PARTICIPATION AGREEMENT N___AT

                          dated as of __________, 200_

                                      among

                            AMERICAN TRANS AIR, INC.,
                                     Lessee,

                      GENERAL ELECTRIC CAPITAL CORPORATION,
                               Owner Participant,

                                       and

                   FIRST SECURITY BANK, NATIONAL ASSOCIATION,
       not in its individual capacity except as expressly provided herein,
                          but solely as Owner Trustee,
                                 Owner Trustee



                            One Boeing model 737-800
                         aircraft bearing manufacturer's
                                serial no. _____
                        and U.S. registration no. N___AT







<PAGE>




                                                               CONTENTS


1. DEFINITIONS AND CONSTRUCTION................................................1

2. PARTICIPATION IN LESSOR'S COST; ............................................2
   ISSUANCE OF EQUIPMENT NOTES; TERMINATION OF OBLIGATION TO PARTICIPATE
         2.1 Participation in Lessor's Cost....................................2
         2.2 Termination of Obligation to Participate..........................2

3. LEASE OF AIRCRAFT...........................................................2

4. PROCEDURE FOR PARTICIPATION IN PAYMENT OF LESSOR'S COST; ...................3
   POSTPONEMENT OF SCHEDULED DELIVERY DATE
         4.1 Notices of Scheduled Delivery Date................................3
         4.2 Payment of Lessor's Cost..........................................3
         4.3 Postponement of Scheduled Delivery Date...........................4
         4.4 Closing...........................................................4

5. CLOSING CONDITIONS..........................................................4
         5.1 Conditions to Participants' Obligations...........................4
         5.2 Conditions to Owner Trustee's Obligations.........................9
         5.4 Conditions to Lessee's Obligations...............................10
         5.5 Post-Registration Opinion........................................10

6. REPRESENTATIONS AND WARRANTIES.............................................11
         6.1 Lessee's Representations and Warranties..........................11
         6.2 Owner Participant's Representations and Warranties...............15
         6.3 FSB's Representations and Warranties.............................17

7. COVENANTS..................................................................19
         7.1 Lessee's Covenants...............................................19
         7.2 Owner Participant's Covenants....................................21
         7.3 FSB's and Owner Trustee's Covenants..............................23
         7.6 Other Agreements.................................................25

8. CONFIDENTIALITY............................................................30

9. INDEMNIFICATION AND EXPENSES...............................................30
         9.1 General Indemnity................................................30
         9.2 Expenses.........................................................36
         9.3 General Tax Indemnity............................................37
         9.4 Payments.........................................................48
         9.5 Interest.........................................................48
         9.6 Benefit of Indemnities...........................................48

10. ASSIGNMENT OR TRANSFER OF INTERESTS.......................................49
         10.1 Participants, Owner Trustee, and Note Holders...................49
         10.2 Effect of Transfer..............................................50

11. RE-FUNDING AND CERTAIN OTHER MATTERS......................................51

12. SECTION 1110..............................................................51

13. CHANGE OF CITIZENSHIP.....................................................51
         13.1 Generally.......................................................51
         13.2 Owner Participant...............................................52
         13.3 Owner Trustee...................................................52

14. CONCERNING OWNER TRUSTEE..................................................52

15. MISCELLANEOUS   53
         15.1 Amendments......................................................53
         15.2 Severability....................................................53
         15.3 Survival........................................................53
         15.4 Reproduction of Documents.......................................53
         15.5 Counterparts....................................................54
         15.6 No Waiver.......................................................54
         15.7 Notices.........................................................54
         15.8 Governing Law; Submission to Jurisdiction; Venue................55
         15.9 Third-Party Beneficiary.........................................56
         15.10 Entire Agreement...............................................56
         15.11 Further Assurances.............................................56

ANNEX A                  Definitions

SCHEDULE 1               Accounts; Addresses
SCHEDULE 2               Commitments
SCHEDULE 3               Certain Terms


EXHIBIT A                Opinion of special counsel to Lessee
EXHIBIT B                Opinion of corporate counsel to Lessee
EXHIBIT C                Opinion of corporate counsel to Airframe Manufacturer
EXHIBIT D                Opinion of special counsel to Owner Trustee
EXHIBIT E                Opinion of special counsel to Owner Participant
EXHIBIT F                Opinion of FAA Counsel
EXHIBIT G                Opinion of corporate counsel to Owner Participant
EXHIBIT H                Form of Assignment and Assumption Agreement
EXHIBIT I                Form of Owner Participant Guaranty


<PAGE>





                         PARTICIPATION AGREEMENT N___AT

         This  Participation  Agreement N___AT (this  "Agreement"),  dated as of
__________,  200_,  is entered  into by and among (1) American  Trans Air,  Inc.
("Lessee"),  an Indiana  corporation,  (2) General Electric Capital  Corporation
("Owner  Participant"),  a New York  corporation,  and (3) First  Security Bank,
National  Association,  a national  banking  association,  not in its individual
capacity (except as expressly provided herein),  but solely as Owner Trustee (in
its  capacity  as  Owner  Trustee,  "Owner  Trustee"  or  "Lessor",  and  in its
individual capacity, "FSB").

                                                               RECITALS

         A........Owner   Participant  and  FSB  are  entering  into  the  Trust
Agreement,  pursuant to which Owner Trustee  agrees to hold the Trust Estate for
the use and benefit of Owner Participant.

         B........Lessee  and  Airframe  Manufacturer  entered into the Purchase
Agreement, pursuant to which Airframe Manufacturer agreed to manufacture certain
aircraft  (including the Aircraft) and sell them to Lessee, and Lessee agreed to
buy certain aircraft (including the Aircraft) from Airframe Manufacturer.

         C........Seller will sell the Aircraft to Owner Trustee pursuant to the
terms of this Participation Agreement.

         D........Lessee  and  Owner  Trustee  are  entering  into the  Purchase
Agreement Assignment and the Engine Manufacturer Warranty Agreement, pursuant to
which  Lessee  assigns to Owner  Trustee  certain of Lessee's  rights  under the
Purchase Agreement and the Engine Manufacturer Warranty Agreement.

         E........Lessor  and Lessee are  entering  into the Lease,  pursuant to
which  Lessor is leasing  the  Aircraft  to Lessee  and  Lessee is  leasing  the
Aircraft from Lessor.

         F........The  parties  to  this  Agreement  want to set  forth  in this
Agreement  the terms and  conditions  upon and  subject  to which the  foregoing
transactions shall be effected.

         The parties hereto agree as follows:

     1. DEFINITIONS AND CONSTRUCTION

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

     2. PARTICIPATION IN LESSOR'S COST; TERMINATION OF OBLIGATION TO PARTICIPATE

         2.1             Participation in Lessor's Cost

     Subject to the terms and  conditions  of this  Agreement,  on the  Delivery
Date,  Owner  Participant  shall  participate in the payment of Lessor's Cost as
follows:

     Owner  Participant  shall finance Owner Trustee's  payment of Lessor's Cost
for the Aircraft by making an equity  investment in the beneficial  ownership of
the Aircraft in the amount in Dollars equal to Lessor's Cost.

         2.2             Termination of Obligation to Participate

     Notwithstanding any other provision of this Agreement,  if the Closing does
not occur on or before the Commitment  Termination Date, the Commitment of Owner
Participant  and its  obligation to  participate in the payment of Lessor's Cost
shall expire and be of no further force and effect; provided, that the liability
of Owner  Participant if it has defaulted in the payment of its Commitment shall
not be released.

     3. LEASE OF AIRCRAFT

     Subject to the terms and  conditions  of this  Agreement,  on the  Delivery
Date,  Owner  Trustee  shall  purchase and accept  delivery of the Aircraft from
Seller under and pursuant to the Purchase  Agreement and the Purchase  Agreement
Assignment,  and thereupon Owner Trustee shall lease the Aircraft to Lessee, and
Lessee shall lease the Aircraft from Owner Trustee, under the Lease.

     4. PROCEDURE FOR PARTICIPATION IN PAYMENT OF LESSOR'S COST; POSTPONEMENT OF
SCHEDULED DELIVERY DATE

         4.1             Notices of Scheduled Delivery Date

     Lessee  agrees to give  Owner  Participant  and Owner  Trustee at least one
Business Day's written notice of the Scheduled Delivery Date, which notice shall
set forth Lessor's Cost and the amount of Owner Participant's Commitment.  Owner
Participant  agrees that making its  Commitment  available  shall  constitute  a
waiver of such notice.

         4.2             Payment of Lessor's Cost

     (a) Owner Participant  agrees,  subject to the terms and conditions of this
Agreement,  to make the  Dollar  amount  of its  Commitment  available,  by wire
transfer of immediately available funds to FSB's account at First Security Bank,
National Association,  ABA No. _______,  account no. ______,  reference American
Trans Air, Inc.  Lease N___AT,  at or before 12:00 noon,  New York City time, on
the Scheduled  Delivery Date. All such funds made available by Owner Participant
to FSB shall,  until payment  thereof to Seller as provided in ss.  4.2(b)(2) or
return thereof to Owner  Participant as provided in ss. 4.3.2, be held by FSB in
trust  for the  benefit  of the  Owner  Participant  as the sole  and  exclusive
property of the Owner Participant and not as part of the Trust Estate.

     (b) Subject to the satisfaction,  or waiver by the applicable party, of the
conditions  precedent set forth in ss. 5, and simultaneously with the receipt by
the  parties  hereto  of all  amounts  to be paid to them on the  Delivery  Date
pursuant to this ss. 4.2, Owner Trustee shall:

     (1) purchase, take title to, and accept delivery of the Aircraft;

     (2) in  consideration  of the  transfer  of title to the  Aircraft to Owner
Trustee,  direct FSB to pay,  from the funds made  available to FSB hereunder by
Owner  Participant,  all such funds,  which  payments in the aggregate  shall be
equal to Lessor's  Cost,  by wire  transfer of  immediately  available  funds to
Seller's account set forth in Schedule 1 or as otherwise directed by Seller;

     (3) execute an application for registration of the Aircraft with the FAA;

     (4) lease the Aircraft to Lessee pursuant to the Lease; and

     (5) take such other action as may be required to be taken by Owner  Trustee
on the Delivery Date by the terms of any Operative Agreement.

     4.3 Postponement of Scheduled Delivery Date

                  4.3.1                 Postponement

     If  for  any  reason  whatsoever  the  Closing  is not  consummated  on the
Scheduled  Delivery Date,  Lessee may,  subject to the provisions of 1(e) of the
Note Purchase Agreement,  by telephonic notice, given by 5:00 p.m. New York City
time (such  telephonic  notice to be promptly  confirmed  in writing by personal
delivery or facsimile) on the Scheduled  Delivery Date, to Owner Participant and
Owner  Trustee,   designate  a  Delayed  Delivery  Date,  in  which  case  Owner
Participant will keep its funds available.

     FSB shall promptly return to Owner  Participant all funds made available to
FSB in  accordance  with ss.  4.2(a),  together  with  interest or income earned
thereon, if the Closing fails to occur on the Scheduled Delivery Date.

     4.4 Closing

     The Closing  shall occur at the offices of Troutman  Sanders LLP, 5200 Bank
of America Plaza,  Atlanta,  GA (with a set of Operative  Agreements  also being
delivered in New York City), or such other place as the parties shall agree.

5.       CLOSING CONDITIONS

     5.1 Conditions to Owner Participant's Obligations

     Owner Participant's  obligation to make the Dollar amount of its Commitment
available  for  payment as  directed by Owner  Trustee on the  Delivery  Date is
subject to the satisfaction or such Owner Participant's waiver, on or before the
Delivery Date, of the conditions in this ss. 5.1; provided, that it shall not be
a condition to the obligation of Owner Participant that any document be produced
or action taken that is to be produced or taken by such Owner  Participant or by
a Person within Owner Participant's control.

     5.1.1 Notice

         Owner  Participant  received the notice described in ss. 4.1 or, in the
case of a Delayed Delivery Date, ss. 4.3, when and as required thereby.

     5.1.2 Delivery of Documents

     Except as otherwise provided in this ss. 5.1.2, Owner Participant  receives
executed counterparts of the following documents, and such counterparts (x) have
been duly authorized,  executed,  and delivered by the party or parties thereto,
(y) are reasonably satisfactory in form and substance to Owner Participant,  and
(z) are in full force and effect:

     (a) the Lease (Lessor to receive the sole executed  chattel paper  original
thereof);

     (b) the Tax Indemnity Agreement;  provided, that only Owner Participant and
Lessee shall receive copies of the Tax Indemnity Agreement;

     (c) the Trust Agreement;

     (d) the Purchase Agreement Assignment;

     (e)  the  Consent  and  Agreement  and  the  Engine  Manufacturer  Warranty
Agreement;

     (f) an excerpted copy of the Purchase  Agreement to the extent  relating to
Airframe   Manufacturer's  or  Engine   Manufacturer's   warranties  or  related
obligations  or any right in the Purchase  Agreement  assigned to Owner  Trustee
pursuant to the Purchase Agreement Assignment; provided, that only Owner Trustee
shall  receive  copies of such  agreement  (copies of which may be  inspected by
Owner  Participant  and its special  counsel on the Delivery Date, but after the
Delivery  Date  such  copies  shall  be  retained  by Owner  Trustee  and may be
inspected  and  reviewed  by Owner  Participant  or its counsel if and only if a
Default exists);

     (g) the Bills of Sale;

     (h) the Guarantee;

     (i) an invoice from Seller  specifying  the amount due to Seller in respect
of the Aircraft, which amount shall equal Lessor's Cost of the Aircraft;

     (j) the broker's report and insurance certificates required byss. 11 of the
Lease;

     (k) an  appraisal  or  appraisals  from an  Appraiser,  which  appraisal or
appraisals  shall be  reasonably  satisfactory  in form and  substance  to Owner
Participant;  provided, that only Owner Participant shall receive copies of such
appraisal(s);

     (l)  (1) a  copy  of  Lessee's  articles  of  incorporation,  by-laws,  and
resolutions,  in each case certified as of the Delivery Date by the Secretary or
an Assistant Secretary of Lessee, duly authorizing Lessee's execution, delivery,
and performance of the Lessee Operative  Agreements  required to be executed and
delivered  by Lessee on or  before  the  Delivery  Date in  accordance  with the
provisions  hereof  and  thereof;   (2)  a  copy  of  Guarantor's   articles  of
incorporation,  by-laws,  and  resolutions,  in each  case  certified  as of the
Delivery  Date by the  Secretary or an Assistant  Secretary of  Guarantor,  duly
authorizing  Guarantor's execution,  delivery, and performance of the Guarantee;
(3) incumbency certificates of Lessee, Guarantor, Owner Participant,  and FSB as
to the  person(s)  authorized  to execute  and deliver  the  relevant  Operative
Agreements  on behalf  of such  party;  and (4)  copies  of the  certificate  or
articles of incorporation,  by-laws, and general authorizing  resolutions of the
boards of directors (or executive  committees) or other satisfactory evidence of
authorization of Owner Participant and FSB, certified as of the Delivery Date by
the Secretary or an Assistant or Attesting  Secretary of Owner  Participant  and
FSB,  which   authorize  the  execution,   delivery  and  performance  by  Owner
Participant and FSB, respectively,  of each of the Operative Agreements to which
it is a party,  together with such other  documents and evidence with respect to
it as Lessee or Owner Participant  reasonably requests in order to establish the
consummation of the  transactions  contemplated by this Agreement and the taking
of all corporate proceedings in connection therewith;

     (m) an Officer's  Certificate of Lessee,  dated the Delivery Date,  stating
that its  representations  and warranties in this Agreement are true and correct
as of the  Delivery  Date (or,  to the extent that any such  representation  and
warranty  expressly  relates to an  earlier  date,  true and  correct as of such
earlier date);

     (n) an Officer's  Certificate of FSB, dated the Delivery Date, stating that
its  representations  and  warranties,  in its individual  capacity and as Owner
Trustee,  in this Agreement are true and correct as of the Delivery Date (or, to
the extent that any such  representation  and warranty  expressly  relates to an
earlier date, true and correct as of such earlier date);

     (o) an Officer's Certificate of Owner Participant, dated the Delivery Date,
stating that its  representations  and warranties in this Agreement are true and
correct as of the Delivery Date (or, to the extent that any such  representation
and warranty  expressly  relates to an earlier date, true and correct as of such
earlier date);

     (p) an  application  for  registration  of the Aircraft with the FAA in the
name of Owner  Trustee (FAA Counsel to receive the sole  executed  copy thereof,
for filing with the FAA);

     (q) the Financing Statements;

     (r) the  following  opinions  of counsel,  in each case dated the  Delivery
Date:

     (1) an opinion  of  Troutman  Sanders  LLP,  special  counsel to Lessee and
Guarantor, substantially in the form of Exhibit A;

     (2) an opinion of Lessee's and Guarantor's Legal Department,  substantially
in the form of Exhibit B;

     (3) an opinion of corporate counsel to Airframe Manufacturer, substantially
in the form of Exhibit C;

     (4) an opinion of Ray, Quinney & Nebeker, special counsel to Owner Trustee,
substantially in the form of Exhibit D;

     (5)  an  opinion  of  Dewey   Ballantine  LLP,  special  counsel  to  Owner
Participant, substantially in the form of Exhibit E;

     (6) an opinion of FAA Counsel, substantially in the form of Exhibit F;

     (7) an  opinion  of Dewey  Ballantine  LLP,  special  tax  counsel to Owner
Participant,  with  respect  to certain  tax  consequences  of the  transactions
contemplated  hereby;  provided,  that only Owner Participant shall receive such
opinion; and

     (8) an opinion of corporate counsel of Owner Participant,  substantially in
the form of Exhibit G, and

     (s)  Owner  Participant  receives  copies  of such  other  documents  as it
reasonably requests, except as provided in clause (f) of this ss. 5.1.2.

