Exhibit 10.16


 


EXECUTION
VERSION


 






 


MORTGAGE
AND SECURITY AGREEMENT







Dated
as of August 14, 2007







between







ATA
AIRLINES, INC.







and







JPMORGAN
CHASE BANK, N.A.,

as Administrative Agent







in
respect of







TWO
(2) L1011-500 (385-3) AIRCRAFT


1.
Manufacturer’s Serial No. 1238, FAA Registration No. N164AT


2.
Manufacturer’s Serial No. 1219, FAA Registration No. N161AT


 






 

















 


TABLE
OF CONTENTS


 


	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE I DEFINITIONS

  	
   

  	
  1

  
	
   

  	
   

  	
   

  
	
  Section 1.1.

  	
  Certain Definitions

  	
  1

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II SECURITY

  	
   

  	
  1

  
	
   

  	
   

  	
   

  
	
  Section 2.1.

  	
  Grant of Security Interest

  	
  1

  
	
  Section 2.2.

  	
  Exclusion for Certain
  Inflight Equipment

  	
  3

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III COVENANTS OF
  THE COMPANY

  	
   

  	
  4

  
	
   

  	
   

  	
   

  
	
  Section 3.1.

  	
  [Intentionally left blank]

  	
  4

  
	
  Section 3.2.

  	
  Lease

  	
  4

  
	
  Section 3.3.

  	
  Identification of Security
  Interest; Filings

  	
  4

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV REMEDIES OF THE
  ADMINISTRATIVE AGENT UPON AN EVENT OF DEFAULT

  	
  5

  
	
   

  	
   

  	
   

  
	
  Section 4.1.

  	
  Event of Default

  	
  5

  
	
  Section 4.2.

  	
  Remedies with Respect to
  Collateral

  	
  5

  
	
  Section 4.3.

  	
  Waiver of Appraisement,
  etc., Laws

  	
  7

  
	
  Section 4.4.

  	
  Remedies Cumulative

  	
  7

  
	
  Section 4.5.

  	
  Discontinuance of
  Proceedings

  	
  8

  
	
  Section 4.6.

  	
  Concerning the Cape Town
  Convention

  	
  8

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V DUTIES OF THE
  ADMINISTRATIVE AGENT

  	
   

  	
  9

  
	
   

  	
   

  	
   

  
	
  Section 5.1.

  	
  Action Upon Event of
  Default

  	
  9

  
	
  Section 5.2.

  	
  [Intentionally left blank]

  	
  9

  
	
  Section 5.3.

  	
  Indemnification

  	
  9

  
	
  Section 5.4.

  	
  No Duties Except as
  Specified in Collateral Documents or Instructions

  	
  9

  
	
  Section 5.5.

  	
  No Action Except Under
  Collateral Documents or Instructions

  	
  9

  
	
  Section 5.6.

  	
  Capacity of the
  Administrative Agent

  	
  10

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  ARTICLE VI SUPPLEMENTS AND
  AMENDMENTS TO THIS MORTGAGE AND OTHER DOCUMENTS

  	
  10

  
	
   

  	
   

  	
   

  
	
  Section 6.1.

  	
  Supplemental Mortgages

  	
  10

  
	
  Section 6.2.

  	
  Exchange Notes; Take-Out
  Debt

  	
  10

  
	
  Section 6.3.

  	
  Administrative Agent
  Protected

  	
  11

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII INVESTMENT OF
  SECURITY FUNDS

  	
  11

  
	
   

  	
   

  	
   

  
	
  Section 7.1.

  	
  Investment of Security
  Funds

  	
  11

  
					



 


iii

















 


	
   

  	
   

  	
  Page

  
	
   

  	
   

  
	
  ARTICLE VIII MISCELLANEOUS

  	
  11

  
	
   

  	
   

  	
   

  
	
  Section 8.1.

  	
  Termination of Mortgage

  	
  11

  
	
  Section 8.2.

  	
  Alterations to Mortgage

  	
  12

  
	
  Section 8.3.

  	
  No Legal Title to
  Collateral in Lender or Holder

  	
  12

  
	
  Section 8.4.

  	
  Sale of the Aircraft by
  Administrative Agent Is Binding

  	
  12

  
	
  Section 8.5.

  	
  Benefit of Mortgage

  	
  13

  
	
  Section 8.6.

  	
  Section 1110 of the
  Bankruptcy Code

  	
  13

  
	
  Section 8.7.

  	
  Notices

  	
  13

  
	
  Section 8.8.

  	
  Severability

  	
  13

  
	
  Section 8.9.

  	
  No Waiver; Cumulative
  Remedies

  	
  13

  
	
  Section 8.10.

  	
  Separate Counterparts

  	
  13

  
	
  Section 8.11.

  	
  Successors and Assigns

  	
  13

  
	
  Section 8.12.

  	
  Headings

  	
  14

  
	
  Section 8.13.

  	
  Governing Law

  	
  14

  
	
  Section 8.14.

  	
  Normal Commercial
  Relations

  	
  14

  
	
  Section 8.15.

  	
  Language

  	
  14

  
	
  Section 8.16.

  	
  Execution of Financing
  Statements

  	
  14

  
				



 


iv

















 


MORTGAGE AND SECURITY AGREEMENT


 


This MORTGAGE AND SECURITY
AGREEMENT, dated as of August 14, 2007, between ATA AIRLINES, INC., an
Indiana corporation (together with its successors and permitted assigns, the “Company”),
and JPMORGAN CHASE BANK, N.A., a national banking association formed under the
federal laws of the United States of America, as Administrative Agent for the
benefit of the Lenders and the other Secured Parties (together with its
permitted successors and assigns, the “Administrative Agent”);


 


W  I  T
N  E  S  S  E  T  H:


 


WHEREAS, pursuant to the
Term Loan Agreement, dated as of August 14, 2007 (as amended, supplemented
or otherwise modified from time to time, the “Term Loan Agreement”),
among New ATA Acquisition Inc. (the “Borrower”), the Lenders parties
thereto from time to time (the “Lenders”), the Administrative Agent and
the other parties thereto, the Lenders have severally agreed to make term loans
to the Borrower upon the terms and subject to the conditions set forth therein;


 


WHEREAS, pursuant to the
Term Loan Agreement, loans made by the Lenders may be exchanged for Exchange
Notes issued pursuant to the Indenture upon the Initial Maturity Date (as each
such term is defined in the Term Loan Agreement);


 


WHEREAS, the Borrower is a
member of an affiliated group of companies that includes the Company; and


 


WHEREAS, it is a condition
precedent to the obligation of the Lenders to make their respective term loans
to the Borrower under the Term Loan Agreement that the Company shall have
executed and delivered this Mortgage to the Administrative Agent for the
ratable benefit of the Secured Parties;


 


NOW, THEREFORE, to secure
the due and punctual payment of the Obligations, it is hereby covenanted and
agreed by and between the parties hereto as follows:


 


ARTICLE
I


 


DEFINITIONS


 


Section 1.1.            Certain Definitions.


