exv4w19






EXECUTION COPY




EXHIBIT C TO NOTE PURCHASE AGREEMENT




 





TRUST INDENTURE AND SECURITY AGREEMENT [____]




Dated as of [________ __], 20[__]



Between



US AIRWAYS, INC.,



Owner



and



WILMINGTON TRUST COMPANY,

not in its individual capacity,

except as expressly stated herein,

but solely as Indenture Trustee,



Indenture Trustee



 





EQUIPMENT NOTES COVERING

ONE AIRBUS [______] AIRCRAFT

BEARING U.S. REGISTRATION MARK N[______]

AND MANUFACTURER’S SERIAL NO. [______]




 





 









 





TABLE OF CONTENTS




	 	 	 	 	 
	 	 	Page
	GRANTING CLAUSE
	 	 	1	 
	 
	 	 	 	 
	ARTICLE I DEFINITIONS
	 	 	4	 
	 
	 	 	 	 
	ARTICLE II THE EQUIPMENT NOTES
	 	 	5	 
	SECTION 2.01. Form of Equipment Notes
	 	 	4	 
	SECTION 2.02. Issuance and Terms of Equipment Notes
	 	 	10	 
	SECTION 2.03. Method of Payment
	 	 	12	 
	SECTION 2.04. Application of Payments
	 	 	14	 
	SECTION 2.05. Termination of Interest in Collateral
	 	 	15	 
	SECTION 2.06. Registration Transfer and Exchange of Equipment Notes

	 	 	15	 
	SECTION 2.07. Mutilated, Destroyed, Lost or Stolen Equipment Notes

	 	 	16	 
	SECTION 2.08. Payment of Expenses on Transfer; Cancellation
	 	 	17	 
	SECTION 2.09. Mandatory Redemptions of Equipment Notes
	 	 	17	 
	SECTION 2.10. Optional Redemptions of Equipment Notes
	 	 	17	 
	SECTION 2.11. Redemptions; Notice of Redemption
	 	 	18	 
	SECTION 2.12. Subordination
	 	 	19	 
	 
	 	 	 	 
	ARTICLE III RECEIPT, DISTRIBUTION AND APPLICATION OF PAYMENTS
	 	 	20	 
	SECTION 3.01. Basic Distributions
	 	 	20	 
	SECTION 3.02. Event of Loss; Replacement; Optional Redemption
	 	 	20	 
	SECTION 3.03. Payments After Event of Default
	 	 	22	 
	SECTION 3.04. Certain Payments
	 	 	24	 
	SECTION 3.05. Other Payments
	 	 	25	 
	SECTION 3.06. Cooperation
	 	 	25	 
	SECTION 3.07. Securities Account
	 	 	25	 
	SECTION 3.08 Payments to Owner
	 	 	26	 
	 
	 	 	 	 
	ARTICLE IV COVENANTS OF THE OWNER
	 	 	26	 
	SECTION 4.01. Liens
	 	 	26	 
	SECTION 4.02. Possession, Operation and Use, Maintenance, Registration and
Markings
	 	 	27	 
	SECTION 4.03. Inspection
	 	 	32	 
	SECTION 4.04. Replacement and Pooling of Parts, Alterations, Modifications
and Additions; Substitution of Engines
	 	 	33	 
	SECTION 4.05. Loss, Destruction or Requisition
	 	 	37	 
	SECTION 4.06. Insurance
	 	 	41	 
	SECTION 4.07. Merger of Owner
	 	 	42	 
	 
	 	 	 	 
	ARTICLE V EVENTS OF DEFAULT; REMEDIES OF INDENTURE TRUSTEE
	 	 	43	 
	SECTION 5.01. Event of Default
	 	 	42	 






 









 





TABLE OF CONTENTS
(continued)





	 	 	 	 	 
	 	 	Page
	SECTION 5.02. Remedies
	 	 	45	 
	SECTION 5.03. Return of Aircraft, Etc.
	 	 	46	 
	SECTION 5.04. Remedies Cumulative
	 	 	47	 
	SECTION 5.05. Discontinuance of Proceedings
	 	 	47	 
	SECTION 5.06. Waiver of Past Defaults
	 	 	48	 
	SECTION 5.07. Appointment of Receiver
	 	 	48	 
	SECTION 5.08. Indenture Trustee Authorized to Execute Bills of Sale, Etc.
	 	 	48	 
	SECTION 5.09. Rights of Note Holders to Receive Payment
	 	 	48	 
	 
	 	 	 	 
	ARTICLE VI DUTIES OF THE INDENTURE TRUSTEE
	 	 	49	 
	SECTION 6.01. Notice of Event of Default
	 	 	49	 
	SECTION 6.02. Action Upon Instructions; Certain Rights and Limitations

	 	 	49	 
	SECTION 6.03. Indemnification
	 	 	50	 
	SECTION 6.04. No Duties Except as Specified in Trust Indenture or
Instructions
	 	 	50	 
	SECTION 6.05. No Action Except Under Trust Indenture or Instructions

	 	 	51	 
	SECTION 6.06. Investment of Amounts Held by Indenture Trustee
	 	 	51	 
	 
	 	 	 	 
	ARTICLE VII THE INDENTURE TRUSTEE
	 	 	51	 
	SECTION 7.01. Acceptance of Trusts and Duties
	 	 	51	 
	SECTION 7.02. Absence of Duties
	 	 	52	 
	SECTION 7.03. No Representations or Warranties as to Aircraft or Documents

	 	 	52	 
	SECTION 7.04. No Segregation of Monies; No Interest
	 	 	52	 
	SECTION 7.05. Reliance; Agreements; Advice of Counsel
	 	 	53	 
	SECTION 7.06. Compensation
	 	 	53	 
	SECTION 7.07. Instructions from Note Holders
	 	 	53	 
	 
	 	 	 	 
	ARTICLE VIII INDEMNIFICATION
	 	 	54	 
	SECTION 8.01. Scope of Indemnification
	 	 	54	 
	 
	 	 	 	 
	ARTICLE IX SUCCESSOR AND SEPARATE TRUSTEES
	 	 	54	 
	SECTION 9.01. Resignation of Indenture Trustee; Appointment of Successor

	 	 	54	 
	SECTION 9.02. Appointment of Additional and Separate Trustees
	 	 	55	 
	 
	 	 	 	 
	ARTICLE X SUPPLEMENTS AND AMENDMENTS TO THIS TRUST INDENTURE AND OTHER DOCUMENTS
	 	 	57	 
	SECTION 10.01. Instructions of Majority; Limitations
	 	 	57	 






ii 









 





TABLE OF CONTENTS
(continued)





	 	 	 	 	 
	 	 	Page
	SECTION 10.02. Indenture Trustee Protected
	 	 	58	 
	SECTION 10.03. Documents Mailed to Note Holders
	 	 	58	 
	SECTION 10.04. No Request Necessary for Trust Indenture Supplement

	 	 	59	 
	 
	 	 	 	 
	ARTICLE XI MISCELLANEOUS
	 	 	59	 
	SECTION 11.01. Termination of Trust Indenture
	 	 	59	 
	SECTION 11.02. No Legal Title to Collateral in Note Holders
	 	 	59	 
	SECTION 11.03. Sale of Aircraft by Indenture Trustee Is Binding
	 	 	59	 
	SECTION 11.04. Trust Indenture for Benefit of Owner, Indenture Trustee,
Note Holders and the other Indenture Indemnitees
	 	 	60	 
	SECTION 11.05. Notices
	 	 	60	 
	SECTION 11.06. Severability
	 	 	60	 
	SECTION 11.07. No Oral Modification or Continuing Waivers
	 	 	60	 
	SECTION 11.08. Successors and Assigns
	 	 	61	 
	SECTION 11.09. Headings
	 	 	61	 
	SECTION 11.10. Normal Commercial Relations
	 	 	61	 
	SECTION 11.11. Governing Law; Counterpart Form
	 	 	61	 
	SECTION 11.12. Voting By Note Holders
	 	 	61	 
	SECTION 11.13. Bankruptcy
	 	 	61	 






	 	 	 

	ANNEX A

	 	Definitions
	ANNEX B

	 	Insurance
	EXHIBIT A

	 	Form of Trust Indenture and Security Agreement Supplement
	SCHEDULE I

	 	Equipment Notes Amortization and Interest Rates







iii 









 








TRUST INDENTURE AND SECURITY AGREEMENT [____]




          TRUST INDENTURE AND SECURITY AGREEMENT [____], dated as of [________ __], 20[__] (this “Trust
Indenture”), between US AIRWAYS, INC., a Delaware corporation (“Owner”), and WILMINGTON TRUST
COMPANY, a Delaware banking corporation, not in its individual capacity, except as expressly stated
herein, but solely as Indenture Trustee hereunder (together with its successors hereunder, the
“Indenture Trustee”).




W I T N E S S E T H




          WHEREAS, all capitalized terms used herein shall have the respective meanings set forth or
referred to in Article I hereof;




          WHEREAS, the parties hereto desire by this Trust Indenture, among other things, (i) to provide
for the issuance by the Owner of the Series of Equipment Notes specified on Schedule I hereto, and
(ii) to provide for the assignment, mortgage and pledge by the Owner to the Indenture Trustee, as
part of the Collateral hereunder, among other things, of all of the Owner’s right, title and
interest in and to the Aircraft and, except as hereinafter expressly provided, all payments and
other amounts received hereunder in accordance with the terms hereof, as security for, among other
things, the Owner’s obligations to the Note Holders and the Indenture Indemnitees;




          WHEREAS, all things have been done to make the Equipment Notes of the Series listed on
Schedule I hereto, when executed by the Owner and authenticated and delivered by the Indenture
Trustee hereunder, the valid, binding and enforceable obligations of the Owner; and




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




GRANTING CLAUSE




          NOW, THEREFORE, THIS TRUST INDENTURE AND SECURITY AGREEMENT WITNESSETH, that, to secure the
prompt payment of the Original Amount of, interest on, Make-Whole Amount, if any, and all other
amounts due with respect to, all Equipment Notes from time to time outstanding hereunder according
to their tenor and effect and to secure the performance and observance by the Owner of all the
agreements, covenants and provisions contained herein and in the Participation Agreement and in the
Equipment Notes and to secure the Related Secured Obligations and the performance and observance by
the Owner of all agreements, covenants and provisions contained in the Related Equipment Notes, for
the benefit of the Note Holders and each of the Indenture Indemnitees, and in consideration of the
premises and of the covenants herein contained, and of the acceptance of the Equipment Notes and
the Related Equipment Notes by the holders thereof, and for other good and valuable consideration
the receipt and adequacy whereof are hereby acknowledged, the Owner has granted, bargained, sold,
assigned, transferred, conveyed, mortgaged, pledged and confirmed, and does hereby grant, bargain,
sell, assign, transfer, convey, mortgage, pledge and confirm, unto the Indenture Trustee, its
successors in trust and assigns, for the security and benefit of, the Note






 









 







Holders and each of the Indenture Indemnitees, a first priority security interest and, in the
case of the Airframe and Engines, an International Interest in and mortgage lien on all right,
title and interest of the Owner in, to and under the following described property, rights and
privileges, whether now or hereafter acquired (which, collectively, together with all property
hereafter specifically subject to the Lien of this Trust Indenture by the terms hereof or any
supplement hereto, are included within, and are referred to as, the “Collateral”), to wit:




          (1) The Airframe which is one Airbus [______] aircraft with the FAA Registration number of
N[______] and the manufacturer’s serial number of [______] and [two] Engines, each of which Engines
is a [________________________] jet propulsion aircraft engine with at least 1750 lb. of thrust,
with the manufacturer’s serial numbers of [______] and [______] (such Airframe and Engines more
particularly described in the Trust Indenture Supplement executed and delivered as provided herein)
as the same is now and will hereafter be constituted, whether now owned by the Owner or hereafter
acquired, 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 (a) all Parts of whatever nature,
which are from time to time included within the definitions of “Airframe” or “Engines”, whether now
owned or hereafter acquired, including all substitutions, renewals and replacements of and
additions, improvements, accessions and accumulations to the Airframe and Engines (other than
additions, improvements, accessions and accumulations which constitute appliances, parts,
instruments, appurtenances, accessories, furnishings or other equipment excluded from the
definition of Parts) and (b) all Aircraft Documents;




          (2) [The Purchase Agreement, the Consent and Agreement, the Engine Consent and Agreement and
the Bills of Sale to the extent the same relate to continuing rights of the Owner]1 [The
Bills of Sale, to the extent they relate to any continuing rights of the Owner, and any other
continuing rights of the Owner, to the extent the Owner may assign or otherwise grant a Lien on
them without the consent of any other Person,]2 in respect of any warranty, indemnity or
agreement, express or implied, as to title, materials, workmanship, design or patent infringement
or related matters with respect to the Airframe or the Engines (reserving to the Owner, however,
all of the Owner’s other rights and interest in and to [the Purchase Agreement]3 [such
other continuing rights of the Owner]4) together with all rights, powers, privileges,
options and other benefits of the Owner thereunder (subject to such reservation) with respect to
the Airframe or the Engines, including, without limitation, the right to make all waivers and
agreements, to give and receive all notices and other instruments or communications, to take such
action upon the occurrence of a default thereunder, including the commencement, conduct and
consummation of legal, administrative or other proceedings, as shall be permitted thereby or by
law, and to do any and all other things which the Owner is or may be entitled to do thereunder






 




			
	1.	 	Insert for New Aircraft.
	 
	2.	 	Insert for Owned Aircraft.
	 
	3.	 	Insert for New Aircraft.
	 
	4.	 	Insert for Owned Aircraft.





2









 




(subject to such reservation), [subject, with respect to the Purchase Agreement, to the terms
and conditions of the Consent and Agreement and the Engine Consent and Agreement]5;




          (3) All proceeds with respect to the requisition of title to or use of the Aircraft or any
Engine by any Government Entity or from the sale or other disposition of the Aircraft, the
Airframe, any Engine or other property described in any of these Granting Clauses by the Indenture
Trustee pursuant to the terms of this Trust Indenture, and all insurance proceeds with respect to
the Aircraft, the Airframe, any Engine or any part thereof, but excluding any insurance maintained
by the Owner and not required under Section 4.06;




          (4) All rents, revenues and other proceeds collected by the Indenture Trustee pursuant to
paragraph (iv) of clause “Third” of Section 3.03 and Section 5.03(b) and all monies and securities
from time to time deposited or required to be deposited with the Indenture Trustee by or for the
account of the Owner pursuant to any terms of this Trust Indenture held or required to be held by
the Indenture Trustee hereunder, including the Securities Account and all monies and securities
deposited into the Securities Account; and




          (5) All proceeds of the foregoing.




          PROVIDED, HOWEVER, that notwithstanding any of the foregoing provisions, so long as no Event
of Default shall have occurred and be continuing, (a) the Indenture Trustee shall not take or cause
to be taken any action contrary to the Owner’s right hereunder to quiet enjoyment of the Airframe
and Engines, and to possess, use, retain and control the Airframe and Engines and all revenues,
income and profits derived therefrom, and (b) the Owner shall have the right, to the exclusion of
the Indenture Trustee, with respect to the Indenture Agreements, to exercise in the Owner’s name
all rights and powers of the Owner under the Indenture Agreements (other than to amend, modify or
waive any of the warranties or indemnities contained therein, except in the exercise of the Owner’s
reasonable business judgment) and to retain any recovery or benefit resulting from the enforcement
of any warranty or indemnity under the Indenture Agreements; and provided further that,
notwithstanding the occurrence or continuation of an Event of Default, the Indenture Trustee shall
not enter into any amendment of any Indenture Agreement which would increase the obligations of the
Owner thereunder.




          TO HAVE AND TO HOLD all and singular the aforesaid property unto the Indenture Trustee, and
its successors and assigns, in trust for the equal and proportionate benefit and security of the
Note Holders and the Indenture Indemnitees, except as provided in Section 2.12 and Article III
hereof, without any preference, distinction or priority of any one Equipment Note over any other,
or any Related Equipment Note over any other, by reason of priority of time of issue, sale,
negotiation, date of maturity thereof or otherwise for any reason whatsoever, and for the uses and
purposes and in all cases and as to all property specified in clauses (1) through (5) inclusive
above, subject to the terms and provisions set forth in this Trust Indenture.




          It is expressly agreed that anything herein contained to the contrary notwithstanding, the
Owner shall remain liable under the Indenture Agreements to perform all of






 




			
	5.	 	Insert for New Aircraft.




3









 









the obligations assumed by it thereunder, except to the extent prohibited or excluded from
doing so pursuant to the terms and provisions thereof, and the Indenture Trustee, the Note Holders
and the Indenture Indemnitees shall have no obligation or liability under the Indenture Agreements
by reason of or arising out of the assignment hereunder, nor shall the Indenture Trustee, the Note
Holders or the Indenture Indemnitees be required or obligated in any manner to perform or fulfill
any obligations of the Owner under or pursuant to the Indenture Agreements, or, except as herein
expressly provided, to make any payment, or to make any inquiry as to the nature or sufficiency of
any payment received by it, or present or file any claim, or take any action to collect or enforce
the payment of any amounts which may have been assigned to it or to which it may be entitled at any
time or times.




          The Owner does hereby constitute the Indenture Trustee the true and lawful attorney of the
Owner, irrevocably, granted for good and valuable consideration and coupled with an interest and
with full power of substitution, and with full power (in the name of the Owner or otherwise) to ask
for, require, demand, receive, compound and give acquittance for any and all monies and claims for
monies (in each case including insurance and requisition proceeds) due and to become due under or
arising out of the Indenture Agreements, and all other property which now or hereafter constitutes
part of the Collateral, to endorse any checks or other instruments or orders in connection
therewith and to file any claims or to take any action or to institute any proceedings which the
Indenture Trustee may deem to be necessary or advisable in the premises; provided that no
action of the Indenture Trustee pursuant to this paragraph shall increase the obligations or
liabilities of the Owner to any Person beyond those obligations and liabilities specifically set
forth in this Trust Indenture and in the other Operative Agreements and the Indenture Trustee shall
not exercise any such rights except upon the occurrence and during the continuance of an Event of
Default hereunder.




          The Owner agrees that at any time and from time to time, upon the written request of the
Indenture Trustee, the Owner will promptly and duly execute and deliver or cause to be duly
executed and delivered any and all such further instruments and documents (including without
limitation UCC continuation statements) as the Indenture Trustee may reasonably deem necessary to
perfect, preserve or protect the mortgage, security interests, International Interests and
assignments created or intended to be created hereby or to obtain for the Indenture Trustee the
full benefits of the assignment hereunder and of the rights and powers herein granted.




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




ARTICLE I




DEFINITIONS



          Capitalized terms used but not defined herein shall have the respective meanings set forth or
incorporated by reference, and shall be construed in the manner described, in Annex A hereto.







4









 








ARTICLE II




THE EQUIPMENT NOTES



          SECTION 2.01. Form of Equipment Notes




          The Equipment Notes shall be substantially in the form set forth below:



THIS EQUIPMENT NOTE HAS NOT BEEN REGISTERED PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED (THE
“ACT”), OR PURSUANT TO THE SECURITIES LAWS OF ANY STATE. ACCORDINGLY, THIS EQUIPMENT NOTE MAY NOT
BE SOLD UNLESS EITHER REGISTERED UNDER THE ACT AND SUCH APPLICABLE STATE LAWS OR AN EXEMPTION FROM
SUCH REGISTRATIONS IS AVAILABLE.




US AIRWAYS, INC.



SERIES [_____] EQUIPMENT NOTE DUE [____] ISSUED IN CONNECTION WITH THE AIRBUS MODEL [_____]
AIRCRAFT BEARING UNITED STATES REGISTRATION NUMBER N[_____]




			
	 	 	 
	No. ____
	 	Date: [__________, ____]               





_______________________




	 	 	 
	INTEREST RATE
	 	MATURITY DATE

	 
	 	 
	[___________]

	 	[____________]






          US AIRWAYS, INC., a Delaware corporation (“Owner”), hereby promises to pay to
__________________, or the registered assignee thereof, the principal sum of $____________ (the
“Original Amount”), together with interest on the amount of the Original Amount remaining unpaid
from time to time (calculated on the basis of a year of 360 days comprised of twelve 30-day months)
from the date hereof until paid in full at a rate per annum equal to the Debt Rate. The Original
Amount of this Equipment Note shall be due and payable in installments on the dates set forth in
Schedule I hereto equal to the corresponding percentage of the Original Amount of this Equipment
Note set forth in Schedule I hereto. Accrued but unpaid interest shall be due and payable in
semi-annual installments commencing on October 22, 2011 and thereafter on April 22 and October 22
of each year, to and including [_______________]. Notwithstanding the foregoing, the final payment
made on this Equipment Note shall be in an amount sufficient to discharge in full the unpaid
Original Amount and all accrued and unpaid interest on, and any other amounts due under, this
Equipment Note. Notwithstanding anything to the contrary contained herein, if any date on which a
payment under this Equipment Note becomes due and payable is not a Business Day, then such payment
shall not be made on such scheduled date but shall be made on the next succeeding Business Day and






5









 







if such payment is made on such next succeeding Business Day, no interest shall accrue on the
amount of such payment during such extension.




          For purposes hereof, the term “Trust Indenture” means the Trust Indenture and Security
Agreement [____] dated as of [______ __], 20[__], between the Owner and Wilmington Trust Company
(the “Indenture Trustee”), as the same may be amended or supplemented from time to time. All other
capitalized terms used in this Equipment Note and not defined herein shall have the respective
meanings assigned in the Trust Indenture.




          This Equipment Note shall bear interest, payable on demand, at the Payment Due Rate
(calculated on the basis of a year of 360 days comprised of twelve 30-day months) on any overdue
Original Amount, any overdue Make-Whole Amount, if any, and (to the extent permitted by applicable
Law) any overdue interest and any other amounts payable hereunder which are overdue, in each case
for the period the same is overdue. Amounts shall be overdue if not paid when due (whether at
stated maturity, by acceleration or otherwise).




          There shall be maintained an Equipment Note Register for the purpose of registering transfers
and exchanges of Equipment Notes at the Corporate Trust Office of the Indenture Trustee or at the
office of any successor in the manner provided in Section 2.06 of the Trust Indenture.




          The Original Amount and interest and other amounts due hereunder shall be payable in Dollars
in immediately available funds at the Corporate Trust Office of the Indenture Trustee, or as
otherwise provided in the Trust Indenture. Each such payment shall be made on the date such
payment is due and without any presentment or surrender of this Equipment Note, except that in the
case of any final payment with respect to this Equipment Note, the Equipment Note shall be
surrendered promptly thereafter to the Indenture Trustee for cancellation.




          The holder hereof, by its acceptance of this Equipment Note, agrees that, except as provided
in the Trust Indenture, each payment of the Original Amount, Make-Whole Amount, if any, and
interest received by it hereunder shall be applied, first, to the payment of Make-Whole
Amount, if any, and any other amount (other than as covered by any of the following clauses) due
hereunder or under the Trust Indenture, second, to the payment of accrued interest on this
Equipment Note (as well as any interest on any overdue Original Amount, any overdue Make-Whole
Amount, if any, or, to the extent permitted by Law, any overdue interest and other amounts
hereunder) to the date of such payment, third, to the payment of the Original Amount of
this Equipment Note then due, and fourth, the balance, if any, remaining thereafter, to the
payment of installments of the Original Amount of this Equipment Note remaining unpaid in the
inverse order of their maturity.




          This Equipment Note is one of the Equipment Notes referred to in the Trust Indenture which
have been or are to be issued by the Owner pursuant to the terms of the Trust Indenture. The
Collateral is held by the Indenture Trustee as security, in part, for the Equipment Notes. The
provisions of this Equipment Note are subject to the Trust Indenture and the Related Indentures.
Reference is hereby made to the Trust Indenture and the Related Indentures for a complete statement
of the rights and obligations of the holder of, and the nature and extent of the security for, this
Equipment Note (including as a “Related Equipment Note” under each of the






6









 







Related Indentures) and the rights and obligations of the holders of, and the nature and
extent of the security for, any other Equipment Notes executed and delivered under the Trust
Indenture, as well as for a statement of the terms and conditions of the Trust created by the Trust
Indenture, to all of which terms and conditions in the Trust Indenture each holder hereof agrees by
its acceptance of this Equipment Note.




          As provided in the Trust Indenture and subject to certain limitations therein set forth, this
Equipment Note is exchangeable for a like aggregate Original Amount of Equipment Notes of different
authorized denominations, as requested by the holder surrendering the same.




          Prior to due presentment for registration of transfer of this Equipment Note, the Owner and
the Indenture Trustee shall treat the person in whose name this Equipment Note is registered as the
owner hereof for all purposes, whether or not this Equipment Note be overdue, and neither the Owner
nor the Indenture Trustee shall be affected by notice to the contrary.




          This Equipment Note is subject to redemption as provided in Sections 2.09, 2.10 and 2.11 of
the Trust Indenture but not otherwise. In addition, this Equipment Note may be accelerated as
provided in Section 5.02 of the Trust Indenture.




          This Equipment Note is subject to certain restrictions set forth in Sections 4.1(a)(i) and
4.1(a)(iii) of the Intercreditor Agreement, as further specified in Section 2.06 of the Trust
Indenture, to all of which terms and conditions in the Intercreditor Agreement each holder hereof
agrees by its acceptance of this Equipment Note.




          [The indebtedness evidenced by this Equipment Note is, to the extent and in the manner
provided in the Trust Indenture, subordinate and subject in right of payment to the prior payment
in full of the Secured Obligations (as defined in the Trust Indenture) in respect of [Series A
Equipment Notes and Related Series A Equipment Notes]6 [Series A Equipment Notes, Series
B Equipment Notes, Related Series A Equipment Notes and Related Series B Equipment
Notes]7, and certain other Secured Obligations, and this Equipment Note is issued
subject to such provisions. The Note Holder of this Equipment Note, by accepting the same, (a)
agrees to and shall be bound by such provisions, (b) authorizes and directs the Indenture Trustee
on its behalf to take such action as may be necessary or appropriate to effectuate the
subordination as provided in the Trust Indenture and (c) appoints the Indenture Trustee its
attorney-in-fact for such purpose.]8




          Unless the certificate of authentication hereon has been executed by or on behalf of the
Indenture Trustee by manual signature, this Equipment Note shall not be entitled to any benefit
under the Trust Indenture or be valid or obligatory for any purpose.






 




			
	6.	 	To be inserted in the case of a Series B
Equipment Note.
	 
	7.	 	To be inserted in the case of a Series C
Equipment Note.
	 
	8.	 	To be inserted for each Equipment Note other
than any Series A Equipment Note.





7









 





THIS EQUIPMENT NOTE SHALL BE GOVERNED BY AND

CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK.




* * *



8









 





          IN WITNESS WHEREOF, the Owner has caused this Equipment Note to be executed in its corporate
name by its officer thereunto duly authorized on the date hereof.




	 	 	 	 	 
	 	US AIRWAYS, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 



9









 






	 	 	 	 	 



INDENTURE TRUSTEE’S CERTIFICATE OF AUTHENTICATION




          This is one of the Equipment Notes referred to in the within-mentioned Trust Indenture.




	 	 	 	 	 
	 	WILMINGTON TRUST COMPANY, as 

     Indenture Trustee

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



SCHEDULE I




EQUIPMENT NOTE AMORTIZATION



	 	 	 

	Payment Date

	 	Percentage of Original Amount to Be Paid






[SEE SCHEDULE I TO TRUST INDENTURE

WHICH IS INSERTED UPON ISSUANCE]

* * *




10









 





          SECTION 2.02. Issuance and Terms of Equipment Notes




          The Equipment Notes shall be dated the Closing Date, shall be issued in three separate series
consisting of Series A, Series B and Series C and in the maturities and principal amounts and shall
bear interest as specified in Schedule I hereto. On the Closing Date, each Series specified in
Schedule I shall be issued to the Subordination Agent on behalf of the Applicable Pass Through
Trustee under the Applicable Pass Through Trust Agreement. The Equipment Notes shall be issued in
registered form only. The Equipment Notes shall be issued in denominations of $1,000 and integral
multiples thereof, except that one Equipment Note of each Series may be in an amount that is not an
integral multiple of $1,000. Without limitation of the foregoing, new Series B Equipment Notes may
be issued pursuant to the provisions of Section 2.10(b) and new Series C Equipment Notes may be
issued pursuant to the provisions of Section 2.10(c).




          Each Equipment Note shall bear interest at the applicable Debt Rate (calculated on the basis
of a year of 360 days comprised of twelve 30-day months) on the unpaid Original Amount thereof from
time to time outstanding. Accrued interest shall be payable in arrears on October 22, 2011, and
on each April 22 and October 22 thereafter until maturity. The Original Amount of each Equipment
Note shall be payable on the dates and in the installments equal to the corresponding percentage of
the Original Amount as set forth in Schedule I hereto which shall be attached as Schedule I to such
Equipment Notes. Notwithstanding the foregoing, the final payment made under each Equipment Note
shall be in an amount sufficient to discharge in full the unpaid Original Amount and all accrued
and unpaid interest on, and any other amounts due under, such Equipment Note. Each Equipment Note
shall bear interest, payable on demand, at the Payment Due Rate (calculated on the basis of a year
of 360 days comprised of twelve 30-day months) on any part of the Original Amount, Make-Whole
Amount, if any, and, to the extent permitted by applicable Law, interest and any other amounts
payable thereunder not paid when due for any period during which the same shall be overdue, in each
case for the period the same is overdue. Amounts under any Equipment Note shall be overdue if not
paid when due (whether at stated maturity, by acceleration or otherwise). Notwithstanding anything
to the contrary contained herein, if any date on which a payment under any Equipment Note becomes
due and payable is not a Business Day then such payment shall not be made on such scheduled date
but shall be made on the next succeeding Business Day and if such payment is made on such next
succeeding Business Day, no interest shall accrue on the amount of such payment during such
extension.




