EXHIBIT 10.44

CONFIDENTIAL INFORMATION HAS BEEN OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT REQUEST PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934,
AS AMENDED. THE OMITTED CONFIDENTIAL INFORMATION APPEARS ON THREE (3) PAGES OF
THIS EXHIBIT.

EXECUTION VERSION

 

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SECURITY AGREEMENT

dated as of August 1, 2006

between

AIRTRAN AIRWAYS, INC.,

Borrower

and

BNP PARIBAS S.A. (ACTING THROUGH ITS PARIS BRANCH),

Security Agent

 

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Loan Certificates covering

Advance Payments relating to

Seven (7) Boeing model 737-7BD Aircraft

each to be equipped with

Two (2) CFM International model CFM56 engines

 

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TABLE OF CONTENTS

 

1.    DEFINITIONS    5 2.    THE CERTIFICATES    5    2.1    FORM OF LOAN
CERTIFICATES.    5    2.2    TERMS OF LOAN CERTIFICATES; DRAWINGS.    5    2.3
   TAXES.    6    2.4    DISTRIBUTION OF FUNDS RECEIVED.    8    2.5    METHOD
OF PAYMENT.    9    2.6    [INTENTIONALLY OMITTED].    10    2.7   
REGISTRATION, TRANSFER AND EXCHANGE OF LOAN CERTIFICATES.    10    2.8   
MUTILATED, DESTROYED, LOST OR STOLEN LOAN CERTIFICATES.    11    2.9    PAYMENT
OF EXPENSES ON TRANSFER; CANCELLATION.    12    2.10    PREPAYMENT.    12   
2.11    PROVISIONS RELATING TO PREPAYMENT.    13 3.    EVENTS OF DEFAULT    13
4.    REMEDIES    15    4.1    GENERAL; ACCELERATION.    15    4.2   
DISCONTINUANCE OF PROCEEDINGS.    16    4.3    WAIVER OF PAST DEFAULTS.    17   
4.4    REMEDIES CUMULATIVE.    17    4.5    SECURITY AGENT’S APPOINTMENT AS
ATTORNEY-IN-FACT, ETC.    17    4.6    DUTY OF SECURITY AGENT    19    4.7   
EXECUTION OF FINANCING STATEMENTS    19    4.8    AUTHORITY OF SECURITY AGENT   
19 5.    INVESTMENT OF AMOUNTS HELD BY SECURITY AGENT    19 6.    SUPPLEMENTS
AND AMENDMENTS TO THIS SECURITY AGREEMENT AND OTHER DOCUMENTS    20    6.1   
INSTRUCTIONS OF A MAJORITY IN INTEREST OF LENDERS.    20    6.2    SECURITY
AGENT PROTECTED.    21    6.3    DOCUMENTS MAILED TO LENDERS.    21 7.   
MISCELLANEOUS    22    7.1    TERMINATION OF SECURITY AGREEMENT.    22    7.2   
NO LEGAL TITLE TO COLLATERAL IN HOLDERS.    22    7.3    SALE OF COLLATERAL BY
SECURITY AGENT IS BINDING.    22    7.4    SECURITY AGREEMENT FOR BENEFIT OF
SECURITY AGENT AND HOLDERS.    23    7.5    NO ACTION CONTRARY TO BORROWER’S
RIGHTS; QUIET ENJOYMENT.    23    7.6    NOTICES.    23    7.7    SEVERABILITY.
   23    7.8    NO ORAL MODIFICATIONS OR CONTINUING WAIVERS.    23

 

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 7.9    SUCCESSORS AND ASSIGNS.    23

7.10

   NORMAL COMMERCIAL RELATIONS.    24

7.11

   HEADINGS.    24

7.12

   GOVERNING LAW    24

7.13

   COUNTERPART FORM.    24

7.14

   SUBMISSION TO JURISDICTION; WAIVERS.    24

ANNEX A – definitions

EXHIBIT A – Form of Loan Certificate

SCHEDULE 1 – Purchase Agreement Reserved Provisions

SCHEDULE 2 – GTA Reserved Provisions

 

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SECURITY AGREEMENT

THIS SECURITY AGREEMENT, dated as of August 1, 2006 (this “Security Agreement”),
is by and between AIRTRAN AIRWAYS, INC. (the “Borrower”) and BNP PARIBAS S.A.
(ACTING THROUGH ITS PARIS BRANCH), as Security Agent for the Lenders (together
with its successors hereunder in such capacity, the “Security Agent”).

RECITALS:

WHEREAS, Borrower desires by this Security Agreement, among other things (i) to
provide for the issuance by Borrower to the Lenders of Loan Certificates
evidencing participation by the Lenders in the secured loans as provided in the
Credit Agreement, and (ii) to provide for the assignment, mortgage and pledge by
Borrower to Security Agent, as the Collateral hereunder, among other things,
certain of Borrower’s right, title and interest in and to the Purchase Agreement
and the GTA, as security for, among other things, Borrower’s obligations to the
Lenders, and for the benefit and security of the Lenders;

WHEREAS, all things have been done to make the Loan Certificates, when executed
by Borrower and issued and delivered hereunder, the valid obligations of
Borrower; and

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

GRANTING CLAUSE:

NOW, THEREFORE, THIS SECURITY AGREEMENT WITNESSETH, that, to secure the prompt
payment of the principal amount of, interest on, and all other amounts due with
respect to all Loan Certificates and (subject to Section 14 of the Credit
Agreement) the Related Notes, and to secure Borrower’s prompt and complete
payment, performance and observance of (x) all the agreements, covenants, and
provisions herein, in the Credit Agreement and the other Operative Agreements,
the Loan Certificates and (subject to Section 14 of the Credit Agreement) in the
Loan Agreements, the Related Mortgages and the Related Notes, for the benefit of
the Lenders and (subject to Section 14 of the Credit Agreement) the holders of
the Related Notes, and (y) all other Secured Obligations, and in consideration
of the premises and of the covenants herein, and of the acceptance of the Loan
Certificates by the holders thereof, and for other good and valuable
consideration the receipt and adequacy whereof are hereby acknowledged, Borrower
hereby grants to Security Agent (and its successors in trust and assigns), for
the security and benefit of the Lenders and (subject to Section 14 of the Credit
Agreement) the holders of the Related Notes and all other Persons holding
Secured Obligations, a security interest in and Lien on all Borrower’s right,
title and interest in, to, and under the following described property, rights,
and privileges, whether now existing or hereafter acquired (which, collectively,
together with all property hereafter specifically subject to the Lien of this
Security Agreement by the terms hereof or any supplement hereto, are included
within, and are referred to as, the “Collateral”):

 

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(1) Subject to the terms and conditions of the Consent and Agreement, the
Purchase Agreement, including, without limitation, (i) the right to purchase
each of the Aircraft pursuant to and in accordance with the Purchase Agreement
upon valid tender by Airframe Manufacturer; (ii) all claims for damages in
respect of each of the Aircraft arising as a result of any default by Airframe
Manufacturer under the Purchase Agreement or by any vendor or other supplier of
components or other parts or equipment installed on or in any of the Aircraft
referred to therein, including, without limitation, all warranty, service life
policy and indemnity provisions contained in the Purchase Agreement and all
claims thereunder; (iii) any and all rights of Borrower to compel performance of
the terms of the Purchase Agreement in respect of the Aircraft; and (iv) all of
Borrower’s rights and interests in or arising out of any payments or deposits
made or to be made by Borrower to Airframe Manufacturer or amounts paid, or to
be paid, by Airframe Manufacturer to Borrower in respect of the Aircraft,
together with all rights, powers, privileges, options and other benefits of
Borrower in respect thereof, including, without limitation, the right to make
all waivers and agreements, to give and receive all notices and other
instruments or communications, and to take such action upon the occurrence of a
default in respect of such provisions, including the commencement, conduct and
consummation of legal, administrative or other proceedings, as shall be
permitted thereby or by law, and to do any and all other things which Borrower
is or may be entitled to do in respect of such provisions;

(2) Subject to the terms and conditions of the Engine Consent and Agreement, the
GTA, including, without limitation, (i) all claims for damages in respect of
each of the Engines arising as a result of any default by the Engine
Manufacturer under the GTA or by any vendor or other supplier of components or
other parts or equipment installed on or in any of the Engines referred to
therein, including, without limitation, all warranty and indemnity provisions
contained in the GTA and all claims thereunder; and (ii) any and all rights of
Borrower to compel performance of the terms of the GTA in respect of the
Engines, together with all rights, powers, privileges, options and other
benefits of Borrower in respect thereof, including, without limitation, the
right to make all waivers and agreements, to give and receive all notices and
other instruments or communications, and to take such action upon the occurrence
of a default in respect of such provisions, including the commencement, conduct
and consummation of legal, administrative or other proceedings, as shall be
permitted thereby or by law, and to do any and all other things which Borrower
is or may be entitled to do in respect of such provisions;

(3) all payments or proceeds with respect to either the Purchase Agreement or
the GTA in respect of the Aircraft and/or the Engines or any part thereof as the
result of the sale or other disposition thereof, and all estate, right, title
and interest of every nature whatsoever of Borrower in and to the same and every
part thereof;

(4) all monies and securities deposited or required to be deposited with
Security Agent pursuant to any term of this Security Agreement or required to be
held by Security Agent hereunder;

 

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(5) any and all property that may, from time to time, by delivery or by other
writing of any kind, for the purposes hereof be in any way subjected to the lien
and the security interest hereof or be expressly conveyed, mortgaged, assigned,
transferred, deposited, in which a security interest may be granted by the
Borrower and/or pledged by the Borrower, or by any Person authorized to do so on
its behalf or with its consent, to and with the Security Agent, including
(without limitation) under and pursuant to any of the Related Mortgages, who is
hereby authorized to receive the same at any and all times as and for additional
security hereunder; and

(6) all proceeds of the foregoing.

Any and all properties referred to in this Granting Clause which are hereafter
acquired by Borrower, shall, without further conveyance, assignment or act by
Borrower or Security Agent thereby become and be subject to the security
interest hereby granted as fully and completely as though specifically described
herein; provided, however, that all rights and interests in and to the Purchase
Agreement and the GTA as and to the extent the same relate to aircraft and
engines other than the Aircraft and the Engines are reserved to and retained by
Borrower.

Anything in this Security Agreement to the contrary notwithstanding:

(1) Borrower shall at all times remain liable (A) to Airframe Manufacturer to
perform all the duties and obligations of “Customer” under the Purchase
Agreement, and (B) to Engine Manufacturer to perform all the duties and
obligations of “Airline” under the GTA, in each case to the same extent as if
this Security Agreement had not been executed;

(2) Security Agent’s exercise of any of the rights assigned hereunder shall not
release Borrower from any of its duties or obligations to Airframe Manufacturer
under the Purchase Agreement or to Engine Manufacturer under the GTA, except to
the extent that such exercise constitutes performance of such duties and
obligations;

(3) except as provided in the next paragraph, neither Security Agent nor any
Lender shall have any obligation or liability under the Purchase Agreement or
the GTA by reason of, or arising out of, this Security Agreement, or be
obligated to perform any of Borrower’s obligations or duties under the Purchase
Agreement or the GTA, or to make any payment thereunder, or to make any inquiry
as to the sufficiency of any payment received by any of them, or to present or
file any claim or to take any other action to collect or enforce any claim for
any payment assigned under this Security Agreement; and

(4) During the existence of an Event of Default, Security Agent shall be
entitled to exercise the rights and powers under and with respect to the
Purchase Agreement, as and to the extent provided in the Consent and Agreement,
and with respect to the GTA, as and to the extent provided in the Engine Consent
and Agreement, without the necessity of enforcing the Lien of this Security
Agreement or exercising any remedies hereunder.

 

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Notwithstanding anything to the contrary in this Security Agreement, the Consent
and Agreement or the Engine Consent and Agreement, but without in any way
releasing Borrower from any of its duties or obligations under the Purchase
Agreement, the GTA, or this Security Agreement, Security Agent confirms for the
benefit of Airframe Manufacturer and Engine Manufacturer that, insofar as the
provisions of the Purchase Agreement or the GTA relate to the Aircraft or the
Engines (respectively), in exercising any rights under the Purchase Agreement or
under the GTA, or in making any claim with respect to the Aircraft, Engines or
other goods and services delivered or to be delivered pursuant to the Purchase
Agreement or the GTA, the terms and conditions thereof (including warranty
disclaimers, liability exclusions, indemnity, and insurance) shall apply to and
bind Security Agent to the same extent as Borrower. At Borrower’s cost and
expense, Security Agent further agrees, expressly for the benefit of Airframe
Manufacturer and Engine Manufacturer, that upon the written request of Airframe
Manufacturer or Engine Manufacturer, Security Agent will promptly execute and
deliver such further assurances and documents and take such further action as
Airframe Manufacturer or Engine Manufacturer reasonably requests in order to
obtain the full benefits of Security Agent’s agreements in this paragraph.
Borrower and Security Agent understand and acknowledge that no further
assignment of the Purchase Agreement or GTA, including, without limitation,
assignments for security purposes, are permitted without the express written
consent of Airframe Manufacturer or Engine Manufacturer (as the case may be)
except as otherwise provided in the Consent and Agreement and the Engine Consent
and Agreement.