     5.1.3 Violation of Law

     No change  occurs after the date of this  Agreement in any  applicable  Law
that makes it a violation  of Law for (a) Lessee,  Owner  Participant,  or Owner
Trustee to execute, deliver, and perform the Operative Agreements to which it is
a party or to be a party subject to the obligations of the Operative  Agreements
to which Owner Participant is bound, or (b) Owner Participant to make the Dollar
amount of its Commitment available.

     5.1.4 Representations, Warranties, and Covenants

     The  representations  and  warranties of each other party to this Agreement
made, in each case, in any Operative  Agreement to which it is a party, are true
and accurate in all material  respects as of the Delivery  Date (unless any such
representation  and warranty was made with  reference  to a specified  date,  in
which case such  representation  and  warranty  was true and accurate as of such
specified  date),  and each other  party to this  Agreement  has  performed  and
observed,  in all material  respects,  all of its  covenants,  obligations,  and
agreements in each Operative  Agreement to which it is a party to be observed or
performed by it as of the Delivery Date.

     5.1.5 No Default

     On the Delivery  Date,  no Default  exists or would result from the sale or
lease of the Aircraft.

     5.1.6 No Event of Loss

     No Event of Loss with respect to the  Airframe or any Engine has  occurred,
and no circumstance, condition, act, or event has occurred that, with the giving
of notice or lapse of time,  would give rise to or  constitute  an Event of Loss
with respect to the Airframe or any Engine.

     5.1.7 Title

     Owner Trustee has good title (subject to filing and  recordation of the FAA
Bill of Sale with the FAA) to the Aircraft,  free and clear of Liens, except (a)
the  rights of Lessee  under the Lease,  (b) the  beneficial  interest  of Owner
Participant  created by the Trust  Agreement,  (c) Liens permitted by clause (d)
(solely for taxes not yet due) of ss. 6 of the Lease, and (d) Liens permitted by
clause (e) of ss. 6 of the Lease.

     5.1.8 Certification

         The Aircraft has been duly certificated by the FAA as to type, and upon
     registration   in  Owner  Trustee's  name  will  be  eligible  for  an  FAA
airworthiness
certificate.

     5.1.9 Section 1110

     Owner  Trustee,  as lessor under the Lease,  is entitled to the benefits of
Section  1110  (as  currently  in  effect)  with  respect  to the  right to take
possession  of the Airframe and Engines as provided in the Lease in the event of
a case under Chapter 11 of the Bankruptcy Code in which Lessee is a debtor.

     5.1.10 Filing

     The FAA-Filed Documents are on the Delivery Date duly filed for recordation
with the FAA in accordance  with the  Transportation  Code,  and each  Financing
Statement  has been duly  filed or is in the  process of being duly filed in the
appropriate jurisdiction.

     5.1.11 No Proceedings

     No action or proceeding has been instituted,  nor is any action  threatened
in writing, before any Government Entity, nor has any order, judgment, or decree
been  issued or proposed to be issued by any  Government  Entity,  to set aside,
restrain,  enjoin,  or prevent the completion and  consummation of any Operative
Agreement or the Transactions.

     5.1.12 Governmental Action

     All appropriate action required to have been taken before the Delivery Date
by the FAA, or any other Government  Entity of the United States,  in connection
with  the  Transactions  has  been  taken,  and all  orders,  permits,  waivers,
authorizations,  exemptions,  and approvals of such  entities  required to be in
effect  on the  Delivery  Date in  connection  with the  Transactions  have been
issued.

     5.2 Conditions to Owner Trustee's Obligations

     Owner Trustee's obligation to apply the Commitments to pay Lessor's Cost on
the Delivery Date is subject to the satisfaction or Owner Trustee's  waiver,  on
or before the Delivery Date, of the conditions in this ss. 5.2.

     5.2.1 Notice

     Owner Trustee receives the notice described in ss. 4.1 or, in the case of a
Delayed Delivery Date, ss. 4.3, when and as required thereby.

     5.2.2 Documents Owner Trustee receives executed  originals of the documents
described in ss. 5.1.2, except as otherwise provided therein, unless the failure
to receive  any such  document  is the result of any action or inaction by Owner
Trustee.

     5.2.3 Other Conditions Precedent

     Each of the  conditions  in  ss.ss.  5.1.3,  5.1.4,  5.1.5,  and  5.1.9  is
satisfied,  unless the  failure of any such  condition  to be  satisfied  is the
result of any action or inaction by Owner Trustee.

     5.3 Conditions to Lessee's Obligations

     Lessee's  obligation  to lease the Aircraft on the Delivery Date is subject
to the satisfaction or Lessee's  waiver,  on or before the Delivery Date, of the
conditions in this ss. 5.3.

     5.3.1 Documents

     Lessee receives executed originals of the documents described in ss. 5.1.2,
except as  otherwise  provided  therein,  and they are  satisfactory  to Lessee,
unless the failure to receive  any such  document is the result of any action or
inaction by Lessee.

     5.3.2 Taxes

     Lessee is satisfied that no sales, use, value-added, goods-and-services, or
like tax, and no stamp tax duty,  is payable with respect to the delivery of the
Aircraft  on the  Delivery  Date (to the  extent  that  Lessee  could be  liable
therefor under ss. 9.3).

     5.3.3 Other Conditions

     Each of the conditions in ss.ss.  5.1.3, 5.1.4, 5.1.5, 5.1.6, 5.1.7, 5.1.8,
5.1.9, 5.1.10, 5.1.11, and 5.1.12 has been satisfied or waived by Lessee, unless
the failure of any such condition to be satisfied is the result of any action or
inaction by Lessee.

     5.4 Post-Registration Opinion

     Promptly after the  registration of the Aircraft and the recordation of the
FAA-Filed  Documents pursuant to the Transportation  Code, Lessee will cause FAA
Counsel to deliver to Lessee,  Owner Participant,  and Owner Trustee a favorable
opinion or opinions addressed to each of them with respect to such recordation.

     6. REPRESENTATIONS AND WARRANTIES

     6.1 Lessee's Representations and Warranties

     Lessee represents and warrants to Owner Participant and Owner Trustee that:

     6.1.1 Organization; Qualification

     Lessee is a corporation duly  incorporated,  validly existing,  and in good
standing under the Laws of Indiana, and has the corporate power and authority to
conduct the business in which it is  currently  engaged and to own or hold under
lease its  properties  and to enter into and perform its  obligations  under the
Lessee  Operative  Agreements.  Lessee is duly  qualified  to do  business  as a
foreign  corporation in good standing in each  jurisdiction  in which the nature
and extent of the business  conducted by it, or the ownership of its properties,
requires such  qualification,  except where the failure to be so qualified would
not give rise to a Materially Adverse Change to Lessee.

     6.1.2 Corporate Authorization

     Lessee has taken,  or caused to be taken,  all necessary  corporate  action
(including  obtaining  any consent or approval of  stockholders  required by its
articles of incorporation or by-laws) to authorize its execution,  delivery, and
performance of its obligations under each of the Lessee Operative Agreements.

     6.1.3 No Violation

     Lessee's execution,  delivery, and performance of its obligations under the
Lessee  Operative  Agreements  do not and will not (a) violate any  provision of
Lessee's articles of incorporation or by-laws, (b) violate any Law applicable to
or binding on Lessee, or (c) violate or constitute any default under (other than
any violation or default that would not result in a Materially Adverse Change to
Lessee),  or result in the creation of any Lien (other than as  permitted  under
the Lease) upon the Aircraft under, any lease, loan, or other material agreement
to which Lessee is a party or by which Lessee or any of its properties is bound.

     6.1.4 Approvals

     Lessee's  execution  and delivery of, and  performance  of its  obligations
under, the Lessee  Operative  Agreements do not and will not require the consent
or approval of, the giving of notice to, the registration with, the recording or
filing of any  documents  with,  or the taking of any other action in respect of
(a) any  trustee  or other  holder  of any Debt of  Lessee,  (b) any  Government
Entity, or (c) any other Person,  other than (x) the FAA-Filed Documents and the
Financing  Statements  (and  continuation  statements  periodically),   and  (y)
filings,  recordings,  notices,  corporate  approvals of Lessee (which have been
duly obtained) or other ministerial  actions pursuant to any routine  recording,
contractual, or regulatory requirements.

     6.1.5 Valid and Binding Agreements

     The Lessee Operative  Agreements have been duly authorized,  executed,  and
delivered by Lessee,  and  (assuming  their due  authorization,  execution,  and
delivery by the other parties  thereto)  constitute  legal,  valid,  and binding
obligations  of Lessee and are  enforceable  against  Lessee in accordance  with
their  terms,  except  as such  enforceability  may be  limited  by  bankruptcy,
insolvency,  and other similar Laws affecting the rights of creditors  generally
and general principles of equity.

     6.1.6 Litigation

     Except as set forth in Guarantor's  most recent Annual Report on Form 10-K,
filed by Lessee with the SEC on or before the Delivery Date, or in any Quarterly
Report on Form 10-Q or Current  Report on Form 8-K filed by  Guarantor  with the
SEC  subsequent to such Form 10-K and on or before the Delivery Date, no action,
claim,  or  proceeding  is  now  pending  or,  to  Lessee's  Actual   Knowledge,
threatened,  against Lessee,  Guarantor, or any of their Affiliates,  before any
Government Entity or any arbitrator,  that is reasonably likely to be determined
adversely  to Lessee and if  determined  adversely  to Lessee  would result in a
Materially Adverse Change.

     6.1.7 Financial Condition

     Guarantor's audited  consolidated  balance sheet for its most-recent fiscal
year, included in Guarantor's Annual Report on Form 10-K filed by Guarantor with
the SEC for  such  fiscal  year,  and the  related  consolidated  statements  of
operations  and cash flows for the period  then  ended,  have been  prepared  in
accordance  with GAAP and fairly present in all material  respects the financial
condition of Guarantor and its consolidated subsidiaries as of such date and the
results of its operations and cash flows for such period,  and since the date of
such  balance  sheet,  there  has  been no  Materially  Adverse  Change  in such
financial  condition  or  operations,  except for matters  disclosed  in (a) the
financial  statements referred to above, or (b) any subsequent  Quarterly Report
on Form 10-Q or Current Report on Form 8-K filed by Guarantor with the SEC on or
before the Delivery Date.

     6.1.8 Registration and Recordation

     Except  for (a)  registering  the  Aircraft  with the FAA  pursuant  to the
Transportation  Code in the name of Owner  Trustee,  (b) filing for  recordation
(and  recording) the FAA-Filed  Documents,  (c) filing the Financing  Statements
(and  continuation  statements  relating  thereto at  periodic  intervals),  (d)
Lessor's taking possession and retaining the chattel paper original  counterpart
of the Lease,  and (e)  affixing  the  placards  referred to in ss. 7.1.3 of the
Lease, no further action,  including filing or recording any document (including
any financing  statement under UCC Article 9) is necessary in order to establish
and perfect Owner Trustee's right, title, and interest,  in the Aircraft and the
Lease, as against Lessee and any other Person, in any applicable jurisdiction in
the United States.

     6.1.9 Chief Executive Office

     Lessee's chief executive office (as defined in UCC Article 9) is located at
7337 West Washington Street, Indianapolis, Indiana, 46231.

     6.1.10 No Default

     No Default exists.

     6.1.11 No Event of Loss

     No Event of Loss has  occurred  with respect to the Airframe or any Engine,
and, to Lessee's Actual Knowledge, no circumstance, condition, act, or event has
occurred that,  with the giving of notice or lapse of time,  gives or would give
rise to or constitutes  or would  constitute an Event of Loss to the Airframe or
any Engine.

     6.1.12 Compliance With Laws

     (a) Lessee is a Citizen of the United States and a U.S. Air Carrier.

     (b) Lessee holds all licenses, permits, and franchises from the appropriate
Government  Entities  necessary  to authorize  Lessee  lawfully to engage in air
transportation  and to  carry  on  scheduled  commercial  passenger  service  as
currently  conducted,  except to the  extent  that the  failure to hold any such
license, permit, or franchise would not give rise to a Materially Adverse Change
to Lessee.

     (c) Lessee is not an  "investment  company" or a company  controlled  by an
"investment company" within the meaning of the Investment Company Act of 1940.

     6.1.13 Securities Laws

     Neither Lessee nor any Person  authorized to act on its behalf has directly
or  indirectly  offered any  beneficial  interest  or  Security  relating to the
ownership  of the  Aircraft or the Lease or any interest in the Trust Estate and
the Trust  Agreement  for sale to, or  solicited  any offer to acquire  any such
interest or security  from,  or has sold any such  interest or security  to, any
Person in violation of the Securities Act.

     6.1.14 Broker's Fees

     No Person acting on behalf of Lessee is or will be entitled to any broker's
fee, commission, or finder's fee in connection with the Transactions, except for
fees payable to Lessee's Advisor(s), if any.

     6.1.15 Section 1110

     Owner Trustee,  as lessor under the Lease, will be entitled to the benefits
of Section  1110 (as  currently  in effect),  with  respect to the right to take
possession of the Airframe and Engines as provided in the Lease, in the event of
a case under Chapter 11 of the Bankruptcy Code in which Lessee is a debtor.

     6.1.16 No Government Consents

     Neither  Lessee's  execution  and  delivery of any of the Lessee  Operative
Agreements nor Lessee's  performance of its obligations  hereunder  requires the
consent or approval of, the giving of notice to, or the  registration  with,  or
the taking of any other action in respect of any Government  Entity,  except for
(a) the orders, permits,  waivers,  exemptions,  authorizations and approvals of
the  regulatory  authorities  having  jurisdiction  over  the  operation  of the
Aircraft by Lessee, which orders, permits, waivers,  exemptions,  authorizations
and approvals  have been duly obtained and are, or will on the Delivery Date be,
in full force and effect,  and the  registration  and filings referred to herein
and  (b)  any  normal  periodic  and  other  reporting  requirements  under  the
applicable  rules of the FAA to the extent required to be given or obtained only
on or after the Delivery Date.

     6.1.17 Payment of Taxes

     Lessee and its  Affiliates  have  filed or caused to be filed all  federal,
state, and material local and non-U.S. tax returns that are required to be filed
and have paid or caused to be paid all taxes shown to be due on such  returns or
on any  assessment  received  by Lessee or its  Affiliates,  except any that are
being contested diligently and in good faith by appropriate  proceedings and for
which  adequate  provision  for payment has been made in  accordance  with GAAP.
There is no ongoing audit or, to the knowledge of Lessee, other investigation by
any Government Entity of the tax liability of Lessee or its Affiliates and there
is no  unresolved  claim  by a  taxing  authority  concerning  Lessee's  or  any
Affiliate's  tax liability,  for any period for which returns have been filed or
were  due,  that,  in  either  case,  reasonably  may be  expected  to result in
liability  of  Lessee  which  could  have a  materially  adverse  effect  on the
business,  operations or financial  condition of Lessee or the ability of Lessee
to perform its obligations under the Operative Agreements.

     6.2 Owner Participant's Representations and Warranties

     Owner Participant represents and warrants to Lessee and Owner Trustee that:

     6.2.1 Organization, etc.

     Owner Participant (a) is a corporation duly incorporated,  validly existing
and in  good  standing  under  the  Laws  of the OP  Jurisdiction,  (b)  has the
corporate  power and  authority to conduct the business in which it is currently
engaged,  to own or hold  under  lease  its  properties,  and to enter  into and
perform its obligations  under the Owner Participant  Agreements,  and (c) has a
tangible net worth (exclusive of goodwill) greater than $50 million.