          The Owner agrees to pay to the Indenture Trustee for distribution in accordance with Section
3.04 hereof: (a)(i) to the extent not payable (whether or not in fact paid) under Section 6(a) of
the Note Purchase Agreement, an amount equal to the fees payable to the Liquidity Provider under
Section 2.03 of each Liquidity Facility and the related Fee Letter (as defined in the Intercreditor
Agreement) multiplied by a fraction the numerator of which shall be the then outstanding aggregate
principal amount of the Series A Equipment Notes and Series B Equipment Notes and the denominator
of which shall be the then outstanding aggregate principal amount of all “Series A Equipment Notes”
and “Series B Equipment Notes” (each as defined in the Note Purchase Agreement); (ii) (x) the
amount equal to interest on any Downgrade Advance (other than any Applied Downgrade Advance)
payable under Section 3.07 of each Liquidity






11









 







Facility minus Investment Earnings from such Downgrade Advance multiplied by (y) the fraction
specified in the foregoing clause (i); (iii) (x) the amount equal to interest on any Non-Extension
Advance (other than any Applied Non-Extension Advance) payable under Section 3.07 of each Liquidity
Facility minus Investment Earnings from such Non-Extension Advance multiplied by (y) the fraction
specified in the foregoing clause (i); (iv) (x) the amount equal to interest on any Special
Termination Advance (other than any Applied Special Termination Advance) payable under Section 3.07
of each Liquidity Facility minus Investment Earnings from such Special Termination Advance
multiplied by (y) the fraction specified in the foregoing clause (i); (v) if any payment default
shall have occurred and be continuing with respect to interest on any “Series A Equipment Notes” or
“Series B Equipment Notes” (each as defined in the Note Purchase Agreement), (x) the excess, if
any, of (1) an amount equal to interest on any Unpaid Advance, Applied Downgrade Advance, Applied
Non-Extension Advance or Applied Special Termination Advance payable under Section 3.07 of each
Liquidity Facility over (2) the sum of Investment Earnings from any Final Advance plus any amount
of interest at the Payment Due Rate actually payable (whether or not in fact paid) by the Owner on
the overdue scheduled interest on the “Equipment Notes” (as defined in the Note Purchase Agreement)
in respect of which such Unpaid Advance, Applied Downgrade Advance, Applied Non-Extension Advance
or Applied Special Termination Advance was made by the Liquidity Provider multiplied by (y) a
fraction the numerator of which shall be the then aggregate overdue amounts of interest on the
Series A Equipment Notes and Series B Equipment Notes (other than interest becoming due and
payable solely as a result of acceleration of any such Equipment Notes) and the denominator of
which shall be the then aggregate overdue amounts of interest on all “Series A Equipment Notes” and
“Series B Equipment Notes” (each as defined in the Note Purchase Agreement) (other than interest
becoming due and payable solely as a result of acceleration of any such “Equipment Notes”); and
(vi) any other amounts owed to the Liquidity Provider by the Subordination Agent as borrower under
each Liquidity Facility other than amounts due as repayment of advances thereunder or as interest
on such advances, except to the extent payable pursuant to clause (ii), (iii), (iv) or (v) above,
multiplied by the fraction specified in the foregoing clause (i), (b) without duplication of any
amounts paid or payable pursuant to the provisions hereof, Owner’s pro rata share of all
compensation and reimbursement of expenses, disbursements and advances payable by the Owner under
the Pass Through Trust Agreements, (c) without duplication of any amounts paid or payable pursuant
to the provisions hereof, Owner’s pro rata share of all compensation and reimbursement of expenses
and disbursements payable to the Subordination Agent under the Intercreditor Agreement except with
respect to any income or franchise taxes incurred by the Subordination Agent in connection with the
transactions contemplated by the Intercreditor Agreement and (d) in the event the Owner requests
any amendment to any Operative Agreement or Pass Through Agreement, the Owner’s pro rata share of
all reasonable fees and expenses (including, without limitation, fees and disbursements of counsel)
of the Escrow Agents and the Paying Agents in connection therewith payable by the Pass Through
Trustees under the Escrow Agreements. As used herein, “Owner’s pro rata share” means as of any
time a fraction, the numerator of which is the principal balance then outstanding of Equipment
Notes and the denominator of which is the aggregate principal balance then outstanding of all
“Equipment Notes” (as each such term is defined in each of the Operative Indentures). For purposes
of this paragraph, the terms “Applied Downgrade Advance”, “Applied Non-Extension Advance”, “Applied
Special Termination Advance”, “Cash Collateral Account”, “Downgrade Advance”, “Final Advance”,
“Investment Earnings”, “Non-






12









 







Extension Advance”, “Special Termination Advance” and “Unpaid Advance” shall have the meanings
specified in each Liquidity Facility.




          The Equipment Notes shall be executed on behalf of the Owner by one of its authorized
officers. Equipment Notes bearing the signatures of individuals who were at any time the proper
officers of the Owner shall bind the Owner, notwithstanding that such individuals or any of them
have ceased to hold such offices prior to the authentication and delivery of such Equipment Notes
or did not hold such offices at the respective dates of such Equipment Notes. The Owner may from
time to time execute and deliver Equipment Notes with respect to the Aircraft to the Indenture
Trustee for authentication upon original issue and such Equipment Notes shall thereupon be
authenticated and delivered by the Indenture Trustee upon the written request of the Owner signed
by an authorized officer of the Owner. No Equipment Note shall be secured by or entitled to any
benefit under this Trust Indenture or be valid or obligatory for any purposes, unless there appears
on such Equipment Note a certificate of authentication in the form provided for herein executed by
the Indenture Trustee by the manual signature of one of its authorized officers and such
certificate upon any Equipment Notes be conclusive evidence, and the only evidence, that such
Equipment Note has been duly authenticated and delivered hereunder.




          The aggregate Original Amount of any Series of Equipment Notes issued hereunder shall not
exceed the amount set forth as the maximum therefor on Schedule I hereto.




          SECTION 2.03. Method of Payment




               (a) The Original Amount of, interest on, Make-Whole Amount, if any, and other amounts due
under each Equipment Note or hereunder will be payable in Dollars by wire transfer of immediately
available funds not later than 12:30 p.m., New York time, on the due date of payment to the
Indenture Trustee at the Corporate Trust Office for distribution among the Note Holders in the
manner provided herein, and payment of such amount by the Owner to the Indenture Trustee shall be
deemed to satisfy the Owner’s obligation to make such payment. The Owner shall not have any
responsibility for the distribution of such payment to any Note Holder. Notwithstanding the
foregoing or any provision in any Equipment Note to the contrary, the Indenture Trustee will use
reasonable efforts to pay or cause to be paid, if so directed in writing by any Note Holder (with a
copy to the Owner), all amounts paid by the Owner hereunder and under such holder’s Equipment Note
or Equipment Notes to such holder or a nominee therefor (including all amounts distributed pursuant
to Article III of this Trust Indenture) by transferring, or causing to be transferred, by wire
transfer of immediately available funds in Dollars, prior to 2:00 p.m., New York City time, on the
due date of payment, to an account maintained by such holder with a bank located in the continental
United States the amount to be distributed to such holder, for credit to the account of such holder
maintained at such bank. If the Indenture Trustee shall fail to make any such payment as provided
in the immediately foregoing sentence after its receipt of funds at the place and prior to the time
specified above, the Indenture Trustee, in its individual capacity and not as trustee, agrees to
compensate such holders for loss of use of funds at Debt Rate until such payment is made and the
Indenture Trustee shall be entitled to any interest earned on such funds until such payment is
made. Any payment made hereunder shall be made without any presentment or surrender of any
Equipment Note, except that, in the case of the final payment in respect of any Equipment Note,



13









 




such Equipment Note shall be surrendered to the Indenture Trustee for cancellation promptly
after such payment. Notwithstanding any other provision of this Trust Indenture to the contrary,
the Indenture Trustee shall not be required to make, or cause to be made, wire transfers as
aforesaid prior to the first Business Day on which it is practicable for the Indenture Trustee to
do so in view of the time of day when the funds to be so transferred were received by it if such
funds were received after 12:30 p.m., New York time, at the place of payment. Prior to the due
presentment for registration of transfer of any Equipment Note, the Owner and the Indenture Trustee
shall deem and treat the Person in whose name any Equipment Note is registered on the Equipment
Note Register as the absolute owner and holder of such Equipment Note for the purpose of receiving
payment of all amounts payable with respect to such Equipment Note and for all other purposes, and
none of the Owner or the Indenture Trustee shall be affected by any notice to the contrary. So
long as any signatory to the Participation Agreement or nominee thereof shall be a registered Note
Holder, all payments to it shall be made to the account of such Note Holder specified in Schedule 1
thereto and otherwise in the manner provided in or pursuant to the Participation Agreement unless
it shall have specified some other account or manner of payment by notice to the Indenture Trustee
consistent with this Section 2.03.




               (b) The Indenture Trustee, as agent for the Owner, shall exclude and withhold at the
appropriate rate from each payment of Original Amount of, interest on, Make-Whole Amount, if any,
and other amounts due hereunder or under each Equipment Note (and such exclusion and withholding
shall constitute payment in respect of such Equipment Note) any and all United States withholding
taxes applicable thereto as required by Law. The Indenture Trustee agrees to act as such
withholding agent and, in connection therewith, whenever any present or future United States taxes
or similar charges are required to be withheld with respect to any amounts payable hereunder or in
respect of the Equipment Notes, to withhold such amounts and timely pay the same to the appropriate
authority in the name of and on behalf of the Note Holders, that it will file any necessary United
States withholding tax returns or statements when due, and that as promptly as possible after the
payment thereof it will deliver to each Note Holder (with a copy to the Owner) appropriate receipts
showing the payment thereof, together with such additional documentary evidence as any such Note
Holder may reasonably request from time to time.



          If a Note Holder which is a Non-U.S. Person has furnished to the Indenture Trustee a properly
completed, accurate and currently effective U.S. Internal Revenue Service Form W-8BEN, W-8EXP or
W-8IMY (or such successor form or forms as may be required by the United States Treasury
Department) during the calendar year in which the payment hereunder or under the Equipment Note(s)
held by such holder is made (but prior to the making of such payment), or in any of the three
preceding calendar years, and has not notified the Indenture Trustee of the withdrawal or
inaccuracy of such form prior to the date of such payment (and the Indenture Trustee has no reason
to believe that any information set forth in such form is inaccurate), the Indenture Trustee shall
withhold only the amount, if any, required by Law (after taking into account any applicable
exemptions properly claimed by the Note Holder) to be withheld from payments hereunder or under the
Equipment Notes held by such holder in respect of United States federal income tax. If a Note
Holder (x) which is a Non-U.S. Person has furnished to the Indenture Trustee a properly completed,
accurate and currently effective U.S. Internal Revenue Service Form W-8ECI in duplicate (or such
successor certificate, form or forms as may be required by the United States Treasury Department as
necessary in order to






14









 







properly avoid withholding of United States federal income tax) during the calendar year in
which the payment hereunder or under the Equipment Note(s) held by such holder is made (but prior
to the making of such payment) or in any of the three preceding calendar years, and has not
notified the Indenture Trustee of the withdrawal or inaccuracy of such certificate or form prior to
the date of such payment (and the Indenture Trustee has no reason to believe that any information
set forth in such form is inaccurate) or (y) which is a U.S. Person has furnished to the Indenture
Trustee a properly completed, accurate and currently effective U.S. Internal Revenue Service Form
W-9, if applicable, prior to a payment hereunder or under the Equipment Notes held by such holder,
no amount shall be withheld from payments in respect of United States federal income tax. If any
Note Holder has notified the Indenture Trustee that any of the foregoing forms or certificates is
withdrawn or inaccurate, or if such holder has not filed a form claiming an exemption from United
States withholding tax or if an applicable income tax convention, the Code or the regulations
thereunder or the administrative interpretation of any of the foregoing is at any time after the
date hereof amended to require such withholding of United States federal income taxes from payments
under the Equipment Notes held by such holder, the Indenture Trustee agrees to withhold from each
payment due to the relevant Note Holder withholding taxes at the appropriate rate under Law and
will, on a timely basis as more fully provided above, deposit such amounts with an authorized
depository and make such returns, statements, receipts and other documentary evidence in connection
therewith as required by Law.




          SECTION 2.04. Application of Payments




          In the case of each Equipment Note, each payment of Original Amount, Make-Whole Amount, if
any, and interest due thereon shall be applied:





     First: to the payment of Make-Whole Amount, if any, with respect to such Equipment
Note and any other amount (other than as covered by any of the following clauses) due
hereunder or under such Equipment Note;




     Second: to the payment of accrued interest on such Equipment Note (as well as any
interest on any overdue Original Amount, any overdue Make-Whole Amount, if any, and to the
extent permitted by Law, any overdue interest and any other overdue amounts thereunder) to
the date of such payment;




     Third: to the payment of the Original Amount of such Equipment Note (or a portion
thereof) then due thereunder; and




     Fourth: the balance, if any, remaining thereafter, to the payment of the Original
Amount of such Equipment Note remaining unpaid (provided that such Equipment Note shall not
be subject to redemption except as provided in Sections 2.09, 2.10 and 2.11 hereof).


The amounts paid pursuant to clause “Fourth” above shall be applied to the installments of Original
Amount of such Equipment Note in the inverse order of their maturity.







15









 








          SECTION 2.05. Termination of Interest in Collateral




          No Note Holder nor any other Indenture Indemnitee shall, as such, have any further interest
in, or other right with respect to, the Collateral when and if the Original Amount of, Make-Whole
Amount, if any, and interest on and other amounts due under all Equipment Notes held by such Note
Holder and all other sums then due and payable to such Note Holder, such Indenture Indemnitee or
the Indenture Trustee hereunder (including, without limitation, under the third paragraph of
Section 2.02 hereof) and under the other Operative Agreements by the Owner and all Related Secured
Obligations (collectively, the “Secured Obligations”) shall have been paid in full.




          SECTION 2.06. Registration Transfer and Exchange of Equipment Notes




          The Indenture Trustee shall keep a register (the “Equipment Note Register”) in which the
Indenture Trustee shall provide for the registration of Equipment Notes and the registration of
transfers of Equipment Notes. No such transfer shall be given effect unless and until registration
hereunder shall have occurred. The Equipment Note Register shall be kept at the Corporate Trust
Office of the Indenture Trustee. The Indenture Trustee is hereby appointed “Equipment Note
Registrar” for the purpose of registering Equipment Notes and transfers of Equipment Notes as
herein provided. A holder of any Equipment Note intending to exchange such Equipment Note shall
surrender such Equipment Note to the Indenture Trustee at the Corporate Trust Office, together with
a written request from the registered holder thereof for the issuance of a new Equipment Note,
specifying, in the case of a surrender for transfer, the name and address of the new holder or
holders. Upon surrender for registration of transfer of any Equipment Note, the Owner shall
execute, and the Indenture Trustee shall authenticate and deliver, in the name of the designated
transferee or transferees, one or more new Equipment Notes of a like aggregate Original Amount and
of the same Series. At the option of the Note Holder, Equipment Notes may be exchanged for other
Equipment Notes of any authorized denominations of a like aggregate Original Amount, upon surrender
of the Equipment Notes to be exchanged to the Indenture Trustee at the Corporate Trust Office.
Whenever any Equipment Notes are so surrendered for exchange, the Owner shall execute, and the
Indenture Trustee shall authenticate and deliver, the Equipment Notes which the Note Holder making
the exchange is entitled to receive. All Equipment Notes issued upon any registration of transfer
or exchange of Equipment Notes (whether under this Section 2.06 or under Section 2.07 hereof or
otherwise under this Trust Indenture) shall be the valid obligations of the Owner evidencing the
same respective obligations, and entitled to the same security and benefits under this Trust
Indenture, as the Equipment Notes surrendered upon such registration of transfer or exchange.
Every Equipment Note presented or surrendered for registration of transfer, shall (if so required
by the Indenture Trustee) be duly endorsed, or be accompanied by a written instrument of transfer
in form satisfactory to the Indenture Trustee duly executed by the Note Holder or such holder’s
attorney duly authorized in writing, and the Indenture Trustee shall require evidence satisfactory
to it as to the compliance of any such transfer with the Securities Act, and the securities Laws of
any applicable state. The Indenture Trustee shall make a notation on each new Equipment Note of
the amount of all payments of Original Amount previously made on the old Equipment Note or
Equipment Notes with respect to which such new Equipment Note is issued and the date to which
interest on such old Equipment Note or Equipment Notes has been paid. Interest shall be deemed to
have been paid on such new Equipment Note to the date on which interest shall have




16









 







been paid on such old Equipment Note, and all payments of the Original Amount marked on such
new Equipment Note, as provided above, shall be deemed to have been made thereon. The Owner shall
not be required to exchange any surrendered Equipment Notes as provided above during the ten-day
period preceding the due date of any payment on such Equipment Note. The Owner shall in all cases
deem the Person in whose name any Equipment Note shall have been issued and registered as the
absolute owner and holder of such Equipment Note for the purpose of receiving payment of all
amounts payable by the Owner with respect to such Equipment Note and for all purposes until a
notice stating otherwise is received from the Indenture Trustee and such change is reflected on the
Equipment Note Register. The Indenture Trustee will promptly notify the Owner of each registration
of a transfer of an Equipment Note. Any such transferee of an Equipment Note, by its acceptance of
an Equipment Note, (i) agrees to the provisions of this Trust Indenture and the Participation
Agreement applicable to Note Holders, including Sections 6.3, 6.4 and 9.1 thereof, and shall be
deemed to have covenanted to the parties to the Participation Agreement as to the matters
covenanted by the original Note Holder in the Participation Agreement and (ii) agrees to the
restrictions set forth in Sections 4.1(a)(i) and 4.1(a)(iii) of the Intercreditor Agreement, and
shall be deemed to have covenanted to the parties to the Intercreditor Agreement not to give any
direction, or otherwise authorize, the Indenture Trustee to take any action that would violate
Sections 4.1(a)(i) or 4.1(a)(iii) of the Intercreditor Agreement. Subject to compliance by the
Note Holder and its transferee (if any) of the requirements set forth in this Section 2.06, the
Indenture Trustee and the Owner shall use all reasonable efforts to issue new Equipment Notes upon
transfer or exchange within 10 Business Days of the date an Equipment Note is surrendered for
transfer or exchange.




          SECTION 2.07. Mutilated, Destroyed, Lost or Stolen Equipment Notes




          If any Equipment Note shall become mutilated, destroyed, lost or stolen, the Owner shall, upon
the written request of the holder of such Equipment Note, execute and the Indenture Trustee shall
authenticate and deliver in replacement thereof a new Equipment Note, payable in the same Original
Amount dated the same date and captioned as issued in connection with the Aircraft. If the
Equipment Note being replaced has become mutilated, such Equipment Note shall be surrendered to the
Indenture Trustee and a photocopy thereof shall be furnished to the Owner. If the Equipment Note
being replaced has been destroyed, lost or stolen, the holder of such Equipment Note shall furnish
to the Owner and the Indenture Trustee such security or indemnity as may be required by them to
save the Owner and the Indenture Trustee harmless and evidence satisfactory to the Owner and the
Indenture Trustee of the destruction, loss or theft of such Equipment Note and of the ownership
thereof. If a “qualified institutional buyer” of the type referred to in paragraph (a)(1)(i)(A),
(B), (D) or (E) of Rule 144A under the Securities Act (a “QIB”) is the holder of any such
destroyed, lost or stolen Equipment Note, then the written indemnity of such QIB, signed by an
authorized officer thereof, in favor of, delivered to and in form reasonably satisfactory the Owner
shall be accepted as satisfactory indemnity and security and no further indemnity or security shall
be required as a condition to the execution and delivery of such new Equipment Note. Subject to
compliance by the Note Holder with the requirements set forth in this Section 2.07, the Indenture
Trustee and the Owner shall use all reasonable efforts to issue new Equipment Notes within 10
Business Days of the date of the written request therefor from the Note Holder.







17









 








          SECTION 2.08. Payment of Expenses on Transfer; Cancellation




               (a) No service charge shall be made to a Note Holder for any registration of transfer or
exchange of Equipment Notes, but the Indenture Trustee, as Equipment Note Registrar, may require
payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Equipment Notes.



               (b) The Indenture Trustee shall cancel all Equipment Notes surrendered for replacement,
redemption, transfer, exchange, payment or cancellation and shall destroy the canceled Equipment
Notes.



          SECTION 2.09. Mandatory Redemptions of Equipment Notes




               On the date on which the Owner is required pursuant to Section 4.05 hereof to make payment for
an Event of Loss with respect to the Airframe, all of the Equipment Notes shall be redeemed in
whole at a redemption price equal to 100% of the unpaid Original Amount thereof, together with all
accrued interest thereon to the date of redemption and all other Secured Obligations (other than
Related Secured Obligations) owed or then due and payable to the Note Holders but without
Make-Whole Amount.



          SECTION 2.10. Optional Redemptions of Equipment Notes




               (a) All (but not less than all) of the Equipment Notes may be redeemed by the Owner upon at
least thirty (30) days’ revocable prior written notice to the Indenture Trustee and the Note
Holders, and such Equipment Notes shall be redeemed in whole at a redemption price equal to 100% of
the unpaid Original Amount thereof, together with accrued interest thereon to the date of
redemption and all other Secured Obligations (other than Related Secured Obligations) owed or then
due and payable to the Note Holders plus Make-Whole Amount, if any, provided that no
redemption shall be permitted under this Section 2.10(a) unless simultaneously with such redemption
all Related Series A Equipment Notes, Related Series B Equipment Notes and Related Series C
Equipment Notes shall also be redeemed.



               (b) All of the Series B Equipment Notes may be redeemed by the Owner upon at least thirty (30)
days’ revocable prior written notice to the Indenture Trustee and the Note Holders of such Series,
and such Equipment Notes shall be redeemed in whole at a redemption price equal to 100% of the
unpaid Original Amount thereof, together with accrued interest thereon to the date of redemption
and all other Secured Obligations (other than Related Secured Obligations) owed or then due and
payable to the Note Holders of such Series plus Make-Whole Amount, if any; provided that no
redemption shall be permitted under this Section 2.10(b) unless the following conditions have been
satisfied: (1) simultaneously with such redemption, the Related Series B Equipment Notes shall also
be redeemed; and (2) simultaneously with such redemption, new Series B Equipment Notes shall be
reissued in accordance with Section 4(a)(v) of the Note Purchase Agreement and Section 9.1(c) of
the Intercreditor Agreement.



               (c) All of the Series C Equipment Notes may be redeemed by the Owner upon at least thirty (30)
days’ revocable prior written notice to the Indenture Trustee and



18









 




the Note Holders of such Series, and such Equipment Notes shall be redeemed in whole at a
redemption price equal to 100% of the unpaid Original Amount thereof, together with accrued
interest thereon to the date of redemption and all other Secured Obligations (other than Related
Secured Obligations) owed or then due and payable to the Note Holders of such Series plus
Make-Whole Amount, if any; provided that no redemption shall be permitted under this
Section 2.10(c) unless the following conditions have been satisfied: (1) simultaneously with such
redemption, the Related Series C Equipment Notes shall also be redeemed; and (2) simultaneously
with such redemption, new Series C Equipment Notes shall be reissued in accordance with Section
4(a)(v) of the Note Purchase Agreement and Section 9.1(c) of the Intercreditor Agreement.




          SECTION 2.11. Redemptions; Notice of Redemption




               (a) No redemption of any Equipment Note may be made except to the extent and in the manner
expressly permitted by this Trust Indenture. No purchase of any Equipment Note may be made by the
Indenture Trustee.



               (b) Notice of redemption with respect to the Equipment Notes shall be given by the Indenture
Trustee by first-class mail, postage prepaid, mailed not less than twenty (20) nor more than sixty
(60) days prior to the applicable redemption date, to each Note Holder of such Equipment Notes to
be redeemed, at such Note Holder’s address appearing in the Equipment Note Register; provided that
such notice shall be revocable by written notice from the Owner to the Indenture Trustee given not
later than three days prior to the redemption date. All notices of redemption shall state: (1) the
redemption date, (2) the applicable basis for determining the redemption price, (3) that on the
redemption date, the redemption price will become due and payable upon each such Equipment Note,
and that, if any such Equipment Notes are then outstanding, interest on such Equipment Notes shall
cease to accrue on and after such redemption date, and (4) the place or places where such Equipment
Notes are to be surrendered for payment of the redemption price.



               (c) On or before the redemption date, the Owner (or any person on behalf of the Owner) shall,
to the extent an amount equal to the redemption price for the Equipment Notes to be redeemed on the
redemption date shall not then be held by the Indenture Trustee, deposit or cause to be deposited
with the Indenture Trustee by 12:30 p.m. New York time on the redemption date in immediately
available funds the redemption price of the Equipment Notes to be redeemed.



               (d) Notice of redemption having been given as aforesaid, the Equipment Notes to be redeemed
shall, on the redemption date, become due and payable at the Corporate Trust Office of the
Indenture Trustee or at any office or agency maintained for such purposes pursuant to Section 2.06,
and from and after such redemption date (unless there shall be a default in the payment of the
redemption price) any such Equipment Notes then outstanding shall cease to bear interest. Upon
surrender of any such Equipment Note for redemption in accordance with said notice, such Equipment
Note shall be redeemed at the redemption price. If any Equipment Note called for redemption shall
not be so paid upon surrender thereof for redemption, the principal amount thereof shall, until
paid, continue to bear interest from the



19









 




applicable redemption date at the interest rate in effect for such Equipment Note as of such
redemption date.




          SECTION 2.12. Subordination




               (a) The Owner, each Note Holder (by acceptance of its Equipment Notes of any Series) and each
Related Note Holder (by acceptance of its Related Equipment Note), hereby agree that no payment or
distribution shall be made on or in respect of the Secured Obligations owed to such Note Holder of
such Series or owed to such Related Note Holder, including any payment or distribution of cash,
property or securities after the commencement of a proceeding of the type referred to in Section
5.01(v), (vi) or (vii) hereof, except as expressly provided in Article III hereof.



               (b) By the acceptance of its Equipment Notes of any Series (other than Series A), each Note
Holder of such Series agrees that in the event that such Note Holder, in its capacity as a Note
Holder, shall receive any payment or distribution on any Secured Obligations in respect of such
Series which it is not entitled to receive under this Section 2.12 or Article III hereof, it will
hold any amount so received in trust for the Senior Holder and will forthwith turn over such
payment to the Indenture Trustee in the form received to be applied as provided in Article III
hereof. By the acceptance of its Related Equipment Notes (other than Related Series A Equipment
Notes), each Related Note Holder agrees that in the event that such Related Note Holder, in its
capacity as a Related Note Holder, shall receive any payment or distribution pursuant to this Trust
Indenture on any Related Secured Obligations which it is not entitled to receive under this Section
2.12 or Article III hereof, it will hold any amount so received in trust for the Senior Holder (as
defined in Section 2.12(c) hereof) and will forthwith turn over such payment to the Indenture
Trustee in the form received to be applied as provided in Article III hereof.



               (c) As used in this Section 2.12, the term “Senior Holder” shall mean (i) the Note Holders of
Series A Equipment Notes and Related Note Holders of the Related Series A Equipment Notes until the
Secured Obligations in respect of Series A Equipment Notes and Related Series A Equipment Notes
have been paid in full, (ii) after the Secured Obligations in respect of Series A Equipment Notes
and Related Series A Equipment Notes have been paid in full, the Note Holders of Series B Equipment
Notes and Related Note Holders of the Related Series B Equipment Notes until the Secured
Obligations in respect of Series B Equipment Notes and Related Series B Equipment Notes have been
paid in full, and (iii) after the Secured Obligations in respect of Series B Equipment Notes and
Related Series B Equipment Notes have been paid in full, the Note Holders of Series C Equipment
Notes and Related Note Holders of the Related Series C Equipment Notes until the Secured
Obligations in respect of Series C Equipment Notes and Related Series C Equipment Notes have been
paid in full, and (iv) after the Secured Obligations in respect of Series C Equipment Notes and
Related Series C Equipment Notes have been paid in full (and except as otherwise provided in an
amendment to this Trust Indenture pursuant to Section 10.01(b) hereof).



