Execution Version
 

AIRCRAFT SECURITY AGREEMENT (2013)
dated as of July 2, 2013
between
REPUBLIC AIRLINE INC.,
as Borrower

and

WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION,
as the Security Trustee

Up to 47 Embraer ERJ 175LR (Certification Designation
and shown on the FAA records as ERJ 170-200LR) Aircraft

 

CERTIFIED COPY - TO BE RECORDED

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Execution Version

 

AIRCRAFT SECURITY AGREEMENT (2013)
dated as of July 2, 2013
between
REPUBLIC AIRLINE INC.,
as Borrower

and

WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION,
as the Security Trustee

Up to 47 Embraer ERJ 175LR (Certification Designation
and shown on the FAA records as ERJ 170-200LR) Aircraft

 

ORIGINAL-TO BE RETURNED

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Table of Contents
 
Page

SECTION 1. DEFINITIONS
1

Section 1.1 Certain Definitions
1

Section 1.2 Bankruptcy Default
2

 
 
SECTION 2. SECURITY
2

Section 2.1 Grant of Security
2

 
 
SECTION 3. COVENANTS OF THE BORROWER
6

Section 3.1 Liens
6

Section 3.2 Possession
7

Section 3.3 Registration and Operation
12

Section 3.4 Loss, Destruction, Requisition, Etc.
19

Section 3.5 Other Obligations
22

Section 3.6 Agreement Regarding Engines
24

Section 3.7 Quiet Enjoyment
25

Section 3.8 Inspection
25

Section 3.9 Cape Town Treaty
25

 
 
SECTION 4. RECEIPT, DISTRIBUTION AND APPLICATION OF CERTAIN FUNDS
25

Section 4.1 Application of Income from the Collateral
25

Section 4.2 Payments of Principal, Interest and Other Amounts
26

Section 4.3 Withholding
26

 
 
SECTION 5. REMEDIES OF THE SECURITY TRUSTEE UPON AN EVENT OF DEFAULT
26

Section 5.1 Remedies with Respect to Collateral
26

Section 5.2 Remedies Cumulative
29

Section 5.3 Discontinuance of Proceedings
29

 
 
SECTION 6. DUTIES OF THE SECURITY TRUSTEE
29

Section 6.1 Notice of Event of Default; Action Upon Event of Default
29

Section 6.2 Action Upon Instructions
30

Section 6.3 Indemnification
30

Section 6.4 No Duties Except as Specified in Security Agreement or Instructions
31

Section 6.5 No Action Except Under Security Agreement or Instructions
31

Section 6.6 Reports, Notices, Etc.
31

Section 6.7 Removal of Certain Liens
31

Section 6.8 No Charges
32

 
 
SECTION 7. THE SECURITY TRUSTEE
32

Section 7.1 Acceptance of Trusts and Duties
32

Section 7.2 Absence of Duties
32

i

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Section 7.3 No Representations or Warranties as to the Aircraft or Documents
33

Section 7.4 No Segregation of Moneys; No Interest
33

Section 7.5 Reliance; the Security Trustees; Advice of Counsel
34

Section 7.6 Capacity in Which Acting
34

Section 7.7 Compensation and Reimbursement
35

 
 
SECTION 8. SUCCESSOR TRUSTEE
35

Section 8.1 Resignation of the Security Trustee; Appointment of Successor
35

 
 
SECTION 9. SUPPLEMENTS AND AMENDMENTS TO THIS SECURITY AGREEMENT AND OTHER
DOCUMENTS
37

Section 9.1 Supplemental Security Agreements
37

Section 9.2 The Security Trustee Protected
37

Section 9.3 Documents Mailed to the Lender
37

 
 
SECTION 10. INVESTMENT OF SECURITY FUNDS
37

Section 10.1 Investment of Security Funds
37

Section 10.2 Liability for Losses
37

 
 
SECTION 11. MISCELLANEOUS
38

Section 11.1 Termination of Security Agreement
38

Section 11.2 No Legal Title to Collateral in the Lender
39

Section 11.3 Sale of an Aircraft by the Security Trustee is Binding
39

Section 11.4 Benefit of Security Agreement
39

Section 11.5 Section 1110
39

Section 11.6 The Borrower's Performance and Rights
39

Section 11.7 Notices
40

Section 11.8 Severability
40

Section 11.9 Separate Counterparts
40

Section 11.10 Successors and Assigns
40

Section 11.11 Third Party Beneficiary
41

Section 11.12 Headings
41

Section 11.13 Governing Law; Jurisdiction
41

Section 11.14 Normal Commercial Relations
42

Section 11.15 Confidential Information
42

Section 11.16 Notices, Instructions, Consents, Execution and Waiver
43

Section 11.17 Register
43

Section 11.18 WAIVERS OF JURY TRIAL
43

Annex A
--
Definitions
Annex B
--
Foreign Registration
Annex C
--
Insurance
Annex D
--
Inspection
Annex E
--
Permitted Countries
Exhibit A
--
Form of Security Agreement Supplement
Exhibit B
--
Form of Lease Assignment

ii

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AIRCRAFT SECURITY AGREEMENT (2013)

This AIRCRAFT SECURITY AGREEMENT (2013), dated as of July 2, 2013 is between
REPUBLIC AIRLINE INC" an Indiana corporation (together with its successors and
permitted assigns, the "Borrower") and WELLS FARGO BANK NORTHWEST, NATIONAL
ASSOCIATION, a national banking association, as the Security Trustee hereunder
(herein called, together with its permitted successors and assigns, the
"Security Trustee"),
W I T N E S S E T H:

WHEREAS, the Lender (such term and other capitalized terms used herein without
definition being defined as hereinafter provided) has agreed, pursuant and
subject to the terms and conditions of the Loan Agreement, to ma1ce up to 47
Relevant Advances, each in respect of a Loan, to the Borrower, the proceeds of
each of which will be used to enable the Borrower to purchase an Aircraft, each
such Loan to be evidenced by the Notes to be issued by the Borrower; and
WHEREAS, the Borrower desires by this Security Agreement, among other things, to
grant to the Security Trustee a Lien on the Collateral in accordance with the
terms hereof as security for the Secured Obligations; and
WHEREAS, all things have been done to make the Notes, when executed, issued and
delivered by the Borrower, the legal, valid and binding obligation of the
Borrower; and
WHEREAS, all things necessary to make this Security Agreement a legal, valid and
binding obligation of the Borrower and the Security Trustee, for the uses and
purposes herein set forth, in accordance with its terms, have been done and
performed and have occurred;
NOW, THEREFORE, it is hereby covenanted and agreed by and between the parties
hereto as follows:
SECTION 1. DEFINITIONS
Section 1.1     Certain Definitions. For all purposes of this Security
Agreement, except as otherwise expressly provided or unless the context
otherwise requires:
(a)     capitalized terms used herein have the meanings set forth in Annex A
hereto unless otherwise defined herein;
(b)     the definitions stated herein and those stated in Annex A apply equally
to both the singular and the plural forms of the terms defined;
(c)    the words "herein", "hereof" and "hereunder" and other words of similar
import refer to this Security Agreement as a whole and not to any particular
Section or other subdivision;

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(d)     references herein to sections, appendices and exhibits pertain to
sections, appendices and exhibits in or to this Security Agreement;
(e)     references to any agreement shall be to such agreement, as amended,
modified or supplemented; and
(f)     references to any Person shall include such Person's successors and
assigns subject to any limitations provided for herein or in the other Operative
Agreements.

Section 1.2     Bankruptcy Default. For purposes of each Operative Agreement,
the occurrence and continuance of a Bankruptcy Event shall not be deemed to
prohibit the Borrower from taking any action or exercising any right that is
conditioned on no Bankruptcy Default, Default or Event of Default having
occurred and be continuing if such Bankruptcy Default, Default or Event of
Default consists of the institution of reorganization proceedings with respect
to the Borrower under Chapter 11 of the Bankruptcy Code and the trustee or
debtor-in possession in such proceedings shall have entered into a Section 1110
Agreement and thereafter shall have continued to perform such obligations so
that it is entitled to retain possession of the Aircraft in accordance with
Section 1110.
SECTION 2. SECURITY
Section 2.1     Grant of Security. To secure the prompt and complete payment
(whether at the stated maturity, by acceleration or otherwise) of (x) all
principal of, and interest on, the Loans and all other amounts payable by the
Borrower under the Operative Agreements now in existence or hereafter incurred,
and the performance and observance by the Borrower of all the agreements and
covenants to be performed or observed by it for the benefit of the Lender, the
Export Credit Guarantor and the Security Trustee contained in the Operative
Agreements (the "2013 Secured Obligations"), and (y) all Other FINAME
Indebtedness incurred under all Other FINAME Transactions and all other amounts
payable by the Borrower under all Other Operative Agreements now in existence or
hereafter incurred, and the performance and observance by the Borrower of all
the agreements and covenants to be performed or observed by it for the benefit
of the Lender, the Export Credit Guarantor and the Security Trustee contained in
the Other Operative Agreements (the "Other Secured Obligations" and together
with the 2013 Secured Obligations, the "Secured Obligations"), and in
consideration of other good and valuable consideration given to the Borrower by
the Security Trustee the receipt of which is hereby acknowledged, the Borrower
does hereby grant, bargain, sell, convey, transfer, mortgage, assign, pledge,
and confirm unto the Security Trustee and its permitted successors and assigns,
for the security and benefit of the Security Trustee and the Lender, a security
interest in, and (in the case of each Airframe and Engine) an International
Interest in, all estate, right, title and interest of the Borrower in, to and
under, all and singular, the following described properties, rights, interests
and privileges whether now or hereafter acquired (hereinafter sometimes referred
to as the "Collateral") :
(a)     each Aircraft, including each Airframe and Engine, whether or not any
such Engine may from time to time be installed on an Airframe or any other
airframe or any other aircraft, any and all Parts which are from time to time
included within the definitions of

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"Airframe" or "Engine" and, to the extent provided herein, all substitutions and
replacements of and additions, improvements, accessions and accumulations to the
Aircraft, the Airframes, the Engines and any and all such Parts (such Airframes
and Engines as more particularly described in the Security Agreement Supplement
executed and delivered with respect to an Aircraft on the Relevant Borrowing
Date or with respect to any substitutions or replacements therefor), and
together with all Aircraft Documents;
(b)     the Aircraft Warranties, the Engine Warranties and the Bills of Sale
with respect to each Aircraft to the extent the same relate to continuing rights
of the Borrower in respect of any warranty, indemnity or agreement, express or
implied, as to title, materials, workmanship, design or patent infringement or
related matters with respect to the Airframe or the Associated Engines
comprising such Aircraft (reserving to the Borrower, however, all of the
Borrower's other rights and interest in and to the Purchase Agreement) together
with all rights, powers, privileges, options and other benefits of the Borrower
thereunder (subject to such reservation) with respect to such Airframe or its
Associated Engines, including, without limitation, the right to make all waivers
and agreements, to give and receive all notices and other instruments or
communications, to take such action upon the occurrence of a default thereunder,
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 the Borrower is or may be entitled to do thereunder
(subject to such reservation), subject, with respect to the Aircraft Warranties
and the Engine Warranties, to the terms and conditions of the Manufacturer's
Acknowledgement and the Engine Manufacturer's Consent and Agreement;
(c)     to the extent in each case of the interest of the Security Trustee
pursuant to the terms hereof, all requisition proceeds with respect to each
Airframe, each Engine and any Part thereof, and all insurance proceeds with
respect to each Airframe, each Engine and any Part thereof, but excluding all
proceeds of, and rights under, any insurance maintained by the Borrower pursuant
to Section 3.3(k) and not required under clauses (A), (B) or (C) of Annex C;
(d)     all moneys and securities now or hereafter paid or deposited or required
to be paid or deposited to or with the Security Trustee by or for the account of
the Borrower pursuant to any term of this Security Agreement or any other
Operative Agreement and held or required to be held by the Security Trustee
hereunder or thereunder;
(e)     any Lease Assignment and any Permitted Lease in each case to the extent
assigned under any Lease Assignment, in each case together with all rights,
powers, privileges, options and other benefits thereunder, including the right
to receive and collect all payments thereunder and to make all waivers and
agreements, to give and receive notices, and to take all action thereunder or in
respect thereof as and to the extent provided in the applicable Lease
Assignment;
(f)     all property that may, from time to time, hereafter in accordance with
the provision of this Agreement, be expressly subjected to the Lien of this
Agreement; and

(g)     all proceeds of the foregoing;

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PROVIDED, HOWEVER, that notwithstanding any of the foregoing provisions of this
Section 2, so long as no Event of Default shall have occurred and be continuing,
(a) the Security Trustee and the Lender shall not interfere with the Borrower's
quiet enjoyment of each Aircraft, Airframe and Engine and the other Collateral
or its possession, use, retention and control of each Aircraft, Airframe and
Engine and the other Collateral and all revenues, income and profits derived
therefrom and (b) the Borrower shall have the right, to the exclusion of the
Security Trustee, with respect to the Aircraft Warranties and Engine Warranties,
to exercise in the Borrower's name all rights and powers of the buyer under the
Aircraft Warranties and Engine Warranties and to retain any recovery or benefit
resulting from the enforcement of any warranty or indemnity under the Aircraft
Warranties or Engine Warranties; and provided, further, that notwithstanding the
occurrence or continuation of an Event of Default, the Security Trustee shall
not enter into any amendment of the Aircraft Warranties or Engine Warranties
which would increase the obligations of the Borrower thereunder;
TO HAVE AND TO HOLD all and singular the Collateral unto the Security Trustee,
its permitted successors and assigns, forever, in trust, upon the terms and
trusts herein set forth, for the benefit, security and protection of the Lender
from time to time, and for the uses and purposes and subject to the terms and
provisions set forth in this Security Agreement.
It is expressly agreed that, notwithstanding anything herein to the contrary,
the Borrower shall remain liable under the Operative Agreements to perform all
of its obligations thereunder, and, except to the extent expressly provided
herein or in any other Operative Agreement, neither the Security Trustee nor the
Lender shall be required or obligated in any manner to perform or fulfill any
obligations of the Borrower under or pursuant to any thereof, or to make any
inquiry as to the nature or sufficiency of any payment received by it, or
present or file any claim or take any action to collect or enforce the payment
of any amount which may have been assigned to it or to which it may be entitled
at any time or times.
The parties hereto hereby agree that the Manufacturer shall not be deemed to
have knowledge of, and need not recognize the occurrence or discontinuance of,
any Event of Default, unless and until Manufacturer has received written notice
thereof from the Security Trustee addressed to Manufacturer, to its Director of
Contracts by mail to EMBRAER S.A., Av. Brigadeiro Faria Lima, 2170, 12.227-901
Sao Jose dos Campos-SP, Brazil, or by telecopy to telecopy no.: (55-123)
927-1257, and, in acting in accordance with the terms and conditions of the
Purchase Agreement and the Manufacturer's Acknowledgement, Manufacturer may act
with acquittance and conclusively rely upon any such notice.
The Borrower does hereby constitute and appoint the Security Trustee the true
and lawful attorney of the Borrower (which appointment is coupled with an
interest) with full power (in the name of the Borrower or otherwise) to ask for,
require, demand and receive any and all moneys and claims for moneys due and to
become due under or arising out of all property (in each case including
insurance and requisition proceeds) which now or hereafter constitutes part of
the Collateral, to endorse any checks or other instruments or orders in
connection therewith and to file any claims or to take any action or to
institute any proceeding which the Security Trustee may deem to be necessary or
advisable in the premises; provided that the Security Trustee shall not exercise
any such rights except during the continuance of an Event of Default. Without
limiting the provisions of the foregoing, during the continuance of any Event

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of Default but subject to the terms hereof and any mandatory requirements of
applicable law, the Security Trustee shall have the right under such power of
attorney in its discretion to file any claim or to take any other action or
proceedings, either in its own name or in the name of the Borrower or otherwise,
which the Security Trustee may reasonably deem necessary or appropriate to
protect and preserve the right, title and interest of the Security Trustee in
and to the security intended to be afforded hereby.
SECTION 3. COVENANTS OF THE BORROWER
Section 3.1     Liens. The Borrower will not directly or indirectly create,
incur, assume or suffer to exist any Lien on or with respect to any Aircraft,
Airframe, Engine or Part or its title thereto or any of its interest therein or
in or to any Permitted Lease or in any of the other Collateral except:
(a)     the respective rights of the Security Trustee and the Borrower as
provided herein and the rights of the parties to the other Operative Agreements
or of any Permitted Lessee under any Permitted Lease; (b) the rights of others
under agreements or arrangements to the extent expressly permitted by Sections
3.2 or 3.3; (c) Liens for Taxes of the Borrower (or any of its U.S. Federal
income tax group) either not yet due or being contested in good faith by
appropriate proceedings so long as such Liens and proceedings do not involve any
material danger of the sale, forfeiture or loss of any Aircraft, Airframe or
Engine or the interests of the Security Trustee therein or any risk of criminal
liability or any material risk of material civil penalty against the Lender or
the Security Trustee; (d) Liens on any Airframe, Engine or Part of suppliers,
mechanics, workers, repairers, employees, airport operators, air traffic control
authorities or other like Liens arising in the ordinary course of business and
for amounts the payment of which are either not yet delinquent for more than 30
days or are being contested in good faith (and for the payment of which adequate
reserves have been provided) by appropriate proceedings, so long as such
proceedings do not involve any material danger of the sale, forfeiture or loss
of an Airframe or an Engine or the interest of the Security Trustee therein or
any risk of criminal liability or any material risk of material civil penalty
against the Lender or the Security Trustee; (e) Liens arising out of judgments
or awards against the Borrower (or any Permitted Lessee) so long as within 30
days after entry thereof there shall be in effect a stay of execution or such
Lien shall have been discharged or vacated; (f) salvage and similar rights of
insurers under policies of insurance maintained with respect to any Aircraft;
(g) Security Trustee Liens or Lender Liens; and (h) Liens with respect to which
the Borrower (or any Permitted Lessee) has provided a bond or other security
adequate in the good faith opinion of the Lender and the Security Trustee.
Liens described in clauses (a) through (h) above are referred to herein as
"Permitted Liens". The Borrower shall promptly, at its own expense, take (or
cause to be taken) such action as may be necessary duly to discharge (by bonding
or otherwise) any Lien other than a Permitted Lien arising at any time with
respect to any Collateral and the Borrower will make restitution to the Security
Trustee for actual loss or expenses from any Lien other than a Permitted Lien.

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Section 3.2     Possession.
The Borrower will not, without the prior written consent of the Security
Trustee, acting at the written direction of the Lender, lease or otherwise in
any manner deliver, transfer or relinquish possession of any Aircraft, Airframe
or Engine or install any Engine, or permit any Engine to be installed, on any
airframe other than an Airframe; provided, however, subject to the provisions of
Section 3.2(h), that the Borrower may, so long as no Event of Default has
occurred and is continuing (except during the Section 1110 Period, if and so
long as no Event of Default other than a Bankruptcy Default shall have occurred
and shall be continuing), without such prior written consent:
(a)     Interchange and Pooling
Subject or permit any Permitted Lessee to subject (x) any Airframe to an
Airframe Interchange Agreement or (y) any Engine to normal interchange
agreements or pooling agreements or arrangements, in each case customary in the
commercial airline industry and entered into by the Borrower or such Permitted
Lessee, as the case may be, in the ordinary course of business with an air
carrier or a manufacturer; provided, however, (i) (A) the consent of the Lender
shall be required as a condition to enter into any interchange arrangement with
a non-manufacturer which has a duration of greater than one year and (B) no
Engine may be subject to an interchange agreement that will subject such Engine
to a pooling arrangement that will enable the counterparty to install parts that
are not OEM Parts on such Engine without the written consent of the Lender. (ii)
no such Agreement, agreement or arrangement shall under any circumstances result
in, contemplate or require the transfer of title to any Aircraft, Airframe,
Engine or Part and (iii) if the Borrower's title to any Engine shall
nevertheless be divested under any such agreement or arrangement, such
divestiture shall be deemed to be an Event of Loss as of the date of such
divestiture with respect to such Engine and the Borrower shall be required to
replace such Engine with a Replacement Engine meeting the requirements of, and
in accordance with Section 3.4; and (B) the party to such Airframe Interchange
Agreement, interchange agreement or pooling agreement or arrangement is not then
subject to a proceeding under applicable bankruptcy, insolvency or
reorganization laws on the date such agreement or arrangement is entered into.
(b)     Testing and Service
Deliver or permit any Permitted Lessee to deliver possession of any Aircraft,
Airframe, Engine or Part (i) to the manufacturer thereof or to any third-party
maintenance provider, for testing, service, repair, maintenance or overhaul work
on any Aircraft, Airframe, Engine or Part, or, to the extent required or
permitted by the terms of Section 3.3, for alterations or modifications in or
additions to any Aircraft, Airframe or Engine or (ii) to any Person for the
purpose of transport to a Person referred to in the preceding clause (i).
(c)     Transfer to U.S. Government
Transfer or permit any Permitted Lessee to transfer possession of any Aircraft,
Airframe or Engine to the U.S. Government, in which event the Borrower shall
promptly notify the Security Trustee in writing of any such transfer of
possession and, in the case of any transfer

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pursuant to CRAF, in such notification shall identify by name, address and
telephone numbers the Contracting Office Representative or Representatives for
the Military Airlift Command of the United States Air Force to whom notices must
be given and to whom requests or claims must be made to the extent applicable
under CRAF.
(d)     Installation of Engines on Owned Aircraft
Install or permit any Permitted Lessee to install an Engine on an airframe owned
by the Borrower or such Permitted Lessee, as the case may be, free and clear of
all Liens, except (a) Permitted Liens and those that do not apply to the Engines
and (b) the rights of third parties under normal interchange or pooling
agreements and arrangements of the type that would be permitted under Section
3.2(a).
(e)     Installation of Engines on Other Airframes
Install or permit any Permitted Lessee to install an Engine on an airframe
leased to the Borrower or such Permitted Lessee, or purchased by the Borrower or
such Permitted Lessee and subject to a mortgage, security agreement, conditional
sale or other secured financing arrangement, but only if (a) such airframe is
free and clear of all Liens, except (i) the rights of the parties to such lease,
or any such secured financing arrangement, covering such airframe and (ii) Liens
of the type permitted by clauses (a) and (b) of Section 3.2(d) and (b) the
Borrower or Permitted Lessee, as the case may be, shall have received from the
lessor, mortgagee, secured party or conditional seller, in respect of such
airframe, a written agreement (which may be a copy of the lease, mortgage,
security agreement, conditional sale or other agreement covering such airframe),
whereby such Person agrees that it will not acquire or claim any right, title or
interest in, or Lien on, such Engine by reason of such Engine being installed on
such airframe at any time while such Engine is subject to the Lien of this
Security Agreement.
(f)     Installations of Engines on Financed Aircraft
Install or permit any Permitted Lessee to install an Engine on an airframe owned
by the Borrower or such Permitted Lessee, leased to the Borrower or such
Permitted Lessee, or purchased by the Borrower or such Permitted Lessee subject
to a conditional sale or other security agreement under circumstances where
neither Section 3 .2(d) or 3 .2(e) is applicable; provided, however, that any
such installation shall be deemed an Event of Loss with respect to such Engine,
and the Borrower shall comply with Section 3.4( d) hereof in respect thereof.
(g)     Leasing
With respect to any Aircraft, Airframe or Engine, so long as no Payment Default,
Bankruptcy Default or Event of Default has occurred and is continuing, enter
into a lease with any Permitted Lessee, but only if:
(i)     The Borrower shall provide written notice to the Security Trustee of the
Borrower's intent to enter into a Permitted Lease 20 days in advance of entering
into such lease, such notice to be accompanied by the proposed lease documents;

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(ii)     At the time that the Borrower enters into such Permitted Lease, such
Permitted Lessee shall not be subject to any bankruptcy, insolvency,
liquidation, reorganization, dissolution or similar proceeding, shall not be
seeking any reorganization or any readjustment of its debts and shall not be, or
shall not have substantially all of its property, in the possession of any
liquidator, trustee, receiver or similar person;
(iii)     Any such Permitted Lease: (i) shall include provisions for the
maintenance, operation, possession, inspection and insurance of, and removal of
Liens on, such Aircraft, Airframe or Engine that are the same in all material
respects as the applicable provisions of this Security Agreement, (ii) shall
provide that such Permitted Lessee may not further lease or transfer its
interests (except transfers of the type permitted in Sections 3.2(a) through
3.2(f)), inclusive, in such Aircraft, Airframe or Engine, (iii) shall be
expressly subject and subordinate to all the terms of this Agreement and to the
rights, powers and remedies of the Security Trustee hereunder and (iv) the
Borrower shall collaterally assign such Permitted Lease to the Security Trustee
for the Secured Obligations pursuant to a Lease Assignment;
(iv) In connection with a lease to a Permitted Lessee that is not a U.S. Air
Carrier, the Borrower shall have furnished the Security Trustee and the Lender
an opinion (reasonably satisfactory to the Lender and the Security Trustee) of
counsel (reasonably satisfactory to the Lender and the Security Trustee), in the
country of domicile of such Permitted Lessee, that (i) the terms of such lease
are the legal, valid and binding obligations of the parties thereto enforceable
under the Laws of such jurisdiction, (ii) it is not necessary for the Lender or
the Security Trustee to register or qualify to do business in such jurisdiction,
if not already so registered or qualified, as a result, in whole or in part, of
the proposed lease, (iii) the Laws of such jurisdiction of domicile require fair
compensation by the government of such jurisdiction, payable in a currency
freely convertible into Dollars, for the loss of title to such Aircraft,
Airframe or Engine in the event of the requisition by such government of such
title (unless the Borrower shall provide insurance in the amounts required with
respect to hull insurance under Section 3.3(k) covering the requisition of title
to such Aircraft, Airframe or Engine by the government of such jurisdiction so
long as such Aircraft, Airframe or Engine is subject to such lease), (iv) the
laws of such lessee's country of domicile would give recognition to the
Borrower's title to, and the Security Trustee's Lien in respect of, such
Aircraft, Airframe or Engine and to the registry of such Aircraft, Airframe or
Engine in the name of the Borrower (or the proposed lessee, as appropriate), (v)
the agreement of such Permitted Lessee that its rights under the lease are
subject and subordinate to all the terms of this Agreement is enforceable
against such Permitted Lessee under applicable Law, and (vi) there exist no
possessory rights in favor of the Permitted Lessee under such lease under the
Laws of such Permitted Lessee's country of domicile that would, upon bankruptcy
or insolvency of or other default by the Borrower and assuming that at such time
such Permitted Lessee is not insolvent or bankrupt, prevent the return or
repossession of such Aircraft, Airframe or Engine in accordance with and when
permitted by the terms of Section 5 upon the exercise by the Security Trustee of
its remedies under Section 5;