Notwithstanding any of the foregoing provisions of this Granting Clause, but
subject to the express provisions of the other articles of this Security
Agreement, so long as an Event of Default has not occurred and is continuing
and, if legally permitted by Law to do so, Security Agent has not commenced the
exercise of remedies under Section 4 hereof and except as provided in the
Consent and Agreement and in the Engine Consent and Agreement, Borrower shall
have the right, to the exclusion of Security Agent and any others claiming by,
through or under Security Agent, to exercise in Borrower’s name all rights and
powers of (x) the “Customer” with respect to the Aircraft under the Purchase
Agreement and (y) the “Airline” with respect to the Engines under the GTA,
provided, that, Borrower may not enter into any change order or other
termination, amendment, modification or supplement to or give or accept any
waiver or consent under, either the Purchase Agreement or the GTA to the extent
related to the Collateral without the written consent of Security Agent if such
change order, amendment, modification, supplement, waiver or consent would:

(1) change the time of or the amount of any Advance or the manner in which any
Advance can be returned or credited to Borrower under the Purchase Agreement;

(2) result in the rescission, cancellation or termination of the Purchase
Agreement or the GTA, except with respect to a rescission, cancellation or
termination to the extent Airframe Manufacturer has the right to rescind, cancel
or terminate the Purchase Agreement pursuant to the Consent and Agreement;

(3) result in the increase in the purchase price with respect to an Aircraft
unless Borrower pays the amount of such increase to Airframe Manufacturer as an
additional advance payment under the Purchase Agreement;

 

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(4) materially diminish the rights assigned hereunder to, or potentially
increase the liabilities and obligations of, Security Agent; or

(5) modify the configuration and/or specification of an Aircraft in a manner
which diminishes the value, utility or useful life of such Aircraft;

provided, if Borrower seeks to effectuate any change order, amendment,
modification, supplement, waiver or consent which would materially diminish the
rights assigned hereunder to, or potentially increase the liabilities and
obligations of, Security Agent or modify the configuration and/or specification
of an Aircraft in a manner which diminishes the value, utility or useful life of
such Aircraft, Borrower shall give prior written notice to Security Agent
thereof and Security Agent shall have ten (10) Business Days after receipt of
such notice to object to such change order, amendment, modification, supplement,
waiver or consent.

HABENDUM CLAUSE:

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

Borrower, Agent and Security Agent further agree as follows:

1. DEFINITIONS

The terms defined in Annex A, when capitalized as in Annex A, have the same
meanings when used in this Security Agreement. Annex A also contains rules of
usage that control construction in this Security Agreement.

2. THE CERTIFICATES

2.1 Form of Loan Certificates.

The Loan Certificates shall be substantially in the form of Exhibit A.

2.2 Terms of Loan Certificates; Drawings.

(a) On the Borrowing Date coinciding with the Effective Date, Borrower shall
issue a Series of Loan Certificate to each Lender in an aggregate original
principal amount equal to such Lender’s Maximum Commitment in respect of each
Aircraft. Borrower shall be entitled to make Drawings under each Loan
Certificate in accordance with Section 2(a) of the Credit Agreement.

(b) Each Loan Certificate shall bear interest on the unpaid principal amount
thereof from time to time outstanding from and including the date thereof until
such principal amount is paid in full. Such interest shall accrue with respect
to each Interest Period at the Applicable Rate in effect for such Interest
Period and shall be payable in arrears on each Interest Payment Date and on the
date such Loan Certificate is paid in full. Interest hereunder and under the
Loan Certificates shall be calculated on the basis of a year of 360 days and
actual number of days

 

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elapsed. If any amount payable under the Loan Certificates or under the
Operative Agreements falls due on a day which is not a Business Day, then such
amount shall be payable on the next succeeding Business Day; provided, that in
the case of principal of and interest on the Loan Certificates payable on a
Interest Payment Date, if by virtue of such extension such payment would fall in
the next succeeding month, such sum shall be payable on the next preceding
Business Day. Notwithstanding any provisions in the Operative Agreements to the
contrary, if the Interest Period in respect of a Series of Loan Certificates is
scheduled to commence on a date that is less than one (1) month prior to the
scheduled Delivery Date of the Aircraft to which such Series relates, Borrower,
upon written notice to Security Agent given by Borrower within three
(3) Business Days prior to the commencement of such Interest Period, may
designate that, for purposes of such Series of Loan Certificates, such Interest
Period shall end on such scheduled Delivery Date and the Applicable Rate for
such Interest Period shall be calculated accordingly.

(c) The principal amount of each Loan Certificate shall be due and payable in
full upon the earlier of (1) the Delivery Date of the Aircraft to which such
Loan Certificate relates, but only with respect to the applicable Series of Loan
Certificates; (2) three (3) months following the last day of the Scheduled
Delivery Month of the Aircraft to which such Loan Certificate relates, but only
with respect to the applicable Series of Loan Certificates; and (3) the
Commitment Termination Date (the “Maturity Date”). The “Scheduled Delivery
Month” in respect of an Aircraft, for all purposes of the Operative Agreements,
shall mean the scheduled delivery month notified by Borrower as being the
scheduled delivery month for such Aircraft, which Scheduled Delivery Month shall
fall within the same Scheduled Delivery Quarter for such Aircraft and which
notice Borrower agrees to provide to Security Agent no later than twelve
(12) months prior to the last day of such Scheduled Delivery Month.

(d) Each Loan Certificate shall bear interest at the Past Due Rate on any unpaid
principal amount thereof and, to the extent permitted by applicable Law,
interest (other than interest accrued at the Past Due Rate) and other amounts
due thereunder and hereunder, not paid when due (whether at stated maturity, by
acceleration or otherwise), for any period during which the same shall be
overdue, payable on demand by the respective Lender (which may be given through
Security Agent).

(e) The Loan Certificates shall be executed on behalf of Borrower by one of its
authorized officers. Loan Certificates bearing the signatures of individuals who
were at any time the proper officers of Borrower shall bind Borrower,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the delivery of such Loan Certificates or did not hold such
offices at the respective dates of such Loan Certificates. No Loan Certificates
shall be issued hereunder except those provided for in Section 2.2(a) and any
Loan Certificates issued in exchange or replacement therefor pursuant to the
terms of this Security Agreement.

2.3 Taxes.

(a) Security Agent (as agent for Borrower) shall exclude and withhold at the
appropriate rate from each payment of principal of, interest on, and other
amounts due from Borrower to any Lender hereunder or under each Loan Certificate
any and all withholding taxes applicable thereto as required by Law. Security
Agent agrees (1) to act as such withholding agent in accordance with Treasury
Regulation 1.1441-1(b)(2)(iv) and, in connection therewith, (2)

 

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whenever any present or future taxes or similar charges are required by
applicable Law to be withheld with respect to any amounts payable by Borrower
hereunder or in respect of the Loan Certificates, to withhold such amounts and
timely pay the same to the appropriate authority in the name of and on behalf of
the Lenders, (3) to file any necessary withholding tax returns or statements
when due, and (4) as promptly as possible after the payment thereof, to deliver
to each Lender (with a copy to Borrower) appropriate receipts, if reasonably
available, showing the payment thereof, together with such additional
documentary evidence as any such Lender reasonably requests from time to time.
In accordance with the foregoing, Security Agent further agrees to provide
Borrower with a properly completed and executed Form W-8IMY certifying that
Security Agent has agreed to be treated as a U.S. Person with respect to
payments received from Borrower hereunder. Such Form W-8IMY shall be provided by
Security Agent prior to the due date of any amounts payable by Borrower
hereunder. For the avoidance of doubt, by failing to comply with this
Section 2.3(a), Security Agent shall be in breach of the foregoing covenant and
responsible for damages resulting therefrom.

(b) In the case of a Lender that is a Non-U.S. Person, such Lender shall furnish
such Security Agent with a properly completed and executed withholding
certificate on Form W-8BEN, W-8IMY or W-8ECI (or any successor forms) and/or
such other applicable documentation as may be necessary or desirable to enable
such Lender to claim an exemption from, or reduced rate of, such taxes. Provided
that such Lender has furnished Security Agent with the requested forms and other
documentation duly executed by such Lender and has not notified Security Agent
of the withdrawal or inaccuracy of such form prior to the date of each interest
payment, only the reduced amount (if any) required by applicable law or treaty
shall be withheld from payments under the Loan Certificates held by such Lender
in respect of United States federal income tax. In the case of a Lender that is
a U.S. Person and (1) not an Exempt Recipient that has furnished to the Security
Agent a properly completed and currently effective U.S. Treasury Form W-9 or
(2) that is an Exempt Recipient (not required to deliver an IRS Form W-8), no
amount shall be withheld from payments under the Loan Certificates held by such
Lender in respect of United States federal income tax. If any Lender has
notified Security Agent that any of the foregoing forms or certificates is
withdrawn or inaccurate, or if the Internal Revenue Code or the regulations
thereunder or the administrative interpretation thereof are at any time after
the date hereof amended to require such withholding of United States federal
income taxes from payments under the Loan Certificates held by such Lender, or
if such withholding is otherwise required, Security Agent agrees to withhold
from each payment due to the relevant Lender withholding taxes at the
appropriate rate under applicable Law, and will, as more fully provided above,
on a timely basis, deposit such amounts with an authorized depository and make
such returns, filings, and other reports in connection therewith, and in the
manner required under applicable Law. For purposes of this paragraph, an “Exempt
Recipient” is a Person described in Code §6049(b)(4). Notwithstanding any other
provision of this paragraph, a Lender that is a Non-U.S. Person shall not be
required to deliver any form pursuant to this paragraph that such Lender is not
legally able to deliver.

(c) If, for any reason, Security Agent (or any successor institution acting as
Security Agent) is unable to provide Borrower with a properly completed and
executed Form W-8IMY, Borrower shall exclude and withhold at the appropriate
rate from each payment of Original Amount of, interest on, and other amounts due
from Borrower to any Lender hereunder or under each Loan Certificate it holds
any and all withholding taxes applicable thereto as required by

 

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Law. Borrower agrees (1) whenever any present or future taxes or similar charges
are required by applicable Law to be withheld with respect to any amounts
payable hereunder or in respect of the Loan Certificates, to withhold such
amounts and timely pay the same to the appropriate authority in the name and on
behalf of the Lenders, (2) to file any necessary withholding tax returns or
statements when due, and (3) as promptly as possible after the payment thereof,
to deliver to each Lender appropriate receipts, if reasonably available, showing
the payment thereof, together with such additional documentary evidence as any
such Lender reasonably requests from time to time. Furthermore, all necessary
documentation addressed in Section 2.3(b) hereof shall be furnished to Borrower
prior to the due date of any amounts payable by Borrower hereunder to enable
such Lender to claim an exemption from, or reduced rate of, such taxes.

(d) Borrower shall not have any liability hereunder to Security Agent or any
Lender for Security Agent’s failure to withhold taxes in the manner provided for
herein or for any false, inaccurate, or untrue evidence provided by any Lender
hereunder.

2.4 Distribution of Funds Received.

(a) All amounts payable hereunder shall be paid to Security Agent for
application and distribution as provided herein.

(b) Except as provided in clause (c) below, each payment made by Borrower of the
principal of, interest on or other amount in respect of the Loan Certificates
shall be distributed by Security Agent as promptly as possible on or after the
date that such amount is paid to Security Agent and becomes immediately
available to Security Agent:

FIRST, to the payment in full of the aggregate amount of interest due under and
Break Loss (if any) and, except as provided in clause “Second” below, all other
amounts due under or in respect of the Loan Certificates; and

SECOND, to the payment in full of the unpaid principal amount of the Loan
Certificates then due.

(c) After an Event of Default shall have occurred, and so long as such Event of
Default shall be continuing and one or more Series of the Loan Certificates have
been subject to the provisions of Section 4.1(b) or (c), all payments in respect
of the Loan Certificates and all proceeds of any of the Collateral and all other
amounts held by Security Agent hereunder shall be distributed in the following
order of priority:

FIRST, to the extent not theretofore paid by or on behalf of Borrower, to pay
all costs and expenses of Security Agent incurred in connection with the
performance of its duties hereunder or under any other Operative Agreement,
including reasonable attorneys’ fees and expenses and all costs and expenses
incurred by Security Agent in connection with its entering upon, taking
possession of, holding, operating, managing, selling or otherwise disposing of
the Collateral or any part thereof, any and all Taxes, assessments or other
charges of any kind prior to the Lien

 

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of any Operative Agreement that Security Agent determined in good faith to pay
or be paid, and all amounts payable to Security Agent hereunder or under any of
the Operative Agreements in respect of any indemnities or other obligations of
Borrower;

SECOND, to the payment of the unpaid principal amount of, and all accrued and
unpaid interest on, all of the Loan Certificates (including Break Loss, if any,
and interest on account of overdue payments of principal and interest) and all
other Obligations;

THIRD, subject to Section 14 of the Credit Agreement, so much of such payments
or amounts remaining to pay in full the other Secured Obligations, whether or
not then due (by reason of acceleration or otherwise), in the following order:
(1) unpaid principal amount of, and all accrued and unpaid interest on, all
Related Notes issued under the Loan Agreement described in clause (b) of the
definition of “Loan Agreements” and all other Related Obligations thereto;
(2) unpaid principal amount of, and all accrued and unpaid interest on, all
Related Notes issued under the Loan Agreement described in clause (a) of the
definition of “Loan Agreements” and all other Related Obligations thereto; and
(3) all other Secured Obligations, if any; and

FOURTH, the balance, if any, thereof thereafter remaining, to Borrower or such
other Person(s) as may then lawfully be entitled thereto.

(d) Distributions among the Loan Certificates shall be made ratably, without
priority of one Loan Certificate over another, in accordance with the respective
amounts due or unpaid as appropriate to the particular distribution, except for
distributions in respect of amounts owing under Section 2.3 or 2.10(b) of this
Security Agreement, Sections 3(f), 3(g) or 10 of the Credit Agreement or
elsewhere where payments are due to particular Lenders or other Persons, in
which event distributions in respect thereof shall be made to the Lender(s) or
Person(s) entitled thereto.