 


Unless otherwise defined
herein or the context requires otherwise, capitalized terms used herein shall
have the meanings set forth in Appendix A hereto.


 


ARTICLE
II


 


SECURITY


 


Section 2.1.            Grant of Security Interest.


 


The Company, in order to
secure (i) the prompt payment when due of the Loans and of the other
Obligations and (ii) the performance and observance by the Company of all
agreements,


 

















 


covenants and provisions
contained herein and in the Financing Documents, and in consideration of the
premises and of the covenants herein contained, and of other good and valuable consideration,
the receipt of which is hereby acknowledged, has granted, bargained, sold,
assigned, transferred, conveyed, mortgaged, pledged and confirmed and does
hereby (subject to the terms and conditions hereof) grant, bargain, sell,
assign, transfer, convey, mortgage, pledge and confirm unto the Administrative
Agent, its permitted successors and assigns, for the security and benefit of
the Secured Parties, forever, a continuing security interest in, and mortgage
lien on, all estate, right, title and interest of the Company in, to and under
the following described properties, rights, interests and privileges (which,
collectively, including all property hereafter specifically subjected to the
lien of this Mortgage by any instrument supplemental hereto, are referred to
herein as the “Collateral”):


 


(a)           the Airframe and the Engines, each of
which Engines is of 49,120 or more pounds of thrust or its equivalent, and in
the case of such Engines, whether or not any such Engine shall be installed in
or attached to the Airframe or any other airframe, together with all
accessories, equipment, parts and appurtenances appertaining or attached to the
Airframe (other than aircraft engines not constituting Engines) or Engines and
owned by the Company, whether now owned or hereafter acquired, and all
substitutions, renewals and replacements of and additions, improvements,
accessions and accumulations to the Airframe and Engines and all records, logs,
manuals and other documents (“Documents”) at any time maintained with respect
to the foregoing;


 


(b)           any Lease Assignment and all rights
thereunder;


 


(c)           all proceeds with respect to the
requisition of title to or use of the Aircraft or any part thereof, and all
insurance proceeds with respect to the Aircraft or any part thereof, but
excluding any insurance maintained by the Company and not required under the
Financing Documents;


 


(d)           all moneys and securities now or
hereafter paid or deposited or required to be paid or deposited to or with the
Administrative Agent in pledge hereunder and held or required to be held by the
Administrative Agent hereunder;


 


(e)           any and all property that may, from
time to time hereafter, in accordance with the provisions of this Mortgage, by
delivery or by Mortgage Supplement or by other writing of any kind, for the
purposes hereof be in any way subjected to the lien and security interest
hereof or be expressly conveyed, mortgaged, assigned, transferred, deposited,
in which a security interest may be granted by the Company and/or pledged by the
Company, or by any Person authorized to so do on its behalf or with its
consent, to and with the Administrative Agent hereunder, who is hereby
authorized to receive the same at any and all times as and for additional
security hereunder; and


 


(f)            all proceeds of the foregoing;


 


PROVIDED, HOWEVER, that
notwithstanding any of the foregoing provisions of this Section 2.1, so
long as no Event of Default shall have occurred and be continuing, (i) the
Company shall have the right, to the exclusion of the Administrative Agent, to
quiet enjoyment of the Airframe, Engines and Documents and to possess, use,
retain and control (including entering into Leases and Wet Leases with respect
to) the Airframe, Engines and Documents and all revenues, income and profits
derived therefrom subject to the terms of the Financing Documents, and (ii) the
Administrative Agent, shall not, through its own actions or inactions, nor
shall it permit any person lawfully claiming by or through it, including,
without limitation, any Secured Party to interfere with, or suffer to exist
with respect to the Aircraft any Lien attributable to the Administrative Agent
or any such person that might interfere with,


 


2

















 


the Company’s (or any
Lessee’s) continued possession, use and operation of, and quiet enjoyment
(including, without limitation, administrative quiet enjoyment) of, the
Aircraft, Engines and Documents during the term of this Mortgage in accordance
with the terms of the Financing Documents so long as no Event of Default shall
have occurred and be continuing.  In view
of the foregoing provisions of this paragraph, the Company hereby waives the
provisions of Article XVI(1)(a) of the Protocol.


 


TO HAVE AND TO HOLD the
Collateral unto the Administrative Agent, its permitted successors and assigns,
forever, upon the terms herein set forth, in trust for the benefit, security
and protection of the Secured Parties, without any priority of any Loan, Note
or Obligation over any other except as may be separately agreed among the
Secured Parties and such other secured parties or as provided herein, and for
the uses and purposes and subject to the terms and provisions set forth in this
Mortgage.


 


It is expressly agreed that
anything herein contained to the contrary notwithstanding, the Company shall
remain liable under each of the Financing Documents to which it is a party to
perform all of the obligations assumed by it thereunder, all in accordance with
and pursuant to the terms and provisions thereof, and neither the
Administrative Agent nor any Secured Party shall have any obligation or
liability under any of the Financing Documents to which the Company is a party
by reason of or arising out of the assignment hereunder, nor shall the
Administrative Agent or any Secured Party be required or obligated in any
manner to perform or fulfill any obligations of the Company under any of the
Financing Documents to which the Company is a party, or, except as herein
expressly provided, to make any payment, or to make any inquiry as to the
nature or sufficiency of any payment received by it, or present or file any
claim, or take any action to collect or enforce the payment of any amounts that
may have been assigned to it or to which it may entitled at any time or times.


 


The Company does hereby
irrevocably constitute and appoint the Administrative Agent the true and lawful
attorney of the Company (which appointment is coupled with an interest) with
full power (in the name of the Company or otherwise) to ask, require, demand,
receive, compound and give acquittance for any and all moneys and claims for
moneys (in each case including insurance and requisition proceeds) and all
other property that now or hereafter constitutes part of the Collateral, to
endorse any checks or other instruments or orders in connection therewith and
to file any claims or to take any action or to institute any proceeding that
the Administrative Agent may deem to be necessary or advisable in the premises;
provided that the Administrative
Agent shall not exercise any such rights except upon the occurrence and during
the continuance of an Event of Default.


 


The Company agrees that at
any time and from time to time, upon the written request of the Administrative
Agent, the Company will promptly and duly execute and deliver or cause to be
duly executed and delivered any and all such further instruments and documents
as the Administrative Agent may reasonably request to obtain the full benefits
of the assignment hereunder and of the rights and powers herein granted.