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(v)     The Borrower shall furnish to the Security Trustee a certificate of its
regularly retained independent insurance broker to the effect that the insurance
required by Section 3.3(k) remains in effect at the time such lease is entered
into;
(vi)     All necessary documents shall have been duly filed, registered or
recorded in such public offices in the United States and in such country and all
necessary registrations with the International Registry shall have been duly
made, in each case, as may be required fully to preserve the title of the
Borrower, and the first priority perfected security interest (subject to
Permitted Liens) of the Security Trustee, in such Aircraft, Airframe or Engine
and in the Borrower's interest in such Permitted Lease, and the Security Trustee
and the Lender shall have received such opinions of counsel as they may
reasonably request in connection with such registration, filing or recording;

(vii)     The Borrower shall reimburse the Security Trustee and the Lender for
all of their reasonable out-of-pocket fees and expenses, including, without
limitation, reasonable fees and disbursements of counsel, incurred by the
Security Trustee or the Lender in connection with any such lease; and
(viii)     The Borrower shall have furnished to the Security Trustee an
Officer's Certificate to the effect that all conditions precedent provided for
herein relating to entry into such lease have been complied with.
(h)     Certain Limitations on Leasing or Other Relinquishment of Possession
Notwithstanding anything to the contrary in this Section 3.2:
(i)     The rights of any person that receives possession of any Aircraft,
Airframe or Engine in accordance with this Section 3.2 and the rights of any
lessee under any Wet Lease shall be subject and subordinate to all the terms of
this Security Agreement, and to the Security Trustee's rights, powers and
remedies hereunder, including, without limitation (i) the Security Trustee's
right to repossess such Aircraft, Airframe or Engine pursuant to Section 5, (ii)
the Security Trustee's right to terminate and avoid such lease, delivery,
transfer or relinquishment of possession upon the occurrence of an Event of
Default and (iii) the right to require the Borrower or such other Person to
forthwith deliver such Aircraft, Airframe or Engine subject to such transfer
upon the occurrence of an Event of Default;
(ii)     The Borrower shall remain primarily liable hereunder for the
performance of all the terms of this Agreement and the other Operative
Agreements to the same extent as if such transfer had not occurred, and no
transfer of possession of any Aircraft, Airframe, Engine or Part or any failure
of performance under or with respect to any such transfer shall in any way
discharge or diminish any of the Borrower's obligations to the Security Trustee
or the Lender hereunder or under any other Operative Agreement;

(iii)     The Borrower shall ensure that no lease, delivery, transfer or
relinquishment permitted under Section 3.2 shall affect the United States
registration of the Aircraft, unless also made in accordance with the provisions
of Section 3.3;

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(iv)     Any event that constitutes or would, with the passage of time,
constitute an Event of Loss under paragraph (c), (d), or (e) of the definition
of such term (as set forth in Annex A) shall not be deemed to violate the
provisions of Section 3.2; and
(v)     Any Wet Lease shall not constitute a delivery, transfer or
relinquishment of possession for purposes of Section 3.2 and shall not be
prohibited by the terms hereof.

Section 3.3 Registration and Operation.
(a)     Registration and Recordation. The Borrower shall cause each Aircraft to
be, and at all times to remain, duly registered with the FAA under the Federal
Aviation Code in the name of the Borrower or with such other country of registry
and in such name as shall be permitted under Section 3 J(b) below. the Borrower
shall execute any and all such documents as may be required by law or as the
Lender or the Security Trustee may reasonably request for the purpose of
effecting and continuing such registration. Unless the Lien of this Agreement
has been discharged, the Borrower shall also cause this Agreement to be duly
recorded and at all times maintained of record as a first-priority perfected
mortgage (subject to Permitted Liens) on each Aircraft, each Airframe, and each
of the Engines (except to the extent that such perfection or priority cannot be
maintained as a result of the failure by the Security Trustee to execute and
delivery any necessary documents). Unless the Lien of this Agreement has been
discharged, the Borrower shall cause the International Interest granted under
this Security Agreement in favor of the Security Trustee in each Airframe and
each Engine to be registered on the International Registry as an International
Interest on each Airframe and each Engine, subject to the Security Trustee
providing its consent to the International Registry with respect thereto, and
shall cause the sale to the Borrower of each Airframe and each Engine (if
occurring after February 28, 2006) to be registered on the International
Registry.
(b)     Re-registration. So long as no Payment Default, Bankruptcy Default or
Event of Default shall have occurred and be continuing, the Borrower may, by 20
days' written notice to the Security Trustee, request to change the country of
registration of any Aircraft. Any such change in registration shall be effected
only in compliance with, and subject to all of the conditions set forth in,
Annex B of this Agreement.
(c)     Markings. If permitted by applicable Law, on or reasonably promptly
after the Relevant Borrowing Date for an Aircraft, the Borrower will cause to be
affixed to, and maintained in, the cockpit of the Airframe and on each
Associated Engine comprising such Aircraft, in each case, in a clearly visible
location a placard of a reasonable size and shape bearing the following legend,
in English: "MORTGAGED TO WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION, as
SECURITY TRUSTEE". Such placards may be removed temporarily, if necessary, in
the course of maintenance of an Airframe or Engine. If any such placard is
damaged or becomes illegible, the Borrower shall promptly replace it with a
placard complying with the requirements of this Section 3.3(c).
(d)     Compliance With Laws. The Borrower shall not, and shall not allow any
other Person to, use, operate, maintain, service, repair or overhaul any
Aircraft, Airframe or Engine in violation of any Law binding on or applicable to
such Aircraft, Airframe or Engine, or

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in violation of any airworthiness certificate, license or registration of any
Government Entity relating to the Borrower or such Aircraft, Airframe or Engine,
except for immaterial or nonrecurring violations with respect to which
corrective measures are taken promptly by the Borrower or Permitted Lessee, as
the case may be, upon discovery, unless (i) the validity thereof is being
contested in good faith and by appropriate proceedings which do not involve a
material danger of the sale, forfeiture or loss of such Aircraft, Airframe or
Engine or the interest of the Security Trustee therein, any risk of criminal
liability or any material risk of material civil liability against the Security
Trustee or the Lender, or (ii) it is not possible for the Borrower (or a
Permitted Lessee) to comply with the laws of a jurisdiction other than the
United States (or other than any jurisdiction in which such Aircraft is then
registered) because of a conflict with the applicable Laws of the United States
(or such jurisdiction in which such Aircraft is then registered).

(e)     Operation. The Borrower agrees not to operate, use or locate any
Aircraft, Airframe or Engine, or allow any Aircraft, Airframe or Engine to be
operated, used or located (a) in any area excluded from coverage by any
insurance required by the terms of Section 3.3(k), except in the case of a
requisition by the U.S. Government where the Borrower obtains (and provides
evidence of) an indemnity in lieu of such insurance from the U.S. Government, or
insurance from the U.S. Government, covering such area, in accordance with
Section 3.3(k) or (b) in any recognized area of hostilities unless fully covered
in accordance with Annex C by war-risk insurance as required by the terms of
Section 3.3(k) (including, without limitation, Section 3.3(k)(iii)), unless in
any case referred to in this Section 3.3(e) such Aircraft, Airframe or Engine is
only temporarily operated, used or located in such area as a result of an
emergency, equipment malfunction, navigational error, hijacking, weather
condition or other similar unforeseen circumstances, so long as the Borrower
diligently and in good faith proceeds to remove such Aircraft, Airframe or
Engine from such area.
 
(f)     Information for Filings. The Borrower shall promptly furnish to the
Security Trustee such information within the Borrower's or any Permitted
Lessee's possession, or reasonably available to or obtainable by the Borrower or
such Permitted Lessee, as may be required to enable the Security Trustee timely
to file any reports required to be filed by it as the Security Trustee under
this Agreement with any Government Entity because of, or in connection with, the
interest of the Security Trustee in any Aircraft, Airframe or Engine, or any
other part of the Collateral; provided, however, that with respect to any such
information which the Borrower reasonably deems commercially sensitive or
confidential, the Security Trustee shall afford the Borrower a reasonable
opportunity to seek from any such Government Entity a waiver of the obligation
of any such information, or shall consent to the filing of such information
directly by the Borrower in lieu of filing by the Security Trustee, and if any
such waiver or consent is evidenced to the reasonable satisfaction of the
Security Trustee then the Borrower shall not be required to furnish such
information to the Security Trustee.

(g)     Maintenance. The Borrower shall maintain and operate each Aircraft,
Airframe and Engine, or cause each Aircraft, Airframe and Engine to be
maintained and operated, in accordance with (1) the Borrower's or a Permitted
Lessee's maintenance program for such Aircraft, Airframe and Engine approved by
the FAA under FAA Regulations Part 121 (or, if leased to a Permitted Lessee, in
accordance with a maintenance program approved by or substantially equivalent to
maintenance standards required by the FAA, the EASA or the central

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civil aviation authority of Japan or Canada) (the "Maintenance Program"), so as
to (i) keep such Aircraft, Airframe and Engine in as good operating condition as
originally delivered hereunder, ordinary wear and tear excepted, (ii) keep such
Aircraft in such operating condition as may be necessary to enable the
airworthiness certificate of such Aircraft to be maintained under FAA
Regulations parts 21 and 121 or other Aviation Authority then having
jurisdiction over the operation of such Aircraft under regulations which are, on
the whole, qualitatively equivalent to FAA Regulations parts 21 and 121, except
to the extent the FAA or other such Aviation Authority has revoked or suspended
the airworthiness certificates for all aircraft of the same type and (iii)
comply with all service, inspection, maintenance, modification, repair and
overhaul regulations, directives and instructions which are mandatory by the FAA
(or, if such Aircraft is registered in another country, the regulations of such
country) upon the operator of such Aircraft and Engines from time to time; (2)
the requirements of the Purchase Agreement so as to preserve the availability of
any product warranties thereunder (including, without limitation, the Engine
Warranties); and (3) except during periods when a Permitted Lease is in effect,
the same standards as the Borrower uses with respect to aircraft of similar size
in its fleet (including other aircraft of comparable size) and, during a period
when a Permitted Lease is in effect, the same standards used by the Permitted
Lessee thereunder with respect to similar aircraft of similar size in its fleet
and operated by such Permitted Lessee in similar circumstances. The Borrower
will not discriminate against any Aircraft (as compared to other aircraft of
similar size, including other regional aircraft, in the Borrower's fleet), in
respect of maintenance; provided that the foregoing non-discrimination provision
shall not apply to any Optional Modifications or Mandatory Modifications (as
such terms are defined below) to any Aircraft not required to be complied with
prior to the Relevant Loan Maturity Date for the Relevant Loan. The Borrower
further agrees that each Aircraft, Airframe and Engine will be maintained, used,
serviced, repaired, overhauled and inspected in compliance with applicable Laws
with respect to the maintenance of such Aircraft and in compliance with each
applicable airworthiness certificate, license and registration relating to such
Aircraft, Airframe or Engine issued by the Aviation Authority, other than minor
or non-recurring violations with respect to which corrective measures are taken
promptly upon discovery thereof and except to the extent the Borrower or
Permitted Lessee is contesting in good faith the validity or application of any
such Law or requirement relating to any such certificate, license or
registration in any reasonable manner which does not involve any risk of
criminal liability or greater than non-material risk of material civil penalty
against the Security Trustee or the Lender, or any material danger of the sale,
forfeiture or loss of such Aircraft, Airframe or Engine. The Borrower shall
maintain or cause to be maintained the Aircraft Documents in English. The
Borrower or a Permitted Lessee may have any Aircraft, Airframe, Engine or Part
maintained by a third party under a maintenance agreement, provided that such
third party shall be duly certified by the FAA as a repair station. Any such
maintenance agreement shall require maintenance in a manner consistent with the
requirements of this Agreement.
(h)     Replacement of Parts.
Except as otherwise provided herein, the Borrower, at its own cost and expense,
will, or will cause a Permitted Lessee to, at its own cost and expense, promptly
replace (or cause to be replaced) all Parts which may from time to time be
incorporated or installed in or attached to any Aircraft, Airframe or Engine and
which may from time to time become worn out, lost, stolen, destroyed, seized,
confiscated, damaged beyond repair or permanently rendered unfit for

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use for any reason whatsoever. In addition, the Borrower may, at its own cost
and expense, or may permit a Permitted Lessee at its own cost and expense to,
remove (or cause to be removed) in the ordinary course of maintenance, service,
repair, overhaul or testing any Parts, whether or not worn out, lost, stolen,
destroyed, seized, confiscated, damaged beyond repair or permanently rendered
unfit for use; provided, however, that the Borrower, except as otherwise
provided herein, at its own cost and expense, will, or will cause a Permitted
Lessee at its own cost and expense to, replace such Parts as promptly as
practicable; provided further that (1) landing gear and Engine Parts (excluding
line-replaceable units and quick engine change Parts) shall be OEM Parts and (2)
the maximum value of other OEM Parts replaced with non-OEM Parts with respect to
an Aircraft shall not exceed $500,000 at any time during the term of the
applicable Relevant Loan for such Aircraft. All replacement Parts shall be free
and clear of all Liens, except for Permitted Liens and pooling arrangements to
the extent permitted by Section 3.3(i) below (and except in the case of
replacement property temporarily installed on an emergency basis), and shall be
in good operating condition and have a value and utility not less than the value
and utility of the Parts replaced (assuming such replaced Parts were in the
condition required under this Agreement). Except as otherwise provided herein,
all Parts at any time removed from any Aircraft, Airframe or Engine shall remain
subject to the Lien of this Agreement, no matter where located, until such time
as such Parts shall be replaced by Parts which have been incorporated or
installed in or attached to such Aircraft, Airframe or Engine and which meet the
requirements for replacement Parts specified above. Immediately upon any
replacement Part becoming incorporated or installed in or attached to such
Aircraft, Airframe or Engine as above provided, without further act, (i) such
replacement part shall become subject to the Lien of this Agreement and be
deemed part of such Aircraft, Airframe or Engine for all purposes hereof and of
the Operative Agreements to the same extent as the Parts originally incorporated
or installed in or attached to such Aircraft, Airframe or Engine and (ii) the
replaced Part shall thereupon be free and clear of all rights of the Security
Trustee and shall no longer be deemed a Part under this Agreement.
(i)     Pooling of Parts.
Any Part removed from any Aircraft, Airframe or Engine may be subjected by the
Borrower or a Permitted Lessee to a normal pooling arrangement customary in the
airline industry, so long as, if such pooling arrangement is not with the Part
manufacturer, such Part is subject to such pooling arrangement for a period of
not more than twelve (12) months and entered into in the ordinary course of
business of the Borrower or such Permitted Lessee, so long as a Part replacing
such removed Part shall be incorporated or installed in or attached to such
Aircraft, Airframe or Engine in accordance with Section 3.3(h) as promptly as
practicable after the removal of such removed Part. In addition, any replacement
Part when incorporated or installed in or attached to any Aircraft, Airframe or
Engine may be owned by any third party subject to such a normal pooling
arrangement, so long as the Borrower, or Permitted Lessee, at its own cost and
expense, as promptly thereafter as reasonably possible either (x) causes such
replacement part to become subject to the Lien of this Agreement, free and clear
of all Liens (except Permitted Liens), at which time such replacement part shall
become a Part or (y) replaces (or causes to be replaced) such replacement part
by incorporating or installing in or attaching to such Aircraft, Airframe or
Engine a further replacement Part owned by Borrower or a Permitted Lessee free
and clear of all Liens (except Permitted Liens).

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(j)     Alterations, Modifications and Additions.
The Borrower shall, or shall cause a Permitted Lessee to, make (or cause to be
made) such alterations and modifications in and additions to each Aircraft,
Airframe and Engine as may be required from time to time by applicable Law, to
the extent made mandatory in respect of such Aircraft, Airframe or Engine (a
"Mandatory Modification"); provided, however, that the Borrower or any Permitted
Lessee may, in good faith and by appropriate procedure, contest the validity or
application of any Law, rule, regulation or order in any reasonable manner which
does not involve any risk of criminal liability or material risk of material
civil liability against the Security Trustee or the Lender, does not involve a
material risk of sale, forfeiture or loss of such Aircraft, Airframe or Engine,
and does not adversely affect the Security Trustee's Lien on such Aircraft,
Airframe or Engine. In addition, so long as no Payment Default or Event of
Default shall have occurred and be continuing, the Borrower, at its own cost and
expense, may, or may permit a Permitted Lessee at its own cost and expense to,
from time to time make such alterations and modifications in and additions to
any Aircraft, Airframe or Engine (each an "Optional Modification") as the
Borrower or such Permitted Lessee may deem desirable in the proper conduct of
its business, including, without limitation, removal of Parts which the Borrower
or such Permitted Lessee deems are obsolete or no longer suitable or appropriate
for use in such Aircraft, Airframe or Engine ("Obsolete Parts"); provided,
however, that (A) the aggregate value of such removed parts with respect to any
Aircraft (based on their value on the Delivery Date) shall not exceed $2,500,000
and (B) no such Optional Modification shall (i) diminish the fair market value,
utility, condition or useful life of such Aircraft, Airframe or Engine below its
fair market value, utility, condition or useful life immediately prior to such
Optional Modification (assuming such Aircraft, Airframe or Engine was in the
condition required by this Agreement immediately prior to such Optional
Modification), or (ii) cause such Aircraft to cease to have a standard
certificate of airworthiness issued under FAA Regulations Parts 21 and 121 and
cease to be eligible for operation under FAA Regulations Part 121. Except as
otherwise provided herein, title to all Parts (other than Removable Parts (as
defined below» incorporated in such Aircraft, Airframe or Engine as the result
of such Optional Modification shall, without further act, become subject to the
Lien of this Agreement. Notwithstanding anything to the contrary in this Section
3.3(j), the Borrower or a Permitted Lessee may, at any time, remove any Part
(such Part being referred to herein as a "Removable Part") if (i) such Part is
in addition to, and not in replacement of or substitution for, any Part
originally incorporated in any Aircraft, Airframe or Engine at the time of
delivery thereof hereunder, (ii) such Part is not required to be incorporated in
such Aircraft, Airframe or Engine pursuant to the terms of Sections 3.3(g) or
(h), and (iii) such Part can be removed from such Aircraft, Airframe or Engine
without causing damage to such Aircraft, Airframe or Engine that is not repaired
by the Borrower. The Borrower shall be responsible for the cost of any such
removal and repair of any such damage. Removable Parts may be leased from or
financed by third parties. Notwithstanding anything to the contrary contained
herein, any Removable Part so leased from or financed by a third party shall not
be subject to the Lien of this Agreement. Upon the removal by the Borrower or
such Permitted Lessee of any Removable Part or Obsolete Part as above provided,
such Part shall no longer be deemed a Part hereunder and shall be free and clear
of all rights of the Security Trustee.

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(k)     Insurance.
(i)     the Borrower's Obligation to Insure. The Borrower shall comply with, or
cause to be complied with, each of the provisions of Annex C, which provisions
are hereby incorporated by reference as if set forth in full herein.
(ii)     Insurance for Own Account. Nothing in this Section 3.3(k) shall limit
or prohibit (x) the Borrower from maintaining the policies of insurance required
under this Section 3.3(k) with higher limits than those specified in this
Section 3.3(k) or (y) the Security Trustee or the Lender from obtaining
insurance for its own account (and any proceeds payable under such separate
insurance shall be payable as provided in the policy relating thereto);
provided, however, that no insurance may be obtained or maintained that would
limit or otherwise adversely affect the coverage of any insurance required to be
obtained or maintained by the Borrower pursuant to this Section 3.3(k), it being
understood that all salvage rights to any Airframe or Engine shall remain with
the Borrower's insurers at all times.
(iii)     Indemnification by Government in Lieu of Insurance. The Borrower may
obtain and maintain, in lieu of insurance against any risk with respect to any
Aircraft described in this Section 3.3(k) indemnification from, or insurance
provided by, the U.S. Government, or upon the written consent of the Security
Trustee, acting at the written direction of the Lender, other Government Entity,
against such risk in an amount that, when added to the amount of insurance
(including permitted self-insurance), if any, against such risk that the
Borrower (or any Permitted Lessee) may continue to maintain, in accordance with
this Section 3.3(k), shall be at least equal to the amount of insurance against
such risk otherwise required by this Section 3.3(k).
(iv)     Application of Insurance Proceeds. As between the Borrower and the
Security Trustee, all insurance proceeds received as a result of the occurrence
of an Event of Loss with respect to any Aircraft or Engine under policies
required to be maintained by the Borrower pursuant to this Section 3.3(k) will
be applied as provided in Section 3.5(b). All proceeds of insurance required to
be maintained by the Borrower, in accordance with this Section 3.3(k), in
respect of any property damage or loss not constituting an Event of Loss with
respect to any Aircraft, Airframe or Engine will be applied in payment (or to
reimburse the Borrower) for repairs or for replacement property, and any balance
remaining after such repairs or replacement with respect to such damage or loss
shall be paid over to, or retained by, the Borrower.
(v)     Application of Payments During Existence of Default. Any amount
described in this Section 3.3(k) that is payable or creditable to, or retainable
by, the Borrower shall not be paid or credited to, or retained by, the Borrower
if at the time such payment, credit or retention would otherwise occur a Payment
Default, a Bankruptcy Default or any Event of Default shall have occurred and be
continuing, but shall instead be held by or paid over to the Security Trustee
(so long as the Lien of this Agreement has not been duly discharged) as security
for the obligations of the Borrower under this Agreement and shall be invested
and applied pursuant to Section 10.

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Section 3.4     Loss, Destruction, Requisition, Etc.
(a)     Event of Loss With Respect to Aircraft.
(i) Upon the occurrence of an Event of Loss with respect to any Airframe, and
any Engine or Engines installed thereon at the time of such Event of Loss, the
Borrower shall promptly (and in any event within 10 Business Days after such
occurrence) give the Security Trustee written notice of such Event of Loss. The
Borrower shall not have the right to replace any Airframe in case of an
occurrence of an Event of Loss with respect to such Airframe with a Replacement
Airframe.
(ii) For purposes of Section 3.4(b), an Event of Loss with respect to any
Airframe shall be deemed to constitute an Event of Loss with respect to the
Aircraft of which such Airframe is a part.

(b)     Payment of Loan. Upon the occurrence of an Event of Loss with respect to
an Aircraft, the Borrower shall pay, in the manner and in funds of the type
specified in Section 2.2(a) of the Loan Agreement, on or before the Business Day
next following the earlier of (x) the 120th day following the date of the
occurrence of such Event of Loss, and (y) the third day following the receipt of
insurance proceeds with respect to such occurrence (such date of payment, the
"Loss Payment Date"), the principal of, unpaid interest on, and other amounts
with respect to the Relevant Loan in full in accordance with Section 2.5 of the
Loan Agreement.
(c)     Event of Loss With Respect to an Engine.
(i)     Notice.
Upon the occurrence of an Event of Loss with respect to an Engine under
circumstances in which an Event of Loss with respect to an Airframe has not
occurred, the Borrower shall promptly (and in any event within 10 Business Days
after such occurrence) give the Security Trustee written notice of such Event of
Loss.
(ii)     Replacement of Engine.
The Borrower shall, promptly and in any event within 90 days after the
occurrence of such Event of Loss, cause to be subjected to the Lien of this
Agreement, in compliance with Section 3.4(d) and as replacement for the Engine
with respect to which any Event of Loss occurred, a Replacement Engine free and
clear of all Liens other than Permitted Liens. Such Replacement Engine shall be
an engine manufactured by Engine Manufacturer that is the same model as the
Engine to be replaced thereby, or an improved model, and that is suitable for
installation and use on the Associated Airframe, and that has a value, utility
and remaining useful life (without regard to hours and cycles remaining until
overhaul) at least equal to that of the Engine to be replaced thereby
immediately prior to such Event of Loss (assuming that such Engine had been
maintained in accordance with this Agreement).

