CREDIT AGREEMENT

Loan Agreement

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ALASKA AIR GROUP INC | BANK OF AMERICA, N.A., | CITICORP USA, INC., | U.S. BANK NATIONAL ASSOCIATION

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Title: CREDIT AGREEMENT
Governing Law: Washington Date: 5/6/2005
Industry: Airline Sector: Transportation

CREDIT AGREEMENT, Parties: alaska air group inc , bank of america n.a. , citicorp usa inc. , u.s. bank national association

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EXHIBIT 10.1

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

FOIA CONFIDENTIAL

TREATMENT REQUESTED

[PUBLISHED CUSIP NUMBER: ______________]

CREDIT AGREEMENT

Dated as of March 25, 2005

among

ALASKA AIRLINES, INC.,

as Borrower,

BANK OF AMERICA, N.A.,

as Administrative Agent,

CITICORP USA, INC.,

as Syndication Agent,

U.S. BANK NATIONAL ASSOCIATION

as Documentation Agent,

and

The Other Lenders Party Hereto

BANC OF AMERICA SECURITIES LLC,

CITIGROUP GLOBAL MARKETS INC.

as Joint-Lead Arrangers and Joint-Book Managers

[BANK OF AMERICA LOGO] [CITIGROUP LOGO]

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TABLE OF CONTENTS

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Section Page

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ARTICLE I. DEFINITIONS AND ACCOUNTING TERMS................................... 1

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

1.02 Other Interpretive Provisions..................................... 21

1.03 Accounting Terms.................................................. 22

1.04 Rounding.......................................................... 22

1.05 Times of Day...................................................... 23

ARTICLE II. THE COMMITMENTS AND CREDIT EXTENSIONS............................. 23

2.01 Loans............................................................. 23

2.02 Borrowings, Conversions and Continuations of Loans................ 23

2.03 Prepayments....................................................... 24

2.04 Termination or Reduction of Commitments........................... 25

2.05 Repayment of Loans................................................ 25

2.06 Interest.......................................................... 25

2.07 Fees.............................................................. 26

2.08 Computation of Interest and Fees.................................. 27

2.09 Evidence of Debt.................................................. 27

2.10 Payments Generally; Agent's Clawback.............................. 27

2.11 Sharing of Payments............................................... 29

2.12 Security.......................................................... 30

ARTICLE III. TAXES, YIELD PROTECTION AND ILLEGALITY........................... 30

3.01 Taxes............................................................. 30

3.02 Illegality........................................................ 32

3.03 Inability to Determine Rates...................................... 32

3.04 Increased Costs................................................... 32

3.05 Compensation for Losses........................................... 33

3.06 Mitigation of Obligations; Replacement of Lenders................. 34

3.07 Survival.......................................................... 34

ARTICLE IV. CONDITIONS PRECEDENT TO CREDIT EXTENSIONS......................... 35

4.01 Conditions of Initial Borrowing................................... 35

4.02 Conditions to all Borrowings...................................... 37

ARTICLE V. REPRESENTATIONS AND WARRANTIES..................................... 37

5.01 Existence, Qualification and Power; Compliance with Laws.......... 37

5.02 Authorization; No Contravention................................... 38

5.03 Governmental Authorization; Other Consents........................ 38

5.04 Binding Effect.................................................... 38

5.05 Financial Statements; No Material Adverse Effect.................. 38

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5.06 Litigation and Judgments.......................................... 39

5.07 No Default........................................................ 39

5.08 Ownership of Property; Liens...................................... 39

5.09 Environmental Compliance.......................................... 39

5.10 Insurance......................................................... 40

5.11 Taxes............................................................. 40

5.12 ERISA Compliance.................................................. 40

5.13 Subsidiaries...................................................... 41

5.14 Margin Regulations; Investment Company Act; Public Utility

Holding Company Act............................................... 41

5.15 Disclosure........................................................ 41

5.16 Compliance with Laws.............................................. 41

5.17 Intellectual Property; Licenses, Etc.............................. 41

5.18 Solvency.......................................................... 42

5.19 Collateral and Security Documents................................. 42

5.20 Burdensome Agreements............................................. 43

5.21 Compliance with OFAC Rules and Regulations........................ 43

ARTICLE VI. AFFIRMATIVE COVENANTS............................................. 44

6.01 Financial Statements.............................................. 44

6.02 Certificates; Other Information................................... 44

6.03 Notices........................................................... 46

6.04 Payment of Obligations............................................ 46

6.05 Preservation of Existence, Etc.................................... 46

6.06 Maintenance of Properties......................................... 47

6.07 Maintenance of Insurance.......................................... 47

6.08 Compliance with Laws.............................................. 48

6.09 Books and Records................................................. 48

6.10 Inspection Rights................................................. 48

6.11 Use of Proceeds................................................... 48

6.12 Financial Covenants............................................... 48

6.13 Collateral Records................................................ 49

6.14 Security Interests................................................ 49

6.15 Collateral........................................................ 49

6.16 State of Incorporation............................................ 54

6.17 Further Assurances................................................ 54

ARTICLE VII. NEGATIVE COVENANTS............................................... 54

7.01 Liens............................................................. 54

7.02 Fundamental Changes............................................... 55

7.03 Dispositions...................................................... 56

7.04 Restricted Expenditures........................................... 57

7.05 Dividends......................................................... 57

7.06 ERISA............................................................. 57

7.07 Air Carrier....................................................... 57

7.08 Change in Nature of Business...................................... 57

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7.09 Transactions with Affiliates...................................... 57

7.10 Burdensome Agreements............................................. 57

7.11 Loans............................................................. 58

7.12 Use of Proceeds................................................... 58

ARTICLE VIII. EVENTS OF DEFAULT AND REMEDIES.................................. 58

8.01 Events of Default................................................. 58

8.02 Remedies Upon Event of Default, Change of Control,

Invalidity Event or Material Failure of Security.................. 60

8.03 Application of Funds.............................................. 60

ARTICLE IX. ADMINISTRATIVE AGENT.............................................. 61

9.01 Appointment and Authorization of Administrative Agent............. 61

9.02 Rights as a Lender................................................ 61

9.03 Exculpatory Provisions............................................ 61

9.04 Reliance by Administrative Agent.................................. 62

9.05 Delegation of Duties.............................................. 62

9.06 Resignation of Agent.............................................. 63

9.07 Non-Reliance on Agent and Other Lenders........................... 63

9.08 No Other Duties, Etc.............................................. 63

9.09 Administrative Agent May File Proofs of Claim..................... 64

9.10 Collateral Matters................................................ 64

9.11 Other Agents; Arrangers and Managers.............................. 66

ARTICLE X. MISCELLANEOUS...................................................... 66

10.01 Amendments, Etc................................................... 66

10.02 Notices; Effectiveness; Electronic Communications................. 67

10.03 No Waiver; Cumulative Remedies.................................... 69

10.04 Expenses; Indemnity; Damage Waiver................................ 69

10.05 Payments Set Aside................................................ 71

10.06 Successors and Assigns............................................ 71

10.07 Treatment of Certain Information; Confidentiality................. 74

10.08 Right of Setoff................................................... 75

10.09 Interest Rate Limitation.......................................... 75

10.10 Counterparts; Integration; Effectiveness.......................... 76

10.11 Survival of Representations and Warranties........................ 76

10.12 Severability...................................................... 76

10.13 Replacement of Lenders............................................ 76

10.14 Governing Law; Jurisdiction; Etc.................................. 77

10.15 Waiver of Right to Trial by Jury.................................. 78

10.16 USA Patriot Act Notice............................................ 78

10.17 Time of the Essence............................................... 78

10.18 Oral Agreements Not Enforceable................................... 78

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iii

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SCHEDULES

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1.01 Approved Appraisers

2.01 Commitments and Pro Rata Shares

5.06 Litigation

5.09 Environmental Matters

5.13 Equity Investments

7.01 Existing Liens

10.02 Administrative Agent's Office, Certain Addresses for Notices

10.06 Processing and Recordation Fees

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EXHIBITS

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A Form of Loan Notice

B Form of Note

C Form of Compliance Certificate

D Form of Assignment and Assumption

E-1 Form of Legal Opinion of Borrower's Counsel

E-2 Form of Legal Opinion of FAA Counsel

F Form of Amended and Restated Security Agreement

G Form of Cash Pledge Agreement

</TABLE>

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CREDIT AGREEMENT

This CREDIT AGREEMENT (this "Agreement") is entered into as of March 25,

2005 among ALASKA AIRLINES, INC., an Alaska corporation ("Borrower"), each

lender from time to time party hereto (collectively, "Lenders" and individually,

a "Lender"), CITICORP USA, INC., as Syndication Agent, USBANKCORP as

Documentation Agent, and BANK OF AMERICA, N.A., as Administrative Agent.

RECITALS

A. Borrower, certain lenders identified therein (the "Existing Lenders"),

and Bank of America, N.A., as administrative agent, are parties to that certain

Credit Agreement dated as of December 23, 1999 (as amended, the "Existing Credit

Agreement"), providing for the Existing Lenders to make revolving loans to

Borrower.

B. All obligations of Borrower pursuant to the Existing Credit Agreement

and related documents are secured by that certain Aircraft Chattel Mortgage

Security Agreement dated as of March 4, 2003 and effective as of December 31,

2002, between Borrower and Bank of America, N.A. (the "Existing Security

Agreement").

C. Borrower has requested that Lenders provide a revolving credit facility

to replace the revolving credit facility established pursuant to the Existing

Credit Agreement, and Lenders are willing to do so on the condition that the

Existing Security Agreement is amended and restated to secure the Obligations

(as defined herein) and on the other terms and conditions set forth herein.

D. In consideration of the mutual covenants and agreements herein

contained, the parties hereto covenant and agree as follows:

ARTICLE I.

DEFINITIONS AND ACCOUNTING TERMS

1.01 DEFINED TERMS. As used in this Agreement, the following terms shall

have the meanings set forth below:

"Added Aircraft" has the meaning set forth in Section 6.15(d) hereof.

"Added Engine" has the meaning set forth in Section 6.15(c) hereof.

"Administrative Agent" or "Agent" means Bank of America in its capacity as

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

administrative agent.

"Administrative Agent's Office" means Agent's address and, as appropriate,

account as set forth on Schedule 10.02, or such other address or account as

Agent may from time to time notify Borrower and Lenders.

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"Administrative Questionnaire" means an Administrative Questionnaire in a

form supplied by Agent.

"Affiliate" means, with respect to any Person, another Person that

directly, or indirectly through one or more intermediaries, Controls or is

Controlled by or is under common Control with the Person specified.

"Aircraft" means (a) each of the Airframes together with the Engines,

whether or not such Engines are installed on the Airframes or any other

airframes; (b) except for Excluded Equipment, all appliances, equipment,

instruments, and accessories (including radio and radar) from time to time

belonging to, installed in, or appurtenant to such Airframes and Engines; and

"Aircraft Collateral" means all of the Aircraft in which the Security

Agreement creates, or purports to create, a security interest.

"Airframe" means (a) any aircraft as specified by United States

Registration Number and manufacturer's serial number in the Security Agreement;

(b) any replacement airframe which may from time to time be substituted for such

airframe; and (c) in either case, any and all parts which are from time to time

incorporated or installed in or attached to such airframe or, so long as such

parts are subject to the Security Agreement covering such airframe, after

removal from such airframe.

"Agent Fee Letter" has the meaning specified in Section 2.07(b).

"Aggregate Commitments" means the Commitments of all Lenders.

"Agreed Value Amount" means, with respect to any Event of Loss of any

Pledged Aircraft, the amount (which shall be no less than the Current Market

Value of such Pledged Aircraft), reflected on the then current insurance

certificate as the amount that the insurers have agreed with Borrower to pay to

the Administrative Agent for the benefit of the Lenders in the event that the

Aircraft suffering an Event of Loss suffered such Event of Loss.

"Agreement" means this Credit Agreement.

"Applicable Percentage" means with respect to any Lender at any time, the

percentage (carried out to the ninth decimal place) of the Aggregate Commitments

represented by such Lender's Commitment at such time. If the commitment of each

Lender to make Loans has been terminated pursuant to Section 8.02 or if the

Aggregate Commitments have expired, then the Applicable Percentage of each

Lender shall be determined based on the Applicable Percentage of such Lender

most recently in effect, giving effect to any subsequent assignments. The

initial Applicable Percentage of each Lender is set forth opposite the name of

such Lender on Schedule 2.01 or in the Assignment and Assumption pursuant to

which such Lender becomes a party hereto, as applicable.

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"Applicable Rate" means, from time to time, the following percentages per

annum, based upon the Fixed Charge Coverage Ratio (the "Financial Covenant") as

set forth in the most recent Compliance Certificate received by Agent pursuant

to Section 6.02:

APPLICABLE RATE

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Pricing Fixed Charge Commitment Eurodollar Rate Base Rate

Level Coverage Ratio Fee** + +

------- -------------- ---------- --------------- ---------

[***] [***] [***] [***] [***]

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** The Applicable Rate for the commitment fee shall reduce by [***] at all

levels at all times during which the Outstanding Amount exceed [***] of the

Aggregate Commitments.

Any increase or decrease in the Applicable Rate resulting from a change in the

Financial Covenant shall become effective as of the first Business Day

immediately following the date a Compliance Certificate is delivered pursuant to

Section 6.02; provided, however, that if a Compliance Certificate is not

delivered when due in accordance with such Section, then [***] shall apply

commencing on the first Business Day following the date such Compliance

Certificate was required to have been delivered until such Certificate is

delivered. The Applicable Rate in effect from the Closing Date through June 29,

2005 shall be determined based upon [***]. Beginning with the quarter ended June

30, 2005, the Applicable Rate shall be determined pursuant to this section.

"Approved Appraiser" means any independent appraisal firm set forth on

Schedule 1.01 hereto.

"Approved Fund" means any Fund that is administered or managed by (a) a

Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an

entity that administers or manages a Lender.

"Assignee Group" means two or more Eligible Assignees that are Affiliates

of one another or two or more Approved Funds managed by the same investment

advisor.

"Arrangement/Upfront Fee Letter" has the meaning specified in Section

2.07(c).

"Assignee Group" means two or more Eligible Assignees that are Affiliates

of one another or two or more Approved Funds managed by the same investment

advisor.

"Assignment and Assumption" means an assignment and assumption entered

into by a Lender and an Eligible Assignee (with the consent of any party whose

consent is required by

* 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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Section 10.06(b)), and accepted by Agent, in substantially the form of Exhibit D

or any other form approved by Agent.

"Attributable Indebtedness" means, on any date, (a) in respect of any

Capital Lease of any Person, the capitalized amount thereof that would appear on

a balance sheet of such Person prepared as of such date in accordance with GAAP,

and (b) in respect of any Synthetic Lease Obligation, the capitalized amount of

the remaining lease payments under the relevant lease that would appear on a

balance sheet of such Person prepared as of such date in accordance with GAAP if

such lease were accounted for as a Capital Lease.

"Audited Financial Statements" means the audited consolidated balance

sheet of Borrower and its Subsidiaries for the fiscal year ended December 31,

2004, and the related consolidated statements of income or operations,

shareholders' equity and cash flows for such fiscal year of Borrower and its

Subsidiaries, including the notes thereto.

"Availability Period" means the period from and including the Closing Date

to the earliest of (a) the Maturity Date, (b) the date of termination of the

Aggregate Commitments pursuant to Section 2.04, and (c) the date of termination

of the commitment of each Lender to make Loans pursuant to Section 8.02.

"Bank of America" means Bank of America, N.A. and its successors.

"Bank of America Cash Collateral" means cash deposits with Bank of

America, N.A., in its capacity as Administrative Agent.

"Base Rate" means for any day a fluctuating rate per annum equal to the

higher of (a) the Federal Funds Rate plus 1/2 of 1% and (b) the rate of interest

in effect for such day as publicly announced from time to time by Bank of

America as its "prime rate." The "prime rate" is a rate set by Bank of America

based upon various factors including Bank of America's costs and desired return,

general economic conditions and other factors, and is used as a reference point

for pricing some loans, which may be priced at, above, or below such announced

rate. Any change in such rate announced by Bank of America shall take effect at

the opening of business on the day specified in the public announcement of such

change.

"Base Rate Loan" means a Loan that bears interest based on the Base Rate.

"Borrower" has the meaning specified in the introductory paragraph hereto.

"Borrower Materials" means has the meaning specified in Section 6.02.

