AIRCRAFT GENERAL TERMS AGREEMENT

 

<PAGE>

                                                                  Exhibit 10.1

 

 

                                                               FOIA CONFIDENTIAL

                                                             TREATMENT REQUESTED

 

                         AIRCRAFT GENERAL TERMS AGREEMENT

 

                                    AGTA-ASA

 

                                     BETWEEN

 

                               THE BOEING COMPANY

 

                                       AND

 

                               ALASKA AIRLINES, INC.

 

                                    AGTA-ASA

                               BOEING PROPRIETARY

 

<PAGE>

 

                                TABLE OF CONTENTS

 

<TABLE>

<CAPTION>

                                                                                          PAGE

                                                                                        NUMBER

                                                                                        ------

<S>                                                                                       <C>

  ARTICLES

 

    1.        Subject Matter of Sale                                                         1

 

    2.        Price, Taxes and Payment                                                        1

 

    3.        Regulatory Requirements and Certificates                                       3

 

    4.        Detail Specification; Changes                                                  4

 

    5.        Representatives, Inspection, Demonstration Flights,

             Test Data and Performance Guarantee Compliance                                 4

 

    6.        Delivery                                                                       5

 

    7.        Excusable Delay                                                                 5

 

    8.        Risk Allocation/Insurance                                                      7

 

    9.        Assignment, Resale or Lease                                                    8

 

    10.       Termination for Certain Events                                                 9

 

    11.       Notices                                                                       10

 

    12.       Miscellaneous                                                                 11

 

  EXHIBITS

 

     A        Buyer Furnished Equipment Provisions Document

 

     B        Customer Support Document

 

     C        Product Assurance Document

 

APPENDICES

 

     I        Insurance Certificate

 

    II        Purchase Agreement Assignment

 

    III       Post-Delivery Sale Notice

 

    IV        Post-Delivery Lease Notice

 

     V        Purchaser's/Lessee's Agreement

 

    VI        Owner Appointment of Agent - Warranties

 

    VII       Contractor Confidentiality Agreement

 

   VIII       Post-Delivery Sale with Lease to Seller

 

    IX        Sale with Lease

 

    X         Post-Delivery Security

</TABLE>

 

AGTA-ASA                                i

 

<PAGE>

 

RESTRICTED LETTER AGREEMENT

 

      6-1162-MSA-591   AGTA Terms Revisions

 

AGTA-ASA                                ii

 

<PAGE>

 

                AIRCRAFT GENERAL TERMS AGREEMENT NUMBER AGTA-ASA

 

                                     between

 

                               The Boeing Company

 

                                       and

 

                              Alaska Airlines, Inc.

 

                                   Relating to

 

                                 BOEING AIRCRAFT

 

            This Aircraft General Terms Agreement Number AGTA-ASA (AGTA) between

The Boeing Company, including its wholly-owned subsidiary McDonnell Douglas

Corporation, (BOEING) and Alaska Airlines, Inc. (CUSTOMER) will apply to all

Boeing aircraft contracted for purchase from Boeing by Customer after the

effective date of this AGTA.

 

Article 1.   Subject Matter of Sale.

 

            1.1 Aircraft. Boeing will manufacture and sell to Customer and

Customer will purchase from Boeing aircraft under purchase agreements that

incorporate the terms and conditions of this AGTA.

 

            1.2 Buyer Furnished Equipment. Exhibit A, Buyer Furnished Equipment

Provisions Document to the AGTA, contains the obligations of Customer and Boeing

with respect to equipment purchased and provided by Customer, which Boeing will

receive, inspect, store, and install in an aircraft before delivery to Customer.

This equipment is defined as BUYER FURNISHED EQUIPMENT (BFE).

 

            1.3 Customer Support. Exhibit B, Customer Support Document to the

AGTA, contains the obligations of Boeing relating to Materials (as defined in

Part 3 thereof), training, services, and other things in support of aircraft.

 

            1.4 Product Assurance. Exhibit C, Product Assurance Document to the

AGTA, contains the obligations of Boeing and the suppliers of equipment

installed in each aircraft at delivery relating to warranties, patent

indemnities, software copyright indemnities, and service life policies.

 

Article 2.   Price, Taxes, and Payment.

 

            2.1 Price.

 

                  2.1.1 AIRFRAME PRICE is defined as the price of the airframe

for a specific model of aircraft described in a purchase agreement. (For Models

717-200, 737-600, 737-700, 737-800, 737-900, 777-200LR and 777-300ER the

Airframe Price includes the engine price at its basic thrust level.)

 

AGTA-ASA                         - 1 -

 

<PAGE>

 

                  2.1.2 OPTIONAL FEATURES PRICES are defined as the prices for

optional features selected by Customer for a specific model of aircraft

described in a purchase agreement.

 

                  2.1.3 ENGINE PRICE is defined as the price set by the engine

manufacturer for a specific engine to be installed on the model of aircraft

described in a purchase agreement (not applicable to Models 717-200, 737-600,

737-700, 737-800, 737-900, 777-200LR and 777-300ER).

 

                  2.1.4 AIRCRAFT BASIC PRICE is defined as the sum of the

Airframe Price, Optional Features Prices, and the Engine Price, if applicable.

 

                  2.1.5 ESCALATION ADJUSTMENT is defined as the price adjustment

to the Airframe Price (which includes the basic engine price for Models 717-200,

737-600, 737-700 737-800, 737-900, 777-200LR and 777-300ER) and the Optional

Features Prices resulting from the calculation using the economic price formula

contained in the Airframe and Optional Features Escalation Adjustment

supplemental exhibit to the applicable purchase agreement. The price adjustment

to the Engine Price for all other models of aircraft will be calculated using

the economic price formula in the Engine Escalation Adjustment supplemental

exhibit to the applicable purchase agreement.

 

                   2.1.6 ADVANCE PAYMENT BASE PRICE is defined as the estimated

price of an aircraft rounded to the nearest thousand U. S. dollars, as of the

date of signing a purchase agreement, for the scheduled month of delivery of

such aircraft using commercial forecasts of the Escalation Adjustment.

 

                  2.1.7 AIRCRAFT PRICE is defined as the total amount Customer

is to pay for an aircraft at the time of delivery, which is the sum of the

Aircraft Basic Price, the Escalation Adjustment, and other price adjustments

made pursuant to the purchase agreement.

 

            2.2 Taxes.

 

                  2.2.1 Taxes. TAXES are defined as all taxes, fees, charges, or

duties and any interest, penalties, fines, or other additions to tax, including,

but not limited to sales, use, value added, gross receipts, stamp, excise,

transfer, and similar taxes imposed by any domestic or foreign taxing authority

arising out of or in connection with the performance of the applicable purchase

agreement or the sale, delivery, transfer, or storage of any aircraft, BFE, or

other things furnished under the applicable purchase agreement. Except for U.S.

federal or California State income taxes imposed on Boeing or Boeing's assignee,

and Washington State business and occupation taxes imposed on Boeing or Boeing's

assignee, Customer will be responsible for and pay all Taxes. Customer is

responsible for filing all tax returns, reports, declarations and payment of any

taxes related to or imposed on BFE.

 

                  2.2.2 Reimbursement of Boeing. Customer will promptly

reimburse Boeing on demand, net of additional taxes thereon, for any Taxes that

are imposed on and paid by Boeing or that Boeing is responsible for collecting.

 

AGTA-ASA                            - 2 -

 

<PAGE>

 

             2.3 Payment.

 

                  2.3.1 Advance Payment Schedule. Customer will make advance

payments to Boeing for each aircraft in the amounts and on the dates indicated

in the schedule set forth in the applicable purchase agreement.

 

                  2.3.2 Payment at Delivery. Customer will pay any unpaid

balance of the Aircraft Price at the time of delivery of each aircraft.

 

                  2.3.3 Form of Payment. Customer will make all payments to

Boeing by unconditional wire transfer of immediately available funds in United

States Dollars in a bank account in the United States designated by Boeing.

 

                  2.3.4 Monetary and Government Regulations. Customer is

responsible for complying with all monetary control regulations and for

obtaining necessary governmental authorizations related to payments.

 

Article 3.   Regulatory Requirements and Certificates.

 

            3.1 Certificates. Boeing will manufacture each aircraft to conform

to the appropriate Type Certificate issued by the United States Federal Aviation

Administration (FAA) for the specific model of aircraft and will obtain from the

FAA and furnish to Customer at delivery of each aircraft either a Standard

Airworthiness Certificate or an Export Certificate of Airworthiness issued

pursuant to Part 21 of the Federal Aviation Regulations.