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(iii)     Engine Exchange.
Unless a Payment Default, Bankruptcy Default or Event of Default shall have
occurred and be continuing, upon not less than 30 days' prior written notice to
the Security Trustee, the Borrower may replace any Engine subject to the Lien of
this Agreement with another engine (the "Exchanged Engine") meeting the
requirements of Section 3.4(c)(ii). Such Exchanged Engine shall be deemed to be
a "Replacement Engine" and the Borrower and the Security Trustee shall comply
with the provisions of Section 3.4(d) with regard to the Exchanged Engine and
the Engine so replaced.
(d)     Conditions to any Replacement.
(i)     Documents.
Prior to or at the time of subjecting to the Lien of this Agreement any
Replacement Engine, the Borrower shall take each of the following actions:
(A)     cause (i) a Security Agreement Supplement, subjecting such Replacement
Engine to the Security Agreement, to be filed for recordation with the FAA
pursuant to the Federal Aviation Code and (ii) such UCC financing statements and
other filings, as may be required by applicable law or as the Lender or the
Security Trustee may reasonably request, to be filed in such locations as may be
required by applicable law to perfect the Security Trustee's interest in such
Replacement Engine or as such party may reasonably request;
(B)     furnish a certificate of its regularly retained independent insurance
broker to the effect that the insurance provisions of Section 3.3(k) with
respect to such Replacement Engine have been complied with;
(C)     furnish (x) an opinion or opinions of the Borrower's counsel reasonably
satisfactory to the Security Trustee and addressed to the Security Trustee as to
the due filing for recordation of such Security Agreement Supplement with
respect to such Replacement Engine under the Federal Aviation Code and the
registration with the International Registry of the sale to the Borrower of such
Replacement Engine (if occurring after February 28, 2006) and the International
Interest granted under such Security Agreement Supplement with respect to such
Replacement Engine and (y) an Officer's Certificate of the Borrower stating that
all conditions precedent provided for herein to the replacement of such Engine
have been complied with;
(D)     furnish a certificate of a qualified aircraft engineer (who may be an
employee of the Borrower) certifying that such Replacement Engine complies with
the value, utility and remaining useful life requirements set forth in Section
3.4(c)(ii);
(E)     furnish an opinion of the Borrower's counsel (which may be the
Borrower's general counsel) reasonably satisfactory to the Security Trustee and
addressed to the Security Trustee to the effect that the Security Trustee will
be

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entitled to the benefits of Section 1110 with respect to the Replacement Engine
or the benefits of Section 111 0 were not, solely by reason of a change in Law
or court interpretation thereof, available to the Security Trustee; and
(F)     cause the sale of such Replacement Engine to the Borrower (if occurring
after February 28, 2006) and the International Interest granted under such
Security Agreement Supplement in favor of the Security Trustee with respect to
such Replacement Engine each to be registered on the International Registry as a
sale or an International Interest, respectively.
The Borrower and the Security Trustee understand and agree that if at the time
of any replacement of any Engine, as contemplated in this Section 3.4, the
Associated Airframe with respect to such Engine was registered in a jurisdiction
other than the United States, then the requirements set forth above in this
Section 3.4 relating to compliance with the requirements of the Federal Aviation
Code or the FAA, shall be deemed to refer to the comparable applicable Law of,
and the Aviation Authority of, such other jurisdiction.
(ii)     Upon completion of the actions required pursuant to the preceding
clause (i), the Security Trustee shall release from the Lien of this Agreement
each Engine replaced by a Replacement Engine (and all Aircraft Documents
relating thereto) by executing and delivering to the Borrower all documents and
instruments as the Borrower may prepare and reasonably request to evidence such
release.
Section 3.5     Other Obligations.
(a)     (i)     No Change in Payment Obligations. No Event of Loss with respect
to an Airframe or Engine shall result in, or otherwise allow or permit (other
than as provided in Section 3.4(b», any reduction, deferral, discharge or other
change in the timing or amount of payments under the Loan Agreement.
(ii)     Section 1110. The Borrower and the Security Trustee shall, in all
events, be entitled to the benefits of Section 1110 with respect to any
Replacement Engine, and the Borrower and the Security Trustee shall cooperate
and take such action as the other may reasonably request so as to ensure the
Security Trustee shall be entitled to such benefits.
(iii)     Replacement Engine. The Borrower shall reimburse the Security Trustee
and the Lender for all reasonable out-of-pocket costs (including reasonable
attorney's fees) incurred by each of them in connection with any Replacement
Engine becoming an Engine hereunder.
(iv)     Secured Obligations. The Borrower agrees to timely and fully pay and
perform all of its duties and obligations under the Operative Agreements.
(b)     Application of Payments. Any amounts, other than insurance proceeds in
respect of damage or loss not constituting an Event of Loss (the application of
which is provided for in Section 3.3(k)(iv)), received at any time by the
Security Trustee or any Permitted Lessee

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from any Government Entity or any other Person in respect of any Event of Loss
will be applied as follows:
(i)     Loss of Engine. If such amounts are received with respect to an Engine
(other than an Engine installed on an Airframe at the time such Airframe suffers
an Event of Loss), upon compliance by the Borrower with the applicable terms of
Section 3.4(c) with respect to the Event of Loss for which such amounts are
received, such amounts shall be paid over to, or retained by, the Borrower.

(ii)     Payment of Loss. If such amounts are received, in whole or in part,
with respect to an Airframe, such amounts shall be applied as follows:

(A)     first, to reimburse the Security Trustee for its reasonable costs
(including attorney's fees), if any, of procuring such payments; and
(B)     second, if the sum described in Section 3.4(b) has not then been paid in
full by the Borrower, such amounts shall be paid to the Security Trustee so long
as the Lien of this Agreement has not been duly discharged to the extent
necessary to pay in full such sum; and

(C)     third, the remainder, if any, shall be paid to the Borrower.
(c)     Requisition of Aircraft for Use. If any Government Entity shall
requisition for use an Airframe and the Engines or engines installed thereon,
and if the same does not constitute an Event of Loss, the Borrower shall
promptly notify the Security Trustee of such requisition and all of the
Borrower's obligations under this Agreement shall continue to the same extent as
if such requisition had not occurred.
(d)     Requisition of an Engine for Use. If any Government Entity shall
requisition for use any Engine but not any Airframe, the Borrower will replace
such Engine by complying with the applicable terms of Sections 3.4(c) and 3.4(d)
to the same extent as if an Event of Loss had occurred with respect to such
Engine, and any payments received by the Security Trustee from such Government
Entity with respect to such requisition shall be paid or retained in accordance
with Section 3.5(b)(i).
(e)     Application of Payments. All payments received by the Security Trustee,
or any Permitted Lessee, from any Government Entity for the use of any Airframe
and Engines or engines installed thereon shall be paid over to, or retained by,
the Borrower; provided that, if such requisition constitutes an Event of Loss,
then all such payments shall be paid over to the Security Trustee so long as the
Lien of this Agreement has not been du1y discharged, and held and applied as
provided in Section 3.5(b).
(f)     Application of Payments During Existence of Certain Defaults. Any amount
described in Section 3.4 or 3.5 that is payable or creditable to, or retainable
by the Borrower, shall not be paid or credited to, or retained by, the Borrower
if at the time such payment, credit or retention would otherwise occur a Payment
Default, Bankruptcy Default or Event of Default shall have occurred and be
continuing, but shall instead be held by or paid over to the Security Trustee so
long as the Lien of this Agreement has not been duly discharged and

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shall be held and applied as provided in Section 10 hereof. At such time as
there shall not be continuing an Event of Default. Payment Default or Bankruptcy
Default, such amount shall be paid to the Borrower to the extent not previously
applied in accordance with this Section 3.5.
Section 3.6     Agreement Regarding Engines.
The Security Trustee agrees, for the benefit of each lessor, conditional seller,
mortgagee or secured party of any airframe or engine leased to, or owned by, the
Borrower (or any Permitted Lessee) subject to a lease, conditional sale, trust
indenture or other security agreement that it will not acquire or claim, as
against such lessor, conditional seller, mortgagee or secured party, any right,
title or interest in any engine as the result of such engine being installed on
an airframe subject to the Lien of this Agreement at any time while such engine
is subject to such lease, conditional sale, trust indenture or other security
agreement and owned by such lessor or conditional seller or subject to a trust
indenture or security interest in favor of such mortgagee or secured party.
Section 3.7     Quiet Enjoyment.
So long as no Event of Default shall have occurred and be continuing, the
Security Trustee shall not interfere with the Borrower's rights hereunder to
continued possession, use and operation of, and quiet enjoyment of, each
Aircraft.
Section 3.8     Inspection. The obligations of the Borrower with respect to
inspections of the Aircraft are set forth in Annex D to this Agreement, which
Annex D is incorporated herein by reference as though fully set forth in this
Section 3.8. All references to any provision of Section 3.8 in this Agreement or
in any other Operative Agreement shall be references to the relevant provision
in Annex D hereto.
Section 3.9     Cape Town Treaty. The parties hereto agree that for all purposes
of the Cape Town Treaty (i) this Security Agreement constitutes a separate
International Interest with respect to each of the Airframes and the Engines and
(ii) each of the Airframes and the Engines constitutes an Aircraft Object.
SECTION 4.     RECEIPT, DISTRIBUTION AND APPLICATION OF CERTAIN FUNDS
Section 4.1     Application of Income from the Collateral. After an Event of
Default shall have occurred and be continuing, and the unpaid principal of the
Loans shall have been accelerated (or deemed accelerated), the Security Trustee
shall apply any payments received, any amounts then held and any amounts
realized by the Security Trustee with respect to the Collateral in the following
order of priority: first, so much of such payments or amounts as shall be
required to reimburse the Security Trustee for or to pay the Security Trustee
any unpaid fee or out-of-pocket costs and expenses (to the extent not previously
reimbursed), including reasonable compensation to the Security Trustee's agents
and counsel, and all charges, expenses, liabilities and advances reasonably
incurred or made by the Security Trustee for services under this Security
Agreement and any other amounts owing to the Security Trustee under Section 6.3
hereof and Sections 9.15 and 9.16 of the Loan Agreement shall be applied by the
Security Trustee in reimbursement of such fees, costs, expenses and other
amounts; second,

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so much of such payments or amounts as shall be required to reimburse the Lender
for payments made by it to the Security Trustee pursuant to Section 6.3 or 7.7
(to the extent not previously reimbursed) shall be distributed to the Lender;
third, so much of such payments or amounts as shall be required to pay to the
Lender all other amounts payable by the Borrower pursuant to the Loan Agreement
or pursuant to any other provision of any other Operative Agreement (other than
amounts payable pursuant to clause "second" or "fourth" of this Section 4.1) to
the Lender and remaining unpaid shall be distributed to the Lender; fourth, so
much of such payments or amounts as shall be required to pay in full (i) the
accrued but unpaid interest on the Relevant Loans for all Aircraft to the date
of distribution shall be distributed to the Lender, such distribution to be made
ratably in the proportion that the amount of such interest payment then due in
respect of an Aircraft bears to the aggregate amount of interest payments then
due on all Aircraft, followed by (ii) the aggregate unpaid principal amount of
the Relevant Loans for all Aircraft then due, such distribution to be made
ratably in the proportion that the amount of such principal payment then due in
respect of an Aircraft bears to the aggregate amount of principal payments then
due on all Aircraft; fifth, to the payment of the Secured Obligations arising
under the Other Operative Agreements then due and unpaid for application as
provided in the applicable Other Operative Agreements, and sixth, the balance,
if any, of such payments or amounts remaining thereafter shall be distributed
to, or as directed by, the Borrower.
Section 4.2     Payments of Principal, Interest and Other Amounts. Payments made
by the Borrower to the Security Trustee for the account of the Lender shall
constitute payment by the Borrower to the Lender. Provided that the Borrower
shall have paid to the Security Trustee in immediately available funds amounts
then due on any Note by 11:30 a.m., New York time, the Security Trustee shall,
no later than 3:30 p.m., New York time, on the date of such payment by the
Borrower, remit to the Lender (or as it may direct) all such amounts so received
by it to such address and in such manner (by wire transfer of immediately
available funds if not otherwise specified) as the Lender shall have designated
to the Security Trustee in writing. In the event the Security Trustee shall fail
to ma1ce any such payment as provided above after its receipt of immediately
available funds at the place and by the time specified above, the Security
Trustee agrees to compensate the Lender for loss of use of funds at the Relevant
Interest Rate, in the case of principal of or interest on any Relevant Loan, or
the weighted average interest rate of the Loans, in the case of any other
amount, in each case for the applicable period.
Section 4.3     Withholding. The Security Trustee shall only withhold from any
amounts payable by it as paying agent to the Lender pursuant to Section 4.2
hereof or to the Lender or BNDES under any other Operative Agreement to the
extent the Borrower would be permitted to do so as provided in Section 2.7 of
the Loan Agreement and provided that it shall comply with the requirements set
forth in Section 2.7(c) thereof.
SECTION 5. REMEDIES OF THE SECURITY TRUSTEE UPON AN EVENT OF DEFAULT
Section 5.1     Remedies with Respect to Collateral. (a) Remedies Available.
Upon the occurrence of any Event of Default and at any time thereafter so long
as the same shall be continuing, the Security Trustee (in accordance with the
provisions of Section 6) shall, upon the written direction of the Lender, do one
or more of the following to the extent permitted by, and subject to compliance
with the mandatory requirements of, applicable law then in effect: (A)

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demand the Borrower, upon the written demand of the Security Trustee, at the
Borrower's expense, to deliver promptly, and the Borrower shall deliver
promptly, all or such part of any Airframe or Engine as the Security Trustee,
acting at the direction of the Lender, may so demand to the Security Trustee or
its designee or, the Security Trustee, at its option, may enter upon the
premises where all or any part of any Airframe or Engine is located and take
immediate possession of and remove the same by summary proceedings or otherwise;
and/or (B) sell all or any part of any Airframe or Engine at public or private
sale, whether or not the Security Trustee shall at the time have possession
thereof, as the Security Trustee, acting at the written direction of the Lender,
may determine, or otherwise dispose of, hold, use, operate, lease to others or
keep idle all or any part of such Airframe or Engine as the Security Trustee, in
its sole discretion, acting at the written direction of the Lender, may
determine, all free and clear of any rights or claims of the Borrower, and the
proceeds of such sale or disposition shall be applied in the order of priorities
set forth in Section 4.1; and/or (C) acting at the written direction of the
Lender, exercise any other remedy of a secured party under the UCC of the State
of New York (whether or not in effect in the jurisdiction in which enforcement
is sought) and the Cape Town Treaty, including, without limitation, all rights
and remedies under Chapter III of the Cape Town Treaty and Chapter II of the
Aircraft Equipment Protocol or pursue any other remedy available at Law.
Upon every taking of possession of Collateral under this Section 5.1, the
Security Trustee shall, acting at the written direction of the Lender, from time
to time, at the expense of the Borrower, make all such expenditures for
maintenance, insurance, repairs, replacements, alterations, additions and
improvements to and of the Collateral, as it may reasonably deem proper. In each
such case, the Security Trustee shall have the right to maintain, use, operate,
store, lease, control or manage the Collateral and to exercise all rights and
powers of the Borrower relating to the Collateral in connection therewith, as
the Security Trustee shall deem best, acting at the written direction of the
Lender, including the right to enter into any and all such agreements with
respect to the maintenance, insurance, use, operation, storage, leasing,
control, management or disposition of the Collateral or any part thereof as the
Security Trustee may, acting at the written direction of the Lender, reasonably
determine; and the Security Trustee shall be entitled to collect and receive
directly all tolls, rents, revenues, issues, income, products and profits of the
Collateral and every part thereof. Such tolls, rents, revenues, issues, income,
products and profits shall be applied to pay the expenses of use, operation,
storage, leasing, control, management or disposition of the Collateral, and of
all maintenance, repairs, replacements, alterations, additions and improvements,
and to make all payments which the Security Trustee may be required or may
elect, acting at the written direction of the Lender, to make, if any, for
Taxes, insurance or other proper charges assessed against or otherwise imposed
upon the Collateral or any part thereof, and all other payments which the
Security Trustee may be required or expressly authorized to make under any
provision of this Security Agreement, as well as just and reasonable
compensation for the services of the Security Trustee and all other amounts
owing to the Security Trustee under Section 7.7, and shall otherwise be applied
in accordance with the provisions of Section 4.
The Borrower hereby consents to the exercise by the Security Trustee of the
remedies granted herein and in the Cape Town Treaty. The Borrower acknowledges
and agrees that the Security Trustee may exercise such of the foregoing remedies
as it shall determine in its sole discretion and none of the foregoing remedies
is manifestly unreasonable.

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If an Event of Default shall have occurred and be continuing and the Security
Trustee shall be entitled to exercise remedies hereunder, at the request of the
Security Trustee, acting at the written direction of the Lender, the Borrower
shall promptly execute and deliver to the Security Trustee such instruments of
title and other documents as the Security Trustee may deem necessary or
advisable to enable the Security Trustee or an agent or representative
designated by the Security Trustee, at such time or times and place or places as
the Security Trustee may specify, to obtain possession of all or any part of the
Collateral to which the Security Trustee shall at the time be entitled
hereunder. In addition, following the occurrence and during the continuance of
an Event of Default, the Borrower agrees, upon demand by the Security Trustee,
immediately to provide its consent to the International Registry for the
discharge of any registration of an International Interest with respect to any
Airframe or Engine made with the International Registry. If the Borrower shall
for any reason fail to execute and deliver such instruments and documents after
such request by the Security Trustee, the Security Trustee, acting at the
written direction of the Lender, may obtain a judgment conferring on the
Security Trustee the right to immediate possession and requiring the Borrower to
execute and deliver such instruments and documents to the Security Trustee, to
the entry of which judgment the Borrower hereby specifically consents to the
fullest extent it may lawfully do so. The Security Trustee hereby agrees to give
to the Borrower at least 30 days' notice for any request under this paragraph,
which the Borrower and the Security Trustee agree satisfies the requirement of
"reasonable prior notice" specified in article IX(6) of the Aircraft Equipment
Protocol in connection with a proposal to procure the de-registration and export
of the Aircraft without a court order.
Nothing in the foregoing shall affect the right of the Lender to receive all
amounts owing to the Lender as and when the same may be due.
(b)     Notice of Sale. The Security Trustee shall give the Borrower at least 30
days' prior notice of any public sale or of the date on or after which any
private sale will be held, which notice the Borrower hereby agrees to the extent
permitted by applicable law is reasonable notice and satisfies the requirement
of "reasonable prior notice" in Article 8(4) of the Cape Town Treaty. The Lender
shall be entitled to bid for and become the purchaser of any Collateral offered
for sale pursuant to this Section 5.1 and to credit against the purchase price
bid at such sale by the Lender all or any part of the due and unpaid amounts of
the Secured Obligations secured by the Lien of this Security Agreement.
Section 5.2     Remedies Cumulative. To the extent permitted by applicable law,
each and every right, power and remedy herein specifically given to the Security
Trustee 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, by statute or by the Operative
Agreements, 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 may be deemed expedient by the Security Trustee,
acting at the written direction of the Lender, and the exercise or the beginning
of the exercise of any power or remedy shall not be construed to be a waiver of
the right to exercise at the same time or thereafter any other right, power or
remedy. No delay or omission by the Security Trustee in the exercise of any
right, remedy or power or in the pursuit of any remedy shall, to the extent
permitted by

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applicable law, impair any such right, power or remedy or be construed to be a
waiver of any default on the part of the Borrower or to be an acquiescence
therein.
Section 5.3     Discontinuance of Proceedings. In case the Security Trustee
shall have instituted any proceeding to enforce any right, power or remedy under
this Security Agreement by foreclosure, entry or otherwise, and such proceedings
shall have been discontinued or abandoned for any reason or shall have been
determined adversely to the Security Trustee, then and in every such case the
Borrower and the Security Trustee 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 the Security
Trustee shall continue, as if no such proceedings had been undertaken (but
otherwise without prejudice).
SECTION 6. DUTIES OF THE SECURITY TRUSTEE
Section 6.1     Notice of Event of Default; Action Upon Event of Default. If any
payments of the principal of, and interest on, any Note due and payable on any
Payment Date for any Relevant Loan, or when otherwise due and payable, shall not
have been paid in full on such Payment Date or such other date, the Security
Trustee shall give telephonic notice within one Business Day (followed by prompt
written notice) to the Borrower and the Lender specifying the amount and nature
of such deficiency in payment; provided that any failure to give such notice
shall not relieve the Borrower of its obligation to make such payment. If the
Security Trustee has actual knowledge of an Event of Default, the Security
Trustee shall promptly give notice of such Event of Default to the Lender and to
the Borrower by electronic mail, facsimile, or telephone (to be promptly
confirmed in writing). The Security Trustee shall only take such action, or
refrain from taking such action, with respect to such Event of Default
(including with respect to the exercise of any rights or remedies hereunder), as
the Security Trustee shall be instructed in writing by the Lender. For all
purposes of this Security Agreement, in the absence of actual knowledge, the
Security Trustee shall not be deemed to have knowledge of a Default, an Event of
Default, an acceleration of the Notes or an Event of Loss, Bankruptcy Event or
Bankruptcy Default unless notified in writing by the Borrower or the Lender; and
"actual knowledge" (as used in the foregoing clause) of the Security Trustee
shall mean actual knowledge of an officer in the Corporate Trust Department of
the Security Trustee; provided, however, the Security Trustee shall be deemed to
have actual knowledge of the failure of the Borrower to maintain insurance as
required under Section 3.3(k) if the Security Trustee shall receive written
notice thereof from an insurer or insurance broker.
Section 6.2     Action Upon Instructions. Subject to the terms of this Section
6, upon the written instructions at any time of the Lender, the Security Trustee
shall promptly (i) give such notice, direction, consent, waiver or approval, or
exercise such right, remedy or power hereunder in respect of all or any part of
the Collateral, or (ii) take such other action in accordance with the terms
hereof as shall be specified in such instruction. The Security Trustee shall not
be liable to the Borrower with respect to any action taken or omitted to be
taken by it in accordance with the requests or instructions of the Lender, which
requests or instructions are in accordance with the terms hereof, except for any
actions or omissions constituting the gross negligence or willful misconduct of
the Security Trustee.

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Section 6.3     Indemnification. The parties hereto acknowledge and agree that
the Security Trustee both in its individual capacity and in its capacity as
Security Trustee shall not be required to take any action or refrain from taking
any action under Section 6.1 (other than the first two sentences thereof),
Section 6.2 or Section 5 or to take any action or refrain from taking any action
at the direction or instructions of the Lender under any other Section hereof or
under any other Operative Agreement unless it shall have received
indemnification against any risks or costs incurred in connection therewith in
form and substance reasonably satisfactory to it, including, without limitation,
adequate advances against costs which may be incurred by it in connection
therewith. The Security Trustee shall not be required to take any action under
Section 6.1 (other than the first two sentences thereof), Section 6.2 or Section
5, nor shall any other provision of this Security Agreement or any other
Operative Agreement be deemed to impose a duty on the Security Trustee to take
any action, if the Security Trustee shall have been advised in writing by
outside counsel that such action is contrary to the terms hereof or is otherwise
contrary to law.
Section 6.4     No Duties Except as Specified in Security Agreement or
Instructions. The Security Trustee shall not have any duty or obligation to
manage, control, lease, use, sell, operate, store, dispose of or otherwise deal
with any Aircraft or any other part of the Collateral, or to otherwise take or
refrain from taking any action under, or in connection with, this Security
Agreement, except as expressly provided by the terms of this Security Agreement
or as expressly provided in written instructions received pursuant to the terms
of Section 6.1 or 6.2; and no implied duties or obligations shall be read into
this Security Agreement against the Security Trustee.
Section 6.5     No Action Except Under Security Agreement or Instructions. The
Security Trustee agrees that it will not manage, control, use, sell, lease,
operate, store, dispose of or otherwise deal with any Aircraft or other property
constituting part of the Collateral except in accordance with the powers granted
to, or the authority conferred upon, the Security Trustee pursuant to this
Security Agreement and in accordance with the express terms hereof.
Section 6.6     Reports, Notices, Etc. The Security Trustee will furnish to the
Lender, promptly upon receipt thereof, duplicates or copies of all reports,
opinions, notices, requests, demands, certificates, financial statements and
other instruments furnished to the Security Trustee, to the extent that the same
shall not have been otherwise furnished to the Lender pursuant to this Security
Agreement or any other Operative Agreement; provided, the failure of the
Security Trustee to furnish the Lender with such duplicates or copies shall not
impair or affect the validity of any such report, opinion, notice, request,
demand, certificate, financial statement or other instrument. The Security
Trustee's sole responsibility with respect to such reports, opinions, notices,
requests, demands, certificates, financial statements and other instruments
shall be to furnish them to the Lender to the extent provided in this Section.
Section 6.7     Removal of Certain Liens. Wells Fargo will not directly or
indirectly cause, incur, assume or suffer to exist any the Security Trustee
Liens on any part of the Collateral, and it agrees that it will, at its own cost
and expense, promptly take such action as may be necessary to discharge and
satisfy any such the Security Trustee Lien and it shall indemnify, protect,
defend and hold harmless the Borrower against any claims in any way resulting
from or arising out of a breach by it of its obligations under this Section 6.7.