2.5 Method of Payment.

The principal amount of, interest on, and other amount due under each Loan
Certificate or hereunder will be payable in Dollars by wire transfer of
immediately available funds not later than 12:00 Noon, New York time, on the due
date of payment to Security Agent for distribution in the manner provided
herein. Notwithstanding the foregoing or any provision in any Loan Certificate
to the contrary, Security Agent will pay or cause to be paid all amounts to be
paid by Borrower hereunder and under any Loan Certificate to the holder thereof
(including all amounts distributed pursuant to Section 2.4 of this Security
Agreement) by transferring, or causing to be transferred, by wire transfer of
immediately available funds in Dollars, promptly after receipt to an account
maintained by such holder with a bank located in the continental United States
the amount to be distributed to such holder, for credit to the account of such
holder maintained at such bank. If Security Agent fails to initiate the transfer
by federal wire transfer of any such payment as provided in the foregoing
sentence after its receipt of funds by reason of its failure to

 

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use ordinary care, Security Agent shall compensate such holders for loss of use
of funds at the Applicable Rate until such payment is made, and Security Agent
shall be entitled to any interest earned on such funds until such payment is
made. Any payment made hereunder shall be made without any presentment or
surrender of any Loan Certificate, except that, in the case of the final payment
in respect of any Loan Certificate, such Loan Certificate shall be surrendered
to Security Agent for cancellation promptly after such payment. Notwithstanding
any other provision of this Security Agreement to the contrary, Security Agent
shall not be required to make, or cause to be made, wire transfers as aforesaid
before the first Business Day on which it is practicable for Security Agent to
do so in view of the time of day when the funds to be so transferred were
received by it if such funds were received after 12:00 Noon, New York time, at
the place of payment. Before the due presentment for registration of transfer of
any Loan Certificate, Borrower and Security Agent shall deem and treat the
Person in whose name any Loan Certificate is registered on the Certificate
Register as the absolute owner and holder of such Loan Certificate for the
purpose of receiving payment of all amounts payable with respect to such Loan
Certificate and for all other purposes, and neither Borrower nor Security Agent
shall be affected by any notice to the contrary. So long as any signatory to the
Credit Agreement or nominee thereof shall be a registered Lender, all payments
and distributions to it shall be made to the account of such Lender specified in
Schedule 1 of the Credit Agreement, and otherwise in the manner provided in or
pursuant to the Credit Agreement, unless and until it specifies some other
account or manner of payment by notice to Security Agent consistent with this
Section 2.5.

2.6 [Intentionally Omitted].

2.7 Registration, Transfer and Exchange of Loan Certificates.

Security Agent shall keep a register (the “Certificate Register”) in which
Security Agent shall provide for the registration of Loan Certificates and the
registration of transfers of Loan Certificates. No such transfer shall be given
effect unless and until registered hereunder. Security Agent shall keep the
Certificate Register at its Administrative Office. Security Agent is hereby
appointed “Certificate Registrar” for the purpose of registering Loan
Certificates and transfers of Loan Certificates as herein provided. A holder of
any Loan Certificate intending to exchange such Loan Certificate shall surrender
such Loan Certificate to Security Agent at its Administrative Office, together
with a written request from the registered holder thereof for the issuance of a
new Loan Certificate, specifying (in the case of a surrender for transfer) the
name(s) and address(es) of the new holder(s). Upon surrender for registration of
transfer of any Loan Certificate, Borrower shall execute, and Security Agent
shall authenticate and deliver, in the name(s) of the designated transferee(s),
one or more new Loan Certificate of a like aggregate original principal amount
and Series. At the Lender’s option, Loan Certificates may be exchanged for other
Loan Certificates of any authorized denominations of a like aggregate original
principal amount and Series, upon surrender of the Loan Certificates to be
exchanged to Security Agent at its Administrative Office. Whenever any Loan
Certificates are so surrendered for exchange, Borrower shall execute, and
Security Agent shall authenticate and deliver, the Loan Certificates which the
Lender making the exchange is entitled to receive. All Loan Certificates issued
upon any registration of transfer or exchange of Loan Certificates (whether
under this Section 2.7 or under Section 2.8 or otherwise under this Security
Agreement) shall be the valid obligations of Borrower evidencing the same
respective obligations, and entitled to the same security and benefits under
this Security Agreement, as the Loan Certificates surrendered

 

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upon such registration of transfer or exchange. Every Loan Certificate presented
or surrendered for registration of transfer, shall (if so required by Security
Agent) be duly endorsed, or be accompanied by a Transfer Agreement as required
under Section 9 of the Credit Agreement in form satisfactory to Security Agent
duly executed by the Lender or such holder’s attorney duly authorized in
writing. Security Agent shall make a notation on each new Loan Certificate of
the amount of principal amounts of Drawings previously made under, and the
payments of principal previously made, on the old Loan Certificate or Loan
Certificates with respect to which such new Loan Certificate is issued and the
date to which interest on such old Loan Certificate or Loan Certificates has
been paid. Interest shall be deemed to have been paid on such new Loan
Certificate to the date on which interest shall have been paid on such old Loan
Certificate, and the principal amounts of Drawings and all payments of the
principal marked on such new Loan Certificate, as provided above, shall be
deemed to have been made thereon. Security Agent shall not be required to
exchange any surrendered Loan Certificates as provided above during the 10-day
period preceding the due date of any payment on such Loan Certificate. Borrower
and Security Agent shall in all cases deem the Person in whose name any Loan
Certificate shall have been issued and registered as the absolute owner and
holder of such Loan Certificate for the purpose of receiving payment of all
amounts payable by Borrower with respect to such Loan Certificate, and for all
other purposes, until Borrower receives from Security Agent a notice stating
otherwise and such change is reflected on the Certificate Register. Security
Agent will promptly notify Borrower of each registration of a transfer of a Loan
Certificate. Subject to compliance by the Lender and its transferee (if any) of
the requirements in this Section 2.7, Security Agent and Borrower shall use all
reasonable efforts to issue new Loan Certificates upon transfer or exchange
within ten (10) Business Days of the date a Loan Certificate is surrendered for
transfer or exchange.

2.8 Mutilated, Destroyed, Lost or Stolen Loan Certificates.

If any Loan Certificate shall become mutilated, destroyed, lost, or stolen, upon
the written request of the holder of such Loan Certificate, Borrower shall
execute, and Security Agent shall authenticate and deliver, in replacement
thereof, a new Loan Certificate of a like aggregate original principal amount
and Series, dated the same date, and captioned as issued in connection with the
Aircraft. If the Loan Certificate being replaced has become mutilated, such Loan
Certificate shall be surrendered to Security Agent and a photocopy thereof shall
be furnished to Borrower. If the Loan Certificate being replaced has been
destroyed, lost, or stolen, the holder of such Loan Certificate shall furnish to
Borrower and Security Agent (a) such security or indemnity as they require to
save Borrower and Security Agent harmless, and (b) evidence satisfactory to
Borrower and Security Agent of the destruction, loss, or theft of such Loan
Certificate and of the ownership thereof. If a “qualified institutional buyer”
of the type referred to in paragraph (a)(1)(i)(A), (B), (D), or (E) of Rule 144A
under the Securities Act (a “QIB”) is the holder of any such destroyed, lost, or
stolen Loan Certificate, then the written indemnity of such QIB, signed by an
authorized officer thereof, in favor of, delivered to, and in form reasonably
satisfactory to Borrower shall be accepted as satisfactory indemnity and
security, and no further indemnity or security shall be required as a condition
to the execution and delivery of such new Loan Certificate. Subject to the
Lender’s compliance with the requirements in this Section 2.8, Security Agent
and Borrower shall use all reasonable efforts to issue new Loan Certificates
within ten (10) Business Days after receiving the Lender’s written request
therefor.

 

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2.9 Payment of Expenses on Transfer; Cancellation.

(a) No service charge shall be made to a Lender for any registration of transfer
or exchange of Loan Certificates, but Security Agent, as Certificate Registrar,
may require payment from any such Lender of a sum sufficient to cover any tax or
other governmental charge that may be imposed in connection with any
registration of transfer or exchange of Loan Certificates and any charges and
expenses connected with such tax or other governmental charge paid or payable by
Borrower or Security Agent, as the case may be.

(b) Security Agent shall cancel all Loan Certificates surrendered for
replacement, redemption, transfer, exchange, payment, or cancellation, and shall
destroy the cancelled Loan Certificates.

2.10 Prepayment.

(a) Borrower may prepay in full the Loan Certificates affected thereby upon at
least five (5) Business Days’ prior written notice to Security Agent and the
relevant Lenders upon and in connection with the occurrence of any one of the
following events: (1) Indemnified Withholding Taxes are then payable by Borrower
and Borrower becomes entitled to prepay such Loan Certificates pursuant to
Section 10(c)(i) of the Credit Agreement, (2) Increased Costs are then payable
by Borrower and Borrower becomes entitled to prepay such Loan Certificates
pursuant to Section 3(f) of the Credit Agreement or (3) it becomes unlawful for
a Lender to maintain the indebtedness evidenced by such Loan Certificate and
Borrower becomes entitled to prepay such Loan Certificates pursuant to
Section 3(g) of the Credit Agreement (each an “Optional Prepayment Triggering
Event”). If a prepayment date is not a Payment Date, Borrower shall pay, in
addition to the unpaid principal amount of the relevant Loan Certificate,
together with accrued interest thereon to the date of prepayment, and all other
amounts due thereunder and hereunder and under the Operative Agreements, any
Break Loss associated with any such prepayment.

(b) Borrower shall prepay the unpaid principal amount of the applicable Series,
or all Series, of Loan Certificates, in full, but not in part, together with
accrued interest thereon to the date of prepayment and all other amounts due
thereunder and hereunder and under the other Operative Agreements to Security
Agent as follows (1) all Series of Loan Certificates shall be prepaid upon the
termination of the Purchase Agreement by Borrower or Airframe Manufacturer;
(2) all Series of Loan Certificates shall be prepaid upon the termination of the
GTA by Borrower or Engine Manufacturer; (3) the applicable Series of Loan
Certificates shall be prepaid upon the termination or cancellation by Borrower
or by Airframe Manufacturer of the order under the Purchase Agreement for the
Aircraft to which such Series of Loan Certificates relate; or (4) the applicable
Series of Loan Certificates shall be prepaid if Airframe Manufacturer extends
the Scheduled Delivery Month of an Aircraft to which such Series of Loan
Certificates relate to a date that is greater than three (3) months from the
last day of the Scheduled Delivery Month in respect of such Aircraft. Borrower
will give notice of prepayment to Security Agent and the relevant Lenders under
this Section 2.10(b) promptly after the occurrence of any event specified in
clauses (1) through (4) of the preceding sentence. The date of prepayment shall
be as specified in Borrower’s prepayment notice, but not earlier than five
(5) Business Days after the date of such notice nor later than thirty (30) days
after the date of the event giving rise to such

 

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prepayment. If a prepayment date under this Section 2.10(b) is not a Interest
Payment Date, Borrower shall pay, in addition to the amounts described above,
any Break Loss associated with any such prepayment.

(c) Any notice of prepayment delivered by Borrower pursuant to paragraph (a) or
(b) above shall state: (1) the prepayment date, (2) the prepayment price,
(3) the applicable basis for determining the prepayment price, (4) any Break
Loss associated with such prepayment, and (5) that on the prepayment date, the
amounts specified in paragraphs (a) and (b) above as appropriate will become due
and payable upon each such Loan Certificate.

(d) Borrower shall not be entitled to reborrow amounts prepaid on the Loan
Certificates.

2.11 Provisions Relating to Prepayment.

(a) No prepayment of any unpaid principal amount of the Loan Certificates may be
made except to the extent and in the manner expressly provided in this Security
Agreement.

(b) Notice of prepayment having been given, the unpaid principal amount of the
Loan Certificates so to be prepaid, plus accrued interest thereon to the date of
prepayment, together with the Break Loss, if any, shall become due and payable
on the prepayment date.

3. EVENTS OF DEFAULT

“Event of Default” means any of the following events:

(a) Borrower fails to pay (1) principal of and, interest on, any Loan
Certificate when due, and such failure shall continue unremedied for a period of
three (3) Business Days, or (2) any other amount payable by it to Security Agent
or the Lenders under this Security Agreement or the other Operative Agreements
when due, and such failure continues for a period in excess of ten (10) Business
Days after Borrower has received written notice from Security Agent of the
failure to make such payment when due;

(b) Borrower or Holdings fails to observe or perform (or caused to be observed
and performed) in any material respect any other covenant, agreement, or
obligation of Borrower or Holdings in any Operative Agreement, and such failure
continues unremedied for a period of thirty (30) days from and after the date
Borrower or Holdings receives written notice thereof from Security Agent, unless
such failure is capable of being corrected and Borrower or Holdings is
diligently proceeding to correct such failure, in which case there shall be no
Event of Default unless and until such failure continues unremedied for a period
of 120 days after receipt of such notice;

(c) any representation or warranty made by Borrower or Holdings in any Operative
Agreement proves to have been untrue or inaccurate in any material respect as of
the date made, is material at the time in question, and remains uncured for a
period in excess of thirty (30) days from and after the date of written notice
thereof from Security Agent to Borrower or Holdings unless such failure is
capable of being corrected and Borrower or Holdings is diligently proceeding to
correct such failure, in which case there shall be no Event of Default unless
and until such failure continues unremedied for a period of 120 days after
receipt of such notice;

 

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(d) Borrower or Holdings consents to the appointment of or taking possession by
a receiver, trustee, or liquidator of itself or of a substantial part of its
property, or Borrower or Holdings admits in writing its inability to pay its
debts generally as they come due or makes a general assignment for the benefit
of its creditors, or Borrower or Holdings files a voluntary petition in
bankruptcy or a voluntary petition or an answer seeking reorganization,
liquidation, or other relief as debtor under any bankruptcy Laws or insolvency
Laws (as in effect at such time), or an answer admitting the material
allegations of a petition filed against it in any such case, or Borrower or
Holdings seeks relief as debtor by voluntary petition, answer, or consent under
the provisions of any other bankruptcy or similar Law providing for the
reorganization or winding-up of corporations (as in effect at such time), or
Borrower or Holdings seeks an agreement, composition, extension, or adjustment
with its creditors under such laws;

(e) an order, judgment, or decree is entered by any court of competent
jurisdiction appointing, without Borrower’s or Holdings’ consent, a receiver,
trustee, or liquidator of Borrower or Holdings or of all or substantially all of
its property, or all or substantially all of the property of Borrower or
Holdings is sequestered, or any other relief in respect of Borrower as a debtor
is granted under any bankruptcy Laws or other insolvency Laws (as in effect at
such time), and any such order, judgment, decree, or decree of appointment or
sequestration remains in force undismissed, unstayed, and unvacated for a period
of ninety (90) days after the date of entry thereof;

(f) a petition against Borrower or Holdings in a proceeding under any bankruptcy
Laws or other insolvency Laws (as in effect at such time) is filed and not
withdrawn or dismissed within ninety (90) days thereafter, or if, under the
provisions of any Law providing for reorganization or winding-up of corporations
that applies to Borrower or Holdings, any court of competent jurisdiction
assumes jurisdiction, custody, or control of Borrower or Holdings or of
substantially all of the property of Borrower or Holdings, and such
jurisdiction, custody, or control remains in force unrelinquished, unstayed, and
unterminated for a period of ninety (90) days;

(g) subject to Section 14 of the Credit Agreement, an “Event of Default” (as
defined in any Related Mortgage) exists;

(h) the Holdings Guarantee shall cease, for any reason, to be in full force and
effect, or Holdings shall terminate, renounce or repudiate the validity or
enforceability of its obligations under the Holdings Guarantee;

(i) an “Event of Default” under Section 3(a) of that certain Security Agreement,
dated as of August 1, 2006, by and between Borrower and The Royal Bank of
Scotland plc New York Branch, as security agent, exists, and the outstanding
amounts under the loan facility to which such agreement relates shall become due
prior to the stated maturity as a result of the existence of such “Event of
Default”; or

 

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(j) any Indebtedness of Borrower or Holdings, the outstanding amount of which in
the aggregate is in excess or Twenty Five Million Dollars ($25,000,000) (or the
equivalent thereof in other currencies at the relevant time), shall become due
prior to its stated maturity as a result of the existence of an “event of
default” in respect thereof.

