Document:

<PAGE>

                                                                   Exhibit 10.22

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

                               CREDIT AGREEMENT
                                 [Midway/LBK]

                                  Dated as of

                                 July 31, 2000

                                     AMONG

                         MIDWAY AIRLINES CORPORATION,
                                   Borrower,

                         EACH SENIOR LOAN PARTICIPANT
                       IDENTIFIED ON SCHEDULE I HERETO,
                           Senior Loan Participants,

                             BOEING NEVADA, INC.,
                            Junior Loan Participant

                                      and

                  LANDESBANK SCHLESWIG-HOLSTEIN GIROZENTRALE,
                                Security Agent

                      -----------------------------------
                       Vedder, Price, Kaufman & Kammholz
                      -----------------------------------
<PAGE>

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                       Page
                                                                                       ----
<S>                                                                                    <C>
SECTION 1.  Certain Definitions......................................................    1

SECTION 2.  Commitments; Borrower's Notice of Payment Dates; Closing Procedure.......    1

SECTION 3.  Terms of Loan Certificates; Fees.........................................    4

SECTION 4.  Conditions...............................................................    4
            (a) Conditions Precedent to the Effectiveness of the Commitments.........    4
            (b) Conditions Precedent to the Loan Participants' Participation
                in each Advance......................................................    6

SECTION 5.  [Intentionally Omitted]..................................................    8

SECTION 6.  Extent of Interest of Holders............................................    8

SECTION 7.  Borrower's Representations and Warranties................................    8

SECTION 8.  Indemnities..............................................................   12
            (a) General Indemnity....................................................   12
            (b) [Intentionally Omitted]..............................................   15
            (c) Withholding Taxes....................................................   15
            (d) Interest.............................................................   16
SECTION 9.  Covenants of the Borrower................................................   16
            (a) Borrower Merger......................................................   16
            (b) U.S. Air Carrier.....................................................   17
            (c) Purchase Agreements..................................................   17
            (d) Financial Covenants..................................................   18
            (e) Restriction on Subsidiaries..........................................   18
            (f) Further Assurances...................................................   18

SECTION 11. Governing Law; Consent to Jurisdiction; Waiver of Jury Trial.............   19

SECTION 12. Invoices and Payment of Expenses.........................................   20

SECTION 13. Terms of Subordination...................................................   20
</TABLE>

                                       i
<PAGE>

<TABLE>
<S>                                                                                     <C>
SECTION 14. Payment Rights...........................................................   22

SECTION 15. Confidentiality..........................................................   24

SECTION 16. Miscellaneous............................................................   24
</TABLE>

Schedules:
I.   Notice and Account Information
II.  Participations
III. Description of Aircraft
IV.  Advances

Exhibits:
Exhibit A - Form of Funding Notice
Exhibit B - Form of Assignment Agreement
Exhibit C - Financial Covenants of Borrower
Exhibit D - Intentionally Reserved
Exhibit E-1 - Consent and Agreement to Mortgage and Security Agreement
Exhibit E-2 - Consent and Agreement of CFM International, Inc.
Exhibit F - Remarketing and Support Agreement

                                      ii
<PAGE>

                         CREDIT AGREEMENT [Midway/LBK]
                         -----------------------------

     THIS CREDIT AGREEMENT [Midway/LBK] dated as of July 31, 2000 is among (i)
Midway Airlines Corporation, a Delaware corporation, (the "Borrower"), (ii) each
                                                           --------
Senior Loan Participant identified on Schedule I hereto, (iii) Boeing Nevada,
Inc., as Junior Loan Participant, and (iv) Landesbank Schleswig-Holstein
Girozentrale, a statutory body incorporated under public law, domiciled in Kiel,
as the Security Agent.

                              W I T N E S S E T H:
                              --------------------

     WHEREAS, certain terms are used herein as defined in Section 1(a) hereof;
and

     WHEREAS, concurrently with the execution and delivery of this Agreement,
the Borrower and the Security Agent are entering into the Mortgage and Security
Agreement [Midway/LBK] dated as of the date hereof (the "Mortgage") pursuant to
                                                         --------
which the Borrower agrees, among other things, to issue one or more Senior Loan
Certificates and Junior Loan Certificates in respect of each Advance payable to
the Manufacturer under the Boeing Purchase Agreement as evidence of the
Borrower's indebtedness to the Senior Loan Participants and the Junior Loan
Participant, respectively, which Loan Certificates will be secured by the
mortgage and security interest created by the Borrower in favor of the Security
Agent.

     NOW THEREFORE, in consideration of the mutual agreements herein contained,
the parties hereto agree as follows:

     SECTION 1.  Certain Definitions.
                 -------------------

     Except as otherwise defined in this Agreement, including its annexes,
schedules and exhibits, terms used herein in capitalized form shall have the
meanings attributed thereto in the Mortgage.

     Unless the context otherwise requires, any reference herein to any of the
Operative Documents refers to such document as it may be modified, amended or
supplemented from time to time in accordance with its terms and the terms of
each other agreement restricting the modification, amendment or supplement
thereof.

     SECTION 2.  Commitments; Borrower's Notice of Payment Dates; Closing
                 --------------------------------------------------------
Procedure.
---------

          (a) Subject to the terms and conditions of this Agreement, each Loan
Participant agrees to make a secured loan to the Borrower in respect of each
Advance (herein called, for such Advance, a "Drawing") on a Borrowing Date to be
                                             -------
designated pursuant to Section 2(c) hereof, but in no event later than the
Commitment Termination Date.  In the case of each Senior Loan Participant, such
Drawing shall be equal to the lesser of (i) $ *  minus the aggregate amount of
                                             ---
outstanding Drawings made by such Senior Loan Participant prior to such
Borrowing Date and (ii) such Senior Loan Participant's Participation Percentage
set forth

_________________________________
* Indicates information deleted for confidentiality purposes.
<PAGE>

opposite such Senior Loan Participant's name in Schedule II hereto multiplied by
the Senior Loan Portion of such Advance (for each Senior Loan Participant, such
Senior Loan Participant's "Commitment" with respect to such Advance) and, in the
                           ----------
case of Junior Loan Participant, such Drawing shall be provided that at no time
shall the aggregate amount of Drawings made by the Senior Loan Participants in
respect of such Aircraft be more than * % of the sum of such Senior Loan
                                     ---
Participants' outstanding Drawings with respect to such Aircraft plus the
Borrower's Cash Contribution for such Aircraft plus the Junior Loan
Participant's outstanding Drawings for such Aircraft (such Drawing, the Junior
Loan Participant's "Commitment" with respect to such Advance); provided
                    ----------
further that the aggregate amount of Drawings for all Advances to be made by any
Senior Loan Participant shall not exceed the amount in Dollars set forth
opposite such Senior Loan Participant's name in Schedule II hereto as its
Maximum Commitment (its "Maximum Commitment").  The Drawings shall be made in
                         ------------------
separate series (each, a "Series") with respect to each Aircraft.
                          ------

     If any Loan Participant shall default in its obligation to make the amount
of its Commitment available pursuant to this Section 2(a) in respect of any
Advance, no other Loan Participant shall have an obligation to increase the
amount of its Commitment for such Advance and the obligations of the non-
defaulting Loan Participant shall remain subject to the terms and conditions set
forth in this Agreement.

     Borrower shall execute and deliver to each Loan Participant with
appropriate insertions a Loan Certificate to evidence such Loan Participant's
Commitment.  The Loan Certificates shall be issued in two classes, with each
Senior Loan Participant receiving a Senior Loan Certificate and the Junior Loan
Participant receiving a Junior Loan Certificate.  Each Drawing shall be
evidenced by this Agreement, the Loan Certificate with respect thereto, and
notations made from time to time by each Loan Participant in its books and
records, including computer records.  Each Loan Participant shall record in its
books and records, including computer records, the principal amount of the
Drawings owing to it from time to time.  Each Loan Participant's books and
records shall constitute presumptive evidence, absent manifest error, of the
accuracy of the information contained therein.  Failure by any Loan Participant
to make any such notation or record shall not affect the obligations of Borrower
to such Loan Participant with respect to the repayment of its Drawings.

          (b) The Borrower may arrange to have another financial institution
reasonably acceptable to the Security Agent act as a Senior Loan Participant
hereunder (an "Additional Senior Loan Participant"), as if it had been a Senior
               ----------------------------------
Loan Participant as of the initial Payment Date hereunder.  Such Additional
Senior Loan Participant and the parties hereto shall execute an amendment to
this Agreement whereby (i) such Additional Senior Loan Participant shall become
a Senior Loan Participant hereunder, (ii) such Additional Senior Loan
Participant shall have a Maximum Commitment of up to  *, and (iii) the
                                                     --
Additional Senior Loan Participant shall have a Participation Percentage for the
Senior Loan Portion of each Advance payable after the date of the addition of
the Additional Senior Loan Participant equal to such Additional Senior Loan

_________________________________
* Indicates information deleted for confidentiality purposes.

                                       2
<PAGE>

Participant's Pro Rata Portion of the Senior Loan Portion of each such Advance.
In addition, each Senior Loan Participant's Participation Percentage (other than
the Additional Senior Loan Participant) shall be reduced to the percentage equal
to such Senior Loan Participant's Maximum Commitment divided by the sum of the
Maximum Commitments of all Senior Loan Participants (including the Additional
Senior Loan Participant).  In addition, for each Loan made by the Senior Loan
Participants prior to the addition of the Additional Senior Loan Participant, on
the first Interest Payment Date after such addition, the Additional Senior Loan
Participant shall purchase at par from such Senior Loan Participants a portion
of each outstanding Senior Loan Certificate (based on a pro rata portion of the
outstanding balance of the Senior Loan Certificate then held by each Senior Loan
Participant) such that, after such purchase, the Additional Senior Loan
Participant shall hold its Pro Rata Portion of the outstanding amount of each
Drawing then made by the Senior Loan Participants and remaining outstanding
hereunder, such purchase and transfer to be accomplished in accordance with the
terms of Section 2.08 of the Mortgage.

          (c) (i) The Borrower agrees to give the Security Agent at least five
(5) Business Days' prior written notice (the "Funding Notice") of the Effective
                                              --------------
Date and the Borrowing Date for each Advance, which Borrowing Date shall be a
Business Day not later than the Commitment Termination Date, which notice shall
specify any funding instructions and shall be in substantially the form of
Exhibit A.  On the date of the execution and delivery of this Agreement and the
satisfaction of the conditions precedent in Section 4(a) hereof (the "Effective
Date"), the Loan Participants shall make Drawings (subject to the parameters in
Section 2(a)) in respect of Advances which were paid by Borrower or third-party
financiers prior to the Effective Date.  The proceeds of such Drawings shall be
paid to Borrower or such third-party financiers as Borrower shall direct;
provided, however, that Borrower shall remain responsible for, and shall have
paid, its Cash Contribution for each Aircraft for which such Advances have been
paid.

              (ii) In the event that any Drawing shall not be consummated in
accordance with the terms hereof on the Effective Date or the specified
Borrowing Date, the Senior Loan Participants, the Junior Loan Participant and
the Borrower shall cooperate with each other to arrange a mutually acceptable
postponement of such date (the "Delayed Borrowing Date").  In the event that the
                                ----------------------
Drawing shall not be consummated in accordance with the terms by 2:00 p.m. (New
York time) on the Delayed Borrowing Date or, if earlier, the date on which the
Borrower notifies the Senior Loan Participants and the Junior Loan Participant
that the Drawing will not occur, the Senior Loan Participants and the Junior
Loan Participant may cancel or terminate any funding arrangements that they may
have made to enable them to fund their respective Commitments and the Borrower
shall pay to the Senior Loan Participants on demand their respective Break
Amounts (as reasonably determined by the Senior Loan Participants and certified
to the Borrower).

          (d) On the Borrowing Date for each Drawing specified in a Borrower's
notice referred to in Section 2(c), subject to the terms and conditions of this
Agreement, each Loan Participant, through or on behalf of the Security Agent,
agrees to pay the amount of its Commitment for such Advance to the Manufacturer
by wire transferring (or by making other arrangements reasonably satisfactory to
the Security Agent and the Manufacturer) such amounts

                                       3
<PAGE>

to account or accounts specified in the applicable Funding Notice, subject to
continued compliance with the parameters set forth in Section 2(b), to such
other account as the Borrower shall direct the Security Agent in writing, upon
closing to reimburse Borrower for previously funded Advances.

     The closing with respect to the financing of each Advance shall take place
at the offices of Vedder Price, 222 N. LaSalle, Chicago, Illinois 60601.

     SECTION 3. Terms of Loan Certificates; Fees.
                --------------------------------

          (a)   Each Loan Certificate shall bear interest and be repaid in
accordance with the applicable terms of the Mortgage.

          (b)   In consideration of the Senior Loan Participants' Commitments
hereunder, the Borrower shall pay to the Security Agent for the account of each
Senior Loan Participant on the Effective Date the up-front fee as separately
agreed in the Fee Letter.  In addition, the Borrower shall pay to the Security
Agent for the account of each Senior Loan Participant quarterly on the 9th day
of each February, May, August and November in arrears on the basis of a year of
360 days and the actual number of days elapsed the commitment fee separately
agreed in the Fee Letter in respect of the average daily unused portion of each
such Senior Loan Participant's Maximum Commitment during the preceding quarterly
period.  The Borrower shall continue to pay such commitment fee until the
earliest to occur of (i) the full drawing of each Senior Loan Participant's
Maximum Commitment, (ii) the Commitment Termination Date, and (iii) cancellation
or termination of the remaining unfunded Maximum Commitments of the Senior Loan
Participants.

     SECTION 4.  Conditions.
                 ----------

          (a)    Conditions Precedent to the Effectiveness of the Commitments.
                 ------------------------------------------------------------
It is agreed that the respective Commitments of each Loan Participant and the
effectiveness of this Agreement is subject to the satisfaction prior to or on
the Effective Date of the following conditions precedent:

                 (i) The following documents shall have been duly authorized,
     executed and delivered by the respective party or parties thereto, shall
     each be satisfactory in form and substance to such Loan Participant and
     shall be in full force and effect and executed counterparts shall have been
     delivered to such Loan Participant and its counsel:

                     (1)  the Mortgage;

                     (2)  a copy of each of the Purchase Agreements certified by
          the Secretary or an Assistant Secretary of the Borrower as being a
          true and accurate copy of the same;

                                       4
<PAGE>

                    (3) the Consent and Agreement and the Engine Consent and
          Agreement;

                    (4) such Loan Participant's Loan Certificate; and

                    (5) the Remarketing Agreement.

               (ii)  Such Loan Participant shall have received the following, in
     each case in form and substance satisfactory to it:

                     (1) a certified copy of the Articles of Incorporation and
          Bylaws of the Borrower and a copy of resolutions of the board of
          directors of the Borrower or the executive committee thereof,
          certified by the Secretary or an Assistant Secretary of the Borrower,
          duly authorizing the execution, delivery and performance by the
          Borrower of this Agreement, the Mortgage and each other document
          required to be executed and delivered by the Borrower on each Delivery
          Date in accordance with the provisions hereof and thereof; and

                     (2) a certificate of the Borrower as to the Person or
          Persons authorized to execute and deliver this Agreement, the other
          Operative Documents, and any other documents to be executed on behalf
          of the Borrower in connection with the transactions contemplated
          hereby and as to the signature of such person or persons.

               (iii) Such Loan Participant shall have received opinions
     addressed to such Loan Participant and the Security Agent from Jonathan S.
     Waller, Esq., Senior Vice President and General Counsel for the Borrower,
     Fulbright & Jaworski, special counsel to Borrower, and Kennedy, Covington,
     Lobdell & Hickman, L.L.P., special North Carolina counsel to Borrower, each
     in form and substance reasonably satisfactory to the addressees thereof.

               (iv)  Such Loan Participant shall have received an opinion
     addressed to such Loan Participant and the Security Agent from counsel to
     Manufacturer, in respect of the Boeing Purchase Agreement and the Consent
     and Agreement, in form and substance reasonably satisfactory to the
     addressees thereof.

               (v)   Such Loan Participant shall have received evidence in form
     and substance satisfactory to such Loan Participant that the aggregate
     amount of Advances in connection with each Aircraft shall be sufficient
     when paid to the Manufacturer in accordance with the Credit Agreement to
     satisfy the obligation of the Borrower with respect to all advance payments
     due and payable for each such Aircraft under the Boeing Purchase Agreement.

                                       5
<PAGE>

               (vi)   Such Loan Participant shall have received evidence in form
     and substance reasonably satisfactory to such Loan Participant that the
     rights of any lessee or purchaser of the Aircraft pursuant to any existing
     contract between the Borrower or any of its Affiliates and such lessee or
     purchaser shall not conflict with and shall be subordinate to the rights of
     the Security Agent under the Mortgage.

               (vii)  Each Senior Loan Participant shall have received executed
     copies of the Manufacturer Financing Letter and the Midway Letter.

               (viii) In respect of Advances paid prior to the Effective Date,
     any liens over the Mortgage Estate granted by the Borrower to finance such
     Advances shall be released and terminated.

               (ix)   A Uniform Commercial Code financing statement or
     statements covering all the security interests created by or pursuant to
     the granting clause of the Mortgage shall have been executed and delivered
     by the Borrower, and such financing statement or statements shall have been
     duly filed in all places deemed necessary or advisable in the opinion of
     counsel for the Senior Loan Participants or the Junior Loan Participant,
     and any additional Uniform Commercial Code financing statements deemed
     advisable by any Loan Participant or its counsel shall have been executed
     and delivered by the Borrower and duly filed and all other action shall
     have been taken as is deemed necessary or advisable, in the opinion of
     counsel for the Senior Loan Participants or the Junior Loan Participant, to
     establish and perfect the Security Agent's security interest in each of the
     Purchase Agreements.

               (x)    Each Senior Loan Participant shall have received from
     Vedder, Price, Kaufman & Kammholz, special counsel for the Senior Loan
     Participants, an opinion satisfactory in substance and form to such Senior
     Loan Participant, as to such matters incident to the transactions
     contemplated hereby as such Senior Loan Participant may reasonably request.

               (xi)   The Security Agent shall have received for account of the
     Senior Loan Participants the up-front fee specified in Section 3(b).  The
     Security Agent shall disburse to each Senior Loan Participant such up-front
     fee on such Loan Participant's Maximum Commitment as separately agreed.

               (xii)  The Rights Offering shall have closed.

          (b)  Conditions Precedent to the Loan Participants' Participation in
               ---------------------------------------------------------------
each Advance. It is agreed that the respective obligations of each Loan
------------
Participant to lend its Commitment to the Borrower in respect of each Advance
(including Advances made by Borrower or a third-party financier prior to the
applicable Borrowing Date) is subject to the satisfaction prior to or on the
Borrowing Date for such Advance of the following conditions precedent:

                                       6
<PAGE>

               (i)    The Security Agent shall have received due notice with
     respect to the Borrowing Date for such Advance pursuant to Section 2 hereof
     (or shall have waived such notice either in writing or as provided in
     Section 2).

               (ii)   No change shall have occurred after the date of the
     execution and delivery of this Agreement in applicable law or regulations
     thereunder or interpretations thereof by appropriate regulatory authorities
     which, in the reasonable opinion of such Loan Participant would make it a
     violation of law or regulations for such Loan Participant to make its
     Commitment for such Advance available to acquire its Loan Certificate(s) or
     to realize the benefits of the security afforded by the Mortgage.

               (iii)  Each other Loan Participant shall have made available the
     amount of its Commitment for such Advance in accordance with Section 2(c)
     hereof (unless Borrower (in the case of Junior Loan Participant or any
     Senior Loan Participant) or the Junior Loan Participant (as an additional
     Drawing made by the Junior Loan Participant hereunder, in the case of any
     Senior Loan Participant) shall have made available the amount of such
     unfunded Commitment) and the Borrower shall have paid to the Manufacturer
     its Cash Contribution in respect of the applicable Aircraft.

               (iv)   All appropriate action required to have been taken by any
     governmental or political agency, subdivision or instrumentality of the
     United States, on or prior to the Delivery Date for such Aircraft in
     connection with the transaction 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 such Borrowing
     Date in connection with the transaction contemplated by this Agreement
     shall have been issued, and all such orders, permits, waivers,
     authorizations, exemptions and approvals shall be in full force and effect
     on such Borrowing Date.

               (v)    On such Borrowing Date, (A) the representations and
     warranties of the Borrower contained in Section 7 of this Agreement shall
     be true and accurate as though made on and as of such date except to the
     extent that such representations and warranties relate solely to an earlier
     date (in which case such representations and warranties shall be true and
     accurate on and as of such earlier date), (B) no event shall have occurred
     and be continuing which constitutes (or would, with the passage of time or
     the giving of notice or both, constitute) an Event of Default, and (C)
     since December 31, 1999 there shall have been no material and adverse
     change in the financial or operational condition of the Borrower.

               (vi)   No action or proceeding shall have been instituted nor
     shall governmental action be threatened before any court or governmental
     agency, nor shall any order, judgment or decree have been issued or
     proposed to be issued by any court or governmental agency at the time of
     such Borrowing Date to set aside, restrain, enjoin or

                                       7
<PAGE>

     prevent the completion and consummation of this Agreement or the
     transaction contemplated hereby.

               (vii)  The Security Agent shall have received for the account of
     the Senior Loan Participants the commitment fees specified in Section 3(b)
     and due and payable on or prior to such Borrowing Date.  The Security Agent
     shall distribute to each Senior Loan Participant such commitment fee as
     separately agreed.

     SECTION 5.  [Intentionally Omitted].
                 -----------------------

     SECTION 6.  Extent of Interest of Holders.
                 -----------------------------

     No Holder shall have any further interest in, or other right with respect
to, the mortgage and security interests created by the Mortgage when and if the
Original Amount of and interest on the Loan Certificate held by such Holder and
all other sums payable to such Holder hereunder, under the Mortgage and under
such Loan Certificate shall have been paid in full; provided, however, that the
                                                    --------  -------
interests and rights of the Loan Participants in and with respect to the
mortgage and security interests created by the Mortgage shall continue after all
such amounts have been paid in full so long as the Commitments have not
terminated.

     SECTION 7.  Borrower's Representations and Warranties.
                 -----------------------------------------

     The Borrower represents and warrants that on the date hereof and on each
Borrowing Date:

                 (i)  the Borrower is a corporation duly organized and validly
     existing in good standing pursuant to the laws of the State of Delaware; is
     duly qualified to do business as a foreign corporation in each jurisdiction
     in which its operations or the nature of its business requires, except
     where the failure to be so qualified would not have a material adverse
     effect on the Borrower or its business; is a U.S. Air Carrier; has its
     chief executive office (as such term is defined in Article 9 of the Uniform
     Commercial Code) in the State of North Carolina; and has the corporate
     power and authority to engage in air transport and to carry on scheduled
     passenger service as presently conducted, to purchase the Aircraft under
     the Boeing Purchase Agreement and to enter into and perform its obligations
     under the Operative Documents;

                 (ii) the execution, delivery and performance by the Borrower of
     the Operative Documents have been duly authorized by all necessary
     corporate action on the part of the Borrower, do not require any
     stockholder approval, or approval or consent of any trustee or holders of
     any indebtedness or obligations of the Borrower except such as have been
     duly obtained and are in full force and effect, and none of the execution,
     delivery or performance by Borrower of such Operative Documents contravenes
     any law, judgment, government rule, regulation or order binding on the
     Borrower or the articles of incorporation or bylaws of the Borrower or
     contravenes the provisions of, or constitutes a

                                       8
<PAGE>

     default under, or results in the creation of any Lien (other than Permitted
     Liens) upon the property of the Borrower under, any indenture, mortgage,
     contract or other agreement to which the Borrower is a party or by which it
     or its properties may be bound or affected;

               (iii)  neither the execution and delivery by the Borrower of the
     Operative Documents nor the performance by the Borrower of its obligations
     thereunder requires the consent or approval of, the giving of notice to, or
     the registration with, or the taking of any other action in respect of any
     Federal, state or foreign government authority or agency, except for (A)
     the orders, permits, waivers, exemptions, authorizations and approvals of
     the regulatory authorities having jurisdiction over the operation of the
     Aircraft by the Borrower, which orders, permits, waivers, exemptions,
     authorizations and approvals, if any, required to be obtained and in full
     force and effect as of the date hereof, have been duly obtained and are in
     full force and effect except for those Permits the failure to obtain which
     would not have a material adverse effect on the financial condition of the
     Borrower or the ability of the Borrower to perform its obligations under
     the Operative Documents, and (B) any filings, registrations or applications
     specifically described in this Agreement (the items referred to in (A) and
     (B) collectively referred to as "Permits");

               (iv)   the Operative Documents to which the Borrower is a party
     each constitute legal, valid and binding obligations of the Borrower
     enforceable against the Borrower in accordance with the terms thereof
     except as such enforceability may be limited by equitable principles or
     applicable bankruptcy, insolvency, reorganization, moratorium or other
     similar laws affecting creditors' rights generally;

               (v)    there are no pending or  (to the best of Borrower's
     knowledge) threatened actions or proceedings before any court, arbitrator
     or administrative agency which individually (or in the aggregate in the
     case of any group of related lawsuits) is expected to have a material and
     adverse effect on the financial condition of the Borrower or the ability of
     the Borrower to perform its obligations under the Operative Documents;

               (vi)   except for the filing of financing statements (and
     continuation statements at periodic intervals) with respect to the
     interests created by such documents under the Uniform Commercial Code of
     North Carolina, and Delaware and such other states as may be specified in
     the opinion furnished pursuant to Section 4(b)(ix) hereof, no further
     action, including any filing or recording of any document (including any
     financing statement in respect thereof under Article 9 of the Uniform
     Commercial Code of any applicable jurisdiction), is necessary or advisable
     in order to establish and perfect the first mortgage Lien on each of the
     Purchase Agreements and the rest of the Mortgage Estate in favor of the
     Security Agent pursuant to the Mortgage in any applicable jurisdiction in
     the United States;

               (vii)  there has not occurred any event which constitutes a
     Default or an Event of Default under the Mortgage which is presently
     continuing;

                                       9
<PAGE>

               (viii) the statements of financial position of the Borrower as
     of December 31, 1999 and March 31, 2000 and the related statements of
     earnings and cash flow of the Borrower in all material respects for the
     year and fiscal quarter, as the case may be, then ended, copies of which
     have been furnished to each Loan Participant, fairly present the financial
     condition of the Borrower at such date and the results of operations and
     cash flow of the Borrower for the period ended on such dates, in accordance
     with generally accepted accounting principles consistently applied, and
     subject, in the case of the March 31, 2000 statements, to normal year-end
     adjustments, and since December 31, 1999 there has been no material and
     adverse change in such condition or operations;

               (ix)   each of the Purchase Agreements is in full force and
     effect and neither the Borrower nor, to the knowledge of the Borrower,
     either the Manufacturer or the Engine Manufacturer is in default of its
     obligations thereunder. Except as contemplated by the Mortgage and Liens
     granted to third-party financiers and released and terminated prior to the
     Effective Date, the Borrower has not assigned nor granted any Lien in its
     rights under either Purchase Agreement in respect of any of the Aircraft or
     the Engines;

               (x)    assuming the Loan Participants are acquiring their Loan
     Certificates in the ordinary course of their normal business operations for
     their own accounts, none of the transactions contemplated by this Agreement
     will violate or result in a violation of the Securities Act of 1933, as
     amended, the Securities Exchange Act of 1934, as amended, or any
     regulations issued pursuant thereto;

               (xi)   neither the Borrower nor anyone acting on behalf of the
     Borrower has directly or indirectly offered any interest in the Loan
     Certificates for sale to, or solicited any offer to acquire any of the same
     from, anyone other than the Loan Participants and not more than 35 other
     institutions believed capable of evaluating and bearing the risks of
     investment in the transactions contemplated hereby;

               (xii)  no governmental approval of any kind is required of any
     Loan Participant for its execution of or performance under this Agreement
     or any agreement contemplated hereby solely by reason of any fact or
     circumstance peculiar to the Borrower;

               (xiii) the Borrower has filed or caused to be filed all Federal,
     state, local and (in the Borrower's opinion) foreign tax returns which are
     required to be filed and has paid or caused to be paid or provided adequate
     reserves for the payment of all taxes shown to be due and payable on such
     returns or (except to the extent being contested in good faith and by
     appropriate proceedings and for the payment of which adequate reserves have
     been provided in accordance with generally accepted accounting principles)
     on any assessment received by the Borrower, to the extent that such taxes
     have become due and payable, except such returns or taxes as to which the
     failure to file or pay, as the

                                      10
<PAGE>

     case may be, could not be reasonably expected to materially and adversely
     affect the assets, operations or financial condition, of the Borrower;

               (xiv)  the Borrower is not (x) in default under any indenture,
     mortgage, lease or credit agreement or under any other agreement or
     instrument of a material nature to which the Borrower is now a party or by
     which it is bound, and no event has occurred and is continuing which, under
     the provisions of any such indenture, mortgage, credit agreement or other
     material agreement or instrument, with the lapse of time or the giving of
     notice, or both, would constitute a default thereunder or (y) in violation
     of any law, order, injunction, decree, rule or regulation applicable to the
     Borrower of any court or administrative body, which default or violation
     would reasonably be expected to materially and adversely affect the
     operations or financial condition of the Borrower or the Borrower's ability
     to execute, deliver and perform its obligations under the Operative
     Documents;

               (xv)   (v) the Borrower has not engaged in any transaction with
     respect to any Plan in connection with which the Borrower could be
     subjected to either a material civil penalty assessed pursuant to Section
     502(i) of ERISA, or a material tax imposed by Section 4975 of the Code; (w)
     no material liability to the Pension Benefit Guaranty Corporation (other
     than liability for premiums) has been incurred by the Borrower with respect
     to any Plan; (x) there has been no event or condition which presents a
     material risk of termination of any Plan by the Pension Benefit Guaranty
     Corporation; (y) no accumulated funding deficiency (as defined in Section
     302 of ERISA and Section 412 of the Code), whether or not waived, exists
     with respect to any Plan; and (z) no material amount of "withdrawal
     liability," as that term is used in Section 4201 of ERISA, has been or is
     expected to be incurred by the Borrower nor has the Borrower or any
     affiliate of the Borrower been notified by any multi-employer plan (within
     the meaning of Section 3(37)(A) of ERISA) that such multi-employer plan is
     in reorganization or insolvency within the meaning of Section 4241 or
     Section 4245 of ERISA or that such multi-employer plan intends to terminate
     or has been terminated under Section 4041A of ERISA (for purposes of this
     subclause (z), the term "affiliate" shall mean any corporation or person
     which is a member of the same controlled group of corporations (within the
     meaning of Section 414(b) of the Code) as the Borrower or is under common
     control (within the meaning of Section 414(c) of the Code) with the
     Borrower);

               (xvi)  assuming the Loan Participants are not using the assets of
     any Plan to make the Drawings contemplated by this Agreement neither the
     Borrower nor any Plan nor any trust created thereunder has engaged in a
     "prohibited transaction," within the meaning of Section 406 of ERISA or
     Section 4975 of the Code with respect to the transactions contemplated
     hereby which could subject the Borrower to any material tax or penalty
     pursuant to Section 4975 of the Code or Section 502(i) of ERISA;

               (xvii) the Borrower is not an "investment company" as defined
     in, or subject to regulation under, the Investment Company Act of 1940 and
     the Borrower is not

                                      11
<PAGE>

     a "holding company" as defined in, or subject to regulation under, the
     Public Utility Holding Company Act of 1935;

               (xviii)  to the best of Borrower's knowledge, none of the written
     financial statements or other written financial information (excluding
     financial projections, information derived from secondary sources and
     general market data) furnished by or on behalf of the Borrower to the
     Security Agent or any Loan Participant in connection with the negotiation
     of this Agreement or delivered hereunder (as modified or supplemented by
     other information so furnished) contains any material misstatement of fact
     or omits to state any material fact necessary to make the statements
     therein, in the light of the circumstances under which they were made, not
     misleading and the financial projections were prepared in good faith;

               (xix)    no part of the proceeds of any Loan hereunder will be
     used, whether directly or indirectly, for any purpose that entails a
     violation of any of the Regulations of the Board of Governors of the
     Federal Reserve, including Regulations U and X;

               (xx)     there have been no amendments or supplements to the
     Manufacturer Financing so as to make the terms of the Manufacturer
     Financing Letter untrue in any material respect;

               (xxi)    each of the Purchase Agreements, the Remarketing
     Agreement and the Manufacturer Financing is in full force and effect and
     neither Borrower nor Manufacturer is in material default in respect of its
     obligations thereunder;

               (xxii)   the Security Agent has a duly perfected first priority
     security interest in each of the Purchase Agreements (subject to Permitted
     Liens); and

               (xxiii)  the Mortgage Estate is free and clear of all Liens
     (except Liens contemplated by the Mortgage and Permitted Liens).