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Section 6.8     No Charges. The Security Trustee agrees that it will not impose
any lifting charge, cable charge, remittance charge or any other charge or fee
on any transfer by the Borrower of funds to, through or by the Security Trustee
pursuant to any Operative Agreement, except as may be otherwise agreed in
writing by the Borrower.
SECTION 7. THE SECURITY TRUSTEE
Section 7.1     Acceptance of Trusts and Duties. Pursuant to the Loan Agreement,
Wells Fargo Bank Northwest, National Association, has been appointed as the
Security Trustee by the Lender. The Security Trustee accepts, for the benefit of
the Lender, the trusts and duties hereby created and applicable to it and agrees
to perform such duties but only upon the terms of this Security Agreement and
agrees to receive and disburse all moneys received by it as the Security Trustee
constituting part of the Collateral in accordance with the terms hereof. The
Security Trustee shall have no liability hereunder or under any other Operative
Agreement, except (a) for its own willful misconduct or gross negligence (or
ordinary negligence in the receipt or disbursement of money) or breach of any of
its representations or warranties made herein or in any other Operative
Agreement to which it is a party, or (b) as otherwise expressly provided in this
Security Agreement or the other Operative Agreements.
Section 7.2     Absence of Duties. Except in accordance with written
instructions, requests or consents furnished pursuant to Sections 6.1, 6.2 or
9.1 and except as provided in, and without limiting the generality of, Section
6.4, the Security Trustee shall have no duty (a) to see to any registration of
any Aircraft or any recording or filing of this Security Agreement or any other
document, or to see to the maintenance of any such registration, recording or
filing, (b) to see to any insurance on any Aircraft or to effect or maintain any
such insurance, whether or not the Borrower shall be in default with respect
thereto, (c) to confirm, verify or inquire into the failure to receive any
financial statements of the Borrower, (d) to inspect any Aircraft at anytime or
ascertain or inquire as to the performance or observance of any of the
Borrower's covenants under this Security Agreement with respect to any Aircraft
or (e) to give any consent, make any election or determination or exercise any
discretion, it being understood that, except as otherwise expressly provided
herein, the duties of the Security Trustee hereunder and under any other
Operative Agreement shall be wholly ministerial in nature.
Section 7.3     No Representations or Warranties as to the Aircraft or
Documents. The Security Trustee shall not be deemed to have made any
representation or warranty as to the validity, legality or enforceability of
this Security Agreement, the Notes, any Security Agreement Supplement, any other
Operative Agreement or any other document or instrument, or as to the
correctness of any statement (other than a statement by the Security Trustee)
contained herein or therein, except that the Security Trustee hereby represents
and warrants that:
(a)     Wells Fargo Bank Northwest, N.A. is a national banking association duly
organized and validly existing and in good standing under the laws of the United
States, is a "citizen of the United States" within the meaning of the Federal
Aviation Code and the rules and regulations of the FAA promulgated thereunder
(without the use of a voting trust agreement), and has the full corporate power
and authority and the legal right under the laws of the State of Utah and the
laws of the United States in each case governing its banking, trust and
fiduciary

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powers to execute, deliver and carry out the terms of this Security Agreement
and the other Operative Agreements to which it is a party;
(b)     this Security Agreement and the other Operative Agreements to which it
is a party have been duly authorized by all necessary corporate action on its
part, and neither the execution and delivery hereof or thereof nor its
performance of any of the terms and provisions hereof or thereof will violate
any law or regulation of the State of Utah or any federal law or regulation of
the United States in each case governing its banking or trust powers, any order
or judgment applicable to it or contravene or result in a breach of, or
constitute any default under, its corporate charter or by-laws; and
(c)     each of this Security Agreement and the other Operative Agreements to
which it is a party has been or will be duly executed and delivered by one of
its officers who is and will be duly authorized to execute and deliver such
document on its behalf and that each such document is its valid and binding
obligation, enforceable against the Security Trustee in accordance with its
terms, subject to the effects of bankruptcy, insolvency, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally, general equitable principles (whether considered in a proceeding at
law or in equity) and an implied covenant of good faith and fair dealing.

Section 7.4     No Segregation of Moneys; No Interest. No moneys received by the
Security Trustee hereunder need be segregated in any manner except to the extent
required by law, and any such moneys may be deposited under such general
conditions for the holding of trust funds as may be prescribed by law applicable
to the Security Trustee, and, except as otherwise provided herein or as agreed
in writing by the Security Trustee, the Security Trustee shall not be liable for
any interest thereon; provided that any payments received or applied hereunder
by the Security Trustee shall be accounted for by the Security Trustee so that
any portion thereof paid or applied pursuant hereto shaH be identifiable as to
the source thereof.
Section 7.5     Reliance; the Security Trustees; Advice of Counsel. The Security
Trustee shall incur no liability to anyone in acting upon any signature,
instrument, notice, resolution, request, consent, order, certificate, report,
opinion, bond or other document or paper reasonably believed by the Security
Trustee to be genuine and reasonably believed by it to be signed by the proper
party or parties. The Security Trustee may accept a copy of a resolution of the
Board of Directors of the Borrower or the Lender certified by the Secretary or
an Assistant Secretary of such party or in the case of the Lender, by any
officer as duly adopted and in full force and effect, as conclusive evidence
that such resolution has been duly adopted and that the same is in full force
and effect. As to any fact or matter the manner of ascertainment of which is not
specifically described herein, the Security Trustee may for all purposes hereof
rely on an Officer's Certificate of the Borrower, as to such fact or matter, and
such certificate shall constitute full protection to the Security Trustee for
any action taken or omitted to be taken by it in good faith in reliance thereon.
The Security Trustee shall furnish to the Borrower upon request such information
and copies of such documents as the Security Trustee may have and as are
necessary for the Borrower to perform its duties under this Agreement; provided
that the failure of the Security Trustee to furnish such information or
documents shall not affect the Borrower's obligations hereunder or under the
Notes. The Security Trustee shall assume, and shall be fully protected in
assuming, that the Borrower is authorized to enter into this Security

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Agreement and to take all actions permitted to be taken by it pursuant to the
provisions hereof, and shall not inquire into the authorization of the Borrower
with respect thereto. In the administration of the trusts hereunder, the
Security Trustee may execute any trust or power hereof and perform its powers
and duties hereunder directly or through agents or attorneys and the Security
Trustee shall not be responsible for any misconduct or negligence on the part of
any agent or attorney appointed with due care by it hereunder and may consult
with independent counsel, accountants and other skilled persons to be selected
and employed by it, and the Security Trustee shall not be liable for anything
done, suffered, or omitted in good faith by it in accordance with the written
advice or opinion of any such independent counsel, accountants or other skilled
persons acting within such persons' area of competence (so long as the Security
Trustee shall have exercised reasonable care in selecting such persons).
Section 7.6     Capacity in Which Acting. Wells Fargo has entered into this
Security Agreement in its individual capacity.
Section 7.7     Compensation and Reimbursement. The Borrower agrees:
(a)     to pay to the Security Trustee from time to time reasonable compensation
for all services rendered by it hereunder or under any Operative Agreement
(which compensation shall not be limited by any provision of law in regard to
the compensation of a trustee of an express trust); and
(b)     except as otherwise expressly provided herein, to reimburse the Security
Trustee upon its request for all reasonable expenses, disbursements and advances
incurred or made by the Security Trustee in accordance with any provision of
this Security Agreement or any Operative Agreement (including the reasonable
compensation and the expenses and disbursements of its agents and counsel),
except any such expense, disbursement or advance as may be attributable to its
gross negligence or bad faith.

The obligations of the Borrower under this Section 7.7 shall survive the
resignation or removal of the Security Trustee and the termination of this
Security Agreement and are in addition to any provision in any other Operative
Agreement relating to the subject matter thereof, which provision shall not be
deemed to limit the obligations of the Borrower contained in this Section.
SECTION 8. SUCCESSOR TRUSTEE
Section 8.1     Resignation of the Security Trustee; Appointment of Successor.
(a) The resignation or removal of the Security Trustee and the appointment of a
successor the Security Trustee shall become effective only upon the successor
the Security Trustee's acceptance of appointment as provided in this Section
8.1. The Security Trustee or any successor thereto may resign at any time
without cause by giving at least 60 days' prior written notice to the Borrower
and the Lender. In addition, either the Borrower (so long as no Event of Default
shall have occurred and be continuing) or the Lender may at any time remove the
Security Trustee without cause by an instrument in writing delivered to the
Security Trustee, the Lender and (in the case of a removal by the Lender) the
Borrower.

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In the case of the resignation or removal of the Security Trustee, the Borrower
(unless an Event of Default shall have occurred and be continuing, in which case
the Lender) shall promptly appoint a successor the Security Trustee reasonably
acceptable to the Lender; provided that the Lender may appoint, within one year
after such resignation or removal, a successor the Security Trustee which may be
other than any successor the Security Trustee appointed by the Borrower as
provided above, so long as such other successor is (so long as no Event of
Default shall have occurred and be continuing) satisfactory to the Borrower, and
such successor the Security Trustee appointed as provided above shall be
superseded by the successor the Security Trustee so appointed by the Lender. If
a successor the Security Trustee shall not have been appointed and accepted its
appointment hereunder within 60 days after the Security Trustee gives notice of
resignation as provided above, the retiring the Security Trustee, the Borrower
or the Lender may petition any court of competent jurisdiction for the
appointment of a successor the Security Trustee. Any successor the Security
Trustee so appointed by such court shall immediately and without further act be
superseded by any successor the Security Trustee appointed as provided in the
proviso to the second preceding sentence within one year from the date of the
appointment by such court.
(b)     Any successor the Security Trustee, however appointed, shall execute and
deliver to the Borrower, the Lender and the predecessor the Security Trustee an
instrument accepting such appointment, and thereupon such successor the Security
Trustee, without further act, shall become vested with all the estates,
properties, rights, powers, duties and trusts of the predecessor the Security
Trustee hereunder in the trusts hereunder applicable to it with like effect as
if originally named the Security Trustee herein; but nevertheless, upon the
written request of such successor the Security Trustee, such predecessor the
Security Trustee shall execute and deliver an instrument transferring to such
successor the Security Trustee, upon the trusts herein expressed applicable to
it, all the estates, properties, rights, powers and trusts of such predecessor
the Security Trustee, and, upon payment of its charges, such predecessor the
Security Trustee shall duly assign, transfer, deliver and pay over to such
successor the Security Trustee all moneys or other property then held by such
predecessor the Security Trustee hereunder.
(c)     Any successor the Security Trustee, however appointed, shall be a
"citizen of the United States" within the meaning of the Federal Aviation Code
(49 U.S.C. § 401 02(a)(15)) and shall also be a bank or trust company having a
combined capital and surplus of at least $100,000,000 or a bank or trust company
whose obligations are guaranteed by a bank or trust company having a combined
capital and surplus of at least $100,000,000 or a corporation with a net worth
of at least $100,000,000.
(d)     Any corporation into which the Security Trustee may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Security Trustee shall
be a party, or any corporation to which all or substantially all of the
corporate trust business of the Security Trustee may be transferred, shall,
subject to the terms of paragraph (c) of this Section, be the Security Trustee
under this Security Agreement without further act.
(e)     The Borrower consents to any change in the identity of the Security
Trustee on the International Registry occasioned by provisions of this Section
8.1, and if required by the International Registry to reflect such change, will
provide its consent thereto.

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SECTION 9. SUPPLEMENTS AND AMENDMENTS TO THIS SECURITY AGREEMENT
AND OTHER DOCUMENTS

Section 9.1     Supplemental Security Agreements. With the written consent of
the Lender, the Borrower may, and the Security Trustee, subject to Section 9.2,
shall, at any time and from time to time, enter into an amendment or amendments
hereto or to any of the other Operative Agreements for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Security Agreement or of modifying in any manner the rights and obligations
of the Lender and of the Borrower hereunder or thereunder.
Section 9.2     The Security Trustee Protected. If in the opinion of the
Security Trustee any document required to be executed pursuant to the terms of
Section 9.1 adversely affects any right, duty, immunity or indemnity in favor of
the Security Trustee under this Security Agreement or the other Operative
Agreements, the Security Trustee may in its discretion decline to execute such
document.
Section 9.3     Documents Mailed to the Lender. Promptly after the execution by
the Security Trustee of any document entered into pursuant to this Section 9,
the Security Trustee shall mail, by first-class mail (air mail in the case of
international), postage prepaid, a conformed copy thereof to the Lender at the
address provided for the Lender in Section 9.2 of the Loan Agreement or at such
other address as may be specified by the Lender pursuant to Section 9.2 of the
Loan Agreement, but the failure of the Security Trustee to mail such conformed
copies shall not impair or affect the validity of such document.
SECTION 10. INVESTMENT OF SECURITY FUNDS
Section 10.1     Investment of Security Funds. Any monies paid to or retained by
the Security Trustee that are required to be paid to the Borrower or applied for
the benefit or at the direction of the Borrower, but which the Security Trustee
is entitled to hold under the terms hereof pending the occurrence of some event
or the performance of some act (including, without limitation, the remedying of
a Default or Event of Default), shall, until paid to the Borrower or applied as
provided herein, be invested by the Security Trustee at the written
authorization and direction of the Borrower from time to time at the sole
expense and risk of the Borrower in Permitted Investments. Such authorization
and direction of the Borrower shall specify the particular investment to be made
and shall certify that such investment constitutes a Permitted Investment. All
Permitted Investments held by the Security Trustee pursuant to this Section 10.1
shall either be (a) registered in the name of, payable to the order of, or
specially endorsed to, the Security Trustee, or (b) held in an Eligible Account.
There shall be promptly remitted to the Borrower any income or gain (including
interest received) realized as the result of any such investment (net of any
fees, commissions and other expenses, if any, incurred in connection with such
investment) unless a Default or Event of Default shall have occurred and be
continuing. If a Default or Event of Default shall have occurred and be
continuing, the Security Trustee shall hold any such income or gain as security
for the obligations of the Borrower hereunder and apply it against such
obligations as and when due, and at such time as there shall not be continuing
any such Default or Event of Default, such amount, to the extent not previously
so applied against the Borrower's obligations, shall be paid to the Borrower;
provided that if any such amount has been so held as security for more than 183
days, during which period (i) the Security Trustee shall not

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have been limited by operation of law or otherwise from exercising remedies and
(ii) the Security Trustee shall not have exercised any remedy available to it
under Section 5.1, then such amount, to the extent not previously so applied
against such obligations of the Borrower, shall be paid to the Borrower.
Section 10.2     Liability for Losses. Except to the extent provided in Section
7.1, the Security Trustee in its individual capacity shall not be liable for any
loss relating to an investment made in accordance with instructions received by
it pursuant to this Section 10. The Borrower will promptly pay to the Security
Trustee, on demand, the amount of any loss for which the Security Trustee is not
liable realized as the result of any such investment (together with any fees,
commissions and other expenses, if any, incurred in connection with such
investment).
SECTION 11. MISCELLANEOUS
Section 11.1     Termination of Security Agreement. Upon payment in full of the
principal of, and interest on, the Relevant Loan with respect to an Aircraft and
all other amounts then due and owing of the 2013 Secured Obligations and only in
the event that no Event of Default, or "Event of Default" (as defined in any
thereof), shall have occurred and be continuing under any of the Other Operative
Agreements, the Security Trustee shall, upon the written request of the Borrower
and at the written direction of the Lender, execute and deliver to, or as
directed in writing by, and at the expense of, the Borrower an appropriate
instrument or instruments (in due form for recording and in the form provided by
the Borrower and approved by the Lender) releasing, without recourse,
representation or warranty, such Aircraft and the Related Collateral (or, in the
case of the last remaining Aircraft, all remaining Collateral) from the Lien of
this Security Agreement and, in such event, this Security Agreement and the
trusts created hereby shall terminate and this Security Agreement shall be of no
further force or effect except as provided in Section 7.7. Except as otherwise
provided above, this Security Agreement and the trusts created hereby shall
continue in full force and effect in accordance with the terms hereof.
Section 11.2     No Legal Title to Collateral in the Lender. Except as otherwise
provided in Section 5.1, the Lender shall have no legal title to any part of the
Collateral. No transfer, by operation of law or otherwise, of any right, title
and interest of the Lender in and to the Collateral or this Security Agreement
shall operate to terminate this Security Agreement or the trusts hereunder or
entitle any successor or transferee of the Lender to an accounting or to the
transfer to it of legal title to any part of the Collateral.
Section 11.3     Sale of an Aircraft by the Security Trustee is Binding. Any
sale or other conveyance of any Aircraft, Airframe, Engine or interest therein
by the Security Trustee made pursuant to the terms of this Security Agreement
shall bind the Lender and the Borrower, and shall be effective to transfer or
convey all right, title and interest of the Security Trustee, the Borrower and
the Lender in and to such Aircraft, Airframe, Engine or interest therein. 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 the Lender.

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Section 11.4     Benefit of Security Agreement. Nothing in this Security
Agreement, whether express or implied, shall be construed to give to any Person
other than the Borrower, the Security Trustee and the Lender any legal or
equitable right, remedy or claim under or in respect of this Security Agreement.

Section 11.5     Section 1110. It is the intention of the parties hereto that
the security interest created hereby, to the fullest extent available under
applicable law, entitles the Security Trustee, on behalf of the Lender, to all
of the benefits of Section 1110 with respect to the Aircraft including the right
to take possession of the Airframes and Engines in compliance with this
Agreement in the event of a case under Chapter 11 of the Bankruptcy Code in
which the Borrower is a debtor.

Section 11.6     The Borrower's Performance and Rights. Any obligation imposed
on the Borrower herein shall require only that the Borrower perform or cause to
be performed such obligation, even if stated as a direct obligation, and the
performance of any such obligation by any permitted assignee, lessee or
transferee under an assignment, lease or transfer agreement then in effect and
in accordance with the provisions of the Operative Agreements shall constitute
performance by the Borrower and to the extent of such performance, discharge
such obligation by the Borrower. Except as otherwise expressly provided herein,
any right granted to the Borrower in this Agreement shall grant the Borrower the
right to permit such right to be exercised by any such assignee, lessee or
transferee. The inclusion of specific references to obligations or rights of any
such assignee, lessee or transferee in certain provisions of this Agreement
shall not in any way prevent or diminish the application of the provisions of
the two sentences immediately preceding with respect to obligations or rights in
respect of which specific reference to any such assignee, lessee or transferee
has not been made in this Agreement.

Section 11.7     Notices. Unless otherwise expressly specified or permitted by
the terms hereof, all notices required or permitted under the terms and
provisions hereof shall be in English and in writing, and any such notice may be
given by U. S. mail, courier service or facsimile (confirmed by telephone or in
writing in the case of notice by facsimile) or any other customary means of
communication, and shall in addition be delivered by email (but delivery by
email shall not determine the time when such notice or communication shall be
deemed "delivered" hereunder), and any such notice shall be effective when
delivered if to the Borrower or the Security Trustee, to its address or number
set forth below its signature at the foot of this Agreement (which in the case
of the Security Trustee shall be deemed, unless otherwise indicated, to be the
address of the Corporate Trust Department), and, if to the Lender, to its
address or number set forth in Section 9.2 of the Loan Agreement.

Section 11.8     Severability. Should anyone or more provisions of this Security
Agreement be determined to be illegal or unenforceable by a court of any
jurisdiction, such provision shall be ineffective to the extent of such
illegality or unenforceability without invalidating the remaining provisions
hereof or affecting the validity or enforceability of such provision in any
other jurisdiction, to the extent permitted by applicable Law.

Section 11.9     Separate Counterparts. This Security Agreement may be executed
in any number of counterparts (and each of the parties hereto shall not be
required to execute the same counterpart). Each counterpart of this Security
Agreement including a signature page

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executed by each of the parties hereto shall be an original counterpart of this
Security Agreement, but all of such counterparts together shall constitute one
instrument.
Section 11.10     Successors and Assigns. All covenants and agreements contained
herein and in the other Operative Agreements shall be binding upon, and inure to
the benefit of, the Borrower and its successors and permitted assigns, and the
Security Trustee and its successors and permitted assigns, and the Lender and
its successors and permitted assigns, all as provided herein or in the other
Operative Agreements. Any request, notice, direction, consent, waiver or other
instrument or action by the Lender (unless withdrawn by the Lender or its
successor prior to it being acted upon by the Security Trustee) shall bind the
successors of the Lender.
Section 11.11     Third Party Beneficiary. The Export Credit Guarantor and it
successors and permitted assigns shall be a third party beneficiary of the
statements made, undertakings and obligations of the Borrower pursuant to the
Operative Agreements.
Section 11.12     Headings. The headings of the various 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.
Section 11.13     Governing Law; Jurisdiction.
(a)     THIS SECURITY AGREEMENT IS BEING DELIVERED IN THE STATE OF NEW YORK AND
THIS SECURITY AGREEMENT AND ANY SECURITY AGREEMENT SUPPLEMENT SHALL IN ALL
RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
(b)     Each of the parties hereto hereby irrevocably and unconditionally
submits, for itself and its property, to the nonexclusive jurisdiction of any
New York State court or Federal court of the United States of America sitting in
New York City, and any appellate court from any thereof, in any action or
proceeding arising out of or relating to this Security Agreement or any of the
other Operative Agreements to which it is a party, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims arising thereunder in respect of any
such action or proceeding may be heard and determined in any such New York State
court or, to the fullest extent permitted by law, in such Federal court. Each of
the parties hereto agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law. Nothing in this Security
Agreement shall affect any right that any party may otherwise have to bring any
action or proceeding relating to this Security Agreement or any of the other
Operative Agreements in the courts of any jurisdiction.
(c)     Each of the parties hereto irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any objection that it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Security Agreement or any of the
other Operative Agreements to which it is a party in any New York

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State or Federal court. Each of the parties hereto hereby irrevocably waives, to
the fullest extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.
(d)     The Borrower hereby irrevocably and unconditionally agrees that service
of process upon it 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 under
Section 11.7 hereof or at such other address of which it shall have notified to
the other party pursuant thereto.
Section 11.14     Normal Commercial Relations. Anything contained in this
Security Agreement to the contrary notwithstanding, the Borrower, the Lender or
the Security Trustee or any Affiliate of the Borrower, the Lender or the
Security Trustee may enter into commercial banking or other financial
transactions with each other, and conduct banking or other commercial
relationships with each other, fully to the same extent as if this Security
Agreement were not in effect, including, without limitation, the making of loans
or other extensions of credit for any purpose whatsoever.
Section 11.15     Confidential Information. Each of the Borrower and the
Security Trustee agrees to keep confidential all non-public information provided
to it pursuant to or in connection with this Security Agreement, the other
Operative Agreements and the transactions contemplated hereby or thereby;
provided that nothing herein shall prevent any party hereto from disclosing any
such information (i) to its employees, directors, agents, attorneys, accountants
and other professional advisors in which case such persons will be advised of
the confidential nature of the information so disclosed and will be required to
keep such information confidential, (ii) to the Lender or BNDES, (iii) upon the
demand of any Government Entity having jurisdiction over such party, or in
response to any order of any court or other Government Entity or as may
otherwise be required pursuant to any Requirement of Law, after providing the
other party with prompt notice of such request, demand, order or other
requirement so that such party may seek an appropriate protective order and
after making reasonable efforts to resist disclosure, (iv) in connection with
the exercise of any remedy hereunder or under the other Operative Agreements,
(v) in the situations foreseen in Complementary Law no. 105 of January 10, 2001
of Brazil or at the request of the Federal Public Administration of the
Accounting Court of Brazil Tribunal de Contas da União, in which case the
requesting entities will be advised of the confidential nature of the
information so disclosed, or (vii) as permitted in the Loan Agreement or the
Funding Agreement.
Section 11.16     Notices, Instructions, Consents, Execution and Waiver.
Whenever the provisions of this Security Agreement require or permit notice from
or to, instructions from, consent of, execution of any amendment, supplement,
instrument, certificate or other document by, or a waiver by, the Lender, the
notice from or to, instruction from, consent of, execution by or waiver by, the
holders on the date of such notice, instruction, consent, execution or waiver of
more than 50% in interest of the principal amount of the Notes then outstanding
shall be considered notice from or to, instruction from, consent of, execution
by or waiver by, the Lender and shall be binding upon any present or subsequent
the Lender; provided, however, that without the consent of each holder at the
time thereof affected thereby, no amendment, supplement, consent or waiver
shall:

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(a)     change the final maturity of any Note, or change the dates or amounts of
payment of any installment of the principal of or interest on any Note, or
reduce the principal of or interest on any Note, or change to a location outside
the United States of America the place of payment where, or the coin or currency
in which, the principal amount of any Note is payable; or

(b)     create any Lien with respect to the Collateral except such as are
permitted by this Security Agreement, or deprive any such holder of the benefit
of the Lien on the Collateral created by the Security Agreement; or

(c)     modify the provisions of this Section 11.16; or
(d)     adversely affect any indemnities in favor of such holder.

Section 11.17     Register. The Security Trustee hereby agrees to maintain the
Register pursuant to Section 9.5(d)(v) of the Loan Agreement as agent for and on
behalf of the Borrower.
Section 11.18     WAIVERS OF JURY TRIAL. TO THE EXTENT PERMITTED BY APPLICABLE
LAW, EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY
JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER
OPERATIVE AGREEMENT AND FOR ANY COUNTERCLAIM THEREIN.

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IN WITNESS WHEREOF, the parties hereto have caused this Security Agreement to be
duly executed by their respective officers, as the case may be, thereunto duly
authorized, as of thc day and year first above written.
REPUBLIC AIRLINE INC.
 
 
 
 
 
By:
/s/ Lars - Erik Arnell
 
Name:
LARS - ERIK ARNELL
 
 
Title:
SENIOR VP
 
 
Address:
8909 Purdue Road
 
 
 
Suite 300
 
 
 
Indianapolis, IN 46268
 
 
 
 
 
 
 
 
 
WELLS FARGO BANK NORTHWEST,
NATIONAL ASSOCIATION,
 
as the Security Trustee
 
 
By:
 
 
 
 
Name:
 
 
 
Title:
 
 
 
Address:
260 N. Charles Lindbergh Drive
 
 
Salt Lake City, UT 84116
 
 
 
 
 
Attn:
Corporate Trust Department

[Signature page to Aircraft Security Agreement (2013)]

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IN WI1NESS WHEREOF, the parties hereto have caused this Security Agreement to be
duly executed by their respective officers, as the case may be, thereunto duly
authorized, as of the day and year first above written.
REPUBLIC AIRLINE INC.
 
