7(a)(ix), Schedule 2.1 or in any 

Pledge Supplement); and

(I) All books, records, information and data with respect to any of the foregoing, and 

all tangible embodiments and fixations thereof (including all databases, files and 

media in which any of the foregoing is recorded or stored).

(x) “Loyalty Program Intellectual Property” shall mean the Intellectual Property 

included in the Loyalty Program Assets.

(xi) “Loyalty Program Rules” shall mean the rules, policies and procedures that 

govern the applicable Carrier Loyalty Program.

(xii) “Loyalty Program Trademarks” shall mean the Trademarks included in the 

Loyalty Program Assets.

(xiii) [Reserved]. 

(xiv) “Receivables” shall mean all rights to payment, whether or not earned by 

performance, for goods or other property sold, leased, licensed, assigned or 

otherwise Disposed of, or services rendered or to be rendered, including, but not 

limited to, all such rights constituting or evidenced by any Account, Chattel Paper, 

Instrument or General Intangible, together with all of Grantor’s rights, if any, in 

any goods or other property giving rise to such right to payment and all Collateral 

Support and Supporting Obligations related thereto and all Receivables Records.

(xv) “Receivables Records” shall mean all original copies of all documents, 

instruments or other writings or electronic records or other Records evidencing the 

Receivable, relating thereto or obtained or maintained in connection therewith.

(xvi) [Reserved].

(xvii) [Reserved].

(b) For the avoidance of doubt, each of the following terms shall have the meaning ascribed to 

such term in the Loan Agreement: (i) Carrier Loyalty Program; (ii) Currency; (iii) Loyalty 

Program; (iv) Loyalty Program Agreement; (v) Loyalty Program Data; (vi) Loyalty 

Program Member; (vii) Loyalty Program Participant; (ix) Loyalty Program Revenue; (x) 

Material Loyalty Program Agreement; and (xi) IT Systems. 
Annex 1 - 14

WEIL:\97681611\4\13173.0005

Schedule 7(a)(ix)(E) to Annex 1 (Loyalty Program Assets) 

Schedule 7(a)(ix)(E)(x) 

None.4

Schedule 7(a)(ix)(E)(y)

None.5

 

4

If any collateral of this type is pledged or added to this Schedule after the closing date, then the UCC-1 financing statement 

collateral description may need to be amended to reflect this additional asset(s).

5

If any collateral of this type is pledged or added to this Schedule after the closing date, then the UCC-1 financing statement 

collateral description may need to be amended to reflect this additional asset(s).
Annex 1 - 15

WEIL:\97681611\4\13173.0005

EXHIBIT 1 to Annex 1 (Loyalty Program Assets)

FORM OF IP SECURITY AGREEMENT—COPYRIGHTS

COPYRIGHT SECURITY AGREEMENT

COPYRIGHT SECURITY AGREEMENT, dated as of [●], made by and between [●] (“Grantor”) and 

THE BANK OF NEW YORK MELLON (the “Collateral Agent”).

WHEREAS, the Initial Lender has agreed to make Loans to the Grantor under that certain Loan and 

Guarantee Agreement, dated as of September 28, 2020 (as amended by that certain Restatement Agreement, 

dated as of October 30, 2020, and as further amended, restated, amended and restated, supplemented or 

otherwise modified from time to time, the “Loan Agreement”) by and among ALASKA AIRLINES, INC., 

as Borrower, the Guarantors party thereto, the Collateral Agent, the Administrative Agent named therein 

and the United States Department of the Treasury, as Lender;

WHEREAS, the Collateral Agent entered into that certain Amended and Restated Horizon Aircraft, Engine 

and Propeller Pledge and Security Agreement dated as of as of October 30, 2020, by and among Grantor, 

the grantors party thereto and the Collateral Agent (as amended, restated, amended and restated, 

supplemented or otherwise modified from time to time, the “Security Agreement”).

WHEREAS, pursuant to the Security Agreement, the Grantor granted a security interest to the Collateral 

Agent in the Copyright Collateral (as defined below) and is required to execute and deliver this Copyright 

Security Agreement.

NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, 

the receipt of which is hereby acknowledged, Grantor and the Collateral Agent hereby agree as follows:

1. Defined Terms

All capitalized terms used in this Copyright Security Agreement and not otherwise defined herein will 

have the meanings assigned to them in the Security Agreement or Loan Agreement, as applicable.

2. Supplement to Security Agreement

This Copyright Security Agreement has been entered into in conjunction with the security interest granted 

to the Collateral Agent under the Security Agreement, and Grantor hereby acknowledges and affirms that 

the rights and remedies of the Collateral Agent with respect to the security interest in Collateral made and 

granted hereby are more fully set forth in the Security Agreement, the terms and provisions of which are 

incorporated by reference herein as if fully set forth herein. The terms of this Copyright Security 

Agreement are supplemental to and not in replacement of the terms of the Security Agreement, and the 

rights and remedies of the Collateral Agent with respect to the security interests granted herein are 

without prejudice to, but in addition to, those set forth in the Security Agreement. If there is any conflict 

between this Copyright Security Agreement and the Security Agreement, the Security Agreement will 

govern.

3. Security Interest and Collateral

Grantor hereby grants to the Collateral Agent a security interest in and continuing lien on all of such 

Grantor’s right, title and interest in, to and under the following, in each case whether now owned or 
Annex 1 - 16

WEIL:\97681611\4\13173.0005

existing or hereafter acquired, developed, created or arising and wherever located (collectively, the 

“Copyright Collateral”):

a. any United States or foreign: (i) copyrights, whether registered or unregistered, whether 

in published or unpublished works of authorship; (ii) copyright registrations or applications 

in any IP Filing Office; (iii) copyright renewals or extensions; and (iv) rights corresponding, 

derived from or analogous to the foregoing, in each case included in the Collateral,

including any copyright listed in Schedule 1 attached hereto (as such schedule may be 

amended or supplemented from time to time) (collectively “Copyrights”);

b. any agreements, whether or not styled as a “license,” that grant to Grantor an exclusive 

license to use or exercise rights in any registered or applied-for Copyright, included in the 

Collateral, including any agreement listed in Schedule 1 attached hereto (as such schedule 

may be amended or supplemented from time to time) (collectively, “Copyright Licenses”); 

and

c. for any Copyright or Copyright License, any (i) Proceeds and rights to royalties, revenues, 

income, payments, claims, damages and proceeds of suit and other payments arising 

therefrom; and (ii) all other accrued and unaccrued causes of action (whether in contract, 

tort or otherwise) or rights to claim, sue or collect damages for or enjoin or obtain other 

legal or equitable relief for, an infringement, misuse, violation, unfair competition or other 

impairment (whether past, present or future) thereof, including expired items.

For the avoidance of doubt, this Copyright Security Agreement is not to be construed as an assignment of 

any Copyright Collateral.

4. Recordation

Grantor hereby authorizes the Register of Copyrights and any other government officials to record and 

register, and Grantor hereby agrees to file at the United States Copyright Office, this Copyright Security 

Agreement upon request by the Collateral Agent, and Grantor hereby agrees to furnish to the Collateral 

Agent evidence of such recordation and registration.

5. Termination

When all Secured Obligations have been completely and indefeasibly paid and performed in full and the 

Lender no longer has a commitment to make any Loan to the Borrower, this Copyright Security 

Agreement will terminate.

6. Governing law

This Copyright Security Agreement shall be governed by, and construed in accordance with, the law of the 

State of New York.

7. Counterparts; Electronic communications

This Copyright Security Agreement may be executed (including through electronic signatures) in one or 

more 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. Notices and other communications may be delivered electronically (including by 

e-mail) and will be effective upon receipt, except that any record required to be signed, executed or 
Annex 1 - 17

WEIL:\97681611\4\13173.0005

authenticated will only be effective when authenticated and delivered by electronic imaging means 

(e.g., .pdf or .tiff).

[Remainder of page left intentionally blank]
Annex 1 - 18

WEIL:\97681611\4\13173.0005

IN WITNESS WHEREOF, [each][the] Grantor and the Collateral Agent have caused this Copyright 

Security Agreement to be duly executed and delivered by their respective officers thereunto duly authorized 

as of the date first written above.

[GRANTOR], as Grantor

By: 

[NAME]

[TITLE]

THE BANK OF NEW YORK MELLON, as Collateral Agent 

By: 

[NAME]

[TITLE]
Annex 1 - 19

WEIL:\97681611\4\13173.0005

SCHEDULE 1

TO COPYRIGHT SECURITY AGREEMENT

REGISTERED COPYRIGHTS

NO. TITLE OF WORK REGISTRATION 

NUMBER

REGISTRATION 

DATE

GRANTOR

1.

COPYRIGHT APPLICATIONS

NO. TITLE OF WORK APPLICATION DATE GRANTOR

1.

EXCLUSIVE COPYRIGHT IP LICENSES

NO. TITLE OF WORK REGISTRATION 

NUMBER

REGISTRATION 

DATE

GRANTOR

1.
Annex 1 - 20

WEIL:\97681611\4\13173.0005

EXHIBIT 2 to Annex 1 (Loyalty Program Assets)

FORM OF IP SECURITY AGREEMENT—PATENTS

PATENT SECURITY AGREEMENT

PATENT SECURITY AGREEMENT, dated as of [●], made by and between [●] (“Grantor”) and [●] (the 

“Collateral Agent”).

WHEREAS, the Initial Lender has agreed to make Loans to the Grantor under that certain Loan and 

Guarantee Agreement, dated as of September 28, 2020 (as amended by that certain Restatement Agreement, 

dated as of October 30, 2020, and as further amended, restated, amended and restated, supplemented or 

otherwise modified from time to time, the “Loan Agreement”) by and among ALASKA AIRLINES, INC., 

as Borrower, the Guarantors party thereto, the Collateral Agent, the Administrative Agent named therein 

and the United States Department of the Treasury, as Lender;

WHEREAS, the Collateral Agent entered into that certain Amended and Restated Horizon Aircraft, Engine 

and Propeller Pledge and Security Agreement dated as of as of October 30, 2020, by and among Grantor, 

the grantors party thereto and the Collateral Agent (as amended, restated, amended and restated, 

supplemented or otherwise modified from time to time, the “Security Agreement”).

WHEREAS, pursuant to the Security Agreement, the Grantor granted a security interest to the Collateral 

Agent in the Patent Collateral (as defined below) and is required to execute and deliver this Patent Security 

Agreement.

NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the 

receipt of which is hereby acknowledged, Grantor and the Collateral Agent hereby agree as follows:

1. Defined Terms

All capitalized terms used in this Patent Security Agreement and not otherwise defined herein will have the 

meanings assigned to them in the Security Agreement or Loan Agreement, as applicable.

2. Supplement to Security Agreement

This Patent Security Agreement has been entered into in conjunction with the security interest granted to 

the Collateral Agent under the Security Agreement, and Grantor hereby acknowledges and affirms that the 

rights and remedies of the Collateral Agent with respect to the security interest in Collateral made and 

granted hereby are more fully set forth in the Security Agreement, the terms and provisions of which are 

incorporated by reference herein as if fully set forth herein. The terms of this Patent Security Agreement 

are supplemental to and not in replacement of the terms of the Security Agreement, and the rights and 

remedies of the Collateral Agent with respect to the security interests granted herein are without prejudice 

to, but in addition to, those set forth in the Security Agreement. If there is any conflict between this Patent 

Security Agreement and the Security Agreement, the Security Agreement will govern.

3. Security Interest and Collateral

Grantor hereby grants the Collateral Agent a security interest in and continuing lien on all of such Grantor’s 

right, title and interest in, to and under the following, in each case whether now owned or existing or 

hereafter acquired, developed, created or arising and wherever located (collectively, the “Patent 

Collateral”):
Annex 1 - 21

WEIL:\97681611\4\13173.0005

a. Any United States and foreign issued patents (whether utility, design, or plant) and 

certificates of invention, and similar industrial property rights, and applications for any of 

the foregoing, in each case included in the Collateral, including: (i) all reissues, divisions, 

continuations, continuations-in-part, extensions, renewals, and reexaminations thereof, (ii) 

all rights corresponding, derived from or analogous thereto throughout the world and (iii) 

all inventions and improvements described or claimed therein, including any patent listed 

in Schedule 1 attached hereto (as such schedule may be amended or supplemented from 

time to time) (collectively, “Patents”); and

b. for any Patent, any (i) Proceeds therefrom and all rights to royalties, revenue, income, 

payments, claims, damages, and proceeds of suit and other payments arising therefrom; 

and (ii) all other accrued and unaccrued causes of action (whether in contract, tort or 

otherwise) or rights to claim, sue or collect damages for or enjoin or obtain other legal or 

equitable relief for, an infringement, misuse, violation, unfair competition or other 

impairment (whether past, present or future) thereof, including expired items.

For the avoidance of doubt, this Patent Security Agreement is not to be construed as an assignment of any 

Patent Collateral.

4. Recordation

Grantor hereby authorizes the Commissioner for Patents and any other government officials to record and 

register, and Grantor hereby agrees to file at the United States Patent and Trademark Office, this Patent 

Security Agreement upon request by the Collateral Agent, and Grantor hereby agrees to furnish to the 

Collateral Agent evidence of such recordation and registration.

5. Termination

When all Secured Obligations have been completely and indefeasibly paid and performed in full and the 

Lender no longer has a commitment to make any Loan to the Borrower, this Patent Security Agreement 

will terminate.

6. Governing law

This Patent Security Agreement shall be governed by, and construed in accordance with, the law of the 

State of New York.

7. Counterparts; Electronic communications

This Patent Security Agreement may be executed (including through electronic signatures) in one or more 

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. Notices and other communications may be delivered electronically (including by e-mail) 

and will be effective upon receipt, except that any record required to be signed, executed or authenticated 

will only be effective when authenticated and delivered by electronic imaging means (e.g., .pdf or .tiff).

[Remainder of page left intentionally blank]
Annex 1 - 22

WEIL:\97681611\4\13173.0005

IN WITNESS WHEREOF, [each][the] Grantor and the Collateral Agent have caused this Patent Security 

Agreement to be duly executed and delivered by their respective officers thereunto duly authorized as of 

the date first written above.

[GRANTOR], as Grantor

By: 

[NAME]

[TITLE]

THE BANK OF NEW YORK MELLON, as Collateral Agent

By: 

[NAME]

[TITLE]
Annex 1 - 23

WEIL:\97681611\4\13173.0005

SCHEDULE 1

TO PATENT SECURITY AGREEMENT

ISSUED PATENTS

NO. PATENT NUMBER DATE ISSUED TITLE GRANTOR

1.

PATENT APPLICATIONS

NO. APPLICATION NUMBER FILING DATE TITLE GRANTOR

1.
Annex 1 - 24

WEIL:\97681611\4\13173.0005

EXHIBIT 3 to Annex 1 (Loyalty Program Assets)

FORM OF IP SECURITY AGREEMENT—TRADEMARKS

TRADEMARK SECURITY AGREEMENT

TRADEMARK SECURITY AGREEMENT, dated as of [●], made by and between [●] (“Grantor”) and 

[●] (the “Collateral Agent”).

WHEREAS, the Initial Lender has agreed to make Loans to the Grantor under that certain Loan and 

Guarantee Agreement, dated as of September 28, 2020 (as amended by that certain Restatement Agreement, 

dated as of October 30, 2020, and as further amended, restated, amended and restated, supplemented or 

otherwise modified from time to time, the “Loan Agreement”) by and among ALASKA AIRLINES, INC., 

as Borrower, the Guarantors party thereto, the Collateral Agent, the Administrative Agent named therein 

and the United States Department of the Treasury, as Lender;

WHEREAS, the Collateral Agent entered into that certain Amended and Restated Horizon Aircraft, Engine 

and Propeller Pledge and Security Agreement dated as of as of October 30, 2020, by and among Grantor, 

the grantors party thereto and the Collateral Agent (as amended, restated, amended and restated, 

supplemented or otherwise modified from time to time, the “Security Agreement”).

WHEREAS, pursuant to the Security Agreement, the Grantor granted a security interest to the Collateral 

Agent in the Trademark Collateral (as defined below) and is required to execute and deliver this Trademark 

Security Agreement.

NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the 

receipt of which is hereby acknowledged, Grantor and the Collateral Agent hereby agree as follows:

1. Defined Terms

All capitalized terms used in this Trademark Security Agreement and not otherwise defined herein will 

have the meanings assigned to them in the Security Agreement or Loan Agreement, as applicable.

2. Supplement to Security Agreement

This Trademark Security Agreement has been entered into in conjunction with the security interest granted 

to the Collateral Agent under the Security Agreement, and Grantor hereby acknowledges and affirms that 

the rights and remedies of the Collateral Agent with respect to the security interest in Collateral made and 

granted hereby are more fully set forth in the Security Agreement, the terms and provisions of which are 

incorporated by reference herein as if fully set forth herein. The terms of this Trademark Security 

Agreement are supplemental to and not in replacement of the terms of the Security Agreement, and the 

rights and remedies of the Collateral Agent with respect to the security interests granted herein are without 

prejudice to, but in addition to, those set forth in the Security Agreement. If there is any conflict between 

this Trademark Security Agreement and the Security Agreement, the Security Agreement will govern.

3. Security Interest and Collateral

Grantor hereby grants the Collateral Agent a security interest in and continuing lien on all of such Grantor’s 

right, title and interest in, to and under the following, in each case whether now owned or existing or 

hereafter acquired, developed, created or arising and wherever located (collectively, the “Trademark 

Collateral”):
Annex 1 - 25

WEIL:\97681611\4\13173.0005

a. all United States and foreign trademarks, trade names, corporate names, company names, 

business names, fictitious business names, Internet domain names, trade dress, service 

marks, certification marks, collective marks, logos, social media identifiers, handles, other 

source or business identifiers, designs and general intangibles of a like nature, whether 

arising under a statute, common law, or the laws of any jurisdiction throughout the world, 

whether registered or unregistered, in each case included in the Collateral, including (i) all 

registrations, applications, extensions, renewals or other filings of any of the foregoing and 

(ii) all of the goodwill of the business connected with the use of and symbolized by the 

foregoing, including any trademark listed in Schedule 1 attached hereto (as such schedule 

may be amended or supplemented from time to time), in each case and any successor or 

replacement trademarks thereto, (collectively, “Trademarks”); and

b. for any Trademark, any (i) Proceeds therefrom and rights to royalties, revenues, income, 

payments, claims, damages and proceeds of suit and other payments arising therefrom; and 

(ii) all other accrued and unaccrued causes of action (whether in contract, tort or otherwise) 

or rights to claim, sue or collect damages for or enjoin or obtain other legal or equitable 

relief for, an infringement, misuse, dilution, violation, unfair competition, injury to 

goodwill or other impairment (whether past, present or future) thereof, including expired 

items.

Notwithstanding the foregoing, the Trademark Collateral shall not include any “intent-to-use” application 

for registration of a Trademark filed with the USPTO pursuant to Section 1(b) of the Lanham Act, 15 U.S.C. 

§ 1051, prior to the filing of a “Statement of Use” pursuant to Section 1(d) of the Lanham Act or an 

“Amendment to Allege Use” pursuant to Section 1(c) of the Lanham Act with respect thereto, but solely to 

the extent, if any, that, and solely during the period, if any, in which, the grant of a security interest therein 

would impair the validity or enforceability of any registration that issues from such “intent-to-use”

application under applicable federal law. For the avoidance of doubt, this Trademark Security Agreement 

is not to be construed as an assignment of any Trademark Collateral.

4. Recordation

Grantor hereby authorizes the Commissioner for Trademarks and any other government officials to record 

and register, and Grantor hereby agrees to file at the United States Patent and Trademark Office, this 

Trademark Security Agreement upon request by the Collateral Agent, and Grantor hereby agrees to furnish 

to the Collateral Agent evidence of such recordation and registration.

5. Termination

When all Secured Obligations have been completely and indefeasibly paid and performed in full and the 

Lender no longer has a commitment to make any Loan to the Borrower, this Trademark Security Agreement 

will terminate.

6. Governing law

This Trademark Security Agreement shall be governed by, and construed in accordance with, the law of 

the State of New York.

7. Counterparts; Electronic communications

This Trademark Security Agreement may be executed (including through electronic signatures) in one or 

more counterparts and by different parties hereto in separate counterparts, each of which when so executed 
Annex 1 - 26

WEIL:\97681611\4\13173.0005

and delivered shall be deemed an original, but all such counterparts together shall constitute but one and 

the same instrument. Notices and other communications may be delivered electronically (including by email) and will be effective upon receipt, except that any record required to be signed, executed or 

authenticated will only be effective when authenticated and delivered by electronic imaging means 

(e.g., .pdf or .tiff).

[Remainder of page left intentionally blank]
Annex 1 - 27

WEIL:\97681611\4\13173.0005

IN WITNESS WHEREOF, [each][the] Grantor and the Collateral Agent have caused this Trademark 

Security Agreement to be duly executed and delivered by their respective officers thereunto duly authorized 

as of the date first written above.

[GRANTOR], as Grantor

By: 

[NAME]

[TITLE]

THE BANK OF NEW YORK MELLON, as Collateral Agent

By: 

[NAME]

[TITLE]
Annex 1 - 28

WEIL:\97681611\4\13173.0005

SCHEDULE 1

TO TRADEMARK SECURITY AGREEMENT

REGISTERED TRADEMARKS

NO. MARK REGISTRATION 

NUMBER

REGISTRATION 

DATE

GRANTOR

1.

TRADEMARK APPLICATIONS

NO. MARK APPLICATION NUMBER FILING DATE GRANTOR

1.
Annex 2 - 1

WEIL:\97681611\4\13173.0005

Annex 2 (Control Collateral)

Each Grantor and the Collateral Agent hereby agree that the terms of this Annex shall apply with respect 

to Collateral consisting of Deposit Accounts and Securities Accounts (including the Collateral Proceeds 

Account).

1. Perfection Requirement. The following requirements shall be included in the definition of 

“Perfection Requirement” and shall constitute an additional “Perfection Requirement” with respect 

to Collateral consisting of:

(a) A Deposit Account, each applicable Grantor shall, on or prior to the Closing Date or on the 

date of the establishment of a Deposit Account constituting Collateral, execute and deliver 

a control agreement with respect to such Collateral in form and substance satisfactory to 

the Appropriate Party and agreed to by the relevant depositary institution such that, upon 

the effectiveness of such control agreement, the Collateral Agent has Control over such 

Collateral. Without limiting the generality of the foregoing, such control agreement shall 

require such depositary institution to comply with the Collateral Agent’s instructions with 

respect to Disposition of funds held in such Deposit Account without further instruction or 

consent by any other Person; provided, that the Collateral Agent agrees with respect to the 

Collection Account not to give any such instructions unless an Event of Default has 

occurred and is continuing.

(b) A Securities Account (including any Security Entitlement with respect thereto), each 

applicable Grantor shall, on or prior to the Closing Date or on the date of the establishment 

of a Securities Account constituting Collateral, execute and deliver a control agreement 

with respect to such Collateral in form and substance satisfactory to the Appropriate Party

and agreed to by the relevant securities intermediary such that, upon the effectiveness of 

such control agreement, the Collateral Agent has Control over such Collateral. Without 

limiting the generality of the foregoing, such control agreement shall require such securities 

intermediary to comply with the Collateral Agent’s entitlement orders with respect to such 

Securities Account without further consent by any other Person.

(c) A Collateral Proceeds Account, each applicable Grantor shall, on or prior to the Closing 

Date and, for any Collateral Proceeds Account established after the Closing Date, on the 

date of the establishment of such Collateral Proceeds Account, in addition to the above 

requirements, cause to be included in the applicable control agreement such further 

provisions required or advisable to implement the provisions of the Loan Agreement 

applicable to such Collateral Proceeds Account, all in form and substance satisfactory to 

the Appropriate Party.

2. Representations and Warranties. Each Grantor (as applicable) hereby additionally represents 

and warrants, on the Closing Date and on the date of each Borrowing (or, in the case of an 

Additional Grantor or Additional Collateral, on the date of such Grantor’s execution and delivery 

of a Pledge Supplement, or the date such Additional Collateral becomes subject to the security 

interest created hereby, as applicable):

(a) Schedule 2.1 to this Agreement sets forth Deposit Accounts and Securities Accounts

constituting Collateral (including the Collateral Proceeds Account). Each Grantor is the 

sole account holder thereof, as applicable.

(b) It has not consented to, and is not otherwise aware of, any Person having Control over, or 

any other interest in, any Deposit Account and Securities Accounts (including any Security 
Annex 2 - 2

WEIL:\97681611\4\13173.0005

Entitlement in respect thereof) constituting Collateral or any property deposited therein or 

credited thereto.

(c) Upon satisfaction and completion of the Perfection Requirements under this Annex, the 

Collateral Agent will (i) have Control over all Deposit Accounts and Securities Accounts

(including any Security Entitlement in respect thereof) constituting Collateral and (ii) 

obtain a legal, valid and perfected first-priority security interest upon and in all Deposit 

Accounts and Securities Accounts (including any Security Entitlement in respect thereof) 

constituting Collateral, subject to no Lien (other than Permitted Liens).

3. Covenants. Each Grantor (as applicable) hereby agrees and covenants that:

(a) It shall not grant Control of any Collateral to any Person other than the Secured Parties or 

any depositary bank or securities intermediary of any Deposit Account or Securities 

Account constituting Collateral, respectively.

(b) Each Grantor of Collateral consisting of a Collateral Proceeds Account agrees to comply 

with the provisions of the Loan Agreement applicable to such Collateral Proceeds Account.

4. Defaults and Remedies. If any Event of Default shall have occurred and be continuing, without 

limiting the generality of Section 8.1 of this Agreement and in addition to any rights and remedies 

that the Collateral Agent may have under the Loan Documents and the applicable Law, the 

Collateral Agent may:

(a) give a notice of exclusive control or any other instruction under any control agreement and 

take any action provided therein with respect to Collateral consisting of Deposit Accounts

or Securities Accounts, including any Collateral Proceeds Account;

(b) instruct the relevant depositary institution or securities intermediary to pay the balance of

or credited to such Deposit Account or Securities Account, including any Collateral 

Proceeds Account; and

(c) apply funds held in or credited to Collateral consisting of Deposit Accounts and Securities 

Accounts, including any Collateral Proceeds Account, to the Secured Obligations as set 

forth in Section 7.02 of the Loan Agreement.

5. Miscellaneous. Each Grantor and the Collateral Agent agree that:

(a) The terms of this Annex shall be deemed incorporated into and part of this Agreement.

