Document:

magex10-4_20100328.htm

EXHIBIT 10.4

Magnetek, Inc.

Non-Qualified Stock Option Agreement

FOR GOOD AND VALUABLE CONSIDERATION, MAGNETEK, INC., a Delaware corporation, hereby irrevocably grants to the Optionee named below the non-qualified stock option (the “Option”) to purchase any part or all of the specified number of shares of its $0.01 par value Common Stock upon the terms and subject to the conditions set forth in this Agreement, at the specified purchase price per share without commission or other charge.  The Option is granted pursuant to the plan specified below (the “Plan”) and the standard terms and conditions (“Standard Terms and Conditions”) promulgated under such Plan.  The terms of the Plan and the Standard Terms and Conditions are hereby incorporated herein by reference and made a part of this Agreement.  The Compensation Committee shall have the power to interpret this Agreement.

	
The Plan

	
Second Amended and Restated 2004 Stock Incentive Plan of Magnetek, Inc., November 5, 2009

	
Name of Optionee:

	  
	  	  
	
Social Security Number:

	  
	  	  
	
Number of Shares covered by Option:

	  
	  	  
	
Grant Date:

	  
	  	  
	
Purchase Price Per Share:

	  
	  	  
	
Minimum Number of Shares Per Partial Exercise:

	
100 Shares

The Option shall vest and become exercisable in installments as follows:

Until ____________, the Option shall not be exercisable to any degree.

As of ______________, the Option shall become exercisable as to 25% of the Shares covered by the Option.

As of ______________, the Option shall become exercisable as to an additional 25% of the Shares covered by the Option.

As of ________________, the Option shall become exercisable as to an additional 25% of the Shares covered by the Option.

As of ______________, the Option shall become exercisable as to the remaining 25% of the Shares covered by the Option.

Option Term:     10 years from the Grant Date.

The Option exercise price may be paid in the form of one or more of the following:  (i) cash or certified or cashiers’ check, (ii) delivery of shares of Common Stock or other property deemed acceptable by the Committee; or (iii) a reduction in the number of Shares issuable pursuant to the Option.  Unless otherwise specified by the Committee, Optionee may, upon termination of employment, exercise the vested, unexercised portion of the Option within 90 days after his or her employment termination date.  The Option may not be sold, assigned, conveyed, gifted, pledged, hypothecated or otherwise transferred in any manner prior to the vesting or lapse of all restrictions, other than by will or the laws of descent and distribution or pursuant to a “domestic relations order” as defined in the Internal Revenue Code of 1986, as amended.

	
 

MAGNETEK, INC.

	  	
 

OPTIONEE

	  	  	  	  
	
By:

	  	  	  
	  	
[Name]

	  	
Name:

	  	
President and Chief Executive Officer

	  	  
	  	  	  	  
	
By:

	  	  	  
	  	
[Name]

	  	
Address

	  	
Vice President Legal Affairs

	  	  
	  	
and Corporate Secretaryex10-1.htm

    
      
         

      

      
         

        
        

      

      
         

        Exhibit
10.1

      

    

    

    

    

    

     

    
      FOIA
CONFIDENTIAL TREATMENT REQUESTED

    

    

     

    

     

    CREDIT
AGREEMENT

     

    by
and among

     

    ALASKA
AIRLINES, INC.

     

    as
Borrower,

     

    THE
LENDERS THAT ARE SIGNATORIES HERETO

     

    as
the Lenders,

     

    WELLS
FARGO CAPITAL FINANCE, LLC

     

    as
Agent, as Co-Lead Arranger, and as Joint Bookrunner,

     

    and

     

    U.S.
BANK NATIONAL ASSOCIATION

     

    as
Documentation Agent, as Co-Lead Arranger, and as Joint Bookrunner

     

    

     

    Dated
as of March 31, 2010

     

    

     

    

     

    

     

    
      
         

      

      
         

        
          

        

      

      
         

        
          TABLE OF
CONTENTS

          

          Page

           

          

        

      

    

    
      	
              1.

            	
              DEFINITIONS
      AND CONSTRUCTION

            	
              1

            
	
              1.1

            	
              Definitions

            	
              1

            
	
              1.2

            	
              Accounting
      Terms

            	
              1

            
	
              1.3

            	
              Code

            	
              1

            
	
              1.4

            	
              Construction

            	
              1

            
	
              1.5

            	
              Schedules
      and Exhibits

            	
              2

            
	
              2.

            	
              LOAN
      AND TERMS OF PAYMENT

            	
              2

            
	
              2.1

            	
              Revolver
      Advances

            	
              2

            
	
              2.2

            	
              [Intentionally
      Omitted]

            	
              2

            
	
              2.3

            	
              Borrowing
      Procedures and Settlements

            	
              3

            
	
              2.4

            	
              Payments;
      Reductions of Commitments; Prepayments

            	
              7

            
	
              2.5

            	
              Overadvances

            	
              10

            
	
              2.6

            	
              Interest
      Rates:  Rates, Payments, and Calculations

            	
              10

            
	
              2.7

            	
              Crediting
      Payments; Clearance Charge

            	
              11

            
	
              2.8

            	
              Designated
      Account

            	
              12

            
	
              2.9

            	
              Maintenance
      of Loan Account; Statements of Obligations

            	
              12

            
	
              2.10

            	
              Fees

            	
              12

            
	
              2.11

            	
              [Intentionally
      Omitted]

            	
              13

            
	
              2.12

            	
              LIBOR
      Option

            	
              13

            
	
              2.13

            	
              Capital
      Requirements

            	
              15

            
	
              3.

            	
              CONDITIONS;
      TERM OF AGREEMENT

            	
              16

            
	
              3.1

            	
              Conditions
      Precedent to the Initial Extension of Credit

            	
              16

            
	
              3.2

            	
              Conditions
      Precedent to all Extensions of Credit

            	
              16

            
	
              3.3

            	
              Term

            	
              16

            
	
              3.4

            	
              Effect
      of Termination

            	
              16

            
	
              3.5

            	
              Early
      Termination by Borrower

            	
              16

            
	
              4.

            	
              REPRESENTATIONS
      AND WARRANTIES

            	
              16

            
	
              4.1

            	
              Due
      Organization and Qualification; No Subsidiaries

            	
              17

            
	
              4.2

            	
              Due
      Authorization; No Conflict

            	
              17

            
	
              4.3

            	
              Governmental
      Consents

            	
              17

            
	
              4.4

            	
              Binding
      Obligations; Perfected Liens

            	
              17

            
	
              4.5

            	
              Title
      to Assets; No Encumbrances

            	
              18

            
	
              4.6

            	
              Jurisdiction
      of Organization; Location of Chief Executive Office; Organizational
      Identification Number; Commercial Tort Claims

            	
              18

            

    

    
      
         

      

      
         

        
          

        

      

      
         

        
          TABLE OF
CONTENTS

          (continued)

          Page

           

          

        

      

    

    
      	
              4.7

            	
              Litigation

            	
              18

            
	
              4.8

            	
              Compliance
      with Laws

            	
              18

            
	
              4.9

            	
              No
      Material Adverse Change

            	
              19

            
	
              4.10

            	
              Fraudulent
      Transfer

            	
              19

            
	
              4.11

            	
              Employee
      Benefits

            	
              19

            
	
              4.12

            	
              Environmental
      Condition

            	
              20

            
	
              4.13

            	
              Intellectual
      Property

            	
              20

            
	
              4.14

            	
              Leases

            	
              20

            
	
              4.15

            	
              Deposit
      Accounts and Securities Accounts

            	
              20

            
	
              4.16

            	
              Complete
      Disclosure

            	
              20

            
	
              4.17

            	
              Material
      Contracts

            	
              21

            
	
              4.18

            	
              Patriot
      Act

            	
              21

            
	
              4.19

            	
              Indebtedness

            	
              21

            
	
              4.20

            	
              Payment
      of Taxes

            	
              21

            
	
              4.21

            	
              Margin
      Stock

            	
              21

            
	
              4.22

            	
              Governmental
      Regulation

            	
              22

            
	
              4.23

            	
              OFAC

            	
              22

            
	
              4.24

            	
              Employee
      and Labor Matters

            	
              22

            
	
              4.25

            	
              Group
      as a Holding Company

            	
              22

            
	
              4.26

            	
              Required
      Equity Documents

            	
              22

            
	
              4.27

            	
              Other
      Documents

            	
              23

            
	
              4.28

            	
              Eligible
      Accounts

            	
              24

            
	
              4.29

            	
              Eligible
      Inventory

            	
              25

            
	
              4.30

            	
              Locations
      of Inventory and Equipment

            	
              25

            
	
              4.31

            	
              Inventory
      Records

            	
              25

            
	
              5.

            	
              AFFIRMATIVE
      COVENANTS

            	
              25

            
	
              5.1

            	
              Financial
      Statements, Reports, Certificates

            	
              25

            
	
              5.2

            	
              Collateral
      Reporting

            	
              25

            
	
              5.3

            	
              Existence

            	
              26

            
	
              5.4

            	
              Maintenance
      of Properties

            	
              26

            
	
              5.5

            	
              Taxes

            	
              26

            
	
              5.6

            	
              Insurance

            	
              26

            
	
              5.7

            	
              Inspection

            	
              27

            

    

    
      
         

      

      
         

        
          

        

      

      
         

        
          TABLE OF
CONTENTS

          (continued)

          Page

           

          

        

      

    

    
      	
              5.8

            	
              Compliance
      with Laws

            	
              27

            
	
              5.9

            	
              Environmental

            	
              27

            
	
              5.10

            	
              Disclosure
      Updates

            	
              28

            
	
              5.11

            	
              [Intentionally
      omitted]

            	
              28

            
	
              5.12

            	
              Further
      Assurances

            	
              28

            
	
              5.13

            	
              Lender
      Meetings

            	
              28

            
	
              5.14

            	
              Material
      Contracts

            	
              28

            
	
              5.15

            	
              Location
      of Inventory and Equipment

            	
              29

            
	
              5.16

            	
              Assignable
      Material Contracts

            	
              29

            
	
              6.

            	
              NEGATIVE
      COVENANTS

            	
              31

            
	
              6.1

            	
              Indebtedness

            	
              31

            
	
              6.2

            	
              Liens

            	
              31

            
	
              6.3

            	
              Restrictions
      on Fundamental Changes

            	
              31

            
	
              6.4

            	
              Disposal
      of Assets

            	
              31

            
	
              6.5

            	
              Change
      Name

            	
              31

            
	
              6.6

            	
              Nature
      of Business

            	
              31

            
	
              6.7

            	
              Prepayments
      and Amendments

            	
              32

            
	
              6.8

            	
              Change
      of Control

            	
              32

            
	
              6.9

            	
              Restricted
      Junior Payments

            	
              32

            
	
              6.10

            	
              Accounting
      Methods

            	
              33

            
	
              6.11

            	
              Investments

            	
              33

            
	
              6.12

            	
              Transactions
      with Affiliates

            	
              33

            
	
              6.13

            	
              Use
      of Proceeds

            	
              34

            
	
              6.14

            	
              Group
      as Holding Company

            	
              34

            
	
              6.15

            	
              Consignments

            	
              34

            
	
              6.16

            	
              Inventory
      and Equipment with Bailees

            	
              34

            
	
              7.

            	
              FINANCIAL
      COVENANTS

            	
              34

            
	
              8.

            	
              EVENTS
      OF DEFAULT

            	
              34

            
	
              9.

            	
              RIGHTS
      AND REMEDIES

            	
              36

            
	
              9.1

            	
              Rights
      and Remedies

            	
              36

            
	
              9.2

            	
              Remedies
      Cumulative

            	
              37

            
	
              10.

            	
              WAIVERS;
      INDEMNIFICATION

            	
              37

            
	
              10.1

            	
              Demand;
      Protest; etc

            	
              37

            

    

    
      
         

      

      
         

        
          

        

      

      
         

        
          TABLE OF
CONTENTS

          (continued)

          Page

           

          

        

      

    

    
      	
              10.2

            	
              The
      Lender Group’s Liability for Collateral

            	
              37

            
	
              10.3

            	
              Indemnification

            	
              37

            
	
              11.

            	
              NOTICES

            	
              38

            
	
              12.

            	
              CHOICE
      OF LAW AND VENUE; JURY TRIAL WAIVER

            	
              39

            
	
              13.

            	
              ASSIGNMENTS
      AND PARTICIPATIONS; SUCCESSORS

            	
              40

            
	
              13.1

            	
              Assignments
      and Participations

            	
              40

            
	
              13.2

            	
              Successors

            	
              42

            
	
              14.

            	
              AMENDMENTS;
      WAIVERS

            	
              42

            
	
              14.1

            	
              Amendments
      and Waivers

            	
              42

            
	
              14.2

            	
              Replacement
      of Certain Lenders

            	
              43

            
	
              14.3

            	
              Removal
      of Tax Lenders

            	
              44

            
	
              14.4

            	
              No
      Waivers; Cumulative Remedies

            	
              45

            
	
              15.

            	
              AGENT;
      THE LENDER GROUP

            	
              45

            
	
              15.1

            	
              Appointment
      and Authorization of Agent

            	
              45

            
	
              15.2

            	
              Delegation
      of Duties

            	
              45

            
	
              15.3

            	
              Liability
      of Agent

            	
              46

            
	
              15.4

            	
              Reliance
      by Agent

            	
              46

            
	
              15.5

            	
              Notice
      of Default or Event of Default

            	
              46

            
	
              15.6

            	
              Credit
      Decision

            	
              46

            
	
              15.7

            	
              Costs
      and Expenses; Indemnification

            	
              47

            
	
              15.8

            	
              Agent
      in Individual Capacity

            	
              47

            
	
              15.9

            	
              Successor
      Agent

            	
              48

            
	
              15.10

            	
              Lender
      in Individual Capacity

            	
              48

            
	
              15.11

            	
              Collateral
      Matters

            	
              48

            
	
              15.12

            	
              Restrictions
      on Actions by Lenders; Sharing of Payments

            	
              49

            
	
              15.13

            	
              Agency
      for Perfection

            	
              50

            
	
              15.14

            	
              Payments
      by Agent to the Lenders

            	
              50

            
	
              15.15

            	
              Concerning
      the Collateral and Related Loan Documents

            	
              50

            
	
              15.16

            	
              Audits
      and Examination Reports; Confidentiality; Disclaimers by Lenders; Other
      Reports and Information

            	
              50

            
	
              15.17

            	
              Several
      Obligations; No Liability

            	
              51

            
	
              16.

            	
              WITHHOLDING
      TAXES

            	
              51

            
	
              17.

            	
              GENERAL
      PROVISIONS

            	
              54

            
	
              17.1

            	
              Effectiveness

            	
              54

            

    

    
      
         

      

      
         

        
          

        

      

      
         

        
          TABLE OF
CONTENTS

          (continued)

          Page

           

          

        

      

    

    
      	
              17.2

            	
              Section
      Headings

            	
              54

            
	
              17.3

            	
              Interpretation

            	
              54

            
	
              17.4

            	
              Severability
      of Provisions

            	
              54

            
	
              17.5

            	
              Debtor-Creditor
      Relationship

            	
              54

            
	
              17.6

            	
              Counterparts;
      Electronic Execution

            	
              54

            
	
              17.7

            	
              Revival
      and Reinstatement of Obligations

            	
              54

            
	
              17.8

            	
              Confidentiality

            	
              55

            
	
              17.9

            	
              Lender
      Group Expenses

            	
              56

            
	
              17.10

            	
              USA
      PATRIOT Act

            	
              56

            
	
              17.11

            	
              Integration

            	
              56

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

        
          TABLE OF
CONTENTS

          

          

        

      

    

    EXHIBITS
AND SCHEDULES

     

    Exhibit
A-1                                Form
of Assignment and Acceptance

    Exhibit
B-1                                Form
of Borrowing Base Certificate

    Exhibit
C-1                                Form
of Compliance Certificate

    Exhibit
L-1                                Form
of LIBOR Notice

    

    Schedule
A-1                                Agent’s
Account

    Schedule
A-2                                Authorized
Persons

    Schedule
C-1                                Commitments

    Schedule
D-1                                Designated
Account

    Schedule
D-2                                Designated
Engines

    Schedule
P-1                                Permitted
Investments

    Schedule
P-2                                Permitted
Liens

    Schedule
1.1                                Definitions

    Schedule
2.6(d)                                Borrower
Representatives

    Schedule
3.1                                Conditions
Precedent

    Schedule
4.6(a)                                States
of Organization

    Schedule
4.6(b)                                Chief
Executive Offices

    Schedule
4.6(c)                                Organizational
Identification Numbers

    Schedule
4.7(b)                                Litigation

    Schedule
4.11                                Benefit
Plans

    Schedule
4.12                                Environmental
Matters

    Schedule
4.15                                Deposit
Accounts and Securities Accounts

    Schedule
4.17                                Material
Contracts

    Schedule
4.19                                Permitted
Indebtedness

    Schedule
4.24                                Employee
and Labor Matters

    Schedule
4.27                                Locations
of Spare Parts

    
      	
               
      

            	
              Schedule
      4.28(d)

            	
              Locations
      of Ground Service Equipment

            

    

    
      	
               
      

            	
              Schedule
      4.28(e)

            	
              Locations
      of Designated Engines

            

    

    
      	
               
      

            	
              Schedule
      4.29

            	
              Locations
      of Ineligible Equipment

            

    

    Schedule
5.1                                Financial
Statements, Reports, Certificates

    Schedule
5.2                                Collateral
Reporting

    Schedule
6.6                                Nature
of Business

    Schedule
6.12                                Existing
Transactions with Affiliates

    

    
      
         

      

      
        
          

        

      

      
         

      

    

    CREDIT
AGREEMENT

     

    

     

    THIS CREDIT
AGREEMENT (this
“Agreement”),
is entered into as of March 31, 2010 by and among the lenders identified on the
signature pages hereof (each of such lenders, together with their respective
successors and permitted assigns, are referred to hereinafter as a “Lender”, as that term
is hereinafter further defined), WELLS FARGO CAPITAL
FINANCE, LLC, a Delaware limited liability company, as agent for the
Lenders (in such capacity, together with its successors and assigns in such
capacity, “Agent”), as co-lead
arranger, and as joint bookrunner, U.S. BANK NATIONAL
ASSOCIATION (“US Bank”), as
documentation agent, as co-lead arranger, and as joint bookrunner, and ALASKA AIRLINES,
INC., an Alaska corporation (“Borrower”).

     

    The
parties agree as follows:

     

    1.           DEFINITIONS AND
CONSTRUCTION.

     

    1.1           Definitions.  Capitalized terms
used in this Agreement shall have the meanings specified therefor on Schedule
1.1.

     

    1.2           Accounting
Terms.  All accounting
terms not specifically defined herein shall be construed in accordance with
GAAP; provided,
however, that
if Borrower notifies Agent that Borrower requests an amendment to any provision
hereof to eliminate the effect of any Accounting Change occurring after the
Closing Date or in the application thereof on the operation of such provision
(or if Agent notifies 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 Accounting Change or in the application thereof, then
Agent and Borrower agree that they will negotiate in good faith amendments to
the provisions of this Agreement that are directly affected by such Accounting
Change with the intent of having the respective positions of the Lenders and
Borrower after such Accounting Change conform as nearly as possible to their
respective positions as of the date of this Agreement and, until any such
amendments have been agreed upon, the provisions in this Agreement shall be
calculated as if no such Accounting Change had occurred.  When used
herein, the term “financial statements” shall include the notes and schedules
thereto.  Whenever the term “Borrower” is used in respect of a
financial covenant or a related definition, it shall be understood to mean
Borrower, on an unconsolidated basis, unless the context clearly requires
otherwise.

     

    1.3           Code.  Any terms used in
this Agreement that are defined in the Code shall be construed and defined as
set forth in the Code unless otherwise defined herein; provided, however, that to the
extent that the Code is used to define any term herein and such term is defined
differently in different Articles of the Code, the definition of such term
contained in Article 9 of the Code shall govern.

     

    1.4           Construction.  Unless the
context of this Agreement or any other Loan Document clearly requires otherwise,
references to the plural include the singular, references to the singular
include the plural, the terms “includes” and  “including” are not
limiting, and the term “or” has, except where otherwise indicated, the inclusive
meaning represented by the phrase “and/or.”  The words “hereof,”
“herein,” “hereby,” “hereunder,” and similar terms in this Agreement or any
other Loan Document refer to this Agreement or such other Loan Document, as the
case may be, as a whole and not to any particular provision of this Agreement or
such other Loan Document, as the case may be.  Section, subsection,
clause, schedule, and exhibit references herein are to this Agreement unless
otherwise specified.  Any reference in this Agreement or in any other
Loan Document to any agreement, instrument, or document shall include all
written alterations, amendments, changes, extensions, modifications, renewals,
replacements, substitutions, joinders, and supplements, thereto and thereof, as
applicable (subject to any restrictions on such alterations, amendments,
changes, extensions, modifications, renewals, replacements, substitutions,
joinders, and supplements set forth herein).  The words “asset” and
“property” shall be construed to have the same meaning and effect and to refer
to any and all

     

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

    tangible
and intangible assets and properties, including cash, securities, accounts, and
contract rights.  Any reference herein or in any other Loan Document
to the satisfaction, repayment, or payment in full of the Obligations shall mean
the repayment in Dollars in full in cash or immediately available funds of all
of the Obligations other than unasserted contingent indemnification
Obligations.  Any reference herein to any Person shall be construed to
include such Person’s successors and assigns.  Any requirement of a
writing contained herein or in any other Loan Document shall be satisfied by the
transmission of a Record.

     

    1.5           Schedules
and Exhibits.  All of the
schedules and exhibits attached to this Agreement shall be deemed incorporated
herein by reference.

     

    2.           LOANS AND TERMS OF
PAYMENT.

     

    2.1           Revolver
Advances.

     

    (a)           Subject
to the terms and conditions of this Agreement, and during the term of this
Agreement, each Lender with a Commitment agrees (severally, not jointly or
jointly and severally) to make revolving loans (“Advances”) to
Borrower in an amount at any one time outstanding not to exceed the lesser of:

     

    (i)         such
Lender’s Commitment, or

     

    (ii)         such
Lender’s Pro Rata Share of an amount equal to the lesser of:

     

    (A)           the
Maximum Revolver Amount less
the principal amount of Swing Loans outstanding at such time,
and

     

    (B)           the
Borrowing Base at such time less the principal amount of
Swing Loans outstanding at such time.

     

    (b)           Amounts
borrowed pursuant to this Section 2.1 may be
repaid and, subject to the terms and conditions of this Agreement, reborrowed at
any time during the term of this Agreement.  The outstanding principal
amount of the Advances, together with interest accrued thereon, shall be due and
payable on the Maturity Date or, if earlier, on the date on which they are
declared due and payable pursuant to the terms of this Agreement.

     

    (c)           Anything
to the contrary in this Section 2.1
notwithstanding, Agent shall have the right (but not the obligation) to
establish, increase, reduce, eliminate, or otherwise adjust reserves from time
to time against the Borrowing Base or the Maximum Revolver Amount in such
amounts, and with respect to such matters, as Agent in its Permitted Discretion
shall deem necessary or appropriate, including reserves with respect to
(i) sums that Borrower is required to pay under any Section of this
Agreement or any other Loan Document (such as taxes, assessments, insurance
premiums, or, in the case of leased assets, rents or other amounts payable under
such leases) and has failed to pay, and (ii) amounts owing by Borrower to any
Person to the extent secured by a Lien on, or trust over, any of the Collateral
(other than a Permitted Lien which is a purchase money Lien or the interest of a
lessor under a Capital Lease), which Lien or trust, in the Permitted Discretion
of Agent likely would have a priority superior to Agent’s Liens (such as Liens
or trusts in favor of landlords, warehousemen, carriers, mechanics, materialmen,
laborers, or suppliers, or Liens or trusts for ad valorem, excise, sales, or
other taxes where given priority under applicable law) in and to such item of
the Collateral.  Agent shall endeavor to notify Borrower at or before
the time any such reserve is to be established or increased, but a non-willful
failure of Agent to so notify Borrower shall not be a breach of this Agreement
and shall not cause such establishment or increase of a reserve to be
ineffective.

     

    2.2           [Intentionally
Omitted].

     

    
      
         

      

      
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    2.3           Borrowing
Procedures and Settlements.

     

    (a)           Procedure for
Borrowing.  Each Borrowing shall be made by a written request
by an Authorized Person delivered to Agent.  Unless Swing Lender is
not obligated to make a Swing Loan pursuant to Section 2.3(b) below,
such notice must be received by Agent no later than 10:00 a.m. (California time)
on the Business Day that is the requested Funding Date specifying (i) the amount
of such Borrowing, and (ii) the requested Funding Date, which shall be a
Business Day; provided, however, that if
Swing Lender is not obligated to make a Swing Loan as to a requested Borrowing,
such notice must be received by Agent no later than 10:00 a.m. (California time)
on the Business Day prior to the date that is the requested Funding
Date.  At Agent’s election, in lieu of delivering the above-described
written request, any Authorized Person may give Agent telephonic notice of such
request by the required time.  In such circumstances, Borrower agrees
that any such telephonic notice will be confirmed in writing within 24 hours of
the giving of such telephonic notice, but the failure to provide such written
confirmation shall not affect the validity of the request.

     

    (b)           Making of Swing
Loans.  In the case of a request for an Advance and so long as
either (i) the aggregate amount of Swing Loans made since the last Settlement
Date, minus the amount of Collections or payments applied to Swing Loans since
the last Settlement Date, plus the amount of the requested Advance does not
exceed $25,000,000, or (ii) Swing Lender, in its sole discretion, shall agree to
make a Swing Loan notwithstanding the foregoing limitation, Swing Lender shall
make an Advance in the amount of such requested Borrowing (any such Advance made
solely by Swing Lender pursuant to this Section 2.3(b) being
referred to as a “Swing Loan” and such
Advances being referred to collectively as “Swing Loans”)
available to Borrower on the Funding Date applicable thereto by transferring
immediately available funds to the Designated Account.  Anything
contained herein to the contrary notwithstanding, the Swing Lender may, but
shall not be obligated to, make Swing Loans at any time that one or more of the
Lenders is a Defaulting Lender.  Each Swing Loan shall be deemed to be
an Advance hereunder and shall be subject to all the terms and conditions
(including Section 3) applicable to other Advances, except that all payments on
any Swing Loan shall be payable to Swing Lender solely for its own
account.  Subject to the provisions of Section 2.3(d)(ii),
Swing Lender shall not make and shall not be obligated to make any Swing Loan if
Swing Lender has actual knowledge that (i) one or more of the applicable
conditions precedent set forth in Section 3 will not be
satisfied on the requested Funding Date for the applicable Borrowing, or (ii)
the requested Borrowing would exceed the Availability on such Funding
Date.  Swing Lender shall not otherwise be required to determine
whether the applicable conditions precedent set forth in Section 3 have been
satisfied on the Funding Date applicable thereto prior to making any Swing
Loan.  The Swing Loans shall be secured by Agent’s Liens, constitute
Advances and Obligations hereunder, and bear interest at the rate applicable
from time to time to Advances that are Base Rate Loans.

     

    (c)           Making of Loans.

     

    (i)         In
the event that Swing Lender is not obligated to make a Swing Loan, then promptly
after receipt of a request for a Borrowing pursuant to Section 2.3(a), Agent
shall notify the Lenders, not later than 1:00 p.m. (California time) on the
Business Day immediately preceding the Funding Date applicable thereto, by
telecopy, telephone, or other similar form of transmission, of the requested
Borrowing.  Each Lender shall make the amount of such Lender’s Pro
Rata Share of the requested Borrowing available to Agent in immediately
available funds, to Agent’s Account, not later than 10:00 a.m. (California time)
on the Funding Date applicable thereto.  After Agent’s receipt of the
proceeds of such Advances, Agent shall make the proceeds thereof available to
Borrower on the applicable Funding Date by transferring immediately available
funds equal to such proceeds received by Agent to the Designated Account; provided, however, that,
subject to the provisions of Section 2.3(d)(ii),
Agent shall not request any Lender to make, and no Lender shall have the
obligation to make, any Advance if (1) one or more of the applicable conditions
precedent set forth in Section 3 will not be
satisfied on the requested Funding Date for the applicable Borrowing unless such
condition has been waived, or (2) the requested Borrowing would exceed the
Availability on such Funding Date.

     

    
      
         

      

      
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    (ii)         Unless
Agent receives notice from a Lender prior to 9:00 a.m. (California time) on the
date of a Borrowing, that such Lender will not make available as and when
required hereunder to Agent for the account of Borrower the amount of that
Lender’s Pro Rata Share of the Borrowing, Agent may assume that each Lender has
made or will make such amount available to Agent in immediately available funds
on the Funding Date and Agent may (but shall not be so required), in reliance
upon such assumption, make available to Borrower on such date a corresponding
amount.  If any Lender shall not have made its full amount available
to Agent in immediately available funds and if Agent in such circumstances has
made available to Borrower such amount, that Lender shall on the Business Day
following such Funding Date make such amount available to Agent, together with
interest at the Defaulting Lender Rate for each day during such
period.  A notice submitted by Agent to any Lender with respect to
amounts owing under this Section 2.3(c)(ii)
shall be conclusive, absent manifest error.  If such amount is so made
available, such payment to Agent shall constitute such Lender’s Advance on the
date of Borrowing for all purposes of this Agreement.  If such amount
is not made available to Agent on the Business Day following the Funding Date,
Agent will notify Borrower of such failure to fund and, upon demand by Agent,
Borrower shall pay such amount to Agent for Agent’s account, together with
interest thereon for each day elapsed since the date of such Borrowing, at a
rate per annum equal to the interest rate applicable at the time to the Advances
composing such Borrowing.

     

    (d)           Protective Advances and Optional
Overadvances.

     

    (i)         Any
contrary provision of this Agreement or any other Loan Document notwithstanding,
Agent hereby is authorized by Borrower and the Lenders, from time to time in
Agent’s sole discretion, (A) after the occurrence and during the continuance of
a Default (if the Threshold Usage Amount exists) or an Event of Default, or (B)
at any time that any of the other applicable conditions precedent set forth in
Section 3 are
not satisfied (if the Threshold Usage Amount exists), to make Advances to, or
for the benefit of, Borrower on behalf of the Lenders that Agent, in its
Permitted Discretion, deems necessary or desirable (1) to preserve or protect
the Collateral, or any portion thereof, or (2) to enhance the likelihood of
repayment of the Obligations (any of the Advances described in this Section 2.3(d)(i)
shall be referred to as “Protective
Advances”).

     

    (ii)         Any
contrary provision of this Agreement or any other Loan Document notwithstanding,
the Lenders hereby authorize Agent or Swing Lender, as applicable, and either
Agent or Swing Lender, as applicable, may, but is not obligated to, knowingly
and intentionally, continue to make Advances (including Swing Loans) to Borrower
notwithstanding that an Overadvance exists or thereby would be created, so long
as (A) after giving effect to such Advances, the outstanding Revolver Usage does
not exceed the Borrowing Base by more than $10,000,000, and (B) after giving
effect to such Advances, the outstanding Revolver Usage (except for and
excluding amounts charged to the Loan Account for interest, fees, or Lender
Group Expenses) does not exceed the Maximum Revolver Amount.  In the
event Agent obtains actual knowledge that the Revolver Usage exceeds the amounts
permitted by the immediately foregoing provisions, regardless of the amount of,
or reason for, such excess, Agent shall notify the Lenders as soon as
practicable (and prior to making any (or any additional) intentional
Overadvances (except for and excluding amounts charged to the Loan Account for
interest, fees, or Lender Group Expenses) unless Agent determines that prior
notice would result in imminent harm to the Collateral or its value, in which
case Agent may make such Overadvances and provide notice as promptly as
practicable thereafter), and the Lenders with Commitments thereupon shall,
together with Agent, jointly determine the terms of arrangements that shall be
implemented with Borrower intended to reduce, within a reasonable time, the
outstanding principal amount of the Advances to Borrower to an amount permitted
by the preceding sentence.  In such circumstances, if any Lender with
a Commitment objects to the proposed terms of reduction or repayment of any
Overadvance, the terms of reduction or repayment thereof shall be implemented
according to the determination of the Required Lenders.  The foregoing
provisions are meant for the benefit of the Lenders and Agent and are not meant
for the benefit of Borrower, which shall continue

     

    
      
         

      

      
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    to be
bound by the provisions of Section
2.5.  Each Lender with a Commitment shall be obligated to
settle with Agent as provided in Section 2.3(e) (or
Section 2.3(g),
as applicable) for the amount of such Lender’s Pro Rata Share of any
unintentional Overadvances by Agent reported to such Lender, any intentional
Overadvances made as permitted under this Section 2.3(d)(ii),
and any Overadvances resulting from the charging to the Loan Account of
interest, fees, or Lender Group Expenses.

     

    (iii)         Each
Protective Advance and each Overadvance shall be deemed to be an Advance
hereunder, except that no Protective Advance or Overadvance shall be eligible to
be a LIBOR Rate Loan and, prior to Settlement therefor, all payments on the
Protective Advances shall be payable to Agent solely for its own
account.  The Protective Advances and Overadvances shall be repayable
on demand, secured by Agent’s Liens, constitute Obligations hereunder, and bear
interest at the rate applicable from time to time to Advances that are Base Rate
Loans.  The ability of Agent to make Protective Advances is separate
and distinct from its ability to make Overadvances and its ability to make
Overadvances is separate and distinct from its ability to make Protective
Advances.  For the avoidance of doubt, the limitations on Agent’s
ability to make Protective Advances do not apply to Overadvances and the
limitations on Agent’s ability to make Overadvances do not apply to Protective
Advances.  The provisions of this Section 2.3(d) are
for the exclusive benefit of Agent, Swing Lender, and the Lenders and are not
intended to benefit Borrower in any way.

     

    (e)           Settlement.  It is
agreed that each Lender’s funded portion of the Advances is intended by the
Lenders to equal, at all times, such Lender’s Pro Rata Share of the outstanding
Advances.  Such agreement notwithstanding, Agent, Swing Lender, and
the other Lenders agree (which agreement shall not be for the benefit of
Borrower) that in order to facilitate the administration of this Agreement and
the other Loan Documents, settlement among the Lenders as to the Advances, the
Swing Loans, and the Protective Advances shall take place on a periodic basis in
accordance with the following provisions:

     

    (i)         Agent
shall request settlement (“Settlement”) with the
Lenders on a weekly basis, or on a more frequent basis if so determined by Agent
(1) on behalf of Swing Lender, with respect to the outstanding Swing Loans, (2)
for itself, with respect to the outstanding Protective Advances, and (3) with
respect to Borrower’s Collections or payments received, as to each by notifying
the Lenders by telecopy, telephone, or other similar form of transmission, of
such requested Settlement, no later than 2:00 p.m. (California time) on the
Business Day immediately prior to the date of such requested Settlement (the
date of such requested Settlement being the “Settlement
Date”).  Such notice of a Settlement Date shall include a
summary statement of the amount of outstanding Advances, Swing  Loans,
and Protective Advances for the period since the prior Settlement
Date.  Subject to the terms and conditions contained herein (including
Section
2.3(g)):  (y) if the amount of the Advances (including Swing
Loans and Protective Advances) made by a Lender that is not a Defaulting Lender
exceeds such Lender’s Pro Rata Share of the Advances (including Swing Loans and
Protective Advances) as of a Settlement Date, then Agent shall, by no later than
12:00 p.m. (California time) on the Settlement Date, transfer in immediately
available funds to a Deposit Account of such Lender (as such Lender may
designate), an amount such that each such Lender shall, upon receipt of such
amount, have as of the Settlement Date, its Pro Rata Share of the Advances
(including Swing Loans and Protective Advances), and (z) if the amount of the
Advances (including Swing Loans and Protective Advances) made by a Lender is
less than such Lender’s Pro Rata Share of the Advances (including Swing Loans
and Protective Advances) as of a Settlement Date, such Lender shall no later
than 12:00 p.m. (California time) on the Settlement Date transfer in immediately
available funds to Agent’s Account, an amount such that each such Lender shall,
upon transfer of such amount, have as of the Settlement Date, its Pro Rata Share
of the Advances (including Swing Loans and Protective Advances).  Such
amounts made available to Agent under clause (z) of the immediately preceding
sentence shall be applied against the amounts of the applicable Swing Loans or
Protective Advances and, together with the portion of such Swing Loans or
Protective Advances representing Swing Lender’s Pro Rata Share thereof, shall
constitute Advances of such Lenders.  If any such

     

    
      
         

      

      
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    amount is
not made available to Agent by any Lender on the Settlement Date applicable
thereto to the extent required by the terms hereof, Agent shall be entitled to
recover for its account such amount on demand from such Lender together with
interest thereon at the Defaulting Lender Rate.

     

    (ii)         In
determining whether a Lender’s balance of the Advances, Swing Loans, and
Protective Advances is less than, equal to, or greater than such Lender’s Pro
Rata Share of the Advances, Swing Loans, and Protective Advances as of a
Settlement Date, Agent shall, as part of the relevant Settlement, apply to such
balance the portion of payments actually received in good funds by Agent with
respect to principal, interest, fees payable by Borrower and allocable to the
Lenders hereunder, and proceeds of Collateral.

     

    (iii)         Between
Settlement Dates, Agent, to the extent Protective Advances or Swing Loans are
outstanding, may pay over to Agent or Swing Lender, as applicable, any
Collections or payments received by Agent, that in accordance with the terms of
this Agreement would be applied to the reduction of the Advances, for
application to the Protective Advances or Swing Loans.  Between
Settlement Dates, Agent, to the extent no Protective Advances or Swing Loans are
outstanding, may pay over to Swing Lender any Collections or payments received
by Agent, that in accordance with the terms of this Agreement would be applied
to the reduction of the Advances, for application to Swing Lender’s Pro Rata
Share of the Advances.  If, as of any Settlement Date, Collections or
payments of Borrower received since the then immediately preceding Settlement
Date have been applied to Swing Lender’s Pro Rata Share of the Advances other
than to Swing Loans, as provided for in the previous sentence, Swing Lender
shall pay to Agent for the accounts of the Lenders, and Agent shall pay to the
Lenders (other than a Defaulting Lender if Agent has implemented the provisions
of Section
2.3(g)), to be applied to the outstanding Advances of such Lenders, an
amount such that each such Lender shall, upon receipt of such amount, have, as
of such Settlement Date, its Pro Rata Share of the Advances.  During
the period between Settlement Dates, Swing Lender with respect to Swing Loans,
Agent with respect to Protective Advances, and each Lender (subject to the
effect of agreements between Agent and individual Lenders) with respect to the
Advances other than Swing Loans and Protective Advances, shall be entitled to
interest at the applicable rate or rates payable under this Agreement on the
daily amount of funds employed by Swing Lender, Agent, or the Lenders, as
applicable.

     

    (iv)         Anything
in this Section
2.3(e) to the contrary notwithstanding, in the event that a Lender is a
Defaulting Lender, Agent shall be entitled to refrain from remitting settlement
amounts to the Defaulting Lender and, instead, shall be entitled to elect to
implement the provisions set forth in Section
2.3(g).

     

    (f)           Notation.  Agent, as
a non-fiduciary agent for Borrower, shall maintain a register showing the
principal amount of the Advances owing to each Lender, including the Swing Loans
owing to Swing Lender, and Protective Advances owing to Agent, and the interests
therein of each Lender, from time to time and such register shall, absent
manifest error, conclusively be presumed to be correct and
accurate.

     

    (g)           Defaulting
Lenders.  Agent shall not be obligated to transfer to a
Defaulting Lender any payments made by Borrower to Agent for the Defaulting
Lender’s benefit or any Collections or proceeds of Collateral that would
otherwise be remitted hereunder to the Defaulting Lender, and, in the absence of
such transfer to the Defaulting Lender, Agent shall transfer any such payments
(A) first, to Swing Lender to the extent of any Swing Loans that were made by
Swing Lender and that were required to be, but were not, repaid by the
Defaulting Lender, (B) second, to each non-Defaulting Lender ratably in
accordance with their Commitments (but, in each case, only to the extent that
such Defaulting Lender’s portion of an Advance (or other funding obligation) was
funded by such other non-Defaulting Lender), (C) to a suspense account
maintained by Agent, the proceeds of which shall be retained by Agent and
may

     

    
      
         

      

      
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    be made
available to be re-advanced to or for the benefit of Borrower as if such
Defaulting Lender had made its portion of Advances (or other funding
obligations) hereunder, and (D) from and after the date on which all other
Obligations have been paid in full, to such Defaulting Lender in accordance with
tier (L) of Section
2.4(b)(ii).  Subject to the foregoing, Agent may hold and, in
its Permitted Discretion, re-lend to Borrower for the account of such Defaulting
Lender the amount of all such payments received and retained by Agent for the
account of such Defaulting Lender.  Solely for the purposes of voting
or consenting to matters with respect to the Loan Documents (including the
calculation of Pro Rata Share in connection therewith) and for the purpose of
calculating the fee payable under Section 2.10(b), such
Defaulting Lender shall be deemed not to be a “Lender” and such Lender’s
Commitment shall be deemed to be zero.  The provisions of this Section 2.3(g) shall
remain effective with respect to such Defaulting Lender until the earlier of (y)
the date on which the non-Defaulting Lenders, Agent, and Borrower shall have
waived, in writing, the application of this Section 2.3(g) to
such Defaulting Lender, or (z) the date on which such Defaulting Lender makes
payment of all amounts that it was obligated to fund hereunder, pays to Agent
all amounts owing by Defaulting Lender in respect of the amounts that it was
obligated to fund hereunder, and, if requested by Agent, provides adequate
assurance of its ability to perform its future obligations
hereunder.  The operation of this Section 2.3(g) shall
not be construed to increase or otherwise affect the Commitment of any Lender,
to relieve or excuse the performance by such Defaulting Lender or any other
Lender of its duties and obligations hereunder, or to relieve or excuse the
performance by Borrower of its duties and obligations hereunder to Agent or to
the Lenders other than such Defaulting Lender.  Any failure by a
Defaulting Lender to fund amounts that it was obligated to fund hereunder shall
constitute a material breach by such Defaulting Lender of this Agreement and
shall entitle Borrower, at its option, upon written notice to Agent, to arrange
for a substitute Lender to assume the Commitment of such Defaulting Lender, such
substitute Lender to be reasonably acceptable to Agent.  In connection
with the arrangement of such a substitute Lender, the Defaulting Lender shall
have no right to refuse to be replaced hereunder, and agrees to execute and
deliver a completed form of Assignment and Acceptance in favor of the substitute
Lender (and agrees that it shall be deemed to have executed and delivered such
document if it fails to do so) subject only to being repaid its share of the
outstanding Obligations; provided, however, that any
such assumption of the Commitment of such Defaulting Lender shall not be deemed
to constitute a waiver of any of the Lender Groups’ or Borrower’s rights or
remedies against any such Defaulting Lender arising out of or in relation to
such failure to fund.  In the event of a direct conflict between the
priority provisions of this Section 2.3(g) and
any other provision contained in this Agreement or any other Loan Document, it
is the intention of the parties hereto that such provisions be read together and
construed, to the fullest extent possible, to be in concert with each
other.  In the event of any actual, irreconcilable conflict that
cannot be resolved as aforesaid, the terms and provisions of this Section 2.3(g) shall
control and govern.

     

    (h)           Independent
Obligations.  All Advances (other than Swing Loans and
Protective Advances) shall be made by the Lenders contemporaneously and in
accordance with their Pro Rata Shares.  It is understood that (i) no
Lender shall be responsible for any failure by any other Lender to perform its
obligation to make any Advance (or other extension of credit) hereunder, nor
shall any Commitment of any Lender be increased or decreased as a result of any
failure by any other Lender to perform its obligations hereunder, and (ii) no
failure by any Lender to perform its obligations hereunder shall excuse any
other Lender from its obligations hereunder.

     

    2.4           Payments; Reductions of Commitments;
Prepayments.

     

    (a)           Payments by
Borrower.

     

    (i)         Except
as otherwise expressly provided herein, all payments by Borrower shall be made
to Agent’s Account for the account of the Lender Group and shall be made in
immediately available funds, no later than 11:00 a.m. (California time) on the
date specified herein.  Any payment received by Agent later than 11:00
a.m. (California time) shall be deemed to have been

     

    
      
         

      

      
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    received
on the following Business Day and any applicable interest or fee shall continue
to accrue until such following Business Day.

     

    (ii)         Unless
Agent receives notice from Borrower prior to the date on which any payment is
due to the Lenders that Borrower will not make such payment in full as and when
required, Agent may assume that Borrower has made (or will make) such payment in
full to Agent on such date in immediately available funds and Agent may (but
shall not be so required), in reliance upon such assumption, distribute to each
Lender on such due date an amount equal to the amount then due such
Lender.  If and to the extent Borrower does not make such payment in
full to Agent on the date when due, each Lender severally shall repay to Agent
on demand such amount distributed to such Lender, together with interest thereon
at the Defaulting Lender Rate for each day from the date such amount is
distributed to such Lender until the date repaid.

     

    (b)           Apportionment and
Application.

     

    (i)         So
long as no Application Event has occurred and is continuing and except as
otherwise provided herein with respect to Defaulting Lenders, all principal and
interest payments received by Agent shall be apportioned ratably among the
Lenders (according to the unpaid principal balance of the Obligations to which
such payments relate held by each Lender) and all payments of fees and expenses
received by Agent (other than fees or expenses that are for Agent’s separate
account) shall be apportioned ratably among the Lenders having a Pro Rata Share
of the type of Commitment or Obligation to which a particular fee or expense
relates.  All payments to be made hereunder by Borrower shall be
remitted to Agent and all (subject to Section 2.4(b)(iv),
Section
2.4(d)(ii), and Section 2.4(e)) such
payments, and all proceeds of Collateral received by Agent, shall be applied, so
long as no Application Event has occurred and is continuing, to reduce the
balance of the Advances outstanding and, thereafter, to Borrower (to be wired to
the Designated Account) or such other Person entitled thereto under applicable
law.

     

    (ii)         At
any time that an Application Event has occurred and is continuing and except as
otherwise provided herein with respect to Defaulting Lenders, all payments
remitted to Agent and all proceeds of Collateral received by Agent shall be
applied as follows:

     

    (A)           first, to pay any
Lender Group Expenses (including cost or expense reimbursements) or indemnities
then due to Agent under the Loan Documents, until paid in full,

     

    (B)           second, to pay any
fees or premiums then due to Agent under the Loan Documents until paid in
full,

     

    (C)           third, to pay
interest due in respect of all Protective Advances until paid in
full,

     

    (D)           fourth, to pay the
principal of all Protective Advances until paid in full,

     

    (E)           fifth, ratably, to
pay any Lender Group Expenses (including cost or expense reimbursements) or
indemnities then due to any of the Lenders under the Loan Documents, until paid
in full,

     

    (F)           sixth, ratably, to
pay any fees or premiums then due to any of the Lenders under the Loan Documents
until paid in full,

     

    (G)           seventh, to pay
interest accrued in respect of the Swing Loans until paid in full,

     

    
      
         

      

      
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    (H)           eighth, to pay the
principal of all Swing Loans until paid in full,

     

    (I)           ninth, ratably, to
pay interest accrued in respect of the Advances (other than Protective Advances)
until paid in full,

     

    (J)           tenth, ratably, to
pay the principal of all Advances until paid in full,

     

    (K)           eleventh, to pay any
other Obligations other than Obligations owed to Defaulting
Lenders,

     

    (L)           twelfth, ratably to
pay any Obligations owed to Defaulting Lenders; and

     

    (M)           thirteenth, to
Borrower (to be wired to the Designated Account) or such other Person entitled
thereto under applicable law.

     

    (iii)         Agent
promptly shall distribute to each Lender, pursuant to the applicable wire
instructions received from each Lender in writing, such funds as it may be
entitled to receive, subject to a Settlement delay as provided in Section
2.3(e).

     

    (iv)         In
each instance, so long as no Application Event has occurred and is continuing,
Section
2.4(b)(i) shall not apply to any payment made by Borrower to Agent and
specified by Borrower to be for the payment of specific Obligations then due and
payable (or prepayable) under any provision of this Agreement or any other Loan
Document.

     

    (v)         For
purposes of Section
2.4(b)(ii), “paid in full” of a type of Obligation means payment in cash
or immediately available funds of all amounts owing on account of such type of
Obligation, including interest accrued after the commencement of any Insolvency
Proceeding, default interest, interest on interest, and expense reimbursements,
irrespective of whether any of the foregoing would be or is allowed or
disallowed in whole or in part in any Insolvency Proceeding.