 
 
 
 
By:
 
 
 
 
Name:
 
 
 
Title:
 
 
 
Address:
8909 Purdue Road
 
 
 
Suite 300
 
 
 
Indianapolis, IN 46268
 
 
 
 
 
 
 
 
 
WELLS FARGO BANK NORTHWEST,
NATIONAL ASSOCIATION,
 
as the Security Trustee
 
 
By:
/s/ Jon Croasmun
 
Name:
Jon Croasmun
 
 
Title:
Vice President
 
 
Address:
260 N. Charles Lindbergh Drive
 
 
Salt Lake City, UT 84116
 
 
 
 
 
Attn:
Corporate Trust Department

[Signature page to Aircraft Security Agreement (2013)]

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ANNEX A
to Loan Agreement
and to Security Agreement

FINANCING OF UP TO 47 EMBRAER ERJ 175LR (CERTIFICATION
DESIGNATION AND SHOWN ON THE FAA RECORDS AS ERJ 170-200LR)
AIRCRAFT DEFINITIONS RELATING TO LOAN AGREEMENT
AND SECURITY AGREEMENT

"2013 Secured Obligations"; has the meaning set forth in Section 2.1 of the
Security Agreement
"Actual Knowledge"; with respect to any party, except as provided in Section
6.1 of the Security Agreement, actual knowledge of a President, Vice President,
Director or more senior officer thereof, or any other officer of a party having
responsibility for the transactions contemplated by the Operative Agreements;
provided that each party shall be deemed to have "Actual Knowledge" of any
matter as to which it has received notice in accordance with Section 9.2 of the
Loan Agreement.
"Additional Insureds"; has the meaning set forth in Section D of Annex C of the
Security Agreement.
"Affiliate"; with respect to a specified Person, any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such Person. For the purpose of this definition, "control" when
used with respect to any specified Person, means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise, and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"After-tax Basis"; with respect to any payment to be received or accrued by any
Person, the amount of such payment adjusted, if necessary, so that such payment,
after taking into account all Taxes payable to any taxing authority as a result
of the receipt or accrual of such payments and any savings in Taxes (other than
Indemnified Taxes) as a result of the payment or accrual of the Indemnified Tax,
Expenses or other liability in respect of which such payment is due, shall be
equal to the payment to be received or accrued.
"Aircraft"; an Airframe and its Associated Engines and includes, for any
Aircraft, the BFE for such Aircraft or, collectively, all Airframes and Engines.
"Aircraft Documents"; with respect to any Aircraft, all technical data, manuals
and log books, and all inspection, modification and overhaul records and other
service, repair, maintenance and technical records that are required by the FAA
(or the relevant Aviation Authority) to be maintained with respect to such
Aircraft (or any of its component Airframe, Engines or Parts); and such term
shall include all additions, renewals, revisions and replacements of any such
materials from time to time made, or required to be made, by the FAA (or other
Aviation Authority) regulations, and in each case in whatever form and by
whatever means or medium (including, without limitation,

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microfiche, microfilm, paper or computer disk) such materials may be maintained
or retained by or on behalf of the Borrower; provided that all such materials
shall be maintained in the English language.
"Aircraft Object": is defined in the Cape Town Treaty.
"Aircraft Warranties": with respect to any Aircraft, all warranties and
assurances relating to such Aircraft and related equipment manufactured by the
Manufacturer contained in Attachment C of the Purchase Agreement.
"Airframe": (a) each Embraer ERJ l75LR (certification designation and shown on
the FAA records as ERJ l70-200LR) aircraft (except the Engines or engines from
time to time installed thereon) listed by manufacturer's serial number and
subjected to the Lien of the Security Agreement pursuant to the Security
Agreement Supplement executed and delivered by the Borrower on a Relevant
Borrowing Date; and (b) any and all Parts so long as the same shall be
incorporated or installed in or attached to such aircraft, or so long as the
same shall be subject to the Lien of the Security Agreement in accordance with
the terms of Section 3.4 thereof after removal from such aircraft. The term
"Airframe" shall include any Replacement Airframe which may from time to time be
substituted pursuant to Section 3.4 of the Security Agreement. At such time as a
Replacement Airframe shall be so substituted and the Airframe for which the
substitution is made shall be released from the Lien of the Security Agreement,
such replaced Airframe shall cease to be an Airframe under the Security
Agreement.
"Airframe Interchange Agreement": an agreement between the Borrower (or a
Permitted Lessee) and another air carrier which qualifies as a Permitted Lessee
pursuant to which they agree to provide passenger service to multiple
destinations under circumstances where an Airframe may be operated by and in the
possession of such other air carrier for a period not to exceed seven
consecutive days (subject to extension in the event of unforeseen
circumstances).
"Annual Inspection": has the meaning set forth in Annex D to the Security
Agreement.
"Annual Inspection Report": has the meaning set forth in Annex D to the Security
Agreement.
"Applicable Percentage" means (a) 85%, if Guarantor's ASU risk classification is
B or higher or (b) 80% if Guarantor's ASU risk classification is B-or lower.
"Assignment": has the meaning specified in Section 9.5(b)(2) of the Loan
Agreement.
"Associated Airframe": with respect to any Engine, the Airframe specified as
comprising part of the Aircraft that included such Engine (or if such Engine is
a Replacement Engine, the original Engine that such Replacement Engine directly
or indirectly replaced) in the Security Agreement Supplement delivered at the
Relevant Closing for such Aircraft, or any Replacement Airframe substituted
therefor.

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"Associated Engines": with respect to any Aircraft, the Engines specified as
comprising part of such Aircraft (or, if the Airframe included as part of such
Aircraft is a Replacement Airframe, the Aircraft that included the original
Airframe that such Replacement Airframe directly or indirectly replaced) in the
Security Agreement Supplement delivered at the Relevant Closing for such
Aircraft, or any Replacement Engine substituted therefor (in each case, whether
or not such Engine is then installed on the Airframe comprising part of such
Aircraft).
"ASU": the Sector Understanding on Export Credits for Civil Aircraft published
by the OECD, effective 1 February 2011, as supplemented and/or amended from time
to time.
"Aviation Authority": the FAA or, in the case of any Aircraft that is permitted
to be, and is, registered with any other Government Entity under and in
accordance with Section 3.3 of the Security Agreement, such other Government
Entity.
"Bankruptcy Code": the United States Bankruptcy Code, 11 U.S.C. § 101 et seq, as
amended, modified, succeeded or replaced from time to time.
"Bankruptcy Default": a Default under Section 8.1(f) of the Loan Agreement.
"Bankruptcy Event": with respect to any Person, any of the following events:
(a)     such Person shall consent to the appointment of or the taking of
possession by the receiver, trustee or liquidator of itself or of substantially
all of its property, or such Person shall admit in writing its inability to pay
its debts generally as they come due, or does not pay its debts generally as
they become due or shall authorize a general payment moratorium, except to the
extent payments are made within applicable grace periods, or shall make a
general assignment for the benefit of creditors; or
(b)     such Person shall file a voluntary petition in bankruptcy or a voluntary
petition or an answer seeking reorganization, liquidation or other relief in a
proceeding under the Bankruptcy Code (as in effect at such time) or other
bankruptcy or insolvency Laws (as in effect at such time) or such Person shall
seek relief by voluntary petition, answer, or consent under the provisions of
any other bankruptcy, insolvency or other similar Law providing for the
reorganization or winding-up of corporations (as in effect at such time) or such
Person's board of directors shall adopt a resolution authorizing any of the
foregoing; or
(c)     an order, judgment or decree shall be entered by any court of competent
jurisdiction appointing, without the consent of such Person, a receiver, trustee
or liquidator of such Person or of substantially all of its property, or
sequestering substantially all of the property of such Person, and any such
order, judgment or decree of appointment or sequestration shall remain in force
undismissed, unstayed or unvacated for a period of 60 days after the date of
entry thereof; or
(d)     a petition against such Person in a proceeding under the Bankruptcy Code
(as in effect at such time) or any other bankruptcy laws or other

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insolvency laws (as in effect at such time) shall be filed and shall not be
withdrawn or dismissed within 60 days thereafter, or, under the provisions of
any Law providing for reorganization or winding-up of corporations which may
apply to such Person, any court of competent jurisdiction shall assume
jurisdiction, custody or control of such Person or of substantially all of its
property and such jurisdiction, custody or control shall remain in force
unrelinquished, unstayed or unterminated for a period of 60 days.
"Basel III": the comprehensive set of reform measures developed (and designated
as "Basel III" in September 2010) by the Basel Committee on Banking Supervision,
to strengthen the regulation, supervision and risk management of the banking
sector.
"BFE": all buyer furnished equipment, if any, installed on the Aircraft on or
before the Delivery Date, and listed in an attachment to the BFE Bill of Sale.
"Bills of Sale": in the case of any Aircraft, the FAA Bill of Sale and the
Warranty Bill of Sale with respect to such Aircraft.
"BNDES": Banco Nacional de Desenvolvimento Econ6mico e Social, a Brazilian
Federal public company with its principal place of business in Brasilia,
Distrito Federal, Federative Republic of Brazil, and main offices in the City of
Rio de Janeiro, at Avenida República do Chile, No. 100 CEP 20139-900 -Rio de
Janeiro -RJ, Brazil 20-139-900 registered in the General Register of Taxpayers
under the number 33.657.248/0001-89.
"Borrower": Republic Airline Inc., an Indiana corporation.
"Brazil": the Federative Republic of Brazil.
"Brazilian Currency Equivalent": has the meaning set forth in Section 2.1 of the
Loan Agreement.
"Brazilian Government Lender": any of FINAME, BNDES or any other Lender which is
the federal government (União Federal) of Brazil or which is controlled directly
or indirectly by the federal government of Brazil.
"Break Amount": in respect of any Loan:
(a)     (in the case of a Relevant Loan bearing Floating Rate), the amount (if
any) by which any interest which would be received by the Lender as a result of
putting the relevant principal amount of such Relevant Loan on deposit with one
of the Reference Banks for a period equal to the then remaining portion of the
Interest Period in relation to such Relevant Loan is lower than the amount of
interest which would have accrued pursuant to clause 2.2 of the Loan Agreement
on such principal amount of such Relevant Loan during such remaining portion of
such Interest Period had such principal not been prepaid; and
(b)     (in the case of a Loan bearing interest at a Fixed Rate), on any day,
the excess, if any, of (i) the present value, calculated as of the date of such
prepayment utilizing as a discount rate the Fixed Rate that would be applied if
a Loan with a Fixed

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Rate of interest was made to the Borrower on such date of prepayment, of all
remaining principal and interest payments related to such Relevant Loan over
(ii) one hundred per cent (100%) of the outstanding principal amount of such
Relevant Loan and accrued interest as at such date of prepayment.
"Broad Based Offering": has the meaning specified in Section 9.5(d)(iii) of the
Loan Agreement.
"Business Day": any day other than a Saturday, Sunday or other day on which
commercial banks are authorized or required by law, regulation or executive
order to close in New York, New York, Indianapolis, Indiana, Rio de Janeiro,
Brazil or the city and state in which the Corporate Trust Department is located.
"Cape Town Treaty": the Cape Town Convention on International Interests in
Mobile Equipment and the related Aircraft Equipment Protocol, as in effect in
the United States.
"Change in U.S. Tax Law": (a) any change after the Document Closing Date to the
Code, the Regulations, or administrative guidance or (b) any formal or informal
change in any IRS position with respect to, or interpretation of, U.S. Tax Law,
regardless of how and when such change is advanced, announced or articulated
provided that for purposes of clarification, if any private letter ruling has
been formally revoked as of the Closing Date and notice of such revocation has
been made readily available to the public as of such date, such revocation shall
not constitute a Change in U.S. Tax Law.
"Citizen of the United States": is defined in Section 40102(a)(15) of the
Federal Aviation Code and in the FAA Regulations.
"Code": the United States Internal Revenue Code of 1986, as amended from time to
time.
"Code-Share Agreement" has the meaning set forth in the Funding Agreement.
"Collateral": has the meaning specified in Section 2.1 of the Security
Agreement.
"Commitment": has the meaning set forth in the Funding Agreement.
"Commitment Fee": has the meaning provided in Section 2.2(a) of the Funding
Agreement.
"Commitment Termination Event": has the meaning provided in Section 1.1 of the
Funding Agreement.
"Confidential Information": has the meaning set forth in Section 9.14 of the
Loan Agreement.

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"Consent to Assignment": with respect to any Permitted Lease, a consent to
assignment in substantially the form of Exhibit B to the form of Notice of
Assignment attached to the Aircraft Security Agreement, duly completed by the
applicable parties.
"Contractual Currency": has the meaning set forth in Section 9.7 of the Loan
Agreement.
"Corporate Trust Department" or "Trust Department": the Corporate Trust
Department of the Security Trustee located at the principal corporate trust
office of the Security Trustee as specified in Section 11.7 of the Security
Agreement, or such other department or office at which the Security Trustee's
corporate trust business shall be administered which the Security Trustee shall
have specified by written notice to the Borrower and the Lender.
"CRAF": the Civil Reserve Air Fleet Program authorized under 10 U.S.C. § 9511 et
seq. or any substantially similar program under the laws of the United States.
"Debt": any liability for borrowed money, or any liability for the payment of
money in connection with any letter of credit transaction or any other
liabilities evidenced or to be evidenced by bonds, debentures, notes or other
similar instruments.
"Debt Balance": has the meaning set forth in Section B of Annex C to the
Security Agreement.
"Default": an event that, with the giving of notice or the lapse of time or
both, would become an Event of Default.
"Default Rate": the sum of (A) (x) LIB OR, in the case of a Relevant Loan
bearing interest based on LIBOR or (y) the relevant CIRR Rate, for any Relevant
Loan bearing interest based on a Relevant CIRR Rate or (z) the Relevant Swap
Rate, for any Relevant Loan bearing interest based on a Relevant Swap Rate plus
(B) a rate of 2.0% per annum, plus (C) the Margin, plus (D) the Administrative
Fee. The Default Rate shall be calculated on the basis of a 360-day year for the
actual number of days elapsed. The default rate shall not exceed the maximum
interest rate permitted under applicable law.
"Delivery Date" or "Date of Actual Delivery": in the case of any Aircraft, the
date on which such Aircraft is or was delivered by the Manufacturer to the
Borrower.
"Deregistration Power of Attorney": with respect to any Aircraft, the
Deregistration Power of Attorney, substantially in the form of Exhibit F to the
Loan Agreement.
"Document Closing Date": has the meaning specified in the Funding Agreement.
"Dollars", "United States Dollars" or "$": the lawful currency of the United
States.
"EASA": the European Aviation Safety Agency.

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"Eligible Account": an account established by and with an Eligible Institution
acting at the request of the Security Trustee, which institution agrees, for all
purposes of the UCC including Article 8 thereof, that (a) such account shall be
a "securities account" (as defined in Section 8-501 of the UCC), (b) all
property (other than cash) credited to such account shall be treated as a
"financial asset" (as defined in Section 8-102(9) of the UCC), (c) the Security
Trustee shall be the "entitlement holder" (as defined in Section 8102(7) of the
UCC) in respect of such account, (d) it will comply with all entitlement orders
issued by the Security Trustee to the exclusion of the Borrower, and (e) the
"securities intermediary jurisdiction" (under Section 8-110(e) of the UCC) shall
be the State of New York.
"Eligible Institution": the corporate trust department of (a) Wells Fargo Bank
Northwest, National Association, acting solely in its capacity as a "securities
intermediary" (as defined in Section 8-102(14) of the UCC), or (b) a depository
institution organized under the laws of the United States of America or anyone
of the states thereof or the District of Columbia (or any U.S. branch of a
foreign bani,), which has a long-term unsecured debt rating from Moody's and
Standard & Poor's of at least A3 or its equivalent.
"Engine": (a) each of the General Electric CF34-8E5 series engines listed by
manufacturer's serial numbers and subjected to the Lien of the Security
Agreement pursuant to a Security Agreement Supplement executed and delivered by
the Borrower on a Relevant Borrowing Date, whether or not from time to time
installed on an Airframe or installed on any other airframe or on any other
aircraft; and (b) any Replacement Engine that may from time to time be
substituted for an Engine pursuant to Section 3.3 or Section 3.4 of the Security
Agreement; together, in each case, with any and all Parts so long as the same
shall be incorporated or installed in or attached thereto or so long as the same
shall be subject to the Lien of the Security Agreement in accordance with the
terms of Section 3.3 thereof after removal from any such engine. At such time as
a Replacement Engine shall be so substituted and the Engine for which
substitution is made shall be released from the Lien of the Security Agreement,
such replaced Engine shall cease to be an Engine under the Security Agreement.
"Engine Manufacturer": General Electric Company, a New York corporation,
together with its successors and permitted assigns.
"Engine Manufacturer's Consent and Agreement": in the case of any Aircraft, the
consent of the Engine Manufacturer dated as of the Relevant Borrowing Date for
such Aircraft relating to the grant of a security interest in the Engine
Warranties with respect to the Associated Engines for such Aircraft by the
Borrower to the Security Trustee for the benefit of the Lenders.
"Engine Warranties": with respect to any Engine, all warranties and assurances
relating to such Engine and related equipment manufactured by the Engine
Manufacturer contained in the CF34 Turbofan Airline Operator Warranty.
"Equipment": any Aircraft, Airframe, Engine and/or Part.

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"ERISA": the Employee Retirement Income Security Act of 1974, as amended.
"Event of Default": has the meaning set forth in Section 8.1 of the Loan
Agreement.
"Event of Loss": with respect to any Aircraft, Airframe or Engine, any of the
following circumstances, conditions or events with respect to such property, for
any reason whatsoever:
(a)     the destruction of such property, damage to such property beyond
economic repair or rendition of such property permanently unfit for normal use
by Borrower;
(b)     the actual or constructive total loss of such property or any damage to
such property, or requisition of title or use of such property, which results in
an insurance settlement with respect to such property on the basis of a total
loss or constructive or compromised total loss;
(c)     any theft, hijacking or disappearance of such property for a period of
90 consecutive days or more;
(d)     any seizure, condemnation, confiscation, taking or requisition
(including loss of title), appropriation or condemnation of such property by any
Government Entity or purported Government Entity (other than a requisition of
use by the U.S. Government) for a period exceeding 90 consecutive days; or
(e)     as a result of any law, rule, regulation, order or other action by the
Aviation Authority or by any Government Entity of the government of registry of
an Aircraft, or by any Government Entity otherwise having jurisdiction over the
operation or use of such Aircraft, the use of such property in the normal course
of Borrower's business of passenger air transportation is prohibited for a
period of 90 consecutive days, unless Borrower, prior to the expiration of such
90-day period, shall have undertaken and shall be diligently carrying forward
such steps as may be necessary or desirable to permit the normal use of such
property by Borrower, but in any event if such use shall have been prohibited
for a period of 365 days, provided that no Event of Loss shall be deemed to have
occurred if such prohibition has been applicable to Borrower's (or a Permitted
Lessee's) entire U.S. fleet of such property and Borrower (or a Permitted
Lessee), prior to the expiration of such 365-day period, shall have conformed at
least one unit of such property in its fleet to the requirements of any such
law, rule, regulation, order or other action and commenced regular commercial
use of the same in such jurisdiction and shall be diligently carrying forward in
a manner which does not discriminate against such property in so conforming such
property, steps which are necessary or desirable to permit the normal use of
such property by Borrower, but in any event if such use shall have been
prohibited for a period of three years.

"Expenses": has the meaning specified in Section 9.l6(h) of the Loan Agreement.

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"Export Credit Guarantee": the export credit guarantee to be granted by the
Export Credit Guarantor for the benefit of the Lender.
"Export Credit Guarantee Loan Prepayment Amount": with respect to a Relevant
Export Credit Guarantee Loan as of any date, an amount equal to the sum of (i)
the amount listed on Schedule 2 to the Relevant Note B evidencing such Relevant
Export Credit Guarantee Loan opposite the Payment Date next preceding such date,
unless such date is a Payment Date, then opposite such Payment Date (whichever
is applicable, the "Applicable Payment Date"), plus (ii) unless such date is a
Payment Date, interest accrued on the amount referred to in clause (i) of this
definition from and including the Applicable Payment Date to but excluding such
date at the Relevant Loan B Prepayment Rate, plus (iii) any installment of
principal of such Relevant Export Credit Guarantee Loan due on or prior to the
Applicable Payment Date and accrued interest on any such amount not paid when
due at the Default Rate, plus (iv) interest accrued at the Relevant Loan B
Prepayment Rate on the amount referred to in clause (i) of this definition from
and including such date to but excluding the 90th day after such date, plus (v)
if such Export Credit Guarantee Loan Prepayment Amount is required to be paid
(a) on or prior to 180 days from the Delivery Date for the relevant Aircraft,
Unreimbursed Premium up to $ 270,000.00, (b) after 180 days from the Delivery
Date for the relevant Aircraft but on or prior to 360 days from the Delivery
Date for the relevant Aircraft, Unreimbursed Premium up to $ 210,000.00, (c)
after 360 days from the Delivery Date for the relevant Aircraft but on or prior
to 540 days from the Delivery Date for the relevant Aircraft, Unreimbursed
Premium up to $ 140,000.00, or (d) after 540 days from the Delivery Date for the
relevant Aircraft but on or prior to 720 days from the Delivery Date for the
relevant Aircraft, Unreimbursed Premium up to $ 70,000.00.
"Export Credit Guarantor": the Brazilian Federal Government - Secretaria de
Assuntos Internacionais do Ministério da Fazenda (SAIN), through the Fundo de
Garantia à Exportação - FGE.

"FAA": the U.S. Federal Aviation Administration and any agency or
instrumentality of the U.S. Government succeeding to its functions.
"FAA Application for Aircraft Registration": with respect to any Aircraft, an
application for registration of such Aircraft on AC Form 8050-1 or such other
form approved by the FAA.
"FAA Bill of Sale": with respect to any Aircraft, the bill of sale for such
Aircraft on AC Form 8050-2 (or such other form approved by the FAA) executed by
the Manufacturer in favor of the Borrower, dated the Delivery Date for such
Aircraft.
"FAA Regulations": the Federal Aviation Regulations issued or promulgated
pursuant to the Federal Aviation Code from time to time.
"FATCA" means Sections 1471 through 1474 of the Code, as of the date of this
Agreement (or amended successor version that is substantively comparable and mot
materially more onerous to comply with), any current or future regulations or
official

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

interpretations thereof and any agreements entered into pursuant to Section
l47l(b)(1) of the Code and an agreement entered into relating to Section s 1471
through 1474 of the Code.
"Federal Aviation Code": the sections of Title 49 of the United States Code
relating to aviation, as amended from time to time, or any similar legislation
of the United States enacted in substitution or replacement therefor.
"FGE": Fundo de Garantia às Exportações - FGE.
"FINAME": has the meaning specified in the recitals to the Loan Agreement.
"FINAME Related Agreement": the "Loan Documents", "Operative Agreements",
"Operative Documents" or other equivalent term as used and defined in the
documents governing any Debt now or hereafter and directly or indirectly owing
by Guarantor or any of its direct or indirect Subsidiaries to FINAME or any
security trustee acting for FINAME.
"Fixed Rate": with respect to any Relevant Loan bearing interest at a fixed
rate, either the Relevant CIRR Rate or the Relevant Swap Rate (whichever is
applicable) for such Relevant Loan.
"Floating Rate": with respect to an Interest Period for any Relevant Loan
bearing interest at a floating rate, LIB OR for such Interest Period for such
Relevant Loan.
"Fly-Away-Factory Condition": with respect to any Aircraft, that such Aircraft
is or was accepted by Borrower from the Manufacturer on the Delivery Date as new
and in compliance with the Purchase Agreement, subject to unsatisfied delivery
discrepancies that Manufacturer agrees or agreed to remedy.
"Frontier": means Frontier Airlines Holdings, Inc., a Delaware corporation, and
its subsidiaries.
"Funding Agreement": means the Funding Agreement (2013), dated as of July 2,
2013, between FINAME and Republic.
"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 such
principles may at any time or from time to time be varied by any applicable
financial accounting rules or regulations issued by the SEC and, with respect to
any Person, shall mean such principles applied on a basis consistent with prior
periods except as may be disclosed in such Person's financial statements.
"Government Entity": (a) any national, federal, state, provincial or similar
government, and any body, board, department, commission, court, tribunal,
authority, agency or other instrumentality of any such government or otherwise
exercising any executive, legislative, judicial, administrative or regulatory
functions of such government

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or (b) any other government entity having jurisdiction over any matter
contemplated by the Operative Agreements or relating to the observance or
performance of the obligations of any of the parties to the Operative
Agreements.
"Guarantor": Republic Airways Holdings Inc., a Delaware corporation.
"Guaranty": the Guaranty (2013), dated as of the date of the Loan Agreement, by
the Guarantor in favor of the Security Trustee and the Lenders, in substantially
the form set forth in Exhibit E to the Funding Agreement.
"Indemnitee": has the meaning set forth in Section 9.16(i) of the Loan
Agreement.
"Indemnified Taxes": means Taxes with respect to the Loan other than:
1.Taxes imposed on the Lender in excess of Taxes that would have been imposed if
such Lender had not engaged in any business in or had any presence or contact in
the jurisdiction imposing such Taxes other than any business, presence or
contact as a result of the operation, presence, registration or location of the
Aircraft in such jurisdiction or as a result of the transactions contemplated by
the Operative Agreements;
2.Taxes imposed on the Lender that arise out of or are caused by the gross
negligence or willful misconduct of such Lender (unless such gross negligence or
willful misconduct is imputed to such Lender by reason of the acts or omissions
of the Borrower);
3.Taxes that would not have been imposed but for any failure of the Lender to
(x) file proper and timely reports or returns or to pay any Taxes when due
(except to the extent caused by a breach by Borrower of its obligations pursuant
to Section 2.6 of the Loan Agreement), (y) with respect to a Lender other than a
Brazilian Government Lender, comply with any certification, information,
documentation, reporting or other similar requirements, concerning the
nationality, residence, identity or connection with jurisdiction imposing such
Taxes, if such compliance is required to obtain or establish relief or exemption
from or reduction in such Taxes and such Lender was eligible to comply with such
requirement but only if and to the extent that such Lender is entitled under
applicable Law to furnish such forms and is eligible to claim such reduction or
exemption and only to the extent that such forms may be filed by such Lender
without adverse consequences to the Lender or any of its Affiliates, or risk
thereof, as reasonably determined by such Lender in good faith (and only if in
the case of Taxes other than U.S. Withholding Taxes, the Borrower has given the
Lender prior notice of such compliance requirements) or (z) with respect to a
Brazilian Government Lender, failure to comply with such Lender's obligations in
Section 2.7(d) of the Loan Agreement;

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4.(A) With respect to a Brazilian Government Lender, Taxes imposed by any
Government Entity of or in Brazil other than such Taxes resulting from the
presence, activities or conduct of the Borrower (or any Affiliate of the
Borrower or the presence of any Aircraft, Engine or Part subsequent to the
Delivery Date) in Brazil, (B) with respect to a Lender that is not a Brazilian
Government Lender, Taxes imposed by any Government Entity in a jurisdiction
within which such Lender is incorporated or has its principal place of business
(but excluding any such Taxes resulting from the presence, activities or conduct
of the Borrower (or any Affiliate of the Borrower or the presence of any
Aircraft, Engine or Part subsequent to the Delivery Date) in such jurisdiction);
5.With respect to a Brazilian Government Lender, U.S. Withholding Taxes imposed
other than by reason of a Change in U.S. Tax Law; or

6.     Taxes imposed pursuant to FATCA.
"Initial Principal Payment": has the meaning set forth in Section 2.4(c) of the
Funding Agreement.
"Inspection Agent": at any time, any person engaged by the Borrower to inspect
the Aircraft and who at such time is qualified by ISTAT and has been approved by
the Lender (and such approval has not been withdrawn by the Lender).
"Interest Period": with respect to any Relevant Loan, the period commencing on
and including the Relevant Borrowing Date for such Relevant Loan and ending on
but excluding the next succeeding Payment Date for such Relevant Loan; and
thereafter, each successive period commencing on and including the last day of
the next preceding Interest Period for such Relevant Loan and ending on but
excluding the next succeeding Payment Date for such Relevant Loan; provided,
that, if any Payment Date would otherwise be a day that is not a Business Day,
such Interest Period shall end on the next succeeding Business Day; provided,
further, that if such extension would cause payment of interest on or principal
of such Relevant Loan bearing interest at the Floating Rate to be made in the
next following calendar month, such Interest Period shall end on the next
preceding Business Day.
"International Interest": is defined in the Cape Town Treaty.
"International Registry": is defined in the Cape Town Treaty.
"IRS": the United States Internal Revenue Service or any agency or
instrumentality of the U.S. Government succeeding to its functions.
"Law": (a) any constitution, treaty, convention (including the Cape Town
Treaty), statute, law, decree, regulation, order, rule or directive of any
Government Entity, and (b) any judicial or administrative interpretation or
application of, or decision under, any of the foregoing.

