Document:

e60709081ex4_9.htm

    EXHIBIT B to

    Note Purchase
Agreement

     

    FORM OF
PARTICIPATION AGREEMENT

    
 

    
      

      
        
          	
                  CONFIDENTIAL:  Subject
      to Restrictions on Dissemination

                  Set
      Forth in Section 7 of this
Agreement

                

        

      

      

    
      ______________________________________________________________

       

      PARTICIPATION
AGREEMENT [___]

       

      Dated as
of [_____________], 2009

       

      Among

       

      CONTINENTAL
AIRLINES, INC.,

      Owner,

       

      and

       

      WILMINGTON
TRUST COMPANY,

      Not in
its individual capacity

      except as
expressly provided herein,

      but
solely as Mortgagee, Subordination Agent

      under the
Intercreditor Agreement and Pass Through Trustee

      under the
Pass Through Trust Agreement

       

      ____________________________

       

      One
Boeing Model [_________] Aircraft

      Bearing
Manufacturer’s Serial No.[______]

      and U.S.
Registration No. N[_______]

       

      ______________________________________________________________

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      CONTENTS

      
        
          	
                   

                  SECTION 1.  DEFINITIONS AND
      CONSTRUCTION

                	
                   

                  2

                
	
                   

                  SECTION 2.  SECURED LOANS;
    CLOSING

                	
                   

                  2

                
	
                  2.1  Making of Loans and Issuance of Equipment
      Notes

                	
                  2

                
	
                  2.2  Closing

                	
                  3

                
	
                   

                  SECTION 3.  [Intentionally
      omitted]

                	
                   

                  3

                
	
                   

                  SECTION 4.  CONDITIONS
    PRECEDENT

                	
                   

                  3

                
	
                  4.1  Conditions Precedent to the Obligations of
      the Pass Through Trustee

                	
                  3

                
	
                  4.2  Conditions Precedent to Obligations of
      Mortgagee

                	
                  8

                
	
                  4.3  Conditions Precedent to Obligations of
      Owner

                	
                  8

                
	
                  4.4  Post-Registration
Opinion

                	
                  9

                
	
                   

                  SECTION 5.  REPRESENTATIONS AND
      WARRANTIES

                	
                   

                  9

                
	
                  5.1  Owner’s Representations and
      Warranties

                	
                  9

                
	
                  5.2  WTC’s Representations and
      Warranties

                	
                  14

                
	
                   

                  SECTION 6.  COVENANTS, UNDERTAKINGS AND
      AGREEMENTS

                	
                   

                  17

                
	
                  6.1  Covenants of Owner

                	
                  17

                
	
                  6.2  Covenants of WTC

                	
                  19

                
	
                  6.3  Covenants of Note
Holders

                	
                  21

                
	
                  6.4  Agreements

                	
                  22

                
	
                   

                  SECTION 7.  CONFIDENTIALITY

                	
                   

                  26

                
	
                   

                  SECTION 8.  INDEMNIFICATION AND
      EXPENSES

                	
                   

                  26

                
	
                  8.1  General Indemnity

                	
                  26

                
	
                  8.2  Expenses

                	
                  33

                
	
                  8.3  General Tax Indemnity

                	
                  33

                
	
                  8.4  Payments

                	
                  44

                
	
                  8.5  Interest

                	
                  44

                
	
                  8.6  Benefit of Indemnities

                	
                  44

                
	
                   

                  SECTION 9.  ASSIGNMENT OR TRANSFER OF
      INTEREST

                	
                   

                  45

                
	
                  9.1  Note Holders

                	
                  45

                
	
                  9.2  Effect of Transfer

                	
                  45

                

        

      

    

     

     

    

    
      
        
           

        

        
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i

          
            

          

        

        
           

        

      

    

    

    

    
      
        	
                 

                SECTION 10.  SECTION 1110

              	
                 

                45

              
	
                 

                SECTION 11.  CHANGE OF
      CITIZENSHIP

              	
                 

                46

              
	
                11.1  Generally

              	
                46

              
	
                11.2  Mortgagee

              	
                46

              
	
                 

                SECTION 12.  MISCELLANEOUS

              	
                 

                46

              
	
                12.1  Amendments

              	
                46

              
	
                12.2  Severability

              	
                47

              
	
                12.3  Survival

              	
                47

              
	
                12.4  Reproduction of
    Documents

              	
                47

              
	
                12.5  Counterparts

              	
                47

              
	
                12.6  No Waiver

              	
                48

              
	
                12.7  Notices

              	
                48

              
	
                12.8  GOVERNING LAW; SUBMISSION TO JURISDICTION;
      VENUE

              	
                49

              
	
                12.9  Third-Party
Beneficiary

              	
                49

              
	
                12.10  Entire Agreement

              	
                50

              
	
                12.11  Further Assurances

              	
                50

              

      

    

     

    

    
      
        	
                SCHEDULES
      AND EXHIBITS

                 

              
	
                SCHEDULE 1 -  Accounts;
      Addresses

              
	
                SCHEDULE 2 -  Commitment

              
	
                SCHEDULE 3 -  Certain
  Terms

              
	
                SCHEDULE 4 -  Permitted
      Countries

              
	 
      
	
                EXHIBIT
      A - Opinion of special counsel to Owner

              
	
                EXHIBIT
      B - Opinion of corporate counsel to Owner

              
	
                EXHIBIT
      C - Opinion of special counsel to Mortgagee and
      to the Pass Through Trustee

              
	
                EXHIBIT
      D - Opinion of special counsel in Oklahoma City,
  Oklahoma

              

      

    

    

    

    
      
        
           

        

        
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          BACK

        

      

    

    

     

    PARTICIPATION
AGREEMENT [___]

     

    PARTICIPATION
AGREEMENT [____], dated as of [____________], 2009 (this “Agreement”), among
(a) CONTINENTAL AIRLINES, INC., a Delaware corporation (“Owner”),
(b) WILMINGTON TRUST COMPANY, a Delaware banking corporation, not in its
individual capacity, except as expressly provided herein, but solely as
Mortgagee (in its capacity as Mortgagee, “Mortgagee” and in its individual
capacity, “WTC”), (c) WILMINGTON TRUST COMPANY, not in its individual
capacity, except as expressly provided herein, but solely as Pass Through
Trustee under the Pass Through Trust Agreement and (d) WILMINGTON TRUST
COMPANY, not in its individual capacity, except as expressly provided herein,
but solely as Subordination Agent under the Intercreditor Agreement
(“Subordination Agent”).

     

    RECITALS

     

    A.           [The
Aircraft is currently owned by Owner.]1  [Owner and Airframe Manufacturer
have entered into the Purchase Agreement, pursuant to which, among other things,
Airframe Manufacturer has agreed to manufacture and sell to Owner and Owner has
agreed to purchase from Airframe Manufacturer, certain aircraft, including the
Aircraft.]2

     

    B.           Pursuant
to the Pass Through Trust Agreement, the Pass Through Trust was created and the
Pass Through Certificates were issued and sold.

     

    C.           The
Pass Through Trustee has agreed to use a portion of the proceeds from the
issuance and sale of the Pass Through Certificates to purchase from Owner, on
behalf of the Pass Through Trust, the Equipment Notes.

     

    D.           Owner
and Mortgagee, concurrently with the execution and delivery hereof, have entered
into the Trust Indenture for the benefit of the Note Holders, pursuant to which,
among other things, Owner agrees (1) to issue Equipment Notes, in the amounts
and otherwise as provided in the Trust Indenture, and (2) to mortgage,
pledge and assign to Mortgagee all of Owner’s right, title and interest in the
Collateral to secure the Secured Obligations, including, without limitation,
Owner’s obligations under the Equipment Notes.

    

      

    

    
      
        	
                1.

              	
                Insert
      for Owned Aircraft.

              

      

    

    
       

      
        	
                2.

              	
                Insert
      for New Aircraft.

              

      

    

    

    
      
        
           

        

        
           

          
            

          

        

        
          BACK

        

      

    

    

     

    E.           The
parties hereto wish to set forth in this Agreement the terms and conditions upon
and subject to which the aforesaid transactions shall be effected.

     

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

     

    
      	
              SECTION 1.

            	
              DEFINITIONS
      AND CONSTRUCTION

            

    

     

    Capitalized
terms used but not defined herein (including in the initial paragraph and
Recitals above) shall have the respective meanings set forth or incorporated by
reference, and shall be construed and interpreted in the manner described, in
Annex A to the Trust Indenture.

     

    
      	
              SECTION 2.

            	
              SECURED
      LOANS; CLOSING

            

    

     

    
      	
               
      

            	
              2.1

            	
              Making
      of Loans and Issuance of Equipment
Notes

            

    

     

    Subject
to the terms and conditions of this Agreement, on the date hereof or on such
other date agreed to by the parties hereto (the “Closing Date”):

     

    
      	
               
      

            	
              (a)

            	
              The
      Pass Through Trustee shall make a secured loan to the Owner in the amount
      in Dollars listed on Schedule 2;
and

            

    

     

    
      	
               
      

            	
              (b)

            	
              The
      Owner shall issue, pursuant to and in accordance with the provisions of
      Article II of the Trust Indenture, to the Subordination Agent as the
      registered holder on behalf of the Pass Through Trustee, one or more
      Equipment Notes, dated the Closing Date, in an aggregate principal amount
      equal to the amount of the secured loan made by the Pass Through
      Trustee.

            

    

     

    In
addition, the Owner shall have the option after the Closing Date to issue from
time to time Additional Series Equipment Notes, subject to the terms of the Note
Purchase Agreement and the Intercreditor Agreement.  If Additional
Series Equipment Notes are so issued after the Closing Date, the Note Holder of
such Equipment Notes shall be entitled to execute a counterpart to this
Agreement and become a party hereto.

    

    
      
        
           

        

        
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              2.2

            	
              Closing

            

    

     

    (a)           The
Closing of the transactions contemplated hereby shall take place at the offices
of Hughes Hubbard & Reed LLP, One Battery Park Plaza, New York, New
York 10004, or at such other place as the parties shall agree.

     

    (b)           All
payments pursuant to this Section 2 shall be made in immediately available funds
to such accounts set forth in Schedule 1 hereto.

     

    
      	
              SECTION 3.

            	
              [Intentionally
      omitted]

            

    

     

    
      	
              SECTION 4.

            	
              CONDITIONS
      PRECEDENT

            

    

     

    
      	
               
      

            	
              4.1

            	
              Conditions
      Precedent to the Obligations of the Pass Through
  Trustee

            

    

     

    The
obligation of the Pass Through Trustee to make the secured loan described in
Section 2.1(a) and to participate in the transactions contemplated by this
Agreement on the Closing Date is subject to the fulfillment, prior to or on the
Closing Date, of the following conditions precedent:

     

    
      	
               
      

            	
              4.1.1

            	
              Equipment
      Notes

            

    

     

    The Owner
shall have tendered the Equipment Notes to be issued to the Pass Through Trustee
to the Mortgagee for authentication and the Mortgagee shall have authenticated
such Equipment Notes to be issued to the Pass Through Trustee and shall have
tendered the Equipment Notes to the Subordination Agent on behalf of the Pass
Through Trustee, against receipt of the loan proceeds, in accordance with
Section 2.1.

     

    
      	
               
      

            	
              4.1.2

            	
              Delivery
      of Documents

            

    

     

    The
Subordination Agent on behalf of the Pass Through Trustee shall have received
executed counterparts or conformed copies of the following
documents:

     

                     (i)this Agreement;

     

                     (ii)the Trust Indenture;

     

            
(iii)        the initial Trust Indenture
Supplement;

     

                     (iv)the broker’s report and insurance
certificates required by Section 4.06 of the Trust Indenture;

    

    
      
        
           

        

        
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                     (v)[the Consent and Agreement and the
Engine Consent and Agreement;]3 [the Release;]4

     

                     (vi)the Bills of Sale;

     

         (vii)       (A) a
copy of the Certificate of Incorporation and By-Laws of Owner and resolutions of
the board of directors of Owner and/or the executive committee thereof, in each
case certified as of the Closing Date, by the Secretary or an Assistant
Secretary of Owner, duly authorizing the execution, delivery and performance by
Owner of the Operative Agreements to which it is party required to be executed
and delivered by Owner on or prior to the Closing Date in accordance with the
provisions hereof and thereof; and (B) an incumbency certificate of Owner
as to the person or persons authorized to execute and deliver the Operative
Agreements on behalf of Owner;

     

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

     

                     (ix)the Financing Statements;

     

                     (x)the following opinions of counsel, in
each case dated the Closing Date:

     

    (A)           an
opinion of Hughes Hubbard & Reed LLP, special counsel to Owner,
substantially in the form of Exhibit A;

     

    (B)           an
opinion of Owner’s Legal Department, substantially in the form of
Exhibit B;

     

    (C)           an
opinion of Richards, Layton & Finger, special counsel to Mortgagee and to
the Pass Through Trustee, substantially in the form of
Exhibit C;

     

    (D)           an
opinion of Lytle Soulé & Curlee, special counsel in Oklahoma City, Oklahoma,
substantially in the form of Exhibit D; and

    

      

    
      
        	
                3.

              	
                Insert
      for New Aircraft.

              

      

    

      
      
        	
                4.

              	
                Insert
      for Owned Aircraft.

              

      

    

    

    
      
        
           

        

        
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                     (xi)a copy of a current, valid Standard
Certificate of Airworthiness for the Aircraft duly issued by the FAA[, together
with a copy of a duly executed application for registration of the Aircraft with
the FAA in the name of the Owner.]5

     

    
      	
               
      

            	
              4.1.3

            	
              Perfected
      Security Interest

            

    

     

    On the
Closing Date, after giving effect to the filing of the FAA Filed Documents and
the Financing Statements[, the discharge of any International Interest relating
to the Existing Financing]6 and the registration of the International
Interest (or Prospective International Interest) of the Mortgagee in the
Airframe and each Engine with the International Registry, Mortgagee shall have
received a duly perfected first priority security interest in all of Owner’s
right, title and interest in the Aircraft, subject only to Permitted
Liens.

     

    
      	
               
      

            	
              4.1.4

            	
              Violation
      of Law

            

    

     

    No change
shall have occurred after the date of this Agreement in any applicable Law that
makes it a violation of Law for (a) Owner, Pass Through Trustee,
Subordination Agent or Mortgagee to execute, deliver and perform the Operative
Agreements to which any of them is a party or (b) Pass Through Trustee to
make the loan contemplated by Section 2.1, to acquire an Equipment Note or to
realize the benefits of the security afforded by the Trust
Indenture.

     

    
      	
               
      

            	
              4.1.5

            	
              Representations,
      Warranties and Covenants

            

    

     

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

    

      

    

    
      
        	
                5.

              	
                Insert
      for New Aircraft.

              

      

    

      
      
        	
                6.

              	
                Insert
      for Aircraft N77006 and
N34131.

              

      

    

    

    
      
        
           

        

        
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              4.1.6

            	
              No
      Event of Default

            

    

     

    On the
Closing Date, no event shall have occurred and be continuing, or would result
from the mortgage of the Aircraft, which constitutes a Default or an Event of
Default.

     

    
      	
               
      

            	
              4.1.7

            	
              No
      Event of Loss

            

    

     

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

     

    
      	
               
      

            	
              4.1.8

            	
              Title

            

    

     

    Owner
shall have good title [(subject to filing and recordation of the FAA Bill of
Sale with the FAA)]7 to the Aircraft, free and clear of all Liens,
except Permitted Liens [and subject to filing and recordation of the Release
with the FAA]8.

     

    
      	
               
      

            	
              4.1.9

            	
              Certification

            

    

     

    The
Aircraft shall have been duly certificated by the FAA as to type and
airworthiness in accordance with the terms of the Purchase
Agreement.

     

    
      	
               
      

            	
              4.1.10

            	
              Section
      1110

            

    

     

    Mortgagee
shall be entitled to the benefits of Section 1110 (as currently in effect)
with respect to the right to take possession of the Airframe and Engines and to
enforce any of its other rights or remedies as provided in the Trust Indenture
in the event of a case under Chapter 11 of the Bankruptcy Code in which
Owner is a debtor.

     

    
      	
               
      

            	
              4.1.11

            	
              Filing

            

    

     

    On the
Closing Date (a) the FAA Filed Documents shall have been duly filed for
recordation (or shall be in the process of being so duly filed for recordation)
with the FAA in accordance with the Act, (b) [the sale of the Airframe and
Engines to the

    

      

    

    
      
        	
                7.

              	
                Insert
      for New Aircraft.

              

      

    

      
      
        	
                8.

              	
                Insert
      for Owned Aircraft.

              

      

    

    

    
      
        
           

        

        
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    Owner
and]9 the International Interest (or Prospective
International Interest) of the Mortgagee in the Airframe and Engines granted (or
to be granted) under the Trust Indenture shall have been registered with the
International Registry and there shall exist no registered International
Interest with respect to the Airframe or either Engine on the International
Registry with a priority over the International Interest of the Mortgagee
therein[, except the International Interest relating to the Existing Financing,
which is being discharged on the Closing Date],10 (c) each Financing Statement shall have
been duly filed (or shall be in the process of being so duly filed) in the
appropriate jurisdiction and (d) the Subordination Agent, on behalf of the Pass
Through Trustee, shall have received a printout of the “priority search
certificate” from the International Registry relating to the Airframe and each
Engine showing no International Interest with a priority over the International
Interest of the Mortgagee therein[, except the International Interest relating
to the Existing Financing, which is being discharged on the Closing Date].11

     

    
      	
               
      

            	
              4.1.12

            	
              No
      Proceedings

            

    

     

    No action
or proceeding shall have been instituted, nor shall any action be threatened in
writing, before any Government Entity, nor shall any order, judgment or decree
have been issued or proposed to be issued by any Government Entity, to set
aside, restrain, enjoin or prevent the completion and consummation of this
Agreement or any other Operative Agreement or the transactions contemplated
hereby or thereby.

     

    
      	
               
      

            	
              4.1.13

            	
              Governmental
      Action

            

    

     

    All
appropriate action required to have been taken prior to the Closing Date by the
FAA, or any governmental or political agency, subdivision or instrumentality of
the United States, in connection with the transactions contemplated by this
Agreement shall have been taken, and all orders, permits, waivers,
authorizations, exemptions and approvals of such entities required to be in
effect on the Closing Date in connection with the transactions contemplated by
this Agreement shall have been issued.

    

      

    

    
      
        	
                9.

              	
                Insert
      for New Aircraft.

              

      

    

      
      
        	
                10.

              	
                Insert
      for Aircraft N77006 and
N34131.

              

      

    

      
      
        	
                11.

              	
                Insert
      for Aircraft N77006 and
N34131.

              

      

    

    

    
      
        
           

        

        
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              4.1.14

            	
              Note
      Purchase Agreement

            

    

     

    The
conditions precedent to the obligations of the Pass Through Trustee and the
other requirements relating to the Aircraft and the Equipment Notes set forth in
the Note Purchase Agreement shall have been satisfied.

     

    
      	
               
      

            	
              4.2

            	
              Conditions
      Precedent to Obligations of
Mortgagee

            

    

     

    The
obligation of Mortgagee to authenticate the Equipment Notes on the Closing Date
is subject to the satisfaction or waiver by Mortgagee, on or prior to the
Closing Date, of the conditions precedent set forth below in this Section
4.2.

     

    
      	
               
      

            	
              4.2.1

            	
              Documents

            

    

     

    Executed
originals of the agreements, instruments, certificates or documents described in
Section 4.1.2 shall have been received by Mortgagee, except as specifically
provided therein, unless the failure to receive any such agreement, instrument,
certificate or document is the result of any action or inaction by
Mortgagee.

     

    
      	
               
      

            	
              4.2.2

            	
              Other
      Conditions Precedent

            

    

     

    Each of
the conditions set forth in Sections 4.1.4, 4.1.5, 4.1.6 and 4.1.10 shall
have been satisfied unless the failure of any such condition to be satisfied is
the result of any action or inaction by Mortgagee.

     

    
      	
               
      

            	
              4.3

            	
              Conditions
      Precedent to Obligations of Owner

            

    

     

    The
obligation of Owner to participate in the transaction contemplated hereby on the
Closing Date is subject to the satisfaction or waiver by Owner, on or prior to
the Closing Date, of the conditions precedent set forth below in this
Section 4.3.

     

    
      	
               
      

            	
              4.3.1

            	
              Documents

            

    

     

    Executed
originals of the agreements, instruments, certificates or documents described in
Section 4.1.2 shall have been received by Owner, except as specifically
provided therein, and shall be satisfactory to Owner, unless the failure to
receive any such agreement, instrument, certificate or document is the result of
any action or inaction by Owner.  In addition, the Owner shall have
received the following:

    

    
      
        
           

        

        
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          BACK

        

      

    

    

     

                     (i)(A) an incumbency certificate of
WTC as to the person or persons authorized to execute and deliver the Operative
Agreements on behalf of WTC and (B) a copy of the Certificate of
Incorporation and By-Laws and general authorizing resolution of the board of
directors (or executive committee) or other satisfactory evidence of
authorization of WTC, certified as of the Closing Date by the Secretary or
Assistant or Attesting Secretary of WTC, which authorize the execution, delivery
and performance by WTC of the Operative Agreements to which it is a party;
and

     

                     (ii)an Officer’s Certificate of WTC, dated
as of the Closing Date, stating that its representations and warranties in its
individual capacity or as Mortgagee, Pass Through Trustee or Subordination
Agent, as the case may be, set forth in this Agreement are true and correct as
of the Closing Date (or, to the extent that any such representation and warranty
expressly relates to an earlier date, true and correct as of such earlier
date);

     

    
      	
               
      

            	
              4.3.2

            	
              Other
      Conditions Precedent

            

    

     

    Each of
the conditions set forth in Sections 4.1.4, 4.1.5, 4.1.6, 4.1.7, 4.1.8,
4.1.9, 4.1.10, 4.1.11, 4.1.12 and 4.1.13 shall have been satisfied or waived by
Owner, unless the failure of any such condition to be satisfied is the result of
any action or inaction by Owner.

     

    
      	
               
      

            	
              4.4

            	
              Post-Registration
      Opinion

            

    

     

    Promptly
upon [the registration of the Aircraft and]12 the recordation of the FAA Filed Documents
pursuant to the Act, Owner will cause Lytle Soulé & Curlee, special counsel
in Oklahoma City, Oklahoma, to deliver to Owner, Pass Through Trustee and
Mortgagee a favorable opinion or opinions addressed to each of them with respect
to such [registration and]13 recordation.

     

    
      	
              SECTION 5.

            	
              REPRESENTATIONS
      AND WARRANTIES

            

    

     

    
      	
               
      

            	
              5.1

            	
              Owner’s
      Representations and Warranties

            

    

     

    Owner
represents and warrants to Pass Through Trustee, Subordination Agent and
Mortgagee that:

    

      

    

    
      
        	
                12.

              	
                Insert
      for New Aircraft.

              

      

    

      
      
        	
                13.

              	
                Insert
      for New Aircraft.

              

      

    

    

    
      
        
           

        

        
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              5.1.1

            	
              Organization;
      Qualification

            

    

     

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

     

    
      	
               
      

            	
              5.1.2

            	
              Corporate
      Authorization

            

    

     

    Owner has
taken, or caused to be taken, all necessary corporate action (including, without
limitation, the obtaining of any consent or approval of stockholders required by
its Certificate of Incorporation or By-Laws) to authorize the execution and
delivery of each of the Operative Agreements to which it is party, and the
performance of its obligations thereunder.

     

    
      	
               
      

            	
              5.1.3

            	
              No
      Violation

            

    

     

    The
execution and delivery by Owner of the Operative Agreements to which it is
party, the performance by Owner of its obligations thereunder and the
consummation by Owner on the Closing Date of the transactions contemplated
thereby, do not and will not (a) violate any provision of the Certificate
of Incorporation or By-Laws of Owner, (b) violate any Law applicable to or
binding on Owner or (c) violate or constitute any default under (other than
any violation or default that would not result in a Material Adverse Change to
Owner), or result in the creation of any Lien (other than as permitted under the
Trust Indenture) upon the Aircraft under, any indenture, mortgage, chattel
mortgage, deed of trust, conditional sales contract, lease, loan or other
material agreement, instrument or document to which Owner is a party or by which
Owner or any of its properties is bound.

     

    
      	
               
      

            	
              5.1.4

            	
              Approvals

            

    

     

    The
execution and delivery by Owner of the Operative Agreements to which Owner is a
party, the performance by Owner of its obligations thereunder and the
consummation by Owner on

    

    
      
        
           

        

        
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    the
Closing Date of the transactions contemplated thereby do not and will not
require the consent or approval of, or the giving of notice to, or the
registration with, or the recording or filing of any documents with, or the
taking of any other action in respect of, (a) any trustee or other holder
of any Debt of Owner and (b) any Government Entity, other than (x) the
filings, registrations and recordations referred to in Section 5.1.6 and
(y) filings, recordings, notices or other ministerial actions pursuant to
any routine recording, contractual or regulatory requirements applicable to
it.

     

    
      	
               
      

            	
              5.1.5

            	
              Valid
      and Binding Agreements

            

    

     

    The
Operative Agreements to which Owner is a party have been duly authorized,
executed and delivered by Owner and, assuming the due authorization, execution
and delivery thereof by the other party or parties thereto, constitute the
legal, valid and binding obligations of Owner and are enforceable against Owner
in accordance with the respective terms thereof, except as such enforceability
may be limited by bankruptcy, insolvency, reorganization, receivership,
moratorium and other similar Laws affecting the rights of creditors generally
and general principles of equity, whether considered in a proceeding at law or
in equity.

     

    
      	
               
      

            	
              5.1.6

            	
              Registration
      and Recordation

            

    

     

    Except
for [(a) the registration of the Aircraft with the FAA pursuant to the Act
in the name of Owner, (b) the filing with the FAA of the AC Forms 8050-135
with respect to the sale of the Airframe and Engines to Owner and the
International Interests (or Prospective International Interests) granted under
the Trust Indenture thereon and the filing with the FAA for recordation (and
recordation) of the FAA Filed Documents, (c) the registration of the
International Interest (or Prospective International Interest) in, and the sale
to the Owner of, the Airframe and Engines with the International Registry,]14 [(a) the filing with the FAA of the AC
Forms 8050-135 with respect to the International Interests (or Prospective
International Interests) granted under the Trust Indenture on the Airframe and
Engines [and the discharge of any International Interest thereon relating to the
Existing Financing],15 (b) the filing with the FAA for
recordation (and recordation) of the FAA Filed

    

      

    

    
      
        	
                14.

              	
                Insert
      for New Aircraft.

              

      

    

      
      
        	
                15.

              	
                Insert
      for Aircraft N77006 and
N34131.

              

      

    

    

    
      
        
           

        

        
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    Documents,
(c) the registration with the International Registry of the International
Interest (or Prospective International Interest) in the Airframe and Engines
[and of the discharge of any International Interests thereon relating to the
Existing Financing],16]17 (d) the filing of the Financing
Statements (and continuation statements relating thereto at periodic intervals),
and (e) the affixation of the nameplates referred to in
Section 4.02(f) of the Trust Indenture, no further action, including any
filing or recording of any document (including any financing statement in
respect thereof under Article 9 of the UCC) is necessary in order to establish
and perfect Mortgagee’s security interest in the Aircraft as against Owner and
any other Person, in each case, in any applicable jurisdictions in the United
States.