4. REMEDIES

4.1 General; Acceleration.

(a) If an Event of Default shall occur and be continuing, the Security Agent, on
behalf of the Lenders, may exercise, in addition to all other rights and
remedies granted to them in this Security Agreement and in any other instrument
or agreement securing, evidencing or relating to the Obligations, all rights and
remedies of a secured party under the New York UCC or any other applicable Law.
Without limiting the generality of the foregoing, the Security Agent, without
demand of performance or other demand, presentment, protest, advertisement or
notice of any kind (except any notice required by Law referred to below) to or
upon Borrower or any other Person (all and each of which demands, defenses,
advertisements and notices are hereby waived), may in such circumstances
forthwith collect, receive, appropriate and realize upon the Collateral, or any
part thereof, and/or may forthwith sell, lease, assign, give option or options
to purchase, or otherwise dispose of and deliver the Collateral or any part
thereof (or contract to do any of the foregoing), in one or more parcels at
public or private sale or sales, at any exchange, broker’s board or office of
the Security Agent or any Lender or elsewhere upon such terms and conditions as
it may deem advisable and at such prices as it may deem best, for cash or on
credit or for future delivery without assumption of any credit risk. The
Security Agent or any Lender shall have the right upon any such public sale or
sales, and, to the extent permitted by Law, upon any such private sale or sales,
to purchase the whole or any part of the Collateral so sold, free of any right
or equity of redemption in Borrower, which right or equity of redemption is
hereby waived and released. At any public or private sale the Lenders shall be
entitled to credit against the purchase price bid at such sale all or any part
of the unpaid amounts of Loan Certificates or other Secured Obligations.
Borrower further agrees, at the Security Agent’s request, to make the Collateral
available to the Security Agent at places which the Security Agent shall
reasonably select, whether at Borrower’s premises or elsewhere. The Security
Agent shall apply the net proceeds of any action taken by it pursuant to this
Section 4.1, after deducting all reasonable costs and expenses of every kind
incurred in connection therewith or incidental to the care or safekeeping of any
of the Collateral or in any way relating to the Collateral or the rights of
Security Agent and the Lenders hereunder, including, without limitation,
reasonable attorneys’ fees and disbursements, to the payment in whole or in part
of the Secured Obligations, in such order as Security Agent may elect consistent
with Section 2.4, and only after such application and after the payment by
Security Agent of any other amount required by any provision of Law, need
Security Agent account for the surplus, if any, to Borrower. To the extent
permitted by applicable Law, Borrower waives all claims, damages and demands it
may acquire against the Security Agent or any Lender arising out of the exercise
by them of any rights hereunder. Borrower shall remain liable for any deficiency
if the proceeds of any sale or other disposition of the Collateral are
insufficient to pay all Obligations.

(b) If an Event of Default referred to in Subsections (d), (e) or (f) of
Section 3 shall have occurred, then and in every such case all unfunded
Commitments shall be immediately

 

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terminated, the unpaid principal amount of all Loan Certificates then
outstanding, together with interest accrued but unpaid thereon, and all other
amounts due to the holders of the Loan Certificates thereunder and hereunder and
under the other Operative Agreements, shall, unless Security Agent acting upon
the instructions of the Majority in Interest of Lenders shall otherwise direct,
immediately and without further act become due and payable, without presentment,
demand, protest or notice, all of which are hereby waived.

(c) If any other Event of Default shall have occurred and be continuing, then
and in every such case, Security Agent, acting upon the instructions of the
Majority in Interest of Lenders, may at any time, by written notice or notices
to Borrower, (i) terminate the unfunded Commitments in whole or in part (and for
purposes of this clause (i) an “Event of Default” shall be determined without
regard to Section 14 of the Credit Agreement) and/or (ii) declare all the Loan
Certificates of any or all Series to be due and payable, whereupon the unpaid
principal amount of such Loan Certificates then outstanding, together with
accrued but unpaid interest thereon, and all other amounts due to the Lenders
thereunder, hereunder and under the other Operative Agreements, shall
immediately and without further act become due and payable without presentment,
demand, protest or other notice, all of which are hereby waived.

(d) If the unpaid principal amount of the Loan Certificates of one or more
Series shall have become due and payable pursuant to this Section 4.1, there
shall also become due and payable to each applicable Lender upon demand, without
presentment, protest or notice, all of which are hereby waived, the Break Loss
(if any) with respect to such Loan Certificates.

(e) The Security Agent agrees, to the extent permitted at the time by applicable
Law, to give to Borrower at least ten (10) days’ prior written revocable notice
of any foreclosure of the Lien of this Security Agreement (which period of
notice the parties hereto confirm is commercially reasonable).

(f) If an Event of Default shall occur and be continuing, all proceeds of the
Collateral received by Borrower consisting of cash, checks and other near-cash
items shall be held by Borrower in trust for the Security Agent and the Lenders,
segregated from other funds of Borrower, and shall, forthwith upon receipt by
Borrower, be turned over to Security Agent in the exact form received by
Borrower (duly indorsed by Borrower to Security Agent, if required).

(g) Without limitation of any other provision hereof, Security Agent shall be
entitled to take any action, give any notice or exercise any right, power or
remedy under and with respect to the Purchase Agreement and the GTA to the
extent provided in the Consent and Agreement and in the Engine Consent and
Agreement.

4.2 Discontinuance of Proceedings.

If Security Agent institutes any proceeding to enforce any right, power, or
remedy under this Security Agreement by foreclosure, entry, or otherwise, and
such proceedings is discontinued or abandoned for any reason or is determined
adversely to Security Agent, then and in every such case Borrower and Security
Agent shall, subject to any determination in such proceedings, be restored to
their former positions and rights hereunder with respect to the Collateral, and
all rights, remedies, and powers of Borrower or Security Agent shall continue as
if no such proceedings had been instituted.

 

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4.3 Waiver of Past Defaults.

Upon written instruction from a Majority in Interest of Lenders, Security Agent
shall waive any past Default hereunder and its consequences, and upon any such
waiver such Default shall cease to exist and any Event of Default arising
therefrom shall be deemed to have been cured for every purpose of this Security
Agreement, but no such waiver shall extend to any subsequent or other Default or
impair any right consequent thereon; provided, that in the absence of written
instructions from all Lenders, Security Agent shall not waive any Default in
respect of a covenant or provision hereof which, under Section 6, cannot be
changed without the consent of all Lenders.

4.4 Remedies Cumulative.

Each and every right, power, and remedy given to Security 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 and in such order as Security
Agent deems expedient, and the exercise or the beginning of the exercise of any
right, 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 Security Agent in the exercise of any right, remedy, or
power or in the pursuance of any remedy shall impair any such right, power, or
remedy or be construed to be a waiver of any default on the part of Borrower or
to be an acquiescence therein.

4.5 Security Agent’s Appointment as Attorney-in-Fact, etc.

(a) Borrower hereby irrevocably constitutes and appoints the Security Agent and
any officer or agent thereof, with full power of substitution, as its true and
lawful attorney-in-fact with full irrevocable power and authority in the place
and stead of Borrower and in the name of Borrower or in its own name, for the
purpose of carrying out the terms of this Security Agreement, to take any and
all appropriate action and to execute any and all documents and instruments
which may be reasonably necessary to accomplish the purposes of this Security
Agreement, and, without limiting the generality of the foregoing, Borrower
hereby gives the Security Agent the power and right, on behalf of Borrower,
without notice to or assent by Borrower, to do any or all of the following:

(i) in the name of Borrower or its own name, or otherwise, take possession of
and indorse and collect any checks, drafts, notes, acceptances or other
instruments for the payment of moneys due with respect to any Collateral and
file any claim or take any other action or proceeding in any court of law or
equity or otherwise deemed appropriate by the Security Agent for the purpose of
collecting any and all such moneys due with respect to any other Collateral
whenever payable;

 

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(ii) pay or discharge taxes and Liens levied or placed on or threatened against
the Collateral, effect any repairs or any insurance called for by the terms of
this Security Agreement and pay all or any part of the premiums therefor and the
costs thereof;

(iii) execute, in connection with any sale provided for herein, any
indorsements, assignments or other instruments of conveyance or transfer with
respect to the Collateral; and

(iv) (1) direct any party liable for any payment under any of the Collateral to
make payment of any and all moneys due or to become due thereunder directly to
the Security Agent or as the Security Agent shall direct; (2) ask or demand for,
collect, and receive payment of and receipt for, any and all moneys, claims and
other amounts due or to become due at any time in respect of or arising out of
any Collateral; (3) sign and indorse any invoices, freight or express bills,
bills of lading, storage or warehouse receipts, drafts against debtors,
assignments, verifications, notices and other documents in connection with any
of the Collateral; (4) commence and prosecute any suits, actions or proceedings
at law or in equity in any court of competent jurisdiction to collect the
Collateral or any portion thereof and to enforce any other right in respect of
any Collateral; (5) defend any suit, action or proceeding brought against
Borrower with respect to any Collateral; (6) settle, compromise or adjust any
such suit, action or proceeding and, in connection therewith, give such
discharges or releases as the Security Agent may deem appropriate; (7) take any
action, give any notice or exercise any right, power or privilege under or in
respect of the Purchase Agreement or the GTA to the extent permitted in the
Consent and Agreement and the Engine Consent and Agreement and (8) generally,
sell, transfer, pledge and make any agreement with respect to or otherwise deal
with any of the Collateral as fully and completely as though the Security Agent
were the absolute owner thereof for all purposes, and do, at the Security
Agent’s option and Borrower’s expense, at any time, or from time to time, all
acts and things which the Security Agent deems reasonably necessary to protect,
preserve or realize upon the Collateral and the Security Agent’s and the
Lenders’ security interests therein and to effect the intent of this Security
Agreement, all as fully and effectively as Borrower might do.

Anything in this Section 4.5(a) to the contrary notwithstanding, the Security
Agent agrees that it will not exercise any rights under the power of attorney
provided for in this Section 4.5(a) unless an Event of Default shall have
occurred and be continuing.

(b) If Borrower fails to perform or comply with any of its agreements contained
herein, the Security Agent, at its option, but without any obligation so to do,
may perform or comply, or otherwise cause performance or compliance, with such
agreement.

(c) The expenses of the Security Agent reasonably incurred in connection with
actions undertaken as provided in this Section 4.5, together with interest
thereon at the Past Due Rate, from the date of payment by the Security Agent to
the date reimbursed by Borrower, shall be payable by Borrower to the Security
Agent within ten (10) days following demand.

 

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(d) Borrower hereby ratifies all that said attorneys shall lawfully do or cause
to be done by virtue hereof. All powers, authorizations and agencies contained
in this Security Agreement are coupled with an interest and are irrevocable
until this Security Agreement is terminated and the security interests created
hereby are released.

4.6 Duty of Security Agent. Security Agent’s sole duty with respect to the
custody, safe keeping and physical preservation of the Collateral in its
possession, under Section 9-207 of the New York UCC or otherwise, shall be to
deal with it in the same manner as the Security Agent deals with similar
property for its own account. Subject to mandatory provisions of applicable Law,
neither Security Agent, any Lender nor any of their respective officers,
directors, employees or agents shall be liable for failure to demand, collect or
realize upon any of the Collateral or for any delay in doing so or shall be
under any obligation to sell or otherwise dispose of any Collateral upon the
request of Borrower or any other Person or to take any other action whatsoever
with regard to the Collateral or any part thereof. The powers conferred on
Security Agent and the Lenders hereunder are solely to protect Security Agent’s
and the Lenders’ interests in the Collateral and, subject to mandatory
provisions of applicable Law, (i) such powers shall not impose any duty upon
Security Agent or any Lender to exercise any such powers and (ii) Security Agent
and the Lenders shall be accountable only for amounts that they actually receive
as a result of the exercise of such powers and neither they nor any of their
officers, directors, employees or agents shall be responsible to Borrower for
any act or failure to act hereunder, except for their own gross negligence or
willful misconduct.

4.7 Execution of Financing Statements.

Pursuant to any applicable Law, Borrower authorizes the Security Agent to file
or record financing statements and other filing or recording documents or
instruments with respect to the Collateral without the signature of Borrower in
such form and in such offices as are necessary or appropriate to perfect the
security interests of the Security Agent under this Security Agreement.