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"Lease": any lease of any Aircraft, including any subsequent Permitted Lease.
"Lease Assignment": an assignment of a Permitted Lease substantially in the form
of Exhibit B to the Security Agreement.
"Lender": FINAME and each Person that becomes a Lender pursuant to an
Assignment, in each case so long as it is listed as the registered holder of a
Note in the Register.
"Lender Liens": any Lien attributable to a Lender with respect to any Aircraft,
any interest therein, or any other portion of the Collateral, arising as a
result of (i) claims against such Lender not related to its interest in such
Aircraft or the administration of the Loan under the Loan Agreement, (ii) acts
of such Lender not permitted by, or failure of such Lender to take any action
required of it by, the Operative Agreements, (iii) Taxes against such Person or
any of its Affiliates not required to be indemnified by Borrower under the Loan
Agreement, or (iv) claims against such Person arising out of any transfer by
such Person of its interest in any Loan, any Note and its interests in the
Operative Agreements.
"LIBOR": with respect to an Interest Period or any other applicable period, the
rate of interest for deposits in United States Dollars as indicated on Bloomberg
page "BBAM" (or any successor or substitute therefor) or, if not so indicated,
the average (rounded upwards to the nearest 1/16th of 1.00%) of such rates
offered by the Reference Banks in the London interbank market, in each case at
or about 11:00 a.m., London time, on the day two Business Days prior to the
first day of such Interest Period or other applicable period for deposits of a
duration comparable to such Interest Period or other applicable period, in an
amount (if applicable) approximately equal to the amount on which such interest
will accrue as of the first day of such Interest Period or other applicable
period.
"LIBOR Breakage" with respect to any Relevant Loan bearing interest at a
Floating Rate, the amount determined by the Lender to be sufficient to
compensate it for any loss, cost or expense, including any loss, cost or expense
in liquidating or redeploying funds acquired by the Lender to fund any Relevant
Loan (but excluding loss of the Margin), attributable to (x) any payment or
prepayment of principal on any of the Relevant Notes if such date is not a
Payment Date, or (y) the failure of the Borrower to prepay any Relevant Note
after giving notice of prepayment.
"Lien": any mortgage, pledge, lien, charge, claim, encumbrance, International
Interest, lease or security interest affecting title to or any interest in
property.
"Loans": collectively, all of the Relevant Loans.
"Loan A Commitment": the obligation of the Lender to make Relevant Loans A
pursuant to Section 2.1 of the Funding Agreement in an aggregate principal
amount up to but not exceeding $1,048,164,738.10.

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"Loan Agreement": the Loan Agreement (2013) entered into pursuant to the Funding
Agreement between the Borrower and the Lender, including all annexes, schedules,
exhibits, appendices, amendments and supplements thereto, as amended and
restated, supplemented or otherwise modified from time to time.
"Loan Participants": has the meaning set forth in Section 9.5(d) of the Loan
Agreement.
"Loss Payment Date": has the meaning set forth in Section 3.4(b) of the Security
Agreement.
"Maintenance Program": has the meaning set forth in Section 3.3(g) of the
Security Agreement.
"Mandatory Modification": has the meaning set forth in Section 3.30) of the
Security Agreement.
"Manufacturer": means Embraer S.A., and its successors and permitted assigns.
"Manufacturer's Acknowledgment": with respect to an Aircraft, the Manufacturer's
Acknowledgment, dated the Relevant Borrowing Date for such Aircraft, relating to
the grant of a security interest in the Aircraft Warranties with respect to such
Aircraft by the Borrower to the Security Trustee for the benefit of the Lenders.
"Margin": a rate of 0.30% per annum; provided if the Commitment has not been
fully utilized or terminated in accordance with the terms of this Agreement
during the period ending on Document Closing Date in the 18th month after the
Document Closing Date, the "Margin" for any Loans advanced after such date shall
be adjusted to the minimum rate required according to the ASU.
"Material Adverse Change": as of any date, a material adverse change in the
consolidated business, operations, results of operations, or financial condition
of Guarantor and its consolidated subsidiaries, as of such date compared to
December 31, 2012. Without limiting the generality of the foregoing, a Material
Adverse Change shall include: (a) a material default by an RJET Airline under
any loan, lease or other financing obligation to which an RJET Airline and the
Lender are parties; (b) the occurrence of a Bankruptcy Event with respect to
Republic or Guarantor; (c) the reduction of the number of Code-Share Agreements
under which the RJET Airlines, collectively, are operating aircraft to less than
two or the failure of American Airlines, Inc. to be one code-share partner;
provided that any reduction due to the consolidation, merger or other
combination of the operations of two or more code-share partners of the RJET
Airlines where the consolidated, merged or combined airline continues as a
code-share partner of an RJET Airline shall not be deemed to have occurred for
purposes of this definition so long as, subject to Section 7.8 of the Loan
Agreement, one such code-share partner is American Airlines, Inc.; or (d) any
order or administrative action by the FAA or any other aviation authority which
grounds all or a substantial portion of the combined fleet of the RJET Airlines
or imposes operating restrictions on the RJET Airlines that may reasonably be
expected to be material and adverse and that are not

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applicable to regional air carriers generally. The provisions of the preceding
sentence shall not be deemed to influence the interpretation of the first
sentence of this definitional paragraph, it being intended that the first
sentence of this paragraph shall be interpreted in accordance with normal
commercial practice. Notwithstanding anything in the foregoing, any disposition
by Guarantor of some or all of Frontier or any Bankruptcy Event with respect to
Frontier or any of its subsidiaries shall not be a Material Adverse Change in
and as itself, but shall be a Material Adverse Change to the extent such
disposition or Bankruptcy Event results in a material adverse change in the
consolidated business, operations, results of operations or financial condition
of Guarantor and its consolidated subsidiaries (excluding Frontier) compared to
December 31, 2012, provided that any non-cash write-offs or accounting
adjustments relating to any such disposition or bankruptcy with respect to the
Guarantor's consolidated financial statements shall not be a Material Adverse
Change.
"Material Change": any event, condition or circumstance that materially and
adversely affects the Guarantor's consolidated business, operations, results of
operations or financial condition, or the Borrower's or the Guarantor's ability
to observe or perform its obligations, liabilities and agreements under, or
affect the validity or enforceability of the Operative Agreements.
Notwithstanding anything in the foregoing, any disposition by Guarantor of some
or all of Frontier or any Bankruptcy Event with respect to Frontier or any of
its subsidiaries shall not be a Material Change in and as itself, but shall be a
Material Change to the extent such disposition or Bankruptcy Event results in a
material adverse change in the consolidated business, operations, results of
operations or financial condition of Guarantor and its consolidated subsidiaries
( excluding Frontier) compared to December 31, 2012, provided that any non-cash
write-offs or accounting adjustments relating to any such disposition or
bankruptcy with respect to the Guarantor's consolidated financial statements
shall not be a Material Change.
"Notes": the Relevant Notes issued and outstanding under the Loan Agreement.
"Notice of Assignment": with respect to any Permitted Lease, a notice of
assignment in substantially the form of Exhibit A to the form of Lease
Assignment attached to the Security Agreement, duly completed by the applicable
parties.
"Notice of Borrowing": has the meaning set forth in the Funding Agreement.
"Obsolete Parts": has the meaning set forth in Section 3.3G) of the Security
Agreement.
"OECD": the Organization for Economic Cooperation and Development.
"OEM Parts": parts manufactured by, or approved by, the original equipment
manufacturer.
"Officer's Certificate": in respect of any Person, 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), any Director, the
Treasurer or the Secretary of such Person.

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"Operative Agreements": the Loan Agreement, the Notes, the Security Agreement,
the Funding Agreement, the "Guaranty" (as defined in the Funding Agreement),
each Security Agreement Supplement, any amendment to the Security Agreement, the
Guaranty and, for each Aircraft, the Bills of Sale, any Permitted Lease, any
Lease Assignment, the Manufacturer's Acknowledgment, the Engine Manufacturer's
Consent and Agreement, and any other agreement or instrument specifically
identified therein with the consent of the Borrower as an "Operative Agreement"
for purposes hereof.
"Optional Modification": has the meaning set forth m Section 3.3(j) of the
Security Agreement.
"Other Collateral": the "Collateral" (or equivalent term) as used and defined in
the Other FINAME Transactions.
"Other FINAME Indebtedness": without duplication, all Debt now or hereafter and
directly or indirectly owing by Guarantor or any of its direct or indirect
Subsidiaries pursuant to the Other Operative Agreements.
"Other FINAME Transactions": any direct or indirect, past, present or future
FINAME-supported financing which is now or hereafter guaranteed by the Export
Credit Guarantor (whether by way of a loan, a lease or a guarantee) for or for
the benefit of Guarantor or any of its direct or indirect Subsidiaries under
which any Other FINAME Indebtedness is outstanding, in each case only so long as
the Export Credit Guarantor has outstanding guarantees of more than 50% of the
principal amount of the Relevant Loans and more than 50% of the principal amount
of such Other FINAME Indebtedness.
"Other Operative Agreements": the "Loan Documents", "Operative Agreements",
"Operative Documents" or other equivalent term as used and defined in the Other
FlNAME Transactions.
"Other Secured Obligations" has the meaning set forth in Section 2.1 of the
Security Agreement
"Other Security Agreement": the "Security Agreement" (or equivalent term) as
used and defined in the Other FINAME Transactions.
"Other Security Trustee": the "Security Trustee" (or equivalent term) as used
and defined in the Other FINAME Transactions.
"Other Taxes": all present or future stamp or documentary taxes or any other
excise or taxes, charges or similar levies arising from any payment made
hereunder or from the execution, delivery or enforcement of, or otherwise with
respect to, any of the Operative Agreements. other than any such Taxes imposed
as a result of a transfer of any Relevant Loan or any interest therein or any
Taxes based upon the value or principal amount of any Relevant Loan imposed by a
jurisdiction in which the Lender is subject to Taxes of such type as a result of
a connection with such jurisdiction unrelated to the transactions contemplated
by the Operative Agreements

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"Parts": all appliances, parts, components, avionics, landing gear, instruments,
appurtenances, accessories, furnishings, seats and other equipment of whatever
nature (other than (a) Engines or engines, and (b) any Removable Parts leased by
Borrower from a third party or subject to a security interest granted to a third
party), that may from time to time be installed or incorporated in or attached
or appurtenant to any Airframe or any Engine.
"Payment Date": with respect to any Relevant Loan, (a) the Relevant Borrowing
Date of such Relevant Loan, (b) October 15, January 15, April 15 and July 15 of
each year prior to the Relevant Loan Maturity Date for such Relevant Loan,
commencing with the first such date following the Relevant Borrowing Date and
(c) the Relevant Loan Maturity Date for such Relevant Loan.
"Payment Default": the failure of the Borrower to pay any amount of principal of
or interest on any of the Loans when due.
"Permitted Country": means any country listed on Annex E to the Security
Agreement.
"Permitted Investments": the following securities (which shall mature within 90
days of the date of purchase thereof): (a) direct obligations of the U.S.
Government; (b) obligations fully guaranteed by the U.S. Government; (c)
certificates of deposit issued by, or bankers' acceptances of, or time deposits
or a deposit account with, Security Trustee 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 $500,000,000 and having a rating of Aa or better
by Moody's Investor Service, Inc. or AA or better by Standard & Poor's Rating
Services; or (d) 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 Ratings Services of at
least A-1 or its equivalent or by Moody's Investors Service, Inc. of at least
P-l or its equivalent.
"Permitted Lease": a lease permitted under Section 3.2 of the Security
Agreement.
"Permitted Lessee": a lessee that is a duly qualified operator of aircraft of
the same type as the Aircraft, which is incorporated in (a) any Permitted
Country, (b) any country which is a contracting party to, and has implemented,
the Cape Town Convention on International Interests in Mobile Equipment having
made the "Qualifying Declarations" from Annex 1 of ASU, (c) any country which is
a participant of ASU (other than Belgium, Italy and Spain), or (d) the United
States or any jurisdiction within the United States.
"Permitted Liens": has the meaning set forth in Section 3.1 of the Security
Agreement.

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"Person" or "person": an individual, partnership, corporation, limited liability
company, business trust, joint stock company, trust, unincorporated association,
joint venture, governmental authority or other entity of whatever nature.
"Plan": any employee benefit plan within the meaning of Section 3(3) of ERISA or
any plan within the meaning of Section 4975(e)(1) of the Code.
"Premium Rate": shall mean 1.92 % per annum; provided, however, that, the
Premium Rate may be adjusted by the Lender after the date corresponding to the
Document Closing Date in the eighteenth (18th) month after Document Closing Date
to the minimum Premium Rate then applicable under the ASU and by reference to
the then current risk classification of the Guarantor and any applicable
discount under the terms of the ASU.
"PROEX Breakage Costs": any and all losses suffered or incurred by the Lender
under the Program for Financing of Exports ("PROEX") as established in
connection with the interest rate support paid to the Lender under Brazilian law
as a consequence of any prepayment or acceleration of the Loan.
"Prospective International Interests": is defined in the Cape Town Treaty.
"Purchase Agreement": the Amended and Restated Purchase Agreement COM 0190-10
dated as of January 23, 2013, between the Manufacturer and Republic providing
for, inter alia, the purchase of the Aircraft, as amended, supplemented or
restated from time to time, together with the exhibits and the letter agreements
thereto.
"Reference Banks": has the meaning specified in Section 1.1 of the Funding
Agreement.
"Register": has the meaning specified III Section 9.5(d)(v) of the Loan
Agreement.
"Related Collateral": with respect to any Aircraft, the Aircraft Documents,
Aircraft Warranties, Engine Warranties, Bills of Sale, requisition and insurance
proceeds and any Permitted Lease with respect to such Aircraft and any other
property, right or privilege included in the Collateral solely due to the
inclusion of any of the foregoing in the Collateral.
"Relevant Additional Interest": with respect to a payment on a Relevant Loan A
by the Borrower pursuant to Sections 2.4 or 2.5 of the Loan Agreement, an amount
equal to interest at the Relevant Spread Rate accrued on the outstanding
principal amount of the applicable Relevant Loan A from and including the
"Applicable Payment Date" (as defined in and determined in accordance with the
definition of "Export Credit Guarantee Loan Prepayment Amount") to but excluding
the date of payment of such Relevant Loan A.
"Relevant Advance": has the meaning specified III Section 2.1 of the Loan
Agreement.

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"Relevant Aircraft BFE": with respect to any Aircraft, the buyer furnished
equipment, if any, to be installed thereon on or prior to the Delivery Date, as
scheduled in the Relevant BFE Bill of Sale.
"Relevant Borrowing Date": in the case of any Aircraft, the date on which the
Relevant Loan with respect to such Aircraft is made by the Lender to the
Borrower.
"Relevant CIRR Rate": in respect of any Relevant Loan, the rate per annum which
is the fixed interest rate equal to the Commercial Interest Reference Rate
("CIRR") for civil aircraft under the ASU for Dollars based on the seven
(7)-year US Treasury bond yields and for a repayment period of twelve (12) years
published by the Secretariat of the OECD and effective as at the relevant date
for such Relevant Loan, as noted on the internet in the week preceding the
fifteenth (15th) calendar day of each month (effective on the fifteenth (15th)
day of each such month) and available and prevailing on the website of the OECD
at http://www.oecd.org on the relevant date for such Relevant Loan. The "CIRR"
applicable to each Relevant Loan advanced within 180 days from the Document
Closing Date shall be the rate prevailing at the Document Closing Date. After
each successive period of 180 days elapsed from the Document Closing Date, if
the "CIRR" is higher than the previous one, "CIRR" shall be reset to such higher
rate for the next 180 days; if the "CIRR" applicable on the next day after such
180 day period is lower than or equal to the previous one, the previous one
shall prevail for the next 180 days, in each case for Relevant Loan advances
during such next 180 day period.
"Relevant Closing": has the meaning set forth in Section 2.1 of the Loan
Agreement.
"Relevant Export Credit Guarantee Loan": in the case of any Aircraft, that
portion of the Relevant Loan in the principal amount initially equal to the
Upfront Amount (as defined in the Funding Agreement) for such Aircraft.
"Relevant Interest Rate": with respect to any Relevant Loan, the sum of (a) the
Margin, plus (b) the Administration Fee Rate, plus (c) the Relevant CIRR Rate,
the Relevant Swap Rate or LIBOR, whichever shall be applicable to such Relevant
Loan as specified in the Notice of Borrowing for such Relevant Loan; provided,
however, that the Borrower shall not elect any of the Loans to accrue interest
at the Relevant CIRR Rate.
"Relevant Loan" in the case of any Aircraft, the Relevant Loan A and the
Relevant Export Credit Guarantee Loan, collectively, made under the Loan
Agreement to the Borrower with respect to such Aircraft.
"Relevant Loan A": in the case of any Aircraft, that portion of the Relevant
Loan in the principal amount initially equal to the Relevant Advance for such
Aircraft.
"Relevant Loan B Prepayment Rate": with respect to a Relevant Export Credit
Guarantee Loan, a rate per annum equal to the sum of the Relevant Interest Rate
plus the Relevant Spread Rate.
 

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"Relevant Loan Maturity Date": in the case of any Relevant Loan, the date
corresponding to the Relevant Borrowing Date for such Relevant Loan in the 141
st month after such Relevant Borrowing Date.
"Relevant Manufacturer's Invoice": with respect to any Aircraft, the invoice of
the Manufacturer setting forth the purchase price for such Aircraft.
"Relevant Net Aircraft Cost": with respect to any Aircraft, the purchase price
under the Purchase Agreement of such Aircraft, net of all credit memoranda and
adjustments, as set forth in the Relevant Manufacturer's Invoice.
"Relevant Note A": with respect to a Relevant Loan A, the promissory note
substantially in the form of Annex B-1 to the Loan Agreement, dated the Relevant
Borrowing Date for such Relevant Loan A and executed by the Borrower, and each
promissory note issued in replacement thereof.
"Relevant Note B": with respect to a Relevant Export Credit Guarantee Loan, the
promissory note substantially in the form of Annex B-2 to the Loan Agreement,
dated the Relevant Borrowing Date for such Export Credit Guarantee Loan and
executed by the Borrower, and each promissory note issued in replacement
thereof.
"Relevant Notes": with respect to a Relevant Loan, the Relevant Notes A and
Relevant Notes B evidencing such Relevant Loan.
"Relevant Spread Rate": means the Premium Rate applicable to the Relevant Loan.
"Relevant Swap Rate": with respect to any Relevant Loan, the rate of interest
shown on the Bloomberg service, page USSWAP7, "Trade Recap" screen with the
"Composite (NY)" source as the fixed rate (calculated on the basis of a 360-day
year of twelve 30-day months and payable on a quarterly basis) under a seven
year U.S. dollar swap transaction for USD LIB OR -BBA (calculated on a 360-day
year and an actual days payable on a quarterly basis), determined on the second
Business Day prior to the Relevant Borrowing Date of such Relevant Loan at 11:00
a.m., New York time, or if no such rate is shown at such time, then the rate
shown on such Bloomberg screen soonest thereafter.
"Removable Part": has the meaning set forth in Section 3.30) of the Security
Agreement.
"Replacement Engine": an engine which shall have been subjected to the Lien of
the Security Agreement pursuant to Section 3.3 or Section 3.4 thereof.
"Republic": Republic Airline Inc., an Indiana corporation.
"Republic Merger Transaction": as defined in Section 8.8(a) of the Funding
Agreement.

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"Republic Successor": has the meaning provided in Section 8.7(a) of the Funding
Agreement.
"Requirement of Law": as to any Person, the certificate of incorporation and
bylaws or other organizational or governing documents of such Person, and any
law, treaty, rule or regulation or determination of an arbitrator or a court or
other Government Entity, in each case applicable to or binding upon such Person
or any of its property or to which such Person or any of its property is
subject.
"RJET Airline": each Subsidiary of Guarantor that is a U.S. Air Carrier.
"SBCE": SBCE -Seguradora Brasileira de Crédito à Exportação S.A. and any agency
or instrumentality of the Brazilian government succeeding to its functions.
"SEC": the Securities and Exchange Commission of the United States, or any
Government Entity succeeding to the functions of such Securities and Exchange
Commission.
"Section 1110": 11 U.S.C. § 1110 of the Bankruptcy Code or any successor section
of the federal bankruptcy Law in effect from time to time.
"Section 1110 Agreement": a written agreement of the debtor to perform referred
to in Section 1110(a)(2)(A) of the Bankruptcy Code that, without further review
or modification, qualifies under Section 1110 to keep the automatic stay
provided by Section 362 of the Bankruptcy Code in effect with respect to all
Aircraft.
"Section 1110 Air Carrier": a Person holding an air carrier operating
certificate issued pursuant to chapter 447 of Title 49 of the United States Code
for aircraft capable of carrying 10 or more individuals or 6,000 pounds or more
of cargo.
"Section 1110 Period": the continuous period of (i) 60 days specified in Section
1110(a)(2)(A) of the Bankruptcy Code (or such longer period, if any, agreed to
under Section 1110(b) of the Bankruptcy Code), plus (ii) an additional period,
if any, commencing with the trustee or debtor-in-possession in such proceeding
entering into with court approval a Section 1110 Agreement within such 60 days
(or longer period as agreed) and continuing until such time as such trustee or
debtor-in-possession ceases to fully perform its obligations thereunder with the
result that the period during which the Security Trustee is prohibited from
repossessing all Aircraft under the Security Agreement comes to an end; provided
that, at all times on and after such 60-day period, all cures specified in
Section 1110(a)(2)(B) have been timely and fully made and performed.
"Secured Obligations": has the meaning set forth in Section 2.1 of the Security
Agreement.
"Securitization": has the meaning specified in Section 9.5(b)(2) of the Loan
Agreement.

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"Securities Act": means the Securities Act of 1933, as amended.
"Security Agreement": the Aircraft Security Agreement (2013), entered into
pursuant to the Funding Agreement between the Borrower and the Security Trustee,
including all annexes, schedules, exhibits, appendices, amendments and
supplements thereto.
"Security Agreement Supplement": each supplement to the Security Agreement from
time to time executed and delivered by the Borrower and the Security Trustee,
substantially in the form of Exhibit A to the Security Agreement.
"Security Trustee": has the meaning set forth in the introductory paragraph of
the Security Agreement.
"Security Trustee Liens": any Lien attributable to the Security Trustee with
respect to any Aircraft, any interest therein, or any other portion of the
Collateral, arising as a result of (i) claims against the Security Trustee in
its individual capacity not related to its interest in such Aircraft or the
administration of the Collateral pursuant to the Security Agreement, (ii) acts
of the Security Trustee not permitted by, or failure of the Security Trustee to
take any action required by, the Operative Agreements, (iii) Taxes against the
Security Trustee or any of its Affiliates not required to be indemnified by
Borrower under the Loan Agreement, or (iv) claims against the Security Trustee
arising out of the transfer by the Security Trustee of all or any portion of its
interest in the Collateral, other than a transfer permitted by the terms of the
Operative Agreements or pursuant to the exercise of remedies set forth in
Section 5 of the Security Agreement.
"Similar Carriers": has the meaning set forth in Section C of Annex C to the
Security Agreement.
"Solvent": with respect to any Person on any date of determination, that on such
date (i) the present fair salable value of the assets of such Person is not less
than the amount that will be required to pay the probable liability of such
Person on its debts as they become absolute and matured, (ii) such Person does
not intend to, and does not believe that it will, incur debts or liabilities
beyond such Person's ability to pay such debts and liabilities as they mature
and (iii) such Person is not engaged in business or a transaction, and is not
about to engage in business or a transaction, for which such Person's properly
would constitute an unreasonably small capital (it being understood that the
amount of contingent liabilities at any time shall be computed as the amount
that, in the light of all the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an actual or
matured liability).
"SPV": has the meaning specified in Section 9.5(b)(2)(i) of the Loan Agreement.
"SPV Securities": has the meaning specified in Section 9.5(d)(iii) of the Loan
Agreement.
"Structuring Fee": has the meaning specified in the Funding Agreement.