     

    (vi)         In
the event of a direct conflict between the priority provisions of this Section 2.4 and any
other provision contained in this Agreement or any other Loan Document, it is
the intention of the parties hereto that such provisions be read together and
construed, to the fullest extent possible, to be in concert with each
other.  In the event of any actual, irreconcilable conflict that
cannot be resolved as aforesaid, if the conflict relates to the provisions of
Section 2.3(g)
and this Section
2.4, then the provisions of Section 2.3(g) shall
control and govern, and if otherwise, then the terms and provisions of this
Section 2.4
shall control and govern.

     

    (c)           Reduction of
Commitments.

     

    (i)         Commitments.  The
Commitments shall terminate on the Maturity Date.  Borrower may reduce
the Commitments, without premium or penalty, to an amount (which may be zero)
not less than the sum of (A) the Revolver Usage as of such date, plus (B) the
principal amount of all Advances not yet made as to which a request has been
given by Borrower under Section
2.3(a).  Each such reduction shall be in an amount which is not
less than $10,000,000 (unless the Commitments are being reduced to zero and the
amount of the Commitments in effect immediately prior to such reduction are less
than $10,000,000), shall be made by providing not less than 5 Business Days
prior written notice to Agent and shall be irrevocable.  Once reduced,
the Commitments may not be increased.  Each such reduction of the
Commitments shall reduce the Commitments of each Lender proportionately in
accordance with its Pro Rata Share thereof.

     

    (ii)         [Intentionally
Omitted].

     

    
      
         

      

      
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    (d)           Optional
Prepayments.

     

    (i)         Advances.  Borrower
may prepay the principal of any Advance at any time in whole or in part, without
premium or penalty.

     

    (ii)         [Intentionally
Omitted].

     

    (e)           Mandatory
Prepayments.

     

    (i)         Borrowing Base.  If,
at any time, (A) the Revolver Usage on such date exceeds (B) the Borrowing Base
(such excess being referred to as the “Borrowing Base
Excess”), then Borrower shall immediately prepay the Obligations in
accordance with Section 2.4(f)(i) in
an aggregate amount equal to the Borrowing Base Excess.

     

    (ii)         [Intentionally
Omitted].

     

    (iii)         [Intentionally
Omitted].

     

    (iv)         [Intentionally
Omitted].

     

    (v)         [Intentionally
Omitted].

     

    (vi)         [Intentionally
Omitted].

     

    (f)           Application of
Payments.

     

    (i)         Each
prepayment pursuant to Section 2.4(e)(i) shall,
(A) so long as no Application Event shall have occurred and be continuing,
be applied, to the outstanding principal amount of the Advances until paid in
full, and (B) if an Application Event shall have occurred and be
continuing, be applied in the manner set forth in Section 2.4(b)(ii).

     

    (ii)         [Intentionally
Omitted].

     

    2.5           Overadvances.  If, at any time
or for any reason, the amount of Obligations owed by Borrower to the Lender
Group pursuant to Section 2.1 is
greater than any of the limitations set forth in Section 2.1 (an
“Overadvance”),
Borrower shall immediately pay to Agent, in cash, the amount of such excess,
which amount shall be used by Agent to reduce the Obligations in accordance with
the priorities set forth in Section
2.4(b).  Borrower promises to pay the Obligations (including
principal, interest, fees, costs, and expenses) in full on the Maturity Date or,
if earlier, on the date on which the Obligations become due and payable pursuant
to the terms of this Agreement.

     

    2.6           Interest
Rates:  Rates, Payments, and Calculations.

     

    (a)           Interest
Rates.  Except as provided in Section 2.6(c), all
Obligations that have been charged to the Loan Account pursuant to the terms
hereof shall bear interest on the Daily Balance thereof as follows:

     

    (i)         if
the relevant Obligation is a LIBOR Rate Loan, at a per annum rate equal to the
LIBOR Rate plus the LIBOR Rate Margin, and

     

    (ii)         otherwise,
at a per annum rate equal to the Base Rate plus the Base Rate
Margin.

     

    (b)           [Intentionally
Omitted].

     

    
      
         

      

      
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    (c)            Default Rate.  Upon
the occurrence and during the continuation of an Event of Default and at the
election of the Required Lenders, all Obligations that have been charged to the
Loan Account pursuant to the terms hereof shall bear interest on the Daily
Balance thereof at a per annum rate equal to 2 percentage points above the per
annum rate otherwise applicable thereunder.

     

    (d)           Payment.  Except to
the extent provided to the contrary in Section 2.10 or Section 2.12(a), all
interest, all fees payable hereunder or under any of the other Loan Documents,
and all costs, expenses, Lender Group Expenses, or other amounts payable
hereunder or under any of the other Loan Documents shall be due and payable, in
arrears, on the first day of each month.  Borrower hereby authorizes
Agent, from time to time without prior notice to Borrower, (i) if Borrower does
not pay any interest or scheduled fees (including the fee provided for in Section 2.10(b))
due and payable hereunder or under any other Loan Document within 3 Business
Days of the date of Borrower’s receipt of written notice thereof (which notice
shall be sent by Agent no earlier than the date on which any such amount first
becomes due and payable and shall be sent to the email addresses for the
individuals set forth on Schedule 2.6(d) hereto), to charge to the Loan Account
all such interest and scheduled fees, and (ii) if Borrower does not pay any
unscheduled fees, costs, expenses, Lender Group Expenses, or other amounts due
and payable hereunder or under any other Loan Document within 30 days of the
date of Borrower’s receipt of written notice thereof (which notice shall be sent
by Agent no earlier than the date on which any such amount first becomes due and
payable and shall be sent to the email addresses for the individuals set forth
on Schedule
2.6(d) hereto), to charge to the Loan Account all such unscheduled fees,
costs, expenses, Lender Group Expenses, or other amounts; provided, however, that if such
amounts are not paid and, instead, are charged to the Loan Account they shall be
charged thereto as of the day on which the item was first due and payable
without regard to the applicable delay and such amounts shall accrue interest
from such original date; provided further,
however, that
the applicable delays set forth in the foregoing clauses (i) and (ii) shall not
be applicable (and Agent shall be entitled to immediately charge to the Loan
Account) at any time that an Event of Default has occurred and is continuing
and, if such an Event of Default has occurred and is continuing, Agent shall be
entitled to charge such amounts to the Loan Account on the date when due and
payable hereunder or under any other Loan Document.  Any interest,
fees, costs, expenses, Lender Group Expenses, or other amounts payable hereunder
or under any other Loan Document that are charged to the Loan Account shall be
compounded (by being charged to the Loan Account) and shall thereafter
constitute Advances hereunder and shall initially accrue interest at the rate
then applicable to Advances that are Base Rate Loans.

     

    (e)           Computation.  All
interest and fees chargeable under the Loan Documents shall be computed on the
basis of a 360 day year, in each case, for the actual number of days elapsed in
the period during which the interest or fees accrue.  In the event the
Base Rate is changed from time to time hereafter, the rates of interest
hereunder based upon the Base Rate automatically and immediately shall be
increased or decreased by an amount equal to such change in the Base
Rate.

     

    (f)           Intent to Limit Charges to Maximum
Lawful Rate.  In no event shall the interest rate or rates
payable under this Agreement, plus any other amounts paid in connection
herewith, exceed the highest rate permissible under any law applicable
hereto.  Borrower and the Lender Group, in executing and delivering
this Agreement, intend legally to agree upon the rate or rates of interest and
manner of payment stated within it; provided, however, that,
anything contained herein to the contrary notwithstanding, if said rate or rates
of interest or manner of payment exceeds the maximum allowable under applicable
law, then, ipso facto,
as of the date of this Agreement, Borrower is and shall be liable only for the
payment of such maximum as allowed by law, and payment received from Borrower in
excess of such legal maximum, whenever received, shall be applied to reduce the
principal balance of the Obligations to the extent of such excess.

     

    2.7           Crediting
Payments.

     

    
      
         

      

      
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    (a)      The
receipt of any payment item by Agent shall not be considered a payment on
account unless such payment item is a wire transfer of immediately available
federal funds made to Agent’s Account or unless and until such payment item is
honored when presented for payment.  Should any payment item not be
honored when presented for payment, then Borrower shall be deemed not to have
made such payment and interest shall be calculated
accordingly.  Anything to the contrary contained herein
notwithstanding, any payment item shall be deemed received by Agent only if it
is received into Agent’s Account on a Business Day on or before 11:00 a.m.
(California time).  If any payment item is received into Agent’s
Account on a non-Business Day or after 11:00 a.m. (California time) on a
Business Day, it shall be deemed to have been received by Agent as of the
opening of business on the immediately following Business Day.

     

    (b)           [Intentionally
Omitted].

     

    2.8           Designated
Account.  Agent is
authorized to make the Advances under this Agreement based upon telephonic or
other instructions received from anyone purporting to be an Authorized Person
or, without instructions, if pursuant to Section
2.6(d).  Borrower agrees to establish and maintain the
Designated Account with the Designated Account Bank for the purpose of receiving
the proceeds of the Advances requested by Borrower and made by Agent or the
Lenders hereunder.  Unless otherwise agreed by Agent and Borrower, any
Advance or Swing Loan requested by Borrower and made by Agent or the Lenders
hereunder shall be made to the Designated Account.

     

    2.9           Maintenance
of Loan Account; Statements of Obligations.  Agent shall
maintain an account on its books in the name of Borrower (the “Loan Account”) on
which Borrower shall be charged with the amount of all Advances (including
Protective Advances and Swing Loans) made by Agent, Swing Lender, or the Lenders
to Borrower or for Borrower’s account and, subject to the delays set forth in
clauses (a) and (b) below (if applicable), with all other payment Obligations
hereunder or under the other Loan Documents.  If (a) Borrower does not
pay any interest or scheduled fees (including the fee provided for in Section 2.10(b))
due and payable hereunder or under any other Loan Document within 3 Business
Days of the date of Borrower’s receipt of written notice thereof (which notice
shall be sent by Agent no earlier than the date on which any such amount first
becomes due and payable and shall be sent to the email addresses for the
individuals set forth on Schedule 2.6(d)
hereto), Agent shall be entitled to charge such amounts to the Loan Account, and
(b) Borrower does not pay any unscheduled fees, costs, expenses, Lender Group
Expenses, or other amounts due and payable hereunder or under any other Loan
Document within 30 days of the date of Borrower’s receipt of written notice
thereof (which notice shall be sent by Agent no earlier than the date on which
any such amount first becomes due and payable and shall be sent to the email
addresses for the individuals set forth on Schedule 2.6(d)
hereto), Agent shall be entitled to charge such amounts to the Loan Account;
provided, however, that if such
amounts are not paid and, instead, are charged to the Loan Account they shall be
charged thereto as of the day on which the item was first due and payable
without regard to the applicable delay and such amounts shall accrue interest
from such original date; provided further,
however, that
the applicable delays set forth in the foregoing clauses (a) and (b) shall not
be applicable (and Agent shall be entitled to immediately charge to the Loan
Account) at any time that an Event of Default has occurred and is continuing
and, if such an Event of Default has occurred and is continuing, Agent shall be
entitled to charge such amounts to the Loan Account on the date when due and
payable hereunder or under any other Loan Document.  In accordance
with Section
2.7, the Loan Account will be credited with all payments received by
Agent from Borrower or for Borrower’s account.  Agent shall render
statements regarding the Loan Account to Borrower, including principal,
interest, fees, and including an itemization of all charges and expenses
constituting Lender Group Expenses owing (and, if requested by Borrower with
respect to, and after receipt of, a particular statement, reasonable supporting
detail), and such statements, absent manifest error, shall be conclusively
presumed to be correct and accurate and constitute an account stated between
Borrower and the Lender Group unless, within 60 days after receipt thereof by
Borrower, Borrower shall deliver to Agent written objection thereto describing
the error or errors contained in any such statements or the lack of any
requested supporting detail.

     

    2.10           Fees.  Borrower shall
pay to Agent,

     

    
      
         

      

      
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    (a)           for
the account of Agent, as and when due and payable under the terms of the Fee
Letter, the fees set forth in the Fee Letter.

     

    (b)           for
the ratable account of those Lenders with Commitments, on the first day of each
month from and after the date of this Agreement up to the first day of the month
prior to the Payoff Date and on the Payoff Date, an unused line fee in an amount
equal to [***].

     

    2.11           [Intentionally
Omitted].

     

    2.12           LIBOR
Option.

     

    (a)           Interest and Interest Payment
Dates.  In lieu of having interest charged at the rate based
upon the Base Rate, Borrower shall have the option, subject to Section 2.12(b) below
(the “LIBOR
Option”) to have interest on all or a portion of the Advances be charged
(whether at the time when made (unless otherwise provided herein), upon
conversion from a Base Rate Loan to a LIBOR Rate Loan, or upon continuation of a
LIBOR Rate Loan as a LIBOR Rate Loan) at a rate of interest based upon the LIBOR
Rate.  Interest on LIBOR Rate Loans shall be payable on the earliest
of (i) the last day of the Interest Period applicable thereto; (ii) the date on
which all or any portion of the Obligations become due and payable pursuant to
the terms hereof, or (iii) the date on which this Agreement is terminated
pursuant to the terms hereof.  On the last day of each applicable
Interest Period, unless Borrower properly has exercised the LIBOR Option with
respect thereto to elect an Interest Period of a different duration or unless
the LIBOR Option is no longer available to Borrower, the interest rate
applicable to such LIBOR Rate Loan automatically shall convert to a LIBOR Rate
Loan having an Interest Period of 1 month.  At any time that an Event
of Default has occurred and is continuing, at the written election of the
Required Lenders, Advances shall no longer bear interest at, and Borrower no
longer shall have the option to request that Advances bear interest at, a rate
based upon the LIBOR Rate.

     

    (b)           LIBOR Election.

     

    (i)         Borrower
may, at any time and from time to time, so long as Borrower has not received a
notice from Agent, after the occurrence and during the continuance of an Event
of Default, of the election of the Required Lenders to terminate the right of
Borrower to exercise the LIBOR Option during the continuance of such Event of
Default, elect to exercise the LIBOR Option by notifying Agent prior to 11:00
a.m. (California time) at least 3 Business Days prior to the commencement of the
proposed Interest Period (the “LIBOR
Deadline”).  Notice of Borrower’s election of the LIBOR Option
for a permitted portion of the Advances and an Interest Period pursuant to this
Section shall be made by delivery to Agent of a LIBOR Notice received by Agent
before the LIBOR Deadline, or by telephonic notice received by Agent before the
LIBOR Deadline (to be confirmed by delivery to Agent of a LIBOR Notice received
by Agent prior to 5:00 p.m. (California time) on the same
day).  Promptly upon its receipt of each such LIBOR Notice, Agent
shall provide a copy thereof to each of the affected Lenders.

     

    (ii)         Each
LIBOR Notice shall be irrevocable and binding on Borrower.  In
connection with each LIBOR Rate Loan, Borrower shall indemnify, defend, and hold
Agent and the Lenders harmless against any loss, cost, or expense actually
incurred by Agent or any Lender as a result of (A) the payment of any principal
of any LIBOR Rate Loan other than on the last day of an Interest Period
applicable thereto (including as a result of an Event of Default), (B) the
conversion of any LIBOR Rate Loan other than on the last day of the Interest
Period applicable thereto, or (C) the failure to borrow, convert, continue or
prepay any LIBOR Rate Loan on the date specified in any

     

    
      
         

      

      
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      *
Indicates that certain information contained herein has been omitted and filed
separately with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted portions.

    

    LIBOR
Notice delivered pursuant hereto (such losses, costs, or expenses, “Funding
Losses”).  A certificate of Agent or a Lender delivered to
Borrower setting forth in reasonable detail any amount or amounts that Agent or
such Lender is entitled to receive pursuant to this Section 2.12
shall be conclusive absent manifest error.  Borrower shall pay such
amount to Agent or the Lender, as applicable, within 30 days of the date of its
receipt of such certificate.

     

    (iii)         Borrower
shall have not more than 5 LIBOR Rate Loans in effect at any given
time.  Borrower only may exercise the LIBOR Option for proposed LIBOR
Rate Loans of at least
$1,000,000.

     

    (c)           Conversion.  Borrower
may convert LIBOR Rate Loans to Base Rate Loans at any time; provided, however, that in the
event that LIBOR Rate Loans are converted or prepaid on any date that is not the
last day of the Interest Period applicable thereto, including as a result of any
automatic prepayment through the required application by Agent of proceeds of
Borrower’s Collections in accordance with Section 2.4(b) or for
any other reason, including early termination of the term of this Agreement or
acceleration of all or any portion of the Obligations pursuant to the terms
hereof, Borrower shall indemnify, defend, and hold Agent and the Lenders and
their Participants harmless against any and all Funding Losses in accordance
with Section 2.12
(b)(ii).

     

    (d)           Special Provisions Applicable to
LIBOR Rate.

     

    (i)         The
LIBOR Rate may be adjusted by Agent with respect to any Lender on a prospective
basis to take into account any additional or increased costs to such Lender of
maintaining or obtaining any eurodollar deposits or increased costs, in each
case, due to changes in applicable law occurring subsequent to the commencement
of the then applicable Interest Period, including changes in tax laws (except
changes of general applicability in corporate income tax laws) and changes in
the reserve requirements imposed by the Board of Governors of the Federal
Reserve System (or any successor), excluding the Reserve Percentage, which
additional or increased costs would increase the cost of funding or maintaining
loans bearing interest at the LIBOR Rate.  In any such event, the
affected Lender shall give Borrower and Agent notice of such a determination and
adjustment and Agent promptly shall transmit the notice to each other Lender
and, upon its receipt of the notice from the affected
Lender,  Borrower may, by notice to such affected Lender (y) require
such Lender to furnish to Borrower a statement setting forth the basis for
adjusting such LIBOR Rate and the method for determining the amount of such
adjustment, or (z) repay the LIBOR Rate Loans with respect to which such
adjustment is made (together with any amounts due under Section
2.12(b)(ii)).

     

    (ii)         In
the event that any change in market conditions or any law, regulation, treaty,
or directive, or any change therein or in the interpretation or application
thereof, shall at any time after the date hereof, in the reasonable opinion of
any Lender, make it unlawful or impractical for such Lender to fund or maintain
LIBOR Rate Loans or to continue such funding or maintaining, or to determine or
charge interest rates at the LIBOR Rate, such Lender shall give notice of such
changed circumstances to Agent and Borrower and Agent promptly shall transmit
the notice to each other Lender and (y) in the case of any LIBOR Rate Loans of
such Lender that are outstanding, the Business Day specified in such Lender’s
notice shall be deemed to be the last day of the Interest Period of such LIBOR
Rate Loans, and interest upon the LIBOR Rate Loans of such Lender thereafter
shall accrue interest at the rate then applicable to Base Rate Loans, and (z)
Borrower shall not be entitled to elect the LIBOR Option until such Lender
determines that it would no longer be unlawful or impractical to do
so.

     

    (e)           No Requirement of Matched
Funding.  Anything to the contrary contained herein
notwithstanding, neither Agent, nor any Lender, nor any of their Participants,
is required actually to acquire eurodollar deposits to fund or otherwise match
fund any Obligation as to which interest accrues at the LIBOR Rate.

     

    
      
         

      

      
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    2.13           Capital
Requirements.

     

    (a)           If,
after the date hereof, any Lender determines that (i) the adoption of or change
in any law, rule, regulation or guideline regarding capital or reserve
requirements for banks or bank holding companies, or any change in the
interpretation, implementation, or application thereof by any Governmental
Authority charged with the administration thereof, or (ii) compliance by such
Lender or its parent bank holding company with any guideline, request or
directive of any such entity regarding capital adequacy (whether or not having
the force of law), has the effect of reducing the return on such Lender’s or
such holding company’s capital as a consequence of such Lender’s Commitments
hereunder to a level below that which such Lender or such holding company could
have achieved but for such adoption, change, or compliance (taking into
consideration such Lender’s or such holding company’s then existing policies
with respect to capital adequacy and assuming the full utilization of such
entity’s capital) by any amount deemed by such Lender to be material, then such
Lender may notify Borrower and Agent thereof.  Following receipt of
such notice, Borrower agrees to pay such Lender on demand the amount of such
reduction of return of capital as and when such reduction is determined, payable
within 30 days after presentation by such Lender of a statement in the amount
and setting forth in reasonable detail such Lender’s calculation thereof and the
assumptions upon which such calculation was based (which statement shall be
deemed true and correct absent manifest error).  In determining such
amount, such Lender may use any reasonable averaging and attribution
methods.  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
Borrower shall not be required to compensate a Lender pursuant to this Section
for any reductions in return incurred more than 30 days prior to the date that
such Lender notifies Borrower of such law, rule, regulation or guideline giving
rise to such reductions and of such Lender’s intention to claim compensation
therefor; provided further that if such
claim arises by reason of the adoption of or change in any law, rule, regulation
or guideline that is retroactive, then the 30-day period referred to above shall
be extended to include the period of retroactive effect thereof.

     

    (b)           If
any Lender requests additional or increased costs referred to in Section 2.12(d)(i) or
amounts under Section
2.13(a) (any such Lender, an “Affected Lender”),
then such Affected Lender shall use reasonable efforts to promptly designate a
different one of its lending offices or to assign its rights and obligations
hereunder to another of its offices or branches, if (i) in the reasonable
judgment of such Affected Lender, such designation or assignment would eliminate
or reduce amounts payable pursuant to Section 2.12(d)(i) or
Section
2.13(a), as applicable, and (ii) in the reasonable judgment of such
Affected Lender, such designation or assignment would not subject it to any
material unreimbursed cost or expense and would not otherwise be materially
disadvantageous to it.  Borrower agrees to pay all reasonable
out-of-pocket costs and expenses incurred by such Affected Lender in connection
with any such designation or assignment.  If, after such reasonable
efforts, such Affected Lender does not so designate a different one of its
lending offices or assign its rights to another of its offices or branches so as
to eliminate Borrower’s obligation to pay any future amounts to such Affected
Lender pursuant to Section 2.12(d)(i) or
Section
2.13(a), as applicable, then Borrower (without prejudice to any amounts
then due to such Affected Lender under Section 2.12(d)(i) or
Section
2.13(a), as applicable) may, unless prior to the effective date of any
such assignment the Affected Lender withdraws its request for such additional
amounts under Section
2.12(d)(i) or Section 2.13(a), as
applicable, may seek a substitute Lender reasonably acceptable to Agent to
purchase the Obligations owed to such Affected Lender and such Affected Lender’s
Commitments hereunder (a “Replacement Lender”),
and if such Replacement Lender agrees to such purchase, such Affected Lender
shall assign to the Replacement Lender its Obligations and Commitments, pursuant
to an Assignment and Acceptance Agreement, and upon such purchase by the
Replacement Lender, such Replacement Lender shall be deemed to be a “Lender” for
purposes of this Agreement and such Affected Lender shall cease to be a “Lender”
for purposes of this Agreement.

     

    
      
         

      

      
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    3.           CONDITIONS; TERM OF
AGREEMENT.

     

    3.1           Conditions
Precedent to the Initial Extension of Credit.  The obligation of
each Lender to make its initial extension of credit provided for hereunder is
subject to the fulfillment, to the satisfaction of Agent and each Lender, of
each of the conditions precedent set forth on Schedule 3.1 (the
making of such initial extension of credit by a Lender being conclusively deemed
to be its satisfaction or waiver of the conditions precedent).

     

    3.2           Conditions
Precedent to all Extensions of Credit.  The obligation of
the Lender Group (or any member thereof) to make any Advances hereunder (or to
extend any other credit hereunder) at any time shall be subject to the following
conditions precedent:

     

    (a)           the
representations and warranties of Borrower contained in this Agreement or in the
other Loan Documents shall be true and correct in all material respects (except
that such materiality qualifier shall not be applicable to any representations
and warranties that already are qualified or modified by materiality in the text
thereof) on and as of the date of such extension of credit, as though made on
and as of such date (except to the extent that such representations and
warranties relate to an earlier date); and

     

    (b)           no
Default or Event of Default shall have occurred and be continuing on the date of
such extension of credit, nor shall either result from the making
thereof.

     

    3.3           Maturity.  This Agreement
shall continue in full force and effect for a term ending on March 31, 2014 (the
“Maturity
Date”).  The foregoing notwithstanding, the Lender Group, upon
the election of the Required Lenders, shall have the right to terminate its
obligations under this Agreement immediately and without notice upon the
occurrence and during the continuation of an Event of Default.

     

    3.4           Effect of
Maturity.  On the Maturity
Date, all commitments of the Lender Group to provide additional credit hereunder
shall automatically be terminated and all of the Obligations immediately shall
become due and payable without notice or demand and Borrower shall be required
to repay all of the Obligations in full.  No termination of the
obligations of the Lender Group (other than payment in full of the Obligations
and termination of the Commitments) shall relieve or discharge Borrower of its
duties, obligations, or covenants hereunder or under any other Loan Document and
Agent’s Liens in the Collateral shall continue to secure the Obligations and
shall remain in effect until all Obligations have been paid in full and the
Commitments have been terminated.  When all of the Obligations have
been paid in full and the Lender Group’s obligations to provide additional
credit under the Loan Documents have been terminated irrevocably, Agent will, at
Borrower’s sole expense, execute and deliver any termination statements, lien
releases, discharges of security interests, and other similar discharge or
release documents (and, if applicable, in recordable form) as are reasonably
necessary to release, as of record, Agent’s Liens and all notices of security
interests and liens previously filed by Agent.

     

    3.5           Early
Termination by Borrower.  Borrower has the
option, at any time upon 5 Business Days prior written notice to Agent, to
terminate this Agreement and terminate the Commitments hereunder by repaying to
Agent all of the Obligations in full.

     

    4.           REPRESENTATIONS AND
WARRANTIES.

     

    In order
to induce the Lender Group to enter into this Agreement, Borrower makes the
following representations and warranties to the Lender Group which shall be
true, correct, and complete, in all material respects (except that such
materiality qualifier shall not be applicable to any representations and
warranties that already are qualified or modified by materiality in the text
thereof), as of the Closing Date, and shall be true, correct, and complete, in
all material respects (except that such materiality qualifier shall not be
applicable to any representations and warranties that already are qualified or
modified by materiality in the text

     

    
      
         

      

      
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    thereof),
as of the date of the making of each Advance (or other extension of credit) made
thereafter, as though made on and as of the date of such Advance (or other
extension of credit) (except to the extent that such representations and
warranties relate solely to an earlier date) and such representations and
warranties shall survive the execution and delivery of this
Agreement:

     

    4.1           Due
Organization and Qualification; No Subsidiaries.

     

    (a)           Borrower
(i) is duly organized and existing and in good standing under the laws of the
jurisdiction of its organization, (ii) is qualified to do business in any state
where the failure to be so qualified could reasonably be expected to result in a
Material Adverse Change, and (iii) has all requisite power and authority to own
and operate its properties, to carry on its business as now conducted and as
proposed to be conducted, to enter into the Loan Documents to which it is a
party and to carry out the transactions contemplated thereby.

     

    (b)           Borrower
is not subject to any obligation (contingent or otherwise) to repurchase or
otherwise acquire or retire any shares of its capital Stock or any security
convertible into or exchangeable for any of its capital Stock.

     

    (c)           Borrower
has no Subsidiaries.

     

    4.2           Due
Authorization; No Conflict.

     

    (a)           The
execution, delivery, and performance by Borrower of the Loan Documents to which
it is a party have been duly authorized by all necessary action on the part of
Borrower.

     

    (b)           The
execution, delivery, and performance by Borrower of the Loan Documents to which
it is a party do not and will not (i) violate any material provision of federal,
state, or local law or regulation applicable to Borrower, the Governing
Documents of Borrower, or any order, judgment, or decree of any court or other
Governmental Authority binding on Borrower, (ii) conflict with, result in a
breach of, or constitute (with due notice or lapse of time or both) a default
under any Material Contract of Borrower except to the extent that any such
conflict, breach or default could not individually or in the aggregate
reasonably be expected to have a Material Adverse Change, (iii) result in
or require the creation or imposition of any Lien of any nature whatsoever upon
any assets of Borrower, other than Permitted Liens, or (iv) require any approval
of Borrower’s interestholders or any approval or consent of any Person under any
Material Contract of Borrower, other than consents or approvals that have been
obtained and that are still in force and effect and except, in the case of
Material Contracts, for consents or approvals, the failure to obtain could not
individually or in the aggregate reasonably be expected to cause a Material
Adverse Change.

     

    4.3           Governmental
Consents.  The execution,
delivery, and performance by Borrower of the Loan Documents to which Borrower is
a party and the consummation of the transactions contemplated by the Loan
Documents do not and will not require any registration with, consent, or
approval of, or notice to, or other action with or by, any Governmental
Authority, other than registrations, consents, approvals, notices, or other
actions that have been obtained and that are still in force and effect and
except for filings and recordings with respect to the Collateral to be made, or
otherwise delivered to Agent for filing or recordation, as of the Closing
Date.

     

    4.4           Binding
Obligations; Perfected Liens.

     

    (a)           Each
Loan Document has been duly executed and delivered by Borrower that is a party
thereto and is the legally valid and binding obligation of Borrower, enforceable
against Borrower in accordance with its respective terms, except as enforcement
may be limited by equitable principles or

     

    
      
         

      

      
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    by
bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to
or limiting creditors’ rights generally.

     

    (b)           Agent’s
Liens are validly created, perfected (other than (i) in respect of motor
vehicles that are subject to a certificate of title and as to which Agent has
not caused its Lien to be noted on the applicable certificate of title, and (ii)
any Deposit Accounts and Securities Accounts not subject to a Control Agreement
as permitted by Section 6.11, and
subject only to the filing of financing statements in the appropriate filing
offices and the recordation of the Engine and Spare Parts Security Agreement
with the FAA), and first priority Liens, subject only to Permitted Liens which
by operation of law or contract would have priority over the Liens securing the
Obligations.

     

    4.5           Title to
Assets; No Encumbrances.  Borrower has good
and marketable title to all of its personal property assets that constitute
Collateral and that are reflected in the most recent financial statements
delivered pursuant to Section 5.1, in each
case except for assets disposed of since the date of such financial statements
to the extent permitted hereby.

     

    4.6           Jurisdiction
of Organization; Location of Chief Executive Office; Organizational
Identification Number; Commercial Tort Claims.

     

    (a)           The
name of (within the meaning of Section 9-503 of the Code) and jurisdiction of
organization of Borrower is set forth on Schedule 4.6 (as such
Schedule may be updated from time to time to reflect changes resulting from
transactions permitted under this Agreement).

     

    (b)           The
chief executive office of Borrower is located at the address indicated on Schedule 4.6 (as such
Schedule may be updated from time to time to reflect changes resulting from
transactions permitted under this Agreement).

     

    (c)           Borrower’s
tax identification number and organizational identification number, if any, are
identified on Schedule
4.6 (as such Schedule may be updated from time to time to reflect changes
resulting from transactions permitted under this Agreement).

     

    4.7           Litigation.

     

    (a)           There
are no actions, suits, or proceedings pending or, to the knowledge of Borrower,
after due inquiry, threatened in writing against Borrower that either
individually or in the aggregate could reasonably be expected to result in a
Material Adverse Change.

     

    (b)           Schedule 4.7(b) sets
forth a complete and accurate description, with respect to each of the actions,
suits, or proceedings with asserted liabilities in excess of, or that could
reasonably be expected to result in liabilities in excess of, [***] that, as of
the Closing Date, is pending or, to the knowledge of Borrower, after due
inquiry, threatened against Borrower, of (i) the parties to such actions, suits,
or proceedings, (ii) the nature of the dispute that is the subject of such
actions, suits, or proceedings, (iii) the status, as of the Closing Date, with
respect to such actions, suits, or proceedings, and (iv) whether any liability
of Borrower in connection with such actions, suits, or proceedings is covered by
insurance.

     

    4.8           Compliance
with Laws.  Borrower
(a) is not in violation of any applicable laws, rules, regulations,
executive orders, or codes (including Environmental Laws) that, individually or
in the aggregate, could reasonably be expected to result in a Material Adverse
Change, or (b) is not subject to or in default with respect to any final
judgments, writs, injunctions, decrees, rules or regulations of any court or any
federal,

     

    
      
         

          *
Indicates that certain information contained herein has been omitted and filed
separately with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted
portions.

        

      

      
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    state,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, that, individually or in the aggregate,
could reasonably be expected to result in a Material Adverse
Change.

     

    4.9           No
Material Adverse Change.  All historical
financial statements relating to Borrower that have been delivered by Borrower
to Agent have been prepared in accordance with GAAP (except, in the case of
unaudited financial statements, for the lack of footnotes and being subject to
year-end audit adjustments) and present fairly in all material respects,
Borrower’s financial condition as of the date thereof and results of operations
for the period then ended.  Since September 30, 2009, no event,
circumstance, or change has occurred that has or could reasonably be expected to
result in a Material Adverse Change with respect to Borrower.

     

    4.10           Fraudulent
Transfer.

     

    (a)           Borrower
is Solvent.

     

    (b)           No
transfer of property is being made by Borrower and no obligation is being
incurred by Borrower in connection with the transactions contemplated by this
Agreement or the other Loan Documents with the intent to hinder, delay, or
defraud either present or future creditors of Borrower.

     

    4.11           Employee
Benefits; Benefit Arrangements.

     

    (a)           Employee
Benefits.  Borrower and its ERISA Affiliates do not maintain,
sponsor, contribute to, administer, or have any liability with respect to any
Foreign Pension Plan or Multiemployer Plan.  Schedule 4.11 sets
forth each Benefit Plan of Borrower or its ERISA Affiliates.  Except
as otherwise set forth in Schedule 4.11, (i)
each Benefit Plan (and each related trust, insurance contract, or fund) is and
has at all times been operated and maintained in material compliance with its
terms and with all applicable laws, including ERISA and the IRC, (ii) each
Benefit Plan (and each related trust, if any) has received a determination
letter from the Internal Revenue Service to the effect that it meets the
requirements of Sections 401(a) and 501(a) of the IRC, (iii) no ERISA Event has
occurred that could reasonably be expected to result in liabilities in excess of
[***], (iv) no Benefit Plan has an Unfunded Benefit Liability in an amount that
could reasonably be expected to result in a Material Adverse Change, (iv) except
as otherwise required by the termination and funding requirements of ERISA and
the IRC and by any applicable collective bargaining agreements, Borrower and
each of its ERISA Affiliates may, at any time and without material liability,
terminate or cease making contributions to any “employee benefit plan,” within
the meaning of Section 3(3) of ERISA, to which such Person maintains or makes
(or has any liability to make) contributions, or with respect to which such
Person has any liability and (v) each group health plan (as defined in Section
607(l) of ERISA or Section 4980B(g)(2) of the IRC) that covers or has covered
employees or former employees of Borrower or any of its ERISA Affiliates has at
all times been operated in material compliance with the provisions of Part 6 of
subtitle B of Title I of ERISA and Section 4980B of the IRC.

     

    (b)           Benefit
Arrangements.

     

    (i)         All
liabilities under the Benefit Arrangements are (A) funded to at least the
minimum level required by applicable law including, but not limited to, ERISA
and the IRC or, if higher, to the level required by the terms of any applicable
collective-bargaining agreements, (B) insured with a reputable insurance
company, (C) provided for or recognized in the financial statements most
recently delivered to Agent pursuant to Section 5.1 hereof,
or (D) estimated in the formal notes to the financial statements most recently
delivered to Agent pursuant to Section 5.1 hereof,
where such failure
to fund, insure, provide for, recognize or estimate the liabilities arising
under such arrangements could reasonably be expected to result in a Material
Adverse Change.

     

    
      
         

      

      
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    (ii)         There
are no circumstances that may give rise to a liability in relation to the
Benefit Arrangements that are not funded, insured, provided for, recognized or
estimated in the manner described in clause (i) above that could reasonably be
expected to result in a Material Adverse Change.

     

    (iii)         Borrower
and each of its ERISA Affiliates is in compliance with all applicable laws,
trust documentation and contracts relating to the Benefit Arrangements (and each
related trust, insurance contract, or fund), except to the extent that the
non-compliance therewith could not reasonably be expected to result in a
Material Adverse Change.

     

    4.12           Environmental
Condition.  Except as set
forth on Schedule
4.12, (a) to Borrower’s knowledge, neither Borrower’s properties or
assets has ever been used by Borrower or by previous owners or operators in the
disposal of, or to produce, store, handle, treat, release, or transport, any
Hazardous Materials, where such disposal, production, storage, handling,
treatment, release or transport was in material violation of any applicable
Environmental Law, (b) to Borrower’s knowledge, after due inquiry, Borrower’s
properties or assets has not ever been designated or identified in any manner
pursuant to any environmental protection statute as a Hazardous Materials
disposal site, (c) Borrower has not received notice that a Lien arising under
any Environmental Law has attached to any revenues or to any Real Property owned
or operated by Borrower, and (d) neither Borrower nor any of its facilities or
operations is subject to any outstanding written order, consent decree, or
settlement agreement with any Person relating to any Environmental Law or
Environmental Liability that, individually or in the aggregate, could reasonably
be expected to result in a Material Adverse Change.

     

    4.13           Intellectual
Property.  To Borrower’s
knowledge, Borrower owns, or hold licenses in, all trademarks, trade names,
copyrights, patents, and licenses that are necessary to the conduct of its
business as currently conducted.

     

    4.14           Leases.  Borrower enjoys
peaceful and undisturbed possession under all leases material to its business
and to which it is a party or under which it is operating, and, subject to
Permitted Protests, all of such material leases are valid and subsisting and, to
Borrower’s knowledge, no material default by Borrower exists under any of
them.

     

    4.15           Deposit
Accounts and Securities Accounts.  Set forth on
Schedule 4.15
(as updated pursuant to the provisions of the Security Agreement from time to
time) is a listing of all of Borrower’s Deposit Accounts into which the proceeds
of Accounts that constitute so-called “corporate receivables”, so-called
“general traffic receivables”, so-called “service sales receivables” or
so-called “travel agent receivables” or Interline Receivables or Mileage Plan
Receivables are deposited (or are expected to be deposited) (excluding, in each
case, any Excluded Accounts), including, with respect to each bank (a) the name
and address of such bank, and (b) the account numbers of such Deposit Accounts
maintained with bank.  No proceeds of Borrower’s Accounts that
constitute so-called “corporate receivables”, so-called “general traffic
receivables”, so-called “service sales receivables” or so-called “travel agent
receivables” or Interline Receivables or Mileage Plan Receivables are deposited
(or are expected to be deposited) (excluding, in each case, any Excluded
Accounts) into any Securities Account.

     

    4.16           Complete
Disclosure.  All factual
information taken as a whole (other than forward-looking information and
projections and information of a general economic nature and general information
about Borrower’s industry) furnished by or on behalf of Borrower in writing to
Agent or any Lender (including all information contained in the Schedules hereto
or in the other Loan Documents) for purposes of or in connection with this
Agreement or the other Loan Documents, and all other such factual information
taken as a whole (other than forward-looking information and projections and
information of a general economic nature

     

    
      
         

      

      
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    and
general information about Borrower’s industry) hereafter furnished by or on
behalf of Borrower in writing to Agent or any Lender will be, true and accurate,
in all material respects, on the date as of which such information is dated or
certified and not incomplete by omitting to state any fact necessary to make
such information (taken as a whole) not misleading in any material respect at
such time in light of the circumstances under which such information was
provided.  The Projections delivered to Agent on November 17, 2009
represent, and as of the date on which any other Projections are delivered to
Agent, such additional Projections represent, Borrower’s good faith estimate, on
the date such Projections are delivered, of Borrower’s future performance for
the periods covered thereby based upon assumptions believed by Borrower to be
reasonable at the time of the delivery thereof to Agent (it being understood
that such Projections are subject to uncertainties and contingencies, many of
which are beyond the control of Borrower, that no assurances can be given that
such Projections will be realized, and that actual
results may differ in a material manner from such
Projections).

     

    4.17           Material
Contracts.  Set forth on Schedule 4.17 (as
such Schedule shall automatically be deemed updated from time to time when new
or amended Material Contracts are filed with the SEC) is a reasonably detailed
description of the Material Contracts of Borrower as of the most recent date on
which Borrower provided its Compliance Certificate pursuant to Section
5.1.

     

    4.18           Patriot
Act.  To the extent
applicable, Borrower is in compliance, in all material respects, with the
(a) Trading with the Enemy Act, as amended, and each of the foreign assets
control regulations of the United States Treasury Department (31 CFR, Subtitle
B, Chapter V, as amended) and any other enabling legislation or executive order
relating thereto, and (b) Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism (USA Patriot Act
of 2001) (the “Patriot
Act”).  No part of the proceeds of the loans made hereunder
will be used by Borrower or any of its Affiliates, directly or indirectly, for
any payments to any governmental official or employee, political party, official
of a political party, candidate for political office, or anyone else acting in
an official capacity, in order to obtain, retain or direct business or obtain
any improper advantage, in violation of the United States Foreign Corrupt
Practices Act of 1977, as amended.

     

    4.19           Indebtedness.  Set forth on
Schedule 4.19
is a true and complete list of all Indebtedness of Borrower outstanding
immediately prior to the Closing Date that is to remain outstanding immediately
after giving effect to the closing hereunder on the Closing Date and such
Schedule accurately sets forth the aggregate principal amount of such
Indebtedness as of the Closing Date.  The Chattel Mortgage dated as of
May 1, 1962 between Borrower, as mortgagor, and Home Life Insurance Company and
State Mutual Life Assurance Company of America, jointly as mortgagees, which was
recorded by the Federal Aviation Administration on May 17, 1962 and assigned
Conveyance No. A198036, as supplemented (the “Chattel Mortgage”),
is no longer of any force or effect.  Borrower is not indebted to Home
Life Insurance Company, State Mutual Life Assurance Company, or either of their
respective successors or assigns under such Chattel Mortgage.

     

    4.20           Payment
of Taxes.  Except as
otherwise permitted under Section 5.5, all tax
returns and reports of Borrower required to be filed by it have been timely
filed, and all taxes shown on such tax returns to be due and payable and all
assessments, fees and other governmental charges upon Borrower or upon its
assets, income, businesses and franchises that are due and payable have been
paid when due and payable.  Borrower has made adequate provision in
accordance with GAAP for all taxes not yet due and payable.  Borrower
knows of no proposed tax assessment against Borrower that is not being actively
contested by Borrower diligently, in good faith, and by appropriate proceedings;
provided such
reserves or other appropriate provisions, if any, as shall be required in
conformity with GAAP shall have been made or provided therefor.

     

    4.21           Margin
Stock.  Borrower is not
engaged principally, or as one of its important activities, in the business of
extending credit for the purpose of purchasing or carrying any Margin
Stock.  No part of the proceeds of the loans made to Borrower will be
used to purchase or carry any such Margin Stock or to extend credit to others
for the purpose of purchasing or carrying any such margin stock or for any
purpose that violates
the provisions of Regulation T, U or X of the Board of Governors of the United
States Federal Reserve.

     

    
      
         

      

      
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    4.22           Governmental
Regulation.  Borrower is not
subject to regulation under the Federal Power Act or the Investment Company Act
of 1940 or under any other federal or state statute or regulation which may
limit its ability to incur Indebtedness or which may otherwise render all or any
portion of the Obligations unenforceable.  Borrower is not a
“registered investment company” or a company “controlled” by a “registered
investment company” or a “principal underwriter” of a “registered investment
company” as such terms are defined in the Investment Company Act of
1940.

     

    4.23           OFAC.  Borrower is not
in violation of any of the country or list based economic and trade sanctions
administered and enforced by OFAC.  Borrower (a) is not a Sanctioned
Person or a Sanctioned Entity, (b) does not have its assets located in
Sanctioned Entities, or (c) does not derive revenues from investments in, or
transactions with Sanctioned Persons or Sanctioned Entities.  No
proceeds of any loan hereunder will be used to fund any operations in, finance
any investments or activities in, or make any payments to, a Sanctioned Person
or a Sanctioned Entity.

     

    4.24           Employee
and Labor Matters.  Except as set forth on Schedule 4.24, there
is (i) no unfair labor practice complaint pending or, to the knowledge of
Borrower, threatened against Borrower before any Governmental Authority and no
grievance or arbitration proceeding pending or threatened against Borrower which
arises out of or under any collective bargaining agreement and that could
reasonably be expected to result in a material liability, (ii) no strike, labor
dispute, slowdown, stoppage or similar action or grievance pending or threatened
in writing against Borrower that could reasonably be expected to result in a
material liability, or (iii) to the knowledge of Borrower, after due inquiry, no
union representation question existing with respect to the employees of Borrower
and no union organizing activity taking place with respect to any of the
employees of Borrower.  Borrower has not incurred any liability or
obligation under the Worker Adjustment and Retraining Notification Act or
similar state law, which remains unpaid or unsatisfied.  The hours
worked and payments made to employees of Borrower have not been in violation of
the Fair Labor Standards Act or any other applicable legal requirements, except
to the extent such violations could not, individually or in the aggregate,
reasonably be expected to result in a Material Adverse Change.  All
material payments due from Borrower on account of wages and employee health and
welfare insurance and other benefits have been paid or accrued as a liability on
the books of Borrower, except where the failure to do so could not, individually
or in the aggregate, reasonably be expected to result in a Material Adverse
Change.

     

    4.25           PDP
Facility and Bank Facility Documents.

     

    (a)           As
of the Closing Date, Borrower has delivered to Agent a complete and correct copy
of the Bank Facility Documents, including all schedules and exhibits
thereto.  Borrower is not in default in the performance or compliance
with any provisions of the Bank Facility Documents.

     

    (b)           As
of the Closing Date, Borrower has made available to Agent a complete and correct
copy of the PDP Facility Documents, including all schedules and exhibits
thereto.  Borrower is not in default in the performance or compliance
with any provisions of the PDP Facility Documents.

     

    (c)           To
Borrower’s knowledge, the Bank Facility Documents comply in all material
respects with all applicable laws.  The Bank Facility Documents are in
full force and effect as of the Closing Date and have not been terminated,
rescinded or withdrawn as of such date.

     

    (d)           To
Borrower’s knowledge, the PDP Facility Documents comply in all material respects
with all applicable laws.  The PDP Facility Documents are in full
force and effect as of the Closing Date and have not been terminated, rescinded
or withdrawn as of such date.

     

    4.26           Eligible
Accounts.  As to each
Receivable that is identified by Borrower as an Eligible Account in a Borrowing
Base Certificate submitted to Agent, such Receivable is (a) a bona fide
existing

     

    
      
         

      

      
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    payment
obligation of the applicable Account Debtor created by the rendition of services
to such Account Debtor or the sale of mileage awards, miles, or credits, in each
case, in the ordinary course of Borrower’s business, (b) owed to Borrower
without any known defenses, disputes, offsets, counterclaims, or rights of
return or cancellation, and (c) not excluded as ineligible by virtue of one or
more of the excluding criteria (other than Agent-discretionary criteria) set
forth in the definition of Eligible Accounts.

     

    4.27           Spare
Parts.

     

    (a)           Borrower
keeps correct and accurate records itemizing and describing the type,
serviceability, and quantity of its Spare Parts.  In the case of Spare
Parts identified by Borrower as an Eligible Extendable or Eligible Replaceable
Spare Part, as applicable, in the most recent Borrowing Base Certificate
submitted to Agent, Borrower has full legal and beneficial ownership to such
Spare Parts (other than those disposed of since such date to the extent
permitted hereunder), free and clear of all Liens (other than non-consensual
Permitted Liens).

     

    (b)           Each
Spare Part that is identified by Borrower as an Eligible Expendable or Eligible
Replaceable Spare Part, as applicable, in the most recent Borrowing Base
Certificate submitted to Agent is, as of the date of such Borrowing Base
Certificate (i) of good and merchantable quality, free from material defects,
serviceable in accordance with the Maintenance Program, in good operating
condition and ready for immediate use or operation in accordance with the
Maintenance Program and has all required FAA serviceability tags or records
applicable thereto and, if required by the FAA or the Maintenance Program, back
to birth records and all other documents required by the Maintenance Program,
(ii) not excluded as ineligible by virtue of one or more of the excluding
criteria set forth in the definition of Eligible Expendables or Eligible
Replaceable Spare Parts, as applicable, and (iii) accurately described in such
Borrowing Base Certificate (including by manufacturer’s serial number or
manufacturer’s part number, as applicable, if a serialized Spare Part that
Borrower customarily tracks by serial number, and location).