     SECTION 8.  Indemnities.
                 -----------

          (a)  General Indemnity.  Subject to the next following paragraph,
               -----------------
the Borrower hereby agrees to indemnify each Indemnitee against, and agrees to
protect, save and keep harmless each of them from any and all Expenses imposed
on, incurred by or asserted against any Indemnitee arising out of or directly
resulting from (i) the operation, possession, use, maintenance, overhaul,
testing, registration, reregistration, delivery, non-delivery, lease, nonuse,
modification, alteration, or sale of any Aircraft, Airframe or Engine, or any
engine used in connection with any Airframe or any part of any of the foregoing
by the Borrower, any lessee or any other Person whatsoever, including, without
limitation, claims for death, personal injury or property damage or other loss
or harm to any person whatsoever and claims relating to any laws, rules or
regulations pertaining to such operation, possession, use, maintenance,
overhaul, testing,

                                      12
<PAGE>

registration, reregistration, delivery, non-delivery, lease, non-use,
modification, alteration, sale or return including environmental control, noise
and pollution laws, rules or regulations; (ii) the manufacture, design,
purchase, acceptance, rejection, delivery, or condition of any Aircraft,
Airframe or Engine, any engine used in connection with any Airframe, or any part
of any of the foregoing including, without limitation, latent and other defects,
whether or not discoverable, or trademark or copyright infringement; (iii) any
breach of or failure to perform or observe, or any other noncompliance with, any
covenant or agreement to be performed, or other obligation of the Borrower under
any of the Operative Documents, or the falsity of any representation or warranty
of the Borrower in any of the Operative Documents; (iv) assuming the Loan
Participants are making Drawings in the ordinary course of their business for
their own accounts, the offer, sale and delivery by the Borrower or anyone
acting on behalf of the Borrower of any Loan Certificates or successor debt
obligations issued in connection with the refunding or refinancing thereof
(including, without limitation, any claim arising out of the Securities Act of
1933, as amended, the Securities Exchange Act of 1934, as amended, or any other
federal or state statute, law or regulation, or at common law or otherwise
relating to securities (collectively "Securities Liabilities")) (the indemnity
                                      ----------------------
provided in this clause (iv) to extend also to any Person who controls an
Indemnitee, its successors, assigns, employees, directors, officers, servants
and agents within the meaning of Section 15 of the Securities Act of 1933, as
amended); and (v) the transactions contemplated by the Operative Documents, any
Event of Default under the Mortgage or the enforcement against the Borrower of
any of the terms thereof (including, without limitation, Article V of the
Mortgage).

     The foregoing indemnity shall not extend to any Expense of any Indemnitee
to the extent attributable to one or more of the following:  (1) acts or
omissions involving the willful misconduct or gross negligence of such
Indemnitee or any Person acting on behalf of such Indemnitee (other than gross
negligence imputed to such Indemnitee solely by reason of its interest in an
Aircraft); (2) any Tax, or increase in tax liability under any tax law (such
matter being subject to the indemnity in Section (c) hereof); provided, however,
that this clause (2) shall not apply to (A) taxes taken into consideration in
making any payments on an after-tax basis or (B) any license, documentation,
registration or filing fees imposed upon or in connection with the execution,
delivery, registration or filing of this Agreement, a Loan Certificate or the
Mortgage as contemplated in Section 12(iii) hereof; or (3) a failure on the part
of the Security Agent to distribute in accordance with the Mortgage any amounts
received and distributable by it thereunder.

     The Borrower further agrees that any payment or indemnity pursuant to this
Section 8(a) in respect of any "Expense" shall be in an amount which, after
deduction of all Taxes required to be paid by such recipient with respect to
such payment or indemnity under the laws of any federal, state or local
government or taxing authority in the United States, or under the laws of any
taxing authority or governmental subdivision of a foreign country, or any
territory or possession of the United States or any international authority,
shall be equal to the excess, if any, of (A) the amount of such Expense over (B)
the net reduction in Taxes required to be paid by such recipient resulting from
the accrual or payment of such Expense.

                                      13
<PAGE>

     If a claim is made against an Indemnitee involving one or more Expenses and
such Indemnitee has notice thereof, such Indemnitee shall after receiving such
notice give notice of such claim to the Borrower; provided that the failure to
provide such notice shall not release the Borrower from any of its obligations
to indemnify hereunder except to the extent that the Borrower is prejudiced as a
result of the failure to give such notice, and no payment by the Borrower to an
Indemnitee pursuant to this Section 8(a) shall be deemed to constitute a waiver
or release of any right or remedy which the Borrower may have against such
Indemnitee for any actual damages as a result of the failure by such Indemnitee
to give the Borrower such notice.  The Borrower shall be entitled, at its sole
cost and expense, acting through counsel reasonably acceptable to the respective
Indemnitee, so long as the Borrower has acknowledged in writing its
responsibility for such Expense hereunder (unless such Expense is covered by the
second paragraph of this Section 8(a), except that such acknowledgment does not
apply if the decision of a court or arbitrator provides that the Borrower is not
liable hereunder), (A) in any judicial or administrative proceeding that
involves solely a claim for one or more Expenses, to assume responsibility for
and control thereof, (B) in any judicial or administrative proceeding involving
a claim for one or more Expenses and other claims related or unrelated to the
transactions contemplated by the Operative Documents, to assume responsibility
for and control of such claim for Expenses to the extent that the same may be
and is severed from such other claims (and such Indemnitee shall use its
reasonable efforts to obtain such severance), and (C) in any other case, to be
consulted by such Indemnitee with respect to judicial proceedings subject to the
control of such Indemnitee and to be allowed, at the Borrower's sole expense, to
participate therein.  The Indemnitee may participate at its own expense and with
its own counsel in any judicial proceeding controlled by the Borrower pursuant
to the preceding provisions.  Notwithstanding any of the foregoing, the Borrower
shall not be entitled to assume responsibility for and control of any such
judicial or administrative proceedings if any Event of Default shall have
occurred and be continuing, if such proceedings will involve a material risk of
the sale, forfeiture or loss of an Aircraft unless the Borrower shall have
posted a bond or other security reasonably satisfactory to the relevant
Indemnitee with respect to such risk or if such proceedings could entail any
risk of criminal liability being imposed on such Indemnitee.

     The Indemnitee shall supply the Borrower with such information reasonably
requested by the Borrower as is necessary or advisable for the Borrower to
control or participate in any proceeding to the extent permitted by this Section
8(a).  Such Indemnitee shall not enter into a settlement or other compromise
with respect to any Expense without the prior written consent of the Borrower,
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(a).

     The Borrower shall supply the Indemnitee with such information reasonably
requested by the Indemnitee as is necessary or advisable for the Indemnitee to
control or participate in any proceeding to the extent permitted by this Section
8(a).

     Notwithstanding any other provision of this Section 8(a) to the contrary,
in the case of any Expense indemnified by the Borrower hereunder which is
covered by a policy of insurance

                                      14
<PAGE>

maintained by the Borrower, it shall be a condition of such indemnity with
respect to any particular Indemnitee that such Indemnitee shall cooperate with
the insurers in the exercise of their rights to investigate, defend or
compromise such claim as may be required to retain the benefits of such
insurance with respect to such claim.

     To the extent of any payment of any Expense pursuant to this Section 8(a),
the Borrower, without any further action, shall be subrogated to any claims the
Indemnitee may have relating thereto.  The Indemnitee agrees to give such
further assurances or agreements and to cooperate with the Borrower to permit
the Borrower to pursue such claims, if any, to the extent reasonably requested
by the Borrower.

     In the event that the Borrower shall have paid an amount to an Indemnitee
pursuant to this Section 8(a), and such Indemnitee subsequently shall be
reimbursed in respect of such indemnified amount from any other Person, such
Indemnitee shall promptly pay the Borrower the amount of such reimbursement,
including interest received attributable thereto, provided that no Default or
Event of Default has occurred and is continuing.

          (b)  [Intentionally Omitted].
               -----------------------

          (c)  Withholding Taxes.
               -----------------

               (i) The Borrower agrees that any payment made to or for the
     benefit of a Loan Participant that is a Treaty Lender with respect to
     interest, principal, Break Amount or other amounts payable on or with
     respect to a Loan Certificate (including, without limitation, amounts
     payable pursuant to Section 2.13 of the Mortgage) shall be free of all
     withholdings or deductions with respect to United States Federal income
     withholding Taxes ("U.S. Withholding Taxes"), and in the event that the
                         ----------------------
     Security Agent shall be required by applicable law to make any such
     withholding or deduction for any such U.S. Withholding Taxes (a) the
     Borrower shall pay to such Loan Participant an additional amount so that
     after making all required withholdings or deductions for U.S. Withholding
     Taxes from such payment such Loan Participant receives the same amount it
     would have received had no such withholdings or deductions been made, (b)
     the Security Agent shall make all such withholdings or deductions, and (c)
     the Security Agent shall pay such amount withheld or deducted to the
     Internal Revenue Service in accordance with applicable law; provided,
                                                                 --------
     however, that the Borrower shall only have an obligation under this Section
     -------
     8(c) for U.S. Withholding Taxes if such Loan Participant is a Treaty Lender
     and such U.S. Withholding Taxes result from a change in the income tax
     treaty between the United States and Austria, France, Germany, Ireland, the
     Netherlands or the United Kingdom (each, a "Specified Transferee
                                                 --------------------
     Jurisdiction") or any applicable law or regulation that occurs after the
     ------------
     Effective Date.

               (ii) For purposes of this Section 8(c), the term "Treaty Lender"
                                                                 -------------
     shall mean (a) a Senior Loan Participant who is a resident of a Specified
     Transferee Jurisdiction and entitled to claim the benefits of the income
     tax treaty between the United

                                      15
<PAGE>

     States and such Specified Transferee Jurisdiction on the Effective Date or
     (b) a transferee of a Treaty Lender described in clause (a) of this Section
     8(c)(ii) which transferee satisfies all the requirements of such clause (a)
     at the time it acquires its interest in a Loan Certificate.

               (iii)  Each Loan Participant agrees to investigate alternatives
     for reducing or avoiding any Taxes indemnifiable pursuant to this Section
     8(c) and to use reasonable efforts to avoid or minimize, to the greatest
     extent possible, any liability with respect to such Taxes, including,
     without limitation, by transferring its Loan Certificates to an Affiliate
     or to a third party or by designating a different lending office, if such
     transfer, designation or other action would avoid the need for, or reduce
     the amount of, any such Taxes; provided, however, that this sentence shall
                                    --------  -------
     not obligate any Loan Participant to take any action that would, in its
     reasonable judgment, cause such Loan Participant to incur any loss or cost,
     unless the Borrower agrees to reimburse such Loan Participant therefor in
     manner reasonably satisfactory to such Loan Participant.

               (iv)   If by reason of any U.S. Withholding Taxes with respect to
     which a payment or indemnity was made or paid by the Borrower to, or on
     behalf of, a Senior Loan Participant under clause (a) of Section 8(c)(i),
     such Senior Loan Participant realizes a net tax savings (by means of a
     credit, deduction or otherwise), such Senior Loan Participant shall pay to
     the Borrower, as promptly as practicable after the realization of such net
     saving, the amount of such net tax saving together with any additional tax
     saving realized as a result of such payment (it being understood that the
     amount of such tax saving and the timing of the realization thereof shall
     be reasonably determined in good faith by the Holder).

          (d)  Interest.  The Borrower will pay to each Indemnitee on demand,
               --------
to the extent permitted by applicable law, interest on any amount of indemnity
not paid when due pursuant to this Section 8 until the same shall be paid, at
the Past Due Rate.

     SECTION 9.  Covenants of the Borrower.  The Borrower hereby covenants for
                 -------------------------
the benefit of (x) in the case of Sections 9(a) and 9(d), the Senior Loan
Participants and (y) in all other cases, all Loan Participants, as follows:
                                                                          -

          (a)  Borrower Merger.  For so long as the Mortgage remains in force,
               ---------------
the Borrower shall not enter into any merger or consolidation, or sell,
transfer, lease or convey all or a substantial part of its assets, unless, only
in the case of such merger or consolidation:

               (i)    the Borrower shall be in compliance with the Financial
     Covenants in Exhibit C hereto and no Default under Sections 4.01, 4.02,
     4.07 or 4.08 of the Mortgage or Event of Default shall have occurred and be
     continuing or would result therefrom;

                                      16
<PAGE>

               (ii)   the Borrower is the surviving corporation or, if
     otherwise, such other Person or continuing corporation (herein called
     "Successor Corporation") shall be a corporation incorporated under the
      ---------------------
     laws of a state of the United States, and shall be a U.S. Air Carrier;

               (iii)  in the case of a Successor Corporation, such Successor
     Corporation shall (A) execute, prior to or contemporaneously with the
     consummation of such transaction, such agreements, if any, as are in the
     reasonable opinion of the Security Agent necessary or advisable to evidence
     the assumption by the Successor Corporation of liability for all of the
     obligations of the Borrower under the Mortgage and the other Operative
     Documents, (B) make such recordings and filings, and take such other action
     with respect to the Operative Documents, as shall be necessary or advisable
     in the reasonable opinion of the Loan Participants to protect their
     security interest in the Aircraft, and (C) cause to be delivered to the
     Security Agent and the Loan Participants such legal opinions (which may be
     from in-house counsel) as any of them may reasonably request in connection
     with the matters specified in the preceding clauses (A) and (B).

      *
     ---
     Upon any consolidation or merger in accordance with this Section 9(a), the
Successor Corporation shall succeed to, and be substituted for, and may exercise
every right and power of, the Borrower under this Agreement with the same effect
as if such Successor Corporation had been named as the Borrower herein.

          (b) U.S. Air Carrier.  The Borrower covenants and agrees that at all
              ----------------
times it will be an "air carrier" within the meaning of the Federal Aviation Act
operating under certificates issued pursuant to Section 40102(a) of such Act and
shall otherwise meet the standards of the definition of U.S. Air Carrier.

          (c) Purchase Agreements.  The Borrower shall duly perform all of its
              -------------------
obligations under each of the Purchase Agreements and take all actions necessary
to keep the Purchase Agreements in full force and effect.  The Borrower shall
immediately notify the Security Agent of any default (whether by the Borrower or
the Manufacturer or the Engine Manufacturer) under or cancellation, termination
or rescission or purported cancellation, termination or rescission of either
Purchase Agreement specifying in reasonable detail the nature of such default,
cancellation, rescission or termination.  The Borrower shall not in any way
modify, terminate or amend either Purchase Agreement, except as expressly
permitted by the Mortgage, or the Manufacturer Financing in a way which would
make any material term of the Manufacturer Financing Letter untrue or would
otherwise adversely affect the Borrower's ability to utilize the Manufacturer
Financing without the written consent of the Security Agent (acting at the
unanimous direction of 100% of the Holders).

-------------------
* Indicates information deleted for confidentiality purposes.

                                      17
<PAGE>

          (d) Financial Covenants.  Subject to Section 3.04 of the Mortgage, the
              -------------------
Borrower shall comply with the Financial Covenants set forth in Exhibit C.

          (e) Restriction on Subsidiaries.  The Borrower may not invest on an
              ---------------------------
aggregate basis more than Ten Million Dollars in any direct of indirect
subsidiary unless such subsidiary guarantees all of the Borrower's payment and
performance obligations under the Operative Documents.

          (f) Further Assurances.  The Borrower covenants and agrees with each
              ------------------
party hereto as follows:

              (i)   The Borrower will cause to be done, executed, acknowledged
     and delivered all and every such further acts, conveyances and assurances
     as any Holder shall reasonably require for accomplishing the purposes of
     this Agreement and the other Operative Documents; provided that any
     instrument or other document so executed by the Borrower will not expand
     any obligations or limit any rights of the Borrower in respect of the
     transactions contemplated by any Operative Documents.

              (ii)  The Borrower, at its expense, will take all actions
     (including the filing of financing statements under the Uniform Commercial
     Code in all applicable jurisdictions) and cause the lien of the Mortgage to
     at all times be and remain a first priority and perfected Lien on the
     Mortgage Estate.

              (iii) The Borrower shall pay all reasonable costs and expenses
     (including costs and disbursements of counsel) incurred by the Security
     Agent and the Holders after the date hereof in connection with (x) any
     supplements or amendments of the Operative Documents (including, without
     limitation, any related recording costs) (other than any supplement or
     amendment associated with the syndication of the Loan Certificates or the
     sale of participation interests therein), (y) any Default and any
     enforcement or collection proceedings resulting therefrom or in connection
     with the negotiation of any restructuring or "work-out" (whether or not
     consummated), or (z) the enforcement of this Section 9.

     SECTION 10.    Notices.
                    -------

     All notices, demands, instructions and other communications required or
permitted to be given to or made upon any party hereto shall be in writing and
shall be personally delivered or sent by registered or certified mail, postage
prepaid, or by facsimile, or by prepaid courier service, and shall be effective
upon receipt.

     Unless otherwise specified in a notice sent or delivered in accordance with
the foregoing provisions of this Section 10, notices, demands, instructions and
other communications in writing shall be given to or made upon the respective
parties hereto at their respective addresses (or to their respective telex
address or facsimile numbers) as follows:  (a) if to the Borrower or

                                      18
<PAGE>

the Security Agent, to the respective addresses set forth in Section 9.06 of the
Mortgage, (b) if to a Loan Participant, to the address set forth on Schedule I
hereto, or (c) if to any subsequent Holder, addressed to such Holder at its
address set forth in the Certificate Register maintained pursuant to the
Mortgage.

     SECTION 11.    Governing Law; Consent to Jurisdiction; Waiver of Jury
                    ------------------------------------------------------
Trial.
-----

          (a) This Agreement shall in all respects be governed by, and construed
in accordance with, the law of the State of New York, including all matters of
construction, validity and performance.

          (b) Each party hereby irrevocably and unconditionally submits, for
itself and its property, to the nonexclusive jurisdiction of the Supreme Court
of the State of New York sitting in New York County and of the United States
District Court of the Southern District of New York, and any appellate court
from any thereof, in any action or proceeding arising out of or relating to this
Agreement, or for recognition or enforcement of any judgment, and each of the
parties hereto hereby irrevocably and unconditionally agrees that all claims in
respect of any such action or proceeding may be heard and determined in such New
York State or, to the extent permitted by law, in such Federal court.  Each of
the parties hereto agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law.  Nothing in this Agreement
shall affect any right that any party may otherwise have to bring any action or
proceeding relating to this Agreement against another party or its properties in
the courts of any jurisdiction.

          (c) Each party hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection which it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement in any court referred to in
paragraph (b) of this Section.  Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.

          (d) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 10.  Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.

          (e) EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL
PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY
OTHER THEORY).  EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER AND

                                      19
<PAGE>

(B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION.

     SECTION 12.    Invoices and Payment of Expenses.
                    --------------------------------

     Each of the Security Agent and the Loan Participants shall promptly submit
to the Borrower for its prompt approval copies of invoices of the Transaction
Expenses (as defined below) as they are received.  The Borrower agrees to pay
Transaction Expenses promptly upon receipt of invoices of such Transaction
Expenses.  For the purposes hereof, "Transaction Expenses" means (i) with
                                     --------------------
respect to the preparation, negotiation, execution and delivery of this
Agreement and the payment or anticipated payment of each Advance on each
Borrowing Date, the reasonable fees, expenses and disbursements of Vedder,
Price, Kaufman & Kammholz, special counsel to the Senior Loan Participants, (ii)
Kaye, Scholer, Fierman, Hays & Handler, LLP, special counsel to the Junior Loan
Participant, (iii) all fees, taxes (including license, documentary, stamp,
excise and property taxes) and other charges payable in connection with the
recording or filing of instruments and financing statements, (iv) each Loan
Participant's reasonable out-of-pocket costs and expenses relating to the
negotiation and closing of this transaction and (v) the up-front fee and
commitment fee of the Senior Loan Participants as separately agreed.

     SECTION 13.    Terms of Subordination.
                    ----------------------

     The Junior Loan Certificate and all other sums payable to the Junior Loan
Participant under the Operative Documents shall be subordinate and junior in
right of payment to the Senior Loan Certificates and all other sums payable to
the Senior Loan Participants under the Operative Documents to the extent and in
the manner hereinafter set forth:

          (a) No payment or distribution shall be made on or in respect of the
principal or interest on the Junior Loan Certificate nor shall any payment or
distribution be made on or in respect of any other claim (other than an
indemnity claim under Section 8 hereof, an "Indemnity Claim") or obligation
                                            ---------------
owing to the Junior Loan Participant under any Operative Document, in either
case, except directly to the Security Agent for application as expressly
provided in Section 2.04 of the Mortgage.

          (b) Any payment or distribution of any kind or character, whether in
cash, property, stock or obligations which may be payable or deliverable on or
in respect of the Junior Loan Certificate or other sum owing to the Junior Loan
Participant under the Operative Documents (other than an Indemnity Claim) shall
be paid or delivered directly to the Security Agent for distribution as provided
in Section 2.04 of the Mortgage.  In the event that, notwithstanding the
foregoing, any such payment or distribution shall be received by the Junior Loan
Participant (other than from the Security Agent as provided in Section 2.04 of
the Mortgage, before the amount of all principal, Break Amount, if any, and
interest on all Senior Loan Certificates) and all other sums owing to the Senior
Loan Participants under the Operative

                                      20
<PAGE>

Documents is paid in full, or provision made for such payment, in accordance
with its terms, such payment or distribution shall be held in trust for and paid
over or delivered to the Security Agent in the form received for distribution as
provided in Section 2.04 of the Mortgage.

          (c) By acceptance of its Junior Loan Certificate, the Junior Loan
Participant hereby irrevocably authorizes and empowers the Senior Loan
Participants or the Security Agent acting on its behalf, to demand, sue for,
collect and receive every payment or distribution made on or in respect of the
Junior Loan Certificate or other sum owing to the Junior Loan Participant under
the Operative Documents (other than an Indemnity Claim) and to file claims and
take such other proceedings, in its own name or in the name of the Junior Loan
Participant or otherwise, as the Senior Loan Participants or the Security Agent
acting on their behalf may deem necessary or advisable for the enforcement of
the provisions hereof.  By the acceptance of its Junior Loan Certificate, the
Junior Loan Participant agrees duly and promptly to take such action as may be
reasonably requested by the Senior Loan Participants or the Security Agent
acting on their behalf to collect the indebtedness evidenced by its Junior Loan
Certificate or otherwise owing to it under the Operative Documents (other than
Indemnity Claims) for the account of the Senior Loan Participants and/or to file
appropriate proofs of claim in respect of such indebtedness, and to execute and
deliver to the Senior Loan Participants or the Security Agent acting on their
behalf on demand such powers of attorney, proofs of claims, assignments of claim
or proofs of claim, or other instruments as may be reasonably requested by the
Senior Loan Participants or the Security Agent acting on their behalf to enforce
any and all claims upon or with respect to its Junior Loan Certificate or
otherwise owing to it under the Operative Documents (other than Indemnity
Claims).

          (d) The Senior Loan Participants or the Security Agent acting on their
behalf may, at any time and from time to time, without the consent of or notice
to the Junior Loan Participant, without incurring responsibility to such Junior
Loan Participant and without impairing or releasing any of the rights of the
Senior Loan Participants, or any of the obligations of the Junior Loan
Participant hereunder:

              (i)   sell, exchange, release or otherwise deal with all or any
     part of any property by whomsoever mortgaged or pledged to secure, or
     howsoever securing, the Senior Loan Certificates;

              (ii)  except as otherwise expressly provided in this Agreement,
     exercise or refrain from exercising rights against the Borrower or any
     other Person; and

              (iii) other than Indemnity Claims, apply any sums, by whomsoever
     paid or however realized, as provided in Section 2.04 of the Mortgage.

          (e) By the acceptance of its Junior Loan Certificate, the Junior Loan
Participant agrees that in the event that it shall receive any payment on the
Junior Loan Certificate or otherwise owing to it under the Operative Documents
which it is not entitled to receive under this Section 13 or Section 2.04 of the
Mortgage, it will hold any amount so

                                      21
<PAGE>

received in trust for the Senior Loan Participants and will forthwith turn over
such payment to the Security Agent on behalf of the Senior Loan Participants in
the form received to be applied as provided in Section 2.04 of the Mortgage.

          (f) By acceptance of its Junior Loan Certificate, the Junior Loan
Participant agrees that it may not commence any action or proceeding against the
Borrower or any other Person obligated in respect of any Operative Document to
recover all or any part of the principal or interest on its Junior Loan
Certificate or any other sum owing to it under any Operative Document or join
with any creditor, unless the Senior Loan Participants shall also join, in
bringing any such action or proceeding.

          (g) By acceptance of its Junior Loan Certificate, the Junior Loan
Participant hereby irrevocably authorizes and empowers the Security Agent on
behalf of the Senior Loan Participants to vote the full amount of the
indebtedness evidenced by the Junior Loan Certificate or otherwise owing to it
under the Operative Documents.

          (h) By acceptance of its Junior Loan Certificate, the Junior Loan
Participant agrees that it will not transfer, assign or otherwise dispose of any
interest in the Junior Loan Certificate to any entity that is not the
Manufacturer or an Affiliate of the Manufacturer without the prior written
consent of the Security Agent, such consent not to be unreasonably withheld.

          (i) [Intentionally omitted]

          (j) The provisions of this Section 13 and Section 2.04 of the Mortgage
are solely for the purpose of defining the relative rights of the Senior Loan
Participants on one hand, and the Junior Loan Participant on the other hand, and
nothing herein shall, except as otherwise provided herein, impair, as between
the Borrower, and the Junior Loan Participant, the obligation of the Borrower,
which is unconditional and absolute, to pay to the Junior Loan Participant the
principal amount of the Junior Loan Certificate, interest thereon and all other
amounts payable hereunder and under the other Operative Documents in accordance
with the terms and the provisions hereof and thereof.

     SECTION 14.    Payment Rights.
                    --------------

          (a) (i)  In the event that an Event of Default shall have occurred and
be continuing, the Junior Loan Participant may elect, by written notice to the
Security Agent, to purchase all, but not less than all, the Senior Loan
Certificates then outstanding on the date specified in such written notice,
which notice, in order to be effective, shall state that it is irrevocable.
Each Senior Loan Participant agrees by its acceptance thereof that it will upon
payment to it from the Junior Loan Participant of an amount equal to the
aggregate unpaid principal amount of all Senior Loan Certificates then held by
such Loan Participant, together with accrued and unpaid interest thereon to the
date of payment, Break Amount, if any, for such Loan Participant, with respect
to such Loan Certificates and all other sums then due and payable to such Loan
Participant hereunder, all in immediately available funds under its Senior Loan

                                      22
<PAGE>

Certificates and under the other Operative Documents, forthwith sell, assign,
transfer and convey to the Junior Loan Participant (without recourse,
representation or warranty of any kind except as to title in and to the Senior
Loan Certificates and except for its own acts or omissions, including without
limitation the absence of liens attributable to it), all of the right, title and
interest of such Loan Participant in and to the Mortgage Estate, the Mortgage,
Senior Loan Certificates held by such Loan Participant and the other Operative
Documents and the purchaser shall assume all of such Loan Participant's
obligations under the Operative Documents from and after the effectiveness of
such transfer.  If the Junior Loan Participant shall so request, such Loan
Participant will comply with all provisions of Section 2.08 of the Mortgage
(other than those relating to Securities Act compliance) to enable new Loan
Certificates to be issued to the purchaser in such denominations as it shall
request.  All charges and expenses in connection with the issuance of any such
new Senior Loan Certificates shall be borne by the Junior Loan Participant.  In
the case of such purchase, the Junior Loan Participant shall, upon request,
furnish to the Senior Loan Participants an opinion of counsel for the purchaser
satisfactory to such Senior Loan Participants (or other evidence reasonably
satisfactory to the Senior Loan Participants) that such transfer and conveyance
are exempt from registration under the Securities Act and do not violate any
registration provision of any applicable state securities laws.

              (ii)  Prior to the exercise of its rights and remedies under
     Article V of the Mortgage and/or the exercise of the Security Agent's
     purchase right under Section 3.a of the Consent and Agreement in respect of
     any Aircraft as a result of the occurrence of an Event of Default under the
     Mortgage, the Security Agent shall notify the Junior Loan Participant in
     writing.  The Junior Loan Participant shall have the option, exercisable at
     any time within ten (10) Business Days following receipt by the Junior Loan
     Participant of such notice, to purchase the Security Agent's interest in
     the Boeing Purchase Agreement insofar as it relates to any or all such
     Aircraft.  In the event that the Junior Loan Participant notifies the
     Security Agent that it intends to exercise its option with respect to any
     or all such Aircraft, the Junior Loan Participant shall purchase the
     Security Agent's interest in the Boeing Purchase Agreement in respect of
     such Aircraft by paying to the Security Agent within ten (10) Business Days
     following the date of its notice to the Security Agent an amount equal to
     the aggregate amount of Drawings outstanding with respect to such Aircraft,
     accrued and unpaid interest thereon and Break Amount (if any), in each case
     owed the Senior Loan Participants under the Senior Loan Certificates or
     otherwise under the Operative Documents.