     

    
      	
               
      

            	
              5.1.7

            	
              Owner’s
      Location

            

    

     

    The
Owner’s location (as such term is used in Section 9-307 of the UCC) is
Delaware.  The full and correct legal name and mailing address of
Owner are correctly set forth in Schedule 1 hereto in the column “Address for
Notices”.

     

    
      	
               
      

            	
              5.1.8

            	
              No
      Event of Loss

            

    

     

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

     

    
      	
               
      

            	
              5.1.9

            	
              Compliance
      With Laws

            

    

     

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

     

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

    

      

    

    
      
        	
                16.

              	
                Insert
      for Aircraft N77006 and
N34131.

              

      

    

      
      
        	
                17.

              	
                Insert
      for Owned Aircraft.

              

      

    

    

    
      
        
           

        

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

     

    
      	
               
      

            	
              5.1.10

            	
              Securities
      Laws

            

    

     

    Neither
Owner nor any person authorized to act on its behalf has directly or indirectly
offered any beneficial interest or Security relating to the ownership of the
Aircraft, or any of the Equipment Notes or any other interest in or security
under the Trust Indenture, for sale to, or solicited any offer to acquire any
such interest or security from, or has sold any such interest or security to,
any person in violation of the Securities Act.

     

    
      	
               
      

            	
              5.1.11

            	
              Broker’s
      Fees

            

    

     

    No Person
acting on behalf of Owner is or will be entitled to any broker’s fee, commission
or finder’s fee in connection with the Transactions, other than the fees and
expenses payable by Owner in connection with the sale of the Pass Through
Certificates.

     

    
      	
               
      

            	
              5.1.12

            	
              Section
      1110

            

    

     

    Mortgagee
is entitled to the benefits of Section 1110 (as currently in effect) with
respect to the right to take possession of the Airframe and Engines and to
enforce any of its other rights or remedies as provided in the Trust Indenture
in the event of a case under Chapter 11 of the Bankruptcy Code in which Owner is
a debtor.

     

    
      	
                            
      5.1.13  

            	
              Cape
      Town

            

    

     

    The Owner
is a Transacting User Entity (as defined in the regulations of the International
Registry); is “situated”, for the purposes of the Cape Town Treaty, in the
United States; and has the power to “dispose” (as such term is used in the Cape
Town Treaty) of the Airframe and each Engine.  The [Bills of Sale for
the Airframe and Engines constitute a “contract of sale” (as defined in the Cape
Town Treaty), and the]18 Trust Indenture, as supplemented by the Trust
Indenture Supplement in which such Airframe and Engines are listed, creates an
International Interest in such Airframe and Engines.  The Airframe and
each Engine are “aircraft objects” (as defined in

    

      

    

    
      
        	
                18.

              	
                Insert
      for New Aircraft.

              

      

    

    

    
      
        
           

        

        
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    the Cape
Town Treaty); and the United States is a Contracting State under the Cape Town
Treaty.

     

    
      	
               
      

            	
              5.2

            	
              WTC’s
      Representations and Warranties

            

    

     

    WTC
represents and warrants (with respect to Section 5.2.10, solely in its
capacity as Subordination Agent) to Owner that:

     

    
      	
               
      

            	
              5.2.1

            	
              Organization,
      Etc.

            

    

     

    WTC is a
Delaware banking corporation duly organized, validly existing and in good
standing under the Laws of the State of Delaware, holding a valid certificate to
do business as a Delaware banking corporation with banking authority to execute
and deliver, and perform its obligations under, the Pass Through Trustee
Agreements and the Operative Agreements to which it is a party.

     

    
      	
               
      

            	
              5.2.2

            	
              Corporate
      Authorization

            

    

     

    WTC has
taken, or caused to be taken, all necessary corporate action (including, without
limitation, the obtaining of any consent or approval of stockholders required by
Law or by its Certificate of Incorporation or By-Laws) to authorize the
execution and delivery by WTC, in its individual capacity or as Mortgagee, Pass
Through Trustee or Subordination Agent, as the case may be, of the Pass Through
Trustee Agreements and the Operative Agreements to which it is a party and the
performance of its obligations thereunder.

     

    
      	
               
      

            	
              5.2.3

            	
              No
      Violation

            

    

     

    The
execution and delivery by WTC, in its individual capacity or as Mortgagee, Pass
Through Trustee or Subordination Agent, as the case may be, of the Pass Through
Trustee Agreements and the Operative Agreements to which it is a party, the
performance by WTC, in its individual capacity or as Mortgagee, Pass Through
Trustee or Subordination Agent, as the case may be, of its obligations
thereunder and the consummation on the Closing Date of the transactions
contemplated thereby, do not and will not (a) violate any provision of the
Certificate of Incorporation or By-Laws of WTC, (b) violate any Law
applicable to or binding on WTC, in its individual capacity or (except in the
case of any Law relating to any Plan) as Mortgagee, Pass Through Trustee or
Subordination Agent, or (c) violate or constitute any default under (other
than any violation or default that would not result in a Material Adverse Change
to

    

    
      
        
           

        

        
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    WTC, in
its individual capacity or Mortgagee, Pass Through Trustee or Subordination
Agent), or result in the creation of any Lien (other than the Lien of the Trust
Indenture) upon any property of WTC, in its individual capacity or as Mortgagee,
Pass Through Trustee or Subordination Agent, or any of WTC’s subsidiaries under,
any indenture, mortgage, chattel mortgage, deed of trust, conditional sales
contract, lease, loan or other agreement, instrument or document to which WTC,
in its individual capacity or as Mortgagee, Pass Through Trustee or
Subordination Agent, is a party or by which WTC, in its individual capacity or
as Mortgagee, Pass Through Trustee or Subordination Agent, or any of their
respective properties is bound.

     

    
      	
               
      

            	
              5.2.4

            	
              Approvals

            

    

     

    The
execution and delivery by WTC, in its individual capacity or as Mortgagee, Pass
Through Trustee or Subordination Agent, as the case may be, of the Pass Through
Trustee Agreements and the Operative Agreements to which it is a party, the
performance by WTC, in its individual capacity or as Mortgagee, Pass Through
Trustee or Subordination Agent, as the case may be, of its obligations
thereunder and the consummation on the Closing Date by WTC, in its individual
capacity or as Mortgagee, Pass Through Trustee or Subordination Agent, as the
case may be, of the transactions contemplated thereby do not and will not
require the consent, approval or authorization of, or the giving of notice to,
or the registration with, or the recording or filing of any documents with, or
the taking of any other action in respect of, (a) any trustee or other
holder of any Debt of WTC or (b) any Government Entity, other than the
filing of the FAA Filed Documents and the Financing Statements.

     

    
      	
               
      

            	
              5.2.5

            	
              Valid
      and Binding Agreements

            

    

     

    The Pass
Through Trustee Agreements and the Operative Agreements to which it is a party
have been duly authorized, executed and delivered by WTC and, assuming the due
authorization, execution and delivery by the other party or parties thereto,
constitute the legal, valid and binding obligations of WTC, in its individual
capacity or as Mortgagee, Pass Through Trustee or Subordination Agent, as the
case may be, and are enforceable against WTC, in its individual capacity or as
Mortgagee, Pass Through Trustee or Subordination Agent, as the case may be, in
accordance with the respective terms thereof, except as such enforceability may
be limited by bankruptcy, insolvency, reorganization, receivership, moratorium
or other similar Laws affecting the rights of creditors

    

    
      
        
           

        

        
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15

          
            

          

        

        
          BACK

        

      

    

    

     

    generally
and general principles of equity, whether considered in a proceeding at law or
in equity.

     

    
      	
               
      

            	
              5.2.6

            	
              Citizenship

            

    

     

    WTC is a
Citizen of the United States.

     

    
      	
               
      

            	
              5.2.7

            	
              No
      Liens

            

    

     

    On the
Closing Date, there are no Liens attributable to WTC in respect of all or any
part of the Collateral.

     

    
      	
               
      

            	
              5.2.8

            	
              Litigation

            

    

     

    There are
no pending or, to the Actual Knowledge of WTC, threatened actions or proceedings
against WTC, in its individual capacity or as Mortgagee, Pass Through Trustee or
Subordination Agent, before any court, administrative agency or tribunal which,
if determined adversely to WTC, in its individual capacity or as Mortgagee, Pass
Through Trustee or Subordination Agent, as the case may be, would materially
adversely affect the ability of WTC, in its individual capacity or as Mortgagee,
Pass Through Trustee or Subordination Agent, as the case may be, to perform its
obligations under any of the Mortgagee Agreements, the Pass Through Trustee
Agreements or the Subordination Agent Agreements.

     

    
      	
               
      

            	
              5.2.9

            	
              Securities
      Laws

            

    

     

    Neither
WTC nor any person authorized to act on its behalf has directly or indirectly
offered any beneficial interest or Security relating to the ownership of the
Aircraft or any interest in the Collateral or any of the Equipment Notes or any
other interest in or security under the Collateral for sale to, or solicited any
offer to acquire any such interest or security from, or has sold any such
interest or security to, any Person other than the Subordination Agent and the
Pass Through Trustee, except for the offering and sale of the Pass Through
Certificates.

     

    
      	
               
      

            	
              5.2.10

            	
              Investment

            

    

     

    The
Equipment Notes to be acquired by the Subordination Agent are being acquired by
it for the account of the Pass Through Trustee, for investment and not with a
view to any resale or distribution thereof, except that, subject to the
restrictions on transfer set forth in Section 9, the
disposition

    

    
      
        
           

        

        
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    by it of
its Equipment Notes shall at all times be within its control.

     

    
      	
               
      

            	
              5.2.11

            	
              Taxes

            

    

     

    There are
no Taxes payable by the Pass Through Trustee or WTC, as the case may be, imposed
by the State of Delaware or any political subdivision or taxing authority
thereof in connection with the execution, delivery and performance by the Pass
Through Trustee or WTC, as the case may be, of this Agreement or any of the Pass
Through Trustee Agreements (other than franchise or other taxes based on or
measured by any fees or compensation received by the Pass Through Trustee or
WTC, as the case may be, for services rendered in connection with the
transactions contemplated by the Pass Through Trust Agreement), and there are no
Taxes payable by the Pass Through Trustee or WTC, as the case may be, imposed by
the State of Delaware or any political subdivision thereof in connection with
the acquisition, possession or ownership by the Pass Through Trustee of any of
the Equipment Notes (other than franchise or other taxes based on or measured by
any fees or compensation received by the Pass Through Trustee or WTC, as the
case may be, for services rendered in connection with the transactions
contemplated by the Pass Through Trust Agreement), and, assuming that the trust
created by the Pass Through Trust Agreement will not be taxable as corporations,
but, rather, each will be characterized as a grantor trust under subpart E, Part
I of Subchapter J of the Code or as a partnership under Subchapter K of the
Code, such trusts will not be subject to any Taxes imposed by the State of
Delaware or any political subdivision thereof;

     

    
      	
               
      

            	
              5.2.12

            	
              Broker’s
      Fees

            

    

     

    No Person
acting on behalf of WTC, in its individual capacity or as Mortgagee, Pass
Through Trustee or Subordination Agent, is or will be entitled to any broker’s
fee, commission or finder’s fee in connection with the
Transactions.

     

    
      	
              SECTION 6.

            	
              COVENANTS,
      UNDERTAKINGS AND AGREEMENTS

            

    

     

    
      	
               
      

            	
              6.1

            	
              Covenants
      of Owner

            

    

     

    Owner
covenants and agrees, at its own cost and expense, with Note Holder and
Mortgagee as follows:

    

    
      
        
           

        

        
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              6.1.1

            	
              Corporate
      Existence; U.S. Air Carrier

            

    

     

    Owner
shall at all times maintain its corporate existence, except as permitted by
Section 4.07 of the Trust Indenture, and shall at all times remain a U.S.
Air Carrier.

     

    
      	
               
      

            	
              6.1.2

            	
              Notice
      of Change of Location

            

    

     

    Owner
will give Mortgagee timely written notice (but in any event within 30 days prior
to the expiration of the period of time specified under applicable Law to
prevent lapse of perfection) of any change in its location (as such term is used
in Section 9-307 of the UCC) or legal name and will promptly take any
action required by Section 6.1.3(c) as a result of such
relocation.

     

    
      	
               
      

            	
              6.1.3

            	
              Certain
      Assurances

            

    

     

    (a)           Owner
shall duly execute, acknowledge and deliver, or shall cause to be executed,
acknowledged and delivered, all such further agreements, instruments,
certificates or documents, and shall do and cause to be done such further acts
and things, in any case, as Mortgagee shall reasonably request for accomplishing
the purposes of this Agreement and the other Operative Agreements, provided that any instrument
or other document so executed by Owner will not expand any obligations or limit
any rights of Owner in respect of the transactions contemplated by any Operative
Agreement.

     

    (b)           Owner
shall promptly take such action with respect to the recording, filing,
re-recording and refiling of the Trust Indenture and any supplements thereto,
including, without limitation, the initial Trust Indenture Supplement, as shall
be necessary to continue the perfection and priority of the Lien created by the
Trust Indenture.

     

    (c)           Owner,
at its sole cost and expense, will cause the FAA Filed Documents, the Financing
Statements and all continuation statements (and any amendments necessitated by
any combination, consolidation or merger of the Owner, or any relocation of its
chief executive office) in respect of the Financing Statements to be prepared
and, subject only to the execution and delivery thereof by Mortgagee, duly and
timely filed and recorded, or filed for recordation, to the extent permitted
under the Act (with respect to the FAA Filed Documents) or the UCC or similar
law of any other applicable jurisdiction (with respect to such other
documents).  Mortgagee, and not Owner, shall be responsible for any
amendments to the

    

    
      
        
           

        

        
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18

          
            

          

        

        
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    foregoing
documents and filings, recordings and registrations thereof necessitated in any
such case by any combination, consolidation or merger of Mortgagee or change in
the Mortgagee’s name, status, jurisdiction of organization or
address.

     

    (d)           If
the Aircraft has been registered in a country other than the United States
pursuant to Section 4.02(e) of the Trust Indenture, Owner will furnish to
Mortgagee annually after such registration, commencing with the calendar year
after such registration is effected, an opinion of special counsel reasonably
satisfactory to Mortgagee stating that, in the opinion of such counsel, either
that (i) such action has been taken with respect to the recording, filing,
rerecording and refiling of the Operative Agreements and any supplements and
amendments thereto as is necessary to establish, perfect and protect the Lien
created by the Trust Indenture, reciting the details of such actions, or
(ii) no such action is necessary to maintain the perfection of such
Lien.

     

    
      	
               
      

            	
              6.1.4

            	
              Securities
      Laws

            

    

     

    Neither
Owner nor any person authorized to act on its behalf will directly or indirectly
offer any beneficial interest or Security relating to the ownership of the
Aircraft or any interest in any of the Equipment Notes or any other interest in
or security under the Trust Indenture, for sale to, or solicit any offer to
acquire any such interest or security from, or sell any such interest or
security to, any person in violation of the Securities Act or applicable state
or foreign securities Laws.

     

    
      	
               
      

            	
              6.1.5.

            	
              Notice
      of Lease

            

    

     

    Owner
shall give to Standard & Poor’s Ratings Services, a Standard & Poor’s
Financial Services LLC business, a copy of any notice regarding a lease of the
Aircraft required to be given to the Mortgagee pursuant to clause (w) of
the first sentence of the penultimate paragraph of Section 4.02(b) of the
Mortgage, at the time such notice is given to Mortgagee, if at such time
Standard & Poor’s is then rating the Pass Through Certificates.

     

    
      	
               
      

            	
              6.2

            	
              Covenants
      of WTC

            

    

     

    WTC in
its individual capacity or as Mortgagee, Pass Through Trustee or Subordination
Agent, as the case may be, covenants and agrees with Owner as
follows:

    

    
      
        
           

        

        
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19

          
            

          

        

        
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              6.2.1

            	
              Liens

            

    

     

    WTC (a)
will not directly or indirectly create, incur, assume or suffer to exist any
Lien attributable to it on or with respect to all or any part of the Collateral
or the Aircraft, (b) will, at its own cost and expense, promptly take such
action as may be necessary to discharge any Lien attributable to WTC on all or
any part of the Collateral or the Aircraft and (c) will personally hold harmless
and indemnify Owner, each Note Holder, each of their respective Affiliates,
successors and permitted assigns, and the Collateral from and against (i) any
and all Expenses, (ii) any reduction in the amount payable out of the
Collateral, and (iii) any interference with the possession, operation or other
use of all or any part of the Aircraft, imposed on, incurred by or asserted
against any of the foregoing as a consequence of any such Lien.

     

    
      	
               
      

            	
              6.2.2

            	
              Securities
      Act

            

    

     

    WTC in
its individual capacity or as Mortgagee, Pass Through Trustee or Subordination
Agent, will not offer any beneficial interest or Security relating to the
ownership of the Aircraft or any interest in the Collateral, or any of the
Equipment Notes or any other interest in or security under the Trust Indenture
for sale to, or solicit any offer to acquire any such interest or security from,
or sell any such interest or security to, any Person in violation of the
Securities Act or applicable state or foreign securities Laws, provided that the
foregoing shall not be deemed to impose on WTC any responsibility with respect
to any such offer, sale or solicitation by any other party hereto.

     

    
      	
               
      

            	
              6.2.3

            	
              Performance
      of Agreements

            

    

     

    WTC, in
its individual capacity and as Mortgagee, Pass Through Trustee or Subordination
Agent, as the case may be, shall perform its obligations under the Pass Through
Trustee Agreements and the Operative Agreements in accordance with the terms
thereof.

     

    
      	
               
      

            	
              6.2.4

            	
              Withholding
      Taxes

            

    

     

    WTC shall
indemnify (on an after-tax basis) and hold harmless Owner against any United
States withholding taxes (and related interest, penalties and additions to tax)
as a result of the failure by WTC to withhold on payments to any Note Holder if
such Note Holder failed to provide to Mortgagee necessary

    

    
      
        
           

        

        
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          BACK

        

      

    

    

     

    certificates
or forms to substantiate the right to exemption from such withholding
tax.

     

    
      	
               
      

            	
              6.3

            	
              Covenants
      of Note Holders

            

    

     

    Each Note
Holder (including Subordination Agent) as to itself only covenants and agrees
with Owner and Mortgagee as follows:

     

    
      	
               
      

            	
              6.3.1

            	
              Withholding
      Taxes

            

    

     

    Such Note
Holder (if it is a Non-U.S. Person) agrees to indemnify (on an after-tax basis)
and hold harmless Owner and Mortgagee against any United States withholding
taxes (and related interest, penalties and additions to tax) as a result of the
inaccuracy or invalidity of any certificate or form provided by such Note Holder
to Mortgagee in connection with such withholding taxes.  Any amount
payable hereunder shall be paid within 30 days after receipt by a Note Holder of
a written demand therefor.

     

    
      	
               
      

            	
              6.3.2

            	
              Transfer;
      Compliance

            

    

     

    (a)           Such
Note Holder will (i) not transfer any Equipment Note or interest therein in
violation of the Securities Act or applicable state or foreign securities Law;
provided, that
the foregoing provisions of this section shall not be deemed to impose on such
Note Holder any responsibility with respect to any such offer, sale or
solicitation by any other party hereto, and (ii) perform and comply with the
obligations specified to be imposed on it (as a Note Holder) under each of the
Trust Indenture and the form of Equipment Note set forth in the Trust
Indenture.

     

    (b)           Except
for the transfer of the interests of the Pass Through Trustee in the Equipment
Notes to the trustee of the Related Trust (as defined in the Pass Through Trust
Agreement) in accordance with the Pass Through Trust Agreement, each Note Holder
will not sell, assign, convey, exchange or otherwise transfer any Equipment Note
or any interest in, or represented by, any Equipment Note (it being understood
that this provision is not applicable to the Pass Through Certificates) unless
the proposed transferee thereof first provides Owner with both of the
following:

     

                     (i)a written representation and covenant
that either (a) no portion of the funds it uses to purchase, acquire and hold
such Equipment Note or interest directly or

    

    
      
        
           

        

        
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    indirectly
constitutes, or may be deemed under the Code or ERISA or any rulings,
regulations or court decisions thereunder to constitute, the assets of any Plan
or (b) the transfer, and subsequent holding, of such Equipment Note or interest
shall not involve or give rise to a transaction that constitutes a prohibited
transaction within the meaning of Section 406 of ERISA or Section 4975(c)(1) of
the Code involving Owner, the Pass Through Trustee, the Subordination Agent or
the proposed transferee (other than a transaction that is exempted from the
prohibitions of such sections by applicable provisions of ERISA or the Code or
administrative exemptions or regulations issued thereunder); and

     

                     (ii)a written covenant that it will not
transfer any Equipment Note or any interest in, or represented by, any Equipment
Note unless the subsequent transferee also makes the representation described in
clause (i) above and agrees to comply with this clause (ii).

     

    
      	
               
      

            	
              6.4

            	
              Agreements

            

    

     

    
      	
               
      

            	
              6.4.1

            	
              Quiet
      Enjoyment

            

    

     

    Pass
Through Trustee, Subordination Agent, each Note Holder and Mortgagee each agrees
as to itself with Owner that, so long as no Event of Default shall have occurred
and be continuing, such Person shall not (and shall not permit any Affiliate or
other Person claiming by, through or under it to) interfere with Owner’s rights
in accordance with the Indenture to the quiet enjoyment, possession and use of
the Aircraft.

     

    
      	
               
      

            	
              6.4.2

            	
              Consents

            

    

     

    Pass
Through Trustee, Subordination Agent and Mortgagee each covenants and agrees,
for the benefit of Owner, that it shall not unreasonably withhold its consent to
any consent or approval requested of it under the terms of any of the Operative
Agreements which by its terms is not to be unreasonably withheld.

     

    
      	
               
      

            	
              6.4.3

            	
              Insurance

            

    

     

    Pass
Through Trustee, Subordination Agent, Mortgagee and each Note Holder each agrees
not to obtain or maintain insurance for its own account as permitted by
Section 4.06 of the Trust Indenture if such insurance would limit or
otherwise adversely affect the coverage of any insurance required to be obtained
or

    

    
      
        
           

        

        
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    maintained
by Owner pursuant to Section 4.06 of the Trust Indenture.

     

    
      	
               
      

            	
              6.4.4

            	
              Extent
      of Interest of Note Holders

            

    

     

    A Note
Holder shall not, as such, have any further interest in, or other right with
respect to, the Collateral when and if the principal and Make-Whole Amount, if
any, of and interest on the Equipment Note held by such Holder, and all other
sums, then due and payable to such Holder hereunder and under any other
Operative Agreement, shall have been paid in full.  The preceding
sentence shall not limit the rights of the Related Note Holders with respect to
Related Secured Obligations under the Trust Indenture, provided that a
Related Note Holder shall not, as such, have any further interest in, or other
right with respect to, the Collateral when and if the Related Secured
Obligations attributable to the Related Equipment Note held by such Holder shall
have been paid in full.

     

    
      	
               
      

            	
              6.4.5

            	
              Foreign
      Registration

            

    

     

    Each Note
Holder and Mortgagee hereby agree, for the benefit of Owner but subject to the
provisions of Section 4.02(b) of the Trust Indenture:

     

    (a)           that
Owner shall be entitled to register the Aircraft or cause the Aircraft to be
registered in a country other than the United States subject to compliance with
the following:

     

                     (i)each of the following requirements is
satisfied:

     

    
      	
               
      

            	
              (A)

            	
              no
      Special Default or Event of Default shall have occurred and be continuing
      at the time of such registration;

            

    

     

    
      	
               
      

            	
              (B)

            	
              such
      proposed change of registration is made in connection with a Permitted
      Lease to a Permitted Air Carrier;
and

            

    

     

    
      	
               
      

            	
              (C)

            	
              such
      country is a country with which the United States then maintains normal
      diplomatic relations or, if such country is Taiwan, the United States then
      maintains diplomatic relations at least as good as those in effect on the
      Closing Date;

            

    

     

                     (ii)the Mortgagee shall have received an
opinion of counsel (subject to customary exceptions) reasonably

    

    
      
        
           

        

        
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    satisfactory
to the Mortgagee addressed to Mortgagee to the effect that:

     

    (A)           such
country would recognize the Owner’s ownership interest in the
Aircraft;

     

    (B)           after
giving effect to such change in registration, the Lien of the Trust Indenture on
the Owner’s right, title and interest in and to the Aircraft shall continue as a
valid and duly perfected first priority security interest and International
Interest and all filing, recording or other action necessary to protect the same
shall have been accomplished (or, if such opinion cannot be given at the time of
such proposed change in registration because such change in registration is not
yet effective, (1) the opinion shall detail what filing, recording or other
action is necessary and (2) the Mortgagee shall have received a certificate
from Owner that all possible preparations to accomplish such filing, recording
and other action shall have been done, and such filing, recording and other
action shall be accomplished and a supplemental opinion to that effect shall be
delivered to the Mortgagee on or prior to the effective date of such change in
registration);

     

    (C)           unless
Owner or the Permitted Air Carrier shall have agreed to provide insurance
covering the risk of requisition of use of the Aircraft by the government of
such country (so long as the Aircraft is registered under the laws of such
country), the laws of such country require fair compensation by the government
of such country payable in currency freely convertible into Dollars and freely
removable from such country (without license or permit, unless Owner prior to
such proposed reregistration has obtained such license or permit) for the taking
or requisition by such government of such use; and

     

    (D)           it
is not necessary, solely as a consequence of such change in registration and
without giving effect to any other activity of the Mortgagee (or any Affiliate
of the Mortgagee), for the Mortgagee to qualify to do business in such
jurisdiction as a result of such reregistration in order to exercise any rights
or remedies with respect to the Aircraft.

    

    
      
        
           

        

        
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    (b)           In
addition, as a condition precedent to any change in registration Owner shall
have given to  Mortgagee assurances reasonably satisfactory to
Mortgagee:

     

    
      	
               
      

            	
              (i)

            	
              to
      the effect that the provisions of Section 4.06 of the Trust Indenture
      have been complied with after giving effect to such change of
      registration;

            

    

     

    
      	
               
      

            	
              (ii)

            	
              of
      the payment by Owner of all reasonable out-of-pocket expenses of each Note
      Holder and Mortgagee in connection with such change of registry,
      including, without limitation (1) the reasonable fees and
      disbursements of counsel to Mortgagee, (2) any filing or recording
      fees, Taxes or similar payments incurred in connection with the change of
      registration of the Aircraft and the creation and perfection of the
      security interest therein in favor of Mortgagee for the benefit of Note
      Holders, and (3) all costs and expenses incurred in connection with
      any filings necessary to continue in the United States the perfection of
      the security interest in the Aircraft in favor of Mortgagee for the
      benefit of Note Holders; and

            

    

     

    
      	
               
      

            	
              (iii)

            	
              to
      the effect that the tax and other indemnities in favor of each person
      named as an indemnitee under any other Operative Agreement afford each
      such person substantially the same protection as provided prior to such
      change of registration (or Owner shall have agreed upon additional
      indemnities that, together with such original indemnities, in the
      reasonable judgment of Mortgagee, afford such
  protection).

