EXHIBIT 4.15 


	
 


	 





INDENTURE AND SECURITY AGREEMENT


([Reg. No.])


Dated as of ____________ ___, 20071


between


DELTA AIR LINES, INC.,


and


U.S. BANK TRUST NATIONAL ASSOCIATION,


as Loan Trustee


One Boeing [Model] (Generic Model [Generic
Model]) Aircraft

U.S. Registration No. [Reg. No.]


	
 


	 





 


	
 

	
 

	
 


	
 

	
 

	 
	
1

	
To insert
 the relevant Closing Date. 











Table of Contents


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
 

	
Page


	
 

	
 

	
 

	
 

	 


	
 

	
 

	
ARTICLE I

	
 

	
 


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
DEFINITIONS

	
 

	
 


	
 

	
 

	
 

	
 

	
 


	
Section 1.01

	
 

	
Definitions

	
 

	
5


	
Section 1.02

	
 

	
Other
 Definitional Provisions

	
 

	
5


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
ARTICLE II

	
 

	
 


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
THE EQUIPMENT NOTES

	
 

	
 


	
 


	
Section 2.01

	
 

	
Form of Equipment Notes

	
 

	
5


	
Section 2.02

	
 

	
Issuance and Terms of Equipment Notes

	
 

	
11


	
Section 2.03

	
 

	
Method of Payment

	
 

	
13


	
Section 2.04

	
 

	
Withholding Taxes

	
 

	
14


	
Section 2.05

	
 

	
Application of Payments

	
 

	
14


	
Section 2.06

	
 

	
Termination of Interest in Collateral

	
 

	
14


	
Section 2.07

	
 

	
Registration, Transfer and Exchange of
 Equipment Notes

	
 

	
15


	
Section 2.08

	
 

	
Mutilated, Destroyed, Lost or Stolen
 Equipment Notes

	
 

	
16


	
Section 2.09

	
 

	
Payment of Expenses on Transfer;
 Cancellation

	
 

	
17


	
Section 2.10

	
 

	
Mandatory Redemption of Equipment Notes

	
 

	
17


	
Section 2.11

	
 

	
Voluntary Redemption of Equipment Notes

	
 

	
17


	
Section 2.12

	
 

	
Redemptions; Notice of Redemptions;
 Repurchases

	
 

	
18


	
Section 2.13

	
 

	
Subordination

	
 

	
19


	
Section 2.14

	
 

	
Certain Payments

	
 

	
20


	
Section 2.15

	
 

	
Repayment of Monies for Equipment Note
 Payments Held by Loan Trustee

	
 

	
22


	
Section 2.16

	
 

	
Directions by Subordination Agent

	
 

	
22


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
ARTICLE III

	
 

	
 


	
 

	
 

	
 

	
 

	
 


	
RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME FROM THE

 COLLATERAL


	
 

	
 

	
 

	
 

	
 


	
Section 3.01

	
 

	
Basic
 Distributions

	
 

	
23


	
Section 3.02

	
 

	
Event of
 Loss; Replacement; Optional Redemption

	
 

	
24


	
Section 3.03

	
 

	
Payments
 After Event of Default

	
 

	
25


	
Section 3.04

	
 

	
Certain
 Payments

	
 

	
33


	
Section 3.05

	
 

	
Payments to
 Company

	
 

	
34


	
Section 3.06

	
 

	
Cooperation

	
 

	
34


	
Section 3.07

	
 

	
Securities
 Account

	
 

	
34





i







	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
Table of Contents

 (Continued)

	
 

	
 


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
 

	
Page


	
 

	
 

	
 

	
 

	 


	
 

	
 

	
 

	
 

	
 


	
ARTICLE IV


	
 

	
 

	
 

	
 

	
 


	
EVENTS OF
 DEFAULT; REMEDIES OF LOAN TRUSTEE


	
 

	
 

	
 

	
 


	
Section 4.01

	
 

	
Events of
 Default

	
 

	
35


	
Section 4.02

	
 

	
Remedies

	
 

	
37


	
Section 4.03

	
 

	
Remedies
 Cumulative

	
 

	
41


	
Section 4.04

	
 

	
Discontinuance
 of Proceedings

	
 

	
42


	
Section 4.05

	
 

	
Waiver of
 Past Defaults

	
 

	
42


	
Section 4.06

	
 

	
Noteholders
 May Not Bring Suit Except Under Certain Conditions

	
 

	
42


	
Section 4.07

	
 

	
Appointment
 of a Receiver

	
 

	
43


	
 

	
 

	
 

	
 

	
 


	
ARTICLE V


	
 

	
 

	
 

	
 

	
 


	
DUTIES OF LOAN TRUSTEE


	
 

	
 

	
 

	
 

	
 


	
Section 5.01

	
 

	
Notice of
 Event of Default

	
 

	
43


	
Section 5.02

	
 

	
Action upon
 Instructions; Certain Rights and Limitations

	
 

	
44


	
Section 5.03

	
 

	
Indemnification

	
 

	
44


	
Section 5.04

	
 

	
No Duties
 Except as Specified in Indenture or Instructions

	
 

	
45


	
Section 5.05

	
 

	
No Action
 Except under Indenture or Instructions

	
 

	
45


	
Section 5.06

	
 

	
Investment
 of Amounts Held by Loan Trustee

	
 

	
45


	
 

	
 

	
 

	
 

	
 


	
ARTICLE VI


	
 

	
 

	
 

	
 

	
 


	
LOAN TRUSTEE


	
 

	
 

	
 

	
 

	
 


	
Section 6.01

	
 

	
Acceptance
 of Trusts and Duties

	
 

	
46


	
Section 6.02

	
 

	
Absence of
 Certain Duties

	
 

	
46


	
Section 6.03

	
 

	
No
 Representations or Warranties as to the Documents

	
 

	
47


	
Section 6.04

	
 

	
No
 Segregation of Monies; No Interest

	
 

	
47


	
Section 6.05

	
 

	
Reliance;
 Agents; Advice of Counsel

	
 

	
47


	
Section 6.06

	
 

	
Instructions
 from Noteholders

	
 

	
48


	
 

	
 

	
 

	
 

	
 


	
ARTICLE VII


	
 

	
 

	
 

	
 

	
 


	
OPERATING COVENANTS OF COMPANY


	
 

	
 

	
 

	
 

	
 


	
Section 7.01

	
 

	
Liens

	
 

	
48


	
Section 7.02

	
 

	
Possession,
 Operation and Use, Maintenance and Registration

	
 

	
49


	
Section 7.03

	
 

	
Inspection;
 Financial Information

	
 

	
56


	
Section 7.04

	
 

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

	
 

	
58





ii







	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
Table of Contents

 (Continued)

	
 

	
 


	
 

	
 

	
 

	
 

	
Page 


	
 

	
 

	
 

	
 

	 


	
 

	
 

	
 

	
 

	
 


	
Section 7.05

	
 

	
Loss,
 Destruction or Requisition

	
 

	
60


	
Section 7.06

	
 

	
Insurance

	
 

	
66


	
 

	
 

	
ARTICLE VIII

	
 

	
 


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
SUCCESSOR AND ADDITIONAL TRUSTEES

	
 

	
 


	
 

	
 

	
 

	
 

	
 


	
Section 8.01

	
 

	
Resignation
 or Removal; Appointment of Successor

	
 

	
74


	
Section 8.02

	
 

	
Appointment
 of Additional and Separate Trustees

	
 

	
75


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
ARTICLE IX

	
 

	
 


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
AMENDMENTS AND WAIVERS

	
 

	
 


	
 

	
 

	
 

	
 

	
 


	
Section 9.01

	
 

	
Amendments
 to this Indenture without Consent of Holders

	
 

	
77


	
Section 9.02

	
 

	
Amendments
 to this Indenture with Consent of Holders

	
 

	
78


	
Section 9.03

	
 

	
Amendments,
 Waivers, Etc. of the Participation Agreement

	
 

	
79


	
Section 9.04

	
 

	
Revocation
 and Effect of Consents

	
 

	
80


	
Section 9.05

	
 

	
Notation on
 or Exchange of Equipment Notes

	
 

	
80


	
Section 9.06

	
 

	
Trustee
 Protected

	
 

	
80


	
Section 9.07

	
 

	
No Consent
 of Individual Indenture Indemnitees Required

	
 

	
80


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
ARTICLE X

	
 

	
 


	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
MISCELLANEOUS

	
 

	
 


	
 

	
 

	
 

	
 

	
 


	
Section
 10.01

	
 

	
Termination
 of Indenture

	
 

	
80


	
Section
 10.02

	
 

	
No Legal
 Title to Collateral in Noteholders

	
 

	
81


	
Section
 10.03

	
 

	
Sale of
 Aircraft by Loan Trustee is Binding

	
 

	
81


	
Section
 10.04

	
 

	
Indenture
 for Benefit of Company, Loan Trustee and Noteholders

	
 

	
81


	
Section
 10.05

	
 

	
Notices

	
 

	
81


	
Section
 10.06

	
 

	
Severability

	
 

	
83


	
Section
 10.07

	
 

	
No Oral
 Modification or Continuing Waivers

	
 

	
83


	
Section
 10.08

	
 

	
Successors
 and Assigns

	
 

	
83


	
Section
 10.09

	
 

	
Headings

	
 

	
83


	
Section
 10.10

	
 

	
Normal
 Commercial Relations

	
 

	
83


	
Section
 10.11

	
 

	
Voting by
 Noteholders

	
 

	
83


	
Section
 10.12

	
 

	
Section 1110

	
 

	
84


	
Section
 10.13

	
 

	
Company’s
 Performance and Rights

	
 

	
84


	
Section
 10.14

	
 

	
Counterparts

	
 

	
84


	
Section
 10.15

	
 

	
Governing
 Law

	
 

	
84


	
Section
 10.16

	
 

	
Confidential
 Information

	
 

	
84


	
Section
 10.17

	
 

	
Submission
 to Jurisdiction

	
 

	
85





iii







	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
Table of Contents

 (Continued)

	
 

	
 


	
 

	
 

	
 

	
 

	
Page


	
 

	
 

	
 

	
 

	 


	
 

	
 

	
 

	
 

	
 


	
Exhibit A

	
 

	
Form of
 Indenture Supplement

	
 

	
 


	
Exhibit B

	
 

	
List of
 Permitted Countries

	
 

	
 


	
Exhibit C

	
 

	
Certain
 Terms

	
 

	
 


	
 

	
 

	
 

	
 

	
 


	
Schedule I

	
 

	
Description
 of Equipment Notes

	
 

	
 


	
Schedule II

	
 

	
Pass Through
 Trust Agreement and Pass Through Trust Supplements

	
 

	
 


	
 

	
 

	
 

	
 

	
 


	
Annex A

	
 

	
Definitions

	
 

	
 





iv









INDENTURE
AND SECURITY AGREEMENT 

([REG. NO.])


          This
INDENTURE AND SECURITY AGREEMENT ([REG. NO.]), dated as of _______________ ___,
20072,
is made by and between DELTA AIR LINES, INC., a Delaware corporation (together
with its successors and permitted assigns, “Company”), and U.S. BANK
TRUST NATIONAL ASSOCIATION, a national banking association, not in its
individual capacity, except as expressly stated herein, but solely as Loan
Trustee hereunder (together with its permitted successors hereunder, “Loan
Trustee”).


W I T N E S S E T H:


          WHEREAS,
the parties desire by this Indenture (such term and other capitalized terms
used herein without definition being defined as provided in Article I), among
other things, to provide for (i) the issuance by Company of the
Equipment Notes specified on Schedule I hereto and Additional Series, and (ii) the
assignment, mortgage and pledge by Company to Loan Trustee, as part of the
Collateral hereunder, among other things, of all of Company’s estate, right, title
and interest in and to the Aircraft, as security for, among other things,
Company’s obligations to Loan Trustee, for the equal and proportionate benefit
and security of Noteholders, Indenture Indemnitees and Related Indenture
Indemnitees, subject to Section 2.13 and Article III;


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


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


GRANTING CLAUSE


          NOW,
THEREFORE, (x) to secure the prompt and complete payment (whether at
stated maturity, by acceleration or otherwise) of principal of, Make-Whole
Amount, if any, and interest on, the Equipment Notes and all other amounts
payable by Company under the Operative Documents and the performance and
observance by Company of all the agreements and covenants to be performed or
observed by Company for the benefit of Noteholders and Indenture Indemnitees
contained in the Operative Documents and (y) to secure the Related
Secured Obligations, and in consideration of the premises and of the covenants
contained in the Operative Documents and the Related Indentures, and for 


	
 

	
 

	
 


	
 

	
 


	
2

	
To insert the relevant Closing Date.










other good and valuable consideration given by
Noteholders, Indenture Indemnitees and Related Indenture Indemnitees to Company
at or before the Closing Date, the receipt and adequacy of which is hereby
acknowledged, Company does hereby grant, bargain, sell, convey, transfer,
mortgage, assign, pledge and confirm unto Loan Trustee and its successors in
trust and permitted assigns, for the security and benefit of Noteholders, each
Indenture Indemnitee and each Related Indenture Indemnitee, a first priority
security interest in, and mortgage lien on, all estate, right, title and
interest of Company in, to and under, all and singular, the following described
properties, rights, interests and privileges, whether now or hereafter acquired
(which, collectively, together with all property hereafter specifically subject
to the Lien of this Indenture by the terms hereof or any supplement hereto, are
included within, and are referred to as, the “Collateral”):


          (1)
the Aircraft, including the Airframe and the Engines, whether or not any such
Engine from time to time is installed on the Airframe or any other airframe or
any other aircraft, and any and all Parts relating thereto, and, to the extent
provided herein, all substitutions and replacements of, and additions, improvements,
accessions and accumulations to, the Aircraft, including the Airframe, the
Engines and any and all Parts (in each case other than Excluded Equipment)
relating thereto (such Airframe and Engines as more particularly described in
the Indenture Supplement executed and delivered with respect to the Aircraft on
the Closing Date or with respect to any substitutions or replacements therefor)
and together with all logs, manuals, modification and maintenance records at
any time required to be maintained with respect to the Aircraft in accordance
with the rules and regulations of the FAA if the Aircraft is registered under
the laws of the United States or the rules and regulations of the government of
the country of registry if the Aircraft is registered under the laws of a
jurisdiction other than the United States;


          (2)
the Warranty Rights, together with all rights, powers, privileges, options and
other benefits of Company under the same;


          (3)
all requisition proceeds with respect to the Aircraft or any Part thereof, and
all insurance proceeds with respect to the Aircraft or any Part thereof, but
excluding all proceeds of, and rights under, any insurance maintained by
Company and not required, or in excess of that required, under Section 7.06(b);


          (4)
all moneys and securities held by Loan Trustee pursuant to paragraph (xi) or
(xvii) of clause “third” of Section 3.03, all rents, revenues and other
proceeds collected by Loan Trustee pursuant to Section 4.02(a), all moneys and
securities from time to time paid or deposited or required to be paid or
deposited to or with Loan Trustee by or for the account of Company pursuant to
any term of any Operative Document and held or required to be held by Loan
Trustee hereunder or thereunder, including the Securities Account and all
monies and securities deposited into the Securities Account; and


          (5)
all proceeds of the foregoing;


2






          PROVIDED,
HOWEVER, that notwithstanding any of the foregoing provisions, so long as no
Event of Default shall have occurred and be continuing, Company shall have the
right, to the exclusion of Loan Trustee, (i) to quiet enjoyment of
the Aircraft, the Airframe, the Parts and the Engines, and to possess, use,
retain and control the Aircraft, the Airframe, the Parts and the Engines and
all revenues, income and profits derived therefrom and (ii) with
respect to the Warranty Rights, to exercise in Company’s name all rights and
powers of the Buyer (as defined in the Purchase Agreement) under the Warranty
Rights and to retain any recovery or benefit resulting from the enforcement of
any warranty or indemnity or other obligation under the Warranty Rights; provided,
further, that notwithstanding the occurrence and continuation of an
Event of Default, Loan Trustee shall not enter into any amendment or
modification of the Purchase Agreement that would alter the rights, benefits or
obligations of Company thereunder;


          TO
HAVE AND TO HOLD all and singular the aforesaid property unto Loan Trustee, and
its successors and permitted assigns, in trust for the equal and proportionate
benefit and security of Noteholders, Indenture Indemnitees and Related
Indenture Indemnitees, except as otherwise provided in this Indenture,
including Section 2.13 and Article III, without any priority of any one
Equipment Note over any other, or any Related Equipment Note over any other, or
any Related Non-Subordination Agent 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 paragraphs (1) through (5)
inclusive above, subject to the terms and provisions set forth in this
Indenture.


          It
is expressly agreed that notwithstanding anything herein to the contrary,
Company shall remain liable under the Purchase Agreement to perform all of its
obligations thereunder, and, except to the extent expressly provided in any
Operative Document, none of Loan Trustee, any Noteholder, any other Indenture
Indemnitee or any Related Indenture Indemnitee shall be required or obligated
in any manner to perform or fulfill any obligations of Company under or
pursuant to any Operative Document, or have any obligation or liability under
the Purchase Agreement by reason of or arising out of the assignment hereunder,
or to make any inquiry as to the nature or sufficiency of any payment received
by it, or present or file any claim or take any action to collect or enforce
the payment of any amount that may have been assigned to it or to which it may
be entitled at any time or times.


          Notwithstanding
anything herein to the contrary (but without in any way releasing Company from
any of its duties or obligations under the Purchase Agreement), Loan Trustee,
Noteholders, other Indenture Indemnitees and Related Indenture Indemnitees
confirm for the benefit of Manufacturer that in exercising any rights under the
Warranty Rights, or in making any claim with respect to the Aircraft or other
goods and services delivered or to be delivered pursuant to the Purchase
Agreement, the terms and conditions of the Purchase Agreement relating to the
Warranty Rights, including, without 


3






limitation, the warranty disclaimer provisions for the
benefit of Manufacturer, shall apply to and be binding upon Loan Trustee,
Noteholders, other Indenture Indemnitees and Related Indenture Indemnitees to
the same extent as Company. Company
hereby directs Manufacturer, so long as an Event of Default shall have occurred
and be continuing, to pay all amounts, if any, payable to Company pursuant to
the Warranty Rights directly to Loan Trustee to be held and applied as provided
herein. Nothing contained herein shall
subject Manufacturer to any liability to which it would not otherwise be
subject under the Purchase Agreement or modify in any respect the contract
rights of Manufacturer thereunder except as provided in the Manufacturer’s
Consent.


          Subject
to the terms and conditions hereof, Company does hereby irrevocably constitute
Loan Trustee the true and lawful attorney of Company (which appointment is
coupled with an interest) with full power (in the name of Company or otherwise)
to ask for, require, demand and receive any and all monies and claims for
monies (in each case including insurance and requisition proceeds) due and to
become due to Company under or arising out of the Purchase Agreement (to the
extent assigned hereby), 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 Loan Trustee may deem to be necessary or
advisable in the premises; provided that Loan Trustee shall not exercise
any such rights except during the continuance of an Event of Default. Company agrees that, promptly upon receipt
thereof, to the extent required by the Operative Documents, it will transfer to
Loan Trustee any and all monies from time to time received by Company
constituting part of the Collateral, for distribution by Loan Trustee pursuant
to this Indenture.


          Company
does hereby warrant and represent that it has not sold, assigned or pledged,
and hereby covenants and agrees that it will not sell, assign or pledge, so
long as this Indenture shall remain in effect and the Lien hereof shall not
have been released pursuant to the provisions hereof, any of its estate, right,
title or interest hereby assigned, to any Person other than Loan Trustee,
except as otherwise provided in or permitted by any Operative Document.


          Company
agrees that at any time and from time to time, upon the written request of Loan
Trustee, Company shall promptly and duly execute and deliver or cause to be
duly executed and delivered any and all such further instruments and documents
as Loan Trustee may reasonably deem necessary to perfect, preserve or protect
the mortgage, security interests and assignments created or intended to be
created hereby or to obtain for Loan Trustee the full benefit of the assignment
hereunder and of the rights and powers herein granted; provided that any
instrument or other document so executed by Company will not expand any
obligations or limit any rights of Company in respect of the transactions
contemplated by the Operative Documents.


4






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


ARTICLE I


Definitions


          Section
1.01 Definitions. For all
purposes of this Indenture, unless the context otherwise requires, capitalized
terms used but not defined herein have the respective meanings set forth or
incorporated by reference in Annex A.


          Section
1.02 Other Definitional Provisions.


          (a)
The definitions stated herein and in Annex A apply equally to both the singular
and the plural forms of the terms defined.


          (b)
All references in this Indenture to designated “Articles”, “Sections”,
“Subsections”, “Schedules”, “Exhibits”, “Annexes” and other subdivisions are to
the designated Article, Section, Subsection, Schedule, Exhibit, Annex or other
subdivision of this Indenture, unless otherwise specifically stated.


          (c)
The words “herein”, “hereof’ and “hereunder” and other words of similar import
refer to this Indenture as a whole and not to any particular Article, Section,
Subsection, Schedule, Exhibit, Annex or other subdivision.


          (d)
Unless the context otherwise requires, whenever the words “including”,
“include” or “includes” are used herein, they shall be deemed to be followed by
the phrase “without limitation”.


          (e)
All references in this Indenture to a “government” are to such government and
any instrumentality or agency thereof.


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 OR OTHER 





5






	
 

	
 


	
 

	
JURISDICTION.
 ACCORDINGLY, THIS EQUIPMENT NOTE MAY NOT BE OFFERED FOR SALE OR SOLD
 UNLESS EITHER REGISTERED UNDER THE ACT AND SUCH APPLICABLE STATE OR OTHER
 LAWS OR EXEMPTIONS FROM SUCH REGISTRATION REQUIREMENTS ARE AVAILABLE. IN ADDITION, THIS EQUIPMENT NOTE IS
 SUBJECT TO RESTRICTIONS ON TRANSFER PURSUANT TO THE PARTICIPATION AGREEMENT
 REFERRED TO HEREIN.





DELTA AIR LINES,
INC.


SERIES
2007-1[__]-[___]


EQUIPMENT NOTE DUE
[MATURITY DATE]


ISSUED IN
CONNECTION WITH THE BOEING MODEL [MODEL] (GENERIC 

MODEL [GENERIC MODEL]) AIRCRAFT BEARING UNITED STATES 

REGISTRATION NUMBER [REG. NO.]


	
 

	
 


	
No. __________

	
Date: ________


	
 

	
 


	
INTEREST RATE

	
MATURITY DATE


	
 

	
 


	
__________

	
_______________





          DELTA AIR LINES, INC. (together with its successors
and permitted assigns, “Company”) hereby promises to pay
to          , or the
registered assignee thereof, the principal amount of __________________________
Dollars ($___________) [on _______]3
[in installments on the Payment Dates set forth in Schedule I hereto, each such
installment to be in an amount computed by multiplying the original principal
amount of this Equipment Note by the percentage set forth in Schedule I hereto
opposite the Payment Date on which such installment is due,]4
and to pay interest in arrears on each Payment Date at the Debt Rate on the
principal 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. Notwithstanding the
foregoing, the final payment made on this Equipment Note shall be in an amount
sufficient to discharge in full the unpaid principal amount and all accrued and
unpaid interest on, and any other 



	
 

	
 

	
 


	
 

	
 


	
3

	
To be inserted in non-installment Equipment Notes.


	
 

	
 


	
4

	
To be inserted in installment Equipment Notes.





6






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 with the same force and effect as if made on
such scheduled date, and if payment is made on such next succeeding Business
Day, no interest shall accrue on the amount of such payment from and after such
scheduled date.


          For
purposes hereof, the term “Indenture” means the Indenture and Security
Agreement ([Reg. No.]), dated as of _________ ___, 2007, between Company and
U.S. Bank Trust National Association, as Loan Trustee (“Loan Trustee”),
as the same may be amended, supplemented or otherwise modified from time to
time in accordance with its terms. All
capitalized terms used in this Equipment Note and not defined herein, unless
the context otherwise requires, shall have the respective meanings set forth or
incorporated by reference, and shall be construed and interpreted in the manner
described, in the Indenture. 


          This
Equipment Note shall bear interest, payable on demand, at the Past Due Rate
(and not the Debt Rate) (calculated on the basis of a year of 360 days
comprised of twelve 30-day months) on any principal amount and (to the extent
permitted by applicable law) interest and any other amounts payable hereunder
not paid when due for any period during which the same is overdue, in each case
for the period the same is overdue.
Amounts shall be overdue if not paid in the manner provided herein or in
the Indenture 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
Loan Trustee, or at the office of any successor trustee, in the manner provided
in Section 2.07 of the Indenture. 


          The
principal amount and interest and other amounts due hereunder shall be payable
in Dollars in immediately available funds at the Corporate Trust Office of Loan
Trustee, or as otherwise provided in the Indenture. Company shall not have any responsibility for the distribution of
any such payment to Noteholder of this Equipment Note. 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 to Loan Trustee for
cancellation. 


          The
holder hereof, by its acceptance of this Equipment Note, agrees that, except as
provided in the Indenture, including the subordination provisions referred to
below, each payment of an installment of principal amount, Make-Whole Amount,
if any, and interest received by it hereunder shall be applied: first, to the payment of accrued interest
on this Equipment Note (as well as any interest on (i) any overdue
principal amount, and 


7








(ii) to the
extent permitted by law, any overdue Make-Whole Amount, if any, any overdue
interest and any other overdue amounts hereunder) to the date of such payment;
second, to the payment of Make-Whole Amount, if any; third, to the
payment of the principal amount of this Equipment Note (or portion thereof)
then due; and fourth, the balance, if any, remaining thereafter to the
payment of installments of the principal amount of this Equipment Note (or
portion thereof) remaining unpaid in the inverse order of their maturity.  


          This
Equipment Note is one of the Equipment Notes referred to in the Indenture which
have been or are to be issued by Company pursuant to the terms of the
Indenture. The Collateral is held by Loan Trustee as security, in part, for the
Equipment Notes. The provisions of this Equipment Note are subject to the
Indenture, the Related Indentures, the Participation Agreement, the other
Operative Documents and the Pass Through Documents. Reference is hereby made to
the Indenture, the Related Indentures, the Participation Agreement, the other
Operative Documents and the Pass Through Documents 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 Related Indenture) 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 Indenture, to all of which terms and
conditions in the Indenture, the Related Indentures, the Participation
Agreement, the other Operative Documents and the Pass Through Documents each
holder hereof agrees by its acceptance of this Equipment Note. 


          As
provided in the Indenture and subject to certain limitations therein set forth,
this Equipment Note is exchangeable for a like aggregate principal amount of
Equipment Notes of the same Series of different authorized denominations, as
requested by the holder surrendering the same. Prior to the due presentment for
registration of transfer of this Equipment Note, Company and Loan Trustee shall
deem and treat the Person in whose name this Equipment Note is registered on
the Equipment Note Register as the absolute owner and holder hereof for the
purpose of receiving all amounts payable with respect to this Equipment Note
and for all purposes, and neither Company nor Loan Trustee shall be affected by
notice to the contrary. 


          This
Equipment Note is subject to redemption as provided in Sections 2.10, 2.11 and
2.12 of the Indenture but not otherwise. In addition, this Equipment Note may
be accelerated as provided in Section 4.02 of the Indenture. 


          This
Equipment Note is subject to purchase as set forth in Section 2.07 of the Intercreditor
Agreement, and to certain restrictions set forth in Sections 4.01(a)(ii) and
4.01(a)(iii) of the Intercreditor Agreement, as further specified in Section
2.07 of the Indenture, to all of which terms and conditions in the
Intercreditor Agreement each holder hereof agrees by its acceptance of this
Equipment Note. 


8






          The
holder hereof, by its acceptance of this Equipment Note, agrees that no payment
or distribution shall be made on or in respect of the Secured Obligations (as
defined in the Indenture) or the Secured Obligations (as defined in any Related
Indenture) owed to such holder, including, without limitation, any payment or
distribution of cash, property or securities after the occurrence of any of the
events referred to in Section 4.01(f) of the Indenture or after the
commencement of any proceedings of the type referred to in Sections 4.01 (g),
(h) or (i) of the Indenture, except, in each case, as expressly provided in
Article III of the Indenture or Article III of the applicable Related
Indenture, as appropriate. 


          The
indebtedness evidenced by this Equipment Note is[,]5 [(i) to the
extent and in the manner provided in the Indenture, subordinate and subject in
right of payment to the prior payment in full of the Secured Obligations in
respect of [Series A Equipment Notes]6 [Series A Equipment Notes and
Series B Equipment Notes]7 [Series A Equipment Notes, Series B
Equipment Notes and Series C Equipment Notes]8, and certain other
Secured Obligations, and (ii)]9 to the extent and in the manner
provided in each Related Indenture, subordinate and subject in right of payment
to the prior payment in full of the “Secured Obligations” in respect of the
“Equipment Notes” issued under such Related Indenture, and this Equipment Note
is issued subject to such provisions. Noteholder of this Equipment Note, by
accepting the same, (a) agrees to and shall be bound by such provisions, (b)
authorizes and directs Loan Trustee or the Related Loan Trustee under the
applicable Related Indenture, as appropriate, on such Noteholder’s behalf to
take any action necessary or appropriate to effectuate the subordination as
provided in this Indenture or the applicable Related Indenture and (c) appoints
Loan Trustee or the Related Loan Trustee under the applicable Related
Indenture, as appropriate, as such Noteholder’s attorney-in-fact for such
purpose.  


          [Without
limiting the foregoing, the Noteholder of this Equipment Note, by accepting the
same, agrees that if such Noteholder, in its capacity as a Noteholder, receives
any payment or distribution on any Secured Obligation in respect of this
Equipment Note that it is not entitled to receive under Section 2.13 or Article
III of the Indenture, it shall hold any amount so received in trust for Loan Trustee
and forthwith 




	
 

	
 

	
 


	
 

	
 





	
 

	
 


	
5

	
To be
 inserted in the case a Series A Equipment Note. 


	
 

	
 


	
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 in the case of an Additional Series Equipment Note. 


	
 

	
 


	
9

	
To be
 inserted in the case of a Series B Equipment Note, a Series C Equipment Note
 or an Additional Series Equipment Note.





9






turn over such amount to Loan
Trustee in the form received to be applied as provided in Article III of the
Indenture.]10


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


          THIS
EQUIPMENT NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE, AND THE OBLIGATIONS, RIGHTS AND REMEDIES IN CONNECTION HEREWITH
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS. 


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


	
 

	
 

	
 


	
 

	
DELTA AIR
 LINES, INC. 


	
 

	
 


	
 

	
By:

	
 


	
 

	
 

	 


	
 

	
 

	
Name:


	
 

	
 

	
Title: 





LOAN
TRUSTEE’S CERTIFICATE OF AUTHENTICATION 


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


	
 

	
 

	
 


	
 

	
U.S. BANK
 TRUST NATIONAL

 ASSOCIATION,

 not in its individual capacity but solely as

 Loan Trustee 


	
 

	
 


	
 

	
By:

	
 


	
 

	
 

	 


	
 

	
 

	
Name: 


	
 

	
 

	
Title: 





	
 

	
 

	
 


	
 

	
 





	
 

	
 


	
10

	
To be
 inserted in the case of any Equipment Note other than Series A Equipment
 Note. 











10








SCHEDULE 1 11


EQUIPMENT NOTE AMORTIZATION


	
 

	
 

	
 

	
 


	
Payment Date 

	
 

	
 

	
Percentage of Original

Principal Amount

to be Paid 


	 

	
 

	
 

	 





[SEE “EQUIPMENT NOTES AMORTIZATION” ON
SCHEDULE I TO

INDENTURE WHICH IS TO BE INSERTED UPON ISSUANCE]


* * *


          Section
2.02 Issuance and Terms of Equipment Notes. The Equipment Notes (other
than the Additional Series Equipment Notes) shall be dated the date of issuance
thereof, shall be issued in (a) separate Series consisting of
Series A Equipment Notes, Series B Equipment Notes and Series C Equipment Notes
and (b) the maturities and principal amounts and shall bear
interest at the applicable Debt Rates specified in Schedule I. On the Closing
Date, each Series A Equipment Note, Series B Equipment Note and Series C
Equipment Note shall be issued to Subordination Agent on behalf of each of Pass
Through Trustees for the applicable Pass Through Trust created under the Pass
Through Trust Agreements referred to in Schedule II. Subject to the conditions
set forth in Section 4(a)(v) of the Note Purchase Agreement and Section 8.01(d)
of the Intercreditor Agreement, Company shall have the option to issue
Additional Series Equipment Notes at any time and from time to time. The
Additional Series Equipment Notes may be issued in an unlimited number of
separate series (if more than one series of Additional Series Equipment Notes
are so issued, each such series shall have a different designation such as, for
example, “Series D” and “Series E”), shall be dated the date of original
issuance thereof and shall have such maturities, principal amounts and interest
rates as specified in an amendment to this Indenture. 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, Series C Equipment Notes or Additional Series Equipment Notes may be
issued pursuant to the provisions of Section 2.11(b).


          Each
Equipment Note shall bear interest at the Debt Rate (calculated on the basis of
a year of 360 days comprised of twelve 30-day months), payable in arrears on
each Payment Date on the unpaid principal amount thereof from time to time
outstanding until such principal amount is paid in full, as further provided in
the form of Equipment Note set forth in Section 2.01. The principal amount of
each Series A Equipment Note, each 


	
 

	
 


	
 


	
 


	
11

	
To be inserted in installment Equipment Notes.