     

    (c)           Except
to the extent permitted by Section 5.17(b), the
Spare Parts of Borrower are in the possession and control of Borrower, used or
held for use in Borrower’s business, and only located at the locations
identified on Schedule
4.27 (as such Schedule may be updated pursuant to Section
5.17(b)).

     

    (d)           Schedule 1.1(S) of
the Engine and Spare Parts Security Agreement contains a true and complete
summary description by type and location of all of the Spare Parts owned by
Borrower that are located in the United States (other than Spare Parts that are
specifically excluded from Schedule 1.1(S)
pursuant to the terms of the Engine and Spare Parts Security Agreement) as of
each date that this representation and warranty is given.  The Spare
Parts located in the United States are primarily maintained for the purposes of
installing such Spare Parts on Aircraft, Engines, or Appliances operated by
Borrower.

     

    (e)           Borrower
possesses all necessary certificates, permits, rights, authorizations and
concessions and consents which are material to the repair, refurbishment, or
overhaul of any of the Spare Parts (to the extent Borrower performs any of such
actions) or to the maintenance, use, operation, or sale of any of the Spare
Parts.

     

    (f)           Borrower
uses, stores, maintains, overhauls, repairs, and refurbishes (or causes a duly
authorized FAA repair station or overhaul vendor to maintain, overhaul, repair,
and refurbish) all Spare Parts and maintains books and records with respect
thereto in compliance with the material requirements of applicable law
(including the provision of all required FAA serviceability tags or records
where applicable) and with the Maintenance Program, except for such requirements
of applicable law the validity or applicability of which are being protested by
Borrower so long as (i) such protest is instituted promptly and prosecuted
diligently by Borrower in good faith, (ii) there is no material risk of any
sale,

     

    
      
         

      

      
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    forfeiture,
or loss of any Spare Part or diminution in value of any Spare Part as a result
of such contest, (iii) there is no risk of any criminal liability, or any
material civil liability, for Borrower, Agent, or any of the Lenders as a result
of such contest, (iv) Agent is satisfied that while such contest is pending,
there is no impairment of the enforceability, validity, or priority of any of
the Agent’s Liens on the Spare Parts, and (v) there is no material risk of any
adverse affect on the ownership interest of Borrower in such Spare
Part.

     

    4.28           Ground
Service Equipment and Engines.

     

    (a)           Borrower
keeps correct and accurate records itemizing and describing the type and
quantity of its Ground Service Equipment and the Designated
Engines.  In the case of Ground Service Equipment and Engines
identified by Borrower as an item of Eligible Ground Service Equipment or an
Eligible Engine, as applicable, in the most recent Borrowing Base Certificate
submitted to Agent, Borrower has full legal and beneficial ownership to such
Ground Service Equipment and Engines (other than assets that have been disposed
of since the date of such Borrowing Base Certificate if and so long as the
disposition of such assets was not prohibited hereby), free and clear of all
Liens (other than non-consensual Permitted Liens).

     

    (b)           Each
item of Ground Service Equipment that is identified by Borrower as an item of
Eligible Ground Service Equipment in the most recent Borrowing Base Certificate
submitted to Agent is, as of the date of such Borrowing Base Certificate (i) of
good and merchantable quality and in good operating condition (except for those
items of Eligible Ground Service Equipment that are being repaired so long as
the applicable repairs are routine repairs that are not expected to take more
than a normal service period to complete), (ii) not excluded as ineligible by
virtue of one or more of the excluding criteria set forth in the definition of
Eligible Ground Service Equipment, and (iii) accurately described in such
Borrowing Base Certificate (including by manufacturer’s serial number or
manufacturer’s part number, as applicable, if a serialized item of Ground
Service Equipment that Borrower customarily tracks by serial number, location,
and, to the knowledge of a Responsible Officer of Borrower, whether the subject
of a certificate of title).

     

    (c)           Each
Engine that is identified by Borrower as an Eligible Engine in the most recent
Borrowing Base Certificate submitted to Agent is, as of the date of such
Borrowing Base Certificate (i) either (A) of good and merchantable quality, free
from defects, serviceable in accordance with the Maintenance Program, in good
operating condition and ready for immediate use or operation in accordance with
the Maintenance Program and has all required FAA serviceability tags or records
applicable thereto and, if required by the FAA or the Maintenance Program, back
to birth records and all other documents required by the Maintenance Program or
(B) following customary repairs that are not expected to take more than a normal
service period to complete, will be of good and merchantable quality, free from
defects, serviceable in accordance with the Maintenance Program, in good
operating condition and ready for immediate use or operation in accordance with
the Maintenance Program and has all required FAA serviceability tags or records
applicable thereto and, if required by the FAA or the Maintenance Program, back
to birth records and all other documents required by the Maintenance Program,
(ii) not excluded as ineligible by virtue of one or more of the excluding
criteria set forth in the definition of Eligible Engines, and
(iii) accurately described in such Borrowing Base Certificate (including by
manufacturer’s serial number).

     

    (d)           Except
to the extent permitted by Section 5.18, the
Ground Service Equipment is in the possession and control of Borrower, is used
or held for use in Borrower’s business, and is stored at the locations
identified on Schedule
4.28(d) (as such Schedule may be updated pursuant to Section
5.18).

     

    (e)           Except
to the extent permitted by Section 5.18, the
Designated Engines are in the possession and control of Borrower, are used or
held for use in Borrower’s business, and are stored at the locations identified
on Schedule
4.28(e) (as such Schedule may be updated pursuant to Section
5.18).

     

    
      
         

      

      
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    (f)           Except
for those Designated Engines that have been sold, leased, or disposed of
pursuant to a Permitted Exchange, Schedule D-2 contains
a true and complete summary description by type and serial number of the
Designated Engines and, unless such Designated Engines have been sold, leased,
or disposed of pursuant to a Permitted Lease or a Permitted Exchange, unless
such Designated Engines are attached to an Aircraft owned or leased by Borrower
pursuant to a Permitted Engine Installation, or unless such Designated Engines
are out for repair, such Engines are located at the locations identified on
Schedule
4.28(e)

     

    (g)           Borrower
possesses all necessary certificates, permits, rights, authorizations and
concessions and consents which are material to the repair, refurbishment, or
overhaul of any of the Designated Engines (to the extent Borrower performs any
of such actions) or to the maintenance, use, operation, or sale of any of such
Engines.

     

    (h)           Borrower
uses, stores, maintains, overhauls, repairs, and refurbishes (or causes a duly
authorized FAA repair station to maintain, overhaul, repair, and refurbish) all
of the Designated Engines and maintains books and records with respect thereto
in compliance with the material requirements of applicable law (including the
provision of all required FAA serviceability tags or records where applicable)
and with the Maintenance Program, except for such requirements of applicable law
the validity or applicability of which are being protested by Borrower so long
as (i) such protest is instituted promptly and prosecuted diligently by Borrower
in good faith, (ii) there is no material risk of any sale, forfeiture, or loss
of any such Engine or diminution in value of any such Engine as a result of such
contest, (iii) there is no risk of any criminal liability, or any material civil
liability, for Borrower, Agent, or any of the Lenders as a result of such
contest, (iv) Agent is satisfied that while such contest is pending, there is no
impairment of the enforceability, validity, or priority of any of the Agent’s
Liens on such Engines, and (v) there is no material risk of any adverse affect
on the ownership interest of Borrower in such Engines.

     

    4.29           Air
Carrier.  Borrower is a
Certificated Air Carrier.  Borrower possesses all other necessary
certificates, franchises, air carrier and other licenses, permits, rights,
authorizations and concessions and consents which are material to the operation
of Aircraft operated by it and routes flown by it and the conduct of its
business and operations as currently conducted.

     

    5.           AFFIRMATIVE
COVENANTS.

     

    Borrower
covenants and agrees that, until termination of all of the Commitments and
payment in full of the Obligations, Borrower shall comply with each of the
following:

     

    5.1           Financial
Statements, Reports, Certificates.  Deliver to Agent,
with copies to each Lender, each of the financial statements, reports, and other
items set forth on Schedule 5.1 no later
than the times specified therein.  In addition, Borrower agrees to
maintain a system of accounting that enables Borrower to produce financial
statements in accordance with GAAP.  Borrower shall also (a) keep a
reporting system that shows all additions, sales, claims, returns, and
allowances with respect to its sales, and (b) maintain its billing
systems/practices as approved by Agent prior to the Closing Date and shall only
make material modifications thereto if such modifications comply with GAAP and
are not materially adverse to the interests of the Lenders or if such
modifications are required to comply with Accounting Changes or applicable law
(including the rules and regulations of the SEC).

     

    5.2           Collateral
Reporting.  Provide Agent
(and if so requested by Agent, with copies for each Lender) with each of the
reports set forth on Schedule 5.2 at the
times specified therein. In addition, Borrower agrees to use commercially
reasonable efforts in cooperation with Agent to facilitate and implement a
system of electronic collateral reporting in order to provide electronic
reporting of each of the items set forth on such Schedule.

     

    
      
         

      

      
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    5.3           Existence.  Except as
otherwise permitted under Section 6.3 or Section 6.4, at all
times maintain and preserve in full force and effect its existence (including
being in good standing in its jurisdiction of organization) and all rights and
franchises, licenses and permits material to its business; provided, however, that
Borrower shall not be required to preserve any such right or franchise, licenses
or permits if Borrower’s Responsible Officers determine that the preservation
thereof is no longer desirable in the conduct of the business of Borrower and
that the loss thereof is not disadvantageous in any material respect to Borrower
or to the Lenders.

     

    5.4           Maintenance
of Properties.  Maintain and
preserve all of its assets that are necessary or useful in the proper conduct of
its business in good working order and condition, ordinary wear, tear, and
casualty excepted and Permitted Dispositions excepted, and comply with the
material provisions of all material leases to which it is a party as lessee, so
as to prevent the loss or forfeiture thereof, unless such provisions are the
subject of a Permitted Protest.

     

    5.5           Taxes.  Cause all
assessments and taxes imposed, levied, or assessed against Borrower or any of
its assets or in respect of any of its income, businesses, or franchises to be
paid in full, before delinquency or before the expiration of any extension
period, except to the extent (a) the validity of such assessment or tax shall be
the subject of a Permitted Protest or (b) such assessments or taxes do not
exceed  $250,000 in the aggregate at any one time.  Borrower
will make timely payment or deposit of all tax payments and withholding taxes
required of it and them by applicable laws, including those laws concerning
F.I.C.A., F.U.T.A., state disability, and local, state, and federal income
taxes.

     

    5.6           Insurance.  At Borrower’s
expense, maintain insurance respecting Borrower’s assets wherever located,
covering loss or damage by fire, theft, explosion, and all other hazards and
risks as ordinarily are insured against by other Persons engaged in the same or
similar businesses (including all-risk ground coverage of Borrower’s Spare
Parts, Designated Engines, and Ground Service Equipment).  Borrower
also shall maintain general liability, aircraft public liability insurance
(including (i) passenger legal liability, and (ii) if such insurance is then
generally carried by major United States air carriers, aircraft war risk and
allied perils insurance in accordance with London form AVN52E (as in effect on
the date hereof or in accordance with the FAA’s Chapter 443 Aviation Insurance
Policy as in effect on the date hereof) or its equivalent form), cargo liability
insurance, and war risk and allied perils hull (including confiscation,
expropriation, nationalization and seizure by a government other than the United
States), terrorist and hijacking insurance, product liability insurance,
director’s and officer’s liability insurance, fiduciary liability insurance, and
employment practices liability insurance, as well as insurance against larceny,
embezzlement, and criminal misappropriation.  All such policies of
insurance shall be with creditworthy, responsible and reputable insurance
companies and in such amounts as is carried generally in accordance with sound
business practice by companies in similar businesses similarly situated and
located (it being understood that the insurance coverage reflected on the
certificates of insurance delivered to Agent on the Closing Date is acceptable
to Agent.  All deductibles shall be in an amount reasonably
satisfactory to Agent (it being understood that the deductibles reflected on the
certificates of insurance delivered to Agent on the Closing Date are acceptable
to Agent).  All property insurance policies covering the Collateral
are to be made payable to Agent for the benefit of Agent and the Lenders, as
their interests may appear, in case of loss, pursuant to a standard loss payable
endorsement with a standard non-contributory “lender” or “secured party” clause
and are to contain such other provisions as Agent may reasonably require to
fully protect the Lenders’ interest in the Collateral and to any payments to be
made under such policies; provided, however, that if
insurance proceeds are paid to Agent pursuant to such clauses or endorsements,
then (a) so long as at the time the proceeds are received (i) no Default or
Event of Default has occurred and is continuing and so long as no Overadvance
exists, and (ii) the Threshold Usage Amount does not exist, then such amounts
received by Agent shall be promptly remitted by Agent to Borrower, and (b)
otherwise, such amounts received by Agent shall be promptly applied by Agent to
the repayment of the Obligations in accordance with Section 2.4(b) (with
Borrower being relieved of any obligation to make payment of any Funding Losses
that may be incurred as a result of

     

    
      
         

      

      
        26

        
          

        

      

      
         

      

    

    such
repayment of the Obligations); provided further, however, that if, at
the time that a claim for such amounts is first made by Borrower under its
insurance policies, no Default or Event of Default has occurred and is
continuing, no Overadvance exists, and the Threshold Usage Amount does not
exist, Borrower may request that Agent notify Borrower’s insurance broker to
remit (or cause to be remitted) the applicable payment directly to Borrower
(instead of to Agent) and, if it receives such a request and if the requisite
conditions are satisfied, Agent shall promptly notify such broker to remit (or
cause to be remitted) the applicable payment directly to
Borrower.  All certificates of property and general liability
insurance are to be delivered to Agent, with the loss payable (but only in
respect of Collateral) and additional insured endorsements in favor of Agent and
shall provide (except any policy of insurance placed with the FAA) for not less
than 30 days (10 days in the case of non-payment and 7 days in the case of war
risk and allied perils coverage if and to the extent available) prior written
notice to Agent of the exercise of any right of cancellation.  If
Borrower fails to maintain such insurance, Agent may arrange for such insurance,
but at Borrower’s expense and without any responsibility on Agent’s part for
obtaining the insurance, the solvency of the insurance companies, the adequacy
of the coverage, or the collection of claims.  Borrower shall give
Agent prompt notice of (i) any loss exceeding $5,000,000 covered by its casualty
insurance, and (ii) any cancellation of any policy of
insurance.  Upon the occurrence and during the continuance of an Event
of Default and so long as the Threshold Usage Amount exists, Agent shall have
the sole right to file claims under any property and general liability insurance
policies in respect of the Collateral, to receive, receipt and give acquittance
for any payments that may be payable thereunder, and to execute any and all
endorsements, receipts, releases, assignments, reassignments or other documents
that may be necessary to effect the collection, compromise or settlement of any
claims under any such insurance policies.

     

    5.7           Inspection.  Permit Agent and
each of its duly authorized representatives or agents to visit any of its
properties and inspect any of its assets or books and records, to conduct
appraisals and valuations, to examine and make copies of its books and records,
and to discuss its affairs, finances, and accounts with, and to be advised as to
the same by, its officers and employees at such reasonable times and intervals
as Agent may designate and, so long as no Default or Event of Default exists,
with reasonable prior notice to Borrower; provided, however, that so long
as no Event of Default shall have occurred and be continuing, Borrower shall not
be obligated to reimburse Agent for more than 2 audits during any calendar year,
more than 1 appraisal of the Collateral during any calendar year, or more than 1
business valuation during any calendar year; provided further, however, if no
Advances have been made in any calendar year and no Event of Default shall have
occurred and be continuing, Borrower shall not be obligated to reimburse Agent
for more than 1 audit during any calendar year.

     

    5.8           .Compliance
with Laws.  Comply with the
requirements of all applicable laws, rules, regulations, and orders of any
Governmental Authority, other than laws, rules, regulations, and orders the
non-compliance with which, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Change.

     

    5.9           Environmental.

     

    (a)           Keep
any property either owned or operated by Borrower free of any Environmental
Liens or post bonds or other financial assurances sufficient to satisfy the
obligations or liability evidenced by such Environmental Liens,

     

    (b)           Comply,
in all material respects, with Environmental Laws and provide to Agent
documentation of such compliance when and if Agent reasonably
requests,

     

    (c)           Promptly
notify Agent of any release of which a Responsible Officer of Borrower has
knowledge of a Hazardous Material in any reportable quantity from or onto
property owned

     

    
      
         

      

      
        27

        
          

        

      

      
         

      

    

    or
operated by Borrower and take any Remedial Actions required to abate said
release or otherwise to come into compliance, in all material respects, with
applicable Environmental Law, and

     

    (d)           Promptly,
but in any event within 5 Business Days of receipt thereof by a Responsible
Officer, provide Agent with written notice of any of the
following:  (i) notice that an Environmental Lien has been filed
against any of the real or personal property of Borrower, (ii) commencement of
any Environmental Action or written notice that an Environmental Action will be
filed against Borrower, and (iii) written notice of a violation, citation, or
other administrative order from a Governmental Authority; provided that, in each
case, the event, individually or when added to all other such events, is
reasonably expected to involve $1,000,000 or more in remediation costs; provided, however, that
Borrower shall not be required to provide such written notice relative to
individual violations, citations, or other administrative orders that are
reasonably expected to involve, individually or as part of a series of related
events, less than $100,000 in remediation costs.

     

    5.10           Disclosure
Updates.  Promptly and in
no event later than 5 Business Days after a Responsible Officer obtains
knowledge thereof, notify Agent if any written information, exhibit, or report
furnished to Agent or the Lenders contained, at the time it was furnished, any
untrue statement of a material fact or omitted to state any material fact
necessary to make the statements contained therein not misleading in light of
the circumstances in which made.  The foregoing to the contrary
notwithstanding, any notification pursuant to the foregoing provision will not
cure or remedy the effect of the prior untrue statement of a material fact or
omission of any material fact nor shall any such notification have the effect of
amending or modifying this Agreement or any of the Schedules
hereto.

     

    5.11           [Intentionally
omitted].

     

    5.12           Further
Assurances.  At any time upon
the reasonable request of Agent, execute or deliver to Agent any and all
financing statements, fixture filings, security agreements, pledges,
assignments, endorsements of certificates of title (provided, however, that
certificates of title shall only be required to be endorsed to reflect Agent’s
security interest in the subject vehicles if Borrower elects so as to include
the vehicles in the Borrowing Base or if an Event of Default has occurred and is
continuing), and all other documents (collectively, the “Additional
Documents”) that Agent may reasonably request to create, perfect, and
continue perfected or to better perfect Agent’s Liens in the collateral
described in the Security Agreement or the Engine and Spare Parts Security
Agreement of Borrower (whether now owned or hereafter arising or acquired,
tangible or intangible) and in order to fully consummate all of the transactions
contemplated hereby and under the other Loan Documents.  To the
maximum extent permitted by applicable law, if Borrower refuses or fails to
execute or deliver any reasonably requested Additional Documents within a
reasonable period of time following the request to do so, Borrower hereby
authorizes Agent to execute any such Additional Documents in Borrower’s name, as
applicable, and authorizes Agent to file such executed Additional Documents in
any appropriate filing office.

     

    5.13           Lender
Meetings.  Within 120 days after the close of each fiscal year
of Borrower, at the request of Agent or of the Required Lenders and upon
reasonable prior notice, hold a meeting (at a mutually agreeable location and
time or, at the option of Agent or Borrower, by conference call) with all
Lenders who choose to attend such meeting, at which meeting shall be reviewed
the financial results of the previous fiscal year and the financial condition of
Borrower and the projections presented for the current fiscal year of
Borrower.

     

    5.14           Material
Contracts.  Make available to
Agent (including by virtue of the filing thereof with the SEC),
contemporaneously with the filing thereof with the SEC, copies of (a) each
Material Contract entered into since the Closing Date or, after the Closing
Date, since the previous delivery pursuant to this Section, and (b) each
material amendment or modification of any Material Contract entered into since
the Closing Date or, after the Closing Date, since the previous delivery
pursuant to this Section.

     

    
      
         

      

      
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    5.15           [Intentionally
Omitted].

     

    5.16           [Intentionally
Omitted].

     

    5.17           Spare
Parts.

     

    (a)           Store
all Eligible Expendables and Eligible Replaceable Spare Parts only at the
locations set forth on Schedule 4.27 and not
permit any Eligible Expendables or Eligible Replaceable Spare Parts to be
located at the premises of or otherwise put into the possession or control of
any bailee, warehouseman, FAA repair station, servicer, mechanic, vendor,
supplier, or other Person); provided however, that
Borrower may amend Schedule 4.27 to add
additional locations so long as (i) such amendment occurs by written notice
received by Agent not less than 20 days prior to the date on which such Spare
Parts are moved to such new location, (ii) at least 5 Business Days prior to the
date on which such Spare Parts are moved to such new location, Borrower
executes, delivers, and records any amendment or supplement to the Engine and
Spare Parts Security Agreement that Agent reasonably requests in order to
reflect such new location as a permitted location and in order to perfect and
continue perfected Agent’s security interest in the Spare Parts to be located at
such new location, and (iii) such new location is within the United States
(exclusive of its territories and possessions); provided further,
however, that
so long as such transit is in the ordinary course of Borrower’s
business, (A) Borrower may move Eligible Expendables and Eligible
Replaceable Spare Parts to the location of Aircraft operated by Borrower or
Engines for the purpose of completing a Permitted Spare Parts Installation, and
(B) Borrower may move Eligible Expendables and Eligible Replaceable Spare Parts
from any location in the United States identified on Schedule 4.27 to any
other location in the United States identified on Schedule
4.27. 

     

    (b)           Store
all Spare Parts of Borrower not designated as Eligible Expendables or Eligible
Replaceable Spare Parts only at the locations identified on Schedule 4.27 (and
not permit any Spare Parts to be located at the premises of or otherwise put
into the possession or control of any bailee, warehouseman, FAA repair station,
servicer, mechanic, vendor, supplier, or other Person); provided however, that (i) any
Spare Part that is not an Eligible Expendable or Eligible Replaceable Spare Part
may be transported to or from, or in the possession of or under the control of a
bailee, warehouseman, FAA repair station, overhaul or maintenance servicer,
mechanic, or similar Person for purposes of repair in the ordinary course of
Borrower’s business and any Spare Parts that are in the possession or control of
such Persons shall immediately cease to be Eligible Expendables or Eligible
Replaceable Spare Parts, as applicable, (ii) so long as such transit is in the
ordinary course of Borrower’s business, Borrower may move Spare Parts from
any location in the United States identified on Schedule 4.27 to any
other location in the United States identified on Schedule 4.27; (iii)
so long as (A) no Event of Default has occurred and is continuing or would
result therefrom, (B) such transit is in the ordinary course of Borrower’s
business, and (C) the aggregate value of all Spare Parts moved to all such
foreign locations, in the aggregate, does not exceed [***], Borrower may move
Spare Parts that are not Eligible Expendables or Eligible Replaceable Spare
Parts from any location in the United States identified on Schedule 4.27 to any
location outside the United States or to locations at territories or possessions
of the United States; (iv) so long as such transit is in the ordinary course of
Borrower’s business, Borrower may move Spare Parts that are not Eligible
Expendables or Eligible Replaceable Spare Parts from any location outside the
United States (including locations at territories or possessions of the United
States) to any other location outside the United States (including locations at
territories or possessions of the United States), and (v) so long as in the
ordinary course of Borrower’s business, Borrower may lend Spare Parts to, or
exchange Spare Parts with, other airlines.

     

    (c)           Maintain
in effect the Spare Parts Tracking System.

     

    
      *
Indicates that certain information contained herein has been omitted and filed
separately with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted portions.

    

    

     

    (d)   Maintain,
with respect to Spare Parts, all records, logs, serviceability tags and other
documents and materials required by applicable law, including the FARs, or by
the Maintenance Program.

     

    
      
         

      

      
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    (e)           Except
for Permitted Dispositions or Permitted Spare Parts Installations, not permit
any Spare Parts to be leased, sold, exchanged, disposed of, or affixed, attached
or installed to or on any Aircraft, Engine, or other Equipment.

     

    5.18           Ground
Service Equipment and Engines.

     

    (a)           Unless
an item of Eligible Ground Service Equipment is out for repair, store the
Eligible Ground Service Equipment only at the locations set forth on Schedule 4.28(d);
provided, however that so long
as such transit is in the ordinary course of Borrower’s business, Eligible
Ground Service Equipment may be in transit between the locations on Schedule 4.28(d);
provided
further, however, that (i)
Borrower may amend Schedule 4.28(d) to
add additional locations so long as (A) such amendment occurs by written notice
received by Agent not less than 20 days prior to the date on which such Ground
Service Equipment is moved to such new location, and (B) such new location is
within the United States (exclusive of its territories and
possessions).

     

    (b)           Unless
a Designated Engine is attached to one of the Aircraft operated by Borrower as a
result of a Permitted Engine Installation, is the subject of a Permitted Lease,
or is out for repair, store the Designated Engines only at the locations
identified on Schedule
4.28(e); provided, however that so long
as such transit is in the ordinary course of Borrower’s business, such Engines
may be (i) in transit between the locations on Schedule 4.28(e), and
(ii) moved to the location of an Aircraft operated by Borrower for the purpose
of completing a Permitted Engine Installation; provided further,
however, that
(i) Borrower may amend Schedule 4.28(e) to
add additional locations so long as (A) such amendment occurs by written notice
received by Agent not less than 20 days prior to the date on which such
Designated Engines are moved to such new location, and (B) such new location is
within the United States (exclusive of its territories and
possessions).

     

    (c)           Except
for Permitted Dispositions, not permit any Eligible Ground Service Equipment to
be leased, sold, exchanged, or otherwise disposed of.

     

    (d)           Unless
a Designated Engine is attached to one of the Aircraft operated by Borrower as a
result of a Permitted Engine Installation, is the subject of a Permitted Lease,
or has been the subject of a Permitted Disposition, not permit any Designated
Engine to be leased, sold, exchanged, disposed of, or affixed, attached or
installed to or on any Aircraft.

     

    5.19           Benefit
Plans.

     

    (a)           A
Responsible Officer of Borrower shall provide (or cause to be provided) to Agent
promptly and in any event within 5 Business Days (if the Threshold Usage Amount
exists) or within 20 Business Days (if the Threshold Usage Amount does not
exist) after (i) Borrower or any of its ERISA Affiliates knows or has reason to
know that, with respect to any Benefit Plan, any ERISA Event that could
reasonably be expected to result in liabilities in excess of [***] has occurred
or is likely to occur within the following 30 days or that any of the covenants
set forth in Section
5.19(b), (c), (d), or (e), below are untrue
or are likely to be untrue within the following 30 days, a statement of
Responsible Officer of Borrower setting forth the details of such occurrence or
the likelihood of such occurrence and the action, if any, which the Borrower or
ERISA Affiliate proposes to take with respect thereto, (ii) written request
from

     

    
      
         

          *
Indicates that certain information contained herein has been omitted and filed
separately with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted
portions.

        

      

      
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    Agent,
copies of the most-recent annual report and all schedules and attachments
thereto filed with the Internal Revenue Service or the U.S. Department of Labor,
(iii) written request from Agent, copies of the most recently-prepared actuarial
reports in relation to the Benefit Plans and the Benefit Arrangements and such
other information concerning any Benefit Plan or Benefit Arrangement as may be
reasonably requested by Agent, and (iv) written request from Agent, a
certificate of a Responsible Officer certifying that each required contribution
with respect to a Benefit Plan was timely made,

     

    (b)           With
respect to years before the effective date of the Pension Act as it applies to
each Benefit Plan, no accumulated funding deficiency (as defined in ERISA
Section 302 and IRC Section 412), whether or not waived, exits with respect to
any Benefit Plan,

     

    (c)           The
minimum funding standards under the Pension Funding Rules with respect to each
Benefit Plan have been satisfied and will be satisfied at all
times.

     

    (d)           Neither
the Borrower nor any ERISA Affiliate will maintain, sponsor, contribute to,
administer, or have any liability with respect to any Foreign Pension Plan or
Multiemployer plan.

     

    (e)           No
liability to the PBGC has been incurred or will be incurred by the Borrower or
any ERISA Affiliate with respect to any Benefit Plan.

     

    6.           NEGATIVE
COVENANTS.

     

    Borrower
covenants and agrees that, until termination of all of the Commitments and
payment in full of the Obligations, Borrower will not do any of the
following:

     

    6.1           Indebtedness.  Create, incur,
assume, suffer to exist, guarantee, or otherwise become or remain, directly or
indirectly, liable with respect to any Indebtedness, except for Permitted
Indebtedness.

     

    6.2           Liens.  Create, incur,
assume, or suffer to exist, directly or indirectly, any Lien on or with respect
to any of its assets, of any kind, whether now owned or hereafter acquired, or
any income or profits therefrom, except for Permitted Liens.

     

    6.3           Restrictions
on Fundamental Changes.

     

    (a)           Other
than in order to consummate a Permitted Acquisition, enter into any merger,
consolidation, reorganization, or recapitalization, or reclassify its
Stock,

     

    (b)           Liquidate,
wind up, or dissolve itself (or suffer any liquidation or dissolution),
or

     

    (c)           Suspend
or go out of a substantial portion of its business, except in connection with
the transactions permitted pursuant to Section 6.4.

     

    6.4           Disposal
of Assets.  Other than
Permitted Dispositions, Permitted Investments, or transactions expressly
permitted by Sections
6.3 and 6.11, convey, sell,
lease, license, assign, transfer, or otherwise dispose of (or enter into an
agreement to convey, sell, lease, license, assign, transfer, or otherwise
dispose of) any of Borrower’s assets.

     

    6.5           Change
Name.  Change Borrower’s
name, organizational identification number, state of organization or
organizational identity; provided, however, that
Borrower may change its name upon at least 10 days prior written notice to Agent
of such change.

     

    6.6           Nature of
Business.  Make any change
in the nature of its business as described in Schedule 6.6 or
acquire any properties or assets that are not reasonably related to the conduct
of such business activities;

     

    
      
         

      

      
        31

        
          

        

      

      
         

      

    

    provided, however, that the
foregoing shall not prevent Borrower from engaging in any business that is
reasonably related or ancillary to its business.

     

    6.7           Prepayments
and Amendments.

     

    (a)           Except
in connection with Refinancing Indebtedness permitted by Section
6.1,

     

    (i)         if
by doing so Borrower’s Liquidity would drop below that required by Section 7, optionally
prepay, redeem, defease, purchase, or otherwise acquire any Indebtedness of
Borrower, other than the Obligations in accordance with this
Agreement,

     

    (ii)         make
any payment on account of Indebtedness that has been contractually subordinated
in right of payment if such payment is not permitted at such time under the
subordination terms and conditions, or

     

    (b)           Directly
or indirectly, amend, modify, or change any of the terms or provisions
of

     

    (i)         any
agreement, instrument, document, indenture, or other writing
evidencing  or concerning Permitted Indebtedness other than (A) the
Obligations in accordance with this Agreement, (B) [intentionally omitted], (C)
Indebtedness permitted under the definition of Permitted Indebtedness (other
than Indebtedness permitted under clauses (g) or (h) of the definition
of Permitted Indebtedness), and (D) Indebtedness permitted under clauses (g) or (h) of the definition
of Permitted Indebtedness so long as such amendment, modification, or change (x)
could not, individually or in the aggregate, reasonably be expected to be
materially adverse to the interests of the Lenders, and (y) would not otherwise
cause Borrower to breach any of the provisions of this Agreement,

     

    (ii)         any
Material Contract except to the extent that such amendment, modification, or
change could not, individually or in the aggregate, reasonably be expected to be
materially adverse to the interests of the Lenders, or

     

    (iii)         the
Governing Documents of Borrower if the effect thereof, either individually or in
the aggregate, could reasonably be expected to be materially adverse to the
interests of the Lenders.

     

    6.8           Change of
Control.  Cause, permit, or
suffer, directly or indirectly, any Change of Control.

     

    6.9           Restricted
Junior Payments.  Make any
Restricted Junior Payment; provided, however, that, so
long as it is permitted by law, and so long as no Default or Event of Default
shall have occurred and be continuing or would result therefrom,

     

    (a)           Borrower
may make distributions to former employees, officers, or directors of Borrower
(or any spouses, ex-spouses, or estates of any of the foregoing) on account of
redemptions of Stock of Group held by such Persons, provided, however, that the
aggregate amount of such redemptions made by Borrower during the term of this
Agreement plus the amount of Indebtedness outstanding under clause (l) of the
definition of Permitted Indebtedness, does not exceed [***] in the
aggregate,

     

    (b)           Borrower
may make distributions to former employees, officers, or directors of Borrower
(or any spouses, ex-spouses, or estates of any of the foregoing), solely in the
form of forgiveness of
Indebtedness of such Persons owing to Borrower on account of repurchases of the
Stock of Group held by such Persons; provided that such
Indebtedness was incurred by such Persons solely to acquire Stock of
Group,

     

    
      
         

          *
Indicates that certain information contained herein has been omitted and filed
separately with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted
portions.

        

      

      
        32

        
          

        

      

      
         

      

    

     

    (c)           Borrower
may declare and pay dividends or make distributions to Group, the proceeds of
which shall be used by Group solely to pay (i) (y) franchise taxes (other than
income taxes) and other fees, taxes and expenses required to maintain its
corporate existence or arising as a result of its ownership of Borrower, and (z)
federal, state and local income taxes, to the extent such income taxes are
attributable to the income of Borrower; provided that the amount of such
payments in any fiscal year does not exceed the amount that Borrower would be
required to pay in respect of federal, state and local taxes for such fiscal
year were Borrower to pay such taxes separately from Group, and (ii) ordinary
course operating and corporate overhead expenses and administrative and similar
expenses related to its existence and ownership of Borrower, and

     

    (d)      Borrower
may declare and pay dividends or make distributions to Group so long as (i) no
Event of Default has occurred and is continuing or would result therefrom and
(i) Borrower has Liquidity of $600,000,000, or greater, before and immediately
after giving effect thereto.

     

    6.10           Accounting
Methods.  Modify or change
its fiscal year or its method of accounting (other than changes to its method of
accounting if such changes comply with GAAP and are not materially adverse to
the interests of the Lenders or if such changes are required to comply with
Accounting Changes or applicable law (including the rules and regulations of the
SEC)).

     

    6.11           Investments;
Controlled Investments .

     

    (a)           Except
for Permitted Investments, directly or indirectly, make or acquire any
Investment or incur any liabilities (including contingent obligations) for or in
connection with any Investment.

     

    (b)           Establish
or maintain any Deposit Account in to which proceeds of Borrower’s Accounts that
constitute so-called “corporate receivables”, so-called “general traffic
receivables”, so-called “service sales receivables” or so-called “travel agent
receivables” or Interline Receivables or Mileage Plan Receivables are deposited
(or are expected to be deposited) (excluding, in each case, any Excluded
Accounts) unless Borrower and the applicable bank have entered into a Control
Agreement with Agent governing such Deposit Account in order to perfect (and
further establish) Agent’s Liens in such Deposit Accounts.

     

    (c)           Establish
or maintain any Deposit Account in to which proceeds of Borrower’s Accounts that
constitute so-called “corporate receivables”, so-called “general traffic
receivables”, so-called “service sales receivables” or so-called “travel agent
receivables” or Interline Receivables or Mileage Plan Receivables are deposited
(or are expected to be deposited) (excluding, in each case, any Excluded
Accounts) other than the Deposit Accounts that are identified on Schedule
4.15.

     

    (d)           Establish
or maintain any Securities Account in to which proceeds of Borrower’s Accounts
that constitute so-called “corporate receivables”, so-called “general traffic
receivables”, so-called “service sales receivables” or so-called “travel agent
receivables” or Interline Receivables or Mileage Plan Receivables are deposited
(or are expected to be deposited) (excluding, in each case, any Excluded
Accounts).

     

    6.12           Transactions
with Affiliates.  Directly or
indirectly enter into or permit to exist any material transaction with any
Affiliate of Borrower unless such transaction, taken as a whole, is
substantially as favorable to Borrower as would be obtainable by Borrower in a
comparable arm’s length transaction with a Person other than an Affiliate,
except for:

     

    
      
         

      

      
        33

        
          

        

      

      
         

      

    

    (a)           so
long as it has been approved by Borrower’s board of directors (or comparable
governing body) in accordance with applicable law, any indemnity provided for
the benefit of directors (or comparable managers) of Borrower, and

     

    (b)           transactions
permitted by Section
6.3 or Section
6.9.

     

    6.13           Use of
Proceeds.  Use the proceeds
of the Advances for any purpose other than, consistent with the terms and
conditions hereof, for its lawful and permitted purposes (including that no part
of the proceeds of the loans made to Borrower will be used to purchase or carry
any such Margin Stock or to extend credit to others for the purpose of
purchasing or carrying any such margin stock or for any purpose that violates
the provisions of Regulation T, U or X of the Board of Governors of the United
States Federal Reserve).

     

    6.14           Limitation
on Issuance of Stock. Except for the issuance or sale of common stock or
Permitted Preferred Stock by Borrower, issue or sell or enter into any agreement
or arrangement for the issuance and sale of any of its Stock.

     

    6.15           Equipment
with Bailees.  Store the
Equipment of Borrower that constitutes a portion of the Collateral at any time
now or hereafter with a bailee, warehouseman, or similar party except as
expressly permitted pursuant to Section 5.17 or Section
5.18.

     

    7.           FINANCIAL
COVENANT. Borrower
covenants and agrees that, until termination of all of the Commitments and
payment in full of the Obligations, Borrower shall have Liquidity of at least
$500,000,000 at all times.

     

    8.           EVENTS OF
DEFAULT.

     

    Any one
or more of the following events shall constitute an event of default (each, an
“Event of
Default”) under this Agreement:

     

    8.1           If
Borrower fails to pay when due and payable, or when declared due and payable,
(a) all or any portion of the Obligations consisting of interest or scheduled
fees (including any portion thereof that accrues after the commencement of an
Insolvency Proceeding, regardless of whether allowed or allowable in whole or in
part as a claim in any such Insolvency Proceeding) and such failure continues
for a period of 3 Business Days after the date of Borrower’s receipt of written
notice thereof (which notice shall have been sent by Agent to the email
addresses for the individuals set forth on Schedule 2.6(d)
hereto), or (b) all or any portion of the Obligations consisting of unscheduled
fees or charges due the Lender Group, reimbursement of Lender Group Expenses, or
other amounts (other than any portion thereof constituting principal, interest,
or scheduled fees) constituting Obligations (including any portion thereof that
accrues after the commencement of an Insolvency Proceeding, regardless of
whether allowed or allowable in whole or in part as a claim in any such
Insolvency Proceeding) and such failure continues for a period of 30 days after
the date of Borrower’s receipt of written notice thereof (which notice shall
have been sent by Agent to the email addresses for the individuals set forth on
Schedule 2.6(d)
hereto), or (c) all or any portion of the principal of the
Obligations;

     

    
      
         

      

      
        34

        
          

        

      

      
         

      

    

    8.2           If
Borrower:

     

    (a)           fails
to perform or observe any covenant or other agreement contained in any of Sections 5.6 or 7 (any of which such
failures shall not be an Event of Default if no Threshold Usage Amount exists
unless such failures continue for a period of 1 Business Days after the earlier
of (i) the date on which such failure shall first become known to any
Responsible Officer of Borrower or (ii) the date on which written notice
thereof is given to Borrower by Agent);

     

    (b)           fails
to perform or observe any covenant or other agreement contained in any of (i)
Sections 5.1,
5.2, 5.3, 5.4, 5.5, 5.7, 5.8, 5.10, 5.12, 5.13, 5.14, 5.17, 5.18, or 5.19 of this
Agreement, (ii) Sections 6.1 through 6.15 of this
Agreement, (iii) Section 6 of the Security Agreement, or (iv) Section 4 of the
Engine and Spare Parts Security Agreement, and any such failure continues for a
period of 10 Business Days after the earlier of (i) the date on which such
failure shall first become known to any Responsible Officer of Borrower or
(ii) the date on which written notice thereof is given to Borrower by
Agent; or

     

    (c)           fails
to perform or observe any covenant or other agreement contained in this
Agreement, or in any of the other Loan Documents, in each case, other than any
such covenant or agreement that is the subject of another provision of this
Section 8 (in
which event such other provision of this Section 8 shall
govern), and such failure continues for a period of 30 days after the earlier of
(i) the date on which such failure shall first become known to any Responsible
Officer of Borrower or (ii) the date on which written notice thereof is given to
Borrower by Agent;

     

    8.3           If
one or more judgments, orders, or awards for the payment of money involving an
aggregate amount of $30,000,000, or more (except to the extent fully covered
(other than to the extent of customary deductibles) by insurance pursuant to
which the insurer has not denied coverage) is entered or filed against Borrower
or any of its assets, and either (a) there is a period of 30 consecutive
days  at any time after the entry of any such judgment, order, or
award during which (i) the same is not discharged, satisfied, vacated, or bonded
pending appeal, or (ii) a stay of enforcement thereof is not in effect, or (b)
enforcement proceedings are commenced upon such judgment, order, or
award;

     

    8.4           If
an Insolvency Proceeding is commenced by Borrower;

     

    8.5           If
an Insolvency Proceeding is commenced against Borrower and any of the following
events occur: (a) Borrower consents to the institution of such Insolvency
Proceeding against it, (b) the petition commencing the Insolvency Proceeding is
not timely controverted, (c) the petition commencing the Insolvency Proceeding
is not dismissed within 60 calendar days of the date of the filing thereof, (d)
an interim trustee is appointed to take possession of all or any substantial
portion of the properties or assets of, or to operate all or any substantial
portion of the business of, Borrower, or (e) an order for relief shall have been
issued or entered therein;

     

    8.6           If
Borrower is enjoined, restrained, or in any way prevented by court order from
continuing to conduct all or any material part of the business affairs of
Borrower;

     

    8.7           If
there is a default in one or more agreements to which Borrower is a party with
one or more third Persons relative to Borrower’s Indebtedness involving an
aggregate amount of $30,000,000 or more, and such default (a) occurs at the
final maturity of the obligations thereunder, or (b) results in a right by such
third Person, irrespective of whether exercised, to accelerate the maturity of
Borrower’s obligations thereunder;

     

    8.8           If
any warranty, representation, certificate, statement, or Record (each, a “Representation”) made
herein or in any other Loan Document or delivered in writing to Agent or any
Lender in connection with this Agreement or any other Loan Document proves to be
untrue in any material respect (except that such materiality qualifier shall not
be applicable to any Representations that already are qualified or modified by
materiality in the text thereof) as of the date of issuance or making or deemed
making thereof and if (a) at the

     

    
      
         

      

      
        35

        
          

        

      

      
         

      

    

    time when
issued, made, or deemed made, such untrue Representation was made with knowledge
that it was untrue or with reckless disregard of the truth, or (b) such
Representation is not capable of being cured, or (c) at the time when issued,
made, or deemed made, such Representation was not made with knowledge that it
was untrue or with reckless disregard of the truth, such Representation is
capable of being cured, and such Representation is not cured within 10 Business
Days after the earlier of (i) the date on which such untrue Representation first
became known to any Responsible Officer of Borrower or (ii) the date on which
written notice thereof is given to Borrower by Agent;

     

    8.9           [Intentionally
Omitted];

     

    8.10           If
the Security Agreement, the Engine and Spare Parts Security Agreement, or any
other Loan Document that purports to create a Lien, shall, for any reason, fail
or cease to create a valid and perfected and, except to the extent of Permitted
Liens which by operation of law or contract would have priority, first priority
Lien on the Collateral covered thereby, except (a) as a result of a disposition
of the applicable Collateral in a transaction permitted under this Agreement, or
(b) as the result of an action or failure to act on the part of
Agent;

     

    8.11           The
validity or enforceability of any Loan Document shall at any time for any
reason  (other than solely as the result of an action or failure to
act on the part of Agent) be declared to be null and void, or a proceeding shall
be commenced by Borrower seeking to establish the invalidity or unenforceability
thereof, or Borrower shall deny that Borrower has any liability or obligation
purported to be created under any Loan Document; or

     

    

    8.12           If
any of the following events occur and such events continue in existence for a
period of 15 Business Days after the earlier of (i) the date on which such
failure shall first become known to any Responsible Officer of Borrower or (ii)
the date on which written notice thereof is given to Borrower by
Agent:

     

    (a)           If
Borrower or any of its ERISA Affiliates shall have made a complete or partial
withdrawal from a Multiemployer Plan, and, as a result of such complete or
partial withdrawal, any of them incurs a withdrawal liability in a total amount
that is or exceeds an amount that could reasonably be expected to result in a
Material Adverse Change; or if a Multiemployer Plan enters reorganization status
under Section 4241 of ERISA, and, as a result thereof, Borrower’s or any of its
ERISA Affiliate’s total contribution requirement with respect to such
Multiemployer Plan is or exceeds an amount that could reasonably be expected to
result in a Material Adverse Change; or

     

    (b)           One
or more ERISA Events has occurred with respect to a Benefit Plan that has
resulted or could reasonably be expected to result in liability of Borrower or
any of its ERISA Affiliates in an aggregate amount that could reasonably be
expected to result in a Material Adverse Change; or

     

    (c)           (i)      There
shall exist an amount of Unfunded Benefit Liabilities, individually or in the
aggregate, in an amount that could reasonably be expected to result in a
Material Adverse Change, or (ii) the total projected benefit obligation of
Borrower and its ERISA Affiliates, determined as of the close of any fiscal year
of Borrower and in accordance with Financial Accounting Standards Board
Statement No. 106 (without regard to continuation coverage required under Part 6
of subtitle B of Title I of ERISA or Section 4980B of the IRC), for any
post-employment or retiree health benefits, life insurance coverage, or any
other welfare benefits could reasonably be expected to result in a Material
Adverse Change.

     

    9.           RIGHTS AND
REMEDIES.

     

    9.1           Rights
and Remedies.  Upon the
occurrence and during the continuation of an Event of Default, Agent may, and,
at the instruction of the Required Lenders, shall (in the case of clauses (a)
and (b), by written
notice to Borrower), in addition to any other rights or remedies provided for
hereunder or under any other Loan Document or by applicable law, do any one or
more of the following on behalf of the Lender Group:

     

    
      
         

      

      
        36

        
          

        

      

      
         

      

    

     

    (a)           declare
the Obligations, whether evidenced by this Agreement or by any of the other Loan
Documents immediately due and payable, whereupon the same shall become and be
immediately due and payable and Borrower shall be obligated to repay all of such
Obligations in full, without presentment, demand, protest, or further notice or
other requirements of any kind, all of which are hereby expressly waived by
Borrower; and

     

    (b)           declare
the Commitments terminated, whereupon the Commitments shall immediately be
terminated together with (i) any obligation of any Lender hereunder to make
Advances, and (ii) the obligation of the Swing Lender to make Swing Loans;
and

     

    (c)           exercise
all other rights and remedies available to it or the Lenders under the Loan
Documents or under applicable law.

     

    The
foregoing to the contrary notwithstanding, upon the occurrence of any Event of
Default described in Section 8.4 or Section 8.5, in
addition to the remedies set forth above, without any notice to Borrower or any
other Person or any act by the Lender Group, the Commitments shall automatically
terminate and the Obligations, inclusive of all accrued and unpaid interest
thereon and all fees and all other amounts owing under this Agreement or under
any of the other Loan Documents, shall automatically and immediately become due
and payable and Borrower shall be obligated to repay all of such Obligations in
full, without presentment, demand, protest, or notice of any kind, all of which
are expressly waived by Borrower.

     

    9.2           Remedies
Cumulative.  The rights and
remedies of the Lender Group under this Agreement, the other Loan Documents, and
all other agreements shall be cumulative.  The Lender Group shall have
all other rights and remedies not inconsistent herewith as provided under the
Code, by law, or in equity.  No exercise by the Lender Group of one
right or remedy shall be deemed an election, and no waiver by the Lender Group
of any Event of Default shall be deemed a continuing waiver.  No delay
by the Lender Group shall constitute a waiver, election, or acquiescence by
it.

     

    10.           WAIVERS;
INDEMNIFICATION.

     

    10.1           Demand;
Protest; etc.  Borrower waives
demand, protest, notice of protest, notice of default or dishonor, notice of
payment and nonpayment, nonpayment at maturity, release, compromise, settlement,
extension, or renewal of documents, instruments, chattel paper, and guarantees
at any time held by the Lender Group on which Borrower may in any way be
liable.