            

    

     

    
      	
               
      

            	
              6.4.6

            	
              Interest
      in Certain Engines

            

    

     

    Each Note
Holder and Mortgagee agree, for the benefit of each of the lessor, conditional
seller, mortgagee or secured party of any airframe or engine leased to, or
purchased by, Owner or any Permitted Lessee subject to a lease, conditional
sale, trust indenture or other security agreement that it will not acquire or
claim, as against such lessor, conditional seller, mortgagee 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

    

    
      
        
           

        

        
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    subject
to a trust indenture or security interest in favor of such mortgagee or secured
party.

     

    
      	
              SECTION 7.

            	
              CONFIDENTIALITY

            

    

     

    Owner,
Note Holders and Mortgagee shall keep the Participation Agreement and Annex B to
the Trust Indenture confidential and shall not disclose, or cause to be
disclosed, the same to any Person, except (A) to prospective and permitted
transferees of Owner’s, a Note Holder’s, the Liquidity Provider’s, Mortgagee’s
or other Indenture Indemnitee’s interest or their respective counsel or special
counsel, independent insurance brokers, auditors, or other agents who agree to
hold such information confidential, (B) to Owner’s, a Note Holder’s, the
Liquidity Provider’s, the Pass Through Trustee’s, Mortgagee’s or other Indenture
Indemnitee’s counsel or special counsel, independent insurance brokers,
auditors, or other agents, Affiliates or investors who agree to hold such
information confidential, (C) as may be required by any statute, court or
administrative order or decree, legal process or governmental ruling or
regulation, including those of any applicable insurance regulatory bodies
(including, without limitation, the National Association of Insurance
Commissioners), federal or state banking examiners, Internal Revenue Service
auditors or any stock exchange, (D) with respect to a Note Holder or the Pass
Through Trustee, to a nationally recognized rating agency for the purpose of
obtaining a rating on the Equipment Notes or the Pass Through Certificates or to
support an NAIC rating for the Equipment Notes or (E) such other Persons as
are reasonably deemed necessary by the disclosing party in order to protect the
interests of such party or for the purposes of enforcing such documents by such
party; provided, that any
and all disclosures permitted by clauses (C), (D), or (E) above shall be
made only to the extent necessary to meet the specific requirements or needs of
the Persons making such disclosures.

     

    
      	
              SECTION 8.

            	
              INDEMNIFICATION
      AND EXPENSES

            

    

     

    
      	
               
      

            	
              8.1

            	
              General
      Indemnity

            

    

     

    
      	
               
      

            	
              8.1.1

            	
              Indemnity

            

    

     

    Whether
or not any of the transactions contemplated hereby are consummated, Owner shall
indemnify, protect, defend and hold harmless each Indemnitee from, against and
in respect of, and shall pay on a net after-tax basis, any and all Expenses of
any kind or nature whatsoever that may be imposed on, incurred by
or

    

    
      
        
           

        

        
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    asserted
against any Indemnitee, relating to, resulting from, or arising out of or in
connection with, any one or more of the following:

     

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

     

    (b)           The
Aircraft, the Airframe, any Engine or any Part, including, without limitation,
with respect thereto, (i) the manufacture, design, purchase, acceptance,
nonacceptance or rejection, ownership, registration, reregistration,
deregistration, delivery, nondelivery, lease, sublease, assignment, possession,
use or non-use, operation, maintenance, testing, repair, overhaul, condition,
alteration, modification, addition, improvement, storage, airworthiness,
replacement, repair, sale, substitution, return, abandonment, redelivery or
other disposition of the Aircraft, any Engine or any Part, (ii) any claim or
penalty arising out of violations of applicable Laws by Owner (or any Permitted
Lessee), (iii) tort liability, whether or not arising out of the negligence of
any Indemnitee (whether active, passive or imputed), (iv) death or property
damage of passengers, shippers or others, (v) environmental control, noise or
pollution and (vi) any Liens in respect of the Aircraft, any Engine or any
Part;

     

    (c)           The
offer, sale, or delivery of any Equipment Notes, Pass Through Certificates or
any interest therein or represented thereby; and

     

    (d)           Any
breach of or failure to perform or observe, or any other noncompliance with, any
covenant or agreement or other obligation to be performed by Owner under any
Operative Agreement to which it is party or any Pass Through Agreement or the
falsity of any representation or warranty of Owner in any Operative Agreement to
which it is party or any Pass Through Agreement.

     

    
      	
               
      

            	
              8.1.2

            	
              Exceptions

            

    

     

    Notwithstanding
anything contained in Section 8.1.1, Owner shall not be required to
indemnify, protect, defend and hold harmless any Indemnitee pursuant to
Section 8.1.1 in respect of any Expense of such Indemnitee:

     

    (a)           For
any Taxes or a loss of Tax benefit, whether or not Owner is required to
indemnify therefor pursuant to Section 8.3;

    

    
      
        
           

        

        
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    (b)           Except
to the extent attributable to acts or events occurring prior thereto, acts or
events (other than acts or events related to the performance by Owner of its
obligations pursuant to the terms of the Operative Agreements) that occur after
the Trust Indenture is required to be terminated in accordance with Section
11.01 of the Trust Indenture; provided, that
nothing in this clause (b) shall be deemed to exclude or limit any claim that
any Indemnitee may have under applicable Law by reason of an Event of Default or
for damages from Owner for breach of Owner’s covenants contained in the
Operative Agreements or to release Owner from any of its obligations under the
Operative Agreements that expressly provide for performance after termination of
the Trust Indenture;

     

    (c)           To
the extent attributable to any Transfer (voluntary or involuntary) by or on
behalf of such Indemnitee of any Equipment Note or interest therein, except for
out-of-pocket costs and expenses incurred as a result of any such Transfer
pursuant to the exercise of remedies under any Operative Agreement;

     

    (d)           [Intentionally
Omitted]

     

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

     

    (f)           [Intentionally
Omitted]

     

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

     

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

     

    (i)           To
the extent attributable to the offer or sale by such Indemnitee or any related
Indemnitee of any interest in the Aircraft, the Equipment Notes, the Pass
Through Certificates, or any similar interest, in violation of the Securities
Act or other applicable federal, state or foreign securities Laws (other than
any thereof caused by acts or omissions of Owner);

    

    
      
        
           

        

        
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    (j)           (i) With
respect to any Indemnitee (other than Mortgagee), to the extent attributable to
the failure of the Mortgagee to distribute funds received and distributable by
it in accordance with the Trust Indenture, (ii) with respect to any
Indemnitee (other than the Subordination Agent), to the extent attributable to
the failure of the Subordination Agent to distribute funds received and
distributable by it in accordance with the Intercreditor Agreement,
(iii) with respect to any Indemnitee (other than the Pass Through Trustee),
to the extent attributable to the failure of the Pass Through Trustee to
distribute funds received and distributable by it in accordance with the Pass
Through Trust Agreement, (iv) with respect to any Indemnitee (other than
the Escrow Agent), to the extent attributable to the failure of the Escrow Agent
to pay funds received and payable by it in accordance with the Escrow Agreement,
(v) with respect to any Indemnitee (other than the Paying Agent), to the
extent attributable to the failure of the Paying Agent to distribute funds
received and distributable by it in accordance with the Escrow Agreement,
(vi) to the extent attributable to the failure of the Depositary to pay
funds payable by it in accordance with the Deposit Agreement, (vii) with
respect to Mortgagee, to the extent attributable to the negligence or willful
misconduct of Mortgagee in the distribution of funds received and distributable
by it in accordance with the Trust Indenture, (viii) with respect to the
Subordination Agent, to the extent attributable to the negligence or willful
misconduct of the Subordination Agent in the distribution of funds received and
distributable by it in accordance with the Intercreditor Agreement,
(ix) with respect to the Pass Through Trustee, to the extent attributable
to the negligence or willful misconduct of the Pass Through Trustee in the
distribution of funds received and distributable by it in accordance with the
Pass Through Trust Agreement, (x) with respect to the Escrow Agent, to the
extent attributable to the negligence or willful misconduct of the Escrow Agent
in the payment of funds received and payable by it in accordance with the Escrow
Agreement and (xi) with respect to the Paying Agent, to the extent
attributable to the negligence or willful misconduct of the Paying Agent in the
distribution of funds received and distributable by it in accordance with the
Escrow Agreement;

     

    (k)           Other
than during the continuation of an Event of Default, to the extent attributable
to the authorization or giving or withholding of any future amendments,
supplements, waivers or consents with respect to any Operative Agreement or Pass
Through Agreement other than such as have been requested by

    

    
      
        
           

        

        
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    Owner or
as are required by or made pursuant to the terms of the Operative Agreements or
Pass Through Agreements (unless such requirement results from the actions of an
Indemnitee not required by or made pursuant to the Operative Agreements or the
Pass Through Agreements);

     

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

     

    (m)           To
the extent that it is an ordinary and usual operating or overhead
expense;

     

    (n)           [Intentionally
Omitted]

     

    (o)           For
any Lien attributable to such Indemnitee or any related Indemnitee;

     

    (p)           If
another provision of an Operative Agreement or a Pass Through Agreement
specifies the extent of Owner’s responsibility or obligation with respect to
such Expense, to the extent arising from other than failure of Owner to comply
with such specified responsibility or obligation; or

     

    (q)           To
the extent incurred by or asserted against an Indemnitee as a result of any
"prohibited
transaction",
within the meaning of Section 406 of ERISA or Section 4975(c)(1) of the
Code.

     

    For
purposes of this Section 8.1, a Person shall be considered a "related" Indemnitee with
respect to an Indemnitee if such Person is an Affiliate or employer of such
Indemnitee, a director, officer, employee, agent, or servant of such Indemnitee
or any such Affiliate or a successor or permitted assignee of any of the
foregoing.

     

    
      	
               
      

            	
              8.1.3

            	
              Separate
      Agreement

            

    

     

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

     

    
      	
               
      

            	
              8.1.4

            	
              Notice

            

    

     

    If a
claim for any Expense that an Indemnitee shall be indemnified against under this
Section 8.1 is made, such Indemnitee shall give prompt written notice
thereof to Owner.  Notwithstanding the foregoing, the failure of any
Indemnitee to

    

    
      
        
           

        

        
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    notify
Owner as provided in this Section 8.1.4, or in Section 8.1.5, shall not
release Owner from any of its obligations to indemnify such Indemnitee
hereunder, except to the extent that such failure results in an additional
Expense to Owner (in which event Owner shall not be responsible for such
additional expense) or materially impairs Owner’s ability to contest such
claim.

     

    
      	
               
      

            	
              8.1.5

            	
              Notice
      of Proceedings; Defense of Claims;
Limitations

            

    

     

    (a)           In
case any action, suit or proceeding shall be brought against any Indemnitee for
which Owner is responsible under this Section 8.1, such Indemnitee shall
notify Owner of the commencement thereof and Owner may, at its expense,
participate in and to the extent that it shall wish (subject to the provisions
of the following paragraph), assume and control the defense thereof and, subject
to Section 8.1.5(c), settle or compromise the same.

     

    (b)           Owner
or its insurer(s) shall have the right, at its or their expense, to investigate
or, if Owner or its insurer(s) shall agree not to dispute liability to the
Indemnitee giving notice of such action, suit or proceeding under this
Section 8.1.5 for indemnification hereunder or under any insurance policies
pursuant to which coverage is sought, control the defense of, any action, suit
or proceeding, relating to any Expense for which indemnification is sought
pursuant to this Section 8.1, and each Indemnitee shall cooperate with
Owner or its insurer(s) with respect thereto; provided, that Owner
shall not be entitled to control the defense of any such action, suit,
proceeding or compromise any such Expense during the continuance of any Event of
Default.  In connection with any such action, suit or proceeding being
controlled by Owner, such Indemnitee shall have the right to participate
therein, at its sole cost and expense, with counsel reasonably satisfactory to
Owner; provided, that such
Indemnitee’s participation does not, in the reasonable opinion of the
independent counsel appointed by the Owner or its insurers to conduct such
proceedings, interfere with the defense of such case.

     

    (c)           In
no event shall any Indemnitee enter into a settlement or other compromise with
respect to any Expense without the prior written consent of Owner, which consent
shall not be unreasonably withheld or delayed, unless such Indemnitee waives its
right to be indemnified with respect to such Expense under this Section
8.1.

    

    
      
        
           

        

        
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    (d)           In
the case of any Expense indemnified by the Owner hereunder which is covered by a
policy of insurance maintained by Owner pursuant to Section 4.06 of the
Indenture, at Owner’s expense, each Indemnitee agrees to cooperate with the
insurers in the exercise of their rights to investigate, defend or compromise
such Expense as may be required to retain the benefits of such insurance with
respect to such Expense.

     

    (e)           If
an Indemnitee is not a party to this Agreement, Owner may require such
Indemnitee to agree in writing to the terms of this Section 8 and
Section 12.8 prior to making any payment to such Indemnitee under this
Section 8.

     

    (f)           Nothing
contained in this Section 8.1.5 shall be deemed to require an Indemnitee to
contest any Expense or to assume responsibility for or control of any judicial
proceeding with respect thereto.

     

    
      	
               
      

            	
              8.1.6

            	
              Information

            

    

     

    Owner
will provide the relevant Indemnitee with such information not within the
control of such Indemnitee, as is in Owner’s control or is reasonably available
to Owner, which such Indemnitee may reasonably request and will otherwise
cooperate with such Indemnitee so as to enable such Indemnitee to fulfill its
obligations under Section 8.1.5.  The Indemnitee shall supply
Owner with such information not within the control of Owner, as is in such
Indemnitee’s control or is reasonably available to such Indemnitee, which Owner
may reasonably request to control or participate in any proceeding to the extent
permitted by Section 8.1.5.

     

    
      	
               
      

            	
              8.1.7

            	
              Effect
      of Other Indemnities; Subrogation; Further
  Assurances

            

    

     

    Upon the
payment in full by Owner of any indemnity provided for under this Agreement,
Owner, without any further action and to the full extent permitted by Law, will
be subrogated to all rights and remedies of the person indemnified (other than
with respect to any of such Indemnitee’s insurance policies or in connection
with any indemnity claim such Indemnitee may have under Section 6.03 or
8.01 of the Trust Indenture) in respect of the matter as to which such indemnity
was paid.  Each Indemnitee will give such further assurances or
agreements and cooperate with Owner to permit Owner to pursue such claims, if
any, to the extent reasonably requested by Owner and at Owner’s
expense.

    

    
      
        
           

        

        
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              8.1.8

            	
              Refunds

            

    

     

    If an
Indemnitee receives any refund, in whole or in part, with respect to any Expense
paid by Owner hereunder, it will promptly pay the amount refunded (but not an
amount in excess of the amount Owner or any of its insurers has paid in respect
of such Expense) over to Owner unless an Event of Default shall have occurred
and be continuing, in which case such amounts shall be paid over to Mortgagee to
hold as security for Owner’s obligations under the Operative Agreements or, if
requested by Owner, applied to satisfy such obligations.

     

    
      	
               
      

            	
              8.2

            	
              Expenses

            

    

     

    
      	
               
      

            	
              8.2.1

            	
              Invoices
      and Payment

            

    

     

    The
Mortgagee, the Pass Through Trustee and the Subordination Agent shall promptly
submit to Owner for its prompt approval (which shall not be unreasonably
withheld) copies of invoices in reasonable detail of the Transaction Expenses
for which it is responsible for providing information as they are received (but
in no event later than the 90th day after the Closing Date). If so submitted and
approved, the Owner agrees promptly, but in any event no later than the 105th
day after the Closing Date, to pay Transaction Expenses.

     

    
      	
               
      

            	
              8.2.2

            	
              Payment
      of Other Expenses

            

    

     

    Owner
shall pay (i) the ongoing fees and expenses of Mortgagee, and (ii) all
reasonable out-of-pocket costs and expenses (including the reasonable fees and
disbursements of counsel) incurred by Mortgagee or any Note Holder attributable
to any waiver, amendment or modification of any Operative Agreement to the
extent requested by Owner.

     

    
      	
               
      

            	
              8.3

            	
              General
      Tax Indemnity

            

    

     

    
      	
               
      

            	
              8.3.1

            	
              General

            

    

     

    Except as
provided in Section 8.3.2, Owner agrees that each payment paid by Owner under
the Equipment Notes, and any other payment or indemnity paid by Owner to a Tax
Indemnitee under any Operative Agreement, shall be free of all withholdings or
deductions with respect to Taxes of any nature (other than U.S. federal, state
or local withholding taxes on, based on or measured by gross or net income), and
in the event that Owner shall be required by applicable law to make any such
withholding or deduction for any such payment (x) Owner shall make all
such

    

    
      
        
           

        

        
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    withholdings
or deductions, (y) the amount payable by Owner shall be increased so that after
making all required withholdings or deductions such Tax Indemnitee receives the
same amount that it would have received had no such withholdings or deductions
been made, and (z) Owner shall pay the full amount withheld or deducted to
the relevant Taxing Authority in accordance with applicable
law.  Except as provided in Section 8.3.2 and whether or not any of
the transactions contemplated hereby are consummated, Owner shall pay,
indemnify, protect, defend and hold each Tax Indemnitee harmless from all Taxes
imposed by any Taxing Authority that may from time to time be imposed on or
asserted against any Tax Indemnitee or the Aircraft, the Airframe, any Engine or
any Part or any interest in any of the foregoing (whether or not indemnified
against by any other Person), upon or with respect to the Operative Agreements
or the transactions or payments contemplated thereby, including but not limited
to any Tax imposed upon or with respect to (x) the Aircraft, the Airframe,
any Engine, any Part, any Operative Agreement (including without limitation any
Equipment Notes) or any data or any other thing delivered or to be delivered
under an Operative Agreement, (y) the purchase, manufacture, acceptance,
rejection, sale, transfer of title, return, ownership, mortgaging, delivery,
transport, charter, rental, lease, re-lease, sublease, assignment, possession,
repossession, presence, use, condition, storage, preparation, maintenance,
modification, alteration, improvement, operation, registration, transfer or
change of registration, reregistration, repair, replacement, overhaul, location,
control, the imposition of any Lien, financing, refinancing requested by the
Owner, abandonment or other disposition of the Aircraft, the Airframe, any
Engine, any Part, any data or any other thing delivered or to be delivered under
an Operative Agreement or (z) interest, fees or any other income, proceeds,
receipts or earnings, whether actual or deemed, arising upon, in connection
with, or in respect of, any of the Operative Agreements (including the property
or income or other proceeds with respect to property held as part of the
Collateral) or the transactions contemplated thereby.

     

    
      	
               
      

            	
              8.3.2

            	
              Certain
      Exceptions

            

    

     

    The
provisions of Section 8.3.1 shall not apply to, and Owner shall have no
liability hereunder for, Taxes:

     

    (a)           imposed
on a Tax Indemnitee by the federal government of the United States or any Taxing
Authority or governmental subdivision of the United States or therein (including
any state or local Taxing Authority) (i) on, based on, or measured
by,

    

    
      
        
           

        

        
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    gross or
net income or gross or net receipts, including capital gains taxes, excess
profits taxes, minimum taxes from tax preferences, alternative minimum taxes,
branch profits taxes, accumulated earnings taxes, personal holding company
taxes, succession taxes and estate taxes, and any withholding taxes on, based on
or measured by gross or net income or receipts or (ii) on, or with respect to,
or measured by, capital or net worth or in the nature of a franchise tax or a
tax for the privilege of doing business (other than, in the case of clause (i)
or (ii), sales, use, license or property Taxes);

     

    (b)           imposed
on a Tax Indemnitee by any Taxing Authority or governmental subdivision thereof
or therein outside of the United States (including any Taxing Authority in or of
a territory, possession or commonwealth of the United States) (i) on, based on,
or measured by, gross or net income or gross or net receipts, including capital
gains taxes, excess profits taxes, minimum taxes from tax preferences,
alternative minimum taxes, branch profits taxes, accumulated earnings taxes,
personal holding company taxes, succession taxes and estate taxes, and any
withholding taxes on, based on or measured by gross or net income or receipts or
(ii) on, or with respect to, or measured by, capital or net worth or in the
nature of a franchise tax or a tax for the privilege of doing business (other
than, in the case of clause (i) or (ii), (A) sales, use, license or property
Taxes, or (B) any Taxes imposed by any Taxing Authority (other than a Taxing
Authority within whose jurisdiction such Tax Indemnitee is incorporated or
organized or maintains its principal place of business) if such Tax Indemnitee
would not have been subject to Taxes of such type by such jurisdiction but for
(I) the location, use or operation of the Aircraft, the Airframe, any Engine or
any Part thereof by an Owner Person within the jurisdiction of the Taxing
Authority imposing such Tax,  or (II) the activities of any Owner
Person in such jurisdiction, including, but not limited to, use of any other
aircraft by Owner in such jurisdiction, (III) the status of any Owner Person as
a foreign entity or as an entity owned in whole or in part by foreign persons,
(IV) Owner having made (or having been deemed to have made) payments to such Tax
Indemnitee from the relevant jurisdiction or (V) in the case of the Pass
Through Trustees, the Note Holders or any related Tax Indemnitee, the Owner
being incorporated or organized or maintaining a place of business or conducting
activities in such jurisdiction);

    

    
      
        
           

        

        
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    (c)           on,
or with respect to, or measured by, any trustee fees, commissions or
compensation received by the Pass Through Trustee, Subordination Agent or
Mortgagee;

     

    (d)           that
are being contested as provided in Section 8.3.4 hereof;

     

    (e)           imposed
on any Tax Indemnitee to the extent that such Taxes result from the gross
negligence or willful misconduct of such Tax Indemnitee or any Affiliate
thereof;

     

    (f)           imposed
on or with respect to a Tax Indemnitee (including the transferee in those cases
in which the Tax on transfer is imposed on, or is collected from, the
transferee) as a result of a transfer or other disposition (including a deemed
transfer or disposition) by such Tax Indemnitee or a related Tax Indemnitee of
any interest in the Aircraft, the Airframe, any Engine or any Part, any interest
arising under the Operative Agreements or any Equipment Note or as a result of a
transfer or disposition (including a deemed transfer or disposition) of any
interest in a Tax Indemnitee (other than (A) a substitution or replacement of
the Aircraft, the Airframe, any Engine or any Part by an Owner Person that is
treated for Tax purposes as a transfer or disposition, or (B) a transfer
pursuant to an exercise of remedies upon an Event of Default that shall have
occurred and have been continuing);

     

    (g)           Taxes
in excess of those that would have been imposed had there not been a transfer or
other disposition by or to such Tax Indemnitee or a related Tax Indemnitee
described in paragraph (f) above;

     

    (h)           consisting
of any interest, penalties or additions to tax imposed on a Tax Indemnitee as a
result of (in whole or in part) failure of such Tax Indemnitee or a related Tax
Indemnitee to file any return properly and timely, unless such failure shall be
caused by the failure of Owner to fulfill its obligations, if any, under
Section 8.3.6 with respect to such return;

     

    (i)           resulting
from, or that would not have been imposed but for, any Liens arising as a result
of claims against, or acts or omissions of, or otherwise attributable to such
Tax Indemnitee or a related Tax Indemnitee that the Owner is not obligated to
discharge under the Operative Agreements;

     

    (j)           imposed
on any Tax Indemnitee as a result of the breach by such Tax Indemnitee or a
related Tax Indemnitee of any

    

    
      
        
           

        

        
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    covenant
of such Tax Indemnitee or any Affiliate thereof contained in any Operative
Agreement or the inaccuracy of any representation or warranty by such Tax
Indemnitee or any Affiliate thereof in any Operative Agreement;

     

    (k)           in
the nature of an intangible or similar Tax (i) upon or with respect to the value
or principal amount of the interest of any Note Holder in any Equipment Note or
the loan evidenced thereby but only if such Taxes are in the nature of franchise
Taxes or result from the Tax Indemnitee doing business in the taxing
jurisdiction and are imposed because of the place of incorporation or the
activities unrelated to the transactions contemplated by the Operative
Agreements in the taxing jurisdiction of such Tax Indemnitee;

     

    (l)           imposed
on a Tax Indemnitee by a Taxing Authority of a jurisdiction outside the United
States to the extent that such Taxes would not have been imposed but for a
connection between the Tax Indemnitee or a related Tax Indemnitee and such
jurisdiction imposing such Tax unrelated to the transactions contemplated by the
Operative Agreements; or

     

    (m)           Taxes
relating to ERISA or Section 4975 of the Code.

     

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

     

    
      	
               
      

            	
              8.3.3

            	
              Payment

            

    

     

    (a)           Owner’s
indemnity obligation to a Tax Indemnitee under this Section 8.3 shall equal the
amount which, after taking into account any Tax imposed upon the receipt or
accrual of the amounts payable under this Section 8.3 and any tax benefits
actually recognized by such Tax Indemnitee as a result of the indemnifiable Tax
(including, without limitation, any benefits recognized as a result of an
indemnifiable Tax being utilized by such Tax Indemnitee as a credit against
Taxes not indemnifiable under this Section 8.3), shall equal the amount of the
Tax indemnifiable under this Section 8.3.

     

    (b)           At
Owner’s request, the computation of the amount of any indemnity payment owed by
Owner or any amount owed by a Tax Indemnitee to Owner pursuant to this Section
8.3 shall be verified and certified by an independent public accounting firm
selected by such Tax Indemnitee and reasonably satisfactory to
Owner.  Such verification shall be binding.  The costs of
such

    

    
      
        
           

        

        
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    verification
(including the fee of such public accounting firm) shall be borne by Owner
unless such verification shall result in an adjustment in Owner’s favor of 5% or
more of the net present value of the payment as computed by such Tax Indemnitee,
in which case the costs shall be paid by such Tax Indemnitee.

     

    (c)           Each
Tax Indemnitee shall provide Owner with such certifications, information and
documentation as shall be in such Tax Indemnitee’s possession and as shall be
reasonably requested by Owner to minimize any indemnity payment pursuant to this
Section 8.3; provided, that notwithstanding anything to the contrary contained
herein, no Tax Indemnitee shall be required to provide Owner with any Tax
returns.

     

    (d)           Each
Tax Indemnitee shall promptly forward to Owner any written notice, bill or
advice received by it from any Taxing Authority concerning any Tax for which it
seeks indemnification under this Section 8.3.  Owner shall pay any
amount for which it is liable pursuant to this Section 8.3 directly to the
appropriate Taxing Authority if legally permissible or upon demand of a Tax
Indemnitee, to such Tax Indemnitee within 30 days of such demand (or, if a
contest occurs in accordance with Section 8.3.4, within 30 days after a Final
Determination (as defined below)), but in no event more than one Business Day
prior to the date the Tax to which such amount payable hereunder relates is
due.  If requested by a Tax Indemnitee in writing, Owner shall furnish
to the appropriate Tax Indemnitee the original or a certified copy of a receipt
for Owner’s payment of any Tax paid by Owner or such other evidence of payment
of such Tax as is acceptable to such Tax Indemnitee.  Owner shall also
furnish promptly upon written request such data as any Tax Indemnitee may
reasonably require to enable such Tax Indemnitee to comply with the requirements
of any taxing jurisdiction unless such data is not reasonably available to Owner
or, unless such data is specifically requested by a Taxing Authority, is not
customarily furnished by domestic air carriers under similar
circumstances.  For purposes of this Section 8.3, a "Final
Determination" shall mean (i) a
decision, judgment, decree or other order by any court of competent jurisdiction
that occurs pursuant to the provisions of Section 8.3.4, which decision,
judgment, decree or other order has become final and unappealable, (ii) a
closing agreement or  settlement agreement entered into in accordance
with Section 8.3.4 that has become binding and is not subject to further review
or appeal (absent fraud, misrepresentation, etc.), or (iii) the termination of
administrative proceedings and the expiration of the time for instituting a
claim in a court proceeding.