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"Subsidiary": as to any Person, a corporation, partnership or other entity of
which shares of stock or other ownership interests having ordinary voting power
(other than stock or such other ownership interests having such power only by
reason of the happening of a contingency) to elect a majority of the board of
directors or other managers of such corporation, partnership or other entity are
at the time owned, or the management of which is otherwise controlled, directly
or indirectly through one or more intermediaries, or both, by such Person.
"Tax" and "Taxes": all governmental or quasi-governmental fees (including,
without limitation, license, filing and registration fees) and all taxes
(including, without limitation, franchise, excise, stamp, value added, income,
gross receipts, sales, use, property, personal and real, tangible and intangible
taxes and mandatory contributions), withholdings, assessments, levies, imposts,
duties or charges, of any nature whatsoever, together with any penalties, fines,
additions to tax or interest thereon or other additions thereto imposed,
withheld, levied or assessed by any country, taxing authority or governmental
subdivision thereof or therein or by any international authority, including any
taxes imposed on any Person as a result of such Person being required to collect
and pay over withholding taxes.
"Tax Savings": has the meaning specified in Section 2.7(h)(ii) of the Loan
Agreement.
"Threshold Amount": $1,000,000.
"Transacting User Entity": is defined in the Regulations of the International
Registry.
"UCC": means the Uniform Commercial Code as in effect in any applicable
jurisdiction.
"United States" and "U.S.": each means the United States of America.
"Unreimbursed Premium": in the case of any prepayment of a Relevant Loan, the
amount of the premium paid for the Export Credit Guarantee covering such
Relevant Loan that is not refunded by the insurer as a result of such
prepayment.
"U.S. Air Carrier": any United States air carrier that is a Citizen of the
United States holding a certificate of public convenience and necessity issued
pursuant to 49 U.S.C. Section 41102 and an air carrier operating certificate
issued pursuant to chapter 447 of title 49 of the United States Code for
aircraft capable of carrying 10 or more individuals or 6,000 pounds or more of
cargo, and as to which there is in force an air carrier operating certificate
issued pursuant to Part 121 of the FAA Regulations, or which may operate as an
air carrier by certification or otherwise under any successor or substitute
provisions therefore or in the absence thereof.
"U.S. Government": the federal government of the United States, or any
instrumentality or agency thereof the obligations of which are guaranteed by the
full faith and credit of the United States.

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"U.S. Tax Law": includes the Code, any regulations promulgated or proposed
thereunder and any private letter rulings issued, in each case, as of the
initial Relevant Borrowing Date (as though such rulings have the force of law).
"U.S. Withholding Tax": any Tax imposed by way of deduction or withholding by
the United States federal government, including the federal income tax imposed
under Sections 881(a) and 1442 of the Code, on payments to a person who is not a
U.S. Person within the meaning of Section 7701(a)(30) of the Code.
"Warranty Bill of Sale": with respect to an Aircraft, the full warranty bill of
sale covering such Aircraft, executed by Manufacturer in favor of the Borrower,
dated the Delivery Date for such Aircraft.
"Wells Fargo": Wells Fargo Bank Northwest, National Association, not in its
capacity as Security Trustee.
"Wet Lease": any arrangement whereby Borrower or a Permitted Lessee agrees to
furnish any Aircraft, Airframe or Engine to a third party pursuant to which such
Aircraft, Airframe or Engine shall at all times be in the operational control of
Borrower or a Permitted Lessee; provided that Borrower's obligations under the
Operative Agreements shall continue in full force and effect notwithstanding any
such arrangement.

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Annex B to Security Agreement

Foreign Registration
Subject to the provisions of Section 3 .3(b) of this Security Agreement:
(a) The Borrower shall be entitled to register any Aircraft or cause any
Aircraft to be registered in a country other than the United States subject to
compliance with the following:
(i) each of the following requirements is satisfied:
(A) no Event of Default or Bankruptcy Default shall have occurred and be
continuing at the time of such registration; and
(B) such proposed change of registration is made in connection with a Permitted
Lease to a Permitted Lessee; and
(C) the Security Trustee shall have received an IDERA (as defined in the Cape
Town Treaty) or, if the Cape Town Treaty is not applicable, a deregistration
power of attorney with respect to such Aircraft; and

(ii) Lender and the Security Trustee shall have received an opinion (subject to
customary exceptions), in form and substance reasonably satisfactory to each of
them, of counsel (reasonably satisfactory to each of them) addressed to each
such party to the effect that:
(A) such country would recognize the Borrower's ownership interest in and right
to possession of, such Aircraft;
(B) after giving effect to such change in registration, the Lien of the Security
Agreement on the Borrower's right, title and interest in and to such Aircraft
shall continue as a valid and duly perfected first priority security interest
and all filing, recording or other action necessary to protect the same shall
have been accomplished (or, if such opinion cannot be given at the time of such
proposed change in registration because such change in registration is not yet
effective, (1) the opinion shall detail what filing, recording or other action
is necessary and (2) the Security Trustee shall have received a certificate from
the Borrower that all possible preparations to accomplish such filing, recording
and other action shall have been done, and such filing, recording and other
action shall be accomplished and a supplemental opinion to that effect shall be
delivered to the Security Trustee on or prior to the effective date of such
change in registration);

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(C) it is not necessary, solely as a consequence of such change in registration
and without giving effect to any other activity of the Security Trustee (or any
Affiliate thereof), for the Security Trustee to qualify to do business in such
country as a result of such reregistration;
(D) unless the Borrower or the Permitted Lessee shall have agreed to provide
insurance reasonably satisfactory to the Lender and the Security Trustee
covering the risk of requisition of use of such Aircraft by the government of
such country (so long as such Aircraft is registered under the laws of such
country), the laws of such country require fair compensation by the government
of such country payable in currency freely convertible into Dollars and freely
removable from such country (without license or permit, unless the Borrower
prior to such proposed reregistration has obtained such license or permit) for
the taking or requisition by such government of such use,

(b) In addition, as a condition precedent to any change in registration the
Borrower shall have given to the Lender and the Security Trustee assurances
reasonably satisfactory to each of them:
(i) to the effect that the provisions of Section 3.3(k) of the Security
Agreement have been complied with after giving effect to such change of
registration;
(ii) the country of such re-registration imposes aircraft maintenance standards
approved by, or at least as stringent as those approved by, the FAA, the EASA or
the central civil aviation authority of Japan or Canada;

(iii) no Liens (except Permitted Liens) shall arise by reason of such
registration;

(iv) any export licenses and certificate of deregistration required in
connection with any repossession or return of such Aircraft will be readily
obtainable in the normal course without material delay or material burden on the
Security Trustee, it being agreed that the Borrower shall be responsible for the
cost thereof;
(v) the courts of such proposed country of registry will give effect to the
choice of New York law to govern the Operative Agreements;
(vi) of the payment by the Borrower of all reasonable out-of-pocket expenses at
no after-tax cost to the Lender or the Security Trustee in connection with such
change of registry, including, without limitation (1) the reasonable fees and
disbursements of counsel to the Lender and the Security Trustee, (2) any filing
or recording fees, Taxes or similar payments incurred in connection with the
change of registration of such Aircraft and the creation and perfection of the
security interest therein in favor of the Security Trustee for the benefit of
the Lender, and (3) all costs and expenses incurred in connection with any
filings necessary to continue in the United States the perfection of the
security interest in such Aircraft in favor of the Security Trustee for the
benefit of the Lender.

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Annex C to
Security Agreement
Insurance

A.     Liability Insurance
Subject to the rights of the Borrower under Section G, the Borrower shall,
without expense to Lender and Security Trustee, maintain or cause to be
maintained in effect at all times with insurers of nationally or internationally
recognized responsibility public liability insurance (including, without
limitation, aircraft third party, passenger legal liability, property damage,
general third party legal liability and product liability coverage but excluding
manufacturer's product liability coverage) with respect to each Aircraft in an
amount not less than the greater of (i) the amount which the Borrower may carry
from time to time on other similar aircraft in its fleet (whether owned or
leased) and (ii) $750,000,000 per occurrence. Such insurance shall be of the
type usually carried by the Borrower with respect to similar aircraft and
engines, and covering risks of the kind customarily insured against by the
Borrower.

B.     Hull Insurance
Subject to the rights of the Borrower under Section G, the Borrower shall,
without expense to Lender or Security Trustee, maintain or cause to be
maintained in effect at all times with insurers of nationally or internationally
recognized responsibility (i) all risk ground and flight hull insurance, which
may, except as provided below, exclude war risks and allied perils, covering
each Aircraft for an amount at all times (even when such Aircraft is grounded or
in storage) not less than 110% of the outstanding principal amount of the
Relevant Loan in respect of such Aircraft (the "Debt Balance"); provided that,
neither the Borrower nor any Permitted Lessee shall be required to maintain all
risk flight aircraft hull insurance with respect to an Aircraft for any period
in which such Aircraft is grounded and properly stored or hangared. Such
insurance shall not provide insurers with a right to replace any Airframe or
Engine with another airframe or engine. Such hull insurance or other insurance
of the Borrower (or a Permitted Lessee') shall cover Engines and Parts
temporarily removed from an Airframe, pending replacement by installation of the
same or similar Engines or Parts on such Airframe. Such insurance shall be of
the type usually carried by the Borrower with respect to similar aircraft and
engines, and covering risks of the kind customarily insured against by the
Borrower.
Any policies of insurance carried in accordance with this Section B covering an
Aircraft and any policies taken out in substitution or replacement for any such
policies (i) shall name the Security Trustee as exclusive loss payee for any
proceeds to be paid under such policies up to an amount equal to the Debt
Balance for such Aircraft and (ii) shall provide that (A) in the event of a loss
with respect to such Aircraft involving proceeds in excess of the Threshold
Amount, the proceeds in respect of such loss shall be payable to the Security
Trustee (so long as the Lien of this Agreement with respect to such Aircraft
shall not have been discharged), except in the case of a loss with respect to an
Engine installed on an airframe other than an Airframe, in which case the
Borrower (or any Permitted Lessee) shall endeavor to arrange for any payment of
insurance proceeds in respect of such loss to be held for the account

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

of the Security Trustee (so long as the Lien of this Agreement with respect to
such Engine shall not have been discharged) whether such payment is made to the
Borrower (or any Permitted Lessee) or any third party, it being understood and
agreed that in the case of any payment to the Security Trustee otherwise than in
respect of an Event of Loss, the Security Trustee shall, upon receipt of a
certificate of a qualified engineer (who may be an employee of the Borrower)
certifying that the damage giving rise to such payment shall have been repaired
or that such payment shall then be required to pay for repairs then being made,
pay the amount of such payment to the Borrower or its order, and (B) the entire
amount of any loss with respect to such Aircraft involving proceeds of the
Threshold Amount or less or the amount of any proceeds of any loss in excess of
the Debt Balance for such Aircraft shall be paid to the Borrower or its
designee, provided that if a Payment Default, Bankruptcy Default or any Event of
Default shall have occurred and be continuing and the insurers have been
notified thereof by the Lender or the Security Trustee, such payment referred to
in clause (B) shall be made as provided in clause (i) above. In the case of a
loss with respect to an engine (other than an Engine) installed on an Airframe,
the Security Trustee shall hold any payment to it of any insurance proceeds in
respect of such loss for the account of the Borrower or any other third party
that is entitled to receive such proceeds.

C.     War-Risk, Hijacking and Allied Perils Insurance
The Borrower or such Permitted Lessee shall maintain or cause to be maintained
at all times in effect with respect to all Aircraft (i) war risk and allied
perils hull insurance in an amount not less than the Debt Balance and (ii) war
risk and allied perils liability insurance in an amount not less than the
greater of (x) the amount which the Borrower may carry from time to time on
other similar aircraft in its fleet (whether owned or leased) and (y)
$750,000,000 per occurrence; provided that, if the Borrower furnishes to the
Security Trustee a certificate of a firm of aircraft insurance brokers (which
may be the Borrower's regularly retained brokers) stating its opinion that a
majority of the other U.S. regional air carriers similarly situated with the
Borrower operating aircraft similar to such Aircraft on similar routes ("Similar
Carriers") are carrying such insurance referred to in the foregoing clause (i)
or (ii) in a lesser amount or are not carrying such insurance, then the Borrower
shall be entitled to reduce the amount of coverage to the extent of the
coverages carried by such Similar Carriers (including, if applicable, to none)
provided that the Borrower does not carry such insurance in a greater amount of
coverage on any other aircraft operated by the Borrower of the same type
included in the Borrower's fleet.

D.     General Provisions
The Borrower shall cause all policies of insurance carried in accordance with
Section A, B, and C, to name the Security Trustee and the Lender as additional
insureds (collectively, the "Additional Insureds"), as their respective
interests may appear. Such policies shall provide with respect to such
Additional Insureds that (i) none of their respective interest in such policies
shall be invalidated by any act or omission or breach of warranty or condition
contained in such policies by the Borrower or, in the case of any particular
Additional Insured, any other Additional Insured; (ii) no cancellation or lapse
of coverage for nonpayment of premium or otherwise, and no substantial change of
coverage which adversely affects the interests of any such Additional Insured,
shall be effective as to such Additional Insured until 30 days (or such lesser
period as may be applicable in the case of any war risk, hijacking and allied

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

perils insurance coverage) after receipt by such Additional Insured of written
notice from the insurers of such cancellation, lapse or change; (iii) they shall
have no liability for premiums, commissions, calls, assessments or advances with
respect to such policies; (iv) such policies will be primary without any right
of contribution from any other insurance carried by such Additional Insureds;
(v) the insurers waive any rights of set-off, counterclaim, deduction or
subrogation against such Additional Insureds; (vi) shall apply worldwide and
have no territorial restrictions or limitations (except in the case of war risk,
hijacking or related perils insurance, which shall apply to the fullest extent
available in the international insurance market); and (vii) shall contain a
50/50% Clause per Lloyd's Aviation Underwriter's Association Standard Policy
Form AVS 103. Each liability policy shall provide that all the provisions
thereof, except the limits of liability, shall operate in the same manner as if
there were a separate policy covering each insured and provide that the exercise
by the insurer of rights of subrogation derived from rights retained by the
Borrower will not delay payment of any claim that would otherwise be payable but
for such rights of subrogation.

E.     Reports and Certificates; Other Information
The Borrower will furnish to the Lender and the Security Trustee (A) on or prior
to the Relevant Borrowing Date for an Aircraft, insurance certificates
describing in reasonable detail the insurance maintained by the Borrower as
required pursuant to this Annex C with respect to such Aircraft, (B) prior to
the cancellation, lapse or expiration of the insurance policies required
pursuant to this Annex C, evidence of renewal of such insurance policies, and a
copy of the renewed or new insurance policies with all endorsements not later
than 30 days after any such cancellation, lapse or expiration, and (C) on or
prior to the Relevant Borrowing Date for an Aircraft and on or before the
renewal dates of the insurance policies carried by the Borrower pursuant to this
Annex C, a report signed by a firm of aircraft insurance brokers, not affiliated
with the Borrower, regularly retained by the Borrower, stating the opinion of
such firm that all premiums in connection with the insurance then due have been
paid and the insurance then carried and maintained on such Aircraft complies
with the terms hereof and, in the case of renewal insurance, that such renewal
insurance will on and after the effective date thereof so comply with the terms
hereof (except that such opinion shall not be required with respect to war risk
insurance provided by the FAA), provided that all information contained in such
report shall be held confidential by the Lender and the Security Trustee and
their respective agents (provided that they shall agree for the benefit of the
Borrower to hold all such information similarly confidential) or as may be
required by Applicable Law. The Borrower will instruct such firm to give prompt
written advice to the Lender and the Security Trustee of any default in the
payment of any premium and of any other act or omission on the part of the
Borrower of which it has knowledge and which would in such firm's opinion
invalidate or render unenforceable, in whole or in any material part, any
insurance on any Aircraft. The Borrower will also instruct such firm to advise
the Lender and the Security Trustee in writing at least 30 days prior to the
termination or cancellation of, or material adverse change in, such insurance
carried and maintained on any Aircraft pursuant to this Annex C (or such lesser
period as may be applicable in the case of war risk, hijacking and allied perils
coverage).

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

F.     Right to Pay Premiums
The Additional Insureds shall have the rights but not the obligations of an
additional named insured. None of the Additional Insureds shall have any
obligation to pay any premium, commission, assessment or call due on any such
insurance (including reinsurance). Notwithstanding the foregoing, in the event
of cancellation of any insurance due to the nonpayment of premiums, each of the
Lender and the Security Trustee shall have the option, in its sole discretion,
to pay any cash premium in respect of an Aircraft that is due in respect of the
coverage pursuant to this Agreement and to maintain such coverage, as the Lender
or the Security Trustee may require, until the scheduled expiry date of such
insurance and, in such event, the Borrower shall, upon demand, reimburse the
Lender and the Security Trustee for amounts so paid by them.
G.     Deductibles; Self-insurance
The Borrower may self-insure, by way of deductible or premium adjustment
provisions in insurance policies or otherwise, the risks required to be insured
against pursuant to Section 3.3(k) and this Annex C in such amounts as are then
self-insured with respect to similar owned or leased aircraft in the Borrower's
fleet but in no case shall such self-insurance in the aggregate exceed, on a per
occurrence or on a fleetwide basis during any policy year, an amount equal to 5%
of the Borrower's tangible net worth, calculated as at the end of the Borrower's
immediately preceding fiscal year (but in no event to exceed $10,000,000). A
deductible per occurrence that is not in excess of the prevailing standard
market deductible for similar aircraft shall be permitted, for each aircraft in
the Borrower's fleet, in addition to such self-insurance.

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

Annex D
to Security Agreement

(a)     Annual Inspections. (i) From January 2016 on, until such time as all
Aircraft have been released from the lien of the Security Agreement, the
Borrower shall arrange for an Inspection Agent to undertake a comprehensive
inspection 25% of the Aircraft subject to the lien of the Security Agreement at
such time (as selected by the Lender after consultation with the Borrower) in
accordance with industry standards, provided, however, that (x) all Aircraft
shall be the subject of at least one Annual Inspection during each four-year
period, and (y) in the event that the Borrower ceases to have a Maintenance
Program approved by the FAA that requires "A" checks or their equivalent, an
Annual Inspection in accordance with this clause (a) shall be required with
respect to each Aircraft no later than ninety (90) days after the end of each
year following the Delivery Date of such Aircraft.
(ii)     The Borrower shall provide or procure all necessary permits and other
permissions for the Inspection Agent to enter upon any premises where an
Aircraft undergoing inspection pursuant to this clause (a) is located during
normal business hours and to examine (1) the Aircraft by visual walk around
inspection, including on-board inspection and inspection of areas exposed by any
open panels, bays or the like (but no inspection will involve the opening of any
fixed panels, bays or the like without the express written consent of the
Borrower), and (2) the Aircraft Documents.
(iii)     The Inspection Agent shall be provided with the serial numbers of the
Engines related to an Aircraft undergoing inspection pursuant to this clause (a)
and, if such Engines are not installed on the Aircraft at the time of the
inspection, details of the condition of such Engines as described in paragraph
(3) of Part II of this Annex D and the manufacturer's serial number and
registration number of the airframe on which they are installed. In the event
that any engine installed on the Aircraft is not an Engine, the inspection shall
include an inspection of the Aircraft Documents relating to the Engines, but
will not include a visual check of any Engine that is not then installed on the
Aircraft undergoing such inspection.
(iv)     The Inspection Agent shall be provided, on request, with any of the
Aircraft Documents relating to an Aircraft undergoing inspection pursuant to
this clause (a) to ensure that (I) such Aircraft Documents have been properly
maintained and updated, and (2) such Aircraft Documents are a complete record of
all checks and maintenance tasks carried out on such Aircraft demonstrating that
all the checks and maintenance tasks in accordance with the Maintenance Program
have been carried out given such Aircraft's flight history. Following a review
of such Aircraft Documents, the Inspection Agent shall draw the Borrower's
attention to anything that requires remedial action.

(v)     Following the physical inspection of an Aircraft and the related
Aircraft Documents by the Inspection Agent pursuant to this clause (a), the
Inspection Agent shall complete those additional inspection and reporting
requirements set out in Part II of this

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

Annex D, including, but not limited to, delivering a report in the form
prescribed in Part II of this Annex D (the "Annual Inspection Report") to the
Borrower for initial review and, if appropriate, discussion with the Inspection
Agent, and then the Borrower shall deliver, no later than six (6) months
following the completion of such Annual Inspection, the Annual Inspection Report
to the Lender and the Export Credit Guarantor.
(vi)     The cost and expense of each Annual Inspection shall be for the account
of the Borrower. For the avoidance of doubt, absent the situation described in
clause (a)(i)(y), the parties agree that each Aircraft need only undergo one
Annual Inspection during any four-year period.
(b)     Inspections Generally. (i) An annual inspection under clause (a) (an
"Annual Inspection") shall occur during normal business hours and shall not
interfere with the operations of the Borrower, or any scheduled operation of the
Aircraft or maintenance thereof.
(ii)     The Lender or its agents or representatives (the "Authorized
Personnel") may conduct an inspection (a) at its cost, up to one Aircraft per
year and (b) at any time while an Event of Default is continuing, at Borrower's
cost and at any time, in each case, in accordance with the terms of this clause
(b)(ii). For the purpose of such inspection of an Aircraft, the Authorized
Personnel will be entitled to board the Aircraft. No inspection shall involve
the opening of any fixed panels or interfere with the normal commercial
operation or maintenance of the Aircraft by, or the business of, the Borrower.
The Borrower shall ensure that the Authorized Personnel are permitted to, and
afforded such facilities as may be reasonably necessary to, inspect or survey
any Aircraft and its Manuals and Technical Records upon giving the Borrower
reasonable notice.

(iii) In undertaking any inspection or examination pursuant to the terms of this
Part I of Annex D, the Inspection Agent or the Authorized Personnel, as the case
may be, shall comply with the Borrower's occupational health and safety
requirements and any security restrictions and shall sign such agreements and/or
waivers as may be customarily required by the Borrower in granting access to any
Aircraft, Aircraft Documents or the premises where the same are located.
(iv) All references in this Part I of Annex D to the Borrower's obligation to
procure access to an Aircraft and the related Aircraft Documents, and to
non-interference with the Borrower's operations, shall be deemed to take into
consideration the existence of any Permitted Lease of such Aircraft and the
rights of the Permitted Lessee thereunder.
PART II: ANNUAL INSPECTION AND REPORTING REQUIREMENTS
(1)     Assess the airworthiness of the Aircraft, including but not limited to:
(a)     the Aircraft's general state and condition (Flight Log Book, LOPA
-Layout of Passenger Accommodation and Weight and Balance reports);

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

(b)     the Aircraft's general maintenance state and condition (maintenance
history, management and control, planning and track record), including relevant
events of unscheduled maintenance, i.e., those which may have had a detrimental
effect on the Aircraft's airworthiness;

(c)     the updated record of compliance with ADs -Airworthiness Directives -and
SBs -Service Bulletins -since the Aircraft was delivered by the Manufacturer to
the Borrower;

(d)     accidents or incidents in which the Aircraft took part;
(e)     major repairs or modifications carried out on the Aircraft.

(2)     Based on the parts inventory supplied by the Borrower, check and
evaluate the control procedures and mechanisms used to track and monitor the
main aircraft components, including series items, hard time components, TSO
(Technical Standard Order) items and emergency items and equipment.

(3)     For (x) each Engine related to the Aircraft and (y) the APU installed on
the Aircraft at the time of the inspection, evaluate:
(a)     its general state and condition, with reference to its maintenance track
record;
(b)     the updated record of compliance with ADs -Airworthiness Directives -and
SBs -Service Bulletins -since such Aircraft was delivered by the Manufacturer to
the Borrower;

(c)     Engine/ APU total hours and cycles to date;
(d)     Engine/ APU total hours and cycles to date since last removal/overhaul;
(e)     description of the services/tasks performed during the last
removal/overhaul; and
(f)     Engine/APU hours and cycles remaining until the next removal/overhaul.

(4)     For each landing gear leg -LB, RH and nose gear -assess:

(a)     its general state and condition, with reference to its maintenance track
record;
(b)     total hours and cycles to date;
(c)     total hours and cycles since last removal/overhaul;
(d)     description of the services/tasks performed since last removal/overhaul;
and
(e)     hours and cycles remaining until the next scheduled overhaul.

(5)     [intentionally omitted]

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

(6)     Collect any other data or relevant information concerning the general
state or condition of the Aircraft, reflecting its continued upkeep, looking
both outside and inside the Aircraft with particular attention to the passenger
cabin, the cockpit, on-board systems such as the avionics, and facilities such
as the toilet(s), galley, passenger seats, furnishings, doors, etc. If deemed
necessary the written assessment may be complemented by photographs of the
relevant parts or items (see following item).

(7)     A report (the "Technical Inspection Report") should be produced and sent
to the Borrower for initial review as described in clause (a) (v) of Part I of
this Annex D, commenting on the maintenance requirements set forth in the
Aircraft Documents, and how they have been met -or not -on the Aircraft. This
should include indications of the extent or magnitude of any detected
deficiencies on the physical condition of the Aircraft as well as on the
associated documentation. Thirty (30) days following the Borrower's receipt of
the Technical Inspection Report, the Borrower shall send such Technical
Inspection Report to the Lender and the Export Credit Guarantor.

