8-K

                                          SECURITIES AND EXCHANGE COMMISSION
                                                Washington, D.C. 20549

                                                       FORM 8-K

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

Date of Report (date of earliest event reported): March 25, 2003


                                                FRONTIER AIRLINES, INC
                                (Exact name of Registrant as specified in its charter)


            Colorado                                0-24126                       84-1256945
(State or Other Jurisdiction of                     (Commission                (I.R.S. Employer
         Incorporation)                             File                      Identification No.)
                                                    Number)



       7001 Tower Road, Denver, CO                                           80249
(Address of principal executive offices)                                   (zip code)

Registrant's telephone number, including area code: (720) 374-4500


                                                    Not Applicable
                            (Former name or former address, if changed since last report)






Item 5.  Other Events and Regulation FD Disclosure

         Frontier Airlines, Inc.(Frontier)announced on Friday, February 14, 2003, that it had closed a $70 million
commercial loan facility supported by a $63 million guarantee of the Air Transportation Board.  On February 18,
2003, Frontier filed a Current Report on Form 8-K providing additional details regarding the loan. The discussion
of the loan in the February 18, 2003 Form 8-K is qualified by reference to the full text of the agreements
evidencing the commercial loan facility, which are filed as exhibits to this report on Form 8-K.


Item 7.    Financial Statements, Pro Forma Financial Information and Exhibits.

(c)      Exhibits

Exhibit No.                                         Description

4.5* #                      Frontier  Airlines Inc.  Warrant to Purchase Common Stock,  No. 1 - Air
                            Transportation Stabilization Board

4.6 *                       Registration  Rights  Agreement  dated as of  February  14, 2003 by and
                            between  Frontier  Airlines,  Inc.  as  the  Issuer,  and  the  Holders
                            Referred to Herein of Warrants to Purchase Common Stock, No Par Value

10.77 *                     $70,000,000  Loan  Agreement  dated  as  of  February  14,  2003  among
                            Frontier  Airlines,  Inc. as Borrower,  West LB AG, as Tranche A Lender
                            and Tranche C Lender,  Wells Fargo Bank,  N.A.,  as Tranche B-1 Lender,
                            Tranche B-2 Lender, and a Tranche C Lender, Bearingpoint,  Inc. as Loan
                            Administrator,  Wells Fargo Bank Northwest,  N.A. as Collateral  Agent,
                            West LB AG, as Agent, and Air Transportation Stabilization Board

10.78*                      Mortgage and Security  Agreement  dated as of February 14, 2003 made by
                            Frontier  Airlines,  Inc. in favor of Wells Fargo Bank Northwest,  N.A.
                            as the Collateral Agent


(*) Portions of this Exhibit have been omitted and filed  separately with the Securities and Exchange  Commission in a
    confidential treatment request under Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

(#) Two  Warrants,  dated as of February 14, 2003,  substantially  identical in all material  respect to this Exhibit,
    have been  entered into with each of the  Supplemental  Guarantors  (as defined in Exhibit  10.77)  granting  each
    Supplemental  Guarantor a warrant to purchase  191,697  shares  under the same terms and  conditions  described in
    this Exhibit.






SIGNATURES

                  Pursuant to the  requirements  of the  Securities  Exchange  Act of 1934,  the  registrant  has duly
caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

                                                          FRONTIER AIRLINES, INC.



Date:  March 26, 2003                                     By:/s/Jeff S. Potter          
                                                              Jeff S. Potter, President & CEO


                                                          By:/s/Paul H. Tate            
                                                              Paul H. Tate, CFO

EX-10

     PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
    EXCHANGE COMMISSION IN A CONFIDENTAL TREATMENT REQUEST UNDER RULE 24b-2 OF THE SECURITIES
       EXCHANGE ACT OF 1934, AS AMENDED. THE SYMBOL "[***]" IN THIS EXHIBIT INDICATES THAT
 INFORMATION HAS BEEN OMITTED. IN SECTION 1.1 - DEFINED TERMS, CERTAIN DEFINED TERMS WERE MOVED
      TO THE END OF SECTION 1.1 TO PRESERVE THE CONFIDENTIALITY OF THE OMITTED INFORMATION.

                                           $70,000,000

                                         LOAN AGREEMENT


                                  Dated as of February 14, 2003

                                              among

                                    FRONTIER AIRLINES, INC.,
                                          as Borrower,

                                           WESTLB AG,
                           as Tranche A Lender and a Tranche C Lender,

                                     WELLS FARGO BANK, N.A.,
                as Tranche B-1 Lender, Tranche B-2 Lender and a Tranche C Lender,

                                       BEARINGPOINT, INC.,
                                (formerly KPMG Consulting, Inc.),
                                     as Loan Administrator,

                                WELLS FARGO BANK NORTHWEST, N.A.,
                                      as Collateral Agent,

                                           WESTLB AG,
                                            as Agent,

                                               and

                             AIR TRANSPORTATION STABILIZATION BOARD

                                                             

                                           WESTLB AG,
                                          Lead Arranger






                                        TABLE OF CONTENTS


                                                                                          Page

Article I DEFINITIONS, INTERPRETATION AND ACCOUNTING TERMS......................................1

   Section 1.1.         Defined Terms...........................................................1
   Section 1.2.         Computation of Time Periods............................................23
   Section 1.3.         Accounting Terms and Principles........................................24
   Section 1.4.         Certain Terms..........................................................24

Article II THE LOAN............................................................................25

   Section 2.1.         The Loan...............................................................25
   Section 2.2.         Borrowing Procedures...................................................25
   Section 2.3.         Scheduled Repayment of the Loan........................................26
   Section 2.4.         Evidence of Debt; Use of Proceeds......................................26
   Section 2.5.         Optional Prepayments...................................................27
   Section 2.6.         Mandatory Prepayments..................................................28
   Section 2.7.         Interest...............................................................31
   Section 2.8.         Fees...................................................................32
   Section 2.9.         Payments and Computations..............................................33
   Section 2.10.        Certain Provisions Governing the Notes.................................35
   Section 2.11.        Capital Adequacy.......................................................38
   Section 2.12.        Taxes..................................................................39

Article III CONDITIONS TO LOAN.................................................................42

   Section 3.1.         Conditions Precedent to the Loan.......................................42

Article IV REPRESENTATIONS AND WARRANTIES......................................................47

   Section 4.1.         Organization, Powers, Qualification, Good Standing, Business,
                        Subsidiaries, the Act and the Regulations..............................47
   Section 4.2.         Authorization of Borrowing, Etc........................................48
   Section 4.3.         Financial Condition....................................................49
   Section 4.4.         No Material Adverse Change; No Restricted Payments or Defaults.........50
   Section 4.5.         Title To Properties; Liens.............................................50
   Section 4.6.         Litigation; Adverse Facts..............................................51
   Section 4.7.         Payment of Taxes; Tax Sharing Agreements...............................51
   Section 4.8.         Performance of Agreements; Material Agreements.........................51
   Section 4.9.         Governmental Regulation................................................52
   Section 4.10.        Securities Activities..................................................52
   Section 4.11.        Employee Benefit Plans.................................................52
   Section 4.12.        Environmental Protection...............................................53
   Section 4.13.        Solvency...............................................................54
   Section 4.14.        Disclosure.............................................................54
   Section 4.15.        Compliance With Laws...................................................54
   Section 4.16.        Indebtedness; Off Balance Sheet Transactions...........................54
   Section 4.17.        Perfected Security Interest............................................54
   Section 4.18.        Insurance..............................................................54
   Section 4.19.        Absence of Labor Disputes..............................................55
   Section 4.20.        Gates and Slots........................................................55
   Section 4.21.        Section 1110...........................................................55

Article V COVENANTS............................................................................55

   Section 5.1.         Financial Statements and Other Reports.................................55
   Section 5.2.         Corporate Existence....................................................62
   Section 5.3.         Payment of Taxes and Claims; Tax Consolidation.........................62
   Section 5.4.         Maintenance of Properties; Insurance...................................63
   Section 5.5.         Inspection.............................................................63
   Section 5.6.         Compliance With Laws, Etc..............................................63
   Section 5.7.         Hazardous Materials....................................................64
   Section 5.8.         Contractual Obligations................................................64
   Section 5.9.         Employee Benefit Plans.................................................65
   Section 5.10.        FAA Matters; Citizenship...............................................65
   Section 5.11.        Board Guarantee........................................................65
   Section 5.12.        Lower-Tier Covered Transaction.........................................65
   Section 5.13.        Comptroller General Audits and Reviews.................................66
   Section 5.14.        Appraisal Reports; Additional Collateral...............................66
   Section 5.15.        Additional Subsidiaries................................................67
   Section 5.16.        Further Assurances.....................................................67

Article VI NEGATIVE COVENANTS..................................................................68

   Section 6.1.         Liens and Related Matters..............................................68
   Section 6.2.         Investments............................................................69
   Section 6.3.         Restricted Payments....................................................69
   Section 6.4.         Financial Covenants....................................................69
   Section 6.5.         Restriction on Acquisitions; New Subsidiaries..........................70
   Section 6.6.         Sales and Lease-Backs..................................................71
   Section 6.7.         Transactions with Affiliates...........................................72
   Section 6.8.         Conduct of Business....................................................72
   Section 6.9.         Merger or Consolidation................................................72
   Section 6.10.        Limitation on Asset Sales..............................................73
   Section 6.11.        Limitations with Respect to Subsidiaries...............................73
   Section 6.12.        Speculative Transactions...............................................74
   Section 6.13.        Limitations on Amendments..............................................74
   Section 6.14.        Going Private Transactions.............................................74
   Section 6.15.        No Further Negative Pledges............................................74
   Section 6.16.        Incentive Equity Plan and Other Incentive Compensation.................75
   Section 6.17.        Incurrence of Indebtedness.  ..........................................75

Article VII EVENTS OF DEFAULT..................................................................75

   Section 7.1.         Events of Default......................................................75
   Section 7.2.         Remedies...............................................................78

Article VIII THE LOAN ADMINISTRATOR............................................................79

   Section 8.1.         Acceptance of Appointment and Services.................................79
   Section 8.2.         Loan Administrator's Reliance..........................................82
   Section 8.3.         Indemnification........................................................83
   Section 8.4.         Successor Loan Administrator...........................................83
   Section 8.5.         Conflict of Interest...................................................84
   Section 8.6.         Representations, Warranties and Covenants of the Loan Administrator....85

Article IX THE FACILITY AGENTS.................................................................85

   Section 9.1.         Authorization and Action...............................................85
   Section 9.2.         Facility Agents' Reliance, Etc.........................................86
   Section 9.3.         Facility Agents and Affiliates.........................................87
   Section 9.4.         Representations of Certain Parties.....................................87
   Section 9.5.         Events of Default; Termination of Board Guarantee......................88
   Section 9.6.         Facility Agents' Right to Indemnity....................................88
   Section 9.7.         Indemnification of Facility Agents.....................................88
   Section 9.8.         Successor Facility Agents..............................................89
   Section 9.9.         Special Rules Governing Transaction Guarantees.........................90

Article X MISCELLANEOUS........................................................................90

   Section 10.1.        Amendments, Waivers, Etc...............................................90
   Section 10.2.        Assignments and Participations.........................................92
   Section 10.3.        Costs and Expenses.....................................................94
   Section 10.4.        Indemnities............................................................94
   Section 10.5.        Right of Set-off.......................................................95
   Section 10.6.        Sharing of Payments, Etc...............................................95
   Section 10.7.        Notices, Etc...........................................................96
   Section 10.8.        No Waiver; Remedies....................................................96
   Section 10.9.        Independence of Representations, Warranties and Covenants..............96
   Section 10.10.       Governing Law..........................................................97
   Section 10.11.       Submission to Jurisdiction; Service of Process.........................97
   Section 10.12.       Waiver of Jury Trial...................................................97
   Section 10.13.       Marshaling; Payments Set Aside.........................................97
   Section 10.14.       Section Titles.........................................................98
   Section 10.15.       Execution in Counterparts..............................................98
   Section 10.16.       Third Party Beneficiary................................................98
   Section 10.17.       Severability...........................................................98
   Section 10.18.       Confidentiality........................................................98
   Section 10.19.       Acknowledgement Regarding Federal Authority............................99
   Section 10.20.       Cumulative Rights and Remedies........................................101

Annexes

Annex A     -     Notice Addresses; Payment Instructions
Annex B     -     Lending Office
Annex C     -     Supplemental Guarantee Rate Schedule



Schedules

Schedule 2.8(c)   Loan Administrator Hourly Fee Rate Schedule
Schedule 4.1(c)   Subsidiaries of Borrower
Schedule 4.2(b)   Consents under Contractual Obligations
Schedule 4.2(c)   Governmental Consents
Schedule 4.7      Payment of Taxes
Schedule 4.16     Indebtedness
Schedule 6.1      Liens and Payment Restrictions
Schedule 6.7(b)   Transactions with Affiliates



Exhibits

Exhibit A   -     Form of Assignment and Acceptance
Exhibit B1  -     Form of Tranche A Note
Exhibit B2-1-     Form of Tranche B-1 Note
Exhibit B2-2-     Form of Tranche B-2 Note
Exhibit B3  -     Form of Tranche C Note
Exhibit C   -     Form of Notice of Borrowing
Exhibit D   -     Form of Board Guarantee
Exhibit E1-1-     Form of [***] Supplemental Guarantee
Exhibit E1-2-     Form of [***] Counter Guarantee
Exhibit E2  -     Form of [***] Supplemental Guarantee
Exhibit F   -     Form of Warrant Agreement
Exhibit G   -     Form of Registration Rights Agreement
Exhibit H   -     Form of Security Agreement
Exhibit I   -     Form of Collateral Value Certificate






                  LOAN AGREEMENT, dated as of February 14, 2003, among FRONTIER AIRLINES, INC.,
a Colorado corporation (the "Borrower"); WESTLB AG, as a lender in respect of Tranche A
(together with its successors and permitted assigns, the "Tranche A Lender"); WELLS FARGO BANK,
N.A., as a lender in respect of Tranche B-1 (together with its successors and permitted
assigns, the "Tranche B-1 Lender"), WELLS FARGO BANK, N.A., as a lender in respect of Tranche
B-2 (together with its successors and permitted assigns, the "Tranche B-2 Lender"), WESTLB AG
and WELLS FARGO BANK, N.A., each as a lender in respect of Tranche C  (together with their
respective successors and permitted assigns, the "Tranche C Lenders," and together with the
Tranche A Lender, the Tranche B-1 Lender and the Tranche B-2 Lender, the "Lenders");
EARINGPOINT, INC. (formerly KPMG Consulting, Inc.), in its capacity as loan administrator
hereunder (together with its successors and permitted assigns, the "Loan Administrator"); WELLS
FARGO BANK NORTHWEST, N.A., in its capacity as Collateral Agent hereunder (together with its
successors and permitted assigns, the "Collateral Agent"); WESTLB AG, as agent for the Lenders
(in such capacity, together with its successors and permitted assigns, the "Agent"); and AIR
TRANSPORTATION STABILIZATION BOARD, created pursuant to Section 102 of the Act referred to
below (the "Board").

                                      W I T N E S S E T H:


                  WHEREAS, the Borrower has requested that the Lenders make available to the
Borrower a Loan for such general corporate purposes as are permissible under the Air
Transportation Safety and System Stabilization Act, P.L. 107-42, as the same may be amended
from time to time (the "Act") and the regulations for Air Carrier Guarantee Loan Program issued
pursuant to the Act, 14 C.F.R. Part 1300, as the same may be amended from time to time (the
"Regulations"); and

                  WHEREAS, the Tranche A Lender, the Tranche B-1 Lender, the Tranche B-2 Lender
and the Tranche C Lenders are willing severally to make available to the Borrower the Loan upon
the terms and subject to the conditions set forth herein;

                  NOW, THEREFORE, in consideration of the premises and the covenants and
agreements contained herein, the parties hereto hereby agree as follows:

                                             ARTICLE I

                           DEFINITIONS, INTERPRETATION AND ACCOUNTING TERMS


SECTION 1.1       DEFINED TERMS.  As used in this Agreement, the following terms have the
following meanings (such meanings to be equally applicable to both the singular and plural forms of the
terms defined):

                  "Act" has the meaning specified in the first recital to this Agreement.

                  "Affiliate" means, with respect to any Person, any other Person which,
directly or indirectly, controls, is controlled by or is under common control with such
Person.  For the purposes of this definition, "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of management and policies of such
Person, whether through the ownership of voting securities, by contract or otherwise.

                  "Affiliate Transaction" has the meaning specified in SECTION 6.7(A).

                  "Agent" has the meaning specified in the preamble to this Agreement.

                  "Aggregate Amounts Due" has the meaning specified in SECTION 10.6.

                  "Agreement" means this Loan Agreement.

                  "Aircraft Related Equipment" means aircraft (including aircraft engines
installed thereon) in the fleet of the Borrower (or other Wholly-Owned Subsidiary of the
Borrower), spare aircraft engines, aircraft parts, simulators and passenger loading bridges or
other flight or ground equipment.

                  "Alliance Agreements" means those certain business alliance agreements among
the Borrower and any of Mesa Air Group, Great Lakes Aviation and such other parties or
agreements from time to time that include, but are not limited to, code-sharing, frequent
flyer, ground handling and marketing agreements that are entered into in the ordinary course of
business.

                  "Applicable Tranche A Interest Rate" means, (i) from and including the Closing
Date to but excluding the fourth Business Day thereafter, the Base Rate, (ii) for the first
Interest Period, the sum of (1) the Tranche A Lender's cost of funding for such Interest
Period, and (2) [***]% per annum and (iii) for each Interest Period thereafter, a rate per
annum equal to the sum of (1) LIBOR for such Interest Period plus (2) [***]% per annum.  For
purposes of the foregoing, the Tranche A Lender's "cost of funding" shall be the amount
certified by the Tranche A Lender as its cost of funds for such period, which amount shall be
conclusive absent manifest error.

                  "Applicable Tranche B-1 Interest Rate" means, (i) from and including the
Closing Date to but excluding the fourth Business Day thereafter, the Base Rate, (ii) for the
first Interest Period, the sum of (1) the Tranche B-1 Lender's cost of funding for such
Interest Period, and (2) [***]% per annum and (iii) for each Interest Period thereafter, a rate
per annum equal to the sum of (1) LIBOR for such Interest Period plus (2) [***]% per annum.
For purposes of the foregoing, the Tranche B-1 Lender's "cost of funding" shall be the amount
certified by the Tranche B-1 Lender as its cost of funds for such period, which amount shall be
conclusive absent manifest error.


                  "Applicable Tranche B-2 Interest Rate" means, (i) from and including the
Closing Date to but excluding the fourth Business Day thereafter, the Base Rate, (ii) for the
first Interest Period, the sum of (1) the Tranche B-2 Lender's cost of funding for such
Interest Period and (2) [***]% per annum, and (ii) for each Interest Period thereafter, a rate
per annum equal to the sum of (1) LIBOR for such Interest Period plus (2) [***]% per annum.
For purposes of the foregoing, the Tranche B-2 Lender's "cost of funding" shall be the amount
certified by the Tranche B-2 Lender as its cost of funds for such period, which amount shall be
conclusive absent manifest error.


                  "Applicable Tranche C Interest Rate" means, (i) from and including the Closing
Date to but excluding the fourth Business Day thereafter, the Base Rate, (ii) for the first
Interest Period, the sum of (1) for any Tranche C Lender, the sum of such Tranche C Lender's
cost of funding for such Interest Period and (2) [***]% per annum and (iii) for each Interest
Period thereafter, a rate per annum equal to the sum of (1) LIBOR for such Interest Period plus
(2) [***]% per annum.  For purposes of the foregoing, the Tranche C Lenders' "cost of funding"
shall be the amount certified by the Tranche C Lenders as their cost of funds for such period,
which amount shall be conclusive absent manifest error.

                  "Application" means the Application dated June 28, 2002 of the Borrower to the
Board for the issuance of a federal credit instrument under the Act and the Regulations, as
supplemented to the Closing Date.

                  "Appraisal Report" means a desktop appraisal (or, if applicable, pursuant to
SECTION 5.14(A), a physical inspection report) in form and substance reasonably satisfactory to
the Board (or if the Board Guarantee is no longer in effect, the Requisite Lenders) and
prepared by an Appraiser, which certifies, at the time of determination, the market value and
distress value of the applicable Appraised Collateral (each of the terms "desktop appraisal,"
"market value" and "distress value" as defined by the International Society of Transport
Aircraft Trading).

                  "Appraised Collateral" means Collateral that is Spare Engines, Spare Parts,
any other individual asset that has a book value as of, or had a book value as of the end of
the fiscal quarter that most recently precedes, a date as of which an Appraisal Report is
required to be prepared hereunder, in excess of $100,000, or any aircraft that becomes
Collateral pursuant to Section 5.14(b).

                  "Appraised Value" means, with respect to Appraised Collateral, the market
value of such Collateral as reflected in the most recent Appraisal Report obtained in respect
of such Collateral in accordance with this Agreement.

                  "Appraiser" means Morten Beyer & Agnew or any other firm of nationally
recognized, independent appraisers as may be agreed by the Borrower, the Board and the Lenders.

                  "ARE Acquisition Financing" means Indebtedness (i) incurred to finance the
acquisition of Aircraft Related Equipment, which may include Indebtedness incurred subsequent
to the acquisition (other than pursuant to a buy-out option under a lease) of such Aircraft
Related Equipment, provided that such subsequent financing occurs within eighteen months after
such acquisition or in the case of Aircraft Related Equipment owned by the Borrower or any
Subsidiary on the Closing Date, eighteen months after the Closing Date, (ii) in an aggregate
principal amount not in excess of the gross purchase price (before adjustments for deposits,
credits and similar items) for such Aircraft Related Equipment and costs and expenses
reasonably incurred in connection with its acquisition, and (iii) for which the applicable
lenders require that the Aircraft Related Equipment be pledged to them to secure such
Indebtedness, including any cross-collateralization arrangements involving the same lender or
group of lenders.

                  "ASM" means the "available seat miles" of the Borrower.

                  "Asset Sale" means any sale, transfer or other disposition (including by way
of merger, consolidation, exchange of assets or sale-leaseback transactions), in one
transaction or a series of related transactions, by the Borrower or any of its Subsidiaries to
any Person of (i) all or any of the Capital Stock of any Subsidiary of the Borrower, (ii) all
or substantially all of the property and assets of an operating unit or business of the
Borrower or any of its Subsidiaries or (iii) any other property and assets of the Borrower or
any of its Subsidiaries outside of the ordinary course of business of the Borrower or such
Subsidiary; provided, that none of the following shall be included within the meaning of "Asset
Sale" or for any reason subject to the terms of Section 2.6(a) in respect of the proceeds
thereof: (i) sales of Aircraft Related Equipment as part of a sale-leaseback transaction in
connection with the acquisition (other than pursuant to a buy-out option under a lease) of such
Aircraft Related Equipment by the Borrower or a Wholly-Owned Subsidiary of the Borrower and
entered into within eighteen months after such acquisition or in the case of Aircraft Related
Equipment owned by the Borrower or any Subsidiary on the Closing Date, eighteen months after
the Closing Date and (ii) any sale or disposition of spare parts in the ordinary course of
business.

                  "Assignment and Acceptance" means an assignment and acceptance entered into by
a Lender and an Eligible Lender, consented to by the Board and accepted by the Agent (unless
consummated pursuant to SECTION 10.2(D)), in substantially the form of Exhibit A.

                  "Bankruptcy Code" means Title 11 of the United States Code as now and
hereafter in effect, or any successor statute.

                  "Base Rate" means, as at any date of determination, the higher of (x) the
prime or base rate announced from time to time by WestLB AG and (y) the Fed Funds Rate plus1/2
of 1%.

                  "Board" has the meaning specified in the preamble to this Agreement.

                  "Board Guarantee" means the Guarantee Agreement dated as of the date hereof
and executed by the Board, the Tranche A Lender and the Agent, in substantially the form of
Exhibit D.

                  "Borrower" has the meaning specified in the preamble to this Agreement.

                  "Borrowing" means the borrowing of the Loan.

                  "Breakage Costs" has the meaning specified in SECTION 2.10(E).

                  "Business Day" means a day of the year on which banks are not required or
authorized to close in New York, New York or Denver, Colorado and, if the applicable Business
Day relates to the borrowing, payment of principal of, interest on or prepayment of, any Loan,
any Interest Period or any notice in respect of any thereof, a day on which dealings in Dollar
deposits are also carried on in the London interbank market.

                  "Capital Lease," as applied to any Person, means any lease of any property
(whether real, personal or mixed) by that Person as lessee that, in conformity with GAAP, is
required to be accounted for as a capital lease on the balance sheet of that Person, and the
amount of Indebtedness represented by such lease shall be the capitalized amount of the
obligations evidenced thereby determined in accordance with GAAP.

                  "Capital Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated, whether voting or
non-voting) of such Person's capital stock, or corresponding equity rights in any partnership,
limited liability company or other entity, whether now outstanding or issued after the date of
this Agreement, including, without limitation, all Common Stock.

                  "Cash" means money, currency or a credit balance.

                  "Cash Equivalents" means, as at any date of determination, (i) marketable
securities (a) issued or directly and unconditionally guaranteed as to interest and principal
by the United States Government or (b) issued by any agency or instrumentality of the United
States the obligations of which are backed by the full faith and credit of the United States,
in each case maturing within one year after such date; (ii) marketable direct obligations
issued by any state of the United States of America or any political subdivision of any such
state or any instrumentality thereof, in each case maturing within one year after such date and
having, at the time of the acquisition thereof, the highest rating obtainable from either S&P
or Moody's; (iii) commercial paper not issued by the Borrower or any of its Subsidiaries
maturing no more than 270 days after such date and having, at the time of the acquisition
thereof, a rating of at least A-1 from S&P or at least P-1 from Moody's; (iv) certificates of
deposit or bankers' acceptances maturing within one year after such date and issued or accepted
by any Lender or by any commercial bank organized under the laws of the United States of
America or any state thereof or the District of Columbia that (a) is at least "adequately
capitalized" (as defined in the regulations of its primary Federal banking regulator) and (b)
has Tier 1 capital (as defined in such regulations) of not less than $100,000,000; and (v)
shares of any money market mutual fund that (a) has at least 95% of its assets invested
continuously in the types of investments referred to in clauses (i) and (ii) above, (b) has net
assets of not less than $500,000,000, and (c) has the highest rating obtainable from either S&P
or Moody's.

                  "Cash Proceeds" means, with respect to any Asset Sale, the proceeds of such
Asset Sale in the form of Cash and Cash Equivalents, including payments of deferred payment
obligations when received in the form of Cash or Cash Equivalents and proceeds from the
conversion of other property received when converted to Cash or Cash Equivalents.

                  "Change in Control" means (i) the acquisition at any time by any Person or two
or more Persons acting in concert of "beneficial ownership" (within the meaning of Section
13(d) under the Exchange Act and the rules and regulations promulgated thereunder) in excess of
35% of the total voting power of the Voting Stock of the Borrower; (ii) the sale, lease,
transfer or other disposition, of all or substantially all of the assets of the Borrower to any
Person or two or more Persons acting in concert as an entirety or substantially as an entirety
in one transaction or a series of related transactions; (iii) the merger or consolidation of
the Borrower with or into another Person, or the merger of another Person into the Borrower, or
any other transaction, with the effect that a Person or two or more Persons acting in concert
has "beneficial ownership" (within the meaning of Section 13(d) of the Exchange Act and the
rules and regulations promulgated thereunder) in excess of 35% of the total voting power of the
Voting Stock of the consolidated entity; (iv) the liquidation or dissolution of the Borrower;
or (v) if a majority of the board of directors of the Borrower shall no longer be composed of
individuals (a) who were members of said board on the date hereof, (b) whose election or
nomination to said board was approved by individuals referred to in clause (a) above
constituting at the time of such election or nomination at least a majority of said board or
(c) whose election or nomination to said board was approved by individuals referred to in
clauses (a) and (b) above constituting at the time of such election or nomination at least a
majority of said board.  For purposes of this definition, the term Person includes a "person"
or "group" within the meaning of Rule 13d-3 under the Exchange Act.

                  "Closing Date" means the Business Day on which the Loan is made.

                  "Collateral" has the meaning set forth in the Security Agreement.

                  "Collateral Agent" has the meaning set forth in the preamble to this Agreement.

                  "Collateral Value" means, as of any date of determination, the sum of (i) the
Appraised Value of all Appraised Collateral, as stated in the then most current Appraisal
Report(s) therefor (which shall be as of a date no earlier than the most recent date for which
an Appraisal Report is required under Section 5.14(a)), and (ii) 50% of the gross book value of
all other Collateral other than the Pledged Tax Receivable, as reflected on the balance sheet
of the Borrower as of the end of the most recently ended fiscal quarter; provided, that none of
the following assets shall be included in the computation of Collateral Value (collectively,
the "Ineligible Assets"): (A) property or assets not subject to a first priority perfected Lien
in favor of the Collateral Agent under the Security Agreement, including any property or assets
that may no longer be owned by the Borrower as a result of an Asset Sale or otherwise; and (B)
property or assets subject to any event of loss, damage or other casualty that has materially
and adversely affected the value of such Collateral, whether insured or not, and in the event
that any Ineligible Assets are excluded from the computation of the Collateral Value based on
this proviso, the Collateral Value computed in accordance with the foregoing method shall be
adjusted to exclude such Ineligible Assets.

                  "Collateral Value Certificate" means a certificate executed by a Responsible
Officer of Borrower in substantially the form of Exhibit I annexed hereto, or as otherwise
agreed among the Borrower, the Lenders and the Board with respect to the Collateral Value
Certificate required by SECTION 3.1(A)(VIII).

                  "Commitment" has the meaning specified in SECTION 2.1.

                  "Commodity Agreement" means any agreement or arrangement the value of which
 fluctuates based on the value of a commodity.

                  "Common Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated, whether voting or
non-voting) of such Person's common stock, whether now outstanding or issued after the date of
this Agreement, including, without limitation, all series and classes of such common stock.

                  "Consolidated EBITDAR" means, with respect to any Person, for any period, the
sum of (i) the operating income of such Person for such period, (ii) rental expense obligations
of such Person for such period under Operating Leases, (iii) depreciation and non-cash
amortization, non-cash stock compensation expenses, non-cash extraordinary charges and non-cash
impairment charges, in each case, to the extent deducted in determining such operating income
for such period, (iv) rental expenses of such Person for such period under each synthetic lease
that would appear on the balance sheet of such Person calculated as if such lease were treated
as a Capital Lease, and (v) interest income of such Person during such period, all as
determined on a consolidated basis in accordance with GAAP.

                  "Consolidated Fixed Charges" means, with respect to any Person, for any
period, the sum of (a) aggregate regularly scheduled principal payments on, and gross interest
expense relating to, Indebtedness of such Person for such period (calculated without regard to
any limitations on the payment thereof), including the corresponding amounts for such period
under Capital Lease obligations of such Person, (b) the aggregate rental expenses of such
Person for such period under Operating Leases of real or personal property, and (c) dividends
or any other payments or distributions in respect of any class of Capital Stock of such Person,
including in connection with any redemption, purchase, retirement or other acquisition,
directly or indirectly of any such class of Capital Stock, paid or payable during such period
(but only to the extent payment thereof is permitted under this Agreement), all determined on a
consolidated basis.

                  "Contractual Obligation" as applied to any Person, means any provision of any
equity security issued by that Person or of any indenture, mortgage, deed of trust, contract,
undertaking, lease, agreement or other instrument to which that Person is a party or by which
it or any of its properties is bound or to which it or any of its properties is subject.

                  "Currency Agreement" means any foreign exchange contract, currency swap
agreement, futures contract, option contract, synthetic cap or other similar agreement or
arrangement.

                  "Default" means any condition or event which with the passing of time or the
giving of notice or both would become an Event of Default.

                  "Dollars" and the sign "$" each mean the lawful money of the United States of
America.

                  "Eligible Collateral" means property of the same nature and type pledged as of
the Closing Date pursuant to the Security Agreement.

                  "Eligible Lender" means any "lender" under and as defined in the Act and the
Regulations.

                  "Employee Compensation Agreement" has the meaning specified in SECTION 3.1(C).

                  "Environmental Claim" means any investigation, written request for
information, notice, claim, suit, proceeding, demand or order, by any Governmental Authority or
any Person arising in connection with any alleged or actual violation of Environmental Laws or
with any liability related to Hazardous Materials Activity, or any actual or alleged property
damage or harm to human health, safety or the environment.

                  "Environmental Laws" means any and all applicable statutes, ordinances,
orders, rules, regulations, guidance documents (to the extent compliance therewith is required
by any Governmental Authority), judgments, Governmental Authorizations, or any other
requirement of any Governmental Authority relating to (a) the prevention or control of
pollution or protection of the environment, (b) the presence, generation, handling, treatment,
storage, disposal, discharge, Release, emission or transportation of Hazardous Materials, or
(c) exposure to Hazardous Materials.  "Environmental Laws" shall include, but not be limited
to, the Comprehensive Environmental Response, Compensation, and Liability Act (42 U.S.C. 9601
et seq.), the Resource Conservation and Recovery Act (42 U.S.C. 6901 et seq.), the National
Environmental Policy Act (42 U.S.C. 4321 et seq.), the Hazardous Materials Transportation Act
(49 U.S.C. 1801 et seq.), the Toxic Substances Control Act (49 U.S.C. 2601 et seq.), the Clean
Air Act (42 U.S.C. 7401 et seq.), the Federal Water Pollution Control Act (33 U.S.C. 1251 et
seq.), the Safe Drinking Water Act (42 U.S.C. 3007 et seq.), the Emergency Planning and
Community Right-to-Know Act (42 U.S.C. 11001 et seq.), the Occupational Safety and Health Act
(29 U.S.C. 641 et seq.), and the equivalent statutes in effect in the State of Colorado.

                  "ERISA" means the Employee Retirement Income Security Act of 1974, as amended
from time to time, and any successor statute.

                  "ERISA Affiliate" means, as applied to the Borrower, (i) any corporation which
is, or was at any time, a member of a controlled group of corporations within the meaning of
Section 414(b) of the Internal Revenue Code of which the Borrower is a member; (ii) any trade
or business (whether or not incorporated) which is a member of a group of trades or businesses
under common control within the meaning of Section 414(c) of the Internal Revenue Code of which
the Borrower is a member; and (iii) solely for purposes of Section 302 of ERISA and Section 412
of the Internal Revenue Code, any member of an affiliated service group within the meaning of
Section 414(m) or (o) of the Internal Revenue Code of which the Borrower is a member.

                  "ERISA Event" means (a) the occurrence of any "reportable event", as defined
in Section 4043 of ERISA or the regulations issued thereunder with respect to a Plan (other
than an event for which the 30-day notice period is waived); (b) the existence with respect to
any Plan of an "accumulated funding deficiency" (as defined in Section 412 of the Internal
Revenue Code or Section 302 of ERISA), whether or not waived; (c) the filing pursuant to
Section 412(d) of the Internal Revenue Code or Section 303(d) of ERISA of an application for a
waiver of the minimum funding standard with respect to any Plan; (d) the incurrence by the
Borrower or any ERISA Affiliate of any liability under Title IV of ERISA with respect to the
termination of any Plan; (e) the incurrence by the Borrower or any ERISA Affiliate of any
liability with respect to the withdrawal or partial withdrawal from any Plan or Multiemployer
Plan; (f) the receipt by the Borrower or any ERISA Affiliate from the PBGC or a plan
administrator of a notice of intent to terminate any Plan or Plans or to appoint a trustee to
administer any Plan; or (g) the receipt by the Borrower or any ERISA Affiliate of any notice,
or the receipt by any Multiemployer Plan from the Borrower or any ERISA Affiliate of any
notice, concerning the imposition of Withdrawal Liability or a determination that a
Multiemployer Plan is, or is expected to be, insolvent or in reorganization, within the meaning
of Title IV of ERISA.

                  "Event of Default" has the meaning specified in SECTION 7.1.

                  "Excess Cash Flow" means, with respect to any Person, for any period, (i)
Consolidated EBITDAR of such Person for such period, minus (ii) the sum of the following, all
determined on a consolidated basis:  (A) any change (positive or negative) in Working Capital
of such Person from the first day of such period to the last day of such period, (B) payments
of principal and interest with respect to the consolidated Indebtedness for borrowed money of
such Person during such period, to the extent such payments are not prohibited under this
Agreement, (C) income taxes paid by such Person during such period, (D) rentals paid by such
Person during such period under Operating Leases, (E) subject to compliance with the second
proviso of SECTION 5.14(B), cash used during such period to purchase Aircraft Related
Equipment, and (F) $[***].

                  "Excess Proceeds" has the meaning specified in SECTION 2.6(B).

                  "Exchange Act" means the Securities Exchange Act of 1934, as amended from time
to time, and any successor statute.

                  "Facilities" means any and all real property now, hereafter or heretofore
owned, leased, used or operated by the Borrower or any of its Subsidiaries and any of their
respective predecessors.

                  "Facility Agent" has the meaning specified in SECTION 9.1.

                  "Fair Market Value" of any asset, as used in the definitions of Indebtedness,
in Section 7.1(b)(ii), or with respect to any asset subject to an Asset Sale, means the price
that could be obtained for such asset by a seller at the time of determination in an
arm's-length transaction between an informed and willing seller under no compulsion to sell and
an informed and willing buyer, as determined in good faith by the board of directors or a
Responsible Officer of the Borrower or the Subsidiary thereof making such determination, taking
into consideration market conditions at the time of determination.

                  "Fed Funds Rate" means, for any day, the weighted average (rounded upwards, if
necessary, to the next 1/100 of 1%) of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers, as published on the
next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not
so published for any day that is a Business Day, the average (rounded upwards, if necessary, to
the next 1/100 of 1%) of the quotations for such day for such transactions received by the
Agent from three Federal funds brokers of recognized standing selected by it.

                  "Federal Reserve Board" means the Board of Governors of the Federal Reserve
System, or any successor thereto.

                  "Fee Letter" means the fee letter dated the date hereof among the Borrower,
the Agent and the Lenders.

                  "Fiscal Year" means the fiscal year of the Borrower referenced in the
financial statements to be delivered by them pursuant to SECTION 5.1.

                  "Fitch" means Fitch, Inc., and any successor thereto that is a nationally
recognized rating agency.

                  "Future Issuance" means each (i) borrowing by the Borrower or any of its
Subsidiaries from any source (other than Trade Payables and accrued expenses arising in the
ordinary course of business or borrowings from any of its Subsidiaries), including in the debt
capital markets or from commercial bank lenders after the date of this Agreement, and (ii)
issuance of any Capital Stock or any warrants, options or other rights that are convertible
into or exercisable for Capital Stock by the Borrower or any of its Subsidiaries after the date
of this Agreement, except for issuances of Capital Stock of the Borrower in connection with the
exercise by existing or former officers, directors or employees of the Borrower or any of its
Subsidiaries of stock options or similar rights issued as compensation.

                  "GAAP" means, subject to the limitations on the application thereof set forth
in SECTION 1.3, generally accepted accounting principles set forth in opinions and
pronouncements of the Accounting Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting Standards Board or in
such other statements by such other entity as may be approved by a significant segment of the
accounting profession or as may be mandated by applicable law.

                   "Governmental Authority" means any nation or government, any state or other
political subdivision thereof 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.

                  "Governmental Authorization" means any permit, license, certificate,
authorization, plan, directive, consent order or consent decree issued, promulgated or entered
into by or with any Governmental Authority.

                  "Guarantee" means any obligation, contingent or otherwise, of any Person
directly or indirectly guaranteeing any Indebtedness or other obligation of any other Person
and, without limiting the generality of the foregoing, any obligation, direct or indirect,
contingent or otherwise, of such first Person (i) to purchase or pay (or advance or supply
funds for the purchase or payment of) such Indebtedness or other obligation of such other
Person (whether arising by virtue of partnership arrangements, or by agreement to keep-well, to
purchase assets, goods, securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise); (ii) entered into for purposes of assuring in any other
manner the obligee of such Indebtedness or other obligation of the payment thereof or to
protect such obligee against loss in respect thereof (in whole or in part); or (iii) to
maintain working capital, equity capital or any other financial statement condition or
liquidity or level of income or cash flow of such other Person so as to enable such Person to
pay such Indebtedness.  The term "Guarantee" used as a verb has a corresponding meaning.

                  "Guarantee Fee" has the meaning specified in SECTION 2.6 of the Board
Guarantee.

                  "Hazardous Materials" means (y) any petroleum or petroleum products
(including, without limitation, gasoline, crude oil, or any fraction thereof), radioactive
materials or wastes, radon, asbestos in any form, urea formaldehyde foam insulation and
polychlorinated biphenyls and (z) any other chemical, material, substance or waste that in
relevant form or concentration is prohibited, limited or regulated, or is defined, listed or
classified as a hazardous or toxic substance, under any Environmental Law.

                  "Hazardous Materials Activity" means any past or current use, storage,
Release, threatened Release, generation, treatment, remediation, proposed remediation or
transportation of any Hazardous Material caused by, or undertaken by or on behalf of, the
Borrower, any of its Subsidiaries or any of their respective predecessors or Affiliates.

                  "Indebtedness" means, with respect to any Person at any date of determination
(without duplication), (i) all indebtedness of such Person for borrowed money; (ii) all
obligations of such Person evidenced by bonds, debentures, notes or other similar instruments;
(iii) all obligations of such Person in respect of letters of credit (except, with respect to
determining compliance with the provisions of Sections 6.4(b) and 6.4(c), to the extent such
letters of credit secure Trade Payables or other similar liabilities incurred in the ordinary
course of business, and are collateralized by such Person by Cash or Cash Equivalents) or other
similar instruments (including reimbursement obligations with respect thereto); (iv) all
obligations of such Person to pay the deferred and unpaid purchase price of property or
services, which purchase price is due more than six months after the date of placing such
property in service or taking delivery and title thereto or the completion of such services;
(v) all Capital Lease obligations of such Person (the amount of the Indebtedness in respect of
Capital Lease obligations to be determined as provided in the definition of Capital Lease in
this SECTION 1.1); (vi) all Indebtedness of other Persons secured by a Lien on any asset of
such Person, whether or not such Indebtedness is assumed by such Person; provided, that the
amount of such Indebtedness shall be the lesser of (A) the Fair Market Value of such asset at
such date of determination and (B) the stated principal amount of such Indebtedness; (vii) all
Indebtedness of other Persons Guaranteed by such Person to the extent such Indebtedness is
Guaranteed by such Person, including Indebtedness described in the preceding clause (vi) which
is recourse to such guarantor; (viii) to the extent not otherwise included in this definition
and to the extent treated as a liability under GAAP, obligations under Currency Agreements,
Interest Rate Agreements and Commodity Agreements; (ix) the capitalized amount of remaining
lease payments owing by such Person under synthetic leases that would appear on the balance
sheet of such Person if such lease were treated as a Capital Lease; (x) the aggregate amount of
uncollected accounts receivable of such Person subject at such time to a sale of receivables
(or similar transaction) to the extent such transaction is effected with recourse to such
Person (whether or not such transaction would be reflected on the balance sheet of such Person
in accordance with GAAP); (xi) solely for purposes of determining compliance with SECTION
6.4(b), all Operating Lease obligations of such Person with respect to Aircraft Related
Equipment (the amount of Indebtedness in respect of Operating Lease obligations to be
determined as provided in the definition of Operating Lease in this SECTION 1.1); and (xii) the
Indebtedness of any partnership or unincorporated joint venture in which such Person is a
general partner or a joint venturer to the extent such Indebtedness is recourse to such Person;
provided that the term "Indebtedness" shall not include (A) Trade Payables and accrued expenses
arising in the ordinary course of business, (B) agreements providing for indemnification,
purchase price adjustments or similar obligations incurred or assumed in connection with the
acquisition or disposition of assets or Capital Stock, (C) purchase price, rents and other
payment obligations, in each case, owed under aircraft purchase agreements (or agreements to
lease aircraft) in respect of aircraft not yet delivered to the Borrower or (D) obligations
under maintenance agreements to make payments for ongoing maintenance of engines or other
aircraft parts.  The amount of Indebtedness of any Person at any date shall be the outstanding
balance at such date of all unconditional obligations as described above and the maximum
liability, upon the occurrence of the contingency giving rise to the obligation, of any
contingent obligations at such date; provided that the amount outstanding at any time of any
Indebtedness issued with original issue discount is the face amount of such Indebtedness less
the remaining unamortized portion of the original issue discount of such Indebtedness at such
time as determined in conformity with GAAP.

                  "Indemnified Liabilities" has the meaning specified in SECTION 10.4.

                  "Indemnified Taxes" has the meaning specified in SECTION 2.12(A).

                  "Indemnitees" has the meaning specified in SECTION 10.4.

                  "Interest Payment Date" means the last Business Day of each March, June,
September and December in each year, commencing March 2003; provided, however, that following a
Payment Default or an Event of Default, each "Interest Payment Date" shall be the last day of
each Interest Period occurring during such period in which such Payment Default or Event of
Default exists.

                  "Interest Period" means (a) initially, the period commencing on the fourth
Business Day following the Closing Date and ending on but excluding the first Interest Payment
Date thereafter, (b) thereafter, each successive period commencing on and including the
immediately preceding Interest Payment Date and ending on but excluding the next succeeding
Interest Payment Date; provided, that following a Payment Default or Event of Default, each
Interest Period shall be for such duration of one month or less as shall be selected by the
Agent by notice to the Borrower, each Lender, each Supplemental Guarantor, the Loan
Administrator and the Board on or prior to start of such Interest Period (and in the absence of
any such notice or selection, the applicable Interest Period shall be determined as provided
above without regard to this proviso).

                  "Interest Rate Agreement" means any interest rate future agreement, interest
rate option agreement, interest rate swap agreement, interest rate cap agreement, interest rate
collar agreement, interest rate hedge agreement or other similar agreement or arrangement.

                  "Internal Revenue Code" means the Internal Revenue Code of 1986, as amended to
the date hereof and from time to time hereafter.

                  "Investment" means, with respect to any Person, any direct or indirect
advance, loan (other than advances to customers in the ordinary course of business consistent
with past practices that are recorded as accounts receivable on the balance sheet of such
Person or its Subsidiaries) or other extension of credit or capital contribution or other
equity investment by such Person to any other Person, including by means of any transfer of
cash or other property to others or any payment for property or services for the account or use
of others or any purchase or acquisition by such Person of Capital Stock (or warrants, options
or any other rights convertible into or exercisable for Capital Stock), bonds, notes,
debentures or other similar instruments issued by any other Person.

                  "IRS" means the Internal Revenue Service of the United States or any successor
thereto.

                  "Lender" means the Tranche A Lender and/or the Tranche B-1 Lender and/or the
Tranche B-2 Lender and/or any Tranche C Lender (including their respective successors and
permitted assigns), as the context may require, and the term "Lenders" means the Tranche A
Lender, the Tranche B-1 Lender, the Tranche B-2 Lender and the Tranche C Lenders (including
their respective successors and permitted assigns) collectively; provided, that the terms
"Lender" and "Lenders" shall include the Board if it acquires any interest in Tranche A of the
Loan as contemplated by SECTION 2.9(F) and the Board Guarantee.

                  "Lending Office" means, with respect to any Lender, the office of such Lender
specified as its "Lending Office" opposite its name on Annex B or on the Assignment and
Acceptance by which it became a Lender or such other office of such Lender as such Lender may
from time to time specify to the Borrower and the Agent.

                  "LIBOR" means, with respect to any Interest Period, the offered rate in the
London interbank market for deposits in United States dollars of amounts equal or comparable to
the unpaid principal amount of the applicable Tranche of the Loan offered for a term comparable
to such Interest Period, as currently shown on the Telerate page 3750 as of 11:00 a.m., London
time, two London Business Days prior to the first day of such Interest Period, rounded upwards
to the nearest 1/16 of 1%; provided, however, that if no such offered rates appear, the rate
used for such Interest Period will be the arithmetic average (rounded upward, if necessary, to
the next higher 1/16 of 1%) of rates quoted by the Reference Banks at approximately 10:00 a.m.,
New York time, two Business Days prior to the first day of such Interest Period for deposits in
United States dollars offered to leading European banks for a period comparable to such
Interest Period in an amount comparable to the unpaid principal amount of the applicable
Tranche of the Loan.  If the Agent ceases generally to use such Telerate page for determining
interest rates based on eurodollar deposit rates, a comparable internationally recognized
interest rate reporting service shall be used to determine such offered rates.

                  "Lien" means any lien, mortgage, pledge, assignment, security interest,
charge, hypothecation, preference, priority, privilege, lease or encumbrance of any kind
(including any conditional sale or other title retention agreement, any lease in the nature
thereof, any easement, right-of-way or other encumbrance on title to real property, and any
agreement to give any security interest).

                  "Liquidity Certificate" has the meaning specified in SECTION 5.1(B)(X).

                  "Loan" has the meaning specified in SECTION 2.1.

                  "Loan Administrator" has the meaning specified in the preamble to this
Agreement.

                  "Loan Administrator Relationship" has the meaning specified in SECTION 8.5(A).

                  "Loan Documents" means, collectively, this Agreement, the Notes, the Warrants,
the Registration Rights Agreement, the Employee Compensation Agreement, the Security Documents,
the Fee Letter, and each other certificate, agreement or document executed by the Borrower or
any of its Subsidiaries and delivered to the Agent, the Collateral Agent, the Lenders or the
Board in connection with or pursuant to this Agreement.

                  "Loan Maturity Date" means the Interest Payment Date falling on or closest to
June 30, 2007.

                  "Margin Stock" has the meaning assigned to that term in Regulation T, U or X
of the Board of Governors of the Federal Reserve System as in effect from time to time.

                  "Material Adverse Effect" means (a) a material adverse effect on (i) the
business condition (financial or otherwise), operations, performance, prospects, assets or
properties of the Borrower and its Subsidiaries, taken as a whole or (ii) the legality,
validity, binding effect or enforceability against the Borrower or its Subsidiaries of any Loan
Document, the rights and remedies of the Agent, the Collateral Agent, the Board or any Lender
under any Loan Document, or (b) any material adverse effect on or material impairment of (i)
the ability of the Borrower or its Subsidiaries to perform its payment or other obligations
under the Loan Documents or (ii) the value of, or the validity and priority of the Liens on,
the Collateral.

                  "Mitigation Price" has the meaning specified in SECTION 2.10(C).

                  "Moody's" means Moody's Investors Service, Inc., and any successor thereto
that is a nationally recognized rating agency.

                  "Multiemployer Plan" means a multiemployer plan as defined in Section
 4001(a)(3) of ERISA.

                  "Net Cash Proceeds" means, with respect to any Asset Sale, the Cash Proceeds
of such Asset Sale, net of (i) reasonable and customary brokerage commissions and other
reasonable and customary fees and expenses (including reasonable fees and expenses of counsel
and investment bankers) related to such Asset Sale, (ii) provisions for all taxes payable as a
result of such Asset Sale taking into account the consolidated results of operations of the
Borrower and its Subsidiaries, taken as a whole (as estimated in good faith by the Chief
Financial Officer of the Borrower), (iii) payments made to repay Indebtedness or any other
obligation outstanding at the time of such Asset Sale that (A) is secured by a Lien on the
property or assets sold and (B) is required by its terms to be paid as a result of such Asset
Sale, and (iv) appropriate amounts to be provided by the Borrower or any of its Subsidiaries
as a reserve against any liabilities associated with such Asset Sale, including, without
limitation, pension and other post-employment benefit liabilities, liabilities related to
environmental matters and liabilities under any indemnification obligations associated with
such Asset Sale, all as determined in conformity with GAAP, but limited to the period of the
required reserve.

                  "Net Condemnation Proceeds" means an amount equal to:  (i) any cash payments
or proceeds received by the Borrower or any of its Subsidiaries as a result of any condemnation
or other taking or temporary or permanent requisition of any property, any interest therein or
right appurtenant thereto, or any change of grade affecting any property, as the result of the
exercise of any right of condemnation or eminent domain by a Governmental Authority (including
a transfer to a Governmental Authority in lieu or anticipation of a condemnation), minus (ii)
(a) any actual and reasonable costs incurred by the Borrower or any of its Subsidiaries in
connection with any such condemnation or taking, (b) any taxes payable in connection therewith,
taking into account the consolidated results of operations of the Borrower and its
Subsidiaries, taken as a whole (as estimated in good faith by the Chief Financial Officer of
the Borrower), (c) the amount of any Indebtedness secured by a Lien on any property subject to
such condemnation or taking and any related expenses of third parties, in each case required by
the documentation related to such Lien to be discharged or paid from the proceeds thereof and
(d) any amounts required to be paid to any Person (other than the Borrower or any of the
Borrower' Subsidiaries) owning a beneficial interest in the property subject to such
condemnation or taking.

                  "Net Insurance Proceeds" means an amount equal to:  (i) any Cash payments or
proceeds received by or on behalf of the Borrower or any of its Subsidiaries  under any
casualty insurance policy in respect of a covered loss thereunder with respect to tangible,
real or personal property, minus (ii)(a) any actual and reasonable costs incurred by the
Borrower or any of its Subsidiaries  in connection with the adjustment or settlement of any
claims in respect thereof, (b) any taxes payable in connection therewith, taking into account
the consolidated results of operations of the Borrower and its Subsidiaries, taken as a whole
(as estimated in good faith by the Chief Financial Officer of the Borrower), (c) the amount of
any Indebtedness secured by a Lien on any property subject to such covered loss and required to
be discharged from the proceeds thereof and (d) any amounts required to be paid to any Person
(other than the Borrower or any of its Subsidiaries) owning a beneficial interest in the
property subject to such loss.

                  "Non-U.S. Person" means a Person that is not a United States person as defined
in section 7701(a)(30) of the Internal Revenue Code.

                  "Notes" has the meaning specified in SECTION 2.4(D).

                  "Notice of Borrowing" has the meaning specified in SECTION 2.2(A).

                  "Obligations" means all payment and performance obligations of every nature of
the Borrower from time to time owed to the Agent, the Collateral Agent, the Lenders, the Loan
Administrator, the Supplemental Guarantors or the Board or any of their respective Affiliates,
officers, directors, employees, agents and advisors in, under or in respect of this Agreement
or any Note, whether for principal, interest, fees, expenses, indemnification or otherwise.

                  "Officer" means, with respect to any Person, any Responsible Officer and any
of the Chairman of the Board (if an officer), any Vice President, the Controller, any Assistant
Treasurer, the Secretary or any Assistant Secretary.

                  "Officer's Certificate" means, as applied to any Person, a certificate
executed by a Responsible Officer of such Person in his/her capacity as such; provided, that
every Officer's Certificate shall include (i) a statement that the Officer acting in such
capacity making or giving such Officer's Certificate has read the provisions contained in this
Agreement relating thereto, and (ii) a statement that, in the opinion of the signer, s/he has
made or has caused to be made such examination or investigation as is necessary to enable
her/him to express an informed opinion as to the substance of such Officer's Certificate in
light of the provisions hereof pursuant to which it is being delivered.

                  "Operating Lease" means, as applied to any Person, any lease (including,
without limitation, leases that may be terminated by the lessee at any time) of any property
(whether real, personal or mixed) under which such Person is lessee, that is not a Capital
Lease.  For purposes of determining compliance with SECTION 6.4(B), the amount of Indebtedness
in respect of any Operating Lease shall be an amount equal to six (6) times the total amount of
all lease rental payments in respect of such Operating Lease for the four most recently ended
fiscal quarters.

                  "Other Taxes" has the meaning specified in SECTION 2.12(C).

                  "Payment Default" means any failure to make a payment of principal or interest
or of the Guarantee Fee or the Supplemental Guarantee Fees due hereunder which with the passing
of time or the giving of notice or both would become an Event of Default under SECTION 7.1(A).

                  "Payment Restriction" means any encumbrance, restriction or limitation,
whether by operation of the terms of its charter or by reason of any agreement or instrument,
on the ability of (i) a Subsidiary of any Person to (a) pay dividends or make other
distributions on its Capital Stock or make payments on any obligation, liability or
Indebtedness owed to such Person or any other Subsidiary of such Person, (b) make loans or
advances to such Person or any other Subsidiary of such Person, or (c) transfer any of its
property or assets to such Person or any other Subsidiary of such Person, or (ii) such Person
or any other Subsidiary of such Person to receive or retain any such (a) dividend,
distributions or payments, (b) loans or advances, or (c) property or assets.

                  "Permitted Encumbrances" means the following types of Liens (other than any
such Lien imposed pursuant to Section 412(n) of the Internal Revenue Code or pursuant to
Section 302(f) or 4062 of ERISA) as applied to property:
                  (i)      Liens for taxes, assessments or governmental charges or claims the payment
         of which is either (a) not delinquent for a period of more than 30 days or (b) being contested
         in good faith by appropriate proceedings, if such reserve or other appropriate provision, if
         any, as shall be required by GAAP shall have been made therefor;
                 (ii)     statutory Liens of landlords and Liens of carriers, vendors, warehousemen,
         repairmen, mechanics, materialmen, airport operators and air traffic control authorities and
         other Liens, in each case, incurred in the ordinary course of business for sums either (a) not
         delinquent for a period of more than 30 days or (b) being contested in good faith by
         appropriate proceedings, if such reserve or other appropriate provision, if any, as
         required by GAAP shall have been made therefor;
                (iii)    Liens incurred or deposits made in the ordinary course of business in connection
         with workers'compensation, unemployment insurance and other types of social security, or to secure
         the performance of tenders, statutory obligations, surety and appeal bonds, bids,
         leases, government contracts, trade contracts, performance and return-of-money bonds
         (other than bonds related to judgments and litigations), reimbursement obligations and
         chargeback rights of Persons performing services for the Borrower or any of its
         Subsidiaries and other similar obligations (exclusive of obligations for the payment
         of borrowed money);
                 (iv)     easements, rights-of-way, restrictions, minor defects, encroachments or
         irregularities in title and other similar charges or encumbrances not interfering in any material
         respect with the ordinary conduct of the business of the Borrower or any of its Subsidiaries;
                  (v)      Liens in favor of customs and revenue authorities arising as a matter of law to
         secure payment of customs duties in connection with the importation of goods in the ordinary course of
         business;
                 (vi)     any interest or title of a lessor in property leased by the Borrower under any
         Capital Lease obligation or Operating Lease which, in each case, is not prohibited under this Agreement
         (disregarding for this purpose SECTION 6.1);
                (vii)    Liens in favor of collecting or payor banks having a right of setoff, revocation,
         refund or chargeback arising in the ordinary course of business of the Borrower with respect to
         money or instruments of the Borrower or any of its Subsidiaries on deposit with or in
         possession of such bank;
               (viii)   any renewal of or substitution for any Lien permitted by any of the preceding
         clauses; provided that the debt secured is not increased nor the Lien extended to any additional
         assets; and
                 (ix)     Liens of creditors of any Person to whom the assets of the Borrower or any of its
         Subsidiaries are consigned for sale in the ordinary course of business.

                  "Permitted Liens" has the meaning specified in the Security Agreement.

                  "Permitted Refinancing Indebtedness" means Indebtedness of the Borrower or any
of its Subsidiaries (for purposes of this definition, "Refinancing Indebtedness") the cash
proceeds of which are used to refinance then outstanding Indebtedness (for purposes of this
definition, "Old Indebtedness") (including by way of an extension, renewal or replacement of,
or substitution for, such Old Indebtedness) in an amount not to exceed the then outstanding
principal amount of the Old Indebtedness, plus accrued and unpaid interest, premiums and fees
thereon and reasonable costs and expenses relating to the refinancing (the "Permitted
Refinancing Cap") (a) at the maturity of the Old Indebtedness; or (b) prior to maturity of the
Old Indebtedness, provided that: (i) (x) the Old Indebtedness is ARE Acquisition Financing or
(y) the proceeds thereof were used to refinance ARE Acquisition Financing or other Indebtedness
that refinanced ARE Acquisition Financing, in each case in this clause (y), on terms that
complied with clauses (ii) through (v) below, (ii) if the Old Indebtedness is subordinated in
right of payment to the Loan, the Refinancing Indebtedness, by its terms or by the terms of any
agreement or instrument pursuant to which it is outstanding, is expressly made subordinate in
right of payment to the Loan, (iii) the Refinancing Indebtedness does not have a final
scheduled maturity prior to the final scheduled maturity of the Old Indebtedness, (iv) the
average life of the Refinancing Indebtedness calculated as of the consummation of the
refinancing is not less than the remaining average life of the Old Indebtedness; and (v) with
respect to any change in interest rates between the Refinancing Indebtedness and the Old
Indebtedness: (x) in the case that the Refinancing Indebtedness provides for a fixed rate of
interest and the Old Indebtedness provides for a fixed rate of interest, the Refinancing
Indebtedness does not provide for an interest rate higher than 115% of the sum of (A) the
average remaining interest rate of the Old Indebtedness, plus (B) the excess, if any, of (a)
the "ask" USD swap rate as quoted on Bloomberg page IRSB-18 (or the successor quotation screen
thereto) at the time of such refinancing as interpolated based upon the average life of the
Refinancing Indebtedness, over (b) the "ask" USD swap rate as quoted on Bloomberg page IRSB-18
(or the successor quotation screen thereto) at the time of such refinancing as interpolated
based upon the then-remaining average life of the Old Indebtedness; (y) in the case that the
Refinancing Indebtedness provides for a floating rate of interest and the Old Indebtedness
provides for a floating rate of interest, the Refinancing Indebtedness does not provide for a
credit margin over a commercial floating index rate that is higher than 115% of the credit
margin of the Old Indebtedness; or (z) in the case that the Refinancing Indebtedness provides
for a floating rate of interest and the Old Indebtedness provides for a fixed rate of interest,
or in the case that the Refinancing Indebtedness provides for a fixed rate of interest and the
Old Indebtedness provides for a floating rate of interest, solely for purposes of making an
economic comparison hereunder of the respective interest rates of the Old Indebtedness and the
Refinancing Indebtedness, the loan that bears a floating rate of interest shall be converted to
an equivalent fixed rate using the "ask" USD swap rate as quoted on Bloomberg page IRSB-18 (or
the successor quotation screen thereto) as interpolated based upon the then-remaining average
life of such floating rate loan, and such equivalent fixed rate of such loan shall be used to
determine that the Refinancing Indebtedness does not provide for a fixed interest rate higher
than 115% of the sum of (A) the average remaining interest rate of the Old Indebtedness, plus
(B) the excess, if any, of (a) the "ask" USD swap rate as quoted on Bloomberg page IRSB-18 (or
the successor quotation screen thereto) at the time of such refinancing as interpolated based
upon the average life of the Refinancing Indebtedness, over (b) the "ask" USD swap rate as
quoted on Bloomberg page IRSB-18 (or the successor quotation screen thereto) at the time of
such refinancing as interpolated based upon the then-remaining average life of the Old
Indebtedness.

                  "Person" means an individual, partnership, corporation (including a business
trust), joint stock company, estate, trust, limited liability company, unincorporated
association, joint venture or other entity, or a Governmental Authority.

                  "Plan" means any "employee benefit plan" as defined in section 3(3) of ERISA
(other than a Multiemployer Plan that is subject to Title IV of ERISA) in respect of which the
Borrower or any ERISA Affiliate is (or if such plan were terminated, would under Section 4069
of ERISA be deemed to be) an "employer" as defined in Section 3(5) of ERISA.

                  "Pledged Tax Receivable" has the meaning specified in the Security Agreement.

                  "Proceedings" has the meaning specified in SECTION 5.1(B)(VI).

                  "Pro Forma Basis" means, with respect to compliance with any covenant
hereunder, compliance with such covenant after giving effect to any proposed incurrence of
Indebtedness by the Borrower or any of its Subsidiaries and the application of the proceeds
thereof, the acquisition (whether by purchase, merger or otherwise) or disposition (whether by
sale, merger or otherwise) of any company, entity or business or any asset by the Borrower or
any of its Subsidiaries or any other action which requires compliance on a Pro Forma Basis.  In
making any determination of compliance on a Pro Forma Basis, such determination shall be
performed using the consolidated financial statements of the Borrower or such Subsidiary which
shall be reformulated as if any such incurrence of Indebtedness and the application of
proceeds, acquisition, disposition or other action had been consummated at the beginning of the
period specified in the covenant with respect to which Pro Forma Basis compliance is required.

                  "Redeemable Stock" means any class or series of Capital Stock of any Person
that by its terms or otherwise (i) is required to be redeemed prior to the Loan Maturity Date,
(ii) may be required to be redeemed at the option of the holder of such class or series of
Capital Stock at any time prior to the Loan Maturity Date, or (iii) is convertible into or
exchangeable for Capital Stock referred to in clause (i) or (ii) above or Indebtedness having a
scheduled maturity prior to the Loan Maturity Date; provided that any Capital Stock that would
constitute Redeemable Stock solely because of provisions offering holders thereof the right to
require the issuer thereof to repurchase or redeem such Capital Stock upon the occurrence of an
"asset sale" occurring prior to the Loan Maturity Date shall not constitute Redeemable Stock if
the asset sale provisions contained in such Capital Stock specifically provide that the issuer
thereof will not be required to repurchase or redeem any such Capital Stock pursuant to such
provisions to the extent that the Borrower is required to permanently reduce the aggregate
outstanding principal amount of the Loan with the Net Cash Proceeds from such asset sale.

                  "Reference Banks" means Wells Fargo Bank, N.A., WestLB AG and Bank of America,
N.A., and each of their respective successors.

                  "Register" has the meaning specified in SECTION 2.4(E).

                  "Registration Rights Agreement" means the Registration Rights Agreement dated
as of the date hereof among Borrower and the Persons to whom Warrants are being issued
hereunder, substantially in the form of Exhibit G.

                  "Regulations" has the meaning specified in the first recital to this Agreement.

                  "Release" means any release, spill, emission, leaking, pumping, pouring,
injection, escaping, deposit, disposal, discharge, dispersal, dumping, leaching or migration of
Hazardous Materials into the indoor or outdoor environment (including, without limitation, the
abandonment or disposal of any barrels, containers or other closed receptacles containing any
Hazardous Materials), including the movement of any Hazardous Material through the air, soil,
surface water, groundwater or property.

                  "Requesting Party" has the meaning specified in SECTION 8.1(B).

                  "Requisite Lenders" means, collectively, Lenders holding in excess of  fifty
percent (50%) of the principal amount of the Loan then outstanding or, prior to the making of
the Loan, the Tranche A Lender.

                  "Responsible Officer" means, with respect to any Person, any of the Chief
Executive Officer, President, any Executive Vice President, General Counsel, Chief Financial
Officer or Treasurer of such Person, but in any event, with respect to financial matters, the
Chief Executive Officer, Chief Financial Officer or Treasurer of such Person.

                  "Restricted Payment" means with respect to any Person (i) any declaration or
payment of dividends on or making of any distributions in respect of the Capital Stock of such
Person (other than dividends or distributions payable solely in shares of Capital Stock (other
than Redeemable Stock) or in options, warrants, or other rights to purchase Capital Stock
(other than Redeemable Stock)) to holders of Capital Stock of such Person, (ii) any purchase,
redemption or other acquisition or retirement for value by such Person (other than through the
issuance solely of Capital Stock (other than Redeemable Stock) or options, warrants or other
rights to purchase Capital Stock (other than Redeemable Stock)) of any Capital Stock or
warrants, rights (other than exchangeable or convertible Indebtedness of such Person not
prohibited under clause (iii) below) or options to acquire Capital Stock of such Person, and
(iii) any redemption, repurchase, defeasance (including, but not limited to, in substance or
legal defeasance), or other acquisition or retirement for value by such Person (other than through
the issuance solely of Capital Stock (other than Redeemable Stock) or warrants, rights or options
to acquire Capital Stock (other than Redeemable Stock)), directly or indirectly, of any Indebtedness of
such Person or any Subsidiary of such Person (including by way of setoff or of amendment of the
terms of any Indebtedness in connection with any retirement or acquisition of such
Indebtedness), which is made (A) other than at any scheduled maturity thereof or by any
scheduled repayment or scheduled sinking fund payment (collectively, a "prepayment"), or (B) at
any time while there exists an Event of Default; provided that repayment of the Loan shall not
constitute a Restricted Payment.

                  "SEC" means the Securities and Exchange Commission of the United States of
America.

                  "Security Agreement" means the Mortgage and Security Agreement dated the date
hereof by the Borrower in favor of the Collateral Agent, as the same may be amended,
supplemented or otherwise modified from time to time, including by any Security Agreement
Supplement.

                  "Security Agreement Supplement" means a supplement to the Security Agreement
that subjects additional Collateral to the Lien of the Security Agreement.

                  "Security Documents" means the Security Agreement and each certificate,
agreement or document executed by the Borrower or any of its Subsidiaries pursuant to the
Security Agreement.

                  "Solvent" means, with respect to any Person as of any date of determination,
the fact that both (A) (i) the then fair saleable value of the property of such Person is (y)
greater than the total amount of liabilities (including contingent liabilities) of such Person
and (z) not less than the amount that will be required to pay the probable liabilities on such
Person's then existing debts as they become absolute and matured considering all financing
alternatives and potential asset sales reasonably available to such Person; (ii) such Person's
capital is not unreasonably small in relation to its business or any contemplated or undertaken
transaction; and (iii) such Person does not intend to incur, or believes that it will not
incur, debts beyond its ability to pay such debts as they become due; and (B) such Person is
"solvent" within the meaning given that term and similar terms under applicable laws relating to
fraudulent transfers and conveyances.  For purposes of this definition, the amount of any
contingent liability at any time shall be computed as the amount that, in light of all of the
facts and circumstances existing at such time, represents the amount that can reasonably be
expected to become an actual or matured liability.

                  "Spare Engines" has the meaning specified in the Security Agreement.

                  "Spare Parts" has the meaning specified in the Security Agreement.

                  "Standard & Poor's" or "S&P" means Standard & Poor's Group, a division of The
McGraw Hill Companies, Inc., and any successor thereto that is a nationally recognized rating
agency.

                  "Subsidiary" means, with respect to any Person, any corporation, partnership,
association, limited liability company, trust or estate, joint venture or other business entity
of which more than 50% of the issued and outstanding shares of Voting Stock at the time of
determination are owned or controlled, directly or indirectly, by that Person or one or more of
the other Subsidiaries of that Person or a combination thereof.

                  "Substitute Basis" has the meaning specified in SECTION 2.10(B).

                  "Supplemental Guarantees" means (i) the Supplemental Guarantee dated as of the
date hereof among the [***] Supplemental Guarantor, the Tranche B-1 Lender and the Agent and
(ii) the Supplemental Guarantee dated as of the date hereof among the [***] Supplemental
Guarantor, the Tranche B-2 Lender and the Agent, each in substantially the form of Exhibits
E1-1 and E2, respectively.

                  "Supplemental Guarantors" means the [***] Supplemental Guarantor and the [***]
Supplemental Guarantor.

                  "Supplemental Guarantor Fees" means, with respect to each period set forth in
Annex C, the supplemental guarantee fee payable to each Supplemental Guarantor during such
period in an amount equal to the product of (x) the Supplemental Guarantee Rate for such period
and (y) the average outstanding amount of the portion of the Tranche B Loan covered by such
Supplemental Guarantor's Supplemental Guarantee scheduled to be outstanding for the then
succeeding three month period as determined by the Agent as of the date of payment of such fee
(computed on the basis of a quarterly period of 90 days and actual number of days elapsed);
provided, that if the Borrower fails to make any scheduled payment of principal of the Tranche
B Loan on such payment date, such principal amount shall be included in the average outstanding
amount for purposes of this calculation.

                  "Supplemental Guarantee Rate" means, with respect to each date set forth in
Annex C hereto, the percentage set forth opposite such date.

                  "Taxes" means any and all present or future taxes, levies, fees, duties,
imposts, deductions, charges or withholdings of any nature, and all interest, penalties and
other liabilities thereon or computed by reference thereto imposed by any Governmental
Authority.

                  "Title 49" means Title 49 of the United States Code, as amended and in effect
from time to time, and the regulations promulgated pursuant thereto.

                  "Trade Payables" means, with respect to any Person, any accounts payable or
any other indebtedness or monetary obligation to trade creditors created, assumed or Guaranteed
by such Person or any of its Subsidiaries and arising in the ordinary course of business in
connection with the acquisition of goods or services but limited to current liabilities in
accordance with GAAP.