          (b) In the event of any default by the Borrower in the payment when
due (without regard to any applicable grace period) of any installment of
interest due under the Senior Loan Certificates, the Junior Loan Participant
may, within five (5) Business Days after such default shall have become an Event
of Default (such period, the "Cure Period"), without the consent or concurrence
of any Senior Loan Participant, pay, as provided in Section 2.05 of the
Mortgage, for application in accordance with Section 2.04 of the Mortgage a sum
equal to the amount of all (but not less than all) such overdue interest.
Solely for the purpose of determining whether there exists an Event of Default,
any timely payment by the Junior Loan Participant pursuant to, and in compliance
with, the first sentence of this Section 14(b) shall be deemed to

                                      23
<PAGE>

remedy (but solely for purposes of the Mortgage) any default by the Borrower in
the payment of installments of interest theretofore due and payable under the
Senior Loan Certificates. If, on the basis specified in the preceding sentence,
any Event of Default shall have been remedied, then any declaration pursuant to
the Mortgage that the Senior Loan Certificates are due and payable or that an
Event of Default exists hereunder shall be deemed to be rescinded, and the
Junior Loan Participant shall (to the extent of any such payments made by it) be
subrogated to the rights of the Senior Loan Participants, to receive from the
Security Agent any such payment of overdue interest when made by the Borrower
and shall be entitled, so long as no other Default under Section 4.07 or 4.08 or
any Event of Default under the Mortgage shall have occurred and be continuing or
would result therefrom, to receive, subject to the provisions hereof and of the
Mortgage, such payment upon receipt thereof by the Security Agent; provided that
                                                                   --------
the Junior Loan Participant shall not otherwise attempt to recover any such
amount paid by it on behalf of the Borrower pursuant to this Section 14(b)
except by demanding of the Borrower payment of such amount or by commencing an
action at law against the Borrower for the payment for such amount; provided,
                                                                    --------
further, that at no time while an Event of Default shall have occurred and be
-------
continuing (A) shall any such demand be made or shall any such action be
commenced (or continued), and (B) any amounts nevertheless received by the
Junior Loan Participant in respect thereof shall be held in trust for the
benefit of, and promptly paid to, the Security Agent for distribution as
provided in Section 2.04 of the Mortgage; and further provided that:
                                              ------- --------

          (x) the Junior Loan Participant may cure only three defaults during
     the term hereof; and

          (y) the Junior Loan Participant shall have no right to cure any Event
     of Default except as specified in this Section 14(b).

     SECTION 15.    Confidentiality.
                    ---------------

     Each of the Loan Participants and the Security Agent covenants and agrees
to keep confidential, and not to disclose to any third parties, all non-public
information received by it from the Borrower pursuant to the Operative
Documents, provided that such information may be made available:  (1) to
prospective and permitted transferees of a Loan Participant's Loan Certificates
or the Security Agent's respective interest in the Mortgage Estate, who agree to
hold such information confidential, (2) to any Holder's counsel or independent
certified public accountants, independent insurance advisors or other agents who
agree to hold such information confidential, (3) as may be required by
applicable law or by any statute, court or administrative order or decree or
governmental ruling or regulation (or, in the case of any Holder, to any bank
examiner or other regulatory personnel), or (4) as may be necessary for purposes
of enforcement of any Operative Document.

     SECTION 16.    Miscellaneous.
                    -------------

          (a) The representations, warranties, indemnities and agreements of the
Borrower provided for in this Agreement and each party's obligations under any
and all thereof,

                                      24
<PAGE>

shall survive the expiration or other termination of this Agreement or any other
Operative Document, except as expressly provided herein or therein.

          (b) This Agreement may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an original,
but all such counterparts shall together constitute but one and the same
instrument.  Neither this Agreement nor any of the terms hereof may be
terminated, amended, supplemented, waived or modified, except by an instrument
in writing signed by the party or parties thereto.

          (c)  (i)   This Agreement shall be binding upon and shall inure to the
benefit of, and shall be enforceable by, the parties hereto and their respective
successors and permitted assigns including each successive holder of any Loan
Certificate(s) issued and delivered pursuant to this Agreement or the Mortgage
whether or not an express assignment to any such holder of rights under the
Agreement has been made.

               (ii)  The Borrower may not assign any of its rights or
     obligations under this Agreement or the other Operative Documents except to
     the extent expressly provided thereby.

               (iii) Each Senior Loan Participant may assign its Senior Loan
     Certificate, in whole or in part, as provided in Section 2.08 of the
     Mortgage, which assignment shall be effected pursuant to an agreement
     substantially in the form of Exhibit B hereto.  In addition, a Senior Loan
     Participant may assign, in whole or in part, its Commitment in respect of
     any Advance to any other financial institution (so long as Borrower has no
     obligations under Section 8 hereof or Section 2.13 of the Mortgage for such
     transferee that are higher than the obligations that would be payable to
     the transferor) having a net worth which demonstrates that such financial
     institution is capable of meeting its funding obligation in respect of the
     assigned Commitment, which assignment shall be effected pursuant to an
     agreement substantially in the form of Exhibit B hereto, appropriately
     modified to relate to the assignment of a Commitment.  Effective upon the
     assignment of any Commitment, the assigning Loan Participant shall be
     relieved of its obligations in respect of such Commitment to the extent the
     assignee thereof shall have become obligated in respect thereof.

          (d) No Loan Participant shall have any obligation or duty to the
Borrower, or to other Persons with respect to the transactions contemplated
hereby except those obligations or duties of such Loan Participant expressly set
forth in this Agreement and the other Operative Documents and no Loan
Participant shall be liable for performance by any other party hereto of such
other party's obligations or duties hereunder.  Without limitation of the
generality of the foregoing, under no circumstances whatsoever shall any Loan
Participant be liable to the Borrower for any action or inaction on the part of
the Security Agent in connection with the transactions contemplated herein,
whether or not such action or inaction is caused by willful misconduct or gross
negligence of the Security Agent.

                                      25
<PAGE>

          (e) Any reference herein to an approval, consent or waiver to be given
by the Loan Participants shall be deemed hereunder to be an approval, consent or
waiver, as the case may be, if a Majority in Interest of Holders approve,
consent or waive, as the case may be.

                       *               *               *

                                      26
<PAGE>

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

                         MIDWAY AIRLINES CORPORATION,
                         Borrower

                         By:         *
                            --------------------------------------

                            ______________________________________

                         LANDESBANK SCHLESWIG-HOLSTEIN
                         GIROZENTRALE, Security Agent

                         By:          *
                            --------------------------------------

                            ______________________________________

                         Senior Loan Participants:
                         ------------------------

                         LANDESBANK SCHLESWIG-HOLSTEIN GIROZENTRALE

                         By:          *
                            --------------------------------------

                            ______________________________________

                         WACHOVIA BANK, N.A.

                         By:         *
                            --------------------------------------
                            Senior Vice President

                         BANKGESELLSCHAFT BERLIN, A.G.

                         By:         *
                            --------------------------------------

                            ______________________________________

__________________
* Indicates information deleted for confidentiality purposes.

                                      27
<PAGE>

                                 Junior Loan Participant:
                                 -----------------------

                                 BOEING NEVADA, INC.

                                 By:           *
                                    --------------------------------------
                                 Its: ____________________________________

________________
* Indicates information deleted for confidentiality purposes.

                                      28
<PAGE>

                                  Schedule I

                         Notice & Account Information
                         ----------------------------

                                       *

---------------
* Indicates information deleted for confidentiality purposes.
<PAGE>

                                  Schedule II

                                Participations
                                --------------

                                       *

--------------
* Indicates information deleted for confidentiality purposes.

<PAGE>

                                 Schedule III

                            Description of Aircraft
                            -----------------------

<TABLE>
<CAPTION>
 Aircraft       Scheduled Delivery Date
----------      -----------------------
<S>             <C>
  30740             February 2001

  30741               April 2001

  30742               June 2001

  30743              August 2001

  30744              October 2001

  30745              December 2001

  30746              February 2002

  30747               April 2002

  30748               June 2002

  30749              August 2002

  30750              October 2002
</TABLE>

                                      A-1
<PAGE>

                                  Schedule IV

                                   Advances
                                   --------

                                       *

-----------------
* Indicates information deleted for confidentiality purposes.

                                      A-2
<PAGE>

                                                                       EXHIBIT A

                          FUNDING NOTICE [MIDWAY/LBK]

                                ______ __, 200_

Landesbank Schleswig-Holstein Girozentrale

*

Re:  Predelivery Deposit Payment Financing for Midway Airlines
     ---------------------------------------------------------

Ladies and Gentlemen:

Reference is hereby made to that certain Credit Agreement [Midway/LBK] dated as
of July 31, 2000 (the "Credit Agreement"; capitalized terms used herein without
                       ----------------
definition shall have the definitions set forth in the Credit Agreement) entered
into among Midway Airlines Corporation, as borrower (the "Borrower"), the
                                                          --------
institutions listed on Schedule I thereto, as senior loan participants (the
"Senior Loan Participants"), Boeing Nevada, Inc., as junior loan participant
-------------------------
(the "Junior Loan Participant") and Landesbank Schleswig-Holstein Girozentrale,
      -----------------------
as security agent (the "Security Agent").
                        --------------

               1.   Pursuant to Section 2(c)(i) of the Credit Agreement,
     Borrower hereby requests a Drawing in accordance with the following
     parameters:

                    (1) Aircraft MSN: _________________

                    (2) Borrowing/Effective Date: ______________

                    (3) Advance Amount: _______________

                    (4) Senior Loan Portion: ______________

                    (5) Junior Loan Portion: _____________

                    (6) Each Loan Participant's Commitment for the Drawing is
          set forth in Annex 1 hereto.

------------------------
* Indicates information deleted for confidentiality purposes.

                                      A-3
<PAGE>

               2.   Please distribute the proceeds of the Drawing as follows:

               3.   Borrower hereby confirms that the representations and
     warranties of the Borrower in Section 7 of the Credit Agreement are true
     and accurate on the date hereof as though made on the date hereof except to
     the extent that such representations and warranties relate solely to an
     earlier date (in which case such representations and warranties were true
     and accurate on and as of such earlier date).

The terms and provisions of this Funding Notice shall be binding upon and inure
to the benefit of the Senior Loan Participants, the Junior Loan Participant and
the Borrower and their respective successors and assigns.

This Funding Notice shall be governed by the internal laws of the State of New
York.

                                 *     *     *

                                      A-4
<PAGE>

     By signing and returning an original counterpart hereof, the Senior Loan
Participants and the Junior Loan Participant hereby accept and agree to the
foregoing terms and provisions of this Letter Agreement.

                                    Very truly yours,

                                    MIDWAY AIRLINES CORPORATION

                                    By: __________________________________
                                    Title: _______________________________

                                      A-5
<PAGE>

                                    Annex 1

                        Loan Participants' Commitments
                        ------------------------------

               Loan Participant               Commitment
               ----------------               -----------

                                      A-6
<PAGE>

                                                                       EXHIBIT B

                              ASSIGNMENT AGREEMENT

     ASSIGNMENT AGREEMENT [Midway/LBK] dated as of __________ __, ____ between
________________________________ (the "Assignee") and
                                       --------
_____________________________ (the "Assignor").
                                    --------

                                   RECITALS

     WHEREAS, the Assignor is the holder of the Loan Certificate No. ____ dated
__________ __, ____ (the "Assignor's Loan Certificate") issued under the Credit
                          ---------------------------
Agreement [Midway/LBK], dated as of July ___, 2000 (the "Credit Agreement")
                                                         ----------------
between Midway Airlines Corporation ("Midway"), the Loan Participants party
                                      ------
thereto and Landesbank Schleswig-Holstein Girozentrale, as Security Agent (the
"Security Agent");
 --------------

     WHEREAS, the Assignor proposes to assign to the Assignee $____________ of
the $_____________ Assignor's Loan Certificate and a pro rata portion of all of
the rights and obligations of the Assignor under the Credit Agreement and the
other Operative Documents (as defined below) in respect thereof, on the terms
and subject to the conditions set forth herein, and the Assignee proposes to
accept the assignment of such rights and obligations from the Assignor on such
terms and subject to such conditions;

     NOW, THEREFORE, in consideration of the foregoing and the mutual agreements
contained herein, the parties hereto agree as follows:

     Section 1.  Definitions.  Unless otherwise defined herein, terms defined in
                 -----------
the Credit Agreement are used herein as therein defined.

     Section 2.  Assignment.  On __________ __, ____ (the "Effective Date"), and
                 ----------                                --------------
on the terms and subject to the conditions set forth herein, the Assignor will
sell, assign and transfer to the Assignee, without recourse to or
representation, express or implied, by the Assignor (except as expressly set
forth in Section 5 hereof), a $___________ portion of the Assignor's Loan
Certificate and a pro rata portion of the rights and obligations of the Assignor
under the Credit Agreement and the other Operative Documents in respect thereof
(but not with respect to any indemnity or other claim, interest thereon at the
Past Due Rate and breakage amounts, if any, accrued and unpaid as of the
Effective Date or thereafter payable to the Assignor in respect of the period
prior to the Effective Date), and the Assignee shall accept such assignment from
the Assignor and assume all of the obligations of the Assignor accruing from and
after the Effective Date under the Credit Agreement and the other Operative
Documents relating to the Assignor's Loan Certificate on such terms and subject
to such conditions.  Upon the satisfaction of the

                                      B-1
<PAGE>

conditions set forth in Section 4 hereof, (A) the Assignee shall, on the
Effective Date, succeed to the rights and be obligated to perform the
obligations of a Loan Participant and Holder under the Credit Agreement and the
other Operative Documents, and (B) the Assignor shall be released from its
obligations under the Credit Agreement and the other Operative Documents accrued
from and after the Effective Date, in each case to the extent such obligations
have been assumed by the Assignee.

     Section 3.  Payments.  As consideration for the sale, assignment and
                 --------
transfer contemplated in Section 2 hereof, the Assignee shall pay to the
Assignor, on the Effective Date, in lawful currency of the United States and in
immediately available funds, to the account specified below its signature on the
signature pages hereof, an amount equal to $_______________.

     Section 4.  Conditions.  This Assignment Agreement shall be effective upon
                 ----------
the due execution and delivery of this Assignment Agreement by the Assignor and
the Assignee and the effectiveness of the assignment contemplated by Section 2
hereof is subject to (a) the receipt by the Assignor of the payment provided for
in Section 3 hereof [and the receipt by the Assignee of an up-front fee in the
amount of $_______] and (b) the delivery to the Security Agent of the Assignor's
Loan Certificate, duly endorsed for [partial] transfer to the Assignee, together
with a request in the form attached hereto as Exhibit A that a new Loan
Certificate be issued to the Assignee and Assignor.

     Section 5.  Representations and Warranties of the Assignor.  The Assignor
                 ------------------------------------- --------
represents and warrants as follows: (a) the Assignor has full power and
authority, and has taken all action necessary to execute and deliver this
Assignment Agreement and any other documents required or permitted to be
executed or delivered by it in connection with this Assignment Agreement and to
fulfill its obligations under, and to consummate the transactions contemplated
by, this Assignment Agreement, and no governmental authorizations or other
authorizations are required in connection therewith, (b) the Assignor's interest
in the Assignor's Loan Certificate is free and clear of any and all Liens
created by or through the Assignor, (c) this Assignment Agreement constitutes
the legal, valid and binding obligation of the Assignor, enforceable against the
Assignor in accordance with its terms, and (d) the Assignor has received no
written notice of any Default having occurred and continuing on the date of
execution hereof.

     Section 6.  Representations and Warranties of the Assignee.  The Assignee
                 ----------------------------------------------
hereby represents and warrants to the Assignor that (a) the Assignee has full
power and authority, and has taken all action necessary to execute and deliver
this Assignment Agreement and any and all other documents required or permitted
to be executed or delivered by it in connection with this Assignment Agreement
and to fulfill its obligations under, and to consummate the transactions
contemplated by, this Assignment Agreement, and no governmental authorizations
or other authorizations are required in connection therewith, (b) this
Assignment Agreement constitutes the legal, valid and binding obligation of the
Assignee, enforceable against the Assignee in accordance with its terms, and (c)
the Assignee has fully reviewed the terms of the Operative Documents and has
independently and without reliance upon the Assignor and based on such

                                      B-2
<PAGE>

information as the Assignee has deemed appropriate, made its own credit analysis
and decision to enter into this Assignment Agreement.

     Section 7.  Further Assurances.  The Assignor and the Assignee hereby agree
                 ------------------
to execute and deliver such other instruments, and take such other action, as
either party may reasonably request in connection with the transactions
contemplated by this Assignment Agreement.

     Section 8.  Governing Law.  This Assignment Agreement shall be governed by,
                 -------------
and construed in accordance with, the law of the State of New York.

     Section 9.  Notices.  All communications between the parties or notices in
                 -------
connection herewith shall be in writing, hand-delivered or sent by ordinary
mail, telex or facsimile transmitter, addressed as set forth on the signature
pages hereof.  All such communications and notices shall be effective upon
receipt.

     Section 10. Binding Effect.  This Assignment Agreement shall be binding
                 --------------
upon and inure to the benefit of the parties hereto and their respective
successors and assigns.

     Section 11. Interpretation.  The headings of the various sections hereof
                 --------------
are for convenience of reference only and shall not affect the meaning or
construction of any provision hereof.

     Section 12. Integration of Terms.  This Assignment Agreement contains the
                 --------------------
entire agreement between the parties relating to the subject matter hereof and
supersedes all oral statements and other writings with respect to the subject
matter hereof.

     Section 13. Counterparts.  This Assignment Agreement may be executed in
                 ------------
one or more counterparts, each of which shall be an original but all of which,
taken together, shall constitute one and the same instrument.

                                      B-3
<PAGE>

     IN WITNESS WHEREOF, the parties have caused this Assignment Agreement to be
executed and delivered by their duly authorized officers as of the date first
above written.

                                             [ASSIGNEE]

                                             By ______________________________
                                                 Name:
                                                 Title:

                                             Address for Notices:

                                             Wire Instructions:

                                             [ASSIGNOR]

                                             By ______________________________
                                                 Name:
                                                 Title:

                                             Address for Notices:

                                             Wire Instructions:

                                      B-4
<PAGE>

                                                                       Exhibit A
                                                         to Assignment Agreement

                 Request for Loan Certificate and Registration

                                                              _________ __, ____

To:  Landesbank Schleswig-Holstein Girozentrale,
     as Security Agent

Ladies and Gentlemen:

     We refer to the assignment by ___________________________ (the "Assignor"),
                                                                     --------
of certain of its rights and obligations with respect to Loan Certificate No.
______ in the principal amount of $____________ (the "Assignor's Loan
                                                      ---------------
Certificate") to ___________________________ (the "Assignee"), pursuant to
-----------                                        --------
an Assignment Agreement [Midway/LBK] dated as of _______ __, ____ between the
Assignor and the Assignee. Capitalized terms not otherwise defined herein shall
have the meanings assigned thereto in such Assignment Agreement.  The Assignor
hereby delivers the Assignor's Loan Certificate to Landesbank Schleswig-Holstein
Girozentrale, in its capacity as Security Agent.  The Assignor requests Midway
Airlines Corporation to issue to (i) the Assignee a new Loan Certificate (the
"New Loan Certificate") in the principal amount of $____________ and (ii) to the
---------------------
Assignor a new Loan Certificate (the "Assignor's New Loan Certificate") in the
                                      -------------------------------
principal amount of $______________, each, with a [Borrowing Date] issue date.

     [The Assignor represents, for the benefit of the Security Agent and each
Senior Loan Participant, that the Assignee is the Manufacturer or an Affiliate
of the Manufacturer.]/1/

     The Security Agent is hereby instructed to pay all interest on the portion
of the Assignor's Loan Certificate being assigned hereunder accrued through the
date hereof directly to Assignor on the Interest Borrowing Date such interest is
payable and paid.

------------------------
/1/    To be used for transfers with respect to the Junior Loan Certificate.

                                      B-5
<PAGE>

     The Assignor requests the Security Agent to deliver the New Loan
Certificate to the Assignee at its address set forth below and to deliver the
Assignor's New Loan Certificate to the undersigned.

                                   Very truly yours,

                                   [ASSIGNOR]

                                   By _____________________________________
                                      Name:
                                      Title:

                                   [ASSIGNEE]

                                   By _____________________________________
                                      Name:
                                      Title:

                                   Address for Notices:

                                   Wire Instructions:

Accepted and Agreed:

LANDESBANK SCHLESWIG-HOLSTEIN
GIROZENTRALE, as Security Agent

By ________________________________
   Title:

                                      B-6
<PAGE>

                                                                       EXHIBIT C

                                       *

--------------------
* Indicates information deleted for confidentiality purposes.

                                      C-1
<PAGE>

                                                                       EXHIBIT D

                             Intentionally Reserved

                                      D-1
<PAGE>

                                                                     EXHIBIT E-1

                             CONSENT AND AGREEMENT
                             ---------------------
                TO MORTGAGE AND SECURITY AGREEMENT [MIDWAY/LBK]
                -----------------------------------------------

     THIS CONSENT AND AGREEMENT ("Consent") entered into as of August __, 2000
is among Midway Airlines Corporation ("Midway"), each Senior Loan Participant
identified on the signature pages hereto (together with their successors and
assigns "Senior Loan Participants"), Boeing Nevada, Inc.  ("Junior Loan
Participant"), Landesbank Schleswig-Holstein Girozentrale, as Security Agent on
behalf of each Loan Participant ("Assignee") and The Boeing Company
("Manufacturer").

                                    RECITALS
                                    --------

     A.   Midway and Assignee have heretofore entered into that certain Credit
Agreement [Midway/LBK] dated as of July 31, 2000 ("Credit Agreement") among
Midway, the Senior Loan Participants, the Junior Loan Participant and Assignee,
pursuant to which Assignee and the Loan Participants have agreed to make certain
funds available to Midway in order to enable Midway to meet certain of its
deposit and advance payment obligations under the Boeing Purchase Agreement in
respect of the Aircraft specified in the Mortgage.

     B.   Midway and Assignee have entered into that certain Mortgage and
Security Agreement [Midway/LBK] dated as of July 31, 2000 ("Mortgage"), pursuant
to which Midway has granted to Assignee a security interest in all of Midway's
right and interest in and to the Boeing Purchase Agreement with respect to the
Aircraft in order to secure performance of Midway under and in respect of the
Operative Documents.

     C.   Midway and Assignee wish to obtain Manufacturer's consent to the
Mortgage and Manufacturer is willing to grant such consent, all subject to and
upon the terms and conditions provided herein.

     NOW THEREFORE, in consideration of the mutual promises herein contained,
the parties agree as follows:

     1.   Definitions
          -----------

          Capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to such terms in the Mortgage.

                                     E-1-1
<PAGE>

2.   Consent of Manufacturer
     -----------------------

          a.   Manufacturer hereby acknowledges notice of the Mortgage and
               consents, subject to the terms and conditions of this Consent, to
               the assignment to Assignee of all of Midway's right and interest
               in and to the Boeing Purchase Agreement with respect to the
               Aircraft pursuant to the Mortgage.

          b.   Manufacturer agrees that this Consent constitutes the consent of
               Manufacturer as required by the Boeing Purchase Agreement.

     3.   Assignee's Rights under the Mortgage
          ------------------------------------

          a.   Event of Default.  Manufacturer acknowledges that, subject to the
               ----------------
               provisions of Paragraph 4 hereof, upon and after notice to
               Manufacturer by Assignee that an Event of Default under the
               Mortgage has occurred and is continuing and that Assignee is
               exercising its rights and remedies under the Mortgage (and until
               Manufacturer receives a further written notice from Assignee to
               the effect that Midway may again exercise the rights of
               "Customer" under the Boeing Purchase Agreement), Assignee shall
               be entitled to make all demands, give all notices, take all
               actions and exercise all rights of "Customer" under and subject
               to the Boeing Purchase Agreement and Midway shall not be entitled
               to do so including, if Assignee purchases an Aircraft, the right
               to all product support and warranties with respect thereto under
               the Boeing Purchase Agreement, to the extent assigned under the
               Mortgage.  Manufacturer acknowledges that such rights of
               "Customer" include Assignee's right to purchase the Aircraft and
               agrees that in such event, the purchase price for an Aircraft
               shall be equal to the Aircraft Price (as defined in the Boeing
               Purchase Agreement) minus twenty-five percent of the escalated
               Airframe Price (as defined in the Boeing Purchase Agreement) as
               set forth in that certain Letter Agreement 6-1162-CPJ-313 dated
               June 11, 1999 between Manufacturer and Midway ("Agreed Price").
               To the extent Assignee exercises its right to purchase one or
               more Aircraft, it shall be under no obligation to exercise such
               right with respect to any other Aircraft.

          b.   Termination of Boeing Purchase Agreement by Manufacturer.
               --------------------------------------------------------
               Manufacturer agrees that upon deciding to terminate the Boeing
               Purchase Agreement with respect to the rights related to any one
               or more of the Aircraft, (i) it shall give Assignee written
               notice of its intent to terminate the Boeing Purchase Agreement;
               and (ii) Assignee shall have the right, within ten (10) business
               days of receipt of such notice, subject to the provisions of
               Paragraph 4 of this Consent, to give Manufacturer written notice
               of its irrevocable decision to assume all of the obligations of
               "Customer" under the terminated Boeing Purchase Agreement insofar
               as it

                                     E-1-2
<PAGE>

               relates to any or all of the Aircraft by entering into a
               substitute purchase agreement with Manufacturer, relating to such
               Aircraft on terms and conditions substantially equivalent to
               those set out in the Boeing Purchase Agreement. If Assignee does
               so notify Manufacturer and enter into a substitute purchase
               agreement, then, subject to the terms of the Mortgage and
               Paragraph 7 of this Consent, Assignee shall be entitled to make
               all demands, give all notices, take all actions and exercise all
               rights of "Customer" under and subject to the substitute purchase
               agreement and purchase the Aircraft for the Agreed Price. If no
               notice from Assignee is timely received, Midway and Assignee will
               be deemed to have waived all rights thereto. In such case,
               Manufacturer shall be entitled but not obliged to purchase from
               Assignee or Midway, as applicable, all buyer furnished equipment
               related to the terminated Aircraft under the Boeing Purchase
               Agreement, in which Assignee or Midway, as appropriate, has title
               or an uncontested right to title. To the extent Assignee
               exercises its right to be treated as "Customer" with respect to
               one or more Aircraft, Assignee shall be under no obligation to
               exercise such right with respect to any other Aircraft.

          c.   Assignment.  Manufacturer acknowledges that upon the occurrence
               ----------
               of an Event of Default under the Mortgage and notice thereof by
               the Assignee to Manufacturer, subject to Section 4 hereof, the
               Assignee shall have the right to assign its rights in and to the
               Mortgage and this Consent (including the right to purchase
               Aircraft in accordance with Section 3 hereof), as a delivery
               assignment taking effect at or about delivery of the relevant
               Aircraft, pursuant to an assignment agreement in the form of
               Annex I hereto and any such assignee shall be entitled to
               exercise the Assignee's rights thereunder and hereunder;
               provided, that Assignee shall not assign its rights to any other
               manufacturer of aircraft or to an entity with which the
               Manufacturer is prevented by law from doing business, without the
               Manufacturer's prior written consent.

          d.   Delivery Location.  Manufacturer agrees that if Assignee
               -----------------
               exercises its rights under the Mortgage and purchases one or more
               of the Aircraft, that Manufacturer will cooperate with Assignee
               in accordance with and subject to the relevant provisions of the
               Boeing Purchase Agreement to deliver the Aircraft in a
               jurisdiction reasonably satisfactory to Assignee and Manufacturer
               in order to minimize or avoid the imposition of any sales, use,
               value added or other transfer taxes which may be imposed in
               connection with such purchase.  In the event that the Aircraft is
               to be delivered in a location other than the location specified
               in the Boeing Purchase Agreement, Assignee will be responsible
               for all costs beyond those required to support delivery per the
               Boeing Purchase Agreement.  Such costs will include (but are not
               limited to) ferry flight of the aircraft to

                                     E-1-3
<PAGE>

               the alternate delivery location, transportation costs and per
               diem for Manufacturer's personnel required to support delivery in
               the alternate location, charges associated with the use of the
               alternate location and any increased tax obligation on
               Manufacturer. In any case, all pre-delivery activity (including
               but not limited to); customer inspections, customer flights and
               document reviews will be conducted at Manufacturer's facilities
               in Washington State. It is agreed that the states of Montana, New
               Hampshire and South Carolina are appropriate alternate delivery
               locations.

     4.   Manufacturer's Purchase Option
          ------------------------------

     Prior to the exercise of its rights and remedies under Article V of the
Mortgage and/or the exercise of Assignee's purchase right under Section 3.a
hereof in respect of any Aircraft as a result of the occurrence of an Event of
Default under the Mortgage, Assignee shall notify Manufacturer in writing.
Manufacturer shall have the option (the "Manufacturer's Option"), exercisable at
any time within ten (10) Business Days following receipt by Manufacturer of such
notice, to purchase Assignee's interest in the Boeing Purchase Agreement insofar
as it relates to any or all such Aircraft.  In the event that Manufacturer
notifies Assignee that it intends to exercise Manufacturer's Option with respect
to any or all such Aircraft, Manufacturer shall purchase Assignee's interest in
the Boeing Purchase Agreement by paying to Assignee within ten (10) Business
Days following the date of its notice to Assignee, an amount equal to the
aggregate amount of Drawings outstanding to the Senior Loan Participants with
respect to such Aircraft, accrued and unpaid interest thereon (up to 90 days of
accrued and unpaid interest only) and Break Amount (if any) owed the Senior Loan
Participants under the Senior Loan Certificates or otherwise under the Operative
Documents.  If Manufacturer fails to exercise Manufacturer's Option during such
ten (10) Business Day period, Manufacturer shall be deemed to have waived the
Manufacturer's Option and Assignee may exercise its rights and remedies under
the Mortgage.

     5.   Midway's Waiver and Indemnity; No Release from Obligations
          ----------------------------------------------------------

          a.   Midway hereby waives any rights which it may have pursuant to
               contract or law or otherwise against Manufacturer arising out of,
               or resulting from, the exercise by Assignee of its rights and
               remedies under the Mortgage or this Consent and agrees to
               indemnify and hold harmless Manufacturer, its successors and
               assigns, and their respective officers, directors and employees
               from and against any and all claims, losses or liabilities
               (including reasonable attorneys' fees) resulting therefrom.

          b.   Midway hereby agrees, expressly for the benefit of Manufacturer
               that notwithstanding anything contained in the Mortgage to the
               contrary:  (i) Midway shall at all times remain liable to
               Manufacturer under the Boeing Purchase Agreement to perform all
               duties and obligations of the "Customer" thereunder in respect of
               the Aircraft to the same extent as if

                                     E-1-4
<PAGE>

               the Mortgage and this Consent had not been executed, and (ii) the
               exercise by Assignee of any rights assigned under the Mortgage
               shall not release Midway from any of its duties or obligations to
               Manufacturer under the Boeing Purchase Agreement except to the
               extent that such exercise by Assignee shall constitute
               performance of such duties or obligations.