11






Series B Equipment Note and each Series C
Equipment Note shall be payable in installments on the Payment Dates and in the
installments equal to the corresponding percentage of the principal amount set
forth in Schedule I hereto applicable to such Series, which shall be attached
as Schedule I to such Equipment Note. Each Additional Series Equipment Note, if
issued, shall be payable in installments or in a single payment as set forth in
an amendment to this Indenture, and if payable in installments, such
installments shall be calculated as set forth in the second preceding sentence.
Notwithstanding the foregoing, the final payment made under each Equipment Note
shall be in an amount sufficient to discharge in full the unpaid principal
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 Past Due Rate (and not at the Debt Rate) (calculated on the basis
of a year of 360 days comprised of twelve 30-day months) on any principal
amount 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 is overdue, in each case for the period the same is overdue. Amounts shall
be overdue under an Equipment Note if not paid in the manner provided herein
when due (whether at stated maturity, by acceleration or otherwise).
Notwithstanding anything to the contrary contained herein, if any date on which
a payment hereunder or 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 with the same force and
effect as if made on such scheduled date, and if such payment is made on such
next succeeding Business Day, no interest shall accrue on the amount of such
payment from and after such scheduled date.


          The
Equipment Notes shall be executed on behalf of Company by the manual or
facsimile signature of one of its authorized officers. Equipment Notes bearing
the signatures of individuals who were at the time of execution the proper
officers of Company shall bind Company, 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. No Equipment Note shall be secured by or
entitled to any benefit under this Indenture or be valid or obligatory for any
purposes unless there appears on such Equipment Note a certificate of
authentication in the form provided herein executed by Loan Trustee by the
manual signature of one of its authorized officers, and such certificate upon
any Equipment Notes shall be conclusive evidence, and the only evidence, that
such Equipment Note has been duly authenticated and delivered hereunder.


          The
aggregate principal amount of any Series of Equipment Notes issued hereunder
shall not exceed the amount set forth as the maximum therefor on Schedule I
hereto (as amended, in the case of any Additional Series, at the time of
original issuance of such Additional Series).


12






          Section
2.03 Method of Payment. The principal amount of, interest on, Make-Whole
Amount, if any, and, except to the extent expressly provided herein, all other
amounts due under each Equipment Note or otherwise payable hereunder shall be
payable by Company in Dollars by wire transfer of immediately available funds
not later than 10:00 a.m. (New York City time) on the due date of payment to
Loan Trustee at the Corporate Trust Office for distribution among Noteholders
in the manner provided herein, and payment of such amount by Company to Loan
Trustee shall be deemed to satisfy Company’s obligation to make such payment.
Company shall not have any responsibility for the distribution of such payment
to any Noteholder. Notwithstanding the foregoing or any provision in any
Equipment Note to the contrary, Loan Trustee will use reasonable efforts to pay
or cause to be paid, if so directed in writing by any Noteholder (with a copy
to Company), all amounts paid by Company hereunder and under such Noteholder’s
Equipment Note or Equipment Notes to such Noteholder or a nominee therefor
(including all amounts distributed pursuant to Article III) by transferring, or
causing to be transferred, by wire transfer of immediately available funds in
Dollars, prior to 12:00 noon (New York City time) on the due date of payment,
to an account maintained by such Noteholder with a bank located in the
continental United States the amount to be distributed to such Noteholder, for
credit to the account of such Noteholder maintained at such bank; provided
that, in the event the Equipment Notes are not held by Subordination Agent on
behalf of Pass Through Trustees, Loan Trustee shall, unless instructed by
Company to use another method, pay such amounts by check mailed to Noteholder’s
address as it appears on the Equipment Note Register. If, after its receipt of
funds at the place and prior to the time specified above in the immediately
preceding sentence, Loan Trustee fails (other than as a result of a failure of
Noteholder to provide it with wire transfer instructions) to make any such
payment required to be paid by wire transfer as provided in the immediately
preceding sentence on the Business Day it receives such funds, Loan Trustee, in
its individual capacity and not as trustee, agrees to compensate such
Noteholders for loss of use of funds at the Federal Funds Rate until such
payment is made and Loan 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, such Equipment Note
shall be surrendered to Loan Trustee for cancellation. Notwithstanding any
other provision of this Indenture to the contrary, Loan 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 Loan 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 1:00 p.m. (New York City time) at the place of
payment. So long as any signatory to the Participation Agreement or nominee
thereof shall be a registered Noteholder, all payments to it shall be made to
the account of such Noteholder specified in Schedule I 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 Loan
Trustee consistent with this Section 2.03.


13






          Section
2.04 Withholding Taxes. Loan Trustee shall exclude and withhold at the
appropriate rate from each payment of principal amount of, interest on,
Make-Whole Amount, if any, and other amounts due hereunder or under each
Equipment Note (which exclusion and withholding shall constitute payment of
such amounts payable hereunder or in respect of such Equipment Notes, as
applicable) any and all withholding taxes applicable thereto as required by
law. Loan Trustee agrees to act as such withholding agent and, in connection
therewith, whenever any present or future 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 (which withholding shall constitute
payment of such amounts payable hereunder or in respect of such Equipment
Notes, as applicable) and timely pay the same to the appropriate authority in
the name of and on behalf of Noteholders, that it will file any necessary
withholding tax returns or statements when due, and that as promptly as
possible after the payment thereof it will deliver to each Noteholder (with a
copy to Company) appropriate documentation showing the payment thereof,
together with such additional documentary evidence as any such Noteholder may
reasonably request from time to time. Loan Trustee agrees to file any other
information reports it is required to file under United States law.


          Section
2.05 Application of Payments. Subject always to Section 2.13 and except
as otherwise provided in Article III, in the case of each Equipment Note, each
payment of an installment of principal amount, Make-Whole Amount, if any, and
interest paid thereon shall be applied:


	
 

	
 


	
 

	
          first,
 to the payment of accrued interest on such Equipment Note (as well as any
 interest on (i) any overdue principal amount, and (ii) to the
 extent permitted by law, any overdue Make-Whole Amount, if any, any overdue
 interest and any other overdue amounts thereunder) to the date of such
 payment; 


	
 

	
 


	
 

	
          second,
 to the payment of Make-Whole Amount, if any;


	
 

	
 


	
 

	
          third,
 to the payment of the principal amount of such Equipment Note (or portion
 thereof) then due; and 


	
 

	
 


	
 

	
          fourth,
 the balance, if any, remaining thereafter, to the payment of installments of
 the principal amount of such Equipment Note (or portion thereof) remaining
 unpaid in the inverse order of their maturity.





          Section
2.06 Termination of Interest in Collateral. No Noteholder, Indenture
Indemnitee or Related Indenture Indemnitee shall, as such, have any further
interest in, or other right with respect to, the Collateral when and if (i)
the principal amount of, Make-Whole Amount, if any, and interest (including
post-petition interest and interest on any overdue amounts) on and all other
amounts due under all Equipment Notes held by such Noteholder and all other
sums then due and payable to such Noteholder or Indenture Indemnitee, as the
case may be, hereunder (including, without limitation, under Section 


14






2.14) and
under the Participation Agreement by Company and (ii) all Related
Secured Obligations ((i) and (ii), collectively, “Secured Obligations”)
have been paid in full.


          Section 2.07 Registration,
Transfer and Exchange of Equipment Notes. Loan Trustee shall keep a
register or registers (the “Equipment Note Register”) in which Loan
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 Loan
Trustee. Loan 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 or
transfer such Equipment Note shall surrender such Equipment Note to Loan
Trustee at the Corporate Trust Office, together with a written request from the
registered holder thereof for the issuance of a new Equipment Note of the same
Series, 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 and subject to satisfaction of Section 2.09,
Company shall execute, and Loan Trustee shall authenticate and deliver, in the
name of the designated transferee or transferees, one or more new Equipment
Notes of an equal aggregate principal amount and of the same Series. At the
option of Noteholder, Equipment Notes may be exchanged for other Equipment
Notes of the same Series of any authorized denominations of an equal aggregate
principal amount, upon surrender of the Equipment Notes to be exchanged to Loan
Trustee at the Corporate Trust Office. Whenever any Equipment Notes are so
surrendered for exchange, Company shall execute, and Loan Trustee shall
authenticate and deliver, the Equipment Notes which Noteholder 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 2.07 or under Section 2.08 or otherwise under this Indenture) shall be
the valid obligations of Company evidencing the same respective obligations, and
entitled to the same security and benefits under this 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 Company or Loan Trustee) be duly endorsed or be
accompanied by a written instrument of transfer in form satisfactory to Loan
Trustee, duly executed by Noteholder or such Noteholder’s attorney duly
authorized in writing, and Company and Loan 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 or jurisdiction.
Loan Trustee shall make a notation on each new Equipment Note of the amount of
all payments of principal 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. Principal, interest and all other amounts shall be deemed to have been
paid on such new Equipment Note to the date on which such amounts have been
paid on such old Equipment Note. Company shall not be required to exchange any
surrendered Equipment Notes as provided above (a) during the 


15






ten-day period
preceding the due date of any payment on such Equipment Note or (b) that
has been called for redemption. Company and Loan Trustee shall in all cases
deem and treat the Person in whose name any Equipment Note has been issued and
registered on the Equipment Note Register as the absolute owner and Noteholder
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
neither Company nor Loan Trustee shall be affected by any notice to the
contrary. Loan Trustee will promptly notify Company of each registration of a
transfer of an Equipment Note. Any such transferee of an Equipment Note, by its
acceptance of an Equipment Note, agrees to the provisions of the Indenture, the
Related Indentures, the Participation Agreement, the other Operative Documents
and the Pass Through Documents applicable to Noteholders or, in the case of
each Related Indenture, Related Noteholders, and, without limiting the generality
of the foregoing, any such transferee of an Equipment Note, by its acceptance
of an Equipment Note: (i) agrees to the applicable provisions of
Sections 6.01, 7.10 and 7.11 of the Participation Agreement, and shall be
deemed to have represented, warranted and covenanted to the parties to the
Participation Agreement as to the matters represented, warranted and covenanted
by Noteholders, including Pass Through Trustees, in the Participation
Agreement, (ii) agrees to the restrictions set forth in Sections 4.01(a)(ii)
and 4.01(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, Loan Trustee to take any action that would
violate Sections 4.01(a)(ii) or 4.01(a)(iii) of the Intercreditor Agreement,
and (iii) agrees to the provisions of Section 2.07 of the Intercreditor
Agreement, and shall be deemed to have covenanted to the parties to the
Intercreditor Agreement to perform its obligations as a Noteholder under
Section 2.07 of the Intercreditor Agreement. Subject to compliance by
Noteholder and any transferee of the requirements set forth in this Section
2.07 and in Section 2.09, Loan Trustee and Company shall use all reasonable
efforts to issue new Equipment Notes upon transfer or exchange within ten
Business Days of the date an Equipment Note is surrendered for transfer or
exchange.


          Section 2.08 Mutilated,
Destroyed, Lost or Stolen Equipment Notes. If any Equipment Note becomes
mutilated, destroyed, lost or stolen, Company shall, upon the written request
of the holder of such Equipment Note and subject to satisfaction of this
Section 2.08 and of Section 2.09, execute and Loan Trustee shall authenticate
and deliver in replacement thereof a new Equipment Note of the same Series,
payable in the same principal 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 Loan Trustee,
and a photocopy thereof shall be furnished to Company. If the Equipment Note
being replaced has been destroyed, lost or stolen, the holder of such Equipment
Note shall furnish to Company and Loan Trustee such security or indemnity as
may be required by them to save Company and Loan Trustee harmless and evidence
satisfactory to Company and Loan Trustee of the destruction, loss or theft of
such Equipment Note and of the ownership thereof. 


16






          Section
2.09 Payment of Expenses on Transfer; Cancellation.


          (a)
No service charge shall be made to a Noteholder for any registration of
transfer or exchange of Equipment Notes, but Loan 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)
Loan Trustee shall cancel all Equipment Notes surrendered for replacement,
redemption, transfer, exchange, payment or cancellation, shall keep a copy of
such canceled Equipment Notes, and shall send the original canceled Equipment
Notes marked “canceled” to Company.


          Section
2.10 Mandatory Redemption of Equipment Notes. Company shall redeem the
Equipment Notes in whole in connection with an Event of Loss in respect of the
Airframe or the Airframe and the Engines installed thereon (unless Company has
performed the option set forth in Section 7.05(a)(i) with respect thereto) on
or before the Loss Payment Date at a redemption price equal to 100% of the
unpaid principal amount thereof, together with all accrued interest thereon to
(but excluding) the date of redemption and all other Secured Obligations (other
than any Related Secured Obligations) owed or then due and payable to
Noteholders, but without any Make-Whole Amount.


          Section
2.11 Voluntary Redemption of Equipment Notes. 


          (a)
All (but not less than all) of the Equipment Notes may be redeemed by Company
upon at least 30 days’ revocable prior written notice to Loan Trustee and
Noteholders, and such Equipment Notes shall be redeemed in whole at a
redemption price equal to 100% of the unpaid principal amount thereof, together
with accrued interest thereon to (but excluding) the date of redemption and all
other Secured Obligations (other than any Related Secured Obligations) owed or
then due and payable to Noteholders, plus Make-Whole Amount, if any.


          (b)
All of the Equipment Notes of any of the Series B or Series C or of any
particular series of Additional Series Equipment Notes may be redeemed by
Company upon at least 30 days’ revocable prior written notice to Loan Trustee
and Noteholders of each Series to be redeemed, and such Equipment Notes shall
be redeemed in whole at a redemption price equal to 100% of the unpaid
principal amount thereof, together with accrued interest thereon to the date of
redemption and all other Secured Obligations (other than any Related Secured
Obligations) owed or then due and payable to Noteholders of such Series, plus
Make-Whole Amount, if any; provided that no redemption shall be
permitted under this Section 2.11(b) unless the following conditions have
been satisfied: (1) simultaneously with such redemption, the Related
Series B Equipment Notes (in the case of redemption hereunder of the Series B
Equipment Notes),


17






Related Series
C Equipment Notes (in the case of redemption hereunder of the Series C
Equipment Notes) or the Related Additional Series Equipment Notes in respect of
the Additional Series Equipment Notes being redeemed (in the case of redemption
of any series of Additional Series Equipment Notes), as the case may be, shall
also be redeemed; and (2) simultaneously with such redemption, new
Series B Equipment Notes (in the case of redemption hereunder of the Series B
Equipment Notes), new Series C Equipment Notes (in the case of redemption
hereunder of the Series C Equipment Notes) or new Additional Series Equipment
Notes of the same series being redeemed (in the case of redemption hereunder of
a series of Additional Series Equipment Notes), which, in any such case, may
have terms different from those of the redeemed Equipment Notes, shall be
issued in accordance with Sections 2.02 and 6.02(g) of the Participation
Agreement, Section 4(a)(vi) of the Note Purchase Agreement and Section 8.01(c)
of the Intercreditor Agreement.


          Section
2.12 Redemptions; Notice of Redemptions; Repurchases.


          (a)
No redemption of any Equipment Note may be made except to the extent and in the
manner expressly permitted by this Indenture. Company may at any time
repurchase any of the Equipment Notes not held by the Subordination Agent at
any price and may hold, resell or surrender such Equipment Notes to Loan
Trustee for cancellation.


          (b)
Notice of redemption with respect to the Equipment Notes shall be given by Loan
Trustee by first-class mail, postage prepaid, mailed not less than 30 nor more
than 60 days prior to the applicable redemption date, to each Noteholder of
such Equipment Notes to be redeemed, at such Noteholder’s address appearing in
the Equipment Note Register; provided that such notice shall be
revocable by written notice from Company to Loan Trustee given no 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, Company (or any person on behalf of Company)
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 Loan
Trustee, deposit or cause to be deposited with Loan Trustee by 10:00 a.m. (New
York City 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 (and not revoked as
permitted by this Section 2.12), the Equipment Notes to be redeemed shall, on
the redemption date, become due and payable at the Corporate Trust Office of
Loan Trustee,


18






and from and
after such redemption date (unless there is 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. 


          Section
2.13 Subordination.


          (a)
The indebtedness evidenced by the Series B Equipment Notes is, to the extent
and in the manner provided in this Indenture, subordinate and subject in right
of payment to the prior payment in full of the Secured Obligations in respect
of the Series A Equipment Notes, and the Series B Equipment Notes are issued
subject to such provisions. The indebtedness evidenced by the Series C
Equipment Notes is, to the extent and in the manner provided in this Indenture,
subordinate and subject in right of payment to the prior payment in full of the
Secured Obligations in respect of the Series A Equipment Notes and the Series B
Equipment Notes, and the Series C Equipment Notes are issued subject to such
provisions. The indebtedness evidenced by the Additional Series Equipment
Notes, if issued, will be, to the extent and in the manner provided in this
Indenture (as may be amended in connection with any issuance of the Additional
Series Equipment Notes), subordinate and subject in right of payment to the
prior payment in full of the Secured Obligations in respect of the Series A
Equipment Notes, the Series B Equipment Notes and the Series C Equipment Notes,
and any Series of the Additional Series Equipment Notes, if issued, will be
issued subject to such provisions. The indebtedness evidenced by the Series A
Equipment Notes, the Series B Equipment Notes and the Series C Equipment Notes
is, and the indebtedness evidenced by any Series of the Additional Series
Equipment Notes, if issued, will be, to the extent and in the manner provided
in each Related Indenture, subordinate and subject in right of payment to the
prior payment in full of the “Secured Obligations” in respect of the “Equipment
Notes” issued under such Related Indenture, and the Series A Equipment Notes,
the Series B Equipment Notes and the Series C Equipment Notes are, and the
indebtedness evidenced by any Series of the Additional Series Equipment Notes
will be, issued subject to such provisions. By acceptance of its Equipment Notes
of any Series, each Noteholder of such Series (a) agrees to and shall be
bound by such provisions, (b) authorizes and directs Loan Trustee or the
Related Loan Trustee under the applicable Related Indenture, as appropriate, on
such Noteholder’s behalf to take any action necessary or appropriate to
effectuate the subordination as provided in this Indenture and the applicable
Related Indenture and (c) appoints Loan Trustee or the Related Loan
Trustee under the applicable Related Indenture, as appropriate, as such
Noteholder’s attorney-in-fact for such purpose.


          (b)
Company, Loan Trustee and, by acceptance of its Equipment Notes of any Series,
each Noteholder of such Series, hereby agree that no payment or distribution
shall be made on or in respect of the Secured Obligations, or the “Secured
Obligations” under any Related Indenture, owed to such Noteholder, including
any payment or distribution


19






of cash,
property or securities after the occurrence of any of the events referred to in
Section 4.01(f) or after the commencement of any proceedings of the type
referred to in Sections 4.01(g), (h) or (i), except, in each case, as
expressly provided in Article III of this Indenture or Article III of the
applicable Related Indenture, as appropriate.


          (c)
By the acceptance of its Equipment Notes of any Series, each Noteholder of such
Series agrees that (i) if such Noteholder, in its capacity as a
Noteholder, receives any payment or distribution on any Secured Obligations in
respect of such Series that it is not entitled to receive under this Section
2.13 or Article III, it will hold any amount so received in trust for Loan
Trustee and forthwith turn over such amount to Loan Trustee in the form
received to be applied as provided in Article III and (ii) if such
Noteholder, in its capacity as a “Noteholder” under any Related Indenture,
receives any payment or distribution on any “Secured Obligations” in respect of
“Equipment Notes” of any “Series” issued under such Related Indenture that it
is not entitled to receive under Section 2.13 or Article III of such Related
Indenture, it will hold any amount so received in trust for the Related Loan
Trustee under such Related Indenture and forthwith turn over such amount to
such Related Loan Trustee under such Related Indenture in the form received to
be applied as provided in Article III of such Related Indenture.


          Section
2.14 Certain Payments. Company agrees to pay to Loan Trustee for
distribution in accordance with Section 3.04:


	
 

	
 


	
 

	
          (a)
 an amount or amounts equal to the fees payable to 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 is the sum of the then outstanding aggregate principal
 amount of the Series A Equipment Notes and the Series B Equipment Notes and
 the denominator of which is the sum of 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) with respect to all
 of the Indentures (as defined in the Note Purchase Agreement);


	
 

	
 


	
 

	
          (b)
 an 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 the fraction specified in the foregoing clause (a);


	
 

	
 


	
 

	
          (c)
 an amount equal to interest on any Downgrade Advance (other than any Applied
 Downgrade Advance) payable under Section 3.07 of each Liquidity Facility
 minus Investment Earnings from such Downgrade Advance multiplied by the
 fraction specified in the foregoing clause (a);





20






	
 

	
 


	
 

	
          (d)
 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) the amount equal to the sum of interest on any Unpaid
 Advance (other than a Special Termination Advance) or Applied Provider
 Advance payable under Section 3.07 of each Liquidity Facility plus any other
 amounts payable in respect of such Unpaid Advance, Applied Provider Advance
 or Applied Special Termination Advance under Section 3.01, 3.03 or 3.09 of
 each Liquidity Facility under which such Unpaid Advance, Applied Provider
 Advance or Applied Special Termination Advance was made over (2) the
 sum of Investment Earnings from any Final Advance plus any amount of interest
 at the Past Due Rate actually payable (whether or not in fact paid) by
 Company in respect of the overdue scheduled interest on the “Series A
 Equipment Notes” and “Series B Equipment Notes” (each as defined in the Note
 Purchase Agreement) in respect of which such Unpaid Advance, Applied Provider
 Advance or Applied Special Termination Advance was made, multiplied by (y)
 a fraction, the numerator of which is 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 is 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) with
 respect to all of the Indentures (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”);


	
 

	
 


	
 

	
          (e)
 any amounts owed to Liquidity Provider by Subordination Agent as borrower
 under Section 3.01 (other than in respect of an Unpaid Advance, Applied
 Provider Advance or Applied Special Termination Advance), 3.03 (other than in
 respect of an Unpaid Advance, Applied Provider Advance or Applied Special
 Termination Advance), 7.05 and 7.07 of each Liquidity Facility (or similar
 provisions of any Replacement Liquidity Facility) multiplied by a fraction,
 the numerator of which is the sum of the then outstanding aggregate principal
 amount of the Series A Equipment Notes, the Series B Equipment Notes, the
 Series C Equipment Notes and any Additional Series Equipment Notes and the
 denominator of which is the sum of the then outstanding aggregate principal
 amount of all “Series A Equipment Notes”, “Series B Equipment Notes”, “Series
 C Equipment Notes” and “Additional Series Equipment Notes” (each as defined
 in the Note Purchase Agreement) with respect to all of the Indentures (as defined
 in the Note Purchase Agreement); and


	
 

	
 


	
 

	
          (f)
 an amount or amounts equal to the compensation, including reasonable expenses
 and disbursements actually incurred, payable to Subordination Agent under
 Section 6.07 of the Intercreditor Agreement, 





21






	
 

	
 


	
 

	
multiplied
 by the fraction specified in the foregoing clause (a) (but in any event
 without duplication of any amount or amounts payable by Company in respect of
 such compensation under any other Operative Document or Pass Through
 Document).





          For
purposes of this paragraph, the terms “Applied Downgrade Advance”, “Applied
Provider Advance”, “Applied Special Termination Advance”, “Downgrade Advance”,
“Final Advance”, “Investment Earnings”, “Replacement Liquidity Facility”,
“Special Termination Advance” and “Unpaid Advance” have the meanings specified
in each Liquidity Facility or the Intercreditor Agreement, as applicable.


          Section
2.15 Repayment of Monies for Equipment Note Payments Held by Loan Trustee.
Any money held by Loan Trustee in trust for any payment of the principal of,
Make-Whole Amount, if any, or interest or any other amounts due on, any
Equipment Note, including, without limitation, any money deposited pursuant to
Section 2.12(c) or 10.01, and remaining unclaimed for a 730-day period (for
purposes of calculating this 730-day period, all days on which the payment of
such money shall not have been made because of operation of law shall be
excluded) after the due date for such payment (or such lesser time as Loan Trustee
is satisfied, after 60 days’ notice from Company, is one month prior to the
escheat period provided under applicable state law) shall be paid to Company.
Noteholders of any outstanding Equipment Notes shall thereafter, as unsecured
general creditors, look only to Company for payment thereof, and all liability
of Loan Trustee with respect to such trust money shall thereupon cease. Loan
Trustee, before being required to make any such repayment, may at the expense
of Company cause to be mailed to each such Noteholder notice that such money
remains unclaimed. After a date specified in such notice, which may not be less
than 30 days from the date of mailing, any unclaimed balance of such money then
remaining will be repaid to Company as provided herein.


          Section
2.16 Directions by Subordination Agent. So long as Subordination Agent
is a Noteholder, notwithstanding anything contained herein or in any other
Operative Document to the contrary, in exercising its right to vote the
Equipment Notes held by it, or in giving or taking any direction, consent,
request, demand, instruction, authorization, notice, waiver or other action
provided by this Indenture or in respect of the Equipment Notes to be given or
taken by a Noteholder (each such vote or other action, a “Direction”) in
respect of such Equipment Notes, Subordination Agent may act in accordance with
any votes, directions, consents, requests, demands, instructions,
authorizations, notices, waivers or other actions given or taken by any
applicable Pass Through Trustee or the Controlling Party pursuant to the
Intercreditor Agreement, including without limitation pursuant to Section 2.06,
Article IV or Section 8.01(b) thereof. Subordination Agent shall be permitted (x) to
give a Direction with respect to less than the entire principal amount of any
single Equipment Note held by it, and (y) to give different
Directions with respect to different portions of the principal amount of any


22








single
Equipment Note held by it. Any Direction given by Subordination Agent at any
time with respect to more than a majority in aggregate unpaid principal amount
of all of the Equipment Notes issued and then outstanding hereunder shall be
deemed to have been given by a Majority in Interest of Noteholders.


ARTICLE III



Receipt, Distribution and Application of Income

From the Collateral


          Section
3.01 Basic Distributions. Except as otherwise provided in Sections 3.02,
3.03 and 3.04, each periodic payment by Company of regularly scheduled
installments of principal or interest on the Equipment Notes received by Loan
Trustee shall be promptly distributed in the following order of priority:


	
 

	
 


	
 

	
          first,
 so much of such payment as is required to pay in full the aggregate amount of
 the payment or payments of principal amount and interest (as well as any
 interest on any overdue principal amount and, to the extent permitted by
 applicable law, on any overdue interest and any other overdue amounts) then due
 under all Series A Equipment Notes shall be distributed to Noteholders of
 Series A Equipment Notes 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;


	
 

	
 


	
 

	
          second,
 after giving effect to clause “first” above, so much of such payment
 remaining as is required to pay in full the aggregate amount of the payment
 or payments of principal amount and interest (as well as any interest on any
 overdue principal amount and, to the extent permitted by applicable law, on
 any overdue interest and any other overdue amounts) then due under all Series
 B Equipment Notes shall be distributed to Noteholders of Series B Equipment
 Notes 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;


	
 

	
 


	
 

	
          third,
 after giving effect to clause “second” above, so much of such payment
 remaining as is required to pay in full the aggregate amount of the payment
 or payments of principal amount and interest (as well as any interest on any
 overdue principal amount and, to the extent permitted by applicable law, on
 any overdue interest and any other overdue amounts) then due under all Series
 C Equipment Notes shall be distributed to Noteholders of Series C Equipment
 Notes ratably, without priority of one over the other, in the proportion that
 the amount of





23






	
 

	
 


	
 

	
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;


	
 

	
 


	
 

	
          fourth,
 after giving effect to clause “third” above (and except as otherwise provided
 in an amendment to this Indenture pursuant to Section 9.01), so much of such
 payment remaining as is required to pay in full the aggregate amount of the
 payment or payments of principal amount and interest (as well as any interest
 on any overdue principal amount and, to the extent permitted by applicable
 law, on any overdue interest and any other overdue amounts) then due under
 all Additional Series Equipment Notes shall be distributed to Noteholders of
 Additional Series Equipment Notes ratably, without priority of one over the
 other, in the proportion that the amount of such payment or payments then due
 under each Additional Series Equipment Note bears to the aggregate amount of
 the payments then due under all Additional Series Equipment Notes; and


	
 

	
 


	
 

	
          fifth,
 the balance, if any, of such installment remaining thereafter shall be
 distributed to Company.


	
 

	
 


	
 

	
          Section
 3.02 Event of Loss; Replacement; Optional Redemption.





                    Except
as otherwise provided in Sections 3.03 and 3.04 and subject to the following
proviso, any payments received by Loan 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 2.10 or (ii) pursuant to an optional redemption
of the Equipment Notes pursuant to Section 2.11 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:


	
 

	
 


	
 

	
          first,
 so much of such payment as is required (i) to reimburse Loan Trustee
 and Noteholders for any reasonable costs or expenses actually incurred in
 connection with such redemption for which they are entitled to reimbursement,
 or indemnity by Company, under the Operative Documents and then (ii)
 to pay any other Secured Obligations then due (except as provided in clause
 “second” and “third” below) to Loan Trustee, Noteholders and the other
 Indenture Indemnitees under this Indenture, the Participation Agreement or
 the Equipment Notes (other than amounts specified in clause “second” and
 “third” below);


	
 

	
 


	
 

	
          second,
 after giving effect to clause “first” above:








	
 

	
 

	
 


	
 

	
 

	
          (i)
 so much of such payment remaining as is required to pay the amounts specified
 in paragraph (i) of clause “third” of Section 3.03 plus Make-Whole Amount, if
 any, then due and payable in respect of the





24






	
 

	
 

	
 


	
 

	
 

	
Series
 A Equipment Notes, but excluding distributions of amounts of Related Secured
 Obligations to Related Noteholders;


	
 

	
 

	
 


	
 

	
 

	
          (ii)
 after giving effect to paragraph (i) above, so much of such payment remaining
 as is required to pay the amounts specified in paragraph (ii) of clause
 “third” of Section 3.03 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 Noteholders;


	
 

	
 

	
 


	
 

	
 

	
          (iii)
 after giving effect to paragraph (ii) above, so much of such payment
 remaining as is required to pay the amounts specified in paragraph (iii) of
 clause “third” of Section 3.03 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
 Noteholders; and


	
 

	
 

	
 


	
 

	
 

	
          (iv)
 after giving effect to paragraph (iii) above, so much of such payment
 remaining as is required to pay the amounts specified in paragraph (iv) of
 clause “third” of Section 3.03, but excluding distributions of amounts of
 Related Secured Obligations to Related Noteholders; 







	
 

	
 


	
 

	
          third,
 as provided in clause “third” of Section 3.03 in respect of Related Secured
 Obligations under each Defaulted Operative Indenture other than sub-clauses
 (xi) and (xvii) of clause “third” of Section 3.03; and


	
 

	
 


	
 

	
          fourth,
 the balance, if any, of such payment, as provided in clause “fourth” of
 Section 3.03;





provided that any insurance, condemnation or
similar proceeds resulting from an Event of Loss that are received by Loan
Trustee shall be held and distributed by Loan Trustee as provided in Sections
7.05(c) and 7.06(d), and any such proceeds that are held by Loan Trustee shall
be invested as provided in Section 5.06; and provided, further,
in the case of a redemption of Equipment Notes pursuant to
Section 2.11(b), if a particular Series is not being redeemed pursuant
thereto, no application of funds shall be made pursuant to the paragraphs in
clause “second” above that refer 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. 