"Borrowing" means a borrowing consisting of simultaneous Loans of the same

Type and, in the case of Eurodollar Rate Loans, having the same Interest Period

made by each of the Lenders pursuant to Section 2.01.

"Borrowing Base" means, as applicable, (a) [***] of the Current Market

Value of the Aircraft Collateral; (b) one hundred percent (100%) of the Bank of

America Cash Collateral; and (c) a Designated Percentage of Other Cash

Collateral.

* 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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"Business Day" means (i) any day other than a Saturday, Sunday or other

day on which commercial banks are authorized to close under the Laws of, or are

in fact closed in, the state of Washington or the state where Administrative

Agent's Office is located; and (ii) if such day relates to any Eurodollar Rate

Loan, any such day on which dealings in Dollar deposits are conducted by and

between banks in the London interbank eurodollar market.

"Capital Lease" means, with respect to any Person, a lease (or leases) for

real or personal property required to be capitalized under GAAP or which is

treated as an operating lease under regulations applicable to such Person but

which otherwise would be required to be capitalized under GAAP.

"Cash Collateral" means the Bank of America Cash Collateral and the Other

Cash Collateral.

"Cash Pledge Agreement" means a Cash Pledge Agreement made by the Borrower

in favor of the Administrative Agent in substantially the form of Exhibit G.

"Change in Law" means the occurrence, after the date of this Agreement, of

any of the following: (a) the adoption or taking effect of any law, rule,

regulation or treaty, (b) any change in any law, rule, regulation or treaty or

in the administration, interpretation or application thereof by any Governmental

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

(whether or not having the force of law) by any Governmental Authority.

"Change of Control" means, with respect to Borrower, an event or series of

events by which:

(a) Parent shall cease to own, directly or indirectly, 100% of the equity

securities of Borrower entitled to vote for members of the board of directors or

equivalent governing body of Borrower on a fully-diluted basis (and taking into

account all such securities that such person or group has the right to acquire

pursuant to any option right);

(b) during any period of 18 consecutive months, a majority of the members

of the board of directors or other equivalent governing body of Borrower cease

to be composed of individuals (i) who were members of that board or equivalent

governing body on the first day of such period, (ii) whose election or

nomination to that board or equivalent governing body was approved by

individuals referred to in clause (i) above constituting at the time of such

election or nomination at least a majority of that board or equivalent governing

body or (iii) whose election or nomination to that board or other equivalent

governing body was approved by individuals referred to in clauses (i) and (ii)

above constituting at the time of such election or nomination at least a

majority of that board or equivalent governing body (excluding, in the case of

both clause (ii) and clause (iii), any individual whose initial nomination for,

or assumption of office as, a member of that board or equivalent governing body

occurs as a result of an actual or threatened solicitation of proxies or

consents for the election or removal of one or more directors by any person or

group other than a solicitation for the election of one or more directors by or

on behalf of the board of directors); or

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shall have acquired by contract or otherwise, or shall have entered into a

contract or arrangement that, upon consummation thereof, will result in its or

their acquisition of the power to exercise, directly or indirectly, a

controlling influence over the management or policies of Borrower, or control

over the equity securities of Borrower entitled to vote for members of the board

of directors or equivalent governing body of Borrower on a fully-diluted basis

(and taking into account all such securities that such individual(s) or

entity(s) or group has the right to acquire pursuant to any option right)

representing 49% or more of the combined voting power of such securities.

"Claim Collateral Period" means, with respect to any Event of Loss of any

Pledged Aircraft, the period beginning on the date when such Event of Loss

occurs and continuing until the earliest of the date when (a) any proceeds from

any insurance claim arising from such Event of Loss have been paid to the

Administrative Agent for the benefit of Lenders; (b) any underwriter of the

insurance policy covering such Aircraft has denied coverage for such Event of

Loss; (c) 60 days have elapsed after the Event of Loss and the Administrative

Agent has not received insurance proceeds in respect of such Event of Loss in at

least the Agreed Value Amount; (d) the lead insurance underwriter under such

policy has become insolvent; or (e) the lead insurance underwriter under such

policy has commenced, has had commenced against it, or has otherwise become

subject to, a bankruptcy, receivership or other insolvency proceeding.

"Closing Date" means the first date all the conditions precedent in

Section 4.01 are satisfied or waived in accordance with Section 10.01.

"Code" means the Internal Revenue Code of 1986.

"Collateral" shall mean any and all assets and rights and interests in or

to property of Borrower, whether real or personal, tangible or intangible, in

which a Lien is granted or purported to be granted pursuant to the Collateral

Documents.

"Collateral Documents" means the Security Agreement, any Cash Pledge

Agreement and any other agreements, instruments and documents now or hereafter

executed and delivered in connection with this Agreement, pursuant to which

Liens are granted or purported to be granted to Agent to secure all or part of

the Obligations, each in form and substance satisfactory to Agent.

"Collateral Review Date" has the meaning set forth in Section 6.15(a).

"Collateral Shortfall" means any time when the amount of the Borrowing

Base is less than [***].

"Commitment" means, as to each Lender, its obligation to make Loans to

Borrower pursuant to Section 2.01, in an aggregate principal amount at any one

time outstanding not to exceed the amount set forth opposite such Lender's name

on Schedule 2.01 or in the Assignment and Assumption pursuant to which such

Lender becomes a party hereto, as applicable, as such amount may be adjusted

from time to time in accordance with this Agreement.

"Compliance Certificate" means a certificate substantially in the form of

Exhibit C.

* 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.

<PAGE>

"Consolidated Funded Debt and Leases" means all Funded Debt of Borrower

and its Subsidiaries calculated in accordance with GAAP (other than debt

outstanding between Borrower and its Affiliates) (i) which by its terms matures

more than one year from the date created or which is renewable or extendible at

the option of the obligor to a date beyond one year from such date, including

all payments due within 12 months of the date of such determination, (ii) any

short-term debt evidenced by a promissory note or similar agreement (including

the Loans), plus (iii) an amount equal to seven times Borrower's Consolidated

Lease Expense.

"Consolidated Lease Expense" means the aggregate Aircraft rental expense

incurred during the period indicated under leases for Aircraft (net of income

received during such period (if no default), from subleases thereof, but

including taxes, insurance, maintenance and similar expenses which the lessee

paid to the lessor under the terms of such leases during such period), excluding

however, Capital Leases.

"Consolidated Net Liquidity" means, at any date of determination, for the

Borrower and its Subsidiaries on a consolidated basis, the total of unrestricted

cash and marketable securities less the Outstanding Amount.

"Consolidated Tangible Net Worth" means, at any date of determination, for

the Borrower and its Subsidiaries on a consolidated basis, the total of

shareholder's equity (including capital stock, additional paid-in capital and

retained earnings) of the Borrower and its Subsidiaries on that date, less the

Intangible Assets of the Borrower and its Subsidiaries on that date which are

acquired or incurred after the date of this Agreement and excluding (a)

Permitted Asset Adjustments, (b) non-cash asset impairment charges incurred

prior to December 31, 2004 related to the 737-200 fleet, (c) the

marked-to-market Swap Termination Value for Swap Contracts that have not been

closed out, and (d) unusual, non-cash special charges and credits (excluding

Permitted Asset Adjustments), each without duplication and determined in

accordance with GAAP.

"Contractual Obligation" means, as to any Person, any provision of any

security issued by such Person or of any agreement, instrument or other

undertaking to which such Person is a party or by which it or any of its

property is bound.

"Control" means the possession, directly or indirectly, of the power to

direct or cause the direction of the management or policies of a Person, whether

through the ability to exercise voting power, by contract or otherwise.

"Controlling" and "Controlled" have meanings correlative thereto.

"Current Market Value" means the current market value of an Aircraft, as

set forth in the applicable Qualified Appraisal; provided that the current

market value shall be deemed to be $0 for [***] each Pledged Aircraft with

respect to which there has been a Failure of Security that has not been cured.

"Debtor Relief Laws" means the Bankruptcy Code of the United States, and

all other liquidation, conservatorship, bankruptcy, assignment for the benefit

of creditors, moratorium, rearrangement, receivership, insolvency,

reorganization, or similar debtor relief Laws of the

* 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.

<PAGE>

United States or other applicable jurisdictions from time to time in effect and

affecting the rights of creditors generally.

"Default" means any event or condition that constitutes an Event of

Default or that, with the giving of any notice, the passage of time, or both,

would be an Event of Default.

"Default Rate" means an interest rate equal to (i) the Base Rate plus (ii)

the Applicable Rate, if any, applicable to Base Rate Loans plus (iii) [***] per

annum; provided, however, that with respect to a Eurodollar Rate Loan, the

Default Rate shall be an interest rate equal to the interest rate (including any

Applicable Rate) otherwise applicable to such Loan plus [***] per annum.

"Defaulting Lender" means any Lender that (a) has failed to fund any

portion of the Loans required to be funded by it hereunder within one Business

Day of the date required to be funded by it hereunder, (b) has otherwise failed

to pay over to Agent or any other Lender any other amount required to be paid by

it hereunder within one Business Day of the date when due, unless the subject of

a good faith dispute, or (c) has been deemed insolvent or become the subject of

a bankruptcy or insolvency proceeding.

"Designated Percentage" means the percentage of the value of Other Cash

Collateral designated by Lenders for inclusion in the Borrowing Base.

"Disposition" or "Dispose" means the sale, transfer, license, lease or

other disposition (including any sale and leaseback transaction) of any property

by any Person, including any sale, assignment, transfer or other disposal, with

or without recourse, of any notes or accounts receivable or any rights and

claims associated therewith.

"Dollar" and "$" mean lawful money of the United States.

"Eligible Assignee" means (a) a Lender; (b) an Affiliate of a Lender; (c)

an Approved Fund; and (d) any other Person (other than a natural person)

approved by (i) Agent, and (ii) unless an Event of Default has occurred and is

continuing, Borrower (each such approval not to be unreasonably withheld or

delayed); provided that notwithstanding the foregoing, "Eligible Assignee" shall

not include Borrower or any of Borrower's Affiliates or Subsidiaries.

"Engine" means: (a) any engine listed by manufacturer's serial numbers in

the Security Agreement, whether or not from time to time installed on an

Airframe or any other airframe; (b) any replacement engine which from time to

time may be substituted for any Engine in accordance with this Agreement; and

or installed in or attached to any such engine or, so long as such parts are

subject to the Security Agreement, after removal from any such engine.

"Environmental Laws" means any and all Federal, state, local, and foreign

statutes, laws, regulations, ordinances, rules, judgments, orders, decrees,

permits, concessions, grants, franchises, licenses, agreements or governmental

restrictions relating to pollution and the protection of the environment or the

release of any materials into the environment, including

* 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.

<PAGE>

those related to hazardous substances or wastes, air emissions and discharges to

waste or public systems.

"Environmental Liability" means any liability, contingent or otherwise

(including any liability for damages, costs of environmental remediation, fines,

penalties or indemnities), of Borrower or any of its Subsidiaries directly or

indirectly resulting from or based upon (a) violation of any Environmental Law,

(b) the generation, use, handling, transportation, storage, treatment or

disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials,

(d) the release or threatened release of any Hazardous Materials into the

environment or (e) any contract, agreement or other consensual arrangement

pursuant to which liability is assumed or imposed with respect to any of the

foregoing.

"Equity Interests" means, with respect to any Person, all of the shares of

capital stock of (or other ownership or profit interests in) such Person, all of

the warrants, options or other rights for the purchase or acquisition from such

Person of shares of capital stock of (or other ownership or profit interests in)

such Person, all of the securities convertible into or exchangeable for shares

of capital stock of (or other ownership or profit interests in) such Person or

warrants, rights or options for the purchase or acquisition from such Person of

such shares (or such other interests), and all of the other ownership or profit

interests in such Person (including partnership, member or trust interests

therein), whether voting or nonvoting, and whether or not such shares, warrants,

options, rights or other interests are outstanding on any date of determination.

"ERISA" means the Employee Retirement Income Security Act of 1974.

"ERISA Affiliate" means any trade or business (whether or not

incorporated) under common control with Borrower within the meaning of Section

414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes

of provisions relating to Section 412 of the Code).

"ERISA Event" means (a) a Reportable Event with respect to a Pension Plan;

(b) a withdrawal by Borrower or any ERISA Affiliate from a Pension Plan subject

to Section 4063 of ERISA during a plan year in which it was a substantial

employer (as defined in Section 4001(a)(2) of ERISA) or a cessation of

operations that is treated as such a withdrawal under Section 4062(e) of ERISA;

Multiemployer Plan or notification that a Multiemployer Plan is in

reorganization; (d) the filing of a notice of intent to terminate, the treatment

of a Plan amendment as a termination under Sections 4041 or 4041A of ERISA, or

the commencement of proceedings by the PBGC to terminate a Pension Plan or

Multiemployer Plan; (e) an event or condition which constitutes grounds under

Section 4042 of ERISA for the termination of, or the appointment of a trustee to

administer, any Pension Plan or Multiemployer Plan; or (f) the imposition of any

liability under Title IV of ERISA, other than for PBGC premiums due but not

delinquent under Section 4007 of ERISA, upon Borrower or any ERISA Affiliate.

"Eurodollar Base Rate" has the meaning specified in the definition of

Eurodollar Rate.

"Eurodollar Rate" means for any Interest Period with respect to a

Eurodollar Rate Loan, a rate per annum determined by Agent pursuant to the

following formula:

<PAGE>

Eurodollar Rate = Eurodollar Base Rate

------------------------------------------

1.00 - Eurodollar Reserve Percentage

Where,

"Eurodollar Base Rate" means, for such Interest Period the rate per

annum equal to the British Bankers Association LIBOR Rate ("BBA

LIBOR"), as published by Reuters (or other commercially available

source providing quotations of BBA LIBOR as designated by Agent from

time to time) at approximately 11:00 a.m., London time, two Business

Days prior to the commencement of such Interest Period, for Dollar

deposits (for delivery on the first day of such Interest Period)

with a term equivalent to such Interest Period. If such rate is not

available at such time for any reason, then the "Eurodollar Base

Rate" for such Interest Period shall be the rate per annum

determined by Agent to be the rate at which deposits in Dollars for

delivery on the first day of such Interest Period in same day funds

in the approximate amount of the Eurodollar Rate Loan being made,

continued or converted by Bank of America and with a term equivalent

to such Interest Period would be offered by Bank of America's London

Branch to major banks in the London interbank eurodollar market at

their request at approximately 11:00 a.m. (London time) two Business

Days prior to the commencement of such Interest Period.

"Eurodollar Reserve Percentage" means, for any day during any

Interest Period, the reserve percentage (expressed as a decimal,

carried out to five decimal places) in effect on such day, whether

or not applicable to any Lender, under regulations issued from time

to time by the Board of Governors of the Federal Reserve System of

the United States for determining the maximum reserve requirement

(including any emergency, supplemental or other marginal reserve

requirement) with respect to Eurocurrency funding (currently

referred to as "Eurocurrency liabilities"). The Eurodollar Rate for

each outstanding Eurodollar Rate Loan shall be adjusted

automatically as of the effective date of any change in the

Eurodollar Reserve Percentage.

"Eurodollar Rate Loan" means a Loan that bears interest at a rate based on

the Eurodollar Rate.

"Event of Default" has the meaning specified in Section 8.01.

"Event of Loss" has the meaning set forth in the Security Agreement.

"Excluded Equipment" means all appliances, equipment, instruments, and

accessories the values of which are not included in the determination of Current

Market Value in any Qualified Appraisal.

"Excluded Taxes" means, with respect to Agent, any Lender or any other

recipient of any payment to be made by or on account of any obligation of

Borrower hereunder, (a) Taxes imposed on or measured by its overall net income

(however denominated and whether imposed

<PAGE>

by withholding or otherwise) or its gross receipts, and doing business, value

added and franchise taxes that are imposed in lieu of a net income tax), by the

United States government or any jurisdiction (or any political subdivision

thereof) under the laws of which such recipient is organized or in which its

principal office is located or in which it conducts or is deemed to conduct

business (other than solely as a result of the transactions contemplated herein)

or, in the case of any Lender, in which its applicable Lending Office is

located; (b) any Taxes caused by activities of such Person unrelated to the

transactions contemplated herein; (c) any Taxes caused by such Person's gross

negligence or willful misconduct or any breach of such Person's obligations

contained herein; (d) any branch profits taxes imposed by the United States or

any similar tax imposed by any other jurisdiction in which Borrower is located;

and (e) in the case of a Foreign Lender (other than an assignee pursuant to a

request by the Borrower under Section 10.13), any withholding tax that is

imposed on amounts payable to such Foreign Lender at the time such Foreign

Lender becomes a party hereto (or designates a new Lending Office) or is

attributable to such Foreign Lender's failure or inability (other than as a

result of a Change in Law) to comply with Section 3.01(e), except to the extent

that such Foreign Lender is organized in and a resident of the same country as

the Assignor and the Assignor was entitled, at the time of designation of a new

Lending Office (or assignment), to receive additional amounts from the Borrower

with respect to such withholding tax pursuant to Section 3.01(a).

