Document:

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           CONFIDENTIAL: ANNEXES B, C AND D AND SCHEDULES 1, 2, 3 AND
            4 OF THIS LEASE AGREEMENT ARE SUBJECT TO RESTRICTIONS ON
            DISSEMINATION SET FORTH IN SECTION 8 OF THE PARTICIPATION
                          AGREEMENT (AS DEFINED HEREIN)
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                              LEASE AGREEMENT [TN]

                                Dated as of [DD]

                                     Between

              WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION,

                         Not in its Individual Capacity,
                      except as expressly provided herein,
                          but solely as Owner Trustee,

                                     Lessor

                                       and

                           CONTINENTAL AIRLINES, INC.,

                                     Lessee

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

                    One Embraer Model EMB-145 XR Aircraft
              Bearing United States Registration No. N[REG] and
               Bearing Manufacturer's Serial No. [MSN] with two
                            Allison AE3007A1E Engines
          Bearing Engine Manufacturer's Serial Nos. CAE[E1] and CAE[E2]

          =============================================================

The right, title and interest of Lessor in and to, among other things, this
Lease Agreement has been assigned to and is subject to a security interest in
favor of Wilmington Trust Company, a Delaware banking corporation, as Mortgagee,
under the Trust Indenture and Mortgage [TN], dated as of [DD], for the benefit
of the holders of the Equipment Notes referred to in such Trust Indenture, all
to the extent provided in such Trust Indenture. This Lease Agreement has been
executed in multiple counterparts; to the extent, if any, that this Lease
Agreement constitutes chattel paper (as defined in the Uniform Commercial Code
as in effect in any applicable jurisdiction), no security interest in Lessor's
right, title and interest in and to this Lease Agreement may be perfected
through the delivery or possession of any counterpart of this Lease Agreement
other than the counterpart of this Lease Agreement that contains the original
receipt executed by Wilmington Trust Company, as Mortgagee.

<PAGE>

                                    CONTENTS

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

SECTION 2.  DELIVERY AND ACCEPTANCE....................................1
            2.1  Delivery and Lease of Aircraft........................1
            2.2  Acceptance by Lessee..................................1

SECTION 3.  TERM AND RENT..............................................2
            3.1  Term..................................................2
            3.2  Rent..................................................2
            3.3  Payments..............................................4

SECTION 4.  DISCLAIMER; CERTAIN AGREEMENTS OF LESSOR;
            SECTION 1110 MATTERS.......................................4
            4.1  Disclaimer............................................4
            4.2  Certain Agreements of Lessor..........................5
            4.3  Quiet Enjoyment.......................................5
            4.4  Investment of Funds Held as Security..................5
            4.5  Title Transfers by Lessor.............................6
            4.6  Lessor's Interest in Certain Engines..................6
            4.7  Lease For U.S. Federal Income Tax Law
                 Purposes; Section 1110 of Bankruptcy Code.............7

SECTION 5.  RETURN OF AIRCRAFT.........................................7
            5.1  Compliance with Annex B...............................7
            5.2  Storage and Related Matters...........................7
            5.3  Return of Other Engines...............................7

SECTION 6.  LIENS......................................................8

SECTION 7.  REGISTRATION, OPERATION, POSSESSION, SUBLEASING
            AND RECORDS................................................8
            7.1  Registration and Operation............................8
            7.2  Possession...........................................10
            7.3  Certain Limitations on Subleasing or Other
                 Relinquishment of Possession.........................13

SECTION 8.  MAINTENANCE; REPLACEMENT AND POOLING OF PARTS;
            ALTERATIONS, MODIFICATIONS AND ADDITIONS; OTHER
            LESSEE COVENANTS..........................................14
            8.1  Maintenance; Replacement and Pooling of Parts;
                 Alterations, Modifications and Additions.............14
            8.2  Information, Certificates, Notices and Reports.......14

SECTION 9.  VOLUNTARY TERMINATION UPON OBSOLESCENCE...................15
            9.1  Right of Termination.................................15
            9.2  Election by Lessor to Sell...........................16
            9.3  Retention of Aircraft by Lessor......................18

<PAGE>

SECTION 10. LOSS, DESTRUCTION, REQUISITION, ETC.......................19
            10.1  Event of Loss With Respect to Aircraft..............19
            10.2  Event of Loss With Respect to an Engine.............20
            10.3  Conditions to any Replacement.......................21
            10.4  Conveyance to Lessee................................23
            10.5  Application of Payments.............................23
            10.6  Requisition of Aircraft for Use.....................24
            10.7  Requisition of an Engine for Use....................24
            10.8  Application of Payments.............................24
            10.9  Application of Payments During Existence
                  of a Lease Event of Default.........................24

SECTION 11. INSURANCE.................................................25
            11.1  Lessee's Obligation to Insure.......................25
            11.2  Insurance for Own Account...........................25
            11.3  Indemnification by Government in Lieu of
                  Insurance...........................................25
            11.4  Application of Insurance Proceeds...................25
            11.5  Application of Payments During Existence
                  of Default..........................................26

SECTION 12. INSPECTION................................................26

SECTION 13. ASSIGNMENT; MERGER; SUCCESSOR OWNER TRUSTEE...............27
            13.1  In General..........................................27
            13.2  Merger of Lessee....................................27
            13.3  Assignment Security for Lessor's Obligations........28
            13.4  Successor Owner Trustee.............................28

SECTION 14. LEASE EVENTS OF DEFAULT...................................28
            14.1  Payments............................................29
            14.2  Insurance...........................................29
            14.3  Other Covenants.....................................29
            14.4  Representations and Warranties......................29
            14.5  Bankruptcy and Insolvency...........................29

SECTION 15. REMEDIES AND WAIVERS......................................30
            15.1  Remedies............................................30
            15.2  Limitations Under CRAF..............................32
            15.3  Right to Perform for Lessee.........................33
            15.4  Determination of Fair Market Sales Value............33
            15.5  Remedies Cumulative.................................33

<PAGE>

SECTION 16. LESSEE'S OBLIGATIONS; NO SETOFF, COUNTERCLAIM, ETC........34

SECTION 17. RENEWAL AND PURCHASE OPTIONS..............................34
            17.1  Notices Generally...................................34
            17.2  Renewal Options.....................................35
            17.3  Purchase Option.....................................36
            17.4  Appraisals..........................................37

SECTION 18. MISCELLANEOUS.............................................38
            18.1  Amendments..........................................38
            18.2  Severability........................................38
            18.3  Third-Party Beneficiary.............................38
            18.4  Reproduction of Documents...........................38
            18.5  Counterparts........................................39
            18.6  Notices.............................................39
            18.7  GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE....39
            18.8  No Waiver...........................................40
            18.9  Entire Agreement....................................40

ANNEXES, EXHIBITS AND SCHEDULES

ANNEX A        Definitions
ANNEX B        Return Conditions
ANNEX C        Maintenance
ANNEX D        Insurance
EXHIBIT A      Form of Lease Supplement
EXHIBIT B      Form of Return Acceptance Supplement
SCHEDULE 1     Certain Terms
SCHEDULE 2     Basic Rent
SCHEDULE 3     Stipulated Loss Value
SCHEDULE 4     Termination Value
SCHEDULE 5     Permitted Countries
SCHEDULE 6     Placards

<PAGE>

                              LEASE AGREEMENT [TN]

            LEASE AGREEMENT [TN], dated as of [DD] (this "Agreement" or
"Lease"), between (a) WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION, a
national banking association, not in its individual capacity, except as
expressly provided herein, but solely as Owner Trustee (this and all other
capitalized terms used but not defined herein shall have the respective meanings
ascribed thereto in Section 1 below) ("Lessor" or "Owner Trustee"), and (b)
CONTINENTAL AIRLINES, INC., a Delaware corporation ("Lessee").

                                    RECITALS

            A. Lessor and Lessee are parties to the Participation Agreement,
pursuant to which, among other things, Lessor and Lessee have agreed to enter
into this Agreement.

            B. Pursuant to the Trust Agreement, Owner Participant has authorized
Lessor to enter into this Agreement.

            NOW, THEREFORE, for and in consideration of the premises and the
mutual agreements contained herein and for other good and valuable
consideration, the sufficiency and receipt of which are hereby acknowledged, the
parties hereto agree as follows:

SECTION 1.      DEFINITIONS AND CONSTRUCTION

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

SECTION 2.      DELIVERY AND ACCEPTANCE

      2.1      DELIVERY AND LEASE OF AIRCRAFT

            Lessor hereby agrees (subject to the satisfaction or waiver of the
conditions set forth in Section 5 of the Participation Agreement) to lease to
Lessee for the Term and Lessee hereby agrees (subject to the satisfaction or
waiver of the conditions set forth in Section 5 of the Participation Agreement)
to lease from Lessor for the Term, the Aircraft, commencing immediately upon
acquisition of the Aircraft by Lessor pursuant to the Participation Agreement.

      2.2      ACCEPTANCE BY LESSEE

            By executing and delivering Lease Supplement No. 1, Lessee confirms
to Lessor that Lessee has duly and irrevocably accepted delivery of the Aircraft
for all purposes of this Agreement.

<PAGE>

SECTION 3.      TERM AND RENT

      3.1      TERM

            The Aircraft shall be leased hereunder for the Term, unless this
Agreement or the leasing of the Aircraft is earlier terminated in accordance
with any provision of this Agreement. Lessee shall have the option to renew the
leasing of the Aircraft hereunder pursuant to, and subject to the terms and
conditions of, Section 17, for the Renewal Lease Term.

      3.2      RENT

               3.2.1       BASIC RENT

            (a) During the Base Lease Term, Lessee shall pay to Lessor, on each
Payment Date, in the manner and in the funds of the type specified in Section
3.3, Basic Rent in the amount specified in the column with the heading "Total
Basic Rent" in Schedule 2 for such Payment Date, which shall be rent paid in
advance for the Payment Period ending on the next Payment Date (except that the
first payment shall include rent in arrears since the Closing Date).

            (b) Notwithstanding anything to the contrary in any Operative
Agreement, the amount of the payment of Basic Rent due and payable on each
Payment Date shall be at least sufficient to pay in full, as of such Payment
Date (assuming timely payment of the Equipment Notes prior to such Date), the
aggregate principal amount of scheduled installments due on the Equipment Notes
outstanding on such Payment Date, together with the accrued and unpaid interest
thereon, due on such Payment Date in respect of the Equipment Notes; provided,
however, that no installment of Basic Rent shall be increased to the extent such
increase would be based upon (i) any attachment or diversion of Basic Rent on
account of Lessor Liens attributable to Lessor or Owner Participant, (ii) any
modification of the payment terms of the Equipment Notes, or (iii) the
acceleration of any Equipment Note or Equipment Notes due solely to the
occurrence of an Indenture Event of Default that does not constitute a Lease
Event of Default.

               3.2.2       SUPPLEMENTAL RENT

            Lessee shall pay to Lessor, or to whomever shall be entitled
thereto, any and all Supplemental Rent when and as the same shall become due and
owing. Lessee will also pay to Lessor, or to whomever shall be entitled thereto
as Supplemental Rent, to the extent permitted by applicable Law, interest at the
Payment Due Rate on any part of any amount of Rent (including, without
limitation, Supplemental Rent) not paid by 12:30 p.m., New York time, on the
date when due (so long as, in the case of any Person not a party to the
Participation Agreement, Lessee had received timely notice of the account to
which such payment was required to be made), for the period from and including
the date on which the same was due to, but excluding, the date of payment in
full.

<PAGE>

               3.2.3       ADJUSTMENTS TO STIPULATED LOSS VALUES AND
                               TERMINATION VALUES

            (a) In the event that Lessee is required to indemnify the Owner
Participant under the Tax Indemnity Agreement, the Stipulated Loss Value
percentages set forth in Schedule 3 and the Termination Value percentages set
forth in Schedule 4 shall be recalculated (upwards or downwards) by Owner
Participant, using the same methods and assumptions (except to the extent such
assumptions shall be varied to take into account the Loss or Foreign Tax Credit
Loss (as each such term is defined in the Tax Indemnity Agreement) that is the
subject of such indemnification and any prior or contemporaneous Loss or Foreign
Tax Credit Loss) used to calculate the Stipulated Loss Value percentages and the
Termination Value percentages on the Closing Date, in order to maintain the
Owner Participant's Net Economic Return.

            (b) All adjustments pursuant to Section 3.2.3(a) shall be made as
promptly as practicable after either Owner Participant or Lessee gives notice to
the other that an event has occurred that requires an adjustment. Owner
Participant and Lessee shall give prompt notice to the other of any event
requiring an adjustment. Any recalculation of the percentages of Stipulated Loss
Value and Termination Value shall be prepared by Owner Participant, subject to
verification at the request of Lessee in accordance with Section 3.2.3(c), on
the basis of the same methodology and assumptions used by Owner Participant in
determining the percentages of Stipulated Loss Value and Termination Value as of
the Closing Date, except as such assumptions have been modified to reflect the
events giving rise to adjustments hereunder. Promptly after an adjustment is
made hereunder, Owner Participant shall deliver to Lessee a description of such
adjustment, setting forth in reasonable detail the calculation thereof. All
adjustments required pursuant to Section 3.2.3(a) shall be set forth in a Lease
Supplement or in an amendment to this Lease, and, promptly after execution
thereof by Lessor and Lessee, Lessee shall give a copy thereof to Mortgagee.

            (c) If Lessee believes that any calculations by Owner Participant
pursuant to Section 3.2.3(b) are in error, and if, after consultation, Lessee
and Owner Participant are unable to agree on an adjustment, then a nationally
recognized firm of accountants selected by Lessee and reasonably satisfactory to
Owner Participant shall verify such calculations. Owner Participant will make
available to such firm, but not, in any circumstances, to Lessee or any
representative of Lessee, the methodology and assumptions referred to in Section
3.2.3(b) and any modifications thereto made to reflect the events giving rise to
adjustments hereunder (subject to the execution by such firm of a
confidentiality agreement, reasonably acceptable to Owner Participant,
prohibiting disclosure of such methodology and assumptions to any third party).
The determination by such firm of accountants shall be final absent manifest
error. Lessee will pay the reasonable costs and expenses of such further
verification by such accountants, provided that if it results in a decrease in
the present value (discounted at the Debt Rate) of any Stipulated Loss Value or
Termination Value by ten or more basis points from such Stipulated Loss Value or
Termination Value as recalculated by the Owner Participant, then the Owner
Participant will pay such costs and expenses.

<PAGE>

      3.3      PAYMENTS

            (a) Payments of Rent by Lessee shall be paid by wire transfer of
immediately available Dollars, not later than 12:30 p.m., New York time, on the
date when due, to the account of Lessor specified in Schedule 1 to the
Participation Agreement or to such other account in the United States as
directed by Lessor to Lessee in writing at least 10 Business Days prior to the
date such payment of Rent is due or, in the case of any payment of Supplemental
Rent expressly payable to a person other than Lessor, to the person that shall
be entitled thereto to such account in the United States as such person may
specify from time to time to Lessee at least 10 Business Days prior to the date
such payment of Rent is due.

            (b) Except as otherwise expressly provided herein, whenever any
payment of Rent shall be due on a day that is not a Business Day, such payment
shall be made on the next day that is a Business Day, and, if such payment is
made on such next Business Day, no interest shall accrue on the amount of such
payment during such extension.

            (c) So long as Lessee has not received written notice from the
Mortgagee that the Trust Indenture has been discharged, and notwithstanding
Section 3.3(a), Lessor hereby irrevocably directs, and Lessee agrees, that all
payments of Rent and all other amounts payable by Lessee hereunder, other than
Excluded Payments, shall be paid directly to Mortgagee on behalf of Lessor by
wire transfer of immediately available Dollars to the account of Mortgagee
specified in Schedule 1 to the Participation Agreement, or to such other account
in the United States as Mortgagee may specify by written notice to Lessor and
Lessee at least 10 Business Days prior to the date such payment of Rent is due.

            (d) Excluded Payments shall be paid by wire transfer of immediately
available Dollars to the account of the person specified in the Participation
Agreement or, if not so specified, to such account in the United States as may
be specified by such person by written notice to Lessor and Lessee from time to
time at least 10 Business Days prior to the date such payment is required to be
made.

            (e) All computations of interest under this Agreement shall be made
on the basis of a year of 360 days comprised of twelve 30-day months.

SECTION 4.      DISCLAIMER; CERTAIN AGREEMENTS OF LESSOR; SECTION 1110 MATTERS

      4.1      DISCLAIMER

            LESSOR LEASES AND LESSEE TAKES THE AIRCRAFT "AS-IS, WHERE-IS."
LESSEE ACKNOWLEDGES AND AGREES THAT AS BETWEEN LESSEE AND EACH OF LESSOR,
MORTGAGEE AND ANY PARTICIPANT (i) LESSEE HAS SELECTED THE AIRCRAFT AND
MANUFACTURER THEREOF AND (ii) NONE OF LESSOR, MORTGAGEE AND ANY PARTICIPANT
MAKES, HAS MADE OR SHALL BE DEEMED TO HAVE MADE, AND EACH WILL BE DEEMED TO HAVE
EXPRESSLY DISCLAIMED, ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO:

<PAGE>

      (v)   THE AIRWORTHINESS, VALUE, CONDITION, DESIGN, OPERATION, ANY IMPLIED
            WARRANTY OF MERCHANTABILITY OR FITNESS FOR USE OR FOR ANY PARTICULAR
            PURPOSE OF THE AIRFRAME, ANY ENGINE OR ANY PART THEREOF;

      (w)   THE QUALITY OF THE MATERIAL OR WORKMANSHIP WITH RESPECT TO THE
            AIRFRAME, ANY ENGINE OR ANY PART THEREOF;

      (x)   THE ABSENCE OF LATENT OR ANY OTHER DEFECT IN THE AIRFRAME, ANY
            ENGINE OR ANY PART THEREOF, WHETHER OR NOT DISCOVERABLE;

      (y)   THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR
            COPYRIGHT OR THE LIKE; OR

      (z)   THE ABSENCE OF OBLIGATIONS BASED ON STRICT LIABILITY IN TORT, OR ANY
            OTHER REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED,
            WITH RESPECT TO THE AIRFRAME, ANY ENGINE OR ANY PART THEREOF.

      4.2      CERTAIN AGREEMENTS OF LESSOR

            Unless a Lease Event of Default shall have occurred and be
continuing, Lessor agrees to make available to Lessee such rights as Lessor may
have under any warranty with respect to the Aircraft made, or made available, by
Airframe Manufacturer or any of its subcontractors or suppliers, as the case may
be, pursuant to and in accordance with the terms of the Purchase Agreement
Assignment.

      4.3      QUIET ENJOYMENT

            So long as no Lease Event of Default shall have occurred and be
continuing, Lessor shall not interfere with Lessee's rights hereunder to
continued possession, use and operation of, and quiet enjoyment of, the Aircraft
during the Term. The foregoing, however, shall not be construed or deemed to
modify or condition in any respect the obligations of the Lessee pursuant to
Section 16, which obligations are absolute and unconditional.

      4.4      INVESTMENT OF FUNDS HELD AS SECURITY

               4.4.1       INVESTMENT

            Any moneys required to be paid to or retained by Lessor that are
required to be paid to Lessee or applied as provided herein shall, until paid to
Lessee as provided herein or applied as provided herein, be invested by Lessor
from time to time as directed in writing by Lessee (or, if Lessee fails to so
direct, by or as directed by Lessor in its sole discretion) and at the expense
and risk of Lessee in Cash Equivalents so long as such Cash Equivalents
specified by Lessee or Lessor, as the case may be, can be acquired by Lessor
using its best efforts; provided, that so long as the Lien of the Trust
Indenture shall not have been discharged, such moneys shall be invested and held
by Mortgagee, as assignee of Lessor, in accordance with this Lease and upon

<PAGE>

discharge of such Lien, Mortgagee shall pay any such money held by it to Lessor
to be held and invested in accordance with this Section.

               4.4.2       PAYMENT OF GAIN OR LOSS

            Any net gain (including interest received) realized as the result of
investments pursuant to Section 4.4.1 (net of any fees, commissions and other
reasonable expenses, if any, incurred in connection with such investment) shall
be held and applied in the same manner as the principal amount is to be held and
applied hereunder. Lessee will promptly pay to Lessor, on demand, the amount of
any loss realized as the result of any such investment (together with any fees,
commissions and other reasonable expenses, if any, incurred in connection with
such investment), such amount so paid to be held and applied by Lessor as
contemplated in Section 4.4.1 above.

               4.4.3       LIMITATION OF LIABILITY

            All investments under this Section 4.4 shall be at the expense and
risk of Lessee, and Lessor and Mortgagee shall not be liable for any loss
resulting from any investment made under this Section 4.4 other than by reason
of its willful misconduct or gross negligence. Any such investment may be sold
(without regard to its maturity) by Lessor without instructions whenever such
sale is necessary to make a distribution required by this Lease.

      4.5      TITLE TRANSFERS BY LESSOR

            If Lessor shall be required to transfer title to the Aircraft,
Airframe or any Engine to Lessee or any other person pursuant to this Lease,
then (a) Lessor shall (1) transfer to Lessee or such other person, as the case
may be, all of Lessor's right, title and interest in and to the Aircraft,
Airframe or such Engine, as the case may be, free and clear of all Lessor Liens
but otherwise on an "as-is", "where is" basis, (2) so long as the Lien of the
Trust Indenture has not been discharged, comply with the Trust Indenture
relating to the release of the Aircraft, Airframe or such Engine, (3) assign to
Lessee or such other person, as the case may be, if and to the extent permitted
under the Purchase Agreement, all warranties of Airframe Manufacturer with
respect to the Aircraft, Airframe or such Engine, and (4) assign to Lessee or
such other person, as the case may be, if and to the extent permitted, all
claims, if any, for damage to the Aircraft, Airframe or such Engine, in each
case free of Lessor Liens, and without recourse or warranty of any kind
whatsoever (except as to the transfer described in clause (1) above and as to
the absence of such Lessor Liens, as aforesaid), and (b) Lessor shall promptly
deliver to Lessee or such other person, as the case may be, a bill of sale and
agreements of assignment, evidencing such transfer and assignment, and such
other instruments of transfer, all in form and substance reasonably satisfactory
to Lessee (or such other person, as the case may be), as Lessee (or such other
person, as the case may be) may reasonably request.

      4.6      LESSOR'S INTEREST IN CERTAIN ENGINES

            Lessor hereby agrees for the benefit of each lessor, conditional
seller, indenture trustee or secured party of any engine leased to, or purchased
by, Lessee or any Permitted Sublessee subject to a lease, conditional sale,
trust indenture or other security agreement that Lessor, its successors and
assigns will not acquire or claim, as against such lessor, conditional seller,

<PAGE>

indenture trustee or secured party, any right, title or interest in any engine
as the result of such engine being installed on the Airframe at any time while
such engine is subject to such lease, conditional sale, trust indenture or other
security agreement and owned by such lessor or conditional seller or subject to
a trust indenture or security interest in favor of such indenture trustee or
secured party.

      4.7      LEASE FOR U.S. FEDERAL INCOME TAX LAW PURPOSES; SECTION 1110
               OF BANKRUPTCY CODE

            (a) Lessee and Lessor agree that this Lease is, and shall be treated
as, a lease for U.S. federal income tax purposes of the Aircraft, Airframe,
Engines and Parts.

            (b) It is the intention of each of Lessee and Lessor that Lessor
(and Mortgagee as assignee of Lessor under the Trust Indenture) shall be
entitled to the benefits of Section 1110 with respect to the right to take
possession of the Aircraft, Airframe, Engines and Parts and to enforce any of
its other rights or remedies as provided in this Lease.

SECTION 5.      RETURN OF AIRCRAFT

      5.1      COMPLIANCE WITH ANNEX B

            Lessee shall comply with each of the provisions of Annex B hereto,
which provisions are hereby incorporated by this reference as if set forth in
full herein.

      5.2      STORAGE AND RELATED MATTERS

            If Lessor gives written notice to Lessee not less than 60 days nor
more than 120 days prior to the end of the Term requesting storage of the
Aircraft upon its return hereunder, Lessee will provide Lessor, or cause Lessor
to be provided, with outdoor parking facilities for the Aircraft for a period up
to 30 days, commencing on the date of such return, and upon request of Lessor to
Lessee made at least 10 days prior to the end of such initial 30 day period, for
an additional 120 day period commencing upon expiration of such initial period,
at such storage facility in the 48 contiguous states of the United States on
Lessee's route system for Similar Aircraft as Lessor may select as the site for
such return of the Aircraft. Such storage shall be at Lessor's risk, and Lessor
shall pay all applicable storage fees, except that Lessee shall pay the parking
fees for the initial 30 day storage period; PROVIDED that Lessee's obligation to
provide parking shall be subject to Lessor entering into an agreement prior to
the commencement of the storage period with the storage facility providing,
among other things, that Lessor shall bear all maintenance charges and other
costs (other than parking fees for the initial 30 day period) incurred.

      5.3      RETURN OF OTHER ENGINES

            In the event that any Engine owned by Lessor shall not be installed
on the Airframe at the time of return hereunder, Lessee shall be required to
return the Airframe hereunder with a Replacement Engine meeting the requirements
of, and in accordance with, Section 10 hereof and Annex B hereto. Thereupon,

<PAGE>

Lessor will transfer to Lessee the Engine constituting part of such Aircraft but
not installed on such Airframe at the time of the return of the Airframe.

SECTION 6.      LIENS

            Lessee shall not, directly or indirectly, create, incur, assume or
suffer to exist any Lien on or with respect to the Aircraft, the Airframe, any
Engine or any Part, title to any of the foregoing or any interest of Lessee
therein, or the Lessee's rights in and to this Lease or any Permitted Sublease,
except (a) the respective rights of Lessor, Mortgagee, the Participants or
Lessee under the Operative Agreements, or of any Permitted Sublessee under any
Permitted Sublease; (b) Lessor Liens with respect to any Participant, Lessor or
Mortgagee; (c) the rights of others under agreements or arrangements to the
extent permitted by the terms of Sections 7.2 and 7.3 or Annex C; (d) Liens for
Taxes of Lessee (and its U.S. federal tax law consolidated group), or Liens for
Taxes of any Tax Indemnitee (and its U.S. federal tax law consolidated group)
for which Lessee is obligated to indemnify such Tax Indemnitee under any of the
Lessee Operative Agreements, in any such case either not yet due or being
contested in good faith by appropriate proceedings so long as such Liens and
such proceedings do not involve any material danger of the sale, forfeiture or
loss of the Aircraft, the Airframe, any Engine or any Part thereof; (e)
materialmen's, mechanics', workers', repairers', employees' or other like Liens
arising in the ordinary course of business for amounts the payment of which is
either not yet delinquent for more than 35 days or is being contested in good
faith by appropriate proceedings, so long as such Liens and such proceedings do
not involve any material danger of the sale, forfeiture or loss of the Aircraft,
the Airframe, any Engine or any Part thereof; and (f) Liens arising out of any
judgment or award against Lessee (or against any Permitted Sublessee), so long
as such judgment shall, within 30 days after the entry thereof, have been
discharged or vacated, or execution thereof stayed pending appeal or shall have
been discharged, vacated or reversed within 30 days after the expiration of such
stay, and so long as during any such 30-day period there is not, or any such
judgment or award does not involve, any material risk of the sale, forfeiture or
loss of the Aircraft, the Airframe or any Engine. Lessee shall promptly (and in
any case, by the end of the Term), at its own expense, take (or cause to be
taken) such action as may be necessary to duly discharge (by bonding or
otherwise) any Lien not excepted above if the same shall at any time arise in
respect of the Aircraft, the Airframe, any Engine or any Part during the Term.

SECTION 7.      REGISTRATION, OPERATION, POSSESSION, SUBLEASING AND RECORDS

      7.1      REGISTRATION AND OPERATION

               7.1.1       REGISTRATION AND RECORDATION

            Subject to the compliance by Lessor and Owner Participant with their
respective obligations under Section 13 of the Participation Agreement, Lessee
shall cause the Aircraft to be, and at all times during the Term to remain, duly
registered with the FAA under the Act or with such other country of registry as
shall be permitted under Section 7.1.2 below, in the name of Lessor as owner and
lessor (except to the extent that such registration under the Act cannot be
effected with the FAA because of Lessor's or Owner Participant's failure to

<PAGE>

comply with the citizenship requirements for registration of the Aircraft under
the Act). Lessor shall execute any and all such documents as Lessee (or any
Permitted Sublessee) may reasonably request for the purpose of effecting and
continuing such registration. Unless Mortgagee has given Lessee notice that the
Trust Indenture has been discharged, Lessee shall also cause the Trust Indenture
to be duly recorded and at all times maintained of record as a first-priority
perfected mortgage (subject to Permitted Liens) on the Aircraft, the Airframe
and each of the Engines (except to the extent that such perfection or priority
cannot be maintained as a result of the failure by Lessor or Mortgagee to
execute and deliver any necessary documents).

               7.1.2       REREGISTRATION

            So long as no Lease Event of Default shall have occurred and be
continuing, Lessee may, by written notice to Lessor, request to change the
country of registration of the Aircraft. Any such change in registration shall
be effected only in compliance with, and subject to all of the conditions set
forth in, Section 7.6.11 of the Participation Agreement.

               7.1.3       MARKINGS

            If permitted by applicable Law, on or reasonably promptly after the
Closing, Lessee will cause to be affixed to, and maintained in, the cockpit of
the Airframe and on each Engine, in each case, in a clearly visible location (it
being understood that the location of such placards, as identified to the Owner
Participant prior to the Closing, shall be deemed to be in compliance with this
requirement), a placard of a reasonable size and shape bearing the legend, in
English, set forth in Schedule 6. Such placards may be removed temporarily, if
necessary, in the course of maintenance of the Airframe or Engines. If any such
placard is damaged or becomes illegible, Lessee shall promptly replace it with a
placard complying with the requirements of this Section 7.1.3.

               7.1.4       COMPLIANCE WITH LAWS

            Lessee shall not, and shall not allow any other person to, operate,
use, maintain, service, repair or overhaul the Aircraft (a) in violation of any
Law binding on or applicable to the Aircraft, the Airframe or any Engine, or (b)
in violation of any airworthiness certificate, license or registration of any
Government Entity relating to Lessee or the Aircraft, the Airframe or any
Engine, except (1) immaterial or non-recurring violations with respect to which
corrective measures are taken promptly by Lessee or a Permitted Sublessee, as
the case may be, upon discovery thereof, and (2) to the extent Lessee or any
Permitted Sublessee is contesting the validity or application of any such Law or
requirement relating to any such certificate, license or registration in good
faith in any reasonable manner that does not involve a material danger of the
sale, forfeiture or loss of the Aircraft, the Airframe, or any Engine, any risk
of criminal liability or a greater than de minimis risk of material civil
penalties being imposed against Lessor, Mortgagee or any Participant or impair
the Lien of the Trust Indenture.

               7.1.5       OPERATION

            Lessee agrees not to operate, use or locate the Aircraft, the
Airframe or any Engine, or allow the Aircraft, the Airframe or any Engine to be
operated, used or located (a) in any area excluded from coverage by any
insurance required by the terms of Section 11, except in the case of a

<PAGE>

requisition by the U.S. Government where Lessee obtains an indemnity in lieu of
such insurance from the U.S. Government, or insurance from the U.S. Government,
covering such area, in accordance with Section 11.3 or (b) in any recognized
area of hostilities unless fully covered in accordance with Annex D by war-risk
insurance as required by the terms of Section 11 (including, without limitation,
Section 11.3), unless in any case referred to in this Section 7.1.5 the Aircraft
is only temporarily operated, used or located in such area as a result of an
emergency, equipment malfunction, navigational error, hijacking, weather
condition or other similar unforeseen circumstances, so long as Lessee
diligently and in good faith proceeds to remove the Aircraft from such area.

      7.2      POSSESSION

            Lessee will not, without the prior written consent of Lessor and
Owner Participant (which consent shall not be unreasonably withheld), sublease
or otherwise in any manner deliver, transfer or relinquish possession of the
Aircraft, the Airframe or any Engine or install any Engine, or permit any Engine
to be installed, on any airframe other than the Airframe; PROVIDED, HOWEVER,
subject to the provisions of Section 7.3, Lessee may, without such prior written
consent:

               7.2.1       INTERCHANGE AND POOLING

            Subject or permit any Permitted Sublessee to subject any Engine to
normal interchange agreements or pooling agreements or arrangements, in each
case customary in the commercial airline industry and entered into by Lessee or
such Permitted Sublessee, as the case may be, in the ordinary course of
business; PROVIDED, HOWEVER, that if Lessor's title to any such Engine is
divested under any such agreement or arrangement, then such Engine shall be
deemed to have suffered an Event of Loss as of the date of such divestiture,
with the effect that Lessee shall be required to replace such Engine with a
Replacement Engine meeting the requirements of, and in accordance with, Section
10.

               7.2.2       TESTING AND SERVICE

            Deliver or permit any Permitted Sublessee to deliver possession of
the Aircraft, Airframe, any Engine or any Part (i) to the manufacturer thereof
or to any third-party maintenance provider, for testing, service, repair,
maintenance or overhaul work on the Aircraft, Airframe, any Engine or any Part,
or, to the extent required or permitted by the terms of Annex C, for alterations
or modifications in or additions to the Aircraft, Airframe or any Engine or (ii)
to any Person for the purpose of transport to a Person referred to in the
preceding clause (i).

               7.2.3       TRANSFER TO U.S. GOVERNMENT

            Transfer or permit any Permitted Sublessee to transfer possession of
the Aircraft, Airframe or any Engine to the U.S. Government, in which event
Lessee shall promptly notify Lessor and Mortgagee in writing of any such
transfer of possession and, in the case of any transfer pursuant to CRAF, in
such notification shall identify by name, address and telephone numbers the
Contracting Office Representative or Representatives for the Military Airlift

<PAGE>

Command of the United States Air Force to whom notices must be given and to whom
requests or claims must be made to the extent applicable under CRAF.

               7.2.4       INSTALLATION OF ENGINES ON OWNED AIRCRAFT

            Install or permit any Permitted Sublessee to install an Engine on an
airframe owned by Lessee or such Permitted Sublessee, as the case may be, free
and clear of all Liens, except (a) Permitted Liens and those that do not apply
to the Engines and (b) the rights of third parties under normal interchange or
pooling agreements and arrangements of the type that would be permitted under
Section 7.2.1.