4.8 Authority of Security Agent.

Borrower acknowledges that the rights and responsibilities of the Security Agent
under this Security Agreement with respect to any action taken by the Security
Agent or the exercise or non-exercise by the Security Agent of any option,
voting right, request, judgment or other right or remedy provided for herein or
resulting or arising out of this Security Agreement shall, as between the
Security Agent and the Lenders, be governed by the Credit Agreement and by such
other agreements with respect thereto as may exist from time to time among them,
but, as between the Security Agent and Borrower, the Security Agent shall be
conclusively presumed to be acting as agent for the Lenders with full and valid
authority so to act or refrain from acting, and Borrower shall not be under any
obligation, or entitlement, to make any inquiry respecting such authority.

5. INVESTMENT OF AMOUNTS HELD BY SECURITY AGENT

Any amounts held by Security Agent pursuant to Section 2.10 or pursuant to any
provision of any Operative Agreement providing for amounts to be held by
Security Agent which are not distributed pursuant to the other provisions of
Section 2.4 shall be invested by

 

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Security Agent from time to time in Cash Equivalents as directed by Borrower so
long as Security Agent may acquire them using its reasonable efforts. All Cash
Equivalents held by Security Agent pursuant to this Article 5 shall either be
(a) registered in the name of, payable to the order of, or specially endorsed
to, Security Agent, or (b) held in an Eligible Account. Unless otherwise
expressly provided in this Security Agreement, any income realized as a result
of any such investment, net of Security Agent’s reasonable fees and expenses in
making such investment, shall be held and applied by Security 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. Security Agent shall not be liable for
any loss resulting from any investment required to be made by it under this
Security Agreement other than by reason of its willful misconduct or gross
negligence, and any such investment may be sold (without regard to its maturity)
by Security Agent without instructions whenever such sale is necessary to make a
distribution required by this Security Agreement.

6. SUPPLEMENTS AND AMENDMENTS TO THIS SECURITY AGREEMENT AND OTHER DOCUMENTS

6.1 Instructions of a Majority in Interest of Lenders.

(a) No provision of this Security Agreement may be amended, supplemented,
waived, modified, discharged, terminated, or otherwise varied orally, but only
by an instrument in writing that specifically identifies the provision of this
Security Agreement that it purports to amend, supplement, waive, modify,
discharge, terminate, or otherwise vary and is signed by the party against whom
the enforcement of the amendment, supplement, waiver, modification, discharge,
termination, or variance is sought. The Majority in Interest of Lenders and
Borrower may, or, with the written consent of the Majority in Interest of
Lenders, parties to the Operative Agreements may, from time to time, and
Security Agent shall, at the direction of the Majority in Interest of Lenders,
(unless its respective rights or obligations as Security Agent are adversely
affected thereby), (a) enter into written amendments, supplements or
modifications hereto and to the other Operative Agreements for the purpose of
adding any provisions to this Security Agreement or the other Operative
Agreements or changing in any manner the rights of the Lenders, Security Agent
or Borrower hereunder or thereunder or (b) waive, on such terms and conditions
as the Majority in Interest of Lenders may specify in such instrument, any of
the requirements of this Security Agreement or the other Operative Agreements or
any Default or Event of Default and its consequences; provided, however, that no
such waiver and no such amendment, supplement or modification shall (i) modify
this Section 6.1, or Article 2 or Article 3, the definition of “Event of
Default” or “Default”, (ii) forgive the principal amount or extend the final
scheduled date of maturity of any Loan Certificate, extend the scheduled date of
any payment of principal of any Loan Certificate, reduce the stated rate of any
interest payable on any Loan Certificate or any interest or fee payable
hereunder or extend the scheduled date of any payment thereof, or increase the
amount or extend the expiration date of the Commitments, in each case without
the written consent of each Lender directly affected thereby; (iii) eliminate or
reduce the voting rights of any Lender under this Article 6 without the written
consent of such Lender; (iv)(w) reduce any percentage specified in the
definition of Majority in Interest of Lenders, (x) consent to the assignment or
transfer by Borrower of any of its rights and obligations under this Security
Agreement and the other Operative Agreements or (y) reduce,

 

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modify or amend any indemnities in favor of Security Agent or the Lenders
without, in any such case, the consent of each Person effected thereby;
(v) amend, modify or waive any provision of Sections 4.5, 4.6, 4.7, 4.8, 6.1,
6.2 or 6.3 without the written consent of Security Agent; or (vi) take any
action inconsistent with the provisions of Section 16(c) of the Credit Agreement
without the written consent of each Lender affected thereby. Any such waiver and
any such amendment, supplement or modification shall apply equally to each of
the Lenders and shall be binding upon Borrower, the Lenders, Security Agent and
all future holders of the Loan Certificates. In the case of any waiver,
Borrower, the Lenders and Security Agent shall be restored to their former
position and rights hereunder and under the other Operative Agreements, and any
Default or Event of Default waived shall be deemed to be cured and not
continuing; but no such waiver shall extend to any subsequent or other Default
or Event of Default, or impair any right consequent thereon. Each such
amendment, supplement, waiver, modification, discharge, termination, or variance
shall be effective only in the specific instance and for the specific purpose
for which it is given. No provision of this Security Agreement shall be varied
or contradicted by oral communication, course of dealing or performance, or
other manner not set forth in writing and signed by the party against whom
enforcement of the same is sought.

(b) Borrower and Security Agent may enter into one or more agreements
supplemental hereto without the consent of a Majority in Interest of Lenders for
any of the following purposes: (1) (aa) to cure any defect or inconsistency
herein or in the Loan Certificate, or to make any change not inconsistent with
the provisions hereof (provided that such change does not adversely affect the
interests of any Lender in its capacity solely as Lender), or (bb) to cure any
ambiguity or correct any mistake; (2) to evidence the succession of another
party as Borrower in accordance with the terms hereof or to evidence the
succession of another party as Security Agent in accordance with the terms of
the Credit Agreement; (3) to convey, transfer, assign, mortgage, or pledge any
property to or with Security Agent; (4) to correct or amplify the description of
any property at any time subject to the Lien of this Security Agreement or
better to assure, convey, and confirm to Security Agent any property subject or
required to be subject to the Lien of this Security Agreement; (5) to add to the
covenants of Borrower for the benefit of the Lenders, or to surrender any rights
or power herein conferred upon Borrower; (6) to add to the rights of the
Lenders; and (7) to include on the Loan Certificates any legend as may be
required by Law.

6.2 Security Agent Protected.

If, in the opinion of the institution acting as Security Agent hereunder, any
document required to be executed by it pursuant to Section 6.1 affects any
right, duty, immunity, or indemnity with respect to such institution under this
Security Agreement, such institution may in its discretion decline to execute
such document.

6.3 Documents Mailed to Lenders.

Promptly after Borrower or Security Agent executes any document entered into
pursuant to Section 6.1, Security Agent shall mail, by commercial courier
service for next day delivery (or the nearest thereto as practicable), a copy
thereof to Borrower (if not a party thereto) and to each Lender at its address
last set forth in the Certificate Register, but Security Agent’s failure to mail
such copies shall not impair or affect the validity of such document.

 

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7. MISCELLANEOUS

7.1 Termination of Security Agreement.

(a) Upon (or at any time after) payment in full of the principal amount of,
interest on and Break Loss, if any, and all other amounts due under, or
otherwise due to the Lenders of, all Loan Certificates and provided that (i) the
Commitments shall have terminated and (ii) there shall then be no other amounts
due to the Lenders and Security Agent hereunder or under the Credit Agreement or
the other Operative Agreements or outstanding Secured Obligations, Security
Agent shall execute and deliver to or as directed in writing by Borrower an
appropriate instrument releasing the Collateral from the Lien of this Security
Agreement, and Security Agent shall execute and deliver such instrument as
aforesaid and, at Borrower’s expense, will execute and deliver such other
instruments or documents as may be reasonably requested by Borrower to give
effect to such release; 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 Security Agent of all
property constituting part of the Collateral and the final distribution by
Security 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.

(b) In addition, upon (or at any time after) payment in full of principal amount
of, interest on and Break Loss, if any, and all other amounts due under, or
otherwise due to the Lenders of, all Loan Certificates of a Series and provided
that there shall then be no other amounts due to the Lenders and Security Agent
hereunder or under the Credit Agreement or the other Operative Agreements or
otherwise secured hereby in respect of such Series of Loan Certificates and no
Event of Default has occurred and is continuing and no Commitments remain
outstanding, Security Agent shall execute and deliver to or as directed in
writing by Borrower an appropriate instrument releasing the Collateral to the
extent it relates to the Aircraft relating to such Series from the Lien of this
Security Agreement, and Security Agent shall execute and deliver such instrument
as aforesaid and, at Borrower’s expense, will execute and deliver such other
instruments or documents as may be reasonably requested by Borrower to give
effect to such release.

7.2 No Legal Title to Collateral in Holders.

No holder of a Loan Certificate shall have legal title to any part of the
Collateral. No transfer, by operation of law or otherwise, of any Loan
Certificate or other right, title and interest of any holder of a Loan
Certificate in and to the Collateral or hereunder shall operate to terminate
this Security Agreement or entitle such holder or any successor or transferee of
such holder to an accounting or to the transfer to it of legal title to any part
of the Collateral.

7.3 Sale of Collateral by Security Agent is Binding.

Any sale or other conveyance of the Collateral, or any part thereof (including
any part thereof or interest therein), by Security Agent made pursuant to this
Security Agreement shall bind the Lenders and shall be effective to transfer or
convey all right, title, and interest of

 

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Security Agent, Borrower, and such holders in and to such Collateral or part
thereof. No purchaser or other grantee shall be required to inquire as to the
authorization, necessity, expediency, or regularity of such sale or conveyance
or as to the application of any sale or other proceeds with respect thereto by
Security Agent.

7.4 Security Agreement for Benefit of Security Agent and Holders.

Nothing in this Security Agreement, whether express or implied, shall be
construed to give to any Person other than Borrower, Security Agent, and the
Lenders any legal or equitable right, remedy or claim under or in respect of
this Security Agreement.

7.5 No Action Contrary to Borrower’s Rights; Quiet Enjoyment.

Notwithstanding any of the provisions of this Security Agreement to the
contrary, so long as no Event of Default shall have occurred and be continuing,
Security Agent agrees that neither it nor any Person claiming by, through or
under Security Agent, will take any action in violation of Borrower’s rights,
including the right to purchase the Aircraft under the Purchase Agreement in
accordance with the terms of this Security Agreement by Borrower.

7.6 Notices.

Unless otherwise expressly specified or permitted by the terms hereof, all
notices, requests, demands, authorizations, directions, consents, waivers, or
other communications provided or permitted by this Security Agreement to be
made, given, furnished, or filed shall be made, given, furnished, or filed, and
shall become effective, in the manner prescribed in the Credit Agreement.

7.7 Severability.

Any provision of this Security Agreement which is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof. Any such prohibition or unenforceability in any particular
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

7.8 No Oral Modifications or Continuing Waivers.

No term or provision of this Security Agreement or the Loan Certificates may be
changed, waived, discharged, or terminated orally, but only by an instrument in
writing signed by Borrower and Security Agent, in compliance with Section 6.1.
Any waiver of the terms hereof or of any Loan Certificate shall be effective
only in the specific instance and for the specific purpose given.

7.9 Successors and Assigns.

All covenants and agreements herein shall bind and benefit each of the parties
hereto and the permitted successors and assigns of each, all as herein provided.
The provisions of this Security Agreement shall be binding upon and inure to the
benefit of the parties hereto and their

 

23

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respective successors and assigns permitted under the Operative Agreements,
except that (i) Borrower may not assign or otherwise transfer any of its rights
or obligations hereunder without the prior written consent of each Lender (and
any attempted assignment or transfer by Borrower without such consent shall be
null and void) and (ii) no Lender may assign or otherwise transfer its rights or
obligations hereunder except in accordance with Section 9 of the Credit
Agreement.

7.10 Normal Commercial Relations.

Anything in this Security Agreement to the contrary notwithstanding, Security
Agent may conduct any banking or other financial transactions, and have banking
or other commercial relationships, with Borrower or any Affiliate of Borrower,
fully to the same extent as if this Security Agreement were not in effect,
including the making of loans or other extensions of credit to Borrower for any
purpose whatsoever, whether related to any of the transactions contemplated
hereby or otherwise.

7.11 Headings.

The headings of the Articles and sections herein and in the table of contents
hereto are for convenience of reference only, and shall not define or limit any
of the terms or provisions hereof.

7.12 Governing Law

THIS SECURITY AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS
SECURITY AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

7.13 Counterpart Form.

This Security Agreement may be executed in any number of counterparts (or upon
separate signature pages bound together into one or more counterparts), each
fully-executed set taken together shall be deemed to constitute one and the same
instrument. Delivery of an executed signature page of this Security Agreement by
facsimile transmission shall be effective as delivery of a manually executed
counterpart hereof.

7.14 Submission to Jurisdiction; Waivers.

Each of the parties irrevocably and unconditionally:

(a) submits for itself and its property in any legal action or proceeding
relating to this Security Agreement or for recognition and enforcement of any
judgment in respect thereof, to the non exclusive general jurisdiction of the
courts of the State of New York, the courts of the United States for the
Southern District of New York, and appellate courts from any thereof;

(b) consents that any such action or proceeding may be brought in such courts
and waives any objection that it may now or hereafter have to the venue of any
such action or proceeding in any such court or that such action or proceeding
was brought in an inconvenient court and agrees not to plead or claim the same;

 

24

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(c) agrees that service of process in any such action or proceeding may be
effected by mailing a copy thereof by registered or certified mail (or any
substantially similar form of mail), postage prepaid, to it at its address for
notices determined pursuant to Section 7.6;

(d) agrees that nothing herein shall affect the right to effect service of
process in any other manner permitted by Law or shall limit the right to sue in
any other jurisdiction;

(e) waives, to the maximum extent not prohibited by Law, any right it may have
to claim or recover in any legal action or proceeding referred to in this
Section any special, exemplary, punitive or consequential damage; and

(f) irrevocably and unconditionally waives trial by jury in any legal action or
proceeding relating to this Security Agreement or any other Operative Agreement
and for any counterclaim therein.