                  "Tranche" has the meaning specified in SECTION 2.1(C).

                 "Tranche A" has the meaning specified in SECTION 2.1(A).

                  "Tranche A Lender" has the meaning specified in the preamble to this
Agreement; provided that the term "Tranche A Lender" shall include the Board if it acquires any
interest in Tranche A of the Loan as contemplated by SECTION 2.9(F) and the Board Guarantee.

                  "Tranche A Note" has the meaning specified in SECTION 2.4(D)(i).

                 "Tranche B-1" has the meaning specified in SECTION 2.1(B)(I).

                 "Tranche B-1 Lender" has the meaning specified in the preamble to this
Agreement.

                  "Tranche B-1 Note" has the meaning specified in SECTION 2.4(D)(ii)(A).

                  "Tranche B-2" has the meaning specified in SECTION 2.1(B)(II).

                  "Tranche B-2 Lender" has the meaning specified in the preamble to this
Agreement.

                  "Tranche B-2 Note" has the meaning specified in SECTION 2.4(D)(ii)(B).

                  "Tranche C" has the meaning specified in SECTION 2.1(C).

                  "Tranche C Lender" has the meaning specified in the preamble to this Agreement.

                  "Tranche C Note" has the meaning specified in SECTION 2.4(D)(iii).

                 "United States Citizen" has the meaning specified in SECTION 4.1(B).

                  "Value Differential" has the meaning specified in SECTION 5.14(B).

                  "Voting Stock" means any class or classes of Capital Stock pursuant to which
the holders thereof have the general voting power under ordinary circumstances to vote for the
election of directors, managers or trustees of any Person (or Persons performing similar
functions) irrespective of whether or not at the time stock of any such class or classes will
have or might have such voting power by the reason of the happening of any contingency.

                  "Warrants" means collectively (i) the Warrant to purchase shares of the
Borrower's Common Stock issued by the Borrower to the Board, or, at the Board's request, to its
designee, (ii) the Warrant to purchase shares of the Borrower's Common Stock issued by the
Borrower to the [***] Supplemental Guarantor, and (iii) the Warrant to purchase shares of the
Borrower's Common Stock issued by the Borrower to the [***] Supplemental Guarantor, in each
case substantially in the form of Exhibit F.

                  "Wholly-Owned" denotes a Subsidiary all of the Voting Stock of which (other
than the minimum number of director's qualifying shares, shares that are required to be held by
a second shareholder or Investments by foreign nationals, in each case, as mandated by
applicable law) is owned directly or indirectly by a single holder.

                  "Withdrawal Liability" means liability to a Multiemployer Plan as a result of
a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in
Part I of Subtitle E of Title IV of ERISA.

                  "Working Capital" means, with respect to any Person, as of any date, (i) the
current assets (excluding Cash and Cash Equivalents) of such Person minus (ii) the current
liabilities of such Person (other than the current portion of long-term debt), in each case,
determined on a consolidated basis and otherwise in accordance with GAAP as of such date.

                  "[***] Counter Guarantee" means the [***] Guarantee dated as of the date
hereof among the [***] Counter Guarantor, the Tranche B-1 Lender and the Agent, in
substantially the form of Exhibit E1-2.

                  "[***] Counter Guarantor" means [***].

                  "[***] Letter Agreement" has the meaning specified in Section 3.1(a)(v).

                  "[***] Supplemental Guarantor" means [***], a company incorporated under the
laws of [***].

                  "[***] Supplemental Guarantor" means [***], a Delaware corporation, and its
successors and permitted assigns.




SECTION 1.2.      COMPUTATION OF TIME PERIODS.  In this Agreement, in the computation of periods
of time from a specified date to a later specified date, the word "from" means "from and including" and the
words "to" and "until" each mean "to but excluding" and the word "through" means "to and
including."

SECTION 1.3.      ACCOUNTING TERMS AND PRINCIPLES.
(a)      All accounting terms not specifically defined herein shall be construed in conformity with GAAP
and all accounting determinations required to be made pursuant hereto shall, unless expressly otherwise
provided herein, be made in conformity with GAAP.
(b)      If any change in accounting principles used in the preparation of the most recent financial
statements referred to in SECTION 5.1 is hereafter required or permitted by the rules, regulations,
pronouncements and opinions of the Financial Accounting Standards Board or the Accounting
Principles Board of the American Institute of Certified Public Accountants (or any successor
thereto) and such change is adopted by the Borrower with the agreement of its independent
public accountants and results in a change in any of the calculations required by ARTICLE VI
had such accounting change not occurred, the parties hereto agree to enter into negotiations in
order to amend such provisions so as to equitably reflect such change with the desired result
that the criteria for evaluating compliance with such covenants by the Borrower shall be the
same after such change as if such change had not been made; provided, however, that no change
in GAAP that would affect a calculation that measures compliance with any covenant contained in
ARTICLE VI shall be given effect until such provisions are amended to reflect such changes in
GAAP.
(c)      Financial statements and other information required to be delivered by the Borrower to the Agent,
the Lenders, the Supplemental Guarantors, the Board or the Loan Administrator pursuant to SECTION
5.1 shall be prepared in accordance with GAAP in effect at the time of such preparation.

SECTION 1.4.      CERTAIN TERMS.
(a)      The words "herein," "hereof" and "hereunder" and similar words refer to this Agreement as a whole,
and not to any particular Article, Section, subsection or clause in this Agreement.
(b)      References in this Agreement to an Exhibit, Annex, Schedule, Article, Section, subsection or clause
refer to the appropriate Exhibit, Annex, or Schedule to, or Article, Section, subsection or
clause in this Agreement.
(c)      Each agreement defined in this ARTICLE I shall include all appendices, annexes, exhibits and
schedules thereto.  If the prior written consent of any Person is required hereunder for an amendment,
restatement, supplement or other modification to any such agreement and the consent of each
such Person is obtained, references in this Agreement to such agreement shall be to such
agreement as so amended, restated, supplemented or modified.
(d)      References in this Agreement to any statute shall be to such statute as amended or modified and in
effect at the time any such reference is operative.
(e)      The term "including" when used in any Loan Document means "including without limitation" except when
used in the computation of time periods.

                                           ARTICLE II

                                            THE LOAN

SECTION 2.1.      THE LOAN.  On the terms and subject to the conditions contained in this
Agreement and in reliance upon the representations and warranties of the Borrower set forth herein, the
Lenders severally agree to make on or before February 14, 2003 a multi-tranched term loan (the "Loan")
to the Borrower in a single Borrowing not to exceed the principal amount of $70,000,000 as
follows:
(a)      the Tranche A Lender agrees to participate in the making of the Loan in an amount not to exceed
$63,000,000 (such portion of the Loan being herein referred to as "Tranche A" of the Loan);
(b)      (i) the Tranche B-1 Lender agrees to participate in the making of the Loan in an amount not to exceed
$3,150,000 (such portion of the Loan being herein referred to as "Tranche B-1" of the Loan) and
(ii) the Tranche B-2 Lender agrees to participate in the making of the Loan in an amount not to
exceed $3,150,000 (such portion of the Loan being herein referred to as "Tranche B-2" of the
Loan; and
(c)       each Tranche C Lender severally agrees to participate in the making of the Loan in an amount not to
exceed $350,000 for such Tranche C Lender (such portion of the Loan ($700,000 in aggregate)
being herein referred to as "Tranche C" of the Loan and collectively, together with Tranche A,
Tranche B-1 and Tranche B-2, the "Tranches" and each a "Tranche").

                  Any amount of the Loan repaid or prepaid may not be reborrowed.  The
obligation of each Lender to participate in the making of the Loan up to its respective amount
specified above on the terms and conditions hereof is hereinafter called its "Commitment."  The
Commitments of the Lenders are several and no Lender shall be responsible for any other
Lender's failure to make available its Commitments as required.

SECTION 2.2.      BORROWING PROCEDURES.
(a)      The Borrowing shall be made on notice given by the Borrower to the Agent not later than
11:00 a.m. (New York City time) on the Business Day prior to the proposed Closing Date.  Such notice
shall be in substantially the form of Exhibit C (a "Notice of Borrowing"), specifying (A) the
proposed Closing Date and (B) the aggregate amount of the proposed Borrowing.  The Notice of Borrowing
shall be irrevocable, and duly executed and delivered on behalf of the Borrower by its Chief
Financial Officer or President/Chief Executive Officer.
(b)      The Agent shall give to the Lenders, each Supplemental Guarantor and the Loan Administrator
prompt notice of the Agent's receipt of a Notice of Borrowing.  Each of the Lenders shall, before 1:00
p.m. (New York City time) on the date of the proposed Borrowing, make available to the Agent as
per the Payment Instructions for the Agent set forth on Annex A hereto, in immediately
available funds, an amount equal to its Commitment.  After the Agent's receipt of such funds
and upon fulfillment or waiver of the applicable conditions set forth in SECTION 3.1, the Agent
will make such funds available to the Borrower.

SECTION 2.3.      SCHEDULED REPAYMENT OF THE LOAN.  The Borrower shall repay the Loan
in fourteen (14) consecutive quarterly installments of $2,642,857.14 on the last Business Day of each
calendar quarter commencing with the Interest Payment Date falling on or closest to December 31, 2003,
together with a final payment of $33,000,000.04 on the Loan Maturity Date; provided that, the
Borrower shall repay the entire unpaid principal amount of the Loan together with accrued and
unpaid interest thereon and all other amounts owing hereunder in respect thereof on the Loan
Maturity Date.

SECTION 2.4.      EVIDENCE OF DEBT; USE OF PROCEEDS.
(a)      Each Lender shall maintain in accordance with its usual practice an account or accounts
evidencing such Lender's portion of the Loan outstanding from time to time, including the amounts
of principal and interest payable and paid to such Lender from time to time under this Agreement.
(b)      The Agent shall establish and maintain a register for recording with respect to the Loan
(i) the date and amount of each payment on the Loan made by or on behalf of, or collected from, the
Borrower, (ii) the amount of each such payment applied in accordance with each clause of
paragraphs (d) and (e) of SECTION 2.9 or other applicable terms hereof to scheduled principal
of or interest on the Loan and to each of the fees payable after the Closing Date identified in
paragraphs (a) through (d) of SECTION 2.8 hereof, and (iii) the date and amount of each payment
made by the Board under the Board Guarantee.
(c)      The entries made in the accounts maintained pursuant to clauses (A) and (B) of this SECTION
2.4 shall, to the extent permitted by applicable law, be prima facie evidence of the existence and amounts
of the obligations recorded therein; provided, however, that the failure of any Lender or the
Agent to maintain such accounts or any error therein shall not in any manner affect the
obligations of the Borrower to repay the Loan in accordance with its terms.
(d)      The Borrower shall execute and deliver to the Agent on the Closing Date (i) a promissory note
substantially in the form of Exhibit B1 in the principal amount of Tranche A of the Loan, dated
the Closing Date and otherwise appropriately completed (such note, including any replacement
note therefor issued in accordance with the provisions of this SECTION 2.4(D), the "Tranche A
Note"), (ii) (A) a promissory note substantially in the form of Exhibit B2-1 in the principal
amount of Tranche B-1 of the Loan, dated the Closing Date and otherwise appropriately completed
(such note, including any replacement note therefor issued in accordance with the provisions of
this SECTION 2.4(D), the "Tranche B-1 Note") and (B)  a promissory note substantially in the
form of Exhibit B2-2 in the principal amount of Tranche B-2 of the Loan, dated the Closing Date
and otherwise appropriately completed (such note, including any replacement note therefor
issued in accordance with the provisions of this SECTION 2.4(D), the "Tranche B-2 Note")  and
(iii)  a promissory note substantially in the form of Exhibit B3 in the aggregate principal
amount of Tranche C of the Loan, dated the Closing Date and otherwise appropriately completed
(such note, including any replacement note therefor issued in accordance with the provisions of
this SECTION 2.4(D), the "Tranche C Note" and, collectively, together with the Tranche A Note,
the Tranche B-1 Note and the Tranche B-2 Note, the "Notes").  The Notes shall be made payable
to the Agent at the office of the Agent.  If any Note is mutilated, lost, stolen or destroyed,
the Borrower shall issue a new Note in the same principal amount and having the same interest
rate, date and maturity as the Note so mutilated, lost, stolen or destroyed endorsed to
indicate all payments thereon.  In the case of any lost, stolen or destroyed Note, there shall
first be furnished to the Borrower and the Board or the applicable Supplemental Guarantor an
instrument of indemnity from the Agent and evidence of such loss, theft or destruction
reasonably satisfactory to each of them, together with an Officer's Certificate of the Borrower
certifying and warranting as to the due authorization, execution and delivery of the new Note.
(e)      This Agreement and the Notes are registered instruments.  A manually signed copy of this
Agreement and the original of a Note shall be evidence of (i) the rights of each Lender under this
Agreement and such Note and (ii) the rights of the Agent under this Agreement.  Neither this Agreement
nor any Note is a bearer instrument.  The Agent will establish and maintain a record of
ownership (the "Register") in which the Agent agrees to register by book entry the Agent's and
each Lender's interest in the Loan, the Notes and this Agreement, and in the right to receive
any payments hereunder or thereunder and any assignment of any such interest or rights. In
connection with any assignment pursuant to SECTION 10.2, the Agent shall maintain a copy of
each Assignment and Acceptance delivered to and accepted by it and shall record the names and
addresses of the Lenders and principal amount of each Tranche of the Loan owing to each Lender
from time to time.  The entries in the Register shall be conclusive and binding for all
purposes, absent manifest error, and the Borrower, the Board, the Agent and the Lenders may
treat each Person whose name is recorded in the Register as a Lender for all purposes of this
Agreement.  Any assignment of all or part of any Loan shall be effective only upon appropriate
entries with respect thereto being made in the Register.  The Register shall be available for
inspection by the Borrower, the Agent, the Collateral Agent, the Board, the Loan Administrator
or any Lender or Supplemental Guarantor at any reasonable time and from time to time upon
reasonable prior notice.
(f)      The Borrower may use the proceeds from the Loan for such general corporate purposes as are
permissible under the Act and Regulations.  No portion of the proceeds from the Borrowing shall be
used by the Borrower or any of its Subsidiaries in any manner that might cause the borrowing or the
application of such proceeds to violate Regulation U, Regulation T or Regulation X of the
Federal Reserve Board or any other regulation of the Federal Reserve Board or to violate
Section 7(c) of the Exchange Act, in each case as in effect on the date or dates of such
borrowing and such use of proceeds.

SECTION 2.5.      OPTIONAL PREPAYMENTS.
(a)      The Borrower may, upon at least five (5) Business Days' prior irrevocable written notice
to the Board, the Supplemental Guarantors, the Loan Administrator and the Agent stating the proposed
date of prepayment (which shall be a Business Day) and aggregate principal amount of the prepayment,
elect to prepay the outstanding principal amount of the Loan, ratably as to each Tranche, in
whole or in part (but not less than a minimum amount of $1,000,000), together with accrued
interest to the date of such prepayment on the principal amount prepaid; provided, however,
that if any prepayment of all or a portion of the Loan is made by the Borrower other than on an
Interest Payment Date or if the Borrower fails to make such payment on the date specified on
its notice, the Borrower shall also pay any amounts owing pursuant to SECTION 2.10(E).
(b)      Upon the giving of any notice of prepayment under clause (a) of this SECTION 2.5, the principal
amount of the Loan specified to be prepaid together with accrued and unpaid interest thereon shall
become due and payable on the date specified for such prepayment; provided, however, that any
failure to make any such prepayment in full on such date shall be deemed to be an automatic
revocation of the notice of prepayment given under SECTION 2.5(A) and such failure shall not
constitute a Default or an Event of Default hereunder; provided, further, however, that the
Borrower shall be obligated to pay on such date any amounts owing under SECTION 2.10(E) due to
such failure to prepay.
(c)      Any such prepayment shall be paid to the Agent for application as provided in SECTION 2.9, and any
partial prepayment of the Loan resulting from such application shall be applied to the then
remaining installments of the outstanding principal amount of the Loan (ratably as to each
Tranche) in the inverse order of maturity thereof.  The Borrower shall have no right to
optionally prepay the principal amount of the Loan other than as provided in this SECTION 2.5,
SECTION 2.10(B) or SECTION 2.10(D).
(d)      The Borrower may prepay any Lender's Notes (whether or not the Notes held by any other Lender are
subject to prepayment) to the extent permitted by Sections 2.10(c), 2.11 or 2.12.

SECTION 2.6.      MANDATORY PREPAYMENTS.

(a)      Future Issuances.  The Borrower shall give the Agent, the Lenders, the Loan Administrator
and the Board not less than five Business Days' prior written notice of any anticipated Future Issuance
and upon receipt by the Borrower or any of its Subsidiaries of the proceeds of such Future
Issuance, the Borrower shall prepay the Loan in the manner provided below in an amount equal to
the applicable amount of such proceeds, net of any reasonable and customary brokers' and
advisors' fees, any underwriting discounts and commissions and other costs incurred in
connection with such transaction (provided that evidence of such fees, discounts, commissions
and costs is provided to the Board and the Agent) ("Net Issue Proceeds"); provided, that,
the Borrower shall not be obligated to so prepay the Loan if and to the extent that (i) the
proceeds are from ARE Acquisition Financing, or (ii) the Borrower applies such proceeds from an
issuance or incurrence of Permitted Refinancing Indebtedness to repay the then outstanding
principal amount of the refinanced Old Indebtedness and to pay accrued and unpaid interest,
premiums and fees thereon; or (iii) the Future Issuance is an incurrence of Indebtedness for
the sole purpose of repaying existing Indebtedness that is required to be repaid under the
terms of the existing Indebtedness that (x) require prepayment because of any law that has made
it illegal for the lender thereof to continue to maintain the existing Indebtedness or (y)
permit prepayment in the event of the imposition of increased costs, withholding taxes or other
similar amounts (after required mitigation efforts have not been successful) or similar
occurrences or conditions; and provided, further, that, (iv) with respect to each Future
Issuance of Capital Stock, the Borrower shall be obligated to prepay the Loan only in an amount
equal to 60% of the Net Issue Proceeds therefrom, (v) with respect to each incurrence of
Indebtedness from which the Net Issue Proceeds will be applied to refinance ARE Acquisition
Financing or Indebtedness that refinanced ARE Acquisition Financing, but which does not satisfy
all of the applicable conditions set forth in the definition of Permitted Refinancing
Indebtedness, the Borrower shall be obligated to prepay the Loan in an amount equal to (A) 25%
of the Net Issue Proceeds therefrom, plus (B) each dollar in excess of such 25% amount that is
not used to refinance such Indebtedness, up to a maximum amount 75% of such Net Issue Proceeds,
except that if the Refinancing Indebtedness does not satisfy all conditions of such definition
solely because the principal amount exceeds the Permitted Refinancing Cap, the Borrower shall
be obligated to prepay the loan only in an amount equal to 75% of the amount of the Net Issue
Proceeds in excess of the Permitted Refinancing Cap, and (vi) with respect to each incurrence
of Indebtedness not otherwise contemplated above in this Section 2.6(a), the Borrower shall be
obligated to prepay the Loan only in an amount equal to 75% of the Net Issue Proceeds
therefrom.  Any such prepayment of the Loan shall be made on the date of receipt of the
proceeds of the applicable Future Issuance; provided, however, in all cases, that if prepayment
at such time would cause the Borrower to incur Breakage Costs, the Borrower may, by delivery of
written notice to the Agent, elect to deposit the amount that it would otherwise prepay at such
time in the Prepayment Account established under Section 6.06 of the Security Agreement, for
application on the next Interest Payment Date in manner provided in the second sentence of
Section 2.6(f) below.
(b)      Asset Sales.  In the event and to the extent that on any date after the Closing Date the
Borrower or any of its Subsidiaries shall receive Net Cash Proceeds from one or more Asset Sales (other
than Asset Sales by a Wholly-Owned Subsidiary of the Borrower to the Borrower or another
Wholly-Owned Subsidiary of the Borrower) in excess of $2,500,000 during any Fiscal Year (such
excess amount, "Excess Proceeds") then the Borrower shall, or shall cause such Subsidiary to,
prepay the Loan in an aggregate amount equal to such Excess Proceeds; provided, however, that
during the existence of a Value Differential, all Net Cash Proceeds received from Asset Sales
shall be applied to prepay the Loan without regard to the $2,500,000 retention amount
referenced above.  Any such prepayment of the Loan shall be made on the third Business Day
following the date on which the Excess Proceeds are received; provided, however, in all cases,
that if prepayment at such time would cause the Borrower to incur Breakage Costs, the Borrower
may, by delivery of written notice to the Agent, elect to deposit the amount that it would
otherwise prepay at such time in the Prepayment Account established under Section 6.06 of the
Security Agreement, for application on the next Interest Payment Date in manner provided in the
second sentence of Section 2.6(f) below.
(c)      Insurance/Condemnation Proceeds.  The Borrower shall prepay the Loan in an amount equal
to the amount by which the aggregate amount of all Net Insurance Proceeds and Net Condemnation Proceeds
received by the Borrower or any of its Subsidiaries in any Fiscal Year exceeds $2,500,000, not counting
amounts prepaid under the immediately following proviso; provided, that with respect to
proceeds from an Event of Loss of a Spare Engine (as such terms are defined in the Security
Agreement) if the Borrower does not pledge appropriate substitute Collateral in accordance with
the terms of Section 3.01 of the Security Agreement, the Borrower shall apply all such proceeds
to prepay the Loan; and provided further that the Borrower shall not be obligated to prepay the
Loan from Net Insurance Proceeds or Net Condemnation Proceeds if and to the extent that the
Borrower certifies to the Board that the recipient intends to repair, restore or replace the
assets from which such Net Insurance Proceeds or Net Condemnation Proceeds derived, and does so
(or enters into a definitive agreement committing to do so) within 6 months after receipt of
such Net Insurance Proceeds or Net Condemnation Proceeds (or in the case of proceeds derived
from Collateral, the Borrower uses such proceeds to repair, restore or replace the assets from
which such proceeds derived in accordance with the applicable provisions of the Security
Agreement).  Any prepayment pursuant to this SECTION 2.6(C) shall be made on the third Business
Day following the date of receipt of the Net Insurance Proceeds or Net Condemnation Proceeds in
excess of the specified level by the Borrower or any of its Subsidiaries, or if later, the
six-month period referenced above (or such later date as it is determined that the proceeds
will not be applied in accordance with an agreement entered into within such six-month period),
or in the case of proceeds derived from Collateral and for which the timing of prepayment is
otherwise provided for in the Security Agreement, at such time as determined in accordance with
the applicable provisions thereof; provided, however, in all cases, that if prepayment at such
time would cause the Borrower to incur Breakage Costs, the Borrower may, by delivery of written
notice to the Agent, elect to deposit the amount that it would otherwise prepay at such time in
the Prepayment Account established under Section 6.06 of the Security Agreement, for
application on the next Interest Payment Date in manner provided in the second sentence of
Section 2.6(f) below.
(d)      Change in Control.  Upon the occurrence of a Change in Control with respect to the Borrower,
the Borrower shall promptly give the Agent, the Lenders, the Loan Administrator and the Board
written notice thereof, and the Board shall have the right, by written notice to the Borrower
(with a copy to the Agent and each Lender) delivered not more than 30 days following delivery
of the notice of the Change in Control, to require the Borrower to prepay the Loan in full,
together with accrued and unpaid interest thereon to the date of such prepayment, on the date
specified in such notice (which date shall be a Business Day not less than ten nor more than
twenty Business Days' after the date of such notice), and upon the specified payment date, the
Borrower shall so prepay the then outstanding principal amount of the Loan together with such
accrued and unpaid interest thereon.
(e)      Pledged Tax Receivable Proceeds.  The Borrower shall promptly give the Agent, the Lenders,
the Loan Administrator, the Supplemental Guarantors and the Board written notice of the Borrower's
receipt of the proceeds of the Pledged Tax Receivable (the "Tax Refund") and the amount
thereof.  Promptly upon receipt of the Tax Refund but in any event no later than two (2)
Business Days after receipt thereof, the Borrower shall prepay the Loan in an amount equal to
the lesser of (i) one-hundred percent (100%) of the Tax Refund and (ii) $10,000,000; provided,
however, in all cases, that if prepayment at such time would cause the Borrower to incur
Breakage Costs, the Borrower may, by delivery of written notice to the Agent, elect to deposit
the amount that it would otherwise prepay at such time in the Prepayment Account established
under Section 6.06 of the Security Agreement, for application on the next Interest Payment Date
in manner provided in the second sentence of Section 2.6(f) below.  Upon the prepayment of the
Loan by the Borrower with the Tax Refund in accordance with the preceding sentence, the
Collateral Agent shall release its Lien on the balance (if any) of the Tax Refund and the
Pledged Tax Receivable.  The terms of subsection (f) hereof notwithstanding, the prepayment of
the Loan in accordance with this subsection (e) shall be applied to the then remaining
installments of the outstanding principal balance of the Loan (ratably as to each Tranche) in
the order of maturity thereof.
(f)      Application.  If any such prepayment is made by the Borrower other than on an Interest
Payment Date, the Borrower shall also pay any amounts owing pursuant to SECTION 2.10(E).  Any such
prepayment of the Loan shall be paid to the Agent for application as provided in SECTION 2.9, and any
partial prepayment of the Loan resulting from such application shall be applied to the then remaining
installments of the outstanding principal balance of the Loan (ratably as to each Tranche) in
the inverse order of maturity thereof.

SECTION 2.7.      INTEREST.

(a)      Tranche A Rate of Interest.  Except as otherwise provided in SECTION 2.7(E) and SECTION 2.10,
Tranche A of the Loan shall bear interest on the unpaid principal amount thereof from the Closing Date
until paid in full at the Applicable Tranche A Interest Rate.
(b)      Tranche B-1 and B-2 Rate of Interest.  Except as otherwise provided in SECTION 2.7(F) and
SECTION 2.10,

                  (i) Tranche B-1 of the Loan shall bear interest on the unpaid principal amount thereof from the
                  Closing Date until paid in full at the Applicable Tranche B-1 Interest Rate and (ii) Tranche
                  B-2 of the Loan shall bear interest on the unpaid principal amount thereof from the Closing
                  Date until paid in full at the Applicable Tranche B-2 Interest Rate.

(c)      Tranche C Rate of Interest.  Except as otherwise provided in SECTION 2.7(F) and SECTION 2.10,
Tranche C of the Loan shall bear interest on the unpaid principal amount thereof from the Closing Date
until paid in full at the Applicable Tranche C Interest Rate.
(d)      Interest Payments.  Interest accrued on each Tranche of the Loan and each Note shall be payable
in arrears on each Interest Payment Date, upon the payment or prepayment thereof in whole or in
part, and, if not previously paid in full, at maturity (whether by acceleration or otherwise).
Interest on each Tranche of the Loan shall be calculated on the basis of a year of 360 days and
actual number of days elapsed.
(e)      Tranche A Default Interest.  Notwithstanding the rate of interest specified in SECTION 2.7(A)
or elsewhere herein, if any principal of or interest on Tranche A of the Loan is not paid when
due, whether at stated maturity, upon acceleration, by mandatory prepayment or otherwise (but
other than any voluntary prepayment), such overdue amount shall bear interest at a rate which
is [***] percent per annum in excess of the Applicable Tranche A Interest Rate as in effect
from time to time.
(f)      Tranche B-1, Tranche B-2 and Tranche C Default Interest.  Notwithstanding the rate of interest
specified in SECTION 2.7(B), SECTION 2.7(C) or elsewhere herein, if any principal of or interest on
Tranche B-1 of the Loan,  Tranche B-2 of the Loan or Tranche C of the Loan is not paid when
due, whether at stated maturity, upon acceleration, by mandatory prepayment or otherwise (but
other than any voluntary prepayment), such overdue amount shall bear interest at a rate which
is [***] percent per annum in excess of the Applicable Tranche B-1 Interest Rate, Applicable
Tranche B-2 Interest Rate and Applicable Tranche C Interest Rate, as the case may be, as in
effect from time to time.
(g)      Interest on Fees and Other Amounts.  If any fee, indemnity (including for increased costs and
withholding taxes) or other amount payable by the Borrower hereunder (other than amounts
payable under SECTION 2.7(B) is not paid when due, such overdue amount shall bear interest at a
rate equal to the Base Rate plus [***]% per annum.

SECTION 2.8.      FEES.

(a)      Supplemental Guarantor Fees.  The Borrower agrees to pay the Supplemental Guarantor Fees to
the Agent for the account of each Supplemental Guarantor on the Closing Date and quarterly in advance
thereafter for so long as the Loan and such Supplemental Guarantor's Supplemental Guarantee
shall remain in effect.
(b)      Board Guarantee Fees.  The Borrower agrees to pay to the Agent for the account of the Board
on the Closing Date and quarterly in advance thereafter for so long as the Board Guarantee shall
remain in effect, the Guarantee Fee set forth in Section 2.06 of the Board Guarantee (as in
effect on the Closing Date).
(c)      Loan Administrator Fee.
                  (i)      Basic Fee.  The Borrower agrees to pay to the Agent for the account of the Loan
                  Administrator a fixed annual fee of $[***] for each of the first two years (increased annually
                  thereafter on each anniversary of the Closing Date by [***]% per annum) for the standard services
                  described in Sections 8.1(b)(i) through 8.1(b)(vi) and 8.1(b)(x) through 8.1(b)(xiii)
                  for so long as the Loan shall remain outstanding.  On the Closing Date and on each
                  subsequent Interest Payment Date, the Borrower agrees to pay to the Loan Administrator
                  one quarter of the annual fee amount.
                  (ii)     Fee for Additional Services.  In the event that a Requesting Party requests that
                  the Loan Administrator provide any of the services described in Sections 8.1(b)(vii) through
                  (ix), (xiv) or (xv), the Loan Administrator's fee for each of such services shall be equal to the
                  product of (A) the total number of hours actually worked performing such services, as
                  set forth in a statement to be delivered by the Loan Administrator to the party at
                  whose expense such service was performed, and (B) the agreed upon hourly rate charged
                  for such services in accordance with the rate schedule attached as Schedule 2.8(c)
                  (increased annually effective on each anniversary of the Closing Date by [***]%).
(d)      Collateral Agent Fee.  The Borrower agrees to pay to the Agent, for the account of the Collateral Agent,
 a fee in the amount of $[***] plus $[***] on the Closing Date and $[***] annually thereafter
for so long as the Loan shall remain outstanding.
(e)      Other Fees.  The Borrower agrees to pay to the Agent, for the account of the Lenders and the Agent, such
other fees as are provided for in the Fee Letter, at such times and on such other terms as are
provided therein.
(f)      Distribution of Fees.  On the Closing Date, and promptly following its receipt thereof, the Agent shall
distribute to the Person entitled thereto each of the fees paid to it referred to in this
SECTION 2.8 payable on such date.  Thereafter, the Agent will distribute any and all fees
payable under this SECTION 2.8 in accordance with SECTION 2.9(D) or (E) hereof, as applicable.
(g)      Fees Non-Refundable.  All fees payable under this SECTION 2.8 shall be non-refundable.

SECTION 2.9.      PAYMENTS AND COMPUTATIONS.

(a)      The Borrower shall make each payment hereunder (including fees and expenses) not later than 11:00 a.m.
(New York City time) on the day when due, in Dollars, to the Agent at its account specified on
Annex A hereto in immediately available funds without set-off or counterclaim.  All payments in
respect of any Obligations shall at all times be made to the Agent, whether or not a demand
shall have been made or paid under the Board Guarantee.  The Agent will promptly cause all such
payments received by it to be distributed promptly to the Person entitled thereto in accordance
with the priorities of payment set forth below in clause (D) or (E) of this SECTION 2.9 or
both, as applicable.  Payments received by the Agent after 11:00 a.m. (New York City time)
shall be deemed to be received on the next Business Day.
(b)      Each determination by the Agent of an interest rate hereunder, including, without limitation, under
Section 2.10(a), shall be conclusive and binding for all purposes, absent manifest error.
(c)      Whenever any payment hereunder shall be stated to be due on a day other than a Business Day, such
payment shall be made on the next succeeding Business Day, and such extension of time shall in
such case be included in the computation of payment of interest or fees, as the case may be.
(d)      So long as no Event of Default under any of SECTION 7.1(A) (including any failure to pay all amounts
hereunder upon acceleration as a result of any other Event of Default), (F) and (g) has
occurred and is continuing or would result therefrom, the Agent shall apply all payments in
respect of any Obligations in the following order:
                  (i)      first, to pay any fees then due and payable under Sections 2.8(c), (d) and (e)
                  hereof to the Agent, the Collateral Agent and the Loan Administrator, as the case may be,
                  on a pro rata basis;
                 (ii)     second, to pay interest then due and payable in respect of the Loan to the Lenders,
                  on a pro rata basis; provided that, to the extent that any amount received by the Agent
                  constitutes interest accrued on any overdue principal of or interest on Tranche A of the Loan in
                  excess of the interest that would have accrued thereon at the Applicable Tranche A
                  Interest Rate, so much of such amount, if any, as exceeds the interest that would have
                  so accrued at the Applicable Tranche A Interest Rate shall be distributed to the Board
                  under this clause (ii) as if it were a Lender;
                (iii)    third, to pay principal then due and payable on the Loan to the Lenders, on a pro rata basis;
                 (iv)    fourth, to pay any fees then due and payable under Sections 2.8(a) and (b) hereof to the
                  Board and the Supplemental Guarantors on a pro rata basis; and
                  (v)      fifth, to pay any other Obligations then due and payable to the Agent, the Collateral
                  Agent, the Loan Administrator, the Board, the Lenders and the Supplemental Guarantors, on a pro
                  rata basis.
(e)      After the occurrence and during the continuance of an Event of Default under any of SECTION 7.1(A)
(including any failure to pay all amounts hereunder upon acceleration as a result of any other
Event of Default), (F) and (g), the Agent shall apply all payments in respect of any
Obligations in the following order:
                  (i)      first, to pay Obligations in respect of any expenses, fees (other than any fees payable
                  under clause (v) below), indemnities or other sums owing hereunder not referred to in clauses (ii)
                  through (iv) below then due to the Agent, the Collateral Agent, and the Loan
                  Administrator, on a pro rata basis;
                 (ii)     second, to pay Obligations in respect of any expenses, fees (other than any fees payable
                  under clause (v) below), indemnities or other sums owing hereunder not referred to in clauses (iii)
                  and (iv) below then due to the Board, the Lenders and the Supplemental Guarantors, on
                  a pro rata basis;
                (iii)    third, to pay on a pro rata basis, (A) interest then due and payable in respect of the
                  Loan to the Lenders, on a pro rata basis, provided that, to the extent that any amount
                  received by the Agent constitutes interest accrued on any overdue principal of or interest on
                  Tranche A of the Loan in excess of the interest that would have accrued thereon at the
                  Applicable Tranche A Interest Rate, so much of such amount, if any, as exceeds the
                  interest that would have so accrued at the Applicable Tranche A Interest Rate shall be
                  distributed to the Board under this clause (iii) as if it were a Lender, (B) fees
                  payable to the Board under SECTION 2.8(B) and (C) fees payable to the Supplemental
                  Guarantors under SECTION 2.8(A);
                 (iv)     fourth, to pay or prepay principal payments on the Loan to the Lenders, on a pro rata
                  basis; and
                  (v)      fifth, to pay any additional fees payable under Sections 2.8(a) and (b) hereof to the
                  Board and the Supplemental Guarantors on a pro rata basis.
(f)      Upon the assignment to the Board of the Tranche A Lender's right, title and interest in and to its pro
rata portion of the principal of and interest on Tranche A of the Loan in accordance with the
Board Guarantee, the Board shall have the rights and privileges of a Lender with respect to
such payment (to the extent of the interests in Tranche A of the Loan so assigned to the
Board).
(g)      No payment by the Board to the Agent or the Tranche A Lender under the Board Guarantee shall
reduce, discharge, satisfy, modify or terminate the corresponding payment or any other obligation of
Borrower under this Agreement or the Tranche A Note, which shall remain in full force and
effect, and no payment by the Supplemental Guarantor to the Agent or Tranche B-1 Lender or
Tranche B-2 Lender under a Supplemental Guarantee shall reduce, discharge, satisfy, modify or
terminate the corresponding payment or any other obligation of Borrower under this Agreement or
the Tranche B-1 Note or Tranche B-2 Note, which shall remain in full force and effect.

SECTION 2.10.     CERTAIN PROVISIONS GOVERNING THE NOTES.

(a)      Determination of Interest Rate.  The Applicable Tranche A Interest Rate, the Applicable
Tranche B-1 Interest Rate, the Applicable Tranche B-2 Interest Rate and the Applicable Tranche C
Interest Rate for each Interest Period of the Loan shall be determined by the Agent pursuant to the
procedures set forth in the definition of "Applicable Tranche A Interest Rate," "Applicable
Tranche B-1 Interest Rate," "Applicable Tranche B-2 Interest Rate," "Applicable Tranche C
Interest Rate" and "LIBOR," as applicable, and shall promptly thereafter be notified to the
Borrower, the Board, the Loan Administrator, each Lender and each Supplemental Guarantor.
(b)      Interest Rate Unascertainable, Inadequate or Unfair.  In the event that:
(i) the Agent determines that adequate and fair means do not exist for ascertaining the
applicable interest rates by reference to which the LIBOR then being determined is to be fixed;
or (ii) the Requisite Lenders notify the Agent that the LIBOR for any Interest Period will not
adequately reflect the cost to the Lenders of making or maintaining the Loan for such Interest
Period, the Agent shall forthwith so notify the Borrower, the Board, the Supplemental
Guarantors and the Lenders, whereupon during the 30 days following the date of any such notice
the Lenders, the Agent and the Borrower shall negotiate in good faith (subject to the consent
of the Board and the Supplemental Guarantors) in order to arrive at a mutually acceptable
alternative basis for determining the interest rate from time to time applicable to the
relevant Tranche or Tranches of the Loan (the "Substitute Basis").  If within the 20 days
following the date of any such notice from the Agent, the Lenders, the Agent and the Borrower
shall agree upon, and the Board and the Supplemental Guarantors shall consent to, a Substitute
Basis, such Substitute Basis shall be retroactive to and effective from the first day of the
then current Interest Period until and including the last day of such Interest Period.  If
after 20 days from the date of such notice, the Lenders, the Agent and the Borrower shall have
failed to agree upon, or the Board or the Supplemental Guarantors shall have failed to consent
to, a Substitute Basis, then the Agent (upon instructions from the Requisite Lenders) shall
certify in writing to the Borrower (such certification to be conclusive and binding on all
Lenders and all other parties hereto absent manifest error) the interest rate at which the
Lenders are prepared to maintain their portion of the Loan for such Interest Period, it being
understood that such Lenders' interest rate shall be at a rate per annum equal to a rate which
adequately and fairly reflects the cost to such Lenders of obtaining the funds necessary to
maintain their portion of the Loan for such Interest Period.  If no Substitute Basis is
established, upon receipt of notice of the interest rates at which the Requisite Lenders are
prepared to maintain their respective portion of the Loan, the Borrower shall have the right
exercisable upon ten Business Days' prior notice to the Lenders, the Supplemental Guarantors
and the Board through the Agent (i) to continue to borrow the Loan at the interest rate so
advised by the Agent (as such rate may be modified, from time to time, at the outset of each
subsequent Interest Period) or (ii) to prepay on at least three Business Day's prior
irrevocable notice in full the Loan together with accrued but unpaid interest thereon at the
interest rate certified in writing by the Requisite Lenders as provided above and all other
amounts due under the Loan Documents, whereupon the Loan shall become due and payable on the
date specified by the Borrower in such notice.
(c)      Increased Costs.  If at any time any Lender or Supplemental Guarantor shall determine
that as a result of the introduction of or any change in or in the interpretation by any Governmental
Authority of any law, treaty or governmental rule, regulation or order after the date hereof or the
compliance by such Lender or Supplemental Guarantor with any guideline, request or directive
after the date hereof from any central bank or other Governmental Authority (whether or not
having the force of law), there shall be any increase in the cost to such Lender or
Supplemental Guarantor of agreeing to make or making, funding or maintaining any portion of the
Loan or its Supplemental Guarantee (except in respect of Taxes, payments with respect to which
are addressed in SECTION 2.12) (an "Increased Cost"), then the Borrower shall from time to
time, upon demand (which demand shall be accompanied by a statement setting forth the basis for
such demand and a calculation of the amount thereof in reasonable detail) by such Lender or
Supplemental Guarantor (with a copy of such demand to the Agent), pay to the Agent for account
of such Lender or Supplemental Guarantor additional amounts sufficient to compensate such
Lender or Supplemental Guarantor for such increased cost.  A certificate as to the amount of
such increased cost (which certificate shall state that increased costs are being demanded of
the Borrower by such Lender or Supplemental Guarantor on a nondiscriminatory basis, consistent
with other requests being made by such Lender or Supplemental Guarantor in connection with
other similar loans held (or in the case of a Supplemental Guarantor, credit supports provided)
by such Lender or Supplemental Guarantor), submitted to the Borrower and the Agent by such
Lender or Supplemental Guarantor shall be conclusive and binding for all purposes, absent
manifest error; provided, however, that if any Lender or Supplemental Guarantor fails to give
such certificate 90 days after it obtains knowledge of the event giving rise to such Increased
Cost, such Lender or Supplemental Guarantor shall, with respect to amounts payable pursuant to
this SECTION 2.10(C) resulting from such event, be entitled to payment under this SECTION
2.10(C) for amounts incurred only from and after the date 90 days prior to the date that such
does give such notice.  In addition upon the receipt of any notice of an Increased Cost, the
affected Lender, the Supplemental Guarantor and the Borrower shall consult in good faith and
each shall use its reasonable efforts to avoid or mitigate the amount of any Increased Cost,
including without limitation, by assigning the rights and obligations of the Lender or
Supplemental Guarantor hereunder to another office or branch of such Lender or Supplemental
Guarantor or in the case of a Lender, by selling or transferring (for the Mitigation Price) the
rights, interests and obligations of the affected Lender hereunder to another bank, financial
or lending institution identified by the Borrower, subject to the terms hereof, that would not
be subject to any such Increased Cost, provided that such Lender or Supplemental Guarantor
shall not be required to take such action to avoid or mitigate such Increased Cost hereunder if
such action would result in any material economic, legal or regulatory disadvantage, or any
adverse tax consequence to such Lender or Supplemental Guarantor (other than (i) economic
disadvantage for which the Borrower agrees to indemnify such Lender or Supplemental Guarantor
on an After-Tax Basis and in a manner reasonably acceptable to such Lender or Supplemental
Guarantor, or (ii) adverse tax consequences for which the Borrower agrees to indemnify such
Lender or Supplemental Guarantor on an After-Tax Basis and in a manner reasonably acceptable to
such Lender or Supplemental Guarantor).  In the event the amount of such Increased Costs can
not be avoided or mitigated, or such Notes are not transferred as contemplated by the prior
sentence, the Borrower may prepay such affected portion of the Loan held by the affected Lender
(or guaranteed by the affected Supplemental Guarantor) at par, together with accrued but unpaid
interest thereon, any amounts payable in accordance with SECTION 2.10(E) and all other sums
payable hereunder (the "Mitigation Price") with respect thereto on any Business Day selected by
the Borrower.
(d)      Illegality.  Notwithstanding any other provision of this Agreement, if any Lender
determines that the introduction of or any change in or in the interpretation by any Governmental
Authority of any law, treaty or governmental rule, regulation or order after the date of this Agreement
shall make it unlawful, or any central bank or other Governmental Authority shall assert that it is
unlawful, for such Lender to continue to fund or maintain its portion of the Loan, then, on
notice thereof by such Lender to the Borrower through the Agent, the obligation of such Lender
to maintain its portion of the Loan shall be terminated and the Borrower shall prepay such
affected portion of the Loan to such Lender, together with accrued but unpaid interest thereon
and all other sums payable hereunder with respect thereto on the last day of the then current
Interest Period or earlier if necessary to avoid such illegality; provided that,
notwithstanding the foregoing, upon the receipt of any notice of any such illegality, the
affected Lender and the Borrower shall consult in good faith and each shall use its reasonable
efforts to avoid or mitigate such illegality, including without limitation, by adjusting the
interest rate basis for the affected portion of such Loan (with an interest rate margin to be
agreed), if doing so would avoid such illegality or by assigning the rights and obligations of
the Lender hereunder to another office or branch of such Lender or by selling or transferring
(for the Mitigation Price) the rights, interests and obligations of the affected Lender
hereunder to another bank, financial or lending institution identified by the Borrower, subject
to terms hereof, that would not be subject to such illegality, provided that such Lender shall
not be required to take such action to avoid such illegality if such action would result in any
material economic, legal or regulatory disadvantage, or any adverse tax consequence to such
Lender (other than (i) economic disadvantage for which the Borrower agrees to indemnify such
Lender on an After-Tax Basis and in a manner reasonably acceptable to such Lender, or (ii)
adverse tax consequences for which the Borrower agrees to indemnify such Lender on an After-Tax
Basis and in a manner reasonably acceptable to such Lender).  In the event such illegality
cannot be avoided, or such Notes are not transferred as contemplated by the prior sentence, the
Borrower may prepay such affected portion of the Loan held by the affected Lender at the
Mitigation Price with respect thereto on any Business Day selected by the Borrower.  Any such
prepayment of the Loan shall be paid to the Agent for application as provided in SECTION 2.9,
and any such partial prepayment resulting from such application shall be applied ratably to the
then unpaid installments thereof in accordance with the amount of each such unpaid installment.
(e)      Breakage Costs.  In addition to all amounts required to be paid by the Borrower
pursuant to SECTION 2.7, the Borrower shall compensate each Lender or each Supplemental Guarantor
upon demand, for all losses, expenses and liabilities (including any loss or expense incurred by
reason of the liquidation or reemployment of deposits or other funds acquired by such Lender or
Supplemental Guarantor or the termination of any other financial arrangement it may have entered
into to fund or maintain or support such Lender's portion of the Loan or its Supplemental Guarantee
through the conclusion of the applicable Interest Period but excluding Taxes, payments with
respect to which are addressed in SECTION 2.12) which such Lender or Supplemental Guarantor may
sustain (but excluding any loss of profit) (i) if for any reason the proposed Borrowing does
not occur on a date specified therefor in the Notice of Borrowing given by a Borrower, (ii) if
for any reason any portion of the Loan is prepaid (or required to be sold) on other than the
last day of an Interest Period or with less than three Business Days' notice (including
mandatorily pursuant to SECTION 2.6 or this SECTION 2.10), or (iii) as a consequence of any
failure by a Borrower to repay or prepay any portion of the Loan when required by the terms
hereof or irrevocable notice thereof has been furnished (any such losses, expenses and
liabilities referred to as "Breakage Costs").  The Lender or Supplemental Guarantor making
demand for such compensation shall deliver to the Borrower (with a copy to the Agent)
concurrently with such demand a written statement as to such losses, expenses and liabilities,
and this statement shall be conclusive as to the amount of compensation due to that Lender or
Supplemental Guarantor absent manifest error, and such compensation shall be paid to the Agent
for account of such Lender or Supplemental Guarantor.

SECTION 2.11.     CAPITAL ADEQUACY.

If at any time any Lender or Supplemental Guarantor determines that (a) the
adoption of or any change in or in the interpretation by any Governmental Authority of any law,
treaty or governmental rule, regulation or order after the date of this Agreement regarding
capital adequacy, (b) compliance with any such law, treaty, rule, regulation, or order, or (c)
compliance with any guideline or request or directive from any central bank or other
Governmental Authority (whether or not having the force of law) shall have the effect of
reducing the rate of return on such Lender's or Supplemental Guarantor's (or any corporation
controlling such Lender's or Supplemental Guarantor's) capital as a consequence of this
Agreement and the portion of the Loan made available thereby to a level below that which such
Lender or Supplemental Guarantor or such corporation could have achieved but for such adoption,
change, compliance or interpretation, then, upon demand from time to time by such Lender or
Supplemental Guarantor (with a copy of such demand to the Agent), the Borrower shall pay to the
Agent for account of such Lender or Supplemental Guarantor from time to time as specified by
such Lender or Supplemental Guarantor additional amounts (the "Additional Amounts") sufficient
to compensate such Lender or Supplemental Guarantor for such reduction.  A certificate as to
such amounts (which certificate shall state that increased costs are being demanded of the
Borrower by such Lender or Supplemental Guarantor on a nondiscriminatory basis, consistent with
other requests being made by such Lender or Supplemental Guarantor in connection with other
similar loans (or in the case of a Supplemental Guarantor, other similar credit supports
provided) held by such Lender or Supplemental Guarantor) submitted to the Borrower and the
Agent by such Lender or Supplemental Guarantor shall be conclusive and binding for all purposes
absent manifest error; provided, however, that if any Lender or Supplemental Guarantor fails to
give such certificate 90 days after it obtains knowledge of the event giving rise to such
Additional Amount, such Lender or Supplemental Guarantor shall, with respect to amounts payable
pursuant to this SECTION 2.11 resulting from such event, be entitled to payment under this
SECTION 2.11 for amounts incurred only from and after the date 90 days prior to the date that
such does give such notice.  In addition upon the receipt of any notice of an Additional
Amount, the Borrower may require the affected Lender to sell or transfer (for the Mitigation
Price) the rights, interests and obligations of the affected Lender hereunder to another bank,
financial or lending institution identified by the Borrower, subject to the terms hereof, that
would not be subject to any such Additional Amount.  In the event the Loan of the affected
Lender or Supplemental Guarantor is not transferred as contemplated by the prior sentence, the
Borrower may prepay such affected portion of the Loan to the affected Lender (or guaranteed by
the affected Supplemental Guarantor), together with accrued but unpaid interest thereon and all
other sums payable hereunder with respect thereto on any Business Day selected by the Borrower
(subject to SECTION 2.10(E)).

SECTION 2.12.     TAXES.

(a)      Except as otherwise provided in SECTION 10.2 or required by applicable law, any and all
payments by the Borrower under each Loan Document shall be made free and clear of and without
deduction for any and all Taxes, excluding (i) in the case of each Lender and each participant in
a Loan (hereinafter, a "participant"), the Loan Administrator, each Supplemental Guarantor and the
Agent, Taxes measured by its net income or net profits (or branch profits), and franchise Taxes
imposed on it, by the United States of America (or any political subdivision thereof) or by any
jurisdiction under the laws of which such Lender, the Loan Administrator, each such
Supplemental Guarantor or the Agent (as the case may be) is organized, (ii) in the case of each
Lender and each participant, Taxes measured by its net income or net profits (or branch
profits), and franchise Taxes imposed on it, by the jurisdiction in which such Lender's Lending
Office is located or in which such participant booked its participation for tax accounting
purposes, (iii) in the case of each Supplemental Guarantor, Taxes measured by its net income or
net profits (or branch profits), and franchise Taxes imposed on it, by the jurisdiction to
which the Borrower is directed to make payments to such Supplemental Guarantor pursuant to the
Loan Documents, (iv) in the case of each Lender, each participant, the Loan Administrator, the
Agent and either Supplemental Guarantor, Taxes imposed as a result of such Person failing to
comply with its obligations under SECTION 2.12(H) or SECTION 2.12(I) and (v) in the case of
each Lender, the Loan Administrator, each participant, each Supplemental Guarantor and the
Agent that is a party hereto, Supplemental Guarantor or participant, as the case may be, any
withholding Taxes imposed by the United States of America unless imposed as a result of a
change in applicable law or regulations, including income tax conventions, after the latest of
(x) the Closing Date, (y) the date on which it becomes a Lender, the Loan Administrator, a
Supplemental Guarantor, a participant or the Agent, as the case may be, and (z) in the case of
a Lender, the date on which it designates a new Lending Office, unless such designation is
pursuant to SECTION 2.12(I) (all such non-excluded Taxes being hereinafter referred to as
"Indemnified Taxes").  If any Indemnified Taxes shall be required by law to be deducted from or
in respect of any sum payable by the Borrower under any Loan Document to any Lender, the Loan
Administrator, any Supplemental Guarantor or the Agent (i) the sum payable shall be increased
as may be necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this SECTION 2.12) such Lender, the Loan
Administrator, such Supplemental Guarantor or the Agent (as the case may be) receives an amount
equal to the sum it would have received had no such deductions been made, (ii) the Borrower
shall make such deductions, and (iii) the Borrower shall pay the full amount deducted to the
relevant taxing authority or other authority in accordance with applicable law.
(b)      If any Taxes are required by law to be deducted from or in respect of any sum payable under
any Supplemental Guarantee by any Supplemental Guarantor to the Agent, any Lender or any
participant and such Supplemental Guarantor in accordance with the terms of its Supplemental
Guarantee pays such amounts as may be necessary so that after making all required deductions
the Agent, such Lender or such participant, as the case may be, receives an amount equal to the
sum it would have received had no such deduction been made, the Borrower shall pay the amount
thereof to the Agent for the account of such Supplemental Guarantor (together with any
additional amounts such that the Supplemental Guarantor receives, after deduction for all Taxes
required to be withheld, the amount so paid by the Supplemental Guarantor).
(c)      In addition, the Borrower agrees to pay any present or future stamp or documentary Taxes
or any other excise or property Taxes (excluding Taxes described in Section 2.12(a)(i), (ii) or (iii)),
charges or similar levies of the United States or any political subdivision thereof or any
applicable foreign jurisdiction or subdivision thereof, and all liabilities with respect
thereto, which arise from any payment made under any Loan Document or Supplemental Guarantee or
from the execution, delivery or registration of, or otherwise with respect to, any Loan
Document or Supplemental Guarantee (collectively, "Other Taxes") to the Agent for the account
of the affected party.
(d)      The Borrower will indemnify each Lender, the Agent, the Loan Administrator and each
Supplemental Guarantor on an after-tax basis for the full amount of Indemnified Taxes or Other Taxes
(including any Taxes imposed by any jurisdiction on amounts payable under this SECTION 2.12)
paid by such Lender, the Loan Administrator, the Agent or Supplemental Guarantor (as the case
may be) and any liability (including for penalties, interest and expenses) arising therefrom or
with respect thereto.  This indemnification shall be made to the Agent for account of the
relevant Lender, the Loan Administrator, the relevant Supplemental Guarantor or the Agent, as
the case may be, within 30 days from the date such Lender, the Loan Administrator, such
Supplemental Guarantor or the Agent (as the case may be) makes written demand therefor (with a
copy to the Agent if made by a Lender, the Loan Administrator or Supplemental Guarantor and
accompanied by a statement setting forth the basis for such taxation and the calculation of the
amount thereof in reasonable detail).
(e)      Within 30 days after the date of any payment of Indemnified Taxes or Other Taxes, the
Borrower will furnish to the Agent the original or a certified copy of a receipt evidencing payment
thereof or other documentation reasonably satisfactory to the Agent.
(f)      If a Lender, a Supplemental Guarantor, the Loan Administrator or the Agent determines, in
its sole discretion, that it has received a refund in respect of any Indemnified Taxes or Other Taxes
as to which it has been indemnified by the Borrower pursuant to this SECTION 2.12, it shall within
30 days from the date of such receipt pay over such refund to the Borrower hereunder (but only
to the extent of indemnity payments made by the Borrower pursuant to this SECTION 2.12 with
respect to the Indemnified Taxes or Other Taxes giving rise to such refund), net of any
additional Taxes incurred due to such refund and out-of-pocket expenses of such Lender, such
Supplemental Guarantor, the Loan Administrator or the Agent as a result of such refund or
payment hereunder and without interest (other than interest paid by the relevant Governmental
Authority with respect to such refund); provided, that no Default which if not cured would
become an Event of Default under Sections 7.1(a), (f) or (g) or Event of Default is continuing,
and provided further, that the Borrower hereunder, upon the request of such Lender, such
Supplemental Guarantor or the Agent, agrees to repay the amount paid over to the Borrower (plus
penalties, interest or other charges) to such Lender, such Supplemental Guarantor or the Agent
in the event such Lender, such Supplemental Guarantor or the Agent is required to repay such
refund to or if it is otherwise disallowed by such Governmental Authority.
(g)      Without prejudice to the survival of any other agreement of the Borrower hereunder, the
agreements and obligations of the parties contained in this SECTION 2.12 shall survive the payment
in full of the Obligations.
(h)      Each of the Lenders, each Supplemental Guarantor, the Loan Administrator and the Agent that
is a Non-U.S. Person and that is entitled at such time to an exemption from United States
withholding tax, or that is subject to such tax at a reduced rate under an applicable tax
treaty, shall, on or prior to the Closing Date or on or prior to the date of the Assignment and
Acceptance pursuant to which it becomes a Lender or on or prior to the date such Person becomes
a Supplemental Guarantor, the Loan Administrator or the Agent, as applicable, and from time to
time thereafter if requested by the Agent, a Supplemental Guarantor or the Borrower or if
necessary to keep the provided forms from lapsing, provide the Agent and the Borrower, and, in
the case of each of the Lenders and the Agent, provide each Supplemental Guarantor, with two
completed copies of either IRS Form W-8BEN or W-8ECI or other applicable form, certificate or
document prescribed by the IRS certifying as to such Non-U.S. Person's entitlement to such
exemption from United States withholding tax or reduced rate with respect to all payments to be
made to such Non-U.S. Person under the Loan Documents.  In addition, each of the Lenders, each
Supplemental Guarantor, the Loan Administrator and the Agent that is a Non-U.S. Person, as the
case may be, shall deliver to the Borrower and the Agent, and, in the case of each of the
Lenders and the Agent, deliver to each Supplemental Guarantor, notice of any event (other than
a change in applicable law, including income tax conventions) requiring a change in the most
recent form previously delivered by such Person to the Borrower and the Agent or the
Supplemental Guarantors, as the case may be.  Each participant in a Loan shall comply with the
requirements of this clause (h) as if it were a Lender, except that it shall only be required
to provide forms and notices to the Agent, or in conjunction with a written agreement delivered
pursuant to clause (j) hereof or a request for indemnification pursuant to this Section 2.12.
                  (i)      Any Lender claiming any additional amounts payable pursuant to this
                  SECTION 2.12 ("Additional Tax Amounts") shall use its reasonable efforts
                  (consistent with its internal policy and legal and regulatory restrictions) to change
                  the jurisdiction of its Lending Office if the making of such a change would avoid the
                  need for, or reduce the amount of, any such Additional Tax Amounts which would be payable
                  or may thereafter accrue and would not, in the sole determination of such Lender, be
                  disadvantageous to such Lender.  In addition, upon receipt by Borrower of any notice that
                  any Additional Tax Amounts are due, the affected Lender shall sell or transfer (for the
                  Mitigation Price) the rights, interests and obligations of the affected Lender hereunder
                  to another bank, financial or lending institution identified by the Borrower and approved
                  by the affected Supplemental Guarantor, such approval not to be unreasonably withheld,
                  subject to the terms hereof, that would not require that any such Additional Tax Amounts
                  be paid.  In the event such Additional Tax Amounts can not be avoided or mitigated, or such
                  Notes are not transferred as contemplated by the prior sentence, the Borrower may prepay
                  such affected portion of the Loan held by the affected Lender (or guaranteed by the affected
                  Supplemental Guarantor) at the Mitigation Price with respect thereto on any Business Day
                  selected by the Borrower.
(j)      Each participant in the Loan will be entitled to the benefits and subject to the requirements of this
SECTION 2.12 to the same extent as if such Person were a Lender; provided such participant
agrees in writing to be subject to all of the provisions of this SECTION 2.12; and provided,
further, that a participant shall not be entitled to indemnification or payment of additional
amounts under this SECTION 2.12 with respect to any Taxes which are in effect and would not
apply to amounts payable to the participating Lender on the date such participant acquires its
participation.  In addition, each Supplemental Guarantor seeking the benefits of this SECTION
2.12 must agree in writing to be subject to all of the provisions of this SECTION 2.12.

                                           ARTICLE III

                                        CONDITIONS TO LOAN

SECTION 3.1.      CONDITIONS PRECEDENT TO THE LOAN.  The obligation of the Lenders to make
available their respective Tranches of the Loan on the Closing Date is subject to the satisfaction (in the
judgment of the Agent, the Board, each Supplemental Guarantor and the Lenders (except as otherwise provided
below in this SECTION 3.1)) of all of the following conditions precedent before or concurrently with such
Borrowing:
(a)      Certain Documents.  The Agent, the Lenders, each Supplemental Guarantor (except as to
clauses (IX)(G) through (J), (XII) and (XIII), for opinions of counsel to and documents relating to
the other Supplemental Guarantors) and the Board shall have received on the Closing Date each of the
following, each dated as of the Closing Date, in form and substance satisfactory to the Agent,
the Board, the Lenders and each Supplemental Guarantor (except as otherwise provided below in
this SECTION 3.1(A)):
                  (i)     this Agreement, duly executed and delivered by the parties hereto;
                 (ii)     the Notes duly executed by the Borrower and conforming to the requirements set
                  forth in SECTION 2.4(D) hereof;
                (iii)     the Security Agreement, duly executed and delivered by the parties thereto;
                 (iv)     the Board Guarantee, duly executed and delivered by the parties thereto;
                  (v)     each Supplemental Guarantee, the [***] Counter Guarantee and, for the Tranche B-1 Lender,
                  a letter agreement from [***] in form and substance satisfactory to it (the "[***] Letter
               Agreement"), duly executed and delivered by the parties thereto;
                 (vi)     the Warrants (which need to be in form and substance satisfactory only to the holders
                  thereof), duly executed, validly issued and delivered by the Borrower;
                (vii)     the Registration Rights Agreement (which need be in form and substance satisfactory only
                  to the holders of Warrants), duly executed and delivered by the parties thereto;
               (viii)   (A) a Collateral Value Certificate with respect to the Collateral setting forth the
                  Collateral Value as of the Closing Date, together with (B) insurance certificates and insurance
                  brokers' reports evidencing the insurance coverages required under the Loan Documents;
                 (ix)     the favorable opinions of (A) Fulbright & Jaworski, LLP, special counsel to the Borrower,
                  (B) David Sislowski, internal counsel to the Borrower, (C) Faegre & Benson, LLP, local Colorado
                  counsel to the Borrower, (D) James R. Levine, legal counsel to the Board (which need
                  be addressed and delivered only to the Agent and the Tranche A Lender), (E) Curtis,
                  Mallet-Prevost, Colt & Mosle LLP, special New York counsel to the Board (which need be
                  addressed and delivered only to the Agent and the Tranche A Lender), (F) David R.
                  Schwiesow, Associate General Counsel of the Loan Administrator, (G) (1) [***], counsel
                  to the [***] Supplemental Guarantor, (2) [***], counsel to the [***] Counter Guarantor
                  and (3) [***], special New York counsel to the [***] Supplemental Guarantor and the
                  [***] Counter Guarantor, (H) [***], internal counsel to the [***] Supplemental
                  Guarantor (which need be addressed and delivered only to the Agent and the Tranche B-2
                  Lender), (I) [***], special New York counsel to the [***] Supplemental Guarantor
                  (which need be addressed and delivered only to the Agent and the Tranche B-2 Lender),
                  (J) Vedder, Price, Kaufman & Kammholz, special New York counsel to the Lenders and the
                  Agent and (K) Crowe & Dunlevy, special FAA counsel;
                  (x)     a copy of the articles or certificate of incorporation of the Borrower and each of
                  its Subsidiaries, certified as of a recent date by the Secretary of State of the state of
                  organization of such Person, together with a "long-form" certificate of such official attesting
                  to the good standing of such Person;
                 (xi)     a certificate of the Secretary or an Assistant Secretary of the Borrower and
                  each of its Subsidiaries certifying (A) the names and true signatures of each officer of
                  such Person who has been authorized to execute and deliver each Loan Document required to be
                  executed and delivered by or on behalf of such Person hereunder or thereunder, (B) the by-laws of
                  such Person as in effect on the date of such certification, (C) the resolutions of
                  such Person's board of directors approving and authorizing the execution, delivery and
                  performance of each Loan Document to which it is a party and (D) that there have been
                  no changes in the certificate of incorporation of such Person from the certificate of
                  incorporation delivered pursuant to the immediately preceding clause;
                (xii)     a copy of the articles or certificate of organization or comparable document of each
                  of the [***] Supplemental Guarantor, the [***] Counter Guarantor and the [***] Supplemental
                  Guarantor, certified, if available, as of a recent date by an appropriate official of
                  the jurisdiction of organization of each such Person, together with, if available, a
                  certificate or comparable document of such official attesting to the good standing of
                  such Person;
               (xiii)     (A) a certificate of the Secretary or Assistant Secretary of each of the [***]
                  Supplemental Guarantor, the [***] Counter Guarantor and the [***] Supplemental Guarantor
                  certifying (A) the names and true signatures of each officer of such Person who has been
                  authorized to execute and deliver the applicable Supplemental Guarantee or the [***] Counter
                  Guarantee, (B) the by-laws of such Person as in effect on the date of such
                  certification, (C) the resolutions of such Person's board of directors approving and
                  authorizing the execution, delivery and performance of the applicable Supplemental
                  Guarantee, and (D) that there have been no changes in the certificate of organization
                  of such Person from the certificate of organization delivered pursuant to the
                  immediately preceding clause and (B) in the case of [***], a delegation as to the name
                  and specimen signature of the officer authorized to execute and deliver the [***]
                  Letter Agreement;
                (xiv)     an Officer's Certificate of the Borrower signed by its Chief Financial Officer, stating
                  that the Borrower is Solvent after giving effect to the Loan, the application of the proceeds
                  thereof in accordance with SECTION 2.4(F) on the Closing Date and the payment of all
                  legal, accounting and other fees (as reasonably estimated by the Borrower as of, and
                  on the assumption that such amounts were to be paid on, the Closing Date) related
                  hereto;
                 (xv)     an Officer's Certificate of the Borrower certifying that all representations, warranties
                  and certifications made by the Borrower in the Loan Agreement, the other Loan Documents,
                  the Application are true and correct in all material respects on and as of the Closing
                  Date, before and after giving effect to the Borrowing and to the application of the
                  proceeds therefrom, as though made on and as of such date (except to the extent
                  relating to an earlier date, in which case such representations and warranties were
                  true and correct in all material respects as of such earlier date);
                (xvi)     a true and correct copy of the Borrower's Application (excluding therefrom any information
                  provided by the Tranche A Lender to the Board in connection therewith), as approved by the Board,
                  together with an Officer's Certificate certifying that as of the Closing Date, the
                  information contained therein (excluding such information provided by the Tranche A
                  Lender ) is true and complete in all material respects (except to the extent of (x)
                  any differences between the collateral described therein and the Collateral and (y)
                  changes with respect to the prospects of the Borrower that are reflected in the
                  projections delivered pursuant to SECTION 3.1(K));
               (xvii)   an Officer's Certificate of the Borrower signed by a duly authorized officer of such
                  Person certifying (A) that no Event of Default or Default has occurred and is continuing or
                  would result from the Borrowing, and (B) that since September 30, 2002, there has been no material
                  adverse change (I) in the business, condition (financial or otherwise), operations,
                  performance, prospects (except to the extent of changes with respect to the prospects
                  of the Borrower that are reflected in the projections delivered pursuant to SECTION
                  3.1(K)), assets or properties of the Borrower and its Subsidiaries taken as a whole or
                  in the Borrower's ability to repay the Loan or (II) with respect to any of the matters
                  covered by the representations and warranties of the Borrower in its Application to
                  the Board;
              (xviii)  an Officer's Certificate of the Borrower certifying that (i) it will use the proceeds
                  from the Borrowing in compliance with SECTION 2.4(F) of this Agreement and consistent with Section
                  4.1(e), (ii) the Borrower qualifies as an "eligible borrower" under the Act and the
                  Regulations (assuming the satisfaction of the Board as contemplated in Section
                  1300.11(a) of the Regulations), and (iii) the Borrower does not have any outstanding
                  delinquent Federal debt (including tax liabilities); and
                (xix)    such other certificates (including Officer's Certificates), documents, agreements and
                  information from the Borrower and its Subsidiaries  as the Agent, the Lenders, any Supplemental
                  Guarantor or the Board may reasonably request.
(b)      Collateral.  (i)  Completion of all notices, recordings and filings of or with respect to
the Security Agreement and the Collateral covered thereby, that are necessary or desirable in order to
perfect and protect the security interest created by the Security Agreement or that arrangements therefor
satisfactory to the Collateral Agent have been made, including, without limitation, the filing of the
applicable Security Agreement and any other required instruments and documents with the Federal Aviation
Administration, the filing of Uniform Commercial Code financing statements in all applicable jurisdictions,
the recording with appropriate motor vehicle authorities of endorsements on the certificates of title for motor
vehicle Collateral, and the delivery of favorable legal opinions from counsel; and (ii) completion by the Borrower
of all other actions necessary or desirable to perfect and protect the security interest in the
Collateral or that satisfactory arrangements therefor have been made.
(c)      Other Agreements.  The Agent, the Board, each Lender and each Supplemental Guarantor shall
have received evidence reasonably satisfactory to each of them that the Borrower has agreed on terms
satisfactory to the Board regarding certain employee compensation matters as required by
Section 104(a) of the Act (the "Employee Compensation Agreement").
(d)      Fees and Expenses Paid.  The Borrower shall have paid all fees due and payable on the Closing Date
(including, without limitation, the fees referenced in SECTION 2.8 hereof), and all expenses of
the Agent, the Collateral Agent, the Lenders, the Loan Administrator and each Supplemental
Guarantor due and payable on or before the Closing Date.
(e)      Consents, Etc.  The Borrower and each of its Subsidiaries shall have received all consents and
authorizations required pursuant to any Contractual Obligation with any other Person and shall
have obtained all consents, waivers and authorizations of, and effected all notices to and
filings with any Governmental Authority, in each case, as may be necessary to allow the
Borrower and each of its Subsidiaries lawfully to execute, deliver and perform, in all material
respects, its obligations under the Loan Documents to which it is, or shall be, a party and
each other agreement or instrument to be executed and delivered by it, pursuant thereto or in
connection therewith.
(f)      No Illegality.  No law or regulation shall be applicable in the judgment of any Lender or the
Board that restrains, prevents or imposes materially adverse conditions upon the transactions contemplated
hereby.
(g)      Representations and Warranties of Borrower.  All representations and warranties of the
Borrower set forth herein and of the Borrower and each of its Subsidiaries in each other Loan Document to
which it is a party are true and correct on and as of the Closing Date, before and after giving
effect to the Borrowing and to the application of the proceeds therefrom, as though made on and
as of such date.
(h)      Representations and Warranties of Supplemental Guarantnors.  All representations and
warranties of each of the [***] Supplemental Guarantor, the [***] Counter Guarantor, [***] and the [***]
Supplemental Guarantor in the Supplemental Guarantee or other applicable document required to
be delivered under a Supplemental Guarantee to which it is a party, are true and correct on and
as of the Closing Date, before and after giving effect to the Borrowing and to the application
of the proceeds therefrom, as though made on and as of such date, in the judgment of the
Tranche B-1 Lender, Tranche B-2 Lender and the Board, except that in the case of [***], in the
judgment of the Tranche B-1 Lender.
(i)      No Event of Default.  No Event of Default or Default has occurred and is continuing,
or would result from the Borrowing after giving effect to the Borrowing and to the application of the
proceeds therefrom.
(j)      Corporate and other proceedings.  All corporate and other proceedings, and all documents,
instruments and other legal matters in connection with the transactions contemplated hereby shall be
satisfactory in form and substance to the Agent, the Board, each Lender and each Supplemental
Guarantor.
(k)      Projections.  The Lenders and the Board shall have received satisfactory projections and
pro forma financial information for the Borrower for the fiscal years 2003 through and including 2007,
which projections shall be certified by the Chief Executive Officer or the Chief Financial
Officer of the Borrower as being reasonable, including with respect to the assumptions on which
they are based, as of the Closing Date.
(l)      No Material Adverse Change.  Since September 30, 2002, no material adverse change shall
have occurred (i) in the business, condition (financial or otherwise), operations, performance, prospects
(except to the extent of changes with respect to the prospects of the Borrower that are
reflected in the projections delivered pursuant to SECTION 3.1(K)), assets or properties of the
Borrower and its Subsidiaries taken as a whole or in the Borrower's ability to repay the Loan
or (ii) with respect to any of the matters covered by the representations and warranties made
in the Application.
(m)      Filing Memoranda; Post Recordation Opinions.  The Borrower shall have submitted to the
Federal Aviation Administration the Security Agreement and all other instruments or documents that are required
to be recorded by the Federal Aviation Administration in order to perfect the Lien on the Collateral in favor
of the Collateral Agent, and promptly upon the recordation of such documents with the Federal Aviation
Administration, the Borrower will cause Crowe & Dunlevy to deliver to the Collateral Agent a favorable
legal opinion with respect to the perfection of the security interest in the Collateral covered by such
recordation.
(n)      Due Diligence.   The Agent, the Board, each Supplemental Guarantor and each Lender shall
have received such information as they shall reasonably request concerning the Spare Engines and Spare Parts
constituting the Collateral, and Borrower's inventory control and tracking systems with respect
thereto.
(o)      Process Agents.  The Agent shall have received evidence  of the appointment of CT Corporation
as process agent for each of the [***] Supplemental Guarantor and the [***] Counter Guarantor.