 


The Company does hereby
warrant and represent that it has not assigned or pledged (except any
assignment or pledge that has been terminated on or prior to the date hereof)
and hereby covenants that it will not assign or pledge, so long as the assignment
hereunder shall remain in effect, any of its right, title or interest hereby
assigned, to anyone other than the Administrative Agent except to the extent
permitted by the Term Loan Agreement.


 


Section 2.2.            Exclusion for Certain Inflight
Equipment.


 


The Administrative Agent
acknowledges and agrees that notwithstanding anything to the contrary herein
set forth, the Company may at any time during the term of this Mortgage install
a


 


3

















 


telephone system and/or an
inflight entertainment system for passenger use on any Aircraft (collectively,
the “Inflight Equipment”) provided that in the case of Inflight
Equipment which is owned by a third party and leased to the Company:


 


(a)           the owner or financier of the Inflight
Equipment will have no Lien on or against such Aircraft and no rights with
respect to such Aircraft except the right to remove the Inflight Equipment from
such Aircraft if such owner, financier or the Company repairs and restores such
Aircraft as provided below;


 


(b)           such right of installation and removal
is subject to and conditional upon any such owner or financier repairing any
damage to the Aircraft in connection therewith and paying (and holding the
Agents and the other Secured Parties harmless with respect to) all costs,
expenses and liabilities in connection therewith; and


 


(c)           prior to the installation of any such
Inflight Equipment, the Company shall provide the Administrative Agent with the
identity and notice particulars of the owner or financier of such Inflight
Equipment. The Administrative Agent acknowledges that, whether or not the
requirements of this Section 2.2 are satisfied in full, at all times (i) the
leased Inflight Equipment will not constitute a Part or a part of such Aircraft,
and (ii) the leased Inflight Equipment will not become subject to the Lien
of this Mortgage.


 


ARTICLE
III


 


COVENANTS
OF THE COMPANY


 


Section 3.1.            [Intentionally left blank].


 


Section 3.2.            Lease.  Lessee agrees that it shall cause any Lease
or Wet Lease of more than six (6) months duration (or, if an Event of
Default is continuing, any Lease or Wet Lease regardless of its duration) to be
assigned to Administrative Agent at the time such Lease or Wet Lease is entered
into pursuant to a Lease Assignment substantially in the form of Exhibit B
hereto with such changes as may be requested by Company, the consent of
Administrative Agent not to be unreasonably withheld, at least ten (10) days
before the intended date of execution thereof. 
In connection therewith the Company shall cause (subject to the consent
of the Administrative Agent) an Assignment of such Lease or Wet Lease to be
registered with the International Registry, and in addition shall take such
additional actions as are required under Section 5.18 of the Term Loan
Agreement.


 


Section 3.3.            Identification of Security
Interest; Filings.


 


(a)           As soon as practicable after the date
hereof but no later than 60 days after the Closing Date, the Company agrees to
affix and maintain (or cause to be affixed and maintained), at its expense, in
the cockpit of the Airframe adjacent to the airworthiness certificate therein
and on each Engine a nameplate bearing the inscription:


 


“SUBJECT TO A MORTGAGE AND
SECURITY AGREEMENT IN FAVOR OF JPMORGAN CHASE BANK, N.A., AS ADMINISTRATIVE
AGENT”


 


(such nameplate to be
replaced, if necessary, with a nameplate reflecting the name of any successor
Administrative Agent). Except as above provided or as may be required by Law,
the Company will not allow the name of any Person (other than the Company) to
be placed on the Airframe or on any Engine as


 


4

















 


a designation that might be
interpreted as a claim of security interest or ownership and will remove any
such existing designation no later than the time such nameplate is affixed; provided that nothing herein contained
shall prohibit the Company (or any Lessee) from placing its customary colors
and insignia on the Airframe or any Engine.


 


(b)           The Company will take, or cause to be taken,
at the Company’s cost and expense, such action with respect to the recording,
filing, re-recording and re-filing of this Mortgage, each Mortgage Supplement
and each Lease Assignment, and any financing statements or other instruments as
are reasonably requested by the Administrative Agent to maintain, so long as
this Mortgage is in effect, the perfection of the Lien created by this Mortgage
and the other Collateral Documents, or at the request of the Administrative
Agent, will furnish to the Administrative Agent such instruments, in execution
form, and such other information as may be reasonably requested by the
Administrative Agent to enable the Administrative Agent to take such action.


 


ARTICLE
IV


 


REMEDIES
OF THE ADMINISTRATIVE AGENT


UPON
AN EVENT OF DEFAULT


 


Section 4.1.            Event of Default.  For purposes of the Cape Town Convention, a
“default” means any Event of Default.


 


Section 4.2.            Remedies with Respect to
Collateral.


 


(a)           Remedies Available.


 


Upon the occurrence of any
Event of Default and at any time thereafter so long as the same shall be
continuing, this Mortgage shall be in default and the Administrative Agent (in
accordance with the provisions of Article 5) may, and upon the written
instructions of the Required Lenders shall, do one or more of the following:


 


(A)          cause the Company, upon the written
demand of the  Administrative Agent, at the Company’s
expense, to deliver promptly, and the Company shall deliver promptly, all or
such part of the Airframe or any Engine or other Collateral as the
Administrative Agent may so demand to the Administrative Agent or its order, or
the Administrative Agent, at its option, may enter upon the premises where all
or any part of the Airframe or any Engine or other Collateral are located and
take immediate possession (to the exclusion of the Company and all Persons
claiming under or through the Company) of and remove the same by summary
proceedings or otherwise together with any engine that is not an Engine but
which is installed on the Airframe, subject to all of the rights of the owner,
lessor, lienor or secured party of such engine; provided that such engine shall be held for the account of
any such owner, lessor, lienor or secured party or, if owned by the Company,
may at the option of the Administrative Agent, be exchanged with the Company
for an Engine;  


 


(B)           sell all or any
part of the Airframe and any Engine or other Collateral at public or private
sale, whether or not the Administrative Agent shall at the time have possession
thereof, as the Administrative Agent may determine, or lease or otherwise
dispose of all or any part of the Airframe or such Engine or


 


5

















 


other Collateral as the
Administrative Agent, in its sole discretion, may determine, all free and clear
of any rights or claims of whatsoever kind of the Company, provided the same is
conducted in accordance with applicable law; or


 


(C)           exercise any or
all of the rights and powers and pursue any and all remedies of a secured party
under applicable law, including, without limitation, the Uniform Commercial
Code of the State of New York.