"Existing Credit Agreement" has the meaning specified in Recital A hereto.

"Existing Lenders" has the meaning specified in Recital A hereto.

"Existing Security Agreement" has the meaning specified in Recital B

hereto.

"FAA Registry" has the meaning set forth in Section 6.15(b)(ii)(B) hereof.

"Failure of Security" means the occurrence of either of the following: any

Collateral Document ceases to be in full force and effect, or is declared by a

court of competent jurisdiction to be null and void, invalid or unenforceable in

any respect; or the Agent shall not have or shall cease to have a valid and

perfected Lien of first priority (other than Liens expressly permitted to be

prior to such Lien pursuant to Section 7.01) in the Collateral purported to be

covered thereby, in each case for any reason other than (i) as provided in such

Collateral Document, or (ii) the agreement of all the Lenders or satisfaction in

full of all the Obligations secured by such Collateral Document.

"Federal Funds Rate" means, for any day, the rate per annum equal to the

weighted average of the rates on overnight Federal funds transactions with

members of the Federal Reserve System arranged by Federal funds brokers on such

day, as published by the Federal Reserve Bank of New York on the Business Day

next succeeding such day; provided that (a) if such day is not a Business Day,

the Federal Funds Rate for such day shall be such rate on such transactions on

the next preceding Business Day as so published on the next succeeding Business

Day, and (b) if no such rate is so published on such next succeeding Business

Day, the Federal Funds Rate for such day shall be the average rate (rounded

upward, if necessary, to a whole multiple of 1/100 of 1%) charged to Bank of

America on such day on such transactions as determined by Agent.

<PAGE>

"Fixed Charge Coverage Ratio" means, for the four quarters preceding the

applicable date of calculation, the ratio of (a) to (b) where (a) equals the sum

of (i) Borrower's and its Subsidiaries' consolidated earnings before interest

expense (net of capitalized interest) and taxes during such period, plus, to the

extent such amounts are deducted when determining consolidated earnings, (ii)

consolidated depreciation and amortization expense (other than airframe and

engine overhaul amortization) during such period, plus (iii) Consolidated Lease

Expense during such period, plus (iv) amounts related to Permitted Asset

Adjustments, plus (v) non-cash asset impairment charges incurred prior to

December 31, 2004 related to the 737-200 fleet, plus (vi) 100% of Government

Compensation in the quarter in which it was received with such amount decreasing

by 25% per quarter in subsequent calculation periods until decreased to 0%,

excluding (x) unusual, non-cash special charges and credits, (excluding

Permitted Asset Adjustments) and (y) the marked-to-market Swap Termination value

for Swap Contracts that have not been closed out, and (b) equals the sum of (1)

Consolidated Lease Expense during such period, plus (2) consolidated interest

expense (net of capitalized interest) during such period in respect of

Consolidated Funded Debt and Leases, plus (3) the principal amount of the

scheduled current portion of all Consolidated Funded Debt and Leases, but

excluding any Loans, or short-term borrowings or debt outstanding between

Borrower and its Affiliates each without duplication and determined in

accordance with GAAP.

"Foreign Lender" means any Lender that is organized under the laws of a

jurisdiction other than that in which the Borrower is resident for tax purposes.

For purposes of this definition, the United States, each State thereof and the

District of Columbia shall be deemed to constitute a single jurisdiction.

"FRB" means the Board of Governors of the Federal Reserve System of the

United States.

"Fund" means any Person (other than a natural person) that is (or will be)

engaged in making, purchasing, holding or otherwise investing in commercial

loans and similar extensions of credit in the ordinary course of its business.

"Funded Debt" means all Indebtedness that appears on the liability side of

Borrower's balance sheet in accordance with GAAP.

"GAAP" means generally accepted accounting principles in the United States

set forth in the opinions and pronouncements of the Accounting Principles Board

and the American Institute of Certified Public Accountants and statements and

pronouncements of the Financial Accounting Standards Board or such other

principles as may be approved by a significant segment of the accounting

profession in the United States, that are applicable to the circumstances as of

the date of determination, consistently applied.

"Governmental Authority" means the government of the United States or any

other nation, or of any political subdivision thereof, whether state or local,

and any agency, authority, instrumentality, regulatory body, court, central bank

or other entity exercising executive, legislative, judicial, taxing, regulatory

or administrative powers or functions of or pertaining to government (including

any supra-national bodies such as the European Union or the European Central

Bank).

<PAGE>

"Government Compensation" means non-refundable cash received by Borrower

and/or its Subsidiaries and other commercial air carriers from the U.S. federal

government and recognized as extraordinary non-operating income in conformity

with GAAP.

"Granting Lender" has the meaning specified in Section 10.06(h).

"Guarantee" means, as to any Person, any (a) any obligation, contingent or

otherwise, of such Person guaranteeing or having the economic effect of

guaranteeing any Indebtedness or other obligation payable or performable by

another Person (the "primary obligor") in any manner, whether directly or

indirectly, and including any obligation of such Person, direct or indirect, (i)

to purchase or pay (or advance or supply funds for the purchase or payment of)

such Indebtedness or other obligation, (ii) to purchase or lease property,

securities or services for the purpose of assuring the obligee in respect of

such Indebtedness or other obligation of the payment or performance of such

Indebtedness or other obligation, (iii) to maintain working capital, equity

capital or any other financial statement condition or liquidity or level of

income or cash flow of the primary obligor so as to enable the primary obligor

to pay such Indebtedness or other obligation, or (iv) entered into for the

purpose of assuring in any other manner the obligee in respect of such

Indebtedness or other obligation of the payment or performance thereof or to

protect such obligee against loss in respect thereof (in whole or in part), or

(b) any Lien on any assets of such Person securing any Indebtedness or other

obligation of any other Person, whether or not such Indebtedness or other

obligation is assumed by such Person (or any right, contingent or otherwise, of

any holder of such Indebtedness to obtain any such Lien). The amount of any

Guarantee shall be deemed to be an amount equal to the stated or determinable

amount of the related primary obligation, or portion thereof, in respect of

which such Guarantee is made or, if not stated or determinable, the maximum

reasonably anticipated liability in respect thereof as determined by the

guaranteeing Person in good faith, except that, in the case of Liens referred to

in clause (b), the amount of such Guarantee shall not exceed the greater of the

book value or the fair market value of the property subject to such Lien unless

such Person has assumed or is otherwise liable for the secured obligation. The

term "Guarantee" as a verb has a corresponding meaning.

"Hazardous Materials" means all explosive or radioactive substances or

wastes and all hazardous or toxic substances, wastes or other pollutants,

including petroleum or petroleum distillates, asbestos or asbestos-containing

materials, polychlorinated biphenyls, radon gas, infectious or medical wastes

and all other similar substances or wastes of any nature regulated pursuant to

any Environmental Law.

"Horizon" means Horizon Air Industries, Inc., a Washington corporation.

"Indebtedness" means, as to any Person at a particular time, without

duplication, all of the following:

(a) all obligations of such Person for borrowed money, and all obligations

of such Person evidenced by bonds, debentures, notes, loan agreements or other

similar instruments;

<PAGE>

(b) all direct or contingent obligations of such Person arising under

letters of credit (including standby and commercial), bankers' acceptances, bank

guaranties, surety bonds and similar instruments;

(d) all obligations of such Person to pay the deferred purchase price of

property or services (other than trade accounts payable in the ordinary course

of business and, in each case, not past due for more than 60 days after the date

on which such trade account payable was created);

(e) indebtedness (excluding prepaid interest thereon) secured by a Lien on

property owned or being purchased by such Person (including indebtedness arising

under conditional sales or other title retention agreements), whether or not

such indebtedness shall have been assumed by such Person or is limited in

recourse;

(f) Capital Leases and Synthetic Lease Obligations;

(g) all obligations of such Person to purchase, redeem, retire, defease or

otherwise make any payment in respect of any Equity Interest in such Person or

any other Person, valued, in the case of a redeemable preferred interest, at the

greater of its voluntary or involuntary liquidation preference plus accrued and

unpaid dividends; and

(h) all Guarantees of such Person in respect of any of the foregoing.

For all purposes hereof, the Indebtedness of any Person shall include the

Indebtedness of any partnership or joint venture (other than a joint venture

that is itself a corporation or limited liability company) in which such Person

is a general partner or a joint venturer, unless such Indebtedness is expressly

made non-recourse to such Person. The amount of any net obligation under any

Swap Contract on any date shall be deemed to be the Swap Termination Value

thereof as of such date. If the Swap Termination Value with respect to a Swap

Contract represents an amount owing to such Person, such amount shall not

constitute a reduction in the amount of "Indebtedness" for purposes of this

definition but, in accordance with GAAP, may constitute an asset of such Person.

The amount of any Capital Lease or Synthetic Lease Obligation as of any date

shall be deemed to be the amount of Attributable Indebtedness in respect thereof

as of such date.

"Indemnified Taxes" means Taxes other than Excluded Taxes.

"Indemnitees" has the meaning specified in Section 10.04(b).

"Invalidity Event" means: (i) any Loan Document or any provision thereof,

at any time after its execution and delivery and for any reason other than as

expressly permitted hereunder or thereunder or satisfaction in full of all the

Obligations, ceases to be in full force and effect; or (ii) Borrower or any

other Person contests in any manner the validity or enforceability of any Loan

Document or any provision thereof; or (iii) Borrower denies that it has any or

further liability or

<PAGE>

obligation under any Loan Document, or purports to revoke, terminate or rescind

any Loan Document or any provision thereof.

"Intangible Assets" means assets that are considered to be intangible

assets as determined in accordance with GAAP, including customer lists,

goodwill, computer software, copyrights, trade names, trademarks, patents,

franchises, licenses, unamortized deferred charges, unamortized debt discount

and capitalized research and development costs less noncontributory and defined

benefit pension amounts included as intangible assets incurred after December

31, 2004.

"Interest Payment Date" means, (a) as to any Loan other than a Base Rate

Loan, the last day of each Interest Period applicable to such Loan and the

Maturity Date; provided, however, that if any Interest Period for a Eurodollar

Rate Loan exceeds three months, the respective dates that fall every three

months after the beginning of such Interest Period shall also be Interest

Payment Dates; and (b) as to any Base Rate Loan, the last Business Day of each

month and the Maturity Date.

"Interest Period" means, as to each Eurodollar Rate Loan, the period

commencing on the date such Eurodollar Rate Loan is disbursed or converted to or

continued as a Eurodollar Rate Loan and ending on the date one, two, three or

six months thereafter, as selected by Borrower in its Loan Notice; provided

that:

(i) any Interest Period that would otherwise 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;

(ii) any Interest Period that begins on the last Business Day of a

calendar month (or on a day for which there is no numerically

corresponding day in the calendar month at the end of such Interest

Period) shall end on the last Business Day of the calendar month at the

end of such Interest Period; and

(iii) no Interest Period shall extend beyond the Maturity Date.

"Internal Control Event" means a material weakness in, or fraud that

involves management or other employees who have a significant role in, the

Borrower's internal controls over financial reporting, in each case as described

in the Securities Laws.

"Investment" means, as to any Person, any direct or indirect acquisition

or investment by such Person, whether by means of (a) the purchase or other

acquisition of capital stock or other securities of another Person, (b) a loan,

advance or capital contribution to, Guarantee or assumption of debt of, or

purchase or other acquisition of any other debt or equity participation or

interest in, another Person, including any partnership or joint venture interest

in such other Person and any arrangement pursuant to which the investor

Guarantees Indebtedness of such other Person, or (c) the purchase or other

acquisition (in one transaction or a series of transactions) of assets of

another Person that constitute a business unit. For purposes of covenant

<PAGE>

compliance, the amount of any Investment shall be the amount actually invested,

without adjustment for subsequent increases or decreases in the value of such

Investment.

"IP Rights" has the meaning specified in Section 5.17.

"IRS" means the United States Internal Revenue Service.

"Laws" means, collectively, all international, foreign, Federal, state and

local statutes, treaties, rules, guidelines, regulations, ordinances, codes and

administrative or judicial precedents or authorities, including the

interpretation or administration thereof by any Governmental Authority charged

with the enforcement, interpretation or administration thereof, and all

applicable administrative orders, directed duties, requests, licenses,

authorizations and permits of, and agreements with, any Governmental Authority,

in each case whether or not having the force of law.

"Lender" has the meaning specified in the introductory paragraph hereto.

"Lending Office" means, as to any Lender, the office or offices of such

Lender described as such in such Lender's Administrative Questionnaire, or such

other office or offices as a Lender may from time to time notify Borrower and

Agent.

"Lien" means any mortgage, pledge, hypothecation, assignment, deposit

arrangement, encumbrance, lien (statutory or other), charge, or preference,

priority or other security interest or preferential arrangement in the nature of

a security interest of any kind or nature whatsoever (including any conditional

sale, equipment trust agreement, or other title retention agreement, any

easement, right of way or other encumbrance on title to real property, and any

financing lease having substantially the same economic effect as any of the

foregoing).

"Loan" means an extension of credit by a Lender to Borrower under Article

II.

"Loan Documents" means this Agreement, each Note, the Agent Fee Letter,

Arrangement/Upfront Fee Letter, and each Collateral Document.

"Loan Notice" means a notice of (a) a Borrowing, (b) a conversion of Loans

from one Type to the other, or (c) a continuation of Eurodollar Rate Loans,

pursuant to Section 2.02(a), which, if in writing, shall be substantially in the

form of Exhibit A.

"Material Adverse Effect" means (a) a material adverse change in, or a

material adverse effect upon, the business, assets, properties, liabilities

(actual and contingent), operations or financial condition of Borrower and its

Subsidiaries, taken as a whole, (b) a material impairment of the ability of

Borrower to perform its obligations under any Loan Document or (c) a material

adverse effect on the rights and remedies of the Administrative Agent or the

Lenders under any Loan Document.

"Material Failure of Security" means a Failure of Security with respect to

Collateral whose removal from the Borrowing Base, individually or in the

aggregate, causes the Borrowing Base to be less than [***].

* 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.

<PAGE>

"Maturity Date" means March __, 2008.

"Multiemployer Plan" means any employee benefit plan of the type described

in Section 4001(a)(3) of ERISA, to which Borrower or any ERISA Affiliate makes

or is obligated to make contributions, or during the preceding five plan years,

has made or been obligated to make contributions.

"Note" means a promissory note made by Borrower in favor of a Lender

evidencing Loans made by such Lender, substantially in the form of Exhibit B.

"Obligations" means all advances to, and debts, liabilities, obligations,

covenants and duties of, Borrower arising under any Loan Document or otherwise

with respect to any Loan, whether direct or indirect (including those acquired

by assumption), absolute or contingent, due or to become due, now existing or

hereafter arising and including interest and fees that accrue after the

commencement by or against Borrower or any Subsidiary thereof of any proceeding

under any Debtor Relief Laws naming such Person as the debtor in such

proceeding, regardless of whether such interest and fees are allowed claims in

such proceeding.

"Organization Documents" means, (a) with respect to any corporation, the

certificate or articles of incorporation and the bylaws (or equivalent or

comparable constitutive documents with respect to any non-U.S. jurisdiction);

(b) with respect to any limited liability company, the certificate or articles

of formation or organization and operating agreement; and (c) with respect to

any partnership, joint venture, trust or other form of business entity, the

partnership, joint venture or other applicable agreement of formation or

organization and any agreement, instrument, filing or notice with respect

thereto filed in connection with its formation or organization with the

applicable Governmental Authority in the jurisdiction of its formation or

organization and, if applicable, any certificate or articles of formation or

organization of such entity.

"Other Cash Collateral" means U.S. government securities and other cash

equivalents (other than Bank of America Cash Collateral) reasonably acceptable

to Lenders.

"Other Taxes" means all present or future stamp, intangible or documentary

taxes or any other excise or property taxes, charges or similar levies arising

from any payment made hereunder or under any other Loan Document or from the

execution, delivery or enforcement of, or otherwise with respect to, this

Agreement or any other Loan Document; provided, however, that "Other Taxes"

shall not include and Excluded Taxes.