 

            3.2 FAA or Applicable Regulatory Authority Manufacturer Changes.

 

                  3.2.1 A MANUFACTURER CHANGE is defined as any change to an

aircraft, data relating to an aircraft, or testing of an aircraft required by

the FAA to obtain a Standard Airworthiness Certificate, or by the country of

import and/or registration to obtain an Export Certificate of Airworthiness.

 

                  3.2.2 Boeing will bear the cost of incorporating all

Manufacturer Changes into the aircraft:

 

                        (i) resulting from requirements issued by the

FAA prior to the date of the Type Certificate for the applicable aircraft;

 

                        (ii) resulting from requirements issued by the FAA prior

to the date of the applicable purchase agreement; and

 

                        (iii) for any aircraft delivered during the 18 month

period immediately following the date of the applicable purchase agreement

(regardless of when the requirement for such change was issued by the FAA).

 

AGTA-ASA                             - 3 -

 

<PAGE>

 

                  3.2.3 Customer will pay Boeing's charge for incorporating all

other Manufacturer Changes into the aircraft, including all changes for

validation of an aircraft required by any governmental agency of the country of

import and/or registration.

 

            3.3 FAA Operator Changes.

 

                  3.3.1 An OPERATOR CHANGE is defined as a change in equipment

that is required by Federal Aviation Regulations which (i) is generally

applicable to transport category aircraft to be used in United States certified

air carriage and (ii) the required compliance date is on or before the scheduled

delivery month of the aircraft.

 

                  3.3.2 Boeing will deliver each aircraft with Operator Changes

incorporated or, at Boeing's option, with suitable provisions for the

incorporation of such Operator Changes, and Customer will pay Boeing's

applicable charges.

 

            3.4 Export License. If an export license is required by United

States law or regulation for any aircraft or any other things delivered under

the purchase agreement, it is Customer's obligation to obtain such license. If

requested, Boeing will assist Customer in applying for any such export license.

Customer will furnish any required supporting documents.

 

Article 4.   Detail Specification; Changes.

 

            4.1 Configuration Changes. The DETAIL SPECIFICATION is defined as

the Boeing document that describes the configuration of each aircraft purchased

by Customer. The Detail Specification for each aircraft may be amended (i) by

Boeing to reflect the incorporation of Manufacturer Changes and Operator Changes

or (ii) by the agreement of the parties. In either case the amendment will

describe the particular changes to be made and any effect on design,

performance, weight, balance, scheduled delivery month, Aircraft Basic Price,

Aircraft Price, and/or Advance Payment Base Price.

 

            4.2 Development Changes. DEVELOPMENT CHANGES are defined as changes

to aircraft that do not affect the Aircraft Price or scheduled delivery month,

and do not adversely affect guaranteed weight, guaranteed performance, or

compliance with the interchangeability or replaceability requirements set forth

in the applicable Detail Specification. Boeing may, at its option, incorporate

Development Changes into both the Detail Specification and the aircraft prior to

delivery to Customer.

 

            4.3 Notices. Boeing will promptly notify Customer of any amendments

to a Detail Specification, including providing the associated Detail

Specification updates.

 

Article 5.   Representatives, Inspection, Demonstration Flights, Test Data and

            Performance Guarantee Compliance.

 

            5.1 Office Space. Twelve months before delivery of the first

aircraft purchased, and continuing until the delivery of the last aircraft on

firm order, Boeing will furnish, free of charge, suitable office space and

equipment for the accommodation of up to three representatives of Customer in or

conveniently located near the assembly plant.

 

AGTA-ASA                             - 4 -

 

<PAGE>

 

            5.2 Inspection. Customer's representatives may inspect each aircraft

at any reasonable time, provided such inspection does not interfere with

Boeing's performance.

 

            5.3 Demonstration Flights. Prior to delivery, Boeing will fly each

aircraft up to 4 hours to demonstrate to Customer the function of the aircraft

and its equipment using Boeing's production flight test procedures. Customer may

designate up to five representatives to participate as observers.

 

            5.4 Test Data; Performance Guarantee Compliance. PERFORMANCE

GUARANTEES are defined as the written guarantees in a purchase agreement

regarding the operational performance of an aircraft. Boeing will furnish to

Customer flight test data obtained on an aircraft of the same model to evidence

compliance with the Performance Guarantees. Performance Guarantees will be met

if reasonable engineering interpretations and calculations based on the flight

test data establish that the particular aircraft being delivered under the

applicable purchase agreement would, if actually flown, comply with the

guarantees.

 

            5.5 Special Aircraft Test Requirements. Boeing may use an aircraft

for flight and ground tests prior to delivery, without reduction in the Aircraft

Price, if the tests are considered necessary by Boeing (i) to obtain or maintain

the Type Certificate or Certificate of Airworthiness for the aircraft or (ii) to

evaluate potential improvements that may be offered for production or retrofit

incorporation.

 

Article 6.   Delivery.

 

            6.1 Notices of Delivery Dates. Boeing will notify Customer of the

approximate delivery date of each aircraft at least 30 days before the scheduled

month of delivery and again at least 14 days before the scheduled delivery date.

 

            6.2 Place of Delivery. Each aircraft will be delivered at a facility

selected by Boeing in the same state as the primary assembly plant for the

aircraft.

 

            6.3 Bill of Sale. At delivery of an aircraft, Boeing will provide

Customer a bill of sale conveying good title, free of encumbrances.

 

            6.4 Delay. If Customer delays acceptance of an aircraft beyond the

scheduled delivery date, Customer will reimburse Boeing for all costs incurred

by Boeing as a result of the delay.

 

Article 7.   Excusable Delay.

 

            7.1 General. Boeing will not be liable for any delay in the

scheduled delivery month of an aircraft or other performance under a purchase

agreement caused by (i) acts of God; (ii) war or armed hostilities; (iii)

government acts or priorities; (iv) fires, floods, or earthquakes; (v) strikes

or labor troubles causing cessation, slowdown, or interruption of work; (vi)

inability, after due and timely diligence, to procure materials, systems,

accessories, equipment or parts; (vii) inability, after due and timely

diligence, to obtain type certification; or (viii) any other cause

 

AGTA-ASA                          - 5 -

 

<PAGE>

 

to the extent such cause is beyond Boeing's control and not occasioned by

Boeing's fault or negligence. A delay resulting from any such cause is defined

as an EXCUSABLE DELAY.

 

            7.2 Notice. Boeing will give written notice to Customer (i) of a

delay as soon as Boeing concludes that an aircraft will be delayed beyond the

scheduled delivery month due to an Excusable Delay and, when known, (ii) of a

revised delivery month based on Boeing's appraisal of the facts.

 

            7.3 Delay in Delivery of Twelve Months or Less. If the revised

delivery month is 12 months or less after the scheduled delivery month, Customer

will accept such aircraft when tendered for delivery, subject to the following:

 

                  7.3.1 The calculation of the Escalation Adjustment will be

based on the previously scheduled delivery month.

 

                  7.3.2 The advance payment schedule will be adjusted to reflect

the revised delivery month.

 

                  7.3.3 All other provisions of the applicable purchase '

agreement, including the BFE on-dock dates for the delayed aircraft, are

unaffected by an Excusable Delay.

 

            7.4 Delay in Delivery of More Than Twelve Months. If the revised

delivery month is more than 12 months after the scheduled delivery month, either

party may terminate the applicable purchase agreement with respect to such

aircraft within 30 days of the notice. If either party does not terminate the

applicable purchase agreement with respect to such aircraft, all terms and

conditions of the applicable purchase agreement will remain in effect.

 

            7.5 Aircraft Damaged Beyond Repair. If an aircraft is destroyed or

damaged beyond repair for any reason before delivery, Boeing will give written

notice to Customer specifying the earliest month possible, consistent with

Boeing's other contractual commitments and production capabilities, in which

Boeing can deliver a replacement. Customer will have 30 days from receipt of

such notice to elect to have Boeing manufacture a replacement aircraft under the

same terms and conditions of purchase, except that the calculation of the

Escalation Adjustment will be based upon the scheduled delivery month in effect

immediately prior to the date of such notice, or, failing such election, the

applicable purchase agreement will terminate with respect to such aircraft.

Boeing will not be obligated to manufacture a replacement aircraft if

reactivation of the production line for the specific model of aircraft would be

required.

 

            7.6 Termination. Termination under this Article will discharge all

obligations and liabilities of Boeing and Customer with respect to any aircraft

and all related undelivered Materials (as defined in Exhibit B, Customer Support

Document), training, services, and other things terminated under the applicable

purchase agreement, except that Boeing will return to Customer, without

interest, an amount equal to all advance payments paid by Customer for the

aircraft. If Customer terminates the applicable purchase agreement as to any

aircraft, Boeing may elect, by written notice to Customer within 30 days, to

purchase from Customer any BFE related to the aircraft at the invoice prices

paid, or contracted to be paid, by Customer.