(b) The terms of this Annex are cumulative in nature and shall not limit the applicability or 

scope of the other terms of this Agreement.
Annex 3A - 1

WEIL:\97681611\4\13173.0005

Annex 3A (Propeller Assets)

Each Grantor and the Collateral Agent hereby agree that the terms of this Annex shall apply with respect 

to Collateral consisting of Propellers.

1. Perfection Requirement. The following requirements shall be included in the definition of 

“Perfection Requirement” and shall constitute an additional “Perfection Requirement” with respect

to Collateral consisting of Propellers: 

The applicable Grantor, at its sole cost and expense, shall on the date of execution of any Mortgage 

Supplement or a Pledge Supplement:

(i) execute and deliver, or cause to be executed and delivered, the Mortgage 

Supplements in form and substance satisfactory to the Appropriate Party; and

(ii) duly prepare and file, or cause to be duly prepared and filed, the FAA Filed 

Documents for recordation with the FAA in accordance with Title 49 and the 

regulations thereunder.

2. Required Filings. The filing of an FAA Filed Document with respect to Propellers with the FAA 

shall be included in the definition of “Required Filing” and shall constitute an additional “Required 

Filing” with respect to Collateral consisting of Propellers:

3. Representations and Warranties. Each Grantor (as applicable) represents and warrants on the 

date of each Borrowing (or, in the case of an Additional Grantor or Additional Collateral, including 

any Additional Propeller, on the date of such Grantor’s execution and delivery of a Mortgage 

Supplement or a Pledge Supplement, or the date such Additional Collateral becomes subject to the 

security interest created hereby, as applicable):

(a) Schedule 2.1 sets forth all Propeller Assets constituting Collateral and that such Grantor is 

the owner of the Propellers listed in Schedule 2.1.

(b) Necessary Filings. Upon (x) the filing of UCC financing statements (and continuation 

statements at periodic intervals) with respect to the security and other interests created 

hereby under the UCC as in effect in any applicable jurisdiction and (y) the recording and 

the filing of each Mortgage or Mortgage Supplement in the office of the FAA pursuant to 

Title 49, in each case, with respect to each Propeller constituting Collateral, (i) all filings, 

registrations and recordings necessary in the United States to create, preserve, protect and 

perfect the security interest granted by the Grantors to the Collateral Agent hereby in 

respect of the Collateral have been accomplished or, as to Collateral to become subject to 

the security interest of this Agreement after the date hereof, will be so filed, registered and 

recorded simultaneously with such Collateral being subject to the Lien of this Agreement 

and (ii) the security interest granted to the Collateral Agent pursuant to this Agreement in 

and to the Collateral will constitute a perfected security interest therein prior to the rights 

of all other Persons therein, but subject to no other Liens (other than Permitted Liens), and 

is entitled to all the rights, priorities and benefits afforded by Title 49 and any other 

applicable Law to perfected security interests or Liens. 

(c) Other Filings or Registrations. There is no registration covering or purporting to cover any 

interest of any kind in Propellers constituting Collateral (other than Permitted Liens).
Annex 3A - 2

WEIL:\97681611\4\13173.0005

(d) All Propellers constituting Collateral have been first placed in service after October 22, 

1994.

(e) All Propellers constituting Collateral have been duly certified by the FAA as to type and 

airworthiness. 

(f) All Propellers are habitually located in the United States.

4. Covenants. Each Grantor (as applicable) covenants and agrees that:

8. Filings and Registrations

(a) Such Grantor (as applicable) will take, or cause to be taken, at such Grantor’s cost and 

expense, such action with respect to the recording, filing, re-recording and refiling of each 

Mortgage or Mortgage Supplement in the office of the FAA, pursuant to Title 49, and such 

other documents in such other places as may be required or desirable under any applicable 

Law, and any other instruments as are necessary or desirable by the Appropriate Party or 

the Collateral Agent, to maintain the existence, perfection, priority and preservation of the 

Lien created by this Agreement, the related Mortgages and the related Mortgage 

Supplement(s) of the Collateral Agent in the Propeller Assets constituting Collateral. The 

Grantors will furnish to the Collateral Agent timely notice of the necessity or desirability 

of such action, together with, if requested by the Collateral Agent, such instruments, in 

execution form, and such other information as may be required to enable the Collateral 

Agent to take such action or otherwise requested by the Appropriate Party.

9. Possession, Operation and Use, Maintenance, Registration and 

Markings.

(a) General. Except as otherwise expressly provided herein, it shall be entitled to operate, use, 

locate, employ or otherwise utilize or not utilize any Propeller in any lawful manner or 

place in accordance with such Grantor’s business judgment.

(b) Possession. It shall not lease or otherwise in any manner deliver, transfer or relinquish 

possession of any Propeller, or install any Propeller, or permit any Propeller to be installed, 

on any engine other than an Engine, in each case, to the extent constituting Collateral; 

except that the applicable Grantor may, so long as no Event of Default has occurred:

(i) Deliver possession of any Propeller constituting Collateral (x) to the Manufacturer 

thereof or to any third-party maintenance provider for testing service, repair, 

maintenance or overhaul work on such Propeller, or, to the extent required or 

permitted by Section 3(c) of this Annex, for alterations or modifications in or 

additions to such Propeller or (y) to any Person for the purpose of transport to a 

Person referred to in the preceding clause (x); provided that such Grantor 

covenants to promptly pay when due any payment obligation resulting in a 

mechanic’s or other Lien related to such testing service, repair, maintenance, 

overhaul, alternation, modification, addition or transport;

(ii) Transfer possession of the Propeller constituting Collateral to the U.S. Government, 

in which event such Grantor shall promptly notify the Appropriate Party of any 

such transfer of possession and, in the case of any transfer pursuant to CRAF, in 

such notification shall identify by name, address and telephone numbers the 

Contracting Office Representative or Representatives for the Military Airlift 
Annex 3A - 3

WEIL:\97681611\4\13173.0005

Command of the United States Air Force to whom notices must be given and to 

whom requests or claims must be made to the extent applicable under CRAF; and

(iii) Install a Propeller on an engine owned (including any Engine) or leased by such 

Grantor; provided that upon such installation, such Grantor shall be deemed to 

covenant to the Collateral Agent for the benefit of the Secured Parties that such 

installation shall not result in any material impairment (as compared to if such 

Propeller had not so been installed) of the Collateral Agent’s rights and remedies 

in respect of such Propeller and access in connection therewith and to comply with 

the Appropriate Party’s requests in furtherance of the exercise of such rights and 

remedies (including access). With respect to this clause (b)(iii), (A) the Collateral 

Agent hereby agrees on behalf of the Secured Parties, and for the benefit of each 

lessor, conditional seller, indenture trustee or secured party of any engine leased 

to, or owned by, the applicable Grantor subject to a lease, conditional sale, trust 

indenture or other security agreement that the Collateral Agent, on behalf of the 

Secured Parties, will not acquire or claim, as against such lessor, conditional seller, 

indenture trustee or secured party, any right, title or interest in such engine as the 

result of any Propeller being installed on such engine at any time while such engine 

is subject to such lease, conditional sale, trust indenture or other security agreement 

and (B) such Grantor shall cause any lessor, conditional seller, indenture trustee or 

secured party of any engine leased to, or owned by, the applicable Grantor subject 

to any lease, conditional sale, trust indenture or other security agreement to 

acknowledge that it will not acquire or claim, as against the Collateral Agent or 

any other Secured Parties, any right, title or interest in a Propeller as the result of 

such Propeller being installed on such engine at any time which such engine is 

subject to such lease, conditional sale, trust indenture or other security agreement. 

(c) Operation and Use. It shall not operate, use or locate such Propeller, or allow such Propeller 

to be operated, used or located, (i) in any area excluded from coverage by any insurance 

required by any Loan Document, except in the case of a requisition by the U.S. Government 

where the Grantors obtain indemnity in lieu of such insurance from the U.S. Government, 

or insurance from the U.S. Government, against substantially the same risks and for at least 

the amounts of insurance required by any Loan Document covering such area, or (ii) in any 

recognized area of hostilities unless covered in accordance with this Annex by war risk 

insurance, or in either case unless the Propeller is only temporarily operated, used or 

located in such area as a result of an emergency, equipment malfunction, navigational error, 

hijacking, weather condition or other similar unforeseen circumstance, so long as such 

Grantor diligently and in good faith proceeds to remove such Propeller from such area. No 

Grantor shall permit such Propeller to be used, operated, maintained, serviced, repaired or 

overhauled (x) in violation of any applicable Law or (y) in violation of any airworthiness 

certificate, license or registration of any Governmental Authority relating to such Propeller, 

except to the extent the validity or application of any such law or requirement relating to 

any such certificate, license or registration is being contested in good faith by such Grantor 

in any reasonable manner which does not involve any material risk of the sale, forfeiture 

or loss of such Propeller, any material risk of criminal liability or material civil penalty 

against the Collateral Agent or any Secured Party or impair the Appropriate Party’s security 

interest in such Propeller.

(d) Maintenance and Repair. It shall cause all Propeller Assets to be maintained, serviced, 

repaired and overhauled in accordance with maintenance standards required by or 

substantially equivalent to those required by the FAA so as to keep such Propeller Assets 
Annex 3A - 4

WEIL:\97681611\4\13173.0005

in such operating condition as may be necessary to enable the applicable airworthiness 

certification of such Propeller, or, in the case of any Propeller that is installed on an Engine, 

the applicable Engine to be maintained under the regulations of the FAA. Each Grantor 

further agrees that each Propeller constituting Collateral will be maintained, used, serviced, 

repaired, overhauled or inspected in compliance with applicable Laws with respect to the 

maintenance of the Propellers and in compliance with each applicable airworthiness 

certificate, license and registration relating to such Propeller issued by the applicable 

Aviation Authority.

10. Replacement of Parts, Alterations, Modification and Additions.

(a) Replacement of Parts. Except as otherwise provided herein, so long as the security interest 

created herein has not been released in accordance with the Loan Agreement, each 

applicable Grantor, at its own cost and expense, will, at its own cost and expense, promptly 

replace (or cause to be replaced) all Parts which may from time to time be incorporated or 

installed in or attached to such Propeller and 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. In addition, each Grantor may, at its own 

cost and expense, remove in the ordinary course of maintenance, service, repair, overhaul 

or testing any Parts, whether or not worn out, lost, stolen, destroyed, seized, confiscated, 

damaged beyond repair or permanently rendered unfit for use; provided, however, that such 

Grantor, except as otherwise provided herein, at its own cost and expense, will, promptly 

replace such Parts. All replacement parts shall be free and clear of all Liens, except 

Permitted Liens and shall be in as good an operating condition and have a value and utility 

not less than the value and utility of the Parts replaced (assuming such replaced Parts were 

in the condition required hereunder).

(b) Parts Subject to Lien. Except as otherwise provided herein, any Part at any time removed 

from a Propeller shall remain subject to the security interest created in this Mortgage, no 

matter where located, until such time as such Part shall be replaced by a part that has been 

incorporated or installed in or attached to such Propeller and that meets the requirements 

for replacement parts specified above. Immediately upon any replacement part becoming 

incorporated or installed in or attached to such Propeller as provided in this Annex, without 

further act, (i) the replaced Part shall thereupon be free and clear of all rights of the 

Collateral Agent and shall no longer be deemed a Part hereunder and (ii) such replacement 

part shall become subject to this Agreement and be deemed part of such Propeller, as the 

case may be, for all purposes hereof to the same extent as the Parts originally incorporated 

or installed in or attached to such Propeller.

(c) Alterations, Modifications and Additions. It shall make alterations and modifications in 

and additions to each Propeller as may be required to be made from time to time to meet 

the applicable standards of the FAA, to the extent made mandatory in respect of such 

Propeller (a “Mandatory Alteration”); provided, however, that each Grantor may, in good 

faith and by appropriate procedure, contest the validity or application of any law, rule, 

regulation or order in any reasonable manner which does not materially adversely affect 

the Appropriate Party’s interest in such Propeller and does not involve any material risk of 

sale, forfeiture or loss of such Propeller or the interest of the Appropriate Party therein, or 

any material risk of material civil penalty or any material risk of criminal liability being 

imposed on the Collateral Agent or any Secured Party. In addition, each Grantor, at its 

own expense, may from time to time make such alterations and modifications in and 

additions to any Propeller (each an “Optional Alteration”) as such Grantor may deem 
Annex 3A - 5

WEIL:\97681611\4\13173.0005

desirable in the proper conduct of its business including the removal of Parts which such 

Grantor deems are obsolete or no longer suitable or appropriate for use in such Propeller 

(“Obsolete Parts”); provided, however, that no such Optional Alteration to a Propeller 

shall (i) materially diminish the fair market value, utility or remaining useful life of such 

Propeller below its fair market value, utility or remaining useful life immediately prior to 

such Optional Modification (assuming such Propeller was in the condition required by this 

Agreement immediately prior to such Optional Modification) or (ii) cause such Propeller 

to cease to have the applicable standard certificate of airworthiness. All Parts incorporated 

or installed in or attached to any Propeller as the result of any alteration, modification or 

addition effected by each applicable Grantor shall be free and clear of any Liens except 

Permitted Liens and become subject to the Lien of this Agreement; provided that such 

Grantor may, at any time so long as any Propeller is subject to the Lien of this Agreement, 

remove any Part (such Part being referred to herein as a “Removable Part”) from such 

Propeller if (i) such Part is in addition to, and not in replacement of or in substitution for, 

any Part originally incorporated or installed in or attached to such Propeller at the time of 

original delivery thereof by the Manufacturer or any Part in replacement of, or in 

substitution for, any such original Part, (ii) such Part is not required to be incorporated or 

installed in or attached or added to such Propeller pursuant to the terms of this Annex and 

(iii) such Part can be removed from such Propeller without materially diminishing the fair 

market value, utility or remaining useful life which such Propeller would have had at the 

time of removal had such removal not been effected by such Grantor, assuming such 

Propeller was otherwise maintained in the condition required by this Agreement and such 

Removable Part had not been incorporated or installed in or attached to such Propeller. 

Upon the removal by any applicable Grantor of any such Removable Part or Obsolete Part 

as above provided, (A) title thereto shall, without further act, be free and clear of all rights 

of the Collateral Agent and (B) such Removable Part or Obsolete Part shall no longer be 

deemed a Part hereunder.

11. Loss, Destruction or Requisitions: Addition of Propellers. 

(a) Event of Loss. Upon the occurrence of an Event of Loss with respect to a Propeller:

(i) each applicable Grantor shall promptly upon obtaining knowledge of such Event 

of Loss (and in any event within fifteen (15) Business Days after such occurrence) 

give the Collateral Agent written notice of such Event of Loss. 

(ii) prior to the occurrence of a Recovery Event with respect to such Propeller, each 

applicable Grantor shall have the right to replace and substitute such Propeller in 

accordance with Section 4(d) of this Annex.

(iii) each Grantor shall comply with the applicable requirements of Section 2.06(b)(ii) 

of the Loan Agreement with respect to any Recovery Event relating to such Event 

of Loss, and upon such compliance, the Propeller suffering such Event of Loss 

shall be released from the Lien of this Agreement.

(b) Requisition for Use. In the event of a requisition for use by any Governmental Authority 

or a CRAF activation of a Propeller or a propeller installed on an Engine while such Engine 

is subject to Liens of this Agreement, each applicable Grantor shall promptly notify the 

Collateral Agent of such requisition or activation and all of such Grantor’s obligations 

under this Agreement and the Loan Agreement shall continue to the same extent as if such 

requisition or activation had not occurred and shall not be reduced or delayed by such 

requisition or activation. So long as no Event of Default shall have occurred and be 
Annex 3A - 6

WEIL:\97681611\4\13173.0005

continuing, any payments received by the Collateral Agent or any Grantor from such 

Governmental Authority with respect to such requisition of use or activation may be paid 

over to, or retained by, such Grantor and shall not be required to be paid over to the 

Collateral Agent to hold as Collateral.

(c) Conditions to Addition of a Propeller. When any Grantor (including any Additional 

Grantor) is granting a security interest to the Collateral Agent for the benefit of the Secured 

Parties in an additional Propeller (an “Additional Propeller”) pursuant to the requirements 

under the Loan Documents, such Grantor shall, at such Grantor’s sole cost and expense, 

fulfill the following conditions:

(i) an executed counterpart of a Mortgage Supplement or a Pledge Supplement 

covering such Additional Propeller;

(ii) an executed counterpart of a Mortgage Supplement (in form and substance 

satisfactory to the Appropriate Party) covering such Additional Propeller, which 

shall have been duly filed for recordation pursuant to the Act or such other 

applicable Law or as required under the terms of this Agreement;

(iii) each applicable Grantor shall have furnished to the Collateral Agent such evidence 

of compliance with the insurance provisions of this Annex with respect to such 

Additional Propeller;

(iv) such Grantor shall have furnished to the Collateral Agent and the Appropriate 

Party, at the expense of such Grantor, (A) an opinion of counsel reasonably 

satisfactory to the Appropriate Party and addressed to the Secured Parties, to the 

effect that this Agreement creates a valid security interest in such Grantor’s interest 

in the Additional Propeller and a UCC filing has been filed with respect thereto 

resulting in a perfected security interest to the extent the UCC is applicable, (B) an 

opinion of the Grantor’s in-house counsel, reasonably satisfactory to the 

Appropriate Party and addressed to the Secured Parties, to the effect that the 

Secured Parties will have the benefits of Section 1110 of the U.S. Bankruptcy Code 

with respect to the Additional Propeller, and (C) an opinion of such Grantor’s 

aviation law counsel reasonably satisfactory and addressed to the Appropriate 

Party as to the due filing for recordation of the Mortgage Supplement with respect 

to such Additional Propeller under the Act or any other applicable Law, and the 

perfection and first priority (other than with respect to any Permitted Lien) of the 

security interest in the Additional Propeller granted to the Appropriate Party 

hereunder.

(v) the Grantors shall have delivered an Appraisal of such Additional Propeller to the 

Appropriate Party and, if such Additional Propeller were delivered to such grantor 

by the manufacturers within ninety (90) days prior to the date such Additional 

Propeller is added as Collateral, in an officer’s certificate attesting to the foregoing; 

and

(vi) the Grantors shall have taken such other actions and furnished such other 

certificates and documents as the Appropriate Party may require in order to assure 

that the Additional Propeller is duly and properly subjected to the Lien of this 

Agreement. 

(d) Substitution of Propellers. 
Annex 3A - 7

WEIL:\97681611\4\13173.0005

(i) Each Grantor shall have the right at its option at any time, on at least five (5) days’ 

prior notice to the Collateral Agent and the Appropriate Party, at such Grantor’s 

sole cost and expense, to substitute an Additional Propeller to replace any Propeller 

(such replaced Propeller, the “Replaced Propeller”) (including, if so elected by 

such Grantor, in satisfaction of any applicable obligations in relation to an Event 

of Loss with respect to such Propeller prior to the occurrence of a related Recovery 

Event) in accordance with the requirements of Section 6.17(b)(iii) of the Loan 

Agreement and Section 4(d) of this Annex. Such Additional Propeller shall be a 

Propeller manufactured by the Manufacturer of the Replaced Propeller that is the 

same model as the Replaced Propeller, or an improved model, and that has a value 

and utility (without regard to hours and cycles remaining until overhaul) at least 

equal to the Replaced Propeller (assuming that such Propeller had been maintained 

in accordance with this Agreement (and, as applicable, had not suffered such Event 

of Loss), which value and utility shall be established by an Appraisal delivered 

pursuant to the terms of this Agreement; provided, that, until an Appraisal is 

obtained for such Additional Propeller, it shall be deemed to have the same 

Appraised Value of zero).

(ii) Each Grantor’s right to make a substitution hereunder shall be subject to the 

delivery of (A) a written request from the applicable Grantor, requesting release of 

the Replaced Propeller from Collateral and specifically describing such Propeller 

and (B) a certificate of a Responsible Officer of such Grantor providing:

1. a description of the Replaced Propeller which shall be identified by 

Manufacturer, model, and Propeller’s serial number;

2. a description of the Additional Propeller (including the Manufacturer, 

model, and Propeller’s serial number) to be received as consideration for 

the Replaced Propeller; 

3. that on the date of the Mortgage Supplement relating to the Additional 

Propeller, such Grantor will be the legal owner of such Additional 

Propeller free and clear of all Liens (other than the Lien under this 

Agreement and Permitted Liens), and that such Additional Propeller has 

been duly registered in the name of such Grantor and that such Grantor 

has the full right and authority to use such Additional Propeller; 

4. that the insurance required by this Agreement is in full force and effect 

with respect to such Additional Propeller and all premiums then due 

thereon have been paid in full; 

5. that no Event of Default has occurred and is continuing or would result 

from the making and granting of the request for release and the addition 

of such Additional Propeller; and

6. that the conditions set forth in Section 6.17(b)(iii) of the Loan Agreement 

and Section 4(d) of this Annex have been satisfied after giving effect to 

such substitution (it being understood and agreed, for the avoidance of 

doubt, that any reference in Section 6.17(b)(iii) of the Loan Agreement to 

existing Additional Collateral shall include such Replaced Propeller).
Annex 3A - 8

WEIL:\97681611\4\13173.0005

(iii) Immediately upon the satisfaction of conditions set forth in this Section 4(d) of this 

Annex and without further act, (A) the Replaced Propeller shall thereupon be 

released from and be free and clear of the Lien of this Agreement and shall no 

longer be deemed Collateral and (B) such Additional Propeller shall become 

subject to this Agreement as a Propeller and as Collateral.

12. Insurance. 

(a) Each applicable Grantor shall furnish to the Collateral Agent such evidence of compliance 

with the insurance provisions of this Annex with respect to Propellers constituting 

Collateral. 

(b) Each Grantor shall ensure that at all times the Collateral Agent, for the benefit of the 

Secured Parties, shall be named as an additional insured and lender loss payee with respect 

to the insurance policies referenced in Appendix I with respect to any Propeller Assets 

constituting Collateral and take any other steps required under this Annex.

(c) Obligation to Insure. Each Grantor (as applicable) shall comply with, or cause to be 

complied with, each of the provisions of Appendix I to this Annex, which provisions are 

hereby incorporated by this reference as if set forth in full herein.

(d) Insurance for Own Account. Nothing in this Annex shall limit or prohibit (i) any Grantor’s 

from maintaining the policies of insurance required under Appendix I of this Annex with 

higher coverage than those specified in Appendix I, or (ii) the Collateral Agent or any other 

Additional Insured from obtaining, upon the occurrence of an Event of Default, at the 

Grantors’ expense, insurance for its own account (and any proceeds payable under such 

separate insurance shall be payable as provided in the policy relating thereto); provided, 

however, that no insurance may be obtained or maintained that would limit or otherwise 

adversely affect the coverage of any insurance required to be obtained or maintained by 

any Grantor pursuant to this Annex and Appendix I of this Annex.

(e) Application of Insurance Proceeds. As between each applicable Grantor and the Collateral 

Agent, all insurance proceeds received as a result of the occurrence of an Event of Loss 

with respect to any Propeller constituting Collateral at the time of such receipt shall be 

applied in accordance with Section 2.06(b) of the Loan Agreement.

5. Defaults and Remedies. If any Event of Default shall have occurred and be continuing, without 

limiting the generality of Section 8.1 of this Agreement, the Collateral Agent may exercise all of 

the rights and remedies of a secured party under the UCC and the Cape Town Treaty. 

6. Release of Collateral. Each Grantor and the Collateral Agent agree that upon satisfaction and 

completion, as determined by the Appropriate Party, of the conditions for release of any Propeller 

Assets constituting Collateral from the Lien granted hereby in accordance with 

to Section 6.17(b)(iii) of the Loan Agreement such Replaced Propeller, as the case may be, shall 

be released from the Lien granted under this Agreement, and the Collateral Agent will thereupon 

execute and deliver to the applicable Grantor, at such Grantor’s sole expense, all appropriate UCC 

termination statements and other documents that such Grantor shall reasonably request to evidence 

such release in such released Propeller Assets or Replaced Propeller. The Collateral Agent shall 

have no liability whatsoever to any Secured Party as a result of its execution of any such 

documentation with respect to any such release. The release of a Propeller from the Lien of this 

Agreement shall have effect without further action of releasing all other Collateral, including the 

related Propeller Documents relating to such released Propeller.
Annex 3A - 9

WEIL:\97681611\4\13173.0005

7. Miscellaneous. Each Grantor and the Collateral Agent agree that:

(a) The terms of this Annex shall be deemed incorporated into and part of this Agreement.

(b) The terms of this Annex are cumulative in nature and shall not limit the applicability or 

scope of the other terms of this Agreement.

(c) It is the intention of the parties that the Appropriate Party shall be entitled to the benefits 

of Section 1110 with respect to the right to take possession of the Propellers as provided 

herein in the event of a case under Chapter 11 of the Bankruptcy Code in which the 

Grantors are debtors, and in any instance where more than one construction is possible of 

the terms and conditions hereof or any other pertinent Loan Document, each such party 

agrees that a construction which would preserve such benefits shall control over any 

construction which would not preserve such benefits.

(d) The applicable Grantor shall deliver to the Collateral Agent a certificate from a Responsible 

Officer of such Grantor, dated as of the date of the Mortgage Supplement or the Pledge 

Supplement, which shall contain representations that such Grantor has exclusive title in all 

Propeller Assets constituting Collateral.

8. Terms. The following capitalized terms used in this Annex shall have the following meanings:

(a) “Additional Insureds” is defined in Appendix I to this Annex.

(b) “Aircraft Protocol” means the official English language text of the Protocol to the 

Convention on International Interests in Mobile Equipment on Matters Specific to Aircraft 

Equipment adopted on November 16, 2001, at a diplomatic conference in Cape Town, 

South Africa, and all amendments, supplements and revisions thereto, as in effect in the 

United States.

(c) “Aviation Authority” means, in the case of any Propeller, the FAA or, if such Propeller 

is permitted to be, and is, registered with any other Governmental Authority, such other 

Governmental Authority.

(d) “Cape Town Convention” shall mean the official English language text of the Convention 

on International Interests in Mobile Equipment, adopted on November 16, 2001 at a 

diplomatic conference in Cape Town, South Africa, and all amendments, supplements and 

revisions thereto, as in effect in the United States.

(e) “Cape Town Treaty” shall mean, collectively, (a) the Cape Town Convention, (b) the 

Aircraft Protocol, and (c) all rules and regulations (including the Regulations and 

Procedures for the International Registry) adopted pursuant thereto and all amendments, 

supplements and revisions thereto.

(f) “CRAF” means the Civil Reserve Air Fleet Program established pursuant to 10 U.S.C. 

Section 9511-13 or any similar substitute program.