    

    
      
        
           

        

        
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    (e)           If
any Tax Indemnitee shall actually realize a tax savings by reason of any Tax
paid or indemnified by Owner pursuant to this Section 8.3 (whether such tax
savings shall be by means of a foreign tax credit, depreciation or cost recovery
deduction or otherwise) and such savings is not otherwise taken into account in
computing such payment or indemnity such Tax Indemnitee shall pay to Owner an
amount equal to the lesser of (i) the amount of such tax savings, plus any
additional tax savings recognized as the result of any payment made pursuant to
this sentence, when, as, if, and to the extent, realized or (ii) the amount of
all payments pursuant to this Section 8.3 by Owner to such Tax Indemnitee (less
any payments previously made by such Tax Indemnitee to Owner pursuant to this
Section 8.3.3 (e)) (and the excess, if any, of the amount described in clause
(i) over the amount described in clause (ii) shall be carried forward and
applied to reduce pro tanto any subsequent obligations of Owner to make payments
to such Tax Indemnitee pursuant to this Section 8.3); provided, that such Tax
Indemnitee shall not be required to make any payment pursuant to this sentence
so long as a Lease Event of Default of a monetary nature has occurred and is
continuing.  If a tax benefit is later disallowed or denied, the
disallowance or denial shall be treated as a Tax indemnifiable under Section
8.3.1 without regard to the provisions of Section 8.3.2 (other than Section
8.3.2 (f)).  Each such Tax Indemnitee shall in good faith use
reasonable efforts in filing its tax returns and in dealing with Taxing
Authorities to seek and claim any such tax benefit.

     

    
      	
               
      

            	
              8.3.4

            	
              Contest

            

    

     

    (a)           If
a written claim is made against a Tax Indemnitee for Taxes with respect to which
Owner could be liable for payment or indemnity hereunder, or if a Tax Indemnitee
makes a determination that a Tax is due for which Owner could have an indemnity
obligation hereunder, such Tax Indemnitee shall promptly give Owner notice in
writing of such claim (provided, that failure to so notify Owner shall not
relieve Owner of its indemnity obligations hereunder unless such failure to
notify effectively forecloses Owner’s rights to require a contest of such claim)
and shall take no action with respect to such claim without the prior written
consent of Owner for 30 days following the receipt of such notice by Owner;
provided, that, in the case of a claim made against a Tax Indemnitee, if such
Tax Indemnitee shall be required by law to take action prior to the end of such
30-day period, such Tax Indemnitee shall, in such notice to Owner, so inform
Owner, and such Tax Indemnitee shall take no action for as long as it is legally
able to do so (it being

    

    
      
        
           

        

        
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    understood
that a Tax Indemnitee shall be entitled to pay the Tax claimed and sue for a
refund prior to the end of such 30-day period if (i)(A) the failure to so
pay the Tax would result in substantial penalties (unless immediately reimbursed
by Owner) and the act of paying the Tax would not materially prejudice the right
to contest or (B) the failure to so pay would result in criminal penalties and
(ii) such Tax Indemnitee shall take any action so required in connection with so
paying the Tax in a manner that is the least prejudicial to the pursuit of the
contest).  In addition, such Tax Indemnitee shall (provided, that
Owner shall have agreed to keep such information confidential other than to the
extent necessary in order to contest the claim) furnish Owner with copies of any
requests for information from any Taxing Authority relating to such Taxes with
respect to which Owner may be required to indemnify hereunder.  If
requested by Owner in writing within 30 days after its receipt of such notice,
such Tax Indemnitee shall, at the expense of Owner (including, without
limitation, all reasonable costs, expenses and reasonable attorneys’ and
accountants’ fees and disbursements), in good faith contest (or, if permitted by
applicable law, allow Owner to contest) through appropriate administrative and
judicial proceedings the validity, applicability or amount of such Taxes by (I)
resisting payment thereof, (II) not paying the same except under protest if
protest is necessary and proper or (III) if the payment is made, using
reasonable efforts to obtain a refund thereof in an appropriate administrative
and/or judicial proceeding.  If requested to do so by Owner, the Tax
Indemnitee shall appeal any adverse administrative or judicial decision, except
that the Tax Indemnitee shall not be required to pursue any appeals to the
United States Supreme Court.  If and to the extent the Tax Indemnitee
is able to separate the contested issue or issues from other issues arising in
the same administrative or judicial proceeding that are unrelated to the
transactions contemplated by the Operative Agreements without, in the good faith
judgment of such Tax Indemnitee, adversely affecting such Tax Indemnitee, such
Tax Indemnitee shall permit Owner to control the conduct of any such proceeding
and shall provide to Owner (at Owner’s cost and expense) with such information
or data that is in such Tax Indemnitee’s control or possession that is
reasonably necessary to conduct such contest. In the case of a contest
controlled by a Tax Indemnitee, such Tax Indemnitee shall consult with Owner in
good faith regarding the manner of contesting such claim and shall keep Owner
reasonably informed regarding the progress of such contest. A Tax Indemnitee
shall not fail to take any action expressly required by this Section 8.3.4
(including, without limitation, any action regarding any appeal of an
adverse

    

    
      
        
           

        

        
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    determination
with respect to any claim) or settle or compromise any claim without the prior
written consent of the Owner (except as contemplated by Section 8.3.4(b) or
(c)).

     

    (b)           Notwithstanding
the foregoing, in no event shall a Tax Indemnitee be required to pursue any
contest (or to permit Owner to pursue any contest) unless (i) Owner shall have
agreed to pay such Tax Indemnitee on demand all reasonable costs and expenses
incurred by such Tax Indemnitee in connection with contesting such Taxes,
including, without limitation, all reasonable out of pocket costs and expenses
and reasonable attorneys’ and accountants’ fees and disbursements, (ii) if such
contest shall involve the payment of the claim, Owner shall advance the amount
thereof (to the extent indemnified hereunder) plus interest, penalties and
additions to tax with respect thereto that are required to be paid prior to the
commencement of such contest on an interest-free after-Tax basis to such Tax
Indemnitee (and such Tax Indemnitee shall promptly pay to the Owner any net
realized tax benefits resulting from such advance including any tax benefits
resulting from making such payment), (iii) such Tax Indemnitee shall have
reasonably determined that the action to be taken will not result in any
material risk of forfeiture, sale or loss of the Aircraft (unless Owner shall
have made provisions to protect the interests of any such Tax Indemnitee in a
manner reasonably satisfactory to such Tax Indemnitee) (provided, that such Tax
Indemnitee agrees to notify Owner in writing promptly after it becomes aware of
any such risk), (iv) no Lease Event of Default shall have occurred and be
continuing unless Owner has provided security for its obligations hereunder by
advancing to such Tax Indemnitee before proceeding or continuing with such
contest, the amount of the Tax being contested, plus any interest and penalties
and an amount estimated in good faith by such Tax Indemnitee for expenses, and
(v) prior to commencing any judicial action controlled by Owner, Owner shall
have acknowledged its liability for such claim hereunder, provided that Owner
shall not be bound by its acknowledgment if the Final Determination articulates
conclusions of law and fact that demonstrate that Owner has no liability for the
contested amounts hereunder.  Notwithstanding the foregoing, if any
Tax Indemnitee shall release, waive, compromise or settle any claim which may be
indemnifiable by Owner pursuant to this Section 8.3 without the written
permission of Owner, Owner’s obligation to indemnify such Tax Indemnitee with
respect to such claim (and all directly related claims and claims based on the
outcome of such claim) shall terminate, subject to Section 8.3.4(c), and subject
to Section 8.3.4(c), such Tax Indemnitee shall repay to Owner any
amount

    

    
      
        
           

        

        
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    previously
paid or advanced to such Tax Indemnitee with respect to such claim, plus
interest at the rate that would have been payable by the relevant Taxing
Authority with respect to a refund of such Tax.

     

    (c)           Notwithstanding
anything contained in this Section 8.3, a Tax Indemnitee will not be required to
contest the imposition of any Tax and shall be permitted to settle or compromise
any claim without Owner’s consent if such Tax Indemnitee (i) shall waive its
right to indemnity under this Section 8.3 with respect to such Tax (and any
directly related claim and any claim the outcome of which is determined based
upon the outcome of such claim), (ii) shall pay to Owner any amount previously
paid or advanced by Owner pursuant to this Section 8.3 with respect to such Tax,
plus interest at the rate that would have been payable by the relevant Taxing
Authority with respect to a refund of such Tax, and (iii) shall agree to discuss
with Owner the views or positions of any relevant Taxing Authority with respect
to the imposition of such Tax.

     

    
      	
               
      

            	
              8.3.5

            	
              Refund

            

    

     

    If any
Tax Indemnitee shall receive a refund of, or be entitled to a credit against
other liability for, all or any part of any Taxes paid, reimbursed or advanced
by Owner, such Tax Indemnitee shall pay to Owner within 30 days of such
receipt  an amount equal to the lesser of (a) the amount of such
refund or credit plus any net tax benefit (taking into account any Taxes
incurred by such Tax Indemnitee by reason of the receipt of such refund or
realization of such credit) actually realized by such Tax Indemnitee as a result
of any payment by such Tax Indemnitee made pursuant to this sentence (including
this clause (a)) and (b) such tax payment, reimbursement or advance by Owner to
such Tax Indemnitee theretofore made pursuant to this Section 8.3 (and the
excess, if any, of the amount described in clause (a) over the amount described
in clause (b) shall be carried forward and applied to reduce pro tanto any
subsequent obligation of Owner to make payments to such Tax Indemnitee pursuant
to this Section 8.3).  If, in addition to such refund or credit, such
Tax Indemnitee shall receive (or be credited with) an amount representing
interest on the amount of such refund or credit, such Tax Indemnitee shall pay
to Owner within 30 days of such receipt or realization of such credit that
proportion of such interest that shall be fairly attributable to Taxes paid,
reimbursed or advanced by Owner prior to the receipt of such refund or
realization of such credit.

    

    
      
        
           

        

        
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              8.3.6

            	
              Tax
      Filing

            

    

     

    If any
report, return or statement is required to be filed with respect to any Tax
which is subject to indemnification under this Section 8.3, Owner shall timely
file the same (except for any such report, return or statement which a Tax
Indemnitee has timely notified the Owner in writing that such Tax Indemnitee
intends to file, or for which such Tax Indemnitee is required by law to file, in
its own name); provided, that the relevant Tax Indemnitee shall furnish Owner
with any information in such Tax Indemnitee’s possession or control that is
reasonably necessary to file any such return, report or statement and is
reasonably requested in writing by Owner (it being understood that the Tax
Indemnitee shall not be required to furnish copies of its actual tax returns,
although it may be required to furnish relevant information contained
therein).  Owner shall either file such report, return or statement
and send a copy of such report, return or statement to such Tax Indemnitee, or,
where Owner is not permitted to file such report, return or statement, it shall
notify such Tax Indemnitee of such requirement and prepare and deliver such
report, return or statement to such Tax Indemnitee in a manner satisfactory to
such Tax Indemnitee within a reasonable time prior to the time such report,
return or statement is to be filed.

     

    
      	
               
      

            	
              8.3.7

            	
              Forms

            

    

     

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

     

    
      	
               
      

            	
              8.3.8

            	
              Non-Parties

            

    

     

    If a Tax
Indemnitee is not a party to this Agreement, Owner may require the Tax
Indemnitee to agree in writing, in a form reasonably acceptable to Owner, to the
terms of this Section 8.3 and Section 15.8 prior to making any payment to
such Tax Indemnitee under this Section 8.3.

    

    
      
        
           

        

        
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              8.3.9

            	
              Subrogation

            

    

     

    Upon
payment of any Tax by Owner pursuant to this Section 8.3 to or on behalf of a
Tax Indemnitee, Owner, without any further action, shall be subrogated to any
claims that such Tax Indemnitee may have relating thereto.  Such Tax
Indemnitee shall cooperate with Owner (to the extent such cooperation does not
result in any unreimbursed cost, expense or liability to such Tax Indemnitee) to
permit Owner to pursue such claims.

     

    
      	
               
      

            	
              8.4

            	
              Payments

            

    

     

    Any
payments made pursuant to Section 8.1 or 8.3 shall be due on the 60th day
after demand therefor and shall be made directly to the relevant Indemnitee or
Tax Indemnitee or to Owner, in immediately available funds at such bank or to
such account as specified by such Indemnitee or Tax Indemnitee or Owner, as the
case may be, in written directives to the payor, or, if no such direction shall
have been given, by check of the payor payable to the order of, and mailed to,
such Indemnitee or Tax Indemnitee or Owner, as the case may be, by certified
mail, postage prepaid, at its address as set forth in this
Agreement.

     

    
      	
               
      

            	
              8.5

            	
              Interest

            

    

     

    If any
amount, payable by Owner, any Indemnitee or any Tax Indemnitee under
Section 8.1 or 8.3 is not paid when due, the person obligated to make such
payment shall pay on demand, to the extent permitted by Law, to the person
entitled thereto, interest on any such amount for the period from and including
the due date for such amount to but excluding the date the same is paid, at the
Payment Due Rate.  Such interest shall be paid in the same manner as
the unpaid amount in respect of which such interest is due.

     

    
      	
               
      

            	
              8.6

            	
              Benefit
      of Indemnities

            

    

     

    The
obligations of Owner in respect of all indemnities, obligations, adjustments and
payments in Section 8.1 or 8.3 are expressly made for the benefit of, and
shall be enforceable by, the Indemnitee or Tax Indemnitee entitled thereto,
notwithstanding any provision of the Trust Indenture.

    

    
      
        
           

        

        
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              SECTION 9.

            	
              ASSIGNMENT
      OR TRANSFER OF INTEREST

            

    

     

    
      	
               
      

            	
              9.1

            	
              Note
      Holders

            

    

     

    Subject
to Section 6.3.2 hereof and Section 2.07 of the Trust Indenture, any Note
Holder may, at any time and from time to time, Transfer or grant participations
in all or any portion of the Equipment Notes and/or all or any portion of its
beneficial interest in its Equipment Notes to any person (it being understood
that the sale or issuance of Pass Through Certificates by the Pass Through
Trustee shall not be considered a Transfer or participation); provided, that any
participant in any such participations shall not have any direct rights under
the Operative Agreements or any Lien on all or any part of the Aircraft or the
Collateral and Owner shall not have any increased liability or obligations as a
result of any such participation.  In the case of any such Transfer,
the Transferee, by acceptance of Equipment Notes in connection with such
Transfer, shall be deemed to be bound by (i) all of the covenants of Note
Holders contained in the Operative Agreements and (ii) certain terms of the
Intercreditor Agreement as specified in such Equipment Notes and/or Section 2.07
of the Trust Indenture.

     

    
      	
               
      

            	
              9.2

            	
              Effect
      of Transfer

            

    

     

    Upon any
Transfer in accordance with Section 9.1 (other than any Transfer by any
Note Holder, to the extent it only grants participations in Equipment Notes or
in its beneficial interest therein), Transferee shall be deemed a "Note Holder," for all purposes
of this Agreement and the other Operative Agreements, and the transferring Note
Holder shall be released from all of its liabilities and obligations under this
Agreement and any other Operative Agreements to the extent such liabilities and
obligations arise after such Transfer and, in each case, to the extent such
liabilities and obligations are assumed by the Transferee; provided, that such
transferring Note Holder (and its respective Affiliates, successors, assigns,
agents, servants, representatives, directors and officers) will continue to have
the benefit of any rights or indemnities under any Operative Agreement vested or
relating to circumstances, conditions, acts or events prior to such
Transfer.

     

    
      	
              SECTION 10.

            	
              SECTION
      1110

            

    

     

    It is the
intention of each of the Owner, the Note Holders (such intention being evidenced
by each of their acceptance of an Equipment Note), and Mortgagee that Mortgagee
shall be

    

    
      
        
           

        

        
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    entitled
to the benefits of Section 1110 in the event of a case under Chapter 11 of
the Bankruptcy Code in which Owner is a debtor.

     

    
      	
              SECTION 11.

            	
              CHANGE
      OF CITIZENSHIP

            

    

     

    
      	
               
      

            	
              11.1

            	
              Generally

            

    

     

    Without
prejudice to the representations, warranties or covenants regarding the status
of any party hereto as a Citizen of the United States, each of Owner, WTC and
Mortgagee agrees that it will, immediately upon obtaining knowledge of any facts
that would cast doubt upon its continuing status as a Citizen of the United
States and promptly upon public disclosure of negotiations in respect of any
transaction which would or might adversely affect such status, notify in writing
all parties hereto of all relevant matters in connection therewith.

     

    
      	
               
      

            	
              11.2

            	
              Mortgagee

            

    

     

    Upon WTC
giving any notice in accordance with Section 11.1, Mortgagee shall (if and
so long as such citizenship is necessary under the Act as in effect at such time
or, if it is not necessary, if and so long as Mortgagee’s citizenship could have
any adverse effect on Owner, or any Note Holder), subject to Section 9.02
of the Trust Indenture, resign as Mortgagee promptly upon its ceasing to be such
a citizen.

     

    
      	
              SECTION 12.

            	
              MISCELLANEOUS

            

    

     

    
      	
               
      

            	
              12.1

            	
              Amendments

            

    

     

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

    

    
      
        
           

        

        
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              12.2

            	
              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.

     

    
      	
               
      

            	
              12.3

            	
              Survival

            

    

     

    The
indemnities set forth herein shall survive the delivery or return of the
Aircraft, the Transfer of any interest by any Note Holder of its Equipment Note
and the expiration or other termination of this Agreement or any other Operative
Agreement.

     

    
      	
               
      

            	
              12.4

            	
              Reproduction
      of Documents

            

    

     

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

     

    
      	
               
      

            	
              12.5

            	
              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

    

    
      
        
           

        

        
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    deemed to
be an original, and all of which counterparts, taken together, shall constitute
one and the same instrument.

     

    
      	
               
      

            	
              12.6

            	
              No
      Waiver

            

    

     

    No
failure on the part of any party hereto to exercise, and no delay by any party
hereto in exercising, any of its respective 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 it or the exercise of any other right, power, remedy or privilege by
it.  No notice to or demand on any party hereto in any case shall,
unless otherwise required under this Agreement, entitle such party to any other
or further notice or demand in similar or other circumstances or constitute a
waiver of the rights of any party hereto to any other or further action in any
circumstances without notice or demand.

     

    
      	
               
      

            	
              12.7

            	
              Notices

            

    

     

    Unless
otherwise expressly permitted by the terms hereof, all notices, requests,
demands, authorizations, directions, consents, waivers and other communications
required or permitted to be made, given, furnished or filed hereunder shall be
in writing (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 or other
applicable Operative 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, or to such other address, facsimile or other
number as each party hereto may hereafter specify by notice to the other parties
hereto.  Each such notice, request, demand, authorization, direction,
consent, waiver or other communication shall be effective when received or, if
made, given, furnished or filed (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.

    

    
      
        
           

        

        
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              12.8

            	
              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 MAILING COPIES
THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, AT THE ADDRESS SET
FORTH PURSUANT TO SECTION 12.7.  EACH PARTY HERETO HEREBY AGREES
THAT SERVICE UPON IT, OR ANY OF ITS AGENTS, IN EACH CASE IN ACCORDANCE WITH THIS
SECTION 12.8(c), SHALL CONSTITUTE VALID AND EFFECTIVE PERSONAL SERVICE UPON SUCH
PARTY, AND EACH PARTY HERETO HEREBY AGREES THAT THE FAILURE OF ANY OF ITS AGENTS
TO GIVE ANY NOTICE OF SUCH SERVICE TO ANY SUCH PARTY SHALL NOT IMPAIR OR AFFECT
IN ANY WAY THE VALIDITY OF SUCH SERVICE ON SUCH PARTY OR ANY JUDGMENT RENDERED
IN ANY ACTION OR PROCEEDING BASED THEREON.

     

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

     

    
      	
               
      

            	
              12.9

            	
              Third-Party
      Beneficiary

            

    

     

    This
Agreement is not intended to, and shall not, provide any person not a party
hereto (other than the Indenture

    

    
      
        
           

        

        
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    Indemnitees
(including the Related Note Holders), each of which is an intended third party
beneficiary with respect to the provisions of Section 8.1 (and, in the case
of the Tax Indemnitees, Section 8.3) and the persons referred to in Section
6.4.6, which are intended third party beneficiaries with respect to such
Section) with any rights of any nature whatsoever against any of the parties
hereto and no person not a party hereto (other than the Indenture Indemnitees
(including the Related Note Holders), with respect to the provisions of
Section 8.1 (and, in the case of the Tax Indemnitees, Section 8.3), and the
persons referred to in Section 6.4.6 with respect to the provisions of such
Section) shall have any right, power or privilege in respect of any party
hereto, or have any benefit or interest, arising out of this
Agreement.

     

    
      	
               
      

            	
              12.10

            	
              Entire
      Agreement

            

    

     

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

     

    
      	
               
      

            	
              12.11

            	
              Further
      Assurances

            

    

     

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

     

    [This
space intentionally left blank]

    

    

    
      
        
           

        

        
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    IN
WITNESS WHEREOF, each of the parties has caused this Participation Agreement to
be duly executed and delivered as of the day and year first above
written.

    

    
      	 
      	
              CONTINENTAL
      AIRLINES, INC.,

                  Owner

            
	 
      	 
      
	 
      	 
      
	 
      	
              By

            	 
      
	 
      	 
      	
              Name:

            	 
      
	 
      	 
      	
              Title:

            	 
      

    

    

    
      	 
      	
              WILMINGTON
      TRUST COMPANY,

              not
      in its individual capacity, except as expressly provided herein, but
      solely as Mortgagee

            
	 
      	 
      
	 
      	 
      
	 
      	
              By

            	 
      
	 
      	 
      	
              Name:

            	 
      
	 
      	 
      	
              Title:

            	 
      

    

    

    

    
      	 
      	
              WILMINGTON
      TRUST COMPANY,

              not
      in its individual capacity, except as expressly provided herein, but
      solely as Pass Through Trustee under the Pass Through Trust Agreement for
      the Continental Airlines Pass Through Trust, 2009-1A-0

            
	 
      	 
      
	 
      	 
      
	 
      	
              By

            	 
      
	 
      	 
      	
              Name:

            	 
      
	 
      	 
      	
              Title:

            	 
      

    

    

    

    
      
        
           

        

        
          SIGNATURE
PAGE  

          
            

          

        

        
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              WILMINGTON
      TRUST COMPANY,

              not
      in its individual capacity, except as expressly provided herein, but
      solely as Subordination Agent

            
	 
      	 
      
	 
      	 
      
	 
      	
              By

            	 
      
	 
      	 
      	
              Name:

            	 
      
	 
      	 
      	
              Title:

            	 
      

    

    

    

    
      
        
           

        

        
          SIGNATURE
PAGE  

          
            

          

        

        
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                    SCHEDULE 1

                    TO

                    PARTICIPATION
      AGREEMENT
[___]

                  

          

        

    

     

    ACCOUNTS;
ADDRESSES

    
 

    
      
        
          	 
      	
                  Account for Payments

                	
                  Address for Notices

                
	
                  Continental
      Airlines, Inc.

                	
                  JPMorgan
      Chase Bank

                  New
      York, New York 10081

                  Account
      No.: 910-2-499291

                  ABA#:
      021-000021

                  Attention: Alice
      Free

                  Voice: 318-362-8612

                  Facsimile:
      318-362-8613

                  Reference:
      Continental [___]

                	
                  Continental
      Airlines, Inc.

                  1600
      Smith Street

                  Dept.
      HQS-FN

                  Houston,
      Texas 77002

                  Attention:
      Treasurer

                  Facsimile:
      (713) 324-2447

                
	
                  Wilmington
      Trust Company, Mortgagee

                	
                  Wilmington
      Trust Company

                  Wilmington,
      Delaware 19890

                  Account
      No.: [___]

                  ABA#:
      031-100092

                  Attention:
      Corporate Trust

                   Administration

                  Reference:
      Continental [___]

                	
                  Wilmington
      Trust Company

                  Rodney
      Square North

                  1100
      North Market Street

                  Wilmington,
      Delaware  19890

                  Attention:
      Corporate Trust

                   Administration

                  Facsimile:
      (302) 636-4140

                
	
                  Wilmington
      Trust Company, as Subordination Agent

                	
                  Wilmington
      Trust Company

                  Wilmington,
      Delaware 19890

                  Account
      No.: [___]

                  ABA#:
      031-100092

                  Attention:
      Corporate Trust

                   Administration

                  Reference:
      Continental [__]

                	
                  Wilmington
      Trust Company

                  Rodney
      Square North

                  1100
      North Market Street

                  Wilmington,
      Delaware  19890

                  Attention:
      Corporate Trust

                   Administration

                  Facsimile:  (302)
      636-4140

                
	
                  Wilmington
      Trust Company, as Pass Through Trustee for the 2009-1A Pass Through
      Trust

                	
                  Wilmington
      Trust Company

                  Wilmington,
      Delaware 19890

                  Account
      No.: [___]

                  ABA#:
      031-100092

                  Attention:
      Corporate Trust

                   Administration

                   Reference:
      Continental [__]

                	
                  Wilmington
      Trust Company

                  Rodney
      Square North

                  1100
      North Market Street

                  Wilmington,
      Delaware  19890

                  Attention:  Corporate
      Trust

                   Administration

                  Facsimile:  (302)
      636-4140

                

        

      

    

     

    

    
      
        
           

        

        
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                      SCHEDULE 2 - COMMITMENTS

                      PARTICIPATION
      AGREEMENT
[___]

                    

                  

          

        

    

     

    COMMITMENT

    
 

    
      
        
          	
                  
                     

                     

                    Equipment
      Notes

                  

                	 
      	
                  
                     

                    Dollar
      Amount

                    of
      Loan

                  

                
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      

        

      

    

     

    

    
      
        
           

        

        
          Page
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          BACK

        

      

    

    

    
 

    
      
        
          
            	
                    
                      
                        SCHEDULE 3 - CERTAIN TERMS

                        PARTICIPATION
      AGREEMENT [___]

                      

                    

                  

          

        

    

     

    CERTAIN
TERMS

     

     

    
      
        
          	
                  Defined Term

                	 	
                  Definition

                
	
                   

                  Minimum
      Liability Insurance Amount

                	 	
                   

                  $350,000,000

                
	
                   

                  Threshold
      Amount

                	 	
                   

                  $[________]19

                

        

      

    

    

    

    

      

    

      
      19.Insert
$10,000,000 for 777-224ER, $7,500,000 for 757-224 and $5,000,000 for other
models.