               7.2.5       INSTALLATION OF ENGINES ON OTHER AIRFRAMES

            Install or permit any Permitted Sublessee to install an Engine on an
airframe leased to Lessee or such Permitted Sublessee, or purchased by Lessee or
such Permitted Sublessee subject to a mortgage, security agreement, conditional
sale or other secured financing arrangement, but only if (a) such airframe is
free and clear of all Liens, except (i) the rights of the parties to such lease,
or any such secured financing arrangement, covering such airframe and (ii) Liens
of the type permitted by clauses (a) and (b) of Section 7.2.4 and (b) Lessee or
Permitted Sublessee, as the case may be, shall have received from the lessor,
mortgagee, secured party or conditional seller, in respect of such airframe, a
written agreement (which may be a copy of the lease, mortgage, security
agreement, conditional sale or other agreement covering such airframe), whereby
such Person agrees that it will not acquire or claim any right, title or
interest in, or Lien on, such Engine by reason of such Engine being installed on
such airframe at any time while such Engine is subject to this Lease or is owned
by Lessor.

               7.2.6       INSTALLATIONS OF ENGINES ON FINANCED AIRCRAFT

            So long as no Payment Default, Bankruptcy Default or Lease Event of
Default shall have occurred and be continuing, install or permit any Permitted
Sublessee to install an Engine on an airframe owned by Lessee or such Permitted
Sublessee, leased to Lessee or such Permitted Sublessee, or purchased by Lessee
or such Permitted Sublessee subject to a conditional sale or other security
agreement under circumstances where neither Section 7.2.4 or 7.2.5 is
applicable; PROVIDED, HOWEVER, that any such installation shall be deemed an
Event of Loss with respect to such Engine, and Lessee shall comply with Section
10.2 hereof in respect thereof.

               7.2.7       SUBLEASING

            With respect to the Aircraft, Airframe or any Engine, so long as no
Payment Default, Bankruptcy Default or Lease Event of Default has occurred and
is continuing, enter into a sublease with any Permitted Air Carrier, but only
if:

            (a) Lessee shall provide written notice to Lessor of Lessee's intent
to enter into a Permitted Sublease (except if the Permitted Sublessee is
Express) and of any permitted sub-sublease, such notice in the event of a
sublease to a U.S. Air Carrier to be given promptly after entering into any such
sublease or, in the case of a sublease to any other Permitted Air Carrier, 20
days in advance of entering into such sublease;

<PAGE>

            (b) At the time that Lessee enters into such Permitted Sublease or a
sublessee enters into a permitted sub-sublease, such Permitted Sublessee shall
not be subject to any bankruptcy, insolvency, liquidation, reorganization,
dissolution or similar proceeding, shall not be seeking any reorganization or
any readjustment of its debts and shall not be, or shall not have substantially
all of its property, in the possession of any liquidator, trustee, receiver or
similar person and, if such Permitted Sublessee is a Permitted Foreign Air
Carrier, the United States then maintains normal diplomatic relations with the
country in which such Permitted Sublessee has its principal executive offices;

            (c) Any such Permitted Sublease (including any permitted
sub-sublease) (i) shall include provisions for the maintenance, operation,
possession, inspection and insurance of the Aircraft that are the same in all
material respects as the applicable provisions of this Lease, (ii) shall provide
that, except if Express or any subsidiary of Lessee is the Permitted Sublessee,
such Permitted Sublessee may not further sublease or transfer its interests
(except transfers of the type permitted in Sections 7.2.1 through 7.2.6,
inclusive) in the Aircraft, Airframe or Engines, (iii) shall not extend beyond
the end of the Term and (iv) shall be expressly subject and subordinate to all
the terms of this Agreement and to the rights, powers and remedies of Lessor
hereunder;

            (d) In connection with a sublease (including any permitted
sub-sublease) to a Permitted Foreign Air Carrier, Lessee shall have furnished
Lessor and Mortgagee an opinion of counsel, reasonably satisfactory to Lessor
and Mortgagee, in the country of domicile of such Permitted Foreign Air Carrier,
that (i) the terms of such sublease are the legal, valid and binding obligations
of the parties thereto enforceable under the Laws of such jurisdiction, (ii) it
is not necessary for Owner Participant, Lessor or Mortgagee to register or
qualify to do business in such jurisdiction, if not already so registered or
qualified, as a result, in whole or in part, of the proposed sublease, (iii)
Lessor's title to, and Mortgagee's Lien in respect of, the Aircraft, Airframe
and Engines will be recognized in such jurisdiction, (iv) the Laws of such
jurisdiction of domicile require fair compensation by the government of such
jurisdiction, payable in a currency freely convertible into Dollars, for the
loss of title to the Aircraft, Airframe or Engines in the event of the
requisition by such government of such title (unless Lessee shall provide
insurance in the amounts required with respect to hull insurance under Section
11 covering the requisition of title to the Aircraft, Airframe or Engines by the
government of such jurisdiction so long as the Aircraft, Airframe or Engines are
subject to such sublease), (v) the agreement of such Permitted Foreign Air
Carrier that its rights under the sublease are subject and subordinate to all
the terms of this Lease is enforceable against such Permitted Foreign Air
Carrier under applicable Law, and (vi) there is no tort liability of the owner
or Lessor of an aircraft not in possession thereof under the Laws of such
country (it being agreed that, in the event such latter opinion cannot be given
in a form satisfactory to the Owner Participant and Mortgagee, such opinion
shall be waived if insurance reasonably satisfactory to the Owner Participant
and Mortgagee is provided to cover such risk);

            (e) No such sublease shall be made to a "tax exempt entity" as
defined in Section 168(h)(2) of the Code (including any Permitted Foreign Air
Carrier) prior to the close of the Tax Attribute Period, unless Lessee prepays
on a lump-sum basis any liability due under the Tax Indemnity Agreement as a
result of such sublease based upon the assumption that such sublease were to
continue for the remainder of the term of such sublease, PROVIDED, that

<PAGE>

notwithstanding the foregoing, such sublease may be made without requiring such
prepayment during the taxable year in which the seventh anniversary of the
Closing Date occurs so long as the Aircraft is not "used predominantly outside
the United States" within the meaning of Section 168(g) of the Code during such
taxable year;

            (f) Lessee shall furnish to Lessor and Mortgagee evidence reasonably
satisfactory to Lessor and Mortgagee that the insurance required by Section 11
remains in effect at the time such sublease (including any permitted
sub-sublease) is entered into;

            (g) All necessary documents shall have been duly filed, registered
or recorded in such public offices as may be required fully to preserve the
title of Lessor, and the first priority perfected security interest (subject to
Permitted Liens) of Mortgagee, in the Aircraft, Airframe and Engines;

            (h) Except for the initial sublease to Express, Lessee shall
reimburse Lessor and Mortgagee for all of its reasonable out-of-pocket fees and
expenses, including, without limitation, reasonable fees and disbursements of
counsel, incurred by Lessor and Mortgagee in connection with any such sublease;
and

            (i) For all purposes of this Section 7.2.7, the term "sublease"
shall be deemed to include interchange agreements with respect to the Aircraft
or Airframe.

      7.3      CERTAIN LIMITATIONS ON SUBLEASING OR OTHER RELINQUISHMENT OF
               POSSESSION

            Notwithstanding anything to the contrary in Section 7.2:

            (a) The rights of any person that receives possession of the
Aircraft in accordance with Section 7.2 shall be subject and subordinate to all
the terms of this Lease, and to Lessor's rights, powers and remedies hereunder,
including, without limitation (i) Lessor's right to repossess the Aircraft
pursuant to Section 15, (ii) Lessor's right to terminate and avoid such
sublease, delivery, transfer or relinquishment of possession upon the occurrence
of a Lease Event of Default and (iii) the right to require such person to
forthwith deliver the Aircraft, the Airframe and Engines subject to such
transfer upon the occurrence of a Lease Event of Default;

            (b) Lessee shall remain primarily liable hereunder for the
performance of all the terms of this Lease to the same extent as if such
transfer had not occurred, and no transfer of possession of the Aircraft, the
Airframe, any Engine or any Part shall in any way discharge or diminish any of
Lessee's obligations to Lessor hereunder or under any Operative Agreement;

            (c) Lessee shall ensure that no sublease, delivery, transfer or
relinquishment permitted under Section 7.2 shall affect the United States
registration of the Aircraft, unless also made in accordance with the provisions
of Section 7.1.2;

            (d) Any event that constitutes or would, with the passage of time,
constitute an Event of Loss under paragraph (c), (d), or (e) of the definition
of such term (as set forth in Annex A) shall not be deemed to violate the
provisions of Section 7.2; and

<PAGE>

            (e) Any Wet Lease shall not constitute a delivery, transfer or
relinquishment of possession for purposes of Section 7.2 and shall not be
prohibited by the terms hereof.

SECTION 8.      MAINTENANCE; REPLACEMENT AND POOLING OF PARTS; ALTERATIONS,
                MODIFICATIONS AND ADDITIONS; OTHER LESSEE COVENANTS

      8.1      MAINTENANCE; REPLACEMENT AND POOLING OF PARTS; ALTERATIONS,
               MODIFICATIONS AND ADDITIONS

            At all times during the Term, Lessee shall comply with, or cause to
be complied with, each of the provisions of Annex C, which provisions are hereby
incorporated by this reference as if set forth in full herein.

      8.2      INFORMATION, CERTIFICATES, NOTICES AND REPORTS

               8.2.1       FINANCIAL INFORMATION

            Lessee will furnish to Lessor and Mortgagee:

            (a) Within 90 days after the end of each of the first three fiscal
quarters in each fiscal year of Lessee, a consolidated balance sheet of Lessee
as of the end of such quarter and related statements of income and cash flows
for the period commencing at the end of the previous fiscal year and ending with
the end of such quarter, setting forth in each case in comparative form the
corresponding figures for the corresponding period in the preceding fiscal year,
prepared in accordance with GAAP; PROVIDED THAT so long as Lessee is subject to
the reporting requirements of the Securities Exchange Act of 1934, a copy of
Lessee's report on Form 10-Q for such fiscal quarter (excluding exhibits) or an
e-mail notice that such report has been filed with the SEC and providing a
website address at which such report may be accessed will satisfy this paragraph
(a).

            (b) Within 120 days after the end of each fiscal year of Lessee, a
consolidated balance sheet of Lessee as of the end of such fiscal year and
related statements of income and cash flows of Lessee for such fiscal year, in
comparative form with the preceding fiscal year, prepared in accordance with
GAAP, together with a report of Lessee's independent certified public
accountants with respect to their audit of such financial statements; PROVIDED
THAT so long as Lessee is subject to the reporting requirements of the
Securities Exchange Act of 1934, a copy of Lessee's report on Form 10-K for such
fiscal year (excluding exhibits) or an e-mail notice that such report has been
filed with the SEC and providing a website address at which such report may be
accessed will satisfy this paragraph (b).

               8.2.2       ANNUAL CERTIFICATE

            Within 120 days after the close of each fiscal year of Lessee,
Lessee shall deliver to Lessor and Mortgagee an Officer's Certificate of Lessee
(which, in lieu of delivery pursuant to Section 18.6, may be delivered by e-mail
and, in such case, need not include a manual signature of a required officer but
instead shall set forth a typed signature of such officer) to the effect that
such officer is familiar with or has reviewed or caused to be reviewed the

<PAGE>

relevant terms of this Lease and the other Lessee Operative Agreements and that
such officer does not have knowledge of the existence as at the date of such
certificate of any Lease Event of Default or if there is knowledge of a Lease
Event of Default, the steps that are being taken with respect thereto.

               8.2.3       INFORMATION FOR FILINGS

            Lessee shall promptly furnish to Owner Participant, Mortgagee or
Lessor such information (other than with respect to the citizenship of Owner
Participant and Lessor) within Lessee's or any Permitted Sublessee's possession,
or reasonably available to or obtainable by Lessee or such Permitted Sublessee,
as may be required to enable Lessor timely to file any reports required to be
filed by it as lessor under the Lease, to enable Mortgagee timely to file any
reports required to be filed by it as Mortgagee under the Trust Indenture or to
enable Owner Participant to timely file any reports required to be filed by it,
as the beneficiary of the Trust Estate, in any such case, with any Government
Entity because of, or in connection with, the interest of Owner Participant,
Mortgagee or Lessor in the Aircraft, Airframe or Engines, this Lease or any
other part of the Trust Estate; provided, however, that with respect to any such
information which Lessee reasonably deems commercially sensitive or
confidential, Owner Participant, Mortgagee or Lessor, as the case may be, shall
afford Lessee a reasonable opportunity to seek from any such Government Entity a
waiver of the obligation of Owner Participant, Mortgagee or Lessor to file any
such information, or shall consent to the filing of such information directly by
Lessee in lieu of filing by Owner Participant, Mortgagee or Lessor, and if any
such waiver or consent is evidenced to the reasonable satisfaction of Owner
Participant, Mortgagee or Lessor, as the case may be, then Lessee shall not be
required to furnish such information to Owner Participant, Mortgagee or Lessor.

SECTION 9.      VOLUNTARY TERMINATION UPON OBSOLESCENCE

      9.1      RIGHT OF TERMINATION

            (a) Unless a Lease Event of Default, Payment Default or Bankruptcy
      Default shall have occurred and be continuing, Lessee shall have the right
      at its option to terminate this Lease during the Base Lease Term,
      effective only on a Termination Date occurring after the end of the Tax
      Attribute Period, if:

            (i) Lessee makes a good faith determination that the Aircraft either
      has become economically obsolete or is surplus to Lessee's requirements
      and the Chief Financial Officer or Treasurer of Lessee so certifies in
      writing to Lessor; and

            (ii) written notice of Lessee's exercise of its option to terminate
      this Agreement shall be given to Lessor not less than 90 days prior to the
      proposed Termination Date specified in such notice.

            (b) Lessor shall notify Lessee and Mortgagee of Lessor's intention
      to sell or retain the Aircraft, as provided in this Section 9, no later
      than 45 days after Lessee gives Lessor written notice pursuant to Section
      9.1(a)(ii). Any failure by Lessor to give such notice of its election
      shall be deemed to be an election to sell the Aircraft, as provided in
      this Section 9.

<PAGE>

            (c) Any termination pursuant to this Section 9 shall become
      effective on the date of the sale, if any, pursuant to Section 9.2 or upon
      the date of termination and payment by Lessee and Lessor in accordance
      with Section 9.3 if Lessor elects to retain the Aircraft.

      9.2      ELECTION BY LESSOR TO SELL

               9.2.1       BIDS; CLOSING OF SALE

            Unless Lessor has given Lessee notice of Lessor's election to retain
the Aircraft, Lessee, as agent for Lessor, shall, until the date ten Business
Days prior to the proposed Termination Date, use commercially reasonable efforts
to obtain bids for a cash purchase of the Aircraft and Lessor may, if it desires
to do so, also seek to obtain such bids. In the event Lessee receives any bid,
Lessee shall promptly, and in any event at least ten Business Days prior to the
proposed date of sale, certify to Lessor in writing the amount and terms of such
bid, the proposed date of such sale and the name and address of the person (who
shall not be Lessee or any Affiliate of Lessee or any person with whom Lessee or
any such Affiliate has an arrangement for the future use of the Aircraft by
Lessee or any such Affiliate) submitting such bid. In the event Lessor receives
any bid on or prior to the date ten Business Days prior to the proposed
Termination Date, Lessor shall, at least ten Business Days prior to the proposed
date of sale, certify to Lessee in writing the amount and terms of such bid, the
proposed date of such sale and the name and address of the person submitting
such bid.

               9.2.2       CLOSING OF SALE

            (a) On the proposed Termination Date (i) Lessee shall deliver the
      Airframe and Engines or engines constituting part of the Aircraft to the
      bidder, if any, which shall have submitted the highest cash bid (net of
      applicable brokerage commissions) on or before the date ten Business Days
      prior to such Termination Date, in the same manner as if delivery were
      made to Lessor pursuant to Section 5 and Annex B and in full compliance
      with the terms thereof, and shall duly transfer to Lessor title to any
      such engines not owned by Lessor, all in accordance with the terms of
      Section 5 and Annex B, and (ii) Lessor shall simultaneously therewith
      transfer the Airframe and Engines or engines to such bidder, in the manner
      described in Section 4.5, against cash paid to Lessor in the amount of
      such highest bid (net of applicable brokerage commissions and all
      reasonable out-of-pocket fees and expenses incurred by Lessor, Mortgagee
      and Owner Participant in connection with such sale and the related
      termination of this Lease (collectively, the "Expenses of Sale") and in
      the manner and in funds of the type specified in Section 3.3.

            (b) All proceeds of any sale described in Section 9.2.2(a), net of
      Expenses of Sale, shall be paid to and retained by Lessor and, on such
      Termination Date, and as a condition precedent to such sale and the
      delivery of the Aircraft and Engines or engines to such bidder, Lessee
      shall pay to Lessor, in the manner and in funds of the type specified in
      Section 3.3:

            (i) all unpaid Basic Rent due at any time prior to such Termination
      Date, but excluding Basic Rent due on such Termination Date; plus

            (ii) an amount equal to the excess, if any, of the Termination Value
      for the Aircraft, computed as of such Termination Date, over the proceeds
      of such sale, net of Expenses of Sale; plus

<PAGE>

            (iii) as provided in Section 3.2.2, interest on the amounts
      specified in the foregoing clause (i) at the Payment Due Rate from and
      including the date on which any such amount was due to the date of payment
      of such amount in full.

            As a further condition precedent to such sale and delivery, Lessee
shall pay all Supplemental Rent due by Lessee to Lessor, Mortgagee or the
Participants under this Lease (including, without limitation, (A) Supplemental
Rent in respect of Make-Whole Amount, if any, payable pursuant to Section
2.10(b) of the Trust Indenture in connection with a prepayment of the Equipment
Notes upon such sale, (B) all interest charges provided for hereunder or under
any other Lessee Operative Agreement with respect to the late payment of any
amounts so payable, (C) the Expenses of Sale).

            (c) Upon and subject to any such sale and receipt of proceeds by
      Lessor, and full and final payment of all amounts described in Section
      9.2.2(b), and compliance by Lessee with all the other provisions of this
      Section 9.2,

            (i) Lessor will transfer to Lessee, in accordance with Section 4.5,
      any Engines constituting part of the Aircraft but which were not then
      installed on the Airframe and sold therewith; and

            (ii) the obligation of Lessee to pay Basic Rent, on or after the
      Payment Date with reference to which Termination Value is computed, shall
      cease, and the Term for the Aircraft shall end effective as of the date of
      such sale.

            (d) A sale of the Aircraft pursuant to this Section 9.2.2 shall take
      place only on a Termination Date. Subject to Section 9.3, if no sale shall
      have occurred on or as of the proposed Termination Date, this Agreement
      shall continue in full force and effect, and all of Lessee's obligations
      shall continue, including, without limitation, its obligation to pay Rent,
      in each case, as if the notice under Section 9.1 shall not have been given
      and, subject to Section 9.2.3, Lessee may give another notice pursuant to
      Section 9.1.

               9.2.3       WITHDRAWAL OF NOTICE OF TERMINATION

            (a) Lessee may withdraw any notice given pursuant to Section 9.1 at
any time on or before the date 20 days prior to the proposed Termination Date,
whereupon this Agreement shall continue in full force and effect and all of
Lessee's obligations shall continue, including, without limitation, its
obligation to pay Rent, in each case, as if the notice under Section 9.1 shall
not have been given and Lessee may give another notice pursuant to Section 9.1;
PROVIDED that Lessee shall not be entitled to give more than three notices
pursuant to Section 9.1.

            (b) Lessee shall pay all reasonable out-of-pocket fees and expenses
of Lessor, Mortgagee and Owner Participant in connection with any notice of
termination withdrawn by Lessee or in connection with any notice of termination
pursuant to which a sale of the Aircraft fails to occur.

<PAGE>

      9.3      RETENTION OF AIRCRAFT BY LESSOR

            (a) If Lessor shall elect to retain the Aircraft in accordance with
      Section 9.1, on the proposed Termination Date:

            (i) Lessor shall pay, or cause to be paid, in the manner and in
      funds of the type specified in Section 3.3, to the Mortgagee an amount
      sufficient to prepay all outstanding Equipment Notes pursuant to Section
      2.10(b) of the Trust Indenture;

            (ii) subject to receipt by Mortgagee of the funds described in
      paragraph (i) above, Lessee shall deliver the Airframe and Engines or
      engines constituting part of the Aircraft to Lessor pursuant to Section 5
      and Annex B and in full compliance with the terms thereof, and shall duly
      transfer to Lessor title to any such engines not owned by Lessor, all in
      accordance with the terms of Section 5 and Annex B;

            (iii) Lessee shall pay to Lessor, in the manner and in funds of the
      type specified in Section 3.3:

            (1) all unpaid Basic Rent due at any time prior to such Termination
      Date, but excluding Basic Rent due on such Termination Date; plus

            (2) as provided in Section 3.2.2, interest on the amounts specified
      in the foregoing clause (1) at the Payment Due Rate from and including the
      date on which any such amount was due to the date of payment of such
      amount in full; and

            (iv) Lessee shall also pay all Supplemental Rent due and payable by
      Lessee to Lessor, Mortgagee or the Participants under this Lease
      (including without limitation (A) Supplemental Rent in respect of
      Make-Whole Amount, if any, payable pursuant to Section 2.10(b) of the
      Trust Indenture in connection with a prepayment of the Equipment Notes,
      (B) all interest charges provided for hereunder or under any other Lessee
      Operative Agreement with respect to the late payment of any amounts so
      payable, and (C) the reasonable out-of-pocket fees and expenses incurred
      by Lessor and Owner Participant in connection with such termination and
      sale).

            (b) Upon full and final payment to Lessor, Mortgagee and the
      Participants of the amounts described in Section 9.3(a), and compliance by
      Lessee with all the other applicable provisions of this Section 9.3,

            (i) Lessor will transfer to Lessee, in accordance with Section 4.5,
      any Engines constituting part of the Aircraft but which were not then
      installed on the Airframe and returned therewith; and

            (ii) The obligation of Lessee to pay Basic Rent otherwise due on or
      after the Termination Date shall cease, and the Term for the Aircraft
      shall end effective as of such Termination Date.

<PAGE>

SECTION 10.     LOSS, DESTRUCTION, REQUISITION, ETC.

      10.1     EVENT OF LOSS WITH RESPECT TO AIRCRAFT

               10.1.1      NOTICE AND ELECTION

            (a) Upon the occurrence of an Event of Loss with respect to the
Airframe, and any Engine or Engines installed thereon at the time of such Event
of Loss, Lessee shall promptly (and in any event within 10 Business Days after
such occurrence) give Lessor and Mortgagee written notice of such Event of Loss.
Within 45 days after such occurrence, Lessee shall give Lessor and Mortgagee
written notice of Lessee's election to make payment in respect of such Event of
Loss, as provided in Section 10.1.2, or to replace the Airframe, and any such
Engines, as provided in Section 10.1.3.

            (b) Any failure by Lessee to give such notice of its election shall
be deemed to be an election of the option set forth in Section 10.1.2. In
addition, Lessee shall not be entitled to elect the option set forth in Section
10.1.3 if, at the time Lessor receives such notice from Lessee, there shall have
occurred and be continuing a Payment Default, a Bankruptcy Default or a Lease
Event of Default.

            (c) For purposes of Section 10.1.2, an Event of Loss with respect to
the Airframe shall be deemed to constitute an Event of Loss with respect to the
Aircraft. For purposes of Section 10.1.3, any Engine not actually suffering an
Event of Loss shall not be required to be replaced.

               10.1.2      PAYMENT OF LOSS AND TERMINATION OF LEASE

            (a)  If Lessee elects, in accordance with Section 10.1.1, to make
payment in respect of any such Event of Loss, then Lessee shall pay, in the
manner and in funds of the type specified in Section 3.3, the following amounts:

            (i)  on the Stipulated Loss Value Date next following the earlier of
     (x) the 120th day following the date of the occurrence of such Event of
     Loss, and (y) the twentieth day following the receipt of insurance proceeds
     with respect to such occurrence (but in any event not earlier than the date
     of Lessee's election under Section 10.1.1 to make payment under this
     Section 10.1.2), Lessee shall pay to Lessor:

            (1)   all unpaid Basic Rent or Renewal Rent, as the case may be, due
                  at any time prior to such Stipulated Loss Value Date; plus

            (2)   the Stipulated Loss Value of the Aircraft computed as of such
                  Stipulated Loss Value Date; plus

            (3)   as provided in Section 3.2.2, interest on the amount specified
                  in the foregoing clause (1) at the Payment Due Rate from and
                  including the date on which any such amount was due to the
                  date of payment of such amount in full;

<PAGE>

      PROVIDED, that if such Stipulated Loss Value Date is a Payment Date,
      Lessee shall not be obligated to pay the Basic Rent or Renewal Rent
      otherwise required to be paid on such date; and

            (ii) on or before the date required for payment of the amounts
      specified in paragraph (i) above, Lessee shall also pay to Lessor,
      Mortgagee and the Participants all other amounts due and payable by Lessee
      to Lessor, Mortgagee and the Participants under this Lease, the
      Participation Agreement or any other Lessee Operative Agreement.

            (b) Upon payment in full of all amounts described in the foregoing
      paragraph (a),(i) the obligation of Lessee to pay Basic Rent or Renewal
      Rent hereunder with respect to the Aircraft shall terminate, (ii) the Term
      for the Aircraft shall end and (iii) Lessor will transfer the Aircraft to
      Lessee, as-is and where-is, and subject to any insurer's salvage rights,
      but otherwise in the manner described in Section 4.5.

               10.1.3      REPLACEMENT OF AIRFRAME AND ENGINES

            (a) If Lessee elects, in accordance with Section 10.1.1, to replace
the Airframe, and any Engine actually suffering the Event of Loss, then Lessee
shall, as promptly as possible and in any event within 120 days after the
occurrence of such Event of Loss, convey or cause to be conveyed to Lessor, in
compliance with Section 10.3 and as replacement for the Airframe, and any such
Engine, title to a Replacement Airframe (which shall comply with paragraph (b)
below), and for each such Engine a Replacement Engine, in each case free and
clear of all Liens other than Permitted Liens. If Lessee makes such election,
but for any reason fails or is unable to effect such replacement within such
time period and in compliance with the requirements set forth in Section 10.3,
then Lessee shall be deemed to have initially made the election set forth in
Section 10.1.2 with the effect that Lessee shall immediately pay, in the manner
and in funds of the type specified in Section 3.3, the amounts required under,
and in accordance with, Section 10.1.2.

            (b) Any such Replacement Airframe shall be an airframe that is the
same model as the Airframe to be replaced thereby, or an improved model, and
that has a value, utility and remaining useful life (without regard to hours or
cycles remaining until the next regular maintenance check), at least equal to
the Airframe to be replaced thereby (assuming that such Airframe had been
maintained in accordance with the Lease). Any such Replacement Engine shall meet
the requirements of, and be conveyed by Lessee to Lessor in accordance with,
Section 10.2 (other than the notice requirement set forth in Section 10.2.1).

      10.2     EVENT OF LOSS WITH RESPECT TO AN ENGINE

               10.2.1      NOTICE

            Upon the occurrence of an Event of Loss with respect to an Engine
under circumstances in which an Event of Loss with respect to the Airframe has
not occurred, Lessee shall promptly (and in any event within 10 Business Days
after such occurrence) give Lessor written notice of such Event of Loss.

<PAGE>

               10.2.2      REPLACEMENT OF ENGINE

            Lessee shall, promptly and in any event within 90 days after the
occurrence of such Event of Loss, convey or cause to be conveyed to Lessor, in
compliance with Section 10.3 and as replacement for the Engine with respect to
which any Event of Loss occurred, title to a Replacement Engine free and clear
of all Liens other than Permitted Liens. Such Replacement Engine shall be an
engine manufactured by Engine Manufacturer that is the same model as the Engine
to be replaced thereby, or an improved model, and that is suitable for
installation and use on the Airframe, and that has a value, utility and
remaining useful life (without regard to hours and cycles remaining until
overhaul) at least equal to the Engine to be replaced thereby (assuming that
such Engine had been maintained in accordance with the Lease).

               10.2.3      ENGINE EXCHANGE

            Unless a Payment Default, Bankruptcy Default or Lease Event of
Default shall have occurred and be continuing, upon not less than five (5)
Business Days' prior written notice to Lessor, Lessee may replace any Engine
leased hereunder with another engine (the "Exchanged Engine") meeting the
requirements of Section 10.2.2. Such Exchanged Engine shall be deemed to be a
"Replacement Engine" and Lessor and Lessee shall comply with the provisions of
Section 10.3 with regard to the Exchanged Engine and the Engine so replaced.

      10.3     CONDITIONS TO ANY REPLACEMENT

               10.3.1      DOCUMENTS

            Prior to or at the time of conveyance of title to any Replacement
Airframe or Replacement Engine to Lessor, Lessee shall take each of the
following actions:

            (a) furnish Lessor with a full warranty bill of sale duly conveying
to Lessor such Replacement Airframe or Replacement Engine, in form and substance
reasonably satisfactory to Lessor and cause such Replacement Airframe to be duly
registered in the name of Lessor pursuant to the Act;

            (b) cause (i) a Lease Supplement subjecting such Replacement
Airframe or Replacement Engine to this Lease, duly executed by Lessee, to be
delivered to Lessor for execution and, upon such execution, to be filed for
recordation with the FAA pursuant to the Act, (ii) a Trust Indenture Supplement,
subjecting such Replacement Airframe or Replacement Engine to the Trust
Indenture, to be delivered to Lessor for execution and, upon execution, to be
filed for recordation with the FAA pursuant to the Act and (iii) such Financing
Statements and other filings, as Lessor or Mortgagee may reasonably request,
duly executed by Lessee and, to the extent applicable, Lessor and Mortgagee (and
Lessor and Mortgagee shall execute and deliver the same), to be filed in such
locations as any such party may reasonably request;

            (c) furnish such evidence of compliance with the insurance
provisions of Section 11 with respect to such Replacement Airframe or
Replacement Engine as Lessor may reasonably request;

<PAGE>

            (d) furnish an opinion or opinions of Lessee's counsel (which may be
Lessee's legal department) reasonably satisfactory to Lessor and Mortgagee and
addressed to Lessor and Mortgagee to the effect that (i) such full warranty bill
of sale referred to in Section 10.3.1(a) constitutes an effective instrument for
the conveyance of title to the Replacement Airframe or Replacement Engine and
(ii) in the case of a Replacement Airframe, Lessor and Mortgagee, as assignee of
Lessor, will be entitled to the benefits of Section 1110 with respect to the
Replacement Airframe, provided that such opinion referred to in this clause (ii)
need not be delivered to the extent that immediately prior to such replacement
the benefits of Section 1110 were not, solely by reason of a change in law or
court interpretation thereof, available to Lessor or Mortgagee, as assignee of
Lessor;

            (e) furnish an opinion of Lessee's aviation law counsel reasonably
satisfactory to Lessor and Mortgagee and addressed to Lessor and Mortgagee as to
the due registration of any such Replacement Airframe, the ownership of title to
such Replacement Airframe by Owner Trustee and the absence of Liens of record
with respect to such Replacement Airframe (other than Permitted Liens) and the
due filing for recordation of each Lease Supplement and Trust Indenture
Supplement with respect to such Replacement Airframe or Replacement Engine under
the Act;

            (f) with respect to the replacement of the Airframe, and any Engine
installed thereon at the time of the subject Event of Loss, if requested by
Lessor and at Lessee's expense, furnish a certified report of a qualified
independent aircraft appraiser, reasonably satisfactory to Lessor, certifying
that such Replacement Airframe and any such Replacement Engine complies with the
value, utility and remaining useful life requirements set forth in Section
10.1.3(b); and

            (g) furnish a certificate of a qualified aircraft engineer (who may
be an employee of Lessee) certifying that such Replacement Engine complies with
the value, utility and remaining useful life requirements set forth in Section
10.2.2.

            Lessor and Lessee understand and agree that if at the time of any
replacement of the Airframe or any Engine, as contemplated in this Section 10,
the Airframe was registered in a jurisdiction other than the United States, then
the requirements set forth above in this Section 10.3.1 relating to compliance
with the requirements of the Act or the FAA, shall be deemed to refer to the
comparable applicable Law of, and the Aviation Authority of, such other
jurisdiction.

               10.3.2      OTHER OBLIGATIONS

            (a) Lessor and Lessee agree that, upon any Replacement Airframe
becoming the Airframe hereunder, and upon any Replacement Engine becoming an
Engine hereunder, this Lease shall continue to be, and shall be treated as, a
lease for U.S. federal income tax purposes of, among other things, such
Replacement Airframe and such Replacement Engine. Without limiting the
foregoing, Lessee and Lessor intend that Lessor shall, in all events, be
entitled to the benefits of Section 1110 with respect to any Replacement
Airframe or Replacement Engine and Lessee and Lessor shall cooperate and take
such action as the other may reasonably request so as to ensure that Lessor
shall be entitled to such benefits.

<PAGE>

            (b) No Event of Loss with respect to an Engine, or with respect to
an Airframe, shall result in, or otherwise allow or permit (other than as
provided in Section 10.1.2(b)), any reduction, deferral, discharge or other
change in the timing or amount of any Rent payable by Lessee hereunder, and
(subject to such Section 10.1.2(b)) Lessee shall pay all such Rent and other
amounts as though such Event of Loss had not occurred.

      10.4     CONVEYANCE TO LESSEE

            Upon compliance by Lessee with the applicable terms of Sections
10.1.3, 10.2 and 10.3.1, Lessor will transfer to Lessee the Airframe or Engine,
as the case may be, with respect to which such Event of Loss occurred, in
accordance with Section 4.5.

      10.5     APPLICATION OF PAYMENTS

            Any amounts, other than insurance proceeds in respect of damage or
loss not constituting an Event of Loss (the application of which is provided for
in Section 11), received at any time by Lessor, Lessee or any Permitted
Sublessee from any Government Entity or any other Person in respect of any Event
of Loss will be applied as follows:

               10.5.1      REPLACEMENT OF AIRFRAME AND ENGINES

            If such amounts are received with respect to the Airframe, and any
Engine installed thereon at the time of such Event of Loss, upon compliance by
Lessee with the applicable terms of Section 10.1.3 with respect to the Event of
Loss for which such amounts are received, such amounts shall be paid over to, or
retained by, Lessee.