 

AGTA-ASA                         - 6 -

 

<PAGE>

 

             7.7 Exclusive Rights. The termination rights in this Article are in

substitution for all other rights of termination or any claim arising by

operation of law due to delays in performance covered by this Article.

 

Article 8.   Risk Allocation/Insurance.

 

            8.1 Title and Risk with Boeing.

 

                  8.1.1 Boeing's Indemnification of Customer. Until transfer of

title to an aircraft to Customer, Boeing will indemnify and hold harmless

Customer and Customer's observers from and against all claims and liabilities,

including all expenses and attorneys' fees incident thereto or incident to

establishing the right to indemnification, for injury to or death of any

person(s), including employees of Boeing but not employees of Customer, or for

loss of or damage to any property, including an aircraft, arising out of or in

any way related to the operation of an aircraft during all demonstration and

test flights conducted under the provisions of the applicable purchase

agreement, whether or not arising in tort or occasioned by the negligence of

Customer or any of Customer's observers.

 

                  8.1.2 Definition of Customer. For the purposes of this

Article, "Customer" is defined as Alaska Airlines, Inc., its divisions,

subsidiaries, affiliates, the assignees of each, and their respective directors,

officers, employees, and agents.

 

            8.2 Insurance.

 

                  8.2.1 Insurance Requirements. Customer will purchase and

maintain insurance acceptable to Boeing and will provide a certificate of such

insurance that names Boeing as an additional insured for any and all claims and

liabilities for injury to or death of any person or persons, including employees

of Customer but not employees of Boeing, or for loss of or damage to any

property, including any aircraft, arising out of or in any way relating to

Materials, training, services, or other things provided under Exhibit B of the

AGTA, which will be incorporated by reference into the applicable purchase

agreement, whether or not arising in tort or occasioned by the negligence of

Boeing, except with respect to legal liability to persons or parties other than

Customer or Customer's assignees arising out of an accident caused solely by a

product defect in an aircraft. Customer will provide such certificate of

insurance at least thirty (30) days prior to the scheduled delivery of the first

aircraft under a purchase agreement. The insurance certificate will reference

each aircraft delivered to Customer pursuant to each applicable purchase

agreement. Annual renewal certificates will be submitted to Boeing before the

expiration of the policy periods. The form of the insurance certificate,

attached as Appendix I, states the terms, limits, provisions, and coverages

required by this Article 8.2.1. The failure of Boeing to demand compliance with

this 8.2.1 in any year will not in any way relieve Customer of its obligations

hereunder nor constitute a waiver by Boeing of these obligations.

 

                  8.2.2 Noncompliance with Insurance Requirements. If Customer

fails to comply with any of the insurance requirements of Article 8.2.1 or if

any of the insurers fails to pay a claim covered by the insurance or otherwise

fails to meet any of insurer's obligations

 

AGTA-ASA                         - 7 -

 

<PAGE>

 

required by Appendix I, Customer will provide the same protection to Boeing as

that required by Article 8.2.1 above.

 

                  8.2.3 Definition of Boeing. For purposes of this article,

"Boeing" is defined as The Boeing Company, its divisions, subsidiaries,

affiliates, assignees of each, and their respective directors, officers,

employees, and agents.

 

Article 9.   Assignment, Resale, or Lease.

 

            9.1 Assignment. This AGTA and each applicable purchase agreement are

for the benefit of the parties and their respective successors and assigns. No

rights or duties of either party may be assigned or delegated, or contracted to

be assigned or delegated, without the prior written consent of the other party,

except:

 

                  9.1.1 Either party may assign its interest to a corporation

that (i) results from any merger, reorganization, or acquisition of such party

and (ii) acquires substantially all the assets of such party;

 

                  9.1.2 Boeing may assign its rights to receive money; and

 

                  9.1.3 Boeing may assign any of its rights and duties to any

wholly-owned subsidiary of Boeing.

 

                  9.1.4 Boeing may assign any of its rights and duties with

respect to Part 1, Articles 1, 2, 4 and 5 of Exhibit B, Customer Support

Document to the AGTA, to Alteon Training L.L.C.

 

            9.2 Transfer by Customer at Delivery. Boeing will take any requested

action reasonably required for the purpose of causing an aircraft, at time of

delivery, to be subject to an equipment trust, conditional sale, lien, or other

arrangement for Customer to finance the aircraft. However, no such action will

require Boeing to divest itself of title to or possession of the aircraft until

delivery of and payment for the aircraft. A sample form of assignment acceptable

to Boeing is attached as Appendix II.

 

            9.3 Sale or Lease by Customer After Delivery. If, following delivery

of an aircraft, Customer sells or leases the aircraft (including any sale and

lease-back to seller for financing purposes), Customer may assign some or all of

its rights with respect to the aircraft under the applicable purchase agreement

to the purchaser or lessee of such aircraft, and all such rights will inure to

the benefit of such purchaser or lessee effective upon Boeing's receipt of the

written agreement of the purchaser or lessee, in a form satisfactory to Boeing,

to comply with all applicable terms and conditions of the applicable purchase

agreement. Sample forms of notice to Boeing of such assignments giving examples

of language acceptable to Boeing are attached as Appendices III, IV, VIII, IX

and X.

 

AGTA-ASA                        - 8 -

 

<PAGE>

 

            9.4 Notice of Sale or Lease After Delivery. Customer will give

notice to Boeing as soon as practicable of the sale or lease of an aircraft,

including in the notice the name of the entity or entities with title and/or

possession of such aircraft.

 

            9.5 Exculpatory Clause in Post-Delivery Sale or Lease. If, following

the delivery of an aircraft, Customer sells or leases such aircraft and obtains

from the transferee any form of exculpatory clause protecting Customer from

liability for loss of or damage to the aircraft, and/or related incidental or

consequential damages, including without limitation loss of use, revenue, or

profit, Customer shall obtain for Boeing the purchaser's or lessee's written

agreement to be bound by terms and conditions substantially as set forth in

Appendix V. This Article 9.5 applies only if purchaser or lessee has not

provided to Boeing the written agreement described in Article 9.3 above.

 

            9.6 Appointment of Agent - Warranty Claims. If, following delivery

of an aircraft, Customer appoints an agent to act directly with Boeing for the

administration of claims relating to the warranties under the applicable

purchase agreement, Boeing will deal with the agent for that purpose, effective

upon Boeing's receipt of the agent's written agreement, in a form satisfactory

to Boeing, to comply with all applicable terms and conditions of the applicable

purchase agreement. A sample form of agreement acceptable to Boeing is attached

as Appendix VI.

 

            9.7 No Increase in Boeing Liability. No action taken by Customer or

Boeing relating to the resale or lease of an aircraft or the assignment of

Customer's rights under the applicable purchase agreement will subject Boeing to

any liability beyond that in the applicable purchase agreement or modify in any

way Boeing's obligations under the applicable purchase agreement.

 

Article 10. Termination of Purchase Agreements for Certain Events.

 

            10.1 Termination. If either party

 

                  (i)    ceases doing business as a going concern, or suspends

                        all or substantially all its business operations, or

                        makes an assignment for the benefit of creditors, or

                        generally does not pay its debts as they become due, or

                        admits in writing its inability to pay its debts; or

 

                  (ii)   petitions for or acquiesces in the appointment of any

                        receiver, trustee or similar officer to liquidate or

                        conserve its business or any substantial part of its

                         assets; commences any legal proceeding such as

                        bankruptcy, reorganization, readjustment of debt,

                        dissolution, or liquidation available for the relief of

                        financially distressed debtors; or becomes the object of

                        any such proceeding, unless the proceeding is dismissed

                        or stayed within a reasonable period, not to exceed 60

                        days,

 

the other party may terminate any purchase agreement with respect to any

undelivered aircraft, Materials, training, services, and other things by giving

written notice of termination.

 

AGTA-ASA                          - 9 -

 

<PAGE>

 

            10.2 Repayment of Advance Payments. If Customer terminates the

applicable purchase agreement under this Article, Boeing will repay to Customer,

without interest, an amount equal to any advance payments received by Boeing

from Customer with respect to undelivered aircraft.

 

Article 11. Notices.

 

             All notices required by this AGTA or by any applicable purchase

agreement will be written in English, will be effective on the date of receipt,

and will be delivered or transmitted by any customary means to the appropriate

address or number listed below:

 

            Customer    Delivery or    Alaska Airlines, Inc.

                       Courier:       19300 International Blvd. South

                                     Seattle, Washington

                                     98188

                                      Attention: Vice President - Finance

 

                       Mail:          Alaska Airlines, Inc.