    

    

    
      
        
           

        

        
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                              SCHEDULE 4 - PERMITTED COUNTRIES

                              PARTICIPATION
      AGREEMENT
[___]

                            

                          

                        

                      

                    

            

          

      

    

    PERMITTED
COUNTRIES

    

     

    

    

    
      	
              Argentina

            	
              Luxembourg

            
	
              Australia

            	
              Malaysia

            
	
              Austria

            	
              Malta

            
	
              Bahamas

            	
              Mexico

            
	
              Belgium

            	
              Morocco

            
	
              Bolivia

            	
              Netherlands

            
	
              Brazil

            	
              Netherlands
      Antilles

            
	
              Canada

            	
              New
      Zealand

            
	
              Chile

            	
              Norway

            
	
              Colombia

            	
              Panama

            
	
              Czech
      Republic

            	
              People’s
      Republic of China

            
	
              Denmark

            	
              Peru

            
	
              Egypt

            	
              Philippines

            
	
              Ecuador

            	
              Poland

            
	
              Finland

            	
              Portugal

            
	
              France

            	
              Republic
      of China (Taiwan)

            
	
              Germany

            	
              Russia

            
	
              Greece

            	
              Singapore

            
	
              Guatemala

            	
              South
      Africa

            
	
              Hungary

            	
              South
      Korea

            
	
              Iceland

            	
              Spain

            
	
              India

            	
              Sweden

            
	
              Indonesia

            	
              Switzerland

            
	
              Ireland

            	
              Thailand

            
	
              Italy

            	
              Trinidad
      and Tobago

            
	
              Jamaica

            	
              Turkey

            
	
              Japan

            	
              United
      Kingdom

            
	
              Jordan

            	
              Uruguay

            
	
              Kuwait

            	
              Venezuela

            

    

    
 

    Page
1e60709081ex4_10.htm

    

    EXHIBIT C to

    Note Purchase
Agreement

     

    FORM OF
INDENTURE

    

     

    

    

    
      

       

        
          

        

      

      

    

     

    TRUST
INDENTURE AND MORTGAGE [____]

     

    Dated as
of [________ __], 2009

     

    Between

     

    CONTINENTAL
AIRLINES, INC.,

     

    Owner

     

    and

     

    WILMINGTON
TRUST COMPANY,

    not in
its individual capacity,

    except as
expressly stated herein,

    but
solely as Mortgagee,

     

    Mortgagee

    
      

       

      
        
          

        

    

     

    EQUIPMENT
NOTES COVERING

    ONE
BOEING [______] AIRCRAFT

    BEARING
U.S. REGISTRATION MARK N[______]

    AND
MANUFACTURER’S SERIAL NO. [______]

    
      

       

        
          

        

      

      

    

    

    

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

    TABLE OF CONTENTS

     

    Page

    
      
        	
                 

                GRANTING CLAUSE

              	
                 

                1

              
	
                 

                ARTICLE I  DEFINITIONS

              	
                 

                4

              
	
                 

                ARTICLE II  THE EQUIPMENT
      NOTES

              	
                 

                5

              
	
                SECTION 2.01.  Form of Equipment
      Notes

              	
                5

              
	
                SECTION 2.02.  Issuance and Terms of Equipment
      Notes

              	
                11

              
	
                SECTION 2.03.  [Intentionally
      Omitted]

              	
                13

              
	
                SECTION 2.04.  Method of
Payment

              	
                13

              
	
                SECTION 2.05.  Application of
      Payments

              	
                15

              
	
                SECTION 2.06.  Termination of Interest in
      Collateral

              	
                16

              
	
                SECTION 2.07.  Registration Transfer and Exchange
      of Equipment Notes

              	
                16

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

              	
                17

              
	
                SECTION 2.09.  Payment of Expenses on Transfer;
      Cancellation

              	
                18

              
	
                SECTION 2.10.  Mandatory Redemptions of Equipment
      Notes

              	
                18

              
	
                SECTION 2.11.  Voluntary Redemptions of Equipment
      Notes

              	
                18

              
	
                SECTION 2.12.  Redemptions; Notice of
      Redemption

              	
                19

              
	
                SECTION 2.13.  Subordination

              	
                19

              
	
                 

                ARTICLE III  RECEIPT, DISTRIBUTION AND
      APPLICATION OF PAYMENTS

              	
                 

                20

              
	
                SECTION 3.01.  Basic
    Distributions

              	
                20

              
	
                SECTION 3.02.  Event of Loss; Replacement; Optional
      Redemption

              	
                21

              
	
                SECTION 3.03.  Payments After Event of
      Default

              	
                22

              
	
                SECTION 3.04.  Certain Payments

              	
                24

              
	
                SECTION 3.05.  Other Payments

              	
                24

              
	
                SECTION 3.06.  Cooperation

              	
                25

              
	
                SECTION 3.07.  Securities
    Account

              	
                25

              
	
                 

                ARTICLE IV  COVENANTS OF THE
      OWNER

              	
                 

                26

              
	
                SECTION 4.01.  Liens

              	
                26

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

              	
                26

              
	
                SECTION 4.03.  Inspection

              	
                31

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

              	
                31

              
	
                SECTION 4.05.  Loss, Destruction or
      Requisition

              	
                35

              
	
                SECTION 4.06.  Insurance

              	
                39

              
	
                SECTION 4.07.  Merger of Owner

              	
                40

              
	
                 

                ARTICLE V  EVENTS OF DEFAULT; REMEDIES OF
      MORTGAGEE

              	
                 

                41

              
	
                SECTION 5.01.  Event of Default

              	
                41

              
	
                SECTION 5.02.  Remedies

              	
                42

              

      

    

    

    
      
        
           

        

        
           

          
            

          

        

        
           

        

      

    

    

     

    TABLE OF
CONTENTS

    (continued)

     

    Page

     

    
      
        	
                SECTION 5.03.  Return of Aircraft,
      Etc.

              	
                44

              
	
                SECTION 5.04.  Remedies
    Cumulative

              	
                45

              
	
                SECTION 5.05.  Discontinuance of
      Proceedings

              	
                45

              
	
                SECTION 5.06.  Waiver of Past
      Defaults

              	
                45

              
	
                SECTION 5.07.  Appointment of
      Receiver

              	
                45

              
	
                SECTION 5.08.  Mortgagee Authorized to Execute
      Bills of Sale, Etc.

              	
                46

              
	
                SECTION 5.09.  Rights of Note Holders to Receive
      Payment

              	
                46

              
	
                 

                ARTICLE VI  DUTIES OF THE
      MORTGAGEE

              	
                 

                46

              
	
                SECTION 6.01.  Notice of Event of
      Default

              	
                46

              
	
                SECTION 6.02.  Action Upon Instructions; Certain
      Rights and Limitations

              	
                47

              
	
                SECTION 6.03.  Indemnification

              	
                47

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

              	
                48

              
	
                SECTION 6.05.  No Action Except Under Trust
      Indenture or Instructions

              	
                48

              
	
                SECTION 6.06.  Investment of Amounts Held by
      Mortgagee

              	
                48

              
	
                 

                ARTICLE VII  THE
    MORTGAGEE

              	
                 

                49

              
	
                SECTION 7.01.  Acceptance of Trusts and
      Duties

              	
                49

              
	
                SECTION 7.02.  Absence of
Duties

              	
                49

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

              	
                49

              
	
                SECTION 7.04.  No Segregation of Monies; No
      Interest

              	
                50

              
	
                SECTION 7.05.  Reliance; Agreements; Advice of
      Counsel

              	
                50

              
	
                SECTION 7.06.  Compensation

              	
                51

              
	
                SECTION 7.07.  Instructions from Note
      Holders

              	
                51

              
	
                 

                ARTICLE
      VIII  INDEMNIFICATION

              	
                 

                51

              
	
                SECTION 8.01.  Scope of
      Indemnification

              	
                51

              
	
                 

                ARTICLE IX  SUCCESSOR AND SEPARATE
      TRUSTEES

              	
                 

                51

              
	
                SECTION 9.01.  Resignation of Mortgagee;
      Appointment of Successor

              	
                51

              
	
                SECTION 9.02.  Appointment of Additional and
      Separate Trustees

              	
                52

              
	
                 

                ARTICLE X  SUPPLEMENTS AND AMENDMENTS TO THIS
      TRUST INDENTURE AND OTHER DOCUMENTS

              	
                 

                54

              
	
                SECTION 10.01.  Instructions of Majority;
      Limitations

              	
                54

              
	
                SECTION 10.02.  Mortgagee
      Protected

              	
                55

              
	
                SECTION 10.03.  Documents Mailed to Note
      Holders

              	
                56

              
	
                SECTION 10.04.  No Request Necessary for Trust
      Indenture Supplement

              	
                56

              

      

    

    

    
      
        
           

        

        
          ii

          
            

          

        

        
           

        

      

    

    

     

    TABLE OF
CONTENTS

    (continued)

     

    Page

    
      
        	
                 

                ARTICLE
      XI MISCELLANEOUS

              	
                 

                56

              
	
                SECTION 11.01.  Termination of Trust
      Indenture

              	
                56

              
	
                SECTION 11.02.  No Legal Title to Collateral in
      Note Holders

              	
                56

              
	
                SECTION 11.03.  Sale of Aircraft by Mortgagee Is
      Binding

              	
                57

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

              	
                57

              
	
                SECTION 11.05.  Notices

              	
                57

              
	
                SECTION 11.06.  Severability

              	
                57

              
	
                SECTION 11.07.  No Oral Modification or Continuing
      Waivers

              	
                58

              
	
                SECTION 11.08.  Successors and
      Assigns

              	
                58

              
	
                SECTION 11.09.  Headings

              	
                58

              
	
                SECTION 11.10.  Normal Commercial
      Relations

              	
                58

              
	
                SECTION 11.11.  Governing Law; Counterpart
      Form

              	
                58

              
	
                SECTION 11.12.  Voting By Note
      Holders

              	
                58

              
	
                SECTION 11.13.  Bankruptcy

              	
                59

              

      

    

     

    

    
      
        	
                ANNEX
      A

              	
                Definitions

              
	
                ANNEX
      B

              	
                Insurance

              
	
                EXHIBIT
      A

              	
                Form of Trust Indenture and Mortgage
      Supplement

              
	
                SCHEDULE
      I

              	
                Equipment Notes Amortization and Interest
      Rates

              

      

    

    

    

    
      
        
           

        

        
          iii

          
            

          

        

        
          BACK

        

      

    

    

     

    TRUST
INDENTURE AND MORTGAGE [____]

     

    TRUST
INDENTURE AND MORTGAGE [____], dated as of [________ __], 2009 (“Trust
Indenture”), between CONTINENTAL AIRLINES, INC., a Delaware corporation
(“Owner”), and WILMINGTON TRUST COMPANY, a Delaware banking corporation, not in
its individual capacity, except as expressly stated herein, but solely as
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 parties hereto desire by this Trust Indenture, among other things, (i) to
provide for the issuance by the Owner of the Series A Equipment Notes and the
possible issuance of Additional Series, and (ii) to provide for the assignment,
mortgage and pledge by the Owner to the Mortgagee, as part of the Collateral
hereunder, among other things, of all of the Owner’s right, title and interest
in and to the Aircraft and, except as hereinafter expressly provided, all
payments and other amounts received hereunder in accordance with the terms
hereof, as security for, among other things, the Owner’s obligations to the Note
Holders and the Indenture Indemnitees;

     

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

     

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

     

    GRANTING CLAUSE

     

    NOW,
THEREFORE, THIS TRUST INDENTURE AND 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 to secure the
performance and observance by the Owner of all the agreements, covenants and
provisions contained herein and in the Participation Agreement and in the
Equipment Notes and to secure the Related Secured Obligations and the
performance and observance by the Owner of all agreements, covenants and
provisions contained in the Related Equipment Notes, for the benefit of the Note
Holders and each of the Indenture Indemnitees, and in consideration of the
premises and of the covenants herein contained, and of the acceptance of the
Equipment Notes and the Related Equipment Notes by the holders thereof, and for
other good and valuable consideration the receipt and adequacy whereof are
hereby acknowledged, the Owner has granted, bargained, sold, assigned,
transferred, conveyed, mortgaged, pledged and confirmed, and does hereby grant,
bargain, sell, assign, transfer, convey, mortgage, pledge and confirm, unto the
Mortgagee, its successors in trust and assigns, for the security and benefit of,
the Note Holders and each of the

    

    
      
        
           

        

        
           

          
            

          

        

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

     

    (1)           The
Airframe which is one Boeing [______] aircraft with the FAA Registration number
of N[______] and the manufacturer’s serial number of [______] and two Engines,
each of which Engines is a [________________________] jet propulsion aircraft
engine with at least 1750 lb. of thrust, with the manufacturer’s serial numbers
of [______] and [______] (such Airframe and Engines more particularly described
in the Trust Indenture Supplement executed and delivered as provided herein) as
the same is now and will hereafter be constituted, whether now owned by the
Owner or hereafter acquired, and in the case of such Engines, whether or not any
such Engine shall be installed in or attached to the Airframe or any other
airframe, together with (a) all Parts of whatever nature, which are from time to
time included within the definitions of “Airframe” or “Engines”, whether now
owned or hereafter acquired, including all substitutions, renewals and
replacements of and additions, improvements, accessions and accumulations to the
Airframe and Engines (other than additions, improvements, accessions and
accumulations which constitute appliances, parts, instruments, appurtenances,
accessories, furnishings or other equipment excluded from the definition of
Parts) and (b) all Aircraft Documents;

     

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

    

      

    

      
      
        	
                1.

              	
                Insert
      for New Aircraft.

              

      

    

      
      
        	
                2.

              	
                Insert
      for Owned Aircraft.

              

      

    

      
      
        	
                3.

              	
                Insert
      for New Aircraft.

              

      

    

      
      
        	
                4.

              	
                Insert
      for Owned Aircraft.

              

      

    

    

    
      
        
           

        

        
          2

          
            

          

        

        
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    Purchase
Agreement, to the terms and conditions of the Consent and Agreement and the
Engine Consent and Agreement]5;

     

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

     

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

     

    (5)           All
proceeds of the foregoing.

     

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

     

    TO HAVE
AND TO HOLD all and singular the aforesaid property unto the Mortgagee, and its
successors and assigns, in trust for the equal and proportionate benefit and
security of the Note Holders and the Indenture Indemnitees, except as provided
in Section 2.13 and Article III hereof, without any preference, distinction or
priority of any one Equipment Note over any other, or any Related Equipment Note
over any other, by reason of priority of time of issue, sale, negotiation, date
of maturity thereof or otherwise for any reason whatsoever, and for the uses and
purposes and in all cases and as to all property specified in clauses (1)
through (5) inclusive above, subject to the terms and provisions set forth in
this Trust Indenture.

     

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

    
 

      
      

       

      
        	
                5.

              	
                Insert
      for New Aircraft.

              

      

    

    

    
      
        
           

        

        
          3

          
            

          

        

        
          BACK

        

      

    

    

     

    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 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 Note Holders or
the Indenture Indemnitees be required or obligated in any manner to perform or
fulfill any obligations of the Owner under or pursuant to the Indenture
Agreements, or, except as herein expressly provided, to make any payment, or to
make any inquiry as to the nature or sufficiency of any payment received by it,
or present or file any claim, or take any action to collect or enforce the
payment of any amounts which may have been assigned to it or to which it may be
entitled at any time or times.

     

    The Owner
does hereby constitute the Mortgagee the true and lawful attorney of the Owner,
irrevocably, granted for good and valuable consideration and coupled with an
interest and with full power of substitution, and with full power (in the name
of the Owner or otherwise) to ask for, require, demand, receive, compound and
give acquittance for any and all monies and claims for monies (in each case
including insurance and requisition proceeds) due and to become due under or
arising out of the Indenture Agreements, and all other property which now or
hereafter constitutes part of the Collateral, to endorse any checks or other
instruments or orders in connection therewith and to file any claims or to take
any action or to institute any proceedings which the Mortgagee may deem to be
necessary or advisable in the premises; provided that the
Mortgagee shall not exercise any such rights except upon the occurrence and
during the continuance of an Event of Default hereunder.

     

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

     

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

     

    ARTICLE I

     

    DEFINITIONS

     

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

    

    
      
        
           

        

        
          4

          
            

          

        

        
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    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.

     

    

     

    CONTINENTAL
AIRLINES, INC.

     

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

     

    No.
____                                                                                               Date:
[__________,
____]

     

    _______________________

                

    INTEREST
RATE                                                                                                                            MATURITY
DATE

     

    [___________]                                                                                                                             
 [____________]

     

    CONTINENTAL
AIRLINES, INC., a Delaware corporation (“Owner”), hereby promises to pay to
__________________, or the registered assignee thereof, the principal sum of
$____________ (the “Original Amount”), together with interest on the amount of
the Original Amount remaining unpaid from time to time (calculated on the basis
of a year of 360 days comprised of twelve 30-day months) from the date hereof
until paid in full at a rate per annum equal to the Debt Rate.  The
Original Amount of this Equipment Note shall be due and payable in installments
on the dates set forth in Schedule I hereto equal to the corresponding
percentage of the Original Amount of this Equipment Note set forth in Schedule I
hereto.  Accrued but unpaid interest shall be due and payable in
semi-annual installments commencing on [______ __, 20__,]6 and thereafter on July 8 and January 8 of each
year, to and including [_______________].  Notwithstanding the
foregoing, the final payment made on this Equipment Note shall be in an amount
sufficient to discharge in full the unpaid Original Amount and all accrued and
unpaid interest on, and any other amounts due under, this Equipment
Note.  Notwithstanding anything to the contrary contained herein, if
any date on which a payment under

    
 

      
      

       

      
        	
                6.

              	
                Insert
      first July 8 or January 8 after the Closing
  Date.

              

      

    

    

    
      
        
           

        

        
          5

          
            

          

        

        
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    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 [____] dated as of [______ __], 2009, between the Owner 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).

     

    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 Make-Whole Amount, if any, and any other amount (other than as covered by any
of the following clauses) due hereunder or under the Trust Indenture, second, to the
payment of accrued interest on this Equipment Note (as well as any interest on
any overdue Original Amount, any overdue Make-Whole Amount, if any, or, to the
extent permitted by Law, any overdue interest and other amounts hereunder) to
the date of such payment, third, to the payment
of the Original Amount of this Equipment Note then due, and fourth, the balance,
if any, remaining thereafter, to the payment of installments of the Original
Amount of this Equipment Note remaining unpaid in the inverse order of their
maturity.

     

    This
Equipment Note is one of the Equipment Notes referred to in the Trust Indenture
which have been or are to be issued by the Owner pursuant to the terms of the
Trust Indenture.  The Collateral is held by the Mortgagee as security,
in part, for the Equipment Notes.  The provisions of this Equipment
Note are subject to the Trust Indenture and the Related

    

    
      
        
           

        

        
          6

          
            

          

        

        
          BACK

        

      

    

    

     

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

     

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

     

    Prior to
due presentment for registration of transfer of this Equipment Note, the Owner
and the 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 nor the Mortgagee shall be affected by
notice to the contrary.

     

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

     

    This
Equipment Note is subject to certain restrictions set forth in Sections
4.1(a)(i) and 4.1(a)(iii) of the Intercreditor Agreement, as further specified
in Section 2.07 of the Trust Indenture, to all of which terms and conditions in
the Intercreditor Agreement each holder hereof agrees by its acceptance of this
Equipment Note.

     

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

     

    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.

    
 

      
      

       

      
        	
                7.

              	
                Insert
      in the case of an Additional Series Equipment
  Note.

              

      

    

    

    
      
        
           

        

        
          7

          
            

          

        

        
          BACK

        

      

    

    

     

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

     

    *   *   *

    

    
      
        
           

        

        
          8

          
            

          

        

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

    

    

    
      	 
      	
              CONTINENTAL
      AIRLINES, INC.

            
	 
      	 
      
	 
      	 
      
	 
      	
              By:

            	 
      
	 
      	 
      	
              Name:

            	 
      
	 
      	 
      	
              Title:

            	 
      

    

    

    

    
      
        
           

        

        
          9

          
            

          

        

        
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    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:

            	 
      

    

    

    

    SCHEDULE
I

     

    EQUIPMENT
NOTE AMORTIZATION

     

    Payment
Date                                                                                Percentage of Original
Amount to Be Paid

     

    [SEE
SCHEDULE I TO TRUST INDENTURE

    WHICH
IS INSERTED UPON ISSUANCE]

    *   *   *

    

    
      
        
           

        

        
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    SECTION 2.02.  Issuance and Terms of Equipment
Notes

     

    The
Series A Equipment Notes shall be dated the Closing Date, shall have the
maturity and principal amount and shall bear interest as specified in Schedule I
hereto.  On the Closing Date, the Series A Equipment Notes shall be
issued to the Subordination Agent on behalf of the Pass Through Trustee under
the Pass Through Trust Agreement.  In addition to the foregoing, Owner
shall have the option to issue Additional Series Equipment Notes at any
time and from time to time at or after the “Delivery Period Termination Date”
(as defined in the Note Purchase Agreement), subject to the terms of Section
4(a)(vi) of the Note Purchase Agreement and Section 9.1(c) of the Intercreditor
Agreement.  If Owner so elects to issue Additional Series Equipment
Notes, the Additional Series Equipment Notes shall be issued in a single
separate series outstanding at any time, shall be dated the date of original
issuance thereof and shall have such maturity, principal amount and interest
rate as specified in an amendment to this Trust Indenture.  The
Equipment Notes shall be issued in registered form only.  The
Equipment Notes shall be issued in denominations of $1,000 and integral
multiples thereof, except that one Equipment Note of each Series may be in an
amount that is not an integral multiple of $1,000.

     

    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.  Accrued interest shall
be payable in arrears on January 8, 2010, and on each July 8 and January 8
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 (as amended,
in the case of any Additional Series, at the time of original issuance of such
Additional Series) which shall be attached as Schedule I to such Equipment
Notes.  Notwithstanding the foregoing, the final payment made under
each Equipment Note shall be in an amount sufficient to discharge in full the
unpaid Original Amount and all accrued and unpaid interest on, and any other
amounts due under, such Equipment Note.  Each Equipment Note shall
bear interest, payable on demand, at the Payment Due Rate (calculated on the
basis of a year of 360 days comprised of twelve 30-day months) on any part of
the Original Amount, Make-Whole Amount, if any, and, to the extent permitted by
applicable Law, interest and any other amounts payable thereunder not paid when
due for any period during which the same shall be overdue, in each case for the
period the same is overdue.  Amounts under any Equipment Note shall be
overdue if not paid when due (whether at stated maturity, by acceleration or
otherwise).  Notwithstanding anything to the contrary contained
herein, if any date on which a payment under any Equipment Note becomes due and
payable is not a Business Day then such payment shall not be made on such
scheduled date but shall be made on the next succeeding Business Day and if such
payment is made on such next succeeding Business Day, no interest shall accrue
on the amount of such payment during such extension.

     

    The Owner
agrees to pay to the Mortgagee for distribution in accordance with Section 3.04
hereof:  (a)(i) to the extent not payable (whether or not in fact
paid) under Section 6(a) of the Note Purchase Agreement, an amount equal to the
fees payable to the Liquidity Provider under Section 2.03 of the 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

    

    
      
        
           

        

        
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    outstanding
aggregate principal amount of the Series A Equipment Notes and the denominator
of which shall be the then outstanding aggregate principal amount of all “Series
A Equipment Notes” (as defined in the Note Purchase Agreement); (ii) (x) the
amount equal to interest on any Downgrade Advance (other than any Applied
Downgrade Advance) payable under Section 3.07 of the 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 Non-Extension Advance (other than any Applied Non-Extension Advance) payable
under Section 3.07 of the Liquidity Facility minus Investment Earnings from such
Non-Extension Advance multiplied by (y) the fraction specified in the foregoing
clause (i); (iv) (x) the amount equal to interest on any Special Termination
Advance (other than any Applied Special Termination Advance) payable under
Section 3.07 of the Liquidity Facility minus Investment Earnings from such
Special Termination Advance multiplied by (y) the fraction specified in the
foregoing clause (i); (v) if any payment default shall have occurred and be
continuing with respect to interest on any “Series A Equipment Notes” (as
defined in the Note Purchase Agreement), (x) the excess, if any, of (1) an
amount equal to interest on any Unpaid Advance, Applied Downgrade Advance,
Applied Non-Extension Advance or Applied Special Termination Advance payable
under Section 3.07 of the 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 on the overdue
scheduled interest on the “Equipment Notes” (as defined in the Note Purchase
Agreement) in respect of which such Unpaid Advance, Applied Downgrade Advance,
Applied Non-Extension Advance or Applied Special Termination Advance was made by
the Liquidity Provider multiplied by (y) a fraction the numerator of which shall
be the then aggregate overdue amounts of interest on the Series A Equipment
Notes (other than interest becoming due and payable solely as a result of
acceleration of any such Equipment Notes) and the denominator of which shall be
the then aggregate overdue amounts of interest on all “Series A Equipment Notes”
(as defined in the Note Purchase Agreement) (other than interest becoming due
and payable solely as a result of acceleration of any such “Equipment Notes”);
and (vi) any other amounts owed to the Liquidity Provider by the
Subordination Agent as borrower under the Liquidity Facility other than amounts
due as repayment of advances thereunder or as interest on such advances, except
to the extent payable pursuant to clause (ii), (iii), (iv) or (v) above,
multiplied by the fraction specified in the foregoing clause (i), (b) Owner’s
pro rata share of all compensation and reimbursement of expenses, disbursements
and advances payable by Owner under the Pass Through Trust Agreement, (c)
Owner’s pro rata share of all compensation and reimbursement of expenses and
disbursements payable to the Subordination Agent under the Intercreditor
Agreement except with respect to any income or franchise taxes incurred by the
Subordination Agent in connection with the transactions contemplated by the
Intercreditor Agreement and (d) in the event Owner requests any amendment to any
Operative Agreement or Pass Through Agreement, Owner’s pro rata share of all
reasonable fees and expenses (including, without limitation, fees and
disbursements of counsel) of the Escrow Agent and the Paying Agent in connection
therewith payable by the Pass Through Trustee under the Escrow
Agreement.  As used herein, “Owner’s pro rata share” means as of any
time a fraction, the numerator of which is the principal balance then
outstanding of Equipment Notes and the denominator of which is the aggregate
principal balance then outstanding of all “Equipment Notes” (as each such term
is defined in each of the Operative Indentures).  For purposes of this
paragraph, the terms “Applied Downgrade Advance”, “Applied Non-Extension
Advance”, “Applied Special Termination Advance”, “Cash Collateral
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    “Downgrade
Advance”, “Final Advance”, “Investment Earnings”, “Non-Extension Advance”,
“Special Termination Advance” and “Unpaid Advance” shall have the meanings
specified in the Liquidity Facility.