20









 





ARTICLE III




RECEIPT, DISTRIBUTION AND APPLICATION OF PAYMENTS



          SECTION 3.01. Basic Distributions




          Except as otherwise provided in Sections 3.02 and 3.03 hereof, each periodic payment of
principal or interest on the Equipment Notes received by the Indenture Trustee shall be promptly
distributed in the following order of priority:





	 	(i)	 	so much of such payment as shall be required to pay in full the aggregate
amount of the payment or payments of Original Amount and interest (as well as any
interest on any overdue Original Amount and, to the extent permitted by Law, on any
overdue interest) then due under all Series A Equipment Notes shall be distributed
to the Note Holders of Series A ratably, without priority of one over the other, in
the proportion that the amount of such payment or payments then due under each
Series A Equipment Note bears to the aggregate amount of the payments then due under
all Series A Equipment Notes;
	 
	 	(ii)	 	after giving effect to paragraph (i) above, so much of such payment
remaining as shall be required to pay in full the aggregate amount of the payment or
payments of Original Amount and interest (as well as any interest on any overdue
Original Amount and, to the extent permitted by Law, on any overdue interest) then
due under all Series B Equipment Notes shall be distributed to the Note Holders of
Series B ratably, without priority of one over the other, in the proportion that the
amount of such payment or payments then due under each Series B Equipment Note bears
to the aggregate amount of the payments then due under all Series B Equipment Notes;
	 
	 	(iii)	 	after giving effect to paragraph (ii) above, so much of such payment
remaining as shall be required to pay in full the aggregate amount of the payment or
payments of Original Amount and interest (as well as any interest on any overdue
Original Amount and, to the extent permitted by Law, on any overdue interest) then
due under all Series C Equipment Notes shall be distributed to the Note Holders of
Series C ratably, without priority of one over the other, in the proportion that the
amount of such payment or payments then due under each Series C Equipment Note bears
to the aggregate amount of the payments then due under all Series C Equipment Notes.





          SECTION 3.02. Event of Loss; Replacement; Optional Redemption




          Except as otherwise provided in Section 3.03 hereof, any payments received by the Indenture
Trustee (i) with respect to the Airframe or the Airframe and one or more Engines as the result of
an Event of Loss pursuant to Section 2.09 or (ii) pursuant to an optional redemption of the
Equipment Notes pursuant to Section 2.10 hereof shall be applied to redemption of the Equipment
Notes and to all other Secured Obligations then due by applying such funds in the following order
of priority:







21









 









	First, 	 	 	 (a) to reimburse the Indenture Trustee and the Note
Holders for any reasonable costs or expenses incurred in
connection with such redemption for which they are
entitled to reimbursement, or indemnity by the Owner,
under the Operative Agreements and then (b) to pay any
other Secured Obligations then due (except as provided in
clauses “Second” and “Third” below) to the Indenture
Trustee, the Note Holders and the other Indenture
Indemnitees under this Trust Indenture, the Participation
Agreement or the Equipment Notes (other than amounts
specified in clauses “Second” and “Third” below);
	 
	Second, 	(i) 	 	to pay the amounts specified in paragraph (i) of clause
“Third” of Section 3.03 hereof plus Make-Whole Amount, if
any, then due and payable in respect of the Series A
Equipment Notes, but excluding distributions of amounts
of Related Secured Obligations to Related Note Holders;
	 
	 	(ii)	 	after giving effect to paragraph (i) above, to pay the amounts specified
in paragraph (ii) of clause “Third” of Section 3.03 hereof plus Make Whole Amount,
if any, then due and payable in respect of the Series B Equipment Notes, but
excluding distributions of amounts of Related Secured Obligations to Related Note
Holders;
	 
	 	(iii)	 	after giving effect to paragraph (ii) above, to pay the amounts
specified in paragraph (iii) of clause “Third” of Section 3.03 hereof plus Make
Whole Amount, if any, then due and payable in respect of the Series C Equipment
Notes, but excluding distributions of amounts of Related Secured Obligations to
Related Note Holders; and
	 
	Third, 	(i) 	 	to pay the amounts specified in paragraph (i) of clause “Third” of Section 3.03 hereof
then due and payable in respect of the Related Series A Equipment Notes;
	 
	 	(ii)	 	after giving effect to paragraph (i) above, to pay the amounts specified
in paragraph (ii) of clause “Third” of Section 3.03 hereof then due and payable in
respect of the Related Series B Equipment Notes;
	 
	 	(iii)	 	after giving effect to paragraph (ii) above, to pay the
amounts specified in paragraph (iii) of clause “Third” of Section
3.03 hereof then due and payable in respect of the Related Series
C Equipment Notes; and
	 
	Fourth, 	 	 	as provided in clause “Fourth” of Section 3.03 hereof;




provided, however, that if a Replacement Airframe or Replacement Engine shall be
substituted for the Airframe or Engine subject to such Event of Loss as provided in Section 4.05
hereof, any insurance, condemnation or similar proceeds which result from such Event of Loss and
are paid over to the Indenture Trustee shall be held by the Indenture Trustee as permitted by
Section 7.04 hereof (provided that such moneys shall be invested as provided in Section 6.06
hereof) as additional security for the obligations of the Owner under Operative Agreements and such
proceeds (and such investment earnings), to the extent not theretofore applied as provided herein,
shall be released to the Owner at the Owner’s written request upon the release of such Airframe or
Engine and the replacement thereof as provided herein; provided, further,
however, in the case






22









 







of a redemption of Equipment Notes pursuant to Section 2.10(b), if a particular Series is not being
redeemed pursuant thereto, no application of funds shall be made pursuant to the paragraph in
clause “Second” above that refers to such Series in connection with such redemption. No Make-Whole
Amount shall be due and payable on the Equipment Notes as a consequence of the redemption of the
Equipment Notes as a result of an Event of Loss with respect to the Airframe or the Airframe and
one or more Engines.




          SECTION 3.03. Payments After Event of Default




          Except as otherwise provided in Section 3.04 hereof, all payments received and amounts held or
realized by the Indenture Trustee (including any amounts realized by the Indenture Trustee from the
exercise of any remedies pursuant to Article V hereof) after an Event of Default shall have
occurred and be continuing, as well as all payments or amounts then held by the Indenture Trustee
as part of the Collateral, shall be promptly distributed by the Indenture Trustee in the following
order of priority:





	First, 	 	 	so much of such payments or amounts as shall be required
to (i) reimburse the Indenture Trustee or WTC for any tax
(except to the extent resulting from a failure of the
Indenture Trustee to withhold taxes pursuant to Section
2.03(b) hereof), expense or other loss (including,
without limitation, all amounts to be expended at the
expense of, or charged upon the rents, revenues, issues,
products and profits of, the property included in the
Collateral (all such property being herein called the
“Mortgaged Property”) pursuant to Section 5.03(b) hereof)
incurred by the Indenture Trustee or WTC (to the extent
not previously reimbursed), the expenses of any sale, or
other proceeding, reasonable attorneys’ fees and
expenses, court costs, and any other expenditures
incurred or expenditures or advances made by the
Indenture Trustee, WTC or the Note Holders in the
protection, exercise or enforcement of any right, power
or remedy or any damages sustained by the Indenture
Trustee, WTC or any Note Holder, liquidated or otherwise,
upon such Event of Default shall be applied by the
Indenture Trustee as between itself, WTC and the Note
Holders in reimbursement of such expenses and any other
expenses for which the Indenture Trustee, WTC or the Note
Holders are entitled to reimbursement under any Operative
Agreement and (ii) pay all Secured Obligations payable to
the other Indenture Indemnitees hereunder and under the
Participation Agreement (other than amounts specified in
clauses Second and Third below); and in the case the
aggregate amount to be so distributed is insufficient to
pay as aforesaid in clauses (i) and (ii), then ratably,
without priority of one over the other, in proportion to
the amounts owed each hereunder;
	 
	Second, 	 	 	so much of such payments or amounts remaining as shall be
required to reimburse the then existing or prior Note
Holders for payments made pursuant to Section 6.03 hereof
(to the extent not previously reimbursed) shall be
distributed to such then existing or prior Note Holders
ratably, without priority of one over the other, in
accordance with the amount of the payment or payments
made by each such then existing or prior Note Holder
pursuant to said Section 6.03 hereof;




23









 






	Third, 	(i) 	 	so much of such payments or amounts remaining as shall be
required to pay in full the aggregate unpaid Original
Amount of all Series A Equipment Notes, and the accrued
but unpaid interest and other amounts due thereon and all
other Secured Obligations in respect of the Series A
Equipment Notes to the date of distribution and all other
Related Secured Obligations in respect of Related Series
A Equipment Notes then due, shall be distributed to the
Note Holders of Series A and Related Note Holders of the
Related Series A Equipment Notes, and in case the
aggregate amount so to be distributed shall be
insufficient to pay in full as aforesaid, then ratably,
without priority of one over the other, to each Note
Holder and Related Note Holder in the proportion that the
aggregate unpaid Original Amount of all Series A
Equipment Notes held by such holder plus the accrued but
unpaid interest and other amounts due hereunder or
thereunder to the date of distribution and all other
Related Secured Obligations then due in respect of the
Related Series A Equipment Notes held by such holder,
bears to the aggregate unpaid Original Amount of all
Series A Equipment Notes plus the accrued but unpaid
interest and other amounts due thereon to the date of
distribution and all other Related Secured Obligations in
respect of the Related Series A Equipment Notes then due;
	 
	 	(ii)	 	after giving effect to paragraph (i) above, so much of such payments or
amounts remaining as shall be required to pay in full the aggregate unpaid Original
Amount of all Series B Equipment Notes, and the accrued but unpaid interest and other
amounts due thereon and all other Secured Obligations in respect of the Series B
Equipment Notes to the date of distribution and all other Related Secured Obligations
in respect of Related Series B Equipment Notes then due, shall be distributed to the
Note Holders of Series B and Related Note Holders of the Related Series B Equipment
Notes, and in case the aggregate amount so to be distributed shall be insufficient to
pay in full as aforesaid, then ratably, without priority of one over the other, to
each Note Holder and Related Note Holder in the proportion that the aggregate unpaid
Original Amount of all Series B Equipment Notes held by such holder plus the accrued
but unpaid interest and other amounts due hereunder or thereunder to the date of
distribution and all other Related Secured Obligations then due in respect of the
Related Series B Equipment Notes held by such holder, bears to the aggregate unpaid
Original Amount of all Series B Equipment Notes plus the accrued but unpaid interest
and other amounts due thereon to the date of distribution and all other Related
Secured Obligations in respect of the Related Series B Equipment Notes then due;
	 
	 	(iii)	 	after giving effect to paragraph (ii) above, so much of such payments or
amounts remaining as shall be required to pay in full the aggregate unpaid Original
Amount of all Series C Equipment Notes, and the accrued but unpaid interest and other
amounts due thereon and all other Secured Obligations in respect of the Series C
Equipment Notes to the date of distribution and all other Related Secured Obligations
in respect of Related Series C Equipment Notes then due, shall be distributed to the
Note Holders of Series C and Related Note Holders of the Related Series C Equipment
Notes, and in case the aggregate amount so to be distributed shall be insufficient to
pay in full as aforesaid, then ratably, without




24









 






	 	 	 	priority of one over the other, to each Note Holder and Related Note Holder in the
proportion that the aggregate unpaid Original Amount of all Series C Equipment Notes
held by such holder plus the accrued but unpaid interest and other amounts due
hereunder or thereunder to the date of distribution and all other Related Secured
Obligations then due in respect of the Related Series C Equipment Notes held by such
holder, bears to the aggregate unpaid Original Amount of all Series C Equipment
Notes plus the accrued but unpaid interest and other amounts due thereon to the date
of distribution and all other Related Secured Obligations in respect of the Related
Series C Equipment Notes then due; and
	 
	 	(iv)	 	after giving effect to paragraph (iii) above, if any Related Equipment Note
is outstanding, any of such payments or amounts remaining and any invested Cash
Equivalents shall be held by the Indenture Trustee in an Eligible Account in
accordance with the provisions of Section 3.07 (and invested as provided in Section
6.06 hereof) as additional security for the Related Secured Obligations, and such
amounts (and any investment earnings thereon) shall be distributed from time to time
in accordance with the foregoing provisions of this clause “Third” as and to the
extent any Related Secured Obligation shall at any time and from time to time become
due and remain unpaid after the giving of any required notice and the expiration of
any applicable grace period; and, upon the payment in full of all Related Secured
Obligations the balance, if any, of any such remaining amounts and investment
earnings thereon shall be applied as provided in clause Fourth of this Section 3.03;
and
	 
	Fourth, 	 	 	the balance, if any, of such payments or amounts remaining thereafter shall be distributed to the Owner.





          No Make-Whole Amount shall be due and payable on the Equipment Notes as a consequence of the
acceleration of the Equipment Notes as a result of an Event of Default.




          SECTION 3.04. Certain Payments




               (a) Any payments received by the Indenture Trustee for which no provision as to the
application thereof is made in this Trust Indenture and for which such provision is made in any
other Operative Agreement shall be applied forthwith to the purpose for which such payment was made
in accordance with the terms of such other Operative Agreement, as the case may be.



               (b) Notwithstanding anything to the contrary contained in this Article III, the Indenture
Trustee will distribute promptly upon receipt any indemnity payment received by it from the Owner
in respect of the Indenture Trustee in its individual capacity, any Note Holder or any other
Indenture Indemnitee, in each case whether or not pursuant to Section 8 of the Participation
Agreement, directly to the Person entitled thereto. Any payment received by the Indenture Trustee
under the third paragraph of Section 2.02 shall be distributed to the Subordination Agent in its
capacity as Note Holder to be distributed in accordance with the terms of the Intercreditor
Agreement.



25









 





               (c) For the avoidance of doubt, no amount will be distributed pursuant to this Article III to
any holder of a note issued under a Related Indenture that is not a Related Note Holder (as such).



          SECTION 3.05. Other Payments




          Any payments received by the Indenture Trustee for which no provision as to the application
thereof is made elsewhere in this Trust Indenture or in any other Operative Agreement shall be
distributed by the Indenture Trustee to the extent received or realized at any time, in the order
of priority specified in Section 3.01 hereof, and after payment in full of all amounts then due in
accordance with Section 3.01 in the manner provided in clause “Fourth” of Section 3.03 hereof.




          SECTION 3.06. Cooperation




          Prior to making any distribution under this Article III, the Indenture Trustee shall consult
with the Related Indenture Trustees to determine amounts payable with respect to the Related
Secured Obligations. The Indenture Trustee shall cooperate with the Related Indenture Trustees and
shall provide such information as shall be reasonably requested by each Related Indenture Trustee
to enable such Related Indenture Trustee to determine amounts distributable under Article III of
its Related Indenture.




          SECTION 3.07. Securities Account




          In furtherance of the provisions of Section 3.03 of this Trust Indenture, WTC agrees to act as
an Eligible Institution under this Trust Indenture in accordance with the provisions of this Trust
Indenture (in such capacity, the “Securities Intermediary”). Except in its capacity as the
Indenture Trustee, WTC waives any claim or lien against any Eligible Account it may have, by
operation of law or otherwise, for any amount owed to it by the Owner. The Securities Intermediary
hereby agrees that, notwithstanding anything to the contrary in this Trust Indenture, (i) any
amounts to be held by the Indenture Trustee pursuant to paragraph (iv) of clause “Third” of Section
3.03 and any investment earnings thereon or other Cash Equivalents will be credited to an Eligible
Account (the “Securities Account”) for which it is a “securities intermediary” (as defined in
Section 8-102(a)(14) of the NY UCC) and the Indenture Trustee is the “entitlement holder” (as
defined in Section 8-102(a)(7) of the NY UCC) of the “securities entitlement” (as defined in
Section 8-102(a)(17) of the NY UCC) with respect to each “financial asset” (as defined in Section
8-102(a)(9) of the NY UCC) credited to such Eligible Account, (ii) all such amounts, Cash
Equivalents and all other property acquired with cash credited to the Securities Account will be
credited to the Securities Account, (iii) all items of property (whether cash, investment property,
Cash Equivalents, other investments, securities, instruments or other property) credited to the
Securities Account will be treated as a “financial asset” under Article 8 of the NY UCC, (iv) its
“securities intermediary’s jurisdiction” (as defined in Section 8-110(e) of the NY UCC) with
respect to the Securities Account is the State of New York, and (v) all securities, instruments and
other property in order or registered from and credited to the Securities Account shall be payable
to or to the order of, or registered in the name of, the Securities Intermediary or shall be
indorsed to the Securities Intermediary or in blank, and in no case whatsoever shall any financial
asset credited to the Securities Account be registered in the






26









 







name of the Owner, payable to or to the order of the Owner or specially indorsed to the Owner
except to the extent the foregoing have been specially endorsed by the Owner to the Securities
Intermediary or in blank. The Indenture Trustee agrees that it will hold (and will indicate
clearly in its books and records that it holds) its “securities entitlement” to the “financial
assets” credited to the Securities Account in trust for the benefit of the Note Holders and each of
the Indenture Indemnitees as set forth in this Trust Indenture. The Owner acknowledges that, by
reason of the Indenture Trustee being the “entitlement holder” in respect of the Securities Account
as provided above, the Indenture Trustee shall have the sole right and discretion, subject only to
the terms of this Trust Indenture, to give all “entitlement orders” (as defined in Section
8-102(a)(8) of the NY UCC) with respect to the Securities Account and any and all financial assets
and other property credited thereto to the exclusion of the Owner.




          SECTION 3.08. Payments to Owner.




          Any amount distributed hereunder by the Indenture Trustee to Owner shall be paid to Owner
(within the time limits contemplated by Section 2 03(a)) by wire transfer of funds of the type
received by the Indenture Trustee at such office and to such account or accounts of such entity or
entities as shall be designated by notice from the Owner to the Indenture Trustee from time to
time. The Owner hereby notifies the Indenture Trustee that unless and until the Indenture Trustee
receives notice to the contrary from the Owner, all amounts to be distributed to the Owner pursuant
to this Trust Indenture shall be distributed by wire transfer of funds of the type received by the
Indenture Trustee to the Owner’s account specified in Schedule 1 to the Participation Agreement.




ARTICLE IV




COVENANTS OF THE OWNER



          SECTION 4.01. Liens




          The Owner will not directly or indirectly create, incur, assume or suffer to exist any Lien on
or with respect to the Airframe or any Engine, title to any of the foregoing or any interest of the
Owner therein, except Permitted Liens. The Owner shall promptly, at its own expense, take such
action as may be necessary to duly discharge (by bonding or otherwise) any Lien other than a
Permitted Lien arising at any time.




          SECTION 4.02. Possession, Operation and Use, Maintenance, Registration and Markings




               (a) General. Except as otherwise expressly provided herein, the Owner shall be
entitled to operate, use, locate, employ or otherwise utilize or not utilize the Airframe, any
Engine or any Parts in any lawful manner or place in accordance with the Owner’s business judgment.



27









 





               (b) Possession. The Owner, without the prior consent of the Indenture Trustee, shall
not lease or otherwise in any manner deliver, transfer or relinquish possession of the Aircraft,
the Airframe or any Engine or install any Engine, or permit any Engine to be installed, on any
airframe other than the Airframe; except that the Owner may, without such prior written consent of
the Indenture Trustee:



                    (i) Subject or permit any Permitted Lessee to subject (i) the Airframe to normal interchange
agreements or (ii) any Engine to normal interchange, pooling, borrowing or similar arrangements, in
each case customary in the commercial airline industry and entered into by the Owner or such
Permitted Lessee, as the case may be, in the ordinary course of business; provided,
however, that if the Owner’s title to any such Engine is divested under any such agreement
or arrangement, then such Engine shall be deemed to have suffered an Event of Loss as of the date
of such divestiture, and the Owner shall comply with Section 4.04(e) in respect thereof;



                    (ii) Deliver or permit any Permitted Lessee to deliver possession of the Aircraft, Airframe,
any Engine or any Part (x) to the manufacturer thereof or to any third-party maintenance provider
for testing, service, repair, maintenance or overhaul work on the Aircraft, Airframe, any Engine or
any Part, or, to the extent required or permitted by Section 4.04, for alterations or modifications
in or additions to the Aircraft, Airframe or any Engine or (y) to any Person for the purpose of
transport to a Person referred to in the preceding clause (x);



                    (iii) Install or permit any Permitted Lessee to install an Engine on an airframe owned by the
Owner or such Permitted Lessee, as the case may be, free and clear of all Liens, except (x)
Permitted Liens and those that do not apply to the Engines, and (y) the rights of third parties
under normal interchange or pooling agreements and arrangements of the type that would be permitted
under Section 4.02(b)(i);



                    (iv) Install or permit any Permitted Lessee to install an Engine on an airframe leased to the
Owner or such Permitted Lessee, or purchased by the Owner or such Permitted Lessee subject to a
mortgage, security agreement, conditional sale or other secured financing arrangement, but only if
(x) such airframe is free and clear of all Liens, except (A) the rights of the parties to such
lease, or any such secured financing arrangement, covering such airframe and (B) Liens of the type
permitted by clause (iii) above and (y) the Owner or Permitted Lessee, as the case may be, shall
have received from the lessor, mortgagee, secured party or conditional seller, in respect of such
airframe, a written agreement (which may be a copy of the lease, mortgage, security agreement,
conditional sale or other agreement covering such airframe), whereby such Person agrees that it
will not acquire or claim any right, title or interest in, or Lien on, such Engine by reason of
such Engine being installed on such airframe at any time while such Engine is subject to the Lien
of this Trust Indenture;



                    (v) Install or permit any Permitted Lessee to install an Engine on an airframe owned by the
Owner or such Permitted Lessee, leased to the Owner or such Permitted Lessee, or purchased by the
Owner or such Permitted Lessee subject to a conditional sale or other security agreement under
circumstances where neither clause (iii) or (iv) above is applicable; provided,
however, that any such installation shall be deemed an Event of Loss with



28









 




respect to such Engine, and the Owner shall comply with Section 4.04(e) hereof in respect
thereof;




                    (vi) Transfer or permit any Permitted Lessee to transfer possession of the Aircraft, Airframe
or any Engine to the U.S. Government, in which event the Owner shall promptly notify the Indenture
Trustee in writing of any such transfer of possession and, in the case of any transfer pursuant to
CRAF, in such notification shall identify by name, address and telephone numbers the Contracting
Office Representative or Representatives for the Military Airlift Command of the United States Air
Force to whom notices must be given and to whom requests or claims must be made to the extent
applicable under CRAF;



                    (vii) To the extent permitted by Section 4.04(c) hereof, subject any appliances, Parts or
other equipment owned by the Owner and removed from the Airframe, or any Engine, to any pooling
arrangement referred to in Section 4.04(c) hereof;



                    (viii) Enter into a charter or Wet Lease or other similar arrangement with respect to the
Aircraft or any other aircraft on which any Engine may be installed (which shall not be considered
a transfer of possession hereunder); provided that the Owner’s obligations
hereunder shall continue in full force and effect notwithstanding any such charter or Wet Lease or
other similar arrangement;



                    (ix) So long as no Event of Default shall have occurred and be continuing, subject to the
provisions of the immediately following paragraph, enter into a lease with respect to the Aircraft,
Airframe or any Engine to any Permitted Air Carrier that is not then subject to any bankruptcy,
insolvency, liquidation, reorganization, dissolution or similar proceeding and shall not have
substantially all of its property in the possession of any liquidator, trustee, receiver or similar
person; provided that, in the case only of a lease to a Permitted Foreign Air
Carrier, (A) the United States maintains diplomatic relations with the country of domicile of such
Permitted Foreign Air Carrier (or, in the case of Taiwan, diplomatic relations at least as good as
those in effect on the Closing Date) and (B) the Owner shall have furnished the Indenture Trustee
with a favorable opinion of counsel, reasonably satisfactory to the Indenture Trustee, in the
country of domicile of such Permitted Foreign Air Carrier, that (v) the terms of such lease are the
legal, valid and binding obligations of the parties thereto enforceable under the laws of such
jurisdiction, (w) it is not necessary for the Indenture Trustee to register or qualify to do
business in such jurisdiction, if not already so registered or qualified, as a result, in whole or
in part, of the proposed lease, (x) the Indenture Trustee’s Lien in respect of, the Aircraft,
Airframe and Engines will be recognized in such jurisdiction, (y) the Laws of such jurisdiction of
domicile require fair compensation by the government of such jurisdiction, payable in a currency
freely convertible into Dollars, for the loss of title to the Aircraft, Airframe or Engines in the
event of the requisition by such government of such title (unless the Owner shall provide insurance
in the amounts required with respect to hull insurance under this Trust Indenture covering the
requisition of title to the Aircraft, Airframe or Engines by the government of such jurisdiction so
long as the Aircraft, Airframe or Engines are subject to such lease) and (z) the agreement of such
Permitted Air Carrier that its rights under the lease are subject and subordinate to all the terms
of this Trust Indenture is enforceable against such Permitted Air Carrier under applicable law;



29









 




provided that (1) the rights of any transferee or Permitted Lessee who receives possession
by reason of a transfer permitted by any of clauses (i) through (ix) of this Section 4.02(b) (other
than by a transfer of an Engine which is deemed an Event of Loss) shall be subject and subordinate
to all the terms of this Trust Indenture, (2) the Owner shall remain primarily liable for the
performance of all of the terms of this Trust Indenture and all the terms and conditions of this
Trust Indenture and the other Operative Agreements shall remain in effect and (3) no lease or
transfer of possession otherwise in compliance with this Section 4.02(b) shall (x) result in any
registration or re-registration of an Aircraft, except to the extent permitted by Section 4.02(e)
or the maintenance, operation or use thereof except in compliance with Sections 4.02(c) and 4.02(d)
or (y) permit any action not permitted to the Owner hereunder.




          In the case of any lease permitted under this Section 4.02(b), the Owner will comply with the
notice requirement of Section 6.1.5 of the Participation Agreement and will include in such lease
appropriate provisions which (t) make such lease expressly subject and subordinate to all of the
terms of this Trust Indenture, including the rights of the Indenture Trustee to avoid such lease in
the exercise of its rights to repossession of the Airframe and Engines hereunder; (u) require the
Permitted Lessee to comply with the terms of Section 4.06; and (v) require that the Airframe or any
Engine subject thereto be used in accordance with the limitations applicable to the Owner’s
possession and use provided in this Trust Indenture. No lease permitted under this Section 4.02(b)
shall be entered into unless (w) the Owner shall provide written notice to the Indenture Trustee
(such notice in the event of a lease to a U.S. Air Carrier to be given promptly after entering into
any such lease or, in the case of a lease to any other Permitted Air Carrier, 10 days in advance of
entering into such lease); (x) the Owner shall furnish to the Indenture Trustee evidence reasonably
satisfactory to the Indenture Trustee that the insurance required by Section 4.06 remains in
effect; (y) all necessary documents shall have been duly filed, registered or recorded in such
public offices as may be required fully to preserve the first priority security interest and
International Interest (subject to Permitted Liens) of the Indenture Trustee in the Aircraft,
Airframe and Engines; and (z) the Owner shall reimburse the Indenture Trustee for all of its
reasonable out-of-pocket fees and expenses, including, without limitation, reasonable fees and
disbursements of counsel, incurred by the Indenture Trustee in connection with any such lease.
Except as otherwise provided herein and without in any way relieving the Owner from its primary
obligation for the performance of its obligations under this Trust Indenture, the Owner may in its
sole discretion permit a lessee to exercise any or all rights which the Owner would be entitled to
exercise under Sections 4.02 and 4.04, and may cause a lessee to perform any or all of the Owner’s
obligations under Article IV, and the Indenture Trustee agrees to accept actual and full
performance thereof by a lessee in lieu of performance by the Owner.




          Any Wet Lease or similar arrangement under which the Owner maintains operational control of
the Aircraft shall not constitute a deliver, transfer or relinquishment of possession of the
Aircraft for purposes of this Section.




          The Indenture Trustee hereby agrees, and each Note Holder and Related Note Holder by
acceptance of an Equipment Note and a Related Equipment Note, respectively, agrees, for the benefit
of each lessor, conditional seller, indenture trustee or secured party of any engine leased to, or
purchased by, the Owner or any Permitted Lessee subject to a lease, conditional sale, trust
indenture or other security agreement that the Indenture Trustee, each Note Holder and






30









 







Related Note Holder and their respective successors and assigns will not acquire or claim, as
against such lessor, conditional seller, indenture trustee or secured party, any right, title or
interest in any engine as the result of such engine being installed on the Airframe at any time
while such engine is subject to such lease, conditional sale, trust indenture or other security
agreement and owned by such lessor or conditional seller or subject to a trust indenture or
security interest in favor of such indenture trustee or secured party.