"Outstanding Amount" means with respect to Loans on any date, the

aggregate outstanding principal amount thereof after giving effect to any

borrowings and prepayments or repayments of Loans occurring on such date.

"Over Advance" has the meaning specified in Section 2.03(b).

"Parent" means Alaska Air Group, Inc., a Delaware corporation.

"Participant" has the meaning specified in Section 10.06(d).

<PAGE>

"PBGC" means the Pension Benefit Guaranty Corporation.

"Pension Plan" means any "employee pension benefit plan" (as such term is

defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is

subject to Title IV of ERISA and is sponsored or maintained by Borrower or any

ERISA Affiliate or to which Borrower or any ERISA Affiliate contributes or has

an obligation to contribute, or in the case of a multiple employer or other plan

described in Section 4064(a) of ERISA, has made contributions at any time during

the immediately preceding five plan years.

"Permitted Asset Adjustments" means the write-down in the book value of

any flight and non-flight equipment assets owned by Borrower or its Subsidiaries

of up to [***] in the aggregate occurring after January 1, 2005; provided,

however, that the maximum amount of the write-down for non-flight assets

included in calculating Permitted Asset Adjustments will be [***], all

determined in accordance with GAAP.

"Person" means any natural person, corporation, limited liability company,

trust, joint venture, association, company, partnership, Governmental Authority

or other entity.

"Plan" means any "employee benefit plan" (as such term is defined in

Section 3(3) of ERISA) established by Borrower or, with respect to any such plan

that is subject to Section 412 of the Code or Title IV of ERISA, any ERISA

Affiliate.

"Platform" has the meaning specified in Section 6.02.

"Pledged Aircraft" means each Aircraft in which the Security Agreement

creates, or purports to create, a security interest.

"Qualified Appraisal" means a desk-top appraisal of the Aircraft

Collateral addressed to the Administrative Agent, Lenders and Borrower by an

Approved Appraiser. Each such appraisal shall be in a form that is reasonably

acceptable to the Administrative Agent and shall be accompanied by a letter

stating that the purpose of the appraisal is to provide a report, upon which the

Administrative Agent and Lenders may rely, of the value of the Pledged Aircraft

as Aircraft Collateral under the Security Agreement. Each such appraisal shall

set forth the current market value of each Pledged Aircraft (including any

Aircraft being added to the Aircraft Collateral and excluding any Aircraft being

removed from the Aircraft Collateral) determined in accordance with the

definition of "current market value" promulgated by the International Society of

Transport Aircraft Trading, as of the date of such appraisal.

"Register" has the meaning specified in Section 10.06(c).

"Registered Public Accounting Firm" has the meaning specified in the

Securities Laws and shall be independent of the Borrower as prescribed by the

Securities Laws.

"Related Parties" means, with respect to any Person, such Person's

Affiliates and the partners, directors, officers, employees, agents and advisors

of such Person and of such Person's Affiliates.

* 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.

<PAGE>

"Removed Aircraft" has the meaning set forth in Section 6.15(d) hereof.

"Reportable Event" means any of the events set forth in Section 4043(c) of

ERISA, other than events for which the 30-day notice period has been waived.

"Required Lenders" means, as of any date of determination, Lenders having

more than 50% of the Aggregate Commitments or, if the commitment of each Lender

to make Loans has been terminated pursuant to Section 8.02, Lenders holding in

the aggregate more than 50% of the Outstanding Amount; provided that the

Commitment of, and the portion of the Outstanding Amount held or deemed held by,

any Defaulting Lender shall be excluded for purposes of making a determination

of Required Lenders.

"Responsible Officer" means the chief executive officer, president, chief

financial officer, vice president of finance, treasurer, assistant treasurer or

director of treasury of Borrower. Any document delivered hereunder that is

signed by a Responsible Officer of Borrower shall be conclusively presumed to

have been authorized by all necessary corporate and/or other action on the part

of Borrower and such Responsible Officer shall be conclusively presumed to have

acted on behalf of Borrower.

"Restricted Expenditure" means any Restricted Payment, Investment or

capital expenditure.

"Restricted Payment" means any cash dividend or distribution with respect

to any capital stock or other Equity Interest of Borrower or any Subsidiary, or

any payment (whether in cash, securities or other property), including any

sinking fund or similar deposit, on account of the purchase, redemption,

retirement, acquisition, cancellation or termination of any such capital stock

or other Equity Interest or on account of any return of capital to Borrower's

stockholders, partners or members (or the equivalent Person thereof).

"Sarbanes-Oxley" means the Sarbanes-Oxley Act of 2002.

"SEC" means the Securities and Exchange Commission, or any Governmental

Authority succeeding to any of its principal functions.

"Securities Laws" means the Securities Act of 1933, the Securities

Exchange Act of 1934, Sarbanes-Oxley and the applicable accounting and auditing

principles, rules, standards and practices promulgated, approved or incorporated

by the SEC or the Public Company Accounting Oversight Board, as each of the

foregoing may be amended and in effect on any applicable date hereunder.

"Security Agreement" means that certain Amended and Restated Aircraft

Chattel Mortgage Security Agreement dated as of the date hereof made by Borrower

in favor of the Administrative Agent in substantially the form of Exhibit F,

including any Security Agreement Supplements.

"Security Agreement Supplement" has the meaning specified in Section

6.15(b)(ii).

<PAGE>

"Stage 3 Aircraft" means "Stage 3 Airframes" with "Stage 3 Engines"

installed owned by Borrower and qualifying as Stage 3 airplanes, as set forth in

Federal Aviation Regulation 36.1(f)(6), 14 C.F.R. Section 6.1(f)(6) or any

successor regulation, as amended; and "Stage 3 Engines" also include spare

engines which are suitable for use on Stage 3 Airframes and are being maintained

according to Borrower's normal and customary standards.

"Subordinated Liabilities" means liabilities subordinated to the

Obligations in a manner acceptable to Agent in its reasonable discretion.

"SPC" has the meaning specified in Section 10.06(h).

"Subsidiary" of a Person means a corporation, partnership, joint venture,

limited liability company or other business entity of which a majority of the

shares of securities or other interests having ordinary voting power for the

election of directors or other governing body (other than securities or

interests having such power only by reason of the happening of a contingency)

are at the time beneficially owned, or the management of which is otherwise

controlled, directly, or indirectly through one or more intermediaries, or both,

by such Person. Unless otherwise specified, all references herein to a

"Subsidiary" or to "Subsidiaries" shall refer to a Subsidiary or Subsidiaries of

Borrower.

"Swap Contract" means (a) any and all rate swap transactions, basis swaps,

credit derivative transactions, forward rate transactions, commodity swaps,

commodity options, forward commodity contracts, equity or equity index swaps or

options, bond or bond price or bond index swaps or options or forward bond or

forward bond price or forward bond index transactions, interest rate options,

forward foreign exchange transactions, cap transactions, floor transactions,

collar transactions, currency swap transactions, cross-currency rate swap

transactions, currency options, spot contracts, or any other similar

transactions or any combination of any of the foregoing (including any options

to enter into any of the foregoing), whether or not any such transaction is

governed by or subject to any master agreement, and (b) any and all transactions

of any kind, and the related confirmations, which are subject to the terms and

conditions of, or governed by, any form of master agreement published by the

International Swaps and Derivatives Association, Inc., any International Foreign

Exchange Master Agreement, or any other master agreement (any such master

agreement, together with any related schedules, a "Master Agreement"), including

any such obligations or liabilities under any Master Agreement.

"Swap Termination Value" means, in respect of any one or more Swap

Contracts, after taking into account the effect of any legally enforceable

netting agreement relating to such Swap Contracts, (a) for any date on or after

the date such Swap Contracts have been closed out and termination value(s)

determined in accordance therewith, such termination value(s), and (b) for any

date prior to the date referenced in clause (a), the amount(s) determined as the

mark-to-market value(s) for such Swap Contracts, as determined based upon one or

more mid-market or other readily available quotations provided by any recognized

dealer in such Swap Contracts (which may include a Lender or any Affiliate of a

Lender).

"Synthetic Lease Obligation" means the monetary obligation of a Person

under (a) a so-called synthetic, off-balance sheet or tax retention lease, or

(b) an agreement for the use or

<PAGE>

possession of property creating obligations that do not appear on the balance

sheet of such Person but which, upon the insolvency or bankruptcy of such

Person, would be characterized as the indebtedness of such Person (without

regard to accounting treatment).

"Taxes" means all present or future taxes, levies, imposts, duties,

deductions, withholdings, assessments, fees or other charges imposed by any

Governmental Authority, including any interest, additions to tax or penalties

applicable thereto.

"Threshold Amount" means [***].

"Total Liabilities" means the sum of current liabilities plus long term

liabilities.

"Type" means, with respect to a Loan, its character as a Base Rate Loan or

a Eurodollar Rate Loan.

"Unfunded Pension Liability" means the excess of a Pension Plan's benefit

liabilities under Section 4001(a)(16) of ERISA, over the current value of that

Pension Plan's assets, determined in accordance with the assumptions used for

funding the Pension Plan pursuant to Section 412 of the Code for the applicable

plan year.

"United States" and "U.S." mean the United States of America.

"U.S. Air Carrier" means any United States air carrier engaged in

scheduled air transportation and in all material respects duly qualified and

licensed under all applicable Laws to carry on its business as a scheduled

airline currently subject to regulation by the Federal Aviation Administration

and the Department of Transportation as to which there is in force a certificate

issued pursuant to Section 401 of the Federal Aviation Act, 49 U.S.C. Section

41101 et seq., and as to which there is in force an air carrier operating

certificate issued under Part 121 of the Federal Aviation Regulations, or which

may operate as an air carrier by certificate or otherwise under any successor or

substitute provisions therefor or in the absence thereof.

"Valuation Date" means, with respect to any Qualified Appraisal, the date

as of which the Current Market Value of the Aircraft Collateral is determined

according to such appraisal.

1.02 OTHER INTERPRETIVE PROVISIONS. With reference to this Agreement and

each other Loan Document, unless otherwise specified herein or in such other

Loan Document:

(a) The definitions of terms herein shall apply equally to the singular

and plural forms of the terms defined. Whenever the context may require, any

pronoun shall include the corresponding masculine, feminine and neuter forms.

The words "include," "includes" and "including" shall be deemed to be followed

by the phrase "without limitation." The word "will" shall be construed to have

the same meaning and effect as the word "shall." Unless the context requires

otherwise, (i) any definition of or reference to any agreement, instrument or

other document (including any Organization Document) shall be construed as

referring to such agreement, instrument or other document as from time to time

amended, supplemented or otherwise modified (subject to any restrictions on such

amendments, supplements or modifications set forth herein or in any other Loan

Document), (ii) any reference herein to any

* 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.

<PAGE>

Person shall be construed to include such Person's successors and assigns, (iii)

the words "herein," "hereof" and "hereunder," and words of similar import when

used in any Loan Document, shall be construed to refer to such Loan Document in

its entirety and not to any particular provision thereof, (iv) all references in

a Loan Document to Articles, Sections, Exhibits and Schedules shall be construed

to refer to Articles and Sections of, and Exhibits and Schedules to, the Loan

Document in which such references appear, (v) any reference to any law shall

include all statutory and regulatory provisions consolidating, amending,

replacing or interpreting such law and any reference to any law or regulation

shall, unless otherwise specified, refer to such law or regulation as amended,

modified or supplemented from time to time, and (vi) the words "asset" and

"property" shall be construed to have the same meaning and effect and to refer

to any and all tangible and intangible assets and properties, including cash,

securities, accounts and contract rights.

(b) In the computation of periods of time from a specified date to a later

specified date, the word "from" means "from and including;" the words "to" and

"until" each mean "to but excluding;" and the word "through" means "to and

including."

for convenience of reference only and shall not affect the interpretation of

this Agreement or any other Loan Document.

1.03 ACCOUNTING TERMS.

(a) Generally. All accounting terms not specifically or completely defined

herein shall be construed in conformity with, and all financial data (including

financial ratios and other financial calculations) required to be submitted

pursuant to this Agreement shall be prepared in conformity with, GAAP applied on

a consistent basis, as in effect from time to time, applied in a manner

consistent with that used in preparing the Audited Financial Statements, except

as otherwise specifically prescribed herein.

(b) Changes in GAAP. If, at any time, any change in GAAP or in practices

or estimates which are in accordance with GAAP (each, a "Change") would affect

the computation of any financial ratio or requirement set forth in any Loan

Document, and either Borrower or the Required Lenders shall so request, then

Agent, Lenders and Borrower shall negotiate in good faith to amend such ratio or

requirement to preserve the original intent thereof in light of such Change

(subject to the approval of the Required Lenders); provided that, until so

amended, (i) such ratio or requirement shall continue to be computed in

accordance with GAAP and such practices and estimates prior to such Change and

(ii) Borrower shall provide to Agent and Lenders financial statements and other

documents required under this Agreement or as reasonably requested hereunder

setting forth a reconciliation between calculations of such ratio or requirement

made before and after giving effect to such Change.

1.04 ROUNDING. Any financial ratios required to be maintained by Borrower

pursuant to this Agreement shall be calculated by dividing the appropriate

component by the other component, carrying the result to one place more than the

number of places by which such ratio is expressed herein and rounding the result

up or down to the nearest number (with a rounding-up if there is no nearest

number).

<PAGE>

1.05 TIMES OF DAY. Unless otherwise specified, all references herein to

times of day shall be references to Pacific time (daylight or standard, as

applicable).

ARTICLE II.

THE COMMITMENTS AND CREDIT EXTENSIONS

2.01 LOANS. Subject to the terms and conditions and relying upon the

representations and warranties set forth herein, each Lender, severally and not

jointly, agrees to make loans (each such loan, a "Loan") to Borrower from time

to time, on any Business Day during the Availability Period, in an aggregate

amount not to exceed at any time outstanding the amount of such Lender's

Commitment; provided, however, that after giving effect to any Borrowing, (i)

the Outstanding Amount shall not exceed the Aggregate Commitments, (ii) the

Outstanding Amount of the Loans of any Lender shall not exceed such Lender's

Commitment, and (iii) the Outstanding Amount shall not exceed the Borrowing

Base. Within the limits of each Lender's Commitment, and subject to the other

terms and conditions hereof, Borrower may borrow under this Section 2.01, prepay

under Section 2.03, and reborrow under this Section 2.01. Loans may be Base Rate

Loans or Eurodollar Rate Loans, as further provided herein.

2.02 BORROWINGS, CONVERSIONS AND CONTINUATIONS OF LOANS.

(a) Each Borrowing, each conversion of Loans from one Type to the other,

and each continuation of Eurodollar Rate Loans shall be made upon Borrower's

irrevocable notice to Agent, which may be given by telephone. Each such notice

must be received by Agent not later than 11:00 a.m. (i) three Business Days

prior to the requested date of any Borrowing of, conversion to or continuation

of Eurodollar Rate Loans or of any conversion of Eurodollar Rate Loans to Base

Rate Loans, and (ii) on the requested date of any Borrowing of Base Rate Loans.

Each telephonic notice by Borrower pursuant to this Section 2.02(a) must be

confirmed promptly by delivery to Agent of a written Loan Notice, appropriately

completed and signed by a Responsible Officer of Borrower. Each Borrowing of,

conversion to or continuation of Eurodollar Rate Loans shall be in a principal

amount of $5,000,000 or a whole multiple of $1,000,000 in excess thereof. Each

Borrowing of or conversion to Base Rate Loans shall be in a principal amount of

$1,000,000 or a whole multiple of $500,000 in excess thereof. Each Loan Notice

(whether telephonic or written) shall specify (i) whether Borrower is requesting

a Borrowing, a conversion of Loans from one Type to the other, or a continuation

of Eurodollar Rate Loans, (ii) the requested date of the Borrowing, conversion

or continuation, as the case may be (which shall be a Business Day), (iii) the

principal amount of Loans to be borrowed, converted or continued, (iv) the Type

of Loans to be borrowed or to which existing Loans are to be converted, and (v)

if applicable, the duration of the Interest Period with respect thereto. If

Borrower fails to specify a Type of Loan in a Loan Notice or if Borrower fails

to give a timely notice requesting a conversion or continuation, then the

applicable Loans shall be made as, or converted to, Base Rate Loans. Any such

automatic conversion to Base Rate Loans shall be effective as of the last day of

the Interest Period then in effect with respect to the applicable Eurodollar

Rate Loans. If Borrower requests a Borrowing of, conversion to, or continuation

of Eurodollar Rate Loans in any such Loan Notice, but fails to specify an

Interest Period, it will be deemed to have specified an Interest Period of one

month.