                                           ARTICLE IV

                                    REPRESENTATIONS AND WARRANTIES

                  To induce the other parties to enter into this Agreement, to induce the Board
to enter into the Board Guarantee and to induce the Supplemental Guarantors to enter into their
respective Supplemental Guarantees, the Borrower represents and warrants to each other party
hereto and to each Supplemental Guarantor that, on and as of the Closing Date:

SECTION 4.1.      ORGANIZATION, POWERS, QUALIFICATION, GOOD STANDING, BUSINESS, SUBSIDIARIES,
THE ACT AND THE REGULATIONS.

(a)      The Borrower is a corporation duly organized, validly existing and in good standing under the
laws of the State of Colorado.  The Borrower has all requisite corporate and other power and authority
to own and operate its properties, to carry on its business as now conducted and as proposed to
be conducted, to enter into the Loan Documents to which it is a party and to carry out the
transactions contemplated hereby and thereby.
(b)      The Borrower is qualified to do business and in good standing in every jurisdiction where its
assets are located and wherever necessary to carry out its business and operations, except in
jurisdictions where the failure to be so qualified or in good standing could not reasonably be
expected to have a Material Adverse Effect.  The Borrower is an "air carrier" within the
meaning of the Act and holds a certificate under Sections 41102(a)(1) and 41103 of Title 49.
Each of the Borrower and its Subsidiaries engaged in operations as an "air carrier" is a
"citizen of the United States" as defined in Section 40102(a)(15) of Title 49 (a "United States
Citizen") and holds an air carrier operating certificate issued pursuant to Chapter 447 of
Title 49 for aircraft capable of carrying 10 or more individuals or 6,000 pounds or more of
cargo.  The Borrower and each of its Subsidiaries possess all necessary certificates,
franchises, licenses, permits, rights and concessions and consents which are material to the
operation of the routes flown by it and the conduct of its business and operations as currently
conducted.
(c)      All of the Subsidiaries of the Borrower as of the Closing Date are identified on Schedule
4.1(c), as said Schedule 4.1(c) may be supplemented from time to time pursuant to the provisions of
SECTION 5.15.  Each of the Subsidiaries identified in Schedule 4.1(c) (as so supplemented) is
duly organized, validly existing and in good standing under the laws of its respective
jurisdiction of formation set forth therein, has all requisite corporate, partnership or
limited liability power and authority to own and operate its properties and to carry on its
business as now conducted and as proposed to be conducted, and is qualified to do business and
in good standing in every jurisdiction where its assets are located and wherever necessary to
carry out its business and operations, in each case except where failure to be so qualified or
in good standing or a lack of such corporate, partnership or limited liability power and
authority could not reasonably be expected to have a Material Adverse Effect.  Schedule 4.1(c)
(as so supplemented) correctly sets forth the ownership interest of the Borrower and each of
its Subsidiaries in each of the Subsidiaries identified therein.  There are no limitations on
the right of the Borrower to vote the Capital Stock it owns of any of its Subsidiaries.  Except
as otherwise described on Schedule 4.1(c), the Subsidiaries listed on Schedule 4.1(c) have no
assets or liabilities and have undertaken no operations except in connection with their
formation.
(d)      The Borrower meets each of the conditions set out in paragraphs (1) through (5) of Section
1300.11(a) of the Regulations, it does not have any outstanding delinquent Federal debt (including tax
liabilities), and the Application, the Loan, the Supplemental Guarantees and the transactions
contemplated hereby (assuming each Lender is an Eligible Lender) comply with the requirements
of the Act and the Regulations (it being understood that no representation is being made hereby
as to whether the Board has made any determinations or findings required to be made by it under
the Act and the Regulations as conditions to the issuance of the Board Guarantee).
(e)      The Borrower intends to use the proceeds of the Loan only for general corporate purposes as are
permissible under the Act and the Regulations, and not for the prepayment or refinancing of any
Indebtedness for borrowed money of the Borrower or any other Person, nor for the acquisition of
stock or of all or any substantial part of the assets of any Person.

SECTION 4.2.      AUTHORIZATION OF BORROWING, ETC.

(a)      Each of the Borrower and its Subsidiaries has duly authorized by all necessary corporate
action the execution, delivery and performance of the Loan Documents to which it is a party.
(b)      The execution, delivery and performance by the Borrower and each of its Subsidiaries of
the Loan Documents to which it is a party and the consummation of the transactions contemplated by the
Loan Documents to which it is a party do not and will not (i) violate any provision of any law
or any governmental rule or regulation applicable to the Borrower or any of its Subsidiaries,
the certificate or articles of incorporation or by-laws of the Borrower or any of its
Subsidiaries or any order, judgment or decree of any court or other agency of government
binding on the Borrower or any of the Borrower's Subsidiaries, (ii) conflict with, result in a
material breach of or constitute (with due notice or lapse of time or both) a default or
require any payment under any Contractual Obligation of the Borrower or any of its
Subsidiaries, (iii) result in or require the creation or imposition of any Lien upon any of the
properties or assets of the Borrower or any of the Borrower's Subsidiaries (other than pursuant
to the Loan Documents), or (iv) require any approval of stockholders or any approval or consent
of any Person under any material Contractual Obligation of the Borrower or any of the
Borrower's Subsidiaries, except for such approvals or consents which will have been obtained on
or before the Closing Date and are disclosed on Schedule 4.2(b).
(c)      The execution, delivery and performance by the Borrower and each of its Subsidiaries
of the Loan Documents to which it is a party and the consummation of the transactions contemplated
by the Loan Documents to which it is a party do not and will not require any registration with,
consent or approval of, or notice to, or other action to, with or by, any federal, state or
other Governmental Authority or regulatory body or any other Person except as disclosed on
Schedule 4.2(c) and all of such registrations, consents, approvals, notices and other actions
which are required to be obtained or made on or prior to the Closing Date have previously been
obtained or made (it being understood that no representation is being made hereby as to whether
the Board has made any determinations or findings required to be made by it under the Act and
the Regulations as conditions to the issuance of the Board Guarantee).
(d)      The Borrower and each of its Subsidiaries has duly executed and delivered each of the Loan
Documents to which it is party and each such Loan Document is the legally valid and binding obligation
of the Borrower or such Subsidiary, as applicable, enforceable against the Borrower or such
Subsidiary in accordance with its terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or other similar laws relating to or affecting
the enforcement of creditors' rights generally, and by general principles of equity (regardless
of whether considered in a proceeding in equity or at law).

SECTION 4.3.      FINANCIAL CONDITION.

(a)      The Borrower has heretofore delivered to the Agent, the Board, the Loan Administrator, the
Lenders and the Supplemental Guarantors the following financial statements and information:  (i) the
audited balance sheet of the Borrower as at March 31, 2002, and the related  statements of
income, stockholders' equity and cash flows of the Borrower for the Fiscal Year then ended and
(ii) the unaudited balance sheet of the Borrower as at September 30, 2002 and the related
unaudited statements of income, stockholders' equity and cash flows of the Borrower for the six
months then ended.  All such statements were prepared in conformity with GAAP consistently
applied and fairly present the financial position of the Borrower as at the respective dates
thereof and the results of operations and cash flows of the Borrower for each of the periods
then ended subject, in the case of the unaudited statements, to normal year-end audit
adjustments.  Except as disclosed in writing to the Agent and the Board prior to the date of
this Agreement, neither the Borrower nor any of its Subsidiaries has any material contingent
liability or liability for taxes, long-term lease or unusual forward or long-term commitment
that is not reflected in the foregoing financial statements or in the most recently delivered
financial statements delivered pursuant to SECTION 5.1(B)(I)(A) or (II) or the notes thereto
and which in any such case is material in relation to the business, operations, properties,
prospects, assets or condition (financial or otherwise) of the Borrower.
(b)      Any projections and pro forma financial information contained in the Application and the
projections and pro forma financial information delivered to the Lenders and the Board pursuant to
SECTION 3.1(K) are reasonable, including with respect to the assumptions on which they were based, at
the time made (or as of the Closing Date in the case of the projections and pro forma financial
information delivered pursuant to SECTION 3.1(K)), it being recognized by the Board and the
Lenders that such projections as to future events are not to be viewed as facts and that actual
results during the period or periods covered by any such projections may differ from the
projected results.
(c)      The Borrower and its Subsidiaries maintain, in accordance with sound business practices
and applicable law and rules and regulations issued by any Governmental Authority (i) a system of
accounting, which includes maintenance of proper books and records, that permits preparation of
financial statements in conformity with GAAP and provides reasonable assurances that (A) transactions
are executed in accordance with management's general or specific authorization; (B) transactions
are recorded as necessary to permit preparation of financial statements in conformity with GAAP
and to maintain accountability for assets; (C) access to assets is permitted only in accordance
with management's general or specific authorization; and (D) the recorded accountability for
assets is compared with the existing assets at reasonable intervals and appropriate action is
taken with respect to any differences; and (ii) effective disclosure controls and procedures
designed to ensure that material information relating to the Borrower and its Subsidiaries is
made known to Responsible Officers of the Borrower in a timely manner.

SECTION 4.4.      NO MATERIAL ADVERSE CHANGE; NO RESTRICTED PAYMENTS OR DEFAULTS.

(a)      Since September 30, 2002, no material adverse change has occurred (i) in the business,
condition (financial or otherwise), operations, performance, prospects (except to the extent of
changes with respect to the prospects of the Borrower that are reflected in the projections delivered
pursuant to SECTION 3.1(K)), assets or properties of the Borrower and its Subsidiaries taken as
a whole or in the Borrower's ability to repay the Loan or (ii) with respect to any of the
matters covered by the representations and warranties made in the Application.
(b)      Since September 30, 2002, neither the Borrower nor any of its Subsidiaries has directly
or indirectly declared, ordered, paid or made, or set apart any sum of property for any Restricted
Payment or agreed to do so except as would have been permitted by SECTION 6.3, as if such Section
were in effect at all times since such date (but assuming that no Defaults or Events of Default had
occurred).
(c)      No event has occurred and no conditions exist which would constitute a Default or Event
of Default after giving effect to the Borrowing and the application of the proceeds, and no such
event or condition will result from the Borrowing.

SECTION 4.5.      TITLE TO PROPERTIES; LIENS.

Each of the Borrower and its Subsidiaries has (i) good record,
legal and marketable title to (in the case of fee interests in real property), (ii) valid
leasehold interests in (in the case of leasehold interests in real or personal property) or
other valid and enforceable rights to use property owned by others, or (iii) good and
marketable title to (in the case of all other personal property), all properties and assets
necessary to or used in the conduct of its business including:  (x) all Collateral and other
properties and assets reflected in the financial statements referred to in SECTION 4.3 or in
the most recent financial statements delivered pursuant to SECTION 5.1 (other than assets
disposed of since the date of such financial statements in the ordinary course of business),
and (y) all additional Collateral reflected in the Collateral Value Certificate delivered on
the Closing Date.  Except as otherwise permitted by this Agreement, all such properties and
assets are free and clear of Liens.

SECTION 4.6.      LITIGATION; ADVERSE FACTS.

There are no actions, suits, proceedings, arbitrations or governmental investigations (whether
or not purportedly on behalf of the Borrower or any of its Subsidiaries) at law or in equity
or before or by any Governmental Authority pending or, to the knowledge of the Borrower,
threatened against or affecting the Borrower or any of its Subsidiaries or any property of
the Borrower or any of its Subsidiaries that, individually or in the aggregate, if adversely
determined, could reasonably be expected to have a Material Adverse Effect or which challenges
the legality, validity or binding effect of, or restricts the Borrower from entering into or
performing under, any Loan Document including, without limitation, this Agreement and the
Security Agreement nor does the Borrower have knowledge of any basis for any Person to institute
any such action, suit, proceeding, arbitration or investigation.  Neither the Borrower nor any
of its Subsidiaries is subject to or in default with respect to any final judgments, writs,
injunctions, decrees of any court or any Governmental Authority.

SECTION 4.7.      PAYMENT OF TAXES; TAX SHARING AGREEMENTS.

(a)      All federal income tax returns and other material tax returns and reports of the Borrower
and its Subsidiaries required to be filed by any of them have been timely filed (or timely extensions
have been obtained with respect thereto).  All federal income taxes and material Taxes imposed
upon the Borrower and its Subsidiaries and upon their respective properties, assets, income,
businesses and franchises which are due and payable have been paid before any penalty, fine or
interest accrues thereon, or are being contested in good faith through appropriate proceedings
and an adequate reserve has been established by the Borrower and its Subsidiaries to the extent
required by GAAP.  Except as disclosed in Schedule 4.7, there are no closing, settlement or
similar agreements with respect to Taxes between the Borrower or any of its Subsidiaries and
any taxing agency or authority.
(b)      Neither the Borrower nor any of its Subsidiaries is party to any tax sharing agreements
with any Person other than the Borrower or any of its Subsidiaries.

SECTION 4.8.      PERFORMANCE OF AGREEMENTS; MATERIAL AGREEMENTS.

(a)      Neither the Borrower nor any of its Subsidiaries is in default in the performance,
observance or fulfillment of (i) any of the material obligations, covenants or conditions
contained in any of its Contractual Obligations, or (ii) any other obligation, covenant or
condition thereof which could reasonably be expected to have a Material Adverse Effect, and no
condition exists that, with the giving of notice or the lapse of time or both, would constitute
such a default after giving effect to the Borrowing and the application of the proceeds therefrom.
(b)      Neither the Borrower nor any of its Subsidiaries is a party to or is otherwise subject to
any agreements or instruments or any charter or other internal restrictions which, individually or
in the aggregate, could reasonably be expected to have a Material Adverse Effect.
(c)      Neither the Borrower nor any of its Subsidiaries is a party to or is otherwise subject to
any material Contractual Obligation, including, but not limited to, agreements relating to Indebtedness,
lease agreements or Guarantees, that provide for early payment, additional collateral support,
changes in terms or acceleration of maturity, or the creation of an additional financial
obligation, as a result of any of (i) an adverse change in the credit rating of the Borrower or
any of its Subsidiaries, (ii) an adverse change in the financial ratios, earnings, cash flow or
stock price of the Borrower or any of its Subsidiaries (except for the aircraft lease
agreements or credit card processing agreements which provide that a material adverse change in
the financial condition of the Borrower constitutes an event of default), or (iii) changes in
the value of underlying, linked or indexed assets.

SECTION 4.9.      GOVERNMENTAL REGULATION.
Neither the Borrower nor any of its Subsidiaries is subject to regulation under the Public Utility
Holding Company Act of 1935, the Federal Power Act, the Interstate Commerce Act or the Investment
Company Act of 1940 or under any other federal or state statute or regulation which may limit its
ability to incur Indebtedness or which may otherwise render all or any portion of the Obligations
unenforceable.

SECTION 4.10.     SECURITIES ACTIVITIES.

Neither the Borrower nor any of its Subsidiaries owns or is engaged principally, or as one of its
important activities, in the business of extending credit for the purpose of purchasing or carrying
any Margin Stock, nor shall any proceeds of the Loan be used to purchase or carry Margin Stock or to
extend credit to any Person for the purpose of purchasing or carrying any Margin Stock in a manner that
violates or causes a violation of Regulations T, U or X of the Board of Governors of the Federal Reserve
System or any other regulation of such Board.

SECTION 4.11.     EMPLOYEE BENEFIT PLANS.

(a)      Except in such instances where an omission or failure could not reasonably be expected to
have a Material Adverse Effect (i) all returns, reports and notices required to be filed with any
regulatory agency with respect to any Plan have been filed timely, (ii) neither the Borrower
nor any ERISA Affiliate has failed to make any contribution or pay any amount due or owing as
required by the terms of any Plan and (iii) each Plan maintained by the Borrower or any of its
Subsidiaries or an ERISA Affiliate is in compliance with all applicable laws.
(b)      There are no pending or, to the Borrower's knowledge, threatened claims, lawsuits,
investigations or actions (other than routine claims for benefits in the ordinary course) asserted
or instituted against the assets of any Plan or its related trust or against any fiduciary of a Plan
with respect to the operation of such Plan that are likely to result in liability of any Person that
could reasonably be expected to have a Material Adverse Effect.
(c)      Except in such instances where an omission or failure could not reasonably be expected to have a
Material Adverse Effect, the Borrower has received, or will timely obtain, a favorable
determination or opinion that each Plan maintained by the Borrower or an ERISA Affiliate that
is intended to be "qualified" within the meaning of section 401(a) of the Internal Revenue
Code, and each amendment thereto, is so qualified.  Neither the Borrower nor any ERISA
Affiliate has engaged in any prohibited transaction, within the meaning of section 406 of ERISA
or section 4975 of the Internal Revenue Code, in connection with any Plan which could result in
liability of any Person that could reasonably be expected to have a Material Adverse Effect.
(d)      Neither the Borrower nor any ERISA Affiliate has any contingent liability with respect to any
post-retirement benefits under a welfare benefit plan as defined in ERISA other than a
liability for continuation coverage under Part 6 of Title I of ERISA or applicable state law,
except where such liability could not reasonably be expected to have a Material Adverse
Effect.
(e)      Neither the Borrower nor any ERISA Affiliate maintains, has established or has ever
participated in a multiple employer welfare arrangement within the meaning of section 3(40) of
ERISA.  The Borrower has not incurred any Withdrawal Liability with respect to a Multiemployer
Plan or a plan described in section 4063(a) of ERISA except to the extent that such liability
could not reasonably be expected to have a Material Adverse Effect.
(f)      Neither the Borrower nor any ERISA Affiliate has incurred any liability under Title IV of
ERISA that has not been satisfied, and no condition exists that could reasonably be expected to result
in the Borrower or an ERISA Affiliate incurring any liability under Title IV of ERISA that,
individually or in the aggregate, could reasonably be expected to have a Material Adverse
Effect.
(g)      No ERISA Event has occurred or is reasonably expected to occur that, when taken together
with all other ERISA Events for which liability is reasonably expected to occur, would result in
liability of the Borrower or any of its Subsidiaries that could reasonably be expected to have a
Material Adverse Effect.

SECTION 4.12.     ENVIRONMENTAL PROTECTION.

(a)      All Facilities and operations of the Borrower and its Subsidiaries are, and have been to
the Borrower' knowledge, in compliance in all material respects with all Environmental Laws.
(b)      There is no, and has been no, condition, occurrence, or Hazardous Materials Activity
arising (a) at any Facilities or, to the knowledge of the Borrower, at any other location or (b)
in connection with the operations of the Borrower or its Subsidiaries (including the transportation
of Hazardous Materials in accordance with applicable regulations), which condition, occurrence or
Hazardous Materials Activity could reasonably be expected to form the basis of an Environmental
Claim against the Borrower or any of its Subsidiaries and which, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.
(c)      There are no pending or, to the Borrower's knowledge, threatened Environmental Claims
against the Borrower or its Subsidiaries, and neither the Borrower nor its Subsidiaries have
received any written notices, inquiries, or requests for information with respect to any Environmental
Claims which if adversely determined could, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
(d)      Except as disclosed to the Agent, the Board, the Supplemental Guarantors and the Lenders
in writing on or prior to the Closing Date, neither the Borrower nor any of its Subsidiaries is
currently operating or required to be operating under any compliance order, schedule, decree or
agreement, any consent decree, order or agreement, and/or any corrective action decree, order
or agreement issued or entered into under any Environmental Law, the failure to comply with
which could, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.

SECTION 4.13.     SOLVENCY.

After giving effect to the Borrowing and to the application of the proceeds therefrom, the Borrower
is Solvent.

SECTION 4.14.     DISCLOSURE.

No representation or warranty or certification of the Borrower or any of its
Responsible Officers or other Officers contained in this Agreement, any other Loan Document,
the Application or in any other document, certificate or written statement, or any other
written information, including information contained in the Application, furnished to the
Board, the Agent, the Lenders or the Supplemental Guarantors by or on behalf of the Borrower or
any of its Subsidiaries for use in connection with the negotiation and closing of the
transactions contemplated by this Agreement contains any untrue statement or omits any
information necessary to make the statements therein not untrue, in each case, as and when made
or furnished, or in the case of any such representations and warranties, on the Closing Date.
There are no facts known to any Officer of the Borrower (other than matters of a general
economic nature) that, individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.

SECTION 4.15.     COMPLIANCE WITH LAWS.  The Borrower and each of its Subsidiaries
is in material compliance with all laws, statutes, rules, regulations and orders binding on or
applicable to the Borrower, its Subsidiaries and all of their respective properties.

SECTION 4.16.     INDEBTEDNESS; OFF BALANCE SHEET TRANSACTIONS.

(a)      Schedule 4.16 correctly sets forth the consolidated Indebtedness of the Borrower and
its Subsidiaries as of December 31, 2002.
(b)      Other than as disclosed with reasonable sufficiency and specificity (as contemplated in
SEC Release No. 33-8056 (January 22, 2002)) in the notes to the financial statements described in
SECTION 4.3(a), there are no transactions, arrangements or other relationships between and/or among
the Borrower or any of its Affiliates (as such term is described in Rule 405 under the Securities
Act of 1933, as amended) and any unconsolidated entity, including but not limited to, any
structured finance, special purpose or limited purpose entity, of the type contemplated in SEC
Release No. 33-8056.

SECTION 4.17.     PERFECTED SECURITY INTEREST.

The Collateral Agent, on behalf of the Lenders and the Board, has a first-priority perfected
security interest in the Collateral (except as permitted in the Security Agreement), subject
only to Permitted Liens that have not been filed or recorded with any Governmental Authority.

SECTION 4.18.     INSURANCE.

The properties, business and operations of the Borrower and its Subsidiaries are insured with
reputable insurance companies reasonably believed to be financially sound (none of which are
Affiliates of the Borrower) or by the United States of America in such amounts, with such
deductibles and covering such risks as are insured against (including, but not limited to, war
risk and third party liability) and carried in accordance with applicable law and prudent
industry practice by U.S. commercial air carriers similarly situated with the Borrower and
owning or operating similar properties, aircraft and engines.

SECTION 4.19.     ABSENCE OF LABOR DISPUTES.

No strikes, boycotts, work stoppages or labor disputes with employees of the Borrower or its
Subsidiaries exist or, to the knowledge of the Officers of the Borrower, are imminent or would
reasonably be expected to occur that would reasonably be expected to have a Material Adverse Effect.

SECTION 4.20.     GATES AND SLOTS.

(a)      The Borrower and each of its Subsidiaries is in material compliance with all leases,
licenses or other agreements necessary in connection with such Person's use, operation or
occupancy of gates at airport terminals.
(b)      The Borrower and each of its Subsidiaries having any operational authority granted under
49 U.S.C.ss. 40103 and 14 C.F.R. Sec.ss.ss.93.211-93.227 to conduct aircraft landing or take-off
operations (such operational authority, "Slots") maintains a system for monitoring and
utilizing such Slots in compliance with the regulations governing Slot use and loss set forth in
14 C.F.R.ss.93.227, as amended from time to time.

SECTION 4.21.     SECTION 1110.

The Collateral Agent shall be entitled to the benefits of Section 1110 of the
Bankruptcy Code with respect to the Spare Engines and Spare Parts, in each case to the
extent first placed into service after October 22, 1994 in the event of a case under
Chapter 11 of the Bankruptcy Code in which the Borrower is a debtor.

                                              ARTICLE V

                                                COVENANTS

                  To induce the other parties to enter into this Agreement and to induce the
Supplemental Guarantors to enter into their respective Supplemental Guarantees, the Borrower
agrees with each other party hereto that, so long as any of the Obligations remain outstanding

SECTION 5.1.      FINANCIAL STATEMENTS AND OTHER REPORTS.

(a)      The Borrower will establish and maintain, and will cause each of its Subsidiaries to
establish and maintain, in accordance with sound business practices and applicable law and rules
and regulations issued by any Governmental Authority (i) a system of accounting, which shall
include maintenance of proper books and records, to permit preparation of financial statements
in conformity with GAAP and to provide reasonable assurances that
(A) transactions are executed in accordance with management's general or specific
authorization; (B) transactions are recorded as necessary to permit preparation of financial
statements in conformity with GAAP and to maintain accountability for assets; (C) access to
assets is permitted only in accordance with management's general or specific authorization; and
(D) the recorded accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences; and (ii) effective
disclosure controls and procedures designed to ensure that material information relating to the
Borrower and its Subsidiaries is made known to Responsible Officers of the Borrower in a timely
manner.
(b)      The Borrower will deliver to the Agent, the Lenders, the Supplemental Guarantors, the Board,
the Loan Administrator and the Collateral Agent (but only to the extent information is to be delivered
pursuant to clauses (V), (VII) and, in the case of information requested by the Collateral
Agent, (XX) below):
(i)      (A)  Quarterly Financials:  as soon as available and in any event within five (5) days
         after the date on which the Borrower is required to file its Form 10-Q under the
         Exchange Act, (x) the balance sheet of the Borrower as at the end of each fiscal
         quarter and the related statements of income and stockholders' equity of the Borrower
         for such fiscal quarter and cash flows of the Borrower for the period from the
         beginning of the then current Fiscal Year to the end of such fiscal quarter, setting
         forth in each case in comparative form the corresponding figures from the
         corresponding periods of the previous Fiscal Year and the corresponding figures from
         the quarterly projections delivered pursuant to clause (viii)(B) of this SECTION
         5.1(b) for such quarter, all prepared in accordance with GAAP and in reasonable detail
         and certified by the Chief Financial Officer or the Chief Executive Officer of such
         company that they fairly present the financial condition of the Borrower as at the
         dates indicated and the results of its operations and its cash flows for the periods
         indicated (subject to normal year-end audit adjustments), and (y) a narrative report
         describing the operations of the Borrower in the form prepared for presentation to
         senior management for such fiscal quarter and for the period from the beginning of
         then current Fiscal Year to the end of such fiscal quarter; provided that the delivery
         of the Form 10-Q filed by the Borrower with the SEC for such fiscal quarter shall be
         deemed to satisfy all of the requirements of this SECTION 5.1(B)(I)(A);

         (B)  Monthly Reporting:  as soon as available and in any event within 30
         days after the end of each calendar month, the balance sheet of the Borrower as at the
         end of such month and the related statements of income and cash flows of the Borrower
         for such calendar month and for the period from the beginning of the then current
         Fiscal Year to the end of such month, setting forth in each case with respect to the
         year-to-date period, in comparative form, the corresponding figures from the
         corresponding periods of the previous Fiscal Year, together with a unit-basis income
         statement (with per-ASM revenue and expenses (line by line)), variances from the
         monthly operating plan delivered pursuant to clause (viii)(B) of this SECTION 5.1(B)
         for such month for each income statement line item and breakdowns of salary and
         benefits expenses in sufficient detail to facilitate monitoring; all such financial
         statements to be in the form prepared for the management of the Borrower and certified
         by the Chief Financial Officer or Chief Executive Officer of such company as fairly
         presenting, in all material respects, the financial condition of the Borrower as at
         the dates indicated and the results of its operations and its cash flows for the
         periods indicated (subject to normal year-end audit adjustments);

(ii)     Year-End Financials:  as soon as available and in any event within five (5) days
         after the date on which the Borrower is required to file its Form 10-K under the Exchange
         Act, (A) the balance sheet of the Borrower as at the end of each Fiscal Year and the
         related statements of income and stockholders' equity of the Borrower for such Fiscal Year
         and cash flows of the Borrower for such Fiscal Year, setting forth in each case in comparative
         form the corresponding figures for the previous Fiscal Year and the corresponding figures from
         the annual financial plan delivered pursuant to SECTION 5.1(B)(VIII) for the Fiscal
         Year covered by such financial statements, all in reasonable detail and certified by
         the Chief Financial Officer or the Chief Executive Officer of the Borrower that they
         fairly present the financial condition of the Borrower as at the date indicated and
         the results of its operations and its cash flows for the periods indicated; (B) a
         narrative report describing the operations of the Borrower in the form prepared for
         presentation to senior management for such Fiscal Year; and (C) an accountant's report
         on such financial statements of KPMG LLP or other independent certified public
         accountants of recognized national standing selected by the Borrower, which report (1)
         shall contain no qualification about the ability of the Borrower to continue as a
         going concern and shall be otherwise unqualified in all respects, and (2) shall state
         that such financial statements fairly present in all material respects the financial
         position of the Borrower as at the dates indicated and the results of its operations
         and its cash flows for the periods indicated in conformity with GAAP applied on a
         basis consistent with prior years and that the examination by such accountants in
         connection with such financial statements has been made in accordance with generally
         accepted auditing standards; provided, that (x) references in an accountant's report
         to changes in GAAP, changes in accounting standards, highlighting contents of
         footnotes, limitations in the scope of the audit or exclusions from the audit
         information not required by GAAP that are, in each case, customary in industry
         practice and not prejudicial to the opinion stated therein shall not be deemed to be
         "qualifications" for the purpose of this clause (C) and (y) the delivery of the Form
         10-K filed by the Borrower with the SEC for such Fiscal Year, and which satisfies the
         requirements of this clauses (C) shall be deemed to satisfy the requirements of this
         clause (C); and (D) an accountant's report on compliance with contractual provisions
         of this debt agreement which would indicate that in connection with their audit,
         nothing came to their attention that caused them to believe that the Company failed to
         comply with the terms, covenants, provisions, or conditions described herein insofar
         as they relate to accounting matters or, if any such Default or Event of Default
         exists, shall state the nature and status of such Default or Event of Default (to the
         extent such statement is not prohibited by, or inconsistent with, applicable
         accounting standards), it being understood that this clause (D) shall not require that
         the auditors expand the scope of their examination beyond the scope required to audit
         the financial statements of the Borrower in accordance with generally accepted
         auditing standards;

(iii)    Officer's Certificates:  together with each delivery of financial statements of
         the Borrower pursuant to SECTION 5.1(B)(I) and (II) above after the Closing Date, (A)
         an Officer's Certificate from the Borrower (1) stating the signer has reviewed the terms
         of this Agreement and has made, or caused to be made under such Officer's supervision, a
         review in reasonable detail of the transactions and condition of the Borrower during the
         accounting period covered by such financial statements and that such review has not
         disclosed the existence during or at the end of such accounting period, and that the
         signer does not have knowledge of the existence as at the date of such Officer's
         Certificate, of any condition or event that constitutes an Event of Default or
         Default, or, if any such condition or event so existed or exists, specifying the
         nature and period of existence thereof and what action the Borrower has taken, is
         taking and proposes to take with respect thereto, (2) demonstrating in reasonable
         detail compliance (or noncompliance) with the restrictions contained in SECTION 6.4(C)
         for the period specified in such Section that ends on the last day of, and with the
         restrictions contained in SECTION 6.3, SECTION 6.4(A) and SECTION 6.4(B) as of the end
         of, the applicable quarterly and annual accounting periods specified in such Sections
         and (3) stating whether any change in GAAP or in the application thereof has occurred
         since the date of delivery of the most recent financial statements under SECTION
         5.1(B)(I) and (II), and (B) with respect to the financial statements delivered
         pursuant to clauses (I)(A) and (II) above of this SECTION 5.1(B), an Officer's
         Certificate from the Borrower (1) certifying that (w) such Officer has reviewed the
         financial statements and the narrative report delivered pursuant to such clause, (x)
         based on such Officer's knowledge, the report does not contain any untrue statement of
         a material fact or omit to state a material fact necessary in order to make the
         statements made, in light of the circumstances under which such statements were made,
         not misleading with respect to the period covered by the report, (y) based on such
         Officer's knowledge, such report, together with the corresponding financial
         statements, fairly present in all material respects the financial condition, results
         of operations and cash flows of the Borrower as of, and for, the periods presented in
         the report, and (z) the representations and warranties contained in Section 4.3(c) of
         this Agreement are true and correct as of the date of such certificate, (2) stating
         that there are no significant deficiencies in the design or operation of internal
         controls of the Borrower and its Subsidiaries which could adversely affect the
         Borrower's ability to record, process, summarize and report financial data, or, if any
         such deficiencies exist, describing them and what action the Borrower has taken, is
         taking or proposes to take with respect thereto, and (3) certifying that any such
         deficiencies and any fraud, whether or not material, that involves management or other
         employees who have a significant role in the Borrower's internal controls system have
         been disclosed to the Borrower's auditors and the audit committee of the Board of
         Directors of the Borrower;

(iv)     SEC Filings and Press Releases:  promptly upon their becoming available, copies of
         (A) all financial statements, reports, notices and proxy statements sent or made available
         generally by the Borrower to its security holders, (B) all regular and periodic reports and all
         registration statements and prospectuses filed by the Borrower or any of its
         Subsidiaries with any securities exchange or with the SEC or any Governmental
         Authority or private regulatory authority, and (C) all material press releases and
         other statements made available generally by the Borrower or any of its Subsidiaries
         to the public concerning material developments in the business of the Borrower or any
         of its Subsidiaries;

(v)      Events of Default, etc.:  promptly upon any Responsible Officer of the Borrower
         obtaining knowledge (A) of any condition or event that constitutes an Event of Default or
         Default, (B) that any creditor has given any notice to the Borrower or any its Subsidiaries
         or taken any other action with respect to a claimed default or event or condition of the type
         referred to in SECTION 7.1(B), (C) unless provided pursuant to clause (iv) above, of
         any condition or event that is required to be disclosed in a current report filed by
         the Borrower with the SEC on Form 8-K, (D) of the occurrence of any event or change
         that has had, or would reasonably be expected to have, a Material Adverse Effect, or
         (E) of any condition or event that constitutes a default or an event of default (or
         any condition with which the passing of time or the giving of notice or both would,
         unless cured or waived, become a default or event of default) under any material
         Contractual Obligation, an Officer's Certificate specifying the nature and period of
         existence of such Default, Event of Default, condition, event or change (including
         with respect to notices under clause (A) of this SECTION 5.1(B)(V), specific
         references to all provisions of the Loan Documents under which the Default or Event of
         Default has occurred) or specifying the notice given or action taken by any such
         Person and the nature of such claimed Event of Default, Default, default, event or
         condition, as the case may be, and in any such case, what action the Borrower has
         taken, is taking and proposes to take with respect thereto;

(vi)     Litigation or Other Proceedings:  to the extent not otherwise disclosed pursuant to
         this SECTION 5.1(B),

         (A) promptly upon any Responsible Officer of the Borrower obtaining knowledge of

                           (x)      the institution of, or threat of, any action, suit,
                  proceeding (whether administrative, judicial or otherwise), arbitration,
                  governmental or other public agency or quasi-governmental investigation
                  against or affecting the Borrower or any of its Subsidiaries or any property
                  of the Borrower or any of its Subsidiaries which is otherwise described in any
                  of clauses (1) - (4) of clause (y) below, unless the Borrower's General
                  Counsel or outside legal counsel has determined that a favorable outcome to
                  the Borrower is reasonably likely (collectively, "Proceedings"), or

                           (y)      any material development in any Proceeding that, in the case
                  of either (x) or (y):
(1)      if adversely determined could reasonably be expected to have a Material Adverse Effect;
(2)      seeks to enjoin or otherwise prevent the consummation of, or to recover any damages or obtain
                           relief as a result of the transactions contemplated hereby;
(3)      challenges or calls into question the financial or other operational condition or results of the
                           Borrower; or
(4)      could cause any of the property comprising the Collateral to be subject to any restriction on
                           ownership, occupancy, use or transferability;

         written notice thereof together with such other information as may be reasonably
         available to the Borrower to enable each Lender, each Supplemental Guarantor, the
         Agent, the Loan Administrator and the Board, and their respective counsel to evaluate
         such matters, and (B) within twenty days after the end of each Fiscal Year, a schedule
         of all Proceedings involving an alleged liability of, or claims against or affecting,
         the Borrower or any of its Subsidiaries the uninsured portion of which (treating as
         uninsured deductibles and any amounts which are insured by Affiliates or covered by
         self-insurance) is equal to or greater than $5,000,000 and promptly after request by
         the Agent, the Loan Administrator or the Board such other information as may be
         reasonably requested by the Agent, the Loan Administrator or the Board to enable the
         Agent, the Loan Administrator or the Board and their respective counsel to evaluate
         any of such Proceedings;

(vii)    ERISA Reports:  promptly after the receipt by the Borrower of a request therefor
         by the Agent, the Loan Administrator, the Board, any Lender or any Supplemental Guarantor,
         the Borrower shall provide the Agent, the Loan Administrator, the Board, such Lender and such
         Supplemental Guarantor copies of any annual and other reports (including Schedule B
         thereto) with respect to a Plan filed by the Borrower or any ERISA Affiliate with the
         United States Department of Labor, the IRS or the Pension Benefit Guaranty Corporation;

(viii)   Financial Plans and Projections:  (A) annually, as soon as practicable after preparation
         thereof in the ordinary course of business but in no event later than sixty (60) days following
         the start of each Fiscal Year of the Borrower, the Borrower shall provide the Agent, the
         Loan Administrator, the Board, each Lender and each Supplemental Guarantor copies of
         its annual financial and operating plan and projections for such Fiscal Year, and (B)
         as soon as available but in any event at least ten (10) days prior to the beginning of
         each fiscal quarter of each Fiscal Year, the Borrower shall provide the Agent, the
         Loan Administrator, the Board, each Lender and each Supplemental Guarantor copies of
         its financial and operating plan and projections for such quarter, and for each month
         in such quarter;

(ix)     Environmental Audits and Reports:  as soon as practicable following receipt thereof,
         the Borrower shall provide the Agent, the Loan Administrator, the Board, each Lender and each
         Supplemental Guarantor copies of all environmental audits and reports, whether
         prepared by personnel of the Borrower or any of its Subsidiaries or by independent
         consultants, with respect to (i) significant environmental matters at any Facility or
         (ii) which relate to an Environmental Claim, which in either instance could be
         expected to have a Material Adverse Effect;

(x)      Ratings Change; Liquidity Certificates:  (A) within five Business Days after any public
         release by S&P or Moody's raising, lowering, suspending or placing under review for
         possible downgrade or suspension its credit rating or changing its outlook on any debt
         obligations of the Borrower or any of its Subsidiaries, and (B) at such additional
         times as the Board may elect, the Borrower shall provide the Agent, the Board, each
         Lender and each Supplemental Guarantor a certificate setting forth the credit ratings
         on the debt obligations of the Borrower and its Subsidiaries (each, a "Liquidity
         Certificate");

(xi)     Insurance/Condemnation Proceeds:  in addition to any similar reporting obligations
         under the Security Documents but without the duplication of any such obligation, promptly
         notify the Agent, the Collateral Agent, each Lender, each Supplemental Guarantor, the Loan
         Administrator and the Board upon a Responsible Officer of the Borrower or any of its
         Subsidiaries obtaining knowledge of (A) the occurrence of an event of loss or damage
         to, or any taking, condemnation or requisition by any Governmental Authority of, any
         property of the Borrower or any of its Subsidiaries having fair market value or a
         replacement value in excess of $5,000,000 whether or not such loss or damage is
         expected to result in receipt of insurance or condemnation proceeds or of any other
         event of loss or damage that the Borrower reasonably expect to result in proceeds
         reasonably estimated by them to exceed $5,000,000 and (B) the receipt of insurance
         proceeds or condemnation proceeds from an event of loss or material damage to, or any
         taking, condemnation or requisition by any Governmental Authority of, any property of
         the Borrower or any of its Subsidiaries;

(xii)    Future Issuance and Asset Sales:  as soon as reasonably practicable but in no
         event less than five (5) days prior to the consummation by the Borrower or any of its
         Subsidiaries of any Future Issuance or Asset Sale, the Borrower shall (A) notify the Agent,
         each Lender, each Supplemental Guarantor, the Loan Administrator and the Board of such event
         and what action the Borrower or such Subsidiary has taken, is taking and proposes to take
         with respect thereto, including the use of proceeds, and (B) in connection with each
         such Asset Sale, deliver to the Agent, each Lender, each Supplemental Guarantor, the
         Loan Administrator and the Board an Officer's Certificate from the Borrower certifying
         that the provisions of SECTION 6.10 will be satisfied;

(xiii)   Plan Audits and Liabilities:  promptly after the Borrower or any ERISA Affiliate (A)
         contacts the IRS for the purpose of participating in a closing agreement or any voluntary
         resolution program with respect to a Plan or Multiemployer Plan which could reasonably be
         expected to have a Material Adverse Effect, or (B) knows or has reason to know that
         any event with respect to any Plan or Multiemployer Plan occurred that could
         reasonably be expected to have a Material Adverse Effect, notice of such contact or
         occurrence of such event;

(xiv)    Funding Changes and New Plan Benefits:  promptly after a change, a notification of
         any material increases in the benefits, or material change in funding method, with respect
         to which the Borrower or any of its Subsidiaries may have any liability, or the establishment
         of any material new Plan or Multiemployer Plan with respect to which the Borrower or
         any of its Subsidiaries may have any liability or the commencement of contributions to
         any Plan or Multiemployer Plan to which the Borrower or any ERISA Affiliate was not
         previously contributing, except to the extent that such an event would not reasonably
         be expected to have a Material Adverse Effect;

(xv)     Claims and Proceedings:  promptly after receipt of written notice of commencement
         thereof, notification of all (A) claims made by participants or beneficiaries with respect
         to any Plan, and (B) actions, suits, proceedings before any court or governmental department,
         commission, board, bureau, agency or instrumentality, domestic or foreign, affecting
         the Borrower or any ERISA Affiliate with respect to any Plan, except those which, in
         the aggregate, if adversely determined, could not reasonably be expected to have a
         Material Adverse Effect;

(xvi)    ERISA Events:  promptly after the occurrence of any ERISA Event that would reasonably
         be expected to have a Material Adverse Effect, notice thereof;

(xvii)   Labor Disputes:  promptly upon any Responsible Officer of the Borrower or any of its
         Subsidiaries obtaining knowledge of the institution or threat of any strike, boycott, work
         stoppage or labor dispute relating to the Borrower or any of its Subsidiaries that would
         reasonably be expected to have a Material Adverse Effect;

(xviii)  Collateral Value Certificates:  no later than the date upon which the quarterly
         financial statements are delivered under clause (I)(A) of this SECTION 5.1(B) for each
         fiscal quarter of each Fiscal Year and the date upon which the annual financial statements
         are delivered under clause (II) of this SECTION 5.1(B) for each Fiscal Year, a Collateral
         Value Certificate certifying the Collateral Value, in each case as of a date no earlier than
         the end of the fiscal quarter or the Fiscal Year with respect to which the
         corresponding financial statements referenced above in this clause (XVIII) are being
         delivered;

(xix)    Pledged Tax Receivable:  promptly after any material changes in the estimated amount
         of the Pledged Tax Receivable, based on the Borrower's reasonable estimate therefor, and
         upon receipt from the IRS of any written notice challenging or disputing the existence or
         amount thereof, notice of such change, challenge or dispute; and

(xx)     Other Information:  with reasonable promptness, such other information and data with
         respect to the Borrower or any of its Subsidiaries as from time to time may be reasonably
         requested by the Agent, the Collateral Agent, any Lender, any Supplemental Guarantor, the Board
         or the Loan Administrator.

SECTION 5.2.      CORPORATE EXISTENCE.

Except as permitted under SECTION 6.5(A)(I) and SECTION 6.9, the Borrower
will do or cause to be done all things necessary to preserve and keep in full force and effect
its corporate existence and the corporate, partnership or other existence of each of its
Subsidiaries and the  permits, licenses, rights (charter and statutory), and franchises of the
Borrower and its Subsidiaries; provided, that the Borrower shall not be required to preserve
any permit, license, right or franchise, or the existence of any Subsidiary, if the
preservation thereof is no longer desirable in the conduct of the business of the Borrower and
the non-preservation thereof does not have a Material Adverse Effect.

SECTION 5.3.      PAYMENT OF TAXES AND CLAIMS; TAX CONSOLIDATION.

(a)      The Borrower will, and will cause its Subsidiaries to, pay or discharge or cause to be paid or
discharged, before the same shall become delinquent, (i) all taxes, assessments and
governmental charges levied or imposed upon the Borrower or any of its Subsidiaries or upon the
income, profits or property of the Borrower or any of its Subsidiaries, and (ii) all lawful
claims for labor, materials and supplies that, if unpaid, might by law become a Lien on the
property of the Borrower or any of its Subsidiaries; provided, however, that no such Person
shall be required to pay or discharge or cause to be paid or discharged any such tax,
assessment, charge or claim the amount, applicability or validity of which is being contested
in good faith by appropriate proceedings and with respect to which an adequate reserve has been
established by it to the extent required by GAAP.
(b)      The Borrower will not, and will not permit any of its Subsidiaries to, file or consent to
the filing of any consolidated income tax return with any Person (other than the Borrower and any
of its Subsidiaries).

SECTION 5.4.      MAINTENANCE OF PROPERTIES; INSURANCE.

(a)      The Borrower will, and will cause each of its Subsidiaries to, maintain all properties used
or useful in the conduct of their business in good condition, repair and working order and supply such
properties with all necessary equipment and make all necessary repairs, renewals, replacements,
betterments and improvements thereto, all as in the judgment of the Borrower may be necessary
so that the business carried on in connection therewith may be properly and advantageously
conducted at all times; provided, however, that nothing in this Section shall prevent the
Borrower or any of its Subsidiaries from discontinuing the operation and maintenance of any
such properties if such discontinuance is, in the good faith judgment of the Borrower,
desirable in the conduct of such Person's business and could not reasonably be expected to have
a Material Adverse Effect, but subject in each case to all applicable provisions of the
Security Documents.

(b)      The Borrower will insure and keep insured, and will cause each of its Subsidiaries
to insure and keep insured, with reputable insurance companies reasonably believed
to be financially sound that are not Affiliates of the Borrower or any of its Subsidiaries,
their properties, business and operations, in such amounts, with such deductibles and covering
such risks as are insured against (including, but not limited to, war risk and third party
liability) and carried in accordance with applicable law and prudent industry practice by U.S.
commercial air carriers similarly situated with the Borrower and owning or operating similar
properties, aircraft and engines, including, without limitation, such insurance coverage as is
required to be maintained under the Security Documents, and providing for not less than thirty
(30) days' (or in the case of war risk coverage, the maximum time as is reasonably obtainable)
prior notice to the Agent, the Board and the Collateral Agent of termination, lapse or
cancellation of such insurance.

SECTION 5.5.      INSPECTION.  The Borrower will, and will cause its Subsidiaries to,
permit any authorized representatives designated by the Agent, any Lender, any Supplemental
Guarantor, the Loan Administrator or the Board to visit and inspect any of the properties of
the Borrower or any of its Subsidiaries, including their financial and accounting records, and
to make copies and take extracts therefrom, and to discuss their affairs, finances and accounts
with its and their officers and independent public accountants, at the Borrower's expense, during
normal business hours and as often as may be reasonably requested; provided, that such inspection
shall be upon reasonable notice and at reasonable times, and shall not be unduly disruptive to
the business of the Borrower and its Subsidiaries.

SECTION 5.6.      COMPLIANCE WITH LAWS, ETC.  The Borrower will, and will cause each
of its Subsidiaries to, comply in all material respects with all applicable statutes, rules,
regulations, orders, restrictions and Governmental Authorizations of any applicable Governmental
Authority, or of any department, commission, board, regulatory authority, bureau, agency and
instrumentality of the foregoing, in respect of the conduct of their respective businesses and the
ownership of their respective properties, except such as are being contested in good faith by
appropriate proceedings.  The Borrower shall not, and shall cause its Subsidiaries not to, conduct any
Hazardous Materials Activity at any Facility or at any other location in a manner that does not
materially comply with Environmental Laws.  The Borrower and its Subsidiaries shall, and shall
use commercially reasonable efforts to, cause all other Persons operating or occupying any of
their properties to comply with Environmental Laws in all material respects.

SECTION 5.7.      HAZARDOUS MATERIALS.
(a)      To the extent the following are required by Environmental Laws, the Borrower will conduct,
and will cause each of its Subsidiaries to conduct, any and all investigations, studies, sampling and
testing and will take, and will cause each of its Subsidiaries to take, any and all necessary
remedial action in connection with the presence, storage, use, disposal, transportation or
Release of any Hazardous Materials for which the Borrower is, or could be, liable.  The
foregoing shall not apply if, and only to the extent that (i) the Borrower's or such
Subsidiary's liability for such presence, storage, use, disposal, transportation or Release of
any Hazardous Materials is being contested in good faith and by appropriate proceedings
diligently conducted by the Borrower or such Subsidiary, (ii) such remedial action is taken by
other Persons responsible for such remedial action through an indemnification of the Borrower
or such Subsidiary or (iii) such non-compliance would not in any case or in the aggregate
reasonably be expected to have a Material Adverse Effect.  In the event that the Borrower or
any of its Subsidiaries undertakes any such investigation, study, sampling, testing or remedial
action with respect to any Hazardous Materials, the Borrower or such Subsidiary will conduct
and complete such action in compliance in all material respects with all applicable
Environmental Laws, and other applicable policies, orders and directives of all federal, state
and local Governmental Authorities.
(b)      At the request of the Requisite Lenders or the Board from time to time, the Borrower
will provide to the Lenders within sixty (60) days after such request, at the expense of the
Borrower, an environmental site assessment report for any properties of the Borrower or any of its
Subsidiaries described in such request, prepared by an environmental consulting firm reasonably
acceptable to the Agent, indicating the presence or absence of Hazardous Materials and the
estimated cost of any compliance, removal or remedial action in connection with any Hazardous
Materials on such properties; without limiting the generality of the foregoing, if the Agent
determines at any time that a material risk exists that any such report will not be provided in
the time referred to above, the Agent may retain an environmental consulting firm to prepare
such report at the expense of the Borrower, and the Borrower hereby grants and agrees to cause
any Subsidiary that owns property described in such a request to grant at the time of such
request to the Agent, the Lenders, the Board, such firm and any agents or representatives
thereof an irrevocable non-exclusive license, subject to the rights of tenants, to enter into
their respective properties to undertake such an assessment.

SECTION 5.8.      CONTRACTUAL OBLIGATIONS.  The Borrower and its Subsidiaries will
perform, observe or fulfill all obligations, covenants and conditions contained in their Contractual
Obligations; provided that any failure to perform, observe or fulfill such obligations,
covenants and conditions that could not reasonably be expected to have a Material Adverse Effect
shall not constitute a breach of this Section 5.8.

SECTION 5.9.      EMPLOYEE BENEFIT PLANS.  The Borrower and its Subsidiaries shall
ensure that the Plans with respect to which they may have any liability are operated in compliance
in all material respects with all applicable laws.  Neither the Borrower nor any of its Subsidiaries
shall amend, adopt or terminate any Plan or Multiemployer Plan unless such action would not
reasonably be expected to have a Material Adverse Effect.

SECTION 5.10.     FAA MATTERS; CITIZENSHIP.  The Borrower will at all times hereunder be
an "air carrier" within the meaning of the Act and hold a certificate under 49 U.S.C. Section 41102(a)
(1) as currently in effect or as may be amended or recodified from time to time.  The Borrower and
each Subsidiary of the Borrower engaged in operations as an "air carrier" will at all times
hereunder be a United States Citizen holding an air carrier operating certificate issued
pursuant to Chapter 447 of Title 49 for aircraft capable of carrying 10 or more individuals or
6,000 pounds or more of cargo.  The Borrower and each of its Subsidiaries will possess and
maintain all necessary consents, franchises, licenses, permits, rights and concessions and
consents which are material to the operation of the routes flown by it and the conduct of its
business and operations from time to time.

SECTION 5.11.     BOARD GUARANTEE.  The Borrower and each of its Subsidiaries shall
comply with all of the terms, requirements and conditions applicable to it under the Act and the
Regulations, or as may otherwise be imposed by, or agreed with, the Board in connection with the
issuance of the Board Guarantee, and shall promptly furnish to the Board, the Loan Administrator
and the Agent all such information as may be requested by the Board, the Loan Administrator or the
Agent in connection with the Board Guarantee.  The Borrower and each of its Subsidiaries shall
execute such documents and take such actions in furtherance of its obligations under the Act and the
Regulations as the Board, the Loan Administrator or the Agent may request.

SECTION 5.12.     LOWER-TIER COVERED TRANSACTION.  The Borrower agrees that in the event
that it enters into any "lower-tier covered transaction" (as such term is defined in 31 C.F.R.
Section 19.110, as amended or modified from time to time and not excepted therefrom by 31 C.F.R.
Section 19.200(c)) it being understood by the parties hereto that entering into the Loan Documents on
the date hereof with the parties thereto does not constitute such a "lower-tier transaction")
in respect of the transactions contemplated hereunder, it will include the clause entitled
"Certificate Regarding Debarment, Suspension, Ineligibility and Voluntary Exclusion - Lower Tier
Covered Transactions" as set forth in Appendix B to Part 19 of title 31 of the C.F.R. in such
"lower-tier covered transaction", and that it will obtain a certification from the other Person
or Persons party to such "lower-tier covered transaction" to the effect that each such other
Person (and each "principal" thereof, as such term is defined in 31 C.F.R. Section 19.105, as
amended or modified from time to time) is not presently debarred, suspended, proposed for
debarment, declared ineligible, or voluntarily excluded from participation in such transaction
by any Federal department or agency, or an explanation why such Person is unable to so
certify.  Further, the Borrower agrees that it will not enter into a "lower-tier covered
transaction" with a Person who has been proposed for debarment under 48 C.F.R. Section 9.4,
debarred or suspended unless granted an exception for such "lower-tier covered transaction"
pursuant to 31 C.F.R. Section 19.215.

SECTION 5.13.     COMPTROLLER GENERAL AUDITS AND REVIEWS.  The Borrower agrees to permit,
and to cooperate in the conduct of, such audits and reviews during the period the Loan is outstanding
and for three years thereafter, as the Board may deem appropriate, by an independent auditor acceptable
to the Board or the United States Comptroller General.  To the extent requested by the Board or
the Loan Administrator, the Borrower shall provide access to the officers and employees, books,
records, accounts, documents, correspondence, and other information of the Borrower, its
Subsidiaries, Affiliates, financial advisors, consultants and independent certified accountants
that the Board or the United States Comptroller General considers necessary.

SECTION 5.14.     APPRAISAL REPORTS; ADDITIONAL COLLATERAL.

(a)      The Borrower shall obtain one or more Appraisal Reports establishing the value of the
Appraised Collateral as of (i) the last day of each Fiscal Year commencing with March 31, 2003,
(ii) the date upon which any additional property or assets that constitutes Appraised Collateral
is pledged as Collateral to the Collateral Agent pursuant to Section 5.14(b) to secure the
Obligations, but only with respect to such additional Collateral and (iii) no more than once in
any twelve (12) month period, a date which is no later than 60 days after the Board (or if the
Board Guarantee shall have terminated, the Requisite Lenders) has requested that the Borrower
obtain an Appraisal Report (it being understood that the obligation herein of the Borrower to
periodically obtain Appraisal Reports shall be in addition to any rights or obligations under
the Security Agreement).  Such Appraisal Reports may be based on desktop appraisals unless the
Board (or if the Board Guarantee shall have terminated, the Requisite Lenders) shall have
requested that an Appraisal Report be based on physical inspection.
(b)      The Borrower shall maintain the value of the Collateral.  In furtherance thereof, if at
any time (x) the then aggregate Collateral Value shall be less than (y) an amount equal to 20%
of the principal amount of the Loan then outstanding (the difference between (x) and (y), the "Value
Differential"), the Borrower shall promptly do one of the following to the extent (but only to
the extent) necessary to eliminate such Value Differential:  (i) prepay the Loan from the
Borrower's Excess Cash Flow for the fiscal quarter during which or as of the end of which the
Value Differential is established, in accordance with the provisions of SECTION 2.5 hereof,
(ii) pledge pursuant to a Security Agreement Supplement delivered to the Collateral Agent, and
subject to the terms and conditions of the applicable Security Agreement, or other Collateral
Document reasonably satisfactory to the Board and the Agent, additional Eligible Collateral
available to be pledged to the Collateral Agent, or (iii) prepay the Loan as provided in clause
(i) above and pledge pursuant to a Security Agreement Supplement delivered to the Collateral
Agent, and subject to the terms and conditions of the applicable Security Agreement, additional
Eligible Collateral; provided, that if the Borrower's Excess Cash Flow for such fiscal quarter,
together with all Eligible Collateral that is available to be pledged to the Collateral Agent
is not sufficient to eliminate such Value Differential, the Borrower shall continue to prepay
the Loan from the Borrower's Excess Cash Flow for each subsequent fiscal quarter and pledge all
additional Eligible Collateral as it becomes available until the Value Differential no longer
exists (it being understood that assets subject to a Lien permitted under SECTION 6.1 other
than a Permitted Encumbrance are not available to be pledged to the Collateral Agent), and
provided, further, that (A) if any cash which is used to purchase Aircraft Related Equipment is
deducted from Consolidated EBITDAR in computing the amount of Excess Cash Flow for any fiscal
quarter during the existence of a Value Differential, the Aircraft Related Equipment purchased
with such cash (other than aircraft and engines therefor (but not Spare Engines) which the
Borrower is required to pledge to another Lender of purchase money financing) shall be pledged
to the Collateral Agent pursuant to clause (ii) above; and (B) if the Borrower subsequently
enters into an agreement to sell any aircraft or engine pledged to the Collateral Agent under
clause (A) of this proviso as part of a sale-leaseback transaction of the type excepted from
the definition of Asset Sale or finances such aircraft or engine in a transaction that fits
within the definition of ARE Acquisition Financing, the Board, or if the Board Guarantee is no
longer in effect, the Requisite Lenders shall instruct the Collateral Agent to release the Lien
so granted.
(c)      If additional Collateral is being pledged in accordance with SECTION 5.14(B), such
additional Collateral shall be free and clear of any Liens (other than Permitted Liens that have
not been filed or recorded with any Governmental Authority) and the pledgor(s) shall execute and
deliver to the Collateral Agent the applicable Security Agreement Supplements and take all other
action necessary or desirable to cause the Liens created thereby to be perfected first priority
Liens protected under applicable law, shall furnish favorable legal opinions to the Collateral
Agent with respect to such additional Eligible Collateral, including the perfection and priority
of the Collateral Agent's Lien thereon and evidence of applicable filings to the Loan
Administrator, and shall otherwise comply with the provisions of the applicable Security
Agreement that apply to a pledge of such Collateral.
(d)      In connection with each prepayment or pledge of additional Eligible Collateral pursuant
to SECTION 5.14(B) above, the Borrower shall deliver to the Collateral Agent, the Loan Administrator
and the Board either (i) a Collateral Value Certificate which establishes that the applicable Value
Differential no longer exists, or (ii) an Officer's Certificate from the Borrower that
certifies (A) the amount of the Borrower's Excess Cash Flow for the most recently ended fiscal
quarter, and (B) that the Borrower has pledged pursuant to SECTION 5.14(B) all available
Eligible Collateral.

SECTION 5.15.     ADDITIONAL SUBSIDIARIES.  With reasonable promptness and in any event
within 30 days following the formation or acquisition of a Subsidiary by the Borrower or upon the
commencement of operations by any inactive Subsidiary listed on Schedule 4.1(c), as applicable, the
Borrower shall provide the Agent, the Loan Administrator, the Board and each Lender the name, corporate
structure and allocation of Voting Stock of such Subsidiary.

SECTION 5.16.     FURTHER ASSURANCES.  At any time or from time to time upon the
request of the Board, any Lender, any Supplemental Guarantor (with respect to Obligations owing
directly to it hereunder), the Loan Administrator, the Collateral Agent or the Agent, the Borrower
will, and will cause its Subsidiaries to, at the Borrower's expense, promptly execute, acknowledge
and deliver such further documents and do such other acts and things as the Board, such Lender,
such Supplemental Guarantor, the Loan Administrator, the Collateral Agent or the Agent may
reasonably request in order to correct material defects or errors in the Loan Documents or the
execution, acknowledgement, filing or recordation thereof, to maintain and ensure the validity,
effectiveness, priority and perfection of the Collateral Agent's Liens intended to be created
pursuant to the Security Agreement, to provide for payment of the Obligations in accordance
with the terms of this Agreement, the Notes and the other Loan Documents and otherwise to
effect fully the purposes of the Loan Documents.

                                              ARTICLE VI

                                             NEGATIVE COVENANTS

                  To induce the other parties to enter into this Agreement and to induce the
Supplemental Guarantors to enter into their respective Supplemental Guarantees, the Borrower
agrees with each other party hereto, as long as any of the Commitments remain in existence or
the Obligations remain outstanding:

SECTION 6.1.      LIENS AND RELATED MATTERS.

(a)      Prohibition on Liens.  The Borrower shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly create, incur, assume or permit to exist any Lien on or
with respect to any property or asset of any kind (including any document or instrument in respect
of goods or accounts receivable or the Collateral) of the Borrower or any of its Subsidiaries,
whether now owned or hereafter acquired, or any income or profits therefrom, or file or permit
the filing of, or permit to remain in effect, any financing statement or other similar notice of
any Lien with respect to any such property, asset, income or profits under the Uniform Commercial
Code of any state or under any similar recording or notice statute, except:

                  (i)    Permitted Encumbrances;
                 (ii)    Liens on Aircraft Related Equipment securing (A) ARE Acquisition Financing in
                  respect of such Aircraft Related Equipment or (B) Permitted Refinancing Indebtedness
                  or other Indebtedness the proceeds of which are used to prepay Indebtedness that was
                  secured by such Aircraft Related Equipment, in each case in (A) or (B), including
                  cross-collateralization arrangements involving the same lender or group of lenders;
                (iii)    other Liens securing or relating to Indebtedness permitted pursuant to this
                  Agreement and other liabilities and obligations permitted pursuant to this Agreement
                  in an aggregate amount not to exceed $15,000,000 at any time outstanding;
                 (iv)    Liens securing Indebtedness used to refinance the Loan;
                  (v)    Liens described in Schedule 6.1 annexed hereto;
                 (vi)    judgment and attachment Liens not giving rise to an Event of Default or relating
                  to an action or judgment that is a Default or Event of Default;
                (vii)    Liens on the assets of any entity or on any asset existing at the time such entity
                  or asset is acquired by the Borrower or any Subsidiary of the Borrower, whether by merger,
                  consolidation, purchase of assets or otherwise; provided, that such Liens (i) are not
                  created, incurred or assumed by such entity in contemplation of or in connection with the
                  financing of such entity's being acquired by the Borrower or such Subsidiary; (ii) do
                  not extend to any other assets of the Borrower or such Subsidiary; and (iii) the
                  Indebtedness secured by such Lien is permitted pursuant to this Agreement; and
               (viii)    leases or subleases granted to others not interfering in any material respect with
                  the ordinary conduct of business of the Borrower or any of its Subsidiaries.

(b)      No Restrictions on Subsidiary Distributions to Borrower or Other Subsidiaries.  Except (i)
as provided herein or (ii) as described on Schedule 6.1 annexed hereto, the Borrower will not, and will not
permit any of its Subsidiaries to, create or otherwise cause or suffer to exist or become
effective any Payment Restriction.

SECTION 6.2.      INVESTMENTS.  The Borrower shall not, nor shall it permit any of its
Subsidiaries to, make any Investment other than (a) Investments consisting of Cash Equivalents; (b)
accounts receivable if credited or acquired in the ordinary course of business and payable or
dischargeable in accordance with customary trade terms; (c) payroll advances and advances for business
and travel expenses in the ordinary course of business; (d) Investments by the Borrower in its
Wholly-Owned Subsidiaries in the ordinary course of business; (e) Investments by any Subsidiary
of the Borrower in the Borrower or in any other Wholly-Owned Subsidiary of the Borrower; (f)
Investments made by way of any endorsement of negotiable instruments received by the Borrower
or any of its Subsidiaries in the ordinary course of its business and presented by it to any
bank for collection or deposit; (g) stock, obligations or securities received in settlement of
debts created in the ordinary course of business owing to the Borrower or any of its
Subsidiaries; (h) in addition to any other permitted investments, any other Investments by the
Borrower in an aggregate outstanding amount not exceeding $10,000,000 at any time; and (i)
Investments in travel or airline related businesses made in connection with marketing and
promotion agreements, Alliance Agreements, distribution agreements, agreements relating to
flight training and other similar agreements under which a portion of the consideration to one
or more of the Borrower and its Subsidiaries includes an opportunity for Investment in the
Capital Stock of other Persons, which Investments under this clause (i) shall not exceed
$20,000,000  in the aggregate.

SECTION 6.3.      RESTRICTED PAYMENTS.  The Borrower shall not, nor shall it permit
any of its Subsidiaries to, directly or indirectly, declare, order, pay, make or set apart any sum
for any Restricted Payment; provided, however, that any Wholly-Owned Subsidiary of the Borrower
may make dividend payments to the Borrower; and provided further that the Borrower and its
Subsidiaries may repay ARE Acquisition Financing and other Indebtedness that refinanced ARE Acquisition
Financing (a) so long as (i) the Borrower has not failed to make any payment (which failure is
continuing immediately prior to such repayment) which with the giving of notice or the passage of
time or both would become an Event of Default under Section 7.1(a), and (ii) immediately before and
after such repayment the Borrower is in compliance with Section 6.4(a); or (b) if a default
contemplated under clause (a) above exists, at any time following the tenth Business Day after
the occurrence of such default.

SECTION 6.4.      FINANCIAL COVENANTS.

(a)      The Borrower shall not permit the reserve of unrestricted Cash and Cash Equivalents (that
in either case are free from all Liens other than Permitted Encumbrances of the type described
in clause (vii) of the definition of Permitted Encumbrances) of the Borrower and its Wholly-Owned
Subsidiaries to be less than $25,000,000 at any time through and including September 30, 2004 or
$75,000,000 thereafter; it being understood that to the extent that obligations in respect of
letters of credit are collateralized by Cash or Cash Equivalents, the Cash or Cash Equivalents that
secures such obligations shall be excluded from unrestricted Cash and Cash Equivalents for
purpose of this Section 6.4(a).
(b)      The Borrower shall not permit its ratio of  consolidated Indebtedness as of the last day
of any fiscal quarter ending during the periods specified below to Consolidated EBITDAR (calculated
for the four consecutive fiscal quarters ending on such day) to be greater than the applicable ratio
set forth below:


                                                               Applicable Consolidated
                  Fiscal Quarter Ending During:              Indebtedness to EBITDAR Ratio

                  January 1, 2004
                  through December 31,                               7.00 : 1.00
                  2004

                  January 1, 2005
                  through                                            6.00 : 1.00
                  June 30, 2005

(c)      The Borrower shall not permit its ratio of Consolidated EBITDAR  (calculated for any period of four
consecutive fiscal quarters ending during the periods specified below) to Consolidated Fixed
Charges for such four fiscal quarters to be less than the applicable ratio specified below:


                                                               Applicable Consolidated EBITDAR
                  Fiscal Quarter Ending During:              to Consolidated Fixed Charges Ratio


                  January 1, 2004
                  through December 31,                               1.00 : 1.00
                  2004

                  January 1, 2005
                  through                                                1.10 : 1.00
                  June 30, 2007

SECTION 6.5.      RESTRICTION ON ACQUISITIONS; NEW SUBSIDIARIES.

(a)      The Borrower shall not, nor shall permit any of its Subsidiaries to, liquidate, wind-up
or dissolve itself (or suffer any liquidation or dissolution) or acquire by purchase or otherwise,
including in a transaction structured as a merger, all or any portion of the business, property
or assets (excluding therefrom purchases and acquisitions in the ordinary course of business by
the Borrower and its Subsidiaries of property from any Person not constituting all or
substantially all of the property of such Person), or Capital Stock or other evidence of
beneficial ownership of, any Person or any division or line of business of any Person, except
that:
(i)      any Wholly-Owned Subsidiary of the Borrower may be merged with or into the Borrower or
         any Wholly-Owned Subsidiary of the Borrower or be liquidated, wound up or dissolved, or
         all or any part of its business, property or assets may be conveyed, sold, leased,
         transferred or otherwise disposed of, in one transaction or a series of transactions, to
         the Borrower or any Wholly-Owned Subsidiary of the Borrower; and

(ii)     the Borrower may make (x) Investments permitted under SECTION 6.2 above at any time, and
         (y) acquisitions of Capital Stock, the assets and/or the business of another Person
         (including any division or line of business of such Person); provided, that, (A) the
         acquisition primarily involves the acquisition of assets to be used in the business of
         the Borrower, (B) with respect to such acquisition any newly acquired Subsidiary of
         the Borrower shall be a Wholly-Owned Subsidiary, (C) immediately before and after
         giving effect thereto, no Default or Event of Default shall have occurred and be
         continuing, (D) immediately after giving effect to the acquisition, the Borrower shall
         be in compliance on a Pro Forma Basis with SECTION 6.4 (in the case of SECTION 6.4(B)
         and (C), based on Consolidated EBITDAR for the four quarters ended as of the end of
         the most recently ended fiscal quarter) and such compliance shall be evidenced by an
         Officer's Certificate demonstrating such compliance, (E) immediately following such
         acquisition, the Borrower' credit rating by any nationally recognized rating agency is
         no lower than immediately prior thereto, (F) the aggregate purchase price in
         connection with all such acquisitions consummated after the Closing Date (excluding
         therefrom any Indebtedness assumed in connection with such acquisitions and any
         portion of the purchase price thereof paid with the Borrower's Capital Stock) does not
         exceed $40,000,000, or after the date on which the outstanding principal amount of the
         Loan is equal to or less than $35,000,000, $70,000,000, and (G) neither the Borrower
         nor any Subsidiary shall assume any Indebtedness that was incurred or issued by any
         Person to finance such acquisition; and

(iii)    the Borrower may enter into a consolidation or merger that complies with SECTION 6.9 hereof.

(b)      The Borrower will not change its Fiscal Year or fiscal quarters, other than to adopt a calendar
Fiscal Year.

SECTION 6.6.      SALES AND LEASE-BACKS.  The Borrower shall not, and shall not permit
any of its Subsidiaries to, directly or indirectly, become or remain liable as lessee or as a guarantor
or other surety with respect to any lease, whether an Operating Lease or a Capital Lease, of any
property (whether real, personal or mixed), whether now owned or hereafter acquired (other than leases
of Aircraft Related Equipment) which (a) the Borrower or any of its Subsidiaries has sold or
transferred or is to sell or transfer to any other Person (other than the Borrower or any of
its Subsidiaries) or (b) the Borrower or any of its Subsidiaries intends to use for
substantially the same purpose as any other property which has been or is to be sold or
transferred by the Borrower or any of its Subsidiaries to any Person (other than the Borrower
or any of its Subsidiaries) in connection with such lease; provided, that the Borrower and its
Subsidiaries may become and remain liable as lessee, guarantor or other surety with respect to
any such lease if and to the extent that the annual aggregate rentals under all such leases
does not exceed $5,000,000.

SECTION 6.7.      TRANSACTIONS WITH AFFILIATES.