               (c) Operation and Use. So long as the Aircraft, Airframe or any Engine is subject to
the Lien of this Trust Indenture, the Owner shall not operate, use or locate the Aircraft, Airframe
or any Engine, or allow the Aircraft, Airframe or any Engine to be operated, used or located, (i)
in any area excluded from coverage by any insurance required by the terms of Section 4.06, except
in the case of a requisition by the U.S. Government where the Owner obtains indemnity in lieu of
such insurance from the U.S. Government, or insurance from the U.S. Government, against
substantially the same risks and for at least the amounts of the insurance required by Section 4.06
covering such area, or (ii) in any recognized area of hostilities unless covered in accordance with
Section 4.06 by war risk insurance, or in either case unless the Aircraft, the Airframe or any
Engine is only temporarily operated, used or located in such area as a result of an emergency,
equipment malfunction, navigational error, hijacking, weather condition, medical emergency or other
circumstances beyond the reasonable control of the Owner (or any Permitted Lessee), so long as the
Owner (or any Permitted Lessee) diligently and in good faith proceeds to remove the Aircraft from
such area. The Owner shall also have the right to operate the Aircraft without having on board the
original registration certificate or airworthiness certificate in the event that either or both
such certificates disappear from the Aircraft, but only to the extent permitted by Exemption No.
5318 of the FAA Regulations or other similar exemption. So long as the Aircraft, the Airframe or
any Engine is subject to the Lien of this Trust Indenture, the Owner shall not permit such
Aircraft, Airframe or any Engine, as the case may be, to be used, operated, maintained, serviced,
repaired or overhauled (x) in violation of any Law of any Government Entity having jurisdiction
over the Aircraft that is binding on or applicable to such Aircraft, Airframe or Engine or (y) in
violation of any airworthiness certificate, license or registration of any Government Entity
relating to the Aircraft, the Airframe or any Engine, except (i) immaterial or non-recurring
violations with respect to which corrective measures are taken promptly by the Owner or Permitted
Lessee, as the case may be, upon discovery thereof, or (ii) to the extent the validity or
application of any such Law or requirement relating to any such certificate, license or
registration is being contested in good faith by the Owner or Permitted Lessee in any reasonable
manner which does not involve any material risk of the sale, forfeiture or loss of the Aircraft,
Airframe or any Engine, any material risk of criminal liability or material civil penalty against
the Indenture Trustee or impair the Indenture Trustee’s security interest or International Interest
in the Aircraft, Airframe or any Engine. Owner shall not be in default under or required to take
any action set forth in the preceding sentence if it is not possible for Owner to comply with the
laws of a jurisdiction other than the United States (or other jurisdiction in which the Aircraft is
registered) because of a conflict with the Laws of the United States (or other jurisdiction in
which the Aircraft is registered).



               (d) Maintenance and Repair. So long as the Aircraft, Airframe or any Engine is
subject to the Lien of this Trust Indenture, the Owner shall cause the Aircraft, Airframe and each
Engine to be maintained, serviced, repaired and overhauled in accordance with (i)



31









 




maintenance standards required by or substantially equivalent to those required by the Owner’s
FAA approved maintenance program or while registered in another jurisdiction, under the applicable
maintenance standards required by the Aviation Authority in such jurisdiction (provided,
that in any case, if operated under the maintenance program of an Aviation Authority other the FAA,
the Aircraft, Airframe and each Engine shall be maintained according to standards substantially
equivalent to those required by the Aviation Authority of any of Australia, Austria, Belgium,
Canada, Denmark, Finland, France, Germany, Ireland, Italy, Japan, the Netherlands, New Zealand,
Norway, Spain, Sweden, Switzerland or the United Kingdom) so as to (A) keep the Aircraft, the
Airframe and each Engine in as good operating condition as on the Closing Date, ordinary wear and
tear excepted, (B) keep the Aircraft in such operating condition as may be necessary to enable the
applicable airworthiness certification of such Aircraft to be maintained under the regulations of
the FAA or other Aviation Authority then having jurisdiction over the operation of the Aircraft,
except (w) during temporary periods of storage in accordance with applicable regulations, (x)
maintenance, testing and modification permitted hereunder, (y) during periods when the FAA or such
other Aviation Authority has revoked or suspended the airworthiness certificates for Similar
Aircraft or (z) with respect to minor or nonrecurring violations with respect to which corrective
measures are taken upon discovery thereof and except to the extent the Owner or Permitted Lessee is
promptly contesting in good faith the validity or application of any such Law or requirement
relating to any such certificate, license or registration in any reasonable manner which does not
create a material risk of sale, loss or forfeiture of the Aircraft, the Airframe or any Engine or
the interest of the Indenture Trustee therein or any material risk of criminal liability or
material civil penalty against the Indenture Trustee; and (ii) except during periods when a
Permitted Lease is in effect, the same standards as the Owner uses with respect to similar aircraft
of similar size in its fleet operated by the Owner in similar circumstances and, during any period
in which a Permitted Lease is in effect, the same standards used by the Permitted Lessee with
respect to similar aircraft of similar size in its fleet and operated by the Permitted Lessee in
similar circumstances (it being understood that this clause (ii) shall not limit the Owner’s
obligations under the preceding clause (i)). The Owner further agrees that the Aircraft, Airframe
and Engines will be maintained, used, serviced, repaired, overhauled or inspected in compliance
with each applicable airworthiness certificate, license and registration relating to the Aircraft,
Airframe or any Engine issued by the FAA (or other applicable Aviation Authority). The Owner shall
maintain or cause to be maintained the Aircraft Documents in the English language.




               (e) Registration. The Owner on or prior to the date of the Closing shall cause the
Aircraft to be duly registered in its name under the Act and except as otherwise permitted by this
Section 4.02(e) at all times thereafter shall cause the Aircraft to remain so registered. So long
as no Special Default or Event of Default shall have occurred and be continuing, the Owner may, by
written notice to the Indenture Trustee, request to change the country of registration of the
Aircraft. Any such change in registration shall be effected only in compliance with, and subject
to all of the conditions set forth in, Section 6.4.5 of the Participation Agreement. Unless the
Trust Indenture has been discharged, the Owner shall also cause the Trust Indenture to be duly
recorded and at all times maintained of record as a first-priority perfected mortgage (subject to
Permitted Liens) on the Aircraft, the Airframe and each of the Engines (except to the extent such
perfection or priority cannot be maintained solely as a result of the failure by the Indenture
Trustee to execute and deliver any necessary documents). Unless the Lien of this Indenture has
been discharged, the Owner shall cause the International



32









 




Interest granted under this Indenture in favor of the Indenture Trustee in each Airframe and
Engine to be registered on the International Registry as an International Interest on such Airframe
and Engine, subject to the Indenture Trustee providing its consent to the International Registry
with respect thereto[, and shall cause the sale to the Owner of the Airframe and each Engine at the
Closing to be registered on the International Registry]9.




               (f) Markings. If permitted by applicable Law, on or reasonably promptly after the
Closing Date, the Owner will cause to be affixed to, and maintained in, the cockpit of the Airframe
and on each Engine, in each case, in a clearly visible location, a placard of a reasonable size and
shape bearing the legend: “Subject to a security interest in favor of Wilmington Trust Company,
not in its individual capacity but solely as Indenture Trustee.” Such placards may be removed
temporarily, if necessary, in the course of maintenance of the Airframe or Engines. If any such
placard is damaged or becomes illegible, the Owner shall promptly replace it with a placard
complying with the requirements of this Section.



          SECTION 4.03. Inspection




               (a) At all reasonable times upon at least 15 Business Days prior written notice to Owner, so
long as the Aircraft is subject to the Lien of this Trust Indenture, the Indenture Trustee and its
authorized representatives (the “Inspecting Parties”) may (not more than once every twelve (12)
months unless an Event of Default has occurred and is continuing then such inspection right shall
not be so limited) inspect the Aircraft, Airframe and Engines (including without limitation, the
Aircraft Documents) and any such Inspecting Party may make copies of such Aircraft Documents not
reasonably deemed confidential by the Owner or such Permitted Lessee.



               (b) Any inspection of the Aircraft hereunder shall be limited to a visual, walk-around
inspection and shall not include the opening of any panels, bays or the like or other components of
the Aircraft, and no such inspection shall interfere with the Owner’s or any Permitted Lessee’s
maintenance and operation of the Aircraft, Airframe and Engines. Any inspection shall be subject
to the Owner’s safety and security rules applicable to the location of the Aircraft.



               (c) With respect to such rights of inspection, the Indenture Trustee shall not have any duty
or liability to make, or any duty or liability by reason of not making, any such visit, inspection
or survey.



               (d) Each Inspecting Party shall bear its own expenses in connection with any such inspection
(including the cost of any copies made in accordance with Section 4.03(a)).





 




			
	9.	 	Insert for New Aircraft.





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          SECTION 4.04. Replacement and Pooling of Parts, Alterations, Modifications and Additions;
Substitution of Engines




               (a) Replacement of Parts. Except as otherwise provided herein, so long as the
Airframe or Engine is subject to the Lien of this Trust Indenture, the Owner, at its own cost and
expense, will, or will cause a Permitted Lessee to, at its own cost and expense, promptly replace
(or cause to be replaced) all Parts which may from time to time be incorporated or installed in or
attached to the Aircraft, Airframe or any Engine and which may from time to time become worn out,
lost, stolen, destroyed, seized, confiscated, damaged beyond repair or permanently rendered unfit
for use for any reason whatsoever, except as otherwise provided in paragraph (d) of this Section
4.04 or if the Airframe or Engine to which a Part relates has suffered an Event of Loss. In
addition, the Owner may, at its own cost and expense, or may permit a Permitted Lessee at its own
cost and expense to, remove (or cause to be removed) in the ordinary course of maintenance,
service, repair, overhaul or testing any Parts, whether or not worn out, lost, stolen, destroyed,
seized, confiscated, damaged beyond repair or permanently rendered unfit for use; provided,
however, that the Owner, except as otherwise provided herein, at its own cost and expense,
will, or will cause a Permitted Lessee at its own cost and expense to, replace such Parts as
promptly as practicable. All replacement parts shall be free and clear of all Liens, except for
Permitted Liens and pooling arrangements to the extent permitted by Section 4.04(c) below (and
except in the case of replacement property temporarily installed on an emergency basis) and shall
be in good operating condition and have a value and utility not less than the value and utility of
the Parts replaced (assuming such replaced Parts were in the condition required hereunder).



               (b) Parts. Except as otherwise provided herein, any Part at any time removed from the
Airframe or any Engine shall remain subject to the Lien of this Trust Indenture, no matter where
located, until such time as such Part shall be replaced by a part that has been incorporated or
installed in or attached to such Airframe or any Engine and that meets the requirements for
replacement parts specified above. Immediately upon any replacement part becoming incorporated or
installed in or attached to such Airframe or any Engine as provided in Section 4.04(a), without
further act, (i) the replaced Part shall thereupon be free and clear of all rights of the Indenture
Trustee and shall no longer be deemed a Part hereunder, and (ii) such replacement part shall become
a Part subject to this Trust Indenture and be deemed part of such Airframe or any Engine, as the
case may be, for all purposes hereof to the same extent as the Parts originally incorporated or
installed in or attached to such Airframe or any Engine. Upon request of Owner, the Indenture
Trustee shall, at Owner’s expense, execute and deliver to Owner such documents as may be reasonably
required to evidence the release of any replaced Part from the Lien of the Indenture.



               (c) Pooling of Parts. Any Part removed from the Aircraft, Airframe or an Engine may
be subjected by the Owner or a Permitted Lessee to a normal pooling arrangement customary in the
airline industry and entered into in the ordinary course of business of the Owner or Permitted
Lessee, provided that the part replacing such removed Part shall be incorporated or installed in or
attached to such Airframe or any Engine in accordance with Sections 4.04(a) and 4.04(b) as promptly
as practicable after the removal of such removed Part. In addition, any replacement part when
incorporated or installed in or attached to the Airframe or any Engine may be owned by any third
party, subject to a normal pooling arrangement, so long



34









 




as the Owner or a Permitted Lessee, at its own cost and expense, as promptly thereafter as
reasonably possible, either (i) causes such replacement part to become subject to the Lien of this
Trust Indenture, free and clear of all Liens except Permitted Liens, at which time such replacement
part shall become a Part or (ii) replaces (or causes to be replaced) such replacement part by
incorporating or installing in or attaching to the Aircraft, Airframe or any Engine a further
replacement part owned by the Owner free and clear of all Liens except Permitted Liens and which
shall become subject to the Lien of this Trust Indenture in accordance with Section 4.04(b).




               (d) Alterations, Modifications and Additions. The Owner shall, or shall cause a
Permitted Lessee to, make (or cause to be made) alterations and modifications in and additions to
the Aircraft, Airframe and each Engine as may be required to be made from time to time to meet the
applicable standards of the FAA or other Aviation Authority having jurisdiction over the operation
of the Aircraft, to the extent made mandatory in respect of the Aircraft (a “Mandatory
Modification”); except for (i) immaterial and non-recurring violations with respect to which
corrective measures are being taken promptly by Owner or a Permitted Lessee and (ii) any law, rule,
regulation or order the validity or application of which is being contested in good faith by the
Owner or any Permitted Lessee in any reasonable manner which does not materially adversely affect
the Indenture Trustee’s interest in the Aircraft, does not impair the Indenture Trustee’s security
interest or International Interest in the Aircraft and does not involve any material risk of sale,
forfeiture or loss of the Aircraft or the interest of the Indenture Trustee therein or any material
risk of material civil penalty or any material risk of criminal liability being imposed on the
Indenture Trustee or the holder of any Equipment Note. In addition, the Owner, at its own expense,
may, or may permit a Permitted Lessee at its own cost and expense to, from time to time make or
cause to be made such alterations and modifications in and additions to the Airframe or any Engine
(each an “Optional Modification”) as the Owner or such Permitted Lessee may deem desirable in the
proper conduct of its business including, without limitation, removal of Parts which the Owner
deems are obsolete or no longer suitable or appropriate for use in the Aircraft, Airframe or such
Engine; provided, however, that no such Optional Modification shall (i) materially
diminish the fair market value, utility, or useful life of the Aircraft or any Engine below its
fair market value, utility or useful life immediately prior to such Optional Modification (assuming
the Aircraft or such Engine was in the condition required by this Trust Indenture immediately prior
to such Optional Modification) or (ii) cause the Aircraft to cease to have the applicable standard
certificate of airworthiness except that such certificate of airworthiness temporarily may be
replaced by an experimental certificate during the process of implementing and testing such
Optional Modification and securing related FAA re-certification of the Aircraft. For the avoidance
of doubt, Owner may make alterations in the passenger configuration of the Aircraft and such
alterations shall not constitute an Optional Modification. All Parts incorporated or installed in
or attached to any Airframe or any Engine as the result of any alteration, modification or addition
effected by the Owner shall be free and clear of any Liens except Permitted Liens and become
subject to the Lien of this Trust Indenture; provided that the Owner or any Permitted
Lessee may, at any time so long as the Airframe or any Engine is subject to the Lien of this Trust
Indenture, remove any such Part (such Part being referred to herein as a “Removable Part”)
from such Airframe or an Engine if (i) such Part is in addition to, and not in replacement of or in
substitution for, any Part originally incorporated or installed in or attached to such Airframe or
any Engine at the time of delivery thereof hereunder or any Part in replacement of, or in
substitution for, any such original



35









 




Part, (ii) such Part is not required to be incorporated or installed in or attached or added
to such Airframe or any Engine pursuant to the terms of Section 4.02(d) or the first sentence of
this Section 4.04(d) and (iii) such Part can be removed from such Airframe or any Engine without
materially diminishing the fair market value, utility or remaining useful life which such Airframe
or any Engine would have had at the time of removal had such removal not been effected by the
Owner, assuming the Aircraft was otherwise maintained in the condition required by this Trust
Indenture and such Removable Part had not been incorporated or installed in or attached to the
Aircraft, Airframe or such Engine. Upon the removal by the Owner of any such Part as above
provided in this Section 4.04(d), title thereto shall, without further act, be free and clear of
all rights of the Indenture Trustee and such Part shall no longer be deemed a Part hereunder.
Removable Parts may be leased from or financed by third parties other than the Indenture Trustee.
Notwithstanding any other provision of this Indenture, Owner may, at any time, install or permit to
be installed in the Aircraft Passenger Convenience Equipment owned by Owner or any Permitted Lessee
or by third parties and leased or otherwise furnished to Owner in the ordinary course of business
(including pursuant to a conditional sale contract, a licence or otherwise), and Owner may remove
(and not replace) or permit to be removed (and not replaced) the same, and Indenture Trustee shall
not acquire a Lien thereon by virtue of such installation or otherwise, and the rights of the
owners therein shall not constitute a default under this Trust Indenture, it being acknowledged and
agreed, however, that in no event shall the installation of any such Passenger Convenience
Equipment impair or otherwise affect the rights and remedies of the Indenture Trustee hereunder and
under applicable law.




               (e) Substitution of Engines. Upon the occurrence of an Event of Loss with respect to
an Engine under circumstances in which an Event of Loss with respect to the Airframe has not
occurred, the Owner shall promptly (and in any event within fifteen (15) days after such
occurrence) give the Indenture Trustee written notice of such Event of Loss. The Owner shall have
the right at its option at any time, on at least five (5) Business Days’ prior notice to the
Indenture Trustee, to substitute, and if an Event of Loss shall have occurred with respect to an
Engine under circumstances in which an Event of Loss with respect to the Airframe has not occurred,
shall within one hundred and twenty (120) days of the occurrence of such Event of Loss substitute,
a Replacement Engine for any Engine. In such event, immediately upon the effectiveness of such
substitution and without further act, (i) the replaced Engine shall thereupon be free and clear of
all rights of the Indenture Trustee and the Lien of this Trust Indenture and shall no longer be
deemed an Engine hereunder and (ii) such Replacement Engine shall become subject to this Trust
Indenture and be deemed part of the Aircraft for all purposes hereof to the same extent as the
replaced Engine. Such Replacement Engine shall be an engine manufactured by Engine Manufacturer
that is the same model as the Engine to be replaced thereby, or an improved model, and that is
suitable for installation and use on the Airframe, and that has a value, utility and remaining
useful life (without regard to hours and cycles remaining until overhaul) at least equal to the
Engine to be replaced thereby (assuming that such Engine had been maintained in accordance with
this Trust Indenture). The Owner’s right to make a replacement hereunder shall be subject to the
fulfillment (which may be simultaneous with such replacement) of the following conditions precedent
at the Owner’s sole cost and expense, and the Indenture Trustee agrees to cooperate with the Owner
to the extent necessary to enable it to timely satisfy such conditions:



36









 





                    (i) an executed counterpart of each of the following documents shall be delivered to the
Indenture Trustee:




     (A) a Trust Indenture Supplement covering the Replacement Engine, which shall
have been duly filed for recordation pursuant to the Act or such other applicable
law of the jurisdiction other than the United States in which the Aircraft of which
such Engine is a part is registered in accordance with Section 4.02(e), as the case
may be;




     (B) a full warranty bill of sale (as to title), covering the Replacement
Engine, executed by the former owner thereof in favor of the Owner (or, at the
Owner’s option, other evidence of the Owner’s ownership of such Replacement Engine,
reasonably satisfactory to the Indenture Trustee); and




     (C) UCC financing statements covering the security interests created by this
Trust Indenture (or any similar statements or other documents required to be filed
or delivered pursuant to the laws of the jurisdiction in which such Aircraft may be
registered) as are deemed necessary or desirable by counsel for the Indenture
Trustee to protect the security interests of the Indenture Trustee in the
Replacement Engine;



                    (ii) the Owner shall cause to be delivered to the Indenture Trustee an opinion of counsel to
the effect that the Lien of this Trust Indenture continues to be in full force and effect with
respect to the Replacement Engine and such evidence of compliance with the insurance provisions of
Section 4.06 with respect to such Replacement Engine as the Indenture Trustee shall reasonably
request;



                    (iii) promptly after the filing of the Trust Indenture Supplement, the Owner shall have caused
to be furnished to the Indenture Trustee an opinion of the Owner’s aviation law counsel reasonably
satisfactory to the Indenture Trustee addressed to the Indenture Trustee as to the due filing for
recordation of the Trust Indenture Supplement with respect to such Replacement Engine under the Act
or such other applicable law of the jurisdiction other than the United States in which the Aircraft
is registered in accordance with Section 4.02(e), as the case may be, and the registration (which
the Owner shall have caused to be effected) with the International Registry of the sale to the
Owner of such Replacement Engine (if occurring after February 28, 2006) and the International
Interest granted under such Trust Indenture Supplement with respect to such Replacement Engine; and



                    (iv) the Owner shall have furnished to the Indenture Trustee a certificate of a qualified
aircraft engineer (who may be an employee of the Owner) or an independent appraiser certifying that
such Replacement Engine has a value and utility and remaining useful life (without regard to hours
and cycles remaining until overhaul) at least equal to the Engine so replaced (assuming that such
Engine had been maintained in accordance with this Trust Indenture).


Upon satisfaction of all conditions to such substitution, (x) the Indenture Trustee shall execute
and deliver to the Owner such documents and instruments, prepared at the Owner’s expense, as






37









 







the Owner shall reasonably request to evidence the release of such replaced Engine from the Lien of
this Trust Indenture, (y) the Indenture Trustee shall assign to the Owner all claims it may have
against any other Person relating to any Event of Loss giving rise to such substitution and (z) the
Owner shall receive all insurance proceeds (other than those reserved to others under Section
4.06(b)) and proceeds in respect of any Event of Loss giving rise to such replacement to the extent
not previously applied to the purchase price of the Replacement Engine as provided in Section
4.05(d).




          SECTION 4.05. Loss, Destruction or Requisition




               (a) Event of Loss With Respect to the Airframe. Upon the occurrence of an Event of
Loss with respect to the Airframe, the Owner shall promptly (and in any event within fifteen (15)
days after such occurrence) give the Indenture Trustee written notice of such Event of Loss. The
Owner shall, within forty-five (45) days after such occurrence, give the Indenture Trustee written
notice of the Owner’s election to either replace the Airframe as provided under Section 4.05(a)(i)
or to make payment in respect of such Event of Loss as provided under Section 4.05(a)(ii) (it being
agreed that if the Owner shall not have given the Indenture Trustee such notice of such election
within the above specified time period, the Owner shall be deemed to have elected to make payment
in respect of such Event of Loss as provided under Section 4.05(a)(ii)):



                    (i) if the Owner elects to replace the Airframe, the Owner shall, subject to the satisfaction
of the conditions contained in Section 4.05(c), as promptly as possible and in any event within one
hundred and twenty (120) days after the occurrence of such Event of Loss, cause to be subjected to
the Lien of this Trust Indenture, in replacement of the Airframe with respect to which the Event of
Loss occurred, a Replacement Airframe and, if any Engine shall have been installed on the Airframe
when it suffered the Event of Loss, a Replacement Engine therefor, such Replacement Airframe and
Replacement Engines to be free and clear of all Liens except Permitted Liens and to have a value,
utility and remaining useful life (without regard to hours or cycles remaining until the next
regular maintenance check) at least equal to the Airframe or Engine, as the case may be, to be
replaced thereby (assuming that such Airframe or Engine had been maintained in accordance with this
Trust Indenture); provided that if the Owner shall not perform its obligation to
effect such replacement under this clause (i) during the 120-day period of time provided herein, it
shall pay the amounts required to be paid pursuant to and within the time frame specified in clause
(ii) below; or



                    (ii) if the Owner elects to make a payment in respect of such Event of Loss of the Airframe,
the Owner shall make a payment to the Indenture Trustee for purposes of redeeming Equipment Notes
in accordance with Section 2.09 hereof on a date on or before the Business Day next following the
earlier of (x) the one hundred and twentieth (120)th day following the date of the occurrence of
such Event of Loss, and (y) the fourth (4th) Business Day following the receipt of
insurance proceeds with respect to such Event of Loss (but in any event not earlier than the date
of the Owner’s election under Section 4.05(a) to make payment under this Section 4.05 (a)(ii)); and
upon such payment and payment of all other Secured Obligations then due and payable, the Indenture
Trustee shall, at the cost and expense of the Owner, release from the Lien of this Trust Indenture
the Airframe and the Engines, by executing



38









 




and delivering to the Owner all documents and instruments as the Owner may reasonably request
to evidence such release.




               (b) Effect of Replacement. Should the Owner have provided a Replacement Airframe and
Replacement Engines, if any, as provided for in Section 4.05(a)(i), (i) the Lien of this Trust
Indenture shall continue with respect to such Replacement Airframe and Replacement Engines, if any,
as though no Event of Loss had occurred; (ii) the Indenture Trustee shall, at the cost and expense
of the Owner, release from the Lien of this Trust Indenture the replaced Airframe and Engines, if
any, by executing and delivering to the Owner such documents and instruments as the Owner may
reasonably request to evidence such release; and (iii) in the case of a replacement upon an Event
of Loss, the Indenture Trustee shall assign to the Owner all claims the Indenture Trustee may have
against any other Person arising from the Event of Loss and the Owner shall receive all insurance
proceeds (other than those reserved to others under Section 4.06(b)) and proceeds from any award in
respect of condemnation, confiscation, seizure or requisition, including any investment interest
thereon, to the extent not previously applied to the purchase price of the Replacement Airframe and
Replacement Engines, if any, as provided in Section 4.05(d).



               (c) Conditions to Airframe and Engine Replacement. The Owner’s right to substitute a
Replacement Airframe and Replacement Engines, if any, as provided in Section 4.05(a)(i) shall be
subject to the fulfillment, at the Owner’s sole cost and expense, in addition to the conditions
contained in such Section 4.05(a)(i), of the following conditions precedent:



                    (i) on the date when the Replacement Airframe and Replacement Engines, if any, is subjected to
the Lien of this Trust Indenture (such date being referred to in this Section 4.05 as the
“Replacement Closing Date”), an executed counterpart of each of the following documents (or, in the
case of the FAA Bill of Sale and full warranty bill of sale referred to below, a photocopy thereof)
shall have been delivered to the Indenture Trustee:




     (A) a Trust Indenture Supplement covering the Replacement Airframe and
Replacement Engines, if any, which shall have been duly filed for recordation
pursuant to the Act or such other applicable law of such jurisdiction other than the
United States in which the Replacement Airframe and Replacement Engines, if any, are
to be registered in accordance with Section 4.02(e), as the case may be;




     (B) an FAA Bill of Sale (or a comparable document, if any, of another Aviation
Authority, if applicable) covering the Replacement Airframe and Replacement Engines,
if any, executed by the former owner thereof in favor of the Owner;




     (C) a full warranty (as to title) bill of sale, covering the Replacement
Airframe and Replacement Engines, if any, executed by the former owner thereof in
favor of the Owner (or, at the Owner’s option, other evidence of the Owner’s
ownership of such Replacement Airframe and Replacement Engines, if any, reasonably
satisfactory to the Indenture Trustee); and



39









 






     (D) UCC financing statements (or any similar statements or other documents
required to be filed or delivered pursuant to the laws of the jurisdiction in which
the Replacement Airframe and Replacement Engines, if any, may be registered in
accordance with Section 4.02(e)) as are deemed necessary or desirable by counsel for
the Indenture Trustee to protect the security interests of the Indenture Trustee in
the Replacement Airframe and Replacement Engines, if any;



                    (ii) the Replacement Airframe and Replacement Engines, if any, shall be of the same model as
the Airframe or Engines, as the case may be, or an improved model of such aircraft or engines of
the manufacturer thereof, shall have a value and utility (without regard to hours or cycles
remaining until the next regular maintenance check) at least equal to, and be in as good operating
condition and repair as, the Airframe and any Engines replaced (assuming such Airframe and Engines
had been maintained in accordance with this Trust Indenture);



                    (iii) the Indenture Trustee (acting directly or by authorization to its special counsel) shall
have received satisfactory evidence as to the compliance with Section 4.06 with respect to the
Replacement Airframe and Replacement Engines, if any;



                    (iv) on the Replacement Closing Date, (A) the Owner shall cause the Replacement Airframe and
Replacement Engines, if any, to be subject to the Lien of this Trust Indenture free and clear of
Liens (other than Permitted Liens), (B) the Replacement Airframe shall have been duly certified by
the FAA as to airworthiness in accordance with the terms of this Trust Indenture, (C) application
for registration of the Replacement Airframe in accordance with Section 4.02(e) shall have been
duly made with the FAA or other applicable Aviation Authority and the Owner shall have authority to
operate the Replacement Airframe and (D) the Owner shall have caused the sale of such Replacement
Airframe and Replacement Engine(s), if any, to the Owner (if occurring after February 28, 2006) and
the International Interest granted under the Trust Indenture Supplement in favor of the Indenture
Trustee with respect to such Replacement Airframe and Replacement Engine(s), if any, each to be
registered on the International Registry as a sale or an International Interest, respectively;



                    (v) the Indenture Trustee at the expense of the Owner, shall have received (acting directly or
by authorization to its special counsel) (A) an opinion of counsel, addressed to the Indenture
Trustee, to the effect that the Replacement Airframe and Replacement Engine, if any, has or have
duly been made subject to the Lien of this Trust Indenture, and the Indenture Trustee will be
entitled to the benefits of Section 1110 with respect to the Replacement Airframe, provided that
such opinion with respect to Section 1110 need not be delivered to the extent that immediately
prior to such replacement the benefits of Section 1110 were not, solely by reason of a change in
law or court interpretation thereof, available to the Indenture Trustee;



                    (vi) promptly after the filing of the Trust Indenture Supplement, the Owner shall cause to be
furnished to the Indenture Trustee an opinion of the Owner’s aviation law counsel reasonably
satisfactory to and addressed to the Indenture Trustee as to the



40









 




due registration of any such Replacement Airframe and the due filing for recordation of each
Trust Indenture Supplement with respect to such Replacement Airframe or Replacement Engine under
the Act or such other applicable law of the jurisdiction other than the United States in which the
Replacement Airframe is to be registered in accordance with Section 4.02(e), as the case may be,
and the registration (which the Owner shall have caused to be effected) with the International
Registry of the sale of such Replacement Airframe and Replacement Engine(s), if any, to the Owner
(if occurring after February 28, 2006) and of the International Interest granted under the Trust
Indenture Supplement with respect to such Replacement Aircraft and Replacement Engine(s), if any;
and




                    (vii) the Owner shall have furnished to the Indenture Trustee a certificate of a qualified
aircraft engineer (who may be an employee of the Owner) or an independent appraiser certifying that
the Replacement Airframe and Replacement Engines, if any, have a value and utility and remaining
useful life (without regard to hours and cycles remaining until overhaul) at least equal to the
Airframe and any Engines so replaced (assuming that such Airframe and Engines had been maintained
in accordance with this Trust Indenture).