[Remainder of Page Intentionally Blank.]

 

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

 

AIRTRAN AIRWAYS, INC., as Borrower By:  

 

Name:   Title:  

BNP PARIBAS S.A. (ACTING THROUGH

ITS PARIS BRANCH),

as Security Agent

By              

 

Name:   Title:  

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ANNEX A

DEFINITIONS AND CONSTRUCTION

GENERAL PROVISIONS

(a) In each Operative Agreement, unless otherwise expressly provided, a
reference to:

(1) each of “Borrower”, “Lender”, “Security Agent” and any other Person includes
any successor in interest to it and any permitted transferee, permitted
purchaser, or permitted assignee of it;

(2) any agreement or other document (including any annex, schedule, or exhibit
thereto, or any other part thereof) includes that agreement or other document as
amended, supplemented, or otherwise modified from time to time in accordance
with its terms and in accordance with the Operative Agreements, and any
agreement or other document entered into in substitution or replacement
therefor;

(3) any provision of any Law includes any such provision as amended, modified,
supplemented, substituted, reissued, or reenacted before the Effective Date, and
thereafter from time to time;

(4) “Agreement”, “this Security Agreement”, “hereby”, “herein”, “hereto”,
“hereof”, “hereunder”, and words of similar import, when used in any Operative
Agreement, refer to such Operative Agreement as a whole and not to any
particular provision of such Operative Agreement;

(5) “including”, “include”, and terms or phrases of similar import means
“including, without limitation”; and

(6) a reference to a “Section”, an “Exhibit”, an “Annex”, or a “Schedule” in any
Operative Agreement, or in any annex thereto, is a reference to a section of, or
an exhibit, an annex, or a schedule to, such Operative Agreement or such annex,
respectively; and

(7) Each exhibit, annex, and schedule to any Operative Agreement is incorporated
in, and is a part of, such Operative Agreement.

(b) Unless otherwise defined or specified in the Credit Agreement, all
accounting terms therein shall be construed and all accounting determinations
thereunder shall be made in accordance with GAAP.

(c) Headings used in any Operative Agreement are for convenience only, and shall
not in any way affect the construction of, or be taken into consideration in
interpreting, such Operative Agreement.

 

Annex A-1

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DEFINED TERMS

Actual Knowledge: as it applies to any Person, actual knowledge of a vice
president or more-senior officer of such Person or any other officer of such
Person having responsibility for the transactions contemplated by the Operative
Agreements; provided, that each of Borrower and Security Agent shall be deemed
to have “Actual Knowledge” of any matter as to which it has received notice
pursuant to Section 16(a) of the Credit Agreement.

Additional Costs: as defined in Section 3(f) of the Credit Agreement.

Administrative Office: Security Agent’s principal office, located at Security
Agent’s address for notices under the Credit Agreement, or such other office at
which Security Agent specifies by notice in writing to Borrower.

Advance: each non-deferrable Advance Payment (as defined in the Purchase
Agreement) paid or payable by Borrower in respect of each Aircraft in accordance
with the terms of the Purchase Agreement.

Advance Payments: as defined in the Purchase Agreement.

Affiliate: of any Person, any other Person directly or indirectly controlling,
controlled by, or under common control with such Person. For purposes of this
definition, “control” means the power, directly or indirectly, to direct or
cause the direction of the management and policies of such Person, whether
through the ownership of voting securities, by contract, or otherwise, and
“controlling”, “controlled by”, and “under common control with” have correlative
meanings.

After-Tax Basis: a basis such that any payment to be received or receivable by
any Person is supplemented by a further payment to that Person so that the sum
of the two payments, after deducting all Taxes (taking into account any credits
or deductions attributable to the event or circumstance giving rise to the
requirement that original payment be made) payable by such Person or any of its
Affiliates under any law or governmental authority, is equal to the payment due
to such Person.

AGTA-CQT: means the Aircraft General Terms Agreement AGTA-CQT, dated as of
July 3, 2003, by and between Airframe Manufacturer and Borrower.

Aircraft: each Boeing model 737-700 aircraft identified by manufacturer’s serial
number in Schedule 3 to the Credit Agreement.

Airframe Manufacturer: The Boeing Company.

Applicable Margin: *** per annum.

 

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*** Represents material which has been redacted and filed separately with the
Commission pursuant to a request for confidential treatment pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended. Page 1 of 3 pages
containing information redacted pursuant to a request for confidential
treatment.

 

Annex A-2

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Applicable Rate: or any Interest Period, a rate per annum equal to the LIBOR
Rate for such Interest Period plus the Applicable Margin.

Bankruptcy Code: the United States Bankruptcy Code, 11 U.S.C. § 101 et seq.

BNPP: BNP Paribas S.A. (acting through its Paris Branch).

Borrower Person: Borrower and any Affiliate of Borrower.

Borrower’s Advisor: SkyWorks Capital, LLC.

Borrowing Date: as specified in Section 2(d) of the Credit Agreement.

Borrowing Notice: as specified in Section 2(e) of the Credit Agreement.

Break Loss: as of the date of determination thereof the amount, if any, required
to compensate any Lender in respect of the net amount of any actual
out-of-pocket loss, cost or expense incurred by such Lender in connection with
the unwinding or liquidating of any deposits or funding or financing arrangement
with its funding sources as the result of (a) failure by Borrower in making a
borrowing of loans after Borrower has given a notice requesting the same in
accordance with the provisions of the Credit Agreement other than as a result of
a breach by an Lender to make its Commitment available pursuant to Section 2(a)
of the Credit Agreement, (b) failure by Borrower in making any prepayment or
redemption of Loan Certificates after Borrower has given a notice thereof in
accordance with the provisions of the Operative Agreements, or (c) the making of
a prepayment or redemption of Loan Certificates on a day that is not the last
day of an Interest Period with respect thereto. Such amount includes without
limitation, any and all penalties or charges for prepayment or liquidation or
other arrangement or redeployment of funds.

Business Day: any day other than a Saturday, Sunday or a day on which commercial
banking institutions in New York City, New York, USA, Orlando, Florida, USA or
London, England, are authorized or required by law, regulation or executive
order to be closed, and if in respect of any payment or prepayment on the Loan
Certificates, the determination of the LIBOR Rate or an Interest Period or any
notice in respect thereof, a day that is also a day on which dealings in Dollar
deposits are carried out in the London interbank market.

Capital Lease Obligations: for any Person, all obligations of such Person to pay
rent or other amounts under a lease of (or other agreement conveying the right
to use) property to the extent such obligations are required to be classified
and accounted for as a capital lease on a balance sheet of such Person under
GAAP (including Statement of Financial Accounting Standards No. 13 of the
Financial Accounting Standards Board), and, for purposes of this Agreement, the
amount of such obligations shall be the capitalized amount thereof, determined
in accordance with GAAP (including such Statement No. 13).

Cash Contribution: an amount equal to twenty-five percent (25%) of an Advance.

Cash Equivalents: the following securities (which shall mature within ninety
(90) days of the date of purchase thereof): (1) direct obligations of the U.S.
Government; (2) obligations

 

Annex A-3

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fully guaranteed by the U.S. Government; (3) certificates of deposit issued by,
or bankers’ acceptances of, or time deposits or a deposit account with, Security
Agent or any bank, trust company, or national banking association incorporated
or doing business under the laws of the United States or any state thereof
having a combined capital and surplus and retained earnings of at least $1
billion and having a rate of “A” or better from Standard & Poor’s; or
(4) commercial paper of any issuer doing business under the laws of the United
States or one of the states thereof and in each case having a rating assigned to
such commercial paper by Standard & Poor’s or Moody’s equal to or higher than A1
or P1, respectively.

Certificate Register: as defined in Section 2.7 of the Security Agreement.

Citizen of the United States: as defined in Section 40102(a)(15) of the
Transportation Code and in the FARs.

Code: the Internal Revenue Code of 1986, as amended or any successor thereto.

Collateral: as defined in the Granting Clause of the Security Agreement.

Commitment: in respect of each Lender and any one Advance, as defined in
Section 2(a) of the Credit Agreement.

Commitment Fee: ***per annum of the unused portion of the aggregate Maximum
Commitment of the Lenders in respect of all Advances.

Commitment Termination Date: December 31, 2008 or such later date as agreed to
by Borrower and Security Agent.

Consent and Agreement: the consent and agreement of Airframe Manufacturer to the
Security Agreement.

Credit Agreement: Credit Agreement, dated as of August 1, 2006, among Borrower,
the Lenders and Security Agent, as such Credit Agreement may be amended or
supplemented from time to time pursuant to the applicable provisions thereof.

Default: (1) any event or condition that, with the giving of notice or the lapse
of time, would become an Event of Default, or (2) any Event of Default.

Delivery Date: the date on which an Aircraft is tendered for delivery by
Airframe Manufacturer to Borrower which shall be a Business Day

Dollars, United States Dollars, or $: the lawful currency of the United States.

Drawing: in respect of any Advance, the borrowing made by Borrower on the
Borrowing Date with respect to such Advance from each Lender.

 

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*** Represents material which has been redacted and filed separately with the
Commission pursuant to a request for confidential treatment pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended. Page 2 of 3 pages
containing information redacted pursuant to a request for confidential
treatment.

 

Annex A-4

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

Effective Date: the date on which the applicable conditions precedent for the
“Effective Date” set forth in Section 4(a) of the Credit Agreement are satisfied
and/or waived.

Eligible Account: an account established by and with an Eligible Institution at
Security Agent’s request, which institution agrees, for all purposes of the UCC
(including UCC Article 8), that (1) such account shall be a “securities account”
(as defined in UCC § Section 8-501), (2) all property (other than cash) credited
to such account shall be treated as a “financial asset” (as defined in UCC §
8-102(9)), (3) Security Agent shall be the “entitlement holder” (as defined in
UCC § 8-102(7)) of such account, (4) it will comply with all entitlement orders
issued by Security Agent to the exclusion of Borrower, and (5) the “securities
intermediary jurisdiction” (under UCC § 8-110(e)) shall be the State of New
York.

Engines: in respect of each Airframe, each of the two CFM International, Inc.
model CFM56-7B20 engines delivered with such Airframe under the Purchase
Agreement.

Engine Consent and Agreement: the consent and agreement of Engine Manufacturer
to the Security Agreement.

Engine Manufacturer: CFM International, Inc.

Equipment Notes: one or more equipment notes issued in respect of an aircraft,
evidencing a secured loan made pursuant to either of the Loan Agreements.

ERISA: the Employee Retirement Income Security Act of 1974.

Event of Default: as defined in Section 3 of the Security Agreement.

Expenses: any and all liabilities, obligations, losses, damages, settlements,
penalties, claims, actions, suits, proceedings of whatsoever kind and nature
(whether or not on the basis of negligence, strict or absolute liability or
liability in tort) that may be imposed on, incurred by, suffered by or asserted
against an Indemnitee, and shall include all out-of-pocket costs, expenses and
disbursements (including reasonable fees and disbursements of legal counsel,
accountants, appraisers, inspectors, or other professionals, and costs of
investigation) of an Indemnitee in connection therewith or related hereto.

Fee Letter: the letter agreement, dated as of August 1, 2006, by and between
Borrower and Security Agent, in respect of the payment by Borrower to Security
Agent of certain fees described therein.

Financing Statements: UCC-1 financing statements covering the Collateral (as
defined in the Security Agreement) by Borrower, as debtor, showing Security
Agent as secured party, for filing in Delaware and each other jurisdiction where
filing is necessary to perfect its Lien on the Collateral.

GAAP: generally accepted accounting principles as set forth in the statements of
financial accounting standards issued by the Financial Accounting Standards
Board of the American Institute of Certified Public Accountants, as varied by
any applicable financial accounting rules or regulations issued by the SEC or
the Public Company Accounting Oversight Board, and applied on a basis consistent
with prior periods except as may be disclosed in the pertinent Person’s
financial statements.

 

Annex A-5

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Guarantee: a guarantee, an endorsement, a contingent agreement to purchase or to
furnish funds for the payment or maintenance of, or otherwise to be or become
contingently liable under or with respect to, the Indebtedness, other
obligations, net worth, working capital or earnings of any Person, or a
guarantee of the payment of dividends or other distributions upon the stock or
equity interests of any Person, or an agreement to purchase, sell or lease (as
lessee or lessor) property, products, materials, supplies or services primarily
for the purpose of enabling a debtor to make payment of such debtor’s
obligations or an agreement to assure a creditor against loss, and including,
without limitation, causing a bank or other financial institution to issue a
letter of credit or other similar instrument for the benefit of another Person,
but excluding endorsements for collection or deposit in the ordinary course of
business.

Governmental Entity: (1) any national government, political subdivision thereof,
or local jurisdiction therein; (2) any instrumentality, board, commission,
court, or agency of any thereof, however constituted; and (3) any association,
organization, or institution of which any of the above is a member or to whose
jurisdiction any thereof is subject.

GTA: General Terms Agreement No. CFM-03-0017, dated June 30, 2003, by and
between Engine Manufacturer and Borrower including all exhibits thereto, but
excluding the Reserved Provisions.

Holdings: AirTran Holdings, Inc., a Nevada corporation.

Holdings Guarantee: the Guarantee, dated August 1, 2006, issued by Holdings in
connection with the Credit Agreement.

Indebtedness: for any Person: (a) obligations created, issued or incurred by
such Person for borrowed money; (b) obligations of such Person to pay the
deferred purchase or acquisition price of property or services, other than trade
accounts payable (other than for borrowed money) arising, and accrued expenses
incurred, in the ordinary course of business; (c) Indebtedness of others secured
by a Lien on the property of such Person, whether or not the respective
indebtedness so secured has been assumed by such Person; (d) obligations of such
Person in respect of letters of credit or similar instruments issued or accepted
by banks and other financial institutions for account of such Person;
(e) Capital Lease Obligations of such Person; and (f) Indebtedness of others
Guaranteed by such Person.