(8)     The Technical Inspection Report should contain at least the following
sections:
(a)     introduction;
(b)     assessment of the Airframe & documentation (which should include the
contents as per paragraph (I) above);
(c)     an estimate of the number of flight cycles and hours remaining until the
next major maintenance check; this projection should take into account the date
of the last major check performed and the average number of hours and cycles
performed daily by the Aircraft);
(d)     the manufacturer's serial numbers of the engines installed, plus the
contents of paragraph (3) above in respect of the Engines related to the
Aircraft undergoing inspection, together with the manufacturer's serial number
and FAA registration number of any airframe on which an Engine is installed (if
other than on the Aircraft undergoing inspection), which is also further
applicable, in case of mismatched engines, to the aircraft's original engines
when first delivered as per item I above;
(e)     the manufacturer's serial number of the APU installed in the Aircraft at
the time of the inspection plus the contents as per paragraph (3) above);
(f)     status of the landing gear & documentation (which should include the
contents as per paragraph (4) above);
(g)     conclusions, including attest of existence of the Insurance in
accordance with Annex C of this Agreement and validity of the certificate of
airworthiness;

(h) recommendations (if any); and

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

(i) Annex I -to the extent the Inspection Agent customarily provides such
information, a summary of the CV s (curriculum vitae) of each member of the
Inspection Agent's team who carried out the Aircraft's physical inspection, the
documentation check and wrote the Technical Inspection Report, including, in
each case, his or her technical competences & qualifications (degrees,
certifications, licenses, etc.).

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

Annex E
to Security Agreement

PERMITTED COUNTRIES

Australia
Austria
Canada
Denmark
Finland
France
Germany
Iceland
Ireland
Japan
Luxembourg
Netherlands
New Zealand
Norway
Portugal
Sweden
Switzerland
United Kingdom

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Exhibit A to
Security Agreement
SECURITY AGREEMENT SUPPLEMENT NO. _____
SECURITY AGREEMENT SUPPLEMENT NO. ___ , dated _____("Security Agreement
Supplement"), between Republic Airline Inc. (the "the Borrower") and Wells Fargo
Bank Northwest, National Association, as the Security Trustee under the Security
Agreement (each as hereinafter defined).
W I T N E S S E T H:
WHEREAS, the Aircraft Security Agreement (2013), dated as of July 2, 2013 (the
"Security Agreement"; capitalized terms used herein without definition shall
have the meanings specified therefor in Annex A to the Security Agreement),
between the Borrower and Wells Fargo Bank Northwest, National Association, as
the Security Trustee (the "the Security Trustee"), provides for the execution
and delivery of supplements thereto substantially in the form hereof which shall
particularly describe each Aircraft, and shall specifically grant a security
interest in such Aircraft to the Security Trustee; and
[WHEREAS, the Security Agreement relates to the Airframe and Engines described
in Annex A attached hereto and made a part hereof, and a counterpart of the
Security Agreement is attached to and made a part of this Security Agreement
Supplement;]l  
[WHEREAS, the Borrower has, as provided in the Security Agreement, heretofore
executed and delivered to the Security Trustee Security Agreement Supplement(s)
for the purpose of specifically subjecting to the Lien of the Security Agreement
certain airframes and/or engines therein described, which Security Agreement
Supplement(s) is/are dated and has/have been duly recorded with the FAA as set
forth below, to wit:
Date                Recordation Date                     FAA Document Number] *2
 
______________ 

1.
Use for Security Agreement Supplement No. I only.

2.
* Use for all Security Agreement Supplements other than Security Agreement
Supplement No. 1.

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

NOW, THEREFORE, to secure the prompt and complete payment (whether at the stated
maturity, by acceleration or otherwise) of all principal of, and interest on,
the Loans and the Other FINAME Indebtedness incurred under Other FINAME
Transactions and all other amounts payable by the Borrower under the Operative
Agreements and under the Other Operative Agreements now in existence or
hereafter incurred, and the performance and observance by the Borrower of all
the agreements and covenants to be performed or observed by it for the benefit
of the Lender and the Security Trustee contained in the Operative Agreements and
the Other Operative Agreements and in consideration of the Notes and the
premises and of the covenants contained in the Security Agreement, the other
Operative Agreements and Other Operative Agreements, and of other good and
valuable consideration given to the Borrower by the Security Trustee, the
receipt of which is hereby acknowledged, the Borrower has granted, bargained,
sold, conveyed, transferred, mortgaged, assigned, pledged and confirmed, and
does hereby grant, bargain, sell, convey, transfer, mortgage, assign, pledge and
confirm, unto the Security Trustee and its permitted successors and assigns, for
the security and benefit of the Security Trustee and the Lender, a security
interest in, and an International Interest in, all estate, right, title and
interest of the Borrower in, to and under, all and singular, the Airframe and
Engines described in Annex A attached hereto, whether or not any such Engine
shall be installed on the Airframe or any other airframe of any other aircraft,
and any and all Parts, and, to the extent provided in the Security Agreement,
all substitutions and replacements of and additions, improvements, accessions
and accumulations to such Airframe, Engines and Parts;
To have and to hold all and singular the aforesaid property unto the Security
Trustee, its permitted successors and assigns, forever, in trust, upon the terms
and trusts set forth in the Security Agreement, for the benefit, security and
protection of the Lender from time to time, and for the uses and purposes and
subject to the terms and provisions set forth in the Security Agreement.
This Security Agreement Supplement may be executed in any number of counterparts
(and each of the parties hereto shall not be required to execute the same
counterpart). Each counterpart of this Security Agreement Supplement including a
signature page executed by each of the parties hereto shall be an original
counterpart of this Security Agreement Supplement, but all of such counterparts
together shall constitute one instrument.
This Security Agreement Supplement shall be construed as supplemental to the
Security Agreement and shall form a part thereof, and the Security Agreement is
hereby incorporated by reference herein and is hereby ratified, approved and
confirmed.
THIS SECURITY AGREEMENT SUPPLEMENT IS BEING EXECUTED AND DELIVERED IN THE STATE
OF NEW YORK AND SHALL IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE, BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAW OF THE STATE OF NEW YORK.
[REMAINDER OF THIS PAGE IS LEFT BLANK INTENTIONALLY]

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

IN WITNESS WHEREOF, the undersigned have caused this Supplement No. __ to be
duly executed by their respective duly authorized officers, on the day and year
first above written.
REPUBLIC AIRLINE INC.
By:
 
 
 
Name:
 
 
Title:
 
 
 
 
WELLS FARGO BANK NORTHWEST,
NATIONAL ASSOCIATION,
 
as the Security Trustee
 
 
 
By:
 
 
 
Name:
 
 
Title:
 

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

Annex A to
Security Agreement
Supplement No. [ ]

DESCRIPTION OF AIRFRAME AND ENGINES

AIRFRAME
Manufacturer
 
Model
 
FAA Registration No.
 
Manufacturer's Serial No.
Embraer
 
ERJ 175LR
 
 
 
 
 
 
(certification
 designation and
shown on the FAA
records as ERJ 170-
200LR)
 
 
 
 

ENGINES
Manufacturer
 
Model
 
Manufacturer's Serial No.
General Electric
 
CF34-8E5
 
[_______________]
General Electric
 
CF34-8E5
 
[_______________]

Each such engine being a jet propulsion aircraft engine with at least 1750 lb of
thrust or its equivalent.

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

Exhibit B
to Security Agreement
LEASE ASSIGNMENT
Dated as of [__________ __ ,____]
by and among
REPUBLIC AIRLINE INC.
and
WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION,
not in its individual capacity, but solely as the Security Trustee,

Aircraft Lease Agreement, dated as of [__________],
between Republic Airline Inc., as lessor,
and [__________],
as lessee,
relating to
One ERJ 175LR (certification designation and
shown on the FAA records as ERJ 170-200LR)
Aircraft Bearing Manufacturer's Serial Number [__________]
and U.S. Registration [TN]

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

LEASE ASSIGNMENT, dated as of [________ __, ____] (the "Assignment") by and
between Republic Airline Inc. ("Republic") and Wells Fargo Bank Northwest,
National Association, as the Security Trustee (the "the Security Trustee").
WHEREAS, pursuant to that certain Aircraft Lease Agreement, dated as of
[________ __, ____] (as amended or modified from time to time, the "Lease")
between Republic, as lessor, and [________], as lessee (the "Lessee"), Republic
leased one ERJ l75LR (certification designation and shown on the FAA records as
ERJ l70-200LR) aircraft bearing manufacturer's serial number [________] and U.S.
Registration No. [TN] and the aircraft engines described therein (the
"Aircraft") to Lessee upon the terms and conditions set forth therein;
WHEREAS, Republic and the Security Trustee have entered into that certain
Aircraft Security Agreement (2013), dated as of July 2, 2013 (as amended or
modified from time to time, the "Security Agreement") and Republic has agreed to
collaterally assign all of its rights, title and interest in, to and under the
Lease to the Security Trustee; and
WHEREAS, capitalized terms used in this Assignment shall, unless otherwise
defined herein, have the meanings ascribed them in Annex A to that certain Loan
Agreement (2013), dated as of July 2, 2013, as amended or modified from time to
time, ("Annex A") between Republic, as borrower, and the Lender named therein.
[Add any necessary recording or other information as is required for recordation
with FAA.]
NOW, THEREFORE, the parties hereby agree as follows:
1. Lease Assignment.
(a) For value received and to secure the due and punctual payment and
performance of all the Secured Obligations, Republic hereby collaterally
assigns, transfers and conveys to the Security Trustee, its successors and
assigns, all its right, title and interest in, to and under the Lease, including
but not limited to:
(i) all of Republic's rights and interests as lessor of the Aircraft and any
part thereof at any time subject to the Lease;
(ii) any and all rents, insurance and condemnation proceeds, and all other
payments and other moneys due or to become due, and any and all claims, rights,
powers, remedies, title and interest of Republic in and to or under or arising
out of the Lease (including without limitation all claims for damages or other
sums arising upon sale or other disposition of or loss of use of or requisition
of title to or use of the Aircraft and any part thereof at any time subject to
the Lease or upon any event of default specified therein (hereinafter referred
to as an "Lease Event of Default");

(iii) all rights, powers, privileges, remedies and other benefits of Republic
under the Lease and all rights to make determinations, exercise options

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

or elections, give or withhold consents, waivers and approvals, give notices and
exercise remedies (including the right to declare or exercise remedies with
respect to a Lease Event of Default and to repossess any property), to appoint
any appraiser or to take any other action under or in respect of the Lease or
accept any surrender or redelivery of the Aircraft and any part thereof, as well
as all the rights, powers and remedies on the part of Republic, whether arising
under the Lease or by statute or at law or in equity or otherwise, as a result
of any Lease Event of Default or event that, with the giving of notice or the
lapse of time, or both, would become a Lease Event of Default (hereinafter
referred to as a "Lease Default"); and
(iv) all proceeds of the foregoing.
((i), (ii), (iii) and (iv) above, collectively, the "Assigned Rights")
(b) This Assignment is a present assignment and shall be effective, and the
security interest created hereby shall attach, immediately upon execution of
this Assignment; provided, however, that the Security Trustee shall not be
entitled to exercise, and Republic alone shall remain entitled to exercise, any
of the rights, powers, privileges, remedies and other benefits of Republic
described above, unless and until an "Event of Default" under the Loan Agreement
shall have occurred and be continuing.
2.Performance of Republic's Obligations. It is expressly agreed that
notwithstanding anything herein contained to the contrary, (i) Republic shall
remain liable under the Lease to perform all of its obligations thereunder to
the same extent as if this Assignment had not been executed, and (ii) the
Security Trustee shall not have any obligation or liability under the Lease
solely by reason of or arising out of the Assignment, nor shall the Security
Trustee or any other party be required or obligated in any manner to perform or
fulfill any obligation of Republic under or pursuant to the Lease, or to make
any payment, or to make any inquiry as to the nature or sufficiency of any
payment received by it, or to present or file any claim or to take any other
action to collect or enforce the payment of any amounts to which it or they may
be entitled hereunder at any time or times.
3.Event of Default. Upon the occurrence of an Event of Default under the Loan
Agreement and at any time thereafter so long as the same shall be continuing,
the Security Trustee may, at its option, exercise one or more of the remedies
set forth below and/or available to it under the Security Agreement or which may
be available to it under the New York Uniform Commercial Code whether or not
applicable in the relevant jurisdiction, as the Security Trustee may, in its
sole discretion determine, which remedies are cumulative and in addition to
every other right or remedy provided by law.

3.1     Collection of Lease Payments. The Security Trustee may collect and
retain all rents, proceeds, payments and other moneys due or to become due under
the Lease or any other property assigned hereunder and apply such amount to
payments due under the Loan Agreement, as the Security Trustee, in its
discretion, shall determine;

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3.2     Maintenance of Lease. The Security Trustee may assume all or any part of
Republic's right, title and interest in the Lease and/or any other property
assigned thereunder and maintain the Lease and such other property assigned
hereunder in full force and effect, with the Security Trustee, substituted for
Republic as the beneficiary thereunder, and in any such event all the right,
title and interest of Republic therein shall be extinguished and the Security
Trustee, shall be entitled to collect and retain all rents and payments
thereunder; and/or
3.3     Sale. The Security Trustee may sell at public or private sale, without
appraisal, for such price as it may deem fair, the Lease and all Republic's
right, title and interest therein, in which case the Security Trustee shall give
Republic at least 15 days' notice of the date fixed for any public sale or of
the date on or after which will occur the execution of any contract providing
for any private sale thereof, and each purchaser at any such sale shall hold
such property absolutely free from any claim or right on the part of Republic,
Republic hereby waiving and releasing (to the extent permitted by law) all
rights of redemption, stay, appraisal, reclamation and turnover that Republic
now has or may at any time in the future have under any rule of law or statute
now existing or hereafter enacted.
4.Waiver, Invalidity of Remedies. Republic waives any right to require the
Security Trustee to pursue any other remedy it may have against Republic. The
invalidity or unenforceability of any remedy in any jurisdiction shall not
invalidate such remedy or render it unenforceable in any other jurisdiction. The
invalidity or unenforceability of any of the remedies provided herein in any
jurisdiction shall not in any way affect the right to enforcement in such
jurisdiction or elsewhere of any of the other remedies provided herein.
5.Power of Attorney. Republic does hereby constitute the Security Trustee and
its successors and assigns, its respective true and lawful attorney-in-fact,
with full power (in the name of Republic or otherwise) and at the expense of
Republic but for the use and benefit of the Security Trustee, at any time after
an Event of Default under the Loan Agreement has occurred and for so long as it
is continuing, to enforce each and every term and provision of the Lease and any
other property assigned hereunder, to ask, require, demand, receive, collect,
compound and give acquittance and discharge for any and all moneys and claims
for moneys due and to become due under or arising out of the Lease or any other
property assigned hereunder, to endorse any checks or other instruments or
orders in connection therewith, to settle, compromise, compound or adjust any
such claims, to exercise and enforce any and all claims, rights, powers or
remedies of every kind and description of Republic under or arising out of the
Lease or any other property assigned hereunder, to file, commence, prosecute,
compromise and settle in the name of Republic or the Security Trustee, or
otherwise any suits, actions or proceedings at law or in equity in any court, to
collect any such moneys or to enforce any rights in respect thereto on all other
claims, rights, powers and remedies of every kind and description of Republic
under or arising out of the Lease or any other property assigned hereunder and
generally to sell, assign, transfer, pledge, make any agreement with respect to
or otherwise deal with any of such claims, rights, powers and remedies as fully
and completely as though the Security Trustee were the absolute owner thereof
for all purposes, and at such times and in such manner as may seem to the
Security Trustee to be necessary or advisable or convenient or proper in its
absolute discretion.

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6.Execution of Documents. Republic agrees that at any time or from time to time,
upon the written request of the Security Trustee, it shall promptly and duly
execute and deliver any and all such further instruments, documents and
financing statements and do such other acts and things as the Security Trustee
may reasonably request in order to obtain the full benefit of this Assignment
and the rights and powers granted herein. Republic agrees to give a notice of
assignment in the form of Exhibit A hereto to the Lessee and to obtain from the
Lessee a Consent to Assignment in the form of Exhibit B hereto concurrently with
its execution of this Agreement.
7.Assignment; Payments. The Security Trustee may at any time sell, assign,
transfer or otherwise dispose of its interest in the Lease, this Assignment, and
in the property and security created thereby and hereby, but only in accordance
with the express provisions of the Security Agreement and other Operative
Agreements. Republic shall not assign, delegate, pledge or otherwise encumber
any of its rights or obligations hereunder except as provided herein.
8.Republic's Representations and Warranties. Republic represents and warrants
that it has not assigned, transferred or pledged, and hereby covenants that it
will not assign, transfer or pledge, the whole or any part of the rents, moneys,
claims, rights, powers, remedies, titles or interests hereby assigned except as
provided herein.
9.Governing Law. This Assignment is being delivered in the State of New York,
United States of America. This Assignment, including all matters of
construction, validity and performance, shall in all respects be governed by,
and construed in accordance with, the laws of the State of New York applicable
to contracts made in such State by residents thereof and to be performed
entirely within such State.
10.Counterparts. This Assignment may be executed in several counterparts, each
of which shall be deemed an original, and all such counterparts shall constitute
one and the same instrument.

11.     Miscellaneous. This Assignment may not be amended, supplemented,
modified or waived without the prior written consent of the Security Trustee and
Republic. This Assignment shall be binding upon, and inure to the benefit of,
the parties hereto and their respective successors and permitted assigns. Except
as otherwise provided in this Assignment, all notices hereunder shall be in
writing and shall be given in the manner and at the addresses provided for
notices under the Loan Agreement.
[Continued on the following page]

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IN WITNESS WHEREOF, each of these parties hereto have duly executed this
Assignment as of the date first set forth above.
REPUBLIC AIRLINE INC.
 
 
 
 
By:
 
 
Name:
 
Title:
 
 
WELLS FARGO BANK NORTHWEST,
NATIONAL ASSOCIATION, AS
SECURITY TRUSTEE
 
 
 
 
By:
 
 
Name:
 
Title:

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EXHIBIT A
NOTICE OF ASSIGNMENT
[______ __, ____]
[Name and Address of Lessee]
Ladies and Gentlemen:

We hereby give you notice that by that certain Lease Assignment dated as of
[______ __, ____] and made among Republic Airline Inc. ("Republic") and Wells
Fargo Bank Northwest, National Association, as the Security Trustee (the
"Security Trustee"), Republic has collaterally assigned to the Security Trustee
all right, title and interest in, to and under that certain Aircraft Lease
Agreement dated as of [______ __, ____] (the "Lease") between Republic and you
relating to one [__________] aircraft bearing manufacturer's serial number
[__________].

Henceforth, (a) upon receipt of written notice from the Security Trustee that an
Event of Default has occurred and is continuing under the Loan Agreement all
moneys that may be payable by you under said Lease shall be paid to the Security
Trustee's account at [_____] and (b) all notices, documents and materials
required to be delivered by you to Republic under the Lease shall be delivered
to the Security Trustee, and not to Republic, at: [____________________]
Attention: [__________].
This notice shall be governed by and construed in accordance with the laws of
the State of New York.
This notice and the instructions herein contained are irrevocable. Please
acknowledge receipt of this notice to the Security Trustee on the enclosed
consent to assignment.
REPUBLIC AIRLINE INC.
 
 
 
 
By:
 
 
Name:
 
Title:
 
 
WELLS FARGO BANK NORTHWEST,
NATIONAL ASSOCIATION, AS
SECURITY TRUSTEE
 
 
 
 
By:
 
 
Name:
 
Title:

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EXHIBITB
CONSENT TO ASSIGNMENT
[Name of Lessee]
[______ __, ____]

To: Those parties listed on Schedule A attached hereto
Ladies and Gentlemen:
We acknowledge receipt of a copy of (i) a Notice of Assignment dated as of
[______ __, ____] and (ii) a Lease Assignment dated as of [______ __, ____] (the
"Assignment") by and among Republic Airline Inc. and Wells Fargo Bank Northwest,
National Association, as the Security Trustee, as adequate notice of such
Assignment.
For good and valuable consideration, the receipt of which we hereby acknowledge,
we hereby agree that upon receipt of written notice from the Security Trustee
that an Event of Default has occurred under the Loan Agreement and is continuing
and thereafter, until otherwise notified in writing by the Security Trustee, (i)
all moneys that may be payable by us pursuant to the Lease shall be paid to the
Security Trustee's account at: ___________________ and (ii) all notices,
documents and materials required to be delivered to Republic under the Lease
shall be delivered to the Security Trustee at such address as listed on the
attached Schedule A.
This consent shall be governed by and construed in accordance with the laws of
the State of New York.
[Name of Lessee]
By: _____________
Name:
Title:

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SCHEDULE A TO CONSENT TO ASSIGNMENT
Republic Airline Inc.
8909 Purdue Road
Suite 300
Indianapolis, IN 46268

Wells Fargo Bank Northwest, National Association
260 N. Charles Lindbergh Drive
Salt Lake City, UT 84116
Tel: (801) 246-6000
Fax: (801) 246-7142

Attn: Corporate Trust Lease Group

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SECURITY AGREEMENT SUPPLEMENT NO.1
SECURITY AGREEMENT SUPPLEMENT NO.1, dated July 15, 2013 ("Security Agreement
Supplement"), between Republic Airline Inc. (the "the Borrower") and Wells Fargo
Bank Northwest, National Association, as the Security Trustee under the Security
Agreement (each as hereinafter defined).
WHEREAS, the Aircraft Security Agreement (2013), dated as of July 2, 2013 (the
"Security Agreement"; capitalized terms used herein without definition shall
have the meanings specified therefor in Annex A to the Security Agreement),
between the Borrower and Wells Fargo Bank Northwest, National Association, as
the Security Trustee (the "the Security Trustee''), provides for the execution
and delivery of supplements thereto substantially in the form hereof which shall
particularly describe each Aircraft, and shall specifically grant a security
interest in such Aircraft to the Security Trustee; and
WHEREAS, the Security Agreement relates to the Airframe and Engines described in
Annex A attached hereto and made a part hereof, and a counterpart of the
Security Agreement is attached to and made a part of this Security Agreement
Supplement;
NOW, THEREFORE, to secure the prompt and complete payment (whether at the stated
maturity, by acceleration or otherwise) of all principal of, and interest on,
the Loans and the Other FINAME Indebtedness incurred under Other FINAME
Transactions and all other amounts payable by the Borrower under the Operative
Agreements and under the Other Operative Agreements now in existence or
hereafter incurred, and the performance and observance by the Borrower of all
the agreements and covenants to be performed or observed by it for the benefit
of the Lender and the Security Trustee contained in the Operative Agreements and
the Other Operative Agreements and in consideration of the Notes and the
premises and of the covenants contained in the Security Agreement, the other
Operative Agreements and Other Operative Agreements, and of other good and
valuable consideration given to the Borrower by the Security Trustee, the
receipt of which is hereby acknowledged, the Borrower has granted, bargained,
sold, conveyed, transferred, mortgaged, assigned, pledged and confirmed, and
does hereby grant, bargain, sell, convey, transfer, mortgage, assign, pledge and
confirm, unto the Security Trustee and its permitted successors and assigns, for
the security and benefit of the Security Trustee and the Lender, a security
interest in, and an International Interest in, all estate, right, title and
interest of the Borrower in, to and under, all and singular, the Airframe and
Engines described in Annex A attached hereto, whether or not any such Engine
shall be installed on the Airframe or any other airframe of any other aircraft,
and any and all Parts, and, to the extent provided in the Security Agreement,
all substitutions and replacements of and additions, improvements, accessions
and accumulations to such Airframe, Engines and Parts;
To have and to hold all and singular the aforesaid property unto the Security
Trustee, its permitted successors and assigns, forever, in trust, upon the terms
and trusts set forth in the Security Agreement, for the benefit, security and
protection of the Lender from time to time, and

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for the uses and purposes and subject to the terms and provisions set forth in
the Security Agreement.
This Security Agreement Supplement may be executed in any number of counterparts
(and each of the parties hereto shall not be required to execute the same
counterpart). Each counterpart of this Security Agreement Supplement including a
signature page executed by each of the parties hereto shall be an original
counterpart of this Security Agreement Supplement, but all of such counterparts
together shall constitute one instrument.
This Security Agreement Supplement shall be construed as supplemental to the
Security Agreement and shall form a part thereof, and the Security Agreement is
hereby incorporated by reference herein and is hereby ratified, approved and
confirmed.
THIS SECURITY AGREEMENT SUPPLEMENT IS BEING EXECUTED AND DELIVERED IN THE STATE
OF NEW YORK AND SHALL IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE, BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAW OF THE STATE OF NEW YORK.
[REMAINDER OF THIS PAGE IS LEFT BLANK INTENTIONALLY]

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IN WITNESS WHEREOF, the undersigned have caused this Supplement No. I to be duly
executed by their respective duly authorized officers, on the day and year first
above written.
REPUBLIC AIRLINE INC.

By: /s/ LARS-ERIK ARNELL
Name: LARS - ERIK ARNELL
Title: SENIOR VP

WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION,
as the Security Trustee

By: _______________________
Name:
Title:

[Security Agreement Supplement Signature Page]

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IN WITNESS WHEREOF, the undersigned have caused this Supplement No, 1 to be duly
executed by their respective duly authorized officers, on the day and year first
above written,
REPUBLIC AIRLINE INC,
By: ________________________
Name:
Title:
WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION,
as the Security Trustee
By: /s/ Jon Croasmun
Name: Jon Croasmun
Title: Vice President
[Security Agreement Supplement Signature Page]

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Annex A to
Security Agreement
Supplement No. 1

DESCRIPTION OF AIRFRAME AND ENGINES

AIRFRAME
Manufacturer
 
Model
 
FAA Registration No.
 
Manufacturer's Serial No.
Embraer
 
ERJ 175LR
 
N401YX
 
17000363
 
 
(certification
 designation and
shown on the FAA
records as ERJ 170-
200LR)
 
 
 
 

ENGINES
Manufacturer
 
Model
 
Manufacturer's Serial No.
General Electric
 
CF34-8E5
 
193916
General Electric
 
CF34-8E5
 
193917

Each such engine being a jet propulsion aircraft engine with at least 1750 lb of
thrust or its equivalent.