     6.2.2 Corporate Authorization

     Owner Participant has taken (or caused to be taken) all necessary corporate
action (including obtaining any consent or approval of stockholders  required by
its  certificate  of  incorporation  or by-laws)  to  authorize  its  execution,
delivery, and performance of its obligations under each of the Owner Participant
Agreements.

     6.2.3 No Violation

     Owner Participant's execution, delivery, and performance of its obligations
under each of the Owner  Participant  Agreements do not and will not (a) violate
any provision of Owner  Participant's  certificate of  incorporation or by-laws,
(b)  violate  any  Law  applicable  to  or  binding  on  Owner  Participant  (no
representation  or  warranty  is made with  respect to ERISA,  other than as set
forth in ss. 6.2.9) or (c) violate or  constitute  any default under (other than
any violation or default that would not result in a Materially Adverse Change to
Owner  Participant),  or  result  in the  creation  of any Lien  (other  than as
provided for or otherwise permitted in the Operative  Agreements) upon the Trust
Estate  under,  any lease,  loan,  or other  material  agreement  to which Owner
Participant is a party or by which Owner Participant or any of its properties is
bound.

     6.2.4 Approvals

     Owner Participant's execution, delivery, and performance of its obligations
under each of the Owner  Participant  Agreements do not and will not require the
consent or  approval  of, the giving of notice to, the  registration  with,  the
recording or filing of any documents  with, or the taking of any other action in
respect of (a) any trustee or other holder of any Debt of Owner Participant, and
(b) any  Government  Entity,  other than filing the FAA-Filed  Documents and the
Financing Statements and routine regulatory filings.

     6.2.5 Valid and Binding Agreements

     The Owner Participant  Agreements have been duly authorized,  executed, and
delivered by Owner Participant, and (assuming the due authorization,  execution,
and delivery by the other parties thereto)  constitute legal, valid, and binding
obligations of Owner  Participant and are enforceable  against Owner Participant
in accordance with their terms,  except as such enforceability may be limited by
bankruptcy, insolvency, and other similar Laws affecting the rights of creditors
generally and general principles of equity.

     6.2.6 Citizenship

     Owner Participant is a Citizen of the United States.

     6.2.7 No Liens

     There are no Lessor Liens  attributable to Owner  Participant on all or any
part of the Trust Estate.

     6.2.8 Investment by Owner Participant

     Owner Participant is acquiring its beneficial  interest in the Trust Estate
for  its own  account,  for  investment  and not  with a view to any  resale  or
distribution  thereof;  provided,  that, subject to the transfer restrictions in
ss. 10, its disposition of its beneficial  interest in the Trust Estate shall at
all times be within its control.

     6.2.9 ERISA

     No part of the funds to be used by Owner Participant to acquire or hold its
interests in the Trust Estate  directly or  indirectly  constitutes  assets of a
Plan.

     6.2.10 Litigation

     There  are  no  pending  or,  to  Owner  Participant's   Actual  Knowledge,
threatened   actions  or  proceedings   against  Owner  Participant  before  any
Government  Entity that, if  determined  adversely to Owner  Participant,  would
materially   adversely  affect  Owner  Participant's   ability  to  perform  its
obligations under the Owner Participant Agreements.

     6.2.11 Securities Laws

     Neither Owner  Participant nor any Person Owner  Participant has authorized
to act on its behalf has directly or indirectly offered any beneficial  interest
in or Security  relating to the ownership of the Aircraft or any interest in the
Trust  Estate for sale to, or  solicited  any offer to  acquire  any of the same
from,  any  Person  in  violation  of the  Securities  Act or  applicable  state
securities  Laws (with the  understanding  that Owner  Participant  shall not be
deemed to have  authorized  Lessee's  Advisor(s)  to act on Owner  Participant's
behalf).

     6.2.12 Broker's Fees

     No Person acting on behalf of Owner  Participant  is or will be entitled to
any  broker's  fee,   commission,   or  finder's  fee  in  connection  with  the
Transactions.

     6.3 FSB's Representations and Warranties

     FSB represents and warrants to Lessee and Owner Participant that:

     6.3.1 Organization, etc.

     FSB is a national banking association duly organized,  validly existing and
in  good  standing  under  the  Laws  of the  United  States,  holding  a  valid
certificate  to do  business  as a national  banking  association  with  banking
authority  to execute,  deliver,  and perform  its  obligations  under the Owner
Trustee Agreements.

     6.3.2 Corporate Authorization

     FSB has  taken  (or  caused to be taken)  all  necessary  corporate  action
(including obtaining any consent or approval of stockholders  required by Law or
by its  articles of  association  or by-laws) to  authorize  the  execution  and
delivery by FSB or Owner Trustee, of each of the Owner Trustee  Agreements,  and
the performance of its obligations thereunder.

     6.3.3 No Violation

     FSB's and Owner  Trustee's  execution,  delivery,  and performance of their
respective  obligations  under the Owner Trustee  Agreements do not and will not
(a) violate any  provision  of FSB's  articles of  association  or by-laws,  (b)
violate any Utah Law or federal  banking Law  applicable  to or binding on Owner
Trustee or FSB, or (c) violate or  constitute  any default under (other than any
violation or default that would not result in a Materially Adverse Change to FSB
or Owner  Trustee),  or result in the  creation of any Lien upon any property of
FSB, Owner Trustee,  or any of FSB's  subsidiaries  under,  any lease,  loan, or
other  material  agreement to which FSB or Owner  Trustee is a party or by which
FSB, Owner Trustee, or any of their properties is or may be bound or affected.

     6.3.4 Approvals

     FSB's and Owner  Trustee's  execution,  delivery,  and performance of their
respective  obligations  under the Owner Trustee  Agreements do not and will not
require the consent, approval, or authorization of, the giving of notice to, the
registration  with, the recording or filing of any documents with, or the taking
of any other  action in respect of, (a) any trustee or other  holder of any Debt
of FSB, or (b) any Government Entity governing  banking and trust powers,  other
than filing the FAA-Filed Documents and the Financing Statements.

     6.3.5 Valid and Binding Agreements

     The Owner  Trustee  Agreements  have been duly  authorized,  executed,  and
delivered  by FSB and  Owner  Trustee,  and  (assuming  the  due  authorization,
execution,  and delivery thereof by the other parties thereto) constitute legal,
valid,  and binding  obligations  of FSB and Owner  Trustee and are  enforceable
against FSB and Owner  Trustee in  accordance  with their terms,  except as such
enforceability may be limited by bankruptcy,  insolvency, and other similar Laws
affecting the rights of creditors generally and general principles of equity.

     6.3.6 Citizenship

     FSB is a Citizen of the United States.

     6.3.7 Chief Executive Office

     The chief  executive  office (as defined in UCC Article 9) of Owner Trustee
is located at 79 South Main Street, Salt Lake City, Utah 84111.

     6.3.8 Title

     On the Delivery Date,  Owner Trustee shall have received  whatever title to
the Aircraft as was conveyed to it by Seller.

     6.3.9 No Liens; Financing Statements

     There are no Lessor Liens  attributable  to FSB or Owner Trustee in respect
of all or any  part  of the  Aircraft,  or the  Trust  Estate.  Except  for  the
Financing  Statements,  neither  FSB nor  Owner  Trustee  has  executed  any UCC
financing statement relating to the Aircraft or the Lease.

     6.3.10 Litigation

     There are no pending or, to FSB's Actual Knowledge,  threatened  actions or
proceedings  against FSB or Owner Trustee before any Government  Entity that, if
determined  adversely to FSB, would  materially  adversely affect the ability of
FSB or Owner  Trustee  to  perform  its  obligations  under  the  Owner  Trustee
Agreements.

     6.3.11 Securities Laws

     Neither FSB, nor any Person  authorized to act on its behalf,  has directly
or  indirectly  offered any  beneficial  interest  or  Security  relating to the
ownership of the Aircraft or any interest in the Trust  Estate,  for sale to, or
solicited any offer to acquire any such  interest or security  from, or has sold
any such interest or security to, any Person other than Owner Participant.

     6.3.12 Expenses and Taxes

     There are no Expenses  or Taxes that may be imposed on or asserted  against
the Trust, the Trust Estate, or any part thereof or any interest therein, Lessee
or Owner  Participant  (except as to Owner  Trustee,  Taxes  imposed on the fees
payable  to Owner  Trustee)  under  the laws of Utah in  connection  with  Owner
Trustee's execution,  delivery, or performance of any Operative Agreement, which
Expenses or Taxes would not have been  imposed if Owner  Trustee had not (x) had
its  principal  place of  business in Utah,  (y)  performed  (in its  individual
capacity  or as Owner  Trustee)  any or all of its  duties  under the  Operative
Agreements  in  Utah,  or  (z)  engaged  in  any  activities  unrelated  to  the
transactions contemplated by the Operative Agreements in Utah.

     7. COVENANTS

     7.1 Lessee's Covenants

     Lessee  agrees for the benefit of Owner  Participant  and Owner  Trustee as
follows:

     7.1.1 Corporate Existence; U.S. Air Carrier

     Lessee  shall at all times  maintain  its  corporate  existence,  except as
permitted  byss.  13.2 of the Lease,  and shall at all times  remain a U.S.  Air
Carrier.

     7.1.2 Notice of Change of Chief Executive Office

     Lessee will give to Owner  Participant  and Owner  Trustee  timely  written
notice of (but in any event  within 90 days after) any  relocation  of its chief
executive  office (as  defined in UCC  Article  9), and will  promptly  take any
action required by ss. 7.1.3(c) as a result of such relocation.

     7.1.3 Certain Assurances

     (a) Lessee  shall duly  execute,  acknowledge,  and deliver (or cause to be
executed,  acknowledged, and delivered) all such further documents, and shall do
and cause to be done such further things,  as Owner Participant or Owner Trustee
reasonably  requests to  accomplish  the purposes of the  Operative  Agreements,
provided that no document so executed by Lessee will expand any  obligations  or
limit any rights of Lessee in respect of the Transactions.

     (b) Lessee shall  promptly take such action with respect to the  recording,
filing, re-recording, and refiling of the Lease and the Trust Agreement, and any
supplements  thereto, as shall be necessary to establish,  perfect,  and protect
Owner Trustee's interests and rights in and to the Aircraft and under the Lease.
Lessee shall  furnish to Owner  Participant  or Owner  Trustee such  information
(other  than with  respect to the  citizenship  of Owner  Participant  and Owner
Trustee) in Lessee's possession or otherwise  reasonably available to Lessee and
required to enable Owner  Participant  or Owner Trustee to apply to register the
Aircraft  under the  Transportation  Code (subject to Lessee's  rights under ss.
7.1.2 of the Lease),  and shall pay or cause to be paid all out-of-pocket  costs
and expenses thereof (including reasonable attorneys' fees and disbursements).

     (c) Lessee will cause the FAA-Filed  Documents,  the Financing  Statements,
and  all  continuation  statements  (and  any  amendments  necessitated  by  any
combination,  consolidation, or merger pursuant to ss. 13.2 of the Lease, or any
relocation of its chief executive office) in respect of the Financing Statements
to be prepared and,  subject only to the execution and delivery thereof by Owner
Trustee,  duly and timely filed and recorded,  or filed for recordation,  to the
extent  permitted under the  Transportation  Code (with respect to the FAA-Filed
Documents) or the UCC or similar law of any other applicable  jurisdiction (with
respect to such other documents).

     (d) If the Aircraft is registered in a country other than the United States
pursuant to ss.  7.1.2 of the Lease,  Lessee will  furnish to Owner  Trustee and
Owner Participant  annually while the Aircraft is not U.S.-registered  (starting
with the  calendar  year  after such  registration  is  effected)  an opinion of
special counsel  reasonably  satisfactory to Owner Participant  stating that, in
the opinion of such counsel,  either (1) such action has been taken with respect
to  the  recording,  filing,  re-recording,   and  re-filing  of  the  Operative
Agreements  and any  supplements  and  amendments  thereto  as is  necessary  to
establish, perfect, and protect Owner Trustee's right, title and interest in and
to the  Aircraft  and the  Operative  Agreements,  reciting  the details of such
actions,  or (2) no such action is necessary to maintain the  perfection of such
right, title, and interest.

     7.1.4 Securities Laws

     Neither Lessee nor any Person authorized to act on its behalf will directly
or  indirectly  offer  any  beneficial  interest  or  Security  relating  to the
ownership  of the  Aircraft or the Lease or any interest in the Trust Estate and
Trust  Agreement  for sale to, or solicit any offer to acquire any such interest
or  security  from,  or sell any such  interest  or  security  to, any Person in
violation of the Securities Act or applicable state or foreign securities Laws.

                  7.1.5                 Certification

     Lessee  shall  cause the  Aircraft  to be duly  certified  by the FAA as to
airworthiness and shall,  immediately upon registration of the Aircraft in Owner
Trustee's name, obtain an FAA airworthiness certificate for the Aircraft.

     7.2 Owner Participant's Covenants

     Owner  Participant  agrees for the  benefit of Lessee and Owner  Trustee as
follows:

     7.2.1 Liens

     Owner  Participant (a) (1) will not directly or indirectly  create,  incur,
assume, or suffer to exist any Lessor Lien attributable to it on or with respect
to all or any part of the Trust Estate or the Aircraft, and (2) will, at its own
cost and expense,  promptly  take such action as is  necessary to discharge  any
Lessor Lien  attributable  to Owner  Participant on all or any part of the Trust
Estate or the Aircraft;  provided,  that Owner Participant shall not be required
to comply with the  foregoing  provisions of this clause (a) if it shall in good
faith by appropriate proceedings contest claims or charges resulting in any such
Lien as long as such contest  does not involve any material  danger of the sale,
forfeiture,  loss,  or loss of use of the  Aircraft or the interest of Lessor or
Owner  Participant  therein;  and (b) will hold harmless and  indemnify  Lessee,
Owner Trustee, each of their respective  Affiliates,  successors,  and permitted
assigns, and the Trust Estate from and against (1) any and all Expenses, (2) any
reduction  in  the  amount  payable  out  of  the  Trust  Estate,  and  (3)  any
interference with the possession,  operation, or other use of all or any part of
the Aircraft,  in each case imposed on, incurred by, or asserted  against any of
the  foregoing as a consequence  of any such Lessor Lien (without  regard to the
proviso to the foregoing clause (a)).

     7.2.2 Revocation of Trust Agreement

     (a)  Owner  Participant  will  comply  with  the  provisions  of the  Trust
Agreement  applicable to it, will not terminate or revoke the Trust Agreement or
the trusts created  thereunder  without the prior written consent of Lessee, and
will not amend,  modify, or supplement the Trust Agreement,  or waive any of the
provisions thereof, if such amendment, modification, supplement, or waiver would
have any adverse effect on Lessee, without the consent of Lessee.

     (b) Notwithstanding ss. 7.2.2(a),  Owner Participant may at any time remove
Owner Trustee  pursuant to ss. 9.1 of the Trust Agreement or terminate the Trust
Agreement pursuant to ss. 11.2 of the Trust Agreement.

     7.2.3 Change of Situs of Owner Trust

     If, at any time, any Tax Indemnitee or the Trust Estate becomes  subject to
any Taxes for which it is indemnified  pursuant to ss. 9.3 of this Agreement and
if, as a  consequence  thereof,  Lessee  requests that the situs of the Trust be
moved to another  state in the United  States from the state in which it is then
located,  the situs of the Trust may be moved with the written  consent of Owner
Participant  (which  consent  shall  not be  unreasonably  withheld)  and  Owner
Participant will take whatever action is reasonably necessary to accomplish such
removal;  provided, that, in any event, (a) Lessee shall provide such additional
tax  indemnification  as Owner  Participant  reasonably  requests  to cover  any
additional  unindemnified  Taxes  or  loss  of  Tax  benefits  described  in the
assumptions in the Tax Indemnity  Agreement resulting from such change in situs,
(b)  the  rights  and  obligations  under  the  Operative  Agreements  of  Owner
Participant  shall not be  adversely  affected as a result of the taking of such
action,  (c) Owner  Participant  shall receive an opinion or opinions of counsel
(which counsel is reasonably satisfactory to Owner Participant), in scope, form,
and substance reasonably  satisfactory to Owner Participant,  to the effect that
(1) the Trust, as thus removed,  remains a  validly-established  trust,  (2) any
amendments to the Trust  Agreement  necessitated  by such removal have been duly
authorized, executed, and delivered and constitute valid and binding obligations
of such parties,  enforceable in accordance with their terms,  (3) covering such
other  matters as Owner  Participant  reasonably  requests,  (d)if such  removal
involves the replacement of Owner Trustee,  then Owner Participant shall receive
an opinion of counsel to such  successor  Owner  Trustee,  in form and substance
reasonably satisfactory to Owner Participant,  covering the matters described in
the  opinion  delivered  pursuant  to ss.  5.1.2(r)(4),  and  (e)  Lessee  shall
indemnify and hold harmless Owner Participant,  FSB, and Owner Trustee, on a net
after-tax basis, against any and all reasonable out-of-pocket costs and expenses
(including  attorneys'  fees and  disbursements),  fees and  expenses of any new
owner trustee,  registration,  recording,  or filing fees, and taxes incurred by
Owner  Participant  or Owner  Trustee in  connection  with such change of situs.
Owner Participant agrees, for Lessee's benefit,  that Owner Participant will not
consent to or direct a change in the situs of the Trust Estate without  Lessee's
prior written consent.