               10.5.2      LOSS OF ENGINE

            If such amounts are received with respect to an Engine (other than
an Engine installed on the Airframe at the time such Airframe suffers an Event
of Loss), upon compliance by Lessee with the applicable terms of Section 10.2.2
with respect to the Event of Loss for which such amounts are received, such
amounts shall be paid over to, or retained by, Lessee.

               10.5.3      PAYMENT OF LOSS

            If such amounts are received, in whole or in part, with respect to
the Airframe, and Lessee makes, has made or is deemed to have made the election
set forth in Section 10.1.2, such amounts shall be applied as follows:

            (a) FIRST, if the sum described in Section 10.1.2 has not then been
paid in full by Lessee, such amounts shall be paid to Lessor (or to Mortgagee so
long as Mortgagee has not given notice to Lessee that the Lien of the Trust
Indenture has been duly discharged, except with respect to Excluded Payments) to
the extent necessary to pay in full such sum;

            (b) SECOND, the remainder, if any, shall be paid to Lessee.

<PAGE>

      10.6     REQUISITION OF AIRCRAFT FOR USE

            If any Government Entity shall requisition for use the Airframe and
the Engines or engines installed thereon, and if the same does not constitute an
Event of Loss, Lessee shall promptly notify Lessor and Mortgagee of such
requisition and all of Lessee's obligations under this Agreement shall continue
to the same extent as if such requisition had not occurred; PROVIDED, HOWEVER,
that if the Airframe and Engines or engines installed thereon are not returned
to Lessor by Lessee at the end of the Term, unless Lessor shall have elected,
upon notice given not less than 30 days nor more than 120 days before the end of
the Term, not to treat such event as constituting an Event of Loss with respect
to the Aircraft, Lessee shall be obligated to pay the Stipulated Loss Value and
all other amounts payable pursuant to Section 10.1.2 with respect to the
Aircraft. If Lessor shall have elected not to treat such event as an Event of
Loss, Lessee shall be obligated to return the Airframe and Engines or engines to
Lessor pursuant to, and in all other respects to comply with the provisions of,
Section 5 promptly upon their return by such Government Entity, and Lessee shall
pay to Lessor upon such return an amount equal to the average daily Basic Rent
payable by Lessee during the Term for each day after the end of the Term to but
excluding the day of such return, up to a maximum of 30 days.

      10.7     REQUISITION OF AN ENGINE FOR USE

            If any Government Entity shall requisition for use any Engine but
not the Airframe, Lessee will replace such Engine by complying with the
applicable terms of Sections 10.2 and 10.3 to the same extent as if an Event of
Loss had occurred with respect to such Engine, and any payments received by
Lessor or Lessee from such Government Entity with respect to such requisition
shall be paid or retained in accordance with Section 10.5.2.

      10.8     APPLICATION OF PAYMENTS

            All payments received by Lessor or Lessee, or any Permitted
Sublessee, from any Government Entity for the use of the Airframe and Engines or
engines installed thereon during the Term shall be paid over to, or retained by,
Lessee and all payments received by Lessor or Lessee from any Government Entity
for the use of the Airframe and Engines or engines installed thereon after the
Term shall be paid over to, or retained by, Lessor; provided that, if such
requisition constitutes an Event of Loss, then all such payments shall be paid
over to Lessor (or to Mortgagee so long as Mortgagee has not given notice to
Lessee that the Trust Indenture has been duly discharged), and held as provided
in Section 10.5.

      10.9     APPLICATION OF PAYMENTS DURING EXISTENCE OF A LEASE EVENT OF
               DEFAULT

            Any amount described in this Section 10 that is payable or
creditable to, or retainable by, Lessee shall not be paid or credited to, or
retained by, Lessee if at the time such payment, credit or retention would
otherwise occur a Lease Event of Default, Payment Default or Bankruptcy Default
shall have occurred and be continuing, but shall instead be held by or paid over
to Lessor (or to Mortgagee so long as Mortgagee has not given notice to Lessee
that the Trust Indenture has been duly discharged) as security for the
obligations of Lessee under this Lease and the other Lessee Operative Agreements
and shall be invested pursuant to Section 4.4 hereof unless and until Lessor
shall have demanded liquidated damages pursuant to Section 15.1.3 or 15.1.4 and

<PAGE>

such amount is applied, at the option of Lessor, or upon the written request of
Lessee to Lessor, from time to time during the continuance of a Lease Event of
Default, to Lessee's obligations under this Lease as and when due, it being
understood that any such application shall be made to such obligations of Lessee
as Lessor may determine in its sole discretion. At such time as there shall not
be continuing any Lease Event of Default, Payment Default or Bankruptcy Default,
such amount shall be paid to Lessee to the extent not previously applied in
accordance with this Section 10.9.

SECTION 11.     INSURANCE

      11.1     LESSEE'S OBLIGATION TO INSURE

            Lessee shall comply with, or cause to be complied with, each of the
provisions of Annex D, which provisions are hereby incorporated by this
reference as if set forth in full herein.

      11.2     INSURANCE FOR OWN ACCOUNT

            Nothing in Section 11 shall limit or prohibit (a) Lessee from
maintaining the policies of insurance required under Annex D with higher limits
than those specified in Annex D, or (b) Lessor, Mortgagee or Owner Participant
from obtaining insurance for its own account (and any proceeds payable under
such separate insurance shall be payable as provided in the policy relating
thereto); PROVIDED, HOWEVER, that no insurance may be obtained or maintained
that would limit or otherwise adversely affect the coverage of any insurance
required to be obtained or maintained by Lessee pursuant to this Section 11 and
Annex D.

      11.3     INDEMNIFICATION BY GOVERNMENT IN LIEU OF INSURANCE

            Lessor agrees to accept, in lieu of insurance against any risk with
respect to the Aircraft described in Annex D, indemnification from, or insurance
provided by, the U.S. Government, or upon the written consent of Lessor and
Mortgagee, other Government Entity, against such risk in an amount that, when
added to the amount of insurance (including permitted self-insurance), if any,
against such risk that Lessee (or any Permitted Sublessee) may continue to
maintain, in accordance with this Section 11, during the period of such
requisition or transfer, shall be at least equal to the amount of insurance
against such risk otherwise required by this Section 11.

      11.4     APPLICATION OF INSURANCE PROCEEDS

            As between Lessor and Lessee, all insurance proceeds received as a
result of the occurrence of an Event of Loss with respect to the Aircraft or any
Engine under policies required to be maintained by Lessee pursuant to this
Section 11 will be applied in accordance with Section 10.5. All proceeds of
insurance required to be maintained by Lessee, in accordance with Section 11 and
Section B of Annex D, in respect of any property damage or loss not constituting
an Event of Loss with respect to the Aircraft, Airframe or any Engine will be
applied in payment (or to reimburse Lessee) for repairs or for replacement
property, and any balance remaining after such repairs or replacement with
respect to such damage or loss shall be paid over to, or retained by, Lessee.

<PAGE>

      11.5     APPLICATION OF PAYMENTS DURING EXISTENCE OF DEFAULT

            Any amount described in this Section 11 that is payable or
creditable to, or retainable by, Lessee shall not be paid or credited to, or
retained by, Lessee if at the time such payment, credit or retention would
otherwise occur a Lease Event of Default shall have occurred and be continuing,
but shall instead be held by or paid over to Lessor (or to Mortgagee so long as
Mortgagee has not given notice to Lessee that the Trust Indenture has been duly
discharged) as security for the obligations of Lessee under this Lease and shall
be invested pursuant to Section 4.4 hereof unless and until Lessor shall have
demanded liquidated damages pursuant to Section 15.1.3 or 15.1.4 and such amount
is applied, at the option of Lessor, or upon the written request of Lessee to
Lessor, from time to time during the continuance of a Lease Event of Default, to
Lessee's obligations under this Lease and the other Lessee Operative Agreements
as and when due, it being understood that any such application shall be made to
such obligations of Lessee as Lessor may determine in its sole discretion. At
such time as there shall not be continuing any Lease Event of Default, such
amount shall be paid to Lessee to the extent not previously applied in
accordance with this Section 11.5.

SECTION 12.     INSPECTION

            (a) Lessor, Mortgagee or their respective authorized representatives
(the "Inspecting Parties") may, upon reasonable notice to Lessee, inspect the
Aircraft, Airframe and Engines (including, without limitation, the Aircraft
Documents) and Lessee shall cooperate, and shall cause any Permitted Sublessee
to cooperate, with the Inspecting Parties in connection with any such inspection
(including, without limitation, permitting any such Inspecting Party to make
copies of such Aircraft Documents not reasonably deemed confidential by Lessee
or such Permitted Sublessee).

            (b) Except during the continuance of any Lease Event of Default
while the Section 1110 Period shall not be in effect, any inspection of the
Aircraft hereunder shall be limited to a visual, walk-around inspection and
shall not include the opening of any panels, bays or other components of the
Aircraft, Airframe or Engines. Any inspection permitted hereunder, including any
inspection conducted during the continuance of a Lease Event of Default, shall
be conducted in a manner which does not interfere with Lessee's or a Permitted
Sublessee's operation, use and maintenance of such Aircraft, which determination
of interference shall be made by Lessee in its reasonable sole discretion.

            (c) With respect to such rights of inspection, neither Lessor nor
Mortgagee shall have any duty or liability to make, or any duty or liability by
reason of not making, any such visit, inspection or survey.

            (d) Each Inspecting Party shall bear its own expenses in connection
with any such inspection (including the cost of any copies made in accordance
with Section 12(a)); PROVIDED, that if a Lease Event of Default shall have
occurred and be continuing, Lessee shall bear all such reasonable expenses,
except, in the case of a Chapter 11 reorganization, during the Section 1110
Period.

<PAGE>

            (e) If requested by Lessor or Mortgagee, Lessee shall promptly
advise, or shall cause any Permitted Sublessee to advise, Lessor of the date
upon which the Aircraft, Airframe or any Engine undergoes its next scheduled
maintenance visit or next major check, and with respect to any Engine, the next
off-the-wing maintenance, and shall advise Lessor of the name and location of
the relevant maintenance performer. An Inspecting Party shall have the
opportunity to attend such scheduled maintenance visit or major check, subject
to the other provisions of this Section 12.

SECTION 13.     ASSIGNMENT; MERGER; SUCCESSOR OWNER TRUSTEE

      13.1     IN GENERAL

            This Lease and the other Lessee Operative Agreements shall be
binding upon and inure to the benefit of Lessor and Lessee and their respective
successors and permitted assigns. Except as otherwise expressly permitted by the
terms of the Lease or any other Lessee Operative Agreement, Lessee will not,
without the prior written consent of Lessor and Mortgagee, assign any of its
rights under this Lease. Except as otherwise provided herein (including, without
limitation, under the provisions of Section 15 hereof) or in the Trust
Indenture, Lessor and Mortgagee may not assign or convey any of its right, title
and interest in and to this Lease or the Aircraft without the prior written
consent of Lessee, such consent not to be unreasonably withheld.

      13.2     MERGER OF LESSEE

               13.2.1      IN GENERAL

            Lessee shall not consolidate with or merge into any other person
under circumstances in which Lessee is not the surviving corporation, or convey,
transfer or lease in one or more transactions all or substantially all of its
assets to any other person, unless:

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

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

            (c) such person makes such filings and recordings with the FAA
pursuant to the Act as shall be necessary to evidence such consolidation or
merger; and

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

<PAGE>

               13.2.2      EFFECT OF MERGER

            Upon any such consolidation or merger of Lessee with or into, or the
conveyance, transfer or lease by Lessee of all or substantially all of its
assets to, any Person in accordance with this Section 13.2, such Person will
succeed to, and be substituted for, and may exercise every right and power of,
Lessee under the Lessee Operative Agreements with the same effect as if such
person had been named as "Lessee" therein. No such consolidation or merger, or
conveyance, transfer or lease, shall have the effect of releasing Lessee or such
Person from any of the obligations, liabilities, covenants or undertakings of
Lessee under the Lease.

      13.3     ASSIGNMENT SECURITY FOR LESSOR'S OBLIGATIONS

            In order to secure the indebtedness evidenced by the Equipment
Notes, Lessor has agreed in the Trust Indenture, among other things, to assign
to Mortgagee this Lease and to mortgage the Aircraft, Airframe and Engines in
favor of Mortgagee, subject to the reservations and conditions therein set
forth. Lessee hereby accepts and consents to the assignment of all Lessor's
right, title and interest in and to this Lease pursuant to the terms of the
Trust Indenture. In accordance with Section 3.3(c), Lessee agrees to pay
directly to Mortgagee (or, after receipt by Lessee of notice from Mortgagee of
the discharge of the Trust Indenture, to Lessor), all amounts of Rent (other
than Excluded Payments) due or to become due hereunder and assigned to Mortgagee
and Lessee agrees that Mortgagee's right to such payments hereunder shall be
absolute and unconditional and shall not be affected by any circumstance,
including, without limitation, the circumstances set forth in Section 16 hereof.
Notwithstanding the foregoing assignment of this Lease, the obligations of
Lessee to Lessor to perform the terms and conditions of this Lease shall remain
in full force and effect.

      13.4     SUCCESSOR OWNER TRUSTEE

            Lessee agrees that in the case of the appointment of any successor
Owner Trustee pursuant to the terms of the Participation Agreement and the Trust
Agreement, such successor Owner Trustee shall, upon written notice by such
successor Owner Trustee to Lessee, succeed to all the rights, powers and title
of Lessor hereunder and shall be deemed to be Lessor and the owner of the
Aircraft and the other assets of the Trust Estate for all purposes hereof
without the necessity of any consent or approval by Lessee and without in any
way altering the terms of this Lease or Lessee's obligations hereunder. An
appointment and designation of a successor Owner Trustee shall not exhaust the
right to appoint and designate further successor or additional Owner Trustees
pursuant to the Participation Agreement and the Trust Agreement, and such right
may be exercised repeatedly as long as this Lease shall be in effect.

SECTION 14.     LEASE EVENTS OF DEFAULT

            The occurrence of any one or more of the following circumstances,
conditions, acts or events, for any reason whatsoever and whether any such
circumstance, condition, act or event shall be voluntary or involuntary or come
about or be effected by operation of Law or pursuant to or in compliance with
any judgment, decree, order, rule or regulation of any Government Entity, shall
constitute a Lease Event of Default so long as it shall not have been remedied:

<PAGE>

      14.1     PAYMENTS

            Lessee shall fail to pay any amount of Basic Rent, Renewal Rent,
Stipulated Loss Value or Termination Value within five (5) Business Days after
the same shall have become due; or Lessee shall fail to pay any Supplemental
Rent (other than Stipulated Loss Value or Termination Value) when due and such
failure shall continue for a period in excess of ten (10) Business Days from and
after the date of any written notice to Lessee from Lessor, Mortgagee or Owner
Participant of the failure to make such payment when due; provided that any such
failure to pay any Excluded Payment shall not constitute a Lease Event of
Default until written notice is given by the Owner Participant to Lessee and
Mortgagee that such failure constitutes a Lease Event of Default and such
failure shall have continued for a period in excess of ten (10) Business Days
after such notice.

      14.2     INSURANCE

            Lessee shall fail to carry and maintain, or cause to be carried and
maintained, insurance on and in respect of the Aircraft, Airframe and Engines in
accordance with the provisions of Section 11.

      14.3     OTHER COVENANTS

            Lessee shall fail to observe or perform (or cause to be observed and
performed) in any material respect any other covenant, agreement or obligation
set forth herein or in any other Lessee Operative Agreement (other than the
covenants, agreements and obligations set forth in the Tax Indemnity Agreement),
and such failure shall continue unremedied for a period of 30 days from and
after the date of written notice thereof to Lessee from Lessor, Owner
Participant or Mortgagee, unless such failure is capable of being corrected and
Lessee shall be diligently proceeding to correct such failure, in which case
there shall be no Lease Event of Default unless and until such failure shall
continue unremedied for a period of 90 days after receipt of such notice.

      14.4     REPRESENTATIONS AND WARRANTIES

            Any representation or warranty made by Lessee herein, in the
Participation Agreement or in any other Lessee Operative Agreement (other than
the representations and warranties of Lessee in the Tax Indemnity Agreement) (a)
shall prove to have been untrue or inaccurate in any material respect as of the
date made, (b) such untrue or inaccurate representation or warranty is material
at the time in question, (c) and the same shall remain uncured (to the extent of
the adverse impact of such incorrectness on the interest of the Participants or
Lessor) for a period in excess of 30 days from and after the date of written
notice thereof from Lessor, Owner Participant or Mortgagee to Lessee (except
that this clause (c) shall be inapplicable in the case of Section 6.1.7 of the
Participation Agreement).

      14.5     BANKRUPTCY AND INSOLVENCY

            (a) Lessee shall consent to the appointment of or the taking of
possession by a receiver, trustee or liquidator of itself or of substantially
all of its property, or Lessee shall admit in writing its inability to pay its
debts generally as they come due, or does not pay its debts generally as they

<PAGE>

become due or shall make a general assignment for the benefit of creditors, or
Lessee shall file a voluntary petition in bankruptcy or a voluntary petition or
an answer seeking reorganization, liquidation or other relief in a case under
any bankruptcy Laws or other insolvency Laws (as in effect at such time), or
Lessee shall seek 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 corporations (as in effect at such time) or
Lessee's board of directors shall adopt a resolution authorizing any of the
foregoing; or

            (b) an order, judgment or decree shall be entered by any court of
competent jurisdiction appointing, without the consent of Lessee, a receiver,
trustee or liquidator of Lessee or of substantially all of its property, or
substantially all of the property of Lessee shall be sequestered, and any such
order, judgment or decree of appointment or sequestration shall remain in force
undismissed, unstayed and unvacated for a period of 90 days after the date of
entry thereof; or

            (c) a petition against Lessee in a case under any bankruptcy Laws or
other insolvency Laws (as in effect at such time) is filed and not withdrawn or
dismissed within 90 days thereafter, or if, under the provisions of any Law
providing for reorganization or winding-up of corporations which may apply to
Lessee, any court of competent jurisdiction assumes jurisdiction, custody or
control of Lessee or of substantially all of its property and such jurisdiction,
custody or control remains in force unrelinquished, unstayed and unterminated
for a period of 90 days.

SECTION 15.     REMEDIES AND WAIVERS

      15.1     REMEDIES

            If any Lease Event of Default shall occur and be continuing, Lessor
may, at its option and at any time and from time to time, exercise any one or
more of the following remedies as Lessor in its sole discretion shall elect:

               15.1.1      RETURN AND REPOSSESSION

            Lessor may cause Lessee, upon giving written notice to Lessee, to
return promptly, and Lessee shall return promptly, the Airframe and Engines as
Lessor may so demand, to Lessor or its order in the manner and condition
required by, and otherwise in accordance with, all the provisions of Section 5
as if the Airframe or Engine were being returned at the end of the Base Lease
Term or any Renewal Lease Term or Lessor, at its option, may enter upon the
premises where the Airframe or any Engine, or any Part thereof, are located and
take immediate possession of and remove the same by summary proceedings or
otherwise, all without liability accruing to Lessor for or by reason of such
entry or taking of possession, whether for the restoration of damage to property
caused by such taking or otherwise, and Lessee expressly waives any right it may
have to a hearing prior to repossession of the Aircraft.

               15.1.2      SALE AND USE

            Lessor may sell the Airframe and/or any Engine at public or private
sale, at such times and places, and to such Persons (including Lessor, Mortgagee

<PAGE>

or any Participant), as Lessor may determine; or Lessor may otherwise dispose
of, hold, use, operate, lease to others or keep idle the Airframe and/or any
Engine, as Lessor, in its sole discretion, may determine, all free and clear of
any rights of Lessee and without any duty to account to Lessee with respect to
such action or inaction or for any proceeds with respect thereto, except as
hereinafter set forth in this Section 15, and except to the extent that such
proceeds would constitute, under applicable Law, a mitigation of Lessor's
damages suffered or incurred as a result of the subject Lease Event of Default.
Lessor shall give Lessee at least 15 days prior written notice of the date fixed
for any public sale of the Airframe and/or any Engine or of the date on or after
which will occur the execution of any contract providing for any private sale.

               15.1.3      CERTAIN LIQUIDATED DAMAGES

            Whether or not Lessor shall have exercised, or shall thereafter at
any time exercise, any of its rights under Section 15.1.1 or 15.1.2 with respect
to the Airframe and/or any Engine, or any Part thereof, Lessor, by written
notice to Lessee specifying a payment date (which shall be the Stipulated Loss
Value Date next occurring not less than 10 days after the date of such notice),
may demand Lessee to pay to Lessor, and Lessee shall pay to Lessor, on the
payment date so specified and in the manner and in funds of the type specified
in Section 3.3, as liquidated damages for loss of a bargain and not as a penalty
(in lieu of the Basic Rent or Renewal Rent, as the case may be, for the Aircraft
in respect of all periods commencing on or after the date specified for payment
in such notice), the following amounts:

            (a) all unpaid Basic Rent or Renewal Rent, as the case may be, due
at any time prior to the Stipulated Loss Value Date specified in such notice,
but excluding Basic Rent or Renewal Rent due on such Stipulated Loss Value Date;
plus

            (b) an amount equal to the excess, if any, of the Stipulated Loss
Value for the Aircraft, computed as of the Stipulated Loss Value Date specified
in such notice, over the Fair Market Sales Value of the Aircraft, as of the
Stipulated Loss Value Date specified in such notice; plus

            (c) interest on the amounts specified in the foregoing clause (a) at
the Payment Due Rate from and including the date on which any such amount was
due to the date of payment of such amount; plus

            (d) interest on the amount specified in the foregoing clause (b) at
the Payment Due Rate from and including the Stipulated Loss Value Date specified
in such notice to the date of payment of such amount.

               15.1.4      LIQUIDATED DAMAGES UPON SALE

            If Lessor, pursuant to Section 15.1.2 or applicable Law, shall have
sold the Aircraft, Lessor, in lieu of exercising its rights under Section 15.1.3
with respect to the Aircraft, may, if Lessor shall so elect, upon giving written
notice to Lessee, demand Lessee to pay Lessor, and Lessee shall pay to Lessor,
on the date of such sale and in the manner and in funds of the type specified in
Section 3.3, as liquidated damages for loss of a bargain and not as a penalty
(in lieu of the Basic Rent or Renewal Rent, as the case may be, for the Aircraft
in respect of all periods commencing on or after the date of such sale), the
following amounts:

<PAGE>

            (a) all unpaid Basic Rent or Renewal Rent, as the case may be, due
at any time prior to the Stipulated Loss Value Date on or immediately preceding
the date of such sale, but excluding Basic Rent or Renewal Rent due on such
Stipulated Loss Value Date; plus

            (b) an amount equal to the excess, if any, of (i) the Stipulated
Loss Value of the Aircraft, computed as of the Stipulated Loss Value Date used
in the foregoing clause (a) for the computation of unpaid Rent, over (ii) the
proceeds of such sale, minus all reasonable costs of Lessor in connection with
the sale; plus

            (c) if the date of such sale is not a Stipulated Loss Value Date, an
amount equal to interest on the outstanding principal amount of the Equipment
Notes at the rate per annum borne thereby from and including the Stipulated Loss
Value Date used in the foregoing clause (a) for the computation of unpaid Rent
to the date of such sale; plus

            (d) interest on the amounts specified in the foregoing clause (a) at
the Payment Due Rate from and including the date on which any such amount was
due to the date of payment of such amount; plus

            (e) interest on the sum of the amounts specified in the foregoing
clause (b) at the Payment Due Rate from and including the date of such sale to
the date of payment of such amounts.

               15.1.5      RESCISSION

            Lessor may (i) at its option, rescind or terminate this Lease as to
the Aircraft, Airframe or any Engine, or any Part thereof, or (ii) exercise any
other right or remedy that may be available to it under applicable Law or
proceed by appropriate court action to enforce the terms hereof or to recover
damages for the breach hereof, including without limitation Lessee's agreement
to lease the Aircraft for the Term and to pay Rent.

               15.1.6      OTHER REMEDIES

            In addition to the foregoing remedies (but without duplication of
amounts otherwise paid under this Section 15), Lessee shall be liable for any
and all unpaid Rent due hereunder before, during or after (except as otherwise
provided herein) the exercise of any of the foregoing remedies and for all
reasonable attorneys' fees and other costs and expenses of Lessor, including,
without limitation, interest on overdue Rent at the rate as herein provided,
incurred by reason of the occurrence of any Lease Event of Default or the
exercise of Lessor's remedies with respect thereto, including all reasonable
costs and expenses of Lessor incurred in connection with the return of the
Airframe or any Engine, in accordance with the terms of Section 5 or in placing
the Airframe or any Engine, in the condition and airworthiness required by
Section 5.

      15.2     LIMITATIONS UNDER CRAF

            Notwithstanding the provisions of Section 15.1, during any period
that the Aircraft, Airframe or any Engine is subject to CRAF in accordance with
the provisions of Section 7.2.3 and in the possession of the U.S. Government,
Lessor shall not, as a result of any Lease Event of Default, exercise its
remedies hereunder in such manner as to limit Lessee's control under this Lease

<PAGE>

(or any Permitted Sublessee's control under any Permitted Sublease) of the
Aircraft, Airframe or such Engine, unless at least 30 days' (or such other
period as may then be applicable under CRAF) written notice of default hereunder
shall have been given by Lessor or Mortgagee by registered or certified mail to
Lessee (and any Permitted Sublessee) with a copy to the Contracting Officer
Representative or Representatives for the Military Airlift Command of the United
States Air Force to whom notices must be given under the contract governing
Lessee's (or any Permitted Sublessee's) participation in CRAF with respect to
the Aircraft, Airframe or any Engine.

      15.3     RIGHT TO PERFORM FOR LESSEE

            If Lessee (i) fails to make any payment of Rent required to be made
by it hereunder or (ii) fails to perform or comply with any of its agreements
contained herein and such failure continues for a period of thirty days after
written notice thereof is given by Lessor, Mortgagee or Owner Participant to
Lessee, Lessor may (but shall not be obligated to) make such payment or perform
or comply with such agreement, and the amount of such payment and the amount of
the expenses of Lessor or Mortgagee incurred in connection with such payment or
the performance of or compliance with such agreement, as the case may be,
together with interest thereon at the Payment Due Rate, shall be deemed
Supplemental Rent, payable by Lessee upon demand by Lessor or Mortgagee,
whichever is entitled thereto. No such payment, performance or compliance shall
be deemed to cure any Lease Default or Lease Event of Default or otherwise
relieve Lessee of its obligations with respect thereto.

      15.4     DETERMINATION OF FAIR MARKET SALES VALUE

            For the purpose of this Section 15, the "Fair Market Sales Value" of
the Aircraft shall be determined on an "as is, where is" basis and shall take
into account customary brokerage and other out-of-pocket fees and expenses which
typically would be incurred in connection with a sale of the Aircraft. Any such
determination shall be made by an Appraiser selected by Lessor and the costs and
expenses associated therewith shall be borne by Lessee, unless Lessor does not
obtain possession of the Aircraft, Airframe and Engines pursuant to this Section
15, in which case an Appraiser shall not be appointed and Fair Market Sales
Value for purposes of this Section 15 shall be zero.

      15.5     REMEDIES CUMULATIVE

            Nothing contained in this Lease shall be construed to limit in any
way any right, power, remedy or privilege of Lessor hereunder or under any other
Operative Agreement or now or hereafter existing at law or in equity. Each and
every right, power, remedy and privilege hereby given to, or retained by, Lessor
in this Lease shall be in addition to and not in limitation of every other
right, power, remedy and privilege given under the Operative Agreements or now
or hereafter existing at law or in equity. Each and every right, power, remedy
and privilege of Lessor under this Lease and any other Operative Agreement may
be exercised from time to time or simultaneously and as often and in such order
as may be deemed expedient by Lessor. All such rights, powers, remedies and
privileges shall be cumulative and not mutually exclusive, and the exercise of
one shall not be deemed a waiver of the right to exercise any other. Lessee

<PAGE>

hereby waives to the extent permitted by applicable Law any right which it may
have to require Lessor to choose or elect remedies.

SECTION 16.     LESSEE'S OBLIGATIONS; NO SETOFF, COUNTERCLAIM, ETC.

            (a) Lessee's obligation to pay Rent hereunder shall be absolute and
unconditional, and shall not be affected by any event or circumstance,
including, without limitation: (i) any setoff, counterclaim, recoupment, defense
or other right that Lessee may have against Lessor, Mortgagee, any Participant,
any Note Holder, or any other Person for any reason whatsoever; (ii) any defect
in the title, airworthiness, condition, design, operation or fitness for use of,
or any damage to or loss or destruction of, the Aircraft, Airframe or any
Engine, or any interruption or cessation in the use or possession thereof by
Lessee for any reason whatsoever; (iii) any insolvency, bankruptcy,
reorganization or similar proceedings by or against Lessee or any other Person;
or (iv) any other circumstance, happening or event whatsoever, whether or not
similar to any of the foregoing.

            (b) If for any reason whatsoever this Lease shall be terminated in
whole or in part by operation of Law or otherwise except as specifically
provided herein, Lessee nonetheless agrees to pay an amount equal to each Rent
payment at the time such payment would have become due and payable in accordance
with the terms hereof had this Agreement not been terminated in whole or in
part. Lessee hereby waives, to the extent permitted by applicable Law, any and
all rights that it may now have or that at any time hereafter may be conferred
upon it, by statute or otherwise, to terminate, cancel, quit or surrender this
Agreement, except in accordance with the express terms hereof.

            (c) Nothing set forth in this Section 16 shall be construed to
prohibit Lessee from separately pursuing any claim that it may have from time to
time against Lessor or any other Person with respect to any matter (other than
the absolute and unconditional nature of Lessee's obligations hereunder to pay
Rent, and other than the matters specified in paragraphs (a) and (b) above).
Without limiting the foregoing, nothing in this Section 16 shall be construed as
a waiver by Lessee, or otherwise limit Lessee in pursuing any claim by Lessee,
of any breach by Lessor, Owner Participant or any other Person of any covenant
or obligation contained in any Operative Agreement.

SECTION 17.     RENEWAL AND PURCHASE OPTIONS

      17.1     NOTICES GENERALLY

            (a) At least 225 days but not more than 375 days prior to the
Scheduled Expiration Date or, if a Renewal Lease Term is then in effect, prior
to the Scheduled Renewal Term Expiration Date of such Renewal Lease Term, Lessee
may provide notice to Lessor that Lessee may exercise either the option to
extend the leasing of the Aircraft for a Renewal Lease Term pursuant to Section
17.2 or the option to purchase the Aircraft on the Scheduled Expiration Date or
Scheduled Renewal Term Expiration Date of such Renewal Lease Term, as the case
may be, pursuant to Section 17.3 (a "Preliminary Notice").

<PAGE>

            (b) If any such Preliminary Notice is given by Lessee, then Lessee
may provide a further notice specifying which option it intends to elect, with
respect to the relevant period, pursuant to Section 17.2.1 or 17.3.1, as the
case may be.

      17.2     RENEWAL OPTIONS

               17.2.1      RENEWAL NOTICE

            (a) If Lessee has given a Preliminary Notice, as specified in
      Section 17.1, and subject to the terms and conditions of this Section
      17.2, Lessee may exercise its option to extend the leasing of the Aircraft
      hereunder on two occasions, in each case until the next Scheduled Renewal
      Term Expiration Date, on the same terms, provisions and conditions (except
      as contemplated by this Section 17) set forth herein and in the other
      Lessee Operative Agreements with respect to the Base Lease Term, by
      delivery of a notice (a "Renewal Notice") to Lessor not less than 180 days
      but not more than 375 days prior to (i) if the Base Lease Term is then in
      effect, the Scheduled Expiration Date, or (ii) if a Renewal Lease Term is
      then in effect, the Scheduled Renewal Term Expiration Date for such
      Renewal Lease Term.

            (b) Notwithstanding anything to the contrary in this Agreement or
      any other Operative Agreement:

            (i) No Preliminary Notice or Renewal Notice shall be binding on
      Lessor or oblige Lessor to extend the leasing of the Aircraft hereunder
      for a Renewal Lease Term if any Payment Default, Bankruptcy Default or
      Lease Event of Default shall have occurred and be continuing on and as of
      the date that such Renewal Lease Term would otherwise commence.

            (ii) Any Renewal Notice shall be revocable by Lessee until 10
      Business Days after the Renewal Rent is determined in accordance with
      Sections 17.2.2 and unless revoked by written notice by Lessee to Lessor
      shall thereafter become irrevocable and shall constitute an unconditional
      obligation of Lessee to extend the leasing of the Aircraft hereunder for
      the Renewal Lease Term to which such Renewal Notice relates.

            (iii) Lessee shall not be entitled to give any Renewal Notice if it
      has (x) not delivered a Preliminary Notice or (y) delivered a Purchase
      Notice to Lessor.

               17.2.2      RENEWAL RENT

            (a) During the Renewal Lease Term, Lessee shall pay to Lessor on
each Payment Date, in the manner and in the funds of the type specified in
Section 3.3, Renewal Rent in advance.

            (b) The Renewal Rent payable by Lessee on each Payment Date during
any Renewal Lease Term shall be the Fair Market Rental Value of the Aircraft for
such Renewal Lease Term. Any such Fair Market Rental Value shall be determined
not more than 10 Business Days after Lessee gives a Preliminary Notice by mutual
agreement of Lessor and Lessee or, if they shall be unable to agree, by an
appraisal in accordance with Section 17.4.

<PAGE>

               17.2.3      STIPULATED LOSS AND TERMINATION VALUES

            (a) For any Renewal Lease Term, Stipulated Loss Value dates and
Termination Value dates shall be extended throughout such Renewal Lease Term on
the same days and for the same months as during the Base Lease Term.

            (b) Stipulated Loss Value and Termination Value amounts that are
payable during any such Renewal Lease Term shall be determined at the same time
that the Renewal Rent for such Renewal Lease Term is determined under Section
17.2.2. Stipulated Loss Values and Termination Values for any such Renewal Lease
Term shall, commencing on the first day of such Renewal Lease Term, be equal to
the Fair Market Sales Value of the Aircraft, computed as of the first day of
such Renewal Lease Term, and shall decline ratably on a monthly basis to the
Fair Market Sales Value of the Aircraft as of the last day of such Renewal Lease
Term, but shall be adjusted to credit Lessee for any Renewal Rent paid in
advance attributable to any subsequent period.

            (c) Any Fair Market Sales Value of the Aircraft, for purposes of
calculating Stipulated Loss Value and Termination Value amounts applicable
during any such Renewal Lease Term, shall be determined by mutual agreement of
Lessor and Lessee or, if they shall be unable to agree, by an appraisal in
accordance with Section 17.4.