 


Upon every taking of
possession of Collateral under this Section 4.2, the Administrative Agent
may, from time to time, at the expense of the Administrative Agent, make all
such expenditures for maintenance, insurance, repairs, replacements,
alterations, additions and improvements to and of the Collateral, as it may
deem proper. In each such case, the Administrative Agent shall have the right
to maintain, store, lease, control or manage the Collateral and to exercise all
rights and powers of the Company relating to the Collateral in connection
therewith, as the Administrative Agent shall deem prudent, including the right
to enter into any and all such agreements with respect to the maintenance,
insurance, storage, leasing, control, management or disposition of the
Collateral or any part thereof as the Administrative Agent may determine; and
the Administrative Agent shall be entitled to collect and receive directly all
tolls, rents, revenues, issues, income, products and profits of the Collateral
and every part thereof, without prejudice, however, to the right of the
Administrative Agent under any provision of this Mortgage to collect and
receive all cash held by, or required to be deposited with, the Administrative
Agent hereunder. Such tolls, rents, revenues, issues, income, products and
profits shall be applied to pay the expenses of storage, leasing, control,
management or disposition of the Collateral, and of all maintenance, repairs,
replacements, alterations, additions and improvements, and to make all payments
that the Administrative Agent may be required or may elect to make, if any, for
taxes, assessments, insurance or other proper charges upon the Collateral or any
part thereof (including the employment of engineers and accountants to examine,
inspect and make reports upon the properties and books and records of the
Company), and all other payments that the Administrative Agent may be required
or authorized to make under any provision of this Mortgage, as well as just and
reasonable compensation for the services of the Administrative Agent, and of
all Persons properly engaged and employed by the Administrative Agent.


 


In addition, the Company
shall be liable for all reasonable legal fees and other reasonable
out-of-pocket costs and expenses incurred by reason of the occurrence of any
Event of Default or the exercise of the Administrative Agent’s remedies with
respect thereto, including all costs and expenses incurred in connection with
the retaking or return of the Airframe or any Engine in accordance with the
terms hereof or under applicable law, including, without limitation, the
Uniform Commercial Code of the State of New York, which amounts shall, until
paid, be secured by the Lien of this Mortgage.


 


If an Event of Default shall
have occurred and be continuing and the Loans shall have been accelerated
pursuant to Section 7 of the Term Loan Agreement, at the request of the
Administrative Agent the Company shall promptly execute and deliver to the
Administrative Agent such instruments of title and other documents as the
Administrative Agent may reasonably request to enable the Administrative Agent
or an agent or representative designated by the Administrative Agent, at such
time or times and place or places as the Administrative Agent may specify, to
obtain possession of all or any part of the Collateral to which the
Administrative Agent shall at the time be entitled hereunder. If the Company
shall for any reason fail to execute and deliver such instruments and documents
after such request by the Administrative Agent, the Administrative Agent may
obtain a judgment conferring on the Administrative Agent the right to immediate
possession and requiring the Company to execute and deliver such instruments
and documents to the Administrative Agent, to the entry of which judgment the
Company hereby specifically consents to the fullest extent it may lawfully do
so.


 


6

















 


Nothing in the foregoing
shall affect the right of each Secured Party to receive all payments of
principal of, and interest on, the Loans held by such Secured Party and all
other amounts owing to such Secured Party as and when the same may be due.


(b)           Notice of Sale.


 


The Administrative Agent
shall give the Company at least fifteen (15) days’ prior written notice of the
date fixed for any public sale of the Airframe or any Engine or of the date on
or after which any private sale will be held, which notice the Company hereby
agrees is reasonable notice, and any such public sale shall be conducted in
general so as to afford the Company (and any Lessee) a reasonable opportunity
to bid.


 


(c)           Receiver.


 


If any Event of Default
shall occur and be continuing, to the extent permitted by law, the
Administrative Agent shall be entitled, as a matter of right as against the
Company, without notice or demand and without regard to the adequacy of the
security for the Loans or the solvency of the Company, upon the commencement of
judicial proceedings by it to enforce any right under this Mortgage, to the
appointment of a receiver of the Collateral and of the tolls, rents, revenues,
issues, income, products and profits thereof.


 


(d)           Concerning Sales.


 


At any sale under this
Article, any Secured Party or the Administrative Agent may bid for and purchase
the property offered for sale, may make payment on account thereof as herein
provided, and, upon compliance with the terms of sale, may hold, retain and
dispose of such property without further accountability therefor.  Any purchaser shall be entitled, for the
purpose of making payment for the property purchased, to surrender for the
cancellation, all or any part of the Loan (and any Notes evidencing the same)
in lieu of cash in the amount that shall be payable thereon as principal and/or
accrued interest.  In the event that
amounts due on any Loan exceed the amounts being surrendered as aforesaid, such
Loan shall be returned to the Secured Parties making such surrender after being
stamped or endorsed to show partial cancellation.


 


Section 4.3.            Waiver of Appraisement, etc.,
Laws.


 


To the full extent that it
may lawfully so agree, the Company agrees that it will not at any time insist
upon, plead, claim or take the benefit or advantage of, any appraisement,
valuation, stay, extension, or redemption law now or hereafter in force, in
order to prevent or hinder the proper enforcement of this Mortgage or the
absolute sale of the Collateral as permitted hereunder, or any part thereof, or
the possession thereof by any purchaser at any proper sale under this Article;
but the Company, for itself and all who may claim under it, so far as it or
they now or hereafter lawfully may, hereby waives the benefit of all such laws.
The Company, for itself and all who may claim under it, waives, to the extent
that it lawfully may, all right to have the property in the Collateral
marshaled upon any foreclosure hereof, and agrees that any court having
jurisdiction to foreclosure this Mortgage may order the sale of the Collateral
as an entirety.


 


Section 4.4.            Remedies Cumulative.


 


Subject to the provisions of
Section 4.6 below, each and every right, power and remedy herein
specifically given to the Administrative Agent or otherwise in this Mortgage
shall be cumulative and shall be in addition to every other right, power and
remedy herein specifically given or now or


 


7

















 


hereafter existing in the
Financing Documents or at law, in equity or by statute, and each and every right,
power and remedy whether specifically herein given or otherwise existing may be
exercised from time to time and as often and in such order as may be deemed
expedient by the Administrative Agent, and the exercise or the beginning of the
exercise of any power or remedy shall not be construed to be a waiver of the
right to exercise at the time or thereafter any other right, power or remedy.
No delay or omission by the Administrative Agent in the exercise of any right,
remedy or power or in the pursuance of any remedy shall impair any such right,
power or remedy or be construed to be a waiver of any default on the part of
the Company or to be an acquiescence therein. Notwithstanding the foregoing,
nothing herein shall be deemed to permit duplicative recovery by Administrative
Agent or any Secured Party of any amount due and owing to it hereunder or under
any other Financing Document.


 


Section 4.5.            Discontinuance of Proceedings.