(a)      Neither the Borrower nor any of its Subsidiaries shall, directly or indirectly (i) sell,
lease, transfer or otherwise dispose of any of its properties or assets, or issue securities to,
(ii) purchase any property, assets or securities from, (iii) make any Investment in, or (iv) enter
into or suffer to exist any contract or agreement with or for the benefit of, any Affiliate or holder
of 5% or more of any class of Capital Stock (and any Affiliate of such holder) of the Borrower
(an "Affiliate Transaction"), other than (x) Affiliate Transactions permitted under SECTION
6.7(B) hereof and (y) Affiliate Transactions (including lease transactions) which are on fair
and reasonable terms no less favorable to the Borrower or such Subsidiary, as the case may be,
than those that might reasonably have been obtainable at such time from an unaffiliated party;
provided, that if an Affiliate Transaction or series of Affiliate Transactions involves or has
a value in excess of $1,000,000, the Borrower or such Subsidiary, as the case may be, shall not
enter into such Affiliate Transaction or series of Affiliate Transactions unless a majority of
the disinterested members of the board of directors of the Borrower shall reasonably and in
good faith determine that such Affiliate Transaction is fair and reasonable to the Borrower or
such Subsidiary, as the case may be, or is on terms no less favorable to the Borrower or such
Subsidiary, as the case may be, than those that might reasonably have been obtained at such
time from an unaffiliated party.
(b)      The provisions of SECTION 6.7(A) shall not apply to (i) the agreements listed on Schedule
6.7(b) as in effect on the Closing Date or any transaction contemplated thereby so long as any such
agreement or transaction is not disadvantageous to the Board, the Lenders or solely in respect
of its interest in the transactions contemplated by this Agreement and its Supplemental
Guarantee, any Supplemental Guarantor, in any material respect; (ii) any transaction between
the Borrower and any of its Wholly-Owned Subsidiaries or between such Wholly-Owned
Subsidiaries, provided such transactions are not otherwise prohibited by this Agreement;
(iii) reasonable and customary fees and compensation paid to, and indemnity provided on behalf
of, officers, directors or employees of the Borrower or any of its Subsidiaries, as determined
by the board of directors of the Borrower or any of its Subsidiaries or the senior management
thereof in good faith; (iv) any Restricted Payments permitted by SECTION 6.3; (v) any payments
or other transactions pursuant to any tax sharing agreement between the Borrower and its
Subsidiaries; (vi) transactions contemplated by any Alliance Agreements as in effect on the
Closing Date; and (vii) the Loan Documents and the transactions contemplated thereby.

SECTION 6.8.      CONDUCT OF BUSINESS.  From and after the date hereof, the Borrower
shall not, nor shall it permit any of its Subsidiaries to, engage in any business other than (a)
the businesses engaged in by the Borrower and its Subsidiaries on the date hereof and related
businesses (which may include marketing branded consumer products and services and other customer
loyalty and brand recognition activities) and (b) such other lines of business as may be consented
to by the Board and the Requisite Lenders.

SECTION 6.9.      MERGER OR CONSOLIDATION.  The Borrower shall not consolidate with
or merge with any other Person or convey, lease, sub-lease, otherwise dispose of, or transfer all
or substantially all its business, properties and assets substantially as an entirety to any Person,
unless: (a) the Borrower is the surviving entity or if the Borrower is not the surviving entity,
such surviving entity or the Person that acquires by conveyance, lease or transfer the properties
and assets of the Borrower substantially as an entirety, shall be a corporation organized and existing
under the laws of the United States of America or any State or the District of Columbia and can
make the representations contained in SECTION 4.1(B), and shall expressly assume, by an
agreement executed and delivered to the Agent, for the benefit of the Lenders, the Supplemental
Guarantors (as third-party beneficiaries hereof) and the Board, in form satisfactory to the
Agent, the Obligations and all of the other obligations of the Borrower hereunder and under the
other Loan Documents; (b) immediately before and after giving effect to such transaction, no
Event of Default or Default shall have occurred and be continuing and immediately after giving
effect to such transaction the Borrower shall be in compliance on a Pro Forma Basis with
SECTION 6.4 (in the case of SECTION 6.4(B) and (C), based on Consolidated EBITDAR for the four
quarters ended as of the end of the most recently ended fiscal quarter); (c) immediately
following such acquisition, the Borrower' credit rating is no lower than immediately prior
thereto; (d) neither the Borrower nor any of its Subsidiaries shall assume any Indebtedness
that was incurred or issued by any Person to finance such transaction; (e) the Borrower shall
have delivered to the Agent and the Board an Officer's Certificate from the Borrower and an
opinion of counsel from counsel satisfactory to the Agent, in form and substance satisfactory
to the Agent and the Board, stating that such transaction and such agreement comply with this
Section and that all conditions precedent herein provided for relating to such transaction have
been complied with and addressing such other matters as may be reasonably requested by the
Board and the Agent; provided, however, that notwithstanding the foregoing provisions of this
SECTION 6.9, prior to the date on which the outstanding principal amount of the Loan is equal
to or less than $35,000,000, the Borrower shall not consolidate with or merge with any other
Person or convey, lease or transfer its properties and assets substantially as an entirety to
any Person.

SECTION 6.10.     LIMITATION ON ASSET SALES.  The Borrower will not, and shall cause
its Subsidiaries not to, directly or indirectly, consummate any Asset Sale in respect of any asset
or related collection of assets having a Fair Market Value in excess of $100,000 unless (i) the
consideration received in respect of such Asset Sale is at least equal to the Fair Market Value
of the assets subject to such Asset Sale, (ii) at least 85% of the value of the consideration
therefrom received by the Borrower or its Subsidiary is in the form of a combination of the following:
(A) cash or Cash Equivalents, (B) Aircraft Related Equipment or other assets to be owned by and
used in the business of the Borrower, or (C) the assumption by the Person acquiring the assets
in such Asset Sale of Indebtedness or Trade Payables of the Borrower or such Subsidiary with
the effect that the Borrower and its Subsidiaries will no longer have any obligation with
respect to such Indebtedness or Trade Payables, and (iii) immediately before and after giving
effect to such Asset Sale, no Event of Default shall have occurred and be continuing.

SECTION 6.11.     LIMITATIONS WITH RESPECT TO SUBSIDIARIES.

(a)      Each Subsidiary of the Borrower shall at all times be a Wholly-Owned Subsidiary of
the Borrower and there shall not exist any restrictions on the right of the Borrower to vote
any Voting Stock of its Subsidiaries.
(b)      The Borrower may not create or acquire new Subsidiaries, except Wholly-Owned Subsidiaries,
and so long as (i) the total assets of such Subsidiaries in the aggregate (other than single purpose
Subsidiaries created solely for the purpose of financing aircraft for use by the Borrower) do
not at any time exceed five percent (5%) of the consolidated total assets of the Borrower,
determined in accordance with GAAP and (ii) the Borrower complies with the provisions of
Section 5.15 hereof; provided, that the Borrower may make Investments permitted under
Section 6.2.

SECTION 6.12.     SPECULATIVE TRANSACTIONS.  Neither the Borrower nor any Subsidiary
thereof shall become a general partner in any general or limited partnership or joint venture engaged
or involved in, nor shall the Borrower or any of its Subsidiaries engage in any transaction involving,
commodity options or future contracts or any similar speculative transactions; provided,
however, that entry into those transactions designed to hedge against fluctuations in fuel costs
incurred in the ordinary course of business, consistent with past business practice or then
prevailing industry practice, and not entered into for speculative purposes shall not be
prohibited by this SECTION 6.12.

SECTION 6.13.     LIMITATIONS ON AMENDMENTS.  Neither the Borrower nor any of its
Subsidiaries shall amend, waive or modify, nor shall it consent to or request any amendment, waiver
or modification, of any of the material terms, conditions, representations and covenants contained
in any Indebtedness for borrowed money (for purposes of this SECTION 6.13, "Initial Indebtedness")
unless (i) if (A) the Initial Indebtedness is treated as Old Indebtedness (within the meaning of the
definition of Permitted Refinancing Indebtedness) and (B) the amended, waived or modified Indebtedness
(for purposes of this SECTION 6.13, the "Amended Indebtedness") is treated as Refinancing
Indebtedness (within the meaning of the definition of Permitted Refinancing Indebtedness), (ii)
a refinancing of the Initial Indebtedness with Indebtedness having the terms of the Amended
Indebtedness would satisfy the conditions set forth in (b)(ii) through (b)(v) of the definition
of Permitted Refinancing Indebtedness.

SECTION 6.14.     GOING PRIVATE TRANSACTIONS.  Neither the Borrower nor any of its
Subsidiaries shall redeem, purchase or otherwise acquire any Capital Stock of the Borrower, or
otherwise engage or participate in any "Rule 13e-3 transaction" (as defined in Rule 13e-3 under
the Exchange Act) or similar transaction, or agree to engage in or commence any such transaction;
provided, that this SECTION 6.14 shall not apply to any involuntary delisting of the Common
Stock of the Borrower from NASDAQ or any national securities exchange (as defined in the Securities
Exchange Act of 1934, as amended), other than any such delisting that occurs in connection with a
transaction otherwise prohibited by this SECTION 6.14.

SECTION 6.15.     NO FURTHER NEGATIVE PLEDGES.  Except with respect to (a) specific property
encumbered to secure payment of particular Indebtedness (or to be sold pursuant to an executed agreement
with respect to a permitted asset sale), and (b) restrictions by reason of customary provisions
restricting assignments, subletting or other transfers contained in leases, licenses and
similar agreements entered into in the ordinary course of business (provided that such
restrictions are limited to the property or assets secured by such Liens or the property or
assets subject to such leases, licenses or similar agreements, as the case may be), after the
date hereof neither the Borrower nor any of its Subsidiaries shall enter into any agreement
prohibiting the creation or assumption of any Lien upon any of their properties or assets,
whether now owned or hereafter acquired.

SECTION 6.16.     INCENTIVE EQUITY PLAN AND OTHER INCENTIVE COMPENSATION.  Any employee
stock options granted under any incentive stock or stock option plan maintained by the Borrower or
any of its Subsidiaries on or prior to the Closing Date shall not have been, and shall not be, repriced
(within the meaning of Item 402(i) of Regulation S-K under the Securities Act of 1933, as
amended) from the initial date of the Borrower's Application for so long as any of the
Obligations shall remain outstanding.  The Borrower shall not award or pay any compensation to
any officer, director or employee who holds options that are subject to the restriction in this
SECTION 6.16 which is intended to off-set the effect of such repricing restriction.

SECTION 6.17.     INCURRENCE OF INDEBTEDNESS.  The Borrower shall not, and shall not
permit any of its Subsidiaries to, incur any Indebtedness if immediately after giving effect to
such incurrence, the Borrower would not be in compliance on a Pro Forma Basis with SECTION 6.4(B)
(based on Consolidated EBITDAR for the four quarters ended as of the end of the most recently ended
fiscal quarter (starting with the fiscal quarter ended December 31, 2004) or for fiscal
quarters ending after December 31, 2004, if the Indebtedness is proposed to be incurred prior
to the time that financial statements covering such fiscal quarter are required to be delivered
under SECTION 5.1(B) (and they have not been delivered) and the Borrower is unable to
reasonably estimate Consolidated EBITDAR for such four quarter period, the four quarters ended
as of the end of the most recently ended fiscal quarter for which financial statements were
required to have been delivered under SECTION 5.1(B)).

                                              ARTICLE VII

                                             EVENTS OF DEFAULT

SECTION 7.1.      EVENTS OF DEFAULT.  Each of the following events shall be an Event of
Default (whatever the reason for such Event of Default and whether such event shall be voluntary or
involuntary or come about or be effected by operation of law or pursuant to or in compliance with any
judgment, decree or order of any court or any order, rule or regulation of any administration
or governmental body):
(a)      Failure by the Borrower to pay any installment of principal of the Loan when due, whether
at stated maturity, by acceleration, by mandatory prepayment or otherwise or  failure by the Borrower
to pay any interest on the Loan or any fee or any other amount due under this Agreement or any
other Loan Document within five Business Days after the date due; or
(b)      The Borrower or any Subsidiary (i) fails to make (whether as primary obligor or as guarantor
or other surety) payments in an aggregate amount that equals or exceeds $[***] in respect of rents,
principal, interest or premium or other payments (excluding good faith resolution of disputes
relating to payments due in connection with returns of ARE or with engine maintenance
obligations and provided that there is no material disruption to the operations of the Borrower
or any Subsidiary), if any, under or in respect of one or more Capital Leases or other
Indebtedness or Operating Leases (other than Indebtedness referred to in SECTION 7.1(A)) (in
any case after giving effect to any applicable grace period) or (ii) fails to duly observe,
perform or comply with any agreement with any Person or any term or condition of any
instrument, if such failure, either individually or in the aggregate, shall have (A) resulted
in the acceleration of, or entitles any Person to accelerate, the payment of Indebtedness owed
by the Borrower or any Subsidiary, which together with all other accelerated Indebtedness and
Indebtedness that is entitled to be accelerated, has a principal amount that equals or exceeds
$[***], (B) given rise under one or more Operating Leases to obligations by, or rights of any
other Person(s) to require, the Borrower or any Subsidiary to make payments that equal or
exceed $[***], or (C) resulted in the termination of or given rise to rights of any other
Person(s) to terminate one or more Operating Leases under which the aggregate net present value
of the remaining basic rent payments (as determined in accordance with the formulas for
calculating "net present value" under the applicable leases or for leases without such formulas
under leases for comparable terms and comparable amounts) equals or exceeds $[***], or (iii)
defaults with respect to any lease or license obligation and such default materially and
adversely affects, or precludes, continued operations by the Borrower at Denver International
Airport and (A) is not capable of being cured within 30 days in a manner which would permit
continuous operations in a manner substantially as if such defaults had not occurred or (B) if
capable of being so cured, is not so cured within 30 days; or
(c)      Failure of the Borrower to perform or comply in any material respect with any term or
condition contained in any of SECTION 2.4(F), 5.2, 5.10, 6.3, 6.4, 6.5, 6.9, 6.10 or 6.14 of this
Agreement; or
(d)      Any representation, warranty or certification made by the Borrower in this Agreement or
any other Loan Document or in any certificate at any time given by the Borrower in writing pursuant
hereto or thereto shall be false in any material respect on the date as of which made; or
(e)      Any default by the Borrower in the performance of or compliance with any term contained
in this Agreement or any of the other Loan Documents (other than any such term referred to in any
other subsection of this SECTION 7.1), including, without limitation, any failure by any Subsidiary
of the Borrower to comply with any of such terms as if it were a party hereto, and such default
shall not have been remedied or waived within 30 days after the earlier of (A) a Responsible
Officer of the Borrower obtaining knowledge of such default or (B) receipt by the Borrower of
notice from the Agent, any Lender or the Board of such default, unless such default is curable
and the Borrower shall then be diligently proceeding to correct such failure and shall in fact
correct such failure within sixty (60) days or in the case of any default in respect of any
provision of any Security Document relating to the maintenance of Collateral, within ninety
(90) days, after the earlier of such Responsible Officer obtaining knowledge of it and receipt
of such notice; or
(f)      (i) A court shall enter a decree or order for relief in respect of the Borrower in an
involuntary case under the Bankruptcy Code or under any other applicable bankruptcy, insolvency or
similar law now or hereafter in effect or any other relief described in clause (ii) below, or other
similar relief shall be granted under any applicable federal or state law; or (ii) an involuntary case
shall be commenced against the Borrower seeking (A) relief under the Bankruptcy Code or under
any other applicable bankruptcy, insolvency or similar law now or hereafter in effect, (B) the
appointment of a receiver, liquidator, sequestrator, trustee, custodian or other officer having
similar powers over the Borrower, or over all or a substantial part of its property, or (C) the
appointment of an interim receiver, trustee or other custodian of the Borrower for all or a
substantial part of its property, and any such event described in this clause (ii) shall
continue for 60 days without being dismissed or discharged; or (iii) a warrant of attachment,
execution or similar process shall have been issued against any substantial part of the
property of the Borrower; or
(g)      (i)(A) the Borrower shall have an order for relief entered with respect to it or commence a
voluntary case under the Bankruptcy Code or under any other applicable bankruptcy, insolvency or
similar law now or hereafter in effect, or shall consent to the entry of an order for relief in an
involuntary case, or to the conversion of an involuntary case to a voluntary case, under any
such law, or shall consent to the appointment of or taking possession by a receiver, trustee or
other custodian of all or a substantial part of its property; or (B) the Borrower shall make a
general assignment for the benefit of creditors; or (ii) the board of directors of the Borrower
(or any committee thereof) shall adopt any resolution or otherwise authorize any action to
approve any of the actions referred to in clause (i) above; or
(h)      There shall be any period of 60 consecutive days following entry of a final judgment or
order that causes the aggregate amount for all final judgments or orders outstanding against the
Borrower and its Subsidiaries and not covered by insurance (treating any deductibles, self-insurance
or retention as not so covered) to exceed $[***] during which a stay of enforcement of such final
judgments or orders, by reason of a pending appeal or otherwise, shall not be in effect; or
(i)      Any order, judgment or decree shall be entered against the Borrower decreeing the dissolution
or split up of the Borrower and such order, judgment or decree shall remain undischarged or unstayed for
a period in excess of 30 days; or
(j)      The Board Guarantee shall for any reason (other than by reason of Section 2.03, 2.04 or 2.05
of the Board Guarantee) cease to be in full force and effect or the Board shall assert that any of its
obligations thereunder are invalid or unenforceable; or
(k)      Any Supplemental Guarantee shall for any reason cease to be in full force and effect or any
Supplemental Guarantor shall, in writing, repudiate such Supplemental Guarantee or deny that its obligations
thereunder are valid, binding or enforceable; or
(l)      The Security Agreement shall for any reason cease to be in full force and effect or the pledgor
thereunder shall assert that any of its obligations thereunder are invalid or unenforceable; or
(m)      The Borrower shall fail to carry and maintain, or cause to be carried and maintained, insurance
coverages required to be maintained by the Borrower and its Subsidiaries pursuant hereto or to
any Security Agreement, other than coverage of losses and liabilities that are in the aggregate
reasonably expected to be immaterial; or
(n)      (i)(A) A court shall enter a decree or order for relief in respect of any Subsidiary of the
Borrower in an involuntary case under the Bankruptcy Code or under any other applicable bankruptcy,
insolvency or similar law now or hereafter in effect, or any other similar relief shall be
granted under any applicable federal or state law; or (B) an involuntary case shall be
commenced against any Subsidiary of the Borrower under the Bankruptcy Code or under any other
applicable bankruptcy, insolvency or similar law now or hereafter in effect; or a decree or
order of a court for the appointment of a receiver, liquidator, sequestrator, trustee,
custodian or other officer having similar powers over any Subsidiary of the Borrower, or over
all or a substantial part of its property, shall have been entered; or (C) there shall have
occurred the involuntary appointment of an interim receiver, trustee or other custodian of any
Subsidiary of the Borrower for all or a substantial part of its property; or (D) a warrant of
attachment, execution or similar process shall have been issued against any substantial part of
the property of any Subsidiary of the Borrower; and (ii) any such event described in clause (i)
above which could reasonably be expected to have a Material Adverse Effect and shall continue
without being dismissed, bonded or discharged for sixty (60) consecutive days; or
(o)      (i)(A) Any Subsidiary of the Borrower shall have an order for relief entered with respect
to it or commence a voluntary case under the Bankruptcy Code or under any other applicable bankruptcy,
insolvency or similar law now or hereafter in effect, or shall consent to the entry of an order
for relief in an involuntary case, or to the conversion of an involuntary case to a voluntary
case, under any such law, or shall consent to the appointment of or taking possession by a
receiver, trustee or other custodian of all or a substantial part of its property, or (B) any
Subsidiary of the Borrower shall make any assignment for the benefit of creditors, or (C) any
Subsidiary of the Borrower shall fail generally, or shall admit in writing its inability, to
pay its debts as such debts become due, and such event described in this clause (i) could
reasonably be expected to have a Material Adverse Effect; or (ii) the board of directors of any
Subsidiary of the Borrower (or any committee thereof) shall adopt any resolution to approve any
of the actions referred to in clause (i) above; or
(p)      the Borrower shall fail generally, or shall admit in writing its inability, to pay its debts
as such debts become due.

SECTION 7.2.      REMEDIES.  During the continuance of any Event of Default, the Agent
shall, solely at the request of the Board or if the Board Guarantee is no longer in full force and
effect (or there occurs a Default under Section 7.1(j)), the Requisite Lenders, by notice to the
Borrower, declare the Loan, all interest thereon and all other amounts and Obligations payable under
this Agreement to be immediately due and payable, whereupon the Loan, all such interest and all such
amounts and Obligations shall become and be immediately due and payable, without presentment,
demand, protest or further notice of any kind, all of which are hereby expressly waived by the
Borrower; provided, however, that upon the occurrence of the Event of Default specified in
SECTION 7.1(F) or SECTION 7.1(G), the Loan, all such interest and all such amounts and
Obligations shall automatically become and be immediately due and payable, without presentment,
demand, protest or any notice of any kind, all of which are hereby expressly waived by the
Borrower.  For so long as the Board Guarantee shall remain in effect, remedies exercisable by
the Agent hereunder or the Collateral Agent under the Security Agreement or any other Security
Document shall be exercised solely upon instructions received in writing by the Agent or the
Collateral Agent, as the case may be, from the Board or, if the Board Guarantee is no longer in
effect, the Requisite Lenders.  If an Event of Default shall occur and be continuing, the
Collateral Agent may upon the instructions of the Board, or if the Board Guarantee is no longer
in effect (or there occurs a Default under Section 7.1(j)), the Requisite Lenders, exercise any
or all of the rights and powers and pursue any and all of the remedies available to the
Collateral Agent under any Security Agreement and shall have and may upon the written request
of the Board or, if the Board Guarantee is no longer in effect, the Requisite Lenders, exercise
any and all of the rights and remedies of a secured party under the Uniform Commercial Code of
any applicable jurisdiction and under any other applicable law.

                                              ARTICLE VIII

                                          THE LOAN ADMINISTRATOR

SECTION 8.1.      ACCEPTANCE OF APPOINTMENT AND SERVICES.

(a)      The Lenders hereby appoint the Loan Administrator to provide the services described in
SECTION 8.1(B) and (C) below for the benefit of the Lenders and the Board in respect of the Loan
and the Loan Documents.  The Loan Administrator hereby accepts such appointment and agrees to
perform such services in a professional, diligent and workmanlike manner for the benefit of the
Lenders and the Board, on and subject to the terms and conditions set forth in this Agreement,
but shall have no other obligations to the Lenders, the Board or any other Person except as expressly
provided herein.
(b)      The Loan Administrator hereby agrees to perform at any time and from time to time, at the request
of the Board or any Lender (other than the Tranche A Lender, which shall not make any requests of the
Loan Administrator) (any such Person so requesting, a "Requesting Party") all of the following
services:
                  (i)    monitor and promptly distribute to the Requesting Party any financial
                  information, compliance certificates and other reports or written communications
                  provided by or on behalf of the Borrower or the Agent to the Loan Administrator
                  hereunder or under any other Loan Document, and report to the Requesting Party
                  whether such documents on their face comply with the requirements of the Loan Documents;
                 (ii)    based on the reports of the Borrower, monitor the performance of the Borrower under
                  this Agreement and the other Loan Documents and promptly report to the Requesting Party any
                  failure by Borrower to comply with its obligations hereunder and thereunder;
                (iii)    promptly notify the Requesting Party of (A) any downgrade in the credit rating of
                  the Borrower by either S&P, Moody's or Fitch, (B) any receipt by the Loan Administrator
                  of a notice of a Default or Event of Default, or (C) any receipt by the Loan Administrator
                  of notice of any prepayment of the Loan under SECTION 2.5, SECTION 2.6 or SECTION 2.10 hereof;
                 (iv)    for each fiscal quarter of the Borrower, provide (A) a quarterly financial report,
                  within two weeks of the Borrower's delivery of financial statements for such quarter to
                  the Loan Administrator, analyzing the Borrower's financial statements and operations for
                  such fiscal quarter, including a review of variances from targets identified in the
                  operating plan of the Borrower, revenue and expense performance, operating cash flow
                  results, quarterly investment cash flows, net changes in the Borrower's cash position,
                  debt covenant compliance and such other financial matters as shall be reasonably
                  requested in writing by a Requesting Party and (B) an indicative credit rating of the
                  Borrower; it being acknowledged and agreed that the Loan Administrator may retain a
                  sub-servicer reasonably acceptable to the Requesting Party to provide these services,
                  in which event, the Loan Administrator shall not be in default of its obligations
                  hereunder (x) if the sub-servicer fails to comply with its obligations to provide the
                  quarterly financial reports or indicative credit rating of the Borrower described
                  herein so long as the Loan Administrator had exercised reasonable care and good faith
                  in providing the financial statements to the sub-servicer and attempting to procure
                  the report or indicative credit rating on behalf of the Requesting Party, or (y) if
                  the Loan Administrator is unable, after exercising reasonable care and good faith, to
                  retain a sub-servicer to provide an indicative credit rating of the Borrower;
                  (v)      review the periodic reports and other reports which the Borrower is obligated to
                  provide to the Loan Administrator, the Lenders or the Board hereunder or under any other
                  Loan Document, and report to the Requesting Party regarding such matters as are specifically
                  identified in writing by such Requesting Party with respect to such reports;
                 (vi)    at the written direction of a Requesting Party, give notices or provide instructions
                  on behalf of the Requesting Party to any Person under this Agreement or any of the other
                  Loan Documents in accordance with the terms and conditions hereof and thereof;
                (vii)    at the written request of a Requesting Party and at the expense of the Borrower, report
                  to the Requesting Party on the business and financial substance of any proposed amendment to,
                  or assignment of, this Agreement or any other Loan Document;
               (viii)    at the written request of a Requesting Party and at the expense of the Borrower, visit
                  the Borrower and inspect the financial and accounting records and take extracts therefrom and
                  make relevant inquiries of each such Person so as to respond to specific questions from the
                  Requesting Party regarding such Person's financial condition and ability to perform
                  its respective obligations under the other Loan Documents;
                 (ix)    at the direction and expense of the Requesting Party, procure and coordinate the advice
                  of professional advisers necessary for such Requesting Party to perform its obligations and enforce
                  its rights under the Loan Documents;
                  (x)    analyze the Appraisal Reports submitted by the Borrower under the Loan Documents and
                  report to the Board regarding the Appraised Value of the Collateral reflected in such reports;
                 (xi)    promptly notify the Board of any material changes in the value of Collateral of which it
                  becomes aware through the Borrower's reports or certificates, notices, appraisals or other
                  communications delivered by or on behalf of the Borrower hereunder;
                (xii)    based on certificates, notices, appraisals or other communications delivered by or on
                  behalf of the Borrower hereunder, monitor their compliance with covenants and agreements
                  relating to Collateral including Borrower's obligations to prepay the Loan in the amount of the
                  Value Differential;
               (xiii)    monitor Collateral-related regulatory and UCC filings to ensure that continuation statements,
                  extensions or renewals, as applicable, are timely filed;
                (xiv)    following an Event of Default, at the written request and expense of the Requesting Party,
                  assist and advise such Requesting Party in connection with the liquidation of the Collateral,
                  including selecting specialists to assist in appraisal and liquidation of collateral,
                  recommending liquidation strategies, identifying potential buyers of the assets and
                  analyzing bids; and
                 (xv)    subject to subsection (C) below, at the expense of the Requesting Party, take such
                  other actions as may be reasonably requested in writing by the Requesting Party in respect
                  of the Loan and the Loan Documents, such actions to be upon such terms and conditions as shall be
                  mutually agreed to by the Requesting Party and the Loan Administrator.
(c)      With respect to the Loan Administrator's responsibilities under SECTION 8.1(B) above, the Loan
Administrator shall not be required to take any action which exposes the Loan Administrator to
liability or which is contrary to this Agreement, any other Loan Document, the Board Guarantee
or applicable law.  The execution and delivery of this Agreement by the Loan Administrator
shall not give rise to any implied duties or fiduciary obligations of the Loan Administrator to
any Requesting Party or any other Person.  The Board hereby acknowledges and agrees that the
failure of the Loan Administrator to perform any of its obligations hereunder shall not
invalidate or otherwise affect the Board Guarantee.
(d)      Except as permitted in subsection (B)(IV) ABOVE, the Loan Administrator shall not be permitted to
assign any of its obligations hereunder, enter into sub-servicing agreements or otherwise delegate any
of its duties under this Agreement without the prior written consent of the Requisite Lenders
and the Board.  The Loan Administrator hereby acknowledges and agrees that the fees and
expenses payable to any sub-servicer retained by it in accordance with this Agreement shall be
paid out of the fees payable by the Borrower to the Loan Administrator under SECTION 2.8(C).
(e)      The Loan Administrator may retain legal counsel (including counsel for the Loan Administrator),
independent public accountants and other experts or advisers as desirable to provide the
services set forth in SECTION 8.1(B), and shall be reimbursed by the Borrower for the
reasonable associated costs and such other reasonable expenses as the Loan Administrator shall
incur in providing such services.  The Borrower shall be responsible for such costs and
expenses with respect to the services set forth in SECTION 8.1(B)(VII) and (viii) hereof
(calculated in the manner set forth in SECTION 2.8(C)), and a Requesting Party shall be
responsible for the costs and expenses with respect to the services set forth in SECTION
8.1(B)(IX), (xiv) and (xv) if requested by such Requesting Party (calculated in the manner set
forth in SECTION 2.8(C)).
(f)      In the event that any of the Lenders or the Board shall request that the Loan Administrator provide
additional services to it under SECTION 8.1(B)(XIV) and (XV) or which are otherwise outside the
scope of the services to be provided by the Loan Administrator hereunder, the Loan
Administrator shall, to the extent it agrees to provide such additional services to such party,
be entitled to charge such party such additional fees in accordance with SECTION 2.8(C).
Unless otherwise agreed to by such Person and the Loan Administrator, the terms and conditions
of this ARTICLE VIII shall apply to the provision by the Loan Administrator of such additional
services to such party.

SECTION 8.2.      LOAN ADMINISTRATOR'S RELIANCE.

(a)      The Loan Administrator shall be entitled to rely upon any note, notice, consent, certificate,
affidavit, letter, telegram, teletype message, facsimile transmission, statement, order or other document
in good faith believed by it to be genuine and correct and to have been signed or sent by the
proper person or persons and, in respect of legal matters, upon the opinion of counsel selected
by the Loan Administrator.
(b)      Neither the Loan Administrator nor any of its directors, officers, agents, employees or its
sub-servicer shall be liable to any Lender, the Board or any Supplemental Guarantor for any action
taken or omitted to be taken by it or by such directors, officers, agents or employees under or in
connection with this Agreement or any other Loan Document, except for its or their own gross
negligence or willful misconduct.  Without limitation of the generality of the foregoing, the
Loan Administrator:  (i) may consult with legal counsel, independent public accountants and
other experts selected by it and shall not be liable to any Lender, any Supplemental Guarantor
or the Board for any action taken or omitted to be taken in good faith by it in accordance with
the advice of such experts; (ii) except as provided in SECTION 8.1(B) above, shall not have any
duty to ascertain or to inquire as to the performance or observance of any of the terms,
covenants or conditions of this Agreement, the Notes or any other Loan Document on the part of
the Borrower or to inspect the property (including the books and records) of the Borrower or
any of its Subsidiaries; (iii) except as otherwise provided in this ARTICLE VIII, shall not be
responsible to any Lender, any Supplemental Guarantor or the Board for the due execution,
legality, validity, enforceability, genuineness, sufficiency or value of this Agreement, the
Notes or any other Loan Document, or any other instrument or document furnished pursuant
thereto; and (iv) shall incur no liability under or in respect to this Agreement, the Notes or
any other Loan Document by acting upon any notice, consent, certificate or other instrument or
writing (which may be by telegram, facsimile transmission, cable or telex) in good faith
believed by it to be genuine and signed or sent by the proper party or parties.
(c)      IN NO EVENT SHALL THE LOAN ADMINISTRATOR, ITS EMPLOYEES, OFFICERS, DIRECTORS, AGENTS OR ITS
SUB-SERVICER BE LIABLE FOR CONSEQUENTIAL, SPECIAL, INDIRECT, INCIDENTAL, PUNITIVE OR EXEMPLARY
DAMAGES, COSTS, EXPENSES, OR LOSSES (INCLUDING, WITHOUT LIMITATION, LOST PROFITS AND OPPORTUNITY
COSTS).  THE LENDERS, THE SUPPLEMENTAL GUARANTORS AND THE BOARD AGREE THAT THE LOAN
ADMINISTRATOR, ITS EMPLOYEES, OFFICERS, DIRECTORS, AGENTS AND ITS SUB-SERVICER SHALL NOT BE
LIABLE TO THE LENDERS, THE SUPPLEMENTAL GUARANTORS AND THE BOARD FOR ANY ACTIONS, DAMAGES,
CLAIMS, LIABILITIES, COSTS, EXPENSES OR LOSSES IN ANY WAY ARISING OUT OF OR RELATING TO THE
PERFORMANCE OR NONPERFORMANCE OF SERVICES HEREUNDER OR UNDER ANY OTHER LOAN DOCUMENT FOR AN
AGGREGATE AMOUNT IN EXCESS OF THE FEES PAID BY THE LENDERS, THE SUPPLEMENTAL GUARANTORS AND THE
BOARD TO THE LOAN ADMINISTRATOR IN PERFORMING THE SERVICES DESCRIBED HEREIN.  NO TERMS OF THIS
AGREEMENT, OR ANY OTHER LOAN DOCUMENT SHALL BENEFIT OR CREATE ANY RIGHT OR CAUSE OF ACTION IN
OR ON BEHALF OF ANY PERSON OR ENTITY OTHER THAN THE LENDERS, THE SUPPLEMENTAL GUARANTORS AND
THE BOARD.  THE PROVISIONS OF THIS SUBSECTION SHALL APPLY REGARDLESS OF THE FORM OF ACTION,
DAMAGE, CLAIM, LIABILITY, COST, EXPENSE, OR LOSS, WHETHER IN CONTRACT, STATUTE, TORT
(INCLUDING, WITHOUT LIMITATION, NEGLIGENCE), OR OTHERWISE.

SECTION 8.3.      INDEMNIFICATION.

The Borrower and each Requesting Party (other than the Board) agrees to indemnify the Loan
Administrator and its directors, officers, employees, advisors, sub-servicer and representatives
from and against any and all costs, losses, liabilities, claims, damages or expenses (excluding
Taxes) which may be incurred by or asserted or awarded against the Loan Administrator in any way
relating to or arising out of the services provided by the Loan Administrator on behalf of and at
the request of such Requesting Party in connection with this Agreement or any action taken or omitted
by the Loan Administrator under this Agreement or any other Loan Document or both on behalf of and at
the request of such Requesting Party; provided, that neither the Borrower nor any Requesting
Party shall be liable for any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting from the Loan Administrator's
gross negligence or willful misconduct.  Without limitation of the foregoing, and to the extent that
the Loan Administrator is not reimbursed therefor by the Borrower under any Loan Document, any Requesting
Party requesting the Loan Administrator to take any action hereunder on its behalf agrees to
reimburse the Loan Administrator promptly upon demand (but in all events within 30 days after
written request) for any and all fees of the Loan Administrator, reasonable out-of-pocket costs
and expenses (including counsel fees) incurred by the Loan Administrator in connection with the
performance of the requested services requested by such Requesting Party hereunder and under
the Loan Documents.  Except as provided in the preceding sentence regarding reimbursement, in
no event shall the Board be obligated to indemnify the Loan Administrator or any of its
directors, officers, employees, advisors, representatives or any other party under any
circumstances.

SECTION 8.4.      SUCCESSOR LOAN ADMINISTRATOR.

The Loan Administrator may resign at any time by giving 30 days prior written notice thereof to the Agent,
the Lenders and the Board and may be removed at any time with or without cause by the Requisite Lenders
and the Board; provided, however, that the Loan Administrator shall continue to perform all Loan
Administrator functions hereunder until a successor Loan Administrator shall have been appointed.  Upon
any such resignation or removal, the Requisite Lenders shall have the right to appoint a successor Loan
Administrator, subject to confirmation by the Board and the approval (including in respect of fees payable
to the Loan Administrator), not to be unreasonably withheld, of the Borrower.  If no successor Loan
Administrator shall have accepted such appointment, or the parties are unable to agree on a
successor Loan Administrator, within 120 days after the retiring Loan Administrator's giving of
notice of resignation or the removal of the Loan Administrator, the Loan Administrator may
appoint a successor Loan Administrator who shall be willing to accept such appointment.  Upon
the acceptance of any appointment as Loan Administrator hereunder by a successor Loan
Administrator, such successor Loan Administrator shall thereupon succeed to and become vested
with all the rights, powers, privileges and duties of the retiring or removed Loan
Administrator, and the retiring or removed Loan Administrator shall be discharged from its
duties and obligations as Loan Administrator under this Agreement.  After any Loan
Administrator's resignation or removal hereunder as Loan Administrator the provisions of this
ARTICLE VIII shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Loan Administrator under this Agreement.

SECTION 8.5.      CONFLICT OF INTEREST.

(a)      The parties hereto acknowledge and agree that (i) in addition to serving as Loan
Administrator under this Agreement, the Loan Administrator may at any time and from time to
time service, manage or enter into other commercial arrangements with the Agent, any Lender,
the Board or any Supplemental Guarantor (each a "Loan Administrator Relationship"); (ii) in
the course of conducting such activities or the services to be provided by it hereunder, or both,
the Loan Administrator may from time to time have conflicts of interest by virtue of a Loan
Administrator Relationship; and (iii) the parties hereto expressly recognize that such
conflicts of interest may arise, do hereby waive such conflicts and agree that when such
conflicts of interest arise the Loan Administrator shall perform the services to be provided by
it hereunder in a professional, diligent and workmanlike fashion.  The parties hereto and the
Supplemental Guarantors further acknowledge and agree that the Loan Administrator, in its
capacity as Loan Administrator, is not acting as an Affiliate of any of the parties hereto, and
the performance of the Loan Administrator's obligations hereunder shall not affect any right or
remedy which the Agent, any Lender or any participant may have under any Loan Document, any
participation or the Board Guarantee.  Each Requesting Party expressly acknowledges and agrees
that at all times it shall take such action or omit to take such action hereunder based on its
own independent analysis of the relevant transaction and attendant facts and circumstances.
(b)      Notwithstanding any provision herein to the contrary, if in connection with the provision
of services, a conflict of interest shall exist that, in the good faith opinion of the Loan Administrator,
requires an arm's-length negotiation between the Loan Administrator, on the one hand, and any
Person with a Loan Administrator Relationship, on the other hand, and the Loan Administrator
believes it would not be appropriate for the Loan Administrator to act on behalf of the
Requesting Party in connection with such matter, then the Loan Administrator shall withdraw
from acting as Loan Administrator in connection with the matter giving rise to such conflict of
interest by giving written notice to the Requesting Party not more than ten (10) Business Days
after it has made such determination.  In such event, the Requesting Party shall be entitled to
appoint an independent representative to act on its behalf and at its expense for purposes of
the matter giving rise to such conflict of interest, and the Loan Administrator shall have no
responsibility or liability to the Requesting Party with respect to such matter.  During the
period of such independent representative's appointment, the Loan Administrator shall continue
to perform its ordinary functions as Loan Administrator to the extent that the performance of
the Loan Administrator does not, in the reasonable opinion of the Requesting Party, directly or
indirectly affect the matter giving rise to the conflict of interest.

SECTION 8.6.      REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE LOAN ADMINISTRATOR.

The Loan Administrator hereby represents, warrants and covenants with the Lenders and the Board as follows:
(a)      it is duly incorporated and validly existing under the laws of its jurisdiction of incorporation;
(b)      it has the corporate power and authority to execute, deliver and perform its obligations under this
Agreement, and this Agreement has been duly authorized by it by all necessary corporate action;
(c)      no authorization, consent or approval of any Governmental Authority, regulatory body or other Person is
required for the due authorization, execution, delivery or performance by it of this Agreement;
(d)      this Agreement has been duly executed and delivered by it and constitutes a legal and binding obligation
of it, enforceable against it in accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws
now or hereinafter in effect, relating to the enforcement of creditors' rights in general and
except as such enforceability may be limited by general principles of equity (whether
considered in a proceeding at law or in equity);
(e)      the execution, delivery and performance by it of this Agreement does not violate any provision of any
existing law or regulation or any material agreement to which it is subject or to which it is a
party or result in the creation of any Lien;
(f)      it has all corporate power and governmental licenses, authorizations, and consents and approvals
required to carry on its business as now conducted, except where the failure to have such
licenses, authorizations, and consents and approvals would not have a material adverse effect
on its ability to perform its duties under this Agreement; and
(g)      it will maintain and implement administrative and operating procedures, and keep and maintain all
documents, books, computer records and other information reasonably necessary or advisable for
the performance of the services to be provided by it hereunder.

                                              ARTICLE IX

                                            THE FACILITY AGENTS

SECTION 9.1.      AUTHORIZATION AND ACTION.

Each Lender and the Board hereby appoints and authorizes (i) WestLB AG to take such action as
administrative agent on its behalf and to exercise such powers under this Agreement, the Notes
and the other Loan Documents as are delegated by such Lender and the Board to it as Agent by
the terms hereof and thereof and (ii) Wells Fargo Bank Northwest, N.A. to take such action as
collateral agent on its behalf and to exercise such powers under the Security Agreement as are
delegated by such Lender and the Board to it as Collateral Agent by the terms hereof and thereof,
together, in each case, with such powers as are reasonably incidental thereto (the Agent and the
Collateral Agent are referred to in this ARTICLE IX individually as a "Facility Agent" and collectively,
as the "Facility Agents"), and each Facility Agent hereby accepts such authorization and
appointment.  As to any matters not expressly provided for by this Agreement, the Notes, a Security
Agreement or any other Loan Document or provided for with specific reference to this SECTION 9.1
(including, without limitation, enforcement or collection of the Notes), neither Facility Agent
shall be required to exercise any discretion or take any action, but shall be required to act or to
refrain from acting (and shall be fully protected in so acting or refraining from action) upon the
instructions of the Board or, if the Board Guarantee is no longer in full force and effect, the
Requisite Lenders and such instructions shall be binding upon all Lenders; provided, however,
that neither Facility Agent shall be required to take any action which exposes such Facility
Agent to liability or which is contrary to this Agreement, the Board Guarantee, the Security
Documents, any Note or applicable law.  As to any provision of this Agreement, the Security
Agreement or any other Loan Document under which action may be taken or approval given by the
Requisite Lenders or the Board or both, as the case may be, the action taken or approval given
by the Requisite Lenders or the Board or both, as the case may be, shall be binding upon all
Lenders and Supplemental Guarantors to the same extent and with the same effect as if each
Lender and each Supplemental Guarantor had joined therein.  Each Facility Agent shall be
entitled to rely upon any note, notice, consent, certificate, affidavit, letter, teletype
message, facsimile transmission, statement, order, other document or other instrument or
writing believed by it to be genuine and correct and to have been signed or sent by the proper
person or persons and, in respect of legal matters, upon the opinion of counsel selected by
such Facility Agent.  The Agent may deem and treat the payee of each Note as the owner thereof
for all purposes hereof unless and until a written notice of the assignment or transfer thereof
shall have been filed with the Agent.  Any request, authority or consent of any Person who at
the time of making such request or giving such authority or consent is the holder of a Note
shall be conclusive and binding on any subsequent holder, transferee or assignee of such Note.
Upon any delivery of any instructions to the Collateral Agent by the Requisite Lenders pursuant
to this Agreement, the Agent shall certify to the Collateral Agent that the Lenders delivering
such instructions constitute the Requisite Lenders under this Agreement.

SECTION 9.2.      FACILITY AGENTS' RELIANCE, ETC.

Neither Facility Agent nor any of its directors, officers, agents or employees shall be liable
to any Lender, any Supplemental Guarantor, the Loan Administrator or the Board for any action
taken or omitted to be taken by it or by such directors, officers, agents or employees under
or in connection with this Agreement, any Note or any other Loan Document, except for its or
their own gross negligence or willful misconduct as actually and finally determined by a final,
non-appealable judgment of a court of competent jurisdiction and only to the extent of direct
(as opposed to special, indirect, consequential or punitive) damages.  Without limitation of the
generality of the foregoing, each Facility Agent:  (a) may consult with legal counsel, independent
public accountants and other experts selected by it and shall not be liable to any Lender, any
Supplemental Guarantor, the Loan Administrator or the Board for any action taken or omitted to
be taken in good faith by it in accordance with the advice of such experts; (b) makes no warranty
or representation to any Lender, any Supplemental Guarantor, the Loan Administrator or, except as
expressly provided in the Board Guarantee, the Board and shall not be responsible to any Lender,
any Supplemental Guarantor, the Loan Administrator or, except as expressly provided in the Board
Guarantee, the Board for any statements, warranties or representations (whether oral or written)
made in or in connection with this Agreement, any Note or any other Loan Document; (c) shall not
have any duty, and shall incur no liability for its failure, to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions of this Agreement, any
Note or any other Loan Document on the part of the Borrower or to inspect the property
(including the books and records) of the Borrower or any of its Subsidiaries; (d) shall not be
responsible to any Lender, any Supplemental Guarantor, the Loan Administrator or the Board for
the due execution, legality, validity, enforceability, genuineness, sufficiency or value of
this Agreement, any Note or any other Loan Document, or any other instrument or document
furnished pursuant thereto; (e) shall incur no liability under or in respect of this Agreement,
any Note or any other Loan Document by acting upon any note, notice, consent, certificate,
affidavit, letter, telegram, teletype message, facsimile transmission, statement, order or
other instrument or writing (which may be by telegram, facsimile transmission, cable or telex)
believed by it to be genuine and signed or sent by the proper party or parties; and (f) may
deem and treat each Lender which makes a loan hereunder as the holder of the indebtedness
resulting therefrom for all purposes hereof until the Agent receives and accepts an Assignment
and Acceptance Agreement entered into by such Lender, as assignor, and an eligible assignee as
provided in SECTION 10.2 hereof.

SECTION 9.3.      FACILITY AGENTS AND AFFILIATES.

If and so long as either Facility Agent shall remain a Lender, such Facility Agent shall have the
same rights and powers under this Agreement as any other Lender and may exercise the same rights
and powers under this Agreement as any other Lender and may exercise the same as though it were
not a Facility Agent; and the term "Lender" or "Lenders" shall, unless otherwise expressly indicated,
include such Facility Agent in its individual capacity.  Unrelated to its role as a Facility Agent
as set forth herein, each Facility Agent and its affiliates may accept deposits from, lend money to,
act as trustee under indentures of, and generally engage in any kind of business with the Borrower
or its respective Subsidiaries and any Person who may do business with or own securities of the Borrower,
all as if it were not a Facility Agent hereunder and without any duty to account therefor to the
Lenders.

SECTION 9.4.      REPRESENTATIONS OF CERTAIN PARTIES.

Each Lender, each Supplemental Guarantor, the Loan Administrator and the Board's representatives
have actively engaged in the negotiation of all of the terms of this Agreement.  The Board's
representatives have met with the Borrower to discuss the business, affairs, financial condition
and prospects of the Borrower.  Neither Facility Agent has any duty or responsibility, either
initially or on a continuing basis, to provide any Lender, any Supplemental Guarantor, the Loan
Administrator or the Board with any credit or other information with respect to the Borrower
whether coming into its possession as of the date of this Agreement or at any time thereafter,
or to notify any Lender, any Supplemental Guarantor, the Loan Administrator or the Board of any
Event of Default except as provided in SECTION 9.5 hereof.  This Agreement and all instruments or
documents delivered in connection with this Agreement have been reviewed and approved by each Lender,
each Supplemental Guarantor, the Loan Administrator and the Board and none of the Lenders, the
Supplemental Guarantors, the Loan Administrator nor the Board have relied on any Facility Agent
as to any legal or factual matter in connection therewith or in connection with the
transactions contemplated thereunder.

SECTION 9.5.      EVENTS OF DEFAULT; TERMINATION OF BOARD GUARANTEE.

(a)      In the event of the occurrence of any Default or Event of Default, any Lender, any
Supplemental Guarantor or the Board knowing of such event may (but shall have no duty to), or
the Borrower pursuant to SECTION 5.1(B)(V) hereof shall, give the Agent written notice specifying
such Event of Default or other event and expressly stating that such notice is a "notice of default".
The Agent shall not be deemed to have knowledge of such events unless the Agent has received such
notice, or unless the Default or Event of Default consists of a failure of payment of principal
or interest on the Notes.  In the event that the Agent receives such a notice of the occurrence
of a Default or Event of Default, the Agent shall give written notice thereof to the Collateral
Agent, the Lenders, the Supplemental Guarantors, the Loan Administrator and the Board.  In the
event that such notice is a notice of an Event of Default or such notice of Default matures
into an Event of Default, each Facility Agent shall take such action with respect to such
Default or Event of Default as shall be reasonably directed in writing by the Board or, if the
Board Guarantee is no longer in full force and effect, the Requisite Lenders, subject to the
provisions of SECTION 9.6; provided, however, that, unless and until such Facility Agent shall
have received such directions, such Facility Agent may (but shall not be obligated to) take
such action, or refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable and in the best interest of the Lenders and of the Board and
shall incur no liability for acting or refraining to act in such manner except for such
Facility Agent's gross negligence or willful misconduct as actually and finally determined by a
court of competent jurisdiction and only to the extent of direct (as opposed to special,
indirect, consequential or punitive) damages.
(b)      In the event the Agent shall receive any notice from the Board to the effect that (i) the
Board has the right to terminate the Board Guarantee under Section 2.05 thereof, (ii) any portion
of the Board Guarantee has terminated under Section 2.04 thereof or otherwise, or (iii) the Board
Guarantee shall for any reason have ceased to be in full force and effect or the Board shall
have asserted that any of its obligations thereunder is invalid or unenforceable, the Agent
shall promptly give written notice thereof to the Collateral Agent and the Lenders.  The Agent
shall not be deemed to have knowledge of any such event unless the Agent has received such
notice (except if any such event results from the failure of the Agent to perform any of its
obligations under the Board Guarantee).

SECTION 9.6.      FACILITY AGENTS' RIGHT TO INDEMNITY.

Except for action expressly required of a Facility Agent hereunder without instructions from
any Person, each Facility Agent shall be fully justified in failing or refusing to take any
action hereunder on behalf of any Lender or the Board unless it shall first be indemnified to
its satisfaction by such Person (or any affiliate thereof) or the Board, as the case may be,
against any and all liability and expense which may be incurred by it by reason of taking or
continuing to take any such action.

SECTION 9.7.      INDEMNIFICATION OF FACILITY AGENTS.

The Lenders hereby agree to indemnify each Facility Agent and all affiliates, directors,
officers, employees, advisors and representatives thereof (to the extent not reimbursed
by the Borrower), ratably in accordance with the Obligations owed thereto as most recently
in effect prior to the date indemnification is sought, from and against any and all costs,
losses, liabilities, claims, damages or expenses which may be incurred by or asserted or awarded
against such Facility Agent in any way relating to or arising out of this Agreement, the Notes
or the other Loan Documents or any action taken or omitted by such Facility Agent under this
Agreement, the Notes or the other Loan Documents; provided, that the Lenders shall not be liable
for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from any Facility Agent's gross negligence or
willful misconduct as actually and finally determined by a final, non-appealable judgment of a
court of competent jurisdiction and only to the extent of direct (as opposed to special, indirect,
consequential or punitive) damages.  Without limitation of the foregoing, each Lender agrees to
reimburse each Facility Agent promptly upon demand for its ratable share of any out-of-pocket expenses
(including counsel fees) incurred by such Facility Agent in connection with the administration,
or enforcement of, or the preservation of any rights under, this Agreement, the Notes or the
other Loan Documents, to the extent that such Facility Agent is not reimbursed for such
expenses by the Borrower.

SECTION 9.8.      SUCCESSOR FACILITY AGENTS.

(a)      Each Facility Agent may resign at any time by giving written notice thereof to the Lenders,
the Board and the Borrower and may be removed at any time with cause (or, following the Board's
honoring of a demand for payment in accordance with the Board Guarantee, without cause) by the Board.
Upon any such resignation or removal, the Borrower shall have the right with the prior written
consent of the Board and the Requisite Lenders to appoint a successor Facility Agent.  If no
successor Facility Agent shall have accepted such appointment within 30 days after the retiring
Facility Agent's giving of notice of resignation or the Board's removal of such Facility Agent,
the Board and the Requisite Lenders shall have the right to appoint a successor Facility Agent
who shall be willing to accept such appointment.  In any event such successor Facility Agent
shall be a commercial bank organized or licensed under the laws of the United States of America
or of any State thereof and shall have a combined capital and surplus of at least
$500,000,000.  Upon the acceptance of any appointment as a Facility Agent hereunder by a
successor Facility Agent, such successor Facility Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring or removed Facility
Agent, and the retiring or removed Facility Agent shall be discharged from its duties and
obligations as agent under this Agreement or as collateral agent under the Security Agreement,
as the case may be.  After any Facility Agent's resignation or removal hereunder as a Facility
Agent the provisions of this ARTICLE IX shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was a Facility Agent under this Agreement or the Security
Agreement, as the case may be.
(b)      Any corporation into which either Facility Agent may be merged or converted or with which
it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to
which either Facility Agent shall be a party, or any corporation succeeding to the business of
either Facility Agent, provided that such corporation is a commercial bank organized or
licensed under the laws of the United States of America or any State thereof or under the laws
of any other jurisdiction (as long as such bank is licensed under any applicable U.S. or State
law to conduct business in the United States) and has a combined capital and surplus of at
least $500,000,000, shall be the successor of such Facility Agent hereunder without the
execution or filing of any paper with any party hereto or any further act on the part of any of
the parties hereto except where an instrument of transfer or assignment is required by law to
effect such succession.

SECTION 9.9.      SPECIAL RULES GOVERNING TRANSACTION GUARANTEES.

Anything in this Agreement to the contrary
notwithstanding, in respect of any action under (i) the Board Guarantee, (ii) (x) the
Supplemental Guarantee issued by the [***] Supplemental Guarantor and (y) the [***] Counter
Guarantee (the instruments in the preceding clauses (x) and (y) being herein collectively
called the "[***] Instruments") and (iii) the Supplemental Guarantee issued by the [***]
Supplemental Guarantor (and, collectively with the [***] Instruments and the Board Guarantee,
the "Transaction Guarantees"), including any demand for payment thereunder (a "Transaction
Guarantee Demand"), and any demand required to be made under this Agreement (a "Past Due
Demand") that is a precondition to making a Transaction Guarantee Demand under any such
Transaction Guarantee, the Agent shall be directed exclusively by Lenders, and take the
direction of Lenders, holding in excess of fifty percent (50%) of the principal amount of the
Loan subject to such Transaction Guarantee then outstanding.  In respect of any action to be
taken under the [***] Letter Agreement, the Agent shall be directed exclusively by Lenders, and
take the direction of Lenders, holding in excess of fifty (50%) of the principal amount of
Tranche B-1 of the Loan.  In respect of any such action, the Agent shall be entitled to the
indemnities provided under Sections 9.6 and 9.7 hereof, but only from the Lenders entitled to
give the direction in respect of such action.  The Agent agrees to make a Past Due Demand
hereunder and a Transaction Guarantee Demand under a Transaction Guarantee if it is directed to
do so by the requisite Lenders and is entitled to do so hereunder and under such Transaction
Guarantee, as the case may be.  The Agent further agrees that if it shall be directed to make
(i) a Past Due Demand in respect of any amounts not paid hereunder when due or (ii) a
Transaction Guarantee Demand under any Transaction Guarantee, in either case, from the
Lender(s) entitled to direct the same (and the Agent is in fact entitled to make such a demand
hereunder and under such Transaction Guarantee), it shall, whether or not it receives a
direction to make  Past Due Demand from the other Lenders (or the Board) in respect of other
amounts past due or a Transaction Guarantee Demand in respect of any other Transaction
Guarantee, make a contemporaneous Past Due Demand hereunder in respect of all then past due
amounts hereunder or a Transaction Guarantee Demand under each Transaction Guarantee (to the
extent any Past Due Demand required thereunder has been made and it is otherwise entitled to do
so thereunder), as the case may be.

                                              ARTICLE X

                                              MISCELLANEOUS

SECTION 10.1.     AMENDMENTS, WAIVERS, ETC.

(a)      No amendment, modification or waiver of any provision of this Agreement or any other Loan
Document nor consent to any departure by the Borrower therefrom shall in any event be effective
unless the same shall be in writing and, with respect to any such amendment or modification, signed
by the Borrower, and with respect to any such amendment, modification, waiver or consent (x) so long
as the Board Guarantee is in full force and effect, signed by the Board or (y) if the Board
Guarantee is no longer in effect, signed by the Requisite Lenders, and then any such waiver or
consent shall be effective only in the specific instance and for the specific purpose for which
given; provided, however, that no amendment, modification, waiver or consent shall, unless in
writing and signed by each Lender and each Supplemental Guarantor, do any of the following:

                  (i)    subject such Lender and Supplemental Guarantor to any additional obligations;
                 (ii)    change the scheduled final maturity of the Loan or any Tranche, or change the
                  amount or date for payment of any date fixed for the payment or reduction of principal
                  of the Loan or any Tranche;
                (iii)    change the principal amount of the Loan or any Tranche (other than by the payment
                  or prepayment thereof);
                 (iv)    increase the rate of interest on the Loan or any Tranche or any fee, indemnity
                  or other amount payable thereunder or to or for the benefit of such Person;
                  (v)    change any date fixed for payment of such interest, indemnity or other amount or fees;
                 (vi)    release all or any portion of the Collateral with a material Collateral Value (other
                  than upon any sale or other disposition thereof permitted under this Agreement or the applicable
                  Security Agreement);
                (vii)    amend the definition of "Requisite Lenders" or this SECTION 10.1(A);
               (viii)    modify the application of payments to the Loan under SECTION 2.9; or
                 (ix)    amend or modify any provision of ARTICLE II, Article IX, SECTION 5.1 (other than SECTION
                  5.1(B)(I)(B)), SECTION 5.2, SECTION 5.5, SECTION 5.6, SECTION 5.10, SECTION 5.14, SECTION 10.1,
                  SECTION 10.2, SECTION 10.3, SECTION 10.4, SECTION 10.5, SECTION 10.6, SECTION 10.7,
                  SECTION 10.10, SECTION 10.11, SECTION 10.12, SECTION 10.13, SECTION 10.16 and SECTION
                  10.18 or any of the definitions as relevant thereto;

and provided, further, that (A) no amendment, modification, waiver or consent shall, unless in
writing and signed by the affected Facility Agent in addition to the Persons required above to
take such action, affect the rights or duties of either Facility Agent under this Agreement,
the other Loan Documents, any Supplemental Guarantee or the Board Guarantee; and (B) no
amendment, modification, waiver or consent of or in respect of the Board Guarantee, any
Supplemental Guarantee, the [***] Counter Guarantee or the [***] Letter Agreement shall be
effective without the written consent of the Lender that is a beneficiary of such guarantee or
agreement.
(b)      The Agent may, but shall have no obligation to, with the written concurrence of any Lender,
execute amendments, modifications, waivers or consents on behalf of that Lender.  Any waiver or consent
shall be effective only in the specific instance and for the specific purpose for which it was
given.  No notice to or demand on the Borrower in any case shall entitle the Borrower to any
other or further notice or demand in similar or other circumstances.
(c)      Notwithstanding anything herein to the contrary, in the event that the Borrower shall have
requested each of the Lenders and Supplemental Guarantors, in writing, to agree to an amendment,
modification, waiver or consent with respect to any particular provision or provisions hereof,
and any such Lender or Supplemental Guarantor shall have failed to state, in writing, that it
either agrees or disagrees (in full or in part) with such request (in the case of its statement
of agreement, subject to satisfactory documentation and such other conditions it may specify)
within 30 days of such request, then such Lender or Supplemental Guarantor hereby irrevocably
authorizes the Agent to agree or disagree, in full or in part, and in the Agent's sole
discretion, to such requests on behalf of such Lender or Supplemental Guarantor as such
Lender's or Supplemental Guarantor's attorney-in-fact and to execute and deliver any writing
approved by the Agent which evidences such agreement as such Lender's or Supplemental
Guarantor's duly authorized agent for such purposes.
(d)      In connection with any proposed amendment, modification, waiver or termination (a "Proposed
Change") requiring the consent of all affected Lenders, if the consent of the Requisite Lenders is
obtained, but the consent of other Lenders whose consent is required is not obtained (any such
Lender whose consent is not obtained as described in this SECTION 10.1 being referred to as a
"Non-Consenting Lender"), then, so long as the Lender that is acting as the Agent is not a
Non-Consenting Lender, at the Borrower's request, the Agent or an Eligible Lender that is
acceptable to the Agent and the Board shall have the right with the Agent's consent and in the
Agent's sole discretion (but shall have no obligation) to purchase from such Non-Consenting
Lender, and such Non-Consenting Lender agrees that it shall, upon the Agent's request, sell and
assign to the Lender that is acting as the Agent or such Eligible Lender, all of the portion of
the Loan of such Non-Consenting Lender for an amount equal to the principal balance of such
portion of the Loan held by the Non-Consenting Lender and all accrued interest and fees with
respect thereto through the date of sale, such purchase and sale to be consummated pursuant to
an executed Assignment and Acceptance.

SECTION 10.2.     ASSIGNMENTS AND PARTICIPATIONS.

(a)      Each Lender may sell, transfer, negotiate or assign either in whole or in part to one or
more Eligible Lenders its rights and obligations hereunder and under the Notes and the other Loan
Documents without the prior consent of the Borrower but, except as otherwise provided in SECTION 10.2(D),
with the consent, not to be unreasonably withheld, of the Agent, and the prior written approval
of the Board (such consent, in the case of an assignment to an Affiliate of any Lender that is
an Eligible Lender, not to be unreasonably withheld); provided, that (i) the assigning Lender
shall give prompt written notice to the Agent and the Board of the terms of and the parties to
any such assignment, (ii) the proposed assignee shall provide to the Agent and the Board all
documentation and certificates as required by the Agent and the Board to confirm to the Agent's
and the Board's satisfaction that such proposed assignee is an Eligible Lender, and (iii) the
Borrower will not be obligated to pay any greater amount under SECTION 2.10(C), SECTION 2.11 or
SECTION 2.12(A), (c), or (d) (in respect of increased costs, amounts in respect of capital
adequacy or Taxes imposed pursuant to applicable law in effect on the date of such assignment)
to the assignee than the Borrower is then obligated to pay to the assigning Lender under such
Sections; provided, however, that the consent of the Board shall not be required for any
assignment which occurs after the Board has been reimbursed in full for all payments under the
Board Guarantee or the Board Guarantee shall have terminated.
(b)      The parties to each assignment shall execute and deliver to the Agent, for its acceptance
and recording, an Assignment and Acceptance, and the assignee, if a Non-U.S. Person, shall deliver
to the Borrower, the Agent and each Supplemental Guarantor, as applicable, on or prior to the date
of the assignment, two completed copies of either IRS Form W-8BEN or W-8ECI or other applicable
form, certificate or document required to satisfy the requirements of SECTION 2.12.  Upon such
execution, delivery and acceptance and the receipt by the Agent of an assignment fee in the
amount of $5,000, the Agent shall record such Assignment and Acceptance and from and after the
effective date specified in such Assignment and Acceptance (i) the assignee thereunder of all
or any portion of the Loan shall become a party hereto and, to the extent that rights and
obligations under the Loan Documents have been assigned to such assignee pursuant to such
Assignment and Acceptance, have the rights and obligations of a Lender and (ii) the assignor
thereunder shall, to the extent that rights and obligations under this Agreement have been
assigned by it pursuant to such Assignment and Acceptance, relinquish its rights (except those
which survive the payment in full of the Obligations) and be released from its obligations
under the Loan Documents, other than those relating to events or circumstances occurring prior
to such assignment (and, in the case of an Assignment and Acceptance covering all or the
remaining portion of an assigning Lender's rights and obligations under the Loan Documents,
such Lender shall cease to be a party hereto).
(c)      Upon its receipt of an Assignment and Acceptance executed by an assigning Lender and
an assignee, the Agent shall, if such Assignment and Acceptance has been completed, (i) accept
such Assignment and Acceptance, (ii) record the information contained therein in the Register,
(iii) give prompt notice thereof to the Borrower and (iv) give prompt written notice of the terms
of and parties to any such assignment to the Board.
(d)      In addition to the other assignment rights provided in this SECTION 10.2, each Lender may
assign, without the prior consent of the Borrower, the Agent or the Board, as collateral or otherwise,
any of its rights under this Agreement to any Federal Reserve Bank pursuant to Regulation A of
the Federal Reserve Board, provided, however, that no such assignment shall release the
assigning Lender from any of its obligations hereunder.
(e)      Each Lender may, without the prior consent of the Borrower or any other Person, sell
participations, to the extent permitted by the Regulations and except as provided in Section 5.4(b)
of the Board Guarantee, in or to all or a portion of its rights and obligations hereunder and under
any Note and the other Loan Documents; provided, that (i) neither any Note nor the Board
Guarantee is assigned, conveyed, sold or transferred in whole or in part in connection with any
participation, (ii) the Board's ability to assert any and all defenses available to it under
the Board Guarantee and the law is not adversely affected, (iii)  subject to the final sentence
of this SECTION 10.2 the Borrower will not be obligated to pay any greater amount under SECTION
2.10(C), 2.11 or SECTION 2.12(A), (c) or (d) to such participant than the Borrower would then
obligated to pay to any selling Lender under such Sections had such participation not been
sold, and (iv) the initial Lenders shall maintain and shall not sell any participation in
Tranche C of the Loan.  In the event of the sale of any participation by any Lender, except as
otherwise expressly provided herein, (A) such Lender's obligations under the Loan Documents
shall remain unchanged, (B) such Lender shall remain solely responsible to the other parties
for the performance of such obligations, (C) such Lender shall remain the holder of such
Obligations for all purposes of this Agreement and (D) the Agent, the Board and the other
Lenders shall continue to deal solely and directly with such Lender in connection with such
Lender's rights and obligations under this Agreement.  Any holder of such a participation will
be entitled to the benefits of Sections 2.10(c), 2.11 and 2.12 to the same extent as if such
Person were a Lender (but subject to the restrictions of SECTION 2.12(J)); provided that, no
such holder shall be entitled to any such benefits (x) unless such holder shall have agreed in
writing for the benefit of the Borrower to be bound by the provisions of Section 2.10(c), 2.11
and 2.12 applicable to a Lender claiming amounts under such Sections or (y) to the extent the
Borrower would not have had to have paid thereunder had such participation not been sold.
(f)      The Company shall not be responsible for the costs incurred by any Lender in connection
with assigning or granting a participation in any Note held by such Lender.

SECTION 10.3.     COSTS AND EXPENSES.

(a)      Whether or not the transactions contemplated hereby shall be consummated, the Borrower
agrees to pay promptly (i) all costs and expenses incurred by the Loan Administrator, the Lenders,
each Supplemental Guarantor, the Collateral Agent and the Agent in connection with the negotiation,
preparation, execution and delivery of the Loan Documents, the Board Guarantee, the
Supplemental Guarantees and all documents relating thereto (including, without limitation,
reasonable legal fees and expenses), (ii) all costs and expenses incurred by the Loan
Administrator, the Lenders, the Supplemental Guarantors, the Board, the Collateral Agent and
the Agent in connection with any consents, amendments, waivers or other modifications hereto or
thereto (including, without limitation, reasonable legal fees and expenses), except, as to any
party, to the extent any of the foregoing are requested by such party other than the Borrower
and (iii) all costs and expenses, including, without limitation, legal fees and expenses
incurred by the Agent, the Collateral Agent, the Lenders, the Board, the Loan Administrator and
each Supplemental Guarantor in enforcing any Obligations of, or in collecting any payments due
from, the Borrower hereunder or under the other Loan Documents (including without limitation
any costs and expenses contemplated under the Security Agreement) or in connection with the
administration, or enforcement of, or the preservation of any rights under any Loan Document.
(b)      Each Lender agrees to pay promptly all reasonable costs and expenses incurred by the
Agent, the Board and each Supplemental Guarantor in connection with the procurement of any
requisite approval required therefrom in respect of any assignment or participation of the Loan
by such Lender.

SECTION 10.4.     INDEMNITIES.

Whether or not the transactions contemplated hereby shall be consummated, the
Borrower agrees to defend, indemnify, pay and hold harmless the Board, the Agent, the
Collateral Agent, the Lenders, the Supplemental Guarantors, the [***] Counter Guarantor, the
Loan Administrator and their respective Affiliates, officers, directors, employees, agents and
advisors (collectively called the "Indemnitees") on an after-tax basis from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, claims,
costs, expenses and disbursements of any kind or nature whatsoever (including without
limitation the reasonable fees and disbursements of counsel for such Indemnitees, but excluding
Taxes), whether direct, indirect or consequential or special or punitive, and whether based on
any federal, state or foreign laws, statutes, rules or regulations (including without
limitation securities and commercial laws, statutes and rules or regulations), on common law or
equitable cause or on contract or otherwise, that may be imposed on, incurred by, or asserted
against any such Indemnitee, in any manner arising out of this Agreement, the other Loan
Documents, the Supplemental Guarantees or the transactions contemplated hereby or thereby
(including, without limitation, the use or intended use of the proceeds of the Loan) or any
statement contained in the Application or otherwise made by or on behalf of the Borrower to the
Board or any breach or default by the Borrower of any provision of the Loan Documents
(collectively called the "Indemnified Liabilities"); provided, that the Borrower shall not have
any obligation to any Indemnitee hereunder with respect to any Indemnified Liabilities to the
extent such Indemnified Liabilities (i) arise from the gross negligence or willful misconduct
of such Indemnitee (as actually and finally determined by a final, non-appealable judgment of a
court of competent jurisdiction), (ii) constitute ordinary and usual operating or overhead
expenses of such Indemnitee or (iii) relate to amounts which any other Person has agreed to
pay).  To the extent that the undertaking to defend, indemnify, pay and hold harmless set forth
in the preceding sentence may be unenforceable because it is violative of any law or public
policy, the Borrower shall contribute the maximum portion that they are permitted to pay and
satisfy under applicable law to the payment and satisfaction of all Indemnified Liabilities
incurred by the Indemnitees or any of them.  In no event, however, shall any Indemnitee be
liable on any theory of liability for any special, indirect, consequential or punitive damages
(including, without limitation, any loss of profits, business or anticipated savings).

SECTION 10.5.     RIGHT OF SET-OFF.

In addition to any rights now or hereafter granted under applicable law and not by way of
limitation of any such rights, upon the occurrence and during the continuance of any Event
of Default, to the fullest extent permitted by law, each Lender is hereby authorized by the
Borrower at any time or from time to time, without notice to the Borrower or to any other
Person, any such notice being hereby expressly waived, to set off and to appropriate and
to apply any and all deposits (general or special, including, but not limited to, Indebtedness
evidenced by certificates of deposit, whether matured or unmatured) and any other Indebtedness
at any time held or owing by that Lender to or for the credit or the account of the Borrower
against and on account of the obligations and liabilities of the Borrower to that Lender under
this Agreement, the Notes, and the other Loan Documents, including, but not limited to, all
claims of any nature or description arising out of or connected with this Agreement, the Notes,
or any other Loan Document, irrespective of whether or not (i) that Lender shall have made any
demand hereunder or (ii) the principal of or the interest on the Loan or any other amounts due
hereunder shall have become due and payable pursuant to SECTION 7.2 and although said
obligations and liabilities, or any of them, may be contingent or unmatured.

SECTION 10.6.     SHARING OF PAYMENTS, ETC.