      17.3     PURCHASE OPTION

               17.3.1      PURCHASE NOTICE

            (a) Subject to Section 17.1 and the terms and conditions of this
      Section 17.3, Lessee may elect to purchase the Aircraft, on any Purchase
      Date, at a purchase price equal to the lesser of (i) the Purchase Price
      Cap (as defined in Schedule 1 to the Lease) and (ii) the Fair Market Sales
      Value of the Aircraft computed as of the Purchase Date.

            (b) Lessee may exercise such option to purchase the Aircraft, by
      delivery of a notice (a "Purchase Notice") to Lessor not less than 180 and
      not more than 375 days prior to the Purchase Date specified in such
      Purchase Notice.

            (c) Notwithstanding anything to the contrary in this Agreement or
      any other Operative Agreement:

            (i) Any Purchase Notice (whether delivered or deemed to have been
      delivered) shall be revocable until 10 Business Days after the
      determination of the Fair Market Sales Value in accordance with Section
      17.3.2 and unless revoked by written notice by Lessee to Lessor shall
      thereafter become irrevocable and shall constitute an unconditional
      obligation of Lessee to purchase the Aircraft under this Section 17.3.

            (ii) No Preliminary Notice or Purchase Notice shall be binding on
      Lessor or oblige Lessor to sell the Aircraft hereunder if any Payment
      Default, Bankruptcy Default or Lease Event of Default shall have occurred
      and be continuing on and as of such Purchase Date.

<PAGE>

            (iii) Lessee shall not be entitled to give any Purchase Notice in
      respect of any Purchase Date if it has (x) not delivered a Preliminary
      Notice or (y) delivered a Renewal Notice for a Renewal Lease Term that
      would commence immediately following such Purchase Date.

               17.3.2      DETERMINATION OF FAIR MARKET SALES VALUE

            The Fair Market Sales Value of the Aircraft shall be determined not
more than 10 Business Days after Lessee gives a Preliminary Notice by mutual
agreement of Lessor and Lessee or, if they shall be unable to agree, by an
appraisal in accordance with Section 17.4.

               17.3.3      TITLE

            Upon full and final payment by Lessee of (a) the applicable purchase
price of the Aircraft, (b) all unpaid Rent due and payable through and including
the Purchase Date and (c) all other amounts due and payable by Lessee under this
Agreement, Lessor will transfer to Lessee title to the Aircraft in accordance
with Section 4.5.

      17.4     APPRAISALS

            Whenever Fair Market Rental Value or Fair Market Sales Value of the
Aircraft is required to be determined by an appraisal under this Section 17,
Lessee and Lessor shall appoint a mutually satisfactory Appraiser to conduct
such appraisal. If Lessee and Lessor fail to agree upon a satisfactory Appraiser
then each shall promptly appoint a separate Appraiser and such Appraisers shall
jointly determine such amount. If either Lessee or Lessor fails to so appoint an
Appraiser, the determination of the single Appraiser appointed shall be final.
If two Appraisers are appointed and within 7 days after the appointment of the
latter of such two Appraisers, they cannot agree upon such amount, such two
Appraisers shall, within 8 days after such latter appointment, appoint a third
Appraiser and such amount shall be determined by such three Appraisers, who
shall make their separate appraisals within 7 days following the appointment of
the third Appraiser, and any determination so made shall be conclusive and
binding upon Lessor and Lessee. If no such third Appraiser is appointed within
such 8-day period, either Lessor or Lessee may apply to the American Arbitration
Association to make such appointment, and both parties shall be bound by such
appointment. The foregoing appraisal procedure shall in any event be completed
no less than 190 days before the end of the Base Lease Term or the current
Renewal Lease Term, as the case may be. If three Appraisers are appointed and
the difference between the determination which is farther from the middle
determination and the middle determination is more than 125% of the difference
between the middle determination and the third determination, then such farther
determination shall be excluded, the remaining two determinations shall be
averaged and such average shall be final and binding upon Lessor and Lessee.
Otherwise, the average of all three determinations shall be final and binding
upon Lessor and Lessee. The fees and expenses of all such Appraisers and such
appraisal procedure shall be borne equally by Lessee and Lessor, PROVIDED that
if Lessee elects not to renew this Lease or purchase the Aircraft following the
conclusion of such appraisal, Lessee shall pay all expenses of such appraisal.

<PAGE>

SECTION 18.     MISCELLANEOUS

      18.1     AMENDMENTS

            No provision of this Agreement may be amended, supplemented, waived,
modified, discharged, terminated or otherwise varied orally, but only by an
instrument in writing that specifically identifies the provision of this
Agreement that it purports to amend, supplement, waive, modify, discharge,
terminate or otherwise vary and is signed by Lessor and Lessee with the written
consent of the Mortgagee if required by the Trust Indenture. Each such
amendment, supplement, waiver, modification, discharge, termination or variance
shall be effective only in the specific instance and for the specific purpose
for which it is given. No provision of this Agreement shall be varied or
contradicted by oral communication, course of dealing or performance or other
manner not set forth in an agreement, document or instrument in writing and
signed by Lessor and Lessee.

      18.2     SEVERABILITY

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

      18.3     THIRD-PARTY BENEFICIARY

            This Agreement is not intended to, and shall not, provide any person
not a party hereto (other than Mortgagee, the Participants, the Indenture
Indemnitees and the Persons referred to in Section 4.6, with respect to matters
expressly for their benefit in this Lease) with any rights of any nature
whatsoever against either of the parties hereto, and no person not a party
hereto (other than Mortgagee, the Participants, the Indenture Indemnitees and
the Persons referred to in Section 4.6, with respect to matters expressly for
their benefit in this Lease) shall have any right, power or privilege in respect
of, or have any benefit or interest arising out of, this Agreement.

      18.4     REPRODUCTION OF DOCUMENTS

            This Agreement, all annexes, schedules and exhibits hereto and all
agreements, instruments and documents relating hereto, including, without
limitation (a) consents, waivers and modifications that may hereafter be
executed and (b) financial statements, certificates and other information
previously or hereafter furnished to any party hereto, may be reproduced by such
party by any photographic, photostatic, microfilm, micro-card, miniature
photographic or other similar process, and such party may destroy any original
documents so reproduced. Any such reproduction shall be admissible in evidence
as the original itself in any judicial or administrative proceeding (whether or
not the original is in existence and whether or not such reproduction was made

<PAGE>

by such party in the regular course of business) and any enlargement, facsimile
or further reproduction of such reproduction likewise is admissible in evidence.

      18.5     COUNTERPARTS

            This Agreement and any amendments, waivers, consents or supplements
hereto may be executed in any number of counterparts (or upon separate signature
pages bound together into one or more counterparts), each of which when so
executed shall be deemed to be an original, and all of which counterparts, taken
together, shall constitute one and the same instrument.

      18.6     NOTICES

            Unless otherwise expressly permitted by the terms hereof, all
notices, requests, demands, authorizations, directions, consents, waivers and
other communications required or permitted to be made, given, furnished or filed
hereunder shall be in writing (it being understood that the specification of a
writing in certain instances and not in others does not imply an intention that
a writing is not required as to the latter), shall refer specifically to this
Agreement and shall be personally delivered, sent by facsimile or
telecommunication transmission (which in either case provides written
confirmation to the sender of its delivery), sent by registered mail or
certified mail, return receipt requested, postage prepaid, or sent by overnight
courier service, in each case to the respective address or facsimile number set
forth for such party in Schedule 1 to the Participation Agreement, or to such
other address or number as either party hereto may hereafter specify by notice
to the other party hereto. Each such notice, request, demand, authorization,
direction, consent, waiver or other communication shall be effective when
received or, if made, given, furnished or filed (a) by facsimile or
telecommunication transmission, when confirmed, or (b) by registered or
certified mail, three Business Days after being deposited, properly addressed,
with the U.S. Postal Service.

      18.7     GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE

            (A) THIS AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED BY THE LAWS OF
THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE. THIS AGREEMENT IS BEING DELIVERED IN THE STATE OF NEW YORK.

            (B) EACH PARTY HERETO HEREBY IRREVOCABLY AGREES, ACCEPTS AND SUBMITS
ITSELF TO THE NON-EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK
IN THE CITY AND COUNTY OF NEW YORK AND OF THE UNITED STATES FOR THE SOUTHERN
DISTRICT OF NEW YORK, IN CONNECTION WITH ANY LEGAL ACTION, SUIT OR PROCEEDING
WITH RESPECT TO ANY MATTER RELATING TO OR ARISING OUT OF OR IN CONNECTION WITH
THIS AGREEMENT.

            (C) EACH PARTY HERETO HEREBY IRREVOCABLY CONSENTS AND AGREES TO THE
SERVICE OF ANY AND ALL LEGAL PROCESS, SUMMONS, NOTICES AND DOCUMENTS OF ANY OF
THE AFOREMENTIONED COURTS IN ANY SUCH SUIT, ACTION OR PROCEEDING MAY BE MADE BY

<PAGE>

MAILING COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, AT THE
ADDRESS SET FORTH PURSUANT TO SECTION 18.6. EACH PARTY HERETO HEREBY AGREES THAT
SERVICE UPON IT, OR ANY OF ITS AGENTS, IN EACH CASE IN ACCORDANCE WITH THIS
SECTION 18.7(C), SHALL CONSTITUTE VALID AND EFFECTIVE PERSONAL SERVICE UPON SUCH
PARTY, AND EACH PARTY HERETO HEREBY AGREES THAT THE FAILURE OF ANY OF ITS AGENTS
TO GIVE ANY NOTICE OF SUCH SERVICE TO ANY SUCH PARTY SHALL NOT IMPAIR OR AFFECT
IN ANY WAY THE VALIDITY OF SUCH SERVICE ON SUCH PARTY OR ANY JUDGMENT RENDERED
IN ANY ACTION OR PROCEEDING BASED THEREON.

            (D) EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE EXTENT
PERMITTED BY APPLICABLE LAW, AND AGREES NOT TO ASSERT, BY WAY OF MOTION, AS A
DEFENSE, OR OTHERWISE, IN ANY LEGAL ACTION OR PROCEEDING BROUGHT HEREUNDER IN
ANY OF THE ABOVE-NAMED COURTS, THAT SUCH ACTION OR PROCEEDING IS BROUGHT IN AN
INCONVENIENT FORUM, THAT VENUE FOR THE ACTION OR PROCEEDING IS IMPROPER OR THAT
THIS AGREEMENT OR ANY OTHER OPERATIVE AGREEMENT MAY NOT BE ENFORCED IN OR BY
SUCH COURTS.

            (E) EACH PARTY HERETO HEREBY WAIVES ITS RESPECTIVE RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION IN ANY COURT IN ANY JURISDICTION BASED
UPON OR ARISING OUT OF OR RELATING TO THIS AGREEMENT.

      18.8     NO WAIVER

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

      18.9     ENTIRE AGREEMENT

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

                    [This space intentionally left blank.]

<PAGE>

            IN WITNESS WHEREOF, Lessor and Lessee have each caused this Lease
Agreement to be duly executed as of the day and year first above written.

                                       WELLS FARGO BANK NORTHWEST, NATIONAL
                                       ASSOCIATION, not in its individual
                                       capacity, except as expressly provided
                                       herein, but solely as Owner Trustee under
                                       the Trust Agreement, as Lessor

                                       By
                                          --------------------------------------
                                          Name:
                                          Title:

                                       CONTINENTAL AIRLINES, INC.,
                                       as Lessee

                                       By
                                          --------------------------------------
                                          Name:
                                          Title:

            Receipt of this original counterpart of the foregoing Lease
Agreement is hereby acknowledged on this ____ day of _________, _______.

                                       WILMINGTON TRUST COMPANY,
                                       as Mortgagee

                                       By
                                          --------------------------------------
                                          Name:
                                          Title:

<PAGE>

            IN WITNESS WHEREOF, Lessor and Lessee have each caused this Lease
Agreement to be duly executed as of the day and year first above written.

                                       WELLS FARGO BANK NORTHWEST, NATIONAL
                                       ASSOCIATION, not in its individual
                                       capacity, except as expressly provided
                                       herein, but solely as Owner Trustee under
                                       the Trust Agreement, as Lessor

                                       By
                                          --------------------------------------
                                          Name:
                                          Title:

                                       CONTINENTAL AIRLINES, INC.,
                                       as Lessee

                                       By
                                          --------------------------------------
                                          Name:
                                          Title:

<PAGE>

                                     ANNEX A
                                   DEFINITIONS

                      [SEE PARTICIPATION AGREEMENT ANNEX A]

<PAGE>

                                     ANNEX B
                                RETURN CONDITIONS

           [OMITTED AS CONTAINING CONFIDENTIAL FINANCIAL INFORMATION]

<PAGE>

                                     ANNEX C
                                   MAINTENANCE

           [OMITTED AS CONTAINING CONFIDENTIAL FINANCIAL INFORMATION]

<PAGE>

                                     ANNEX D
                                    INSURANCE

           [OMITTED AS CONTAINING CONFIDENTIAL FINANCIAL INFORMATION]

<PAGE>

                                           ------------------------------------
                                          |    EXHIBIT A - LEASE SUPPLEMENT    |
                                          |        LEASE AGREEMENT [TN]        |
                                           ------------------------------------

                             LEASE SUPPLEMENT NO.__

            LEASE SUPPLEMENT No. __, dated ________, 200_, between WELLS FARGO
BANK NORTHWEST, NATIONAL ASSOCIATION, a national banking association, not in its
individual capacity, but solely as Owner Trustee under the [Amended and
Restated]1 Trust Agreement [TN], dated as of [DD], with the Owner Participant
named therein (such Owner Trustee, in its capacity as such Owner Trustee being
herein called "Lessor"), and CONTINENTAL AIRLINES, INC., a Delaware corporation,
as Lessee ("Lessee").

            Lessor and Lessee have heretofore entered into that certain Lease
Agreement [TN], dated as of [DD], relating to one Embraer Model EMB-145 XR
aircraft (herein called the "Lease" and the defined terms therein being
hereinafter used with the same meanings). The Lease provides for the execution
and delivery of this Lease Supplement for the purpose of leasing the Airframe
and Engines under the Lease as and when delivered by Lessor to Lessee in
accordance with the terms thereof.

            The Lease relates to the Airframe and Engines described below, and a
counterpart of the Lease to which this Lease Supplement is attached and of which
this Lease Supplement is a part, is being filed for recordation on the date
hereof with the Federal Aviation Administration as one document.

            NOW, THEREFORE, in consideration of the premises and other good and
sufficient consideration, Lessor and Lessee hereby agree as follows:

            1. Lessee has been duly authorized by Lessor to accept, and does
      hereby irrevocably accept on behalf of Lessor delivery of the Aircraft
      under, and for all purposes of, the Aircraft Bill of Sale, the
      Participation Agreement and the Purchase Agreement Assignment.

            2. Lessor hereby delivers and leases to Lessee under the Lease and
      Lessee hereby accepts and leases from Lessor under the Lease the following
      described Embraer EMB-145 XR aircraft (the "Aircraft"), which Aircraft as
      of the date hereof consists of the following components:

            (i)     Airframe:  U.S. Registration No. ___________;
      manufacturer's serial no. ___________; and

            (ii) Engines: two (2) Allison AE3007A1E engines bearing,
      respectively, manufacturer's serial nos. ___________ and ____________(each
      of which engines has 750 or more rated takeoff horsepower or the
      equivalent of such horsepower).

            3. The Closing Date for the Aircraft is the date of this Lease
      Supplement set forth in the opening paragraph hereof.

--------

1. Delete for New Aircraft.

<PAGE>

            4. Lessee hereby confirms to Lessor that Lessee has duly and
      irrevocably accepted the Aircraft under and for all purposes hereof, of
      the Lease and of the other Lessee Operative Agreements.

            5. All of the terms and provisions of this Lease Supplement are
      hereby incorporated by reference in the Lease to the same extent as if
      fully set forth therein.

            6. This Lease Supplement may be executed by the parties hereto in
      separate counterparts, each of which when so executed and delivered shall
      be an original, but all such counterparts shall together constitute but
      one and the same instrument.

            7. To the extent, if any, that this Lease Supplement constitutes
      chattel paper (as such term is defined in the Uniform Commercial Code as
      in effect in any applicable jurisdiction), no security interest in this
      Lease Supplement may be created through the transfer or possession of any
      counterpart other than the original executed counterpart, which shall be
      identified as the counterpart containing the receipt therefor executed by
      the Mortgagee on the signature page thereof.

                    [This space intentionally left blank.]

<PAGE>

            IN WITNESS WHEREOF, Lessor and Lessee have each caused this Lease
Supplement to be duly executed as of the day and year first above written.

                                       WELLS FARGO BANK NORTHWEST, NATIONAL
                                       ASSOCIATION, not in its
                                       individual capacity, except
                                       as expressly provided herein,
                                       but solely as Owner Trustee
                                       under the Trust Agreement, as
                                       Lessor

                                       By
                                          --------------------------------------
                                          Name:
                                          Title:

                                       CONTINENTAL AIRLINES, INC.,
                                       as Lessee

                                       By
                                          --------------------------------------
                                          Name:
                                          Title:

<PAGE>

            IN WITNESS WHEREOF, Lessor and Lessee have each caused this Lease
Supplement to be duly executed as of the day and year first above written.

                                       WELLS FARGO BANK NORTHWEST, NATIONAL
                                       ASSOCIATION, not in its individual
                                       capacity, except as expressly provided
                                       herein, but solely as Owner Trustee under
                                       the Trust Agreement, as Lessor

                                       By
                                          --------------------------------------
                                          Name:
                                          Title:

                                       CONTINENTAL AIRLINES, INC.,
                                       as Lessee

                                       By
                                          --------------------------------------
                                          Name:
                                          Title:

            Receipt of this original counterpart of the foregoing Lease
Supplement is hereby acknowledged on this ____ day of _________, __________.

                                      WILMINGTON TRUST COMPANY,
                                      as Mortgagee

                                       By
                                          --------------------------------------
                                          Name:
                                          Title:

<PAGE>

                               ------------------------------------------------
                              |    EXHIBIT B - RETURN ACCEPTANCE SUPPLEMENT    |
                              |              LEASE AGREEMENT [TN]              |
                               ------------------------------------------------

                          RETURN ACCEPTANCE SUPPLEMENT

            RETURN ACCEPTANCE SUPPLEMENT dated ________, between WELLS FARGO
BANK NORTHWEST, NATIONAL ASSOCIATION, a national banking association, not in its
individual capacity, but solely as Owner Trustee under the [Amended and
Restated]2 Trust Agreement [TN], dated as of [DD], with the Owner Participant
named therein (such Owner Trustee, in its capacity as such Owner Trustee being
herein called "Lessor"), and CONTINENTAL AIRLINES, INC., a Delaware corporation,
as Lessee ("Lessee").

            Lessor and Lessee have heretofore entered into that certain Lease
Agreement [TN], dated as of [DD], relating to one Embraer Model EMB-145 XR
aircraft (herein called the "Lease" and the defined terms therein being
hereinafter used with the same meanings). The Lease relates to the Airframe and
Engines described below.

            NOW, THEREFORE, in consideration of the premises and other good and
sufficient consideration, Lessor and Lessee hereby agree as follows:

            1. This Return Acceptance Supplement is executed by Lessor and
      Lessee to confirm that on the date hereof the following described Airframe
      and Engines were returned by Lessee to Lessor:

            (i) Airframe: U.S. Registration No. ______________; manufacturer's
      serial no. __________________; and

            (ii)    Engines:  two (2) Allison AE3007A1E engines bearing,
      respectively, manufacturer's serial nos. ____________________________
      and _________________________.

            2. This Return Acceptance Supplement is intended to be delivered in
      _____________________.

            3. Lessor and Lessee agree that the return of the Aircraft is in
      compliance with Section 5 and Annex B of the Lease, except as set forth
      below:

         4. Lessor and Lessee agree that the Lease is terminated, except for
      the provisions thereof that expressly survive termination.

--------

2. Delete for New Aircraft.

<PAGE>

            IN WITNESS WHEREOF, Lessor and Lessee have each caused this Return
Acceptance Supplement to be duly executed as of the day and year first above
written.

                                       WELLS FARGO BANK NORTHWEST, NATIONAL
                                       ASSOCIATION, not in its individual
                                       capacity, except as expressly provided
                                       herein, but solely as Owner Trustee under
                                       the Trust Agreement, as Lessor

                                      By
                                         ------------------------------------
                                         Name:
                                         Title:

                                      CONTINENTAL AIRLINES, INC.,
                                       as Lessee

                                      By
                                         ------------------------------------
                                         Name:
                                         Title:

<PAGE>

                                           ------------------------------------
                                          |    SCHEDULE 1 - CERTAIN TERMS      |
                                          |        LEASE AGREEMENT [TN]        |
                                           ------------------------------------

                                 CERTAIN TERMS

          DEFINED TERM                                 DEFINITION

         [OMITTED AS CONTAINING CONFIDENTIAL FINANCIAL INFORMATION]

<PAGE>

                                           ------------------------------------
                                          |      SCHEDULE 2 - BASIC RENT       |
                                          |       LEASE AGREEMENT [TN]         |
                                           ------------------------------------

                                BASIC RENT

       PAYMENT DATE                              TOTAL BASIC RENT
       ------------                              ----------------

       [OMITTED AS CONTAINING CONFIDENTIAL FINANCIAL INFORMATION]

<PAGE>

                                         --------------------------------------
                                        |  SCHEDULE 3 - STIPULATED LOSS VALUE  |
                                        |         LEASE AGREEMENT [TN]         |
                                         --------------------------------------

                              STIPULATED LOSS VALUE

                          STIPULATED LOSS
        DATE                   VALUE
   -------------      -----------------------

   [OMITTED AS CONTAINING CONFIDENTIAL FINANCIAL INFORMATION]

<PAGE>

                                         --------------------------------------
                                        |    SCHEDULE 4 - TERMINATION VALUE    |
                                        |         LEASE AGREEMENT [TN]         |
                                         --------------------------------------

                                TERMINATION VALUE

        DATE             TERMINATION VALUE
   -------------      -----------------------

   [OMITTED AS CONTAINING CONFIDENTIAL FINANCIAL INFORMATION]

<PAGE>

                                         --------------------------------------
                                        |   SCHEDULE 5 - PERMITTED COUNTRIES   |
                                        |         LEASE AGREEMENT [TN]         |
                                         --------------------------------------

                               PERMITTED COUNTRIES

              Argentina                      Luxembourg
              Australia                      Malaysia
              Austria                        Malta
              Bahamas                        Mexico
              Belgium                        Netherlands
              Brazil                         New Zealand
              Canada                         Norway
              Chile                          Philippines
              Denmark                        Portugal
              Ecuador                        Republic of China (Taiwan)
              Egypt                          Singapore
              Finland                        South Africa
              France                         South Korea
              Germany                        Spain
              Greece                         Sweden
              Hungary                        Switzerland
              Iceland                        Thailand
              India                          Tobago
              Indonesia                      Trinidad
              Ireland                        United Kingdom
              Italy                          Venezuela
              Japan

<PAGE>

                                         --------------------------------------
                                        |         SCHEDULE 6 - PLACARDS        |
                                        |         LEASE AGREEMENT [TN]         |
                                         --------------------------------------

                                    PLACARDS

                                   Leased from

              Wells Fargo Bank Northwest, National Association,
                 not in its individual capacity but solely as
                         Owner Trustee, Owner and Lessor
                                       and
                                  Mortgaged to
                            Wilmington Trust Company,
             not in its individual capacity but solely as Mortgagee==============================================================================

                        TRUST INDENTURE AND MORTGAGE [TN]

                                Dated as of [DD]

                                     Between

              WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION,
                         not in its individual capacity,
                       except as expressly stated herein,
                          but solely as Owner Trustee,

                                  Owner Trustee

                                       and

                            WILMINGTON TRUST COMPANY,
                         not in its individual capacity,
                       except as expressly stated herein,
                            but solely as Mortgagee,

                                    Mortgagee

==============================================================================

                            EQUIPMENT NOTES COVERING
                         ONE EMBRAER EMB-145 XR AIRCRAFT
                      BEARING U.S. REGISTRATION MARK N[REG]
                      LEASED BY CONTINENTAL AIRLINES, INC.

<PAGE>

                                TABLE OF CONTENTS

                                                                            PAGE

GRANTING CLAUSE...............................................................1

                                   ARTICLE I

                                  DEFINITIONS

                                   ARTICLE II

                              THE EQUIPMENT NOTES

SECTION 2.01.  Form of Equipment Notes........................................7

SECTION 2.02.  Issuance and Terms of Equipment Notes..........................11

SECTION 2.03.  Payments from Trust Indenture Estate Only......................13

SECTION 2.04.  Method of Payment..............................................14

SECTION 2.05.  Application of Payments........................................17

SECTION 2.06.  Termination of Interest in Trust Indenture Estate..............17

SECTION 2.07.  Registration Transfer and Exchange of Equipment Notes..........17

SECTION 2.08.  Mutilated, Destroyed, Lost or Stolen Equipment Notes...........18

SECTION 2.09.  Payment of Expenses on Transfer; Cancellation..................19

SECTION 2.10.  Mandatory Redemptions of Equipment Notes.......................19

SECTION 2.11.  [Reserved].....................................................20

SECTION 2.12.  Redemptions; Notice of Redemption..............................20

SECTION 2.13.  Option to Purchase Equipment Notes.............................20

SECTION 2.14.  Priority of Distributions......................................21

                                  ARTICLE III

                    RECEIPT, DISTRIBUTION AND APPLICATION OF
                     INCOME FROM THE TRUST INDENTURE ESTATE

SECTION 3.01.  Basic Rent Distribution........................................22

SECTION 3.02.  Event of Loss; Replacement; Voluntary Termination; Optional
                Redemption....................................................22

SECTION 3.03.  Payments After Event of Default................................23

SECTION 3.04.  Certain Payments...............................................24

SECTION 3.05.  Other Payments.................................................25

SECTION 3.06.  Payments to Owner Trustee......................................25

                                      (i)

<PAGE>

                                TABLE OF CONTENTS
                                   (Continued)

                                                                            PAGE

                                   ARTICLE IV

                     COVENANTS OF OWNER TRUSTEE; EVENTS OF
                         DEFAULT; REMEDIES OF MORTGAGEE

SECTION 4.01.  Covenants of Owner Trustee.....................................26

SECTION 4.02.  Event of Default...............................................27

SECTION 4.03.  Certain Rights.................................................29

SECTION 4.04.  Remedies.......................................................30

SECTION 4.05.  Return of Aircraft, Etc........................................33

SECTION 4.06.  Remedies Cumulative............................................34

SECTION 4.07.  Discontinuance of Proceedings..................................34

SECTION 4.08.  Waiver of Past Defaults........................................34

SECTION 4.09.   Appointment of Receiver.......................................34

SECTION 4.10.  Mortgagee Authorized to Execute Bills of Sale, Etc.............35

SECTION 4.11.  Rights of Note Holders to Receive Payment......................35

                                    ARTICLE V

                             DUTIES OF THE MORTGAGEE

SECTION 5.01.  Notice of Event of Default.....................................35

SECTION 5.02.  Action upon Instructions; Certain Rights and Limitations.......36

SECTION 5.03.  Indemnification................................................38

SECTION 5.04.  No Duties Except as Specified in Trust Indenture or
                Instruction...................................................39

SECTION 5.05.  No Action Except Under Lease, Trust Indenture or
                Instruction...................................................39

SECTION 5.06.  Replacement Airframes and Replacement Engines..................39

SECTION 5.07.  Indenture Supplements for Replacements.........................40

SECTION 5.08.  Effect of Replacement..........................................40

SECTION 5.09.  Investment of Amounts Held by Mortgagee........................40

                                   ARTICLE VI

                      THE OWNER TRUSTEE AND THE MORTGAGEE

SECTION 6.01.  Acceptance of Trusts and Duties................................41

SECTION 6.02.  Absence of Duties..............................................41

SECTION 6.03.  No Representations or Warranties as to Aircraft or
                Documents.....................................................42

                                      (ii)

<PAGE>

                                TABLE OF CONTENTS
                                   (Continued)

                                                                            PAGE

SECTION 6.04.  No Segregation of Monies; No Interest..........................42

SECTION 6.05.  Reliance; Agreements; Advice of Counsel........................42

SECTION 6.06.  Capacity in Which Acting.......................................43

SECTION 6.07.  Compensation...................................................43

SECTION 6.08.  Instructions from Note Holders.................................43

                                  ARTICLE VII

                 INDEMNIFICATION OF MORTGAGEE BY OWNER TRUSTEE

SECTION 7.01.  Scope of Indemnification.......................................44

                                  ARTICLE VIII

                         SUCCESSOR AND SEPARATE TRUSTEES

SECTION 8.01.  Notice of Successor Owner Trustee..............................45

SECTION 8.02.  Resignation of Mortgagee; Appointment of Successor.............45

SECTION 8.03.  Appointment of Additional and Separate Trustees................46

                                   ARTICLE IX

                          SUPPLEMENTS AND AMENDMENTS TO
                       TRUST INDENTURE AND OTHER DOCUMENTS

SECTION 9.01.  Instructions of Majority; Limitations..........................48

SECTION 9.02.  Trustees Protected.............................................50

SECTION 9.03.  Documents Mailed to Note Holders...............................50

SECTION 9.04.  No Request Necessary for Lease Supplement or Trust
                Indenture Supplement..........................................50

                                    ARTICLE X

                                  MISCELLANEOUS

SECTION 10.01.  Termination of Trust Indenture................................50

SECTION 10.02.  No Legal Title to Trust Indenture Estate in Note Holders......51

SECTION 10.03.  Sale of Aircraft by Mortgagee Is Binding......................51

SECTION 10.04.  Trust Indenture for Benefit of Owner Trustee, Mortgagee,
                 Owner Participant, Note Holders and the Other Indenture
                 Indemnitees..................................................51

SECTION 10.05.  Notices.......................................................51

SECTION 10.06.  Severability..................................................52

                                     (iii)
<PAGE>

                                TABLE OF CONTENTS
                                   (Continued)

                                                                            PAGE

SECTION 10.07.  No Oral Modification or Continuing Waivers....................52

SECTION 10.08.  Successors and Assigns........................................52

SECTION 10.09.  Headings......................................................52

SECTION 10.10.  Normal Commercial Relations...................................52

SECTION 10.11.  Governing Law; Counterpart Form...............................53

SECTION 10.12.  Voting by Note Holders........................................53

SECTION 10.13.  Bankruptcy....................................................53

EXHIBIT A       Form of Trust Indenture and Mortgage Supplement

SCHEDULE I      Equipment Notes Amortization and Interest Rates

                                      (iv)

<PAGE>

                       TRUST INDENTURE AND MORTGAGE [TN]

            TRUST INDENTURE AND MORTGAGE [TN], dated as of [DD] ("Trust
Indenture"), between WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION, a
national banking association, not in its individual capacity, except as
expressly stated herein, but solely as Owner Trustee under the Trust Agreement
referred to below (together with its successors under the Trust Agreement, the
"Owner Trustee"), and WILMINGTON TRUST COMPANY, a Delaware banking corporation,
not in its individual capacity, except as expressly stated herein, but solely as
Mortgagee hereunder (together with its successors hereunder, the "Mortgagee").