25






                    Except
as otherwise provided in Section 3.04, all payments received and amounts held
or realized by Loan Trustee (including any amounts realized by Loan Trustee
from the exercise of any remedies pursuant to Article IV) after both an Event
of Default shall have occurred and be continuing and the Equipment Notes shall
have become due and payable pursuant to Section 4.02(a), as well as all
payments or amounts then held by Loan Trustee as part of the Collateral, shall
be promptly distributed by Loan Trustee in the following order of priority:


	
 

	
 


	
 

	
          first,
 so much of such payments or amounts as is required to (i) reimburse
 Loan Trustee or U.S. Bank, to the extent Loan Trustee or U.S. Bank is
 entitled to be reimbursed or indemnified under the Operative Documents, for
 any Tax, expense or other loss (including, without limitation, all amounts to
 be expended at the expense of, or charged upon the tolls, rents, revenues,
 issues, products and profits of, the property included in the Collateral
 pursuant to Section 4.02(a)) actually incurred by Loan Trustee or U.S.
 Bank (to the extent not previously reimbursed), the expenses of any sale,
 taking or other proceeding, reasonable attorneys’ fees and expenses, court
 costs, and any other expenditures actually incurred or expenditures or
 advances made by Loan Trustee, U.S. Bank or Noteholders in the protection,
 exercise or enforcement of any right, power or remedy or any damages
 sustained by Loan Trustee, U.S. Bank or any Noteholder, liquidated or
 otherwise, upon such Event of Default shall be applied by Loan Trustee as
 between itself, U.S. Bank and Noteholders in reimbursement of such expenses
 and any other expenses for which Loan Trustee, U.S. Bank or Noteholders are
 entitled to reimbursement under any Operative Document (including by
 subrogation pursuant to Section 2.07(h) of the Intercreditor 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 case the aggregate amount so to
 be distributed shall be 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,
 after giving effect to clause “first” above, so much of such payments or
 amounts remaining as is required to reimburse the then existing or prior
 Noteholders for payments made pursuant to Section 5.03 (to the extent
 not previously reimbursed) shall be distributed to such then existing or
 prior Noteholders 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 Noteholder pursuant to Section 5.03;


	
 

	
 


	
 

	
          third,
 after giving effect to clause “second” above:








	
 

	
 

	
 


	
 

	
 

	
          (i)
 so much of such payments or amounts remaining as is required to pay in full
 the aggregate unpaid principal amount of all Series





26






	
 

	
 

	
 


	
 

	
 

	
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, shall be distributed to Noteholders of 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, in the proportion that (x) the aggregate unpaid
 principal amount of all Series A Equipment Notes held by each holder thereof
 plus the accrued but unpaid interest and other amounts due hereunder or
 thereunder to the date of distribution bears to (y) the aggregate
 unpaid principal amount of all Series A Equipment Notes held by all holders
 thereof plus the accrued but unpaid interest and other amounts due thereon to
 the date of distribution;


	
 

	
 

	
 


	
 

	
 

	
          (ii)
 after giving effect to paragraph (i) above, so much of such payments or
 amounts remaining as is required to pay in full the aggregate unpaid
 principal 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, shall be
 distributed to Noteholders of 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, in the
 proportion that (x) the aggregate unpaid principal amount of all
 Series B Equipment Notes held by each holder thereof plus the accrued but
 unpaid interest and other amounts due hereunder or thereunder to the date of
 distribution bears to (y) the aggregate unpaid principal amount of all
 Series B Equipment Notes held by all holders thereof plus the accrued but
 unpaid interest and other amounts due thereon to the date of distribution; 


	
 

	
 

	
 


	
 

	
 

	
          (iii)
 after giving effect to paragraph (ii) above, so much of such payments or
 amounts remaining as is required to pay in full the aggregate unpaid
 principal 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, shall be
 distributed to Noteholders of 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 priority of one over the other, in the
 proportion that (x) the aggregate unpaid principal amount of all
 Series C Equipment Notes held by each holder thereof plus the accrued but
 unpaid interest and other amounts due hereunder or thereunder to the date of
 distribution bears to (y) the aggregate unpaid principal amount of all
 Series C Equipment Notes held by all holders





27






	
 

	
 

	
 


	
 

	
 

	
thereof plus
 the accrued but unpaid interest and other amounts due thereon to the date of
 distribution;


	
 

	
 

	
 


	
 

	
 

	
          (iv)
 after giving effect to paragraph (iii) above (and except as otherwise
 provided in an amendment to this Indenture pursuant to Section 9.01), so much
 of such payments or amounts remaining as is required to pay in full the
 aggregate unpaid principal amount of all Additional Series Equipment Notes,
 and the accrued but unpaid interest and other amounts due thereon and all
 other Secured Obligations in respect of the Additional Series Equipment Notes
 to the date of distribution, shall be distributed to Noteholders of
 Additional Series, 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, in the proportion that (x) the
 aggregate unpaid principal amount of all Additional Series Equipment Notes
 held by each holder plus the accrued but unpaid interest and other amounts
 due hereunder or thereunder to the date of distribution bears to (y)
 the aggregate unpaid principal amount of all Additional Series Equipment
 Notes held by all holders thereof plus the accrued but unpaid interest and
 other amounts due thereon to the date of distribution; 


	
 

	
 

	
 


	
 

	
 

	
          (v)
 after giving effect to paragraph (iv) above, so much of such payments or
 amounts remaining as is required to pay in full the amounts then due and
 covered by clause “first” of Section 3.03 of each Defaulted Operative
 Indenture shall be distributed to the Related Loan Trustee under each
 respective Defaulted Operative Indenture, 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, in accordance with the
 priorities and prorations in such clause “first”;


	
 

	
 

	
 


	
 

	
 

	
          (vi)
 after giving effect to paragraph (v) above, so much of such payments or
 amounts remaining as is required to pay in full the amounts then due and
 covered by clause “second” of Section 3.03 of each Defaulted Operative
 Indenture (other than any amounts payable to any Related Non-Subordination
 Agent Noteholder) shall be distributed to the Related Loan Trustee under each
 respective Defaulted Operative Indenture, 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, in accordance with the
 priorities and prorations in such clause “second”;


	
 

	
 

	
 


	
 

	
 

	
          (vii)
 after giving effect to paragraph (vi) above, so much of such payments or amounts
 remaining as is required to pay in full the aggregate amount of the payment
 or payments of principal amount and interest (as well as any interest on any
 overdue principal amount and, to the extent





28






	
 

	
 

	
 


	
 

	
 

	
permitted by
 applicable law, on any overdue interest and any other overdue amounts) then
 due under all Related Series A Equipment Notes, if any, issued under any
 Defaulted Operative Indenture shall be distributed to the Related Loan
 Trustee under each respective Defaulted Operative Indenture under which any
 Related Series A Equipment Notes are outstanding, 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, in the
 proportion that (x) the amount of such payment or payments then due
 under all Related Series A Equipment Notes issued under each Defaulted
 Operative Indenture bears to (y) the aggregate amount of the payments
 then due under all Related Series A Equipment Notes issued under all Defaulted
 Operative Indentures;


	
 

	
 

	
 


	
 

	
 

	
          (viii)
 after giving effect to paragraph (vii) above, so much of such payments or
 amounts remaining as is required to pay in full the aggregate amount of the
 payment or payments of principal amount and interest (as well as any interest
 on any overdue principal amount and, to the extent permitted by applicable
 law, on any overdue interest and any other overdue amounts) then due under
 all Related Series B Equipment Notes, if any, issued under any Defaulted
 Operative Indenture shall be distributed to the Related Loan Trustee under
 each respective Defaulted Operative Indenture under which any Related Series
 B Equipment Notes are outstanding, 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, in the proportion that (x) the
 amount of such payment or payments then due under all Related Series B
 Equipment Notes issued under each Defaulted Operative Indenture bears to (y)
 the aggregate amount of the payments then due under all Related Series B
 Equipment Notes issued under all Defaulted Operative Indentures;


	
 

	
 

	
 


	
 

	
 

	
          (ix)
 after giving effect to paragraph (viii) above, so much of such payments or
 amounts remaining as is required to pay in full the aggregate amount of the
 payment or payments of principal amount and interest (as well as any interest
 on any overdue principal amount and, to the extent permitted by applicable
 law, on any overdue interest and any other overdue amounts) then due under
 all Related Series C Equipment Notes, if any, issued under any Defaulted
 Operative Indenture shall be distributed to the Related Loan Trustee under
 each respective Defaulted Operative Indenture under which any Related Series
 C Equipment Notes are outstanding, 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, in the proportion that (x) the
 amount of such payment or payments then due under all Related Series C
 Equipment Notes issued





29






	
 

	
 

	
 


	
 

	
 

	
under each
 Defaulted Operative Indenture bears to (y) the aggregate amount of the
 payments then due under all Related Series C Equipment Notes issued under all
 Defaulted Operative Indentures;


	
 

	
 

	
 


	
 

	
 

	
          (x)
 after giving effect to paragraph (ix) above (and except as otherwise provided
 in amendments to the applicable Related Indentures pursuant to Sections 9.01
 thereof), so much of such payments or amounts remaining as is required to pay
 in full the aggregate amount of the payment or payments of principal amount
 and interest (as well as any interest on any overdue principal amount and, to
 the extent permitted by applicable law, on any overdue interest and any other
 overdue amounts) then due under all Related Additional Series Equipment
 Notes, if any, issued under any Defaulted Operative Indenture shall be
 distributed to the Related Loan Trustee under each respective Defaulted
 Operative Indenture under which any Related Additional Series Equipment Notes
 are outstanding, 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, in the proportion that (x) the amount of such
 payment or payments then due under all Related Additional Series Equipment
 Notes issued under each Defaulted Operative Indenture bears to (y) the
 aggregate amount of the payments then due under all Related Additional Series
 Equipment Notes issued under all Defaulted Operative Indentures;


	
 

	
 

	
 


	
 

	
 

	
          (xi)
 after giving effect to paragraph (x) above, if any Related Equipment Note is
 outstanding, any of such payments or amounts remaining and any invested
 Permitted Investments shall be held by Loan Trustee in an Eligible Account in
 accordance with the provisions of Section 3.07 (and invested as provided
 in Section 5.06) as additional security for the Related Secured Obligations
 (other than any Related Secured Obligations owed to any Related
 Non-Subordination Agent Noteholder), 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 such
 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 such
 Related Secured Obligations the balance, if any, of any such remaining
 amounts and investment earnings thereon shall be applied as provided in the
 following paragraphs of this clause “third”; 


	
 

	
 

	
 


	
 

	
 

	
          (xii)
 after giving effect to paragraph (xi) above, so much of such payments or
 amounts remaining as is required to pay in full the amounts then due to any
 Related Non-Subordination Agent Noteholder and covered





30






	
 

	
 

	
 


	
 

	
 

	
by clause
 “second” of Section 3.03 of each Defaulted Operative Indenture shall be
 distributed to the Related Loan Trustees under each respective Defaulted
 Operative Indenture, 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, in accordance with the priorities and
 prorations in such clause “second”;


	
 

	
 

	
 


	
 

	
 

	
          (xiii)
 after giving effect to paragraph (xii) above, if no Related Equipment Note is
 outstanding, so much of the balance, if any, of any such remaining amounts
 and investment earnings thereon as is required to pay in full the aggregate
 amount of the payment or payments of principal amount and interest (as well
 as any interest on any overdue principal amount and, to the extent permitted
 by applicable law, on any overdue interest and any other overdue amounts)
 then due under all Related Non-Subordination Agent Series A Equipment Notes,
 if any, issued under any Defaulted Operative Indenture shall be distributed
 to the Related Loan Trustee under each respective Defaulted Operative
 Indenture under which any Related Non-Subordination Agent Series A Equipment Notes
 are outstanding, 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, in the proportion that (x) the amount of such
 payment or payments then due under all Related Non-Subordination Agent Series
 A Equipment Notes issued under each Defaulted Operative Indenture bears to (y)
 the aggregate amount of the payments then due under all Non-Subordination
 Agent Series A Equipment Notes issued under all Defaulted Operative
 Indentures;


	
 

	
 

	
 


	
 

	
 

	
          (xiv)
 after giving effect to paragraph (xiii) above, if no Related Equipment Note
 is outstanding, so much of such payments or amounts remaining as is required
 to pay in full the aggregate amount of the payment or payments of principal
 amount and interest (as well as any interest on any overdue principal amount
 and, to the extent permitted by applicable law, on any overdue interest and
 any other overdue amounts) then due under all Related Non-Subordination Agent
 Series B Equipment Notes, if any, issued under any Defaulted Operative
 Indenture shall be distributed to the Related Loan Trustee under each
 respective Defaulted Operative Indenture under which any Related
 Non-Subordination Agent Series B Equipment Notes are outstanding, 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, in
 the proportion that (x) the amount of such payment or payments then
 due under all Related Non-Subordination Agent Series B Equipment Notes issued
 under each Defaulted Operative Indenture bears to (y) the aggregate
 amount of the





31






	
 

	
 

	
 


	
 

	
 

	
payments
 then due under all Non-Subordination Agent Series B Equipment Notes issued
 under all Defaulted Operative Indentures;


	
 

	
 

	
 


	
 

	
 

	
          (xv)
 after giving effect to paragraph (xiv) above, if no Related Equipment Note is
 outstanding, so much of such payments or amounts remaining as is required to
 pay in full the aggregate amount of the payment or payments of principal
 amount and interest (as well as any interest on any overdue principal amount
 and, to the extent permitted by applicable law, on any overdue interest and
 any other overdue amounts) then due under all Related Non-Subordination Agent
 Series C Equipment Notes, if any, issued under any Defaulted Operative
 Indenture shall be distributed to the Related Loan Trustee under each
 respective Defaulted Operative Indenture under which any Related
 Non-Subordination Agent Series C Equipment Notes are outstanding, 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, in
 the proportion that (x) the amount of such payment or payments then
 due under all Related Non-Subordination Agent Series C Equipment Notes issued
 under each Defaulted Operative Indenture bears to (y) the aggregate
 amount of the payments then due under all Non-Subordination Agent Series C
 Equipment Notes issued under all Defaulted Operative Indentures;


	
 

	
 

	
 


	
 

	
 

	
          (xvi)
 after giving effect to paragraph (xv) above (and except as otherwise provided
 in amendments to the applicable Related Indentures pursuant to Sections 9.01
 thereof), if no Related Equipment Note is outstanding, so much of such
 payments or amounts remaining as is required to pay in full the aggregate
 amount of the payment or payments of principal amount and interest (as well
 as any interest on any overdue principal amount and, to the extent permitted
 by applicable law, on any overdue interest and any other overdue amounts)
 then due under all Related Non-Subordination Agent Additional Series
 Equipment Notes, if any, issued under any Defaulted Operative Indenture shall
 be distributed to the Related Loan Trustee under each respective Defaulted
 Operative Indenture under which any Related Non-Subordination Agent
 Additional Series Equipment Notes are outstanding, 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, in the
 proportion that (x) the amount of such payment or payments then due
 under all Related Non-Subordination Agent Additional Series Equipment Notes
 issued under each Defaulted Operative Indenture bears to (y) the
 aggregate amount of the payments then due under all Non-Subordination Agent
 Additional Series Equipment Notes issued under all Defaulted Operative
 Indentures; and





32






	
 

	
 

	
 


	
 

	
 

	
          (xvii)
 after giving effect to paragraph (xvi) above, if any Related
 Non-Subordination Agent Equipment Note is outstanding and no Related
 Equipment Note is outstanding, any of such payments or amounts remaining and
 any invested Permitted Investments shall be held by Loan Trustee in an
 Eligible Account in accordance with the provisions of Section 3.07 (and
 invested as provided in Section 5.06) as additional security for the Related
 Secured Obligations in respect of such Related Non-Subordination Agent
 Equipment Notes and amounts covered by clause “first” of each Related Indenture,
 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 such 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 such 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 Company.


	
 

	
 


	
          No
 Make-Whole Amount shall be payable on the Equipment Notes as a consequence of
 or in connection with an Event of Default or the acceleration of the
 Equipment Notes.


	
 

	
 


	
 

	
Section 3.04
 Certain Payments.


	
 

	
 


	
          (a)
 Any payments received by Loan Trustee for which provision as to the
 application thereof is made in this Indenture other than in this Article III
 shall be applied as provided in those provisions. Without limiting the
 foregoing, any payments received by Loan Trustee which are payable to Company
 pursuant to any of the provisions of this Indenture other than those set
 forth in this Article III (including Sections 5.06, 7.05 and 7.06) shall be
 so paid to Company. Any payments received by Loan Trustee for which no
 provision as to the application thereof is made in this Indenture and for
 which such provision is made in any other Operative Document shall be applied
 forthwith to the purpose for which such payment was made in accordance with
 the terms of such other Operative Document.


	
 

	
 


	
          (b)
 Notwithstanding anything to the contrary contained in this Article III, Loan
 Trustee will distribute promptly upon receipt any indemnity payment received
 by it from Company pursuant to Section 4.02 of the Participation Agreement
 payable to (i) U.S. Bank and Loan Trustee, (ii) Subordination
 Agent, (iii) any separate or additional trustee appointed
 pursuant to Section 8.02, (iv) Pass Through Trustees, and (v) any





33








Liquidity Provider, in each case, directly to the
Person entitled thereto. Any payment received by Loan Trustee from Company
under Section 2.14 shall be distributed to Subordination Agent to be
distributed in accordance with Section 2.03(c) of the Intercreditor Agreement,
except that any portion of any such payment to which a Noteholder has been
subrogated pursuant to Section 2.07(h) of the Intercreditor Agreement shall
instead be distributed to such Noteholder.


          (c)
Any payments received by Loan Trustee not constituting part of the Collateral
or otherwise for which no provision as to the application thereof is made in
any Operative Document shall be distributed by Loan Trustee to Company.
Further, and except as otherwise provided in Sections 3.02, 3.03 and 3.04, all
payments received and amounts realized by Loan Trustee with respect to the
Aircraft, to the extent received or realized at any time after payment in full
of all Secured Obligations, as well as any amounts remaining as part of the
Collateral after the occurrence of such payment in full, shall be distributed
by Loan Trustee to Company.


          Section
3.05 Payments to Company. Any amounts distributed hereunder by Loan
Trustee to Company shall be paid to Company (within the time limits contemplated
by Section 2.03) by wire transfer of funds of the type received by Loan Trustee
at such office and to such account or accounts of such entity or entities as
shall be designated by notice from Company to Loan Trustee from time to time.


          Section
3.06 Cooperation. Prior to making any distribution under this Article
III, Loan Trustee shall consult with Related Loan Trustees to determine amounts
payable with respect to the Related Secured Obligations. Loan Trustee shall
cooperate with Related Loan Trustees and shall provide such information as
shall be reasonably requested by each Related Loan Trustee to enable such
Related Loan 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 Indenture, U.S. Bank agrees to act as an Eligible Institution
under the Indenture in accordance with the provisions of this Indenture (in
such capacity, the “Securities Intermediary”). Except in its capacity as
Loan Trustee, U.S. Bank 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
Company. The Securities Intermediary hereby agrees that, notwithstanding anything
to the contrary in this Indenture, (i) any amounts to be held by Loan
Trustee pursuant to paragraph (xi) or (xvii) of clause “third” of Section 3.03
and any investment earnings thereon or other Permitted Investments in which
such amounts are invested 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 Loan 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, Permitted
Investments and all 


34






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, Permitted Investments,
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 form 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 name of Company, payable to or to
the order of Company or specially indorsed to Company except to the extent the
foregoing have been specially endorsed by Company to the Securities
Intermediary or in blank. Loan 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 Noteholders, each Indenture Indemnitee and each
Related Indenture Indemnitee as set forth in this Indenture. Company
acknowledges that, by reason of Loan Trustee being the “entitlement holder” in
respect of the Securities Account as provided above, Loan Trustee shall have
the sole right and discretion, subject only to the terms of this 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 Company. If any Person
asserts any Lien (including, without limitation, any writ, garnishment,
judgment, warrant of attachment, execution or similar process) against the
Securities Account or any financial asset carried therein, U.S. Bank will
promptly notify Loan Trustee and Company thereof.


ARTICLE IV


Events of Default;
Remedies of Loan Trustee


          Section
4.01 Events of Default. Each of the following events constitutes an
“Event of Default” whether such event is voluntary or involuntary or comes
about or is 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 and each such Event of Default is
deemed to exist and continue so long as, but only as long as, it has not been
remedied or explicitly waived:


	
 

	
 


	
 

	
          (a)
 Company fails to make any payment of principal amount of, Make-Whole Amount,
 if any, or interest on, any Equipment Note within 15 days after such payment
 is due;





35






	
 

	
 


	
 

	
          (b)
 Company fails to make payment when the same is due of any amount (other than
 amounts referred to in Section 4.01(a)) due hereunder, under any Equipment
 Note or under any other Operative Document, and such failure continues
 unremedied for 30 days after the receipt by Company of written notice thereof
 from Loan Trustee or any Noteholder;


	
 

	
 


	
 

	
          (c)
 Company fails to carry and maintain (or cause to be maintained) insurance or
 indemnity on or with respect to the Aircraft in accordance with the
 provisions of Section 7.06; provided that no such failure to carry and
 maintain insurance shall constitute an Event of Default until the earlier of
 (i) the date such failure has continued unremedied for a period
 of 30 days after receipt by Loan Trustee of the notice of cancellation or
 lapse referred to in Section 7.06 or (ii) the date such insurance
 is not in effect as to Loan Trustee;


	
 

	
 


	
 

	
          (d)
 Company fails to perform or observe any other covenant, condition or
 agreement to be performed or observed by it under any Operative Document, and
 such failure continues unremedied for a period of 60 days after receipt by
 Company of written notice thereof from Loan Trustee or any Noteholder; provided
 that, if such failure is capable of being remedied, no such failure shall
 constitute an Event of Default for a period of one year after such notice is
 received by Company so long as Company is diligently proceeding to remedy
 such failure;


	
 

	
 


	
 

	
          (e)
 any representation or warranty made by Company in any Operative Document was
 incorrect in any material respect at the time made, and such incorrectness
 continues to be material to the transactions contemplated hereby and
 continues unremedied for a period of 60 days after receipt by Company of
 written notice thereof from Loan Trustee; provided that, if such
 incorrectness is capable of being remedied, no such incorrectness shall
 constitute an Event of Default for a period of one year after such notice is
 received by Company so long as Company is diligently proceeding to remedy
 such incorrectness;


	
 

	
 


	
 

	
          (f)
 Company consents to the appointment of or the taking of possession by a
 receiver, trustee or liquidator in respect of a substantial part of its
 property, admits in writing its inability to pay its debts generally as they
 come due or makes a general assignment for the benefit of its creditors;


	
 

	
 


	
 

	
          (g)
 Company files a voluntary petition in bankruptcy or a voluntary petition or
 an answer seeking reorganization, liquidation or other relief as a debtor in
 a case 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 Company as a debtor in any such case, or Company as a debtor seeks
 relief by voluntary petition, answer or consent, under the provisions of any
 other bankruptcy or other similar law providing for the reorganization or
 winding-up of 





36






	
 

	
 


	
 

	
corporations (as in effect at such time), or Company
 seeks an agreement, composition, extension or adjustment with its creditors
 under such laws;


	
 

	
 


	
 

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


	
 

	
 


	
 

	
          (i)
 a petition against Company as a debtor in a case under the federal 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 that
 may apply to Company, any court of competent jurisdiction assumes
 jurisdiction, custody or control of Company or of any substantial part of its
 property and such jurisdiction, custody or control remains in force
 unrelinquished, unstayed or unterminated for a period of 90 days; or


	
 

	
 


	
 

	
          (j)
 (i) any amount in respect of the Equipment Notes, the Related
 Equipment Notes or the Related Non-Subordination Agent Equipment Notes,
 including any payment of principal amount of, Make-Whole Amount, if any, or
 Related Make-Whole Amount, if any, as applicable, or interest on, any
 Equipment Note, Related Equipment Note or Related Non-Subordination Agent
 Equipment Note, has not been paid in full on the Final Maturity Date or (ii)
 any other amounts payable under the “Operative Documents” (as defined in each
 Related Indenture) that are due and payable on or before the Final Maturity
 Date are not paid in full on the Final Maturity Date and, to the extent not
 prohibited by law, Company shall have received not less than twenty Business
 Days’ notice from Subordination Agent indicating the amounts referred to in
 this clause (ii);





provided
that notwithstanding anything to the contrary contained in this Section 4.01,
any failure of Company to perform or observe any covenant, condition or
agreement shall not constitute an Event of Default if such failure arises by
reason of an event referred to in the definition of “Event of Loss” so
long as Company is continuing to comply with all of the terms of Section 7.05.


          Section
4.02 Remedies.


          (a)
If an Event of Default has occurred and is continuing and so long as the same
shall continue unremedied, then and in every such case Loan Trustee may, and
upon the written instructions of a Majority in Interest of Noteholders, Loan
Trustee shall, do one or more of the following to the extent permitted by, and
subject to compliance 


37






with the requirements of, applicable law then in
effect (provided that during any period the Airframe or any Engine is
subject to the CRAF Program and is in possession of or being operated under the
direction of the United States government or an agency or instrumentality of
the United States, Loan Trustee shall not, on account of any Event of Default,
be entitled to exercise or pursue any of the powers, rights or remedies
described in this Section 4.02 in such manner as to limit Company’s control
under this Indenture (or any Permitted Lessee’s control under any Lease) of the
Airframe or such Engine, unless at least 60 days’ (or such lesser period as may
then be applicable under the CRAF Program of the United States government)
prior written notice of default hereunder has been given by Loan Trustee by
registered or certified mail to Company (and any such Permitted Lessee) with a
copy addressed to the Contracting Office Representative or other appropriate
person for the Air Mobility Command of the United States Air Force under any
contract with Company (or such Permitted Lessee) relating to the Aircraft):


	
 

	
 


	
 

	
          (i)
 declare by written notice to Company all the Equipment Notes to be due and
 payable, whereupon the aggregate unpaid principal amount of all Equipment
 Notes then outstanding, together with accrued but unpaid interest thereon,
 and other amounts due thereunder (but without Make-Whole Amount), 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 Subsections 4.01(f), (g), (h) or (i) has
 occurred and is continuing, then and in every such case the unpaid principal
 amount then outstanding, together with accrued but unpaid interest with
 respect thereto, and all other amounts due thereunder (but without Make-Whole
 Amount) shall immediately and without further act become due and payable
 without presentment, demand, protest or other notice, all of which are hereby
 waived; and, following such declaration or deemed declaration:


	
 

	
 


	
 

	
          (ii)
 (A) cause Company, upon the demand by notice of Loan Trustee, at
 Company’s expense, to deliver promptly, and Company shall deliver promptly,
 all or such part of the Airframe or any Engine as Loan Trustee so demands to
 Loan Trustee or its order, or, if Company has failed to so deliver the Airframe
 or any Engine after such demand, Loan Trustee, at its option, may enter upon
 the premises where all or any part of the Airframe or any Engine are located
 and take immediate possession of and remove the same together with any engine
 which is not an Engine but which is installed on the Airframe, subject to all
 of the rights of the owner, lessor, lienor or secured party of such engine; provided
 that the Airframe with an engine (which is not an Engine) installed thereon
 may be flown or returned only to a location within the continental United
 States, and such engine shall be held for the account of any such owner,
 lessor, lienor, secured party or, if such engine is owned by Company, may at
 the option of Company with the consent of Loan Trustee (which will not be 





38






	
 

	
 


	
 

	
unreasonably withheld) or at the option of Loan
 Trustee with the consent of Company (which will not be unreasonably
 withheld), be exchanged with Company for an Engine in accordance with the
 provisions of Section 7.05(b); (B) sell all or any part of the
 Airframe and any Engine at public or private sale, whether or not Loan
 Trustee at the time has possession thereof, as Loan Trustee may determine, or
 otherwise dispose of, hold, use, operate, lease to others or keep idle all or
 any part of the Airframe or such Engine as Loan Trustee, in its sole
 discretion, determines, all free and clear of any rights or claims of
 Company, and the proceeds of such sale or disposition shall be applied as set
 forth in Section 3.03; or (C) exercise any other remedy of a
 secured party under the Uniform Commercial Code of the State of New York
 (whether or not in effect in the jurisdiction in which enforcement is
 sought); provided that, notwithstanding anything to the contrary set
 forth herein or in any other Operative Document, (i) as permitted by
 Article 15 of the Cape Town Convention, the provisions of Chapter III of the
 Cape Town Convention are hereby excluded and made inapplicable to this
 Indenture and the other Operative Documents, except for those provisions of
 such Chapter III that cannot be derogated from; and (ii) as permitted
 by Article IV(3) of the Aircraft Protocol, the provisions of Chapter II of
 the Aircraft Protocol are hereby excluded and made inapplicable to this
 Indenture and the other Operative Documents, except for (x) Article
 XVI of the Aircraft Protocol and (y) those provisions of such Chapter
 II that cannot be derogated from. In furtherance of the foregoing, the
 parties hereto agree that the exercise of remedies hereunder and the other
 Operative Documents is subject to other applicable law, including without
 limitation, the Uniform Commercial Code (as in effect in the State of New
 York) and the Bankruptcy Code, and that nothing herein derogates from the
 rights of Company or Loan Trustee under or pursuant to such other applicable
 law, including without limitation, the Uniform Commercial Code (as in effect
 in the State of New York) or the Bankruptcy Code.





          Upon
every such taking of possession of Collateral under this Section 4.02, Loan Trustee
may, from time to time, at the expense of the Collateral, make all such
expenditures for maintenance, insurance, repairs, alterations, additions and
improvements to and of the Collateral as it deems necessary to cause the
Collateral to be in such condition as required by the provisions of this
Indenture. In each such case, Loan Trustee may maintain, use, operate, store,
insure, lease, control, manage or dispose of the Collateral and may exercise
all rights and powers of Company relating to the Collateral as Loan Trustee
reasonably deems best, including the right to enter into any and all such
agreements with respect to the maintenance, use, operation, storage, insurance,
leasing, control, management or disposition of the Collateral or any part
thereof as Loan Trustee may reasonably determine; and Loan Trustee shall be
entitled to collect and receive directly all tolls, rents, revenues, issues,
income, products and profits of the Collateral and every part thereof without
prejudice, however, to the rights of Loan Trustee under any provision of this
Indenture to collect and receive all cash held by, or required to be deposited
with Loan Trustee hereunder. Such tolls, rents, revenues, issues, income, 


39






products and profits shall be applied to pay the expenses
of the use, operation, storage, insurance, leasing, control, management or
disposition of the Collateral, and of all maintenance, repairs, replacements,
alterations, additions and improvements, and to make all payments that Loan
Trustee is required or elects to make, if any, for Taxes, insurance or other
proper charges assessed against or otherwise imposed upon the Collateral or any
part thereof, and all other payments which Loan Trustee is required or
expressly authorized to make under any provision of this Indenture, as well as
just and reasonable compensation for the services of Loan Trustee, and shall
otherwise be applied in accordance with Article III. If an Event of Default has
occurred and is continuing and the Equipment Notes either have been accelerated
pursuant to this Section 4.02 or have become due at maturity and Loan Trustee
is entitled to exercise rights hereunder, at the request of Loan Trustee,
Company shall promptly execute and deliver to Loan Trustee such instruments of
title and other documents as Loan Trustee reasonably deems necessary or
advisable to enable Loan Trustee or an agent or representative designated by
Loan Trustee, at such time or times and place or places as Loan Trustee
specifies, to obtain possession of all or any part of the Collateral to which
Loan Trustee at the time is entitled hereunder. If Company for any reason fails
to execute and deliver such instruments and documents after such request by
Loan Trustee, Loan Trustee may seek a judgment conferring on Loan Trustee the
right to immediate possession and requiring Company to execute and deliver such
instruments and documents to Loan Trustee, to the entry of which judgment
Company hereby specifically consents to the fullest extent it may lawfully do
so. All actual and reasonable expenses of obtaining such judgment or of
pursuing, searching for and taking such property shall, until paid, be secured
by the Lien of this Indenture.


          (b)
Loan Trustee shall give Company at least 30 days’ prior written notice of any
public sale or of the date on or after which any private sale will be held,
which notice Company hereby agrees to the extent permitted by applicable law is
reasonable notice. Any Noteholder or Noteholders shall be entitled to bid for
and become the purchaser of any Collateral offered for sale pursuant to this
Section 4.02 and to credit against the purchase price bid at such sale by such
Noteholders all or any part of the unpaid amounts owing to such Noteholders
under the Operative Documents and secured by the Lien of this Indenture (but
only to the extent that such purchase price would have been paid to such
Noteholders pursuant to Article III if such purchase price were paid in cash
and the foregoing provision of this Section 4.02(b) were not given effect).
Loan Trustee may exercise such right without possession or production of the
Equipment Notes or proof of ownership thereof, and as a representative of
Noteholders may exercise such right without notice to Noteholders as party to
any suit or proceeding relating to the foreclosure of any Collateral. Company
may also bid for and become the purchaser of any Collateral offered for sale
pursuant to this Section 4.02.


          (c)
To the extent permitted by applicable law, while an Event of Default has
occurred and is continuing, Company irrevocably appoints Loan Trustee the true
and 


40






lawful attorney-in-fact of Company (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 Indenture, whether pursuant to foreclosure or
power of sale, or otherwise, to execute and deliver all such bills of sale,
assignments and other instruments as may be necessary or appropriate, with full
power of substitution, Company hereby ratifying and confirming all that such
attorney or any substitute does by virtue hereof in accordance with applicable
law; provided that if so requested by Loan Trustee or any purchaser,
Company shall ratify and confirm any such sale, assignment or transfer of
delivery, by executing and delivering to Loan Trustee or such purchaser all
bills of sale, assignments, releases and other proper instruments to effect
such ratification and confirmation as may reasonably be designated in any such
request.


          (d)
At any time after Loan Trustee has declared the unpaid principal amount of all
Equipment Notes then outstanding to be due and payable, or all Equipment Notes
shall have become due and payable as provided in the proviso to Section
4.02(a)(i), and, in either case, prior to the sale of any part of the
Collateral pursuant to this Article IV, a Majority in Interest of Noteholders,
by written notice to Company and Loan Trustee, may rescind and annul such
declaration, whether made by Loan Trustee on its own accord or as directed or
deemed declaration, and its consequences if: (i) there has been
paid to or deposited with Loan Trustee an amount sufficient to pay all overdue
installments of principal amount of, and interest on, the Equipment Notes, and
all other amounts owing under the Operative Documents, that have become due
otherwise than by such declaration of acceleration and (ii) all
other Events of Default, other than nonpayment of principal amount or interest
on the Equipment Notes that have become due solely because of such
acceleration, have been either cured or waived; provided that no such
rescission or annulment shall extend to or affect any subsequent default or
Event of Default or impair any right consequent thereon.


          (e)
Notwithstanding anything contained herein, (i) so long as Pass Through
Trustee under any Pass Through Trust Agreement or Subordination Agent on its
behalf is a Noteholder, Loan 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 Pass
Through Trust to fail to qualify as a “grantor trust” for federal income tax
purposes, and (ii) Loan Trustee will not take any action that would
violate Sections 4.01(a)(ii) or 4.01(a)(iii) of the Intercreditor Agreement.


          Section
4.03 Remedies Cumulative. To the extent permitted under applicable law,
each and every right, power and remedy specifically given to Loan Trustee
herein or otherwise in this Indenture shall be cumulative and shall be in
addition to every other right, power and remedy specifically given herein or
now or hereafter existing at law, in equity or by statute, and each and every
right, power and remedy whether specifically given herein or otherwise existing
may be exercised from time to time and as often and in 


41






such order as may be deemed expedient by Loan 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 Loan
Trustee in the exercise of any right, remedy or power or in the pursuance of
any remedy shall, to the extent permitted by applicable law, impair any such
right, power or remedy or be construed to be a waiver of any default on the
part of Company or to be an acquiescence therein.