Each of the Lenders and the Board hereby agree among themselves that if any of them shall,
whether by voluntary payment, by realization upon security, through the exercise of and
right of set-off or banker's lien, by counterclaim or cross action or by the enforcement
of any right under the Loan Documents or otherwise, or as adequate protection of a deposit
treated as cash collateral under the Bankruptcy Code, receive payment or reduction of a
proportion of the aggregate amount of principal, interest, fees and other amounts then due and
owing to the Lenders and the Board hereunder or under the other Loan Documents (collectively,
the "Aggregate Amounts Due") which is greater than the proportion received by any other Lender
or the Board in respect of the Aggregate Amounts Due to such other Lender or the Board, then
the Lender or the Board receiving such proportionately greater payment shall (i) notify the
Agent and each other Lender and the Board of the receipt of such payment, and (ii) (A) in the
case of a Lender, (1) apply a portion of such payment to purchase participations equal to the
portion of the Aggregate Amounts Due to the other Lenders and (2) pay to the Board the portion
of the Aggregate Amounts Due to it, or (B) in the case of the Board, pay to each Lender the
portion of the Aggregate Amounts Due to it (which participations shall be deemed to have been
purchased and payments made simultaneously upon the receipt by the seller or the Board of its
portion of such payment, and which participations will be permitted notwithstanding any
prohibition to the contrary in Section 10.2(e)) so that all such recoveries of Aggregate
Amounts Due shall be shared by all Lenders and the Board in proportion to the Aggregate Amounts
Due to them; provided, that if all or part of such proportionately greater payment received by
such purchasing Lender or the Board is thereafter recovered from such Lender or the Board upon
the bankruptcy or reorganization of the Borrower or otherwise, those purchases or other
payments shall be rescinded and the purchase prices paid for such participations or other
payments shall be returned to such purchasing Lender or the Board ratably to the extent of such
recovery, but without interest.  The Borrower expressly consents to the foregoing arrangement
and agrees that any holder of a participation so purchased may exercise any and all rights of
banker's lien, set-off or counterclaim with respect to any and all monies owing by the Borrower
to that holder with respect thereto as fully as if that holder were owed the amount of the
participation held by that holder.

SECTION 10.7.     NOTICES, ETC.

Unless otherwise specifically provided herein, any notice, request or other communication
herein required or permitted to be given shall be in writing and may be personally served
or sent by telefacsimile or United States mail or courier service and shall be deemed to
have been given when delivered in person or by courier service, or upon receipt of
telefacsimile, or five (5) Business Days after depositing it in the United States mail with
postage prepaid and properly addressed; provided that notices shall not be effective against an
addressee until received by it.  For the purposes hereof, the address of each party hereto and
each Supplemental Guarantor shall be as set forth under such party's name on Annex A, or (i) as
to either of the Borrower and the Agent, such other address as shall be designated by such
Person in a written notice delivered to the other parties hereto and (ii) as to each other
party hereto, such other address as shall be designated by such party in a written notice
delivered to the Agent.  A copy of any and all notices, requests, communications, demands,
reports, documents or other materials (including, without limitation, any of the materials
delivered by the Borrower under SECTION 5.1(B)) delivered or sent by any party pursuant to the
terms of this Agreement or any other Loan Document, shall be given to the Loan Administrator.

SECTION 10.8.     NO WAIVER; REMEDIES.

No failure on the part of the Board, any Lender, the Collateral Agent or the Agent to exercise,
and no delay in exercising, any right hereunder shall operate as a waiver thereof; nor shall
any single or partial exercise of any such right preclude any other or further exercise thereof
or the exercise of any other right.  The remedies herein provided are cumulative and not exclusive
of any remedies provided by law.

SECTION 10.9.     INDEPENDENCE OF REPRESENTATIONS, WARRANTIES AND COVENANTS.

All representations and warranties made in and covenants under this Agreement shall be given
independent effect so that (a) if a particular representation and warranty is unqualified, the
fact that another representation and warranty is qualified shall not affect the operation of
the former provision; and (b) if a particular action or condition is not permitted by any of
such covenants, the fact that it would be permitted by an exception to, or would otherwise be
within the limitations of, another covenant shall not avoid the occurrence of an Event of Default
or Default if such action is taken or condition exists.

SECTION 10.10.    GOVERNING LAW.

This Agreement and the rights and obligations of the parties hereto shall be governed by, and
construed in accordance with, the law of the State of New York; provided, that
in the event the Board becomes a Lender pursuant to the Board Guarantee, the rights and
obligations of the Board hereunder shall be governed by, and construed in accordance with, the
Federal law of the United States of America, if and to the extent such Federal law is
applicable, and otherwise in accordance with the law of the State of New York.

SECTION 10.11.    SUBMISSION TO JURISDICTION; SERVICE OF PROCESS.

(a)      Any legal action or proceeding with respect to this Agreement or any other Loan Document
may be brought in the courts of the State of New York located in New York County or of the United
States of America for the Southern District of New York, and, by execution and delivery of this
Agreement, the Borrower hereby accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts.  The parties hereto hereby
irrevocably waive any objection, including any objection to the laying of venue or based on the
grounds of forum non conveniens, which any of them may now or hereafter have to the bringing of
any such action or proceeding in such respective jurisdictions.
(b)      The Borrower hereby irrevocably consents to the service of any and all legal process,
summons, notices and documents in any suit, action or proceeding brought in the United States of
America arising out of or in connection with this Agreement or any of the other Loan Documents by
the mailing (by registered or certified mail, postage prepaid) or delivering of a copy of such
process to the Borrower in accordance with the provisions of SECTION 10.7.  The Borrower agrees
that a final judgment in any such action or proceeding shall be conclusive and may be enforced in
other jurisdictions by suit on the judgment or in any other manner provided by law.
(c)      Nothing contained in this SECTION 10.11 shall affect the right of the Agent or any Lender
or other party to serve process in any other manner permitted by law or commence legal proceedings or
otherwise proceed against the Borrower in any other jurisdiction.

SECTION 10.12.    WAIVER OF JURY TRIAL.

Each of the parties hereto irrevocably waives trial by jury in any action or proceeding with respect
to this Agreement or any other Loan Document.

SECTION 10.13.    MARSHALING; PAYMENTS SET ASIDE.

Neither the Agent nor any Lender shall be under any obligation to marshal any assets in favor of
the Borrower or any other party or against or in payment of any or all of the Obligations.  To the
extent that the Borrower makes a payment or payments to the Agent for the account of the Board, the
Loan Administrator, any Lender or any Supplemental Guarantor (each, a "Payee") or any Payee receives
payment from exercise of their rights of setoff, and such payment or payments or the proceeds of such
setoff or any part thereof are subsequently invalidated, declared to be fraudulent or preferential,
set aside or required to be repaid to a trustee, receiver or any other party, then (i) to the extent
of such recovery, the obligation or part thereof originally intended to be satisfied, and all rights
and remedies therefor, shall be revived and continued in full force and effect as if such payment had not
been made or such enforcement or setoff had not occurred, and (ii) each Payee shall pay and
return such amount to the Agent as the Agent may be required to disgorge or otherwise pay to a
trustee, receiver or any other party in respect of the portion of the payment from the Borrower
distributed by the Agent to such Payee hereunder.

SECTION 10.14.    SECTION TITLES.

The Section titles contained in this Agreement are and shall be without substantive meaning or
content of any kind whatsoever and are not a part of the agreement between the parties hereto.

SECTION 10.15.    EXECUTION IN COUNTERPARTS.

This Agreement may be executed in any number of counterparts and by different parties in
separate counterparts, each of which when so executed shall be deemed to be an original and all
of which taken together shall constitute one and the same agreement. Signature pages may be
detached from multiple separate counterparts and attached to a single counterpart so that all
signature pages are attached to the same document.  Delivery of an executed signature page of
this Agreement by facsimile transmission shall be as effective as delivery of a manually executed
counterpart hereof.  A set of the copies of this Agreement signed by all parties shall be lodged
with the Borrower and the Agent.

SECTION 10.16.    THIRD PARTY BENEFICIARY.

Each Supplemental Guarantor shall be an express third party beneficiary of this Agreement to the
extent the provisions of this Agreement by their terms confer upon such Supplemental Guarantor
any right or remedy and shall be entitled to rely on each representation and warranty of the
Borrower hereunder and the covenants of the Borrower contained in herein as fully and with the
same force and effect as if made expressly to such Supplemental Guarantor, and the execution and
delivery of its Supplemental Guarantee to the Agent and the Tranche B-1 Lender and the Tranche B-2
Lender, respectively, shall constitute such Supplemental Guarantor's agreement to the provisions of
this Agreement and the Security Agreement and to be bound by the terms and conditions hereof and
thereof applicable to the Supplemental Guarantors (including, without limitation, ARTICLE IX and
Sections 2.8, 2.9, 10.13 and 10.18 hereof) in asserting any right or remedy hereunder.

SECTION 10.17.    SEVERABILITY.

In case any provision in or obligation under this Agreement, any Note or the other Loan Documents
shall be invalid, illegal or unenforceable in any jurisdiction the validity, legality and
enforceability of the remaining provisions or obligations, or of such provision or obligation in
any other jurisdiction, shall not in any way be affected or impaired thereby.

SECTION 10.18.    CONFIDENTIALITY.

(a)      Each party hereto (other than the Board) and each Supplemental Guarantor shall, and shall procure that
its respective officers, employees and agents shall, keep confidential and shall not, without
the prior written consent of the other parties, disclose to any third party this Agreement, any
other Loan Document or any of the information, reports or documents supplied by or on behalf of
such other party not otherwise publicly available, except that a party shall be entitled to
disclose this Agreement, any other Loan Document, and any such information, reports or
documents:
                  (i)    in connection with any proceeding arising out of or in connection with this
                  Agreement, any of the other Loan Documents, the Board Guarantee or any Supplemental
                  Guarantee to the extent that such party may reasonably consider necessary to protect
                  its interest; or
                 (ii)    to any potential assignee or transferee of any party's rights under this
                  Agreement or any of the Loan Documents or any Supplemental Guarantor's rights under
                  its Supplemental Guarantee or any other Person proposing to enter into contractual
                  arrangements with any party in relation to this Agreement, any of the other Loan
                  Documents, the Board Guarantee or any Supplemental Guarantee subject to the relevant
                  party obtaining an undertaking from such potential assignee or transferee or other
                  person in corresponding terms to this SECTION 10.18; or
                (iii)    pursuant to any applicable laws, ordinances, judgments, decrees, injunctions,
                  writs, rules, regulations, orders, interpretations, licenses, permits and orders of
                  any competent court, arbitrator or governmental agency or authority in any relevant
                  jurisdiction; or
                 (iv)    to bank examiners or any other regulatory authority or rating agencies or
                  similar entities, if requested to do so; or
                  (v)    to its auditors and its legal, tax and other professional advisers; or
                 (vi)    to its Affiliates and their respective directors, officers, employees and agents.
(b)      Notwithstanding anything to the contrary set forth herein, the obligations of confidentiality
contained herein as they relate to the transactions contemplated by this Agreement or any other Loan
Documents, shall not apply to the structure or tax aspects of such transactions, and any party
to this Agreement (and any employee, representative, or agent of any party to this Agreement) may
disclose to any and all persons, without limitation of any kind, such structure and tax aspects of
such transactions, and all materials of any kind (including opinions or other tax analyses) related
to such structure and tax aspects.  Further, each party hereto acknowledges that it has no proprietary
rights to any tax matter or tax idea related to the transactions contemplated by this Agreement or any
other Loan Documents.
(c)      The provisions of this SECTION 10.18 shall survive any termination of this Agreement, any
Supplemental Guarantee or any other Loan Document or any assignment, transfer or participation under
this Agreement or any Supplemental Guarantee.

SECTION 10.19.    ACKNOWLEDGEMENT REGARDING FEDERAL AUTHORITY.

(a)      Each of the parties hereto and each of the Supplemental Guarantors acknowledges and agrees that:
                  (i)    the operations and assets of the Borrower and its Subsidiaries (including, without
                  limitation, Aircraft Related Equipment and other assets that constitute Collateral) are
                  subject, directly and indirectly, to the actions, inaction and policies of various
                  Governmental Authorities, including, in particular but without limitation, the United
                  States Department of Transportation (of which the Federal Aviation Administration is a
                  component) and the United States Department of Justice;
                 (ii)    Governmental Authorities, in discharging their current and future statutory or
                  regulatory responsibilities, may act, decline to act, or adopt policies resulting in
                  material adverse effects on (A) the business, condition (financial or otherwise),
                  operations, performance, prospects, assets or properties of the Borrower and its
                  Subsidiaries, (B) the ability of the Borrower and its Subsidiaries to perform their
                  payment or other material obligations under the Loan Documents, and (C) the value of
                  the Collateral or the practical ability of the Collateral Agent to realize such value
                  in the event of a Default or an Event of Default;
                (iii)    no Governmental Authority, in discharging its statutory or regulatory
                  responsibilities, has or shall have any obligation whatsoever to the Borrower or any
                  of its Subsidiaries, or to any secured party by reason of such Governmental Authority's
                  representation on the Board, the Board's issuance of the Board Guarantee, or the Board's
                  participation as a party to the other Loan Documents, to consider the potential that
                  any of the material adverse effects referred to in clause (ii) above may result from
                  such Governmental Authority's discharge of its statutory or regulatory responsibilities;
                  and
                  iv)    neither the Board, in discharging its rights and responsibilities, or in exercising
                  its discretion, under the Act, the Regulations, the Board Guarantee or the other Loan
                  Documents, nor any of the Board's members, acting in their capacities as such, has or
                  shall have any obligation whatsoever to the Borrower or any of its Subsidiaries or to
                  any of the secured parties to take any action in connection with a Governmental Authority's
                  discharge of its statutory or regulatory responsibilities which may have any of the
                  material adverse effects referred to in clause (ii) above, and the Board may not take
                  any action depriving a Governmental Authority of its rights and powers to discharge
                  its statutory and regulatory responsibilities in any manner that may have any of the
                  material adverse effects referred to in clause (ii) above.
(b)      Without limiting the generality of the foregoing, the parties and the Supplemental Guarantors
acknowledge and agree that (i) the Department of Transportation, through the Federal Aviation
Administration, has broad authority under Title 49 of the United States Code to regulate the
use of the navigable airspace of the United States so as to ensure its safe and efficient
utilization, (ii) the exercise of such authority may substantially impair or eliminate
altogether the utility to the Borrower and its Subsidiaries and value to the secured parties of
Aircraft Related Equipment pledged as Collateral and other assets of the Borrower and its
Subsidiaries such as gates and slots utilized at airports, and (iii) no assurance, express or
implied, has been given by any Governmental Authority, including the Board, to the Borrower or
to any secured party, nor has either of the Borrower or any secured party relied upon any such
assurance, with respect to any future action, inaction or policy of the Federal Aviation
Administration or any other Governmental Authority relating to any such Collateral or other
assets.
(c)      Nothing in this SECTION 10.19 shall be construed to limit or otherwise affect the Board's obligations
under the Board Guarantee.

SECTION 10.20.    CUMULATIVE RIGHTS AND REMEDIES.

The rights and remedies conferred upon the parties hereto shall be cumulative, and the exercise or waiver
of any such right or remedy shall not preclude or inhibit the exercise of any additional rights or remedies.
The waiver of any right or remedy hereunder shall not preclude the subsequent exercise of such right or remedy.








                  IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date first above
written.


                                                            FRONTIER AIRLINES, INC.


                                                            By:                           
                                                                 Name:
                                                                 Title:


                                                            WESTLB AG,
                                                            as Agent


                                                            By:                           
                                                                 Name:
                                                                 Title:


                                                            WESTLB AG,
                                                            as Tranche A Lender and a Tranche C
                                                            Lender


                                                            By:                           
                                                                 Name:
                                                                 Title:

                                                            WELLS FARGO BANK, N.A.,
                                                              as Tranche B-1 Lender, Tranche B-2
                                                              Lender and a Tranche C Lender


                                                            By:                           
                                                                 Name:
                                                                 Title:


                                                            WELLS FARGO BANK NORTHWEST, N.A.,
                                                            as Collateral Agent


                                                            By:                           
                                                                 Name:
                                                                 Title:





                                                            BEARINGPOINT, INC.,
                                                            (formerly KPMG Consulting, Inc.)
                                                            as Loan Administrator


                                                            By:                           
                                                                 Name:  Timothy F. Kenny
                                                                 Title:  Managing Director


                                                            AIR TRANSPORTATION
                                                            STABILIZATION BOARD


                                                            By:                           
                                                                 Name:
                                                                 Title:








                                             Annex A

                             Notice Addresses; Payment Instructions


If to the Borrower:

Notices

Frontier Airlines, Inc.
7001 Tower Road
Denver, Colorado 80249
Attention: General Counsel
Phone: (720) 374-4512
Facsimile: (720) 374-4379

Payment Instructions


If to the Agent:

Notices

WestLB AG
1211 Avenue of the Americas
New York, New York  10036

For credit issues:
         Brigitte Thieme
         Transportation Finance
         Tel.:  212 852-6111
         Fax:   212 869-7634

         with a copy to:

         Louisa Lee
         Transaction Management
         Tel.:  212 597-1332
         Fax:   212 869-7634

For issues related to payment, setting of interest rate, drawdowns / repayments:
         Suzy Kong
         Loan Administration
         Tel.:  212 597-1319
         Fax:   212 302-7946

         with a copy to:

         Arcadio Diaz
         GSF-Agency Dept.
         Tel.:  212 597-1426
         Fax:   212 921-5947

         Louisa Lee
         Transaction Management
         Tel.:  212 597-1332
         Fax:   212 869-7634

Payment Instructions

Bank:                    JP Morgan Chase
ABA No:                  [***]
Account Name:            WestLB AG New York Branch
Account No.:             [***]
Ref.:                    [***]


If to the Tranche A Lender and a Tranche C Lender:

Notices

WestLB AG
1211 Avenue of the Americas
New York, New York  10036

For credit issues:
         Brigitte Thieme
         Transportation Finance
         Tel.:  212 852-6111
         Fax:   212 869-7634

         with a copy to:

         Louisa Lee
         Transaction Management
         Tel.:  212 597-1332
         Fax:   212 869-7634

For issues related to payment, setting of interest rate, drawdowns / repayments:
         Suzy Kong
         Loan Administration
         Tel.:  212 597-1319
         Fax:   212 302-7946

         with a copy to:

         Arcadio Diaz
         GSF-Agency Dept.
         Tel.:  212 597-1426
         Fax:   212 921-5947

         Louisa Lee
         Transaction Management
         Tel.:  212 597-1332
         Fax:   212 869-7634

Payment Instructions

Bank:                    JP Morgan Chase
ABA No:                  [***]
Account Name:            WestLB AG New York Branch
Account No.:             [***]
Ref.:                    [***]









If to the Tranche B-1 Lender, Tranche B-2 Lender and a Tranche C Lender:

Notices

Wells Fargo Bank, N.A.
Denver Wholesale Loan Servicing
1740 Broadway MAC C7300-034
Denver, CO 80274

Attention: Lynn Hout
Phone: (303) 863-5040
Facsimile: (303) 863-5726


Payment Instructions

ABA/RTN:                 [***]
Account Name:            Wires in Progress
Account Number:          [***]
Reference:               [***],
                         Frontier Airlines, Inc.,
                         please do a breakdown
                         of the payment (i.e.. Principal
                         & Interest Breakdown).




If to the Loan Administrator:

BearingPoint, Inc. (formerly KPMG Consulting, Inc.)
1676 International Drive
McLean, VA 22102
Attention: Timothy F. Kenny
Phone: (703) 747-3056
Facsimile: (703) 747-8758

With a copy to:
Bearing Point, Inc. (formerly KPMG Consulting, Inc.)
1676 International Drive
McLean, VA 22102
Attention:  Group Counsel Public Services
Phone: (703) 747-6328
Facsimile: (703) 747-8003


If to the Collateral Agent:

Wells Fargo Bank Northwest, N.A.
299 South Main Street, 12th Floor
Salt Lake City, UT 84111

Attention: Brett R. King
Phone: (801) 246-5819
Facsimile: (801) 246-5053


If to the Board:

Notices

Air Transportation Stabilization Board
1120 Vermont Avenue
Suite 970
Washington, D.C. 20005
Attn: Executive Director
Tel: (202) 775-8030
Fax: (202) 622-3420

with a copy to:

United States Department of the Treasury
1500 Pennsylvania Avenue, N.W.
Washington, D.C. 20220
Attn: Deputy Assistant Secretary for Government Financial Policy
Tel: (202) 622-7073
Fax: (202) 622-0387

Payment Instructions


If to the [***] Supplemental Guarantor:

[***]

with a copy to:

[***]


If to the [***] Supplemental Guarantor:


[***]

with a copy to:
[***]


Payment Instructions

Bank:                    [***]
ABA No:                  [***]
Account Name:            [***]
Account No.:             [***]







                                             Annex B

                                         Lending Office



Wells Fargo Bank, N.A.
Denver Wholesale Loan Servicing
1740 Broadway MAC C7300-034
Denver, CO 80274





                                             Annex C


                                   Supplemental Guarantee Rate Schedule



                             Period                                             Guarantee Rate
                                                                                (per quarter)

On or before February 14, 2004                                                       [***]%

After February 14, 2004 and on or before February 14, 2005                           [***]%

After February 14, 2005 and on or before February 14, 2006                           [***]%

After February 14, 2006 and on or before June 30, 2007                               [***]%








                                         Schedule 2.8(c)

                           Loan Administrator Hourly Fee Rate Schedule



            Managing Director                                                $[***]

             Senior Manager                                                  $[***]

                 Manager                                                     $[***]

            Senior Consultant                                                $[***]

               Consultant                                                    $[***]

                 Analyst                                                     $[***]

         The above rates shall be increased annually effective on each anniversary of the
Closing Date for so long as this Agreement remains in effect by [***]%.






                                         Schedule 4.1(c)

                                    Subsidiaries of Borrower


                                              None







                                         Schedule 4.2(b)

                             Consents under Contractual Obligations


                                              None







                                         Schedule 4.2(c)

                                      Governmental Consents


                                              None






                                          Schedule 4.7

                                        Payment of Taxes


                                              None







                                          Schedule 4.16

                                          Indebtedness







                                          Schedule 6.1

                                 Liens and Payment Restrictions


                                              None






                                         Schedule 6.7(b)

                                  Transactions with Affiliates


                                              None






                                            EXHIBIT A

                                FORM OF ASSIGNMENT AND ACCEPTANCE

                  Assignment and Acceptance dated as of _________, ____ between
              ______________ (the "Assignor") and ______________ (the "Assignee").


                  Reference is made to the Loan Agreement, dated as of February 14, 2003 (as the
same may be amended, restated, supplemented or otherwise modified from time to time, the "Loan
Agreement"), among Frontier Airlines, Inc., as Borrower, WestLB AG, as Tranche A Lender , a
Tranche C Lender and as Agent, Wells Fargo Bank, N.A., Tranche B-1 Lender, Tranche B-2 Lender
and a Tranche C Lender, BearingPoint, Inc., as the Loan Administrator, Wells Fargo Bank
Northwest, N.A., as the Collateral Agent and Air Transportation Stabilization Board.
Capitalized terms used herein and not otherwise defined herein are used herein as defined in
the Loan Agreement.

                  The Assignor and the Assignee hereby agree as follows:

1.        The Assignor hereby sells and assigns to the Assignee, and the Assignee hereby
          purchases and assumes from the Assignor, [all of] [a __% interest in] the Assignor's
          rights and obligations under the Loan Agreement and the [Tranche A/Tranche B-1/Tranche
          B-2/Tranche C] Note.  The principal amount of the portion of [Tranche A/Tranche B] of
          the Loan and the [Tranche A/Tranche B-1/Tranche B-2/Tranche C] Note assigned to the
          Assignee are set forth in Section 1 of Schedule I [and the principal amount of
          [Tranche A/Tranche B-1/Tranche B-2/Tranche C] of the Loan and the [Tranche A/Tranche
          B-1/Tranche B-2/Tranche C] Note retained by the Assignor after giving effect to such
          sale and assignment are set forth in Section 2 of Schedule I.].

2.        The Assignor (i) represents and warrants that[, subject to the rights of any
          participant,] it is the legal and beneficial owner of the interest being assigned by
          it hereunder and that such interest is free and clear of any adverse claim; (ii) makes
          no representation or warranty and assumes no responsibility with respect to any
          statements, warranties or representations made in or in connection with the Loan
          Agreement or any other Loan Document or any other instrument or document furnished
          pursuant thereto or the execution, legality, validity, enforceability, genuineness,
          sufficiency or value of the Loan Agreement or any other Loan Document or any other
          instrument or document furnished pursuant thereto; and (iii) makes no representation
          or warranty and assumes no responsibility with respect to the financial condition of
          the Borrower or the performance or observance by the Borrower of any of its
          obligations under the Loan Agreement or any other Loan Document or any other
          instrument or document furnished pursuant thereto.

3.        The Assignee (i) agrees that it will, independently and without reliance upon the
          Agent, the Assignor or any other Lender and based on such documents and information as
          it shall deem appropriate at the time, continue to make its own credit decisions in
          taking or not taking action under the Loan Agreement; (ii) appoints and authorizes the
          Agent to take such action as agent on its behalf and to exercise such powers under the
          Loan Agreement and the other Loan Documents as are delegated to the Agent by the terms
          thereof, together with such powers as are reasonably incidental thereto; (iii) agrees
          that it will perform in accordance with their terms all of the obligations which by
          the terms of the Loan Agreement are required to be performed by it as a Lender; (iv)
          represents and warrants that it is an Eligible Lender; (v) confirms it has received
          such documents and information as it has deemed appropriate to make its own credit
          analysis and decision to enter into this Assignment and Acceptance; and (vi) specifies
          as its Lending Office (and address for notices) the office set forth beneath its name
          on the signature pages hereof.

4.        Following the execution of this Assignment and Acceptance by the Assignor and the
          Assignee, it will be delivered to the Agent [(with a copy to the Board)]1  for
          acceptance and recording by the Agent, together with an assignment fee of $10,000.
          The effective date of this Assignment and Acceptance shall be __________ [or such
          later date as of which the Board shall have consented to the sale and assignment of
          [all of] [a __% interest in] the Assignor's rights and obligations under the Loan
          Agreement and the Tranche A Note to the Assignee as provided herein and as evidenced
          by its signed confirmation thereof set forth on the signature pages hereof (the
          "Effective Date")]2.

5.        Upon such acceptance and recording by the Agent, then, as of the Effective Date, (i)
          the Assignee shall be a party to the Loan Agreement and, to the extent provided in
          this Assignment and Acceptance, have the rights and obligations under the Loan
          Agreement of a Lender and (ii) the Assignor shall, to the extent provided in this
          Assignment and Acceptance, relinquish its rights (except those which survive the
          payment in full of the Obligations) other than those relating to events or
          circumstances occurring prior to the Effective Date and be released from its
          obligations under the Loan Documents.

6.        Upon such acceptance and recording by the Agent, from and after the Effective Date,
          the Agent shall make all payments under the Loan Documents in respect of the interest
          assigned hereby (i) to or for the account of the Assignee, in the case of amounts
          accrued with respect to any period on or after the Effective Date, and (ii) to or for
          the account of the Assignor, in the case of amounts accrued with respect to any period
          prior to the Effective Date.

7.        This Assignment and Acceptance shall be governed by, and be construed in accordance
          with, the law of the State of New York.

8.        This Assignment and Acceptance may be executed in any number of counterparts and by
          different parties on separate counterparts, each of which when so executed shall be
          deemed to be an original and all of which taken together shall constitute but one and
          the same agreement.  Delivery of an executed counterpart of this Assignment and
          Acceptance by telecopier shall be effective as delivery of a manually executed
          counterpart of this Assignment and Acceptance.

                  In Witness Whereof, the parties hereto have caused this Assignment and
Acceptance to be executed by their respective officers thereunto duly authorized, as of the
date first above written.

                                                      [Assignor]


                                                      By:                    
                                                           Name:
                                                           Title:

                                                      [Assignee]


                                                      By:                    
                                                           Name:
                                                           Title:

                                                      Lending Office (and
                                                                address for notices):

                                                      [Address]

Accepted this day
of             , ____

[               ],
as Agent


By:                    
     Name:
     Title:

[The Board hereby confirms its consent to this
Assignment and Acceptance in accordance with the
provisions of SECTION 10.2 of the Loan Agreement]3

Air Transportation Stabilization Board

By:                    
     Name:
     Title:









                                           Schedule I
                                               to
                                      Assignment and Acceptance


Section 1.

Aggregate Outstanding Principal Amount of
[Tranche A/Tranche B-1/Tranche B-2/Tranche C] of the Loan and of the
[Tranche A/Tranche B-1/Tranche B-2/Tranche C] Note Assigned to Assignee:        $
                                                                                       

Section 2.

Aggregate Outstanding Principal Amount of
[Tranche A/Tranche B-1/Tranche B-2/Tranche C] of the Loan and of the
[Tranche A/Tranche B-1/Tranche B-2/Tranche C] Note retained by Assignor:        $
                                                                                       









                                           EXHIBIT B1

                                     FORM OF TRANCHE A NOTE

                                                                                New York, New York
$                                                                        February [_], 2003

                  FOR VALUE RECEIVED, the undersigned FRONTIER AIRLINES, INC., a Colorado
corporation (the "Borrower"), hereby promises to pay to WESTLB AG, as Agent, for account of the
Tranche A Lender, the principal amount set forth above, or, if less, the aggregate unpaid
principal amount of Tranche A of the Loan, payable at such times, and in such amounts, as are
specified in the Loan Agreement.  The Borrower hereby promises to pay interest on the unpaid
principal amount of Tranche A of the Loan from the date hereof until such principal amount is
paid in full, at the rate or rates, and payable at such times as are specified in the Loan
Agreement.

                  This Tranche A Note shall be payable at the principal office of the Agent
presently located at 1211 Avenue of the Americas, New York NY 10036.

                  This Tranche A Note is the "Tranche A Note" referred to in that certain Loan
Agreement, dated as of February [__], 2003 (as the same may be amended, restated, supplemented
or otherwise modified from time to time, the "Loan Agreement"), among the Borrower, WestLB AG,
as Tranche A Lender, a Tranche C Lender and as Agent, Wells Fargo Bank, N.A., as Tranche B-1
Lender, as Tranche B-2 Lender and as a Tranche C Lender, BearingPoint, Inc. (formerly KPMG
Consulting, Inc.), as the Loan Administrator, Wells Fargo Bank Northwest, N.A., as the
Collateral Agent, and Air Transportation Stabilization Board, and entitled to the benefits
thereof and of the Security Agreement.  Capitalized terms used herein and not defined herein
are used herein as defined in the Loan Agreement.

                  Demand, diligence, presentment, protest and notice of non-payment and protest
are hereby waived by the Borrower.  This Tranche A Note may be prepaid solely as provided in
the Loan Agreement and may be accelerated in whole or in part as provided in the Loan Agreement.

                  This Tranche A Note shall be governed by, and construed in accordance with,
the law of the State of New York; provided, that in the event the Board becomes a Tranche A
Lender pursuant to the Board Guarantee, the rights and obligations of the Board hereunder shall
be governed by, and construed in accordance with, the Federal law of the United States of
America, if and to the extent such Federal law is applicable, and otherwise in accordance with
the law of the State of New York.

                  IN WITNESS WHEREOF, the Borrower has caused this Tranche A Note to be executed
and delivered by its duly authorized officer as of the date and at the place set forth above.

                                                              FRONTIER AIRLINES, INC.


                                                              By:            
                                                                    Name:
                                                                    Title:








                                          Exhibit B2-1

                                    Form of Tranche b-1 Note


                                                                                New York, New York
$                                                                        February [_], 2003

                  FOR VALUE RECEIVED, the undersigned FRONTIER AIRLINES, INC., a Colorado
corporation (the "Borrower"), hereby promises to pay to WESTLB AG, as Agent, for account of the
Tranche B Lenders, the principal amount set forth above, or, if less, the aggregate unpaid
principal amount of Tranche B-1 of the Loan, payable at such times, and in such amounts, as are
specified in the Loan Agreement.  The Borrower hereby promises to pay interest on the unpaid
principal amount of Tranche B-1 of the Loan from the date hereof until such principal amount is
paid in full, at the rate or rates, and payable at such times as are specified in the Loan
Agreement.

                  This Tranche B-1 Note shall be payable at the principal office of the Agent
presently located at 1211 Avenue of the Americas, New York, NY 10036.

                  This Tranche B-1 Note is the "Tranche B-1 Note" referred to in that certain
Loan Agreement, dated as of February [__], 2003 (as the same may be amended, restated,
supplemented or otherwise modified from time to time, the "Loan Agreement"), among the
Borrower, WestLB AG, as Tranche A Lender, a Tranche C Lender and as Agent, Wells Fargo Bank,
N.A., as Tranche B-1 Lender, as Tranche B-2 Lender and as a Tranche C Lender, BearingPoint,
Inc. (formerly KPMG Consulting, Inc.), as the Loan Administrator, Wells Fargo Bank Northwest,
N.A., as the Collateral Agent, and Air Transportation Stabilization Board and entitled to the
benefits thereof and of the Security Agreement.  Capitalized terms used herein and not defined
herein are used herein as defined in the Loan Agreement.

                  Demand, diligence, presentment, protest and notice of non-payment and protest
are hereby waived by the Borrower.  This Tranche B-1 Note may be prepaid solely as provided in
the Loan Agreement and may be accelerated in whole or in part as provided in the Loan Agreement.

                  This Tranche B-1 Note shall be governed by, and construed in accordance with,
the law of the State of New York.

                  IN WITNESS WHEREOF, the Borrower has caused this Tranche B-1 Note to be
executed and delivered by its duly authorized officer as of the date and at the place set forth
above.

                                                              FRONTIER AIRLINES, INC.


                                                              By:            
                                                                    Name:
                                                                    Title:








                                          Exhibit B2-2

                                    Form of Tranche b-2 Note


                                                                                New York, New York
$                                                                        February [_], 2003

                  FOR VALUE RECEIVED, the undersigned FRONTIER AIRLINES, INC., a Colorado
corporation (the "Borrower"), hereby promises to pay to WESTLB AG, as Agent, for account of the
Tranche B Lenders, the principal amount set forth above, or, if less, the aggregate unpaid
principal amount of Tranche B-2 of the Loan, payable at such times, and in such amounts, as are
specified in the Loan Agreement.  The Borrower hereby promises to pay interest on the unpaid
principal amount of Tranche B-2 of the Loan from the date hereof until such principal amount is
paid in full, at the rate or rates, and payable at such times as are specified in the Loan
Agreement.

                  This Tranche B-2 Note shall be payable at the principal office of the Agent
presently located at 1211 Avenue of the Americas, New York, NY 10036.

                  This Tranche B-2 Note is the "Tranche B-2 Note" referred to in that certain
Loan Agreement, dated as of February [__], 2003 (as the same may be amended, restated,
supplemented or otherwise modified from time to time, the "Loan Agreement"), among the
Borrower, WestLB AG, as Tranche A Lender, a Tranche C Lender and as Agent, Wells Fargo Bank,
N.A., as Tranche B-1 Lender, as Tranche B-2 Lender and as a Tranche C Lender, BearingPoint,
Inc. (formerly KPMG Consulting, Inc.), as the Loan Administrator, Wells Fargo Bank Northwest,
N.A., as the Collateral Agent, and Air Transportation Stabilization Board and entitled to the
benefits thereof and of the Security Agreement.  Capitalized terms used herein and not defined
herein are used herein as defined in the Loan Agreement.

                  Demand, diligence, presentment, protest and notice of non-payment and protest
are hereby waived by the Borrower.  This Tranche B-2 Note may be prepaid solely as provided in
the Loan Agreement and may be accelerated in whole or in part as provided in the Loan Agreement.

                  This Tranche B-2 Note shall be governed by, and construed in accordance with,
the law of the State of New York.

                  IN WITNESS WHEREOF, the Borrower has caused this Tranche B-2 Note to be
executed and delivered by its duly authorized officer as of the date and at the place set forth
above.

                                                              FRONTIER AIRLINES, INC.


                                                              By:            
                                                                    Name:
                                                                    Title:








                                           Exhibit B3

                                     Form of Tranche C Note


                                                                                New York, New York
$                                                                      February [_], 2003

                  FOR VALUE RECEIVED, the undersigned FRONTIER AIRLINES, INC., a Colorado
corporation (the "Borrower"), hereby promises to pay to WESTLB AG, as Agent, for account of the
Tranche C Lenders, the principal amount set forth above, or, if less, the aggregate unpaid
principal amount of Tranche C of the Loan, payable at such times, and in such amounts, as are
specified in the Loan Agreement.  The Borrower hereby promises to pay interest on the unpaid
principal amount of Tranche C of the Loan from the date hereof until such principal amount is
paid in full, at the rate or rates, and payable at such times as are specified in the Loan
Agreement.

                  This Tranche C Note shall be payable at the principal office of the Agent
presently located at 1211 Avenue of the Americas, New York, NY 10036.

                  This Tranche C Note is the "Tranche C Note" referred to in that certain Loan
Agreement, dated as of February [__], 2003 (as the same may be amended, restated, supplemented
or otherwise modified from time to time, the "Loan Agreement"), among the Borrower, WestLB AG,
as Tranche A Lender, a Tranche C Lender and as Agent, Wells Fargo Bank, N.A., as Tranche B-1
Lender, Tranche B-2 Lender and as a Tranche C Lender, BearingPoint, Inc. (formerly KPMG
Consulting, Inc.), as the Loan Administrator, Wells Fargo Bank Northwest, N.A., as the
Collateral Agent, and Air Transportation Stabilization Board and entitled to the benefits
thereof and of the Security Agreement.  Capitalized terms used herein and not defined herein
are used herein as defined in the Loan Agreement.

                  Demand, diligence, presentment, protest and notice of non-payment and protest
are hereby waived by the Borrower.  This Tranche C Note may be prepaid solely as provided in
the Loan Agreement and may be accelerated in whole or in part as provided in the Loan Agreement.

                  This Tranche C Note shall be governed by, and construed in accordance with,
the law of the State of New York.

                  IN WITNESS WHEREOF, the Borrower has caused this Tranche C Note to be executed
and delivered by its duly authorized officer as of the date and at the place set forth above.

                                                              FRONTIER AIRLINES, INC.


                                                              By:            
                                                                    Name:
                                                                    Title:

















                                            EXHIBIT C

                                   FORM OF NOTICE OF BORROWING


WestLB AG,
  as Agent under the Loan Agreement
  referred to below
[      ]
[      ]

                                                                                February [__], 2003

                  Re:      FRONTIER AIRLINES, INC. (the "Borrower")

         Reference is made to the Loan Agreement, to be dated as of February [_], 2003 (as the
same may be amended, restated, supplemented or otherwise modified from time to time, the "Loan
Agreement"), among the Borrower, WestLB AG, as Tranche A Lender, a Tranche C Lender and as
Agent, Wells Fargo Bank, N.A., as Tranche B Lender and as a Tranche C Lender, BearingPoint,
Inc. (formerly KPMG Consulting, Inc.), as the Loan Administrator, Wells Fargo Bank Northwest,
N.A., as the Collateral Agent, and Air Transportation Stabilization Board.  Capitalized terms
used herein and not otherwise defined herein are used herein as therein defined.

         The Borrower hereby gives you irrevocable notice, pursuant to Section 2.2 of the Loan
Agreement, that the undersigned hereby requests a Borrowing under the Loan Agreement and, in
that connection, sets forth below the information relating to such Borrowing (the "Proposed
Borrowing") as required by Section 2.2 of the Loan Agreement:


                  (i)      The date of the Proposed Borrowing is February [__], 2003 (the
                  "Closing Date").

                  (ii)     The aggregate amount of the Proposed Borrowing is $      .

                  (iii)    Tranche A of the Loan is $      .

                  (iv)     Tranche B-1 of the Loan is $      .

                  (v)      Tranche B-2 of the Loan is $      .

                  (vi)     Tranche C of the Loan is $      .

         The undersigned hereby certifies that the following statements are true on the date
hereof and shall be true on the Closing Date both before and after giving effect to the
Proposed Borrowing and to the application of the proceeds therefrom:

                  (i)      the representations, warranties and certifications set forth in
         Article IV of the Loan Agreement, in the other Loan Documents and the Application and
         any other document, certificate or written statement delivered in connection therewith
         are true and correct on and as of the Closing Date before and after giving effect to
         the Borrowing and to the application of the proceeds therefrom, with the same effect
         as though made on and as of such date, except to the extent such representations and
         warranties expressly relate to an earlier date; and

                  (ii)     no Event of Default or event which, with the giving of notice or
         passage of time or both, would be an Event of Default, has occurred and is continuing
         on the Closing Date, or would result from the Borrowing after giving effect to the
         Borrowing and the application of the proceeds therefrom.

                                                           FRONTIER AIRLINES, INC.


                                                           By:               _
                                                                Name:
                                                                Title: [Chief Financial
                                                                Officer/President/Chief
                                                                Executive Officer]







                                            EXHIBIT D

                                     FORM OF BOARD GUARANTEE







                                          EXHIBIT E1-1

                              FORM OF [***] SUPPLEMENTAL GUARANTEE




                                          EXHIBIT E1-2


                                 FORM OF [***] COUNTER GUARANTEE





                                           EXHIBIT E2

                              FORM OF [***] SUPPLEMENTAL GUARANTEE









                                            EXHIBIT F

                                    FORM OF WARRANT AGREEMENT








                                            EXHIBIT G

                              FORM OF REGISTRATION RIGHTS AGREEMENT








                                            EXHIBIT H

                                   FORM OF SECURITY AGREEMENT







                                            EXHIBIT I

                              FORM OF COLLATERAL VALUE CERTIFICATE




                  Reference is made to the Loan Agreement  dated as of February [__],  2003 among
Frontier  Airlines,  Inc. (the  "Borrower"),  WestLB AG, as Tranche A Lender,  a Tranche C Lender
and Agent,  Wells Fargo  Bank,  N.A.,  as Tranche B-1 Lender,  Tranche B-2 Lender and a Tranche C
Lender, BearingPoint,  Inc. (formerly KPMG Consulting, Inc.), as Loan Administrator,  Wells Fargo
Bank Northwest,  N.A., as the Collateral Agent, and Air  Transportation  Stabilization  Board (as
the same may be amended,  restated or supplemented  or otherwise  modified from time to time, the
"Loan  Agreement").  Capitalized  terms used herein and not otherwise  defined  herein shall have
the meanings assigned to such terms in the Loan Agreement.

                  The undersigned,  being the        of Borrower,  does hereby certify
as of the date hereof, that the Collateral Value is as follows:




Spare Parts


         (Appraised Value based on the Appraisal Report(s) attached hereto as
         Appendix I)                                                                                $[  ]

Less Ineligible Assets, as identified and described on Schedule I hereto                           ($[  ])


Spare Engines


         (Appraised Value based on the Appraisal Report(s) attached hereto as
Appendix II)                                                                                        $[  ]


Less Ineligible Assets, as identified and described on Schedule II hereto                          ($[  ])


Other Appraised Collateral


Aircraft, as described on Appendix III, if any


         (Appraised Value based on the Appraisal Report(s) attached hereto as
Appendix III)                                                                                       $[  ]


Other Appraised Collateral, as described on Appendix IV (being Collateral
having a book value of or in excess of $100,000), if any


         (Appraised Value based on the Appraisal Report(s) attached hereto as                       $[  ]
Appendix IV)                                                                                       ($[  ])

Less Ineligible Assets, as identified and described on Schedules III and IV


Other Collateral, as described on Appendix V


         (Book value as of the end of the most recently ended fiscal quarter X
50%: $       x .50)
                                                                                                    $[  ]

Less Ineligible Assets, as identified and described on Schedule V hereto
                                                                                                   ($[  ])

Total Collateral Value                                                                              $[  ]



                  In addition, the undersigned hereby certifies as of the date hereof as follows:

                  None of the Collateral  included in the calculation of the Collateral  Value is
subject to any event of loss,  damage or other  casualty not  disclosed in a schedule  referenced
above.

                                                     [and/or]

                  To the  knowledge  of the  undersigned,  no [other]  event has  occurred and no
[other]  condition  exists,  that has affected,  or would reasonably be expected to affect,  in a
materially  adverse  way,  the value of such  Collateral,  in any such case,  whether  insured or
not.

                                                     [and/or]

                  An event has  occurred  or  condition  now exists that has  affected,  or would
reasonably  be expected to affect,  in a  materially  adverse  way,  the value of the  Collateral
identified  on Schedule V hereto (as described  thereon),  in any such case,  whether  insured or
not.

                  [No Value Differential exists] or [A Value Differential of $       exists.].

                  The undersigned hereby certifies that all statements made in this Collateral
Value Certificate are true and correct as of the date hereof.

                                                          FRONTIER AIRLINES, INC.



                                                          By:                
                                                               Name:
                                                               Title:

EX-10

                                                                                                     EXECUTION COPY

     PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
    EXCHANGE COMMISSION IN A CONFIDENTAL TREATMENT REQUEST UNDER RULE 24b-2 OF THE SECURITIES
       EXCHANGE ACT OF 1934, AS AMENDED. THE SYMBOL "[***]" IN THIS EXHIBIT INDICATES THAT
                                  INFORMATION HAS BEEN OMITTED.



                                 MORTGAGE AND SECURITY AGREEMENT

                                  Dated as of February 14, 2003

                                             made by

                                     Frontier Airlines, Inc.

                                           in favor of

                                Wells Fargo Bank Northwest, N.A.,

                                     as the Collateral Agent








                                        TABLE OF CONTENTS


                                                                                             Page

Article 1 DEFINITIONS..............................................................................6

   Section 1.01      Definitions...................................................................6

Article 2 COVENANTS OF THE COMPANY................................................................12

   Section 2.01      Maintenance and Operation; Possession; Insignia....................... ......12
   Section 2.02      Replacement and Pooling of Parts; Alterations, Modifications and Additions...17
   Section 2.03      Use, Possession and Designated Locations of Spare Parts and Pledged
                     Equipment....................................................................18
   Section 2.04      Insurance....................................................................20
   Section 2.05      Inspection...................................................................24
   Section 2.06      Pledged Equipment/Tax Receivable.............................................25
   Section 2.07      Liens........................................................................26
   Section 2.08      Further Assurances...........................................................26

Article 3 EVENT OF LOSS...........................................................................26

   Section 3.01      Event of Loss; Application of Payments and Proceeds..........................26

Article 4 REMEDIES................................................................................31

   Section 4.01      Remedies Available to Collateral Agent.......................................31
   Section 4.02      Expenses.....................................................................34
   Section 4.03      Waiver of Claims.............................................................35
   Section 4.04      Discontinuance of Proceedings................................................35

Article 5 TERMINATION OF SECURITY AGREEMENT.......................................................36

   Section 5.01      Termination of Security Agreement............................................36

Article 6 MISCELLANEOUS...........................................................................36

   Section 6.01      Notices......................................................................36
   Section 6.02      Governing Law................................................................37
   Section 6.03      Execution in Counterparts....................................................37
   Section 6.04      Amendments...................................................................37
   Section 6.05      Documentation................................................................37
   Section 6.06      Prepayment Account...........................................................37
   Section 6.07      Cash Collateral..............................................................38

EXHIBITS

Exhibit A1........Form of Mortgage and Security Agreement Supplement (Spare Engine)

Exhibit A2........Form of Mortgage and Security Agreement Supplement (Spare Parts)

Exhibit B.........Schedule of Spare Engines

Exhibit C.........Designated Locations

Exhibit D.........Schedule of Countries Authorized for Domicile of Permitted Lessees





                                 MORTGAGE AND SECURITY AGREEMENT


         This  MORTGAGE  AND SECURITY  AGREEMENT  (as  amended,  modified,  restated or otherwise
supplemented  from time to time in accordance with the terms hereof,  this "Security  Agreement")
dated as of February 14, 2003 is made by Frontier  Airlines,  Inc., a Colorado  corporation  (the
"Company")  in favor of Wells  Fargo Bank  Northwest,  N.A.,  acting  solely in its  capacity  as
Collateral Agent for the Board,  the Lenders and the  Supplemental  Guarantors (as such terms are
defined in the Loan  Agreement  (as defined  below)) and as directed by the Board and the Lenders
(the "Collateral Agent").


                                      W I T N E S S E T H:


         WHEREAS,  all  capitalized  terms used and not otherwise  defined  herein shall have the
respective meanings set forth or referred to in ARTICLE 1 hereof;

         WHEREAS,  the Company is an air carrier  certificated  under Sections 41102 and 44705 of
Title 49 of the United States Code and holds air carrier operating certificates;

         WHEREAS,  the Company,  the Lenders,  BearingPoint,  Inc.,  as Loan  Administrator,  the
Collateral Agent,  WestLB AG, as Agent, and Air  Transportation  Stabilization  Board are parties
to a Loan Agreement  dated as of February 14, 2003 (as amended,  modified,  restated or otherwise
supplemented  from time to time in accordance with its terms,  the "Loan  Agreement")  providing,
subject to the terms and  conditions  thereof,  for a single term loan (the "Loan") to be made by
such lenders;

         WHEREAS,  it is a condition  precedent to the making of the Loan that the Company  shall
have executed and delivered to the Collateral Agent this Security Agreement;

         WHEREAS,  the  Company  wishes  to  execute  this  Security  Agreement  to  satisfy  the
condition  described in the preceding  paragraph and to grant  certain first  priority  perfected
security  interests in the  Collateral in favor of the Collateral  Agent for the ratable  benefit
and security of the Board and the Lenders; and

         WHEREAS,  all things  necessary to make this  Security  Agreement  the legal,  valid and
binding  obligation of the Company and the  Collateral  Agent,  for the uses and purposes  herein
set forth, in accordance with its terms, have been done and performed and have happened;

                                         GRANTING CLAUSE


         NOW,  THEREFORE,  THIS MORTGAGE AND SECURITY AGREEMENT  WITNESSETH,  that, to secure the
prompt  payment of the principal of,  interest on, and all other amounts due with respect to, the
Loan and to secure the  performance  and  observance by the Company  under the Loan  Agreement of
all the agreements,  covenants and provisions  contained herein, in the Loan Agreement and in the
other Loan  Documents,  and the prompt  payment  of any and all  amounts  from time to time owing
hereunder,  under the Loan Agreement and the other Loan Documents,  and for the uses and purposes
and subject to the terms and provisions  hereof,  and in consideration of the premises and of the
covenants  herein  contained,  and of other  good and  valuable  consideration  the  receipt  and
adequacy whereof are hereby  acknowledged,  the Company has granted,  bargained,  sold, assigned,
transferred,  conveyed,  mortgaged,  pledged and confirmed, and does hereby grant, bargain, sell,
assign,  transfer,   convey,  mortgage,  pledge  and  confirm  unto  the  Collateral  Agent,  its
successors and assigns,  for the ratable  security and benefit of the Board,  the Lenders and the
Supplemental  Guarantors,  a security interest in and mortgage Lien on all estate,  right,  title
and  interest  of the  Company  in,  to and  under  the  following  described  property,  rights,
interests  and  privileges  ownership of which is now held or hereafter  acquired by the Company,
and  wherever  located  (which  collectively,   including  all  property  hereafter  specifically
subjected  to the Lien of the Security  Documents  by any  instrument  supplemental  hereto,  are
herein called the "Collateral"):

                  (1)      each Spare  Engine  (each such Spare  Engine  having 750 or more rated
         take-off  horsepower or the  equivalent  thereof) as the same is now and will  hereafter
         be  constituted,  whether now owned or hereafter  acquired,  and whether or not any such
         Spare Engine  shall be  installed  in or attached to any airframe and all  substitutions
         or  replacements  therefor,  as provided in this Security  Agreement,  together with all
         Parts of whatever  nature which are from time to time  included in the "Spare  Engines",
         whether   now  owned  or   hereafter   acquired,   and  all   renewals,   substitutions,
         replacements,  additions,  improvements,  accessories and accumulations  with respect to
         any of the foregoing;

                  (2)      all Spare  Parts,  whether  now  owned or  hereafter  acquired  by the
         Company,   including  any  replacements,   substitutions  or  renewals   therefor,   and
         accessions  thereto,  including  but not  limited to those  spare  parts  located at the
         Designated  Locations  described on Exhibit C attached hereto and incorporated herein by
         reference or any supplement or amendment  thereto supplied  hereunder or in any Security
         Agreement Supplement (Spare Parts) executed and delivered from time to time hereunder;

                  (3)      without  limiting the  generality of the  foregoing,  all  requisition
         proceeds  (including,  without  limitation,  all payments and proceeds or other revenues
         or income under the Civil  Reserve Air Fleet  Program) with respect to any Spare Engine,
         any Spare Part or any Part thereof and all  insurance  proceeds with respect to any loss
         of or damage to any Spare  Engine,  any Spare Part or any Part  thereof  from  insurance
         required  to be  maintained  by the  Company  under  SECTION  2.04,  but  excluding  any
         insurance  maintained  by the  Company  and not  required  under  SECTION  2.04  and all
         proceeds  from the sale or  disposition  of any  Spare  Engine,  Spare  Part or any Part
         thereof or any other property described in any paragraph of this Granting Clause;

                  (4)      the Purchase Agreements and the Warranty Bills of Sale;

                  (5)      the rights of the Company under any warranty,  indemnity or agreement,
         express  or  implied,  regarding  title,  materials,   workmanship,   design  or  patent
         infringement or related  matters in respect of any Spare Part,  Spare Engine or any Part
         thereof (other than a warranty,  indemnity or other such agreement  which, by its terms,
         cannot be transferred or encumbered  without  resulting in its  termination or causing a
         default or breach thereunder);

                  (6)      all repair,  maintenance and inventory records,  logs, manuals and all
         other documents and materials similar thereto (including,  without limitation,  any such
         records,  logs,  manuals,  documents and materials that are in electronic  format or are
         computer  print-outs) at any time  maintained,  created or used by the Company,  and all
         records,  logs,  documents and other materials  required at any time to be maintained by
         the Company  pursuant to the FAA or under the  Federal  Aviation  Act, in each case with
         respect to any Spare Engine or any Part thereof or any of the Spare Parts ("Records");

                  (7)      all Pledged Equipment,  in each case, whether now owned or existing or
         hereafter acquired or arising, and all proceeds, products,  accessions,  rents, profits,
         income,   benefits,   indemnification   and  insurance   proceeds,   substitutions   and
         replacements  of and to any of  such  Collateral  and,  to the  extent  related  to such
         Collateral,  all  books,  correspondence,  credit  files,  records,  invoices  and other
         papers  (including,  without  limitation,  all  tapes,  cards,  computer  runs and other
         papers and  documents  in the  possession  or under the  control  of the  Company or any
         computer bureau or service company from time to time acting for the Company);

                  (8)      all  moneys and  securities  now or  hereafter  paid or  deposited  or
         required to be paid or deposited to or with the  Collateral  Agent by or for the account
         of the Company  pursuant to any term  hereof or of any other Loan  Document  and held or
         required to be held by the Collateral Agent hereunder or thereunder;

                  (9)      the Pledged Tax Receivable;

                  (10)     all right, title, interest,  claims and demands of the Company, in, to
         and under any  lease of any  Spare  Engines  (other  than  indemnity  claims  thereunder
         personal  to  the  Company  as  lessor  and  proceeds  of  insurance   with  respect  to
         third-party liability claims);

                  (11)     the  Prepayment  Account and all monies,  Cash  Equivalents  and other
         amounts on deposit therein, and earnings thereon; and

                  (12)     all  proceeds  (including,   without  limitation,   Proceeds)  of  the
         foregoing  (other than  proceeds or Proceeds of insurance  maintained by the Company and
         not required under SECTION 2.04).

                                         HABENDUM CLAUSE

         TO HAVE AND TO HOLD all and singular the aforesaid  property unto the Collateral  Agent,
its  successors  and  assigns,  and for the  uses and  purposes  and  subject  to the  terms  and
provisions set forth in this Security Agreement.

                  (1)      It is expressly agreed  that anything  herein contained to the contrary
notwithstanding,  the Company shall remain  liable under each of the Assigned  Documents to which
it is a party to perform  all of the  obligations  assumed by it  thereunder,  all in  accordance
with and pursuant to the terms and provisions  thereof,  and the  Collateral  Agent shall have no
obligation  or liability  under any of the Assigned  Documents by reason of or arising out of the
assignment  hereunder,  nor shall the Collateral  Agent be required or obligated in any manner to
perform or fulfill any  obligations  of the Company under any of the Assigned  Documents to which
the Company is a party,  or,  except as herein  expressly  provided,  to make any payment,  or to
make any inquiry as to the nature or  sufficiency  of any  payment  received by it, or present or
file any claim,  or take any action to collect or enforce the  payment of any  amounts  which may
have been assigned to it or to which it may be entitled at any time or times.

                  (2)      The Company does hereby constitute the Collateral Agent as its true and
lawful attorney,  irrevocably,  for good and  valuable  consideration  and coupled  with an interest
and with full power of  substitution  (in its name or otherwise)  subject to the terms and conditions
of this  Security  Agreement,  to ask,  require,  demand,  receive,  sue for,  compound  and give
acquittance  for any and all  moneys  and  claims for moneys due and to become due to it under or
arising  out of the Loan  Documents,  to  endorse  any checks or other  instruments  or orders in
connection  therewith,  to file any claims or take any action or institute any proceedings  which
the  Collateral  Agent may deem to be  necessary  or  advisable  in the  premises as fully as the
Company  itself  could do;  provided  that the  Collateral  Agent shall not  exercise any of such
rights except upon the occurrence and during the continuance of an Event of Default.

                  (3)      The Company agrees that at any time and from time to time, at its sole
cost and  expense,  upon the  written  request of the Collateral Agent, it will promptly and duly
execute,  deliver,  file  and  record  (as  applicable)  any and  all  such  further  agreements,
certificates,  instruments  and  documents  as  may  be  necessary  or  desirable  or  which  the
Collateral  Agent may  reasonably  request  in order to  create,  preserve,  perfect,  confirm or
validate the security  interests in the  Collateral or to enable the  Collateral  Agent to obtain
the full benefits of this Security  Agreement and the other  Security  Documents or to enable the
Collateral  Agent  lawfully to enforce any of its  rights,  powers,  and  remedies  hereunder  or
thereunder with respect to any of the Collateral,  including,  without limitation,  to enable the
Collateral  Agent to comply with 31 U.S.C.ss. 3727 in respect of an assignment of the Pledged Tax
Receivable to the Collateral  Agent, it being  acknowledged  and agreed that the Collateral Agent
is expressly  authorized to unilaterally  exercise or cause to be exercised any and all rights of
a secured  party  hereunder  or under  applicable  law,  including  the  filing of UCC  financing
statements  (or  amendment  thereto)  in respect of any of the  Collateral.  Notwithstanding  any
contrary  provision in this  Security  Agreement  or the other  Security  Documents,  the Company
shall not be  obligated  to  perfect  the  security  interest  of the  Collateral  Agent in Motor
Vehicles  for which the  Company has a  certificate  of title and which are a part of the Pledged
Equipment  except as  follows:    the Company will cause the Lien of the  Collateral  Agent to be
perfected  on any Motor  Vehicle  acquired: (a) after  the date of this  Security  Agreement at a
cost in  excess of  $50,000;  (b) at  any time  while the  aggregate  book  value of all of Motor
Vehicles on which the Collateral  Agent does not have a perfected Lien, net of  depreciation  and
as  determined  in  accordance  with  GAAP, exceeds  $200,000 or (c) while an Event of Default or
Specified  Default  exists.  In addition,  the Company,  at the request of the  Collateral  Agent
made at any time after the  occurrence of and during the  continuance  of any Event of Default or
Specified  Default,  shall cause the Lien of the  Collateral  Agent to be  perfected on all Motor
Vehicles.

                  (4)      The Company does hereby warrant and represent that (a) it has not
assigned or pledged,  and hereby  covenants  that it will not (i)  assign or pledge to any Person
other than the Collateral  Agent,  so long as the Lien of the Security  Documents has not been
discharged in accordance with the terms hereof, any of its rights, titles or interests hereby assigned
(including,  with  respect to the Pledged  Tax  Receivable,  any rights of the Company  under any
supporting  obligation,  instrument  or other  document  evidencing  or  supporting  its right to
payment in respect of the Pledged  Tax  Receivable)  and (ii)  subject to the  provisions  of the
Loan Agreement, except as  provided hereunder or except in a manner  that does not adversely
affect the Collateral  Agent,  the Board and the Lenders,  (A) enter into any agreement  amending
or  supplementing  any Assigned  Document,  (B) execute any waiver or modification of, or consent
under,  the terms of, or during the  continuance  of an Event of  Default,  exercise  any rights,
powers or privileges under, any Assigned  Document,  or (C) during the continuance of an Event of
Default,  settle or compromise any claim arising under any Security  Document,  submit or consent
to the  submission of any dispute,  difference or other matter arising under or in respect of any
Security  Document,  or to arbitration  thereunder;  (b) all of the Spare Parts are or will (upon
becoming  subject to the Lien of the Security  Documents)  be  maintained  by or on behalf of the
Company at the Designated  Locations,  subject to SECTION 2.03 hereof; (c) Exhibit C sets forth a
true and complete  list of all  locations  at which the Company  maintains  Spare Parts;  (d) the
Company has full  power,  authority  and legal right to assign and pledge all of the  Collateral,
and the  Company  owns and has good and  marketable  title to the  Collateral  now subject to the
Lien of the Security  Documents,  free and clear of any Liens,  except for Permitted  Liens;  (e)
the Company's  location (as such term is used in Section  9-307 of the UCC) is Colorado,  and the
full and correct  legal name and mailing  address of the Company are correctly set forth in Annex
A to the Loan Agreement;  (f) except for (x) the filing of a UCC-1  financing  statement with the
Secretary of State of Colorado  naming the Company as Debtor and the Collateral  Agent as Secured
Party in respect of the  Collateral,  (y) the filing for  recordation  of this Agreement with the
FAA and (z) in respect of any Motor Vehicle,  endorsing on the  certificate of title therefor the
Lien  of  the  Collateral  Agent  thereon,  no  registration,  recordation  or  filing  with  any
Governmental  Authority  is  required  in  connection  with the  execution  and  delivery of this
Security  Agreement  and the  other  Security  Documents  or is  necessary  for the  validity  or
enforceability  hereof or thereof or for the perfection or enforcement of the security  interests
created  hereunder  or  thereunder;  and (g) upon the  filing  of the UCC-1  financing  statement
referred to in clause (f)(x) above,  the filing for  recordation of this Security  Agreement with
the FAA and the  endorsement  on the  certificate  of title in respect of any Motor  Vehicle  the
Lien of the Collateral  Agent thereon,  subject to the  penultimate  sentence of Habendum  Clause
(3), the security  interest  granted to the Collateral Agent herein in and to the Collateral will
constitute  a first  priority  perfected  security  interest  therein  prior to the rights of all
other Persons and subject to no other Liens other than Permitted Liens not of record.

                  (5)      It is hereby further agreed that any and all property  described or
referred to in the Granting  Clause hereof which is hereafter  acquired by the Company shall ipso
facto,  and without any other  conveyance,  assignment  or act on the part of the  Company or the
Collateral Agent, become and be subject to the Lien herein granted as fully and completely as though
specifically described herein.

IT IS HEREBY FURTHER COVENANTED AND AGREED by and among the parties hereto as follows:


                                            ARTICLE 1

                                           DEFINITIONS

SECTION 1.01      DEFINITIONS.

(a)      For all  purposes  of this  Security  Agreement,  except as  otherwise  expressly  provided  or unless the
context otherwise requires:
(i)      each of the  "Company",  "Collateral  Agent",  or any other  Person  includes,  without  prejudice  to the
         provisions  of any Loan  Documents,  any  successor in interest to it and any  permitted
         transferee, permitted purchaser or permitted assignee of it;
(ii)     the terms  defined in this  ARTICLE 1 have the  meanings  assigned to them in this  ARTICLE 1, and include
         the plural as well as the singular;
(iii)    all accounting  terms not otherwise  defined herein have the meanings  assigned to them in accordance with
         generally accepted accounting principles in the United States;
(iv)     the words  "herein",  "hereof" and  "hereunder"  and other words of similar import refer to this Security
         Agreement as a whole and not to any particular Article, Section or other subdivision;
(v)      all references in this Security Agreement to Articles,  Sections and Exhibits refer to Articles,  Sections
         and Exhibits of this Security Agreement; and
(vi)     all  references  in this  Security  Agreement to Exhibits  refer to such  Exhibits as such Exhibits may be
         amended,  supplemented  or otherwise  modified from time to time in accordance  with the
         terms hereof.
(b)      The terms  "aircraft",  "aircraft  engine",  "appliance"  and "cargo" shall have the  respective  meanings
ascribed  thereto in Section  40102 of Chapter 401 of Title 49 of the United  States Code and the
term "engine" shall include an "aircraft engine" as defined therein.
(c)      The term  "UCC"  means the  Uniform  Commercial  Code as in effect on the date  hereof in the State of New
York;  provided,  however,  that if by reason of mandatory  provisions of law, the  perfection or
the effect of  perfection  or  non-perfection  of any  security  interest  in any  Collateral  is
governed  by the  Uniform  Commercial  Code as in effect in a  jurisdiction  other than New York,
then for  purposes  of the  provisions  hereof  relating  to such  perfection  or the  effect  of
perfection  or  non-perfection  of any  security  interest  the term "UCC" shall mean the Uniform
Commercial  Code as in effect in such other  jurisdiction  and references to Article 9 of the UCC
shall include such Article however numbered in any relevant jurisdiction.
(d)      The terms  "Equipment",  "Fixtures" and "Proceeds" shall have the respective  meanings ascribed thereto in
Article 9 of the UCC.
(e)      For all  purposes  of this  Security  Agreement,  the  following  capitalized  terms  have  the  following
respective meanings:

                  "Acceptable  Alternate  Spare  Engine"  means a Pratt &  Whitney  JT8D or CFM56
         engine or an engine of either  such or another  manufacturer  of  equivalent  or greater
         value and  utility  (without  regard to hours and  cycles);  provided  that such  engine
         shall be an engine of a type then  being  utilized  by the  Company  on other  Boeing or
         Airbus aircraft, as applicable, then being operated by the Company.

                  "Additional  Insured" means each Lender,  the Board, the Collateral  Agent, the
         Agent, the Loan  Administrator and each of their respective  Affiliates,  successors and
         permitted assigns, and the respective  directors,  officers and employees of each of the
         foregoing.

                  "Appliances"   means  an   instrument,   equipment,   apparatus,   a  part,  an
         appurtenance,  or an accessory  used,  capable of being used,  or intended to be used in
         operating  or  controlling  aircraft  in flight,  including a  parachute,  communication
         equipment,  and another  mechanism  installed in or attached to aircraft  during flight,
         and not part of an aircraft or engine.

                  "Assigned  Documents" means the Purchase Agreements and Warranty Bills of Sale,
         collectively.

                  "Available Engine" has the meaning assigned thereto in SECTION 3.01(A)(V).

                  "Bankruptcy  Default"  means any event or  condition  which is or upon  notice,
         lapse of time or both would,  unless cured or waived,  become an Event of Default  under
         clause (f), (g), (n) or (o) of Section 7.1 of the Loan Agreement.

                  "Certificated  Air  Carrier"  means a Person  holding an air carrier  operating
         certificate  issued by the Secretary of  Transportation of the United States pursuant to
         Chapter 447 of Title 49 of the United States Code or any analogous  successor  provision
         of the United States Code, for aircraft  capable of carrying ten or more  individuals or
         6,000 pounds or more of cargo.

                  "Civil  Reserve Air Fleet  Program"  means the Civil  Reserve Air Fleet Program
         administered by the United States  Government  pursuant to Executive Order No. 11490, as
         amended, or any substantially similar program.

                  "Collateral" has the meaning assigned thereto in the Granting Clause hereof.

                  "Company" has the meaning assigned thereto in the preamble to this Agreement.

                 "Designated  Locations"  means the  locations in the United  States  designated
         from time to time by the  Company  at which it may keep  Spare  Parts,  which  initially
         shall  be the  locations  set  forth in  Exhibit  C and  shall  include  the  additional
         locations designated by the Company pursuant to SECTION 2.03 hereof.

                  "Event of Loss" means, with respect to any Spare Engine,  any Spare Part or any
         Pledged  Equipment,  as  applicable,  any of the  following  events with respect to such
         property:  (i) the loss of such  property or of the use  thereof due to the  destruction
         of or damage to such  property  which  renders  repair  uneconomic or which renders such
         property  permanently  unfit for normal use for any reason  whatsoever;  (ii) any damage
         to  such  property  which  results  in an  insurance  settlement  with  respect  to such
         property  on the basis of a total loss or a  constructive  or  compromised  total  loss;
         (iii) the theft or  disappearance  of such  property  for the  lesser of (A) a period in
         excess  of  sixty  (60)  consecutive  days,  (B) the  period  to the  date  when the Net
         Insurance  Proceeds with respect to such property are paid to the Collateral  Agent,  or
         (C) the period to the date when the Company has  confirmed  to the  Collateral  Agent in
         writing that it cannot recover such property;  (iv) (x) the  confiscation,  condemnation
         or seizure of, or requisition of, title to such property by any  Governmental  Authority
         or purported  Governmental  Authority or (y) the  confiscation,  condemnation or seizure
         of, or requisition of, use of such property by any  Governmental  Authority or purported
         Governmental  Authority,  which shall have  resulted in the loss of  possession  of such
         property by the  Company  for a period in excess of six months;  and (v) any other event
         which constitutes an Event of Loss hereunder.

                  "Expendables"  means those Spare  Parts of a type  normally  used only once and
         thereby  consumed or otherwise  discarded  including all Parts which have a limited life
         and are not classified as fixed assets in accordance with GAAP.

                  "FAA" means the United States Federal Aviation  Administration or any successor
         thereto  administering  the functions of the Federal Aviation  Administration  under the
         Federal Aviation Act.

                  "Federal  Aviation  Act" means  Subtitle  VII of Title 49 of the United  States
         Code relating to aviation,  as amended from time to time, or any similar  legislation of
         the United States enacted to supersede, amend or supplement such Subtitle.

                  "Insurance Brokers" has the meaning assigned thereto in SECTION 2.04(C).

                  "Insured  Amount"  for  any  Spare  Engine  or  Spare  Part  as of any  date of
         determination means an amount equal to its replacement value.

                  "Insurers" has the meaning assigned thereto in SECTION 2.04(A)(I).

                  "Loss  Payment  Date" has the  meaning  assigned  thereto  in clause  (B)(1) of
          SECTION 3.01(A)(I).

                  "Manufacturer"  means with  respect to each Spare  Engine and Spare  Part,  the
         manufacturer thereof, and its successors and assigns.

                  "Minimum Liability Insurance Amount" means $750,000,000.

                  "Motor  Vehicle"  means any  vehicle  the  ownership  of which is governed by a
          certificate of title statute.

                  "Parts"  means,  in respect of any Spare Engine or any Spare Part,  any and all
         parts,  instruments,  appurtenances,  accessories and other equipment of whatever nature
         (other  than  complete  Spare  Engines  or  engines)  which  may  from  time  to time be
         incorporated or installed in or attached to such Spare Engine or such Spare Part.

                  "Passenger   Convenience  Equipment"  means  severable  components  or  systems
         installed  on  or  affixed  to  any  airframe  that  are  used  to  provide   individual
         telecommunications or electronic entertainment to passengers aboard an aircraft.

                  "Payment  Default" means any event or condition which is or upon notice,  lapse
           of time or both  would,  unless  cured or  waived,  become  an Event  of  Default  under
         Section 7.1(a) of the Loan Agreement.

                  "Permitted   Lease"  means  a  lease  permitted  under  the  terms  of  SECTION
           2.01(B)(I)(H).

                  "Permitted Lessee" means the lessee under a Permitted Lease.

                 "Permitted  Liens" means (i) those Liens  permitted  under clauses (i) and (ii)
          of the definition of Permitted  Encumbrances  contained in the Loan Agreement,  (ii) the
         Lien of this  Agreement and (iii) rights of third  parties in respect of the  Collateral
         to the  extent  permitted  hereby  (including  rights  under  Capital  Leases  or  title
         retention or security agreements).

                  "Pledged Equipment" means all of the Company's  Equipment,  including,  without
         limitation,  any  maintenance  tools,  ground  equipment and vehicles  (including  Motor
         Vehicles),  computer equipment and furniture;  provided, that to the extent (i) any such
          property  owned by the Company on the date hereof,  is, on the date hereof,  subject to,
         or (ii) any such  property  acquired by the Company  after the date hereof,  is acquired
         subject  to, a Capital  Lease or title  retention  or security  agreement  and cannot be
         transferred or encumbered by the Company  without  resulting in the  termination of such
         agreement  or  causing  a default  thereunder,  then the  grant of a  security  interest
         therein  in  accordance  with  this  Security   Agreement  shall  exclude  such  Pledged
         Equipment.