          (d) Non-Insurance Payments Received on Account of an Event of Loss. Any amounts,
other than insurance proceeds in respect of damage or loss not constituting an Event of Loss (the
application of which is provided for in Annex B), received at any time by the Indenture Trustee or
the Owner from any Government Entity or any other Person in respect of any Event of Loss will be
applied as follows:





     (i) If such amounts are received with respect to the Airframe, and any Engine
installed thereon at the time of such Event of Loss, upon compliance by the Owner
with the applicable terms of Section 4.05(c) with respect to the Event of Loss for
which such amounts are received, such amounts shall be paid over to, or retained by,
the Owner;




     (ii) If such amounts are received with respect to an Engine (other than an
Engine installed on the Airframe at the time such Airframe suffers an Event of
Loss), upon compliance by the Owner with the applicable terms of Section 4.04(e)
with respect to the Event of Loss for which such amounts are received, such amounts
shall be paid over to, or retained by, the Owner;




     (iii) If such amounts are received, in whole or in part, with respect to the
Airframe, and the Owner makes, has made or is deemed to have made the election set
forth in Section 4.05(a)(ii), such amounts shall be applied as follows:




          first, if the sum described in Section 4.05(a)(ii) has not then been
paid in full by the Owner, such amounts shall be paid to the Indenture Trustee to
the extent necessary to pay in full such sum; and




          second, the remainder, if any, shall be paid to the Owner.



          (e) Requisition for Use. In the event of a requisition for use by any Government
Entity of the Airframe and the Engines, if any, or engines installed on such Airframe while such
Airframe is subject to the Lien of this Trust Indenture, the Owner shall






41









 







promptly notify the Indenture Trustee of such requisition and all of the Owner’s obligations
under this Trust Indenture shall continue to the same extent as if such requisition had not
occurred except to the extent that the performance or observance of any obligation by the Owner
shall have been prevented or delayed by such requisition; provided that the Owner’s
obligations under this Section 4.05 with respect to the occurrence of an Event of Loss for the
payment of money and under Section 4.06 (except while an assumption of liability by the U.S.
Government of the scope referred to in Section 4.02(c) is in effect) shall not be reduced or
delayed by such requisition. Any payments received by the Indenture Trustee or the Owner or
Permitted Lessee from such Government Entity with respect to such requisition of use shall be paid
over to, or retained by, the Owner. In the event of an Event of Loss of an Engine resulting from
the requisition for use by a Government Entity of such Engine (but not the Airframe), the Owner
will replace such Engine hereunder by complying with the terms of Section 4.04(e) and any payments
received by the Indenture Trustee or the Owner from such Government Entity with respect to such
requisition shall be paid over to, or retained by, the Owner.




               (f) Certain Payments to be Held As Security. Any amount referred to in this Section
4.05 or Section 4.06 which is payable or creditable to, or retainable by, the Owner shall not be
paid or credited to, or retained by the Owner if at the time of such payment, credit or retention a
Special Default or an Event of Default shall have occurred and be continuing, but shall be paid to
and held by the Indenture Trustee as security for the obligations of the Owner under this Trust
Indenture and the Operative Agreements, and at such time as there shall not be continuing any such
Special Default or Event of Default such amount and any gain realized as a result of investments
required to be made pursuant to Section 6.06 shall to the extent not theretofore applied as
provided herein, be paid over to the Owner.



          SECTION 4.06. Insurance




               (a) Owner’s Obligation to Insure. The Owner shall comply with, or cause to be
complied with, each of the provisions of Annex B, which provisions are hereby incorporated by this
reference as if set forth in full herein.



               (b) Insurance for Own Account. Nothing in Section 4.06 shall limit or prohibit (a)
Owner from maintaining the policies of insurance required under Annex B with higher limits than
those specified in Annex B, or (b) Indenture Trustee from obtaining insurance for its own account
(and any proceeds payable under such separate insurance shall be payable as provided in the policy
relating thereto); provided, however, that no insurance may be obtained or
maintained that would limit or otherwise adversely affect the coverage of any insurance required to
be obtained or maintained by the Owner pursuant to this Section 4.06 and Annex B.



               (c) Indemnification by Government in Lieu of Insurance. The Indenture Trustee agrees
to accept, in lieu of insurance against any risk with respect to the Aircraft described in Annex B,
indemnification from, or insurance provided by, the U.S. Government, or upon the written consent of
the Indenture Trustee, other Government Entity, against such risk in an amount that, when added to
the amount of insurance (including permitted self-insurance), if any, against such risk that the
Owner (or any Permitted Lessee) may continue to maintain, in accordance with this Section 4.06,
during the period of such requisition or



42









 




transfer, shall be at least equal to the amount of insurance against such risk otherwise
required by this Section 4.06.




               (d) Application of Insurance Proceeds. As between the Owner and the Indenture
Trustee, all insurance proceeds received as a result of the occurrence of an Event of Loss with
respect to the Aircraft or any Engine under policies required to be maintained by the Owner
pursuant to this Section 4.06 will be applied in accordance with Section 4.05(d). All proceeds of
insurance required to be maintained by the Owner, in accordance with Section 4.06 and Section B of
Annex B, in respect of any property damage or loss not constituting an Event of Loss with respect
to the Aircraft, Airframe or any Engine will be applied in payment (or to reimburse Owner) for
repairs or for replacement property, and any balance remaining after such repairs or replacement
with respect to such damage or loss shall be paid over to, or retained by, the Owner.



          SECTION 4.07. Merger of Owner




               (a) In General. The Owner shall not consolidate with or merge into any other person
under circumstances in which Owner is not the surviving corporation, or convey, transfer or lease
in one or more transactions all or substantially all of its assets to any other person, unless:



                    (i) such person is organized, existing and in good standing under the Laws of the United
States, any State of the United States or the District of Columbia and, upon consummation of such
transaction, such person will be a U.S. Air Carrier;



                    (ii) such person executes and delivers to the Indenture Trustee a duly authorized, legal,
valid, binding and enforceable agreement, reasonably satisfactory in form and substance to the
Indenture Trustee, containing an effective assumption by such person of the due and punctual
performance and observance of each covenant, agreement and condition in the Operative Agreements to
be performed or observed by the Owner;



                    (iii) if the Aircraft is, at the time, registered with the FAA, such person makes such filings
and recordings with the FAA pursuant to the Act or if the Aircraft is, at the time, not registered
with FAA, such person makes such filings and recordings with the applicable Aviation Authority and,
irrespective of the registry of the Aircraft, such person makes such registrations with the
International Registry, in any case, as shall be necessary to evidence such consolidation or
merger; and



                    (iv) immediately after giving effect to such consolidation or merger no Event of Default shall
have occurred and be continuing.



               (b) Effect of Merger. Upon any such consolidation or merger of the Owner with or
into, or the conveyance, transfer or lease by the Owner of all or substantially all of its assets
to, any Person in accordance with this Section 4.07, such Person will succeed to, and be
substituted for, and may exercise every right and power of, the Owner under the Operative
Agreements with the same effect as if such person had been named as “Owner” therein. No such
consolidation or merger, or conveyance, transfer or lease, shall have the effect of releasing



43









 




Owner or such Person from any of the obligations, liabilities, covenants or undertakings of
the Owner under this Trust Indenture.




ARTICLE V




EVENTS OF DEFAULT; REMEDIES OF INDENTURE TRUSTEE



          SECTION 5.01. Event of Default




          “Event of Default” means any of the following events (whatever the reason for such Event of
Default and whether such event shall be voluntary or involuntary or come about or be effected by
operation of Law or pursuant to or in compliance with any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):




                    (i) the failure of the Owner to pay (i) principal of, interest on or Make-Whole Amount, if
any, under any Equipment Note when due, and such failure shall continue unremedied for a period of
ten (10) Business Days, or (ii) any other amount payable by it to the Note Holders under this Trust
Indenture or the Participation Agreement when due, and such failure shall continue for a period in
excess of ten (10) Business Days after the Owner has received written notice from the Indenture
Trustee of the failure to make such payment when due;



                    (ii) Owner shall fail to carry and maintain, or cause to be carried and maintained, insurance
on and in respect of the Aircraft, Airframe and Engines in accordance with the provisions of
Section 4.06;



                    (iii) Owner shall fail to observe or perform (or caused to be observed and performed) in any
material respect any other covenant, agreement or obligation set forth herein or in any other
Operative Agreement to which Owner is a party and such failure shall continue unremedied for a
period of thirty (30) days from and after the date of written notice thereof to the Owner from the
Indenture Trustee, unless such failure is capable of being corrected and the Owner shall be
diligently proceeding to correct such failure, in which case there shall be no Event of Default
unless and until such failure shall continue unremedied for a period of two hundred and seventy
(270) days after receipt of such notice;



                    (iv) any representation or warranty made by the Owner herein, in the Participation Agreement
or in any other Operative Agreement to which Owner is a party (a) shall prove to have been untrue
or inaccurate in any material respect as of the date made, (b) such untrue or inaccurate
representation or warranty is material at the time in question, (c) and the same shall remain
uncured (to the extent of the adverse impact of such incorrectness on the interest of the Indenture
Trustee) for a period in excess of thirty (30) days from and after the date of written notice
thereof from the Indenture Trustee to the Owner;



                    (v) the Owner shall consent to the appointment of or taking possession by a receiver, trustee
or liquidator of itself or of a substantial part of its property, or the Owner shall admit in
writing its inability to pay its debts generally as they come due or shall make a general
assignment for the benefit of its creditors, or the Owner shall file a voluntary petition in
bankruptcy or a voluntary petition or an answer seeking reorganization, liquidation or



44









 




other relief under any bankruptcy laws or insolvency laws (as in effect at such time), or an
answer admitting the material allegations of a petition filed against it in any such case, or the
Owner shall seek relief by voluntary petition, answer or consent, under the provisions of any other
bankruptcy or similar law providing for the reorganization or winding-up of corporations (as in
effect at such time), or the Owner shall seek an agreement, composition, extension or adjustment
with its creditors under such laws;




                    (vi) an order, judgment or decree shall be entered by any court of competent jurisdiction
appointing, without the consent of the Owner, a receiver, trustee or liquidator of the Owner or of
any substantial part of its property, or any substantial part of the property of the Owner shall be
sequestered, or granting any other relief in respect of the Owner as a debtor under any bankruptcy
laws or other insolvency laws (as in effect at such time), and any such order, judgment, decree, or
decree of appointment or sequestration shall remain in force undismissed, unstayed or unvacated for
a period of ninety (90) consecutive days after the date of entry thereof;



                    (vii) a petition against the Owner in a proceeding under any bankruptcy laws or other
insolvency laws (as in effect at such time) is filed and not withdrawn or dismissed within 90 days
thereafter, or if, under the provisions of any law providing for reorganization or winding-up of
corporations which may apply to the Owner, any court of competent jurisdiction shall assume
jurisdiction, custody or control of the Owner of any substantial part of its property and such
jurisdiction, custody or control shall remain in force unrelinquished, unstayed or unterminated for
a period of ninety (90) consecutive days; or



                    (viii) the occurrence of a Related Indenture Event of Default.


provided, however, that, notwithstanding anything to the contrary contained in this
Section 5.01, any failure of Owner to perform or observe any covenant, condition, agreement or any
error in a representation or warranty shall not constitute an Event of Default if such failure or
error is caused solely by reason of any event that constitutes an Event of Loss so long as Owner is
continuing to comply with all of the terms of Section 4.04(e) and Section 4.05 hereof.




          SECTION 5.02. Remedies




               (a) If an Event of Default shall have occurred and be continuing and so long as the same shall
continue unremedied, then and in every such case the Indenture Trustee may exercise any or all of
the rights and powers and pursue any and all of the remedies pursuant to this Article V and shall
have and may exercise all of the rights and remedies of a secured party under the Uniform
Commercial Code or of a chargee under the Cape Town Treaty and may take possession of all or any
part of the properties covered or intended to be covered by the Lien created hereby or pursuant
hereto and may exclude the Owner and all persons claiming under it wholly or partly therefrom;
provided that the Indenture Trustee shall give the Owner twenty (20) days’ prior written
notice of its intention to sell the Aircraft; provided further, that during any period the
Aircraft is subject to the CRAF program and in possession of the U.S. Government or an agency or
instrumentality of the United States, the Indenture Trustee shall not, on account of



45









 




any Event of Default, be entitled to exercise or pursue any of the powers, rights or remedies
described in this Article V in such manner as to limit the Owner’s control (or any Permitted
Lessee’s control under any lease) of any Airframe or any Engines installed thereon, unless at least
sixty (60) days (or such lesser period as may then be applicable under the Air Mobility Command
program of the U.S. Government) written notice of default hereunder shall have been given by the
Indenture Trustee by registered or certified mail to the Owner (any Permitted Lessee) with a copy
addressed to the Contracting Office Representative of the Air Mobility Command of the United States
Air Force under any contract with the Owner (or any Permitted Lessee) relating to the Aircraft.
Without limiting any of the foregoing, it is understood and agreed that the Indenture Trustee may
exercise any right of sale of the Aircraft available to it, even though it shall not have taken
possession of the Aircraft and shall not have possession thereof at the time of such sale.




               (b) If an Event of Default shall have occurred and be continuing, then and in every such case
the Indenture Trustee may (and shall, upon receipt of a written demand therefor from a Majority in
Interest of Note Holders), at any time, by delivery of written notice or notices to the Owner,
declare all the Equipment Notes to be due and payable, whereupon the unpaid Original Amount of all
Equipment Notes then outstanding, together with accrued but unpaid interest thereon (without
Make-Whole Amount) and other amounts due thereunder or otherwise payable hereunder, shall
immediately become due and payable without presentment, demand, protest or notice, all of which are
hereby waived; provided that if an Event of Default referred to in clause (v), (vi) or (vii) of
Section 5.01 hereof shall have occurred, then and in every such case the unpaid Original Amount
then outstanding, together with accrued but unpaid interest (without Make-Whole Amount) and all
other amounts due hereunder and under the Equipment Notes shall immediately and without further act
become due and payable without presentment, demand, protest or notice, all of which are hereby
waived.



          This Section 5.02(b), however, is subject to the condition that, if at any time after the
Original Amount of the Equipment Notes shall have become so due and payable, and before any
judgment or decree for the payment of the money so due, or any thereof, shall be entered, all
overdue payments of interest upon the Equipment Notes and all other amounts payable hereunder or
under the Equipment Notes (except the Original Amount of the Equipment Notes and any Make-Whole
Amount which by such declaration shall have become payable) shall have been duly paid, and every
other Default and Event of Default with respect to any covenant or provision of this Trust
Indenture shall have been cured, then and in every such case a Majority in Interest of Note Holders
may (but shall not be obligated to), by written instrument filed with the Indenture Trustee,
rescind and annul the Indenture Trustee’s declaration (or such automatic acceleration) and its
consequences; but no such rescission or annulment shall extend to or affect any subsequent Default
or Event of Default or impair any right consequent thereon.




               (c) The Note Holders shall be entitled, at any sale pursuant to this Section 5.02, to credit
against any purchase price bid at such sale by such holder all or any part of the unpaid
obligations owing to such Note Holder and secured by the Lien of this Trust Indenture (only to the
extent that such purchase price would have been paid to such Note Holder pursuant to Article III
hereof if such purchase price were paid in cash and the foregoing provisions of this subsection (c)
were not given effect).



46









 





               (d) In the event of any sale of the Collateral, or any part thereof, pursuant to any judgment
or decree of any court or otherwise in connection with the enforcement of any of the terms of this
Trust Indenture, the unpaid Original Amount of all Equipment Notes then outstanding, together with
accrued interest thereon (without Make-Whole Amount), and other amounts due thereunder, shall
immediately become due and payable without presentment, demand, protest or notice, all of which are
hereby waived.



               (e) Notwithstanding anything contained herein, so long as the Pass Through Trustee under any
Pass Through Trust Agreement (or its designee) is a Note Holder, the Indenture Trustee will not be
authorized or empowered to acquire title to any Collateral or take any action with respect to any
Collateral so acquired by it if such acquisition or action would cause any Trust to fail to qualify
as a “grantor trust” for federal income tax purposes.



          SECTION 5.03. Return of Aircraft, Etc.




               (a) If an Event of Default shall have occurred and be continuing and the Equipment Notes have
been accelerated, at the request of the Indenture Trustee, the Owner shall promptly execute and
deliver to the Indenture Trustee such instruments of title and other documents as the Indenture
Trustee may deem necessary or advisable to enable the Indenture Trustee or an agent or
representative designated by the Indenture Trustee, at such time or times and place or places as
the Indenture Trustee may specify, to obtain possession of all or any part of the Collateral to
which the Indenture Trustee shall at the time be entitled hereunder. If the Owner shall for any
reason fail to execute and deliver such instruments and documents after such request by the
Indenture Trustee, the Indenture Trustee may (i) obtain a judgment conferring on the Indenture
Trustee the right to immediate possession and requiring the Owner to execute and deliver such
instruments and documents to the Indenture Trustee, to the entry of which judgment the Owner hereby
specifically consents to the fullest extent permitted by Law, and (ii) pursue all or part of such
Collateral wherever it may be found and may enter any of the premises of the Owner wherever such
Collateral may be or be supposed to be and search for such Collateral and take possession of and
remove such Collateral. All expenses of obtaining such judgment or of pursuing, searching for and
taking such property shall, until paid, be secured by the Lien of this Trust Indenture.



               (b) Upon every such taking of possession, the Indenture Trustee may, from time to time, at the
expense of the Collateral, make all such expenditures for maintenance, use, operation, storage,
insurance, leasing, control, management, disposition, modifications or alterations to and of the
Collateral, as it may deem proper. In each such case, the Indenture Trustee shall have the right
to maintain, use, operate, store, insure, lease, control, manage, dispose of, modify or alter the
Collateral and to exercise all rights and powers of the Owner relating to the Collateral, as the
Indenture Trustee shall deem best, including the right to enter into any and all such agreements
with respect to the maintenance, use, operation, storage, insurance, leasing, control, management,
disposition, modification or alteration of the Collateral or any part thereof as the Indenture
Trustee may determine, and the Indenture Trustee shall be entitled to collect and receive directly
all rents, revenues and other proceeds of the Collateral and every part thereof, without prejudice,
however, to the right of the Indenture Trustee under any provision of this Trust Indenture to
collect and receive all cash held by, or required to be deposited with, the Indenture Trustee
hereunder. Such rents, revenues and other proceeds shall



47









 




be applied to pay the expenses of the maintenance, use, operation, storage, insurance,
leasing, control, management, disposition, improvement, modification or alteration of the
Collateral and of conducting the business thereof, and to make all payments which the Indenture
Trustee 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
Owner), and all other payments which the Indenture Trustee may be required or authorized to make
under any provision of this Trust Indenture, as well as just and reasonable compensation for the
services of the Indenture Trustee, and of all persons properly engaged and employed by the
Indenture Trustee with respect hereto.




          SECTION 5.04. Remedies Cumulative




          Each and every right, power and remedy given to the Indenture Trustee specifically or
otherwise in this Trust Indenture shall be cumulative and shall be in addition to every other
right, power and remedy herein specifically given or now or hereafter existing at Law, in equity or
by statute, and each and every right, power and remedy whether specifically herein given or
otherwise existing may be exercised from time to time and as often and in such order as may be
deemed expedient by the Indenture Trustee, and the exercise or the beginning of the exercise of any
power or remedy shall not be construed to be a waiver of the right to exercise at the same time or
thereafter any other right, power or remedy. No delay or omission by the Indenture Trustee 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 Owner or to
be an acquiescence therein.




          SECTION 5.05. Discontinuance of Proceedings




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




          SECTION 5.06. Waiver of Past Defaults




          Upon written instruction from a Majority in Interest of Note Holders, the Indenture Trustee
shall waive any past Default hereunder and its consequences and upon any such waiver such Default
shall cease to exist and any Event of Default arising therefrom shall be deemed to have been cured
for every purpose of this Trust Indenture, but no such waiver shall extend to any subsequent or
other Default or impair any right consequent thereon; provided, that in the absence of written
instructions from all the Note Holders, the Indenture Trustee shall not waive any Default (i) in
the payment of the Original Amount, Make-Whole Amount, if any, and interest and other amounts due
under any Equipment Note then outstanding, or (ii) in respect of a






48









 







covenant or provision hereof which, under Article X hereof, cannot be modified or amended
without the consent of each Note Holder.




          SECTION 5.07. Appointment of Receiver




          If an Event of Default shall have occurred and be continuing, the Indenture Trustee shall, as
a matter of right, be entitled to the appointment of a receiver (who may be the Indenture Trustee
or any successor or nominee thereof) for all or any part of the Collateral, whether such
receivership be incidental to a proposed sale of the Collateral or the taking of possession thereof
or otherwise, and the Owner hereby consents to the appointment of such a receiver and will not
oppose any such appointment. Any receiver appointed for all or any part of the Collateral shall be
entitled to exercise all the rights and powers of the Indenture Trustee with respect to the
Collateral.




          SECTION 5.08. Indenture Trustee Authorized to Execute Bills of Sale, Etc.




          The Owner irrevocably appoints, while an Event of Default has occurred and is continuing, the
Indenture Trustee the true and lawful attorney-in-fact of the Owner (which appointment is coupled
with an interest) in its name and stead and on its behalf, for the purpose of effectuating any
sale, assignment, transfer or delivery for the enforcement of the Lien of this Trust Indenture,
whether pursuant to foreclosure or power of sale, assignments and other instruments as may be
necessary or appropriate, with full power of substitution, the Owner hereby ratifying and
confirming all that such attorney or any substitute shall do by virtue hereof in accordance with
applicable law. Nevertheless, if so requested by the Indenture Trustee or any purchaser, the Owner
shall ratify and confirm any such sale, assignment, transfer or delivery, by executing and
delivering to the Indenture Trustee or such purchaser all bills of sale, assignments, releases and
other proper instruments to effect such ratification and confirmation as may be designated in any
such request.




          SECTION 5.09. Rights of Note Holders to Receive Payment




          Notwithstanding any other provision of this Trust Indenture, the right of any Note Holder to
receive payment of principal of, and premium, if any, and interest on an Equipment Note on or after
the respective due dates expressed in such Equipment Note, or to bring suit for the enforcement of
any such payment on or after such respective dates in accordance with the terms hereof, shall not
be impaired or affected without the consent of such Note Holder.




ARTICLE VI




DUTIES OF THE INDENTURE TRUSTEE



          SECTION 6.01. Notice of Event of Default




          If the Indenture Trustee shall have Actual Knowledge of an Event of Default or of a Default
arising from a failure to pay any installment of principal and interest on any Equipment Note, the
Indenture Trustee shall give prompt written notice thereof to each Note Holder. Subject to the
terms of Sections 5.06, 6.02 and 6.03 hereof, the Indenture Trustee shall take such






49









 







action, or refrain from taking such action, with respect to such Event of Default or Default
(including with respect to the exercise of any rights or remedies hereunder) as the Indenture
Trustee shall be instructed in writing by a Majority in Interest of Note Holders. Subject to the
provisions of Section 6.03, if the Indenture Trustee shall not have received instructions as above
provided within 20 days after mailing notice of such Event of Default to the Note Holders, the
Indenture Trustee may, subject to instructions thereafter received pursuant to the preceding
provisions of this Section 6.01, take such action, or refrain from taking such action, but shall be
under no duty to take or refrain from taking any action, with respect to such Event of Default or
Default as it shall determine advisable in the best interests of the Note Holders;
provided, however, that the Indenture Trustee may not sell the Aircraft or any
Engine without the consent of a Majority in Interest of Note Holders. For all purposes of this
Trust Indenture, in the absence of Actual Knowledge on the part of the Indenture Trustee, the
Indenture Trustee shall not be deemed to have knowledge of a Default or an Event of Default
(except, the failure of the Owner to pay any installment of principal or interest within one
Business Day after the same shall become due, which failure shall constitute knowledge of a
Default) unless notified in writing by the Owner or one or more Note Holders.




          SECTION 6.02. Action Upon Instructions; Certain Rights and Limitations




          Subject to the terms of Sections 5.02(a), 5.06, 6.01 and 6.03 hereof, upon the written
instructions at any time and from time to time of a Majority in Interest of Note Holders, the
Indenture Trustee shall, subject to the terms of this Section 6.02, take such of the following
actions as may be specified in such instructions: (i) give such notice or direction or exercise
such right, remedy or power hereunder as shall be specified in such instructions and (ii) give such
notice or direction or exercise such right, remedy or power hereunder with respect to any part of
the Collateral as shall be specified in such instructions; it being understood that without the
written instructions of a Majority in Interest of Note Holders, the Indenture Trustee shall not,
except as provided in Section 6.01, approve any such matter as satisfactory to the Indenture
Trustee.




          The Indenture Trustee will execute and the Owner will file such continuation statements with
respect to financing statements relating to the security interest created hereunder in the
Collateral as may be specified from time to time in written instructions of a Majority in Interest
of Note Holders (which instructions shall be accompanied by the form of such continuation statement
so to be filed). The Indenture Trustee will furnish to each Note Holder, promptly upon receipt
thereof, duplicates or copies of all reports, notices, requests, demands, certificates and other
instruments furnished to the Indenture Trustee hereunder.




          SECTION 6.03. Indemnification




          The Indenture Trustee shall not be required to take any action or refrain from taking any
action under Section 6.01 (other than the first sentence thereof), 6.02 or Article V hereof unless
the Indenture Trustee shall have been indemnified to its reasonable satisfaction against any
liability, cost or expense (including counsel fees) which may be incurred in connection therewith
pursuant to a written agreement with one or more Note Holders. The Indenture Trustee agrees that
it shall look solely to the Note Holders for the satisfaction of any indemnity (except expenses for
foreclosure of the type referred to in clause “First” of Section






50









 







3.03 hereof) owed to it pursuant to this Section 6.03. The Indenture Trustee shall not be
under any obligation to take any action under this Trust Indenture or any other Operative Agreement
and nothing herein or therein shall require the Indenture Trustee to expend or risk its own funds
or otherwise incur the risk of any financial liability in the performance of any of its rights or
powers if it shall have reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it (the written indemnity of
any Note Holder who is a QIB, signed by an authorized officer thereof, in favor of, delivered to
and in form reasonably satisfactory to the Indenture Trustee shall be accepted as reasonable
assurance of adequate indemnity). The Indenture Trustee shall not be required to take any action
under Section 6.01 (other than the first sentence thereof) or 6.02 or Article V hereof, nor shall
any other provision of this Trust Indenture or any other Operative Agreement be deemed to impose a
duty on the Indenture Trustee to take any action, if the Indenture Trustee shall have been advised
by counsel that such action is contrary to the terms hereof or is otherwise contrary to Law.




          SECTION 6.04. No Duties Except as Specified in Trust Indenture or Instructions




          The Indenture Trustee shall not have any duty or obligation to use, operate, store, lease,
control, manage, sell, 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,
this Trust Indenture or any part of the Collateral, except as expressly provided by the terms of
this Trust Indenture or as expressly provided in written instructions from Note Holders as provided
in this Trust Indenture; and no implied duties or obligations shall be read into this Trust
Indenture against the Indenture Trustee. The Indenture Trustee agrees that it will in its
individual capacity and at its own cost and expense (but without any right of indemnity in respect
of any such cost or expense under Section 8.01 hereof), promptly take such action as may be
necessary duly to discharge all liens and encumbrances on any part of the Collateral which result
from claims against it in its individual capacity not related to the administration of the
Collateral or any other transaction pursuant to this Trust Indenture or any document included in
the Collateral.




          SECTION 6.05. No Action Except Under Trust Indenture or Instructions




          The Indenture Trustee will not use, operate, store, lease, control, manage, sell, dispose of
or otherwise deal with the Aircraft or any other part of the Collateral except in accordance with
the powers granted to, or the authority conferred upon the Indenture Trustee pursuant to this Trust
Indenture and in accordance with the express terms hereof.




          SECTION 6.06. Investment of Amounts Held by Indenture Trustee




          Any amounts held by the Indenture Trustee pursuant to Section 3.02, 3.03 or 3.07 or pursuant
to any provision of any other Operative Agreement providing for amounts to be held by the Indenture
Trustee which are not distributed pursuant to the other provisions of Article III hereof shall be
invested by the Indenture Trustee from time to time in Cash Equivalents as directed by the Owner so
long as the Indenture Trustee may acquire the same using its best efforts. All Cash Equivalents
held by the Indenture Trustee pursuant to this Section 6.06 shall






51









 







either be (a) registered in the name of, payable to the order of, or specially endorsed to,
the Indenture Trustee, or (b) held in an Eligible Account. Unless otherwise expressly provided in
this Trust Indenture, any income realized as a result of any such investment, net of the Indenture
Trustee’s reasonable fees and expenses in making such investment, shall be held and applied by the
Indenture Trustee in the same manner as the principal amount of such investment is to be applied
and any losses, net of earnings and such reasonable fees and expenses, shall be charged against the
principal amount invested. The Indenture Trustee shall not be liable for any loss resulting from
any investment required to be made by it under this Trust Indenture other than by reason of its
willful misconduct or gross negligence or negligence in the handling of funds, and any such
investment may be sold (without regard to its maturity) by the Indenture Trustee without
instructions whenever such sale is necessary to make a distribution required by this Trust
Indenture.