          Section
4.04 Discontinuance of Proceedings. In case Loan Trustee has instituted
any proceedings to enforce any right, power or remedy under this Indenture by
foreclosure, entry or otherwise, and such proceedings have been discontinued or
abandoned for any reason or have been determined adversely to Loan Trustee, then
and in every such case Company and Loan 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 Loan Trustee shall continue as if no such proceedings had been
undertaken (but otherwise without prejudice).


          Section
4.05 Waiver of Past Defaults. Upon written instruction from a Majority
in Interest of Noteholders, Loan 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 Indenture and the other Operative Documents,
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 each of the affected Noteholders, Loan Trustee shall not
waive any default (i) in the payment of the principal amount,
Make-Whole Amount, if any, or interest due under any Equipment Note then
outstanding (other than with the consent of the holder thereof), or (ii) in
respect of a covenant or provision hereof which, under Article IX, cannot be
modified or amended without the consent of each such affected Noteholder.


          Section
4.06 Noteholders May Not Bring Suit Except Under Certain Conditions. A
Noteholder of any Series shall not have the right to institute any suit, action
or proceeding at law or in equity or otherwise with respect to this Indenture
for the appointment of a receiver or for the enforcement of any other remedy
under this Indenture, unless:


	
 

	
 


	
 

	
          (1)
 such Noteholder previously shall have given written notice to Loan Trustee of
 a continuing Event of Default;


	
 

	
 


	
 

	
          (2)
 A Majority in Interest of Noteholders shall have requested Loan Trustee in
 writing to institute such action, suit or proceeding and shall have offered
 to Loan Trustee indemnity as provided in Section 5.03;





42






	
 

	
 


	
 

	
          (3)
 Loan Trustee shall have refused or neglected to institute any such action,
 suit or proceeding for 60 days after receipt of such notice, request and
 offer of indemnity; and


	
 

	
 


	
 

	
          (4)
 no direction inconsistent with such written request shall have been given to
 Loan Trustee during such 60-day period by a Majority in Interest of
 Noteholders.





          Except
to the extent provided in the Intercreditor Agreement or in any Indenture
Supplement, it is understood and intended that no one or more of Noteholders of
any Series shall have any right in any manner whatsoever hereunder or under the
Indenture Supplement or under the Equipment Notes of such Series to (i) surrender,
impair, waive, affect, disturb or prejudice any Collateral, or the Lien of the
Indenture on any Collateral, or the rights of Noteholders of such Series, (ii) obtain
or seek to obtain priority over or preference with respect to any other such
Noteholder of such Series or (iii) enforce any right under this
Indenture, except in the manner provided in this Indenture and for the equal,
ratable and common benefit of all Noteholders of such Series subject to the
provisions of this Indenture.


          Section
4.07 Appointment of a Receiver. To the extent permitted by applicable
law, Loan Trustee shall, as a matter of right, be entitled to the appointment
of a receiver (who may be Loan 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, to the extent permitted by applicable law, Company 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 Loan Trustee with respect
to the Collateral.


ARTICLE V


Duties of Loan
Trustee


          Section
5.01 Notice of Event of Default. If Loan Trustee has knowledge of an
Event of Default or of a default arising from a failure by Company to pay when
due any payment of principal amount, interest on, or Make-Whole Amount, if any,
due and payable under any Equipment Note, Loan Trustee shall promptly give
notice thereof to Company, each Liquidity Provider and each Noteholder. Subject
to the terms of Sections 4.02, 4.05, 5.02 and 5.03, Loan Trustee shall take
such action, or refrain from taking such action, with respect to such default
or Event of Default (including with respect to the exercise of any rights or
remedies hereunder) as Loan Trustee is instructed in writing by a Majority in
Interest of Noteholders. Subject to the provisions of Section 5.03, if Loan
Trustee does not receive instructions as above provided within 20 Business Days
after 


43






giving notice of such default or Event of Default to
Noteholders, Loan Trustee may, subject to instructions thereafter received
pursuant to the preceding provisions of this Section 5.01, take such action, or
refrain from taking such action with respect to such default or Event of
Default as it reasonably determines to be advisable in the best interests of
Noteholders, but shall be under no duty to take or refrain from taking any
action. It shall use the same degree of care and skill in connection therewith
as a prudent person would use under the circumstances in the conduct of his or
her own affairs. Loan Trustee may not sell the Airframe or any Engine without
the consent of a Majority in Interest of Noteholders.


          For
all purposes of this Indenture, in the absence of actual knowledge, Loan
Trustee shall not be deemed to have knowledge of a default or an Event of
Default unless notified in writing by Company or one or more Noteholders; and
“actual knowledge” (as used in the foregoing clause) of Loan Trustee shall mean
actual knowledge of an officer in the Corporate Trust Division of Loan Trustee;
provided that Loan Trustee is deemed to have actual knowledge of (i) the
failure of Company to pay any principal amount of, or interest on, the Equipment
Notes directly to Loan Trustee when the same shall become due or (ii) the
failure of Company to maintain insurance as required under Section 7.06 if Loan
Trustee receives written notice thereof from an insurer or insurance broker.


          Section
5.02 Action upon Instructions; Certain Rights and Limitations. Subject
to the terms of Article IV and this Article V, upon the written instructions at
any time of a Majority in Interest of Noteholders, Loan Trustee shall promptly
(i) give such notice, direction, consent, waiver or approval or
exercise such right, remedy or power hereunder in respect of all or any part of
the Collateral or (ii) take such other action permitted hereunder,
in each case, as is specified in such instructions.


          Loan
Trustee will cooperate with Company in connection with the recording, filing,
re-recording and refiling of the Indenture and any supplements to it and any
financing statements or other documents as is necessary to maintain the
perfection hereof or otherwise protect the security interests created hereby.
Loan Trustee shall furnish to Company upon request such information and copies
of such documents as Loan Trustee may have and as are necessary for Company to
perform its duties under Article II.


          Section
5.03 Indemnification. Loan Trustee shall not be required to take any
action or refrain from taking any action under Sections 5.01 (other than the
first sentence thereof) or 5.02 or Article IV unless it shall have received
indemnification against any risks incurred in connection therewith in form and
substance reasonably satisfactory to it, including, without limitation,
adequate advances against costs that may be actually incurred by it in
connection therewith. Loan Trustee shall not be required to take any action
under Section 5.01 (other than the first sentence thereof) or 5.02 or Article
IV, nor shall any other provision of any Operative Document be deemed to impose
a duty on Loan Trustee to take any action, if Loan Trustee shall have been
advised by outside counsel that such action is contrary to the terms hereof or
is otherwise contrary to law.


44






          Section
5.04 No Duties Except as Specified in Indenture or Instructions. Loan
Trustee shall not have any duty or obligation to manage, control, lease, use,
sell, operate, store, dispose of or otherwise deal with the Aircraft or any
other part of the Collateral, or to otherwise take or refrain from taking any
action under, or in connection with, this Indenture, except as expressly
provided by the terms of this Indenture or the Participation Agreement or as
expressly provided in written instructions received pursuant to the terms of
Section 5.01 or 5.02; and no implied duties or obligations shall be read into
this Indenture against Loan Trustee.


          Section
5.05 No Action Except under Indenture or Instructions. Loan Trustee will
not manage, control, use, sell, lease, operate, store, 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, Loan Trustee
pursuant to this Indenture and in accordance with the express terms hereof.


          Section
5.06 Investment of Amounts Held by Loan Trustee. Any monies (including
for the purpose of this Section 5.06 any amounts held by Loan Trustee pursuant
to Section 3.02, 3.03 or 3.07 or pursuant to any provision of any other
Operative Document providing for amounts to be held by Loan Trustee which are
not distributed pursuant to the other provisions of Article III, or any cash
received by Loan Trustee pursuant to Sections 7.05(c) or 7.06(d) or otherwise,
or Permitted Investments purchased by the use of such cash pursuant to this
Section 5.06 or any cash constituting the proceeds of the maturity, sale or
other disposition of any Permitted Investments) held by Loan Trustee hereunder
as part of the Collateral, until paid out by Loan Trustee as herein provided, (i) subject
to clause (ii) below, may be carried by Loan Trustee on deposit with
itself or on deposit to its account with any bank, trust company or national
banking association incorporated or doing business under the laws of the United
States or one of the states thereof having combined capital and surplus and
retained earnings of a least $100,000,000, and Loan Trustee shall not have any
liability for interest upon any such monies except as otherwise agreed in
writing with Company, or (ii) at any time and from time to time, so
long as no Event of Default shall have occurred and be continuing, at the
request of Company, shall be invested and reinvested in Permitted Investments
as specified in such request (if such investments are reasonably available for
purchase) and sold, in any case at such prices, including accrued interest or
its equivalent, as are set forth in such request, and such Permitted
Investments shall be held by Loan Trustee in trust as part of the Collateral
until so sold; provided that Company shall upon demand pay to Loan
Trustee the amount of any loss realized upon maturity, sale or other disposition
of any such Permitted Investment and, so long as no Event of Default or Payment
Default shall have occurred and be continuing, Company shall be entitled to
receive from Loan Trustee, and Loan Trustee shall promptly pay to Company, any
profit, income, interest, dividend or gain realized upon maturity, sale or
other disposition of any Permitted Investment. All Permitted Investments held
by Loan Trustee pursuant to this Section 5.06 shall either be (i)
registered in the name of, payable to the order of, or 


45






specially endorsed to, Loan Trustee or (ii)
held in an Eligible Account. If an Event of Default or Payment Default shall
have occurred and be continuing, any net income, profit, interest, dividend or
gain realized upon maturity, sale or other disposition of any Permitted
Investment shall be held as part of the Collateral and shall be applied by Loan
Trustee at the same time, on the same conditions and in the same manner as the
amounts in respect of which such income, profit, interest, dividend or gain was
realized are required to be distributed in accordance with the provisions
hereof pursuant to which such amounts were required to be held. Loan Trustee
shall not be responsible for any losses on any investments or sales of
Permitted Investments made pursuant to the procedure specified in this Section
5.06 other than by reason of its willful misconduct or negligence. If any
moneys or investments are held by Loan Trustee solely because an Event of
Default has occurred and is continuing and such moneys or investments have been
held for a period of 90 consecutive days during which such Event of Default is
continuing without any remedial action being taken by Loan Trustee (it being
expressly understood that such remedial action includes any declaration of
acceleration of the Equipment Notes) in respect of such Event of Default
pursuant to Section 4.02, and provided that there is no stay, moratorium or
injunction in effect preventing the taking of such action, then,
notwithstanding any other provision of the Operative Documents, all such moneys
and investments held by Loan Trustee shall be released to Company on such 90th
day, or on the next Business Day after such 90th day.


ARTICLE VI


Loan Trustee


          Section
6.01 Acceptance of Trusts and Duties. U.S. Bank accepts the trusts and
duties hereby created and applicable to it and agrees to perform such duties,
but only upon the terms of this Indenture and agrees to receive, handle and
disburse all monies received by it as Loan Trustee constituting part of the
Collateral in accordance with the terms. U.S. Bank shall have no liability
hereunder except (a) for its own willful misconduct or negligence,
(b) as provided in the fourth sentence of Section 2.03 and the
penultimate sentence of Section 5.06, (c) for liabilities that may
result from the inaccuracy of any representation or warranty of U.S. Bank in
the Participation Agreement or expressly made hereunder and (d) as
otherwise expressly provided in the Operative Documents.


          Section
6.02 Absence of Certain Duties. Except in accordance with written
instructions furnished pursuant to Sections 5.01, 5.02 or 6.06, and except as
provided in, and without limiting the generality of, Sections 5.02, 5.03 and
5.04, Loan Trustee shall have no duty (a) to see to any
registration of the Aircraft or any recording or filing of this Indenture or
any other document, or to see to the maintenance of any such registration,
recording or filing, (b) to see to any insurance on the Aircraft or
to effect or maintain any such insurance, whether or not Company is in default
with respect thereto, (c) to confirm, 


46






verify or inquire into the failure to receive any
financial statements of Company or (d) to inspect the Aircraft at
any time or ascertain or inquire as to the performance or observance of any of
Company’s covenants hereunder with respect to the Aircraft.


          Section
6.03 No Representations or Warranties as to the Documents. Except as
provided in Article 5 of the Participation Agreement, Loan Trustee shall not be
deemed to have made any representation or warranty as to the validity, legality
or enforceability of any Operative Document or any other document or
instrument, or as to the correctness of any statement (other than a statement
by Loan Trustee) contained herein or therein, except that Loan Trustee hereby
represents and warrants that each of said specified documents to which it is a
party has been or will be duly executed and delivered by one of its officers
who is and will be duly authorized to execute and deliver such document on its
behalf.


          Section
6.04 No Segregation of Monies; No Interest. Subject to Section 5.06 and
except as provided in Section 3.07, all moneys received by Loan Trustee shall,
until used or applied as herein provided, be held in trust for the purposes for
which they were received, but need not be segregated from other funds except to
the extent required by mandatory provisions of law, and neither Loan Trustee
nor any agent of Loan Trustee shall be under any liability for interest on any
moneys received by it hereunder; provided that any payments received, or
applied hereunder, by Loan Trustee shall be accounted for by Loan Trustee so
that any portion thereof paid or applied pursuant hereto shall be identifiable
as to the source thereof.


          Section
6.05 Reliance; Agents; Advice of Counsel. Loan 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 reasonably believed by it to be genuine and reasonably
believed by it to be signed by the proper party or parties. Loan Trustee may
accept a copy of a resolution of the Board of Directors of any party to the
Participation Agreement, certified by the Secretary or an Assistant Secretary
of such party as duly adopted and in full force and effect, as conclusive
evidence that such resolution has been duly adopted and that the same is in
full force and effect. As to any fact or matter the manner of ascertainment of
which is not specifically described herein, Loan Trustee may for all purposes
hereof rely on a certificate, signed by a duly authorized officer of Company,
as to such fact or matter, and such certificate shall constitute full
protection to Loan 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,
Loan Trustee may (a) execute any of the trusts or powers hereof and
perform its powers and duties hereunder directly or through agents (including
paying agents or registrars) or attorneys, and (b) at the expense
of the Collateral, consult with counsel, accountants and other skilled Persons
to be selected and retained by it; provided that, prior to retaining
agents (including paying agents or registrars), counsel, accountants or other
skilled Persons, so long as no Event of Default exists, Loan Trustee shall
obtain 


47






Company’s consent (such consent not to be unreasonably
withheld). Loan Trustee shall not be liable for anything done, suffered or
omitted in good faith by it in accordance with the advice or opinion of any
such counsel, accountants or other skilled Persons acting within such
counsel’s, accountants’ or Person’s area of competence (so long as Loan Trustee
shall have exercised reasonable care and judgment in selecting such Persons).


          Section
6.06 Instructions from Noteholders. In the administration of the trusts
created hereunder, Loan Trustee shall have the right to seek instructions from
a Majority in Interest of Noteholders should any provision of this Indenture
appear to conflict with any other provision herein or any other Operative
Document or Pass Through Document or should Loan Trustee’s duties or
obligations hereunder be unclear, and Loan Trustee shall incur no liability in
refraining from acting until it receives such instructions. Loan Trustee shall
be fully protected for acting in accordance with any instructions received
under this Section 6.06.


ARTICLE VII


Operating
Covenants of Company


          Section
7.01 Liens. Company will not directly or indirectly create, incur,
assume or suffer to exist any Lien on or with respect to the Aircraft, its
title thereto or any of its interest therein, except:


	
 

	
 


	
 

	
          (a)
 the respective rights of Loan Trustee and Company as provided in the
 Operative Documents, the Lien of this Indenture, the rights of any Permitted
 Lessee under a Lease permitted hereunder and the rights of any Person
 existing pursuant to the Operative Documents or the Pass Through Documents;


	
 

	
 


	
 

	
          (b)
 the rights of others under agreements or arrangements to the extent expressly
 permitted by this Indenture;


	
 

	
 


	
 

	
          (c)
 Loan Trustee Liens, Noteholder Liens and Other Party Liens;


	
 

	
 


	
 

	
          (d)
 Liens for Taxes either not yet overdue or being contested in good faith by
 appropriate proceedings so long as such proceedings do not involve any
 material risk of the sale, forfeiture or loss of the Airframe or any Engine
 or Loan Trustee’s interest therein or impair the Lien of this Indenture;


	
 

	
 


	
 

	
          (e)
 materialmen’s, mechanics’, workers’, repairmen’s, employees’ or other like
 Liens arising in the ordinary course of business (including those arising
 under maintenance agreements entered into in the ordinary course of business)
 securing obligations that either are not yet overdue for a period of more
 than 60 days or are being contested in good faith by appropriate proceedings
 so long as 





48






	
 

	
 


	
 

	
such proceedings do not involve any material risk of
 the sale, forfeiture or loss of the Airframe or any Engine or Loan Trustee’s
 interest therein or materially impair the Lien of this Indenture;


	
 

	
 


	
 

	
          (f)
 Liens arising out of any judgment or award, so long as such judgment is,
 within 60 days after the entry thereof, discharged, vacated or reversed, or
 execution thereof stayed pending appeal or other judicial review or is
 discharged, vacated or reversed within 60 days after the expiration of such
 stay;


	
 

	
 


	
 

	
          (g)
 any other Lien with respect to which Company provides a bond, cash collateral
 or other security adequate in the reasonable opinion of Loan Trustee;


	
 

	
 


	
 

	
          (h)
 salvage or similar rights of insurers under insurance policies maintained by
 Company; and


	
 

	
 


	
 

	
          (i)
 Liens approved in writing by Loan Trustee with the consent of a Majority in
 Interest of Noteholders.





          Liens
described in clauses (a) through (i) above are referred to herein as “Permitted
Liens”. Company shall promptly, at its own expense, take (or cause to be
taken) such action as may be necessary duly to discharge (by bonding or
otherwise) any Lien other than a Permitted Lien arising at any time with
respect to the Aircraft, its title thereto or any of its interest therein.


          Section
7.02 Possession, Operation and Use, Maintenance and Registration.


          (a)
Possession. Without the prior written consent of Loan Trustee, Company
shall not lease or otherwise in any manner deliver, transfer or relinquish
possession of the Airframe or any Engine or install any Engine, or permit any
Engine to be installed, on any airframe other than the Airframe; provided
that Company (or, except with respect to clauses (viii) and (ix) below,
any Permitted Lessee) may without the prior written consent of Loan Trustee:


	
 

	
 


	
 

	
          (i)
 subject the Airframe to interchange agreements or subject any Engine to
 interchange or pooling agreements or arrangements, in each case entered into
 by Company (or any Permitted Lessee) in the ordinary course of its business; provided
 that (A) no such agreement or arrangement contemplates or
 requires the transfer of title to the Airframe and (B) if
 Company’s title to any such Engine is divested under any such agreement or
 arrangement, such divestiture shall be deemed to be an Event of Loss with
 respect to such Engine, and Company shall (or shall cause any Permitted
 Lessee to) comply with Section 7.05(b) in respect thereof;





49






	
 

	
 


	
 

	
          (ii)
 deliver possession of the Airframe or any Engine to any Person for testing,
 service, repair, restoration, storage, maintenance or other similar purposes
 or for alterations, modifications or additions to the Airframe or such Engine
 to the extent required or permitted by the terms hereof;


	
 

	
 


	
 

	
          (iii)
 transfer or permit the transfer of possession of the Airframe or any Engine
 to any Government pursuant to a lease, contract or other instrument;


	
 

	
 


	
 

	
          (iv)
 subject (or permit any Permitted Lessee to subject) the Airframe or any
 Engine to the CRAF Program or transfer (or permit any Permitted Lessee to
 transfer) possession of the Airframe or any Engine to the United States
 government in accordance with applicable laws, rulings, regulations or orders
 (including, without limitation, any transfer of possession pursuant to the
 CRAF Program); provided that Company (or any Permitted Lessee) (A) shall
 promptly notify Loan Trustee upon transferring possession of the Airframe or
 any Engine pursuant to this clause (iv) and (B) in the case
 of a transfer of possession pursuant to the CRAF Program, shall notify Loan
 Trustee of the name and address of the responsible Contracting Office
 Representative for the Air Mobility Command of the United States Air Force or
 other appropriate Person to whom notices must be given and to whom requests
 or claims must be made to the extent applicable under the CRAF Program;


	
 

	
 


	
 

	
          (v)
 install an Engine on an airframe owned by Company (or any Permitted Lessee)
 free and clear of all Liens, except (A) Permitted Liens and Liens
 that apply only to the engines (other than Engines), appliances, parts,
 instruments, appurtenances, accessories, furnishings and other equipment
 (other than Parts) installed on such airframe (but not to the airframe as an
 entirety) and (B) the rights of third parties under interchange
 agreements or pooling or similar arrangements that would be permitted under
 clause (i) above;


	
 

	
 


	
 

	
          (vi)
 install an Engine on an airframe leased to Company (or any Permitted Lessee)
 or purchased or owned by Company (or any Permitted Lessee) subject to a
 conditional sale or other security agreement; provided that: (A) such
 airframe is free and clear of all Liens except (1) the rights of
 the parties to the lease or conditional sale or other security agreement
 covering such airframe, or their successors and assigns, and (2) Liens
 of the type permitted by clause (v) of this Section 7.02(a); and (B) either:
 (1) Company has obtained from the lessor or secured party of such
 airframe a written agreement (which may be the lease, conditional sale or
 other security agreement covering such airframe), in form and substance
 satisfactory to Loan Trustee (an agreement from such lessor or secured party
 substantially in the form of the penultimate paragraph of this Section
 7.02(a) being deemed to be satisfactory to Loan Trustee), whereby such lessor
 or secured party expressly agrees that neither it nor its successors or
 assigns will acquire or claim any right, title or interest in any Engine by
 reason of such Engine being 





50






	
 

	
 


	
 

	
installed on such airframe at any time while such
 Engine is subject to the Lien of this Indenture, or (2) such
 lease, conditional sale or other security agreement provides that such Engine
 shall not become subject to the Lien of such lease, conditional sale or other
 security agreement at any time while such Engine is subject to the Lien of
 this Indenture, notwithstanding its installation on such airframe;


	
 

	
 


	
 

	
          (vii)
 install an Engine on an airframe owned by Company (or any Permitted Lessee),
 leased to Company (or any Permitted Lessee) or purchased by Company (or any
 Permitted Lessee) subject to a conditional sale or other security agreement
 under circumstances where neither clause (v) nor clause (vi) of
 this Section 7.02(a) is applicable; provided that such installation
 shall be deemed an Event of Loss with respect to such Engine, and Company
 shall comply with Section 7.05(b) in respect thereof, if such installation
 adversely affects Loan Trustee’s security interest in such Engine, Loan
 Trustee not intending hereby to waive any right or interest it may have to or
 in such Engine under applicable law until compliance by Company with Section
 7.05(b);


	
 

	
 


	
 

	
          (viii)
 lease any Engine or the Airframe and Engines to any United States air carrier
 as to which there is in force a certificate issued pursuant to the
 Transportation Code (49 U.S.C. Sections 41101-41112) or successor provision
 that gives like authority; provided that no Event of Default exists at
 the time such lease is entered into; and


	
 

	
 


	
 

	
          (ix)
 lease any Engine or the Airframe and Engines to (A) any foreign
 air carrier other than those set forth in clause (B), (B) any
 foreign air carrier that is at the inception of the lease based in and a
 domiciliary of a country listed in Exhibit B hereto, (C) the
 manufacturer of the Airframe or any Engine (either directly or through an
 affiliate) and (D) any foreign air carrier consented to in
 writing by Loan Trustee with the consent of a Majority in Interest of
 Noteholders; provided that (v) no Event of Default exists
 at the time such lease is entered into, (w) in the case of a
 lease to a foreign air carrier under clause (A) above, Loan Trustee
 receives at the time of such lease (1) written confirmation from
 each of the Applicable Rating Agencies that such lease would not result in a
 reduction of the rating for any class of Pass Through Certificates below the
 then current rating for such class of Pass Through Certificates then rated by
 such Applicable Rating Agency or a withdrawal or suspension of the rating of
 any class of Pass Through Certificates and (2) an opinion of
 counsel to Company (such counsel to be reasonably satisfactory to Loan
 Trustee) to the effect that there exist no possessory rights in favor of the
 lessee under the laws of such lessee’s country which would, upon bankruptcy
 or insolvency of or other default by Company and assuming at such time such
 lessee is not insolvent or bankrupt, prevent the taking of possession of any
 such Engine or the Airframe and any such Engine by Loan 





51






	
 

	
 


	
 

	
Trustee in accordance with and when permitted by the
 terms of Section 4.02 upon the exercise by Loan Trustee of its remedies under
 Section 4.02, (x) in the case of a lease to any foreign air
 carrier (other than a foreign air carrier principally based in Taiwan), the
 United States maintains normal diplomatic relations with the country in which
 such foreign air carrier is based at the time such lease is entered into and
 in the case of a lease to a foreign air carrier principally based in Taiwan,
 the United States maintains diplomatic relations with Taiwan at least as good
 as those on the Closing Date, (y) in the case of a lease to any
 foreign air carrier, Company furnishes Loan Trustee with a certificate from a
 Responsible Officer of Company certifying that there exist no possessory
 rights in favor of such lessee under the laws of such lessee’s country which
 would, upon bankruptcy or insolvency of or other default by Company, and
 assuming at such time such lessee is not insolvent or bankrupt, prevent the
 taking of possession of any such Engine or the Airframe and any such Engine
 by Loan Trustee in accordance with and when permitted by the terms of Section
 4.02 upon the exercise by Loan Trustee of its remedies under Section 4.02,
 and (z) in the case of any lease to a foreign air carrier, such
 carrier 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 the rights of any lessee or other transferee who receives possession of
the Aircraft, the Airframe or any Engine by reason of a transfer permitted by
this Section 7.02(a) (other than the transfer of an Engine which is deemed an
Event of Loss) shall be subject and subordinate to, and any permitted lease
shall be made expressly subject and subordinate to, all the terms of this
Indenture, including Loan Trustee’s rights to repossess pursuant to Section
4.02 and to avoid such lease upon such repossession, and Company shall remain
primarily liable hereunder for the performance and observance of all of the
terms and conditions of this Indenture to the same extent as if such lease or
transfer had not occurred, any such lease shall include appropriate provisions
for the maintenance and insurance of the Aircraft, the Airframe or such Engine,
and no lease or transfer of possession otherwise in compliance with this
Section shall (x) result in any registration or re-registration of
the Aircraft except to the extent permitted in Section 7.02(e) or the
maintenance, operation or use thereof that does not comply with Section 7.02(b)
and (c) or (y) permit any action not permitted to be
taken by Company with respect to the Aircraft hereunder. Company shall promptly
notify Loan Trustee and the Rating Agencies of the existence of any such lease
with a term in excess of one year.


          Loan
Trustee, each Noteholder by acceptance of an Equipment Note, and each Related
Noteholder by acceptance of a Related Equipment Note agrees, for the benefit of
Company (and any Permitted Lessee) and for the benefit of the lessor or secured
party of any airframe or engine leased to Company (or any Permitted Lessee) or
purchased or owned by Company (or any Permitted Lessee) subject to a
conditional sale or other 


52






security agreement, that Loan Trustee, Noteholders and
Related Noteholders will not acquire or claim, as against Company (or any
Permitted Lessee) or such lessor or secured party, any right, title or interest
in: (A) any engine or engines owned by Company (or any Permitted
Lessee) or by the lessor under such lease or subject to a security interest in
favor of the secured party under such conditional sale or other security
agreement as the result of such engine or engines being installed on the Airframe,
or (B) any airframe owned by Company (or any Permitted Lessee) or
by the lessor under such lease or subject to a security interest in favor of
the secured party under such conditional sale or other security agreement as
the result of any Engine being installed on such airframe.


          Loan
Trustee acknowledges that any “wet lease” or other similar arrangement under
which Company (or any Permitted Lessee) maintains operational control of the
Aircraft does not constitute a delivery, transfer or relinquishment of
possession for purposes of this Section 7.02(a).


          (b)
Operation and Use. Company agrees that the Aircraft will not be
maintained, used or operated in violation of any law, rule or regulation of any
government of any country having jurisdiction over the Aircraft or in violation
of any airworthiness certificate, license or registration relating to the
Aircraft issued by any such government, except to the extent Company (or, if a
Lease is then in effect, any Permitted Lessee) is contesting in good faith the
validity or application of any such law, rule or regulation in any manner that
does not involve any material risk of sale, forfeiture or loss of the Aircraft
or impair the Lien of this Indenture; provided that Company shall not be
in default under, or required to take any action set forth in, this sentence if
it is not possible for it to comply with the laws of a jurisdiction other than
the United States (or other than any jurisdiction in which the Aircraft is then
registered) because of a conflict with the applicable laws of the United States
(or such jurisdiction in which the Aircraft is then registered). Company will
not operate the Aircraft, or permit the Aircraft to be operated or located, (i) in
any area excluded from coverage by any insurance required by the terms of
Section 7.06 or (ii) in any war zone or recognized or, in Company’s
judgment, threatened areas of hostilities unless covered by war risk insurance
in accordance with Section 7.06, unless in the case of either clause (i)
or (ii), (x) government indemnification complying with Section 7.06
(a) and (b) has been provided or (y) the Aircraft is only
temporarily located in such area as a result of an isolated occurrence or
isolated series of occurrences attributable to a hijacking, medical emergency,
equipment malfunction, weather conditions, navigational error or other similar
circumstances and Company is using its good faith efforts to remove the
Aircraft from such area as promptly as practicable.


          (c)
Maintenance. Company shall maintain, service, repair and overhaul the
Aircraft (or cause the same to be done) (i) so as to keep the Aircraft
in good operating condition and in such condition as may be necessary to enable
the airworthiness certification of the Aircraft to be maintained in good
standing at all times (other than 


53






during temporary periods of storage, during
maintenance, testing or modification permitted hereunder, or during periods of
grounding by applicable governmental authorities) under the Transportation
Code, during such periods in which the Aircraft is registered under the laws of
the United States, or, if the Aircraft is registered under the laws of any
other jurisdiction, the applicable laws of such jurisdiction and (ii)
using the same standards as Company (or a Permitted Lessee, if a Lease is in
effect) uses with respect to similar aircraft operated by Company (or such
Permitted Lessee) in similar circumstances (it being understood that the
obligations pursuant to this clause (ii) do not limit Company’s obligations
under the preceding clause (i)). In any case, the Aircraft will be maintained
in accordance with the maintenance standards required by the FAA (while
operated under an FAA-approved maintenance program) or, while operated under
the maintenance program of another jurisdiction, standards substantially
equivalent to those required by the central aviation authority of Australia,
Austria, Belgium, Canada, Denmark, Finland, France, Germany, Ireland, Italy,
Japan, the Netherlands, New Zealand, Norway, Spain, Sweden, Switzerland or the
United Kingdom. Company shall maintain or cause to be maintained all records,
logs and other documents required to be maintained in respect of the Aircraft
by appropriate authorities in the jurisdiction in which the Aircraft is
registered.


          (d)
Identification of Loan Trustee’s Interest. Company agrees to affix as
promptly as practicable after the Closing Date and thereafter to maintain in
the cockpit of the Aircraft, in a clearly visible location, and (if not
prevented by applicable law or regulations or by any government) on each
Engine, a nameplate bearing the inscription “MORTGAGED TO U.S. BANK TRUST
NATIONAL ASSOCIATION, AS LOAN TRUSTEE” (such nameplate to be replaced, if
necessary, with a nameplate reflecting the name of any successor Loan Trustee).