                  "Pledged Tax Receivable"  means the receivable of any income tax refund payable
         to the Company by the Internal  Revenue  Service for the  Company's  taxable year ending
         March 31, 2003,  including any  adjustment to such refund amount  thereafter  payable to
         the Company.

                  "Prepayment  Account"  means the deposit  account or  subaccount in the name of
         the Collateral  Agent  established for the purpose of depositing cash in satisfaction of
         the  Company's  prepayment   obligations  under  Sections  2.6  and  2.10  of  the  Loan
         Agreement.

                  "Purchase Agreements" means,  collectively,  with respect to each Spare Engine,
         the  agreement  between the  Company and the  applicable  Manufacturer  or other  seller
         relating to the purchase by the Company of such Spare Engine as  originally  executed or
         as modified,  amended or  supplemented  in accordance  with the terms thereof,  but only
         insofar  as the  foregoing  relates  to such  Spare  Engine  and to such  Manufacturer's
         warranty obligations (if applicable) with respect thereto.

                  "Records"  has the meaning  assigned  thereto in paragraph  (6) of the Granting
         Clause hereof.

                  "Replacement  Engine"  means any  engine  or  engines  substituted  for a Spare
          Engine in accordance with SECTION 2.01(D) and SECTION 3.01(A) hereof.

                  "Rotables"  means  those  Spare  Parts that can be  repeatedly  overhauled  and
          repaired.

                  "Security  Agreement"  or "this  Agreement"  means this  Mortgage  and Security
          Agreement.

                  "Security  Agreement  Supplement  (Spare  Engine)"  means a supplement  to this
         Security Agreement in the form of Exhibit A1.

                  "Security  Agreement  Supplement  (Spare  Parts)"  means a  supplement  to this
          Security Agreement in the form of Exhibit A2.

                  "Security  Documents"  means,   collectively,   this  Security  Agreement,  any
         Security Agreement  Supplement (Spare Engine),  any Security Agreement Supplement (Spare
         Parts),  and any  additional  pledge  agreements,  security  agreements,  supplements or
         other agreements  delivered  pursuant to the Loan Documents to secure the obligations of
         the Company thereunder, and each certificate,  instrument,  financing statement or other
         document  executed,  delivered,  filed or recorded  by, on behalf,  or in respect of (as
         applicable) the Company, in connection with or pursuant to the foregoing.

                  "Similar Carriers" has the meaning assigned thereto in SECTION 2.04(A)(I).

                  "Spare  Engine" means (i) each of the engines listed by  Manufacturer's  serial
         number on Exhibit B hereto  and on any  Security  Agreement  Supplement  (Spare  Engine)
         executed  and  delivered  from  time  to  time  hereunder,  and  whether  or not  either
         initially or from time to time installed on any airframe;  (ii) any  Replacement  Engine
         which may from time to time be  substituted  for any of such Spare  Engines  pursuant to
         the terms  hereof;  and (iii) in either  case,  any and all Parts which are from time to
         time  incorporated  or installed in or attached to any such engine and any and all Parts
         removed  therefrom,  unless the Lien of the Security  Documents  shall not apply to such
         Parts in accordance with SECTION 2.02.

                  "Spare Part" means an accessory,  appurtenance,  Appliance, instrument or part,
         of whatever nature (including,  without limitation,  Passenger  Convenience  Equipment),
         relating to an aircraft (except an engine),  engine,  spare engine or Appliance owned by
         the  Company  that  is to be  installed  at a  later  time  on an  aircraft,  engine  or
         Appliance if the same is (i) Expendable or Rotable and suitable for  installation  in or
         on a Boeing  737-200  or Boeing  737-300  aircraft  or a Pratt &  Whitney  JT8D or CFM56
         engine (or any other engine)  installed or intended to be installed on a Boeing  737-200
         or 737-300  aircraft,  or (ii)  Expendable  and  suitable for  installation  in or on an
         Airbus  aircraft  or an  engine  installed  or  intended  to be  installed  on an Airbus
         aircraft,  and,  in the case of clause  (i),  without  regard to whether  any such Spare
         Parts are  appropriate  for  installation  or use on, in or with any other type or model
         of Boeing aircraft or engine utilized  thereon (it being  understood that Rotables which
         are suitable for  installation on an Airbus aircraft or an engine  installed or intended
         to be installed  thereon are excluded from the  definition  of Spare  Parts);  provided,
         however,  that  the  following  Spare  Parts  shall  be  excluded  from  the Lien of the
         Granting  Clause  of  this  Security  Agreement:  (a)  any  Spare  Part so long as it is
         incorporated in,  installed on or attached or appurtenant to an aircraft or engine,  and
         (b) any Spare  Part to the  extent  (x) it is owned by the  Company  on the date  hereof
         subject  to, or (y) is  acquired  by the  Company  after the date  hereof  subject to, a
         Capital  Lease or title  retention or security  agreement and cannot be  transferred  or
         encumbered by the Company  without  resulting in the  termination  of such  agreement or
         causing a default thereunder  (including  Passenger  Convenience  Equipment subject to a
         security  interest,  license or other  interest  of a party other than the Company or an
         affiliate of the Company).

                  "Specified Default" means a Payment Default or a Bankruptcy Default.

                  "Tax  Receivable  Debtor"  means each  Person  obligated  to pay the Company in
         respect of the Pledged Tax Receivable.

                  "Tracking  System"  means,   collectively,   the  Company's  [***]  centralized
         computer  system for  tracking  its Spare Parts and the [***]  system for  tracking  its
         Spare  Engines  and  Pledged  Equipment,   and  any  and  all  improvements,   upgrades,
         substitutes or replacement systems.

                  "United States" or "U.S." means the United States of America.

                  "United States  Government"  means the federal  government of the United States
         or any instrumentality or agency thereof.

                  "Warranty Bills of Sale" means,  collectively,  each full warranty bill of sale
         delivered to the Company from the applicable  Manufacturer  (or other seller) in respect
         of each Spare Engine.

                  "Wet  Lease"  means any  arrangement  whereby  the  Company  (or any  Permitted
         Lessee)  agrees to furnish an aircraft on which a Spare  Engine is  installed to a third
         party  pursuant to which such  aircraft (i) shall remain in the  operational  control of
         the  Company  (or such  Permitted  Lessee)  and (ii) shall be  maintained,  insured  and
         otherwise used and operated in accordance with the provisions hereof.
(f)      Capitalized terms which are defined in the Loan Agreement and which are not otherwise defined
herein shall have the meanings assigned to such terms in the Loan Agreement.


                                            ARTICLE 2

                                    COVENANTS OF THE COMPANY

The Company covenants and agrees as follows:

SECTION 2.01      MAINTENANCE AND OPERATION; POSSESSION; INSIGNIA.

(a)      Maintenance and Operation of Spare Engines.

(i)      The Company, at its own cost and expense, shall: (A) maintain, service, repair, and overhaul
         (or cause to be maintained, serviced, repaired, and overhauled) each Spare Engine and each of
         the Spare  Parts (x) so as to keep the  Spare  Engines  in an  airworthy  condition  and
         suitable for  installation  and  operation on a Boeing 737 airframe in  accordance  with
         any applicable  maintenance program and in compliance with all applicable  airworthiness
         directives;  and (y) so as to  maintain  the  Spare  Parts  in good  working  order  and
         condition and shall perform all  maintenance  thereon  necessary for that purpose and in
         accordance  with the  requirements of each of the  Manufacturer's  manuals and mandatory
         service  bulletins,  excluding  Spare  Parts that have  become  worn out or  obsolete or
         unfit  for use and are not  reasonably  repairable;  and (B)  maintain  or  cause  to be
         maintained all Records,  logs and other  materials  required to be maintained by the FAA
         or any other  applicable  regulatory  agency or body in respect of each Spare Engine and
         each of the Spare Parts.
(ii)     The Company will not (or permit any Permitted Lessee to) maintain, use, store, service,
         repair, overhaul or operate any Spare Engine in material violation of any law, rule, regulation,
         treaty,  order or certificate of any government or Governmental  Authority  (domestic or
         foreign)  having  jurisdiction,  or in violation  of any  airworthiness  certificate  or
         material  violation of any license or registration  relating to such Spare Engine issued
         by any such  authority.  In the  event  that any such  law,  rule,  regulation,  treaty,
         order,  certificate,  license or registration  requires  alteration of any Spare Engine,
         the Company will, at its sole cost and expense,  conform  thereto or obtain  conformance
         therewith.  Notwithstanding  the  foregoing,  the  Company or any  Permitted  Lessee may
         contest in good faith the validity or  application  of any such law,  rule,  regulation,
         treaty,  order,  certificate,  license or  registration  in any reasonable  manner which
         does not materially  adversely affect the Collateral  Agent, the Board or any Lender, or
         any of their respective  legal and economic  interests in or to any of the Spare Engines
         or any Loan  Documents,  including  the Lien of the Security  Documents.  In every case,
         operation,  use,  storage,  maintenance,  servicing,  repair or  overhaul  of each Spare
         Engine is subject to  compliance  by the Company with the  provisions  of SECTION  2.04.
         If the indemnities or insurance from the United States  Government  specified in SECTION
         2.04(F),  or some  combination  thereof in amounts equal to amounts  required by SECTION
         2.04,  have not been obtained  (unless  indemnities  or insurance in amounts so required
         are  available  in the  commercial  aviation  insurance  market and are  obtained),  the
         Company  will not  operate or locate any Spare  Engine in or to any area  excluded  from
         coverage  by any  insurance  required  to be  maintained  by the terms of SECTION  2.04;
         provided,  however,  that the failure of the Company to comply  with the provisions of
         this SECTION  2.01(A)(II)  shall not give rise to an Event of Default where such failure
         is  attributable  to a hijacking,  medical  emergency,  equipment  malfunction,  weather
         conditions,  navigational  error or act of  terrorism  and the  Company  is  taking  all
         reasonable steps to remedy such failure as soon as practicable.

(b)      Possession of Spare Engines.

(i)      The Company will not, without the prior written consent of the Collateral Agent, lease or
         otherwise in any manner  deliver,  transfer or  relinquish  possession of any Spare Engine
         or install or permit any Spare Engine to be installed on any airframe; provided that,
         so long as (x) no Specified Default or Event of Default shall have occurred and be continuing
         at the time of such delivery, transfer or  relinquishment  of possession or  installation
         and (y) such  action  shall not  deprive  the  Collateral  Agent of the  first  priority
         perfected  Lien of the  Security  Documents  on any Spare  Engine,  the  Company  or any
         Permitted  Lessee  (except  with respect to clause (H)) may,  without the prior  written
         consent of Collateral Agent:

(A)      subject  any Spare  Engine to normal pooling or similar arrangements, in each case customary
                  in the airline  industry and entered into by the Company in the ordinary course of
                  its business; provided, that (1) no such arrangement contemplates or requires the
                  transfer  of title to any Spare  Engine and (2) if the  Company's  title to any
                  Spare Engine shall be divested  under any such  arrangement,  such  divestiture
                  shall be deemed to be an Event of Loss with respect to such Spare  Engine,  and
                  the Company shall comply with SECTION 3.01 hereof in respect thereof;

(B)      deliver  possession  of any Spare Engine to the  Manufacturer  thereof or to any other Person
                  for testing, service, repair,  maintenance or overhaul work on such Spare Engine or
                  any part thereof or for alterations or modifications in or additions to such Spare
                  Engine to the extent required or permitted by the terms hereof;

(C)      install  a Spare Engine on an airframe registered in the United States owned by the Company
                  which airframe is free and clear of all Liens, except: (1)  Permitted  Liens and
                  those which apply only to the engines (other than Spare  Engines),  Appliances,
                  parts,   instruments,   appurtenances,   accessories,   furnishings  and  other
                  equipment  (other  than  Parts)  installed  on such  airframe  (but  not to the
                  airframe as an entirety),  (2) the rights of third  parties  under  interchange
                  agreements  customary  in the airline  industry and entered into by the Company
                  in the ordinary  course of its business,  provided that Company's title to such
                  Spare Engine shall not be divested as a result  thereof and (3) mortgage  Liens
                  or other security interests,  provided, that (as regards this clause (3)), such
                  mortgage Liens or other security interests  effectively provide that such Spare
                  Engine  shall not  become  subject  to the Lien of such  mortgage  or  security
                  interest, notwithstanding the installation thereof on such airframe;

(D)      install a Spare Engine on an airframe registered in the United States leased to the Company
                  (or a Permitted  Lessee) or purchased by the Company (or a Permitted Lessee) subject
                  to a  conditional  sale or other  security  agreement,  provided  that (1) such
                   airframe  is free  and  clear  of all  Liens,  except:  (x) the  rights  of the
                  parties to the lease or conditional sale or other security  agreement  covering
                  such  airframe,  or their  assignees,  and (y) Liens of the type  permitted  by
                  clause (C) of this SECTION  2.01(B)(I) and (2) such lease,  conditional sale or
                  other security agreement  effectively provides that such Spare Engine shall not
                  become  subject to the Lien of such lease,  conditional  sale or other security
                  agreement, notwithstanding the installation thereof on such airframe;

(E)      install  a Spare  Engine on an airframe registered in the United States owned by the Company
                  (or a Permitted  Lessee),  leased to the Company or purchased by the Company subject
                  to a conditional  sale or other security  agreement under  circumstances  where
                  neither  clause (C) nor clause (D) of this SECTION  2.01(B)(I)  is  applicable,
                  provided  that any  divestiture  of title to such Spare Engine  resulting  from
                  such  installation  shall be deemed an Event of Loss with respect to such Spare
                  Engine,  and the Company  shall comply with SECTION  3.01(A)  hereof in respect
                  thereof,  the  Collateral  Agent  not  intending  hereby  to waive any right or
                  interest  it may have to or in such Spare  Engine  under  applicable  law until
                  compliance by the Company with such SECTION 3.01(A);

(F)      transfer (or permit any Permitted Lessee to transfer) possession of any Spare Engine to the
                  United States of America or any instrumentality oragency thereof pursuant  to the
                  Civil  Reserve  Air Fleet  Program  so long as the  Company  shall  notify  the
                  Collateral Agent (1) prior to transferring  possession of any such Spare Engine
                  to the  United  States of  America  or any  agency or  instrumentality  thereof
                  pursuant  to the Civil  Reserve  Air Fleet  Program and (2) of the name and the
                  address of the Contracting  Office  Representative for the Air Mobility Command
                  of the  United  States  Air  Force to whom  notice  must be given  pursuant  to
                  SECTION 4.01(A) hereof;

(G)      transfer  possession of any Spare Engine to the United States of America or any instrumentality
                  or agency thereof pursuant to a lease, contract or other instrument, a copy of which
                  shall be provided to the Collateral Agent; or

(H)      enter into a lease of any Spare Engine with (1) a Certificated Air Carrier, (2) any airline
                  domiciled and principally located in a country listed on Exhibit D hereto, or (3)
                  any other Person approved in writing by the Collateral Agent;  provided that (I) no
                  such lease shall be permitted  to a lessee that is subject to a  proceeding  or
                  final order under applicable  bankruptcy,  insolvency or reorganization laws on
                  the  date  the  lease  is  entered  into,  (II) in the  case  of a lease  under
                  subclause  (2) or (3)  above,  on the  date of such  lease  or any  renewal  or
                  extension  thereof,  the United  States and the country in which such lessee is
                  domiciled and principally  located maintain normal diplomatic  relations (which
                  for purposes of this clause (H) shall include  Taiwan),  (III) in the case only
                  of a lease to any Person  under  subclause  (3)  above,  the  Collateral  Agent
                  receives  at the time of such lease an  opinion  of  counsel  (in form and from
                  counsel  reasonably  satisfactory  to the Collateral  Agent) to the effect that
                  (w) the terms of the proposed lease will be legal, valid,  binding and (subject
                  to customary  exceptions  in foreign  opinions  generally  that are of a nature
                  accepted by financiers)  enforceable  in accordance  with its terms against the
                  proposed  lessee in the  country in which the  proposed  lessee is  principally
                  based,  (x) there exist no possessory  rights in favor of the lessee under such
                  lease  under the laws of such  lessee's  country of domicile  that would,  upon
                  bankruptcy  or  insolvency  of or other  default by the Company and assuming at
                  such time such  lessee is not  insolvent  or  bankrupt,  prevent  the return or
                  repossession  of such  Spare  Engine  in  accordance  with the  lease  and when
                  permitted by the terms of ARTICLE 4 upon the exercise by the  Collateral  Agent
                  of its  remedies  pursuant  to  such  Article,  (y) the  laws of such  lessee's
                  country  of  domicile  require  fair  compensation  by the  government  of such
                  jurisdiction  payable in currency freely  convertible into Dollars for the loss
                  of use of such Spare Engine in the event of the  requisition by such government
                  of such use, and (z) the laws of such lessee's  country of domicile  would give
                  recognition to the Company's title to the Spare Engine,  to the registration of
                  the Spare  Engine (if such  country  maintains a registry  for  engines) in the
                  name of the Company (or the proposed lessee, as "lessee", as appropriate),  and
                  to the Lien of the Security  Documents,  (IV) if the lessee under such lease is
                  a  governmental  entity,  such  lessee  has  waived  all  rights  of  sovereign
                  immunity,  and (V) if the lessee is a  Certificated  Air  Carrier,  the Company
                  will be entitled as lessor to the  benefits of Section  1110 of the  Bankruptcy
                  Code with respect to such Spare Engine in  connection  with a proceeding  under
                  Chapter 11 of the Bankruptcy Code in which the lessee is the debtor.

(ii)     The rights of any  transferee  (other than a  transferee  where the transfer is of a Spare
         Engine which is to be an Event of Loss) shall be (and the  assignment or other  transfer
         document under which such transfer is governed shall explicitly provide  that) during the
         period of such possession, subject and subordinate to, all the terms of the Security Docu-
         ments, including, without limitation, the covenants contained in this ARTICLE 2, including
         the  inspection  rights  contained in SECTION 2.05 and the  Collateral  Agent's right to
         repossess  such  Spare  Engine.   No  pooling   agreement,   Permitted  Lease  or  other
         relinquishment  of  possession  of any  Spare  Engine  shall  in any  way  discharge  or
         diminish any of the Company's  obligations  to the  Collateral  Agent under the Security
         Documents or constitute a waiver of Collateral  Agent's rights or remedies  hereunder or
         thereunder.

(iii)    In connection with any Permitted Lease, all necessary action shall be taken by the Company
         at its expense which is required to continue the Collateral Agent's security interest in the
         applicable  Spare Engine,  and such Permitted  Lease and all other  necessary  documents
         shall be duly filed,  registered  or recorded in such public  offices as may be required
         to fully  preserve  the  priority of the security  interest of the  Collateral  Agent in
         such  Spare  Engine.  Any Wet  Lease  shall  not  constitute  a  delivery,  transfer  or
         relinquishment  of possession for purposes of this SECTION 2.01.  The  Collateral  Agent
         acknowledges  that any  consolidation  or merger of the Company or conveyance,  transfer
         or  lease  of all or  substantially  all  of the  Company's  assets,  in  each  case  as
         permitted  by the Loan  Documents,  shall not be  prohibited  by this SECTION  2.01.  No
         Permitted  Lease  entered  into  pursuant  to this  SECTION  2.01(B)  shall  permit  any
         subleasing of the Spare Engines.

(iv)     Any  Permitted  Lease  having a term in excess of one (1) year  shall be assigned by the
         Company to the Collateral Agent as additional Collateral hereunder; provided that,
         except upon the occurrence and during the continuance of a Specified Default or Event of
         Default,  (A) the Company shall be entitled to retain the rental payments made to the
         Company under such Permitted Lease, and (B) the rights as lessor under any Permitted Lease
         shall not vest (to the exclusion of the Company as lessor thereunder) in the Collateral
         Agent. Upon the occurrence of a default under such Permitted  Lease, both the Company and
         the Collateral Agent shall have the right, acting separately or together, to enforce the
         terms of such Permitted Lease;  provided,  however,  that upon the occurrence and during
         the continuance of a Specified  Default or Event of Default,  the Collateral Agent shall
         have the  exclusive  right to enforce the terms of such  Permitted  Lease.  In the event
         of the expiration or termination of the Permitted Lease, at the Company's  request,  the
         Collateral Agent shall release its interest in such Permitted Lease.

(c)      Insignia.  Within ninety (90) days after (x) the Closing Date (with  respect to Spare
Engines  covered by the Lien of the Security  Documents as of the  Closing  Date), and (y) the date
on which  any Security  Agreement Supplement (Spare  Engine) is delivered (with  respect to such
additional Collateral), and so long as any Spare Engines are subject to the Lien of the  Security
Documents,  the Company  agrees to affix and maintain (or cause to be affixed and  maintained) on
each Spare Engine a nameplate bearing the inscription:

                                   THIS ENGINE IS MORTGAGED TO
                                WELLS FARGO BANK NORTHWEST, N.A.,
                                       AS COLLATERAL AGENT


(such  nameplate  to be  replaced,  if  necessary,  with a nameplate  reflecting  the name of any
successor  collateral  agent,  in each case as  permitted  under the Loan  Documents).  Except as
above  provided,  the Company  will not allow the name of any Person other than the Company to be
placed on any Spare Engine as a  designation  that might be  interpreted  as a claim of ownership
or of any rights therein.

(d)      Substitution  of Spare  Engines.  The Company may at any time,  at its sole cost and
expense, replace any Spare Engine subjected to the Lien hereof by causing one or more Acceptable
Alternate Spare Engines to be substituted for such Spare Engine hereunder in accordance with the
provisions of SECTION 3.01(A) hereof to the same extent as if an Event of Loss has occurred with
respect to such Spare Engine; provided, that the terms of SECTION  3.01(A)(V) shall not apply
to any such substitution.

SECTION 2.02      REPLACEMENT AND POOLING OF PARTS; ALTERATIONS, MODIFICATIONS AND ADDITIONS.
(a)      Replacement of Parts.  The Company, at its own cost and expense,  will promptly
replace or cause to be replaced  all Parts of each Spare Engine that may from time to time become
worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair or permanently
rendered unfit for use for any reason whatsoever, except as otherwise provided in SECTION 2.02(C).
All replacement parts shall be owned by the Company free and clear of all Liens (except Permitted
Liens,  pooling   arrangements   permitted  by  SECTION  2.02(B)  hereof  and  replacement  parts
temporarily  installed on an emergency basis) and shall be in as good an operating  condition as,
and shall have a value and utility at least equal to, the Parts  replaced  assuming such replaced
Parts were in the  condition  and repair  required  to be  maintained  by the terms  hereof.  All
Parts at any time  removed  from any Spare  Engine  shall  remain the property of the Company and
subject to the Lien of the Security Documents,  no matter where located,  until such time as such
Parts shall be replaced by parts which meet the  requirements  for  replacement  parts  specified
above.  Immediately upon any replacement  part becoming  incorporated or installed in or attached
to any Spare  Engine,  without  further  act  (subject  only to  Permitted  Liens and any pooling
arrangement  permitted by SECTION  2.02(B)  hereof and except any  replacement  part  temporarily
installed  on an emergency  basis),  (i) such  replacement  part shall become the property of the
Company and subject to the Lien of the Security  Documents  and be deemed a Part for all purposes
hereof to the same extent as the Part  originally  incorporated  or  installed  in or attached to
such  Spare  Engine  and (ii) the  replaced  Part  shall be free and  clear of all  rights of the
Collateral Agent and shall no longer be deemed a Part hereunder.

(b)      Pooling of Parts.  Any Part  removed from any Spare Engine as provided in SECTION 2.02(A)
hereof may be subjected by the Company to a pooling arrangement of the type which is permitted by
clause (A) of SECTION  2.01(B)(I) hereof; provided, that the part replacing such removed Part shall be
incorporated  or  installed  in or  attached  to such Spare  Engine in  accordance  with  SECTION
2.02(a) as promptly as  practicable  after the removal of such removed  Part.  In  addition,  any
replacement  part when  incorporated  or installed in or attached to a Spare Engine in accordance
with  such  Section  may be owned by any  third  party  subject  to such a  pooling  arrangement,
provided,  that the Company (or any Permitted Lessee),  at its expense, as promptly thereafter as
practicable,  either  (i)  causes  such  replacement  part to become  subject  to the Lien of the
Security  Documents,  free and clear of all Liens  other than  Permitted  Liens or (ii)  replaces
such  replacement  part with a further  replacement  part owned by the Company (or any  Permitted
Lessee)  which shall  become the  property of the Company and subject to the Lien of the Security
Documents, free and clear of all Liens other than Permitted Liens.

(c)      Alterations,  Modifications  and  Additions.  The Company, at its own expense, will
make (or cause to be made) such alterations and modifications in and additions to the Spare Engines
as may be required to be made from time to time so as to comply with any law, rule, regulation or
order of any regulatory agency or body  of any jurisdiction  in  which  any  aircraft  may  then be
registered;  provided,  however,  that the Company (or any Permitted  Lessee) or any may, in good
faith,  and by  appropriate  proceedings  contest the  validity or  application  of any such law,
rule,  regulation or order in any reasonable  manner which does not materially  adversely  affect
the  Collateral  Agent,  the Board or any Lender or any of their  respective  legal and  economic
interests in or to such Spare  Engine,  or subject any such Person to risk of any material  civil
or any criminal  penalties or involve any material  risk of loss or  forfeiture  of title to such
Spare Engine. In addition,  the Company (or any Permitted Lessee),  at its own expense,  may from
time to time make such  alterations  and  modifications  in and  additions to any Spare Engine as
the Company (or any Permitted  Lessee) may deem  desirable in the proper conduct of its business,
including  removal of Parts which the Company (or any  Permitted  Lessee) deems to be obsolete or
no longer  suitable or appropriate for use on such Spare Engine (such parts,  "Obsolete  Parts");
provided  that no such  alteration,  modification,  removal or addition  impairs the condition or
airworthiness of such Spare Engine,  or materially  diminishes the value or utility of such Spare
Engine below the condition,  airworthiness,  value or utility thereof  immediately  prior to such
alteration,  modification,  removal  or  addition  assuming  such  Spare  Engine  was then in the
condition  required to be maintained by the terms of this Security  Agreement.  In addition,  the
value (but not the  utility,  condition or  airworthiness)  of any Spare Engine may be reduced by
the value,  if any, of Obsolete  Parts  which  shall have been  removed so long as the  aggregate
fair market  value of all Obsolete  Parts which shall have been  removed and not  replaced  shall
not exceed  1.5% of the then  Appraised  Value of such Spare  Engine (as shown in the most recent
Appraisal  Report  delivered on or prior to such date).  All Parts  incorporated  or installed in
or  attached  or added to a Spare  Engine  as the  result  of such  alteration,  modification  or
addition  (except  those parts which are excluded  from the  definition  of Parts or which may be
removed by the Company  pursuant to the next sentence) (the  "Additional  Parts") shall,  without
further  act,  become  subject  to  the  Lien  of the  Security  Documents.  Notwithstanding  the
foregoing  sentence,  the Company may, at its own expense,  so long as no Event of Default  shall
have occurred and be  continuing,  remove or suffer to be removed any Additional  Part, provided
that such Additional  Part (i) is in addition to, and not in replacement of or substitution  for,
any Part  originally  incorporated or installed in or attached to any Spare Engine at the time of
delivery  thereof  hereunder or any part in  replacement  of or  substitution  for any such Part,
(ii) is not  required  to be  incorporated  or  installed  in or  attached  or added to any Spare
Engine  pursuant to the first  sentence of this  paragraph (c) and (iii) can be removed from such
Spare Engine without  diminishing  the condition,  airworthiness,  value or utility of such Spare
Engine which such Spare Engine would have had at such time had such  alteration,  modification or
addition not occurred.  Upon the removal  thereof as provided  above,  such Additional Part shall
no longer be deemed to be  subject  to the Lien of the  Security  Documents  or part of the Spare
Engine from which it was removed.

SECTION 2.03      USE, POSSESSION AND DESIGNATED LOCATIONS OF SPARE PARTS AND PLEDGED EQUIPMENT.

(a)      The Company shall have the right,  at any time and from time to time at its own cost and
expense, without any release from or consent by the Collateral Agent, to deal with the Spare Parts
and the Pledged  Equipment in any manner consistent with the Company's ordinary  course of business,
including without limitation any of the following:

(i)      with respect to the Spare Parts, to incorporate in, install on or attach or make appurtenant
         to any aircraft, engine or Appliance leased  to or owned  by the  Company  (whether  or not
         subject to any Lien) any Spare Part, free from the Lien of the Security Documents;

(ii)     with respect to the Spare Parts or the Pledged Equipment, to dismantle any Spare Part or
         Pledged Equipment that has become worn out or obsolete or unfit for use,  and to sell or
         dispose of any such Spare Part or Pledged  Equipment or any salvage  resulting from such
         dismantling, free from the Lien of the Security Documents; and

(iii)    with respect to the Spare Parts, to transfer any or all of the Spare Parts located at one
         or more Designated Locations to one or more other Designated Locations.

(b)      Without the prior consent of the Collateral  Agent, the Company will not sell, lease,
transfer or relinquish possession of any Spare Part or any Pledged Equipment to any Person, except
as permitted by the provisions of this SECTION  2.03 and except that the Company shall have the
right in the ordinary  course of business,  (i) to transfer  possession  of any Spare Part or any
Pledged  Equipment to the  Manufacturer  thereof or any service  provider for testing,  overhaul,
repairs,  maintenance,  alterations or  modifications  purposes,  (ii) to sell any of the same in
the  ordinary  course of  business  or (iii) to  subject  any  Spare  Part to an  interchange  or
pooling,  exchange,  borrowing  or  maintenance  servicing  arrangement  customary in the airline
industry and entered into in the ordinary  course of  business;  provided,  however,  that in the
case of any sale or if the  Company's  title to any such Spare Part shall be  divested  under any
such  agreement  or  arrangement,  such  divestiture  shall be deemed to be an Event of Loss with
respect  to  such  Spare  Part  subject  to the  provisions  of  SECTION  3.01(B).  So long as no
Specified  Default or Event of Default shall have occurred and be continuing,  and subject to the
Company's  obligations  under SECTION 3.01 hereof and Section 2.6(c) of the Loan  Agreement,  the
Company  shall be entitled  to retain all  payments  received  by it in respect of any  warranty,
indemnity or similar agreement  relating to Spare Parts,  Pledged Equipment and Spare Engines and
deal with the  counterparties  to such agreements  with respect to its rights  thereunder in such
manner as the Company deems appropriate.

(c)      The Company shall maintain and keep the Spare Parts at one or more of the Designated
Locations, except as otherwise permitted under this SECTION  2.03. If (x) any Spare Part, at any
time and for any reason, is stored at any other than a Designated Location or (y) the Company wishes
to subject additional unencumbered spare parts of a type which are similar to the Spare Parts pledged
hereunder  (including,  without  limitation,  spare parts suitable for  installation  in or on an
Airbus  aircraft  or an engine  utilized  thereon)  to the Lien of the  Security  Documents,  the
Company will promptly furnish to the Collateral Agent the following:

(i)      a Security Agreement Supplement (Spare Parts) duly executed by the Company, describing the
         additional unencumbered spare parts which are being subjected to the Lien of the Security
         Documents  (if  applicable)  and/or  identifying  each  location  that  is to  become  a
         Designated  Location  and  specifically  subjecting  the Spare Parts (or spare parts) at
         such location to the Lien of the Security Documents;

(ii)     a legal  opinion from counsel (which opinion and counsel shall be  reasonably satisfactory
         to the Collateral Agent), dated the date of execution of said Security Agreement Supplement
         (Spare Parts),  stating that said Security  Agreement  Supplement (Spare Parts) has been
         duly filed for  recording in  accordance  with the  provisions  of the Federal  Aviation
         Act,  and  either:  (A) no other  filing or  recording  is  required  in any other place
         within the United  States in order to perfect the Lien of the Security  Documents on the
         Spare  Parts  (or  spare  parts)  held at the  Designated  Locations  specified  in such
         Security  Agreement  Supplement  (Spare Parts) under the laws of the United  States,  or
         (B) if any such  filing  or  recording  shall be  required  that  said  filing  has been
         accomplished  in such other  manner and places,  which shall be  specified in such legal
         opinion, as are necessary to perfect the Lien of the Security Documents; and

(iii)    an Officer's Certificate stating that in the opinion of the officer executing the Officers'
         Certificate, all conditions precedent provided for in this Security Agreement relating to the
         subjection  of such  property to the Lien of the Security  Documents  have been complied
         with.

                  The Company shall,  on an ongoing  basis,  effect any filings or recordings (or
amend any  existing  filings or  recordings)  which are  necessary  or  desirable  to perfect the
security  interest of the  Collateral  Agent in the Spare Parts and the Pledged  Equipment  which
are being  subjected to the Lien hereof in accordance  with this SECTION 2.03 and shall  promptly
deliver copies of any such filings or recordings to the Collateral Agent.

SECTION 2.04      INSURANCE.

(a)      Public Liability and Property Damage Insurance.

(i)      Except as provided in clause (II) of this SECTION  2.04(A), the Company will carry or cause
         to be carried with respect to each Spare Engine at its expense (A) comprehensive airline
         liability (including, without limitation, passenger, contractual, bodily injury, and property
         damage liability and product liability) insurance  (exclusive of Manufacturer's  product
         liability   insurance)  and  (B)  war  risk,   hijacking  and  allied  perils  liability
         insurance,  in each case (I) in an amount per  occurrence  not less than the  greater of
         (x)  the  amounts  of  comprehensive  airline  liability  insurance  from  time  to time
         applicable  per  occurrence  to engines  owned or leased and  operated by the Company of
         the same type as such Spare  Engines and (y) the  Minimum  Liability  Insurance  Amount,
         (II) of the same  type and  covering  at least  the same  risks as from time to time are
         applicable  to engines  owned or leased and  operated by  similarly  situated  U.S.  Air
         Carriers owning and operating similar aircraft and engines ("Similar  Carriers"), (III)
          which is  maintained in effect with insurers of  internationally  recognized  reputation
         and reasonably  believed to be financially  sound  ("Insurers")  and (IV) in the case of
          war risk,  hijacking  and allied  perils  coverage,  of a scope  then  being  carried by
         Similar Carriers,  at least in the Minimum  Liability  Amount,  which may be effected by
         combining  insurance  available in  commercial  insurance  markets with  coverage of the
         type  described  in SECTION  2.04(F)  (it being  agreed that the  Company's  obligations
         under this  clause  (IV) shall be subject in any event and at all times to whether  such
         coverage  is  available  on  commercially  reasonable  terms  through a  combination  of
         commercial insurance coverage and coverage of the type described in SECTION 2.04(F)).

(ii)     During any period that a Spare Engine is on the ground and not in  operation, the Company
         may carry or cause to be carried as to such non-operating property, in lieu of the insurance
         required  by clause (I) above,  insurance  by  Insurers  otherwise  conforming  with the
         provisions  of clause (I) except that (A) the amounts of coverage  shall not be required
         to exceed the amounts of  comprehensive  airline  liability  insurance from time to time
         applicable  to  property  owned  or  leased  by the  Company  of the  same  type as such
         non-operating  property  and which is on the  ground and not in  operation;  and (B) the
         scope of the risks  covered and the type of insurance  shall be the same as from time to
         time shall be  applicable  to property  owned or leased by Similar  Carriers of the same
         type as such non-operating property and which is on the ground and not in operation.

(iii)    The Company will carry or cause to be carried at all  times, (x) with respect to the Spare
         Parts, comprehensive airline liability insurance, including, without limitation, property
         damage   liability   insurance   and  (y)  with   respect  to  the  Pledged   Equipment,
         comprehensive  property  damage  liability  insurance,  in each  case,  which  is (A) of
         amount and scope as may be  customarily  maintained  by Similar  Carriers  for  property
         similar to the Spare  Parts and  Pledged  Equipment  and (B)  maintained  in effect with
         Insurers.

(b)      Insurance  Against  Loss or Damage to a Spare  Engine,  etc. The Company shall
maintain or cause to be maintained in effect, at its (or a Permitted  Lessee's) expense, (A) with
Insurers, "all-risk" coverage of Spare Engines (while such Spare Engines are either (x) installed
on any airframe or (y) not installed on an airframe) and Spare Parts and (B) with insurers of
nationally recognized reputation and reasonably believed to be financially sound, "all-risk" coverage
with respect to Pledged Equipment, in each case in such forms as are customarily  maintained  with
respect to similar  property  owned or operated by Similar  Carriers and in an amount of coverage
not less than the Insured  Amount  therefor.  In addition,  the Company shall maintain in respect
of the Spare  Engines war risk,  hijacking  and allied  perils  insurance  of a scope  carried by
Similar  Carriers in an amount  equal to the Insured  Amount  therefor,  unless and to the extent
that SECTION  2.04(A)(II) shall apply (it being agreed that the Company's  obligations under this
sentence  shall be subject in any event and at all times to whether  such  coverage is  available
on  commercially  reasonable  terms through a combination  of commercial  insurance  coverage and
coverage of the type  described in SECTION  2.04(F)).  All losses will be adjusted by the Company
(giving  due  regard to the interest of the Collateral  Agent) with the insurers; provided,
however,  that during a period when any Specified Default or Event of Default shall have occurred
and be continuing,  the Company shall not agree to any such adjustment  without the prior written
consent of the Collateral  Agent. As between the Collateral  Agent and the Company,  it is agreed
that all  proceeds of  insurance  maintained  in  compliance  with the  preceding  paragraph  and
received as the result of the  occurrence of an Event of Loss will be applied in accordance  with
SECTION 3.01.

(c)      Reports,  Certificates,  etc. The Company will furnish, or cause to be furnished,
to the Collateral Agent on or before the Closing Date, and each annual renewal of the applicable
insurances,  (i) a report, signed by a recognized independent firm of insurance brokers reasonably
acceptable to the  Collateral Agent which brokers may be regularly retained by the Company (the
"Insurance Brokers"), describing in reasonable detail the property and liability insurance
then carried and maintained with respect to the Collateral and stating the opinion of such firm
that (A) such  insurance complies with the terms hereof, (B) all premiums in connection with such
insurance  then  due have  been  paid and (C) such  insurance  together  with any  self-insurance
permitted  hereby  provides  coverages  against  risks that are  customarily  insured  against by
Similar  Carriers and that such coverages are in  substantially  similar forms, are of such types
and have  limits as are  customarily  carried  by Similar  Carriers;  and (ii) a  certificate  of
insurance  evidencing  the due  compliance  with  the  terms of this  SECTION  2.04  relating  to
insurance with respect to the  Collateral.  To the extent that the insurance  obligations of this
SECTION  2.04  are  satisfied  in part  with the  coverage  described  in  SECTION  2.04(F),  the
Insurance  Broker's report and  certificate  need not certify such coverage but may instead refer
to the FAA  Certificate  of Insurance  (which the  Insurance  Broker shall attach to its report).
The Company will cause such Insurance  Broker to agree to advise the Collateral  Agent in writing
of any  default  in the  payment of any  premium  and of any act or  omission  on the part of the
Company of which it has knowledge and which might  invalidate or render  unenforceable,  in whole
or in part,  any insurance on the applicable  Collateral  and to advise the  Collateral  Agent in
writing  at least  thirty  (30) days  (twenty  (20) days in the case of lapse for  nonpayment  of
premiums  and seven (7) days in the case of war risk and  allied  perils  coverage)  prior to the
cancellation  (but not  expiration),  lapse for non-payment of premium or material adverse change
of any insurance  maintained  pursuant to this SECTION 2.04; provided that if the war risk notice
period  specified  above is not  reasonably  obtainable,  the  Company  will cause the  Insurance
Broker to provide for as long a period of prior  notice as shall then be  reasonably  obtainable.
In the event that the  Company  shall fail to  maintain or cause to be  maintained  insurance  as
herein  provided,  the Collateral  Agent may, at its sole option,  but shall be under no duty to,
procure  such  insurance  on behalf of the Company and, in such event,  the Company  shall,  upon
demand,  reimburse the Collateral  Agent for the cost thereof to the Collateral  Agent,  together
with  interest on such cost at the Overdue Rate from the date of such  payment by the  Collateral
Agent to the date of  reimbursement  without waiver of any other rights the Collateral  Agent may
have;  provided,  however,  that no exercise by the Collateral  Agent of said option shall affect
the provisions of this Security  Agreement or the other Loan Documents,  including the provisions
that failure by the Company to maintain the  prescribed  insurance  shall  constitute an Event of
Default.  Upon  receipt of any  notices or  reports,  the  Collateral  Agent shall as promptly as
practicable forward copies of the same to the Agent, the Loan  Administrator,  the Board and each
of the Lenders.  The Collateral Agent shall have no responsibility  for  independently  verifying
the accuracy or completeness of any information  contained in any report or certificate  provided
by the Insurance Brokers.

(d)      Self-Insurance.  The Company (but no Permitted  Lessee) may  self-insure the risks
required to be insured against pursuant to this SECTION 2.04 under a program applicable to all
aircraft and engines (whether owned or leased) in the Company's fleet, but in no case shall the
aggregate amount of such self-insurance in regard to SECTION 2.04(A) and SECTION 2.04(B) hereof for
any calendar year, with respect to all of the aircraft and  engines (whether owned or leased) in the
Company's  fleet,  exceed  $1,000,000.  In addition to the foregoing  right to  self-insure,  the
Company may self-insure  the risks required to be insured  against  pursuant to this SECTION 2.04
in an amount  equal to any  applicable  minimum per  occurrence  (or, if  applicable,  annual (or
other) period) deductible  imposed by its property or liability  Insurer,  which are commensurate
with the standard deductibles in the aircraft insurance industry.

(e)      Additional  Insurance by the Company.  The Company may at its own expense carry
insurance with respect to its  interest in the Spare Engines and Spare Parts in amounts in excess
of that required to be maintained by this SECTION 2.04; provided, however, that such insurance does
not prevent the Company  from  carrying  the  insurance  required or  permitted by this SECTION 2.04
or adversely affect such insurance or the cost thereof; and provided, further, that the
proceeds of such insurance shall be subject to Section 2.6(c) of the Loan Agreement.

(f)      Indemnification  by Government in Lieu of Insurance.  Notwithstanding any provisions
of this SECTION 2.04 requiring insurance, the Collateral Agent agrees to accept, in lieu of insurance
required by the terms of this SECTION  2.04, indemnification from, or insurance provided by, the United
States  Government,  against such risk in an amount which,  when added to the amount of insurance
against such risk  maintained  by the Company  shall be at least equal to the amount of insurance
against such risk  otherwise  required by this  SECTION 2.04 (taking into account  self-insurance
permitted by SECTION  2.04(D)  hereof).  Any such  indemnification  or insurance  provided by the
United  States  Government  shall  provide  substantially  similar  protection  as the  insurance
required  by this  SECTION  2.04  (other  than  SECTION  2.04(G)  to the  extent  that any of the
provisions of such section are generally  unavailable  from the United  States  Government).  The
Company  shall furnish to the  Collateral  Agent a copy of any FAA  Certificate  of Insurance (if
such  certificates  are then being  furnished by the FAA),  and at the request of the  Collateral
Agent,  an Officer's  Certificate  confirming in  reasonable  detail the amount and scope of such
indemnification  or insurance and  certifying  that such  indemnification  or insurance  complies
with the terms of this SECTION 2.04(F).

(g)      Terms of  Insurance  Policies.  Any policies carried in accordance with SECTION
2.04(A) and SECTION 2.04(b) hereof covering the applicable Collateral, and any policies taken out
in substitution or replacement for any such policies, (i) shall name the Additional Insureds as
additional insureds, as their respective interests may appear (but without imposing on any such
party liability to pay premiums with respect to such insurance), (ii) shall name the Collateral
Agent as sole loss payee in respect of insurances maintained pursuant to SECTION 2.04(B);
provided, Default, in respect of any casualty occurrence the insurance proceedsof which
are less than $2,000,000, such insurance proceeds shall be paid directly to the Company, (iii)
may provide for self-insurance to the extent permitted in SECTION 2.04(D) hereof, (iv) shall
provide that if the insurers cancel such insurance for any reason whatever, or if the same is
allowed to lapse for non-payment of premium or if any  material change is made in the insurance
which adversely affects the interest of any Additional Insured, such lapse, cancellation  or change
shall not be  effective  as to any  Additional  Insured for thirty (30) days (twenty (20) days in
the case of lapse  for  non-payment  of  premiums  and seven (7) days in the case of war risk and
allied  perils  coverage)  after  receipt by such  Additional  Insured of written  notice by such
insurers of such lapse,  cancellation or change;  provided,  however, that if the war risk notice
period  specified above is not reasonably  obtainable,  such policies shall provide for as long a
period  of prior  notice as shall  then be  reasonably  obtainable,  (v)  shall  provide  that in
respect of the  respective  interests of each  Additional  Insured in such policies the insurance
shall not be  invalidated  by any action or inaction of the Company or any other Person and shall
insure the respective  interests of the Additional  Insureds,  as they appear,  regardless of any
breach or violation of any warranty,  declaration or condition  contained in such policies by the
Company or by any other  Person,  (vi) shall be primary  without any right of  contribution  from
any other insurance  which is carried by any Additional  Insured,  (vii) shall expressly  provide
that all of the  provisions  thereof,  except the limits of liability,  shall operate in the same
manner as if there were a separate policy covering each  Additional  Insured,  (viii) shall waive
any right of the  insurers  to  set-off,  recoupment  or  counterclaim  or any  other  deduction,
whether by attachment or otherwise,  in respect of any liability of any Additional Insured,  (ix)
shall waive any right of the insurers to  subrogation  against any  Additional  Insured,  and (x)
shall  provide  for a 50/50  claims  settlement  per AVS 103 or its  equivalent,  except  that if
coverage  required  under this SECTION 2.04 is then being provided  under SECTION  2.04(F),  such
claims  settlement  shall be made pursuant to provisions then generally in effect with respect to
commercial aviation insurance.

(h)     Application  of  Payments  During  Existence  of a Specified  Default or an Event of  Default.
Any amount referred to in this SECTION 2.04 which is payable to or retainable by the Company (or
any Permitted  Lessee) shall not be paid to or retained by the Company (or any  Permitted  Lessee)
if at the time of such payment or retention a Specified  Default or an Event of Default shall have
occurred and be continuing,  but shall, so long as such Specified  Default or an Event of Default
is  continuing,  be held by or paid over to the  Collateral  Agent and, at the  direction  of the
Board (or if the Board  Guarantee  is no longer in effect,  the  Requisite  Lenders),  subject to
applicable law, be applied  against the  obligations of the Company under the Loan Documents.  At
such time as there shall not be continuing any such Specified  Default or Event of Default,  such
amount shall be paid to the Company to the extent not previously  applied in accordance  with the
preceding  sentence.  Prior to remitting  any such funds to the  Company,  the  Collateral  Agent
shall be authorized to request and receive an Officer's  Certificate from the Company  certifying
that no Specified Default or Event of Default has occurred and is continuing.

SECTION 2.05      INSPECTION.

(a)      Subject to  subsection  (B),  at  reasonable  times but not more often than once in any twelve
(12) month period, and upon at least ten (10) days prior written notice to the Company (provided,
however, that if an Event of Default shall have occurred and be continuing, any such inspection
shall be at reasonable times without any limit on the number of times and upon at least one (1)
Business Day's prior written notice to and at the expense of the Company), the Collateral Agent or
the Board or their respective authorized representatives may inspect the Spare Engines, Spare Parts
and Pledged  Equipment,  inspect and make copies of the books and records of the Company relating
to such  Collateral,  including  books and records  required to be maintained by the FAA or other
applicable  regulatory  agency or body, and access (with  assistance from Company  personnel) the
Tracking System (at the Company's risk and expense).  Any such  inspection of Pledged  Equipment,
Spare  Engine or any Spare  Part  shall be subject to the  Company's  safety and  security  rules
applicable at the location of such  Collateral  and, so long as no Specified  Default or Event of
Default  shall have  occurred  and be  continuing,  no  exercise of such  inspection  right shall
interfere  with the  normal  operation  or  maintenance  of such  Collateral  by,  or the  normal
business  operations of, the Company.  Neither the Collateral  Agent nor the Board shall have any
duty to make any such  inspection  and shall incur no  liability or  obligation  by reason of not
making any such inspection.

(b)      The Company  shall at all times  maintain the Tracking  System in at least as favorable
a condition as the condition as at the Closing Date and its perpetual inventory procedures for
the Spare Engines, Spare Parts and Pledged Equipment that provide a continuous internal audit of
the Spare Engines, Spare Parts and the Pledged Equipment. Notwithstanding subsection (A), at any
time during normal business hours and upon reasonable notice to the Company (without any limit on
the number of times),  the  Collateral  Agent shall be entitled  to inspect the  Tracking  System
relating  to the  Collateral  to ensure the  Company's  compliance  with the terms  hereof.  Such
inspection  right shall not be  exercised in a manner  which is unduly  disruptive  to the normal
operation  or  maintenance  of the  Tracking  System or the  normal  business  operations  of the
Company.

SECTION 2.06      PLEDGED EQUIPMENT/TAX RECEIVABLE.  The Company shall:

(a)      upon the occurrence and during the continuance of an Event of Default and upon the request
of the Collateral Agent, promptly (i) notify the Tax Receivable Debtor in respect of the Pledged Tax
Receivable that the Pledged Tax Receivable has been assigned to the Collateral  Agent  hereunder,
and that any  payments  due or to become due in respect  thereof  are to be made  directly to the
Collateral  Agent or its designee (it being  understood  and agreed that the foregoing  shall not
limit the rights of the Collateral  Agent upon the  occurrence  and during the  continuance of an
Event of  Default  to so notify the Tax  Receivable  Debtor  without  giving  prior  notice to or
making a demand upon the  Company  including,  without  limitation,  any  notices  required to be
given under the  Anti-Assignment  Act (31 U.S.C.ss. 3727)) and (ii)  transfer  to the  Collateral
Agent or its designee  all funds  received by it from or on behalf of the Tax  Receivable  Debtor
in respect of the  Pledged  Tax  Receivable  (it being  acknowledged  and agreed that the Company
shall be deemed to be holding  all such funds as trustee for the  Collateral  Agent and, as such,
shall not  commingle  such funds with other  funds of the  Company);  and in  furtherance  of the
rights of the  Collateral  Agent's  described  in the  parenthetical  to clause  (i)  above,  the
Company shall deliver to the  Collateral  Agent on the Closing Date an executed  undated power of
attorney in favor of the  Collateral  Agent and such other  documents  or  agreements  reasonably
requested by the Collateral Agent (in form and substance  reasonably  acceptable to it) to enable
the Collateral  Agent to comply,  upon the  occurrence and during the  continuance of an Event of
Default, with the terms of the Anti-Assignment Act (31 U.S.C.ss.3727);

(b)      upon the acquisition after the date hereof by the Company of any additional or replacement
Motor Vehicle, other than a Motor Vehicle described  in the  proviso to the  definition  of Pledged
Equipment or a Motor  Vehicle as to which the Company  need not perfect the security  interest of
the  Collateral  Agent thereon  pursuant to clause (a) of the  penultimate  sentence of paragraph
(3) of the Habendum  Clause,  cause the  Collateral  Agent to be listed as the lienholder on such
certificate  of title and take such other steps as may be required  under the law  applicable  to
perfection  of a security  interest  in such  property to perfect  such  security  interest,  and
within 30 days of the acquisition thereof deliver evidence of the same to the Collateral Agent;

(c)      use commercially reasonable efforts to cause to be collected from the Tax Receivable Debtor,
as and when due all amounts owing under or on account of the Pledged Tax Receivable (including,
without limitation, a Pledged Tax Receivable which is delinquent, which shall  be  collected  in
accordance  with lawful  collection  procedures)  and shall apply  forthwith upon receipt thereof
all such amounts as are so collected to the outstanding balance of the Pledged Tax Receivable;

(d)      keep the Pledged  Equipment in good working order and repair, and not use such Collateral
in violation of law or any policy of insurance thereon; and

(e)      not change (i) its name, identity or corporate structure in any manner,  (ii) its "location"
(as such term is defined in Article 9 of the UCC) from Colorado, (iii) the  location  of its chief
executive office or (iv) its  jurisdiction of organization in any manner,  unless (in the case of
any event  described  in clause (i)  through  (iv)) it shall have given the  Collateral  Agent at
least thirty (30) days' prior written notice thereof.

SECTION 2.07      LIENS.  The Company will not directly or indirectly create, incur, assume or
suffer to exist any Lien on or with respect to any Collateral, except Permitted Liens. The Company
shall promptly,  at its own expense,  take such action as may be necessary to duly discharge any Lien
(other than a Permitted Liens) arising at any time.

SECTION 2.08      FURTHER  ASSURANCES.  The Company agrees that it will promptly correct any
defect or error that may be discovered in any document delivered in connection with the Security
Documents to which it is a party or in the execution, acknowledgment or recordation thereof.

                                            ARTICLE 3

                                          EVENT OF LOSS

SECTION 3.01      EVENT OF LOSS; APPLICATION OF PAYMENTS AND PROCEEDS.

(a)      Event of Loss with Respect to a Spare Engine.

(i)      Upon the occurrence of an Event of Loss with respect to any Spare Engine, the Company shall:

(A)      forthwith  (and in any event,  within five (5) Business Days after such  occurrence)  give the
                  Collateral Agent written notice of such Event of Loss; and

(B)      not later  than the  earlier of (x) 60 days  after the  occurrence  of such Event of Loss or
                  (y) the fifth (5th)  Business  Day  following  notification  to the Company of receipt
                  by the loss payee of the insurance  proceeds with respect to such Event of Loss, give
                  the  Collateral  Agent  written  notice of its  election  to perform one of the
                  following  options  (it being  understood  that the failure to give such notice
                  shall be deemed to be an  election  of the  option set forth in  subclause  (1)
                  below):

(1)      Not later than the earlier of (x) the Business Day next succeeding the ninetieth (90th)day
                           following the occurrence of such Event of Loss or (y) the first Interest
                           Payment  Date that is at least three (3) Business  Days after  receipt
                           by the loss  payee of the  insurance  proceeds  with  respect  to such
                           Event  of Loss  (but not  earlier  than the  first  Business  Day next
                           succeeding  the thirtieth  (30th) day following the occurrence of such
                           Event of Loss) (the  applicable  day being the "Loss  Payment  Date"),
                           the Company shall,  to the extent not paid to the Collateral  Agent as
                           insurance  proceeds,  pay or cause to be paid to the Collateral  Agent
                           the  proceeds of insurance  required to be  maintained  under  SECTION
                           2.04  in  respect  of  such  Event  of  Loss.  Upon  receipt  of  such
                           insurance   proceeds  from  the  Company  or  the  relevant  insurance
                           provider,  the Collateral Agent shall apply such insurance proceeds on
                           behalf of the Company as a prepayment of the Loan in  accordance  with
                           Section  2.6(c) of the Loan Agreement  (without  regard to whether the
                           aggregate  amount of all Net Insurance  Proceeds and Net  Condemnation
                           Proceeds  received by the Company or any of its  Subsidiaries  in such
                           Fiscal Year,  including the insurance  proceeds received in respect of
                           such  Event of Loss,  exceeds  the  threshold  amount set forth in the
                           first sentence of such Section  2.6(c)).  If such  insurance  proceeds
                           are less than the Insured  Amount,  the Company  shall pay or cause to
                           be paid to the  Collateral  Agent the  difference  between the Insured
                           Amount and the amount of such  proceeds  (which  payment shall also be
                           applied  on  behalf  of the  Company  as a  prepayment  of the Loan in
                           accordance with Section 2.6(c) of the Loan Agreement); or

(2)      Not later than the Business Day next succeeding the ninetieth (90th) day following the
                           occurrence of such Event of Loss, the Company shall substitute one or
                           more Acceptable Alternate Spare Engines (subject to  subsection (A)(V)
                           below),  free and clear of all Liens (other than Permitted  Liens) and
                           cause such  Acceptable  Alternate Spare Engines to be subjected to the
                           Lien of the Security Documents, provided  that  if (x) a Specified
                           Default or Event of Default  shall have  occurred and be continuing as
                           of such  election date or (y) the Company shall have elected to make a
                           substitution  under  this  clause (2) and shall fail for any reason to
                           make such  substitution in accordance with the terms hereof,  then the
                           Company  shall make the payments  required by clause (1) above on such
                           date.

(ii)     At such time as the Company shall have complied fully with the provisions of clause (1) above,
         the Collateral  Agent  shall  release  from the Lien of the  Security  Documents  such Spare
         Engine by  executing  and  delivering  to the Company  all  documents  and  instruments,
         prepared at the Company's sole cost and expense,  as the Company may reasonably  request
         to evidence such release.

(iii)    The Company's right to substitute any Replacement Engine as provided in clause (B)(2) of
         SECTION 3.01(A)(I) shall be subject to the fulfillment (which may be simultaneous with such
         replacement),  at the  Company's  sole cost and  expense,  of the  following  conditions
         precedent:

(A)      on the date when any Replacement Engine is subjected to the Lien of the Security Documents
                  (such date being referred to in this SECTION 3.01 as the "Replacement Closing Date"),
                  the following documents shall have been duly authorized,  executed and delivered by
                  the respective  party or parties thereto and shall be in full force and effect,
                  and an executed  counterpart  of each thereof shall have been  delivered by the
                  Company to the Collateral Agent:

(I)      a Security Agreement Supplement (Spare Engine) covering such Replacement Engine, which shall
                           have been duly filed for recordation pursuant to the Federal Aviation Act; and

(II)     UCC financing statements covering such Replacement Engine, which shall have been duly filed
                           for recordation in such places as shall be required;

(B)      each Replacement Engine shall be an Acceptable Alternate Spare Engine (subject to subsection
                  (A)(V) below), and the Collateral Agent shall have received an Appraisal Report from
                  an Appraiser of such Replacement  Engine  (together with any other  Replacement
                  Engines that are  replacing a Spare  Engine),  dated  within ten (10)  Business
                  Days of the Replacement  Closing Date,  evidencing that such Replacement Engine
                  is of at least  the same  value as the  replaced  Spare  Engine  at the time of
                  replacement  (assuming the replaced Spare Engine was in the condition and state
                  of repair required by this Security Agreement) (provided, that if the Company
                  is pledging an Available  Engine in  accordance  with  subsection  (A)(V) below
                  such  Appraisal  Report shall set forth the  Appraised  Value of the  Available
                  Engine and shall not be required to state that such  Available  Engine is of at
                  least the same value as the replaced Spare Engine at the time of replacement);

(C)      the Collateral Agent shall have received satisfactory evidence as to the compliance with
                  SECTION 2.04 with respect to such Replacement Engine;

(D)      the Collateral Agent, at the expense of the Company, shall have received (acting directly
                  or by authorization to its special counsel) (I) an opinion of counsel to the Company
                  (which opinion and counsel shall be reasonably  satisfactory  to the Collateral
                  Agent),  addressed to the Collateral Agent, to the effect that each Replacement
                  Engine has been made  subject to the Lien of the Security  Documents,  that all
                  required  action has been taken in order to  maintain,  and such  action  shall
                  maintain,  the  effectiveness  and  perfection  (to the extent the same existed
                  immediately  prior  to the  occurrence  of such  Event of  Loss,  assuming  the
                  Company was in  compliance  with all  relevant  terms  hereof) of the  security
                  interests  in such Spare  Engine  and title  thereto  created by this  Security
                  Agreement  and that,  except as may have been  effected by a change in law, the
                  protections  afforded to the Collateral Agent by Section 1110 of the Bankruptcy
                  Code  will  not  be  less  than  such  protections  immediately  prior  to  the
                  occurrence of such Event of Loss  (assuming the Company was in compliance  with
                  all relevant  terms  hereof) and (II) an opinion of  qualified  FAA counsel (or
                  counsel in any  jurisdiction  outside the United  States where the  Replacement
                  Engine  and/or  the  aircraft  of which  such  Replacement  Engine is a part is
                  required to be registered in accordance  with applicable law (which opinion and
                  counsel shall be reasonably  satisfactory to the Collateral  Agent),  addressed
                  to the  Collateral  Agent,  stating,  in the  case  of FAA  counsel,  that  the
                  Security  Agreement  Supplement  (Spare  Engine)  and all  other  documents  or
                  instruments  the  recordation  of which is necessary to perfect and protect the
                  rights of the Collateral Agent in each such  Replacement  Engine have been duly
                  recorded and that each such Replacement  Engine is free and clear of any liens,
                  security  interests  and  encumbrances  of record  with the FAA, in the case of
                  counsel in another  jurisdiction,  that all action  necessary has been taken in
                  such jurisdiction for such purposes;

(E)      the  representation  contained  in Section  4.5 of the Loan  Agreement  with  respect to such  Replacement
                  Engine shall be true and correct; and

(F)      the  Collateral  Agent shall have  received an  Officer's  Certificate  of the  Company  stating  that all
                  conditions  precedent  provided  for in this SECTION  3.01(A)  relating to such
                  replacement have been complied with and representing  that any such Replacement
                  Engine is an Acceptable  Alternate  Spare Engine and authorizing the Collateral
                  Agent to rely on such Officer's Certificate.

(iv)     Upon satisfaction of all conditions to such substitution, (x) the Collateral Agent shall
         execute and deliver to the Company such documents and instruments, prepared by the Company
         at the Company's sole cost and expense, as the Company shall reasonably request to evidence
         the  release  of  each  such  replaced  Spare  Engine  from  the  Lien  of the  Security
         Documents,  (y) the Collateral  Agent shall assign to the Company all claims it may have
         against  any  other  Person   relating  to  any  Event  of  Loss  giving  rise  to  such
         substitution  and (z)  subject to Section  2.6(c) of the Loan  Agreement  (to the extent
         that less than 100% of the insurance  proceeds  received in respect of the Event of Loss
         giving rise to such  replacement  were used to acquire  such  Replacement  Engine),  the
         Company  shall  receive  all  insurance  proceeds  and other  proceeds in respect of any
         Event of Loss  giving  rise to such  replacement.  For all  purposes  hereof,  each such
         Replacement  Engine so  substituted  shall be deemed to be  subjected to the Lien of the
         Security Documents and shall be deemed a "Spare Engine" as defined herein.

(v)      Anything to the contrary contained in this SECTION 3.01(A) notwithstanding, in the event that,
         following an Event of Loss, (x) the only unencumbered engines owned by the Company are engines
         which do not meet the  criteria  for  Acceptable  Alternate  Spare  Engines  (each  such
         engine, an "Available  Engine"), or (y) the Company does not then own any unencumbered
         engines,  and in the case of each of (x) and (y),  the  Company  does not  intend to use
         the proceeds  received in  connection  with such Event of Loss to acquire an  Acceptable
         Alternate  Spare Engine,  then in lieu of pledging an Acceptable  Alternate Spare Engine
         in  accordance  with this  SECTION  3.01(A),  the  Company  shall be  entitled to do the
         following on or prior to the date set forth in SECTION 3.01(A)(I)(B)(2):

(A)      in the case of (x) above, pledge to the Collateral Agent in accordance with the terms hereof
                  (1) such Available Engines or (2) such Available Engine(s) and unencumbered spare
                  parts (of a type which are similar to the Spare Parts pledged hereunder), in each
                  case  which  have an  aggregate  value  at  least  equal  to the  most  current
                  Appraised Value of the Spare Engine being replaced; and

(B)      in the case of (y) above, pledge to the Collateral Agent in accordance with the terms hereof
                  unencumbered  spare  parts (of a type  which  are  similar  to the Spare  Parts
                  pledged  hereunder)  which have an  aggregate  value at least equal to the most
                  current Appraised Value of the Spare Engine being replaced;

         so long as,  on or  prior to such  date,  the  Company  shall  have  (I)  satisfied  the
         conditions  precedent set forth in SECTION  3.01(A)(III),  in connection with the pledge
         of any Available  Engine,  (II) satisfied the conditions  precedent set forth in SECTION
         2.03(C)(I)  through (III), in connection with the pledge of such spare parts,  and (III)
         in the Officer's  Certificate  delivered pursuant to SECTION  3.01(A)(III)(F) or SECTION
         2.03(C)(III),  as the case may be,  included a  certification  that the Company does not
         intend to use the  proceeds  received in  connection  with such Event of Loss to acquire
         an Acceptable  Alternate  Spare Engine.  Upon  satisfaction  of the terms and conditions
         of  this  subsection  (A)(V),  the  Company  shall  be  deemed  to  have  satisfied  its
         obligations  under  SECTION  3.01(A)(I)(B)(2)  to pledge an Acceptable  Alternate  Spare
         Engine in place of the Spare Engine subject to such Event of Loss.

         The parties  acknowledge and agree that this  subsection  (A)(V) shall not be applicable
         to a substitution of a Spare Engine effected pursuant to SECTION 2.01(D).

(b)      Event  of Loss  with  Respect  to Spare  Parts or  Pledged  Equipment.  As between
the Company and the Collateral Agent,  all insurance proceeds received in respect of Spare Parts or
Pledged Equipment, whether as a result of the occurrence of an Event of Loss, or property damage or
loss not constituting an Event of Loss,  under policies  required to be maintained by the Company
pursuant  to  SECTION  2.04 and all  proceeds  of a transfer  of title to Spare  Parts or Pledged
Equipment  contemplated  by the terms of SECTION  2.03(B) will be applied in accordance  with the
provisions of Section 2.6(c) of the Loan Agreement.

(c)      Application  of Payments  from  Governmental  Authorities  for  Requisition  of Title,  etc.
Any payments (other than insurance proceeds the application of which is provided for elsewhere in this
SECTION  3.01)  received  at any  time  by  the  Collateral  Agent  or by the  Company  from  any
Governmental  Authority  or  other  Person  with  respect  to an  Event  of  Loss,  other  than a
requisition  for use by the United  States  Government  or other  government  of  registry  of an
aircraft  or any  instrumentality  or agency of any thereof  not  constituting  an Event of Loss,
will be applied in accordance with Section 2.6(c) of the Loan Agreement.

(d)      Requisition for Use of a Spare Engine by the United States Government or the Government of
Registry of an Aircraft. In the event of the requisition for use of a Spare Engine by the United
States Government or any other government of registry of the applicable  aircraft or any agency or
instrumentality  of any  thereof  (other than in the  circumstances  contemplated  by  subsection
(e)), any payments  received by Collateral Agent or the Company from such government with respect
to such requisition shall be paid over to, or retained by the Company.

(e)      Application  of  Payments  During  Existence  of  Specified  Defaults  and Events of  Default.
Any amount referred  to in this SECTION 3.01 which is payable to or retainable by the Company (or
any Permitted  Lessee) shall not be paid to or retained by the Company (or any Permitted Lessee)
if at the time of such payment or retention a Specified  Default or any Event of Default shall have
occurred and be  continuing,  but shall be held by or paid over to  Collateral  Agent and, at the
direction  of the  Board (or if the  Board  Guarantee  is no  longer  in  effect,  the  Requisite
Lenders),  subject to applicable  law, be applied  against the  obligations  of the Company under
the Loan  Documents.  At such time as there shall not be continuing  any such  Specified  Default
or Event of  Default,  such  amount  shall be paid to the  Company to the  extent not  previously
applied in  accordance  with the  preceding  sentence.  Prior to remitting  any such funds to the
Company,  the  Collateral  Agent  shall  be  authorized  to  request  and  receive  an  Officer's
Certificate  from the  Company  certifying  that no  Specified  Default or Event of  Default  has
occurred and is continuing.

(f)      Treatment  of  Insurance  Proceeds in  Accordance  with Loan  Agreement.  Notwithstanding
anything to the contrary contained herein,  any insurance proceeds and any proceeds received in
connection with a requisition of title by any Governmental Authority payable to the Company or the
loss payee as a result of an Event of Loss with respect to all or any  portion of the Collateral
shall be subject to Section 2.6(c) of the Loan  Agreement (including the threshold set forth in the
first sentence thereof for proceeds not applied to repair, restore or replace the asset from which
such proceeds  derived)  without  regard to whether the Company  elects  pursuant to this SECTION
3.01 to  substitute  an  Acceptable  Alternate  Spare Engine in respect of the Spare Engine which
has suffered an Event of Loss.

                                            ARTICLE 4

                                            REMEDIES

SECTION 4.01      REMEDIES AVAILABLE TO COLLATERAL AGENT.

(a)      For the purpose of enforcing any and all rights and remedies under this Security Agreement,
after an Event of Default shall have occurred and so long as such Event of Default shall be continuing:
(i) upon the written demand of the  Collateral  Agent and at the Company's  expense,  the Company
shall give the Collateral  Agent immediate  access to the Tracking System  (together with Company
personnel  necessary  to operate the  Tracking  System) and promptly  deliver  possession  of any
Collateral as the Collateral  Agent may so demand to the Collateral  Agent or its designee in the
manner and condition  required by, and otherwise in accordance  with all the  provisions of, this
Security  Agreement,  or the Collateral Agent at its option may enter upon the premises where all
or any part of the  Collateral  is located and take  immediate  possession of and remove the same
by summary  proceedings  or otherwise (and at the Collateral  Agent's  option,  store the same at
the Company's  premises until disposal thereof by the Collateral  Agent),  all without  liability
accruing  to the  Collateral  Agent  (other than that caused by the  Collateral  Agent's  willful
misconduct  or gross  negligence as actually and finally  determined  by a final,  non-appealable
judgment  of a court of  competent  jurisdiction)  for or by  reason  of such  entry or taking of
possession or removing  whether for the  restoration of damage to property  caused by such action
or  otherwise;  and (ii) the Company  shall,  at the request of the  Collateral  Agent,  promptly
execute  and  deliver to the  Collateral  Agent such  instruments  or other  documents  as may be
necessary or advisable to enable the Collateral  Agent or an agent or  representative  designated
by the Collateral  Agent,  at such time or times and place or places as the Collateral  Agent may
specify,  to obtain  possession of all or any part of the  Collateral the possession of which the
Collateral  Agent shall at the time be entitled to  hereunder;  provided,  that during any period
any  aircraft on which a Spare  Engine is  installed  is  activated  under the Civil  Reserve Air
Fleet  Program in  accordance  with the  provisions  of SECTION  2.01(B)(I)(F)  hereof and in the
possession  of the  government of the United  States of America or an  instrumentality  or agency
thereof,  the  Collateral  Agent shall not,  on account of any Event of  Default,  be entitled to
exercise any of its rights under this  SECTION 4.01 against the  Collateral  in such manner as to
limit the  Company's  control of the  associated  aircraft,  unless at least sixty (60) days' (or
such  lesser  period as may then be  applicable  under the Air  Mobility  Command  program of the
United States  Government)  prior written  notice of Default  hereunder  shall have been given by
the  Collateral  Agent  to  the  Company  with  a  copy  addressed  to  the  Contracting   Office
Representative  for the Air  Mobility  Command of the United  States Air Force under the contract
with the Company relating to such aircraft.

(b)      After an Event of Default shall have occurred and so long as such Event of Default shall
be continuing, then and in every such case the Collateral Agent, as holder of a security interest
in the Collateral may, and when required pursuant to the provisions of Section  7.2 of the Loan
Agreement  shall,  exercise,  any or all of the  rights  and powers and pursue any and all of the
remedies  accorded  to a secured  party  under the UCC and under any other  applicable  law,  may
recover  judgment  in its own  name as  Collateral  Agent  against  the  Collateral  and may take
possession  of all or any part of the  Collateral  and may  exclude  the  Company and all Persons
claiming  under any of them  wholly or partly  therefrom.  Any  proceeds  received or realized by
the  Collateral  Agent at any time  pursuant  to the  exercise  of  remedies  hereunder  shall be
promptly  transferred  by the Collateral  Agent to the account of the Agent  specified in Section
2.9(a) of the Loan  Agreement for  application  in  accordance  with the priority of payments set
forth in Section 2.9(e) of the Loan Agreement.

(c)      So long as an Event of Default shall have occurred and be continuing, the Collateral Agent
may, if at the time such action may be lawful and always subject to compliance with any mandatory
legal requirements, either with or without taking possession, and either before or after  taking
possession  and without  instituting  any legal  proceedings  whatsoever,  and having first given
notice of such sale by  registered  mail to the  Company,  at least 20 days  prior to the date of
such  sale,  and any  other  notice  which  may be  required  by law,  sell  and  dispose  of the
Collateral,  or any part thereof,  or interest therein, at public auction or private sale, in one
lot as an  entirety or in  separate  lots,  and either for cash or on credit and on such terms as
the Collateral  Agent may  determine,  and at any place (whether or not it be the location of the
Collateral or any part thereof) and time designated in the notice above referred to.