<PAGE>

(b) Each Loan Notice submitted by Borrower shall be deemed to be a

representation and warranty that (i) since the Closing Date no event or

circumstance has had or could be reasonably expected to have, either

individually or in the aggregate, a Material Adverse Effect; (ii) no Default or

Collateral Shortfall exists or will exist upon giving effect to the requested

Borrowing, conversion or continuation, and (iii) the conditions specified in

Section 4.02(a) have been satisfied, on and as of the date of the applicable

Borrowing, conversion of Loans from one Type to the other, or continuation of

Eurodollar Rate Loans.

Lender of the amount of its Applicable Percentage of the applicable Loans, and

if no timely notice of a conversion or continuation is provided by Borrower,

Agent shall notify each Lender of the details of any automatic conversion to

Base Rate Loans described in the preceding subsection. In the case of a

Borrowing, each Lender shall make the amount of its Loan available to Agent in

immediately available funds at Administrative Agent's Office not later than 1:00

p.m. on the Business Day specified in the applicable Loan Notice. Upon

satisfaction of the applicable conditions set forth in Section 4.02 (and, if

such Borrowing is the initial Borrowing, Section 4.01), Agent shall make all

funds so received available to Borrower in like funds as received by Agent

either by (i) crediting the account of Borrower on the books of Bank of America

with the amount of such funds or (ii) wire transfer of such funds, in each case

in accordance with instructions provided to (and reasonably acceptable to) Agent

by Borrower.

(d) Except as otherwise provided herein, a Eurodollar Rate Loan may be

continued or converted only on the last day of an Interest Period for such

Eurodollar Rate Loan. During the existence of a Default, no Loans may be

requested as, converted to or continued as Eurodollar Rate Loans without the

consent of the Required Lenders. During the existence of an Event of Default, if

Agent declares all amounts owing under this Agreement to be immediately due and

payable pursuant to Section 8.02, then the Required Lenders may also demand that

any or all of the then outstanding Eurodollar Rate Loans be converted

immediately to Base Rate Loans and Borrower agrees to pay all amounts due under

Section 3.05 in accordance with the terms thereof due to any such conversion.

(e) Agent shall promptly notify Borrower and Lenders of the interest rate

applicable to any Interest Period for Eurodollar Rate Loans upon determination

of such interest rate. At any time that Base Rate Loans are outstanding, the

Administrative Agent shall notify the Borrower and the Lenders of any change in

Bank of America's prime rate used in determining the Base Rate promptly

following the public announcement of such change.

(f) After giving effect to all Borrowings, all conversions of Loans from

one Type to the other, and all continuations of Loans as the same Type, there

shall not be more than 5 Interest Periods in effect at any one time with respect

to Loans.

2.03 PREPAYMENTS.

(a) Borrower may, upon notice to Agent, at any time or from time to time

voluntarily prepay Loans in whole or in part without premium or penalty;

provided that (i) such notice must be received by Agent not later than 11:00

a.m. (A) three Business Days prior to any date of prepayment of Eurodollar Rate

Loans and (B) on the date of prepayment of Base Rate Loans;

<PAGE>

(ii) any prepayment of Eurodollar Rate Loans shall be in a principal amount of

$5,000,000 or a whole multiple of $1,000,000 in excess thereof; and (iii) any

prepayment of Base Rate Loans shall be in a principal amount of $1,000,000 or a

whole multiple of $500,000 in excess thereof or, in each case, if less, the

entire principal amount thereof then outstanding. Each such notice shall specify

the date and amount of such prepayment and the Type(s) of Loans to be prepaid.

Agent will promptly notify each Lender of its receipt of each such notice, and

of the amount of such Lender's Applicable Percentage of such prepayment. If such

notice is given by Borrower, Borrower shall make such prepayment and the payment

amount specified in such notice shall be due and payable on the date specified

therein. Any prepayment of a Eurodollar Rate Loan shall be accompanied by all

accrued interest on the amount prepaid, together with any additional amounts

required pursuant to Section 3.05. Each such prepayment shall be applied to the

Loans of Lenders in accordance with their respective Applicable Percentages.

(b) If for any reason the Outstanding Amount at any time exceeds the

Aggregate Commitments then in effect, Borrower shall immediately prepay Loans in

an aggregate amount equal to such excess. If for any reason the Outstanding

Amount at any time exceeds the Borrowing Base (an "Over Advance") then in

effect, Borrower shall either: (i) immediately prepay Loans in an aggregate

amount equal to such Over Advance or (ii) cure such Over Advance by pledging

additional Collateral in accordance with Section 6.15(b) within five Business

Days.

2.04 TERMINATION OR REDUCTION OF COMMITMENTS. Borrower may, upon notice to

Agent, terminate the Aggregate Commitments, or from time to time permanently

reduce the Aggregate Commitments; provided that (i) any such notice shall be

received by Agent not later than 11:00 a.m. five Business Days prior to the date

of termination or reduction, (ii) any such partial reduction shall be in an

aggregate amount of $5,000,000 or any whole multiple of $1,000,000 in excess

thereof, and (iii) Borrower shall not terminate or reduce the Aggregate

Commitments if, after giving effect thereto and to any concurrent prepayments

hereunder, the Outstanding Amount would exceed the Aggregate Commitments. Agent

will promptly notify the Lenders of any such notice of termination or reduction

of the Aggregate Commitments. Any reduction of the Aggregate Commitments shall

be applied to the Commitment of each Lender according to its Applicable

Percentage. All fees accrued until the effective date of any termination of the

Aggregate Commitments shall be paid on the effective date of such termination.

2.05 REPAYMENT OF LOANS. Borrower shall repay to Lenders on the Maturity

Date the aggregate principal amount of Loans outstanding on such date.

2.06 INTEREST.

(a) Subject to the provisions of subsection (b) below, (i) each Eurodollar

Rate Loan shall bear interest on the outstanding principal amount thereof for

each Interest Period at a rate per annum equal to the Eurodollar Rate for such

Interest Period plus the Applicable Rate; and (ii) each Base Rate Loan shall

bear interest on the outstanding principal amount thereof from the applicable

borrowing date at a rate per annum equal to the Base Rate plus the Applicable

Rate.

<PAGE>

(b) (i) If any amount of principal of any Loan is not paid when due

(without regard to any applicable grace periods), whether at stated maturity, by

acceleration or otherwise, such amount shall thereafter bear interest at a

fluctuating interest rate per annum at all times equal to the Default Rate to

the fullest extent permitted by applicable Laws.

(ii) If any amount (other than principal of any Loan) payable by

Borrower under any Loan Document is not paid when due (without regard to

any applicable grace periods), whether at stated maturity, by acceleration

or otherwise, then upon the request of the Required Lenders, such amount

shall thereafter bear interest at a fluctuating interest rate per annum at

all times equal to the Default Rate to the fullest extent permitted by

applicable Laws.

(iii) Upon the request of the Required Lenders, while any Event of

Default exists, Borrower shall pay interest on the principal amount of all

outstanding Obligations hereunder at a fluctuating interest rate per annum

at all times equal to the Default Rate to the fullest extent permitted by

applicable Laws.

(iv) Accrued and unpaid interest on past due amounts (including

interest on past due interest) shall be due and payable upon demand.

Interest Payment Date applicable thereto and at such other times as may be

specified herein. Interest hereunder shall be due and payable in accordance with

the terms hereof before and after judgment, and before and after the

commencement of any proceeding under any Debtor Relief Law.

2.07 FEES.

(a) Commitment Fee. Borrower shall pay to Agent for the account of each

Lender in accordance with its Applicable Percentage, a commitment fee equal to

the Applicable Rate times the actual daily amount by which the Aggregate

Commitments exceed the Outstanding Amount. The commitment fee shall accrue at

all times during the Availability Period, including at any time during which one

or more of the conditions in Article IV is not met, and shall be due and payable

quarterly in arrears on the last Business Day of each March, June, September and

December, commencing with the first such date to occur after the Closing Date,

and on the Maturity Date. The commitment fee shall be calculated quarterly in

arrears, and if there is any change in the Applicable Rate during any quarter,

the actual daily amount shall be computed and multiplied by the Applicable Rate

separately for each period during such quarter that such Applicable Rate was in

effect.

(b) Agent's Fees. Borrower shall pay to Agent for Agent's own account,

fees in the amounts and at the times specified in the letter agreement, dated

November 30, 2004 (the "Agent Fee Letter"), between Borrower and Agent. Such

fees shall be fully earned when paid and shall be nonrefundable for any reason

whatsoever.

delivery of this Agreement, Borrower shall pay the arrangement fees and the

upfront fees set forth in, and in

<PAGE>

accordance with, the letter agreement, dated November 30, 2004 (the

"Arrangement/Upfront Fee Letter"), among Borrower, the Joint Lead Arrangers and

certain Lenders. Such fees shall be fully earned when paid and shall be

nonrefundable for any reason whatsoever. The upfront fee shall be in an amount

equal to: (i) for each Lender having a Commitment of [***] or less, [***] basis

points times such Lender's Commitment, and (ii) for each Lender having a

Commitment of more than [***], [***] basis points times such Lender's

Commitment.

2.08 COMPUTATION OF INTEREST AND FEES. All computations of interest for

Base Rate Loans when the Base Rate is determined by Bank of America's "prime

rate" shall be made on the basis of a year of 365 or 366 days, as the case may

be, and actual days elapsed. All other computations of fees and interest shall

be made on the basis of a 360-day year and actual days elapsed (which results in

more fees or interest, as applicable, being paid than if computed on the basis

of a 365-day year). Interest shall accrue on each Loan for the day on which the

Loan is made, and shall not accrue on a Loan, or any portion thereof, for the

day on which the Loan or such portion is paid, provided that any Loan that is

repaid on the same day on which it is made shall, subject to Section 2.10(a),

bear interest for one day. Each determination by Agent of an interest rate or

fee hereunder shall be conclusive and binding for all purposes, absent manifest

error.

2.09 EVIDENCE OF DEBT. The Borrowings made by each Lender shall be

evidenced by one or more accounts or records maintained by such Lender and by

Agent in the ordinary course of business. The accounts or records maintained by

Agent and each Lender shall be conclusive absent manifest error of the amount of

the Borrowings made by Lenders to Borrower and the interest and payments

thereon. Any failure to so record or any error in doing so shall not, however,

limit or otherwise affect the obligation of Borrower hereunder to pay any amount

owing with respect to the Obligations. In the event of any conflict between the

accounts and records maintained by any Lender and the accounts and records of

Agent in respect of such matters, the accounts and records of Agent shall

control in the absence of manifest error. Upon the request of any Lender made

through Agent, Borrower shall execute and deliver to such Lender (through Agent)

a Note, which shall evidence such Lender's Loans in addition to such accounts or

records. Each Lender may attach schedules to its Note and endorse thereon the

date, Type (if applicable), amount and maturity of its Loans and payments with

respect thereto.

2.10 PAYMENTS GENERALLY; AGENT'S CLAWBACK.

(a) (i) General. All payments to be made by Borrower shall be made

without condition or deduction for any counterclaim, defense, recoupment or

setoff. Except as otherwise expressly provided herein, all payments by Borrower

hereunder shall be made to Agent, for the account of the respective Lenders to

which such payment is owed, at the Administrative Agent's Office in Dollars and

in immediately available funds not later than 12:00 noon on the date specified

herein. Agent will promptly distribute to each Lender its Applicable Percentage

(or other applicable share as provided herein) of such payment in like funds as

received by wire transfer to such Lender's Lending Office. All payments received

by Agent after 12:00 noon shall be deemed received on the next succeeding

Business Day and any applicable interest or fee shall continue to accrue. If any

payment to be made by Borrower shall come due on a day other than a Business

Day, payment shall be made on the next following Business Day, and such

extension of time shall be reflected in computing interest or fees, as the case

may be.

* 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.

<PAGE>

(ii) On each date when the payment of any principal, interest or

fees are due hereunder or under any Note, if Agent gives Borrower one Business

Day's prior notice of the amount of such payment, Borrower agrees to maintain on

deposit in an ordinary checking account maintained by Borrower with Agent (as

such account shall be designated by Borrower in a written notice to Agent from

time to time, the "Borrower Account") an amount sufficient to pay such

principal, interest or fees in full on such date. Borrower hereby authorizes

Agent (A) to deduct automatically all principal, interest or fees when due

hereunder or under any Note from the Borrower Account, and (B) if and to the

extent any payment of principal, interest or fees under this Agreement or any

Note is not made when due to deduct any such amount from any or all of the

accounts of Borrower maintained at Agent. Agent agrees to provide written notice

to Borrower of any automatic deduction made pursuant to this Section 2.10(a)(ii)

showing in reasonable detail the amounts of such deduction. Lenders agree to

reimburse Borrower based on their Applicable Percentage for any amounts deducted

from such accounts in excess of amount due hereunder and under any other Loan

Documents.

(b) (i) Funding by Lenders; Presumption by Agent. Unless Agent shall

have received notice from a Lender prior to the proposed date of any Borrowing

that such Lender will not make available to Agent such Lender's share of such

Borrowing, Agent may assume that such Lender has made such share available on

such date in accordance with Section 2.02 and may, in reliance upon such

assumption, make available to Borrower a corresponding amount. In such event, if

a Lender has not in fact made its share of the applicable Borrowing available to

Agent, then the applicable Lender and Borrower severally agree to pay to Agent

forthwith on demand such corresponding amount in immediately available funds

with interest thereon, for each day from and including the date such amount is

made available to Borrower to but excluding the date of payment to Agent, at (A)

in the case of a payment to be made by such Lender, the greater of the Federal

Funds Rate and a rate determined by Agent in accordance with banking industry

rules on interbank compensation, plus any administrative, processing or similar

fees customarily charged by Agent in connection with the foregoing and (B) in

the case of a payment to be made by Borrower, the interest rate applicable to

Base Rate Loans. If Borrower and such Lender shall pay such interest to Agent

for the same or an overlapping period, Agent shall promptly remit to Borrower

the amount of such interest paid by Borrower for such period. If such Lender

pays its share of the applicable Borrowing to Agent, then the amount so paid

shall constitute such Lender's Loan included in such Borrowing. Any payment by

Borrower shall be without prejudice to any claim Borrower may have against a

Lender that shall have failed to make such payment to Agent.

(ii) Payments by Borrower; Presumptions by Agent. Unless Agent shall

have received notice from Borrower prior to the date on which any payment is due

to Agent for the account of the Lenders that Borrower will not make such

payment, Agent may assume that Borrower has made such payment on such date in

accordance herewith and may, in reliance upon such assumption, distribute to

Lenders the amount due. In such event, if Borrower has not in fact made such

payment, then each of Lenders severally agrees to repay to Agent forthwith on

demand the amount so distributed to such Lender, in immediately available funds

with interest thereon, for each day from and including the date such amount is

distributed to it but excluding the date of payment to Agent, at the greater of

the Federal Funds Rate and a rate determined by Agent in accordance with banking

industry rules on interbank compensation. A notice of Agent

<PAGE>

to any Lender or Borrower with respect to any amount owing under this subsection

(b) shall be conclusive, absent manifest error.

to Agent funds for any Loan to be made by such Lender as provided in the

foregoing provisions of this Article II, and such funds are not made available

to Borrower by Agent because the conditions to the applicable Borrowing set

forth in Article IV are not satisfied or waived in accordance with the terms

hereof, Agent shall return such funds (in like funds as received from such

Lender) to such Lender, without interest.

(d) Obligations of Lenders Several. The obligations of Lenders hereunder

to make Loans and to make payments under Section 10.04(c) are several and not

joint. The failure of any Lender to make any Loan, to fund any such

participation or to make any payment under Section 10.04(c) on any date required

hereunder shall not relieve any other Lender of its corresponding obligation to

do so on such date, and no Lender shall be responsible for the failure of any

other Lender to so make its Loan, purchase its participation or to make its

payment under Section 10.04(c):

(e) Funding Source. Nothing herein shall be deemed to obligate any Lender

to obtain the funds for any Loan in any particular place or manner or to

constitute a representation by any Lender that it has obtained or will obtain

the funds for any Loan in any particular place or manner.