          (e)
Registration. Company shall cause the Aircraft to remain duly
registered, under the laws of the United States, in the name of Company except
as otherwise required by the Transportation Code; provided that Loan
Trustee shall, at Company’s expense, execute and deliver all such documents as
Company may reasonably request for the purpose of continuing such registration.
Notwithstanding the preceding sentence, Company, at its own expense, may cause
or allow the Aircraft to be duly registered under the laws of any foreign
jurisdiction in which a Permitted Lessee could be principally based, in the
name of Company or of any nominee of Company, or, if required by applicable
law, in the name of any other Person (and, following any such foreign
registration, may cause the Aircraft to be re-registered under the laws of the
United States); provided that in the case of jurisdictions other than
those approved by Loan Trustee with the consent of a Majority in Interest of
Noteholders (i) if such jurisdiction is at the time of registration
listed on Exhibit B, Loan Trustee shall have received at the time of such
registration an opinion of counsel to Company to the effect that (A) this
Indenture and Loan Trustee’s right to repossession thereunder is valid and
enforceable under the laws of such country, (B) after giving effect
to such change in registration, the 


54






Lien of this Indenture shall continue as a valid Lien
and shall be duly perfected in the new jurisdiction of registration and that
all filing, recording or other action necessary to perfect and protect the Lien
of this Indenture has been accomplished (or if such opinion cannot be given at
such time, (x) the opinion shall detail what filing, recording or
other action is necessary and (y) Loan Trustee shall have received
a certificate from a Responsible Officer of Company that all possible
preparations to accomplish such filing, recording and other action shall have
been done, and such filing, recording and other action shall be accomplished
and a supplemental opinion to that effect shall be promptly delivered to Loan
Trustee subsequent to the effective date of such change in registration), (C) the
obligations of Company under this Indenture shall remain valid, binding and
(subject to customary bankruptcy and equitable remedies exceptions and to other
exceptions customary in foreign opinions generally) enforceable under the laws
of such jurisdiction (or the laws of the jurisdiction to which the laws of such
jurisdiction would refer as the applicable governing law), (D) all
approvals or consents of any government in such jurisdiction having
jurisdiction required for such change in registration shall have been duly
obtained and shall be in full force and effect and (E) (unless
Company shall have agreed to provide insurance covering the risk of requisition
of use or title of the Aircraft by the government of such jurisdiction so long
as the Aircraft is registered under the laws of such jurisdiction) the laws of
such jurisdiction require fair compensation by the government of such
jurisdiction payable in currency freely convertible into Dollars for the loss
of use or title of the Aircraft in the event of requisition by such government
of such use or title, and (ii) if such jurisdiction is at the time
of registration not listed on Exhibit B, Loan Trustee shall have received (in
addition to the opinions set forth in clause (i) above) at the time of
such registration an opinion of counsel to Company to the effect that (A) the
terms of this Indenture are legal, valid, binding and enforceable in such
jurisdiction (subject to exceptions customary in such jurisdiction; provided
that, subject to exceptions relating to bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights of creditors generally and
exceptions relating to general principles of equity, such counsel shall opine
that any applicable laws limiting the remedies provided in Section 4.02 do not
in the opinion of such counsel make the remedies provided in Section 4.02
inadequate for the practical realization of the rights and benefits provided
thereby), (B) it is not necessary for Loan Trustee to register or
qualify to do business in such jurisdiction and (C) there is no
tort liability of the lender of an aircraft not in possession thereof under the
laws of such jurisdiction other than tort liability that might have been
imposed on such lender under the laws of the United States or any state thereof
(it being understood that such opinion shall be waived if insurance reasonably
satisfactory to Loan Trustee is provided, at Company’s expense, to cover such
risk). Loan Trustee will cooperate with Company in effecting such foreign
registration. Notwithstanding the foregoing, prior to any such change in the
country of registry of the Aircraft, the following conditions shall be met (or
waived as provided in Section 6.01(b) of the Participation Agreement):


55








	
 

	
 


	
 

	
          (i) no Event
  of Default shall have occurred and be continuing at the effective date of the
  change in registration; provided that it shall not be necessary to
  comply with this condition if the change in registration results in the
  registration of the Aircraft under the laws of the United States or if a
  Majority in Interest of Noteholders consents to such change in registration;


	
 

	
 


	
 

	
          (ii) Loan
  Trustee shall have received evidence of compliance with the insurance
  provisions contained herein after giving effect to such change in
  registration;


	
 

	
 


	
 

	
          (iii) other
  than in the case of a change in registration to Taiwan, the proposed change
  in registration is made to a country with which the United States then
  maintains normal diplomatic relations, and in the case of a change in
  registration to Taiwan, the United States maintains diplomatic relations with
  Taiwan at least as good as those on the Closing Date; and


	
 

	
 


	
 

	
          (iv) Company
  shall have paid or made provision reasonably satisfactory to Loan Trustee for
  the payment of all reasonable expenses (including reasonable attorneys’ fees)
  of Loan Trustee and Noteholders in connection with such change in
  registration.





          Company shall
(i) at Loan Trustee’s request from time to time, take such actions as
may be required to be taken by Company so that any International Interest
arising in relation to this Indenture, the Aircraft, any Replacement Aircraft,
any Engine or Replacement Engine may be duly registered (and any such
registration may be assigned, amended, extended or discharged) at the
International Registry, and (ii) obtain from the International Registry
all approvals as may be required duly and timely to perform Company’s
obligations under this Indenture with respect to the registration of any such
International Interest. Loan Trustee shall take all actions necessary with
respect to the International Registry to consent to Company’s initiation of any
registrations required under this Indenture to enable Company to complete such
registrations, including, without limitation, appointing Daugherty, Fowler,
Peregrin, Haught & Jenson, a Professional Corporation, as its “professional
user entity” (as defined in the Cape Town Treaty) to consent to any
registrations on the International Registry with respect to the Airframe or any
Engine. 


          Section 7.03 Inspection; Financial Information.


          (a) Inspection. At all reasonable times, but upon at least 15 Business Days’
prior written notice to Company, Loan Trustee or its authorized representatives
may, subject to the other conditions of this Section 7.03(a), inspect the
Aircraft and may inspect the books and records of Company relating to the
maintenance of the Aircraft required to be maintained by the FAA or the
government of another jurisdiction in which the Aircraft is then registered; provided
that (i) Loan Trustee or its representatives, as the


56






case may be, shall be fully insured at no cost to
Company or any Permitted Lessee in a manner satisfactory to Company with
respect to any risks incurred in connection with any such inspection or shall
provide to Company a written release satisfactory to Company and any Permitted
Lessee with respect to such risks, (ii) any such inspection shall
be during Company’s or Permitted Lessee’s, as the case may be, normal business
hours and subject to the safety, security and workplace rules applicable at the
location where such inspection is conducted and any applicable governmental
rules or regulations, (iii) any such inspection of the Aircraft
shall be a visual, walk-around inspection of the interior and exterior of the
Aircraft and shall not include opening any panels, bays or the like without
Company’s express consent, which consent Company may in its sole discretion
withhold, and (iv) no exercise of such inspection right shall
interfere with the use, operation or maintenance of the Aircraft by, or the
business of, Company or any Permitted Lessee and Company and any Permitted
Lessee shall not be required to undertake or incur any additional liabilities
in connection therewith. All information obtained in connection with any such
inspection of the Aircraft and of such books and records shall be Confidential
Information and shall be treated by Loan Trustee and its representatives in
accordance with the provisions of Section 10.16. Any inspection pursuant to
this Section 7.03(a) shall be at the sole risk (including, without limitation,
any risk of personal injury or death) and expense of Loan Trustee (or its
representatives) making such inspection. Except during the continuance of an
Event of Default, all inspections by Loan Trustee and its representatives
provided for under this Section 7.03(a) shall be limited to one inspection of
any kind contemplated by this Section 7.03(a) during any consecutive twelve
month period.


          (b) Financial Information. So long as any of the Secured Obligations remain
unpaid, Company agrees to furnish to Loan Trustee: (i) within 60
days after the end of each of the first three quarterly periods in each fiscal
year of Company, either (x) a consolidated balance sheet of Company
and its consolidated subsidiaries prepared by it as of the close of such
period, together with the related consolidated statements of income for such
period or (y) a report of Company on Form 10-Q in respect of such
period in the form filed with the Securities and Exchange Commission and (ii) within
120 days after the close of each fiscal year of Company, either (x) a
consolidated balance sheet of Company and its consolidated subsidiaries as of
the close of such fiscal year, together with the related consolidated
statements of income for such fiscal year, certified by independent public
accountants, or (y) a report of Company on Form 10-K in respect of
such year in the form filed with the Securities and Exchange Commission. The
items required to be furnished pursuant to clause (i) and clause (ii) above
shall be deemed to have been furnished on the date on which such item is posted
on the Securities and Exchange Commission’s website at www.sec.gov, and such
posting shall be deemed to satisfy the requirements of clause (i) and clause
(ii); provided that Company will deliver a paper copy of any item
referred to in clause (i) and clause (ii) above if Loan Trustee so requests.


57






          Section
7.04 Replacement and Pooling of Parts;
Alterations, Modifications and Additions; Substitution of Engines.


          (a) Replacement of Parts. Company shall promptly replace or cause to be
replaced all Parts incorporated or installed in or attached to the Airframe or
any Engine and that become worn out, lost, stolen, destroyed, seized,
confiscated, damaged beyond repair or rendered permanently unfit for use for
any reason, except as otherwise provided in Section 7.04(c) or if the Airframe
or an Engine to which a Part relates has suffered an Event of Loss. In
addition, Company (or any Permitted Lessee) may remove 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 rendered permanently unfit for use; provided that Company (or any
Permitted Lessee), except as otherwise provided in Section 7.04(c), will
replace such Parts as promptly as practicable. All replacement Parts shall be
free and clear of all Liens (except for Permitted Liens and except in the case
of replacement property temporarily installed on an emergency basis) and shall
be in the condition and repair required to be maintained by the terms hereof.
Except as otherwise provided in Section 7.04(c), any Parts removed from the
Airframe or any Engine shall remain subject to the Lien of this Indenture no
matter where located until it is replaced by a part incorporated or installed
in or attached to the Airframe or such Engine that meets the requirements for
replacement Parts specified above. Immediately upon any replacement Part
becoming incorporated or installed in or attached to the Airframe or any Engine
as above provided (except in the case of replacement property temporarily
installed on an emergency basis), without further act, (i) the
replaced Part shall thereupon be free and clear of all rights of Loan Trustee
and of the Lien of this Indenture and shall no longer be deemed a Part
hereunder, and (ii) such replacement Part shall become subject to
the Lien of this Indenture and be deemed a Part of the Airframe or such Engine
for all purposes to the same extent as the Parts originally incorporated or
installed in or attached to the Airframe or such Engine. Upon request of
Company from time to time, Loan Trustee shall execute and deliver to Company an
appropriate instrument confirming the release of any such replaced Part from
the Lien of this Indenture.


          (b) Pooling of Parts. Any Part removed from the Airframe or any Engine as
provided in Section 7.04(a) may be subjected by Company or a Person permitted
to be in possession of the Aircraft to a pooling arrangement entered into in
the ordinary course of Company’s or such Person’s business; provided
that the part replacing such removed Part shall be incorporated or installed in
or attached to the Airframe or such Engine in accordance with Section 7.04(a)
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 such a
pooling arrangement; provided that Company, at its expense, as promptly
thereafter as practicable either (i) causes title to such
replacement Part to vest in Company free and clear of all Liens (except Permitted
Liens), or (ii) replaces such replacement Part by 


58






incorporating or installing in or attaching to the
Airframe or such Engine a further replacement Part in the manner contemplated
by Section 7.04(a).


          (c) Alterations, Modifications and Additions. Company will make (or cause to be
made) such alterations and modifications in and additions to the Airframe and
the Engines as are required from time to time to meet the applicable
requirements of the FAA or any applicable government of any other jurisdiction
in which the Aircraft is then registered; provided that Company (or, if
a Lease is then in effect, any Permitted Lessee) may, in good faith, contest
the validity or application of any such requirement in any manner that does not
involve any material risk of sale, loss or forfeiture of the Aircraft and does
not materially adversely affect Loan Trustee’s interest in the Aircraft. In
addition, Company (or any Permitted Lessee), at its own expense, may from time
to time add further parts or accessories and make or cause to be made such
alterations and modifications in and additions to the Airframe or any Engine as
Company (or any Permitted Lessee) deems desirable in the proper conduct of its
business, including, without limitation, removal (without replacement) of
Parts; provided that no such alteration, modification or addition shall
materially diminish the value or utility of the Airframe or such Engine below
its value or utility immediately prior to such alteration, modification or
addition, assuming that the Airframe or such Engine was then in the condition
required to be maintained by the terms of this Indenture, except that the value
(but not the utility) of the Airframe or any Engine may be reduced by the value
of any such Parts that are removed that Company deems obsolete or no longer
suitable or appropriate for use on the Airframe or any Engine. All Parts
incorporated or installed in or attached or added to the Airframe or any Engine
as the result of such alteration, modification or addition shall, without
further act, be subject to the Lien of this Indenture. Notwithstanding the
foregoing, Company (or any Permitted Lessee) may, at any time, remove any Part
from the Airframe or any Engine if such Part: (i) is in addition
to, and not in replacement of or substitution for, any Part originally
incorporated or installed in or attached to the Airframe or such Engine at the
time of delivery thereof to Company or any Part in replacement of, or
substitution for, any such Part, (ii) is not required to be
incorporated or installed in or attached or added to the Airframe or such
Engine pursuant to the first sentence of this Section 7.04(c) and (iii) can
be removed from the Airframe or such Engine without materially diminishing the
value or utility required to be maintained by the terms of this Indenture that
the Airframe or such Engine would have had at such time had such removal not
occurred. Upon the removal by Company (or any Permitted Lessee) of any Part as
permitted by this Section 7.04(c), such removed Part shall, without further
act, be free and clear of all rights and interests of Loan Trustee and the Lien
of this Indenture and shall no longer be deemed a Part hereunder. Upon request
of Company from time to time, Loan Trustee shall execute and deliver to Company
an appropriate instrument confirming the release of any such removed Part from
the Lien of this Indenture. Loan Trustee acknowledges that it has no interest
in the Excluded Equipment. Notwithstanding the provisions of this Section
7.04(c) or any other term or condition of this Indenture, Company (or any
Permitted Lessee) may from time to 


59






time install on, and remove from, the Aircraft
equipment that is owned by, leased to or conditionally sold to Company (or any
Permitted Lessee) (and title to such equipment shall remain vested in Company,
such Permitted Lessee, or the lessor or the conditional vendor thereof) if (1) such
equipment is Excluded Equipment and (2) the location affected by any such removal, if
damaged, is repaired prior to return, in a workmanlike manner, to a condition
suitable for commercial passenger service; provided that all
costs of installation, removal and replacement shall be the responsibility of
Company.


          (d) Substitution of Engines. Company shall have the right at its option at any
time, on at least 30 days’ prior written notice to Loan Trustee, to substitute
a Replacement Engine for any Engine. In such event, and prior to the date of
such substitution, Company shall replace such Engine by complying with the
terms of Section 7.05(b) to the same extent as if an Event of Loss had occurred
with respect to such Engine.


          Section
7.05 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 or the Airframe and the Engines then
installed thereon, Company shall as soon as practicable (and, in any event,
within 30 days after an Event of Loss has occurred) notify Loan Trustee of such
Event of Loss, and, within 90 days after such Event of Loss, Company shall give
Loan Trustee written notice of its election to perform one of the following
options (it being agreed that if Company has not given such notice of election
within such 90-day period, Company shall be deemed to have elected to perform
the option set forth in the following clause (ii)). Company may elect either
to:


                    (i)
substitute, on or before the Loss Payment Date (as defined below), as
replacement for the Airframe or Airframe and Engines with respect to which an
Event of Loss has occurred, a Replacement Airframe (together with a number of
Replacement Engines equal to the number of Engines, if any, with respect to
which the Event of Loss occurred), such Replacement Airframe and Replacement
Engines to be owned by Company free and clear of all Liens (other than
Permitted Liens); provided that if Company has not performed such
obligation on or prior to the Loss Payment Date, then Company shall on the Loss
Payment Date prepay the Equipment Notes in full in accordance with Section
2.10; or


                    (ii)
redeem, on or before the Loss Payment Date, the Equipment Notes in full in
accordance with Section 2.10. Company shall give Loan Trustee 20 days prior
written notice if it elects to redeem the Equipment Notes on any day prior to
the Loss Payment Date.


60






          The
“Loss Payment Date” with respect to an Event of Loss means the Business
Day next succeeding the 120th day following the date of occurrence of such
Event of Loss.


          If
Company elects to substitute a Replacement Airframe (or a Replacement Airframe
and one or more Replacement Engines, as the case may be) Company shall, at its
sole expense, not later than the Loss Payment Date, (A) cause an
Indenture Supplement for such Replacement Airframe and Replacement Engines, if
any, to be delivered to Loan Trustee for execution and, upon such execution, to
be filed for recordation pursuant to the Transportation Code or the applicable
laws of such other jurisdiction in which the Aircraft is then registered, (B)
cause the sale of such Replacement Airframe and Replacement Engines, if any, to
Company (if occurring after February 28, 2006 and if the seller of such
Replacement Airframe and Replacement Engines, if any, is “situated in” a
country that has ratified the Cape Town Convention) and the International
Interest created pursuant to the Indenture Supplement in favor of Loan Trustee
with respect to such Replacement Airframe and Replacement Engines, if any, each
to be registered on the International Registry as a sale or an International
Interest, respectively; provided that if the seller of such Replacement
Airframe and Replacement Engines, if any, is not situated in a country that has
ratified the Cape Town Convention, Company will use its best efforts to cause
the seller to register the contract of sale on the International Registry, (C)
cause a financing statement or statements with respect to the Replacement
Airframe and Replacement Engines, if any, or other requisite documents or
instruments to be filed in such place or places as necessary in order to
perfect Loan Trustee’s interest therein in the United States, or in any other
jurisdiction in which the Aircraft is then registered, (D) furnish
Loan Trustee with an opinion of Company’s counsel (which may be internal
counsel of Company) addressed to Loan Trustee to the effect that upon such
replacement, such Replacement Airframe and Replacement Engines, if any, will be
subject to the Lien of this Indenture and addressing the matters set forth in
clauses (A), (B) and (C), (E) furnish Loan Trustee with a
certificate of an independent aircraft engineer or appraiser, certifying that
the Replacement Airframe and Replacement Engines, if any, have a value and
utility (without regard to hours or cycles) at least equal to the Airframe and
Engines, if any, so replaced, assuming the Airframe and such Engines were in
the condition and repair required by the terms hereof immediately prior to the
occurrence of such Event of Loss, (F) furnish Loan Trustee with
evidence of compliance with the insurance provisions of Section 7.06 with
respect to such Replacement Airframe and Replacement Engines, if any, (G) furnish
Loan Trustee with a copy of the original bill of sale respecting such
Replacement Airframe and a copy of the original bill of sale or, if the bill of
sale is unavailable, other evidence of ownership reasonably satisfactory to
Loan Trustee (which may be a copy of an invoice or purchase order) respecting
such Replacement Engines, if any, and (H) furnish Loan Trustee with
an opinion of Company’s counsel (which may be internal counsel of Company)
reasonably satisfactory to Loan Trustee to the effect that Loan Trustee will be
entitled to the benefits of Section 1110 with respect to the 


61








Replacement Airframe;
provided that (i) such opinion need not be delivered to the
extent that the benefits of Section 1110 were not, by reason of a change in law
or governmental or judicial interpretation thereof, available to Loan Trustee
with respect to the Aircraft immediately prior to such substitution and (ii) such
opinion may contain qualifications and assumptions of the tenor contained in
the Section 1110 opinion of Company’s counsel delivered pursuant to Section
3.01 of the Participation Agreement on the Closing Date and such other
qualifications and assumptions as are at the time customary in opinions
rendered in comparable circumstances.


          In the case of each Replacement Airframe or
Replacement Airframe and one or more Replacement Engines subjected to the Lien
of this Indenture under this Section 7.05(a), promptly upon the recordation of
the Indenture Supplement covering any such Replacement Airframe and Replacement
Engines, if any, pursuant to the Transportation Code (or pursuant to the
applicable law of such other jurisdiction in which such Replacement Airframe
and Replacement Engines, if any, are registered), Company will cause to be delivered
to Loan Trustee a favorable opinion of FAA counsel selected by Company if at
the time of the Event of Loss the Aircraft was registered under the laws of the
United States (or, if at the time of the Event of Loss the Aircraft was
registered under the laws of another jurisdiction, counsel qualified to opine
on matters of registration in such jurisdiction selected by Company, which
counsel shall be reasonably satisfactory to Loan Trustee) addressed to Loan
Trustee as to the due registration of such Replacement Aircraft and the due
recordation of such Indenture Supplement or such other requisite documents or
instruments and the validity and perfection of the security interest in the
Replacement Aircraft granted to Loan Trustee under this Indenture.


          For all purposes hereof, upon the attachment
of the Lien of this Indenture thereto, the Replacement Aircraft and Replacement
Engines, if any, shall become part of the Collateral, the Replacement Airframe
shall be deemed an “Airframe” as defined herein, and each such
Replacement Engine shall be deemed an “Engine” as defined herein. Upon
compliance with clauses (A) through (H) of the third paragraph of this
Section 7.05(a), Loan Trustee shall execute and deliver to Company an
appropriate instrument releasing such replaced Airframe and Engines (if any)
installed thereon at the time such Event of Loss occurred, all proceeds
(including, without limitation, insurance proceeds), the Warranty Rights in
respect of such replaced Airframe and Engines (if any) and all rights relating
to the foregoing, from the Lien of this Indenture and assigning to Company all
claims against third Persons for damage to or loss of the Airframe and Engines
arising from the Event of Loss.


          If, after an Event of Loss, Company performs
the option set forth in clause (ii) of the first paragraph of this Section
7.05(a), Loan Trustee shall execute and deliver to Company an appropriate
instrument releasing the Aircraft, all proceeds (including, without limitation,
insurance proceeds), the Warranty Rights in respect of the Aircraft and all
rights relating to the foregoing from the Lien of this Indenture and assigning
to


62






Company all
claims against third Persons for damage to or loss of the Aircraft arising from
the Event of Loss, and will take such actions as may be required to be taken by
Loan Trustee to cancel or release any International Interest of Loan Trustee
registered with the International Registry in relation to the Airframe and
Engines, if any, with respect to which such Event of Loss occurred.


          (b)
Event of Loss with Respect to an Engine. As soon as practicable
following the occurrence of an Event of Loss with respect to an Engine under
circumstances in which there has not occurred an Event of Loss with respect to
the Airframe, Company shall give Loan Trustee prompt written notice thereof and
shall, within 120 days after the occurrence of such Event of Loss, cause to be
subjected to the Lien of this Indenture, as replacement for the Engine with
respect to which such Event of Loss occurred, a Replacement Engine free and
clear of all Liens (other than Permitted Liens).


          Prior
to or at the time of any replacement under this Section 7.05(b), Company will (i) cause
an Indenture Supplement covering such Replacement Engine to be delivered to
Loan Trustee for execution and, upon such execution, to be filed for
recordation pursuant to the Transportation Code or the applicable laws of any
other jurisdiction in which the Aircraft is then registered, (ii) furnish
Loan Trustee with a copy of the original bill of sale or, if the bill of sale
is unavailable, other evidence of ownership reasonably satisfactory to Loan
Trustee (which may be a copy of an invoice or purchase order) respecting such
Replacement Engine, which in the case of any such conveyance to which the Cape
Town Convention is applicable shall be in such form as will qualify as “contract
of sale” pursuant to Article V of the Aircraft Protocol, and all documents
required under the Operative Documents to establish, continue, confirm,
register and/or perfect the interests of Loan Trustee in such Replacement
Engine, (iii) cause the sale of such Replacement Engine to Company (if
occurring after February 28, 2006 and if the seller of such Replacement
Engine is “situated in” a country that has ratified the Cape Town Convention)
and the International Interest created pursuant to the Indenture Supplement in
favor of Loan Trustee with respect to such Replacement Engine, each to be
registered on the International Registry as a sale or an International
Interest, respectively; provided that if the seller of such Replacement
Engine is not situated in a country that has ratified the Cape Town Convention,
Company will use its best efforts to cause the seller to register the contract
of sale on the International Registry, (iv) cause a financing
statement or statements with respect to such Replacement Engine or other
requisite documents or instruments to be filed in such place or places as
necessary in order to perfect Loan Trustee’s interest therein in the United
States, or in such other jurisdiction in which the Engine is then registered, (v) furnish
Loan Trustee with an opinion of Company’s counsel (which may be internal
counsel to Company) addressed to Loan Trustee to the effect that, upon such
replacement, the Replacement Engine will be subject to the Lien of this
Indenture, (vi) furnish Loan Trustee with a certificate of an
aircraft engineer or appraiser (who may be an employee of Company) certifying
that such


63






Replacement
Engine has a value and utility (without regard to hours or cycles) at least
equal to the Engine so replaced assuming such Engine was in the condition and
repair required by the terms hereof immediately prior to the occurrence of such
Event of Loss and (vii) furnish Loan Trustee with evidence of
compliance with the insurance provisions of Section 7.06 with respect to such
Replacement Engine. In the case of each Replacement Engine subjected to the
Lien of this Indenture under this Section 7.05(b), promptly upon the
recordation of the Indenture Supplement covering such Replacement Engine
pursuant to the Transportation Code (or pursuant to the applicable law of such
other jurisdiction in which the Aircraft is registered), Company will cause to
be delivered to Loan Trustee an opinion of FAA counsel selected by Company if
at the time of the Event of Loss the Aircraft was registered under the laws of
the United States (or, if at the time of the Event of Loss the Aircraft was
registered under the laws of another jurisdiction, counsel qualified to opine
on matters of registration in such jurisdiction selected by Company, which
counsel shall be reasonably satisfactory to Loan Trustee) addressed to Loan
Trustee as to the due recordation of such Indenture Supplement or such other
requisite documents or instruments, the registration with the International
Registry of the sale of such Replacement Engine to Company (if occurring after
February 28, 2006) and of the International Interest created pursuant to
the Indenture Supplement with respect to such Replacement Engine and the
validity and perfection of the security interest in the Replacement Engine
granted to Loan Trustee under this Indenture. For all purposes hereof, upon the
attachment of the Lien of this Indenture thereto, the Replacement Engine shall
become part of the Collateral and shall be deemed an “Engine” as defined
herein. Upon compliance with clauses (i) through (vii) of the first
sentence of this paragraph, Loan Trustee shall execute and deliver to Company
an appropriate instrument releasing such replaced Engine, any proceeds
(including, without limitation, insurance proceeds), the Warranty Rights in
respect of such replaced Engine and all rights relating to any of the foregoing
from the Lien of this Indenture and assigning to Company all claims against
third Persons for damage to or loss of such Engine arising from the Event of
Loss, and will take such actions as may be required to be taken by Loan Trustee
to cancel or release any International Interest of Loan Trustee registered with
the International Registry in relation to the Engines with respect to which
such Event of Loss occurred.


          (c)
Application of Payments for Event of Loss from Requisition of Title or Use.
Any payments other than insurance proceeds (the application of which is
provided for in Section 7.06) received at any time by Company or by Loan
Trustee from any government or other Person with respect to an Event of Loss to
the Airframe or any Engine, will be applied as follows:


	
 

	
 


	
 

	
          (i)
  if such payments are received with respect to the Airframe or the Airframe
  and any Engines installed on the Airframe that has been or is being replaced
  by Company pursuant to Section 7.05(a), such payments shall be paid 





64







	
 

	
 


	
 

	
over to, or
  retained by, Loan Trustee and upon completion of such replacement shall be
  paid over to, or retained by, Company;


	
 

	
 


	
 

	
          (ii)
  if such payments are received with respect to the Airframe or the Airframe
  and any Engines installed on the Airframe that has not been and will not be
  replaced pursuant to Section 7.05(a), so much of such payments remaining after
  reimbursement of Loan Trustee for costs and expenses that shall not exceed
  the amounts required to be paid to Noteholders pursuant to Section 2.10 shall
  be applied in reduction of Company’s -obligation to pay such amounts, if not
  already paid by Company, or, if already paid by Company, shall be applied to
  reimburse Company for its payment of such amount and the balance, if any, of
  such payment remaining thereafter will be paid over to, or retained by,
  Company; and


	
 

	
 


	
 

	
          (iii)
  if such payments are received with respect to an Engine with regard to which
  an Event of Loss has occurred, so much of such payments remaining after
  reimbursement of Loan Trustee for costs and expenses shall be paid over to,
  or retained by, Company; provided that Company has fully performed its
  obligations under Section 7.05(b) with respect to the Event of Loss for which
  such payments are made.





          (d)
Requisition for Use by the Government of the Airframe and the Engines
Installed Thereon. In the event of the requisition for use or hire by any
government (it being acknowledged that the use of the Airframe or any Engine
pursuant to the CRAF Program does not constitute such a requisition) of the
Airframe and the Engines or engines installed on the Airframe that does not
constitute an Event of Loss, all of Company’s rights and obligations under this
Indenture with respect to the Airframe and such Engines shall continue to the
same extent as if such requisition had not occurred; provided that,
notwithstanding the foregoing, Company’s obligations other than payment
obligations shall only continue to the extent feasible. All payments received
by Company or Loan Trustee from such government for such use of the Airframe
and Engines or engines shall be paid over to, or retained by, Company.


          (e)
Requisition for Use by the Government of an Engine not Installed on the
Airframe. If any government requisitions the use or hire (it being
acknowledged that the use of the Airframe or any Engine pursuant to the CRAF
Program does not constitute such a requisition), for a period in excess of
sixty (60) days, of any Engine not then installed on the Airframe, Company will
replace such Engine by complying with the terms of Section 7.05(b) to the same
extent as if an Event of Loss had occurred with respect to such Engine. Upon
such replacement, any payments received by Company or Loan Trustee from such
government with respect to such requisition shall be paid over to, or retained
by, Company.


          (f)
Application of Payments During Existence of Event of Default. Any amount
referred to in Section 7.05 that is payable to or retainable by Company shall
not


65






be paid to or
retained by Company if at the time of such payment or retention an Event of
Default or Payment Default has occurred and is continuing, but shall be held by
or paid over to Loan Trustee as security for the obligations of Company under
this Indenture and the Participation Agreement. When any such Event of Default
or Payment Default ceases, such amount shall be paid to Company.


          Section
7.06 Insurance.


	
 

	
 


	
 

	
(a) Aircraft
  Liability Insurance.


	
 

	
 


	
 

	
          (i)
  Except as provided in clause (ii) of this Section 7.06(a), and subject
  to the rights of Company to establish and maintain self-insurance in the
  manner and to the extent specified in Section 7.06(d), Company will carry, or
  cause to be carried, at no expense to Loan Trustee, aircraft liability
  insurance (including, but not limited to, passenger, contractual, bodily
  injury, personal injury and property damage liability (exclusive of
  manufacturer’s product liability insurance and war risk, hijacking and
  related perils insurance)) with respect to the Aircraft that is of the type
  as from time to time applicable to aircraft operated by Company (or, if a
  Lease in respect of the Aircraft is then in effect, by Permitted Lessee) of
  the same type as the Aircraft (A) in amounts that are not less
  than the aircraft liability insurance applicable to similar aircraft and
  engines in Company’s fleet on which Company carries insurance and operated by
  Company on the same or similar routes as operated by the Aircraft; provided
  that such liability insurance shall not be less than the amount (the “Minimum
  Insurance Amount”) certified in the insurance report delivered to Loan
  Trustee and Liquidity Providers on the Closing Date, and (B) that is
  maintained in effect with insurers of recognized responsibility. Any policies
  of insurance carried in accordance with this Section 7.06(a) and any policies
  taken out in substitution or replacement for any of such policies shall: (1) name
  Loan Trustee, Subordination Agent, each Pass Through Trustee and each
  Liquidity Provider as their Interests (defined below in this Section 7.06)
  may appear, as additional insureds (the “Additional Insureds”), (2) subject
  to the conditions of clause (3) below, provide that, in respect of the
  interest of each Additional Insured in such policies, the insurance shall not
  be invalidated by any action or inaction of Company or any other Person
  (other than such Additional Insured) and shall insure each Additional Insured’s
  Interests as they appear, regardless of any breach or violation of any
  warranty, declaration or condition contained in such policies by Company or
  any other Person (other than such Additional Insured), (3) provide
  that, if such insurance is canceled for any reason, or if any change is made
  in the insurance that materially reduces the amount of insurance or the
  coverage certified in the insurance report delivered on the Closing Date to
  Loan Trustee and Liquidity Providers, or if such insurance is allowed to
  lapse for nonpayment of premium, such cancellation, change or lapse shall not
  be effective as to any Additional Insured for 30 days after receipt by





66







	
 

	
 


	
 

	
such
  Additional Insured of written notice from such insurers of such cancellation,
  change or lapse, (4) provide that the Additional Insureds shall
  have no obligation or liability for premiums, commissions, assessments or
  calls in connection with such insurance, (5) provide that the
  insurers shall waive any rights of (x) set-off, counterclaim or
  any other deduction, whether by attachment or otherwise, in respect of any
  liability of the Additional Insureds to the extent of any moneys due to the
  Additional Insureds and (y) subrogation against the Additional
  Insureds to the extent that Company has waived its rights by its agreements
  to indemnify the Additional Insureds pursuant to the Operative Documents, (6) be
  primary without right of contribution from any other insurance carried by any
  Additional Insured with respect to its Interests as such in the Aircraft and
  (7) expressly provide that all of the provisions thereof, except
  the limits of liability, shall operate in the same manner as if there were a
  separate policy covering each insured. “Interests” as used in this
  Section 7.06(a) and in Sections 7.06(b) and 7.06(c) with respect to any
  Person means the interests of such Person in the transactions contemplated by
  the Operative Documents.


	
 

	
 


	
 

	
          (ii)
  During any period that the Airframe or an Engine, as the case may be, is on
  the ground and not being flown, Company may carry or cause to be carried as
  to such non-flown Airframe or Engine, in lieu of the insurance required by
  clause (i) above, and subject to self-insurance to the extent permitted
  by Section 7.06(d) below, insurance otherwise conforming with the provisions of
  said clause (i) except that: (A) the amounts of coverage
  shall not be required to exceed the amounts of airline liability insurance
  from time to time applicable to airframes or engines owned or leased by
  Company (or, if a Lease is then in effect, by the Permitted Lessee) of the
  same type as such non-flown Airframe or Engine and that are on the ground and
  not being flown and (B) the scope of the risks covered and the
  type of insurance shall be the same as from time to time are applicable to
  airframes or engines operated by Company (or, if a Lease is then in effect,
  by the Permitted Lessee) of the same type as such non-flown Airframe or
  Engine and that are on the ground and not being flown.