                               W I T N E S S E T H

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

            WHEREAS, the Owner Participant and the Owner Trustee in its
individual capacity have entered into the Trust Agreement whereby, among other
things, (i) the Owner Trustee has established a certain trust for the use and
benefit of the Owner Participant subject, however, to the Trust Indenture Estate
created pursuant hereto for the use and benefit of, and with the priority of
payment to, the holders of Equipment Notes issued hereunder, and (ii) the Owner
Trustee has been authorized and directed to execute and deliver this Trust
Indenture;

            WHEREAS, the parties hereto desire by this Trust Indenture, among
other things, (i) to provide for the issuance by the Owner Trustee of the
Equipment Notes and (ii) to provide for the assignment, mortgage and pledge by
the Owner Trustee to the Mortgagee, as part of the Trust Indenture Estate
hereunder, among other things, of all of the Owner Trustee's right, title and
interest in and to the Aircraft and, except as hereinafter expressly provided,
all of the Owner Trustee's right, title and interest in, to and under the Lease
and the Participation Agreement and all payments and other amounts received
hereunder or thereunder in accordance with the terms hereof or thereof, as
security for, among other things, the Owner Trustee's and the Lessee's
obligations to the Note Holders and the Indenture Indemnitees;

            WHEREAS, all things have been done to make the Equipment Notes, when
executed by the Owner Trustee and authenticated and delivered by the Mortgagee
hereunder, the valid, binding and enforceable obligations of the Owner Trustee;
and

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

                                 GRANTING CLAUSE

            NOW, THEREFORE, THIS TRUST INDENTURE AND MORTGAGE WITNESSETH, that,
to secure the prompt payment of the Original Amount of, interest on, Make-Whole
Amount, if any, and all other amounts due with respect to, all Equipment Notes
from time to time outstanding hereunder according to their tenor and effect and

<PAGE>

to secure the performance and observance by the Owner Trustee of all the
agreements, covenants and provisions contained herein and in the Participation
Agreement and the Equipment Notes, for the benefit of the Note Holders, the Loan
Participant and each of the Indenture Indemnitees and the prompt payment of all
amounts from time to time owing hereunder, under the Participation Agreement and
the Lease to the Loan Participant, the Note Holders or any Indenture Indemnitee
by the Owner Trustee or the Lessee and for the uses and purposes and subject to
the terms and provisions hereof, and in consideration of the premises and of the
covenants herein contained, and of the acceptance of the Equipment Notes by the
holders thereof, and for other good and valuable consideration the receipt and
adequacy whereof are hereby acknowledged, the Owner Trustee has granted,
bargained, sold, assigned, transferred, conveyed, mortgaged, pledged and
confirmed, and does hereby grant, bargain, sell, assign, transfer, convey,
mortgage, pledge and confirm, unto the Mortgagee, its successors in trust and
assigns, for the security and benefit of the Loan Participant, the Note Holders
and each of the Indenture Indemnitees, a first priority security interest in and
mortgage lien on all right, title and interest of the Owner Trustee in, to and
under the following described property, rights and privileges, whether now or
hereafter acquired, other than Excluded Payments (which, collectively, excluding
Excluded Payments but including all property hereafter specifically subject to
the Lien of this Trust Indenture by the terms hereof or any supplement hereto,
are included within, and are referred to as, the "Trust Indenture Estate"), to
wit:

            (1)   The Airframe which is one EMBRAER EMB-145 XR aircraft with the
FAA Registration number of N[REG] and the manufacturer's serial number of [MSN]
and two Engines, with the manufacturer's serial numbers of CAE[E1] and CAE[E2],
each of which is an Allison engine and is of 750 or more rated takeoff
horsepower or the equivalent of such horsepower (such Airframe and Engines more
particularly described in the Trust Indenture Supplement executed and delivered
as provided herein) as the same is now and will hereafter be constituted,
whether now owned by the Owner Trustee or hereafter acquired, leased or intended
to be leased under the Lease, and in the case of such Engines, whether or not
any such Engine shall be installed in or attached to the Airframe or any other
airframe, together with (a) all Parts of whatever nature, which are from time to
time included within the definitions of "Airframe" or "Engines", whether now
owned or hereafter acquired, including all substitutions, renewals and
replacements of and additions, improvements, accessions and accumulations to the
Airframe and Engines (other than additions, improvements, accessions and
accumulations which constitute appliances, parts, instruments, appurtenances,
accessories, furnishings or other equipment excluded from the definition of
Parts) and (b) all Aircraft Documents;

            (2)   All right, title, interest, claims and demands of the Owner
Trustee, as Lessor, in, to and under the Lease, together with all rights,
powers, privileges, options and other benefits of the Owner Trustee as lessor
under the Lease, including the immediate and continuing right to receive and
collect all Rent, income, revenues, issues, profits, insurance proceeds,
condemnation awards and other payments, tenders and security now or hereafter
payable to or receivable by the Lessor under the Lease pursuant thereto, and,
subject to Section 5.02 hereof, the right to make all waivers and agreements, to
give and receive copies of all notices and other instruments or communications,
to accept surrender or redelivery of the Aircraft or any part thereof, as well
as all the rights, powers and remedies on the part of the Owner Trustee as
Lessor under the Lease, to take such action upon the occurrence of a Lease Event
of Default thereunder, including the commencement, conduct and consummation of

<PAGE>

legal, administrative or other proceedings, as shall be permitted by the Lease
or by Law, and to do any and all other things whatsoever which the Owner Trustee
or any lessor is or may be entitled to do under or in respect of the Lease and
any right to restitution from the Lessee or any other Person in respect of any
determination of invalidity of the Lease;

            (3)   All right, title, interest, claims and demands of the Owner
Trustee in, to and under:

            (a)   the Purchase Agreement;

            (b)   the Purchase Agreement Assignment, with the Consent and
      Agreement attached thereto;

            (c)   the Bills of Sale; and

            (d)   any and all other contracts, agreements and instruments
relating to the Airframe and Engines or any rights or interests therein to which
the Owner Trustee is now or may hereafter be a party;

together with all rights, powers, privileges, licenses, easements, options and
other benefits of the Owner Trustee under each contract, agreement and
instrument referred to in this clause (3), including the right to receive and
collect all payments to the Owner Trustee thereunder now or hereafter payable to
or receivable by the Owner Trustee pursuant thereto and, subject to Section 5.02
hereof, the right to make all waivers and agreements, to give and receive
notices and other instruments or communications, or to take any other action
under or in respect of any thereof or to take such action upon the occurrence of
a default thereunder, including the commencement, conduct and consummation of
legal, administrative or other proceedings, as shall be permitted thereby or by
Law, and to do any and all other things which the Owner Trustee is or may be
entitled to do thereunder and any right to restitution from the Lessee, the
Owner Participant or any other Person in respect of any determination of
invalidity of any thereof;

            (4)   All rents, issues, profits, revenues and other income of the
property subjected or required to be subjected to the Lien of this Trust
Indenture, including all payments or proceeds payable to the Owner Trustee after
termination of the Lease with respect to the Aircraft as the result of the sale,
lease or other disposition thereof, and all estate, right, title and interest of
every nature whatsoever of the Owner Trustee in and to the same;

            (5)   Without limiting the generality of the foregoing, all
insurance and requisition proceeds with respect to the Aircraft or any part
thereof, including the insurance required under Section 11 of the Lease;

            (6)   Without limiting the generality of the foregoing, all rights
of the Owner Trustee to amounts paid or payable by Lessee to the Owner Trustee
under the Participation Agreement and all rights of the Owner Trustee to enforce
payments of any such amounts thereunder;

            (7)   Without limiting the generality of the foregoing, all monies
and securities from time to time deposited or required to be deposited with the
Mortgagee pursuant to any terms of this Trust Indenture or the Lease or required

<PAGE>

hereby or by the Lease to be held by the Mortgagee hereunder as security for the
obligations of the Lessee under the Lease or of the Owner Trustee hereunder; and

            (8)   All proceeds of the foregoing;

excluding, however, in all events from each of foregoing clauses (1) through (8)
inclusive all Excluded Payments and the right to specifically enforce the same
or to sue for damages for the breach thereof as provided in Section 5.02 hereof.

            Concurrently with the delivery of this Trust Indenture, the Owner
Trustee will deliver to the Mortgagee the original executed counterpart of the
Lease and the Lease Supplement No. 1 (to each of which a chattel paper receipt
is attached), and executed copies of the Participation Agreement and the
Purchase Agreement (to the extent assigned by the Purchase Agreement
Assignment), the Purchase Agreement Assignment, with the Consent and Agreement
attached thereto.

            TO HAVE AND TO HOLD all and singular the aforesaid property unto the
Mortgagee, and its successors and assigns, in trust for the equal and
proportionate benefit and security of the Loan Participant, the Note Holders and
the Indenture Indemnitees, except as provided in Section 2.14 and Article III
hereof without any preference, distinction or priority of any one Equipment Note
over any other by reason of priority of time of issue, sale, negotiation, date
of maturity thereof or otherwise for any reason whatsoever, and for the uses and
purposes and in all cases and as to all property specified in paragraphs (1)
through (8) inclusive above, subject to the terms and provisions set forth in
this Trust Indenture.

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

            The Owner Trustee does hereby constitute the Mortgagee the true and
lawful attorney of the Owner Trustee, irrevocably, granted for good and valuable
consideration and coupled with an interest and with full power of substitution,
and with full power (in the name of the Owner Trustee or otherwise) to ask for,
require, demand, receive, compound and give acquittance for any and all monies
and claims for monies (in each case including insurance and requisition proceeds
but in all cases excluding Excluded Payments) due and to become due under or
arising out of the Indenture Agreements, and all other property which now or

<PAGE>

hereafter constitutes part of the Trust Indenture Estate, to endorse any checks
or other instruments or orders in connection therewith and to file any claims or
to take any action or to institute any proceedings which the Mortgagee may deem
to be necessary or advisable in the premises. Without limiting the generality of
the foregoing, but subject to the rights of the Owner Trustee and the Owner
Participant under Sections 2.13, 4.03 and 4.04(a) hereof, during the continuance
of any Event of Default under this Trust Indenture, the Mortgagee shall have the
right under such power of attorney to accept any offer in connection with the
exercise of remedies as set forth herein of any purchaser to purchase the
Airframe and Engines and upon such purchase to execute and deliver in the name
of and on behalf of the Owner Trustee an appropriate bill of sale and other
instruments of transfer relating to the Airframe and Engines, when purchased by
such purchaser, and to perform all other necessary or appropriate acts with
respect to any such purchase, and in its discretion to file any claim or take
any other action or proceedings, either in its own name or in the name of the
Owner Trustee or otherwise, which the Mortgagee may deem necessary or
appropriate to protect and preserve the right, title and interest of the
Mortgagee in and to such Rents and other sums and the security intended to be
afforded hereby; PROVIDED, HOWEVER, that no action of the Mortgagee pursuant to
this paragraph shall increase the obligations or liabilities of the Owner
Trustee to any Person beyond those obligations and liabilities specifically set
forth in this Trust Indenture and in the other Operative Agreements. Under the
Lease, Lessee is directed, so long as this Trust Indenture shall not have been
fully discharged, to make all payments of Rent (other than Excluded Payments)
and all other amounts which are required to be paid to or deposited with the
Owner Trustee pursuant to the Lease (other than Excluded Payments) directly to,
or as directed by, the Mortgagee at such address or addresses as the Mortgagee
shall specify, for application as provided in this Trust Indenture. The Owner
Trustee agrees that promptly upon receipt thereof, it will transfer to the
Mortgagee any and all monies from time to time received by it constituting part
of the Trust Indenture Estate, for distribution by the Mortgagee pursuant to
this Trust Indenture, except that the Owner Trustee shall accept for
distribution pursuant to the Trust Agreement any amounts distributed to it by
the Mortgagee under this Trust Indenture.

            The Owner Trustee agrees that at any time and from time to time,
upon the written request of the Mortgagee, the Owner Trustee will promptly and
duly execute and deliver or cause to be duly executed and delivered any and all
such further instruments and documents as the Mortgagee may reasonably deem
necessary or desirable to perfect, preserve or protect the mortgage, security
interests and assignments created or intended to be created hereby or to obtain
for the Mortgagee the full benefits of the assignment hereunder and of the
rights and powers herein granted.

            The Owner Trustee does hereby warrant and represent that it has not
assigned or pledged, and hereby covenants and agrees that it will not assign or
pledge, so long as the assignment hereunder shall remain in effect, and the Lien
hereof shall not have been released pursuant to Section 10.01 hereof, any of its
right, title or interest hereby assigned, to anyone other than the Mortgagee,
and that it will not, except as otherwise provided in this Trust Indenture and
except with respect to Excluded Payments to which it is entitled, (i) accept any
payment from Lessee under any Indenture Agreement, (ii) enter into any agreement
amending or supplementing any Indenture Agreement, (iii) execute any waiver or
modification of, or consent under, the terms of, or exercise any rights, powers
or privileges under, any Indenture Agreement, (iv) settle or compromise any
claim arising under any Indenture Agreement or (v) submit or consent to the

<PAGE>

submission of any dispute, difference or other matter arising under or in
respect of any Indenture Agreement to arbitration thereunder.

            The Owner Trustee does hereby agree that it will not without the
written consent of the Mortgagee:

            (a)   receive or collect or agree to the receipt or collection of
      any payment (other than Excluded Payments) of Rent, including Basic Rent,
      Stipulated Loss Value, Termination Value or any other payment to be made
      pursuant to Section 9 or 10 of the Lease prior to the date for the payment
      thereof provided for by the Lease or assign, transfer or hypothecate
      (other than to the Mortgagee hereunder) any payment of Rent, including
      Basic Rent, Stipulated Loss Value, Termination Value or any other payment
      to be made pursuant to Section 9 or 10 of the Lease, then due or to accrue
      in the future under the Lease in respect of the Airframe and Engines; or

            (b)   except as contemplated by the Trust Agreement in connection
      with the appointment of a successor owner trustee, sell, mortgage,
      transfer, assign or hypothecate (other than to the Mortgagee hereunder)
      its interest in the Airframe and Engines or any part thereof or in any
      amount to be received by it from the use or disposition of the Airframe
      and Engines, other than amounts distributed to it pursuant to Article III
      hereof.

            It is hereby further agreed that any and all property described or
referred to in the granting clauses hereof which is hereafter acquired by the
Owner Trustee shall IPSO FACTO, and without any other conveyance, assignment or
act on the part of the Owner Trustee or the Mortgagee, become and be subject to
the Lien herein granted as fully and completely as though specifically described
herein, but nothing contained in this paragraph shall be deemed to modify or
change the obligations of the Owner Trustee contained in the foregoing
paragraphs.

            The Owner Trustee does hereby ratify and confirm the Lease and does
hereby agree that it will not violate any covenant or agreement made by it
therein, herein or in any other Owner Trustee Agreement.

            Notwithstanding the Granting Clause or any of the preceding
paragraphs, all Excluded Payments are hereby excluded from the foregoing sale,
transfer, assignment, grant, pledge and security interest. Further, nothing in
the Granting Clause or the preceding paragraphs shall impair any of the rights
of the Owner Trustee or the Owner Participant under Section 2.13, 4.03, 4.04,
4.08, 5.02 or 5.03 hereof.

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

<PAGE>

                                    ARTICLE I

                                   DEFINITIONS

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

                                   ARTICLE II

                               THE EQUIPMENT NOTES

            SECTION 2.01.   FORM OF EQUIPMENT NOTES.

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

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

                WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION,

     AS OWNER TRUSTEE UNDER [AMENDED AND RESTATED](1) TRUST AGREEMENT [TN]

                               DATED AS OF [DDC].

      LIMITED RECOURSE EQUIPMENT NOTE DUE [____] ISSUED IN CONNECTION WITH
           THE EMBRAER MODEL EMB-145 XR AIRCRAFT BEARING UNITED STATES
                          REGISTRATION NUMBER N[REG].

No.                                                  Date:[                    ]
   ----                                                    -------------, -----

                           $
                            ---------------------------
      INTEREST RATE                                        MATURITY DATE
      [          ]                                         [            ]
       ----------                                           ------------

            WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION, not in its
individual capacity but solely as Owner Trustee (herein in such capacity called

---------------
(1)  Delete for New Aircraft.

<PAGE>

the "Owner Trustee") under that certain [Amended and Restated](2) Trust
Agreement [TN], dated as of [DD], between the Owner Participant named therein
and Wells Fargo Bank Northwest, National Association (herein as such Trust
Agreement may be supplemented or amended from time to time called the "Trust
Agreement"), hereby promises to pay to WILMINGTON TRUST COMPANY, or the
registered assignee thereof, the principal sum of $____________ (the "Original
Amount"), together with interest on the amount of the Original Amount remaining
unpaid from time to time (calculated on the basis of a year of 360 days
comprised of twelve 30-day months) from the date hereof until paid in full at a
rate per annum equal to the Debt Rate. The Original Amount of this Equipment
Note shall be payable in installments on the dates set forth in Schedule I
hereto equal to the corresponding percentage of the Original Amount of this
Equipment Note set forth in Schedule I hereto. Accrued but unpaid interest shall
be due and payable in monthly installments commencing on [__________, 200_], and
thereafter on the first day of each month, to and including [_______________].
Notwithstanding the foregoing, the final payment made on this Equipment Note
shall be in an amount sufficient to discharge in full the unpaid Original Amount
and all accrued and unpaid interest on, and any other amounts due under, this
Equipment Note. Notwithstanding anything to the contrary contained herein, if
any date on which a payment under this Equipment Note becomes due and payable is
not a Business Day, then such payment shall not be made on such scheduled date
but shall be made on the next succeeding Business Day and if such payment is
made on such next succeeding Business Day, no interest shall accrue on the
amount of such payment during such extension.

            For purposes hereof, the term "Trust Indenture" means the Trust
Indenture and Mortgage [TN], dated as of [DD], between the Owner Trustee and
Wilmington Trust Company (the "Mortgagee"), as the same may be amended or
supplemented from time to time. All other capitalized terms used in this
Equipment Note and not defined herein shall have the respective meanings
assigned in the Trust Indenture.

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

            All payments of Original Amount, interest, Make-Whole Amount, if
any, and other amounts, if any, to be made by the Owner Trustee hereunder and
under the Trust Indenture or the Participation Agreement shall be payable only
from the income and proceeds from the Trust Estate to the extent included in the
Trust Indenture Estate and only to the extent that the Owner Trustee shall have
sufficient income or proceeds from the Trust Estate to the extent included in
the Trust Indenture Estate to enable the Mortgagee to make such payments in
accordance with the terms of Section 2.03 and Article III of the Trust
Indenture, and each holder hereof, by its acceptance of this Equipment Note,
agrees that it will look solely to the income and proceeds from the Trust
Indenture Estate to the extent available for distribution to the holder hereof
as above provided and that none of the Owner Participant, the Owner Trustee and

---------------
(2)  Delete for New Aircraft.

<PAGE>

the Mortgagee is personally liable or liable in any manner extending to any
assets other than the Trust Indenture Estate to the holder hereof for any
amounts payable or any liability under this Equipment Note or, except as
provided in the Trust Indenture or in the Participation Agreement, for any
liability under the Trust Indenture or the Participation Agreement; PROVIDED,
HOWEVER, that nothing herein contained shall limit, restrict or impair the right
of the Mortgagee, subject always to the terms and provisions of the Trust
Indenture, to accelerate the maturity of this Equipment Note upon occurrence of
an Event of Default under the Trust Indenture in accordance with Section 4.04(b)
of the Trust Indenture, to bring suit and obtain a judgment against the Owner
Trustee on this Equipment Note for purposes of realizing upon the Trust
Indenture Estate and to exercise all rights and remedies provided under the
Trust Indenture or otherwise realize upon the Trust Indenture Estate as provided
under the Trust Indenture.

            There shall be maintained an Equipment Note Register for the purpose
of registering transfers and exchanges of Equipment Notes at the Corporate Trust
Office of the Mortgagee or at the office of any successor in the manner provided
in Section 2.07 of the Trust Indenture.

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

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

            This Equipment Note is one of the Equipment Notes referred to in the
Trust Indenture which have been or are to be issued by the Owner Trustee
pursuant to the terms of the Trust Indenture. The Trust Indenture Estate is held
by the Mortgagee as security, in part, for the Equipment Notes. The provisions
of this Equipment Note are subject to the Trust Indenture. Reference is hereby
made to the Trust Indenture 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 and the rights and obligations of the holders of, and the
nature and extent of the security for, any other Equipment Notes executed and
delivered under the Trust Indenture, as well as for a statement of the terms and
conditions of the Trust created by the Trust Indenture, to all of which terms
and conditions in the Trust Indenture each holder hereof agrees by its
acceptance of this Equipment Note.

<PAGE>

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

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

            This Equipment Note is subject to redemption as provided in Sections
2.10 and 2.12 of the Trust Indenture but not otherwise. This Equipment Note is
also subject to exchange and to purchase by the Owner Participant or the Owner
Trustee as provided in Section 2.13 of the Trust Indenture but not otherwise. In
addition, this Equipment Note may be accelerated as provided in Section 4.04 of
the Trust Indenture.

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

            THIS EQUIPMENT NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.

                                    * * *

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

                                    WELLS FARGO BANK NORTHWEST,
                                     NATIONAL ASSOCIATION, not in its individual
                                     capacity but solely as Owner Trustee

                                    By:
                                        ------------------------------------
                                        Name:
                                        Title:

MORTGAGEE'S CERTIFICATE OF AUTHENTICATION

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

                                    WILMINGTON TRUST COMPANY, as Mortgagee

                                    By:
                                        ------------------------------------
                                        Name:
                                        Title:

<PAGE>

                                   SCHEDULE I

                          EQUIPMENT NOTE AMORTIZATION

                                                     Percentage of
                                                    Original Amount
              Payment Date                             to Be Paid

                       [SEE SCHEDULE I TO TRUST INDENTURE

                        WHICH IS INSERTED UPON ISSUANCE]

                                      * * *

            SECTION 2.02.   ISSUANCE AND TERMS OF EQUIPMENT NOTES.

            The Equipment Notes shall be dated the date of issuance thereof and
shall have the maturity date and shall bear interest as specified in Schedule I
hereto. On the date of the consummation of the Transactions, the initial
Equipment Note shall be issued in the initial Original Amount set forth in
Schedule I hereto to the Subordination Agent on behalf of the Pass Through
Trustee under the Pass Through Trust Agreement. The Equipment Notes shall be
issued in registered form only. The Equipment Notes shall be issued in
denominations of $1,000 and integral multiples thereof, except that one
Equipment Note may be in an amount that is not an integral multiple of $1,000.

            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) on the
unpaid Original Amount thereof from time to time outstanding, payable in arrears
on [_________, 200_], and on the first day of each month thereafter until
maturity. The Original Amount of each Equipment Note shall be payable on the
dates and in the installments equal to the corresponding percentage of the
Original Amount as set forth in Schedule I hereto which shall be attached as
Schedule I to the Equipment Notes. Notwithstanding the foregoing, the final
payment made under each Equipment Note shall be in an amount sufficient to
discharge in full the unpaid Original Amount and all accrued and unpaid interest
on, and any other amounts due under, such Equipment Note. Each Equipment Note
shall bear interest at the Payment Due Rate (calculated on the basis of a year
of 360 days comprised of twelve 30-day months) on any part of the Original
Amount, Make-Whole Amount, if any, and, to the extent permitted by applicable
Law, interest and any other amounts payable thereunder not paid when due for any
period during which the same shall be overdue, in each case for the period the
same is overdue. Amounts shall be overdue if not paid when due (whether at
stated maturity, by acceleration or otherwise). Notwithstanding anything to the
contrary contained herein, if any date on which a payment under any Equipment
Note becomes due and payable is not a Business Day then such payment shall not
be made on such scheduled date but shall be made on the next succeeding Business
Day and if such payment is made on such next succeeding Business Day, no
interest shall accrue on the amount of such payment during such extension.

<PAGE>

            The Owner Trustee agrees to pay to the Mortgagee for distribution in
accordance with Section 3.04 hereof: (i) to the extent not payable (whether or
not in fact paid) under Section 6(a) of the Note Purchase Agreement (as
originally in effect or amended with the consent of the Owner Participant), an
amount or amounts equal to the fees payable to the Liquidity Providers under
Section 2.03 of each Liquidity Facility and the related Fee Letter (as defined
in the Intercreditor Agreement) multiplied by a fraction the numerator of which
shall be the then outstanding aggregate principal amount of the Equipment Notes
and the denominator of which shall be the then outstanding aggregate principal
amount of all "Equipment Notes" (as defined in the Intercreditor Agreement);
(ii) (x) the amount equal to interest on any Downgrade Advance (other than any
Applied Downgrade Advance) payable under Section 3.07 of each Liquidity Facility
minus Investment Earnings from such Downgrade Advance multiplied by (y) the
fraction specified in the foregoing clause (i); (iii) (x) the amount equal to
interest on any CNAI Special Termination Advance (other than any Applied CNAI
Special Termination Advance) payable under Section 3.07 of the CNAI Liquidity
Facility minus Investment Earnings from such CNAI Special Termination Advance
multiplied by (y) the fraction specified in the foregoing clause (i); (iv) (x)
the amount equal to interest on any WestLB Expiration Advance (other than an
Applied WestLB Expiration Advance) payable under Section 3.07 of the WestLB
Liquidity Facility minus Investment Earnings from such WestLB Expiration Advance
multiplied by (y) the fraction specified in the foregoing clause (i); (v) (x)
the amount equal to interest on any Non-Extension Advance (other than any
Applied Non-Extension Advance) payable under Section 3.07 of the CNAI Liquidity
Facility minus Investment Earnings from such Non-Extension Advance multiplied by
(y) the fraction specified in the foregoing clause (i); (vi) (x) the amount
equal to interest on any WestLB Early Termination Advance (other than any
Applied WestLB Early Termination Advance) payable under Section 3.07 of the
WestLB Liquidity Facility minus Investment Earnings from such WestLB Early
Termination Advance multiplied by (y) the fraction specified in the foregoing
clause (i); and (vii) if any payment default shall have occurred and be
continuing with respect to interest on any Equipment Notes, (x) the excess, if
any, of (1) an amount equal to interest on any Unpaid Advance, Applied Downgrade
Advance, Applied CNAI Special Termination Advance, Applied WestLB Early
Termination Advance, Applied WestLB Expiration Advance or Applied Non-Extension
Advance payable under Section 3.07 of the applicable Liquidity Facility over (2)
the sum of Investment Earnings from any Final Advance plus any amount of
interest at the Payment Due Rate actually payable (whether or not in fact paid)
by Owner Trustee on the overdue scheduled interest on the Equipment Notes in
respect of which such Unpaid Advance, Applied Downgrade Advance, Applied CNAI
Special Termination Advance, Applied WestLB Early Termination Advance, Applied
WestLB Expiration Advance or Applied Non-Extension Advance was made multiplied
by (y) a fraction the numerator of which shall be the then aggregate overdue
amounts of interest on the Equipment Notes (other than interest becoming due and
payable solely as a result of acceleration of any such Equipment Notes) and the
denominator of which shall be the then aggregate overdue amounts of interest on
all "Equipment Notes" (as defined in the Intercreditor Agreement) (other than
interest becoming due and payable solely as a result of acceleration of any such
"Equipment Notes"). For purposes of this paragraph, (i) the terms "Applied
Downgrade Advance", "Cash Collateral Account", "Downgrade Advance", "Final
Advance", "Investment Earnings", and "Unpaid Advance" shall have the meanings
specified in each Liquidity Facility, (ii) the terms "Applied WestLB Early
Termination Advance", "Applied WestLB Expiration Advance", "WestLB Expiration
Advance" and "WestLB Early Termination Advance" shall have the meanings

<PAGE>

specified in the WestLB Liquidity Facility and (iii) the terms "Applied
Non-Extension Advance", "Applied CNAI Special Termination Advance",
"Non-Extension Advance" and "CNAI Special Termination Advance" shall have the
meanings specified in the CNAI Liquidity Facility.

            The Equipment Notes shall be executed on behalf of the Owner Trustee
by its President or one of its Vice Presidents, Assistant Vice Presidents or
Assistant Secretaries or other authorized officer. Equipment Notes bearing the
signatures of individuals who were at any time the proper officers of the Owner
Trustee shall bind the Owner Trustee, notwithstanding that such individuals or
any of them have ceased to hold such offices prior to the authentication and
delivery of such Equipment Notes or did not hold such offices at the respective
dates of such Equipment Notes. The Owner Trustee may from time to time execute
and deliver Equipment Notes with respect to the Aircraft to the Mortgagee for
authentication upon original issue and such Equipment Notes shall thereupon be
authenticated and delivered by the Mortgagee upon the written request of the
Owner Trustee signed by a Vice President or Assistant Vice President or other
authorized officer of the Owner Trustee; PROVIDED, HOWEVER, that each such
request shall specify the aggregate Original Amount of all Equipment Notes to be
authenticated hereunder on original issue with respect to the Aircraft. No
Equipment Note shall be secured by or entitled to any benefit under this Trust
Indenture or be valid or obligatory for any purposes, unless there appears on
such Equipment Note a certificate of authentication in the form provided for
herein executed by the Mortgagee 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.

            SECTION 2.03.   PAYMENTS FROM TRUST INDENTURE ESTATE ONLY.

            (a)   Without impairing any of the other rights, powers, remedies,
      privileges, liens or security interests of the Note Holders under this
      Trust Indenture, each Note Holder, by its acceptance of an Equipment Note,
      agrees that as between it and the Owner Trustee, except as expressly
      provided in this Trust Indenture, the Participation Agreement or any other
      Operative Agreement, (i) the obligation to make all payments of the
      Original Amount of, interest on, Make-Whole Amount, if any, and all other
      amounts due with respect to the Equipment Notes, and the performance by
      the Owner Trustee of every obligation or covenant contained in this Trust
      Indenture and in the Participation Agreement or any of the other Operative
      Agreements, shall be payable only from the income and proceeds from the
      Trust Estate to the extent included in the Trust Indenture Estate and only
      to the extent that the Owner Trustee shall have sufficient income or
      proceeds from the Trust Estate to the extent included in the Trust
      Indenture Estate to enable the Mortgagee to make such payments in
      accordance with the terms of Article III hereof, and all of the
      statements, representations, covenants and agreements made by the Owner
      Trustee (when made in such capacity) contained in this Trust Indenture and
      any agreement referred to herein other than the Trust Agreement, unless
      expressly otherwise stated, are made and intended only for the purpose of
      binding the Trust Estate and establishing the existence of rights and
      remedies which can be exercised and enforced against the Trust Estate;
      therefore, anything contained in this Trust Indenture or such other
      agreements to the contrary notwithstanding (except for any express
      provisions or representations that the Owner Trustee is responsible for,

<PAGE>

      or is making, in its individual capacity, for which there would be
      personal liability of the Owner Trustee), no recourse shall be had with
      respect to this Trust Indenture or such other agreements against the Owner
      Trustee in its individual capacity or against any institution or person
      which becomes a successor trustee or co-trustee or any officer, director,
      trustee, servant or direct or indirect parent or controlling Person or
      Persons of any of them, and (ii) none of the Owner Trustee, in its
      individual capacity, the Owner Participant, the Mortgagee and any officer,
      director, trustee, servant, employee, agent or direct or indirect parent
      or controlling Person or Persons of any of them shall have any personal
      liability for any amounts payable hereunder, under the Participation
      Agreement or any of the other Operative Agreements or under the Equipment
      Notes except as expressly provided herein, in the Lease or in the
      Participation Agreement; PROVIDED, HOWEVER, that nothing contained in this
      Section 2.03(a) shall be construed to limit the exercise and enforcement
      in accordance with the terms of this Trust Indenture or such other
      agreements of rights and remedies against the Trust Indenture Estate.

            (b)   If (i) all or any part of the Trust Estate becomes the
      property of, or the Owner Trustee or Owner Participant becomes, a debtor
      subject to the reorganization provisions of the Bankruptcy Code, (ii)
      pursuant to such reorganization provisions, including Section 1111(b) of
      the Bankruptcy Code, the Owner Trustee (in its individual capacity) or the
      Owner Participant is required, by reason of the Owner Trustee (in its
      individual capacity) or the Owner Participant being held to have recourse
      liability to any Note Holder or the Mortgagee, directly or indirectly
      (other than the recourse liability of the Owner Trustee (in its individual
      capacity) or the Owner Participant under the Participation Agreement, the
      Lease or this Trust Indenture or by separate agreement), to make payment
      on account of any amount payable as Original Amount, Make-Whole Amount, if
      any, interest or other amounts on the Equipment Notes and (iii) any Note
      Holder or the Mortgagee actually receives any Excess Amount (as
      hereinafter defined) which reflects any payment by the Owner Trustee (in
      its individual capacity) or the Owner Participant on account of clause
      (ii) above, then such Note Holder or the Mortgagee, as the case may be,
      shall promptly refund to the Owner Trustee (in its individual capacity) or
      the Owner Participant (whichever shall have made such payment) such Excess
      Amount.

            For purposes of this Section 2.03(b), "Excess Amount" means the
amount by which such payment exceeds the amount that would have been received by
a Note Holder or the Mortgagee if the Owner Trustee (in its individual capacity)
or the Owner Participant had not become subject to the recourse liability
referred to in clause (ii) above. Nothing contained in this Section 2.03(b)
shall prevent a Note Holder or the Mortgagee from enforcing any personal
recourse obligation (and retaining the proceeds thereof) of the Owner Trustee
(in its individual capacity) or the Owner Participant under the Participation
Agreement, the Lease or this Trust Indenture (and any exhibits or annexes hereto
or thereto) or from retaining any amount paid by Owner Participant under Section
2.13 or 4.03 hereof.

            SECTION 2.04.   METHOD OF PAYMENT.

            (a)   The Original Amount of, interest on, Make-Whole Amount, if
      any, and other amounts due under each Equipment Note or hereunder will be

<PAGE>

      payable in Dollars by wire transfer of immediately available funds not
      later than 12:30 p.m., New York City time, on the due date of payment to
      the Mortgagee at the Corporate Trust Office for distribution among the
      Note Holders in the manner provided herein. The Owner Trustee shall not
      have any responsibility for the distribution of such payment to any Note
      Holder. Notwithstanding the foregoing or any provision in any Equipment
      Note to the contrary, the Mortgagee will use reasonable efforts to pay or
      cause to be paid, if so directed in writing by any Note Holder (with a
      copy to the Owner Trustee), all amounts paid by the Owner Trustee
      hereunder and under such holder's Equipment Note or Equipment Notes to
      such holder or a nominee therefor (including all amounts distributed
      pursuant to Article III of this Trust Indenture) by transferring, or
      causing to be transferred, by wire transfer of immediately available funds
      in Dollars, prior to 2:00 p.m., New York City time, on the due date of
      payment, to an account maintained by such holder with a bank located in
      the continental United States the amount to be distributed to such holder,
      for credit to the account of such holder maintained at such bank. If the
      Mortgagee shall fail to make any such payment as provided in the
      immediately foregoing sentence after its receipt of funds at the place and
      prior to the time specified above, the Mortgagee, in its individual
      capacity and not as trustee, agrees to compensate such holders for loss of
      use of funds at the Debt Rate until such payment is made and the Mortgagee
      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 the Mortgagee for cancellation promptly after such payment.
      Notwithstanding any other provision of this Trust Indenture to the
      contrary, the Mortgagee shall not be required to make, or cause to be
      made, wire transfers as aforesaid prior to the first Business Day on which
      it is practicable for the Mortgagee to do so in view of the time of day
      when the funds to be so transferred were received by it if such funds were
      received after 12:30 p.m., New York City time, at the place of payment.
      Prior to the due presentment for registration of transfer of any Equipment
      Note, the Owner Trustee and the Mortgagee shall deem and treat the Person
      in whose name any Equipment Note is registered on the Equipment Note
      Register as the absolute owner and holder of such Equipment Note for the
      purpose of receiving payment of all amounts payable with respect to such
      Equipment Note and for all other purposes, and none of the Owner Trustee
      or the Mortgagee shall be affected by any notice to the contrary. So long
      as any signatory to the Participation Agreement or nominee thereof shall
      be a registered Note Holder, all payments to it shall be made to the
      account of such Note Holder specified in Schedule 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 the Mortgagee consistent with this Section 2.04.

            (b)   The Mortgagee, as agent for the Owner Trustee, shall exclude
      and withhold at the appropriate rate from each payment of Original Amount
      of, interest on, Make-Whole Amount, if any, and other amounts due
      hereunder or under each Equipment Note (and such exclusion and withholding
      shall constitute payment in respect of such Equipment Note) any and all
      United States withholding taxes applicable thereto as required by Law. The
      Mortgagee agrees to act as such withholding agent and, in connection
      therewith, whenever any present or future United States taxes or similar
      charges are required to be withheld with respect to any amounts payable

<PAGE>

      hereunder or in respect of the Equipment Notes, to withhold such amounts
      and timely pay the same to the appropriate authority in the name of and on
      behalf of the Note Holders, that it will file any necessary United States
      withholding tax returns or statements when due, and that as promptly as
      possible after the payment thereof it will deliver to each Note Holder
      (with a copy to the Owner Trustee and the Lessee) appropriate receipts
      showing the payment thereof, together with such additional documentary
      evidence as any such Note Holder may reasonably request from time to time.