     7.2.4 Compliance with Lease Provisions

     Owner Participant  agrees,  solely for Lessee's benefit, to comply with the
express provisions applicable to Owner Participant in the Lease.

     7.2.5 Securities Act

     Owner  Participant  will not directly or  indirectly  offer any  beneficial
interest or security  relating to the  ownership of the Aircraft or any interest
in the Trust  Estate  for sale to, or  solicit  any  offer to  acquire  any such
interest or security  from, or sell any such interest or security to, any Person
in violation of the  Securities  Act or applicable  state or foreign  securities
Laws,  provided,  that this ss. 7.2.5 shall not impose on Owner  Participant any
responsibility  with respect to any such offer,  sale,  or  solicitation  by any
other party hereto.

     7.2.6 Regarding Owner Trustee

     Owner  Participant  will direct  Owner  Trustee to perform its  obligations
under each Owner Trustee Agreement.

     7.3 FSB's and Owner Trustee's Covenants

     FSB and Owner Trustee agree for the benefit of Lessee and Owner Participant
as follows:

     7.3.1 Liens

     FSB (a) will not directly or indirectly create, incur, assume, or suffer to
exist any Lessor Lien  attributable to it or Owner Trustee on all or any part of
the  Trust  Estate  or the  Aircraft,  (b)  will,  at its own cost and  expense,
promptly  take  such  action  as is  necessary  to  discharge  any  Lessor  Lien
attributable  to FSB or Owner  Trustee on all or any part of the Trust Estate or
the Aircraft,  and (c) will personally hold harmless and indemnify Lessee, Owner
Participant,  each of their Affiliates,  successors,  and permitted assigns, and
the Trust Estate from and against (1) any and all Expenses, (2) any reduction in
the amount payable out of the Trust Estate,  and (3) any  interference  with the
possession,  operation,  or other use of all or any part of the Aircraft imposed
on,  incurred by, or asserted  against any of the foregoing as a consequence  of
any such Lessor Lien.

     7.3.2 Other Business

     Owner Trustee will not enter into any business or other activity  except as
contemplated by the Operative Agreements.

     7.3.3 Notice of Change of Chief Executive Office

     FSB and Owner  Trustee will give to Lessee and Owner  Participant  30 days'
prior written notice of any relocation of its chief executive office (as defined
in UCC Article 9), and will promptly take any action  required by ss. 7.3.7 as a
result of such relocation.

     7.3.4 Securities Act

     Neither  FSB nor  Owner  Trustee  will  directly  or  indirectly  offer any
beneficial interest or Security relating to the ownership of the Aircraft or any
interest  in the Trust  Estate for sale to, or solicit  any offer to acquire any
such  interest or security  from,  or sell any such interest or security to, any
Person  in  violation  of the  Securities  Act or  applicable  state or  foreign
securities Laws,  provided,  that the foregoing shall not impose on FSB or Owner
Trustee any responsibility with respect to any such offer, sale, or solicitation
by any other party hereto.

     7.3.5 Performance of Agreements

     Owner  Trustee  shall  perform  its  obligations  under the  Owner  Trustee
Agreements in accordance with the terms thereof.

     7.3.6 Notices; Documents

     If any claim with respect to any liabilities is filed against Owner Trustee
and Owner  Trustee  has  Actual  Knowledge  thereof,  then Owner  Trustee  shall
promptly  notify  Lessee in writing  thereof.  Owner Trustee  further  agrees to
provide to Lessee promptly any documents  (including the certificate of aircraft
registration) that it receives from the FAA with respect to the Aircraft.

     7.3.7 Filings

     After the Delivery  Date,  Owner  Trustee shall duly execute and deliver to
Lessee all  filings and  recordings  (including  all  filings and UCC  financing
statements under the  Transportation  Code and the UCC and any amendments to UCC
financing  statements  necessitated  by any  relocation  of its chief  executive
office),  prepared  and  delivered  to it by Lessee,  required to perfect  Owner
Trustee's  title to the  Aircraft  and to make such title,  liens,  and security
interests valid and enforceable.

     7.3.8 Trust Agreement

     FSB and Owner  Trustee  hereby  (a) agree for the  benefit of Lessee not to
amend,  supplement,  terminate,  or otherwise  modify any provision of the Trust
Agreement  in a manner  that  adversely  affects  the  rights of any such  party
without the prior written  consent of such party,  and (b) agree for the benefit
of  Lessee  not to revoke  the trust  created  by the  Trust  Agreement  if such
revocation  would have an adverse  effect on Lessee.  Nothing in this  Agreement
shall  impair  any right  under the  Trust  Agreement  of FSB to resign as Owner
Trustee in accordance with the provisions of the Trust Agreement.

     7.4 Other Agreements

     7.4.1 Owner Trustee Is Owner for All Purposes

     Lessee,  Owner Participant,  and Owner Trustee agree that for all purposes,
after the Closing,  Owner Trustee will be the owner of the Aircraft (except that
Owner  Participant will be the owner for income tax purposes) and Lessee will be
the lessee  thereof.  No transfer,  by operation of Law or  otherwise,  of Owner
Participant's  beneficial  interest in and to the Trust Estate shall  operate to
transfer legal title to any part of the Trust Estate to any transferee thereof.

     7.4.2 Commencement of Bankruptcy Proceedings

     Lessee, Owner Participant,  FSB, and Owner Trustee agree for the benefit of
each of the others that it will not commence or join in any proceeding under the
Bankruptcy  Code to commence a case under ss. 303 of the Bankruptcy Code against
the Trust Estate.  Nothing  contained  herein shall be deemed to preclude  Owner
Participant,  FSB,  or Owner  Trustee  from  filing any claim  against the Trust
Estate in any case commenced against the Trust Estate.

     7.4.3 Quiet Enjoyment; Sale by Owner Trustee Binding

     (a) Owner  Participant  and Owner  Trustee  agree for the benefit of Lessee
that,  unless an Event of Default  exists,  such Person shall not interfere (and
shall not permit any Affiliate or other Person claiming by, through, or under it
to  interfere)  with Lessee's  rights in accordance  with the Lease to the quiet
enjoyment, possession, and use of the Aircraft during the Term.

     (b) Any assignment,  sale, transfer, or other conveyance of the Aircraft by
Owner  Trustee made  pursuant to the terms of this  Agreement or the Lease shall
bind Owner Participant,  and shall be effective to transfer or convey all right,
title,  and  interest  of Owner  Trustee  and  Owner  Participant  in and to the
Aircraft.  No purchaser or other  grantee shall be required to inquire as to the
authorization,  necessity,  expediency, or regularity of such assignment,  sale,
transfer, or conveyance,  or as to the application of any sale or other proceeds
with respect thereto by Owner Trustee, as regards Owner Participant.

     7.4.4 Other Documents; Amendment

     (a) Each of Owner  Participant  and Owner  Trustee  hereby  agrees  for the
benefit of Lessee not to amend, supplement, or otherwise modify any provision of
the Trust Agreement in a manner that could adversely affect such party,  without
the prior  written  consent  of such  party.  Owner  Trustee  agrees to  furnish
promptly to Lessee copies of any supplement,  amendment, waiver, or modification
of any of the Operative Agreements to which Lessee is not a party.

     (b) Owner  Trustee  agrees to join with Lessee to the extent that action on
its part is  necessary  or  appropriate  (1) to cause the  following  to be duly
accomplished in accordance with applicable United States federal Law by the time
the Aircraft is delivered  under this Agreement and the Lease:  (aa) to apply to
register  the  Aircraft in Owner  Trustee's  name,  and (bb) all related  action
necessary  in order for  Lessee to have  temporary  or  permanent  authority  to
operate the  Aircraft  as  contemplated  by the Lease,  and (2)  forthwith  upon
delivery  of the  Aircraft  under this  Agreement  and the  Lease,  to cause all
necessary documents to be duly filed for recording in accordance with applicable
United States federal Law.

     7.4.5 Consents

     Each of Owner  Participant  and Owner  Trustee  covenants  and agrees,  for
Lessee's  benefit,  that it shall not  unreasonably  withhold its consent to any
consent or approval  requested of it or of Owner  Trustee under the terms of any
of the  Operative  Agreements  which  by  its  terms  is not to be  unreasonably
withheld.

     7.4.6 Insurance

     Each of Owner  Participant  and  Owner  Trustee  agrees  not to  obtain  or
maintain  insurance for its own account as permitted by ss. 11.2 of the Lease if
such insurance would limit,  increase the cost of, or otherwise adversely affect
the coverage of any  insurance  required to be obtained or  maintained by Lessee
pursuant to ss. 11 and Annex D of the Lease.

     7.4.7 Foreign Registration

     (a) Owner  Participant and Owner Trustee hereby agree for Lessee's  benefit
that,  subject to ss.  7.1.2 of the Lease,  Lessee shall be entitled to register
the Aircraft or cause the Aircraft to be  registered in a country other than the
United States, if:

     (1) such registration is made only after the Tax Attribute  Period,  unless
Lessee prepays on a lump-sum basis any liability that would be due under the Tax
Indemnity  Agreement as a result of such registration  based upon the assumption
that such  registration  would  continue  for the  remainder  of the term of the
Permitted Sublease described in clause (3) below;

     (2) no  Special  Default  or Event of  Default  exists  at the time of such
registration;

     (3) such  proposed  change of  registration  is made in  connection  with a
Permitted  Sublease  to a  Permitted  Air  Carrier,  and  such  country  is such
Permitted Air Carrier's domicile;

     (4) such country is a country with which the United  States then  maintains
normal  diplomatic  relations  (or, if Taiwan,  the United States then maintains
diplomatic  relations at least as good as those in effect on the Delivery  Date,
provided  that Lessee may not effect such  registration  in Taiwan unless it has
obtained the prior written consent of Owner Participant, which Owner Participant
may withhold in its sole and absolute discretion); and

     (5) Owner  Participant  and Owner  Trustee  receive  an  opinion of counsel
(subject to customary exceptions) reasonably  satisfactory to Owner Participant,
addressed to each such party, to the effect that:

     (aa) such country  recognizes  Owner  Trustee's  ownership  interest in the
Aircraft;

     (bb) Lessee's obligations,  and Owner Trustee's rights and remedies,  under
the  Lease  are  valid,   binding,  and  enforceable  under  the  laws  of  such
jurisdiction;

     (cc) after giving effect to such change in  registration,  Owner  Trustee's
title continues as a valid and protected interest, and all filing, recording, or
other  action   necessary  to  protect  Owner   Trustee's   interest  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)  Owner  Participant  and  Owner  Trustee  shall  receive  a
certificate  from Lessee  that all  possible  preparations  to  accomplish  such
filing,  recording,  and other action are done, and such filing,  recording, and
other action are accomplished,  and a supplemental  opinion to that effect shall
be delivered to Owner Participant and Owner Trustee promptly after the effective
date of such change in registration;

     (dd)  it is not  necessary,  solely  as a  consequence  of such  change  in
registration and without giving effect to any other activity of Owner Trustee or
Owner  Participant,  for Owner  Trustee  or Owner  Participant  to qualify to do
business in such jurisdiction as a result of such  reregistration or in order to
exercise any rights or remedies  with  respect to the  Aircraft  pursuant to the
Lease;

     (ee) there is no tort  liability  of the owner or lessor of an aircraft not
in possession thereof under the laws of such jurisdiction (it being agreed that,
if  such  latter  opinion  cannot  be  given  in a form  satisfactory  to  Owner
Participant,  such opinion shall be waived if insurance reasonably  satisfactory
to Owner Participant is provided to cover such risk); and

     (ff)  unless  Lessee  agrees  to  provide  insurance  covering  the risk of
requisition of use of the Aircraft by the government of such country (so long as
the 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 Lessee before 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,  Lessee  shall  give to Owner  Participant  assurances  reasonably
satisfactory to each of them:

     (1) that the provisions ofss. 11 of the Lease have been complied with after
giving effect to such change of registration;

     (2)  of  Lessee's  payment,  on  an  after-tax  basis,  of  all  reasonable
out-of-pocket  expenses of Lessor and Owner  Participant in connection with such
change of registry,  including (aa) the  reasonable  fees and  disbursements  of
counsel to Lessee and  Lessor,  (bb) any filing or  recording  fees,  Taxes,  or
similar  payments  incurred in connection with the change of registration of the
Aircraft; and

     (3) that the tax and other  indemnities in favor of each Person named as an
indemnitee  under  any other  Operative  Agreement  afford  to each such  Person
substantially the same protection as provided before such change of registration
(or Lessee agrees to provide,  or cause to be provided,  additional  indemnities
that,  together with such original  indemnities,  in the reasonable  judgment of
Owner Participant and Lessor, afford such protection).

     7.4.8 Other Commercial Relations Unaffected

     Notwithstanding  anything  to the  contrary  set  forth  in  any  Operative
Agreement:

     (a) except as set forth in the Purchase  Agreement  Assignment,  nothing in
the Operative  Agreements shall constitute or be deemed to be a waiver by Lessee
of any rights,  remedies, or claims it may have against Airframe Manufacturer or
Engine  Manufacturer  or any  subcontractor  or  supplier  of  either;  and  the
Operative  Agreements  do not and shall not be construed or deemed to create any
rights, waivers,  immunities,  or indemnities in favor of Airframe Manufacturer,
Engine Manufacturer,  or any subcontractor or supplier of either with respect to
any such rights, remedies, or claims of Lessee; and

     (b) neither  Airframe  Manufacturer,  by its  execution and delivery of the
Consent and Agreement, nor Engine Manufacturer, by its execution and delivery of
the Engine Manufacturer  Warranty Agreement,  shall be deemed to have waived any
rights,  remedies,  or claims which Airframe Manufacturer or Engine Manufacturer
(or any  subcontractor  or  supplier  of either)  has  against  Lessee;  and the
Operative  Agreements  do not and shall not be construed or deemed to create any
rights, waivers,  immunities,  or indemnities in favor of Lessee with respect to
any such  rights,  remedies,  or  claims  of  Airframe  Manufacturer  or  Engine
Manufacturer (or any subcontractor or supplier of either).

     7.4.9 Interest in Certain Engines

     Owner  Participant and Owner Trustee agree, for the benefit of each lessor,
conditional  seller,  or  secured  party of any  airframe  or engine  leased to,
purchased by, or owned by Lessee or any Permitted  Sublessee subject to a lease,
conditional sale, or other security agreement that it will not acquire or claim,
as against such lessor,  conditional seller, or secured party, any right, title,
or  interest in any engine as the result of the  installation  of such engine on
the Airframe at any time while such engine is subject to such lease, conditional
sale, or other security agreement and owned by such lessor or conditional seller
or subject to a security interest in favor of such secured party.

     8. CONFIDENTIALITY

     Lessee, Owner Participant, and Owner Trustee shall keep Annexes B, C, and D
and  Schedules 1, 2, 3, and 4 to the Lease,  the  Participation  Agreement,  the
Purchase Agreement Assignment, and the Tax Indemnity Agreement confidential, and
shall not disclose  them, or cause them to be disclosed,  to any Person,  except
(a) to prospective and permitted  transferees of Lessee's,  Owner Participant's,
or Owner Trustee's  interest or their counsel,  independent  insurance  brokers,
auditors, or other agents who agree to hold such information  confidential,  (b)
to  Lessee's,  Owner  Participant's,  or Owner  Trustee's  counsel,  independent
insurance brokers, auditors, or other agents, Affiliates, or investors who agree
to hold such  information  confidential,  (c) as may be required by any statute,
court, or administrative  order or decree, legal process, or governmental ruling
or regulation,  including those of any applicable  insurance  regulatory  bodies
(including  the National  Association  of Insurance  Commissioners),  federal or
state  banking  examiners,  Internal  Revenue  Service  auditors,  or any  stock
exchange, (d) with respect to Lessee and Owner Participant,  by mutual agreement
of such parties, or (e) to such other Persons as are reasonably deemed necessary
by the  disclosing  party in order to protect the interests of such party or for
the purposes of enforcing such documents by such party;  provided,  that any and
all disclosures  permitted by clauses (c), (d), and (e) above shall be made only
to the  extent  necessary  to meet  the  specific  requirements  or needs of the
Persons making such disclosures.