Indemnified Withholding Taxes: has the meaning specified in Section 10(c)(i) of
the Credit Agreement.

Indemnitee: (1) the Lenders, (2) Security Agent, (3) each Affiliate of the
Persons described in clauses (1) and (2) above, (4) the directors, officers,
employees, and agents of each of the Persons described in clauses (1) through
(3) above and (5) the successors and permitted assigns of the persons described
in clauses (1) through (3) above.

Interest Payment Date: for each Series of Loan Certificates, the first day of
each calendar month succeeding the applicable Borrowing Date and the Maturity
Date, except as

 

Annex A-6

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provided in Section 2.2(b) of the Security Agreement; provided that, if any such
date shall not be a Business Day, then the relevant Interest Payment Date shall
be the next succeeding Business Day unless by virtue of such extension such date
would fall in the next succeeding calendar month, in which case the relevant
Interest Payment Date shall be the next preceding Business Day.

Interest Period: (a) initially, the period commencing on the first Borrowing
Date and ending on but excluding the first Interest Payment Date and
(b) thereafter, each successive period commencing on the final day of the
preceding Interest Period and ending on but excluding the next succeeding
Interest Payment Date.

Law: (1) any constitution, treaty, statute, law, decree, regulation, order,
rule, or directive of any Governmental Entity, and (2) any judicial or official
administrative interpretation or application of, or decision under, any of the
foregoing having the force of law.

Lender: (1) initially each Person identified in Schedule 2 of the Credit
Agreement as a Lender, and (2) thereafter any Person registered as a holder of
one or more Loan Certificates.

LIBOR Rate: with respect to any Interest Period, (a) the rate per annum
(calculated on the basis of a 360-day year and actual days elapsed) equal to the
rate per annum at which Dollar deposits are offered in the London interbank
market for a one-month period as such rate (rounded upwards, if necessary, to
the nearest 1/10000 of 1%) as displayed on Telerate Page 3750 (or such other
page as may replace Telerate Page 3750) at approximately 11:00 a.m., London
time, or if such service is not available or no longer displays any such quote,
Page LIBO of the Reuters Money Service Monitor System (or such other page as may
replace Reuters Page LIBO) at approximately 11:00 a.m., London time on the day
that is two Business Days prior to the first day of such Interest Period for a
period comparable to such Interest Period, or (b) if no such rate is published
on either such service or if neither of such services is then available, the
interest rate per annum equal to the average (rounded up, if necessary, to the
nearest 1/10000 of 1%) of the rates at which deposits in Dollars are offered by
the Reference Banks (or, if fewer than all of the Reference Banks are quoting a
rate for deposits in Dollars for the applicable period and amount, such fewer
number of Reference Banks) at approximately 11:00 a.m. (London time) on the day
that is two Business Days prior to the first day of such Interest Period to
prime banks in the London interbank market for a period comparable to such
Interest Period and in an amount approximately equal to the aggregate principal
amount of the Loan Certificates scheduled to be outstanding during such Interest
Period or (c) if none of the Reference Banks is quoting a rate for deposits in
Dollars in the London interbank market for such a period and amount, the
interest rate per annum equal to the average (rounded up, if necessary, to the
nearest 1/10000 of 1%) of the rates at which deposits in Dollars are offered by
the principal London offices of the Reference Banks (or, if fewer than all of
the Reference Banks are quoting a rate for deposits in Dollars in the London
interbank market for the applicable period and amount, such fewer number of
Reference Banks) at approximately 11:00 a.m. (London time) on the day that is
two Business Days prior to the first day of such Interest Period or other
period, as applicable, to prime banks in the London interbank market for a
period comparable to such Interest Period and in an amount approximately equal
to the aggregate principal amount of the Loan Certificates scheduled to be
outstanding during such Interest Period.

 

Annex A-7

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In the event that, prior to the first day of any Interest Period, Security Agent
shall have determined, acting reasonably and in good faith, that, by reason of
circumstances affecting the market generally, adequate and reasonable means do
not exist for ascertaining the LIBOR Rate for such Interest Period, Security
Agent shall give telecopy or telephonic notice thereof to Borrower and the
Lenders as soon as practicable thereafter. In such case, Borrower and Security
Agent, in consultation with the Lenders, shall negotiate a mutually satisfactory
interest rate to be substituted for the LIBOR Rate until such time as such
adequate and reasonable means for ascertaining the LIBOR Rate shall exist. If a
substituted interest rate is agreed upon, it shall be effective from the first
day of the applicable Interest Period. If Borrower and Security Agent fail to
agree upon a substituted interest rate by the first day of the applicable
Interest Period, the applicable interest rate for each Loan Certificate shall be
equal to the sum of (x) the rate determined reasonably and in good faith by
Security Agent, in consultation with the Lenders, to be the Lenders’ cost to
maintain the Loan Certificates plus (y) the Applicable Margin.

Lien: any mortgage, pledge, lien, charge, claim, encumbrance, lease, or security
interest affecting the title to or any interest in property.

Loan Agreements: (a) the Loan Agreement, dated as of August 16, 2004, among
Borrower, the lenders identified therein in Schedule 1 thereto and BNPP, as
security agent for the lenders thereto and (b) the Loan Agreement among
Borrower, the lenders identified therein in Schedule 1 thereto and BNPP, as
security agent for the lenders thereto, in respect of the acquisition financing
of four (4) Boeing model 737-7BD aircraft bearing manufacturer’s serial numbers
33931, 36091, 33938 and 33940, respectively.

Loan Certificate: any loan certificate issued under the Security Agreement in
the form specified in Section 2.1 and Exhibit A thereof (as such form may be
varied pursuant to the terms of the Security Agreement), or any Loan Certificate
issued under such Security Agreement in exchange for or replacement of any such
Loan Certificate.

Majority in Interest of Lenders: as of a particular date of determination
(a) until the first Borrowing Date, the Lenders holding more than 50% of the
unused Maximum Commitments then in effect and (b) thereafter, Lenders holding
more than 50% of the aggregate unpaid principal amount of Drawings made under
all Series of Loan Certificates outstanding as of such date.

Material Adverse Change: with respect to any Person, any event, condition, or
circumstance that materially adversely affects such Person’s business or
consolidated financial condition, or its ability to observe or perform its
obligations, liabilities, and agreements under the Operative Agreements.

Maturity Date: as defined in Section 2.2(c) of the Security Agreement.

Maximum Commitment: as defined with respect to any Lender in Section 2(a) of the
Credit Agreement.

Mortgage: a mortgage that is entered into in connection with either of the Loan
Agreements.

 

Annex A-8

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Non-U.S. Person: any Person, other than a United States person as defined in
Code Section 7701(a)(30).

Obligations: means the unpaid principal of and interest on the Loan
Certificates, the performance and observance by Borrower of all the agreements
and covenants to be performed or observed by it for the benefit of Security
Agent and the Lenders contained in the Operative Agreements and all other
obligations and liabilities of Borrower (including, without limitation, interest
accruing at the then applicable rate provided in the Credit Agreement and the
Loan Certificates after maturity of the Loan Certificates and interest accruing
at the then applicable rate provided therein after filing of any petition in
bankruptcy, or the commencement of any insolvency, reorganization or like
proceeding relating to Borrower, whether or not a claim for post-filing or
post-petition interest is allowed in such proceeding) whether direct or
indirect, absolute or contingent, due or to become due, or now existing or
hereafter incurred, which may arise under, out of, or in connection with the
Credit Agreement and the Loan Certificates or any other document made, delivered
or given in connection with any of the foregoing, in each case whether on the
account of principal, interest, fees, indemnities, costs, expenses or otherwise
(including, without limitation, all reasonable fees, charges, and disbursements
of counsel to Security Agent or the Lenders that Borrower is required to pay
pursuant to the terms of any Operative Agreement).

Officer’s Certificate: of any party to any Operative Agreement, a certificate
signed by the Chairman, the President, any Vice President (including those with
varying ranks such as Executive, Senior, Assistant, or Staff Vice President),
the Treasurer, or the Secretary of such party.

Operative Agreements: the Credit Agreement, the Security Agreement, the Loan
Certificates, the Consent and Agreement, the Engine Consent and Agreement, the
Holdings Guarantee, the Fee Letter and any amendments or supplements of any of
the foregoing.

Optional Prepayment Triggering Event: as specified in Section 2.10(a) of the
Security Agreement.

Participation Percentage: in respect of each Lender, the percentage set forth
for such Lender on Schedule 2 to the Credit Agreement.

Past-Due Rate: the lesser of Applicable Rate plus ***per annum and the maximum
rate permitted under applicable Law.

Permitted Lien: (a) the rights of Security Agent under the Operative Agreements;
(b) Liens which Security Agent or the Lender, as the case may be, is expressly
required to remove under the terms of the Operative Agreements; (c) Liens of
Taxes either not yet due or being contested in good faith by appropriate
procedures if such Liens and such procedures (i) do not involve any material
risk of the sale, forfeiture, or loss of the Collateral, or the interest of

 

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*** Represents material which has been redacted and filed separately with the
Commission pursuant to a request for confidential treatment pursuant to Rule
24b-2 of the Securities Exchange Act of 1934, as amended. Page 3 of 3 pages
containing information redacted pursuant to a request for confidential
treatment.

 

Annex A-9

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Security Agent or any Lender therein, or (ii) do not involve any risk of
criminal liability or material risk of civil liability being imposed on Security
Agent or other Indemnitee, or (iii) impair the first and prior Lien of the
Security Agreement and for which adequate reserves have been established under
GAAP; (d) Liens arising out of any judgment or award against Borrower, if,
within sixty (60) days after the entry thereof, that judgment or award is
discharged or vacated, or has its execution stayed pending appeal, or is
discharged, vacated, or reversed, and if during any such 60-day period there is
not, or any such judgment or award does not involve, a material risk of the
sale, forfeiture, or loss of the Collateral, or the interest of Security Agent
or any Lender therein, or impair the first and prior Lien of the Security
Agreement; and (e) any other Lien with respect to which Borrower shall have
provided a bond, cash collateral, or other security adequate in the reasonable
opinion of Security Agent.

Person or person: an individual, firm, partnership, joint venture, trust,
trustee, Governmental Entity, organization, association, corporation, limited
liability company, government agency, committee, department, authority, and
other body, corporate or not, whether having distinct legal status or not, or
any member of any of the same.

Plan: any employee benefit plan within the meaning of ERISA § 3(3), which is
subject to Title I of ERISA, or any plan subject to Code § 4975(e)(1).

Potential Competitor: a U.S. Air Carrier or an Affiliate thereof or a
shareholder of a U.S. Air Carrier holding or having the right to acquire
(without regard to the happening of a contingency) capital stock in such U.S.
Air Carrier in excess of 25%.

Purchase Agreement: Purchase Agreement No. 2444, dated July 3, 2003, between
Airframe Manufacturer and Borrower (which incorporates by reference AGTA-CQT),
including all exhibits thereto, together with all letter agreements related
thereto, but excluding the Reserved Provisions.

Reference Banks: the principal London offices of Security Agent, JPMorgan Chase
Bank, Citibank, N.A., and such other or additional banking institutions as may
be designated from time to time by mutual agreement of Borrower and Security
Agent.

Related Aircraft: any Boeing model 737-7BD aircraft that is the subject of any
Related Mortgage.

Related Mortgage: any of the Mortgages.

Related Note: an equipment note issued pursuant to a Related Mortgage.

Related Note Agreement: means the Related Mortgages, each Related Note and any
agreements or instruments entered into in connection therewith.

Related Obligations: means the unpaid principal of and interest accrued and
payable at any relevant time on any loans made and/or Related Notes issued,
under any Related Note Agreement, the performance and observance by Borrower of
all the agreements and covenants to be performed or observed by it for the
benefit of any financing party contained in any Related Note Agreement and all
other obligations and liabilities of Borrower (including, without

 

Annex A-10

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limitation, interest accruing at the then applicable rate provided in the
relevant Related Note Agreements after maturity of the relevant loans, notes or
other obligations and interest accruing at the then applicable rate provided
therein after filing of any petition in bankruptcy, or the commencement of any
insolvency, reorganization or like proceeding relating to Borrower, whether or
not a claim for post-filing or post-petition interest is allowed in such
proceeding) whether direct or indirect, absolute or contingent, due or to become
due, or now existing or hereafter incurred, which may arise under, out of, or in
connection with such Related Note Agreements or any other document made,
delivered or given in connection with any of the foregoing, in each case whether
on the account of principal, interest, rent, termination amounts, fees,
indemnities, costs, expenses or otherwise (including, without limitation, all
reasonable fees, charges, and disbursements of counsel to any such financing
party that Borrower is required to pay pursuant to the terms of any Related Note
Agreement).

Remarketing Agreement: the Remarketing and Support Agreement, dated August 1,
2006, between Security Agent and Airframe Manufacturer.

Reserved Provisions: means (1) as they relate to the Purchase Agreement, each
and all of the provisions and agreements identified in Schedule 1 of the
Security Agreement, as the same may be amended, supplemented or modified from
time to time and (2) as they relate to the GTA, each and all of the provisions
and agreements identified in Schedule 2 of the Security Agreement, as the same
may be amended, supplemented or modified from time to time.

SEC: the Securities and Exchange Commission of the United States, or any
Governmental Entity succeeding to the functions of such Securities and Exchange
Commission.

Secured Obligations: the Obligations and the Related Obligations

Securities Act: the Securities Act of 1933.

Security: a “security” as defined in Section 2(l) of the Securities Act.

Security Agreement: the Security Agreement, dated as of August 1, 2006, between
Borrower and Security Agent, as such Security Agreement may be amended or
supplemented from time to time pursuant to the applicable provisions thereof.

Scheduled Delivery Month: has the meaning specified in Section 2.2(c) of the
Security Agreement.

Series: has the meaning specified in Section 2(a) of the Credit Agreement.

Tax Indemnitee: (1) each Lender, (2) Security Agent and (3) the successors,
assigns, officers, directors and agents of the foregoing.