     

    10.2           The
Lender Group’s Liability for Collateral.  Borrower hereby
agrees that:  (a) so long as Agent complies with its obligations,
if any, under the Code, the Lender Group shall not in any way or manner be
liable or responsible for:  (i) the safekeeping of the Collateral,
(ii) any loss or damage thereto occurring or arising in any manner or fashion
from any cause, (iii) any diminution in the value thereof, or (iv) any act
or default of any carrier, warehouseman, bailee, forwarding agency, or other
Person, and (b) all risk of loss, damage, or destruction of the Collateral shall
be borne by Borrower.

     

    10.3           Indemnification.  Borrower shall
pay, indemnify, defend, and hold the Agent-Related Persons, and the
Lender-Related Persons (each, an “Indemnified Person”)
harmless (to the fullest extent permitted by law) from and against any and all
claims, demands, suits, actions, investigations, proceedings, liabilities,
fines, costs, penalties, and damages, and all reasonable fees and disbursements
of attorneys, experts, or consultants and all other costs and expenses actually
incurred in connection therewith or in connection with the enforcement of this
indemnification (as and when they are incurred and irrespective of whether suit
is brought), at any time asserted against, imposed upon, or incurred by any of
them (a) in connection with or as a result of or related to the execution and
delivery (provided that Borrower shall not be liable for costs and

     

    
      
        
          -  -

        

         

      

      
        37

        
          

        

      

      
         

      

    

    expenses
(including attorneys fees) of any Lender (other than WFCF) incurred in advising,
structuring, drafting, reviewing, administering or syndicating the Loan
Documents), enforcement, performance, or administration (including any
restructuring or workout with respect hereto) of this Agreement, any of the
other Loan Documents, or the transactions contemplated hereby or thereby or the
monitoring of Borrower’s compliance with the terms of the Loan Documents (provided, however, that the
indemnification in this clause (a) shall not extend to (i) disputes solely
between or among the Lenders or (ii) disputes solely between or among the
Lenders and their respective Affiliates; it being understood and agreed that the
indemnification in this clause (a) shall extend to disputes between or among
Agent on the one hand, and one or more Lenders, or one or more of their
Affiliates, on the other hand), (b) with respect to any investigation,
litigation, or proceeding related to this Agreement, any other Loan Document, or
the use of the proceeds of the credit provided hereunder (irrespective of
whether any Indemnified Person is a party thereto), or any act, omission, event,
or circumstance in any manner related thereto, and (c) in connection with
or arising out of any presence or release of Hazardous Materials at, on, under,
to or from any assets or properties owned, leased or operated by Borrower or any
Environmental Actions, Environmental Liabilities or Remedial Actions related in
any way to any such assets or properties of Borrower (each and all of the
foregoing, the “Indemnified
Liabilities”), in all cases, whether or not caused by or arising, in
whole or in part, out of the comparative or contributory negligence of the
Indemnified Person.  The foregoing to the contrary notwithstanding,
Borrower shall have no obligation to any Indemnified Person under this Section 10.3 with
respect to any Indemnified Liability resulting from (1) the gross negligence or
willful misconduct of such Indemnified Person or its officers, directors,
employees, attorneys, or agents, or (2) the negligence of such Indemnified
Person or its officers, directors, employees, attorneys, or agents if such
negligence relates solely to the handling of funds of Borrower on deposit with
such Indemnified Person.  This provision shall survive the termination
of this Agreement and the repayment of the Obligations.  If any
Indemnified Person makes any payment to any other Indemnified Person with
respect to an Indemnified Liability as to which Borrower was required to
indemnify the Indemnified Person receiving such payment, the Indemnified Person
making such payment is entitled to be indemnified and reimbursed by Borrower
with respect thereto.  EXCEPT AS EXPRESSLY STATED ABOVE, THE
FOREGOING INDEMNITY SHALL APPLY TO EACH INDEMNIFIED PERSON WITH RESPECT TO
INDEMNIFIED LIABILITIES WHICH ARE CAUSED BY OR ARISE OUT OF ANY NEGLIGENT ACT OR
OMISSION OF SUCH INDEMNIFIED PERSON OR OF ANY OTHER PERSON.

     

    11.           NOTICES.

     

    Unless
otherwise provided in this Agreement, all notices or demands relating to this
Agreement or any other Loan Document shall be in writing and (except for
financial statements and other informational documents which may be sent by
first-class mail, postage prepaid) shall be personally delivered or sent by
registered or certified mail (postage prepaid, return receipt requested),
overnight courier, electronic mail (at such email addresses as a party may
designate in accordance herewith), or facsimile.  In the case of
notices or demands to Borrower or Agent, as the case may be, they shall be sent
to the respective address set forth below:

     

    

    
      	
              If
      to Borrower:

            	
              ALASKA
      AIRLINES, INC.

            
	 
      	
              19300
      International Blvd.

            
	 
      	
              Seattle,
      WA 98188

            
	 
      	
              Attn:
      Vice President Finance

            
	 
      	
              Fax
      No. [***]

            
	 
      	 
      
	
              with
      copies to:

            	
              ALASKA
      AIRLINES, INC.

            
	 
      	
              19300
      International Blvd.

            
	 
      	
              Seattle,
      WA 98188

            
	 
      	
              Attn:
      General Counsel

            
	 
      	
              Fax
      No. [***]

            
	 
      	 
      
	
              If
      to Agent:

            	
              WELLS
      FARGO CAPITAL FINANCE, LLC

            
	 
      	
              2450
      Colorado Avenue

              Suite
      3000 West

            
	 
      	
              Santa
      Monica, California 90404

            
	 
      	
              Attn:
      Business Finance Division Manager

            
	 
      	
              Fax
      No.:  [***]

            
	 
      	 
      
	
              with
      copies to:

            	
              PAUL,
      HASTINGS, JANOFSKY & WALKER LLP

            
	 
      	
              515
      S. Flower Street

            
	 
      	
              Twenty-fifth
      Floor

            
	 
      	
              Los
      Angeles, California  90071

            
	 
      	
              Attn:  [***]

            

    

    

    
      
         

          *
Indicates that certain information contained herein has been omitted and filed
separately with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted
portions.

        

      

      
        38

        
          

        

      

      
         

      

    

    Any party
hereto may change the address at which they are to receive notices hereunder, by
notice in writing in the foregoing manner given to the other
party.  All notices or demands sent in accordance with this Section 11, shall be
deemed received on the earlier of the date of actual receipt or 3 Business Days
after the deposit thereof in the mail; provided, that (a)
notices sent by overnight courier service shall be deemed to have been given
when received, (b) notices by facsimile shall be deemed to have been given when
sent (except that, if not given during normal business hours for the recipient,
shall be deemed to have been given at the opening of business on the next
Business Day for the recipient) and (c) notices by electronic mail shall be
deemed received upon the sender's receipt of an acknowledgment from the intended
recipient (such as by the "return receipt requested" function, as available,
return email or other written acknowledgment).

     

    12.           CHOICE OF LAW AND
VENUE; JURY TRIAL WAIVER.

     

    (a)           THE VALIDITY OF THIS AGREEMENT AND
THE OTHER LOAN DOCUMENTS (UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER
LOAN DOCUMENT IN RESPECT OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION,
INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS OF THE
PARTIES HERETO AND THERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR
THEREUNDER OR RELATED HERETO OR THERETO SHALL BE DETERMINED UNDER, GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
CALIFORNIA.

     

    (b)           THE PARTIES AGREE THAT ALL ACTIONS OR
PROCEEDINGS ARISING IN CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS SHALL BE TRIED AND LITIGATED ONLY IN THE STATE AND, TO THE EXTENT
PERMITTED BY APPLICABLE LAW, FEDERAL COURTS LOCATED IN THE COUNTY OF LOS
ANGELES, STATE OF CALIFORNIA; PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT
AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT AGENT’S OPTION, IN
THE COURTS OF ANY JURISDICTION WHERE AGENT ELECTS TO BRING SUCH ACTION OR WHERE
SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND.  BORROWER AND EACH
MEMBER OF THE LENDER GROUP WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW,
ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT
ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION
12(b).

     

    (c)           TO THE MAXIMUM EXTENT PERMITTED BY
APPLICABLE LAW, BORROWER AND EACH MEMBER OF THE LENDER GROUP HEREBY WAIVE THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED

     

    
 

     

    
      
         

      

      
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    UPON
OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS
CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY
CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS.  BORROWER AND
EACH MEMBER OF THE LENDER GROUP REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND
EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL.  IN THE EVENT OF LITIGATION, A COPY
OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE
COURT.

     

    13.           ASSIGNMENTS AND
PARTICIPATIONS; SUCCESSORS.

     

    13.1           Assignments
and Participations.

     

    (a)           With
the prior written consent of Agent, which consent of Agent shall not be
unreasonably withheld, delayed or conditioned, and shall not be required in
connection with an assignment to a Person that is a Lender or an Affiliate
(other than individuals) of a Lender, any Lender may assign and delegate to one
or more assignees (each, an “Assignee”; provided, however, that neither
Borrower nor an Affiliate of Borrower shall be permitted to become an Assignee)
all or any portion of the Obligations, the Commitments and the other rights and
obligations of such Lender hereunder and under the other Loan Documents, in a
minimum amount (unless waived by Agent) of $5,000,000 (except such minimum
amount shall not apply to (x) an assignment or delegation by any Lender to any
other Lender or an Affiliate of any Lender or (y) a group of new Lenders, each
of which is an Affiliate of each other or a Related Fund of such new Lender to
the extent that the aggregate amount to be assigned to all such new Lenders is
at least $5,000,000); provided, however, that
Borrower and Agent may continue to deal solely and directly with such Lender in
connection with the interest so assigned to an Assignee until (i) written notice
of such assignment, together with payment instructions, addresses, and related
information with respect to the Assignee, have been given to Borrower and Agent
by such Lender and the Assignee, (ii) such Lender and its Assignee have
delivered to Borrower and Agent an Assignment and Acceptance and Agent has
notified the assigning Lender of its receipt thereof in accordance with Section 13.1(b), and
(iii) unless waived by Agent, the assigning Lender or Assignee has paid to Agent
for Agent’s separate account a processing fee in the amount of $3,500 (except
such processing fee shall not be payable in connection with an assignment or
delegation by any Lender to any of its Affiliates).

     

    (b)           From
and after the date that Agent notifies the assigning Lender (with a copy to
Borrower) that it has received an executed Assignment and Acceptance and, if
applicable, payment of the required processing fee, (i) the Assignee thereunder
shall be a party hereto and, to the extent that rights and obligations hereunder
have been assigned to it pursuant to such Assignment and Acceptance, shall be a
“Lender” and shall have the rights and obligations of a Lender under the Loan
Documents, and (ii) the assigning Lender shall, to the extent that rights and
obligations hereunder and under the other Loan Documents have been assigned by
it pursuant to such Assignment and Acceptance, relinquish its rights (except
with respect to Section 10.3) and be
released from any future obligations under this Agreement (and in the case of an
Assignment and Acceptance covering all or the remaining portion of an assigning
Lender’s rights and obligations under this Agreement and the other Loan
Documents, such Lender shall cease to be a party hereto and thereto); provided, however, that nothing
contained herein shall release any assigning Lender from obligations that
survive the termination of this Agreement, including such assigning Lender’s
obligations under Section 15 and Section
17.8(a).

     

    (c)           By
executing and delivering an Assignment and Acceptance, the assigning Lender
thereunder and the Assignee thereunder confirm to and agree with each other and
the other parties hereto as follows:  (i) other than as provided in
such Assignment and Acceptance, such assigning Lender makes no representation or
warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement or any other Loan Document

     

    
      
         

      

      
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    furnished
pursuant hereto, (ii) such assigning Lender makes no representation or warranty
and assumes no responsibility with respect to the financial condition of
Borrower or the performance or observance by Borrower of any of its obligations
under this Agreement or any other Loan Document furnished pursuant hereto, (iii)
such Assignee confirms that it has received a copy of this Agreement, together
with such other documents and information as it has deemed appropriate to make
its own credit analysis and decision to enter into such Assignment and
Acceptance, (iv) such Assignee will, independently and without reliance upon
Agent, such assigning Lender or any other Lender, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under this Agreement, (v)
such Assignee appoints and authorizes Agent to take such actions and to exercise
such powers under this Agreement and the other Loan Documents as are delegated
to Agent, by the terms hereof and thereof, together with such powers as are
reasonably incidental thereto, and (vi) such Assignee agrees that it will
perform all of the obligations which by the terms of this Agreement are required
to be performed by it as a Lender.

     

    (d)           Immediately
upon Agent’s receipt of the required processing fee, if applicable, and delivery
of notice to the assigning Lender pursuant to Section 13.1(b), this
Agreement shall be deemed to be amended to the extent, but only to the extent,
necessary to reflect the addition of the Assignee and the resulting adjustment
of the Commitments arising therefrom.  The Commitment allocated to
each Assignee shall reduce such Commitments of the assigning Lender pro tanto.

     

    (e)           Any
Lender may at any time sell to one or more commercial banks, financial
institutions, or other Persons (a “Participant”)
participating interests in all or any portion of its Obligations, its
Commitment, and the other rights and interests of that Lender (the “Originating Lender”)
hereunder and under the other Loan Documents; provided, however, that (i) the
Originating Lender shall remain a “Lender” for all purposes of this Agreement
and the other Loan Documents and the Participant receiving the participating
interest in the Obligations, the Commitments, and the other rights and interests
of the Originating Lender hereunder shall not constitute a “Lender” hereunder or
under the other Loan Documents and the Originating Lender’s obligations under
this Agreement shall remain unchanged, (ii) the Originating Lender shall remain
solely responsible for the performance of such obligations, (iii) Borrower,
Agent, and the Lenders shall continue to deal solely and directly with the
Originating Lender in connection with the Originating Lender’s rights and
obligations under this Agreement and the other Loan Documents, (iv) no Lender
shall transfer or grant any participating interest under which the Participant
has the right to approve any amendment to, or any consent or waiver with respect
to, this Agreement or any other Loan Document, except to the extent such
amendment to, or consent or waiver with respect to this Agreement or of any
other Loan Document would (A) extend the final maturity date of the
Obligations hereunder in which such Participant is participating,
(B) reduce the interest rate applicable to the Obligations hereunder in
which such Participant is participating, (C) release all or substantially
all of the Collateral or guaranties (except to the extent expressly provided
herein or in any of the Loan Documents) supporting the Obligations hereunder in
which such Participant is participating, (D) postpone the payment of, or reduce
the amount of, the interest or fees payable to such Participant through such
Lender (other than a waiver of default interest), or (E) change the amount or
due dates of scheduled principal repayments or prepayments or premiums, and (v)
all amounts payable by Borrower hereunder shall be determined as if such Lender
had not sold such participation, except that, if amounts outstanding under this
Agreement are due and unpaid, or shall have been declared or shall have become
due and payable upon the occurrence of an Event of Default, each Participant
shall be deemed to have the right of set off in respect of its participating
interest in amounts owing under this Agreement to the same extent as if the
amount of its participating interest were owing directly to it as a Lender under
this Agreement.  The rights of any Participant only shall be
derivative through the Originating Lender with whom such Participant
participates and no Participant shall have any rights under this Agreement or
the other Loan Documents or any direct rights as to the other Lenders, Agent,
Borrower, the Collections of Borrower, the Collateral, or otherwise in respect
of the Obligations.  No Participant shall have the right to
participate directly in the making of decisions by the Lenders among
themselves.

     

    
      
         

      

      
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    (f)           In
connection with any such assignment or participation or proposed assignment or
participation or any grant of a security interest in, or pledge of, its rights
under and interest in this Agreement, a Lender may, subject to the provisions of
Section
17.8,  disclose all documents and information which it now or
hereafter may have relating to Borrower and its business.

     

    (g)           Any
other provision in this Agreement notwithstanding, any Lender may at any time
create a security interest in, or pledge, all or any portion of its rights under
and interest in this Agreement in favor of any Federal Reserve Bank in
accordance with Regulation A of the Federal Reserve Bank or U.S. Treasury
Regulation 31 CFR §203.24, and such Federal Reserve Bank may enforce such pledge
or security interest in any manner permitted under applicable law.

     

    13.2           Successors.  This Agreement
shall bind and inure to the benefit of the respective successors and assigns of
each of the parties; provided, however, that
Borrower may not assign this Agreement or any rights or duties hereunder without
the Lenders’ prior written consent and any prohibited assignment shall be
absolutely void ab
initio.  No consent to assignment by the Lenders shall release
Borrower from its Obligations.  A Lender may assign this Agreement and
the other Loan Documents and its rights and duties hereunder and thereunder
pursuant to Section
13.1 and, except as expressly required pursuant to Section 13.1, no
consent or approval by Borrower is required in connection with any such
assignment.

     

    14.           AMENDMENTS;
WAIVERS.

     

    14.1           Amendments
and Waivers.

     

    (a)           No
amendment, waiver or other modification of any provision of this Agreement or
any other Loan Document (other than the Fee Letter), and no consent with respect
to any departure by Borrower therefrom, shall be effective unless the same shall
be in writing and signed by the Required Lenders (or by Agent at the written
request of the Required Lenders) and Borrower that are party thereto and then
any such waiver or consent shall be effective, but only in the specific instance
and for the specific purpose for which given; provided, however, that no such
waiver, amendment, or consent shall, unless in writing and signed by all of the
Lenders directly affected thereby and Borrower, do any of the
following:

     

    (i)         increase
the amount of or extend the expiration date of any Commitment of any Lender or
amend, modify, or eliminate the last sentence of Section
2.4(c)(i),

     

    (ii)         postpone
or delay any date fixed by this Agreement or any other Loan Document for any
payment of principal, interest, fees, or other amounts due hereunder or under
any other Loan Document,

     

    (iii)         reduce
the principal of, or the rate of interest on, any loan or other extension of
credit hereunder, or reduce any fees or other amounts payable hereunder or under
any other Loan Document (except (y) in connection with the waiver of
applicability of Section 2.6(c) (which
waiver shall be effective with the written consent of the Required Lenders), and
(z) that any amendment or modification of defined terms used in the financial
covenants in this Agreement shall not constitute a reduction in the rate of
interest or a reduction of fees for purposes of this clause (iii)),

     

    (iv)         amend,
modify, or eliminate this Section or any provision of this Agreement providing
for consent or other action by all Lenders,

     

    (v)         other
than as permitted by Section 15.11,
release Agent’s Lien in and to any of the Collateral,

     

    (vi)         amend,
modify, or eliminate the definition of “Required Lenders” or “Pro Rata
Share”,

     

    
      
         

      

      
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    (vii)         contractually
subordinate any of Agent’s Liens,

     

    (viii)         release
Borrower from any obligation for the payment of money or consent to the
assignment or transfer by Borrower of any of its rights or duties under this
Agreement or the other Loan Documents,

     

    (ix)         amend,
modify, or eliminate the definition of “Application Event” or any of the
provisions of Section
2.4(b)(i) or (ii),

     

    (x)         amend,
modify, or eliminate any of the provisions of Section 13.1(a) to
permit Borrower or an Affiliate of Borrower to be permitted to become an
Assignee,

     

    (xi)         amend,
modify, or eliminate any of the provisions of Section 14.3(c),
or

     

    (xii)         amend,
modify, or eliminate the definition of Borrowing Base or any of the defined
terms that are used in such definition to the extent that any such change
results in more credit being made available to Borrower based upon the Borrowing
Base, but not otherwise, or the definition of Maximum Revolver Amount, or change
Section
2.1(c).

     

    (b)           No
amendment, waiver, modification, elimination, or consent shall amend, modify, or
waive (i) the definition of, or any of the terms or provisions of, the Fee
Letter, without the written consent of Agent and Borrower (and shall not require
the written consent of any of the Lenders), and (ii) any provision of Section 15 pertaining
to Agent, or any other rights or duties of Agent under this Agreement or the
other Loan Documents, without the written consent of Agent, Borrower, and the
Required Lenders,

     

    (c)           [Intentionally
Omitted].

     

    (d)           No
amendment, waiver, modification, elimination, or consent shall amend, modify, or
waive any provision of this Agreement or the other Loan Documents pertaining to
Swing Lender, or any other rights or duties of Swing Lender under this Agreement
or the other Loan Documents, without the written consent of Swing Lender, Agent,
Borrower, and the Required Lenders,

     

    (e)           Anything
in this Section
14.1 to the contrary notwithstanding, (i) any amendment, modification,
elimination, waiver, consent, termination, or release of, or with respect to,
any provision of this Agreement or any other Loan Document that relates only to
the relationship of the Lender Group among themselves, and that does not affect
the rights or obligations of Borrower, shall not require consent by or the
agreement of Borrower, and (ii) any amendment, waiver, modification,
elimination, or consent of or with respect to any provision of this Agreement or
any other Loan Document may be entered into without the consent of, or over the
objection of, any Defaulting Lender.

     

    14.2           Replacement
of Certain Lenders.

     

    (a)           If
(i) any action to be taken by the Lender Group or Agent hereunder requires the
consent, authorization, or agreement of all Lenders or all Lenders affected
thereby and if such action has received the consent, authorization, or agreement
of the Required Lenders but not of all Lenders or all Lenders affected thereby,
or (ii) any Lender makes a claim for compensation under Section 16, then
Borrower or Agent, upon at least 5 Business Days prior irrevocable notice, may
permanently replace any Lender that failed to give its consent, authorization,
or agreement (a “Holdout Lender”) or
any Lender that made a claim for compensation (a “Tax Lender”) with one
or more Replacement Lenders, and the Holdout Lender or Tax Lender, as
applicable, shall have no right to refuse to be replaced
hereunder.  Such notice to replace the Holdout Lender or Tax Lender,
as applicable, shall specify an effective date for such replacement, which date
shall not be later than 15 Business Days after the date such notice is
given.

     

    
      
         

      

      
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    (b)           Prior
to the effective date of such replacement, the Holdout Lender or Tax Lender, as
applicable, and each Replacement Lender shall execute and deliver an Assignment
and Acceptance, subject only to the Holdout Lender or Tax Lender, as applicable,
being repaid in full its share of the outstanding Obligations (without any
premium or penalty of any kind whatsoever, but including all interest, fees and
other amounts that may be due in payable in respect thereof).  If the
Holdout Lender or Tax Lender, as applicable, shall refuse or fail to execute and
deliver any such Assignment and Acceptance prior to the effective date of such
replacement, Agent may, but shall not be required to, execute and deliver such
Assignment and Acceptance in the name or and on behalf of the Holdout Lender or
Tax Lender, as applicable, and irrespective of whether Agent executes and
delivers such Assignment and Acceptance, the Holdout Lender or Tax Lender, as
applicable, shall be deemed to have executed and delivered such Assignment and
Acceptance.  The replacement of any Holdout Lender or Tax Lender, as
applicable, shall be made in accordance with the terms of Section
13.1.  Until such time as one or more Replacement Lenders shall
have acquired all of the Obligations, the Commitments, and the other rights and
obligations of the Holdout Lender or Tax Lender, as applicable, hereunder and
under the other Loan Documents, the Holdout Lender or Tax Lender, as applicable,
shall remain obligated to make the Holdout Lender’s or Tax Lender’s, as
applicable, Pro Rata Share of Advances.

     

    14.3           Removal
of Tax Lenders.

     

    (a)           Subject
to the condition specified in Section 14.3(d), if
any Tax Lender makes a claim for compensation under Section 16, then
Borrower, upon at least 5 Business Days prior irrevocable notice, may
permanently terminate the Commitments of such Lender and remove such Tax Lender
hereunder and the Tax Lender shall have no right to refuse to be removed
hereunder.  Such notice to remove the Tax Lender, as applicable, shall
specify an effective date for such termination and removal, which date shall not
be later than 15 Business Days after the date such notice is given.

     

    (b)           Prior
to the effective date of such termination and removal, the Tax Lender and
Borrower shall execute and deliver a removal agreement in form and substance
reasonably satisfactory to Borrower, subject only to the Tax Lender being repaid
in full its share of the outstanding Obligations (without any premium or penalty
of any kind whatsoever, but including all interest, fees and
other amounts that may be due in payable in respect thereof) by
Borrower.  If the Tax Lender shall refuse or fail to execute and
deliver any such removal agreement prior to the effective date of such removal,
the termination of the Commitments of such Tax Lender and the removal of such
Tax Lender shall nonetheless occur on the effective date originally specified by
Borrower.

     

    (c)           Anything
contained in this Agreement to the contrary notwithstanding, any payment made
under this Section
14.3 to a Tax Lender that is being removed need not be a pro-rata payment
to all Lenders and the Obligations due to the Tax Lender may be satisfied while
leaving remaining Obligations outstanding.

     

    (d)           Borrower
shall only be entitled to terminate the Commitments of a Tax Lender and remove
such Tax Lender if and only if no Event of Default has occurred and is
continuing.

     

    (e)           Once
a termination and removal of a Tax Lender is effectuated under this Section 14.3, the
term Maximum Revolver Amount shall automatically be deemed reduced by the amount
of the terminated Commitment of such removed Tax Lender and all of the
provisions of this Agreement (other than Section 10.3) and the
other Loan Documents, including the determination of Required Lenders and Pro
Rata Share, shall be interpreted and determined without regard to such
terminated Commitment and without regard to the removed Tax Lender.

     

    (f)           The
termination of the Commitment of a Tax Lender and the removal of such Tax Lender
pursuant to this Section 14.3 shall
not eliminate or affect such Tax Lender’s rights under Section 10.3, which
rights shall survive any such termination and removal.

     

    
      
        
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    14.4           No
Waivers; Cumulative Remedies.  No failure by
Agent or any Lender to exercise any right, remedy, or option under this
Agreement or any other Loan Document, or delay by Agent or any Lender in
exercising the same, will operate as a waiver thereof.  No waiver by
Agent or any Lender will be effective unless it is in writing, and then only to
the extent specifically stated.  No waiver by Agent or any Lender on
any occasion shall affect or diminish Agent’s and each Lender’s rights
thereafter to require strict performance by Borrower of any provision of this
Agreement.  Agent’s and each Lender’s rights under this Agreement and
the other Loan Documents will be cumulative and not exclusive of any other right
or remedy that Agent or any Lender may have.

     

    15.           AGENT; THE LENDER
GROUP.

     

    15.1           Appointment
and Authorization of Agent.  Each Lender
hereby designates and appoints WFCF as its agent under this Agreement and the
other Loan Documents and each Lender hereby irrevocably authorizes Agent to
execute and deliver each of the other Loan Documents on its behalf and to take
such other action on its behalf under the provisions of this Agreement and each
other Loan Document and to exercise such powers and perform such duties as are
expressly delegated to Agent by the terms of this Agreement or any other Loan
Document, together with such powers as are reasonably incidental
thereto.  Agent agrees to act as agent for and on behalf of the
Lenders on the conditions contained in this Section
15.  Any provision to the contrary contained elsewhere in this
Agreement or in any other Loan Document notwithstanding, Agent shall not have
any duties or responsibilities, except those expressly set forth herein or in
the other Loan Documents, nor shall Agent have or be deemed to have any
fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against
Agent.  Without limiting the generality of the foregoing, the use of
the term “agent” in this Agreement or the other Loan Documents with reference to
Agent is not intended to connote any fiduciary or other implied (or express)
obligations arising under agency doctrine of any applicable
law.  Instead, such term is used merely as a matter of market custom,
and is intended to create or reflect only a representative relationship between
independent contracting parties.  Each Lender hereby further
authorizes Agent to act as the secured party under each of the Loan Documents
that create a Lien on any item of Collateral.  Except as expressly
otherwise provided in this Agreement, Agent shall have and may use its sole
discretion with respect to exercising or refraining from exercising any
discretionary rights or taking or refraining from taking any actions that Agent
expressly is entitled to take or assert under or pursuant to this Agreement and
the other Loan Documents.  Without limiting the generality of the
foregoing, or of any other provision of the Loan Documents that provides rights
or powers to Agent, Lenders agree that Agent shall have the right to exercise
the following powers as long as this Agreement remains in effect:  (a)
maintain, in accordance with its customary business practices, ledgers and
records reflecting the status of the Obligations, the Collateral, the
Collections of Borrower, and related matters, (b) execute or file any and all
financing or similar statements or notices, amendments, renewals, supplements,
documents, instruments, proofs of claim, notices and other written agreements
with respect to the Loan Documents, (c) make Advances, for itself or on behalf
of Lenders, as provided in the Loan Documents, (d) exclusively receive, apply,
and distribute the Collections of Borrower as provided in the Loan Documents,
(e) open and maintain such bank accounts and cash management arrangements as
Agent deems necessary and appropriate in accordance with the Loan Documents for
the foregoing purposes with respect to the Collateral and the Collections of
Borrower, (f) perform, exercise, and enforce any and all other rights and
remedies of the Lender Group with respect to Borrower, the Obligations, the
Collateral, the Collections of Borrower, or otherwise related to any of same as
provided in the Loan Documents, and (g) incur and pay such Lender Group Expenses
as Agent may deem necessary or appropriate for the performance and fulfillment
of its functions and powers pursuant to the Loan Documents.

     

    15.2           Delegation
of Duties.  Agent may execute
any of its duties under this Agreement or any other Loan Document by or through
agents, employees or attorneys in fact and shall be entitled to advice of
counsel concerning all matters pertaining to such duties.  Agent shall
not be responsible for the negligence or misconduct of any agent or attorney in
fact that it selects as long as such selection was made without gross negligence
or willful misconduct.

     

    
      
         

      

      
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    15.3           Liability
of Agent.  None of the
Agent-Related Persons shall (a) be liable for any action taken or omitted to be
taken by any of them under or in connection with this Agreement or any other
Loan Document or the transactions contemplated hereby (except for its own gross
negligence or willful misconduct), or (b) be responsible in any manner to any of
the Lenders for any recital, statement, representation or warranty made by
Borrower or any of its Affiliates, or any officer or director thereof, contained
in this Agreement or in any other Loan Document, or in any certificate, report,
statement or other document referred to or provided for in, or received by Agent
under or in connection with, this Agreement or any other Loan Document, or the
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Loan Document, or for any failure of Borrower or any
other party to any Loan Document to perform its obligations hereunder or
thereunder.  No Agent-Related Person shall be under any obligation to
any Lenders to ascertain or to inquire as to the observance or performance of
any of the agreements contained in, or conditions of, this Agreement or any
other Loan Document, or to inspect the books and records or properties of
Borrower.

     

    15.4           Reliance
by Agent.  Agent shall be
entitled to rely, and shall be fully protected in relying, upon any writing,
resolution, notice, consent, certificate, affidavit, letter, telegram, facsimile
or other electronic method of transmission, telex or telephone message,
statement or other document or conversation believed by it to be genuine and
correct and to have been signed, sent, or made by the proper Person or Persons,
and upon advice and statements of legal counsel (including counsel to Borrower
or counsel to any Lender), independent accountants and other experts selected by
Agent.  Agent shall be fully justified in failing or refusing to take
any action under this Agreement or any other Loan Document unless Agent shall
first receive such advice or concurrence of the Lenders as it deems appropriate
and until such instructions are received, Agent shall act, or refrain from
acting, as it deems advisable.  If Agent so requests, it shall first
be indemnified to its reasonable satisfaction by the Lenders against any and all
liability and expense that may be incurred by it by reason of taking or
continuing to take any such action.  Agent shall in all cases be fully
protected in acting, or in refraining from acting, under this Agreement or any
other Loan Document in accordance with a request or consent of the requisite
Lenders and such request and any action taken or failure to act pursuant thereto
shall be binding upon all of the Lenders.

     

    15.5           Notice of
Default or Event of Default.  Agent shall not
be deemed to have knowledge or notice of the occurrence of any Default or Event
of Default, except with respect to defaults in the payment of principal,
interest, fees, and expenses required to be paid to Agent for the account of the
Lenders and, except with respect to Events of Default of which Agent has actual
knowledge, unless Agent shall have received written notice from a Lender or
Borrower referring to this Agreement, describing such Default or Event of
Default, and stating that such notice is a “notice of default.”  Agent
promptly will notify the Lenders of its receipt of any such notice or of any
Event of Default of which Agent has actual knowledge.  If any Lender
obtains actual knowledge of any Event of Default, such Lender promptly shall
notify the other Lenders and Agent of such Event of Default.  Each
Lender shall be solely responsible for giving any notices to its Participants,
if any.  Subject to Section 15.4, Agent
shall take such action with respect to such Default or Event of Default as may
be requested by the Required Lenders in accordance with Section 9; provided, however, that unless
and until Agent has received any such request, Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default or Event of Default as it shall deem advisable.

     

    15.6           Credit
Decision.  Each Lender
acknowledges that none of the Agent-Related Persons has made any representation
or warranty to it, and that no act by Agent hereinafter taken, including any
review of the affairs of Borrower or its Affiliates, shall be deemed to
constitute any representation or warranty by any Agent-Related Person to any
Lender.  Each Lender represents to Agent that it has, independently
and without reliance upon any Agent-Related Person and based on such due
diligence, documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, prospects, operations,
property, financial and other condition and creditworthiness of Borrower or any
other Person party to a Loan Document, and all applicable bank regulatory laws
relating to the transactions contemplated hereby, and made its own decision to
enter into this Agreement and to extend credit to Borrower.  Each
Lender also represents and warrants that it will, independently and without
reliance upon any Agent-Related Person and based on

     

    
      
         

      

      
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    such
documents and information as it shall deem appropriate at the time, continue to
make its own credit analysis, appraisals and decisions in taking or not taking
action under this Agreement and the other Loan Documents, and to make such
investigations as it deems necessary to inform itself as to the business,
prospects, operations, property, financial and other condition and
creditworthiness of Borrower or any other Person party to a Loan
Document.  Except for notices, reports, and other documents expressly
herein required to be furnished to the Lenders by Agent, Agent shall not have
any duty or responsibility to provide any Lender with any credit or other
information concerning the business, prospects, operations, property, financial
and other condition or creditworthiness of Borrower or any other Person party to
a Loan Document that may come into the possession of any of the Agent-Related
Persons.  Each Lender acknowledges that Agent does not have any duty
or responsibility, either initially or on a continuing basis (except to the
extent, if any, that is expressly specified herein) to provide such Lender with
any credit or other information with respect to Borrower, its Affiliates or any
of their respective business, legal, financial or other affairs, and
irrespective of whether such information came into Agent's or its Affiliates’ or
representatives’ possession before or after the date on which such Lender became
a party to this Agreement.

     

    15.7           Costs and
Expenses; Indemnification.  Agent may incur
and pay Lender Group Expenses to the extent Agent reasonably deems necessary or
appropriate for the performance and fulfillment of its functions, powers, and
obligations pursuant to the Loan Documents, including court costs, attorneys
fees and expenses, fees and expenses of financial accountants, advisors,
consultants, and appraisers, costs of collection by outside collection agencies,
auctioneer fees and expenses, and costs of security guards or insurance premiums
paid to maintain the Collateral, whether or not Borrower is obligated to
reimburse Agent or Lenders for such expenses pursuant to this Agreement or
otherwise.  Agent is authorized and directed to deduct and retain
sufficient amounts from the Collections of Borrower received by Agent to
reimburse Agent for such out-of-pocket costs and expenses prior to the
distribution of any amounts to Lenders.  In the event Agent is not
reimbursed for such costs and expenses by Borrower, each Lender hereby agrees
that it is and shall be obligated to pay to Agent such Lender’s ratable
thereof.  Whether or not the transactions contemplated hereby are
consummated, each of the Lenders, on a ratable basis, shall indemnify and defend
the Agent-Related Persons (to the extent not reimbursed by or on behalf of
Borrower and without limiting the obligation of Borrower to do so) from and
against any and all Indemnified Liabilities; provided, however, that no
Lender shall be liable for the payment to any Agent-Related Person of any
portion of such Indemnified Liabilities resulting solely from such Person’s
gross negligence or willful misconduct nor shall any Lender be liable for the
obligations of any Defaulting Lender in failing to make an Advance or other
extension of credit hereunder.  Without limitation of the foregoing,
each Lender shall reimburse Agent upon demand for such Lender’s ratable share of
any costs or out of pocket expenses (including attorneys, accountants, advisors,
and consultants fees and expenses) incurred by Agent in connection with the
preparation, execution, delivery, administration, modification, amendment, or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement
or any other Loan Document to the extent that Agent is not reimbursed for such
expenses by or on behalf of Borrower.  The undertaking in this Section
shall survive the payment of all Obligations hereunder and the resignation or
replacement of Agent.

     

    15.8           Agent in
Individual Capacity.  WFCF and its
Affiliates may make loans to, issue letters of credit for the account of, accept
deposits from, provide financial products or services, acquire equity interests
in, and generally engage in any kind of banking, trust, financial advisory,
underwriting, or other business with Borrower and its Affiliates and any other
Person party to any Loan Document as though WFCF were not Agent hereunder, and,
in each case, without notice to or consent of the other members of the Lender
Group.  The other members of the Lender Group acknowledge that,
pursuant to such activities, WFCF or its Affiliates may receive information
regarding Borrower or its Affiliates or any other Person party to any Loan
Documents that is subject to confidentiality obligations in favor of Borrower or
such other Person and that prohibit the disclosure of such information to the
Lenders, and the Lenders acknowledge that, in such circumstances (and in the
absence of a waiver of such confidentiality obligations, which waiver Agent will
use its reasonable best efforts to obtain), Agent shall not be under any
obligation to provide such information to them.  The terms “Lender”
and “Lenders” include WFCF in its individual capacity.

     

    
      
         

      

      
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    15.9           Successor
Agent.  Agent may resign
as Agent upon 30 days prior written notice to the Lenders (unless such notice is
waived by the Required Lenders) and Borrower (unless such notice is waived by
Borrower).  If Agent resigns under this Agreement, the Required
Lenders shall be entitled, with (so long as no Event of Default has occurred and
is continuing) the consent of Borrower (such consent not to be unreasonably
withheld, delayed, or conditioned), appoint a successor Agent for the
Lenders.  If, at the time that Agent’s resignation is effective, it is
acting as the Swing Lender, such resignation shall also operate to effectuate
its resignation as the Swing Lender, and it shall automatically be relieved of
any further obligation to make Swing Loans.  If no successor Agent is
appointed prior to the effective date of the resignation of Agent, Agent may
appoint, after consulting with the Lenders and Borrower, a successor
Agent.  If Agent has materially breached or failed to perform any
material provision of this Agreement or of applicable law, the Required Lenders
may agree in writing to remove and replace Agent with a successor Agent from
among the Lenders with (so long as no Event of Default has occurred and is
continuing) the consent of Borrower (such consent not to be unreasonably
withheld, delayed, or conditioned).  In any such event, upon the
acceptance of its appointment as successor Agent hereunder, such successor Agent
shall succeed to all the rights, powers, and duties of the retiring Agent and
the term “Agent” shall mean such successor Agent and the retiring Agent’s
appointment, powers, and duties as Agent shall be terminated.  After
any retiring Agent’s resignation hereunder as Agent, the provisions of this
Section 15
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Agent under this Agreement.  If no successor Agent has
accepted appointment as Agent by the date which is 30 days following a retiring
Agent’s notice of resignation, the retiring Agent’s resignation shall
nevertheless thereupon become effective and the Lenders shall perform all of the
duties of Agent hereunder until such time, if any, as the Lenders appoint a
successor Agent as provided for above.

     

    15.10           Lender in
Individual Capacity.

     

    (a)           Any
Lender and its respective Affiliates may make loans to, issue letters of credit
for the account of, accept deposits from, provide financial products or services
to, acquire equity interests in and generally engage in any kind of banking,
trust, financial advisory, underwriting, or other business with Borrower and its
Affiliates and any other Person party to any Loan Documents as though such
Lender were not a Lender hereunder without notice to or consent of the other
members of the Lender Group.  The other members of the Lender Group
acknowledge that, pursuant to such activities, such Lender and its respective
Affiliates may receive information regarding Borrower or its Affiliates or any
other Person party to any Loan Documents that is subject to confidentiality
obligations in favor of Borrower or such other Person and that prohibit the
disclosure of such information to the Lenders, and the Lenders acknowledge that,
in such circumstances (and in the absence of a waiver of such confidentiality
obligations, which waiver such Lender will use its reasonable best efforts to
obtain), such Lender shall not be under any obligation to provide such
information to them.

     

    (b)           WFCF
and US Bank, in their respective capacities as “co-lead arrangers” and “joint
bookrunners”, and US Bank, in its capacity as “documentation agent”, shall not
have any right, power, obligation, liability, responsibility or duty under this
Agreement other than those applicable to them in their capacities as Lenders or,
in the case of WFCF, in its capacity as Agent.  Without limiting the
foregoing, WFCF and US Bank, in their respective capacities as “co-lead
arrangers” and “joint bookrunners”, and US Bank, in its capacity as
“documentation agent”, shall not have or be deemed to have any fiduciary
relationship with Borrower or with any Lender.  Each Lender
acknowledges that it has not relied upon, and will not rely upon, WFCF or US
Bank in deciding to enter into this Agreement or in taking or not taking action
hereunder.

     

    15.11           Collateral
Matters.

     

    (a)           The
Lenders hereby irrevocably authorize Agent to release any Lien on any Collateral
(i) upon the termination of the Commitments and payment and satisfaction in full
by Borrower of all of the Obligations, (ii) constituting property being sold,
leased, licensed, or otherwise disposed of, if a release is required or
desirable in connection therewith and if Borrower certifies to Agent that the
sale,

     

    
      
         

      

      
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    lease,
license, or other disposition is permitted under Section 6.4 (and
Agent may rely conclusively on any such certificate, without further inquiry),
(iii) constituting property which is the subject of a Permitted Spare Parts
Installation (exclusive of any installation of Spare Parts of Borrower into
other Spare Parts of Borrower, the installation of Spare Parts of Borrower into
the Designated Engines, or the installation of Spare Parts of Borrower into any
Ground Service Equipment of Borrower), (iv) so long as in the ordinary course of
Borrower’s business, the exchange of Spare Parts of Borrower with other
airlines, (v) constituting property in which Borrower owned no interest at the
time Agent’s Lien was granted nor at any time thereafter, or
(vi) constituting property leased to Borrower under a lease that has
expired or is terminated in a transaction permitted under this
Agreement.  Borrower and the Lenders hereby irrevocably authorize
Agent, based upon the instruction of the Required Lenders, to credit bid and
purchase (either directly or through one or more acquisition vehicles) all or
any portion of the Collateral at any sale thereof conducted by Agent under the
provisions of the Code, including pursuant to Sections 9-610 or 9-620 of the
Code, at any sale thereof conducted under the provisions of the Bankruptcy Code,
including Section 363 of the Bankruptcy Code, or at any sale or foreclosure
conducted by Agent (whether by judicial action or otherwise) in accordance with
applicable law.  Except as provided above, Agent will not execute and
deliver a release of any Lien on any Collateral without the prior written
authorization of (y) if the release is of all or substantially all of the
Collateral, all of the Lenders, or (z) otherwise, the Required
Lenders.  Upon request by Agent or Borrower at any time, the Lenders
will confirm in writing Agent’s authority to release any such Liens on
particular types or items of Collateral pursuant to this Section 15.11; provided, however, that (1)
Agent shall not be required to execute any document necessary to evidence such
release on terms that, in Agent’s opinion, would expose Agent to liability or
create any obligation or entail any consequence other than the release of such
Lien without recourse, representation, or warranty, and (2) such release shall
not in any manner discharge, affect, or impair the Obligations or any Liens
(other than those expressly being released) upon (or obligations of Borrower in
respect of) all interests retained by Borrower, including, the proceeds of any
sale, all of which shall continue to constitute part of the
Collateral.  The Lenders further hereby irrevocably authorize Agent,
at its option and in its sole discretion, to subordinate any Lien granted to or
held by Agent under any Loan Document to the holder of any Permitted Lien on
such property if such Permitted Lien secures Permitted Purchase Money
Indebtedness.

     

    (b)           Agent
shall have no obligation whatsoever to any of the Lenders to assure that the
Collateral exists or is owned by Borrower or is cared for, protected, or insured
or has been encumbered, or that Agent’s Liens have been properly or sufficiently
or lawfully created, perfected, protected, or enforced or are entitled to any
particular priority, or that any particular items of Collateral meet the
eligibility criteria applicable in respect thereof or whether to impose,
maintain, reduce, or eliminate any particular reserve hereunder or whether the
amount of any such reserve is appropriate or not, or to exercise at all or in
any particular manner or under any duty of care, disclosure or fidelity, or to
continue exercising, any of the rights, authorities and powers granted or
available to Agent pursuant to any of the Loan Documents, it being understood
and agreed that in respect of the Collateral, or any act, omission, or event
related thereto, subject to the terms and conditions contained herein, Agent may
act in any manner it may deem appropriate, in its sole discretion given Agent’s
own interest in the Collateral in its capacity as one of the Lenders and that
Agent shall have no other duty or liability whatsoever to any Lender as to any
of the foregoing, except as otherwise provided herein.

     

    15.12           Restrictions
on Actions by Lenders; Sharing of Payments.

     

    (a)           Each
of the Lenders agrees that it shall not, without the express written consent of
Agent, and that it shall, to the extent it is lawfully entitled to do so, upon
the written request of Agent, set off against the Obligations, any amounts owing
by such Lender to Borrower or any deposit accounts of Borrower now or hereafter
maintained with such Lender.  Each of the Lenders further agrees that
it shall not, unless specifically requested to do so in writing by Agent, take
or cause to be taken any action, including, the commencement of any legal or
equitable proceedings to enforce any Loan Document against
Borrower or to foreclose any Lien on, or otherwise enforce any security interest
in, any of the Collateral.

     

    
      
         

      

      
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    (b)           If,
at any time or times any Lender shall receive (i) by payment, foreclosure,
setoff, or otherwise, any proceeds of Collateral or any payments with respect to
the Obligations, except for any such proceeds or payments received by such
Lender from Agent pursuant to the terms of this Agreement, or (ii) payments
from Agent in excess of such Lender’s Pro Rata Share of all such distributions
by Agent, such Lender promptly shall (A) turn the same over to Agent, in kind,
and with such endorsements as may be required to negotiate the same to Agent, or
in immediately available funds, as applicable, for the account of all of the
Lenders and for application to the Obligations in accordance with the applicable
provisions of this Agreement, or (B) purchase, without recourse or warranty, an
undivided interest and participation in the Obligations owed to the other
Lenders so that such excess payment received shall be applied ratably as among
the Lenders in accordance with their Pro Rata Shares; provided, however, that to the
extent that such excess payment received by the purchasing party is thereafter
recovered from it, those purchases of participations shall be rescinded in whole
or in part, as applicable, and the applicable portion of the purchase price paid
therefor shall be returned to such purchasing party, but without interest except
to the extent that such purchasing party is required to pay interest in
connection with the recovery of the excess payment.

     

    15.13           Agency
for Perfection.  Agent hereby
appoints each other Lender as its agent (and each Lender hereby accepts for the
purpose of perfecting Agent’s Liens in assets which, in accordance with Article
8 or Article 9, as applicable, of the Code can be perfected by possession or
control.  Should any Lender obtain possession or control of any such
Collateral, such Lender shall notify Agent thereof, and, promptly upon Agent’s
request therefor shall deliver possession or control of such Collateral to Agent
or in accordance with Agent’s instructions.

     

    15.14           Payments
by Agent to the Lenders.  All payments to
be made by Agent to the Lenders shall be made by bank wire transfer of
immediately available funds pursuant to such wire transfer instructions as each
party may designate for itself by written notice to
Agent.  Concurrently with each such payment, Agent shall identify
whether such payment (or any portion thereof) represents principal, premium,
fees, or interest of the Obligations.

     

    15.15           Concerning
the Collateral and Related Loan Documents.  Each member of
the Lender Group authorizes and directs Agent to enter into this Agreement and
the other Loan Documents.  Each member of the Lender Group agrees that
any action taken by Agent in accordance with the terms of this Agreement or the
other Loan Documents relating to the Collateral and the exercise by Agent of its
powers set forth therein or herein, together with such other powers that are
reasonably incidental thereto, shall be binding upon all of the
Lenders.