                                     P.O. Box 68900

                                     Seattle, Washington

                                      98168

                                     Attention: Vice President - Finance

 

                       Facsimile:     206-392-5007

                       Telephone:     206-392-5015

 

            Boeing      Delivery or    Boeing Commercial Airplanes

                        Courier:       1901 Oakesdale Avenue S.W.

                                     Renton, Washington   98055

                                     U.S.A.

                                     Attention: Vice President - Contracts

                                                 Mail Code 21-34

 

                       Mail:          Boeing Commercial Airplanes

                                     P.O. Box 3707

                                     Seattle, Washington   98124-2207

                                      U.S.A.

                                     Attention: Vice President - Contracts

                                                Mail Code 21-34

 

                       Facsimile:     425 237-1706

                       Telephone:     206 766-2400

 

AGTA-ASA                        - 10 -

 

<PAGE>

 

Article 12. Miscellaneous.

 

            12.1 Government Approval. Boeing and Customer will assist each other

in obtaining any governmental consents or approvals required to effect

certification and sale of aircraft under the applicable purchase agreement.

 

            12.2 Headings. Article and paragraph headings used in this AGTA and

in any purchase agreement are for convenient reference only and are not intended

to affect the interpretation of this AGTA or any purchase agreement.

 

            12.3 GOVERNING LAW. THIS AGTA AND ANY PURCHASE AGREEMENT WILL BE

INTERPRETED UNDER AND GOVERNED BY THE LAWS OF THE STATE OF WASHINGTON, U.S.A.,

EXCEPT THAT WASHINGTON'S CHOICE OF LAW RULES SHALL NOT BE INVOKED FOR THE

PURPOSE OF APPLYING THE LAW OF ANOTHER JURISDICTION.

 

            12.4 Waiver/Severability. Failure by either party to enforce any

provision of this AGTA or any purchase agreement will not be construed as a

waiver. If any provision of this AGTA or any provision of any purchase agreement

are held unlawful or otherwise ineffective by a court of competent jurisdiction,

the remainder of the AGTA or the applicable purchase agreement will remain in

effect.

 

            12.5 Survival of Obligations. The Articles and Exhibits of this AGTA

including but not limited to those relating to insurance, DISCLAIMER AND RELEASE

and the EXCLUSION OF CONSEQUENTIAL AND OTHER DAMAGES will survive termination or

cancellation of any purchase agreement or part thereof.

 

             12.6 AGTA Changes. The intent of the AGTA is to simplify the

standard contracting process for terms and conditions which are related to the

sale and purchase of all Boeing aircraft. This AGTA has been mutually agreed to

by the parties as of the date indicated below. From time to time the parties may

elect, by mutual agreement to update, or modify the existing articles as written

and revise this AGTA. If such changes are made, any existing executed Purchase

Agreement(s) will be governed by the terms and conditions in effect on the date

of the executed Purchase Agreement.

 

DATED AS OF June 15, 2005

          

 

Alaska Airlines, Inc.                              THE BOEING COMPANY

 

By _______________________________                 By __________________________

 

Its ______________________________                 Its _________________________

 

AGTA-ASA                          - 11 -

 

<PAGE>

 

                                    EXHIBIT A

 

                                       TO

 

                        AIRCRAFT GENERAL TERMS AGREEMENT

 

                                    AGTA-ASA

 

                                     BETWEEN

 

                               THE BOEING COMPANY

 

                                       AND

 

                              ALASKA AIRLINES, INC.

 

                  BUYER FURNISHED EQUIPMENT PROVISIONS DOCUMENT

 

                               BOEING PROPRIETARY

AGTA-ASA                                 A

 

<PAGE>

 

                  BUYER FURNISHED EQUIPMENT PROVISIONS DOCUMENT

 

1. General.

 

       Certain equipment to be installed in the Aircraft is furnished to Boeing

by Customer at Customer's expense. This equipment is designated "Buyer Furnished

Equipment" (BFE) and is listed in the Detail Specification. Boeing will provide

to Customer a BFE Requirements On-Dock/Inventory Document (BFE Document) or an

electronically transmitted BFE Report which may be periodically revised, setting

forth the items, quantities, on-dock dates and shipping instructions relating to

the in sequence installation of BFE as described in the applicable Supplemental

Exhibit to this Exhibit A in a purchase agreement at the time of aircraft

purchase.

 

2. Supplier Selection.

 

      Customer will:

 

      2.1 Select and notify Boeing of the suppliers of BFE items by those dates

appearing in Supplemental Exhibit BFE1 to the applicable purchase agreement at

the time of aircraft purchase.

 

      2.2 Meet with Boeing and such selected BFE suppliers promptly after such

selection to:

 

            2.2.1 complete BFE configuration design requirements for such BFE;

and

 

            2.2.2 confirm technical data submittal requirements for BFE

certification.

 

3. Customer's Obligations.

 

      Customer will:

 

      3.1 comply with and cause the supplier to comply with the provisions of

the BFE Document or BFE Report; including, without limitation,

 

            3.1.1 deliver technical data (in English) to Boeing as required to

support installation and FAA certification in accordance with the schedule

provided by Boeing or as mutually agreed upon during the BFE meeting referred to

above;

 

                             BOEING PROPRIETARY

AGTA-ASA                              A-1

 

<PAGE>

 

            3.1.2 deliver BFE including production and/or flight training spares

and BFE Aircraft Software to Boeing in accordance with the quantities, schedule,

and other instructions provided therein; and

 

            3.1.3 assure that all BFE Aircraft Software is delivered in

compliance with Boeing's then-current Standards for Loadable Systems;

 

            3.1.4 assure that all BFE parts are delivered to Boeing with

appropriate quality assurance documentation;

 

      3.2 authorize Boeing to discuss all details of the BFE directly with the

BFE suppliers;

 

      3.3 authorize Boeing to conduct or delegate to the supplier quality source

inspection and supplier hardware acceptance of BFE at the supplier location;

 

            3.3.1 require supplier's contractual compliance to Boeing defined

quality assurance requirements, source inspection programs and supplier

delegation programs, including availability of adequate facilities for Boeing

resident personnel; and

 

            3.3.2 assure that all BFE supplier's quality systems are approved to

Boeing's then current standards for such systems;

 

      3.4 obtain from supplier a non-exclusive, perpetual, royalty-free,

irrevocable license for Boeing to copy BFE Aircraft Software. The license is

needed to enable Boeing to load the software copies in (i) the aircraft's mass

storage device (MSD), (ii) media (e.g., diskettes, CD-ROMs, etc.), (iii) the BFE

hardware and/or (iv) an intermediate device or other media to facilitate copying

of the BFE Aircraft Software into the aircraft's MSD, BFE hardware and/or media,

including media as Boeing may deliver to Customer with the aircraft;

 

      3.5 grant Boeing a license, extending the same rights set forth in

paragraph 3.4 above, to copy: a) BFE Aircraft Software and data Customer has

modified and/or b) other software and data Customer has added to the BFE

Aircraft Software;

 

      3.6 provide necessary field service representation at Boeing's facilities

to support Boeing on all issues related to the installation and certification of

BFE;

 

      3.7 deal directly with all BFE suppliers to obtain overhaul data,

provisioning data, related product support documentation and any warranty

provisions applicable to the BFE;

 

      3.8 work closely with Boeing and the BFE suppliers to resolve any

difficulties, including defective equipment, that arise;

 

                             BOEING PROPRIETARY

AGTA-ASA                              A-2

 

<PAGE>

 

      3.9 be responsible for modifying, adjusting and/or calibrating BFE as

required for FAA approval and for all related expenses;

 

      3.10 assure that a proprietary information agreement is in place between

Boeing and BFE suppliers prior to Boeing providing any documentation to such

suppliers;

 

      3.11 warrant that the BFE will comply with all applicable FARs and the

U.S. Food and Drug Administration (FDA) sanitation requirements for installation

and use in the Aircraft at the time of delivery. Customer will be responsible

for supplying any data and adjusting, calibrating, re-testing or updating such

BFE and data to the extent necessary to obtain applicable FAA and FDA approval

and shall bear the resulting expenses;

 

      3.12 warrant that the BFE will meet the requirements of the Detail

Specification; and

 

      3.13 be responsible for providing equipment which is FAA certifiable at

time of Aircraft delivery, or for obtaining waivers from the applicable

regulatory agency for non-FAA certifiable equipment.

 

4. Boeing's Obligations.

 

      Other than as set forth below, Boeing will provide for the installation of

and install the BFE and obtain certification of the Aircraft with the BFE

installed.