(g) “Engine” means (a) each of the engines identified by Manufacturer, model and 

Manufacturer’s serial number in Schedule 2.1 or in the initial Mortgage Supplement or any 

subsequent Mortgage Supplement or any subsequent Pledge Supplement, in each case, 

executed and delivered by any Grantor and whether or not from time to time installed on 

an Airframe or installed on any other airframe, and (b) any and all Parts incorporated or 
Annex 3A - 10

WEIL:\97681611\4\13173.0005

installed in or attached or appurtenant to such engine, and any and all Parts removed from 

such engine, unless the Lien created hereunder shall not apply to such Parts in accordance 

with Section 3 of this Annex, but excluding any such engine that has subsequently been 

released from the Lien in accordance with the terms of this Agreement.

(h) “Event of Loss” means with respect to any Propeller, any of the following circumstances, 

conditions or events with respect to such property, for any reason whatsoever:

(i) the destruction of such property, damage to such property beyond economic repair 

or rendition of such property permanently unfit for normal use by the applicable 

Grantor;

(ii) the actual or constructive total loss of such property or any damage to such property, 

or requisition of title or use of such property, which results in an insurance 

settlement with respect to such property on the basis of a total loss or constructive 

or compromised total loss;

(iii) any theft, hijacking or disappearance of such property for a period of one hundred 

and eighty (180) consecutive days or more; or

(iv) any seizure, condemnation, confiscation, taking or requisition (including loss of 

title) of such property by any Governmental Authority or purported Governmental 

Authority for a period exceeding one hundred and eighty (180) consecutive days

(i) “FAA Filed Document” shall mean the Mortgage or Mortgage Supplement executed by a 

Grantor.

(j) “Mandatory Alteration” shall have the meaning given in this Annex.

(k) “Manufacturer” shall mean, with respect to any Propeller, the manufacturer thereof.

(l) “Mortgage” shall mean an FAA Mortgage, with appropriate modifications to reflect the 

purpose for which it is being used in form and substance satisfactory to the Appropriate 

Party.

(m) “Mortgage Supplement” shall mean an FAA Mortgage, substantially in the form of 

Exhibit A to this Annex, with appropriate modifications to reflect the purpose for which it 

is being used in form and substance satisfactory to the Appropriate Party.

(n) “Obsolete Part” shall have the meaning given in Section 3(c) of this Annex.

(o) “Optional Alteration” shall have the meaning given in Section 3(c) of this Annex.

(p) “Parts” means all appliances, parts, components, instruments, appurtenances, accessories, 

furnishings, seats and other equipment of whatever nature, that may from time to time be 

installed or incorporated in or attached or appurtenant to any Propeller or removed 

therefrom unless the Lien created under this Agreement shall not be applicable to such 

Parts in accordance with Section 3 of this Annex.

(q) “Propeller(s)” means (i) each of the propellers listed in Schedule 2.1 or in the initial 

Mortgage Supplement or any subsequent Mortgage Supplement or any subsequent Pledge 

Supplement, in each case, executed and delivered by any Grantor,whether or not from time 

to time installed on any Engine or any other engine, and (ii) any replacement propeller 
Annex 3A - 11

WEIL:\97681611\4\13173.0005

which may from time to time be substituted for any Propeller pursuant to the terms hereof; 

and (iii) in each case, any and all related Parts.

(r) “Propeller Assets” shall mean:

(i) Each Propeller as the same is now and will hereafter be constituted, together with 

(a) all Parts of whatever nature, which are from time to time included within the 

definition of “Propeller”, including all substitutions, renewals and replacements of 

and additions, improvements, accessions and accumulations to the Propellers 

(other than additions, improvements, accessions and accumulations which 

constitute appliances, parts, instruments, appurtenances, accessories, furnishings 

or other equipment excluded from the definition of Parts) and (b) all Propeller 

Documents owned by, or in the possession of, the applicable Grantor; 

(ii) Any continuing rights of any Grantor in respect of any warranty, indemnity or 

agreement, express or implied, as to title, materials, workmanship, design or patent 

infringement with respect to such Propellers (reserving in each case to the Grantors, 

however, all of the Grantors’ other rights and interest in and to such warranty, 

indemnity or agreement) together in each case under this clause with all rights, 

powers, privileges, options and other benefits of such Grantor thereunder (subject 

to such reservations) with respect to such Propellers, including the right to make 

all waivers and agreements, to give and receive all notices and other instruments 

or communications, to take such action upon the occurrence of a default thereunder, 

including the commencement, conduct and consummation of legal, administrative 

or other proceedings, as shall be permitted thereby or by law, and to do any and all

other things which such Grantor is or may be entitled to do thereunder (subject to 

such reservations); 

(iii) All General Intangibles which are owned by such Grantor (including the General 

Intangibles described on Schedule 2.1) relating to Propeller Assets described in the 

foregoing; and 

(iv) All Insurance with respect to any of the foregoing.

(s) “Propeller Documents” means, with respect to any Propeller, all technical data, manuals 

and log books, and all inspection, modification and overhaul records and other service, 

repair, maintenance and technical records that are required by the FAA (or the relevant 

Aviation Authority), to be maintained with respect to such Propeller, and such term shall 

include all additions, renewals, revisions and replacements of any such materials from time 

to time made, or required to be made, by the FAA (or other Aviation Authority) regulations, 

and in each case in whatever form and by whatever means or medium (including any 

microfiche, microfilm, paper or computer disk) such materials may be maintained or 

retained by or on behalf of the applicable Grantor.
Annex 3A - 12

WEIL:\97681611\4\13173.0005

Appendix I to Annex 3A

APPENDIX I 

INSURANCE 

A. Liability Insurance. 

1. Except as provided in Section A.2 below, the applicable Grantor will carry at all times, at 

no expense to the Collateral Agent or any Secured Party, commercial airline legal liability 

insurance (including any passenger liability, property damage, baggage liability, cargo and 

mail liability, hangarkeeper’s liability and contractual liability insurance) with respect to 

each Propeller (including, as applicable, in respect of an Engine on which a Propeller is 

then installed) which is (i) in an amount not less than the amount of commercial airline 

legal liability insurance from time to time applicable to propellers owned or leased and 

operated by the applicable Grantor of the same type and operating on similar routes as such 

Propeller and (ii) of the type and covering the same risks as from time to time applicable 

to propellers operated by the applicable Grantor of the same type as such Propeller; and 

(iii) maintained in effect with insurers of nationally or internationally recognized 

responsibility (such insurers being referred to herein as “Approved Insurers”). 

2. During any period that a Propeller is on the ground and not in operation, the applicable 

Grantor may carry, in lieu of the insurance required by Section A.1 above, insurance 

otherwise conforming with the provisions of said Section A.1 except that (i) the amounts 

of coverage shall not be required to exceed the amounts of liability and property damage 

insurance from time to time applicable to propeller owned or operated by the applicable 

Grantor of the same type as such Propeller which is on the ground and not in operation and 

(ii) the scope of the risks covered and the type of insurance shall be the same as from time 

to time shall be applicable to propellers owned or operated by the applicable Grantor of the 

same type which are on the ground and not in operation by the applicable Grantor on the 

ground, not in operation, and stored or hangared. 

B. Hull Insurance. 

1. Except as provided in Section B.2 below, the applicable Grantor will carry, at no expense 

to the Collateral Agent or any Secured Party, with Approved Insurers “all-risk” aircraft 

hull insurance covering the Propellers (including when the Propeller is not installed on any 

engine) which is of the type as from time to time applicable to propellers owned by the 

applicable Grantor of the same type as such Propeller for an amount denominated in United 

States Dollars not less than, for each Propeller, 100% of the Appraised Value (which, as 

applicable based on the relevant Appraisal, may at the applicable Grantor’s option be a 

combined value for an aircraft comprised of its airframe, its associated Engines, and its 

associated Propellers or separate such values for any airframe, Engine or Propeller) as set 

forth in the most recent Appraisal delivered pursuant to the Loan Agreement before the 

date (or renewal date) of the applicable insurance policies (the “Agreed Value”), or, prior 

to the delivery of the initial Appraisal covering such Propeller, the applicable “Agreed 

Value” set forth in the initial insurance certificate delivered with respect thereto, but in no 

event, in all cases, less than applicable replacement value (as reasonably determined by the 

applicable Grantor and its insurers); and in each case such insurance shall include all-risk 

property damage insurance covering Propellers temporarily removed from an Engine and 

Parts while temporarily removed from any Engine, in each case and not replaced by similar 

components for not less than the replacement value thereof which are of the type as from 

time to time applicable to components owned by the applicable Grantor of the same type 
Annex 3A - 13

WEIL:\97681611\4\13173.0005

as such Propeller and Parts for an amount denominated in United States Dollars (which 

replacement value shall, for a Propeller with a separate Agreed Value pursuant to the 

foregoing, be not less than such Agreed Value). 

All losses will be adjusted by the applicable Grantor with the insurers; provided, however, 

that during a period when an Event of Default shall have occurred and be continuing, the 

applicable Grantor shall not agree to any such adjustment without the consent of the 

Appropriate Party. 

Any policies of insurance carried in accordance with this Section B.1 or Section C covering 

any Propeller and any policies taken out in substitution or replacement for any such policies 

shall provide that insurance proceeds under such policies shall be payable directly to the 

Collateral Agent for prompt deposit into a Collateral Proceeds Account if such insurance 

proceeds are in respect of an Event of Loss. The Collateral Agent shall be entitled to notify 

an insurer that such insurance proceeds shall be paid directly to the Collateral Agent as 

provided in the immediately preceding sentence.

For the avoidance of doubt, this Section B.1 shall not prohibit standard deductibles or 

industry standard self-insured retentions for hull insurance carried by the applicable 

Grantor.

2. During any period that a Propeller is on the ground and not in operation, the applicable 

Grantor may carry, in lieu of the insurance required by Section B.1 above, insurance 

otherwise conforming with the provisions of said Section B.1 except that the scope of the 

risks and the type of insurance shall be the same as from time to time applicable to propeller 

owned by the applicable Grantor of the same type as such Propeller similarly on the ground 

and not in operation, provided that the applicable Grantor shall maintain insurance against 

risk of loss or damage to such Propeller in an amount at least equal to the Agreed Value 

for such Propeller during such period that it is on the ground and not in operation. 

C. War-Risk, Hijacking and Allied Perils Insurance. 

If the applicable Grantor shall at any time operate or propose to operate the Propeller (i) in any area of 

recognized hostilities or (ii) on international routes and war-risk, hijacking or allied perils insurance is 

maintained by the applicable Grantor with respect to other aircraft owned or operated by the applicable 

Grantor on such routes or in such areas, the applicable Grantor shall maintain war-risk, hijacking and related 

perils insurance of substantially the same type carried by major United States commercial air carriers 

operating the same or comparable models of aircraft on similar routes or in such areas and in no event in 

an amount less than the Agreed Value.

D. General Provisions.

Any policies of insurance carried in accordance with Sections A, B and C, including any policies taken out 

in substitution or replacement for such policies: 

in the case of Section A, shall name the Collateral Agent and each other Secured Party (collectively, 

the “Additional Insureds”), as an additional insured, as its interests may appear; 

shall apply worldwide subject to standard territorial restrictions or limitations applicable in the 

Lloyd’s of London Insurance Market at the time the policy is issued (except only in the case of war, 

hijacking and related perils insurance required under Section C, which shall apply to the fullest 

extent available in the international insurance market);

shall provide that, in respect of the coverage of the Additional Insureds in such policies, the 

insurance shall not be invalidated by any act or omission (including misrepresentation and 
Annex 3A - 14

WEIL:\97681611\4\13173.0005

nondisclosure) by the applicable Grantor which results in a breach of any term, condition or 

warranty of the polices, provided that the Additional Insured so protected has not caused, 

contributed to or knowingly condoned said act or omission. However, the coverage afforded the 

Additional Insured will not apply in the event of exhaustion of policy limits or to losses or claims 

arising from perils specifically excluded from coverage under the policies; 

shall provide that, if the insurers cancel such insurance for any reason whatsoever, or if any material 

change is made in the insurance policies by insurers which adversely affects the interest of any of 

the Additional Insureds, such cancellation or change shall not be effective as to the Additional 

Insureds for thirty (30) days (seven (7) days in the case of war risk, hijacking and allied perils 

insurance and ten (10) days in the case of nonpayment of premium) after receipt by the Additional 

Insureds of written notice by such insurers of such cancellation or change, provided that, if any 

notice period specified above is not reasonably obtainable, such policies shall provide for as long 

a period of prior notice as shall then be reasonably obtainable; 

shall waive any rights of setoff (including for unpaid premiums), recoupment, counterclaim or other 

deduction, whether by attachment or otherwise, against each Additional Insured; 

shall waive any right of subrogation against any Additional Insured; 

shall be primary without right of contribution from any other insurance that may be available to 

any Additional Insured; 

shall provide that all of the liability insurance provisions thereof, except the limits of liability, shall 

operate in all respects as if a separate policy had been issued covering each party insured thereunder; 

shall provide that none of the Additional Insureds shall be liable for any insurance premium; and 

shall contain a 50/50 Clause per Lloyd’s Aviation Underwriters’ Association Standard Policy Form 

AVS 103 or U.S. market equivalent. 

E. Reports and Certificates; Other Information. 

On the date of delivery of any Mortgage Supplement or Pledge Supplement with respect to each Propeller 

constituting Collateral, and on or prior to each renewal date of the insurance policies required hereunder, 

the applicable Grantor will furnish or cause to be furnished to the Collateral Agent insurance certificates 

describing in reasonable detail the commercial insurance maintained by the applicable Grantor hereunder 

and a report, signed by the applicable Grantor’s regularly retained independent insurance broker (the 

“Insurance Broker”), stating the opinion of such Insurance Broker that (a) all premiums in connection with 

the commercial insurance then due have been paid and (b) such insurance complies with the terms of this 

Appendix I. To the extent such agreement is reasonably obtainable the applicable Grantor will also cause 

the Insurance Broker to agree to advise the Secured Parties in writing of any default in the payment of any 

premium and of any other act or omission on the part of the applicable Grantor of which it has knowledge 

and which might invalidate or render unenforceable, in whole or in part, any commercial insurance on such 

Propeller or cause the cancellation or termination of such insurance, and to advise the Secured Parties in 

writing at least thirty (30) days (seven (7) days in the case of war-risk and allied perils coverage and ten 

(10) days in the case of nonpayment of premium, or such shorter period as may be available in the 

international insurance market, as the case may be) prior to the cancellation or material adverse change of 

any commercial insurance maintained pursuant to this Appendix I. 

F. Right to Pay Premiums. 

The Additional Insureds shall have the rights but not the obligations of an additional named insured. None 

of the Collateral Agent or the other Additional Insureds shall have any obligation to pay any premium, 

commission, assessment or call due on any such insurance (including reinsurance). Notwithstanding the 

foregoing, in the event of cancellation of any insurance due to the nonpayment of premiums, the Collateral 

Agent shall have the option, as directed by the Required Lenders, to pay any such premium in respect of 
Annex 3A - 15

WEIL:\97681611\4\13173.0005

the Propeller that is due in respect of the coverage pursuant to this Agreement and to maintain such coverage, 

as the Collateral Agent or the Appropriate Party may require, until the scheduled expiry date of such 

insurance and, in such event, the applicable Grantor shall, upon demand, reimburse the Collateral Agent or 

any Lender for amounts so paid by it, together with interest therein at the Default Rate from the date of 

payment. 

G. Salvage Rights; Other. 

All salvage rights to each Propeller shall remain with the applicable Grantor’s insurers at all times, and any 

insurance policies of the Collateral Agent insuring any Propeller shall provide for a release to the applicable 

Grantor of any and all salvage rights in and to any Propeller. 
Annex 3A - 16

WEIL:\97681611\4\13173.0005

Exhibit A to Annex 3A

[FORM OF MORTGAGE SUPPLEMENT]

FAA MORTGAGE 

THIS FAA MORTGAGE dated __________ (herein, this “FAA Mortgage”) made by [_____], a [_____] 

(together with its permitted successors and assigns, the “Grantor”), in favor of The Bank of New York 

Mellon, as the Collateral Agent (together with its successors and permitted assigns, the “Collateral Agent”). 

W I T N E S S E T H:

WHEREAS, the Amended and Restated Horizon Aircraft, Engine and Propeller Pledge and 

Security Agreement, dated as of October 30, 2020 and filed for recordation with the FAA Registry pursuant 

to and in accordance with the provisions of Section 44107 of the Transportation Code on September 28, 

2020 at 8:17 A.M., C.D.T. (herein called the “PSA”; capitalized terms used herein but not defined shall 

have the meaning ascribed to them in the PSA), between the Grantors and the Collateral Agent, provides 

for the execution and delivery of this FAA Mortgage substantially in the form hereof, which shall 

particularly describe certain collateral, and shall specifically mortgage the same to the Collateral Agent; 

WHEREAS, the PSA was entered into between the Grantors and the Collateral Agent in order to 

secure the Secured Obligations; and

WHEREAS, the Grantors wish to supplement the PSA and to subject the Aircraft and Engine 

Assets described in Exhibit A hereto to the security interest created by the PSA by execution and delivery 

of this FAA Mortgage, and by reference herein to the terms of the PSA which are hereby made a part hereof, 

and this FAA Mortgage is being filed for recordation on the date hereof with the FAA pursuant to Title 49 

by the FAA at Oklahoma City, Oklahoma; 

NOW, THEREFORE, THIS FAA MORTGAGE , in order to secure the prompt payment and 

performance of the Secured Obligations from time to time outstanding and to secure the performance and

observance by the Grantor[s] and each of the other Credit Parties of all the agreements, covenants and 

provisions contained in the Loan Documents for the benefit of the Secured Parties, the Grantor[s] has/have

mortgaged, assigned, pledged, hypothecated, transferred, conveyed and granted, and does hereby mortgage, 

assign, pledge, hypothecate, transfer, convey and grant, unto the Collateral Agent, for the security and 

benefit of the Secured Parties, a continuing first priority security interest in all right, title and interest of the 

Grantors in, to and under the following described property: 

1. The Propellers as further described on Exhibit A hereto, in each case together with any and all Parts 

of whatever nature, which are from time to time included within the definitions of “Propeller”, 

including all substitutions, renewals and replacements of and additions, improvements, accessions 

and accumulations to each such Propeller (other than additions, improvements, accessions and 

accumulations which constitute appliances, parts, instruments, appurtenances, accessories, 

furnishings or other equipment excluded from the definition of Parts) and all Propeller Documents 

relating to each such Propeller. 
WEIL:\97681611\4\13173.0005

TO HAVE AND TO HOLD all and singular the aforesaid property unto the Collateral Agent, its 

successors and assigns, for the uses and purposes and subject to the terms and provisions set forth in the 

PSA. 

This FAA Mortgage shall be governed by, and construed in accordance with, the law of the State of New 

York.

This FAA Mortgage shall be construed in every way in accordance to the terms of the PSA and as a part 

thereof, and the PSA is hereby incorporated by reference herein and is hereby ratified, approved and 

confirmed. 

[Remainder of Page Intentionally Left Blank] 
Annex 3A - 18

WEIL:\97681611\4\13173.0005

IN WITNESS WHEREOF, the Grantor[s] has/have caused this FAA Mortgage to be duly 

executed by one of its officers, thereunto duly authorized, on the day and year first above written. 

[_____]

By:

Name:

Title:
Annex 3A - 19

WEIL:\97681611\4\13173.0005

EXHIBIT A 

TO 

FAA MORTGAGE 

THE PROPELLERS:

No. Propeller Model Propeller 

Serial No.

1. [●] [●]

Each of the above listed Propellers is capable of absorbing 750 or more “rated take-off shaft horsepower.”
Annex 3A - 20

WEIL:\97681611\4\13173.0005

Exhibit B to Annex 3A

FORM OF OFFICER’S CERTIFICATE

[●], 202[●]

Reference is made to that certain Amended and Restated Horizon Aircraft, Engine and Propellers 

Pledge and Security Agreement, dated as of the date hereof (the “Agreement”), between Horizon Air 

Industries, Inc., a Washington corporation (the “Company”), as the Grantor, and The Bank of New York 

Mellon, as Collateral Agent. Capitalized terms used herein but not otherwise defined shall have the 

meanings ascribed to such terms in the Agreement.

The undersigned is a duly authorized Responsible Officer of the Company and I hereby certify, solely in 

my capacity as a Responsible Officer of the Company, and not in my individual capacity, on the date hereof 

that:

1. The Company is an “air carrier” within the meaning of Section 40102 of Title 49 and holds a 

certificate under Section 40102 of Title 49;

2. The Company has exclusive title in all Aircraft and Engine Assets and Propeller Assets listed in 

Schedule I attached hereto. 

3. The information supplied by the Company with respect to the Aircraft and Engine Assets and the 

Propeller Assets included in Schedule I and corresponding information in Schedule 2.1 to the 

Agreement is true, correct and complete on and as of the date hereof. 

4. Each Aircraft or Airframe listed on Schedule I has been duly registered in the name of the 

applicable Company under Chapter 441 of the Transportation Code. An airworthiness certificate 

has been duly issued under Chapter 447 of the Transportation Code with respect to each Aircraft 

and Airframe listed on Schedule I. Each of the Aircraft and Airframes listed on Schedule I

corresponds to an Aircraft or Airframe specified in Schedule 2.1 to the Agreement. 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
Annex 3A - 21

WEIL:\97681611\4\13173.0005

The undersigned hereby certifies, in his or her capacity as a Responsible Officer of the Company 

and not in his or her individual capacity, each and every matter contained herein to be true and correct as 

of the date first written above. 

[●]

By: _______________________________

Name:

Title: 
Annex 3A - 22

WEIL:\97681611\4\13173.0005

Schedule I

1. Aircraft/Airframes

[●] aircraft more specifically described below:

Aircraft Model Aircraft Generic Model Airframe Serial No. U.S. Registration No.

1.

2.

3.

4.

5.

6.

7.

2. Engines

[●] engines as more specifically described below:

Engine Model Engine Generic Model Engine Serial No.

1.

2.

3.

4.

5.

6.

7.

Each of the above described Engines is of 550 or more “rated take-off horsepower” or the equivalent of 

such horsepower.

3. Propellers

[●] propellers as more specifically described below:

Propeller Model Propeller Serial No. Propeller Location

1.

2.

3.

4.

5.

6.

7.

Each Propeller is capable of absorbing 750 or more “rated take-off shaft horsepower”.
Annex 3B - 1

WEIL:\97681611\4\13173.0005

Annex 3B (Aircraft and Engine Assets)

Each Grantor and the Collateral Agent hereby agree that the terms of this Annex shall apply with respect 

to Collateral consisting of Aircraft and Engine Assets.

1. Perfection Requirement. The following requirements shall be included in the definition of 

“Perfection Requirement” and shall constitute an additional “Perfection Requirement” with respect 

to Collateral consisting of Aircraft and Engine Assets:

(a) The applicable Grantor, at its sole cost and expense, shall on or within one (1) Business 

Day after the Closing Date or the date of execution of any Pledge Supplement:

(i) execute and deliver, or cause to be executed and delivered, the Mortgage 

Supplements in form and substance satisfactory to the Appropriate Party;

(ii) duly prepare and file, or cause to be duly prepared and filed, the FAA Filed

Documents for recordation with the FAA in accordance with Title 49 and the 

regulations thereunder; and

(iii) duly prepare and make, or cause to be duly prepared and made, all registrations of 

the International Interests with respect to such Collateral in the International 

Registry.

(b) The applicable Grantor, at is sole cost and expense, will on or within a commercially 

reasonable time after the Closing Date or the date of execution of any Pledge Supplement, 

as applicable, cause to be affixed to, and maintained in, the cockpit of all Airframes 

constituting Collateral and on all Engines constituting Collateral, in a clearly visible 

location, a placard of a reasonable size and shape bearing the legend: “Subject to a security 

interest in favor of The Bank of New York Mellon, as Collateral Agent for the benefit of 

the Secured Parties.”

2. Required Filings. Each of the following filings, recordings or other documents shall be included 

in the definition of “Required Filing” and shall constitute an additional “Required Filing” with 

respect to Collateral consisting of Aircraft and Engine Assets:

(a) Filing of an FAA Filed Document with respect to such Collateral with the FAA; and

(b) Registration of each International Interest with respect to such Collateral in the

International Registry.

3. Representations and Warranties. Each Grantor (as applicable) represents and warrants, on the 

Closing Date and on the date of each Borrowing (or, in the case of an Additional Grantor or 

Additional Collateral, including any Additional Airframe or Additional Engine, on the date of such 

Grantor’s execution and delivery of a Pledge Supplement, or the date such Additional Collateral 

becomes subject to the security interest created hereby, as applicable):

(a) Schedule 2.1 sets forth all Aircraft and Engine Assets constituting Collateral. Each Grantor 

that is listed as owner in Schedule 2.1 is the registered owner as shown in FAA records, 

and the registration of each Airframe constituting Collateral has not expired.

(b) Necessary Filings. Upon (x) the filing of UCC financing statements (and continuation 

statements at periodic intervals) with respect to the security and other interests created 
Annex 3B - 2

WEIL:\97681611\4\13173.0005

hereby under the UCC as in effect in any applicable jurisdiction, (y) the recording and the 

filing of each Mortgage Supplement in the office of the FAA pursuant to Title 49 and (z) 

the registration of each International Interest in the International Registry, in each case, 

with respect to each Airframe and Engine constituting Collateral, (i) all filings, 

registrations and recordings necessary in the United States or in the International Registry 

to create, preserve, protect and perfect the security interest granted by the Grantors to the 

Collateral Agent hereby in respect of the Collateral have been accomplished or, as to 

Collateral to become subject to the security interest of this Agreement after the date hereof, 

will be so filed, registered and recorded simultaneously with such Collateral being subject 

to the Lien of this Agreement and (ii) the security interest granted to the Collateral Agent

pursuant to this Agreement in and to the Collateral will constitute a perfected security 

interest therein prior to the rights of all other Persons therein, but subject to no other Liens 

(other than Permitted Liens), and is entitled to all the rights, priorities and benefits afforded 

by Title 49, the Cape Town Treaty, and any other applicable Law to perfected security 

interests or Liens. 

(c) Other Filings or Registrations. There is no registration covering or purporting to cover any 

interest of any kind in Airframes and Engines constituting Collateral (other than Permitted 

Liens), and there are no International Interests registered on the International Registry in 

respect of such. Each Grantor will not execute or authorize or permit to be filed in any 

public office any registration covering International Interests on the International Registry 

(other than the Lien created under this Agreement and the related Mortgage Supplement(s))

relating to such Collateral or location.