     6.   Notices
          -------

          a.   Midway and Assignee agree, expressly for the benefit of
               Manufacturer, that for all purposes of the Mortgage, Manufacturer
               shall not be deemed to have knowledge of and need not recognize
               any event, condition, right, remedy or dispute affecting the
               interests of Midway or Assignee under the Mortgage unless and
               until Manufacturer shall have received written notice thereof
               from Assignee addressed to its Vice President-Contracts, Boeing
               Commercial Airplane Group, if by mail, at P.O. Box 3707, Mail
               Code 21-34, Seattle, Washington 98124 or to 32-9430 Answerback
               BOEINGREN RNTN, if by telex. In acting in accordance with the
               Boeing Purchase Agreement and this Consent, Manufacturer may rely
               conclusively upon any such notice.

          b.   Manufacturer shall be entitled to rely conclusively upon any
               notice or instruction received by it from Assignee pursuant to
               the Mortgage or this Consent, and Manufacturer shall have no
               obligation to inquire as to the accuracy of such notice or
               instruction or as to the relative priority of rights of any
               person asserting rights in and to the Boeing Purchase Agreement
               and the Aircraft.

          c.   Except as provided in Paragraph 3 of this Consent, unless and
               until Assignee shall have notified Manufacturer that it is
               exercising its rights and remedies under the Mortgage, Midway
               shall have all rights and obligations of "Customer" under the
               Boeing Purchase Agreement and Manufacturer shall have no duty to
               consult with or otherwise deal with Assignee concerning the
               Boeing Purchase Agreement or the Aircraft.  Without limiting the
               generality of the foregoing, prior to the receipt of Assignee's
               written notice that it is exercising its remedies under the
               Mortgage, as provided in Paragraph 3(a) hereof, Manufacturer
               shall have no obligation to inquire as to whether Midway has
               complied with the provisions of the Mortgage and shall be
               entitled to rely upon any notice, consent, waiver or other action
               taken by Midway in connection with the Boeing Purchase Agreement.

                                     E-1-5
<PAGE>

          d.   Notice to Assignee hereunder shall be given by hand, first class,
               certified or registered mail, by a recognized overnight courier
               service or by telecopier (confirmed by mail or overnight courier)
               at *.

     7.   Rights Subject to the Boeing Purchase Agreement
          -----------------------------------------------

          a.   Assignee and each Loan Participant hereby agrees, expressly for
               the benefit of Manufacturer, that, notwithstanding anything
               contained in the Mortgage to the contrary (and without in any way
               releasing Midway from any of its duties or obligations under the
               Boeing Purchase Agreement), insofar as the provisions of the
               Boeing Purchase Agreement relate to the Aircraft, in exercising
               any rights under the Boeing Purchase Agreement, or in making any
               claim with respect to the Aircraft or other things (including
               without limitation data, documents, training and services)
               delivered or to be delivered pursuant to the Boeing Purchase
               Agreement, the terms and conditions of the Boeing Purchase
               Agreement, including without limitation, the DISCLAIMER AND
                                                            --------------
               RELEASE and EXCLUSION OF CONSEQUENTIAL AND OTHER DAMAGES in
               -------     --------------------------------------------
               Article 11 of Part 2 of Exhibit C to the AGTA which was
               incorporated by reference into the Boeing Purchase Agreement and
               the insurance provisions in Article 8.2 of the AGTA which was
               incorporated by reference into the Boeing Purchase Agreement,
               shall apply to and be binding upon Assignee to the same extent as
               if Assignee had been the original "Customer" thereunder.
               Assignee and each Loan Participant further agrees, expressly for
               the benefit of Manufacturer, that at any time and from time to
               time upon the written request of Manufacturer, it shall promptly
               and duly execute and deliver any and all such further assurances,
               instruments and documents and take all such further action as
               Manufacturer may reasonably request in order to obtain the full
               benefits of its agreements set forth in this paragraph.

          b.   Except as otherwise expressly provided in this Consent, the
               execution and delivery by Manufacturer of this Consent and the
               performance by Manufacturer of its obligations hereunder shall
               not be regarded as having created or imposed upon Manufacturer
               any increased or additional obligations or undertakings or any
               increased or additional limitations to the rights and duties on
               its part than are contained in the Boeing Purchase Agreement as a
               result of entering into this Consent.  Manufacturer shall not be
               required to divest itself of title to or possession of the
               Aircraft or any other thing to be delivered under the Boeing
               Purchase Agreement until delivery and transfer thereof and
               payment therefor, as provided in the Boeing Purchase Agreement,
               or to take any action with respect to the

-----------------
* Indicates information deleted for confidentiality purposes.

                                     E-1-6
<PAGE>

               Boeing Purchase Agreement or the Aircraft in any manner
               inconsistent with applicable law (including, without limitation,
               any bankruptcy or other court order, ruling or finding).

     8.   Application of Deposits and Advance Payments
          --------------------------------------------

     The parties hereto acknowledge and agree that in the event Assignee
exercises its rights under the Mortgage and purchases any Aircraft, the deposits
and advance payments made under the Boeing Purchase Agreement with respect to
such Aircraft shall be applied toward the purchase price of such Aircraft.

     9.   Indemnification of Manufacturer by the Assignee
          -----------------------------------------------

     Assignee agrees to indemnify, defend and hold harmless Manufacturer, its
successors and assigns, and their respective officers, directors and employees
(collectively, the "Indemnitees") and each an "Indemnitee") from and against any
and all claims, losses obligations, damages, penalties, actions, judgments,
suits, costs, expenses and disbursements and liabilities of any kind whatsoever
(including, without limitation, the reasonable fees and disbursements of counsel
for such Indemnitees) which may be imposed on, incurred by, or asserted against
such Indemnitees in any manner resulting from or arising out of the exercise by
Assignee of its rights or remedies under the Mortgage or this Consent, if and
only if it is determined by the final judgment of a court of competent
jurisdiction that Assignee was not entitled to exercise such rights or remedies
or that such rights or remedies were exercised contrary to the provisions of
this Consent, the Mortgage or applicable law.  If any Indemnitee hereunder has
knowledge of any liability hereby indemnified against, it shall give prompt
written notice thereof to Assignee.  Assignee shall have the right to
investigate, defend or compromise any claim for which indemnification is sought
and each Indemnitee hereunder shall cooperate with the reasonable requests of
Assignee with respect thereto.

     10.  Manufacturer's Representations, Warranties and Covenants
          --------------------------------------------------------

     Manufacturer hereby represents and warrants to Midway and Assignee that:

          a.   Manufacturer is a corporation duly incorporated, validly existing
               and in good standing under the laws of the State of Delaware and
               is duly qualified to do business as a foreign corporation in the
               State of Washington.

          b.   Manufacturer has all requisite corporate power and authority to
               execute, deliver and perform its obligations under this Consent
               and the execution, delivery and performance of this Consent have
               been duly authorized by all necessary corporate action on the
               part of Manufacturer.

                                     E-1-7
<PAGE>

          c.   Each of the Boeing Purchase Agreement and this Consent has been
               duly executed and delivered by Manufacturer and constitute the
               legally valid and binding obligation of Manufacturer, enforceable
               against Manufacturer in accordance with its terms except as
               enforceability may be limited by applicable bankruptcy,
               insolvency, moratorium and other similar laws affecting the
               enforcement of creditors' rights generally and general principles
               of equity (regardless of whether such enforceability is at issue
               in the proceeding in equity or at law).

          d.   Manufacturer confirms that the amounts set forth in Table 1 to
               the Boeing Purchase Agreement accurately represent the advance
               payments due and owing under the Boeing Purchase Agreement with
               respect to each Aircraft.

          e.   In the event the Manufacturer releases Midway from its
               obligations under the Boeing Purchase Agreement to purchase an
               Aircraft prior to the expiration of the ten (10) Business Day
               period in Section 3.b hereof, the Manufacturer shall pay to the
               Assignee in full the Series of Drawings made by the Senior Loan
               Participants with respect to such Aircraft, together with all
               interest accrued and unpaid thereon under the Senior Loan
               Certificates, and all other amounts due and payable in respect of
               such Drawings under the Operative Documents.

          f.   Manufacturer will not convey title to any of the Aircraft to
               Midway without confirmation from the Security Agent that all
               amounts due and owing from Midway to the Loan Participants with
               respect to such Aircraft have been paid in full (or arrangements
               are in place to repay the Loan Participants simultaneously with
               such conveyance).

     11.  GOVERNING LAW
          -------------

     THIS CONSENT WILL BE INTERPRETED UNDER AND GOVERNED BY THE LAWS OF THE
STATE OF WASHINGTON, U.S.A., EXCEPT THAT WASHINGTON'S CHOICE OF LAW RULES SHALL
NOT BE INVOKED FOR THE PURPOSE OF APPLYING THE LAW OF ANOTHER JURISDICTION.

     12.  Counterparts
          ------------

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

                                     E-1-8
<PAGE>

     IN WITNESS WHEREOF, the parties hereto have caused this Consent to be
executed by their respective officers or agents as of the date first above
written.

MIDWAY:                            MIDWAY AIRLINES CORPORATION

                                   By: ________________________________________
                                   Its: _______________________________________

ASSIGNEE:                          LANDESBANK SCHLESWIG-HOLSTEIN GIROZENTRALE,
                                    as Security Agent

                                   By: ________________________________________
                                   Its: _______________________________________

MANUFACTURER:                      THE BOEING COMPANY

                                   By: ________________________________________
                                   Its: _______________________________________

SENIOR LOAN PARTICIPANTS:          LANDESBANK SCHLESWIG-HOLSTEIN GIROZENTRALE

                                   By: ________________________________________
                                   Its: _______________________________________

                                   BANKGESELLSCHAFT BERLIN A.G.

                                   By: ________________________________________
                                   Its: _______________________________________

                                   WACHOVIA BANK, N.A.

                                   By: ________________________________________
                                   Its: _______________________________________

JUNIOR LOAN PARTICIPANT:           BOEING NEVADA, INC.

                                   By: ________________________________________
                                   Its: _______________________________________

                                     E-1-9
<PAGE>

                                    ANNEX I

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

                         PURCHASE AGREEMENT ASSIGNMENT

                                     Dated
                                [_____________]

                                    between

                  LANDESBANK SCHLESWIG-HOLSTEIN GIROZENTRALE,
           not individually, but solely as Security Agent, on behalf
                           of the Loan Participants,
                                    Assignor

                                      and

                          --------------------------
                                    Assignee

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

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

                                    E-1-10
<PAGE>

                         PURCHASE AGREEMENT ASSIGNMENT

          THIS PURCHASE AGREEMENT ASSIGNMENT dated ________, ____ between
LANDESBANK SCHLESWIG-HOLSTEIN GIROZENTRALE, not individually, but solely as
Security Agent on behalf of the Loan Participants under the Credit Agreement (as
defined below) ("Assignor"), and __________________________________,
                 --------
("Assignee").
  --------

                              W I T N E S S E T H
                              - - - - - - - - - -

          WHEREAS, Midway Airlines Corporation ("Midway") has entered into the
Purchase Agreement (as hereinafter defined) with Manufacturer (as hereinafter
defined) pursuant to which, among other things, Manufacturer has agreed to sell
to Midway, and Midway has agreed to purchase from Manufacturer, the Aircraft (as
hereinafter defined);

          WHEREAS, Midway has entered into a Credit Agreement [Midway/LBK] dated
as of July 31, 2000 ("Credit Agreement") among Midway, Assignor, as Security
Agent, Wachovia Bank, N.A., Bankgesellschaft Berlin, A.G. and Landesbank
Schleswig-Holstein Girozentrale (together with their successors and assigns, the
"Senior Loan Participants") and Boeing Nevada, Inc. ("Junior Loan Participant);

          WHEREAS, Midway and Assignor have entered into a Mortgage and Security
Agreement [Midway/LBK] dated as of July 31, 2000 ("Mortgage"), pursuant to which
Midway has granted to Assignor a security interest in all of Midway's right and
interest in and to the Purchase Agreement with respect to the Aircraft in order
to secure payment and performance by Midway of its obligations under and in
respect of the Operative Documents, including the Credit Agreement;

          WHEREAS, pursuant to the Mortgage, and the Consent and Agreement to
Mortgage and Security Agreement executed by the Manufacturer in connection with
the Credit Agreement, Assignor has the right, following an Event of Default
under the Mortgage, to purchase the Aircraft from the Manufacturer; and

          WHEREAS, Assignee wishes to acquire the Aircraft and Assignor, on the
terms and conditions herein and in the Consent and Agreement of the Manufacturer
attached hereto as Exhibit A, desires to assign to Assignee all of Assignor's
                   ---------
rights and interests in and under the Purchase Agreement relating to the
Aircraft, and Assignee desires to accept such assignment, as hereinafter set
forth.

          NOW, THEREFORE, in consideration of the mutual covenants herein
contained and for other good and valuable consideration, the parties hereto
agree as follows:

                                    E-1-11
<PAGE>

     Section 1.  Definitions.  For all purposes of this Assignment, except as
                 -----------
otherwise expressly provided for or unless the context otherwise requires, the
following terms shall have the following meanings:

          "Aircraft" means that certain Boeing Model 737-700 Aircraft bearing
           --------
     manufacturer's serial number ________, including two (2) CFM International,
     Inc. Model CFM56-7 engines bearing manufacturer's serial numbers ________
     and __________ in the configuration (including all optional features and
     customer furnished equipment) specified in the Purchase Agreement, together
     with, as the context permits, the aircraft and engine manuals, records and
     other technical documents delivered therewith under each of the Purchase
     Agreements.

          "Consent and Agreement" means a consent and agreement substantially in
           ---------------------
     the form of Exhibit A attached hereto.
                 ---------

          "Manufacturer" shall mean The Boeing Company, a Delaware corporation,
           ------------
     and its successors and assigns.

          "Purchase Agreement" means that certain Purchase Agreement Number 2235
           ------------------
     dated June 11, 1999 between Manufacturer and Midway, together with that
     certain Aircraft General Terms Agreement AGTA-MID dated as of June 11, 1999
     between Manufacturer and Midway and that certain Customer Service General
     Terms Agreement dated as of June 11, 1999 between Manufacturer and Midway,
     in each case only to the extent relating to the Aircraft and including all
     Exhibits, Appendices, Tables, and Letter Agreements (excluding, in the case
     of the Purchase Agreement, Supplemental Exhibit EE1, Letter Agreements 6-
     1162-CPJ-308 (Schedule Reliability), 6-1162-CPJ-311 (Maintenance Cost
     Protection) and 6-1162-CPJ-316 (Special Matters); but including, without
     limitation, Letter Agreement 6-1162-CPJ-313 (Basic Credit Memorandum)).

          "Purchase Agreement Assignment", "this Agreement" or "this Assignment"
           -----------------------------
     shall mean this Purchase Agreement Assignment.

          "Purchase Price" shall mean the full invoice price for the Aircraft as
           --------------
specified in the invoice for the Aircraft to be delivered by the Manufacturer
pursuant to the Purchase   Agreement.

          All other terms used herein in capitalized form which are defined in
the Credit Agreement and not otherwise defined herein shall have the respective
meanings set forth in the Credit Agreement.

     Section 2.  Assignment.  Assignor does hereby assign, transfer and set over
                 ----------
unto Assignee all of Assignor's right, title and interest in and to the Purchase
Agreement, as and to the extent that such right, title and interest relate to
the Aircraft and the purchase and operation thereof, including, without
limitation, (a) the right to purchase the Aircraft pursuant to and in

                                    E-1-12
<PAGE>

accordance with the Purchase Agreement upon valid tender by the Manufacturer,
(b) the right to accept delivery of the Aircraft, such acceptance to be
exercised by an authorized representative of Assignee (provided that
Manufacturer shall have received the written notice in advance of the identity
and authority of such authorized representative), (c) the right to take title to
the Aircraft and to be named as the purchaser in the bill of sale (the "Bill of
                                                                        -------
Sale") to be delivered by the Manufacturer, (d) all claims for damages in
----
respect of the Aircraft arising as a result of any default by the Manufacturer
under the Purchase Agreement or by any vendor or other supplier of aircraft
engines or other parts or equipment installed on or in the Aircraft referred to
therein, including, without limitation, all warranty, service life policy,
aircraft performance guarantee and indemnity provisions contained in the
Purchase Agreement and all claims thereunder and (e) any and all rights of
Assignor to compel performance of the terms of the Purchase Agreement in respect
of the Aircraft; provided, however, notwithstanding anything contained herein to
the contrary: (a) Assignor shall at all times remain liable to Manufacturer
under the Purchase Agreement as and to the extent relating to the Aircraft to
perform all duties and obligations of the Customer thereunder to the same extent
as if this Assignment had not been executed, and (b) the exercise by Assignee of
any rights assigned hereunder shall not release Assignor from any of its duties
or obligations to Manufacturer under the Purchase Agreement except to the extent
that such exercise by Assignee shall constitute performance of such duties or
obligations.

     Section 3.  Representations, Warranties and Covenants of Assignor.
                 -----------------------------------------------------
Assignor does hereby represent and warrant that Assignor has not sold, assigned
or pledged or otherwise disposed of the whole or any part of the rights hereby
assigned, and that such rights are free and clear of all liens, claims or
encumbrances, except as provided in the Purchase Agreement.

     Section 4.  Acceptance of Assignment.  Assignee hereby accepts the
                 ------------------------
assignment contained in Section 2 hereof.

     Section 5.  Rights of Assignee.
                 ------------------

          (a) Effective upon the purchase of the Aircraft by Assignee, Assignee
and its successors and permitted assigns shall, to the exclusion of Assignor, be
entitled to assert and enforce such rights and claims as substitute party
plaintiff or otherwise, and Assignor shall, at the request of Assignee or its
successors or permitted assigns and at Assignor's expense, cooperate with and
take such action as is reasonably necessary to enable Assignee and its
successors and permitted assigns to enforce such rights and claims (including,
without limitation, providing Assignee with an execution original or certified
copy of the Purchase Agreement (but excluding therefrom any and all confidential
pricing information)). In furtherance of the foregoing, Assignor hereby
constitutes and appoints Assignee, its successors and permitted assigns,
Assignor's true and lawful attorney, irrevocably (it being acknowledged that
such appointment is coupled with an interest, namely Assignee's rights acquired
and to be acquired hereunder) with full power (in the name of Assignor or
otherwise) to ask, require, demand, receive, compromise, settle, compound and
give acquittance for any and all monies and claims for monies due and to become
due under, or arising out of, the Purchase Agreement in respect of the Aircraft,
to the extent that the same have been assigned by this Assignment, and for such
period as Assignee may

                                    E-1-13
<PAGE>

exercise rights with respect thereto hereunder, to endorse any checks or other
instruments or orders in connection therewith and to file any claims or take any
action or institute (or, if previously commenced, assume control of) any
proceedings and to obtain any recovery in connection therewith that Assignee may
deem to be necessary or advisable in the premises.

          (b) All amounts that the Manufacturer or subcontractor or vendor, as
the case may be, is obligated to pay to Assignor under the Purchase Agreement
with respect to the Aircraft, including, without limitation, in respect of
refunds thereunder or resulting from the enforcement of any warranty, covenant,
representation, service life policy, aircraft performance guarantee, indemnity
or product support agreement thereunder or the enforcement or exercise of any
right or power under the Purchase Agreement or hereunder (a "Manufacturer
Payment"), will be payable and applicable directly to the Assignee.

     Section 6.  Certain Rights and Obligations of the Parties.
                 ---------------------------------------------

          (a) Assignee confirms for the benefit of the Manufacturer and
subcontractor and vendor, as the case may be, that, insofar as the provisions of
the Purchase Agreement (and applicable vendor and subcontractor agreements)
relate to the Aircraft, in exercising any rights under the Purchase Agreement
(and applicable vendor and subcontractor agreements), or in making any claim
with respect to the Aircraft or other goods and services delivered or to be
delivered pursuant to the Purchase Agreement (and applicable Vendor and
subcontractor agreements), the terms and conditions of the Purchase Agreement
(and applicable Vendor and subcontractor agreements) (including, without
limitation, the DISCLAIMER AND RELEASE and EXCLUSION OF CONSEQUENTIAL AND OTHER
DAMAGES in Article 11 of Part 2 of Exhibit C of the General Terms Agreement, and
other warranty disclaimer, insurance and indemnity provisions in the Customer
Support or Product Assurance Documents of Exhibits B and C, respectively, to the
General Terms Agreement (and such similar provisions in the applicable Vendor
and subcontractor agreements)) shall apply to, and be binding upon, Assignee to
the same extent as if originally named "Customer" therein.  Assignee further
confirms that it cannot further assign its rights under the Purchase Agreement
without the written consent of Manufacturer.

          (b) Nothing contained herein shall (i) subject the Manufacturer or
subcontractors and vendors, as the case may be, to any liability to which it
would not otherwise be subject under the Purchase Agreement (and applicable
vendor and subcontractor agreements) or (ii) modify in any respect the
Manufacturer's (or subcontractor's and vendor's, as the case may be) contract
rights thereunder, except as provided in the Consent and Agreement attached
hereto.  Without limiting the generality of the foregoing, nothing contained in
this Assignment shall require Manufacturer (or subcontractors and vendors, as
the case may be) to transfer title to or possession of the Aircraft or any other
goods, property or services under the Purchase Agreement (and applicable vendor
and subcontractor agreements) until delivery thereof and payment therefor
pursuant to and in accordance with the terms of the Purchase Agreement (and
applicable vendor and subcontractor agreements).

                                    E-1-14
<PAGE>

          (c) Insofar as this Agreement purports to assign vendor and
subcontractor agreements and to bind vendors and subcontractors, Assignee agrees
that such assignments and binding are subject to the terms and conditions of
such vendor and subcontractor agreements and any provision of this Agreement
that would violate any such agreement shall be considered void to the extent
relating to such agreement, and neither Assignor nor any other person has made
any representations as to the assignability of such agreements or the binding
effect of this Agreement on such vendors and subcontractors.  For the avoidance
of doubt, Assignee acknowledges that the Manufacturer makes no representations
or warranties about, and does not consent to, the assignment of engine
warranties or warranties, if any, provided by any vendor or subcontractor
suppliers of parts or equipment installed on the Aircraft.

          (d) Assignor and Assignee agree, expressly for the benefit of
Manufacturer, that for all purposes of this Assignment, Manufacturer shall not
be deemed to have knowledge of and need not recognize any event, condition,
right, remedy or dispute affecting the interests of Assignor or Assignee unless
and until Manufacturer shall have received written notice thereof addressed to
its Vice President-Contracts at P.O. Box 3707, Mail Code 21-34, Seattle,
Washington 98124, if by mail, or to 32-9430 Answerback BOEINGREN RNTN, if by
telex, and in acting in accordance with the Purchase Agreement and this
Assignment, Manufacturer may conclusively rely upon such notice.

     Section 7.  Further Assurances.  Assignor agrees that at any time and from
                 ------------------
time to time Assignor shall promptly and duly execute and deliver any and all
such further instruments and documents and take such further action as Assignee
may reasonably request in writing in order to obtain the full benefits of this
Assignment and of the rights and powers herein granted; provided however, that
the execution and delivery of any such instrument or document shall not in any
way limit or restrict the rights or enlarge the obligations of Assignor in
respect of any of the Operative Documents.

     Section 8.  Nondisclosure.  Assignor and Assignee agree, expressly for the
                 -------------
benefit of the Manufacturer, that they will not disclose the terms of the
Purchase Agreement to any third party, except (a) as required by applicable laws
or governmental regulations, (b) with the prior written consent of the
Manufacturer, (c) to the Participants and to potential transferees thereof
permitted by the Operative Documents and their respective counsel or (d) to bona
fide potential purchasers of the Aircraft or Assignee's interest therein
permitted by the Participation Agreement or their respective counsel,
independent auditors, insurance brokers or other agents.  Any disclosure
contemplated by clause (c) or (d) of the preceding sentence shall include a
requirement that the entity to whom such information is disclosed shall be
subject to obligations of nondisclosure with respect to such information
substantially the same as those contained herein.

     Section 9.  Binding Effect.  This Assignment shall be binding upon and
                 --------------
shall inure to the benefit of Assignor, Assignee and their respective successors
and permitted assigns.

                                    E-1-15
<PAGE>

     Section 10.  Notice.  Except as otherwise expressly provided herein, notice
                  ------
hereunder may be given, and shall be deemed to have been received when given.
Notice shall be sent to:

               Assignor

               Landesbank Schleswig-Holstein Girozentrale

               *

               Assignee

     Section 11.  Counterparts.  This Assignment may be executed by the parties
                  ------------
hereto in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute one
and the same instrument.

     Section 12.  Governing Law.  This Assignment shall be governed by and
                  -------------
construed in accordance with the internal laws of the State of New York,
including all matters of construction, validity and performance.

     Section 13.  Delivery.  This Assignment is being delivered in the State of
                  --------
New York.

                                   *   *   *

-------------------
* Indicates information deleted for confidentiality purposes.

                                    E-1-16
<PAGE>

          IN WITNESS WHEREOF, the parties hereto have caused this Purchase
Agreement Assignment to be duly executed the day and year first above written.

                                   LANDESBANK SCHLESWIG-HOLSTEIN GIROZENTRALE,
                                   as Assignor

                                   By: _____________________________________
                                   Name:
                                   Title:

                                   _________________________________________
                                   as Assignee

                                   By: _____________________________________
                                   Name:
                                   Title:

                                    E-1-17
<PAGE>

                                   EXHIBIT A
                                   ---------

                             CONSENT AND AGREEMENT

          The undersigned, THE BOEING COMPANY, a Delaware corporation, subject
to the last paragraph hereof, hereby acknowledges notice of, and consents to all
of the terms of, the Purchase Agreement Assignment dated _________, ______ by
and between Landesbank Schleswig-Holstein Girozentrale, as Security Agent
("Assignor") and _________________ ("Assignee") (herein called the "Purchase
  --------                           --------                       --------
Agreement Assignment"; the terms defined therein or by reference therein being
--------------------
hereinafter used with the same meaning) and hereby confirms to the Assignor and
the Assignee, and agrees, that:  (i) all representations, warranties,
indemnities and agreements of the Manufacturer under the Aircraft Purchase
Agreement No. 2235 dated June 11, 1999 between Manufacturer and Midway, together
with that certain Aircraft General Terms Agreement AGTA-MID dated as of June 11,
1999 between Manufacturer and Midway and that certain Customer Service General
Terms Agreement dated as of June 11, 1999 between Manufacturer and Midway, in
each case only to the extent relating to the Aircraft and including all
Exhibits, Appendices, Tables, and Letter Agreements (excluding, in the case of
the Purchase Agreement, Supplemental Exhibit EE1, Letter Agreements 6-1162-CPJ-
308 (Schedule Reliability), 6-1162-CPJ-311 (Maintenance Cost Protection) and 6-
1162-CPJ-316 (Special Matters); but including, without limitation, Letter
Agreement 6-1162-CPJ-313 (Basic Credit Memorandum)) (the "Purchase Agreement")
                                                          ------------------
with respect to the Aircraft, to the extent assigned by the Assignor to the
Assignee, shall inure to the benefit of the Assignee to the same extent as if
originally named the "Customer" therein, subject to the terms and conditions of
the Purchase Agreement Assignment and the Purchase Agreement; (ii) the terms and
conditions of the Purchase Agreement relating to the Aircraft (including,
without limitation, the DISCLAIMER AND RELEASE and EXCLUSION OF CONSEQUENTIAL
AND OTHER DAMAGES in Article 11 of Part 2 of Exhibit C of the General Terms
Agreement and other warranty disclaimer, insurance and indemnity provision in
the Customer Support or Product Assurance Documents of Exhibits B and C,
respectively, to the General Terms Agreement) shall apply to, and be binding
upon, the Assignee to the same extent as if originally named "Customer" therein,
(iii) the Manufacturer will pay to the Assignee all payments and amounts owed
which the Manufacturer may be required to make in respect to the Aircraft under
the Purchase Agreement directly to the Assignee at its address at
______________________________ Attention:  ______________; (iv) the Assignee
cannot further assign its rights under the Purchase Agreement without the
written consent of Manufacturer; (v) until Assignee purchases the Aircraft,
Assignor shall remain obligated to purchase the Aircraft, to the extent the
Assignee fails to do so in accordance with the Purchase Agreement; (vi) the
Manufacturer agrees that it will not assert any lien or claim against the
Aircraft or any Part thereof arising with respect to or in connection with any
work or other services performed by the Manufacturer or at its direction on the
Aircraft on or prior to the Delivery Date; and (vii) for all purposes of an
Assignment under the Purchase Agreement Assignment, Manufacturer shall not be
deemed to have knowledge of and need not recognize any

                                    E-1-18
<PAGE>

event, condition, right, remedy or dispute affecting the interests of Assignor
or Assignee unless and until Manufacturer shall have received written notice
thereof addressed to its Vice President - Contracts at P.O. Box 3707, Mail Code
21-34, Seattle, Washington 98124, if by mail, or to 32-9430 Answerback BOEINGREN
RNTN, if by telex, and in acting in accordance with the Purchase Agreement and
the Purchase Agreement Assignment, Manufacturer may conclusively rely upon such
notice.

          The Manufacturer hereby represents and warrants that (A) the
Manufacturer is a corporation duly organized and existing in good standing under
the laws of the State of Delaware, (B) the making and performance of the
Purchase Agreement, the Bills of Sale and this Consent and Agreement have been
duly authorized by all necessary corporate action on the part of the
Manufacturer, do not require any stockholder or other approval, do not
contravene the Manufacturer's Restated Certificate of Incorporation or By-laws
or any indenture, credit agreement or other contractual agreement to which the
Manufacturer is a party or by which it is bound, and the making of the Purchase
Agreement, the Bills of Sale and this Consent and Agreement does not contravene,
and to the best of the Manufacturer's knowledge, the Manufacturer's performance
of the Bills of Sale and this Consent and Agreement, does not contravene, any
law binding on the Manufacturer, and (C) each of the Purchase Agreement, the
Bills of Sale and this Consent and Agreement constitutes a binding obligation of
the Manufacturer enforceable against the Manufacturer in accordance with its
respective terms, subject to (a) applicable bankruptcy, insolvency, moratorium
and other similar laws affecting the enforcement of creditors' rights generally
and (b) general principles of equity (regardless of whether such enforceability
is considered in a proceeding in equity or at law).

          Insofar as the Purchase Agreement Assignment purports to assign vendor
and subcontractor agreements and to bind vendors and subcontractors,
Manufacturer makes no representations or warranties about, and does not consent
to, the assignment of engine warranties or warranties, if any, provided by any
vendor or subcontractor suppliers of parts or equipment installed on the
Aircraft.

                                 *    *     *

                                    E-1-19
<PAGE>

          This Consent and Agreement shall be governed by and construed in
accordance with the internal laws of the State of Washington, including all
matters of construction, validity and performance.

Dated __________, _____

                              THE BOEING COMPANY

                              By: ___________________________________
                                Name:
                                Title:

                                    E-1-20
<PAGE>

                                                                     EXHIBIT E-2

                CONSENT AND AGREEMENT OF CFM INTERNATIONAL, INC.
                ------------------------------------------------

August __ , 2000

To:  Midway Airlines Corporation
     Landesbank Schleswig-Holstein Girozentrale
     Wachovia Bank, N.A.
     Bankgesellschaft Berlin, A.G.
     Boeing Nevada, Inc.