     

    15.16           Audits
and Examination Reports; Confidentiality; Disclaimers by Lenders; Other Reports
and Information.  By becoming a
party to this Agreement, each Lender:

     

    (a)           is
deemed to have requested that Agent furnish such Lender, promptly after it
becomes available, a copy of each field audit or examination report respecting
Borrower and a copy of any
document Agent receives pursuant to Section
5.10 (each a “Report” and
collectively, “Reports”) prepared by
or at the request of Agent, and Agent shall so furnish each Lender with such
Reports,

     

    (b)           expressly
agrees and acknowledges that Agent does not (i) make any representation or
warranty as to the accuracy of any Report, and (ii) shall not be liable for any
information contained in any Report,

     

    (c)           expressly
agrees and acknowledges that the Reports are not comprehensive audits or
examinations, that Agent or other party performing any audit or examination will
inspect only specific
information regarding Borrower and will rely significantly upon Borrower’s books
and records, as well as on representations of Borrower’s
personnel,

     

    
      
         

      

      
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    (d)           agrees
to keep all Reports and other material, non-public information regarding
Borrower and its operations, assets, and existing and contemplated business
plans in a confidential manner in accordance with Section 17.8,
and

     

    (e)           without
limiting the generality of any other indemnification provision contained in this
Agreement, agrees:  (i) to hold Agent and any other Lender preparing a
Report harmless from any action the indemnifying Lender may take or fail to take
or any conclusion the indemnifying Lender may reach or draw from any Report in
connection with any loans or other credit accommodations that the indemnifying
Lender has made or may make to Borrower, or the indemnifying Lender’s
participation in, or the indemnifying Lender’s purchase of, a loan or loans of
Borrower, and (ii) to pay and protect, and indemnify, defend and hold Agent, and
any such other Lender preparing a Report harmless from and against, the claims,
actions, proceedings, damages, costs, expenses, and other amounts (including,
attorneys fees and costs) incurred by Agent and any such other Lender preparing
a Report as the direct or indirect result of any third parties who might obtain
all or part of any Report through the indemnifying Lender.

     

    In
addition to the foregoing:  (x) any Lender may from time to time
request of Agent in writing that Agent provide to such Lender a copy of any
report or document provided by Borrower to Agent that has not been
contemporaneously provided by Borrower to such Lender, and, upon receipt of such
request, Agent promptly shall provide a copy of same to such Lender, (y) to the
extent that Agent is entitled, under any provision of the Loan Documents, to
request additional reports or information from Borrower, any Lender may, from
time to time, reasonably request Agent to exercise such right as specified in
such Lender’s notice to Agent, whereupon Agent promptly shall request of
Borrower the additional reports or information reasonably specified by such
Lender, and, upon receipt thereof from Borrower, Agent promptly shall provide a
copy of same to such Lender, and (z) any time that Agent renders to Borrower a
statement regarding the Loan Account, Agent shall send a copy of such statement
to each Lender.

     

    15.17           Several
Obligations; No Liability.  Notwithstanding
that certain of the Loan Documents now or hereafter may have been or will be
executed only by or in favor of Agent in its capacity as such, and not by or in
favor of the Lenders, any and all obligations on the part of Agent (if any) to
make any credit available hereunder shall constitute the several (and not joint)
obligations of the respective Lenders on a ratable basis, according to their
respective Commitments, to make an amount of such credit not to exceed, in
principal amount, at any one time outstanding, the amount of their respective
Commitments.  Nothing contained herein shall confer upon any Lender
any interest in, or subject any Lender to any liability for, or in respect of,
the business, assets, profits, losses, or liabilities of any other
Lender.  Each Lender shall be solely responsible for notifying its
Participants of any matters relating to the Loan Documents to the extent any
such notice may be required, and no Lender shall have any obligation, duty, or
liability to any Participant of any other Lender.  Except as provided
in Section
15.7, no member of the Lender Group shall have any liability for the acts
of any other member of the Lender Group.  No Lender shall be
responsible to Borrower or any other Person for any failure by any other Lender
to fulfill its obligations to make credit available hereunder, nor to advance
for such Lender or on its behalf, nor to take any other action on behalf of such
Lender hereunder or in connection with the financing contemplated
herein.

     

    16.           WITHHOLDING
TAXES.

     

     

    (a)           All
payments made by Borrower hereunder or under any note or other Loan Document
will be made without setoff, counterclaim, or other defense.  In
addition, all such payments will be made free and clear of, and without
deduction or withholding for, any present or future Indemnified Taxes, and in
the event any deduction or withholding of Indemnified Taxes is required,
Borrower shall

     

    
      
         

      

      
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    comply
with the next sentence of this Section
16(a).  If any Indemnified Taxes are so levied or imposed,
Borrower agrees to pay the full amount of such Indemnified Taxes and such
additional amounts as may be necessary so that every payment of all amounts due
under this Agreement, any note, or Loan Document, including any amount paid
pursuant to this Section 16(a) after
withholding or deduction for or on account of any Indemnified Taxes, will not be
less than the amount provided for herein; provided, however, that Borrower shall
not be required to increase any such amounts if the increase in such amount
payable results from Agent’s or such Lender’s own willful misconduct or gross
negligence (as finally determined by a court of competent
jurisdiction).  Borrower will furnish to Agent as promptly as possible
after the date the payment of any Tax is due pursuant to applicable law,
certified copies of tax receipts evidencing such payment by
Borrower.

     

    (b)           Borrower
agrees to pay any present or future stamp, value added or documentary taxes or
any other excise or property taxes, charges, or similar levies that arise from
any payment made hereunder or from the execution, delivery, performance,
recordation, or filing of, or otherwise with respect to this Agreement or any
other Loan Document.

     

    (c)           If
a Lender or Participant is entitled to claim an exemption or reduction from
United States withholding tax, such Lender or Participant agrees with and in
favor of Agent, to deliver to Agent (or, in the case of a Participant, to the
Lender granting the participation only) one of the following before receiving
its first payment under this Agreement:

     

    (i)              if
such Lender or Participant is entitled to claim an exemption from United States
withholding tax pursuant to the portfolio interest exception, (A) a statement of
the Lender or Participant, signed under penalty of perjury, that it is not a (I)
a “bank” as described in Section 881(c)(3)(A) of the IRC, (II) a 10% shareholder
of Borrower (within the meaning of Section 871(h)(3)(B) of the IRC), or (III) a
controlled foreign corporation related to Borrower within the meaning of Section
864(d)(4) of the IRC, and (B) a properly completed and executed IRS Form W-8BEN
or Form W-8IMY (with proper attachments);

     

    (ii)              if
such Lender or Participant is entitled to claim an exemption from, or a
reduction of, withholding tax under a United States tax treaty, a properly
completed and executed copy of IRS Form W-8BEN;

     

    (iii)              if
such Lender or Participant is entitled  to claim that interest paid
under this Agreement is exempt from United States withholding tax because it is
effectively connected with a United States trade or business of such Lender, a
properly completed and executed copy of IRS Form W-8ECI;

     

    (iv)              if
such Lender or Participant is entitled to claim that interest paid under this
Agreement is exempt from United States withholding tax because such Lender or
Participant serves as an intermediary, a properly completed and executed copy of
IRS Form W-8IMY (with proper attachments); or

     

    (v)              a
properly completed and executed copy of any other form or forms, including IRS
Form W-9, as may be required under the IRC or other laws of the United States as
a condition to exemption from, or reduction of, United States withholding or
backup withholding tax.

     

    Each
Lender or Participant shall provide new forms (or successor forms) upon the
expiration or obsolescence of any previously delivered forms and to promptly
notify Agent (or, in the case of a Participant, to the Lender granting the
participation only) of any change in circumstances which would modify or render
invalid any claimed exemption or reduction.

     

    
      
         

      

      
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    (d)           If
a Lender or Participant claims an exemption from withholding tax in a
jurisdiction other than the United States, such Lender or such Participant
agrees with and in favor of Agent, to deliver to Agent (or, in the case of a
Participant, to the Lender granting the participation only) any such form or
forms, as may be required under the laws of such jurisdiction as a condition to
exemption from, or reduction of, foreign withholding or backup withholding tax
before receiving its first payment under this Agreement, but only if such Lender
or such Participant is legally able to deliver such forms, provided, however, that nothing
in this Section
16(d) shall require a Lender or Participant to disclose any information
that it deems to be confidential (including without limitation, its tax
returns).  Each Lender and each Participant shall provide new forms
(or successor forms) upon the expiration or obsolescence of any previously
delivered forms and to promptly notify Agent (or, in the case of a Participant,
to the Lender granting the participation only) of any change in circumstances
which would modify or render invalid any claimed exemption or
reduction.

     

    (e)           If
a Lender or Participant claims exemption from, or reduction of, withholding tax
and such Lender or Participant sells, assigns, grants a participation in, or
otherwise transfers all or part of the Obligations of Borrower to such Lender or
Participant, such Lender or Participant agrees to notify Agent (or, in the case
of a sale of a participation interest, to the Lender granting the participation
only) of  the percentage amount in which it is no longer the
beneficial owner of Obligations of Borrower to such Lender or
Participant.  To the extent of such percentage amount, Agent will
treat such Lender’s or such Participant’s documentation provided pursuant to
Section 16(c)
or 16(d) as no
longer valid.  With respect to such percentage amount, such
Participant or Assignee may provide new documentation, pursuant to Section 16(c) or
16(d), if
applicable.  Borrower agrees that each Participant shall be entitled
to the benefits of this Section 16 with
respect to its participation in any portion of the Commitments and the
Obligations so long as such Participant complies with the obligations set forth
in this Section
16 with respect thereto.

     

    (f)           If
a Lender or a Participant is entitled to a reduction in the applicable
withholding tax, Agent (or, in the case of a Participant, to the Lender granting
the participation) may withhold from any interest payment to such Lender or such
Participant an amount equivalent to the applicable withholding tax after taking
into account such reduction.  If the forms or other documentation
required by Section
16(c) or 16(d) are not
delivered to Agent (or, in the case of a Participant, to the Lender granting the
participation), then Agent (or, in the case of a Participant, to the Lender
granting the participation) may withhold from any interest payment to such
Lender or such Participant not providing such forms or other documentation an
amount equivalent to the applicable withholding tax.

     

    (g)           If
the IRS or any other Governmental Authority of the United States or other
jurisdiction asserts a claim that Agent (or, in the case of a Participant, to
the Lender granting the participation) or Borrower did not properly withhold tax
from amounts paid to or for the account of any Lender or any Participant due to
a failure on the part of the Lender or such Participant (because the wrong form
was delivered, the form was incorrectly filled out or executed, or because such
Lender failed to notify Agent (or such Participant failed to notify the Lender
granting the participation) of a change in circumstances which rendered the
exemption from, or reduction of, withholding tax ineffective), such Lender shall
indemnify and hold Agent or Borrower harmless (or, in the case of a Participant,
such Participant shall indemnify and hold the Lender granting the participation
harmless) for all amounts paid, directly or indirectly, by Agent or Borrower
(or, in the case of a Participant, to the Lender granting the participation), as
tax or otherwise, including penalties and interest, and including any taxes
imposed by any jurisdiction on the amounts payable to Agent or Borrower (or, in
the case of a Participant, to the Lender granting the participation only) under
this Section
16, together with all costs and expenses (including attorneys fees and
expenses).  The obligation of the Lenders and the Participants under
this subsection shall survive the payment of all Obligations and the resignation
or replacement of Agent.

     

    (h)           If
Agent or a Lender determines, in its reasonable discretion, that it has received
a refund or credit of any Indemnified Taxes as to which it has been indemnified
by Borrower or with

     

    
      
         

      

      
        53

        
          

        

      

      
         

      

    

    respect
to which Borrower has paid additional amounts pursuant to this Section 16, so long
as no Default or Event of Default has occurred and is continuing, it shall pay
over such refund or credit to Borrower (but only to the extent of payments made,
or additional amounts paid, by Borrower under this Section 16 with
respect to Indemnified Taxes giving rise to such a refund or credit), net of all
out-of-pocket expenses of Agent or such Lender and without interest (other than
any interest paid by the relevant Governmental Authority with respect to such a
refund or credit); provided, that
Borrower, upon the request of Agent or such Lender, agrees to repay the amount
paid over to Borrower (plus any penalties, interest or other charges, imposed by
the relevant Governmental Authority, other than such penalties, interest or
other charges imposed as a result of the willful misconduct or gross negligence
of Agent hereunder) to Agent or such Lender in the event Agent or such Lender is
required to repay such refund or credit to such Governmental
Authority.  Notwithstanding anything in this Agreement to the
contrary, this Section
16 shall not be construed to require Agent or any Lender to make
available its tax returns (or any other information which it deems confidential)
to Borrower or any other Person.

     

    (i)           If
a change in circumstances requires a Borrower to pay Lender additional amounts
pursuant to this Section 16, such Lender shall use reasonable efforts
to designate a different one of its lending offices or assign
its rights and obligations hereunder to another of its offices or branches
if (i) such designation or assignment would reduce or eliminate the obligation
to pay additional amounts and (ii) would not, in the sole discretion of the
Lender, be materially disadvantageous to such Lender.  Borrowers agree to
pay all reasonable out-of-pocket costs and expenses incurred by such Lender in
connection with such designation or assignment.

     

    17.           GENERAL
PROVISIONS.

     

    17.1           Effectiveness.  This Agreement
shall be binding and deemed effective when executed by Borrower, Agent, and each
Lender whose signature is provided for on the signature pages
hereof.

     

    17.2           Section
Headings.  Headings and
numbers have been set forth herein for convenience only.  Unless the
contrary is compelled by the context, everything contained in each Section
applies equally to this entire Agreement.

     

    17.3           Interpretation.  Neither this
Agreement nor any uncertainty or ambiguity herein shall be construed against the
Lender Group or Borrower, whether under any rule of construction or
otherwise.  On the contrary, this Agreement has been reviewed by all
parties and shall be construed and interpreted according to the ordinary meaning
of the words used so as to accomplish fairly the purposes and intentions of all
parties hereto.

     

    17.4           Severability
of Provisions.  Each provision of
this Agreement shall be severable from every other provision of this Agreement
for the purpose of determining the legal enforceability of any specific
provision.

     

    17.5           Debtor-Creditor
Relationship.  The relationship
between the Lenders and Agent, on the one hand, and Borrower, on the other hand,
is solely that of creditor and debtor.  No member of the Lender Group
has (or shall be deemed to have) any fiduciary relationship or duty to Borrower
arising out of or in connection with the Loan Documents or the transactions
contemplated thereby, and there is no agency or joint venture relationship
between the members of the Lender Group, on the one hand, and Borrower, on the
other hand, by virtue of any Loan Document or any transaction contemplated
therein.

     

    17.6           Counterparts;
Electronic Execution.  This Agreement
may be executed in any number of counterparts and by different parties on
separate counterparts, each of which, when executed and delivered, shall be
deemed to be an original, and all of which, when taken together, shall
constitute but one and the same Agreement.  Delivery of an executed
counterpart of this Agreement by facsimile or other electronic method of
transmission shall be equally as effective as delivery of an original executed
counterpart of this Agreement.  Any party delivering an executed
counterpart of this Agreement by facsimile or other electronic method of
transmission also shall deliver an original executed counterpart of this
Agreement but the failure to deliver an original
executed counterpart shall not affect the validity, enforceability, and binding
effect of this Agreement.  The foregoing shall apply to each other
Loan Document mutatis
mutandis.

     

    
      
         

      

      
        54

        
          

        

      

      
         

      

    

     

    17.7           Revival
and Reinstatement of Obligations.  If the incurrence
or payment of the Obligations by Borrower or the transfer to the Lender Group of
any property should for any reason subsequently be asserted, or declared, to be
void or voidable under any state or federal law relating to creditors’ rights,
including provisions of the Bankruptcy Code relating to fraudulent conveyances,
preferences, or other voidable or recoverable payments of money or transfers of
property (each, a “Voidable Transfer”),
and if the Lender Group is required to repay or restore, in whole or in part,
any such Voidable Transfer, or elects to do so upon the reasonable advice of its
counsel, then, as to any such Voidable Transfer, or the amount thereof that the
Lender Group is required or elects to repay or restore, and as to all reasonable
costs, expenses, and attorneys fees of the Lender Group related thereto, the
liability of Borrower automatically shall be revived, reinstated, and restored
and shall exist as though such Voidable Transfer had never been
made.

     

    17.8           Confidentiality.

     

    (a)           Agent
and Lenders each individually (and not jointly or jointly and severally) agree
that material, non-public information regarding Borrower and its operations,
assets, and existing and contemplated business plans (“Confidential
Information”) shall be treated by Agent and the Lenders in a confidential
manner, and shall not be disclosed by Agent and the Lenders to Persons who are
not parties to this Agreement, except:  (i) to attorneys for and other
advisors, accountants, auditors, and consultants to any member of the Lender
Group (“Lender Group
Representatives”), (ii) to Subsidiaries and Affiliates of any member of
the Lender Group, provided that any such Subsidiary or Affiliate shall have
agreed to receive such information hereunder subject to the terms of this Section 17.8, (iii)
as may be required by regulatory authorities so long as such authorities are
informed of the confidential nature of such information, (iv) as may be required
by statute, decision, or judicial or administrative order, rule, or regulation;
provided that (x) prior to any disclosure under this clause (iv), the disclosing
party agrees to provide Borrower with prior notice thereof, to the extent that
it is practicable to do so and to the extent that the disclosing party is
permitted to provide such prior notice to Borrower pursuant to the terms of the
applicable statute, decision, or judicial or administrative order, rule, or
regulation and (y) any disclosure under this clause (iv) shall be limited to the
portion of the Confidential Information as may be required by such statute,
decision, or judicial or administrative order, rule, or regulation, (v) as may
be agreed to in advance by Borrower or as requested or required by any
Governmental Authority pursuant to any subpoena or other legal process,
provided, that, (x) prior to any disclosure under this clause (v) the disclosing
party agrees to provide Borrower with prior notice thereof, to the extent that
it is practicable to do so and to the extent that the disclosing party is
permitted to provide such prior notice to Borrower pursuant to the terms of the
subpoena or other legal process and (y) any disclosure under this clause (v)
shall be limited to the portion of the Confidential Information as may be
required by such governmental authority pursuant to such subpoena or other legal
process, (vi) as to any such information that is or becomes generally available
to the public (other than as a result of prohibited disclosure by Agent or the
Lenders or the Lender Group Representatives), (vii) in connection with any
assignment, participation  or pledge of any Lender’s interest under
this Agreement, provided that any such assignee, participant, or pledgee shall
have agreed in writing to receive such information hereunder subject to the
terms of this Section, (viii) in connection with any litigation or other
adversary proceeding involving parties hereto which such litigation or adversary
proceeding involves claims related to the rights or duties of such parties under
this Agreement or the other Loan Documents; provided, that, prior to any
disclosure to any Person (other than Borrower, Agent, any Lender, any of their
respective Affiliates, or their respective counsel) under this clause (viii)
with respect to litigation involving any Person (other than Borrower, Agent, any
Lender, any of their respective Affiliates, or their respective counsel), the
disclosing party agrees to provide Borrower with prior notice thereof, and, if
Borrower is not a party to such litigation or other adversary proceeding, taking
such reasonable steps to limit disclosure as may be requested in writing by
Borrower (including seeking a protective order); provided, however, that the
disclosing party shall not be obligated to take such steps unless and until
Borrower agrees to indemnify and hold the disclosing party harmless from and
against any and all costs and expenses (including reasonable attorneys fees)
incurred by the disclosing party in seeking to limit disclosure in accordance
with the request of Borrower, and (ix) in connection with, and to the extent
reasonably necessary for, the exercise of any secured creditor remedy under this
Agreement or under any other Loan Document.

     

    
      
         

      

      
        55

        
          

        

      

      
         

      

    

     

    (b)           Anything
in this Agreement to the contrary notwithstanding, Agent may provide information
concerning the terms and conditions of this Agreement and the other Loan
Documents to loan syndication and pricing reporting services.

     

    17.9           Lender
Group Expenses.  Borrower agrees
to pay any and all Lender Group Expenses (a) if no Event of Default has occurred
and is continuing, within 30 days of the date of Borrower’s receipt of written
notice thereof (which notice shall be sent by Agent to the email addresses for
the individuals set forth on Schedule 2.6(d)
hereto), and (b) if an Event of Default has occurred and is continuing,
immediately upon demand therefor  and agrees that its obligations
contained in this Section 17.9 shall
survive payment or satisfaction in full of all other Obligations.

     

    17.10           Survival.  All
representations and warranties made by Borrower in the Loan Documents and in the
certificates or other instru­ments delivered in connection with or pursuant
to this Agreement or any other Loan Document shall be considered to have been
relied upon by the other parties hereto and shall survive the execution and
delivery of the Loan Documents and the making of any loans, regardless of any
investigation made by any such other party or on its behalf and notwithstanding
that Agent or any Lender may have had notice or knowledge of any Default or
Event of Default or incorrect representation or warranty at the time any credit
is extended hereunder, and shall continue in full force and effect as long as
the principal of or any accrued interest on any loan or any fee or any other
amount payable under this Agreement is outstand­ing and so long as the
Commitments have not expired or terminated.

     

    17.11           USA
PATRIOT Act. Each
Lender that is subject to the requirements of the Patriot Act hereby notifies
Borrower that pursuant to the requirements of the Act, it is required to obtain,
verify and record information that identifies Borrower, which information
includes the name and address of Borrower and other information that will allow
such Lender to identify Borrower in accordance with the Patriot
Act.

     

    17.12           Integration.  This Agreement,
together with the other Loan Documents, reflects the entire understanding of the
parties with respect to the transactions contemplated hereby and shall not be
contradicted or qualified by any other agreement, oral or written, before the
date hereof.

     

     [Signature
pages to follow.]

     

    
      
         

      

      
        56

        
          

        

      

      
         

      

    

    IN WITNESS WHEREOF,
the parties hereto have caused this Agreement to be executed and
delivered as of the date first above written.

     

    

    

    
      	 
      	
              ALASKA
      AIRLINES, INC., an Alaska corporation, as
  Borrower

            
	 
      	 
      
	 
      	 
      
	 
      	
              By:

            	
              /s/ John F. Schaefer,
Jr.

            
	 
      	
              Name:

            	
              John
      F. Schaefer, Jr.

            
	 
      	
              Title:

            	
              Vice
      President Finance &
Treasurer_____

            

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    
      	 
      	
              WELLS FARGO CAPITAL FINANCE,
      LLC,

              a
      Delaware limited liability company,

              as
      Agent, as Co-Lead arranger, as Joint Bookrunner, and as a
      Lender

            
	 
      	 
      
	 
      	 
      
	 
      	
              By:

            	
              /s/ David R. Klages

            
	 
      	
              Name:

            	
              David
      R. Klages

            
	 
      	
              Title:

            	
              Vice
      President_____

            

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    
      	 
      	
              U.S. BANK NATIONAL
      ASSOCIATION,

              as
      Documentation Agent, as Co-Lead arranger, as Joint Bookrunner, and as a
      Lender

            
	 
      	 
      
	 
      	 
      
	 
      	
              By:

            	
              /s/ Jeffrey S. Gruender

            
	 
      	
              Name:

            	
              Jeffrey
      S. Gruender

            
	 
      	
              Title:

            	
              Vice
      President

            

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    
      	 
      	
              BANK
      SINOPAC, as a
      Lender

            
	 
      	 
      
	 
      	 
      
	 
      	
              By:

            	
              /s/ Alton Wang

            
	 
      	
              Name:

            	
              Alton
      Wang

            
	 
      	
              Title:

            	
              First
      Vice President, General Manager

            

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

     

    EXHIBIT
A-1

    

     

    FORM
OF ASSIGNMENT AND ACCEPTANCE AGREEMENT

     

    This
ASSIGNMENT AND ACCEPTANCE
AGREEMENT (“Assignment Agreement”) is entered into as of  between  (“Assignor”)
and 
(“Assignee”).  Reference is made to the Credit Agreement described in
Annex I hereto
(the “Credit Agreement”).  Capitalized terms used herein and not
otherwise defined shall have the meanings ascribed to them in the Credit
Agreement.

     

    I.           In
accordance with the terms and conditions of Section 13 of the
Credit Agreement, the Assignor hereby sells and assigns to the Assignee, and the
Assignee hereby purchases and assumes from the Assignor, that interest in and to
the Assignor's rights and obligations under the Loan Documents as of the date
hereof with respect to the Obligations owing to the Assignor, and Assignor’s
portion of the Commitments, all to the extent specified on Annex I.

     

    II.           The
Assignor (a) represents and warrants that (i) it is the legal and beneficial
owner of the interest being assigned by it hereunder and that such interest is
free and clear of any adverse claim and (ii) it has full power and authority,
and has taken all action necessary, to execute and deliver this Assignment
Agreement and to consummate the transactions contemplated hereby; (b) makes no
representation or warranty and assumes no responsibility with respect to (i) any
statements, representations or warranties made in or in connection with the Loan
Documents, or (ii) the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Loan Documents or any other instrument
or document furnished pursuant thereto; (c) makes no representation or warranty
and assumes no responsibility with respect to the financial condition of
Borrower or the performance or observance by Borrower of any of its obligations
under the Loan Documents or any other instrument or document furnished pursuant
thereto, and (d) represents and warrants that the amount set forth as the
Purchase Price on Annex I represents
the amount owed by Borrower to Assignor with respect to Assignor’s share of the
Advances assigned hereunder, as reflected on Assignor’s books and
records.

     

    III.           The
Assignee (a) confirms that it has received copies of the Credit Agreement and
the other Loan Documents, together with copies of the financial statements
referred to therein and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Assignment Agreement; (b) agrees that it will, independently and without
reliance upon Agent, Assignor, or any other Lender, based upon such documents
and information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking any action under the Loan
Documents; (c) appoints and authorizes Agent to take such action as agent on its
behalf and to exercise such powers under the Loan Documents as are delegated to
Agent by the terms thereof, together with such powers as are reasonably
incidental thereto; (d) agrees that it will perform in accordance with their
terms all of the obligations which by the terms of the Loan Documents are
required to be performed by it as a Lender; [and (e) attaches the forms
prescribed by the Internal Revenue Service of the United States certifying as to
the Assignee’s status for purposes of determining complete exemption from United
States withholding taxes with respect to all payments to be made to the Assignee
under the Credit Agreement (or if not a complete exemption, information
describing the nature of the withholding tax exemption or lack
thereof).]

     

    IV.           Following
the execution of this Assignment Agreement by the Assignor and Assignee, the
Assignor will deliver this Assignment Agreement to Agent for recording by
Agent.  The effective date of this Assignment (the “Settlement Date”)
shall be the latest to occur of (a) the date of the execution and delivery
hereof by the Assignor and the Assignee, (b) the receipt by Agent for its sole
and separate account a processing fee in the amount of $3,500 (if required by
the Credit Agreement), (c) the receipt of any required consent of the Agent,
(d) the date Assignor and Assignee have delivered to Borrower
and

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Agent an
executed copy of this Assignment Agreement and Agent has notified Assignor (with
a copy to Borrower) of its receipt thereof and, if applicable, payment of the
required processing fee, and (e) the date specified in Annex I.

     

    V.           As
of the Settlement Date (a) the Assignee shall be a party to the Credit Agreement
and, to the extent of the interest assigned pursuant to this Assignment
Agreement, have the rights and obligations of a Lender thereunder and under the
other Loan Documents, and (b) the Assignor shall, to the extent that rights and
obligations under the Credit Agreement and under the other Loan Documents have
been assigned by Assignor pursuant to this Assignment Agreement, relinquish its
rights (except with respect to Section 10.3 of the
Credit Agreement) and be released from any future obligations under the Credit
Agreement and the other Loan Documents (and if Assignor is assigning all or the
remaining portion of its rights and obligations under the Credit Agreement and
the other Loan Documents, Assignor shall cease to be a party to the Credit
Agreement and the other Loan Documents), provided, however, that nothing
contained herein shall release Assignor from obligations that survive the
termination of this Agreement, including such assigning Lender’s obligations
under Article
15 and Section
17.8(a) of the Credit Agreement.

     

    VI.           Upon
the Settlement Date, Assignee shall pay to Assignor the Purchase Price (as set
forth in Annex
I).  From and after the Settlement Date, Agent shall make all
payments that are due and payable to the holder of the interest assigned
hereunder (including payments of principal, interest, fees and other amounts) to
Assignor for amounts which have accrued up to but excluding the Settlement Date
and to Assignee for amounts which have accrued from and after the Settlement
Date.  On the Settlement Date, Assignor shall pay to Assignee an
amount equal to the portion of any interest, fee, or any other charge that was
paid to Assignor prior to the Settlement Date on account of the interest
assigned hereunder and that are due and payable to Assignee with respect
thereto, to the extent that such interest, fee or other charge relates to the
period of time from and after the Settlement Date.

     

    VII.           This
Assignment Agreement may be executed in counterparts and by the parties hereto
in separate counterparts, each of which when so executed and delivered shall be
an original, but all of which shall together constitute one and the same
instrument.  This Assignment Agreement may be executed and delivered
by facsimile or other electronic method of transmission all with the same force
and effect as if the same were a fully executed and delivered original manual
counterpart.

     

    VIII.           THE
VALIDITY OF THIS ASSIGNMENT AGREEMENT, THE CONSTRUCTION, INTERPRETATION, AND
ENFORCEMENT HEREOF, AND THE RIGHTS OF THE PARTIES HERETO WITH RESPECT TO ALL
MATTERS ARISING HEREUNDER OR RELATED HERETO SHALL BE DETERMINED UNDER, GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
CALIFORNIA.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    IN
WITNESS WHEREOF, the parties hereto have caused this Assignment Agreement and
Annex I hereto to be executed by their respective officers, as of the first date
written above.

     

    [NAME OF
ASSIGNOR]

    

      as
Assignor

    

    

    By         

    Name:

    Title:

    

    

    [NAME OF
ASSIGNEE]

    

      as
Assignee

    

    

    By:           

    Name:

    Title:

    

    

    [ACCEPTED
THIS ____ DAY OF

    _______________

    

    WELLS FARGO CAPITAL FINANCE,
LLC,

    a
Delaware limited liability company, as Agent

    

    By:           

    Name:

    Title:]1

    

    

      

    

     

      1 Include to the extent required
by Section 13.1(a) of the Credit Agreement.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    ANNEX FOR
ASSIGNMENT AND ACCEPTANCE AGREEMENT

     

    

     

    ANNEX
I

     

    

    
      	
              1.

            	
              Borrower:  Alaska
      Airlines, Inc., an Alaska
corporation

            

    

     

    
      	
              2.

            	
              Name
      and Date of Credit Agreement:

            

    

     

    Credit
Agreement, dated as of March 31, 2010, by and among Borrower, the lenders from time to time party thereto
(the “Lenders”), Wells Fargo Capital Finance, LLC, a Delaware limited liability
company, as agent for the Lenders, as co-lead arranger, and as joint bookrunner,
and U.S. Bank National Association, as documentation agent, as co-lead arranger,
and as joint bookrunner

    

    3.           Date
of Assignment
Agreement:                                                                                                

    

    4.           Amounts:

    

    
      	
               
      

            	
              (i)

            	
              Assigned
      Amount of Commitment

            	
              $

            	 

    

     

    b.           Assigned
Amount of
Advances                                                                                     $                      

     

    5.           Settlement
Date:                                                                                                

    

    6.           Purchase
Price                                                                                                $___________

    

    7.           Notice
and Payment Instructions, etc.

    

    Assignee:                                                        Assignor:

    
      	 
      	 
      

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    EXHIBIT
B-1

     

    FORM
OF BORROWING BASE CERTIFICATE

     

    Wells
Fargo Capital Finance, LLC, as Agent

    under the
below referenced Credit Agreement

    2450
Colorado Avenue

    Suite
3000 West

    Santa
Monica, California 90404

    Attn:  Business
Finance Division Manager

    

    The
undersigned, Alaska Airlines, Inc., an Alaska corporation (“Borrower”), pursuant
to Schedule 5.2
of that certain Credit Agreement dated as of March 31, 2010 (as amended,
restated, modified, supplemented, refinanced, renewed, or extended from time to
time, the “Credit Agreement”), entered into among Borrower, the lenders
identified on the signature pages thereof (such lenders, together with their
respective successors and permitted assigns, are referred to collectively as the
“Lenders”), Wells Fargo Capital Finance, LLC, a Delaware limited liability
company, as agent for the Lenders (in such capacity, together with its
successors and assigns, if any, in such capacity, “Agent”), as co-lead arranger,
and as joint bookrunner, and U.S. Bank National Association, as documentation
agent, as co-lead arranger, and as joint bookrunner, hereby certifies to Agent
that the following items, calculated in accordance with the terms and
definitions set forth in the Credit Agreement for such items are true and
correct, and that Borrower is in compliance with and, after giving effect to any
currently requested Advances, will be in compliance with, the terms, conditions,
and provisions of the Credit Agreement.

     

    All
initially capitalized terms used in this Borrowing Base Certificate have the
meanings set forth in the Credit Agreement unless specifically defined
herein.

     

    [Remainder
of page intentionally left blank.]

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

     

    
      	
              Effective
      Date of
      Calculation:                                                      

            	 
      	 
      
	
              1.1 Borrowing Base Calculation

            	 
      	 
      
	
              (a)Eligible
      Accounts

            	 
      	 
      
	
              (i)85% of Eligible
      Accounts2

            	
              $                      

            	 
      
	
              (ii)the amount, if any, of
      the Dilution Reserve

            	
              $                      

            	 
      
	
              (iii)Item 1.a.. minus Item
      1.b.

            	 
      	
              $                      

            
	 
      	 
      	 
      
	
              (b)Eligible
      Expendables

            	 
      	 
      
	
              (i)$10,000,000

            	
              $                      

            	 
      
	
              (ii)50% of the value
      (calculated at cost minus accumulated depreciation that is calculated in
      accordance with GAAP) of Eligible Expendables3

            	
              $                      

            	 
      
	
              (iii)85% times the most recently
      determined Net Liquidation Percentage times the value
      (calculated at cost minus accumulated depreciation that is calculated in
      accordance with GAAP) of Eligible Expendables

            	
              $                      

            	 
      
	
              (iv)The lowest of Items
      2.a., 2.b. and 2.c.

            	 
      	
              $                      

            
	 
      	 
      	 
      
	
              (c)Eligible Replaceable
      Spare Parts

            	 
      	 
      
	
              (i)$45,000,000

            	
              $                      

            	 
      
	
              (ii)50% of the value
      (calculated at cost minus accumulated depreciation that is calculated in
      accordance with GAAP) of Eligible Replaceable Spare Parts4

            	
              $                      

            	 
      
	
              (iii)85% times the most recently
      determined Net Liquidation Percentage times the value
      (calculated at cost minus accumulated depreciation that is calculated in
      accordance with GAAP) of Eligible Replaceable Spare Parts

            	
              $                      

            	 
      
	
              (iv)The lowest of Items
      3.a., 3.b. and 3.c.

            	 
      	
              $                      

            
	 
      	 
      	 
      
	
              (d)Eligible
      Engines

            	 
      	 
      
	
              (i)$40,000,000

            	
              $                      

            	 
      
	
              (ii)50% of the value
      (calculated at cost minus accumulated depreciation that is calculated in
      accordance with GAAP) of Eligible Engines5

            	
              $                      

            	 
      
	
              (iii)85% times the most recently
      determined Net Liquidation Percentage times the value
      (calculated at cost minus accumulated depreciation that is calculated in
      accordance with GAAP) of Eligible Engines

            	
              $                      

            	 
      
	
              (iv)The lowest of Items
      4.a., 4.b. and 4.c.

            	 
      	
              $                      

            
	 
      	 
      	 
      
	
              (e)Eligible Ground
      Equipment

            	 
      	 
      
	
              (i)$25,000,000

            	
              $                      

            	 
      
	
              (ii)50% of the value
      (calculated at cost minus accumulated depreciation that is calculated in
      accordance with GAAP) of Eligible Ground Service Equipment6

            	
              $                      

            	 
      
	
              (iii)85% times the most recently
      determined Net Liquidation Percentage times the value
      (calculated at cost minus accumulated depreciation that is calculated in
      accordance with GAAP) of Eligible Ground Service Equipment

            	
              $                      

            	 
      
	
              (iv)The lowest of Items
      5.a., 5.b. and 5.c.

            	 
      	
              $                      

            
	 
      	 
      	 
      
	
              (f)a.          3
      times the amount of credit availability

                                         created
      by Item
      1.c.

            	
              $                      

            	 
      
	
              b.           Sum of Items 2.d., 3.d., 4.d.,
      and 5.d.

            	
              $                      

            	 
      
	
              c.           The
      lowest of Items 6.a. and 6.b.

            	 
      	
              $                      

            
	 
      	 
      	 
      
	
              (g)

              Reserves

            	 
      	 
      
	
              (i)the sum of the
      aggregate amount of reserves, if any, established by Agent under Section 2.1(c) of the Credit
      Agreement

            	
              $                      

            	 
      
	 
      	 
      	 
      
	
              (h)Borrowing Base (Sum of Items 1.c. and 6.c. minus Item
      7.a.)

            	 
      	
              $                      

            
	 
      	 
      	 
      
	
              (i)Availability
      Calculation

            	 
      	 
      
	
              (i)(a)Maximum Revolver
      Amount

            	
              $                      

            	 
      
	
              (B)outstanding
      Advances

            	
              $                      

            	 
      
	
              (C)outstanding
      Swing Loans

            	
              $                      

            	 
      
	
              (D)Item 9.a.(i) minus Item
      9.a.(ii) minus Item 9.a.(iii)

            	
              $                      

            	 
      
	
              (ii)(b)Borrowing Base (Item
      8)

            	
              $                      

            	 
      
	
              (B)outstanding
      Advances

            	
              $                      

            	 
      
	
              (C)outstanding
      Swing Loans

            	 
      	 
      
	
              (D)Item 9.b.(i) minus Item
      9.b.(ii) minus Item 9.b.(iii)

            	
              $                      

            	 
      
	
              (iii)lesser of Item 9.a.
      and 9.b.

            	 
      	
              $                      

            

    

    

     

    

      

    

     

      2 See Annex
A

    

     

      3 See Annex
B

    

     

      4 See Annex
C

    

     

      5 See Annex
D

    

     

      6 See Annex
E

    

    
      
        
          -  -

        

         

      

      
         

        
          

        

      

      
         

      

    

    

     

    Additionally,
the undersigned hereby certifies and represents and warrants to the Lender Group
on behalf of Borrower that (i) as of the date hereof, each representation or
warranty contained in or pursuant to any Loan Document, any agreement,
instrument, certificate, document or other writing furnished at any time under
or in connection with any Loan Document, and as of the effective date of any
advance, continuation or conversion requested above is true and correct in all
material respects (except to the extent that such representation or warranty
relates solely to an earlier date), (ii) each of the covenants and agreements
contained in any Loan Document have been performed (to the extent required to be
performed on or before the date hereof or each such effective date), (iii) no
Default or Event of Default has occurred and is continuing on the date hereof,
nor will any thereof occur after giving effect to the request above, and (iv)
all of the foregoing is true and correct as of the effective date of the
calculations set forth above and that such calculations have been made in
accordance with the requirements of the Credit Agreement.

     

    ALASKA AIRLINES,
INC.,

    an Alaska
corporation, as Borrower

    

    

    By:           

    Name:

    Title:

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Annex A

    

    
      	
              Receivables
      created by Borrower in the ordinary course of its business, that arise out
      of Borrower’s rendition of services or the sale of mileage plan awards,
      that comply with each of the representations and warranties respecting
      Eligible Accounts made in the Loan Documents

            	 
      	
              $                      

            
	
              Less (without
      duplication)

            	 
      	 
      
	
              Receivables
      that the Account Debtor has failed to pay within 90 days of original
      invoice date, that are more than 60 days past due, or have selling terms
      of more than 45 days

            	
              $                      

            	 
      
	
              Receivables
      owed by an Account Debtor (or its Affiliates) where 50% or more of all
      Receivables owed by that Account Debtor (or its Affiliates) are deemed
      ineligible under the immediately preceding clause

            	
              $                      

            	 
      
	
              Receivables
      with respect to which the Account Debtor is an Affiliate of Borrower or an
      employee or agent of Borrower or any Affiliate of Borrower

            	
              $                      

            	 
      
	
              Receivables
      that are Excluded Accounts

            	
              $                      

            	 
      
	
              Receivables
      arising in a transaction involving terms or conditions by reason of which
      the payment by the Account Debtor may be conditional

            	
              $                      

            	 
      
	
              Receivables
      that are not payable in Dollars

            	
              $                      

            	 
      
	
              Receivables
      with respect to which the Account Debtor either (i) does not maintain its
      chief executive office in the United States, or (ii) is not organized
      under the laws of the United States or any state thereof, or (iii) is the
      government of any foreign country or sovereign state, or of any state,
      province, municipality, or other political subdivision thereof, or of any
      department, agency, public corporation, or other instrumentality thereof,
      unless (y) the Receivable is supported by an irrevocable letter of credit
      satisfactory to Agent (as to form, substance, and issuer or domestic
      confirming bank) that has been delivered to Agent and is directly drawable
      by Agent, or (z) the Receivable is covered by credit insurance in
      form, substance, and amount, and by an insurer, reasonably satisfactory to
      Agent

            	
              $                      

            	 
      
	
              Receivables
      with respect to which the Account Debtor is either (i) the United
      States or any department, agency, or instrumentality of the United States
      (exclusive, however, of Receivables with respect to which Borrower has
      complied, to the reasonable satisfaction of Agent, with the Assignment of
      Claims Act, 31 USC § 3727), or (ii) any state of the United
      States

            	
              $                      

            	 
      
	
              Receivables
      with respect to which the Account Debtor is a creditor of Borrower, has or
      has asserted a right of setoff, or has disputed its obligation to pay all
      or any portion of the Receivable, to the extent of such claim, right of
      setoff, or dispute

            	
              $                      

            	 
      
	
              (i) Receivables
      owed by Bank of America, N.A. or its Affiliates to the extent of the
      obligations owing by such Account Debtor in excess of 50% of all Eligible
      Accounts (such percentage being subject to reduction by Agent in its
      Permitted Discretion if the creditworthiness of such Account Debtor
      deteriorates), and (ii) Receivables with respect to any other Account
      Debtor whose total obligations owing to Borrower exceed 10% (such
      percentage as applied to a particular Account Debtor being subject to
      reduction by Agent in its Permitted Discretion if the creditworthiness of
      such Account Debtor deteriorates) of all Eligible Accounts, to the extent
      of the obligations owing by such Account Debtor in excess of such
      percentage; provided, however, that, in each case, the amount of
      Eligible Accounts that are excluded because they exceed the foregoing
      percentage shall be determined by Agent based on all of the otherwise
      Eligible Accounts prior to giving effect to any eliminations based upon
      the foregoing concentration limit

            	
              $                      

            	 
      
	
              Receivables
      with respect to which the Account Debtor is subject to an Insolvency
      Proceeding, is not Solvent, has gone out of business, or as to which
      Borrower has received notice of an imminent Insolvency Proceeding or a
      material impairment of the financial condition of such Account
      Debtor

            	
              $                      

            	 
      
	
              Receivables,
      the collection of which, Agent, in its Permitted Discretion, believes to
      be doubtful by reason of the Account Debtor’s financial
      condition

            	
              $                      

            	 
      
	
              Receivables
      that are not subject to a valid and perfected first priority Agent’s
      Lien

            	
              $                      

            	 
      
	
              Receivables
      with respect to which (i) the mileage awards or miles giving rise to such
      Receivable have not been transferred to and the Receivable billed to the
      Account Debtor, or (ii) the services giving rise to such Receivable have
      not been performed and billed to the Account Debtor

            	
              $                      

            	 
      
	
              Receivables
      with respect to which the Account Debtor is a Sanctioned Person or
      Sanctioned Entity

            	
              $                      

            	 
      
	
              Receivables
      that represent the right to receive progress payments or other advance
      billings that are due prior to the completion of performance by Borrower
      of the subject contract

            	
              $                      

            	 
      
	
              Other

            	
              $                      

            	 
      
	
              Total
      Excluded Receivables

            	 
      	
              $                      

            
	
              Eligible
      Accounts (Total Receivables less Total Excluded
      Receivables):

            	 
      	
              $                      

            

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Annex B

    

    
      	
              Expendables
      of Borrower, maintained in conformity with the Maintenance Program, that
      comply with each of the representations and warranties respecting Eligible
      Expendables made in the Loan Documents (calculated at cost minus
      accumulated depreciation that is calculated in accordance with
      GAAP)

            	 
      	
              $                      

            
	
              less (without
      duplication)

            	 
      	 
      
	
              Expendables
      that Borrower does not have good, valid, and marketable title
      to

            	
              $                      

            	 
      
	
              Expendables
      that are not located at one of the locations identified on Schedule 4.27 to the Credit
      Agreement

            	
              $                      

            	 
      
	
              Expendables
      that are in the possession or control of a bailee, warehouseman, FAA
      repair station, overhaul or maintenance servicer, mechanic, or other third
      Person

            	
              $                      

            	 
      
	
              Expendables
      that are located at a location at which less than $100,000 of otherwise
      Eligible Expendables, Eligible Ground Service Equipment, or Eligible
      Replaceable Spare Parts are located

            	
              $                      

            	 
      
	
              Expendables
      that are located on Real Property leased by Borrower or in a contract
      warehouse, in each case, (i) unless it is subject to a Collateral Access
      Agreement executed by the lessor or warehouseman, as the case may be
      (provided, however, that, (x) during the 90-day
      period immediately following the Closing Date, such leased Real Property
      or contract warehouse need not be subject to a Collateral Access
      Agreement, and (y) during all times thereafter, either such leased Real
      Property or contract warehouse must be subject to a Collateral Access
      Agreement, or if such leased Real Property or contract warehouse is not
      subject to a Collateral Access Agreement, the failure to have a Collateral
      Access Agreement will not, in and of itself, render the Eligible
      Expendables ineligible, but Agent may, at its election, establish a
      reserve against the Borrowing Base and the Maximum Revolver Amount in an
      aggregate amount equal to 3 months rent under the lease for each location
      (or, if applicable, 3 months of storage fees under the warehouse agreement
      for each contract warehouse) that is not subject to a Collateral Access
      Agreement), and (ii) unless it is segregated or otherwise separately
      identifiable from Spare Parts of others, if any, stored on the
      premises

            	
              $                      

            	 
      
	
              Expendables
      that are not subject to a valid and perfected first priority Agent’s Lien
      or are not free and clear of all Liens (other than a valid and perfected
      first priority Agent’s Lien and Permitted Liens that are junior in
      priority to Agent’s Lien)

            	
              $                      

            	 
      
	
              Expendables
      that are the subject of any warehouse receipt or other document of title,
      unless such receipt or other document of title is delivered to Agent with
      all necessary endorsements

            	
              $                      

            	 
      
	
              Expendables
      that are beyond economic repair, obsolete, or unserviceable, are not
      unused, have not been maintained in accordance with the FARs or Borrower’s
      Maintenance Program, or are not in a condition for immediate use by
      Borrower in its Certificated Air Carrier operations in compliance with the
      FARs or the Maintenance Program

            	
              $                      

            	 
      
	
              Expendables
      that do not have (i) all required FAA serviceability tags or records (or,
      if applicable, full back-to-birth traceability), or (ii) all manuals,
      documents, and records required by the FARs or the Maintenance
      Program

            	
              $                      

            	 
      
	
              Expendables
      that have been installed on any Aircraft, Engine, other Spare Part, or any
      other item of Equipment or otherwise become an accession, or are the
      subject of a pooling, exchange, borrowing, leasing, consignment, or other
      similar arrangement

            	
              $                      

            	 
      
	
              Expendables
      that do not conform in all material respects to all applicable
      airworthiness directives or limits imposed by any Governmental Authority
      which has regulatory authority over such Expendables or their
      use

            	
              $                      

            	 
      
	
              Other

            	
              $                      

            	 
      
	
              Total
      Excluded Expendables

            	 
      	
              $                      

            
	
              Eligible
      Expendables (Total Expendables less Total Excluded
      Expendables):

            	 
      	
              $                      

            

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Annex C

    

    
      	
              Replaceable
      Spare Parts of Borrower, manufactured and refurbished, as the case may be,
      in conformity with the Maintenance Program, in conformity with the
      Maintenance Program, that comply with each of the representations and
      warranties respecting Eligible Replaceable Spare Parts made in the Loan
      Documents (calculated at cost minus accumulated depreciation that is
      calculated in accordance with GAAP)

            	 
      	
              $                      

            
	
              less (without
      duplication)

            	 
      	 
      
	
              Replaceable
      Spare Parts that Borrower does not have good, valid, and marketable title
      to

            	
              $                      

            	 
      
	
              Replaceable
      Spare Parts that are not located at one of the locations identified on
      Schedule 4.27 to the Credit
      Agreement