(d) All Engines constituting Collateral have been first placed in service after October 22, 1994.

(e) All Airframes constituting Collateral are equal to or less than 20 years old on the date that 

the relevant Airframes are first pledged as Collateral. 

(f) All Airframes constituting Collateral have been duly certified by the FAA as to type and 

airworthiness. 

(g) All Engines constituting Collateral have been duly certified by the FAA as to type.

(h) All Airframes are registered and all Engines are habitually located, as applicable, in the 

United States.

4. Covenants. Each Grantor (as applicable) covenants and agrees that:

Filings and Registrations

(a) Such Grantor (as applicable) will take, or cause to be taken, at such Grantor’s cost and 

expense, such action with respect to the recording, filing, re-recording and refiling of each 

Mortgage Supplement in the office of the FAA, pursuant to Title 49, and such other 

documents in such other places as may be required or desirable under any applicable Law, 

and any other instruments, or registrations on the International Registry, as are necessary 

or desirable by the Appropriate Party or the Collateral Agent, to maintain the existence, 

perfection, priority and preservation of the Lien created by this Agreement, the related 

Mortgage Supplement(s) and the International Interests of the Collateral Agent in the 

Aircraft and Engines Assets constituting Collateral. The Grantors will furnish to the 

Collateral Agent timely notice of the necessity or desirability of such action, together with, 

if requested by the Collateral Agent, such instruments, in execution form, and such other 
Annex 3B - 3

WEIL:\97681611\4\13173.0005

information as may be required to enable the Collateral Agent to take such action or 

otherwise requested by the Appropriate Party.

Possession, Operation and Use, Maintenance, Registration and Markings.

(b) General. Except as otherwise expressly provided herein, it shall be entitled to operate, use, 

locate, employ or otherwise utilize or not utilize any Airframe, Engine or Part in any lawful 

manner or place in accordance with such Grantor’s business judgment.

(c) Possession. It shall not lease or otherwise in any manner deliver, transfer or relinquish 

possession of any Airframe or Engine, or install any Engine, or permit any Engine to be 

installed, on any airframe other than an Airframe, in each case, to the extent constituting 

Collateral; except that the applicable Grantor may, so long as no Event of Default has 

occurred:

(i) Deliver possession of any Airframe, Engine or Part constituting Collateral (x) to 

the Manufacturer thereof or to any third-party maintenance provider for testing 

service, repair, maintenance or overhaul work on such Airframe, Engine or Part, 

or, to the extent required or permitted by Section 4(k) of this Annex, for alterations 

or modifications in or additions to such Airframe or Engine or (y) to any Person 

for the purpose of transport to a Person referred to in the preceding clause (x); 

provided that such Grantor covenants to promptly pay when due any payment 

obligation resulting in a mechanic’s or other Lien related to such testing service, 

repair, maintenance, overhaul, alternation, modification, addition or transport;

(ii) Transfer possession of the Aircraft, Airframe or any Engine constituting Collateral

to the U.S. Government, in which event such Grantor shall promptly notify the 

Appropriate Party of any such transfer of possession and, in the case of any transfer 

pursuant to CRAF, in such notification shall identify by name, address and 

telephone numbers the Contracting Office Representative or Representatives for 

the Military Airlift Command of the United States Air Force to whom notices must 

be given and to whom requests or claims must be made to the extent applicable 

under CRAF; and

(iii) Install an Engine on an airframe owned (including any Airframe) or leased by such

Grantor; provided that upon such installation, such Grantor shall be deemed to 

covenant to the Collateral Agent for the benefit of the Secured Parties that such 

installation shall not result in any material impairment (as compared to if such 

Engine had not so been installed) of the Collateral Agent’s rights and remedies in 

respect of such Engine and access in connection therewith and to comply with the 

Appropriate Party’s requests in furtherance of the exercise of such rights and 

remedies (including access). With respect to this clause (c)(iii), (A) the Collateral 

Agent hereby agrees on behalf of the Secured Parties, and for the benefit of each 

lessor, conditional seller, indenture trustee or secured party of any airframe leased 

to, or owned by, the applicable Grantor subject to a lease, conditional sale, trust 

indenture or other security agreement that the Collateral Agent, on behalf of the 

Secured Parties, will not acquire or claim, as against such lessor, conditional seller, 

indenture trustee or secured party, any right, title or interest in such airframe as the 

result of any Engine being installed on such airframe at any time while such 

airframe is subject to such lease, conditional sale, trust indenture or other security 

agreement and (B) such Grantor shall cause any lessor, conditional seller, 

indenture trustee or secured party of any airframe leased to, or owned by, the 
Annex 3B - 4

WEIL:\97681611\4\13173.0005

applicable Grantor subject to any lease, conditional sale, trust indenture or other 

security agreement to acknowledge that it will not acquire or claim, as against the 

Collateral Agent or any other Secured Parties, any right, title or interest in an

Engine as the result of such Engine being installed on such airframe at any time 

which such airframe is subject to such lease, conditional sale, trust indenture or 

other security agreement. 

(d) Operation and Use. It shall not operate, use or locate such Airframe or Engine, or allow 

such Airframe or Engine to be operated, used or located, (i) in any area excluded from 

coverage by any insurance required by any Loan Document, except in the case of a 

requisition by the U.S. Government where the Grantors obtain indemnity in lieu of such 

insurance from the U.S. Government, or insurance from the U.S. Government, against 

substantially the same risks and for at least the amounts of insurance required by any Loan 

Document covering such area, or (ii) in any recognized area of hostilities unless covered 

in accordance with this Annex by war risk insurance, or in either case unless the Airframe 

or Engine is only temporarily operated, used or located in such area as a result of an 

emergency, equipment malfunction, navigational error, hijacking, weather condition or 

other similar unforeseen circumstance, so long as such Grantor diligently and in good faith 

proceeds to remove such Airframe or Engine from such area. No Grantor shall permit such 

Airframe or Engine to be used, operated, maintained, serviced, repaired or overhauled 

(x) in violation of any applicable Law or (y) in violation of any airworthiness certificate, 

license or registration of any Governmental Authority relating to such Airframe or Engine, 

except to the extent the validity or application of any such law or requirement relating to 

any such certificate, license or registration is being contested in good faith by such Grantor 

in any reasonable manner which does not involve any material risk of the sale, forfeiture 

or loss of such Airframe or Engine, any material risk of criminal liability or material civil 

penalty against the Collateral Agent or any Secured Party or impair the Appropriate Party’s 

security interest in such Airframe or Engine.

(e) Maintenance and Repair. It shall cause all Aircraft and Engine Assets to be maintained, 

serviced, repaired and overhauled in accordance with maintenance standards required by 

or substantially equivalent to those required by the FAA so as to keep such Aircraft and 

Engine Assets in such operating condition as may be necessary to enable the applicable 

airworthiness certification of such Airframe or, in the case of any Engine that is installed 

on an Aircraft, the applicable Aircraft to be maintained under the regulations of the FAA. 

Each Grantor further agrees that each Airframe or Engine constituting Collateral will be 

maintained, used, serviced, repaired, overhauled or inspected in compliance with 

applicable Laws with respect to the maintenance of the Airframes and Engines and in 

compliance with each applicable airworthiness certificate, license and registration relating 

to such Airframe or Engine issued by the applicable Aviation Authority.

(f) Registration. It shall cause each Airframe to remain duly registered in its name under Title 

49, except as otherwise expressly permitted under any Loan Document. 

(g) Markings. The placards described under “Perfection Requirement” in this Annex may be 

removed temporarily, if necessary, in the course of maintenance of the Airframes and 

Engines. If any such placard is damaged or becomes illegible, the applicable Grantor shall 

promptly replace it with a placard complying with the requirements of this Annex. If the 

Collateral Agent is replaced or its name is changed, such Grantor shall replace such 

placards with new placards reflecting the correct name of the Collateral Agent promptly 
Annex 3B - 5

WEIL:\97681611\4\13173.0005

after such Grantor receives notice of such replacement or change (in any event within 

fifteen (15) days).

Replacement of Parts, Alterations, Modification and Additions.

(h) Replacement of Parts. Except as otherwise provided herein, so long as the security interest 

created herein has not been released in accordance with the Loan Agreement, each 

applicable Grantor, at its own cost and expense, will, at its own cost and expense, promptly 

replace (or cause to be replaced) all Parts which may from time to time be incorporated or 

installed in or attached to such Airframe or Engine and 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. In addition, each Grantor 

may, at its own cost and expense, remove in the ordinary course of maintenance, service, 

repair, overhaul or testing any Parts, whether or not worn out, lost, stolen, destroyed, seized, 

confiscated, damaged beyond repair or permanently rendered unfit for use; provided, 

however, that such Grantor, except as otherwise provided herein, at its own cost and 

expense, will, promptly replace such Parts. All replacement parts shall be free and clear of 

all Liens, except Permitted Liens and shall be in as good an operating condition and have 

a value and utility not less than the value and utility of the Parts replaced (assuming such 

replaced Parts were in the condition required hereunder).

(i) Parts Subject to Lien. Except as otherwise provided herein, any Part at any time removed 

from an Airframe or Engine shall remain subject to the security interest created in this 

Agreement, no matter where located, until such time as such Part shall be replaced by a 

part that has been incorporated or installed in or attached to such Airframe or Engine and 

that meets the requirements for replacement parts specified above. Immediately upon any 

replacement part becoming incorporated or installed in or attached to such Airframe or 

Engine as provided in this Annex, without further act, (i) the replaced Part shall thereupon 

be free and clear of all rights of the Collateral Agent and shall no longer be deemed a Part 

hereunder and (ii) such replacement part shall become subject to this Agreement and be 

deemed part of such Airframe or Engine, as the case may be, for all purposes hereof to the 

same extent as the Parts originally incorporated or installed in or attached to such Airframe 

or Engine.

(j) [Reserved.]

(k) Alterations, Modifications and Additions. It shall make alterations and modifications in 

and additions to each Airframe and Engine as may be required to be made from time to 

time to meet the applicable standards of the FAA, to the extent made mandatory in respect 

of such Airframe or Engine (a “Mandatory Alteration”); provided, however, that each

Grantor may, in good faith and by appropriate procedure, contest the validity or application 

of any law, rule, regulation or order in any reasonable manner which does not materially 

adversely affect the Appropriate Party’s interest in such Airframe or Engine and does not 

involve any material risk of sale, forfeiture or loss of such Airframe or Engine or the 

interest of the Appropriate Party therein, or any material risk of material civil penalty or 

any material risk of criminal liability being imposed on the Collateral Agent or any Secured 

Party. In addition, each Grantor, at its own expense, may from time to time make such 

alterations and modifications in and additions to any Airframe or Engine (each an 

“Optional Alteration”) as such Grantor may deem desirable in the proper conduct of its 

business including the removal of Parts which such Grantor deems are obsolete or no 

longer suitable or appropriate for use in such Airframe or Engine (“Obsolete Parts”); 
Annex 3B - 6

WEIL:\97681611\4\13173.0005

provided, however, that no such Optional Alteration to an Airframe or Engine shall 

(i) materially diminish the fair market value, utility or remaining useful life of such 

Airframe or Engine below its fair market value, utility or remaining useful life immediately 

prior to such Optional Alteration (assuming such Airframe or Engine was in the condition 

required by this Agreement immediately prior to such Optional Alteration) or (ii) cause 

such Airframe to cease to have the applicable standard certificate of airworthiness. All 

Parts incorporated or installed in or attached to any Airframe or Engine as the result of any 

alteration, modification or addition effected by each applicable Grantor shall be free and 

clear of any Liens except Permitted Liens and become subject to the Lien of this Agreement; 

provided that such Grantor may, at any time so long as any Airframe or Engine is subject 

to the Lien of this Agreement, remove any Part (such Part being referred to herein as a 

“Removable Part”) from such Airframe or Engine if (i) such Part is in addition to, and not 

in replacement of or in substitution for, any Part originally incorporated or installed in or 

attached to such Airframe or Engine at the time of original delivery thereof by the 

Manufacturer or any Part in replacement of, or in substitution for, any such original Part, 

(ii) such Part is not required to be incorporated or installed in or attached or added to such 

Airframe or Engine pursuant to the terms of this Annex and (iii) such Part can be removed 

from such Airframe or Engine without materially diminishing the fair market value, utility 

or remaining useful life which such Airframe or Engine would have had at the time of 

removal had such removal not been effected by such Grantor, assuming such Airframe or 

Engine was otherwise maintained in the condition required by this Agreement and such 

Removable Part had not been incorporated or installed in or attached to such Airframe or 

Engine. Upon the removal by any applicable Grantor of any such Removable Part or 

Obsolete Part as above provided, (A) title thereto shall, without further act, be free and 

clear of all rights of the Collateral Agent and (B) such Removable Part or Obsolete Part 

shall no longer be deemed a Part hereunder.

Loss, Destruction or Requisitions: Addition of Airframes and Engines. 

(l) Event of Loss. Upon the occurrence of an Event of Loss with respect to an Airframe or an 

Engine:

(i) each applicable Grantor shall promptly upon obtaining knowledge of such Event 

of Loss (and in any event within fifteen (15) Business Days after such occurrence) 

give the Collateral Agent written notice of such Event of Loss. 

(ii) prior to the occurrence of a Recovery Event with respect to such Airframe or 

Engine, each applicable Grantor shall have the right to replace and substitute such 

Airframe or Engine in accordance with Sections 4(p) and 4(q) of this Annex, as 

applicable.

(iii) each Grantor shall comply with the applicable requirements of Section 2.06(b)(ii)

of the Loan Agreement with respect to any Recovery Event relating to such Event 

of Loss, and upon such compliance, the Airframe or Engine suffering such Event 

of Loss shall be released from the Lien of this Agreement.

(m) Requisition for Use. In the event of a requisition for use by any Governmental Authority 

or a CRAF activation of an Airframe, Engine (whether or not installed on an Airframe), or 

engine installed on such Airframe while such Airframe is subject to the Lien of this 

Agreement, each applicable Grantor shall promptly notify the Collateral Agent of such 

requisition or activation and all of such Grantor’s obligations under this Agreement and 

the Loan Agreement shall continue to the same extent as if such requisition or activation 
Annex 3B - 7

WEIL:\97681611\4\13173.0005

had not occurred and shall not be reduced or delayed by such requisition or activation. So 

long as no Event of Default shall have occurred and be continuing, any payments received 

by the Collateral Agent or any Grantor from such Governmental Authority with respect to 

such requisition of use or activation may be paid over to, or retained by, such Grantor and 

shall not be required to be paid over to the Collateral Agent to hold as Collateral.

(n) Conditions to Addition of Airframe. When any Grantor (including any Additional Grantor) 

is granting a security interest to the Collateral Agent for the benefit of the Secured Parties 

in an additional Airframe (an “Additional Airframe”) pursuant to the requirements under 

the Loan Documents, such Grantor shall, at such Grantor’s sole cost and expense, fulfill 

the following conditions:

(i) an executed counterpart of a Pledge Supplement covering such Additional 

Airframe;

(ii) an executed counterpart of a Mortgage Supplement (in form and substance 

satisfactory to the Appropriate Party) covering such Additional Airframe, which 

shall have been duly filed for recordation pursuant to the Act or such other 

applicable Law or as required under the terms of this Agreement;

(iii) each applicable Grantor shall have furnished to the Collateral Agent such evidence 

of compliance with the insurance provisions of this Annex with respect to such 

Additional Airframe;

(iv) (A) the Additional Airframe shall have been duly certified by the FAA as to type 

and airworthiness, (B) application for registration of the Additional Airframe in 

accordance with the terms of this Annex shall have been duly made with and 

granted by the FAA and each applicable Grantor shall own and have the authority 

to operate the Additional Airframe and (C) each applicable Grantor shall have 

caused the sale of such Additional Airframe to the such Grantor (if occurring after 

February 28, 2006) and the International Interest granted under the Mortgage 

Supplement in favor of the Collateral Agent for the benefit of the Secured Parties

with respect to such Additional Airframe, each to be registered on the International 

Registry as a sale or an International Interest, respectively;

(v) the Collateral Agent and the Appropriate Party, at the expense of the Grantors, 

shall have received (A) an opinion of counsel, reasonably satisfactory to the 

Appropriate Party and addressed to the Secured Parties, to the effect that this 

Agreement creates a valid security interest in each applicable Grantor’s interest in 

the Additional Airframe, the Secured Parties will be entitled to the benefits of 

Section 1110 of the U.S. Bankruptcy Code with respect to the Additional Airframe

and a UCC filing has been filed with respect thereto resulting in a perfected 

security interest to the extent the UCC is applicable and (B) an opinion of such 

Grantor’s aviation law counsel reasonably satisfactory to and addressed to the 

Appropriate Party as to the due registration of any such Additional Airframe and 

the due filing for recordation of the Mortgage Supplement with respect to such 

Additional Airframe under the Act and any other applicable Law, and the 

perfection and first priority (other than with respect to any Liens permitted under 

the Loan Agreement) of the security interest in the Additional Airframe, granted 

to the Appropriate Party hereunder and the registration with the International 

Registry of the sale of such Additional Airframe, to such Grantor (if occurring after 
Annex 3B - 8

WEIL:\97681611\4\13173.0005

February 28, 2006) and the International Interest granted under the Mortgage 

Supplement with respect to such Additional Airframe;

(vi) the Grantors shall have delivered an Appraisal of such Additional Airframe to the 

Appropriate Party and, if such Additional Airframes were delivered to such grantor 

by the manufacturers within ninety (90) days prior to the date such Additional 

Airframe is added as Collateral, in an officer’s certificate attesting to the foregoing; 

and

(vii) the Grantors shall have taken such other actions and furnished such other 

certificates and documents as the Appropriate Party may require in order to assure 

that the Additional Airframe is duly and properly subjected to the Lien of this 

Agreement. 

(o) Conditions to Addition of Engine. When any Grantor (including any Additional Grantor) 

is granting a security interest to the Collateral Agent for the benefit of the Secured Parties

in an additional Engine (an “Additional Engine”) pursuant to the requirements under the 

Loan Documents, such Grantor shall, at such Grantor’s sole cost and expense, fulfill the 

following conditions:

(i) an executed counterpart of a Pledge Supplement covering such Additional Engine; 

(ii) an executed counterpart of a Mortgage Supplement covering the Additional Engine, 

which shall have been duly filed for recordation pursuant to the Act;

(iii) such Grantor shall have furnished to the Appropriate Party such evidence of 

compliance with the insurance provisions of this Agreement with respect to such 

Additional Engine;

(iv) such Grantor shall have furnished to the Collateral Agent and the Appropriate 

Party an opinion of counsel from counsel satisfactory to the Appropriate Party to 

the effect that (A) this Agreement creates a valid security interest in such Grantor’s 

interest in the Additional Engine and (B) the Secured Parties will have the benefits 

of Section 1110 of the U.S. Bankruptcy Code with respect to the Additional Engine, 

and a UCC filing has been filed with respect thereto resulting in a perfected 

security interest to the extent the UCC is applicable;

(v) such Grantor shall have furnished to the Appropriate Party an opinion of such 

Grantor’s aviation law counsel satisfactory to the Appropriate Party as to the due 

filing for recordation of the Mortgage Supplement with respect to such Additional 

Engine under the Act or any other applicable Law, and the perfection and first 

priority (other than with respect to any Permitted Lien) of the security interest in 

the Additional Engine granted to the Appropriate Party hereunder, and the 

registration with the International Registry of the sale to the Grantors of such 

Additional Engine (if occurring after February 28, 2006) and the International 

Interest granted under such Mortgage Supplement with respect to such Additional 

Engine;

(vi) such Grantor shall have caused the sale of such Additional Engine to such Grantor 

(if occurring after February 28, 2006) and the International Interest granted under 

such Mortgage Supplement in favor of the Appropriate Party with respect to such 
Annex 3B - 9

WEIL:\97681611\4\13173.0005

Additional Engine each to be registered on the International Registry as a sale or 

an International Interest, respectively;

(vii) such Grantor shall have delivered an Appraisal of such Additional Engine to the 

Appropriate Party and, if such Additional Engine were delivered new to such 

Grantor by the manufacturers within ninety (90) days prior to the date such 

Additional Engine is added as Collateral, in an officer’s certificate attesting to the 

foregoing; and

(viii) such Grantor shall have taken such other actions and furnished such other 

certificates and documents as the Appropriate Party may require in order to assure 

that the Additional Engine is duly and properly subjected to the Lien of this 

Agreement.

Promptly after the recordation of the Mortgage Supplement or other requisite documents 

or instruments covering such Additional Engine, if any, pursuant to the Act, the Grantors 

shall cause to be delivered to the Appropriate Party an opinion of counsel, satisfactory in 

form and substance to the Appropriate Party, as to the due recordation of the Mortgage 

Supplement or other requisite documents or instruments covering such Additional Engine 

and the perfection and first priority (other than with respect to any Liens permitted under 

the Loan Agreement) of the security interest in such Additional Engine granted to the 

Appropriate Party hereunder.

(p) Substitution of Airframes. 

(i) Each Grantor shall have the right at its option at any time, on at least five (5) days’ 

prior notice to the Collateral Agent and the Appropriate Party, at such Grantor’s 

sole cost and expense, to substitute an Additional Airframe to replace any Airframe

(such replaced Airframe, the “Replaced Airframe”) (including, if so elected by 

such Grantor, in satisfaction of any applicable obligations in relation to an Event 

of Loss with respect to such Airframe prior to the occurrence of a related Recovery 

Event) in accordance with the requirements of Section 6.17(b)(iii) of the Loan 

Agreement and Section 4(n) of this Annex. Such Additional Airframe shall be an 

airframe manufactured by the Manufacturer of the Replaced Airframe that is the 

same model as the Replaced Airframe, or an improved model, and that has a value 

and utility (without regard to hours and cycles remaining until overhaul) at least 

equal to the Replaced Airframe (assuming that such Airframe had been maintained 

in accordance with this Agreement (and, as applicable, had not suffered such Event 

of Loss), which value and utility shall be established by an Appraisal delivered 

pursuant to the terms of this Agreement; provided, that, until an Appraisal is 

obtained for such Additional Airframe, it shall be deemed to have the same 

Appraised Value of zero).

(ii) Each Grantor’s right to make a substitution hereunder shall be subject to the 

delivery of (A) a written request from the applicable Grantor, requesting release of 

the Replaced Airframe from Collateral and specifically describing such Airframe 

and (B) a certificate of a Responsible Officer of such Grantor providing:

1. a description of the Replaced Airframe which shall be identified by 

Manufacturer, model, FAA registration number and Manufacturer’s serial 

number;
Annex 3B - 10

WEIL:\97681611\4\13173.0005

2. a description of the Additional Airframe (including the Manufacturer, 

model, FAA registration number and manufacturer’s serial number) to be 

received as consideration for the Replaced Airframe; 

3. that on the date of the Mortgage Supplement relating to the Additional 

Airframe, such Grantor will be the legal owner of such Additional 

Airframe free and clear of all Liens (other than the Lien under this 

Agreement and Permitted Liens), and that such Additional Airframe has 

been duly registered in the name of such Grantor under Chapter 441 of the 

Transportation Code and that an airworthiness certificate has been duly 

issued under Chapter 447 of the Transportation Code with respect to such 

Additional Airframe, and that such registration and certificate is in full 

force and effect, and that such Grantor has the full right and authority to 

use such Additional Airframe; 

4. that the insurance required by this Agreement is in full force and effect 

with respect to such Additional Airframe and all premiums then due 

thereon have been paid in full; 

5. that no Event of Default has occurred and is continuing or would result 

from the making and granting of the request for release and the addition 

of such Additional Airframe; and

6. that the conditions set forth in Section 6.17(b)(iii) of the Loan Agreement 

and Section 4(n) of this Annex have been satisfied after giving effect to 

such substitution (it being understood and agreed, for the avoidance of

doubt, that any reference in Section 6.17(b)(iii) of the Loan Agreement to

existing Additional Collateral shall include such Replaced Airframe).

(iii) Immediately upon the satisfaction of conditions set forth in this Section 4(p) of this 

Annex and without further act, (A) the Replaced Airframe shall thereupon be 

released from and be free and clear of the Lien of this Agreement and shall no 

longer be deemed Collateral and (B) such Additional Airframe shall become 

subject to this Agreement as an Airframe and as Collateral.

(q) Substitution of Engines. 

(i) Each Grantor shall have the right at its option at any time, on at least five (5) days’ 

prior notice to the Collateral Agent and the Appropriate Party, at such Grantor’s 

sole cost and expense, to substitute an Additional Engine to replace any Engine

(such replaced Engine, the “Replaced Engine”) (including, if so elected by such 

Grantor, in satisfaction of any applicable obligations in relation to an Event of Loss 

with respect to such Engine) in accordance with the requirements of Section 

6.17(b)(iii) of the Loan Agreement and Section 4(o) of this Annex. Such 

Additional Engine shall be an engine manufactured by the Manufacturer of the 

Replaced Engine that is the same model as the Replaced Engine, or an improved 

model, and that has a value and utility (without regard to hours and cycles 

remaining until overhaul) at least equal to the Replaced Engine (assuming that the 

Replaced Engine had been maintained in accordance with this Agreement (and, as 

applicable, had not suffered such Event of Loss), which value and utility shall be 

established by an Appraisal delivered pursuant to the terms of this Agreement; 
Annex 3B - 11

WEIL:\97681611\4\13173.0005

provided, that, until an Appraisal is obtained for such Additional Engine, it shall 

be deemed to have the same Appraised Value of zero).

(ii) Each Grantor’s right to make a substitution hereunder shall be subject to the 

delivery of (A) a written request from the applicable Grantor, requesting release of 

the Replaced Engine from Collateral and specifically describing the Replaced 

Engine and (B) a certificate of a Responsible Officer of such Grantor providing:

1. a description of the Replaced Engine which shall be identified by 

Manufacturer’s name and serial number; 

2. a description of the Additional Engine (including the Manufacturer’s name 

and serial number) to be received as consideration for the Replaced Engine;

3. that on the date of the Mortgage Supplement relating to the Additional 

Engine, such Grantor will be the legal owner of such Additional Engine 

free and clear of all Liens (other than the Lien under this Agreement and 

Permitted Liens); 

4. that the insurance required by this Agreement is in full force and effect 

with respect to such Additional Engine and all premiums then due thereon 

have been paid in full;

5. that no Event of Default has occurred and is continuing or would result 

from the making and granting of the request for release and the addition 

of such Additional Engine; and 

6. that the conditions set forth in Section 6.17(b)(iii) of the Loan Agreement 

and Section 4(o) of this Annex have been satisfied after giving effect to 

such substitution (it being understood and agreed, for the avoidance of 

doubt, that any reference in Section 6.17(b)(iii) of the Loan Agreement to 

existing Additional Collateral shall include such Replaced Engine).