          (b)
War Risk, Hijacking and Related Perils Liability Insurance. If the
Aircraft, the Airframe or any Engine is being operated in any war zone or area
of recognized or, in Company’s judgment, threatened hostilities, then Company
shall maintain or cause to be maintained war risk, hijacking and related perils
liability insurance (x) in an amount that is not less than the aircraft
liability insurance applicable to similar aircraft and engines in Company’s
fleet on which Company carries insurance and operated by Company on the same or
similar routes as the Aircraft, the Airframe or such Engine; provided
that such liability insurance shall not be less than the Minimum Insurance
Amount, (y) that is maintained in effect with insurers of recognized
responsibility, and (z) which shall cover the perils set forth in the
insurance policies maintained in connection with the CRAF Program (as such
insurance policies maintained


67






in connection with the CRAF
Program may be amended from time to time). Except with respect to any war-risk,
hijacking or related perils liability insurance maintained on any aircraft
owned or operated by Company in connection with the CRAF Program, if war-risk,
hijacking or related perils insurance is maintained by Company with respect to
any aircraft owned or operated by Company of the same or similar type operated
by Company on the same or similar routes as operated by the Aircraft, the
Airframe or such Engine, then Company shall maintain or cause to be maintained
with respect to the Aircraft war-risk, hijacking and related perils liability
insurance in scope and coverage no less comprehensive, in an amount not less
than the insurance maintained by Company with respect to such other aircraft,
and with insurers of recognized responsibility. Any policies of insurance
carried in accordance with this Section 7.06(b) and any policies taken out in
substitution or replacement for any of such policies shall: (1) name
Loan Trustee, Subordination Agent, each Pass Through Trustee and each Liquidity
Provider as their Interests may appear, as Additional Insureds, (2)
subject to the conditions of clause (3) below (other than the exception set
forth therein), provide that, in respect of the interest of each Additional
Insured in such policies, the insurance shall not be invalidated by any action
or inaction of Company or any other Person (other than such Additional Insured)
and shall insure each Additional Insured’s Interests as they appear, regardless
of any breach or violation of any warranty, declaration or condition contained
in such policies by Company or any other Person (other than such Additional
Insured), (3) provide that, except to the extent not provided for by
Company’s war risk and allied perils insurance provider, if such insurance is
canceled for any reason, or if any change is made in the insurance that
materially reduces the amount of insurance or the coverage certified in the
insurance report delivered on or prior to the Effective Date to Loan Trustee
and Liquidity Providers or, if such insurance is allowed to lapse for
nonpayment of premium, such cancellation, change or lapse shall not be
effective as to any Additional Insured for seven days (or such other period as
is then generally available in the industry) after receipt by such Additional
Insured of written notice from such insurers of such cancellation, change or
lapse, (4) provide that the Additional Insureds shall have no obligation
or liability for premiums, commissions, assessments or calls in connection with
such insurance, (5) provide that the insurers shall waive any rights of
(x) set-off, counterclaim or any other deduction, whether by attachment
or otherwise, in respect of any liability of the Additional Insureds to the
extent of any moneys due to the Additional Insureds and (y) subrogation
against the Additional Insureds to the extent that Company has waived its
rights by its agreements to indemnify the Additional Insureds pursuant to the
Operative Documents, (6) be primary without right of contribution from
any other insurance carried by any Additional Insured with respect to its
Interests as such in the Aircraft and (7) expressly provide that all of
the provisions thereof, except the limits of liability, shall operate in the
same manner as if there were a separate policy covering each insured. To the
extent that Company’s war-risk and allied perils insurance provider does not
provide for provision of direct notice to Additional Insureds of cancellation,
change or lapse in the insurance required hereunder, Company hereby agrees that
upon receipt of


68








notice of any thereof from such insurance provider it
shall give the Additional Insureds immediate notice of each cancellation or
lapse of, or change to, such insurance.


          (c)
Insurance Against Loss or Damage to Aircraft. 


	
 

	
 


	
 

	
          (i)
  Except as provided in clause (ii) of this Section 7.06(c), and subject
  to the rights of Company to establish and maintain self-insurance in the
  manner and to the extent specified in Section 7.06(d) below, Company shall
  maintain, or cause to be maintained, in effect with insurers of recognized
  responsibility, at no expense to Loan Trustee, all-risk aircraft hull
  insurance covering the Aircraft and all-risk coverage with respect to any
  Engines or Parts while removed from the Aircraft (including, without
  limitation, war risk insurance, if and to the extent the same is maintained
  by Company (or, if a Lease is then in effect, by the Permitted Lessee) with
  respect to other similar aircraft operated by Company or such Permitted
  Lessee, as the case may be, on the same routes) that is of the type as from
  time to time applicable to aircraft operated by Company (or, if a Lease is
  then in effect, by the Permitted Lessee) of the same type as the Aircraft; provided
  that (A) such insurance (including the permitted self-insurance) shall
  at all times while the Aircraft is subject to this Indenture be for an amount
  not less than 110% of the aggregate principal amount of the Equipment Notes
  outstanding from time to time, (B) such insurance need not cover an
  Engine while attached to an airframe not owned, leased or operated by
  Company, and (C) such insurance covering Engines and Parts removed
  from an Airframe or an airframe or (in the case of Parts) an Engine need be
  obtained only to the extent available at reasonable cost (as reasonably
  determined by Company). Any policies carried in accordance with this Section
  7.06(c) and any policies taken out in substitution or replacement for any
  such policies shall: (1) provide that any insurance proceeds up
  to an amount equal to the outstanding principal amount of the Equipment
  Notes, together with accrued but unpaid interest thereon, plus an amount
  equal to the interest that would accrue on the outstanding principal amount
  of the Equipment Notes at the Debt Rate in effect on the date of payment of
  such insurance proceeds to Loan Trustee (as provided for in this sentence)
  during the period commencing on the day following the date of such payment to
  Loan Trustee and ending on the Loss Payment Date (the sum of such three
  amounts being the “Loan Amount”), payable for any loss or damage
  constituting an Event of Loss with respect to the Aircraft and any insurance
  proceeds in excess of the Insurance Threshold up to an amount equal to the
  Loan Amount for any loss or damage to the Aircraft (or Engines) not constituting
  an Event of Loss with respect to the Aircraft (or Engines), shall be paid to
  Loan Trustee as long as the Indenture has not been discharged, and that all
  other amounts shall be paid to Company, unless the insurer has received
  notice that an Event of Default exists, in which case all insurance proceeds
  for any loss or damage to the Aircraft (or Engines) up to an amount equal to
  the Loan Amount 





69






	
 

	
 


	
 

	
shall be payable to Loan Trustee, (2) subject
  to the conditions of clause (C) below (other than the exception set
  forth therein), provide that, in respect of the interest of each Additional
  Insured in such policies, the insurance shall not be invalidated by any
  action or inaction of Company or any other Person (other than such Additional
  Insured) and shall insure each Additional Insured’s Interests as they appear,
  regardless of any breach or violation of any warranty, declaration or
  condition contained in such policies by Company or any other Person (other
  than such Additional Insured), (3) provide that, except to the
  extent not provided for by Company’s hull war risk and allied perils
  insurance provider, if such insurance is canceled for any reason, or if any
  change is made in the insurance that materially reduces the coverage (not
  including the amount) certified in the insurance report delivered on the
  Closing Date to Loan Trustee, and Liquidity Providers or, if such insurance
  is allowed to lapse for nonpayment of premium, such cancellation, change or
  lapse shall not be effective as to the Additional Insureds for 30 days (seven
  days, or such other period as is then customary in the industry, in the case
  of war risk or allied perils coverage) after receipt by the Additional
  Insureds of written notice from such insurers of such cancellation, change or
  lapse, (4) provide that the Additional Insureds shall have no
  obligation or liability for premiums, commissions, assessments or calls in
  connection with such insurance, (5) provide that the insurers
  shall waive rights of (x) setoff, counterclaim or any other
  deduction, whether by attachment or otherwise, in respect of any liability of
  the Additional Insureds to the extent of any moneys due to the Additional
  Insureds and (y) subrogation against the Additional Insureds to
  the extent Company has waived its rights by its agreement to indemnify the
  Additional Insureds pursuant to the Operative Documents, and (6) be
  primary without right of contribution from any other insurance carried by any
  Additional Insured with respect to its Interests as such in the Aircraft. To
  the extent that Company’s war-risk and allied perils insurance provider does
  not provide for provision of direct notice to Additional Insureds of
  cancellation, change or lapse in the insurance required hereunder, Company
  hereby agrees that upon receipt of notice of any thereof from such insurance
  provider it shall give the Additional Insureds immediate notice of each
  cancellation or lapse of, or change to, such insurance.


	
 

	
 


	
 

	
          (ii)
  During any period that the Airframe or an Engine, as the case may be, is on
  the ground and not being flown, Company may carry or cause to be carried as
  to such non-flown Airframe or Engine, in lieu of the insurance required by
  clause (i) above, and subject to self-insurance to the extent permitted
  by Section 7.06(d) below, insurance otherwise conforming with the provisions
  of said clause (i) except that the scope of the risks covered and the
  type of insurance shall be the same as from time to time are applicable to
  airframes and engines operated by Company (or, if a Lease is then in effect,
  by the Permitted Lessee) of the same type as such non-flown Airframe or
  Engine and that are on the ground and not being flown; provided that,
  subject to self-insurance to the extent 





70






	
 

	
 


	
 

	
permitted by Section 7.06(d) below, Company shall
  maintain or cause to be maintained insurance against risk of loss or damage
  to such non-flown Airframe or Engine in an amount at least equal to 110% of
  the aggregate outstanding principal amount of the Equipment Notes during such
  period that such Airframe or Engine is on the ground and not being flown.





          (d)
Self-Insurance. Company may from time-to-time self-insure, by way of
deductible, self-insured retention, premium adjustment or franchise or
otherwise (including, with respect to insurance maintained pursuant to Sections
7.06(a), 7.06(b) or 7.06(c), insuring for a maximum amount that is less than
the amounts set forth in Sections 7.06(a), 7.06(b) and 7.06(c) above), the
risks required to be insured against pursuant to Sections 7.06(a), 7.06(b) and
7.06(c) above, but in no case shall the self-insurance with respect to all of
the aircraft and engines in the combined fleet of Company and its Affiliates
(including, without limitation, the Aircraft) exceed for any 12-month policy
year 1.0% of the average aggregate insurable value (during the preceding policy
year) of all aircraft (including, without limitation, the Aircraft) on which
Company and its Affiliates carry insurance, unless an insurance broker of
national standing certifies that the standard among other major United States
airlines is a higher level of self-insurance, in which case Company may
self-insure the Aircraft to such higher level; provided that (1) any
deductible per occurrence that, in the case of the Aircraft, is not in excess
of the amount customarily allowed as a deductible in the industry or is
required to facilitate claims handling or (2) any applicable
mandatory minimum per aircraft (or if applicable per annum or other period)
hull or liability insurance deductibles imposed by the aircraft hull or
liability insurers shall be permitted in addition to the above-mentioned
self-insurance.


          (e)
Indemnification by United States Government in Lieu of Insurance.
Notwithstanding any provision of this Section 7.06 requiring insurance, in lieu
of insurance against any risk with respect to the Aircraft, indemnification
from, or insurance provided by, the United States government, or any agency or
instrumentality thereof, against such risk in an amount which, when added to the
amount of insurance maintained against such risk by Company (or, if a Lease is
then in effect, by the Permitted Lessee), shall be at least equal to the amount
of insurance against such risk otherwise required by this Section 7.06
(taking into account self-insurance permitted by Section 7.06(d)) shall be
considered adequate insurance for purposes of this Section 7.06.


          (f)
Application of Insurance Payments. All losses will be adjusted by
Company with the insurers. As between Loan Trustee and Company it is agreed
that all insurance payments received under policies required to be maintained
by Company hereunder, exclusive of any payments received in excess of the Loan
Amount for the Aircraft from such policies, as the result of the occurrence of an
Event of Loss with respect to the Airframe or an Engine will be applied as
follows:


71






	
 

	
 


	
 

	
          (i)
  if such payments are received with respect to the Airframe or the Airframe
  and any Engines installed on the Airframe that has been or is being replaced
  by Company pursuant to Section 7.05(a), such payments shall be paid over to,
  or retained by, Loan Trustee and upon completion of such replacement shall be
  paid over to, or retained by, Company;


	
 

	
 


	
 

	
          (ii)
  if such payments are received with respect to the Airframe or the Airframe
  and any Engines installed on the Airframe that has not been and will not be
  replaced as contemplated by Section 7.05(a), so much of such payments
  remaining, after reimbursement of Loan Trustee for its costs and expenses, as
  do not exceed the amounts required to be paid by Company pursuant to Section
  2.10 shall be applied in reduction of Company’s obligation to pay such
  amounts, if not already paid by Company, or, if already paid by Company,
  shall be applied to reimburse Company for its payment of such amounts, and
  the balance, if any, of such payment remaining thereafter will be paid over
  to, or retained by, Company; and


	
 

	
 


	
 

	
          (iii)
  if such payments are received with respect to an Engine, so much of such
  payments remaining after reimbursement of Loan Trustee for its costs and
  expenses shall be paid over to, or retained by, Company; provided that
  Company has fully performed its obligations under Section 7.05(b) with
  respect to the Event of Loss for which such payments are made.





          In
all events, the insurance payment of any property damage loss received under
policies maintained by Company in excess of the Loan Amount for the Aircraft
shall be paid to Company.


          The
insurance payments for any loss or damage to the Airframe or an Engine not
constituting an Event of Loss with respect to the Airframe or such Engine will
be applied in payment (or to reimburse Company) for repairs or for replacement
property in accordance with the terms of Sections 7.02 and 7.04, and any
balance remaining after compliance with such Sections with respect to such loss
or damage shall be paid to Company. Any amount referred to in the preceding
sentence or in clause (i) or (ii) of the first paragraph of this Section
7.06(f) that is payable to Company shall not be paid to Company (or, if it has
been previously paid directly to Company, shall not be retained by Company) if
at the time of such payment an Event of Default or Payment Default has occurred
and is continuing, but shall be paid to and held by Loan Trustee as security
for the obligations of Company under this Indenture and the other Operative
Documents and shall be invested pursuant to Section 5.06 unless and until such
amount is applied, at the option of Loan Trustee, to Company’s obligations
under this Indenture and the other Operative Documents as and when due, it
being understood that any such application shall be made to such obligations of
Company as Loan Trustee may determine in its sole discretion. At such time as there
shall be continuing no Event of Default or Payment 


72






Default, such amount shall be paid to Company to the
extent not previously applied in accordance with this Section 7.06(f).


          (g)
Reports, Etc. On or before the Closing Date and annually following
renewal of Company’s insurance coverage, Company will furnish to Loan Trustee
and Liquidity Providers current certificates of insurance and a report signed
by a firm of independent aircraft insurance brokers appointed by Company (which
brokers may be in the regular employ of Company), stating the opinion of such
firm that the insurance then carried and maintained on the Aircraft complies
with the terms hereof. All information contained in such report shall be
Confidential Information and shall be treated by Loan Trustee and Liquidity
Providers and each of their Affiliates and their respective officers,
directors, agents and employees in accordance with the provisions of Section
10.16. Company will cause such firm to notify Loan Trustee and Liquidity
Providers of any act or omission on the part of Company of which such firm has
knowledge that might invalidate or render unenforceable, in whole or in part,
any insurance on the Aircraft. Company will also cause such firm to notify Loan
Trustee and Liquidity Providers as promptly as practicable after such firm
acquires knowledge that an interruption of any insurance carried and maintained
on the Aircraft pursuant to this Section 7.06 will occur. Such information may
only be provided to other Persons in accordance with Section 10.16.


          In
the event that Company shall fail to maintain or to cause to be maintained
insurance as herein provided, Loan Trustee may at its option obtain such
insurance (giving Company prompt written notice thereof, but the failure to so
notify Company shall not in any way affect the rights of Loan Trustee
hereunder) and, in such event, Company shall, upon demand, reimburse Loan
Trustee for the cost to Loan Trustee of such insurance, together with interest
thereon at the Past Due Rate for the period commencing with the date such cost
was paid to the date of reimbursement; provided, however, that no
exercise by Loan Trustee of said option shall affect the provisions of this
Indenture, including the provisions that failure by Company to maintain the
prescribed insurance shall constitute an Event of Default.


          (e)
Salvage Rights; Other. All salvage rights to the Airframe and each
Engine shall remain with Company’s insurers at all times, and any insurance
policies of Loan Trustee insuring the Airframe or any Engine shall provide for
a release to Company of any and all salvage rights in and to the Airframe or
any Engine. Neither Loan Trustee nor any Noteholder may, directly or
indirectly, obtain insurance for its own account with respect to the Airframe
or any Engine if such insurance would limit or otherwise adversely affect the
coverage or amounts payable under, or increase the premiums for, any insurance
required to be maintained pursuant to this Section 7.06 or any other insurance
maintained with respect to the Aircraft or any other aircraft in Company’s
fleet.


73






ARTICLE VIII


Successor and
Additional Trustees


          Section
8.01 Resignation or Removal; Appointment of Successor.


          (a)
The resignation or removal of Loan Trustee and the appointment of a successor
Loan Trustee shall become effective only upon the successor Loan Trustee’s
acceptance of appointment as provided in this Section 8.01. Loan Trustee or any
successor thereto must resign if at any time it ceases to be eligible in
accordance with the provisions of Section 8.01(c) and may resign at any time
without cause by giving at least 60 days’ prior written notice to Company and
each Noteholder. In addition, either Company (so long as no Event of Default or
Payment Default shall have occurred and be continuing) or a Majority in
Interest of Noteholders (but only with the consent of Company so long as no
Event of Default or Payment Default shall have occurred and be continuing), may
at any time remove Loan Trustee without cause by an instrument in writing
delivered to Loan Trustee and each Noteholder, and, in case of a removal by a
Majority in Interest of Noteholders, to Company. In the case of the resignation
or removal of Loan Trustee, Company shall promptly appoint a successor Loan
Trustee. If a successor Loan Trustee has not been appointed within 60 days
after such notice of resignation or removal, Loan Trustee, Company or any
Noteholder may apply to any court of competent jurisdiction to appoint a successor
Loan Trustee to act until such time, if any, as a successor is appointed as
above provided. The successor Loan Trustee so appointed by such court shall
immediately and without further act be superseded by any successor Loan Trustee
appointed as above provided.


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


          (c)
This Indenture shall at all times have a Loan Trustee, however appointed, that
is a Citizen of the United States (without the use of a voting trust) and a
bank or trust company having a combined capital and surplus of at least
$100,000,000 (or a combined capital and surplus in excess of $5,000,000 and the
obligations of which, whether now in 


74






existence or hereafter incurred, are fully and
unconditionally guaranteed by a corporation organized and doing business under
the laws of the United States or any state or territory thereof or the District
of Columbia and having a combined capital and surplus of at least $100,000,000)
or a corporation with a net worth of at least $100,000,000, if there be such an
institution willing, able and legally qualified to perform the duties of Loan
Trustee upon reasonable or customary terms. If such bank, trust company or
corporation publishes reports of conditions at least annually, pursuant to law
or to the requirements of federal, state, territorial or District of Columbia
supervising or examining authority, then for the purposes of this Section
8.01(c) the combined capital and surplus of such bank, trust company or
corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report of conditions so published. In case at any time Loan
Trustee ceases to be eligible in accordance with the provisions of this Section
8.01(c), Loan Trustee shall resign immediately in the manner and with the
effect specified in Section 8.01(a).


          (d)
Any bank, trust company or corporation into which Loan Trustee may be merged or
converted or with which it may be consolidated, or any bank, trust company or
corporation resulting from any merger, conversion or consolidation to which
Loan Trustee is a party, or any bank, trust company or corporation to which
substantially all the corporate trust business of Loan Trustee may be
transferred, shall, subject to the terms of Section 8.01(c), be a successor
Loan Trustee under this Indenture without further act.


          Section
8.02 Appointment of Additional and Separate Trustees.


          (a)
Whenever (i) Loan Trustee deems it necessary or desirable in order
to conform to any law of any jurisdiction in which all or any part of the
Collateral is situated or to make any claim or bring any suit with respect to
or in connection with the Collateral, any Operative Document or any of the
transactions contemplated by the Operative Documents, (ii) Loan
Trustee shall be advised by counsel satisfactory to it that it is necessary or
prudent in the interests of Noteholders (and Loan Trustee shall so advise
Company) or (iii) Loan Trustee has been requested to do so by a
Majority in Interest of Noteholders, then in any such case, Loan Trustee and,
upon the written request of Loan Trustee, Company, shall execute and deliver an
indenture supplemental hereto and such other, instruments as from time to time
are necessary or advisable either (1) to constitute one or more
banks or trust companies or corporations meeting the requirements of Section
8.01(c) and approved by Loan Trustee, either to act jointly with Loan 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
Indenture as is provided in such supplemental indenture or other instruments as
Loan Trustee or a Majority in Interest of Noteholders deems 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 8.02. If no Event 


75






of Default has occurred and is continuing, no
additional or supplemental trustee shall be appointed without Company’s
consent. If an Event of Default shall have occurred and be continuing, Loan
Trustee may act under the foregoing provisions of this Section 8.02(a) without
the concurrence of Company, and, to the extent permitted by applicable law,
Company hereby irrevocably appoints (which appointment is coupled with an
interest) Loan Trustee as its agent and attorney-in-fact to act for it under
the foregoing provisions of this Section 8.02(a). Loan 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, subject in each case to the remaining
provisions of this Section 8.02. In case any additional or separate trustee
appointed under this Section 8.02(a) becomes incapable of acting, resigns or is
removed, all the assets, property, rights, powers, trusts, duties and
obligations of such additional or separate trustee shall revert to Loan Trustee
until a successor additional or separate trustee is appointed as provided in
this Section 8.02(a).


          (b)
No additional or separate trustee shall be entitled to exercise any of the
rights, powers, duties and obligations conferred upon Loan 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 Documents to Loan Trustee shall be
promptly paid over by it to Loan Trustee. All other rights, powers, duties and
obligations conferred or imposed upon any additional or separate trustee shall
be exercised or performed by Loan 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 Loan 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 Loan Trustee or a Majority
in Interest of Noteholders. No trustee hereunder shall be personally liable by
reason of any act or omission of any other trustee hereunder, except that Loan
Trustee shall be liable for the consequences of its lack of reasonable care in
selecting, and Loan Trustee’s own actions in acting with, any additional or
separate trustee. Each additional or separate trustee appointed pursuant to
this Section 8.02 shall be subject to, and shall have the benefit of Articles
IV, V, VI, VIII, IX and X insofar as they apply to Loan Trustee. The powers of
any additional or separate trustee appointed pursuant to this Section 8.02
shall not in any case exceed those of Loan Trustee.


          (c)
If at any time Loan Trustee deems it no longer necessary or desirable or in the
event that Loan Trustee has been requested to do so in writing by a Majority in
Interest of Noteholders, Loan Trustee and, upon the written request of Loan
Trustee, 


76






Company, shall execute and deliver an indenture
supplemental hereto and all other instruments and agreements necessary or
proper to remove any additional or separate trustee. Loan Trustee may act on
behalf of Company under this Section 8.02(c) when and to the extent it could so
act under Section 8.02(a). In any case, Company may remove an additional or
separate trustee in the manner set forth in Section 8.01.


ARTICLE IX


Amendments and
Waivers


          Section
9.01 Amendments to this Indenture without Consent of Holders. At any
time after the date hereof, Company and Loan Trustee may enter into one or more
agreements supplemental hereto without notice to or consent of any Noteholder,
Indenture Indemnitee or Related Indenture Indemnitee for any of the following
purposes: (i) to evidence the succession of another Person to Company
and the assumption by any such successor of the covenants of Company contained
in any Operative Documents pursuant to Section 6.02(e) of the Participation
Agreement; (ii) 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 Noteholder, any Indenture Indemnitee or any Related Indenture
Indemnitee in its capacity solely as Noteholder, any Indenture Indemnitee or
any Related Indenture Indemnitee, as the case may be); (iii) to
cure any ambiguity or correct any mistake; (iv) to evidence the
succession of a new trustee hereunder pursuant hereto or the removal of the
trustee hereunder or to provide for or facilitate the appointment of an
additional or separate trustee pursuant to Section 8.02; (v) to
convey, transfer, assign, mortgage or pledge any property to or with Loan
Trustee; (vi) to make any other provisions or amendments with
respect to matters or questions arising hereunder or under the Equipment Notes,
or to amend, modify or supplement any provision hereof or thereof, so long as
such action shall not adversely affect the interests of any Noteholder, any
Indenture Indemnitee or any Related Indenture Indemnitee in its capacity solely
as Noteholder, Indenture Indemnitee or any Related Indenture Indemnitee, as the
case may be; (vii) to correct or amplify the description of any
property at any time subject to the Lien of this Indenture, or better to assure,
convey and confirm unto Loan Trustee any property subject or required to be
subject to the Lien of this Indenture or to subject to the Lien of this
Indenture the Airframe or Engines or any Replacement Airframe or Replacement
Engine; (viii) to add to the covenants of Company for the benefit
of Noteholders, Indenture Indemnitees or Related Indenture Indemnitees or to
surrender any rights or power herein conferred upon Company; (ix) to
add to the rights of Noteholders, Indenture Indemnitees or Related Indenture
Indemnitees; (x) to include on the Equipment Notes any legend
required by law or as otherwise necessary or advisable; (xi) to
comply with any applicable requirements of the Indenture Act of 1939, as
amended, or any other requirements of applicable law or of any regulatory body
and (xii) to provide for the 


77






issuance, in connection with a refinancing, of
Series B Equipment Notes (and Related Series B Equipment Notes) or Series
C Equipment Notes (and Related Series C Equipment Notes) or the issuance or
successive refinancing and issuance from time to time of one or more series of
Additional Series Equipment Notes (and any Related Additional Series Equipment
Notes) and for pass through certificates issued by any pass through trust that
acquires any such Equipment Notes and to make changes relating to any of the
foregoing (including without limitation to further provide for the issuance of
more than one series of Additional Series Equipment Notes (including, without
limitation, to provide for the relative priority of different series of
Additional Series Equipment Notes as between such series) and to provide for
any credit support for any such issued or refinanced Equipment Notes or Related
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 8.01 of the
Intercreditor Agreement.


          Section
9.02 Amendments to this Indenture with Consent of Holders.


          (a)
With the written consent of a Majority in Interest of Noteholders, Company may,
and Loan Trustee shall, subject to Section 9.06, at any time and from time to
time, enter into such supplemental agreements to add any provisions to or to
change or eliminate any provisions of this Indenture or of any such
supplemental agreements or to modify in any manner the rights and obligations
of Company, Loan Trustee and of Noteholders under this Indenture; provided
that, without the consent of each Noteholder affected thereby, an amendment
under this Section 9.02 may not:


	
 

	
 


	
 

	
          (1)
  reduce the principal amount of, Make-Whole Amount, if any, or interest on,
  any Equipment Note;


	
 

	
 


	
 

	
          (2)
  change the date on which any principal amount of, Make-Whole Amount, if any,
  or interest on any Equipment Note, is due or payable;


	
 

	
 


	
 

	
          (3)
  create any Lien with respect to the Collateral prior to or pari passu
  with the Lien thereon under this Indenture except such as are permitted by
  this Indenture, or deprive any Noteholder of the benefit of the Lien on the
  Collateral created by this Indenture, except as provided in connection with
  the exercise of remedies under Article IV; provided that, without the
  consent of each holder of an affected Related Equipment Note or Related
  Non-Subordination Agent Equipment Note then outstanding, no such amendment,
  waiver or modification of terms of, or consent under, any thereof shall
  modify Section 3.03 or this clause (3) or deprive any Related Noteholder or
  any Related Non-Subordination Agent 





78






	
 

	
 


	
 

	
Noteholder of the benefit of the Lien of this
  Indenture on the Collateral, except as provided in connection with the
  exercise of remedies under Article IV;


	
 

	
 


	
 

	
          (4)
  reduce the percentage of the outstanding principal amount of the Equipment
  Notes the consent of whose holders is required for any such supplemental
  agreement, or the consent of whose holders is required for any waiver of
  compliance with certain provisions of this Indenture or of certain defaults
  hereunder or their consequences provided for in this Indenture; or


	
 

	
 


	
 

	
          (5)
  make any change in Section 4.05 or this Section 9.02, except to provide that
  certain other provisions of this Indenture cannot be modified or waived
  without the consent of each Noteholder affected thereby.





          Notwithstanding
the foregoing, neither Company nor Loan Trustee shall enter into any
amendment, waiver or modification of, or supplement or consent to, this
Indenture or any other Operative Document other than the Participation Agreement
(which is addressed in Section 9.03) which shall reduce, modify or amend any
indemnities in favor of any Liquidity Provider without the consent of such
Liquidity Provider that is subject to such reduction, modification or
amendment.


          (b)
It is not necessary under this Section 9.02 for Noteholders to consent to the
particular form of any proposed supplemental agreement, but it is sufficient if
they consent to the substance thereof.


          (c)
Promptly after the execution by Company and Loan Trustee of any supplemental
agreement pursuant to the provisions of this Section 9.02, Loan Trustee shall
transmit by first-class mail a notice, setting forth in general terms the
substance of such supplemental agreement, to all Noteholders, as the names and
addresses of such Noteholders appear on the Equipment Note Register. Any
failure of Loan Trustee to mail such notice, or any defect therein, shall not,
however, in any way impair or affect the validity of any such supplemental
agreement.


          Section
9.03 Amendments, Waivers, Etc. of the Participation Agreement. Without
the consent of a Majority in Interest of Noteholders, the respective parties to
the Participation Agreement may not modify, amend or supplement such agreement,
or give any consent, waiver, authorization or approval thereunder, for the
purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions thereof or of modifying in any manner the rights of the
respective parties thereunder; provided that, without the consent of
Loan Trustee or any Noteholder or any other Indenture Indemnitee, the
Participation Agreement may be modified, amended or supplemented in order (i) to
cure any defect or inconsistency therein or to cure any ambiguity or correct
any mistake, (ii) to amend, modify or supplement any provision
thereof or make any other provision with respect to matters or questions
arising thereunder or under this Indenture (provided that the making of
any such other provision shall not materially 


79








adversely
affect the interests of Noteholders) or (iii) to make any other
change, or reflect any other matter, of the kind referred to in
clauses (i) through (xii) of Section 9.01. Notwithstanding the foregoing,
without the consent of any Liquidity Provider, Company shall not enter into any
amendment, waiver or modification of or supplement or consent to the
Participation Agreement which shall reduce, modify or amend any indemnities in
favor of such Liquidity Provider contained therein.


          Section
9.04 Revocation and Effect of Consents. Until an amendment or waiver
becomes effective, a consent to it by a Noteholder is a continuing consent by
Noteholder and every subsequent Noteholder, even if notation of the consent is
not made on any Equipment Note.


          Section
9.05 Notation on or Exchange of Equipment Notes. Loan Trustee may place
an appropriate notation about an amendment or waiver on any Equipment Note
thereafter executed. Loan Trustee in exchange for such Equipment Notes may
execute new Equipment Notes that reflect the amendment or waiver.


          Section
9.06 Trustee Protected. If, in the reasonable opinion of the institution
acting as Loan Trustee, any document required to be executed by it pursuant to
the terms of Section 9.01 or 9.02 adversely affects any right, duty, immunity
or indemnity with respect to such institution under this Indenture, such
institution may in its discretion decline to execute such document.


          Section
9.07 No Consent of Individual Indenture Indemnitees Required.
Notwithstanding anything in this Indenture or any other Operative Document to
the contrary, when any provision hereof or thereof would otherwise require a
consent of an Indenture Indemnitee, such provision shall always be construed to
require only the consent of an Indenture Indemnitee other than any Indenture
Indemnitee covered by clause (x) of the definition of “Indenture Indemnitees”.


ARTICLE X


Miscellaneous


          Section
10.01 Termination of Indenture. Subject to Section 7.05, upon (or at any
time after) payment in full of the principal amount of, Make-Whole Amount, if
any, and interest on and all other amounts due under all Equipment Notes and
provided that (i) there shall then be (x) no other Secured
Obligations due to Noteholders, Loan Trustee and other Indenture Indemnitees
hereunder, under the Participation Agreement or any other Operative Document,
and (y) no Related Secured Obligations due under any Related Indenture or
any other “Operative Document” (as defined in any Related Indenture) and (ii)
in the case of any redemption of all of the Equipment Notes pursuant to Section
2.11(a), the provisions of the foregoing clause (i) shall apply and no Related


80







Indenture Bankruptcy Default or Related Indenture Event of Default shall have
occurred and be continuing, Company shall direct Loan Trustee to execute and
deliver to or as directed in writing by Company an appropriate instrument
releasing the Aircraft and the Engines and (subject to paragraph (xi) or (xvii)
of clause “third” of Section 3.03, if applicable) all other Collateral from the
Lien of this Indenture and Loan Trustee shall execute and deliver such
instrument as aforesaid; provided that this Indenture and the trusts
created hereby shall earlier terminate and this Indenture shall be of no
further force or effect upon any sale or other final disposition by Loan
Trustee of all property constituting part of the Collateral and the final
distribution by Loan 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 Indenture and the trusts created hereby
shall continue in full force and effect in accordance with the terms hereof.


          Section
10.02 No Legal Title to Collateral in Noteholders. No holder of an
Equipment Note, a Related Equipment Note or a Related Non-Subordination Agent
Equipment Note shall have legal title to any part of the Collateral. No
transfer, by operation of law or otherwise, of any Equipment Note, Related
Equipment Note, Related Non-Subordination Agent Equipment Note or other right,
title and interest of any Noteholder, Related Noteholder or Related
Non-Subordination Agent Noteholder in and to the Collateral or hereunder shall
operate to terminate this 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
10.03 Sale of Aircraft by Loan Trustee is Binding. Any sale or other
conveyance of the Aircraft, the Airframe, any Engine or any interest therein by
Loan Trustee made pursuant to the terms of this Indenture shall bind
Noteholders and Company and shall be effective to transfer or convey all right,
title and interest of Loan Trustee, Company and such Noteholders in and to such
Aircraft, Airframe, Engine or interest therein. No purchaser or other grantee
shall be required to inquire as to the authorization, necessity, expediency or
regularity of such sale or conveyance or as to the application of any sale or
other proceeds with respect thereto by Loan Trustee or Noteholders.