     

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

     

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

     

    SECTION
2.03.  [Intentionally
Omitted]

     

    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 payable in Dollars by wire
transfer of immediately available funds not later than 12:30 PM, New York 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, and payment
of such amount by the Owner to the Mortgagee shall be deemed to satisfy the
Owner’s obligation to make such payment.  The Owner shall not have any
responsibility for the distribution of such payment to any Note
Holder.  Notwithstanding the foregoing or any provision in any
Equipment Note to the contrary, the 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), all amounts paid by the Owner hereunder and under such holder’s
Equipment Note or Equipment Notes to such holder or a nominee therefor
(including all amounts distributed pursuant to Article III of this Trust
Indenture) by transferring, or causing to be transferred, by wire transfer of
immediately available funds in Dollars, prior to 2:00 p.m., New York City time,
on the due date of payment, to an account maintained by such holder with a bank
located in the continental United States the amount to be distributed to such
holder, for credit to the account of such holder maintained at such
bank.  If the 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
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    capacity
and not as trustee, agrees to compensate such holders for loss of use of funds
at Debt Rate until such payment is made and the 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 PM, New York time, at the place of
payment.  Prior to the due presentment for registration of transfer of
any Equipment Note, the Owner and the 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 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 1 thereto and otherwise in the manner provided in or pursuant to the
Participation Agreement unless it shall have specified some other account or
manner of payment by notice to the Mortgagee consistent with this Section
2.04.

     

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

     

    If a Note
Holder which is a Non-U.S. Person has furnished to the Mortgagee a properly
completed, accurate and currently effective U.S. Internal Revenue Service Form
W-8BEN or W-8ECI (or such successor form or forms as may be required by the
United States Treasury Department) during the calendar year in which the payment
hereunder or under the Equipment Note(s) held by such holder is made (but prior
to the making of such payment), or in 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
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    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 (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 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 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.

     

    Owner
shall not 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.

     

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

     

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

     

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

     

    Fourth:  the
balance, if any, remaining thereafter, to the payment of the Original Amount of
such Equipment Note remaining unpaid (provided that such Equipment
Note

    

    
      
        
           

        

        
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    shall not
be subject to redemption except as provided in Sections 2.10, 2.11 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 maturity.

     

    SECTION 2.06.  Termination of Interest in
Collateral

     

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

     

    SECTION 2.07.  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 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 and of the same Series.  At the option of the Note
Holder, Equipment Notes may be exchanged for other Equipment Notes of any
authorized denominations of a like aggregate Original Amount, upon surrender of
the Equipment Notes to be exchanged to the Mortgagee at the Corporate Trust
Office.  Whenever any Equipment Notes are so surrendered for exchange,
the Owner 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 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
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    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 shall not be required to exchange any surrendered
Equipment Notes as provided above during the ten-day period preceding the due
date of any payment on such Equipment Note.  The Owner shall in all
cases deem the Person in whose name any Equipment Note shall have been issued
and registered as the absolute owner and holder of such Equipment Note for the
purpose of receiving payment of all amounts payable by the Owner with respect to
such Equipment Note and for all purposes until a notice stating otherwise is
received from the Mortgagee and such change is reflected on the Equipment Note
Register.  The Mortgagee will promptly notify the Owner of each
registration of a transfer of an Equipment Note.  Any such transferee
of an Equipment Note, by its acceptance of an Equipment Note, (i) agrees to
the provisions of this Trust Indenture and the Participation Agreement
applicable to Note Holders, including Sections 6.3, 6.4 and 9.1 thereof, and
shall be deemed to have covenanted to the parties to the Participation Agreement
as to the matters covenanted by the original Note Holder in the Participation
Agreement and (ii) agrees to the restrictions set forth in Sections 4.1(a)(i)
and 4.1(a)(iii) of the Intercreditor Agreement, and shall be deemed to have
covenanted to the parties to the Intercreditor Agreement not to give any
direction, or otherwise authorize, the Mortgagee to take any action that would
violate Sections 4.1(a)(i) or 4.1(a)(iii) of the Intercreditor
Agreement.  Subject to compliance by the Note Holder and its
transferee (if any) of the requirements set forth in this Section 2.07,
Mortgagee and Owner shall use all reasonable efforts to issue new Equipment
Notes upon transfer or exchange within 10 Business Days of the date an Equipment
Note is surrendered for transfer or exchange.

     

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

     

    If any
Equipment Note shall become mutilated, destroyed, lost or stolen, the Owner
shall, upon the written request of the holder of such Equipment Note, execute
and the Mortgagee shall authenticate and deliver in replacement thereof a new
Equipment Note, payable in the same Original Amount dated the same date and
captioned as issued in connection with the Aircraft.  If the Equipment
Note being replaced has become mutilated, such Equipment Note shall be
surrendered to the Mortgagee and a photocopy thereof shall be furnished to the
Owner.  If the Equipment Note being replaced has been destroyed, lost
or stolen, the holder of such Equipment Note shall furnish to the Owner and the
Mortgagee such security or indemnity as may be required by them to save the
Owner and the Mortgagee harmless and evidence satisfactory to the Owner 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”) is the holder of any such destroyed, lost or stolen
Equipment Note, then the written indemnity of such QIB, signed by an authorized
officer thereof, in favor of, delivered to and in form reasonably satisfactory
Owner shall be accepted as satisfactory indemnity and security and no further
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    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 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

     

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

     

    SECTION 2.11.  Voluntary Redemptions of Equipment
Notes

     

    (a)           All
(but not less than all) of the Series A Equipment Notes may be redeemed by the
Owner upon at least 30 days’ revocable prior written notice to the Mortgagee and
the Series A Note Holders, and such Series A Equipment Notes shall be
redeemed in whole at a redemption price equal to 100% of the unpaid Original
Amount thereof, together with accrued interest thereon to the date of redemption
and all other Secured Obligations (other than Related Secured Obligations) owed
or then due and payable to the Series A Note Holders plus Make-Whole
Amount, if any, provided that no
redemption shall be permitted under this Section 2.11(a) unless simultaneously
with such redemption all Related Series A Equipment Notes shall also be
redeemed.

     

    (b)           The
Additional Series Equipment Notes may be redeemed by the Owner upon at least 30
days’ revocable prior written notice to the Mortgagee and the Note Holders of
such Series to be redeemed, and such Equipment Notes shall be redeemed in whole
at a redemption price equal to 100% of the unpaid Original Amount thereof,
together with accrued interest thereon to the date of redemption and all other
Secured Obligations (other than Related Secured Obligations) owed or then due
and payable to the Note Holders of such Series plus Make-Whole Amount, if
any.

    

    
      
        
           

        

        
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    SECTION 2.12.  Redemptions; Notice of
Redemption

     

    (a)           No
redemption of any Equipment Note may be made except to the extent and in the
manner expressly permitted by this Trust Indenture.  No purchase of
any Equipment Note may be made by the 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 20 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 that such notice shall be revocable by
written notice from the Owner to Mortgagee given not later than three days prior
to the redemption date.  All notices of redemption shall state: (1)
the redemption date, (2) the applicable basis for determining the redemption
price, (3) that on the redemption date, the redemption price will become due and
payable upon each such Equipment Note, and that, if any such Equipment Notes are
then outstanding, interest on such Equipment Notes shall cease to accrue on and
after such redemption date, and (4) the place or places where such Equipment
Notes are to be surrendered for payment of the redemption price.

     

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

     

    (d)           Notice
of redemption having been given as aforesaid, the Equipment Notes to be redeemed
shall, on the redemption date, become due and payable at the Corporate Trust
Office of the 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.  Subordination

     

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

    

    
      
        
           

        

        
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    (b)           By
the acceptance of Additional Series Equipment Notes, if issued, each Note Holder
of such Additional Series Equipment Notes agrees that in the event that such
Note Holder, in its capacity as a Note Holder, shall receive any payment or
distribution on any Secured Obligations in respect of such Additional Series
Equipment Notes which it is not entitled to receive under this Section 2.13 or
Article III hereof, it will hold any amount so received in trust for the Senior
Holder (as defined in Section 2.13(c) hereof) and will forthwith turn over such
payment to the Mortgagee in the form received to be applied as provided in
Article III hereof.  By the acceptance of its Related Additional
Series Equipment Notes, each Related Note Holder agrees that in the event that
such Related Note Holder, in its capacity as a Related Note Holder, shall
receive any payment or distribution pursuant to this Trust Indenture on any
Related Secured Obligations which it is not entitled to receive under this
Section 2.13 or Article III hereof, it will hold any amount so received in trust
for the Senior Holder (as defined in Section 2.13(c) hereof) and will forthwith
turn over such payment to the Mortgagee in the form received to be applied as
provided in Article III hereof.

     

    (c)           As
used in this Section 2.13, the term “Senior Holder” shall mean (i) the Note
Holders of Series A Equipment Notes and Related Note Holders of the Related
Series A Equipment Notes until the Secured Obligations in respect of
Series A Equipment Notes and Related Series A Equipment Notes have
been paid in full, (ii) after the Secured Obligations in respect of
Series A Equipment Notes and Related Series A Equipment Notes have
been paid in full, the Note Holders of the Additional Series Equipment Notes, if
issued, and Related Note Holders of the Related Additional Series Equipment
Notes, if issued, until the Secured Obligations in respect of the Additional
Series Equipment Notes and Related Additional Series Equipment Notes have been
paid in full.

     

    ARTICLE III

     

    RECEIPT,
DISTRIBUTION AND APPLICATION OF PAYMENTS

     

    SECTION 3.01.  Basic Distributions

     

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

     

    
      	
               
      

            	
              (i)

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

            

    

     

    
      	
               
      

            	
              (ii)

            	
              after
      giving effect to paragraph (i) above (and except as otherwise provided in
      an amendment to this Trust Indenture pursuant to Section 10.01(b) hereof),
      so much

            

    

    

    
      
        
           

        

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

     

    SECTION 3.02.  Event of Loss; Replacement; 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 pursuant to Section 2.10 or (ii)
pursuant to an optional redemption of the Equipment Notes pursuant to
Section 2.11 hereof shall be applied to redemption of the Equipment Notes
and to all other Secured Obligations then due by applying such funds in the
following order of priority:

     

    
      	
              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 Owner, under the Operative
      Agreements and then (b) to pay any other Secured Obligations then due
      (except as provided in clause “Second” and “Third” below) to the
      Mortgagee, the Note Holders and the other Indenture Indemnitees under this
      Trust Indenture, the Participation Agreement or the Equipment Notes (other
      than amounts specified in clause “Second” and “Third”
    below);

            

    

     

    
      	
              Second,

            	
              (i)

            	
              to
      pay the amounts specified in paragraph (i) of clause “Third” of Section
      3.03 hereof plus Make-Whole Amount, if any, then due and payable in
      respect of the Series A Equipment Notes, but excluding distributions of
      amounts of Related Secured Obligations then due and payable in respect of
      Related Series A Equipment Notes;
and

            

    

     

    
      	
               
      

            	
              (ii)

            	
              after
      giving effect to paragraph (i) above, to pay the amounts specified in
      paragraph (ii) of clause “Third” of Section 3.03 hereof then due and
      payable in respect of the Additional Series Equipment Notes, but excluding
      distributions of amounts of Related Secured Obligations then due and
      payable in respect of Related Additional Series Equipment Notes;
      and

            

    

     

    
      	
               
      Third,

            	
               

            	
              (i)

            	
              to
      pay the amounts specified in paragraph (i) of clause “Third” of Section
      3.03 hereof then due and payable in respect of the Related Series A
      Equipment Notes; and

            

    

     

    
      	
               
      

            	
              (ii)

            	
              after
      giving effect to paragraph (i) above, to pay the amounts specified in
      paragraph (ii) of clause “Third” of Section 3.03 then due and payable in
      respect of the Related Additional Series Equipment Notes;
    and

            

    

    

    
      
        
           

        

        
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              Fourth,

            	
              as
      provided in clause “Fourth” of Section 3.03
  hereof;

            

    

     

    provided, however, that if a
Replacement Airframe or Replacement Engine shall be substituted for the Airframe
or Engine subject to such Event of Loss as provided in Section 4.05 hereof, any
insurance, condemnation or similar proceeds which result from such Event of Loss
and are paid over to the Mortgagee shall be held by the Mortgagee as permitted
by Section 7.04 hereof (provided that such moneys shall be invested as provided
in Section 6.06 hereof) as additional security for the obligations of Owner
under Operative Agreements and such proceeds (and such investment earnings), to
the extent not theretofore applied as provided herein, shall be released to the
Owner at the Owner’s written request upon the release of such Airframe or Engine
and the replacement thereof as provided herein.  No Make-Whole Amount
shall be due and payable on the Equipment Notes as a consequence of the
redemption of the Equipment Notes as a result of an Event of Loss with respect
to the Airframe or the Airframe and one or more Engines.

     

    SECTION 3.03.  Payments After Event of
Default

     

    Except as
otherwise provided in Section 3.04 hereof, all payments received and amounts
held or realized by the Mortgagee (including any amounts realized by the
Mortgagee from the exercise of any remedies pursuant to Article V hereof) after
an Event of Default shall have occurred and be continuing, as well as all
payments or amounts then held by the Mortgagee as part of the Collateral, 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 Collateral
      (all such property being herein called the “Mortgaged Property”) pursuant
      to Section 5.03(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 (including by subrogation
      pursuant to Section 2.7 of the Intercreditor Agreement) and (ii) pay
      all Secured Obligations payable to the other Indenture Indemnitees
      hereunder and under the Participation Agreement (other than amounts
      specified in clauses Second and Third below); and in 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;

            

    

    

    
      
        
           

        

        
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              Second,

            	
              so
      much of such payments or amounts remaining as shall be required to
      reimburse the then existing or prior Note Holders for payments made
      pursuant to Section 6.03 hereof (to the extent not previously
      reimbursed) shall be distributed to such then existing or prior Note
      Holders ratably, without priority of one over the other, in accordance
      with the amount of the payment or payments made by each such then existing
      or prior Note Holder pursuant to said Section 6.03
      hereof;

            

    

     

    
      	
               
      

                Third,

              

            	
               

            	
              (i)

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

            

    

     

    
      	
               
      

            	
              (ii)

            	
              after
      giving effect to paragraph (i) above (and except as otherwise provided in
      an amendment to this Trust Indenture pursuant to Section 10.01(b) hereof),
      so much of such payments or amounts remaining as shall be required to pay
      in full the aggregate unpaid Original Amount of all Additional Series
      Equipment Notes, and the accrued but unpaid interest and other amounts due
      thereon and all other Secured Obligations in respect of the Additional
      Series Equipment Notes to the date of distribution and all other Related
      Secured Obligations in respect of the Related Additional Series Equipment
      Notes then due, shall be distributed to the Note Holders of Additional
      Series and Related Note Holders of the Related Additional Series Equipment
      Notes, and in case the aggregate amount so to be distributed shall be
      insufficient to pay in full as aforesaid, then ratably, without priority
      of one over the other, in the proportion that the aggregate unpaid
      Original Amount of all Additional Series Equipment Notes held by each
      holder plus the accrued but unpaid interest and other amounts due
      hereunder or thereunder to the date of distribution and all other Related
      Secured Obligations then due in respect of Related Additional Series
      Equipment Notes held by such holder, bears to the aggregate unpaid
      Original Amount of all Additional Series Equipment Notes held by all such
      holders plus the accrued but unpaid interest and other amounts due thereon
      to the date of distribution and all other Related Secured Obligations in
      respect of Related Additional Series Equipment Notes then due;
      and

            

    

    

    
      
        
           

        

        
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              (iii)

            	
              after
      giving effect to paragraph (ii) above, if any Related Equipment Note is
      outstanding, any of such payments or amounts remaining and any invested
      Cash Equivalents shall be held by the Mortgagee in an Eligible Account in
      accordance with the provisions of Section 3.07 (and invested as
      provided in Section 6.06 hereof) as additional security for the Related
      Secured Obligations, and such amounts (and any investment earnings
      thereon) shall be distributed from time to time in accordance with the
      foregoing provisions of this clause “Third” as and to the extent any
      Related Secured Obligation shall at any time and from time to time become
      due and remain unpaid after the giving of any required notice and the
      expiration of any applicable grace period; and, upon the payment in full
      of all Related Secured Obligations the balance, if any, of any such
      remaining amounts and investment earnings thereon shall be applied as
      provided in clause Fourth of this Section 3.03;
  and

            

    

     

    
      	
              Fourth,

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

            

    

     

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

     

    SECTION 3.04.  Certain Payments

     

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

     

    (b)           Notwithstanding
anything to the contrary contained in this Article III, the Mortgagee will
distribute promptly upon receipt any indemnity payment received by it from the
Owner in respect of the Mortgagee in its individual capacity, any Note Holder or
any other Indenture Indemnitee, in each case whether or not pursuant to Section
8 of the Participation Agreement, directly to the Person entitled
thereto.  Any payment received by the Mortgagee under the third
paragraph of Section 2.02 shall be distributed to the Subordination Agent in its
capacity as Note Holder to be distributed in accordance with the terms of the
Intercreditor Agreement, except that any portion of any such payment to which a
Note Holder has been subrogated pursuant to Section 2.7 of the Intercreditor
Agreement shall instead be distributed to such Note Holder.

     

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

     

    SECTION 3.05.  Other Payments

     

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

     

    SECTION 3.06.  Cooperation

     

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

     

    SECTION 3.07.  Securities Account

     

    In
furtherance of the provisions of Section 3.03 of the Trust Indenture, WTC agrees
to act as an Eligible Institution under the Trust Indenture in accordance with
the provisions of the Trust Indenture (in such capacity, the “Securities
Intermediary”).  Except in its capacity as Mortgagee, WTC waives any
claim or lien against any Eligible Account it may have, by operation of law or
otherwise, for any amount owed to it by Owner.  The Securities
Intermediary hereby agrees that, notwithstanding anything to the contrary in the
Trust Indenture, (i) any amounts to be held by the Mortgagee pursuant to
paragraph (iii) of clause “Third” of Section 3.03 and any investment earnings
thereon or other Cash Equivalents will be credited to an Eligible Account (the
“Securities Account”) for which it is a “securities intermediary” (as defined in
Section 8-102(a)(14) of the NY UCC) and the Mortgagee is the “entitlement
holder” (as defined in Section 8-102(a)(7) of the NY UCC) of the “securities
entitlement” (as defined in Section 8-102(a)(17) of the NY UCC) with respect to
each “financial asset” (as defined in Section 8-102(a)(9) of the NY UCC)
credited to such Eligible Account, (ii) all such amounts, Cash Equivalents and
all other property acquired with cash credited to the Securities Account will be
credited to the Securities Account, (iii) all items of property (whether cash,
investment property, Cash Equivalents, other investments, securities,
instruments or other property) credited to the Securities Account will be
treated as a “financial asset” under Article 8 of the NY UCC, (iv) its
“securities intermediary’s jurisdiction” (as defined in Section 8-110(e) of the
NY UCC) with respect to the Securities Account is the State of New York, and (v)
all securities, instruments and other property in order or registered from and
credited to the Securities Account shall be payable to or to the order of, or
registered in the name of, the Securities Intermediary or shall be indorsed to
the Securities Intermediary or in blank, and in no case whatsoever shall any
financial asset credited to the Securities Account be registered in the name of
the Owner, payable to or to the order of the Owner or specially indorsed to the
Owner except to the extent the foregoing have been specially endorsed by the
Owner to the Securities Intermediary or in blank.  The Mortgagee
agrees that it will hold (and will indicate clearly in its books and records
that it holds) its “securities entitlement” to the “financial assets” credited
to the Securities Account in trust for the benefit of the Note Holders and each
of the Indenture Indemnitees as set forth in the Trust Indenture.  The
Owner acknowledges that, by reason of the Mortgagee being the “entitlement
holder” in respect of the Securities Account as provided above, the Mortgagee
shall have the sole right and discretion, subject only to the terms of the Trust
Indenture, to give all

    

    
      
        
           

        

        
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    “entitlement
orders” (as defined in Section 8-102(a)(8) of the NY UCC) with respect to the
Securities Account and any and all financial assets and other property credited
thereto to the exclusion of the Owner.

     

    ARTICLE IV

     

    COVENANTS
OF THE OWNER

     

    SECTION 4.01.  Liens

     

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

     

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

     

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

     

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

     

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

     

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

    

    
      
        
           

        

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

     

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

     

    (v)           Install
or permit any Permitted Lessee to install an Engine on an airframe owned by
Owner or such Permitted Lessee, leased to Owner or such Permitted Lessee, or
purchased by Owner or such Permitted Lessee subject to a conditional sale or
other security agreement under circumstances where neither clause (iii) or (iv)
above is applicable; provided, however, that any
such installation shall be deemed an Event of Loss with respect to such Engine,
and Owner shall comply with Section 4.04(e) hereof in respect
thereof;

     

    (vi)           Transfer
or permit any Permitted Lessee to transfer possession of the Aircraft, Airframe
or any Engine to the U.S. Government, in which event Owner shall promptly notify
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 Command of the United States Air Force to whom notices
must be given and to whom requests or claims must be made to the extent
applicable under CRAF;

     

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

     

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

     

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

     

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

     

    Mortgagee
hereby agrees, and each Note Holder and Related Note Holder by acceptance of an
Equipment Note and a Related Equipment Note, respectively, agrees, for the
benefit of each lessor, conditional seller, indenture trustee or secured party
of any engine leased to, or purchased by, Owner or any Permitted Lessee subject
to a lease, conditional sale, trust indenture or other security agreement that
Mortgagee, each Note Holder and Related Note Holder and their respective
successors and assigns will not acquire or claim, as against such lessor,
conditional seller, indenture trustee or secured party, any right, title or
interest in any engine as the result of such engine being installed on the
Airframe at any time while such engine is subject to such lease, conditional
sale, trust indenture or other security agreement and owned by such lessor or
conditional seller or subject to a trust indenture or security interest in favor
of such indenture trustee or secured party.

     

    (c)           Operation and
Use.  So long as the Aircraft, Airframe or any Engine is
subject to the Lien of this Trust Indenture, the Owner shall not operate, use or
locate the Aircraft, Airframe or any Engine, or allow the Aircraft, Airframe or
any Engine to be operated, used or located, (i) in any area excluded from
coverage by any insurance required by the terms of Section 4.06, except in the
case of a requisition by the U.S. Government where the Owner obtains indemnity
in lieu of such insurance from the U.S. Government, or insurance from the U.S.
Government, against substantially the same risks and for at least the amounts of
the insurance required by Section 4.06 covering such area, or (ii) in any
recognized area of hostilities unless covered in accordance with Section 4.06 by
war risk insurance, or in either case unless the Aircraft, the Airframe or any
Engine is only temporarily operated, used or located in such area as a result of
an emergency, equipment malfunction, navigational error, hijacking, weather
condition or other similar unforeseen circumstance, so long as Owner diligently
and in good faith proceeds to remove the Aircraft from such area.  So
long as the Aircraft, the Airframe or any Engine is subject to the Lien of this
Trust Indenture, the Owner shall not permit such Aircraft, Airframe or any
Engine, as the case may be, to be used, operated, maintained, serviced, repaired
or overhauled (x) in violation of any Law binding on or applicable to such
Aircraft, Airframe or Engine or (y) in violation of any airworthiness
certificate, license or registration of any Government Entity relating to the
Aircraft, the Airframe or any Engine, except (i) immaterial or non-recurring
violations with respect to which corrective measures are taken promptly by Owner
or Permitted Lessee, as the case may be, upon discovery thereof, or (ii) to the
extent the validity or application of any such Law or requirement relating to
any such certificate, license or registration is being contested in good faith
by Owner or Permitted Lessee in any reasonable manner which does not involve any
material risk of the sale, forfeiture or loss of the Aircraft,

    

    
      
        
           

        

        
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    Airframe
or any Engine, any material risk of criminal liability or material civil penalty
against Mortgagee or impair the Mortgagee’s security interest in the Aircraft,
Airframe or any Engine.

     

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

     

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

    

    
      
        
           

        

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

     

    (f)           Markings.  If
permitted by applicable Law, on or reasonably promptly after the Closing Date,
Owner will cause to be affixed to, and maintained in, the cockpit of the
Airframe and on each Engine, in each case, in a clearly visible location, a
placard of a reasonable size and shape bearing the legend:  “Subject
to a security interest in favor of Wilmington Trust Company, not in its
individual capacity but solely as Mortgagee.”  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,
Owner shall promptly replace it with a placard complying with the requirements
of this Section.

     

    SECTION 4.03.  Inspection

     

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

     

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

     

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

     

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

     

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

     

    (a)           Replacement of
Parts.  Except as otherwise provided herein, so long as the
Airframe or Engine is subject to the Lien of this Indenture, Owner, at its own
cost and expense, will, or will cause a Permitted Lessee to, at its own cost and
expense, promptly replace (or cause to be replaced) all Parts which may from
time to time be incorporated or installed in or attached to the Aircraft,
Airframe or any Engine and which may from time to time

    

    
      
        
           

        

        
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    become
worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair or
permanently rendered unfit for use for any reason whatsoever.  In
addition, Owner may, at its own cost and expense, or may permit a Permitted
Lessee at its own cost and expense to, remove (or cause to be removed) in the
ordinary course of maintenance, service, repair, overhaul or testing any Parts,
whether or not worn out, lost, stolen, destroyed, seized, confiscated, damaged
beyond repair or permanently rendered unfit for use; provided, however, that Owner,
except as otherwise provided herein, at its own cost and expense, will, or will
cause a Permitted Lessee at its own cost and expense to, replace such Parts as
promptly as practicable.  All replacement parts shall be free and
clear of all Liens, except for Permitted Liens and pooling arrangements to the
extent permitted by Section 4.04(c) below (and except in the case of
replacement property temporarily installed on an emergency basis) and shall be
in good operating condition and have a value and utility not less than the value
and utility of the Parts replaced (assuming such replaced Parts were in the
condition required hereunder).

     

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

     

    (c)           Pooling of
Parts.  Any Part removed from the Aircraft, Airframe or an
Engine may be subjected by the Owner or a Permitted Lessee to a normal pooling
arrangement customary in the airline industry and entered into in the ordinary
course of business of Owner or Permitted Lessee, provided that the part
replacing such removed Part shall be incorporated or installed in or attached to
such Airframe or any Engine in accordance with Sections 4.04(a) and 4.04(b) as
promptly as practicable after the removal of such removed Part.  In
addition, any replacement part when incorporated or installed in or attached to
the Airframe or any Engine may be owned by any third party, subject to a normal
pooling arrangement, so long as the Owner or a Permitted Lessee, at its own cost
and expense, as promptly thereafter as reasonably possible, either (i) causes
such replacement part to become subject to the Lien of this Trust Indenture,
free and clear of all Liens except Permitted Liens, at which time such
replacement part shall become a Part or (ii) replaces (or causes to be replaced)
such replacement part by incorporating or installing in or attaching to the
Aircraft, Airframe or any Engine a further replacement part owned by the Owner
free and clear of all Liens except Permitted Liens and which shall become
subject to the Lien of this Trust Indenture in accordance with Section
4.04(b).