ARTICLE VII




THE INDENTURE TRUSTEE



          SECTION 7.01. Acceptance of Trusts and Duties




          The Indenture Trustee accepts the duties hereby created and applicable to it and agrees to
perform the same but only upon the terms of this Trust Indenture and agrees to receive and disburse
all monies constituting part of the Collateral in accordance with the terms hereof. The Indenture
Trustee, in its individual capacity, shall not be answerable or accountable under any
circumstances, except (i) for its own willful misconduct or gross negligence (other than for the
handling of funds, for which the standard of accountability shall be willful misconduct or
negligence), (ii) as provided in the fourth sentence of Section 2.03(a) hereof and the last
sentence of Section 6.04 hereof, and (iii) from the inaccuracy of any representation or warranty of
the Indenture Trustee (in its individual capacity) in the Participation Agreement or expressly made
hereunder.




          SECTION 7.02. Absence of Duties




          Except in accordance with written instructions furnished pursuant to Section 6.01 or 6.02
hereof, and except as provided in, and without limiting the generality of, Sections 6.03, 6.04 and
7.07 hereof the Indenture Trustee shall have no duty (i) to see to any registration of the Aircraft
or any recording or filing of this Trust Indenture or any other document, or to see to the
maintenance of any such registration, recording or filing, (ii) to see to any insurance on the
Aircraft or to effect or maintain any such insurance, whether or not the Owner shall be in default
with respect thereto, (iii) to see to the payment or discharge of any lien or encumbrance of any
kind against any part of the Collateral, (iv) to confirm, verify or inquire into the failure to
receive any financial statements from the Owner, or (v) to inspect the Aircraft at any time or
ascertain or inquire as to the performance or observance of any of the Owner’s covenants herein or
any Permitted Lessee’s covenants under any assigned Permitted Lease with respect to the Aircraft.







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          SECTION 7.03. No Representations or Warranties as to Aircraft or Documents




          THE INDENTURE TRUSTEE IN ITS INDIVIDUAL OR TRUST CAPACITY DOES NOT MAKE AND SHALL NOT BE
DEEMED TO HAVE MADE AND HEREBY EXPRESSLY DISCLAIMS ANY REPRESENTATION OR WARRANTY, EXPRESS OR
IMPLIED, AS TO THE TITLE, AIRWORTHINESS, VALUE, COMPLIANCE WITH SPECIFICATIONS, CONDITION, DESIGN,
QUALITY, DURABILITY, OPERATION, MERCHANTABILITY OR FITNESS FOR USE FOR A PARTICULAR PURPOSE OF THE
AIRCRAFT OR ANY ENGINE, AS TO THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE,
AS TO THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR COPYRIGHT, AS TO THE ABSENCE OF
OBLIGATIONS BASED ON STRICT LIABILITY IN TORT OR ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER.
The Indenture Trustee, in its individual or trust capacities, does not make or shall not be deemed
to have made any representation or warranty as to the validity, legality or enforceability of this
Trust Indenture, the Participation Agreement, the Equipment Notes, or as to the correctness of any
statement contained in any thereof, except for the representations and warranties of the Owner made
in its individual capacity and the representations and warranties of the Indenture Trustee in its
individual capacity, in each case expressly made in this Trust Indenture or in the Participation
Agreement. The Note Holders make no representation or warranty hereunder whatsoever.




          SECTION 7.04. No Segregation of Monies; No Interest




          Except as otherwise provided in Section 3.07 hereof, any monies paid to or retained by the
Indenture Trustee pursuant to any provision hereof and not then required to be distributed to the
Note Holders, or the Owner as provided in Article III hereof need not be segregated in any manner
except to the extent required by Law or Section 6.06 hereof, and may be deposited under such
general conditions as may be prescribed by Law, and the Indenture Trustee shall not be liable for
any interest thereon (except that the Indenture Trustee shall invest all monies held as directed by
the Owner so long as no Event of Default has occurred and is continuing (or in the absence of such
direction, by the Majority In Interest of Note Holders) in Cash Equivalents); provided,
however, that any payments received, or applied hereunder, by the Indenture Trustee shall
be accounted for by the Indenture Trustee so that any portion thereof paid or applied pursuant
hereto shall be identifiable as to the source thereof.




          SECTION 7.05. Reliance; Agreements; Advice of Counsel




          The Indenture Trustee shall not incur any liability to anyone in acting upon any signature,
instrument, notice, resolution, request, consent, order, certificate, report, opinion, bond or
other document or paper believed by it to be genuine and believed by it to be signed by the proper
party or parties. The Indenture Trustee may accept a copy of a resolution of the Board of
Directors of the Owner, certified by the Secretary or an Assistant Secretary thereof as duly
adopted and in full force and effect, as conclusive evidence that such resolution has been duly
adopted and that the same is in full force and effect. As to the aggregate unpaid Original Amount
of Equipment Notes outstanding as of any date, the Owner may for all purposes hereof rely on a
certificate signed by any Vice President or other authorized corporate trust officer of






53









 







the Indenture Trustee. As to any fact or matter relating to the Owner the manner of the
ascertainment of which is not specifically described herein, the Indenture Trustee may for all
purposes hereof rely on a certificate, signed by a duly authorized officer of the Owner, as to such
fact or matter, and such certificate shall constitute full protection to the Indenture Trustee for
any action taken or omitted to be taken by it in good faith in reliance thereon. In the
administration of the trusts hereunder, the Indenture Trustee may execute any of the trusts or
powers hereof and perform its powers and duties hereunder directly or through agents or attorneys
and may, at the expense of the Collateral, advise with counsel, accountants and other skilled
persons to be selected and retained by it, and the Indenture Trustee shall not be liable for
anything done, suffered or omitted in good faith by it in accordance with the written advice or
written opinion of any such counsel, accountants or other skilled persons.




          SECTION 7.06. Compensation




          The Indenture Trustee shall be entitled to reasonable compensation, including expenses and
disbursements (including the reasonable fees and expenses of counsel), for all services rendered
hereunder and shall, on and subsequent to an Event of Default hereunder, have a priority claim on
the Collateral for the payment of such compensation, to the extent that such compensation shall not
be paid by the Owner, and shall have the right, on and subsequent to an Event of Default hereunder,
to use or apply any monies held by it hereunder in the Collateral toward such payments. The
Indenture Trustee agrees that it shall have no right against the Note Holders for any fee as
compensation for its services as trustee under this Trust Indenture.




          SECTION 7.07. Instructions from Note Holders




          In the administration of the trusts created hereunder, the Indenture Trustee shall have the
right to seek instructions from a Majority in Interest of Note Holders should any provision of this
Trust Indenture appear to conflict with any other provision herein or should the Indenture
Trustee’s duties or obligations hereunder be unclear, and the Indenture Trustee shall incur no
liability in refraining from acting until it receives such instructions. The Indenture Trustee
shall be fully protected for acting in accordance with any instructions received under this Section
7.07.




ARTICLE VIII




INDEMNIFICATION



          SECTION 8.01. Scope of Indemnification




          The Indenture Trustee shall be indemnified by the Owner to the extent and in the manner
provided in Section 8 of the Participation Agreement.







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ARTICLE IX




SUCCESSOR AND SEPARATE TRUSTEES



          SECTION 9.01. Resignation of Indenture Trustee; Appointment of Successor




               (a) The Indenture Trustee or any successor thereto may resign at any time without cause by
giving at least thirty (30) days’ prior written notice to the Owner and each Note Holder, such
resignation to be effective upon the acceptance of the trusteeship by a successor Indenture
Trustee. In addition, a Majority in Interest of Note Holders may at any time (but only with the
consent of the Owner, which consent shall not be unreasonably withheld, except that such consent
shall not be necessary if an Event of Default is continuing) remove the Indenture Trustee without
cause by an instrument in writing delivered to the Owner and the Indenture Trustee, and the
Indenture Trustee shall promptly notify each Note Holder thereof in writing, such removal to be
effective upon the acceptance of the trusteeship by a successor Indenture Trustee. In the case of
the resignation or removal of the Indenture Trustee, a Majority in Interest of Note Holders may
appoint a successor Indenture Trustee by an instrument signed by such holders, which successor, so
long as no Event of Default shall have occurred and be continuing, shall be subject to the Owner’s
reasonable approval. If a successor Indenture Trustee shall not have been appointed within thirty
(30) days after such notice of resignation or removal, the Indenture Trustee, the Owner or any Note
Holder may apply to any court of competent jurisdiction to appoint a successor Indenture Trustee to
act until such time, if any, as a successor shall have been appointed as above provided. The
successor Indenture Trustee so appointed by such court shall immediately and without further act be
superseded by any successor Indenture Trustee appointed as above provided.



               (b) Any successor Indenture Trustee, however appointed, shall execute and deliver to the Owner
and the predecessor Indenture Trustee an instrument accepting such appointment and assuming the
obligations of the Indenture Trustee arising from and after the time of such appointment, and
thereupon such successor Indenture Trustee, without further act, shall become vested with all the
estates, properties, rights, powers and duties of the predecessor Indenture Trustee hereunder in
the trust hereunder applicable to it with like effect as if originally named the Indenture Trustee
herein; but nevertheless upon the written request of such successor Indenture Trustee, such
predecessor Indenture Trustee shall execute and deliver an instrument transferring to such
successor Indenture Trustee, upon the trusts herein expressed applicable to it, all the estates,
properties, rights and powers of such predecessor Indenture Trustee, and such predecessor Indenture
Trustee shall duly assign, transfer, deliver and pay over to such successor Indenture Trustee all
monies or other property then held by such predecessor Indenture Trustee hereunder.



               (c) Any successor Indenture Trustee, however appointed, shall be a bank or trust company
having its principal place of business in the Borough of Manhattan, City and State of New York;
Chicago, Illinois; Hartford, Connecticut; Wilmington, Delaware; or Boston, Massachusetts and having
(or whose obligations under the Operative Agreements are guaranteed by an affiliated entity having)
a combined capital and surplus of at least



55









 




$100,000,000, if there be such an institution willing, able and legally qualified to perform
the duties of the Indenture Trustee hereunder upon reasonable or customary terms.




               (d) Any corporation into which the Indenture Trustee may be merged or converted or with which
it may be consolidated, or any corporation resulting from any merger, conversion or consolidation
to which the Indenture Trustee shall be a party, or any corporation to which substantially all the
corporate trust business of the Indenture Trustee may be transferred, shall, subject to the terms
of paragraph (c) of this Section 9.01, be a successor Indenture Trustee and the Indenture Trustee
under this Trust Indenture without further act.



               (e) The Owner consents to any change in the identity of the Indenture Trustee on the
International Registry occasioned by provisions of this Section 9.01, and if required by the
International Registry to reflect such change, will provide its consent thereto.



          SECTION 9.02. Appointment of Additional and Separate Trustees




               (a) Whenever (i) the Indenture Trustee shall deem it necessary or desirable in order to
conform to any Law of any jurisdiction in which all or any part of the Collateral shall be situated
or to make any claim or bring any suit with respect to or in connection with the Collateral, this
Trust Indenture, any other Indenture Agreement, the Equipment Notes or any of the transactions
contemplated by the Participation Agreement, (ii) the Indenture Trustee shall be advised by counsel
satisfactory to it that it is so necessary or prudent in the interests of the Note Holders (and the
Indenture Trustee shall so advise the Owner), or (iii) the Indenture Trustee shall have been
requested to do so by a Majority in Interest of Note Holders, then in any such case, the Indenture
Trustee and, upon the written request of the Indenture Trustee, the Owner, shall execute and
deliver an indenture supplemental hereto and such other instruments as may from time to time be
necessary or advisable either (1) to constitute one or more bank or trust companies or one or more
persons approved by the Indenture Trustee, either to act jointly with the Indenture Trustee as
additional trustee or trustees of all or any part of the Collateral, or to act as separate trustee
or trustees of all or any part of the Collateral, in each case with such rights, powers, duties and
obligations consistent with this Trust Indenture as may be provided in such supplemental indenture
or other instruments as the Indenture Trustee or a Majority in Interest of Note Holders may deem
necessary or advisable, or (2) to clarify, add to or subtract from the rights, powers, duties and
obligations theretofore granted any such additional or separate trustee, subject in each case to
the remaining provisions of this Section 9.02. If the Owner shall not have taken any action
requested of it under this Section 9.02(a) that is permitted or required by its terms within 15
days after the receipt of a written request from the Indenture Trustee so to do, or if an Event of
Default shall have occurred and be continuing, the Indenture Trustee may act under the foregoing
provisions of this Section 9.02(a) without the concurrence of the Owner, and the Owner hereby
irrevocably appoints (which appointment is coupled with an interest) the Indenture Trustee, its
agent and attorney-in-fact to act for it under the foregoing provisions of this Section 9.02(a) in
either of such contingencies. The Indenture Trustee may, in such capacity, execute, deliver and
perform any such supplemental indenture, or any such instrument, as may be required for the
appointment of any such additional or separate trustee or for the clarification of, addition to or
subtraction from the rights, powers, duties or obligations theretofore granted to any such
additional or separate trustee. In case any additional or separate trustee appointed under this
Section 9.02(a) shall die, become incapable of acting,



56









 




resign or be moved, all the assets, property, rights, powers, trusts, duties and obligations
of such additional or separate trustee shall revert to the Indenture Trustee until a successor
additional or separate trustee is appointed as provided in this Section 9.02(a).




               (b) No additional or separate trustee shall be entitled to exercise any of the rights, powers,
duties and obligations conferred upon the Indenture Trustee in respect of the custody, investment
and payment of monies and all monies received by any such additional or separate trustee from or
constituting part of the Collateral or otherwise payable under any Operative Agreement to the
Indenture Trustee shall be promptly paid over by it to the Indenture Trustee. All other rights,
powers, duties and obligations conferred or imposed upon any additional or separate trustee shall
be exercised or performed by the Indenture Trustee and such additional or separate trustee jointly
except to the extent that applicable Law of any jurisdiction in which any particular act is to be
performed renders the Indenture Trustee incompetent or unqualified to perform such act, in which
event such rights, powers, duties and obligations (including the holding of title to all or part of
the Collateral in any such jurisdiction) shall be exercised and performed by such additional or
separate trustee. No additional or separate trustee shall take any discretionary action except on
the instructions of the Indenture Trustee or a Majority in Interest of Note Holders. No trustee
hereunder shall be personally liable by reason of any act or omission of any other trustee
hereunder, except that the Indenture Trustee shall be liable for the consequences of its lack of
reasonable care in selecting, and the Indenture Trustee’s own actions in acting with, any
additional or separate trustee. Each additional or separate trustee appointed pursuant to this
Section 9.02 shall be subject to, and shall have the benefit of Articles V through IX and Article
XI hereof insofar as they apply to the Indenture Trustee. The powers of any additional or separate
trustee appointed pursuant to this Section 9.02 shall not in any case exceed those of the Indenture
Trustee hereunder.



               (c) If at any time the Indenture Trustee shall deem it no longer necessary or in order to
conform to any such Law or take any such action or shall be advised by such counsel that it is no
longer so necessary or desirable in the interest of the Note Holders, or in the event that the
Indenture Trustee shall have been requested to do so in writing by a Majority in Interest of Note
Holders, the Indenture Trustee and, upon the written request of the Indenture Trustee, the Owner,
shall execute and deliver an indenture supplemental hereto and all other instruments and agreements
necessary or proper to remove any additional or separate trustee. The Indenture Trustee may act on
behalf of the Owner under this Section 9.02(c) when and to the extent it could so act under Section
9.02(a) hereof.



ARTICLE X




SUPPLEMENTS AND AMENDMENTS TO THIS TRUST INDENTURE

AND OTHER DOCUMENTS



          SECTION 10.01. Instructions of Majority; Limitations




               (a) The Indenture Trustee agrees with the Note Holders that it shall not enter into any
amendment, waiver or modification of, supplement or consent to this Trust Indenture, or any other
Operative Agreement to which it is a party, unless such supplement,






57









 







amendment, waiver, modification or consent is consented to in writing by a Majority in
Interest of Note Holders, but upon the written request of a Majority in Interest of Note Holders,
the Indenture Trustee shall from time to time enter into any such supplement or amendment, or
execute and deliver any such waiver, modification or consent, as may be specified in such request
and as may be (in the case of any such amendment, supplement or modification), to the extent such
agreement is required, agreed to by the Owner and, as may be appropriate, the Airframe Manufacturer
or the Engine Manufacturer; provided, however, that, without the consent of each
holder of an affected Equipment Note then outstanding and the Liquidity Providers, no such
amendment, waiver or modification of the terms of, or consent under, any thereof, shall (i) modify
any of the provisions of this Section 10.01, or of Article II or III or Section 5.01, 5.02(c),
5.02(d), or 6.02 hereof, the definitions of “Event of Default,” “Default,” “Majority in Interest of
Note Holders,” “Make-Whole Amount” or “Note Holder,” or the percentage of Note Holders required to
take or approve any action hereunder, (ii) reduce the amount, or change the time of payment or
method of calculation of any amount, of Original Amount, Make-Whole Amount, if any, or interest
with respect to any Equipment Note, (iii) reduce, modify or amend any indemnities in favor of the
Indenture Trustee or the Note Holders (except that the Indenture Trustee may consent to any waiver
or reduction of an indemnity payable to it), or the other Indenture Indemnitees or (iv) permit the
creation of any Lien on the Collateral or any part thereof other than Permitted Liens or deprive
any Note Holder of the benefit of the Lien of this Trust Indenture on the Collateral, except as
provided in connection with the exercise of remedies under Article V hereof; provided,
further, that without the consent of each holder of an affected Related Equipment Note then
outstanding, no such amendment, waiver or modification of terms of, or consent under, any thereof
shall modify Section 3.03 or deprive any Related Note Holder of the benefit of the Lien of this
Trust Indenture on the Collateral, except as provided in connection with the exercise of remedies
under Article V hereof. Notwithstanding the foregoing, without the consent of the affected
Liquidity Provider neither the Owner nor the Indenture Trustee shall enter into any amendment,
waiver or modification of, supplement or consent to this Trust Indenture or the other Operative
Agreements which shall reduce, modify or amend any indemnities in favor of such Liquidity Provider.




               (b) The Owner and the Indenture Trustee may enter into one or more agreements supplemental
hereto without the consent of any Note Holder for any of the following purposes: (i) (a) to cure
any defect or inconsistency herein or in the Equipment Notes, or to make any change not
inconsistent with the provisions hereof (provided that such change does not adversely
affect the interests of any Note Holder in its capacity solely as Note Holder) or (b) to cure any
ambiguity or correct any mistake; (ii) to evidence the succession of another party as the Owner in
accordance with the terms hereof or to evidence the succession of a new trustee hereunder pursuant
hereto, the removal of the trustee hereunder or the appointment of any co-trustee or co-trustees or
any separate or additional trustee or trustees; (iii) to convey, transfer, assign, mortgage or
pledge any property to or with the Indenture Trustee or to make any other provisions with respect
to matters or questions arising hereunder so long as such action shall not adversely affect the
interests of the Note Holders in its capacity solely as Note Holder; (iv) to correct or amplify the
description of any property at any time subject to the Lien of this Trust Indenture or better to
assure, convey and confirm unto the Indenture Trustee any property subject or required to be
subject to the Lien of this Trust Indenture, the Airframe or Engines or any Replacement Airframe or
Replacement Engine; (v) to add to the covenants of the Owner for the benefit of the Note Holders,
or to surrender any rights or power herein conferred upon the



58









 




Owner; (vi) to add to the rights of the Note Holders; (vii) to provide for the reissuance of
Series B Equipment Notes (and Related Series B Equipment Notes), to provide for the reissuance of
Series C Equipment Notes (and Related Series C Equipment Notes) and to make changes relating to any
of the foregoing and to provide for any credit support for any such reissued Series B Equipment
Notes or Related Series B Equipment Notes (including without limitation to secure claims for fees,
interest, expenses, reimbursement of advances and other obligations arising from such credit
support (including without limitation to specify such credit support as a “Liquidity Facility” and
the provider of any such credit support as a “Liquidity Provider”)), provided that such Equipment
Notes are issued in accordance with the Note Purchase Agreement and Section 9.1 of the
Intercreditor Agreement; and (viii) to include on the Equipment Notes any legend as may be required
by Law.




          SECTION 10.02. Indenture Trustee Protected




          If, in the opinion of the institution acting as the Indenture Trustee hereunder, any document
required to be executed by it pursuant to the terms of Section 10.01 hereof affects any right,
duty, immunity or indemnity with respect to such institution under this Trust Indenture, such
institution may in its discretion decline to execute such document.




          SECTION 10.03. Documents Mailed to Note Holders




          Promptly after the execution by the Owner or the Indenture Trustee of any document entered
into pursuant to Section 10.01 hereof, the Indenture Trustee shall mail, by first class mail,
postage prepaid, a copy thereof to the Owner (if not a party thereto) and to each Note Holder at
its address last set forth in the Equipment Note Register, but the failure of the Indenture Trustee
to mail such copies shall not impair or affect the validity of such document.




          SECTION 10.04. No Request Necessary for Trust Indenture Supplement




          No written request or consent of the Note Holders pursuant to Section 10.01 hereof shall be
required to enable the Indenture Trustee to execute and deliver a Trust Indenture Supplement
specifically required by the terms hereof.




ARTICLE XI




MISCELLANEOUS



          SECTION 11.01. Termination of Trust Indenture




          Upon (or at any time after) payment in full of the Original Amount of, Make-Whole Amount, if
any, and interest on and all other amounts due under all Equipment Notes and provided that there
shall then be no other Secured Obligations due to the Indenture Indemnitees, the Note Holders and
the Indenture Trustee hereunder or under the Participation Agreement, any other Operative
Agreement, any Related Equipment Note or any Related Indenture, the Owner shall direct the
Indenture Trustee to execute and deliver to or as directed in writing by the Owner an appropriate
instrument releasing the Aircraft and the Engines and (subject to paragraph (iv) of clause “Third”
of Section 3.03 hereof, if applicable) all other Collateral from the Lien of this






59









 







Trust Indenture and the Indenture Trustee shall execute and deliver such instrument as
aforesaid; provided, however, that this Trust Indenture and the trusts created
hereby shall earlier terminate and this Trust Indenture shall be of no further force or effect upon
any sale or other final disposition by the Indenture Trustee of all property constituting part of
the Collateral and the final distribution by the Indenture Trustee of all monies or other property
or proceeds constituting part of the Collateral in accordance with the terms hereof. Except as
aforesaid otherwise provided, this Trust Indenture and the trusts created hereby shall continue in
full force and effect in accordance with the terms hereof.




          SECTION 11.02. No Legal Title to Collateral in Note Holders




          No holder of an Equipment Note or a Related Equipment Note shall have legal title to any part
of the Collateral. No transfer, by operation of law or otherwise, of any Equipment Note or Related
Equipment Note or other right, title and interest of any Note Holder or holder of a Related
Equipment Note in and to the Collateral or hereunder shall operate to terminate this Trust
Indenture or entitle such holder or any successor or transferee of such holder to an accounting or
to the transfer to it of any legal title to any part of the Collateral.




          SECTION 11.03. Sale of Aircraft by Indenture Trustee Is Binding




          Any sale or other conveyance of the Collateral, or any part thereof (including any part
thereof or interest therein), by the Indenture Trustee made pursuant to the terms of this Trust
Indenture shall bind the Note Holders and shall be effective to transfer or convey all right, title
and interest of the Indenture Trustee, the Owner and such holders in and to such Collateral or part
thereof. No purchaser or other grantee shall be required to inquire as to the authorization,
necessity, expediency or regularity of such sale or conveyance or as to the application of any sale
or other proceeds with respect thereto by the Indenture Trustee.




          SECTION 11.04. Trust Indenture for Benefit of Owner, Indenture Trustee, Note Holders and the
other Indenture Indemnitees




          Nothing in this Trust Indenture, whether express or implied, shall be construed to give any
person other than the Owner, the Indenture Trustee, the Related Indenture Trustees, the Note
Holders, the Related Note Holders and the other Indenture Indemnitees, any legal or equitable
right, remedy or claim under or in respect of this Trust Indenture, except that the persons
referred to in the last paragraph of Section 4.02(b) shall be third party beneficiaries of such
paragraph.




          SECTION 11.05. Notices




          Unless otherwise expressly specified or permitted by the terms hereof, all notices, requests,
demands, authorizations, directions, consents, waivers or documents provided or permitted by this
Trust Indenture to be made, given, furnished or filed shall be in writing, personally delivered or
mailed by certified mail, postage prepaid, or by facsimile or confirmed telex, and (i) if to the
Owner, addressed to it at 111 West Rio Salado Parkway, Tempe, Arizona 85281, Attention: Vice
President and Treasurer, facsimile number (480) 693-5886, with a copy to Deputy General Counsel,
facsimile number (480) 693-5932, (ii) if to the Indenture Trustee, addressed to it at its office at
1100 North Market Street, Wilmington, Delaware 19890,






60









 







Attention: Corporate Trust Administration, facsimile number (302) 636-4140, (iii) if to any
Note Holder or any Indenture Indemnitee, addressed to such party at such address as such party
shall have furnished by notice to the Owner and the Indenture Trustee, or, until an address is so
furnished, addressed to the address of such party (if any) set forth on Schedule 1 to the
Participation Agreement or in the Equipment Note Register. Whenever any notice in writing is
required to be given by the Owner or the Indenture Trustee or any Note Holder to any of the other
of them, such notice shall be deemed given and such requirement satisfied when such notice is
received, or if such notice is mailed by certified mail, postage prepaid, three Business Days after
being mailed, addressed as provided above. Any party hereto may change the address to which
notices to such party will be sent by giving notice of such change to the other parties to this
Trust Indenture.




          SECTION 11.06. Severability




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




          SECTION 11.07. No Oral Modification or Continuing Waivers




          No term or provision of this Trust Indenture or the Equipment Notes may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed by the Owner and the
Indenture Trustee, in compliance with Section 10.01 hereof. Any waiver of the terms hereof or of
any Equipment Note shall be effective only in the specific instance and for the specific purpose
given.




          SECTION 11.08. Successors and Assigns




          All covenants and agreements contained herein shall be binding upon, and inure to the benefit
of, each of the parties hereto and the permitted successors and assigns of each, all as herein
provided. Any request, notice, direction, consent, waiver or other instrument or action by any
Note Holder shall bind the successors and assigns of such holder. Each Note Holder by its
acceptance of an Equipment Note agrees to be bound by this Trust Indenture and all provisions of
the Operative Agreements applicable to a Note Holder.




          SECTION 11.09. Headings




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




          SECTION 11.10. Normal Commercial Relations




          Anything contained in this Trust Indenture to the contrary notwithstanding, the Owner and the
Indenture Trustee may conduct any banking or other financial transactions, and have banking or
other commercial relationships, with Owner, fully to the same extent as if this






61









 







Trust Indenture were not in effect, including without limitation the making of loans or other
extensions of credit to the Owner for any purpose whatsoever, whether related to any of the
transactions contemplated hereby or otherwise.




          SECTION 11.11. Governing Law; Counterpart Form




          THIS TRUST INDENTURE SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAW OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.
THIS TRUST INDENTURE IS BEING DELIVERED IN THE STATE OF NEW YORK. This Trust Indenture may be
executed by the parties hereto in separate counterparts (or upon separate signature pages bound
together into one or more counterparts), each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute but one and the same instrument.




          SECTION 11.12. Voting By Note Holders




          All votes of the Note Holders shall be governed by a vote of a Majority in Interest of Note
Holders, except as otherwise provided herein.




          SECTION 11.13. Bankruptcy




          It is the intention of the parties that the Indenture Trustee shall be entitled to the
benefits of Section 1110 with respect to the right to take possession of the Aircraft, Airframe,
Engines and Parts and to enforce any of its other rights or remedies as provided herein in the
event of a case under Chapter 11 of the Bankruptcy Code in which Owner is a debtor, and in any
instance where more than one construction is possible of the terms and conditions hereof or any
other pertinent Operative Agreement, each such party agrees that a construction which would
preserve such benefits shall control over any construction which would not preserve such benefits.