     9. INDEMNIFICATION AND EXPENSES

     9.1 General Indemnity

     9.1.1 Indemnity

     Whether  or not  any of the  Transactions  are  consummated,  Lessee  shall
indemnify, protect, defend, and hold harmless each Indemnitee from, against, and
in respect of, and shall pay on a net after-tax  basis,  any and all Expenses of
any kind or nature whatsoever,  including those imposed on, incurred or suffered
by, or asserted  against any Indemnitee,  relating to, based on, resulting from,
or arising out of or in connection  with,  in each case directly or  indirectly,
any one or more of the following:

     (a) the Operative Agreements, or the enforcement of any of the terms of any
of the Operative Agreements;

     (b) the Aircraft,  the Airframe,  any Engine, or any Part, including,  with
respect   thereto,   (1)  the   manufacture,   design,   purchase,   acceptance,
nonacceptance,     rejection,    ownership,    registration,     reregistration,
deregistration,  delivery, nondelivery, lease, sublease, assignment, possession,
use, non-use,  operation,  maintenance,  testing, repair,  overhaul,  condition,
alteration,   modification,   addition,  improvement,   storage,  airworthiness,
replacement,  repair, sale, substitution,  return,  abandonment,  redelivery, or
other  disposition  of the Aircraft,  any Engine,  or any Part, (2) any claim or
penalty  arising out of  violations  of  applicable  Laws,  (3) tort  liability,
whether or not arising out of the negligence of any Indemnitee  (whether active,
passive,  or imputed,  and including  strict  liability  and  liability  without
fault),  (4) death or property damage of passengers,  shippers,  or others,  (5)
environmental control, noise, or pollution, (6) any claim for patent, trademark,
or  copyright  infringement  and (7) any Liens in respect of the  Aircraft,  any
Engine, or any Part; and

     (c)  any  breach  of or  failure  to  perform  or  observe,  or  any  other
noncompliance with, any covenant, agreement, or other obligation to be performed
by  Lessee  under  any  Lessee  Operative  Agreement,  or  the  falsity  of  any
representation  or warranty of Lessee in any Lessee Operative  Agreement,  other
than in the Tax Indemnity Agreement.

     9.1.2 Exceptions

     Notwithstanding  anything  in ss.  9.1.1,  Lessee  shall not be required to
indemnify,  protect,  defend,  and hold harmless any Indemnitee  pursuant to ss.
9.1.1 against any Expense of such Indemnitee:

     (a) for any  Taxes  or a loss of Tax  benefit,  whether  or not  Lessee  is
required  to  indemnify  therefor  pursuant  to ss.  9.3 or  the  Tax  Indemnity
Agreement  (other than amounts  required to be paid to render the payment of any
Expense payable under ss. 9.1.1 on an after-tax basis);

     (b) except to the extent  attributable  to acts or events  occurring  prior
thereto,  acts  or  events  (other  than  acts or  events  related  to  Lessee's
performance  of its  obligations  pursuant to the terms of the Lessee  Operative
Agreements) that occur after: (1) with respect to the Airframe,  any Engine,  or
any Part, the return of possession  (which, if the Aircraft is placed in storage
as provided  inss.  5 of the Lease,  is the date that the  Aircraft is placed in
storage) of such  Airframe,  Engine,  or Part  pursuant to the Lease (other than
pursuant toss. 15 thereof,  in which case Lessee's  liability under thisss.  9.1
shall  survive  for so long as Lessor is entitled  to  exercise  remedies  under
suchss.  15 or in  connection  with Lessee in the event of exercise of its early
termination option underss. 9 of the Lease or its purchase options underss. 17.3
of the Lease), and (2) the termination of the Term in accordance with the Lease;

     (c) to the extent  attributable to any Transfer  (voluntary or involuntary)
by or on behalf of Owner  Participant  of any  interest  in the  Aircraft or the
Trust Estate,  except for out-of-pocket  costs and expenses incurred as a result
of such  Transfer  during the existence of an Event of Default (or in connection
with Lessee in the event of exercise of its early termination option under ss. 9
of the Lease or its purchase options under ss. 17.3 of the Lease);

     (d)  to  the  extent  attributable  to  the  gross  negligence  or  willful
misconduct  of such  Indemnitee  or any related  Indemnitee  (as defined  below)
(other than gross  negligence  or willful  misconduct  imputed to such Person by
reason of its interest in the Aircraft or any Operative Agreement);

     (e) in the case of FSB, to the extent attributable to matters enumerated in
the proviso toss. 13;

     (f) to the  extent  attributable  to the  incorrectness  or  breach  of any
representation  or  warranty  of  such  Indemnitee  or  any  related  Indemnitee
contained in or made pursuant to any Operative Agreement;

     (g) to the extent  attributable  to the failure,  by such Indemnitee or any
related Indemnitee, to perform or observe any agreement,  covenant, or condition
on its part to be performed or observed in any Operative Agreement;

     (h) to the extent  attributable  to the offer or sale by such Indemnitee or
any related Indemnitee of any interest in the Aircraft, the Trust Estate, or the
Trust Agreement,  or any similar interest, in violation of the Securities Act or
other  applicable  federal,  state,  or foreign  securities Laws (other than any
thereof caused by the acts or omissions of Lessee or any person acting on behalf
of Lessee);

     (i) with  respect  to Owner  Trustee,  to the  extent  attributable  to its
negligence  or willful  misconduct  in the  distribution  of funds  received and
distributable by it in accordance with the Trust Agreement,

     (j) other than during the  existence of an Event of Default,  to the extent
attributable  to the  authorization  or  giving  or  withholding  of any  future
amendments,  supplements,  waivers,  or consents  with respect to any  Operative
Agreement, other than any requested by Lessee or required by or made pursuant to
the terms of the Operative  Agreements (unless such requirement results from the
actions of an  Indemnitee  not  required by or made  pursuant  to the  Operative
Agreements);

     (k) to the extent attributable to any amount which any Indemnitee expressly
agrees to pay or such  Indemnitee  expressly  agrees  shall not be paid by or be
reimbursed by Lessee;

     (l) to the extent that it is an ordinary  and usual  operating  or overhead
expense of such Indemnitee;

     (m) with  respect to Owner  Participant  or Owner  Trustee,  or any related
Indemnitee,  to the extent  attributable to the  deregistration  of the Aircraft
under the Transportation  Code as a result of the failure of such Person (or any
related  Indemnitee  of such  Person) to be a Citizen of the United  States as a
result of any act (other than  reregistration  of the  Aircraft  pursuant to ss.
7.1.2  of the  Lease)  of Owner  Participant  or Owner  Trustee  or any  related
Indemnitee of such Person (not taken at the request of Lessee);

     (n) for any Lessor  Lien  attributable  to such  Indemnitee  or any related
Indemnitee; or

     (o) to the extent incurred by or asserted  against an Indemnitee other than
Owner  Participant (but without limiting the other provisions of this ss. 9.1.2,
including  clauses  (f) and (g),  as to Owner  Participant)  as a result  of any
"prohibited  transaction",  within  the  meaning  of ERISA  ss.  406 or Code ss.
4975(c)(1).

     For  purposes  of this ss.  9.1, a Person  shall be  considered  a "related
Indemnitee"  of an Indemnitee if that Person is an Affiliate or employer of such
Indemnitee,  a director,  officer,  employee, or agent of such Indemnitee or any
such  Affiliate,  or a successor or permitted  assignee of any of the foregoing;
provided,  that  Owner  Trustee  and  FSB  shall  not be  deemed  to be  related
Indemnitees  of Owner  Participant  merely  because of their trust or  fiduciary
relationships.

     9.1.3 Separate Agreement

     This  Agreement  constitutes  a  separate  agreement  with  respect to each
Indemnitee, and is enforceable directly by each such Indemnitee.

     9.1.4 Notice

     If an Indemnitee makes a claim for any Expense indemnifiable under this ss.
9.1,  such  Indemnitee  shall  give  prompt  written  notice  thereof to Lessee.
Notwithstanding  the  foregoing,  any  Indemnitee's  failure to notify Lessee as
provided in this ss. 9.1.4,  or in ss. 9.1.5,  shall not release Lessee from any
of its obligations to indemnify such Indemnitee hereunder,  except to the extent
that such  failure  results in an  additional  Expense to Lessee (in which event
Lessee  shall not be  responsible  for such  additional  expense) or  materially
impairs Lessee's ability to contest such claim.

     9.1.5 Notice of Proceedings; Defense of Claims; Limitations

     (a) If any action,  suit,  or  proceeding  for which Lessee is  responsible
under this ss. 9.1 is brought  against any  Indemnitee,  such  Indemnitee  shall
notify  Lessee of the  commencement  thereof,  and Lessee may,  at its  expense,
participate in and, to the extent that it so desires  (subject to the provisions
of the following paragraph),  assume and control its defense and, subject to ss.
9.1.5(c),  settle or compromise it. Unless Owner  Participant  agrees in writing
otherwise, no settlement of any claim hereunder may require Owner Participant to
agree to any remedy  apart from the  payment  of money  damages  (for which such
payment of money damages Lessee will in any event indemnify the Indemnitees).

     (b) Lessee or its insurer(s) shall have the right, at its or their expense,
to investigate or, if Lessee or its insurer(s) agree not to dispute liability to
the Indemnitee giving notice of such action,  suit, or proceeding under this ss.
9.1.5 for indemnification  hereunder or under any insurance policies pursuant to
which  coverage  is sought,  control  the  defense  of,  any  action,  suit,  or
proceeding, relating to any Expense for which indemnification is sought pursuant
to this  ss.  9.1,  and each  Indemnitee  shall  cooperate  with  Lessee  or its
insurer(s) with respect thereto;  provided, that Lessee shall not be entitled to
control the defense of any such action,  suit,  or  proceeding,  or to settle or
compromise any such Expense,  (i) while any Special  Default or Event of Default
under ss. 14.1 of the Lease exists, or (ii) if such action,  suit, or proceeding
will  involve  a  material  risk of the  sale,  forfeiture,  or loss of,  or the
creation of any Lien (other than a Permitted  Lien) on the  Aircraft,  the Trust
Estate,  or any part  thereof,  unless  Lessee shall have posted a bond or other
security or  collateral  satisfactory  to Owner  Participant  in respect to such
risk,  or (iii) if such  action,  suit,  or  proceeding  could in the good faith
opinion of such  Indemnitee  entail any risk of criminal  liability  or material
civil liability or present a conflict of interest making separate representation
necessary.  In  connection  with any such  Lessee-controlled  action,  suit,  or
proceeding,  such Indemnitee shall have the right to participate therein, at its
sole cost and expense, with counsel reasonably  satisfactory to Lessee, provided
that such Indemnitee's  participation does not, in the reasonable opinion of the
independent  counsel  appointed  by  Lessee  or its  insurers  to  conduct  such
proceedings, interfere with the defense of such case.

     (c) In no event  shall any  Indemnitee  enter  into a  settlement  or other
compromise  with respect to any Expense  without  Lessee's prior written consent
(which shall not be  unreasonably  withheld or delayed),  unless such Indemnitee
waives its right to be  indemnified  with respect to such Expense under this ss.
9.1.

     (d) To the extent that any Expense  indemnified by Lessee  hereunder may be
covered by insurance maintained by Lessee, at Lessee's expense,  each Indemnitee
agrees  to  cooperate  with the  insurers  in the  exercise  of their  rights to
investigate, defend, or compromise that Expense as may be required to retain the
benefits of the insurance for that Expense.

     (e) If an Indemnitee is not a party to this  Agreement,  Lessee may require
that  Indemnitee  to agree in  writing  to the terms of this ss. 9 and ss.  15.8
before making any payment to such Indemnitee under this ss. 9.

     (f) Nothing  herein shall be deemed to be a guarantee of any residual value
of the Aircraft.

     (g) Nothing in this ss. 9.1.5 shall  require an  Indemnitee  to contest any
Expense or to assume  responsibility  for or control of any judicial  proceeding
with respect thereto.

     9.1.6 Information

     Lessee will  provide the  relevant  Indemnitee  with such  information  not
within the control of such  Indemnitee  (but in Lessee's  control or  reasonably
available  to  Lessee)  which  such  Indemnitee  reasonably  requests,  and will
otherwise  cooperate  with such  Indemnitee  so as to enable such  Indemnitee to
fulfill its  obligations  under ss. 9.1.5 and to control or  participate  in any
proceeding to the extent  permitted by ss. 9.1.5.  The  Indemnitee  shall supply
Lessee  with such  information  not  within the  control of Lessee  (but in such
Indemnitee's  control or reasonably  available to such Indemnitee)  which Lessee
reasonably  requests to control or  participate  in any proceeding to the extent
permitted by ss. 9.1.5.

     9.1.7 Effect of Other Indemnities; Subrogation; Further Assurances

     Upon  payment in full by or on behalf of Lessee of any  indemnity  provided
for under this  Agreement,  without  any  further  action and to the full extent
permitted by Law,  Lessee will be  subrogated  to all rights and remedies of the
Person  indemnified  (other  than  with  respect  to  any of  such  Indemnitee's
insurance  policies or in connection with any indemnity claim of such Indemnitee
under ss.  5.3 or ss. 7 of the Trust  Agreement)  in respect of the matter as to
which such indemnity was paid. Each Indemnitee will give such further assurances
or  agreements  and  cooperate  with Lessee to permit  Lessee to pursue any such
claims, to the extent reasonably requested by Lessee and at Lessee's expense.

     9.1.8 Refunds

     If an Indemnitee  receives any refund, in whole or in part, with respect to
any  Expense  paid by or on behalf of Lessee  hereunder,  that  Indemnitee  will
promptly  pay the  amount  refunded  (but not an amount in excess of the  amount
Lessee or any of its  insurers  has paid in  respect  of such  Expense)  over to
Lessee  unless an Event of Default  exists,  in which case such amount  shall be
paid over to Owner  Trustee to hold as security for Lessee's  obligations  under
the Lessee Operative  Agreements or, if requested by Lessee,  applied to satisfy
those obligations. Any subsequent loss of such recovery or tax benefit or refund
shall be subject to the provisions of ss. 9.1 and ss. 9.3.

     9.2 Expenses

     9.2.1 Invoices and Payment

     Owner Trustee and Owner Participant shall promptly submit to Lessee for its
prompt approval (which shall not be unreasonably withheld) copies of invoices in
reasonable  detail of the  Transaction  Expenses for which it is responsible for
providing  information  as they are  received  (and not later  than the 90th day
after the Delivery Date). If so submitted and approved, Owner Participant agrees
promptly  (and not later than the later of (i) the 105th day after the  Delivery
Date and (ii) the  tenth  Business  Day  following  such  approval)  to pay such
Transaction Expenses . Notwithstanding the foregoing,  Lessee at its sole option
shall have the right to pay directly any and all Transaction Expenses payable to
Lessee  Advisor  or  Lessee's  counsel  or (if such  payment  does not result in
adverse tax  consequences to Owner  Participant)  to any other Person.  If Owner
Participant  fails to pay any  Transaction  Expense  that it is obligated to pay
hereunder, Lessee shall pay such Transaction Expense. Any such payment by Lessee
shall not affect Owner  Participant's  obligations  or Lessee's  rights  against
Owner Participant for its failure to make any such payment.

     9.2.2 Payment of Other Expenses

     Lessee shall pay (a) the ongoing fees and  expenses of Owner  Trustee,  and
(b) all reasonable  out-of-pocket  costs and expenses  (including the reasonable
fees and disbursements of counsel) incurred by Owner Participant attributable to
(1) any transfer of title to the Aircraft or any Engine  contemplated by ss. 4.5
of the Lease,  or (2) any waiver,  amendment,  or  modification of any Operative
Agreement to the extent requested by Lessee.

     9.2.3 Indemnification Interest

     Lessee will pay to each Indemnitee upon demand,  to the extent permitted by
applicable  Law,  interest at the Past Due Rate on any amount of  indemnity  not
paid when due pursuant to this ss. 9 until the same shall be paid.