 

5. Nonperformance by Customer.

 

      If Customer's nonperformance of obligations in this Exhibit or in the BFE

Document causes a delay in the delivery of the Aircraft or causes Boeing to

perform out-of-sequence or additional work, Customer will reimburse Boeing for

all resulting expenses and be deemed to have agreed to any such delay in

Aircraft delivery. In addition Boeing will have the right to:

 

      5.1 provide and install specified equipment or suitable alternate

equipment and increase the price of the Aircraft accordingly; and/or

 

      5.2 deliver the Aircraft to Customer without the BFE installed.

 

6. Return of Equipment.

 

      BFE not installed in the Aircraft will be returned to Customer in

accordance with Customer's instructions and at Customer's expense.

 

                             BOEING PROPRIETARY

AGTA-ASA                              A-3

 

<PAGE>

 

7. Title and Risk of Loss.

 

      7.1 With respect to Aircraft manufactured in the State of Washington,

title to and risk of loss of BFE provided for such Aircraft will at all times

remain with Customer or other owner. Boeing will have only such liability for

BFE as a bailee for mutual benefit would have, but will not be liable for loss

of use.

 

      7.2 With respect to Aircraft manufactured in the State of California,

Customer agrees to sell and Boeing agrees to purchase each item of BFE

concurrently with its delivery to Boeing. A reasonable shipset price for the BFE

shall be established with Customer. Customer and Boeing agree that the Aircraft

Price will be increased by the amount of said shipset price and such amount will

be included on Boeing's invoice at time of Aircraft delivery. Boeing's payment

for the purchase of each shipset of BFE from Customer will be made at the time

of delivery of the Aircraft in which the BFE is installed.

 

8. Interchange of BFE

 

      To properly maintain Boeing's production flow and to preserve Boeing's

delivery commitments, Boeing reserves the right, if necessary, due to equipment

shortages or failures, to interchange new items of BFE acquired from or for

Customer with new items of the same part numbers and modification status

acquired from or for other customers of Boeing. Used BFE acquired from Customer

or from other customers of Boeing will not be interchanged.

 

9. Indemnification of Boeing.

 

      Customer hereby indemnifies and holds harmless Boeing from and against all

claims and liabilities, including costs and expenses (including attorneys' fees)

incident thereto or incident to successfully establishing the right to

indemnification, for injury to or death of any person or persons, including

employees of Customer but not employees of Boeing, or for loss of or damage to

any property, including any Aircraft, arising out of or in any way connected

with any nonconformance or defect in any BFE and whether or not arising in tort

or occasioned by the negligence of Boeing. This indemnity will not apply with

respect to any nonconformance or defect caused solely by Boeing's installation

of the BFE.

 

10. Patent Indemnity.

 

       Customer hereby indemnifies and holds harmless Boeing from and against all

claims, suits, actions, liabilities, damages and costs arising out of any actual

or alleged infringement of any patent or other intellectual property rights by

BFE or arising out of the installation, sale or use of BFE by Boeing.

 

                             BOEING PROPRIETARY

AGTA-ASA                              A-4

 

<PAGE>

 

11. Definitions.

 

      For the purposes of the above indemnities, the term "Boeing" includes The

Boeing Company, its divisions, subsidiaries and affiliates, the assignees of

each, and their directors, officers, employees and agents.

 

                             BOEING PROPRIETARY

AGTA-ASA                              A-5

 

<PAGE>

 

                                     EXHIBIT B

 

                                       TO

 

                        AIRCRAFT GENERAL TERMS AGREEMENT

 

                                    AGTA-ASA

 

                                     BETWEEN

 

                               THE BOEING COMPANY

 

                                       AND

 

                              ALASKA AIRLINES, INC.

 

                            CUSTOMER SUPPORT DOCUMENT

 

                             This document contains:

 

      Part 1:       Maintenance and Flight Training Programs; Operations

                   Engineering Support

 

      Part 2:       Field Services and Engineering Support

                   Services

 

      Part 3:       Technical Information and Materials

 

      Part 4:       Alleviation or Cessation of Performance

 

      Part 5:       Protection of Proprietary Information and

                   Proprietary Materials

 

                               BOEING PROPRIETARY

AGTA-ASA                                B

                                       i

 

<PAGE>

 

                            CUSTOMER SUPPORT DOCUMENT

 

                 PART 1: BOEING MAINTENANCE AND FLIGHT TRAINING

                    PROGRAMS; OPERATIONS ENGINEERING SUPPORT

 

1. Boeing Training Programs.

 

      1.1 Boeing will provide maintenance training and flight training programs

to support the introduction of a specific model of aircraft into service. The

training programs will consist of general and specialized courses and will be

described in a Supplemental Exhibit to the applicable purchase agreement.

 

      1.2 Boeing will conduct all training at Boeing's primary training facility

for the model of aircraft purchased unless otherwise agreed.

 

      1.3 All training will be presented in the English language. If translation

is required, Customer will provide interpreters.

 

      1.4 Customer will be responsible for all expenses of Customer's personnel.

Boeing will transport Customer's personnel between their local lodging and

Boeing's training facility.

 

2. Training Planning Conferences.

 

       Customer and Boeing will conduct planning conferences approximately 12

months before the scheduled delivery month of the first aircraft of a model to

define and schedule the maintenance and flight training programs.

 

3. Operations Engineering Support.

 

       3.1 As long as an aircraft purchased by Customer from Boeing is operated

by Customer in scheduled revenue service, Boeing will provide operations

engineering support. Such support will include:

 

            3.1.1 assistance with the analysis and preparation of performance

data to be used in establishing operating practices and policies for Customer's

operation of aircraft;

 

            3.1.2 assistance with interpretation of the minimum equipment list,

the definition of the configuration deviation list and the analysis of

individual aircraft performance;

 

                               BOEING PROPRIETARY

AGTA-ASA                                B

                                      1-1

 

<PAGE>

 

            3.1.3 assistance with solving operational problems associated with

delivery and route-proving flights;

 

            3.1.4 information regarding significant service items relating to

aircraft performance or flight operations; and

 

            3.1.5 if requested by Customer, Boeing will provide operations

engineering support during an aircraft ferry flight.

 

4. Training at a Facility Other Than Boeing's.

 

      If requested by Customer, Boeing will conduct the classroom portions of

the maintenance and flight training (except for the Performance Engineer

training courses) at a mutually acceptable alternate training site, subject to

the following conditions:

 

      4.1 Customer will provide acceptable classroom space, simulators (as

necessary for flight training) and training equipment required to present the

courses;

 

      4.2 Customer will pay Boeing's then-current per diem charge for each

Boeing instructor for each day, or fraction thereof, that the instructor is

outside King County, Washington, including travel time;

 

      4.3 Customer will reimburse Boeing for the actual costs of round-trip

transportation for Boeing's instructors and the shipping costs of training

Materials between the primary training facility and the alternate training site

outside King County, Washington;

 

      4.4 Customer will be responsible for all taxes, fees, duties, licenses,

permits and similar expenses incurred by Boeing and its employees as a result of

Boeing's providing training at the alternate site outside King County,

Washington or incurred as a result of Boeing providing revenue service training;

and

 

      4.5 Those portions of training that require the use of training devices

not available at the alternate site will be conducted at Boeing's facility or at

some other alternate site.

 

5. General Terms and Conditions.

 

       5.1 Boeing flight instructor personnel will not be required to work more

than 5 days per week, or more than 8 hours in any one 24-hour period, of which

not more than 5 hours per 8-hour workday will be spent in actual flying. These

foregoing restrictions will not apply to ferry assistance or revenue service

training services, which will be governed by FAA rules and regulations.

 

                               BOEING PROPRIETARY

AGTA-ASA                                B

                                       1-2

 

<PAGE>

 

      5.2 NORMAL LINE MAINTENANCE is defined as line maintenance that Boeing

might reasonably be expected to furnish for flight crew training at Boeing's

facility, and will include ground support and aircraft storage in the open, but

will not include provision of spare parts. Boeing will provide Normal Line

Maintenance services for any aircraft while the aircraft is used for flight crew

training at Boeing's facility in accordance with the Boeing Maintenance Plan

(Boeing document D6-82076) and the Repair Station Operation and Inspection

Manual (Boeing document D6-25470). Customer will provide such services if flight

crew training is conducted elsewhere. Regardless of the location of such

training, Customer will be responsible for providing all maintenance items

(other than those included in Normal Line Maintenance) required during the

training, including, but not limited to, fuel, oil, landing fees and spare

parts.

 

      5.3 If the training is based at Boeing's facility, and the aircraft is

damaged during such training, Boeing will make all necessary repairs to the

aircraft as promptly as possible. Customer will pay Boeing's reasonable charge,

including the price of parts and materials, for making the repairs. If Boeing's

estimated labor charge for the repair exceeds $25,000, Boeing and Customer will

enter into an agreement for additional services before beginning the repair

work.