 


If the Administrative Agent
shall have proceeded to enforce any right, power or remedy under this Mortgage
by foreclosure, entry or otherwise, and such proceedings shall have been
discontinued or abandoned for any reason, then and in every such case the
Company and the Administrative Agent shall be restored to their former
positions and rights hereunder with respect to the property, subject to the
Lien of this Mortgage, and all rights, remedies and powers of the
Administrative Agent shall continue, as if no such proceedings had been
undertaken (but otherwise without prejudice).


 


Section 4.6.            Concerning the Cape Town
Convention.


 


Without limiting the
foregoing, the parties agree that (x) in addition to the remedies set
forth in this Article IV or otherwise available to Administrative Agent
under this Mortgage and the other Financing Documents, at law or in equity,
upon the occurrence and during the continuation of an Event of Default, the
Administrative Agent may, but shall not be obligated to, exercise any remedy
available to it under the Cape Town Convention (subject, in each case to the
requirements and limitations of the Cape Town Convention), including the
remedies set forth in Articles 8, 9 and 34 of the Cape Town Convention, but
excluding the (a) procurement of the de-registration of the Aircraft (if
the Aircraft is registered with the FAA or any successor agency thereto) and
the export and physical transfer of the Aircraft or any Engine from the
territory (if from a territory within the territorial limits of the United
States) in which it is situated pursuant to Article IX of the Protocol
(without prejudice to the applicability of other applicable law), and (b) solely
to the extent permitted by Article 15 of the Cape Town Convention, the
provisions of Chapter III of the Cape Town Convention with regard to default
remedies, provided that such exclusion in this clause (b) shall not be
applicable (to the extent permitted by Article 15 of the Cape Town
Convention) to the extent such default remedies are exercised outside the
territorial limits of the United States and in a manner not involving the
courts of the United States or of its territorial units; and


 


(y)           where a remedy is available to it
under the Cape Town Convention and also under this Agreement and the other
Financing Documents or other applicable law, to the extent permitted by the
Cape Town Convention and other applicable law, and subject to the provisions of
the previous clause (x), the Administrative Agent may elect under which of the
foregoing it shall exercise such remedy.


 


8

















 


ARTICLE
V


 


DUTIES
OF THE ADMINISTRATIVE AGENT


 


Section 5.1.            Action
Upon Event of Default.


 


Subject to the terms of
Sections 4.2 and 5.3, the Administrative Agent shall take such action, or
refrain from taking such action, with respect to an Event of Default (including
with respect to the exercise of any rights or remedies under the Collateral
Documents) as it may deem advisable in the best interests of the Lenders or as
shall be instructed in writing by the Required Lenders. The Administrative
Agent may, but shall not be obligated to, take such action, or refrain from
taking such action, under or with respect to the Collateral Documents and with
respect to such Event of Default as it shall determine to be advisable in the
best interests of the Secured Parties.


 


Section 5.2.            [Intentionally
left blank].


 


Section 5.3.            Indemnification.


 


The Administrative Agent
shall not be required to take any action or refrain from taking any action
under Section 5.1 or Article 4 if it shall have reasonable grounds
for believing that repayment of any funds expended by it or adequate
indemnification against any risks incurred in connection therewith is not
reasonably assured to it. The Administrative Agent shall not be required to
take any action under Section 5.1 or Article 4, nor shall any other
provision of any Collateral Document be deemed to impose a duty on the
Administrative Agent to take any action, if the Administrative Agent shall have
been advised in writing by independent counsel that such action is contrary to
the terms hereof or is otherwise contrary to law.


 


Section 5.4.            No Duties Except as Specified in
Collateral Documents or Instructions.


 


The Administrative Agent
shall not have any duty or obligation to manage, control, use, sell, operate,
store, dispose of or otherwise deal with the Aircraft or any other part of the
Collateral, or to otherwise take or refrain from taking any action under, or in
connection with, any Collateral Document, except as expressly provided by the
terms thereof; and no implied duties or obligations shall be read into any
Collateral Document against the Administrative Agent. The Administrative Agent
nevertheless agrees that it will, at its own cost and expense, promptly take
such action as may be necessary duly to discharge any Liens on any part of the
Collateral, or on any properties of the Company assigned, pledged or mortgaged
under the Collateral Documents, that result from claims against the
Administrative Agent in its individual capacity not related to the
administration of such properties or any other transaction under this Mortgage
or any document included in the Collateral.


 


Section 5.5.            No Action Except Under Collateral
Documents or Instructions.


 


The Administrative Agent
agrees that it will not manage, control, use, sell, operate, store, dispose of
or otherwise deal with the Aircraft or other property constituting part of the
Collateral or subject to any Lease Assignment except (i) in accordance
with the powers granted to, or the authority conferred upon, the Administrative
Agent pursuant to the applicable Collateral Documents, or (ii) in
accordance with the express terms hereof.


 


9

















 


Section 5.6.            Capacity of the Administrative
Agent.


 


The Administrative Agent has
been appointed under Section 8 of the Term Loan Agreement, and is acting
hereunder, as a “secured party” for purposes of Section 9-102 of the New
York Uniform Commercial Code, as a representative party of and for the benefit
of the Secured Parties.  Any property
held by the Administrative Agent under this Agreement shall be held in trust
for the benefit of the Secured Parties and such other secured parties.


 


ARTICLE
VI


 


SUPPLEMENTS
AND AMENDMENTS

TO THIS MORTGAGE AND OTHER DOCUMENTS


 


Section 6.1.            Supplemental Mortgages.


 


The Company and the
Administrative Agent may, from time to time, enter into a Mortgage or Mortgages
supplemental hereto for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Mortgage or of
modifying in any manner the rights and obligations of the Company under this
Mortgage; provided, however, without
the consent of each Secured Party directly affected thereby, no such
supplemental Mortgage shall, except as provided in Section 6.2:


 


(i)   create any Lien with respect to the
Collateral except such as are permitted by this Mortgage or the Term Loan
Agreement, or release the Lien on the Collateral created by this Mortgage
except as provided herein or in the Term Loan Agreement; or


 


(ii)   change the composition of Secured Parties the
consent of which is required for any such supplemental mortgage, or the consent
of which is required for any waiver (of compliance with certain provisions of
this Mortgage, or of certain defaults hereunder and their consequences) provided
for in this Mortgage; or


 


(iii)   modify any provisions of this Section 6.1,
except to provide that certain other provisions of this Mortgage cannot be
modified or waived without the consent of each Secured Party affected thereby.


 


Section 6.2.            Exchange Notes; Take-Out Debt.


 


(a)           The parties hereto agree to
supplement, or amend and restate, this Mortgage upon the request of the
Administrative Agent in connection with the issuance of Exchange Notes and the
execution and delivery of the Indenture in order, as may be reasonably
requested or necessary, to (i) replace the Administrative Agent with the
Trustee or its designee and (ii) to facilitate compliance of this Mortgage
and the Indenture, or of the Trustee, with the Trust Indenture Act of 1939 or
any other Federal or state securities laws applicable to this Mortgage, the
Indenture or the Exchange Notes or the Trustee.