Taxes: all taxes, levies, imposts, duties, charges, assessments, or withholdings
of any nature whatsoever imposed by any Taxing Authority, and any penalties,
additions to tax, fines, or interest thereon or additions thereto.

 

Annex A-11

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Taxing Authority: any federal, state, or local government or other taxing
authority in the United States, any foreign government or any political
subdivision or taxing authority thereof, any international taxing authority, or
any territory or possession of the United States or any taxing authority
thereof.

Tax Benefits:

(a) any benefits with respect to Taxes which are actually and currently realized
by any Tax Indemnitee, which are attributable solely to the incurrence or
payment by such Tax Indemnitee of any indemnified Losses or Taxes or an event
giving rise to such Losses or Taxes; provided, that for the purpose of
calculating such Tax Benefit, such Tax Indemnitee shall be deemed to utilize all
other items of income, gain, loss, deduction or credit, including those that
arise outside the scope of this Agreement, before utilizing any item arising
from the incurrence or payment of any indemnified Loss or Tax. A Tax Indemnitee
shall be deemed to have actually and currently realized and utilized a Tax
Benefit to the extent that, and at such time as, the amount of Taxes payable by
the Tax Indemnitee is actually reduced below the amount of Taxes such Tax
Indemnitee would be required to pay but for the incurrence or payment of such
Loss or Taxes, computed in accordance with the ordering rules set forth above.
Notwithstanding anything to the contrary in this clause (a), in calculating any
Tax Benefit, a Tax Indemnitee, to the extent not prohibited by applicable law or
by contract, shall determine when Tax Benefits are utilized in a manner which is
non-discriminatory with respect to all other Similar Loans, it being understood
that if, after taking into account all tax items of such Tax Indemnitee other
than from this Loan and Similar Loans, such Tax Indemnitee has the capacity to
use some or all of the Tax Benefits and some or all of the tax benefits
generated by Similar Loans, it cannot rely upon a provision in such Similar Loan
that requires the tax benefits from such Similar Loans to be applied last to
avoid applying the tax benefits under those Similar Loans and, based on this
non-discriminatory provision, also the Tax Benefits from this Loan in
calculating the indemnities due under the respective loan. For purposes of this
provision, “Similar Loans” means loans (i) in which the Tax Indemnitee or any
affiliate thereof is a participant and with respect to which such Tax Indemnitee
or affiliate is entitled to indemnification with respect to Taxes, and (ii) in
which the Borrower is a U.S. Borrower with a similar or lesser credit as the
Borrower.

(b) The determination of whether the Tax Indemnitee has realized a Tax Benefit
and the calculation of the amount of such Tax Benefit shall be made by the Tax
Indemnitee in the ordinary course of administering its Tax affairs.
Notwithstanding anything to the contrary herein, if the Borrower provides a Tax
Indemnitee with a written notice setting forth facts and circumstances which
create a reasonable possibility that a Tax Benefit has been realized with
respect to an Indemnified Tax, such Tax Indemnitee shall agree to make a
determination as to whether it has realized such a Tax Benefit. If a Tax
Indemnitee determines that it has realized such a Tax Benefit, it shall pay such
Tax Benefit to Borrower in accordance with the terms of Section 10(c)(iv)(5).

Tax Documents: any report, returns, certification, statement or other document
related to a Tax.

Transaction Expenses: the reasonable out-of-pocket costs and expenses incurred
by Security Agent and each of the Lenders (1) in connection with the
preparation, execution, and

 

Annex A-12

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delivery of the Operative Agreements and the recording or filing of any
documents, certificates, or instruments in accordance with any Operative
Agreement, including the Financing Statements, and (2) the reasonable fees and
disbursements of counsel for Security Agent and the Lenders in connection with
the Closing.

Transfer: the transfer, sale, assignment, or other conveyance by a Lender, but
not including the granting of participations by a Lender as contemplated by
Section 9 of the Credit Agreement.

Transfer Agreement: an assignment and assumption agreement substantially in the
form set out in Exhibit A to the Credit Agreement.

Transferee: any commercial bank or financial institution, credit or leasing
company, special purpose or other entity to whom any Lender purports or intends
to Transfer any or all of its Commitment or right, title, or interest in a Loan
Certificate it holds, pursuant to Section 9 of the Credit Agreement; provided,
that in the event a Transferee of the Commitment is not a commercial bank or
financial institution, Borrower’s written consent shall be required (which
consent shall not be unreasonably withheld or delayed); and provided, further,
that in any case no Transferee may be a Potential Competitor.

Transportation Code: subtitle VII of title 49, United States Code.

UCC: means the Uniform Commercial Code as in effect in State of New York from
time to time.

United States or U.S.: the United States of America; provided, that for
geographic purposes, “United States” means the 50 states and the District of
Columbia of the United States of America.

U.S. Air Carrier: any United States air carrier who is a Citizen of the United
States holding an air carrier operating certificate issued by the Secretary of
Transportation pursuant to chapter 447 of the Transportation Code for aircraft
capable of carrying 10 or more individuals or 6000 pounds or more of cargo, and
as to whom there is in force an air carrier operating certificate issued
pursuant to FAR Part 121, or who may operate as an air carrier by certification
or otherwise under any successor or substitute provisions therefor or in the
absence thereof.

 

Annex A-13

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EXHIBIT A

FORM OF:

LOAN CERTIFICATE

 

Series: MSN [ ]

No. [ ]

   New York, New York

$[ ]

   [    ], 2006

AirTran Airways, Inc., a Delaware corporation (the “Borrower”) hereby promises
to pay to [                        ] (or its registered transferees), the
principal sum of $[                    ],or, if less the aggregate unpaid
principal amount of all Drawings made hereunder, together with interest at the
Applicable Rate on the unpaid principal amount hereof from and including the
date hereof until paid in full. The unpaid principal amount hereof shall be due
and payable on the Maturity Date as provided in Section 2.2(c) of the Security
Agreement. Interest shall accrue with respect to each Interest Period at the
Applicable Rate in effect for such Interest Period and shall be payable in
arrears on each Interest Payment Date and on the date this Loan Certificate is
paid in full. The Interest Periods can vary in accordance with Section 2.2(b) of
the Security Agreement. Interest shall be calculated on the basis of a year of
360 days and actual number of days elapsed. If any date on which a payment under
this Loan Certificate becomes due and payable is not a Business Day, then such
payment shall not be made on such scheduled date but shall be made on the
following Business Day (unless such extension would cause such payment to be
made in a succeeding calendar month, in which case such payment shall be made on
the preceding Business Day), and if such payment is made on such following
Business Day, interest shall accrue on the amount of such payment during such
extension at the Applicable Rate.

For purposes hereof, “Security Agreement” means the Security Agreement, dated as
of August 1, 2006, between Borrower and BNP Paribas S.A. (acting through its
Paris Branch) (“Security Agent”), as amended or supplemented from time to time.
All terms used in this Loan Certificate, if defined in the Security Agreement
and not in this Loan Certificate, have the same meanings as in the Security
Agreement.

This Loan Certificate shall bear interest, payable on demand, at the Past-Due
Rate (calculated on the basis of a 360-day year and actual number of days
elapsed) on any overdue payment of principal, interest or any other amount
required to be made hereunder for the period that it is overdue. Amounts shall
be overdue if not paid when due (whether at stated maturity, by acceleration, or
otherwise).

A Certificate Register shall be maintained at Security Agent’s Administrative
Office (or at the office of any successor), for the purpose of registering
transfers and exchanges of Loan Certificates, in the manner provided in
Section 2.7 of the Security Agreement.

The principal and interest and other amounts due hereunder shall be payable in
Dollars in immediately available funds at Security Agent’s Administrative
Office, or as otherwise provided

 

Exh A-1

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in the Security Agreement. Each such payment shall be made without any
presentment or surrender of this Loan Certificate. However, this Loan
Certificate shall be surrendered to Security Agent for cancellation promptly
after payment in full.

The holder hereof, by its acceptance of this Loan Certificate, agrees that
(except as otherwise provided in the Security Agreement) each payment of
principal and interest and Break Loss received by it hereunder shall be applied:
first, to pay accrued interest on this Loan Certificate (as well as any interest
on any overdue payment of principal required to be made hereunder) to the date
of such payment and to pay any Break Loss, second, to pay the unpaid principal
amount of this Loan Certificate then due, and third, to pay any other amount due
hereunder or under the Security Agreement. Each holder hereof is authorized to
endorse on the grid attached hereto each Drawing thereunder and each payment of
principal and interest with respect thereto.

This Loan Certificate is one of the Loan Certificate referred to in the Security
Agreement which have been or are to be issued by Borrower pursuant to the
Security Agreement. The Collateral is held by Security Agent as security, in
part, for the Loan Certificate. The provisions of this Loan Certificate are
subject to the Security Agreement. Refer to the Security Agreement for a
complete statement of (1) the rights and obligations of the holder of this Loan
Certificate, and the nature and extent of the security for this Loan
Certificate, and (2) the rights and obligations of the holders of any other Loan
Certificate executed and delivered under the Security Agreement, and the nature
and extent of the security for any other Loan Certificates executed and
delivered under the Security Agreement. Each holder hereof agrees by its
acceptance of this Loan Certificate to the terms and conditions in the Security
Agreement.

Before this Loan Certificate is duly presented for registration of transfer,
Borrower and Security Agent shall treat the person in whose name this Loan
Certificate is registered as the owner hereof for all purposes, whether or not
this Loan Certificate is overdue, and neither Borrower nor Security Agent shall
be affected by notice to the contrary.

This Loan Certificate is subject to prepayment as provided in Section 2.10 of
the Security Agreement, but not otherwise. In addition, this Loan Certificate
may be, and shall be, accelerated as provided in Section 4.1 of the Security
Agreement.

Unless the certificate of authentication hereon has been executed by or on
behalf of Security Agent by manual signature, this Loan Certificate shall not be
entitled to any benefit under the Security Agreement or be valid or obligatory
for any purpose.

THIS LOAN CERTIFICATE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK.

 

Exh A-2

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

IN WITNESS WHEREOF, Borrower has executed this Loan Certificate.

 

AIRTRAN AIRWAYS, INC. By:  

 

Name:   Title:  

 

Exh A-3

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

CERTIFICATE OF AUTHENTICATION

This is one of the Loan Certificate referred to in the Security Agreement (as
defined in the foregoing Loan Certificate).

 

BNP PARIBAS S.A. (ACTING THROUGH

ITS PARIS BRANCH), as Security Agent

By:  

 

Name:   Title:  

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

GRID

LOAN CERTIFICATE

Series: MSN [ ]

No. [ ]

 

Date

   Amount of
Drawing    Amount of
Interest    Amount of
Principal
Repaid    Amount of
Interest
Repaid    Notation
Made By

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

SCHEDULE 1

PURCHASE AGREEMENT RESERVED PROVISIONS

 

1. Exhibit A to the AGTA to the extent relating to Block “A” Aircraft

2. Part 1 of Exhibit B to the AGTA (other than Section 3 thereof)

3. Article 1 (other than the first paragraph of Article 1 and Section 1.3
thereof) and Section 2.6 of Part 2 of Exhibit B to the AGTA

4. Exhibit CS1 to Purchase Agreement No. 2444 (other than Article 4 thereof)

5. Exhibit AE1 to Purchase Agreement No. 2444 to the extent relating to Block
“A” Aircraft

6. Purchase Agreement No. 2444 Supplement No. 1

7. Purchase Agreement No. 2444 Supplement No. 2

8. Purchase Agreement No. 2444 Supplement No. 3

9. Purchase Agreement No. 2444 Supplement No. 4

10. Purchase Agreement No. 2444 Supplement No. 5

11. Purchase Agreement No. 2444 Supplement No. 6

12. Purchase Agreement No. 2444 Supplement No. 7

13. Purchase Agreement No. 2444 Supplement No. 8

14. Purchase Agreement No. 2444 Supplement No. 9

15. Purchase Agreement No. 2444 Supplement No. 10 (other than Sections 1, 2, 3,
4, 5(b), 8, 9, 10, 11, 12 and 13 thereof to the extent relating to the Block “B”
Aircraft)

16. Letter Agreement No. 2444-04

17. Letter Agreement No. 2444-05

18. Letter Agreement No. 2444-06

19. Letter Agreement No. 6-1162-SSM-2322 R1

20. Letter Agreement No. 6-1162-SSM-2323

21. Letter Agreement No. 6-1162-SSM-2324

22. Letter Agreement No. 6-1162-SSM-2325

23. Letter Agreement No. 6-1162-SSM-2326 (R1)

24. Letter Agreement No. 6-1162-SSM-2327

25. Letter Agreement No. 6-1162-SSM-2406

26. Letter Agreement No. 6-1162-SSM-2429 (other than Sections 4, 6, 7 and 6
thereof)(Note: the last reference to Section 6 in the preceding parenthetical is
in reference to the confidentiality provisions of such letter agreement, which
was inadvertently designated as Section 6 thereof.)

27. Letter Agreement No. 6-1162-SSM-2431 (other than Sections 9 and 9
thereof)(Note: the second reference to Section 9 in the preceding parenthetical
is in reference to the confidentiality provisions of such letter agreement,
which was inadvertently designated as Section 9 thereof.)

28. Letter Agreement No. 6-1162-SSM-2432

29. Letter Agreement No. 6-1162-SSM-2433

30. Sections 4 and 5 of the Letter Agreement No. 6-1162-SSM-2435

31. Letter Agreement No. 6-1162-SSM-2436 (other than Sections 1, 2 and 7
thereof)

32. Letter Agreement No. 6-1162-JWL-0107(R2) (other than Sections 1.2, 1.3, 3,
4.2, 4.3, 5 and 6 thereof)

 

Sch 1-1

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SCHEDULE 2

GTA RESERVED PROVISIONS

All terms, conditions, provisions, letter agreements, amendments and other
agreements related to the GTA, other than Articles 9, 15, 16(c), Exhibit A of
the GTA and the definitions relating to all defined terms appearing in Articles
9, 15, 16(c) and Exhibit A of the GTA.

 

Sch 2-1