     

    (d)           Alterations, Modifications
and Additions.  The Owner shall, or shall cause a Permitted
Lessee to, make (or cause to be made) alterations and modifications in and
additions to the Aircraft, Airframe and each Engine as may be required to be
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    to time
to meet the applicable standards of the FAA or other Aviation Authority having
jurisdiction over the operation of the Aircraft, to the extent made mandatory in
respect of the Aircraft (a “Mandatory Modification”); provided however, that the
Owner or a Permitted Lessee may, in good faith and by appropriate procedure,
contest the validity or application of any law, rule, regulation or order in any
reasonable manner which does not materially adversely affect Mortgagee’s
interest in the Aircraft, does not impair the Mortgagee’s security interest in
the Aircraft and does not involve any material risk of sale, forfeiture or loss
of the Aircraft or the interest of Mortgagee therein, or any material risk of
material civil penalty or any material risk of criminal liability being imposed
on Mortgagee or the holder of any Equipment Note.  In addition, the
Owner, at its own expense, may, or may permit a Permitted Lessee at its own cost
and expense to, from time to time make or cause to be made such alterations and
modifications in and additions to the Airframe or any Engine (each an “Optional
Modification”) as the Owner or such Permitted Lessee may deem desirable in the
proper conduct of its business including, without limitation, removal of Parts
which Owner deems are obsolete or no longer suitable or appropriate for use in
the Aircraft, Airframe or such Engine; provided, however, that no such
Optional Modification shall (i) materially diminish the fair market value,
utility, or useful life of the Aircraft or any Engine below its fair market
value, utility or useful life immediately prior to such Optional Modification
(assuming the Aircraft or such Engine was in the condition required by this
Trust Indenture immediately prior to such Optional Modification) or
(ii) cause the Aircraft to cease to have the applicable standard
certificate of airworthiness except that such certificate of airworthiness
temporarily may be replaced by an experimental certificate during the process of
implementing and testing such Optional Modification and securing related
FAA re-certification of the Aircraft.  All Parts incorporated or
installed in or attached to any Airframe or any Engine as the result of any
alteration, modification or addition effected by the Owner shall be free and
clear of any Liens except Permitted Liens and become subject to the Lien of this
Trust Indenture; provided that the
Owner or any Permitted Lessee may, at any time so long as the Airframe or any
Engine is subject to the Lien of this Trust Indenture, remove any such Part
(such Part being referred to herein as a “Removable Part”) from
such Airframe or an Engine if (i) such Part is in addition to, and not in
replacement of or in substitution for, any Part originally incorporated or
installed in or attached to such Airframe or any Engine at the time of delivery
thereof hereunder or any Part in replacement of, or in substitution for, any
such original Part, (ii) such Part is not required to be incorporated or
installed in or attached or added to such Airframe or any Engine pursuant to the
terms of Section 4.02(d) or the first sentence of this Section 4.04(d) and (iii)
such Part can be removed from such Airframe or any Engine without materially
diminishing the fair market value, utility or remaining useful life which such
Airframe or any Engine would have had at the time of removal had such removal
not been effected by the Owner, assuming the Aircraft was otherwise maintained
in the condition required by this Trust Indenture and such Removable Part had
not been incorporated or installed in or attached to the Aircraft, Airframe or
such Engine.  Upon the removal by the Owner of any such Part as above
provided, title thereto shall, without further act, be free and clear of all
rights of the Mortgagee and such Part shall no longer be deemed a Part
hereunder.  Removable Parts may be leased from or financed by third
parties other than Mortgagee.

     

    (e)           Substitution of
Engines.  Upon the occurrence of an Event of Loss with respect
to an Engine under circumstances in which an Event of Loss with respect to the
Airframe has not occurred, Owner shall promptly (and in any event within 15 days
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    occurrence)
give the Mortgagee written notice of such Event of Loss.  The Owner
shall have the right at its option at any time, on at least 5 Business Days’
prior notice to the Mortgagee, to substitute, and if an Event of Loss shall have
occurred with respect to an Engine under circumstances in which an Event of Loss
with respect to the Airframe has not occurred, shall within 60 days of the
occurrence of such Event of Loss substitute, a Replacement Engine for any
Engine.  In such event, immediately upon the effectiveness of such
substitution and without further act, (i) the replaced Engine shall
thereupon be free and clear of all rights of the Mortgagee and the Lien of this
Trust Indenture and shall no longer be deemed an Engine hereunder and (ii) such
Replacement Engine shall become subject to this Trust Indenture and be deemed
part of the Aircraft for all purposes hereof to the same extent as the replaced
Engine.  Such Replacement Engine shall be an engine manufactured by
Engine Manufacturer that is the same model as the Engine to be replaced thereby,
or an improved model, and that is suitable for installation and use on the
Airframe, and that has a value, utility and remaining useful life (without
regard to hours and cycles remaining until overhaul) at least equal to the
Engine to be replaced thereby (assuming that such Engine had been maintained in
accordance with this Trust Indenture).  The Owner’s right to make a
replacement hereunder shall be subject to the fulfillment (which may be
simultaneous with such replacement) of the following conditions precedent at the
Owner’s sole cost and expense, and the Mortgagee agrees to cooperate with the
Owner to the extent necessary to enable it to timely satisfy such
conditions:

     

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

     

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

     

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

     

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

     

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

    

    
      
        
           

        

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

     

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

     

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

     

    SECTION 4.05.  Loss, Destruction or
Requisition

     

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

     

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

     

    (ii)           if
Owner elects to make a payment in respect of such Event of Loss of the Airframe,
Owner shall make a payment to the Mortgagee for purposes of redeeming Equipment
Notes in accordance with Section 2.10 hereof on a date on or before the Business
Day next following the earlier of (x) the 120th day following the date of the
occurrence of such Event of Loss, and (y) the fourth Business Day following the
receipt of insurance proceeds with respect to such Event of Loss (but in any
event not earlier than the date of Owner’s election under Section 4.05(a) to
make payment under this Section 4.05 (a)(ii)); and upon such payment and payment
of all other Secured Obligations then due and payable, the Mortgagee shall, at
the cost and expense of the Owner, release from the Lien of this Trust Indenture
the Airframe and the Engines, by executing and delivering to the Owner all
documents and instruments as the Owner may reasonably request to evidence such
release.

     

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

     

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

     

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

    

    
      
        
           

        

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

     

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

     

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

     

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

     

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

     

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

     

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

    

    
      
        
           

        

        
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    with
respect to such Replacement Airframe and Replacement Engine(s), if any, each to
be registered on the International Registry as a sale or an International
Interest, respectively;

     

    (v)           the
Mortgagee at the expense of the Owner, shall have received (acting directly or
by authorization to its special counsel) (A) an opinion of counsel, addressed to
the Mortgagee, to the effect that the Replacement Airframe and Replacement
Engine, if any, has or have duly been made subject to the Lien of this Trust
Indenture, and Mortgagee will be entitled to the benefits of Section 1110
with respect to the Replacement Airframe, provided that such opinion with
respect to Section 1110 need not be delivered to the extent that immediately
prior to such replacement the benefits of Section 1110 were not, solely by
reason of a change in law or court interpretation thereof, available to
Mortgagee, and (B) an opinion of Owner’s aviation law counsel reasonably
satisfactory to and addressed to Mortgagee as to the due registration of any
such Replacement Airframe and the due filing for recordation of each Trust
Indenture Supplement with respect to such Replacement Airframe or Replacement
Engine under the Act or such other applicable law of the jurisdiction other than
the United States in which the Replacement Airframe is to be registered in
accordance with Section 4.02(e), as the case may be, and the registration
with the International Registry of the sale of such Replacement Airframe and
Replacement Engine(s), if any, to the Owner (if occurring after
February 28, 2006) and of the International Interest granted under the
Trust Indenture Supplement with respect to such Replacement Aircraft and
Replacement Engine(s), if any; and

     

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

     

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

     

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

     

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

    

    
      
        
           

        

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

     

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

     

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

     

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

     

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

     

    SECTION 4.06.  Insurance

     

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

     

    (b)           Insurance for Own
Account.  Nothing in Section 4.06 shall limit or prohibit (a)
Owner from maintaining the policies of insurance required under Annex B with
higher limits than those specified in Annex B, or (b) Mortgagee from
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    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
Owner pursuant to this Section 4.06 and Annex B.

     

    (c)           Indemnification by
Government in Lieu of Insurance.  Mortgagee agrees to accept,
in lieu of insurance against any risk with respect to the Aircraft described in
Annex B, indemnification from, or insurance provided by, the U.S. Government, or
upon the written consent of 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 Owner (or any
Permitted Lessee) may continue to maintain, in accordance with this
Section 4.06, 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 4.06.

     

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

     

    SECTION 4.07.  Merger of Owner

     

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

     

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

     

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

     

    (iii)           if
the Aircraft is, at the time, registered with the FAA, such person makes such
filings and recordings with the FAA pursuant to the Act or if the Aircraft is,
at the time, not registered with FAA, such person makes such filings and
recordings with the applicable Aviation Authority as shall be necessary to
evidence such consolidation or merger; and

    

    
      
        
           

        

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

     

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

     

    ARTICLE V

     

    EVENTS
OF DEFAULT; REMEDIES OF MORTGAGEE

     

    SECTION 5.01.  Event of Default

     

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

     

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

     

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

     

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

     

    (iv)           any
representation or warranty made by Owner herein, in the Participation Agreement
or in any other Operative Agreement to which Owner is a party (a) shall
prove to have been untrue or inaccurate in any material respect as of the date
made, (b) such untrue or inaccurate representation or warranty is material
at the time in question,

    

    
      
        
           

        

        
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    (c) and
the same shall remain uncured (to the extent of the adverse impact of such
incorrectness on the interest of the Mortgagee) for a period in excess of 30
days from and after the date of written notice thereof from Mortgagee to
Owner;

     

    (v)           the
Owner shall consent to the appointment of or taking possession by a receiver,
trustee or liquidator of itself or of a substantial part of its property, or the
Owner shall admit in writing its inability to pay its debts generally as they
come due or shall make a general assignment for the benefit of its creditors, or
the Owner shall file a voluntary petition in bankruptcy or a voluntary petition
or an answer seeking reorganization, liquidation or other relief under any
bankruptcy laws or insolvency laws (as in effect at such time), or an answer
admitting the material allegations of a petition filed against it in any such
case, or the Owner shall seek relief by voluntary petition, answer or consent,
under the provisions of any other bankruptcy or similar law providing for the
reorganization or winding-up of corporations (as in effect at such time), or the
Owner shall seek an agreement, composition, extension or adjustment with its
creditors under such laws or the Owner’s board of directors shall adopt a
resolution authorizing corporate action in furtherance of any of the
foregoing;

     

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

     

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

     

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

     

    SECTION 5.02.  Remedies

     

    (a)           If
an Event of Default shall have occurred and be continuing and so long as the
same shall continue unremedied, then and in every such case the Mortgagee may
exercise any or all of the rights and powers and pursue any and all of the
remedies pursuant to this Article V and shall have and may exercise all of the
rights and remedies of a secured party under the Uniform Commercial Code or of a
chargee under the Cape Town Treaty and may take possession of all or any part of
the properties covered or intended to be covered by the Lien created hereby or
pursuant hereto and may exclude the Owner and all persons claiming under it
wholly or partly therefrom; provided, that the
Mortgagee shall give the Owner twenty days’ prior written notice of its
intention to sell the Aircraft.  Without limiting any of the
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    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.

     

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

     

    This
Section 5.02(b), however, is subject to the condition that, if at any time after
the Original Amount of the Equipment Notes shall have become so due and payable,
and before any judgment or decree for the payment of the money so due, or any
thereof, shall be entered, all overdue payments of interest upon the Equipment
Notes and all other amounts payable hereunder or under the Equipment Notes
(except the Original Amount of the Equipment Notes and any Make-Whole Amount
which by such declaration shall have become payable) shall have been duly paid,
and every other Default and Event of Default with respect to any covenant or
provision of this Trust Indenture shall have been cured, then and in every such
case a Majority in Interest of Note Holders may (but shall not be obligated to),
by written instrument filed with the 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.

     

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

     

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

    

    
      
        
           

        

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

     

    SECTION 5.03.  Return of Aircraft, Etc.

     

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

     

    (b)           Upon
every such taking of possession, the Mortgagee may, from time to time, at the
expense of the Collateral, make all such expenditures for maintenance, use,
operation, storage, insurance, leasing, control, management, disposition,
modifications or alterations to and of the Collateral, as it may deem
proper.  In each such case, the Mortgagee shall have the right to
maintain, use, operate, store, insure, lease, control, manage, dispose of,
modify or alter the Collateral and to exercise all rights and powers of the
Owner relating to the Collateral, as the 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 Collateral or any part thereof as
the Mortgagee may determine, and the Mortgagee shall be entitled to collect and
receive directly all rents, revenues and other proceeds of the Collateral and
every part thereof, without prejudice, however, to the right of the 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.  Such
rents, revenues and other proceeds shall be applied to pay the expenses of the
maintenance, use, operation, storage, insurance, leasing, control, management,
disposition, improvement, modification or alteration of the Collateral and of
conducting the business thereof, and to make all payments which the Mortgagee
may be required or may elect to make, if any, for taxes, assessments, insurance
or other proper charges upon the Collateral or any part thereof (including the
employment of engineers and accountants to examine, inspect and make reports
upon the properties and books and records of the Owner), and all other payments
which the Mortgagee may be required or authorized to make under any provision of
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    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 5.04.  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 or to be an
acquiescence therein.

     

    SECTION 5.05.  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 and the Mortgagee shall, subject to any determination in such
proceedings, be restored to their former positions and rights hereunder with
respect to the Collateral, and all rights, remedies and powers of the Owner or
the Mortgagee shall continue as if no such proceedings had been
instituted.

     

    SECTION 5.06.  Waiver of Past Defaults

     

    Upon
written instruction from a Majority in Interest of Note Holders, the 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, 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 X hereof,
cannot be modified or amended without the consent of each Note
Holder.

     

    SECTION 5.07.  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 thereof) for all
or any part of the Collateral, whether such receivership be incidental to a
proposed sale of the Collateral or the taking of possession thereof or
otherwise, and the Owner hereby consents to the appointment of such a receiver
and will not oppose any such appointment.  Any receiver appointed for
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    part of
the Collateral shall be entitled to exercise all the rights and powers of the
Mortgagee with respect to the Collateral.

     

    SECTION 5.08.  Mortgagee Authorized to Execute Bills of
Sale, Etc.

     

    The Owner
irrevocably appoints, while an Event of Default has occurred and is continuing,
the Mortgagee the true and lawful attorney-in-fact of the Owner (which
appointment is coupled with an interest) in its name and stead and on its
behalf, for the purpose of effectuating any sale, assignment, transfer or
delivery for the enforcement of the Lien of this Trust Indenture, whether
pursuant to foreclosure or power of sale, assignments and other instruments as
may be necessary or appropriate, with full power of substitution, the Owner
hereby ratifying and confirming all that such attorney or any substitute shall
do by virtue hereof in accordance with applicable law.  Nevertheless,
if so requested by the Mortgagee or any purchaser, the Owner 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 5.09.  Rights of Note Holders to Receive
Payment

     

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

     

    ARTICLE VI

     

    DUTIES
OF THE MORTGAGEE

     

    SECTION 6.01.  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 any installment of principal and interest on any
Equipment Note, the Mortgagee shall give prompt written notice thereof to each
Note Holder.  Subject to the terms of Sections 5.06, 6.02 and 6.03
hereof, the 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 6.03, 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 6.01, take such action, or refrain from taking such action, but
shall be under no duty to take or refrain from taking any action, with respect
to such Event of Default or Default as it shall determine advisable in the best
interests of the Note Holders; provided, however, that the
Mortgagee may not sell the Aircraft or any Engine without the consent of a
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    purposes
of this Trust Indenture, in the absence of Actual Knowledge on the part of the
Mortgagee, the Mortgagee shall not be deemed to have knowledge of a Default or
an Event of Default (except, the failure of Owner to pay any installment of
principal or interest within one Business Day after the same shall become due,
which failure shall constitute knowledge of a Default) unless notified in
writing by the Owner or one or more Note Holders.

     

    SECTION 6.02.  Action Upon Instructions; Certain Rights
and Limitations

     

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

     

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

     

    SECTION 6.03.  Indemnification

     

    The
Mortgagee shall not be required to take any action or refrain from taking any
action under Section 6.01 (other than the first sentence thereof), 6.02 or
Article V hereof unless the 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
“First” of Section 3.03 hereof) owed to it pursuant to this Section
6.03.  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 6.01 (other than the first sentence thereof) or
6.02 or Article V hereof, nor shall any other provision of this Trust Indenture
or any other Operative Agreement be deemed to impose a duty on the Mortgagee to
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    Mortgagee
shall have been advised by counsel that such action is contrary to the terms
hereof or is otherwise contrary to Law.

     

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

     

    The
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 Collateral, or to otherwise take or refrain from taking any
action under, or in connection with, this Trust Indenture or any part of the
Collateral, except as expressly provided by the terms of this Trust Indenture or
as expressly provided in written instructions from Note Holders as provided in
this Trust Indenture; and no implied duties or obligations shall be read into
this Trust Indenture against the 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 8.01
hereof), promptly take such action as may be necessary duly to discharge all
liens and encumbrances on any part of the Collateral which result from claims
against it in its individual capacity not related to the administration of the
Collateral or any other transaction pursuant to this Trust Indenture or any
document included in the Collateral.

     

    SECTION 6.05.  No Action Except Under Trust Indenture
or Instructions

     

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

     

    SECTION 6.06.  Investment of Amounts Held by
Mortgagee

     

    Any
amounts held by the Mortgagee pursuant to Section 3.02, 3.03 or 3.07 or pursuant
to any provision of any other Operative Agreement providing for amounts to be
held by the 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 so long as the Mortgagee may acquire
the same using its best efforts.  All Cash Equivalents held by the
Mortgagee pursuant to this Section 6.06 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 or negligence in
the handling of funds, 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.

    

    
      
        
           

        

        
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    ARTICLE VII

     

    THE
MORTGAGEE

     

    SECTION 7.01.  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 Collateral in
accordance with the terms hereof.  The Mortgagee, in its individual
capacity, shall not be answerable or accountable under any circumstances, except
(i) for its own willful misconduct or gross negligence (other than for the
handling of funds, for which the standard of accountability shall be willful
misconduct or negligence), (ii) as provided in the fourth sentence of Section
2.04(a) hereof and the last sentence of Section 6.04 hereof, and (iii) from the
inaccuracy of any representation or warranty of the Mortgagee (in its individual
capacity) in the Participation Agreement or expressly made
hereunder.

     

    SECTION 7.02.  Absence of Duties

     

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

     

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

     

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

     

    SECTION 7.04.  No Segregation of Monies; No
Interest

     

    Except as
otherwise provided in Section 3.07 hereof, any monies paid to or retained by the
Mortgagee pursuant to any provision hereof and not then required to be
distributed to the Note Holders, or the Owner as provided in Article III hereof
need not be segregated in any manner except to the extent required by Law or
Section 6.06 hereof, and may be deposited under such general conditions as may
be prescribed by Law, and the Mortgagee shall not be liable for any interest
thereon (except that the Mortgagee shall invest all monies held as directed by
Owner so long as no Event of Default has occurred and is continuing (or in the
absence of such direction, by the Majority In Interest of Note Holders) in Cash
Equivalents); provided, however, that any
payments received, or applied hereunder, by the 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 7.05.  Reliance; Agreements; Advice of
Counsel

     

    The
Mortgagee shall not incur any liability to anyone in acting upon any signature,
instrument, notice, resolution, request, consent, order, certificate, report,
opinion, bond or other document or paper believed by it to be genuine and
believed by it to be signed by the proper party or parties.  The
Mortgagee may accept a copy of a resolution of the Board of Directors (or
Executive Committee thereof) of the Owner, certified by the Secretary or an
Assistant Secretary thereof as duly adopted and in full force and effect, as
conclusive evidence that such resolution has been duly adopted and that the same
is in full force and effect.  As to the aggregate unpaid Original
Amount of Equipment Notes outstanding as of any date, the Owner may for all
purposes hereof rely on a certificate signed by any Vice President or other
authorized corporate trust officer of the Mortgagee.  As to any fact
or matter relating to the Owner the manner of the ascertainment of which is not
specifically described herein, the Mortgagee may for all purposes hereof rely on
a certificate, signed by a duly authorized officer of the Owner, as to such fact
or matter, and such certificate shall constitute full protection to the
Mortgagee for any action taken or omitted to be taken by it in good faith in
reliance thereon.  In the administration of the trusts hereunder, the
Mortgagee may execute any of the trusts or powers hereof and perform its powers
and duties hereunder directly or through agents or attorneys and may, at the
expense of the Collateral, advise with counsel, accountants and other skilled
persons to be selected and retained by it, and the Mortgagee shall not be liable
for anything done, suffered or omitted in good faith by it in accordance with
the written advice or written opinion of any such counsel, accountants or other
skilled persons.

    

    
      
        
           

        

        
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    SECTION 7.06.  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 Collateral for the payment of such
compensation, to the extent that such compensation shall not be paid by Owner,
and shall have the right, on and subsequent to an Event of Default hereunder, to
use or apply any monies held by it hereunder in the Collateral toward such
payments.  The Mortgagee agrees that it shall have no right against
the Note Holders for any fee as compensation for its services as trustee under
this Trust Indenture.

     

    SECTION 7.07.  Instructions from Note
Holders

     

    In the
administration of the trusts created hereunder, the 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 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 7.07.

     

    ARTICLE VIII

     

    INDEMNIFICATION

     

    SECTION 8.01.  Scope of Indemnification

     

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

     

    ARTICLE IX

     

    SUCCESSOR
AND SEPARATE TRUSTEES

     

    SECTION 9.01.  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 the Owner 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 Owner, which consent shall
not be unreasonably withheld, except that such consent shall not be necessary if
an Event of Default is continuing) remove the Mortgagee without cause by an
instrument in writing delivered to the Owner 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
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    Mortgagee
by an instrument signed by such holders, which successor, so long as no Event of
Default shall have occurred and be continuing, shall be subject to Owner’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 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
and the predecessor Mortgagee an instrument accepting such appointment and
assuming the obligations of the Mortgagee 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 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 9.01,
be a successor Mortgagee and the Mortgagee under this Trust Indenture without
further act.

     

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

     

    SECTION 9.02.  Appointment of Additional and Separate
Trustees

     

    (a)           Whenever
(i) the 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 Collateral shall be
situated or to make any claim or bring any suit with respect to or in connection
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    Collateral,
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), 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, 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 Collateral, or to act as separate trustee or trustees of all or any
part of the Collateral, in each case with such rights, powers, duties and
obligations consistent with this Trust Indenture as may be provided in such
supplemental indenture or other instruments as the 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 9.02. If the Owner shall not have taken any
action requested of it under this Section 9.02(a) that is permitted or required
by its terms within 15 days after the receipt of a written request from the
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
9.02(a) without the concurrence of the Owner, and the Owner hereby 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 9.02(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 9.02(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 9.02(a).

     

    (b)           No
additional or separate trustee shall be entitled to exercise any of the rights,
powers, duties and obligations conferred upon the 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 Collateral 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 Collateral in any such jurisdiction) shall be exercised and
performed by such additional or separate trustee.  No additional or
separate trustee shall take any discretionary action except on the instructions
of the 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
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    and the
Mortgagee’s own actions in acting with, any additional or separate
trustee.  Each additional or separate trustee appointed pursuant to
this Section 9.02 shall be subject to, and shall have the benefit of Articles V
through IX and Article XI hereof insofar as they apply to the
Mortgagee.  The powers of any additional or separate trustee appointed
pursuant to this Section 9.02 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, 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 under this Section 9.02(c) when and to the extent
it could so act under Section 9.02(a) hereof.

     

    ARTICLE X

     

    SUPPLEMENTS
AND AMENDMENTS TO THIS TRUST INDENTURE

    AND
OTHER DOCUMENTS

     

    SECTION 10.01.  Instructions of Majority;
Limitations

     

    (a)           The
Mortgagee agrees with the Note Holders that it shall not enter into any
amendment, waiver or modification of, supplement or consent to this Trust
Indenture, or any other Operative Agreement to which it is a party, unless such
supplement, 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 and, as may be
appropriate, the Airframe Manufacturer or the Engine Manufacturer; provided, however, that,
without the consent of each holder of an affected Equipment Note then
outstanding and the Liquidity Provider, no such amendment, waiver or
modification of the terms of, or consent under, any thereof, shall (i) modify
any of the provisions of this Section 10.01, or of Article II or III or Section
5.01, 5.02(c), 5.02(d), or 6.02 hereof, the definitions of “Event of Default,”
“Default,” “Majority in Interest of Note Holders,” “Make-Whole Amount” or “Note
Holder,” or the percentage of Note Holders required to take or approve any
action hereunder, (ii) reduce the amount, or change the time of payment or
method of calculation of any amount, of Original Amount, Make-Whole Amount, if
any, or interest with respect to any Equipment Note, (iii) reduce, modify or
amend any indemnities in favor of the Mortgagee or the Note Holders (except that
the Mortgagee may consent to any waiver or reduction of an indemnity payable to
it), or the other Indenture Indemnitees or (iv) permit the creation of any Lien
on the 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 Collateral,

    

    
      
        
           

        

        
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    except as
provided in connection with the exercise of remedies under Article V hereof;
provided, further, that without
the consent of each holder of an affected Related Equipment Note then
outstanding, no such amendment, waiver or modification of terms of, or consent
under, any thereof shall modify Section 3.03 or deprive any Related Note Holder
of the benefit of the Lien of this Trust Indenture on the Collateral, except as
provided in connection with the exercise of remedies under Article V
hereof.  Notwithstanding the foregoing, without the consent of the
Liquidity Provider neither the Owner nor the Mortgagee shall enter into any
amendment, waiver or modification of, supplement or consent to this Trust
Indenture or the other Operative Agreements which shall reduce, modify or amend
any indemnities in favor of the Liquidity Provider.

     

    (b)           The
Owner 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 in
accordance with the terms hereof or to evidence the succession of a new trustee
hereunder pursuant hereto, the removal of the trustee hereunder or the
appointment of any co-trustee or co-trustees or any separate or additional
trustee or trustees; (iii) to convey, transfer, assign, mortgage or pledge any
property to or with the 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 for the
benefit of the Note Holders, or to surrender any rights or power herein
conferred upon the Owner; (vi) to add to the rights of the Note Holders; (vii)
to provide for the issuance or reissuance from time to time of a single series
of Additional Series Equipment Notes outstanding at any time (and any Related
Additional Series Equipment Notes) and for pass through certificates issued by
any pass through trust that acquires any such Equipment Notes and to make
changes relating to any of the foregoing, provided that such Equipment Notes are
issued in accordance with the Note Purchase Agreement and Section 9.1 of the
Intercreditor Agreement; and (viii) to include on the Equipment Notes any
legend as may be required by Law.

     

    SECTION 10.02.  Mortgagee Protected

     

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

    

    
      
        
           

        

        
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    SECTION 10.03.  Documents Mailed to Note
Holders

     

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

     

    SECTION 10.04.  No Request Necessary for Trust
Indenture Supplement

     

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

     

    ARTICLE XI

     

    MISCELLANEOUS

     

    SECTION 11.01.  Termination of Trust
Indenture

     

    Upon (or
at any time after) payment in full of the Original Amount of, Make-Whole Amount,
if any, and interest on and all other amounts due under all Equipment Notes and
provided that there shall then be no other Secured Obligations due to the
Indenture Indemnitees, the Note Holders and the Mortgagee hereunder or under the
Participation Agreement, any other Operative Agreement, any Related Equipment
Note or any Related Indenture, the Owner shall direct the Mortgagee to execute
and deliver to or as directed in writing by the Owner an appropriate instrument
releasing the Aircraft and the Engines and (subject to paragraph (iii) of clause
“Third” of Section 3.03 hereof, if applicable) all other Collateral from the
Lien of the Trust Indenture and the Mortgagee shall execute and deliver such
instrument as aforesaid; provided, however, that this
Trust Indenture and the trusts created hereby shall earlier terminate and this
Trust Indenture shall be of no further force or effect upon any sale or other
final disposition by the Mortgagee of all property constituting part of the
Collateral and the final distribution by the Mortgagee of all monies or other
property or proceeds constituting part of the Collateral in accordance with the
terms hereof.  Except as aforesaid otherwise provided, this Trust
Indenture and the trusts created hereby shall continue in full force and effect
in accordance with the terms hereof.