 


(b)           The parties hereto agree to
supplement, or amend and restate, this Mortgage upon the request of the Company
in connection with the issuance of Take-Out Debt, as may be reasonably
requested or necessary, to (i) provide for obligations in respect of the
Take-Out Debt to be guaranteed and secured hereunder on the same basis as the
Exchange Notes and (ii) to facilitate compliance of this Mortgage and any
indenture governing the Take-Out Debt, or of the trustee under any such
indenture,


 


10

















 


with the Trust Indenture Act
of 1939 or any other Federal or State securities laws applicable to this
Mortgage, any such indenture or the Take-Out Debt or any such trustee.


 


Section 6.3.            Administrative Agent Protected.


 


If in the opinion of the
Administrative Agent any document required to be executed pursuant to the terms
of Section 6.1 adversely affects any right, duty, immunity or indemnity in
favor of the Administrative Agent under this Mortgage, the Administrative Agent
may in its discretion decline to execute such document.


 


ARTICLE
VII


 


INVESTMENT
OF SECURITY FUNDS


 


Section 7.1.            Investment of Security Funds.


 


Any monies paid to or
retained by the Administrative Agent that are required to be paid to the
Company or applied for the benefit of the Company, but that the Administrative
Agent is entitled to hold under the terms hereof pending the occurrence of some
event or the performance of some act (including, without limitation, the
remedying of an Event of Default), shall, until paid to the Company or applied
as provided herein, be invested by the Administrative Agent at the written
authorization and direction of the Company from time to time at the sole
expense and risk of the Company in Permitted Investments. After the occurrence
and during the continuance of an Event of Default, Permitted Investments will
be selected by the Administrative Agent at its discretion. At the time of such
payment or application, there shall be remitted to the Company any gain
(including interest received) realized as the result of any such investment
(net of any fees, commissions, other expenses or losses, if any, incurred in
connection with such investment) unless an Event of Default shall have occurred
and be continuing in which event the same shall be held by Administrative Agent
until the earlier of (x) such time as there shall not be continuing any
such Event of Default or (y) the termination of this Mortgage in
accordance with Section 8.1. The Administrative Agent shall not be liable
for any loss relating to a Permitted Investment made pursuant to this Article 7.
The Company will promptly pay to the Administrative Agent, on demand, the
amount of any loss (net of any gains, including interest received) realized as
the result of any such investment (together with any reasonable fees,
commissions and other expenses, if any, incurred in connection with such
investment).


 


ARTICLE
VIII


 


MISCELLANEOUS


 


Section 8.1.            Termination of Mortgage.


 


(a)           Upon the payment in full of the
principal of, and accrued interest on, the Loans and any other Obligations then
due and payable, the Aircraft and the balance of the Collateral shall be released
from the Lien of this Mortgage, and, in such event, this Mortgage shall
terminate and this Mortgage shall be of no further force or effect, all without
delivery of any instrument or performance of any act by any party and all
rights to the Aircraft and the balance of the Collateral shall revert to the
Company.  At the written request of the
Company following any such termination, the Administrative Agent shall deliver
to, or as directed in writing by, the Company any Collateral held by the


 


11

















 


Administrative Agent
hereunder and execute and deliver to the Company such documents as such the
Company shall reasonably request to evidence such termination, including an
appropriate instrument(s) (in due form for recording) discharging from the
International Registry the registration of the International Interest created
by this Mortgage (and any other registered interests in the Aircraft in favor
of the Administrative Agent).


 


(b) If any Collateral
shall be sold, transferred or otherwise disposed of by the Company in a
transaction permitted by the Term Loan Agreement, then (i) the Lien
created hereby on such Collateral shall automatically be released and (ii) the
Administrative Agent, at the request of the Company, shall execute and deliver
to the Company all releases or other documents reasonably necessary or
desirable for the release of the Lien created hereby, including an appropriate
instrument(s) (in due form for recording) discharging from the
International Registry the registration of the International Interest created
by this Mortgage (and any other registered interests in the Aircraft in favor
of the Administration Agent).  In
addition, at the request and at the sole expense of the Company, the Administrative
Agent agrees to (x) provide to the Company a power of attorney to execute
any document reasonably required to permit any sale permitted by the Term Loan
Agreement of such Collateral and (y) with respect to any jurisdiction or
registration system in which releases executed pursuant to such power of
attorney are insufficient to release such Liens, (1) execute in blank any
document reasonably required to permit any sale permitted by the Term Loan
Agreement of any such Collateral, free of the Liens created hereby (and
discharge any registration of such Lien) and (2) authorize the Company to
fill in the relevant information to release such Lien (and discharge such
registration and file such document when necessary or advisable).


 


Section 8.2.            Alterations to Mortgage.


 


This Mortgage shall not be
varied except by an instrument in writing of even date herewith or subsequent
hereto executed by each of the parties hereto through its duly authorized
representative.


 


Section 8.3.            No Legal Title to Collateral in
Lender or Holder.


 


No Lender or Holder shall
have legal title to any part of the Collateral. No transfer, by operation of
law or otherwise, of its Loan or Note or other right, title and interest of a
Lender or Holder in and to the Collateral or this Mortgage shall operate to
terminate this Mortgage or entitle any successor or transferee of such Lender
or Holder to an accounting or to the transfer to it of legal title to any part
of the Collateral.


 


Section 8.4.            Sale of the Aircraft by
Administrative Agent Is Binding.


 


Any sale or other conveyance
of the Aircraft, the Airframe, any Engine or any other part of the Collateral
or any interest therein by the Administrative Agent made pursuant to the terms
of this Mortgage shall bind the Administrative Agent, the other Secured Parties
and the Company, and shall be effective to transfer or convey all right, title
and interest of the Company, the Administrative Agent and the other Secured
Parties in and to the Aircraft, the Airframe, any Engine or any interest
therein. No purchaser or other grantee shall be required to inquire as to the
authorization, necessity, expediency or regularity of such sale or conveyance
or as to the application of any sale or other proceeds with respect thereto by
the Administrative Agent. Notwithstanding the foregoing, nothing herein
contained shall be deemed to constitute a waiver by the Company of any right it
may have against the Administrative Agent or any other Secured Party as a
result of any sale or other conveyance in contravention of the terms and
conditions of this Mortgage.


 


12

















 


Section 8.5.            Benefit of Mortgage.


 


Nothing in this Mortgage,
whether express or implied, shall be construed to give to any Person other than
the Company, the Administrative Agent and the other Secured Parties any legal
or equitable right, remedy or claim under or in respect of this Mortgage or any
Loan.


 


Section 8.6.            Section 1110 of the
Bankruptcy Code.