     9.3 General Tax Indemnity

     9.3.1 General

     Except as provided in ss.  9.3.2,  Lessee  agrees that each payment of Rent
paid by Lessee pursuant to the Lease, and any other payment or indemnity paid by
Lessee to a Tax Indemnitee under any Operative  Agreement,  shall be free of all
withholdings or deductions with respect to Taxes of any nature, and if Lessee is
required by  applicable  law to make any such  withholding  or deduction for any
such payment, (a) Lessee shall make all such withholdings or deductions, (b) the
amount  payable by Lessee shall be increased so that,  after making all required
withholdings or deductions, such Tax Indemnitee receives the same amount that it
would have received had no such  withholdings  or deductions  been made, and (c)
Lessee  shall pay the full amount  withheld or deducted to the  relevant  Taxing
Authority in accordance  with  applicable  law. Except as provided in ss. 9.3.2,
and whether or not any of the Transactions  are  consummated,  Lessee shall pay,
indemnify,  protect,  defend,  and hold harmless on an after-tax  basis each Tax
Indemnitee from all Taxes imposed by any Taxing Authority imposed on or asserted
against any Tax  Indemnitee or the Aircraft,  the Airframe,  any Engine,  or any
Part,  or any  interest  in any of the  foregoing  (whether  or not  indemnified
against by any other Person),  upon or with respect to the Operative Agreements,
their execution, or the transactions or payments contemplated thereby, including
any Tax imposed  upon or with respect to (w) the  Aircraft,  the  Airframe,  any
Engine,  any  Part,  any  Operative  Agreement,  any data,  or any  other  thing
delivered or to be delivered  under an Operative  Agreement,  (x) the  purchase,
manufacture,  acceptance, rejection, sale, transfer of title, return, ownership,
delivery,  transport,  charter, rental, lease, re-lease,  sublease,  assignment,
possession,   repossession,  presence,  use,  condition,  storage,  preparation,
maintenance,  modification,  alteration,  improvement,  operation, registration,
transfer  or  change  of  registration,   reregistration,  repair,  replacement,
overhaul,  location, control, imposition of any Lien (other than a Lessor Lien),
financing, refinancing requested by Lessee, abandonment, or other disposition of
the Aircraft,  the Airframe,  any Engine, any Part, any data, or any other thing
delivered  or to be  delivered  under  an  Operative  Agreement,  or  (y)  rent,
interest, fees, or other income, proceeds, receipts, or earnings, whether actual
or  deemed,  arising  upon,  in  connection  with,  or in  respect of any of the
Operative  Agreements  (including  the property or income or other proceeds with
respect  to  property  held as part of the  Trust  Estate)  or the  transactions
contemplated thereby.

     9.3.2 Certain Exceptions

     The  provisions  of ss.  9.3.1 shall not apply to, and Lessee shall have no
liability hereunder for, Taxes:

     (a) imposed on a Tax  Indemnitee  by the federal  government  of the United
States or any Taxing Authority or governmental  subdivision of the United States
or any state or local Taxing Authority (1) on, based on, or measured by gross or
net income or gross or net  receipts,  including  capital  gains  taxes,  excess
profits taxes,  minimum taxes from tax preferences,  alternative  minimum taxes,
branch profits taxes,  accumulated  earnings  taxes,  personal  holding  company
taxes,  succession taxes and estate taxes,  and any withholding  taxes on, based
on, or measured by gross or net income or  receipts,  or (2) on, or with respect
to, or measured by capital or net worth or in the nature of a franchise tax or a
tax for the privilege of doing  business  (other than, in the case of clause (1)
or (2), Taxes in the nature of sales, use,  license,  value added (to the extent
not imposed as a substitute for an income tax), transfer,  stamp, ad valorem, or
property Taxes);

     (b) imposed on a Tax  Indemnitee  by any Taxing  Authority or  governmental
subdivision  thereof or therein  outside of the  United  States  (including  any
Taxing Authority in or of a territory, possession, or commonwealth of the United
States)  (1) on,  based  on, or  measured  by gross or net  income or  receipts,
including  capital gains taxes,  excess  profits  taxes,  minimum taxes from tax
preferences,  alternative  minimum  taxes,  branch  profits  taxes,  accumulated
earnings  taxes,  personal  holding company taxes,  succession  taxes and estate
taxes,  and any  withholding  taxes on,  based on, or  measured  by gross or net
income or receipts, or (2) on, or with respect to, or measured by capital or net
worth or in the nature of a franchise  tax or a tax for the  privilege  of doing
business  (other than, in the case of clause (1) or (2),  Taxes in the nature of
(aa) sales, use, license, value added (to the extent not imposed as a substitute
for an income tax), transfer,  stamp, ad valorem, or property Taxes, or (bb) any
Taxes  imposed by any Taxing  Authority  (other than a Taxing  Authority  within
whose jurisdiction such Tax Indemnitee is incorporated or organized or maintains
its  principal  place of  business) if such Tax  Indemnitee  would not have been
subject  to  such  Taxes  by  such   jurisdiction  but  for  (i)  the  location,
registration,  use, or operation of the Aircraft,  the Airframe,  any Engine, or
any Part  thereof  by a Lessee  Person  within  the  jurisdiction  of the Taxing
Authority imposing such Tax, or (ii) the activities of any Lessee Person (except
for activities of a Lessee Person who is not an Affiliate,  successor, or assign
of Lessee acting in its capacity other than as a Lessee Person, which activities
are unrelated to the transactions  contemplated by the Operative  Agreements) in
such  jurisdiction,  including  use of any  other  aircraft  by  Lessee  in such
jurisdiction, (iii) the status of any Lessee Person as a foreign entity or as an
entity owned in whole or in part by foreign  persons,  (iv) Lessee's having made
(or having been deemed to have made)  payments to such Tax  Indemnitee  from the
relevant jurisdiction,  or (v) in the case of Owner Participant,  or any related
Tax Indemnitee,  Lessee's being incorporated,  organized, or maintaining a place
of business in such jurisdiction);

     (c) on, with  respect to, or  measured  by any trustee  fees,  commissions,
premiums, or compensation received by Owner Trustee;

     (d) on the Trust or the Trust  Estate  that result  from  treatment  of the
Trust or the Trust  Estate as an entity,  such as a  corporation,  separate  and
apart from Owner Participant;

     (e) that are being contested as provided inss. 9.3.4 during the pendency of
such contest;

     (f) imposed on any Tax Indemnitee to the extent that such Taxes result from
the  gross  negligence  or  willful  misconduct  of such Tax  Indemnitee  or any
Affiliate thereof (other than the gross negligence or willful misconduct imputed
to such Tax Indemnitee by reason of such Tax  Indemnitee's  participation in the
transactions contemplated by the Operative Agreements);

     (g)  imposed  on  or  with  respect  to a  Tax  Indemnitee  (including  the
transferee  in those  cases in which the Tax on  transfer  is imposed  on, or is
collected from, the  transferee) as a result of a transfer or other  disposition
(including a deemed transfer or disposition) by such Tax Indemnitee or a related
Tax Indemnitee (or, in the case of Owner Participant,  by Owner Trustee,  or, in
the case of Taxes imposed on a transferee, by the transferor) of any interest in
the Aircraft,  the Airframe,  any Engine,  or any Part, the Rent, the Trust, the
Trust Estate, the Lease, or any interest arising under the Operative  Agreements
or a transfer or disposition (including a deemed transfer or disposition) of any
interest  in a Tax  Indemnitee  (other  than  (1) a  substitution,  replacement,
modification,  pooling, or improvement of the Aircraft, the Airframe, any Engine
or any Part by a Lessee Person that is treated for Tax purposes as a transfer or
disposition,  (2) a  transfer  pursuant  to  an  exercise  of  remedies  upon  a
then-existing  Event of Default,  (3) a transfer  pursuant toss. 17.3 orss. 9 of
the Lease, or (4) a transfer pursuant to an Event of Loss);

     (h) in excess of those that would  have been  imposed  had there not been a
transfer  or other  disposition  by or to such Tax  Indemnitee  or a related Tax
Indemnitee described in clause (g) of this ss. 9.3.2;

     (i) imposed on Owner  Participant and indemnified by Lessee pursuant to the
Tax Indemnity Agreement;

     (j) imposed  with  respect to any period  after the  expiration  or earlier
termination of the Term and, if required pursuant to the terms of the Lease, the
return of  possession  of the  Aircraft to Lessor or placement in storage at the
request of Lessor in accordance with the Lease  (provided,  that this clause (j)
shall  not apply to Taxes  imposed  after  such  period  arising  as a result of
payments  by Lessee  under the  Operative  Agreements  after such  period or are
attributable to events  occurring prior to or coincident with such expiration or
earlier termination of the Term);

     (k) consisting of any interest, penalties, or additions to tax imposed on a
Tax  Indemnitee  as a result  (in  whole or in  part) of a  failure  of such Tax
Indemnitee or a related Tax  Indemnitee to file any return  properly and timely,
unless such failure is caused by Lessee's failure to fulfill its obligations, if
any, under ss. 9.3.6 with respect to such return;

     (l) resulting from, or that would not have been imposed but for, any Lessor
Liens  arising  as a result  of  claims  against,  or acts or  omissions  of, or
otherwise attributable to such Tax Indemnitee or a related Tax Indemnitee;

     (m)  imposed  on any Tax  Indemnitee  as a result of the breach by such Tax
Indemnitee or a related Tax Indemnitee of any covenant of such Tax Indemnitee or
any Affiliate thereof contained in any Operative  Agreement or the inaccuracy of
any  representation  or warranty by such Tax Indemnitee or any Affiliate thereof
in any Operative Agreement;

     (n) in the nature of an  intangible  or similar Tax upon or with respect to
the value of the interest of Owner Participant in the Trust Estate or the Trust,
only if such  Taxes are in the  nature  of  franchise  Taxes or result  from the
conduct of business by such Tax  Indemnitee in the taxing  jurisdiction  and are
imposed because of the place of incorporation or the activities unrelated to the
Transactions in the taxing jurisdiction of such Tax Indemnitee;

     (o) that is included in Lessor's  Cost and paid to the  appropriate  Taxing
Authority;

     (p) other than any Tax described in ss. 9.3.2(b)  hereof,  imposed on a Tax
Indemnitee by a Taxing Authority of a jurisdiction outside the United States, to
the extent  that such Taxes  would not have been  imposed  but for a  connection
between the Tax  Indemnitee or a related Tax  Indemnitee  and such  jurisdiction
imposing such Tax unrelated to the Transactions; or

     (q) relating to ERISA or to Codess. 4975.

     For purposes hereof, a Tax Indemnitee and any other Tax Indemnitees who are
successors,  assigns,  agents,  or  Affiliates of such Tax  Indemnitee  shall be
related Tax Indemnitees.

     9.3.3 Payment

     (a) Without regard to ss. 9.3.2(a),  (b), or (h) hereof, Lessee's indemnity
obligation  to a Tax  Indemnitee  under this ss. 9.3 shall be the amount  which,
after  taking into  account  any Tax imposed  upon the receipt or accrual of the
amounts payable under this ss. 9.3 and any tax benefits  actually  recognized by
such Tax Indemnitee as a result of the indemnifiable Tax (including any benefits
recognized as a result of such Tax Indemnitee's use of an indemnifiable Tax as a
credit against Taxes not indemnifiable under this ss. 9.3), equals the amount of
the Tax indemnifiable under this ss. 9.3.

     (b) At Lessee's  request,  the  computation  of the amount of any indemnity
payment owed by Lessee or any amount owed by a Tax Indemnitee to Lessee pursuant
to this ss.  9.3  shall be  verified  and  certified  by an  independent  public
accounting  firm selected by such Tax Indemnitee and reasonably  satisfactory to
Lessee.  Such  verification  shall be  binding.  The costs of such  verification
(including  the fee of such  public  accounting  firm)  shall be borne by Lessee
unless such  verification  results in an adjustment  in Lessee's  favor of 5% or
more of the net present value of the payment as computed by such Tax Indemnitee,
in which case such Tax Indemnitee shall pay those costs.

     (c) Each Tax Indemnitee shall provide Lessee with such certifications,  and
such  information and  documentation  in such Tax  Indemnitee's  possession,  as
Lessee  reasonably  requests to minimize any indemnity  payment pursuant to this
ss. 9.3;  provided,  that  notwithstanding  anything to the contrary in this ss.
9.3.3(c),  no Tax  Indemnitee  shall be required to provide  Lessee with any Tax
returns.

     (d) Each Tax  Indemnitee  shall  promptly  forward  to Lessee  any  written
notice,  bill,  or advice  that such Tax  Indemnitee  receives  from any  Taxing
Authority concerning any Tax for which it seeks  indemnification  under this ss.
9.3. Lessee shall pay any amount for which it is liable pursuant to this ss. 9.3
directly to the appropriate  Taxing  Authority if legally  permissible,  or upon
demand of a Tax Indemnitee, to such Tax Indemnitee within 30 days of such demand
(or, if a contest  occurs in accordance  with ss. 9.3.4,  within 30 days after a
Final Determination (as defined below)),  but in no event more than one Business
Day before the related Tax is due. If requested by a Tax  Indemnitee in writing,
Lessee  shall  furnish to the  appropriate  Tax  Indemnitee  the  original  or a
certified copy of a receipt for Lessee's  payment of any Tax paid by Lessee,  or
such  other  evidence  of  payment  of such  Tax as is  acceptable  to such  Tax
Indemnitee. Lessee shall also furnish promptly upon written request such data as
any Tax Indemnitee  reasonably  requires to enable such Tax Indemnitee to comply
with the  requirements  of any  taxing  jurisdiction,  unless  such data are not
reasonably  available to Lessee or (unless such data are specifically  requested
by a Taxing  Authority) are not  customarily  furnished by domestic air carriers
under   similar   circumstances.   For  purposes  of  this  ss.  9.3,  a  "Final
Determination" is (1) a decision,  judgment, decree, or other order by any court
of competent  jurisdiction  that occurs pursuant to the provisions of ss. 9.3.4,
which  decision,   judgment,  decree,  or  other  order  has  become  final  and
unappealable,  (2) a closing  agreement or settlement  agreement entered into in
accordance  with ss. 9.3.4 that has become binding and is not subject to further
review or appeal (absent fraud, misrepresentation, etc.), or (3) the termination
of  administrative  proceedings and the expiration of the time for instituting a
claim in a court proceeding.

     (e) If any Tax Indemnitee  actually realizes a tax savings by reason of any
Tax paid or  indemnified  by Lessee  pursuant to this ss. 9.3 (whether  such tax
savings  arise by means of a foreign tax credit,  depreciation  or cost recovery
deduction, or otherwise),  and such savings are not otherwise taken into account
in computing such payment or indemnity,  such Tax Indemnitee shall pay to Lessee
an amount  equal to the lesser of (1) the amount of such tax  savings,  plus any
additional net tax savings recognized as the result of any payment made pursuant
to this sentence,  when, as, if, and to the extent realized,  and (2) the amount
of all payments  pursuant to this ss. 9.3 by Lessee to such Tax Indemnitee (less
any payments  previously  made by such Tax Indemnitee to Lessee pursuant to this
ss.  9.3.3(e))  (and the excess,  if any, of the amount  described in clause (1)
over the amount  described in clause (2) shall be carried forward and applied to
reduce pro tanto any  subsequent  obligations of Lessee to make payments to such
Tax  Indemnitee  pursuant to this ss. 9.3);  provided,  that such Tax Indemnitee
shall not be required to make any payment pursuant to this sentence so long as a
Special  Default or an Event of Default of a monetary  nature  exists.  If a tax
benefit is later  disallowed  or denied,  the  disallowance  or denial  shall be
treated as a Tax indemnifiable  under ss. 9.3.1 without regard to the provisions
of ss. 9.3.2 (other than ss.  9.3.2(f)).  Each such Tax Indemnitee shall in good
faith use  reasonable  efforts in filing  its tax  returns  and in dealing  with
Taxing Authorities to seek and claim any such tax benefit.