62









 








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




	 	 	 	 	 
	 	US AIRWAYS, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	WILMINGTON TRUST COMPANY,

     as Indenture Trustee

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 




63











 





ANNEX A




DEFINITIONS



GENERAL PROVISIONS



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




	 	(i)	 	each of “Owner,” “Indenture Trustee,” “Note Holder” or any other person
includes, without prejudice to the provisions of any Operative Agreement, any successor
in interest to it and any permitted transferee, permitted purchaser or permitted
assignee of it;
	 
	 	(ii)	 	words importing the plural include the singular and words importing the
singular include the plural;
	 
	 	(iii)	 	any agreement, instrument or document, or any annex, schedule or exhibit
thereto, or any other part thereof, includes, without prejudice to the provisions of
any Operative Agreement, that agreement, instrument or document, or annex, schedule or
exhibit, or part, respectively, as amended, modified or supplemented from time to time
in accordance with its terms and in accordance with the Operative Agreements, and any
agreement, instrument or document entered into in substitution or replacement therefor
(including, without limitation, in the case of each Pass Through Trust Agreement, the
“Related Pass Through Trust Agreement” as defined therein);
	 
	 	(iv)	 	any provision of any Law includes any such provision as amended, modified,
supplemented, substituted, reissued or reenacted prior to the Closing Date, and
thereafter from time to time;
	 
	 	(v)	 	the words “Agreement,” “this Agreement,” “hereby,” “herein,” “hereto,” “hereof”
and “hereunder” and words of similar import when used in any Operative Agreement refer
to such Operative Agreement as a whole and not to any particular provision of such
Operative Agreement;
	 
	 	(vi)	 	the words “including,” “including, without limitation,” “including, but not
limited to,” and terms or phrases of similar import when used in any Operative
Agreement, with respect to any matter or thing, mean including, without limitation,
such matter or thing; and
	 
	 	(vii)	 	a “Section,” an “Exhibit,” an “Annex” or a “Schedule” in any Operative
Agreement, or in any annex thereto, is a reference to a section of, or an exhibit, an
annex or a schedule to, such Operative Agreement or such annex, respectively.





               (b) Each exhibit, annex and schedule to each Operative Agreement is incorporated in, and shall
be deemed to be a part of, such Operative Agreement.



 









 





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



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



               (e) For purposes of each Operative Agreement, the occurrence and continuance of a Default or
Event of Default referred to in Section 5.01(v),(vi) or (vii) shall not be deemed to prohibit the
Owner from taking any action or exercising any right that is conditioned on no Special Default,
Default or Event of Default having occurred and be continuing if such Special Default, Default or
Event of Default consists of the institution of reorganization proceedings with respect to the
Owner under Chapter 11 of the Bankruptcy Code and the trustee or debtor-in-possession in such
proceedings shall have agreed to perform its obligations under the Trust Indenture with the
approval of the applicable court and thereafter shall have continued to perform such obligations in
accordance with Section 1110.



DEFINED TERMS




          “Act” means part A of subtitle VII of title 49, United States Code.



          “Actual Knowledge” means (a) as it applies to the Indenture Trustee, actual knowledge
of a responsible officer in the Corporate Trust Office, and (b) as it applies to the Owner, actual
knowledge of a Vice President or more senior officer of the Owner or any other officer of the Owner
having responsibility for the transactions contemplated by the Operative Agreements;
provided that each of the Owner and the Indenture Trustee shall be deemed to have “Actual
Knowledge” of any matter as to which it has received notice from the Owner, any Note Holder or the
Indenture Trustee, such notice having been given pursuant to Section 11.05 of the Trust Indenture.



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



          “Aircraft” means, collectively, the Airframe and Engines.



          “Aircraft Bill of Sale” means the full warranty bill of sale covering the Aircraft
delivered by Airframe Manufacturer to the Owner.



          “Aircraft Documents” means all technical data, manuals and log books, and all
inspection, modification and overhaul records and other service, repair, maintenance and technical
records that are required by the Owner’s FAA approved maintenance program (or the maintenance
program of an applicable Aviation Authority), to be maintained with respect to the



2









 







Aircraft, Airframe, Engines or Parts, and such term shall include all additions, renewals,
revisions and replacements of any such materials from time to time made, or required to be made, by
the Owner’s FAA approved maintenance program (or the maintenance program of an applicable Aviation
Authority), and in each case in whatever form and by whatever means or medium (including, without
limitation, microfiche, microfilm, paper or computer disk) such materials may be maintained or
retained by or on behalf of the Owner (provided, that all such materials shall be
maintained in the English language).



          “Airframe” means (a) the aircraft (excluding Engines or engines from time to time
installed thereon) manufactured by Airframe Manufacturer and identified by Airframe Manufacturer’s
model number, United States registration number and Airframe Manufacturer’s serial number set forth
in the initial Trust Indenture Supplement and any Replacement Airframe and (b) any and all Parts
incorporated or installed in or attached or appurtenant to such airframe, and any and all Parts
removed from such airframe, unless the Lien of the Trust Indenture shall not be applicable to such
Parts in accordance with Section 4.04 of the Trust Indenture. Upon substitution of a Replacement
Airframe under and in accordance with the Trust Indenture, such Replacement Airframe shall become
subject to the Trust Indenture and shall be the “Airframe” for all purposes of the Trust Indenture
and the other Operative Agreements and thereupon the Airframe for which the substitution is made
shall no longer be subject to the Trust Indenture, and such replaced Airframe shall cease to be the
“Airframe.”



          “Airframe Manufacturer” means Airbus S.A.S., a société par actions simplifiée
organized and existing under the laws of the Republic of France.



          “Applicable Pass Through Trust” means each of the separate pass through trusts created
under the Applicable Pass Through Trust Agreements.



          “Applicable Pass Through Trust Agreement” means each of the separate Pass Through
Trust Agreements by and between the Owner and an Applicable Pass Through Trustee.



          “Applicable Pass Through Trustee” means each Pass Through Trustee that is a party to
the Participation Agreement.



          “Average Life Date” for any Equipment Note shall be the date which follows the time of
determination by a period equal to the Remaining Weighted Average Life of such Equipment Note.
“Remaining Weighted Average Life” on a given date with respect to any Equipment Note shall be the
number of days equal to the quotient obtained by dividing (a) the sum of each of the products
obtained by multiplying (i) the amount of each then remaining scheduled payment of principal of
such Equipment Note by (ii) the number of days from and including such determination date to but
excluding the date on which such payment of principal is scheduled to be made, by (b) the then
outstanding principal amount of such Equipment Note.



          “Aviation Authority” means the FAA or, if the Aircraft is permitted to be, and is,
registered with any other Government Entity under and in accordance with Section 4.02(e) of the
Trust Indenture and Section 6.4.5 of the Participation Agreement, such other Government Entity.



3









 





          “Bankruptcy Code” means the United States Bankruptcy Code, 11 U.S.C. Sections 101 et
seq.



          “Basic Pass Through Trust Agreement” means the Pass Through Trust Agreement, dated
December 21, 2010, between the Owner and Pass Through Trustee, but does not include any Trust
Supplement.



          “Bills of Sale” means the FAA Bill of Sale and the Aircraft Bill of Sale.



          “Business Day” means any day other than a Saturday, Sunday or other day on which
commercial banks are authorized or required by law to close in New York, New York, Phoenix,
Arizona, or Wilmington, Delaware.



          “Cape Town Treaty” means the Cape Town Convention on International Interests in
Mobile Equipment and the related Aircraft Equipment Protocol, as in effect in the United States.



          “Cash Equivalents” means the following securities (which shall mature within 90 days
of the date of purchase thereof): (a) direct obligations of the U.S. Government; (b) obligations
fully guaranteed by the U.S. Government; (c) certificates of deposit issued by, or bankers’
acceptances of, or time deposits or a deposit account with, the Indenture Trustee or any bank,
trust company or national banking association incorporated or doing business under the laws of the
United States or any state thereof having a combined capital and surplus and retained earnings of
at least $500,000,000 and having a rating of “C” or better from the Thomson BankWatch Service; or
(d) commercial paper of any issuer doing business under the laws of the United States or one of the
states thereof and in each case having a rating assigned to such commercial paper by Standard &
Poor’s Ratings Services or Moody’s Investors Service, Inc. equal to A1 (or higher) or P-1,
respectively.



          “Certificate Owner” is defined in the Pass Through Trust Agreements.



          “Citizen of the United States” is defined in 49 U.S.C. § 40102(a)(15).



          “Class A Pass Through Trust” means the US Airways Pass Through Trust 2011-1A.



          “Class B Pass Through Trust” means the US Airways Pass Through Trust 2011-1B.



          “Class C Pass Through Trust” means the US Airways Pass Through Trust 2011-1C.



          “Closing” means the closing of the transactions contemplated by the Participation
Agreement.



          “Closing Date” means the date on which the Closing occurs.



4









 





          “Code” means the Internal Revenue Code of 1986, as amended; provided that, when used
in relation to a Plan, “Code” shall mean the Internal Revenue Code of 1986 and any regulations and
rulings issued thereunder, all as amended and in effect from time to time.



          “Collateral” is defined in the Granting Clause of the Trust Indenture.



          [“Consent and Agreement” means the Manufacturer Consent and Agreement [____], dated as
of even date with the Participation Agreement, of Airframe Manufacturer relating to the French
Pledge Agreement.]10



          “Corporate Trust Office” means the principal office of the Indenture Trustee located
at Indenture Trustee’s address for notices under the Participation Agreement or such other office
at which the Indenture Trustee’s corporate trust business shall be administered which the Indenture
Trustee shall have specified by notice in writing to the Owner and each Note Holder.



          “CRAF” means the Civil Reserve Air Fleet Program established pursuant to 10 U.S.C.
Section 9511-13 or any similar substitute program.



          “Debt Rate” means, with respect to (i) any Series of Equipment Notes, the rate per
annum specified for such Series under the heading “Interest Rate” in Schedule I to the Trust
Indenture, and (ii) any other purpose, with respect to any period, the weighted average interest
rate per annum during such period borne by the outstanding Equipment Notes, excluding any interest
payable at the Payment Due Rate.



          “Default” means any event or condition that with the giving of notice or the lapse of
time or both would become an Event of Default.



          “Deposit Agreement” means each of the three Deposit Agreements between the Escrow
Agent and the Depositary, dated as of the Issuance Date, which relate to the Class A, Class B or
Class C Pass Through Trust, provided that, for purposes of any obligation of the Owner, no
amendment, modification or supplement to, or substitution or replacement of, any such Deposit
Agreement shall be effective unless consented to by the Owner.



          “Depositary” means The Bank of New York Mellon, as Depositary under each Deposit
Agreement.



          “Dollars,” “United States Dollars” or “$” means the lawful currency of
the United States.



          “DOT” means the Department of Transportation of the United States or any Government
Entity succeeding to the functions of such Department of Transportation.



          “Eligible Account” means an account established by and with an Eligible Institution at
the request of the Indenture Trustee, which institution agrees, for all purposes of the





 




			
	10.	 	Insert for New Aircraft.





5









 




UCC including Article 8 thereof, that (a) such account shall be a “securities account” (as
defined in Section 8-501(a) of the UCC), (b) all property (other than cash) credited to such
account shall be treated as a “financial asset” (as defined in Section 8-102(a)(9) of the UCC), (c)
the Indenture Trustee shall be the “entitlement holder” (as defined in Section 8-102(a)(7) of the
UCC) in respect of such account, (d) it will comply with all entitlement orders issued by the
Indenture Trustee to the exclusion of the Owner, and (e) the “securities intermediary jurisdiction”
(under Section 8-110(e) of the UCC) shall be the State of New York.




          “Eligible Institution” means the corporate trust department of (a) Wilmington Trust
Company, acting solely in its capacity as a “securities intermediary” (as defined in Section
8-102(a)(14) of the UCC), or (b) a depository institution organized under the laws of the United
States of America or any one of the states thereof or the District of Columbia (or any U.S. branch
of a foreign bank), which has a long-term unsecured debt rating from Moody’s and Standard & Poor’s
of at least A-3 or its equivalent.



          “Engine” means (a) each of the engines manufactured by Engine Manufacturer and
identified by Engine Manufacturer’s model number and Engine Manufacturer’s serial number set forth
in the initial Trust Indenture Supplement and originally installed on the Airframe on the Closing
Date, and any Replacement Engine, in any case whether or not from time to time installed on such
Airframe or installed on any other airframe or aircraft, and (b) any and all Parts incorporated or
installed in or attached or appurtenant to such engine, and any and all Parts removed from such
engine, unless the Lien of the Trust Indenture shall not apply to such Parts in accordance with
Section 4.04 of the Trust Indenture. Upon substitution of a Replacement Engine under and in
accordance with the Trust Indenture, such Replacement Engine shall become subject to the Trust
Indenture and shall be an “Engine” for all purposes of the Trust Indenture and the other Operative
Agreements and thereupon the Engine for which the substitution is made shall no longer be subject
to the Trust Indenture, and such replaced Engine shall cease to be an “Engine.”



          [“Engine Consent and Agreement” means the Engine Manufacturer Consent and Agreement
[____], dated as of even date with the Participation Agreement, of Engine
Manufacturer.]11



          “Engine Manufacturer” means [__________________], a [__________] organized under the
laws of [__________].



          “Equipment Note Register” is defined in Section 2.06 of the Trust Indenture.



          “Equipment Notes” means and includes any equipment notes issued under the Trust
Indenture in the form specified in Section 2.01 thereof (as such form may be varied pursuant to the
terms of the Trust Indenture) and any Equipment Note issued under the Trust Indenture in exchange
for or replacement of any Equipment Note.





 




			
	11.	 	Insert for New Aircraft.





6









 





          “ERISA” means the Employee Retirement Income Security Act of 1974, and any regulations
and rulings issued thereunder all as amended and in effect from time to time.



          “Escrow Agent” means Wells Fargo Bank Northwest, National Assocation, as Escrow Agent
under each of the Escrow Agreements.



          “Escrow Agreement” means each of the three Escrow and Paying Agent Agreements, among
the Escrow Agent, the Paying Agent, certain initial purchasers of the Pass Through Certificates
named therein and one of the Pass Through Trustees, dated as of the Issuance Date, which relate to
the Class A, Class B or Class C Pass Through Trust, provided that, for purposes of any
obligation of the Owner, no amendment, modification or supplement to, or substitution or
replacement of, any such Escrow Agreement shall be effective unless consented to by the Owner.



          “Event of Default” is defined in Section 5.01 of the Trust Indenture.



          “Event of Loss” means, with respect to the Aircraft, Airframe or any Engine, any of
the following circumstances, conditions or events with respect to such property, for any reason
whatsoever:



               (a) the destruction of such property, damage to such property beyond economic repair or
rendition of such property permanently unfit for normal use by the Owner;



               (b) the actual or constructive total loss of such property or any damage to such property, or
requisition of title or use of such property, which results in an insurance settlement with respect
to such property on the basis of a total loss or constructive or compromised total loss;



               (c) any theft, hijacking or disappearance of such property for a period of one hundred and
eighty (180) consecutive days or more;



               (d) any seizure, condemnation, confiscation, taking or requisition (including loss of title)
of such property by any Government Entity or purported Government Entity (other than a requisition
of use by the U.S. Government) for a period exceeding one hundred and eighty (180) consecutive
days;



               (e) as a result of any law, rule, regulation, order or other action by the Aviation Authority
or by any Government Entity of the government of registry of the Aircraft or by any Government
Entity otherwise having jurisdiction over the operation or use of the Aircraft, the use of such
property in the normal course of the Owner’s business of passenger air transportation is prohibited
for a period of one hundred and eighty (180) consecutive days unless the Owner, prior to the
expiration of such one hundred and eighty (180)-day period, shall have undertaken and shall be
diligently carrying forward such steps as may be necessary or desirable to permit the normal use of
such property by the Owner, but in any event if such use shall have been prohibited for a period of
two (2) consecutive years, provided that no Event of Loss shall be deemed to have occurred if such
prohibition has been applicable to the Owner’s entire U.S. fleet of such property and the Owner,
prior to the expiration of such two (2)-year period, shall have



7









 







conformed at least one unit of such property in its fleet to the requirements of any such law,
rule, regulation, order or other action and commenced regular commercial use of the same in such
jurisdiction and shall be diligently carrying forward, in a manner which does not discriminate
against such property in so conforming such property, steps which are necessary or desirable to
permit the normal use of the Aircraft by the Owner, but in any event if such use shall have been
prohibited for a period of three (3) years.



          [“Existing Financing” means the financing arrangements that provided for a security
interest granted by the Owner in the Aircraft and were outstanding on or after June [__],
2011.]12



          “Expenses” means any and all liabilities, obligations, losses, damages, settlements,
penalties, claims, actions, suits, costs, expenses and disbursements (including, without
limitation, reasonable fees and disbursements of legal counsel, accountants, appraisers, inspectors
or other professionals, and costs of investigation).



          “FAA” means the Federal Aviation Administration of the United States or any Government
Entity succeeding to the functions of such Federal Aviation Administration.



          “FAA Bill of Sale” means a bill of sale for the Aircraft on AC Form 8050-2 (or such
other form as may be approved by the FAA) delivered to the Owner by Airframe Manufacturer.



          “FAA Filed Documents” means the [the FAA Bill of Sale, an application for registration
of the Aircraft with the FAA in the name of Owner,]13 [Release,]14 the Trust
Indenture and the initial Trust Supplement.



          “FAA Regulations” means the Federal Aviation Regulations issued or promulgated
pursuant to the Act from time to time.



          “Financing Statements” means, collectively, UCC financing statements covering the
Collateral, by the Owner, as debtor, showing the Indenture Trustee as secured party, [and UCC
termination statements with respect to the termination of the security interest granted under the
Existing Financing]15 for filing in Delaware and each other jurisdiction that, in the
opinion of the Indenture Trustee, is necessary to perfect its Lien on the Collateral.





 




			
	12.	 	Insert for Owned Aircraft.
	 
	13.	 	Insert for New Aircraft.
	 
	14.	 	Insert for Owned Aircraft.
	 
	15.	 	Insert for Owned Aircraft.





8









 





          [“French Pledge Agreement” means the French Pledge Agreement with respect to the
Aircraft, dated the Closing Date, between the Owner (as pledgor) and the Indenture Trustee (as
beneficiary).]16



          “GAAP” means generally accepted accounting principles as set forth in the statements
of financial accounting standards issued by the Financial Accounting Standards Board of the
American Institute of Certified Public Accountants, as such principles may at any time or from time
to time be varied by any applicable financial accounting rules or regulations issued by the SEC
and, with respect to any person, shall mean such principles applied on a basis consistent with
prior periods except as may be disclosed in such person’s financial statements.



          “Government Entity” means (a) any federal, state, provincial or similar government,
and any body, board, department, commission, court, tribunal, authority, agency or other
instrumentality of any such government or otherwise exercising any executive, legislative,
judicial, administrative or regulatory functions of such government or (b) any other government
entity having jurisdiction over any matter contemplated by the Operative Agreements or relating to
the observance or performance of the obligations of any of the parties to the Operative Agreements.



          “Indemnitee” means (i) WTC and the Indenture Trustee, (ii) each separate or additional
trustee appointed pursuant to the Trust Indenture, (iii) the Subordination Agent, the Paying Agent
and the Escrow Agent, (iv) the Liquidity Providers, (v) the Pass Through Trustees and each Related
Note Holder, (vi) each Affiliate of the persons described in clauses (i) and (ii), (vii) each
Affiliate of the persons described in clauses (iii), (iv) and (v), (viii) the respective directors,
officers, employees, agents and servants of each of the persons described in clauses (i), (ii) and
(vi), (ix) the respective directors, officers, employees, agents and servants of each of the
persons described in clauses (iii), (iv), (v) and (vii), (x) the successors and permitted assigns
of the persons described in clauses (i), (ii) and (viii), and (xi) the successors and permitted
assigns of the persons described in clauses (iii), (iv), (v) and (ix); provided that the persons
described in clauses (iii), (iv), (v), (vii), (ix) and (xi) are Indemnitees only for purposes of
Section 8.1 of the Participation Agreement. If any Indemnitee is Airframe Manufacturer or Engine
Manufacturer or any subcontractor or supplier of either thereof, such Person shall be an Indemnitee
only in its capacity as Note Holder.



          “Indenture Agreements” means [the Purchase Agreement and]17 the Bills of
Sale, to the extent included in Granting Clause (2) of the Trust Indenture, and any other contract,
agreement or instrument from time to time assigned or pledged under the Trust Indenture.



          “Indenture Default” means any condition, circumstance, act or event that, with the
giving of notice, the lapse of time or both, would constitute an Indenture Event of Default.





 




			
	16	 	Insert for New Aircraft.
	 
	17.	 	Insert for New Aircraft.





9









 





          “Indenture Event of Default” means any one or more of the conditions, circumstances,
acts or events set forth in Section 5.01 of the Trust Indenture.



          “Indenture Indemnitee” means (i) WTC and the Indenture Trustee, (ii) each separate or
additional trustee appointed pursuant to the Trust Indenture, (iii) the Subordination Agent, (iv)
each Liquidity Provider, (v) each Pass Through Trustee and each Related Note Holder, (vi) the
Paying Agent, (vii) the Escrow Agent and (viii) each of the respective directors, officers,
employees, agents and servants of each of the persons described in clauses (i) through (vii)
inclusive above.



          “Indenture Trustee” means Wilmington Trust Company, a Delaware banking corporation,
not in its individual capacity but solely as indenture trustee under the Trust Indenture.



          “Intercreditor Agreement” means that certain Intercreditor Agreement among the Pass
Through Trustees, the Liquidity Providers and the Subordination Agent, dated as of the Issuance
Date, provided that for purposes of any obligation of the Owner, no amendment, modification or
supplement to, or substitution or replacement of, such Intercreditor Agreement shall be effective
unless consented to by the Owner.



          “International Interest” is defined in the Cape Town Treaty.



          “International Registry” is defined in the Cape Town Treaty.



          “IRS” means the Internal Revenue Service of the United States or any Government Entity
succeeding to the functions of such Internal Revenue Service.



          “Issuance Date” means June 28, 2011.



          “Law” means (a) any constitution, treaty, statute, law, decree, regulation, order,
rule or directive of any Government Entity, and (b) any judicial or administrative interpretation
or application of, or decision under, any of the foregoing.



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



          “Liquidity Facilities” means the two Revolving Credit Agreements (consisting of one
Revolving Credit Agreement with the Liquidity Provider with respect to the Class A Pass Through
Trust and a second Revolving Credit Agreement with the Liquidity Provider with respect to the Class
B Pass Through Trust) between the Subordination Agent, as borrower, and the Liquidity Provider,
each dated as of the Issuance Date, provided that, for purposes of any obligation of the
Owner, no amendment, modification or supplement to, or substitution or replacement of, any such
Liquidity Facility shall be effective unless consented to by the Owner.



          “Liquidity Provider” means Natixis S.A., a société anonyme, organized under the laws
of the Republic of France, acting through its New York Branch, as “Class A Liquidity Provider” and
“Class B Liquidity Provider” (as such terms are defined in the Intercreditor Agreement).



10









 





          “Majority in Interest of Note Holders” means as of a particular date of determination,
the holders of a majority in aggregate unpaid Original Amount of all Equipment Notes outstanding as
of such date (excluding any Equipment Notes held by the Owner or any of its Affiliates (unless all
Equipment Notes then outstanding shall be held by the Owner or any Affiliate of the Owner);
provided that for the purposes of directing any action or casting any vote or giving any
consent, waiver or instruction hereunder, any Note Holder of an Equipment Note or Equipment Notes
may allocate, in such Note Holder’s sole discretion, any fractional portion of the principal amount
of such Equipment Note or Equipment Notes in favor of or in opposition to any such action, vote,
consent, waiver or instruction.



          “Make-Whole Amount” means, with respect to any Equipment Note, an amount (as
determined by an independent investment bank of national standing) equal to the excess, if any, of
(a) the present value of the remaining scheduled payments of principal and interest to maturity of
such Equipment Note computed by discounting such payments on a semiannual basis on each Payment
Date (assuming a 360-day year of twelve 30-day months) using a discount rate equal to the Treasury
Yield plus the Make-Whole Spread, over (b) the outstanding principal amount of such
Equipment Note plus accrued interest to the date of determination. For purposes of determining the
Make-Whole Amount, “Treasury Yield” means, at the date of determination with respect to any
Equipment Note, the interest rate (expressed as a decimal and, in the case of United States
Treasury bills, converted to a bond equivalent yield) determined to be the per annum rate equal to
the semiannual yield to maturity for United States Treasury securities maturing on the Average Life
Date of such Equipment Note and trading in the public securities markets either as determined by
interpolation between the most recent weekly average yield to maturity for two series of United
States Treasury securities, trading in the public securities markets, (A) one maturing as close as
possible to, but earlier than, the Average Life Date of such Equipment Note and (B) the other
maturing as close as possible to, but later than, the Average Life Date of such Equipment Note, in
each case as published in the most recent H.15(519) or, if a weekly average yield to maturity for
United States Treasury securities maturing on the Average Life Date of such Equipment Note is
reported in the most recent H.15(519), such weekly average yield to maturity as published in such
H.15(519). “H.15(519)” means the weekly statistical release designated as such, or any successor
publication, published by the Board of Governors of the Federal Reserve System. The date of
determination of a Make-Whole Amount shall be the third Business Day prior to the applicable
payment or redemption date and the “most recent H.15(519)” means the H.15(519) published prior to
the close of business on the third Business Day prior to the applicable payment or redemption date.



          “Make-Whole Spread” means (i) in the case of Series A Equipment Notes, 0.50%, (ii) in
the case of Series B Equipment Notes, 0.50% and (iii) in the case of Series C Equipment Notes,
0.50%.



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



          “Minimum Liability Insurance Amount” is defined in Schedule 3 to the Participation
Agreement.



11









 





          “Mortgaged Property” is defined in Section 3.03 of the Trust Indenture.



          “Non-U.S. Person” means any Person other than a United States person, as defined in
Section 7701(a)(30) of the Code.



          “Note Holder” means at any time each registered holder of one or more Equipment Notes.



          “Note Purchase Agreement” means the Note Purchase Agreement, dated as of the Issuance
Date, among US Airways, Inc., the Subordination Agent, the Escrow Agent, the Paying Agent and the
Pass Through Trustee under each Pass Through Trust Agreement providing for, among other things, the
issuance and sale of certain equipment notes.



          “NY UCC” means the UCC as in effect on the date of determination in the State of New
York.



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



          “Operative Agreements” means, collectively, the Participation Agreement, the Trust
Indenture, the initial Trust Indenture Supplement, the Bills of Sale, and the Equipment Notes.



          “Operative Indentures” means each of the indentures under which notes have been issued
and purchased by the Pass Through Trustees pursuant to the Note Purchase Agreement (whether before
or after the date of the Trust Indenture).



          “Original Amount,” with respect to an Equipment Note, means the stated original
principal amount of such Equipment Note and, with respect to all Equipment Notes, means the
aggregate stated original principal amounts of all Equipment Notes.



          “Owner Person” means the Owner, any lessee, assignee, successor or other user or
person in possession of the Aircraft, Airframe or an Engine with or without color of right, or any
Affiliate of any of the foregoing (excluding any Tax Indemnitee or any related Tax Indemnitee with
respect thereto, or any person using or claiming any rights with respect to the Aircraft, Airframe
or an Engine directly by or through any of the persons in this parenthetical).



          “Participation Agreement” means the Participation Agreement [____], dated as of
[______ __], 20[__], among Owner, the Applicable Pass Through Trustees, the Subordination Agent and
the Indenture Trustee.



          “Parts” means all appliances, parts, components, instruments, appurtenances,
accessories, furnishings, seats and other equipment of whatever nature (other than (a) Engines or
engines, (b) Passenger Convenience Equipment, (c) cargo containers and (d) any Removable Part
leased by the Owner from a third party or subject to a security interest granted to a third party),
that may from time to time be installed or incorporated in or attached or appurtenant to the



12









 







Airframe or any Engine or removed therefrom unless the Lien of the Trust Indenture shall not
be applicable thereto in accordance with Section 4.04 of the Trust Indenture.



          “Pass Through Agreements” means the Pass Through Trust Agreements, the Note Purchase
Agreement, the Deposit Agreements, the Escrow Agreements, the Intercreditor Agreement, the
Liquidity Facilities and the Fee Letter referred to in Section 2.03 of each of the Liquidity
Facilities, provided that no amendment, modification or supplement to, or substitution or
replacement of, any such Fee Letter shall be effective for purposes of any obligation of the Owner,
unless consented to by the Owner.



          “Pass Through Certificates” means the pass through certificates issued by the Pass
Through Trusts (and any other pass through certificates for which such pass through certificates
may be exchanged).



          “Pass Through Trust” means each of the three separate pass through trusts created
under the Pass Through Trust Agreements.



          “Pass Through Trust Agreement” means each of the three separate Trust Supplements,
together in each case with the Basic Pass Through Trust Agreement, each dated as of the Issuance
Date by and between the Owner and a Pass Through Trustee, provided, that, for purposes of any
obligation of the Owner, no amendment, modification or supplement to, or substitution or
replacement of, any such Agreement shall be effective unless consented to by the Owner.



          “Pass Through Trustee” means Wilmington Trust Company, a Delaware banking corporation,
in its capacity as trustee under each Pass Through Trust Agreement.



          “Pass Through Trustee Agreements” means the Participation Agreement, the Pass Through
Trust Agreements, the Note Purchase Agreement, the Deposit Agreements, the Escrow Agreements, and
the Intercreditor Agreement.



          “Passenger Convenience Equipment” means components or systems installed on or affixed
to the Airframe that are used to provide individual telecommunications services or entertainment
services to passengers aboard the Aircraft.



          “Paying Agent” means Wilmington Trust Company, as paying agent under each of the
Escrow Agreements.



          “Payment Date” means each April 22 and October 22, commencing on October 22, 2011.



          “Payment Due Rate” means (a) with respect to (i) any payment made to a Note Holder
under any Series of Equipment Notes, the Debt Rate applicable to such Series plus 2% and (ii) any
other payment made under any Operative Agreement to any other Person, the Debt Rate applicable to
such payment plus 2% or, if less, (b) the maximum rate permitted by applicable law.