            If a Note Holder which is a Non-U.S. Person has furnished to the
Mortgagee a properly completed, accurate and currently effective U.S. Internal
Revenue Service Form W-8BEN (or such successor form or forms as may be required
by the United States Treasury Department) for each calendar year in which a
payment is made hereunder or under the Equipment Note(s) held by such holder is
made (but prior to the making of such payment), or in either of the two
preceding calendar years, and has not notified the Mortgagee of the withdrawal
or inaccuracy of such form prior to the date of such payment (and the Mortgagee
has no reason to believe that any information set forth in such form is
inaccurate), the Mortgagee shall withhold only the amount, if any, required by
Law (after taking into account any applicable exemptions properly claimed by the
Note Holder) to be withheld from payments hereunder or under the Equipment Notes
held by such holder in respect of United States federal income tax. If a Note
Holder (x) which is a Non-U.S. Person has furnished to the Mortgagee a properly
completed, accurate and currently effective U.S. Internal Revenue Service Form
W-8ECI in duplicate (or such successor certificate, form or forms as may be
required by the United States Treasury Department as necessary in order to
properly avoid withholding of United States federal income tax), for each
calendar year in which a payment is made hereunder or under any Equipment Note
(but prior to the making of any payment for such year), and has not notified the
Mortgagee of the withdrawal or inaccuracy of such certificate or form prior to
the date of such payment (and the Mortgagee has no reason to believe that any
information set forth in such form is inaccurate) or (y) which is a U.S. Person
has furnished to the Mortgagee a properly completed, accurate and currently
effective U.S. Internal Revenue Service Form W-9, if applicable, prior to a
payment hereunder or under the Equipment Notes held by such holder, no amount
shall be withheld from payments in respect of United States federal income tax.
If any Note Holder has notified the Mortgagee that any of the foregoing forms or
certificates is withdrawn or inaccurate, or if such holder has not filed a form
claiming an exemption or reduced withholding from United States withholding tax
or if the Code or the regulations thereunder or the administrative
interpretation thereof is at any time after the date hereof amended to require
such withholding of United States federal income taxes from payments hereunder
or under the Equipment Notes held by such holder, the Mortgagee agrees to
withhold from each payment due to the relevant Note Holder withholding taxes at
the appropriate rate under Law and will, on a timely basis as more fully
provided above, deposit such amounts with an authorized depository and make such
returns, statements, receipts and other documentary evidence in connection
therewith as required by Law.

            Neither the Owner Trustee nor the Owner Participant shall have any
liability for the failure of the Mortgagee to withhold taxes in the manner
provided for herein or for any false, inaccurate or untrue evidence provided by
any Note Holder hereunder.

<PAGE>

            SECTION 2.05.   APPLICATION OF PAYMENTS.

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

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

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

            Third:  to the payment of Make-Whole Amount, if any, and any
other amount due hereunder or under such Equipment Note; and

            Fourth: the balance, if any, remaining thereafter, to the payment of
the Original Amount of such Equipment Note remaining unpaid (provided that such
Equipment Note shall not be subject to redemption except as provided in Sections
2.10 and 2.12 hereof).

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

            SECTION 2.06.   TERMINATION OF INTEREST IN TRUST INDENTURE ESTATE.

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

            SECTION 2.07.   REGISTRATION TRANSFER AND EXCHANGE OF EQUIPMENT
NOTES.

            The Mortgagee shall keep a register (the "Equipment Note Register")
in which the Mortgagee shall provide for the registration of Equipment Notes and
the registration of transfers of Equipment Notes. No such transfer shall be
given effect unless and until registration hereunder shall have occurred. The
Equipment Note Register shall be kept at the Corporate Trust Office of the
Mortgagee. The Mortgagee is hereby appointed "Equipment Note Registrar" for the
purpose of registering Equipment Notes and transfers of Equipment Notes as
herein provided. A holder of any Equipment Note intending to exchange such
Equipment Note shall surrender such Equipment Note to the Mortgagee at the
Corporate Trust Office, together with a written request from the registered
holder thereof for the issuance of a new Equipment Note, specifying, in the case
of a surrender for transfer, the name and address of the new holder or holders.
Upon surrender for registration of transfer of any Equipment Note, the Owner

<PAGE>

Trustee shall execute, and the Mortgagee shall authenticate and deliver, in the
name of the designated transferee or transferees, one or more new Equipment
Notes of a like aggregate Original Amount. At the option of the Note Holder,
Equipment Notes may be exchanged for other Equipment Notes of any authorized
denominations of a like aggregate Original Amount, upon surrender of the
Equipment Notes to be exchanged to the Mortgagee at the Corporate Trust Office.
Whenever any Equipment Notes are so surrendered for exchange, the Owner Trustee
shall execute, and the Mortgagee shall authenticate and deliver, the Equipment
Notes which the Note Holder making the exchange is entitled to receive. All
Equipment Notes issued upon any registration of transfer or exchange of
Equipment Notes (whether under this Section 2.07 or under Section 2.08 hereof or
otherwise under this Trust Indenture) shall be the valid obligations of the
Owner Trustee evidencing the same respective obligations, and entitled to the
same security and benefits under this Trust Indenture, as the Equipment Notes
surrendered upon such registration of transfer or exchange. Every Equipment Note
presented or surrendered for registration of transfer, shall (if so required by
the Mortgagee) be duly endorsed, or be accompanied by a written instrument of
transfer in form satisfactory to the Mortgagee duly executed by the Note Holder
or such holder's attorney duly authorized in writing, and the Mortgagee shall
require evidence satisfactory to it as to the compliance of any such transfer
with the Securities Act, and the securities Laws of any applicable state. The
Mortgagee shall make a notation on each new Equipment Note of the amount of all
payments of Original Amount previously made on the old Equipment Note or
Equipment Notes with respect to which such new Equipment Note is issued and the
date to which interest on such old Equipment Note or Equipment Notes has been
paid. Interest shall be deemed to have been paid on such new Equipment Note to
the date on which interest shall have been paid on such old Equipment Note, and
all payments of the Original Amount marked on such new Equipment Note, as
provided above, shall be deemed to have been made thereon. The Owner Trustee
shall not be required to exchange any surrendered Equipment Notes as provided
above during the ten-day period preceding the due date of any payment on such
Equipment Note. The Owner Trustee shall in all cases deem the Person in whose
name any Equipment Note shall have been issued and registered as the absolute
owner and holder of such Equipment Note for the purpose of receiving payment of
all amounts payable by the Owner Trustee with respect to such Equipment Note and
for all purposes until a notice stating otherwise is received from the Mortgagee
and such change is reflected on the Equipment Note Register. The Mortgagee will
promptly notify the Owner Trustee and the Lessee 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 Participation
Agreement applicable to Note Holders, and shall be deemed to have covenanted to
the parties to the Participation Agreement as to the matters covenanted by the
original Loan Participant in the Participation Agreement. Subject to compliance
by the Note Holder and its transferee (if any) of the requirements set forth in
this Section 2.07, Mortgagee and Owner Trustee shall use all reasonable efforts
to issue new Equipment Notes upon transfer or exchange within 10 Business Days
of the date an Equipment Note is surrendered for transfer or exchange.

            SECTION 2.08.   MUTILATED, DESTROYED, LOST OR STOLEN EQUIPMENT
NOTES.

            If any Equipment Note shall become mutilated, destroyed, lost or
stolen, the Owner Trustee shall, upon the written request of the holder of such
Equipment Note, execute and the Mortgagee shall authenticate and deliver in
replacement thereof a new Equipment Note, payable in the same Original Amount

<PAGE>

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

            SECTION 2.09.   PAYMENT OF EXPENSES ON TRANSFER; CANCELLATION.

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

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

            SECTION 2.10.   MANDATORY REDEMPTIONS OF EQUIPMENT NOTES.

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

            (b)   If the Lease is terminated with respect to the Aircraft by
      Lessee pursuant to Section 9 thereof, on the date the Lease is so
      terminated, all the Equipment Notes shall be redeemed in whole at a
      redemption price equal to 100% of the unpaid Original Amount thereof,
      together with accrued interest thereon to the date of redemption and all
      other amounts then due and payable hereunder and under the Participation
      Agreement and all other Operative Agreements to the Note Holders plus, if
      such redemption is made prior to the Premium Termination Date, Make-Whole
      Amount, if any.

<PAGE>

            SECTION 2.11.   [RESERVED.]

            SECTION 2.12.   REDEMPTIONS; NOTICE OF REDEMPTION.

            (a)   Neither any redemption of any Equipment Note nor any purchase
      by the Owner Trustee of any Equipment Note may be made except to the
      extent and in the manner expressly permitted by this Trust Indenture. No
      purchase of any Equipment Note may be made by the Mortgagee.

            (b)   Notice of redemption with respect to the Equipment Notes shall
      be given by the Mortgagee by first-class mail, postage prepaid, mailed not
      less than 15 nor more than 60 days prior to the applicable redemption
      date, to each Note Holder of such Equipment Notes to be redeemed, at such
      Note Holder's address appearing in the Equipment Note Register; PROVIDED,
      HOWEVER, that, in the case of a redemption to be made pursuant to Section
      2.10(b), such notice shall be revocable and shall be deemed revoked in the
      event that the Lease does not in fact terminate on the specified
      termination date. All notices of redemption shall state: (1) the
      redemption date, (2) the applicable basis for determining the redemption
      price, (3) that on the redemption date, the redemption price will become
      due and payable upon each such Equipment Note, and that, if any such
      Equipment Notes are then outstanding, interest on such Equipment Notes
      shall cease to accrue on and after such redemption date, and (4) the place
      or places where such Equipment Notes are to be surrendered for payment of
      the redemption price.

            (c)   On or before the redemption date, the Owner Trustee (or any
      person on behalf of the Owner Trustee) 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 in the Trust Indenture Estate,
      deposit or cause to be deposited with the Mortgagee by 12:00 noon 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
      deemed revoked as contemplated in the proviso to Section 2.12(b)), the
      Equipment Notes to be redeemed shall, on the redemption date, become due
      and payable at the Corporate Trust Office of the Mortgagee or at any
      office or agency maintained for such purposes pursuant to Section 2.07,
      and from and after such redemption date (unless there shall be a default
      in the payment of the redemption price) any such Equipment Notes then
      outstanding shall cease to bear interest. Upon surrender of any such
      Equipment Note for redemption in accordance with said notice, such
      Equipment Note shall be redeemed at the redemption price. If any Equipment
      Note called for redemption shall not be so paid upon surrender thereof for
      redemption, the principal amount thereof shall, until paid, continue to
      bear interest from the applicable redemption date at the interest rate in
      effect for such Equipment Note as of such redemption date.

            SECTION 2.13.   OPTION TO PURCHASE EQUIPMENT NOTES.

            The Owner Trustee and the Owner Participant may, upon the events and
subject to the terms and conditions and for the price set forth in this Section

<PAGE>

2.13, purchase all but not less than all of the Equipment Notes outstanding
hereunder, and each Note Holder agrees that it will, upon such events and
subject to such terms and conditions and upon receipt of such price, sell,
assign, transfer and convey to such purchaser or its nominee (without recourse
or warranty of any kind except against Liens on such Equipment Notes arising by,
through or under such holder), all of the right, title and interest of such Note
Holder in and to the Equipment Notes held by it, and such purchaser or its
nominee shall assume all of such holder's obligations under the Participation
Agreement and hereunder.

            Such option to purchase the Equipment Notes may be exercised by the
Owner Trustee or the Owner Participant at any time following the occurrence of
any of the following events, and in any such event the purchase price thereof
shall equal for each Equipment Note, the aggregate unpaid Original Amount
thereof, plus accrued and unpaid interest thereon to, but not including, the
date of purchase and all other Secured Obligations owed, or then due and payable
hereunder, to the holder thereof (including under the third paragraph of Section
2.02 hereof). Such option to purchase the Equipment Notes may be exercised (x)
upon a Mortgagee Event or (y) in the event there shall have occurred and be
continuing a Lease Event of Default, PROVIDED, HOWEVER, that if such option is
exercised prior to the Premium Termination Date pursuant to clause (y) at a time
when there shall have occurred and be continuing for less than 120 days a Lease
Event of Default, the purchase price thereof shall equal the price provided in
the preceding sentence plus the Make-Whole Amount, if any.

            Such option to purchase the Equipment Notes may be exercised by the
Owner Trustee or the Owner Participant giving irrevocable written notice of its
election of such option to the Mortgagee, which notice shall specify a date for
such purchase at least 15 days but not more than 20 days from the date of such
notice. The Mortgagee shall not exercise any of the remedies hereunder and,
without the consent of the Owner Trustee or the Owner Participant, under the
Lease, during the period from the date of the giving of such notice until the
date on which such purchase is required to occur pursuant to the terms of the
preceding sentence.

            If the Owner Trustee or the Owner Participant on or before the date
of such purchase shall so request, the Note Holders will comply with all the
provisions of Section 2.07 to enable new Equipment Notes to be issued to the
Owner Trustee or the Owner Participant or its nominee in such denominations as
the Owner Trustee or the Owner Participant shall request. All taxes, charges and
expenses required pursuant to Section 2.09 in connection with the issuance of
such new Equipment Note shall be borne by the Owner Participant.

            SECTION 2.14.   PRIORITY OF DISTRIBUTIONS.

            The Owner Trustee and, by acceptance of its Equipment Notes, each
Note Holder, hereby agree that no payment or distribution shall be made on or in
respect of the Secured Obligations owed to such Note Holder, including any
payment or distribution of cash, property or securities after the commencement
of a proceeding of the type referred to in Section 4.02(g) hereof, except as
expressly provided in Article III hereof.

<PAGE>

                                   ARTICLE III

                    RECEIPT, DISTRIBUTION AND APPLICATION OF
                     INCOME FROM THE TRUST INDENTURE ESTATE

            SECTION 3.01.    BASIC RENT DISTRIBUTION.

            Except as otherwise provided in Sections 3.02 and 3.03 hereof, each
installment of Basic Rent, any payment of interest on overdue installments of
Basic Rent and any payment received by the Mortgagee pursuant to Section 4.03
hereof shall be promptly distributed in the following order of priority:

   FIRST,   so much of such installment or payment as shall be required to
            pay in full the aggregate amount of the payment or payments of
            Original Amount and interest (as well as any interest on any
            overdue Original Amount and, to the extent permitted by Law, on
            any overdue interest) then due under all Equipment Notes shall be
            distributed to the Note Holders ratably, without priority of one
            over the other, in the proportion that the amount of such payment
            or payments then due under each Equipment Note bears to the
            aggregate amount of the payments then due under all Equipment
            Notes;

   SECOND,  the balance, if any, of such installment remaining thereafter shall
            be distributed to the Owner Trustee; PROVIDED, HOWEVER, that if an
            Event of Default shall have occurred and be continuing, then such
            balance shall not be distributed as provided in this clause "Second"
            but shall be held by the Mortgagee as part of the Trust Indenture
            Estate and invested in accordance with Section 5.09 hereof until
            whichever of the following shall first occur: (i) all Events of
            Default shall have been cured or waived, in which event such balance
            shall be distributed as provided in this clause "Second", (ii)
            Section 3.03 hereof shall be applicable, in which event such balance
            shall be distributed in accordance with the provisions of such
            Section 3.03, or (iii) the 120th day after the receipt of such
            payment in which case such payment shall be distributed as provided
            in this clause "Second".

            SECTION 3.02.   EVENT OF LOSS; REPLACEMENT; VOLUNTARY TERMINATION;
OPTIONAL REDEMPTION.

            Except as otherwise provided in Section 3.03 hereof, any payments
received by the Mortgagee (i) with respect to the Airframe or the Airframe and
one or more Engines as the result of an Event of Loss, or (ii) pursuant to a
voluntary termination of the Lease pursuant to Section 9 thereof shall be
applied to redemption of the Equipment Notes and to all other Secured
Obligations by applying such funds in the following order of priority:

   FIRST,   (a) to reimburse the Mortgagee and the Note Holders for any
            reasonable costs or expenses incurred in connection with such
            redemption for which they are entitled to reimbursement, or
            indemnity by Lessee, under the Operative Agreements and then (b)
            to pay any other Secured Obligations then due to the Mortgagee,
            the Note Holders and the other Indenture Indemnitees under this

<PAGE>

            Trust Indenture, the Participation Agreement or the Equipment
            Notes (other than amounts specified in clause Second below);

   SECOND,  to pay the amounts specified in clause "Third" of Section 3.03
            hereof plus Make-Whole Amount, if any, then due and payable in
            respect of the Equipment Notes;

   THIRD,   as provided in clause "Fourth" of Section 3.03 hereof;

provided, however, that if a Replacement Airframe or Replacement Engine shall be
substituted for the Airframe or Engine subject to such Event of Loss as provided
in Section 10 of the Lease and in accordance with Section 5.06 hereof, any
insurance, condemnation or similar proceeds which result from such Event of Loss
and are paid over to the Mortgagee shall be held by the Mortgagee as permitted
by Section 6.04 hereof (provided that such moneys shall be invested as provided
in Section 5.09 hereof) as additional security for the obligations of Lessee
under the Lessee Operative Agreements and, unless otherwise applied pursuant to
the Lease, such proceeds (and such investment earnings) shall be released to the
Lessee at the Lessee's written request upon the release of such damaged Airframe
or Engine and the replacement thereof as provided in the Lease.

            SECTION 3.03.   PAYMENTS AFTER EVENT OF DEFAULT.

            Except as otherwise provided in Section 3.04 hereof, all payments
received and amounts held or realized by the Mortgagee (including any amounts
realized by the Mortgagee from the exercise of any remedies pursuant to Section
15 of the Lease or Article IV hereof) after an Event of Default shall have
occurred and be continuing and after the declaration or other acceleration of
the Equipment Notes specified in Section 4.04(b) hereof, as well as all payments
or amounts then held by the Mortgagee as part of the Trust Indenture Estate,
shall be promptly distributed by the Mortgagee in the following order of
priority:

   FIRST,   so much of such payments or amounts as shall be required to (i)
            reimburse the Mortgagee or WTC for any tax (except to the extent
            resulting from a failure of the Mortgagee to withhold taxes
            pursuant to Section 2.04(b) hereof), expense or other loss
            (including, without limitation, all amounts to be expended at the
            expense of, or charged upon the rents, revenues, issues, products
            and profits of, the property included in the Trust Indenture
            Estate (all such property being herein called the "Mortgaged
            Property") pursuant to Section 4.05(b) hereof) incurred by the
            Mortgagee or WTC (to the extent not previously reimbursed), the
            expenses of any sale, or other proceeding, reasonable attorneys'
            fees and expenses, court costs, and any other expenditures
            incurred or expenditures or advances made by the Mortgagee, WTC
            or the Note Holders in the protection, exercise or enforcement of
            any right, power or remedy or any damages sustained by the
            Mortgagee, WTC or any Note Holder, liquidated or otherwise, upon
            such Event of Default shall be applied by the Mortgagee as
            between itself, WTC and the Note Holders in reimbursement of such
            expenses and any other expenses for which the Mortgagee, WTC or
            the Note Holders are entitled to reimbursement under any
            Operative Agreement and (ii) pay all Secured Obligations payable
            to the other Indenture Indemnitees hereunder and under the
            Participation Agreement and the Lease (other than amounts

<PAGE>

            specified in clauses Second and Third below); and in the case the
            aggregate amount to be so distributed is insufficient to pay as
            aforesaid in clauses (i) and (ii), then ratably, without priority
            of one over the other, in proportion to the amounts owed each
            hereunder;

   SECOND,  so much of such payments or amounts remaining as shall be required
            to reimburse the then existing or prior Note Holders for payments
            made pursuant to Section 5.03 hereof (to the extent not previously
            reimbursed) shall be distributed to such then existing or prior Note
            Holders ratably, without priority of one over the other, in
            accordance with the amount of the payment or payments made by each
            such then existing or prior Note Holder pursuant to said Section
            5.03 hereof;

   THIRD,   so much of such payments or amounts remaining as shall be
            required to pay in full the aggregate unpaid Original Amount of
            all Equipment Notes, and the accrued but unpaid interest and
            other amounts due thereon (other than Make-Whole Amount which
            shall not be due and payable) and all other Secured Obligations
            in respect of the Equipment Notes (other than Make-Whole Amount)
            to the date of distribution, shall be distributed to the Note
            Holders, 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
            the aggregate unpaid Original Amount of all Equipment Notes held
            by each holder plus the accrued but unpaid interest and other
            amounts due hereunder or thereunder (other than Make-Whole
            Amount, if any) to the date of distribution, bears to the
            aggregate unpaid Original Amount of all Equipment Notes held by
            all such holders plus the accrued but unpaid interest and other
            amounts due thereon (other than Make-Whole Amount) to the date of
            distribution; and

   FOURTH,  the balance, if any, of such payments or amounts remaining
            thereafter shall be distributed to the Owner Trustee.

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

            SECTION 3.04.   CERTAIN PAYMENTS.

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

            (b)   Notwithstanding anything to the contrary contained in this
      Article III, the Mortgagee will distribute promptly upon receipt any
      indemnity payment received by it from the Owner Trustee or Lessee in
      respect of the Mortgagee in its individual capacity, any Note Holder or
      any other Indenture Indemnitee, in each case whether pursuant to Section 9
      of the Participation Agreement or as Supplemental Rent, directly to the
      Person entitled thereto. Any payment received by the Mortgagee under the

<PAGE>

      third paragraph of Section 2.02 shall be distributed to the Subordination
      Agent to be distributed in accordance with the terms of the Intercreditor
      Agreement.

            (c)   Notwithstanding anything to the contrary contained in this
      Article III, any payments received by the Mortgagee which constitute
      Excluded Payments shall be distributed promptly upon receipt by the
      Mortgagee directly to the Person or Persons entitled thereto.

            (d)   Notwithstanding any provision of this Trust Indenture to the
      contrary, any amounts held by Mortgagee pursuant to the terms of the Lease
      shall be held by the Mortgagee as security for the obligations of Lessee
      under the Lessee Operative Agreements and, if and when required by the
      Lease, paid and/or applied in accordance with the applicable provisions of
      the Lease.

            SECTION 3.05.   OTHER PAYMENTS.

            Any payments received by the Mortgagee for which no provision as to
the application thereof is made in the Lease, the Participation Agreement,
elsewhere in this Trust Indenture or in any other Operative Agreement shall be
distributed by the Mortgagee to the extent received or realized at any time (i)
prior to the payment in full of all Secured Obligations due the Note Holders, in
the order of priority specified in Section 3.01 hereof subject to the proviso
thereto, and (ii) after payment in full of all Secured Obligations, in the
following order of priority:

   FIRST,   to the extent payments or amounts described in clause "First" of
            Section 3.03 hereof are otherwise obligations of Lessee under the
            Operative Agreements or for which the Lessee is obligated to
            indemnify against thereunder, in the manner provided in clause
            "First" of Section 3.03 hereof, and

   SECOND, in the manner provided in clause "Fourth" of Section 3.03 hereof.

            Further, and except as otherwise provided in Sections 3.02, 3.03 and
3.04 hereof, all payments received and amounts realized by the Mortgagee under
the Lease or otherwise with respect to the Aircraft (including, without
limitation, all amounts realized upon the sale or release of the Aircraft after
the termination of the Lease with respect thereto), to the extent received or
realized at any time after payment in full of all Secured Obligations due the
Note Holders, shall be distributed by the Mortgagee in the order of priority
specified in clause (ii) of the immediately preceding sentence of this Section
3.05.

            SECTION 3.06.   PAYMENTS TO OWNER TRUSTEE.

            Any amounts distributed hereunder by the Mortgagee to the Owner
Trustee shall be paid to the Owner Trustee (within the time limits contemplated
by Section 2.04(a)) by wire transfer of funds of the type received by the
Mortgagee at such office and to such account or accounts of such entity or
entities as shall be designated by notice from the Owner Trustee to the
Mortgagee from time to time. The Mortgagee shall not pay an amount due to Owner
Trustee hereunder to any Person other than Owner Trustee, unless the Lessee
shall have given its written consent thereto.

<PAGE>

                                   ARTICLE IV

                      COVENANTS OF OWNER TRUSTEE; EVENTS OF
                         DEFAULT; REMEDIES OF MORTGAGEE

            SECTION 4.01.   COVENANTS OF OWNER TRUSTEE.

            The Owner Trustee hereby covenants and agrees (the covenants and
agreements only in clause (b) below being made by the Owner Trustee in its
individual capacity) as follows:

            (a) the Owner Trustee will duly and punctually pay the Original
      Amount of, Make-Whole Amount, if any, and interest on and other amounts
      due under the Equipment Notes and hereunder in accordance with the terms
      of the Equipment Notes and this Trust Indenture and all amounts, if any,
      payable by it to the Note Holders under the Participation Agreement or
      Section 9 of the Lease;

            (b) the Owner Trustee in its individual capacity covenants and
      agrees that it shall not, directly or indirectly, cause or permit to exist
      a Lessor Lien attributable to it in its individual capacity with respect
      to the Aircraft or any other portion of the Trust Estate; that, subject to
      the proviso in Section 7.3.1 of the Participation Agreement, it will
      promptly, at its own expense, take such action as may be necessary to duly
      discharge such Lessor Lien attributable to it in its individual capacity;
      and that it will make restitution to the Trust Indenture Estate for any
      actual diminution of the assets of the Trust Estate resulting from such
      Lessor Liens attributable to it in its individual capacity;

            (c) in the event the Owner Trustee shall have Actual Knowledge of an
      Event of Default, a Default or an Event of Loss, the Owner Trustee will
      give prompt written notice of such Event of Default, Default or Event of
      Loss to the Mortgagee, each Note Holder, Lessee and the Owner Participant;

            (d) the Owner Trustee will furnish to the Note Holders and the
      Mortgagee, promptly upon receipt thereof, duplicates or copies of all
      reports, notices, requests, demands, certificates and other instruments
      furnished to the Owner Trustee under the Lease, including, without
      limitation, a copy of each report or notice received pursuant to Section 9
      or 8.2 or Annex D, Paragraph E of the Lease to the extent that the same
      shall not have been furnished or is not required to be furnished by the
      Lessee to the Note Holders or the Mortgagee pursuant to the Lease;

            (e) except with the consent of the Mortgagee (acting pursuant to
      instructions given in accordance with Section 9.01 hereof) or as provided
      in Section 2 of the Participation Agreement, the Owner Trustee will not
      contract for, create, incur, assume or suffer to exist any Debt, and will
      not guarantee (directly or indirectly or by an instrument having the
      effect of assuring another's payment or performance on any obligation or
      capability of so doing, or otherwise), endorse or otherwise be or become
      contingently liable, directly or indirectly, in connection with the Debt
      of any other person; and

            (f) the Owner Trustee will not enter into any business or other
      activity other than the business of owning the Aircraft, the leasing
      thereof to Lessee and the carrying out of the transactions contemplated

<PAGE>

      hereby and by the Lease, the Participation Agreement and the Trust
      Agreement and the other Operative Agreements.

            SECTION 4.02.   EVENT OF DEFAULT.

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

            (a)   any Lease Event of Default (provided that any such Lease Event
      of Default caused solely by a failure of Lessee to pay to the Owner
      Trustee or the Owner Participant when due any amount that is included in
      the definition of Excluded Payments shall not constitute an Event of
      Default unless notice is given by the Owner Trustee to the Mortgagee that
      such failure shall constitute an Event of Default); or

            (b)   the failure of the Owner Trustee to pay when due any payment
      of Original Amount of, interest on, Make-Whole Amount, if any, or other
      amount due and payable under any Equipment Note or hereunder (other than
      as a result of a Lease Event of Default or a Lease Default) and such
      failure shall have continued unremedied for ten Business Days in the case
      of any payment of Original Amount or interest or Make-Whole Amount, if
      any, thereon and, in the case of any other amount, for ten Business Days
      after the Owner Trustee or the Owner Participant receives written demand
      from the Mortgagee or any Note Holder; or

            (c)   any Lien required to be discharged by the Owner Trustee, in
      its individual capacity pursuant to Section 4.01(b) hereof or in its
      individual or trust capacity pursuant to Section 7.3.1 of the
      Participation Agreement, or by the Owner Participant pursuant to Section
      7.2.1 of the Participation Agreement shall remain undischarged for a
      period of 30 days after the Owner Trustee or the Owner Participant, as the
      case may be, shall have received written notice from the Mortgagee or any
      Note Holder of such Lien; or

            (d)   any representation or warranty made by the Owner Participant
      or the Owner Trustee in the Participation Agreement or this Trust
      Indenture or in any certificate furnished by the Owner Participant or the
      Owner Trustee to the Mortgagee or any Note Holder in connection with the
      transactions contemplated by the Operative Agreements shall prove to have
      been false or incorrect when made in any material respect and continues to
      be material and adverse to the interests of the Mortgagee or the Note
      Holders; and if such misrepresentation is capable of being corrected and
      if such correction is being sought diligently, such misrepresentation
      shall not have been corrected within 60 days (or, without affecting
      Section 4.02(f) hereof, in the case of the representation made in Section
      6.3.6 or 6.2.6 of the Participation Agreement as to citizenship of the
      Owner Trustee in its individual capacity or of the Owner Participant,
      respectively, as soon as is reasonably practicable but in any event within
      60 days) following notice thereof from the Mortgagee or any Note Holder to
      the Owner Trustee or the Owner Participant, as the case may be; or

<PAGE>

            (e)   other than as provided in (c) above or (f) below, any failure
      by the Owner Trustee or Owner Participant to observe or perform any other
      covenant or obligation of the Owner Trustee or Owner Participant, as the
      case may be, for the benefit of the Mortgagee or the Note Holders
      contained in the Participation Agreement, Section 4.2.1 of the Trust
      Agreement, the Equipment Notes or this Trust Indenture which is not
      remedied within a period of 60 days after notice thereof has been given to
      the Owner Trustee and the Owner Participant; or

            (f)   if at any time when the Aircraft is registered under the Laws
      of the United States, the Owner Participant shall not be a "citizen of the
      United States" within the meaning of Section 40102(a)(15) of Part A of
      Subtitle VII of Title 49, United States Code, and as the result thereof
      the registration of the Aircraft under the Act, and regulations then
      applicable thereunder, shall cease to be effective; provided that no Event
      of Default shall be deemed to have occurred under this paragraph (f)
      unless such circumstances continue unremedied for more than 30 days after
      the Owner Participant has Actual Knowledge of the state of facts that
      resulted in such ineffectiveness and of such loss of citizenship; or

            (g)   at any time either (i) the commencement of an involuntary case
      or other proceeding in respect of the Owner Participant, the Owner
      Trustee, the Trust or the Trust Estate under the federal bankruptcy Laws,
      as now constituted or hereafter amended, or any other applicable federal
      or state bankruptcy, insolvency or other similar Law in the United States
      or seeking the appointment of a receiver, liquidator, assignee, custodian,
      trustee, sequestrator (or similar official) of the Owner Participant, the
      Owner Trustee, the Trust or the Trust Estate or for all or substantially
      all of its property, or seeking the winding-up or liquidation of its
      affairs and the continuation of any such case or other proceeding
      undismissed and unstayed for a period of 60 consecutive days; or (ii) the
      commencement by the Owner Participant, the Owner Trustee, the Trust or the
      Trust Estate of a voluntary case or proceeding under the federal
      bankruptcy Laws, as now constituted or hereafter amended, or any other
      applicable federal or state bankruptcy, insolvency or other similar Law in
      the United States, or the consent by the Owner Participant, the Owner
      Trustee, the Trust or the Trust Estate to the appointment of or taking
      possession by a receiver, liquidator, assignee, trustee, custodian,
      sequestrator (or other similar official) of the Owner Participant, the
      Owner Trustee, the Trust or the Trust Estate or for all or substantially
      all of its property, or the making by the Owner Participant, the Owner
      Trustee, the Trust or the Trust Estate of any assignment for the benefit
      of creditors or the Owner Participant or the Owner Trustee shall take any
      action to authorize any of the foregoing; PROVIDED, HOWEVER, that an event
      referred to in this Section 4.02(g) with respect to the Owner Participant
      shall not constitute an Event of Default if within 30 days of the
      commencement of the case or proceeding a final non-appealable order,
      judgment or decree shall be entered in such case or proceeding by a court
      or a trustee, custodian, receiver or liquidator, to the effect that, no
      part of the Trust Estate (except for the Owner Participant's beneficial
      interest therein) and no right, title or interest under the Trust
      Indenture Estate shall be included in, or be subject to, any declaration
      or adjudication of, or proceedings with respect to, the bankruptcy,
      insolvency or liquidation of the Owner Participant referred to in this
      Section 4.02(g).

<PAGE>

            SECTION 4.03.   CERTAIN RIGHTS.

            The Mortgagee shall give the Note Holders, the Owner Trustee and the
Owner Participant prompt written notice of any Event of Default of which the
Mortgagee has Actual Knowledge and shall give the Note Holders, the Owner
Trustee and the Owner Participant not less than ten Business Days' prior written
notice of the date (the "Enforcement Date") on or after which the Mortgagee may,
subject to the limitation set forth in Section 4.04(a), commence and consummate
the exercise of any remedy or remedies described in Section 4.04, 4.05 or 4.06
hereof. Without limiting the generality of the foregoing, the Mortgagee shall
give the Owner Trustee, the Owner Participant and the Lessee at least ten
Business Days' prior written notice (which may be given concurrently with notice
of the Enforcement Date) of any declaration of the Lease to be in default
pursuant to Sections 14 and 15 of the Lease or any termination of the Lease or
of the exercise of any remedy or remedies pursuant to Section 15 of the Lease.
If an Event of Default shall have occurred and be continuing, the Owner Trustee
shall have the rights set forth below, any of which may be exercised directly by
the Owner Participant.

            If as a result of the occurrence of an Event of Default in respect
of the nonpayment by Lessee of Basic Rent due under the Lease, the Mortgagee
shall have insufficient funds to make any payment of Original Amount and
interest on any Equipment Note on the day it becomes due and payable, the Owner
Trustee may, but shall not be obligated to pay the Mortgagee prior to the
Enforcement Date, in the manner provided in Section 2.04 hereof, for application
in accordance with Section 3.01 hereof, an amount equal to the portion of the
Original Amount and interest (including interest, if any, on any overdue
payments of such portion of Original Amount and interest) then due and payable
on the Equipment Notes, and, unless the Owner Trustee has cured Events of
Default in respect of payments of Basic Rent on each of the 18 immediately
preceding Basic Rent payment dates, or the Owner Trustee has cured 36 previous
Events of Default in respect of payments of Basic Rent, such payment by the
Owner Trustee shall, solely for purposes of this Trust Indenture be deemed to
cure any Event of Default which would otherwise have arisen on account of the
nonpayment by Lessee of such installment of Basic Rent (but not any other
Default or Event of Default which shall have occurred and be continuing).