(d)      Any such sale may be adjourned from time to time by announcement at the time and place
appointed for such sale, or for any such adjourned sale, without further notice, and the Collateral
Agent or any Lender may bid and become the purchaser at any such sale and each Lender shall be entitled
at any public  auction sale to credit  against any purchase price bid at such public auction sale
by such  Lender all or any part of any unpaid  obligations  owing to such  Lender  secured by the
Lien of the Security Documents.

(e)      If an Event of Default has occurred and is continuing, the Collateral Agent shall also be
entitled to pursue all or any part of the Collateral wherever it may be found and may enter any of the
premises of the Company or any other Person  wherever the  Collateral may be or be supposed to be
and search for the  Collateral  and take  possession  of any item of the  Collateral  pursuant to
this  SECTION  4.01(E).  The  Collateral  Agent  may,  from time to time,  at the  expense of the
Company,  make  all  such  expenditures  for the  collection,  maintenance,  insurance,  repairs,
replacements,  alterations,  additions and improvements to and of the Collateral,  as it may deem
proper.  In each such case,  the  Collateral  Agent  shall have the right to  collect,  maintain,
use, insure,  operate,  store, lease, control or manage the Collateral,  and to carry on business
and exercise all rights and powers of the Company  relating to the  Collateral as the  Collateral
Agent  shall deem  appropriate,  including  the right to enter  into any and all such  agreements
with  respect to the  collection,  maintenance,  use,  insurance,  operation,  storage,  leasing,
control or  management  of the  Collateral or any part  thereof.  The  Collateral  Agent shall be
entitled  to  collect,  sue for and  receive  directly  all monies due or to become  due,  tolls,
rents,  issues,  profits,  products,  revenues or other income pursuant to this SECTION  4.01(E).
In accordance  with the terms of this SECTION  4.01(E),  such monies due or to become due, tolls,
rents,  issues,  profits,  products,  revenues  and  other  income  shall be  applied  to pay the
expenses  of  collecting,  using,  operating,  storing,  leasing,  controlling  or  managing  the
Collateral, and of all maintenance,  insurance,  repairs,  replacements,  alterations,  additions
and  improvements,  and to make all payments  which the  Collateral  Agent may be required or may
elect to make,  if any,  for taxes,  assessments,  insurance  or other  proper  charges  upon the
Collateral  or any part thereof  (including  the  employment  of  engineers  and  accountants  to
examine,  inspect and make reports  upon the  properties  and books and records of the  Company),
and all other  payments  which the  Collateral  Agent may be required or authorized to make under
any provision of this Security  Agreement,  including this SECTION  4.01(E),  as well as just and
reasonable  compensation  for the services of the Collateral  Agent,  and of all persons properly
engaged and employed by the Collateral Agent.

(f)      Subject to SECTION 4.01(C), the Collateral Agent may proceed to protect and enforce this
Security Agreement by suit or suits or proceedings in equity, at law or in bankruptcy, and whether
for the specific performance of any covenant or agreement herein contained or in execution or aid
of any power herein granted; or for foreclosure  hereunder,  or for the appointment of a receiver
or receivers  for the  Collateral  or any part  thereof,  or for the recovery of judgment for the
indebtedness  secured by the Lien created  under this Security  Agreement or for the  enforcement
of any other proper, legal or equitable remedy available under applicable law.

(g)      Each and every right, power and remedy herein given to the Collateral Agent specifically
or otherwise in this Security Agreement shall be cumulative and shall be in addition to every other
right, power and remedy herein specifically given or now or hereafter existing at law, in equity
or by statute, and each and every right, power and remedy whether specifically  herein  given or
otherwise  existing  may be  exercised  from  time to time and as  often in such  order as may be
deemed  expedient by the Collateral  Agent,  and the exercise or the beginning of the exercise of
any power or remedy  shall not be  construed  to be a waiver of the right to exercise at the same
time or  thereafter  any other  right,  power or remedy.  No delay or omission by the  Collateral
Agent in the  exercise of any right,  remedy or power or in pursuing  any remedy shall impair any
such  right,  power or remedy or be  construed  to be a waiver of any  default on the part of the
Company or to be an acquiescence therein.

(h)      Upon and during the continuance of an Event of Default the Collateral Agent shall be
entitled to undertake an acceptance of all or a part of the Collateral in satisfaction of all or a
specified part of the  Obligations  pursuant to and in accordance with the provisions of Sections
9-620 and 9-621 of the UCC and the Company's rights  thereunder,  none of which are waived herein
notwithstanding  the terms of SECTION  4.03,  and, if pursuant  to such  Sections  and after such
Event  of  Default  the  Company  consents  to  such  acceptance,  which  consent  shall  not  be
unreasonably  withheld,  then the Company  shall  execute and deliver  such deeds of  conveyance,
assignments  and other  documents or instruments  (including any notices or  applications  to the
FAA or any other Governmental  Authority having  jurisdiction over the Collateral subject to such
conveyance)  as shall be  reasonably  required to  effectuate  the  transfer of such  Collateral,
together  with the  certificates,  if any,  representing  the same and any  other  rights  of the
Company with respect thereto,  to the Collateral  Agent or any designee or designees  selected by
the Collateral Agent.

SECTION 4.02      EXPENSES.  The Company agrees that it will upon demand pay to the Collateral Agent:

(a)      the amount of any taxes (other than income taxes) payable by reason of the Collateral Agent's
security interests in respect of the Collateral or to free any of the Collateral from any Lien thereon;
and

(b)      the amount of any and all reasonable out-of-pocket expenses, including, but not limited to,
any excise, property, transfer, sales and use taxes imposed by any state, federal or other local
authority on any of the Collateral, and reasonable fees and disbursements of counsel and of any other
experts payable in connection  with the  enforcement of this Security  Agreement after and during
the  continuance  of any Event of Default,  including such expenses as are incurred in connection
with:

(i)      the collection, sale or other disposition of the Collateral;
(ii)     any action taken by the Collateral Agent to effect compliance on behalf of the Company in
         respect of a failure by the Company to comply with the provisions of this Security Agreement
         which results (or is likely to result) in the  diminution  of the value of the Collateral or
         the validity,  perfection,  rank or value of the Collateral Agent's security interest in
         the Collateral;
(iii)    protecting, storing, warehousing, appraising, insuring, handling, maintaining, shipping,
         overhauling and repairing the Collateral; or
(iv)     the exercise by the Collateral Agent of any of the rights or powers conferred upon it hereunder.

         Any such  amount not paid to the  Collateral  Agent on demand  shall bear  interest  for
each day until paid at a rate per annum  equal to the rate  specified  in  Section  2.7(g) of the
Loan Agreement.

SECTION 4.03      WAIVER OF CLAIMS.

(a)      Except as otherwise provided in this Security  Agreement, the Company hereby waives, to the
maximum extent permitted by applicable law, notice and judicial  hearing  in  connection  with the
Collateral  Agent's  taking  possession,  retention,  disposition  or  sale  of  any  Collateral,
including  any and all prior  notice and hearing for any  prejudgment  remedy or remedies and any
such right which the Company  would  otherwise  have under any  applicable  law,  and the Company
hereby further waives, to the maximum extent permitted by law:

(i)      provided that the actions taken comply, in all material respects, with applicable law,
         including but not limited to all applicable provisions of the UCC, all claims, damages and
         demands against the Collateral Agent, the Board and the Lenders arising out of such taking of
         possession,  retention,  disposition  or  sale of the  Collateral  except  such  claims,
         damages and demands as may arise out of such  Person's own gross  negligence  or willful
         misconduct as actually and finally  determined by a final  non-appealable  judgment of a
         court of  competent  jurisdiction  and only to the  extent  of  direct  (as  opposed  to
         special, indirect, consequential or punitive) damages;

(ii)     all other requirements as to the time, place and terms of sale or other requirements with
         respect to the enforcement of the Collateral Agent's rights hereunder; and

(iii)    all rights of appraisal, valuation, stay, extension or moratorium (but not redemption) now
         or hereafter in force under any applicable law in order to prevent or delay the enforcement
         of this Security  Agreement or the absolute sale or other disposition  of any  part of the
         Collateral,  and the Company,  for itself and all who may claim under it,  insofar as it
         or they now or  hereafter  lawfully  may,  hereby  waives the  benefit of all such laws;
         provided,  however,  that the actions taken by the Collateral Agent as described in this
         SECTION 4.03 herein comply,  in all material  respects,  with applicable law,  including
         but not limited to all applicable provisions of the UCC.

(b)      The Company, for itself and all who claim through it, hereby waives all right to have the
Collateral marshaled upon any foreclosure hereof and agrees that any court having jurisdiction  to
foreclose this Security Agreement may order the sale of the Collateral as an entity.

SECTION 4.04      DISCONTINUANCE  OF  PROCEEDINGS.   In case the Collateral Agent shall have
instituted any proceeding to enforce any right, power or remedy under this Security Agreement by
foreclosure, sale, entry or otherwise, and such proceeding shall have been discontinued or abandoned
for any reason or shall have been determined adversely to the Collateral Agent, then and in every
such case the Company, the Collateral  Agent and each  Lender  shall be  restored  to their  former
positions and rights  hereunder with respect to the Collateral  subject to the security  interest
and Lien  created  under the  Security  Documents  and all  rights,  remedies  and  powers of the
Collateral Agent shall continue as if no such proceeding had been instituted.

                                            ARTICLE 5

                                TERMINATION OF SECURITY AGREEMENT

SECTION 5.01      TERMINATION  OF SECURITY  AGREEMENT.  This Security Agreement shall terminate
upon payment and performance in full of all of the Obligations and, as to any item of Collateral,
upon the transfer or disposition of such Collateral as permitted  herein. Upon termination, the
Company shall direct, at the Company's sole cost and expense, the Collateral  Agent to execute and
deliver,  at the  Company's  sole cost and  expense,  to or as directed in writing by the Company
appropriate  instruments  reasonably  required  to  release  all  the  property  included  in the
Collateral  (or such  item of  Collateral,  as the  case  may be)  from the Lien of the  Security
Documents  and the  Collateral  Agent shall  execute and deliver such  instruments  as aforesaid;
provided,  however,  that this Security Agreement shall earlier terminate and this Security
Agreement  shall be of no further  force or effect  upon any sale or other final  disposition  by
the  Collateral  Agent  of all  property  constituting  part  of the  Collateral  and  the  final
distribution  by the Collateral  Agent of all monies or other  property or proceeds  constituting
part of the  Collateral  in  accordance  with the terms  hereof.  Except as  aforesaid  otherwise
provided,  this Security  Agreement  shall  continue in full force and effect in accordance  with
the terms hereof.

                                            ARTICLE 6

                                          MISCELLANEOUS

SECTION 6.01      NOTICES.  All notices and other communication provided for herein shall be
in writing and shall be delivered by hand or overnight courier service, mailed by certified or
registered  mail or sent by telecopy as follows:

         if to the Company, to:

                  Frontier Airlines, Inc.
                  7001 Tower Road
                  Denver, Colorado 80249
                  Attention: Vice President-Administration and General Counsel

                  Phone: (720) 374-4200
                  Facsimile: (720) 374-4379

         if to the Collateral Agent, to:

                  Wells Fargo Bank Northwest, N.A.
                  299 South Main Street, 12th Floor
                  Salt Lake City, Utah 84111
                  Attention: Brett R. King

                  Phone:  (801) 246-5819
                  Facsimile: (801) 246-5053

Either  party  hereto  may  change  its  address  or  telecopy   number  for  notices  and  other
communications   hereunder  by  notice  to  the  other  party  hereto.   All  notices  and  other
communications  given to either party hereto in accordance  with the  provisions of this Security
Agreement shall be deemed to have been given on the date of receipt.

SECTION 6.02      GOVERNING  LAW.  THIS SECURITY AGREEMENT IS BEING DELIVERED IN THE STATE
OF NEW  YORK. THIS SECURITY AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW
OF THE STATE OF NEW  YORK;  PROVIDED  THAT IN THE  EVENT THE BOARD BECOMES A LENDER PURSUANT TO THE
BOARD GUARANTEE, THE RIGHTS AND OBLIGATIONS OF THE  BOARD  HEREUNDER  SHALL BE  GOVERNED  BY,  AND
CONSTRUED IN  ACCORDANCE  WITH,  THE FEDERAL LAW OF THE UNITED  STATES OF AMERICA,  IF AND TO THE
EXTENT SUCH FEDERAL LAW IS APPLICABLE,  AND OTHERWISE IN ACCORDANCE  WITH THE LAW OF THE STATE OF
NEW  YORK.  THE  PROVISIONS  OF  SECTION  10.11 OF THE LOAN  AGREEMENT  ARE  INCORPORATED  HEREIN
MUTATIS MUTANDIS, AS IF FULLY SET FORTH HEREIN.

SECTION 6.03      EXECUTION  IN  COUNTERPARTS.   This Security Agreement may be executed in any
number of counterparts, each of which shall be an  original  but  such  counterparts  shall  together
constitute but one instrument.

SECTION 6.04      AMENDMENTS.  This Security Agreement may be amended in accordance with the
provisions set forth in Section 10.1 of the Loan Agreement.

SECTION 6.05      DOCUMENTATION.  The Company shall provide the Collateral Agent with copies
of all  documents executed in connection with the Security Documents.

SECTION 6.06      PREPAYMENT  ACCOUNT.  Any amounts which the Company may be required to pay
to the Agent as a prepayment in accordance with Section 2.6 or 2.10 of the Loan  Agreement on a day
that is other than an Interest Payment Date may, in lieu of being paid by the Company as a prepayment
on the due date thereof, be deposited in the Prepayment Account if, by virtue of such prepayment,
the Company would be obligated to make a payment in accordance with  Section  2.10(e) of the Loan
Agreement.  To the  extent  the  Company  elects to  deposit  cash in the  Prepayment  Account as
provided in the preceding  sentence,  the  Collateral  Agent shall apply any amounts so deposited
in the  Prepayment  Account  to  prepay  the Loans on the last day of the then  current  Interest
Period.  The Company shall be deemed to have  satisfied the  prepayment  requirements  of Section
2.6 or 2.10,  as  applicable,  upon  deposit of  immediately  available  funds in the  Prepayment
Account in an amount  equal to the amount of the  prepayment  then due  pursuant to such  Section
2.6 or 2.10, as  applicable.  The  Collateral  Agent shall,  at the request of the Company and in
accordance  with SECTION  6.07 hereof,  invest  amounts on deposit in the  Prepayment  Account in
Cash  Equivalents  maturing on or prior to the last day of the then current  Interest Period with
any interest  thereon  remitted to the Company  concurrently  with the application of the amounts
so deposited on the date of prepayment;  provided,  that no such remittance  shall be made if and
so long as a Specified  Default or Event of Default  shall have occurred and be  continuing.  The
parties hereby  acknowledge  and agree that the  Prepayment  Account is, and is intended to be, a
deposit  account (as such term is defined in Section 9-102 of the UCC),  and that the  Collateral
Agent  shall at all times  during the term of this  Agreement  have  control  of such  Prepayment
Account (within the meaning of Section 9-104 of the UCC).

SECTION 6.07      CASH COLLATERAL.

(a)      Any amounts held by the Collateral Agent pursuant to the provisions of this Agreement
shall be invested by the Collateral Agent from time to time in Cash Equivalents as directed in an
Officer's Certificate from the Company so long as the Collateral Agent may acquire the same using
commercially  reasonable  efforts.  The parties hereto agree that the Collateral  Agent and/or an
Affiliate of the  Collateral  Agent may charge  and/or  collect  fees and expenses in  connection
with the  purchase of Cash  Equivalents  or for other  services  rendered  to the parties  hereto
(provided that such charges, fees and expenses are on terms consistent with terms negotiated at
arm's  length).  Neither  the  Collateral  Agent nor any of its  Affiliates  shall be required to
account for any profits or benefits  described in the preceding  sentence.  All Cash  Equivalents
held by the  Collateral  Agent  pursuant to this SECTION 6.07 shall be registered in the name of,
payable to the order of, or specially  endorsed  to, the  Collateral  Agent.  Except as otherwise
provided in SECTION  6.06,  any income  realized as a result of any such  investment,  net of the
Collateral  Agent's  reasonable  fees and expenses in making such  investment,  shall be held and
applied by the  Collateral  Agent in the same manner as the principal  amount of such  investment
is to be applied and any losses,  net of earnings and such  reasonable  fees and expenses,  shall
be charged against the principal  amount  invested.  All taxes on any income so realized shall be
charged to the Company.  The  Collateral  Agent shall not be liable for any loss  resulting  from
any  investment  to be made by it under  this  Agreement  other  than by  reason  of its  willful
misconduct  or gross  negligence as actually and finally  determined  in a final,  non-appealable
judgment of a court of competent jurisdiction.

(b)      Neither the Collateral Agent nor any of its Affiliates assume any duty or liability for
monitoring the rating of the selected investment. In the event an investment selection is not made,
the amounts held by the Collateral Agent pursuant to the  provisions  of this  Security  Agreement
shall not be invested  and the  Collateral  Agent shall not incur any  liability  for interest or
income thereon.

(c)      The Collateral Agent shall have no obligation to invest or reinvest amounts to be held by
the Collateral Agent if all or a portion of such amounts are deposited with the Collateral Agent
after 11:00 a.m. (New York time) on the day of the deposit.  Instructions to invest or reinvest that
are received after 11:00 a.m. (New York time) will be treated  as if  received  on the  following
Business Day in New York.

(d)      The Collateral Agent shall have the power to sell or liquidate the foregoing investments
whenever the Collateral Agent shall be required to distribute the amounts held pursuant to the terms
of this Security Agreement or as otherwise contemplated in this Security Agreement. Requests or
instructions  received  after 11:00 a.m.  (New York time) by the  Collateral  Agent to  liquidate
such amounts will be treated as if received on the following Business Day in New York.

(e)      The Collateral Agent shall have no responsibility for any investment losses resulting from
the investment, reinvestment or liquidation of the amounts held by the Collateral Agent pursuant to
the  terms  of this  Security  Agreement  provided  that  the  Collateral  Agent  has  made  such
investment,  reinvestment  or liquidation of the trust assets in accordance  with the terms,  and
subject to the conditions, of this Security Agreement.

(f)      Each of the parties to this Security Agreement acknowledge that non-deposit investment products
are not obligations of, or guaranteed by, Wells Fargo Bank,  N.A. or any of their affiliates; are not
FDIC  insured;  and are subject to  investment  risks,  including  the possible loss of principal
amount  invested in one of the money market  funds made  available  by the  Collateral  Agent and
selected by the Company.

(g)      Any investment direction contained herein may be executed through an affiliated broker or
dealer of the Collateral Agent and any such affiliated broker or dealer shall be entitled to such
broker's or dealer's usual and customary fees for such execution.

(h)      The Cash Equivalents may be held by the Collateral Agent directly or through any clearing
agency or depository  (collectively, the "Clearing Agency") including, without limitation,
the Federal Reserve/Treasury  Book-Entry  System for United  States and federal  agency  securities,
and The Depository  Trust Company.  The Collateral Agent shall not have any responsibility or liability
for the actions or omissions to act on the part of any Clearing Agency.

(i)      Notwithstanding anything contained herein to the contrary, the parties hereto hereby agree
and acknowledge  that due to the  potential  conflict  of  interest,  the  Collateral  Agent will not
purchase  the  commercial  paper  of Wells  Fargo  Bank,  N.A.  or any  affiliate  (collectively,
"Paper")  unless  the  Collateral  Agent  is  specifically  instructed  to  purchase  Paper in an
Officer's  Certificate from the Company.  Any instruction for the purchase of Paper must be given
by the Company on a  transaction  by  transaction  basis in the manner set forth in the preceding
sentence.

                                              * * *








         IN WITNESS  WHEREOF,  the  parties to hereto  have caused  this  Mortgage  and  Security
Agreement to be duly executed by their respective officers thereunto duly authorized.


FRONTIER AIRLINES, INC.



By:                                                     By:                            
      Name:                                                         Name:
      Title:                                                        Title:



Witnesses:                                                    Witnesses:


By:                                                     By:                            
      Name                                                          Name


By:                                                     By:                            
      Name                                                          Name


STATE OF COLORADO                     )                      STATE OF COLORADO                    )
                                      )        ss.:                                               )        ss.:
COUNTY OF DENVER                      )                      COUNTY OF DENVER                     )


I,                    ,  a Notary                      I,                      ,    a
Public of the  County of  Denver,  State                      Notary   Public  of  the   County  of
of Colorado,  do hereby certify that the                      Denver, State of Colorado,  do hereby
above-referenced   officer  of  Frontier                      certify  that  the   above-referenced
Airlines,  Inc., a Colorado corporation,                      officer of Frontier  Airlines,  Inc.,
personally   appeared   before   me  and                      a  Colorado  corporation,  personally
acknowledged  the due  execution  of the                      appeared  before me and  acknowledged
foregoing  instrument  for and on behalf                      the due  execution  of the  foregoing
of said company.                                              instrument  for and on behalf of said
                                                              company.
WITNESS  my hand and  official  stamp or
seal.                                                         WITNESS  my hand and  official  stamp
                                                              or seal.

                            
Notary Public                                                                             
                                                              Notary Public
My Commission
Expires:                                               My Commission
                                                              Expires:                    

WELLS FARGO BANK NORTHWEST, N.A.,
as Collateral Agent



By:                            
      Name:
      Title:



Witnesses:

By:                            
      Name

By:                            
      Name



STATE OF UTAH                         )
                                      )        ss.:
COUNTY OF SALT LAKE                   )



I,                     ,  a Notary  Public of the County of Salt Lake,  State of Utah,  do
hereby  certify  that  the  above-referenced  officer  of  Wells  Fargo  Bank  Northwest,   N.A.,
personally  appeared  before me and  acknowledged  the due execution of the foregoing  instrument
for and on behalf of said company.

WITNESS my hand and official stamp or seal.


                            
Notary Public

My Commission Expires:                            





                                                                                       EXHIBIT A1
                                                                                  to Mortgage and
                                                                               Security Agreement
                                 MORTGAGE AND SECURITY AGREEMENT
                                SUPPLEMENT (SPARE ENGINE) NO. ( )


         This  MORTGAGE  AND  SECURITY  AGREEMENT   SUPPLEMENT  (SPARE  ENGINE)  NO. (  )  dated
          (herein called this "Security  Agreement  Supplement") made by Frontier Airlines,
Inc.,  a  Colorado  corporation  (herein  called  the  "Company"),  in favor of Wells  Fargo Bank
Northwest,  N.A.,  as  Collateral  Agent for,  and  directed  by, the Board,  the Lenders and the
Supplemental  Guarantors  (each as  defined in the Loan  Agreement  (as  defined in the  Security
Agreement (as defined below))) (the "Collateral Agent").

                                      W I T N E S S E T H:


         WHEREAS,  the Company has heretofore  executed and delivered to the  Collateral  Agent a
Mortgage and Security  Agreement  dated as of February 14, 2003 (as amended,  modified,  restated
or  otherwise  supplemented  from  time to time in  accordance  with  its  terms,  the  "Security
Agreement"), covering, inter alia, Spare Engines of the Company;

         WHEREAS,  terms that are defined in the  Security  Agreement or the Loan  Agreement  (as
such term is  defined in the  Security  Agreement)  and which are not  otherwise  defined  herein
shall have the meanings assigned to such terms in the Security Agreement or the Loan Agreement;

         WHEREAS,  the Security  Agreement and Security  Agreement  Supplement (Spare Engine) No.
  dated                ,    have been duly recorded  pursuant to Subtitle VII of Title 49
of the United  States Code on                 ,   ,  as one document and have been assigned
Conveyance No.        ; and

         WHEREAS,  the Security  Agreement  provides for the  execution and delivery from time to
time of Mortgage and Security Agreement  Supplements,  each substantially in the form hereof, for
the purpose of subjecting engines to the Lien of the Security Agreement.

         NOW,  THEREFORE,  this  Security  Agreement  Supplement  Witnesseth,  that to secure the
prompt  payment of the  principal  of,  interest on and all other amounts due with respect to the
Loan  and to  secure  the  performance  and  observance  by the  Company  of all the  agreements,
covenants and provisions  contained in the Security  Agreement,  in the Loan Agreement and in the
other Loan  Documents  and the  prompt  payment  of any and all  amounts  from time to time owing
hereunder,  under the Loan  Agreement and the other Loan  Documents and for the uses and purposes
and subject to the terms and provisions of the Security  Agreement,  and in  consideration of the
premises  and of the  covenants  contained  in the  Security  Agreement,  and of  other  good and
valuable  consideration  the receipt and adequacy  whereof are hereby  acknowledged,  the Company
has  granted,  bargained,  sold,  assigned,   transferred,   conveyed,   mortgaged,  pledged  and
confirmed, and does hereby grant, bargain, sell, assign, transfer,  convey, mortgage,  pledge and
confirm,  unto the Collateral Agent, its successors and assigns,  for the security and benefit of
the Board and the Lenders,  a first priority  security  interest in and first  priority  mortgage
Lien on the following described property:

                                        AIRCRAFT ENGINES


         [    ] aircraft engines,  each such engine having 750 or more rated take-off  horsepower
or the equivalent  thereof,  whether or not such engines shall be installed in or attached to any
aircraft or airframe, identified as follows:

                 Manufacturer                  Model             Manufacturer's
                                                                 Serial Number



together  with all Parts which are from time to time  incorporated  or  installed  in or attached
thereto or which have been removed  therefrom,  unless the Lien of the Security  Agreement  shall
not be applicable to such Part pursuant to the provisions of the Security Agreement.

         TO HAVE AND TO HOLD all and singular the aforesaid  property unto the Collateral  Agent,
its  successors  and assigns,  for the uses and purposes and subject to the terms and  provisions
set forth in the Security Agreement.

         This  Security  Agreement  Supplement  shall be  construed  as a  supplemental  Security
Agreement and shall form a part thereof,  and the Security  Agreement is hereby  incorporated  by
reference herein and is hereby ratified, approved and confirmed.

                                              * * *









         IN WITNESS  WHEREOF,  the  Company  has caused  this  Mortgage  and  Security  Agreement
Supplement  (Spare  Engine) No. (   ) to be duly executed by one of its officers,  thereunto  duly
authorized, on the day and year first above written.

                                                              FRONTIER AIRLINES, INC.



                                                              By:                         
                                                                 Name:
                                                                 Title:




                                                                                       EXHIBIT A2
                                                                                  to Mortgage and
                                                                               Security Agreement
                                 MORTGAGE AND SECURITY AGREEMENT
                                SUPPLEMENT (SPARE PARTS) NO. ( )


         This  MORTGAGE  AND  SECURITY   AGREEMENT   SUPPLEMENT  (SPARE  PARTS)  NO.  (  )  dated
          (herein called this "Security  Agreement  Supplement") made by Frontier Airlines,
Inc.,  a  Colorado  corporation  (herein  called  the  "Company"),  in favor of Wells  Fargo Bank
Northwest,  N.A.,  as  Collateral  Agent for,  and  directed  by, the Board,  the Lenders and the
Supplemental  Guarantors (as defined in the Loan Agreement (as defined in the Security  Agreement
(as defined below))) (the "Collateral Agent").

                                      W I T N E S S E T H:


         WHEREAS,  the Company has heretofore  executed and delivered to the  Collateral  Agent a
Mortgage and Security  Agreement  dated as of February 14, 2003 (as amended,  modified,  restated
or  otherwise  supplemented  from  time to time in  accordance  with  its  terms,  the  "Security
Agreement"),  covering,  inter alia,  certain  Spare Parts,  Appliances  and  Expendables  of the
Company;

         WHEREAS,  terms that are defined in the  Security  Agreement or the Loan  Agreement  (as
such term is  defined in the  Security  Agreement)  and which are not  otherwise  defined  herein
shall have the meanings assigned to such terms in the Security Agreement or the Loan Agreement;

         WHEREAS,  the Security Agreement and Security Agreement  Supplement (Spare Parts) No.    
dated                 ,    have been duly recorded  pursuant to Subtitle VII of Title 49 of
the United  States Code on                ,   ,  as one document and have been assigned
Conveyance No.          ; and

         WHEREAS,  the Security  Agreement  provides for the  execution and delivery from time to
time of Mortgage and Security Agreement  Supplements,  each substantially in the form hereof, for
the purpose of subjecting  spare parts,  appliances  and  expendables to the Lien of the Security
Agreement.

         NOW,  THEREFORE,  this  Security  Agreement  Supplement  Witnesseth,  that to secure the
prompt  payment of the  principal  of,  interest on and all other amounts due with respect to the
Loan  and to  secure  the  performance  and  observance  by the  Company  of all the  agreements,
covenants and provisions  contained in the Security  Agreement,  in the Loan Agreement and in the
other Loan  Documents  and the  prompt  payment  of any and all  amounts  from time to time owing
hereunder,  under the Loan  Agreement and the other Loan  Documents and for the uses and purposes
and subject to the terms and provisions of the Security  Agreement,  and in  consideration of the
premises  and of the  covenants  contained  in the  Security  Agreement,  and of  other  good and
valuable  consideration  the receipt and adequacy  whereof are hereby  acknowledged,  the Company
has  granted,  bargained,  sold,  assigned,   transferred,   conveyed,   mortgaged,  pledged  and
confirmed, and does hereby grant, bargain, sell, assign, transfer,  convey, mortgage,  pledge and
confirm,  unto the Collateral Agent, its successors and assigns,  for the security and benefit of
the Board and the Lenders,  a first priority  security  interest in and first  priority  mortgage
Lien on the following described property:

                                           SPARE PARTS

                                           [Describe]


         The Spare  Parts  described  above  are  located,  as of the date  hereof,  at  [specify
locations] (each such location to be included as a Designated Location).

         TO HAVE AND TO HOLD all and singular the aforesaid  property unto the Collateral  Agent,
its  successors  and assigns,  for the uses and purposes and subject to the terms and  provisions
set forth in the Security Agreement.

         The Company  hereby  represents  and  warrants  that it holds an air  carrier  operating
certificate  issued by the Secretary of  Transportation  of the United States pursuant to Chapter
447 of Title 49 of the United  States Code or any  analogous  successor  provision  of the United
States Code,  for aircraft  capable of carrying ten or more  individuals  or 6,000 pounds or more
of cargo.

         This  Security  Agreement  Supplement  shall be  construed  as a  supplemental  Security
Agreement and shall form a part thereof,  and the Security  Agreement is hereby  incorporated  by
reference herein and is hereby ratified, approved and confirmed.

                                              * * *











         IN WITNESS  WHEREOF,  the  Company  has caused  this  Mortgage  and  Security  Agreement
Supplement  (Spare  Parts) No. (__) to be duly executed by one of its  officers,  thereunto  duly
authorized, on the day and year first above written.

                                                              FRONTIER AIRLINES, INC.



                                                              By:                         
                                                                 Name:
                                                                 Title:




                                                                 EXHIBIT B
                                                                                  to Mortgage and
                                                                               Security Agreement
                                    SCHEDULE OF SPARE ENGINES


One (1) [***] engine  bearing  manufacturer's  serial number  [***],  which has seven hundred and
fifty (750) or more rated takeoff horsepower or its equivalent.






                                                                                        EXHIBIT C
                                                                                  to Mortgage and
                                                                               Security Agreement
                                      DESIGNATED LOCATIONS


Continental Hangar
Frontier Area
26360 E. 103rd Ave.
Denver, Colorado 80249

12015 East 46th Avenue
Denver, Colorado 80239

Denver International Airport
Concourse A
Gate 36
Denver, Colorado 80249

7642 Undergrove Circle
Unit F
Denver, Colorado 80249

Frontier Airlines/ELP Station
6701 Convair Rd., Suite C
El Paso, Texas 79925

Sky Harbor Airport
3400 Sky Harbor Blvd.
Terminal 3, Gate 20
Phoenix, Arizona 85034

Albuquerque International Airport
2200 Sunport Blvd
Albuquerque, NM 87106






                                                                                        EXHIBIT D
                                                                                  to Mortgage and
                                                                               Security Agreement
                                SCHEDULE OF COUNTRIES AUTHORIZED
                                FOR DOMICILE OF PERMITTED LESSEES

Austria
Belgium
Canada
Denmark
Finland
France
Germany
Iceland
Ireland
Italy
Japan
Netherlands
Norway
Sweden
Switzerland
United Kingdom

EX-4

     PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
    EXCHANGE COMMISSION IN A CONFIDENTAL TREATMENT REQUEST UNDER RULE 24b-2 OF THE SECURITIES
       EXCHANGE ACT OF 1934, AS AMENDED. THE SYMBOL "[***]" IN THIS EXHIBIT INDICATES THAT
                                  INFORMATION HAS BEEN OMITTED.

                                  REGISTRATION RIGHTS AGREEMENT

                                         BY AND BETWEEN
                                     FRONTIER AIRLINES, INC.
                                     AS THE ISSUER, AND THE
                                  HOLDERS REFERRED TO HEREIN OF
                         WARRANTS TO PURCHASE COMMON STOCK, NO PAR VALUE

                                  DATED AS OF FEBRUARY 14, 2003




                          REGISTRATION RIGHTS AGREEMENT

                  THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and entered into
as of February 14, 2003 by and between FRONTIER AIRLINES, INC., a Colorado corporation (the
"Company"), and the Warrant Holders (as hereinafter defined).

                  WHEREAS, the Company and the Warrant Holders have entered into certain
agreements; and

                  WHEREAS, in order to induce the Warrant Holders to enter into such agreements
with the Company, the Company agreed to issue to the Warrant Holders the Warrants (as
hereinafter defined) and to provide the registration rights set forth in this Agreement to the
Warrant Holders and their respective direct and indirect transferees.

                  The parties hereby agree as follows:

SECTION 1.        DEFINITIONS.  As used in this Agreement, the following terms shall have the following meanings:

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

                  "Agreement":  This Registration Rights Agreement, as the same may be amended,
supplemented or modified from time to time in accordance with the terms hereof.

                  "Business Day":  Each Monday, Tuesday, Wednesday, Thursday and Friday that is
not a day on which banking institutions in New York, New York are authorized or obligated by
law or executive order to close.

                  "Closing Date":  February 14, 2003.

                  "Common Stock":  The common stock, no par value, of the Company or shares of
any class or classes resulting from any recapitalization, reorganization, or reclassification
thereof.

                  "Company":  Frontier Airlines, Inc., a Colorado corporation, and any successor
entity thereto.

                  "Demand Registration":  As defined in Section 2(a) hereof.

                  "Exchange Act":  The Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated by the SEC thereunder.

                  "Holder":  Each owner of any Registrable Securities.

                  "Prospectus":  The prospectus included in the Registration Statement
(including, without limitation, a prospectus that discloses information previously omitted from
a prospectus filed in reliance upon Rule 430A), as amended or supplemented by any prospectus
supplement, with respect to the resale of any of the Registrable Securities covered by such
Registration Statement, and all other amendments and supplements to any such prospectus,
including post-effective amendments, and all materials incorporated by reference or deemed to
be incorporated by reference, if any, in such prospectus.

                  "Registrable Securities":  The shares of Common Stock issued or issuable upon
exercise of the Warrants (including any shares of Common Stock issued or issuable thereon upon
any stock split, stock combination, stock dividend or the like or as a result of any
anti-dilution adjustments under the Warrants), upon original issuance thereof and at all times
subsequent thereto, and associated related rights, if any, until the earliest of (i) the date
on which the resale thereof has been effectively registered under the Securities Act and such
securities have been disposed of in accordance with the Registration Statement relating
thereto, (ii) the date on which such securities have been distributed to the public pursuant to
Rule 144 or are saleable pursuant to paragraph (k) of Rule 144 (assuming for purposes hereof
that a Warrant Holder having the right to exercise Warrants for 10% or more of the outstanding
Common Stock shall be deemed to be an affiliate), or (iii) the date on which such securities
cease to be outstanding.

                  "Registration Statement":  Any registration statement of the Company filed
with the SEC pursuant to the Securities Act that covers the resale of any Registrable
Securities pursuant to the provisions of this Agreement, including the Prospectus, amendments
and supplements to such registration statement or Prospectus (including pre- and post-effective
amendments), all exhibits thereto, and all material incorporated by reference or deemed to be
incorporated by reference, if any, in such registration statement.

                  "Required Holders":  Holders of more than 50% of the Registrable Securities.
For purposes of the preceding sentence, Registrable Securities owned, directly or indirectly,
by the Company or its Affiliates (other than persons who are Affiliates solely by virtue of
being holders of the Registrable Securities) shall not be deemed outstanding.

                  "Requisite Information":  As defined in Section 2(d) hereof.

                  "Rule 144":  Rule 144 promulgated by the SEC pursuant to the Securities Act,
as such rule may be amended from time to time, or any successor rule or regulation.

                  "Rule 144A":  Rule 144A promulgated by the SEC pursuant to the Securities Act,
as such rule may be amended from time to time, or any successor rule or regulation.

                  "Rule 415":  Rule 415 promulgated by the SEC pursuant to the Securities Act,
as such rule may be amended from time to time, or any successor rule or regulation.

                  "Rule 424":  Rule 424 promulgated by the SEC pursuant to the Securities Act,
as such rule may be amended from time to time, or any successor rule or regulation.

                  "Rule 430A":  Rule 430A promulgated by the SEC pursuant to the Securities Act,
as such rule may be amended from time to time, or any successor rule or regulation.

                  "SEC":  The Securities and Exchange Commission, or any successor governmental
agency or authority thereto.

                  "Securities Act":  The Securities Act of 1933, as amended, and the rules and
regulations promulgated by the SEC thereunder.

                  "Transfer Agent":  The registrar and transfer agent for the Company's Common
Stock.

                  "Warrants":  The warrant issued to the Air Transportation Stabilization Board
to purchase 3,450,551 shares of Common Stock; the warrant issued to [***] to purchase 191,697
shares of Common Stock; and the warrant issued to [***] to purchase 191,697 shares of Common
Stock.

                  "Warrant Holders":  The initial holders of the Warrants set forth on Schedule
I hereto.

SECTION 2.        REGISTRATION STATEMENT.

(a)      DEMAND REGISTRATION UNDER THE SECURITIES ACT.  The Required Holders will be entitled
         to demand, from time to time, upon written request, that the Company file a Registration
         Statement under the Securities Act to effect the registration of all or part of their
         Registrable Securities on, at the option of the Company, Form S-1 or any similar
         long-form registration, or Form S-2 or S-3 or any similar short-form registration, if
         available, for an offering to be made either on a continuous basis pursuant to Rule
         415 or by means of an underwriting.  Each request for a Demand Registration (as
         defined below) shall specify the approximate number of Registrable Securities
         requested to be registered.

(i)      Within ten (10) days after receipt of any such request, the Company will give written notice
         of such requested registration to all other Holders of Registrable Securities and will include
         in such registration all Registrable Securities with respect to which the Company has
         received written requests for inclusion therein within twenty (20) days after the
         receipt of the Company's notice.  All registrations requested pursuant to this
         paragraph 2(a) are referred to herein as "Demand Registrations".  The Company shall
         use its reasonable best efforts to prepare and file any Registration Statement
         pursuant to a Demand Registration and have any such Registration Statement declared
         effective as promptly as reasonably practicable, but in no event later than (i) 180
         days with respect to a Registration Statement regarding resales of Registrable
         Securities on a continuous basis pursuant to Rule 415 and (ii) 240 days with respect
         to a Registration Statement regarding an underwritten offering, in each case, after
         the request for such Demand Registration was made.  Nothing in this Section 2 shall
         operate to limit the right of a Holder of Registrable Securities to request the
         registration of Registrable Securities issuable upon exercise of the Warrants held by
         such Holder notwithstanding the fact that at the time of request, such Holder holds
         only Warrants.

(ii)     The Company will not be obligated to effect a Registration Statement pursuant to a Demand
         Registration made within one hundred and twenty (120) days after the effective date of a
         Registration Statement effected pursuant to a previous Demand Registration.  The
         Company will not be obligated to effect more than three (3) Demand Registrations.

(iii)    If Required Holders of Registrable Securities requesting registration under this Section 2(a)
         intend to distribute the Registrable Securities covered by their request by means of an
         underwriting, they shall so advise the Company as part of their request pursuant to
         this Section 2(a), and the Company shall include such information in the written
         notice sent to the Holders of Registrable Securities pursuant to this Section 2(a).
         In such event, the right of a Holder to registration pursuant to this Section 2(a)
         shall be conditioned upon such Holder's participation in such underwriting and the
         inclusion of such Holder's Registrable Securities in the underwriting and upon the
         completion by the Holder of all questionnaires, powers of attorney, indemnities and
         other documents reasonably required under the terms of such underwriting
         arrangements.  The Company shall, together with all Holders of Registrable Securities
         requesting to distribute their securities through such underwriting, enter into an
         underwriting agreement in customary form with the managing underwriter.  If a Holder
         has requested inclusion in such registration as provided above but does not agree to
         the terms of any such underwriting, such Holder's Registrable Securities shall be
         excluded therefrom by written notice from the Company or the managing underwriter.
         The selection of investment banker(s) and manager(s), which investment banker(s) and
         manager(s) shall be nationally recognized, shall be made by the Holders of a majority
         of the Registrable Securities being so registered, subject to approval of the Company,
         which approval will not be unreasonably withheld or delayed.

(iv)     The Company shall not grant to any person any rights to request the Company to register any
         equity securities of the Company, or any securities convertible or exchangeable into or
         exercisable for such securities, that are more favorable than the rights granted
         pursuant to this Agreement, without providing the same or equivalent rights to the
         Holders.

(v)      The Holders of Registrable Securities demanding a Demand Registration pursuant to this Section
         2(a) may, at any time prior to the effective date of any Registration Statement filed pursuant
         to this Section 2(a), revoke such request by providing written notice to the Company.
         Such request will not count toward the three (3) Demand Registrations permitted under
         this Section 2(a), provided such Holders promptly reimburse the Company for all
         reasonable out-of-pocket expenses relating to the preparation of such withdrawn
         Registration Statement.  If such Holders elect not to reimburse the Company for such
         reasonable out-of-pocket expenses, then such request will count toward the three (3)
         Demand Registrations permitted under this Section 2(a).  Notwithstanding any other
         provisions of this paragraph, any underwritten offering commenced but not completed
         due to a suspension of sales by the Company pursuant to Section 2(e) and any
         revocation by the Holders due to a material adverse change in the Company's business,
         financial condition or operating results will not count toward the three (3) Demand
         Registrations permitted under this Section 2(a).

(vi)     Whenever the Company shall effect a registration pursuant to this Section 2(a), no securities
         other than Registrable Securities shall be included among the securities covered by such
         registration unless the Holders of not less than 66 ?% of all Registrable Securities
         to be covered by such registration shall have consented in writing to the inclusion of
         such other securities.

(b)      PIGGYBACK REGISTRATION RIGHTS.  The Company shall afford each Holder of Registrable Securities
         the opportunity to include such Registrable Securities in any registration statement filed
         for purposes of a public offering of securities of the Company of the same class as
         the Registrable Securities or which are convertible into or exercisable for such class
         of securities (including, without limitation a public offering made on a continuous
         basis pursuant to Rule 415) (other than registration statements for which the Company
         has contractually agreed not to grant such rights and other than a registration on
         Form S-4 or Form S-8, or any successor or other forms promulgated for similar
         purposes); provided that if the proposed registration does not proceed, the Company
         shall give written notice thereof to each Holder of Registrable Securities that
         requested inclusion in such registration and thereupon, the Company shall be relieved
         of its obligation to register any Registrable Securities in such registration.  If, in
         the written opinion of the managing underwriter of any such offering in the case of an
         underwritten offering, the total amount of securities to be so registered including
         such Registrable Securities, will exceed the maximum amount of the Company's
         securities which can be marketed without adversely affecting the offering (including
         the price as which such securities can be sold), then the Company shall be entitled to
         reduce the number of shares of Registrable Securities to be included in such offering
         to zero.  Any such reduction shall be allocated among all such Holders and other
         holders of piggyback registration rights in proportion (as nearly as practicable) to
         the amount of registrable securities owned by each holder at the time of filing the
         registration statement.  Each Holder desiring to include the Registrable Securities
         held by it in any such registration statement shall notify the Company in writing
         within 15 days after receipt of notice from the Company of its intent to file such a
         registration statement.  If a Holder decides not to include all of the Registrable
         Securities held by it in any registration statement thereafter filed by the Company,
         such Holder shall nevertheless continue to have the right to include any Registrable
         Securities in any subsequent registration statement or registration statements (other
         than registration statements for which the Company has contractually agreed not to
         grant such rights) as may be filed by the Company with respect to offerings of its
         securities (including, without limitation a public offering made on a continuous basis
         pursuant to Rule 415), all upon the terms and conditions set forth herein.  No
         registration effected under this Section 2(b) shall relieve the Company of its
         obligation to effect any Demand Registration under Section 2(a) hereof.

(c)      SUPPLEMENTS AND AMENDMENTS.  The Company shall use reasonable best efforts to keep any
         Registration Statement regarding Registrable Securities continuously effective by supplementing
         and amending such Registration Statement if so required by the rules, regulations or
         instructions applicable to the registration form used for such Registration Statement,
         by the Securities Act, or, if reasonably requested by the Required Holders or by any
         underwriter of such Registrable Securities and in any event for a period not to exceed
         the earlier of (i) 270 days or (ii) the date on which the sale of the Registrable
         Securities covered by such Registration Statement is complete, unless such
         Registration Statement relates to securities offered on a continuous basis pursuant
         Rule 415 in which case the Company's obligations under this paragraph shall continue
         until the sale of the Registrable Securities covered by such Registration Statement is
         complete.  If a Registration Statement under Section 2(a) ceases to be available for
         use by the Holders because the Company no longer qualifies to use such form of
         registration statement, the Company shall be required to file, as promptly as
         reasonably practicable, a new Registration Statement on an appropriate form and its
         obligations hereunder shall continue to apply in all respects.

(d)      SELLING SECURITYHOLDER INFORMATION.  Each Holder wishing to sell Registrable Securities pursuant
         to a Registration Statement and related Prospectus shall furnish to the Company, in a
         timely manner, such information regarding itself and the distribution of its
         Registrable Securities as is required by the rules and regulations of the Securities
         Act to be disclosed by the Holder in the Registration Statement (the "Requisite
         Information").  The Company shall not be required to include in the Registration
         Statement and related Prospectus the Registrable Securities of any Holder that does
         not provide the Company with the Requisite Information in accordance with this Section
         2(d).  Each Holder requesting registration hereunder shall promptly notify the Company
         of any material changes to the Requisite Information provided to the Company by such
         Holder, and the Company shall use best efforts to file, as soon as practicable after
         the receipt of any changes in the Requisite Information with respect to such Holder
         (including, without limitation, any changes in the plan of distribution), a Prospectus
         supplement pursuant to Rule 424 or otherwise amend or supplement such Registration
         Statement to include in the Prospectus the Requisite Information as to such Holder
         (and the Registrable Securities held by such Holder), and the Company shall provide
         such Holder a copy of such Prospectus as so amended or supplemented containing the
         Requisite Information in order to permit such Holder to comply with the Prospectus
         delivery requirements of the Securities Act in a timely manner with respect to any
         proposed disposition of such Holder's Registrable Securities and to file the same with
         the SEC.  Notwithstanding the foregoing, following the effective date of any
         Registration Statement, the Company shall not be required to file more than one such
         supplement or post-effective amendment to reflect changes in the amount of Common
         Stock constituting Registrable Securities held by any particular Holder at the request
         of such Holder in any 30-day period.  The Company may take reasonable steps to
         aggregate the addition of Registrable Securities of more than one Holder for purposes
         of filing amendments to any Registration Statement or supplements to the Prospectus so
         as to reduce the need for multiple amendments or supplements; provided that the
         Company shall not use this sentence to delay the filing of any amendment or supplement
         beyond any such 30-day period.

(e)      MATERIAL EVENTS; SUSPENSION OF SALES.  Notwithstanding the provisions contained in this
         Section 2, with respect to any Registration Statement, the Company may (for a period not to
         exceed 60 consecutive days, and not in any event to exceed 90 days in the aggregate during any
         12 month period) suspend use of such Registration Statement at any time if (and for so
         long as) the continued use thereof would require the Company to disclose a material
         financing, acquisition, other transaction or other material non-public information,
         which disclosure the Board of Directors of the Company shall have determined in good
         faith is not in the best interests of the Company and the Company's stockholders.  The
         Company shall notify each registered Holder, the Transfer Agent and the managing
         underwriters, if any, that the use of the Prospectus is to be suspended until the
         Company shall deliver a written notice that the use of the Prospectus may be resumed.
         During such suspension, the use of the Prospectus shall be suspended, and the Company
         shall not be required to maintain the effectiveness of, or amend or update the
         Registration Statement, or amend or supplement the Prospectus.

(f)      ADDITIONAL AGREEMENTS OF HOLDERS.  Each Holder agrees not to dispose of Registrable
         Securities pursuant to any Registration Statement without complying with the prospectus
         delivery requirements under the Securities Act and the provisions of paragraph (e) above
         regarding use of the Prospectus.  Each Holder further agrees that it will comply fully
         with applicable federal and state securities laws in connection with the distribution
         of any Registrable Securities pursuant to the Registration Statement.  Each Holder
         further acknowledges having been advised by the Company that applicable federal
         securities laws prohibit such Holder from trading in securities of the Company at any
         time while such Holder is in possession of material nonpublic information about the
         Company.

SECTION 3.        REGISTRATION PROCEDURES.  In connection with the Company's registration obligations
hereunder, and subject to and in accordance with the provisions of Section 2 hereof, the Company shall
effect such registrations on the appropriate form selected by the Company to permit the resale
of Registrable Securities in accordance with the Holder's intended method or methods of
disposition thereof, and pursuant thereto the Company shall as expeditiously as reasonably
possible:

(a)      Furnish to the Holders and the managing underwriters, if any, copies of all such documents
         proposed to be filed (excluding, unless requested, those documents incorporated or deemed
         to be incorporated by reference and then only to the Holder who so requested) and use its
         best efforts to reflect in each such document, when so filed with the SEC, such
         comments regarding a Holder as have been reasonably proposed and delivered by such
         Holder to the Company in a timely manner.  The Company shall not file any Registration
         Statement or related Prospectus or any amendments or supplements thereto (excluding
         any document that would be incorporated or deemed incorporated by reference) to which
         the representative of the Required Holders or the managing underwriters, if any, shall
         reasonably object in writing (by hand delivery, courier guaranteeing overnight
         delivery or telecopy) within two Business Days after the receipt of such documents.
         Notwithstanding the foregoing, the Company shall not be required to furnish to the
         Holders or the managing underwriters, if any, any amendments or supplements to the
         Registration Statement or Prospectus filed solely to reflect changes to the amount of
         Common Stock constituting Registrable Securities held by any particular Holder or
         immaterial revisions to the information contained therein.

(b)      Prepare and file with the SEC such amendments, including post-effective amendments, to the
         Registration Statement as may be necessary to keep such Registration Statement continuously
         effective for the applicable time period set forth in Section 2(c) hereof; cause the
         related Prospectus to be supplemented by any required Prospectus supplement, and as so
         supplemented to be filed pursuant to Rule 424 (or any similar provisions then in
         force) under the Securities Act; and comply with the provisions of the Securities Act
         with respect to the disposition of all securities covered by such Registration
         Statement and Prospectus during such period in accordance with the intended method or
         methods of disposition by the Holder set forth in such Registration Statement as so
         amended or in such Prospectus as so supplemented including, without limitation, the
         filing of any Prospectus supplement pursuant to Rule 424 in order to add or change any
         selling security holder information (including any such supplements or amendments
         pursuant to Section 2(d) hereof, provided such Holder to which such change applies
         complies with the Requisite Information requirements of Section 2(d) hereof in a
         timely manner).

(c)      Notify the Holders and the managing underwriters, if any, promptly and, if requested by any
         such person, confirm such notice in writing:

(i)      (A) when a Prospectus or any Prospectus supplement or post-effective amendment is filed and
         (B) with respect to a Registration Statement or any post-effective amendment, when the same has
         become effective;

(ii)     regarding any Registration Statement filed pursuant to Section 2(a) hereof, of any written
         comments from the SEC with respect to any filing and of any request by the SEC or any other
         Federal or state governmental authority for amendments or supplements to such Registration
         Statement or related Prospectus or for additional information related thereto;

(iii)    of the issuance by the SEC, any state securities commission, any other governmental agency or
         any court of any stop order, order or injunction suspending or enjoining the use or
         effectiveness of the Registration Statement or the initiation of any proceedings for
         that purpose;

(iv)     of the receipt by the Company of any notification with respect to the suspension of
         qualification or exemption from qualification of any of the Registrable Securities for sale
         in any jurisdiction, or the initiation or threatening of any proceeding for such purpose;

(v)      of the existence of any fact or the happening of any event that makes any statement of
         material fact made in such Registration Statement or related Prospectus untrue in any material
         respect, or that requires the making of any changes in such Registration Statement or
         Prospectus so that, in the case of the Registration Statement, it will not contain any
         untrue statement of a material fact or omit to state any material fact required to be
         stated therein or necessary to make the statements therein not misleading and that, in
         the case of the Prospectus, such Prospectus will not contain any untrue statement of a
         material fact or omit to state any material fact required to be stated therein or
         necessary to make the statements therein, in light of the circumstances under which
         they were made, not misleading; and

(vi)     of the determination by the Company that a post effective amendment to the Registration
         Statement will be filed with the SEC.

(d)      Use best efforts to obtain the withdrawal of any stop order or order enjoining or suspending
         the use or effectiveness of a Registration Statement or the lifting of any suspension of the
         qualification (or exemption from qualification) of any of the Registrable Securities
         for sale in any jurisdiction, at the earliest practicable moment.

(e)      If reasonably requested by the Required Holders, or managing underwriters, if any, (i) to
         promptly include in a Prospectus supplement or post-effective amendment such information as the
         Required Holders (only regarding the Required Holders) or managing underwriters, if
         any, may reasonably request to be included therein; and (ii) make all required filings
         of such Prospectus supplement or such post effective amendment as soon as reasonably
         practicable after the Company has received notification of such matters to be included
         in such Prospectus supplement or post effective amendment.

(f)      Furnish to each Holder who so requests, and each managing underwriter, if any, without charge,
         at least one copy of the Registration Statement and each amendment thereto (but excluding
         schedules, all documents incorporated or deemed to be incorporated therein by
         reference and all exhibits, unless requested in writing by such Holder or any managing
         underwriter and then only to the person who so requested).

(g)      Deliver to each Holder and the underwriters, if any, without charge, as many copies of the
         Prospectus or Prospectuses (including each form of Prospectus) and each amendment or supplement
         thereto as such persons may reasonably request; and, unless the Company shall have
         given notice to such Holder or underwriter pursuant to Section 2(e), the Company
         hereby consents to the use of such Prospectus, and each amendment or supplement
         thereto, by each of the selling Holders of Registrable Securities and the
         underwriters, if any, in connection with the offering and sale of the Registrable
         Securities covered by such Prospectus and any amendment or supplement thereto.

(h)      Prior to any public offering of Registrable Securities, use all reasonable efforts to register
         or qualify, or cooperate with the Holders of Registrable Securities to be sold or
         tendered or the underwriters, if any, and their respective counsel in connection with
         the registration or qualification (or exemption from such registration or
         qualification) of such Registrable Securities for offer and sale under the securities
         or Blue Sky laws of such jurisdictions within the United States as any Holder or
         underwriter reasonably requests in writing, keep each such registration or
         qualification (or exemption therefrom) effective during the period the Registration
         Statement is required to be kept effective and do any and all other acts or things
         legally necessary to enable the disposition in such jurisdictions of the Registrable
         Securities covered by the Registration Statement; provided, however, that the Company
         shall not be required to qualify generally to do business in any jurisdiction where it
         is not then so qualified, take any action that would subject it to general service of
         process in any such jurisdiction where it is not then so subject or subject the
         Company to any tax in any such jurisdiction where it is not then so subject.

(i)      In connection with any sale or transfer of Registrable Securities that will result in such
         securities no longer being Registrable Securities, cooperate with the Holders and the managing
         underwriters, if any, to (i) facilitate the timely preparation and delivery of
         certificates representing Registrable Securities to be sold, which certificates shall
         not bear any restrictive legends, unless required by applicable securities laws and
         (ii) enable such Registrable Securities to be in such denominations and registered in
         such names as the managing underwriters, if any, or Holders may reasonably request at
         least two Business Days prior to any sale of Registrable Securities.

(j)      Upon the occurrence of any event contemplated by Section 3(c)(v) hereof, as promptly as
         reasonably practicable (subject to any suspension of sales pursuant to Section 2(e) hereof),
         prepare a supplement or amendment, including, if appropriate, a post-effective
         amendment, to the Registration Statement or a supplement to the related Prospectus or
         any document incorporated or deemed to be incorporated therein by reference, and file
         any other required document so that, as thereafter delivered, such Prospectus will not
         contain an untrue statement of a material fact or omit to state a material fact
         required to be stated therein or necessary to make the statements therein, in light of
         the circumstances under which they were made, not misleading (except, upon occurrence
         of an event contemplated by Section 3(c)(v) hereof, to the extent that the Company
         determines in good faith that the disclosure of such event at such time would not be
         in the best interests of the Company and the Company's stockholders provided that any
         such delay in disclosure pursuant to this Section 3(j) shall be considered a
         suspension of the Registration Statement subject to the limitation in Section 2(e)).

(k)      Enter into such agreements (including any underwriting agreements in form, scope and substance
         as may be reasonably requested and as are customary in underwritten offerings, which may include
         indemnification and contribution provisions in favor of underwriters and other persons
         in addition to, or in substitution for, the provisions of Section 5 hereof) and take
         all such other appropriate actions in connection therewith (including those reasonably
         requested by the managing underwriters, if any, or the Holders of a majority in
         interest of the Registrable Securities being sold) in order to expedite or facilitate
         the sale of such Registrable Securities.  In connection with any underwritten
         offering, the Company will:

(i)      make such representations and warranties to the Holders of such Registrable Securities and the
         underwriters, with respect to the business of the Company and its subsidiaries
         (including with respect to businesses or assets acquired or to be acquired by any of
         them), and the Registration Statement, Prospectus and documents, if any, incorporated
         or deemed to be incorporated by reference therein, in each case, in form, substance
         and scope as are customarily made by issuers to underwriters in underwritten
         offerings, and confirm the same if and when requested;

(ii)     obtain, as may reasonably be required, opinions of counsel to the Company (which may include
         in-house counsel) and updates thereof (which counsel and opinions (in form, scope and
         substance) shall be reasonably satisfactory to the managing underwriters, if any,
         addressed to each selling Holder of Registrable Securities and each of the
         underwriters, covering the matters customarily covered in opinions requested in
         underwritten offerings (including any such matters as may be reasonably requested by
         such underwriters));

(iii)    obtain, as may reasonably be required, customary "cold comfort" letters and updates thereof
         from the independent certified public accountants of the Company (and, if necessary, any other
         independent certified public accountants of any subsidiary of the Company or of any
         business acquired by the Company for which financial statements and financial data
         are, or are required to be, included in the Registration Statement), addressed (where
         reasonably possible) to each selling Holder of Registrable Securities and each of the
         underwriters, such letters to be in customary form and covering matters of the type
         customarily covered in "cold comfort" letters in connection with underwritten
         offerings; and

(iv)     deliver such documents and certificates as may be reasonably requested by the Holders of a
         majority in interest of the Registrable Securities being sold and the underwriters, to evidence
         the continued validity of the representations and warranties made pursuant to clause
         (i) of this Section 3(k) and to evidence compliance with any customary conditions
         contained in the underwriting agreement or other agreements entered into by the
         Company.

(l)      Make available for inspection by a representative of the Holders of Registrable Securities
         being sold, any underwriter participating in any such disposition of Registrable Securities,
         if any, and any attorney, consultant or accountant retained by such selling Holders or
         underwriter, at the offices where normally kept, during reasonable business hours, all
         financial and other records, pertinent corporate documents and properties of the
         Company and its subsidiaries (other than records and documents that the Company and
         its subsidiaries agreed contractually not to disclose and the disclosure of which
         would violate such contractual arrangement) as they may reasonably request, and cause
         the officers, directors, agents and employees of the Company and its subsidiaries to
         supply all information (other than information that the Company and its subsidiaries
         agreed contractually not to disclose and the disclosure of which would violate such
         contractual arrangement) in each case reasonably requested by any such representative,
         underwriter, attorney, consultant or accountant in connection with such Registration
         Statement and as shall be reasonably necessary to enable such persons to conduct a
         reasonable investigation within the meaning of Section 11 of the Securities Act;
         provided, however, that the foregoing inspection and information gathering shall be
         coordinated on behalf of the Holders and the other parties thereto by one counsel
         designated by and on behalf of such Holders and other parties and provided further,
         that such persons shall first agree in writing with the Company that any information
         that is reasonably and in good faith designated by the Company as confidential at the
         time of delivery or inspection (as the case may be) of such information shall be kept
         confidential by such persons, unless (i) disclosure of such information is required by
         court or administrative order or is necessary to respond to inquiries of regulatory
         authorities; (ii) disclosure of such information is required by law; (iii) such
         information becomes generally available to the public other than as a result of a
         disclosure or failure to safeguard by any such person; or (iv) such information
         becomes available to any such person from a source other than the Company and such
         source is not known to be bound by a confidentiality agreement.

(m)      (i) list all shares of Common Stock covered by any Registration Statements on any securities
         exchange on which the Common Stock is then listed; or (ii) authorize for quotation on the
         National Market of the National Association of Securities Dealers Automated Quotation System
         ("Nasdaq") all Common Stock covered by all such Registration Statements if the Common
         Stock is then so authorized for quotation.

(n)      Use its best efforts to cause Registrable Securities covered by a Registration Statement to
         be registered with or approved by such governmental agencies or authorities as may be
         necessary to enable the seller or sellers thereof to consummate the disposition of
         such Registrable Securities.

(o)      Make all reasonable efforts to provide such information as is required for any filings
         required to be made with the National Association of Securities Dealers, Inc. ("NASD").

SECTION 4.        REGISTRATION EXPENSES.  All fees and expenses incident to the performance of or
compliance with this Agreement by the Company shall be borne by it whether or not any Registration
Statement is filed or becomes effective.  The fees and expenses referred to in the foregoing sentence
shall include:

(a)      all registration, filing, securities exchange (including Nasdaq) listing, rating agency and
         stock exchange (including Nasdaq) fees and expenses;

(b)      printing expenses (including, without limitation, printing Prospectuses if the printing of
         Prospectuses is required by the managing underwriters, if any, or by the Holders of a majority
         in interest of the Registrable Securities);

(c)      messenger, copying, telephone and delivery expenses;

(d)      reasonable fees and disbursements of counsel for the Company;

(e)      fees and disbursements of all independent certified public accountants referred to in Section
         3(k)(iii) including, without limitation, the expenses of any special audits or "cold comfort"
         letters required by Section 3(k)(iii);

(f)      fees and expenses of all other persons retained by the Company;

(g)      all registration, filing, qualification and other fees and expenses of complying with securities
         or blue sky laws of all jurisdictions in which the Registrable Securities are to be registered
         in accordance with Section 3(h) hereof, and any legal fees and expenses incurred in
         connection with the blue sky qualifications of the Registrable Securities and the
         determination of their eligibility for investment under the laws of all such
         jurisdictions; and

(h)      the reasonable fees and disbursements incurred by the Holders of the Registrable Securities
         being registered (including, without limitation, the reasonable fees and disbursements for
         one counsel or firm of counsel selected by the Holders of a majority in interest of
         the Registrable Securities being registered).  Notwithstanding anything in this
         Agreement to the contrary, the Holders shall be responsible for all expenses
         customarily borne by selling securityholders (including underwriting discounts,
         commissions and fees and expenses of counsel to the selling Holders to the extent not
         required to be paid by the Company pursuant to this clause (h)).

SECTION 5.        INDEMNIFICATION.

(a)      The Company agrees to indemnify and hold harmless each Holder of Registrable Securities,
         such Holder's affiliates, and their respective officers, directors, employees, representatives
         and agents, and each person, if any, who controls any Holder of Registrable Securities
         within the meaning of either Section 15 of the Securities Act or Section 20 of the
         Exchange Act, against any and all loss, liability, claim or damage arising out of any
         untrue statement or alleged untrue statement of a material fact contained in the
         Registration Statement or the Prospectus (or any amendment or supplement thereto), or
         the omission or alleged omission to state therein any material fact required to be
         stated therein or necessary to make the statements therein, in the light of the
         circumstances under which they were made, not misleading; provided, however, that this
         indemnity agreement shall not apply to any loss, liability, claim or damage arising
         out of any untrue statement or omission or alleged untrue statement or omission made
         in reliance upon and in conformity with written information furnished to the Company
         by or on behalf of such Holder of Registrable Securities or any person, if any, who
         controls any such Holder of Registrable Securities expressly for use in the
         Registration Statement (or any amendment thereto), or any preliminary prospectus or
         the Prospectus (or any amendment or supplement thereto); provided, further, that this
         indemnity agreement shall not apply to any loss, liability, claim or damage (i)
         arising from an offer or sale of Registrable Securities occurring during any
         suspension of sales pursuant to Section 2(e) (provided that the Company has given to
         the Holder notice of such suspension prior to such offer or sale), or (ii) if the
         Holder fails to deliver at or prior to the written confirmation of sale, the most
         recent Prospectus, as amended or supplemented, and such Prospectus, as amended or
         supplemented, would have corrected such untrue statement or omission or alleged untrue
         statement or omission of a material fact (provided that the Company has delivered to
         such Holder, or otherwise given notice to such Holder of the existence of, such most
         recent Prospectus, as supplemented or amended).  Any amounts advanced by the Company
         to an indemnified party pursuant to this Agreement shall be returned to the Company if
         it shall be finally determined in a judgment by a court of competent jurisdiction not
         subject to appeal, that such indemnified party was not entitled to indemnification.

(b)      In connection with the preparation of the Registration Statement in which a Holder of
         Registrable Securities is participating in furnishing information relating to such Holder
         of Registrable Securities to the Company for use in such Registration Statement, any
         preliminary prospectus, the Prospectus or any amendments or supplements thereto, each
         such Holder agrees, severally and not jointly, to indemnify and hold harmless any
         other Holders of Registrable Securities, the Company, its affiliates and their
         respective officers, directors, employees, representatives and agents, and each
         person, if any, who controls such other Holders or the Company within the meaning of
         either such Section, against any and all loss, liability, claim or damage described in
         the indemnity contained in subsection (a) of this Section, as incurred, but only with
         respect to untrue statements or omissions, or alleged untrue statements or omissions,
         made in the Registration Statement (or any amendment thereto), or any preliminary
         prospectus or the Prospectus (or any amendment or supplement thereto) in reliance upon
         and in conformity with written information furnished to the Company by or on behalf of
         such Holder of Registrable Securities or any person, if any, who controls any such
         Holder of Registrable Securities expressly for use in the Registration Statement (or
         any amendment thereto) or such preliminary prospectus or the Prospectus (or any
         amendment or supplement thereto).

(c)      Each indemnified party shall give notice as promptly as reasonably practicable to each
         indemnifying party of any action commenced against it in respect of which indemnity may be
         sought hereunder, but failure to so notify an indemnifying party shall not relieve such
         indemnifying party from any liability hereunder to the extent it is not prejudiced as
         a result thereof and in any event shall not relieve it from any liability which it may
         have otherwise than on account of this indemnity agreement.  The indemnifying party,
         upon request of the indemnified party, shall retain counsel reasonably satisfactory to
         the indemnified party to represent the indemnified party and any others the
         indemnifying party may designate in such proceeding and shall pay the reasonable fees
         and disbursements of such counsel related to such proceeding.  In any such proceeding,
         any indemnified party shall have the right to retain its own counsel, but the fees and
         expenses of such counsel shall be at the expense of such indemnified party unless (i)
         the indemnifying party and the indemnified party shall have mutually agreed to the
         retention of such counsel or (ii) the named parties to any such proceeding (including
         any impleaded parties) include both the indemnifying party and the indemnified party
         and representation of both parties by the same counsel would be inappropriate due to
         actual or potential differing interests between them.  It is understood that the
         indemnifying party shall not, in respect of the legal expenses of any indemnified
         party in connection with any proceeding or related proceedings in the same
         jurisdiction, be liable for (a) the fees and expenses of more than one separate firm
         (in addition to any local counsel), for the Holders of Registrable Securities, and all
         persons, if any, who control the Holders of Registrable Securities within the meaning
         of either Section 15 of the Securities Act or Section 20 of the Exchange Act,
         collectively (unless representation of all Holders and such parties by the same
         counsel would be inappropriate due to actual or potential differing interests between
         or among them), and (b) the fees and expenses of more than one separate firm (in
         addition to any local counsel), for the Company and each person, if any, who controls
         the Company within the meaning of either such Section, and that all fees and expenses
         payable under (a) and (b) above shall be reimbursed as they are incurred.  In the case
         of any such separate firm for the Holders of Registrable Securities, and control
         persons of the Holders of Registrable Securities, such firm shall be designated by the
         Holders of a majority in interest of the Registrable Securities and shall be
         reasonably acceptable to the Company.  In the case of any such separate firm for the
         Company and control persons of the Company, such firm shall be reasonably acceptable
         to the Holders of a majority in interest of the Registrable Securities.  The
         indemnifying party shall not be liable for any settlement of any proceeding effected
         without its written consent (which consent shall not be unreasonably withheld or
         delayed), but if settled with such consent or if there be a final non-appealable
         judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified
         party from and against any loss or liability by reason of such settlement or
         judgment.  No indemnifying party shall, without the prior written consent of the
         indemnified parties (which consent shall not be unreasonably withheld or delayed),
         settle or compromise or consent to the entry of any judgment with respect to any
         litigation, or any investigation or proceeding by any governmental agency or body,
         commenced or threatened, or any claim whatsoever in respect of which indemnification
         or contribution could be sought under this Section 5 (whether or not the indemnified
         parties are actual or potential parties thereto), unless such settlement, compromise
         or consent (i) includes an unconditional release of each indemnified party from all
         liability arising out of such litigation, investigation, proceeding or claim and (ii)
         does not include a statement as to or an admission of fault, culpability or a failure
         to act by or on behalf of any indemnified party.  No indemnified party shall, without
         the prior written consent of the indemnifying party, settle or compromise or consent
         to the entry of any judgment with respect to any litigation, or any investigation or
         proceeding by any governmental agency or body, commenced or threatened, or any claim
         whatsoever in respect of which indemnification or contribution could be sought under
         this Section 5 (whether or not the indemnified parties are actual or potential parties
         thereto).

(d)      If the indemnification to which an indemnified party is entitled under this Section 5 is
         for any reason unavailable to or insufficient although applicable in accordance with its
         terms to hold harmless an indemnified party in respect of any losses, liabilities, claims,
         damages or expenses referred to therein, then each indemnifying party shall contribute
         to the aggregate amount of such losses, liabilities, claims, damages and expenses
         incurred by such indemnified party, as incurred, in such proportion as is appropriate
         to reflect the relative fault of the indemnifying party or parties on the one hand and
         of the indemnified party on the other hand in connection with the statements or
         omissions which resulted in such losses, liabilities, claims, damages or expenses, as
         well as any other relevant equitable considerations.

                  The relative fault of the Company on the one hand and the Holders of the
         Registrable Securities on the other hand shall be determined by reference to, among
         other things, whether any such untrue or alleged untrue statement of a material fact
         or omission or alleged omission to state a material fact relates to information
         supplied by the Company or by the Holder of the Registrable Securities and the
         parties' relative intent, knowledge, access to information and opportunity to correct
         or prevent such statement or omission.