The undersigned, CFM International, Inc. ("CFM International"), a corporation
                                           -----------------
organized and existing under the laws of the State of Delaware, hereby
acknowledges notice of:

(a)  the Mortgage and Security Agreement [Midway/LBK], dated July 31, 2000 (the
     "Security Agreement") between Midway Airlines Corporation, a Delaware
      ------------------
     corporation (the "Assignor") and Landesbank Schleswig-Holstein
                       --------
     Girozentrale, as security agent (the "Assignee") in respect of Boeing model
                                           --------
     737-7BX aircraft (each, an "Aircraft"), together with two (2) CFM Model 56-
                                 --------
     7B20 engines for each Aircraft (collectively, the "Engines"); and
                                                        -------

(b)  the sale by The Boeing Company to Assignee of the Engines pursuant to the
     terms of the Purchase Agreement.

CEM International hereby consents to the collateral assignment of certain of
Assignor's rights in the CFM Purchase Agreement pursuant to the granting clauses
of the Security Agreement.  Any capitalized terms used but not defined herein
shall have their respective meaning as set forth in the Security Agreement.

CFM International confirms to the Assignee that:

(i)   any warranties related to the Engines (the "Warranties") provided or
                                                  ----------
      otherwise extended to the Assignor pursuant to the CFM Purchase Agreement
      shall, subject to the terms and conditions thereof and of the Security
      Agreement, inure to the benefit of Assignee to the same extent as if
      originally named "Customer" or the "Airline" therein;

(ii)  Assignee shall not be liable for any of the obligations or duties of the
      Assignor under or in respect of the Warranties, nor shall the Security
      Agreement give rise to any duties or obligations whatsoever on the part of
      Assignee owing to CFM International except for the agreement in the
      Security Agreement on the part of Assignee to the effect that in
      exercising any rights in respect of the Warranties, or in making any claim
      with respect to

                                     E-2-1
<PAGE>

      the Warranties pursuant to the CFM Purchase Agreement, the terms and
      conditions of the Warranties shall apply to and be binding upon Assignee
      to the same extent as Assignor, and with respect to such agreement CFM
      International agrees that, anything contained in the CFM Purchase
      Agreement or the Security Agreement to the contrary notwithstanding, so
      long as CFM International shall not have received notice from the Assignee
      that an Event of Default has occurred and is continuing, the Assignee
      shall not have any liability to CFM International for failure to comply
      with any of the terms of the CFM Purchase Agreement with respect to the
      Warranties; provided always that no person other than CFM International
      shall have any rights against Assignee with respect to the undertaking and
      agreement set forth in this paragraph (ii);

(iii) if, at such time as Assignee shall notify CFM International that an Event
      of Default has occurred and is continuing, Assignee desires to lease or
      sell any Aircraft to a person who is not then a party to a general terms
      agreement with CFM International, to the extent permitted under the laws
      of the United States of America, CFM International agrees that it will
      then offer to such lessee or purchaser, subject to execution of an
      agreement to lease or sell such Aircraft, a general terms agreement on CFM
      International's then standard terms and conditions for a person in the
      category in which CFM International reasonably determines such lessee or
      purchaser falls; provided that if such lessee or purchaser is then a party
      to a general terms agreement with CFM International, such general terms
      agreement shall apply to any purchase by such lessee or purchaser of such
      Aircraft provided however that nothing herein shall be deemed to
      constitute any consent by CFM International to any assignment by the
      Assignee of their rights in respect of the Warranties.

CFM International hereby represents and warrants that:

(a)   CFM International is a company duly organized and validly existing under
      the laws of the State of Delaware;

(b)   the making and performance of this Consent and Agreement has been duly
      authorized by all necessary corporate action on the part of CFM
      International, does not require any shareholder approval and does not
      contravene CFM International's certificate of incorporation or by-laws or
      any indenture, credit agreement or other contractual agreement to which
      CFM International is a party or by which it is bound or any law binding on
      CFM International;

(c)   the making and performance of the Warranties in accordance with their
      terms have been duly authorized by all necessary corporate action on the
      part of CFM International, does not require any shareholder approval, does
      not contravene CFM International's certificate of incorporation or by-laws
      or any indenture, credit agreement or other contractual agreement to which
      CFM International is a party or by which it is bound, and does not, as to
      the making thereof, contravene any law binding on CFM International, and
      to the best knowledge of CFM International, does not, as to the
      performance thereof, contravene any law binding on CFM International;

                                     E-2-2
<PAGE>

(d)  the Warranties constitute as of the date thereof and at all times
     thereafter to and including the date of this Consent and Agreement a
     binding obligation of CFM International enforceable against CFM
     International in accordance with its terms and this Consent and Agreement,
     when executed by CFM International, will be a binding obligation of CFM
     International enforceable against CFM International in accordance with its
     terms, subject to:

     (i)  the limitations of application bankruptcy, insolvency, reorganization,
          moratorium or similar laws affecting the rights of creditors
          generally; and

     (ii) general principles of equity (regardless of whether such
          enforceability is considered in a proceeding in equity or at law).

This Consent and Agreement shall be binding upon and shall inure to the benefit
of the Assignee and its respective successors and permitted assigns.

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

This Consent and Agreement shall be governed by and construed in accordance with
the internal laws of the State of New York, including all matters of
construction, validity and performance.

This Consent and Agreement is being delivered in the State of New York.

                                 *     *     *

                                     E-2-3
<PAGE>

     IN WITNESS WHEREOF, the party hereto has caused this Consent and Agreement
to be duly executed the day and year first above written.

                                    CFM International, Inc.

                                    By: _____________________________
                                     Attorney-in-fact

                                     E-2-4
<PAGE>

                                                                       EXHIBIT F

                       REMARKETING AND SUPPORT AGREEMENT

                                      F-1<PAGE>

                                                                   Exhibit 10.23
================================================================================

                        MORTGAGE AND SECURITY AGREEMENT

                                 [Midway/LBK]

                                  Dated as of

                                 July 31, 2000

                                    BETWEEN

                         MIDWAY AIRLINES CORPORATION,

                                   Borrower

                                      AND

                  LANDESBANK SCHLESWIG-HOLSTEIN GIROZENTRALE,

                                Security Agent

================================================================================
<PAGE>

<TABLE>
<CAPTION>
                               TABLE OF CONTENTS
<S>                                                                                 <C>

                                                                                    Page
                                                                                    ----
ARTICLE I DEFINITIONS..........................................................        6
     SECTION 1.01  Definitions.................................................        6
ARTICLE II THE CERTIFICATES....................................................       14
     SECTION 2.01  Form of Loan Certificates...................................       14
     SECTION 2.02  Terms of Loan Certificates; Drawings........................       19
     SECTION 2.03  Tax Forms...................................................       20
     SECTION 2.04  Distribution of Funds Received..............................       21
     SECTION 2.05  Method of Payment...........................................       23
     SECTION 2.06  [Intentionally Omitted......................................       24
     SECTION 2.07  Termination of Interest in Mortgage Estate..................       24
     SECTION 2.08  Registration, Transfer and Exchange of Loan Certificates....       24
     SECTION 2.09  Mutilated, Destroyed, Lost or Stolen Loan Certificates......       25
     SECTION 2.10  Payment of Expenses on Transfer.............................       26
     SECTION 2.11  Prepayment..................................................       26
     SECTION 2.12  Provisions Relating to Prepayment...........................       27
     SECTION 2.13  Increased Costs.............................................       28
ARTICLE III OTHER COVENANTS OF BORROWER........................................       30
     SECTION 3.01  Liens.......................................................       30
     SECTION 3.02  Amendments, Supplements, Etc................................       30
     SECTION 3.03  Access to or Furnishing of Information......................       31
     SECTION 3.04  Financial Covenants.........................................       32
ARTICLE IV EVENTS OF DEFAULT...................................................       32
     SECTION 4.01  Payment of Principal or Interest............................       32
     SECTION 4.02  Other Payments..............................................       32
     SECTION 4.03  Covenants...................................................       32
     SECTION 4.04  Other Covenants.............................................       32
     SECTION 4.05  Representations and Warranties..............................       33
     SECTION 4.06  Voluntary Bankruptcy........................................       33
     SECTION 4.07  Involuntary Bankruptcy......................................       33
     SECTION 4.08  Certificated Air Carrier Status.............................       33
     SECTION 4.09  Other Indebtedness and Lease Obligations....................       34
     SECTION 4.10  Perfected Security Interest.................................       35
ARTICLE V REMEDIES.............................................................       35
     SECTION 5.01  General; Acceleration.......................................       35
     SECTION 5.02  Discontinuance of Proceedings...............................       36
     SECTION 5.03  Waiver of Past Defaults.....................................       36
     SECTION 5.04  Remedies Cumulative.........................................       37
ARTICLE VI THE SECURITY AGENT..................................................       37
     SECTION 6.01  Appointment, Powers and Immunities..........................       37
     SECTION 6.02  Reliance by Security Agent..................................       38
</TABLE>
                                      -i-
<PAGE>

<TABLE>
<CAPTION>
<S>                                                                                 <C>
     SECTION 6.03  Defaults....................................................       38
     SECTION 6.04  Rights as a Loan Participant................................       38
     SECTION 6.05  Indemnification.............................................       39
     SECTION 6.06  Non-Reliance on Security Agent and Other Loan Participants..       39
     SECTION 6.07  Failure to Act..............................................       40
     SECTION 6.08  Resignation or Removal of Security Agent....................       40
     SECTION 6.09  Consents under Operative Documents..........................       40
     SECTION 6.10  Non-Receipt of Funds by the Security Agent..................       41
ARTICLE VII INVESTMENT OF FUNDS................................................       41
ARTICLE VIII SUPPLEMENTS AND AMENDMENTS TO THIS MORTGAGE AND OTHER DOCUMENTS...       42
     SECTION 8.01  Instructions of Majority; Limitations.......................       42
     SECTION 8.02  Security Agent Protected....................................       43
     SECTION 8.03  Documents Mailed to Holders.................................       43
ARTICLE IX MISCELLANEOUS.......................................................       43
     SECTION 9.01  Termination of Mortgage.....................................       43
     SECTION 9.02  No Legal Title to Mortgage Estate in Holders................       44
     SECTION 9.03  Sale of Mortgage Estate by Security Agent is Binding........       44
     SECTION 9.04  Mortgage for Benefit of Security Agent and Holders..........       44
     SECTION 9.05  No Action Contrary to Borrower's Rights; Quiet Enjoyment....       44
     SECTION 9.06  Notices.....................................................       44
     SECTION 9.07  Security Agent's Right to Perform for Borrower..............       45
     SECTION 9.08  Severability................................................       45
     SECTION 9.09  No Oral Modifications or Continuing Waivers.................       45
     SECTION 9.10  Successors and Assigns......................................       45
     SECTION 9.11  Headings....................................................       46
     SECTION 9.12  GOVERNING LAW; Counterparts.................................       46
     SECTION 9.13  WAIVER OF JURY TRIAL........................................       46
     SECTION 9.14  Jurisdiction................................................       47
</TABLE>
                                     -ii-
<PAGE>

                        MORTGAGE AND SECURITY AGREEMENT

     MORTGAGE AND SECURITY AGREEMENT [Midway/LBK], dated as of July 31, 2000,
between MIDWAY AIRLINES CORPORATION (the "Borrower") and LANDESBANK SCHLESWIG-
                                          --------
HOLSTEIN GIROZENTRALE, a statutory body incorporated under public law, domiciled
in Kiel, not in its individual capacity, except as expressly stated herein, but
solely as Security Agent hereunder (together with its successors hereunder in
such capacity, the "Security Agent").
                    --------------

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

     WHEREAS, the Borrower desires by this Mortgage, among other things (i) to
provide for the issuance by the Borrower to the Loan Participants of Loan
Certificates evidencing participation by the Loan Participants in the Loans as
provided in the Credit Agreement made with respect to each Advance, and (ii) to
provide for the assignment, mortgage and pledge by the Borrower to the Security
Agent, as the Mortgage Estate hereunder, the Borrower's right, title and
interest in and to the Purchase Agreement, and the payments and other amounts
received in respect thereof in accordance with the terms hereof, as security
for, among other things, the Borrower's obligations to the Loan Participants and
the Holders, and for the benefit and security of the Loan Participants and the
Holders;

     WHEREAS, all things have been done to make the Loan Certificates, when
executed by the Borrower and issued and delivered hereunder, the valid
obligations of the Borrower; and

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

                             -- GRANTING CLAUSE --

     NOW, THEREFORE, THIS MORTGAGE AND SECURITY AGREEMENT WITNESSETH, that, to
secure the prompt payment of the principal of and Break Amount (if any) and
interest on, and all other amounts due with respect to, all Loan Certificates
from time to time outstanding hereunder and the performance and observance by
the Borrower of all the agreements, covenants and provisions for the benefit of
the Loan Participants and the Holders herein and in the Credit Agreement and the
Loan Certificates contained, and the prompt payment of any and all amounts from
time to time owing hereunder and under the Credit Agreement and the other
Operative Documents by the Borrower to the Loan Participants and the Holders,
and for the uses and purposes and subject to the terms and provisions hereof,
and in consideration of the premises and of the covenants herein contained, and
of the acceptance of the Loan Certificates by the Holders thereof, and of the
sum of $1 paid to the Borrower by the Security Agent at or before

<PAGE>

                                                                        MORTGAGE
                                                                    [Midway/LBK]

the delivery hereof, the receipt and sufficiency of which is hereby
acknowledged, the Borrower 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 Security
Agent and its successors and permitted assigns, for the security and benefit of
the Loan Participants and the Holders, as aforesaid, a security interest in and
mortgage lien upon, all right, title and interest of the Borrower in, to and
under the following described property, rights and privileges (which
collectively, including all property hereafter specifically subjected to the
Lien of this Mortgage, shall constitute the "Mortgage Estate"), to wit:
                                             ---------------

     1.  The Boeing Purchase Agreement, including, without limitation, (i) the
right to purchase each of the Aircraft pursuant to and in accordance with the
Boeing Purchase Agreement upon valid tender by the Manufacturer; (ii) all claims
for damages in respect of each of the Aircraft arising as a result of any
default by the Manufacturer under the Boeing Purchase Agreement or by any vendor
or other supplier of components or other parts or equipment installed on or in
any of the Aircraft referred to therein, including, without limitation, all
warranty, service life policy, aircraft performance guarantee and indemnity
provisions contained in the Boeing Purchase Agreement and all claims thereunder;
(iii) any and all rights of Borrower to compel performance of the terms of the
Boeing Purchase Agreement in respect of the Aircraft; (iv) all of Borrower's
rights and interests in or arising out of any payments or deposits made or to be
made by Borrower or amounts paid, or to be paid, by the Manufacturer to Borrower
in respect of the Aircraft; and (v) any and all rights to receive any credits,
refunds, rebates or other discounts due to Borrower with respect to the purchase
price of the Aircraft (and the Engines) pursuant to the Boeing Purchase
Agreement together with all rights, powers, privileges, options and other
benefits of the Borrower in respect thereof, including, without limitation, the
right to make all waivers and agreements, to give and receive all notices and
other instruments or communications, and to take such action upon the occurrence
of a default in respect of such provisions, 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
Borrower is or may be entitled to do in respect of such provisions, subject,
with respect to the Boeing Purchase Agreement, to the terms and conditions of
the Consent and Agreement;

     2.  The CFM Purchase Agreement, including, without limitation, (i) all
claims for damages in respect of each of the Engines arising as a result of any
default by the Engine Manufacturer under the CFM Purchase Agreement or by any
vendor or other supplier of components or other parts or equipment installed on
or in any of the Engines referred to therein, including, without limitation, all
warranty, service life policy, aircraft performance guarantee and indemnity
provisions contained in the CFM Purchase Agreement and all claims thereunder;
(ii) any and all rights of Borrower to compel performance of the terms of the
CFM Purchase Agreement in respect of the Engines; (iii) all of Borrower's rights
and interests in or arising out of any payments or deposits made or to be made
by Borrower or amounts paid, or to be paid, by the Engine Manufacturer to
Borrower in respect of the Engines; and (iv) any and all rights to

                                       2
<PAGE>

                                                                        MORTGAGE
                                                                    [Midway/LBK]

receive any credits, refunds, rebates or other discounts due to Borrower with
respect to the purchase price of the Engines pursuant to the CFM Purchase
Agreement together with all rights, powers, privileges, options and other
benefits of the Borrower in respect thereof, including, without limitation, the
right to make all waivers and agreements, to give and receive all notices and
other instruments or communications, and to take such action upon the occurrence
of a default in respect of such provisions, 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
Borrower is or may be entitled to do in respect of such provisions, subject,
with respect to the CFM Purchase Agreement, to the terms and conditions of the
Engine Consent and Agreement;

     3.  all payments or proceeds payable to the Borrower with respect to either
Purchase Agreement in respect of the Aircraft and/or the Engines or any part
thereof as the result of the sale or other disposition thereof, and all estate,
right, title and interest of every nature whatsoever of the Borrower in and to
the same and every part thereof;

     4.  all monies and securities deposited or required to be deposited with
the Security Agent pursuant to any term of this Mortgage or required to be held
by the Security Agent hereunder; and

     5.  all proceeds of the foregoing.

     Any and all properties referred to in this Granting Clause which are
hereafter acquired by the Borrower, shall, without further conveyance,
assignment or act by the Borrower or the Security Agent thereby become and be
subject to the security interest hereby granted as fully and completely as
though specifically described herein; provided, however, that the following
rights with respect to the Purchase Agreements are reserved to and retained by
the Borrower:

          (i)  all of Borrower's right, title and interest in and to the
     Purchase Agreements as and to the extent that it does not relate to any of
     the Aircraft;

          (ii) with respect to any Aircraft so long, and only so long, as the
     Security Agent has not commenced the exercise of remedies under Section
     5.01 hereof and/or under the Purchase Agreement Assignment, all rights (x)
     to demand, accept and retain all rights in and to property (other than the
     Aircraft and any cash payments), data and services of any kind which the
     Manufacturer or the Engine Manufacturer is obligated to provide or does
     provide pursuant to either of the Purchase Agreements with respect to the
     Aircraft or Engines and (y) to obtain any services, training, data,
     demonstration flights and test flights pursuant to the Boeing Purchase
     Agreement with respect to the Aircraft; and

                                       3
<PAGE>

                                                                        MORTGAGE
                                                                    [Midway/LBK]

          (iii)  with respect to any Engine so long, and only so long, as the
     Security Agent has not commenced the exercise of remedies under Section
     5.01 hereof and/or under the Consent and Agreement, all rights (x) to
     demand, accept and retain all rights in and to property (other than the
     Engine and any cash payments), data and services of any kind which the
     Engine Manufacturer is obligated to provide or does provide pursuant to the
     CFM Purchase Agreement with respect to the Engine and (y) to obtain any
     services, training, data, demonstration flights and test flights pursuant
     to the CFM Purchase Agreement with respect to the Engine.

     Anything herein contained to the contrary notwithstanding:  (i) Borrower
shall at all times remain liable to the Manufacturer and the Engine Manufacturer
under the Purchase Agreements to perform all of its duties and obligations of
"Customer" thereunder (including payment of the Purchase Price as such term is
defined in the Boeing Purchase Agreement) to the same extent as if this Mortgage
had not been executed and (ii) the exercise by Security Agent of any of the
rights assigned hereunder shall not release Borrower from any of its duties or
obligations to the Manufacturer or the Engine Manufacturer under the Purchase
Agreements except to the extent that such exercise by Security Agent shall
constitute performance of such duties and obligations.

     Notwithstanding any of the foregoing provisions of this Granting Clause,
                                                             ---------------
but subject to the express provisions of the other articles of this Mortgage, so
long as the Security Agent has not commenced the exercise of remedies under
Section 5.01 hereof and/or the Consent and Agreement, the Borrower shall have
the right, to the exclusion of the Security Agent and any others claiming by,
through or under the Security Agent, to exercise in Borrower's name all rights
and powers of (x) the "Customer" with respect to the Aircraft under the Boeing
Purchase Agreement and (y) the "Airline" with respect to the Engines under the
CFM Purchase Agreement, provided, that, Borrower may not enter into any change
                        --------
order or other amendment, modification or supplement to either Purchase
Agreement without the written consent and countersignature of the Security Agent
(acting at the unanimous direction of the Holders, which direction, in the case
of a postponement under clause (2) below, shall not be unreasonably withheld or
delayed) if such change order, amendment, modification or supplement would:

               (1) change the time of or the amount of any Advance or the manner
          in which any Advance can be returned or credited to the Borrower under
          the Boeing Purchase Agreement;

               (2) postpone the applicable Delivery Date of any of the Aircraft
          for more than sixty (60) days beyond such Aircraft's Scheduled
          Delivery Date;

               (3) result in the rescission, cancellation or termination of
          either Purchase Agreement, except with respect to a rescission,
          cancellation or termination to the extent the Manufacturer has the
          right to rescind, cancel or

                                       4
<PAGE>

                                                                        MORTGAGE
                                                                    [Midway/LBK]

          terminate the Boeing Purchase Agreement pursuant to the Consent and
          Agreement;

               (4) result in the increase in the Aircraft Price (as defined in
          the Boeing Purchase Agreement) with respect to an Aircraft unless
          Borrower or the Junior Loan Participant (as an additional Drawing made
          by the Junior Loan Participant under the Credit Agreement) pays the
          amount of such increase to Manufacturer as an additional advance
          payment under the Boeing Purchase Agreement;

               (5) diminish the rights assigned hereunder to the Security Agent;
          or

               (6) otherwise materially adversely affect the Security Agent or
          any Loan Participant.

     The Borrower shall provide to the Security Agent promptly after the
execution of the same copies, certified by the Borrower as true and complete, of
all change orders, amendments, modifications or supplements to either Purchase
Agreement.

                             -- HABENDUM CLAUSE --

     TO HAVE AND TO HOLD all and singular the aforesaid property unto the
Security Agent, its successors and assigns, in trust for the benefit and
security of the Loan Participants and the Holders, and for the uses and purposes
and subject to the terms and provisions set forth in this Mortgage.

     The Borrower does hereby constitute the Security Agent the true and lawful
attorney of the Borrower (which appointment is coupled with an interest),
irrevocably, with full power (in the name of the Borrower or otherwise) to ask,
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 Operative Documents
and all other property which now or hereafter constitutes part of the Mortgage
Estate, to endorse any checks or other instruments or orders in connection
therewith and to file any claims or to take any action or to institute any
proceedings which the Security Agent may deem to be necessary or advisable in
the premises; provided that the Security Agent agrees not to exercise such power
of attorney unless an Event of Default shall be continuing.

     The Borrower does hereby warrant and represent that (except as permitted
herein) it has not assigned or pledged any of its right, title, and interest
hereby assigned to anyone other than the Security Agent.

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

                                       5
<PAGE>

                                                                        MORTGAGE
                                                                    [Midway/LBK]

                                   ARTICLE I

                                  DEFINITIONS

     SECTION 1.01  Definitions.  For all purposes of this Mortgage the following
                   -----------
terms shall have the following meanings (such definitions to be equally
applicable to both the singular and plural forms of the terms defined).  Any
agreement referred to below shall mean such agreement as amended, supplemented
and modified from time to time in accordance with the applicable provisions
thereof and of the other Operative Documents.  Unless otherwise specified,
Section and Article references are to Sections and Articles of this Mortgage:

     "Advance" means each Advance Payment (as defined in the Boeing Purchase
      -------
Agreement) payable by Borrower in respect of each Aircraft in the amounts, on
the dates and in accordance with the terms of the Boeing Purchase Agreement as
set forth on Schedule IV of the Credit Agreement.

     "Affiliate" means, with respect to any Person, any other Person which
      ---------
directly or indirectly controls, is controlled by, or under common control with,
such Person.  The term "control" means the possession, directly or indirectly of
the power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise.

     "Aircraft" means each Airframe together with the two (2) Engines specified
      --------
by manufacturer's serial number in Schedule III to the Credit Agreement in the
configuration (including all optional features and customer furnished equipment)
specified in the Boeing Purchase Agreement, together with, as the context
permits, the aircraft and engine manuals, records and other technical documents
delivered therewith under each of the Purchase Agreements.

     "Airframe" means each Boeing 737-700 aircraft (excluding Engines or engines
      --------
from time-to-time installed thereon) specified by manufacturer's serial number
in Schedule III to the Credit Agreement.

     "Applicable Margin" means  *  % per annum in the case of the Senior Loan
      -----------------        ---
Certificates and  *  % per annum in the case of the Junior Loan Certificate.
                 ---

_____________________

*  Indicates information deleted for confidentiality purposes.

                                       6
<PAGE>

                                                                        MORTGAGE
                                                                    [Midway/LBK]

     "Applicable Rate"  means  *
      ---------------         ---

     "Boeing Purchase Agreement" means that certain Purchase Agreement Number
      -------------------------
2235 dated June 11, 1999 between Manufacturer and Borrower, together with that
certain Aircraft General Terms Agreement AGTA-MID dated as of June 11, 1999
between Manufacturer and Borrower and that certain Customer Service General
Terms Agreement dated as of June 11, 1999 between Manufacturer and Borrower, in
each case only to the extent relating to the Aircraft and including all
Exhibits, Appendices, Tables, and Letter Agreements (excluding, in the case of
the Boeing Purchase Agreement, Supplemental Exhibit EE1, Letter Agreements 6-
1162-CPJ-308 (Schedule Reliability), 6-1162-CPJ-311 (Maintenance Cost
Protection) and 6-1162-CPJ-316 (Special Matters); but including, without
limitation, Letter Agreement 6-1162-CPJ-313 (Basic Credit Memorandum)).

     "Borrowing Date" means the Effective Date and each date on which an Advance
      --------------
is payable in respect of an Aircraft under the Boeing Purchase Agreement as set
forth on Schedule IV of the Credit Agreement.

     "Break Amount" means the amount, if any, required to compensate each Holder
      ------------
for any losses, costs or expenses (excluding loss of profit) which it may incur
as the result of the prepayment or acceleration (or the failure to make any such
prepayment on the date irrevocably scheduled therefor) of any Loan Certificate
held by it on a date other than the last day of the then current Interest Period
therefor, including, without limitation, losses, costs or expenses incurred in
connection with unwinding or liquidating any deposits or funding or financing
arrangement with its funding sources, as reasonably determined by such Holder.
Without limiting the effect of the preceding sentence, such compensation shall
include an amount equal to the excess, if any, of (i) the amount of interest
which otherwise would have accrued on the principal amount so prepaid or
accelerated to the last day of such Interest Period (the "Break Period") at the
                                                          ------------
LIBO Rate therefor in excess of (ii) the interest component of the amount the
affected Holder would have bid in the London interbank market for Dollar
deposits of leading banks in amounts comparable to such principal amount and
with maturities comparable to the Break Period (as reasonably determined by such
Holder).

     "Business Day" means any day other than a Saturday or Sunday or a day on
      ------------
which commercial banks are required or authorized to close in New York, New
York, Charlotte, North Carolina or London, England.

     "Cash Contribution" means the Borrower's advance payment of $1,000,000 in
      -----------------
respect of each Aircraft, payable to the Manufacturer under the Boeing Purchase
Agreement.

________________________

*  Indicates information deleted for confidentiality purposes.

                                       7
<PAGE>

                                                                        MORTGAGE
                                                                    [Midway/LBK]

     "Certificate Register" has the meaning specified in Section 2.08.
      --------------------

     "CFM Purchase Agreement" means that certain General Terms Agreement No. 6-
      ----------------------
13593 dated as of June 11, 1999 by and between the Engine Manufacturer and the
Borrower, to the extent relating to the Engines, including all Exhibits,
Appendices, Tables and Letter Agreements with respect thereto, excluding Letter
Agreement No. 1, the special guarantees contained in Section II, Subsection J of
Exhibit B thereto, and Attachments A, C, D and E thereto.

     "Class" means, in respect of the Loan Certificates, each of the (i) Senior
      -----
Loan Certificates, collectively and (ii) the Junior Loan Certificate.

     "Code" mean the Internal Revenue Code of 1986, as amended.
      ----

     "Commitment" in respect of any Advance has the meaning specified in Section
      ----------
2(a) of the Credit Agreement.

     "Commitment Termination Date" means April 30, 2002; provided, however, that
      ---------------------------
if an Excusable Delay (as defined in the Boeing Purchase Agreement) occurs, or
if any other delay which does not result in a termination of either Purchase
Agreement or an Event of Default hereunder occurs, then the Commitment
Termination Date shall be October 30, 2002.

     "Consent and Agreement" means the Manufacturer Consent and Agreement
      ---------------------
[Midway/LBK], dated as of the date hereof, of Manufacturer in respect of the
Boeing Purchase Agreement.

     "Credit Agreement" means that certain Credit Agreement [Midway/LBK], dated
      ----------------
as of the date hereof, among the Borrower, the Loan Participants and the
Security Agent as such Credit Agreement may be amended or supplemented from time
to time pursuant to the applicable provisions thereof.

     "Delivery Date" means, for any Aircraft, the date on which such Aircraft is
      -------------
delivered by Manufacturer and accepted by Borrower under the Boeing Purchase
Agreement.

     "Default" means any event which with the giving of notice or the lapse of
      -------
time or both if not timely cured or remedied would become an Event of Default
pursuant to Article IV.

     "Dollars", "Dollar" and "$" means the lawful currency of the United States
      -------    ------       -
of America.

     "Drawing" in respect of any Advance means the borrowing made by the
      -------
Borrower on the Borrowing Date with respect to such Advance from each Loan
Participant.

                                       8
<PAGE>

                                                                        MORTGAGE
                                                                    [Midway/LBK]

     "Effective Date" means the date on which the initial Drawings are made
      --------------
under the Credit Agreement.

     "Engine" means, in respect of each Airframe, each of the two CFM
      ------
International, Inc. model CFM56-7 engines delivered with such Airframe under the
Boeing Purchase Agreement.

     "Engine Consent and Agreement" means the Engine Manufacturer Consent and
      ----------------------------
Agreement [Midway/LBK] dated as of the Effective Date, executed by the Engine
Manufacturer.

     "Engine Manufacturer" means CFM International, Inc.
      -------------------

     "ERISA" means the Employee Retirement Income Security Act of 1974, as
      -----
amended from time to time.

     "Event of Default" has the meaning specified in Article IV hereof.
      ----------------

     "Expense" or "Expenses" means any and all liabilities, obligations, losses,
      -------      --------
damages, penalties, claims, actions, suits, out of pocket costs, expenses and
disbursements (including reasonable legal fees and expenses) of whatever kind
and nature but excluding internal costs and expenses such as salaries, any
amounts that would be included in Break Amount, and overhead of whatsoever kind
and nature.

     "Federal Aviation Act" means subtitle VII of Title 49 of the United States
      --------------------
Code, or any successor provision.

     "Federal Aviation Administration" and "FAA" mean the United States Federal
      -------------------------------       ---
Aviation Administration and any successor agency or agencies thereto.

     "Fee Letter" means that certain Letter Agreement of even date herewith
      ----------
among Borrower, the Senior Loan Participants and the Security Agent.