 

      5.4 If the flight training is based at Boeing's facility, several airports

in surrounding states may be used, at Boeing's option. Unless otherwise agreed

in the flight training planning conference, it will be Customer's responsibility

to make arrangements for the use of such airports.

 

      5.5 If Boeing agrees to make arrangements on behalf of Customer for the

use of airports for flight training, Boeing will pay on Customer's behalf any

landing fees charged by any airport used in conjunction with the flight

training. At least 30 days before flight training, Customer will provide Boeing

an open purchase order against which Boeing will invoice Customer for any

landing fees Boeing paid on Customer's behalf. The invoice will be submitted to

Customer approximately 60 days after flight training is completed, when all

landing fee charges have been received and verified. Customer will pay to Boeing

within 30 days of the date of the invoice.

 

      5.6 If requested by Boeing, in order to provide the flight training or

ferry flight assistance, Customer will make available to Boeing an aircraft

after delivery to familiarize Boeing instructor or ferry flight crew personnel

with such aircraft. If flight of the aircraft is required for any Boeing

instructor or ferry flight crew member to maintain an FAA license for flight

proficiency or landing currency, Boeing will be responsible for the costs of

fuel, oil, landing fees and spare parts attributable to that portion of the

flight.

 

      5.7 If any part of the training described in Article 1.1 of this Exhibit

is not used by Customer within 12 months after the delivery of the last aircraft

under the relevant purchase agreement, Boeing will not be obligated to provide

such training.

 

                               BOEING PROPRIETARY

AGTA-ASA                                B

                                      1-3

 

<PAGE>

 

                             CUSTOMER SUPPORT DOCUMENT

 

                 PART 2: FIELD AND ENGINEERING SUPPORT SERVICES

 

1. Field Service Representation.

 

      Boeing will furnish field service representation to advise Customer with

respect to the maintenance and operation of an aircraft (FIELD SERVICE

REPRESENTATIVES).

 

      1.1 Field Service representation will be available at or near Customer's

main maintenance or engineering facility beginning before the scheduled delivery

month of the first aircraft and ending 12 months after delivery of the last

aircraft covered by a specific purchase agreement.

 

      1.2 Customer will provide, at no charge to Boeing, suitable furnished

office space and office equipment at the location where Boeing is providing

Field Service Representatives. As required, Customer will assist each Field

Service Representative with visas, work permits, customs, mail handling,

identification passes and formal introduction to local airport authorities.

 

      1.3 Boeing Field Service Representatives are assigned to various airports

around the world. Whenever Customer's aircraft are operating through any such

airport, the services of Boeing's Field Service Representatives are available to

Customer.

 

2. Engineering Support Services.

 

      Boeing will, if requested by Customer, provide technical advisory

assistance for any aircraft and Boeing Product (as defined in Part I of Exhibit

C). Technical advisory assistance, provided from the Seattle area or at a base

designated by Customer as appropriate, will include:

 

      2.1 Operational Problem Support. If Customer experiences operational

problems with an aircraft, Boeing will analyze the information provided by

Customer to determine the probable nature and cause of the problem and to

suggest possible solutions.

 

      2.2 Schedule Reliability Support. If Customer is not satisfied with the

schedule reliability of a specific model of aircraft, Boeing will analyze

information provided by Customer to determine the nature and cause of the

problem and to suggest possible solutions.

 

      2.3 Maintenance Cost Reduction Support. If Customer is concerned that

actual maintenance costs of a specific model of aircraft are excessive, Boeing

will analyze

 

                               BOEING PROPRIETARY

AGTA-ASA                                 B

                                      2-1

 

<PAGE>

 

information provided by Customer to determine the nature and cause of the

problem and to suggest possible solutions.

 

      2.4 Aircraft Structural Repair Support. If Customer is designing

structural repairs and desires Boeing's support, Boeing will analyze and comment

on Customer's engineering releases relating to structural repairs not covered by

Boeing's Structural Repair Manual.

 

      2.5 Aircraft Modification Support. If Customer is designing aircraft

modifications and requests Boeing's support, Boeing will analyze and comment on

Customer's engineering proposals for changes in, or replacement of, systems,

parts, accessories or equipment manufactured to Boeing's detailed design. Boeing

will not analyze or comment on any major structural change unless Customer's

request for such analysis and comment includes complete detailed drawings,

substantiating information (including any information required by applicable

government agencies), all stress or other appropriate analyses, and a specific

statement from Customer of the substance of the review and the response

requested.

 

      2.6 Facilities, Ground Equipment and Maintenance Planning Support. Boeing

will, at Customer's request, evaluate Customer's technical facilities, tools and

equipment for servicing and maintaining aircraft, to recommend changes where

necessary and to assist in the formulation of an initial maintenance plan for

the introduction of the aircraft into service.

 

       2.7 Post-Delivery Service Support. Boeing will, at Customer's request,

perform work on an aircraft after delivery but prior to the initial departure

flight or upon the return of the aircraft to Boeing's facility prior to

completion of that flight. In that event the following provisions will apply.

 

            2.7.1 Boeing may rely upon the commitment authority of the

Customer's personnel requesting the work.

 

            2.7.2 As title and risk of loss has passed to Customer, the

insurance provisions of Article 8.2 of the AGTA apply.

 

            2.7.3 The provisions of the Boeing Warranty in Part 2 of Exhibit C

of this AGTA apply.

 

            2.7.4 Customer will pay Boeing for requested work not covered by the

Boeing Warranty, if any.

 

            2.7.5 The DISCLAIMER AND RELEASE and EXCLUSION OF CONSEQUENTIAL AND

OTHER DAMAGES provisions in Article 11 of Part 2 of Exhibit C of this AGTA

apply.

 

                               BOEING PROPRIETARY

AGTA-ASA                                B

                                       2-2

 

<PAGE>

 

      2.8 Additional Services. Boeing may, at Customer's request, provide

additional services for an aircraft after delivery, which may include, but not

be limited to, retrofit kit changes (kits and/or information), training, flight

services, maintenance and repair of aircraft. Such additional services will be

subject to a mutually acceptable price, schedule, scope of work and other

applicable terms and conditions. The DISCLAIMER AND RELEASE and the EXCLUSION OF

CONSEQUENTIAL AND OTHER DAMAGES provisions in Article 11 of Part 2 of Exhibit C

of this AGTA and the insurance provisions in Article 8.2 of this AGTA will apply

to any such work. Title to and risk of loss of any such aircraft will always

remain with Customer.

 

                                BOEING PROPRIETARY

AGTA-ASA                                B

                                      2-3

 

<PAGE>

 

                            CUSTOMER SUPPORT DOCUMENT

 

                   PART 3: TECHNICAL INFORMATION AND MATERIALS

 

1. General.

 

      MATERIALS are defined as any and all items that are created by Boeing or a

third party, which are provided directly or indirectly from Boeing and serve

primarily to contain, convey or embody information. Materials may include either

tangible embodiments (for example, documents or drawings), or intangible

embodiments (for example, software and other electronic forms) of information

but excludes Aircraft Software. AIRCRAFT SOFTWARE is defined as software that is

installed on and used in the operation of the aircraft.

 

      Boeing will furnish to Customer certain Materials to support the

maintenance and operation of the aircraft at no additional charge to Customer,

except as otherwise provided herein. Such Materials will, if applicable, be

prepared generally in accordance with Air Transport Association of America (ATA)

Specification No. 100, entitled "Specification for Manufacturers' Technical

Data". Materials will be in English and in the units of measure used by Boeing

to manufacture an aircraft.

 

      Digitally-produced Materials will, if applicable, be prepared generally in

accordance with ATA Specification No. 2100, dated January 1994, "Digital Data

Standards for Aircraft Support."

 

2. Materials Planning Conferences.

 

      Customer and Boeing will conduct planning conferences approximately 12

months before the scheduled delivery month of the first aircraft of a model in

order to mutually determine the proper format and quantity of Materials to be

furnished to Customer in support of the aircraft.

 

      When available, Customer may select one Boeing digital format as the

delivery medium. Should a Boeing digital format not be chosen, Customer may

select a reasonable quantity of printed and 16mm microfilm formats, with the

exception of the Illustrated Parts Catalog, which will be provided in one

selected format only.

 

3. Information and Materials - Incremental Increase.

 

      Until one year after the month of delivery of the last aircraft covered by

a specific purchase agreement, Customer may annually request in writing a

reasonable increase in the quantity of Materials with the exception of microfilm

master copies, digital formats,

 

                               BOEING PROPRIETARY

AGTA-ASA                                B

                                       3-1

 

<PAGE>

 

and others for which a specified number of copies are provided. Boeing will

provide the additional quantity at no additional charge beginning with the next

normal revision cycle. Customer may request a decrease in revision quantities at

any time.