(iii) Immediately upon the satisfaction of conditions set forth in this Section 4(q) of this 

Annex and without further act, (A) the Replaced Engine shall thereupon be 

released from and be free and clear of the Lien of this Agreement and shall no 

longer be deemed Collateral and (B) such Additional Engine shall become subject 

to this Agreement as an Engine and as Collateral.

Insurance. 

(r) Each applicable Grantor shall furnish to the Collateral Agent such evidence of compliance 

with the insurance provisions of this Annex with respect to Airframe and Engines 

constituting Collateral. 

(s) Each Grantor shall ensure that at all times the Collateral Agent, for the benefit of the 

Secured Parties, shall be named as an additional insured and lender loss payee with respect 

to the insurance policies referenced in Appendix I with respect to any Aircraft and Engine 

Assets constituting Collateral and take any other steps required under this Annex.
Annex 3B - 12

WEIL:\97681611\4\13173.0005

(t) Obligation to Insure. Each Grantor (as applicable) shall comply with, or cause to be 

complied with, each of the provisions of Appendix I to this Annex, which provisions are 

hereby incorporated by this reference as if set forth in full herein.

(u) Insurance for Own Account. Nothing in this Annex shall limit or prohibit (i) any Grantor’s 

from maintaining the policies of insurance required under Appendix I of this Annex with 

higher coverage than those specified in Appendix I, or (ii) the Collateral Agent or any other 

Additional Insured from obtaining, upon the occurrence of an Event of Default, at the 

Grantors’ expense, insurance for its own account (and any proceeds payable under such 

separate insurance shall be payable as provided in the policy relating thereto); provided, 

however, that no insurance may be obtained or maintained that would limit or otherwise 

adversely affect the coverage of any insurance required to be obtained or maintained by 

any Grantor pursuant to this Annex and Appendix I of this Annex.

(v) Application of Insurance Proceeds. As between each applicable Grantor and the Collateral 

Agent, all insurance proceeds received as a result of the occurrence of an Event of Loss 

with respect to any Airframe or Engine constituting Collateral at the time of such receipt

shall be applied in accordance with Section 2.06(b) of the Loan Agreement.

5. Defaults and Remedies. If any Event of Default shall have occurred and be continuing, without 

limiting the generality of Section 8.1 of this Agreement, the Collateral Agent may:

(a) Exercise all of the rights and remedies of a secured party under the UCC and the Cape 

Town Treaty. 

6. Release of Collateral. Each Grantor and the Collateral Agent agree that

(a) Upon satisfaction and completion, as determined by the Appropriate Party, of the 

conditions for release of any Aircraft and Engine Assets constituting Collateral from the 

Lien granted hereby in accordance with to Section 6.17(b)(iii) of the Loan Agreement such 

Replaced Airframe or Replaced Engine, as the case may be, shall be released from the Lien 

granted under this Agreement, and the Collateral Agent will thereupon execute and deliver 

to the applicable Grantor, at such Grantor’s sole expense, all appropriate UCC termination 

statements and other documents that such Grantor shall reasonably request to evidence 

such release and shall take necessary action to permit such Grantor to register with the 

International Registry the discharge of the International Interest created by this Agreement

in such released Aircraft and Engine Assets, Replaced Airframe or Replaced Engine. The 

Collateral Agent shall have no liability whatsoever to any Secured Party as a result of its 

execution of any such documentation with respect to any such release. The release of an 

Airframe or Engine from the Lien of this Agreementshall have effect without further action 

of releasing all other Collateral, including the related Airframe Documents and Engine 

Documents, respectively, relating to such released Airframe or Engine.

7. Miscellaneous. Each Grantor and the Collateral Agent agree that:

(a) The terms of this Annex shall be deemed incorporated into and part of this Agreement.

(b) The terms of this Annex are cumulative in nature and shall not limit the applicability or 

scope of the other terms of this Agreement.

(c) It is the intention of the parties that the Appropriate Party shall be entitled to the benefits 

of Section 1110 with respect to the right to take possession of the Airframes and Engines 
Annex 3B - 13

WEIL:\97681611\4\13173.0005

as provided herein in the event of a case under Chapter 11 of the Bankruptcy Code in which 

the Grantors are debtor, and in any instance where more than one construction is possible 

of the terms and conditions hereof or any other pertinent Loan Document, each such party 

agrees that a construction which would preserve such benefits shall control over any 

construction which would not preserve such benefits.

(d) The applicable Grantor shall deliver to the Collateral Agent a certificate from a Responsible 

Officer of such Grantor in the form set forth in Exhibit B hereto, dated as of the Closing 

Date (and, in the case of such Grantor’s execution and delivery of a Mortgage Supplement 

or Pledge Supplement, the date thereof) which shall contain representations that such

Grantor (i) is an “air carrier” within the meaning of Section 40102 of Title 49 and holds a 

certificate under Section 40102 of Title 49, (ii) has exclusive title in all Aircraft and Engine 

Assets constituting Collateral, and (iii) each Airframe constituting Collateral has been duly 

registered in the name of the Grantors under Chapter 441 of the Transportation Code and 

an airworthiness certificate has been duly issued under Chapter 447 of the Transportation 

Code with respect to each Airframe constituting Collateral.

8. Terms. The following capitalized terms used in this Annex shall have the following meanings:

(a) “Additional Insureds” is defined in Appendix I to this Annex.

(b) “Aircraft” shall mean, in the case of any Engine, the Airframe or airframe on which such 

Engine is then installed (if any). 

(c) “Aircraft and Engine Assets” shall mean:

(i) Each Airframe as the same is now and will hereafter be constituted, together with 

(a) all Parts of whatever nature, which are from time to time included within the 

definition of “Airframe”, including all substitutions, renewals and replacements of 

and additions, improvements, accessions and accumulations to the Airframes 

(other than additions, improvements, accessions and accumulations which 

constitute appliances, parts, instruments, appurtenances, accessories, furnishings 

or other equipment excluded from the definition of Parts) and (b) all Airframe 

Documents owned by, or in the possession of, the applicable Grantor; 

(ii) Each Engine as the same is now and will hereafter be constituted, and whether or 

not any such Engine shall be installed on or attached to an Airframe or any other 

airframe, together with (a) all Parts of whatever nature, which are from time to 

time included within the definition of “Engines”, including all substitutions, 

renewals and replacements of and additions, improvements, accessions and 

accumulations to the Engines (other than additions, improvements, accessions and 

accumulations which constitute appliances, parts, instruments, appurtenances, 

accessories, furnishings or other equipment excluded from the definition of Parts) 

and (b) all Engine Documents owned by, or in the possession of, the applicable 

Grantor;

(iii) Any continuing rights of any Grantor in respect of any warranty, indemnity or 

agreement, express or implied, as to title, materials, workmanship, design or patent 

infringement with respect to such Airframes or Engines (reserving in each case to 

the Grantors, however, all of the Grantors’ other rights and interest in and to such 

warranty, indemnity or agreement) together in each case under this clause with all 

rights, powers, privileges, options and other benefits of such Grantor thereunder 
Annex 3B - 14

WEIL:\97681611\4\13173.0005

(subject to such reservations) with respect to such Airframes or Engines, including 

the right to make all waivers and agreements, to give and receive all notices and 

other instruments or communications, to take such action upon the occurrence of 

a default thereunder, including the commencement, conduct and consummation of 

legal, administrative or other proceedings, as shall be permitted thereby or by law, 

and to do any and all other things which such Grantor is or may be entitled to do 

thereunder (subject to such reservations); 

(iv) All General Intangibles which are owned by such Grantor (including the General 

Intangibles described on Schedule 2.1) relating to Aircraft and Engine Assets

described in the foregoing; and 

(v) All Insurance with respect to any of the foregoing.

(d) [Reserved]. 

(e) “Airframe” means (a) each airframe that is identified by Manufacturer model, United 

States registration number and Manufacturer’s serial number in Schedule 2.1 or in the 

initial Mortgage Supplement or any subsequent Mortgage Supplement or any subsequent 

Pledge Supplement, in each case, executed and delivered by any Grantor and (b) any and 

all Parts incorporated or installed in or attached or appurtenant to such airframe, and any 

and all Parts removed from such airframe, unless the Lien of this Agreement shall not be 

applicable to such Parts in accordance with Section 4 of this Annex, but excluding any such 

airframe that has subsequently been released from the Lien of this Agreement pursuant to 

the Loan Agreement.

(f) “Airframe Documents” means, with respect to any Airframe, all technical data, manuals 

and log books, and all inspection, modification and overhaul records and other service, 

repair, maintenance and technical records that are required by the FAA (or the relevant 

Aviation Authority), to be maintained with respect to such Airframe, and such term shall 

include all additions, renewals, revisions and replacements of any such materials from time 

to time made, or required to be made, by the FAA (or other Aviation Authority) regulations, 

and in each case in whatever form and by whatever means or medium (including any 

microfiche, microfilm, paper or computer disk) such materials may be maintained or 

retained by or on behalf of the applicable Grantor; provided that such term shall not include 

manuals and data relating to aircraft generally of the same fleet type as the Airframe as 

opposed to the Airframe specifically.

(g) “Aviation Authority” means, in the case of any Aircraft or Airframe, the FAA or, if such 

Aircraft or Airframe is permitted to be, and is, registered with any other Governmental 

Authority, such other Governmental Authority.

(h) [Reserved]. 

(i) [Reserved]. 

(j) “CRAF” means the Civil Reserve Air Fleet Program established pursuant to 10 U.S.C. 

Section 9511-13 or any similar substitute program.

(k) “Engine” means (a) each of the engines identified by Manufacturer, model and 

Manufacturer’s serial number in Schedule 2.1 or in the initial Mortgage Supplement or any 

subsequent Mortgage Supplement or any subsequent Pledge Supplement, in each case, 
Annex 3B - 15

WEIL:\97681611\4\13173.0005

executed and delivered by any Grantor and whether or not from time to time installed on 

an Airframe or installed on any other airframe, and (b) any and all Parts incorporated or 

installed in or attached or appurtenant to such engine, and any and all Parts removed from 

such engine, unless the Lien created hereunder shall not apply to such Parts in accordance 

with Section 4 of this Annex, but excluding any such engine that has subsequently been 

released from the Lien in accordance with the terms of this Agreement.

(l) “Engine Documents” means, with respect to any Engine, all technical data, manuals and 

log books, and all inspection, modification and overhaul records and other service, repair, 

maintenance and technical records that are required by the FAA (or the relevant Aviation 

Authority), to be maintained with respect to such Engine, and such term shall include all 

additions, renewals, revisions and replacements of any such materials from time to time 

made, or required to be made, by the FAA (or other Aviation Authority) regulations, and 

in each case in whatever form and by whatever means or medium (including any microfiche, 

microfilm, paper or computer disk) such materials may be maintained or retained by or on 

behalf of any Grantor; provided that such term shall not include manuals and data relating 

to engines generally of the same type as the Engine as opposed to the Engine specifically.

(m) “Event of Loss” means with respect to any Airframe or Engine, any of the following 

circumstances, conditions or events with respect to such property, for any reason 

whatsoever:

(i) the destruction of such property, damage to such property beyond economic repair 

or rendition of such property permanently unfit for normal use by the applicable 

Grantor;

(ii) the actual or constructive total loss of such property or any damage to such property, 

or requisition of title or use of such property, which results in an insurance 

settlement with respect to such property on the basis of a total loss or constructive 

or compromised total loss;

(iii) any theft, hijacking or disappearance of such property for a period of one hundred 

and eighty (180) consecutive days or more; or

(iv) any seizure, condemnation, confiscation, taking or requisition (including loss of 

title) of such property by any Governmental Authority or purported Governmental 

Authority for a period exceeding one hundred and eighty (180) consecutive days.

(n) “FAA Filed Document” shall mean the Mortgage Supplement executed by a Grantor.

(o) “International Interest” shall mean an “international interest” as defined in the Cape 

Town Treaty.

(p) [Reserved]. 

(q) “Mandatory Alteration” shall have the meaning given in this Annex. 

(r) “Manufacturer” shall mean, with respect to any Airframe, Engine or Part, the 

manufacturer thereof.
Annex 3B - 16

WEIL:\97681611\4\13173.0005

(s) “Mortgage Supplement” shall mean an FAA Mortgage, substantially in the form of 

Exhibit A to this Annex, with appropriate modifications to reflect the purpose for which it 

is being used in form and substance satisfactory to the Appropriate Party.

(t) “Obsolete Part” shall have the meaning given in Section 4(j) of this Annex.

(u) “Optional Alteration” shall have the meaning given in Section 4(j) of this Annex.

(v) “Parts” means all appliances, parts, components, instruments, appurtenances, accessories, 

furnishings, seats and other equipment of whatever nature (other than Engines or engines), 

that may from time to time be installed or incorporated in or attached or appurtenant to any 

Airframe or any Engine or removed therefrom unless the Lien created under this 

Agreement shall not be applicable to such Parts in accordance with Section 4 of this Annex.
Annex 3B - 17

WEIL:\97681611\4\13173.0005

Appendix I to Annex 3B

APPENDIX I 

INSURANCE 

A. Liability Insurance. 

1. Except as provided in Section A.2 below, the applicable Grantor will carry at all times, at 

no expense to the Collateral Agent or any Secured Party, commercial airline legal liability 

insurance (including any passenger liability, property damage, baggage liability, cargo and 

mail liability, hangarkeeper’s liability and contractual liability insurance) with respect to 

each Airframe and Engine (including, as applicable, in respect of an applicable Aircraft or 

airframe on which an Engine is then installed) which is (i) in an amount not less than the 

amount of commercial airline legal liability insurance from time to time applicable to 

aircraft (and airframes and engines) owned or leased and operated by the applicable 

Grantor of the same type and operating on similar routes as such aircraft, airframe or engine

and (ii) of the type and covering the same risks as from time to time applicable to aircraft 

operated by the applicable Grantor of the same type as such aircraft, airframe or engine; 

and (iii) maintained in effect with insurers of nationally or internationally recognized 

responsibility (such insurers being referred to herein as “Approved Insurers”). 

2. During any period that an Aircraft, Airframe or Engine is on the ground and not in 

operation, the applicable Grantor may carry, in lieu of the insurance required by 

Section A.1 above, insurance otherwise conforming with the provisions of said Section A.1

except that (i) the amounts of coverage shall not be required to exceed the amounts of 

liability and property damage insurance from time to time applicable to aircraft owned or 

operated by the applicable Grantor of the same type as such Aircraft, Airframe or Engine 

which is on the ground and not in operation and (ii) the scope of the risks covered and the 

type of insurance shall be the same as from time to time shall be applicable to aircraft, 

airframes or engines, as applicable, owned or operated by the applicable Grantor of the 

same type which are on the ground and not in operation by the applicable Grantor on the 

ground, not in operation, and stored or hangared. 

B. Hull Insurance. 

1. Except as provided in Section B.2 below, the applicable Grantor will carry, at no expense 

to the Collateral Agent or any Secured Party, with Approved Insurers “all-risk” aircraft 

hull insurance covering the Airframes and Engines (including when the Engine is not 

installed on any airframe) which is of the type as from time to time applicable to airframes 

and engines owned by the applicable Grantor of the same type as such Airframe or Engine 

for an amount denominated in United States Dollars not less than, for each Aircraft, 

Airframe or Engine, 100% of the Appraised Value (which, as applicable based on the 

relevant Appraisal, may at the applicable Grantor’s option be a combined value for an 

Aircraft comprised of its Airframe and associated Engines, or separate such values for any 

Airframe or Engine) as set forth in the most recent Appraisal delivered pursuant to the Loan 

Agreement before the date (or renewal date) of the applicable insurance policies (the 

“Agreed Value”), or, prior to the delivery of the initial Appraisal covering such Aircraft, 

Airframe or Engine, the applicable “Agreed Value” set forth in the initial insurance 

certificate delivered with respect thereto, but in no event, in all cases, less than applicable 

replacement value (as reasonably determined by the applicable Grantor and its insurers); 

and in each case such insurance shall include all-risk property damage insurance covering 

Engines temporarily removed from an Aircraft and Parts while temporarily removed from 
Annex 3B - 18

WEIL:\97681611\4\13173.0005

any Airframe or Engine, in each case and not replaced by similar components for not less 

than the replacement value thereof which are of the type as from time to time applicable to 

components owned by the applicable Grantor of the same type as such Engine and Parts 

for an amount denominated in United States Dollars (which replacement value shall, for 

an Engine with a separate Agreed Value pursuant to the foregoing, be not less than such 

Agreed Value). 

All losses will be adjusted by the applicable Grantor with the insurers; provided, however, 

that during a period when an Event of Default shall have occurred and be continuing, the 

applicable Grantor shall not agree to any such adjustment without the consent of the 

Appropriate Party. 

Any policies of insurance carried in accordance with this Section B.1 or Section C covering 

any Aircraft, Airframe or Engine and any policies taken out in substitution or replacement 

for any such policies shall provide that insurance proceeds under such policies shall be 

payable directly to the Collateral Agent for prompt deposit into a Collateral Proceeds 

Account if such insurance proceeds are in respect of an Event of Loss. The Collateral 

Agent shall be entitled to notify an insurer that such insurance proceeds shall be paid 

directly to the Collateral Agent as provided in the immediately preceding sentence.

For the avoidance of doubt, this Section B.1 shall not prohibit standard deductibles or 

industry standard self-insured retentions for hull insurance carried by the applicable 

Grantor.

2. During any period that an Aircraft, Airframe or Engine is on the ground and not in 

operation, the applicable Grantor may carry, in lieu of the insurance required by 

Section B.1 above, insurance otherwise conforming with the provisions of said Section B.1

except that the scope of the risks and the type of insurance shall be the same as from time 

to time applicable to aircraft owned by the applicable Grantor of the same type as such 

Aircraft, Airframe or Engine similarly on the ground and not in operation, provided that 

the applicable Grantor shall maintain insurance against risk of loss or damage to such 

Aircraft, Airframe or Engine in an amount at least equal to the Agreed Value for such 

Aircraft, Airframe or Engine during such period that it is on the ground and not in operation. 

C. War-Risk, Hijacking and Allied Perils Insurance. 

If the applicable Grantor shall at any time operate or propose to operate the Aircraft, Airframe or any Engine 

(i) in any area of recognized hostilities or (ii) on international routes and war-risk, hijacking or allied perils 

insurance is maintained by the applicable Grantor with respect to other aircraft owned or operated by the 

applicable Grantor on such routes or in such areas, the applicable Grantor shall maintain war-risk, hijacking 

and related perils insurance of substantially the same type carried by major United States commercial air 

carriers operating the same or comparable models of aircraft on similar routes or in such areas and in no 

event in an amount less than the Agreed Value. 

D. General Provisions. 

Any policies of insurance carried in accordance with Sections A, B and C, including any policies taken out 

in substitution or replacement for such policies: 

in the case of Section A, shall name the Collateral Agent and each other Secured Party (collectively, 

the “Additional Insureds”), as an additional insured, as its interests may appear; 

shall apply worldwide subject to standard territorial restrictions or limitations applicable in the 

Lloyd’s of London Insurance Market at the time the policy is issued (except only in the case of war, 
Annex 3B - 19

WEIL:\97681611\4\13173.0005

hijacking and related perils insurance required under Section C, which shall apply to the fullest 

extent available in the international insurance market); 

shall provide that, in respect of the coverage of the Additional Insureds in such policies, the 

insurance shall not be invalidated by any act or omission (including misrepresentation and 

nondisclosure) by the applicable Grantor which results in a breach of any term, condition or 

warranty of the polices, provided that the Additional Insured so protected has not caused, 

contributed to or knowingly condoned said act or omission. However, the coverage afforded the 

Additional Insured will not apply in the event of exhaustion of policy limits or to losses or claims 

arising from perils specifically excluded from coverage under the policies; 

shall provide that, if the insurers cancel such insurance for any reason whatsoever, or if any material 

change is made in the insurance policies by insurers which adversely affects the interest of any of 

the Additional Insureds, such cancellation or change shall not be effective as to the Additional 

Insureds for thirty (30) days (seven (7) days in the case of war risk, hijacking and allied perils 

insurance and ten (10) days in the case of nonpayment of premium) after receipt by the Additional 

Insureds of written notice by such insurers of such cancellation or change, provided that, if any 

notice period specified above is not reasonably obtainable, such policies shall provide for as long 

a period of prior notice as shall then be reasonably obtainable; 

shall waive any rights of setoff (including for unpaid premiums), recoupment, counterclaim or other 

deduction, whether by attachment or otherwise, against each Additional Insured; 

shall waive any right of subrogation against any Additional Insured; 

shall be primary without right of contribution from any other insurance that may be available to 

any Additional Insured; 

shall provide that all of the liability insurance provisions thereof, except the limits of liability, shall 

operate in all respects as if a separate policy had been issued covering each party insured thereunder; 

shall provide that none of the Additional Insureds shall be liable for any insurance premium; and 

shall contain a 50/50 Clause per Lloyd’s Aviation Underwriters’ Association Standard Policy Form 

AVS 103 or U.S. market equivalent. 

E. Reports and Certificates; Other Information. 

On or prior to the Closing Date or on the date of delivery of any Pledge Supplement with respect to each 

Airframe and Engine constituting Collateral, and on or prior to each renewal date of the insurance policies 

required hereunder, the applicable Grantor will furnish or cause to be furnished to the Collateral Agent

insurance certificates describing in reasonable detail the commercial insurance maintained by the applicable 

Grantor hereunder and a report, signed by the applicable Grantor’s regularly retained independent insurance 

broker (the “Insurance Broker”), stating the opinion of such Insurance Broker that (a) all premiums in 

connection with the commercial insurance then due have been paid and (b) such insurance complies with 

the terms of this Appendix I. To the extent such agreement is reasonably obtainable the applicable Grantor 

will also cause the Insurance Broker to agree to advise the Secured Parties in writing of any default in the 

payment of any premium and of any other act or omission on the part of the applicable Grantor of which it 

has knowledge and which might invalidate or render unenforceable, in whole or in part, any commercial 

insurance on such Airframe or Engine or cause the cancellation or termination of such insurance, and to 

advise the Secured Parties in writing at least thirty (30) days (seven (7) days in the case of war-risk and 

allied perils coverage and ten (10) days in the case of nonpayment of premium, or such shorter period as 

may be available in the international insurance market, as the case may be) prior to the cancellation or 

material adverse change of any commercial insurance maintained pursuant to this Appendix I. 

F. Right to Pay Premiums. 
Annex 3B - 20

WEIL:\97681611\4\13173.0005

The Additional Insureds shall have the rights but not the obligations of an additional named insured. None 

of the Collateral Agent or the other Additional Insureds shall have any obligation to pay any premium, 

commission, assessment or call due on any such insurance (including reinsurance). Notwithstanding the 

foregoing, in the event of cancellation of any insurance due to the nonpayment of premiums, the Collateral 

Agent shall have the option, as directed by the Required Lenders, to pay any such premium in respect of 

the Aircraft that is due in respect of the coverage pursuant to this Agreement and to maintain such coverage, 

as the Collateral Agent or the Appropriate Party may require, until the scheduled expiry date of such 

insurance and, in such event, the applicable Grantor shall, upon demand, reimburse the Collateral Agent or 

any Lender for amounts so paid by it, together with interest therein at the Default Rate from the date of 

payment. 

G. Salvage Rights; Other. 

All salvage rights to each Airframe and Engine shall remain with the applicable Grantor’s insurers at all 

times, and any insurance policies of the Collateral Agent insuring any Airframe or Engine shall provide for 

a release to the applicable Grantor of any and all salvage rights in and to any Airframe and Engine. 
Annex 3B - 21

WEIL:\97681611\4\13173.0005

Exhibit A to Annex 3B

[FORM OF MORTGAGE SUPPLEMENT]

FAA MORTGAGE 

THIS FAA MORTGAGE dated __________ (herein, this “FAA Mortgage”) made by [_____], a [_____] 

(together with its permitted successors and assigns, the “Grantor”), in favor of The Bank of New York 

Mellon, as the Collateral Agent (together with its successors and permitted assigns, the “Collateral Agent”). 

W I T N E S S E T H:

WHEREAS, the Amended and Restated Horizon Aircraft, Engine and Propeller Pledge and 

Security Agreement, dated as of October 30, 2020 and filed for recordation with the FAA Registry pursuant 

to and in accordance with the provisions of Section 44107 of the Transportation Code on September 28, 

2020 at 8:17 A.M., C.D.T. (herein called the “PSA”; capitalized terms used herein but not defined shall 

have the meaning ascribed to them in the PSA), between the Grantors and the Collateral Agent, provides 

for the execution and delivery of this FAA Mortgage substantially in the form hereof, which shall 

particularly describe certain collateral, and shall specifically mortgage the same to the Collateral Agent; 

WHEREAS, the PSA was entered into between the Grantors and the Collateral Agent in order to 

secure the Secured Obligations; and

WHEREAS, the Grantors wish to supplement the PSA and to subject the Aircraft and Engine 

Assets described in Exhibit A hereto to the security interest created by the PSA by execution and delivery 

of this FAA Mortgage, and by reference herein to the terms of the PSA which are hereby made a part hereof, 

and this FAA Mortgage is being filed for recordation on the date hereof with the FAA pursuant to Title 49 

by the FAA at Oklahoma City, Oklahoma; 

NOW, THEREFORE, THIS FAA MORTGAGE , in order to secure the prompt payment and 

performance of the Secured Obligations from time to time outstanding and to secure the performance and 

observance by the Grantors and each of the other Credit Parties of all the agreements, covenants and 

provisions contained in the Loan Documents for the benefit of the Secured Parties, the Grantor[s] has/have

mortgaged, assigned, pledged, hypothecated, transferred, conveyed and granted, and does hereby mortgage, 

assign, pledge, hypothecate, transfer, convey and grant, unto the Collateral Agent, for the security and 

benefit of the Secured Parties, a continuing first priority security interest in all right, title and interest of the 

Grantor[s] in, to and under the following described property: 

2. [The Airframes as further described on Exhibit A hereto, in each case together with any and all 

Parts of whatever nature, which are from time to time included within the definitions of “Airframe”, 

including all substitutions, renewals and replacements of and additions, improvements, accessions 

and accumulations to each such Airframe (other than additions, improvements, accessions and 

accumulations which constitute appliances, parts, instruments, appurtenances, accessories, 

furnishings or other equipment excluded from the definition of Parts) and all Airframe Documents 

relating to each such Airframe; and 

3. The Engines as further described on Exhibit A hereto, in each case together with any and all Parts 

of whatever nature, which are from time to time included within the definition of “Engines”, 
Annex 3B-22

WEIL:\97681611\4\13173.0005

including all substitutions, renewals and replacements of and additions, improvements, accessions 

and accumulations to each such Engine (other than additions, improvements, accessions and 

accumulations which constitute appliances, parts, instruments, appurtenances, accessories, 

furnishings or other equipment excluded from the definition of Parts) and all Engine Documents 

relating to each such Engine.]