 


It is the intention of the
parties hereto that the security interest created hereby entitles the
Administrative Agent on behalf of the Secured Parties to all of the benefits of
Section 1110 of the Bankruptcy Code in the event of any reorganization of
the Company under the Bankruptcy Code subject, in each case, to the relevant
provisions of Section 1110.


 


Section 8.7.            Notices.


 


All notices, requests and
demands to or upon the Administrative Agent or any Grantor hereunder shall be
effected in the manner provided for in Section 8.2 of the Guarantee and
Collateral Agreement.


 


Section 8.8.            Severability.


 


Should any one or more
provisions of this Mortgage be determined to be illegal or unenforceable by a
court of any jurisdiction, such provision shall be ineffective to the extent of
such illegality or unenforceability without invalidating the remaining
provisions hereof or affecting the validity or enforceability of such
provisions in any other jurisdiction. The Company and the Administrative Agent
agree, as to such jurisdiction and to the extent permitted by such jurisdiction’s
laws, to replace any provision of this Mortgage that is so determined to be
illegal or unenforceable by a valid provision that has as nearly as possible
the same effect; provided that
such replacement provision shall not expand the Company’s or the Administrative
Agent’s obligations hereunder.


 


Section 8.9.            No Waiver; Cumulative Remedies.


 


No failure on the part of
the Administrative Agent to exercise, and no course of dealing with respect to,
and no delay in exercising, any remedy hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise by the Administrative Agent
of any right, power or remedy hereunder preclude any other or further exercise
thereof or the exercise of any other right, power or remedy.


 


Section 8.10.          Separate Counterparts.


 


This Mortgage may be
executed in any number of counterparts (and each of the parties hereto shall
not be required to execute the same counterpart). Each counterpart of this
Mortgage including a signature page executed by each of the parties hereto
shall be an original counterpart of this Mortgage, but all of such counterparts
together shall constitute one instrument.


 


Section 8.11.          Successors and Assigns.


 


All covenants and agreements
contained herein shall be binding upon, and inure to the benefit of, the
Company and its successors and permitted assigns, and the Administrative Agent
and its successors and permitted assigns, and the other Secured Parties, all as
herein provided. Any request, notice, direction, consent, waiver or other instrument
or action by a Secured Party (unless withdrawn by


 


13

















 


such Secured Party or
successor or assign prior to it being acted upon by the Administrative Agent)
shall bind the successors and assigns of such Secured Party.


 


Section 8.12.          Headings.


 


The headings of the various
Articles and Sections herein are for convenience of reference only and shall
not define or limit any of the terms or provisions hereof.


 


Section 8.13.          Governing Law.


 


THIS MORTGAGE IS BEING
DELIVERED IN THE STATE OF NEW YORK AND SHALL IN ALL RESPECTS, INCLUDING ALL
MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.


 


Section 8.14.          Normal Commercial Relations.


 


Anything contained in this
Mortgage to the contrary notwithstanding, the Company, any Secured Party, the
Administrative Agent or any Affiliate of the Company, any Secured Party or the
Administrative Agent may enter into commercial banking or other financial
transactions with each other, and conduct banking or other commercial
relationships with each other, fully to the same extent as if this Mortgage
were not in effect, including, without limitation, the making of loans or other
extensions of credit for any purpose whatsoever.


 


Section 8.15.          Language. All correspondence,
documents and any other written matters in connection with this Mortgage shall
be in English.


 


Section 8.16.          Execution of Financing Statements.
Pursuant to any applicable law, the Company authorizes the Administrative Agent
to file or record financing statements and other filing or recording documents
or instruments with respect to the Collateral without the signature of the
Company in such form and in such offices as the Administrative Agent determines
appropriate to perfect the security interests of the Administrative Agent under
and in accordance with this Agreement. The Company hereby ratifies and
authorizes the filing by the Administrative Agent of any financing statement
with respect to the Collateral made prior to the date hereof.


 


14

















 


IN WITNESS WHEREOF, the
parties hereto have caused this Mortgage to be duly executed by their
respective officers, as the case may be, there unto duly authorized, as of the
day and year first above written.


 


	
   

  	
  ATA AIRLINES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ SUBODH KARNIK

  	
   

  
	
   

  	
   

  	
  Title: President and CEO

  	
   

  
	
   

  	
   

  
	
   

  	
  JPMORGAN CHASE BANK, N.A.,
  as Administrative

  
	
   

  	
  Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ JOHN C. RIORDAN

  	
   

  
	
   

  	
   

  	
  Title: Vice President

  	
   

  



 

















 


APPENDIX
A


 


DEFINITIONS
RELATING TO THE

MORTGAGE AND SECURITY AGREEMENT


 


The definitions stated
herein shall apply equally to both the singular and plural forms of the terms
defined.  Capitalized terms used herein
and not defined herein have the meanings set forth in the Term Loan Agreement.


 


“Administrative
Agent” has the meaning specified in the recitals to the Mortgage.


 


“Affiliate” has the
meaning specified in the Term Loan Agreement.


 


“Aircraft” means the Airframe, together with the Engines,
whether or not any of such Engines may from time to time be installed on such
Airframe or may be installed on any other airframe or any other aircraft, as
further specified in the Mortgage.


 


“Airframe” means (A) the
L1011-500 (385-3) aircraft (excluding the Engines or engines from time to time
installed thereon), identified by U.S. registration mark and manufacturer’s
serial number in the initial Mortgage Supplement; and (B) any and all
Parts so long as the same shall be incorporated or installed in or attached to
such Airframe, or so long as the same shall be subject to the Lien of this
Mortgage after removal from the Airframe.


 


“Assignment” has the
meaning specified in the Cape Town Convention.


 


“Bankruptcy Code” means Title 11 of the United States Code,
as amended from time to time, and any successor provisions thereof.


 


“Cape
Town Convention” means the official English
language texts of the Convention on International Interests in Mobile Equipment
and the Protocol to the Convention on International Interests in Mobile
Equipment on Matters Specific to Aircraft Equipment that were signed in Cape
Town, South Africa.


 


“Collateral” has the
meaning given such term in Section 2.1 of the Mortgage.




“Collateral
Documents” means the Mortgage and each Lease Assignment, if
any.


 


“Company” has the
meaning specified in the recitals to the Mortgage.


 


“Dollars” and “$” means the lawful currency of the
United States of America.


 


“Engine” means: (A) each
of the Rolls Royce Model RB211-524B listed by manufacturer’s serial number in
the initial Mortgage Supplement, whether or not from time to time installed on
the Airframe or installed on any other aircraft; and (B) any Replacement
Engine that may from time to time be substituted for such Engine; together in
each case with any and all Parts incorporated or installed in or attached
thereto or so long as such Parts shall be subject to the Lien of this Mortgage
after removal from an Engine.