     

    SECTION 11.02.  No Legal Title to Collateral in Note
Holders

     

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

    

    
      
        
           

        

        
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    SECTION 11.03.  Sale of Aircraft by Mortgagee Is
Binding

     

    Any sale
or other conveyance of the Collateral, 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 Mortgagee, the Owner and
such holders in and to such Collateral or part thereof.  No purchaser
or other grantee shall be required to inquire as to the authorization,
necessity, expediency or regularity of such sale or conveyance or as to the
application of any sale or other proceeds with respect thereto by the
Mortgagee.

     

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

     

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

     

    SECTION 11.05.  Notices

     

    Unless
otherwise expressly specified or permitted by the terms hereof, all notices,
requests, demands, authorizations, directions, consents, waivers or documents
provided or permitted by this Trust Indenture to be made, given, furnished or
filed shall be in writing, personally delivered or mailed by certified mail,
postage prepaid, or by facsimile or confirmed telex, and (i) if to the Owner,
addressed to it at 1600 Smith Street, HQS-FN, Houston, Texas 77002,
Attention:  Treasurer, facsimile number (713) 324-2447, (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) 636-4140, (iii) if to any Note Holder or
any Indenture Indemnitee, addressed to such party at such address as such party
shall have furnished by notice to the Owner and the 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 or the Mortgagee or any Note Holder to any of the other of them, such
notice shall be deemed given and such requirement satisfied when such notice is
received, or if such notice is mailed by certified mail, postage prepaid, three
Business Days after being mailed, addressed as provided above.  Any
party hereto may change the address to which notices to such party will be sent
by giving notice of such change to the other parties to this Trust
Indenture.

     

    SECTION 11.06.  Severability

     

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

    

    
      
        
           

        

        
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    SECTION 11.07.  No Oral Modification or Continuing
Waivers

     

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

     

    SECTION 11.08.  Successors and Assigns

     

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

     

    SECTION 11.09.  Headings

     

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

     

    SECTION 11.10.  Normal Commercial
Relations

     

    Anything
contained in this Trust Indenture to the contrary
notwithstanding.  Owner and Mortgagee may conduct any banking or other
financial transactions, and have banking or other commercial relationships, with
Owner, fully to the same extent as if this Trust Indenture were not in effect,
including without limitation the making of loans or other extensions of credit
to Owner for any purpose whatsoever, whether related to any of the transactions
contemplated hereby or otherwise.

     

    SECTION 11.11.  Governing Law; Counterpart
Form

     

    THIS
TRUST INDENTURE SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE 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 11.12.  Voting By Note Holders

     

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

    

    
      
        
           

        

        
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    SECTION 11.13.  Bankruptcy

     

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

    

    
      
        
           

        

        
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    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.

    

    
      	 
      	
              CONTINENTAL
      AIRLINES, INC.

            
	 
      	 
      
	 
      	 
      
	 
      	
              By:

            	 
      
	 
      	 
      	
              Name:

            	 
      
	 
      	 
      	
              Title:

            	 
      

    

    

    

    
      	 
      	
              WILMINGTON
      TRUST COMPANY, as Mortgagee

            
	 
      	 
      
	 
      	 
      
	 
      	
              By:

            	 
      
	 
      	 
      	
              Name:

            	 
      
	 
      	 
      	
              Title:

            	 
      

    

    

    

    

    
      
        
           

        

        
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    ANNEX A

     

    DEFINITIONS

     

    GENERAL
PROVISIONS

     

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

     

    
      	
               
      

            	
              (i)

            	
              each
      of “Owner,” “Mortgagee,” “Note Holder” or any other person includes,
      without prejudice to the provisions of any Operative Agreement, any
      successor in interest to it and any permitted transferee, permitted
      purchaser or permitted assignee of
it;

            

    

     

    
      	
               
      

            	
              (ii)

            	
              words
      importing the plural include the singular and words importing the singular
      include the plural;

            

    

     

    
      	
               
      

            	
              (iii)

            	
              any
      agreement, instrument or document, or any annex, schedule or exhibit
      thereto, or any other part thereof, includes, without prejudice to the
      provisions of any Operative Agreement, that agreement, instrument or
      document, or annex, schedule or exhibit, or part, respectively, as
      amended, modified or supplemented from time to time in accordance with its
      terms and in accordance with the Operative Agreements, and any agreement,
      instrument or document entered into in substitution or replacement
      therefor (including, without limitation, in the case of the Pass Through
      Trust Agreement, the “Related Pass Through Trust Agreement” as defined
      therein);

            

    

     

    
      	
               
      

            	
              (iv)

            	
              any
      provision of any Law includes any such provision as amended, modified,
      supplemented, substituted, reissued or reenacted prior to the Closing
      Date, and thereafter from time to
time;

            

    

     

    
      	
               
      

            	
              (v)

            	
              the
      words “Agreement,” “this Agreement,” “hereby,” “herein,” “hereto,”
      “hereof” and “hereunder” and words of similar import when used in any
      Operative Agreement refer to such Operative Agreement as a whole and not
      to any particular provision of such Operative
  Agreement;

            

    

     

    
      	
               
      

            	
              (vi)

            	
              the
      words “including,” “including, without limitation,” “including, but not
      limited to,” and terms or phrases of similar import when used in any
      Operative Agreement, with respect to any matter or thing, mean including,
      without limitation, such matter or thing;
and

            

    

     

    
      	
               
      

            	
              (vii)

            	
              a
      “Section,” an “Exhibit,” an “Annex” or a “Schedule” in any Operative
      Agreement, or in any annex thereto, is a reference to a section of, or an
      exhibit, an annex or a schedule to, such Operative Agreement or such
      annex, respectively.

            

    

     

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

    

    
      
        
           

        

        
           

          
            

          

        

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

     

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

     

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

     

    DEFINED
TERMS

     

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

     

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

     

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

     

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

     

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

    

    
      
        
           

        

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

     

    “Aircraft Documents”
means all technical data, manuals and log books, and all inspection,
modification and overhaul records and other service, repair, maintenance and
technical records that are required by the FAA (or the relevant Aviation
Authority), to be maintained with respect to the Aircraft, Airframe, Engines or
Parts, and such term shall include all additions, renewals, revisions and
replacements of any such materials from time to time made, or required to be
made, by the FAA (or other Aviation Authority) regulations, and in each case in
whatever form and by whatever means or medium (including, without limitation,
microfiche, microfilm, paper or computer disk) such materials may be maintained
or retained by or on behalf of Owner (provided, that all
such materials shall be maintained in the English language).

     

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

     

    “Airframe
Manufacturer” means The Boeing Company, a Delaware
corporation.

     

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

     

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

     

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

    

    
      
        
           

        

        
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    “Basic Pass Through Trust
Agreement” means the Pass Through Trust Agreement, dated September 25,
1997, between Owner and Pass Through Trustee, but does not include any Trust
Supplement.

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    [“Consent and
Agreement” means the Manufacturer Consent and Agreement [____], dated as
of even date with the Participation Agreement, of Airframe Manufacturer.]8

    

      

    

      
      
        	
                8.

              	
                Insert
      for New Aircraft.

              

      

    

    

    
      
        
           

        

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    “Eligible Account”
means an account established by and with an Eligible Institution at the request
of the Mortgagee, which institution agrees, for all purposes of the UCC
including Article 8 thereof, that (a) such account shall be a “securities
account” (as defined in Section 8-501(a) of the UCC), (b) all property (other
than cash) credited to such account shall be treated as a “financial asset” (as
defined in Section 8-102(a)(9) of the UCC), (c) the Mortgagee shall be the
“entitlement holder” (as defined in Section 8-102(a)(7) of the UCC) in respect
of such account, (d) it will comply with all entitlement orders issued by the
Mortgagee to the exclusion of the Owner, and (e) the “securities intermediary
jurisdiction” (under Section 8-110(e) of the UCC) shall be the State of New
York.

     

    “Eligible Institution”
means the corporate trust department of (a) Wilmington Trust Company, acting
solely in its capacity as a “securities intermediary” (as defined in Section
8-102(a)(14) of the UCC), or (b) a depository institution organized under the
laws of the United States of America or any one of the states thereof or the
District of Columbia (or any U.S. branch

    

    
      
        
           

        

        
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    of a
foreign bank), which has a long-term unsecured debt rating from Moody’s and
Standard & Poor’s of at least A-3 or its equivalent.

     

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

     

    [“Engine Consent and
Agreement” means the Engine Manufacturer Consent and Agreement [____],
dated as of even date with the Participation Agreement, of Engine
Manufacturer.]9

     

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

     

    “Equipment Note
Register” is defined in Section 2.07 of the Trust Indenture.

     

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

     

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

     

    “Escrow Agent” means
Wells Fargo Bank Northwest, National Association, as Escrow Agent under the
Escrow Agreement.

     

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

    
 

    
      
   
      
        	
                9.

              	
                Insert
      for New Aircraft.

              

      

    

    

    
      
        
           

        

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

     

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

     

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

     

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

     

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

     

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

     

    (e)           as
a result of any law, rule, regulation, order or other action by the Aviation
Authority or by any Government Entity of the government of registry of the
Aircraft or by any Government Entity otherwise having jurisdiction over the
operation or use of the Aircraft, the use of such property in the normal course
of Owner’s business of passenger air transportation is prohibited for a period
of 180 consecutive days unless Owner, prior to the expiration of such 180-day
period, shall have undertaken and shall be diligently carrying forward such
steps as may be necessary or desirable to permit the normal use of such property
by Owner, but in any event if such use shall have been prohibited for a period
of two consecutive years, provided that no Event of Loss shall be deemed to have
occurred if such prohibition has been applicable to Owner’s entire U.S. fleet of
such property and Owner, prior to the expiration of such two-year period, shall
have conformed at least one unit of such property in its fleet to the
requirements of any such law, rule, regulation, order or other action and
commenced regular commercial use of the same in such jurisdiction and shall be
diligently carrying forward, in a manner which does not discriminate against
such property in so conforming such property, steps which are necessary or
desirable to permit the normal use of the Aircraft by Owner, but in any event if
such use shall have been prohibited for a period of three years.

     

    [“Existing Financing”
means the financing arrangements that provided for a security interest granted
by Owner in the Aircraft and were outstanding on or after June 1, 2009.]10

    
 

      
      
        
 

      
        	
                10.

              	
                Insert
      for Owned Aircraft.

              

      

    

    

    
      
        
           

        

        
          7

          
            

          

        

        
          BACK

        

      

    

    

     

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

     

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

     

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

     

    “FAA Filed Documents”
means [the FAA Bill of Sale, an application for registration of the Aircraft
with the FAA in the name of Owner,]11 [the Release,]12 the Trust Indenture and the initial Trust
Supplement.

     

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

     

     “Financing Statements”
means, collectively, UCC financing statements covering the Collateral, by Owner,
as debtor, showing Mortgagee as secured party, [and UCC termination statements
with respect to the termination of the security interest granted under the
Existing Financing]13 for filing in Delaware and each other
jurisdiction that, in the opinion of Mortgagee, is necessary to perfect its Lien
on the Collateral.

     

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

     

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

     

    “Indemnitee” means (i)
WTC and Mortgagee, (ii) each separate or additional trustee appointed pursuant
to the Trust Indenture, (iii) the Subordination Agent, the Paying

    
 

      
      
        
 

      
        	
                11.

              	
                Insert
      for New Aircraft.

              

      

    

      
      
        	
                12.

              	
                Insert
      for Owned Aircraft.

              

      

    

      
      
        	
                13.

              	
                Insert
      for Owned Aircraft.

              

      

    

    

    
      
        
           

        

        
          8

          
            

          

        

        
          BACK

        

      

    

    

     

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

     

    “Indenture Agreements”
means [the Purchase Agreement and]14 the Bills of Sale, to the extent included in
Granting Clause (2) of the Trust Indenture, and any other contract, agreement or
instrument from time to time assigned or pledged under the Trust
Indenture.

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    “Issuance Date” means
July 1, 2009.

    
 

      
      
        
 

      
        	
                14.

              	
                Insert
      for New Aircraft.

              

      

    

    

    
      
        
           

        

        
          9

          
            

          

        

        
          BACK

        

      

    

    

     

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

     

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

     

    “Liquidity Facility”
means the Revolving Credit Agreement between the Subordination Agent, as
borrower, and the Liquidity Provider, dated as of the Issuance Date, provided that, for
purposes of any obligation of Owner, no amendment, modification or supplement
to, or substitution or replacement of, such Liquidity Facility shall be
effective unless consented to by Owner.

     

    “Liquidity Provider”
means Goldman Sachs Bank USA, a corporation organized under the banking law of
the State of New York, as “Liquidity Provider” (as such term is defined in the
Intercreditor Agreement).

     

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

     

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

    

    
      
        
           

        

        
          10

          
            

          

        

        
          BACK

        

      

    

    

     

    yield to
maturity as published in such H.15(519).  “H.15(519)” means the weekly
statistical release designated as such, or any successor publication, published
by the Board of Governors of the Federal Reserve System.  The date of
determination of a Make-Whole Amount shall be the third Business Day prior to
the applicable payment or redemption date and the “most recent H.15(519)” means
the H.15(519) published prior to the close of business on the third Business Day
prior to the applicable payment or redemption date.

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

    

    
      
        
           

        

        
          11

          
            

          

        

        
          BACK

        

      

    

    

     

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

     

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

     

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

     

    “Participation
Agreement” means the Participation Agreement [____], dated as of [______
__], 2009, among Owner, the Pass Through Trustee, the Subordination Agent and
Mortgagee.

     

    “Parts” means all
appliances, parts, components, instruments, appurtenances, accessories,
furnishings, seats and other equipment of whatever nature (other than (a)
Engines or engines, and (b) any Removable Part leased by Owner from a third
party or subject to a security interest granted to a third party), that may from
time to time be installed or incorporated in or attached or appurtenant to the
Airframe or any Engine or removed therefrom unless the Lien of the Trust
Indenture shall not be applicable thereto in accordance with Section 4.04 of the
Trust Indenture.

     

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

     

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

     

    “Pass Through Trust”
means the Continental Airlines Pass Through Trust 2009-1A.

     

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

    

    
      
        
           

        

        
          12

          
            

          

        

        
          BACK

        

      

    

    

     

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

     

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

     

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

     

    “Payment Date” means
each January 8 and July 8, commencing on January 8, 2010.

     

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

     

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

     

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

     

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

     

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

     

    “Permitted Lien” means
(a) the rights of Mortgagee under the Operative Agreements, or of any Permitted
Lessee under any Permitted Lease; (b) Liens attributable to Mortgagee (both in
its capacity as trustee under the Trust Indenture and in its individual
capacity); (c) the rights of others under agreements or arrangements to the
extent expressly permitted by the terms of Section 4.02(b) or 4.04 of the Trust
Indenture; (d) Liens of Taxes of Owner (and its U.S. federal tax law
consolidated group), or Liens for Taxes of any Tax Indemnitee (and its U.S.
federal tax law consolidated group) for which Owner is obligated to indemnify
such Tax Indemnitee under any of the Operative Agreements, in any such case
either not yet due or being contested in good faith by appropriate proceedings
so long as such Liens and such proceedings do not involve any material risk of
the sale, forfeiture or loss of the Aircraft, the Airframe, or any Engine or the
interest of Mortgagee therein or impair the Lien of

    

    
      
        
           

        

        
          13

          
            

          

        

        
          BACK

        

      

    

    

     

    the Trust
Indenture; (e) materialmen’s, mechanics’, workers’, repairers’, employees’ or
other like Liens arising in the ordinary course of business for amounts the
payment of which is either not yet delinquent for more than 60 days or is being
contested in good faith by appropriate proceedings, so long as such Liens and
such proceedings do not involve any material risk of the sale, forfeiture or
loss of the Aircraft, the Airframe, or any Engine or the interest of Mortgagee
therein or impair the Lien of the Trust Indenture; (f) Liens arising out of any
judgment or award against Owner (or any Permitted Lessee), so long as such
judgment shall, within 60 days after the entry thereof, have been discharged or
vacated, or execution thereof stayed pending appeal or shall have been
discharged, vacated or reversed within 60 days after the expiration of such
stay, and so long as during any such 60 day period there is not, or any such
judgment or award does not involve, any material risk of the sale, forfeiture or
loss of the Aircraft, the Airframe, or any Engine or the interest of Mortgagee
therein or impair the Lien of the Trust Indenture; (g) any other Lien with
respect to which Owner (or any Permitted Lessee) shall have provided a bond,
cash collateral or other security adequate in the reasonable opinion of
Mortgagee.

     

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

     

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

     

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

     

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

     

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

     

    “Purchase Agreement”
means, [the Purchase Agreement No. 2061, dated as of October 10,
1997,]15 [the
Purchase Agreement No. 2333, dated December 29, 2000,]16 [the Purchase Agreement No. 1951, dated as of
July 23, 1996,]17 between Airframe Manufacturer and Owner, as
amended (including all exhibits thereto, together with all letter agreements
entered into that by their terms constitute part of such Purchase Agreement), to
the extent included in the Granting Clause (2) of the Trust
Indenture.

     

    “QIB” is defined in
Section 2.08 of the Trust Indenture.

    
 

      
      
        
 

      
        	
                15.

              	
                Insert
      for Boeing 777-224ER
Aircraft.

              

      

    

    
       

      
        	
                16.

              	
                Insert
      for Boeing 757-224 Aircraft.

              

      

    

      
      
        	
                17.

              	
                Insert
      for Boeing 737-924ER, 737-824 or 737-724
  Aircraft.

              

      

    

    

    
      
        
           

        

        
          14

          
            

          

        

        
          BACK

        

      

    

    

     

    “Related Additional Series
Equipment Note” means, with respect to the Additional Series Equipment
Notes and as of any date, an “Additional Series Equipment Note”, as defined in
each Related Indenture, having the same designation as such Additional Series
Equipment Notes, but only if as of such date it is held by the “Subordination
Agent” under the “Intercreditor Agreement”, as such terms are defined in such
Related Indenture.

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

    
 

      
      
        

      

       

      
        	
                18.

              	
                Insert
      for Owned Aircraft.

              

      

    

    

    
      
        
           

        

        
          15

          
            

          

        

        
          BACK

        

      

    

    

     

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

     

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

     

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

     

    “Secured Obligations”
is defined in Section 2.06 of the Trust Indenture.

     

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

     

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

     

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

     

    “Senior Holder” is
defined in Section 2.13(c) of the Trust Indenture.

     

    “Series” means the
Series A or any Additional Series.

     

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

     

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

     

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

     

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

     

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

     

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

     

    “Taxing Authority”
means any federal, state or local government or other taxing authority in the
United States, any foreign government or any political subdivision or
taxing

    

    
      
        
           

        

        
          16

          
            

          

        

        
          BACK

        

      

    

    

     

    authority
thereof, any international taxing authority or any territory or possession of
the United States or any taxing authority thereof.

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    “U.S. Air Carrier”
means any United States air carrier that is a Citizen of the United States
holding an air carrier operating certificate issued pursuant to chapter 447 of
title 49 of the United States Code for aircraft capable of carrying 10 or more
individuals or 6000 pounds or more of cargo, and as to which there is in force
an air carrier operating certificate issued

    

    
      
        
           

        

        
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    pursuant
to Part 121 of the FAA Regulations, or which may operate as an air carrier by
certification or otherwise under any successor or substitute provisions therefor
or in the absence thereof.

     

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

     

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

     

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

     

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

     

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

    

    

    
      
        
           

        

        
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                ANNEX  B
      - INSURANCE

                TRUST
      INDENTURE [___]

              

      

    

    

    

    ANNEX B

     

    INSURANCE

     

     

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

     

    A.           Liability
Insurance

     

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

     

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

     

    B.           Hull Insurance

     

    1.           Except
as provided in Section B.2 below, Owner will carry or cause to be carried at all
times, at no expense to Mortgagee, with Approved Insurers “all-risk” ground and
flight aircraft hull insurance covering each Aircraft (including the Engines
when they are installed on the Airframe or any other airframe) which is of the
type as from time to time applicable to aircraft owned by Owner of the same type
as the Aircraft for an amount denominated in United States Dollars not less than
the unpaid Original Amount together with six months of interest accrued thereon
(collectively, the “Debt Balance”).

     

    Any
policies of insurance carried in accordance with this Section B.1 or
Section C covering the Aircraft and any policies taken out in substitution
or replacement for any such policies (i) shall name Mortgagee as exclusive
loss payee for any proceeds to be paid under such policies up to an amount equal
to the Debt Balance and (ii) shall provide that (A) in the event of a
loss involving proceeds in excess of the Threshold Amount, the proceeds in
respect of such loss up to an amount equal to the Debt Balance shall be payable
to the Mortgagee, except in the

    

    
      
        
           

        

        
           

          
            

          

        

        
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    case of a
loss with respect to an Engine installed on an airframe other than the Airframe,
in which case Owner (or any Permitted Lessee) shall endeavor to arrange for any
payment of insurance proceeds in respect of such loss to be held for the account
of the Mortgagee whether such payment is made to Owner (or any Permitted Lessee)
or any third party, it being understood and agreed that in the case of any
payment to Mortgagee otherwise than in respect of an Event of Loss, the
Mortgagee shall, upon receipt of evidence satisfactory to it that the damage
giving rise to such payment shall have been repaired or that such payment shall
then be required to pay for repairs then being made, pay the amount of such
payment to Owner or its order, and (B) the entire amount of any loss
involving proceeds of the Threshold Amount or less or the amount of any proceeds
of any loss in excess of the Debt Balance shall be paid to Owner or its order
unless an Event of Default shall have occurred and be continuing and the
insurers have been notified thereof by the Mortgagee.  In the case of
a loss with respect to an engine (other than an Engine) installed on the
Airframe, Mortgagee shall hold any payment to it of any insurance proceeds in
respect of such loss for the account of Owner or any other third party that is
entitled to receive such proceeds.

     

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

     

    C.           War-Risk,
Hijacking and Allied Perils Insurance

     

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

     

    D.           General
Provisions

     

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

     

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

     

                     (ii)shall apply worldwide and have no
territorial restrictions or limitations (except only in the case of war,
hijacking and related perils insurance required under

    

    
      
        
           

        

        
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    Section C,
which shall apply to the fullest extent available in the international insurance
market);

     

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

     

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

     

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

     

                     (vi)shall waive any right of recourse,
subrogation, setoff, recoupment, counterclaim or other deduction against any
Additional Insured;

     

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

     

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

     

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

     

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

     

    E.           Reports
and Certificates; Other Information

     

    On or
prior to the Closing Date and on or prior to each renewal date of the insurance
policies required hereunder, Owner will furnish or cause to be furnished to
Mortgagee insurance certificates describing in reasonable detail the insurance
maintained by Owner hereunder and a report, signed by Owner’s regularly retained
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    Broker”),
stating the opinion of such Insurance Broker that (a) all premiums in connection
with the insurance then due have been paid and (b) such insurance complies with
the terms of this Annex B, except that such opinion shall not be required with
respect to war risk insurance provided by the FAA.  To the extent such
agreement is reasonably obtainable Owner will also cause the Insurance Broker to
agree to advise Mortgagee in writing of any default in the payment of any
premium and of any other act or omission on the part of Owner of which it has
knowledge and which might invalidate or render unenforceable, in whole or in
part, any insurance on the Aircraft or Engines or cause the cancellation or
termination of such insurance, and to advise Mortgagee in writing at least 30
days (seven days in the case of war-risk and allied perils coverage or such
shorter period as may be available in the international insurance market, as the
case may be) prior to the cancellation, lapse or material adverse change of any
insurance maintained pursuant to this Annex B.

     

    F.           Right
to Pay Premiums

     

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

     

    G.           Deductibles;
Self-insurance

     

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

    

    

    
      
        
           

        

        
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    EXHIBIT A

    TO

    TRUST
INDENTURE AND MORTGAGE

     

    TRUST
INDENTURE AND MORTGAGE SUPPLEMENT

     

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

     

    W
I T N E S S E T H:

     

    WHEREAS,
the Trust Indenture and Mortgage [____], dated as of [______ __], 2009 (as
amended and supplemented, the “Trust Indenture”), between the Owner 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,
the Trust Indenture relates to the Airframe and Engines described below, and a
counterpart of the Trust Indenture is attached hereto and made a part hereof and
this Trust Indenture Supplement, together with such counterpart of the Trust
Indenture, is being filed for recordation on the date hereof with the FAA as one
document;

     

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

     

    AIRFRAME

     

    One
airframe identified as follows:

    
      	
              
                 

                 

                Manufacturer

              

            	 
      	
              
                 

                 

                Model

              

            	 
      	
              
                 

                FAA
      Registration Number

              

            	 
      	
              
                 

                Manufacturer’s
      Serial Number

              

            
	
               

              The
      Boeing Company

            	 
      	 
      	 
      	 
      	 
      	 
      

    

     

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

     

    AIRCRAFT
ENGINES

     

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

    

    
      
        
           

        

        
           

          
            

          

        

        
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                Manufacturer

              

            	 
      	
              
                 

                Manufacturer’s
      Model

              

            	 
      	
              
                 

                Serial
      Number

              

            
	
               
      

               

            	 
      	 
      	 
      	 
      

    

     

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

     

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

     

    TO HAVE
AND TO HOLD all and singular the aforesaid property unto the Mortgagee, its
successors and assigns, in trust for the equal and proportionate benefit and
security of the Note Holders and the Indenture Indemnitees, except as provided
in Section 2.13 and Article III of the Trust Indenture without any preference,
distinction or priority of any one Equipment Note over any other by reason of
priority of time of issue, sale, negotiation, date of maturity thereof or
otherwise for any reason whatsoever, and for the uses and purposes and subject
to the terms and provisions set forth in the Trust Indenture.

     

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

     

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

     

    *   *   *

     

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

    

    

    
      	 
      	
              CONTINENTAL
      AIRLINES, INC.

            
	 
      	 
      
	 
      	 
      
	 
      	
              By:

            	 
      
	 
      	 
      	
              Name:

            	 
      
	 
      	 
      	
              Title:

            	 
      

    

    

    
      
        
           

        

        
           

          
            

          

        

        
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    SCHEDULE I

    
      	 
      	
              
                 

                Original
      Amount

              

            	 
      	
              
                 

                Interest
      Rate

              

            
	
              Series
      A:

            	 
      	 
      	
              9.00%

            

    

    

     

    Trust
Indenture and Mortgage

    Equipment
Note Amortization

    
      
        
          
            	
                    
                       

                       

                      Payment
      Date

                    

                  	 
      	
                    
                       

                      Percentage
      of Original

                      Amount
      to be Paid

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