                  The parties hereto agree that it would not be just and equitable if
         contribution pursuant to this Section 5(d) were determined by pro rata allocation or
         by any other method of allocation which does not take account of the equitable
         considerations referred to above in this Section 5(d).  The aggregate amount of
         losses, liabilities, claims, damages, and expenses incurred by an indemnified party
         and referred to above in this Section 5(d) shall be deemed to include any
         out-of-pocket legal or other expenses reasonably incurred by such indemnified party in
         investigating, preparing or defending against any litigation, or any investigation or
         proceeding by any governmental agency or body, commenced or threatened, or any claim
         whatsoever based upon any such untrue or alleged untrue statement or omission or
         alleged omission.

                  Notwithstanding the provisions of this Section 5, no Holder shall be required
         to indemnify or contribute any amount in excess of the amount by which the total price
         at which Registrable Securities were sold by such Holder exceeds the amount of any
         damages that such Holder has otherwise been required to pay by reason of such untrue
         or alleged untrue statement or omission to alleged omission.

                  No person guilty of fraudulent misrepresentation (within the meaning of
         Section 11(f) of the Securities Act) shall be entitled to contribution from any person
         who was not guilty of such fraudulent misrepresentation.

                  The remedies provided in this Section 5 are not exclusive and shall not limit
         any rights or remedies which may otherwise be available to any indemnified party at
         law or in equity.

                  For purposes of this Section 5(d), each person, if any, who controls any
         Holder of Registrable Securities within the meaning of Section 15 of the Securities
         Act or Section 20 of the Exchange Act shall have the same rights to contribution as
         such Holder, and each person, if any, who controls the Company within the meaning of
         Section 15 of the Securities Act or Section 20 of the Exchange Act shall have the same
         rights to contribution as the Company.  No party shall be liable for contribution with
         respect to any action, suit, proceeding or claim settled, compromised, or with respect
         to which the party requesting contribution consented to the entry of a judgment,
         without such party's written consent, which consent shall not be unreasonably withheld
         or delayed.

(e)      The agreements contained in this Section 5 shall survive the transfer or sale of the
         Registrable Securities and shall remain in full force and effect, regardless of any
         termination or cancellation of this Agreement or any investigation made by or on behalf of
         any indemnified party.

SECTION 6.        INFORMATION REQUIREMENTS.

(a)      The Company agrees that, if at any time until the Registrable Securities cease to be
         Registrable Securities the Company is not subject to the reporting requirements of the
         Exchange Act, it will cooperate with any Holder of Registrable Securities and use reasonable
         efforts to take such further reasonable action as any Holder of Registrable Securities
         may reasonably request in writing to enable such Holder to sell Registrable Securities
         without registration under the Securities Act within the limitation of the exemptions
         provided by Rule 144 and Rule 144A, if available, under the Securities Act (or any
         similar rule or regulation hereafter adopted by the SEC) and customarily taken in
         connection with sales pursuant to such exemptions, including, without limitation,
         making available adequate current public information within the meaning of paragraph
         (c)(2) of Rule 144 and delivering, upon request, the information required by paragraph
         (d) of Rule 144A.  Notwithstanding the foregoing, nothing in this Section 6 shall be
         deemed to require the Company to register any of its securities under any section of
         the Exchange Act.

(b)      The Company shall file reports required to be filed by it under the Exchange Act and any securities
         exchange (including Nasdaq) on which the Common Stock is listed.

SECTION 7.        UNDERWRITTEN REGISTRATION.  Notwithstanding any other provision of this Agreement,
but subject to the provisions of Section 2(b) hereof, if the underwriter determines in good faith that
marketing factors require a limitation of the number of Registrable Shares to be underwritten,
the number of Registrable Shares that may be included in the underwriting shall be allocated on
a pro rata basis.

SECTION 8.        MISCELLANEOUS.

(a)      OTHER REGISTRATION RIGHTS.  Subject in all cases to Section 2(a)(vi) hereof, the Company
         may in the future grant registration rights that would permit any person that is a third party
         the right to piggy-back on a Registration Statement; provided, however, that if the
         managing underwriter, if any, of such offering notifies the Holders that the total
         amount of Registrable Securities which they and the holders of such piggy-back rights
         intend to include in the Registration Statement is so large as to materially adversely
         affect the success of such offering (including the price at which such securities can
         be sold), then the amount, the number or kind of securities offered for the account of
         holders of such piggy-back rights will be reduced to the extent necessary to reduce
         the total amount of securities to be included in such offering to the amount, number
         or kind recommended by the managing underwriter before the amount of Registrable
         Securities to be included is reduced.

(b)      NO INCONSISTENT AGREEMENTS.  The Company has not entered and shall not enter into any
         agreement that is inconsistent with the rights granted to the Holders in this Agreement or
         otherwise conflicts with the provisions hereof.  The rights granted to the Holders hereunder
         do not in any way conflict with and are not inconsistent with the rights granted to the
         holders of the Company's other issued and outstanding securities under any such
         agreements.

(c)      NO ADVERSE ACTION AFFECTING THE REGISTRABLE SECURITIES.  The Company will not take any
         action with respect to the Registrable Securities with an intent to adversely affect the ability
         of any of the Holders to include such Registrable Securities in a registration
         undertaken pursuant to this Agreement.

(d)      AMENDMENTS AND WAIVERS.  The provisions of this Agreement, including the provisions of
         this sentence, may not be amended, modified or supplemented, and waivers or consents to departures
         from the provisions hereof, may not be given, without the written consent of the
         Company and the Required Holders.  Notwithstanding the foregoing, a waiver or consent
         to depart from the provisions hereof with respect to a matter that relates exclusively
         to the rights of Holders whose Registrable Securities are being sold pursuant to the
         Registration Statement and that does not directly or indirectly affect the rights of
         other Holders may be given by Holders of a majority in interest of the Registrable
         Securities being sold by such Holders pursuant to such Registration Statement,
         provided, however, that the provisions of this sentence may not be amended, modified,
         or supplemented except in accordance with the provisions of the immediately preceding
         sentence.  Each Holder of Registrable Securities outstanding at the time of any such
         amendment, modification, supplement, waiver or consent or thereafter shall be bound by
         any such amendment, modification, supplement, waiver or consent effected pursuant to
         this Section 8(d), whether or not any notice, writing or marking indicating such
         amendment, modification, supplement, waiver or consent appears on the Registrable
         Securities or is delivered to such Holder.

(e)      NOTICES.  All notices and other communications provided for herein or permitted hereunder
         shall be made in writing by hand-delivery, courier guaranteeing overnight delivery, certified
         first-class mail, return receipt requested, or telecopy and shall be deemed given (i)
         when made, if made by hand delivery, (ii) upon confirmation, if made by telecopier,
         (iii) one Business Day after being deposited with such courier, if made by overnight
         courier or (iv) on the date indicated on the notice of receipt, if made by first-class
         mail, to the parties as follows:

(i)      if to a Holder, to the address of such Holder as it appears in Schedule I, or, if not so
         specified, in the Common Stock or Warrants register of the Company, as applicable.  Failure
         to mail a notice or communication to a Holder or any defect in such notice or communication
         shall not affect its sufficiency with respect to other Holders.

(ii)     if to the Company to:

                                    Frontier Airlines, Inc.
                                    7001 Tower Road
                                    Denver, Colorado 80249
                                    Attention: General Counsel
                                    Telephone No.: (720) 374-4200
                                    Facsimile: (720) 374-4379

(iii)    If to a Warrant Holder, to the address of such Warrant Holder set forth on Schedule I.

(f)      SUCCESSORS AND ASSIGNS.  This Agreement shall inure to the benefit of and be binding upon
         the successors and permitted assigns of each of the parties and shall inure to the benefit of
         each existing and future Holder.  The Company may not assign its rights or obligations
         hereunder without the prior written consent of the Holders of a majority in interest
         of the Registrable Securities, other than by operation of law pursuant to a merger or
         consolidation to which the Company is a party.

(g)      COUNTERPARTS.  This Agreement may be executed in any number of counterparts by the parties
         hereto, each of which when so executed shall be deemed to be an original and all of which taken
         together shall constitute one and the same instrument.

(h)      GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH FEDERAL
         LAW, IF AND TO THE EXTENT SUCH FEDERAL LAW IS APPLICABLE, AND OTHERWISE IN ACCORDANCE WITH THE
         LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE
         STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.

(i)      SEVERABILITY.  If any term, provision, covenant or restriction of this Agreement is held by
         a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the
         remainder of the terms, provisions, covenants and restrictions set forth herein shall
         remain in full force and effect and shall in no way be affected, impaired or invalidated,
         and the parties hereto shall use their best efforts to find and employ an alternative
         means to achieve the same or substantially the same result as that contemplated by
         such term, provision, covenant or restriction, it being intended that all of the
         rights and privileges of the parties shall be enforceable to the fullest extent
         permitted by law.

(j)      HEADINGS.  The headings in this Agreement are for convenience of reference only and shall not
         limit or otherwise affect the meaning hereof.  All references made in this Agreement to
         "Section" and "paragraph" refer to such Section or paragraph of this Agreement, unless
         expressly stated otherwise.

(k)      ENTIRE AGREEMENT.  This Agreement (together with Section 7 of the Warrants) is intended by
         the parties as a final expression of their agreement and is intended to be a complete and
         exclusive statement of the agreement and understanding of the parties hereto in
         respect of the subject matter contained herein and the registration rights granted by
         the Company with respect to the Registrable Securities.  There are no restrictions,
         promises, warranties or undertakings, other than those set forth or referred to
         herein, with respect to the registration rights granted by the Company with respect to
         the Registrable Securities.  This Agreement supersedes all prior agreements and
         undertakings among the parties solely with respect to such registration rights.

(l)      TERMINATION.  This Agreement and the obligations of the parties hereunder shall terminate
         when all of the securities issued or issuable upon exercise of the Warrants cease to be
         Registrable Securities, except for any liabilities or obligations under Sections 4 or
         5 hereof.

(m)      SPECIFIC PERFORMANCE.  The parties agree that, to the extent permitted by law, (i) the
         obligations imposed on them in this Agreement are special, unique and of an extraordinary
         character, and that in the event of a breach by any such party, damages would not be
         an adequate remedy; and (ii) each of the other parties shall be entitled to specific
         performance and injunctive and other equitable relief in addition to any other remedy
         to which it may be entitled at law or in equity.

(n)      HOLDBACK AGREEMENT.  If any such registration shall be in connection with an underwritten
         public offering, each Holder of Registrable Securities agrees not to effect any public sale
         or distribution, including any sale pursuant to Rule 144 under the Securities Act, of
         any equity securities of the Company, or of any security convertible into or
         exchangeable or exercisable for any equity security of the Company (in each case,
         other than as part of such underwritten public offering), within 7 days before, or
         such period not to exceed 120 days as the underwriting agreement may require (or such
         lesser period as the managing underwriters may permit) after, the effective date of
         such registration (except as part of such registration), and the Company hereby also
         so agrees and agrees to use its best efforts to cause each other holder of any equity
         security, or of any security convertible into or exchangeable or exercisable for any
         equity security, of the Company purchased from the Company (at any time other than in
         a public offering) to so agree.





                  IN WITNESS WHEREOF, the parties have caused this Registration Rights Agreement
to be duly executed as of the date first written above.


                                                     FRONTIER AIRLINES, INC.


                                                     By:                                            
                                                        Name:
                                                        Title:

                                                     AIR TRANSPORTATION STABILIZATION
                                                     BOARD



                                                     By:                                            
                                                        Name:
                                                        Title:

                                                     [***]


                                                     By:                                            
                                                        Name:
                                                        Title:

                                                     [***]


                                                     By:                                            
                                                        Name:
                                                        Title:








                                           SCHEDULE I

                                   Schedule of Warrant Holders

          1.      Air Transportation Stabilization Board
                  1120 Vermont Avenue, Suite 970
                  Washington, D.C.  20005
                  Attention:  Executive Director
                  Facsimile: (202) 622-3420

                  with a copy to:

                  United States Department of the Treasury
                  1500 Pennsylvania Avenue, N.W.
                  Washington, D.C.  20220
                  Attention:        Deputy Assistant Secretary
                  (Government Financial Policy)
                  Facsimile: (202) 622-0387

         2.

                  [***]

                  with a copy to:

                  [***]

          3.

                  [***]

                  with a copy to:

                  [***]

EX-4

     PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
    EXCHANGE COMMISSION IN A CONFIDENTAL TREATMENT REQUEST UNDER RULE 24b-2 OF THE SECURITIES
       EXCHANGE ACT OF 1934, AS AMENDED. THE SYMBOL "[***]" IN THIS EXHIBIT INDICATES THAT
                                  INFORMATION HAS BEEN OMITTED.

THIS WARRANT AND THE UNDERLYING  SECURITIES HAVE NOT BEEN REGISTERED  UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE  "SECURITIES  ACT") OR APPLICABLE  STATE  SECURITIES  LAWS. THEY MAY NOT BE
TRANSFERRED,  SOLD,  OFFERED FOR SALE,  PLEDGED,  HYPOTHECATED  OR  OTHERWISE  DISPOSED OF IN THE
ABSENCE OF AN EFFECTIVE  REGISTRATION  STATEMENT AS TO SUCH  SECURITIES  UNDER THE SECURITIES ACT
AND APPLICABLE STATE SECURITIES LAWS, UNLESS AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.

                                     FRONTIER AIRLINES, INC.
                                WARRANT TO PURCHASE COMMON STOCK


                                                                          February 14, 2003

                                  VOID AFTER February 14, 2010

                  THIS CERTIFIES THAT, for value received, the Air Transportation Stabilization
Board, with its principal office at 1120 Vermont Avenue, Suite 970, Washington D.C. 20005,
and/or its transferees and assigns (individually or collectively, the "Holder"), is entitled to
purchase at the Exercise Price (defined below) from Frontier Airlines, Inc., a Colorado
corporation, with its principal office at 7001 Tower Road, Denver, CO 80249 (the "Company"),
3,450,551 shares of common stock, no par value per share, of the Company (the "Common Stock"),
upon the terms and conditions as provided herein.

1.       Definitions.  As used herein, the following terms shall have the following respective meanings:

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

                  "Applicable Price" shall mean:

(a)      for purposes of any issuance of Additional Shares of Common Stock (as defined below) under
Section 5.4, the greater of (A) the Fair Market Value of a share of Common Stock being issued (or,
if being issued in an underwritten offering, the Market Price on the day that such offering is being
priced), and (B) the then effective Exercise Price; and

(b)      for purposes of any issuance under Section 5.1(b), the greater of (A) the Market Price on
the date of such issuance, and (B) the then effective Exercise Price.

                  "Business Day" shall mean each Monday, Tuesday, Wednesday, Thursday and Friday
that is not a day on which banking institutions in New York, New York are authorized or
obligated by law or executive order to close.

                  "Common Stock" shall mean the Common Stock of the Company, and all other stock
of any class or classes (however designated) of the Company from time to time outstanding, the
holders of which have the right, without limitation as to amount, either to all or to a share
of the balance of current dividends or liquidating distributions after the payment of dividends
and distributions on any shares entitled to preference.

                  "Exercise Period" shall mean the time period commencing with the date hereof
and ending at 5:00 p.m. New York time on the seventh anniversary of the date hereof.

                  "Exercise Price" shall mean six dollars and no cents ($6.00) per share,
subject to adjustment pursuant to Section 5 below.

                  "Exercise Shares" shall mean the shares of Common Stock issuable upon exercise
of this Warrant, subject to adjustment pursuant to the terms herein, including but not limited
to adjustment pursuant to Section 5 below and shall also mean any other shares, securities,
assets or property otherwise issuable upon exercise of this Warrant.

                  "Excluded Issuance" shall mean:

(a)      shares of Common Stock issued upon exercise of this Warrant or the warrants issued
concurrently to [***] and [***]  (this Warrant and such other warrants, collectively, the "Warrants");

(b)      shares of Common Stock and/or options, warrants or other Common Stock purchase rights
issued and the Common Stock issued or issuable pursuant to such options, warrants or other rights
after the date hereof to employees, officers or directors of, or consultants or advisors to the
Company or any subsidiary pursuant to stock purchase or stock option plans or other arrangements that
are approved by the Board (the "Plans"); provided that such shares, options, warrants or other
Common Stock purchase rights and the Common Stock issued or issuable pursuant to such options,
warrants or other rights shall not be Excluded Issuances in any case where the grantee acquires
the shares, or the right to acquire shares pursuant to such options, warrants or other rights
to purchase Common Stock at a price per share less than the Market Price on the date of such
grant; and

(c)      shares of Common Stock issued pursuant to the exercise of rights, options, warrants or
convertible securities outstanding as of the date hereof.

                  "Fair Market Value" shall mean,

(a)      with respect to a share of Common Stock, or any other security of the Company or any
other issuer:

(i)      if such class of Common Stock or other security is (i) traded on a national securities
exchange or admitted to unlisted trading privileges on such an exchange, or (ii) is quoted on the
National Market System of the Nasdaq Stock Market (the "National Market System") or the Nasdaq
Small Cap Market (the "Small Cap Market"), the average daily Market Price during the period of the
most recent twenty (20) Trading Days, ending on the last Trading Day before the date of
determination of Fair Market Value; or

(ii)     if such class of Common Stock or other security is not then so listed, admitted to trading
or quoted, the Fair Market Value shall be determined in accordance with the Valuation Procedure; or

(b)      with respect to any assets or property other than cash or Common Stock or other securities,
the fair market value as determined in accordance with the Valuation Procedure.

                  "Market Price" shall be, as of any specified date with respect to any share of
any class of Common Stock or any other security of the Company or any other issuer, if such
class of Common Stock or other security is traded on a national securities exchange or admitted
to unlisted trading privileges on such an exchange, or is quoted on the National Market System
or the Small Cap Market, the last reported share or unit sale price of such class of Common
Stock or other security on such exchange or on the National Market System or the Small Cap
Market on such date or if no such sale is made on such day, the mean of the closing bid and
asked prices for such day on such exchange or on the National Market System or the Small Cap
Market.

                  "Participating Securities" shall mean (i) any equity security (other than
Common Stock) that entitles the holders thereof to participate in liquidations or other
distributions with the holders of Common Stock or otherwise participate in the capital of the
Company other than through a fixed or floating rate of return on capital loaned or invested,
and (ii) any stock appreciation rights, phantom stock rights, or any other profit participation
rights with respect to any of the Company's capital stock or other equity ownership interest,
or any rights or options to acquire any such rights; provided that any stock appreciation
rights, phantom stock rights or any other profit participation rights, or any rights or options
to acquire such rights, issued pursuant to any of the Plans shall not be deemed a Participating
Security if their grant or issuance would constitute an Excluded Issuance.

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

                  "Record Date" shall mean, with respect to any dividend, other distribution or
issuance, the record date for the determination of stockholders entitled to receive such
dividend, distribution or issuance, or if no such record date exists, the date of such
dividend, distribution or issuance.

                  "Trading Day" shall mean, with respect to any class of Common Stock or any
other security of the Company or any other issuer a day (i) on which the securities exchange or
other trading platform applicable for purposes of determining the Market Price of a share or
unit of such class of Common Stock or other security shall be open for business or (ii) for
which quotations from such securities exchange or other trading platform of the character
specified for purposes of determining such Market Price shall be reported.

                  "Valuation Procedure" shall mean a determination made in good faith by the
Board of Directors of the Company (the "Board") that is set forth in resolutions of the Board
that are certified by the Secretary of the Company, which certified resolutions (i) set forth
the basis of the Board's determination, which, in the case of a valuation in excess of $10
million, shall include the Board's reliance on the valuation of a nationally recognized
investment banking or appraisal firm (which firm shall be subject to the approval of the
holders of Warrants exercisable for a majority of the securities issuable upon exercise of the
outstanding Warrants and which approval shall not be unreasonably withheld), and (ii) are
delivered to the Holder within ten (10) Business Days following such determination.  A
Valuation Procedure with respect to the value of any capital stock shall be based on the price
that would be paid for all of the capital stock of the issuer in an arm's-length transaction
between a willing buyer and a willing seller (neither acting under compulsion) without any
provision for a minority interest or similar discount.

2.       Exercise of Warrant.

2.1.     Exercise.  This Warrant may be exercised in whole or in part at any time during the
Exercise Period, by delivery of the following to the Company at its address set forth above
(or at such other address as it may designate by notice in writing to the Holder):

(a)      an executed Notice of  Exercise in the form attached as Annex A hereto;

(b)      payment of the Exercise Price (i) in cash or immediately available funds, (ii) by
cancellation of indebtedness or (iii) pursuant to Section 2.2 hereof; and

(c)      this Warrant.

                  Upon the exercise of this Warrant, a certificate or certificates for the
Exercise Shares so purchased, registered in the name of the Holder or such other Person as may
be designated by the Holder (to the extent such transfer is not validly restricted and upon
payment of any transfer taxes that are required to be paid by the Holder pursuant hereto),
shall be issued and delivered by the Company to the Holder or such other Person as soon as
practicable (and in any event within five Business Days) after this Warrant shall have been
exercised.  If this Warrant shall not have been exercised in full, a new Warrant exercisable
for the number of Exercise Shares remaining shall be executed by the Company and delivered to
the Holder or such other Person at the same time as the certificate or certificates
representing the Exercise Shares purchased are delivered.  Such new Warrant shall in all other
respects be identical to this Warrant.

                  The Person in whose name any certificate or certificates for the Exercise
Shares are to be issued upon exercise of this Warrant shall be deemed to have become the holder
of record of such shares on the date on which this Warrant was surrendered and payment of the
Exercise Price was made, irrespective of the date of delivery of such certificate or
certificates, except that, if the date of such surrender and payment is a date when the stock
transfer books of the Company are closed, such Person shall be deemed to have become the holder
of such shares at the close of business on the next succeeding date on which the stock transfer
books are open (whether before or after the end of the Exercise Period).

2.2.     Net Exercise.  Notwithstanding any provision herein to the contrary, and so long
as the Exercise Shares are traded on a national securities exchange or admitted to unlisted trading
privileges on such an exchange, or are quoted on the National Market System or the Small Cap Market,
then in lieu of exercising this Warrant by payment of cash, check or cancellation of indebtedness,
the Holder may elect (the "Conversion Right") to receive shares equal to the value (as determined
below) of this Warrant (or the portion thereof being exercised) if the Market Price of one
Exercise Share is greater than the Exercise Price (at the date of calculation as set forth
below), by surrender of this Warrant at the principal office of the Company together with the
properly endorsed Notice of Exercise in which event the Company shall issue to the Holder a
number of Exercise Shares computed using the following formula:

                  X = Y (A-B)

                  A

                  Where X = the number of Exercise Shares to be issued

                  Y = the number of Exercise Shares purchasable under this Warrant or, if only a
portion of this Warrant is being exercised, the portion of this Warrant being exercised (at the
date of such calculation)

                  A = the Market Price of one Exercise Share (at the date of such calculation)

                  B = the Exercise Price (as adjusted pursuant to Section 5 hereof to the date
of such calculation)

                  The Company shall pay all reasonable administrative costs incurred by the
Holder in connection with the exercise of the Conversion Right by the Holder pursuant to this
Section 2.2.

3.       Covenants and Representations of the Company; Securities Matters.

3.1.     Covenants as to Exercise Shares.
(a)      The Company covenants and agrees that all Exercise Shares that may be issued upon the
exercise of this Warrant will, upon issuance, be validly authorized, issued and outstanding, fully
paid and nonassessable, free of preemptive rights and free from all taxes, liens and charges with
respect to the issuance thereof.  If the Common Stock or the class of securities of any other
Exercise Shares is then listed or quoted on a national securities exchange, the National Market
System or the Small Cap Market, all such Exercise Shares upon issuance shall also be so listed
or quoted.  The Company further covenants and agrees that the Company will at all times during
the Exercise Period, have authorized and reserved solely for purposes of the exercise of this
Warrant, free from preemptive rights, a sufficient number of shares of its Common Stock or the
class of securities of any other Exercise Shares to provide for the exercise in full of this
Warrant (without taking into account any possible exercise pursuant to Section 2.2 hereof).  If
at any time during the Exercise Period the number of authorized but unissued shares of Common
Stock or the class of securities of any other Exercise Shares shall not be sufficient to permit
exercise in full of this Warrant (without taking into account any possible exercise pursuant to
Section 2.2 hereof), the Company will take such corporate action as shall be necessary to
increase its authorized but unissued shares of Common Stock or the class of securities of any
other Exercise Shares to such number of shares as shall be sufficient for such purposes.

(b)      In the event that at any time, including as a result of any provision of Section 5, the
Exercise Shares shall include any shares or other securities other than shares of Common Stock, or
any other property or assets, the terms of this Warrant shall be modified or supplemented (in the
absence of express written documentation thereof, shall be deemed to be so modified or supplemented),
and the Company shall take all actions as may be necessary to preserve, in a manner and on
terms as nearly equivalent as practicable to the provisions of this Warrant as they apply to
the Common Stock, the rights of the Holder hereunder (including, without limitation, the
provisions of Section 5 hereof), including any equitable replacements of the term "Common
Stock" with the term "Exercise Shares" and adjustments of any formula included herein.

(c)      Without prior written consent of the holders of Warrants exercisable for a majority of
the securities issuable upon exercise of the outstanding Warrants, the Company shall not permit
any "significant subsidiary" (as defined by Rule 1-02(w) of Regulation S-X under the Securities Act
or any successor rule) to issue or grant (i) any capital stock or equity ownership interest,
including any Participating Security; (ii) any rights, options, warrants or convertible
security that is exercisable for or convertible into any capital stock or other equity
ownership interest, including any Participating Security; or (iii) any stock appreciation
rights, phantom stock rights, or any other profit participation rights, or any rights or
options to acquire any such rights, in each case of clauses (i), (ii) and (iii) above, to any
Person other than the Company or its wholly-owned subsidiaries.

(d)      Without prior written consent of the holders of Warrants exercisable for a majority of
the securities issuable upon exercise of the outstanding Warrants, the Company shall not make
grants of shares of restricted Common Stock or options, warrants or other rights to purchase
Common Stock or other stock-based awards to employees, officers or directors of, or consultants
or advisors to, the Company pursuant to the Plans from the date hereof through December 31, 2004
covering shares in excess of 2,965,755.  Without prior written consent of the holders of Warrants
exercisable for a majority of the securities issuable upon exercise of the outstanding
Warrants, the Company shall not reprice any of the options outstanding as of the date hereof,
other than as a result of a stock split, consolidation or other recapitalization or
reorganization.

(e)      Until the later of (i) the date as of which the Holder may sell all of the Exercise
Shares without restriction pursuant to Rule 144(k) under the Securities Act, or any successor
rule, and (ii) the last date on which any of the Warrants remain outstanding, the Company shall
timely file all reports required to be filed with the Securities and Exchange Commission ("SEC")
pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the Company
shall not terminate its status as an issuer required to file reports under the Exchange Act, other
than as a result of a merger or consolidation of the Company where (a) the Company is not the
surviving entity or (b) the Company is the surviving entity but its Common Stock is exchanged
for securities of another Person.

3.2.     No Impairment.  Except and to the extent as waived or consented to in writing by the Holder,
the Company will not, by amendment of its Articles of Incorporation or through any reorganization,
transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of the terms to
be observed or performed hereunder by the Company, but will at all times in good faith assist
in the carrying out of all the provisions of this Warrant and in the taking of all such action
as may be necessary or appropriate in order to protect the exercise rights of the Holder
against impairment consistent with the intent and principles expressed in Section 5.9 below.

3.3.     Notices of Record Date.  In the event (i) the Company takes a record of the holders of any
class of securities for the purpose of determining the holders thereof who are entitled to receive
any dividend or other distribution, (ii) the Company authorizes the granting to the holders of
Common Stock (or holders of the class of securities of any other Exercise Shares) of rights to
subscribe to or purchase any shares of capital stock of any class or securities convertible
into any shares of capital stock or of any other right, (iii) the Company authorizes any
reclassification of, or any recapitalization involving, any class of Common Stock or any
consolidation or merger to which the Company is a party and for which approval of the
stockholders of the Company is required, or of the sale or transfer of all or substantially all
of the assets of the Company, (iv) the Company authorizes or consents to or otherwise commences
the voluntary or involuntary dissolution, liquidation or winding up of the Company or (v) the
Company authorizes or takes any other action that would trigger an adjustment in the Exercise
Price or the number or amount of shares of Common Stock or other Exercise Shares subject to
this Warrant (other than a stock split or combination), the Company shall deliver to the
Holder, at least ten (10) days prior to the earlier of the record date for any such action or
stockholder vote and the date of such action, a notice specifying (a) which action is to be
taken and the date on which any such record is to be taken for the purpose of any such action,
(b) the date that any such action is to take place and (c) the amount and character of any
stock, other securities or property and amounts, or rights or options with respect thereto,
proposed to be issued, granted or delivered to each holder of Common Stock (or holders of the
class of securities of any other Exercise Shares).

3.4.     Representations and Warranties.  The Company hereby represents and warrants to the
Holder, as of the date hereof, that:

(a)      The Company:  (i) is a corporation duly organized, validly existing and in good standing
under the laws of the state of Colorado; (ii) is duly qualified to do business and is in good
standing in every jurisdiction where the nature of its business requires it to be so qualified
(except where the failure to so qualify could not reasonably be expected to have a material adverse
effect, individually or in the aggregate, on the business, financial condition or operations of
the Company and its subsidiaries taken as a whole or on its ability to perform its obligations
under this Warrant and the Registration Rights Agreement (as defined below) (collectively, the
"Warrant Documents")); (iii) has received all permits from the Federal Aviation Administration
and the Department of Transportation necessary to conduct the businesses now operated by it and
has received all other permits necessary to conduct the businesses now operated by it (except
for those permits, the failure of which to have received, would not reasonably be expected to
have, individually or in the aggregate, a material adverse effect on the business, financial
condition or operations of the Company and its subsidiaries taken as a whole, or on its ability
to perform its obligations under the Warrant Documents) and has not received notice of
proceedings relating to the revocation or modification of any permit that, if adversely
determined, would reasonably be expected to have, individually or in the aggregate, a material
adverse effect on the business, financial condition or operations of the Company and its
subsidiaries taken as a whole, or on its ability to perform its obligations under the Warrant
Documents; (iv) has all requisite power and authority to own its properties and to carry on its
business as now conducted and as proposed to be conducted, and to execute and deliver the
Warrant Documents to which it is a party and to perform its obligations thereunder; and (v) is
in compliance in all material respects with all applicable law, rules, regulations and orders;

(b)      The execution, delivery and performance by the Company of the Warrant Documents and the
consummation of the transactions contemplated therein: (i) are within its powers and have been duly
authorized by all necessary corporate and stockholder action; (ii) do not contravene its charter
documents or any law, rule, regulation or administrative or court order binding on or affecting the
Company or its property; and (iii) do not conflict with or constitute a breach of, or default
under, or result in the creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company pursuant to any material contract, indenture, mortgage, loan
agreement, note or other instrument to which it is a party, by which it may be bound or to
which its assets may be subject;

(c)      Each of the Warrant Documents has been duly authorized, executed, delivered by the Company
and constitutes a valid and binding obligation of the Company, enforceable against it in accordance
with its terms, except as the enforceability thereof may be subject to or limited by
bankruptcy, insolvency, reorganization, arrangement, moratorium or other similar laws relating
to or affecting the rights of creditors generally and general equitable principles (whether
applied in an action at law or a suit in equity);

(d)      There is no action, suit or proceeding to which the Company is a party or to which its
properties or assets are subject pending or, to its knowledge, threatened before any court,
arbitrator, or governmental authority, domestic or foreign, which would reasonably be expected to
have, individually or in the aggregate, a material adverse effect on its ability to perform its
obligations under the Warrant Documents or on the business, financial condition or operations
of the Company and its subsidiaries taken as a whole;

(e)      The authorized capital stock of the Company consists of 100,000,000 shares of Common Stock,
no par value per share, and 1,000,000 shares of Preferred Stock, no par value per share (the
"Preferred Stock"), of which (i) 29,657,550 shares of Common Stock are outstanding as of February
12, 2003 and (ii) no shares of Preferred Stock are outstanding.  All of the outstanding shares of
Common Stock of the Company have been duly authorized and validly issued, and are fully paid and
nonassessable and are free of any preemptive rights and the shares of Common Stock deliverable
upon exercise of this Warrant have been, and at all times will be, duly authorized and reserved
for issuance upon such exercise, and, when delivered upon such exercise, will be validly
issued, fully paid and nonassessable and free of any preemptive rights;

(f)      Except as set forth in Section 3.4(e) or on SCHEDULE 3.4(f), there are not outstanding nor
are there any understandings, commitments or obligations to issue or grant (i) any shares of
capital stock or securities, rights, options, warrants or subscriptions giving any Person the right
to acquire from the Company, or requiring that the Company or any of its subsidiaries issue any
capital stock or other equity interest in the Company or any of its subsidiaries; (ii) any stock
appreciation rights, phantom stock rights, or any other profit participation rights with
respect to any capital stock or other equity ownership interest in the Company or any of its
subsidiaries, or any rights or options to acquire any such rights; or (iii) any contracts,
agreements, arrangements or understandings to which the Company or any of its subsidiaries is
party or by which any of them is bound, giving any Person any rights of exchange, preemptive
rights (statutory or contractual), anti-dilution rights, rights of first refusal, rights of
first offer or registration rights with respect to any capital stock of the Company or any of
its subsidiaries;

(g)      Assuming the veracity of, and compliance with, the representations, statements and
agreements set forth in Section 4 hereof, the offer and issuance by the Company of this Warrant
are, and the issuance of the Common Stock upon exercise of this Warrant will be, exempt from the
registration requirements under the Securities Act;

(h)      No authorization, approval, consent or order of any court or governmental authority or
agency or any other Person is required in connection with the issuance by the Company of this
Warrant, or the consummation by the Company of any of the transactions contemplated by the Warrant
Documents (other than such approvals, authorizations or consents contemplated by the Registration
Rights Agreement);

(i)      The Company has filed all forms, reports and documents required to be filed by the Company
with the SEC since January 1, 2000.  All such required forms, reports and documents are referred to
herein as the "SEC Reports".  As of their respective dates, the SEC Reports (i) were prepared
in all material respects in accordance with the requirements of the Securities Act or the Exchange
Act, as the case may be, and the rules and regulations of the SEC thereunder applicable to such
SEC Reports and (ii) did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not misleading except to
the extent corrected by a subsequently filed SEC Report.  Taken as a whole, the SEC Reports do
not contain any untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.  None of Company's subsidiaries is
required to file any forms, reports or other documents with the SEC.  Each of the SEC Reports
included, as exhibits thereto, all documents required to be filed as exhibits to such SEC
Report under the rules and regulations of the SEC, except to the extent filed prior to the date
of this Agreement in a subsequently filed SEC Report.

(j)      Neither the Company nor any Affiliate of the Company has directly, or though any agent,
(i) sold, offered for sale, solicited offers to buy or otherwise negotiated in respect of any
security (as defined in the Securities Act) which is or will be integrated with the issuance of
this Warrant, or the Exercise Shares issuable upon exercise of this Warrant, in a manner that would
require the registration under the Securities Act of this Warrant or the Exercise Shares, or
(ii) engaged in any form of general solicitation or general advertising in connection with the
offering of this Warrant or the Exercise Shares (as those terms are used in Regulation D under
the Securities Act) or in any manner involving a public offering within the meaning of Section
4(2) of the Securities Act;

(k)      (i) To the extent the initial Holder is not an "accredited investor" as defined in Rule
501(a) under the Securities Act, the Company has heretofore delivered to the initial Holder, at a
reasonable time prior to the issuance hereof, the information required to be delivered to such
Holder pursuant to Rule 502(b)(ii) under the Securities Act; and (ii) the Company has heretofore
delivered to the initial Holder, the following financial statements and information:  (A) the
audited consolidated balance sheets of the Company as at March 31, 2002, and the related
consolidated statements of income, stockholders' equity and cash flows for the fiscal year then
ended, and (B) the unaudited consolidated balance sheet of the Company as at December 31, 2002
and the related unaudited statements of income, stockholders' equity and cash flows for the
nine months then ended.  All such consolidated statements were prepared in conformity with
United States generally accepted accounting principles and fairly present the consolidated
financial position of the Company as at the respective dates thereof and the consolidated
results of operations and cash flows of the Company for each of the periods then ended subject,
in the case of the unaudited consolidated statements, to year-end audit and other normally
recurring adjustments.  Neither the Company nor any of its subsidiaries has any material
contingent liability or liability for taxes, long-term lease or unusual forward or long-term
commitment that is not reflected in the foregoing consolidated financial statements or the
notes thereto and which in any such case is material in relation to the business, operations,
properties, assets or condition (financial or otherwise) of the Company;

(l)      The representations and warranties made by the Company in that certain Loan Agreement,
dated as of February 14, 2003 (the "Loan Agreement") are true and correct as of the date hereof;

(m)      The rights granted to the Holder in this Agreement do not in any way conflict with and
are not inconsistent with the rights granted to the holders of the Company's other issued and
outstanding securities under any other agreements.

4.       Representations of Holder.

4.1.     Accredited Investor; Acquisition Of Warrant For Personal Account.  The Holder is an
"accredited investor" as defined in Rule 501(a) of the Securities Act, or alternatively, the Holder
has received the information specified in Section 3.4(k)(i) above.  The Holder is aware of the
Company's business affairs and financial condition and has acquired sufficient information
about the Company to reach an informed and knowledgeable decision to acquire the Warrants and
Exercise Shares.  The Holder has such business and financial experience as is required to give
it the capacity to protect its own interests in connection with the acquisition of the Warrants
and Exercise Shares.  The Holder has had the opportunity to ask questions and receive answers
concerning the terms and conditions of its acquisition of the Warrants and Exercise Shares and
to obtain additional information from the Company in connection therewith.  The Holder
represents and warrants that it is acquiring this Warrant and, to the extent this Warrant is
exercised, the Exercise Shares solely for its account for investment and not with a view to or
for sale or distribution of said Warrant or Exercise Shares or any part thereof, other than
potential transfers between Affiliates (including affiliated funds) or transfers pursuant to an
effective registration statement under, or an exemption from the registration requirements of,
the Securities Act.

4.2.     Securities Are Not Registered.

(a)      The Holder understands that this Warrant and the Exercise Shares have not been registered
under the Securities Act, on the basis that no distribution or public offering is being effected.
The Holder realizes that the basis for the exemption may not be present if, notwithstanding its
representations, the Holder has a present intention of acquiring the securities for a fixed or
determinable period in the future, selling (in connection with a distribution or otherwise),
granting any participation in, or otherwise distributing the securities.  The Holder has no
such present intention, other than potential transfers between Affiliates (including affiliated
funds) or transfers pursuant to an effective registration statement under, or an exemption from
the registration requirements of, the Securities Act.

(b)      The Holder recognizes that this Warrant and the Exercise Shares may not be sold unless
they are subsequently registered under the Securities Act or an exemption from such registration is
available.

4.3.     Disposition of Warrant and Exercise Shares.

(a)      The Holder agrees not to make any disposition of all or any part of this Warrant or
Exercise Shares unless:

(i)      The Company shall have received a letter obtained by the Holder from the SEC stating
that no action will be recommended to the SEC with respect to the proposed disposition;

(ii)     There is then in effect a registration statement under the Securities Act covering
such proposed disposition and such disposition is made in accordance with said registration
statement;

(iii)    Pursuant to Rule 144; or

(iv)     The Holder shall have notified the Company of the proposed disposition and shall have
furnished the Company with a statement of the circumstances surrounding the proposed disposition
and if reasonably requested by the Company, the Holder shall have furnished the Company with an
opinion of counsel for the Holder, reasonably satisfactory to the Company, to the effect that
such disposition will not require registration of such Warrant or Exercise Shares under the
Securities Act or any applicable state securities laws.

(b)      The Holder is aware that neither this Warrant nor the Exercise Shares may be sold pursuant
to Rule 144 adopted under the Securities Act unless the applicable conditions thereof are met,
including, among other things, the Company having filed reports with the SEC, the required holding
period under Rule 144 and the number of shares being sold during any three month period not exceeding
specified limitations.

(c)      The Holder understands and agrees that all certificates evidencing the Exercise Shares
may bear the following legend (unless such shares have been disposed of in accordance with clause
(a)(ii) or (iii) or such legend is no longer required to comply with applicable securities laws):

                  "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT") OR APPLICABLE STATE SECURITIES LAWS.  THEY MAY NOT BE
TRANSFERRED, SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO SUCH SECURITIES UNDER THE SECURITIES ACT
AND APPLICABLE STATE SECURITIES LAWS, UNLESS AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE."

5.       Adjustment of Exercise Price, Shares of Common Stock Purchasable and Number of Warrants

5.1.     Adjustment of Exercise Price.  The Exercise Price as defined in Section 1 shall be subject
to adjustment from time to time as follows:

(a)      If the Company after the date hereof shall (i) pay a dividend or make a distribution to
holders of any class of capital stock in shares of Common Stock, (ii) split or otherwise subdivide
the outstanding shares of Common Stock, or (iii) combine the outstanding shares of Common Stock
into a smaller number of shares, then in any such case the Exercise Price in effect immediately
prior thereto shall be adjusted to a price obtained by multiplying such Exercise Price by a
fraction of which the numerator shall be the number of shares of Common Stock outstanding prior
to such action and the denominator shall be the number of shares of Common Stock outstanding
after giving effect to such action.  An adjustment made pursuant to clause (i) of this
subsection (a) shall become effective retroactively immediately after the Record Date for such
dividend or distribution, and an adjustment made pursuant to clause (ii) or (iii) of this
subsection (a) shall become effective immediately after the effective date of such subdivision
or combination.

(b)      If the Company after the date hereof shall distribute rights, options or warrants to
holders of any class of capital stock to subscribe for or purchase shares of Common Stock or
securities convertible into Common Stock at a price per share less than the Applicable Price per
share on the issuance date thereof, the Exercise Price in effect immediately prior thereto shall be
adjusted to a price obtained by multiplying such Exercise Price by a fraction of which (i) the
numerator shall be the number of shares of Common Stock outstanding on the date of issuance of
such rights, options or warrants plus the number of shares of the class of Common Stock subject
to such rights, options or warrants which the aggregate consideration for the total number of
shares to be so offered would purchase at the Applicable Price of a share of the class of
Common Stock subject to such rights, options or warrants, and (ii) the denominator shall be the
number of shares of Common Stock outstanding on the date of issuance of such rights, options or
warrants plus the number of additional shares of Common Stock to be offered for subscription or
purchase; provided, however, that no adjustment shall be made if the Company issues or
distributes to the Holder the rights, options or warrants which the Holder would have been
entitled to receive had this Warrant been exercised prior to the Record Date (and, if
applicable, had this Warrant been exercisable for the class of Common Stock receiving such
issuance or distribution).  Any such adjustments shall be made whenever such rights, options or
warrants are issued and shall become effective retroactively immediately after the Record Date
for the determination of stockholders entitled to receive such rights, options or warrants
unless such rights, options or warrants are not immediately exercisable, in which case, any
such adjustments shall be made at such time such rights, options or warrants become
exercisable.  Upon expiration of the period during which any such rights, options or warrants
may be exercised, any adjustment previously made pursuant to the foregoing provisions shall be
recalculated to take into consideration only those rights, options or warrants actually
exercised during the applicable period for exercise and notice of any such further adjustment
to the Exercise Price shall be given to Holder as herein provided.

(c)      If the Company after the date hereof shall issue or distribute to holders of any class
of Common Stock or any class of capital stock that is convertible into Common Stock evidences
of its indebtedness, cash or other assets, shares of capital stock of any class or any other
securities (other than the Common Stock) or rights to subscribe therefor (excluding those
referred to in subsection (b) above), in each such case the Exercise Price in effect
immediately prior thereto shall be adjusted to a price obtained by multiplying such Exercise
Price by a fraction of which (i) the numerator shall be the sum of the amount, for each class
of Common Stock then outstanding, of the Fair Market Value per share of such class of Common
Stock, multiplied by the number of outstanding shares of such class of Common Stock, in each
case on the Record Date, less the Fair Market Value of the assets, cash or evidences of
indebtedness so distributed, or shares of capital stock or other securities or rights to
subscribe therefor so issued, and (ii) the denominator shall be the sum of the amount, for each
class of Common Stock then outstanding, of the Fair Market Value per share of such class of
Common Stock, multiplied by the number of outstanding shares of such class of Common Stock, in
each case on the Record Date; provided, however, that no adjustment shall be made if the
Company issues or distributes to the Holder the evidence of indebtedness, cash, other assets,
capital stock or other securities or subscription rights referred to above in this subsection
(c) that the Holder would have been entitled to receive had this Warrant been exercised in full
prior to the Record Date (and, if applicable, had this Warrant been exercisable for the class
of capital stock receiving such issuance or distribution).  The Company shall provide the
Holder, upon receipt of a written request therefor, with any indenture or other instrument
defining the rights of the holders of any indebtedness, assets, capital stock or other
securities or subscription rights referred to in this subsection 5.1(c).  Any such adjustment
shall be made whenever any such distribution is made, and shall become effective retroactively
immediately after the Record Date.  Upon expiration of the period during which any subscription
rights granted pursuant to this subsection (c) may be exercised, any adjustment previously made
pursuant to the foregoing provisions shall be recalculated to take into consideration only
those subscription rights actually exercised during the applicable period for exercise and
notice of any such further adjustment to the Exercise Price shall be given to the Holder as
herein provided.

(d)      For purposes of Sections 5.1(a), 5.1(b) and 5.1(c), any dividend or distribution to
which Section 5.1(c) is applicable that also includes shares of Common Stock, a subdivision
of Common Stock or a combination of Common Stock to which Section 5.1(a) applies, or rights or
warrants to subscribe for or purchase shares of Common Stock to which Section 5.1(b) applies
(or any combination thereof), shall be deemed instead to be:

(i)      a dividend or distribution of the evidences of indebtedness, cash, other assets,
                  shares of capital stock, other securities or subscription rights, other than
                  such shares of Common Stock, such subdivision or combination or such rights,
                  options or warrants to which Sections 5.1(a) and 5.1(b) apply, respectively
                  (and any Exercise Price reduction required by Section 5.1(c) with respect to
                  such dividend or distribution shall then be made), immediately followed by

(ii)     a dividend or distribution of such shares of Common Stock, such subdivision or combination
                  or such rights, options or warrants to which Sections 5.1(a) and 5.1(b) apply
                  (and any further Exercise Price reduction required by Sections 5.1(a) and (b) with
                  respect to such actions shall then be made).

(e)      In case a tender or exchange offer (other than an odd lot offer) by the Company for any
Common Stock is consummated at a price in excess of the Market Price of the Common Stock subject
to such tender or exchange offer at the expiration of such tender or exchange offer, the Exercise
Price in effect immediately prior thereto shall be adjusted to a price obtained by multiplying such
Exercise Price by a fraction of which (i) the numerator shall be such Market Price, less the
amount of the excess of the value of the tender or exchange offer price over the Market Price,
and (ii) the denominator shall be the Market Price, such adjustment to become effective
immediately prior the opening of business on the day following such date of expiration.

(f)      If the Company distributes rights to holders of its Common Stock pursuant to that certain Rights
Agreement, dated as of February 20, 1997, between the Company and American Securities Transfer
& Trust, Inc., as amended, then upon exercise of the Warrant the Holder shall receive that
number of unexpired rights it would have received had it exercised the Warrant and been a
holder of the Exercise Shares issuable upon exercise thereof, prior to the record date for such
distribution.

5.2.     Adjustment of Shares of Exercise Shares Purchasable Upon Exercise of Warrants.

                  Upon each adjustment of the Exercise Price pursuant to Section 5.1 or 5.4
hereof the number of Exercise Shares purchasable upon exercise of this Warrant shall be
adjusted to the number of Exercise Shares, calculated to the nearest one-hundredth of a share,
obtained by (i) multiplying the number of Exercise Shares purchasable immediately prior to such
adjustment by the Exercise Price in effect prior to such adjustment, and (ii) dividing the
product so obtained by the Exercise Price in effect after such adjustment of the Exercise Price.

5.3.     Rights Upon Consolidation, Merger, Sale, Transfer, Reclassification or Recapitalization.

(a)      In case of any consolidation or merger of the Company with another Person (other than
a merger or consolidation in which the Company is the continuing Person and the Common Stock is
not exchanged for securities, property or assets issued, delivered or paid by another Person), or
in case of any lease, sale or conveyance to another Person of all or substantially all of the
property or assets of the Company, this Warrant shall thereafter (until the end of the Exercise
Period) evidence the right to receive, upon its exercise, in lieu of the shares of Common Stock
deliverable upon such exercise immediately prior to such consolidation merger, lease, sale or
conveyance the kind and amount of shares and/or other securities and/or property and assets
and/or cash that the Holder would have been entitled to receive upon such consolidation,
merger, lease, sale or conveyance had the Holder exercised this Warrant immediately prior to
such consolidation, merger, lease, sale or conveyance.

(b)      In case of any reclassification or change of, or recapitalization involving, the Common
Stock issuable upon exercise of this Warrant (other than a change in par value, or from no par
value to par value, or as a result of a subdivision or combination), including any such
reclassification, change or recapitalization effected in connection with a consolidation or
merger of the Company with another Person in which the Company is the continuing Person and the
holders of Common Stock receive shares and/or other securities and/or property or assets and/or
cash issued, delivered or paid by the Company in exchange for such shares of Common Stock
(including for this purpose shares reflecting a change in par value or from no par value to par
value or as a result of a subdivision or combination of the shares of Common Stock), this Warrant
shall thereafter (until the end of the Exercise Period) evidence the right to receive, upon its
exercise, in lieu of the shares of Common Stock deliverable upon such exercise immediately
prior to such reclassification, change or recapitalization, the kind and amount of shares
and/or other securities and/or property and assets and/or cash that the Holder would have been
entitled to receive upon such reclassification, change, consolidation or merger had the Holder
exercised this Warrant immediately prior to such reclassification, change, consolidation or
merger.

(c)      The Company shall not consummate any transaction that effects or permits any such event
or occurrence unless each Person whose shares of stock, securities or assets will be issued,
delivered or paid to the holders of the Common Stock (including the Company with respect to
clause (ii) below), prior to or simultaneously with the consummation of the transaction, (i) is a
corporation organized and existing under the laws of the United States of America or any State
or the District of Columbia, and (ii) expressly assumes, or in the case of the Company,
acknowledges, by a Warrant supplement or other document in a form substantially similar hereto,
executed and delivered to the Holder hereof, the obligation to deliver to such Holder such
shares of stock, securities or assets as, in accordance with the foregoing provisions of this
Section 5.3, such Holder is entitled to purchase, and all other obligations and liabilities
under this Warrant, including obligations and liabilities in respect of subsequent adjustments
that are required under this Warrant.

(d)      The above provisions of this Section 5.3 shall similarly apply to successive
reclassifications and changes of Exercise Shares and to successive consolidations mergers,
leases, sales or conveyances, mutatis mutandis.

5.4.     Sale of Shares Below Applicable Price.

(a)      If at any time or from time to time after the date hereof, the Company issues or
sells, or is deemed by the express provisions of this Section 5.4 to have issued or sold,
Additional Shares of Common Stock (as defined below), other than as provided in Sections 5.1,
5.2 or 5.3 above, for an Effective Price (as defined below) less than the Applicable Price
(such issue, a "Qualifying Dilutive Issuance"), then and in each such case, the then effective
Exercise Price shall be reduced, effective as of the opening of business on the date of such
issue or sale (or if earlier, the date on which a binding agreement providing for such issue
or sale was entered into), to a price determined by multiplying the Exercise Price in effect
immediately prior to such issuance or sale by a fraction:

(i)      the numerator of which shall be (A) the number of shares of Common Stock outstanding
                  immediately prior to such issue or sale, plus (B) the number of shares of the
                  class of Common Stock being issued or sold or deemed to be issued or sold which
                  the aggregate consideration received by the Company for the total number of
                  Additional Shares of Common Stock so issued or deemed to be so issued would
                  purchase at the Applicable Price, and
(ii)     the denominator of which shall be the number of shares of Common Stock outstanding
                  immediately prior to such issue or sale plus the total number of Additional
                  Shares of Common Stock so issued or deemed to be so issued.

(b)      For the purpose of the adjustment required under this Section 5.4, if the Company
issues or sells (x) stock or other securities convertible into, shares of Common Stock (such
convertible stock or securities being herein referred to as "Convertible Securities") or (y)
rights, options or warrants for the purchase of shares of Common Stock or Convertible Securities
and if the Effective Price of such shares of Common Stock is less than the Applicable Price, in
each case the Company shall be deemed to have issued at the time of the issuance of such rights,
options or warrants or Convertible Securities the maximum number of Additional Shares of Common
Stock issuable upon exercise or conversion thereof and to have received as aggregate consideration
for the issuance of such shares an amount equal to the total amount of the consideration, if
any, received by the Company for the issuance or sale of such rights, options or warrants or
Convertible Securities plus the minimum amounts of consideration, if any, payable to the
Company upon the exercise or conversion of such rights, options or warrants or Convertible
Securities (other than by cancellation of liabilities or obligations evidenced by such
Convertible Securities); provided that

(i)      subject to paragraph (d) below, if the minimum amounts of such consideration cannot be
                  ascertained, but are a function of antidilution or similar protective clauses,
                  the Company shall be deemed to have received the minimum amounts of consideration
                  without reference to such clauses; and

(ii)     if the minimum amount of consideration payable to the Company upon the exercise or
                  conversion of such rights, options, warrants or Convertible Securities is
                  reduced over time or on the occurrence or non-occurrence of specified events
                  other than by reason of antidilution adjustments, the Effective Price shall be
                  recalculated using the figure to which such minimum amount of consideration is
                  reduced; provided further, that if the minimum amount of consideration payable
                  to the Company upon the exercise or conversion of such rights, options, warrants
                  or Convertible Securities is subsequently increased, the Effective Price shall be
                  again recalculated using the increased minimum amount of consideration payable
                  to the Company upon the exercise or conversion of such rights, options,
                  warrants or Convertible Securities.

                  No further adjustment of the Exercise Price, as adjusted upon the issuance of
such rights, options, warrants or Convertible Securities, shall be made as a result of the
actual issuance of shares of Common Stock upon the exercise of any such rights, options or
warrants or the conversion of any such Convertible Securities.  If any such rights, options or
warrants or the conversion privilege represented by any such Convertible Securities shall
expire without having been exercised, the Exercise Price as adjusted upon the issuance of such
rights, options, or warrants or Convertible Securities shall be readjusted to the Exercise
Price which would have been in effect had an adjustment been made on the basis of only the
shares of Common Stock, if any, actually issued or sold on the exercise or conversion of such
rights, options, warrants or Convertible Securities, and on the basis that such shares of
Common Stock, if any, were issued or sold for the consideration actually received by the
Company upon such exercise or conversion (other than by cancellation of liabilities or
obligations evidenced by such Convertible Securities), plus the consideration, if any, actually
received by the Company for the issue or sale of all such rights, options, warrants and
Convertible Securities, whether or not exercised, provided that such readjustment shall not
apply to prior exercises of this Warrant.

(c)      For the purpose of making any adjustment to the Exercise Price of the Exercise Shares
required under this Section 5.4, "Additional Shares of Common Stock" shall mean all shares of
Common Stock issued by the Company or deemed to be issued pursuant to this Section 5.4 (including
shares of Common Stock subsequently reacquired or retired by the Company), other than any Excluded
Issuance.

                  The "Effective Price" of Additional Shares of Common Stock shall mean the
quotient determined by dividing the total number of Additional Shares of Common Stock issued or
sold, or deemed to have been issued or sold by the Company under this Section 5.4, into the
aggregate consideration received, or deemed to have been received by the Company for such issue
under this Section 5.4, for such Additional Shares of Common Stock.

(d)      In the event that the Company issues or sells, or is deemed to have issued or sold,
Additional Shares of Common Stock in a Qualifying Dilutive Issuance (the "First Dilutive Issuance"),
then in the event that the Company issues or sells, or is deemed to have issued or sold, Additional
Shares of Common Stock in a Qualifying Dilutive Issuance other than the First Dilutive Issuance (a
"Subsequent Dilutive Issuance") pursuant to the same instruments as the First Dilutive Issuance,
then and in each such case upon a Subsequent Dilutive Issuance the Exercise Price shall be
reduced to the Exercise Price that would have been in effect had the First Dilutive Issuance
and each Subsequent Dilutive Issuance all occurred on the closing date of the First Dilutive
Issuance.

5.5.     Additional Adjustments to Exercise Price.  Notwithstanding anything to the contrary
contained in this Section 5, but subject to Section 5.7, the Company shall be entitled, but not
required, to make such reductions in the Exercise Price, in addition to those required by Section
5.1, 5.3 or 5.4, as it, in its sole discretion, shall determine to be advisable, including, without
limitation, in order that any dividend in or distribution of shares of Common Stock or shares
of capital stock of any class other than Common Stock, subdivision, reclassification or
combination of shares of Common Stock, issuance of rights, options, or warrants, or any other
transaction having a similar effect, shall not be treated as a distribution of property by the
Company to its stockholders under Section 305 of the Internal Revenue Code of 1986, as amended,
or any successor provision and shall not be taxable to them.

5.6.     De Minimus Adjustments.  No adjustment pursuant to Section 5.1, 5.3 or 5.4 hereof shall
be required unless such adjustment would require an increase or decrease of at least 1% of the
Exercise Price then subject to adjustment; provided, however, that any adjustments that are not
made by reason of this Section 5.6 shall be carried forward and taken into account in any subsequent
adjustment.  All calculations under this Section 5 shall be made to the nearest thousandth of a
cent.

5.7.     Condition Precedent to Reduction of Exercise Price Below Par Value of Shares of Common
Stock or Increase in Par Value to Above Exercise Price.

(a)      Before taking any action that would cause an adjustment reducing the Exercise Price to
below the then par value of any of the shares of Common Stock issuable upon exercise of this
Warrant, the Company will take any corporate action that may, in the opinion of its counsel, be
necessary in order that the Company may validly and legally issue fully paid and non-assessable
shares of such Common Stock at such adjusted Exercise Price.

(b)      Before taking any action that would increase the par value of the Common Stock issuable
upon exercise of this Warrant to an amount that is greater than the then effective Exercise Price,
the Company will take such corporate action that is necessary in order that the Company may validly
and legally issue fully paid and non-assessable shares of such Common Stock at such then effective
Exercise Price.

5.8.     Certificate of Adjustment.  In each case of an adjustment or readjustment of the
Exercise Price, the Company, at its sole expense, shall compute such adjustment or readjustment
in accordance with the provisions hereof and prepare a certificate showing such adjustment or
readjustment, and shall mail such certificate, by first class mail, postage prepaid, to the Holder
at the Holder's address as shown in the Company's books no later than five (5) Business Days following
the effective date of such adjustment or readjustment.  The certificate shall set forth such
adjustment or readjustment, showing in detail the facts upon which such adjustment or
readjustment is based, including a statement of (i) the number of Additional Shares of Common
Stock issued or sold or deemed to have been issued or sold; (ii) the consideration received or
deemed to be received by the Company for any Additional Shares of Common Stock issued or sold
or deemed to have been issued or sold, (iii) the Exercise Price at the time in effect, and (iv)
the type and amount, if any, of other property which would be received upon exercise of this
Warrant.

5.9.     Other Dilutive Events.  If any event or occurrence shall occur as to which the
provisions of this Section 5 are not strictly applicable but as to which the failure to make any
adjustment to the Exercise Price and/or the number of shares or other assets or property subject
to this Warrant would adversely affect the purchase rights or value represented by this Warrant
in accordance with the essential intent and principles of this Section 5, including any issuance of
Participating Securities, then, in each such case, the Company shall determine the adjustment,
if any, on a basis consistent with the essential intent and principles established in this
Section 5, necessary to preserve, without dilution, the purchase rights represented by this
Warrant.  If such determination involves or is based on a determination of the Fair Market
Value of any securities or other assets or property, such determination shall be made in
accordance with the Valuation Procedure.

5.10.    General Adjustment Provisions.

(a)      Notwithstanding anything to the contrary contained in this Warrant, no adjustments to the
Exercise Price or the number of shares of Common Stock purchasable upon exercise of this Warrant
shall be made solely as a result of any Excluded Issuance.

(b)      In any case in which this Section 5 shall require that an adjustment be made retroactively
immediately following a Record Date, the Company may elect to defer (but only until five (5)
Business Days following the mailing by the Company to the Holder of the certificate as required
by Section 5.8) issuing to the Holder, in the event of any exercise of this Warrant after such
Record Date, the shares of the Common Stock issuable upon such exercise in excess of the shares of
Common Stock issuable upon such exercise prior to such adjustment, if any.

(c)      The provisions and adjustments provided for in this Section 5 shall apply to successive
events or occurrences of the types described in this Section 5.

(d)      For the purpose of making any adjustment required under this Section 5 that requires a
determination of the aggregate consideration received by the Company for any sale, issue or
distribution of securities, the aggregate consideration received by the Company shall equal the
sum of:  (i) to the extent it consists of cash, the net amount of cash received by the Company after
deduction of any underwriting or similar commissions, compensation or concessions paid or allowed
by the Company in connection with such issue or sale but without deduction of any expenses payable
by the Company, and (ii) to the extent it consists of property or assets other than cash, the Fair
Market Value of the property or assets.

6.       Fractional Shares.  No fractional shares shall be issued upon the exercise of this
Warrant as a consequence of any adjustment pursuant hereto.  All Exercise Shares (including fractions)
issuable upon exercise of this Warrant may be aggregated for purposes of determining whether
the exercise would result in the issuance of any fractional share.  If, after aggregation, the
exercise would result in the issuance of a fractional share, the Company shall, in lieu of
issuance of any fractional share, pay the Holder otherwise entitled to such fraction a sum in
cash equal to the product resulting from multiplying such fractional amount by the Fair Market
Value of one share of Common Stock.

7.       Registration Rights.  The Holder shall have the registration rights with respect to
the Common Stock as set forth in that certain Registration Rights Agreement, dated as of February
14, 2003 (the "Registration Rights Agreement") among the Company, the Air Transportation
Stabilization Board, [***] and [***].  To the extent that this Warrant becomes exercisable for
Exercise Shares other than the Common Stock, the Company agrees to grant the Holder hereof the
same registration rights with respect to such Exercise Shares as are currently granted to the
Holder in respect of the Common Stock pursuant to the Registration Rights Agreement.  If
permissible under the Securities Act, the Company shall provide the Holder with the same
registration rights with respect to the resale of the Warrant and the issuance of the Exercise
Shares upon exercise of the Warrant by Holders other than the initial Holder, as are currently
granted to Holder pursuant to the Registration Rights Agreement; provided that this provision
does not entitle the Holder to any additional requests to those granted pursuant to Section 2
of the Registration Rights Agreement.  In addition, the Company shall use its reasonable best
efforts, upon the reasonable request of the Holder, to cause the Warrant to be listed or quoted
on a national securities exchange, the National Market System or the Small Cap Market.

8.       No Stockholder Rights or Liabilities.  This Warrant in and of itself shall not entitle
the Holder to any voting rights or other rights as a stockholder of the Company (subject to the
provisions of Section 5 above).  No provision of this Warrant, in the absence of affirmative action
by the Holder to exercise this Warrant in exchange for shares of Common Stock, and no mere
enumeration herein of the rights or privileges of the Holder, shall give rise to any liability
of the Holder for the Exercise Price or as a stockholder of the Company, whether such liability is
asserted by the Company or by creditors of the Company.

9.       Transfer of Warrant.  Subject to the restriction on transfers set forth in the legend on
the first page of this Warrant and in Section 4.3 and applicable laws, this Warrant and all rights
hereunder, in whole or in part, are transferable, by the Holder in person or by duly authorized
attorney, upon delivery of this Warrant and the form of assignment attached as Annex B hereto to any
transferee designated by Holder.

10.      Payment of Taxes on Stock Certificate Issued Upon Exercise.  The initial issuance of
certificates of Common Stock upon any exercise of this Warrant shall be made without charge to the
exercising Holder for any transfer, stamp or similar tax or for any other governmental charges that
may be imposed in respect of the issuance of such stock certificates, and such stock certificates
shall be issued in the respective names of, or in such names as may be directed by, the Holder;
provided, however, that the Company shall not be required to pay any tax or such other charges
that may be payable in respect of any transfer involved in the issuance and delivery of any
such stock certificate, any new Warrants or other securities in a name other than that of the
Holder upon exercise of this Warrant (other than to an Affiliate), and the Company shall not be
required to issue or deliver such certificates or other securities unless and until the Person
or Persons requesting the issuance thereof shall have paid to the Company the amount of such
tax or shall have established to the satisfaction of the Company that such tax has been paid.

11.      Lost, Stolen, Mutilated or Destroyed Warrant.  If this Warrant is lost, stolen, mutilated
or destroyed, the Company may, on such terms as to indemnity or otherwise as it may reasonably
impose (which shall, in the case of a mutilated Warrant, include the surrender thereof), issue a
new Warrant of like denomination and tenor as this Warrant so lost, stolen, mutilated or destroyed.
Any such new Warrant shall constitute an original contractual obligation of the Company, whether or
not the allegedly lost, stolen, mutilated or destroyed Warrant shall be at any time enforceable
by anyone.

12.      Exchange of Warrant; Divisibility of Warrant.  Subject to compliance with Section 4.3
hereof, this Warrant is exchangeable, without charge to any Holder, upon the surrender hereof by
the Holder at the office or agency of the Company, for one or more new Warrants of the tenor
representing in the aggregate the right to subscribe for and purchase the number of shares of Common
Stock which may be subscribed for and purchased hereunder, each of such new Warrants to represent the
right to subscribe for and purchase such number of shares as shall be designated by said Holder
at the time of such surrender.

13.      Closing of Books.  The Company will at no time close its transfer books against the
transfer of any Warrant or of any shares of Common Stock issued or issuable upon the exercise or
conversion of any Warrant in any manner which interferes with the timely exercise or conversion of
this Warrant.

14.      Notices, Etc.  All notices required or permitted hereunder shall be in writing and
shall be deemed effectively given:  (a) upon personal delivery to the party to be notified, (b) when
sent by confirmed telex or facsimile if sent during normal business hours of the recipient or if not,
then on the next Business Day, (c) five (5) days after having been sent by registered or
certified mail, return receipt requested, postage prepaid, or (d) one (1) Business Day after
deposit with a nationally recognized overnight courier, specifying next Business Day delivery,
with written verification of receipt.  All notices and other communications shall be sent to
the Company at the address listed on the signature page and to Holder at the address set forth
below or at such other address as the Company or Holder may designate by ten (10) days advance
written notice to the other parties hereto:


                  Air Transportation Stabilization Board
                  1120 Vermont Avenue, Suite 970
                  Washington D.C. 20005
                  Attention:  Executive Director
                  Fax: (202) 622-3420

                  with a copy to:

                  United States Department of the Treasury
                  1500 Pennsylvania Avenue, N.W.
                  Washington, D.C. 20220
                  Attention:    Deputy Assistant Secretary (Government
                                Financial Policy)
                  Fax: (202) 622-0387

15.      Acceptance.  Receipt of this Warrant by the Holder shall constitute acceptance of and
agreement to all of the terms and conditions contained herein.

16.      Binding Effect on Successors.  This Warrant shall be binding upon any Person succeeding
the Company by merger or consolidation or acquisition of all or substantially all of the Company's
assets (to the extent provided in Section 5), and all of the obligations of the Company relating
to the Exercise Shares shall survive the exercise of this Warrant and all of the covenants and
agreements of the Company shall inure to the benefit of the successors and assigns of the
Holder.  The covenants and agreements of the Holder of this Warrant and the Exercise Shares
shall be binding upon the Holder's successors and assigns, provided that such covenants and
agreements shall not be binding on any successor or assign that acquires Exercise Shares
pursuant to a disposition made in accordance with Section 4.3(a)(i), (ii) or (iii) hereof.

17.      Waivers; Amendments.  With the written consent of the Holder, any covenant, agreement
or condition contained herein may be waived (either generally or in a particular instance and
either retroactively or prospectively), or such Holder and the Company may from time to time enter
into agreements for the purpose of amending any covenant, agreement or condition hereof or
changing in any manner the rights of the Holder.  Any such amendment or waiver shall be binding
upon each future Holder and upon the Company.  In the event of a waiver or amendment and upon
the request of the Company, the Holder hereof shall submit this Warrant to the Company so that
this Warrant be marked to indicate such amendment or waiver, and any Warrant issued thereafter
shall bear a similar notation referring to any such amendment or continuing waiver.

18.      Severability.  In case any one or more of the provisions contained in this Warrant
shall be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability
of the remaining provisions contained herein and therein shall not in any way be affected or
impaired thereby.  The parties shall endeavor in good faith negotiations to replace the invalid,
illegal or unenforceable provisions with valid provisions the economic effect of which comes as
close as possible to that of the invalid, illegal or unenforceable provisions.

19.      Section Headings.  The section headings used herein are for convenience of reference
only, are not part of this Warrant and are not to affect the construction of or be taken into
consideration in interpreting this Warrant.

20.      Nonwaiver.  No course of dealing or any delay or failure to exercise any right hereunder
on the part of the Holder shall operate as a waiver of such right or otherwise prejudice the Holder's
rights, powers or remedies.

21.      Governing Law.  This Warrant and all rights, obligations and liabilities hereunder shall
be governed and construed in accordance with Federal law, if and to the extent such Federal law is
applicable, and otherwise in accordance with the law of the State of New York.




                  IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its
duly authorized officer as of February 14, 2003.

                                                     FRONTIER AIRLINES, INC.

                                                     By:                                            

                                                     Name:                                          

                                                    Title:                                         

                                                     Address:    7001 Tower Road
                                                     Denver, CO  80249




                  IN WITNESS WHEREOF, the Holder has caused this Warrant to be executed by its
duly authorized officer as of February 14, 2003.

                                                     Holder:    AIR TRANSPORTATION STABILIZATION
                                                                BOARD

                                                     By:                                         

                                                     Name:       Daniel G. Montgomery

                                                     Title:      Executive Director

                                                     Address:    1120 Vermont Avenue, Suite 970
                                                                 Washington, D.C. 20005
                                                                 Attention: Executive Director
                                                                 Phone:        (202) 622-3550
                                                                 Facsimile:    (202) 622-3420

                                                     Copy to:    United States Department of
                                                                 the Treasury
                                                                 1500 Pennsylvania Avenue, N.W.
                                                                 Washington, D.C. 20220
                                                                 Attention:
                                                                 Deputy Assistant Secretary
                                                                 (Government Financial Policy)
                                                                 Phone:        (202) 622-7073
                                                                 Facsimile:    (202) 622-0387




                                                                       Annex A
                                            NOTICE OF EXERCISE

TO:
FRONTIER AIRLINES, INC.
(1)      [ ]  The undersigned hereby elects to purchase         shares of the Common Stock of
Frontier Airlines, Inc. (the "COMPANY") pursuant to the terms of the attached Warrant, and tenders
herewith or is delivering by wire transfer to account number      at            (bank)
payment of the exercise price in full.

                  [ ]  The undersigned hereby elects to purchase         shares of the Common
Stock of Frontier Airlines, Inc. (the "COMPANY") pursuant to the terms of the net exercise
provisions set forth in Section 2.2 of the attached Warrant.

(2)      Please issue a certificate or certificates representing said shares of Common Stock in the
name of the undersigned or in such other name as is specified below:

                                                                             
                                    (Name)
                                                                             
                                    (Address)

                                                                                                    
(Date)                                                               (Signature)
                                                                                                    
                                                                     (Print name)





                                                                     Annex B
                                            ASSIGNMENT FORM

(To assign the foregoing Warrant, execute this form and supply required information.  Do not
use this form to purchase shares.)

                  FOR VALUE RECEIVED, the right to purchase      shares of Common Stock
pursuant to the foregoing Warrant and all other rights evidenced thereby are hereby assigned to
(the "Assignee"):


Name:                                                                        

                                            (Please Print)

Address:                                                                     

                                            (Please Print)




Dated:                                                      

Holder's Signature:                                         


NOTE: The signature to this Assignment Form must correspond with the name as it appears on the
face of this Warrant, without alteration or enlargement or any change whatever.  Officers of
corporations and those acting in a fiduciary or other representative capacity should file
proper evidence of authority to assign the foregoing Warrant.

1.




                                                                            Annex B


                                         SCHEDULE 3.4(f)

Options to purchase 2,433,315 shares of Common Stock