     "GAAP" means generally accepted accounting principles, consistently
      ----
applied.

     "Holder" means, at any time, each Loan Participant and any holder of one or
      ------
more Loan Certificates.

     "Indemnitee" or "Indemnitees" means the Security Agent, the Holders and
      ----------      -----------
each of their respective successors, permitted assigns, directors, officers, and
employees.

     "Interest Payment Date" means September 1, 2000 and thereafter each
      ---------------------
succeeding monthly anniversary of such date; provided that, if any such date
                                             --------
shall not be a Business Day,

                                       9
<PAGE>

                                                                        MORTGAGE
                                                                    [Midway/LBK]

then the relevant Interest Payment Date shall be the next succeeding Business
Day unless by virtue of such extension such date would fall in the next
succeeding calendar month, in which case the relevant Interest Payment Date
shall be the next preceding Business Day.

     "Interest Period" means, (a) initially, the period commencing on the
      ---------------
Effective Date and ending on the first Interest Payment Date thereafter and (b)
thereafter, each successive monthly period commencing on the final day of the
preceding Interest Period and ending on the next succeeding Interest Payment
Date or, if earlier, the Final Maturity Date; provided, for each Series of
Drawings, the Borrower, upon written notice given three (3) Business Days prior
to the commencement of such Interest Period to the Security Agent, may designate
that the Interest Period in which the Delivery Date of the related Aircraft
occurs may terminate on such Delivery Date (as set forth in such notice).

     "Junior Loan Certificate" means the Loan Certificate issued to the Junior
      -----------------------
Loan Participant.

     "Junior Loan Participant" means Boeing Nevada, Inc.
      -----------------------

     "LBK" means Landesbank Schleswig-Holstein Girozentrale.
      ---

     "LIBO Rate" means, with respect to any Interest Period, a rate per annum
      ---------
(calculated on the basis of a 360-day year and actual days elapsed) equal to (x)
for the first and last (if for a period of less than one month) Interest Period
for a Series of Drawings, the rate certified by the Loan Participants as their
cost of funds for such period and (y) otherwise, the rate determined by the
Security Agent (with notice to the Loan Participants and the Borrower) by
reference to Telerate Page 3750 as of 11:00 A.M. (London time) (rounded upwards
to the nearest 1/16 of 1%), on the day two London business days prior to the
first day of such Interest Period for a period comparable to such Interest
Period.

     "Lien" means any mortgage, pledge, lien, claim, encumbrance, lease,
      ----
security interest or other lien of any kind on property.

     "Loan Certificates" means the loan certificates issued pursuant to Section
      -----------------
2.02(a) and any such certificates issued in exchange or replacement therefor
pursuant to Section 2.08 or 2.09.

     "Loan Participant" means each Senior Loan Participant and Junior Loan
      ----------------
Participant party to the Credit Agreement, and its successors and assigns.

     "Majority in Interest of Holders" means, as of any date of the
      -------------------------------
determination thereof, the Holders of not less than two-thirds (2/3) in
aggregate outstanding principal amount of all Loan Certificates as of such date;
excluding, however, the Junior Loan Certificate so long as any

                                      10
<PAGE>

                                                                        MORTGAGE
                                                                    [Midway/LBK]

Senior Loan Certificates are outstanding. For all purposes of the foregoing
definition, in determining as of any date the then aggregate outstanding
principal amount of Loan Certificates, there shall be excluded any Loan
Certificates, if any, held by the Borrower or any of its Affiliates (unless the
Borrower and/or its Affiliates, as the case may be, own all Loan Certificates
then outstanding).

     "Manufacturer" means The Boeing Company, in its capacity as manufacturer of
      ------------
the Aircraft, and its successors and assigns.

     "Manufacturer Financing" means the financing arrangement between the
      ----------------------
Manufacturer and the Borrower pursuant to the letter agreement between Borrower
and Manufacturer for the backstop debt and leveraged lease financing support
covering 80% debt financing with respect to eleven aircraft and 20% lease equity
financing with respect to six aircraft.

     "Manufacturer Financing Letter" means that certain letter from the
      -----------------------------
Manufacturer to the Senior Loan Participants describing the Manufacturer
Financing.

     "Midway Letter" means a letter from the Borrower to the Manufacturer
      -------------
directing the Manufacturer to pay certain monies to the Security Agent in lieu
of the Borrower after termination of the Boeing Purchase Agreement.

     "Mortgage" and "this Mortgage" mean this Mortgage and Security Agreement
      --------       -------------
[Midway/LBK], including each supplement from time to time entered into pursuant
hereto.

     "Mortgage Estate" means the "Mortgage Estate" as defined in the Granting
      ---------------             ---------------
Clause hereof.

     "Non-U.S. Person" means any Person other than (i) a citizen or resident of
      ---------------
the United States of America (for purposes of this definition, the "United
States"), (ii) a corporation, partnership, limited liability company or other
entity created or organized under the laws of the United States or any political
subdivision thereof or therein or (iii) an estate or trust that is subject to
United States federal income taxation regardless of the source of its income.

     "Operative Documents" means the Credit Agreement, the Mortgage, the Loan
      -------------------
Certificates, the Purchase Agreements, the Consent and Agreement, and the Engine
Consent and Agreement, and any amendments or supplements of any of the
foregoing.

     "Original Amount," with respect to a Loan Certificate, means the stated
      ---------------
original amount (that is, principal) of such Loan Certificate.

     "Participation Percentage" in respect of each Loan Participant, the
      ------------------------
percentage set forth for such Loan Participant on Schedule II to the Credit
Agreement.

                                      11
<PAGE>

                                                                        MORTGAGE
                                                                    [Midway/LBK]

     "Past Due Rate" means  *
      -------------        ---

     "Payment Account" means such account as described in Section 2.04(a)
      ---------------
hereof.

     "Payment Office" means the bank and account number of the Security Agent
      --------------
referred to in Schedule I to the Credit Agreement.

     "Permitted Investments" means those investments described in Section 7.01
      ---------------------
hereof.

     "Permitted Lien" means any Lien permitted under Section  3.01 hereof.
      --------------

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

     "Plan" means an "employee pension benefit plan" (as such term is defined in
      ----
Section 3(2) of ERISA) or any "plan" (as such term is defined in Section
4975(e)(1) of the Code) which is maintained or contributed to by the Borrower or
an Affiliate that, together with the Borrower, is treated as a single employer
under Section 414(b), (c) or (m) of the Code or with respect to which Borrower
has any direct or indirect material liability.

     "Pro Rata Portion" in respect of any Senior Loan Participant, means the
      ----------------
percentage determined by dividing (i) such Senior Loan Participant's Maximum
Commitment by (ii) the sum of the Maximum Commitments for all Senior Loan
Participants.

     "Purchase Agreements" means, collectively, the Boeing Purchase Agreement
      -------------------
and the CFM Purchase Agreement.

     "Regulation D" means Regulation D of the Board of Governors of the Federal
      ------------
Reserve System (or any successor), as the same may be modified and supplemented
and in effect from time to time.

     "Regulatory Change" means, with respect to any Holder, any change that
      -----------------
occurs after the date of this Mortgage in Federal, state or foreign law or
regulations (including Regulation D) or the adoption or making after such date
of any interpretation, directive or request applying to a class of banks or
financial institutions including such Holder of or under any Federal, state or
foreign law or regulations (whether or not having the force of law and whether
or not failure to comply therewith would be unlawful so long as compliance
therewith is standard banking

____________________

*  Indicates information deleted for confidentiality purposes.

                                      12
<PAGE>

                                                                        MORTGAGE
                                                                    [Midway/LBK]

practice in the relevant jurisdiction) by any court or governmental or monetary
authority charged with the interpretation or administration thereof.

     "Remarketing Agreement" means the Manufacturer's Remarketing and Support
      ---------------------
Agreement, in the form of Exhibit G to the Credit Agreement.

     "Reserve Requirement" means, for any Loan Certificate, the average maximum
      -------------------
rate at which reserves (including, without limitation, any marginal,
supplemental or emergency reserves) are required to be maintained during the
Interest Period in respect of such Loan Certificate under Regulation D by member
banks of the Federal Reserve System in New York City with deposits exceeding one
billion Dollars against "Eurocurrency liabilities" (as such term is used in
Regulation D).  Without limiting the effect of the foregoing, the Reserve
Requirement includes any other reserves required to be maintained by such member
banks by reason of any Regulatory Change with respect to (i) any category of
liabilities that includes deposits by reference to which the LIBO Rate is to be
determined or (ii) any category of extensions of credit or other assets that
includes the Loan Certificates.

     "Rights Offering" means that certain offering (as described in the
      ---------------
prospectus dated June 26, 2000) of between 6,226,048 and 8,613,592 shares of
common stock of the Borrower to Borrower's existing shareholders.

     "Securities Act" means the Securities Act of 1933, as amended.
      --------------

     "Security Agent" LBK in its capacity as Security Agent hereunder, and any
      --------------
successor thereto in such capacity.

     "Scheduled Delivery Date" means, for each Aircraft, the date specified in
      -----------------------
Schedule IV to the Credit Agreement.

     "Senior Loan Certificate" means any Loan Certificate issued to a Senior
      -----------------------
Loan Participant.

     "Senior Loan Participant" means those parties identified in Schedule I to
      -----------------------
the Credit Agreement.

     "Senior Loan Portion" in respect of each Advance, means the amount
      -------------------
specified therefor in Schedule IV to the Credit Agreement.

     "Series" has the meaning specified in Section 2(a) of the Credit Agreement.
      ------

     "Shareholders" means James H. Goodnight and John P. Sall.
      ------------

                                      13
<PAGE>

                                                                        MORTGAGE
                                                                    [Midway/LBK]

     "Tax" or "Taxes" means any and all fees (including, without limitation,
      ---      -----
license, documentation and registration fees), taxes (including, without
limitation, income, gross receipts, sales, rental, use, turnover, value added,
property (tangible and intangible), excise and stamp taxes), licenses, levies,
imposts, duties, recording charges or fees, charges, assessments, or
withholdings of any nature whatsoever, together with any assessments, penalties,
fines, additions to tax and interest thereon.

     "U.S. Air Carrier" means any United States air carrier as to which there is
      ----------------
in force a certificate issued pursuant to Section 40102(a) of the Federal
Aviation Act, and which is a citizen of the United States (as defined in 49
U.S.C. (S) 40102(a)(15)) holding an air carrier operating certificate issued by
the Secretary of Transportation pursuant to chapter 447 of title 49 (or the
equivalent authority issued by the Civil Aeronautics Board under the predecessor
regulatory laws, rules and regulations) for aircraft capable of carrying 10 or
more individuals or 6,000 pounds or more of cargo or which may operate as an air
carrier by certification or otherwise under any successor or substitute
provisions therefor or in the absence thereof.

                                  ARTICLE II

                               THE CERTIFICATES

     SECTION 2.01  Form of Loan Certificates. The Loan Certificates shall each
                   -------------------------
be substantially in the form set forth below, as follows:

                                 _____________

                          MIDWAY AIRLINES CORPORATION

                   [JUNIOR]/1/ [SENIOR]/2/ LOAN CERTIFICATE

No. R-                                                        New York, New York
Series:
$                                                               [Effective Date]

     Midway Airlines Corporation (the "Borrower") hereby promises to pay to
                                       --------
__________________ ("Lender"), or registered transferees, the principal sum of

__________________________

     /1/ To be included in the Junior Loan Certificate only.

     /2/ To be included in the Senior Loan Certificates only.

                                      14
<PAGE>

                                                                        MORTGAGE
                                                                    [Midway/LBK]

[             *            ($     *    )]/1/ [ * ]/2/, or, if less, the
 -------------------------   ----------       ---
aggregate unpaid principal amount of all Drawings made by Lender to Borrower
pursuant to that certain Credit Agreement [Midway/LBK] of even date herewith
among Borrower, Lender, Landesbank Schleswig-Holstein Girozentrale, as Security
Agent thereunder and certain other lenders named therein, payable in full on
December 31, 2002, together with interest on the unpaid principal amount hereof
from time to time outstanding from and including the date hereof until such
principal amount is paid in full. Interest shall accrue with respect to each
Interest Period at the Applicable Rate in effect for such Interest Period and
shall be payable in arrears on each Interest Payment Date and on the date this
Loan Certificate is paid in full. The Interest Periods for Series of Drawings
evidenced by this Note can vary in accordance with the definition of Interest
Periods in the Credit Agreement. This Loan Certificate shall bear interest at
the applicable Past Due Rate on any principal hereof, and, to the extent
permitted by applicable law, interest and other amounts due hereunder, not paid
when due (whether at stated maturity, by acceleration or otherwise), for any
period during which the same shall be overdue, payable on demand by the Holder
hereof given through the Security Agent.

     Interest shall be payable with respect to the first but not the last day of
each Interest Period.  Interest shall be calculated on the basis of a year of
360 days and actual number of days elapsed.  If any sum payable hereunder falls
due on a day which is not a Business Day, then such sum shall be payable on the
next succeeding Business Day; provided that, in the case of principal of and
interest hereon payable on an Interest Payment Date, if by virtue of such
extension such payment would fall in the next succeeding month, such sum shall
be payable on the next preceding Business Day.

     Borrower hereby acknowledges and agrees that this note is one of the Loan
Certificates referred to in, evidences indebtedness incurred under, and is
subject to the terms and provisions of, the Credit Agreement including, without
limitation, the repayment in full of a Series of Drawings made in respect of an
Aircraft upon the Delivery Date of such Aircraft.  The Credit Agreement, to
which reference is hereby explicitly made, sets forth said terms and provisions,
including those under which this Loan Certificate may or must be paid prior to
its due date or may have its due date accelerated.

     All payments of principal, Break Amount, if any, and interest and other
amounts to be made to the Holder hereof or under the Mortgage and Security
Agreement [Midway/LBK] dated as of July __, 2000 (as amended or supplemented
from time to time, herein called the "Mortgage", the terms defined therein and
                                      --------
not otherwise defined herein being used herein with the same meanings) between
the Borrower and Landesbank Schleswig-Holstein Girozentrale, as Security Agent
thereunder, shall be made in accordance with the terms of the Credit Agreement
and the Mortgage.

_________________________

*  Indicates information deleted for confidentiality purposes.

                                      15
<PAGE>

                                                                        MORTGAGE
                                                                    [Midway/LBK]

     Principal and interest and other amounts due hereon  shall be payable in
Dollars in immediately available funds prior to 11:00 a.m., New York, New York
time, on the due date thereof, to the Security Agent at the Payment Office and
the Security Agent shall, subject to the terms and conditions of the Mortgage,
remit all such amounts so received by it to the Holder hereof in accordance with
the terms of Mortgage at such account or accounts at such financial institution
or institutions as the Holder hereof shall have designated to the Security Agent
in writing, in immediately available funds, such payment to be made, in the case
of any such designated account in New York, New York, prior to 2:00 p.m., New
York time, on the due date thereof.  In the event the Security Agent 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
Security Agent agrees to compensate the Holder hereof for loss of use of funds
in a commercially reasonable manner.  All such payments by the Borrower and the
Security Agent shall be made free and clear of and without reduction for or on
account of all wire or other like charges.

     Each Holder hereof, by its acceptance of this Loan Certificate, agrees
that, except as otherwise expressly provided in the Mortgage, each payment
received by it in respect hereof shall be applied, first, to the payment of any
                                                   -----
amount (other than the principal of or interest on this Loan Certificate) due in
respect of this Loan Certificate, second, to the payment of interest hereon (as
                                  ------
well as any interest on overdue principal and, to the extent permitted by law,
interest and other amounts payable hereunder) due and payable hereunder, third,
                                                                         -----
to the payment of the principal of this Loan Certificate then due and fourth,
                                                                      ------
the balance, if any, remaining thereafter, to the payment of the principal of
this Loan Certificate remaining unpaid, in the manner set forth in the last
sentence of Section 2.04 of the Mortgage.

     This Loan Certificate is one of the Loan Certificates referred to in the
Mortgage which have been or are to be issued by the Borrower pursuant to the
terms of the Mortgage.  The Mortgage Estate is held by the Security Agent as
security, in part, for the Loan Certificates.  Reference is hereby made to the
Mortgage and the Credit Agreement referred to therein for a statement of the
rights and obligations of the Holder hereof, and the nature and extent of the
security for this Loan Certificate and of the rights and obligations of the
other Holders, and the nature and extent of the security for the other Loan
Certificates, as well as for a statement of the terms and conditions of the
trusts created by the Mortgage, to all of which terms and conditions in the
Mortgage and such Credit Agreement each Holder hereof agrees by its acceptance
of this Loan Certificate.

     There shall be maintained a Certificate Register for the purpose of
registering transfers and exchanges of Loan Certificates at the office of the
Security Agent set forth in the Credit Agreement or at the office of any
successor security agent in the manner provided in Section 2.08 of the Mortgage.
As provided in the Mortgage and subject to certain limitations set forth
therein,

                                      16
<PAGE>

                                                                        MORTGAGE
                                                                    [Midway/LBK]

this Loan Certificate or any interest herein may, subject to the next following
paragraph, be assigned or transferred, and the Loan Certificates are
exchangeable for a like aggregate original principal amount of Loan Certificates
of a like Series of any authorized denomination, as requested by the Holder
surrendering the same.

     Prior to the due presentment for registration of transfer of this Loan
Certificate, the Borrower and the Security Agent shall deem and treat the person
in whose name this Loan Certificate is registered on the Certificate Register as
the absolute owner of this Loan Certificate and the Holder for the purpose of
receiving payment of all amounts payable with respect to this Loan Certificate
and for all other purposes whether or not this Loan Certificate is overdue, and
neither the Borrower nor the Security Agent shall be affected by notice to the
contrary.

     This Loan Certificate is subject to [prepayment as permitted by Sections
2.11 and 2.12 of the Mortgage and to]/1/ acceleration by the Security Agent as
provided in Section 5.01 of the Mortgage, and the Holder hereof, by its
acceptance of this Loan Certificate, agrees to be bound by said provisions.
[This Loan Certificate is subject to purchase by the Junior Loan Participant as
provided in Section 14 of the Credit Agreement.]/2/

     [As provided in Section 13 of the Credit Agreement, any sums payable under
this Loan Certificate are in all respect subordinate and junior in right of
payment to the Senior Loan Certificates.]/3/

     [This Loan Certificate is subject to purchase by the Manufacturer following
an Event of Default pursuant to the Consent and Agreement and by the Junior Loan
Participant following an Event of Default pursuant to Section 14 of the Credit
Agreement.]/4/

     This Loan Certificate shall be governed by and construed in accordance with
the law of the State of New York.

___________________

/1/  To be included in the Senior Loan Certificates only.

/2/  To be included in the Senior Loan Certificates only.

/3/  To be included in the Junior Loan Certificate only.

/4/  To be included in the Senior Loan Certificates only.

                                      17
<PAGE>

                                                                        MORTGAGE
                                                                    [Midway/LBK]

     IN WITNESS WHEREOF, the Borrower has caused this Loan Certificate to be
executed in its corporate name by its officer thereunto duly authorized, as of
the date hereof.

                                    MIDWAY AIRLINES CORPORATION

                                    By:_________________________________________

                                    Its:________________________________________

                                      18
<PAGE>

                                                                        MORTGAGE
                                                                    [Midway/LBK]

     SECTION 2.02  Terms of Loan Certificates; Drawings.  (a)  On the Effective
                   ------------------------------------
Date, the Borrower shall issue a Loan Certificate to each Loan Participant in an
aggregate original principal amount equal to such Loan Participant's Maximum
Commitment (or their respective nominees). Each Loan Certificate shall bear an
appropriate designation as to its Class, as determined pursuant to Section 2(a)
of the Credit Agreement.  The Borrower shall be entitled to make Drawings
against each Loan Certificate in accordance with Section 2(a) of the Credit
Agreement.

          (b) Each Loan Certificate shall bear interest on the unpaid principal
amount thereof from time to time outstanding from and including the date thereof
until such principal amount is paid in full.  Such interest shall accrue with
respect to each Interest Period at the Applicable Rate in effect for such
Interest Period and shall be payable in arrears on each Interest Payment Date
and on the date such Loan Certificate is paid in full.  The Interest Periods for
Series of Drawings can vary in accordance with the definition of Interest
Period.  Interest shall be payable with respect to the first but not the last
day of each Interest Period.  Interest hereunder and under the Loan Certificates
shall be calculated on the basis of a year of 360 days and actual number of days
elapsed.  If any sum payable under the Loan Certificates or under this Mortgage
falls due on a day which is not a Business Day, then such sum shall be payable
on the next succeeding Business Day; provided that, in the case of principal of
and interest on the Loan Certificates payable on an Interest Payment Date, if by
virtue of such extension such payment would fall in the next succeeding month,
such sum shall be payable on the next preceding Business Day.

          (c) The principal of the Drawings of each Series shall be due and
payable in full upon the earlier of (x) the Delivery Date of the Aircraft for
such Series and (y) December 31, 2002.

          (d) Each Loan Certificate shall bear interest at the Past Due Rate on
any principal thereof and, to the extent permitted by applicable law, interest
(other than interest accrued at the Past Due Rate) and other amounts due
thereunder and hereunder, not paid when due (whether at stated maturity, by
acceleration or otherwise), for any period during which the same shall be
overdue, payable on demand by the respective Holder given through the Security
Agent.

          (e) The Loan Certificates shall be executed on behalf of the Borrower
by one of its authorized officers.  Loan Certificates bearing the signatures of
individuals who were at any time the proper officers of the Borrower shall bind
the Borrower, notwithstanding that such individuals or any of them have ceased
to hold such offices prior to the delivery of such Loan Certificates or did not
hold such offices at the respective dates of such Loan Certificates.  No Loan
Certificates shall be issued hereunder except those provided for in Section
2.02(a) and any

                                      19
<PAGE>

                                                                        MORTGAGE
                                                                    [Midway/LBK]

Loan Certificates issued in exchange or replacement therefor pursuant to the
terms of this Mortgage.

     SECTION 2.03  Tax Forms.  The Security Agent agrees, to the extent required
                   ---------
by applicable law, to withhold from each payment due hereunder or under any Loan
Certificate United States federal withholding taxes at the appropriate rate,
and, on a timely basis, to deposit such amounts with an authorized depository
and make such reports, filings and other reports in connection therewith, and in
the manner, required under applicable law.  The Security Agent shall furnish no
later than March 15 of each year to each Holder a U.S. Treasury Form 1042S (or
similar forms as at any relevant time in effect), if applicable, indicating
payment in full of any Taxes withheld from any payments by the Security Agent to
such Holder together with all such other information and documents reasonably
requested by such Holder and necessary or appropriate to enable such Person to
substantiate a claim for credit or deduction with respect thereto for income tax
purposes of any jurisdiction with respect to which such Person is required to
file a tax return. Provided that each Holder which is a Non-U.S. Person has
furnished to the Security Agent (and the Security Agent has furnished to the
Borrower a copy of) either (x) a properly completed and currently effective Form
W-8 or U.S. Treasury Form 1001 or W-8BEN (or such substitute or successor form
as may be required by the United States Treasury Department) during the calendar
year in which the payment is made (or at such other times as applicable law may
require), and has not notified the Security Agent of the withdrawal of such Form
prior to the date of each interest payment, or (y) a properly completed and
currently effective U.S. Treasury Form 4224 or W-8 EC1 or other certificate or
form establishing exemption from withholding of United States federal income tax
during each calendar year in which the payment is made (or at such other times
as applicable law may require), and has not notified the Security Agent of the
withdrawal of such Form or certificate prior to the date of each interest
payment, then no amount shall be withheld from payments under the Loan
Certificates held by such Holder in respect of United States federal income tax.
Each Holder shall indemnify and hold harmless the Security Agent and the
Borrower against any claim for United States federal withholding taxes which the
Security Agent improperly fails to withhold on payments to such Holder, except
that, if Borrower shall be required to hold harmless a Holder pursuant to
Section 8(c) of the Credit Agreement with respect to such payment and
withholding, the indemnification required by this Section shall apply only if
such failure to withhold is a direct result of the failure by such Holder to
provide the required certificate or Form or the invalidity of any certificate or
Form provided by such Holder pursuant to this Section 2.03 (it being understood
that the provision of such certificate or form shall constitute a representation
by the relevant Holder as to such Holder's qualification for complete exemption
from United States federal gross income tax withholding or, in the event of a
change in law or regulation for which the Borrower is obligated to hold harmless
the Holder pursuant to Section 8 of the Credit Agreement, for partial exemption
from such withholding).

                                      20
<PAGE>

                                                                        MORTGAGE
                                                                    [Midway/LBK]

     SECTION 2.04  Distribution of Funds Received.  (a) The Security Agent shall
                   ------------------------------
establish and maintain an account (the "Payment Account"), into which all
amounts payable hereunder shall be paid.

          (b) Provided that no Event of Default has occurred and is then
continuing, each installment of interest payable on the Loan Certificates shall
be distributed as promptly as possible on or after the date that such amount is
deposited in the Payment Account and becomes immediately available to the
Security Agent:

          First, to the Senior Loan Participants ratably, without priority of
          -----
     one over the other, to the payment in full of the aggregate amount of
     interest due under the Senior Loan Certificates in an amount equal to (i)
     accrued interest at the rate provided in each Senior Loan Certificate, and
     (ii) any overdue interest thereon; and

          Second, to the Junior Loan Participant, to the payment in full of the
          ------
     aggregate amount of interest then due under the Junior Loan Certificate in
     an amount equal to (i) accrued interest at the rate provided in the Junior
     Loan Certificate, and (ii) any overdue interest thereon.

          (c) Provided that no Event of Default has occurred and is then
continuing, each payment made by the Borrower as repayment of a Series of
Drawings upon the Delivery Date of the related Aircraft shall be distributed as
promptly as possible on or after the date that such amount is deposited in the
Payment Account and becomes immediately available to the Security Agent:

          First, to the Senior Loan Participants ratably, without priority of
          -----
     one over the other, to the payment in full of the aggregate amount of
     interest due under the Senior Loan Certificates in respect of the Series of
     Drawings being repaid in an amount equal to (i) accrued interest at the
     rate provided in each Senior Loan Certificate, and (ii) any overdue
     interest thereon plus the Break Amount, if any, due to the Senior Loan
     Participants in respect of such payment;

          Second, to the Senior Loan Participants ratably, without priority of
          ------
     one over the other, to the payment in full of the outstanding principal
     amount of the Series of Drawings made by the Senior Loan Participants which
     is being repaid;

          Third, to the Junior Loan Participant to the payment in full of the
          -----
     aggregate amount of interest then due under the Junior Loan Certificate in
     an amount equal to (i) accrued interest at the rate provided in the Junior
     Loan Certificate, and (ii) any overdue interest thereon; and

                                      21
<PAGE>

                                                                        MORTGAGE
                                                                    [Midway/LBK]

          Fourth, to the Junior Loan Participant to the payment in full of the
          ------
     outstanding principal amount of the Series of Drawings made by the Junior
     Loan Participant which is being repaid.

          (d) Upon any partial optional repayment of the Senior Loan
Certificates pursuant to Section 2.11(a) hereof, the amount paid by Borrower
shall be applied against the amounts which Borrower is obligated to pay in
connection with such prepayment pursuant to Section 2.11(a) (it being understood
that no prepayment shall be permitted under Section 2.11(a) unless Borrower pays
a sufficient amount to satisfy the amounts owed by it under Section 2.11(a) in
connection with such prepayment.

          (e) After an Event of Default shall have occurred, and so long as such
Event of Default shall be continuing, all amounts deposited in the Payment
Account and all proceeds resulting from a sale of any of the Mortgage Estate
shall be applied in the following order of priority:

          First, to the extent not theretofore paid by or on behalf of the
          -----
     Borrower, to pay all costs and expenses of the Security Agent incurred in
     connection with the performance of its duties hereunder or under any other
     Operative Document, including reasonable attorneys' fees and expenses and
     all costs and expenses incurred by the Security Agent in connection with
     its entering upon, taking possession of, holding, operating, managing,
     selling or otherwise disposing of the Mortgage Estate or any part thereof,
     any and all Taxes, assessments or other charges of any kind prior to the
     Lien of any Operative Document that the Security Agent determined in good
     faith to pay or be paid, and all amounts payable to the Security Agent
     hereunder or under any of the Operative Documents in respect of any
     indemnities or other obligations of the Borrower;

          Second, to the Senior Loan Participants ratably, without priority of
          ------
     one over the other, to the payment of all accrued and unpaid interest
     (including Break Amount, if any, and interest on account of overdue
     payments of principal and interest) then due the Senior Loan Participants
     under the Credit Agreement or any of the Senior Loan Certificates;

          Third, to the Senior Loan Participants ratably, without priority of
          -----
     one over the other, to the payment of any other amount, indebtedness or
     obligations (other than principal) due and payable to the Senior Loan
     Participants under any Operative Documents;

          Fourth, to the Senior Loan Participants ratably, without priority of
          ------
     one over the other, to the payment in full of the principal amount of the
     Senior Loan Certificates;

                                      22
<PAGE>

                                                                        MORTGAGE
                                                                    [Midway/LBK]

          Fifth, to the Junior Loan Participant to the payment of all accrued
          -----
     and unpaid interest (including interest on account of overdue payments of
     interest) then due to the Junior Loan Participant under the Credit
     Agreement or the Junior Loan Certificate;

          Sixth, to the Junior Loan Participant to the payment of any other
          -----
     amount, indebtedness or obligations (other than principal) due and payable
     to the Junior Loan Participant under any Operative Document;

          Seventh, to the Junior Loan Participant to the payment in full of the
          -------
     principal amount of the Junior Loan Certificate; and

          Eighth, the balance, if any, thereof thereafter remaining, to the
          ------
     Borrower or such other Person(s) as may then lawfully be entitled thereto.

     SECTION 2.05  Method of Payment.  Principal and interest and other amounts
                   -----------------
due hereunder or under the Loan Certificates or in respect hereof or thereof
shall be payable in Dollars in immediately available funds prior to 11:00 a.m.,
New York, New York time, on the due date thereof, to the Security Agent at the
Payment Office and the Security Agent shall, subject to the terms and conditions
of Section 2.04, remit all such amounts so received by it to the Holders at such
account or accounts at such financial institution or institutions as the Holders
shall have designated to the Security Agent in writing, in immediately available
funds for distribution to the relevant Holders, such payment to be made, in the
case of any such designated account in New York, New York, prior to 2:00 p.m.,
New York time, on the due date thereof.  In the event the Security Agent 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 Security Agent agrees to compensate the Holders for loss of use of funds in
a commercially reasonable manner.  All such payments by the Borrower and the
Security Agent shall be made free and clear of and without reduction on account
of all wire and other like charges.  Prior to the due presentment for
registration of transfer of any Loan Certificate, the Borrower and the Security
Agent may deem and treat the Person in whose name any Loan Certificate is
registered on the Certificate Register as the absolute owner of such Loan
Certificate for the purpose of receiving payment of all amounts payable with
respect to such Loan Certificate and for all other purposes whether or not such
Loan Certificate shall be overdue, and neither the Borrower nor the Security
Agent shall be affected by any notice to the contrary.  If the Security Agent
disburses funds on a payment date without first having received funds from the
Borrower and if Borrower subsequently fails to make such payment before the end
of the day, then on the next Business Day on demand from the Security Agent,
each Loan Participant which has received such funds will refund to the Security
Agent the amount advanced by the Security Agent which such Loan Participant
received.