2.11 SHARING OF PAYMENTS. If any Lender shall, by exercising any right of

setoff or counterclaim or otherwise, obtain payment in respect of any principal

of or interest on any of the Loans made by it resulting in such Lender's

receiving payment of a proportion of the aggregate amount of such Loans or

participations and accrued interest thereon greater than its pro rata share

thereof as provided herein, then the Lender receiving such greater proportion

shall (a) notify Agent of such fact, and (b) purchase (for cash at face value)

participations in the Loans of the other Lenders, or make such other adjustments

as shall be equitable, so that the benefit of all such payments shall be shared

by the Lenders ratably in accordance with the aggregate amount of principal of

and accrued interest on their respective Loans and other amounts owing them,

provided that:

(i) if any such participations or subparticipations are purchased

and all or any portion of the payment giving rise thereto is recovered,

such participations or subparticipations shall be rescinded and the

purchase price restored to the extent of such recovery, without interest;

and

(ii) the provisions of this Section shall not be construed to apply

to (x) any payment made by Borrower pursuant to and in accordance with the

express terms of this Agreement or (y) any payment obtained by a Lender as

consideration for the assignment of or sale of a participation in any of

its Loans to any assignee or participant, other than to Borrower or any

Subsidiary thereof (as to which the provisions of this Section shall

apply).

<PAGE>

Borrower consents to the foregoing and agrees, to the extent it may

effectively do so under applicable law, that any Lender acquiring a

participation pursuant to the foregoing arrangements may exercise against

Borrower rights of setoff and counterclaim with respect to such participation as

fully as if such Lender were a direct creditor of Borrower in the amount of such

participation.

2.12 SECURITY. All obligations of Borrower under this Agreement, the Notes

and the other Loan Documents shall be secured in accordance with the Collateral

Documents.

ARTICLE III.

TAXES, YIELD PROTECTION AND ILLEGALITY

3.01 TAXES.

(a) Payments Free of Taxes. Any and all payments by Borrower to or on

account of any obligation of Borrower hereunder or under any other Loan Document

shall be made free and clear of and without reduction or withholding for any

Indemnified Taxes, provided that if Borrower shall be required by any applicable

law to deduct any Indemnified Taxes from such payments, then, (i) the sum

payable shall be increased as necessary so that after making all required

deductions (including deductions applicable to additional sums payable under

this Section), Agent or Lender, as the case may be, receives an amount equal to

the sum it would have received had no such deductions been made, (ii) Borrower

shall make such deductions, and (iii) Borrower shall timely pay the full amount

deducted to the relevant Governmental Authority in accordance with applicable

law.

(b) Payment of Other Taxes by Borrower. Without limiting the provisions of

subsection (a) above, Borrower shall timely pay any Other Taxes to the relevant

Governmental Authority in accordance with applicable law.

Lender, within 30 days after demand therefor, for the full amount of any

Indemnified Taxes (including Indemnified Taxes imposed or asserted on or

attributable to amounts payable under this Section) paid or incurred by Agent or

such Lender, as the case may be, and any penalties, interest and reasonable

expenses arising therefrom or with respect thereto, whether or not such

Indemnified Taxes were correctly or legally imposed or asserted by the relevant

Governmental Authority. A certificate as to the amount of such payment or

liability delivered to Borrower by a Lender (with a copy to Agent), or by Agent

on its own behalf or on behalf of a Lender, shall be conclusive absent manifest

error.

(d) Evidence of Payments. As soon as practicable after any payment of

Indemnified Taxes by Borrower to a Governmental Authority, Borrower shall

deliver to Agent the original or a certified copy of a receipt issued by such

Governmental Authority evidencing such payment, a copy of the return reporting

such payment or other evidence of such payment reasonably satisfactory to Agent.

(e) Status of Lenders. Any Foreign Lender that is entitled to an exemption

from or reduction of withholding tax under the law of the jurisdiction in which

the Borrower is resident

<PAGE>

for tax purposes, or any treaty to which such jurisdiction is a party, with

respect to payments hereunder or under any other Loan Document shall deliver to

the Borrower (with a copy to the Administrative Agent), at the time or times

prescribed by applicable law or reasonably requested by the Borrower or the

Administrative Agent, such properly completed and executed documentation

prescribed by applicable law as will permit such payments to be made without

withholding or at a reduced rate of withholding. In addition, any Lender, if

requested by the Borrower or the Administrative Agent, shall deliver such other

documentation prescribed by applicable law or reasonably requested by the

Borrower or the Administrative Agent as will enable the Borrower or the

Administrative Agent to determine whether or not such Lender is subject to

backup withholding or information reporting requirements.

Without limiting the generality of the foregoing, in the event that the Borrower

is resident for tax purposes in the United States, any Foreign Lender shall

deliver to the Borrower and the Administrative Agent (in such number of copies

as shall be requested by the recipient) on or prior to the date on which such

Foreign Lender becomes a Lender under this Agreement (and from time to time

thereafter upon the request of the Borrower or the Administrative Agent, but

only if such Foreign Lender is legally entitled to do so), whichever of the

following is applicable:

(i) duly completed copies of Internal Revenue Service Form W-8BEN claiming

eligibility for benefits of an income tax treaty to which the United

States is a party,

(ii) duly completed copies of Internal Revenue Service Form W-8ECI,

(iii) in the case of a Foreign Lender claiming the benefits of the

exemption for portfolio interest under section 881(c) of the Code, (x) a

certificate to the effect that such Foreign Lender is not (A) a "bank"

within the meaning of section 881(c)(3)(A) of the Code, (B) a "10 percent

shareholder" of the Borrower within the meaning of section 881(c)(3)(B) of

the Code, or (C) a "controlled foreign corporation" described in section

881(c)(3)(C) of the Code or (D) is otherwise entitled to an exemption from

U.S. tax under Section 88(c) on the date it acquires its interest herein,

and (y) duly completed copies of Internal Revenue Service Form W-8BEN, or

(iv) any other form prescribed by applicable law as a basis for claiming

exemption from or a reduction in United States Federal withholding tax

duly completed together with such supplementary documentation as may be

prescribed by applicable law to permit the Borrower to determine the

withholding or deduction required to be made.

(f) Treatment of Certain Refunds. If Agent or any Lender determines, in

its sole discretion, that it has received a refund of any Taxes as to which it

has been indemnified by Borrower or with respect to which Borrower has paid

additional amounts pursuant to this Section, it shall pay to Borrower an amount

equal to such refund (but only to the extent of indemnity payments made, or

additional amounts paid, by Borrower under this Section with respect to the

Taxes giving rise to such refund), net of all out-of-pocket expenses of Agent or

such Lender, as the case may be, and without interest (other than any interest

paid by the relevant Governmental Authority with respect to such refund),

provided that Borrower, upon the request of Agent, such Lender agrees to repay

the amount paid over to Borrower (plus any penalties,

<PAGE>

interest or other charges imposed by the relevant Governmental Authority) to

Agent or such Lender in the event Agent or such Lender is required to repay such

refund to such Governmental Authority. This subsection shall not be construed to

require Agent or any Lender to make available its tax returns (or any other

information relating to its taxes that it deems confidential) to the Borrower or

any other Person.

3.02 ILLEGALITY. If any Lender determines that any Law has made it

unlawful, or that any Governmental Authority has asserted that it is unlawful,

for any Lender or its applicable Lending Office to make, maintain or fund

Eurodollar Rate Loans, or to determine or charge interest rates based upon the

Eurodollar Rate, or any Governmental Authority has imposed material restrictions

on the authority of such Lender to purchase or sell, or to take deposits of,

Dollars in the London interbank market, then, on notice thereof by such Lender

to Borrower through Agent, any obligation of such Lender to make or continue

Eurodollar Rate Loans or to convert Base Rate Loans to Eurodollar Rate Loans

shall be suspended until such Lender notifies Agent and Borrower that the

circumstances giving rise to such determination no longer exist. Upon receipt of

such notice, Borrower shall, upon demand from such Lender (with a copy to

Agent), prepay or, if applicable, convert all Eurodollar Rate Loans of such

Lender to Base Rate Loans, either on the last day of the Interest Period

therefor, if such Lender may lawfully continue to maintain such Eurodollar Rate

Loans to such day, or immediately, if such Lender may not lawfully continue to

maintain such Eurodollar Rate Loans. Upon any such prepayment or conversion,

Borrower shall also pay accrued interest on the amount so prepaid or converted

and all amounts due under Section 3.05 in accordance with the terms thereof due

to such prepayment or conversion.

3.03 INABILITY TO DETERMINE RATES. If the Required Lenders determine, in

connection with any request for a Eurodollar Rate Loan or a conversion to or

continuation thereof, that (a) Dollar deposits are not being offered to banks in

the London interbank eurodollar market for the applicable amount and Interest

Period of such Eurodollar Rate Loan, (b) adequate and reasonable means do not

exist for determining the Eurodollar Base Rate for any requested Interest Period

with respect to a proposed Eurodollar Rate Loan, or (c) an unusual or

extraordinary event or circumstance occurs or exists affecting the applicable

offshore Dollar market such that the Eurodollar Base Rate for any requested

Interest Period with respect to a proposed Eurodollar Rate Loan does not

adequately and fairly reflect the cost to such Lenders of funding such Loan,

Agent will promptly so notify Borrower and each Lender. Thereafter, the

obligation of Lenders to make or maintain Eurodollar Rate Loans shall be

suspended until Agent (upon the instruction of the Required Lenders) revokes

such notice. Upon receipt of such notice, Borrower may revoke any pending

request for a Borrowing of, conversion to or continuation of Eurodollar Rate

Loans or, failing that, will be deemed to have converted such request into a

request for a Borrowing of Base Rate Loans in the amount specified therein.

3.04 INCREASED COSTS.

(a) Increased Costs Generally. If any Change in Law shall:

(i) impose, modify or deem applicable any reserve, special deposit,

compulsory loan, insurance charge or similar requirement against assets

of, deposits with

<PAGE>

or for the account of, or credit extended or participated in by, any

Lender (except any reserve requirement reflected in the Eurodollar Rate);

(ii) impose on any Lender or the London interbank market any other

condition, cost or expense affecting this Agreement or Eurodollar Loans

made by such Lender or participation therein;

and the result of any of the foregoing shall be to increase the cost to such

Lender of making or maintaining any Eurodollar Loan (or of maintaining its

obligation to make any such Loan), or to reduce the amount of any sum received

or receivable by such Lender (whether of principal, interest or any other

amount) then, upon request of such Lender, Borrower will pay to such Lender such

additional amount or amounts as will compensate such Lender for such additional

costs incurred or reduction suffered.

(b) Capital Requirements. If any Lender reasonably determines that any

Change in Law affecting such Lender or any Lending Office of such Lender or such

Lender's holding company, if any, regarding capital requirements has or would

have the effect of reducing the rate of return on such Lender's capital or on

the capital of such Lender's holding company, if any, as a consequence of this

Agreement, the Commitment of such Lender or the Loans made by such Lender to a

level below that which such Lender or such Lender's holding company could have

achieved but for such Change in Law (taking into consideration such Lender's

policies and the policies of such Lender's holding company with respect to

capital adequacy), then from time to time Borrower will pay to such Lender such

additional amount or amounts as will compensate such Lender or such Lender's

holding company for any such reduction suffered.

forth the amount or amounts necessary to compensate such Lender or its holding

company, as the case may be, as specified in subsection (a) or (b) of this

Section and, in reasonable detail, the basis for such calculation and delivered

to Borrower shall be conclusive absent manifest error. Borrower shall pay such

Lender the amount shown as due on any such certificate within 10 days after

receipt thereof. Such certificate shall also include a statement to the effect

that such compensation for additional costs incurred or reduction suffered

reflects a good faith and non-discriminatory allocation to this Agreement.

(d) Delay in Requests. Failure or delay on the part of any Lender to

demand compensation pursuant to the foregoing provisions of 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

the foregoing provisions of this Section for any increased costs incurred or

reductions suffered more than 30 days prior to the date that such Lender

notifies Borrower of the Change in Law giving rise to such increased costs or

reductions and of such Lender's intention to claim compensation therefor (except

that, if the Change in Law giving rise to such increased costs or reductions is

retroactive, then the 30-day period referred to above shall be extended to

include the period of retroactive effect thereof).

3.05 COMPENSATION FOR LOSSES. Upon demand of any Lender (with a copy to

Agent) from time to time, Borrower shall promptly compensate such Lender for and

hold such Lender harmless from any loss, cost or expense incurred by it as a

result of:

<PAGE>

(a) any continuation, conversion, payment or prepayment of any Loan other

than a Base Rate Loan on a day other than the last day of the Interest Period

for such Loan (whether voluntary, mandatory, automatic, by reason of

acceleration, or otherwise);

(b) any failure by Borrower (for a reason other than the failure of such

Lender to make a Loan) to prepay, borrow, continue or convert any Loan other

than a Base Rate Loan on the date or in the amount notified by Borrower; or

day of the Interest Period thereof as a result of a request by the Borrower

pursuant to Section 10.13.

Borrower's compensation to any Lender under this Section 3.05 is intended to put

such Lender in the same financial position it would have been in had the event

referred to in clauses (a), (b) or (c) not occurred, including any loss of

anticipated profits. Borrower's compensation to any such Lender will include any

loss or expense arising from the liquidation or reemployment of funds obtained

by it to maintain such Loan or from fees payable to terminate the deposits from

which such funds were obtained. Borrower shall also pay any customary

administrative fees charged by such Lender in connection with the foregoing. For

purposes of calculating amounts payable by Borrower to Lenders under this

Section 3.05, each Lender shall be deemed to have funded each Eurodollar Rate

Loan made by it at the Eurodollar Base Rate used in determining the Eurodollar

Rate for such Loan by a matching deposit or other borrowing in the London

interbank eurodollar market for a comparable amount and for a comparable period,

whether or not such Eurodollar Rate Loan was in fact so funded.

3.06 MITIGATION OF OBLIGATIONS; REPLACEMENT OF LENDERS.

(a) Designation of Different Lending Office. If any Lender requests

compensation under Section 3.04, or Borrower is required to pay any additional

amount to any Lender or any Governmental Authority for the account of any Lender

pursuant to Section 3.01, or if any Lender gives a notice pursuant to Section

3.02, then such Lender shall use reasonable efforts to designate a different

Lending Office for funding or booking its Loans hereunder or to assign its

rights and obligations hereunder to another of its offices, branches or

affiliates, if, in the judgment of such Lender, such designation or assignment

(i) would eliminate or reduce amounts payable pursuant to Section 3.01 or 3.04,

as the case may be, in the future, or eliminate the need for the notice pursuant

to Section 3.02, as applicable, and (ii) in each case, would not subject such

Lender to any unreimbursed cost or expense and would not otherwise be

disadvantageous to such Lender. Borrower hereby agrees to pay all reasonable

costs and expenses incurred by any Lender in connection with any such

designation or assignment.

(b) Replacement of Lenders. If any Lender requests compensation under

Section 3.04, or if the Borrower is required to pay any additional amount to any

Lender or any Governmental Authority for the account of any Lender pursuant to

Section 3.01, the Borrower may replace such Lender in accordance with Section

10.13.

3.07 SURVIVAL. All of Borrower's obligations under this Article III shall

survive termination of the Aggregate Commitments and repayment of all other

Obligations hereunder.

<PAGE>

ARTICLE IV.