            	
              $                      

            	 
      
	
              Replaceable
      Spare Parts that are in the possession or control of a bailee,
      warehouseman, FAA repair station, overhaul or maintenance servicer,
      mechanic, or other third Person

            	
              $                      

            	 
      
	
              Replaceable
      Spare Parts that are located at a location at which less than $100,000 of
      otherwise Eligible Expendables, Eligible Ground Service Equipment, or
      Eligible Replaceable Spare Parts are located

            	
              $                      

            	 
      
	
              Replaceable
      Spare Parts that are located on Real Property leased by Borrower or in a
      contract warehouse, in each case, (i) unless it is subject to a Collateral
      Access Agreement executed by the lessor or warehouseman, as the case may
      be (provided, however, that, (x) during the 90-day
      period immediately following the Closing Date, such leased Real Property
      or contract warehouse need not be subject to a Collateral Access
      Agreement, and (y) during all times thereafter, either such leased Real
      Property or contract warehouse must be subject to a Collateral Access
      Agreement, or if such leased Real Property or contract warehouse is not
      subject to a Collateral Access Agreement, the failure to have a Collateral
      Access Agreement will not, in and of itself, render the Eligible
      Replacement Spare Parts ineligible, but Agent may, at its election,
      establish a reserve against the Borrowing Base and the Maximum Revolver
      Amount in an aggregate amount equal to 3 months rent under the lease for
      each location (or, if applicable, 3 months of storage fees under the
      warehouse agreement for each contract warehouse) that is not subject to a
      Collateral Access Agreement), and (ii) unless it is segregated or
      otherwise separately identifiable from Spare Parts of others, if any,
      stored on the premises

            	
              $                      

            	 
      
	
              Replaceable
      Spare Parts that are not subject to a valid and perfected first priority
      Agent’s Lien or are not free and clear of all Liens (other than a valid
      and perfected first priority Agent’s Lien and Permitted Liens that are
      junior in priority to Agent’s Lien)

            	
              $                      

            	 
      
	
              Replaceable
      Spare Parts that are the subject of any warehouse receipt or other
      document of title, unless such receipt or other document of title is
      delivered to Agent with all necessary endorsements

            	
              $                      

            	 
      
	
              Replaceable
      Spare Parts that are beyond economic repair, obsolete, or unserviceable,
      are not either unused or have not been rehabilitated to a fully
      serviceable condition, have not been maintained in accordance with the
      FARs or the Maintenance Program, or are not in a condition for immediate
      use by Borrower in its Certificated Air Carrier operations in compliance
      with the FARs or the Maintenance Program

            	
              $                      

            	 
      
	
              Replaceable
      Spare Parts that do not have (i) all required FAA serviceability tags or
      records (or, if applicable, full back-to-birth traceability), or (ii) all
      manuals, documents, and records required by the FARs or the Maintenance
      Program

            	
              $                      

            	 
      
	
              Replaceable
      Spare Parts that are installed on any Aircraft, Engine, or other Spare
      Part (other than an Eligible Replaceable Spare Part) or otherwise become
      an accession, or are the subject of a pooling, exchange, borrowing,
      leasing, consignment, or other similar arrangement

            	
              $                      

            	 
      
	
              Replaceable
      Spare Parts that do not conform in all material respects to all applicable
      airworthiness directives or limits imposed by any Governmental Authority
      which has regulatory authority over such Rotables or their use or by the
      manufacturer of such Replaceable Spare Part or its use

            	
              $                      

            	 
      
	
              Other

            	
              $                      

            	 
      
	
              Total
      Excluded Replaceable Spare Parts

            	 
      	
              $                      

            
	
              Eligible
      Replaceable Spare Parts (Total Replaceable Spare Parts less Total Excluded
      Replaceable Spare Parts):

            	 
      	
              $                      

            

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Annex D

    

    
      	
              Designated
      Engines of Borrower so long as they have been maintained in conformity
      with the Maintenance Program, and comply with each of the representations
      and warranties respecting Eligible Engines made in the Loan Documents
      (calculated at cost minus accumulated depreciation that is calculated in
      accordance with GAAP)

            	 
      	
              $                      

            
	
              less (without
      duplication)

            	 
      	 
      
	
              Engines
      that are not Designated Engines

            	
              $                      

            	 
      
	
              Engines
      that Borrower does not have good, valid, and marketable title
      to

            	
              $                      

            	 
      
	
              Unless
      such Engine is attached to one of the Aircraft operated by Borrower as a
      result of a Permitted Engine Installation, or is the subject of a
      Permitted Lease, or is out for customary repairs that are not expected to
      take more than a normal service period to complete, Engines that are not
      located at one of the locations identified on Schedule 4.28(e) to the Credit
      Agreement

            	
              $                      

            	 
      
	
              Unless
      such Engine is out for repair for customary repairs that are not expected
      to take more than a normal service period to complete, Engines that are in
      the possession or control of a bailee, warehouseman, FAA repair station,
      overhaul or maintenance servicer, mechanic, or other third
      Person

            	
              $                      

            	 
      
	
              Engines
      that are located on Real Property leased by Borrower or in a contract
      warehouse, in each case, (i) unless it is subject to a Collateral Access
      Agreement executed by the lessor or warehouseman, as the case may be
      (provided, however, that, (x) during the 90-day
      period immediately following the Closing Date, such leased Real Property
      or contract warehouse need not be subject to a Collateral Access
      Agreement, and (y) during all times thereafter, either such leased Real
      Property or contract warehouse must be subject to a Collateral Access
      Agreement, or if such leased Real Property or contract warehouse is not
      subject to a Collateral Access Agreement, the failure to have a Collateral
      Access Agreement will not, in and of itself, render the Engine ineligible,
      but Agent may, at its election, establish a reserve against the Borrowing
      Base and the Maximum Revolver Amount in an aggregate amount equal to 3
      months rent under the lease for each location (or, if applicable, 3 months
      of storage fees under the warehouse agreement for each contract warehouse)
      that is not subject to a Collateral Access Agreement), and (ii) unless it
      is segregated or otherwise separately identifiable from Engines of others,
      if any, stored on the premises

            	
              $                      

            	 
      
	
              Engines
      not subject to a valid and perfected first priority Agent’s Lien or is not
      free and clear of all Liens (other than a valid and perfected first
      priority Agent’s Lien and Permitted Liens that are junior in priority to
      Agent’s Lien)

            	
              $                      

            	 
      
	
              Engines
      that are the subject of any warehouse receipt or other document of title,
      unless such receipt or other document of title is delivered to Agent with
      all necessary endorsements

            	
              $                      

            	 
      
	
              Engines
      that are beyond economic repair or obsolete, have not been maintained in
      accordance with the FARs or the Maintenance Program

            	
              $                      

            	 
      
	
              Engines
      that are not either (i) of good and merchantable quality, free from
      defects, in good operating condition and ready for immediate use or
      operation in accordance with the Maintenance Program, or (ii) following
      customary repairs that are not expected to take more than a normal service
      period to complete, will be of good and merchantable quality, free from
      defects, in good operating condition and ready for immediate use or
      operation in accordance with the Maintenance Program

            	
              $                      

            	 
      
	
              Engines
      that do not have (i) all required FAA serviceability tags (if serviceable)
      or record (or, if applicable, full back-to-birth traceability), or (ii)
      all manuals, documents, and records required by the FARs or the
      Maintenance Program

            	
              $                      

            	 
      
	
              Unless
      such Engine is attached to one of the Aircraft operated by Borrower as a
      result of a Permitted Engine Installation, or is the subject of a
      Permitted Lease, Engines that have been installed on any Aircraft or any
      other item of Equipment or otherwise become an accession, or are the
      subject of a pooling, exchange, borrowing, leasing, consignment, or other
      similar arrangement

            	
              $                      

            	 
      
	
              Other

            	
              $                      

            	 
      
	
              Total
      Excluded Engines

            	 
      	
              $                      

            
	
              Eligible
      Engines (Total Designated Engines less Total Excluded
      Engines):

            	 
      	
              $                      

            

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Annex E

    

    
      	
              Ground
      Service Equipment (calculated at cost minus accumulated depreciation that
      is calculated in accordance with GAAP)

            	 
      	
              $                      

            
	
              less (without
      duplication)

            	 
      	 
      
	
              Ground
      Service Equipment that Borrower does not have good, valid, and marketable
      title to

            	
              $                      

            	 
      
	
              Ground
      Service Equipment that is not located at one of the locations identified
      on Schedule 4.28(d) to the Credit
      Agreement

            	
              $                      

            	 
      
	
              Ground
      Service Equipment that is in the possession or control of a bailee,
      warehouseman, FAA repair station, overhaul or maintenance servicer,
      mechanic, or other third Person

            	
              $                      

            	 
      
	
              Ground
      Service Equipment that is located at a location at which less than
      $100,000 of otherwise Eligible Ground Service Equipment is
      located

            	
              $                      

            	 
      
	
              Ground
      Service Equipment that is stored on Real Property leased by Borrower
      unless such leased Real Property is subject to a Collateral Access
      Agreement executed by the lessor (provided, however, that, (i) during the 90-day period
      immediately following the Closing Date, such leased Real Property need not
      be subject to a Collateral Access Agreement, and (ii) during all times
      thereafter, either such leased Real Property must be subject to a
      Collateral Access Agreement or, if such Real Property is not subject to a
      Collateral Access Agreement, the failure to have a Collateral Access
      Agreement will not, in and of itself, render the Eligible Ground Service
      Equipment ineligible, but Agent may, at its election, establish a reserve
      against the Borrowing Base and the Maximum Revolver Amount in an aggregate
      amount equal to 3 months rent under the lease for each Real Property that
      is not subject to a Collateral Access Agreement)

            	
              $                      

            	 
      
	
              Ground
      Service Equipment that is “subject to” (within the meaning of Section
      9-311 of the Code) any certificate of title (or comparable)
      statute

            	
              $                      

            	 
      
	
              Ground
      Service Equipment that is not subject to a valid and perfected first
      priority Agent’s Lien or is not free and clear of all Liens (other than a
      valid and perfected first priority Agent’s Lien and Permitted Liens that
      are junior in priority to Agent’s Lien)

            	
              $                      

            	 
      
	
              Other

            	
              $                      

            	 
      
	
              Total
      Excluded Ground Service Equipment

            	 
      	
              $                      

            
	
              Eligible
      Ground Service Equipment (Total Ground Service Equipment less Total Excluded
      Ground Service Equipment):

            	 
      	
              $                      

            

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    EXHIBIT
C-1

    

    FORM
OF COMPLIANCE CERTIFICATE

    

    [on
Borrower’s letterhead]

    

    To:           Wells
Fargo Capital Finance, LLC, as Agent

    under the
below referenced Credit Agreement

    2450
Colorado Avenue

    Suite
3000 West

    Santa
Monica, California 90404

    Attn:  Business
Finance Division Manager

    

    

    Re:           Compliance
Certificate
dated                                                                           

     

    Ladies
and Gentlemen:

     

    Reference
is made to that certain CREDIT
AGREEMENT (as amended, restated,
supplemented, or otherwise modified from time to time, the “Credit Agreement”) dated as of March 31, 2010, by and among the lenders
identified on the signature pages thereof (such lenders, together with their
respective successors and permitted assigns, are referred to hereinafter each
individually as a “Lender” and collectively as the “Lenders”), WELLS FARGO CAPITAL FINANCE,
LLC, a Delaware limited liability company,
as agent for the Lenders (in such capacity, together with its successors
and assigns, if any, in such capacity, “Agent”), as co-lead arranger, and as joint bookrunner,
U.S. BANK NATIONAL
ASSOCIATION, as documentation agent, as
co-lead arranger, and as joint bookrunner, and ALASKA AIRLINES, INC., an
Alaska corporation (“Borrower”).  Capitalized
terms used in this Compliance Certificate have the meanings set forth in the
Credit Agreement unless specifically defined herein.

     

    Pursuant
to Schedule 5.1
of the Credit Agreement, the undersigned officer of Borrower hereby certifies
that:

     

    1.           The
financial statements of Group and its Subsidiaries furnished in Schedule 1 attached
hereto, have been prepared in accordance with GAAP (except for year-end
adjustments and the lack of footnotes), and fairly present the financial
condition of Group and its Subsidiaries.

     

    2.           Such
officer has reviewed in reasonable detail, or caused to be reviewed under
his/her supervision, the transactions and condition of Borrower during the
accounting period covered by the financial statements delivered pursuant to
Schedule 5.1 of
the Credit Agreement.

     

    3.           On
and as of the date hereof, the undersigned does not have knowledge of the
existence of any event or condition that constitutes a Default or Event of
Default, except for such conditions or events listed on Schedule 2 attached
hereto, specifying the nature and period of existence thereof and what action
Borrower has taken, is taking, or proposes to take with respect
thereto.

     

    4.           The
representations and warranties of Borrower set forth in the Credit Agreement and
the other Loan Documents are true and correct in all material respects on and as
of the date hereof (except to the extent they relate to a specified date),
except as set forth on Schedule 3 attached
hereto.

     

    5.           Borrower
is in compliance with the applicable covenants contained in Section 7 of the
Credit Agreement as demonstrated on Schedule 4 attached
hereto.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    IN
WITNESS WHEREOF, this Compliance Certificate is executed by the undersigned this
_____ day of _______________, ________.

     

    

    ALASKA AIRLINES, INC., an
Alaska corporation

    

    

    By:           

    Name:

    Title:

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    SCHEDULE
1

    

    Financial
Statements

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    SCHEDULE
2

    

    Default
or Event of Default

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    SCHEDULE
3

    

    Representations
and Warranties

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    SCHEDULE
4

    

    Financial
Covenant

    

    Minimum
Liquidity.

     

    Borrower’s Liquidity as of
________________, ______ is $______________, which amount [is/is not] greater than or
equal to the amount set forth in Section 7 of the
Credit Agreement for the corresponding period.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    EXHIBIT
L-1

     

    

     

    FORM
OF LIBOR NOTICE

     

    Wells
Fargo Capital Finance, LLC, as Agent

    under the
below referenced Credit Agreement

    2450
Colorado Avenue

    Suite
3000 West

    Santa
Monica, California  90404

    

     

    Ladies
and Gentlemen:

     

    Reference
hereby is made to that certain Credit Agreement, dated as of March 31, 2010 (the
“Credit
Agreement”), by and among Alaska Airlines, Inc., an Alaska corporation
(“Borrower”),
the lenders identified on the signature pages thereof (such lenders, together
with their respective successors and permitted assigns, are referred to
collectively as the “Lenders”), Wells
Fargo Capital Finance, LLC, a Delaware limited liability company, as agent for
the Lenders (“Agent”), as co-lead
arranger, and as joint bookrunner, and U.S. Bank National Association, as
documentation agent, as co-lead arranger, and as joint
bookrunner.  Capitalized terms used herein and not otherwise defined
herein shall have the meanings ascribed to them in the Credit
Agreement.

     

    This
LIBOR Notice represents Borrower’s request to elect the LIBOR Option with
respect to all or a portion of the outstanding Advances in the amount of
$________ (the “LIBOR
Rate Advance”)[, and is a written confirmation of the telephonic notice
of such election given to Agent].

     

    The LIBOR
Rate Advance will have an Interest Period of [1][2][3] month(s) commencing
on.

     

    This
LIBOR Notice further confirms Borrower’s acceptance, for purposes of determining
the rate of interest based on the LIBOR Rate under the Credit Agreement, of the
LIBOR Rate as determined pursuant to the Credit Agreement.

     

    Borrower
represents and warrants that no Default or Event of Default has occurred and is
continuing on the date hereof, nor will any thereof occur as a result of giving
effect to the request above.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Dated:                      

     

    

     

    

     

    ALASKA AIRLINES, INC., an
Alaska corporation, as Borrower

     

    

     

    

     

    By:           Name:

     

    Title:

     

    Acknowledged
by:

     

    WELLS
FARGO CAPITAL FINANCE, LLC,

    a
Delaware limited liability company, as Agent

    

    

    By:           

    Name:

    Title:

    

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Schedule
A-1

    Agent’s
Account

     

    An account at a bank in the United
States designated by Agent from time to time as the account into which Borrower
shall make all payments to Agent for the benefit of the Lender Group and into
which the Lender Group shall make all payments to Agent under this Agreement and
the other Loan Documents.  Until Agent notifies Borrower and the
Lender Group to the contrary, Agent’s Account shall be that certain deposit
account bearing account number [***].

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    
      *
Indicates that certain information contained herein has been omitted and filed
separately with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted portions.

    

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Schedule
A-2

    Authorized
Persons

    

    Glenn S.
Johnson

    Executive
Vice President, Finance & Chief Financial Officer

    19300
International Boulevard

    Seattle,
Washington 98188

    [***]

    

    John F.
Schaefer, Jr.

    Vice
President, Finance & Treasurer

    19300
International Boulevard

    Seattle,
Washington 98188

    [***]

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    
 

    

    
      
         

          *
Indicates that certain information contained herein has been omitted and filed
separately with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted
portions.

        

      

      
         

        
          

        

      

      
         

      

    

    Schedule
C-1

     

    Commitments

     

    
      	
               

              Lender

            	
               

              Commitment

            	
               

              Total
      Commitment

            
	
              Wells
      Fargo Capital Finance, LLC

            	
              [***]

            	
              [***]

            
	
              U.S.
      Bank National Association

            	
              [***]

            	
              [***]

            
	
              Bank
      SinoPac

            	
              [***]

            	
              [***]

            
	
              All Lenders

            	
              $100,000,000

            	
              $100,000,000

            

    

    

     
 

     

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    
 

    

    
      
         

          *
Indicates that certain information contained herein has been omitted and filed
separately with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted
portions.

        

      

      
         

        
          

        

      

      
         

      

    

    Schedule
D-1

     

    Designated
Account

     

    [***] of
Borrower maintained with Borrower’s Designated Account Bank, or such other
deposit account of Borrower (located within the United States) that has been
designated as such, in writing, by Borrower to Agent.

     

    “Designated Account
Bank” means [***].

     

    

     

    

     

    

     

    

     

    

     

    

     

    

     

    

     

    

     

    

     

    

     

    

     

    

     

    

     

    

     

    

     

    

     

    

     

    

     

    
 

     

    
      
         

          *
Indicates that certain information contained herein has been omitted and filed
separately with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted
portions.

        

      

      
         

        
          

        

      

      
         

      

    

    Schedule
D-2

    Designated
Engines

    

    
      	 
      	
              Serial Numbers

               

            
	
              Model
      CFM56-3C

               

            	
              856774

              857962

              856994

              858683

              858857

               

            
	
              Model
      CFM56-7B

            	
              874853

              888192

              890424

              890919

              896998

              802109

              896963

              896275

            

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Schedule
P-1

    Permitted
Investments

    

    None.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Schedule
P-2

    Permitted
Liens

    

    None.

    

    

     

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

     

    Schedule
1.1

     

    As used in the Agreement, the following
terms shall have the following definitions:

     

    “Account” means an
account (as that term is defined in the Code).

     

    “Account Debtor” means
any Person who is obligated on an Account, chattel paper, or a general
intangible (including a Mileage Plan Receivable).

     

    "Accounting Changes"
means changes in accounting principles required by the promulgation of any rule,
regulation, pronouncement or opinion by the Financial Accounting Standards Board
of the American Institute of Certified Public Accountants (or successor thereto
or any agency with similar functions).

     

    “Acquisition” means
(a) the purchase or other acquisition by a Person of all or substantially
all of the assets of (or any division or business line of) any other Person, or
(b) the purchase or other acquisition (whether by
means of a merger, consolidation, or otherwise) by a Person of all or
substantially all of the Stock of any other Person.

     

    “Additional Documents”
has the meaning specified therefor in Section 5.12 of the
Agreement.

     

    “Advances” has the
meaning specified therefor in Section 2.1(a) of the
Agreement.

     

    “Affected Lender” has
the meaning specified therefor in Section 2.13(b) of
the Agreement.

     

    “Affiliate” means, as
applied to any Person, any other Person who controls, is controlled by, or is
under common control with, such Person.  For purposes of this
definition, “control” means the possession, directly or indirectly through one
or more intermediaries, of the power to direct the management and policies of a
Person, whether through the ownership of Stock, by contract, or otherwise; provided, however, that, for
purposes of the definition of Eligible Accounts  and Section 6.12 of the
Agreement: (a) any Person which owns directly or indirectly 10% or more of the
Stock having ordinary voting power for the election of directors or other
members of the governing body of a Person or 10% or more of the partnership or
other ownership interests of a Person (other than as a limited partner of such
Person) shall be deemed an Affiliate of such Person, (b) each director (or
comparable manager) of a Person shall be deemed to be an Affiliate of such
Person, and (c) each partnership in which a Person is a general partner shall be
deemed an Affiliate of such Person.

     

    “Agent” has the
meaning specified therefor in the preamble to the Agreement.

     

    “Agent-Related
Persons” means Agent, together with its Affiliates, officers, directors,
employees, attorneys, and agents.

     

    “Agent’s Account”
means the Deposit Account of Agent identified on Schedule
A-1.

     

    “Agent’s Liens” means
the Liens granted by Borrower to Agent under the Loan Documents.

     

    “Agreement” means the
Credit Agreement to which this Schedule 1.1 is
attached.

     

    “Aircraft” means any
“aircraft” as defined in Section 40102 of the Federal Aviation Act.

     

    “Appliances” means any
“appliance” as defined in Section 40102 of the Federal Aviation
Act.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    "Application Event"
means the occurrence of (a) a failure by Borrower to repay all of the
Obligations in full on the Maturity Date, or (b) an Event of Default and the
election by Agent or the Required Lenders to require that payments and proceeds
of Collateral be applied pursuant to Section 2.4(b)(ii) of
the Agreement.

     

    “Assignee” has the
meaning specified therefor in Section 13.1(a) of
the Agreement.

     

    “Assignment and
Acceptance” means an Assignment and Acceptance Agreement substantially in
the form of Exhibit
A-1.

     

    “Authorized Person”
means any one of the individuals identified on Schedule A-2, as such
schedule is updated from time to time by written notice from Borrower to
Agent.

     

    “Availability” means,
as of any date of determination, the amount that Borrower is entitled to borrow
as Advances under Section 2.1 of the
Agreement (after giving effect to all then outstanding
Obligations).

     

    “Bank Facility” means
that certain $100,000,000 loan facility provided by a syndicate of lenders and
agented by Citibank, N.A.

     

    “Bank Facility
Documents” means the loan and security documents related to the Bank
Facility or executed in connection therewith.

     

    “Bankruptcy Code”
means title 11 of the United States Code, as in effect from time to
time.

     

    “Base Rate” means the
greatest of (a) the Federal Funds Rate plus 1⁄2%, (b) the LIBOR Rate (which rate
shall be calculated based upon an Interest Period of 3 months and shall be
determined on a daily basis), plus 1 percentage point, and (c) the rate of
interest announced, from time to time, within Wells Fargo at its principal
office in San Francisco as its “prime rate”, with the understanding that the
“prime rate” is one of Wells Fargo’s base rates (not necessarily the lowest of
such rates) and serves as the basis upon which effective rates of interest are
calculated for those loans making reference thereto and is evidenced by the
recording thereof after its announcement in such internal publications as Wells
Fargo may designate.

     

    “Base Rate Loan” means
each portion of the Advances that bears interest at a rate determined by
reference to the Base Rate.

     

    “Base Rate Margin”
means [***].

     

    “Benefit Arrangement”
means in any jurisdiction the benefit schemes or arrangements in respect of any
employees or past employees operated, maintained or contributed to by Borrower
or any of its ERISA Affiliates, with respect to which any of them have any
liability and which provide benefits on retirement, ill-health, injury, death or
voluntary withdrawal from or termination of employment, including termination
indemnity payments and life assurance and post-retirement medical benefits,
other than Benefit Plans and Foreign Pension Plans.

     

    “Benefit Plan” means a
“defined benefit plan” (as defined in Section 3(35) of ERISA) for which Borrower
or any of its ERISA Affiliates has been an “employer” (as defined in Section
3(5) of ERISA) within the past six years.

     

    

    
      
         

          *
Indicates that certain information contained herein has been omitted and filed
separately with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted
portions.

        

      

      
         

        
          

        

      

      
         

      

    

     

    “Board of Directors”
means the board of directors (or comparable managers) of Group or any committee
thereof duly authorized to act on behalf of the board of directors (or
comparable managers).

     

     “Borrower” has the
meaning specified therefor in the preamble to the Agreement.

     

     “Borrowing” means a
borrowing consisting of Advances made on the same day by the Lenders (or Agent
on behalf thereof), or by Swing Lender in the case of a Swing Loan, or by Agent
in the case of a Protective Advance.

     

    “Borrowing Base”
means, as of any date of determination, the result of:

     

    
      	
               
      

            	
              (a)

            	
              85% of the amount of Eligible
      Accounts, less
      the amount, if any, of the Dilution Reserve, plus

            

    

     

    (b)           the lesser of:

     

    
      	
               
      

            	
              (i)  3 times
      the amount of credit availability created by clause (a) above,
      and

            

    

     

    (ii) the sum of

     

    (A)  the
least  of

     

    (1) $10,000,000,

     

    
      	
               
      

            	
              (2)
      50% of the value
      (calculated at cost minus accumulated depreciation that is calculated in
      accordance with GAAP) of Eligible Expendables,
  and

            

    

    

    (3)
85% times the most recently
determined Net Liquidation Percentage times the value (calculated
at cost minus accumulated depreciation that is calculated in accordance with
GAAP) of Eligible Expendables, plus

     

    (B) the
least  of

     

    
      	
               
      

            	
              (1)
      $45,000,000,

            

    

     

    
      	
               
      

            	
              (2)
      50% of the value
      (calculated at cost minus accumulated depreciation that is calculated in
      accordance with GAAP) of Eligible Replaceable Spare Parts,
    and

            

    

     

    
      	
               
      

            	
              (3)
      85% times the most recently
      determined Net Liquidation Percentage times the value
      (calculated at cost minus accumulated depreciation that is calculated in
      accordance with GAAP) of Eligible Replaceable Spare Parts, plus

            

    

     

    (C)           the
least  of

     

    
      	
               
      

            	
              (1)
      $40,000,000,

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              (2)
      50% of the value
      (calculated at cost minus accumulated depreciation that is calculated in
      accordance with GAAP) of Eligible Engines,
and

            

    

     

    
      	
               
      

            	
              (3)
      85% times the most recently
      determined Net Liquidation Percentage times the value
      (calculated at cost minus accumulated depreciation that is calculated in
      accordance with GAAP) of Eligible Engines, plus

            

    

     

    (D)           the
least  of

     

    
      	
               
      

            	
              (1)
      $25,000,000,

            

    

     

    
      	
               
      

            	
              (2)
      50% of the value
      (calculated at cost minus accumulated depreciation that is calculated in
      accordance with GAAP) of Eligible Ground Service Equipment,
      and

            

    

     

    
      	
               
      

            	
              (3)
      85% times the most recently
      determined Net Liquidation Percentage times the value
      (calculated at cost minus accumulated depreciation that is calculated in
      accordance with GAAP) of Eligible Ground Service Equipment, minus

            

    

     

    
      	
               
      

            	
              (c)

            	
              the
      aggregate amount of reserves, if any, established by Agent under Section 2.1(c)
      of the Agreement.

            

    

     

    “Borrowing Base
Certificate” means a certificate in the form of Exhibit
B-1.

     

    “Borrowing Base Excess
Amount” has the meaning set forth in Section
2.4(e)(i).

     

    “Business Day” means
any day that is not a Saturday, Sunday, or other day on which banks are
authorized or required to close in the state of California, except that, if a
determination of a Business Day shall relate to a LIBOR Rate Loan, the term
“Business Day” also shall exclude any day on which banks are closed for dealings
in Dollar deposits in the London interbank market.

     

    “Capitalized Lease
Obligation” means that portion of the obligations under a Capital Lease
that is required to be capitalized in accordance with GAAP.

     

    “Capital Lease” means
a lease that is required to be capitalized for financial reporting purposes in
accordance with GAAP.

     

    “Cash Equivalents” has
the meaning specified therefor under GAAP.

     

    “Cash Management
Services” means any cash management or related services including
treasury, depository, return items, overdraft, controlled
disbursement,  merchant store value cards, e-payables services,
electronic funds transfer, interstate depository network, automatic clearing
house transfer (including the Automated Clearing House processing of electronic
funds transfers through the direct Federal Reserve Fedline system) and other
cash management arrangements.

     

    “Certificated Air
Carrier” means an “air carrier” as defined in Section 40102 of the
Federal Aviation Act that holds an air carrier operating certificate issued
pursuant to chapter 447 of the Federal Aviation Act for aircraft capable of
carrying 10 or more individuals or 6,000 pounds or more of cargo and is
certificated for scheduled passenger operations in interstate commerce using
commercial jet aircraft under Part 121 of the FARs.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     “CFC” means a
controlled foreign corporation (as that term is defined in the
IRC).

     

    “Change of Control”
means that (a) Group fails to own and control, directly or indirectly, all of
the Stock of Borrower having the right to vote for the election of members of
their respective board of directors, (b) any “person” or “group” (within the
meaning of Sections 13(d) and 14(d) of the Exchange Act) becomes the beneficial
owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly,
of [***], or more, of the Stock of Group having the right to vote for the
election of members of the Board of Directors, or (c) a majority of the members
of the Board of Directors do not constitute Continuing Directors.

     

    “Change in Tax Law”
means any change in law, rule, regulation, order or other decision by any
Governmental Authority that would result in the imposition of additional United
States federal withholding taxes relative to a Foreign Lender.

     

     “Closing Date” means
the date of the making of the initial Advance (or other extension of credit)
hereunder or the date on which Agent notifies Borrower that each of the
conditions precedent set forth on Schedule 3.1 either
have been satisfied or have been waived.

     

     “Code” means the
California Uniform Commercial Code, as in effect from time to time.

     

    “Collateral” means all
assets and interests in assets and proceeds thereof now owned or hereafter
acquired by Borrower in or upon which a Lien is granted by Borrower in favor of
Agent or the Lenders under the Security Agreement, the Engine and Spare Parts
Security Agreement, or under any other agreement that constitutes a Loan
Document and pursuant to which a Lien is granted by Borrower in favor of Agent
or the Lenders.

     

    “Collateral Access
Agreement” means a landlord waiver, bailee letter, or acknowledgement
agreement of any lessor, warehouseman, processor, consignee, or other Person in
possession of, having a Lien upon, or having rights or interests in Borrower’s
books and records or Equipment, in each case, in form and substance reasonably
satisfactory to Agent.

     

    “Collections” means
all cash, checks,
notes, instruments, and other items of payment (including insurance proceeds,
cash proceeds of asset sales, rental proceeds, and tax refunds).

     

    “Commitment” means,
with respect to each Lender, its Commitment, and, with respect to all Lenders,
their Commitments, in each case as such Dollar amounts are set forth beside such
Lender’s name under the applicable heading on Schedule C-1 or in
the Assignment and Acceptance pursuant to which such Lender became a Lender
under the Agreement, as such amounts may be reduced or increased from time to
time pursuant to assignments made in accordance with the provisions of Section 13.1 of the
Agreement.

     

    “Compliance
Certificate” means a certificate substantially in the form of Exhibit C-1 delivered
by the chief financial officer or other Responsible Officer of Borrower to
Agent.

     

    “Confidential
Information” has the meaning specified therefor in Section 17.8(a) of
the Agreement.

     

    “Continuing Director”
means (a) any member of the Board of Directors who was a director (or comparable
manager) of Group on the Closing Date, and (b) any individual who becomes a
member of the Board of Directors after the Closing Date if such individual was
approved, appointed or nominated for election to the Board of Directors by a
majority of the Continuing Directors, but excluding any such
individual

     

    
 

    
      
         

          *
Indicates that certain information contained herein has been omitted and filed
separately with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted
portions.

        

      

      
         

        
          

        

      

      
         

      

    

    originally
proposed for election in opposition to the Board of Directors in office at the
Closing Date in an actual or threatened election contest relating to the
election of the directors (or comparable managers) of Group and whose initial
assumption of office resulted from such contest or the settlement
thereof.

     

    “Control Agreement”
means a control agreement, in form and substance reasonably satisfactory to
Agent, executed and delivered by Borrower, Agent, and the applicable securities
intermediary (with respect to a Securities Account) or bank (with respect to a
Deposit Account).

     

    “Controlled Account
Agreement” has the meaning specified therefor in the Security
Agreement.

     

    “Daily Balance” means,
as of any date of determination and with respect to any Obligation, the amount
of such Obligation owed at the end of such day.

     

    “Default” means an
event, condition, or default that, with the giving of notice, the passage of
time, or both, would be an Event of Default.

     

    “Defaulting Lender”
means any Lender that (a) has failed to fund any amounts required to be funded
by it under the Agreement (including the failure to make available to Agent
amounts required pursuant to a Settlement), (b) notified Borrower, Agent, or any
Lender in writing that it does not intend to comply with all or any portion of
its funding obligations under the Agreement, (c) has made a public statement to
the effect that it does not intend to comply with its funding obligations under
the Agreement or under other agreements generally (as reasonably determined by
Agent) under which it has committed to extend credit, (d) failed, within 1
Business Day after written request by Agent, to confirm that it will comply with
the terms of the Agreement relating to its obligations to fund any amounts
required to be funded by it under the Agreement, (e) otherwise failed to pay
over to Agent or any other Lender any other amount required to be paid by it
under the Agreement, or (f) (i) becomes or is insolvent or has a parent company
that has become or is insolvent, or (ii) becomes the subject of a bankruptcy or
insolvency proceeding, or has had a receiver, conservator, trustee, or custodian
or appointed for it, or has taken any action in furtherance of, or indicating
its consent to, approval of or acquiescence in any such proceeding or
appointment or has a parent company that has become the subject of a bankruptcy
or insolvency proceeding, or has had a receiver, conservator, trustee, or
custodian appointed for it, or has taken any action in furtherance of, or
indicating its consent to, approval of or acquiescence in any such proceeding or
appointment.

     

    “Defaulting Lender
Rate” means (a) for the first 3 days from and after the date the relevant
payment is due, the Base Rate, and (b) thereafter, the interest rate then
applicable to Advances that are Base Rate Loans (inclusive of the Base Rate
Margin applicable thereto).

     

    “Deposit Account”
means any deposit account (as that term is defined in the Code).

     

    “Designated Account”
means the Deposit Account of Borrower identified on Schedule
D-1.

     

    “Designated Account
Bank” has the meaning specified therefor in Schedule
D-1.

     

    “Designated Engines”
means the Engines owned by Borrower that are identified on Schedule
D-2.

     

    “Dilution” means, as
of any date of determination, a percentage, based upon the experience of the
immediately prior 90 consecutive days, that is the result of dividing the Dollar
amount of (a) bad debt write-downs, discounts, advertising allowances, credits,
or other dilutive items with respect to Borrower’s Accounts and Mileage Plan
Receivables (of the type that are eligible to be included as Eligible Accounts)
during such period, by (b) Borrower’s billings with respect to
Accounts  and Mileage Plan Receivables (of the type that are eligible
to be included as Eligible Accounts) during such period.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    “Dilution Reserve”
means, as of any date of determination, an amount sufficient to reduce the
advance rate against Eligible Accounts by 1 percentage point for each percentage
point by which Dilution is in excess of 5%.

     

    “Dollars” or “$” means United
States dollars.

     

    “Eligible Accounts”
means those Receivables created by Borrower in the ordinary course of its
business, that arise out of Borrower’s rendition of services or the sale of
mileage plan awards, that comply with each of the representations and warranties
respecting Eligible Accounts made in the Loan Documents, and that are not
excluded as ineligible by virtue of one or more of the excluding criteria set
forth below; provided, however, that such
criteria may be revised from time to time by Agent in Agent’s Permitted
Discretion to address the results of any audit performed by Agent from time to
time after the Closing Date.  In determining the amount to be
included, Eligible Accounts shall be calculated net of customer deposits and
unapplied cash.  Eligible Accounts shall not include the
following:

     

    (a)           (i)
Accounts (other than Interline Receivables or Mileage Plan Receivables) that the
Account Debtor has failed to pay within 90 days of original invoice date, that
are more than 60 days past due, or that have selling terms of more than 45 days
or (ii) Interline Receivables or Mileage Plan Receivables that the Account
Debtor has failed to pay within 45 days of original invoice date, that are more
than 30 days past due, or that have selling terms of more than 45
days,

     

    (b)           Receivables
owed by an Account Debtor (or its Affiliates) where 50% or more of all
Receivables owed by that Account Debtor (or its Affiliates) are deemed
ineligible under clause (a) above,

     

    (c)           Receivables
with respect to which the Account Debtor is an Affiliate of Borrower or an
employee or agent of Borrower or any Affiliate of Borrower,

     

    (d)           Receivables
that are Excluded Accounts,

     

    (e)           Receivables
arising in a transaction involving terms or conditions by reason of which the
payment by the Account Debtor may be conditional,

     

    (f)           Receivables
that are not payable in Dollars,

     

    (g)           Receivables
with respect to which the Account Debtor either (i) does not maintain its chief
executive office in the United States, or (ii) is not organized under the laws
of the United States or any state thereof, or (iii) is the government of any
foreign country or sovereign state, or of any state, province, municipality, or
other political subdivision thereof, or of any department, agency, public
corporation, or other instrumentality thereof, unless (y) the Receivable is
supported by an irrevocable letter of credit reasonably satisfactory to Agent
(as to form, substance, and issuer or domestic confirming bank) that has been
delivered to Agent and is directly drawable by Agent, or (z) the Receivable is
covered by credit insurance in form, substance, and amount, and by an insurer,
reasonably satisfactory to Agent,

     

    (h)           Receivables
with respect to which the Account Debtor is either (i) the United States or any
department, agency, or instrumentality of the United States (exclusive, however,
of Receivables with respect to which Borrower has complied, to the reasonable
satisfaction of Agent, with the Assignment of Claims Act, 31 USC §3727), or (ii)
any state of the United States,

     

    (i)           Receivables
with respect to which the Account Debtor is a creditor of Borrower, has or has
asserted a right of setoff, or has disputed its obligation to pay all or any
portion of the Receivable, to the extent of such claim, right of setoff, or
dispute,

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (j)           (i)
Receivables owed by Bank of America, N.A. or its Affiliates to the extent of the
obligations owing by such Account Debtor in excess of 50% of all Eligible
Accounts (such percentage being subject to reduction by Agent in its Permitted
Discretion if the creditworthiness of such Account Debtor deteriorates), and
(ii) Receivables with respect to any other Account Debtor whose total
obligations owing to Borrower exceed 10% (such percentage as applied to a
particular Account Debtor being subject to reduction by Agent in its Permitted
Discretion if the creditworthiness of such Account Debtor deteriorates) of all
Eligible Accounts, to the extent of the obligations owing by such Account Debtor
in excess of such percentage; provided, however, that, in
each case, the amount of Eligible Accounts that are excluded because they exceed
the foregoing percentage shall be determined by Agent based on all of the
otherwise Eligible Accounts prior to giving effect to any eliminations based
upon the foregoing concentration limit,

     

    (k)           Receivables
with respect to which the Account Debtor is subject to an Insolvency Proceeding,
is not Solvent, has gone out of business, or as to which Borrower has received
notice of an imminent Insolvency Proceeding or a material impairment of the
financial condition of such Account Debtor,

     

    (l)           Receivables,
the collection of which, Agent, in its Permitted Discretion, believes to be
doubtful by reason of the Account Debtor’s financial condition,

     

    (m)           Receivables
that are not subject to a valid and perfected first priority Agent’s
Lien,

     

    (n)           Receivables
with respect to which (i) the miles or mileage awards giving rise to such
Receivable have not been transferred to and the Receivable billed to the Account
Debtor, or (ii) the services giving rise to such Receivable have not been
performed and billed to the Account Debtor,

     

    (o)           Receivables
with respect to which the Account Debtor is a Sanctioned Person or Sanctioned
Entity, or

     

    (p)           Receivables
that represent the right to receive progress payments or other advance billings
that are due prior to the completion of performance by Borrower of the subject
contract.

     

    “Eligible Engines”
means the Designated Engines of Borrower so long as they have been maintained in
conformity with the Maintenance Program, comply with each of the representations
and warranties respecting Eligible Engines made in the Loan Documents, and are
not excluded as ineligible by virtue of one or more of the excluding criteria
set forth below; provided, however, that such
criteria may be revised from time to time by Agent in Agent’s Permitted
Discretion to address the results of any audit or appraisal performed by Agent
from time to time after the Closing Date.  In determining the amount
to be so included, Engines shall be valued at the lower of cost or market on a
basis consistent with Borrower’s historical accounting practices.  An
Engine shall not be included in Eligible Engines if:

     

    (a)           it
is not a Designated Engine,

     

    (b)           Borrower
does not have good, valid, and marketable title thereto,

     

    (c)           unless
such Engine is attached to one of the Aircraft operated by Borrower as a result
of a Permitted Engine Installation, or is the subject of a Permitted Lease, or
is out for customary repairs that are not expected to take more than a normal
service period to complete, it is not located at one of the locations identified
on Schedule
4.28(e),

     

    (d)           unless
such Engine is out for repair for customary repairs that are not expected to
take more than a normal service period to complete, it is in the possession or
control of a bailee, warehouseman, FAA repair station, overhaul or maintenance
servicer, mechanic, or other third Person,

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (e)           it
is located on Real Property leased by Borrower or in a contract warehouse, in
each case, (i) unless it is subject to a Collateral Access Agreement executed by
the lessor or warehouseman, as the case may be (provided, however, that, (x)
during the 90-day period immediately following the Closing Date, such leased
Real Property or contract warehouse need not be subject to a Collateral Access
Agreement, and (y) during all times thereafter, either such leased Real Property
or contract warehouse must be subject to a Collateral Access Agreement, or if
such leased Real Property or contract warehouse is not subject to a Collateral
Access Agreement, the failure to have a Collateral Access Agreement will not, in
and of itself, render the Engine ineligible, but Agent may, at its election,
establish a reserve against the Borrowing Base and the Maximum Revolver Amount
in an aggregate amount equal to 3 months rent under the lease for each location
(or, if applicable, 3 months of storage fees under the warehouse agreement for
each contract warehouse) that is not subject to a Collateral Access Agreement),
and (ii) unless it is segregated or otherwise separately identifiable from
Engines of others, if any, stored on the premises,

     

    (f)           is
not subject to a valid and perfected first priority Agent’s Lien or is not free
and clear of all Liens (other than a valid and perfected first priority Agent’s
Lien and Permitted Liens that are junior in priority to Agent’s
Lien),

     

    (g)           it
is the subject of any warehouse receipt or other document of title, unless such
receipt or other document of title is delivered to Agent with all necessary
endorsements,

     

    (h)           it
is beyond economic repair or obsolete, has not been maintained in accordance
with the FARs or the Maintenance Program,

     

    (j)           it
is either (i) not of good and merchantable quality, free from defects, in good
operating condition and ready for immediate use or operation in accordance with
the Maintenance Program, or (ii) following customary repairs that are not
expected to take more than a normal service period to complete, will not be of
good and merchantable quality, free from defects, in good operating condition
and ready for immediate use or operation in accordance with the Maintenance
Program,

     

    (k)           it
does not have (i) all required FAA serviceability tags (if serviceable) or
record (or, if applicable, full back-to-birth traceability), or (ii) all
manuals, documents, and records required by the FARs or the Maintenance Program,
or

     

    (l)           unless
such Engine is attached to one of the Aircraft operated by Borrower as a result
of a Permitted Engine Installation, or is the subject of a Permitted Lease, it
has been installed on any Aircraft or any other item of Equipment or otherwise
become an accession, or is the subject of a pooling, exchange, borrowing,
leasing, consignment, or other similar arrangement.

     

     “Eligible Expendables”
means Expendables of Borrower, maintained in conformity with the Maintenance
Program, that comply with each of the representations and warranties respecting
Eligible Expendables made in the Loan Documents, and that are not excluded as
ineligible by virtue of one or more of the excluding criteria set forth below;
provided, however, that such
criteria may be revised from time to time by Agent in Agent’s Permitted
Discretion to address the results of any audit or appraisal performed by Agent
from time to time after the Closing Date.  In determining the amount
to be so included, Expendables shall be valued at the lower of cost or market on
a basis consistent with Borrower’s historical accounting
practices.  An Expendable shall not be included in Eligible
Expendables if:

     

    (a)           Borrower
does not have good, valid, and marketable title thereto,

     

    (b)           it
is not located at one of the locations identified on Schedule
4.27,

     

     (c)           it
is in the possession or control of a bailee, warehouseman, FAA repair station,
overhaul or maintenance servicer, mechanic, or other third Person,

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (d)           it
is located at a location at which less than [***] of otherwise Eligible
Expendables, Eligible Ground Service Equipment, or Eligible Replaceable Spare
Parts are located,

     

     (e)           it
is located on Real Property leased by Borrower or in a contract warehouse, in
each case, (i) unless it is subject to a Collateral Access Agreement executed by
the lessor or warehouseman, as the case may be (provided, however, that, (x)
during the 90-day period immediately following the Closing Date, such leased
Real Property or contract warehouse need not be subject to a Collateral Access
Agreement, and (y) during all times thereafter, either such leased Real Property
or contract warehouse must be subject to a Collateral Access Agreement, or if
such leased Real Property or contract warehouse is not subject to a Collateral
Access Agreement, the failure to have a Collateral Access Agreement will not, in
and of itself, render the Eligible Expendables ineligible, but Agent may, at its
election, establish a reserve against the Borrowing Base and the Maximum
Revolver Amount in an aggregate amount equal to 3 months rent under the lease
for each location (or, if applicable, 3 months of storage fees under the
warehouse agreement for each contract warehouse) that is not subject to a
Collateral Access Agreement), and (ii) unless it is segregated or otherwise
separately identifiable from Spare Parts of others, if any, stored on the
premises,

     

    (f)           it
is not subject to a valid and perfected first priority Agent’s Lien or is not
free and clear of all Liens (other than a valid and perfected first priority
Agent’s Lien and Permitted Liens that are junior in priority to Agent’s
Lien),

     

     (g)           it
is the subject of any warehouse receipt or other document of title, unless such
receipt or other document of title is delivered to Agent with all necessary
endorsements,

     

    (h)           it
is beyond economic repair, obsolete, or unserviceable, is not unused, has not
been maintained in accordance with the FARs or the Maintenance Program, or is
not in a condition for immediate use by Borrower in its Certificated Air Carrier
operations in compliance with the FARs or the Maintenance Program,

     

    (i)           it
does not have (i) all required FAA serviceability tags or records (or, if
applicable, full back-to-birth traceability), or (ii) all manuals, documents,
and records required by the FARs or the Maintenance Program,

     

    (j)           it
has been installed on any Aircraft, Engine, other Spare Part, or any other item
of Equipment or otherwise become an accession, or is the subject of a pooling,
exchange, borrowing, leasing, consignment, or other similar arrangement,
or

     

    (k)           such
Expendable does not conform in all material respects to all applicable
airworthiness directives or limits imposed by any Governmental Authority which
has regulatory authority over such Expendable or its use.

     

     “Eligible Ground Service
Equipment” means Ground Service Equipment that is not excluded as
ineligible by virtue of one or more of the excluding criteria set forth below;
provided, however, that such
criteria may be revised from time to time by Agent in Agent’s Permitted
Discretion to address the results of any audit or appraisal performed by Agent
from time to time after the Closing Date.  Ground Service Equipment
shall not be included in Eligible Ground Service Equipment if:

     

    (a)           Borrower
does not have good, valid, and marketable title thereto,

     

    (b)           it
is not located at one of the locations identified on Schedule
4.28(d),

     

    
 

    
      
         

          *
Indicates that certain information contained herein has been omitted and filed
separately with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted
portions.