     9.3.4 Contest

     (a) If a written  claim is made  against a Tax  Indemnitee  for Taxes  that
Lessee could be liable to pay or indemnify for hereunder, or if a Tax Indemnitee
determines that a Tax is due and that Lessee could have an indemnity  obligation
for that Tax  hereunder,  such Tax Indemnitee  shall  promptly  notify Lessee in
writing of such claim  (provided,  that  failure so to notify  Lessee  shall not
relieve  Lessee of its  indemnity  obligations  hereunder  unless the failure to
notify  effectively  forecloses  Lessee's  rights to  require a contest  of such
claim),  and shall take no action with  respect to such claim  without  Lessee's
prior written  consent for 30 days  following  Lessee's  receipt of such notice;
provided,  that, if applicable  Law requires such Tax  Indemnitee to take action
before the end of such 30-day period,  such Tax Indemnitee shall, in such notice
to Lessee, so inform Lessee, and such Tax Indemnitee shall take no action for as
long as it is legally able to avoid taking action (and a Tax Indemnitee shall be
entitled  to pay the Tax  claimed  and sue for a refund  before  the end of such
30-day period if (1)(aa) the failure to pay the Tax would result in  substantial
penalties  (unless  immediately  reimbursed by Lessee) and the act of paying the
Tax would not materially  prejudice the right to contest, or (bb) the failure to
pay would result in criminal  penalties,  and (2) such Tax Indemnitee shall take
any action so required in connection  with so paying the Tax in a manner that is
the least  prejudicial  to the pursuit of the  contest).  In addition,  such Tax
Indemnitee   shall  (provided  that  Lessee  shall  have  agreed  to  keep  such
information  confidential other than to the extent necessary in order to contest
the claim) furnish Lessee with copies of any requests for  information  from any
Taxing  Authority  relating  to such Taxes with  respect to which  Lessee may be
required to indemnify  hereunder.  If  requested by Lessee in writing  within 30
days after its receipt of such notice,  such Tax Indemnitee  shall,  at Lessee's
expense (including all reasonable costs, expenses, and reasonable attorneys' and
accountants' fees and disbursements), in good faith contest (or, if permitted by
applicable law, allow Lessee to contest) through appropriate  administrative and
judicial proceedings the validity, applicability, or amount of such Taxes by (x)
resisting  payment  thereof,  (y) not paying the Taxes except  under  protest if
protest is necessary and proper, or (z) if the payment is made, using reasonable
efforts to obtain a refund thereof in an appropriate  administrative or judicial
proceeding. If requested to do so by Lessee, the Tax Indemnitee shall appeal any
adverse  administrative  or judicial  decision,  except that the Tax  Indemnitee
shall not be required to pursue any appeals to the United States  Supreme Court.
If and to the extent that the Tax  Indemnitee  is able to separate the contested
issue(s)  from other  issues  arising  in the same  administrative  or  judicial
proceeding  that  are  unrelated  to  the  Transactions  without  (in  such  Tax
Indemnitee's good faith judgment) adversely affecting such Tax Indemnitee,  such
Tax Indemnitee shall permit Lessee to control the conduct of any such proceeding
and shall provide to Lessee (at Lessee's cost and expense) with such information
or data in such Tax Indemnitee's  control or possession and reasonably necessary
to conduct such contest  (other than such Tax  Indemnitee's  federal  income Tax
returns) in which case Lessee shall keep such Tax Indemnitee reasonably informed
concerning the progress of such contest. If the contest is being controlled by a
Tax  Indemnitee,  such Tax  Indemnitee  shall  consult with Lessee in good faith
regarding the manner of contesting  such claim and shall keep Lessee  reasonably
informed regarding the progress of such contest. A Tax Indemnitee shall not fail
to take any action  expressly  required by this ss. 9.3.4  (including any action
regarding any appeal of an adverse  determination  with respect to any claim) or
settle or compromise any claim without Lessee's prior written consent (except as
contemplated by ss. 9.3.4(b) or (c)).

     (b)  Notwithstanding  the foregoing,  in no event shall a Tax Indemnitee be
required  to pursue any  contest  (or to permit  Lessee to pursue  any  contest)
unless  (1)  Lessee  agrees to pay to such Tax  Indemnitee  on demand  and on an
after-tax  basis all  reasonable  costs and  expenses  that such Tax  Indemnitee
incurs in  connection  with  contesting  such Taxes,  including  all  reasonable
out-of-pocket costs and expenses and reasonable attorneys' and accountants' fees
and disbursements, (2) if such contest involves the payment of the claim, Lessee
advances the amount thereof (to the extent indemnified hereunder) plus interest,
penalties,  and  additions to tax with  respect  thereto that are required to be
paid before  commencing the contest on an  interest-free  net after-Tax basis to
such Tax Indemnitee,  (3) such Tax Indemnitee does not reasonably determine that
the action to be taken will result in any material risk of forfeiture,  sale, or
loss of the Aircraft (unless Lessee makes provisions to protect the interests of
any  such  Tax  Indemnitee  in a  manner  reasonably  satisfactory  to such  Tax
Indemnitee)  (provided,  that such Tax Indemnitee shall notify Lessee in writing
promptly  after it  becomes  aware of any such  risk),  (4) no Event of  Default
exists,  unless Lessee has provided  security for its  obligations  hereunder by
advancing to such Tax  Indemnitee,  before  proceeding or  continuing  with such
contest, the amount of the Tax being contested,  plus any interest and penalties
and an amount  estimated in good faith by such Tax Indemnitee for expenses,  (5)
before commencing any judicial action controlled by Lessee,  Lessee acknowledges
its liability for such claim hereunder in writing,  provided,  that Lessee shall
not be  bound  by its  acknowledgment  if the  Final  Determination  articulates
conclusions  of law and fact that  demonstrate  that Lessee has no liability for
the contested amounts hereunder,  (6) such Tax Indemnitee shall have received at
Lessee's sole expense,  an opinion  independent tax counsel,  such counsel to be
selected by Lessee and  reasonably  satisfactory  to such Tax  Indemnitee  ("Tax
Counsel"),  to the effect  that a  reasonable  basis,  within the meaning of ABA
Formal Opinion No. 85-352,  exists for contesting such claim,  (7) the amount of
payments  or  indemnification  that  would  be  required  as a  result  of  such
adjustment, when aggregated with further potential payments or adjustments where
the subject matter of the proposed  adjustment is of a continuing  nature, as to
the  Aircraft  and all other  aircraft  operated  by  Lessee,  shall be at least
$10,000,  and (8) the issue  shall not be  substantially  identical  as an issue
previously contested hereunder and decided adversely, unless such Tax Indemnitee
shall have received,  at Lessee's sole expense,  a written opinion,  in form and
substance reasonably satisfactory to such Tax Indemnitee,  of Tax Counsel to the
effect  that  the  applicable  circumstances  or law have  changed  and in light
thereof,  there is reasonable basis under ABA Formal Opinion No. 85-352 that the
tax  treatment  of the item which is the  subject of the claim will be upheld in
litigation if the claimed tax  treatment is  challenged  by a Taxing  Authority.
Notwithstanding  the  foregoing,   if  any  Tax  Indemnitee  releases,   waives,
compromises,  or settles any claim that may be  indemnifiable by Lessee pursuant
to this ss. 9.3 and which such Tax Indemnitee is otherwise  obligated to contest
under this ss. 9.3.4 without Lessee's written permission, Lessee's obligation to
indemnify   such  Tax   Indemnitee   with   respect   to  such  claim  (and  all
directly-related  claims,  and claims  based on the outcome of such claim) shall
terminate,  subject  to ss.  9.3.4(c),  and  subject to ss.  9.3.4(c),  such Tax
Indemnitee shall repay to Lessee any amount  previously paid or advanced to such
Tax Indemnitee with respect to such claim,  plus interest at the rate that would
have been payable by the relevant Taxing Authority on a refund of such Tax.

     (c) Notwithstanding  anything in this ss. 9.3, a Tax Indemnitee will not be
required to contest the  imposition of any Tax, and shall be permitted to settle
or compromise  any claim without  Lessee's  consent,  if such Tax Indemnitee (1)
waives its right to  indemnity  under this ss. 9.3 with respect to such Tax (and
any  directly-related  claim,  and any claim the outcome of which is  determined
based upon the outcome of such claim),  (2) pays to Lessee any amount previously
paid or  advanced by Lessee  pursuant to this ss. 9.3 with  respect to such Tax,
plus  interest at the rate that would have been payable by the  relevant  Taxing
Authority  on a refund of such Tax,  and (3) agrees to discuss  with  Lessee the
views  or  positions  of any  relevant  Taxing  Authority  with  respect  to the
imposition of such Tax provided,  that if Lessee has agreed in writing to settle
a claim for a stated amount and the relevant Tax Indemnitee settles the claim on
more favorable  terms,  such Tax  Indemnitee  shall not be required to waive the
indemnity for such claim to the extent of the amount agreed to by Lessee.

     9.3.5 Refund

     If any Tax Indemnitee receives a refund of, or becomes entitled to a credit
against other liability for, all or any part of any Taxes paid,  reimbursed,  or
advanced by Lessee,  such Tax  Indemnitee  shall pay to Lessee within 30 days of
such  receipt an amount  equal to the lesser of (a) the amount of such refund or
credit plus any net tax benefit  (taking into account any Taxes incurred by such
Tax  Indemnitee by reason of the receipt of such refund or  realization  of such
credit)  actually  realized by such Tax Indemnitee as a result of any payment by
such Tax Indemnitee made pursuant to this sentence  (including this clause (a)),
and (b) such tax  payment,  reimbursement,  or  advance  by  Lessee  to such Tax
Indemnitee theretofore made pursuant to this ss. 9.3 (and the excess, if any, of
the amount described in clause (a) over the amount described in clause (b) shall
be carried forward and applied to reduce pro tanto any subsequent  obligation of
Lessee to make payments to such Tax Indemnitee pursuant to this ss. 9.3). If, in
addition to such refund or credit,  such Tax Indemnitee receives (or is credited
with) an amount  representing  interest  on the amount of such refund or credit,
such Tax  Indemnitee  shall pay to  Lessee  within 30 days  after  receiving  or
realizing such credit the portion of such interest fairly  attributable to Taxes
paid,  reimbursed,  or advanced  by Lessee  before the receipt of such refund or
realization  of such credit.  Notwithstanding  the  foregoing,  a Tax Indemnitee
shall not be obligated to make any payment to Lessee  pursuant to this ss. 9.3.5
if a Special  Default or an Event of Default has occurred and is continuing.  If
it is later  determined that such Tax Indemnitee was not entitled to such refund
or credit, the portion of the refund or credit repaid,  recaptured or disallowed
(and any  interest and tax savings  paid by such Tax  Indemnitee  to Lessee with
respect  thereto) shall be treated as Taxes for which Lessee must indemnify such
Tax Indemnitee pursuant to this ss. 9.3 without regard to ss. 9.3.2 hereof other
than ss. 9.3.2(f).

     9.3.6 Tax Filing

     Lessee shall timely file any report,  return, or statement that is required
to be filed with  respect to any Tax which is subject to  indemnification  under
this ss. 9.3 (except  for any such  report,  return,  or  statement  which a Tax
Indemnitee  has  timely  notified  Lessee in  writing  that such Tax  Indemnitee
intends to file, or for which such Tax Indemnitee is required by law to file, in
its own name);  provided,  that the relevant Tax Indemnitee shall furnish Lessee
with any  information  in such Tax  Indemnitee's  possession  or control that is
reasonably  necessary to file any such  return,  report,  or statement  and that
Lessee  reasonably  requests  in writing  (but the Tax  Indemnitee  shall not be
required  to  furnish  copies of its  actual  tax  returns,  although  it may be
required to furnish relevant information contained therein). Lessee shall either
file such report,  return,  or statement and send a copy to such Tax  Indemnitee
(and to Owner  Trustee,  if the Tax  Indemnitee  is not Owner  Trustee),  or, if
Lessee is not  permitted to file such report,  return,  or  statement,  it shall
notify such Tax  Indemnitee  of such  requirement  and prepare and deliver  such
report,  return,  or statement  to such Tax  Indemnitee  in a manner  reasonably
satisfactory  to such Tax  Indemnitee  within a reasonable  time before the time
such report, return, or statement is to be filed.

     9.3.7 Forms

     Each Tax Indemnitee  agrees to furnish from time to time to Lessee, or such
other Person as Lessee shall designate,  at Lessee's request, such duly-executed
and  properly-completed  forms as may be  necessary or  appropriate  in order to
claim any reduction of or exemption from any withholding or other Tax imposed by
any Taxing  Authority,  if (a) such  reduction or exemption is available to such
Tax  Indemnitee,  and (b)  Lessee  has  provided  such Tax  Indemnitee  with any
information  necessary to complete such form not otherwise  reasonably available
to such Tax Indemnitee.

     9.3.8 Non-Parties

     If a Tax  Indemnitee is not a party to this  Agreement,  Lessee may require
the Tax  Indemnitee  to agree in writing,  in a form  reasonably  acceptable  to
Lessee,  to the terms of this ss. 9.3 and ss. 15.8 before  making any payment to
such Tax Indemnitee under this ss. 9.3.

     9.4 Payments

     Any payments  made  pursuant to ss. 9.1 or ss. 9.3 shall be due on the 30th
day after demand,  and shall be made directly to the relevant  Indemnitee or Tax
Indemnitee or to Lessee, in immediately  available funds at such bank or to such
account  as  specified  by such  Indemnitee  or Tax  Indemnitee  or  Lessee  (as
applicable)  in written  directives to the payor,  or, if no such  direction has
been given,  by check of the payor  payable to the order of, and mailed to, such
Indemnitee  or Tax  Indemnitee  or Lessee (as  applicable)  by  certified  mail,
postage prepaid, at its address as set forth in this Agreement.

     9.5 Interest

     If any amount,  payable by Lessee,  any  Indemnitee,  or any Tax Indemnitee
under ss. 9.1 or ss. 9.3 is not paid when due, the Person obligated to make such
payment  shall pay on demand,  to the  extent  permitted  by Law,  to the Person
entitled thereto,  interest on any such amount for the period from and including
the due date for such amount to but  excluding  the date the amount is paid,  at
the Past-Due Rate.  Such interest shall be paid in the same manner as the unpaid
amount in respect of which such interest is due.

     9.6 Benefit of Indemnities

     Lessee's  obligations  for  indemnities,   obligations,   adjustments,  and
payments in ss. 9.1 or ss. 9.3 are expressly  made for the benefit of, and shall
be enforceable by, the Indemnitee or Tax Indemnitee  entitled  thereto,  without
declaring the Lease to be in default or taking other action thereunder.


     10. ASSIGNMENT OR TRANSFER OF INTERESTS

     10.1 Owner Participant and Owner Trustee

     10.1.1 Owner Participant

     (a) During the Term, Owner Participant shall not Transfer any or all of its
right,  title, or interest in the Trust Estate or the Trust Agreement or to this
Agreement unless:

     (1) the Transferee has full power,  authority,  and legal right to execute,
deliver,  and  perform  the  obligations  of Owner  Participant  under the Owner
Participant  Agreements and provides  reasonably  satisfactory  evidence of such
power and authority to Lessee and Owner Trustee;

     (2) the Transferee  enters into a legal,  valid,  binding,  and enforceable
agreement,  substantially  in the form of Exhibit I hereto (or otherwise in form
and substance reasonably satisfactory to Lessee), effective to confirm that such
Transferee  agrees to be bound by all the terms of, and to undertake  all of the
obligations  arising after such transfer of, the transferring  Owner Participant
in the Owner Participant  Agreements,  and in which it makes representations and
warranties substantially the same as those in ss. 6.2 of this Agreement;

     (3) upon such  Transfer  Lessee  shall not be  obligated to pay any greater
amount or incur  any  greater  obligation  than  that  which it would  have been
obliged to pay or incur under the Lease or other Lessee  Operative  Agreement if
no transfer or assignment had taken place,  and upon such Transfer the terms and
conditions  of the Lessee  Operative  Agreements  insofar as they  relate to the
rights and obligations of Lessee are not altered;

     (4) Owner  Participant shall deliver to Lessee and Owner Trustee an opinion
of  counsel  reasonably  satisfactory  to each of them to the  effect  that such
agreement or agreements referred to in ss. 10.1.1(a)(2) and, if applicable,  ss.
10.1.1(a)(6)  or (a)(7) are legal,  binding,  and enforceable in accordance with
its or their terms and that such  transfer  will not violate the  Transportation
Code, the registration provisions of the Securities Act, or any other applicable
Federal law;

     (5) the Transfer  shall relate to Owner  Participant's  entire  interest as
Owner  Participant;  or, if it relates to less than its entire interest as Owner
Participant,  then (aa) Lessee shall have given its prior written consent to the
partial  Transfer,   and  (bb)  all  amendments  to  the  Operative  Agreements,
reasonably  requested  by Lessee or Owner  Participant,  that are  necessary  or
appropriate to accommodate the existence of multiple Owner  Participants,  shall
be agreed to and  executed  by the  parties  thereto,  all at the expense of the
Owner Participants under ss. 10.1.1(c);

     (6) the  Transferee  is a Citizen of the United  States  (such status to be
determined  without  considering  FAR ss. 47.9 or any other  provision  that may
restrict  Lessee's  use or  operation  of the  Aircraft),  or shall use a voting
powers  trust or similar  arrangement  in order to hold an interest in the Trust
Estate such that the Aircraft can be registered  in the United  States  (without
considering FAR ss. 47.9 or any other  provision that may restrict  Lessee's use
or operation of the Aircraft); and

     (7) the  Transferee  is a single  Person  and is  either  (aa) a  Permitted
Institution,   (bb)  or  an  Affiliate  of  a  Permitted  Institution,  if  such
Affiliate's obligations under the Owner Participant Agreements are guaranteed by
such Permitted Institution pursuant to a written guaranty,  substantially in the
form of  Exhibit  J  hereto  (or  otherwise  in form  and  substance  reasonably
satisfactory to Lessee and Owner  Trustee),  or (cc) with Lessee's prior written
consent,  any other Person the  obligations of whom under the Owner  Participant
Agreements  are  guaranteed  by a  Permitted  Institution  pursuant to a written
guaranty,  in form and  substance  reasonably  satisfactory  to Lessee and Owner
Trustee.