                                      23
<PAGE>

                                                                        MORTGAGE
                                                                    [Midway/LBK]

     SECTION 2.06  [Intentionally Omitted.]
                    ---------------------

     SECTION 2.07  Termination of Interest in Mortgage Estate.  A Holder shall
                   ------------------------------------------
not, as such, have any further interest in, or other right with respect to, the
Mortgage Estate with respect to any Aircraft when and if the principal amount of
and Break Amount, if any, and interest on and other amounts due under all
Drawings of the related Series held by such Holder and all other sums due to
such Holder hereunder and under the other Operative Documents in respect of such
Aircraft shall have been paid in full; provided, however, that the interests and
                                       --------  -------
rights of the Loan Participants in and with respect to the mortgage and security
interests created by the Mortgage shall continue (except with respect to any
Aircraft as to which the related Series of Drawings has been repaid) after all
such amounts have been paid in full so long as the Commitments have not
terminated.  Upon payment in full of any Series of Drawings, Security Agent
shall release that portion of the Mortgage Estate which relates solely to the
applicable Aircraft from the Lien of this Mortgage.

     SECTION 2.08  Registration, Transfer and Exchange of Loan Certificates.
                   --------------------------------------------------------
The Security Agent agrees with the Borrower that the Security Agent shall keep a
register (herein sometimes referred to as the "Certificate Register") in which
                                               --------------------
provision shall be made for the registration of Loan Certificates of each Series
and the registration of transfers of Loan Certificates of such Series.  Prior to
the due presentment for registration of the transfer of any Loan Certificate,
the Borrower and the Security Agent shall deem and treat the person in whose
name such Loan Certificate is registered on the Certificate Register as the
absolute owner of such Loan Certificate, and the Holder for the purpose of
receiving payment of all amounts payable with respect to such Loan Certificate,
and for all other purposes whether or not such Loan Certificate is overdue, and
neither the Borrower nor the Security Agent shall be affected by notice to the
contrary.  The Certificate Register shall be kept at the office of the Security
Agent set forth in the Credit Agreement or at the office of any successor
Security Agent, and the Security Agent is hereby appointed "Certificate
Registrar" for the purpose of registering Loan Certificates and transfers of
Loan Certificates as herein provided.  Upon surrender for registration of
transfer of any Loan Certificate of any Class at the office of the Security
Agent set forth in the Credit Agreement and upon delivery by the Security Agent
to the Borrower of such surrendered Loan Certificate, the Borrower shall
execute, and the Security Agent shall deliver, in the name of the designated
transferee or transferees, one or more new Loan Certificates of a like aggregate
principal amount and Class.  At the option of the Holder, its Loan Certificates
of any Class may be exchanged for other Loan Certificates of such Class of any
authorized denominations, of a like aggregate principal amount, upon surrender
of the Loan Certificates to be exchanged at the office of the Security Agent
specified in the Credit Agreement.  Each new Loan Certificate issued upon
transfer or exchange shall be in a principal amount of at least $100,000 (except
as may be necessary to evidence the entire outstanding principal amount of a
Loan Certificate) and dated the Effective Date.  Whenever any Loan Certificates
are so surrendered for exchange, the Borrower shall execute and deliver the Loan
Certificates which the Holder making the exchange

                                      24
<PAGE>

                                                                        MORTGAGE
                                                                    [Midway/LBK]

is entitled to receive. Each Holder may also assign to any assignee an interest
in any Loan Certificate held by it and the Security Agent shall, upon receipt of
a written request of such assignee, accompanied by such proof of such assignment
as the Security Agent may reasonably require, register in the name of such
assignee such interest in such Loan Certificate and thereafter such assignee
shall be a Holder for all purposes of the Operative Documents (subject to any
limitations in the instrument of assignment). All Loan Certificates issued upon
any registration of transfer or exchange of Loan Certificates shall be the valid
obligations of the Borrower evidencing the same respective obligations, and
entitled to the same security and benefits under this Mortgage, as the Loan
Certificates surrendered upon such registration of transfer or exchange. Every
Loan Certificate presented or surrendered for registration of transfer or
exchange, shall (if so required by the Security Agent) be duly endorsed, or be
accompanied by a written instrument of transfer in form satisfactory to the
Security Agent duly executed by the Holder thereof or his attorney duly
authorized in writing, and the Security Agent may 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 Security Agent shall make a
notation on each new Loan Certificate or Loan Certificates of the amount of all
payments of principal previously made on the old Loan Certificate or Loan
Certificates with respect to which such new Loan Certificate is issued and the
date to which interest accrued on such old Loan Certificate or Loan Certificates
has been paid and the extent, if any, to which any interest therein has been
subject to a registered assignment. The Security Agent shall not be required to
register the transfer of or exchange any surrendered Loan Certificates as above
provided during the five calendar day period preceding the due date of any
payment on such Loan Certificates. Any Holder may transfer any or all of its
Loan Certificates to any Person. The Borrower and the Security Agent shall treat
the Person in whose name each Loan Certificate is registered on the Certificate
Register as the Holder with respect thereto for all purposes hereof until due
presentment for registration of transfer as provided in this Section 2.08. The
Security Agent shall give the Borrower and each Holder notice of such transfer
of a Loan Certificate under this Section 2.08.

     SECTION 2.09  Mutilated, Destroyed, Lost or Stolen Loan Certificates.  If
                   ------------------------------------------------------
any Loan Certificate shall become mutilated, destroyed, lost or stolen, the
Borrower shall, upon the written request of the affected Holder, execute and
deliver in replacement thereof, a new Loan Certificate of a like Class, in the
same principal amount, dated the date of such Loan Certificate and designated as
issued under this Mortgage.  If the Loan Certificate being replaced has become
mutilated, such Loan Certificate shall be surrendered to the Security Agent and
the original thereof shall be furnished to the Borrower by the Security Agent.
If the Loan Certificate being replaced has been destroyed, lost or stolen, the
affected Holder shall furnish to the Borrower and the Security Agent such
security or indemnity as may be reasonably required by them to hold the Borrower
and the Security Agent harmless and evidence satisfactory to the Borrower and
the Security Agent of the destruction, loss or theft of such Loan Certificate
and of the ownership thereof; provided, however, that if the affected Holder is
                              --------  -------
an original party to the Credit Agreement or an Affiliate thereof, the written
notice of such destruction, loss or theft and such

                                      25
<PAGE>

                                                                        MORTGAGE
                                                                    [Midway/LBK]

ownership and the written undertaking of such Holder delivered to the Borrower
and the Security Agent to hold harmless the Borrower and the Security Agent in
respect of the execution and delivery of such new Loan Certificate shall be
sufficient evidence, security
and indemnity.

     SECTION 2.10  Payment of Expenses on Transfer.  Upon the issuance of a new
                   -------------------------------
Loan Certificate or new Loan Certificates pursuant to Section 2.08 or 2.09, the
Borrower and/or the Security Agent may require from the party requesting such
new Loan Certificate or Loan Certificates payment of a sum sufficient to
reimburse the Borrower and/or the Security Agent for, or to provide funds for,
the payment of any tax or other governmental charge in connection therewith or
any charges and expenses connected with such tax or other governmental charge
paid or payable by the Borrower or the Security Agent.

     SECTION 2.11  Prepayment.  (a) On at least five Business Days' prior
                   ----------
written notice, the Borrower may prepay on the date specified in its notice of
prepayment delivered pursuant to paragraph (d) below in whole, or in part, the
Senior Loan Certificates then outstanding at the principal amount thereof (or
portion thereof to be repaid), together with accrued interest thereon to the
date of prepayment plus all Break Amount, if any, and all other amounts due to
the Holders of the Senior Loan Certificates hereunder, thereunder and under the
other Operative Documents; provided that any partial prepayment shall be in an
aggregate original principal amount of at least $500,000 and in $500,000
multiples thereof, and the amount thereof shall be specified in such written
notice.  The Security Agent will give prompt notice of the Borrower's intent to
prepay to the Holders.

          (b)      On five Business Days' prior written notice, the Borrower
shall prepay on the date specified in its notice of prepayment delivered
pursuant to paragraph (d) below the Loan Certificates in full, but not in part,
together with accrued interest thereon to the date of prepayment plus all Break
Amount, if any, and all other amounts due thereunder and hereunder and under the
other Operative Documents to the Holders upon the occurrence of a termination of
the Purchase Agreement by Boeing pursuant to Article 10 of the General Terms
Agreement (which comprises part of the Purchase Agreement) which comprises a
portion of the Purchase Agreement. The Security Agent will give notice of
prepayment to the Holders under this Section 2.11(b) promptly.

          (c)      In the event that a Senior Loan Participant is entitled to a
payment under Section 2.13 hereof or Section 8(c) of the Credit Agreement (an
"Affected Senior Loan Participant"), Borrower, Security Agent and the Affected
Senior Loan Participant shall cooperate for a period of sixty (60) days to (x)
first, restructure the Loan for the Affected Senior Loan Participant so as to
eliminate the need for any such payment (it being agreed that the Affected
Senior Loan Participant shall have no obligation to proceed with such
restructuring to the extent such restructuring would (i) result in an adverse
regulatory consequence for the Affected Senior

                                      26
<PAGE>

                                                                        MORTGAGE
                                                                    [Midway/LBK]

Loan Participant, (ii) involve any unreimbursed or unindemnified cost for the
Affected Senior Loan Participant or (iii) be inconsistent with the Affected
Senior Loan Participant's internal policies) or (y) if no restructuring can be
arranged, attempt, with the Borrower acting as marketing agent, to find an
entity reasonably satisfactory to the Security Agent to purchase the Affected
Senior Loan Participant's Senior Loan Certificate and assume the Affected Senior
Loan Participant's Commitment. The Affected Senior Loan Participant shall be
paid (by the purchasing entity or the Borrower) the outstanding principal
balance of its Senior Loan Certificate, all accrued and unpaid interest thereon,
any Break Amount incurred (calculated as if such purchase were a prepayment of
such Affected Senior Loan Participant's Senior Loan Certificate) and all other
amounts owed to the Affected Senior Loan Participant hereunder, thereunder or
under any other Operative Document as a condition precedent to such purchase. In
the event the Borrower is unable to find a purchaser of the Affected Senior Loan
Participant's Senior Loan Certificate, then, so long as the Borrower is in
compliance with its financial covenants set forth in Exhibit C to the Credit
Agreement and no Default or Event of Default shall have occurred and be
continuing on at least five (5) Business Days' prior written notice, the
Borrower may prepay on the date specified in its notice of prepayment delivered
pursuant to paragraph (d) below in whole the Affected Senior Loan Participant's
Senior Loan Certificate at the principal amount thereof together with accrued
and unpaid interest thereon to the date of prepayment plus all Break Amount, if
any, and all other amounts due to the Affected Senior Loan Participant
hereunder, thereunder and under the other Operative Documents; provided,
however, the Borrower shall be entitled to prepay two Affected Senior Loan
Participants under this Section 2.11(c), either simultaneously or in the
aggregate, only if after such prepayment the Borrower shall have more than $40
million in available liquidity comprised of cash, short term investments (i.e.,
investments maturing in less than twelve (12) months) and available lines of
credit.

          (d)      Any notice of prepayment delivered pursuant to paragraph (a),
(b) or (c) above shall be irrevocable if not revoked within five Business Days
of the specified date of payment and shall identify the amount to be prepaid and
the Series of Drawings (if applicable) subject to prepayment.

     SECTION 2.12  Provisions Relating to Prepayment.  (a)  Notice of prepayment
                   ---------------------------------
having been given and not revoked as aforesaid, the principal amount of the Loan
Certificates so to be prepaid, plus accrued interest thereon to the date of
prepayment, together with, in the case of the Senior Loan Participants, the
Break Amount, if any, shall become due and payable on the prepayment date.

          (b)      On the date fixed for prepayment under Section 2.11,
immediately available funds in Dollars shall be deposited by the Borrower in the
account of the Security Agent at the place and by the time and otherwise in the
manner provided in Section 2.05, in an amount equal to the principal amount of
Loan Certificates to be prepaid together with accrued and unpaid interest
thereon to the date fixed for such prepayment, all Break Amount, if any, and all
other amounts due to the Holders of the Loan Certificates hereunder, thereunder
and under the other Operative Documents.

                                      27
<PAGE>

                                                                        MORTGAGE
                                                                    [Midway/LBK]

          (c)      Each Holder of a Loan Certificate shall furnish to the
Borrower, with a copy to the Security Agent, a certificate setting forth in
reasonable detail the calculation of the amounts of Break Amount due to such
Holder, which certificate shall be presumptively correct.

     SECTION 2.13  Increased Costs.  (a)  The Borrower shall pay directly to
                   ---------------
each Holder of a Senior Loan Certificate from time to time such amounts as such
Holder may determine to be necessary to compensate such Holder for any increase
in actual costs that such Holder determines are attributable to its making or
maintaining of its Commitment or the loans evidenced by its Loan Certificates or
funding arrangements utilized in connection with such loans, or any reduction in
any amount receivable by such Holder hereunder in respect of any of Commitments,
such loans or such arrangements (such increases in costs and reductions in
amounts receivable being herein called "Additional Costs"), resulting from any
                                        ----------------
Regulatory Change that:

                   (i)   imposes any tax that is the functional equivalent of
     any reserve, special deposit or similar requirement of the sort covered by
     clause (ii) below; or

                   (ii)  imposes or modifies any reserve, special deposit or
     similar requirements (including any Reserve Requirement) relating to any
     extensions of credit or other assets of, or any deposits with or other
     liabilities of, such Holder (including, without limitation, any of such
     loans or any deposits referred to in the definition of "LIBO Rate" in
                                                             ---------
     Section 1.01), or any such obligations; or

                   (iii) imposes any other similar condition affecting this
     Mortgage or its Loan Certificates (or any of such extensions of credit or
     liabilities) or any such obligation.

          (b)      Without limiting the effect of the foregoing provisions of
this Section 2.13 (but without duplication), the Borrower shall pay directly to
each Holder of a Senior Loan Certificate from time to time on request such
amounts as such Holder may determine to be necessary to compensate such Holder
(or, without duplication, the holding company of which such Holder is a
subsidiary) for any increase in actual costs that it determines are attributable
to the maintenance by such Holder (or any lending office or such holding
company), pursuant to any law or regulation or any interpretation, directive or
request (whether or not having the force of law and whether or not failure to
comply therewith would be unlawful so long as compliance therewith is standard
banking practice in the relevant jurisdiction) of any court or governmental or
monetary authority following (i) any Regulatory Change or (ii) implementing any
risk-based capital guideline or other similar requirement hereafter issued by
any government or governmental or supervisory authority (but excluding
implementation of the Basel Accord), of capital in respect of its Commitments or
Loan Certificates or funding arrangements utilized in connection with the Loan
Certificates; such compensation to include, without limitation, an amount equal
to any reduction of the rate of return on assets or equity of such Holder (or
any

                                      28
<PAGE>

                                                                        MORTGAGE
                                                                    [Midway/LBK]

lending office or such bank holding company) could have achieved but for such
law, regulation, interpretation, directive or request. For purposes of this
Section 2.13(b), Basel Accord" shall mean the proposals for risk-based capital
                 ------------
framework described by the Basel Committee on Banking Regulations and
Supervisory Practices in its paper entitled "International Convergence of
Capital Measurement and Capital Standards" dated July, 1988.

          (c) Each Holder of a Senior Loan Participant shall notify the Borrower
of any event occurring after the date of this Mortgage entitling such Holder to
compensation under paragraph (a) or (b) of this Section 2.13 as promptly as
practicable, but in any event within 60 days, after such Holder obtains actual
knowledge thereof; provided that (i) such Holder shall, with respect to
                   --------
compensation payable pursuant to this Section 2.13 in respect of any Additional
Costs resulting from such event, only be entitled to payment under this Section
2.13 for Additional Costs incurred from and after the date that is 60 days prior
to the date such Holder does give such notice and (ii) each Holder will use
commercially reasonable efforts (at the Borrower's expense) to mitigate the
amount of the Additional Costs associated with such event, including designating
a different lending office for the Loan Certificates of such Holder affected by
such event if such designation will avoid the need for, or reduce the amount of,
such compensation and will not, in the sole opinion of such Holder, result in
any economic, legal or regulatory disadvantage to such Holder (other than
economic disadvantages for which the Borrower agrees to indemnify such Holder
and which indemnity is acceptable to such Holder in its discretion acting
reasonably based on its credit assessment of the Borrower).  Each Holder of a
Senior Loan Participant will furnish to the Borrower an officer's certificate
setting forth in reasonable detail (i) the events giving rise to such Additional
Costs, (ii) the basis for determining and allocating such Additional Costs and
(iii) the amount of each request by such Holder for compensation under paragraph
(a) or (b) of this Section 2.13 (subject, however, to any limitations such
Holder may require in respect of disclosure of confidential information relating
to its capital structure), together with a statement that the determinations and
allocations made in respect of the Additional Costs comply with the provisions
of this Section 2.13, including as provided in the last proviso of this
paragraph (c).  Determinations and allocations by any Holder of a Senior Loan
Participant for purposes of this Section 2.13 of the effect of any Regulatory
Change pursuant to paragraph (a) of this Section 2.13, or of the effect of
capital maintained pursuant to paragraph (b) of this Section 2.13, on its costs
or rate of return of maintaining its Commitment or Loan Certificate or its
funding, or on amounts receivable by it in respect of Loan Certificates, and of
the amounts required to compensate such Holder under this Section 2.13, shall be
conclusive absent manifest error, provided that such determinations and
                                  --------
allocations are made on a reasonable basis and, in the case of allocations, are
made fairly.

                                      29
<PAGE>

                                                                        MORTGAGE
                                                                    [Midway/LBK]

          (d) The Borrower shall not be required to make payments under this
Section to any Holder if (i) a claim hereunder arises through circumstances
peculiar to such Holder and which do not affect commercial lenders in the same
jurisdiction generally or (ii) the claim arises out of a voluntary relocation by
such Holder of its lending office (it being understood that any such relocation
effected pursuant to Section 2.13(c)(ii) is not "voluntary").

                                  ARTICLE III

                          OTHER COVENANTS OF BORROWER

     SECTION 3.01  Liens.  The Borrower will not directly or indirectly create,
                   -----
incur, assume or suffer to exist any Lien on or with respect to the Mortgage
Estate, title thereto or any interest therein except (i) the rights of the
Borrower as herein provided, the Lien hereof and any other rights existing
pursuant to the Operative Documents, (ii) Liens for Taxes of the Borrower either
not yet due or being contested in good faith by appropriate proceedings (and for
which adequate reserves have been provided in accordance with generally accepted
accounting principles), so long as the continuing existence of such Liens during
such proceedings do not involve any material risk of the sale, forfeiture or
loss of, either Purchase Agreement, any Airframe or any Engine or any interest
therein, (iii) Liens arising out of any judgment or award against the Borrower
with respect to which an appeal or proceeding for review is being prosecuted
diligently and in good faith, so long as such Liens do not result in a material
risk of the sale, forfeiture or loss of, either Purchase Agreement, any Airframe
or any Engine or any interest therein, and (iv) any other Lien with respect to
which the Borrower shall have provided a bond or other security in an amount and
under terms reasonably satisfactory to the Security Agent.  The Borrower will
promptly, at its own expense, take (or cause to be taken) such actions as may be
necessary duly to discharge any Lien not excepted above if the same shall arise
at any time and the Borrower will make restitution to the Security Agent for any
actual loss or expense resulting from any Lien described in subclause (ii),
(iii) or (iv) above.

     SECTION 3.02  Amendments, Supplements, Etc.  Forthwith upon the execution
                   -----------------------------
and delivery of  any amendment to this Mortgage, the Borrower will cause such
amendment to be duly filed and recorded, and maintained of record, in accordance
with all applicable laws.  In addition, the Borrower will promptly and duly
execute and deliver to the Security Agent such further documents and take such
further action as the Security Agent may from time to time reasonably request in
order to more effectively carry out the intent and purpose of this Mortgage and
to establish and protect the rights and remedies created or intended to be
created in favor of the Security Agent hereunder, including, without limitation,
if requested by the Security Agent, at the expense of Borrower, the execution
and delivery of supplements or amendments hereto, each in recordable form,
subjecting to this Mortgage any engine substituted for any Engine pursuant to
the terms thereof and the recording or filing of counterparts hereof, in
accordance with the laws of such jurisdiction as the Security Agent may
reasonably request.

                                      30
<PAGE>

                                                                        MORTGAGE
                                                                    [Midway/LBK]

     SECTION 3.03  Access to or Furnishing of Information.  The Borrower agrees
                   --------------------------------------
to furnish to each Holder of a Senior Loan Certificate and the Junior Loan
Participant:

          (a) as soon as available, but not later than 90 days after the close
of each fiscal year of the Borrower occurring after the date hereof, an audited
balance sheet and related statements of the Borrower at and as of the end of
such fiscal year, together with an audited statement of income and cash flows of
the Borrower for such fiscal year, each of which shall be prepared in accordance
with GAAP and shall be accompanied by an unqualified opinion of a firm of
independent public accountants of nationally recognized standing that said
financial statements fairly present in all material respects the financial
condition and results of operation of the Borrower as at the end of, and for,
such period in accordance with GAAP;

          (b) as soon as available, but not later than 45 days after the close
of each of the first three quarters of each fiscal year of the Borrower, an
unaudited balance sheet of the Borrower at and as of the end of such quarter,
together with an unaudited statement of income and cash flows of the Borrower
for such quarter, each of which shall be prepared in accordance with GAAP,
certified by the Chief Financial Officer of the Borrower that said financial
statements fairly present in all material respects the financial condition and
results of operation of the Borrower as at the end of, and for, such period in
accordance with GAAP (subject to normal year-end audit adjustments), provided
that so long as the Borrower is subject to the reporting provisions of the
Securities Exchange Act of 1934, a copy of the Borrower's quarterly report on
Form 10-Q will satisfy this requirement (to the extent such report contains the
information required to be provided by this clause (b));

          (c) together with the financial statements delivered pursuant to the
preceding paragraphs (a) and (b), (i) a certificate of the chief financial
officer, Treasurer, any Vice President, or other officer of the Borrower elected
by the Borrower's Board of Directors stating that such authorized officer has
reviewed the activities of the Borrower and that, to the best knowledge of such
authorized officer, there exists no Default or Event of Default hereunder and
(ii) a compliance certificate with respect to Borrower's financial covenants in
Section 9(d) of the Credit Agreement, determining Borrower's compliance with
said financial covenants, in sufficient detail to allow the Loan Participants to
verify such determinations;

          (d) simultaneously with the mailing thereof to its shareholders,
copies of all such financial statements, reports, notices of proxy statements as
the Borrower shall (i) mail to its shareholders generally or (ii)  file with the
Securities and Exchange Commission;

                                      31
<PAGE>

                                                                        MORTGAGE
                                                                    [Midway/LBK]

          (e) from time to time, such other non-confidential (except to the
extent the recipients are bound by confidentiality agreements in substance
reasonably acceptable to Borrower) and non-proprietary information as the
Security Agent or any Holder may reasonably request; and

          (f) promptly after the occurrence thereof and actual knowledge thereof
by a responsible officer of the Borrower, notice to the Security Agent of any
Default or Event of Default (provided that the Borrower shall be deemed to have
cured any Default arising under this clause (f) to the extent it shall have
cured the Default to which such notice requirement relates).

     SECTION 3.04  Financial Covenants      *
                   -------------------

                                  ARTICLE IV

                               EVENTS OF DEFAULT

     Each of the following events shall constitute an Event of Default (whether
any 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) and each such Event of Default shall continue so long as, but
only as long as, it shall not have been remedied:

     SECTION 4.01  Payment of Principal or Interest.  The Borrower shall have
                   --------------------------------
failed to make a payment of any principal on any Loan Certificate after the same
shall have become due; or the Borrower shall have failed to make a payment of
interest on any Loan Certificate within five (5) Business Days after the same
shall have become due; or

     SECTION 4.02  Other Payments.  The Borrower shall have failed to make any
                   --------------
payment of any amount other than principal and interest on the Loan after the
same shall have become due and such failure shall continue for fifteen (15) days
after the Borrower has received notice that such payment is due; or

     SECTION 4.03  Covenants.  *
                   ---------  ---

     SECTION 4.04  Other Covenants.  The Borrower shall have failed to perform
                   ---------------
or observe, or caused to be performed and observed, in any material respect, any
other covenant or agreement to be performed or observed by it under any
Operative Document, and such failure

____________________

*  Indicates information deleted for confidentiality purposes.

                                      32
<PAGE>

                                                                        MORTGAGE
                                                                    [Midway/LBK]

shall continue unremedied for a period of thirty (30) days after the Borrower's
receipt of written notice thereof from the Security Agent; or

     SECTION 4.05  Representations and Warranties.  Any representation or
                   ------------------------------
warranty made by the Borrower in any Operative Document or any document or
certificate furnished by the Borrower in connection therewith or pursuant
thereto shall prove to have been incorrect in any respect that is materially
adverse to the Security Agent or any Holder in such party's reasonable judgment
at the time made; or

     SECTION 4.06  Voluntary Bankruptcy.  The commencement by the Borrower of a
                   --------------------
voluntary case under the federal bankruptcy laws, as now constituted or
hereafter amended, or any other applicable federal or state bankruptcy,
insolvency or other similar law in the United States, or the consent by the
Borrower to the appointment of or taking possession by a receiver, liquidator,
assignee, trustee, custodian, sequestrator (or other similar official) of the
Borrower or for all or substantially all of its property, or the making by the
Borrower of any assignment for the benefit of creditors or the Borrower shall
take any corporate action to authorize any of the foregoing or to authorize a
general payment moratorium; or

     SECTION 4.07  Involuntary Bankruptcy.  The commencement of an involuntary
                   ----------------------
case or other proceeding in respect of the Borrower in an involuntary case under
the federal bankruptcy laws, as now or hereafter constituted, or any other
applicable federal or state bankruptcy, insolvency or other similar law in the
United States or seeking the appointment of a receiver liquidator, assignee,
custodian, trustee, sequestrator (or similar official) of the Borrower or for
all or substantially all of its property, or seeking the winding-up or
liquidation of its affairs and the continuation of any such case or other
proceeding remains undismissed and unstayed for a period of sixty (60)
consecutive days, or an order, judgment or decree shall be entered in any
proceeding by any court of competent jurisdiction appointing, without the
consent of the Borrower, a receiver, trustee or liquidator of the Borrower, or
for all or substantially all of its property, or sequestering of all or
substantially all of the property of the Borrower and any such order, judgment
or decree or appointment or sequestration shall be final or shall remain in
force undismissed, unstayed or unvacated for a period of sixty (60) consecutive
days after the date of entry thereof; or

     SECTION 4.08  Certificated Air Carrier Status.  The Borrower fails or
                   -------------------------------
ceases to be a certificated air carrier or shall have been suspended as a
certificated air carrier or shall otherwise no longer have all applicable
licenses (or such licenses shall be suspended) necessary to operate as a
commercial airline for a period of ten (10) days after such failure, cessation,
suspension or loss; provided, that, no Event of Default shall occur under this
Section 4.08 until ten (10) days after loss of any judicial or administrative
appeal, so long as the applicable failure, cessation, suspension or loss is
stayed pending such judicial or administrative appeal; or

                                      33
<PAGE>

                                                                        MORTGAGE
                                                                    [Midway/LBK]

     SECTION 4.09  Other Indebtedness and Lease Obligations.  (i) The Borrower
                   ----------------------------------------
shall default in the payment when due of any principal of or interest on, or
fail to make a scheduled rental payment on, any of its other Indebtedness or any
Lease Obligation; or (ii) any other default by the Borrower in its obligations
in respect of any note, agreement, indenture, lease or other document evidencing
or relating to any Indebtedness or any Lease Obligation shall occur and the
effect of such default in clause (i) or (ii) is to cause such Indebtedness or
Lease Obligation to become due or to be terminated, or to be prepaid in full
(whether by redemption, purchase, offer to purchase or otherwise), prior to its
stated maturity; provided that, (x) the outstanding amount of such Indebtedness,
or (y) the capitalized amount of such Lease Obligation shall, singly or in the
aggregate, be equal to or in excess of $5,000,000 (or the equivalent thereof in
other currencies at the relevant time);

     As used in this Section 4.09, the following terms have the following
meanings:

          "Capital Lease Obligations" means, for any Person, all obligations of
           -------------------------
     such Person to pay rent or other amounts under a lease of (or other
     agreement conveying the right to use) property to the extent such
     obligations are required to be classified and accounted for as a capital
     lease on a balance sheet of such Person under GAAP (including Statement of
     Financial Accounting Standards No. 13 of the Financial Accounting Standards
     Board), and, for purposes of this Agreement, the amount of such obligations
     shall be the capitalized amount thereof, determined in accordance with GAAP
     (including such Statement No. 13).

          "Guarantee" shall mean a guarantee, an endorsement, a contingent
           ---------
     agreement to purchase or to furnish funds for the payment or maintenance
     of, or otherwise to be or become contingently liable under or with respect
     to, the Indebtedness, other obligations, net worth, working capital or
     earnings of any Person, or a guarantee of the payment of dividends or other
     distributions upon the stock or equity interests of any Person, or an
     agreement to purchase, sell or lease (as lessee or lessor) property,
     products, materials, supplies or services primarily for the purpose of
     enabling a debtor to make payment of such debtor's obligations or an
     agreement to assure a creditor against loss, and including, without
     limitation, causing a bank or other financial institution to issue a letter
     of credit or other similar instrument for the benefit of another Person,
     but excluding endorsements for collection or deposit in the ordinary course
     of business.  The terms "Guarantee" and "Guaranteed" used as a verb shall
                              ---------       ----------
     have a correlative meaning.

          "Indebtedness" means, for any Person:  (a) obligations created, issued
           ------------
     or incurred by such Person for borrowed money (whether by loan, the
     issuance and sale of debt securities or the sale of property to another
     Person subject to an understanding or agreement, contingent or otherwise,
     to repurchase such property from such Person); (b) obligations of such
     Person to pay the deferred purchase or acquisition price of

                                      34
<PAGE>

                                                                        MORTGAGE
                                                                    [Midway/LBK]

     property or services, other than trade accounts payable (other than for
     borrowed money) arising, and accrued expenses incurred, in the ordinary
     course of business; (c) Indebtedness of others secured by a Lien on the
     property of such Person, whether or not the respective indebtedness so
     secured has been assumed by such Person; (d) obligations of such Person in
     respect of letters of credit or similar instruments issued or accepted by
     banks and other financial institutions for account of such Person; (e)
     Capital Lease Obligations of such Person; and (f) Indebtedness of others
     Guaranteed by such Person.

          "Lease Obligation" means, of any Person, all obligations of such
           ----------------
     Person to pay rent or other amount under a lease of (or other agreement
     conveying the right to use) property under an operating lease and, for
     purposes of this Agreement, the amount of such obligations shall be the
     capitalized amount thereof.