CONDITIONS PRECEDENT TO CREDIT EXTENSIONS

4.01 CONDITIONS OF INITIAL BORROWING. The obligation of each Lender to

make its initial Borrowing hereunder is subject to satisfaction of the following

conditions precedent:

(a) Agent's receipt of the following, each of which shall be originals or

telecopies (followed promptly by originals) unless otherwise specified, each

properly executed by a Responsible Officer of the Borrower, each dated the

Closing Date (or, in the case of certificates of governmental officials, a

recent date before the Closing Date) and each in form and substance satisfactory

to Agent and each of the Lenders:

(i) executed counterparts of this Agreement and all Collateral

Documents, sufficient in number for distribution to Agent, each Lender and

Borrower;

(ii) a Note executed by Borrower in favor of each Lender requesting

a Note;

(iii) such certificates of resolutions or other action, incumbency

certificates and/or other certificates of Responsible Officers of Borrower

as Agent may require evidencing the identity, authority and capacity of

each Responsible Officer thereof authorized to act as a Responsible

Officer in connection with this Agreement and the other Loan Documents;

(iv) such documents and certifications as Agent may reasonably

require to evidence that Borrower is duly organized or formed, and that

Borrower is validly existing, in good standing and qualified to engage in

business in each jurisdiction where its ownership, lease or operation of

properties or the conduct of its business requires such qualification,

except to the extent that failure to do so would not reasonably be

expected to have a Material Adverse Effect;

(v) a favorable opinion(s) of counsel to Borrower acceptable to

Agent addressed to Agent and each Lender, as to the matters set forth

concerning Borrower, the Loan Documents and the Collateral in form and

substance satisfactory to Agent, including an opinion from FAA counsel

acceptable to Agent as to the perfection and priority of the security

interest created by the Security Agreement;

(vi) a certificate of a Responsible Officer of Borrower either (A)

attaching copies of all consents, licenses and approvals required in

connection with the execution, delivery and performance by Borrower and

the validity against Borrower of the Loan Documents (other than

certificates, consents and licenses related to operating individual

aircraft or its business as a common carrier), and such consents, licenses

and approvals shall be in full force and effect, or (B) stating that no

such consents, licenses or approvals are so required;

(vii) a certificate signed by a Responsible Officer of Borrower

certifying (A) that the conditions specified in Sections 4.02(a) and (b)

have been satisfied, and (B) that there has been no event or circumstance

since the date of the Audited Financial

<PAGE>

Statements that has had or would be reasonably expected to have, either

individually or in the aggregate, a Material Adverse Effect;

(viii) evidence that all insurance required to be maintained

pursuant to the Loan Documents has been obtained and is in effect;

(ix) a duly completed Compliance Certificate as of the last day of

the fiscal quarter of Borrower most recently ended prior to the Closing

Date, signed by a Responsible Officer of Borrower;

(x) evidence that (i) the Security Agreement has created a valid and

effective security interest in the Aircraft Collateral, (ii) such security

interests have been duly perfected, and (iii) the Aircraft Collateral is

free and clear of Liens or options other than such security interests and

any Liens permitted pursuant to Section 7.01. Without limiting the

generality of the foregoing, the Administrative Agent shall have received

evidence that the Security Agreement has been duly filed for record with

the Aircraft Registry of United States Department of Transportation,

Federal Aviation Administration in Oklahoma City and the UCC Financing

Statement has been duly filed in the appropriate UCC filing office in

Alaska;

(xi) Qualified Appraisals showing that the Current Market Value of

the Aircraft Collateral as of the date no earlier than December 31, 2004

is such that the Borrowing Base is not less than [***];

(xii) evidence that (i) any Collateral Documents (other than the

Security Agreement) have created a valid and effective security interest

in any Collateral (other than the Aircraft Collateral), (ii) such security

interests have been duly perfected, and (iii) any Collateral (other

Aircraft Collateral is free and clear of Liens or options other than such

security interests and any Liens permitted pursuant to Section 7.01;

(xiii) the Agent Fee Letter and Arrangement/Upfront Fee Letter; and

(xiv) such other assurances, certificates, documents, consents or

opinions as Agent or the Required Lenders reasonably may require.

(b) Any fees required to be paid on or before the Closing Date shall have

been paid.

disbursements of counsel to Agent to the extent invoiced prior to or on the

Closing Date.

(d) The commitments under the Existing Credit Agreement shall have expired

or been terminated and all amounts owing thereunder shall have been paid in

full. Each party hereto that is also a party to the Existing Credit Agreement

hereby waives any requirement under the Existing Credit Agreement of advance

notice for any such termination or payment.

Without limiting the generality of the provisions of Section 9.04, for purposes

of determining compliance with the conditions specified in this Section 4.01,

each Lender that has signed this

* 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.

<PAGE>

Agreement shall be deemed to have consented to, approved or accepted or to be

satisfied with, each document or other matter required thereunder to be

consented to or approved by or acceptable or satisfactory to a Lender unless

Agent shall have received notice from such Lender prior to the proposed Closing

Date specifying its objection thereto.

4.02 CONDITIONS TO ALL BORROWINGS. The obligation of each Lender to honor

any Loan Notice is subject to the following conditions precedent:

(a) The representations and warranties of Borrower contained in Article V

or any other Loan Document, or which are contained in any document furnished at

any time under or in connection herewith or therewith, shall be true and correct

on and as of the date of such Borrowing, except to the extent that such

representations and warranties specifically refer to an earlier date, in which

case they shall be true and correct as of such earlier date, and except that for

purposes of this Section 4.02, the representations and warranties contained in

subsections (a) and (b) of Section 5.05 shall be deemed to refer to the most

recent statements furnished pursuant to clauses (a) and (b), respectively, of

Section 6.01.

(b) No Change of Control, Invalidity Event or Material Failure of Security

shall have occurred and no Default, Collateral Shortfall or Over Advance shall

exist or would result from such proposed Borrowing or from the application of

the proceeds thereof.

requirements hereof.

(d) Neither the Administrative Agent nor any Lender shall have received

from any Person any notice that any Collateral Document will no longer secure on

a first priority basis (subject to Liens permitted under the applicable

Collateral Document) future Borrowings under this Agreement.

(e) Agent shall have received, in form and substance satisfactory to it:

(i) such other assurances, certificates, documents or consents related to the

foregoing as Agent or the Required Lenders reasonably may require; and (ii) any

information requested more than five Business Days prior to such Loan Notice by

the Agent or any Lender in accordance with Section 6.02(d).

Each Loan Notice submitted by Borrower shall be deemed to be a representation

and warranty that the conditions specified in Sections 4.02(a) and (b) have been

satisfied on and as of the date of the applicable Borrowing.

ARTICLE V.

REPRESENTATIONS AND WARRANTIES

Borrower represents and warrants to Agent and the Lenders that:

5.01 EXISTENCE, QUALIFICATION AND POWER; COMPLIANCE WITH LAWS. Borrower

and each Subsidiary thereof (a) is duly organized or formed, validly existing

and in good standing under the Laws of the jurisdiction of its incorporation or

organization, (b) has all requisite power and authority and all requisite

governmental licenses, authorizations, consents and approvals to

<PAGE>

(i) own its assets and carry on its business and (ii) execute, deliver and

perform its obligations under the Loan Documents, (c) is duly qualified and is

licensed and in good standing under the Laws of each jurisdiction where its

ownership, lease or operation of properties or the conduct of its business

requires such qualification or license, and (d) is in compliance with all Laws;

except in each case referred to in clause (b)(i), (c) or (d), to the extent that

failure to do so would not reasonably be expected to have a Material Adverse

Effect.

5.02 AUTHORIZATION; NO CONTRAVENTION. The execution, delivery and

performance by Borrower of each Loan Document, have been duly authorized by all

necessary corporate or other organizational action, and do not and will not (a)

contravene the terms of Borrower's Organization Documents; (b) conflict with or

result in any breach or contravention of, or the creation of any Lien under, or

require any payment to be made under (i) any Contractual Obligation (other than

the Loan Documents) to which Borrower is a party or affecting Borrower or the

properties of Borrower or any of its Subsidiaries or (ii) any order, injunction,

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

Borrower or its property is subject; or (c) violate any Law. Borrower and each

Subsidiary thereof is in compliance with all Contractual Obligations referred to

in clause (b)(i), except to the extent that failure to do so would not

reasonably be expected to have a Material Adverse Effect.

5.03 GOVERNMENTAL AUTHORIZATION; OTHER CONSENTS. No approval, consent,

exemption, authorization, or other action by, or notice to, or filing with, any

Governmental Authority or any other Person is necessary or required in

connection with the execution, delivery or performance by, or enforcement

against, Borrower of this Agreement or any other Loan Document, except for

recordings or filings in connection with the Liens granted to the Agent under

the Collateral Documents or filing of a redacted copy of the Loan Documents with

the SEC.

5.04 BINDING EFFECT. This Agreement has been, and each other Loan

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

by Borrower. This Agreement constitutes, and each other Loan Document when so

delivered will constitute, a legal, valid and binding obligation of Borrower,

enforceable against Borrower in accordance with its terms.

5.05 FINANCIAL STATEMENTS; NO MATERIAL ADVERSE EFFECT.

(a) The Audited Financial Statements (i) were prepared in accordance with

GAAP consistently applied throughout the period covered thereby, except as

otherwise expressly noted therein; (ii) fairly present the financial condition

of Borrower and its Subsidiaries as of the date thereof and their results of

operations for the period covered thereby in accordance with GAAP consistently

applied throughout the period covered thereby, except as otherwise expressly

noted therein; and (iii) show all material indebtedness and other liabilities,

direct or contingent, of Borrower and its Subsidiaries as of the date thereof,

including liabilities for taxes and material commitments.

(b) The unaudited consolidated balance sheet of Borrower and its

Subsidiaries dated September 30, 2004, and the related consolidated statements

of income or operations, shareholders' equity and cash flows for the fiscal

quarter ended on that date (i) were prepared in accordance with GAAP

consistently applied throughout the period covered thereby, except as

<PAGE>

otherwise expressly noted therein, and (ii) fairly present the financial

condition of Borrower and its Subsidiaries as of the date thereof and their

results of operations for the period covered thereby, subject, in the case of

clauses (i) and (ii), to the absence of footnotes and to normal year-end audit

adjustments.

Statements, there has been no event or circumstance, either individually or in

the aggregate, that has had or could reasonably be expected to have a Material

Adverse Effect.

(d) Since the date of the Audited Financial Statements, no material

Internal Control Event has occurred to the knowledge of Borrower's Chief

Executive Officer, Chief Financial Officer, Vice President-Finance, Treasurer or

Controller.

5.06 LITIGATION AND JUDGMENTS. There are no actions, suits, proceedings,

claims or disputes pending or, to the knowledge of Borrower after due and

diligent investigation, threatened or contemplated, at law, in equity, in

arbitration or before any Governmental Authority, by or against Borrower or any

of its Subsidiaries or against any of their properties or revenues that (a)

purport to affect or pertain to this Agreement or any other Loan Document, or

any of the transactions contemplated hereby, or (b) are reasonably likely to

have a Material Adverse Effect. To the knowledge of Borrower after due and

diligent investigation, there is no outstanding unsatisfied money judgment

against Borrower or any of its Subsidiaries in an amount in excess of the

Threshold Amount, and there are no outstanding unsatisfied money judgments

against Borrower or any of its Subsidiaries which individually or in the

aggregate have or would have a Material Adverse Effect.

5.07 NO DEFAULT. Neither Borrower nor any Subsidiary is in default under

or with respect to any Contractual Obligation that would, either individually or

in the aggregate, reasonably be expected to have a Material Adverse Effect. No

Default has occurred and is continuing or would result from the consummation of

the transactions contemplated by this Agreement or any other Loan Document.

5.08 OWNERSHIP OF PROPERTY; LIENS. Each of Borrower and each Subsidiary

has good record and marketable title in fee simple to, or valid leasehold

interests in, all real property necessary or used in the ordinary conduct of its

business, except for such defects in title as would not, individually or in the

aggregate, reasonably be expected to have a Material Adverse Effect. The

property of Borrower and its Subsidiaries is subject to no Liens, other than

Liens permitted by Section 7.01.

5.09 ENVIRONMENTAL COMPLIANCE. Borrower and its Subsidiaries conduct in

the ordinary course of business a review of the effect of existing Environmental

Laws and claims alleging potential liability or responsibility for violation of

any Environmental Law on their respective businesses, operations and properties,

and as a result thereof Borrower has reasonably concluded that, except as

specifically disclosed in Schedule 5.09, such Environmental Laws and claims

would not, individually or in the aggregate, reasonably be expected to have a

Material Adverse Effect.

<PAGE>

5.10 INSURANCE. The properties and businesses of Borrower and its

Subsidiaries are insured with financially sound and reputable insurance

companies (including Lloyds of London syndicates) not Affiliates of Borrower, in

such amounts (after giving effect to any self-insurance compatible with the

following standards), with such deductibles and covering such risks as are

customarily carried by companies engaged in similar businesses and owning

similar properties in localities where Borrower or the applicable Subsidiary

operates.

5.11 TAXES. Borrower and its Subsidiaries have filed all Federal, state

and other material tax returns and reports required to be filed, and have paid

all Federal, state and other material taxes, assessments, fees and other

governmental charges levied or imposed upon them or their properties, income or

assets otherwise due and payable, except those which are being contested in good

faith by appropriate proceedings diligently conducted and for which adequate

reserves have been provided in accordance with GAAP. To Borrower's knowledge,

there is no proposed tax assessment against Borrower or any Subsidiary that

would, if made, have a Material Adverse Effect.

5.12 ERISA COMPLIANCE.

(a) Each Plan is in compliance in all material respects with the

applicable provisions of ERISA, the Code and other Federal or state Laws. Each

Plan that is intended to qualify under Section 401(a) of the Code has received a

favorable determination letter from the IRS or an application for such a letter

is currently being processed by the IRS with respect thereto and, to the best

knowledge of Borrower, nothing has occurred which would prevent, or cause the

loss of, such qualification. Borrower and each ERISA Affiliate have made all

required contributions to each Plan subject to Section 412 of the Code, and no

application for a funding waiver or an extension of any amortization period

pursuant to Section 412 of the Code has been made with respect to any Plan.

(b) There are no pending or, to the best knowledge of Borrower, threatened

claims, actions or lawsuits, or action by any Governmental Authority, with

respect to any Plan that would be reasonably be expected to have a Material

Adverse Effect. There has been no prohibited transaction or violation of the

fiduciary responsibility rules with respect to any Plan that has resulted or

would reasonably be expected to result in a Material Adverse Effect.

no Pension Plan has any Unfunded Pension Liability in excess [***] of such

Pension Plan's benefit liabilities under Section 4001(a)(16); (iii) neither

Borrower nor any ERISA Affiliate has incurred, or reasonably expects to incur,

any liability under Title IV of ERISA with respect to any Pension Plan (other

than premiums due and not delinquent under Section 4007 of ERISA), which would

reasonably be expected to have a Material Adverse Effect; (iv) neither Borrower

nor any ERISA Affiliate has incurred, or reasonably expects to incur, any

liability (and no event has occurred which, with the giving of notice under

Section 4219 of ERISA, would result in such liability) under Sections 4201 or

4243 of ERISA with respect to a Multiemployer Plan; and (v) neither Borrower nor

any ERISA Affiliate has engaged in a transaction that could be subject to

Sections 4069 or 4212(c) of ERISA.

* 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.

<PAGE>

5.13 SUBSIDIARIES. As of the Closing Date, Borrower has no Subsidiaries.

As of the Closing Date, Parent has no operating Subsidiaries other than Borrower

and Horizon. All of the outstanding Equity Interests in Borrower have been

validly issued and are fully paid and nonassessable and are owned by Parent free

and clear of all Liens.

5.14 MARGIN REGULATIONS; INVESTMENT COMPANY ACT; PUBLIC UTILITY HOLDING

COMPANY ACT.

(a) Borrower is not engaged and will not engage, principally or as one of

its important activities, in the business of purchasing or carrying margin stock

(within the meaning of Regulation U issued by the FRB), or extending credit for

the purpose of purchasing or carrying margin stock.

(b) None of Borrower, any Person Controlling Borrower, or any Subsidiary

(i) is a "holding company," or a "subsidiary company" of a "holding company," or

an "affiliate" of a "holding company" or of a "subsidiary company" of a "holding

company," within the meaning of the Public Utility Holding Company Act of 1935,

or (ii) is or is required to be registered as an "investment company" under the

Investment Company Act of 1940.

5.15 DISCLOSURE. Borrower has disclosed to Agent and Lenders all

agreements, instruments and corporate or other restrictions to which it or any

of its Subsidiaries is subject, and all other matters known to it, that,

individually or in the aggregate, would reasonably be expected to result in a

Material Adverse Effect. No report, financial statement, certificate or other

information furnished (whether in writing or orally) by or on behalf of Borrower

to Agent or any Lender in connection with the transactions contemplated hereby

and the negotiation of this Agreement or delivered hereunder or under any other

Loan Document (in each case, as modified or supplemented by other information so

furnished) contains any material misstatement of fact or omits to state any

material fact necessary to make the statements therein, in the light of the

circumstances under which they were made, not misleading; provided that, with

respect to projected financial information, Borrower represents only that such

information was prepared in good faith based upon assumptions believed to be

reasonable at the time.

5.16 COMPLIANCE WITH LAWS. Each of Borrower and each Subsidiary is in

compliance in all material respects with the requirements of all Laws and all

orders, writs, injunctions and decrees applicable to it or to its properties,

except in such instances in which (a) such requirement of Law or order, writ,

injunction or decree is being contested in good faith by appropriate proceedings

diligently conducted or (b) the failure to comply therewith, either individually

or in the aggregate, would not reasonably be expected to have a Material Adverse

Effect.