13









 





          “Permitted Air Carrier” means (i) any manufacturer of airframes or aircraft engines,
or any Affiliate of a manufacturer of airframes or aircraft engines, (ii) any Permitted Foreign Air
Carrier, (iii) any person approved in writing by the Indenture Trustee or (iv) any U.S. Air
Carrier.



          “Permitted Country” means any country listed on Schedule 4 to the Participation
Agreement.



          “Permitted Foreign Air Carrier” means any air carrier with its principal executive
offices in any Permitted Country and which is authorized to conduct commercial airline operations
and to operate jet aircraft similar to the Aircraft under the applicable Laws of such Permitted
Country.



          “Permitted Government Entity” means (i) the U.S. Government or (ii) any Government
Entity if the Aircraft is then registered under the laws of the country of such Government Entity.



          “Permitted Lease” means a lease permitted under Section 4.02(b) of the Trust
Indenture.



          “Permitted Lessee” means the lessee under a Permitted Lease.



          “Permitted Lien” means (a) the rights of the Indenture Trustee under the Operative
Agreements, or of any Permitted Lessee under any Permitted Lease; (b) Liens attributable to the
Indenture Trustee (both in its capacity as trustee under the Trust Indenture and in its individual
capacity); (c) the rights of others under agreements or arrangements to the extent expressly
permitted by the terms of Section 4.02(b) or 4.04 of the Trust Indenture; (d) Liens of Taxes of the
Owner (and its U.S. federal tax law consolidated group), or Liens for Taxes of any Tax Indemnitee
(and its U.S. federal tax law consolidated group) for which Owner is obligated to indemnify such
Tax Indemnitee under any of the Operative Agreements, in any such case either not yet due or being
contested in good faith by appropriate proceedings so long as such Liens and such proceedings do
not involve any material risk of the sale, forfeiture or loss of the Aircraft, the Airframe, or any
Engine or the interest of the Indenture Trustee therein or impair the Lien of the Trust Indenture;
(e) materialmen’s, mechanics’, workers’, repairers’, employees’ or other like Liens arising in the
ordinary course of business for amounts the payment of which is either not yet delinquent for more
than 60 days or is being contested in good faith by appropriate proceedings, so long as such Liens
and such proceedings do not involve any material risk of the sale, forfeiture or loss of the
Aircraft, the Airframe, or any Engine or the interest of the Indenture Trustee therein or impair
the Lien of the Trust Indenture; (f) Liens arising out of any judgment or award against the Owner
(or any Permitted Lessee), so long as such judgment shall, within 60 days after the entry thereof,
have been discharged or vacated, or execution thereof stayed pending appeal or shall have been
discharged, vacated or reversed within 60 days after the expiration of such stay, and so long as
during any such 60 day period there is not, or any such judgment or award does not involve, any
material risk of the sale, forfeiture or loss of the Aircraft, the Airframe, or any Engine or the
interest of the Indenture Trustee therein or impair the Lien of the Trust Indenture; (g) any other
Lien with respect to which Owner (or any Permitted Lessee) shall have provided a bond, cash
collateral or other security adequate in the reasonable



14









 







opinion of the Indenture Trustee; (h) any Lien approved in writing by the Indenture Trustee;
and (i) salvage or similar rights of insurers under policies required to be maintained by Owner
under Section 4.06 of the Trust Indenture.



          “Persons” or “persons” means individuals, firms, partnerships, joint ventures,
trusts, trustees, Government Entities, organizations, associations, corporations, limited liability
companies, government agencies, committees, departments, authorities and other bodies, corporate or
incorporate, whether having distinct legal status or not, or any member of any of the same.



          “Plan” means any employee benefit plan within the meaning of Section 3(3) of ERISA, or
any plan within the meaning of Section 4975(e)(1) of the Code.



          “Prospective International Interest” is defined in the Cape Town Treaty.



          “Purchase Agreement” means, [__], dated as of [__] between Airframe Manufacturer and
Owner, as amended (including all exhibits thereto, together with all letter agreements entered into
that by their terms constitute part of such Purchase Agreement), to the extent included in the
Granting Clause (2) of the Trust Indenture.



          “QIB” is defined in Section 2.07 of the Trust Indenture.



          “Related Equipment Note” means, as of any date, an “Equipment Note” as defined in each
Related Indenture, but only if as of such date it is held by the “Subordination Agent” under the
“Intercreditor Agreement”, as such terms are defined in such Related Indenture.



          “Related Indenture” means each Operative Indenture (other than the Trust Indenture).



          “Related Indenture Event of Default” means any “Indenture Event of Default” under any
Related Indenture.



          “Related Indenture Trustee” means the “Indenture Trustee” as defined in each Related
Indenture.



          “Related Make-Whole Amount” means the “Make-Whole Amount”, as defined in each Related
Indenture.



          “Related Note Holder” means a registered holder of a Related Equipment Note.



          “Related Secured Obligations” means, as of any date, the outstanding “Original
Amount”, as defined in each Related Indenture, of the Related Equipment Notes issued under such
Related Indenture, the accrued and unpaid interest due thereon in accordance with such Related
Indenture as of such date, the Related Make-Whole Amount, if any, due with respect thereto and all
other amounts due with respect thereto in accordance with such Related Indenture.



15









 





          “Related Series A Equipment Note” means, as of any date, a “Series A Equipment Note”,
as defined in each Related Indenture, but only if as of such date it is held by the “Subordination
Agent” under the “Intercreditor Agreement”, as such terms are defined in such Related Indenture.



          “Related Series B Equipment Note” means, as of any date, a “Series B Equipment Note”,
as defined in each Related Indenture, but only if as of such date it is held by the “Subordination
Agent” under the “Intercreditor Agreement”, as such terms are defined in such Related Indenture.



          “Related Series C Equipment Note” means, as of any date, a “Series C Equipment Note”,
as defined in each Related Indenture, but only if as of such date it is held by the “Subordination
Agent” under the “Intercreditor Agreement”, as such terms are defined in such Related Indenture.



          [“Release” means the instrument releasing the security interest in the Aircraft
granted to secure the Existing Financing.]18



          “Removable Part” is defined in Section 4.04(d) of the Trust Indenture.



          “Replacement Airframe” means any airframe substituted for the Airframe pursuant to
Article IV of the Trust Indenture.



          “Replacement Engine” means an engine substituted for an Engine pursuant to Article IV
of the Trust Indenture.



          “SEC” means the Securities and Exchange Commission of the United States, or any
Government Entity succeeding to the functions of such Securities and Exchange Commission.



          “Section 1110” means 11 U.S.C. Section 1110 of the Bankruptcy Code or any successor or
analogous section of the federal bankruptcy law in effect from time to time.



          “Secured Obligations” is defined in Section 2.05 of the Trust Indenture.



          “Securities Account” is defined in Section 3.07 of the Trust Indenture.



          “Securities Act” means the Securities Act of 1933, as amended.



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



          “Senior Holder” is defined in Section 2.12(c) of the Trust Indenture.



          “Series” means any of Series A, Series B or Series C.





 




			
	18.	 	Insert for Owned Aircraft.




16









 










          “Series A” or “Series A Equipment Notes” means Equipment Notes issued under
the Trust Indenture and designated as “Series A” thereunder, in the Original Amount and maturities
and bearing interest as specified in Schedule I to the Trust Indenture under the heading “Series
A.”



          “Series B” or “Series B Equipment Notes” means Equipment Notes issued under
the Trust Indenture and designated as “Series B” thereunder, in the Original Amount and maturities
and bearing interest as specified in Schedule I to the Trust Indenture under the heading “Series
B”.



          “Series C” or “Series C Equipment Notes” means Equipment Notes issued under
the Trust Indenture and designated as “Series C” thereunder, in the Original Amount and maturities
and bearing interest as specified in Schedule I to the Trust Indenture under the heading “Series
C”.



          “Similar Aircraft” means an Airbus Model [insert model reference the same as the
Aircraft] aircraft.



          “Special Default” means (i) the failure by the Owner to pay any amount of principal of
or interest on any Equipment Note when due or (ii) the occurrence of any Default or Event of
Default referred to in Section 5.01(v), (vi) or (vii).



          “Subordination Agent” means Wilmington Trust Company, as subordination agent under the
Intercreditor Agreement, or any successor thereto.



          “Tax Indemnitee” means (a) WTC and the Indenture Trustee, (b) each separate or
additional trustee appointed pursuant to the Trust Indenture, (c) each Note Holder and (d) the
respective successors, assigns, agents and servants of the foregoing.



          “Taxes” means all license, recording, documentary, registration and other similar fees
and all taxes, levies, imposts, duties, charges, assessments or withholdings of any nature
whatsoever imposed by any Taxing Authority, together with any penalties, additions to tax, fines or
interest thereon or additions thereto.



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



          “Threshold Amount” is defined in Schedule 3 to the Participation Agreement.



          “Transaction Expenses” means all costs and expenses incurred by the Indenture Trustee
in connection with (a) the preparation, execution and delivery of the Operative Agreements and the
recording or filing of any documents, certificates or instruments in accordance with any Operative
Agreement, including, without limitation, the FAA Filed Documents and the Financing Statements, (b)
the initial fee of the Indenture Trustee under the Trust Indenture and (c) the reasonable fees and
disbursements of counsel for the Indenture



17









 







Trustee and special counsel in Oklahoma City, Oklahoma, in each case, in connection with the
Closing.



          “Transactions” means the transactions contemplated by the Participation Agreement.



          “Transfer” means the transfer, sale, assignment or other conveyance of all or any
interest in any property, right or interest.



          “Transferee” means a person to which any Note Holder purports or intends to Transfer
any or all of its right, title or interest in the Equipment Note, as described in Section 9 of the
Participation Agreement.



          “Trust Indenture” means the Trust Indenture and Security Agreement [____], dated as of
the date of the Participation Agreement between the Owner and the Indenture Trustee.



          “Trust Indenture Supplement” means a Trust Indenture and Security Agreement
Supplement, substantially in the form of Exhibit A to the Trust Indenture, with appropriate
modifications to reflect the purpose for which it is being used.



          “Trust Supplement” means an agreement supplemental to the Basic Pass Through Trust
Agreement pursuant to which (i) a separate trust is created for the benefit of the holders of the
Pass Through Certificates of a class, (ii) the issuance of the Pass Through Certificates of such
Class representing fractional undivided interests in such trust is authorized and (iii) the terms
of the Pass Through Certificates of such class are established.



          “UCC” means the Uniform Commercial Code as in effect in any applicable jurisdiction.



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



          “U.S. Air Carrier” means any United States air carrier that is a Citizen of the United
States holding an air carrier operating certificate issued pursuant to chapter 447 of title 49 of
the United States Code for aircraft capable of carrying 10 or more individuals or 6000 pounds or
more of cargo, and as to which there is in force an air carrier operating certificate issued
pursuant to Part 121 of the FAA Regulations, or which may operate as an air carrier by
certification or otherwise under any successor or substitute provisions therefor or in the absence
thereof.



          “U.S. Government” means the federal government of the United States, or any
instrumentality or agency thereof the obligations of which are guaranteed by the full faith and
credit of the federal government of the United States.



          “U.S. Person” means any Person described in Section 7701 (a)(30) of the Code.



18









 





          “Weighted Average Life to Maturity” means, with respect to any specified Debt, at the
time of the determination thereof the number of years obtained by dividing the then Remaining
Dollar-years of such Debt by the then outstanding principal amount of such Debt. The term
“Remaining Dollar-years” shall mean the amount obtained by (1) multiplying the amount of each
then-remaining principal payment on such Debt by the number of years (calculated at the nearest
one-twelfth) that will elapse between the date of determination of the Weighted Average Life to
Maturity of such Debt and the date of that required payment and (2) totaling all the products
obtained in clause (1) above.



          “Wet Lease” means any arrangement whereby the Owner or a Permitted Lessee agrees to
furnish the Aircraft, Airframe or any Engine to a third party pursuant to which the Aircraft,
Airframe or Engine shall at all times be in the operational control of the Owner or a Permitted
Lessee, provided that the Owner’s obligations under the Trust Indenture shall continue in full
force and effect notwithstanding any such arrangement.



          “WTC” means Wilmington Trust Company, a Delaware banking corporation, not in its
capacity as Indenture Trustee under the Trust Indenture, but in its individual capacity.






19









 










					
	 	 	 	 	ANNEX B — INSURANCE
	 	 	 	 	TRUST INDENTURE [  ]








ANNEX B




INSURANCE



     Capitalized terms used but not defined herein shall have the respective meanings set forth or
incorporated by reference in Annex A to the Trust Indenture.



A. Liability Insurance




     1. Except as provided in Section A.2 below, and subject to the self-insurance permitted by
Section G below, the Owner will carry or cause to be carried at all times, at no expense to the
Indenture Trustee, comprehensive airline legal liability (including, but not limited to passenger
liability, property damage, baggage liability, cargo and mail liability, hangarkeeper’s liability
and contractual liability insurance) with respect to the Aircraft, the Airframe and the Engines,
which is (i) in an amount not less than the greater of (x) the amount of comprehensive airline
legal liability insurance from time to time applicable to aircraft owned or leased and operated by
the Owner of the same type and operating on similar routes as the Aircraft and (y) the Minimum
Liability Insurance Amount per occurrence; (ii) of the type and covering the same risks as from
time to time applicable to aircraft operated by the Owner of the same type as the Aircraft; and
(iii) maintained in effect with insurers of nationally or internationally recognized responsibility
(such insurers being referred to herein as “Approved Insurers”); provided, however, that
the Owner need not maintain such cargo liability insurance, or may maintain such cargo liability
insurance in an amount less than the Minimum Liability Insurance Amount per occurrence, so long as
the amount of cargo liability insurance, if any, maintained with respect to the Aircraft is not
less than the cargo liability insurance, if any, maintained for other Airbus model [_________]
aircraft owned or leased and operated by the Owner



     2. During any period that the Aircraft is on the ground and not in operation, the Owner may
carry or cause to be carried, in lieu of the insurance required by Section A.1 above, and subject
to the self insurance permitted by Section G below, insurance otherwise conforming with the
provisions of said Section A.1 except that (i) the amounts of coverage shall not be required to
exceed the amounts of public liability and property damage insurance from time to time applicable
to aircraft owned or operated by the Owner of the same type as the Aircraft which are on the ground
and not in operation and (ii) the scope of the risks covered and the type of insurance shall be the
same as from time to time shall be applicable to aircraft owned or operated by the Owner of the
same type which are on the ground and not in operation.



B. Hull Insurance




     1. Except as provided in Section B.2 below and subject to the self-insurance permitted by
Section G below, the Owner will carry or cause to be carried at all times, at no expense to the
Indenture Trustee, with Approved Insurers “all-risk” ground and flight aircraft hull insurance
covering each Aircraft (including the Engines when they are installed on the Airframe or any other
airframe) which is of the type as from time to time applicable to aircraft owned by the Owner of
the same type as the Aircraft for an amount denominated in United



 









 




States Dollars not less than the unpaid Original Amount together with six months of interest
accrued thereon (collectively, the “Debt Balance”).




     Any policies of insurance carried in accordance with this Section B.1 or Section C covering
the Aircraft and any policies taken out in substitution or replacement for any such policies (i)
shall name Indenture Trustee as exclusive loss payee for any proceeds to be paid under such
policies in excess of the Threshold Amount, if applicable up to an amount equal to the Debt Balance
and (ii) shall provide that (A) in the event of a loss involving proceeds in excess of the
Threshold Amount, the proceeds in respect of such loss up to an amount equal to the Debt Balance
shall be payable to the Indenture Trustee, except in the case of a loss with respect to an Engine
installed on an airframe other than the Airframe, in which case the Owner (or any Permitted Lessee)
shall endeavor to arrange for any payment of insurance proceeds in respect of such loss to be held
for the account of the Indenture Trustee whether such payment is made to the Owner (or any
Permitted Lessee) or any third party, it being understood and agreed that in the case of any
payment to the Indenture Trustee otherwise than in respect of an Event of Loss, the Indenture
Trustee shall, upon receipt of evidence satisfactory to it that the damage giving rise to such
payment shall have been repaired or that such payment shall then be required to pay for repairs
then being made, pay the amount of such payment to the Owner or its order, and (B) the entire
amount of any loss involving proceeds of the Threshold Amount or less or the amount of any proceeds
of any loss in excess of the Debt Balance shall be paid to the Owner or its order unless an Event
of Default shall have occurred and be continuing and the insurers have been notified thereof by the
Indenture Trustee. In the case of a loss with respect to an engine (other than an Engine)
installed on the Airframe, the Indenture Trustee shall hold any payment to it of any insurance
proceeds in respect of such loss for the account of the Owner or any other third party that is
entitled to receive such proceeds.



     2. During any period that the Aircraft is on the ground and not in operation, the Owner may
carry or cause to be carried, subject to the self-insurance permitted by Section G below, in lieu
of the insurance required by Section B.1 above, insurance otherwise conforming with the provisions
of said Section B.1 except that the scope of the risks and the type of insurance shall be the same
as from time to time applicable to aircraft owned by the Owner of the same type similarly on the
ground and not in operation, provided that the Owner shall maintain insurance against risk
of loss or damage to the Aircraft in an amount equal to the Debt Balance during such period that
the Aircraft is on the ground and not in operation.



C. War-Risk, Hijacking and Allied Perils Insurance




     If the Owner (or any Permitted Lessee) shall at any time operate or propose to operate the
Aircraft, Airframe or any Engine (i) in any area of recognized hostilities or (ii) on international
routes and war-risk, hijacking or allied perils insurance is maintained by the Owner (or any
Permitted Lessee) with respect to other aircraft owned or operated by the Owner (or any Permitted
Lessee) on such routes or in such areas, the Owner shall maintain or cause to be maintained
war-risk, hijacking and related perils insurance of substantially the same type carried by major
United States commercial air carriers operating the same or comparable models of aircraft on
similar routes or in such areas and in no event in an amount less than the unpaid Original Amount.



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D. General Provisions




     Any policies of insurance carried in accordance with Sections A, B and C, including any
policies taken out in substitution or replacement for such policies:




     (i) in the case of Section A, shall name Indenture Trustee, each Note Holder, each
Related Indenture Trustee, each Related Note Holder and each Liquidity Provider as an
additional insured (collectively, the “Additional Insureds”), as its interests may appear;




     (ii) shall apply worldwide and have no territorial restrictions or limitations (except
only in the case of war, hijacking and related perils insurance required under Section C,
which shall apply to the fullest extent available in the international insurance market);




     (iii) shall provide that, in respect of the interests of the Additional Insureds in
such policies, the insurance shall not be invalidated or impaired by any act or omission
(including misrepresentation and nondisclosure) by the Owner (or any Permitted Lessee) or
any other Person (including, without limitation, use for illegal purposes of the Aircraft or
any Engine) and shall insure the Additional Insureds regardless of any breach or violation
of any representation, warranty, declaration, term or condition contained in such policies
by the Owner (or any Permitted Lessee);




     (iv) shall provide that, if the insurers cancel such insurance for any reason
whatsoever, or if the same is allowed to lapse for nonpayment of premium, or if any material
change is made in the insurance which adversely affects the interest of any of the
Additional Insureds, such cancellation, lapse or change shall not be effective as to the
Additional Insureds for thirty (30) (ten (10) days in the event of cancellation due to
non-payment of premium and seven (7) days in the case of war risk, hijacking and allied
perils insurance) days after issuance of written notice by such insurers of such
cancellation, lapse or change, provided that if any notice period specified above is
not reasonably obtainable, such policies shall provide for as long a period of prior notice
as shall then be reasonably obtainable;




     (v) shall waive any rights of setoff (including for unpaid premiums), recoupment,
counterclaim or other deduction, whether by attachment or otherwise, against each Additional
Insured;




     (vi) shall waive any right of recourse or subrogation against any Additional Insured;




     (vii) shall be primary without right of contribution from any other insurance that may
be available to any Additional Insured;




     (viii) shall provide that all of the liability insurance provisions thereof, except the
limits of liability, shall operate in all respects as if a separate policy had been issued
covering each party insured thereunder;



3









 






     (ix) with respect to hull insurance and war risk, hijacking and allied perils
insurance, shall provide that (a) in the event of a loss involving proceeds in excess of the
Threshold Amount, the proceeds in respect of such loss up to an amount equal to the amount
payable upon the occurrence of an Event of Loss shall be payable to the Indenture Trustee
(so long as the Trust Indenture shall not have been discharged) in the manner set forth in
Sections 2.09 and 2.11 (except in the case of a loss with respect to an Engine installed on
an airframe other than the Airframe, in which case the Owner (or any Permitted Lessee) shall
arrange for any payment of insurance proceeds in respect of such loss to be held for the
account of the Indenture Trustee (so long as the Trust Indenture shall not have been
discharged) whether such payment is made to Owner (or any Lessee) or any third party), it
being understood and agreed that in the case of any payment to the Indenture Trustee
otherwise than in respect of an Event of Loss, the Indenture Trustee shall, upon receipt of
evidence satisfactory to it that the damage giving rise to such payment shall have been
repaired or that such payment shall then be required to pay for repairs then being made, pay
the amount of such payment (and all earnings, if any, thereon) to the Owner or its order,
and (ii) the entire amount of any loss involving proceeds of the Threshold Amount or less or
the amount of any proceeds of any loss in excess of the amount payable upon the occurrence
of an Event of Loss pursuant to Section 4.05(a) shall be paid to Owner or its order unless
an Event of Default shall have occurred and be continuing and the insurers have been
notified thereof by the Indenture Trustee;




     (x) shall provide that none of the Additional Insureds shall be liable for any
insurance premium; and




     (xi) shall contain a 50/50% Clause per Lloyd’s Aviation Underwriters’ Association
Standard Policy Form AVS 103.



E. Reports and Certificates; Other Information




     On or prior to the Closing Date and on or prior to each renewal date of the insurance policies
required hereunder, the Owner will furnish or cause to be furnished to the Indenture Trustee
insurance certificates describing in reasonable detail the insurance maintained by the Owner
hereunder and a report, signed by the Owner’s regularly retained independent insurance broker (the
“Insurance Broker”), stating the opinion of such Insurance Broker that (a) all premiums in
connection with the insurance then due have been paid and (b) such insurance complies with the
terms of this Annex B, except that such opinion shall not be required with respect to war risk
insurance provided by the FAA. To the extent such agreement is reasonably obtainable Owner will
also cause the Insurance Broker to agree to advise Indenture Trustee in writing of any default in
the payment of any premium due and to advise Indenture Trustee promptly in writing (seven days in
the case of war-risk and allied perils coverage or such shorter period as may be available in the
international insurance market, as the case may be, if applicable) prior to the cancellation, lapse
or material adverse change of any insurance maintained pursuant to this Annex B.



4









 





F. Right to Pay Premiums




     The Additional Insureds shall have the rights but not the obligations of an additional named
insured. None of the Indenture Trustee and the other Additional Insured shall have any obligation
to pay any premium, commission, assessment or call due on any such insurance (including
reinsurance). Notwithstanding the foregoing, in the event of cancellation of any insurance due to
the nonpayment of premiums, the Indenture Trustee shall have the option, in its sole discretion, to
pay any such premium in respect of the Aircraft that is due in respect of the coverage pursuant to
the Trust Indenture and to maintain such coverage, as the Indenture Trustee may require, until the
scheduled expiry date of such insurance and, in such event, the Owner shall, upon demand, reimburse
Indenture Trustee for amounts so paid by them.



G. Deductibles; Self-insurance




     The Owner may self-insure by way of deductible, premium adjustment or franchise provisions or
otherwise (including, with respect to insurance maintained pursuant to Section B, insuring for a
maximum amount which is less than the Debt Balance) in the insurance covering the risks required to
be insured against pursuant to Section 4.06 and this Annex B under a program applicable to all
aircraft in the Owner’s fleet, but in no case shall the aggregate amount of self-insurance in
regard to Section 11 and this Annex B exceed during any policy year, with respect to all of the
aircraft in the Owner’s fleet (including, without limitation, the Aircraft), the lesser of (a) 50%
of the largest replacement value of any single aircraft in the Owner’s fleet and (b) 1-1/2% of the
average aggregate insurable value (during the preceding policy year) of all aircraft (including,
without limitation, the Aircraft) on which the Owner carries insurance, unless an insurance broker
of national standing shall certify that the standard among all other major U.S. airlines is a
higher level of self-insurance, in which case the Owner may self-insure to such higher level. In
addition, the Owner (and any Permitted Lessee) may self-insure to the extent of any applicable
deductible per aircraft that does not exceed industry standards for major U.S. airlines.



5









 





EXHIBIT A

TO

TRUST INDENTURE AND SECURITY AGREEMENT




TRUST INDENTURE AND SECURITY AGREEMENT SUPPLEMENT




          This TRUST INDENTURE AND SECURITY AGREEMENT SUPPLEMENT NO. __, dated [______________ ___,
____] (herein called this “Trust Indenture Supplement”) of US AIRWAYS, INC., as Owner (the
“Owner”).




WITNESSETH:




          WHEREAS, the Trust Indenture and Security Agreement [____], dated as of [______ __], 2011 (as
amended and supplemented, the “Trust Indenture”), between the Owner and Wilmington Trust Company,
as Indenture Trustee (the “Indenture Trustee”), provides for the execution and delivery of a
supplement thereto substantially in the form hereof, which shall particularly describe the
Aircraft, and shall specifically mortgage such Aircraft to the Indenture Trustee; and




          WHEREAS, the Trust Indenture relates to the Airframe and Engines described below, and a
counterpart of the Trust Indenture is attached hereto and made a part hereof and this Trust
Indenture Supplement, together with such counterpart of the Trust Indenture, is being filed for
recordation on the date hereof with the FAA as one document;




          NOW, THEREFORE, this Trust Indenture Supplement WITNESSETH that the Owner hereby confirms that
the Lien of the Trust Indenture on the Collateral covers all of the Owner’s right, title and
interest in and to the following described property and that it hereby grants to the Security
Trustee an “International Interest” (as defined in the Cape Town Convention on International
Interests in Mobile Equipment and related Aircraft Equipment Protocol, as in effect in the United
States) in the following airframe and engines:




AIRFRAME



One airframe identified as follows:




	 	 	 	 	 	 	 
	 	 	 	 	FAA Registration	 	Manufacturer’s Serial
	Manufacturer	 	Model	 	Number	 	Number
	Airbus S.A.S.
	 	 	 	 	 	 





together with all of the Owner’s right, title and interest in and to all Parts of whatever nature,
whether now owned or hereinafter acquired and which are from time to time incorporated or installed
in or attached to said airframe.




AIRCRAFT ENGINES




          [Two] aircraft engines, each such engine being a jet propulsion aircraft engine with at least
1750 lb of thrust or its equivalent, identified as follows:




 









 





	 	 	 	 	 	 	 	 	 
	Manufacturer	 	Manufacturer’s Model	 	Serial Number




together with all of the Owner’s right, title and interest in and to all Parts of whatever nature,
whether now owned or hereafter acquired and which are from time to time incorporated or installed
in or attached to either of such engines.




          Together with all of the Owner’s right, title and interest in and to (a) all Parts of whatever
nature, which from time to time are included within the definition of “Airframe” or “Engine”,
whether now owned or hereafter acquired, including all substitutions, renewals and replacements of
and additions, improvements, accessions and accumulations to the Airframe and Engines (other than
additions, improvements, accessions and accumulations which constitute appliances, parts,
instruments, appurtenances, accessories, furnishings or other equipment excluded from the
definition of Parts) and (b) all Aircraft Documents.




          TO HAVE AND TO HOLD all and singular the aforesaid property unto the Indenture Trustee, its
successors and assigns, in trust for the equal and proportionate benefit and security of the Note
Holders and the Indenture Indemnitees, except as provided in Section 2.12 and Article III of the
Trust Indenture without any preference, distinction or priority of any one Equipment Note over any
other by reason of priority of time of issue, sale, negotiation, date of maturity thereof or
otherwise for any reason whatsoever, and for the uses and purposes and subject to the terms and
provisions set forth in the Trust Indenture.




          This Trust Indenture Supplement shall be construed as supplemental to the Trust Indenture and
shall form a part thereof. The Trust Indenture is each hereby incorporated by reference herein and
is hereby ratified, approved and confirmed.




          AND, FURTHER, the Owner hereby acknowledges that the Aircraft referred to in this Trust
Indenture Supplement has been delivered to the Owner and is included in the property of the Owner
subject to the pledge and mortgage thereof under the Trust Indenture.




* * *




     IN WITNESS WHEREOF, the Owner has caused this Trust Indenture Supplement to be duly executed
by one of its officers, thereunto duly authorized, on the day and year first above written.



	 	 	 	 	 
	 	US AIRWAYS, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 








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SCHEDULE I




	 	 	 	 	 	 	 	 	 
	 	 	Original Amount	 	 	Interest Rate	 
	Series A:
	 	 	 	 	 	 	 	 
	Series B:
	 	 	 	 	 	 	 	 
	Series C:
	 	 	 	 	 	 	 	 
	Total:
	 	 	 	 	 	 	 	 






Trust Indenture and Security Agreement

Equipment Note Amortization




	 	 	 
	 	 	 	 	Percentage of Original
	Payment Date	 	Amount to be Paid