        

      

      
         

        
          

        

      

      
         

      

    

    

     

    (c)           it
is in the possession or control of a bailee, warehouseman, FAA repair station,
overhaul or maintenance servicer, mechanic, or other third Person,

     

    (d)           it
is located at a location at which less than [***] of otherwise Eligible Ground
Service Equipment is located,

     

     (e)           it
is stored on Real Property leased by Borrower unless such leased Real Property
is subject to a Collateral Access Agreement executed by the lessor (provided, however, that, (i)
during the 90-day period immediately following the Closing Date, such leased
Real Property need not be subject to a Collateral Access Agreement, and (ii)
during all times thereafter, either such leased Real Property must be subject to
a Collateral Access Agreement or, if such Real Property is not subject to a
Collateral Access Agreement, the failure to have a Collateral Access Agreement
will not, in and of itself, render the Eligible Ground Service Equipment
ineligible, but Agent may, at its election, establish a reserve against the
Borrowing Base and the Maximum Revolver Amount in an aggregate amount equal to 3
months rent under the lease for each Real Property that is not subject to a
Collateral Access Agreement),

     

    (f)           it
is “subject to” (within the meaning of Section 9-311 of the Code) any
certificate of title (or comparable) statute, or

     

    (g)           it
is not subject to a valid and perfected first priority Agent’s Lien or is not
free and clear of all Liens (other than a valid and perfected first priority
Agent’s Lien and Permitted Liens that are junior in priority to Agent’s
Lien).

     

     “Eligible Replaceable Spare
Parts” means Replaceable Spare Parts of Borrower, manufactured and
refurbished, as the case may be, in conformity with the Maintenance Program,
that comply with each of the representations and warranties respecting Eligible
Replaceable Spare Parts made in the Loan Documents, and that is not excluded as
ineligible by virtue of one or more of the excluding criteria set forth below;
provided, however, that such
criteria may be revised from time to time by Agent in Agent’s Permitted
Discretion to address the results of any audit or appraisal performed by Agent
from time to time after the Closing Date.  In determining the amount
to be so included, Replaceable Spare Parts shall be valued at the lower of cost
or market on a basis consistent with Borrower’s historical accounting
practices.  A Replaceable Spare Part shall not be included in Eligible
Replaceable Spare Parts if:

     

    (a)           Borrower
does not have good, valid, and marketable title thereto,

     

    (b)           it
is not located at one of the locations identified on Schedule
4.27,

     

    (c)           it
is in the possession or control of a bailee, warehouseman, FAA repair station,
overhaul or maintenance servicer, mechanic, or other third Person,

     

    (d)           it
is located at a location at which less than [***] of otherwise Eligible
Expendables, Eligible Ground Service Equipment, or Eligible Replaceable Spare
Parts are located,

     

    (e)           it
is located on Real Property leased by Borrower or in a contract warehouse, in
each case, (i) unless it is subject to a Collateral Access Agreement executed by
the lessor or warehouseman, as the case may be (provided, however, that, (x)
during the 90-day period immediately following the Closing Date, such leased
Real Property or contract warehouse need not be subject to a Collateral Access
Agreement, and (y)

     

    
 

    
      
         

          *
Indicates that certain information contained herein has been omitted and filed
separately with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted
portions.

        

      

      
         

        
          

        

      

      
         

      

    

    during
all times thereafter, either such leased Real Property or contract warehouse
must be subject to a Collateral Access Agreement, or if such leased Real
Property or contract warehouse is not subject to a Collateral Access Agreement,
the failure to have a Collateral Access Agreement will not, in and of itself,
render the Eligible Replaceable Spare Parts ineligible, but Agent may, at its
election, establish a reserve against the Borrowing Base and the Maximum
Revolver Amount in an aggregate amount equal to 3 months rent under the lease
for each location (or, if applicable, 3 months of storage fees under the
warehouse agreement for each contract warehouse) that is not subject to a
Collateral Access Agreement), and (ii) unless it is segregated or otherwise
separately identifiable from Spare Parts of others, if any, stored on the
premises,

     

    (f)           is
not subject to a valid and perfected first priority Agent’s Lien or is not free
and clear of all Liens (other than a valid and perfected first priority Agent’s
Lien and Permitted Liens that are junior in priority to Agent’s
Lien),

     

     (g)           it
is the subject of any warehouse receipt or other document of title, unless such
receipt or other document of title is delivered to Agent with all necessary
endorsements,

     

    (h)           it
is beyond economic repair, obsolete, or unserviceable, is not either unused or
has not been rehabilitated to a fully serviceable condition, has not been
maintained in accordance with the FARs or the Maintenance Program, or is not in
a condition for immediate use by Borrower in its Certificated Air Carrier
operations in compliance with the FARs or the Maintenance Program,

     

    (i)           it
does not have (i) all required FAA serviceability tags or records (or, if
applicable, full back-to-birth traceability), or (ii) all manuals, documents,
and records required by the FARs or the Maintenance Program,

     

    (j)           it
is installed on any Aircraft, Engine, or other Spare Part (other than an
Eligible Replaceable Spare Part) or otherwise become an accession, or is the
subject of a pooling, exchange, borrowing, leasing, consignment, or other
similar arrangement, or

     

    (k)           such
Replaceable Spare Part does not conform in all material respects to all
applicable airworthiness directives or limits imposed by any Governmental
Authority which has regulatory authority over such Replaceable Spare Part or its
use.

     

    “Engine” means an
“aircraft engine” as defined in Section 40102 of the Federal Aviation
Act.

     

    “Engine and Spare Parts
Security Agreement” means an engine and spare parts security agreement
executed and delivered by Borrower in favor of Agent recorded with the FAA,
in form and substance reasonably satisfactory to
Agent.

     

     “Environmental Action”
means any written complaint, summons, citation, notice, directive, order, claim,
litigation, investigation, judicial or administrative proceeding, judgment,
letter, or other written communication from any Governmental Authority, or any
third party involving violations of Environmental Laws or releases of Hazardous
Materials (a) from any assets, properties, or businesses of Borrower or any of
its predecessors in interest, (b) from adjoining properties or businesses,
or (c) from or onto any facilities which received Hazardous Materials generated
by Borrower or any of its predecessors in interest.

     

    “Environmental Law”
means any applicable federal, state, provincial, foreign or local statute, law,
rule, regulation, ordinance, code, binding and enforceable guideline, binding
and enforceable written policy, or rule of common law now or hereafter in effect
and in each case as amended, or any judicial or administrative interpretation
thereof, including any judicial or administrative order, consent decree or
judgment, in each case, to the extent binding on Borrower, relating to the
environment, the effect of the environment on employee health, or Hazardous
Materials, in each case as amended from time to time.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    “Environmental
Liabilities” means all liabilities, monetary obligations, losses,
damages, costs and expenses (including all reasonable fees, disbursements and
expenses of counsel, experts, or consultants, and costs of investigation and
feasibility studies), fines, penalties, sanctions, and interest incurred as a
result of any claim or demand, or Remedial Action required, by any Governmental
Authority or any third party, and which relate to any Environmental
Action.

     

    “Environmental Lien”
means any Lien in favor of any Governmental Authority for Environmental
Liabilities.

     

    “Equipment” means
equipment (as that term is defined in the Code).

     

    “ERISA” means the
Employee Retirement Income Security Act of 1974, as amended, and any successor
statute thereto and the rules and regulations promulgated under such
statutes.

     

    “ERISA Affiliate”
means (a) any Person subject to ERISA whose employees are treated as employed by
the same employer as the employees of Borrower under IRC Section 414(b), (b) any
trade or business subject to ERISA whose employees are treated as employed by
the same employer as the employees of Borrower under IRC Section 414(c), (c)
solely for purposes of Section 302 of ERISA and Section 412 of the IRC, any
organization subject to ERISA that is a member of an affiliated service group of
which Borrower is a member under IRC Section 414(m), or (d) solely for purposes
of Section 302 of ERISA and Section 412 of the IRC, any Person subject to ERISA
that is a party to an arrangement with Borrower and whose employees are
aggregated with the employees of Borrower under IRC Section 414(o); or (e) any
Person that is under “common control” with Borrower within the meaning of
Section 4001(a)(14) of ERISA.

     

    “ERISA Event” means
(a) the occurrence of a Reportable Event, (b) the withdrawal of Borrower or any
of its ERISA Affiliates from a Benefit Plan during a plan year in which it was a
“substantial employer” (as defined in Section 4001(a)(2) of ERISA), (c) the
providing of notice of intent to terminate a Benefit Plan in a distress
termination (as described in Section 4041(c) of ERISA), (d) the institution by
the PBGC of proceedings to terminate a Benefit Plan or the appointment of a
trustee by the PBGC to administer any Benefit Plan, (e) any event or condition
that provides a basis under Section 4042(a)(1), (2), or (3) of ERISA for the
termination of, or the appointment of a trustee to administer, any Benefit Plan,
(f) the providing of any security to any Benefit Plan under the IRC by Borrower
or any of its ERISA Affiliates, (g) failure to meet the minimum funding
standards under the Pension Funding Rules with respect to any Benefit Plan or
the application for a waiver or modification of the minimum funding standards
under the Pension Funding Rules or for the extension of any amortization period
under the IRC, (h) the requirements of Section 4043(b) of ERISA apply with
respect to a contributing sponsor (as defined in Section 4001(a)(13) of ERISA)
of any Benefit Plan, and an event described in paragraph (9), (10), (11), (12)
or (13) of Section 4043(c) of ERISA is reasonably expected to occur with respect
to such Benefit Plan within the following 30 days, (i) the assertion or threat
of a material claim, action, suit, proceeding, hearing, audit or investigation
(other than routine claims for benefits) against any Benefit Plan or the assets
thereof or against Borrower or any of its ERISA Affiliates in connection with
any Benefit Plan that could reasonably be expected to result in a liability in
excess of [***], (j) the receipt by Borrower or any of its ERISA Affiliates from
the United States Internal Revenue Service of notice of the failure of any
Benefit Plan (or any other employee benefit plan intended to be qualified under
Section 401(a) of the IRC) to qualify under Section 401(a) of the IRC, or the
failure of any trust forming part of any Benefit Plan or other employee benefit
plan to qualify for exemption from taxation under Section 501(a) of the IRC, (k)
the imposition of a Lien under the IRC or ERISA on the assets of Borrower or any
of its ERISA Affiliates, (l) the establishment or amendment by Borrower or any
of its ERISA Affiliates of any “employee benefit plan” within the meaning of
Section 3(3) of ERISA, including a Benefit Plan or a Benefit
Arrangement,

     

    
 

    
      
         

          *
Indicates that certain information contained herein has been omitted and filed
separately with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted
portions.

        

      

      
         

        
          

        

      

      
         

      

    

    or the
existence of any facts with respect to any employee benefit plan or Benefit
Arrangement, individually or in the aggregate, that would reasonably be expected
to result in a Material Adverse Change.

     

     “Event of Default” has
the meaning specified therefor in Section 8 of the
Agreement.

     

    “Excess Availability”
means, as of any date of determination, the amount equal to Availability minus the aggregate amount,
if any, of all trade payables of Borrower aged in excess of historical levels
with respect thereto and all book overdrafts of Borrower in excess of historical
practices with respect thereto, in each case as determined by Agent in its
Permitted Discretion.

     

    “Exchange Act” means
the Securities Exchange Act of 1934, as in effect from time to
time.

     

    “Excluded Accounts”
means Accounts of Borrower that meet all of the following
criteria:  (i) they are due from a credit card or debit card issuer,
(ii) they arise from the sale of goods or rendition of services by Borrower
directly to a consumer customer of Borrower for such customer’s personal,
family, or household purposes, (iii) they arise in the ordinary course of
Borrower’s business, and (iv) they arise from transactions involving the use of
credit cards or debit cards by Borrower’s consumer customers.

     

    “Excluded Taxes” means
(i) any tax imposed on the net income or net profits of any Lender or any
Participant (including any branch profits taxes), in each case imposed by the
jurisdiction (or by any political subdivision or taxing authority thereof) in
which such Lender or such Participant is organized or the jurisdiction (or by
any political subdivision or taxing authority thereof) in which such Lender’s or
such Participant’s principal office is located in each case as a result of a
present or former connection between such Lender or such Participant and the
jurisdiction or taxing authority imposing the tax (other than any such
connection arising solely from such Lender or such Participant having executed,
delivered or performed its obligations or received payment under, or enforced
its rights or remedies under the Agreement or any other Loan Document); (ii)
taxes resulting from a Lender’s or a Participant’s failure to comply with the
requirements of Section 16(c) or
(d) of the
Agreement, and (iii) any withholding taxes that would be imposed on amounts
payable to a Foreign Lender based upon the applicable withholding rate in effect
at the time such Foreign Lender becomes a party to the Agreement (or designates
a new lending office) or that result from a Pending Change in Tax Law that
existed as of the date on which such Foreign Lender became a party to the
Agreement (or designated a new lending office), except that Taxes
shall include (A) any amount that such Foreign Lender (or its assignor, if any)
was previously entitled to receive pursuant to Section 16(a) of the
Agreement, if any, with respect to such withholding tax at the time such Foreign
Lender becomes a party to the Agreement (or designates a new lending office)
provided however, that a
Replacement Lender who becomes a party to the Agreement pursuant to Section 14.2
shall not be entitled to such amounts, and (B) additional United States federal
withholding taxes that may be imposed after the time such Foreign Lender becomes
a party to the Agreement (or designates a new lending office), as a result of a
Change in Tax Law (other than a Pending Change in Tax Law that existed as of the
date such Foreign Lender became a party to the Agreement (or designated a new
lending office).

     

    “Expendables” means
those Spare Parts of Borrower for which no FAA or original equipment
manufacturer authorized refurbishment procedure exists or for which the cost of
repair or refurbishment would normally exceed that of replacement.

     

     “FAA” shall mean the
Federal Aviation Administration of the United States Department of
Transportation and any subdivision or office thereof, and any successor or
replacement administrator, agency or other entity having the same or similar
authority and responsibilities.

     

     “FARs” means the rules
and regulations of the FAA, including as set forth in Title 14 of the Code of
Federal Regulations.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    “Federal Aviation Act”
shall mean Title 49 of the United States Code, as amended from time to time,
together with all rules, regulations, procedures, orders, handbooks, guidelines
and interpretations thereunder or related thereto.

     

    “Fee Letter” means
that certain fee letter, dated as of even date with the Agreement, among
Borrower and Agent, in form and substance reasonably satisfactory to
Agent.

     

    “Federal Funds Rate”
means, for any period, a fluctuating interest rate per annum equal to, for each
day during such period, the weighted average of the rates on overnight Federal
funds transactions with members of the Federal Reserve System arranged by
Federal funds brokers, as published on the next succeeding Business Day by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day which is a Business Day, the average of the quotations for such day on such
transactions received by Agent from three Federal funds brokers of recognized
standing selected by it.

     

    “Foreign Lender” means
any Lender or Participant that is not a United States person within the meaning
of IRC section 7701(a)(30).

     

    “Foreign Pension Plan”
means any plan, fund (including any superannuation fund) or other similar
program established or maintained outside the United States by Borrower or any
of its ERISA Affiliates primarily for the benefit of employees of such Person
residing outside the United States, which plan, fund or other similar program
provides, or results in, retirement income, a deferral of income in
contemplation of retirement or payments to be made upon termination of
employment, and which plan is not subject to ERISA or the IRC.

     

    “Funding Date” means
the date on which a Borrowing occurs.

     

    “Funding Losses” has
the meaning specified therefor in Section 2.12(b)(ii)
of the Agreement.

     

    “GAAP” means generally
accepted accounting principles as in effect from time to time in the United
States, consistently applied; provided, however, that all
calculations relative to liabilities shall be made without giving effect to
Statement of Financial Accounting Standards No. 159.

     

    “Governing Documents”
means, with respect to any Person, the certificate or articles of incorporation,
by-laws, or other organizational documents of such Person.

     

    “Governmental
Authority” means any federal, state, local, or other governmental or
administrative body, instrumentality, board, department, or agency or any court,
tribunal, administrative hearing body, arbitration panel, commission, or other
similar dispute-resolving panel or body.

     

    “Ground Service
Equipment” means Equipment of Borrower consisting of vehicles, tractors,
de-icing Equipment, tug Equipment, air conditioning Equipment, man-lift
Equipment, floor sweepers, loading Equipment, ramp Equipment, communications
Equipment, and ground service Equipment (including baggage handling equipment,
catering equipment, and maintenance equipment), and all support Equipment
associated with any of the foregoing.

     

    “Group” means Alaska
Air Group, Inc., a Delaware corporation.

     

    “Hazardous Materials”
means (a) substances that are defined or listed in, or otherwise classified
pursuant to, any applicable laws or regulations as “hazardous substances,”
“hazardous materials,” “hazardous wastes,” “toxic substances,” or any other
formulation intended to define, list, or classify substances by reason of
deleterious properties such as ignitability, corrosivity, reactivity,
carcinogenicity, reproductive toxicity, or “EP toxicity”, (b) oil, petroleum, or
petroleum derived substances, natural gas, natural gas liquids, synthetic gas,
drilling fluids, produced waters, and other wastes associated with the
exploration, development,

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    or
production of crude oil, natural gas, or geothermal resources, (c) any flammable
substances or explosives or any radioactive materials, and (d) asbestos in any
form or electrical equipment that contains any oil or dielectric fluid
containing levels of polychlorinated biphenyls in excess of 50 parts per
million.

     

    “Hedge Agreement”
means a “swap agreement” as that term is defined in Section 101(53B)(A) of the
Bankruptcy Code.

     

    “Holdout Lender” has
the meaning specified therefor in Section 14.2(a) of
the Agreement.

     

    “Indebtedness” as to
any Person means (a) all obligations of such Person for borrowed money, (b) all
obligations of such Person evidenced by bonds, debentures, notes, or other
similar instruments and all reimbursement or other obligations in respect of
letters of credit, bankers acceptances, or other financial products, (c) all
obligations of such Person as a lessee under Capital Leases, (d) all obligations
or liabilities of others secured by a Lien on any asset of such Person,
irrespective of whether such obligation or liability is assumed, (e) all
obligations of such Person to pay the deferred purchase price of assets (other
than trade payables incurred in the ordinary course of business and repayable in
accordance with customary trade practices), (f) all obligations of such Person
owing under Hedge Agreements (which amount shall be calculated based on the
amount that would be payable by such Person if the Hedge Agreement were
terminated on the date of determination), (g) any Prohibited Preferred Stock of
such Person, and (h) any obligation of such Person guaranteeing or intended to
guarantee (whether directly or indirectly guaranteed, endorsed, co-made,
discounted, or sold with recourse) any obligation of any other Person that
constitutes Indebtedness under any of clauses (a) through (g)
above.  For purposes of this definition, (i) the amount of any
Indebtedness represented by a guaranty or other similar instrument shall be the
lesser of the principal amount of the obligations guaranteed and still
outstanding and the maximum amount for which the guaranteeing Person may be
liable pursuant to the terms of the instrument embodying such Indebtedness, and
(ii) the amount of any Indebtedness described in clause (d) above shall be the
lower of the amount of the obligation and the fair market value of the assets of
such Person securing such obligation.

     

    “Indemnified
Liabilities” has the meaning specified therefor in Section 10.3 of the
Agreement.

     

    “Indemnified Person”
has the meaning specified therefor in Section 10.3 of the
Agreement.

     

    “Indemnified Taxes”
means, any Taxes other than Excluded Taxes.

     

    “Insolvency
Proceeding” means any proceeding commenced by or against any Person under
any provision of the Bankruptcy Code or under any other state or federal
bankruptcy or insolvency law, assignments for the benefit of creditors, formal
or informal moratoria, compositions, extensions generally with creditors, or
proceedings seeking reorganization, arrangement, or other similar
relief.

     

    “Interest Period”
means, with respect to each LIBOR Rate Loan, a period commencing on the date of
the making of such LIBOR Rate Loan (or the continuation of a LIBOR Rate Loan or
the conversion of a Base Rate Loan to a LIBOR Rate Loan) and ending 1, 2, or 3
months thereafter; provided, however, that (a)
interest shall accrue at the applicable rate based upon the LIBOR Rate from and
including the first day of each Interest Period to, but excluding, the day on
which any Interest Period expires, (b) any Interest Period that would end on a
day that is not a Business Day shall be extended to the next succeeding Business
Day unless such Business Day falls in another calendar month, in which case such
Interest Period shall end on the next preceding Business Day, (c) with respect
to an Interest Period that begins on the last Business Day of a calendar month
(or on a day for which there is no numerically corresponding day in the calendar
month at the end of such Interest Period), the Interest Period shall end on the
last Business Day of the calendar month that is 1, 2, or 3 months after the date
on which the Interest Period began, as applicable, and (d) Borrower may not
elect an Interest Period which will end after the Maturity Date.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    "Interline
Receivables" means any and all of Borrower’s rights to payment of a
monetary obligation, whether or not earned by performance, owing from airlines
(including any such rights to payment that are paid or payable by or through a
clearinghouse), including rights to payment of a monetary obligation relative to
(i) passenger flight tickets that were or will be issued by such airlines, (ii)
baggage handling services, (iii) freight transportation, (iv) transportation
related goods and services, such as maintenance, ground handling, catering, and
rentals, and (v) Universal Air Travel Plan transactions.

     

    “Inventory” means
inventory (as that term is defined in the Code).

     

    “Investment” means,
with respect to any Person, any investment by such Person in any other Person
(including Affiliates) in the form of loans, guarantees, advances, capital
contributions (excluding (a) commission, travel, and similar advances to
officers and employees of such Person made in the ordinary course of business,
and (b) bona fide
Accounts arising in the ordinary course of business), or acquisitions of
Indebtedness, Stock, or all or substantially all of the assets of such other
Person (or of any division or business line of such other Person), and any other
items that are or would be classified as investments on a balance sheet prepared
in accordance with GAAP.

     

    “IRC” means the
Internal Revenue Code of 1986, as in effect from time to time.

     

    “Lender” has the
meaning set forth in the preamble to the Agreement, shall include the Swing
Lender, and shall also include any other Person made a party to the Agreement
pursuant to the provisions of Section 13.1 of the
Agreement and “Lenders” means each
of the Lenders or any two or more of them.

     

    “Lender Group” means
each of the Lenders and Agent, or any one or more of them.

     

    “Lender Group
Expenses” means all [***].

     

    “Lender Group
Representatives” has the meaning specified therefor in Section 17.8 of the
Agreement.

     

    “Lender-Related
Person” means, with respect to any Lender, such Lender, together with
such Lender’s Affiliates, officers, directors, employees, attorneys, and
agents.

     

    “LIBOR Deadline” has
the meaning specified therefor in Section 2.12(b)(i) of
the Agreement.

     

    “LIBOR Notice” means a
written notice in the form of Exhibit
L-1.

     

    “LIBOR Option” has the
meaning specified therefor in Section 2.12(a) of
the Agreement.

     

    “LIBOR Rate” means the
rate per annum rate appearing on Bloomberg L.P.’s (the "Service") Page
BBAM1/(Official BBA USD Dollar Libor Fixings) (or on any successor or substitute
page of such Service, or any successor to or substitute for such Service) 2
Business Days prior to the commencement of the requested Interest Period, for a
term and in an amount comparable to the Interest Period and the amount of the
LIBOR Rate Loan requested (whether as an initial LIBOR Rate Loan or as a
continuation of a LIBOR Rate Loan or as a conversion of a Base Rate Loan to a
LIBOR Rate Loan) by Borrower in accordance with the Agreement, which
determination shall be conclusive in the absence of manifest error.

     

    “LIBOR Rate Loan”
means each portion of an Advance that bears interest at a rate determined by
reference to the LIBOR Rate.

     

    
      
         

          *
Indicates that certain information contained herein has been omitted and filed
separately with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted
portions.

        

      

      
         

        
          

        

      

      
         

      

    

            “LIBOR Rate Margin”
means [***].

     

    “Lien” means any
mortgage, deed of trust, pledge, hypothecation, assignment, charge, deposit
arrangement, encumbrance, easement, lien (statutory or other), security
interest, or other security arrangement and any other preference, priority, or
preferential arrangement of any kind or nature whatsoever, including any
conditional sale contract or other title retention agreement, the interest of a
lessor under a Capital Lease and any synthetic or other financing lease having
substantially the same economic effect as any of the foregoing.

     

    “Liquidity” means, as
of any date of determination, the sum of, without duplication, (a) the amount on
deposit with Deposit Accounts as of such date, plus (b) the amount of
unrestricted cash and Cash Equivalents as of such date, plus (c) the amount of
unrestricted Marketable Securities as of such date, in each case excluding any
such amounts subject to a Lien permitted pursuant to clause (q) of the
definition of Permitted Liens.

     

    “Loan Account” has the
meaning specified therefor in Section 2.9 of the
Agreement.

     

    “Loan Documents” means
the Agreement, any Borrowing Base Certificate, the Controlled Account
Agreements, the Control Agreements, Engine and Spare Parts Security Agreement,
the Fee Letter, the Security Agreement, any note or notes executed by Borrower
in connection with the Agreement and payable to any member of the Lender Group,
and any other agreement entered into, now or in the future, by Borrower and any
member of the Lender Group in connection with the Agreement.

     

    “Maintenance Program”
means an FAA approved maintenance program that covers Borrower’s Engines and
Spare Parts (which may be the FAA approved maintenance program of a lessee
during the term of a lease of a Designated Engine permitted by the
Agreement).

     
 

    “Margin Stock” as
defined in Regulation U of the Board of Governors of the Federal Reserve System
as in effect from time to time.

     

    “Marketable
Securities” means “available for sale securities” as determined in
accordance with GAAP.

     

    “Material Adverse
Change” means (a) a material adverse change in the
business,  operations, assets, liabilities or financial condition of
Borrower, (b) a material impairment of Borrower’s ability to perform its
obligations under the Loan Documents to which it is a party or of the Lender
Group’s ability to enforce the Obligations or realize upon the Collateral, or
(c) a material impairment of the enforceability or priority of Agent’s Liens
with respect to the Collateral as a result of an action or failure to act on the
part of Borrower.

     

    “Material Contract”
means, with respect to any Person, each contract or agreement to which such
Person is a party and that such Person is required to file with the SEC under
Item 1.01 of Form 8-K of the SEC.

     

    “Maturity Date” has
the meaning specified therefor in Section 3.3 of the
Agreement.

     

    “Maximum Revolver
Amount” means $100,000,000, decreased by the amount of reductions in the
Commitments made in accordance with Section 2.4(c) of the
Agreement.

     

            "Mileage Plan
Receivable" means any and all rights of Borrower to payment of a monetary
obligation, whether or not earned by performance, for the purchase of miles
(currently referred to as "Mileage Plan Miles") or credits.

     

    
      
         

          *
Indicates that certain information contained herein has been omitted and filed
separately with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted
portions.

        

      

      
         

        
          

        

      

      
         

      

    

    “Multiemployer Plan”
means a “multiemployer plan” (as defined in Section 3(37) or 4001(a)(3) of
ERISA) to which Borrower or any of its ERISA Affiliates has contributed, or was
obligated to contribute, or with respect to which any of them had any liability
at any time.

     

    “Net Liquidation
Percentage” means the percentage of the book value of Borrower’s
Inventory that is estimated to be recoverable in an orderly liquidation of such
Inventory net of all associated costs and expenses of such liquidation, such
percentage to be as determined from time to time by an appraisal company
selected by Agent.

     

    “Obligations” means
all loans (including the Advances), debts, principal, interest (including any
interest that accrues after the commencement of an Insolvency Proceeding,
regardless of whether allowed or allowable in whole or in part as a claim in any
such Insolvency Proceeding), premiums, liabilities (including all amounts
charged to the Loan Account pursuant to the Agreement), obligations (including
indemnification obligations), fees (including the fees provided for in the Fee
Letter), Lender Group Expenses (including any fees or expenses that accrue after
the commencement of an Insolvency Proceeding, regardless of whether allowed or
allowable in whole or in part as a claim in any such Insolvency Proceeding),
guaranties, covenants, and duties of any kind and description owing by Borrower
pursuant to or evidenced by the Agreement or any of the other Loan Documents and
irrespective of whether for the payment of money, whether direct or indirect,
absolute or contingent, due or to become due, now existing or hereafter arising,
and including all interest not paid when due and all other expenses or other
amounts that Borrower is required to pay or reimburse by the Loan Documents or
by law or otherwise in connection with the Loan Documents.  Any
reference in the Agreement or in the Loan Documents to the Obligations shall
include all or any portion thereof and any extensions, modifications, renewals,
or alterations thereof, both prior and subsequent to any Insolvency
Proceeding.

     

    “OFAC” means The
Office of Foreign Assets Control of the U.S. Department of the
Treasury.

     

    “Originating Lender”
has the meaning specified therefor in Section 13.1(e) of
the Agreement.

     

    “Overadvance” has the
meaning specified therefor in Section 2.5 of the
Agreement.

     

    “Participant” has the
meaning specified therefor in Section 13.1(e) of
the Agreement.

     

    “Patriot Act” has the
meaning specified therefor in Section 4.18 of the
Agreement.

     

    “Payoff Date” means
the first date on which all of the Obligations are paid in full and the
Commitments of the Lenders are terminated.

     

    “PBGC” means the
Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title
IV of ERISA or any entity succeeding to any or all of its functions under
ERISA.

     

     “PDP Facility” means a
loan facility provided to finance the making of advance purchase deposits to The
Boeing Company which is secured by Borrower’s contract rights in and to the
Aircraft to be purchased from The Boeing Company.

     

    “PDP Facility
Documents” means the loan and security documents related to the PDP
Facility or executed in connection therewith.

     

    “Pending Change in Tax
Law” means any Change in Tax Law (a) that is not in effect at the time a
Foreign Lender becomes a party to the Agreement (or designates a new lending
office) and (b) as to which a public announcement concerning the enactment of
such Change in Tax Law was made at least 5 Business
Days prior to the date on which such Foreign Lender becomes a party to the
Agreement (or designates a new lending office).

       

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    “Pension Act” means
the Pension Protection Act of 2006, as amended from time to time, and the rules
and regulations promulgated thereunder from time to time in effect.

     

    “Pension Funding
Rules” means the rules of the IRC and ERISA regarding minimum required
contributions (including any installment payment thereof) to a Benefit Plan,
including those set forth in Section 412 of the IRC and Section 302 of ERISA in
effect before the Pension Act with respect to plan years ending before the
effective date of the Pension Act as it applies to such Benefit Plan, and with
respect to plan years ending after the effective date of the Pension Act to the
Benefit Plan, including those set forth in Sections 412 and 430 of the Code and
Sections 302 and 303 of ERISA.

     

    “Permitted
Acquisition” means any Acquisition so long
as:

     

    (a)           no
Default or Event of Default shall have occurred and be continuing or would
result from the consummation of the proposed Acquisition and the proposed
Acquisition is consensual,

     

    (b)           if
prepared, Borrower has provided Agent with its due diligence package relative to
the proposed Acquisition,

     

    (c)           Borrower
shall have Availability plus Liquidity in an amount equal to or greater than
$600,000,000 immediately after giving effect to the consummation of the proposed
Acquisition,

     

    (d)           Borrower
has endeavored to provide Agent with written notice of the proposed Acquisition
at least 15 Business Days prior to the anticipated closing date of the proposed
Acquisition and, not later than 5 Business Days prior to the anticipated closing
date of the proposed Acquisition, copies of the acquisition agreement and other
material documents relative to the proposed Acquisition, but a non-willful
failure of Borrower to so notify Agent shall not prevent the subject transaction
from being a Permitted Acquisition, and

     

    (e)           the
assets being acquired (other than a de minimis amount of assets
in relation to Borrower’s total assets), or the Person whose Stock is being
acquired, are useful in or engaged in, as applicable, the business of Borrower
or a business reasonably related thereto.

     

    “Permitted Discretion”
means a determination made in the exercise of reasonable (from the perspective
of a secured lender) business judgment.

     

    “Permitted
Dispositions” means:

     

    (a)           sales,
abandonment, or other dispositions of Equipment (other than the Designated
Engines and other than any Eligible Ground Service Equipment or Eligible Spare
Parts that, in the case of Eligible Ground Service Equipment or Eligible Spare
Parts, was included in the Borrowing Base in the most recent Borrowing Base
Certificate) that is substantially worn, damaged, no longer useful to Borrower,
or obsolete, in each case, in the ordinary course of Borrower’s
business,

     

    (b)           sales
of Inventory to buyers in the ordinary course of business,

     

    (c)           so
long as in the ordinary course of Borrower’s business, the lending of Spare
Parts to, or exchange of Spare Parts with, other airlines,

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (d)           so
long as in the ordinary course of Borrower’s business, the sale, lease, or other
disposition of Engines that are not Designated Engines that Borrower determines
to be no longer useful to the conduct of Borrower’s business (including the
return of leased Engines),

     

    (e)           so
long as in the ordinary course of Borrower’s business, the sale, lease, or other
disposition of Aircraft owned or leased by Borrower that Borrower determines to
be no longer useful to the conduct of Borrower’s business (including the return
of leased Aircraft),

     

    (f)           the
making of Permitted Spare Parts Installations (exclusive of any installation of
Spare Parts of Borrower into other Spare Parts of Borrower, the installation of
Spare Parts of Borrower into the Designated Engines, or the installation of
Spare Parts of Borrower into any Ground Service Equipment of
Borrower),

     

    (g)           the
making of Permitted Exchanges,

     

    (h)           the
making of Permitted Leases,

     

    (i)           the
use or transfer of money or Cash Equivalents in a manner that is not prohibited
by the terms of the Agreement or the other Loan Documents,

     

    (j)           the
licensing, on a non-exclusive basis, of patents, trademarks, copyrights, and
other intellectual property rights in the ordinary course of Borrower’s
business,

     

    (k)           the
granting of Permitted Liens,

     

    (l)           the
sale or discount, in each case without recourse, of Accounts arising in the
ordinary course of business, but only in connection with the compromise or
collection thereof,

     

    (m)           any
involuntary loss, damage or destruction of property,

     

    (n)           any
involuntary condemnation, seizure or taking, by exercise of the power of eminent
domain or otherwise, or confiscation or requisition of use of
property,

     

    (o)           the
leasing or subleasing of assets of Borrower (other than the Designated Engines
and other than any Eligible Ground Service Equipment or Eligible Spare Parts
that, in the case of Eligible Ground Service Equipment or Eligible Spare Parts,
was included in the Borrowing Base in the most recent Borrowing Base
Certificate) in the ordinary course of business,

     

    (p)           the
sale or issuance of Stock (other than Prohibited Preferred Stock) of
Borrower,

     

    (q)           the
lapse of registered patents, trademarks and other intellectual property of
Borrower to the extent not economically desirable in the conduct of its
business,

     

    (r)           the
making of a Restricted Junior Payment that is expressly permitted to be made
pursuant to the Agreement,

     

    (s)           the
making of a Permitted Investment,

     

    (t)           so
long as no Event of Default has occurred and is continuing and so long as no
Overadvance exists either immediately before or immediately after giving effect
thereto, the sale of miles in exchange for a contemporaneous payment of the
purchase price therefor,

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     (u)           so
long as, at the time of a particular disposition, the Threshold Usage Amount
does not exist, dispositions of assets (other than Accounts, Interline
Receivables, Mileage Plan Receivables, and miles) not otherwise permitted in
clauses (a)
through (s)
above, so long as such dispositions are made at fair market value and in the
ordinary course of Borrower’s business, and

     

     (v)           if,
at the time of a particular disposition, the Threshold Usage Amount does exist,
dispositions of assets (other than Accounts, Interline Receivables, Mileage Plan
Receivables, and miles) not otherwise permitted in clauses (a) through
(s) above, so
long as made at fair market value and so long as the aggregate fair market value
of all assets (other than real property and related improvements, which shall
not be subject to, nor be counted towards, the Dollar limitation) disposed of in
all such dispositions during any fiscal year (including the proposed
disposition) would not exceed [***]; provided, however, that if any
such disposition involves a Designated Engine, Eligible Expendables, Eligible
Ground Service Equipment, or Eligible Replaceable Spare Parts, then, as a
condition to consummating such disposition, Borrower must prepay the Obligations
by an amount sufficient to create borrowing availability of not less than the
greater of: (i) the amount of borrowing availability that had been created
immediately before giving effect to the proposed disposition by the inclusion of
the Designated Engine, Eligible Expendables, Eligible Ground Service Equipment,
or Eligible Replaceable Spare Parts in the Borrowing Base, or (ii) the amount of
borrowing availability that existed immediately before giving effect to the
proposed disposition.

     

    “Permitted Engine
Installations” means, so long as in the ordinary course of Borrower’s
business and so long as no Lien of any Person (other than Agent) would attach to
such Engines as a result thereof, the installation of (but not the transfer of
ownership of) the Designated Engines to Aircraft operated by
Borrower.

     

     “Permitted Exchange”
means an exchange (an “Exchange”) of a
Designated Engine (the “Exchanged Engine”)
for an Engine (the “Replaced Engine”)
that is attached to an Aircraft leased by Borrower, which lease will terminate
in less than 5 Business Days, which Exchange Borrower is proposing to make
because the Replaced Engine does not meet the return requirements specified in
the subject lease, if and so long as (a) at the time of the consummation of such
Exchange, no Event of Default has occurred and is continuing, (b) no Overadvance
exists either immediately before or immediately after giving effect to the
Exchange (calculated without regard to value, if any, in the Borrowing Base on
account of the Replacement Engine), (c) prior to the consummation of such
Exchange, Borrower executes and delivers to Agent, in recordable form, any
amendment or supplement to the Engine and Spare Parts Security Agreement that
Agent reasonably requests in order to grant Agent a first priority security
interest in the Replacement Engine, (d) prior to the consummation of such
Exchange, Borrower has given Agent not less than 5 Business Days prior written
notice concerning the prospective Exchange, including a reasonable amount of
detail regarding the value and condition of the Replacement Engine, and (e) if,
at the time of the consummation of the Exchange, the Revolver Usage is [***], or
greater, Borrower repays the Obligations by an amount sufficient to create
borrowing availability of not less than the greater of: (i) the amount of
borrowing availability that had been created immediately before giving effect to
the proposed Exchange by the inclusion of the Exchanged Engine in the Borrowing
Base, or (ii) the amount of borrowing availability that existed immediately
before giving effect to the proposed Exchange.

     

     “Permitted
Indebtedness” means:

     

    (a)           Indebtedness
evidenced by the Agreement and the other Loan Documents,

     

    (b)           Indebtedness
set forth on Schedule
4.19 and any Refinancing Indebtedness in respect of such
Indebtedness,

     

    
 

    
      
         

          *
Indicates that certain information contained herein has been omitted and filed
separately with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted
portions.

        

      

      
         

        
          

        

      

      
         

      

    

    (c)           endorsement
of instruments or other payment items for deposit,

     

    (d)           Indebtedness
consisting of (i) unsecured guarantees incurred in the ordinary course of
business with respect to surety and appeal bonds, performance bonds, bid bonds,
completion guarantee and similar obligations; and (ii) unsecured guarantees
arising with respect to customary indemnification obligations to purchasers in
connection with Permitted Dispositions,

     

    (e)           Indebtedness
incurred in the ordinary course of business under performance, surety,
statutory, and appeal bonds,

     

    (f)           Indebtedness
incurred in respect of credit cards, credit card processing services, debit
cards, stored value cards, purchase cards (including so-called “procurement
cards” or “P-cards”), or Cash Management Services, in each case, incurred in the
ordinary course of business,

     

    (g)           Indebtedness
incurred under the Bank Facility in an aggregate outstanding principal amount
not to exceed $100,000,000 and any Refinancing Indebtedness in respect of any
such Indebtedness,

    

    (h)           Indebtedness
incurred under the PDP Facility Documents in an aggregate outstanding amount not
to exceed $250,000,000 and any Refinancing Indebtedness in respect of any such
Indebtedness,

     

    (i)           Indebtedness
owed to any Person providing property, casualty, liability, or other insurance
to Borrower, so long as the amount of such Indebtedness is not in excess of the
amount of the unpaid cost of, and shall be incurred only to defer the cost of,
such insurance for the year in which such Indebtedness is incurred and such
Indebtedness is outstanding only during such year,

     

    (j)           the
incurrence by Borrower of Indebtedness under Hedge Agreements that are incurred
for the bona fide purpose of hedging the interest rate, foreign currency or
commodity risk associated with Borrower’s operations and not for speculative
purposes,

     

    (k)           unsecured
Indebtedness incurred in respect of netting services, overdraft protection, and
other like services, in each case, incurred in the ordinary course of
business,

     

    (l)           unsecured
Indebtedness of Borrower owing to former employees, officers, or directors (or
any spouses, ex-spouses, or estates of any of the foregoing) incurred in
connection with the repurchase by Borrower of the Stock of Group that has been
issued to such Persons, so long as (i) no Event of Default has occurred and
is continuing or would result from the incurrence of such Indebtedness, (ii) the
aggregate amount of all such Indebtedness outstanding at any one time does not
exceed $1,000,000, and (iii) such Indebtedness is subordinated to the
Obligations on terms and conditions reasonably acceptable to Agent,

     

    (m)           unsecured
Indebtedness owing to sellers of assets or Stock to Borrower that is incurred by
Borrower in connection with the consummation of one or more Permitted
Acquisitions,

     

    (n)           Indebtedness
composing Permitted Investments,

     

    (o)           Indebtedness
incurred to finance Borrower’s purchase or ownership of Aircraft, Engines (other
than the Designated Engines), flight simulators, other flight Equipment (other
than Expendables, Spare Parts, and Ground Service Equipment), or real property
so long as such Indebtedness is underwritten based upon the value of the
Equipment or real property that is security for such Indebtedness,

     

    (p)           unsecured
Indebtedness of Borrower evidenced by bonds or debentures, so long as
(i) no Event of Default has occurred and is continuing or would result from
the incurrence of such Indebtedness, and (ii) the aggregate amount of all such
Indebtedness outstanding at any one time does not exceed
$200,000,000,

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (q)           Indebtedness
in respect of letters of credit obtained in the ordinary course of business,
and

     

    (r)           Indebtedness
incurred in the ordinary course of Borrower’s business.

     

     “Permitted
Investments” means:

     

    (a)           Investments
in cash and Cash Equivalents,

     

    (b)           Investments
in negotiable instruments deposited or to be deposited for collection in the
ordinary course of business,

     

    (c)           advances
made in connection with purchases of goods or services in the ordinary course of
business,

     

    (d)           Investments
received in settlement of amounts due to Borrower effected in the ordinary
course of business or owing to Borrower as a result of Insolvency Proceedings
involving an Account Debtor or upon the foreclosure or enforcement of any Lien
in favor of Borrower,

     

    (e)           Investments
owned by Borrower on the Closing Date and set forth on Schedule
P-1,

     

    (f)           guarantees
permitted under the definition of Permitted Indebtedness,

     

    (g)           so
long as no Event of Default has occurred and is continuing or would result
therefrom, so long as Borrower has Liquidity of $600,000,000, or greater, before
and immediately after giving effect thereto, and so long as made in the ordinary
course of Borrower’s business, Investments in Affiliates of
Borrower,

     

    (h)           Stock
or other securities acquired in connection with the satisfaction or enforcement
of Indebtedness or claims due or owing to Borrower (in bankruptcy of customers
or suppliers or otherwise outside the ordinary course of business) or as
security for any such Indebtedness or claims,

     

    (i)           deposits
of cash made in the ordinary course of business to secure performance of
operating leases,

     

    (j)           non-cash
loans to employees, officers, and directors of Borrower for the purpose of
purchasing Stock in Group so long as the proceeds of such loans are used in
their entirety to purchase such stock in Group,

     

    (k)           Investments
resulting from entering into any agreement relative to financial products or
services (including Hedge Agreements) that is permitted under the
Agreement,

     

    (l)           Permitted
Acquisitions,

     

    (m)           Investments
resulting from loans made by Borrower to Group, the proceeds of which shall be
used by Group solely to pay (i) (y) franchise taxes (other than income taxes)
and other fees, taxes and expenses required to maintain its corporate existence
or arising as a result of its ownership of Borrower, and (z) federal, state and
local income taxes, to the extent such income taxes are attributable to the
income of Borrower; provided that the amount of such loans in any fiscal year
does not exceed the amount that Borrower would be required to pay in respect of
federal, state and local taxes for such fiscal year were Borrower to pay such
taxes separately from Group, and (ii) ordinary course operating and corporate
overhead expenses and administrative and similar expenses related to its
existence and ownership of Borrower, and

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (n)           so
long as no Event of Default has occurred and is continuing or would result
therefrom and so long as Borrower has Liquidity of $600,000,000, or greater,
before and immediately after giving effect thereto, any other Investments in an
aggregate amount not to exceed $250,000,000 during the term of the
Agreement.

     

    “Permitted Lease”
means the lease of Designated Engines by Borrower to unaffiliated third Persons,
if and so long as (a) at the time of the execution and delivery of the subject
lease, no Event of Default has occurred and is continuing, (b) at the time of
the execution and delivery of the subject lease, the Threshold Usage Amount does
not exist, (c) the subject lease is for a term of not more than [***], (d) the
enforceability, perfection, or remedial rights (other than in respect of the
quiet enjoyment of the lessee) respecting Agent’s Lien on the subject Engines
are not impaired, in whole or in part, by the execution and delivery of the
subject lease nor by the use, or the permitted locations of use, that the
prospective lessee would enjoy under the terms of the prospective lease, (e)
Agent retains a perfected security interest in the rights to payment due to
Borrower under the subject lease, (f) Borrower has given Agent not less than 5
Business Days prior written notice concerning the prospective lease, including a
reasonable amount of detail concern the terms of such lease, (g) the lease rate
and other consideration payable by the lessee under the subject lease, in
Borrower’s reasonable opinion, represents fair market value for the subject
Engines, and (h) no more than [***] Engines are subject to such leases at any
one time.

     

    “Permitted Liens”
means

     

    (a)           Liens
held by Agent to secure the Obligations,

     

    (b)           Liens
for unpaid taxes, assessments, or other governmental charges or levies that
either (i) are not yet delinquent, or (ii) do not have priority over Agent’s
Liens and the underlying taxes, assessments, or charges or levies are the
subject of Permitted Protests,

     

    (c)           judgment
Liens arising solely as a result of the existence of judgments, orders, or
awards that do not constitute an Event of Default under Section 8.3 of the
Agreement,

     

    (d)           Liens
set forth on Schedule
P-2; provided, however, that to
qualify as a Permitted Lien, any such Lien described on Schedule P-2 shall
only secure the Indebtedness that it secures on the Closing Date and any
Refinancing Indebtedness in respect thereof,

     

    (e)           the
interests of lessors under operating leases and non-exclusive licensors under
license agreements,

     

    (f)           [Intentionally
omitted],

     

    (g)           Liens
arising by operation of law in favor of warehousemen, landlords, carriers,
mechanics, materialmen, laborers, or suppliers, incurred in the ordinary course
of business and not in connection with the borrowing of money, and which Liens
either (i) are for sums not yet delinquent, or (ii) are the subject of Permitted
Protests,

     

    (h)           Liens
on amounts deposited to secure Borrower’s obligations in connection with
worker’s compensation or other unemployment insurance,

     

    (i)           Liens
on amounts deposited to secure Borrower’s obligations in connection with the
making or entering into of bids, tenders, or leases in the ordinary course of
business and not in connection with the
borrowing of money,

     

    
 

    
      
         

          *
Indicates that certain information contained herein has been omitted and filed
separately with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted
portions.

        

      

      
         

        
          

        

      

      
         

      

    

     

    (j)           Liens
on amounts deposited to secure Borrower’s reimbursement obligations with respect
to surety or appeal bonds obtained in the ordinary course of
business,

     

    (k)           with
respect to any Real Property, easements, rights of way, and zoning restrictions
that do not materially interfere with or impair the use or operation
thereof,

     

    (l)           non-exclusive
licenses of patents, trademarks, copyrights, and other intellectual property
rights in the ordinary course of business,

     

    (m)           Liens
that are replacements of Permitted Liens to the extent that the original
Indebtedness is the subject of permitted Refinancing Indebtedness and so long as
the replacement Liens only encumber those assets that secured the original
Indebtedness,

     

    (n)           rights
of setoff or bankers’ liens upon deposits of cash in favor of banks or other
depository institutions, solely to the extent incurred in connection with the
maintenance of such deposit accounts in the ordinary course of
business,

     

    (o)           Liens
granted in the ordinary course of business on the unearned portion of insurance
premiums securing the financing of insurance premiums to the extent the
financing is permitted under the definition of Permitted
Indebtedness,

     

    (p)            Liens
in favor of customs and revenue authorities arising as a matter of law to secure
payment of customs duties in connection with the importation of
goods,

     

    (q)            Liens
securing Indebtedness permitted pursuant to clause (g) of the definition of
Permitted Indebtedness; provided, however,
that such Liens shall only extend to pledges of cash by Borrower and the
collateral described in the security agreements entered into in connection with
the original closing of such facility (including any replacements or proceeds
thereof); provided further, however, that in no event shall any of the Liens
permitted by this clause (q) include Liens on any Collateral,

     

    (r)           Liens
on Borrower’s contract rights in and to the Aircraft to be purchased from The
Boeing Company securing Indebtedness permitted pursuant to clause (h) of the
definition of Permitted Indebtedness,

     

    (s)            Liens
on Borrower’s Aircraft, Engines (other than the Designated Engines), flight
simulators, other flight Equipment (other than Expendables, Spare Parts, and
Ground Service Equipment), or real property securing Indebtedness permitted
pursuant to clause (o) of the definition of Permitted Indebtedness,

     

    (t)           Liens
on amounts deposited to secure Borrower’s reimbursement obligations with respect
to letters of credit obtained pursuant to clause (q) of the definition of
Permitted Indebtedness, and

     

     (u)           other
Liens (which do not secure Indebtedness for borrowed money (including bonds or
debentures), letters of credit, or an item of Permitted Indebtedness that is
expressly identified as being unsecured) and as to which the aggregate amount of
the obligations secured thereby does not exceed $25,000,000 at any one
time.