          Section
10.04 Indenture for Benefit of Company, Loan Trustee and Noteholders.
Nothing in this Indenture, whether express or implied, shall be construed to
give any Person other than Company, Noteholders, Loan Trustee, the other
Indenture Indemnitees and the Related Indenture Indemnitees any legal or
equitable right, remedy or claim under or in respect of this Indenture, except
that the Persons referred to in the second to last full paragraph of Section
7.02(a) shall be third party beneficiaries of such paragraph.


          Section
10.05 Notices. Unless otherwise expressly specified or permitted by the
terms hereof, all notices, requests, demands, authorizations, directions,
consents, waivers or documents required or permitted under the terms and
provisions of this Indenture shall be in English and in writing, and any such
notice may be given by United States mail,


81






courier
service, facsimile, and any such notice shall be effective when delivered (or,
if mailed, three Business Days after deposit, postage prepaid, in the first
class U.S. mail and, if delivered by facsimile, upon completion of transmission
and confirmation by the sender (by a telephone call to a representative of the
recipient or by machine confirmation) that such transmission was received)
addressed as follows:


          if
to Company, addressed to:


                    Delta
Air Lines, Inc.

                    1030
Delta Boulevard

                    Atlanta,
Georgia 30354

                    Attention:
Treasurer, Dept. 856

                    Telephone:
(404) 715-6583

                    Facsimile:
(404) 773-7345


          with
a copy to the General Counsel at the same address, but Dept. 971


                    Telephone:
(404) 715-7820

                    Facsimile:
(404) 715-7882;


          if
to Loan Trustee, addressed to:


                    U.S.
Bank Trust National Association

                    One
Federal Street, 3rd Floor

                    Boston,
Massachusetts 02110

                    Attention:
Corporate Trust Services

                    Ref.:
Delta 2007-1 EETC

                    Telephone:
(617) 603-6553

                    Facsimile:
(617) 603-6683;


          if
to any Noteholder, addressed to such Noteholder at its address set forth in the
Equipment Note Register maintained pursuant to Section 2.07; 


          if
to any Indenture Indemnitee, addressed to the address of such party (if any)
set forth in Section 7.01 of the Participation Agreement or to such other
address as such Indenture Indemnitee shall have furnished by notice to Company
and Loan Trustee; and


          if
to any Related Indenture Indemnitee, addressed to such Related Indenture
Indemnitee at its address set forth in the Equipment Note Register (defined in
the applicable Related Indenture) maintained pursuant to Section 2.07 of the
applicable Related Indenture.


          Any
party, by notice to the other parties hereto, may designate different addresses
for subsequent notices or communications. Whenever the words “notice” or
“notify” or 


82






similar words
are used herein, they mean the provision of formal notice as set forth in this
Section 10.05.


          Section
10.06 Severability. Any provision of this Indenture that 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, and any such prohibition or unenforceability
in any jurisdiction shall not invalidate or render unenforceable such provision
in any other jurisdiction.


          Section
10.07 No Oral Modification or Continuing Waivers. No terms or provisions
of this Indenture or of the Equipment Notes may be changed, waived, discharged
or terminated orally, but only by an instrument in writing signed by Company
and Loan Trustee, in compliance with Article IX. 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
10.08 Successors and Assigns. All covenants and agreements contained
herein shall bind and inure to the benefit of, and be enforceable by, each of
the parties hereto and the successors and permitted assigns of each, all as
herein provided. Any request, notice, direction, consent, waiver or other
instrument or action by any Noteholder shall bind the successors and permitted
assigns of such Noteholder. Each Noteholder by its acceptance of an Equipment
Note agrees to be bound by (i) this Indenture and all provisions of the
Participation Agreement, the other Operative Documents and the Pass Through
Documents applicable to a Noteholder and (ii) all provisions of each
Related Indenture applicable to a Related Noteholder to the extent such
Noteholder is such Related Noteholder.


          Section
10.09 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
10.10 Normal Commercial Relations. Anything contained in this Indenture
to the contrary notwithstanding, Loan Trustee, any Noteholder or any other
party to any of the Operative Documents or the Pass Through Documents or any of
their affiliates may conduct any banking or other financial transactions, and
have banking or other commercial relationships, with Company, fully to the same
extent as if this Indenture were not in effect, including without limitation
the making of loans or other extensions of credit to Company for any purpose
whatsoever, whether related to any of the transactions contemplated hereby or
otherwise.


          Section
10.11 Voting by Noteholders. All votes of Noteholders shall be governed
by a vote of a Majority in Interest of Noteholders, except as otherwise
provided herein.


83






          Section
10.12 Section 1110. It is the intention of the parties hereto that the
security interest created hereby, to the fullest extent available under
applicable law, entitles Loan Trustee, on behalf of Noteholders, to all of the
benefits of Section 1110 with respect to the Aircraft.


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


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


          Section
10.15 Governing Law. THIS INDENTURE HAS BEEN DELIVERED IN THE STATE OF
NEW YORK AND THIS INDENTURE, ANY INDENTURE SUPPLEMENT AND THE EQUIPMENT NOTES
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, AND
THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS.


          Section
10.16 Confidential Information. The term “Confidential Information”
means: (a) the existence and terms of any lease of the Airframe or
Engines pursuant to Section 7.02(a) and the identity of the Permitted Lessee
thereunder; (b) all information obtained in connection with any
inspection conducted by Loan Trustee or its representative pursuant to Section
7.03(a); (c) each certification furnished to Loan Trustee pursuant
to Sections 7.06(a) and 7.06(b); (d) all information contained in
each report furnished to Loan Trustee pursuant to Section 7.06(e); and (e) all
information regarding the Warranty Rights. All Confidential Information shall
be held confidential


84






by Loan
Trustee and each Noteholder and each affiliate, agent, officer, director, or
employee of any thereof and shall not be furnished or disclosed by any of them
to anyone other than (i) Loan Trustee or any Noteholder and (ii) their
respective bank examiners, auditors, accountants, agents and legal counsel, and
except as may be required by an order of any court or administrative agency or
by any statute, rule, regulation or order of any governmental authority.


          Section
10.17 Submission to Jurisdiction. Each of the parties hereto, and by
acceptance of Equipment Notes, each Noteholder, to the extent it may do so
under applicable law, for purposes hereof and of all other Operative Documents
hereby (a) irrevocably submits itself to the non-exclusive
jurisdiction of the courts of the State of New York sitting in the City of New
York and to the non-exclusive jurisdiction of the United States District Court
for the Southern District of New York, for the purposes of any suit, action or
other proceeding arising out of this Indenture, the subject matter hereof or
any of the transactions contemplated hereby brought by any party or parties
hereto or thereto, or their successors or permitted assigns and (b) waives,
and agrees not to assert, by way of motion, as a defense, or otherwise, in any
such suit, action or proceeding, that the suit, action or proceeding is brought
in an inconvenient forum, that the venue of the suit, action or proceeding is
improper or that this Indenture or the Equipment Notes or the subject matter
hereof or any of the transactions contemplated hereby may not be enforced in or
by such courts.


[Signature Pages Follow.]


85






          IN
WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly
executed by their respective officers thereof duly authorized, as of the date
first above written.


	
 

	
 

	
 


	
 

	
DELTA AIR
 LINES, INC.


	
 

	
 

	
 


	
 

	
By:

	
 


	
 

	
 

	 


	
 

	
 

	
Name:


	
 

	
 

	
Title:


	
 


	
 

	
U.S. BANK
 TRUST NATIONAL

 ASSOCIATION, not in its individual

 capacity, except as expressly provided

 herein, but solely as Loan Trustee


	
 

	
 

	
 


	
 

	
By:

	
 


	
 

	
 

	 


	
 

	
 

	
Name:


	
 

	
 

	
Title: 





Signature Page








Exhibit
A

to Indenture and Security Agreement

([REG. NO.])


FORM OF INDENTURE SUPPLEMENT


INDENTURE
SUPPLEMENT NO. _____


          INDENTURE
SUPPLEMENT NO. ____, dated _______________ ____, 2007 (“Indenture
Supplement”), between DELTA AIR LINES, INC. (“Company”) and U.S.
BANK TRUST NATIONAL ASSOCIATION, not in its individual capacity but solely as
Loan Trustee under the Indenture (each as hereinafter defined).


W I T N E S S E T H:


          WHEREAS,
the Indenture and Security Agreement ([REG. NO.]), dated as of _________ ___,
2007 (the “Indenture”; capitalized terms used herein without definition
shall have the meanings specified therefor in Annex A to the Indenture),
between Company and U.S. Bank Trust National Association, not in its individual
capacity, except as expressly provided therein, but solely as Loan Trustee (“Loan
Trustee”), provides for the execution and delivery of supplements thereto
substantially in the form hereof which shall particularly describe the
Aircraft, and shall specifically grant a security interest in the Aircraft to
Loan Trustee; and


          [WHEREAS,
the Indenture relates to the Airframe and Engines described in Annex A attached
hereto and made a part hereof, and a counterpart of the Indenture is attached
to and made a part of this Indenture Supplement;]12


          [WHEREAS,
Company has, as provided in the Indenture, heretofore executed and delivered to
Loan Trustee Indenture Supplement(s) for the purpose of specifically subjecting
to the Lien of the Indenture certain airframes and/or engines therein
described, which Indenture Supplement(s) is/are dated and has/have been duly
recorded with the FAA as set forth below, to wit:


	
 

	
 

	
 

	
 


	
 

	
Date

	
Recordation Date

	
FAA Document Number]13





          NOW,
THEREFORE, (x) to secure the prompt and complete payment (whether at
stated maturity, by acceleration or otherwise) of principal of, Make-Whole
Amount, if any, and interest on, the Equipment Notes and all other amounts
payable by Company under the Operative Documents and the performance and observance
by Company of all the agreements and covenants to be performed or observed by
Company for the benefit of Noteholders and Indenture Indemnitees contained in
the Operative Documents and (y) to secure the Related Secured
Obligations, and in consideration of the premises and of the 


	
 

	
 

	
 


	
 

	
 


	
 

	
 

	
 


	
12

	
Use for Indenture Supplement No. 1 only.


	
 

	
 

	
 


	
13

	
Use for all Indenture Supplements other than
 Indenture Supplement No. 1.











covenants contained in the Operative Documents and the
Related Indentures, and for other good and valuable consideration given by
Noteholders, Indenture Indemnitees and Related Indenture Indemnitees to Company
at or before the Closing Date, the receipt and adequacy of which is hereby
acknowledged, Company does hereby grant, bargain, sell, convey, transfer,
mortgage, assign, pledge and confirm unto Loan Trustee and its successors in
trust and permitted assigns, for the security and benefit of Noteholders, each
Indenture Indemnitee and each Related Indenture Indemnitee, a first priority
security interest in, and mortgage lien on, all estate, right, title and
interest of Company in, to and under the Aircraft, including the Airframe and
Engines described in Annex A attached hereto, whether or not any such Engine
from time to time is installed on the Airframe or any other airframe or any
other aircraft, and any and all Parts relating thereto, and, to the extent
provided in the Indenture, all substitutions and replacements of, and
additions, improvements, accessions and accumulations to, the Aircraft, including
the Airframe, the Engines and any and all Parts (in each case other than
Excluded Equipment) relating thereto;


          To
have and to hold all and singular the aforesaid property unto Loan Trustee, and
its successors and permitted assigns, in trust for the equal and proportionate
benefit and security of Noteholders, Indenture Indemnitees and Related
Indenture Indemnitees, except as otherwise provided in the Indenture, including
Section 2.13 and Article III of the Indenture, without any priority of any one
Equipment Note over any other, or any Related Equipment Note over any other, or
any Related Non-Subordination Agent 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 Indenture.


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


          THIS
INDENTURE SUPPLEMENT HAS BEEN DELIVERED IN THE STATE OF NEW YORK AND SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED
IN ACCORDANCE WITH SUCH LAWS.


2






          IN
WITNESS WHEREOF, the undersigned have caused this Indenture Supplement
No. _____ to be duly executed by their respective duly authorized
officers, on the date first above written.


	
 

	
 

	
 


	
 

	
DELTA AIR LINES, INC.


	
 

	
 

	
 


	
 

	
By:

	
 


	
 

	
 

	 


	
 

	
 

	
Name:


	
 

	
 

	
Title:


	
 

	
 


	
 

	
 


	
 

	
U.S. BANK TRUST NATIONAL

 ASSOCIATION, as Loan Trustee


	
 

	
 

	
 


	
 

	
By:

	
 


	
 

	
 

	 


	
 

	
 

	
Name:


	
 

	
 

	
Title:





Signature
Page









Annex A

to Indenture Supplement No. ___

([REG. No.])


DESCRIPTION OF AIRFRAME AND ENGINES


          AIRFRAME


	
 

	
 

	
 

	
 

	
 


	
Manufacturer

	
Model

	
Generic Model

	
FAA

 Registration

 No.

	
Manufacturer’s Serial No.


	 

	 

	 

	 

	 


	
 

	
 

	
 

	
 

	
 


	
The Boeing

 Company

	
 

	
 

	
 

	
 





          ENGINES


	
 

	
 

	
 

	
 


	
Manufacturer

	
Model

	
Generic Model

	
Manufacturer’s Serial Nos.


	 

	 

	 

	 


	
 

	
 

	
 

	
 





          Each
Engine is of 550 or more “rated take-off horsepower” or the equivalent of such
horsepower.






Exhibit B

to Indenture and Security Agreement

([REG. NO.])


LIST OF PERMITTED COUNTRIES


	
 

	
 

	
 


	
Australia

	
Greece

	
Norway


	
 

	
 

	
 


	
Austria

	
Hong Kong

	
Peoples’ Republic of China


	
 

	
 

	
 


	
Bahamas

	
Hungary

	
Poland


	
 

	
 

	
 


	
Barbados

	
Iceland

	
Portugal


	
 

	
 

	
 


	
Belgium

	
India

	
Republic of China

 (Taiwan)


	
 

	
 

	
 


	
Bermuda Islands

	
Ireland

	
Singapore


	
 

	
 

	
 


	
Brazil

	
Italy

	
South Africa


	
 

	
 

	
 


	
British Virgin Islands

	
Jamaica

	
South Korea


	
 

	
 

	
 


	
Canada

	
Japan

	
Spain


	
 

	
 

	
 


	
Cayman Islands

	
Liechtenstein

	
Sweden


	
 

	
 

	
 


	
Chile

	
Luxembourg

	
Switzerland


	
 

	
 

	
 


	
Czech Republic

	
Malaysia

	
Thailand


	
 

	
 

	
 


	
Denmark

	
Mexico

	
Trinidad and Tobago


	
 

	
 

	
 


	
Ecuador

	
Monaco

	
United Kingdom


	
 

	
 

	
 


	
Finland

	
Netherlands Antilles

	
 


	
 

	
 

	
 


	
France

	
Netherlands, the

	
 


	
 

	
 

	
 


	
Germany

	
New Zealand

	
 





B-1






Exhibit C

to Indenture and

Security Agreement


CERTAIN TERMS


	
 

	
 

	
 


	
Insurance Threshold:

	
 

	
[$8,000,000]14


	
 

	
 

	
 


	
 

	
 

	
[$15,000,000]15


	
 

	
 

	
 


	
 

	
 

	
[$20,000,000]16


	
 

	
 

	
 


	
 

	
 

	
[$24,000,000]17


	
 

	
 

	
 








	
 

	
 


	



	
14

	
To be inserted in the case of any 737-832 model
 aircraft.


	
 

	
 


	
15

	
To be inserted in the case of any 767-332ER model
 aircraft.


	
 

	
 


	
16

	
To be inserted in the case of any 767-432ER model
 aircraft.


	
 

	
 


	
17

	
To be inserted in the case of any 777-232ER model
 aircraft.





C-1






Schedule I

to Indenture and

Security Agreement


DESCRIPTION OF EQUIPMENT NOTES18  


          The information set forth below this text in this
Schedule has been intentionally omitted from the FAA filing copy as the parties
hereto deem it to contain confidential information.


	
 

	
 


	



	
18

	
This page to be included only in the FAA filing
 package in the place of the completed amortization schedule.





I-1









Schedule I 
to Indenture and 

Security Agreement 


DESCRIPTION OF EQUIPMENT NOTES


	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
Original Principal 

	
  

	
Maturity Date 

	
  

	
Interest Rate 


	
 

	
 

	
Amount19 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Series A

	
 

	
 

	
 

	
August 10, 2022

	
 

	
6.821% per annum


	
Equipment
 Notes:

	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Series B

	
 

	
 

	
 

	
August 10, 2022

	
 

	
8.021% per annum


	
Equipment
 Notes:

	
 

	
 

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
 

	
 

	
 

	
 


	
Series C

	
 

	
 

	
 

	
August 10, 2014

	
 

	
8.954% per annum


	
Equipment
 Notes:

	
 

	
 

	
 

	
 

	
 

	
 






	
 

	
 

	
 


	
 

	
 

	 
	
19

	
For each
 Series, to insert the amount set forth for such Series in the line captioned
 “Total” in the column relating to the relevant aircraft in Appendix III to
 the Offering Memorandum relating to Delta Pass Through Certificates, Series
 2007-1. 






I-1






Schedule I 
to Indenture and 

Security Agreement 

(Cont’d) 


EQUIPMENT NOTES AMORTIZATION20


SERIES A EQUIPMENT NOTES


	
 

	
 

	
 


	
 

	
 

	
Percentage of 


	
  

	
  

	
Original Principal Amount 


	
Payment Date 

	
  

	
to be Paid 


	 

	
 

	 





The portion of
this Schedule appearing below this text is intentionally deleted from the FAA
filing counterpart because the parties hereto deem it to contain confidential information.



	
 

	
 

	
 


	
 

	
 

	 
	
20

	
This page to
 be included only in the FAA filing package in the place of the completed
 amortization schedule. 











Schedule I 
to Indenture and 

Security Agreement 

(Cont’d) 


EQUIPMENT NOTES AMORTIZATION21


SERIES A EQUIPMENT NOTES


	
 

	
 

	
 


	
 

	
 

	
Percentage of 


	
  

	
  

	
Original Principal Amount 


	
Payment Date 

	
  

	
to be Paid 


	 

	
 

	 


	
 

	
 

	
 








	
 

	
 

	
 


	
 

	
 

	 
	
21

	
To be
 completed based on the relevant amortization schedule attached as Schedule
 III to the Note Purchase Agreement. 












Schedule I 
to Indenture and 

Security Agreement 

(Cont’d) 


EQUIPMENT NOTES AMORTIZATION22


SERIES B EQUIPMENT NOTES


	
 

	
 

	
 


	
 

	
 

	
Percentage of 


	
  

	
  

	
Original Principal Amount 


	
Payment Date 

	
  

	
to be Paid 


	 

	
 

	 


	
 

	
 

	
 





The portion of
this Schedule appearing below this text is intentionally deleted from the FAA
filing counterpart because the parties hereto deem it to contain confidential
information. 


	
 

	
 

	
 


	
 

	
 

	 
	
22

	
This page to
 be included only in the FAA filing package in the place of the completed
 amortization schedule. 










Schedule I 
to Indenture and 

Security Agreement 

(Cont’d) 


EQUIPMENT NOTES AMORTIZATION23


SERIES B EQUIPMENT NOTES


	
 

	
 

	
Percentage of 


	
  

	
  

	
Original Principal Amount 


	
Payment Date 

	
  

	
to be Paid 


	 

	
 

	 


	
 

	
 

	
 


	
 

	
 

	
 







	
 

	
 

	
 


	
 

	
 

	 
	
23

	
To be
 completed based on the relevant amortization schedule attached as Schedule
 III to the Note Purchase Agreement. 












Schedule I 
to Indenture and 

Security Agreement 

(Cont’d) 


EQUIPMENT NOTES AMORTIZATION24


SERIES C EQUIPMENT NOTES


	
 

	
 

	
Percentage of 


	
  

	
  

	
Original Principal Amount 


	
Payment Date 

	
  

	
to be Paid 


	 

	
 

	 


	
 

	
 

	
 





The portion of
this Schedule appearing below this text is intentionally deleted from the FAA
filing counterpart because the parties hereto deem it to contain confidential
information. 


	
 

	
 

	
 


	
 

	
 

	 
	
24

	
This page to
 be included only in the FAA filing package in the place of the completed
 amortization schedule. 












Schedule I 
to Indenture and 

Security Agreement 

(Cont’d) 


EQUIPMENT NOTES AMORTIZATION25


SERIES C EQUIPMENT NOTES


	
 

	
 

	
Percentage of 


	
  

	
  

	
Original Principal Amount 


	
Payment Date 

	
  

	
to be Paid 


	 

	
 

	 







	
 

	
 

	
 


	
 

	
 

	 
	
25

	
To be
 completed based on the relevant amortization schedule attached as Schedule
 III to the Note Purchase Agreement. 

















Schedule II

to Indenture and 

Security Agreement


PASS THROUGH TRUST AGREEMENT AND


PASS THROUGH TRUST SUPPLEMENTS


          Pass
Through Trust Agreement, dated as of November 16, 2000, between Delta Air
Lines, Inc. and U.S. Bank Trust National Association (as successor to State
Street Bank and Trust Company of Connecticut, National Association), as
trustee, as supplemented by Trust Supplement No. 2007-1A, dated as of the
Issuance Date, Trust Supplement No. 2007-1B, dated as of the Issuance
Date, and Trust Supplement No. 2007-1C, dated as of the Issuance Date.






Annex A to

Participation Agreement and

Indenture and Security Agreement

([REG. NO.])


DEFINITIONS

([REG. NO.])


          “Additional
Insureds” has the meaning specified in Section 7.06(a) of the Indenture.


          “Additional
Series” or “Additional Series Equipment Notes” means Equipment Notes issued
under the Indenture and designated as a series (other than “Series A”, “Series
B” or “Series C”) thereunder, in the principal amount and maturities and bearing
interest as specified in Schedule I to the Indenture amended at the time of
original issuance of such Additional Series under the heading for such series.  


          “Additional
Series Pass Through Certificates” means the pass through certificates issued
pursuant to any Additional Series Pass Through Trust Agreement.


          “Additional
Series Pass Through Trust” means a grantor trust created to facilitate the
issuance and sale of pass through certificates in connection with the issuance
of any Additional Series Equipment Notes.


          “Additional
Series Pass Through Trust Agreement” means a Trust Supplement entered into
in connection with the creation of an Additional Series Pass Through Trust,
together with the Basic Pass Through Trust Agreement, as the same may be
amended, supplemented or otherwise modified from time to time in accordance
with its terms.


          “Additional
Series Pass Through Trustee” means U.S. Bank Trust National Association, in
its capacity as trustee under an Additional Series Pass Through Trust Agreement
or any successor trustee thereto.


          “Applicable
Rating Agency” means (a) in the case of the Class A Pass Through
Trust, Fitch, Moody’s and Standard & Poor’s and (b) in the case of
the Class B Pass Through Trust and the Class C Pass Through Trust, Moody’s and
Standard & Poor’s.


          “Affiliate”
means with respect to any Person, any other Person directly or indirectly
controlling, controlled by or under common control with such Person. For the
purposes of this definition, “control” (including “controlled by” and “under
common control with”) shall mean 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. In no
event shall U.S. Bank be deemed to be an Affiliate of Loan Trustee or vice
versa.






          “After-Tax
Basis” means that indemnity and compensation payments required to be made
on such basis will be supplemented by the Person paying the base amount by that
amount which, when added to such base amount, and after deduction of all
Federal, state, local and foreign Taxes required to be paid by or on behalf of
the payee with respect of the receipt or realization of the base amount and any
such supplemental amounts, and after consideration of any current tax savings
of such payee resulting by way of any deduction, credit or other tax benefit
actually and currently realized that is attributable to such base amount or
Tax, shall net such payee the full amount of such base amount.


          “Agreement”
and “Participation Agreement” mean that certain Participation Agreement
([REG. NO.]), dated as of the Closing Date, among Company, U.S. Bank, Pass
Through Trustee under each Pass Through Trust Agreement, Subordination Agent
and Loan Trustee, as the same may be amended, supplemented or otherwise
modified from time to time in accordance with its terms.


          “Aircraft”
means the Airframe (or any Replacement Airframe substituted therefor pursuant
to Section 7.05 of the Indenture) together with the two Engines described in
the Indenture Supplement originally executed and delivered under the Indenture
(or any Replacement Engine that may from time to time be substituted for any of
such Engines pursuant to Section 7.04 or Section 7.05 of the Indenture),
whether or not any of such initial or substituted Engines is from time to time
installed on such Airframe or installed on any other airframe or on any other
aircraft. The term “Aircraft” includes any Replacement Aircraft.


          “Aircraft
Protocol” means the official English language text of the Protocol to the
Convention on International Interests in Mobile Equipment on Matters Specific
to Aircraft Equipment, adopted on November 16, 2001, at a diplomatic conference
in Cape Town, South Africa, and all amendments, supplements, and revisions
thereto (and from and after the effective date of the Cape Town Treaty in the
relevant country, means when referring to the Aircraft Protocol with respect to
that country, the Aircraft Protocol as in effect in such country, unless
otherwise indicated).


          “Airframe”
means (a) the Boeing [Model] (generic model [Generic Model]) aircraft
(except (i) the Engines or engines from time to time installed thereon
and any and all Parts related to such Engine or engines and (ii)
Excluded Equipment) specified on Annex A to the Indenture Supplement originally
executed and delivered under the Indenture and (b) any and all related
Parts. The term “Airframe” includes any Replacement Airframe that is
substituted for the Airframe pursuant to Section 7.05 of the Indenture. At such
time as any Replacement Airframe is so substituted and the Airframe for which
such substitution is made is released from the Lien of the Indenture, such
replaced Airframe shall cease to be an Airframe under the Indenture.


A-2






          “Bankruptcy
Code” means the United States Bankruptcy Code, 11 United States Code §§101
et seq., as amended, or any successor statutes thereto.


          “Basic
Pass Through Trust Agreement” means that certain Pass Through Trust
Agreement, dated as of November 16, 2000, between Company and U.S. Bank (as
successor in interest to State Street Bank and Trust Company of Connecticut,
National Association), as the same may be amended, supplemented or otherwise
modified from time to time in accordance with its terms (but does not include
any Trust Supplement).


          “Business
Day” means any day other than a Saturday, a Sunday or a day on which
commercial banks are required or authorized to close in New York, New York,
Atlanta, Georgia or the city and state in which Loan Trustee maintains its
Corporate Trust Office or receives and disburses funds.


          “Cape
Town Convention” means the official English language text of the Convention
on International Interests in Mobile Equipment, adopted on November 16, 2001,
at a diplomatic conference in Cape Town, South Africa, and all amendments,
supplements, and revisions thereto (and from and after the effective date of the
Cape Town Treaty in the relevant country, means when referring to the Cape Town
Convention with respect to that country, the Cape Town Convention as in effect
in such country, unless otherwise indicated).


          “Cape
Town Treaty” means, collectively, the official English language text of (a)
the Convention on International Interests in Mobile Equipment, and (b)
the Protocol to the Convention on International Interests in Mobile Equipment
on Matters Specific to Aircraft Equipment, in each case adopted on November 16,
2001, at a diplomatic conference in Cape Town, South Africa, and from and after
the effective date of the Cape Town Treaty in the relevant country, means when
referring to the Cape Town Treaty with respect to that country, the Cape Town
Treaty as in effect in such country, unless otherwise indicated, and (c)
all rules and regulations adopted pursuant thereto and, in the case of each of
the foregoing described in clauses (a) through (c), all amendments,
supplements, and revisions thereto.


          “Certificated
Air Carrier” means a Citizen of the United States holding an air carrier
operating certificate issued by the Secretary of Transportation pursuant to
Chapter 447 of Title 49 of the United States Code for aircraft capable of
carrying ten or more individuals or 6,000 pounds or more of cargo or that
otherwise is certified or registered to the extent required to fall within the
purview of Section 1110.


          “Citizen
of the United States” has the meaning specified for such term in Section 40102(a)(15)
of Title 49 of the United States Code or any similar legislation of the United
States enacted in substitution or replacement therefor.


A-3






          “Claim”
has the meaning specified in Section 4.02(a) of the Participation Agreement.


          “Class
A Liquidity Facility” means the Revolving Credit Agreement with respect to
the Class A Pass Through Trust between the Subordination Agent, as borrower,
and Class A Liquidity Provider, dated as of the Issuance Date, and any
replacement thereof, in each case as the same may be amended, supplemented or
otherwise modified from time to time in accordance with its terms.


          “Class
A Liquidity Provider” means Landesbank Hessen-Thüringen Girozentrale, a public law banking
institution organized under the laws of Germany, as liquidity provider
under the Class A Liquidity Facility, or any liquidity provider under a
replacement liquidity facility for the Class A Pass Through Trust.


          “Class
A Pass Through Trust” means the Delta Air Lines Pass Through Trust 2007-1A
created pursuant to the Basic Pass Through Trust Agreement, as supplemented by
Trust Supplement No. 2007-1A, dated as of the Issuance Date, between Company
and U.S. Bank, as Class A Trustee.


          “Class
A Trustee” means the trustee for the Class A Pass Through Trust.


          “Class
B Liquidity Facility” means the Revolving Credit Agreement with respect to
the Class B Pass Through Trust between the Subordination Agent, as borrower,
and Class B Liquidity Provider, dated as of the Issuance Date, and any
replacement thereof, in each case as the same may be amended, supplemented or
otherwise modified from time to time in accordance with its terms.


          “Class
B Liquidity Provider” means Landesbank Hessen-Thüringen Girozentrale, a public law banking
institution organized under the laws of Germany, as liquidity provider
under the Class B Liquidity Facility, or any liquidity provider under a
replacement liquidity facility for the Class B Pass Through Trust.


          “Class
B Pass Through Trust” means the Delta Air Lines Pass Through Trust 2007-1B
created pursuant to the Basic Pass Through Trust Agreement, as supplemented by
Trust Supplement No. 2007-1B, dated as of the Issuance Date, between Company
and U.S. Bank, as Class B Trustee.


          “Class
B Trustee” means the trustee for the Class B Pass Through Trust.


          “Class
C Pass Through Trust” means the Delta Air Lines Pass Through Trust 2007-1C
created pursuant to the Basic Pass Through Trust Agreement, as supplemented by
Trust Supplement No. 2007-1C, dated as of the Issuance Date, between Company
and U.S. Bank, as Class C Trustee.


A-4






          “Class
C Trustee” means the trustee for the Class C Pass Through Trust.


          “Closing”
has the meaning specified in Section 2.03 of the Participation Agreement.


          “Closing
Date” means the date of the closing of the transaction contemplated by the
Operative Documents.


          “Code”
means the Internal Revenue Code of 1986, as amended.


          “Collateral”
has the meaning specified in the granting clause of the Indenture.


          “Company”
means Delta Air Lines, Inc., and its successors and permitted assigns.


          “Compulsory
Acquisition” means requisition of title or other compulsory acquisition,
capture, seizure, deprivation, confiscation or detention for any reason of the
Aircraft by any government that results in the loss of title or use of the
Aircraft by Company (or any Permitted Lessee) for a period in excess of 180
consecutive days, but shall exclude requisition for use or hire not involving
requisition of title.


          “Confidential
Information” has the meaning specified in Section 10.16 of the Indenture.


          “Controlling
Party” has the meaning specified in Section 2.06 of the Intercreditor
Agreement.


          “Corporate
Trust Office” means the Corporate Trust Division of Loan Trustee located at
Loan Trustee’s address for notices under the Participation Agreement, or such
other office at which Loan Trustee’s corporate trust business is administered that
Loan Trustee specifies by notice to Company.


          “CRAF
Program” means the Civil Reserve Air Fleet Program authorized under 10
U.S.C. Section 9511 et seq. or any similar or substitute program under the laws
of the United States.


          “Debt
Rate” means, with respect to (i) any Series of Equipment Notes, the
rate per annum specified for the applicable Series under the heading “Interest
Rate” in Schedule I to the Indenture (as amended, in the case of any Additional
Series, at the time of original issuance of such Additional Series) and, in the
case of Series A, Series B and Series C, as such rate per annum may be
increased or decreased from time to time for such period(s), and in such
amount(s) and circumstances, as provided in Section 2(e) of the Registration
Rights Agreement, 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 Past
Due Rate.


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          “Defaulted
Operative Indenture” means any Operative Indenture (the terms “Event of
Default”, “Equipment Notes” and “Payment Default” used in this definition have
the meanings specified therefor in such Operative Indenture) with respect to
which (i) a Payment Default has occurred and is continuing or an Event of
Default described in Section 4.01(a) of such Operative Indenture has occurred
and is continuing or (ii) an Event of Default other than an Event of Default
described in Section 4.01(a) of such Operative Indenture has occurred and is
continuing and, in any such case, either (x) the Equipment Notes issued
thereunder have been accelerated and such acceleration has not been rescinded
and annulled in accordance therewith or (y) the loan trustee under such
Operative Indenture has given Company a notice of its intention to exercise one
or more of the remedies specified in Section 4.02(a) of such Operative
Indenture; provided that in the event of a bankruptcy proceeding under the
Bankruptcy Code under which Company is a debtor, if and so long as the trustee
or the debtor agrees to perform and performs all obligations of Company under
such Operative Indenture and the Equipment Notes issued thereunder in
accordance with Section 1110(a)(2) of the Bankruptcy Code and cures defaults
under such Operative Indentures and Equipment Notes to the extent required by
Section 1110(a)(2) of the Bankruptcy Code, such Operative Indenture shall not
be a Defaulted Operative Indenture.  