 

4. Advance Representative Copies.

 

      All advance representative copies of Materials will be selected by Boeing

from available sources. Such advance copies will be for advance planning

purposes only.

 

5. Customized Materials.

 

       All customized Materials will reflect the configuration of each aircraft

as delivered.

 

6. Revisions.

 

      6.1 Revision Service. Boeing will provide revisions free of charge to

certain Materials to be identified in the planning conference conducted for a

specific model of aircraft, reflecting changes developed by Boeing, as long as

Customer operates an aircraft of that model.

 

      6.2 Revisions Based on Boeing Service Bulletin Incorporation. If Boeing

receives written notice that Customer intends to incorporate, or has

incorporated, any Boeing service bulletin in an aircraft, Boeing will at no

charge issue revisions to Materials with revision service reflecting the effects

of such incorporation into such aircraft.

 

7. Supplier Technical Data.

 

      7.1 For supplier-manufactured programmed airborne avionics components and

equipment classified as Seller Furnished Equipment (SFE) or Seller Purchased

Equipment (SPE) or Buyer Designated Equipment (BDE) which contain computer

software designed and developed in accordance with Radio Technical Commission

for Aeronautics Document No. RTCA/DO-178 dated January 1982, No. RTCA/DO-178A

dated March 1985, or later as available, Boeing will request that each supplier

of the components and equipment make software documentation available to

Customer.

 

      7.2 The provisions of this Article will not be applicable to items of BFE.

 

      7.3 Boeing will furnish to Customer a document identifying the terms and

conditions of the product support agreements between Boeing and its suppliers

requiring the suppliers to fulfill Customer's requirements for information and

services in support of the specific model of aircraft.

 

                               BOEING PROPRIETARY

AGTA-ASA                                B

                                       3-2

 

<PAGE>

 

8. Buyer Furnished Equipment Data.

 

      Boeing will incorporate BFE information into the customized Materials

providing Customer makes the information available to Boeing at least nine

months prior to the scheduled delivery month of Customer's first aircraft of a

specific model. Customer agrees to furnish the information in Boeing standard

digital format if Materials are to be delivered in Boeing standard digital

format.

 

9. Materials Shipping Charges.

 

      Boeing will pay the reasonable transportation costs of the Materials.

Customer is responsible for any customs clearance charges, duties, and taxes.

 

10. Customer's Shipping Address.

 

      The Materials furnished to Customer hereunder are to be sent to a single

address to be specified. Customer will promptly notify Boeing of any change to

the address.

 

                               BOEING PROPRIETARY

AGTA-ASA                                B

                                      3-3

 

<PAGE>

 

                             CUSTOMER SUPPORT DOCUMENT

 

                 PART 4: ALLEVIATION OR CESSATION OF PERFORMANCE

 

Boeing will not be required to provide any Materials, services, training or

other things at a facility designated by Customer if any of the following

conditions exist:

 

      1. a labor stoppage or dispute in progress involving Customer;

 

      2. wars or warlike operations, riots or insurrections in the country where

the facility is located;

 

      3. any condition at the facility which, in the opinion of Boeing, is

detrimental to the general health, welfare or safety of its personnel or their

families;

 

      4. the United States Government refuses permission to Boeing personnel or

their families to enter into the country where the facility is located, or

recommends that Boeing personnel or their families leave the country; or

 

      5. the United States Government refuses permission to Boeing to deliver

Materials, services, training or other things to the country where the facility

is located.

 

After the location of Boeing personnel at the facility, Boeing further reserves

the right, upon the occurrence of any of such events, to immediately and without

prior notice to Customer relocate its personnel and their families.

 

                               BOEING PROPRIETARY

AGTA-ASA                                B

                                      4-1

 

<PAGE>

 

                            CUSTOMER SUPPORT DOCUMENT

 

                  PART 5: PROTECTION OF PROPRIETARY INFORMATION

                            AND PROPRIETARY MATERIALS

 

1.     General.

 

      All Materials provided by Boeing to Customer and not covered by a Boeing

CSGTA or other agreement between Boeing and Customer defining Customer's right

to use and disclose the Materials and included information will be covered by,

and subject to the terms of this AGTA. Title to all Materials containing,

conveying or embodying confidential, proprietary or trade secret information

(Proprietary Information) belonging to Boeing or a third party (Proprietary

Materials), will at all times remain with Boeing or such third party. Customer

will treat all Proprietary Materials and all Proprietary Information in

confidence and use and disclose the same only as specifically authorized in this

AGTA.

 

2.     License Grant.

 

      Boeing grants to Customer a worldwide, non-exclusive, non-transferable

license to use and disclose Proprietary Materials in accordance with the terms

and conditions of this AGTA. Customer is authorized to make copies of Materials

(except for Materials bearing the copyright legend of a third party), and all

copies of Proprietary Materials will belong to Boeing and be treated as

Proprietary Materials under this AGTA. Customer will preserve all proprietary

legends, and all copyright notices on all Materials and insure the inclusion of

those legends and notices on all copies.

 

3.     Use of Proprietary Materials and Proprietary Information.

 

      Customer is authorized to use Proprietary Materials and Proprietary

Information for the purpose of: (a) operation, maintenance, repair, or

modification of Customer's aircraft for which the Proprietary Materials and

Proprietary Information have been specified by Boeing and (b) development and

manufacture of training devices and maintenance tools for use by Customer.

 

4.     Providing of Proprietary Materials to Contractors.

 

      Customer is authorized to provide Proprietary Materials to Customer's

contractors for the sole purpose of maintenance, repair, or modification of

Customer's aircraft for which the Proprietary Materials have been specified by

Boeing. In addition, Customer may provide Proprietary Materials to Customer's

contractors for the sole purpose of developing and manufacturing training

devices and maintenance tools for Customer's use.

 

                                BOEING PROPRIETARY

AGTA-ASA                                B

AGTA_Exhibit_B

                                      5-1

 

<PAGE>

 

Before providing Proprietary Materials to its contractor, Customer will first

obtain a written agreement from the contractor by which the contractor agrees

(a) to use the Proprietary Materials only on behalf of Customer, (b) to be bound

by all of the restrictions and limitations of this Part 5, and (c) that Boeing

is a third party beneficiary under the written agreement. Customer agrees to

provide copies of all such written agreements to Boeing upon request and be

liable to Boeing for any breach of those agreements by a contractor. A sample

agreement acceptable to Boeing is attached as Appendix VII.

 

5.     Providing of Proprietary Materials and Proprietary Information to

      Regulatory Agencies.

 

      When and to the extent required by a government regulatory agency having

jurisdiction over Customer or an aircraft, Customer is authorized to provide

Proprietary Materials and to disclose Proprietary Information to the agency for

use in connection with Customer's operation, maintenance, repair, or

modification of such aircraft. Customer agrees to take all reasonable steps to

prevent the agency from making any distribution, disclosure, or additional use

of the Proprietary Materials and Proprietary Information provided or disclosed.

Customer further agrees to notify Boeing immediately upon learning of any (a)

distribution, disclosure, or additional use by the agency, (b) request to the

agency for distribution, disclosure, or additional use, or (c) intention on the

part of the agency to distribute, disclose, or make additional use of

Proprietary Materials or Proprietary Information.

 

                               BOEING PROPRIETARY

AGTA-ASA                                B

AGTA_Exhibit_B

                                      5-2

 

<PAGE>

 

                                    EXHIBIT C

 

                                       TO

 

                        AIRCRAFT GENERAL TERMS AGREEMENT

 

                                     AGTA-ASA

 

                                     BETWEEN

 

                               THE BOEING COMPANY

 

                                       AND

 

                              ALASKA AIRLINES, INC.

 

                            PRODUCT ASSURANCE DOCUMENT

 

                             This document contains:

 

      Part 1:       Exhibit C Definitions

 

      Part 2:       Boeing Warranty

 

      Part 3        Boeing Service Life Policy

 

      Part 4:       Supplier Warranty Commitment

 

      Part 5:       Boeing Interface Commitment

 

      Part 6:       Boeing Indemnities against Patent and Copyright Infringement

 

                               BOEING PROPRIETARY

AGTA-ASA                                C

                                        i

 

<PAGE>

 

                           PRODUCT ASSURANCE DOCUMENT

 

                          PART 1: EXHIBIT C DEFINITIONS

 

      APPROVED MAINTENANCE SCHEDULE OR AMS shall mean that aircraft maintenance

program document approved by Customer's aviation authority as a condition of

granting Customer operating approval in the jurisdiction where the aircraft is

registered.

 

      AUTHORIZED AGENT - Agent appointed by Customer to perform corrections and

to administer warranties (see Appendix VI to the AGTA for a form acceptable to

Boeing).