     SECTION 4.10  Perfected Security Interest.  The Security Agent shall cease
                   ---------------------------
to hold a valid and perfected first priority security interest in any of the
Mortgage Estate (except with respect to Permitted Liens) for a period of ten
(10) days after the earlier of (i) receipt by Borrower of notice thereof and
(ii) Borrower's general counsel having knowledge of such cessation.

                                   ARTICLE V

                                    REMEDIES

     SECTION 5.01  General; Acceleration.  (a)  If an Event of Default shall
                   ---------------------
have occurred and be continuing and so long as the same shall be continuing
unremedied, then and in every such case, the Security Agent 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, including, without
limitation, the right to assign its right to purchase the Aircraft from the
Manufacturer (subject to the Consent and Agreement).

          (b) If an Event of Default referred to in Section 4.06 or 4.07 shall
have occurred, then and in every such case all unfunded Commitments shall be
terminated the unpaid principal of all Loan Certificates then outstanding,
together with interest accrued but unpaid thereon, and all other amounts due to
the holders of the Loan Certificates thereunder and hereunder and under the
other Operative Documents, shall, unless the Security Agent acting upon the
instructions of the Majority in Interest of Holders shall otherwise direct,
immediately and without further act become due and payable, without presentment,
demand, protest or notice, all of which are hereby waived.

                                      35
<PAGE>

                                                                        MORTGAGE
                                                                    [Midway/LBK]

          (c) If any other Event of Default shall have occurred and be
continuing, then and in every such case, the Security Agent may at any time, by
written notice or notices to the Borrower, (i) terminate all unfunded
Commitments and/or (ii) declare all the Loan Certificates to be due and payable,
whereupon the unpaid principal of all Loan Certificates then outstanding,
together with accrued but unpaid interest thereon, and all other amounts due to
the holders of the Loan Certificates thereunder, hereunder and under the other
Operative Documents, shall immediately and without further act become due and
payable without presentment, demand, protest or other notice, all of which are
hereby waived.

          (d) If the principal of the Loan Certificates shall have become due
and payable pursuant to this Section 5.01, there shall also become due and
payable to each holder of a Loan Certificate upon demand, without presentment,
protest or notice, all of which are hereby waived, the Break Amount therefor.

          (e) Subject to the consent of Majority in Interest of Holders, each
Holder shall be entitled, at any sale pursuant to this Article V, to credit
against any purchase price bid at such sale by such Holder all or any part of
the unpaid obligations owing to such Holder and secured by the Lien of this
Mortgage.  The Security Agent and the Holders shall, upon any such purchase,
acquire good title to the property so purchased, to the extent permitted by
applicable law, free of all rights of redemption.

          (f) The Security Agent agrees to give to the Borrower at least ten
days' prior written revocable notice of any foreclosure of the Lien of this
Mortgage, or of any other action to cause the Borrower to lose its rights under
either Purchase Agreement (which period of notice the parties hereto confirm is
commercially reasonable).

     SECTION 5.02  Discontinuance of Proceedings.  In case the Security Agent
                   -----------------------------
shall have instituted any proceeding to enforce any right, power or remedy under
this Mortgage by foreclosure, entry or otherwise, and such proceedings shall
have been discontinued or abandoned for any reason or shall have been determined
adversely to the Security Agent, then and in every such case, the Security Agent
and the Borrower shall, subject to any determination in such proceedings, be
restored to their former positions and rights hereunder with respect to the
Mortgage Estate, and all rights, remedies and powers of the Security Agent shall
continue as if no such proceedings had been instituted.

     SECTION 5.03  Waiver of Past Defaults.  Upon written instructions from a
                   -----------------------
Majority in Interest of Holders, the Security Agent shall waive any past Default
or Event of Default hereunder and its consequences and upon any such waiver such
Default or Event of Default shall cease to exist and any Event of Default
arising therefrom shall be deemed to have been cured for every purpose of this
Mortgage, but no such waiver shall extend to any subsequent or other Default or
Event of Default or impair any right consequent thereon; provided, however, that
                                                         --------  -------
in

                                      36
<PAGE>

                                                                        MORTGAGE
                                                                    [Midway/LBK]

the absence of written instructions from all Holders, the Security Agent shall
not waive any Default (i) in the payment of the principal of, or interest on, or
other amounts due under, any Loan Certificate then outstanding, or (ii) in
respect of a covenant or provision hereof which, under the proviso to the first
sentence of Section 8.01 or under the penultimate sentence of Section 8.01,
cannot be waived without the consent of each Holder.

     SECTION 5.04  Remedies Cumulative.  Each and every right, power and remedy
                   -------------------
given to the Security Agent specifically or otherwise in this Mortgage shall be
cumulative and shall be in addition to every other right, power and remedy
herein specifically given or now or 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 Security Agent, and the exercise
or the beginning of the exercise of any power or remedy shall not be construed
to be a waiver of the right to exercise at the same time or thereafter any other
right, power or remedy.  No delay or omission by the Security Agent in the
exercise of any right, remedy or power or in the pursuit 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 Borrower or to be an acquiescence therein.

                                  ARTICLE VI

                              THE SECURITY AGENT

     SECTION 6.01  Appointment, Powers and Immunities.  Each Loan Participant
                   ----------------------------------
hereby irrevocably appoints and authorizes Landesbank Schleswig-Holstein
Girozentrale ("LBK") to act as its Security Agent hereunder and under the other
               ---
Operative Documents with such powers as are specifically delegated to the
Security Agent by the terms of this Agreement and of the other Operative
Documents, together with such other powers as are reasonably incidental thereto.
The Security Agent (which term as used in this sentence and in Section 6.05 and
the first sentence of Section 6.06 hereof shall include reference to its
affiliates and its own and its affiliates' officers, directors, employees and
agents):  (a) shall have no duties or responsibilities except those expressly
set forth in this Agreement and in the other Operative Documents, and shall not
by reason of this Agreement or any other Operative Document be a trustee for any
Loan Participant; (b) shall not be responsible to the Loan Participants for any
recitals, statements, representations or warranties contained in this Agreement
or in any other Operative Document, or in any certificate or other document
referred to or provided for in, or received by any of them under, this Agreement
or any other Operative Document, or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement, any Loan
Certificate or any other Operative Document or any other document referred to or
provided for herein or therein or for any failure by the Borrower or any other
Person to perform any of its obligations hereunder or thereunder; (c) except as
set forth in Section 6.03, shall not be required to initiate or conduct any
litigation or collection proceedings hereunder or under any other Operative
Document; and (d)

                                      37
<PAGE>

                                                                        MORTGAGE
                                                                    [Midway/LBK]

shall not be responsible for any action taken or omitted to be taken by it
hereunder or under any other Operative Document or under any other document or
instrument referred to or provided for herein or therein or in connection
herewith or therewith, except for its own gross negligence or willful
misconduct. The Security Agent may employ agents and attorneys-in-fact and shall
not be responsible for the negligence or misconduct of any such agents or
attorneys-in-fact selected by it in good faith.

     SECTION 6.02  Reliance by Security Agent.  The Security Agent shall be
                   --------------------------
entitled to rely upon any certification, notice or other communication
(including, without limitation, any thereof by telephone, telecopy, telex,
telegram or cable) believed by it to be genuine and correct and to have been
signed or sent by or on behalf of the proper Person or Persons, and upon advice
and statements of legal counsel, independent accountants and other experts
selected by the Security Agent.  As to any matters not expressly provided for by
this Agreement or any other Operative Document, the Security Agent shall in all
cases be fully protected in acting, or in refraining from acting, hereunder or
thereunder in accordance with instructions given by the Majority in Interest of
Holders or all of the Loan Participants as is required in such circumstance, and
such instructions of such Loan Participants and any action taken or failure to
act pursuant thereto shall be binding on all of the Loan Participants.

     SECTION 6.03  Defaults.  The Security Agent shall not be deemed to have
                   --------
knowledge or notice of the occurrence of a Mortgage Default (other than the non-
payment of principal of or interest on Loan Certificates) unless the Security
Agent has received notice from a Loan Participant or the Borrower specifying
such Default and stating that such notice is a "Notice of Default".  In the
event that the Security Agent receives such a notice of the occurrence of a
Default, the Security Agent shall give prompt notice thereof to the Loan
Participants (and shall give each Loan Participant prompt notice of each such
non-payment).  The Security Agent shall (subject to Section 8.01 hereof) take
such action with respect to such Default as shall be directed by the Majority in
Interest of Holders, provided that, so long as the Security Agent has notified
                     --------
the Holders of a Default and shall not have received directions from the Holders
within five (5) Business Days of such notice, unless and until the Security
Agent shall have received such directions, the Security Agent may (but shall not
be obligated to) take such action, or refrain from taking such action, with
respect to such Default as it shall deem advisable in the best interest of the
Loan Participants (and shall promptly notify all Holders of any such action or
refrain) except to the extent that this Agreement expressly requires that such
action be taken, or not be taken, only with the consent or upon the
authorization of the Majority in Interest of Holders or all of the Loan
Participants.

     SECTION 6.04  Rights as a Loan Participant.  With respect to its Commitment
                   ----------------------------
and the Loans made by it, LBK (and any successor acting as Security Agent) in
its capacity as a Loan Participant hereunder shall have the same rights and
powers hereunder as any other Loan Participant and may exercise the same as
though it were not acting as the Security Agent, and the

                                      38
<PAGE>

                                                                        MORTGAGE
                                                                    [Midway/LBK]

term "Loan Participant" or "Loan Participants" shall, unless the context
otherwise indicates, include the Security Agent in its individual capacity. LBK
(and any successor acting as Security Agent) and its affiliates may (without
having to account therefor to any Loan Participant) accept deposits from, lend
money to, make investments in and generally engage in any kind of loan, trust or
other business with the Borrower (and any of its subsidiaries or Affiliates) as
if it were not acting as the Security Agent.

     SECTION 6.05  Indemnification.  The Loan Participants agree to indemnify
                   ---------------
the Security Agent (to the extent not reimbursed under Section 8 of the Credit
Agreement, but without limiting the obligations of the Borrower under said
Section 8) ratably in accordance with their respective Loan Certificates, for
any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind and nature
whatsoever that may be imposed on, incurred by or asserted against the Security
Agent (including by any Loan Participant) arising out of or by reason of any
investigation in or in any way relating to or arising out of this Agreement or
any other Operative Document or any other documents contemplated by or referred
to herein or therein or the transactions contemplated hereby or thereby
(including, without limitation, the costs and expenses that the Borrower is
obligated to pay under clause first of Section 2.04(e) hereof but excluding,
                              -----
unless a Mortgage Default has occurred and is continuing, normal administrative
costs and expenses incident to the performance of its agency duties hereunder)
or the enforcement of any of the terms hereof or thereof or of any such other
documents, provided that no Loan Participant shall be liable for any of the
           --------
foregoing to the extent they arise from the gross negligence or willful
misconduct of the party to be indemnified.

     SECTION 6.06  Non-Reliance on Security Agent and Other Loan Participants.
                   ----------------------------------------------------------
Each Loan Participant agrees that it has, independently and without reliance on
the Security Agent or any other Loan Participant, and based on such documents
and information as it has deemed appropriate, made its own credit analysis of
the Borrower and decision to enter into this Agreement and that it will,
independently and without reliance upon the Security Agent or any other Loan
Participant, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own analysis and decisions in
taking or not taking action under this Agreement.  The Security Agent shall not
be required to keep itself informed as to the performance or observance by the
Borrower of this Agreement or any of the other Operative Documents or any other
document referred to or provided for herein or therein or to inspect the
properties or books of the Borrower.  Except for notices, reports and other
documents and information expressly required to be furnished to the Loan
Participants by the Security Agent hereunder, the Security Agent shall not have
any duty or responsibility to provide any Loan Participant with any credit or
other information concerning the affairs, financial condition or business of the
Borrower that may come into the possession of the Security Agent or any of its
affiliates.

                                      39
<PAGE>

                                                                        MORTGAGE
                                                                    [Midway/LBK]

     SECTION 6.07  Failure to Act.  Except for action expressly required of the
                   --------------
Security Agent hereunder and under the other Operative Documents, the Security
Agent shall in all cases be fully justified in failing or refusing to act
hereunder and thereunder unless it shall receive further assurances to its
satisfaction from the Loan Participants of their indemnification obligations
under Section 6.05 hereof against any and all liability and expense that may be
incurred by it by reason of taking or continuing to take any such action.

     SECTION 6.08  Resignation or Removal of Security Agent.  Subject to the
                   ----------------------------------------
appointment and acceptance of a successor Security Agent as provided below, the
Security Agent may resign at any time by giving notice thereof to the Loan
Participants and the Borrower, and the Security Agent may be removed at any time
with or without cause by the Majority in Interest of Holders.  Upon any such
resignation or removal, the Majority in Interest of Holders shall have the right
to appoint a successor Security Agent.  If no successor Security Agent shall
have been so appointed by the Majority in Interest of Holders and shall have
accepted such appointment within 60 days after the retiring Security Agent's
giving of notice of resignation or the Majority in Interest of Holders' removal
of the retiring Security Agent, then the retiring Security Agent may, on behalf
of the Loan Participants, appoint a successor Security Agent.  Upon the
acceptance of any appointment as Security Agent hereunder by a successor
Security Agent, such successor Security Agent shall thereupon succeed to and
become vested with all the rights, powers, privileges and duties of the retiring
Security Agent, and the retiring Security Agent shall be discharged from its
duties and obligations hereunder.  After any retiring Security Agent's
resignation or removal hereunder as Security Agent, the provisions of this
Article VI shall continue in effect for its benefit in respect of any actions
taken or omitted to be taken by it while it was acting as the Security Agent.

     SECTION 6.09  Consents under Operative Documents.  Except as otherwise
                   ----------------------------------
provided in Section 8.01 hereof, the Security Agent may, with the prior consent
of the Majority in Interest of Holders (but not otherwise), consent to any
modification, supplement or waiver under any of the Operative Documents,
provided that, without the prior consent of each Loan Participant, the Security
--------
Agent shall not (except as provided herein) release any collateral or otherwise
terminate any Lien under any Operative Document providing for collateral
security, or agree to additional obligations being secured by such collateral
security (unless the Lien for such additional obligations shall be junior to the
Lien in favor of the other obligations secured by such Operative Document),
except that no such consent shall be required, and the Security Agent is hereby
authorized, to release any Lien covering property which is the subject of a
disposition of property permitted hereunder or to which the Majority in Interest
of Holders have consented; provided further, that, without the consent of the
Junior Loan Participant, the Security Agent shall not consent to any
modification, supplement or waiver under any Operative Document insofar as any
such modification, supplement or waiver would materially adversely affect the
Junior Loan Participant.

                                      40
<PAGE>

                                                                        MORTGAGE
                                                                    [Midway/LBK]

     SECTION 6.10  Non-Receipt of Funds by the Security Agent-.  Unless the
                   -------------------------------------------
Security Agent shall have been notified by a Loan Participant or the Borrower
(the "Payor") prior to the date on which the Payor is to make payment to the
      -----
Security Agent of (in the case of a Loan Participant) the proceeds of a Loan to
be made by it hereunder or (in the case of the Borrower) a payment to the
Security Agent for account of one or more of the Loan Participants hereunder
(such payment being herein called the "Required Payment"), which notice shall be
                                       ----------------
effective upon receipt, that the Payor does not intend to make the Required
Payment to the Security Agent, the Security Agent may assume that the Required
Payment has been made and may, in reliance upon such assumption (but shall not
be required to), make the amount thereof available to the intended recipient(s)
on such date and, if the Payor has not in fact made the Required Payment to the
Security Agent, the recipient(s) of such payment shall, on demand, repay to the
Security Agent the amount so made available together with interest thereon in
respect of each day during the period commencing on the date such amount was so
made available by the Security Agent until the date the Security Agent recovers
such amount at a rate per annum equal to the Federal Funds Rate for such day
and, if such recipient(s) shall fail promptly to make such payment, the Security
Agent shall be entitled to recover such amount, from the Payor, together with
interest as aforesaid.

                                  ARTICLE VII

                              INVESTMENT OF FUNDS

     Any moneys held by the Security Agent as security hereunder for Borrower's
obligations shall, until paid to Borrower or otherwise applied in accordance
with the terms of the Operative Documents, be invested by the Security Agent as
Borrower may from time-to-time direct in writing (or orally and confirmed in
writing), but subject to availability at the Security Agent's discretion (it
being understood that absent such a direction, there shall be no obligation to
invest such moneys) in (i) obligations of, or guaranteed by, the United States
Government or agencies thereof, (ii) open market commercial paper of any
corporation incorporated under the laws of the United States of America or any
State thereof rated at least P-2 or its equivalent by Moody's Investors Service,
Inc. or at least A-2 or its equivalent by Standard & Poor's Ratings Service,
(iii) certificates of deposit issued by commercial banks organized under the
laws of the United States or of any political subdivision thereof having a
combined capital and surplus in excess of $750,000,000 which banks or their
holding companies have a rating of A or its equivalent by Moody's Investors
Service, Inc. or Standard & Poor's Ratings Service; provided, however, that the
                                                    --------  -------
aggregate amount at any one time so invested in certificates of deposit issued
by any one bank shall not exceed five percent (5%) of such bank's capital and
surplus, (iv) Dollar denominated offshore certificates of deposit issued by, or
offshore time deposits with, any commercial bank described in (iii) or any
subsidiary thereof, and (v) repurchase agreements with any financial institution
having combined capital and surplus of at least $750,000,000 with any of the
obligations described in clauses (i) through (iv) as collateral, none of which
investments

                                      41
<PAGE>

                                                                        MORTGAGE
                                                                    [Midway/LBK]

(but exclusive of any underlying investment that may be subject to a
repo) shall have a term to maturity in excess of 30 days.  There shall be
promptly remitted to Borrower or its order (but no more frequently than monthly)
any gain (including interest received) realized as a result of any such
investment (net or any, fees, commissions and other expenses, if any, incurred
in connection with such investment) unless a Special Default or an Event of
Default shall have occurred and be continuing.  The Borrower shall be
responsible for any net loss realized as a result of any such investment and
shall reimburse the Security Agent on demand.

                                 ARTICLE VIII

                      SUPPLEMENTS AND AMENDMENTS TO THIS
                         MORTGAGE AND OTHER DOCUMENTS

     SECTION 8.01  Instructions of Majority; Limitations.  (a)  At any time and
                   -------------------------------------
from time to time, at the request of the Borrower, the Security Agent (but only
on the written direction of a Majority in Interest of Holders) shall (x) execute
a supplement hereto for the purpose of adding provisions to, or changing or
eliminating provisions of, this Mortgage as specified in such request or (y)
provide a consent when required by the terms of any Operative Document,

provided, however, that, without the consent of each Holder, no such amendment
--------  -------
of or supplement to any such document, or waiver or modification of the terms of
any thereof, shall (i) modify any of the provisions of this Section 8.01 or the
definitions of the terms, "Majority in Interest of Holders" or "Operative
                           ----------------------- -------      ---------
Documents", contained herein or in any other Operative Document, (ii) increase
---------
the principal amount of any Loan Certificate or reduce the amount or extend the
time of payment of any amount owing or payable under any Loan Certificate or
(except as provided in this Mortgage) increase or reduce the Break Amount or
interest payable on any Loan Certificate (except that only the consent of the
Holder shall be required for any decrease in any amounts of or the rate of Break
Amount or interest payable on such Loan Certificate or any extension for the
time of payment of any amount payable under such Loan Certificate), (iii)
reduce, modify or amend any indemnities in favor of any Loan Participant or any
Holder or in favor of or to be paid by the Borrower or alter the definition of

"Indemnitee" to exclude any Loan Participant or any Holder (except as consented
-----------
to by each Person adversely affected thereby), or (iv) release the Borrower from
its obligations in respect of the payment of the principal and interest then
outstanding (or other amounts payable therewith) or change any of the
circumstances under which any amounts payable pursuant to the Credit Agreement
or hereto are payable; provided further, that, without the consent of the Junior
Loan Participant, the Security Agent shall not amend or supplement any such
document, or waive or modify the terms thereof insofar as any such amendment,
supplement, waiver or modification would materially adversely affect the Junior
Loan Participant.  Notwithstanding the foregoing, without the consent of each
Holder, no such supplement to this Mortgage, or waiver or modification of the
terms hereof or of any other agreement or document shall expressly permit the
creation of any Lien on the Mortgage Estate or any part thereof, except as
herein expressly permitted, or deprive any

                                      42
<PAGE>

                                                                        MORTGAGE
                                                                    [Midway/LBK]

Holder of the benefit of the Lien of this Mortgage on the Mortgage Estate,
except in connection with the exercise of remedies under Article V. Except as
provided in this Section 8.01, the Security Agent shall not amend, supplement or
waive the terms of the Mortgage or Credit Agreement.

     SECTION 8.02  Security Agent Protected.  If, in the opinion of the
                   ------------------------
institution acting as the Security Agent hereunder any document required to be
executed pursuant to the terms of Section 8.01 affects any right, duty, immunity
or indemnity with respect to it under this Mortgage, the Security Agent may in
its discretion decline to execute such document.

     SECTION 8.03  Documents Mailed to Holders.  Promptly after the execution by
                   ---------------------------
the Security Agent of any document entered into pursuant to Section 8.01, the
Security Agent shall mail, by certified mail, postage prepaid, a conformed copy
thereof to each Holder at its address shown on the Certificate Register, but the
failure of the Borrower or Security Agent, to mail such conformed copies shall
not impair or affect the validity of such document.

                                  ARTICLE IX

                                 MISCELLANEOUS

     SECTION 9.01  Termination of Mortgage.  (a)  Upon (or at any time after)
                   -----------------------
payment in full of the principal of and interest on and Break Amount, if any,
and all other amounts due under, or otherwise due to the Holders of, all Loan
Certificates and provided that (i)  the Commitments shall have terminated and
                 --------
(ii) there shall then be no other amounts due to the Loan Participants, the
Holders and the Security Agent hereunder or under the Credit Agreement or the
other Operative Documents or otherwise secured hereby, the Security Agent shall
execute and deliver to or as directed in writing by the Borrower an appropriate
instrument releasing each of the Purchase Agreements from the Lien of this
Mortgage, and the Security Agent shall execute and deliver such instrument as
aforesaid and, at the Borrower's expense, will execute and deliver such other
instruments or documents as may be reasonably requested by the Borrower to give
effect to such release; provided, however, that this Mortgage and the trusts
                        --------  -------
created hereby shall earlier terminate and this Mortgage shall be of no further
force or effect and the rights of the Holders of the Loan Certificates and the
Security Agent shall terminate (and the Security Agent shall release, by an
appropriate instrument, the Mortgage Estate and the Aircraft from the Lien of
this Mortgage) upon any sale or other final disposition by the Security Agent of
all property part of the Mortgage Estate and the final distribution by the
Security Agent of all monies or other property or proceeds constituting part of
the Mortgage Estate in accordance with the terms hereof.  Except as aforesaid
otherwise provided, this Mortgage and the trusts created hereby shall continue
in full force and effect in accordance with the terms hereof.

          (b) In addition, upon (or at any time after) payment in full of the
principal of

                                      43
<PAGE>

                                                                        MORTGAGE
                                                                    [Midway/LBK]

and interest on and Break Amount, if any, and all other amounts due under, or
otherwise due to the Holders of, all Loan Certificates of a Series and provided
                                                                       --------
that there shall then be no other amounts due to the Loan Participants, the
Holders and the Security Agent hereunder or under the Loan Agreement or the
other Operative Documents or otherwise secured hereby in respect of such Series
of Loan Certificates, the Security Agent shall execute and deliver to or as
directed in writing by the Borrower an appropriate instrument releasing the
right to purchase the applicable Aircraft relating to such Series from the Lien
of this Mortgage, and the Security Agent shall execute and deliver such
instrument as aforesaid and, at the Borrower's expense, will execute and deliver
such other instruments or documents as may be reasonably requested by the
Borrower to give effect to such release.

     SECTION 9.02  No Legal Title to Mortgage Estate in Holders.  No Holder
                   --------------------------------------------
shall have legal title to any part of the Mortgage Estate.  No transfer, by
operation of law or otherwise, of any Loan Certificate or other right, title and
interest of any Holder in and to the Mortgage Estate or hereunder shall operate
to terminate this Mortgage or entitle such Holder or any successor or transferee
of such Holder to an accounting or to the transfer to it of legal title to any
part of the Mortgage Estate.

     SECTION 9.03  Sale of Mortgage Estate by Security Agent is Binding.  Any
                   ----------------------------------------------------
sale or other conveyance of any part of the Mortgage Estate by the Security
Agent made pursuant to the terms of this Mortgage shall bind the Holders and
shall be effective to transfer or convey all right, title and interest of the
Security Agent, the Borrower and the Holders in and to such part of the Mortgage
Estate.  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
Security Agent.

     SECTION 9.04  Mortgage for Benefit of Security Agent and Holders.  Nothing
                   --------------------------------------------------
in this Mortgage, whether express or implied, shall be construed to give to any
person other than the Borrower, the Security Agent, and the Holders any legal or
equitable right, remedy or claim under or in respect of this Mortgage.

     SECTION 9.05  No Action Contrary to Borrower's Rights; Quiet Enjoyment'.
                   ---------------------------------------------------------
Notwithstanding any of the provisions of this Mortgage to the contrary, so long
as no Event of Default shall have occurred and be continuing, the Security Agent
agrees that neither it nor any Person claiming by, through or under the Security
Agent, will not take any action in violation of the Borrower's rights, including
the right to purchase the Aircraft under the Boeing Purchase Agreement in
accordance with the terms of this Mortgage by Borrower.

     SECTION 9.06  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 Mortgage to be
made, given, furnished or filed shall be in writing,

                                      44
<PAGE>

                                                                        MORTGAGE
                                                                    [Midway/LBK]

mailed by certified mail, postage prepaid, or by confirmed telex, or by
confirmed telecopy or electronic mail and (i) if to the Security Agent,
 *  or (ii) if the Borrower,-addressed to it at its office at 2801 Slater
---
Road, Suite 200, Morrisville, NC 27560, or (iii) if to any Loan Participant or
any Holder, addressed to such party at such address as such party shall have
furnished by notice to the Borrower and the Security Agent, or, until an address
is so furnished, addressed to the address of such party (if any) set forth on
Schedule I to the Credit Agreement. Whenever any notice in writing is required
to be given by the Borrower or the Security Agent or any Holder to any of the
other of them, such notice shall be deemed given and such requirement satisfied
when such notice is received, if such notice is received, if such notice is
mailed by certified mail, postage prepaid, or is sent by confirmed telex, or by
confirmed telecopy 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 Mortgage.

     SECTION 9.07  Security Agent's Right to Perform for Borrower.  If the
                   -----------------------------------------------
Borrower fails to make any payment or to perform or comply with any of its
agreements contained herein, then (but in each case, other than in the case of
failure to maintain insurance as required hereunder, no earlier than five
Business Days after notice to Borrower as to the occurrence of such failure,
whether or not it shall yet constitute an Event of Default hereunder) the
Security Agent may itself make such payment or perform or comply with such
agreement but shall not be obligated hereunder to do so, and the amount of such
payment and the amount of the reasonable expenses of the Security Agent incurred
in connection with such payment or the performance of or compliance with such
agreement, as the case may be, together with interest thereon at the Past Due
Rate, shall be payable by Borrower upon demand.

     SECTION 9.08  Severability.  Any provision of this Mortgage 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, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

     SECTION 9.09  No Oral Modifications or Continuing Waivers.  No terms or
                   -------------------------------------------
provisions of this Mortgage or the Loan Certificates may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed by
the party or other Person against whom enforcement of the change, waiver,
discharge or termination is sought and any other party or other Person whose
consent is required pursuant to this Mortgage; and any waiver of the terms
hereof or of any Loan Certificate shall be effective only in the specific
instance and for the specific purpose given.

     SECTION 9.10  Successors and Assigns.  All covenants and agreements
                   ----------------------
contained herein

________________

*  Indicates information deleted for confidentiality purposes.

                                      45
<PAGE>

                                                                        MORTGAGE
                                                                    [Midway/LBK]

shall be binding upon, and inure to the benefit of, each of the parties hereto
and the successors and assigns of each, all as herein provided. Any request,
notice, direction, consent, waiver or other instrument or action by any Holder
shall bind the successors and assigns of such Holder.

     SECTION 9.11  Headings.  The headings of the various Articles and Sections
                   --------
herein and in the table of contents hereto are for the convenience of reference
only and shall not define or limit any of the terms or provisions hereof.

     SECTION 9.12  GOVERNING LAW; Counterparts.  THIS MORTGAGE SHALL IN ALL
                   ---------------------------
RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE
OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.
This Mortgage may be executed by the parties hereto in separate counterparts,
each of which when so executed and delivered shall be an original, but all such
counterparts shall together constitute but one and the same instrument.

     SECTION 9.13  WAIVER OF JURY TRIAL.  EACH PARTY HERETO HEREBY WAIVES, TO
                   --------------------
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS MORTGAGE OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED
ON CONTRACT, TORT OR ANY OTHER THEORY).  EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS MORTGAGE BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

                                      46
<PAGE>

                                                                        MORTGAGE
                                                                    [Midway/LBK]

     SECTION 9.14  Jurisdiction.
                   ------------

          (a) Each party hereby irrevocably and unconditionally submits, for
itself and its property, to the nonexclusive jurisdiction of the Supreme Court
of the State of New York sitting in New York County and of the United States
District Court of the Southern District of New York, and any appellate court
from any thereof, in any action or proceeding arising out of or relating to this
Agreement, or for recognition or enforcement of any judgment, and each of the
parties hereto hereby irrevocably and unconditionally agrees that all claims in
respect of any such action or proceeding may be heard and determined in such New
York State or, to the extent permitted by law, in such Federal court.  Each of
the parties hereto agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law.  Nothing in this Agreement
shall affect any right that any party may otherwise have to bring any action or
proceeding relating to this Agreement against another party or its properties in
the courts of any jurisdiction.

          (b) Each party hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection which it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement in any court referred to in
paragraph (a) of this Section.  Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.

          (c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 10 of the Credit
Agreement.  Nothing in this Agreement will affect the right of any party to this
Agreement to serve process in any other manner permitted by law.

                                      47
<PAGE>

                                                                        MORTGAGE
                                                                    [Midway/LBK]

     IN WITNESS WHEREOF, the parties hereto have caused this Mortgage to be duly
executed by their respective officers thereunto duly authorized, as of the day
and year first above written, and acknowledge that this Mortgage has been made
and delivered in the City of New York, and this Mortgage having become effective
only upon such execution and delivery.

                              MIDWAY AIRLINES CORPORATION,
                                as Borrower

                              By:      *
                                 -------------------------
                              Its:

                              LANDESBANK SCHLESWIG-HOLSTEIN GIROZENTRALE,
                                as Security Agent

                              By:       *
                                 -------------------------

                              By:       *
                                 -------------------------

_______________
* Indicates information deleted for confidentiality purposes.

                                      48

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