            If any Event of Default (other than in respect of the nonpayment of
Basic Rent by the Lessee) which can be cured by the payment of money has
occurred, the Owner Trustee may, but shall not be obligated to, cure such Event
of Default by making such payment prior to the Enforcement Date as is necessary
to accomplish the observance or performance of the defaulted covenant, condition
or agreement to the party entitled to the same.

            Except as hereinafter in this Section 4.03 provided, the Owner
Trustee shall not, as a result of exercising the right to cure any such Event of
Default, obtain any Lien on any of the Mortgaged Property or any Rent payable
under the Lease for or on account of costs or expenses incurred in connection
with the exercise of such right, nor shall any claim of the Owner Trustee
against Lessee or any other party for the repayment of such costs or expenses
impair the prior right and security interest of the Mortgagee in and to the
Mortgaged Property. Upon any payment by the Owner Trustee pursuant to the first
or second preceding paragraphs of this Section 4.03, the Owner Trustee shall be
subrogated to the rights of the Mortgagee and the Note Holders in respect of the
Basic Rent which was overdue at the time of such payment and interest payable by

<PAGE>

the Lessee on account of its being overdue and any Supplemental Rent in respect
of the reimbursement of amounts paid by Owner Trustee pursuant to the
immediately preceding paragraph (but in either case shall have no rights as a
secured party hereunder), and thereafter, the Owner Trustee shall be entitled
(so long as the application thereof shall not give rise to an Event of Default
hereunder) to receive such overdue Basic Rent or Supplemental Rent, as the case
may be, and interest thereon upon receipt thereof by the Mortgagee; PROVIDED,
HOWEVER, that (i) if the Original Amount and interest on the Equipment Notes
shall have become due and payable pursuant to Section 4.04(b) hereof, such
subrogation shall, until the Secured Obligations shall have been paid in full,
be subordinate to the rights of the Mortgagee, the Note Holders and the
Indenture Indemnitees in respect of such payment of overdue Basic Rent,
Supplemental Rent and such interest and (ii) the Owner Trustee shall not
otherwise attempt to recover any such amount paid by it on behalf of the Lessee
pursuant to this Section 4.03 except by demanding of the Lessee payment of such
amount, or by commencing an action at law against the Lessee and obtaining and
enforcing a judgment against the Lessee for the payment of such amount or taking
appropriate action in a pending action at law against the Lessee (PROVIDED,
HOWEVER, that at no time while an Event of Default shall have occurred and be
continuing shall any such demand be made or shall any such action be commenced
(or continued) and any amounts nevertheless received by the Owner Trustee in
respect thereof shall be held in trust for the benefit of, and promptly paid to,
the Mortgagee for distribution as provided in Section 3.03 hereof).

            Neither the Owner Trustee nor the Owner Participant shall have the
right to cure any Lease Event of Default or Lease Default except as specified in
this Section 4.03.

            SECTION 4.04.   REMEDIES.

            (a)   If an Event of Default shall have occurred and be continuing
      and so long as the same shall continue unremedied, then and in every such
      case the Mortgagee may, subject to the second and third paragraphs of this
      Section 4.04(a), exercise any or all of the rights and powers and pursue
      any and all of the remedies pursuant to this Article IV and shall have and
      may exercise all of the rights and remedies of a secured party under the
      Uniform Commercial Code and, in the event such Event of Default is also a
      Lease Event of Default, any and all of the remedies pursuant to Section 15
      of the Lease and may take possession of all or any part of the properties
      covered or intended to be covered by the Lien created hereby or pursuant
      hereto and may exclude the Owner Participant, the Owner Trustee and Lessee
      and all persons claiming under any of them wholly or partly therefrom;
      PROVIDED, HOWEVER, that the Mortgagee shall give the Owner Trustee and the
      Owner Participant twenty days' prior written notice of its intention to
      sell the Aircraft. Unless an Event of Default not resulting from or
      relating to a Lease Event of Default has occurred and is continuing, the
      Owner Participant may bid at the sale and become the purchaser. Without
      limiting any of the foregoing, it is understood and agreed that the
      Mortgagee may exercise any right of sale of the Aircraft available to it,
      even though it shall not have taken possession of the Aircraft and shall
      not have possession thereof at the time of such sale.

            Anything in this Trust Indenture to the contrary notwithstanding,
the Mortgagee shall not be entitled to exercise any remedy hereunder as a result
of an Event of Default which arises solely by reason of one or more events or
circumstances which constitute a Lease Event of Default unless the Mortgagee as

<PAGE>

security assignee of the Owner Trustee shall have exercised or concurrently be
exercising one or more of the dispossessory remedies provided for in Section 15
of the Lease with respect to the Aircraft; PROVIDED, however, that such
requirement to exercise one or more of such remedies under the Lease shall not
apply in circumstances where the Mortgagee is, and has been, involuntarily
stayed or prohibited by applicable law or court order for a continuous period (a
"Continuous Stay Period") in excess of 60 days subsequent to an entry of an
order for relief pursuant to Chapter 11 of the Bankruptcy Code (such 60 day
period, the "Section 1110 Period"); PROVIDED FURTHER, HOWEVER that the
requirement to exercise one or more of such remedies under the Lease shall
nonetheless be applicable during a Continuous Stay Period subsequent to the
expiration of the Section 1110 Period to the extent that the continuation of
such Continuous Stay Period subsequent to the expiration of the Section 1110
Period (A) results from an agreement by the trustee or the debtor-in-possession
in such proceeding during the Section 1110 Period with the approval of the
relevant court to perform the Lease in accordance with Section 1110(a)(2)(A) of
the Bankruptcy Code and continues to perform as required by Section 1110(a)(2)
of the Bankruptcy Code and cures any default (other than a default of the kind
specified in Section 365(b)(2) of the Bankruptcy Code) within the applicable
time period specified in Section 1110(a)(2)(B) of the Bankruptcy Code or (B) is
an extension of the Section 1110 Period with the consent of the Mortgagee
pursuant to Section 1110(b) of the Bankruptcy Code or (C) is the consequence of
the Mortgagee's own failure to give any requisite notice or demand to any
person. In the event that the applicability of Section 1110 of the Bankruptcy
Code to the Aircraft is being contested by Lessee in judicial proceedings, both
of the Mortgagee and the Owner Trustee shall have the right to participate in
such proceedings; PROVIDED, HOWEVER, that any such participation by the Owner
Trustee shall not affect in any way any rights or remedy of the Mortgagee
hereunder.

            It is expressly understood and agreed that, subject only to the two
preceding paragraphs, the inability, described in such paragraphs, of the
Mortgagee to exercise any right or remedy under the Lease shall in no event and
under no circumstances prevent the Mortgagee from exercising any or all of its
rights, powers and remedies under this Trust Indenture, including, without
limitation, this Article IV.

            (b)   If an Event of Default shall have occurred and be continuing,
      then and in every such case the Mortgagee may (and shall, upon receipt of
      a written demand therefor from a Majority in Interest of Note Holders),
      subject to Section 4.03 hereof, at any time, by delivery of written notice
      or notices to the Owner Trustee and the Owner Participant, declare all the
      Equipment Notes to be due and payable, whereupon the unpaid Original
      Amount of all Equipment Notes then outstanding, together with accrued but
      unpaid interest thereon (without Make-Whole Amount) and other amounts due
      thereunder, shall immediately become due and payable without presentment,
      demand, protest or notice, all of which are hereby waived; PROVIDED,
      HOWEVER, that if an Event of Default referred to in clause (g) of Section
      4.02 hereof shall have occurred or a Lease Event of Default under Section
      14.5 of the Lease shall have occurred, then and in every such case the
      unpaid Original Amount then outstanding, together with accrued but unpaid
      interest and all other amounts due thereunder and hereunder shall
      immediately and without further act become due and payable without
      presentment, demand, protest or notice, all of which are hereby waived;
      PROVIDED FURTHER that in the event of a reorganization proceeding
      involving the Lessee instituted under Chapter 11 of the Bankruptcy Code,

<PAGE>

      if no Lease Event of Default (including any Lease Event of Default set
      forth in Section 14.3 of the Lease) and no other Event of Default (other
      than the failure to pay the Original Amount of the Equipment Notes which
      by such declaration shall have become payable) exists at any time after
      the consummation of such proceeding, such declaration shall be
      automatically rescinded without any further action on the part of any Note
      Holder.

            This Section 4.04(b), however, is subject to the condition that, if
at any time after the Original Amount of the Equipment Notes shall have become
so due and payable, and before any judgment or decree for the payment of the
money so due, or any thereof, shall be entered, all overdue payments of interest
upon the Equipment Notes and all other amounts payable under the Equipment Notes
(except the Original Amount of the Equipment Notes which by such declaration
shall have become payable) shall have been duly paid, and every other Default
and Event of Default with respect to any covenant or provision of this Trust
Indenture shall have been cured, then and in every such case a Majority in
Interest of Note Holders may (but shall not be obligated to), by written
instrument filed with the Mortgagee, rescind and annul the Mortgagee's
declaration (or such automatic acceleration) and its consequences; but no such
rescission or annulment shall extend to or affect any subsequent Default or
Event of Default or impair any right consequent thereon.

            Any acceleration pursuant to this Section 4.04(b) shall be
automatically rescinded and any related declaration of an Event of Default
annulled in the event that the Owner Trustee shall have cured, in accordance
with Section 4.03 hereof, the Event of Default that resulted in such
acceleration or declaration.

            (c)   The Note Holders shall be entitled, at any sale pursuant to
      Section 15 of the Lease or this Section 4.04, to credit against any
      purchase price bid at such sale by such holder all or any part of the
      unpaid obligations owing to such Note Holder and secured by the Lien of
      this Trust Indenture (only to the extent that such purchase price would
      have been paid to such Note Holder pursuant to Article III hereof if such
      purchase price were paid in cash and the foregoing provisions of this
      subsection (c) were not given effect).

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

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

<PAGE>

            SECTION 4.05.   RETURN OF AIRCRAFT, ETC.

            (a)   If an Event of Default shall have occurred and be continuing
      and the Equipment Notes have been accelerated, subject to Section 4.03
      hereof and unless the Owner Trustee or the Owner Participant shall have
      elected to purchase the Equipment Notes, at the request of the Mortgagee,
      the Owner Trustee shall promptly execute and deliver to the Mortgagee such
      instruments of title and other documents as the Mortgagee may deem
      necessary or advisable to enable the Mortgagee or an agent or
      representative designated by the Mortgagee, at such time or times and
      place or places as the Mortgagee may specify, to obtain possession of all
      or any part of the Mortgaged Property included in the Trust Indenture
      Estate to which the Mortgagee shall at the time be entitled hereunder. If
      the Owner Trustee shall for any reason fail to execute and deliver such
      instruments and documents after such request by the Mortgagee, the
      Mortgagee may (i) obtain a judgment conferring on the Mortgagee the right
      to immediate possession and requiring the Owner Trustee to execute and
      deliver such instruments and documents to the Mortgagee, to the entry of
      which judgment the Owner Trustee hereby specifically consents to the
      fullest extent permitted by Law, and (ii) pursue all or part of such
      Mortgaged Property wherever it may be found and, in the event that a Lease
      Event of Default has occurred and is continuing, may enter any of the
      premises of Lessee wherever such Mortgaged Property may be or be supposed
      to be and search for such Mortgaged Property and take possession of and
      remove such Mortgaged Property. All expenses of obtaining such judgment or
      of pursuing, searching for and taking such property shall, until paid, be
      secured by the Lien of this Trust Indenture.

            (b)   Upon every such taking of possession, the Mortgagee may, from
      time to time, at the expense of the Mortgaged Property, make all such
      expenditures for maintenance, use, operation, storage, insurance, leasing,
      control, management, disposition, modifications or alterations to and of
      the Mortgaged Property, as it may deem proper. In each such case, the
      Mortgagee shall have the right to maintain, use, operate, store, insure,
      lease, control, manage, dispose of, modify or alter the Mortgaged Property
      and to carry on the business and to exercise all rights and powers of the
      Owner Participant and the Owner Trustee relating to the Mortgaged
      Property, as the Mortgagee shall deem best, including the right to enter
      into any and all such agreements with respect to the maintenance, use,
      operation, storage, insurance, leasing, control, management, disposition,
      modification or alteration of the Mortgaged Property or any part thereof
      as the Mortgagee may determine, and the Mortgagee shall be entitled to
      collect and receive directly all tolls, rents (including Rent), revenues,
      issues, income, products and profits of the Mortgaged Property and every
      part thereof, except Excluded Payments, without prejudice, however, to the
      right of the Mortgagee under any provision of this Trust Indenture to
      collect and receive all cash held by, or required to be deposited with,
      the Mortgagee hereunder other than Excluded Payments. Such tolls, rents
      (including Rent), revenues, issues, income, products and profits shall be
      applied to pay the expenses of the maintenance, use, operation, storage,
      insurance, leasing, control, management, disposition, improvement,
      modification or alteration of the Mortgaged Property and of conducting the
      business thereof, and to make all payments which the Mortgagee may be
      required or may elect to make, if any, for taxes, assessments, insurance
      or other proper charges upon the Mortgaged Property or any part thereof
      (including the employment of engineers and accountants to examine, inspect

<PAGE>

      and make reports upon the properties and books and records of the Owner
      Trustee), and all other payments which the Mortgagee may be required or
      authorized to make under any provision of this Trust Indenture, as well as
      just and reasonable compensation for the services of the Mortgagee, and of
      all persons properly engaged and employed by the Mortgagee with respect
      hereto.

            SECTION 4.06.   REMEDIES CUMULATIVE.

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

            SECTION 4.07.    DISCONTINUANCE OF PROCEEDINGS.

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

            SECTION 4.08.   WAIVER OF PAST DEFAULTS.

            Upon written instruction from a Majority in Interest of Note
Holders, the Mortgagee shall waive any past Default hereunder and its
consequences and upon any such waiver such Default shall cease to exist and any
Event of Default arising therefrom shall be deemed to have been cured for every
purpose of this Trust Indenture, but no such waiver shall extend to any
subsequent or other Default or impair any right consequent thereon; PROVIDED,
HOWEVER, that in the absence of written instructions from all the Note Holders,
the Mortgagee shall not waive any Default (i) in the payment of the Original
Amount, Make-Whole Amount, if any, and interest and other amounts due under any
Equipment Note then outstanding, or (ii) in respect of a covenant or provision
hereof which, under Article IX hereof, cannot be modified or amended without the
consent of each Note Holder.

            SECTION 4.09.   APPOINTMENT OF RECEIVER.

            The Mortgagee shall, as a matter of right, be entitled to the
appointment of a receiver (who may be the Mortgagee or any successor or nominee

<PAGE>

thereof) for all or any part of the Mortgaged Property, whether such
receivership be incidental to a proposed sale of the Mortgaged Property or the
taking of possession thereof or otherwise, and the Owner Trustee 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 Mortgaged Property shall be
entitled to exercise all the rights and powers of the Mortgagee with respect to
the Mortgaged Property.

            SECTION 4.10.   MORTGAGEE AUTHORIZED TO EXECUTE BILLS OF SALE, ETC.

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

            SECTION 4.11.   RIGHTS OF NOTE HOLDERS TO RECEIVE PAYMENT.

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

                                    ARTICLE V

                             DUTIES OF THE MORTGAGEE

            SECTION 5.01.   NOTICE OF EVENT OF DEFAULT.

            If the Mortgagee shall have Actual Knowledge of an Event of Default
or of a Default arising from a failure to pay Rent, the Mortgagee shall give
prompt written notice thereof to the Owner Trustee, the Owner Participant,
Lessee, and each Note Holder. Subject to the terms of Sections 2.13, 4.03, 4.04,
4.08, 5.02 and 5.03 hereof, the Mortgagee shall take such action, or refrain
from taking such action, with respect to such Event of Default or Default
(including with respect to the exercise of any rights or remedies hereunder) as
the Mortgagee shall be instructed in writing by a Majority in Interest of Note
Holders. Subject to the provisions of Section 5.03, if the Mortgagee shall not
have received instructions as above provided within 20 days after mailing notice
of such Event of Default to the Note Holders, the Mortgagee 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, but shall be

<PAGE>

under no duty to take or refrain from taking any action, with respect to such
Event of Default or Default as it shall determine advisable in the best
interests of the Note Holders; PROVIDED, HOWEVER, that the Mortgagee may not
sell the Aircraft or any Engine without the consent of a Majority in Interest of
Note Holders. For all purposes of this Trust Indenture, in the absence of Actual
Knowledge on the part of the Mortgagee, the Owner Trustee or the Owner
Participant, the Mortgagee, the Owner Trustee or the Owner Participant, as the
case may be, shall not be deemed to have knowledge of a Default or an Event of
Default (except, in the case of the Mortgagee, the failure of Lessee to pay any
installment of Basic Rent within one Business Day after the same shall become
due, if any portion of such installment was then required to be paid to the
Mortgagee, which failure shall constitute knowledge of a Default) unless
notified in writing by Lessee, the Owner Trustee, the Owner Participant or one
or more Note Holders.

            SECTION 5.02.   ACTION UPON INSTRUCTIONS; CERTAIN RIGHTS AND
LIMITATIONS.

            (a)   Subject to the terms of Sections 2.13, 4.03, 4.04(a) and (b),
      4.08, 5.01 and 5.03 hereof, upon the written instructions at any time and
      from time to time of a Majority in Interest of Note Holders, the Mortgagee
      shall, subject to the terms of this Section 5.02, take such of the
      following actions as may be specified in such instructions: (i) give such
      notice or direction or exercise such right, remedy or power hereunder as
      shall be specified in such instructions; (ii) give such notice or
      direction or exercise such right, remedy or power under the Lease, the
      Participation Agreement, the Purchase Agreement, the Purchase Agreement
      Assignment, or any other part of the Trust Indenture Estate as shall be
      specified in such instructions; and (iii) approve as satisfactory to the
      Mortgagee all matters required by the terms of the Lease to be
      satisfactory to the Owner Trustee, it being understood that without the
      written instructions of a Majority in Interest of Note Holders, the
      Mortgagee shall not approve any such matter as satisfactory to the
      Mortgagee; PROVIDED, HOWEVER, that anything contained in this Trust
      Indenture, the Lease or the other Operative Agreements to the contrary
      notwithstanding, but subject to the next paragraph hereof:

            (1)   the Owner Trustee or the Owner Participant, may, without the
      consent of the Mortgagee, demand, collect, sue for or otherwise obtain all
      amounts included in Excluded Payments from Lessee and seek legal or
      equitable remedies to require Lessee to maintain the insurance coverage
      referred to in Section 11 of the Lease; PROVIDED, HOWEVER, that the rights
      referred to in this clause (1) shall not be deemed to include the exercise
      of any remedies provided for in Section 15 of the Lease other than the
      right to proceed by appropriate court action, either at Law or in equity,
      to enforce payment by Lessee of such amounts included in Excluded Payments
      or performance by Lessee of such insurance covenant or to recover damages
      for the breach thereof or for specific performance of any other term of
      the Lease;

            (2)   (A) so long as the Mortgagee has not foreclosed the Lien of
      the Trust Indenture, the Mortgagee shall not, without the consent of the
      Owner Trustee, enter into, execute or deliver amendments or modifications
      in respect of any of the provisions of the Lease, and (B) unless a
      Mortgagee Event shall have occurred and be continuing, the Mortgagee shall
      not, without the consent of the Owner Trustee, which consent shall not be

<PAGE>

      withheld if no right or interest of the Owner Trustee or the Owner
      Participant shall be diminished or impaired thereby, (i) enter into,
      execute or deliver waivers or consents in respect of any of the provisions
      of the Lease, or (ii) approve any accountants, engineers, appraisers or
      counsel as satisfactory to render services for or issue opinions to the
      Owner Trustee pursuant to the Operative Agreements, provided that whether
      or not any Mortgagee Event has occurred and is continuing, the Owner
      Trustee's consent shall be required with respect to any waivers or
      consents in respect of any of the provisions of Section 5, 7 or 11 of the
      Lease, or of any other Section of the Lease to the extent such action
      shall affect (y) the amount or timing of, or the right to enforce payment
      of any Excluded Payment or (z) the amount or timing of any amounts payable
      by the Lessee under the Lease as originally executed (or as subsequently
      modified with the consent of the Owner Trustee) which, absent the
      occurrence and continuance of an Event of Default hereunder, would be
      distributable to the Owner Trustee under Article III hereof;

            (3)   whether or not a Default or Event of Default under the Trust
      Indenture has occurred and is continuing, the Owner Trustee and the Owner
      Participant shall have the right, together with the Mortgagee, (i) to
      receive from Lessee certificates and other documents and information which
      Lessee is required to give or furnish to the Owner Trustee or the Lessor
      pursuant to any Operative Agreement and (ii) to inspect in accordance with
      the Lease the Airframe and Engines and all Aircraft Documents;

            (4)   so long as no Mortgagee Event has occurred and is continuing,
      the Owner Trustee shall have the right, to the exclusion of the Mortgagee,
      to adjust Stipulated Loss Values and Termination Values as provided in
      Section 3.2 of the Lease or to adjust any installment or amount of Basic
      Rent, Stipulated Loss Value or Termination Value, as such installments and
      amounts are set forth in Schedules 2, 3 and 4, respectively, to the Lease,
      to the extent of the portion of such installment or amount that would,
      under Section 3.01, 3.02 or 3.03 hereof, as the case may be, be
      distributable to the Owner Trustee or the Owner Participant;

            (5)   whether or not a Default or Event of Default under the Trust
      Indenture has occurred and is continuing, the Owner Trustee may, without
      the consent of the Mortgagee, (i) solicit and make bids with respect to
      the Aircraft under Section 9 of the Lease in respect of a termination of
      the Lease by Lessee pursuant to Section 9 thereof, (ii) determine Fair
      Market Sales Value and Fair Market Rental Value under Section 17 of the
      Lease for all purposes except following a Mortgagee Event pursuant to
      Section 15 of the Lease, (iii) make an election pursuant to and in
      accordance with the provisions of Sections 9.1(b), 9.2 and 9.3 of the
      Lease, and (iv) obtain insurance for its own account in accordance with
      Section 11.2 of the Lease; and

            (6)   so long as no Mortgagee Event shall have occurred and be
      continuing, all other rights of the "Lessor" under the Lease shall be
      exercised by the Owner Trustee to the exclusion of the Mortgagee
      including, without limitation, the right to (i) exercise all rights with
      respect to Lessee's use and operation, modification or maintenance of the
      Aircraft and any Engine which the Lease specifically confers on the
      Lessor, and (ii) consent to and approve any assignment pursuant to Section
      13 of the Lease; PROVIDED, HOWEVER, that the foregoing shall not (x) limit
      (A) any rights separately granted to the Mortgagee under the Operative
      Agreements or (B) the right of the Mortgagee to receive any funds to be

<PAGE>

      delivered to the "Lessor" under the Lease (except with respect to Excluded
      Payments) and under the Purchase Agreement or (y) confer upon the Owner
      Trustee the right to adversely affect the validity or enforceability of
      the lien of this Trust Indenture.

            Notwithstanding anything to the contrary contained herein (including
this Section 5.02), the Mortgagee shall have the right, to the exclusion of the
Owner Trustee and the Owner Participant, to (A) declare the Lease to be in
default under Section 15 thereof and (B) subject only to the provisions of
Sections 4.03, 4.04(a) and (b) and 2.13 hereof, exercise the remedies set forth
in such Section 15 (other than in connection with Excluded Payments and provided
that each of the Owner Trustee, Owner Participant and Mortgagee shall
independently retain the rights set forth in clause (ii) of Section 15.1.5 of
the Lease) at any time that a Lease Event of Default shall have occurred and be
continuing. Further and for the avoidance of doubt, and anything to the contrary
contained herein (including this Section 5.02), in no event may the Owner
Trustee amend or otherwise modify the provisions of Section 3.2.1(b) of the
Lease or of the final sentence of the definition of Stipulated Loss Value or
Termination Value, in any such case, without the prior written consent of the
Mortgagee.

            The Mortgagee will execute and the Owner Trustee will file or cause
to be filed such continuation statements with respect to financing statements
relating to the security interest created hereunder in the Trust Indenture
Estate as may be specified from time to time in written instructions of a
Majority in Interest of Note Holders (which instructions shall be accompanied by
the form of such continuation statement so to be filed). The Mortgagee will
furnish to each Note Holder (and, during the continuation of a Mortgagee Event,
to the Owner Trustee and Owner Participant), promptly upon receipt thereof,
duplicates or copies of all reports, notices, requests, demands, certificates
and other instruments furnished to the Mortgagee under the Lease, under the
Participation Agreement or hereunder, including, without limitation, a copy of
each report or notice received pursuant to Section 9 and Paragraph E of Annex D
of the Lease, respectively, to the extent that the same shall not have been
furnished to such holder pursuant hereto or the Lease.

            (b)   If any Lease Event of Default shall have occurred and be
      continuing and the Owner Trustee shall not have cured fully such Lease
      Event of Default under and in accordance with Section 4.03 hereof, on
      request of a Majority in Interest of Note Holders, the Mortgagee shall
      declare the Lease to be in default pursuant to Section 15 thereof and
      exercise those remedies specified by such Note Holders. The Mortgagee
      agrees to provide to the Note Holders, the Owner Trustee and the Owner
      Participant concurrently with such declaration by the Mortgagee, notice of
      such declaration by the Mortgagee.

            SECTION 5.03.   INDEMNIFICATION.

            The Mortgagee shall not be required to take any action or refrain
from taking any action under Section 5.01 (other than the first sentence
thereof), 5.02 or Article IV hereof unless the Mortgagee shall have been
indemnified to its reasonable satisfaction against any liability, cost or
expense (including counsel fees) which may be incurred in connection therewith
pursuant to a written agreement with one or more Note Holders. The Mortgagee
agrees that it shall look solely to the Note Holders for the satisfaction of any
indemnity (except expenses for foreclosure of the type referred to in clause

<PAGE>

"First" of Section 3.03 hereof) owed to it pursuant to this Section 5.03. The
Mortgagee shall not be under any obligation to take any action under this Trust
Indenture or any other Operative Agreement and nothing herein or therein shall
require the Mortgagee to expend or risk its own funds or otherwise incur the
risk of any financial liability in the performance of any of its rights or
powers if it shall have reasonable grounds for believing that repayment of such
funds or adequate indemnity against such risk or liability is not reasonably
assured to it (the written indemnity of any Note Holder who is a QIB, signed by
an authorized officer thereof, in favor of, delivered to and in form reasonably
satisfactory to the Mortgagee shall be accepted as reasonable assurance of
adequate indemnity). The Mortgagee shall not be required to take any action
under Section 5.01 (other than the first sentence thereof) or 5.02 or Article IV
hereof, nor shall any other provision of this Trust Indenture or any other
Operative Agreement be deemed to impose a duty on the Mortgagee to take any
action, if the Mortgagee shall have been advised by counsel that such action is
contrary to the terms hereof or of the Lease or is otherwise contrary to Law.

            SECTION 5.04.   NO DUTIES EXCEPT AS SPECIFIED IN TRUST INDENTURE OR
INSTRUCTIONS.

            The Mortgagee shall not have any duty or obligation to use, operate,
store, lease, control, manage, sell, dispose of or otherwise deal with the
Aircraft or any other part of the Trust Indenture Estate, or to otherwise take
or refrain from taking any action under, or in connection with, this Trust
Indenture or any part of the Trust Indenture Estate, except as expressly
provided by the terms of this Trust Indenture or as expressly provided in
written instructions from Note Holders as provided in this Trust Indenture; and
no implied duties or obligations shall be read into this Trust Indenture against
the Mortgagee. The Mortgagee agrees that it will in its individual capacity and
at its own cost and expense (but without any right of indemnity in respect of
any such cost or expense under Section 7.01 hereof), promptly take such action
as may be necessary duly to discharge all liens and encumbrances on any part of
the Trust Indenture Estate which result from claims against it in its individual
capacity not related to the ownership of the Aircraft or the administration of
the Trust Indenture Estate or any other transaction pursuant to this Trust
Indenture or any document included in the Trust Indenture Estate.

            SECTION 5.05.   NO ACTION EXCEPT UNDER LEASE, TRUST INDENTURE OR
INSTRUCTIONS.

            The Owner Trustee and the Mortgagee agree that they will not use,
operate, store, lease, control, manage, sell, dispose of or otherwise deal with
the Aircraft or any other part of the Trust Indenture Estate except (i) as
required by the terms of the Lease or (ii) in accordance with the powers granted
to, or the authority conferred upon, the Owner Trustee and the Mortgagee
pursuant to this Trust Indenture and in accordance with the express terms
hereof.

            SECTION 5.06.   REPLACEMENT AIRFRAMES AND REPLACEMENT ENGINES.

            At any time an Airframe or Engine is to be replaced under or
pursuant to Section 10 of the Lease by a Replacement Airframe or Replacement
Engine, if no Lease Event of Default is continuing, the Owner Trustee shall
direct the Mortgagee to execute and deliver to the Owner Trustee an appropriate
instrument releasing such Airframe and/or Engine as appropriate from the Lien of

<PAGE>

this Trust Indenture and the Mortgagee shall execute and deliver such instrument
as aforesaid, but only upon compliance by Lessee with the applicable provisions
of Section 10 of the Lease.

            SECTION 5.07.   INDENTURE SUPPLEMENTS FOR REPLACEMENTS.

            If a Replacement Airframe or Replacement Engine is being substituted
as contemplated by Section 10 of the Lease, the Owner Trustee and the Mortgagee
agree for the benefit of the Note Holders and Lessee, subject to fulfillment of
the conditions precedent and compliance by Lessee with its obligations set forth
in Section 10 of the Lease and the requirements of Section 5.06 hereof with
respect to such Replacement Airframe or Replacement Engine, to execute and
deliver a Lease Supplement and a Trust Indenture Supplement, as applicable, as
contemplated by Section 10 of the Lease.

            SECTION 5.08.   EFFECT OF REPLACEMENT.

            In the event of the substitution of a Replacement Airframe or of a
Replacement Engine pursuant to Section 10 of the Lease, all provisions of this
Trust Indenture relating to the Airframe or Engine or Engines being replaced
shall be applicable to such Replacement Airframe or Replacement Engine or
Engines with the same force and effect as if such Replacement Airframe or
Replacement Engine or Engines were the same airframe or engine or engines, as
the case may be, as the Airframe or Engine or Engines being replaced but for the
Event of Loss with respect to the Airframe or Engine or Engines being replaced.

            SECTION 5.09.   INVESTMENT OF AMOUNTS HELD BY MORTGAGEE.

            Any amounts held by the Mortgagee as assignee of the Owner Trustee's
rights to hold monies for security pursuant to Section 4.4 of the Lease shall be
held in accordance with the terms of such Section and the Mortgagee agrees, for
the benefit of Lessee, to perform the duties of the Owner Trustee under such
Section. Any amounts held by the Mortgagee pursuant to the proviso in Clause
"Second" of the first sentence of Section 3.01, pursuant to Section 3.02, or
pursuant to any provision of any other Operative Agreement providing for amounts
to be held by the Mortgagee which are not distributed pursuant to the other
provisions of Article III hereof shall be invested by the Mortgagee from time to
time in Cash Equivalents as directed by the Owner Trustee so long as the
Mortgagee may acquire the same using its best efforts. All Cash Equivalents held
by the Mortgagee pursuant to Section 4.4 of the Lease or this Section 5.09 shall
either be (a) registered in the name of, payable to the order of, or specially
endorsed to, the Mortgagee, or (b) held in an Eligible Account. Unless otherwise
expressly provided in this Trust Indenture, any income realized as a result of
any such investment, net of the Mortgagee's reasonable fees and expenses in
making such investment, shall be held and applied by the Mortgagee in the same
manner as the principal amount of such investment is to be applied and any
losses, net of earnings and such reasonable fees and expenses, shall be charged
against the principal amount invested. The Mortgagee shall not be liable for any
loss resulting from any investment required to be made by it under this Trust
Indenture other than by reason of its willful misconduct or gross negligence,
and any such investment may be sold (without regard to its maturity) by the
Mortgagee without instructions whenever such sale is necessary to make a
distribution required by this Trust Indenture.

<PAGE>

                                   ARTICLE VI

                       THE OWNER TRUSTEE AND THE MORTGAGEE

            SECTION 6.01.   ACCEPTANCE OF TRUSTS AND DUTIES.

            The Mortgagee accepts the duties hereby created and applicable to it
and agrees to perform the same but only upon the terms of this Trust Indenture
and agrees to receive and disburse all monies constituting part of the Trust
Indenture Estate in accordance with the terms hereof. The Owner Trustee, in its
individual capacity, and the Mortgagee, in its individual capacity, shall not be
answerable or accountable under any circumstances, except (i) for their own
willful misconduct or gross negligence (other than for the handling of funds,
for which the standard of accountability shall be willful misconduct or
negligence), (ii) in the case of the Mortgagee, as provided in the third
sentence of Section 2.04(a) hereof and the last sentence of Section 5.04 hereof,
and (iii) for liabilities that may result, in the case of the Owner Trustee,
from the inaccuracy of any representation or warranty of the Owner Trustee
expressly made in its individual capacity in the Participation Agreement or in
Section 4.01(b) or 6.03 hereof (or in any certificate furnished to the Mortgagee
or any Note Holder in connection with the transactions contemplated by the
Operative Agreements) or, in the case of the Mortgagee (in its individual
capacity), from the inaccuracy of any representation or warranty of the
Mortgagee (in its individual capacity) in the Participation Agreement or
expressly made hereunder. Neither the Owner Trustee nor the Mortgagee shall be
liable for any action or inaction of the other or of the Owner Participant.

            SECTION 6.02.    ABSENCE OF DUTIES.

            In the case of the Mortgagee, except in accordance with written
instructions furnished pursuant to Section 5.01 or 5.02 hereof, and except as
provided in, and without limiting the generality of, Sections 5.03, 5.04 and
6.08 hereof and, in the case of the Owner Trustee, except as provided in Section
4.01(b) hereof, the Owner Trustee and the Mortgagee shall have no duty (i) to
see to any registration of the Aircraft or any recording or filing of the Lease
or of this Trust Indenture or any other document, or to see to the maintenance
of any such registration, recording or filing, (ii) to see to any insurance on
the Aircraft or to effect or maintain any such insurance, whether or not Lessee
shall be in default with respect thereto, (iii) to see to the payment or
discharge of any lien or encumbrance of any kind against any part of the Trust
Estate or the Trust Indenture Estate, (iv) to confirm, verify or inquire into
the failure to receive any financial statements from Lessee, or (v) to inspect
the Aircraft at any time or ascertain or inquire as to the performance or
observance of any of Lessee's covenants under the Lease with respect to the
Aircraft. The Owner Participant shall not have any duty or responsibility
hereunder, including, without limitation, any of the duties mentioned in clauses
(i) through (v) above; PROVIDED, HOWEVER, that nothing contained in this
sentence shall limit any obligations of the Owner Participant under the
Participation Agreement or relieve the Owner Participant from any restriction
under Section 4.03 hereof.