6

TO HAVE AND TO HOLD all and singular the aforesaid property unto the Collateral Agent, its 

successors and assigns, for the uses and purposes and subject to the terms and provisions set forth in the 

PSA. 

This FAA Mortgage shall be governed by, and construed in accordance with, the law of the State of New 

York.

This FAA Mortgage shall be construed in every way in accordance to the terms of the PSA and as a part 

thereof, and the PSA is hereby incorporated by reference herein and is hereby ratified, approved and 

confirmed. 

[remainder of page intentionally left blank] 

 

6 Note to Form: Revise as appropriate to reflect what is listed on Exhibit A.
Annex 3B - 23

WEIL:\97681611\4\13173.0005

IN WITNESS WHEREOF, the Grantor[s] has/have caused this FAA Mortgage to be duly executed by 

one of its officers, thereunto duly authorized, on the day and year first above written. 

[_____]

By:

Name:

Title:
Annex 3B - 24

WEIL:\97681611\4\13173.0005

EXHIBIT A

TO 

FAA MORTGAGE 

THE AIRFRAMES:

No. Owner U.S. Registration 

No.

Airframe 

Manufacturer

Airframe 

Model

Airframe Serial 

No.

1. [●] [●] [●] [●] [●]

THE ENGINES:

No. Manufacturer Model Generic Manufacturer 

and Model Manufacturer’s Serial No.

1.

[●] [●] [●] [●]

(Each of which Engines having at least 550 rated takeoff horsepower or the equivalent thereof). 
Annex 3B - 25

WEIL:\97681611\4\13173.0005

 Exhibit B to Annex 3B

FORM OF OFFICER’S CERTIFICATE

[●], 202[●]

Reference is made to that certain Amended and Restated Horizon Aircraft, Engine and Propellers 

Pledge and Security Agreement, dated as of the date hereof (the “Agreement”), between Horizon Air 

Industries, Inc., a Washington corporation (the “Company”), as the Grantor, and The Bank of New York 

Mellon, as Collateral Agent. Capitalized terms used herein but not otherwise defined shall have the 

meanings ascribed to such terms in the Agreement.

The undersigned is a duly authorized Responsible Officer of the Company and I hereby certify, solely in 

my capacity as a Responsible Officer of the Company, and not in my individual capacity, on the date hereof 

that:

1. The Company is an “air carrier” within the meaning of Section 40102 of Title 49 and holds 

a certificate under Section 40102 of Title 49;

2. The Company has exclusive title in all Aircraft and Engine Assets and Propeller Assets listed in 

Schedule I attached hereto. 

3. The information supplied by the Company with respect to the Aircraft and Engine Assets and the 

Propeller Assets included in Schedule I and corresponding information in Schedule 2.1 to the 

Agreement is true, correct and complete on and as of the date hereof. 

4. Each Aircraft or Airframe listed on Schedule I has been duly registered in the name of the 

applicable Company under Chapter 441 of the Transportation Code. An airworthiness certificate 

has been duly issued under Chapter 447 of the Transportation Code with respect to each Aircraft 

and Airframe listed on Schedule I. Each of the Aircraft and Airframes listed on Schedule I

corresponds to an Aircraft or Airframe specified in Schedule 2.1 to the Agreement. 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
Annex 3B - 26

WEIL:\97681611\4\13173.0005

The undersigned hereby certifies, in his or her capacity as a Responsible Officer of the Company 

and not in his or her individual capacity, each and every matter contained herein to be true and correct as 

of the date first written above. 

[●]

By: _______________________________

Name:

Title: 
Annex 3B - 27

WEIL:\97681611\4\13173.0005

Schedule I

4. Aircraft/Airframes

[●] aircraft more specifically described below:

Aircraft Model Aircraft Generic Model Airframe Serial No. U.S. Registration No.

1.

2.

3.

4.

5.

6.

7.

5. Engines

[●] engines as more specifically described below:

Engine Model Engine Generic Model Engine Serial No.

1.

2.

3.

4.

5.

6.

7.

Each of the above described Engines is of 550 or more “rated take-off horsepower” or the equivalent of 

such horsepower.

6. Propellers

[●] propellers as more specifically described below:

Propeller Model Propeller Serial No. Propeller Location

1.

2.

3.

4.

5.

6.

7.

Each Propeller is capable of absorbing 750 or more “rated take-off shaft horsepower”.
Annex 4 - 1

WEIL:\97681611\4\13173.0005

Annex 4 (Slots, Gates and Routes)

Each Grantor and the Collateral Agent hereby agree that the terms of this Annex shall apply with respect 

to Collateral consisting of SGR Assets and the Grantors of such Collateral. 

1. Perfection Requirement. The following requirements shall be included in the definition of 

“Perfection Requirement” and shall constitute an additional “Perfection Requirement”:

(a) [Reserved]. 

2. Required Filings. Each of the following financing statement, filing, recording or other document 

shall be included in the definition of “Required Filing” and shall constitute an additional “Required 

Filing”:

(a) UCC financing statements for any SGR Assets constituting Collateral in such filing offices 

as the Appropriate Party deems advisable to perfect or protect the security interest set forth 

therein.

3. Representations and Warranties. Each Grantor (as applicable) hereby represents and warrants, 

on the Closing Date and on the date of each Borrowing (or, in the case of an Additional Grantor or 

Additional Collateral, on the date of such Grantor’s execution and delivery of a Pledge Supplement,

or the date such Additional Collateral becomes subject to the security interest created hereby, as 

applicable):

(a) Schedule 2.1 sets forth (i) all Route Authorities that constitute Collateral, including the 

departing airport and the arriving airport for each such Route Authority, (ii) a true, correct 

and complete list of the Slots as of the date hereof (assuming full operation of the Route 

Authorities) and (iii) a copy of each certificate or order issued by the United States 

Department of Transportation (and any successor thereto) representing all Route 

Authorities constituting Collateral as of the date hereof. 

(b) There are no filings, registrations or recordings under Title 49 necessary to create, preserve, 

protect or perfect the security interests granted by such Grantor to the Collateral Agent for 

the benefit of the Secured Parties in respect of the SGR Assets constituting Collateral.

(c) The Grantors hold their Pledged Gate Leaseholds being used for operation of the Scheduled 

Services pursuant to authority granted by the applicable Airport Authority or Foreign 

Aviation Authority, and there exists no material violation of the regulations, terms, 

conditions or limitations of the relevant Airport Authority or Foreign Aviation Authority 

applicable to any Pledged Gate Leasehold or any provision of law applicable to the Pledged 

Gate Leasehold that gives any applicable Airport Authority or Foreign Aviation Authority 

the right to terminate, cancel, withdraw or modify the rights of the Grantors in any such 

Pledged Gate Leasehold.

(d) Except for matters that would not reasonably be expected to result in a Material Adverse 

Effect or a Collateral Material Adverse Effect, no consent of any other party, and no 

consent, authorization, approval, or other action by, and (except in connection with the 

perfection of the Lien created in the SGR Assets) no notice to or filing with, any 

Governmental Authority or other Person is required either (x) for the pledge by the 

Grantors of the SGR Assets constituting Collateral pursuant to this Agreement or for the 

execution, delivery or performance of this Agreement or (y) for the exercise by the 

Collateral Agent of its rights and remedies in respect of the SGR Assets constituting 
Annex 4 - 2

WEIL:\97681611\4\13173.0005

Collateral; provided, however, that (A) the transfer of (other than the grant or pledge of a 

security interest in) the Route Authorities is subject to the consent of the DOT pursuant to 

Section 41105 of Title 49 and is subject to Presidential review pursuant to Section 41307 

of Title 49, (B) the FAA Route Slots, if any, may not be transferred (other than the lease 

or trade of, or the grant or pledge of a security interest in, such FAA Route Slots), (C) the 

transfer of Gate Leaseholds may be subject to the foregoing actions by Governmental 

Authorities, Foreign Aviation Authorities or Airport Authorities, aviation authorities, air 

carriers or other lessors and (D) the transfer of Foreign Route Slots may be subject to 

approval by the applicable Foreign Aviation Authority or Airport Authorities. Section 

4.1(f) and 4.1(h) of this Agreement shall be subject to, and deemed qualified by, the 

foregoing.

(e) Pledged Slots. Except for matters that would not reasonably be expected to result in a 

Material Adverse Effect or a Collateral Material Adverse Effect, and taking into account 

any waivers or other relief granted to the applicable Grantor by the applicable authorities, 

each Grantor holds its respective Pledged Slots pursuant to authority granted by the 

applicable Governmental Authorities and Foreign Aviation Authorities, and there exists no 

material violation by such Grantor of the terms, conditions or limitations of any rule, 

regulation or order of the applicable Governmental Authorities or Foreign Aviation 

Authorities regarding such Pledged Slots or any provisions of law applicable to such 

Pledged Slots that gives any applicable Governmental Authority or Foreign Aviation 

Authority the right to modify in any material respect, terminate, cancel or withdraw the 

rights of such Grantor in any such Pledged Slots to the extent such Governmental Authority 

or Foreign Aviation Authority would not have such right in the absence of such violation.

(f) Pledged Route Authorities. Each Grantor holds or co-holds the requisite authority to 

operate over such Grantor’s Pledged Route Authorities pursuant to Title 49 and all rules 

and regulations promulgated thereunder, subject only to the regulations of the DOT, the 

FAA and the applicable Foreign Aviation Authorities and applicable treaties and bilateral 

and multilateral air transportation agreements, and there exists no material violation by 

such Grantor of any certificate or order issued by the DOT authorizing such Grantor to 

operate over such Pledged Route Authorities, the rules and regulations of any applicable 

Foreign Aviation Authority with respect to such Pledged Route Authorities or the 

provisions of Title 49 and rules and regulations promulgated thereunder applicable to such 

Pledged Route Authorities that gives the FAA, DOT or any applicable Foreign Aviation 

Authority the right to modify in any material respect, terminate, cancel or withdraw the 

rights of such Grantor in any such Pledged Route Authorities.

4. Covenants. Each Grantor (as applicable) covenants and agrees that:

(a) It shall promptly notify the Collateral Agent (which notice shall constitute notice required 

under Section 5.03 of the Loan Agreement) notice or knowledge of any violation of any

applicable Laws or agreements with respect to the SGR Assets constituting Collateral or 

such Grantor’s use thereof that could result in, or could reasonably be expected to result 

in, a Material Adverse Effect or a Collateral Material Adverse Effect.

(b) [Reserved].

(c) [Reserved].

(d) It will at all times (i) possess and maintain all certificates, exemptions, licenses, permits, 

designations, authorizations, frequencies and consents required by the FAA, the DOT or 
Annex 4 - 3

WEIL:\97681611\4\13173.0005

any applicable Foreign Aviation Authority or Airport Authority or any other Governmental 

Authority that are material to the operation of the Pledged Route Authorities and Pledged 

Slots operated by it, and to the conduct of its business and operations as currently 

conducted, in each case, to the extent necessary for the Grantors’ operation of the 

Scheduled Services, (ii) maintain Pledged Gate Leaseholds sufficient to ensure its ability 

to operate the Scheduled Services and to preserve its right in and to its Pledged Slots, (iii) 

utilize its Pledged Slots in a manner consistent with applicable regulations, rules, foreign 

law and contracts in order to preserve its right to hold and use its Pledged Slots, taking into 

account any waivers or other relief granted to it by the FAA, the DOT, any Foreign 

Aviation Authority or any Airport Authority, (iv) cause to be done all things reasonably 

necessary to preserve and keep in full force and effect its rights in and to use its Pledged 

Slots, including, without limitation, satisfying any applicable Use or Lose Rule, taking into 

account any waivers or other relief granted to it by the FAA, the DOT, any Foreign 

Aviation Authority or any Airport Authority, (v) utilize its Pledged Route Authorities in a 

manner consistent with Title 49, applicable foreign law, the applicable rules and 

regulations of the FAA, the DOT and any applicable Foreign Aviation Authorities, and any 

applicable treaty in order to preserve its rights to operate the Scheduled Services and (vi) 

cause to be done all things reasonably necessary to preserve and keep in full force and 

effect its authority to operate the Scheduled Services, except in each case, to the extent that 

any failure to do so would not reasonably be expected to result in a Material Adverse Effect 

or a Collateral Material Adverse Effect. Without in any way limiting the foregoing, each 

Grantor will promptly take all such steps as may be necessary to obtain renewal of its 

Pledged Route Authorities from the DOT and any applicable Foreign Aviation Authorities, 

in each case to the extent necessary to operate the Scheduled Services, within a reasonable 

time prior to the expiration of such authority (as prescribed by law or regulation, if any), 

and promptly notify the Appropriate Party if it has been informed that such authority will 

not be renewed, except to the extent that any failure to take such steps would not reasonably 

be expected to result in a Material Adverse Effect or a Collateral Material Adverse Effect. 

Each Grantor will pay any applicable filing fees and other expenses related to the 

submission of applications, renewal requests, and other filings as may be reasonably 

necessary to maintain or obtain its rights in its Pledged Route Authorities and have access 

to its Pledged Gate Leaseholds in each case to the extent necessary to operate the Scheduled 

Services.

(e) It will not Dispose of any SGR Assets constituting Collateral except for:

i. Dispositions permitted by Section 6.04(b) or (c) of the Loan Agreement;

ii. exchanges of Slots in the ordinary course of business that in Grantor’s reasonable 

judgment are of reasonably equivalent value (so long as the Slots received in such 

exchange are concurrently pledged under this Agreement and constitute Eligible 

Collateral, and such exchange would not result in a Material Adverse Effect or a 

Collateral Material Adverse Effect);

iii. the termination of leases or subleases or airport use or license agreements in the 

ordinary course of business to the extent such terminations do not have a Material 

Adverse Effect or a Collateral Material Adverse Effect;

iv. abandonment or return of Slots and Gate Leaseholds (A) required by the DOT, the 

FAA, Airport Authorities, Foreign Aviation Authorities or other Governmental 

Authority or (B) in the ordinary course of business consistent with past practices 
Annex 4 - 4

WEIL:\97681611\4\13173.0005

and does not materially and adversely affect the business of the Parent and its 

Restricted Subsidiaries, taken as a whole and, in each case, which would not 

reasonably be expected to result in a Material Adverse Effect or a Collateral 

Material Adverse Effect; and

v. any leasing, licensing and use agreements with respect to assets and properties that 

constitute Slots or Gate Leaseholds in the ordinary course of business and swap 

agreements or similar arrangements with respect to Slots in the ordinary course of 

business and, in each case, which leasing, licensing and use agreement or swap 

agreement or similar agreement (A)(i)(x) has a term of one year or less, or does 

not extend beyond two comparable IATA traffic seasons (and contains no option 

to extend beyond either of such periods), or (y) if longer (including any option 

period), is expressly subject and subordinate to the rights (including remedies) of 

the Collateral Agent under this Agreement on terms reasonably satisfactory to the 

Collateral Agent (acting at the direction of the Appropriate Party), or (ii) is for 

purposes of operations by another airline operating under a brand associated with 

the applicable Grantor or otherwise operating routes at such Grantor’s direction 

under a code share agreement, capacity purchase agreement, pro-rate agreement or 

similar arrangement between such airline and such Grantor, and (B) in each case, 

would not reasonably be expected to result in a Material Adverse Effect or a 

Collateral Material Adverse Effect; provided that, at any time, the aggregate of the 

most recently Appraised Value of such Slots and Gate Leaseholds subject to any 

leasing, licensing and use agreements at such time and of such Slots subject to any 

swap agreements or similar arrangements at such time, in each case permitted 

under clause (A)(i)(y) above, is no greater than the lesser of (x) $[•] or (y) [•]% of 

the most recently Appraised Value of the Collateral consisting of SGR Assets; and 

provided further that the applicable Grantor’s rights under any such leasing, 

licensing, use, swap or similar agreement or arrangement shall constitute Collateral 

hereunder (but no representations or covenants shall apply in respect thereof).

(f) Upon the request of the Collateral Agent (acting at the direction of the Appropriate Party),

it shall use commercially reasonable efforts to deliver, in respect of each of the FAA Slots, 

undated slot transfer documents in form and substance reasonably satisfactory to the 

Collateral Agent (acting at the direction of the Appropriate Party) (considering any 

requirements by the DOT, the FAA and/or Airport Authority), executed in blank to be held 

in escrow by the Collateral Agent.

5. Defaults and Remedies.

(a) If any Event of Default shall have occurred and be continuing, without limiting the 

generality of Section 8.1 of this Agreement, the Collateral Agent may:

i. declare the entire right, title and interest of any Grantor in, to and under the SGR Assets 

constituting Collateral vested in the Collateral Agent, in which event such right, title 

and interest shall immediately vest in the Collateral Agent. Such Grantor agrees to 

execute and deliver such deeds of conveyance, assignments and other documents or 

instruments (including any notices or applications to the DOT, the FAA, applicable 

Foreign Aviation Authorities, Governmental Authorities or Airport Authorities having 

jurisdiction over any such SGR Assets constituting Collateral or the use thereof) 

necessary or advisable to effectuate the transfer of such SGR Assets constituting

Collateral (and as requested by the Appropriate Party or the Collateral Agent), together 
Annex 4 - 5

WEIL:\97681611\4\13173.0005

with copies of the certificates or orders issued by the DOT and the Foreign Aviation 

Authorities representing the same and any other rights of such Grantor with respect 

thereto, to any designee or designees selected by the Collateral Agent and approved by 

all necessary Governmental Authorities, Foreign Aviation Authorities and Airport 

Authorities (provided that if any of the foregoing is not permitted under the Law or by 

the DOT or applicable Governmental Authority, Foreign Aviation Authority or Airport 

Authority, the Collateral Agent for the benefit of the Secured Parties shall nevertheless 

continue to have all of such Grantor’s right, title and interest in, to and under all of the 

Proceeds (of any kind) received or to be received by such Grantor upon the use, transfer 

or other disposition of such SGR Assets constituting Collateral); it being understood 

that each Grantor’s obligation to deliver such SGR Assets constituting Collateral and 

such documents and instruments with respect thereto, subject to the aforesaid 

limitations, is of the essence of this Agreement;

ii. require any Grantor, and each Grantor hereby agrees and covenants to, upon the 

occurrence and during the continuance of an Event of Default, use its reasonable best 

efforts to obtain all approvals and consents that would be required to transfer or assign 

all SGR Assets constituting Collateral as the Collateral Agent, acting on behalf of the 

Secured Parties, may designate; and

iii. use the blank, undated, signed Slot transfer documents held in escrow (in form and 

substance reasonably satisfactory to the Collateral Agent (acting at the direction of the 

Appropriate Party) (considering any requirements by the DOT, the FAA and/or Airport 

Authority)) from time to time as a means to effectuate a transfer as contemplated 

herein.

(b) Notwithstanding any other provision of this Agreement, subject to Section 5(a) of this 

Annex 4, if any Transfer Restriction applies to the transfer or assignment of (but not the 

creation of a security interest in) any of the right, title or interest referred to SGR Assets 

constituting Collateral, any provision of this Agreement permitting the Collateral Agent to 

cause the Grantors to transfer or assign to it or any other person any of the Grantors’ right, 

title or interest in any such SGR Assets constituting Collateral (and any right the Collateral

Agent may have under applicable law to do so by virtue of the security interest granted to 

it under this Agreement) shall be subject to such Transfer Restriction. 

6. Release of Collateral. Each Grantor and the Collateral Agent agree that:

(a) For the avoidance of doubt, (i) if any Slot ceases to be included in the SGR Assets 

constituting Collateral because it ceases to be actually utilized in connection with the 

Scheduled Services or any Foreign Gate Leasehold ceases to be included in the SGR Assets 

constituting Collateral because it ceases to be used for servicing the Scheduled Services 

relating to the airport at which such Foreign Gate Leasehold is located, such Slot or Foreign 

Gate Leasehold shall be automatically released from the Lien of this Agreement and 

(ii) subject to Section 5(b) of this Annex, if any FAA Slot or Foreign Slot now held or 

hereafter acquired by any Grantor becomes an FAA Route Slot or a Foreign Route Slot, 

respectively, or any right, title, privilege, interest and authority now held or hereafter 

acquired by such Grantor in connection with the right to use or occupy space in an airport 

terminal becomes a Foreign Gate Leasehold, such FAA Slot, Foreign Slot or right, title, 

privilege, interest and authority shall be automatically subject to the Lien of this Security 

Agreement.
Annex 4 - 6

WEIL:\97681611\4\13173.0005

(b) Upon satisfaction and completion, as determined by the Appropriate Party, of the 

conditions for release of any SGR Assets constituting Collateral from the Lien granted 

hereby in accordance with Section 6.17(b)(iii) of the Loan Agreement, such SGR Assets 

shall be released from the Lien granted under this Agreement, and the Collateral Agent will 

thereupon execute and deliver to the applicable Grantor, at such Grantor’s sole expense, 

all appropriate UCC termination statements and other documents that such Grantor shall 

reasonably request to evidence such release. The Collateral Agent shall have no liability 

whatsoever to any Secured Party as a result of its execution of any such documentation 

with respect to any such release.

(c) In connection with any release of any SGR Assets constituting Collateral pursuant to this 

Section 6, the Collateral Agent will execute and deliver to the applicable Grantor, at such

Grantor’s sole expense, all appropriate UCC termination statements and other documents 

that such Grantor shall reasonably request to evidence such release. The Collateral Agent 

shall have no liability whatsoever to any Secured Party as a result of any release of SGR 

Assets constituting Collateral by it as permitted by this Section 6.

7. Miscellaneous. Each Grantor and the Collateral Agent agree that:

(a) The terms of this Annex shall be deemed incorporated into and part of this Agreement.

(b) The terms of this Annex are cumulative in nature and shall not limit the applicability or 

scope of the other terms of this Agreement.

(c) It is understood and agreed that, notwithstanding anything to the contrary in this Agreement 

(including Section 5.2(a)), Schedule 2.1(c) (Slots) is intended to be descriptive of the Slots 

listed on such Schedule as of the date hereof and shall not be construed as limiting in any 

way the SGR Assets constituting Collateral subject to this Agreement, except as may 

otherwise be expressly set forth herein. 

(d) Any amendment or modification of the Scheduled Services in Schedule 2.1 identified as of

a certain date shall be in form and content similar to the information provided for such

Collateral in Schedule 2.1 on the Closing Date.

8. Terms. The following capitalized terms used in this Annex shall have the following meanings:

(a) “Airport Authority” means any city or any public or private board or other body or 

organization chartered or otherwise established for the purpose of administering, operating 

or managing an airport or related facilities.

(b) “Collateral Material Adverse Effect” means a material adverse effect on the Appraised 

Value (as defined in the Loan Agreement) of the Collateral consisting of SGR Assets, taken 

as a whole.

(c) “Domestic Airport” means any international airport located in the United States.

(d) “Domestic Gate Leasehold” means, at any time of determination, all of the right, title, 

privilege, interest and authority of a Grantor to use or occupy space in an airport terminal 

at any Domestic Airport, in each case, to the extent necessary at the relevant time of 

determination for servicing the scheduled air carrier service authorized by a Route 

Authority relating to such airport.
Annex 4 - 7

WEIL:\97681611\4\13173.0005

(e) “Excluded Asset” means, solely for purposes of this Annex and any SGR Assets 

constituting Collateral, in lieu of the same term in the Agreement, (i) any asset of a Grantor, 

if, to the extent and only for so long as the grant of a Lien on such asset to secure the 

Secured Obligations is prohibited or otherwise restricted by, or requires additional action 

or consent (that has not been taken or obtained) under, any agreement (unless the 

counterparty of such agreement is an Affiliate of any Grantor) or applicable Law, or entitles 

any Governmental Authority or third party to terminate or suspend any right, title or interest 

in any such asset (or the Grantors’ interest in any agreement or license related thereto) in 

each case in this clause (i) except (A) to the extent that the UCC or any other applicable 

Law provides that such grant of Lien is effective irrespective of any prohibitions to such 

grant or (B) so long as any such agreement was not entered into for the purpose of 

prohibiting or restricting such grant of Lien and (ii) any lease, license, contract, property 

right or agreement to which any Grantor is a party to the extent any such lease, license, 

contract, property right or agreement by its terms or applicable Law, prohibits, or requires 

consent (unless such consent has been received or is of an Affiliate of any Grantor) to the 

granting of a Lien in the rights of such Grantor thereunder or which Lien would be invalid 

or unenforceable upon any such grant, in each case in this clause (ii) except (A) to the 

extent that the UCC or any other applicable Law provides that such grant of Lien is 

effective irrespective of any prohibitions to such grant of Lien or (B) so long as any such 

lease, license, contract, property right or agreement was not entered into for the purpose of 

prohibiting or restricting such grant of Lien; provided, however, that clauses (i) and (ii) 

shall not apply to the pledge of any Route Authorities or FAA Slots and provided further 

that Excluded Assets shall not include any Control Collateral or Proceeds, substitutions or 

replacements of any Excluded Assets referred to in clauses (i) through (ii) (unless such 

Proceeds, substitutions or replacements would independently constitute Excluded Assets 

referred to in clauses (i) through (ii)).

(f) “FAA Route Slot” means, at any time of determination, any FAA Slot of such Grantor at 

any Domestic Airport, in each case (i) to the extent such FAA Slot is actually being utilized 

at the relevant time of determination in connection a Scheduled Service and (ii) excluding 

any Temporary Slot.

(g) “FAA Slot” means, at any time of determination, the right and operational authority to 

conduct an Instrument Flight Rule (as defined in Title 14) scheduled landing or take-off 

operation at a specific time or during a specific time period at such Domestic Airport, 

including, without limitation, slots, arrival authorizations and operating authorizations, 

whether pursuant to FAA or DOT regulations or orders pursuant to Title 14, Title 49 or 

other federal statutes or regulations now or hereinafter in effect.

(h) “Foreign Airport” means each international airport not located in the United States that is 

an origin and/or destination point with respect to any Scheduled Service. 