          “Department
of Transportation” means the United States Department of Transportation and
any agency or instrumentality of the United States government succeeding to its
functions.


          “Depositary”
means, subject to Section 4(a)(vi) of the Note Purchase Agreement, Credit
Suisse, a banking corporation organized under the laws of Switzerland, acting
through its New York branch, as Depositary under each Deposit Agreement.


          “Deposit
Agreement” means, subject to Section 4(a)(vi) of the Note Purchase
Agreement, each of the three Deposit Agreements, dated as of the Issuance Date,
between the Escrow Agent and the Depositary, which relate to the Class A, Class
B or Class C Pass Through Trust, respectively; provided that, for
purposes of any obligation of Company, no amendment, modification or supplement
to, or substitution or replacement of, any such Deposit Agreement shall be
effective unless consented to by Company.


          “Direction”
has the meaning specified in Section 2.16 of the Indenture.


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


          “Eligible Account” means an
account established by and with an Eligible Institution at the request of Loan
Trustee, which institution agrees, for all purposes of the UCC including
Article 8 thereof, that (a) such account shall be a “securities account”
(as defined in Section 8-501(a) of the NY 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 NY UCC), (c) Loan Trustee shall be
the “entitlement holder” (as defined in Section 8- 


A-6












102(a)(7) of the NY UCC) in respect of such account, (d)
it will comply with all entitlement orders issued by Loan Trustee to the
exclusion of Company, and (e) the “securities intermediary jurisdiction”
(under Section 8-110(e) of the NY UCC) shall be the State of New York.


          “Eligible
Institution” means the corporate trust department of (a) U.S. Bank,
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 two [Engine Model] engines (generic model [Generic
Model]), listed by manufacturer’s serial number on Annex A to the Indenture
Supplement originally executed and delivered under the Indenture, whether or
not from time to time installed on the Airframe or installed on any other
airframe or on any other aircraft and (b) any Replacement Engine
substituted for an Engine pursuant to Section 7.04 or 7.05 of the Indenture;
together in each case with any and all related Parts but excluding Excluded
Equipment. At such time as a Replacement Engine is so substituted and the
Engine for which substitution is made is released from the Lien of the
Indenture, such replaced Engine shall cease to be an Engine under the Indenture.


          “Equipment
Note” means and includes any equipment notes issued under the Indenture in
the form specified in Section 2.01 thereof (as such form may be varied pursuant
to the terms of the Indenture) and any Equipment Note issued in exchange therefor
or replacement thereof pursuant to Section 2.07 or 2.08 of the Indenture.


          “Equipment
Note Register” has the meaning specified in Section 2.07 of the Indenture.


          “Equipment
Note Registrar” has the meaning specified in Section 2.07 of the Indenture.


          “ERISA”
means the Employee Retirement Income Security Act of 1974, as amended from time
to time, and the regulations promulgated and rulings issued thereunder. Section
references to ERISA are to ERISA as in effect at the date of the Participation
Agreement and any subsequent provisions of ERISA amendatory thereof,
supplemental thereto or substituted therefor.


          “Escrow
Agent” means U.S. Bank National Association, a national banking
association, as escrow agent under each Escrow Agreement, or any successor
agent thereto.


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          “Escrow
Agreement” means each of the three Escrow and Paying Agent Agreements,
among Escrow Agent, 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 Pass Through Trust,
the Class B Pass Through Trust or the Class C Pass Through Trust; provided
that, for purposes of any obligation of Company, no amendment, modification or
supplement to, or substitution or replacement of, any such Escrow Agreement
shall be effective unless consented to by Company.


          “Event
of Default” has the meaning specified in Section 4.01 of the Indenture.


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


          (a)
the loss of such property or of the use thereof due to destruction, damage
beyond repair or rendition of such property permanently unfit for normal use
for any reason whatsoever;


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


          (c)
the theft, hijacking or disappearance of such property for a period in excess
of 180 consecutive days;


          (d)
the requisition for use or hire of such property by any government (other than
a requisition for use or hire by a Government or the government of the country
of registry of the Aircraft) that results in the loss of possession of such
property by Company (or any Permitted Lessee) for a period in excess of 12
consecutive months;


          (e)
the operation or location of the Aircraft, while under requisition for use by
any government, in any area excluded from coverage by any insurance policy in
effect with respect to the Aircraft required by the terms of Section 7.06 of
the Indenture, unless Company shall have obtained indemnity or insurance in
lieu thereof from such government;


          (f)
any Compulsory Acquisition;


          (g)
as a result of any law, rule, regulation, order or other action by the FAA or
other government of the country of registry, the use of the Aircraft or Airframe
in the normal business of air transportation is prohibited by virtue of a
condition affecting all aircraft of the same type for a period of 18
consecutive months, unless Company is diligently carrying forward all steps
that are necessary or desirable to permit the normal use of the Aircraft or
Airframe or, in any event, if such use is prohibited for a period of three
consecutive years; and


A-8






          (h)
with respect to an Engine only, any divestiture of title to or interest in an
Engine or any event with respect to an Engine that is deemed to be an Event of
Loss with respect to such Engine pursuant to Section 7.02(a)(vii) of the
Indenture.


          An
Event of Loss with respect to the Aircraft shall be deemed to have occurred if
an Event of Loss occurs with respect to the Airframe unless Company elects to
substitute a Replacement Airframe pursuant to Section 7.05(a)(i) of the
Indenture.


          “Exchange
Certificate” with respect to any Pass Through Certificate, has the meaning
specified in the Pass Through Trust Agreement for the Pass Through Trust under
which such Pass Through Certificate was issued.


          “Excluded
Equipment” means (i) defibrillators, enhanced emergency medical kits
and other medical equipment, (ii) airphones and other components or
systems installed on or affixed to the Airframe that are used to provide
individual telecommunications or electronic entertainment to passengers aboard
the Aircraft, (iii) galley carts, beverage carts, waste containers,
liquor kits, food tray carriers, ice containers, oven inserts, galley inserts,
and other branded passenger convenience or service items, (iv) any
items, equipment or systems leased by Company or any Permitted Lessee (other
than items, equipment, or systems that are leased from Company pursuant to the
applicable Lease) or owned by Company or any Permitted Lessee subject to a
conditional sales agreement or a security interest (other than the security
interest granted under the Indenture), and (v) cargo containers.


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


          “FAA
Bill of Sale” means the bill of sale for the Aircraft on AC Form 8050-2
executed by Manufacturer or an affiliate of Manufacturer in favor of Company
and recorded with the FAA.


          “Federal
Funds Rate” means a fluctuating interest rate per annum in effect from time
to time, which rate per annum shall at all times be equal to the weighted average
of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers, as published for such
day (or, if such day is not a Business Day, for the next preceding Business
Day) by the Federal Reserve Bank of New York, or if such rate is not so
published for any day that is a Business Day, the average of the quotations for
such day for such transactions received by U.S. Bank from three Federal funds
brokers of recognized standing selected by it.


          “Final
Maturity Date” means August 10, 2022, or if such date is not a Business
Day, the Final Maturity Date shall be the next succeeding Business Day.


          “Fitch”
means Fitch Ratings, Inc.


A-9






          “Government”
means the government of any of Canada, France, Germany, Japan, The Netherlands,
Sweden, Switzerland, the United Kingdom or the United States and any
instrumentality or agency thereof.


          “Indemnitee”
has the meaning specified in Section 4.02(b) of the Participation Agreement.


          “Indenture”
means that certain Indenture and Security Agreement ([REG. NO.]), dated as of
the Closing Date, between Company and Loan Trustee, as the same may be amended,
supplemented or otherwise modified from time to time in accordance with its
terms, including supplementation by an Indenture Supplement pursuant to the
Indenture.


          “Indenture
Indemnitee” means (i) Loan Trustee, (ii) U.S. Bank, (iii)
each separate or successor or additional trustee appointed pursuant to Section
8.02 of the Indenture, (iv) so long as it holds any Equipment Notes or
Related Equipment Notes as agent and trustee of any Pass Through Trustee,
Subordination Agent, (v) each Liquidity Provider, (vi) so long as
it is the holder of any Equipment Notes or Related Equipment Notes, each Pass
Through Trustee, (vii) the Paying Agent, (viii) the Escrow Agent,
and (ix) any of their respective successors and
permitted assigns in such capacities, directors, officers,
employees agents and servants.


          “Indenture
Supplement” means a supplement to the Indenture, substantially in the form
of Exhibit A to the Indenture, which particularly describes the Aircraft, and
any Replacement Airframe and or Replacement Engine, included in the property
subject to the Lien of the Indenture.


          “Initial
Certificate” with respect to any Pass Through Certificate, has the meaning
specified in the Pass Through Trust Agreement for the Pass Through Trust under
which such Pass Through Certificate was issued.


          “Initial
Purchaser” means each of the initial purchasers listed as such in the Pass
Through Purchase Agreement.


          “Insurance
Threshold” is the amount set forth as the Insurance Threshold in Exhibit C
to the Indenture.


          “Intercreditor
Agreement” means that certain Intercreditor Agreement, dated as of the
Issuance Date, among Pass Through Trustees, Liquidity Providers and
Subordination Agent, as the same may be amended, supplemented or otherwise
modified from time to time in accordance with its terms; provided that (i)
for purposes of any obligations of Company, no amendment, modification or
supplement to, or substitution or replacement of, such Intercreditor Agreement
shall be effective unless consented to by Company and (ii) no amendment,
modification or supplement to, or substitution or replacement of, such
Intercreditor Agreement occurring after the date on which an Equipment Note
ceases to 


A-10






be held of record by the Subordination Agent shall be
effective as against any Noteholder of such Equipment Note in relation to
clauses (ii) and (iii) of the penultimate sentence of Section 2.07 of the
Indenture unless such amendment, modification, supplement, substitution or
replacement has been consented to by such Noteholder (after which the same
shall be effective against any subsequent Noteholders of such Equipment Note).


          “International
Interest” has the meaning ascribed to the defined term “international
interest” under the Cape Town Treaty.


          “International
Registry” means the international registry established pursuant to the Cape
Town Treaty.


          “Interests”
has the meaning specified in Section 7.06(a) of the Indenture.


          “Issuance
Date” means October 11, 2007.


          “Lease”
means any lease permitted by the terms of Section 7.02(a) of the Indenture.


          “Lien”
means any mortgage, pledge, lien, encumbrance, lease, sublease, sub-sublease or
security interest.


          “Liquidity
Facilities” means, collectively, the Class A Liquidity Facility and the
Class B Liquidity Facility; provided that, for purposes of any
obligation of Company, no amendment, modification or supplement to, or
substitution or replacement of, any such Liquidity Facility shall be effective
unless consented to by Company.


          “Liquidity
Providers” means, collectively, Class A Liquidity Provider and Class B
Liquidity Provider.


          “Loan
Amount” has the meaning specified in Section 7.06(c) of the Indenture.


          “Loan
Trustee” has the meaning specified in the introductory paragraph of the Indenture.


          “Loan
Trustee Liens” means any Lien attributable to U.S. Bank or Loan Trustee
with respect to the Aircraft, any interest therein or any other portion of the
Collateral arising as a result of (i) claims against U.S. Bank or Loan
Trustee not related to its interest in the Aircraft or the administration of
the Collateral pursuant to the Indenture, (ii) acts of U.S. Bank or Loan
Trustee not permitted by, or the failure of U.S. Bank or Loan Trustee to take
any action required by, the Operative Documents or the Pass Through Documents,
(iii) claims against U.S. Bank or Loan Trustee relating to Taxes or
Claims that are excluded from the indemnification provided by Section 4.02 of
the Participation Agreement pursuant to said Section 4.02 or (iv) claims
against U.S. Bank or 


A-11






Loan Trustee arising out of the transfer by any such
party of all or any portion of its interest in the Aircraft, the Collateral,
the Operative Documents or the Pass Through Documents, except while an Event of
Default is continuing and prior to the time that Loan Trustee has received all
amounts due to it pursuant to the Indenture.


          “Loss
Payment Date” has the meaning specified in Section 7.05(a) of the
Indenture.


          “Majority
in Interest of Noteholders” means, as of a particular date of determination
and subject to Section 2.16 of the Indenture, the holders of at least a
majority in aggregate unpaid principal amount of all Equipment Notes
outstanding as of such date (excluding any Equipment Notes held by Company or
any affiliate thereof, it being understood that a Pass Through Trustee shall be
considered an affiliate of Company as long as more than 50% in the aggregate
face amount of Pass Through Certificates issued by the corresponding Pass
Through Trust are held by Company or an affiliate of Company or a Pass Through
Trustee is otherwise under the control of Company or such affiliate of Company
(unless all Equipment Notes then outstanding are held by Company or any
affiliate thereof, including Pass Through Trustees which are considered
affiliates of Company pursuant hereto) ); provided that for the purposes
of directing any action or casting any vote or giving any consent, waiver or
instruction hereunder, any Noteholder of an Equipment Note or Equipment Notes
may allocate, in such Noteholder’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, the amount (as
determined by an independent investment banker selected by Company (and,
following the occurrence and during the continuance of an Event of Default,
reasonably acceptable to Loan Trustee)), if any, by which (i) the
present value of the remaining scheduled payments of principal and interest
from the redemption date to maturity of such Equipment Note computed by
discounting each such payment on a semiannual basis from its respective 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 exceeds (ii) the
outstanding principal amount of such Equipment Note plus accrued but unpaid
interest thereon. For purposes of determining the Make-Whole Amount, “Treasury
Yield” means, at the date of determination, the interest rate (expressed as
a semiannual equivalent and 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 and trading in the public
securities market 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 and (B)
the other maturing as close as possible 


A-12






to, but later than, the Average Life Date, 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 is reported on 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
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 redemption date. “Average Life Date” means, for each
Equipment Note to be redeemed, the date which follows the redemption date by a
period equal to the Remaining Weighted Average Life at the redemption date of
such Equipment Note. “Remaining Weighted Average Life” of an Equipment
Note, at the redemption date of such Equipment Note, means the number of days
equal to the quotient obtained by dividing: (i) the sum of the products
obtained by multiplying (A) the amount of each then remaining
installment of principal, including the payment due on the maturity date of
such Equipment Note, by (B) the number of days from and including the
redemption date to but excluding the scheduled Payment Date of such principal
installment by (ii) the then unpaid principal amount of such Equipment
Note.


          “Make-Whole
Spread” means (i) in the case of Series A Equipment Notes, 0.40%, (ii) in
the case of Series B Equipment Notes, 0.55%, (iii) in the case of Series C
Equipment Notes, 0.75%, and (iv) in the case of any Additional Series, the
percentage specified in Schedule I to the Indenture (as amended at the time of
original issuance of such Additional Series) as the “Make-Whole Spread” for
such Additional Series.


          “Manufacturer”
means The Boeing Company, a Delaware corporation, and its successors and
assigns.


          “Manufacturer’s
Consent” means the Manufacturer’s Consent and Agreement to Assignment of
Warranties, dated as of the Closing Date, substantially in the form of Exhibit
D to the Participation Agreement.


          “Minimum
Insurance Amount” has the meaning specified in Section 7.06(a) of the
Indenture.


          “Moody’s”
means Moody’s Investors Service, Inc.


          “Noteholder”
means any Person in whose name an Equipment Note is registered on the Equipment
Note Register (including, for so long as it is the registered holder of any
Equipment Notes, Subordination Agent on behalf of Pass Through Trustees
pursuant to the provisions of the Intercreditor Agreement).


A-13










          “Noteholder
Liens” means any Lien attributable to any Noteholder on or against the
Aircraft, any interest therein or any other portion of the Collateral, arising
out of any claim against such Noteholder that is not related to the Operative
Documents or Pass Through Documents, or out of any act or omission of such
Noteholder that is not related to the transactions contemplated by, or that
constitutes a breach by such Noteholder of its obligations under, the Operative
Documents or the Pass Through Documents.


          “Note
Purchase Agreement” means the Note Purchase Agreement, dated as of the
Issuance Date, among Company, Subordination Agent, Escrow Agent, Paying Agent
and 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 UCC as in effect in the State of New York.


          “Operative
Documents” means, collectively, the Participation Agreement, the Indenture,
each Indenture Supplement, the Manufacturer’s Consent and the Equipment Notes.


          “Operative
Indentures” means each of the indentures under which equipment 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 Indenture).


          “Other
Party Liens” means any Lien attributable to Pass Through Trustee (other
than in its capacity as Noteholder), Subordination Agent (other than in its
capacity as Noteholder) or any Liquidity Provider on or against the Aircraft,
any interest therein, or any other portion of the Collateral arising out of any
claim against such party that is not related to the Operative Documents or Pass
Through Documents, or out of any act or omission of such party that is not
related to the transactions contemplated by, or that constitutes a breach by
such party of its obligations under, the Operative Documents or the Pass
Through Documents.


          “Participation
Agreement” has the meaning set forth under the definition of “Agreement”.


          “Parts”
means any and all appliances, parts, instruments, appurtenances, accessories,
furnishings and other equipment of whatever nature (other than (a)
complete Engines or engines and (b) Excluded Equipment), so long as the
same are incorporated or installed in or attached to the Airframe or any Engine
or so long as the same are subject to the Lien of the Indenture in accordance
with the terms of Section 7.04 thereof after removal from the Airframe or any
Engine.


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


A-14






          “Pass
Through Documents” means the Pass Through Trust Agreements, the Note
Purchase Agreement, the
Escrow Agreements, the Deposit Agreements, the Intercreditor Agreement
and the Liquidity Facilities.


          “Pass
Through Purchase Agreement” means that certain Purchase Agreement, dated as
of October 4, 2007, among Company and the initial purchasers named therein.


          “Pass
Through Trust” means each of the three separate grantor trusts created
pursuant to the Pass Through Trust Agreements to facilitate certain of the
transactions contemplated by the Operative Documents.


          “Pass
Through Trust Agreement” means each of the three separate Trust Supplements
together in each case with the Basic Pass Through Trust Agreement, as the same
may be amended, supplemented or otherwise modified from time to time in
accordance with its terms.


          “Pass
Through Trustee” has the meaning specified in the introductory paragraph to
the Participation Agreement.


          “Pass
Through Trustees” means, collectively, Pass Through Trustees under each
Pass Through Trust Agreement.


          “Past
Due Rate” means the lesser of (a) with respect to (i) any
payment made to a Noteholder under any Series of Equipment Notes, the Debt Rate
then applicable to such Series plus 1% and (ii) any other payment made
under any Operative Document to any other Person, the Debt Rate plus 1%
(computed on the basis of a year of 360 days comprised of twelve 30-day months)
and (b) the maximum rate permitted by applicable law.


          “Paying
Agent” means U.S. Bank Trust National Association, a national banking
association, as paying agent under each Escrow Agreement, and any successor
agent thereto.


          “Payment
Date” means, for any Equipment Note, each February 10 and August 10,
commencing with February 10, 2008.


          “Payment
Default” means the occurrence of an event that would give rise to an Event
of Default under Section 4.01(a) of the Indenture upon the giving of notice or
the passing of time or both.


          “Permitted
Investments” means each of (a) direct obligations of the United
States and agencies thereof; (b) obligations fully guaranteed by the
United States; (c) certificates of deposit issued by, or bankers’
acceptances of, or time deposits with, any bank, trust company or national
banking association incorporated or doing business under the laws 


A-15






of the United States or one of the states thereof
having combined capital and surplus and retained earnings of at least
$100,000,000 and having a rating of A, its equivalent or better by Moody’s or
S&P (or, if neither such organization then rates such institutions, by any
nationally recognized rating organization in the United States); (d)
commercial paper of any holding company of a bank, trust company or national
banking association described in clause (c); (e) commercial paper of
companies having a rating assigned to such commercial paper by either Moody’s
or S&P (or, if neither such organization then rates such commercial paper,
by any nationally recognized rating organization in the United States) equal to
either of the two highest ratings assigned by such organization; (f)
Dollar-denominated certificates of deposit issued by, or time deposits with,
the European subsidiaries of (i) any bank, trust company or national
banking association described in clause (c), or (ii) any other bank or
financial institution described in clause (g), (h) or (j) below; (g)
United States-issued Yankee certificates of deposit issued by, or bankers’
acceptances of, or commercial paper issued by, any bank having combined capital
and surplus and retained earnings of at least $100,000,000 and headquartered in
Canada, Japan, the United Kingdom, France, Germany, Switzerland or The
Netherlands and having a rating of A, its equivalent or better by Moody’s or
S&P (or, if neither such organization then rates such institutions, by any
nationally recognized rating organization in the United States); (h)
Dollar-denominated time deposits with any Canadian bank having a combined
capital and surplus and retained earnings of at least $100,000,000 and having a
rating of A, its equivalent or better by Moody’s or S&P (or, if neither
such organization then rates such institutions, by any nationally recognized
rating organization in the United States); (i) Canadian Treasury Bills
fully hedged to Dollars; (j) repurchase agreements with any financial
institution having combined capital and surplus and retained earnings of at
least $100,000,000 collateralized by transfer of possession of any of the
obligations described in clauses (a) through (i) above; (k) bonds, notes
or other obligations of any state of the United States, or any political
subdivision of any state, or any agencies or other instrumentalities of any
such state, including, but not limited to, industrial development bonds,
pollution control revenue bonds, public power bonds, housing bonds, other
revenue bonds or any general obligation bonds, that, at the time of their
purchase, such obligations are rated A, its equivalent or better by Moody’s or
S&P (or, if neither such organization then rates such obligations, by any
nationally recognized rating organization in the United States); (1)
bonds or other debt instruments of any company, if such bonds or other debt
instruments, at the time of their purchase, are rated A, its equivalent or
better by Moody’s or S&P (or, if neither such organization then rates such
obligations, by any nationally recognized rating organization in the United
States); (m) mortgage backed securities (i) guaranteed by the
Federal National Mortgage Association, the Federal Home Loan Mortgage
Corporation or the Government National Mortgage Association or rated AAA, its
equivalent or better by Moody’s or S&P (or, if neither such organization
then rates such obligations, by any nationally recognized rating organization
in the United States) or, if unrated, deemed to be of a comparable quality by
Loan Trustee and (ii) having an average life not to exceed 15 years as
determined by standard industry pricing practices presently in effect; (n)
asset-backed securities rated A, 


A-16






its equivalent or better by Moody’s or S&P (or, if
neither such organization then rates such obligations, by any nationally
recognized rating organization in the United States) or, if unrated, deemed to
be of a comparable quality by Loan Trustee; and (o) such other
investments approved in writing by Loan Trustee; provided that, except in
clause (m), the instruments described in the foregoing clauses shall have a
maturity of no more than six months from the date of acquisition thereof. The
bank acting as Pass Through Trustee or Loan Trustee is hereby authorized, in
making or disposing of any investment described herein, to deal with itself (in
its individual capacity) or with any one or more of its affiliates, whether it
or such affiliate is acting as an agent of Pass Through Trustee or Loan Trustee
or for any third person or dealing as principal for its own account.


          “Permitted
Lessee” means any Person to whom Company is permitted to lease the Airframe
or any Engine pursuant to Section 7.02(a) of the Indenture.


          “Permitted
Lien” has the meaning specified in Section 7.01 of the Indenture.


          “Person”
means any person, including any individual, corporation, limited liability
company, partnership, joint venture, association, joint-stock company, trust,
trustee, unincorporated organization or government or any agency or political
subdivision thereof.


          “Prospective
International Interest” has the meaning ascribed to the defined term
“prospective international interest” under the Cape Town Treaty.


          [“Purchase
Agreement” means Purchase Agreement No. 2022, dated as of October 21, 1997,
which incorporates by reference the Aircraft General Terms Agreement AGTA-DAL,
dated as of October 21, 1997, between Manufacturer and Company, as the same may
be amended, supplemented or otherwise modified from time to time in accordance
with its terms.]26 


          [“Purchase
Agreement” means Purchase Agreement No. 2024, dated as of October 21, 1997,
which incorporates by reference the Aircraft General Terms Agreement AGTA-DAL,
dated as of October 21, 1997, between Manufacturer and Company, as the same may
be amended, supplemented or otherwise modified from time to time in accordance
with its terms.]27 


          [“Purchase
Agreement” means Purchase Agreement No. 2026, dated as of October 21, 1997,
which incorporates by reference the Aircraft General Terms 


	
 

	
 

	
 


	 

	 

	
 


	
26

	
To be inserted for N371DA, N3749D, N3750D, N3751B,
 N3752, N3753, N3754A, N3755D, N3756, N3757D, and N3758Y.


	
 

	
 


	
27

	
To be inserted for N174DZ, N175DZ, N176DZ, and
 N177DZ.





A-17






Agreement AGTA-DAL, dated as of October 21, 1997,
between Manufacturer and Company, as the same may be amended, supplemented or
otherwise modified from time to time in accordance with its terms.]28 


          [“Purchase
Agreement” means Purchase Agreement No. 2025, dated as of October 21, 1997,
which incorporates by reference the Aircraft General Terms Agreement AGTA-DAL,
dated as of October 21, 1997, between Manufacturer and Company, as the same may
be amended, supplemented or otherwise modified from time to time in accordance
with its terms.]29 


          “Rating
Agencies” has the meaning specified in the Intercreditor Agreement.


          “Registration
Rights Agreement” means that certain Registration Rights Agreement among
Company, Merrill Lynch, Pierce, Fenner & Smith Incorporated and Credit
Suisse Securities (USA) LLC, dated as of October 11, 2007, as the same may be
amended, supplemented or otherwise modified from time to time in accordance
with its terms.


          “Related
Additional Series Equipment Note” means, with respect to any particular
series of Additional Series Equipment Notes and as of any date, an “Additional
Series Equipment Note”, as defined in each Related Indenture, having the same
designation (i.e., “Series D”,
“Series E” or the like) as such series of Additional Series Equipment Notes,
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
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
Indemnitee Group” has the meaning specified in Section 4.02(b) of the
Participation Agreement.


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


	
 

	
 

	
 


	 

	 

	
 


	
28

	
To be inserted for N860DA, N861DA, N862DA, N863DA,
 N864DA, N865DA, and N866DA.


	
 

	
 


	
29

	
To be inserted for N825MH, N826MH, N827MH, N834MH,
 N835MH, N836MH, N837MH, N838MH, N839MH, N840MH, N841MH, N842MH, N843MH, and
 N844MH.





A-18






          “Related
Indenture Bankruptcy Default” means any “Event of Default” under Section
4.01(f), (g), (h) or (i) of any Related Indenture, determined without giving
effect to any applicable grace period.


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


          “Related
Indenture Indemnitee” means (i) each Related Noteholder and (ii)
each Related Non-Subordination Agent Noteholder.


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


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


          “Related
Non-Subordination Agent Equipment Note” means, as of any date, any Related
Series A Equipment Note, Related Series B Equipment Note or Related Series C
Equipment Note, but only, in each case, if as of such date it is not held by
the “Subordination Agent” under the “Intercreditor Agreement”, as such terms
are defined in the applicable Related Indenture.


          “Related
Non-Subordination Agent Noteholder” means a registered holder of a Related
Non-Subordination Agent Equipment Note.


          “Related
Non-Subordination Agent Series A Equipment Note” means, as of any date, any
Related Series A Equipment Note, but only, in each case, if as of such date it is
not held by the “Subordination Agent” under the “Intercreditor Agreement”, as
such terms are defined in the applicable Related Indenture.


          “Related
Non-Subordination Agent Series B Equipment Note” means, as of any date, any
Related Series B Equipment Note, but only, in each case, if as of such date it
is not held by the “Subordination Agent” under the “Intercreditor Agreement”,
as such terms are defined in the applicable Related Indenture.


          “Related
Non-Subordination Agent Series C Equipment Note” means, as of any date, any
Related Series C Equipment Note, but only, in each case, if as of such date it
is not held by the “Subordination Agent” under the “Intercreditor Agreement”,
as such terms are defined in the applicable Related Indenture.


          “Related
Non-Subordination Agent Additional Series Equipment Note” means, as of any
date, any Related Additional Series Equipment Note, but only, in each case, if
as of such date it is not held by the “Subordination Agent” under the
“Intercreditor Agreement”, as such terms are defined in the applicable Related
Indenture.


A-19






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


          “Related
Secured Obligations” means, as of any date, the outstanding principal
amount of the Related Equipment Notes and the Related Non-Subordination Agent
Equipment Notes issued under each Related Indenture, the accrued and unpaid
interest (including post-petition interest) due thereon in accordance with such
Related Indenture as of such date, Related Make-Whole Amount, if any, with
respect thereto in accordance with such Related Indenture as of such date, and
any other amounts payable as of such date under the “Operative Documents” (as
defined in each Related Indenture).


          “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.


          “Replacement
Aircraft” means the Aircraft of which a Replacement Airframe is part.


          “Replacement
Airframe” means a Boeing [Model] aircraft or a comparable or improved model
of Manufacturer (except (a) Engines or engines from time to time
installed thereon and any and all Parts related to such Engine or engines and (b)
Excluded Equipment), that shall have been made subject to the Lien of the
Indenture pursuant to Section 7.05 thereof, together with all Parts relating to
such aircraft.


          “Replacement
Engine” means [Engine Model] engine (or an engine of the same or another
manufacturer of a comparable or an improved model and suitable for installation
and use on the Airframe with the other Engine (or any other Replacement Engine
being substituted simultaneously therewith)) that is made subject to the Lien
of the Indenture pursuant to Section 7.04 or Section 7.05 thereof, together with
all Parts relating to such engine.


          “Responsible
Officer” means, with respect to Company, its Chairman of the Board, its
President, its Chief Operating Officer, any Executive Vice President, any 


A-20






Senior Vice President, the Chief Financial Officer,
any Vice President, the Treasurer, the Controller or the Secretary.


          “S&P”
means Standard & Poor’s Ratings Services, a division of The McGraw-Hill
Companies, Inc.


          “Section
1110” means Section 1110 of the Bankruptcy Code.


          “Secured
Obligations” has the meaning specified in Section 2.06 of the Indenture.


          “Securities
Account” has the meaning specified in Section 3.07 of the Indenture.


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


          “Securities
Intermediary” has the meaning specified in Section 3.07 of the Indenture.


          “Senior
Holder” has the meaning specified in Section 2.13(c) of the Indenture.


          “Series”
means any series of Equipment Notes, including the Series A Equipment Notes,
the Series B Equipment Notes, the Series C Equipment Notes, or any Additional
Series Equipment Notes.


          “Series
A” or “Series A Equipment Notes” means Equipment Notes issued and
designated as “Series A Equipment Notes” under the Indenture, in the original
principal amount and maturities as specified in Schedule I to the Indenture
under the heading “Series A Equipment Notes” and bearing interest at the Debt
Rate for Series A Equipment Notes specified in Schedule I to the Indenture.


          “Series
B” or “Series B Equipment Notes” means Equipment Notes issued and
designated as “Series B Equipment Notes” under the Indenture, in the original
principal amount and maturities as specified in Schedule I to the Indenture
under the heading “Series B Equipment Notes” and bearing interest at the Debt
Rate for Series B Equipment Notes specified in Schedule I to the Indenture.


          “Series
C” or “Series C Equipment Notes” means Equipment Notes issued and
designated as “Series C Equipment Notes” under the Indenture, in the original
principal amount and maturities as specified in Schedule I to the Indenture
under the heading “Series C Equipment Notes” and bearing interest at the Debt
Rate for Series C Equipment Notes specified in Schedule I to the Indenture.


          “Subordination
Agent” has the meaning specified in the introductory paragraph of the
Participation Agreement.


A-21






          “Tax”
and “Taxes” mean all governmental fees (including, without limitation.
license, filing and registration fees) and all taxes (including, without
limitation, franchise, excise, stamp, value added, income, gross receipts,
sales, use and property taxes), withholdings, assessments, levies, imposts,
duties or charges, of any nature whatsoever, together with any related
penalties, fines, additions to tax or interest thereon imposed, withheld,
levied or assessed by any country, taxing authority or governmental subdivision
thereof or therein or by any international authority, including any taxes
imposed on any Person as a result of such Person being required to collect and
pay over withholding taxes.


          “Transportation
Code” means that portion of Title 49 of the United States Code comprising
those provisions formerly referred to as the Federal Aviation Act of 1958, as
amended, or any subsequent legislation that amends, supplements or supersedes
such provisions.


          “Trust
Supplements” means those agreements supplemental to the Basic Pass Through
Trust Agreement referred to in Schedule II to the Participation Agreement.


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


          “United
States” means the United States of America.


          “U.S.
Bank” has the meaning specified in the introductory paragraph of the
Participation Agreement.


          “Warranty
Bill of Sale” means the warranty (as to title) bill of sale covering the
Aircraft executed by Manufacturer or an affiliate of Manufacturer in favor of
Company and specifically referring to each Engine, as well as the Airframe,
constituting a part of the Aircraft.


          “Warranty
Rights” means all right and interest of Company in, to and under Parts 1,
2, 3, 4 and 6 of the Product Assurance Document attached as Exhibit C to the
Aircraft General Terms Agreement AGTA-DAL, dated as of October 21, 1997, but
only to the extent the same relate to continuing rights of Company in respect
of any warranty or indemnity, express or implied, pursuant to the Product
Assurance Document with respect to the Airframe, it being understood that the
Warranty Rights exclude any and all other right, title and interest of Company
in, to and under the Purchase Agreement and that the Warranty Rights are
subject to the terms of the Manufacturer’s Consent.


A-22