<PAGE>

            SECTION 6.03.   NO REPRESENTATIONS OR WARRANTIES AS TO AIRCRAFT OR
DOCUMENTS.

            NEITHER THE MORTGAGEE IN ITS INDIVIDUAL OR TRUST CAPACITY NOR THE
OWNER TRUSTEE IN ITS INDIVIDUAL CAPACITY OR AS OWNER TRUSTEE UNDER THE TRUST
AGREEMENT, MAKES OR SHALL BE DEEMED TO HAVE MADE AND EACH HEREBY EXPRESSLY
DISCLAIMS ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE,
AIRWORTHINESS, VALUE, COMPLIANCE WITH SPECIFICATIONS, CONDITION, DESIGN,
QUALITY, DURABILITY, OPERATION, MERCHANTABILITY OR FITNESS FOR USE FOR A
PARTICULAR PURPOSE OF THE AIRCRAFT OR ANY ENGINE, AS TO THE ABSENCE OF LATENT OR
OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, AS TO THE ABSENCE OF ANY
INFRINGEMENT OF ANY PATENT, TRADEMARK OR COPYRIGHT, AS TO THE ABSENCE OF
OBLIGATIONS BASED ON STRICT LIABILITY IN TORT OR ANY OTHER REPRESENTATION OR
WARRANTY WHATSOEVER, except the Owner Trustee in its individual capacity
warrants that (i) the Owner Trustee has received on the Delivery Date whatever
title was conveyed to it, and (ii) the Aircraft is free and clear of Lessor
Liens attributable to the Owner Trustee in its individual capacity. Neither the
Owner Trustee, in its individual capacity or as Owner Trustee under the Trust
Agreement, nor the Mortgagee, in its individual or trust capacities, makes or
shall be deemed to have made any representation or warranty as to the validity,
legality or enforceability of this Trust Indenture, the Trust Agreement, the
Participation Agreement, the Equipment Notes, the Lease, the Purchase Agreement
or the Purchase Agreement Assignment with the Consent and Agreement attached
thereto, or as to the correctness of any statement contained in any thereof,
except for the representations and warranties of the Owner Trustee made in its
individual capacity and the representations and warranties of the Mortgagee in
its individual capacity, in each case expressly made in this Trust Indenture or
in the Participation Agreement. The Loan Participant, the Note Holders and the
Owner Participant make no representation or warranty hereunder whatsoever.

            SECTION 6.04.   NO SEGREGATION OF MONIES; NO INTEREST.

            Any monies paid to or retained by the Mortgagee pursuant to any
provision hereof and not then required to be distributed to the Note Holders,
Lessee or the Owner Trustee as provided in Article III hereof need not be
segregated in any manner except to the extent required by Law or Section 4.4 of
the Lease and Section 5.09 hereof, and may be deposited under such general
conditions as may be prescribed by Law, and the Mortgagee shall not be liable
for any interest thereon (except that the Mortgagee shall invest all monies held
as directed by Lessee so long as no Lease Event of Default or Lease Default has
occurred and is continuing (or in the absence of such direction, by the Majority
in Interest of Note Holders) in Cash Equivalents; PROVIDED, HOWEVER, that any
payments received, or applied hereunder, by the Mortgagee shall be accounted for
by the Mortgagee so that any portion thereof paid or applied pursuant hereto
shall be identifiable as to the source thereof.

            SECTION 6.05.   RELIANCE; AGREEMENTS; ADVICE OF COUNSEL.

            Neither the Owner Trustee nor the Mortgagee shall incur any
liability to anyone in acting upon any signature, instrument, notice,
resolution, request, consent, order, certificate, report, opinion, bond or other

<PAGE>

document or paper believed by it to be genuine and believed by it to be signed
by the proper party or parties. The Owner Trustee and the Mortgagee may accept a
copy of a resolution of the Board of Directors (or Executive Committee thereof)
of any party to the Participation Agreement, certified by the Secretary or an
Assistant Secretary thereof as duly adopted and in full force and effect, as
conclusive evidence that such resolution has been duly adopted and that the same
is in full force and effect. As to the aggregate unpaid Original Amount of
Equipment Notes outstanding as of any date, the Owner Trustee may for all
purposes hereof rely on a certificate signed by any Vice President or other
authorized corporate trust officer of the Mortgagee. As to any fact or matter
relating to Lessee the manner of ascertainment of which is not specifically
described herein, the Owner Trustee and the Mortgagee may for all purposes
hereof rely on a certificate, signed by a duly authorized officer of Lessee, as
to such fact or matter, and such certificate shall constitute full protection to
the Owner Trustee and the Mortgagee for any action taken or omitted to be taken
by them in good faith in reliance thereon. The Mortgagee shall assume, and shall
be fully protected in assuming, that the Owner Trustee is authorized by the
Trust Agreement to enter into this Trust Indenture and to take all action to be
taken by it pursuant to the provisions hereof, and shall not inquire into the
authorization of the Owner Trustee with respect thereto. In the administration
of the trusts hereunder, the Owner Trustee and the Mortgagee each may execute
any of the trusts or powers hereof and perform its powers and duties hereunder
directly or through agents or attorneys and may, at the expense of the Trust
Indenture Estate, advise with counsel, accountants and other skilled persons to
be selected and retained by it, and the Owner Trustee and the Mortgagee shall
not be liable for anything done, suffered or omitted in good faith by them in
accordance with the written advice or written opinion of any such counsel,
accountants or other skilled persons.

            SECTION 6.06.   CAPACITY IN WHICH ACTING.

            The Owner Trustee acts hereunder solely as trustee as herein and in
the Trust Agreement provided, and not in its individual capacity, except as
otherwise expressly provided herein, in the Trust Agreement and in the
Participation Agreement.

            SECTION 6.07.   COMPENSATION.

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

            SECTION 6.08.   INSTRUCTIONS FROM NOTE HOLDERS.

            In the administration of the trusts created hereunder, the Mortgagee
shall have the right to seek instructions from a Majority in Interest of Note
Holders should any provision of this Trust Indenture appear to conflict with any
other provision herein or should the Mortgagee's duties or obligations hereunder

<PAGE>

be unclear, and the Mortgagee shall incur no liability in refraining from acting
until it receives such instructions. The Mortgagee shall be fully protected for
acting in accordance with any instructions received under this Section 6.08.

                                   ARTICLE VII

                  INDEMNIFICATION OF MORTGAGEE BY OWNER TRUSTEE

            SECTION 7.01.   SCOPE OF INDEMNIFICATION.

            The Owner Trustee, not in its individual capacity, but solely as
Owner Trustee, hereby agrees, whether or not any of the transactions
contemplated hereby shall be consummated, except as to matters covered by any
indemnity furnished as contemplated by Section 5.03 hereof and except as
otherwise provided in Section 2.03 or 2.04(b) hereof, to assume liability for,
and does hereby indemnify, protect, save and keep harmless the Mortgagee (in its
individual and trust capacities), and its successors, assigns, agents and
servants, from and against any and all liabilities, obligations, losses,
damages, penalties, taxes (excluding any taxes payable by the Mortgagee on or
measured by any compensation received by the Mortgagee for its services under
this Trust Indenture), claims, actions, suits, costs, expenses or disbursements
(including legal fees and expenses) of any kind and nature whatsoever, which may
be imposed on, incurred by or asserted against the Mortgagee (whether or not
also indemnified against by any other person under any other document) in any
way relating to or arising out of this Trust Indenture or any other Operative
Agreement to which it is a party or the enforcement of any of the terms of any
thereof, or in any way relating to or arising out of the manufacture, purchase,
acceptance, non-acceptance, rejection, ownership, delivery, lease, possession,
use, operation, condition, sale, return or other disposition of the Aircraft or
any Engine (including, without limitation, latent or other defects, whether or
not discoverable, and any claim for patent, trademark or copyright
infringement), or in any way relating to or arising out of the administration of
the Trust Indenture Estate or the action or inaction of the Mortgagee hereunder
except only in the case of willful misconduct or gross negligence (or negligence
in the case of handling funds) of the Mortgagee in the performance of its duties
hereunder or resulting from the inaccuracy of any representation or warranty of
the Mortgagee (in its individual capacity) referred to in Section 6.03 hereof,
or as provided in Section 6.01 hereof or in the last sentence of Section 5.04
hereof, or as otherwise excluded by the terms of Section 9.1 or 9.3 of the
Participation Agreement from Lessee's indemnities under such Sections. In
addition, if necessary, the Mortgagee shall be entitled to indemnification from
the Trust Indenture Estate for any liability, obligation, loss, damage, penalty,
claim, action, suit, cost, expense or disbursement indemnified against pursuant
to this Section 7.01 to the extent not reimbursed by Lessee or others, but
without releasing any of them from their respective agreements of reimbursement;
and to secure the same the Mortgagee shall have a prior Lien on the Trust
Indenture Estate. Without limiting the foregoing, the Mortgagee agrees that,
prior to seeking indemnification from the Trust Indenture Estate, it will
demand, and diligently pursue in good faith (but with no duty to exhaust all
legal remedies therefor), indemnification available to the Mortgagee from Lessee
under the Lease or the Participation Agreement.

<PAGE>

                                  ARTICLE VIII

                         SUCCESSOR AND SEPARATE TRUSTEES

            SECTION 8.01.   NOTICE OF SUCCESSOR OWNER TRUSTEE.

            In the case of any appointment of a successor to the Owner Trustee
pursuant to the Trust Agreement including upon any merger, conversion,
consolidation or sale of substantially all of the corporate trust business of
the Owner Trustee pursuant to the Trust Agreement, the successor Owner Trustee
shall give prompt written notice thereof to the Mortgagee, Lessee and the Note
Holders.

            SECTION 8.02.   RESIGNATION OF MORTGAGEE; APPOINTMENT OF SUCCESSOR.

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

            (b)   Any successor Mortgagee, however appointed, shall execute and
      deliver to the Owner Trustee, the predecessor Mortgagee and the Lessee an
      instrument accepting such appointment and assuming the obligations of the
      Mortgagee under this Trust Indenture and the Participation Agreement
      arising from and after the time of such appointment, and thereupon such
      successor Mortgagee, without further act, shall become vested with all the
      estates, properties, rights, powers and duties of the predecessor
      Mortgagee hereunder in the trust hereunder applicable to it with like
      effect as if originally named the Mortgagee herein; but nevertheless upon
      the written request of such successor Mortgagee, such predecessor
      Mortgagee shall execute and deliver an instrument transferring to such
      successor Mortgagee, upon the trusts herein expressed applicable to it,
      all the estates, properties, rights and powers of such predecessor

<PAGE>

      Mortgagee, and such predecessor Mortgagee shall duly assign, transfer,
      deliver and pay over to such successor Mortgagee all monies or other
      property then held by such predecessor Mortgagee hereunder.

            (c)   Any successor Mortgagee, however appointed, shall be a bank or
      trust company having its principal place of business in the Borough of
      Manhattan, City and State of New York; Chicago, Illinois; Hartford,
      Connecticut; Wilmington, Delaware; or Boston, Massachusetts and having (or
      whose obligations under the Operative Agreements are guaranteed by an
      affiliated entity having) a combined capital and surplus of at least
      $100,000,000, if there be such an institution willing, able and legally
      qualified to perform the duties of the Mortgagee hereunder upon reasonable
      or customary terms.

            (d)   Any corporation into which the Mortgagee may be merged or
      converted or with which it may be consolidated, or any corporation
      resulting from any merger, conversion or consolidation to which the
      Mortgagee shall be a party, or any corporation to which substantially all
      the corporate trust business of the Mortgagee may be transferred, shall,
      subject to the terms of paragraph (c) of this Section 8.02, be a successor
      Mortgagee and the Mortgagee under this Trust Indenture without further
      act.

            SECTION 8.03.   APPOINTMENT OF ADDITIONAL AND SEPARATE TRUSTEES.

            (a)   Whenever (i) the Mortgagee shall deem it necessary or
      desirable in order to conform to any Law of any jurisdiction in which all
      or any part of the Trust Indenture Estate shall be situated or to make any
      claim or bring any suit with respect to or in connection with the Trust
      Indenture Estate, this Trust Indenture, any other Indenture Agreement, the
      Equipment Notes or any of the transactions contemplated by the
      Participation Agreement, (ii) the Mortgagee shall be advised by counsel
      satisfactory to it that it is so necessary or prudent in the interests of
      the Note Holders (and the Mortgagee shall so advise the Owner Trustee and
      Lessee), or (iii) the Mortgagee shall have been requested to do so by a
      Majority in Interest of Note Holders, then in any such case, the Mortgagee
      and, upon the written request of the Mortgagee, the Owner Trustee, shall
      execute and deliver an indenture supplemental hereto and such other
      instruments as may from time to time be necessary or advisable either (1)
      to constitute one or more bank or trust companies or one or more persons
      approved by the Mortgagee, either to act jointly with the Mortgagee as
      additional trustee or trustees of all or any part of the Trust Indenture
      Estate, or to act as separate trustee or trustees of all or any part of
      the Trust Indenture Estate, in each case with such rights, powers, duties
      and obligations consistent with this Trust Indenture as may be provided in
      such supplemental indenture or other instruments as the Mortgagee or a
      Majority in Interest of Note Holders may deem necessary or advisable, or
      (2) to clarify, add to or subtract from the rights, powers, duties and
      obligations theretofore granted any such additional or separate trustee,
      subject in each case to the remaining provisions of this Section 8.03. If
      the Owner Trustee shall not have taken any action requested of it under
      this Section 8.03(a) that is permitted or required by its terms within 15
      days after the receipt of a written request from the Mortgagee so to do,
      or if an Event of Default shall have occurred and be continuing, the
      Mortgagee may act under the foregoing provisions of this Section 8.03(a)
      without the concurrence of the Owner Trustee, and the Owner Trustee hereby

<PAGE>

      irrevocably appoints (which appointment is coupled with an interest) the
      Mortgagee, its agent and attorney-in-fact to act for it under the
      foregoing provisions of this Section 8.03(a) in either of such
      contingencies. The Mortgagee may, in such capacity, execute, deliver and
      perform any such supplemental indenture, or any such instrument, as may be
      required for the appointment of any such additional or separate trustee or
      for the clarification of, addition to or subtraction from the rights,
      powers, duties or obligations theretofore granted to any such additional
      or separate trustee. In case any additional or separate trustee appointed
      under this Section 8.03(a) shall die, become incapable of acting, resign
      or be moved, all the assets, property, rights, powers, trusts, duties and
      obligations of such additional or separate trustee shall revert to the
      Mortgagee until a successor additional or separate trustee is appointed as
      provided in this Section 8.03(a).

            (b)   No additional or separate trustee shall be entitled to
      exercise any of the rights, powers, duties and obligations conferred upon
      the Mortgagee 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 Trust Indenture Estate or otherwise payable under
      any Operative Agreement to the Mortgagee shall be promptly paid over by it
      to the Mortgagee. All other rights, powers, duties and obligations
      conferred or imposed upon any additional or separate trustee shall be
      exercised or performed by the Mortgagee and such additional or separate
      trustee jointly except to the extent that applicable Law of any
      jurisdiction in which any particular act is to be performed renders the
      Mortgagee 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 Trust Indenture Estate in any such
      jurisdiction) shall be exercised and performed by such additional or
      separate trustee. No additional or separate trustee shall take any
      discretionary action except on the instructions of the Mortgagee or a
      Majority in Interest of Note Holders. No trustee hereunder shall be
      personally liable by reason of any act or omission of any other trustee
      hereunder, except that the Mortgagee shall be liable for the consequences
      of its lack of reasonable care in selecting, and the Mortgagee's own
      actions in acting with, any additional or separate trustee. Each
      additional or separate trustee appointed pursuant to this Section 8.03
      shall be subject to, and shall have the benefit of Articles IV through
      VIII and Article X hereof insofar as they apply to the Mortgagee. The
      powers of any additional or separate trustee appointed pursuant to this
      Section 8.03 shall not in any case exceed those of the Mortgagee
      hereunder.

            (c)   If at any time the Mortgagee shall deem it no longer necessary
      or in order to conform to any such Law or take any such action or shall be
      advised by such counsel that it is no longer so necessary or desirable in
      the interest of the Note Holders, or in the event that the Mortgagee shall
      have been requested to do so in writing by a Majority in Interest of Note
      Holders, the Mortgagee and, upon the written request of the Mortgagee, the
      Owner Trustee, shall execute and deliver an indenture supplemental hereto
      and all other instruments and agreements necessary or proper to remove any
      additional or separate trustee. The Mortgagee may act on behalf of the
      Owner Trustee under this Section 8.03(c) when and to the extent it could
      so act under Section 8.03(a) hereof.

<PAGE>

                                   ARTICLE IX

                          SUPPLEMENTS AND AMENDMENTS TO
                       TRUST INDENTURE AND OTHER DOCUMENTS

            SECTION 9.01.   INSTRUCTIONS OF MAJORITY; LIMITATIONS.

            (a)   Except as provided in Section 5.02 hereof, the Owner Trustee
      agrees it shall not enter into any amendment of or supplement to the
      Lease, the Purchase Agreement, the Purchase Agreement Assignment or the
      Consent and Agreement, or execute and deliver any written waiver or
      modification of, or consent under, the terms of the Lease, the Purchase
      Agreement, the Purchase Agreement Assignment or the Consent and Agreement,
      unless such supplement, amendment, waiver, modification or consent is
      consented to in writing by the Mortgagee and a Majority in Interest of
      Note Holders. Anything to the contrary contained herein notwithstanding,
      without the necessity of the consent of any of the Note Holders or the
      Mortgagee, (i) any Excluded Payments payable to the Owner Participant may
      be modified, amended, changed or waived in such manner as shall be agreed
      to by the Owner Participant and Lessee, (ii) the Owner Trustee and Lessee
      may enter into amendments of or additions to the Lease to modify Section 5
      (except to the extent that such amendment would affect the rights or
      exercise of remedies under Section 15 of the Lease) or Section 17 of the
      Lease so long as such amendments, modifications and changes do not and
      would not affect the time of, or reduce the amount of, Rent payments
      (except to the extent expressly permitted by Section 5.02 hereof) until
      after the payment in full of all Secured Obligations or otherwise
      adversely affect the Note Holders and (iii) the Owner Trustee may enter
      into a Lease Supplement (x) to evidence the succession of another party as
      the Owner Trustee in accordance with the terms of the Trust Agreement or
      (y) to provide for subjecting any Replacement Airframe or Replacement
      Engine to the Lease in accordance with the terms of the Lease.

            (b)   Without limiting the provisions of Section 9.01 hereof, the
      Mortgagee agrees with the Note Holders that it shall not consent to or
      enter into any amendment, waiver or modification of or supplement or
      consent to this Trust Indenture, the Lease, the Purchase Agreement, the
      Purchase Agreement Assignment, the Consent and Agreement or the
      Participation Agreement, or any other agreement included in the Trust
      Indenture Estate, unless such supplement, amendment, waiver, modification
      or consent is consented to in writing by a Majority in Interest of Note
      Holders, but upon the written request of a Majority in Interest of Note
      Holders, the Mortgagee shall from time to time enter into any such
      supplement or amendment, or execute and deliver any such waiver,
      modification or consent, as may be specified in such request and as may be
      (in the case of any such amendment, supplement or modification), to the
      extent such agreement is required, agreed to by the Owner Trustee and
      Lessee or, as may be appropriate, the Airframe Manufacturer or the Engine
      Manufacturer; PROVIDED, HOWEVER, that, without the consent of each holder
      of an affected Equipment Note then outstanding and of each Liquidity
      Provider, no such amendment of or supplement to this Trust Indenture, the
      Lease, the Purchase Agreement, the Purchase Agreement Assignment, the
      Consent and Agreement or the Participation Agreement or waiver or
      modification of the terms of, or consent under, any thereof, shall (i)
      modify any of the provisions of this Section 9.01, or of Article II or III

<PAGE>

      or Section 4.02, 4.04(c), 4.04(d), 5.02 or 5.06 hereof, Section 13.3, 14
      (except to add an Event of Default) or 16 of the Lease, Section 15.1 of
      the Participation Agreement, the definitions of "Event of Default,"
      "Default," "Lease Event of Default," "Lease Default," "Majority in
      Interest of Note Holders," "Make-Whole Amount" or "Note Holder," or the
      percentage of Note Holders required to take or approve any action
      hereunder, (ii) reduce the amount, or change the time of payment or method
      of calculation of any amount, of Original Amount, Make-Whole Amount, if
      any, or interest with respect to any Equipment Note, or alter or modify
      the provisions of Article III hereof with respect to the order of
      priorities in which distribution thereunder shall be made as among the
      Note Holders, the Owner Trustee and Lessee, (iii) reduce, modify or amend
      any indemnities in favor of the Owner Trustee, the Mortgagee or the Note
      Holders (except that the Owner Trustee (in its individual capacity) or the
      Mortgagee, as the case may be, may consent to any waiver or reduction of
      an indemnity payable to it) or the other Indenture Indemnitees, (iv)
      consent to any change in the Trust Indenture or the Lease which would
      permit redemption of Equipment Notes earlier than permitted under Section
      2.10 hereof or the purchase or exchange of the Equipment Notes other than
      as permitted by Section 2.13 hereof, (v) except as contemplated by the
      Lease or the Participation Agreement, reduce the amount or extend the time
      of payment of Basic Rent, Stipulated Loss Value, or Termination Value for
      the Aircraft in each case as set forth in the Lease, or modify, amend or
      supplement the Lease or consent to any assignment of the Lease, in either
      case releasing Lessee from its obligations in respect of the payment of
      Basic Rent, Stipulated Loss Value or Termination Value for the Aircraft or
      altering the absolute and unconditional character of the obligations of
      Lessee to pay Rent as set forth in Sections 3 and 16 of the Lease or (vi)
      permit the creation of any Lien on the Trust Indenture Estate or any part
      thereof other than Permitted Liens or deprive any Note Holder of the
      benefit of the Lien of this Trust Indenture on the Trust Indenture Estate,
      except as provided in connection with the exercise of remedies under
      Article IV hereof.

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

<PAGE>

      Owner Trustee, the Owner Participant or the Lessee; (vi) to add to the
      rights of the Note Holders; and (vii) to include on the Equipment Notes
      any legend as may be required by Law.

            SECTION 9.02.   TRUSTEES PROTECTED.

            If, in the opinion of the institution acting as Owner Trustee under
the Trust Agreement or the institution acting as Mortgagee hereunder, any
document required to be executed by it pursuant to the terms of Section 9.01
hereof affects any right, duty, immunity or indemnity with respect to such
institution under this Trust Indenture or the Lease, such institution may in its
discretion decline to execute such document.

            SECTION 9.03.   DOCUMENTS MAILED TO NOTE HOLDERS.

            Promptly after the execution by the Owner Trustee or the Mortgagee
of any document entered into pursuant to Section 9.01 hereof, the Mortgagee
shall mail, by first class mail, postage prepaid, a copy thereof to Lessee and
to each Note Holder at its address last set forth in the Equipment Note
Register, but the failure of the Mortgagee to mail such copies shall not impair
or affect the validity of such document.

            SECTION 9.04.   NO REQUEST NECESSARY FOR LEASE SUPPLEMENT OR TRUST
INDENTURE SUPPLEMENT.

            No written request or consent of the Mortgagee, the Note Holders or
the Owner Participant pursuant to Section 9.01 hereof shall be required to
enable the Owner Trustee to enter into any Lease Supplement specifically
required by the terms of the Lease or to execute and deliver a Trust Indenture
Supplement specifically required by the terms hereof.

                                    ARTICLE X

                                  MISCELLANEOUS

            SECTION 10.01.   TERMINATION OF TRUST INDENTURE.

            Upon (or at any time after) payment in full of the Original Amount
of, Make-Whole Amount, if any, and interest on and all other amounts due under
all Equipment Notes and provided that there shall then be no other Secured
Obligations due to the Indenture Indemnitees, the Note Holders and the Mortgagee
hereunder or under the Participation Agreement or other Operative Agreement, the
Owner Trustee shall direct the Mortgagee to execute and deliver to or as
directed in writing by the Owner Trustee an appropriate instrument releasing the
Aircraft and the Engines from the Lien of this Trust Indenture and releasing the
Lease, the Purchase Agreement, the Purchase Agreement Assignment with the
Consent and Agreement attached thereto from the assignment and pledge thereof
hereunder and the Mortgagee shall execute and deliver such instrument as
aforesaid and give written notice thereof to Lessee; PROVIDED, HOWEVER, that
this Trust Indenture and the trusts created hereby shall earlier terminate and
this Trust Indenture shall be of no further force or effect upon any sale or
other final disposition by the Mortgagee of all property constituting part of
the Trust Indenture Estate and the final distribution by the Mortgagee of all

<PAGE>

monies or other property or proceeds constituting part of the Trust Indenture
Estate in accordance with the terms hereof. Except as aforesaid otherwise
provided, this Trust Indenture and the trusts created hereby shall continue in
full force and effect in accordance with the terms hereof.

            SECTION 10.02.   NO LEGAL TITLE TO TRUST INDENTURE ESTATE IN NOTE
HOLDERS.

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

            SECTION 10.03.   SALE OF AIRCRAFT BY MORTGAGEE IS BINDING.

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

            SECTION 10.04.   TRUST INDENTURE FOR BENEFIT OF OWNER TRUSTEE,
MORTGAGEE, OWNER PARTICIPANT, NOTE HOLDERS AND THE OTHER INDENTURE INDEMNITEES.

            Nothing in this Trust Indenture, whether express or implied, shall
be construed to give any person other than the Owner Trustee, the Mortgagee, the
Owner Participant, the Note Holders and the other Indenture Indemnitees, any
legal or equitable right, remedy or claim under or in respect of this Trust
Indenture.

            SECTION 10.05.   NOTICES.

            Unless otherwise expressly specified or permitted by the terms
hereof, all notices, requests, demands, authorizations, directions, consents,
waivers or documents provided or permitted by this Trust Indenture to be made,
given, furnished or filed shall be in writing, personally delivered or mailed by
certified mail, postage prepaid, or by facsimile or confirmed telex, and (i) if
to the Owner Trustee, addressed to it at MAC: U1228-120, 299 South Main Street,
12th Floor, Salt Lake City, Utah 84111 with a copy to the Owner Participant
addressed as provided in clause (iii) below, (ii) if to Mortgagee, addressed to
it at its office at Rodney Square North, 1100 North Market Street, Wilmington,
Delaware 19890, Attention: Corporate Trust Administration, facsimile number
(302) 651-8882, (iii) if to any Participant, Lessee, any Note Holder or any
other Indenture Indemnitee, addressed to such party at such address as such
party shall have furnished by notice to the Owner Trustee and the Mortgagee, or,
until an address is so furnished, addressed to the address of such party (if
any) set forth on Schedule 1 to the Participation Agreement or in the Equipment
Note Register. Whenever any notice in writing is required to be given by the
Owner Trustee, any Participant or the Mortgagee or any Note Holder to any of the

<PAGE>

other of them, such notice shall be deemed given and such requirement satisfied
when such notice is received, or if such notice is mailed by certified mail,
postage prepaid, three Business Days after being mailed, addressed as provided
above. Any party hereto may change the address to which notices to such party
will be sent by giving notice of such change to the other parties to this Trust
Indenture.

            SECTION 10.06.   SEVERABILITY.

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

            SECTION 10.07.   NO ORAL MODIFICATION OR CONTINUING WAIVERS.

            No term or provision of this Trust Indenture or the Equipment Notes
may be changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the Owner Trustee and the Mortgagee, in
compliance with Section 9.01 hereof. Any waiver of the terms hereof or of any
Equipment Note shall be effective only in the specific instance and for the
specific purpose given.

            SECTION 10.08.   SUCCESSORS AND ASSIGNS.

            All covenants and agreements contained herein shall be binding upon,
and inure to the benefit of, each of the parties hereto and the permitted
successors and assigns of each, all as herein provided. Any request, notice,
direction, consent, waiver or other instrument or action by any Note Holder
shall bind the successors and assigns of such holder. This Trust Indenture and
the Trust Indenture Estate shall not be affected by any amendment or supplement
to the Trust Agreement or by any other action taken under or in respect of the
Trust Agreement, except that each reference in this Trust Indenture to the Trust
Agreement shall mean the Trust Agreement as amended and supplemented from time
to time to the extent permitted hereby, thereby and by the Participation
Agreement. Each Note Holder by its acceptance of an Equipment Note agrees to be
bound by this Trust Indenture and all provisions of the Participation Agreement
applicable to a Loan Participant or a Note Holder.

            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 Trust Indenture to the contrary
notwithstanding, Owner Trustee, Mortgagee, any Participant or any bank or other
Affiliate of such Participant may conduct any banking or other financial
transactions, and have banking or other commercial relationships, with Lessee,
fully to the same extent as if this Trust Indenture were not in effect,

<PAGE>

including without limitation the making of loans or other extensions of credit
to Lessee for any purpose whatsoever, whether related to any of the transactions
contemplated hereby or otherwise.

            SECTION 10.11.   GOVERNING LAW; COUNTERPART FORM.

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

            SECTION 10.12.   VOTING BY NOTE HOLDERS.

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

            SECTION 10.13.   BANKRUPTCY.

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

                    [This space intentionally left blank.]

<PAGE>

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

                                     WELLS FARGO BANK NORTHWEST, NATIONAL
                                     ASSOCIATION, not in its individual
                                     capacity, except as expressly provided
                                     herein, but solely as Owner Trustee, as
                                     Owner Trustee

                                     By:
                                        ---------------------------------------
                                          Name:
                                          Title:

                                     WILMINGTON TRUST COMPANY, as Mortgagee

                                     By:
                                        ---------------------------------------
                                          Name:
                                          Title:

<PAGE>

                                                                       EXHIBIT A
                                            TO TRUST INDENTURE AND MORTGAGE [TN]

                  TRUST INDENTURE AND MORTGAGE [TN] SUPPLEMENT

            This TRUST INDENTURE AND MORTGAGE [TN] SUPPLEMENT NO. 1, dated
__________ (herein called this "Trust Indenture Supplement") of WELLS FARGO BANK
NORTHWEST, NATIONAL ASSOCIATION, not in its individual capacity, but solely as
Owner Trustee (herein called the "Owner Trustee") under that certain [Amended
and Restated](3) Trust Agreement [TN] dated as of [DD] (the "Trust Agreement"),
between the Owner Trustee and the Owner Participant named therein.

                              W I T N E S S E T H:

            WHEREAS, the Trust Indenture and Mortgage [TN], dated as of [DD] (as
amended and supplemented to the date hereof, the "Trust Indenture") between the
Owner Trustee and Wilmington Trust Company, as Mortgagee (the "Mortgagee"),
provides for the execution and delivery of a supplement thereto substantially in
the form hereof, which shall particularly describe the Aircraft, and shall
specifically mortgage such Aircraft to the Mortgagee; and

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

            NOW, THEREFORE, this Trust Indenture Supplement witnesseth that the
Owner Trustee hereby confirms that the Lien of the Trust Indenture on the Trust
Indenture Estate covers all of Owner Trustee's right, title and interest in and
to the following described property:

                                    AIRFRAME

            One airframe identified as follows:

                                                  FAA
                                             Registration       Manufacturer's
     Manufacturer            Model              Number          Serial Number

Embraer-Empresa            EMB-145 XR
Brasileira de
Aeronautica S.A.

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

---------------
(3)  Delete for New Aircraft.

<PAGE>
                                AIRCRAFT ENGINES

            Two aircraft engines, each such engine having 750 or more rated
take-off horsepower or the equivalent thereof, identified as follows:

       Manufacturer          Manufacturer's Model          Serial Number
       ------------          --------------------          -------------

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

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

            As further security for the obligations referred to above and
secured by the Trust Indenture and hereby, the Owner Trustee has granted,
bargained, sold, assigned, transferred, conveyed, mortgaged, pledged and
confirmed, and does hereby grant, bargain, sell, assign, transfer, convey,
mortgage, pledge and confirm, unto the Mortgagee, its successors and assigns,
for the security and benefit of the Loan Participant, the Note Holders and the
Indenture Indemnitees, in the trust created by the Trust Indenture, all of the
right, title and interest of the Owner Trustee in, to and under the Lease
Supplement of even date herewith covering the property described above.

            Notwithstanding any provision hereof, no Excluded Payment shall
constitute security for any of the aforementioned obligations.

            TO HAVE AND TO HOLD all and singular the aforesaid property unto the
Mortgagee, its successors and assigns, in trust for the equal and proportionate
benefit and security of the Loan Participant, the Note Holders and the Indenture
Indemnitees, except as provided in Section 2.14 and Article III of the Trust
Indenture without any preference, distinction or priority of any one Equipment
Note over any other by reason of priority of time of issue, sale, negotiation,
date of maturity thereof or otherwise for any reason whatsoever, and for the
uses and purposes and subject to the terms and provisions set forth in the Trust
Indenture.

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

<PAGE>

            AND, FURTHER, the Owner Trustee hereby acknowledges that the
Aircraft referred to in this Trust Indenture Supplement and the aforesaid Lease
Supplement has been delivered to the Owner Trustee and is included in the
property of the Owner Trustee covered by all the terms and conditions of the
Trust Agreement, subject to the pledge and mortgage thereof under the Trust
Indenture.

                                    * * *

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

                                     WELLS FARGO BANK NORTHWEST, NATIONAL
                                     ASSOCIATION, not in its individual
                                     capacity, but solely as Owner Trustee,
                                     Owner Trustee

                                     By:
                                         -------------------------------------
                                          Name:
                                          Title:

<PAGE>

                          TRUST INDENTURE AND MORTGAGE

                                   SCHEDULE I

ORIGINAL AMOUNT                           INTEREST RATE
---------------                           -------------

<PAGE>

                          TRUST INDENTURE AND MORTGAGE

                           EQUIPMENT NOTE AMORTIZATION

                                          PERCENTAGE OF
                                         ORIGINAL AMOUNT
PAYMENT DATE                               TO BE PAID
------------                             ---------------

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