     (b) Owner Participant shall give written notice to Lessee and Owner Trustee
at least 10 days before any such  Transfer,  specifying  the name and address of
the proposed  Transferee,  and  providing  financial  statements of the proposed
Transferee or guarantor evidencing satisfaction of the requirements described in
ss. 10.1.1(a)(7)(aa) or (bb).

     (c) Any reasonable fees,  charges,  and expenses,  including the reasonable
legal fees,  charges,  and expenses incurred by Lessee,  Owner  Participant,  or
Owner Trustee in connection with any Transfer by Owner Participant  permitted by
this ss.  10.1.1,  or by the  Transferee  in any such case,  will be paid for by
Owner Participant.

     10.1.2 Owner Trustee

     Owner Trustee may transfer its interests in the Trust Agreement pursuant to
ss. 9 thereof.

     10.2 Effect of Transfer

     Upon  any  Transfer  in  accordance  with ss.  10.1.1  or ss.  10.1.2,  the
Transferee shall be deemed "Owner Participant" or "Owner Trustee", respectively,
for all purposes of the Operative Agreements and, in the case of a Transferee of
Owner Participant,  shall be deemed to have paid its ratable portion of Lessor's
Cost  previously  made  by  Owner   Participant,   making  such  conveyance  and
represented by the interest being conveyed,  and each reference  herein to Owner
Participant  or Owner  Trustee  shall  thereafter  be deemed a reference to such
Transferee for all purposes,  and the  transferring  Owner  Participant or Owner
Trustee  shall be released  (including,  in the case of Owner  Participant,  any
Guarantor  with respect to any guaranty  provided by it under ss.  10.1.1(a)(7))
from all of its liabilities and  obligations  under the Operative  Agreements to
the extent such  liabilities and  obligations  arise after such Transfer and, in
each case, to the extent such  liabilities  and  obligations  are assumed by the
Transferee; provided, that such transferring Owner Participant, or Owner Trustee
will  continue  to have the  benefit  of any  rights  or  indemnities  under any
Operative  Agreement vested or relating to circumstances,  conditions,  acts, or
events before such Transfer.

     11. SECTION 1110

     Lessee, Owner Participant,  and Owner Trustee intend that Owner Trustee, as
lessor under the Lease, shall be entitled to the benefits of Section 1110 in the
event of a case under  Chapter 11 of the  Bankruptcy  Code in which  Lessee is a
debtor.

     12. CHANGE OF CITIZENSHIP

     12.1 Generally

     Without prejudice to the  representations,  warranties,  or covenants as to
any party's status as a Citizen of the United States:

     (a) Lessee and FSB agree that,  immediately upon obtaining knowledge of any
facts  that would  cast  doubt  upon its  continuing  status as a Citizen of the
United States, and promptly upon public disclosure of negotiations in respect of
any  transaction  which would or might  adversely  affect such  status,  it will
notify all parties hereto of all relevant matters in connection therewith; and

     (b)  Owner  Participant  agrees  that,  if its  status  is to change or has
changed as a Citizen of the United  States,  or it makes  public  disclosure  of
circumstances  as a result of which it  believes  that such  status is likely to
change, it will notify all the other parties to this Participation  Agreement of
(1) such change in status promptly after obtaining Actual Knowledge thereof, and
(2) such belief as soon as practicable  after such public disclosure (but in any
event within 10 Business Days after such public disclosure).

     12.2 Owner Participant

     Owner Participant  agrees,  solely for the benefit of Lessee, that if, when
the Aircraft is registered in the United States, (a) Owner Participant is not be
a  Citizen  of the  United  States,  and (b) the  Aircraft  shall  be,  or would
therefore become, ineligible for registration in the name of Owner Trustee under
the  Transportation  Code and regulations  then applicable  thereunder  (without
considering  FAR ss. 47.9 or any other  provision that may restrict  Lessee's or
any  Permitted  Sublessee's  use or  operation  of  the  Aircraft),  then  Owner
Participant shall as soon as is reasonably  practicable (but in any event within
30 days after obtaining Actual Knowledge of such  ineligibility and of such loss
of citizenship), (y) effect voting trust or other similar arrangements (in which
case any  provisions  contained in the Operative  Agreements  restricting  Owner
Participant's or Owner Trustee's  ability to amend the Trust Agreement shall not
apply to the extent  necessary to permit the use of such a voting trust or other
similar  arrangement)  or  take  any  other  action  necessary  to  prevent  any
deregistration  or maintain the United States  registration of the Aircraft,  or
(z)  transfer  in  accordance  with the terms of this  Agreement  all its right,
title,  and interest in and to this Agreement,  the Trust Estate,  and the Trust
Agreement in accordance with ss. 10.1.

     12.3 Owner Trustee

     Upon FSB's giving any notice in accordance with ss. 12.1(a),  Owner Trustee
shall,  subject to ss. 9.1.1 of the Trust  Agreement,  resign as Owner  Trustee.
Upon  its  receipt  of such  notice,  Owner  Participant  shall as  promptly  as
practicable  appoint a Citizen of the United  States as successor  Owner Trustee
pursuant to ss. 9.1 of the Trust Agreement.

     13. CONCERNING OWNER TRUSTEE

     Except as otherwise  expressly  provided herein, or in the Trust Agreement,
Owner Trustee is entering into this Agreement  solely in its capacity as trustee
as provided in the Trust Agreement and not in its individual capacity, and in no
case whatsoever will it be liable or accountable in its individual  capacity for
any of the statements,  representations,  warranties, agreements, or obligations
of Owner Trustee  hereunder,  or for any loss in respect  thereof,  as to all of
which the  parties  agree to look  solely to the Trust  Estate;  provided,  that
nothing in this ss. 13 shall limit in scope or substance the personal  liability
of FSB (a) to Owner  Participant as expressly set forth in the Trust  Agreement,
(b) in  respect  of  the  representations,  warranties,  and  agreements  of FSB
expressly made as such herein or in any other Operative Agreement to which it is
a party,  and (c) for the  consequences  of its own  gross  negligence,  willful
misconduct, and, in receiving,  handling or remitting of funds only, its willful
misconduct or simple negligence as a trustee.

     14. MISCELLANEOUS

     14.1 Amendments

     No  provision  of this  Agreement  may be  amended,  supplemented,  waived,
modified,  discharged,  terminated,  or otherwise varied orally,  but only by an
instrument  in  writing  that  specifically  identifies  the  provision  of this
Agreement  that it  purports to amend,  supplement,  waive,  modify,  discharge,
terminate,  or  otherwise  vary and is  signed  by the  party  against  whom the
enforcement  of the  amendment,  supplement,  waiver,  modification,  discharge,
termination,  or variance is sought.  Each such amendment,  supplement,  waiver,
modification, discharge, termination, or variance shall be effective only in the
specific  instance  and for the  specific  purpose  for  which it is  given.  No
provision  of  this  Agreement   shall  be  varied  or   contradicted   by  oral
communication,  course of dealing or performance,  or other manner not set forth
in  writing  and signed by the party  against  whom  enforcement  of the same is
sought.

     14.2 Severability

     If  any  provision  of  this  Agreement  is  held  invalid,   illegal,   or
unenforceable in any respect in any jurisdiction,  then, to the extent permitted
by Law, (a) all other provisions hereof shall remain in full force and effect in
such  jurisdiction,  and (b) such invalidity,  illegality,  or  unenforceability
shall not affect the validity,  legality, or enforceability of such provision in
any other jurisdiction.  If, however,  any Law pursuant to which such provisions
are held invalid,  illegal,  or unenforceable may be waived,  the parties hereto
hereby  waive  that  Law to the full  extent  permitted,  to the end  that  this
Agreement shall be a valid and binding agreement in all respects, enforceable in
accordance with its terms.

     14.3 Survival

     The  indemnities in this Agreement  shall survive the delivery or return of
the  Aircraft,  the  Transfer  of any  interest  of  Owner  Participant  in this
Agreement,  the Trust Estate,  and the Trust  Agreement,  and the  expiration or
other  termination of any Operative  Agreement,  except to the extent  otherwise
provided therein.

     14.4 Reproduction of Documents

     This Agreement (including all annexes,  schedules, and exhibits hereto) and
all documents  relating  hereto,  including (a) future  consents,  waivers,  and
modifications,  and (b) past and future financial statements,  certificates, and
other  information  furnished  to any party  hereto,  may be  reproduced  by any
photographic,  photostatic,  microfilm,  micro-card,  miniature photographic, or
other  similar  process,  and any party may destroy any  original  documents  so
reproduced.  Any such  reproduction  shall be as  admissible  in evidence as the
original itself in any judicial or administrative proceeding (whether or not the
original  exists and  whether or not such  party  made the  reproduction  in the
regular  course  of  business),  and  any  enlargement,  facsimile,  or  further
reproduction of such reproduction also shall be so admissible in evidence.

     14.5 Counterparts

     This Agreement and any amendments, waivers, consents, or supplements hereto
may be executed in any number of counterparts (or upon separate  signature pages
bound together into one or more counterparts),  each fully-executed set of which
shall be deemed to be an original.

     14.6 No Waiver

     No failure on the part of any party hereto to exercise, and no delay by any
party hereto in exercising,  any of its rights, powers,  remedies, or privileges
under this Agreement or otherwise  available shall impair,  prejudice,  or waive
any such right,  power,  remedy, or privilege or be construed as a waiver of any
breach hereof or default hereunder or as an acquiescence  therein, nor shall any
single or partial  exercise  of any such  right,  power,  remedy,  or  privilege
preclude  any other or further  exercise  thereof by it or the  exercise  of any
other right,  power,  remedy,  or privilege by it. No notice to or demand on any
party hereto in any case shall,  unless otherwise required under this Agreement,
entitle such party to any other or further  notice or demand in similar or other
circumstances,  or waive the rights of any party  hereto to any other or further
action in any circumstances without notice or demand.

     14.7 Notices

         Unless otherwise  expressly permitted by the terms hereof, all notices,
requests,  demands,  authorizations,  directions,  consents,  waivers, and other
communications  required or permitted  to be made,  given,  furnished,  or filed
hereunder  shall be in writing  (and the  specification  of a writing in certain
instances  and not in others does not imply an  intention  that a writing is not
required as to the latter),  shall refer  specifically  to this  Agreement,  and
shall be personally  delivered,  sent by fax or  telecommunication  transmission
(which  in  either  case  provides  written  confirmation  to the  sender of its
delivery),  sent by registered mail or certified mail, return receipt requested,
or sent by next-business-day courier service, in each case to the address or fax
number  set forth for such  party in  Schedule  1, or to such  other  address or
number as such party hereafter  specifies by notice to the other parties hereto.
Each such notice, request, demand, authorization, direction, consent, waiver, or
other  communication  shall be  effective  when  received  or,  if made,  given,
furnished, or filed by fax or telecommunication transmission, when confirmed.

     14.8 Governing Law; Submission to Jurisdiction; Venue

     (a) This Agreement  shall in all respects be governed by and interpreted in
accordance  with the laws of the state of New York,  including  all  matters  of
construction, validity, and performance.

     (b) Each party  hereto  hereby  irrevocably  agrees,  accepts,  and submits
itself to the non-exclusive  jurisdiction of the courts of the state of New York
in the city and  county of New York and of the United  States  for the  Southern
District of New York, in connection  with any legal action,  suit, or proceeding
with respect to any matter  relating to or arising out of or in connection  with
the Operative Agreements.

     (c) Each party hereto hereby irrevocably consents and agrees to the service
of any and all legal  process,  summons,  notices,  and  documents of any of the
aforementioned  courts in any such suit,  action,  or proceeding  may be made by
delivering copies thereof by registered or certified mail,  postage prepaid,  at
the address set forth pursuant to ss. 14.7. Each party hereto hereby agrees that
service upon it, or any of its agents,  in each case in accordance with this ss.
14.8(c),  shall constitute valid and effective personal service upon such party,
and each party  hereto  hereby  agrees  that the failure of any of its agents to
give any notice of such  service to any such party shall not impair or affect in
any way the validity of such  service on such party or any judgment  rendered in
any action or proceeding based thereon.

     (d) Each party hereto hereby irrevocably waives, to the extent permitted by
applicable  law, and agrees not to assert,  by way of motion,  as a defense,  or
otherwise,  in any legal action or  proceeding  brought  hereunder in any of the
above-named courts, that such action or proceeding is brought in an inconvenient
forum,  that  venue  for the  action  or  proceeding  is  improper,  or that any
Operative Agreement may not be enforced in or by such courts.

         (e) Each party  hereto  hereby  waives its right to a jury trial of any
claim or cause of action in any court in any jurisdiction  based upon or arising
out of or relating to the Operative Agreements.

     14.9 Third-Party Beneficiary

     This  Agreement  is not  intended to provide  (and shall not  provide)  any
Person not a party hereto with any rights of any nature  whatsoever  against any
of the parties  hereto,  and no Person not a party  hereto shall have any right,
power,  or  privilege  in respect of any party  hereto,  or have any  benefit or
interest, arising out of this Agreement.

     14.10 Entire Agreement

     This Agreement,  together with the other Operative Agreements, on and as of
the date hereof,  constitutes  the entire  agreement of the parties  hereto with
respect  to  the  subject  matter  hereof,  and  all  prior   understandings  or
agreements,  whether  written  or oral,  among any of the  parties  hereto  with
respect to such subject matter are hereby superseded in their entireties.

     14.11 Further Assurances

     Each party hereto shall execute,  acknowledge,  and deliver (or cause to be
executed, acknowledged, and delivered) all such further agreements, instruments,
certificates, or other documents, and shall do and cause to be done such further
things,  as any other party hereto  reasonably  requests in connection  with the
administration  of,  or to carry out more  effectively  the  purposes  of, or to
assure and  confirm  better to such other  party the rights and  benefits  to be
provided under, this Agreement and the other Operative Agreements.



     [This rest of this page is intentionally left blank]


<PAGE>







         IN WITNESS  WHEREOF,  the  parties  have  executed  this  Participation
Agreement N___AT.


                         AMERICAN TRANS AIR, INC., Lessee


                         By: ___________________________________________________

                             Name:
                             Title:

                         GENERAL ELECTRIC CAPITAL CORPORATION, Owner Participant



                         By: ___________________________________________________

                             Name:
                             Title:

                         FIRST     SECURITY    BANK,
                         NATIONAL  ASSOCIATION,  not
                         in its individual  capacity
                         (except    as     expressly
                         provided    herein),    but
                         solely  as  trustee,  Owner
                         Trustee


                         By: ___________________________________________________

                             Name:
                             Title:

                         FIRST SECURITY BANK, NATIONAL ASSOCIATION,(as
                         in its individual capacity
                         expressly provided herein)


                         By: ___________________________________________________

                             Name:
                             Title:




<PAGE>







                             ACCOUNTS; ADDRESSES

                   Account for Payments           Address for Notices
American                                          American Trans Air, Inc.
Trans Air, Inc.                                   7337 West Washington Street
                                                  Indianapolis, Indiana  46231
                                                  Attention: Exec. VP and CFO
                                                  fax: (317) 240-7091

Owner Participant                                 General Electric Capital
                                                  Corp.
                                                  Attention: _________________
                                                  Fax: (____) __________



The Boeing                                        The Boeing Company
Company                                           P.O. Box 3707
                                                  Seattle, WA 98124-3707
                                                  Attention: Treasurer
                                                  M/S 68-34
                                                  fax: (206) 237-8746



First Security                                    First Security Bank, N.A.
Bank,National                                     79 South Main Street
Association                                       Salt Lake City, UT  84111
                                                  Attention: Corporate
                                                  Trust Department
                                                  fax: (801) 246-5053



<PAGE>

                                   COMMITMENTS

   Participant             Percentage of Lessor's Cost       Dollar Amount

Owner Participant          Owner Participant's Percentage

General Electric Capital   100%                              $__________
 Corporation


<PAGE>







     CERTAIN TERMS


Defined Term                             Definition

Commitment Termination Date              __________, 200_

Lessee's Advisor(s)                      Capstar Partners, LLC

Lessor's Cost                            $_______________

OP Jurisdiction                          New York

Owner Participant's Special Counsel      Dewey Ballantine LLP

Trust Company Jurisdiction               Utah