 

      AVERAGE DIRECT HOURLY LABOR RATE - the average hourly rate (excluding all

fringe benefits, premium-time allowances, social charges, business taxes and the

like) paid by Customer to its Direct Labor employees.

 

       BOEING PRODUCT - any system, accessory, equipment, part or Aircraft

Software that is manufactured by Boeing or manufactured to Boeing's detailed

design with Boeing's authorization.

 

      CORRECT(S) - to repair, modify, provide modification kits or replace with

a new product.

 

      CORRECTION - a repair, a modification, a modification kit or replacement

with a new product.

 

      CORRECTED BOEING PRODUCT - a Boeing Product which is free of defect as a

result of a Correction.

 

      DIRECT LABOR - Labor spent by Customer's direct labor employees to access,

remove, disassemble, modify, repair, inspect and bench test a defective Boeing

Product, and to reassemble, reinstall a Corrected Boeing Product and perform

final inspection and testing.

 

      DIRECT MATERIALS - Items such as parts, gaskets, grease, sealant and

adhesives, installed or consumed in performing a Correction, excluding

allowances for administration, overhead, taxes, customs duties and the like.

 

      ROGUE UNIT - A Boeing Product, on which an unscheduled removal due to

breach of warranty occurs three (3) or more times both (i) within the warranty

period and (ii) within either twelve (12) consecutive months or one thousand

(1,000) consecutive operating hours.

 

      SPECIFICATION CONTROL DRAWING (SCD) - a Boeing document defining

specifications for certain Supplier Products.

 

      SUPPLIER - the manufacturer of a Supplier Product.

 

                               BOEING PROPRIETARY

AGTA-ASA                                C

                                       1-1

 

<PAGE>

 

      SUPPLIER PRODUCT - any system, accessory, equipment, part or Aircraft

Software that is not manufactured to Boeing's detailed design. This includes but

is not limited to parts manufactured to a SCD, all standards, and other parts

obtained from non-Boeing sources.

 

                               BOEING PROPRIETARY

AGTA-ASA                                C

                                      1-2

 

<PAGE>

 

                           PRODUCT ASSURANCE DOCUMENT

 

                              PART 2: BOEING WARRANTY

 

1. Applicability.

 

      This warranty applies to all Boeing Products. Warranties applicable to

Supplier Products are in Part 4. Warranties applicable to engines will be

provided by Supplemental Exhibits to individual purchase agreements.

 

2. Warranty.

 

      2.1 Coverage. Boeing warrants that at the time of delivery:

 

            (i)    the aircraft will conform to the Detail Specification except

                  for portions stated to be estimates, approximations or design

                  objectives;

 

            (ii)   all Boeing Products will be free from defects in material,

                  process of manufacture and workmanship, including the

                  workmanship utilized to install Supplier Products, engines and

                  BFE, and;

 

            (iii) all Boeing Products will be free from defects in design,

                  including selection of materials and the process of

                  manufacture, in view of the state of the art at the time of

                  design.

 

      2.2 Exceptions. The following conditions do not constitute a defect under

this warranty:

 

            (i)    conditions resulting from normal wear and tear;

 

            (ii)   conditions resulting from acts or omissions of Customer; and

 

            (iii) conditions resulting from failure to properly service and

                  maintain a Boeing Product.

 

3. Warranty Periods.

 

      3.1 Warranty. The warranty period begins on the date of aircraft or Boeing

Product delivery (Delivery) and ends at the applicable time specified in

subsections 3.1(i) through 3.1(iii) below:

 

            (i)    for Boeing aircraft models 777-200, -300, 737-600, -700, -800,

                  -900, 787 or new aircraft models designed and manufactured

                  with similar, new technology the warranty period ends 48

                  months after Delivery;

 

                               BOEING PROPRIETARY

AGTA-ASA                                C

                                      2-1

 

<PAGE>

 

            (ii)   in addition, for a Boeing Product installed at the time of

                  delivery in a 787 model aircraft but not inspected during the

                  initial 48 month warranty period, the warranty period

                   continues until the date upon which Customer first inspects

                  such Boeing Product pursuant to its Approved Maintenance

                  Schedule but not later than 10 years after Delivery of such

                  787 aircraft;

 

             (iii) for any other Boeing aircraft model the warranty period ends

                  36 months after Delivery.

 

      3.2 Warranty on Corrected Boeing Products. The warranty period applicable

to a Corrected Boeing Product shall begin on the date of delivery of the

Corrected Boeing Product or date of delivery of the kit or kits furnished to

Correct the Boeing Product and shall be for the period specified immediately

below:

 

            (i) For Corrected Boeing Products which have been Corrected because

      of a defect in material, the applicable warranty period is the remainder

      of the initial warranty for the defective Boeing Product.

 

            (ii) For Corrected Boeing Products which have been Corrected because

      of defect in workmanship, the applicable warranty period is the remainder

      of the initial warranty or 12 months following the date of delivery of the

      Corrected Boeing Product, whichever is longer.

 

            (iii) For Corrected Boeing Products which have been Corrected

      because of a defect in design, the applicable warranty period is 18 months

      or the remainder of the initial warranty period, whichever is longer.

 

      3.3 Survival of Warranties. All warranty periods are stated above. The

Performance Guarantees will not survive delivery of the aircraft.

 

4. Remedies.

 

      4.1 Correction Options. Customer may, at its option, either perform a

Correction of a defective Boeing Product or return the Boeing Product to Boeing

for Correction. During the warranty period, Boeing will not charge Customer for

tests on Boeing Products returned to Boeing for Correction on which Boeing is

unable to confirm the failure claimed, provided:

 

            (i)    Boeing's written instructions were followed by the Customer

                   for testing the Boeing Product prior to its return to Boeing,

                  and

 

                               BOEING PROPRIETARY

AGTA-ASA                                C

                                      2-2

 

<PAGE>

 

            (ii)   Customer's claim includes all applicable documentation of such

                  tests with the returned Boeing Product, including but not

                  limited to: Central Maintenance Computer (CMC), Flight

                  Maintenance Computer System, (FMCS), Flight Isolation Manual

                  (FIM), Engine Indicating and Crew Alerting System (EICAS) or

                  Built In Test Equipment (BITE) messages.

 

      4.2 Warranty Inspections. In addition to the remedies to Correct defects

in Boeing Products described in Article 7.3, below, Boeing will reimburse

Customer for the cost of Direct Labor to perform certain inspections of the

aircraft to determine the occurrence of a condition Boeing has identified as a

covered defect, provided the inspections are recommended by a service bulletin

or service letter issued by Boeing during the warranty period.

 

Such reimbursement will not apply to any inspections performed after a

Correction is available to Customer and Customer has had a reasonable time to

incorporate the Correction, given the Customer's fleet size and maintenance

schedule.

 

      4.3 Rogue Units.

 

            4.3.1 Upon written request, Boeing will lend Customer at no charge

      an interchangeable Boeing Product in exchange for a Rogue Unit. Within ten

      (10) calendar days of its receipt of the loaned Boeing Product, Customer

      will ship the Rogue Unit to Boeing. Customer will provide with the Rogue

      Unit verification of the following requirements:

 

            (i)    The removed Boeing Product failed three (3) times within

                  twelve (12) consecutive months or one thousand (1000)

                  consecutive operating hours during the warranty period

                  following initial delivery,

 

             (ii)   Removals were performed in compliance with flight or

                  maintenance manuals approved by the FAA or the comparable

                  regulatory agency for the country in which the aircraft is

                  registered, and

 

             (iii) Any Corrections or tests to the Boeing Product were performed

                  by Customer according to the latest revision of the Boeing

                  Component Maintenance Manual (CMM), according to written

                  instructions from Boeing, or by Boeing.

 

            4.3.2 Upon receipt of a Rogue Unit and the required verifications,

      Boeing will, at no-charge to Customer, either replace the Rogue Unit with

      a new Boeing Product or, if otherwise agreed, allow Customer to retain the

      loaned, Boeing Product.

 

                               BOEING PROPRIETARY

AGTA-ASA                                C

                                      2-3

 

<PAGE>

 

5. Discovery and Notice.

 

      5.1 For a claim to be valid:

 

             (i)    the defect must be discovered during the warranty period; and

 

            (ii)   Boeing Warranty must receive written notice of the discovery

                  no later than 90 days after expiration of the warranty period.

                  The notice must include sufficient information to substantiate

                  the claim.

 

            (iii) For claims pursuant to Article 3.1(ii) of Part 2 of this

                  Exhibit C pertaining to Boeing Products which are first

                  inspected more than 48 months after delivery of the 787 model

                  aircraft in which they are installed, Customer must have

                  provided to Boeing no later than 45 months aft