5.17 INTELLECTUAL PROPERTY; LICENSES, ETC. Borrower and its Subsidiaries

own, or possess the right to use, all of the trademarks, service marks, trade

names, copyrights, patents, patent rights, franchises, licenses and other

intellectual property rights ("IP Rights") that are reasonably necessary for the

operation of their respective businesses, without conflict with the rights of

any other Person. To the best knowledge of Borrower, no slogan or other

advertising device, product, process, method, substance, part or other material

now employed, or now contemplated to be employed, by Borrower or any Subsidiary

infringes upon any rights held by

<PAGE>

any other Person. No claim or litigation regarding any of the foregoing is

pending or, to the best knowledge of Borrower, threatened, which, either

individually or in the aggregate, would reasonably be expected to have a

Material Adverse Effect.

5.18 SOLVENCY. The Borrower is Solvent and shall be Solvent immediately

after the consummation of the transactions contemplated by this Agreement. As

used herein, a Person is "Solvent" on a particular date, if, on such date both

(a) (i) the then fair saleable value of the property of such Person on a going

concern basis is (A) greater than the total amount of liabilities (including

contingent liabilities) of such Person as they mature in the ordinary course and

(B) not less than the amount that will be required to pay the probable

liabilities on such Person's then-existing debts as they become absolute and

matured considering all financing alternatives and potential asset sales

reasonably available to such Person; (ii) such Person's capital is not

unreasonably small in relation to its business or any contemplated or undertaken

transaction; and (iii) such Person does not intend to incur, or believe (nor

should it reasonably believe) that it will incur, debts beyond its ability to

pay such debts as they become due; and (b) such Person is "solvent" within the

meaning given that term and similar terms under applicable laws relating to

fraudulent transfers and conveyances. For purposes of this definition, the debts

and liabilities of a Person, contingent or otherwise, shall include the amount

of all debts and liabilities that are relevant under Section 548 of Title 11 of

the United States Code or any applicable provisions of comparable state law

(collectively, the "Fraudulent Transfer Laws"), and the assets of a Person shall

give effect to the value (as determined under the applicable provisions of the

Fraudulent Transfer Laws) of any rights to subrogation, reimbursement,

indemnification or contribution of such Person pursuant to applicable Law or

pursuant to the terms of any agreement.

5.19 COLLATERAL AND SECURITY DOCUMENTS.

(a) Borrower owns all right, title and interest in and to the Aircraft

Collateral (and any other Collateral) free and clear of all Liens other than (i)

the security interests in favor of the Administrative Agent securing the

Obligations, or (ii) Liens permitted by Section 7.01 that are junior and

subordinate to the security interests created by the Collateral Documents, or

(iii) Liens on the Aircraft Collateral permitted under subsections (e) and (f)

of Section 7.01.

(b) The Security Agreement (and any of other Collateral Documents) create,

in favor of the Administrative Agent for the benefit of itself and the Lenders,

a legal, valid and enforceable security interest in all of Borrower's right,

title and interest in all of the Aircraft Collateral (and any other Collateral),

which security interest has been duly perfected and has priority over any other

Liens on the Collateral (other than Liens on the Aircraft Collateral described

in subsections (e) and (f) of Section 7.01).

and Borrower is a citizen of the United States for purposes of the U.S. Federal

Aviation Act.

(d) Borrower is, and continuously during the five years immediately

preceding the date of this Agreement has been, an Alaska corporation. Borrower's

chief executive office is, and continuously during the five years immediately

preceding the date of this Agreement has been, located in Seattle, Washington.

<PAGE>

(e) No Aircraft, at the time Agent's security interest in such Aircraft

attaches, will be subject to any interest, other than an interest held by

Borrower, that is recorded in the FAA Registry.

(f) The Engines pledged pursuant to the Security Agreement are of the same

series, model and make and the Engines, taken as a group, have approximately the

same aggregate value as the engines upon which the determination of Current

Market Value in each Qualified Appraisal was based.

(g) The representations and warranties in this Section 5.19 (other than

Section 5.19(e)) are made on and as of the date of this Agreement and, with

respect to the representations and warranties in subsections (a), (b) and (c)

hereof, on and as of each date thereafter.

5.20 BURDENSOME AGREEMENTS. Neither Borrower nor any Subsidiary has any

Contractual Obligation (other than this Agreement or any other Loan Document)

that (a) limits the ability (i) of any Subsidiary to make Restricted Payments to

Borrower or to otherwise transfer property to Borrower, (ii) of any Subsidiary

to Guarantee any obligations of Borrower under any of the Loan Documents or

(iii) of Borrower or any Subsidiary to create, incur, assume or suffer to exist

Liens on property of such Person; provided, however, that this clause (iii)

shall not prohibit any negative pledge incurred or provided in favor of any

holder of Indebtedness permitted under this Agreement solely to the extent any

such negative pledge relates to the property financed by or the subject of such

Indebtedness; or (b) requires the grant of a Lien to secure an obligation of

such Person if a Lien is granted to secure another obligation of such Person.

5.21 COMPLIANCE WITH OFAC RULES AND REGULATIONS. None of Borrower, any

Subsidiary of Borrower or any Affiliate of Borrower (a) is a Sanctioned Person,

(b) has more than 15% of its assets in Sanctioned Countries, or (c) derives more

than 15% of its operating income from investments in, or transactions with,

Sanctioned Persons or Sanctioned Countries. No part of the proceeds of any

extension of credit hereunder will be used directly or indirectly to fund any

operations in, finance any investments or activities in or make any payments to,

a Sanctioned Person or a Sanctioned Country. "OFAC" means the U.S. Department of

the Treasury's Office of Foreign Asset Control. "Sanctioned Countries" means a

country subject to a sanctions program identified on the list maintained by OFAC

and available at

http://www.treas.gov/offices/enforcement/ofac/sanctions/index.html, or otherwise

published from time to time. "Sanctioned Person" means (a) a Person named on the

list of "Specially Designated Nationals and Blocked Persons" maintained by OFAC

available at http://www.treas.gov/offices/enforcement/ofac/sanctions/index.html

or otherwise published from time to time, or (b)(i) an agency of the government

of a Sanctioned Country, (ii) an organization controlled by a Sanctioned

Country, to the extent subject to a sanctions program administered by OFAC.

<PAGE>

ARTICLE VI.

AFFIRMATIVE COVENANTS

So long as any Lender shall have any Commitment hereunder, any Loan or

other Obligation hereunder shall remain unpaid or unsatisfied, Borrower shall,

and shall (except in the case of the covenants set forth in Sections 6.01, 6.02

and 6.03) cause each Subsidiary to:

6.01 FINANCIAL STATEMENTS. Deliver to Agent a sufficient number of copies

for delivery by Agent to each Lender, in form and detail satisfactory to Agent

and the Required Lenders:

(a) as soon as available, but in any event no later than the earlier of

five days after the deadline for filing imposed by the SEC or 95 days after the

end of each fiscal year of Borrower, a consolidated balance sheet of Borrower

and its Subsidiaries as at the end of such fiscal year, and the related

consolidated statements of income or operations, shareholders' equity and cash

flows for such fiscal year, setting forth in each case in comparative form the

figures for the previous fiscal year, all in reasonable detail and prepared in

accordance with GAAP, audited and accompanied by: (i) a report and opinion of a

Registered Public Accounting Firm of nationally recognized standing not

reasonably objected to by the Required Lenders, which report and opinion shall

be prepared in accordance with generally accepted auditing standards and

applicable Securities Laws and shall not be subject to any "going concern" or

like qualification or exception or any qualification or exception as to the

scope of such audit and (ii) beginning with the report for December 31, 2005, a

report of such Registered Public Accounting Firm as to the Borrower's internal

controls pursuant to Section 404 of Sarbanes-Oxley that: (A) expresses a

conclusion that would not reasonably be expected to have a Material Adverse

Effect and (B) identifies no issues related to Borrower's or its Subsidiaries'

internal controls that would reasonably be expected to have a Material Adverse

Effect; and

(b) as soon as available, but in any event within 50 days after the end of

each of the first three fiscal quarters of each fiscal year of Borrower, a

consolidated balance sheet of Borrower and its Subsidiaries as at the end of

such fiscal quarter, and the related consolidated statements of income or

operations, shareholders' equity and cash flows for such fiscal quarter and for

the portion of Borrower's fiscal year then ended, setting forth in each case in

comparative form the figures for the corresponding fiscal quarter of the

previous fiscal year and the corresponding portion of the previous fiscal year,

all in reasonable detail, certified by a Responsible Officer of Borrower as

fairly presenting the financial condition, results of operations, shareholders'

equity and cash flows of Borrower and its Subsidiaries in accordance with GAAP,

subject only to normal year-end audit adjustments and the absence of footnotes.

6.02 CERTIFICATES; OTHER INFORMATION. Deliver to Agent a sufficient number

of copies for delivery by Agent to each Lender, in form and detail satisfactory

to Agent and the Required Lenders:

(a) concurrently with the delivery of the financial statements referred to

in Section 6.01(a), a certificate of its independent certified public

accountants certifying such financial statements;

<PAGE>

(b) concurrently with the delivery of the financial statements referred to

in Sections 6.01(a) and (b), a duly completed Compliance Certificate signed by a

Responsible Officer of Borrower;

annual report, proxy or financial statement or other report or communication

sent to the stockholders of Parent, and copies of all annual, regular, periodic

and special reports and registration statements which Parent may file or be

required to file with the Securities and Exchange Commission under Section 13 or

15(d) of the Securities Exchange Act of 1934, and not otherwise required to be

delivered to Agent pursuant hereto; and

(d) promptly, such additional information regarding the business,

financial or corporate affairs of Borrower or any Subsidiary, or compliance with

the terms of the Loan Documents, as Agent or any Lender may from time to time

reasonably request.

Documents required to be delivered pursuant to Section 6.01(a) or (b) or Section

6.02(c) (to the extent any such documents are included in materials otherwise

filed with the SEC) may be delivered electronically and if so delivered, shall

be deemed to have been delivered on the date (i) on which the Borrower posts

such documents, or provides a link thereto on the Borrower's website on the

Internet at the website address listed on Schedule 10.02; or (ii) on which such

documents are posted on the Borrower's behalf on an Internet or intranet

website, if any, (or website maintained by the SEC) to which each Lender and the

Administrative Agent have access (whether a commercial, third-party website or

whether sponsored by the Administrative Agent); provided that: (i) the Borrower

shall deliver paper copies of such documents to the Administrative Agent or any

Lender that specifically requests the Borrower to deliver such paper copies and

(ii) the Borrower shall notify the Administrative Agent and each Lender (by

telecopier or electronic mail) of the posting of any such documents and provide

to the Administrative Agent by electronic mail electronic versions (i.e., soft

copies) of such documents. Notwithstanding anything contained herein, in every

instance the Borrower shall be required to provide paper copies of the

Compliance Certificates required by Section 6.02(b) to the Administrative Agent.

Except for such Compliance Certificates, the Administrative Agent shall have no

obligation to request the delivery or to maintain copies of the documents

referred to above, and in any event shall have no responsibility to monitor

compliance by the Borrower with any such request for delivery, and each Lender

shall be solely responsible for requesting delivery to it or maintaining its

copies of such documents.

Borrower hereby acknowledges that (a) Agent will make available to Lenders

materials and/or information provided by or on behalf of Borrower hereunder

(collectively, "Borrower Materials") by posting Borrower Materials on IntraLinks

or another similar electronic system (the "Platform") and (b) certain of the

Lenders may be "public-side" Lenders (i.e., Lenders that do not wish to receive

material non-public information with respect to Borrower or its securities)

(each, a "Public Lender"). Borrower hereby agrees that (w) all Borrower

Materials that are to be made available to Public Lenders shall be clearly and

conspicuously marked "PUBLIC" which, at a minimum, shall mean that the word

"PUBLIC" shall appear prominently on the first page thereof, provided, however,

that no document available on the website of the SEC need contain any legend;

(x) by marking Borrower Materials "PUBLIC," Borrower shall be

<PAGE>

deemed to have authorized Agent and the Lenders to treat such Borrower Materials

as either publicly available information or not material information (although

it may be sensitive and proprietary) with respect to Borrower or its securities

for purposes of United States Federal and state securities laws; (y) all

Borrower Materials marked "PUBLIC" are permitted to be made available through a

portion of the Platform designated "Public Investor;" and (z) Agent shall be

entitled to treat any Borrower Materials that are not marked "PUBLIC" (other

than documents available on the SEC website) as being suitable only for posting

on a portion of the Platform not designated "Public Investor."

6.03 NOTICES. Not later than five Business Days after Borrower obtains

knowledge thereof, notify Agent and each Lender:

(a) of the occurrence of any Default to the knowledge of Borrower's chief

financial officer or any other officer, employee or agent of Borrower who is

responsible for administering the applicable provisions hereof or who is

responsible for communicating with Administrative Agent or Lenders regarding

this Agreement or any of the matters contemplated by this Agreement;

(b) of any matter that has resulted or would reasonably be expected to

result in a Material Adverse Effect, including (i) breach or non-performance of,

or any default under, a Contractual Obligation of Borrower or any Subsidiary;

(ii) any dispute, litigation, investigation, proceeding or suspension between

Borrower or any Subsidiary and any Governmental Authority; or (iii) the

commencement of, or any material development in, any litigation or proceeding

affecting Borrower or any Subsidiary, including pursuant to any applicable

Environmental Laws;

(d) of any material change in accounting policies or financial reporting

practices by Borrower or any Subsidiary.

Each notice pursuant to this Section shall be accompanied by a statement of a

Responsible Officer of Borrower setting forth details of the occurrence referred

to therein and stating what action Borrower has taken and proposes to take with

respect thereto. Each notice pursuant to Section 6.03(a) shall describe with

particularity any and all provisions of this Agreement and any other Loan

Document that have been breached.

6.04 PAYMENT OF OBLIGATIONS. Pay and discharge as the same shall become

due and payable, all its obligations and liabilities, including (a) all tax

liabilities, assessments and governmental charges or levies upon it or its

properties or assets, unless the same are being contested in good faith by

appropriate proceedings diligently conducted and adequate reserves in accordance

with GAAP are being maintained by Borrower or such Subsidiary; (b) all lawful

claims which, if unpaid, would by law become a Lien upon its property; and (c)

all Indebtedness, as and when due and payable, but subject to any subordination

provisions contained in any instrument or agreement evidencing such

Indebtedness.

6.05 PRESERVATION OF EXISTENCE, ETC. (a) Preserve, renew and maintain in

full force and effect its legal existence and good standing under the Laws of

the jurisdiction of its

<PAGE>

organization except in a transaction permitted by Section 7.02; (b) take all

reasonable action to maintain all rights, privileges, permits, licenses and

franchises necessary or desirable in the normal conduct of its business, except

to the extent that failure to do so would not reasonably be expected to have a

Material Adverse Effect; and (c) preserve or renew all of its registered

patents, trademarks, trade names and service marks, the non-preservation of

which would reasonably be expected to have a Material Adverse Effect.

6.06 MAINTENANCE OF PROPERTIES. (a) Maintain, preserve and protect or

replace all of its material properties and equipment necessary in the operation

of its business in good working order and condition, ordinary wear and tear

excepted; (b) make all necessary repairs thereto and renewals and replacements

thereof except where the failure to do so would not reasonably be expected to

have a Material Adverse Effect; and (c) use not less than the standard of care

typical in the industry in the operation and maintenance of its facilities.

6.07 MAINTENANCE OF INSURANCE.

(a) In addition to insurance requirements set forth in the Collateral

Documents, maintain with financially sound and reputable insurance companies

(including Lloyds of London syndicates) not Affiliates of Borrower, insurance

with respect to its properties and business against loss or damage of the kinds

customarily insured against by Persons engaged in the same or similar business

(operating similar aircraft in similar markets), of such types and in such

amounts (after giving effect to any self-insurance and/or deductible compatible

with the following standards) as are customarily carried under similar

circumstances by such other Persons and providing for not less than 30 days'

prior notice to Agent of termination or cancellation of such insurance. Without

limiting the generality of the foregoing, except as provided in paragraph (b) of

this Section 6.07, Borrower will at all times carry or cause to be carried at

its expense (or at the expense of the lessee of such Aircraft), aircraft

liability insurance including passenger legal liability, property damage

liability and contractual liability (exclusive of manufacturer's product

liability insurance) with respect to each Aircraft owned by Borrower, (A) in an

amount not less

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