(i) “Foreign Aviation Authority” means any non-U.S. governmental, quasi‐governmental, 

regulatory or other agency, public corporation or private entity that exercises jurisdiction 

over the issuance or authorization (i) to serve any non-U.S. point on any Scheduled Service 

that any Grantor is serving at any time and/or to conduct operations related to any 

Scheduled Service and Gate Leaseholds at any time and/or (ii) to hold and operate any 

Foreign Route Slots at any time.

(j) “Foreign Gate Leasehold” means all of the right, title, privilege, interest and authority, 

now held or hereafter acquired, of the Grantorsin connection with the right to use or occupy 
Annex 4 - 8

WEIL:\97681611\4\13173.0005

space at an airport terminal at any Foreign Airport but in each case excluding any Foreign 

Gate Leasehold of Grantor that, at such time, is held, acquired, used, allocated to or 

available for use by another air carrier pursuant to an agreement (including any loan 

agreement, lease agreement, or other gate leasehold use arrangement). 

(k) “Foreign Route Slot” means, at any time of determination, any Foreign Slot of a Grantor 

at any Foreign Airport, but in each case excluding (i) any Temporary Slot and (ii) any 

Foreign Slot of Grantor that, at such time, is held, acquired, used, allocated to or available 

for use by another air carrier pursuant to an agreement (including any loan agreement, lease 

agreement, slot exchange agreement or a slot release agreement).

(l) “Foreign Slot” means, at any time of determination, in the case of airports outside the 

United States, the right and operational authority to conduct one landing or take-off 

operation at a specific time or during a specific time period at such airport.

(m) “Gate Leasehold” means each Domestic Gate Leasehold and each Foreign Gate 

Leasehold, or any of the foregoing.

(n) “Governmental Authority” has the meaning set forth in the Loan Agreement, except that 

for purposes of this Annex, Governmental Authority shall not include any Person in its 

capacity as an Airport Authority.

(o) “IATA” means the International Air Transport Association and any successor thereto.

(p) “Material Adverse Effect” shall have the meaning given in Section 1.01 of the Loan 

Agreement except that, in the case of SGR Assets, clause (b)(ii) of Material Adverse Effect 

shall refer to “the legality, validity, binding effect or enforceability against the Borrower 

or any Credit Party of any Loan Document to which it is a party or the validity, perfection 

and first priority of the Liens on the Collateral in favor of the Collateral Agent taken as a 

whole or with respect to a material portion of the Collateral”.

(q) “Pledged Gate Leaseholds” means, as of any date, the Gate Leaseholds included in the 

Collateral as of such date.

(r) “Pledged Route Authorities” means, as of any date, the Route Authorities included in the 

Collateral as of such date.

(s) “Pledged Slots” means, as of any date, the Slots included in the Collateral as of such date.

(t) “Route Authorities” means, at any time of determination, any route authority whether 

currently in effect or hereafter granted to each Grantor to operate Scheduled Services 

between the points identified in Schedule 2.1 to this Agreement (as such Schedule may be 

amended or modified from time to time pursuant to this Agreement), including applicable 

frequencies, notices, approvals, orders, exemptions and certificate authorities issued to 

such Grantor from time to time, in each case whether or not utilized by the Grantors.

(u) “Scheduled Services” means, at any time of determination, (i) each non-stop scheduled 

air carrier service between any Domestic Airport listed on Schedule 2.1 and any Foreign 

Airport listed on Schedule 2.1 of this Agreement (as such Schedule may be amended, or 

modified from time to time pursuant to this Agreement) (x) being operated by a Grantor or 

(y) available for operation by a Grantor (to the extent, with respect to clause (y), included 

in the then most recent Appraisal delivered under the Loan Agreement) and (ii) any other 
Annex 4 - 9

WEIL:\97681611\4\13173.0005

non-stop scheduled air carrier service (x) being operated by a Grantor at such time or (y) 

available for operation by a Grantor (to the extent, with respect to clause (y), included in 

the then most recent Appraisal delivered under the Loan Agreement) that has been 

designated as an additional “Scheduled Service” pursuant to any Pledge Supplement, and 

“Scheduled Service” shall mean any of such Scheduled Services as the context requires.

(v) “SGR Assets” shall consist of:

i. Gate Leaseholds;

ii. Route Authorities;

iii. Slots; 

iv. Grantor’s rights under any leasing, licensing and use agreements with respect to 

any of the foregoing Slots and Gate Leaseholds and under swap or similar 

agreements or arrangements with respect to any of the foregoing Slots; and 

v. All General Intangibles which are owned by such Grantor (including the General 

Intangibles described on Schedule 2.1) relating to the SGR Assets.

(w) “Slot” means each FAA Route Slot and each Foreign Route Slot, or any of the foregoing.

(x) “Temporary Slot” means, a Slot that was obtained by any Grantor from another air carrier 

pursuant to an agreement (including any loan agreement, lease agreement, slot exchange 

agreement, a slot release agreement or other use arrangement) and is held by such Grantor

on a temporary basis.

(y) “Title 49” means Title 49 of the United States Code, which, among other things, recodified 

and replaced the U.S. Federal Aviation Act of 1958, and the rules and regulations 

promulgated pursuant thereto, as amended from time to time or any subsequent legislation 

that amends, supplements or supersedes such provisions.

(z) “Transfer Restriction” means any restriction or consent requirement relating to the 

transfer or assignment by a Grantor of any right, title or interest in (but not the creation of 

a security interest in) any type of property or any claim, right or benefit arising thereunder 

or resulting therefrom, if an attempted transfer or assignment thereof without the consent 

of any third party would (i) constitute a violation of the terms under which the Grantors

were granted such right, title or interest (or the Grantors’ interest in any agreement or 

license related thereto), (ii) entitle any Governmental Authority or third party to terminate 

or suspend any such right, title or interest (or the Grantors’ interest in any agreement or 

license related thereto), or (iii) violate any applicable Law, rule or regulation, except, in 

any case, to the extent such “Transfer Restriction” shall be rendered ineffective (both to 

the extent that it (x) prohibits, restricts or requires consent and (y) gives rise to a default, 

breach, right of recoupment, claim, defense, termination, right of termination or remedy) 

by virtue of any applicable law, including Sections 9-406, 9-407, 9-408 or 9-409 of the 

UCC as in effect, from time to time, in the State of New York, to the extent applicable (or 

any corresponding sections of the UCC in a jurisdiction other than the State of New York 

to the extent applicable). 
Annex 4 - 10

WEIL:\97681611\4\13173.0005

(aa) “Use or Lose Rule” means, with respect to Slots, any applicable utilization 

requirements issued by the FAA, other Governmental Authorities, any Foreign 

Aviation Authorities or any Airport Authorities.
Annex 5 - 1

WEIL:\97681611\4\13173.0005

Annex 5 (Pledged Collateral)

Each Grantor and the Collateral Agent hereby agree that the terms of this Annex shall apply with respect 

to Collateral consisting of Pledged Collateral.

1. Perfection Requirement. The following requirements shall be included in the definition of 

“Perfection Requirement” and shall constitute an additional “Perfection Requirement” with respect 

to Collateral consisting of:

(a) Certificated Securities, each applicable Grantor shall, on or prior to the Closing Date and 

immediately upon the issuance thereof after the Closing Date, deliver or cause to be 

delivered to the Collateral Agent, for it to hold in its possession, the Security Certificates 

evidencing such Certificated Securities duly indorsed by an effective indorsement (within 

the meaning of Section 8-107 of the UCC) or accompanied by undated share transfer 

powers or other instruments of transfer duly endorsed by such an effective endorsement, 

in each case, to the Collateral Agent or in blank. In addition, each Grantor shall cause any 

certificates evidencing any Pledged Equity Interests to be similarly delivered to the 

Collateral Agent, for it to hold in its possession, regardless of whether such Pledged Equity 

Interests constitute Certificated Securities. Each delivery after the Closing Date pursuant 

to the requirement under this clause (a) shall be accompanied by a schedule describing the 

Certificated Securities and Pledged Equity Interests so delivered, which schedule shall 

supplement Schedule 2.1; provided that failure to provide any such schedule or any error 

therein shall not affect the validity of the pledge of any Certificated Securities or Pledged 

Equity Interests.

(b) Instruments constituting Pledged Debt, each applicable Grantor shall on or prior to the 

Closing Date and immediately upon the issuance thereof after the Closing Date, deliver to 

the Collateral Agent, for it to hold in its possession, all such Instruments duly indorsed or 

accompanied by an undated transfer powers or other instruments of transfer duly endorsed 

by such an effective endorsement, in each case, to the Collateral Agent or in blank. Each 

delivery after the Closing Date pursuant to the requirement under this clause (b) shall be 

accompanied by a schedule describing the Instruments so delivered, which schedule shall 

supplement Schedule 2.1; provided that failure to provide any such schedule or any error 

therein shall not affect the validity of the pledge of any such Instruments. 

2. Representations and Warranties. Each Grantor (as applicable) represents and warrants, on the 

Closing Date and on the date of each Borrowing (or, in the case of an Additional Grantor or 

Additional Collateral, on the date of such Grantor’s execution and delivery of a Pledge Supplement, 

or the date such Additional Collateral becomes subject to the security interest created hereby, as 

applicable):

(a) Schedule 2.1 sets forth all Pledged Collateral that constitutes Collateral.

(b) All Pledged Equity Interests and Pledged Debt issued by the Parent, the Borrower, a 

Grantor (or, in each case, a Subsidiary thereof), (A) have been duly and validly authorized,

(B) are fully paid and nonassessable and (C) are legal, valid and binding obligations of the 

issuers thereof.

(c) (i) The Pledged Collateral is and will continue to be freely transferable and assignable and 

(ii) there are and will be no outstanding warrants, options or other rights to purchase, or 
Annex 5 - 2

WEIL:\97681611\4\13173.0005

shareholder, voting trust or similar agreements outstanding with respect to, or property that 

is convertible into, or that requires the issuance or sale of, any Pledged Equity Interests.

(d) Upon satisfaction and completion of all conditions and steps that constitute Perfection 

Requirement in this Agreement and this Annex, the Collateral Agent will obtain a legal, 

valid and perfected first-priority security interest upon and in such all Pledged Collateral

subject to no Lien (other than the Liens created hereunder and other Permitted Liens).

(e) Unless otherwise specified in Schedule 2.1 of this Agreement, any Pledged Equity Interests 

consisting of an interest in a limited liability company, a partnership or limited partnership 

are not represented by a certificate and are not a “security” within the meaning of the UCC.

3. Covenants. Each Grantor (as applicable) covenants and agrees that:

(a) In the event such Grantor receives any dividends, interest or distributions on any Pledged 

Collateral upon the merger, consolidation, liquidation or dissolution of any issuer or 

obligor thereof, then (a) such dividends, interest or distributions and securities or other 

property shall be included in the definition of Collateral without further action and (b) such 

Grantor shall immediately take all steps, if any, necessary or advisable to ensure the 

validity, perfection, priority and, if applicable, Control of the Collateral Agent over such 

Pledged Collateral and pending any such action, such Grantor shall be deemed to hold such 

dividends, interest, distributions, securities or other property in trust for the benefit of the 

Collateral Agent and shall segregate such dividends, distributions, Securities or other 

property from all other property of such Grantor. Notwithstanding the immediately 

foregoing sentence, without limiting the restrictions and limitations contained in Section 

6.05 of the Loan Agreement, all cash dividends, interest or distributions on any Pledged 

Collateral may be retained and used by the applicable Grantor so long as no Event of 

Default shall have occurred and be continuing.

(b) The Pledged Equity Interests consisting of an interest in a limited liability company, a 

partnership or limited partnership shall not be represented by a certificate, and no Grantor 

shall elect to treat any such Pledged Equity Interests as a “security” within the meaning of 

the UCC other than to the extent any Pledged Equity Interests were represented by a 

certificate as of the Closing Date.

(c) So long as no Event of Default shall have occurred and be continuing, except as otherwise 

provided in this Agreement or other Loan Documents, each Grantor shall be entitled to 

exercise or refrain from exercising any and all voting and other consensual rights pertaining 

to the Pledged Collateral or any part thereof for any purpose not inconsistent with the terms 

of the Loan Agreement, this Agreement or any other Loan Documents; provided, no 

Grantor shall exercise or refrain from exercising such voting and powers in any manner 

that (y) would reasonably be expected to materially and adversely affect the rights and 

remedies of the Collateral Agent with respect to the Pledged Collateral or (z) would result 

in, or would reasonably be expected to result in, a Material Adverse Effect.

(d) If, after the Closing Date, any Grantor forms or acquires a Subsidiary that is a party to a 

contract, agreement, transaction or other undertaking constituting a Material Loyalty 

Program Agreement or Loyalty Program Agreement, then such Grantor will, as promptly 

as practicable and, in any event, within one (1) Business Day (in the case of a Material 

Loyalty Program Agreement) and ten (10) Business Days (in the case of a Loyalty Program 

Agreement) after such Subsidiary is formed or acquired, notify that Appropriate Party 

thereof and, at the request of the Appropriate Party, pledge, in favor of the Appropriate 
Annex 5 - 3

WEIL:\97681611\4\13173.0005

Party, all such Equity Interest in or Indebtedness of such Subsidiary owned by or on behalf 

of any Grantor.

4. Defaults and Remedies. Without limiting the generality of Section 8.1 of this Agreement and in 

addition to any rights and remedies that the Collateral Agent may have under the Loan Documents 

and the applicable Law:

(a) Each Grantor recognizes that, by reason of certain prohibitions contained in the Securities 

Act and applicable state securities laws, the Collateral Agent may be compelled, with 

respect to any sale of all or any part of the Pledged Collateral conducted without prior 

registration or qualification of such Pledged Collateral under the Securities Act and/or such 

state securities laws, to limit purchasers to those who will agree, among other things, to 

acquire the Pledged Collateral for their own account, for investment and not with a view 

to the distribution or resale thereof. Each Grantor acknowledges that any such private sale 

may be at prices and on terms less favorable than those obtainable through a public sale 

without such restrictions (including a public offering made pursuant to a registration 

statement under the Securities Act) and, notwithstanding such circumstances, each Grantor 

agrees that any such private sale shall be deemed to have been made in a commercially 

reasonable manner and that the Collateral Agent shall have no obligation to engage in 

public sales and no obligation to delay the sale of any Pledged Collateral for the period of 

time necessary to permit the issuer thereof to register it for a form of public sale requiring 

registration under the Securities Act or under applicable state securities laws, even if such 

issuer would, or should, agree to so register it. If the Collateral Agent determines to 

exercise its right to sell any or all of the Pledged Collateral, upon written request, each 

Grantor shall and shall cause each issuer of the Pledged Collateral to be sold hereunder 

from time to time to furnish to the Collateral Agent all such information as the Collateral 

Agent may request in order to determine the number and nature of interest, shares or other 

instruments included in the Pledged Collateral which may be sold by the Collateral Agent

in exempt transactions under the Securities Act and the rules and regulations of the 

Securities and Exchange Commission thereunder, as the same are from time to time in 

effect.

(b) Each Grantor hereby authorizes and instructs each issuer of any Pledged Collateral that 

constitute Collateral to (i) comply with any instruction received by it from the Collateral 

Agent that (x) states that an Event of Default (or another applicable similar trigger event) 

has occurred and is continuing and (y) is otherwise in accordance with the terms of this 

Agreement, without any other or further instructions from any other Person, and each 

Grantor agrees that each issuer shall be fully protected in so complying, and (ii) upon the 

occurrence and continuance of any Event of Default, unless otherwise expressly permitted 

hereby, pay any dividends or other payments with respect to the Pledged Collateral directly 

to the Collateral Agent.

(c) If an Event of Default has occurred and is continuing:

(i) at the direction of the Collateral Agent (acting at the direction of the Required 

Lenders), all rights of each Grantor to exercise or refrain from exercising the voting 

and other consensual rights which it would otherwise be entitled to exercise 

pursuant hereto shall cease and all such rights shall thereupon become vested in 

the Collateral Agent, which shall thereupon have the sole and exclusive right to 

exercise such voting and other consensual rights.
Annex 5 - 4

WEIL:\97681611\4\13173.0005

(ii) all rights of any Grantor to dividends, interest, principal or other distributions that 

such Grantor is authorized to receive as otherwise which it would otherwise be 

entitled to exercise pursuant hereto shall cease, and all such rights shall thereupon 

become vested in the Collateral Agent, which shall have the sole and exclusive 

right and authority to receive and retain such dividends, interest, principal or other 

distributions. All dividends, interest, principal or other distributions received by 

any Grantor contrary to this provision shall be held in trust for the benefit of, or 

for and on behalf of, the Collateral Agent and the other Secured Parties, shall be 

segregated from other property or funds of such Grantor and shall be forthwith 

delivered to the Collateral Agent upon demand in the same form as so received 

(with any necessary endorsements, stock or note powers or other instruments of 

transfer). Any and all money and other property paid over to or received by the 

Collateral Agent pursuant to this provision shall be retained by the Collateral 

Agent in an account in the name of the relevant Grantor to be established by the 

Collateral Agent and held as security for the payment and performance of the 

Secured Obligations and shall be applied in accordance with the provisions of 

Section 7.02 of the Loan Agreement.

(iii) each Grantor will promptly give to the Collateral Agent copies of any notices or 

other communications received by it with respect to Pledged Collateral registered 

in the name of such Grantor.

(iv) the Collateral Agent may (and to the extent that action by it is required, the relevant 

Grantor, if directed to do so by the Collateral Agent, will as promptly as 

practicable) cause each of the Pledged Collateral (or any portion thereof specified 

in such direction) to be transferred of record into the name of the Collateral Agent

or its nominee, for the benefit of the Secured Parties. 

(v) the Collateral Agent may exercise all other rights, powers, privileges and remedies 

to which a holder of the Pledged Equity Interests would be entitled (including, with 

respect to the Pledged Equity Interests, giving or withholding written consents of 

members, calling special meetings of members and voting at such meetings).

(vi) each Grantor agrees to use its best efforts to do or cause to be done all such other 

acts as may be necessary to make such sale or sales of all or any portion of the 

Pledged Equity Interests pursuant to this Agreement valid and binding and in 

compliance with any and all other applicable Law. Each Grantor further agrees 

that a breach of any of the covenants contained in this Section of this Annex will 

cause irreparable injury to the Collateral Agent and the Secured Parties, that the 

Collateral Agent and the Secured Parties have no adequate remedy at law with 

respect to such breach and, as a consequence, that each and every covenant 

contained in this Annex shall be specifically enforceable against such Grantor, and 

such Grantor hereby waives and agrees not to assert any defenses against an action 

for specific performance of such covenants except for a defense that no Event of 

Default has occurred under the Loan Agreement and is continuing.

(vii) the Collateral Agent may complete any stock, bond or other power, to receive, 

endorse and collect all instruments made payable to any Grantor representing any 

dividend or other distribution with respect to the Pledged Equity Interests or any 

part thereof and to give full discharge for the same.

5. Miscellaneous. Each Grantor and the Collateral Agent agree that:
Annex 5 - 5

WEIL:\97681611\4\13173.0005

(a) The terms of this Annex shall be deemed incorporated into and part of this Agreement.

(b) The terms of this Annex are cumulative in nature and shall not limit the applicability or 

scope of the other terms of this Agreement.

(c) Upon satisfaction and completion, as determined by the Appropriate Party, of the 

conditions for release of any Pledged Collateral from the Lien granted hereby in accordance 

with Section 6.17(b)(iii) of the Loan Agreement, such Pledged Collateral shall be released 

from the Lien granted under this Agreement, and the Collateral Agent will thereupon 

execute and deliver to the applicable Grantor, at such Grantor’s sole expense, all 

appropriate UCC termination statements and other documents that such Grantor shall 

reasonably request to evidence such release. The Collateral Agent shall have no liability 

whatsoever to any Secured Party as a result of its execution of any such documentation 

with respect to any such release.

6. Terms. The following capitalized terms used in this Annex shall have the following meanings:

(a) “Pledged Collateral” shall mean (i) Pledged Debt, (ii) Pledged Equity Interests, (iii) all 

payments of principal or interest, dividends, cash, instruments and other property from time 

to time received, receivable or otherwise distributed with respect to, in exchange for or 

upon the conversion of, and all other Proceeds received with respect to, the securities and 

instruments referred to in clauses (i) and (ii) above; (iv) all rights and privileges of such 

Grantor with respect to the securities, instruments and other property referred to in 

clauses (i), (ii) and (iii) above; and (v) all Proceeds of any and all of the foregoing.

(b) “Pledged Debt” shall mean all Indebtedness owed to any Grantor issued by the obligors 

named therein, the promissory notes and any other instruments evidencing such 

Indebtedness, and all interest, cash, instruments and other property or proceeds from time 

to time received, receivable or otherwise distributed with respect to or in exchange for any 

or all of such Indebtedness, listed opposite the name of such Grantor on Schedule 2.1.

(c) “Pledged Equity Interests” shall mean (i) Equity Interests set forth opposite the name of 

such Grantor on Schedule 2.1, (ii) all rights, privileges, authorities, and powers of such 

Grantor as an owner or holder of such Equity Interests, including all economic rights, all 

control rights, authority, and powers, all status rights of such Grantor as a member, 

shareholder, or other owner (as applicable), and all rights and interests, if any, to participate 

in the management of each applicable issuer, (iii) all of such Grantor’s options and other 

rights and interests, contractual or otherwise, with respect to the Pledged Equity Interests, 

(iv) all of the certificates, if any, evidencing or representing the Pledged Equity Interests 

and (v) all dividends, distributions, cash, warrants, rights, options, instruments, securities 

and other property or proceeds from time to time received, receivable or otherwise 

distributed with respect to or in exchange for any or all of any of the foregoing.
Annex 6 - 1

WEIL:\97681611\4\13173.0005

Annex 6 (Spare Parts Assets)

Each Grantor and the Collateral Agent hereby agree that the terms of this Annex shall apply with respect 

to Collateral consisting of Spare Parts Assets.

1. Perfection Requirement. The following requirements shall be included in the definition of 

“Perfection Requirement” and shall constitute an additional “Perfection Requirement” with respect 

to Collateral consisting of Spare Parts Assets:

(a) The applicable Grantor, at its sole cost and expense, will cause the FAA Filed Documents 

to be prepared and duly and timely filed and recorded, or filed for recordation with the 

FAA to the extent permitted or required under Title 49.

(b) The applicable Grantor, at its sole cost and expenses, shall:

(i) Execute and deliver, or cause to be executed and delivered, the Mortgage Location 

Supplements in form and substance satisfactory to the Appropriate Party.

(ii) Duly prepare and file, or cause to be duly prepared and filed, the FAA Filed

Documents for recordation with the FAA in accordance with Title 49 and the 

regulations thereunder.

2. Required Filings. Each of the following financing statement, filing, recording or other document 

shall be included in the definition of “Required Filing” and shall constitute an additional “Required 

Filing”:

(a) Each FAA Filed Document.

3. Representations and Warranties. Each Grantor represents and warrants, on the Closing Date and 

on the date of each Borrowing (or, in the case of an Additional Grantor or Additional Collateral, 

on the date of such Grantor’s execution and delivery of a Pledge Supplement, or the date such

Additional Collateral becomes subject to the security interest created hereby, as applicable):

(a) Schedule 2.1 sets forth all Spare Parts Assets that constitute Collateral and information 

with respect thereto, including the Designated Spare Parts Location for all such Spare Parts 

Assets.

(b) Upon satisfaction and completion of the Perfection Requirements under this Annex, the 

Collateral Agent for the benefit of the Secured Parties will obtain a legal, valid and 

perfected first-priority security interest upon and in all Collateral consisting of Spare Parts 

Assets, subject to no Lien (other than the Lien created hereunder and other Permitted Liens) 

and will be entitled to all the rights, priorities and benefits afforded by Title 49 and other 

applicable Laws to perfected security interests or Liens.

(c) All Spare Parts Assets constituting Collateral have been first placed in service after October 

22, 1994. 

(d) There is no registration or filing covering or purporting to cover any interest of any kind in 

the Spare Parts Assets (other than Permitted Liens).

(e) All Spare Parts Assets constituting Collateral are located at a Designated Spare Parts 

Location in the United States.
Annex 6 - 2

WEIL:\97681611\4\13173.0005

(f) The applicable Grantor, in compliance with 14 C.F.R. 49.53(a)(1) and (2), certifies that it

is an air carrier, certificated by the FAA under 49 U.S.C. 44705, and that the Spare Parts 

Assets constituting Collateral are maintained by or on behalf of such Grantor at the 

Designated Spare Parts Locations.

(g) Each Designated Spare Parts Location shall be either owned or leased by the Grantors.

4. Covenants. Each Grantor (as applicable) covenants and agrees that:

(a) It shall not execute or authorize or permit to be filed in any public office any filing (other 

than with respect to Liens hereunder or other Permitted Liens) relating to any Spare Parts 

Assets or the location thereof.

(b) Tracking System. It shall maintain the Tracking System in a manner sufficient to monitor 

the Spare Parts Assets and its perpetual inventory procedures for Spare Parts Assets that 

provide a continuous internal audit of Spare Parts Assets. Notwithstanding the limitations 

herein, the Collateral Agent and the Appropriate Party, or their respective agents (as 

designated by the Lenders) shall be entitled to access and inspect the Tracking System to 

monitor the types, quantities and locations of any Spare Parts Assets and to ensure the 

Grantors’ compliance with the terms hereof in a manner consistent with Section 5.11 of 

the Loan Agreement. If requested by the Appropriate Party or the Collateral Agent, the 

applicable Grantor will obtain a written acknowledgment of the Collateral Agent’s, the 

Appropriate Party’s and their respective agents’ access and inspection rights hereunder 

from any third party that owns or operates the Tracking System.

(c) Designated Spare Parts Locations.

(i) For so long as any Spare Parts Assets constitute Collateral hereunder, the 

applicable Grantor shall remain certified as an air carrier, certificated by the FAA 

under 49 U.S.C. 44705. Except in connection with any utilization or Disposition 

thereof that is permitted hereunder or under the Loan Agreement, the Spare Parts 

Assets constituting Collateral shall be maintained by or on behalf of such Grantor 

at one or more of the Designated Spare Parts Locations, and the nature of such 

Grantor’s interest in and to each such location (e.g., owner, leasehold, tenant) is 

and shall remain as described to the Collateral Agent pursuant to this Agreement.

(ii) Each Grantor will promptly notify (in any event, within fifteen (15) days thereof)

the Collateral Agent if any of the representations, warranties or agreements 

contained in the preceding sentence become inaccurate in any respect with respect 

to any of the Spare Parts Assets or the interest of the applicable Grantor therein.