     

    “Permitted Preferred
Stock” means and refers to any Preferred Stock issued by Borrower that is
not Prohibited Preferred Stock.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    “Permitted Protest”
means the right of Borrower to protest any Lien (other than any Lien that
secures the Obligations), taxes (other than payroll taxes or taxes that are the
subject of a United States federal tax lien), or rental payment, provided that
(a) a reserve with respect to such obligation is established on Borrower’s books
and records in such amount as is required under GAAP, (b) any such protest is
instituted promptly and prosecuted diligently by Borrower in good faith, and (c)
Agent is satisfied that, while any such protest is pending, there will be no
impairment of the enforceability, validity, or priority of any of Agent’s
Liens.

     

    “Person” means natural
persons, corporations, limited liability companies, limited partnerships,
general partnerships, limited liability partnerships, joint ventures, trusts,
land trusts, business trusts, or other organizations, irrespective of whether
they are legal entities, and governments and agencies and political subdivisions
thereof.

     

    “Permitted Spare Parts
Installations” means, so long as in the ordinary course of Borrower’s
business, the installation of Spare Parts of Borrower into Aircraft or Engines
operated by Borrower or into other Equipment of Borrower.

     

     “Preferred Stock”
means, as applied to the Stock of any Person, the Stock of any class or classes
(however designated) that is preferred with respect to the payment of dividends,
or as to the distribution of assets upon any voluntary or involuntary
liquidation or dissolution of such Person, over shares of Stock of any other
class of such Person.

     

    “Prohibited Preferred
Stock” means any Preferred Stock that by its terms is mandatorily
redeemable or subject to any other payment obligation (including any obligation
to pay dividends, other than dividends of shares of Preferred Stock of the same
class and series payable in kind or dividends of shares of common stock) on or
before a date that is less than 1 year after the Maturity Date, or, on or before
the date that is less than 1 year after the Maturity Date, is redeemable at the
option of the holder thereof for cash or assets or securities (other than
distributions in kind of shares of Preferred Stock of the same class and series
or of shares of common stock).

     

    “Projections” means
Borrower’s forecasted (a) profit and loss statements, and (b) cash flow
statements, all prepared on a basis consistent with Borrower’s historical
financial statements, together with appropriate supporting details and a
statement of underlying assumptions.

     

    “Pro Rata Share”
means, as of any date of determination:

     

    (a)           with
respect to a Lender’s obligation to make Advances and right to receive payments
of principal, interest, fees, costs, and expenses with respect thereto, (i)
prior to the Commitments being terminated or reduced to zero, the percentage
obtained by dividing (y) such Lender’s Commitment, by (z) the aggregate
Commitments of all Lenders, and (ii) from and after the time that the
Commitments have been terminated or reduced to zero, the percentage obtained by
dividing (y) the outstanding principal amount of such Lender’s Advances by (z)
the outstanding principal amount of all Advances,

     

    (b)           [Intentionally
Omitted].

     

    (c)           with
respect to all other matters as to a particular Lender (including the
indemnification obligations arising under Section 15.7 of the
Agreement), (i) prior to the Commitments being terminated or reduced to zero,
the percentage obtained by dividing (y) such Lender’s Commitment, by (z) the
aggregate amount of Commitments of all Lenders, and (ii) from and after the time
that the Commitments have been terminated or reduced to zero, the percentage
obtained by dividing (y) the outstanding principal amount of such Lender’s
Advances, by (z) the outstanding principal amount of all Advances.

     

    “Protective Advances”
has the meaning specified therefor in Section 2.3(d)(i) of
the Agreement.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    “Qualified Cash”
means, as of any date of determination, the amount of unrestricted cash and Cash
Equivalents of Borrower that is in Deposit Accounts or in Securities Accounts,
or any combination thereof, and which such Deposit Account or Securities Account
is the subject of a Control Agreement and is maintained by a branch office of
the bank or securities intermediary located within the United
States.

     

    “Receivables” means
(a) Accounts, (b) Interline Receivables, and (c) Mileage Plan
Receivables.

     

    “Record” means
information that is inscribed on a tangible medium or that is stored in an
electronic or other medium and is retrievable in perceivable form.

     

    “Refinancing
Indebtedness” means refinancings, renewals, or extensions of Indebtedness
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, 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 Lender Group as those that were
applicable to the refinanced, renewed, or extended Indebtedness,
and

     

    (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.

     

    “Related Fund” means,
with respect to any Lender that is an investment fund, any other investment fund
that invests in commercial loans and that is managed or advised by the same
investment advisor as such Lender or by an Affiliate of such investment
advisor.

     

    “Remedial Action”
means all actions taken to (a) clean up, remove, remediate, contain, treat,
monitor, assess, evaluate, or in any way address Hazardous Materials in the
indoor or outdoor environment, (b) prevent or minimize a release or threatened
release of Hazardous Materials so they do not migrate or endanger or threaten to
endanger public health or welfare or the indoor or outdoor environment, (c)
restore or reclaim natural resources or the environment, (d) perform any
pre-remedial studies, investigations, or post-remedial operation and maintenance
activities, or (e) conduct any other actions with respect to Hazardous Materials
required by Environmental Laws.

     

    “Replacement Lender”
has the meaning specified therefor in Section 2.13(b) of
the Agreement.

     

    “Report” has the
meaning specified therefor in Section 15.16 of the
Agreement.

     

    “Replaceable Spare
Parts” means those Spare Parts that, in accordance with the FARs and the
Maintenance Program, are either (a) rotable Spare Parts (i.e., Spare Parts that
can be repeatedly restored to a serviceable condition) that are maintained by
Borrower by serial number, or (b) replaceable Spare Parts that

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Borrower
does not maintain by serial number, that can be economically restored to a
serviceable condition over a period that (i) in the case of replaceable Spare
Parts, may have a life shorter than the life of the flight equipment to which
they are related, and (ii) in the case of  rotable Spare Parts,
approximates or exceeds the life of the flight equipment to which they are
related and, in either case, are not treated by Borrower as
Expendables.

     

    “Representation” has
the meaning specified therefor in Section 8.8 of the
Agreement.

     

    “Reportable Event”
shall mean an event described in Section 4043(c) of ERISA with respect to a
Benefit Plan that is subject to Title IV of ERISA, other than those events as to
which the 30-day notice period is waived under subsection .22, .23, .25, .27 or
..28 of the PBGC Regulations under Section 4043.

     

    “Required
Availability” means that the sum of (a) Excess Availability, plus (b) Liquidity of
Borrower exceeds $500,000,000.

     

    “Required Lenders”
means, at any time, Lenders whose aggregate Pro Rata Shares (calculated under
clause (c) of the definition of Pro Rata Shares) exceed 50%; provided, however, that at any time there are 2 or more Lenders,
“Required Lenders” must include at least 2 Lenders.

     

    “Reserve Percentage”
means, on any day, for any Lender, the maximum percentage prescribed by the
Board of Governors of the Federal Reserve System (or any successor Governmental
Authority) for determining the reserve requirements (including any basic,
supplemental, marginal, or emergency reserves) that are in effect on such date
with respect to eurocurrency funding (currently referred to as “eurocurrency
liabilities”) of that Lender, but so long as such Lender is not required or
directed under applicable regulations to maintain such reserves, the Reserve
Percentage shall be zero.

     

    “Responsible Officer”
means any Executive Vice President, Finance & Chief Officer, and Vice
President, Finance & Treasurer of Borrower.

     

    “Restricted Junior
Payment” means to (a) declare or pay any dividend or make any other
payment or distribution on account of Stock issued by Borrower (including any
payment in connection with any merger or consolidation involving Borrower) or to
the direct or indirect holders of Stock issued by Borrower in their capacity as
such (other than dividends or distributions payable in Stock (other than
Prohibited Preferred Stock) issued by Borrower, or (b) purchase, redeem, or
otherwise acquire or retire for value (including in connection with any merger
or consolidation involving Borrower) any Stock issued by Borrower.

     

    “Revolver Usage”
means, as of any date of determination, the amount of outstanding
Advances.

     

    “Sanctioned Entity”
means (a) a country or a government of a country, (b) an agency of the
government of a country, (c) an organization directly or indirectly controlled
by a country or its government, (d) a Person resident in or determined to be
resident in a country, in each case, that is subject to a country sanctions
program administered and enforced by OFAC.

     

    “Sanctioned Person”
means a person named on the list of Specially Designated Nationals maintained by
OFAC.

     

    “SEC” means the United
States Securities and Exchange Commission and any successor
thereto.

     

    “Securities Account”
means a securities account (as that term is defined in the Code).

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    “Securities Act” means
the Securities Act of 1933, as amended from time to time, and any successor
statute.

     

    “Security Agreement”
means a security agreement, dated as of even date with the Agreement, in form
and substance reasonably satisfactory to Agent, executed and delivered by
Borrower to Agent.

     

    “Settlement” has the
meaning specified therefor in Section 2.3(e)(i) of
the Agreement.

     

    “Settlement Date” has
the meaning specified therefor in Section 2.3(e)(i) of
the Agreement.

     

    “Solvent” means, with
respect to any Person on a particular date, that, at fair valuations, the sum of
such Person’s assets is greater than all of such Person’s debts.

     

     “Spare Parts” means
any “appliance” or “spare part” as defined in Section 40102 of the Federal
Aviation Act.  Unless the context otherwise requires, the term “Spare
Parts” shall refer to Spare Parts owned by Borrower.

     

    “Spare Parts Tracking
System” means the computerized spare parts inventory control and tracking
system operated by Borrower on the Closing Date as such system may be changed
after the Closing Date in a manner that is (a) required by the FAA, (b) deemed
desirable by Borrower so long as such changes do not affect the quality or
integrity of the data contained therein, or (c) acceptable to
Agent.

     

     “Stock” means all
shares, options, warrants, interests, participations, or other equivalents
(regardless of how designated) of or in a Person, whether voting or nonvoting,
including common stock, preferred stock, or any other “equity security” (as such
term is defined in Rule 3a11-1 of the General Rules and Regulations promulgated
by the SEC under the Exchange Act).

     

    “Subsidiary” of a
Person means a corporation, partnership, limited liability company, or other
entity in which that Person directly or indirectly owns or controls the shares
of Stock having ordinary voting power to elect a majority of the board of
directors (or appoint other comparable managers) of such corporation,
partnership, limited liability company, or other entity.

     

    “Swing Lender” means
WFCF or any other Lender that, at the request of Borrower and with the consent
of Agent agrees, in such Lender’s sole discretion, to become the Swing Lender
under Section
2.3(b) of the Agreement.

     

    “Swing Loan” has the
meaning specified therefor in Section 2.3(b) of the
Agreement.

     

    “Taxes” means any
taxes, levies, imposts, duties, fees, assessments or other charges of whatever
nature now or hereafter imposed by any jurisdiction or by any political
subdivision or taxing authority thereof or therein with respect to such payments
and all interest, penalties or similar liabilities with respect
thereto.

     

    “Tax Lender” has the
meaning specified therefor in Section 14.2(a) of
the Agreement.

     

    “Threshold Usage
Amount” means, as of any date of determination, that the Revolver Usage
exceeds $1,000,000.

     

    “Unfunded Benefit
Liability” means (i) with respect to each Benefit Plan, the amount (if
any) by which the present value of all non-forfeitable benefits under each
Benefit Plan exceeds the current value of such Benefit Plan’s assets allocable
to such benefits, all determined in accordance with the respective most recent
valuations for such Benefit Plan using applicable PBGC plan termination
actuarial assumptions (the terms “present value” and “current value” shall have
the same meanings specified in Section 3 of ERISA) and

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (ii) with
respect to each Foreign Pension Plan, the amount (if any) by which the present
value of all non-forfeitable benefits under each Foreign Pension Plan exceeds
the current value of such Foreign Pension Plan’s assets allocable to such
benefits, all determined in accordance with the respective most recent
valuations for such Foreign Pension Plan using the most recent actuarial
assumptions and methods being used by the Foreign Pension Plan’s actuaries for
financial reporting under applicable accounting and reporting
standards.

     

    “United States” means
the United States of America.

     

    “US Bank” has the
meaning specified therefor in the preamble to the Agreement.

     

    “Voidable Transfer”
has the meaning specified therefor in Section 17.7 of the
Agreement.

     

    “Wells Fargo” means
Wells Fargo Bank, National Association, a national banking
association.

     

    “WFCF” means Wells
Fargo Capital Finance, LLC, a Delaware limited liability company.

     

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Schedule
2.6(d)

    Borrower
Representatives

    

    [***]

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    
      *
Indicates that certain information contained herein has been omitted and filed
separately with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted portions.

    

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Schedule
3.1

     

    The obligation of each Lender to make
its initial extension of credit provided for in the Agreement is subject to the
fulfillment, to the satisfaction of each Lender (the making of such initial
extension of credit by any Lender being conclusively deemed to be its
satisfaction or waiver of the following), of each of the following conditions
precedent:

     

    (a)           the
Closing Date shall occur on or before April 7, 2010;

     

    (b)           Agent
shall have received a letter duly executed by Borrower authorizing Agent to file
appropriate financing statements in such office or offices as may be necessary
or, in the opinion of Agent, desirable to perfect the security interests to be
created by the Loan Documents;

     

    (c)           Agent
shall have received each of the following documents, in form and substance
satisfactory to Agent, duly executed, and each such document shall be in full
force and effect:

     

    (i)         the
Controlled Account Agreements;

     

    (ii)         the
Control Agreements;

     

    (iii)         the
Engine and Spare Parts Security Agreement, together with (A) evidence that the
International Interest (as defined in the Engine and Spare Parts Security
Agreement) in each Designated Engine has been registered with the International
Registry (as defined in the Engine and Spare Parts Security Agreement) and the
Engine and Spare Parts Security Agreement has been registered with the FAA, and
(B) an opinion from FAA counsel, in form and substance satisfactory to Agent, to
the effect required pursuant to Section 2.3 of the Engine and Spare Parts
Security Agreement;

     

    (iv)         the
Fee Letter; and

     

    (v)         the
Security Agreement;

     

    (d)           Agent
shall have received a certificate from the Corporate Secretary of Borrower
(i) attesting to the resolutions of Borrower’s Board of Directors
authorizing its execution, delivery, and performance of this Agreement and the
other Loan Documents to which Borrower is a party, (ii) authorizing
specific officers of Borrower to execute the same, (iii) attesting to the
incumbency and signatures of such specific officers of Borrower,
(iv) certifying as to the Governing Documents, as amended, modified, or
supplemented to the Closing Date of Borrower, and attaching certified copies of
such Governing Documents to the extent available, and (v) certifying as to
a certificate of status with respect to Borrower, dated within 10 days of the
Closing Date, such certificate to be issued by the appropriate officer of the
jurisdiction of incorporation of Borrower, which certificate shall indicate that
Borrower is in good standing in such jurisdiction;

     

    (e)           Agent
shall have received certificates of insurance, together with the endorsements
thereto, as are required by Section 5.6, the form
and substance of which shall be satisfactory to Agent;

     

    (f)           Agent
shall have received an opinion of Borrower’s counsel and an opinion of
Borrower’s FAA counsel, in each case in form and substance satisfactory to
Agent;

     

    (g)           Borrower
shall have Liquidity of at least $500,000,000 after giving effect to the initial
extensions of credit under the Agreement and the payment of all fees and
expenses required to be paid by Borrower on the Closing Date under the Agreement
or the other Loan Documents;

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (h)           Agent
shall have completed its business, legal, and collateral due diligence,
including, (i) a takeover audit and review of Borrower’s books and records and
verification of Borrower’s representations and warranties to Lender Group, (ii)
review of documentation with respect to Borrower’s existing credit facilities,
and (iii) lien search results (including UCC (certified where available), tax
lien, judgment, bankruptcy and FAA lien searches) with respect to Borrower from
all appropriate jurisdictions and filing offices, and. in the case of each of
(i), (ii), and (iii), the results of which shall be satisfactory to
Agent;

     

    (i)           Agent
shall have received copies of each Material Contract as filed with the
SEC;

     

    (j)           Agent
shall have received a certificate of Borrower executed by the chief financial
officer of Borrower certifying as to the solvency of Borrower immediately after
giving effect to the transactions contemplated by the Agreement;

     

    (k)           Agent
shall have received a duly executed Borrowing Base Certificate dated as of the
Closing Date;

     

    (l)           Agent
shall have completed (i) Patriot Act searches, OFAC/PEP searches and
customary individual background checks for Borrower and (ii) OFAC/PEP
searches and customer individual background searches for Borrower’s senior
management and key principals, in each case, the results of which shall be
satisfactory to Agent;

     

    (m)           Borrower
shall have paid all Lender Group Expenses incurred in connection with the
transactions evidenced by this Agreement;

     

    (n)           Borrower
shall have received all licenses, approvals or evidence of other actions
required by any Governmental Authority in connection with the execution and
delivery by Borrower of the Loan Documents or with the consummation of the
transactions contemplated thereby;

     

    (o)           Agent
shall have received evidence satisfactory to Agent that (i) the Credit
Agreement dated as of March 25, 2005 (“Existing Credit
Facility”), among Borrower, each lender party thereto, Citicorp USA,
Inc., as syndication agent, USBankCorp, as documentation agent, and Bank of
America, N.A., as administrative agent, has been terminated and any outstanding
obligations paid in full in cash and (ii) all of the Liens existing in
connection with the Existing Credit Facility in and to the properties and assets
of Borrower have been terminated; and

     

    (p)           all
other documents and legal matters in connection with the transactions
contemplated by this Agreement shall have been delivered, executed, or, if
applicable, recorded, and shall be in form and substance satisfactory to
Agent.

     

     
 

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Schedule
4.6

    States
of Organization, Chief Executive Offices,

    Organizational
Identification Numbers

    

    Corporate
Name:                                                      Alaska
Airlines, Inc.

    

    Jurisdiction
of
Incorporation:                                                                Alaska

    

    Chief
Executive
Offices:                                                      Alaska
Airlines, Inc.

    19300 International
Boulevard

    Seattle, Washington 98188

    

    Organizational
Identification No./

    Federal
Tax
ID:                                                      92-0009235

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Schedule
4.7(b)

    Litigation

    

    [***]

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    
      *
Indicates that certain information contained herein has been omitted and filed
separately with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted portions.

    

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Schedule
4.11

    Benefit
Plans

    

    Qualified
Plans (PN represents Plan Number for 5500 filings)

    
      	
              Alaska
      Air Group, Inc., Welfare Benefit Plan (PN 501)

            	
              Health
      & welfare plan: includes medical (HMO, PPO, HSA PPO), dental, and
      vision programs; Sec 125 plans, HSA, long/short term disability programs,
      life and AD&D coverage, EE and/or ER paid.

            
	
              Alaska
      Air Group, Inc., Retirement Plan for Salaried Employees (PN
      001)

            	
              Defined
      benefit pension plan

            
	
              Alaska
      Airlines, Inc., Retirement Plan for Clerical, Office & Passenger
      Service Employees (PN 008)

            	
              Defined
      benefit pension plan

            
	
              Alaska
      Airlines, Inc., Retirement Plan for Mechanics & Related Crafts
      Employees

              (PN
      002)

            	
              Defined
      benefit pension plan

            
	
              Alaska
      Airlines, Inc., Fixed Income Retirement Plan for Pilots (PN
      003)

            	
              Defined
      benefit pension plan

            
	
              Alaska
      Air Group, Inc., Alaskasaver Plan

              (PN
      010)

            	
              Defined
      contribution 401(k) plan

            
	
              Alaska
      Airlines, Inc.,  COPS, MRP & Dispatch 401(k) Plan
      (013)

            	
              Defined
      contribution 401(k) plan

            
	
              Alaska
      Airlines, Inc., Flight Attendant 401(k) Plan (PN 012)

            	
              Defined
      contribution 401(k) plan

            
	
              Alaska
      Airlines, Inc., Pilots Investment & Savings Plan (PN
    011)

            	
              Defined
      contribution 401(k) plan

            

    

    

    Nonqualified
Plans

    
      	
              Alaska
      Air Group, Inc., Nonqualified Deferred Compensation Plan

            	
              Nonqualified,
      DC-like benefit plan

            
	
              Alaska
      Air Group, Inc., 1995 Elected Officers Supplementary Retirement
      Plan

            	
              Nonqualified,
      DB-like benefit plan

            
	
              Alaska
      Airlines, Inc., and Alaska Air Group, Inc., Supplementary Retirement Plan
      for 

              Elected
      Officers (3 versions: 1981, 1977, 1976)

            	
              3
      Nonqualified, DB-like benefit plans

            
	
              Alaska
      Airlines, Inc., Pilots Excess Disability Plan

            	
              Nonqualified
      supplemental benefit plan for pilots (frozen to new entrants as of
      1/1/2010)

            

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Schedule
4.12

    Environmental
Matters

    

    
      	
              LOCATION

            	
              ACCRUAL
      BALANCE AS OF 12/31/09

            	
              DETAILS

            
	
              Anchorage

            	
              [***]

            	
              Currently
      monitoring contamination levels.  No active plan currently
      required.

            
	
              Juneau

            	
              [***]

            	
              Cleanup
      began in 2004.  Project to continue for additional three – five
      years

            
	
              Fairbanks

            	
              [***]

            	
              Two
      sites of contamination.  Both locations required long-term
      monitoring per Alaska Dept. of Environmental
  Conservation.

            
	
              Oakland

            	
              [***]

            	
              In
      negotiations with the Port of Oakland to determine cleanup
      requirements.

            

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    
 

    

    
      
         

          *
Indicates that certain information contained herein has been omitted and filed
separately with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted
portions.

        

      

      
         

        
          

        

      

      
         

      

    

    Schedule
4.15

    Deposit
Accounts and Securities Accounts

    

    Credit
Facility Collateral Account

    Alaska
Airlines, Inc.

    [***]

    Account
No. [***]

    ABA
(Wire) [***]

    ABA (ACH)
[***]

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    
 

    
      
         

          *
Indicates that certain information contained herein has been omitted and filed
separately with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted
portions.

        

      

      
         

        
          

        

      

      
         

      

    

    Schedule
4.17

    Material
Contracts

    

    
      	
              Credit
      Agreement, dated October 19, 2005, among Alaska Airlines, Inc., as
      borrower, HSH Nordbank AG New York Branch, as security agent, and other
      loan participants (Filed as Exhibit 10.2 to Registrant’s Quarterly Report
      on Form 10-Q for the period ended September 30, 2005, filed on
      November 9, 2005).

            
	 
      
	
              First
      Amendment to October 19, 2005 Credit Agreement, dated March 27, 2007
      (Filed as Exhibit 10.2.1 to Registrant’s Annual Report on Form 10-K for
      the year ended December 31, 2007, filed on February 20,
      2008).

            
	 
      
	
              Second
      Amendment to October 19, 2005 Credit Agreement, dated November 26, 2007
      (Filed as Exhibit 10.2.2 to Registrant’s Annual Report on Form 10-K for
      the year ended December 31, 2007, filed on February 20,
    2008).

            
	 
      
	
              Third
      Amendment to October 19, 2005 Credit Agreement, dated May 29, 2009 (Filed
      as Exhibit 10.1 to Registrant’s Quarterly Report on Form 10-Q for the
      period ended September 30, 2009, filed on November 6,
    2009).

            
	 
      
	
              Aircraft
      General Terms Agreement, dated June 15, 2005, between the Boeing Company
      and Alaska Airlines, Inc. (Filed as Exhibit 10.1 to Registrant’s Quarterly
      Report on Form 10-Q for the period ended June 30, 2005, filed on
      August 5, 2005).

            
	 
      
	
              Purchase
      Agreement No. 2497, dated June 15, 2005, between the Boeing Company
      and Alaska Airlines, Inc. (Filed as Exhibit 10.2 to Registrant’s Quarterly
      Report on Form 10-Q for the period ended June 30, 2005, filed on
      August 5, 2005).

            
	 
      
	
              Lease
      Agreement, dated January 22, 1990, between International Lease Finance
      Corporation and Alaska Airlines, Inc., summaries of 19 substantially
      identical lease agreements and Letter Agreement #1, dated January 22, 1990
      (Filed as Exhibit 10-14 to Registrant’s Annual Report on Form 10-K
      for the year ended December 31, 1990, filed on April 11,
      1991).

            
	 
      
	
              Alaska
      Airlines, Inc. and Alaska Air Group, Inc. Supplementary Retirement Plan
      for Elected Officers, as amended November 7, 1994 (Filed as Exhibit 10.15
      to Registrant’s Annual Report on Form 10-K for the year ended
      December 31, 1997, filed on February 10, 1998).

            
	 
      
	
              Separation
      Agreement between Gregg Saretsky and Alaska Airlines, Inc. dated December
      10, 2008 (Filed as Exhibit 10.1 to Registrant’s Current Report on
      Form 8-K, filed on December 10,
2008).

            

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Schedule
4.19

    Permitted
Indebtedness

    

    
      	 
      	 
      	 
      	 
      	 
      	 
      	
              Int Rate

            	
              Maturity Date

            	
              Dollar Amount Outstanding as
of

              12/31/2009 (in
thousands)

            
	
              Alaska
      Airlines Senior Secured Aircraft Debt

            	 
      	 
      	 
      
	 
      	
              N302AS

            	 
      	 
      	 
      	 
      	
              [***]

            	
              3/31/2018

            	
              [***]

            
	 
      	
              N303AS

            	 
      	 
      	 
      	 
      	
              [***]

            	
              7/27/2013

            	
              [***]

            
	 
      	
              N305AS

            	 
      	 
      	 
      	 
      	
              [***]

            	
              5/15/2013

            	
              [***]

            
	 
      	
              N306AS

            	 
      	 
      	 
      	 
      	
              [***]

            	
              12/29/2017

            	
              [***]

            
	 
      	
              N307AS

            	 
      	 
      	 
      	 
      	
              [***]

            	
              12/29/2017

            	
              [***]

            
	 
      	
              N309AS

            	 
      	 
      	 
      	 
      	
              [***]

            	
              8/27/2013

            	
              [***]

            
	 
      	
              N315AS

            	 
      	 
      	 
      	 
      	
              [***]

            	
              1/28/2015

            	
              [***]

            
	 
      	
              N317AS

            	 
      	 
      	 
      	 
      	
              [***]

            	
              4/4/2018

            	
              [***]

            
	 
      	
              N318AS

            	 
      	 
      	 
      	 
      	
              [***]

            	
              9/29/2015

            	
              [***]

            
	 
      	
              N319AS

            	 
      	 
      	 
      	 
      	
              [***]

            	
              1/5/2016

            	
              [***]

            
	 
      	
              N320AS

            	 
      	 
      	 
      	 
      	
              [***]

            	
              3/20/2020

            	
              [***]

            
	 
      	
              N323AS

            	 
      	 
      	 
      	 
      	
              [***]

            	
              6/29/2016

            	
              [***]

            
	 
      	
              N551AS

            	 
      	 
      	 
      	 
      	
              [***]

            	
              2/9/2018

            	
              [***]

            
	 
      	
              N552AS

            	 
      	 
      	 
      	 
      	
              [***]

            	
              3/28/2018

            	
              [***]

            
	 
      	
              N553AS

            	 
      	 
      	 
      	 
      	
              [***]

            	
              5/12/2018

            	
              [***]

            
	 
      	
              N556AS

            	 
      	 
      	 
      	 
      	
              [***]

            	
              7/28/2021

            	
              [***]

            
	 
      	
              N558AS

            	 
      	 
      	 
      	 
      	
              [***]

            	
              9/22/2021

            	
              [***]

            
	 
      	
              N557AS

            	 
      	 
      	 
      	 
      	
              [***]

            	
              10/4/2018

            	
              [***]

            
	 
      	
              N560AS

            	 
      	 
      	 
      	 
      	
              [***]

            	
              10/18/2018

            	
              [***]

            
	 
      	
              N559AS

            	 
      	 
      	 
      	 
      	
              [***]

            	
              11/2/2018

            	
              [***]

            
	 
      	
              N563AS

            	 
      	 
      	 
      	 
      	
              [***]

            	
              11/22/2018

            	
              [***]

            
	 
      	
              N566AS

            	 
      	 
      	 
      	 
      	
              [***]

            	
              1/30/2019

            	
              [***]

            
	 
      	
              N568AS

            	 
      	 
      	 
      	 
      	
              [***]

            	
              1/31/2022

            	
              [***]

            
	 
      	
              N569AS

            	 
      	 
      	 
      	 
      	
              [***]

            	
              3/22/2019

            	
              [***]

            
	 
      	
              N570AS

            	 
      	 
      	 
      	 
      	
              [***]

            	
              3/28/2019

            	
              [***]

            
	 
      	
              N577AS

            	 
      	 
      	 
      	 
      	
              [***]

            	
              3/30/2022

            	
              [***]

            
	 
      	
              N581AS

            	 
      	 
      	 
      	 
      	
              [***]

            	
              5/29/2019

            	
              [***]

            
	 
      	
              N586AS

            	 
      	 
      	 
      	 
      	
              [***]

            	
              2/28/2020

            	
              [***]

            
	 
      	
              N588AS

            	 
      	 
      	 
      	 
      	
              [***]

            	
              2/28/2020

            	
              [***]

            
	 
      	
              N590AS

            	 
      	 
      	 
      	 
      	
              [***]

            	
              3/26/2020

            	
              [***]

            
	 
      	
              N594AS

            	 
      	 
      	 
      	 
      	
              [***]

            	
              5/29/2020

            	
              [***]

            
	 
      	
              N583AS

            	 
      	 
      	 
      	 
      	
              [***]

            	
              6/27/2020

            	
              [***]

            
	 
      	
              N584AS

            	 
      	 
      	 
      	 
      	
              [***]

            	
              5/29/2020

            	
              [***]

            

    

    
      
         

          *
Indicates that certain information contained herein has been omitted and filed
separately with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted
portions.

        

      

      
         

        
          

        

      

      
         

      

    

    
 

    
      	 
      	
              N585AS

            	 
      	 
      	 
      	 
      	
              [***]

            	
              8/22/2020

            	
              [***]

            
	 
      	
              N587AS

            	 
      	 
      	 
      	 
      	
              [***]

            	
              9/25/2020

            	
              [***]

            
	 
      	
              N589AS

            	 
      	 
      	 
      	 
      	
              [***]

            	
              8/22/2020

            	
              [***]

            
	 
      	
              N596AS

            	 
      	 
      	 
      	 
      	
              [***]

            	
              7/30/2020

            	
              [***]

            
	 
      	
              N597AS

            	 
      	 
      	 
      	 
      	
              [***]

            	
              7/30/2020

            	
              [***]

            
	 
      	
              N508AS

            	 
      	 
      	 
      	 
      	
              [***]

            	
              7/31/2020

            	
              [***]

            
	 
      	
              N517AS

            	 
      	 
      	 
      	 
      	
              [***]

            	
              3/30/2019

            	
              [***]

            
	 
      	
              N524AS

            	 
      	 
      	 
      	 
      	
              [***]

            	
              5/1/2019

            	
              [***]

            
	 
      	
              N525AS

            	 
      	 
      	 
      	 
      	
              [***]

            	
              5/1/2019

            	
              [***]

            
	 
      	
              N518AS

            	 
      	 
      	 
      	 
      	
              [***]

            	
              6/22/2021

            	
              [***]

            
	 
      	
              N519AS

            	 
      	 
      	 
      	 
      	
              [***]

            	
              7/23/2019

            	
              [***]

            
	 
      	
              N520AS

            	 
      	 
      	 
      	 
      	
              [***]

            	
              10/6/2019

            	
              [***]

            
	 
      	
              N607AS

            	 
      	 
      	 
      	 
      	
              [***]

            	
              11/30/2011

            	
              [***]

            
	 
      	
              N609AS

            	 
      	 
      	 
      	 
      	
              [***]

            	
              11/23/2015

            	
              [***]

            
	 
      	
              N611AS

            	 
      	 
      	 
      	 
      	
              [***]

            	
              11/24/2013

            	
              [***]

            
	 
      	
              N612AS

            	 
      	 
      	 
      	 
      	
              [***]

            	
              11/24/2015

            	
              [***]

            
	 
      	
              N613AS

            	 
      	 
      	 
      	 
      	
              [***]

            	
              12/3/2015

            	
              [***]

            
	 
      	
              N614AS

            	 
      	 
      	 
      	 
      	
              [***]

            	
              8/2/2012

            	
              [***]

            
	 
      	
              N615AS

            	 
      	 
      	 
      	 
      	
              [***]

            	
              8/2/2012

            	
              [***]

            
	 
      	
              N618AS

            	 
      	 
      	 
      	 
      	
              [***]

            	
              8/25/2012

            	
              [***]

            
	 
      	
              N619AS

            	 
      	 
      	 
      	 
      	
              [***]

            	
              8/25/2012

            	
              [***]

            
	 
      	
              CP
      Jr.

            	
              N617AS,
      N622AS, N623AS - JR

            	
              [***]

            	
              11/15/2012

            	
              [***]

            
	 
      	
              CP
      Sr.

            	
              N617AS,
      N622AS, N623AS - SR

            	
              [***]

            	
              11/15/2012

            	
              [***]

            
	 
      	
              N624AS

            	 
      	 
      	 
      	 
      	
              [***]

            	
              12/19/2012

            	
              [***]

            
	 
      	
              N625AS

            	 
      	 
      	 
      	 
      	
              [***]

            	
              2/22/2013

            	
              [***]

            
	 
      	
              N626AS

            	 
      	 
      	 
      	 
      	
              [***]

            	
              5/20/2018

            	
              [***]

            
	 
      	
              N627AS

            	 
      	 
      	 
      	 
      	
              [***]

            	
              6/25/2013

            	
              [***]

            
	 
      	
              N644AS

            	 
      	 
      	 
      	 
      	
              [***]

            	
              6/27/2018

            	
              [***]

            
	 
      	
              N708AS

            	 
      	 
      	 
      	 
      	
              [***]

            	
              11/23/2015

            	
              [***]

            
	 
      	
              N709AS

            	 
      	 
      	 
      	 
      	
              [***]

            	
              11/19/2011

            	
              [***]

            
	 
      	
              N713AS

            	 
      	 
      	 
      	 
      	
              [***]

            	
              11/30/2011

            	
              [***]

            
	
              Alaska
      Airlines Senior Secured Aircraft Debt

            	 
      	 
      	
              1,507,783

            
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
              Other:

            	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
              Total
      Debt

            	 
      	 
      	 
      	 
      	 
      	 
      	
              1,507,783

            
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
              Current
      Portion of Long-Term Debt

            	 
      	 
      	 
      	
              (131,169)

            
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
              Long-Term
      Debt

            	 
      	 
      	 
      	 
      	 
      	
              1,376,613

            

    

    
 

    
      
         

          *
Indicates that certain information contained herein has been omitted and filed
separately with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted
portions.

        

      

      
         

        
          

        

      

      
         

      

    

    Schedule
4.24

    Employee
and Labor Matters

    

    None.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Schedule
4.27

    Location
of Spare Parts

    

    
      	
              Adak

            	
              [***]

            
	
              Anchorage

            	
              [***]

            
	
              Atlanta

            	
              [***]

            
	
              Austin

            	
              [***]

            
	
              Barrow

            	
              [***]

            
	
              Bellingham

            	
              [***]

            
	
              Bethel

            	
              [***]

            
	
              Boise

            	
              [***]

            
	
              Boston

            	
              [***]

            
	
              Burbank

            	
              [***]

            
	
              Chicago

            	
              [***]

            
	
              Cordova

            	
              [***]

            
	
              Dallas

            	
              [***]

            
	
              Denver

            	
              [***]

            
	
              Dillingham

            	
              [***]

            
	
              Fairbanks

            	
              [***]

            
	
              Gustavus

            	
              [***]

            
	
              Honolulu

            	
              [***]

            
	
              Houston

            	
              [***]

            
	
              Juneau

            	
              [***]

            
	
              Ketchikan

            	
              [***]

            
	
              King
      Salmon

            	
              [***]

            
	
              Kodiak

            	
              [***]

            
	
              Kona

            	
              [***]

            
	
              Kotzebue

            	
              [***]

            
	
              Las
      Vegas

            	
              [***]

            
	
              Lihue

            	
              [***]

            
	
              Long
      Beach

            	
              [***]

            
	
              Los
      Angeles

            	
              [***]

            
	
              Maui

            	
              [***]

            
	
              Miami

            	
              [***]

            
	
              Minneapolis

            	
              [***]

            
	
              Newark

            	
              [***]

            
	
              Nome

            	
              [***]

            
	
              Oakland

            	
              [***]

            
	
              Ontario

            	
              [***]

            
	
              Orange
      County

            	
              [***]

            
	
              Orlando

            	
              [***]

            
	
              Palm
      Springs

            	
              [***]

            
	
              Petersburg

            	
              [***]

            
	
              Phoenix

            	
              [***]

            
	
              Portland

            	
              [***]

            
	
              Prudhoe
      Bay

            	
              [***]

            
	
              Sacramento

            	
              [***]

            

    

    

    
      
         

          *
Indicates that certain information contained herein has been omitted and filed
separately with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted
portions.

        

      

      
         

        
          

        

      

      
         

      

    

    
 

    
      	
              San
      Diego

            	
              [***]

            
	
              San
      Francisco

            	
              [***]

            
	
              San
      Jose

            	
              [***]

            
	
              Seattle

            	
              [***]

            
	
              Sitka

            	
              [***]

            
	
              Spokane

            	
              [***]

            
	
              Tucson

            	
              [***]

            
	
              Washington,
      DC

            	
              [***]

            
	
              Wrangell

            	
              [***]

            
	
              Yakutat

            	
              [***]

            

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    
 

    
      
         

          *
Indicates that certain information contained herein has been omitted and filed
separately with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted
portions.

        

      

      
         

        
          

        

      

      
         

      

    

    Schedule
4.28(d)

    Location
of Ground Service Equipment

    

    
      	
              Adak

            	
              [***]

            
	
              Anchorage

            	
              [***]

            
	
              Atlanta

            	
              [***]

            
	
              Austin

            	
              [***]

            
	
              Barrow

            	
              [***]

            
	
              Bellingham

            	
              [***]

            
	
              Bethel

            	
              [***]

            
	
              Boise

            	
              [***]

            
	
              Boston

            	
              [***]

            
	
              Burbank

            	
              [***]

            
	
              Chicago

            	
              [***]

            
	
              Cordova

            	
              [***]

            
	
              Dallas

            	
              [***]

            
	
              Denver

            	
              [***]

            
	
              Dillingham

            	
              [***]

            
	
              Fairbanks

            	
              [***]

            
	
              Gustavus

            	
              [***]

            
	
              Honolulu

            	
              [***]

            
	
              Houston

            	
              [***]

            
	
              Juneau

            	
              [***]

            
	
              Ketchikan

            	
              [***]

            
	
              King
      Salmon

            	
              [***]

            
	
              Kodiak

            	
              [***]

            
	
              Kona

            	
              [***]

            
	
              Kotzebue

            	
              [***]

            
	
              Las
      Vegas

            	
              [***]

            
	
              Lihue

            	
              [***]

            
	
              Long
      Beach

            	
              [***]

            
	
              Los
      Angeles

            	
              [***]

            
	
              Maui

            	
              [***]

            
	
              Miami

            	
              [***]

            
	
              Minneapolis

            	
              [***]

            
	
              Newark

            	
              [***]

            
	
              Nome

            	
              [***]

            
	
              Oakland

            	
              [***]

            
	
              Ontario

            	
              [***]

            
	
              Orange
      County

            	
              [***]

            
	
              Orlando

            	
              [***]

            
	
              Palm
      Springs

            	
              [***]

            
	
              Petersburg

            	
              [***]

            
	
              Phoenix

            	
              [***]

            
	
              Portland

            	
              [***]

            
	
              Prudhoe
      Bay

            	
              [***]

            
	
              Sacramento

            	
              [***]

            

    

    

    
      
         

          *
Indicates that certain information contained herein has been omitted and filed
separately with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted
portions.

        

      

      
         

        
          

        

      

      
         

      

    

    
 

    
      	
              San
      Diego

            	
              [***]

            
	
              San
      Francisco

            	
              [***]

            
	
              San
      Jose

            	
              [***]

            
	
              Seattle

            	
              [***]

            
	
              Sitka

            	
              [***]

            
	
              Spokane

            	
              [***]

            
	
              Tucson

            	
              [***]

            
	
              Washington,
      DC

            	
              [***]

            
	
              Wrangell

            	
              [***]

            
	
              Yakutat

            	
              [***]

            

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    
       

    

    
      
         

          *
Indicates that certain information contained herein has been omitted and filed
separately with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted
portions.

        

      

      
         

        
          

        

      

      
         

      

    

    Schedule
4.28(e)

    Location
of Designated Engines

    

    
      	
              Anchorage

            	
              [***]

            
	
              Los
      Angeles

            	
              [***]

            
	
              Seattle

            	
              [***]

            

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    
       

    

    

    
      
         

          *
Indicates that certain information contained herein has been omitted and filed
separately with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted
portions.

        

      

      
         

        
          

        

      

      
         

      

    

    Schedule
5.1

     

    Deliver to Agent, with copies to each
Lender, each of the financial statements, reports, or other items set forth
below at the following times in form reasonably satisfactory to
Agent:

    

    
      	
               

              as
      soon as available, but in any event within 30 days (45 days in the case of
      a month that is the end of one of Borrower’s fiscal quarters) after the
      end of each month during each of Borrower’s fiscal years

               

            	 	
               

              (a)an
      unaudited consolidated and consolidating balance sheet and income
      statement and an unaudited consolidated statement of cash flow, in each
      case covering Group’s operations during such period and during the period
      commencing at the end of the immediately preceding fiscal year and ending
      with the end of such month, together with a report comparing the figures
      in the income statement with the figures in Borrower’s plan for the
      corresponding periods and for the corresponding periods of the immediately
      preceding fiscal year, and

              (b)a Compliance
      Certificate.

            
	
               

              as
      soon as available, but in any event within 120 days after the end of each
      of Borrower’s fiscal years

               

            	 	
               

              (c)consolidated and
      consolidating financial statements of Group for each such fiscal year and,
      in the case of the consolidated financial statements of Group, audited by
      independent certified public accountants without any qualifications
      (including any (A) “going concern” or like qualification or exception, (B)
      qualification or exception as to the scope of such audit, or (C)
      qualification which relates to the treatment or classification of any item
      and which, as a condition to the removal of such qualification, would
      require an adjustment to such item, the effect of which would be to cause
      any noncompliance with the provisions of Section 7), by such accountants to have
      been prepared in accordance with GAAP (such audited financial statements
      to include a balance sheet, income statement, and statement of cash flow
      and, if prepared, such accountants’ letter to management),
and

              (d)a Compliance
      Certificate.

            
	
               

              as
      soon as available, but in any event no later than 30 days after the start
      of Borrower’s fiscal years,

            	 	
               

              (e)[***].

            
	
               

              if
      and when filed or provided by Group or Borrower,

            	 	
               

              (f)any information that is
      provided by Group or Borrower to its shareholders
    generally.

            

    

    

    

    

    

    

    

    
       

    

    
      
         

          *
Indicates that certain information contained herein has been omitted and filed
separately with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted
portions.

        

      

      
         

        
          

        

      

      
         

      

    

    

    
      	
               

              promptly,
      but in any event within 5 Business Days after a Responsible Officer of
      Borrower has knowledge of any event or condition that constitutes a
      Default or an Event of Default,

               

            	 	
               

              (g)notice of such event or
      condition and a statement of the curative action that Borrower proposes to
      take with respect thereto.

            
	
               

              promptly
      after the commencement thereof, but in any event within 10 days after the
      service of process with respect thereto on Borrower (if
      applicable),

               

            	 	
               

              (h)notice of all actions,
      suits, or proceedings brought by or against Borrower before any
      Governmental Authority which reasonably could be expected to result in a
      Material Adverse Change, and

              (i)notice of any labor
      strike.

            
	
               

              upon
      the request of Agent,

               

            	 	
               

              (j)any other information
      reasonably requested relating to the financial condition of
      Borrower.

            

    

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Schedule
5.2

     

    Provide Agent (and if so requested by
Agent, with copies for each Lender) with each of the documents set forth below
at the following times and, with respect to the documents described in clauses
(b) – (i) and (k) below, in format substantially consistent with the format
provided to Agent during its October of 2009 field examination or as otherwise
mutually agreed by Borrower and Agent:

    

    
      	
              Monthly
      ((a) if Revolver Usage is in excess of the Threshold Amount as of the
      first Business Day of any month, within 20 days after the end of such
      month (or if such month is at the end of one of Borrower’s fiscal
      quarters, within 30 days after the end of such month), and (b) if Revolver
      Usage is less than or equal to the Threshold Usage Amount as of the first
      Business Day of any month, within 30 days after the end of such month (or
      if such month is at the end of one of Borrower’s fiscal quarters, within
      45 days after the end of such month))

            	 	
              (a)
      a Borrowing Base Certificate,

              (b)
      a detailed aging, by total, of Borrower’s Accounts, together with a
      reconciliation and supporting documentation for any reconciling items
      noted (delivered electronically in an acceptable format, if Borrower has
      implemented electronic reporting),

              (c)
      a detailed calculation of those Accounts that are not eligible for the
      Borrowing Base, if Borrower has not implemented electronic
      reporting,

              (d)
      (i) a detailed aging and roll-forward, by total, of the Accounts of
      Borrower, together with a reconciliation to the general ledger, and (ii) a
      manual interline settlement sheet of the Accounts of
Borrower,

              (e)
      a monthly Account roll-forward tied to the beginning and ending Account
      balances of Borrower’s general ledger,

              (f)
      a summary aging, by vendor, of Borrower’s accounts payable and any book
      overdraft  (delivered electronically in an acceptable format, if
      Borrower has implemented electronic reporting) and an aging, by vendor, of
      any held checks, together with a reconciliation to the general
      ledger,

              (g)
      a detailed description by type and location of all of the Replaceable
      Spare Parts, Engines, Expendables, and Ground Service Equipment owned by
      Borrower located both in and outside the United States, together with a
      reconciliation to the general ledger, and

              (h)
      a detailed calculation of Replaceable Spare Parts, Engines, Expendables,
      and Ground Service Equipment that are not eligible for the Borrowing Base,
      if Borrower has not implemented electronic reporting, and

              (i)
      a detailed report regarding any write down or obsolete adjustment of
      Borrower’s Replaceable Spare Parts, Engines, Expendables, or Ground
      Service Equipment.

               

            
	
              Upon
      request by Agent

            	 	
              (j)
      such other reports as to the Collateral or the financial condition of
      Borrower, as Agent may reasonably request in form reasonably acceptable to
      Agent, and

              (k)
      a detailed report regarding Borrower’s cash and Cash Equivalents and
      Marketable Securities.

            
	
              Promptly,
      but in any event within 5 Business Days after a Responsible Officer of
      Borrower has knowledge thereof

               

            	 	
              (l)
      notice that Borrower has pledged cash to secure the Indebtedness permitted
      pursuant to clause (g) of the definition of Permitted Indebtedness and an
      indication of the amount so
pledged.

            

    

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Schedule
6.6

    Nature
of Business

    

    Alaska
Airlines, Inc. (“Alaska”) is a wholly-owned subsidiary of Alaska Air Group,
Inc., and is an Alaska corporation that was organized in 1932 and incorporated
in 1937.  Alaska is a U.S. certificated commercial airline providing
passenger and freight services over selected city pairs in North America and
between North America and Hawaii, and engages in other air travel related
activity.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00172-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00172-of-00352.parquet"}]]