 


“Events of
Default” has the meaning set forth in the Term Loan
Agreement.


 


“Exchange
Notes” has the meaning specified in the Term Loan
Agreement.


 

















 


“FAA” mean the
United States Federal Aviation Administration, and any agency or
instrumentality of the United States government succeeding to its functions.


 


“FARs” mean the FAA
Regulations as in effect from time to time under Title 14 of the United States
Code of Federal Regulations, including, without limitation, the Special Federal
Aviation Regulations (as applicable), as amended, or any successor or
substitute provisions.


 


“Federal
Aviation Act” means the collective reference to the United States
Transportation Code (currently codified at Subtitle VII of Title 49 of the
United States Code), as amended, or any successor or substitute provisions, and
all FARs and other rules, regulations, directives and orders issued or
promulgated from time to time thereunder.


 


“Financing
Documents” means the Term Loan Agreement, the other Loan
Documents, and if Exchange Notes are outstanding, the Indenture and the
Exchange Notes.


 


“Guarantee
and Collateral Agreement” has the meaning specified
in the Term Loan Agreement.


 


“Holders” has the
meaning specified in the Term Loan Agreement.


 


“Indenture” has the
meaning specified in the Term Loan Agreement.


 


“International
Interest” has the meaning specified in the Cape Town Convention.


 


“International
Registry” has the meaning specified in the Cape Town
Convention.


 


“Lease” means any
lease of the Airframe or any Engine permitted by the terms of the Financing
Documents.


 


“Lease
Assignment” means an assignment of a Lease or Wet Lease, substantially
the form of Exhibit B hereto.


 


“Lender” has the meaning set forth in
introductory paragraph of the Term Loan Agreement.


 


“Lessee” means any
lessee pursuant to a Lease.


 


“Lien” means any lien
(statutory or otherwise), security interest or other charge or encumbrance of
any kind, including any interest registered with the International Registry, or
any other type of preferential arrangement, including, without limitation, the
lien or retained security title of a conditional vendor.


 


“Loan
Documents” has the meaning specified in the Term Loan
Agreement.  The term “Loan Documents”
shall include the Mortgage, the Mortgage Supplement and each Lease Assignment.


 


“Loans” means the
loans made under the Term Loan Agreement.


 


“Merger” has the
meaning specified in the Term Loan Agreement.


 


“Mortgage” means the
Mortgage and Security Agreement covering the Collateral dated as of August 14,
2007, between the Company and the Administrative Agent, as the same may be
amended, modified or supplemented from time to time.


 


2

















 


“Mortgage
Supplement” means (a) the Mortgage and Security Agreement
Supplement No. 1 dated August 14, 2007, substantially in the form of Exhibit A
to the Mortgage and (b) any other supplement to the Mortgage from time to
time executed and delivered.


 


“Notes” has the
meaning specified in the Term Loan Agreement.


 


“Obligations” means all
monetary obligations and liabilities of the Company which may arise under or
pursuant to this Mortgage, the Guarantee and Collateral Agreement or any other
Financing Document to which the Company is a party, in each case whether on
account of guarantee obligations, reimbursement obligations, fees, indemnities,
costs, expenses or otherwise (including, without limitation, all fees and
disbursements of counsel to the Administrative Agent, to the Lenders and, if
Exchange Notes are outstanding, to the Trustee or to the Holders, that are
required to be paid by the Company pursuant to the terms of this Mortgage, the
Guarantee and Collateral Agreement or any other Financing Document).


 


“Parts” means any and
all appliances, parts, instruments, appurtenances, accessories, furnishings,
seats, buyer furnished equipment, and other equipment of whatever nature (other
than (a) complete Engines or engines, (b) any items leased by the
Company from a third party and (c) cargo containers) that may from time to
time be incorporated or installed in or attached to any Airframe or any Engine.


 


“Permitted
Investments” means (i) direct obligations of the United
States of America and agencies guaranteed by the United States government
having a final maturity of 90 days or less from date of purchase thereof; (ii) certificates
of deposit issued by, bankers’ acceptances of, or time deposits with, any bank,
trust company or national banking association incorporated under the laws of
the United States of America or one of the states thereof having combined
capital and surplus and retained earnings as of its last report of condition of
at least $500,000,000 and having a rating of Aa or better by Moody’s Investors
Service, Inc. (“Moody’s”) or AA or better by Standard &
Poor’s Corporation (“S&P”) and having a final maturity of 90 days or
less from date of purchase thereof; and (iii) commercial paper of any
holding company of a bank, trust company or national banking association
described in (ii) and commercial paper of any corporation or finance
company incorporated or doing business under the laws of the United States of
America or any state thereof having a rating assigned to such commercial paper
of Al by S&P or P1 by Moody’s and having a final maturity of 90 days or
less from the date of purchase thereof; provided that the aggregate amount at
any one time so invested in certificates of deposit issued by any one bank
shall not be in excess of 5% of such bank’s capital and surplus.


 


“Person” means an
individual, partnership, corporation, business trust, joint stock company,
trust, unincorporated association, joint venture, governmental authority or
other entity of whatever nature.


 


“Protocol” means the
Protocol referred to in the defined term “Cape Town Convention.”


 


“Replacement
Engine” means a Rolls Royce Model RB211-524B engine (or engine of the same
manufacturer of the same or a comparable or an improved model and suitable for
installation and use on the Airframe) that has a value, utility and remaining
useful life (except for maintenance cycle condition) at least equal to the
Engine that it is replacing (immediately prior to such replacement), assuming such
Engine was of the value, utility and remaining useful life (except for
maintenance cycle condition) required by the terms of the Mortgage, and which
shall have been made subject to the Lien of the Mortgage.


 


“Secured
Parties” has the meaning specified in the Guarantee and
Collateral Agreement.


 


3

















 


“Take-Out
Debt”  has the meaning specified in the Term Loan Agreement.


 


“Term Loan
Agreement” means the Term Loan Agreement, dated as of August 14,
2007, among New ATA Acquisition Inc., the several lenders from time to time
parties thereto, Jefferies Finance LLC, as documentation agent, and JPMorgan
Chase Bank, N.A., as administrative agent, as amended, supplemented or
otherwise modified from time to time.


 


“Trustee”  has the meaning
specified in the Term Loan Agreement.


 


“Wet
Lease” means any arrangement whereby the Company agrees to furnish the
Airframe and Engines or engines installed thereon to a third party pursuant to
which such Airframe and Engines or engines (i) shall be operated solely by
regular employees of the Company possessing all current certificates and
licenses that would be required under the Federal Aviation Act for the
performance by such employees of similar functions within the United States of America
or such other jurisdiction of registry (it is understood that cabin attendants
need not be regular employees of the Company) and (ii) shall be maintained
by the Company in accordance with its normal maintenance practices.


 


4