(iii) If any Grantor acquires at any time after the Closing Date a location at which such 

Grantor keeps Spare Parts of a type or model which, if located at a Designated 

Spare Parts Location would be subject to a Lien by this Agreement, then such 

Grantor shall promptly (and in any event within 5 days) furnish to the Collateral 

Agent, at such Grantor’s sole expense, the documents listed in Section 4(c)(iv)(A)-

(C).

(iv) If any Grantor desires at any time after the Closing Date to add a Designated Spare 

Parts Location, such Grantor shall promptly furnish the following to the Collateral 

Agent, at Grantors’ sole expense:
Annex 6 - 3

WEIL:\97681611\4\13173.0005

(A) not less than fifteen (15) days prior to the utilization of such new 

Designated Spare Parts Location, a Mortgage Location Supplement 

duly executed by the applicable Grantor, identifying each location that 

is to become a Designated Spare Parts Location and specifically 

subjecting the applicable Spare Parts Assets at such location to the 

Lien of this Agreement;

(B) not less than five (5) days prior to the utilization of such new 

Designated Spare Parts Location, an opinion of counsel, dated the date 

of execution of said Mortgage Location Supplement, in form and 

substance satisfactory to the Appropriate Party, addressed to the 

Secured Parties, stating that said Mortgage Location Supplement has 

been duly filed for recording in accordance with the provisions of Title 

49, and either: (a) no other filing or recording is required in any other 

place within the United States in order to perfect the Lien of this 

Mortgage on the Spare Parts Assets held at the Designated Spare Parts 

Locations specified in such Mortgage Location Supplement under the 

laws of the United States, or (b) if any such other filing or recording 

shall be required that said filing or recording has been accomplished 

in such other manner and places, which shall be specified in such 

opinion of counsel, as are necessary to perfect the Lien of this 

Mortgage with respect to such Spare Parts Assets; and

(C) not less than five (5) days prior to the utilization of such new 

Designated Spare Parts Location, a certificate of the Responsible 

Officer stating that in the opinion of the Responsible Officer executing 

the certificate, all conditions precedent provided for in this Mortgage 

relating to the subjection of such property to the Lien of this Mortgage 

have been complied with.

(d) Maintenance. At its own cost and expense, it:

(i) shall maintain, or cause to be maintained, at all times the Spare Parts Assets in 

accordance with all applicable Laws, including making any modifications, 

alterations, replacements and additions necessary therefor, and shall utilize, or 

cause to be utilized, the same manner and standard of maintenance with respect to 

each model of Spare Parts or Appliance included in the Collateral as is utilized for 

such model of Spare Parts or Appliance owned by such Grantor and not included 

in the Collateral;

(ii) shall maintain, or cause to be maintained, all records, logs and other materials 

required by the FAA or under Title 49 to be maintained in respect of the Spare 

Parts Assets and shall not modify its record retention procedures in respect of the 

Spare Parts Assets unless such modification is consistent with such Grantor’s FAA 

approved maintenance program;

(iii) shall maintain, or cause to be maintained, all Spare Parts Documents in respect of 

the Spare Parts Assets in the English language; 

(iv) shall maintain, or cause to be maintained on a timely basis, the Spare Parts Assets 

in good working order (other than during periods of maintenance, repair, 

inspection and testing) and condition and shall perform all maintenance thereon 
Annex 6 - 4

WEIL:\97681611\4\13173.0005

necessary for that purpose, excluding (x) Spare Parts Assets that have become 

worn out or unfit for use, beyond economic repair or become obsolete or scrap, (y) 

Spare Parts Assets and quick change engine kits that are not required for such

Grantor’s normal operations and (z) Expendables that have been consumed or used 

in the such Grantor’s operations; and

(v) notwithstanding anything herein to the contrary, all Rotables and Repairables 

constituting Collateral and, to the extent customary, Expendables constituting 

Collateral, located at Designated Spare Parts Locations other than as excluded 

under clause (x), (y) or (z) above of clause (iv) above, shall have a current and 

valid serviceable tag and shall be in compliance with such tag, in each case in 

compliance with applicable FAA regulations.

(e) Possession. No Grantor may (A) Dispose of or relinquish possession of any Spare Parts 

Asset to anyone except that the applicable Grantors shall have the right, (w) to Dispose to 

the extent permitted under Section 6.04 of the Loan Agreement and in the ordinary course 

of business, (x) to transfer possession of any Spare Parts Asset in the ordinary course of 

business to the manufacturer thereof or any other organization for testing, overhaul, repairs, 

maintenance, alterations or modifications (to the extent required or permitted by the terms 

hereof) or to any Person for the purpose of transport to any of the foregoing; provided that 

such Grantor covenants to promptly pay when due any payment obligation resulting in a 

mechanic’s or other Lien related to such testing service, repair, maintenance, overhaul, 

alternation, modification, or transport, (y) to subject any Spare Parts Asset to a maintenance 

servicing agreement arrangement entered into and operated in the ordinary course of 

business or (z) to transfer in the ordinary course of business any Spare Parts Asset between 

any Designated Spare Parts Locations; provided, however, that if the applicable Grantor’s 

title to any such Spare Parts Asset shall be divested under any situation described in clauses 

(x) through (z) above, such divestiture shall be deemed to be a Disposition with respect to 

such Spare Parts Asset subject to the provisions of Section 2.06(b) of the Loan Agreement 

or (B) commingle at any location its Spare Parts Assets that constitute Collateral with (i) 

other Spare Parts of the applicable Grantor not constituting Collateral or (ii) the Spare Parts 

of another Affiliate if such other Affiliate has pledged Spare Parts which are not Collateral 

to secure any other Indebtedness or obligations, unless (x) the ownership of each such 

commingled Spare Parts can be definitely determined at all times by reference to the 

applicable Grantor’s or Affiliate’s Spare Parts tracking number and system, as applicable,

or (y) the Spare Parts of such Grantor or Affiliate are not of a type or category of spare 

parts that corresponds to a type of category of Spare Parts Assets that is included in the 

Collateral; provided that Spare Parts that are segregated on a separate aisle, shelf or in a 

separate storage bin or other storage unit or area shall not be considered as having been 

commingled even though such Spare Parts are present at the same location so long as the 

applicable Grantor install signs in or on each such aisle, shelf, bin or other storage unit or 

area containing Collateral bearing the inscription: “Property of [GRANTOR], Mortgaged

to THE BANK OF NEW YORK MELLON as Collateral Agent for the benefit of the 

Secured Parties” (such sign to be replaced if there is a successor Collateral Agent).

(f) Use; Modifications.

(i) Use. At its own cost and expense, without the necessity of any release from or 

consent by the Collateral Agent, it may: (1) incorporate in, install on, attach or 

make appurtenant to, or use in, any aircraft, engine, or spare part in its fleet 

(whether or not subject to any Lien and whether or not operated by such Grantor) 
Annex 6 - 5

WEIL:\97681611\4\13173.0005

the Spare Parts Assets constituting Collateral and, as a result thereof, if such Spare 

Parts Assets are incorporated in, installed in, attached or made appurtenant to an 

airframe, engine or spare engine, such Spare Parts Asset shall thereupon be free 

from the Lien of this Mortgage; provided that, except as provided for in Sections 

4(e)(A)(x) and 4(f)(i)(2) of this Annex, if the Spare Part incorporated in, installed 

on, attached or made appurtenant to, or used in, any aircraft, engine, or spare part 

in its fleet is used to replace a part that would otherwise be covered by a Lien of 

this Mortgage if it were located at a Designated Spare Parts Location, then the 

applicable Grantor shall return that part to a Designated Spare Parts Location and 

(2) dismantle any Spare Parts Asset that has become worn out or obsolete or unfit 

for use, and to scrap, sell or Dispose of any such Spare Parts Asset or any salvage 

resulting from such dismantling, in which case such Spare Parts Asset shall 

thereupon be free from the Lien of this Agreement.

(g) Insurance. 

(i) Each Grantor shall ensure that at all times the Collateral Agent, for the benefit of 

the Secured Parties, shall be named as an additional insured and lender loss payee 

with respect to any Spare Parts Assets constituting Collateral and take any other 

steps required under this Annex.

(ii) Obligation to Insure. Each Grantor (as applicable) shall comply with, or cause to 

be complied with, each of the provisions of Appendix I to this Annex, which 

provisions are hereby incorporated by this reference as if set forth in full herein.

(iii) Insurance for Own Account. Nothing in this Annex shall limit or prohibit (i) any 

Grantor from maintaining the policies of insurance required under Appendix I of 

this Annex with higher coverage than those specified in Appendix I, or (ii) the 

Collateral Agent (without a duty to do so) or any other Additional Insured from 

obtaining insurance, upon the occurrence of an Event of Default, at the applicable

Grantor’s expense, for its own account (and any proceeds payable under such 

separate insurance shall be payable as provided in the policy relating thereto); 

provided, however, that no insurance may be obtained or maintained that would 

limit or otherwise adversely affect the coverage of any insurance required to be 

obtained or maintained by any Grantor pursuant to this Annex and Appendix I of 

this Annex.

(iv) Application of Insurance Proceeds. As between each applicable Grantor and the 

Collateral Agent, all insurance proceeds received as a result of the occurrence of 

an Event of Loss with respect to any Spare Parts Asset constituting Collateral at 

the time of such receipt shall be applied in accordance with Section 2.06(b) of the 

Loan Agreement.

(h) Inspection.

(i) The Appropriate Party and the Collateral Agent, or their respective authorized 

representatives, as designated by the Lenders may exercise inspection rights with 

respect Aircraft and Engine Assets constituting Collateral to the fullest extent 

permitted under Section 5.11 of the Loan Agreement.
Annex 6 - 6

WEIL:\97681611\4\13173.0005

(ii) With respect to such rights of inspection, the Secured Parties shall not have any 

duty or liability to make, or any duty or liability by reason of not making, any such 

visit, inspection or survey.

(i) Data Reports. After the occurrence and during the continuance of an Event of Default and

as may be requested by the Collateral Agent or the Appropriate Party from time to time, 

the applicable Grantor shall furnish the Collateral Agent and the Appropriate Party with a 

Data Report.

5. Release of Collateral. Each Grantor and the Collateral Agent agree that:

(a) Upon satisfaction and completion, as determined by the Appropriate Party, of the 

conditions for release of any Spare Parts Assets constituting Collateral from the Lien 

granted hereby in accordance with Section 6.17(b)(iii) of the Loan Agreement, such Spare 

Parts Assets shall be released from the Lien granted under this Agreement, and the 

Collateral Agent will thereupon execute and deliver to the applicable Grantor, at such 

Grantor’s sole expense, all appropriate UCC termination statements and other documents

that such Grantor shall reasonably request to evidence such release. The Collateral Agent 

shall have no liability whatsoever to any Secured Party as a result of its execution of any 

such documentation with respect to any such release.

6. Miscellaneous. Each Grantor and the Collateral Agent agree that:

(a) The terms of this Annex shall be deemed incorporated into and part of this Agreement.

(b) The terms of this Annex are cumulative in nature and shall not limit the applicability or 

scope of the other terms of this Agreement.

7. Terms. 

(a) The following capitalized terms used in this Annex shall have the following meanings:

(i) “Additional Insureds” is defined in Appendix I to this Annex.

(ii) “Aircraft” shall mean any contrivance invented, used, or designed to navigate, or 

fly in, the air.

(iii) “Appliance” shall mean any instrument, equipment, apparatus, part, appurtenance, 

or accessory used, capable of being used, or intended to be used, in operating or 

controlling aircraft in flight, including a parachute, communication equipment, and 

another mechanism installed in or attached to aircraft during flight, and not a part 

of an aircraft, engine, or propeller (including “appliances” (as defined in Section 

40102 of Title 49)).

(iv) “Data Report” means information and data relating to the Spare Part Assets 

supplied by the Grantors to the Collateral Agent and the Appropriate Party and 

substantially in the form of Exhibit B to this Annex.

(v) “Designated Spare Parts Locations” shall mean the locations designated from 

time to time by the Grantors at which the Spare Parts Assets may be maintained 

by or on behalf of the Grantors, which shall be the locations set forth on Schedule 

2.1 to this Agreement.
Annex 6 - 7

WEIL:\97681611\4\13173.0005

(vi) “Engine” shall mean an engine used, or intended to be used, to propel an Aircraft, 

including a part, appurtenance, and accessory of the Engine, except a propeller.

(vii) “Event of Loss” means, with respect to any Spare Parts Asset, any of the following 

circumstances, conditions or events with respect to such property, for any reason 

whatsoever:

(A) the destruction of such property, damage to such property beyond 

economic repair or rendition of such property permanently unfit for 

normal use by the Grantors(other than the use of Expendables in Grantor’s 

operations);

(B) the actual or constructive total loss of such property or any damage to such 

property, or requisition of title or use of such property, which results in an 

insurance settlement with respect to such property on the basis of a total 

loss or constructive or compromised total loss;

(C) any theft, hijacking or disappearance of such property for a period of one 

hundred and eighty (180) consecutive days or more; or

(D) any seizure, condemnation, confiscation, taking or requisition (including 

loss of title) of such property by any Governmental Authority or purported 

Governmental Authority (other than a requisition of use by the U.S. 

Government) for a period exceeding one hundred and eighty (180)

consecutive days.

(viii) “Expendables” shall mean Spare Parts, other than Rotables and Repairables.

(ix) “FAA Filed Document” shall mean the Mortgage Location Supplement executed 

by a Grantor.

(x) “Mortgage” shall mean this Pledge and Security Agreement.

(xi) “Mortgage Location Supplement” means a Mortgage Location Supplement, 

substantially in the form of Exhibit A to this Annex, with appropriate modifications 

to reflect the purpose for which it is being used.

(xii) “Repairable” shall mean any Spare Part that wears over time and can be 

commonly restored to a serviceable condition until the expected point of being 

beyond economic repair, excluding any such Spare Parts that qualifies as, and is 

designated by any Grantor to be, a Rotable.

(xiii) “Rotable” means any Spare Part that wears over time and can be repeatedly 

restored to a serviceable condition over a period approximating the life of the flight 

equipment to which it relates, excluding any such Spare Parts that qualifies as, and 

is designated by any Grantor to be, a Repairable.

(xiv) “Spare Parts” shall mean all accessories, appurtenances, or parts of (A) an aircraft 

(except an engine or propeller), (B) an engine (except a propeller), (C) a propeller, 

or (D) an Appliance, that are to be installed at a later time in an aircraft, engine, 

propeller or Appliance (including “spare parts” (as defined in Section 40102 of 
Annex 6 - 8

WEIL:\97681611\4\13173.0005

Title 49)) including, in all cases, any replacements, substitutions or renewals 

therefor, and accessions thereto.

(xv) “Spare Parts Assets” shall mean:

(A) All Spare Parts of the Grantors (including Expendables, Repairables and 

Rotables (and all substitutions or replacements of any of the foregoing)), 

including without limitation, all such Spare Parts from time to time located 

at a Designated Spare Parts Location described on Schedule 2.1; 

(B) Any continuing rights of any Grantor in respect of any warranty, 

indemnity or agreement, express or implied, as to title, materials, 

workmanship, design or patent infringement with respect to such Spare 

Parts (reserving in each case to the Grantors, however, all of the Grantors’

other rights and interest in and to such warranty, indemnity or agreement) 

together in each case under this clause with all rights, powers, privileges, 

options and other benefits of such Grantor thereunder (subject to such 

reservations) with respect to such Spare Parts, including the right to make 

all waivers and agreements, to give and receive all notices and other 

instruments or communications, to take such action upon the occurrence 

of a default thereunder, including the commencement, conduct and 

consummation of legal, administrative or other proceedings, as shall be 

permitted thereby or by law, and to do any and all other things which such 

Grantor is or may be entitled to do thereunder (subject to such 

reservations);

(C) All Appliances with respect to the foregoing;

(D) All General Intangibles which are owned by such Grantor (including the 

General Intangibles described on Schedule 2.1) relating to Spare Parts 

Assets described in the foregoing; and

(E) All Insurance with respect to the foregoing.

(xvi) “Spare Parts Documents” means all repair, maintenance and inventory records, 

logs, manuals and all other documents and materials similar thereto (including any 

such records, logs, manuals, documents and materials that are computer print-outs) 

at any time maintained, created or used by the applicable Grantor, and all records, 

logs, documents and other materials required at any time to be maintained by the

applicable Grantor pursuant to the FAA or under Title 49, in each case with respect 

to any of the Spare Parts Assets.

(xvii) “Tracking System” shall mean Grantor’s centralized computer system for 

monitoring and tracking the location, condition and status of its Spare Parts Assets, 

and any and all improvements, upgrades or replacement systems.
Appendix I to Annex 6 - 1

WEIL:\97681611\4\13173.0005

Appendix I to Annex 6

APPENDIX I

INSURANCE

A. Liability Insurance.

Each Grantor (as applicable) will carry or cause to be carried at all times, at no expense to the 

Collateral Agent or any Secured Party, comprehensive airline liability insurance with respect to the Spare 

Parts Assets, which is (i) of an amount and scope as may be customarily maintained by such Grantor for 

equipment similar to the Spare Parts Assets and (ii) maintained in effect with insurers of nationally or 

internationally recognized responsibility (such insurers being referred to herein as “Approved Insurers”).

B. Hull (Spares) Insurance.

Each Grantor (as applicable) will carry or cause to be carried at all times, at no expense to any 

additional insured/loss payee, with Approved Insurers comprehensive airline hull insurance (including 

spares coverage) covering physical damage to the Spare Parts Assets providing for the reimbursement of 

the actual expenditure incurred in repairing or replacing any damaged or destroyed Spare Parts Asset or, if 

not repaired or replaced, for the payment of the amount it would cost to repair or replace such Spare Parts 

Asset, on the date of loss, with proper deduction for obsolescence and physical depreciation.

Any policies of insurance carried in accordance with this Section B covering the Spare Parts Assets 

and any policies taken out in substitution or replacement for any such policies shall provide that insurance 

proceeds under such policies shall be payable directly to the Collateral Agent for prompt deposit into a

Collateral Proceeds Account in a manner consistent with Section 2.06(b)(ii) of the Loan Agreement as it 

applies to a Recovery Event.

All losses will be adjusted by the applicable Grantor with the insurers; provided, however, that 

during a period when an Event of Default shall have occurred and be continuing, no Grantor shall agree to 

any such adjustment without the written consent of the Collateral Agent (acting at the direction of the 

Required Lenders).

C. Reports and Certificates; Other Information.

On or prior to the Closing Date, and on or prior to each renewal date of the insurance policies 

required hereunder, each applicable Grantor will furnish or cause to be furnished to the Collateral Agent

insurance certificates describing in reasonable detail the commercial insurance maintained by the applicable 

Grantors hereunder, together with endorsements satisfactory to the Collateral Agent and the Appropriate 

Party designating the Secured Parties as loss payees and additional insureds with respect to the Spare Parts 

Assets constituting Collateral. To the extent such agreement is reasonably obtainable, the applicable 

Grantors will also cause the Insurance Broker to agree to advise the Secured Parties in writing of any default 

in the payment of any premium and of any other act or omission on the part of the applicable Grantors of 

which it has knowledge and which might invalidate or render unenforceable, in whole or in part, any 

commercial insurance on such Spare Parts Assets or cause the cancellation or termination of such insurance, 

and to advise the Secured Parties in writing at least thirty (30) days (ten (10) days in the case of nonpayment 

of premium, or such shorter period as may be available in the international insurance market, as the case 
Appendix I to Annex 6 - 2

WEIL:\97681611\4\13173.0005

may be) prior to the cancellation or material adverse change of any commercial insurance maintained 

pursuant to this Appendix I.

D. Right to Pay Premiums.

The additional insureds/loss payees shall have the rights but not the obligations of an additional 

named insured. None of the Collateral Agent or the other additional insureds/loss payees shall have any 

obligation to pay any premium, commission, assessment or call due on any such insurance (including 

reinsurance). Notwithstanding the foregoing, in the event of cancellation of any insurance due to the 

nonpayment of premiums, the Collateral Agent may, at the direction of the Required Lenders, to pay any 

such premium in respect of the Spare Parts Assets that is due in respect of the coverage pursuant to this 

Agreement and to maintain such coverage, as the Secured Parties may require, until the scheduled expiry 

date of such insurance and, in such event, the applicable Grantor shall, upon demand, reimburse the 

Collateral Agent for amounts so paid by it, together with interest therein at the Default Rate from the date 

of payment.

E. Salvage Rights; Other. 

All salvage rights to Spare Parts Assets shall remain with the applicable Grantor’s insurers at all 

times, and any insurance policies of the Collateral Agent insuring Spare Parts Assets shall provide for a 

release to the applicable Grantor of any and all salvage rights in and to any Spare Parts Assets.
Exhibit A to Annex 6 - 1

WEIL:\97681611\4\13173.0005

Exhibit A to Annex 6

[FORM OF MORTGAGE LOCATION SUPPLEMENT]

THIS MORTGAGE LOCATION SUPPLEMENT NO. [•], dated [●] (herein, this “Mortgage

Location Supplement”) made by [NAME(S) OF GRANTOR(S)], [a] [●] (together with its permitted 

successors and assigns, the “Grantor”), in favor of THE BANK OF NEW YORK MELLON, as the 

Collateral Agent (together with its successors and assigns, the “Collateral Agent”) for the benefit of the 

Secured Parties.

W I T N E S S E T H:

WHEREAS, the Amended and Restated Horizon Aircraft, Engine and Propeller Pledge and 

Security Agreement, dated as of October 30, 2020 (as amended, supplement, restated or otherwise modified 

from time to time, the “PSA”; capitalized terms used herein but not defined shall have the meaning ascribed 

to them in the PSA), between the Grantors (as defined in the PSA) party thereto from time to time and the 

Collateral Agent, provides for the execution and delivery of supplements thereto substantially in the form 

hereof;

WHEREAS, the Grantor[s] has/have previously designated the locations at which the Spare Parts 

Assets may be maintained by or on behalf of the Grantors in the PSA [and in Mortgage Location 

Supplement No. [●]];

7

WHEREAS, 8the Mortgage [and the Mortgage Location Supplements] has [have] been duly 

recorded with the FAA, pursuant to Title 49 on the following date as a document or conveyance bearing 

the following number:

[Mortgage]

[DATE OF RECORDING]

[DOCUMENT OR 

CONVEYANCE NO.]

9

WHEREAS, the Grantor[s] hereby confirm[s] that it is a certificated U.S. air carrier under Sections 

41102 and 44705 of Title 49 of the United States Code, and the Spare Parts described in this Mortgage 

Location Supplement are maintained by it or on its behalf at the applicable Designated Spare Parts 

Locations described herein;

WHEREAS, the Grantor[s], as provided in the PSA, is/are hereby executing and delivering to the 

Collateral Agent this Mortgage Location Supplement for the purposes of adding locations at which the 

Spare Parts Assets may be maintained by or on behalf of the Grantor[s]; and

WHEREAS, all things necessary to make this Mortgage Location Supplement the valid, binding 

and legal obligation of the Grantors, including all proper corporate action on the part of the Grantors, have 

been done and performed and have happened;

 

7 Note to Form: Bracketed language not to be included in the initial Mortgage Location Supplement.

8 Note to Form: This recital is not to be included in the initial Mortgage Location Supplement.

9 Note to Form: Table not to be included in the initial Mortgage Location Supplement.
Exhibit A to Annex 6 - 2

WEIL:\97681611\4\13173.0005

NOW, THEREFORE, in order to secure the prompt payment and performance of the Secured 

Obligations from time to time outstanding and to secure the performance and observance by the Grantor[s]

and each of the other Credit Parties of all the agreements and provisions contained in the Loan Documents 

(as such term is defined in the PSA for the benefit of the Secured Parties, the Grantor[s] has/have mortgaged, 

assigned, pledged, hypothecated, transferred, conveyed and granted, and does hereby mortgage, assign, 

pledge, hypothecate, transfer, convey and grant, unto the Collateral Agent, for the benefit and security of 

the Secured Parties, a continuing first priority security interest in, and mortgage lien on, the property 

comprising all its right, title and interest in and to the Spare Parts Assets at the Designated Spare Parts 

Location(s) described on Schedule 1 hereto and the Designated Spare Parts Locations listed on Schedule 1

hereto shall be deemed to amend and supplement Schedule 2.1 to the PSA; 

To have and to hold all and singular the aforesaid property unto the Collateral Agent, its successors 

and assigns, for the benefit and security of the Secured Parties and for the uses and purposes and subject to 

the terms and provisions set forth in the PSA.

This Mortgage Location Supplement shall be construed in every way in accordance to the terms of 

the PSA and as a part thereof, and the PSA is hereby incorporated by reference herein and is hereby ratified, 

approved and confirmed.

This Mortgage Location Supplement will be governed by and construed in accordance with the law 

of the State of New York.

[remainder of page intentionally left blank]
Exhibit A to Annex 6 - 3

WEIL:\97681611\4\13173.0005

IN WITNESS WHEREOF, the Grantor[s] has/have caused this Mortgage Location Supplement to be duly 

executed by one of its officers, thereunto duly authorized, on the day and year first above written.

HORIZON AIR INDUSTRIES, INC., as Grantor

By:___________________________________

Name:

Title:
Exhibit A to Annex 6 - 4

WEIL:\97681611\4\13173.0005

Schedule 1

DESIGNATED SPARE PARTS LOCATIONS

[●]
Exhibit B to Annex 6 - 1

WEIL:\97681611\4\13173.0005

Exhibit B to Annex 6

[Address to Appropriate Party]

____________________, 20__

Data Report For Spare Parts Assets

Ladies and Gentlemen:

We refer to the Amended and Restated Horizon Aircraft, Engine and Propeller Pledge and Security 

Agreement, dated as of October 30, 2020 (as amended, supplement, restated or otherwise modified from 

time to time, the “Security Agreement”), between each Grantor, whether as an original signatory thereto 

or as an Additional Grantor, and The Bank of New York Mellon, as collateral agent for the Secured Parties 

(in such capacity as collateral agent, together with its successors and assigns, the “Collateral Agent”). 

Terms defined in the Security Agreement and used herein have such respective defined meanings. The 

Grantor[s] hereby certifies/certify that: 

Attached hereto as Exhibit 1 is a report that correctly sets forth the following information as of the date 

hereof with respect to each Pledged Spare Part:

1. Manufacturer’s part number; 

2. part description; 

3. related aircraft model(s) in summary form; 

4. classification as Rotable or Expendable or Repairable; 

5. quantity on hand; 

6. Designated Spare Parts Location; 

7. each Spare Parts Asset out for repair; and 

8. each Spare Parts Asset in transit.

Very truly yours,

[GRANTOR]

By:___________________________________

Name:

Title:

Date: